Initiatives to Leverage Buying Power and Small Business Program Have Helped Foster Collaboration among DHS Organizations

In the 2 years since its creation, DHS has realized some successes in  opening the lines of communication among the various organizations  within the department through its strategic sourcing and small business  programs. In fiscal year 2004, 4 commodity councils—office supplies, boats, energy,  and weapons—reported approximately $14.1 million in cost savings and  cost avoidances, and department officials expect the savings to continue  to grow. Small business representatives have been  designated in each DHS procurement office, and each office is required to  submit a forecast of upcoming contract opportunities above $100,000. An integrated acquisition organization is  essential to the department’s success in executing policies and processes  to effectively obligate and administer billions of dollars in acquiring what  DHS needs to accomplish its mission. Staffing disparities  across the procurement organizations have only recently begun to be  addressed. According to DHS officials, this negotiation process has been  problematic. Despite Adoption of Many Best Practices, Review Process for Major Investments Lacks Key Reviews and Some Management Controls

Some DHS organizations have large, complex, and high-cost acquisition  programs that need to be closely managed. For example, DHS does not require a review  to ensure that an investment’s design performs as expected before  investing in a prototype. However, a key practice, contractor tracking and oversight, is not fully  incorporated in the policy and guidance. A list of  selected acquisition management practices and required activities is in  appendix V.

		As Review Process Matures, Some Mechanics Still to Be Worked Out

The investment review process has been under revision for many months. Recommendations for Executive Action

To help ensure that DHS receives the goods and services it needs at the  best value to the government, we recommend that the Secretary of  Homeland Security take the following six actions:    establish a structure to ensure continued support for commodity  councils, such as appointing full-time dedicated commodity managers,  to ensure that the commodity councils develop long-term strategies,  maintain momentum, and continue to realize savings;    provide the Office of the Chief Procurement Officer with sufficient  resources and enforcement authority to enable effective,  departmentwide oversight of acquisition policies and procedures;    conduct a departmentwide assessment of the number of contracting  staff and, if a workload imbalance is found, take steps to correct it by  re-aligning resources;    direct higher-level management attention to the implementation of the  working capital fund (which is to be used to fund contracting staff for  the Office of Procurement Operations) by, for example, determining  the level of contracting support needed by the organizations relying on  this office, ensuring that appropriate funds are committed to hire  needed contracting staff, and ensuring that funds are available on an  ongoing basis for continuity;  revise the October 2004 management directive “Acquisition Line of  Business Integration and Management” to eliminate reference to the  Coast Guard and Secret Service being statutorily exempt from  complying; and    ensure that DHS’s management directive on interagency agreements is  followed and that fees paid to other agencies are tracked. Appendix I: Scope and Methodology

To identify the areas where the Department of Homeland Security (DHS)  has been successful in promoting collaboration among its various  organizations, we interviewed senior acquisition officials at DHS  headquarters and analyzed pertinent documents. To determine areas where DHS faces challenges in integrating the  acquisition function, we reviewed DHS organizational charts to gain  insight into where the procurement offices fall in the hierarchy and to  determine the lines of responsibility and authority between the various  stakeholders in the acquisition process. To assess the department’s progress in implementing a review process for  major, complex systems, we compared DHS’s acquisition policies for  major acquisitions to our knowledge-based approach. Our analysis focused on whether DHS’s  policies contained the measurable criteria and management controls  necessary for minimizing cost, schedule, and performance risks.
Why GAO Did This Study

Department of Homeland Security (DHS) organizations are expected to work together to protect the United States from terrorism. To support this primary mission, DHS has been acquiring billions of dollars worth of goods and services. DHS also has been working to integrate the disparate acquisition processes and systems that organizations brought with them when DHS was created 2 years ago. GAO was asked to identify (1) areas where DHS has been successful in promoting collaboration among its various organizations and (2) areas where DHS still faces challenges in integrating the acquisition function across the department. GAO was also asked to assess DHS's progress in implementing an effective review process for major, complex investments.

What GAO Found

DHS's disparate organizations have quickly established collaborative relationships to leverage spending for various goods and services without losing focus on small businesses. DHS is using strategic sourcing, that is, formulating purchasing strategies to meet departmentwide requirements for specific commodities, such as office supplies, boats, energy, and weapons. By fostering collaboration, DHS has leveraged its buying power and savings are expected to grow. Also off to a good start is the small business program, whose reach is felt across DHS. Representatives have been designated in each DHS procurement office to help ensure that small businesses have opportunities to compete for DHS's contract dollars. In contrast, lack of clear accountability is hampering DHS's efforts to integrate the acquisition functions of its numerous organizations into an effective whole. DHS remains a collection of disparate organizations, many of which are performing functions with insufficient oversight, giving rise to an environment rife with challenges. Some of DHS's organizations have major, complex acquisition programs that are subject to a multitiered investment review process to help reduce risk and increase chances for successful outcomes in terms of cost, schedule, and performance. Part of the review process features a knowledge-based acquisition approach pioneered by successful commercial firms. DHS's adaptation of this best practices approach, however, does not require two critical management reviews and is missing some key information before decisions are made to invest additional resources. In addition, contractor tracking and oversight is not fully incorporated into DHS policy and guidance. Finally, some aspects of the review process--which has been under revision for many months--need clarification.