Specifically, the schedule did not  sufficiently comply with seven of nine key practices that relevant guidance  states are important to having a reliable schedule. DHS Has Largely Defined but Has Not Effectively Implemented the Full Range of Needed Contractor Management and Oversight Controls

Federal regulations and relevant guidance recognize effective contractor  management and oversight as a key acquisition management discipline. To DHS’s credit, it has largely defined key practices aimed at employing  each of these contractor management and oversight controls. Moreover, it  has implemented some of them, such as training key contractor  management and oversight officials and holding management reviews with  the prime contractor. Reasons for these weaknesses  include limitations in the defined verification and acceptance deliverable  process and a SPO decision to exclude some deliverables from the  process, and insufficient time to review technical review documentation. Further, while the SPO has followed key aspects of this  process, it has not effectively documented its review of certain  deliverables and has not effectively communicated to the prime contractor  the basis for rejecting all deliverables. To its credit, CBP has defined policies and procedures for verifying and  accepting SBInet deliverables. To its  credit, DHS has defined a process for conducting technical reviews, but it  has not effectively implemented it. In particular, the SPO did not ensure  that all key documentation was reviewed and relevant criteria were  satisfied before concluding key technical reviews. Concluding  technical reviews without adequate justification has resulted in schedule  delays and costly rework. Reasons cited by program officials for  these weaknesses include the instability in the scope of the work to be  performed, an unexpected temporary stop in Block 1 design and  deployment work when SBInet funding was redirected, and the  contractor’s use of estimated, rather than actual, costs for subcon work, which are subsequently adjusted when actual costs are rec Without effectively implementing EVM, DHS has not been positioned to  identify potential cost and schedule problems early, and thus has not bee able to take timely actions to correct problems and avoid program  schedule delays and cost increases. Program Office Has Not Established Timely Performance Baselines

According to relevant guidance, the performance measurement baseline,  which is the foundation of an EVM system and the estimated cumulative  value of planned work, serves as the value against which performance is  measured for the life of the program or task order. Program officials attribute these limitations in establishing comprehensive  baselines to instability in the nature of the work to be performed and the  prime contractor’s method for determining subcontractor performance. Most significantly, DHS did not adequately  document deliverable reviews and communicate the basis for rejecting  certain deliverables in writing to the contractor, which contributed to  deliverables that did not live up to expectations and necessitated rework  and caused later problems. Notwithstanding of a number of contractor  management and oversight definition and implementation efforts that DHS  executed well, such as defining key processes and practices and training  key staff, these above-cited weaknesses collectively mean that DHS’s  management and oversight of its prime contractor has been a major  contributor to the SBInet program’s well-chronicled history of not  delivering promised system capabilities on time and on budget. Recommendations for Executive Action

To improve DHS management and oversight of the SBInet prime  contractor, we recommend that the Secretary of Homeland Security direct  the Commissioner of the U.S. Customs and Border Protection to have the  SBI Executive Director, in collaboration with the SBInet Program  Director, take the following four actions:    Revise and implement, as applicable, contractor deliverable review  processes and practices to ensure that (1) contractor deliverables are  thoroughly reviewed and are not constrained by late contractor  deliverables and imposed milestones, (2) the reviews are sufficiently  documented, and (3) the acceptance or the rejection of each contractor  deliverable is communicated in writing to the contractor, to include  explicit explanations of the basis for any rejections. The department stated that it took exception to our finding that it did not  ensure performance measurement baselines were validated in a timely  manner, and said that it was not accurate to conclude that the lack of  validated baselines precluded the program office from identifying cost and  schedule problems and taking corrective action. Appendix I: Objectives, Scope, and Methodology

Our objectives were to determine the extent to which the Department of  Homeland Security (DHS) (1) has defined and implemented effective  controls for managing and overseeing the Secure Border Initiative  Network (SBInet) prime contractor and (2) is effectively monitoring the  prime contractor’s progress in meeting cost and schedule expectations. To determine the extent to which DHS is effectively monitoring the prime  contractor’s progress in meeting cost and schedule expectations, we  focused on the program’s implementation of earned value management  (EVM) because it was the tool used to monitor the contractor’s cost and  schedule performance.
Why GAO Did This Study

The Department of Homeland Security's (DHS) Secure Border Initiative Network (SBInet) is to place surveillance systems along our nation's borders and provide Border Patrol command centers with the imagery and related tools and information needed to detect breaches and make agent deployment decisions. To deliver SBInet, DHS has relied heavily on its prime contractor. Because of the importance of effective contractor management and oversight to SBInet, GAO was asked to determine the extent to which DHS (1) defined and implemented effective controls for managing and overseeing the prime contractor and (2) effectively monitored the contractor's progress in meeting cost and schedule expectations. To do this, GAO analyzed key program documentation against relevant guidance and best practices, and interviewed program officials.

What GAO Found

DHS has largely defined but has not adequately implemented the full range of controls that is reflected in relevant guidance and related best practices and is needed to effectively manage and oversee its SBInet prime contractor. To the department's credit, it has defined a number of key policies and procedures for verifying and accepting contract deliverables and conducting technical reviews, such as the criteria that need to be met before commencing and concluding a critical design review. Moreover, it has implemented some of these defined practices, such as those associated with training key contractor management and oversight officials. However, DHS has not effectively implemented other controls. For example, it has not adequately documented its review of contract deliverables and communicated to the prime contractor the basis for rejecting certain deliverables. Further, it has not ensured that key documentation satisfied relevant criteria before concluding key technical reviews. These weaknesses can be attributed in part to limitations in the defined verification and acceptance deliverable process, a program office decision to exclude certain deliverables from the process, and insufficient time to review technical review documentation. All told, DHS has not effectively managed and overseen its SBInet prime contractor, thus resulting in costly rework and contributing to SBInet's well-chronicled history of not delivering promised capabilities and benefits on time and within budget. DHS has not effectively monitored the SBInet prime contractor's progress in meeting cost and schedule expectations. While DHS has used earned value management (EVM), which is a proven management approach for understanding program status and identifying early warning signs of impending schedule delays and cost overruns, it has not ensured that its contractor has effectively implemented EVM. In particular, DHS has not ensured that validated performance baselines (the estimated value of planned work against which performance is measured) were timely, complete, and accurate. For example, the contractor was allowed to perform work on task orders for several months without a validated baseline in place. Further, not all work to be performed was included in the baselines that were eventually established, and the schedules for completing this work did not substantially comply with six of the eight key practices that relevant guidance states are important to having a reliable schedule. Also, DHS regularly received incomplete and anomalous EVM data from the prime contractor, which it had to rely on to measure progress and project the time and cost to complete the program. As a result, DHS has not been able to gain meaningful and proactive insight into potential cost and schedule performance shortfalls, and thus take corrective actions to avoid shortfalls in the future. Program officials attributed these weaknesses in part to the instability in the scope of the work to be performed, and the contractor's use of estimated, rather than actual, costs for subcontractor work and the subsequent adjustments that are made when actual costs are received. This inability has contributed to the program's failure to live up to expectations and to it costing more and taking longer than was necessary.

What GAO Recommends

GAO is making recommendations to DHS aimed at revising and implementing policies and procedures related to contractor deliverables and technical reviews, and improving EVM baselines and data. DHS agreed with GAO's recommendations and described actions to address them, but took exception with selected findings and conclusions regarding EVM implementation. GAO stands by these findings and conclusions for reasons discussed in the report.