	DHS Has Made Progress in Implementing Its Management Functions, but Additional Actions Are Needed to Strengthen These Functions

DHS has made progress in implementing its acquisition, information  technology, financial, and human capital management functions, but  continues to face obstacles and weaknesses in these functions that could  hinder the department’s transformation and implementation efforts. Acquisition management. However, while the Acquisition Review Board reviewed 24  major acquisition programs in fiscal years 2008 and 2009, more than 40  major acquisition programs had not been reviewed, and programs had not  consistently implemented review action items identified as part of the  review by established deadlines. Information technology management. DHS has undertaken efforts to  establish information technology management controls and capabilities,  but in September 2009 we reported that DHS had made uneven progress in  its information technology management efforts to institutionalize a  framework of interrelated management controls and capabilities. DHS has made progress in addressing its  financial management and internal controls weaknesses, but has not yet  addressed all of them or developed a consolidated departmentwide  financial management system. Since its establishment, DHS has been  unable to obtain an unqualified audit opinion on its financial statements  (i.e., prepare a set of financial statements that are considered reliable). For  fiscal year 2009, the independent auditor issued a disclaimer on DHS’s  financial statements and identified eight deficiencies in DHS’s internal  control over financial reporting, six of which were so significant that they  qualified as material weaknesses. Human capital management. DHS’s scores on the 2008 Office of Personnel Management’s Federal  Human Capital Survey—a tool that measures employees’ perceptions of  whether and to what extent conditions characterizing successful  organizations are present in their agency—and the Partnership for Public  Service’s 2010 rankings of the Best Places to Work in the Federal  Government improved from prior years. In addition, in 2010, DHS  was ranked 28 out of 32 agencies in the Best Places to Work ranking on  overall scores for employee satisfaction and commitment. DHS Has Taken Action to Integrate Its Management Functions and Develop Performance Measures, but Could Strengthen Its Integration and Performance Measurement Efforts

DHS has taken actions to integrate its management functions and to  strengthen its performance measures to assess progress in implementing  these functions, but the department has faced challenges in these efforts. Management integration. In November  2009, we reported that DHS had not yet developed a strategy for  management integration as required by the 9/11 Commission Act and with  the characteristics we recommended in our 2005 report. Since our November 2009 report, DHS has taken action to develop a  management integration strategy. Specifically, DHS developed and  provided us with an initial management integration plan in February 2010. The initial plan identified seven priority initiatives for achieving  management integration:    Enterprise governance. We noted that,  for example:  the action plans lacked details on how the seven initiatives contribute to  departmentwide management integration and links to the department’s  overall strategy for transformation;  the performance measures contained in the plans did not identify units of  measure, baseline measurements, or target metrics that would be used to  measure progress;  the impediments and barriers described in the plans did not align with  identified risks and the strategies for addressing these impediments and  barriers; and  the plans did not identify planned resources for carrying out these  initiatives. DHS Has Taken Actions to Transform into an Integrated Department, but Has Not Yet Fully Addressed Its Transformation Challenges

Since we first designated the implementation and transformation of DHS  as high risk in 2003, the department has made progress in its  transformation efforts in relation to the five criteria we established in  November 2000 for removing agencies from the high-risk list, but has not  yet fully addressed its transformation, management, and mission  challenges, such as implementing effective management policies and  deploying capabilities to secure the border and other sectors. In January  2009, we reported that DHS had developed its Integrated Strategy for  High Risk Management outlining the department’s overall approach for  managing its high-risk areas and the department’s processes for assessing  risks and proposing initiatives and corrective actions to address its risks  and challenges. We recommended that for DHS to successfully  transform into a more effective organization, it needed to (1) revise its  Integrated Strategy for High Risk Management and related corrective  action plans to better define root causes, include resources required to  implement corrective actions, and identify key performance measures to  gauge progress; and (2) continue to identify, refine, and implement  corrective actions to improve management functions and address  challenges. Since our 2009 high-risk update, DHS has taken actions to address the  high-risk designation. Department of Homeland Security: Progress Report on Implementation  of Mission and Management Functions, GAO-07-454 (Washington, D.C.:  August 17, 2007).
Why GAO Did This Study

Since 2003, GAO has designated implementing and transforming the Department of Homeland Security (DHS) as high risk because DHS had to transform 22 agencies--several with significant management challenges--into one department, and failure to effectively address its mission and management risks could have serious consequences for national and economic security. This high-risk area includes challenges in management functional areas, including acquisition, information technology, financial, and human capital management; the impact of those challenges on mission implementation; and management integration. GAO has reported that DHS's transformation is a significant effort that will take years to achieve. This testimony discusses DHS's progress and actions remaining in (1) implementing its management functions; (2) integrating those functions and strengthening performance measurement; and (3) addressing GAO's high-risk designation. This testimony is based on GAO's prior reports on DHS transformation and management issues and updated information on these issues obtained from December 2009 through September 2010.

What GAO Found

DHS has made progress in implementing its management functions, but additional actions are needed to strengthen DHS's efforts in these areas. (1) DHS has revised its acquisition management oversight policies, and its senior-level Acquisition Review Board reviewed 24 major acquisition programs in fiscal years 2008 and 2009. However, more than 40 major programs had not been reviewed, and DHS does not yet have accurate cost estimates for most of its major programs. (2) DHS has undertaken efforts to establish information technology management controls and capabilities, but its progress has been uneven and major information technology programs, such as the SBInet virtual fence, have not met capability, benefit, cost, and schedule expectations. (3) DHS has developed corrective action plans to address its financial management weaknesses. However, DHS has been unable to obtain an unqualified audit opinion on its financial statements, and for fiscal year 2009, the independent auditor identified six material weaknesses in DHS's internal controls. Further, DHS has not yet implemented a consolidated departmentwide financial management system. (4) DHS has issued plans for strategic human capital management and employee development. Further, its scores on the Partnership for Public Service's 2010 rankings of Best Places to Work in the Federal Government improved from prior years, yet DHS was ranked 28 out of 32 agencies on scores for employee satisfaction and commitment. DHS has also taken action to integrate its management functions by, for example, establishing common policies within management functions. The Implementing Recommendations of the 9/11 Commission Act of 2007 required DHS to develop a strategy for management integration. In a 2005 report GAO recommended that a management integration strategy contain priorities and goals. DHS developed an initial plan in February 2010 that identified seven initiatives for achieving management integration. While a step in the right direction, among other things, the plan lacked details on how the initiatives contributed to departmentwide management integration. DHS is working to enhance its management integration plan, which GAO will review as part of the 2011 high-risk update. DHS also has not yet developed performance measures to fully assess its progress in integrating management functions. Since GAO first designated DHS's transformation as high risk, DHS has made progress in transforming into a fully functioning department. However, it has not yet fully addressed its transformation, management, and mission challenges, such as implementing effective management policies and deploying capabilities to secure the border and other sectors. In 2009 GAO reported that DHS had developed a strategy for managing its high-risk areas and corrective action plans to address its management challenges. While these documents identified some root causes and corrective actions, GAO reported that they could be improved by DHS identifying resources needed for implementing corrective actions and measures for assessing progress. This testimony contains no new recommendations.

What GAO Recommends

GAO has made over 100 recommendations to DHS since 2003 to strengthen its management and integration efforts. DHS has implemented many of these recommendations and is in the process of implementing others.