Nevertheless, progress has been slow in addressing  some of our recommendations, such as the one encouraging proactive  management of the relationships between ACE and other DHS border  security programs, like US-VISIT. Given that these programs have made  and will continue to make decisions that determine how they will operate,  delays in managing their relationships will increase the chances that later  system rework will eventually be required to allow the programs to  interoperate. This is because DHS has met its  recently revised cost and schedule commitments in part by relaxing system  quality standards, so that milestones are being passed despite material  system defects, and because correcting such defects will ultimately require  the program to expend resources, such as people and test environments, at  the expense of later system releases (some of which are now under way). Recommendations for Executive Action

To strengthen accountability for the ACE program and better ensure that  future ACE releases deliver promised capabilities and benefits within  budget and on time, we recommend that the DHS Secretary, through the  Under Secretary for Border and Transportation Security, direct the  Commissioner, Customs and Border Protection, to define and implement  an ACE accountability framework that ensures  coverage of all program commitment areas, including key expected or  estimated system (1) capabilities, use, and quality; (2) benefits and  mission value; (3) costs; and (4) milestones and schedules;  currency, relevance, and completeness of all such commitments made to  the Congress in expenditure plans;  reliability of data relevant to measuring progress against commitments;   reporting in future expenditure plans of progress against commitments  contained in prior expenditure plans;  use of criteria for exiting key readiness milestones that adequately  consider indicators of system maturity, such as severity of open defects;  and   clear and unambiguous delineation of the respective roles and  responsibilities of the government and the prime contractor. Objectives

As agreed, our objectives were to

determine whether the ACE fiscal year 2005 expenditure plan satisfies the  determine the status of our open recommendations on ACE, and  provide any other observations about the expenditure plan and DHS’s management of the ACE program. Is reviewed by GAO. Complete means that actions have been taken to fully implement the recommendation. Recent changes to the respective roles and responsibilities of the ACE  development contractor and CBP’s Modernization Office are not reflected  in the program and expenditure plans. The plan, including related program documentation and program officials’ statements, partially satisfied this condition by providing for future  compliance with DHS’s enterprise architecture (EA). For example, it  plans to use contract options to extend the initial 5-year performance period. The Under Secretary for Management approved the expenditure plan on  behalf of the Secretary of Homeland Security on November 8, 2004. Observation 6: The fiscal year 2005 expenditure plan does not adequately describe progress against commitments (e.g., ACE capabilities, schedule, cost, and benefits) made in previous plans. The fiscal year 2005 plan, however, did not address progress against these commitments. Without such information, meaningful congressional oversight of CBP progress and  accountability is impaired. Recent program developments and program changes have altered some key bases (e.g., assumptions, release construct, organizational change management approach, and roles and responsibilities) of the ACE program plan, and thus the current expenditure plan. Additionally, while DHS has taken important actions to help address ACE release- by-release cost and schedule overruns that we previously identified, it is unlikely that the effect of these actions will prevent the past pattern of overruns from recurring. Moreover, the commitments that DHS made in the fiscal year 2005 expenditure plan have been overcome by events, which limits the currency and relevance of this plan and its utility to the Congress as an accountability mechanism.
Why GAO Did This Study

The Department of Homeland Security (DHS) is conducting a multiyear, multibillion-dollar acquisition of a new trade processing system, planned to support the movement of legitimate imports and exports and strengthen border security. By congressional mandate, plans for expenditure of appropriated funds on this system, the Automated Commercial Environment (ACE), must meet certain conditions, including GAO review. This study addresses whether the fiscal year 2005 plan satisfies these conditions, describes the status of DHS's efforts to implement prior GAO recommendations for improving ACE management, and provides observations about the plan and DHS's management of the program.

What GAO Found

The fiscal year 2005 ACE expenditure plan, including related program documentation and program officials' statements, largely satisfies the legislative conditions imposed by the Congress. In addition, some of the recommendations that GAO has previously made to strengthen ACE management have been addressed, and DHS has committed to addressing those that remain. However, much remains to be done before these recommendations are fully implemented. For example, progress has been slow on implementing the recommendation that the department proactively manage the dependencies between ACE and related DHS border security programs. Delays in managing the relationships among such programs will increase the chances that later system rework will be needed to allow the programs to interoperate. Among GAO's observations about the ACE program and its management are several regarding DHS's approach to addressing previously identified cost and schedule overruns. DHS has taken actions intended to address these overruns (such as revising its baselines for cost and schedule, as GAO previously recommended); however, it is unlikely that these actions will prevent future overruns, because DHS has relaxed system quality standards, meaning that milestones are being passed despite material system defects. Correcting such defects will require the program to use resources (e.g., people and test environments) at the expense of later system releases. Until the ACE program is held accountable not only for cost and schedule but also for system capabilities and benefits, the program is likely to continue to fall short of expectations. Finally, the usefulness of the fiscal year 2005 expenditure plan for congressional oversight is limited. For example, it does not adequately describe progress against commitments (e.g., ACE capabilities, schedule, cost, and benefits) made in previous plans, which makes it difficult to make well-informed judgments on the program's overall progress. Also, in light of recent program changes, GAO questions the expenditure plan's usefulness to the Congress as an accountability mechanism. The expenditure plan is based largely on the ACE program plan of July 8, 2004. However, recent program developments have altered some key bases of the ACE program plan and thus the current expenditure plan. In particular, the expenditure plan does not reflect additional program releases that are now planned or recent changes to the roles and responsibilities of the ACE development contractor and the program office. Without complete information and an up-to-date plan, meaningful congressional oversight of program progress and accountability is impaired.