In the first few years of DHS’s existence, the S&T Directorate focused on  the urgency of organizing itself to meet the nation’s homeland security  research and development requirements, and had few resources devoted to  developing its management infrastructure, including the management  controls to guard against conflicts of interest. DHS’s S&T Directorate Can Do More to Improve Its Management Controls Related to Conflicts of Interest for Its IPA Portfolio Managers

DHS’s S&T Directorate has implemented several management controls to  help its IPA portfolio managers comply with conflict of interest laws and  regulations. § 208. DHS officials told us that S&T Directorate employees, including those hired  under the IPA, are offered the same new employee and annual ethics  training as are all new DHS employees. Importantly, the process for determining where R&D  projects and funds are directed, including the role of the IPA portfolio  managers, has never been finalized. Further, the S&T Directorate is only now seeking waivers, where  appropriate, and considering whether to grant authorizations or take other  actions for their portfolio managers hired under the IPA. IPA Portfolio Managers’ Role in Determining Where R&D Projects and Funds Were Directed Was Unclear

The recent changes and further improvements to the S&T Directorate’s  ethics-related management controls are critical because we found that the  role of the IPA portfolio managers in determining where R&D projects and  associated funds were directed was unclear. This was due to several  factors, as discussed in more detail below. First, the process that was to be followed by IPA portfolio managers when  determining where R&D projects and funds are directed, and the decision- making role of the IPA portfolio managers within such a process, has never  been finalized. Third,  the testimony regarding the extent of the IPA portfolio managers’  involvement in the decision-making process was inconsistent and, at times,  vague. Because we could not determine whether or not the IPA portfolio managers  participated “personally and substantially” in the decision-making process,  however, we contacted the Acting Director of OGE in September 2005 and  suggested that OGE review this matter further in conjunction with its  planned ethics program review of DHS. In December 2005, OGE officials  told us that they plan to examine, among other matters, the transparency  and accountability issues in DHS’s ethics program raised by our findings. Further, once hired, IPA employees must understand how the ethics laws  address their unique situations; namely, that they have an agreement for  future employment with an entity that stands to benefit from the S&T  Directorate’s funding. Recommendations for Executive Action

To help IPA portfolio managers comply with the conflict of interest law, we  are recommending that the Secretary of Homeland Security direct the  Undersecretary of the S&T Directorate to improve the S&T Directorate’s  management controls related to potential conflicts of interest by   finalizing the S&T Directorate’s R&D process and defining and  standardizing the role of the IPA portfolio managers in this process;  developing a system to document how decisions are made within the   determining, in consultation with DHS’s DAEO and OGE, whether  waivers of 18 U.S.C. Scope and Methodology

The objectives of our review were to examine (1) the management controls  that have been established within the Department of Homeland Security’s  (DHS) Science and Technology (S&T) Directorate to help guard against  conflicts of interest for portfolio managers hired under the  Intergovernmental Personnel Act (IPA), and (2) the role of the IPA portfolio  managers (particularly those from the national laboratories) in determining  where research and development (R&D) projects and associated funds are  directed.
Why GAO Did This Study

The Department of Homeland Security's (DHS) Science and Technology (S&T) Directorate was established to focus on areas such as addressing countermeasures for biological threats. To do this, it hired experts from the national laboratories under the authority of the Intergovernmental Personnel Act (IPA). The Directorate is organized into portfolios, led by portfolio managers. Questions have been raised about potential conflicts of interest for these individuals, since a portion of the Directorate's research funds have gone to the national laboratories. GAO was asked to examine (1) the management controls established within the Directorate to help guard against conflicts of interest for IPA portfolio managers; and (2) the role of the IPA portfolio managers, particularly those from national laboratories, in determining where research and development projects were directed.

What GAO Found

DHS's S&T Directorate is working to improve its management controls to help guard against conflicts of interest for its IPA portfolio managers, but it can do more. In the first few years of DHS's existence, the S&T Directorate focused on the urgency of organizing itself to meet the nation's homeland security research and development requirements, and had few resources devoted to developing its management infrastructure, including the management controls to guard against conflicts of interest. In the past year, steps have been taken to improve these controls. For example, in June 2005, DHS implemented a new process for hiring IPA employees. Although the S&T Directorate is taking steps to improve its ethics-related management controls, several conditions still need to be addressed to better ensure that its IPA portfolio managers comply with the conflict of interest laws. First, the process for determining where research and development projects and funds are directed, including the role of the IPA portfolio managers, has never been finalized. Second, the S&T Directorate does not require documentation of how determinations are made about where research and development projects and funds are directed. Third, S&T Directorate officials are only now seeking waivers, where appropriate, and considering whether to take other actions that would allow IPA portfolio managers to participate in certain matters. Finally, DHS officials told us that S&T Directorate employees, including those hired under the IPA, are offered the same new employee and annual ethics training as are all DHS employees. However, employees hired under the IPA do not receive regular training that addresses their unique situation; namely that they have an agreement for future employment with an entity that may benefit from the S&T Directorate's funding. The role of the IPA portfolio managers, five of whom came from the national laboratories, in determining where research and development projects and associated funds were directed was unclear. This was due to several factors. First, as previously discussed, the S&T Directorate has never finalized a standard process for determining where research and development projects and funds are directed, or the decision-making role of the IPA portfolio managers within such a process. Second, the extent of the IPA portfolio managers' participation in making these determinations was unclear because there was no documentary evidence of how these determinations were actually made. Third, the testimonial evidence on the extent of the IPA portfolio managers' involvement was inconsistent and, at times, vague. Because we could not determine whether or not the IPA portfolio managers participated "personally and substantially" in the decision-making process, which is precluded by 18 U.S.C. 208, GAO contacted the Acting Director of the Office of Government Ethics (OGE) in September 2005. GAO suggested that OGE review this matter further in conjunction with its planned ethics program review of DHS. In December 2005, OGE officials told us that they plan to examine, among other matters, the transparency and accountability issues in DHS's ethics program raised by our findings.