The process  requires event-driven decision making by high-ranking executives at a  number of key points in an investment’s life cycle. Lack of Adherence to the Investment Review Process Led to Oversight Being Seldom Applied to Support Successful Acquisition Outcomes

DHS has not effectively implemented or adhered to its investment review  process due to a lack of involvement by senior officials as well as limited  resources and monitoring; consequently, DHS has not identified and  addressed cost, schedule, and performance problems in many major  investments. Poor implementation largely rests on DHS’s inability to  ensure that the IRB and JRC effectively carried out their oversight  responsibilities. Of 48 major investments requiring department-level  review, 45 were not reviewed in accordance with the department’s  investment review policy, and 18 were not reviewed at all. Moreover, when IRB meetings were held,  DHS did not consistently enforce decisions that were reached because the  department did not track whether components and offices took the  actions required by the IRB. We found that two out of nine components do not  have required component-level review processes to adequately manage  their major investments. Most Major Investments Lacked Required Departmental Reviews and Many of Those Exceeded Cost Estimates

Of DHS’s 48 major investments requiring department-level review between  fiscal year 2004 and the second quarter of fiscal year 2008, only three had  all milestone and annual reviews. Fourteen of the  investments that lacked appropriate review through IRB and JRC  oversight experienced cost growth, schedule delays, and  underperformance—some of which was substantial. This issue is long-standing. It also called for the investment to be  reviewed annually. The  assessment identified a range of systemic weaknesses in the  implementation of its investment review process and in the process itself. DHS’s Investment Review and Budget Processes Are Not Integrated to Help Ensure That Major Investments Maximize Resources to Meet Mission Needs

DHS’s annual budget process for funding major investments has not been  appropriately informed by the investment review process—largely  because the IRB seldom conducts oversight reviews and when it has, the  two processes have not been aligned to better ensure funding decisions  fulfill mission needs. In addition, two-thirds of DHS major investments did not have required  life-cycle cost estimates, which are essential to making informed budget  and capital planning decisions. At the same time, DHS has not conducted  regular reviews of its investment portfolios—broad categories of  investments—to ensure effective performance and minimize unintended  duplication of effort for proposed and ongoing investments. In July 2008,  more than one-quarter of DHS’s major investments were designated by  OMB as poorly planned and by DHS as poorly performing. DHS Budget Decisions for Major Investments Have Generally Not Been Informed by Mission Needs and Life-Cycle Cost Estimates

The DHS investment review process calls for IRB decisions and program  guidance regarding new investments to be reflected to the extent possible  in the budget. Appendix I: Scope and Methodology

Our objectives were to: (1) evaluate DHS’s implementation of the  investment review process, and (2) assess DHS’s integration of the  investment review and budget processes to ensure major investments  fulfill mission needs. In addition, we reviewed  relevant GAO reports. Appendix II: Comments from the Department of Homeland Security

Appendix III: Key Acquisition Documents by Major Investment

Mission needs statements, operational requirements documents, and  acquisition program baselines establish capability gaps, requirements  needed to address those gaps, and cost, schedule, and performance  parameters, respectively. It will  provide DHS with a common flexible suite of human resource business systems.
Why GAO Did This Study

In fiscal year 2007, the Department of Homeland Security (DHS) obligated about $12 billion for acquisitions to support homeland security missions. DHS's major investments include Coast Guard ships and aircraft; border surveillance and screening equipment; nuclear detection equipment; and systems to track finances and human resources. In part to provide insight into the cost, schedule, and performance of these acquisitions, DHS established an investment review process in 2003. However, concerns have been raised about how well the process has been implemented--particularly for large investments. GAO was asked to (1) evaluate DHS's implementation of the investment review process, and (2) assess DHS's integration of the investment review and budget processes to ensure major investments fulfill mission needs. GAO reviewed relevant documents, including those for 57 DHS major investments (investments with a value of at least $50 million)--48 of which required department-level review through the second quarter of fiscal year 2008; and interviewed DHS headquarters and component officials.

What GAO Found

While DHS's investment review process calls for executive decision making at key points in an investment's life cycle--including program authorization--the process has not provided the oversight needed to identify and address cost, schedule, and performance problems in its major investments. Poor implementation of the process is evidenced by the number of investments that did not adhere to the department's investment review policy--of DHS's 48 major investments requiring milestone and annual reviews, 45 were not assessed in accordance with this policy. At least 14 of these investments have reported cost growth, schedule slips, or performance shortfalls. Poor implementation is largely the result of DHS's failure to ensure that its Investment Review Board (IRB) and Joint Requirements Council (JRC)--the department's major acquisition decision-making bodies--effectively carried out their oversight responsibilities and had the resources to do so. Regardless, when oversight boards met, DHS could not enforce IRB and JRC decisions because it did not track whether components took actions called for in these decisions. In addition, many major investments lacked basic acquisition documents necessary to inform the investment review process, such as program baselines, and two out of nine components--which manage a total of 8 major investments--do not have required component-level processes in place. DHS has begun several efforts to address these shortcomings, including issuing an interim directive, to improve the investment review process. The investment review framework also integrates the budget process; however, budget decisions have been made in the absence of required oversight reviews and, as a result, DHS cannot ensure that annual funding decisions for its major investments make the best use of resources and address mission needs. GAO found almost a third of DHS's major investments received funding without having validated mission needs and requirements--which confirm a need is justified--and two-thirds did not have required life- cycle cost estimates. At the same time, DHS has not conducted regular reviews of its investment portfolios--broad categories of investments that are linked by similar missions--to ensure effective performance and minimize unintended duplication of effort for investments. Without validated requirements, life-cycle cost estimates, and regular portfolio reviews, DHS cannot ensure that its investment decisions are appropriate and will ultimately address capability gaps. In July 2008, 15 of the 57 DHS major investments reviewed by GAO were designated by the Office of Management and Budget as poorly planned and by DHS as poorly performing.