DHS’s Transformation

We first designated DHS’s transformation as high risk in January 2003  based on three factors. For example, many of the major components that were merged  into the department, including the Immigration and Naturalization Service,  the Transportation Security Administration, the Customs Service, the  Federal Emergency Management Agency, and the Coast Guard, brought  with them existing challenges in areas such as strategic human capital,  information technology, and financial management. Finally, DHS’s  national security mission was of such importance that the failure to  effectively address its management challenges and program risks could  have serious consequences on our intergovernmental system, our citizens’  health and safety, and our economy. DHS Must Address Key Management Challenges

Managing the transformation of an organization of the size and complexity  of DHS requires comprehensive planning, integration of key management  functions across the department, and partnering with stakeholders across  the public and private sectors. DHS has made some progress in each of  these areas, but much additional work is required to help ensure  sustainable success. Apart from these integration efforts, however, a  successful transformation will also require DHS to follow through on its  initial actions of building capacity to improve the management of its  financial and information technology systems, as well as its human capital  and acquisition efforts. The  strategy should also involve key stakeholders to help ensure that resource  investments target the highest priorities. DHS’s existing strategic plan  lacks these linkages, and DHS has not effectively involved stakeholders in  the development of the plan. DHS has also not completed other important  planning-related activities. However,  DHS lacks a comprehensive management integration strategy with overall  goals, a timeline, and a dedicated team to support its management  integration efforts. Although DHS has issued  guidance and plans to assist management integration on a function by  function basis, it has not developed a plan that clearly identifies the  critical links that should occur across these functions, the necessary  timing to make these links occur, how these interrelationships will occur,  and who will drive and manage them. Financial Management and Internal Controls

DHS has made limited improvements in addressing financial management  and internal control weaknesses and continues to face significant  challenges in these areas. Further, since our 2005 update, DHS has taken some actions to integrate  the legacy agency workforces that make up its components. Transportation Security

Despite progress in this area, DHS continues to face challenges in  effectively executing transportation security efforts. However, DHS still faces significant challenges in its  ability to effectively provide immigration services while at the same time  protecting the immigration system from fraud and mismanagement. We also recommended that DHS   (1) rigorously re-test, train, and exercise its recent clarification of the  roles, responsibilities, and lines of authority for all levels of leadership,  implementing changes needed to remedy identified coordination  problems; (2) direct that the National Response Plan (NRP) base plan and  its supporting Catastrophic Incident Annex be supported by more robust  and detailed operational implementation plans; (3) provide guidance and  direction for federal, state, and local planning, training, and exercises to  ensure such activities fully support preparedness, response, and recovery  responsibilities at a jurisdictional and regional basis; (4) take a lead in  monitoring federal agencies’ efforts to prepare to meet their  responsibilities under the NRP and the interim National Preparedness  Goal; and (5) use a risk management approach in deciding whether and  how to invest finite resources in specific capabilities for a catastrophic  disaster. Actions Needed to Strengthen DHS’s Transformation and Integration Efforts

To be removed from our high-risk list, agencies need to develop a  corrective action plan that defines the root causes of identified problems,  identifies effective solutions to those problems, and provides for  substantially completing corrective measures in the near term. Such a plan  should include performance measures, metrics and milestones to measure  their progress. Appendix I: Related GAO Products

	Implementing and Transforming the Department of Homeland Security

		Implementation and Transformation

High-Risk Series: An Update. Homeland Security: Overview of Department of Homeland Security  Management Challenges.
Why GAO Did This Study

The Department of Homeland Security (DHS) plays a key role in leading and coordinating--with stakeholders in the federal, state, local, and private sectors--the nation's homeland security efforts. GAO has conducted numerous reviews of DHS management functions as well as programs including transportation and border security, immigration enforcement and service delivery, and disaster preparation and response. This testimony addresses why GAO designated DHS's implementation and transformation as a high-risk area, management challenges facing DHS, programmatic challenges facing DHS, and actions DHS should take to strengthen its implementation and transformation efforts.

What GAO Found

GAO designated implementing and transforming DHS as high risk in 2003 because DHS had to transform 22 agencies--several with existing program and management challenges--into one department, and failure to effectively address its challenges could have serious consequences for our homeland security. Despite some progress, this transformation remains high risk. Managing the transformation of an organization of the size and complexity of DHS requires comprehensive planning and integration of key management functions. DHS has made some progress in these areas, but much additional work is required to help ensure success. While DHS has developed a strategic plan, the plan does not link resource requirements to goals and objectives, and its creation did not involve key stakeholders to ensure resource investments target the highest priorities. DHS has also issued guidance and plans to assist management integration on a function by function basis, but lacks a comprehensive management integration strategy with overall goals, a timeline, and a dedicated team to support its integration efforts. The latest independent audit of DHS's financial statements revealed 10 material internal control weaknesses and confirmed that DHS's financial management systems still do not conform to federal requirements. DHS has also not institutionalized an effective strategic framework for information management, and its human capital--the centerpiece of its transformation efforts--and acquisition systems will require continued attention to ensure that DHS allocates its resources efficiently and effectively. Since GAO's January 2005 high-risk update, DHS has taken actions to strengthen program activities. However, DHS continues to face programmatic and partnering challenges. To help ensure that its missions are achieved, DHS must overcome continued challenges related to cargo, transportation, and border security; systematic visitor tracking; efforts to combat the employment of illegal aliens; and outdated Coast Guard asset capabilities. Further, DHS and the Federal Emergency Management Agency need to continue to develop clearly defined leadership roles and responsibilities; necessary disaster response capabilities; accountability systems to provide effective services while protecting against waste, fraud, and abuse; and the ability to conduct advanced contracting for goods and services necessary for emergency response. DHS has not produced a final corrective action plan specifying how it will address its existing management challenges. Such a plan should define the root causes of known problems, identify effective solutions, have management support, and provide for substantially completing corrective measures in the near term. It should also include performance metrics and milestones, as well as mechanisms to monitor progress. It will also be important for DHS to become more transparent and minimize recurring delays in providing access to information on its programs and operations so that Congress, GAO, and others can independently assess its efforts.