Sound Acquisition Management Policy Has Not Been Implemented Consistently and Many Programs Have Performed Poorly

DHS acquisition policy reflects many key program management practices  intended to mitigate the risks of cost growth and schedule slips. However, we previously found that the department did not implement the  policy consistently. A knowledge-based approach to capability development allows  developers to be reasonably certain, at critical points in the acquisition life  cycle, that their products are likely to meet established cost, schedule,  and performance objectives. Over the past  several years, our work has emphasized the importance of obtaining key  knowledge at critical points in major system acquisitions and, based on  this work, we have identified eight key practice areas for program  management. For example, we reported that DHS had  only approved 4 of 66 major programs’ required documents in  accordance with the policy. These  baselines are critical tools for managing acquisition programs, as they are  the agreement between program-, component-, and department-level  officials, establishing how systems will perform, when they will be   Officials from half of the eight  delivered, and what they will cost.components’ acquisition offices we spoke with, as well as PARM officials,  noted that DHS’s culture had emphasized the need to rapidly execute  missions more than sound acquisition management practices. We also reported that DHS’s lack of reliable performance data not  only hindered its internal acquisition management efforts, but also limited  congressional oversight. We made five recommendations to the  Secretary of Homeland Security at that time, identifying specific actions  DHS should take to mitigate the risk of poor acquisition outcomes and  strengthen the department’s investment management activities. DHS  concurred with all five recommendations, and is taking steps to address  them, most notably through policy updates. Since that time, we have continued to assess DHS’s acquisition  management activities and the reliability of the department’s performance  data. We currently have a review underway for this subcommittee  assessing the extent to which DHS is executing effective executive  oversight and governance (including the quality of the data used) of a  major effort to modernize an information technology system, TECS. According to DHS officials, its efforts to implement the department’s  acquisition policy were complicated by the large number of programs  initiated before the department was created, including 11 programs that  PARM officials told us in 2012 had been fielded and were in the  sustainment phase when MD 102 was signed.work, we found that, in May 2013, the USM waived the acquisition  documentation requirements for 42 major acquisition programs that he  identified as having been already fielded for operational use when MD  102 was issued in 2008. In a memo implementing the waiver, the USM  explained that it would be cost prohibitive and inefficient to recreate  documentation for previous acquisition phases. We  plan to obtain more information on this decision and its effect on the  department’s management of its major acquisitions. Most DHS Major Acquisition Programs Have Experienced Cost Overruns or Schedule Delays

In September 2012, we reported that most of DHS’s major acquisition  programs cost more than expected, took longer to deploy than planned,  or delivered less capability than promised. DHS’s Chief  Financial Officer recently issued a memo stating that DHS faced a 30  percent gap between funding requirements for major acquisition  programs and available resources. DHS has efforts underway to develop  a more disciplined and strategic portfolio management approach, but the  department has not yet developed key portfolio management policies and  processes that could help the department address its affordability issues,  and DHS’s primary portfolio management initiative may not be fully  implemented for several years. That is, the department may have to pay more than expected  for less capability than promised, and this could ultimately hinder DHS’s  day-to-day operations.DHS’s Chief Financial Officer issued an internal memo in December  2012, shortly after our report was issued, stating that the aggregate 5- year funding requirements for major acquisitions would likely exceed  available resources by approximately 30 percent. DHS Policy and Process Initiatives Are Intended to Improve Portfolio Management Efforts and Help Address Affordability Issues

In September 2012, we reported that DHS largely made investment  decisions on a program-by-program and component-by-component basis. DHS did not have a process to systematically prioritize its major  investments to ensure that the department’s acquisition portfolio was  consistent with anticipated resource constraints. In our work at DOD, we  have found this approach hinders efforts to achieve a balanced mix of  programs that are affordable and feasible and that provide the greatest  return on investment. In addition to private and public sector practices, which we discuss above,  our prior work at DOD has identified an oversight body similar to the  CRC’s expected function. In September 2012, we reported that the CRC is one of several new  councils and offices that DHS would establish as part of its Integrated  Investment Life Cycle Model (IILCM), which is intended to improve  portfolio management at DHS through the identification of priorities and  capability gaps. DHS explained that the  IILCM would ensure that mission needs drive investment decisions.
Why GAO Did This Study

GAO has highlighted DHS acquisition management issues on its high-risk list, and over the past several years, GAO's work has identified significant shortcomings in the department's ability to manage an expanding portfolio of major acquisitions. It is important for DHS to address these shortcomings because the department invests extensively in acquisition programs to help it execute its many critical missions. DHS is acquiring systems to help secure the border, increase marine safety, enhance cyber security, and execute a wide variety of other operations. In 2011, DHS reported to Congress that it planned to ultimately invest $167 billion in its major acquisition programs. In fiscal year 2013 alone, DHS reported it was investing more than $9.6 billion.
This statement discusses (1) DHS's acquisition policy and how it has been implemented; and (2) DHS's mechanisms for managing emerging affordability issues. The statement is based on GAO's prior work on DHS acquisition management and leading commercial companies' knowledge-based approach to managing their large investments. It also reflects observations from ongoing work for this subcommittee. For that work, GAO is reviewing key documentation, and interviewing headquarters and component level acquisition and financial management officials.

What GAO Found

GAO has previously established that the Department of Homeland Security's (DHS) acquisition policy reflects many sound program management practices intended to mitigate the risks of cost growth and schedule slips. The policy largely reflects the knowledge-based approach used by leading commercial firms, which do not pursue major investments without demonstrating, at critical milestones, that their products are likely to meet cost, schedule, and performance objectives. DHS policy requires that important acquisition documents be in place and approved before programs are executed. For example, one key document is an acquisition program baseline, which outlines a program's expected cost, schedule, and the capabilities to be delivered to the end user. However, in September 2012, GAO found that the department did not implement the policy consistently, and that only 4 of 66 programs had all of the required documents approved in accordance with DHS's policy. GAO made five recommendations, which DHS concurred with, identifying actions DHS should take to mitigate the risk of poor acquisition outcomes and strengthen management activities. Further, GAO reported that the lack of reliable performance data hindered DHS and congressional oversight of the department's major programs. Officials explained that DHS's culture had emphasized the need to rapidly execute missions more than sound acquisition management practices. GAO also reported that most of the department's major programs cost more than expected, took longer to deploy than planned, or delivered less capability than promised. DHS has taken steps to improve acquisition management, but as part of its ongoing work, GAO found that DHS recently waived documentation requirements for 42 programs fielded for operational use since 2008. DHS explained it would be cost prohibitive and inefficient to recreate documentation for previous acquisition phases. GAO plans to obtain more information on this decision and its effect on the management of DHS's major acquisitions. DHS's July 2013 status assessment indicated that, as of the end of fiscal year 2012, many major programs still face cost and schedule shortfalls. DHS expects to provide another update in the near future.
In December 2012, DHS's Chief Financial Officer reported that the department faced a 30 percent gap between expected funding requirements for major acquisition programs and available resources. DHS has efforts underway to develop a more disciplined and strategic approach to managing its portfolio of major investments, but the department has not yet developed certain policies and processes that could help address its affordability issues. In September 2012, GAO reported that DHS largely made investment decisions on a program-by-program and component-by-component basis and did not have a process to systematically prioritize its major investments. In GAO's work at the Department of Defense, it has found this approach hinders efforts to achieve a balanced mix of programs that are affordable and feasible and that provide the greatest return on investment. DHS's proposed Integrated Investment Life Cycle Model (IILCM) is intended to improve portfolio management by ensuring mission needs drive investment decisions. For example, a high-level oversight body would identify potential trade-offs among DHS's component agencies. GAO has recommended such an oversight body for several years. Full implementation of the IILCM may be several years away. GAO will continue to assess the department's progress in its ongoing work.

What GAO Recommends

GAO is not making any new recommendations in this statement. It has made numerous recommendations in its prior work to strengthen acquisition management, and DHS is taking steps to address them.