Operational costs can include funding for  fuel and other consumables as well as personnel. Figure 2 outlines the acquisition life-cycle for major acquisition programs  at DHS. Prior to the 2008 policy, GAO found that nearly two-thirds of programs did  not have life-cycle cost estimates. In accordance with DHS policy and GAO’s Cost Estimating and  Assessment Guide, the O&S costs in the LCCE should inform the O&S  portion of the program’s budget request and the funds provided to the  program. Mission-Oriented Budget Management Provides Operational Flexibility, but Limits Visibility of O&S Costs in Reports to Congress

According to agency officials, DHS’s mission-oriented budget  management provides operational flexibility in using O&S funding. While some program-oriented O&S data are available at the component  level, this information does not appear in DHS’s budget reports to  Congress. This disparity is due, in part, to the format of the budget  reports. This component relies on aggregated O&S accounting and could not  provide program-level O&S cost information for the Multi-Role  Enforcement Aircraft and UH-60 Helicopter programs. Federal standards for internal control state that managers should  communicate quality information to external bodies. Providing data on full program costs  permits Congress to better understand the long term costs of a program  and the budgetary and programmatic effect of its decisions. Ten of 11 O&S Cost Estimates Were Comprehensive

As of December 2017, 10 out of 11 selected programs’ most recent DHS- approved LCCE either substantially or fully met GAO’s four criteria for a  comprehensive cost estimate. GAO best practices in cost estimating note it is important that the O&S  portion of a program’s LCCE be comprehensive. That is, it should provide  an exhaustive and structured accounting of all resources and associated  cost elements—hardware, software, personnel, and so on—required to  deploy and sustain a program. For example, the Coast Guard was unable to share cost  models for the programs we assessed, due to information sensitivities. This aspect of the department’s  budget management did not change with enactment of the common  appropriation structure. Recommendations for Executive Action

We are making the following three recommendations to DHS:  The Secretary of Homeland Security should work with Congress to add  information to its annual congressional budget justification to show O&S  funding requests for major acquisition programs within current  program/project activity accounts. This report assesses, for selected  major acquisition programs, the extent that (1) DHS budget management  and reporting affects operations and oversight; and (2) life-cycle cost  estimates (LCCEs) are comprehensive and accurate, as well as regularly  updated. We selected a non- generalizable sample of programs, and their corresponding components,  based on their stage in the acquisition cycle, including programs in the  deployment phase. To determine whether the  PPAs we identified in the O&S budget request were all-inclusive of O&S  costs, we developed and disseminated a data collection instrument to  program offices, which collected information on selected programs’ O&S  budget requests, budget authority, obligations, and expenditures,  including personnel expenditures, from fiscal years 2015 to 2017. We found  that program costs were identified.
Why GAO Did This Study

O&S costs—the costs used to operate and sustain a program—can account for up to 70 percent of a program's total cost. End users rely on O&S funds for maintenance, spares, and personnel. DHS programs initially identify O&S costs in their life-cycle cost estimate at the outset of the acquisition. This estimate informs the program's budget and affects the amount the department designates for the program's use. In 2015, GAO found that DHS's budget requests did not reflect all estimated costs—including O&S—for certain programs, which limits visibility for decision makers.
GAO was asked to review O&S activities for major acquisition programs at DHS. This report examines the extent that (1) DHS's budget management and reporting affects operations and oversight, and (2) cost estimates are comprehensive and accurate, as well as regularly updated.
GAO selected a non-generalizable sample of 11 major acquisition programs, based on asset type and acquisition status, as case studies from selected DHS components. GAO analyzed selected programs' O&S cost estimates, funding, and spending. In addition, GAO interviewed DHS officials at the headquarters, component, and program office level.

What GAO Found

While the Department of Homeland Security's (DHS) budget management provides flexibility to conduct operations, such as shifting funds to programs within the same mission area to cover unforeseen needs, budget reporting does not provide Congress with insight into specific programs' operations and support O&S costs. The O&S budget information that DHS reports to Congress is oriented by mission—for example, Integrated Operations—instead of by program—for example, the Multi-Role Enforcement Aircraft Program. The figure depicts the mission-oriented nature of the budget.
While some program-oriented O&S data are available at the component level, this information does not appear in DHS's budget reports to Congress. This disparity is due in part to the manner in which the department reports budget information. However, these limitations are not insurmountable. Standards for internal controls state that managers should communicate quality information, in this case full program costs. Providing additional data on O&S costs in budget reports would preserve DHS's flexibility in its use of funds while providing Congress a better understanding of the budgetary and programmatic effect of its funding decisions.
GAO reviewed the O&S portion of the most recently approved cost estimates for selected programs and found that 10 of the 11 estimates provided a complete accounting of all resources and associated cost elements. Further, all the programs had appropriately updated their cost estimates as required, a GAO best practice in cost estimating. Due to the sensitive nature of some programs' cost models, GAO could not verify all aspects of accuracy for all estimates reviewed.

What GAO Recommends

GAO is making three recommendations, including that DHS work with Congress to add program-level O&S funding details to the budget information it provides Congress. DHS concurred.