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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

December 2013: 

DHS Management and Administration Spending: 

Reliable Data Could Help DHS Better Estimate Resource Requests: 

GAO-14-27: 

GAO Highlights: 

Highlights of GAO-14-27, a report to congressional requesters. 

Why GAO Did This Study: 

DHS is the third-largest federal department, with budget authority of 
approximately $60 billion. Since its inception in 2003, DHS has faced 
challenges strengthening its multiple management systems and 
processes. Some Members of Congress said that DHS’s components’ budget 
requests do not provide sufficient detail to allow them to distinguish 
between funding for mission and M&A activities. GAO was asked to 
provide information on what DHS spends on M&A activities, including 
spending by its components since fiscal year 1999. 

This report addresses the following questions: (1) How have select DHS 
components defined and identified their M&A activities and spending, 
and to what extent are M&A data available from fiscal years 1999 
through 2013? (2) How has DHS identified M&A spending department-wide, 
and to what extent has DHS defined M&A activities and taken steps to 
enhance efforts to collect M&A data? GAO analyzed documents, such as 
DHS’s budget execution reports, and efforts to identify spending on 
M&A activities since fiscal year 1999. GAO interviewed officials from 
eight DHS components, selected on the basis of their budget authority, 
which in total accounts for nearly 88 percent of DHS’s fiscal year 
2013 budget authority. Though not generalizable, the interviews 
provided insights. 

What GAO Found: 

Officials from all eight Department of Homeland Security (DHS) 
components in GAO’s review define management and administration (M&A) 
activities—-activities that help agencies achieve their mission and 
program goals—-differently, and while component officials said they 
can identify M&A spending, limitations exist in obtaining spending 
data from fiscal years 1999 through 2013. Officials from four of the 
eight components define their M&A activities according to the 
activities funded through their appropriations accounts and programs, 
projects, or activities (PPA) that are M&A in nature. For example, 
officials from the Transportation Security Administration said its M&A 
activities are those found within three PPAs within its Transportation 
Security Support appropriations account. The remaining four components 
each define M&A activities differently, and those definitions are not 
tied to activities contained in specific appropriations accounts. For 
example, the Coast Guard’s M&A activities are those associated with 
headquarters and its service centers (e.g., personnel support), 
according to officials. According to component officials, the eight 
components GAO reviewed can identify their M&A spending, but currently 
do not because they are not required to do so by the department. 
Officials from seven of the eight components said they could provide 
M&A spending data for some, but not all, fiscal years since 1999 
because of changes in their financial systems, among other reasons. 
Federal Emergency Management Agency (FEMA) officials stated that FEMA 
could provide data since fiscal year 1999. Because components define 
M&A differently, have different methods for identifying spending, and 
limitations exist in obtaining data, it is not possible to compare 
components’ M&A spending data from fiscal years 1999 through 2013. 

DHS has not identified the department’s total spending on M&A 
activities, but has identified some M&A spending through DHS’s 
Efficiency Review—-an effort to identify opportunities to improve 
efficiency—-and the Campaign to Cut Waste-—a government-wide effort to 
reduce administrative spending. DHS is also taking steps to define and 
collect data on M&A activities, but has encountered difficulties in 
implementing these steps. Specifically, in 2010, DHS developed a 
common definition of M&A in conjunction with the Future Years Homeland 
Security Program (FYHSP) System Program Data Module (PDM) for 
components to submit resource allocation requests for future years by 
activity type: mission/operational, mission support, and business 
support/M&A. However, DHS is unable to reliably estimate what 
percentage of its requests are identified as M&A because 4 out of 15 
components did not enter all appropriate business support/M&A 
activities and 1 component did not enter any business support/M&A 
activities, among other errors, which DHS officials said are a result 
of manual data entry and components not adhering to the guidance in 
the user manual. DHS does not have a mechanism in place to work with 
the components to correct data errors in the FYHSP System PDM. By 
implementing a mechanism to assess whether components have entered the 
appropriate M&A activities into the PDM, and working with the 
components to correct the data, as needed, DHS would be better 
positioned to reliably estimate and report to external stakeholders 
what percentage of DHS’s resource allocations requests are identified 
as M&A. 

What GAO Recommends: 

GAO recommends that DHS implement a mechanism to assess and correct 
M&A data entered by components into the PDM. DHS concurred with GAO’s 
recommendation. 

View [hyperlink, http://www.gao.gov/products/GAO-14-27]. For more 
information, contact David C. Maurer at (202) 512-9627 or 
maurerd@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

DHS Components Define M&A Activities Differently and Can Identify M&A 
Spending, but Limitations Exist in Obtaining Data from Fiscal Years 
1999 through 2013: 

DHS Identifies Some M&A Spending and Is Taking Steps to Define and 
Collect Data on M&A Activities, but Could Improve Reliability of Data 
for Estimating Future Resource Requests: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Limitations to Identifying and Analyzing Management and 
Administration Spending: 

Appendix II: Objectives, Scope, and Methodology: 

Appendix III: Comments from the Department of Homeland Security: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Department of Homeland Security Components' Financial 
Systems, as of August 2013: 

Table 2: Selected Department of Homeland Security Components' 
Definitions and Sources for Identifying Their Management and 
Administration Activities and Spending: 

Table 3: Management and Administration Data Available by Selected 
Department of Homeland Security Components for Fiscal Years 1999 
through 2013: 

Table 4: Spending by Campaign to Cut Waste Category, Fiscal Year 2012 
and First Two Quarters of Fiscal Year 2013: 

Table 5: Description of the Object Classification System: 

Figures: 

Figure 1: Department of Homeland Security Organizational Chart: 

Figure 2: Examples of Contractual Services and Supplies Object 
Classification for the Department of Homeland Security: 

Figure 3: Department of Homeland Security's Spending by Efficiency 
Review Initiative, Fiscal Years 2010-2012: 

Figure 4: Department of Homeland Security Cost Avoidances Achieved by 
Efficiency Review Initiative, Fiscal Year 2012 through the First 
Quarter of Fiscal Year 2013: 

Abbreviations: 

ACS: Accounting Classification Structure: 

CBP: U.S. Customs and Border Protection: 

DHS: Department of Homeland Security: 

DMO: Departmental Management and Operations: 

ER: Efficiency Review: 

FEMA: Federal Emergency Management Agency: 

FLETC: Federal Law Enforcement Training Center: 

FYHSP: Future Years Homeland Security Program: 

ICE: U.S. Immigration and Customs Enforcement: 

IT: information technology: 

M&A: management and administration: 

OCFO: Office of the Chief Financial Officer: 

OMB: Office of Management and Budget: 

PA&E: Program Analysis & Evaluation: 

PDM: Program Data Module: 

PPA: program, project, or activity: 

TSA: Transportation Security Administration: 

USSS: U.S. Secret Service: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

December 4, 2013: 

The Honorable Thomas R. Carper: 
Chairman: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Ron Johnson: 
Ranking Member: 
Subcommittee on Financial and Contracting Oversight: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Department of Homeland Security (DHS) is the third-largest federal 
department, with a total budget authority of approximately $60 billion 
for fiscal year 2013 and more than 240,000 employees performing a wide 
variety of missions. Since its inception in 2003 from 22 originating 
agencies and offices, DHS has faced challenges consolidating its 
multiple management systems and processes and transforming into a more 
effective organization with robust planning, management, and 
operations.[Footnote 1] In recent years, DHS has reported maximizing 
effectiveness and efficiency by, in part, prioritizing the funding of 
frontline activities (core missions) by redirecting funding from 
management and administration (M&A) activities--activities that help 
agencies achieve their mission and program goals.[Footnote 2] These 
activities include, among other things, planning and budgeting, legal 
support, acquisitions and grants administration, workforce management, 
information technology (IT) infrastructure and operations, and 
facilities support. However, according to some Members of Congress, 
the budget requests of DHS's components and offices do not provide a 
sufficient level of detail to allow them to distinguish between 
funding for mission versus M&A activities. 

You asked us to provide information on what DHS spends on M&A 
activities, including spending by its components since fiscal year 
1999--prior to their inclusion in DHS. This report addresses the 
following questions: 

1. How have select DHS components defined and identified their M&A 
activities and spending, and to what extent are M&A data available 
from fiscal years 1999 through 2013? 

2. How has DHS identified M&A spending department-wide, and to what 
extent has DHS defined M&A activities and taken steps to enhance 
efforts to collect M&A data? 

To address the first objective, we analyzed DHS's congressional budget 
justifications, budget execution reports, and budget-in-briefs, as 
well as presidential budgets and appropriations legislation from 
fiscal years 2004 through 2013 to understand how M&A activities are 
defined and accounted for within components' appropriations accounts. 
We sought to independently identify components' M&A activities and 
related spending, but were unable to because of various challenges. In 
particular, sources of federal budget data do not define and 
distinguish all M&A spending from other types of spending. Moreover, 
in cases where groupings of budget data, such as appropriation 
accounts, are largely M&A, the activities contained in those groupings 
do not include all M&A activities and are not consistent from year to 
year. See appendix I for further details. To determine how selected 
DHS components define their M&A activities and how they would go about 
identifying spending associated with these activities, we interviewed 
officials representing two of DHS's eight support components--
Departmental Management and Operations (DMO)[Footnote 3] and the 
Federal Law Enforcement Training Center (FLETC)--and six of DHS's 
seven operational components--the Federal Emergency Management Agency 
(FEMA), U.S. Customs and Border Protection (CBP), the U.S. Coast 
Guard, the Transportation Security Administration (TSA), U.S. 
Immigration and Customs Enforcement (ICE), and the U.S. Secret Service 
(USSS).[Footnote 4] We selected these eight components based on the 
amount of their budget authority (totaling nearly 88 percent of DHS's 
fiscal year 2013 budget authority); their mission, whether operational 
or support; and date established, whether before or after the 
inception of DHS. To determine the extent to which M&A data are 
available from fiscal years 1999 through 2013, we interviewed 
officials from the eight selected components about their ability to 
provide M&A spending data during the time frame. We did not obtain 
available data from the components because the data would not be 
comparable. While the results of our interviews cannot be generalized 
across all DHS components, these interviews allowed us to obtain 
perspectives on how selected components define and would identify M&A 
spending, as well as the availability of their M&A data since fiscal 
year 1999. 

To address the second objective, we examined DHS's two efforts to 
identify its spending on specific M&A activities--DHS's Efficiency 
Review (ER)--an effort to identify opportunities to improve efficiency 
and streamline decision making through a series of initiatives--and 
the Obama administration's Campaign to Cut Waste--a government-wide 
effort to reduce administrative spending.[Footnote 5] Specifically, we 
analyzed all available expenditure and cost avoidance data collected 
through the ER from the third quarter of fiscal year 2009[Footnote 6]--
when data collection began--through the first quarter of fiscal year 
2013--the most recent data available at the time of our review. 
[Footnote 7] To assess the reliability of the data, we traced one 
component's recorded expenditure and cost avoidance data back to 
documentation showing its original data submission. We also 
interviewed component officials responsible for entering the data and 
the ER Director to determine how the data are collected and 
maintained. We determined that the expenditure data were sufficiently 
reliable to illustrate general levels of spending by DHS. We 
determined that the cost avoidance data prior to fiscal year 2012 were 
not reliable for two of the initiatives, since the formula used during 
that time was not an accurate method to determine cost avoidances, a 
conclusion with which component officials concurred since figures 
could be overstated. However, we determined that cost avoidance data 
beginning with the first quarter of fiscal year 2012 were sufficiently 
reliable for reporting DHS's cost avoidances, as the ER Office began 
requiring an explanation of the specific actions that led to cost 
avoidance in order for the cost avoidance to be counted. 

We analyzed data collected for the Campaign to Cut Waste for fiscal 
year 2012 through the second quarter of fiscal year 2013--all of the 
data available at the time of our review. Specifically, we analyzed 
DHS's spending against its spending targets for all seven categories 
of the campaign--(1) travel, (2) printing, (3) supplies, (4) advisory 
service contracts, (5) promotional items, (6) IT devices, and (7) 
executive sedan services. To assess the reliability of the data, we 
discussed DHS's implementation of and methodology for developing 
metrics for the campaign with a Budget Analyst from the Office of the 
Chief Financial Officer (OCFO) Budget Division, and we interviewed 
officials from the eight DHS components in our review about how they 
determine and report their spending figures for the campaign and any 
challenges they experience in determining these figures. We determined 
that the data were sufficiently reliable to illustrate general levels 
of DHS's spending against its spending targets on the Campaign to Cut 
Waste categories for six of the seven categories--all but IT devices, 
for which data were not complete, and therefore excluded from our 
analysis. 

We also analyzed fiscal year 2012 and 2013 data in the Future Years 
Homeland Security Program (FYHSP) System Program Data Module (PDM), 
which was developed by DHS, in part to model the percentage of DHS's 
resource allocation requests that are for activities identified as M&A 
in future years. We compared components' categorization of activities 
by type in the PDM with the definitions for the three activity type 
categories (mission/operational, mission support, and business 
support/M&A) as stated in the FYHSP System PDM User Manual, which 
provides guidance to components on entering data into the PDM. We 
discussed the development and implementation of the FYHSP System PDM 
with DHS OCFO Program Analysis & Evaluation (PA&E) officials who 
oversee the PDM. Moreover, we reviewed PA&E's data quality analysis, 
conducted in March 2013, of fiscal years 2014 through 2018 resource 
requests identified as M&A to determine the accuracy of M&A data 
entered into the PDM. On the basis of our review of the analysis for 
any obvious data errors and outliers, we determined that the results 
of PA&E's analysis were reliable for identifying any limitations of 
the PDM data. On the basis of our analysis, PA&E's analysis, and 
interviews with PA&E officials, we determined the data were not 
sufficiently reliable for reporting the percentage of DHS's resource 
allocations requests that are categorized as M&A, as discussed later 
in the report. We compared the ability to use the PDM data with 
criteria in Standards for Internal Control in the Federal Government 
[Footnote 8] and Statement of Federal Financial Accounting Concepts 
No. 1, Objectives of Federal Financial Reporting.[Footnote 9] We did 
not assess the reliability of data beyond the categorization by 
activity type (e.g., categorization of activities by investment type), 
since such data were outside of the scope of our review. 

Also, to address the second objective, we interviewed DHS OCFO 
officials in the Resource Management Transformation Division to 
discuss the steps DHS has taken to enhance the collection of M&A data 
for the department. We analyzed documentation related to DHS's efforts 
to implement its business intelligence initiative to standardize 
financial data, including its draft Accounting Classification 
Structure (ACS) Policy and Standards and ACS Guidebook. We compared 
these efforts to standardize financial data with criteria for cost 
accounting in the Statement of Federal Financial Accounting Standards 
No. 4, Managerial Cost Accounting Standards and Concepts.[Footnote 10] 
We also reviewed the Concept of Operations and program milestones for 
"CFO Horizon"--a means to consolidate components' financial data. 
Finally, we interviewed OCFO Resource Management Transformation 
officials about their efforts to implement CFO Horizon and develop 
ACS. Appendix II provides more details on our objectives, scope, and 
methodology. 

We conducted this performance audit from February 2013 to December 
2013 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

DHS Organization and Missions: 

DHS's seven operational components, listed along the bottom of figure 
1, lead the department's frontline activities. As described in DHS's 
Quadrennial Homeland Security Review Report, the department has five 
core missions: (1) preventing terrorism and enhancing security, (2) 
securing and managing our borders, (3) enforcing and administering our 
immigration laws, (4) safeguarding and securing cyberspace, and (5) 
ensuring resilience to disasters.[Footnote 11] In addition to the five 
missions, DHS focuses on two areas: (1) providing essential support to 
national and economic security, such as maximizing the collection of 
customs revenue, and (2) maturing and strengthening DHS, such as 
enhancing shared awareness of risks and threats. DHS's eight support 
components provide resources, analysis, equipment, research, policy 
development, and support to help ensure the operational components 
have the tools and resources to accomplish DHS's missions. Figure 1 
shows DHS's organizational structure. 

Figure 1: Department of Homeland Security Organizational Chart: 

[Refer to PDF for image: organizational chart] 

Support components: 
Departmental Management and Operations; 
Analysis and Operations; 
Domestic Nuclear Detection Office; 
Science and Technology Directorate; 
National Protection and Programs Directorate; 
Office of Health Affairs; 
Office of Inspector General; 
Federal Law Enforcement Training Center. 

Operational components: 
U.S. Customs and Border Protection; 
U.S. Citizenship and Immigration Services; 
U.S. Coast Guard; 
Federal Emergency Management Agency; 
U.S. Immigration and Customs Enforcement; 
U.S. Secret Service; 
Transportation Security Administration. 

Source: GAO analysis of DHS documentation. 

[End of figure] 

Federal Budget Data Sources: 

Appropriation account and PPA: Congress appropriates funds to DHS in 
appropriations accounts that authorize it to incur obligations and 
make payments (expenditures) from the Treasury for specified purposes. 
[Footnote 12] These appropriations accounts are further broken down by 
program, project, or activity (PPA). PPAs are identified in conference 
reports and in the President's budget submission. In addition, each 
DHS component explains its funding request by PPA in DHS's 
congressional budget justification. PPAs are intended to provide a 
meaningful representation of the operations financed by the account. 
PPAs are not standard among DHS components. For example, the 
Transportation Security Administration's PPAs generally align with its 
programs (e.g., Screening Partnership Program and Secure Flight), 
whereas the Coast Guard's PPAs align with expense type.[Footnote 13] 
For example, the Coast Guard's Operating Expenses account consists of 
the following six PPAs: military pay and allowances, civilian pay and 
benefits, training and recruiting, operating funds and unit-level 
maintenance, centrally managed accounts, and depot-level maintenance. 
In addition, the number of appropriations accounts and PPAs each 
component has varies. For example, the President's fiscal year 2013 
budget submission requested funding for the Federal Law Enforcement 
Training Center in a total of two appropriations accounts and three 
PPAs. In contrast, the budget submission requested funding for FEMA in 
a total of nine appropriations accounts and 19 PPAs. We previously 
found that there are limitations to using account structures to 
identify and analyze M&A spending.[Footnote 14] Specifically, we found 
that the appropriation account structure was not constructed to 
delineate program and administrative expenses. In particular, (1) the 
budget does not identify an administrative account for all agencies, 
(2) similar expenses are categorized differently across agencies and 
within the same agencies from year to year, and (3) administrative 
accounts do not include all administrative expenses of an agency. See 
appendix I for more details on the limitations of using appropriations 
accounts and PPAs to identify M&A spending. 

Object classification: Object classes are numbered categories used in 
budget preparation to classify obligations by the types of goods or 
services purchased by the federal government. Obligations are 
commitments that create a legal liability of the federal government 
for the payment of goods and services. For example, an agency incurs 
an obligation when it places an order, signs a contract, purchases a 
service, or awards a grant. Obligations may also include interagency 
transactions where funds are transferred from one appropriation 
account to another. Object class information is mandated by law, which 
requires the President's budget to present obligations by object class 
for each account.[Footnote 15] In DHS's annual congressional budget 
justification, components break down their funding requests for each 
PPA by object class. The Office of Management and Budget (OMB) 
established five major object classes; by number, they are as follows: 
10, personnel compensation and benefits; 20, contractual services and 
supplies; 30, acquisition of assets; 40, grants and fixed charges; and 
90, other. See appendix I (table 5) for a description of the major 
object classes. These major classes are divided into smaller classes. 
For example, object class 20 includes 21, travel and transportation of 
persons; 24, printing and reproduction; and 26, supplies and 
materials. See figure 2 for examples of the contractual services and 
supplies object classification for DHS. 

Figure 2: Examples of Contractual Services and Supplies Object 
Classification for the Department of Homeland Security: 

Table 1 -- Obligations by Object Class: 

Object Class - President's Budget: 

Object Class: 21.0 Travel and transportation of persons; 
2010 actual: $1.464 billion; 
2011 estimate: $1.166 billion; 
2012 estimate: $1.237 billion. 

Object Class: 22.0 Transportation of things; 
2010 actual: $153 million; 
2011 estimate: $174 million; 
2012 estimate: $159 million. 

Object Class: 23.1 Rental payments to GSA; 
2010 actual: $1.120 billion; 
2011 estimate: $1.199 billion; 
2012 estimate: $1.303 billion. 

Object Class: 23.2 Rental payments to others; 
2010 actual: $222 million; 
2011 estimate: $138 million; 
2012 estimate: $173 million. 

Object Class: 23.3 Communications. utilities. and miscellaneous 
charges; 
2010 actual: $617 million; 
2011 estimate: $722 million; 
2012 estimate: $645 million. 

Object Class: 24.0 Printing and reproduction; 
2010 actual: $28 million; 
2011 estimate: $45 million; 
2012 estimate: $37 million. 

Object Class: 25.1 Advisory and assistance services; 
2010 actual: $4.068 billion; 
2011 estimate: $3.767 billion; 
2012 estimate: $3.026 billion. 

Object Class: 25.2 Other services; 
2010 actual: $5.779 billion; 
2011 estimate: $5.980 billion; 
2012 estimate: $5.685 billion. 

Object Class: 25.3 Other purchases of goods and services from 
Government accounts; 
2010 actual: $2.088 billion; 
2011 estimate: $2.284 billion; 
2012 estimate: $1.839 billion. 

Object Class: 25.4 Operation and maintenance of facilities; 
2010 actual: $1.732 billion; 
2011 estimate: $1.551 billion; 
2012 estimate: $1.398 billion. 

Object Class: 25.5 Research and development contracts; 
2010 actual: $634 million; 
2011 estimate: $763 million; 
2012 estimate: $786 million. 

Object Class: 25.6 Medical care; 
2010 actual: $721 million; 
2011 estimate: $718 million; 
2012 estimate: $753 million. 

Object Class: 25.7 Operation and maintenance of equipment; 
2010 actual: $1.257 billion; 
2011 estimate: $1.399 billion; 
2012 estimate: $1.124 billion. 

Object Class: 25.8 Subsistence and support of persons; 
2010 actual: $99 million; 
2011 estimate: $146 million; 
2012 estimate: $132 million. 

Object Class: 26.0 Supplies and materials; 
2010 actual: $1.405 billion; 
2011 estimate: $1.467 billion; 
2012 estimate: $1.311 billion. 

Contractual Services and Supplies Subtotal 20: 
2010 actual: $21.477 billion; 
2011 estimate: $21.519 billion; 
2012 estimate: $19.608 billion. 

Source: GAO representation of Office of Management and Budget data. 

[End of figure] 

We previously found that object class data have limitations when used 
to identify and analyze obligations of an M&A nature.[Footnote 16] For 
example, there is not an object class exclusively for M&A activities, 
so obligations for M&A activities cannot be separated from obligations 
for mission activities. See appendix I for more details on the 
limitations of using object class data to identify M&A spending. 

Financial Systems: 

Components use financial systems to track obligations and expenditures 
by account and PPA, as well as object classification. The term 
"financial system" includes an information system, composed of one or 
more applications, that is used for collecting, processing, 
maintaining, transmitting, or reporting data about financial events; 
supporting financial planning or budgeting activities; accumulating 
and reporting costs information; or supporting the preparation of 
financial statements.[Footnote 17] Of the 15 DHS components, 6 own and 
operate financial systems. The remaining components, with the 
exception of the Office of Inspector General, which relies on the 
Department of the Treasury, are customers of those 6 components that 
own and operate their own financial systems and serve as internal 
shared service providers.[Footnote 18] For example, the Coast Guard 
owns and operates a financial system, and TSA and the Domestic Nuclear 
Detection Office are customers of the Coast Guard. Each of the 6 
components that own financial systems use different software or 
versions of software. Table 1 depicts which DHS components own 
financial systems and which are customers that use those systems. 

Table 1: Department of Homeland Security Components' Financial 
Systems, as of August 2013: 

System owner/host: Coast Guard; 
Components that use the system: 
Domestic Nuclear Detection Office; 
Transportation Security Administration; 
Financial system: Oracle Federal Financials Core Accounting System. 

System owner/host: Customs and Border Protection; 
Components that use the system: [Empty]; 
Financial system: Systems, Applications and Products (SAP) 
Applications MySAP Enterprise Resource Planning. 

System owner/host: Federal Emergency Management Agency; 
Components that use the system: [Empty]; 
Financial system: Digital Systems Integrated Financial; 
Management Information Systems. 

System owner/host: Federal Law Enforcement Training Center; 
Components that use the system: Analysis and Operations; 
Financial system: Momentum. 

System owner/host: Immigration and Customs Enforcement; 
Components that use the system: 
Departmental Management and Operations; 
National Protection and Programs Directorate; 
Office of Health Affairs; 
Science & Technology Directorate; 
U.S. Citizenship and Immigration Services; 
Financial system: Savantage Federal Financial Management System. 

System owner/host: U.S. Secret Service; 
Components that use the system: [Empty]; 
Financial system: Oracle Federal Financials. 

Source: GAO analysis of Department of Homeland Security information. 

Note: The Office of Inspector General is a customer of the Bureau of 
the Public Debt in the Department of the Treasury, which utilizes 
Oracle Federal Financials. 

[End of table] 

Future Years Homeland Security Program System Program Data Module: 

In addition to the financial systems components utilize to track 
budget execution, DHS utilizes the FYHSP System PDM to develop the 
FYHSP report to Congress and assist the department with budget 
formulation. In response to DHS's Bottom-Up Review,[Footnote 19] which 
called for the capability to better align DHS's budget with its 
missions, PA&E developed the FYHSP System PDM.[Footnote 20] The PDM is 
a data collection tool for components to submit their resource 
allocation plans to request funding for future years. Financial 
systems use the appropriation structure specified by Congress for 
budget execution, while the PDM captures DHS's programmatic structure 
used for resource formulation, managerial decision making, performance 
management, and articulating outcome-oriented mission programs to the 
public. 

DHS Components Define M&A Activities Differently and Can Identify M&A 
Spending, but Limitations Exist in Obtaining Data from Fiscal Years 
1999 through 2013: 

The eight DHS components we reviewed define M&A spending differently. 
According to component officials, the components can identify M&A 
spending, but they do not do so because they are not required to by 
the department. In addition, the methods for identifying M&A spending 
vary among components. Components also have varied ability to report 
consistent, reliable M&A data, limiting the data available from fiscal 
years 1999 through 2013. Because components define M&A differently, 
have different methods for identifying spending, and limitations exist 
in obtaining data, it is not possible to compare components' M&A 
spending data from fiscal years 1999 through 2013. 

DHS Components Define M&A Activities Differently and Can Identify M&A 
Spending: 

Officials from all eight DHS components we reviewed provided us 
different definitions of M&A activities and told us that they can 
identify spending on M&A activities. (See table 2.) Four of the eight 
components in our review--FEMA, FLETC, ICE, and TSA--define their M&A 
activities according to the activities funded through their 
appropriations accounts and PPAs that are M&A in nature (i.e., 
activities of a support nature such as planning and budgeting, legal 
support, and IT infrastructure), while the other four--Coast Guard, 
DMO, CBP, and USSS--each define M&A activities differently and their 
definitions are not tied to activities in specific appropriation 
accounts or PPAs.[Footnote 21] For example, TSA officials stated that 
TSA's M&A activities are those found within its Transportation 
Security Support appropriations account, specifically the following 
three PPAs: Headquarters Administration, Human Capital Services, and 
Information Technology. These three PPAs fund TSA's headquarters and 
support functions. Alternatively, the Coast Guard does not have an M&A 
PPA. According to Coast Guard officials, the Coast Guard's M&A 
activities are those associated with headquarters and its service 
centers, such as personnel support and finance, which support the 
entire Coast Guard and cannot be attributed to a single unit or 
mission. Unlike officials in other components, DMO officials said that 
they consider all of DMO's activities to be M&A in nature, and 
therefore all of its spending to be M&A. 

DHS components are not required by the department to identify M&A 
spending as they obligate or expend funds, and as a result, none of 
the eight components we reviewed currently do so. However, all the 
components said they can identify M&A spending. Seven of the 
components would use their financial systems to identify M&A spending, 
while one component would use its cost model. However, methods for 
identifying spending vary among components. For example, FEMA 
officials said they can obtain M&A data from object classes within 
FEMA's financial system, while Coast Guard officials said that they 
can use expenditures by cost centers and ICE officials said that they 
can calculate obligations and expenditures by PPA. Alternatively, 
officials from one component, CBP, said that CBP can use its cost 
model, which aligns costs with activities--but is separate from its 
financial system--to identify M&A spending. Table 2 summarizes how DHS 
components we reviewed define and would identify M&A activities and 
spending. 

Table 2: Selected Department of Homeland Security Components' 
Definitions and Sources for Identifying Their Management and 
Administration Activities and Spending: 

DHS component: Coast Guard; 
Definition of M&A activities: Activities performed by headquarters and 
service centers, such as the finance center and personnel support 
center, that cater to the entire organization, and cannot be 
attributed to a single unit, mission, or asset class; 
Source for identifying M&A spending: Expenditures by cost centers as 
recorded in the Coast Guard's financial system. 

DHS component: Customs and Border Protection; 
Definition of M&A activities: Generally the same business support 
activities, such as conducting strategic planning, identified by DHS 
for use when requesting resource allocations in future years; 
Source for identifying M&A spending: Profitability & Cost Management 
Application (cost model), which aligns costs to activities. 

DHS component: Departmental Management and Operations; 
Definition of M&A activities: All activities are M&A in nature and 
include providing leadership, direction, and management to the 
department and all of its components; establishing and implementing 
policy; and providing various support functions and oversight to all 
entities within DHS, among others; 
Source for identifying M&A spending: All expenditures recorded in 
financial system. 

DHS component: Federal Emergency Management Agency; 
Definition of M&A activities: Activities contained in the Salaries and 
Expenses appropriation account, which include information technology; 
human capital management; acquisition management; security; and 
administration that include facilities management, records management, 
and occupational health and safety, as well as the leadership, 
management, and mission support functions of the regional offices; 
Source for identifying M&A spending: Object classes contained in the 
financial system. 

DHS component: Federal Law Enforcement Training Center; 
Definition of M&A activities: Activities contained in the Management 
and Administration Program, Project, or Activity (PPA), which include 
providing budget, finance, accounting, financial systems, financial 
statements, relocation, travel, and strategic planning functions, as 
well as asset management and human capital services, among others; 
Source for identifying M&A spending: Organization code, object class 
data, and PPA obligations contained in the financial system. 

DHS component: Immigration and Customs Enforcement; 
Definition of M&A activities: Activities contained in the Personnel 
Compensation and Benefits, Service, and Other Costs PPA, such as 
overseeing the budget, procurement, and facilities; providing human 
resources services and training for all employees and special agents; 
tracking the agency's performance measurements; and agency leadership; 
Source for identifying M&A spending: PPA obligations and expenditures 
captured in spreadsheets produced by financial system. 

DHS component: Secret Service; 
Definition of M&A activities: Activities that support and sustain 
operational success through progressive planning and performance in 
the areas of science and technology, organizational effectiveness, 
professional responsibility, stewardship of resources, and 
communication. Headquarters, management and administration resources 
support the DHS strategic goal to protect critical infrastructure by 
enhancing the Secret Service's administrative, professional, and 
technical infrastructure as well as its management systems and 
processes; 
Source for identifying M&A spending: Project codes and object classes 
in financial system. 

DHS component: Transportation Security Administration; 
Definition of M&A activities: Activities contained in the 
Transportation Security Support Appropriation and three M&A PPAs: 
Headquarters Administration (leadership, management, and logistics 
support for operations); Human Capital Services (oversight of all 
human resources contractual activities; and development of policies, 
guidance, and programs that are used to identify and promote human 
resources practices); and Information Technology (support for core 
information technology and telecommunications infrastructure, and 
personnel such as information technology engineers, application 
developers, and technical specialists); 
Source for identifying M&A spending: PPA expenditures captured in 
Monthly Execution and Staffing Reports produced by financial system. 

Source: GAO analysis of DHS documentation and component information. 

[End of table] 

Limitations Exist in Obtaining Data from Fiscal Years 1999 through 
2013: 

DHS components have varied ability to report consistent, reliable M&A 
data, limiting the data available from fiscal years 1999 through 2013. 
While FEMA officials stated that FEMA could provide data since fiscal 
year 1999, officials from seven of the eight DHS components we 
reviewed told us they would be able to provide M&A spending data for 
some, but not all, fiscal years since 1999 because of changes in their 
financial systems and data reliability issues, among other reasons. 
Examples of these limitations in obtaining data include the following: 

Financial system changes: Officials from two of eight components cited 
a change or upgrade to their financial systems as a reason for not 
having data readily available since fiscal year 1999. For example, 
according to USSS officials, they could most easily identify M&A data 
for fiscal years 2005 through 2012, since USSS changed its financial 
system in 2005. The officials added that obtaining M&A data before 
fiscal year 2005 would be time-consuming, and the data would be 
difficult to merge with data in USSS's current system because the 
financial systems are not compatible or linked. 

Data reliability: Officials from two of eight components cited data 
reliability as a reason for not having data readily available since 
fiscal year 1999. For example, officials representing DMO--which was 
established in fiscal year 2004 along with its financial system--told 
us that they do not consider fiscal year 2004 data to be reliable 
because the data are for a partial year and the officials were 
learning the system; however, they consider the next fiscal year's 
data (2005) reliable, as the financial system was fully operational 
for an entire fiscal year and officials had become familiar with using 
the system. 

Date component established: Four of the eight components were not 
established, or not established in their current form, until after 
1999, and therefore data are not available or could be difficult to 
obtain. For example, CBP officials told us that obtaining M&A data 
prior to fiscal year 2003--when CBP was part of other federal 
departments--would be nearly impossible because the offices and 
agencies in those departments were not wholly transferred into what is 
now CBP.[Footnote 22] 

Table 3 provides information on the range of M&A data available by 
fiscal year, and the reason for that range. 

Table 3: Management and Administration Data Available by Selected 
Department of Homeland Security Components for Fiscal Years 1999 
through 2013: 

DHS component: Coast Guard; 
Date established: 1790; 
Fiscal years M&A data available: 2008-2013; 
Reason for range: The Coast Guard does not archive a complete set of 
data that is more than 5 years old, since single-year appropriations 
are canceled after being in an expired status for 5 years. 
Furthermore, old data are less useful for financial analysis because 
of structural changes endured over time, according to Coast Guard 
officials. 

DHS component: Secret Service (USSS); 
Date established: 1865; 
Fiscal years M&A data available: 2005-2012; 
Reason for range: USSS changed its financial system to Oracle in 2005 
and data in the previous system are difficult to obtain and merge with 
data in the current system because the systems are not compatible or 
linked, according to USSS officials. 

DHS component: Federal Law Enforcement Training Center (FLETC); 
Date established: 1970; 
Fiscal years M&A data available: 2000-2013; 
Reason for range: According to FLETC officials, FLETC changed financial 
systems in 1999 from another federal department-managed system to its 
own financial system, Momentum. Officials told us they could not attest 
to data reliability prior to 2000. 

DHS component: Federal Emergency Management Agency (FEMA); 
Date established: 1979; 
Fiscal years M&A data available: 1999-2013; 
Reason for range: FEMA would be able to provide data for fiscal years 
1999 through 2013, but FEMA officials told us that M&A data from the 
most recent fiscal years would be more reliable and accessible than 
data from earlier years. 

DHS component: Transportation Security Administration (TSA); 
Date established: 2001; 
Fiscal years M&A data available: 2008-2013; 
Reason for range: TSA, consistent with its service provider (the Coast 
Guard), does not archive a complete set of data that is more than 5 
years old, since single-year appropriations are canceled after being 
in an expired status for 5 years. 

DHS component: Customs and Border Protection (CBP); 
Date established: 2003; 
Fiscal years M&A data available: 2010-2013; 
Reason for range: CBP officials told us that they redefined M&A 
activities as a result of DHS's Bottom-Up Review[A] completed in 2010, 
and enhanced CBP's ability to collect M&A data through its cost model. 

DHS component: Immigration and Customs Enforcement (ICE); 
Date established: 2003; 
Fiscal years M&A data available: 2007-2013; 
Reason for range: ICE destroys files 6 years and 3 months after the 
close of the fiscal year consistent with guidance from the National 
Archives and Records Administration. 

DHS component: Departmental Management and Operations (DMO); 
Date established: 2004; 
Fiscal years M&A data available: 2005-2013; 
Reason for range: Officials in the Office of Financial Operations 
within the Office of the Chief Financial Officer, which oversees DMO 
finances, told us that data from fiscal years 2004 are likely not 
reliable as that is when DMO established its financial system. 

Source: GAO analysis of DHS component information. 

[A] The Bottom-Up Review is a department-wide assessment to implement 
the Quadrennial Homeland Security Review strategy by aligning DHS's 
programmatic activities, such as investigating drug smuggling and 
inspecting cargo at ports of entry, and its organizational structure 
with the missions and goals identified in the Quadrennial Homeland 
Security Review. 

[End of table] 

Because components define M&A differently, have different methods for 
identifying spending, and limitations exist in obtaining data, it is 
not possible to compare components' M&A spending data from fiscal 
years 1999 through 2013. Furthermore, components' missions and 
authorities have changed over time, making a meaningful analysis of a 
single component's spending over time difficult. For example, the 
Coast Guard doubled in size shortly after the terrorist attacks of 
September 11, 2001, because its mission was broadened to include 
additional national security responsibilities such as increasing port 
security. Specifically, as reported in the President's fiscal year 
2003 budget, port security accounted for approximately 1 to 2 percent 
of daily operations before September 11, 2001, and accounted for 
between 50 and 60 percent of daily operations in fiscal year 2003. 
Additionally, FEMA's authority changed with the Post-Katrina Emergency 
Management Reform Act of 2006. The act enhanced FEMA's autonomy--FEMA 
became a distinct entity within DHS[Footnote 23]--and 
responsibilities. For example, the act tasked FEMA with leading and 
supporting the nation's risk-based, comprehensive emergency management 
system of preparedness, protection, response, recovery, and 
mitigation.[Footnote 24] Appendix I provides additional information on 
limitations to identifying and analyzing DHS's M&A data. 

DHS Identifies Some M&A Spending and Is Taking Steps to Define and 
Collect Data on M&A Activities, but Could Improve Reliability of Data 
for Estimating Future Resource Requests: 

DHS has not identified the department's total spending on M&A 
activities, but through two efforts to achieve efficiencies and reduce 
spending, it identifies spending on some M&A activities. DHS 
implemented a system to estimate the percentage of the department's 
budget request in future years that is identified as M&A using a 
common definition, but not all components are adhering to the 
definition when entering resource allocation requests into the system. 
DHS is taking steps to require components to apply the same common M&A 
definition to obligations and expenditures contained in their 
financial systems, but it is too early to tell whether the steps DHS 
is taking will allow it to successfully collect reliable M&A data in 
the future. 

DHS Identifies Spending on Specific M&A Activities through Two Efforts 
to Achieve Efficiencies and Reduce Spending: 

According to DHS OCFO officials, DHS has not identified the 
department's total spending on M&A activities since DHS's inception in 
2003 because (1) there has not been a common M&A definition and (2) 
obtaining data would require requesting data from the components, 
which would require a manual, labor-intensive effort on their part to 
identify the data in their financial systems. However, through two 
efforts to achieve efficiencies and reduce spending, DHS is 
identifying and collecting data on components' spending on specific 
M&A activities. 

Efficiency Review: 

The first effort, DHS's Efficiency Review, was initiated by the 
department in March 2009 to achieve efficiencies among initiatives in 
three categories: day-to-day expenditures, personnel, and physical 
assets.[Footnote 25] As of June 2013, DHS has implemented 46 
initiatives through the ER. To assist in determining DHS's cost 
avoidance figures, the ER Office requires components to report their 
respective expenditures and cost avoidance figures quarterly through 
the ER Quarterly Reporting System.[Footnote 26] The ER collects 
expenditure data for three initiatives to determine whether the cost 
avoidance figures are reasonable and to verify components' compliance 
with the initiatives: 

1. facilities: rental costs for nongovernmental facilities for 
meetings, conferences, and training events; 

2. printing: total cost of printed products; and: 

3. travel: all expenditures assigned to object class 21 travel and 
transportation of persons.[Footnote 27] 

The data provided reflect all spending on the initiatives, including 
M&A activities and operational activities, such as mission-critical 
travel. According to the ER data, travel expenditures far exceeded 
spending on facilities rental and printing from fiscal years 2010 
through 2012. Furthermore, components' travel and printing 
expenditures were similar in both fiscal years 2010 and 2011, but 
increased in fiscal year 2012. In contrast, expenditures on facilities 
rental steadily declined from fiscal years 2010 to 2012. According to 
the ER Director, variations in expenditures across years are a result 
of mission needs, which can be cyclical in nature. For example, 
according to USSS officials, USSS generally has increased travel costs 
in an election year because of its mission to protect presidential 
candidates. Figure 3 shows DHS spending by initiative for fiscal years 
2010 through 2012. 

Figure 3: Department of Homeland Security's Spending by Efficiency 
Review Initiative, Fiscal Years 2010-2012: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2010; 
Travel: $723.5 million; 
Printing: $17.5 million; 
Facilities: $11.32 million. 

Fiscal year: 2011; 
Travel: $704.4 million; 
Printing: $16.5 million; 
Facilities: $5.9 million. 

Fiscal year: 2012; 
Travel: $1.012 billion; 
Printing: $22.7 million; 
Facilities: $1.5 million. 

Source: GAO analysis of DHS Efficiency Review data. 

Note: These figures, based on obligations and expenditures, likely 
understate DHS's total spending, as two components and two offices did 
not report their spending in some quarters. Furthermore, the figures 
do not include the Federal Emergency Management Agency's travel for 
disaster recovery or the Transportation Security Administration's 
travel for permanent change of station, and the Coast Guard did not 
report all of its travel during the time frame provided. Data are 
reported at the end of the quarter, but components may not have fully 
reconciled the data. Therefore, the data may not reflect the final, 
fully reconciled expenditures for the department. Despite these 
limitations, we believe the data are sufficiently reliable for 
reporting aggregate spending over time. 

[End of figure] 

The ER office requires components to report their cost avoidance 
figures for 5 of the 46 initiatives: (1) facilities, (2) IT inventory 
management, (3) printing, (4) travel, and (5) wireless assets and 
services. Cost avoidances are savings that are reallocated to mission-
critical activities, and do not result in decreases to the budget. 
These initiatives include M&A activities as well as operational 
activities, such as mission-critical travel, so the cost avoidances 
reported are not limited to M&A activities. DHS has reported achieving 
cost avoidances through sharing excess IT equipment within the 
department rather than buying new equipment, and using government 
office space and online tools for conferences instead of renting 
private facilities, for example. Figure 4 shows the cost avoidances 
DHS has achieved by these five initiatives for fiscal year 2012 
through the first quarter of fiscal year 2013. 

Figure 4: Department of Homeland Security Cost Avoidances Achieved by 
Efficiency Review Initiative, Fiscal Year 2012 through the First 
Quarter of Fiscal Year 2013: 

[Refer to PDF for image: stacked vertical bar graph] 

Date: Q1 FY 2012; 
Wireless assets and services: $1.011 million; 
Facilities: $162,040; 
IT inventory management: $995,735; 
Printing: $161,957; 
Travel: $51,186. 

Date: Q2 FY 2012; 
Wireless assets and services: $2.391 million; 
Facilities: $1.194 million; 
IT inventory management: $1.707 million; 
Printing: $16,500; 
Travel: $93,760. 

Date: Q3 FY 2012; 
Wireless assets and services: $3.078 million; 
Facilities: $1.663 million; 
IT inventory management: $1.878 million; 
Printing: $924,935; 
Travel: $456,223. 

Date: Q4 FY 2012; 
Wireless assets and services: $3.868 million; 
Facilities: $974,543; 
IT inventory management: $1.719 million; 
Printing: $366,713; 
Travel: $919,806. 

Date: Q1 FY 2013; 
Wireless assets and services: $1.213 million; 
Facilities: $3.018 million; 
IT inventory management: $937,874; 
Printing: $672,553; 
Travel: $650,465. 

Source: GAO analysis of DHS Efficiency Review data. 

Note: We did not include data prior to fiscal year 2012, since DHS 
changed its method for determining cost avoidance figures for the 
printing and travel initiatives beginning with the first quarter of 
fiscal year 2012. 

[End of figure] 

DHS has achieved the greatest cost avoidances through the wireless 
assets and services, IT inventory management, and facilities 
initiatives. According to the ER data, FEMA, for example, reported a 
collective cost avoidance of $8 million during the time period as a 
result of reducing by approximately half what it was paying for 
wireless service per employee. Cost avoidances have been limited for 
the printing and travel initiatives relative to the other initiatives. 
According to officials from six of the eight components we 
interviewed, there are limited opportunities to avoid these costs, 
since mission needs dictate spending. For example, USSS officials 
stated that while USSS looks for opportunities to reduce costs and has 
recently opted for travel by bus rather than by aircraft, it 
ultimately has limited control over travel spending because the agency 
must provide protection for its protectees when and where they travel. 

Campaign to Cut Waste: 

In response to the Campaign to Cut Waste--a government-wide effort to 
reduce administrative spending--DHS sets spending targets and tracks 
components' spending (obligations and expenditures) for seven M&A 
categories: (1) travel, (2) printing, (3) supplies, (4) advisory 
service contracts (e.g., contracts for IT services and program 
management), (5) promotional items, (6) IT devices, and (7) executive 
sedan services. DHS components' spending targets generally reflect a 
20 percent decrease from their fiscal year 2010 spending levels in 
accordance with Executive Order 13589, issued in November 
2011,[Footnote 28] and a subsequent May 2012 memorandum from OMB 
providing implementation guidance.[Footnote 29] Unlike ER data, the 
figures reported for the Campaign to Cut Waste generally exclude 
spending on mission-essential activities (e.g., travel for national 
security purposes), as the goal of the Campaign to Cut Waste is to 
reduce spending on administrative activities. The Campaign to Cut 
Waste concluded at the end of fiscal year 2013 per OMB guidance, with 
the exception of continued collection of spending data for travel. 
[Footnote 30] 

Of the eight components we reviewed, officials from six reported 
having difficultly determining spending for some of the Campaign to 
Cut Waste categories, highlighting the challenges of both defining and 
identifying M&A activities and spending. More specifically, while 
officials from all eight components did not report any difficulties 
determining travel spending, six of the eight components reported 
difficultly determining spending on promotional items, supplies, 
and/or IT devices. Officials from these six components cited unclear 
definitions and lack of a straightforward method to identify spending, 
such as no corresponding object class, as reasons for the difficulty. 
For example, ICE, TSA, and USSS officials stated that what qualifies 
as a promotional item is not well defined in the guidance, and as a 
result, the activities and associated spending that should be reported 
for this category are subjective. According to DHS OCFO and FEMA 
officials, FEMA delayed reporting its spending on office supplies in 
April 2013 when it realized the figures previously reported may have 
been overstated, as the object class that contains office supplies 
also includes purchases made on credit cards, which could include 
items other than office supplies. Officials from four of the eight 
components we reviewed reported difficulties determining spending for 
IT devices as a result of the broad definition in the executive order 
and the ability to isolate spending on specific types of IT devices 
(e.g., laptops) in their financial system. 

Despite the data limitations described above, we determined that the 
data are sufficiently reliable to illustrate general levels of DHS's 
spending against its spending targets on the Campaign to Cut Waste 
categories for six of the seven categories (all but IT devices). 
Overall, DHS spent 12 percent less than its spending target for fiscal 
year 2012 on these six categories. However, given that data for the IT 
device category are incomplete and the final spending and spending 
target figures are being determined, it is unknown at this time 
whether DHS met its overall spending goal for fiscal year 2012. 
According to DHS's Budget Division, for fiscal year 2013, the 
department was on track to meet or exceed the reduction levels 
established in the executive order in the areas of supplies and 
advisory service contracts, which will allow DHS to meet its overall 
spending target. Table 4 shows the amount DHS spent compared with its 
spending target by Campaign to Cut Waste category during fiscal year 
2012 and the first two quarters of fiscal year 2013. 

Table 4: Spending by Campaign to Cut Waste Category, Fiscal Year 2012 
and First Two Quarters of Fiscal Year 2013: 

Dollars rounded: 

Travel[B]:
Fiscal Year 2012: 
Total spent (all quarters): $1.362 billion; 
Spending target: $1.202 billion; 
Percentage spent: 113%; 
Fiscal Year 2013: 
Total spent (first two quarters): $488.1; 
Spending target: $1.202 billion; 
Percentage spent: 41%. 

Printing[C]: 
Fiscal Year 2012: 
Total spent (all quarters): $37.2 million; 
Spending target: $22.4 million; 
Percentage spent: 166%; 
Fiscal Year 2013: 
Total spent (first two quarters): $13.3 million; 
Spending target: $28.5 million; 
Percentage spent: 47%. 

Supplies: 
Fiscal Year 2012: 
Total spent (all quarters): $304.4 million; 
Spending target: $527.0 million; 
Percentage spent: 58%; 
Fiscal Year 2013: 
Total spent (first two quarters): $57.9 million; 
Spending target: $526.7 million; 
Percentage spent: 11%. 

Advisory service contracts[C]: 
Fiscal Year 2012: 
Total spent (all quarters): $1.478 billion; 
Spending target: $1.884 billion; 
Percentage spent: 78%; 
Fiscal Year 2013: 
Total spent (first two quarters): $433.4 million; 
Spending target: $2.012 billion; 
Percentage spent: 22%. 

Promotional items[C]: 
Fiscal Year 2012: 
Total spent (all quarters): $2.0 million; 
Spending target: $2.5 million; 
Percentage spent: 80%; 
Fiscal Year 2013: 
Total spent (first two quarters): $.1 million; 
Spending target: $2.7 million; 
Percentage spent: 4%. 

Executive sedan services[C]: 
Fiscal Year 2012: 
Total spent (all quarters): $1.6 million; 
Spending target: $1.4 million; 
Percentage spent: 114%; 
Fiscal Year 2013: 
Total spent (first two quarters): $1.9 million; 
Spending target: $3.6 million; 
Percentage spent: 53%. 

Total: 
Fiscal Year 2012: 
Total spent (all quarters): $3.185 billion; 
Spending target: $3.64 billion; 
Percentage spent: 88%; 
Fiscal Year 2013: 
Total spent (first two quarters): $995 million; 
Spending target: $3.775 billion; 
Percentage spent: 26%. 

Source: GAO analysis of Department of Homeland Security data. 

[A] We excluded the information technology (IT) devices category, 
since the data were incomplete as a result of challenges some 
components face in determining their spending on IT devices. 

[B] Figures do not include mission-critical and operational readiness 
travel (e.g., Secret Service travel for the 2012 presidential 
campaign). 

[C] The spending target was increased in fiscal year 2013 to reflect 
fiscal year 2010 expenses that should have been taken into 
consideration when determining the fiscal year 2012 spending target 
but were inadvertently excluded. 

[End of table] 

DHS Defined M&A Activities for Future Year Resource Requests, but 
Reliable Data Would Allow DHS to Better Estimate the Percentage of 
Requests for M&A Activities: 

In response to DHS's 2010 Bottom-Up Review, which called for the 
capability to better align DHS's budget with its missions,[Footnote 
31] PA&E implemented the FYHSP System PDM in March 2010, as well as 
three activity types for categorizing the department's activities: (1) 
Mission/Operational; (2) Mission Support; and (3) Business Support 
(also referred to as M&A), including a definition of M&A activities. 
The FYHSP System PDM User Manual directs components to submit resource 
allocation requests by activity type according to the definitions 
below: 

1. mission/operational activities: activities that directly contribute 
to a mission outcome (e.g., screening and disaster operations). 
[Footnote 32] 

2. mission support: activities providing a product or service for, and 
tailored to, mission/operational activities (e.g., logistical support, 
research and development, and intelligence). 

3. business support (also referred to as M&A): activities found on the 
master list of 92 activities included in the user manual (e.g., 
conduct strategic planning, manage public affairs, and ensure 
information security). 

As a result, DHS has the ability to model the percentage of its future 
years' budget requests allocated to each of the three activity 
categories, including M&A, using a consistent definition. However, on 
the basis of our analysis of the activities entered into the FYHSP 
System PDM for fiscal years 2012 and 2013, we determined that 1 
component did not enter any business support/M&A activities, and 5 
components did not correctly categorize their business support 
activities since they entered some business support activities as 
mission support activities. Further, according to an analysis 
conducted by PA&E of the activities entered in the PDM as business 
support/M&A for fiscal years 2014 through 2018, components did not 
correctly categorize their requests by activity type or enter all of 
their business support/M&A activities, among other errors. For example, 

* 9 out of 15 components did not correctly word a portion of their 
business support/M&A activities to correspond with the master list; 

* 4 of the 15 components entered the wrong corresponding business 
support/M&A activity number as found on the master list for a portion 
of their business support activities; and: 

* 4 out of 15 components entered fewer business support/M&A activities 
than PA&E would have expected, and 1 component did not enter any 
business support activities. 

According to DHS PA&E officials, the errors are a result of manual 
data entry or components not adhering to the guidance in the PDM user 
manual. For example, 1 component believes every activity it undertakes 
is in support of its mission and therefore it has no business support/ 
M&A activities. Standards for Internal Control in the Federal 
Government calls for relevant, reliable, and timely information to be 
available for external reporting purposes and management decision 
making.[Footnote 33] Additionally, these Standards state that 
management should put in place control mechanisms and activities to 
enable it to enforce its directives and achieve results, such as 
providing relevant, reliable, and timely information. Furthermore, the 
Statement of Federal Financial Accounting Concepts No. 1, Objectives 
of Federal Financial Reporting, states that the objectives of federal 
financial reporting are to provide useful information to assist 
internal and external users in assessing the budget integrity, 
operating performance, stewardship, and systems and control of the 
federal government.[Footnote 34] DHS does not have a mechanism in 
place to work with the components to correct data errors in the PDM. 
According to PA&E, as of August 2013, it was in the process of working 
with components to revise the master list from 92 activities to fewer 
than 50 in conjunction with DHS's efforts to revise its Quadrennial 
Homeland Security Review Report. In addition, in September 2013, PA&E 
told us that it plans to develop drop-down menus for the FYHSP System 
PDM to systematically ensure consistency of nomenclature and spelling 
of business support activities. While the development of drop-down 
menus will likely address the errors as a result of incorrectly worded 
activities and wrong activity numbers, the steps to be taken will not 
address the errors related to components not entering business support 
activities into the PDM or entering business support activities as 
mission support activities. By implementing a mechanism to assess 
whether components have entered the appropriate business support 
activities into the PDM, and working with the components to correct 
the data, as needed, DHS would be better positioned to reliably 
estimate and report to external stakeholders, such as Congress, what 
percentage of the department's resource allocations requests are 
identified as M&A. 

DHS Has Taken Steps to Enhance the Collection of Actual M&A Spending, 
but It Is Too Early to Assess These Efforts: 

DHS has taken steps to enhance the collection of actual M&A spending 
for the department as a whole. However, DHS's M&A definition only 
applies to future allocation requests entered into the FYHSP System 
PDM beginning with fiscal year 2012. Accordingly, it is not used by 
components to identify obligations or expenditures by activity type in 
their financial systems. According to DHS, there is no linkage between 
components' financial systems and the FYHSP System PDM because the 
systems were built upon different structures. Components' financial 
systems are designed to track how components are spending funds and 
track obligations and expenditures according to their appropriations 
accounts and PPAs, which are established by the Appropriations 
Committees and are different for each component. The PDM was designed 
to help estimate future resource needs and was created based on a 
common account structure that aligns activities with the department's 
programmatic structure--missions and objectives, according to the 
FYHSP System PDM User Manual. Managerial cost accounting concepts and 
standards call for reliable and timely information on the full cost of 
federal programs, their activities, and outputs.[Footnote 35] The cost 
information can be used by Congress and federal executives in making 
decisions about allocating federal resources, authorizing and 
modifying programs, and evaluating program performance. The cost 
information can also be used by program managers in making managerial 
decisions to improve operating economy and efficiency. 

DHS plans to require components to collect the same data elements in 
their financial systems when they modernize their systems, an act that 
will, among other things, address challenges in collecting and 
analyzing M&A data for the department as a whole. In response to an 
OMB initiative[Footnote 36] and U.S. Department of the Treasury 
directive[Footnote 37] to standardize the accounting line, DHS OCFO 
has drafted an Accounting Classification Structure (ACS) Policy and 
Standards, and corresponding ACS Guidebook that requires components to 
collect the same 73 data elements as they either (1) implement a new 
financial system, (2) make a major upgrade to their system, or (3) 
move to a shared service provider.[Footnote 38] One element of the 73, 
defined by DHS is "mission activity," which requires components to 
identify data by activity type using the same business support (or 
M&A) definition in the FYHSP System PDM. Furthermore, through an 
effort called CFO Horizon, DHS has developed a data repository in 
which to collect data from DHS and its components' various financial 
systems, so when data such as M&A are collected by the components in 
the future, they can be readily accessible by the department for 
consolidation, according to the CFO Horizon Concept of Operations. 
[Footnote 39] 

DHS OCFO is implementing ACS in two phases: Phase I and Phase II. 
According to DHS OCFO officials, DHS anticipates publishing the ACS 
Policy and Standards in November 2013, thus completing Phase I in the 
first quarter of fiscal year 2014. Phase II, implementation of ACS by 
the components, is scheduled to begin in fiscal year 2014. If a 
component does not store and cannot derive the data element, the 
component will not be expected to report on the data element until it 
modernizes, upgrades or move to a shared service provider, according 
to a DHS official. The mission activity element is not an element 
components can provide or easily provide without financial system 
modernization. According to the preliminary results of an assessment 
conducted by OCFO on the ability of the components to meet the ACS 
requirements using their financial systems as of May 2013, none of the 
components capture or store data by "mission activity" in their 
financial systems. While 4 of 15 components responded they could 
derive the data from their existing systems, 3 reported the level of 
difficulty to be high. Therefore, most components will need to 
modernize their systems in order to obtain M&A data, as they are 
currently unable to obtain or derive the data with their current 
financial systems. DHS is in the early stages of the phased 
implementation of its financial system modernization, with completion 
projected for the second quarter of fiscal year 2018.[Footnote 40] 

OCFO officials told us that in response to their assessment of 
components' readiness to implement ACS, some components reported that 
even after they have a financial system that provides the capability 
to categorize by mission activity, they may not be able to do so 
because funds are not obligated by activity type. For example, CBP 
officials told us that approximately 70 percent of CBP's budget is for 
salaries and benefits, and defining an individual's salary by mission 
activity is difficult given that individuals, especially those working 
in the field (e.g., border patrol agents), perform a wide variety of 
tasks, making it difficult to accurately break down their salary 
expenses by activity type (mission, mission support, and business 
support). Additionally, TSA reported that it would be an extensive 
burden to manually enter such data. According to DHS OCFO officials, 
while implementation of any new financial system and new accounting 
structure is inherently challenging, it is executing a process to 
address issues as they are identified. However, it is too early to 
tell whether the steps DHS is taking will allow it to successfully 
collect reliable M&A data in the future. 

Conclusions: 

DHS has developed a common definition of M&A activities for resource 
planning for the department, but on the basis of our analysis, and 
PA&E's analysis, not all components are accurately identifying or 
entering business support/M&A activities in accordance with the 
definition in the FYHSP System PDM User Manual when entering their 
future resource allocation requests into the PDM. By implementing a 
mechanism to assess whether components have entered the appropriate 
M&A activities into the PDM, and working with the components to 
correct the data, as needed, DHS would be better positioned to 
reliably estimate and report to external stakeholders, such as 
Congress, what percentage of the department's resource allocations 
requests are identified as M&A. DHS's M&A definition applies only to 
future allocation requests entered into the FYHSP System PDM. 
Accordingly, it is not used by components to identify obligations or 
expenditures by activity type in their financial systems. While DHS 
has drafted the ACS Policy and Standards to require components to 
collect the same data elements, including mission activity, financial 
system modernization, which is scheduled for completion in fiscal year 
2018, will need to take place before all components are in a position 
to implement the mission activity element. Further, some components 
have identified challenges to categorizing obligations and 
expenditures by activity type regardless of the capability of their 
financial systems. Consequently, it is too early to tell how 
successful the steps DHS is taking will be in allowing it to collect 
reliable M&A spending data in the future. 

Recommendation for Executive Action: 

To help ensure DHS is able to reliably estimate the department's 
future resource allocation requests identified as M&A, we recommend 
that the Under Secretary for Management direct PA&E to implement a 
mechanism to assess whether components have entered the appropriate 
M&A activities into the PDM, and work with the components to correct 
the data, as needed. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DHS for its review and comment. 
DHS provided written comments, which are reprinted in appendix III, 
and concurred with our recommendation. In its written comments, DHS 
stated that it will continue to periodically assess whether components 
have entered the appropriate M&A activities into the PDM and continue 
to work with components to correct the data, as needed. In addition, 
DHS stated it will develop and implement a mechanism to ensure 
component compliance with guidance in time for the fiscal years 2016-
2020 programming and budget process with an estimated completion date 
of June 30, 2014. Such actions should address the intent of our 
recommendation. DHS also provided technical comments, which we 
incorporated as appropriate. 

As agreed with your office, unless you publicly announce the contents 
of this report, we plan no further distribution for 30 days from the 
report date. At that time, we will send copies of this report to the 
Acting Secretary of Homeland Secretary, appropriate congressional 
committees, and other interested parties. In addition, this report 
will be available at no charge on GAO's website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-9627 or maurerd@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix IV. 

Signed by: 

David C. Maurer: 
Director, Homeland Security and Justice Issues: 

[End of section] 

Appendix I: Limitations to Identifying and Analyzing Management and 
Administration Spending: 

We sought to independently identify and analyze the Department of 
Homeland Security's (DHS) management and administration (M&A) 
activities and related spending from fiscal years 1999 through 2013 
but were unable to because of various limitations. In particular, 
sources of federal budget data, including appropriations accounts 
broken down into program, project, or activity (PPA) and object 
classes, do not clearly distinguish M&A spending from other types of 
spending. Moreover, in cases where appropriations accounts and PPAs 
are largely M&A, the activities contained in those groupings are not 
consistent from year to year or complete since M&A activities can be 
found in other accounts or PPAs. 

Appropriation Account and PPA Limitations: 

We previously found that there are limitations to using account 
structures to identify and analyze M&A spending because the 
appropriation account structure was not constructed to delineate 
program and administrative expenses.[Footnote 41] In particular, (1) 
the budget does not identify an administrative account for all 
agencies, (2) similar expenses are categorized differently across 
agencies and within the same agencies from year to year, and (3) 
administrative accounts do not include all administrative expenses of 
an agency. We identified the same limitations based on our review of 
DHS's appropriations accounts and PPAs. 

On the basis of our review, of DHS's appropriation account and PPA 
structure, 5 of 15 DHS components did not have an M&A account or PPA 
for fiscal year 2013. Moreover, for those 10 components that did have 
M&A PPAs in 2013, they did not all exist as far back as fiscal year 
1999 or did not exist in their current form, making an analysis over 
time nearly impossible. For example, the Federal Law Enforcement 
Training Center's (FLETC) Management and Administration PPA was 
established beginning with fiscal year 2013 at the request of the 
Office of Management and Budget to obtain better insight on M&A costs. 
Additionally, the Federal Emergency Management Agency (FEMA) 
previously had a Management and Administration account with an 
Operating Activities PPA, but those activities were within the 
Salaries and Expenses account, including all seven of its PPAs, for 
fiscal year 2013. For the components, such as U.S. Customs and Border 
Protection (CBP), which existed as legacy agencies in different 
federal departments before DHS was established, it would be difficult 
to identify relevant expenditures by PPA before 2003 because agencies 
and offices were not transferred intact. 

For those 10 components with M&A PPAs, they differed from one another 
in terms of the activities funded through those PPAs. For example, 
activities contained in the Management and Administration PPA for 
FLETC include providing budget, finance, accounting, financial 
systems, financial statements, relocation, travel, and strategic 
planning functions, as well as asset management and human capital 
services, among others. U.S. Immigration and Customs Enforcement's 
(ICE) activities contained in its Personnel Compensation and Benefits, 
Service, and Other Costs PPA include overseeing the budget, 
procurement, and facilities; providing human resources services and 
training for all employees and special agents; and tracking the 
agency's performance measurements, but do not include strategic 
planning functions and asset management like FLETC's. Without a 
consistent definition, comparing M&A spending among DHS components 
would likely lead to inaccurate conclusions about which components are 
spending more or less on M&A activities. 

On the basis of our review we also found that the activities included 
and funded in a component's PPA can also change annually. As a result, 
an increase in an M&A PPA may not actually mean increased M&A 
spending. For example, the conference report accompanying the fiscal 
year 2012 DHS appropriations act provided that funding for the Office 
of the Assistant Secretary for Cybersecurity and Communications and 
the Office of the Assistant Secretary for Infrastructure Protection 
had been moved to the National Protection and Programs Directorate M&A 
account.[Footnote 42] As a result, the National Protection and 
Programs Directorate requested an additional $3.9 million for its 
Directorate Administration PPA within its M&A account in fiscal year 
2013. Without understanding this organizational change or the 
activities included in a particular PPA, the National Protection and 
Programs Directorate appears to have increased spending on Directorate 
Administration activities by $3.9 million. Conducting a year-to-year 
comparison without understanding these types of organizational changes 
could lead to faulty conclusions. Finally, M&A PPAs may not capture 
all M&A-related expenses, as some M&A activities may be captured in 
other PPAs. For example, FEMA officials reported that its M&A PPAs are 
found within its Salaries and Expenses appropriation account, but 
noted that there may be other accounts containing M&A activities. 

Object Classification Limitations: 

We previously found that object class data have limitations when used 
to identify and analyze obligations of an M&A nature since (1) no 
object class contains purely M&A activities, so obligations for M&A 
activities cannot be separated from obligations for mission 
activities; (2) the same type of expenses can be assigned to different 
object classes; and (3) reimbursements made by federal agencies are 
reobligated, which can lead to double counting.[Footnote 43] We 
identified the same limitations on the basis of our review. For 
example, we found that object class 26, supplies and materials, which 
is seemingly an administrative object class, is appropriately used by 
DHS components to capture obligations for more than office supplies. 
Specifically, Coast Guard officials told us the Coast Guard's 
obligations for fuel for marine and air assets, uniforms, and 
ammunition, among other operational expenses, are assigned to object 
class 26. Similarly, the U.S. Secret Service (USSS) uses this object 
class to report obligations for fuel for the presidential limousine as 
well as the rest of its vehicle fleet. See table 5 for the entire list 
of object classes. 

Table 5: Description of the Object Classification System: 

Major object classes: Personnel Compensation and Benefits (10); 
Description: Compensation directly related to duties performed for the 
government by federal civilian employees, military personnel, and non-
federal personnel. Benefits for currently employed federal civilian, 
military, and certain non-federal personnel. Benefits for former 
officers and employees or their supervisors that are based (at least in 
part) on the length of service to the federal government; 
Smaller object classes: Personnel compensation (11.0); 
Personnel benefits (12.0); 
Benefits for former personnel (13.0). 

Major object classes: Contractual Services and Supplies (20); 
Description: Purchases of contractual services and supplies, such as 
travel and transportation costs of government employees and other 
persons. Transportation of things (including animals). Payments for the 
use of land, structures, or equipment owned by others and charges for 
communication and utility services. Printing and reproduction obtained 
from the private sector or from other federal entities. Other 
contractual services for advisory and assistance services acquired by 
contract from non-federal sources, other services provided by non-
federal sources not otherwise classified, purchases of goods and 
services from government accounts, operation and maintenance of 
facilities, research and development contracts, medical care payments 
to contractors, operation and maintenance of equipment, and subsistence 
and support of persons. In addition, includes purchase of supplies and 
materials; 
Smaller object classes: 
Travel and transportation of persons (21.0); 
Transportation of things (22.0); 
Rent, communications, and utilities (23.0); 
Printing and reproduction (24.0); 
Other contractual services (25.0); 
Supplies and materials (26.0). 

Major object classes: Acquisition of Assets (30); 
Description: Purchases of personal property of a durable nature and 
the initial installation of equipment when performed under contract. 
Purchase and improvement of land and interest in lands, buildings, and 
other structures; nonstructural improvements of land; and fixed 
equipment when acquired under contract. Also includes purchases of (1) 
stocks, bonds, debentures, and other securities that are neither U.S. 
government securities nor securities of wholly owned federal government 
enterprises, (2) temporary or permanent investments, and (3) interest 
accrued at the time of purchase and premiums paid on all investments; 
Smaller object classes: Equipment (31.0); 
Land and structures (32.0) 
Investments and loans (33.0). 

Major object classes: Grants and Fixed Charges (40); 
Description: Cash payments to states, other political subdivisions, 
corporations, associations, and individuals for grants, subsidies, 
gratuities, and other aid. Contributions to foreign countries, 
international societies, commissions, proceedings, or projects. Taxes 
imposed by state and local taxing authorities where the federal 
government has consented to taxation and payments in lieu of taxes. 
Benefit payments from the social insurance and federal retirement 
trust funds and payments for losses and claims including those under 
the Equal Access to Justice Act. Payments to creditors, distribution 
of earnings, and interest payments under lease-purchase contracts for 
construction of buildings. Payments of amounts previously collected by 
the government; 
Smaller object classes: 
Grants, subsidies, and contributions (41.0); 
Insurance claims and indemnities (42.0); 
Interest and dividends (43.0); 
Refunds (44.0). 

Major object classes: Other (90); 
Description: Charges that may be incurred lawfully for confidential 
purposes and are not subject to detailed vouchering or reporting. 
Charges that cannot be distributed. Financial interchanges between 
federal government accounts that are not in exchange for goods and 
services. Includes the sum for an object class entry below the 
reporting threshold of $500,000 and the sum of all the below 
thresholds rounds to $1 million or more; 
Smaller object classes: 
Unvouchered (91.0); 
Undistributed (92.0); 
Financial transfers (94.0); 
Below reporting threshold (99.5). 

Source: OMB Circular No. A-11 (August 2012). 

[End of table] 

Given the different missions of DHS components and different 
activities assigned to an object class from component to component, 
any cross-component comparison of object class data could lead to 
inaccurate conclusions. This problem is compounded given that when 
components do have the same types of expenses, they can be 
appropriately assigned to different object class categories. For 
example, on the basis of our review, we found that one component may 
decide that information technology (IT) support belongs to budget 
object class 26, supplies and materials, while another component may 
decide these same IT costs belong to object class 25.7, operation and 
maintenance of equipment, according to a DHS Budget Division Analyst. 

Finally, object class data can exaggerate spending because 
reimbursable authority can lead to double counting if direct 
obligations cannot be distinguished from reimbursable obligations. 
Object classes present gross obligations--that is, the separate 
obligations made by each appropriation account, including the 
"reobligation" of amounts received as reimbursements from other 
federal agencies--and not actual expenses. For example, according to a 
DHS Budget Division Analyst, in fiscal year 2010, DHS had 
approximately $2 billion in expenditures in the supplies object class, 
but $512 million of the $2 billion was reimbursable authority. 

[End of section] 

Appendix II: Objectives, Scope, and Methodology: 

This report addresses the following questions: 

1. How have select DHS components defined and identified their M&A 
activities and spending, and to what extent are M&A data available 
from fiscal years 1999 through 2013? 

2. How has DHS identified M&A spending department-wide, and to what 
extent has DHS defined M&A activities and taken steps to enhance 
efforts to collect M&A data? 

To address the first objective, we analyzed DHS's congressional budget 
justifications, budget execution reports, and budget-in-briefs, as 
well as presidential budgets and appropriations legislation from 
fiscal years 2004 through 2013 to understand how M&A activities are 
defined and accounted for within components' appropriations accounts. 
We sought to independently identify components' M&A activities and 
related spending, but were unable to because of various challenges. In 
particular, sources of federal budget data do not define and 
distinguish all M&A spending from other types of spending. Moreover, 
in cases where groupings of budget data, such as appropriation 
accounts, are largely M&A, the activities contained in those groupings 
do not include all M&A activities and are not consistent from year to 
year. To determine how selected DHS components define their M&A 
activities and how they would go about identifying spending associated 
with these activities, we interviewed officials representing two of 
DHS's eight support components--Departmental Management and Operations 
(DMO)[Footnote 44] and FLETC--and six of DHS's seven operational 
components--FEMA, CBP, the U.S. Coast Guard, the Transportation 
Security Administration, ICE, and USSS.[Footnote 45] We selected these 
eight components based on the amount of their budget authority 
(totaling nearly 88 percent of DHS's fiscal year 2013 budget 
authority); their mission, for components with both operational and 
support missions; and date established, for components established 
both before and after the inception of DHS. To determine the extent to 
which M&A data are available from fiscal years 1999 through 2013, we 
interviewed officials from the eight selected components about their 
ability to provide M&A spending data during the timeframe. We did not 
obtain available data from the components because the data would not 
be comparable. While the results of our interviews cannot be 
generalized across all DHS components, these interviews allowed us to 
obtain perspectives on how selected components would define and 
identify M&A spending, as well as the availability of their M&A data 
since fiscal year 1999. 

To address the second objective, we examined DHS's two efforts to 
identify and manage its spending on specific M&A activities--DHS's 
Efficiency Review (ER)--an effort to identify opportunities to improve 
efficiency and streamline decision making through a series of 
initiatives--and the Obama administration's Campaign to Cut Waste--a 
government-wide effort to reduce administrative spending.[Footnote 46] 
Specifically, we analyzed all available expenditure and cost avoidance 
data collected through the ER.[Footnote 47] The ER collects 
expenditure data for three initiatives: (1) facilities, (2) printing, 
and (3) travel. The ER also collects cost avoidance data for five 
initiatives: (1) facilities, (2) IT inventory management, (3) 
printing, (4) travel, and (5) wireless assets and services.[Footnote 
48] We analyzed all expenditure and cost avoidance data available from 
the third quarter of fiscal year 2009--when data collection began--
through the first quarter of fiscal year 2013--the most recent data 
available at the time of our review. To assess the reliability of the 
data, we reviewed the data for obvious errors and traced one 
component's recorded expenditure and cost avoidance data back to 
documentation showing its original data submission. We also 
interviewed component officials responsible for entering the data, and 
the ER Director to determine how the data are collected and maintained 
in the ER Quarterly Reporting Site. We determined that the expenditure 
data likely understate DHS's total spending, since some components and 
offices did not submit their expenditures at all in certain quarters 
or did not report all expenditures, as they excluded certain types of 
travel. Specifically, one component and one office did not report 
their facilities expenditures, one component and two offices did not 
report their printing expenditures, and one office did not report its 
travel expenditures, and three components under-reported their travel 
expenditures. Despite these limitations, the data were sufficiently 
reliable to illustrate general levels of spending by DHS. We 
determined that the cost avoidance data prior to fiscal year 2012 were 
not reliable, since the formula used during that time frame for two of 
the initiatives--printing and travel--was not an accurate method to 
determine cost avoidances, a conclusion with which component officials 
concurred because figures could be overstated. However, we determined 
that cost avoidance data beginning with the first quarter of fiscal 
year 2012 were sufficiently reliable for reporting DHS's cost 
avoidances as the ER Office began requiring an explanation of the 
specific actions that led to cost avoidance in order for the cost 
avoidance to be counted. 

We analyzed data collected for the Campaign to Cut Waste for fiscal 
year 2012 through the second quarter of fiscal year 2013--all of the 
data available at the time of our review. Specifically, we analyzed 
DHS's spending against its spending targets for all seven categories 
of the campaign--(1) travel, (2) printing, (3) supplies, (4) advisory 
service contracts, (5) promotional items, (6) IT devices, and (7) 
executive sedan services. To assess the reliability of the data, we 
discussed DHS's implementation of and methodology for developing 
metrics for the campaign with a Budget Analyst from the Office of the 
Chief Financial Officer (OCFO) Budget Division. We also interviewed 
officials from the eight DHS components in our review about how they 
determine and report their spending figures for the campaign, and any 
challenges they experience in determining these figures. On the basis 
of these interviews, we identified data limitations in terms of the 
consistency, completeness, and accuracy of the data for three of the 
categories as a result of components defining categories differently, 
and experiencing difficulty identifying accurate figures or not 
reporting figures as a result of the difficulties. After considering 
the portion of spending these categories contributed to total spending 
tracked by the Campaign to Cut Waste, we determined the data were 
sufficiently reliable to illustrate general levels of DHS's spending 
against its spending targets on the Campaign to Cut Waste categories 
for six of the seven categories--all but IT devices, for which data 
are not complete, and therefore excluded from our analysis. 

We also analyzed fiscal year 2012 and 2013 data in the Future Years 
Homeland Security Program (FYHSP) System Program Data Module (PDM), 
which was developed by DHS, in part to model the percentage of DHS's 
resource allocation requests that are for activities identified as M&A 
in future years. We compared components' categorization of activities 
by type in the PDM with the definitions for the three activity type 
categories (mission/operational, mission support, and business 
support/M&A) as stated in the FYHSP System PDM User Manual, which 
provides guidance to components on entering data into the PDM. We 
discussed the development and implementation of the FYHSP System PDM 
with DHS OCFO Program Analysis & Evaluation (PA&E) officials who 
oversee the PDM. Moreover, we reviewed PA&E's data quality analysis of 
fiscal year 2014 through 2018 resource requests identified as M&A to 
determine the accuracy of M&A data entered into the PDM consistent 
with instructions in the user manual. On the basis of our review of 
the analysis for any obvious data errors and outliers, we determined 
that the results of PA&E's analysis are sufficiently reliable for 
identifying any limitations of the PDM data. On the basis of our 
analysis, PA&E's analysis, and interviews with PA&E officials, we 
determined the data were not sufficiently reliable for reporting the 
percentage of DHS's resource allocations requests that are categorized 
as M&A. We compared the ability to use the PDM data with criteria in 
Standards for Internal Control in the Federal Government[Footnote 49] 
and Statement of Federal Financial Accounting Concepts No. 1, 
Objectives of Federal Financial Reporting.[Footnote 50] We did not 
assess the reliability of data beyond the categorization by activity 
type (e.g., categorization of activities by investment type), since 
such data were outside of the scope of our review. 

Also, to address the second objective, we interviewed DHS OCFO 
officials in the Resource Management Transformation Division to 
discuss the steps DHS has taken to enhance the collection of M&A data 
for the department as a whole. We analyzed documentation related to 
DHS's efforts to implement its business intelligence initiative to 
standardize financial data, among other things. Specifically, we 
analyzed documentation describing DHS's plans for standardizing its 
accounting structure across the department, including its draft 
Accounting Classification Structure (ACS) Policy and Standards and ACS 
Guidebook. We compared these efforts against criteria for cost 
accounting in the Statement of Federal Financial Accounting Standards 
No. 4, Managerial Cost Accounting Standards and Concepts.[Footnote 51] 
We also reviewed the Concept of Operations and program milestones for 
"CFO Horizon"--a means to consolidate components' financial data. 
Finally, we interviewed OCFO Resource Management Transformation 
officials about their efforts to implement CFO Horizon and develop ACS. 

We conducted this performance audit from February 2013 to December 
2013 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix III: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

November 18,2013: 

David C. Maurer: 
Director, Homeland Security and Justice Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Re: Draft Report GAO-14-27, "DHS Management And Administration
Spending: Reliable Data Could Help DHS Better Estimate Resource 
Requests" 

Dear Mr. Maurer: 

Thank you for the opportunity to review and comment on this draft 
report. The U.S. Department of Homeland Security (DHS) appreciates the 
U.S. Government Accountability Office's (GAO's) work in planning and 
conducting its review and issuing this report. 

DHS is pleased to note GAO's recognition that the Department has taken 
steps to define and collect data on Management and Administration 
(M&A) activities. Standard M&A activities have been defined and 
implemented in the Future Years Homeland Security Program (FYHSP)
System. DHS is taking actions to improve comparability of M&A data in 
the FYHSP System in parallel with the Quadrennial Homeland Security 
Review and is also in the early stages of adopting a standard 
accounting classification structure consistent with the FYHSP System
activity structure. This will be accomplished in conjunction with the 
modernization of financial systems Department-wide. These achievements 
and on-going efforts highlight the Department's commitment to 
improving budget planning and expenditure data on all DHS activities, 
including M&A. 

The draft report contained one recommendation with which the 
Department concurs. Specifically, GAO recommended the Under Secretary 
for Management direct the Office of the Chief Financial Officer 
(OCFO), Office of Program Analysis and Evaluation (PA&E) to: 

Recommendation: Implement a mechanism to assess whether components 
have entered the appropriate M&A activities into the [Program Data 
Module of the FYHSP System] PDM, and work with components to correct 
the data, as needed. 

Response: Concur. DHS OCFO believes FYHSP System data quality and 
Component compliance with guidance have continually improved since the 
initial guidance was issued in 2010. PA&E will continue to 
periodically assess whether Components have entered the appropriate 
M&A activities into the PDM and continue to work with Components to 
correct data as needed. In addition, DHS will develop and implement a 
mechanism to ensure Component compliance with guidance in time for the 
Fiscal Year (FY) 2016-2020 programming and budget process, or Third 
Quarter FY 2014. Estimated Completion Date: June 30, 2014. 

Again, thank you for the opportunity to review and comment on this 
draft report. Technical comments were previously provided under 
separate cover. Please feel free to contact me should you have any 
questions. We look forward to working with you in the future. 

Sincerely, 

Signed by: 

Jim H. Crumpacker: 
Director: 
Departmental GAO-OIG Liaison Office: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David C. Maurer, (202) 512-9627 or maurerd@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Glenn Davis (Assistant 
Director), Lisa Canini, and Wendy Dye made significant contributions 
to this work. David Dornisch, Eric Hauswirth, Tracey King, Mike 
LaForge, Lara Miklozek, Leah Nash, Jack Warner, and Leonard Zapata 
also contributed to this report. 

[End of section] 

Related GAO Products: 

DHS Financial Management: Additional Efforts Needed to Resolve 
Deficiencies in Internal Controls and Financial Management Systems. 
[hyperlink, http://www.gao.gov/products/GAO-13-561]. Washington, D.C.: 
September 30, 2013. 

High Risk Series: An Update. [hyperlink, 
http://www.gao.gov/products/GAO-13-283]. Washington, D.C.: February 
2013. 

Streamlining Government: Key Practices from Select Efficiency 
Initiatives Should Be Shared Governmentwide. [hyperlink, 
http://www.gao.gov/products/GAO-11-908]. Washington, D.C.: September 
30, 2011. 

Financial Management: NOAA Needs to Better Document Its Policies and 
Procedures for Providing Management and Administration Services. 
[hyperlink, http://www.gao.gov/products/GAO-11-226]. Washington, D.C.: 
January 31, 2011. 

A Glossary of Terms Used in the Federal Budget Process. [hyperlink, 
http://www.gao.gov/products/GAO-05-734SP]. Washington, D.C.: September 
2005. 

Budget Object Classification: Origins and Recent Trends. [hyperlink, 
http://www.gao.gov/products/GAO/AIMD-94-147]. Washington, D.C.: 
September 13, 1994. 

Budget Issues: Assessing Executive Order 12837 on Reducing 
Administrative Expenses. [hyperlink, 
http://www.gao.gov/products/GAO/AIMD-94-15]. Washington, D.C.: 
November 17, 1993. 

Budget Issues: Limitations on Analyzing the Cost of Administrative 
Operations. [hyperlink, http://www.gao.gov/products/GAO/AFMD-86-54BR]. 
Washington, D.C.: July 22, 1986. 

[End of section] 

Footnotes: 

[1] We previously reported on these challenges as Strengthening DHS 
Management Functions is on GAO's high-risk list. See, for example, 
GAO, High Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: February 
2013). 

[2] DHS has five core missions: (1) preventing terrorism and enhancing 
security, (2) securing and managing our borders, (3) enforcing and 
administering our immigration laws, (4) safeguarding and securing 
cyberspace, and (5) ensuring resilience to disasters. 

[3] We discussed DMO's financial management with officials in DHS's 
Office of the Chief Financial Officer (OCFO) because OCFO manages 
DMO's finances. We also interviewed officials within the Office of 
Policy and the Office of the Chief Procurement Officer to obtain the 
perspectives of individual offices within DMO. 

[4] We use "component" consistent with DHS's identification of 
agencies and offices as components in its U.S. Department of Homeland 
Security Annual Performance Report: Fiscal Years 2012-2014, 66. 

[5] DHS initiated the ER in March 2009, and the Obama administration 
launched the Campaign to Cut Waste in June 2011 with Exec. Order No. 
13,576, 76 Fed. Reg. 35,297 (June 16, 2011). 

[6] Cost avoidances are savings that are reallocated to mission-
critical activities, and do not result in decreases to the budget. For 
example, as we previously found, the Coast Guard and CBP reported 
using efficiency gains from ER initiatives to support mission-critical 
activities, such as securing the border, while also facilitating the 
flow of legitimate trade and travel. See GAO, Streamlining Government: 
Key Practices from Select Efficiency Initiatives Should Be Shared 
Governmentwide, [hyperlink, http://www.gao.gov/products/GAO-11-908] 
(Washington, D.C.: Sept. 30, 2011). 

[7] The ER collects expenditure data for three initiatives: (1) 
facilities, (2) printing, and (3) travel. These initiatives represent 
the initiatives for which the ER was collecting cost avoidance data as 
of the second quarter of fiscal year 2013--the time we began our 
review. Data were collected for an additional initiative prior to this 
time, but collection ended when the initiative was sufficiently 
institutionalized. The ER also collects cost avoidance data for five 
initiatives: (1) facilities, (2) IT inventory management, (3) 
printing, (4) travel, and (5) wireless assets and services. 

[8] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: Nov. 1, 1999). 

[9] Statement of Federal Financial Accounting Concepts No. 1, 
Objectives of Federal Financial Reporting, September 2, 1993. These 
standards are part of the Federal Accounting Standards Advisory Board 
Handbook of Federal Accounting Standards and Other Pronouncements, as 
Amended, June 30, 2012, which contains the body of accounting concepts 
and standards for the U.S. government. 

[10] Federal Financial Accounting Standards No. 4, Managerial Cost 
Accounting Standards and Concepts, July 31, 1995. 

[11] DHS, Quadrennial Homeland Security Review Report: A Strategic 
Framework for a Secure Homeland (Washington, D.C.: February 2010). 

[12] For the purposes of this report, we also use "spending" to refer 
more generally to obligations and expenditures. 

[13] The Screening Partnership Program was established to permit an 
airport operator to request screening services through a private 
screening company. Secure Flight's mission is to strengthen the 
security of commercial air travel into, out of, within, and over the 
United States through the use of improved and expanded watch list 
matching using risk-based security measures. 

[14] GAO, Budget Issues: Assessing Executive Order 12837 on Reducing 
Administrative Expenses, [hyperlink, 
http://www.gao.gov/products/GAO/AIMD-94-15] (Washington, D.C.: Nov. 
17, 1993). 

[15] See 31 U.S.C. § 1104(b). 

[16] GAO, Budget Object Classification: Origins and Recent Trends, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-94-147] (Washington, 
D.C.: Sept.13, 1994). 

[17] Pub. L. No. 104-208, § 806(5), 110 Stat. 3009, 3393 (codified at 
31 U.S.C. § 3512 note). 

[18] A shared service provider is a third-party entity that manages 
and distributes software-based services and solutions to customers 
across a wide area network from a central data center. 

[19] DHS, Bottom-Up Review Report (Washington, D.C.: July 2010). 

[20] PA&E, a division of DHS OCFO, is responsible for developing and 
performing analyses and evaluations of alternative plans, programs, 
personnel levels, and budget submissions for the department in 
relation to homeland security objectives, projected threats, 
vulnerability assessments, estimated costs, resource constraints, and 
the most recent homeland security strategy. PA&E also provides 
guidance and oversees the development of the FYHSP, among other things. 

[21] M&A activity definitions represent components' definitions as of 
August 2013, and are not necessarily the same definition used by the 
component since fiscal year 1999. 

[22] The Homeland Security Act of 2002 merged the U.S. Customs Service 
with parts of the Immigration and Naturalization Service and the 
Department of Agriculture's Animal and Plant Health Inspection 
Service, effective in March 2003. Pub. L. No. 107-296, § 402, 116 
Stat. 2135, 2177. 

[23] 6 U.S.C. § 316. 

[24] 6 U.S.C. § 313. 

[25] "Day-to-day expenditures" includes background investigations, 
communication devices, office supplies, software licenses, and 
subscriptions. "Personnel" includes employee orientation and training, 
hiring and security suitability processes, coordination and decision 
making, paperless earning and leave statements, and retention. 
"Physical assets" includes bulk fuel acquisition, energy management, 
fleet management, hybrid vehicles, and IT and office equipment. 

[26] The goal of some initiatives is efficiency gains, such as 
improving processes, so components are not required to report 
expenditures and cost avoidance figures for all initiatives. For 
example, in response to the contractor background investigations 
initiative, which is an initiative to improve the background 
investigation process through new policies, for example, components 
are to report the percentage of contractors found to be ineligible to 
work as a result of criminal conduct, employee misconduct and drug use. 

[27] Officials from four of the eight components we interviewed 
reported providing either obligations or obligations and expenditures 
as opposed to just expenditures. 

[28] The decrease specified in the OMB guidance was15 percent in the 
case of advisory service contracts for fiscal year 2012, and 30 
percent in the case of travel for fiscal year 2013. According to a DHS 
OCFO Budget Analyst, spending targets were determined by DHS using 
fiscal year 2010 obligations in relevant object classes as the 
baseline and working with components to exclude obligations of an 
operational nature. 

[29] Exec. Order No. 13,589, 76 Fed. Reg. 70,863 (Nov. 15, 2011); and 
OMB, M-12-12 Promoting Efficient Spending to Support Agency 
Operations, May 11, 2012. 

[30] OMB, M-12-12. 

[31] DHS, Bottom-Up Review Report. Among other things, the Bottom-Up 
Review identified priority initiatives to strengthen DHS's mission 
performance, improve departmental management, and increase 
accountability. 

[32] DHS's five missions, as stated in the Quadrennial Homeland 
Security Review Report, include (1) preventing terrorism and enhancing 
security, (2) securing and managing our borders, (3) enforcing and 
administering our immigration laws, (4) safeguarding and securing 
cyberspace, and (5) ensuring resilience to disasters. 

[33] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[34] Statement of Federal Financial Accounting Concepts No. 1, 
Objectives of Federal Financial Reporting. 

[35] Statement of Federal Financial Accounting Standards No. 4, 
Managerial Cost Accounting Standards and Concepts. 

[36] Financial Systems Integration Office, 2007 Report on Federal 
Financial Management Standards: Common Government-wide Accounting 
Classification Structure, version 1.0. 

[37] Treasury Financial Management Volume I, Bulletin No. 2012-08. 

[38] Of the 73 elements, 15 are defined by DHS and the remaining 58 
are defined by OMB and the U.S. Department of the Treasury. 

[39] CFO Horizon is a centralized data repository to collect component-
level financial information from various sources and generate 
department-level financial information using business intelligence 
tools. 

[40] For additional information on DHS's modernization efforts, see 
GAO, DHS Financial Management: Additional Efforts Needed to Resolve 
Deficiencies in Internal Controls and Financial Management Systems, 
[hyperlink, http://www.gao.gov/products/GAO-13-561] (Washington, D.C.: 
Sept. 30, 2013). 

[41] [hyperlink, http://www.gao.gov/products/GAO/AIMD-94-15], 7. 

[42] H.R. Rep. No. 112-331, at 985 (2011). 

[43] [hyperlink, http://www.gao.gov/products/GAO/AIMD-94-147]. 

[44] We discussed DMO's financial management with officials in DHS's 
Office of the Chief Financial Officer (OCFO) because OCFO manages 
DMO's finances. We also interviewed officials within the Office of 
Policy and the Office of the Chief Procurement Officer to obtain the 
perspectives of individual offices within DMO. 

[45] We use "component" consistent with DHS's identification of 
agencies and offices as components in its U.S. Department of Homeland 
Security Annual Performance Report: Fiscal Years 2012-2014, 66. 

[46] DHS initiated the ER in March 2009, and the Obama administration 
launched the Campaign to Cut Waste in June 2011 with Exec. Order No. 
13,576, 76 Fed. Reg. 35,297 (June 16, 2011). 

[47] Cost avoidances are savings that are reallocated to mission 
critical activities, and do not result in decreases to the budget. For 
example, as we previously found, the Coast Guard and CBP reported 
using efficiency gains from ER initiatives to support mission-critical 
activities, such as securing the border, while also facilitating the 
flow of legitimate trade and travel. See [hyperlink, 
http://www.gao.gov/products/GAO-11-908]. 

[48] These initiatives represent the initiatives for which the ER was 
collecting cost avoidance data as of the second quarter of fiscal year 
2013--the time we began our review. Data were collected for an 
additional initiative prior to this time, but collection ended when 
the initiative was sufficiently institutionalized. 

[49] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[50] Statement of Federal Financial Accounting Concepts No. 1, 
Objectives of Federal Financial Reporting. These standards are part of 
the Federal Accounting Standards Advisory Board Handbook of Federal 
Accounting Standards and Other Pronouncements, as Amended, which 
contains the body of accounting concepts and standards for the U.S. 
government. 

[51] Statement of Federal Financial Accounting Standards No. 4, 
Managerial Cost Accounting Standards and Concepts. 

[End of section] 

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