Department of Homeland Security:

Improved Assessment and Oversight Needed to Manage Risk of Contracting for Selected Services

GAO-07-990: Published: Sep 17, 2007. Publicly Released: Oct 17, 2007.

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In fiscal year 2005, the Department of Homeland Security (DHS) obligated $1.2 billion to procure four types of professional and management support services--program management and support, engineering and technical, other professional, and other management support. While contracting for such services can help DHS meet its needs, there is risk associated with contractors closely supporting inherently governmental functions--functions that should be performed only by government employees. This report (1) describes the contracted services, (2) identifies potential risk and the extent to which DHS considered risk when deciding to contract for these services, and (3) assesses DHS's approach to managing and overseeing these services. GAO analyzed 117 judgmentally selected statements of work and 9 cases in detail for contracts awarded in fiscal year 2005 by the Coast Guard, the Office of Procurement Operations (OPO), and the Transportation Security Administration (TSA).

More than half of the 117 statements of work that GAO reviewed provided for reorganization and planning activities, policy development, and acquisition support--services that closely support the performance of inherently governmental functions. Other such services supporting a broad range of programs and operations at Coast Guard, OPO, and TSA included budget preparation, regulation development, and employee relations. Decisions to contract for professional and management support services were driven by the need for staff and expertise to get programs and operations up and running. However, for the nine cases we reviewed, program officials did not assess the risk that government decisions may be influenced by, rather than independent from, contractor judgments. These cases included services that have the potential to increase this risk. For example, contractors directly supported DHS missions and performed on an ongoing basis work comparable to that of government employees. Most of the nine contracts also lacked detail or covered a wide range of services. Conditions such as these need to be carefully monitored to ensure the government does not lose control over and accountability for mission-related decisions. DHS has not explored ways to manage the risk of these contractor services, such as through total workforce deployment across the organization. The level of oversight DHS provided did not always ensure accountability for decisions or the ability to judge whether the contractor was performing as required. Federal acquisition policy requires enhanced oversight of contracts for services that can affect government decision making, policy development, or program management. While contracting officers and program officials acknowledged their professional and management support services contracts closely supported inherently governmental functions, they did not see a need for increased oversight. Insufficient oversight increases the potential for a loss of management control and the ability to ensure intended outcomes are achieved.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the department's ability to manage the risk of selected services that closely support inherently governmental functions as well as government control over and accountability for decisions, the Secretary of Homeland Security should assess program office staff and expertise necessary to provide sufficient oversight of selected contractor services.

    Agency Affected: Department of Homeland Security

    Status: Closed - Implemented

    Comments: In September 2011, DHS issued guidance on the performance of inherently governmental and critical functions when contracting for support services. This guidance addresses management and oversight responsibilities required to ensure compliance with Federal Acquisition Regulations, Office of Federal Procurement Policy memoranda, and DHS's balanced workforce strategy, through which contracted agency functions are assessed to determine the appropriate mix of federal employees and contractors. The guidance states that for service contracts, DHS requiring activities and program offices must assign a sufficient number of qualified federal employees with the appropriate training, experience, and expertise to manage the work performed by contractors.

    Recommendation: To improve the department's ability to manage the risk of selected services that closely support inherently governmental functions as well as government control over and accountability for decisions, the Secretary of Homeland Security should define contract requirements to clearly describe roles, responsibilities, and limitations of selected contractor services as part of the acquisition planning process.

    Agency Affected: Department of Homeland Security

    Status: Closed - Implemented

    Comments: DHS officials said they are working to increase awareness and understanding of the risks associated with selected contracted services and improve contract requirements definition by requiring that all professional and management support service contracts over $1 million are reviewed by the cognizant Head of Contracting Activity (and all over $50 million are reviewed by the Chief Procurement Officer). This review includes a description of the work to be performed by the contractor, its relationship to the mission of the DHS office, and the number of federal employees overseeing the contract. While this effort is still underway, we are closing the recommendation as implemented due to the steps taken to date. We will continue to monitor progress through our ongoing DHS engagements.

    Recommendation: To improve the department's ability to manage the risk of selected services that closely support inherently governmental functions as well as government control over and accountability for decisions, the Secretary of Homeland Security should assess the risk of selected contractor services as part of the acquisition planning process, and modify existing acquisition guidance and training to address when to use and how to oversee those services in accordance with federal acquisition policy.

    Agency Affected: Department of Homeland Security

    Status: Closed - Implemented

    Comments: DHS revised the Homeland Security Acquisition Manual to require that all professional service contracts, options, and task/delivery orders valued at over $1 million be reviewed by the cognizant Head of Contracting Activity (or the Chief Procurement Officer if over $50 million) to ensure the contracted service does not impact core functions that must be performed by federal employees. This review must be conducted prior to issuing a solicitation or exercising a contract option.

    Recommendation: To improve the department's ability to manage the risk of selected services that closely support inherently governmental functions as well as government control over and accountability for decisions, the Secretary of Homeland Security should establish strategic-level guidance for determining the appropriate mix of government and contractor employees to meet mission needs.

    Agency Affected: Department of Homeland Security

    Status: Closed - Implemented

    Comments: In July 2010, DHS distributed a balanced workforce strategy with implementing instructions to the component agencies. When OMB guidance is issued, the DHS guidance will be revised to take into account OMB's guidance on inherently governmental and critical functions and considerations in determining the appropriate mix of government and contractor employees.

    Recommendation: To improve the department's ability to manage the risk of selected services that closely support inherently governmental functions as well as government control over and accountability for decisions, the Secretary of Homeland Security should review contracts for selected services as part of the acquisition oversight program.

    Agency Affected: Department of Homeland Security

    Status: Closed - Implemented

    Comments: DHS has addressed this recommendation through its balanced workforce strategy, which involves a systematic review of new and existing service contracts to determine the appropriate mix of federal employees and contract employees. The assessment tool includes checklists to determine if the services required closely support inherently governmental functions or are critical functions. When using contractors for such functions, the strategy states that the contracts require specific safeguards and monitoring to ensure that the work performed by contractors does not become an inherently governmental function and to determine the number of federal employees needed for oversight.

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