Office of the Federal Detention Trustee's (OFDT) Cost Estimation Methods Reflect Features of Best Practices, but Processes Could be Enhanced
GAO-10-1037R, Sep 30, 2010
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This letter formally transmits a summary of an oral briefing we gave to Congress on August 30, 2010 and subsequent agency comments. We gave this briefing in response to the Conference Report accompanying the Consolidated Appropriations Act, 2010 (H.R. Rep. No. 111-366, at 662 (2009) (Conf. Rep.)), which directed us to evaluate the methods the Office of the Federal Detention Trustee (OFDT) uses to project the federal detainee population and the per diem rates OFDT pays for detention services, as well as other factors that are translated into OFDT's annual budget request. In conducting this work, we analyzed OFDT's documentation of its detainee population and cost estimation model, compared OFDT's projections in the President's budget submission with actual values of detainee population and costs, and interviewed OFDT and Department of Justice (DOJ) officials to (1) assess how OFDT develops its detainee population and cost estimates; (2) determine the extent to which OFDT follows best practices for developing high-quality cost estimates; and (3) determine the reasons why OFDT required funds in addition to its annual appropriation in fiscal years 2005, 2008, and 2009.
In summary, OFDT develops its annual budget request for DOJ using three general steps: (1) estimating cost increases needed to maintain current service levels, (2) projecting the changes in the detainee population, and (3) estimating the costs associated with detainee population and other program changes. OFDT's process for estimating the federal detainee population and costs reflects some of the features of GAO's best practices for cost estimation, but OFDT has not adopted enough of the practices to meet the four characteristics that we associate with high-quality cost estimates. Specifically, we determined that OFDT's cost estimation processes substantially met the features that characterize accurate and comprehensive cost estimates and partially met the features that characterize welldocumented and credible cost estimates. OFDT documents the purpose, formulas, and data sources behind its cost estimates, but many of the technical aspects of OFDT's cost estimation model are fully understood only by the individual who runs the model. Further, the President's annual budget request to Congress for OFDT has begun to include estimates of how an increase in the number of individuals charged with drug, weapons, or immigration offenses may affect program costs, but, as a best practice, OFDT also could perform analyses that account for the risks and uncertainties in the model's assumptions and estimates. OFDT and DOJ officials attributed OFDT's need for additional funding to several factors, including unanticipated increases in the detainee population, higher per diem rates resulting from limited available detention bed space, and limited financial reserves at the beginning of the fiscal year. More specifically, law enforcement initiatives related to immigration have significantly increased the total detainee population. OFDT officials stated that it is difficult to incorporate such initiatives into its detainee population model because OFDT, as part of the federal budget process, must submit its projections for a fiscal year 18-24 months before that fiscal year and the law enforcement initiative begin. In addition, since OFDT has limited flexibility in how it spends its funds and its annual costs exceed $1 billion, even a small difference between projected and actual costs could result in OFDT facing costs that exceed its appropriated funds by tens of millions of dollars. As a result of our findings, we are recommending that OFDT improve its documentation of the calculations it uses in its detention population and cost estimation model. We are also recommending that OFDT quantify the extent to which costs could vary due to the inherent risks in key assumptions, data inputs, and other factors.
- Closed - implemented
- Closed - not implemented
Recommendations for Executive Action
Recommendation: To improve OFDT's cost estimation process, the Attorney General should instruct the Federal Detention Trustee to improve documentation of calculations used to (a) project the number of USMS detainees and (b) estimate program costs.
Agency Affected: Department of Justice
Status: Closed - Implemented
Comments: We found that the Office of the Federal Detention Trustee (OFDT) could improve its cost estimation process by better documenting key budget calculations. Therefore, in accordance with best practices contained in GAO's Cost Estimating and Assessment Guide, we recommended that the Attorney General instruct the Federal Detention Trustee to improve documentation of calculations used to (a) project the number of USMS detainees and (b) estimate program costs. In response, OFDT officials told us in July 2012, that they had assigned a contract statistician, in part, to document both the processes OFDT uses to monitor the detention population and its estimates of overall program costs. In September 2012, OFDT officials shared with us the evidence of this documentation, showing the statistician's programming and the steps he used to conduct his analysis. OFDT's actions for improving this documentation are consistent with the intent of our recommendation.
Recommendation: To improve OFDT's cost estimation process, the Attorney General should instruct the Federal Detention Trustee to quantify the extent to which its costs could vary due to changes in key cost assumptions--and submit a risk-adjusted cost estimate, along with an associated confidence level and corresponding budget documentation--to DOJ to facilitate decision making.
Agency Affected: Department of Justice
Status: Closed - Implemented
Comments: We found that OFDT could improve its cost estimation process by conducting risk analyses and assessing the likelihood of costs varying due to outside events. Therefore, in accordance with best practices contained in GAO's Cost Estimating and Assessment Guide, we recommended that the Attorney General instruct the Federal Detention Trustee to quantify the extent to which its costs could vary due to changes in key cost assumptions and submit a risk-adjusted cost estimate, along with an associated confidence level and corresponding budget documentation to DOJ to facilitate decision making. In response, OFDT's statistician explained in January, 2013 that he had compiled a database of monthly budget estimates and actual, observed values for each of OFDT's budget cost categories and primary performance measures dating back to October 2006. He also explained that by comparing the budget estimates with actual population and expenditure data, OFDT has been able to evaluate the accuracy of its estimation process and quantify the magnitude of the estimation error associated with each budget estimate that is the consequence of factors not incorporated into the projected levels for a given fiscal year. Using this data, OFDT calculated 95% confidence intervals for each budget estimate. In addition, when submitting its fiscal year 2013 budget request, OFDT included a probability assessment of budget shortfall or surplus from the recommended funding level. As part of this assessment, OFDT's statistician provided OFDT's leadership and DOJ's leadership with an upper-bound estimated funding level that, if funded, would ensure that the Federal Prisoner Detention Program would have sufficient funding even if an array of unanticipated conditions occurred. OFDT's actions to improve its cost estimation process are consistent with the intent of our recommendation.