Homeland Security Acquisitions: DHS Could Better Manage Its Portfolio to Address Funding Gaps and Improve Communications with Congress
Highlights
What GAO Found
GAO found that the funding plans for all 35 of the Department of Homeland Security (DHS) acquisition programs it reviewed changed to some degree from fiscal years 2012 to 2014, though the instability affected some programs more than others. Program officials reported that funding instability negatively affected 17 of the 35 programs, contributing to schedule slips, cost growth, and capability reductions. DHS officials at headquarters, components, and program offices identified internal and external factors that contributed to funding instability. These included changes in department-wide priorities and congressional funding decisions. Going forward, DHS's largest acquisition programs will likely experience more funding instability because the department's plans for its acquisition portfolio are not currently affordable. In December 2012, DHS issued an internal memo stating that the department's aggregate 5-year funding requirements for its major acquisition programs exceeded expected resources by 30 percent. This acknowledgement was a positive step toward addressing the department's funding gap, and DHS has established a full-funding certification requirement to help address it. Nevertheless, the department has not approved most of its major acquisition programs' cost estimates. As a result, DHS's understanding of its major acquisition programs' funding requirements is limited, and the funding gap may be greater than the department has suggested.
DHS has not consistently developed its multi-year funding plans in accordance with key portfolio management practices that would help the department optimize the return on its acquisition investments. DHS's resource allocation guidance reflects some but not all of these key practices, and the department is working to address the shortfalls. In addition, the 30 percent funding gap indicates that DHS leadership has not effectively prioritized its acquisition needs, even though the department's resource allocation guidance fully reflects this key practice. To help address its funding issues, the department is piloting a four-pronged portfolio management initiative intended to provide a framework for information to flow between four key councils and boards. As identified in the table below, there are opportunities for DHS leadership to improve governance in each of these four management areas, but senior DHS officials do not expect the initiative will be fully implemented in the near term, so it is too soon to tell how effective it will be.
Opportunities for DHS Leadership to Improve Governance in Four Management Areas
|
Strategic Direction |
Requirements Reviews |
Resource Allocation |
Program Governance |
|
Provide planning guidance each year |
Establish priorities across functional portfolios |
Recommend tradeoffs across DHS's major acquisition portfolio |
Assess program-specific affordability tradeoffs |
Source: GAO analysis of DHS information.
DHS has met statutory reporting requirements for its major acquisition programs' multi-year funding plans through its annual Future Years Homeland Security Program reports. However, the department has opportunities to improve how it communicates its acquisition funding needs to Congress in the future. Most notably, DHS does not currently link its major acquisition programs to the homeland security strategy, and its annual report does not identify acquisition programs' funding gaps. Adding this information would provide Congress valuable insights into DHS's acquisition funding needs.
Why GAO Did This Study
Each year, DHS invests billions of dollars in major acquisition programs. In fiscal year 2013 alone, DHS reported it was investing more than $9.6 billion in its major acquisition portfolio. In the past, GAO has identified shortcomings in DHS's ability to manage its major acquisitions. In September 2012, GAO reported that the most prevalent challenge facing DHS's major acquisition programs was funding instability—changes in programs' funding plans over time. Funding instability increases the risk of cost growth, schedule slips, and capability shortfalls.
In response to congressional requests, this report addresses (1) the prevalence of funding instability at DHS and its effects on major acquisition programs, if any; (2) the extent to which DHS develops multi-year funding plans in accordance with key portfolio management practices; and (3) the extent to which DHS has complied with reporting requirements for major acquisition programs' multi-year funding plans. GAO reviewed DHS's three most recent annual funding plans and funding and acquisition decisions, interviewed headquarters and component officials, and solicited input from 35 of DHS's largest acquisition program offices.
Recommendations
GAO recommends DHS take nine actions to better manage its portfolio and improve communications with Congress. DHS concurred with GAO's recommendations and stated that it addressed one in March 2014. DHS presented plans to address the other eight, but GAO does not believe the plan for one of them is fully responsive.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Homeland Security | To enhance DHS's resource allocation guidance, the Secretary of Homeland Security should update the guidance to fully reflect the portfolio management practices by establishing standard assessment criteria to ensure transparency and comparability across alternatives. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and stated that it would update its guidance to incorporate standard assessment criteria to ensure transparency and comparability across alternatives. In July 2016, DHS issued an updated Planning, Programming, Budgeting, and Execution (PPBE) handbook, which established that portfolio teams shall use standard assessment criteria to review all major investments as part of the PPBE process.
|
| Department of Homeland Security | To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the Integrated Investment Life Cycle Management (IILCM), the Secretary of Homeland Security should require the Department Strategy Council, or another body responsible for strategic direction, to issue Integrated Planning Guidance annually, in accordance with DHS guidance. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation and said that it issued Integrated Planning Guidance in March 2014. Because DHS had not issued this guidance for one year only and rectified the situation the following year, we agreed that the action met the intent of this recommendation.
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| Department of Homeland Security | To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the IILCM, the Secretary of Homeland Security should require the Capabilities and Requirements Council, or another body responsible for requirements reviews, to establish priorities across functional portfolios, such as cybersecurity, domain awareness, and law enforcement. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and in November 2014, the DHS Deputy Secretary chartered a Joint Requirements Council (JRC). The JRC charter establishes that its staff shall consolidate capabilities and requirements priorities across missions to inform council recommendations to the Deputy's Management Action Group. The charter also establishes that these recommendations shall support a balanced portfolio of investments by establishing priorities that combine near-term operational improvements with long-term strategic planning.
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| Department of Homeland Security | To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the IILCM, the Secretary of Homeland Security should establish that the Program Review Board should recommend tradeoffs across DHS's major acquisition portfolio to address its major acquisition funding gap. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and in July 2016, DHS issued an updated Planning, Programing, Budgeting, and Execution (PPBE) directive and a supplementary PPBE instruction. This guidance established the Deputy Secretary's Management Action Group (DMAG) as a senior Department-wide decision body for resource allocation issues, effectively assuming the responsibilities of the Program Review Board. The guidance also established that DHS's major acquisition portfolio shall be reviewed during annual PPBE reviews, and when the portfolio faces a funding gap, programs shall be returned to their respective components for scope or funding adjustments, or prioritized at the DMAG to identify an affordable set of programs.
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| Department of Homeland Security | To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the IILCM, the Secretary of Homeland Security should require the Acquisition Review Board to assess program-specific affordability tradeoffs at all of its meetings. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and in June 2014, DHS's Acting Chief Financial Officer (CFO) established that senior financial officers shall enable the Acquisition Review Board (ARB) to discuss program-specific affordability tradeoffs at all meetings. The acting CFO also established that the ARB will specifically address affordability in any circumstance where funding projections do not cover the cost estimate, and that explicit tradeoffs between cost, schedule, or performance will be documented in a corresponding Acquisition Decision Memorandum.
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| Department of Homeland Security | To better communicate acquisition funding needs to Congress, the Secretary of Homeland Security should enhance the content of future Future Years Homeland Security Program (FYHSP) reports--for fiscal years 2016-20 and beyond--by presenting acquisition programs' annual cost estimates and any anticipated funding gaps. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and stated that it provides Congress Comprehensive Acquisition Status Reports (CASR) on a quarterly basis that include cost estimates for all major acquisition programs. However, the CASRs do not disaggregate the cost estimates to identify how much the programs are expected to cost each year, and therefore the proposed approach would not allow Congress to identify funding gaps on an annual basis. In April 2016, DHS included annual acquisition funding gaps in the fiscal years 2018-22 FYHSP report. Further, in August 2019, in the 2020-2024 FYHSP report, DHS added operations and sustainment information for major acquisition programs from all components. These actions meet the intent of the recommendation.
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| Department of Homeland Security | To better communicate acquisition funding needs to Congress, the Secretary of Homeland Security should enhance the content of future FYHSP reports--for fiscal years 2016-20 and beyond--by clearly linking major acquisition programs to the homeland security strategy. |
In August 2014, DHS issued the fiscal years 2015-2019 FYHSP report, which clearly linked the department's major acquisition programs to the missions and goals from the 2014 Quadrennial Homeland Security Review, which outlines a strategic framework to guide homeland security activities. This accomplishment should help DHS provide Congress additional information about its major acquisition programs as the department works to address its major acquisition portfolio's funding gap.
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| Department of Homeland Security | To better communicate acquisition funding needs to Congress, the Secretary of Homeland Security should enhance the content of future FYHSP reports--for fiscal years 2016-20 and beyond--by including all of the programs on DHS's major acquisition oversight list. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and the fiscal years 2015-19 Future Years Homeland Security Program (FYHSP) included all of the acquisition programs listed in DHS's 2013 major acquisition oversight list.
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| Department of Homeland Security | To enhance DHS's resource allocation guidance, the Secretary of Homeland Security should update the guidance to fully reflect the portfolio management practices by continually making go/no-go decisions to rebalance the portfolio. |
In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and in July 2016, DHS issued an updated Planning, Programing, Budgeting, and Execution (PPBE) directive and a supplementary PPBE instruction. This guidance established that DHS's major acquisition portfolio shall be reviewed during annual PPBE reviews, and when the portfolio faces a funding gap, programs shall be returned to their respective components for scope or funding adjustments, or prioritized by Department leadership to identify an affordable set of programs. Additionally, the guidance established that the affordability of each individual program shall be assessed through acquisition reviews. Specifically, if DHS's Chief Acquisition Officer (CAO) finds a program unaffordable at an Acquisition Decision Event, the CAO may direct the program to make the trade-offs necessary to address the funding gap, or to wait to try to address its funding gap through the annual PPBE process.
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