oversight

Homeland Security: DHS Has Enhanced Procurement Oversight Efforts, but Needs to Update Guidance

Published by the Government Accountability Office on 2012-09-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States Government Accountability Office

GAO              Report to the Subcommittee on
                 Oversight, Investigations, and
                 Management, Committee on Homeland
                 Security, House of Representatives

September 2012
                 HOMELAND
                 SECURITY
                 DHS Has Enhanced
                 Procurement
                 Oversight Efforts, but
                 Needs to Update
                 Guidance




GAO-12-947
                                             September 2012

                                             HOMELAND SECURITY
                                             DHS Has Enhanced Procurement Oversight Efforts,
                                             but Needs to Update Guidance
Highlights of GAO-12-947, a report to the
Subcommittee on Oversight, Investigations,
and Management, Committee on Homeland
Security, House of Representatives



Why GAO Did This Study                       What GAO Found
DHS bought over $14 billion in goods         The Department of Homeland Security’s (DHS) Office of the Chief Procurement
and services in fiscal year 2011—over        Officer (OCPO) continues to implement and has improved some aspects of its
one quarter of its budget—and                procurement oversight but has not sufficiently updated its guidance. OCPO’s
processed over 100,000 transactions          oversight has helped ensure that DHS components receive and address
to support its homeland security             constructive assessments of their compliance with procurement regulations and
missions. In 2005, DHS established an        policies. The oversight also has increased the Chief Procurement Officer’s
oversight program to provide                 visibility into components’ progress against procurement-related metrics. For
department-level insight into                example, OCPO establishes annual procurement goals for the components and
components’ procurement of goods
                                             tracks their progress in quarterly reports. OCPO has been less consistent in—but
and services and to identify successful
                                             continues to hone its implementation of—other aspects of the program, such as
acquisition management approaches.
DHS has also established specific
                                             self assessments and parts of its acquisition planning reviews. However, until
initiatives, such as a strategic sourcing    GAO sent DHS a draft of this report recommending that DHS issue updated
program in 2003 to reduce                    policy and guidance to reflect changes to the department’s procurement
procurement costs and gain other             oversight efforts, the department did not issue updated policy or guidance. This
efficiencies by consolidating                has led to a lack of clarity among components regarding what the oversight
requirements. GAO (1) assessed               efforts entail. For example, some components did not complete a required self
DHS’s efforts to implement                   assessment in 2011. GAO’s review of the revised policy and guidance found
procurement oversight, and (2)               inconsistencies between the two and with current oversight efforts.
identified DHS components’ use of
strategic sourcing to leverage their         Examples of Procurement-Related Goals OCPO Established and Tracked in 2011 and 2012, for
                                             the Transportation Security Administration
buying power. To do this, GAO
reviewed procurement oversight                                                                              Tracked in 2011
policies and guidance, interviewed               Topic                                      2011 Goal       Quarterly Report          2012 Goal
officials from OCPO and DHS                      Percent of obligated dollars awarded           ≥74%        Yes                           ≥76%
                                                 competitively
components, reviewed prior GAO
reports, reviewed on-site review                 Percent of contracts awarded to small           ≥23%       Yes                           ≥23%
                                                 businesses
findings and recommendations, and
                                                 Accuracy of Federal Procurement Data            ≥92%       Yes                           ≥93%
examined DHS and component                       System-Next Generation Dataa
documentation of oversight and
                                             Source: GAO analysis of DHS documents.
strategic sourcing efforts.
                                             a
                                             For all elements subject to annual Office of Federal Procurement Policy certification.

What GAO Recommends                          DHS component officials stated that most of their efforts to leverage buying
                                             power are through the department’s strategic sourcing program, which provides
Based on DHS’s actions in response to
the recommendation contained in the
                                             departmentwide contract vehicles for the purchase of specific items or services.
draft report, GAO recommends that the        According to DHS data, the department’s spending through strategic sourcing
Secretary of Homeland Security direct        contract vehicles has increased steadily from $1.8 billion in fiscal year 2008 to
the Chief Procurement Officer to             almost $3 billion in fiscal year 2011, representing about 20 percent of DHS’s
review and ensure consistency                procurement spending for that year. The Office of Management and Budget has
between the new procurement                  recognized some of DHS’s strategic sourcing efforts as best practices. DHS
oversight directive and guidebook and        policies encourage components to consider, but do not require, the use of
with the department’s current                strategic sourcing contract vehicles. The Chief Procurement Officer has identified
procurement oversight efforts.               increasing strategic sourcing as a departmentwide priority and OCPO
                                             encourages the utilization and development of strategic sourcing contract
                                             vehicles in a variety of ways, including hosting quarterly training sessions and
                                             posting contract information on the strategic sourcing web page. In addition,
View GAO-12-947. For more information,       while components have leveraged contracts with other agencies, many found it
contact John Hutton at (202) 512-4841 or
huttonj@gao.gov.
                                             more efficient to use DHS’s strategic sourcing contract vehicles. DHS
                                             components generally do not use other components’ contracts.
                                                                                               United States Government Accountability Office
Contents


Letter                                                                                   1
               Background                                                                3
               DHS Has Improved Some Aspects of Its Procurement Oversight but
                 Guidance Is Not Sufficiently Updated                                    5
               Components Leverage Buying Power through DHS’s Strategic
                 Sourcing Program                                                      15
               Conclusions                                                             17
               Recommendation for Executive Action                                     18
               Agency Comments and Our Evaluation                                      18

Appendix I     Scope and Methodology                                                   20



Appendix II    Comments from the Department of Homeland Security                       22



Appendix III   Snapshot from a 2012 DHS Component Quarterly Report                     24



Appendix IV    GAO Contact and Staff Acknowledgments                                   25



Tables
               Table 1: Comparison of Oversight Mechanisms in the Original
                        Directive and Guidebook with Current Efforts as
                        Described by OCPO Officials                                      7
               Table 2: Examples of OCPO On-Site Review Findings and
                        Recommendations from Contract File Reviews and
                        Actions Components Took to Address the
                        Recommendations                                                  9
               Table 3: Examples of Contracting-Related Goals OCPO Established
                        and Tracked with Metrics in 2011 and 2012, for TSA             11


Figures
               Figure 1: Organization Chart for OCPO’s Oversight and Strategic
                        Support Division                                                 3
               Figure 2: DHS Components with HCAs and Lines of Reporting                 4



               Page i                                          GAO-12-947 Homeland Security
Abbreviations
DHS         Department of Homeland Security
GAO         Government Accountability Office
HCA         Head of Contracting Activity
OCPO        Office of the Chief Procurement Officer
HSAM        Homeland Security Acquisition Manual
FAR         Federal Acquisition Regulation
TSA         Transportation Security Administration

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Page ii                                                     GAO-12-947 Homeland Security
United States Government Accountability Office
Washington, DC 20548




                                   September 10, 2012

                                   The Honorable Michael T. McCaul
                                   Chairman
                                   Subcommittee on Oversight, Investigations,
                                     and Management
                                   Committee on Homeland Security
                                   House of Representatives

                                   The Honorable William R. Keating
                                   Ranking Member
                                   Subcommittee on Oversight, Investigations,
                                     and Management
                                   Committee on Homeland Security
                                   House of Representatives

                                   The Department of Homeland Security (DHS) is a complex organization
                                   responsible for a broad range of mission and management areas, such as
                                   border security, immigration services, aviation security, maritime security,
                                   and emergency preparedness and response. DHS bought over $14 billion
                                   in goods and services in fiscal year 2011—representing over one quarter of
                                   its budget—and processed over 100,000 transactions to support its
                                   homeland security missions. DHS has initiated broad oversight efforts to
                                   improve its procurement of goods and services as well as specific initiatives
                                   to reduce procurement costs, such as strategic sourcing. 1 The Chief
                                   Procurement Officer’s Strategic Plan for Fiscal Year 2012 to 2014
                                   highlights these efforts and other priorities for improving procurement
                                   operations including the oversight activities required to implement the plan.

                                   DHS’s Office of the Chief Procurement Officer (OCPO) established an
                                   acquisition oversight program in 2005 to complement DHS’s existing
                                   acquisition management governance process for major investments.
                                   Management Directive 0784, “Acquisition Oversight Program” (2005) and
                                   the “Acquisition Oversight Program Guidebook” (2006) included policy
                                   and guidance for the program, which was designed to provide


                                   1
                                    DHS defines strategic sourcing as a collaborative and structured process of critically
                                   analyzing DHS spending and using an enterprise approach to make business decisions
                                   about acquiring and managing commodities and services more effectively and efficiently
                                   across multiple components or the entire department.




                                   Page 1                                                    GAO-12-947 Homeland Security
department-level insight into components’ acquisition functions and to
identify successful acquisition management approaches. The program
addressed a broad range of acquisition- and procurement-related issues 2
through four main oversight mechanisms: operational status reviews, on-
site reviews, self assessments, and acquisition planning reviews. 3

OCPO established a strategic sourcing program in 2003 to leverage
DHS’s buying power to increase savings and other efficiencies by
consolidating requirements, increasing standardization of requirements
across components, and enhancing management of commodities or
services. According to DHS, since the program’s inception, it has led to
over $1 billion in savings and increased administrative efficiencies.

Given your interest in sound procurement practices, you requested that
we undertake a review of DHS procurement oversight efforts.
Accordingly, we (1) assessed DHS’s efforts to implement procurement
oversight, and (2) identified DHS components’ use of strategic sourcing to
leverage their buying power.

To assess DHS’s efforts in implementing procurement oversight, we
reviewed procurement oversight policies and guidance; interviewed
knowledgeable officials from OCPO and DHS components; reviewed prior
GAO reports; and examined DHS and component documentation of
oversight efforts, including OCPO’s review schedule, quarterly reports,
goal letters, and on-site reviews from 2007 to the present. To evaluate the
extent to which DHS components address the recommendations
identified in on-site reviews, we interviewed OCPO and component
contracting officials, reviewed on-site review findings and
recommendations, and analyzed components’ written responses
regarding, and documentation of, actions they took to address
recommendations in their most recent on-site reviews.



2
 For the purpose of this report, the term “acquisition” refers to the broader process of
conceptualization, initiation, design, development, test, contracting, production,
deployment, logistics support, modification, and disposal of systems, supplies, or services
to satisfy the government’s needs; we use the terms “procurement” and “contracting”
interchangeably to refer to the specific act of buying or otherwise obtaining goods and
services for the government.
3
 The Federal Acquisition Regulation defines acquisition planning as the process by which
the efforts of all personnel responsible for an acquisition are coordinated through a
comprehensive plan for fulfilling the agency need in a timely manner. FAR §2.101.




Page 2                                                      GAO-12-947 Homeland Security
             To identify practices DHS components use to leverage their buying power
             through strategic sourcing, we reviewed relevant policies and guidance;
             examined OCPO documentation of strategic sourcing efforts; and
             interviewed OCPO and component officials about practices they employ,
             contracts they have leveraged, and resulting benefits.

             A more detailed description of our scope and methodology is presented in
             appendix I. We conducted this performance audit from March 2012 to
             September 2012 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.


             OCPO’s Oversight and Strategic Support Division manages the Chief
Background   Procurement Officer’s procurement oversight efforts. Figure 1 shows the
             division’s four branches. All branches except the strategic sourcing
             branch are responsible for aspects of the procurement oversight efforts.

             Figure 1: Organization Chart for OCPO’s Oversight and Strategic Support Division




             Component-level contracting activity is led by component Heads of
             Contracting Activity (HCA), who have overall responsibility for the day-to-
             day management of the component’s contracting function. OCPO has
             oversight responsibilities for all nine DHS HCAs—one for each of the
             seven components with procurement offices and one HCA each for the
             Office of Selective Acquisitions and the Office of Procurement
             Operations, which provide contracting support to all other components.
             The Selective Acquisitions and Procurement Operations HCAs report
             directly to the Chief Procurement Officer. The seven other HCAs report
             directly to their component heads, but their contracting authority is
             delegated to them from the Chief Procurement Officer. Figure 2 shows


             Page 3                                                GAO-12-947 Homeland Security
the organizational relationships among the HCAs, the Chief Procurement
Officer, and other senior DHS leadership.

Figure 2: DHS Components with HCAs and Lines of Reporting




Page 4                                             GAO-12-947 Homeland Security
                        The Oversight and Strategic Support Division’s strategic sourcing branch
                        has management responsibilities for DHS’s strategic sourcing initiative.
                        DHS defines strategic sourcing as a collaborative and structured process
                        of critically analyzing DHS spending and using an enterprise approach to
                        make business decisions about acquiring and managing commodities and
                        services more effectively and efficiently across multiple components or
                        the entire department. DHS’s strategic sourcing contract vehicles include
                        contracts or agreements that have been established for use by two or
                        more components. To maximize cost savings, DHS encourages
                        component utilization of established strategic sourcing vehicles.


                        OCPO’s oversight has helped ensure that components address
DHS Has Improved        constructive assessments of their compliance with procurement
Some Aspects of Its     regulations and policies and has increased the Chief Procurement
                        Officer’s visibility into components’ progress against procurement-related
Procurement             metrics. OCPO has been less consistent in—but continues to hone—its
Oversight but           implementation of other aspects of the program, including self
Guidance Is Not         assessments and parts of its acquisition planning reviews. However, at
                        the time of our review, DHS had not issued updated policy or guidance
Sufficiently Updated    reflecting OCPO’s current approach to procurement oversight, which led
                        to a lack of clarity for components regarding what the oversight efforts
                        entail.


Procurement Oversight   OCPO has maintained the overarching structure of its oversight program
Focus Has Changed       while making some modifications to reflect a more specific focus on
                        procurement issues versus broader acquisition issues. As described in
                        the management directive and guidebook, OCPO’s original oversight
                        program included four types of reviews: on-site reviews, operational
                        status reviews, self assessments, and acquisition planning reviews. It was
                        based largely on GAO’s Framework for Assessing the Acquisition
                        Function at Federal Agencies 4 and assessed broad issues related to both
                        acquisitions and procurement. Our prior work on the acquisition oversight



                        4
                         GAO, Framework for Assessing the Acquisition Function at Federal Agencies,
                        GAO-05-218G (Washington, D.C.: September 2005). The framework includes tools to
                        enable high-level, qualitative assessments of the strengths and weaknesses of the
                        acquisition function at federal agencies, focusing on the following topics: (1) organizational
                        alignment and leadership, (2) policies and processes, (3) human capital, and (4)
                        knowledge and information management.




                        Page 5                                                        GAO-12-947 Homeland Security
program in 2007 found that OCPO’s oversight plan generally incorporated
effective acquisition management principles, but that DHS faced
challenges in implementing its oversight program. 5 OCPO began making
changes to the program in 2008, starting a transition to what is now
referred to as “procurement oversight.” OCPO’s current efforts, which at
the time of our review were not documented in written policy or guidance,
still include the four types of reviews, but no longer fully reflect the original
guidance. For example, some reviews are now focused on procurement
rather than broader acquisition-related topics, which now fall under the
responsibility of other offices such as the recently created Program
Accountability and Risk Management Division, which is responsible for
acquisition program management oversight. 6 Specifically, OCPO’s
current oversight efforts no longer examine cost, schedule, and
performance variances for major investments, which are the responsibility
of the Program Accountability and Risk Management Division. Table 1
compares the oversight review structure and focus as described in the
original management directive and guidebook with current efforts as
described by OCPO officials, since updated guidance was not available at
the time of our review.




5
 GAO, Department of Homeland Security: Progress and Challenges in Implementing the
Department’s Acquisition Oversight Plan, GAO-07-900 (Washington, D.C.:
June 13, 2007).
6
 We plan to issue a report in September 2012 examining DHS’s oversight and
management of its major acquisition programs.




Page 6                                                  GAO-12-947 Homeland Security
Table 1: Comparison of Oversight Mechanisms in the Original Directive and Guidebook with Current Efforts as Described by
OCPO Officials

Review               Original Oversight Program                                             Current Oversight Efforts
On-site reviews      On-site review—Triennial review of each component’s                    Two types of on-site reviews:
                     (a) compliance with acquisition regulations, (b) contract              (1) On-site review—Review of each component’s (a)
                     administration, (c) acquisition management, and (d)                    compliance with procurement regulations and policies,
                     verification of procurement data.                                      and (b) workforce issues.
                                                                                            (2) Special review—Topic-specific reviews to address
                                                                                            immediate concerns.
Operational status   A quarterly meeting with each HCA to discuss the                       Semi-annual meeting with each HCA to discuss
reviews              results of data submitted by components on a range of                  procurement-related performance metrics from
                     acquisition and performance-related metrics.                           quarterly reports; number of metrics has increased.
Self-assessments     HCA assesses component’s acquisition staff,                            Same except use of questionnaire is not required.
                     processes, and programs using a questionnaire from
                     the guidebook.
Acquisition          Three elements:
planning reviews     (1) Individual Acquisition Plans—Review of acquisition                 Review and approval for procurements with a total
                     plans that exceed a contract value of $50 million for                  lifecycle cost of at least $300 million for supplies and
                                        a
                     most components.                                                       annual costs that exceed $100 million for services.
                     (2) Advanced Acquisition Planning database—                            Acquisition Planning Forecast System—Information
                     Information required for all acquisitions over $100,000.               required for acquisitions that meet the simplified
                                                                                                                   b
                                                                                            acquisition threshold.
                     (3) Acquisition Planning Review—HCAs assess the                        Not an element of oversight efforts.
                     efficiency and effectiveness of their component’s
                     acquisition planning process.
                                             Source: GAO analysis of DHS documents and interviews with OCPO and component officials.
                                             a
                                              The Chief Procurement Officer was to review acquisitions that exceeded $5 million for the Secret
                                             Service and Federal Law Enforcement Training Center.
                                             b
                                             The simplified acquisition threshold is $150,000 with some exceptions.




On-site Reviews Are More                     OCPO continues to conduct triennial on-site reviews and has streamlined
Streamlined and                              the focus of the reviews from broad acquisition-related issues to
Components Generally                         compliance with contracting policies and regulations. OCPO conducted its
                                             initial round of reviews, called baseline reviews, from 2007 to 2010. The
Have Been Responsive to                      baseline reviews focused on a variety of acquisition-related topics, such
the Recommendations                          as organizational leadership and financial accountability, and included a
                                             review of a stratified sample of contract files to assess compliance with
                                             regulations, policies, and procedures, including the Federal Acquisition
                                             Regulation (FAR), the Homeland Security Acquisition Manual (HSAM),
                                             and the Homeland Security Acquisition Regulation. OCPO began a
                                             second round of on-site reviews, called follow-on reviews, in 2010 and
                                             has completed these reviews for all but one of the components. OCPO
                                             has not yet conducted any on-site reviews for the Office of Selective



                                             Page 7                                                                            GAO-12-947 Homeland Security
Acquisitions, which was created in 2008, but OCPO officials stated that
they plan to do so in 2013 because the component now has sufficient
contract activity to merit an on-site review. OCPO narrowed the scope of
the second round reviews to focus on compliance with regulations,
policies, and procedures. OCPO also assessed procurement workforce
issues in both sets of the reviews.

OCPO has taken steps to encourage components to address on-site
review recommendations. More specifically, prior to finalizing results of
on-site reviews, OCPO first requires components to develop plans
describing actions they will take to address the recommendations. OCPO
then monitors components’ efforts by requiring them to submit
documentation of the actions they took. For example, for the three on-site
reviews OCPO conducted in 2011 that included recommendations,
OCPO collected component documentation of actions taken in response
to the 40 OCPO recommendations. 7

Components generally have been responsive to OCPO’s on-site review
recommendations. All components reported actions taken in response to
all 89 recommendations from their most recent on-site reviews, which
OCPO conducted between 2009 and 2012. The components provided
descriptions of these actions, although a few of the actions were still
underway. In most cases, components provided documentation that
verified the actions they took. Table 2 below provides examples of
OCPO’s on-site review findings, recommendations, and actions
components took to address the recommendations.




7
 OCPO also conducted a follow-on review of the Secret Service in 2011. The review did
not include any findings or recommendations and determined the component significantly
improved since its baseline review.




Page 8                                                   GAO-12-947 Homeland Security
Table 2: Examples of OCPO On-Site Review Findings and Recommendations from Contract File Reviews and Actions
Components Took to Address the Recommendations

                                                                                                          Action Component Took to Address
OCPO Finding and Year                     OCPO Recommendation                                             Recommendation
Insufficient documentation of legal       Customs and Border Protection should                            Issued a memorandum on August 12, 2011,
reviews (2011).                           emphasize to contracting personnel the                          and emphasized at its HCA’s all-hands
                                          HSAM requirements for legal reviews.                            meeting in June 2011 the importance of
                                                                                                          ensuring that legal reviews are conducted and
                                                                                                          including evidence in the contract file to
                                                                                                          demonstrate compliance.
Insufficient documentation of             The Secret Service should issue a                               Forwarded policy memorandum to contracting
justification for using other than full   memorandum to contracting personnel                             personnel to highlight the importance of
and open competition (2008).              emphasizing the importance of including an                      competition and adequate justifications in files
                                          adequate justification in the files for using                   where other than full and open competition is
                                          other than full and open competition as                         utilized. Provided refresher training.
                                          required by FAR 6.303-2.
Insufficient documentation of small       Immigration and Customs Enforcement                             Communicated to contracting officers the
business reviews (2010).                  should emphasize to contracting personnel                       circumstances under which the DHS small
                                          the FAR and HSAM requirements to conduct                        business review form is required and advised
                                          small business reviews.                                         them that the form should be kept in the
                                                                                                          contract file.
                                              Source: GAO analysis of DHS documents, component officials’ responses, and component documentation.



                                              OCPO also conducts another type of on-site review, called a “special
                                              review” or a “DHS-wide review,” to address issues and risk areas OCPO
                                              identifies in on-site reviews or that are identified by other sources, such
                                              as DHS’s inspector general or GAO reports. These reviews were not
                                              included in the original guidance. However, in 2007, OCPO started
                                              conducting these reviews to address special topics of concern and OCPO
                                              has completed 12 of these reviews since 2011. These reviews may focus
                                              on a specific topic at one component, such as a review of Customs and
                                              Border Protection’s credit card transactions to purchase fuel for its fleet of
                                              vehicles, or across multiple components, such as a review of the award of
                                              non-competitive contracts. When OCPO identifies weaknesses or gaps in
                                              the reviews, they typically issue memorandums to contracting staff. In
                                              addition, OCPO officials said that they sometimes provide training or
                                              share best practices with the components in response to review findings.


Operational Status                            Since 2011, OCPO has more consistently developed quarterly reports to
Reviews Are More                              track components’ performance against established goals. Under the
Consistent                                    original program, operational status reviews were to include a quarterly
                                              meeting with each HCA to discuss reports based on data submitted by
                                              components on a range of acquisition and performance-related metrics.
                                              We found in 2008 that the quarterly meetings were not being held,



                                              Page 9                                                                            GAO-12-947 Homeland Security
indicating that the review process consisted primarily of preparing the
quarterly reports. Furthermore, OCPO documentation showed that OCPO
only completed one to two reports per year. Initially, the reports tracked
up to 29 metrics, but for many metrics, data were lacking or DHS noted
they were unreliable. In addition, the process was not automated or
standardized. Under OCPO’s current oversight efforts, quarterly reports
continue to be central to the operational status review process and, since
2011, OCPO’s procurement oversight branch has developed a report
each quarter. Furthermore, most aspects of the reports are now
automated and standardized to focus on tracking about 40 metrics
associated with contracting goals as reflected in OCPO’s fiscal year 2012
strategic plan. The reports contain data from DHS’s Enterprise Reporting
Application, which relies on data the components enter as well as
contract data that it automatically pulls from the governmentwide Federal
Procurement Data System—Next Generation (FPDS-NG) and
components’ contract writing systems. In addition, OCPO’s acquisition
systems branch officials stated that they perform data validation on a
regular basis to help ensure the reliability of the FPDS-NG data the
system uses.

OCPO’s current effort ties contracting goals from annual goal letters to
the quarterly reports and includes semi-annual meetings with HCAs to
discuss component performance against the goals. The Chief
Procurement Officer provides annual goal letters to component HCAs,
which include tailored quantitative targets that OCPO then tracks with
metrics in its quarterly reports. In turn, the quarterly reports help inform
the following year’s goal letters. Some officials explained that the goals
help them determine what areas to focus on and that they in turn use the
goals to motivate or assess performance within their contracting activities.
In addition, the Chief Procurement Officer stated that he conducts semi-
annual meetings with each HCA to discuss the component’s goals,
performance reflected in the quarterly reports, and the HCA’s plans to
address areas that need improvement. To motivate performance toward
the goals, component goals are reflected in HCAs’ performance plans
and the Chief Procurement Officer stated that he provides input into the
HCAs’ performance assessments based on the quarterly reports. Table 3
includes examples of contracting-related goals established in goal letters
and tracked with metrics in quarterly reports for the Transportation
Security Administration (TSA). An excerpt from a quarterly report is
included in appendix III.




Page 10                                           GAO-12-947 Homeland Security
                           Table 3: Examples of Contracting-Related Goals OCPO Established and Tracked
                           with Metrics in 2011 and 2012, for TSA

                                                                                            Tracked in 2011
                               Topic                                        2011 Goal       Quarterly Report        2012 Goal
                               Percent of obligated dollars awarded              ≥74%       Yes                         ≥76%
                               competitively
                               Percent of contracts awarded to small             ≥23%       Yes                         ≥23%
                               businesses
                               Accuracy of Federal Procurement Data              ≥92%       Yes                         ≥93%
                                                            a
                               System—Next Generation Data
                           Source: GAO analysis of DHS documents.
                           a
                           For all elements subject to annual Office of Federal Procurement Policy certification.



Self Assessment            OCPO officials stated that annual self assessments continue to be part of
Expectations Are Unclear   their oversight efforts. However, OCPO’s expectations regarding self
                           assessments are unclear and some components did not complete a self
                           assessment in 2011. Under the original program, component HCAs were
                           required to complete annual self assessments, using a questionnaire that
                           addressed a broad range of acquisition and procurement-related issues.
                           OCPO officials stated that, at first, they collected the self assessments,
                           but they stopped doing so and instead asked components to inform
                           OCPO of their completion because the officials thought collecting the
                           assessments led the HCAs to be less forthcoming on the results.
                           Currently, OCPO officials stated that they still expect components to
                           conduct annual self assessments; however, they have not been requiring
                           components to use the questionnaire. In addition, OCPO no longer
                           checks with components to confirm they have completed the
                           assessments. At least four components did not prepare a self
                           assessment for fiscal year 2011 and we found that many components
                           were not aware of this requirement. Among the components that did
                           prepare self assessments, two HCAs explained that some of the
                           questions in the questionnaire address topics that are outside of their
                           authority and one component has shifted responsibility for the
                           assessment to its Chief Acquisition Officer because of the questionnaire’s
                           focus on acquisition issues. OCPO officials stated that, moving forward,
                           they plan to ensure components develop self assessments and that they
                           plan to use the original questionnaire despite the shift in oversight focus
                           to procurement.




                           Page 11                                                            GAO-12-947 Homeland Security
Acquisition Planning       OCPO continues to have mechanisms in place to help ensure acquisition
Reviews Have Evolved and   plans comply with applicable regulations, policies, and procedures,
Some Plans Require         though some of these differ from the original acquisition oversight
                           program established in 2005.
Approval
                           •   Under the original program, the Chief Procurement Officer was
                               required to review acquisition plans for contracts with an expected
                               value of $50 million or more for most components to ensure that each
                               complied with regulations and policies and to provide
                               recommendations and guidance when necessary. Our prior work in
                               2007 found that OCPO had little assurance that components
                               addressed the review comments because the review was advisory. 8
                               In 2009, DHS increased the dollar threshold of the plans that the Chief
                               Procurement Officer is to review to those with life cycle costs of at
                               least $300 million for products and annual costs that exceed $100
                               million for services, which would include major acquisitions. Chief
                               Procurement Officer approval is now required before these acquisition
                               plans can move forward, which OCPO officials stated is a significant
                               improvement from the original program.

                           •   As under the original program, HCAs are still required to provide data
                               into an advanced acquisition planning database to publicize
                               contracting opportunities and to assist components in managing
                               schedules for planned acquisitions. However, we found in 2007 that
                               OCPO had not established an effective mechanism to monitor the
                               database to ensure complete information is entered into the
                               database. 9 While OCPO has still not implemented a mechanism to
                               monitor its database, OCPO officials stated that, as part of the on-site
                               review process, they plan to examine whether required information
                               has been entered into the database.

                           •   Under the original guidance, HCAs were required to annually review
                               the efficiency and effectiveness of their acquisition planning process.
                               OCPO officials stated that this aspect of the oversight was never
                               implemented, but that they have taken some steps to examine
                               acquisition planning across DHS. For example, in 2011 OCPO
                               conducted a special review on acquisition plans that examined
                               compliance of acquisition plans for DHS’s 11 procurements in 2009


                           8
                           GAO-07-900.
                           9
                           GAO-07-900.




                           Page 12                                           GAO-12-947 Homeland Security
                                with a value greater than $10 million but below the Chief Procurement
                                Officer’s review and approval threshold. The review identified several
                                problems, such as lack of appropriate signatures on some of the
                                plans, which OCPO highlighted to HCAs in a memorandum. OCPO
                                officials stated that, moving forward, as part of the on-site review
                                process, they will examine acquisition plans associated with the
                                contracts they review.


Procurement Oversight      At the time of our review, DHS had not issued updated policy or guidance
Policy and Guidance Are    reflecting its current approach to procurement oversight and was still
Not Sufficiently Updated   defining certain aspects of the program. As noted in the Standards for
                           Internal Control in the Federal Government, agency policies should be
                           clearly documented and readily available for examination to ensure
                           effective program management. 10 The existing guidance on the oversight
                           efforts at the time of our review was Management Directive 0784,
                           “Acquisition Oversight Program” (2005) and the “Acquisition Oversight
                           Program Guidebook” (2006). Management Directive 0784, which officially
                           established the oversight program, described OCPO’s original approach
                           to oversight and department and component officials’ roles in the
                           program. The acquisition oversight guidebook provided instructions,
                           checklists, and questionnaires to help guide execution of the program.
                           According to OCPO officials, these documents were removed from DHS’s
                           internal website since they no longer fully represented current efforts.
                           Since 2007, OCPO developed multiple versions of the directive and
                           guidebook though the department had not issued an update to either.
                           Furthermore, we found that OCPO had not fully determined the scope of
                           some of the efforts. For example, at the beginning of our audit, OCPO
                           officials informed us that they did not consider acquisition planning
                           reviews to be part of their current oversight effort. However, much later in
                           the audit, they stated that they plan to include acquisition planning as one
                           aspect of the overall effort when they update the guidance.

                           We found that the absence of an updated directive and guidebook led to
                           a lack of clarity among the components regarding what the efforts entail
                           and reliance on less formal channels for advice. In addition to the general
                           lack of awareness of the requirement for self assessments, we found that
                           several component officials responsible for oversight were new to their


                           10
                             GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1
                           (Washington, D.C.: Nov. 1, 1999).




                           Page 13                                                 GAO-12-947 Homeland Security
positions and some did not have extensive knowledge of the oversight
efforts. In the absence of up-to-date written policy and guidance,
components have relied on OCPO communications about upcoming
reviews through e-mail and at monthly HCA meetings. Most component
officials we spoke to indicated that OCPO’s communications regarding
upcoming reviews and expectations of component involvement in the
oversight efforts were helpful.

DHS has since updated its policy and guidebook to more closely reflect
OCPO’s current oversight efforts, but we found inconsistencies in the
revised documents. In our draft report, we recommended that the
Secretary of Homeland Security direct the Chief Procurement Officer to
issue updated policy and guidance to reflect changes to the department’s
procurement oversight efforts. In commenting on a draft of this report,
DHS informed us that to address the recommendation it updated its policy
and guidebook to better mirror current procurement oversight
practices. The Under Secretary for Management signed the new directive,
DHS Directive Number 143-05 “Procurement Oversight Program” on
August 28, 2012. DHS also reported that it had completed revisions to the
newly named guidebook, “Procurement Oversight Program Guidebook,”
MD 0143-05, on August 29, 2012. We reviewed the revised policy and
guidebook and found inconsistencies between the two as well as with the
program as described to us by DHS officials during the course of our
review. For example, the directive stated that the program has three
elements: HCA self assessment, operational status reports, and on-site
component and special reviews. However, the guidebook includes four
elements—the three above plus acquisition planning reviews. In another
example, the guidebook states that the HCA should review the
component’s acquisition planning process each year to ensure that the
component plans all of its acquisitions. However, OCPO officials told us
this part of the original program was never implemented and indicated it
would be replaced with other acquisition planning oversight-related
efforts.




Page 14                                         GAO-12-947 Homeland Security
Components Leverage
Buying Power
through DHS’s
Strategic Sourcing
Program
Components Actively       DHS component officials stated that most of their efforts to leverage
Support DHS’s Strategic   buying power are through the department’s strategic sourcing program,
Sourcing Program          which facilitates the development and award of contracts for the purchase
                          of specific items or services across DHS. According to DHS data, DHS’s
                          spending through strategic sourcing contract vehicles has increased
                          steadily from $1.8 billion in fiscal year 2008, to almost $3 billion in fiscal
                          year 2011, representing about 20 percent of DHS’s $14 billion in
                          procurement spending for that year. 11 The Office of Management and
                          Budget’s Office of Federal Procurement Policy has cited DHS’s efforts
                          among best practices for implementing federal strategic sourcing
                          initiatives. DHS has implemented 42 strategic sourcing efforts, including
                          indefinite-delivery indefinite-quantity contracts and blanket purchase
                          agreements 12 for goods and services ranging from ammunition to
                          engineering services. The department also has several new initiatives
                          under development.

                          DHS policies encourage components to consider, but do not require, the
                          use of departmentwide strategic sourcing contract vehicles. Usage of all
                          departmentwide contracts is “mandatory for consideration” unless
                          otherwise approved by the Under Secretary for Management, and
                          therefore must be considered by DHS components prior to awarding a
                          contract. Before pursuing their own procurements, components are to
                          review the DHS-wide intranet site that lists available strategic sourcing



                          11
                            We plan to issue a report in September 2012 examining DHS and other selected
                          agencies’ strategic sourcing efforts, including those under the Federal Strategic Sourcing
                          Initiative, and savings they have achieved.
                          12
                            Indefinite-delivery indefinite-quantity contracts are contracts that are established to buy
                          goods and services when the exact times and exact quantities of future deliveries are not
                          known at the time of award. Blanket purchase agreements are agreements between
                          agencies and vendors with terms in place for future use; funds are obligated when orders
                          are placed.




                          Page 15                                                       GAO-12-947 Homeland Security
contract vehicles. Some component officials said that their staff routinely
check that list to determine whether one of those vehicles can be used
before initiating a new procurement effort. Further, to encourage
increased establishment of strategic sourcing contract vehicles, the
HSAM requires the components to involve the strategic sourcing program
office to determine if the requirement lends itself to the establishment of a
departmentwide contract. If a DHS component makes a decision to
implement its own contract instead of a departmentwide contract, it must
document in the acquisition plan and contract file the rationale for doing
so and notify the Chief Procurement Officer for review and approval. DHS
is taking steps to strengthen the use of strategic sourcing at the
department and has drafted, but not yet issued, a management directive
that would make use of strategic sourcing contract vehicles mandatory
with exceptions.

The Chief Procurement Officer has identified increasing strategic sourcing
as a departmentwide priority and OCPO encourages the utilization and
development of strategic sourcing vehicles in a variety of ways. OCPO
officials explained that they host quarterly meetings and training sessions
with the DHS Strategic Sourcing Working Group, meet with individual
component programs and procurement offices, and post all contract
information and ordering guides on the strategic sourcing web page.
OCPO includes metrics in its quarterly reports to track components’
strategic sourcing contract vehicle utilization rates and savings, though it
has not established component-specific goals or targets to further
encourage use and development of strategic sourcing contract vehicles.
OCPO officials told us that they consider their strategic sourcing program
to be robust, and therefore do not currently think it would be worth the
additional effort to develop and track component-specific goals. They said
that if component participation were to decline, they might consider
developing component-specific goals.

Component officials we met with cited a variety of benefits associated
with using DHS’s strategic sourcing program. Most components we
interviewed stated that they rely on department-level strategic sourcing
policy and efforts rather than developing their own. Several officials
explained that, once the contract vehicle is in place, it is much quicker to
award contracts. Some components cited economies of scale and
indicated that they thought prices had gone down in some areas.

In addition to using the vehicles, DHS components are involved with the
program in a variety of ways. Component representatives serve on
working groups to help identify potential strategic sourcing opportunities


Page 16                                            GAO-12-947 Homeland Security
                           and develop shared requirements. Components are also tasked with
                           serving as the lead for specific initiatives. For example, the Secret Service
                           initiated a department-wide contract on tactical communications in 2012
                           and Customs and Border Protection led a department effort to obtain
                           canines in 2011.


Components Have            Some components offered examples of contracts they leveraged with
Leveraged Contracts with   other agencies. For example, Customs and Border Protection leveraged a
Other Agencies             contract with the Department of Defense for air and marine assets in
                           2008 and the Secret Service partnered with the Defense Information
                           Systems Agency and White House Communications Agency in 2012 to
                           obtain an event planning, scheduling and reporting system. In another
                           example, the Coast Guard received price discounts for its HC-130J
                           aircraft starting in 2000 by leveraging an Air Force vehicle rather than
                           contracting directly with the manufacturer. However, most components
                           found it more efficient to use DHS’s strategic sourcing vehicles than to
                           leverage contracts with other agencies. Components described several
                           challenges associated with leveraging contracts with other agencies, such
                           as additional up front planning, identifying shared requirements, and
                           paying associated fees to the lead agency.

                           Component officials indicated that they generally do not leverage
                           contracts directly with other DHS components. Several component
                           officials and the director of DHS’s strategic sourcing branch said that it is
                           not an efficient use of time or resources for individual components to
                           reach out directly to other components to identify shared requirements
                           given the DHS-wide effort does this across components. The director also
                           noted that if a component had an idea of a contract to leverage with
                           another component, they should first share that example at a DHS-wide
                           strategic sourcing forum in case any other components share that same
                           requirement. However, if the components then determine only two
                           components share that requirement, it would make sense for those two
                           components to work together directly.


                           With its initial oversight efforts in 2005 and today’s more streamlined
Conclusions                procurement oversight approach, OCPO has increased department-level
                           insight into components’ procurement operations and recommended
                           ways that components can take steps to improve their overall
                           procurement operations. OCPO’s consistent and constructive on-site and
                           operational status reviews also help ensure that components work
                           towards common departmental procurement goals. However, we found


                           Page 17                                           GAO-12-947 Homeland Security
                     that DHS had not updated its procurement oversight policy and guidance
                     to reflect the increased focus on procurement and changes to the original
                     oversight program. As a result, we found that component officials did not
                     always know what was expected of them regarding the implementation of
                     the procurement oversight efforts. DHS’s recent revision of its policy and
                     guidebook is a step in the right direction, but inconsistencies in the
                     documents as well as with the program as described to us by DHS
                     officials could lead to further confusion, which would diminish the value of
                     the program and opportunities for increased accountability for
                     procurements.

                     In order to help ensure that DHS component officials understand what
Recommendation for   OCPO expects of them in its procurement oversight, we recommend that
Executive Action     the Secretary of Homeland Security direct the Chief Procurement Officer
                     to review and ensure consistency between Directive 143-05 and the
                     Procurement Oversight Program Guidebook and with the department’s
                     current procurement oversight efforts.


                     We provided a draft of this report to DHS for review and comment. The
Agency Comments      draft included a recommendation that DHS issue updated policy and
and Our Evaluation   guidance to reflect changes to the department’s procurement oversight
                     efforts. In written comments, the department concurred with our findings
                     and recommendation. The department’s comments are reprinted in
                     Appendix II. DHS informed us that, to address the recommendation in our
                     draft report, it updated its directive and guidebook to better mirror current
                     procurement oversight practices and that it will make both documents
                     available on DHS’s internal website.

                     DHS’s revisions to the policy and guidance are a step in the right
                     direction. However, we found inconsistencies between the updated
                     directive and guidebook as well as with the program as described to us by
                     DHS officials. As we noted when we made our draft recommendation,
                     component officials do not always know what is expected of them
                     regarding the implementation of the procurement oversight efforts, which
                     diminishes the value of the program. Therefore, while we acknowledge
                     DHS’s most recent efforts to update the directive and guidebook, we
                     continue to believe that additional action is needed and have therefore
                     revised our recommendation.




                     Page 18                                            GAO-12-947 Homeland Security
We are sending copies of this report to the Secretary of Homeland
Security. In addition, the report is also available at no charge on the GAO
website at http://www.gao.gov.

If you or your staff have any questions about this report or need additional
information, please contact me at (202) 512-4841 or huttonj@gao.gov.

Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Staff
acknowledgments are provided in appendix IV.




John P. Hutton
Director
Acquisition and Sourcing Management




Page 19                                           GAO-12-947 Homeland Security
Appendix I: Scope and Methodology
             Appendix I: Scope and Methodology




             The objectives of this review were to (1) assess the Department of
             Homeland Security’s (DHS) efforts to implement procurement oversight,
             and (2) identify DHS components’ use of strategic sourcing to leverage
             their buying power.

             To assess DHS efforts to implement procurement oversight, we examined
             DHS’s procurement oversight policies and guidance; reviewed prior GAO
             reports on acquisition and procurement oversight; interviewed
             knowledgeable officials from the Office of the Chief Procurement Officer
             (OCPO) and from DHS components; and examined OCPO and
             component documentation of oversight efforts, including OCPO’s review
             schedule, quarterly reports, goal letters, operational status reports, and
             documentation of on-site reviews from 2007 to the present. Specifically,
             we interviewed the Chief Procurement Officer, the Director for Oversight
             and Strategic Support, officials from the four branches of the Oversight
             and Strategic Support Division, and senior officials, including four Heads
             of Contracting Activity (HCA), from the nine DHS contracting offices with
             HCAs to discuss the evolution of DHS’s oversight efforts. To evaluate the
             extent to which DHS components address the findings and
             recommendations identified in on-site reviews, we interviewed OCPO and
             component contracting officials, reviewed on-site review findings and
             recommendations, and analyzed components’ written responses
             regarding actions they took to address recommendations from their most
             recent reviews. For all eight contracting offices that OCPO reviewed, 1 we
             examined the contracting offices’ descriptions of actions they took to
             address recommendations from their most recent on-site reviews and
             assessed their documentation of those actions.

             To identify DHS components’ use of strategic sourcing to leverage their
             buying power, we reviewed relevant policies and guidance, examined
             department and component documentation and interviewed OCPO and
             component officials on practices they employ, contracts they have
             leveraged, and views on resulting benefits. Specifically, we interviewed
             officials from DHS’s strategic sourcing branch, as well as all nine
             contracting offices with HCAs, to gain an understanding of DHS’s
             strategic sourcing processes, the availability of strategic sourcing
             contracting vehicles, and the potential of establishing component specific
             strategic sourcing goals.



             1
              OCPO did not conduct an on-site review for the Office of Selective Acquisitions.




             Page 20                                                    GAO-12-947 Homeland Security
Appendix I: Scope and Methodology




We conducted our work from March 2012 to September 2012 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.




Page 21                                         GAO-12-947 Homeland Security
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of Homeland Security



of Homeland Security




             Page 22                                     GAO-12-947 Homeland Security
Appendix II: Comments from the Department
of Homeland Security




Page 23                                     GAO-12-947 Homeland Security
Appendix III: Snapshot from a 2012 DHS
              Appendix III: Snapshot from a 2012 DHS
              Component Quarterly Report



Component Quarterly Report




              Page 24                                  GAO-12-947 Homeland Security
Appendix IV: GAO Contact and Staff
                  Appendix IV: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  John P. Hutton, (202) 512-4841 or huttonj@gao.gov
GAO Contact
                  In addition to the contact named above, the following individuals made
Staff             key contributions to this report: Katherine Trimble, Assistant Director;
Acknowledgments   Laura Holliday, Andrea Bivens, Laura Greifner, and Sylvia Schatz.




(121040)
                  Page 25                                          GAO-12-947 Homeland Security
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