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 email@example.com. 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 This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. 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 firstname.lastname@example.org. 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 email@example.com 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 GAO’s Mission The Government Accountability Office, the audit, evaluation, and investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. 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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)