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Grim future awaits DHS' acquisition portfolio
Wednesday - 4/30/2014, 2:52pm EDT
Federal News Radio
The Homeland Security Department is fighting an uphill battle to keep its acquisition portfolio within budget and on schedule.
The Government Accountability Office found in a new report that the root of the problem is budget uncertainty at multiple levels of the acquisition planning and execution process.
Government auditors found of the 35 major projects it investigated, which typically cost at least $300 million and span several years, all of them experienced some sort of budget turmoil over the past two fiscal years. Some fared better than others, but more than half fell victim to wasted money, schedule delays and poor results because of unforeseen changes in available funds, GAO said.
GAO investigated an assortment of programs ranging from plans to increase airplane safety to natural disaster awareness to one that tracks biological weapons.
The uncertainty effect
The uncertainty over how much money DHS can use every year — and in some cases, every month — is one of the main culprits behind the budget turmoil, GAO stated. DHS told GAO that it believes the problems are coming from both internal and external sources.
GAO conducted interviews with headquarters and component agency officials and found conflicting policies and procedures within the department. Sweeping departmentwide policy changes are forcing component agencies to backtrack and reorganize their acquisition strategies.
This can include "proactive decisions, based on poor program performance or agency reprioritization … [or] changes in the department's mission and priorities, poor program cost estimates, and requirements changes," GAO stated.
Those two factors combine to have a particularly taxing effect on DHS' annual planning, programming, budgeting and execution process (PPBE), specifically on five-year funding plans for individual projects.
As an example, GAO pointed to DHS' $4 billion Risk MAP program. For 2014, the anticipated funding level dropped almost 40 percent because of changing leadership priorities and congressional appropriations. As a result, DHS absorbed a budget cut of about $130 million in the middle of its five-year acquisition plan.
Looking ahead to 2015, DHS already expects $90 million less funding than it originally expected in 2012, according to the report.
It gets worse …
DHS is in a hole regarding funding levels, and it will have to dig deeper before it can escape. The GAO said the department's current plan for its acquisition portfolio already is unaffordable. In fact, the report mentions DHS issued a 2012 memo saying the total cost of its five-year funding requirements for major acquisition projects likely will be 30 percent over budget by 2018.
But that estimate could change for all the wrong reasons. The GAO commended the agency for exposing its predicament, but says DHS still hasn't officially verified almost 80 percent of its major acquisition cost estimates, which cover a project's entire acquisition life cycle. That means DHS doesn't know exactly how bad its funding gap really is, and the GAO suggested it could actually be worse than 30 percent.
That report stated this problem illustrates the internal confusion that's helping undermine acquisition projects at DHS.
"The 30 percent funding gap indicates DHS leadership has not effectively prioritized its acquisition needs, even though the department's resource allocation guidance fully reflects this key practice," the report stated.
As of December 2012, DHS required component agencies to certify that major acquisition projects can stay within budget. But the 30 percent cost overrun still looms large, and the GAO said the department will have to cut funding levels for some programs to keep its total acquisition portfolio within budget.
Those future spending cuts might create even more uncertainty.
… before it gets better
Besides increasing transparency for year-to-year cost estimates, GAO recommended Homeland Security Secretary Jeh Johnson adopt a "go/no-go" approach to major acquisition projects to re-balance its portfolio.
GAO also recommended Johnson more clearly define the priorities of the agency, so resources are divvied between component agencies in a logical and straightforward manner.
Finally, GAO recommended Homeland Security improve its acquisition marketing strategy for the appropriators themselves: Congress. DHS should admit any and all anticipated funding gaps, and combine that honesty with an explanation of why a particular project is vital for national security needs, auditors say.
DHS concurred with the GAO's recommendations.