[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
DHS ACQUISITION MANAGEMENT CHALLENGES:
SOLUTIONS FOR SAVING TAXPAYER DOLLARS
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HEARING
before the
SUBCOMMITTEE ON OVERSIGHT,
INVESTIGATIONS, AND MANAGEMENT
of the
COMMITTEE ON HOMELAND SECURITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 21, 2012
__________
Serial No. 112-120
__________
Printed for the use of the Committee on Homeland Security
[GRAPHIC] [TIFF OMITTED]
Available via the World Wide Web: http://www.gpo.gov/fdsys/
__________
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COMMITTEE ON HOMELAND SECURITY
Peter T. King, New York, Chairman
Lamar Smith, Texas Bennie G. Thompson, Mississippi
Daniel E. Lungren, California Loretta Sanchez, California
Mike Rogers, Alabama Sheila Jackson Lee, Texas
Michael T. McCaul, Texas Henry Cuellar, Texas
Gus M. Bilirakis, Florida Yvette D. Clarke, New York
Paul C. Broun, Georgia Laura Richardson, California
Candice S. Miller, Michigan Danny K. Davis, Illinois
Tim Walberg, Michigan Brian Higgins, New York
Chip Cravaack, Minnesota Cedric L. Richmond, Louisiana
Joe Walsh, Illinois Hansen Clarke, Michigan
Patrick Meehan, Pennsylvania William R. Keating, Massachusetts
Ben Quayle, Arizona Kathleen C. Hochul, New York
Scott Rigell, Virginia Janice Hahn, California
Billy Long, Missouri Ron Barber, Arizona
Jeff Duncan, South Carolina
Tom Marino, Pennsylvania
Blake Farenthold, Texas
Robert L. Turner, New York
Michael J. Russell, Staff Director/Chief Counsel
Kerry Ann Watkins, Senior Policy Director
Michael S. Twinchek, Chief Clerk
I. Lanier Avant, Minority Staff Director
------
SUBCOMMITTEE ON OVERSIGHT, INVESTIGATIONS, AND MANAGEMENT
Michael T. McCaul, Texas, Chairman
Gus M. Bilirakis, Florida William R. Keating, Massachusetts
Billy Long, Missouri, Vice Chair Yvette D. Clarke, New York
Jeff Duncan, South Carolina Danny K. Davis, Illinois
Tom Marino, Pennsylvania Bennie G. Thompson, Mississippi
Peter T. King, New York (Ex (Ex Officio)
Officio)
Dr. R. Nick Palarino, Staff Director
Diana Bergwin, Subcommittee Clerk
Tamla Scott, Minority Subcommittee Director
C O N T E N T S
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Page
Statements
The Honorable Michael T. McCaul, a Representative in Congress
From the State of Texas, and Chairman, Subcommittee on
Oversight, Investigations, and Management:
Oral Statement................................................. 1
Prepared Statement............................................. 3
The Honorable William R. Keating, a Representative in Congress
From the State of Massachusetts, and Ranking Member,
Subcommittee on Oversight, Investigations, and Management...... 4
Witnesses
Mr. John Hutton, Director, Acquisition and Sourcing Management,
Government Accountability Office:
Oral Statement................................................. 7
Prepared Statement............................................. 9
Mr. Nick Nayak, Chief Procurement Officer, Department of Homeland
Security:
Oral Statement................................................. 11
Joint Prepared Statement....................................... 13
Mr. Mark Borkowski, Assistant Commissioner, Office of Technology
Innovation and Acquisition, Customs and Border Protection,
Department of Homeland Security:
Oral Statement................................................. 14
Joint Prepared Statement....................................... 13
Ms. Karen Shelton Waters, Assistant Administrator, Office of
Acquisition, Transportation Security Administration, Department
of Homeland Security:
Oral Statement................................................. 16
Joint Prepared Statement....................................... 13
For the Record
The Honorable Michael T. McCaul, a Representative in Congress
From the State of Texas, and Chairman, Subcommittee on
Oversight, Investigations, and Management:
Letter From Chairman Michael T. McCaul to Hon. Janet Napolitano 5
Appendix
Question From Chairman Michael T. McCaul for John Hutton......... 33
Question From Ranking Member William R. Keating for John Hutton.. 33
Questions From Chairman Michael T. McCaul for Nick Nayak......... 34
Question From Ranking Member William R. Keating for Nick Nayak... 36
Questions From Chairman Michael T. McCaul for Karen Shelton
Waters......................................................... 37
Question From Ranking Member William R. Keating for Karen Shelton
Waters......................................................... 38
Question From Ranking Member William R. Keating for Mark
Borkowski...................................................... 39
DHS ACQUISITION MANAGEMENT CHALLENGES: SOLUTIONS FOR SAVING TAXPAYER
DOLLARS
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Friday, September 21, 2012
U.S. House of Representatives,
Subcommittee on Oversight, Investigations, and
Management,
Committee on Homeland Security,
Washington, DC.
The subcommittee met, pursuant to call, at 9:05 a.m., in
Room 311, Cannon House Office Building, Hon. Michael T. McCaul
[Chairman of the subcommittee] presiding.
Present: Representatives McCaul and Keating.
Mr. McCaul. The committee will come to order.
I believe this is the 21st hearing this subcommittee has
held, which may be a record in the Congress. I want to thank my
Ranking Member for being so patient with all these hearings and
for your great bipartisanship, and it has been a real honor to
work with you. I would say this may be our last hearing, but I
do think we have one more that possibly may be scheduled, but
it has been a real honor to serve with you.
I now recognize myself for an opening statement.
Billions of taxpayer dollars have been put at high risk,
and multiple key security programs do not fully meet the
Department of Homeland Security's needs because DHS senior
leadership is failing to hold acquisition programs accountable.
DHS's major acquisition programs play a critical role in
protecting the homeland. They include surveillance systems,
watching for terrorists and drug traffickers along our borders,
and machines screening airport passengers for explosives and
other deadly threats, among other programs. These programs
represent a significant investment for the American taxpayer.
In 2011, DHS reported to Congress that its current major
acquisition programs would cost taxpayers a total of $167
billion to field in the coming years. Unfortunately, a new
report from the Government Accountability Office raises serious
concerns about whether the Department is effectively managing
these major acquisitions.
To its credit, DHS issued a policy in 2008 intended to
ensure acquisition programs demonstrate critical knowledge at
key points in the life cycle of a program. Such a knowledge-
based approach is often used by leading commercial firms and
successful programs to mitigate risk and help ensure a sound
investment. In essence, the higher the level of knowledge
attained at the outset about how a technology is designed and
how it operates in real-world environments, the lower the risk
to the program and, in that case, the taxpayer.
However, GAO found that the DHS senior leaders rarely hold
programs accountable to this policy, and out of 49 programs
reviewed by DHS leadership 43 were allowed to move forward with
developments even though they had not adhered to the DHS's own
policy. Out of 71 programs reviewed by GAO, only four adhered
to DHS's policy, and over 30 programs had none of the
documentation required to demonstrate this critical knowledge.
These programs include some of the Department's most
important initiatives, such as TSA's Transportation Worker
Identification Credential, created to ensure that individuals
who pose a threat do not gain unescorted access to our Nation's
ports, and CBP's Strategic Air and Marine Plan, intended to
help CBP prevent terrorists, drugs, and other contraband from
entering the country. This lack of accountability, in my
judgment, is unacceptable.
Earlier this year, GAO also reported that TSA did not fully
follow DHS's acquisition policy when acquiring its Advanced
Imaging Technology or full-bodied scanners. Touted as a key
security layer, AIT is intended to use cutting-edge technology
to identify threats that may not be picked up by magnetometers
or other security layers. According to GAO, DHS has approved
deployment of these machines without fully knowing TSA's
revised specifications. As a result, over 670 machines have
been fielded that did not meet requirements that the Department
initially determined were necessary to protect the aviation
system. Then there are examples like CBP's Secure Border
Initiative Network, or SBInet, and TSA's explosive trace portal
program, known as the puffers, where taxpayers received little
to no return on their sizable investment.
These examples are very concerning. It seems like the
Department's senior leadership is missing in action when it
comes to effectively managing DHS. Why have an acquisition
policy if the Department has no intention of enforcing it? A
policy, even a good one, that incorporates best practices isn't
worth the paper it is printed on if it isn't enforced and
doesn't lead to positive outcomes.
The results of these management failures are programs that
are delivered late, cost more, and do less than expected. For
example, costs in 16 programs increased 166 percent in only 3
years. Only one-third of the programs had Department-approved
baselines, documentation essential for measuring cost growth.
For the two-thirds lacking this documentation, DHS doesn't
even have the data needed to measure whether cost growth in
these programs exists; and these programs include CBP's
nonintrusive inspection systems designed to detect contraband,
such as weapons and nuclear materials, and TSA's electronic
baggage screening program used to protect the aviation system
from threats in checked baggage, among others. The total price
tag for these unaccountable programs is about $100 billion.
In total, almost all of the programs GAO reviewed faced
significant challenges. DHS has initiatives under way to try
and improve its acquisition outcomes such as its Centers of
Excellence, intended to leverage acquisition, knowledge, and
expertise across components, and Decision Support Tool,
designed to consolidate key program information to allow DHS
senior leaders to make better decisions.
But we need solutions now, not years down the road. These
issues could result in two options: Fewer resources to protect
our homeland now or bankrolling these failures on the backs of
future generations. Neither of these options is acceptable. The
brave men and women defending our borders, protecting our
airports, and patrolling our shores deserve better; and the
American taxpayer deserves better. So this hearing will examine
why these challenges exist and what DHS needs to do to fix
these problems.
So I want to also just end by saying, I don't want this to
be a ``gotcha'' hearing; I don't want this to be a hearing that
points only at failures; I want this to seriously be a
constructive hearing to look at and examine the policies and
how this committee, the Congress, can help you in doing a
better job in protecting the American people.
[The statement of Chairman McCaul follows:]
Prepared Statement of Chairman Michael T. McCaul
September 21, 2012
Billions of taxpayer dollars have been continually put at high risk
and multiple key security programs do not fully meet the Department of
Homeland Security's needs because DHS senior leadership is failing to
hold acquisition programs accountable.
DHS major acquisition programs play a critical role in protecting
the homeland. They include surveillance systems watching for terrorists
and drug traffickers along our borders and machines screening airport
passengers for explosives and other deadly threats, among other
programs. These programs represent a significant investment for the
American taxpayer.
In 2011, DHS reported to Congress that its current major
acquisition programs will cost taxpayers a total of $167 billion to
field in the coming years. Unfortunately, a new report from the
Government Accountability Office (GAO) raises serious concerns about
whether the Department is effectively managing these major
acquisitions.
To its credit, DHS issued a policy in 2008 intended to ensure
acquisition programs demonstrate critical knowledge at key points in
the life cycle of a program. Such a ``knowledge-based'' approach is
often used by leading commercial firms and successful programs to
mitigate risk and help ensure a sound investment.
In essence, the higher the level of knowledge attained at the
outset about how a technology is designed and how it operates in real-
world environments, the lower the risk to the program and, in this
case, the taxpayer.
However, GAO found that DHS senior leaders rarely hold programs
accountable to this policy. Out of 49 programs reviewed by DHS
leadership, 43 were allowed to move forward with development even
though they had not adhered to DHS's policy. Out of 71 programs
reviewed by GAO, only 4 adhered to DHS's policy; and over 30 programs
had none of the documentation required to demonstrate this critical
knowledge.
These programs include some of the Department's most important
initiatives, such as TSA's Transportation Worker Identification
Credential--created to ensure individuals who pose a threat do not gain
unescorted access to our Nation's ports and CBP's Strategic Air and
Marine Plan--intended to help CBP prevent terrorists, drugs, and other
contraband from entering the country. This lack of accountability is
unacceptable.
Earlier this year, GAO also reported that TSA did not fully follow
DHS acquisition policy when acquiring its Advanced Imaging Technology
or full-body scanners. Touted as a key security layer, AIT is intended
to use cutting-edge technology to identify threats that may not be
picked up by magnetometers or other security layers. According to GAO,
DHS approved deployment of these machines without fully knowing TSA's
revised specifications. As a result, over 670 machines have been
fielded that did not meet requirements that the Department initially
determined were necessary to protect the aviation system.
Then there are examples like CBP's Secure Border Initiative Network
or SBInet and TSA's Explosive Trace Portal program known as ``the
puffers'' where taxpayers received little to no return on their sizable
investment.
These examples are very concerning. It seems like the Department's
senior leadership is ``MIA--missing in action'' when it comes to
effectively managing DHS. Why have an acquisition policy if the
Department has no intention of enforcing it? A policy--even a good one
that incorporates best practices--isn't worth the paper it's printed on
if it isn't enforced and doesn't lead to positive outcomes.
The results of these management failures are programs that are
delivered late, cost more, and do less than expected. For example,
costs in 16 programs increased 166 percent in only 3 years. Only one-
third of the programs had Department-approved baselines--documentation
essential for measuring cost growth.
For the two-thirds lacking this documentation, DHS doesn't even
have the data needed to measure whether cost growth in these programs
exists. These programs include CBP's Non-Intrusive Inspection Systems--
designed to detect contraband, such as weapons and nuclear materials,
and TSA's Electronic Baggage Screening Program--used to protect the
aviation system from threats in checked baggage, among others. The
total price tag for these ``unaccountable'' programs: About $100
billion. In total, almost all the programs GAO reviewed faced
significant challenges.
DHS has initiatives underway to try and improve its acquisition
outcomes, such as its Centers of Excellence intended to leverage
acquisition knowledge and expertise across components, and Decision
Support Tool designed to consolidate key program information to allow
DHS senior leaders to make better decisions, among other initiatives.
But we need solutions now, not years down the road. These issues
could result in two options: Fewer resources to protect our homeland
now or bankrolling these failures on the backs of future generations.
Neither of these options is acceptable. The brave men and women
defending our borders, protecting our airports, and patrolling our
shores deserve better. The American taxpayer deserves better. This
hearing will examine why these challenges exist and what DHS needs to
do to fix these problems.
Mr. McCaul. With that, I now recognize the Ranking Member,
Mr. Keating.
Mr. Keating. Thank you, Mr. Chairman.
Twenty-one meetings is quite a few, and although we have
come at many of the issues from different angles, I must say
that this subcommittee has, I think, set a good standard of
working together in our shared interest in trying to keep our
country safe and to do it as efficiently as possible. I think
we both share the common thread of all those hearings that we
have to do something about the fragmented nature of the way
this agency is set up, and in that measure Congress deserves a
large degree of the responsibility for going forward with that,
too. So I thank you, Mr. Chairman; and I thank our witnesses
for their participation.
In fiscal year, 2011 the Department spent over $14 billion
on goods and services, which was over one-fourth of its budget.
Moreover, the Department processed some 100,000 transactions to
support Homeland Security missions in fiscal year 2011. Given
these large figures, it is crucial for the Office of the Chief
Procurement Officer to ensure both rigorous oversight over its
procurement policies and procedures and effective communication
with key component agency officials and designated personnel. A
clear procurement policy from the Department and accompanying
guidance to implement procurement procedures are also necessary
to avoid instances of duplication and waste.
GAO's recent report regarding the Department's procurement
oversight initiatives rightly criticized the Office of the
Chief Procurement Officer for not adequately communicating with
or preparing component agency officials and personnel for
completing procurement-related self-assessments or other
program requirements, for that matter.
I look forward to hearing from the witnesses about the
actions of the Department, what they are doing to ensure that
the component agencies are aware of what is expected of their
personnel assigned and conducted their own personal oversight.
I also want to learn more from the witnesses about actions
being taken by the Department to prevent future occurrences of
noted failed procurement programs, including FPS's risk
assessment and management tool, TSA's puffer passenger
screening program, and the Office of Health Affairs' BioWatch
and SBInet.
In addition, I am particularly interested in hearing from
the witnesses about the impact that strategic sourcing has had
on procurement at the Department and the training and outreach
that has been offered to component personnel.
Finally, I would be interested to hear what measures the
Office of the Chief Procurement Officer has undertaken to
protect the ability of small, minority, and women-owned and
other disadvantaged businesses to continued competing for
contracting opportunities given that strategic sourcing is
becoming--is, rather, being promoted across the Department and
throughout the entire Federal Government.
With that, I look forward to today's hearing and yield back
my time.
Mr. McCaul. I thank the Ranking Member.
Before I introduce the witnesses, I do want to state for
the record that over 100 days ago this subcommittee requested
information from the Secretary, Secretary Napolitano, on
information related to DHS's conferences, to examine that in
our oversight functions, just as the GSA had their issues. We
have not received a response. We have followed up with a second
letter earlier this week.
I would like to enter that letter into the record, and I
hope the Secretary hears this and responds to that letter.
[The information follows:]
Letter From Chairman Michael T. McCaul to Hon. Janet Napolitano
September 19, 2012.
The Honorable Janet Napolitano,
Secretary, Department of Homeland Security, Washington, DC 20528.
Dear Secretary Napolitano: On April 27, 2012, the Subcommittee on
Oversight, Investigations, and Management requested the Under Secretary
for Management provide information regarding National and international
conferences attended by Department of Homeland Security personnel. This
request was straightforward and limited in scope. It asked for
information on the name, location, and cost (including reimbursement of
personnel) of conferences held in fiscal year 2011 both Nationally and
internationally for a sample of the components within the Department.
As the third-largest Department in the Federal Government with an
annual budget of almost $60 billion, this information should not be
difficult to obtain. We asked that the information be provided no later
than May 31, 2012.
Over 100 business days have since passed and our subcommittee has
yet to receive this information despite promises from your staff that
the information is being compiled. This is truly unacceptable. The
silence from your Department on this issue is deafening. The
Department's dereliction in providing this information raises a simple
question: What does DHS have to hide on its participation in these
conferences? The American people's faith in Government was severely
shaken when the Inspector General at the General Services
Administration (GSA) reported egregious waste and abuse of taxpayer
dollars. Lavish spending on conferences within GSA demonstrated a
culture of waste and misuse of power. Our request, made on behalf of
the taxpayers for whom we serve, is intended to ensure such a culture
does not exist at DHS. Unfortunately, your Department's failure to
provide our requested information leaves this question very much in
doubt.
Upon his inauguration, President Obama pledged that his
administration would usher in a new era of transparency. From
inadequate answers on DHS's role in Operation Fast and Furious,
sidestepping Congress on the administration's policy to allow
foreigners, even members of terrorist organizations, into the United
States, and failure to provide DHS witnesses at important Congressional
hearings, this is just the latest example demonstrating how your
Department has not lived up to the important expectation of an open and
accountable Government.
Finally, if the delay in providing this information is due to
difficulties in obtaining it, I question how the Department can be
entrusted with managing complex acquisition and procurement programs
worth billions in taxpayer dollars. DHS's inability to track and
maintain routine data on personnel travel and conferences could be
symptomatic of negligence in managing other aspects of the Department
that have a direct impact on DHS's ability to protect the homeland. If
your Department cannot immediately provide the subcommittee with our
requested information, we will explore more formal ways to obtain it.
Your staff may contact Dr. R. Nicholas Palarino, Subcommittee Staff
Director for Oversight, Investigations, and Management to discuss these
issues.
Sincerely,
Michael T. McCaul,
Chairman, Subcommittee on Oversight, Investigations, and
Management.
Mr. McCaul. With that, let me introduce Mr. John Hutton,
Director at the U.S. Government Accountability Office, working
for the Acquisition and Sourcing Management team. He provides
direct support to Congressional committees and Members on a
range of acquisition and sourcing issues aimed at improving the
ability of Federal agencies to buy products and services
efficiently and effectively. Throughout his more than 30 years
at the GAO, he has led reviews on numerous issues, including
Iraq and Afghanistan reconstruction and U.S. and Mexico border
infrastructure, which I would be very interested to hear about,
Mr. Hutton. I am very much interested in those areas.
Next, we have Dr. Nick Nayak, who tells me he is pro-Texan.
He is not from Texas, but he wants to move to Texas at some
point.
I think that is what you told me, correct?
Mr. Nayak. Right.
Mr. McCaul. He is the chief procurement officer at the
Department of Homeland Security, and prior to coming to DHS Mr.
Nayak served as deputy director for the IRS Procurement. Before
rising to deputy director for IRS Procurement, Mr. Nayak served
in several high-impact leadership positions in the IRS.
While I do appreciate your pro-Texas views, that may not
get you off the hook completely from my questions.
Mr. Nayak. Happy to be on there.
Mr. McCaul. Next, we have Mr. Mark Borkowski--who I have
known for quite some time now. We have been down to the border
together, and I think he has made great progress in some areas
with respect to the border. Perhaps we will hear about that
today--assistant commissioner for the Office of Technology
Innovation and Acquisition with the U.S. Customs and Border
Protection. He is responsible for ensuring technology efforts
are properly focused on mission and well integrated across CBP
for strengthening effectiveness in acquisition and program
management.
In addition to being the assistant commissioner, Mr.
Borkowski serves as CBP's component acquisition executive. He
has also served 23 years on active duty in the United States
Air Force, and we sure do appreciate your service in the Air
Force.
Last, we have Ms. Karen Shelton Waters, who is the
assistant administrator for the Office of Acquisition at the
Transportation Security Administration. Ms. Waters is TSA's
component acquisition executive responsible for managing and
overseeing TSA acquisition programs that are deployed to
airports Nation-wide and the agency's contracting workforce.
Prior to joining TSA, Ms. Waters served as director of the
Administrative Services Division for the U.S. Department of
Agriculture's Food Safety and Inspection Service.
So I want to thank all of you for being here today; and,
with that, I now recognize Mr. Hutton for his testimony.
STATEMENT OF JOHN HUTTON, DIRECTOR, ACQUISITION AND SOURCING
MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Hutton. Thank you. Chairman McCaul, Ranking Member
Keating, and Members of the subcommittee, thank you for
inviting me here today to discuss investment management at the
Department of Homeland Security.
DHS invests extensively in major acquisition programs to
help the Department execute its many critical missions. It is
acquiring systems to help secure the border, screen travelers,
enhance cybersecurity, and execute a wide variety of other
operations.
In 2011, DHS reported to Congress that it planned to invest
$167 billion in these major acquisition programs. In fiscal
year 2012 alone, DHS reports investing about $18 billion.
However, we have previously reported that DHS has not managed
its investments effectively, and its acquisition management
activities have been highlighted on GAO's high-risk list since
2005.
Earlier this week, as you know, we issued a new report that
focused on the Department's acquisition governance process, and
I would like to highlight three points here today.
First, most of DHS's major acquisition programs have faced
challenges that increase the risk of poor outcomes. Earlier
this year, we surveyed all 77 major program offices identified
by DHS and achieved a 92 percent response rate, which is quite
high. Nearly all responded that their programs experienced
significant challenges that have been shown to increase the
risk of cost growth and schedule delays. Specifically, 68 of
the programs reported experiencing funding instability,
workforce shortfalls, or planned capabilities that changed
after initiation. Thirty programs reported experiencing all
three of these challenges.
Because DHS does not have the data needed to accurately
measure program performance and outcomes, we used our survey
results, information DHS provided to Congress in a recent
internal DHS review, and identified 42 programs that
experienced cost growth, schedule slips, or both.
The second point is that the data needed to help accurately
measure program performance is, in fact, required under DHS's
own acquisition policies. In reviewing these policies, we found
they reflect many key program management practices that can
help mitigate program risks. The policies required DHS program
offices to capture the critical knowledge at key decision
points in documents. This knowledge can provide a foundation
for DHS leadership to make better-informed investment decisions
and to potentially increase the Department's return on its
investments.
However, we found, as we did in 2008, 2010, as well as our
recent report, that DHS generally has not adhered to this
policy. Since 2008, our analysis has shown that DHS permitted
43 of the 49 programs it reviewed to proceed with acquisition
activities without fully demonstrating the required critical
knowledge. As a result, we found that most major programs
lacked reliable cost estimates, realistic schedules, and
agreed-upon performance objectives.
The absence of this key information really limits DHS
leadership's ability to proactively manage its major
investments and provide essential oversight information to
Congress. DHS officials told us they recognize the need to
implement the Department's acquisition policy more
consistently, but we believe significant work remains.
Our third point, over the past 2 years, DHS has introduced
seven major initiatives to help improve the investment
management across the Department and address key issues
identified in our past reports, including the high-risk report.
One initiative, called the Integrated Investment Life Cycle
Model, is intended to improve strategic decisions at critical
phases of the investment life cycle. Other initiatives are
targeted at improving component-level acquisition management,
acquisition workforce development, and the development of a
business intelligence tool, which is essentially a database to
help increase the Department's access to program data and
performance metrics. However, how effective these initiatives
will be remains to be seen. Each of the initiatives face
capacity issues, and DHS is still developing implementation
plans.
In closing, we have made a number of recommendations to DHS
over the years to help improve investment management, including
our latest report, and DHS has generally concurred. The
Department's recent efforts demonstrate a commitment to
improving its investment management. However, it is essential
that it take a more disciplined approach moving forward to
adhering to its acquisition policies, particularly as the
Department must adjust to a period of Government-wide fiscal
constraints. Without greater discipline, DHS decision-makers
will continue to lack the information needed to proactively
manage the major programs, and the Department will continue to
run the risk of paying more than expected for less capability
than promised.
Chairman McCaul, Ranking Member Keating, and Members of the
subcommittee, this concludes my prepared statement, and I would
be happy to answer any questions you may have.
[The prepared statement of Mr. Hutton follows:]
Prepared Statement of John Hutton
September 21, 2012
homeland security.--dhs requires more disciplined investment management
to help meet mission needs
gao-12-1029t
Chairman McCaul, Ranking Member Keating, and Members of the
subcommittee: I am pleased to be here today as you examine investment
management at the Department of Homeland Security (DHS). DHS invests
extensively in acquisition programs to help secure the border,
facilitate trade, screen travelers, enhance cybersecurity, improve
disaster response, and execute a wide variety of other operations in
support of its critical missions. In 2011, DHS reported to Congress
that it planned to ultimately invest $167 billion in its major
acquisition programs, and in fiscal year 2012 alone, DHS reported it
was investing more than $18 billion in the Department's acquisition
programs. DHS acquisition management activities have been highlighted
in our High-Risk List since 2005, and our work over the past several
years has identified significant shortcomings in the Department's
ability to manage an expanding portfolio of complex acquisitions.\1\ We
have previously established that a program must have a sound business
case that includes firm requirements, a knowledge-based acquisition
strategy, and realistic cost estimates in order to reduce program
challenges.\2\ These conditions provide a program a reasonable chance
of overcoming challenges yet delivering on time and within budget.
Earlier this week, GAO issued a report entitled Homeland Security: DHS
Requires More Disciplined Investment Management to Help Meet Mission
Needs.\3\ In this report, GAO found that while DHS has a sound
acquisition management policy in place and has introduced initiatives
to address long-standing challenges, DHS's ability to manage its
acquisition programs is hampered by the lack of consistency with which
it has implemented its policy. This report is the basis for my remarks
today.
---------------------------------------------------------------------------
\1\ GAO, High-Risk Series: An Update, GAO-05-207 (Washington, DC:
January 2005); Department of Homeland Security: Billions Invested in
Major Programs Lack Appropriate Oversight, GAO-09-29 (Washington, DC:
November 18, 2008); Department of Homeland Security: Assessments of
Selected Complex Acquisitions, GAO-10-588SP (Washington, DC: June 30,
2010).
\2\ GAO, Defense Acquisitions: Managing Risk to Achieve Better
Outcomes, GAO-10-374T (Washington, DC: Jan. 20, 2010).
\3\ GAO-12-833 (Washington, DC: Sept. 18, 2012).
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In 2008, DHS issued the initial version of its current acquisition
policy--Acquisition Management Directive 102-01 (AD 102)--in an effort
to establish an acquisition management system that effectively provides
required capability to operators in support of the Department's
missions.\4\ AD 102 establishes that DHS's Chief Acquisition Officer--
currently the Under Secretary for Management (USM)--is responsible for
the management and oversight of the Department's acquisition policies
and procedures.\5\ AD 102 also establishes that the USM and other
senior leaders are responsible for reviewing and approving the movement
of DHS's major acquisition programs through four phases of the
acquisition life cycle at a series of five predetermined Acquisition
Decision Events. An important aspect of the Acquisition Decision Events
is the review and approval of key acquisition documents critical to
establishing the need for a major program, its operational
requirements, an acquisition baseline, and testing and support plans.
At the Acquisition Decision Events, AD 102 requires that an Investment
Review Board (IRB)--consisting of senior managers from various
functional disciplines--support the USM and other senior leaders by
reviewing major acquisition programs for proper management, oversight,
accountability, and alignment to the Department's strategic functions.
The Office of Program Accountability and Risk Management (PARM), which
is responsible for DHS's overall acquisition governance process,
supports the IRB, and reports directly to the USM. PARM develops and
updates program management policies and practices, oversees the
acquisition workforce, provides support to program managers, and
collects program performance data.
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\4\ The interim version of AD 102 replaced Management Directive
1400, which had governed major acquisition programs since 2006. DHS
originally established an investment review process in 2003 to provide
Departmental oversight of major investments throughout their life
cycles, and to help ensure that funds allocated for investments through
the budget process are well spent. DHS issued an updated version of AD
102 in January 2010 and subsequently updated the guidebook and
appendices.
\5\ The Secretary of DHS designated the USM the Department's Chief
Acquisition Officer in April, 2011.
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Because DHS invests significant resources developing capabilities
to support the Department's mission, our recent report identifies the
extent to which: (1) DHS's major acquisition programs face challenges
that increase the risk of poor outcomes; (2) DHS has policies and
processes in place to effectively manage individual acquisition
programs; (3) DHS has policies and processes in place to effectively
manage its portfolio of acquisition programs as a whole; and (4) DHS
has taken actions to address the high-risk acquisition management
issues we have identified in previous reports.\6\ To address these
issues, we surveyed all 77 major program offices from January to March
2012, and achieved a 92 percent response rate.\7\ We also reviewed all
available documentation of Department-level acquisition decisions from
November 2008 to April 2012; interviewed acquisition officials at DHS
headquarters and components; reviewed resource plans and DHS
performance reports; compared our key acquisition management practices
to DHS acquisition policy; identified the extent to which DHS has
implemented its policy; and analyzed the Department's recently proposed
efforts to address high-risk acquisition management challenges.\8\
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\6\ GAO-12-833.
\7\ DHS originally identified 82 major acquisition programs in the
2011 major acquisition oversight list, but five of those programs were
subsequently cancelled in 2011. Seventy-one program managers responded
to the survey.
\8\ We conducted this performance audit from August 2011 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.
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In summary, we found that 68 of the 71 programs that responded to
our survey reported that they experienced funding instability, faced
workforce shortfalls, or that their planned capabilities changed after
initiation. Most respondents reported a combination of these
challenges. We have previously reported that these challenges increase
the likelihood acquisition programs will cost more and take longer to
deliver capabilities than expected. Although DHS largely does not have
reliable cost estimates and realistic schedules to accurately measure
program performance, we used our survey results, cost information DHS
provided to Congress, and an internal DHS review to identify 42
programs that experienced cost growth, schedule slips, or both.
Further, using DHS's future-years funding plans--which aggregate
funding levels to produce total project costs--we gained insight into
the magnitude of the cost growth for 16 of the 42 programs. The total
project costs for these 16 programs increased from $19.7 billion in
2008 to $52.2 billion in 2011, an aggregate increase of 166 percent.
We also found that DHS's acquisition policy reflects many key
program management practices that could help mitigate risks and
increase the chances for successful outcomes. It requires programs to
develop documents demonstrating critical knowledge that would help
leaders make better-informed investment decisions when managing
individual programs, such as operational requirements documents that
provide performance parameters that programs must meet, and acquisition
program baselines that establish programs' critical baseline cost,
schedule, and performance parameters. However, there are areas where
DHS could further enhance its acquisition policy. Furthermore, as we
have similarly reported in 2008 and 2010, DHS has not consistently met
the requirements it has established.\9\ The Department has only
verified that four programs documented all of the critical knowledge
the policy requires to proceed with acquisition activities. A number of
officials explained that DHS's culture has emphasized the need to
rapidly execute missions more than sound acquisition management
practices. DHS recognizes the need to implement its acquisition policy
more consistently, but significant work remains to ensure DHS has the
knowledge required to effectively manage its programs.
---------------------------------------------------------------------------
\9\ GAO-09-29, GAO-10-588SP.
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In addition, we determined that DHS's acquisition policy does not
fully reflect several key portfolio management practices, such as
allocating resources strategically, and DHS has not yet re-established
an oversight board to manage its investment portfolio across the
Department. Since 2006, DHS has largely made investment decisions on a
program-by-program and component-by-component basis. Cost growth and
schedule slips, coupled with the fiscal challenges facing the Federal
Government, make it essential that DHS allocate resources to its major
programs in a deliberate manner. DHS plans to develop stronger
portfolio management policies and processes, but until it does so, DHS
programs are more likely to experience additional funding instability,
which will increase the risk of further cost growth and schedule slips.
These outcomes, combined with a tighter budget, could prevent DHS from
developing needed capabilities.
In 2011, DHS began to develop initiatives that could improve
acquisition management by addressing long-standing challenges we have
identified, such as funding instability and acquisition workforce
shortfalls. DHS has made progress implementing some of the initiatives.
As of August 2012, DHS chartered eight Centers of Excellence to bring
together program managers, senior leadership staff, and subject matter
experts, and created a Procurement Staffing Model to determine optimal
numbers of personnel to properly award and administer contracts.
However, implementation plans are still being developed, and DHS is
still working to address critical issues, particularly capacity
questions. Because of this, it is too early to determine whether the
DHS initiatives will be effective, as we have previously established
that agencies must sustain progress over time to address management
challenges. DHS is also pursuing a tiered governance structure that
would delegate major milestone decision authority to lower-level
managers, but it must reduce risks and improve program outcomes before
delegating this authority.\10\
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\10\ DHS implemented this tiered-governance structure for 14
information technology programs in fiscal year 2011.
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In our report, we made five recommendations intended to improve
investment management at DHS: (1) Modify DHS policy to better reflect
key program management practices, (2) modify DHS policy to better
reflect key portfolio management practices, (3) ensure acquisition
programs fully comply with DHS acquisition policy by obtaining
Department-level approval for key acquisition documents, (4) prioritize
major acquisition programs Department-wide and account for anticipated
resource constraints, and (5) document prerequisites for delegating
major milestone decision authority. In commenting on our draft report,
DHS concurred with all five of our recommendations, and identified
specific actions they plan to take to address three of them. DHS stated
that the remaining two recommendations--ensure acquisition programs
comply with DHS acquisition policy, and document prerequisites for
delegating major milestone decision authority--should be closed based
on actions taken. However, it would be premature to do so because
nearly all of DHS's major acquisition programs lack key acquisition
documents and DHS did not provide documentation clearly establishing
prerequisites for delegating major milestone decision authority.
Chairman McCaul, Ranking Member Keating, and Members of the
subcommittee, this concludes my prepared remarks. I would be happy to
answer any questions that you may have.
Mr. McCaul. I thank you, Mr. Hutton.
The Chairman now recognizes Dr. Nayak.
STATEMENT OF NICK NAYAK, CHIEF PROCUREMENT OFFICER, DEPARTMENT
OF HOMELAND SECURITY
Mr. Nayak. Thank you, Chairman McCaul, Ranking Member
Keating, and other distinguished Members of the subcommittee.
Thank you for the opportunity to discuss DHS's on-going efforts
to improve acquisition investment management.
I am the DHS Chief Procurement Officer and a career public
servant with 23 years of service in the procurement profession.
With 9 days remaining in the fiscal year, this is the busiest
time for my employees, and I want to wish each of them well as
they buy things that protect our great Nation.
I am pleased to be joined today by my colleagues, Mr. Mark
Borkowski and Ms. Karen Shelton Waters, two of our 14 component
acquisition executives who oversee programs within their
respective components.
I also wish to acknowledge Mr. John Hutton of the GAO. GAO
has been a valued partner throughout my tenure at DHS and in
public service.
Our vision: About 24 months ago, without requesting
additional resources, Under Secretary for Management Rafael
Borras, in collaboration with all key DHS acquisition
stakeholders, including myself, set in motion a number of
initiatives to improve all phases of the acquisition life
cycle. A primary goal of the initiatives, to establish an
acquisition process that reduces duplication and saves money;
and you get that done by minimizing program risk and improving
program governance and execution.
The under secretary first established and then elevated an
organization called the Office of Program Accountability and
Risk Management, known as PARM, to focus on these three
objectives: Minimizing program risk, improving program
governance, and improving program execution.
In the area of minimizing program risk, it is through
PARM's implementation of the Department's integrated strategy
for high-risk management that we have more aggressively worked
to reduce risk. For example, the Department has instituted one
component of that strategy, the Integrated Investment Life
Cycle Model, to strengthen the agency's governance of critical
phases of the investment life cycle and thus moving toward a
sound budget strategy that systematically prioritizes the
Department's major investments.
In the area of improving program governance, DHS has also
established a new component acquisition executive structure,
Revised Management Directive 102, and revamped the Acquisition
Review Board process to ensure more active involvement of
science and technology policy, the privacy office, and other
key stakeholders.
The new CAE structure is key because it establishes a more
logical line of authority between the Department and our
components. This allows for uniform implementation of policies,
oversight, and decision making. As a result of this change,
program managers cannot deviate from an approved strategy.
In addition, the Decision Support Tool, a web-enabled
business intelligence tool that enables us to identify programs
that have deviated from pre-established cost and schedule and
performance goals. In addition to that, a quarterly program
accountability report also made available to all key
acquisition stakeholders throughout the Department. So better
business intelligence being provided and consistent information
being provided to the entire program management community.
In the area of improving program execution, as was
mentioned previously, the Department has created--or identified
eight Centers of Excellence. That will provide program
management offices and front-line program managers with best
practices, guidance, and expertise in such areas as
requirements engineering, cost estimating and analysis, test
and evaluation, enterprise architecture, and program
management. Emphasizing continuous and early engagement with
industry, a priority of mine for first-time-ever for a CPO in
DHS, and that will additionally help us with requirements.
In the area of strategic sourcing, we are basically getting
a better deal for all the contracts that support our programs.
We have increased the use of strategically-sourced contracts
supporting our programs by 6 percent. Roughly about 26 percent
or $2.8 of the $14 billion is passed through our strategically
sourced contracts, saving us roughly about $200- to $300
million a year and a billion dollars since our strategic
sourcing program office was stood up.
Finally, in the area of acquisition workforce management,
we have completed a staffing model. You have got to kind of
know how many people you need to carry out all of this
acquisition that we are doing in DHS.
First of all--and I would just remind everybody--that all
of the initiatives that we have in flight now we have done
without additional resources, by realigning what we have, but
it is very clear in DHS acquisition that we need more
resources.
In conclusion, we have made progress in improving DHS
acquisition and investment management. There is still work to
be done. We look forward to our partnership with GAO and
Members of this subcommittee as we collectively work to protect
our Nation.
Thank you again for the opportunity to testify, and I look
forward to answering any questions.
[The joint prepared statement of Mr. Nayak, Mr. Borkowski,
and Ms. Waters follows:]
Joint Prepared Statement of Nick Nayak, Mark Borkowski, and Karen
Shelton Waters
September 21, 2012
Chairman McCaul, Ranking Member Keating, and other distinguished
Members of the subcommittee, I appreciate the opportunity to discuss
the Department of Homeland Security's (DHS) on-going efforts to
integrate all phases of our acquisition process, from the conceptual
phase through execution. The acquisition management portfolio, which
includes the planning, budgeting, procurement, and program management
phases, represents nearly $18 billion of the Department's budget.
Ensuring that it operates at peak efficiency is critical to our ability
to defend the Nation.
I wish to acknowledge the GAO, which has been a valued partner
throughout my tenure. Their independent reviews have been insightful
and have helped shape our strategy. I also wish to acknowledge my
partners from CBP and TSA, who represent two of the seven Component
Acquisition Executives (CAE) who are responsible for overseeing several
of the Department's major acquisition programs. Mr. Borkowski and Ms.
Shelton-Walters have been instrumental in solidifying the CAE structure
and improving the quality of the program management discipline.
I welcome the opportunity to update you on enhancements to the
Department's acquisition management framework. We continue to improve
the analysis and rigor for all phases of the acquisition life cycle. We
are also using more accurate business intelligence and a more mature
governance framework to analyze critical details before authorizing a
program to proceed to the next phase of its life cycle.
policy
Over the past 3\1/2\ years, DHS has strengthened its policy for
approving and managing acquisition programs. The second revision to
Management Directive (MD) 102 is in the final stages of the approval
process with the accompanying instruction and guidance to be developed
over the next couple of years. This policy update will help clarify
standards for all acquisition programs, improve the effectiveness of
governance and ensure that cost, schedule, and performance metrics are
more effectively monitored. As a result, the front-line program manager
will have clearer, more uniform processes and standards to follow,
which will improve efficiency and mitigate risk.
structure
In addition to strengthening DHS's acquisition management policy,
we are also reinforcing our support structure through the creation of
acquisition and program management Centers of Excellence (COE), staffed
by subject matter experts throughout the Department. The Office of
Program Accountability and Risk Management (PARM) championed the
formation of eight COEs, which provide Component program offices with
best practices, guidance, and expertise in such functional domains as
cost estimating and analysis; requirements engineering; test and
evaluation; systems engineering; program management; accessibility; and
privacy. In addition, as a result of this effort, DHS has developed
guidebooks offering practical direction on such issues as acquisitions
planning, requirements development and market research. This initiative
addresses a GAO recommendation to enhance program management
capability, integrate best practices across components, and proactively
address program gaps before they become major issues. To date, the COEs
have engaged with over 78 percent of the Department's major programs
and we expect that all programs will access COE services in fiscal year
2013.
more uniform governance framework
As mentioned earlier, the new CAE structure establishes a more
logical vertical line of authority between the Department and the
components. This allows for uniform implementation of policies,
oversight, and decision making. As a result of this change, program
managers cannot deviate from an approved strategy unless they receive
authorization from the designated decision authority. For major
programs, designated in accordance with MD 102-01, this decision
authority rests with the chairperson of the Acquisition Review Board
(ARB). We have convened 120 ARBs since MD 102-01 was established.
This uniform framework has been well-received by many components
who had been seeking a more disciplined approach to program management
and has resulted in better oversight and better performing programs.
Since the governance framework was solidified, several high-risk
programs have been directed to make adjustments before proceeding to
the next Acquisition Decision Event (ADE).
A number of components have flourished under this new framework and
are considered models for others to follow. For example, CBP
implemented a single Acquisition Policy and Process Guide; developed a
governance structure that simplifies and reduces the number of
redundant reviews; instituted a long-term, multi-year strategy for
acquiring and supporting capabilities and developed a Program Analysis
and Evaluation capability. Likewise, TSA has appointed an Assistant
Administrator for Acquisition who serves as both the Head of the
Contracting Activity and the CAE. This realignment provides improved
efficiency by establishing a single authority that is accountable for
program performance. Both the TSA and CBP CAEs work collaboratively
with PARM to ensure the efficient execution of all major programs in
accordance with DHS policy.
enhancing business intelligence and acquisition management
Through these enhancements, DHS is reducing risk by implementing
improvements in its program management tools. The primary method of
monitoring programs is through the Decision Support Tool (DST) became
operational in October 2011. The DST is a web-enabled business
intelligence tool that provides a central dashboard for assessing and
tracking the health of major acquisition programs, including key
indicators such as cost, funding, and schedule. The DST has yielded
dividends by identifying programs that have deviated from pre-
established cost and schedule performance goals, which are generally
recognized indicators that predict the probability for success. In
addition, the Department recently piloted Joint Functional Portfolio
Reviews to aid in business, financial, and programmatic decision-making
across the acquisition life cycle.
conclusion
While work remains, the Department has made significant strides in
improving acquisition management for the Department's portfolio of
major programs. DHS has worked diligently to improve its acquisition
processes while shifting the decision-making paradigm to the use of
more empirical evidence and support programs throughout their life
cycle. These efforts have produced more effective governance and
significant improvements to current and future acquisitions. Thank you
again for the opportunity to appear before you and I look forward to
your questions.
Mr. McCaul. Thank you, Dr. Nayak.
The Chairman now recognizes Mr. Borkowski for his
testimony.
STATEMENT OF MARK BORKOWSKI, ASSISTANT COMMISSIONER, OFFICE OF
TECHNOLOGY INNOVATION AND ACQUISITION, CUSTOMS AND BORDER
PROTECTION, DEPARTMENT OF HOMELAND SECURITY
Mr. Borkowski. Good morning, Chairman McCaul, Ranking
Member Keating. I appreciate the opportunity to be here and
talk to you about how we see acquisition management and its
trending as we go into the next couple of years.
We have discussed a lot about initiatives and specific
initiatives. One of the things I would like to focus on a
little bit as I get started here is the context of those
initiatives, because I think that is very important. They are
not a loose connection of things that people made up. There is
actually sort of a holistic approach to a problem that those
represent attacks on. So I would like to focus on a couple of
the areas that occur to me as I look at our acquisition
programs and talk about how these initiatives support this
holistic sense.
First of all, when you come into a program like we have
come into, you have to struggle with a balance between past,
present, and future; and what I mean about that is many of the
programs that you cited, many of the programs that we are
dealing with were, frankly, established in the absence of
discipline. They were established with heroics and energy and
commitment but not necessarily with supporting infrastructure,
processes, tools, and skills. As I am sure we all know, if you
move quickly on the wrong path, you get to a bad place faster.
So, frankly, a lot of what we are dealing with is the how do I
get out from under that bad place?
But we don't want to forget as we do that that we don't
want to be in that same bad place in 2 or 3 years. So I think
it is important to understand that these initiatives are
focused on two things. One is, how do we deal with the fact
that we are in a bad place? But, also, how do we make sure that
my successor doesn't have the sleepless nights and the
headaches that I am having so that they are not in a bad place
in the future? We shouldn't forget about that as we go forward.
You mentioned SBInet. We were in a bad place. Sometimes
being in a bad place requires stopping and starting again from
scratch. Other times, it requires less drastic measures, but we
are working through that. These initiatives are designed to
help us with both the bad place and making sure we are not
there in the future.
The second thing I think is important to discuss is risk
management, and that term has been used several times already
in this hearing.
First, I think it is important to understand there is a
very specific definition of risk management. We use the term
very loosely, but in my business there is a well-understood,
well-established definition, and the definition of risk is the
combination of the likelihood that something bad will happen
and the severity of the consequence of it if it does. So if you
have a low probability of something bad happening, and even if
it does happen it doesn't matter, that is low-risk. If you have
a high probability of something bad happen, and if it does it
will be really bad, that is high-risk. Then you have got this
kind of in-between, tough-to-handle area where you have a high
probability of something but it is not a big deal or a low
probability. So that is risk management.
I go through that because what is important to me is to
remember that there is no such thing as a program with no risk.
We don't have the resources to have no risk. So acquisition and
program management is all about identifying, quantifying, and
deciding as a community what risks are reasonable, and
understanding that, even if that decision is rational, we may
still lose the bet. We might say it was reasonable, and we need
to reward prudent risk-taking.
Part of the problem we have had in the past is that we have
taken risks without knowing that they were risks, without
transparency between the components and the Department and
Congress about we all agree that that is a reasonable risk to
take. Many of the initiatives and tools we are talking about
are tools that help us make sure we all understand the risks,
we are transparent about the risks, and we can reinforce the
program managers who we have asked to take those risks as they
proceed.
The third thing I think that is important in context is the
role of the program manager. This is the person who is actually
on the point. We are a support structure to program managers.
But, ultimately, programs will succeed or fail based on the
skill, competence, talent of the program managers.
Many of our initiatives are designed for us to grow program
managers. Because, frankly, we have asked many people to
perform in this role who we have not given the tools and the
support to perform. That is clearly on us. Many of the
initiatives that we have talked about here are focused on
helping strengthen the program manager, either by developing
training or by reinforcing them with access to things like
Centers of Excellence and other executives who can support
them.
So those are kind of three big contextual issues under
which I think it is important to evaluate this portfolio of
initiatives.
From the perspective of CBP and the portfolio I have, we
have valued and benefited from these initiatives as we have
gone forward. We have augmented them with our own initiatives.
We believe that they give us a much brighter future, and we
appreciate the committee's support as we deal with the bad
stuff that we are trying to dig out from under at the same
time.
So I look forward to the committee's questions, and I
appreciate the opportunity to be here.
Mr. McCaul. Thank you, Mr. Borkowski. We certainly
recognize you didn't create all these problems that I
identified. I appreciate your insight and expertise to resolve
these problems. It is very important not only to the Congress
and the DHS but to the American people.
Ms. Waters, you are now recognized for your testimony.
STATEMENT OF KAREN SHELTON WATERS, ASSISTANT ADMINISTRATOR,
OFFICE OF ACQUISITION, TRANSPORTATION SECURITY ADMINISTRATION,
DEPARTMENT OF HOMELAND SECURITY
Ms. Waters. Good morning, Chairman McCaul, Ranking Member
Keating, and distinguished Members of the subcommittee. Thank
you for the opportunity to appear before you today.
As you may know, the Transportation Security
Administration's Office of Acquisition is headquartered in
Arlington, Virginia. OA is a mission-focused adviser for
planning and managing TSA's acquisition programs and
procurements, and our portfolio includes 34 designated
acquisition programs. In addition, we manage the acquisition
workforce and we provide day-to-day support to TSA's
acquisition program managers for a wide range of critical
acquisition-related processes. I serve as the assistant
administrator for acquisition, and I function as the head of
the contracting activity, or HCA, as well as the component
acquisition executive, or CAE.
Our acquisition portfolio includes six level 1, five level
2, and 23 level 3 programs. Level 1 programs consist of life-
cycle costs in excess of $1 billion, level 2 in excess of $300
million, and level 3 programs are budgeted at $300 million or
less.
Among TSA's level 1 programs are the passenger screening
program Secure Flight and our electronic baggage screening
program. Two examples of level 2 programs include the National
Canine Program and the Security Technology Integrated Program.
The office assists program managers in developing
acquisition strategy and program planning. This assistance is
delivered through services such as assisting in preparation and
review of acquisition documents, including acquisition plans,
mission need statements, operational requirements documents,
analysis of alternatives, and life-cycle cost estimates, to
name a few.
Our office operates a training program for TSA program
managers and staff, covering topics such as acquisition
planning, source selection, risk management, writing of
statements of work, and logistics. We provide program offices
in acquisition functional areas of program management,
requirements development life-cycle cost estimating, test
evaluation, systems engineering, acquisition planning, and
certain procurement-specific areas. We also staff a small
business office that promotes initiatives to maximize the use
of small and disadvantaged businesses to meet TSA's needs.
My responsibilities include ensuring programs throughout
the organization follow GHS and TSA acquisition policy. We use
a program scorecard to assess programs in terms of cost,
schedule, technical performance, planning, execution, and risk.
In addition, we conduct quarterly assessments of TSA's
acquisition programs, which are presented to senior leadership.
For each of our level 3 programs, decisions occur at TSA's
acquisition review boards, or ARB, which are attended by
assistant administrators or their representatives from across
TSA. By centralizing CAE and HCA functions with the Office of
Acquisition, TSA receives the benefits of enhanced
collaboration, integration, and reconciliation in supporting
its acquisition programs. I maintain a collaborative
relationship and coordinate with my counterparts at DHS
regularly. Our offices use similar and sometimes shared
databases and systems to monitor and manage the acquisition
performance.
The Aviation and Transportation Security Act, or ASTA,
provides TSA with statutory authority to enter into and perform
such contracts, leases, cooperative agreements or other
transactions as may be necessary to carry out the functions of
the administrator and the administration. Other transaction
agreements establish a set of legally enforceable promises
between TSA and the recipients; and OTA is not a procurement
contract, grant, cooperative agreement, lease, or loan.
TSA uses OTAs in many instances, such as for the advanced
surveillance program that provides Federal dollars to airports
to install closed-circuit cameras to monitor sensitive areas
and the electronic baggage screening program that funds
airports' facility modifications to accommodate checked baggage
and section systems.
The TSA Office of Acquisition is committed to developing,
implementing, and reporting acquisition metrics that coincide
with TSA's mission and vision that are timely, realistic, and
accurate, and that will drive informed and effective decision
making by TSA leadership and management. Thank you again for
the opportunity to appear before you today. I look forward to
answering any questions you may have.
Mr. McCaul. Thank you, Ms. Waters.
Mr. Hutton, I just want to thank you for your excellent
report and work identifying the problems and trying to identify
solutions to those problems.
I remember I used to think that the Secretary of Homeland
Security should be somebody with like our background, a
prosecutor, law-enforcement type. Then I thought, no, maybe a
general, like some military guy that could really run a tight
ship, you know, would be perfect for that job. But more and
more I am starting to think that what we really need is a
business leader at the top, somebody that, when I look at the
problems of DHS and how to fix DHS, so many of these issues are
management-related more than anything, acquisition-related or
management.
I will leave that for the next President, whoever that is,
to make that decision. But, you know, I think like Steve Jobs,
who was just brilliant in terms of business, if he was looking
at his latest version of the iPhone and suddenly it cost 200
percent more than they thought or he had cost overruns or it
was delayed, they were going to announce it was going to come
out in September but it didn't come out until like 2 years
later, you know, in the private sector this just wouldn't--and
I understand this is a different animal than the private
sector, but that would not fly in the private sector. There
were these 2008 guidelines I think DHS, you know, put forward
which were good--and I think you identified that, Mr. Hutton,
in your report--and yet the Department doesn't follow it, for
some reason.
So, Mr. Hutton, let me just go to you first. If you could
just tell me what you--if you could just simply identify what
you perceive to be the problem, what you would also put forward
as the fix to this problem.
Mr. Hutton. Thank you, Chairman. There is a number of
points I think I could make on this.
One, you referenced the private sector and what would the
private sector do. The thing I would point out is that a lot of
the processes and the steps and the decision points that you
will see in the current directive is really based on commercial
practices, and it is all about also managing risk. The private
sector will at the early stages decide what kind of portfolio
of projects they might want to take on, and they may have
varying risks, but they have constant revisiting at early
decision points: What do we know about these risks? What is it
going to cost? You kind of winnow down over time what they
think is executable and what is going to help the bottom line
of the company. But it is based on knowledge, it is based on
stakeholder involvement, that could be the chief financial
officer, business people.
So the process is set, and you are asking about the
execution. The way I see it, that 2008 directive was a real
important first step, and I say that because some of these
requirements were, in fact, in place before 2008. They required
a lot of this knowledge-based approach. In fact, we issued a
report in 2005 that said even what they had in place then
resembled the knowledge-based approach largely, and it was all
about execution.
I think why I say 2008 was important, because what they did
was try to come up with a common lane which would explain what
they want the components to do and how to do it, and they
worked very closely with the different components to adjudicate
a lot of comments, get a lot of understanding, a lot of
conversations, and so it ended with that particular directive.
But I think that was a real important step, because now
everybody is talking a common language and I think should have
a good understanding of what the requirements are.
Why is it not being implemented? I would say largely there
were some capacity issues. I believe around the 2008 time frame
you had the Acquisition Program Management Division and the
cost--they set up the Cost Analysis Division. I think you might
have looked around, 8 people, 9 people. I believe 4 years later
they are up in the stages of shooting towards roughly 55, and
these are folks that are going to help manage the process
through the Department, help provide cost-estimating support.
So I think capacity was one part of it, but I also think it
is leadership and having someone at the USM's level that will
drive the process and insist on adhering to the governance
process, and I think our work has shown that since January we
are hearing more and more of the desire to do that.
Mr. McCaul. It is good news. Just, you know, 4 years later
now suddenly the light bulb is on that, gee, we had a solution
to this that was set forth in a directive 4 years ago, and now
we are thinking about implementing it. But it has been 4 years.
So I guess to the other witnesses--and I know, Ms. Waters,
you just came on board in March, so it may be unfair to pick on
you. But, Dr. Nayak, can you speak to why this has not been
implemented and why it has taken 4 years to finally get this
idea that, gee, we came up with the solution 4 years ago that
may work, and now we are just finally starting to implement
them?
Mr. Nayak. So happy to add to what Mr. Hutton shared.
You know, look, I have been here for a little bit less than
2 years and I think Mark a little bit more than that and,
obviously, Karen is new to her role. So it could possibly be if
we used 4 years as the marker for that transition, you need
steady leadership over time, and we have had it, and now we do
actually have the results, as Mr. Hutton shared.
A couple things I just generally want to share with you
sort of on a positive note and all under the heading of
acquisition, generally speaking.
GAO recently issued in this month, I believe, a report on
management integration, one on procurement oversight at the
Department, as well as this report that we are discussing
today. Lots of positive news in the management integration
report about the things we are actually doing, the things we
are executing against that 2008 directive that we have revised.
Procurement oversight I think was one of the better GAO reports
I have ever seen, and that is really in my wheelhouse we have
enhanced procurement oversight.
In investment management in this report, we recognize, as
Mr. Borkowski pointed out, there is clean-up to be done, and we
are doing that. So we have been living it for the last 2 years.
It kind of starts out with the Integrated Investment Life
Cycle, which essentially is going to have at the front end like
a joint requirements body fed by sort of functional information
that cuts across the components so that in the front end of
acquisition we are going to be discussing commonalities and
what major requirements should actually become programs
eventually after looking across the enterprise of what we
already have as well as even what other agencies have and DOD
has. So you won't ever get programs birthed without being fully
informed. That is the first thing.
But on the back end, where we have lots of clean-up to do
in the acquisition review sort of world and our more than 500
programs, 127 major programs and what we classify as level 1
and level 2, about 40 of each of those, we have lots of things
in flight and are actually getting results.
So just, for instance, because it has been mentioned here,
do we have enough credible cost estimates? Well, we didn't in
the past. Is it increasing? The answer is yes. Do programs go
through ARBs and are they ever delayed? Are they ever stopped?
The answer is yes.
So we are forcing, first of all, a common language so
everybody across the Department now is informed about program
information, the same information through the DST, through the
quarterly program acquisition report, and also Congress is
through our comprehensive acquisition status report. We are
more transparent than ever about everything that is going on
with our programs.
Meanwhile, we double back behind to do the clean-up work
while also making sure no program gets birthed unless it goes
through this Integrated Investment Life Cycle.
So I am pretty confident that moving forward that we need
time to just execution, and we are doing it today. So it is not
like we are saying we need 2 years to begin execution; we are
executing right now.
Mr. McCaul. I think that is the good news. The bad news is
you are still on GAO's high-risk list, despite all this good
news.
Mr. Borkowski.
Mr. Borkowski. Yes, I would just like to also highlight
there is a difference between knowledge management and
documentation. See, that is part of the challenge here, right?
So you mentioned STAMP. STAMP, we believe, has the
knowledge management, but it is not documented in the
appropriate format. So the question we have--and this is part
of that balancing past and future--do we go back and capture
that knowledge management in the now current formats or do we
accept that the knowledge management is complete?
Another I think that you might find intriguing is that, in
the case of SBInet, that scored very highly in terms of the
documentation complete, and yet we know what the status of that
was.
So as we do that balancing between past and future, it is
very important we get in a common language. Because one of the
problems that the Department has with STAMP is, okay, we have
to spend all of this time confirming knowledge management. If
we had had it in the right format, that would have been nearly
the lift it is. But I think that is important as we look at
digging out as opposed to going forward. It is very important
to have a common language, but let's not confuse knowledge
management with documentation.
Mr. McCaul. Ms. Waters, do you have any remarks?
Ms. Waters. No, thank you.
Mr. McCaul. Okay, you are very smart.
Mr. Hutton, it is my understanding that, in terms of
procurement or acquisition, that it is still very siloed within
the Department in terms of the 22 different components coming
together. They are not really brought together; is that
correct?
Mr. Hutton. Well, if you take it from the point of view of
program management and the large acquisitions, I would say that
they are breaking down some of those silos. Because what they
have done is the program accountability and risk management
group, they moved it up under the under secretary of
management, and they now--and then they established a component
acquisition executive. So now you have a link between the
Department-level governance process and the component level to
work together to ensure that the Department's requirements are
being met, and then folks like Mr. Borkowski will work within
the component so that when they are going to an investment
review meeting that through his great work he is going to
ensure that they do have the knowledge and they do have it
properly documented.
I will just say, documentation is important, though,
because it has to go forward for the Department. The Department
is buying off on these large investments, many of them that are
going to cost--you know, go out 20 years, cost billions of
dollars, and you have to know when you are approving those
programs at the start that you are making that commitment.
Because if you don't know that, you may end up at a point in
time where you start managing so many programs and the budget
is forcing decisions where you start adding this funding
instability and other things that we talk about which then
starts creating problems for the program managers to be able to
execute their program. So I think the documentation provides
that added buy-in from the Department but it also facilitates
some accountability as well.
Mr. McCaul. Yeah, I think you make a good point. I mean, I
can see how, you know, somebody in the Department is like, I
have got all this paperwork I have got to do, and they think it
is kind of cumbersome, burdensome, and not necessary. But when
you are talking about particularly these level 1 programs, they
are billions of dollars, and in the private sector I think that
they would certainly have, you know, I think paperwork that
would have to be completed.
So from what I am hearing from you, though, these silos are
not--there is a merger now in terms of acquisition policies is
what you are saying that is happening?
Mr. Hutton. Well, from my view, now there is more
communication. I think there is better understanding. In our
survey--and I would recommend everyone take a look at our
survey in the back of the report. It was an outstanding survey.
The 77 major program offices that we surveyed had a 92 percent
response rate, but there are a whole bunch of questions in
there that give a reflection of the program manager's view, the
program office's view of their initiatives that they are
undertaking now, what they think about PARM's role. PARM
actually got--and I am not saying that as I am surprised--but
they actually got some pretty high scores in terms of
familiarity with what PARM is doing and also what value they
think PARM is bringing to the programs. This is fairly recent,
and that is why I think our survey was really like a health
assessment.
Dr. Nayak has a nice health assessment for his
procurements. But if people go into that survey, there is a lot
of questions that aren't really teased out in the report, but
it is going to give you a good insight of what the ones that
are on the ground trying to make these programs work, what they
think about the Department's requirements, the Department's
initiatives, and things like that.
That said, I do want to make one point, though, sir.
In January 2011 is when we kind of started really working,
you know, back and forth for the Department in their efforts to
get off the high-risk. We submitted five outcomes to the
Department in the acquisition management area back in
September, 2010.
January, 2011, the Department came out with a strategy to
get off the high-risk which includes acquisition management.
That strategy was about 55 pages, and we had some feedback to
the Department where we thought that strategy could be
improved.
They have had subsequent 6-month period strategies. They
are now at a strategy--not saying more pages is better--but
they are at about almost 300 pages in their current strategy,
but they are starting to better link the outcomes that we
expect them to take as to the root causes of why they haven't
done it in the past. So I think that back and forth has helped
a lot in promoting this.
But one of the major features is its Integrated Investment
Life Cycle Model. That was introduced in January, 2011. What is
a little concerning to me is that when we surveyed the program
offices 32 of the 47 of the program offices--and this was a
response in January, March of this year--said that they really
weren't too familiar with it yet. So I think if you are going
to drive this down through the organization I think it is
imperative that they keep talking and communicating.
Yes, it is not fully developed yet. They are working
through a lot of different things. We are open-minded about the
approach they are taking. We want to see it play out. It is
their solution. But we think communications with the components
and constant interaction will help create a better likelihood
of a good outcome in that effort.
Mr. McCaul. It is an actual point that they still remain on
the high-risk list. Are you optimistic that DHS will be off
that list in the future, near future?
Mr. Hutton. Sir, for context, DOD has been on the high-risk
list for acquisition since 1992, the Department since 2005. We
are talking--as Dr. Borkowski said, these are very complex
systems. It is a lot of money. It is a lot of inherent risks.
You take it back to the need to go through a knowledge-
based approach. You are not going to get perfection. Even with
the best knowledge-based approach, it comes down to individual
decisions you make at each point in time along the way.
So I would say that given the fact that they have so many
programs without a lot of the foundational documents that is
going to allow them to have the insight to make those good
decisions, given that they have to get those developed and also
approved by the Department so they know what they are buying
and what capability they are buying.
Mr. McCaul. I appreciate your kind of relationship in view
of this. It is like a diagnostic test, almost like a doctor
would make an analysis on your health. You are not doing quite
as well, so you are on the high-risk list, but here is how you
can get off of it. I think that kind of relationship working
together is the productive way to move forward and get off the
list, and hopefully I can share in your optimism at some point
that they will be off the list.
Last point, because I am taking a lot of time, but I can, I
guess. It is just the two of us.
Mr. Borkowski, I can't let you go without asking you about
one of my favorite issues, and that is border technology. You
and I went down there and looked at some DOD assets technology;
and I still think, given these budgetary constraints we live
in, that--and Mr. Cuellar and I talked to the generals in
Afghanistan and Iraq about transferring some of this technology
and leveraging existing technology within the Federal
Government that we have already invested R&D money into. It is
nothing. You don't have to recreate this stuff.
I know you have some good news on that front, but I want to
give you an opportunity to maybe talk a little bit about that
issue in terms of what you are leveraging and where do we stand
at this point in time with respect to the border and the
technology initiative?
Mr. Borkowski. Well, very quickly, we have built a much
stronger real-time relationship with various elements of the
Department of Defense that are helping us through this. So we
are aware of the availability of all kinds of technologies,
everything from nonintrusive inspection systems to aerostats to
hand-held--you know, long-range night-imaging information.
We have received a whole inventory of those things. I have
sent teams out to Army depots to survey what is in that
inventory and prepare to perhaps lay some claim to some of
those things.
For some of the systems, in particular aerostats and the
towers that support them, we have actually worked with the
Department of Defense to evaluate those systems on the Texas
border in August. We actually had two aerostats and two towers.
What we find, by the way, is that these things are very
effective systems.
What we are evaluating is what do they actually cost for
us, what do we have to do to train our people. We want to make
sure that we don't go into this without complete knowledge.
Again, it is knowledge-based. We don't want to do the
SBInet thing with the DOD technology. We want to make very
clear that as we go into using this technology we are aware of
what the complete bill will be. I will tell you that,
particularly for those aerostats, very effective.
So we are in the process of evaluating those results,
making some trades with cost, looking at the inventory of
things that the Department of Defense has that are oftentimes
more modest things.
In fact, the relationship is such that the Department of
Defense--the Pentagon is a couple of blocks from my office--has
actually left some of these things in my storage room so that
we can actually try them out that way. So I think the
relationship is getting better.
I do want to be a little cautious. We do need to do some
cost evaluation to make sure we can actually afford them, but
it looks very promising.
Mr. McCaul. That is good to hear.
I got a phone call from Commissioner Aguilar actually
updating me on the aerostat program, and specifically in Texas,
and I just actually want to say how much I appreciate getting
that phone call. I thought that was a real positive step to
say, hey, here is some good news of what we are doing on the
border.
Are we still looking at--yeah, I think the fence is up, you
have got more personnel, we can always use more resources. But
when I hear it is going to take 10 more years to secure the
border, that just didn't go over well with my constituents.
Where are we right now?
Mr. Borkowski. Well, with the Arizona----
First of all, the DOD systems--the DOD systems, the way
that we are currently looking at them, they give us an
opportunity to put some deployments, a shot in the arm in areas
that the Arizona deployment doesn't cover, right? So we are
still planning to do the Arizona deployment, but, as you
recall, the rest of the border was intended to follow that. We
reserve the option working with you to change that.
We are seeing things, for example, going on in southern
Texas that concern us, but, right now, the plan is to buy the
things for Arizona and then extend beyond that. So one
advantage of this DOD interaction is it may give us systems
outside of Arizona more quickly than we thought.
Having said that, the Arizona plan itself, many of the
smaller systems have been bought. Those agent portable
surveillance systems which we went and looked at down in
Laredo, we have 15 of those in Arizona. We have been using
them, continue to evaluate them. Mobile surveillance systems
are coming on-line. We have been doing some testing with the
vendors, but that is about done. Those will come on-line.
The two big items that people spend time on are the remote
video surveillance system cameras--those are day and night
cameras that go on towers--and the integrated fixed towers,
which are cameras and radars tied together in areas. Both of
those are in what we know as source selection. We have sent out
requests to industry for proposals. The bids have come back in.
The remote video surveillance system is coming close to the end
of that process. We have to evaluate those.
The integrated fixed towers will take a while. Now there is
a good news/bad news to that. We got so many more proposals for
that than I have ever seen in my life, and it takes a long time
to do due diligence with those proposals.
So I am very, very pleased by the number of proposals that
we have got because that suggests that all the communication we
did with industry on--it is nondevelopmental. It doesn't have
to do everything. If it does a lot and it is a good deal, that
is good enough. It seems like that worked. The downside of that
is I have just got to slog through all of those proposals. But
we do have the proposals in. We are in the source selection
process for those.
Mr. McCaul. I do think those integrated fixed towers are
really going to transform the security down there on the
border.
I agree. I mean, I sort of empathize with your situation
where we are pressuring you to get this done as quickly as
possible, and then we are pointing the finger at procurement
acquisition failures and that sort of thing. So you have got a
lot of proposals coming in, and you have got to weigh them and
make sure you are making the right decision.
I would appreciate it if you would update me personally and
I think the committee as a whole because, you know, we get
asked about this issue a lot when we go back home. I think if I
can give my constituents and others on the committee a more
positive outlook that that would be good.
Because I think the current impression with a lot of the
American people is that there is no security at all down there.
That is, in fact, not the case. You and I know that. But the
more updates you can give me, the more I can be a messenger
that we are actually moving forward. So I would appreciate
that.
With that, I now recognize the Ranking Member.
Mr. Keating. Thank you, Mr. Chairman.
Mr. Hutton, in your remarks, you mentioned one of the
difficulties being funding instability. Do you want to give me
some more detail about exactly what you meant with that?
Mr. Hutton. Sure. One of our questions in the survey was to
have the program offices point out what the challenges were in
executing their programs. Funding instability was one of the
big ones, and we asked them to provide a sense of what are the
various reasons for the funding instability?
Just to give you an example--and I have seen this in the
context of some of the Coast Guard programs that I am
responsible for--is that you may get funding instability in the
out-years for your particular program because of another
program's funding needs. So what happens with--every year, as
they go through the budget and each of the program offices, if
they don't have an acquisition program baseline, hopefully they
will get one, but also a good sense of their cost estimates.
There is a certain outyear funding flow of what they expect
that they are going to get and how much they are going to get
in that year so they can plan their acquisition, execute their
acquisition.
But if you are making like budget decisions every year and
you are trying to make the numbers fit, sometimes there are
some programs that won't be able to execute aspects or buy a
particular asset in that particular year. So what might be
happening in another program--say even within a component--may
affect another program. But that was the largest reason that
was given for decreased out-year funding.
Several other things might involve--the actual life-cycle
cost estimate at the start didn't really affect the true costs.
So there we get back the knowledge. When you are going through
the process, you want to--and it is not easy to come up with
one early on. But you want to keep looking at it, keep refining
it. But if you aren't starting with a good, complete life-cycle
cost estimate, it is hard to have that prediction going through
the execution.
Don't forget, when the Department is deciding they are
going to go ahead with an investment, they will be looking at
things like, what are we getting? What capability gap is it
going to fill? What kind of capability are we going to get? How
much is it going to cost?
If that is not firmly established and you don't have
solid--as best you can at that point in time--good estimates,
then who knows what is going to happen over the course of the
development of that program? Because you have, as we do in the
Department here, at least 70, 80 more major acquisitions that
are all trying to execute their program. As we know, they are
precious dollars.
The Department's budget for procurement has roughly
doubled, I think, since 2004, 2005. Well, I don't know what is
the future for the Department, but I am not sure we would all
take a bet on doubling it again for the next 5 years, given the
current situation. So that is a concern from the standpoint of
if you don't have good insights on your costs right now--and
the Department is really trying to get a handle on that--it
really raises questions in my mind at some point, do we have a
good handle on all the programs we are buying? Are they even
all collectively affordable? Once you start stretching out
programs because of affordability, that naturally one-one
consequence might be further cost growth.
Mr. Keating. When they are deciding, did they do it in that
risk-assessment-type format that they are going to have to pick
within internal areas? Because----
Mr. Hutton. Well, you are pointing to a very good point,
and maybe Mr. Borkowski might be able to talk with more detail
of what happens within a component.
But I think that is one of the issues that we pointed out
in our 2008 report and we continue to point out. That is why
you need this information. Within a component, they might be
able to have a good understanding of kind of their different
programs, but who at the Department level in the absence of
information is going to really be able to play off all of these
different acquisitions that are trying to affect a capability
gap in all these different missions? In the absence of that
information, I am not sure how well you can make those kinds of
good trade-offs. So I think you are pointing to one of the
biggest challenges.
One thing that the Department is working on with their
Integrated Investment Life Cycle is how to match the individual
decisions we are making at program levels to the broader
Department needs and how they are addressing their overall
capability gaps.
Mr. Keating. Did you want to comment on that, Mr.
Borkowski?
Mr. Borkowski. Certainly, sir.
When we go to--and this is why the Integrated Life Cycle
Management is so important. Because when we go to a--and the
development of that and the maturation and rhythm of it. When
we go to a decision about allowing an acquisition to proceed,
we look at what we think that acquisition will cost and we look
at projections of the budget in the out-years, and we make
decisions based on that point in time.
After that decision is made, those budget assumptions
change. There is not something in the acquisition decision
process that forces a reconsideration of the decision based on
that. It is at this point very much dependent on program
managers who, by the way, we still need to train.
So the Department response to that is to establish this
integrated life-cycle management so that budget decisions are
linked--they are not handled independently and the interactions
between them are considered. We are not all the way there yet.
But that is one of the reasons we need that initiative.
In the mean time, all that I can do as a CAE is watch the
program managers and make sure that as I identify those issues,
that I raise them as appropriate. For example, we are about to
do that with the integrated fixed towers. There are budget
changes since we approved that program. We will bring that back
to the Department.
Mr. Keating. Great.
Mr. Nayak--it is interesting, Mr. Nayak said he was going
to move to Massachusetts, not Texas.
Mr. Nayak. I was born in Massachusetts.
Mr. Keating. Mr. Nayak, you mentioned, too, the need for
resources in procurement itself. Do you want to be specific on
that so I know exactly what you mean?
Mr. Nayak. Yes. So a little bit less than 2 years ago, I
arrived at the Department. One of the first things you want to
get your hands around is, okay, what is in the contracting
workforce? Well, at DHS, it is about 1,453 contracting people,
and they are holding up $14 billion worth of contracts, 100,000
contract actions.
Just a little bit more about the environment. The
predominance of buying happens in the second half of the fiscal
year. It is a tremendous lift for that many people. So we have
set in motion an initiative to create a staffing model using
workload data to see how many contracting people--and
contracting being one sliver of the acquisition workforce. We
have spent a lot of this hearing talking about the program
management side of acquisition. In any event, the model shows
us that--and very clearly shows us that we do need more
resources to get done what we are doing.
At the same time, look, we understand the fiscal
environment. We understand where it possibly could go to. What
are we doing within our lane even though we are armed with this
information and would work with the committee and everybody
else to one day possibly get more resources?
We just have a very clear way of leading in procurement. I
have summarized it in a first-ever strategic plan where I have
four priorities for all of the 1,453 contracting employees, and
it has been communicated very clearly. Mr. Hutton alluded to
it. It basically is this:
Quality people. You have got to have good contracting
people.
Quality contracting. There is basically everything but the
kitchen sink that we have to perform while we are trying to get
a good deal for the American taxpayer. You had mentioned small
business, strategic sourcing, buying green. There is just a
number of other things that we have to measure.
Quality program support. We are not in the business of just
contracting at DHS. We are contracting support programs that
protect the country.
The last one is effective engagement with industry. If we
are spending $14 billion, we need to engage industry early and
often and even outside of the procurement process.
I have four priorities, 30 initiatives, 66 metrics to
actually see how we are doing in the contracting lane from year
to year. I would be happy to share more of that with you. But,
with respect to staffing, we know we need more people, and we
have the data to prove it.
Mr. Keating. This is a thought: People I have talked to in
the private sector are talking a lot about using the Cloud and
being able to be to communicate almost real-time, almost the
way they are with social networking. Only it would seem to me,
with so many programs and so many managers, that that kind of
technology would be very cost-effective and effective at
dealing with it, rather than waiting for a GAO report every
couple of years or that kind of oversight. Something that is
more live-time. Something that can be integrated that way. Is
that something that you are considering?
Because it is much more cost-effective, but it also has the
ability to have everyone communicating with each other, so you
know which programs might be having a problem and you can
move--you are not waiting until, you know, periods of fiscal
instability. You are not waiting for this. Are you considering
that kind of technology?
Mr. Nayak. Yeah. Thank you for the question, and I would
love to explore it a little bit more with you to get a better
understanding of what you are sharing.
Certainly we are using social technology in a number of
areas, all of us are, for specific reasons. If I think I am
understanding your point, it would be to make sure that we all
have the same information. If, in fact, that is the point, we
almost have the tools now to do that. I am a big fan of it.
I love the fact that, for the first time ever, I think we
can, in the Department, with respect to our programs, be very
transparent with Congress, with OMB, with our components, and
at a Departmental level, because we know we are all in this
together. So I would love to explore that a little further.
Mr. Keating. Because I think that, as Mr. Borkowski was
mentioning, too, don't be afraid of scrapping a program or
going back to point one. Well, why wait that far down the
continuum to make the decision? If you are communicating all
the way through, you may not have to wait until that point to
say, I will have to start this from the beginning. You will go
at an earlier stage and can manage your resources. That was the
thought behind that.
Mr. Borkowski, on a human sense, we have had other hearings
in our committee. One of the recurrent themes that we have had
you have touched upon a little bit and that is the idea of
preparing successors. You know, there seems, from the personnel
standpoint, such a movement of people. You are dealing with
program--you know, people looking at programming. One of the
things you mentioned is the difficulty with those people and
their training. What can be done?
You know, in terms of changing the climate, I get a sense
that that climate is changing. People are more attuned to
preparing a successor after themselves. But could you comment?
That seems to be something that has come up at other hearings
as well.
Mr. Borkowski. Yes, sir. Thank you for the opportunity,
because that is a huge issue.
We have big programs, and we have smaller programs. We
spend a lot of time on the big programs, and those are the
programs that generally need the more skilled people. When you
don't have those skills, you try to train them. Well, frankly,
this takes experience, and there is no substitute for
experience.
Now in the near term, things like the Decision Support
Tool, which will lead to this Cloud kind of awareness you are
talking about, and the Centers of Excellence help us augment
and reinforce those people. The interesting thing is there are
succession management plans.
DHS has a wonderful internship program that has brought in
some extremely qualified, talented new people, a very
impressive program, very impressive people, people with masters
degrees. They come in for a 3-year internship. DHS pays for
them for 3 years, and then we bring them on-board.
The other thing that I am finding, which is something that
we need to tap into, those smaller programs that don't get
attention, the so-called level 3 programs which even Dr. Nayak
may not get good insight into. We are starting to review those
at my level. What I am seeing there is, that is the bench
strength, right? Those are the people that will become the
level 1 and level 2 program managers.
In the past, we haven't been very conspicuous about that.
We haven't thought about that. Those are people who kind of
accidentally got appointed. The program is fairly small, but
they are fairly talented. We now have the ability to talk with
those people, to watch those people, to mentor those people so
that we can grow a pipeline of program managers from our own
bench strength. So there is a lot going on in that regard.
The Centers of Excellence give us immediate reinforcement.
The governance structure we have put in place gives managers a
better way of assessing whether the big program managers are in
place. The DHS intern program is wonderful and is bringing in
wonderfully talented people. Our own bench strength that we
haven't recognized in the past, this process allows us to
capture.
Mr. Keating. Those internship programs are done with
academic institutions?
Mr. Nayak. Actually, what happens is it is a competitive
program. People apply for it. So they have generally graduated.
This is their first employment, in many cases. Some of them
have other experiences. But it is an extremely competitive
program.
It is wonderful, by the way, to see these talented people
who are taking positions in the Federal civil service starting
at a relatively low grade, frankly, compared to their degrees
and experiences. With 3 years, they get promoted automatically
up to the GS-12 level, and they are noncompetitively eligible
to go to GS-13. So it is a wonderful program. But it is not
with academic. It is our own program that DHS has created, and
it is a wonderful program.
Mr. Nayak. If you don't mind, I will just add to that,
because I actually own the program.
We have 166 participants in the program, and I really
appreciate Mark's enthusiasm and support. Because it really is
one of these One DHS things that we are doing.
I hire the 166. They have a 3-year rotational program,
solid training. Frankly, we are understating what we do in
terms of training our people, although I do 100 percent agree
with Mark. In order to get the skill, you need experience. You
need knowledge and skill.
But, for instance, in the Government, OMB essentially says
for the acquisition workforce you have got to have a
certification program for your contracting people, for your
program managers, and what we call your contracting officers
representatives.
We have gone beyond that at DHS. We have got cost
estimating certification systems, engineering test and
evaluation, life-cycle logistics. All of these certifications
are available, actually, to all members of the DHS acquisition
workforce. But certainly the 166 that we have now in what we
call our acquisition professional career program have access to
that.
Yeah, it really is second to none, at least in the civilian
side of Government.
Mr. Keating. Great.
Mr. Hutton.
Mr. Hutton. Thank you, Mr. Keating.
I just wanted to kind of add on to the points made and also
build on a question I think the Chairman had earlier about, you
know, why has it been difficult for the execution? I think
resources was one of the points that I made.
It is interesting to note, in our report, we highlight
seven of the main key initiatives that we see that the
Department is trying to undertake; and, by my count, there are
about five that I would say get at the resource issue. One has
to do with the acquisition workforce development, as we have
been talking here. One is the program management core.
We were just talking earlier about the other--not just the
contracting people but the people that have the technical skill
to support a program office. That is one area where I believe,
as we conducted our work, the Department at that time
identified about 150 positions that were at a critical level.
I think the Centers of Excellence, as Mr. Borkowski and Dr.
Nayak have mentioned, is another way to leverage in the
knowledge and skills they have, but they are trying to make
that available to others, as well as the component acquisition
executive structure.
But for each of those initiatives, the point we made out
was--and, as I said earlier, you know, going forward, they are
pragmatic, they make sense. But for each of them I think we
still identified one of the questions is the capacity to
execute those initiatives and have the resources do it. But I
do think they are targeting some of the areas that you raised
the question, sir.
Mr. Keating. Okay. Great.
With that, I yield back my time. Thank you.
Mr. McCaul. I thank the Ranking Member.
I want to also pick up on a point that the Ranking Member
made about, you know, the idea of an IT Cloud, a private Cloud
with--and this is like a giant merger--as you know, 22
different companies essentially.
In the House, we have a private IT Cloud, and there are
some cybersecurity issues. I think actually it strengthens
that. So I think that would just make imminent sense for the
Department to, in the near future, move towards the idea--
because I think that would help facilitate the integration and
the One DHS policy that you have.
So, with that, just let me say that I think this has been a
very productive discussion. I think the Department has made
progress. I look forward to--hopefully next year--this
committee hearing even better things. But you certainly have
your work cut out for you and a big challenge ahead of you, and
we want to work with you to help you in that.
So, with that, this committee now stands adjourned.
[Whereupon, at 10:20 a.m., the subcommittee was adjourned.]
A P P E N D I X
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Question From Chairman Michael T. McCaul for John Hutton
Question 1a. One of the Department's key oversight tools is its
Program Accountability and Risk Management (PARM) office.
Based on your assessment, what impact has PARM had in improving
acquisition outcomes and requiring programs to adhere to DHS
acquisition policy?
Question 1b. Is the taxpayer receiving a decent return on its
investment in PARM?
Answer. In November 2008, we reported that DHS invested billions in
major programs without providing appropriate oversight. Specifically,
we found that staffing had not been sufficient to review investments in
a timely manner and recommended that DHS identify and align sufficient
management resources to implement timely oversight reviews throughout
the investment life cycle.
In response, DHS established the Acquisition Program Management
Division and a Cost Analysis Division, and stated it would eventually
increase staff for these offices to a total of 58 personnel. In 2011,
DHS combined the two divisions and established the Office of Program
Accountability and Risk Management (PARM), with responsibility for
DHS's overall acquisition governance process. In February 2012, PARM
officials told us that they had 46 positions available, and expected to
gain another 10 positions during fiscal year 2012. PARM officials also
told us that they had enough resources to hold oversight reviews when
components request them. DHS has elevated PARM to report directly to
the under secretary for management.
We believe the recent steps taken will help position DHS to
implement its knowledge-based acquisition policy more consistently in
the future and reduce the risk that major acquisitions will perform
poorly. Our survey of program managers conducted from January to March
2012 found that program officials valued PARM's services. Seventy-five
percent of survey respondents (49 of 65) reported that they used PARM
or its predecessor office as a resource; and of this group, 94 percent
found the support to be somewhat to very useful. Further, we are
encouraged that PARM officials have told us they would no longer
advance programs through the acquisition life cycle until DHS
leadership verified the programs had developed critical knowledge.
However, our September 2012 report shows that PARM and DHS must
overcome significant challenges moving forward. For example, one of the
PARM initiatives during fiscal year 2011 was to attain Department-level
approval of acquisition program baselines for 19 high-priority
programs. However, we found that only 8 of the 19 programs had current,
Department-approved baselines as of September 2012. In addition, nearly
all the program managers we surveyed reported their programs had
experienced funding instability, faced workforce shortfalls, or changed
planned capabilities after initiation, which increased the risk of poor
outcomes. In fact, nearly 60 percent of the programs experienced cost
growth, schedule slips, or both. If PARM and DHS are to address the
Department's acquisition management challenges and succeed in the long
run, top leadership commitment and sustained implementation of its
knowledge-based acquisition policy will be critical.
Question From Ranking Member William R. Keating for John Hutton
Question. We all know the Department is an operational agency with
a significant, real-time mission, with threats that are on-going and
ever-changing. In this context, please discuss the balance that should
be struck between fielding new capabilities and ensuring that taxpayer
dollars are spent in an effective manner.
Answer. DHS has a diverse, critical, and challenging mission that
requires it to respond to an ever-evolving range of threats. Given this
mission, it is important DHS maintain an agile and flexible management
approach in its day-to-day operations. However, DHS must adopt a more
disciplined and systematic approach for managing its major investments,
which are intended to help meet critical needs. DHS has taken some
steps to improve investment management, but most of its major
acquisition programs continue to cost more than expected, take longer
to deploy than planned, or deliver less capability than promised. These
outcomes are largely the result of DHS's lack of adherence to key
knowledge-based program management practices, even though many are
reflected in the Department's own acquisition policy.
The urgency of DHS's operational needs has been a factor in how the
Department has implemented its acquisition policy. DHS acquisition
policy establishes several key program-management practices through
document requirements, which are intended to provide critical knowledge
needed to support effective decision making. However, PARM officials
explained that DHS has permitted programs to advance without
Department-approved acquisition documents because DHS had an
operational need for the promised capabilities, but the Department
could not approve the documents in a timely manner. In 2008 and 2010,
we reported that several programs were permitted to proceed with
acquisition activities on the condition they complete key action items
in the future, but PARM officials told us that many of these action
items were not addressed in a timely manner.\1\
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\1\ GAO, Department of Homeland Security: Billions Invested in
Major Programs Lack Appropriate Oversight, GAO-09-29 (Washington, DC:
November 18, 2008); Department of Homeland Security: Assessments of
Selected Complex Acquisitions, GAO-10-588SP (Washington, DC: June 30,
2010).
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We understand that there will be instances when it may be
appropriate for DHS to pursue certain capabilities in an accelerated
manner; however, we believe that those instances should be more by
exception than the rule. It is essential that DHS take a more
disciplined acquisition management approach moving forward,
particularly as the Department must adjust to a period of Government-
wide funding constraints. Without greater discipline, decisionmakers
will continue to lack critical information and the Department will
likely continue to pay more than expected for less capability than
promised, which will ultimately hinder DHS's day-to-day operations and
its ability to execute its mission. Further, Congress's ability to
assess DHS funding requests and conduct oversight will remain limited.
Questions From Chairman Michael T. McCaul for Nick Nayak
Question 1a. According to GAO's work, DHS acquisition programs
continue to produce unreliable cost estimates.
What steps, if any, is the Department taking to contain and prevent
cost growth in its major acquisition programs?
Question 1b. How is DHS improving its cost estimates to make them
more reliable?
Answer. Over the past 3\1/2\ years, DHS has strengthened its policy
for approving and managing acquisition programs. In an effort to
contain and prevent cost growth in our major acquisition programs, DHS
has instituted a variety of measures to ensure efficiency and mitigate
risk. In 2010, DHS implemented Acquisition Management Directive (MD)
102-01, which requires components to demonstrate appropriate planning
in order to receive approval for an acquisition. To ensure program
managers are executing within cost and schedule parameters and to
prevent potential cost growth, every program is required to receive
approval from the Acquisition Review Board (ARB) before proceeding to
the next phase of the acquisition life cycle, such as moving from
development to production. A key responsibility of the ARB is to
systematically review major acquisitions to ensure the program has
instituted adequate programmatic risk mitigation strategies. In
addition to ARB reviews at major milestones, DHS actively tracks and
measures actual program performance via monthly reporting and oversight
mechanisms such as the Comprehensive Acquisition Status Report,
Quarterly Program Accountability Report, and Exhibit 300. This
oversight provides an early alert to potential problems, such as cost
growth or requirements creep, and, as a result, the Department can take
corrective action by engaging the component or program.
As a result of these oversight processes, the under secretary for
management (USM) is able to direct improvements to inadequate program
plans before allowing them to proceed. One specific example is the U.S.
Immigration and Customs Enforcement (ICE) TECS Modernization program.
As a result of a regular ARB program review, the USM halted the program
and directed the ICE to re-baseline and effectively scope requirements.
This ARB-directed pause for rebaselining resulted in a cost avoidance
of roughly $46 million in operations and maintenance over the previous
cost estimate. By the consistent application of policy and governance
through the regular ARB review process, DHS has institutionalized a
repeatable acquisition discipline. The result is better-performing
programs and more reliable diagnostics to monitor decisions or actions
that may lead to unplanned cost growth.
The Department has implemented several improvements to the quality
and reliability of the cost estimating discipline across DHS. In 2011,
the USM established the Cost Estimating & Analysis Center of Excellence
(CE&A COE), through the Office of Program Accountability and Risk
Management (PARM), to provide best practices and guidance for
development of all cost estimates and cost analyses in the Department.
The COE has identified and obtained best-in-class cost estimating tools
and standardized operating models that have been disseminated to the
components. By providing cost estimating subject matter expertise to
assist DHS components and program managers, the number of DHS-approved
Life Cycle Cost Estimates (LCCEs) has significantly increased over the
last year which allows DHS to better articulate required funding needs
and more effectively ascertain impacts to program scope should budget
cuts be required.
The COE has developed and implemented a LCCE scorecard to
systematically analyze the quality of LCCEs based on best practices
identified by the GAO. The TECS Modernization system, as evidenced in
their rebaselining efforts, exemplifies the value of both the scorecard
and COE support to develop a reliable LCCE.
DHS has also increased the number of Level III Certified Cost
Estimators by 50 percent. Level III, the highest level certification,
represents a senior level mastery of the knowledge and skills
associated with the complexities of cost estimating. DHS is
institutionalizing the cost estimating discipline across the Department
by embedding experienced certified cost estimators into major
operational components via the CE&A COE.
These cost estimators provide consistent application of GAO best
practices and establish cost estimating standard operating procedures
at the component level. In addition to the added focus on
accountability, risk, and oversight through the establishment of PARM,
the changes have significantly enhanced the maturity of the Department,
particularly in this discipline. These tools and practices provide a
robust foundation upon which to build a culture of cost estimation
within DHS which, in turn, increases the reliability of cost estimates
across the Department.
Question 2a. GAO reported that frequently the original capabilities
for a program are changed. This can lead to cost overruns and schedule
delays down the road.
In your view, how critical is it to keep capabilities stable?
Question 2b. Does DHS prefer to use an incremental approach to
acquiring capabilities (fielding needed capabilities in steps)? If so,
what is the impact of changing capabilities midcourse?
Answer. The Department acknowledges that major acquisition programs
must be properly structured to maintain a stable set of requirements
for capabilities, yet be flexible enough to adjust to changes. This is
particularly important given the adaptive nature of America's
adversaries and the limited predictability of natural disasters.
Management Directive (MD) 102-01 establishes the Department's
acquisition life-cycle framework. The Department does view capability
definition as foundational in defining an acquisition program. Each
step of the life-cycle framework builds on defining a mission need and
capability gap. This standardized framework begins with a component or
program defining their mission need and capability to be developed. The
next phase builds on defining the capability definition by analyzing
alternatives, cost, and defining operational requirements for a
capability gap. Once an alternative for delivering a capability has
been approved, then a program proceeds with acquiring that capability.
This could result in leveraging an existing capability, expanding
existing capability, or acquiring the capability. Each phase of the
acquisition life cycle is systematically reviewed and approved by the
Acquisition Review Board (ARB).
At an early phase in the life cycle the program is reviewed by the
ARB for formal approval as a program of record. At this point the ARB
is looking to verify that the potential acquisition has sufficiently
well-defined operational requirements, a preferred solution set that is
balanced, effective, and achievable, a complete life-cycle cost for
that solution set and complete acquisition and support plans. The
aforementioned are documented in what is known as the Acquisition
Program Baseline (APB). The APB establishes the baseline cost,
schedule, and performance parameters for the program and related
projects. In practical terms, the APB is the ``contract'' between the
Acquisition Decision Authority (ADA) and the component on what will be
delivered, how it will perform, when it will be delivered, and what it
will cost. Should a program or project fail to meet any cost, schedule,
or performance threshold in the APB the Program Manager must submit a
remediation plan to the Department within 30 days explaining
circumstances of the breach and proposing corrective action. Within 90
days of the breach the program should be either be back within approved
APB parameters; undergo a re-baseline of the breached parameters and
have a new APB approved or partake in a program review with the ADA to
review any proposed baseline revisions and recommendations.
In addition to establishing an APB early on in a program's life
cycle the ARB also reviews the approach to delivering capability as
described in the Acquisition Plan. Distinct capabilities require
different approaches to delivering capability to support the mission
need. The acquisition review process reviews each program's delivery
approach, and when appropriate approves incremental delivery.
Incremental delivery being defined as limited production releases. For
example, the Department routinely fields domain awareness assets (e.g.,
ships and aircraft) on a limited production release basis. This
approach for large complex domain capabilities allows the Department to
reduce development and deployment risk (e.g., by refining requirements
or increasing the maturity of technologies prior to full production).
Another example where a limited release approach is being used within
Department is for certain IT system development programs. The use of
this acquisition approach for IT systems is guided by OMB Circular A-
11. In general, capabilities are acquired and developed in useable
segments to minimize financial and operational risk. For its IT
programs, the Department has adopted OMB's ``25 Point Plan to Reform
Federal Information Technology Management.'' The Plan allows
organizations to provide end-users with an early opportunity to
influence the solution before the product is released (i.e., agile
development). DHS will leverage agile development to shift investment
decisions from an inefficient, inflexible choice among projects to the
management of business benefit.
For IT programs using this approach, capabilities are delivered as
smaller and limited chunks of functionality. DHS has already realized
benefits in risk and cost reduction, faster time to field, and better
fit of IT systems to mission needs where this approach has been
adopted. For IT projects, collaboration and use of agile methodologies
allows for production-ready code at the completion of each iteration;
unit testing in each iteration; and, openness to business partner
feedback and reprioritization. One such success story at DHS is the
U.S. Immigration and Customs Enforcement (ICE) Criminal Alien
Identification Initiative (CAII).
The CAII Program Office adopted an agile approach to Systems
Development in 2011 and it has continued to mature its development
practices. The CAII Program Office has been successful in shortening
the ``time to market'' for releases (time-boxed releases) and has
reduced overall program development cost and schedule variances. The
CAII Program Office uses small, highly skilled, and very efficient
development teams that focus on developing working, production-worthy
code. At any one time, the development teams are responsible for only a
small number of documents, freeing up time for actual development. The
Scrum Master, Information Technology Program Manager (ITPM), and
Planning Team are responsible for mitigating any obstacles to efficient
coding.
As a result of these activities CAII has successfully delivered
three ``major'' releases in a shortened time frame. With the agile
approach, mistakes, when made, are smaller and benefits are realized
sooner. CAII development was originally estimated to cost $60 million
over 5 years. To date, 13 months and $5 million have been spent on CAII
and the Program Office now projects a total cost of $12 million and
completion within 2 years.
No matter what delivery approach a program recommends, the ARB
process has defined milestones to evaluate whether proper program
planning has occurred to effectively deliver necessary capability. In
the event of new circumstances (e.g., new threat, disaster, etc.), the
ARB will conduct reviews to re-evaluate the program and make changes
needed to improve the probability of capability delivery. This was the
case for the USCIS Transformation program, where the approach approved
in fiscal year 2010 did not result in capability delivery. The revised
strategy required the program to use an agile development approach with
smaller and more frequent capability delivery. Currently, the program
has delivered more capability within the last year than in the previous
4 years combined. Further, the availability of improved data allows for
greater ability to identify risks and resolve them before they become
issues. This is accomplished through the Decision Support Tool (DST)
which provides cost/schedule/performance data for senior decision
makers. The DST serves as an early warning or trigger mechanism.
Question From Ranking Member William R. Keating for Nick Nayak
Question. How are the Centers of Excellence and the Decision
Support Tool making an impact on the implementation of acquisition
policy and procedures at the component level?
Answer. In the past year, eight COEs have been established to
reduce risk and improve program performance by supporting programs
throughout their life cycle. To reduce risk, each COE reinforces
compliance with the Department's acquisition policy by providing expert
counsel and training to components. The COEs also develop clear, plain
language guidance on how to execute and institutionalize DHS
acquisition policy within the component.
In fiscal year 2012, the Cost Estimating and Analysis Center of
Excellence (CE&A COE) worked collaboratively with the U.S. Immigrations
and Customs Enforcement (ICE) to develop and deploy nine training
modules on cost estimating based on GAO best practices. This training
has inspired ICE to develop and implement a Cost Estimating toolkit to
aid its program managers with developing Life Cycle Cost Estimates
which further institutionalizes the cost estimating discipline within
ICE.
The DST, taking information from the Department's source systems,
is recognized as the principal program reporting tool across the
Department. It provides essential information to the ARB and other
decision makers throughout the life cycle of major acquisitions. In the
past 2 years, component participation has increased from 39 percent to
97 percent. Components such as TSA, ICE, and USCG are augmenting their
governance procedures by using reports generated from the DST to inform
their internal reviews and governance activities. The use of the DST
within the components promotes the integration of critical business
information into operational activities and decision making. The DST
has also proven to be an effective tool for increasing the accuracy and
timeliness of major acquisition program data to track performance and
inform decisions by the ARB.
Additionally, the CE&A COE has worked with DHS Program Analysis and
Evaluation (PA&E) to develop policy that requires Component Senior
Financial Officers to certify the accuracy of key financial
information, including program execution, budget, and out-year funding
information.
Program managers must validate that their program is fully
resourced throughout the 5-year resource plan. If the acquisition is
not fully resourced, the component must identify the trade-offs
necessary to fund the acquisition within existing resources). Part of
the trade-off analysis examines the impact of reducing performance or
schedule to make the acquisition affordable.
Questions From Chairman Michael T. McCaul for Karen Shelton Waters
Question 1a. Earlier this year, GAO reported that TSA did not fully
follow DHS acquisition policies when acquiring Advanced Imaging
Technology--commonly referred to as full-body scanners that identify
objects or anomalies on the outside of the body--which resulted in DHS
approving deployment of AIT without fully knowing TSA's revised
specifications. GAO also said that TSA failed to receive approval from
DHS on how it would test AIT machines before deployment began.
Why did TSA circumvent the Department on AIT?
Answer. The Transportation Security Administration (TSA) did not
circumvent the Department of Homeland Security (DHS), or its policies,
on Advanced Imaging Technology (AIT). DHS Acquisition Management
Directive 102-01 provides the overall policy and structure for
acquisition management within DHS, the DHS Acquisition Lifecycle Review
Framework, and additional management procedures and responsibilities
that augment existing policies, regulations, and statutes that govern
the procurement and contracting aspects of acquisition. Directive 102-
01 was issued as an interim policy in November 2008. By September 2009,
implementation of the requirements of Directive 102-01 interim policy
was still immature both at the Department and TSA, to include the
process for requirements change notifications to acquisition management
authorities. As a result, TSA did not document or process the
notification, mentioning the change verbally at the DHS Acquisition
Review Board in September 2009. Test and Evaluation Directive 026-06
prescribes implementing policies and procedures and assigns
responsibilities for Test and Evaluation activities to be performed
throughout the system acquisition process. Regarding the GAO finding
that TSA failed to receive approval from DHS on the AIT test plan, the
Test and Evaluation Directive 026-06 that required this approval was
signed in May 2009, and since planned testing was already under way at
this time, TSA was unable to delay the project without major
ramifications occurring.
Question 1b. What impact did this decision have on the capabilities
of these machines?
Answer. The failure to go through the formal requirements change
process did not affect the capabilities of the Advanced Imaging
Technology (AIT). Typically, acquisition authorities at DHS do not
determine what the requirements should be, because they are not the
operational experts. Instead, these authorities are primarily concerned
about requirements being properly stated, coordinated with the right
people, and validated before significant investment is made in pursuing
a system that meets them. Threats to aviation are dynamic and
constantly evolving to include non-metallic threat objects and liquids
(for example, explosives) carried on persons. AITs offer a significant
increase in detection capabilities for non-metallic threats previously
not mitigated by walk-through metal detectors and provide the best
opportunity for mitigating these threats, as well as balancing security
effectiveness, operational efficiency, throughput, passenger
satisfaction, and privacy.
Question 1c. Has TSA taken steps to ensure this does not occur in
the future?
Answer. TSA's internal acquisition processes and workforce are in
alignment with DHS policy. TSA fully complies with DHS acquisition
policy and ensures Program Management Offices adhere to the processes,
ensuring compliance with the letter and intent. Numerous TSA
Acquisition Review Boards, continual reviews of key acquisition
management documents, and continual coordination internally in TSA and
externally with DHS provide management controls and adequate oversight.
Question 2. Is DHS's acquisition policy achievable? How could the
Department better ensure programs at the component-level adhere to the
policy?
Answer. Yes, the Department of Homeland Security's (DHS)
acquisition policy is reasonable and achievable. In the past 4 years,
the Transportation Security Administration (TSA) has made great strides
towards understanding and implementing the DHS's acquisition policy,
and adequate governance processes are in place. In addition, DHS and
TSA derive significant benefit from an increase of qualified
acquisition personnel assigned within the governance offices.
Question 3. What steps has TSA taken to ensure a failure like the
puffer machines does not occur in the future?
Answer. As noted previously, improvements in compliance and overall
maturation in the areas of acquisition management, requirements
generation, and testing and evaluation will help ensure that quality
products are delivered to the field to support the Transportation
Security Administration's (TSA) aviation security mission. In
particular, the TSA follows a robust test and evaluation process for
all of its technology procurements. This includes both developmental/
technical testing--and operational testing in the field environment, to
ensure all checkpoint screening technologies are assessed as to
operational effectiveness and suitability prior to full rate production
decisions or wide-scale use--in airport settings. TSA also conducts
additional testing activities at its TSA Systems Integration Facility
(TSIF), which began operations in January 2009. TSA designed the TSIF
to serve as a simulated, but representative, operational environment in
which to test and evaluate security technologies without interfering
with airport operations. This capability did not exist when TSA
purchased the puffer machines, which went from laboratory testing to
field deployment. Additionally, in 2009, the Department of Homeland
Security issued Management Test and Evaluation Directive 026-06 to
prescribe implementing policies and procedures and assigns
responsibilities for Test and Evaluation activities to be performed
throughout the system acquisition process. Management Directive 026-06
also establishes DHS oversight of components. The TSA Passenger
Screening Program strictly adheres to this policy in its program
execution and follows the processes defined within it. The elements
within the test planning and execution process ensure that operational
tests and evaluations have been successfully completed before deploying
checkpoint screening technologies to airport checkpoints.
Question From Ranking Member William R. Keating for Karen Shelton
Waters
Question. To date, how many programs have moved through the review
and approval process under the Program Accountability and Risk
Management Office? What are the dollar thresholds for these programs?
Answer. The Transportation Security Administration (TSA) has 11
major acquisition programs with the Department of Homeland Security
(DHS)'s Program Accountability and Risk Management (PARM) oversight.
Four programs have completed the TSA acquisition process and portions
of the DHS PARM acquisition review process. Seven programs were in full
operational sustainment prior to the initiation of the DHS Acquisition
Management Directive 102-01-001 acquisition policy, and therefore, have
not been through the DHS PARM process. Acquisition Management Directive
102-01-001 are instructions which complement Acquisition Management
Directive 102-01. Acquisition Management Directive 102-01 provides the
overall policy and structure for acquisition management within DHS, the
DHS Acquisition Lifecycle Review Framework, and additional management
procedures and responsibilities that augment existing policies,
regulations, and statutes that govern the procurement and contracting
aspects of acquisition.
However, these programs have undergone reviews as part of the DHS
Portfolio Review process, internal program status assessments, and
Office of Management and Budget Exhibit 300 preparation, review, and
submission. As these programs initiate actions or initiatives that make
it appropriate to do so, the TSA Component Acquisition Executive will
engage with PARM to arrange for the appropriate reviews to take place.
All of these 11 major TSA acquisition programs have been determined to
meet the Directive 102-01-001 criteria identifying them as Level 1 & 2
programs. (Note: Level 1 = Life Cycle Cost at or above $1 billion,
Level 2 = Lifecycle Cost $300 million or more, but less than $1
billion).
Question From Ranking Member William R. Keating for Mark Borkowski
Question. How is the Office of Technology and Innovation, which you
created, working to ensure that CBP personnel understand the
Department's management integration initiatives and their roles in
implementing procurement procedures? What types of outreach and
training for staff are being offered?
Answer. U.S. Customs and Border Protection's (CBP) philosophy
espouses that acquisition (e.g., from cradle to grave) governance
requires cooperation and participation among the Component Acquisition
Executive (CAE), Chief Information Officer (CIO), and Head of
Contracting Activity (HCA). Though each has defined roles and
responsibilities unique to their respective positions, each recognizes
the need for, and enforces collaboration in acquisition program
governance.
In keeping with the philosophy of cooperation and participation for
acquisition governance, CBP's Program Lifecycle Process (PLP) Guide was
signed by Mr. Armstrong, CIO; Mr. Gunderson, HCA; and Mr. Borkowski,
CAE on Friday, March 30, 2012. The Program Lifecycle Process (PLP)
Guide presents a unified governance process for all CBP programs and
implements the DHS acquisition policy directive, D-102 within CBP. All
programs and projects (including capital assets and enterprise
services) are managed through a consistent governance process that
allows leadership to make informed decisions about where money is being
invested and what is being acquired. Efficient governance processes
allow Program Managers (PMs) to maximize program success, navigate
governance processes, and deliver much-needed capability to end-users.
To this end, the CBP PLP Guide integrates investment, acquisition,
enterprise architecture, and systems engineering governance to the
fullest extent possible. CBP policies implementing D-102 and defining
roles and missions of acquisition stakeholders, melding of enterprise
architecture and Systems Engineering Life Cycle (SELC) gate reviews,
and CBP life-cycle logistics have been drafted and are currently in
review.
OTIA and CBP have developed a governance structure that simplifies
and reduces the number of required program reviews while including
participation and representation of functional and technical experts
from across key CBP offices. Additionally, senior leaders in
acquisition at the Department level are involved at critical decision
events. A streamlined acquisition investment review board (IRB) has
been defined, tailorable based on Acquisition Level of a specific
program. CBP's acquisition triad has initiated twice-yearly acquisition
reviews of all CBP programs with CAE/CIO/HCA and DHS Program
Accountability and Risk Management (PARM) office participation. The
CAE's support staff conducts quarterly program manager off-sites to
share information, provide training, and strengthen the acquisition
core. OTIA's Acquisition Guidance and Analysis Directorate (AGAD)
offers training to individual program management offices, two of which
have taken advantage of this training to strengthen their staffs and
program expertise.
CBP is moving away from short-sighted annual budget processes to
long-term (multi-year) strategies for acquiring and supporting
capabilities; establishing the framework for agency level
prioritization of needs with solutions, with the first extensive
bottoms-up build of Resource Allocation Plan (RAP) conducted for fiscal
years 2014-2018.
CBP is changing the organizational culture of submitting ill-
prepared requirements to procurement. Using procurement tools such as
Contract Performance and Reporting System (CPARS), helps improve vendor
performance and responsiveness through accountability. The procurement
function is an integral part of acquisition processes--including
procurement actions early in the acquisition planning process. OTIA, in
coordination with the HCA, established Contract Review Boards (CRBs) to
effect early coordination of acquisition planning with commensurate
procurement planning. As a proven best practice, implementation of the
CRB throughout CBP is in progress.
Top priorities are to increase quality and effectiveness of the
acquisition workforce by supporting CBP's professional Acquisition
Corps development. Current scope for Acquisition Workforce (AWF)
improvement includes on-going Training & Development (T&D), support for
DHS certification attainment, Continuous Learning (CL) achievement/
maintenance, piloting a Succession Planning & Talent Management process
for Acquisition Program Management Office (PMO) staffing, designation
of acquisition positions with flags in human resource systems, and
correlation of Position Descriptions (PDs) properly classified to
support hiring and retention of acquisition professionals to improve
mission outcomes.
OTIA's Acquisition Support Division manages acquisition and
procurement-specific workshops conducted weekly using a portfolio of 1-
hour introductory modules to provide just-in-time acquisition training
in a continuous learning environment. OTIA's Acquisition Management
Division is working jointly with Procurement to deliver ``Procurement
102'' training/workshops; building on next level from ``Procurement
101'' training developed/delivered beginning in fiscal year 2010;
delivering over 50 classes Nation-wide to over a thousand CBP employees
in fiscal year 2010 and fiscal year 2011. OTIA and Procurement jointly
developed and began delivery of Procurement 102, providing 14 training
sessions in fiscal year 2012, across the country, for program and
procurement personnel to enhance planning and quality of procurement
request packages. An ``Acquisition Planning'' workshop was presented
this past week, which we are mapping to DHS MD102.
CBP currently has 1,256 certified AWF professionals in all eight
certification career disciplines, as detailed below. Two-hundred
eighty-five Total CBP Acquisition Professional Certifications were
processed in fiscal year 2012, and maintained 92.6% Total CBP
Continuous Learning Achievement for 1,233 CBP AWF professions with DHS
certification.
------------------------------------------------------------------------
DHS Certified
Professionals
DHS Certification Discipline (as of 9/4/
2012 from
FAITAS)
------------------------------------------------------------------------
Contracting Officer's Representative (COR).............. 737
Acquisition Program Manager (PM)........................ 318
Contracting Officer (CO)................................ 157
Life Cycle Logistics (LCL).............................. 16
Test & Evaluation (T&E)................................. 14
Program Financial Management (PFM)...................... 9
Systems Engineering (SE)................................ 5
Business Cost Estimating (BCE).......................... 0
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OTIA will serve as the test bed and demonstration site for
implementation. OTIA has identified Acquisition Workforce positions
(task completed in fiscal year 2012) and will work with Human Resources
(HR) in fiscal year 2013 to designate those positions in HR database
systems in fiscal year 2013. Also in fiscal year 2013, position
descriptions will be modified for acquisition positions, working
closely with HR classification professionals to ensure accurate,
definitive, and standardized position descriptions are matched to the
designated acquisition positions. Hiring to those positions and
identification of follow on training for continuous learning
opportunities and career development will be a continuous process.
Focus for fiscal year 2014 and fiscal year 2015 will be to share and
flow applicable methodology of designating acquisition positions and
use of standardized acquisition position descriptions to program
offices outside of OTIA. Fiscal year 2016 and fiscal year 2017's
priorities will be to share proven methodologies to CBP acquisition
supporting offices outside of OTIA.