Report finds DHS contracts over budget, behind schedule

The Homeland Security Department's key acquisition programs are experiencing major cost growth and unexpected scheduling delays, according to a new report by the Government Accountability Office.

The report, which House Homeland Security Committee Chairman Rep. Bennie Thompson, D-Miss., released on Wednesday, provides a snapshot of DHS' most complex acquisitions. The findings were not encouraging.

GAO examined 15 of the department's largest and most critical acquisition programs. The contracts were split across six DHS components and had a combined $100 billion in total life-cycle costs and roughly $38 billion in direct procurement costs. Investigators found 12 of the programs reported cost overruns and almost all experienced schedule delays from the initial contractor estimates. Eight of the programs reported delays of one year or more.

In total, DHS' contract spending has increased by 66 percent -- from $8.5 billion in fiscal 2004 to $14.2 billion in fiscal 2009 -- and its portfolio of complex acquisitions continues to expand.

"While DHS has made recent progress in clarifying acquisition oversight processes, much remains to be done to ensure proper implementation and departmentwide coordination," wrote acting Comptroller General Gene Dodaro. "In a time of fiscal constraints, it is increasingly important that DHS' acquisitions maximize resources to effectively meet critical homeland security missions."

DHS officials attributed the ballooning price tag to poor planning. Some managers used cost estimation methods that did not follow best practices, such as fully defining program requirements, accounting for sustainment costs and including costs for the full life-cycle of an initiative, according to the report. The changes in life-cycle cost estimates ranged from decreases of more than 40 percent to upticks in excess of 500 percent.

For example, the BioWatch Generation-3 program to rapidly detect airborne biological agents has been delayed 18 months due to unavailability of vendor equipment, a change in testing responsibilities, and additional time required to complete DHS reviews, the report said. Meanwhile, the total acquisition costs of the Transportation Security Administration's Passenger Screening Program have jumped from $1.8 billion to $2.5 billion, GAO found.

Investigators found other problems. Employees representing more than half the programs GAO reviewed awarded contracts without supervisors approving key planning documents that set operational requirements and established acquisition program baselines. Staffing shortages, funding problems, or a lack of sustainment planning hindered other programs, GAO said.

Thompson attributed many of the problems to Homeland Security's decentralized acquisition system. "The department must undertake significant and concerted efforts to reform and centralize its procurement efforts, engage in strategic long-term, life-cycle planning for major acquisitions, and hire and train a sufficient number of personnel to decrease its reliance on outside contractors," he said.

GAO did find the department was making progress in better overseeing its contracts and implementing a revised acquisition management directive. DHS has developed a database to track key program information, including cost and schedule performance, contract awards and program risks. At the component level, oversight officials are establishing new executive positions to manage the acquisition process, although their decision-making authority is limited, the report said.

In addition, the senior-level Acquisition Review Board reviewed 24 major acquisition programs in fiscal 2008 and 2009. More than 40 other major acquisition programs, however, have yet to be reviewed, GAO said.

In response, DHS said other senior acquisition staff members are conducting their own portfolio review process. In fiscal 2009, officials reviewed 61 of 67 major DHS acquisition programs, wrote Jerald Levine, director of the GAO and Office of Inspector General Liaison Office.