[Senate Hearing 110-240]
[From the U.S. Government Publishing Office]
S. Hrg. 110-240
DHS'S ACQUISITION ORGANIZATION: WHO IS REALLY IN CHARGE?
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HEARING
before the
OVERSIGHT OF GOVERNMENT MANAGEMENT,
THE FEDERAL WORKFORCE, AND THE
DISTRICT OF COLUMBIA SUBCOMMITTEE
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JUNE 7, 2007
__________
Available via http://www.access.gpo.gov/congress/senate
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana TOM COBURN, Oklahoma
BARACK OBAMA, Illinois PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri JOHN WARNER, Virginia
JON TESTER, Montana JOHN E. SUNUNU, New Hampshire
Michael L. Alexander, Staff Director
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE
DISTRICT OF COLUMBIA SUBCOMMITTEE
DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan GEORGE V. VOINOVICH, Ohio
THOMAS R. CARPER, Delaware TED STEVENS, Alaska
MARK L. PRYOR, Arkansas TOM COBURN, Oklahoma
MARY L. LANDRIEU, Louisiana JOHN WARNER, Virginia
Richard J. Kessler, Staff Director
Jennifer A. Hemingway, Minority Staff Director
Emily Marthaler, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Akaka................................................ 1
Senator Voinovich............................................ 3
WITNESSES
Thursday, June 7, 2007
Hon. Paul A. Schneider, Under Secretary for Management, U.S.
Department of Homeland Security................................ 5
Admiral John P. Currier, Assistant Commandant for Acquisition,
U.S. Coast Guard............................................... 7
John P. Hutton, Director of Acquisition and Sourcing Management,
U.S. Government Accountability Office.......................... 9
Alphabetical List of Witnesses
Currier, Admiral John P.:
Testimony.................................................... 7
Prepared statement........................................... 36
Hutton, John P.:
Testimony.................................................... 9
Prepared statement........................................... 41
Schneider, Hon. Paul A.:
Testimony.................................................... 5
Prepared statement........................................... 27
APPENDIX
Background....................................................... 53
Response from Mr. Schneider to specific questions regarding the
number of new acquisition staff the Department has hired....... 59
``Defense Acquisition University Quick Look Study,'' United
States Coast Guard Deepwater Program, February 2007............ 61
DHS'S ACQUISITION ORGANIZATION: WHO IS REALLY IN CHARGE?
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THURSDAY, JUNE 7, 2007
U.S. Senate,
Subcommittee on Oversight of Government
Management, the Federal Workforce,
and the District of Columbia,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:33 p.m., in
Room 342, Dirksen Senate Office Building, Hon. Daniel K. Akaka,
Chairman of the Subcommittee, presiding.
Present: Senators Akaka and Voinovich.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Good afternoon. This hearing of the Homeland
Security and Governmental Affairs Subcommittee on Oversight of
Government Management, the Federal Workforce, and the District
of Columbia is called to order.
I want to welcome our witnesses and offer my special thanks
to Under Secretary Schneider for taking time out of his busy
schedule once again for this Subcommittee. Last month, this
Subcommittee held its first hearing to examine the Department's
management challenges, where we touched on several issues vital
to integrating DHS successfully. In today's hearing, we hope to
explore one of the most critical issues facing DHS, and that is
acquisition management.
Four years ago, the Federal Government started a monumental
task bringing together 22 agencies and offices from across the
Federal Government to form the new Department of Homeland
Security. This reorganization combined 180,000 employees as
well as a massive procurement portfolio. DHS has become the
third-largest spender on contracts behind the Departments of
Defense and Energy, spending more than $15 billion in fiscal
year 2006.
While DHS is still a young agency, it has experienced its
share of contracting woes. Since its creation in 2003, DHS has
found itself on the Government Accountability Office's high-
risk list. This has been due in large part to the challenges
that existed in many of DHS's component agencies before the
reorganization as well as the complexity and critical
importance of a successful reorganization.
In particular contract management has posed a difficult
problem throughout DHS's short history. The Department is
already engaged in several large-scale procurement projects.
Some were poorly executed and managed. Poor contract management
leaves DHS vulnerable to waste, fraud, and abuse. Most
importantly, it exposes the Nation to unacceptable security
risks.
When the Department was created, a total of seven component
agencies brought their own contracting shops to DHS. Those who
did not have their own existing organization before coming to
DHS now utilize the Office of Procurement Operations under the
Chief Procurement Officer. While DHS does have a Chief
Procurement Officer, the acquisition organizational structure
at DHS gives the position little formal authority outside of
the Office of Procurement Operations. A 2004 Management
Directive at DHS gave the CPO oversight and auditing roles
agency-wide, but limited its authority over the Secret Service
and the Coast Guard. The CPO and DHS's other contracting shops
share dual authority over contracting matters. This
decentralized acquisition organization has proven problematic
for the agency, according to GAO.
In addition to the acquisition structure at DHS, the
Department has an inadequate contracting workforce. The
shortage of qualified procurement professionals seriously
hinders the Department's ability to oversee contracts
effectively after they have been awarded. DHS has made some
progress in improving recruitment, training, and retention of
qualified acquisition professionals, notably with its new
internship program.
However, more needs to be done. Without the experienced
workforce the Department requires, I fear it will have to rely
increasingly on large single-source contracts that it cannot
effectively manage, leading to increased waste and fraud.
Last year, problems with the Coast Guard's Deepwater
contract came to a head when costs soared and deliverables did
not meet specifications required under the contract. I
understand that over the last several months, the Coast Guard
has reevaluated its Deepwater contract and implemented reforms,
which I hope Admiral Currier will detail in his testimony, but
it is most important to hear what lessons have been learned
both by the Coast Guard and the Department that can be applied
to future acquisition programs.
The Department is now in the process of implementing the
Customs and Border Protection contract to secure our borders,
known as the Secure Border Initiative, or SBInet. This will be
a multi-year, multi-faceted project of a tremendous scale that
would present a great procurement management challenge to even
the most experienced, highest-functioning organization.
However, as the DHS Inspector General pointed out in a November
2006 report, there are already early warning signs that the
Department may not have the resources available to manage
SBInet properly. According to that report, DHS lacks the
appropriate workforce, business processes, and management
controls to plan and execute it. I am greatly concerned by
this. I hope that Under Secretary Schneider will lay out how
DHS intends to mitigate the problems highlighted in the
Inspector General's report.
DHS needs a comprehensive acquisition structure in which
all components with procurement authority work together, do not
duplicate efforts, and do not unnecessarily compete for
resources. This is essential for the Department to perform its
mission.
As Benjamin Franklin once famously said, ``For want of a
nail, the shoe was lost. For want of a shoe, the horse was
lost. And for want of a horse, the rider was lost.''
Acquisition management is a fancy term for making certain that
our first responders and homeland security professionals have
the tools they need to accomplish their mission. I intend to
keep a close watch on how well DHS is managing acquisition and
look forward to supporting Mr. Schneider's efforts at reform.
Now, I would like to call on Senator Voinovich for his
statement.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. Thank you, Senator Akaka. I want to
thank all of you for being here today. This is the second
hearing we have had on management issues facing the Department
of Homeland Security. I am very worried about the current state
of the Department and where it is going. I don't think the
public understands what a gigantic task it is to take 22
agencies, 200,000 people, and bring them together and come up
with an organization that really gets the job done.
Senator Akaka and I are going to stay committed to the
Department's management issues. We want to make sure that this
gets off the GAO high-risk list, but more important than that,
that it does the job that the people of this country expect it
to do, which is to protect the homeland.
I think too often Congress fails to recognize the link
between agency management and operational success. With a
finite amount of resources and an ever-growing demand for
homeland security services, it is imperative that the
Department employ an effective acquisition management strategy
to ensure taxpayer dollars are spent in a cost-effective
manner.
In 2005, the GAO began reporting on the challenges inherent
in the Department's acquisition process. The 2007 GAO high-risk
report found the Department lacks a unified acquisition
organization and faces a shortage of experienced acquisition
personnel to manage its $15.7 billion procurement budget.
Senator Akaka and I have spent a considerable amount of
time in the Senate focusing on human capital management and
improving the effectiveness of agency programs deemed to be
high risk. We understand how critical it is for DHS to have a
highly-trained, appropriately staffed acquisition workforce to
properly manage its acquisition process. We expect that
individuals supporting the acquisition structure will know who
is in charge. Mr. Schneider, I am pleased that you recognize
these core needs and look forward to learning more about your
plan to ensure that they are met.
One deficiency that continues to plague the Department's
ability to accomplish its mission is the lack of a Chief
Management Officer. The CMO position will become even more
important if the immigration bill currently being debated in
the Senate becomes law. The Department's plan to achieve the
benchmarks in the immigration bill currently being debated by
the Senate will require the dedication of top-level leadership
and considerable resources. I think that our colleagues have no
idea of what a gigantic task it is going to be to implement
this legislation, assuming it gets passed. That is why I am
working on an amendment to ensure the Department consults with
this Committee if the immigration bill becomes law. This will
provide for greater oversight and more acountability.
Mr. Schneider, I remain convinced that elevating your
current position to Deputy Secretary for Management and
requiring a term appointment will provide the top-level
leadership and continuity necessary to meet the current and
future management challenges facing the Department. I recently
read a National Journal article. You have 360 political
appointees in the Department of Homeland Security, as
contrasted to the Veterans Administration, which has 235,000
employees and only 64 appointees. The Defense Department has
283 political appointees, but they have 2.1 million employees.
I was talking to Senator Collins today and we agreed that
we need to look at the number of political appointees and
evaluate which can be eliminated and those positions that can
be put into the civil service. We are going to see lots of
people leave that are in strategic positions in the Department
and then the issue is who is going to run the Department? It
seems to me that we need a CMO. Senator Akaka, we have to
really push to see if we can't get this legislation passed so
we have some kind of decent transition over there, or God only
knows what will happen in the interim period.
As the Department moves forward with major acquisition
projects such as SBInet, a key component of our efforts to
secure the border, I want to be assured DHS has a clear
governance structure in place. This structure must clearly
define how and when decisions will be made, who will make them,
require performance metrics to measure success. Are we doing
any good? And while these characteristics might seem basic to
some, a cursory view of the Federal Government's acquisition
initiative shows they are too often forgotten.
I am pleased to see that SBInet is serving as a pilot for
Acquisition Innovation Project, an effort launched by the
Partnership for Public Service's Private Sector Council to
improve post-award contract management. I encourage the
Department to continue to participate in this pilot to aid in
the success of SBInet and future DHS acquisition projects.
As governor, I know firsthand how important public-private
partnerships can be in improving the functioning of our
government. This Subcommittee has responsibility to ensure the
Department has the ability to carry out its mission. Rest
assured that we will continue to monitor the acquisition
management at the Department.
I look forward to your testimony, and thank you, Senator.
Senator Akaka. Thank you very much, Senator Voinovich.
It is my pleasure to welcome back Paul Schneider, who is
now Under Secretary for Management, Department of Homeland
Security; also Rear Admiral John Currier, Assistant Commandant
for Acquisition, U.S. Coast Guard; and John Hutton, Director of
Acquisition and Sourcing Management, Government Accountability
Office.
As you know, it is the custom of the Subcommittee to swear
in all witnesses, so will you please stand and raise your right
hand.
Do you swear that the testimony you are about to give the
Subcommittee is the truth, the whole truth, and nothing but the
truth, so help you, God?
Mr. Schneider. I do.
Admiral Currier. I do.
Mr. Hutton. I do.
Senator Akaka. Thank you. Let the record note that the
witnesses responded in the affirmative.
I want to thank you again for being here. Although your
statements are limited to 5 minutes, I want all of our
witnesses to know that their entire statement will be included
in the record.
So Mr. Schneider, will you please proceed with your
statement.
TESTIMONY OF HON. PAUL A. SCHNEIDER,\1\ UNDER SECRETARY FOR
MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY
Mr. Schneider. Thank you, Mr. Chairman, Senator Voinovich,
and Members of the Subcommittee. It is a pleasure to appear
before you again. I am here today to discuss acquisition and
procurement issues and authorities.
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\1\ The prepared statement of Mr. Schneider appears in the Appendix
on page 27.
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The Department of Homeland Security is in the midst of many
crucial acquisitions that are vital to the success of DHS.
Acquisition is the process that starts with identifying a
mission need, developing the requirements and budget to meet
that need, developing sound business strategies, contracting
with industry to deliver the products and the services to
fulfill that need, assessing trade-offs, managing program
risks, and sustaining the delivered system through its life.
Procurement is the actual transaction for goods or services and
plays only a part in the overall acquisition process.
The Coast Guard Deepwater program and SBInet are perhaps
the two largest acquisition programs in the Department. The
Deepwater program has been restructured with the role of the
Coast Guard in managing this large-scale effort to be one of
more hands-on control. The Coast Guard is also implementing a
major organization restructuring to strengthen acquisition,
which Admiral Currier will discuss in more detail. The major
challenge the Coast Guard now faces in executing the
Commandant's Blueprint for Acquisition is hiring the
experienced talent that it needs to manage complex acquisitions
and to establish acquisition as a valued career field with
appropriate career plans for both military and civilians. This
will require several years to fully mature.
I am frequently asked if SBInet will turn into a Deepwater
problem. The answer is unequivocally no. SBInet is the
Department's multi-year plan to secure our borders and reduce
illegal immigration. It is managed by one of the most
experienced program managers in government, Kirk Evans. The
program's approach is comprehensive and includes risk
mitigation factors. Project 28 will demonstrate SBInet's system
capabilities by deploying sensor towers, unattended ground
systems, and upgrades to existing Border Patrol vehicles and
communication systems. Upon completion of Project 28, which is
set for this month, the Army will conduct an independent test
and evaluation and provide an assessment of SBInet's interim
operating capabilities.
Because this is a modular and scalable architecture, we
will be in a position to make important trade-offs on
performance, risk, and total system cost very early, all this
in less than 1 year after this contract was awarded. In my
personal opinion, this is a model for how spiral acquisition
and risk reduction ought to be accomplished.
People are the key for us to achieving acquisition
excellence. We currently have a serious shortage of people who
are experienced in program management and the related career
fields. We have the funding to pursue aggressive hiring and are
doing so.
Regarding our acquisition structure, given how the
Department was formed and its current maturity, it is not
surprising to me that we do not have a consistent organization
structure throughout the Department. My written testimony
covers this in some detail. While this may not be ideal for the
long term, I think it is more important to focus on people,
acquisition processes, and the individual program efforts
rather than trying to develop the more perfect organization
structure at this point in time.
The two key positions in the Department with authorities
related to procurement and acquisition are the Chief
Procurement Officer and the Under Secretary for Management. In
accordance with the Service Acquisition Reform Act, which was
enacted as part of Title XIV of the National Defense
Authorization Act for fiscal year 2004, I am the Chief
Acquisition Officer, or CAO, of DHS, as that law requires, the
CAO require to be a non-career employee.
The Chief Procurement Officer, Ms. Elaine Duke, who is here
with me today, is a career civil servant with nearly 25 years
of government service. She serves as the Chief Procurement
Officer and the Senior Procurement Executive of the Department.
The Chief Procurement Officer has authority to exercise
whatever oversight she determines to be proper over the
execution of the procurement and contracting functions across
the Department.
As the Chief Acquisition Officer, my authorities include,
and I will just summarize the big ones, monitoring the
performance of acquisition activities and acquisition programs
of the Department, evaluating the performance of these programs
on the basis of applicable performance measurements, and
advising the Secretary regarding the appropriate business
strategy to achieve the mission of the Department, making
acquisitions consistent with applicable laws and establishing
clear lines of authority, accountability, and responsibility
for acquisition decisionmaking in the Department.
The major differences between the responsibilities of the
Department of Homeland Security Chief Acquisition Officer, me,
and the Under Secretary of Defense for Acquisition Technology
and Logistics is that the Under Secretary of Defense for
Acquisition Technology and Logistics has very specific
authority granted by Title X to direct the service secretaries
in acquisition matters. I think, however, it is important to
recognize that this major change took place as a result of the
Goldwater-Nichols legislation and a major restructuring of the
entire Defense Department and that occurred roughly in 1986
with Goldwater-Nichols and the Defense Management Review, I
think it was of 1989.
DHS is still in the developing stages, and I strongly agree
with the Secretary's decision that as a result of his second-
stage review, there would be no more major reorganizations
during his administration.
I would like to thank you for this opportunity to be here
today and I would be pleased to respond to any questions you
may have.
Senator Akaka. Thank you very much, Mr. Secretary.
Now, Admiral, will you please proceed with your statement.
TESTIMONY OF ADMIRAL JOHN P. CURRIER,\1\ ASSISTANT COMMANDANT
FOR ACQUISITION, U.S. COAST GUARD
Admiral Currier. Good afternoon, Chairman Akaka, Ranking
Member Voinovich. Thank you for allowing my written testimony
to be entered into the record, sir. I am grateful for this
opportunity to come here today and discuss with you the
acquisition policies, processes, and practices of the U.S.
Coast Guard and also describe our relationship with the
Department.
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\1\ The prepared statement of Admiral Currier appears in the
Appendix on page 36.
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Our acquisition portfolio now totals approximately $25.8
billion of critical investment, and that is about a $1.4
billion annual obligation across 16 major programs. When
Admiral Thad Allen became Commandant in May 2006, his first
order directed the consolidation of our previously disjointed
acquisition activities into a single, comprehensive directorate
with a goal of better supporting and enhancing mission
execution by creating a responsive, competent, and efficient
acquisition organization.
Standing up on July 13 of this year, the Acquisition
Directorate will include the Deepwater Program Executive Office
and 15 other acquisition programs, the Office of Procurement
Policy, the Research and Development Program, and the Head of
Contracting Activity. The consolidated Acquisition Directorate
will more effectively deliver the material solutions to
maintain mission readiness for the operating forces of the
Coast Guard.
Also in support of the Commandant's intent, we developed a
blueprint for acquisition reform as a capstone strategy
document defining our future state. We desire to become a model
mid-sized Federal agency for acquisition and procurement. The
blueprint shows the way through a number of improvements in
organizational alignment and leadership, policies and
processes, human capital, which we consider to be the most
important, and knowledge and information management and the
development of decisionmaking tools for program managers. We
have selected or chosen to use the Government Accountability
Office framework for evaluation of Federal acquisition as a
framework for our strategy for restructuring.
Additionally, Vice Admiral Vivien Crea, who is the Agency
Acquisition Executive, is fully engaged with the Department in
two particular activities to ensure that through the Joint
Requirements Council that whatever procurements we are doing
are surveyed across the Department for applicability to other
component agencies, as well as her involvement in the
Investment Review Board on a cyclical basis to review our
financial and program status.
We have established several collaborative teams to
facilitate communications and best practices amongst our
stakeholders within the Coast Guard and within the Department.
For example, the Capstone Integrated Project Team, under the
direction of the Under Secretary for Science and Technology,
was convened for the first time this year to identify
technology gaps and to assess whether projects are capable of
meeting those gaps and meeting the stated objectives of the
procurements.
Under our blueprint strategy, an area of particular focus
will be the New Start Management. We and virtually all other
Federal agencies have been weak in managing the front end of
major systems acquisitions. Adequate cost estimation and
programmatic risk assessment are critical to the success of
program execution. We need to become better at the formulation
of systems acquisition strategies early on in the project
identification phase. This includes not only requirements
generation, but resources and contract vehicle planning. We
also need to become more effective at oversight in two critical
areas, at the program level and at the executive level.
Our blueprint effort to date has already resulted in some
progress. For example, using the Defense Acquisition University
as a third party, we accomplished a nose-to-tail review of our
Rescue 21 program to determine problems, adequacy of our
acquisition strategy, and most importantly, a way ahead in
close collaboration with the prime contractor, General
Dynamics. The contract has been restructured to improve our
business relationship with the prime and also contain costs.
We have aggressively restructured the Deepwater program to
position the Coast Guard to assume a greater systems integrator
responsibility. We want to enhance competition, pursue service-
wide logistics and network architecture solutions, and create
necessary bench strength within our workforce to be able to see
this execution through, we need to see through this vital
recapitalization.
Our executive oversight has been materially enhanced by our
Commandant, Admiral Allen, who periodically meets with the
chief executive officers of the major companies with which we
are contractually engaged. The purpose for those meetings are
to review the programs and to align expectations.
At my level, Admiral Blore, the PEO Deepwater, and myself
regularly meet with our vice president counterparts with the
major companies with which we have contracts and program
reviews on a regular cycle.
Our reformation in acquisition is the result of robust
analysis process, tapping the expertise of several third
parties, notably DOD, the Office of Naval Research, the Center
for Naval Analysis, Naval Sea Systems Command, and the Defense
Acquisition University. We are closely working with the
Department's Chief Procurement Officer, Chief Information
Officer, and Chief Financial Officer to ensure a meaningful
relationship for oversight, guidance, and investment review.
In the end, the Coast Guard must be able to do three
things: Contract for sustainment; procure assets and acquire
major systems on a single asset basis--an example would be
patrol boats; and also employ a government or non-government
commercial systems integrator for networked complex
acquisitions. We are currently reorganizing the Coast Guard
acquisition and, in fact, the overarching mission support
architecture to effectively meet our mission requirements, not
only now but in the future as we grow with our security focus
in the post-September 11 world.
Thank you, Senators, for this opportunity to describe our
program and I look forward to answering your questions.
Senator Akaka. Thank you very much, Admiral.
Mr. Hutton, will you please proceed with your statement.
TESTIMONY OF JOHN P. HUTTON,\1\ DIRECTOR OF ACQUISITION AND
SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Hutton. Thank you. Mr. Chairman, Senator Voinovich, and
Members of the Subcommittee, thank you for inviting GAO to this
hearing to discuss the Department of Homeland Security's
acquisition organization.
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\1\ The prepared statement of Mr. Hutton appears in the Appendix on
page 41.
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As you know, DHS is the result of one of the biggest
mergers to take place in U.S. Government, integrating 22
separate Federal agencies and organizations with multiple
missions, values, and cultures into one department. Now, such a
merger involves a variety of transformational efforts, one of
which is to design and implement the necessary management
structure and processes for acquiring goods and services. In
fact, DHS has some of the most extensive acquisition needs in
the Federal Government. In fiscal year 2006, the Department
reported that it obligated over $15 billion for goods and
services to support its broad and complex acquisition
portfolio.
Now, my testimony today focuses on accountability and
management of DHS acquisitions and it is based primarily on
GAO's reports and testimonies. I will discuss three issues:
First, the Department's challenges in creating an integrated
acquisition function; second, the investment review process;
and third, the Department's reliance on contractors for
critical services.
Having an acquisition function that efficiently,
effectively, and appropriately acquires goods and services is
critical for agencies that rely heavily on the private sector
to support its mission. We have reported, however, that the
structure of DHS's acquisition function creates some ambiguity
about who is actually accountable for acquisition decisions.
Specifically, the structure depends on a system of dual
accountability and cooperation and collaboration between the
Chief Procurement Officer and the component heads.
An October 2004 Management Directive, the Department's
principal guidance for governing and integrating and managing
the acquisition function, highlights the Chief Procurement
Officer's broad authority, including the management,
administration, and oversight of department-wide acquisition.
In our report, we noted that the directive may not achieve its
goal of establishing an integrated acquisition organization
because it creates unclear working relationships between the
CPO and the component heads. For example, some of the duties
delegated to the CPO are shared with the component heads, such
as recruiting, selecting key acquisition officials at the
components, etc.
Another potential integration issue concerns managing and
providing appropriate resources across DHS's acquisition
organization. Indeed, a common theme in our work has been DHS's
struggle to provide adequate support for its mission components
and resources for department-wide oversight. For example, in
our 2005 report, we noted disparities in the staffing levels
and workload among the component procurement offices and we
recommended that DHS conduct a department-wide assessment, and
it is my understanding they plan to do so. While DHS reported
progress in providing staff for the component contracting
offices in 2006, much work, as we have been noting, remains to
fill the positions with qualified, trained acquisition
professionals.
The CPO recently established a department-wide acquisition
oversight program, and this is a promising initiative. It is
designed to provide insight into components' acquisition
programs as well as facilitate lessons learned across the
components. Now, while implementation is ongoing, we reported
in 2006 that the CPO lacks the authority needed to ensure that
the Department's components comply with its procurement
policies and procedures, such as the acquisition oversight
program.
Now, turning to DHS's major investments, DHS put in place a
review process intended to reduce risk and increase the chances
for successful outcomes in terms of cost, schedule, and
performance. In 2005, we reported that this process adopted
many acquisition best practices that, if applied consistently,
could increase the chances for success. We also noted how
additional management reviews and other steps could better
position DHS to make well-informed decisions. Concerns have
been raised about how the investment review process has been
used to oversee its largest acquisitions and we understand DHS
expects to make some changes to the process.
Finally, to quickly get the Department up and running and
to obtain necessary expertise, DHS has relied extensively on
contracts with the private sector for a broad range of mission-
related services and complex acquisitions. In particular, our
work has found at DHS, and it is similar to other government
agencies, they face challenges, particularly when they are
managing the use of another agency's contracting service or
existing contracts to acquire services. Although use of such
interagency contracts can provide advantages in terms of
timeliness and efficiency, they may not necessarily provide the
best outcome for the agency.
Further, the government agencies, including DHS components,
have also turned to a systems integrator in situations such as
when they believe they do not have the in-house capability to
design, develop, and manage a complex acquisition. This
arrangement creates an inherent risk as a contractor is given
more discretion to make certain program decisions. With the
increased reliance on contractors comes a need for an
appropriate level of oversight and management attention to its
contracting for services and major systems.
In closing, since DHS was established in 2003, it has been
challenged to integrate 22 separate Federal agencies and
organizations. Such a merger involves a variety of
transformational efforts, one of which is to design and
implement and the necessary management structure and processes
for acquiring goods and services, and given the size of DHS and
the scope of its acquisitions, we are continuing to assess the
Department's acquisition efforts in ongoing work and planned
work.
Mr. Chairman, this concludes my statement. I will be happy
to answer any questions.
Senator Akaka. Thank you very much.
Mr. Hutton, GAO has recommended for years that the Chief
Procurement Officer be given authority over the Coast Guard and
the Secret Service. You also recommend that the CPO be given
more authority over other DHS component procurement operations.
Exactly what new authorities is GAO recommending for the CPO
and how do you think this would improve acquisition management
at DHS?
Mr. Hutton. Senator, if we take it back to the original
Management Directive where we noted that a goal was to
integrate an acquisition function over at DHS, in reading that
and in our past work, we noted, too, though, that it was
assigning dual accountability and collaboration between CPO and
the component heads. So we had recommendations, as you pointed
out, that we felt that the CPO needed some additional resources
and enforcement authority to make sure that the procurement
policy and procedures are followed through.
Now, we are not talking about a direct report or
centralized procurement, and quite frankly, there is really no
single optimal way to organize an acquisition function. But I
think in our work, what we are trying to point out is that are
we aligned in such a way that we can have an effective
acquisition organization?
And just to use one example, in our work in 2005, we noted
that the Coast Guard and Secret Service were explicitly
exempted from the Management Directive. So you had a situation
where you had a couple components over at DHS and you had the
CPO with their operations and you had several others, but the
way the directive was written, it basically made it sound like
the CPO had no authority over the Secret Service and the Coast
Guard.
So when we raised that issue in that work, initially, we
were informed that it was for statutory reasons, but in that
work, in discussions with DHS General Counsel, we found that it
really was more of a policy decision. And it is my
understanding that DHS is considering having the Secret Service
and Coast Guard under that umbrella of the Management
Directive. So that would be a good thing.
Senator Akaka. Let me try to clarify your last remarks
here. Do you think that DHS can strengthen the CPO using their
own current authority? You used the word ``statutory.'' Is some
kind of Congressional action needed?
Mr. Hutton. Well, sir, I think that GAO wouldn't want to be
prescriptive as to how DHS should go about doing it. I think
what we tried to do was apply some best practices and
principles, and the Admiral went through some of them, what
drove his blueprint, and one of the issues has to do with
organizational alignment and leadership.
What we were just pointing out is that, for example, if you
had a situation, like in our 2005 report where we noted that
the components had varying numbers of contract specialists and
you looked at what their workload is, and just doing simple
math, and that may not be the best analysis, but it is just
showing that, well, maybe the staff isn't perfectly aligned. As
we all note, DHS brought in all these different components and
basically had to start and get up and running.
What we said there was that we felt that we ought to have
an analysis across the components. What are the needs on a
component basis? What are the needs of the DHS? If there are
opportunities that, because of urgent needs and other reasons,
you need to move some people, how easy would that be? What kind
of authorities would be required to be able to do something
like that? And that was where we were coming from when we were
making that particular point about what authorities does the
CPO have to effectively carry out what we are reading in the
Management Directive as the responsibilities.
Senator Akaka. Mr. Schneider, in your testimony, you
explained that you are the Chief Acquisition Officer at DHS
while Ms. Duke is the Chief Procurement Officer. I understand
that Ms. Duke also sits on the Chief Acquisition Officer
Council at the Office of Management and Budget. Do you and the
Chief Procurement Officer have authority over particular
acquisition functions or are you essentially letting the CPO
exercise your authority as the Chief Acquisition Officer under
your supervision?
Mr. Schneider. Senator, first, regarding the Chief
Procurement Officer being on the Acquisition Council, in the
absence of--in the gap between when my predecessor left the
position of Under Secretary until I was appointed, Ms. Duke, in
fact, assumed the responsibility of not just being the Chief
Procurement Officer, but the Chief Acquisition Officer. So as
such, she participated in the Chief Acquisition Officer
Councils.
I believe that the responsibilities of the Chief
Procurement Officer are very clear and so let us kind of take
this a piece at a time. This is where I think, with all due
respect to the GAO reports and considerations, I think there
has been a continuing confusion of this issue of procurement
versus what I will call the big concept of acquisition.
I believe that the responsibilities and authorities of the
Chief Procurement Officer are very clear and I believe the
responsibilities from a procurement standpoint within the
organizational operating components of the Department are very
clear. I also believe that the Chief Procurement Officer has
the authority, if you will, to review--for example, if Ms. Duke
decides that she wants to review every procurement and concur
with every procurement, whether it is CBP or you name the
agency, above $1,000, above $1 million, whatever the threshold
she establishes, that is her authority. She has the authority
to go in and conduct procurement oversight reviews. She has the
authority, I believe, to basically request the removal of a
contracting officer's warrant if she determines, in fact, that
contracting officer is not following the rules and regulations
as dictated by applicable law.
And regarding the issue of resources throughout the
Department, the Chief Procurement Officer at headquarters works
very closely with the Chief Procurement Officers in each of the
operating components. They address resource issues. Ms. Duke
acts as, for all practical purposes, the Chief Recruiting
Officer for contracting officers among the Department. So from
my standpoint, I observe, having been in this job now 5 months,
an unprecedented degree of cooperation, if you will, among the
Chief Procurement Officers at headquarters and within the
Department.
Let us talk the second point about the Coast Guard. From a
practical standpoint, on a day-to-day operational basis, I
couldn't ask, and I know if you asked her she would say the
same thing, for a better, closer working relationship with the
Coast Guard than what we have today. And so regardless of what
the directives say or the like, the fact of the matter is the
Coast Guard is an inherent part of the Department. We operate
as one. I spend a tremendous amount of time with Admiral
Currier, Admiral Blore, the Commandant, Admiral Crea, and their
Chief Procurement Officer when we work together on major
procurement and acquisition issues.
Now, let us talk about acquisition authority. And that is
one of the reasons why I tried to emphasize that in my
testimony--here is where--let us talk about dual
accountability. I do not believe in the case of acquisition
there is a dual accountability. I think it is very clear. I
think it is the Secretary who has responsibility and the head
of the operating component. There is absolutely no doubt in my
mind that the head of Customs and Border Protection is the
official that the Secretary holds responsible and accountable
for the execution of SBInet. There is absolutely no doubt that
the Secretary holds the Commandant responsible for the
execution of Rescue 21 and Deepwater. And so in terms of dual
accountability, I am sorry, but I do not agree with that
statement.
In the course of exercising the Secretary's oversight,
however, there are processes that are put in place at the
Department level to conduct reviews of the program. That is
where we, the Department, exercise oversight. I think the
perfect example of this is the Deepwater program. The Deepwater
program will be coming up for a major acquisition milestone
decision in terms of proceeding to award of National Security
Cutter 3. There was an Investment Review Board review of the
Deepwater program, an acquisition decision memorandum that was
signed by me on behalf of the Deputy Secretary who chairs the
IRB, that basically says prior to coming and getting a
milestone approval, you must do A, B, C, D, and E. It was done
in a cooperative manner with participation on the Coast Guard,
the CPO, the CIO, etc., and so I think that is a process that
is in place by which the Secretary exercises oversight.
That does not dilute, in my mind, or that does not change
what I consider to be the clear line of responsibility and
accountability between the Secretary and the head of the
operating component.
Senator Akaka. Thank you. We will have another round of
questions. Senator Voinovich.
Senator Voinovich. Thank you, Senator Akaka.
You made mention of the issue of recruiting people with the
experience that you need in acquisition. I would like you to
share with me if you have the budget to hire the people that
you need to get the job done? Second, do you have the
flexibilities to bring them on board?
Mr. Schneider. Thank you, Senator, for the question. This
is really the key issue and I would say people is our No. 1
priority. I think, first of all, the most critical career field
in my view is the contracting officer career field, and in that
particular career field, we have direct hiring authority across
the Department, which means we interview somebody, we like
them, we can hire him or her immediately.
And so the challenge then is to find qualified contracting
officers, and to be very frank, we are aggressively trying to
recruit at the mid-level and the higher level. Our intern
program is structured to prime the pipeline, so to speak, at
the intern level, and we have funds in the fiscal year 2008
budget to begin that program. So I am pretty comfortable with
1102s, or the contracting officers.
The other career fields, we do not have direct hire
authority. I will be signing a letter to OPM requesting the
direct hire authority for these other career fields, and this
ends up being logisticians, cost estimators, people that have
managed programs, program management experience, test and
evaluation-type experience, and the reason being is we are in a
very competitive market, not just with private industry but
government, and if we cannot--we think we have a mission that
sells relative to attracting people, but we need to be able to
act and act fast.
So I think, frankly, I am hopeful that we will get the
direct hire authority from OPM without too much difficulty. So
I think that is No. 1.
No. 2 is the ability to hire re-employed annuitants. Let me
give you an example. It is a well known fact, we do not have
the range and depth of experienced acquisition personnel. Key
to the success of our intern program is to have the right types
of mentors to mentor these people. The other thing we are
looking at is getting senior acquisition experienced people
that can mentor ongoing programs, and especially new starts.
And so what we want is the ability, if we can find people and
get them interested in the mission, frankly, like the
Administration did with me, to come back in and go work some of
these programs. We believe that would be helpful. So I am about
to request from OPM the authority to do that.
With respect to money, funding, we have the funding this
year to and are aggressively hiring, so I am not worried about
that. I am worried, however, about what I just learned relative
to the House Appropriations Committee action on our budget for
2008 that basically removed a considerable amount of money that
we had put in for hiring initiatives and training and
development initiatives, especially in the acquisition career
field. So that just happened apparently from what I understand
yesterday, so what I plan to do is to get the facts and figures
and hopefully when the appropriations bill gets considered by
the Senate, we can get some help, if you will, to get that back
in. That hurts us significantly.
So relative to authorities, yes, I have got what I need on
contracting. I am going to OPM for expanding the direct hiring
and to be able to employ re-employed annuitants. And money is
okay this year, but I am worried about next year.
Senator Voinovich. Please let us know about the House
action. We will look into it and see if we can make sure that
it is in the Senate bill. If you don't have the money, you
can't get the job done.
Mr. Schneider. Thank you.
Senator Voinovich. One thing that we have noticed is that
DHS has doubled spending on contracts from 2004 to 2006.
However, over the last 5 years, the number of dollars devoted
to training employees in contract management across the
government has remained basically the same. Once you bring new
people on, how long does it take them to get to the point where
they are fully trained. What is your training budget and why
hasn't that budget increased to respond to the new hires so you
can continue to upgrade their skills?
Mr. Schneider. I think that is a question, frankly, I have
asked myself. I think one of the problems is when, prior to the
forming of the agency or of the Department or shortly
thereafter, the concept of major acquisition, that wasn't the
nature of the business. It was relatively simple procurement.
And so the Department relied most heavily on contracting
officers who typically would be the procurement experts to
basically perform what would be considered to be a simple or
not as complex acquisition. I think it is only in the past 2
years when this concept of what is acquisition and the
complexity of large systems came to the Department. The
Department's budget, and I may not have the numbers totally
right, but it has gone up like about 50 percent over the past 3
or 4 years. A lot of this stuff has gone into the development
and the procurement of major systems.
So if we did not shape or modify the workforce, frankly,
over the past 2 or 3 years, the response to the roughly 50
percent increase in budget authority, and so our training
budget, and I would suspect most organizations, is fairly well
baseline. So organizations like CBP or TSA, whose mission--
well, CBP, for example, in the case of some of their major
initiatives, they didn't have a SBInet, and I think that is one
of the reasons--and the reason they didn't, because their
previous attempts at it in different initiatives were not
successful. Part of the reason it was not successful was
because they didn't have trained people. And so I don't think
there was an ability to, in real time, fundamentally give like
an adrenaline shot of training to people that were trying to
execute.
So what we have been doing with the Chief Human Capital
Officer is work across the Department. What are our training
and development needs? We have a Chief Learning Officer who is
working very closely with all of the operating components
across the Department to leverage those training and
development opportunities that is best of breed and then use,
whether it is CBP or if it is the Coast Guard, use that as the
foundation to provide that training and development capability
for the entire Department.
So we are in many cases relying on Coast Guard for a lot of
their training and development. There are a couple of nuggets
that CBP had in terms of, I believe it is leadership training.
And so that is one of the reasons why we have been trying to
justify, if you will, an increased budget, and it is one of the
reasons why I am shocked, actually, at the budget action on the
House, because for 2008, that is where we wanted to basically
make a significant increase. And so I think we are trying, but
we have been having some difficulty.
And if I might add, I think part of the difficulty is we
get a bad rap, frankly, on this HR Max effort that was
initiated. And so I think there is a tendency, quite frankly,
to paint everything that we are doing in the personnel training
and development area, etc., even though Max HR had six or seven
components, the fact of the matter is it all gets lumped into--
that is one of these personnel things where--and so it is a
target.
And so one of the reasons, frankly, why we have moved away
from Max HR to Human Capital Operating, emphasizing training
and development, is to get away from the stigma of something
that is, frankly, from the public perspective, is out to do
harm to employees, which is not the case.
Senator Voinovich. Thank you. Senator Akaka.
Senator Akaka. Thank you. Admiral Currier, under a 2004 DHS
Management Directive, the Coast Guard is not under the
authority of the Chief Procurement Officer. Can you tell me to
what extent the Coast Guard still works with the CPO?
Admiral Currier. Yes, sir, Senator. I think that Under
Secretary Schneider accurately described our relationship with
the Department. We are very closely tied to the Chief
Procurement Officer, the Chief Information Officer, the Chief
Financial Officer, and all of our processes in acquisition. I
mean, basically, the Department controls our budget, so there
are mechanisms for control of component agencies.
We don't look at it that way. We look at it as a mutually
supportive organization where DHS has brought their
organization and their engagement with the components. They
have matured that as they have formed up the CPO Office. We
helped them do that. We offered policy advice. We offered
people. We have worked collaboratively with DHS to see them
through this, and I think that they have matured to the point
where we are quite comfortable with the relationship of a
subordinate component agency working in close collaboration
with DHS across the board.
I have seen, in my 2 years as Assistant Commandant for
Acquisition, no problems, no issues where they have asked for a
policy implementation and we have not complied, or when we
raise an objection because we feel it is an onerous oversight
or something that doesn't sink up, they are not very
responsive. We have absolutely no complaints from an
organizational level that our relationship with the Department
is anything but proper and mutually supportive.
Senator Akaka. Let me follow up to ask you whether or not
the Coast Guard is under the authority of the Chief Procurement
Officer.
Admiral Currier. I would say, sir, that if you read the
letter, were I an attorney, I would tell you if I read the
Management Directive, I would probably say that could be the
case, but I can tell you functionally that is not the case.
Senator Akaka. Let me ask, would there be a downside to
having the CPO exert more authority over the Coast Guard?
Admiral Currier. I don't see it as being that way, sir. I
really have--I feel that is the functional relationship that
exists. If the statute or the code followed that, currently, we
have certainly no objection to that.
Senator Akaka. Mr. Schneider, last year, DHS appropriations
contained funding for 400 additional acquisition employees at
DHS. How many new acquisition staff have you hired to date?
Mr. Schneider. The key number I track is the contracting
officers. I know we were trying to hire somewhere around three
to--I think we have hired about 50 percent of the number.
Senator Akaka. Well, Mr. Schneider----
Mr. Schneider. It is about 150, so--I can provide that
information.\1\
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\1\ The information provided by Mr. Schneider appears in the
Appendix on page 59.
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Senator Akaka. If you can provide that----
Mr. Schneider. Sure.
Senator Akaka [continuing]. That would be fine. And also, I
would like to know how these staff are being divided between
CPO's office and the component offices, as well.
Mr. Schneider. Well, it is really a joint recruiting
effort, so what Ms. Duke does is if we get a pretty good
athlete and she decides that TSA or CBP needs him, she ships
him in that direction. They work together, the heads of
contracts of all the operating components and the Chief
Procurement Officer, on who is in the most serious shape and
who desperately needs help. And so what they do is working
together among themselves figure out how best to utilize the
talent that comes in.
For example, we had a big exposition, job exposition one
day downtown at the Reagan Building. We had, I think it was
1,200, 1,300 people showed up. And so what we do is we tag them
and classify them. They go talk to people from the CPO's
office. They talk to people from across the Department. Then we
basically evaluate them and we decide who really needs to be
looking at them depending on what the career fields are. We
also advertised in the local papers a couple of months ago, and
in response to two ads we have gotten, I believe it is 400, 500
applicants, and so doing the same thing with them. We are also
targeting, quite frankly, where we think organizations are
leaving town that perhaps we have some experienced people that
may want to do that.
But basically, it is being run like a joint recruiting
effort and, frankly, because they work so well together, this
particular group of Chief Procurement Officers, they recognize
who is in the most serious condition and they try and fulfill
those needs first.
Senator Akaka. Before I call on Senator Voinovich,
Secretary Schneider, the Homeland Security Appropriations Act
contained a provision I authored creating a rotation program at
DHS to let staff gain expertise throughout the Department. With
all of the component agencies of DHS still having their own
individual acquisition shops, I believe this kind of program
could be especially useful for procurement professionals. Is
the Department doing anything to encourage procurement staff to
rotate between procurement offices?
Mr. Schneider. Yes, sir. Let me just give you a couple of
examples. We have two what I call premier leadership programs.
We have an OPM-approved SES candidate program, and so our first
class of SES candidates were selected, I think it might have
been about 4 or 5 months ago. As part of that candidate
development program, these folks are required to go do
rotational assignments.
We also have, and it was actually initiated by the
Commandant of the Marine Corps, Admiral Allen, who had a
personal interest in it, is a DHS Fellows Program. Part of that
DHS Fellows Program, and this is where the best and the
brightest at different grade levels, civilian and in the case
of the Coast Guard military, were picked for this very special
effort. What we have decided to do is at the tail end of that
program, and I forget how long it is, is to require a
mandatory, I think it is 4- or 5-month rotational assignment,
and this is where we use, and this is probably along the lines
of the best practice that many of the Fortune 500 companies
use, we have these folks working critical corporate-type
projects. They work--it is about, I think, roughly 34 of them--
and then at the end of this development effort, they get
assigned at one of--a different operating component from where
they come from, and I think it is 4 to 6 months.
The other thing we do is this. Our Chief Financial Officer,
the counterpart of the Chief Procurement Officer, he has been
very key in hiring. We get a lot of Presidential Management
Interns. He is a former Presidential Management Intern and
apparently that program draws people to where successful folks
that have been in the program are. And what he does is takes
these people, rotates them throughout the Department, and
ultimately we are building a financial officer type of
infrastructure that has had experience across the Department.
I also think it is important to note that I think at least
one and maybe two of the Chief Procurement Officers that are in
the Department used to work at headquarters.
So I think there is no massive initiative that says we are
going to take 25 percent of the workload and start rotating
them around, but I think we started on the right path within
the past 6 months on these key initiatives to making rotation a
key element and almost to be considered as a future
prerequisite to promotion.
Senator Akaka. Senator Voinovich.
Senator Voinovich. Admiral, in your testimony you said that
the end result of the Coast Guard's Blueprint for Acquisitions
Reform will be an Acquisition Directorate capable of
efficiently and effectively meeting mission requirements. Do
you have metrics to measure if the blueprint is successful, and
was Mr. Schneider or anybody from DHS involved with developing
the blueprint? Did you consult with GAO in developing the
blueprint?
Admiral Currier. Thank you, Senator. The blueprint was put
together because we looked at Rescue 21 and the nose-to-tail
survey that I described earlier, and we also did that with
Deepwater over the last 18 months. We looked at a compilation,
a library of IG reports and GAO reports and different programs
and projects that the Coast Guard had done. Initially when I
took over as Assistant Commandant for Acquisition, I looked at
these individually, viewed them, quite frankly, as history and
put them aside.
But it became evident there were emergent themes throughout
these reports, so we cataloged those themes and we put together
about 12 efficiencies in acquisition across the board. When I
showed them to Defense Acquisition University (DAU), it became
evident that those were common acquisition shortcomings across
the Federal Government. So we tried to decipher a way, how
could we devise a strategy that would give us meaningful
solution to some of these things.
The other theme that emerged is the GAO framework for
Federal agency acquisition assessment. We decided to use that
for two reasons. One is it made sense, and secondarily, often
you are what you measure. So we did do that.
As far as metrics, when we produced our first edition of
the blueprint, we had a catalog of activities as an appendix. I
got my senior staff together. We collaborated with the
Department and we cataloged activities that we had to do.
Initially, our metrics were the accomplishment of those
activities on time and basically if there were cost elements,
on cost.
The second edition that will come out when we stand up the
consolidated Acquisition Directorate on July 13 will have a
more robust set of metrics that also measure projects, program
outcomes as far as cost control and schedule execution. So
there will be two tiers of metrics within the blueprint. One is
for activities that are specifically called out, and the second
is the aggregate effect on program execution.
We did closely collaborate with the Department, the Defense
Acquisition University, Admiral Massenburg at NAVAIR, actually
Retired General Kadish, who at one time was in charge of DOD
acquisition reform. They were very generous with their time
sitting down with me, and I will tell you in all honesty, I am
an operator by trade. I am level three certified as a program
manager, but my main experience is certainly not on a par with
theirs. Very generous with their time. The Under Secretary was
generous with his time. Ms. Duke was very--contributed to this.
And I think that the Under Secretary would tell you that
certain elements within this are going to be used as a model
for other agencies within the Department.
Sir, I hope that answers your question.
Senator Voinovich. Mr. Hutton, you have been listening to
the testimony. I would like your comments about what the
Admiral has made reference to and how you feel about it and how
do you think they are coming along.
Mr. Hutton. Sure, Senator. First, I want to say at the
outset that obviously we are very pleased that the Admiral
found that the framework for assessing the acquisition function
was very useful, because that was based on a lot of work that
we have done over the years, best practices, literature
searches, panels that we held and things like that. And it is a
holistic approach to look at the whole function and it breaks
down into very key areas that one wants to look at how they are
doing. It is general guidance. It is not a cookbook, but it is
really used more for self-reflection and assessment of where
you are.
So I was very pleased to hear that. I have reviewed the
Coast Guard's blueprint at a very high level several months
back. I can't right now give you an assessment of the merits
and of all the details and the specifics, and as the Admiral
mentioned, there is apparently going to be a revision coming
very shortly. But I was very pleased to hear that the GAO
framework is one of the instruments that they used to assess
their acquisition function.
Senator Voinovich. Mr. Schneider, it looks like the Coast
Guard is really getting it. It looks like their system is in
decent shape. Mr. Schneider, do you agree with the Admiral?
Mr. Schneider. Let me, Senator----
Senator Voinovich. They have their own acquisition, but Ms.
Duke is in charge of acquisition everywhere else?
Mr. Schneider. Let me try it this way. I guess within the
spirit of full disclosure, the in-depth reviews of the Coast
Guard programs that the Admiral referred to, Rescue 21 and
Deepwater, it really is a coincidence because all this happened
before I was even considered by the Administration for this
job. But I am the guy that led those reviews for the Defense
Acquisition University. It just kind of turns out that way.
It really is a fluke that all these improvements and
recommendations that we developed, especially in the case of
Rescue 21, the Admiral aggressively instituted them, and then
with Deepwater, I think led to a more systematic overview, just
like he said. So we have--which is why--the Admiral and I first
met last March, and so they were kind enough that, just as he
indicated, to work very closely with DAU and I was the lead for
DAU, and so this whole Blueprint for Acquisition, I believe
truly reflects the best practices and lessons learned from a
lot of major programs that have had difficulties.
There is no daylight between us, quite frankly, at the
Department level and at the Coast Guard level in terms of
structure and process. There is no daylight between us in terms
of the individual efforts, whether it be the National Security
Cutter, the Offshore Patrol Cutter, the Aviation Initiatives,
logistics, CFR, ISR, etc. So we are in full concurrence and
working very closely on everything.
And so I think, just as the Admiral said and as I
indicated, this Chief Procurement Officer contracting function
and how I exercise acquisition oversight for the Secretary, I
think it works very well, and quite frankly, it is a model for
how it ought to work across the Department.
Senator Voinovich. Good. Is it coordinated?
Mr. Schneider. Yes, sir.
Senator Voinovich. If GAO reviewed this, they would say
that you are communicating?
Mr. Schneider. Yes, sir.
Senator Voinovich. And are sharing and learning from each
other.
Since the Deepwater problem, you have analyzed the issues.
Is there a piece of paper someplace that talks about lessons
learned and how the new system is going to make sure that those
things don't occur again?
Mr. Schneider. I think, if I recall, the DAU Deepwater
report lists the lessons learned and a series of
recommendations which you or your staff may find informative as
a starting point. I also think, I am not sure if we sent you
several months ago, and maybe not, but we can check that, we
can send you a document that indicates the status of the
Deepwater program which goes asset by asset through what is the
status and what is being done in terms of the restructuring. I
think you would find that informative.
Senator Voinovich. In other words, the recommendations that
came out of that GAO report are being folded into the new
system to make sure that the problems that----
Mr. Schneider. Their blueprint----
Senator Voinovich [continuing]. Occurred there are not
going to occur with other procurement----
Mr. Schneider. Their blueprint for acquisition and
reemergence of a technical authority within the Coast Guard and
migrating to a single logistics concept, C4I that is directed
and more hands-on direction and breaking up some of these
procurements like the Admiral referred to relative to
procurement of patrol boats, which is their specialty and the
like, that is exactly what they are doing.
Senator Voinovich. Thank you. Senator Akaka.
Senator Akaka. We will have another round here.
Mr. Schneider, as you know, and I want to in a sense follow
up on what Senator Voinovich was indicating. As you know, the
Coast Guard recently dropped their lead systems integrator,
choosing instead to fulfill the role itself. In light of
Deepwater, should the Department continue to rely so heavily on
LSIs for large projects?
Mr. Schneider. I have given this a lot of thought, Senator,
and I think in many ways the concept--that the originators of
the Deepwater concept with the integration concept--there are
some days I think it was not a good idea, but frankly, in many
ways, it might have been a brilliant idea. I think the serious
problem that--I think it is almost like a confluence of factors
that contributed to the problem.
First off, clearly, I don't think the Coast Guard had the
range and depth of talent to manage that type of contract. And
so an integrator means different things to different people. In
this particular type of contract, we were talking about a
concept whereby the Coast Guard said, here are my requirements.
I want to totally recapitalize my entire Deepwater fleet of
planes, ships, boats, land-based infrastructure, and logistics,
so you figure out how best to do it.
And so the concept, depending--it might have been brilliant
in concept, but it was seriously flawed in practically being
able to be executed by a Department who is so hands-on
operationally. And I think to think that the operational forces
would allow just an industry team to decide what was best in
terms of operational spaces and how things were going to
operate, what the mix would be, was probably not the right
decision. I also think that trying to start so many individual
asset developments, like the Offshore Patrol Cutter, the Fast
Response Cutter, and National Security Cutter, at the same
time, given the lack of depth and experience they had, was one
of the major contributions to its not being successful.
On the other hand, I think on major system integration-type
contracts where you have, for example--and that is why SBInet,
and I differentiate between it--it may, in fact, be the
appropriate type of concept and contract vehicle, especially in
the fact that I think the SBInet is manned with many more
resources and in many cases they have the range and depth of
talent that are needed to manage a very complex technical
integration effort.
So I would not, to use the expression, throw the baby out
with the bathwater. I think it has a place. I think it needs to
be based on the circumstances and the nature of the contract
and how it is structured and how you incentivize the
contractor. But I think there were really some very strong
reasons why people thought at the start it was a good idea.
Senator Akaka. Admiral, as I understand it, between June
2003 and December 2006, Lockheed and Northrup Grumman, the
former Deepwater lead system integrator, received $18 million
in contract award fees from the Coast Guard. This is about 88
percent of the available award fees, which would seem to
indicate that the job was done 88 percent well. To give it a
grade, you might think of it as being a B-plus in most grading
systems. I don't think, from what we have heard about the
problems with Deepwater, that it deserves a B-plus. My question
to you is, how would you grade Deepwater?
Admiral Currier. Well, Senator, I will be honest with you.
This puts me in a little bit of a difficult situation because I
have been in charge of the Acquisition Directorate, which is
contracting and programs that are non-Deepwater, so I can give
you an observation, but I want to be clear that I am not the
program executive officer for Deepwater.
I can give you my opinion on this, there was a set of
criteria used for award term evaluation that are currently
being reviewed, such that they are more applied to actual
performance than some of the general criteria that were used in
the first evaluation of the award term. I think that is being
relooked at by Admiral Blore, who is the PEO for Deepwater, and
I think that there is going to be some overhaul in that area,
sir. But I cannot give you--I will have to get back to you with
specifics on that information.
Senator Akaka. Would you consider the contract award fees
in this case, fair?
Admiral Currier. Sir, I am not trying to be evasive, but I
don't have enough information. I really don't. I can get back
to you with that, with a statement from Admiral Blore, who is
the PEO. But I, quite frankly, would be uncomfortable rendering
an opinion on that.
Senator Akaka. Let me ask Mr. Hutton, can you give me your
thoughts on these contract award fees? How is it that a program
with so many issues could get 80-plus percent of available
award fees?
Mr. Hutton. Senator, GAO issued a report, I believe a year
ago, where they looked more broadly across several contracts
over at DOD and I think there was a finding that was similar,
that there were fees around that range. But yet when you look
at the systems, they were having problems and it just raised
the issue of are you sufficiently motivating the contractor for
positive performance.
I share the Admiral's point that the award fee determining
official basically makes that determination based on what was
established as the criteria that they were going to use to
judge the contractor's performance. So if that process was
followed as appropriate and the determinations were considered
appropriately and that is the score, then I think that is what
they get. But I do think if there are major problems with
systems, maybe one place you might look at first, though, is
just what was the criteria we were evaluating, if it seemed out
of sync.
Senator Akaka. Senator Voinovich.
Senator Voinovich. Mr. Schneider, a number of corrective
actions to improve acquisition management for the SBInet
program were to have been completed by this January. In the CBP
response to the DHS Inspector General report, made with the
concurrence of the Chief Procurement Officer, the Department
said it would address concerns about the lack of defined
project activities, measures for operational requirements and
performance management objectives, time lines, anticipated
costs, staffing levels, and expected outcomes. GAO testified in
February that many of these issues remained.
I would like you to respond directly to the concern raised
by the GAO and the DHS OIG and to tell us what, in your view,
has been done, what needs to be done, and then Mr. Hutton, if
you are at all familiar with what has transpired since
February, what are your observations.
[The information requested for the Record follows:]
INFORMATION SUBMITTED FOR THE RECORD
DHS's Secure Border Initiative Network (SBInet) is a multi-
year, multi-billion dollar program that will develop a
comprehensive border protection system through a mix of
technology, infrastructure, and personnel. In fiscal year 2007,
the Congress appropriated $1.2 billion for the program and
asked GAO to review the SBInet expenditure plan. In February
2007, we recommended that DHS (1) ensure that future
expenditure plans include explicit and measurable commitments
relative to the capabilities, schedule, costs, and benefits
associated with individual SBInet program activities; (2)
modify the SBInet contract to include a maximum quantity or
dollar value; and (3) re-examine the level of concurrency and
appropriately adjust the acquisition strategy. To address our
recommendation on the level of concurrency, in March 2007, DHS
submitted a revised SBInet expenditure plan for fiscal year
2007 to Congress. The new plan delayed some technology
deployment and, in its place, accelerated tactical
infrastructure construction.
As of July 2007, SBInet is behind schedule because the
pilot deployment project, Project 28, did not meet its June
2007 deadline. We continue to monitor the implementation of the
SBInet program as part of our on-going work.
Mr. Schneider. Well, Senator, first off, as of right now,
we are on track in terms of completing Project 28, and Project
28 is absolutely key. This is a 28-mile stretch of the border
south of Tucson. So this is where we are basically--I call it
the initial deployment of SBInet, where we are using cameras,
we are using radar, we are using wireless communications. We
have these roughly, I think it is 98-foot towers. We are
basically exercising command and control, a common operating
picture that goes back to Tucson headquarters as well as mobile
command units, and we are actually--this is where the Army is
going to be doing this test and evaluation.
So there is a modeling and simulation that has been done to
predict, if you will, how well this system will perform in
terms of tracking, cueing, and then determining the optimum
method of intercept prior to the point of where the illegal
aliens can basically not be apprehended.
So our plan is to--we have a pretty good idea of how well
this system will perform. This equipment, for the most part, is
off-the-shelf type of equipment and the communications gear is
pretty straightforward. So our plan is--and we know how much
this cost. This is a fixed price. I think it is roughly a $20
million effort. And so our plan is, as a result of this initial
deployment and this independent test evaluation of the Army, is
to figure out what the cost-benefit, if you will, is, how
scalable it is as we march across the border.
So while sometimes we are criticized, and I have personally
had this discussion with both the Inspector General and with
the Comptroller General, David Walker, so while we are
criticized sometimes for not having very clear performance
requirements, etc., this is an example where we are trying to
use available technology to minimize the risk and get an
assessment for how well this system will perform, how we can
augment it, if we need to put more cameras, if we need to put
more radar, if we need to put more unattended ground sensors,
etc., to enhance the performance if it is not adequate, and
then make these trade-offs about is that performance
acceptable, what is the manpower that it takes to go execute
this, what is the cost----
Senator Voinovich. What I am trying to get at is that it is
my understanding that they came back and they had some
criticisms of the way this was being undertaken. What have you
done to respond to those criticisms in terms of a system? Mr.
Hutton, are you familiar at all with what has been happening
since February? You folks came in and said they hadn't done
these things. They were supposed to have them done by the end
of January and the fact was they haven't been done. Have they
been done to your knowledge or haven't you reviewed it lately?
Mr. Hutton. Senator, I am not personally involved in that
review. Colleagues at GAO are looking at that system. I believe
there is some ongoing work right now, but I really do not know
the status of those issues.
Senator Voinovich. I would like to know what were the
issues and what have you done to respond to the issues.
I would also like to ask about your work with the
Partnership for Public Service Private Sector Council. Max
Stier and his group are a good resource that can be helpful.
Have they been helpful in improving your post-award contract
management? A lot of times the problem is that once they are
awarded, nobody really stays on top of the contractor to make
sure you get what has been promised. I would like you, Mr.
Schneider, to comment on the partnerships pilot project.
Mr. Schneider. Well, I know that they are looking at best
practices for contract administration, and that is the sum of
it. I would have to get back to you and give you an assessment
of--and I will--about exactly what they have done and what have
we learned from them.
Senator Voinovich. Senator Akaka, I have no more questions.
Senator Akaka. Thank you very much. I want to thank Senator
Voinovich. As you know, I regard him as a champion of human
capital management. He has been going after the high risks
within our government system with me for years, and I want to
emphasize that we are working together on these issues and
trying to improve program outcomes.
So I want to thank you witnesses for being here today and
contributing with your testimony and your responses. Getting
DHS's acquisition management on track is vitally important to
us and it is an important issue because if it is not done
properly, then there is the risk of waste, fraud, and abuse in
contracting, and in this particular case in DHS contracting. It
also puts not only our tax dollars at risk, but more
importantly, our national security. I look forward to
continuing to work with you, with the Department of Homeland
Security, in monitoring this issue.
Senator Voinovich. Senator Akaka, could I make one more
comment after you have finished?
Senator Akaka. Yes. Let me call on Senator Voinovich for
his closing remarks and then I will close it.
Senator Voinovich. I don't know whether this immigration
bill is going to pass or not. Even if it doesn't pass, there is
a lot in there that is already in the law. SBInet is going to
be part of that.
I would like to say to you that there is a feeling out
there that things aren't right at the Department of Homeland
Security and that it has been an embarrassment to the Bush
Administration. There is a feeling on the street that for some
reason we just can't get things done around here. It is not
helpful politically, and it is not helpful from a substantive
point of view because people have to believe that those of us
in government know what we are doing, especially when dealing
with issues of national security.
I would suggest to you that if the immigration bill passes,
the microscope is going to be focused on the Department. I
would suggest that everybody be aware of that fact. Mr.
Schneider, you and I have been talking about, are we winding up
or are we winding down? One of the best things that could
happen is that if it does pass, that you would really get
together and make it happen.
And I am sure, following up on your suggestion about their
budget, I know Senator Akaka and I will do everything within
our power to make sure that money is put back in your budget so
you have the money to do what you have to do.
Mr. Schneider. I would like the opportunity just to make a
comment, if I may, Senator.
Senator Akaka. Go ahead.
Mr. Schneider. I believe that if that bill passes, then the
implementation and execution of that is probably the single
most important thing that I have to worry about. If it helps,
frankly, I would like you to know that going back about 4 or 5
weeks ago is when the Secretary asked me to make sure that we
are positioned to successfully execute that. And I can tell you
that we have put together a team from across the Department in
a manner that is probably unprecedented since the Department
was formed. This team works for me, and our job is the detailed
execution of how this bill will be executed on the assumption
that it passes.
We have the entire leadership of this Department that is
mobilized in terms of focusing on what we have to do to
execute, and I realize, and I know the Secretary and the Deputy
Secretary and the heads of all the operating components realize
what the importance of this bill is to the Nation, and the fact
is we are very well aware that there will be a tremendous
amount of visibility given to how well we perform. That is why
I am personally satisfied that we have some of the best and
brightest people from across the Department that are looking at
how we are going to execute this thing.
Senator Voinovich. Thank you. Thank you, Senator.
Senator Akaka. Thank you very much for your closing
remarks, Mr. Schneider and Senator Voinovich.
Again, I want to thank you for your testimony and your
responses. The hearing record will be open for 1 week for
additional statements or questions other Members may have
pertaining to this hearing.
The hearing is now adjourned.
[Whereupon, at 4:14 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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