[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
   DHS ACQUISITION PRACTICES: IMPROVING OUTCOMES FOR TAXPAYERS USING 
               DEFENSE AND PRIVATE-SECTOR LESSONS LEARNED

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT
                       AND MANAGEMENT EFFICIENCY

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 19, 2013

                               __________

                           Serial No. 113-36

                               __________

       Printed for the use of the Committee on Homeland Security
                                     
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                     COMMITTEE ON HOMELAND SECURITY

                   Michael T. McCaul, Texas, Chairman
Lamar Smith, Texas                   Bennie G. Thompson, Mississippi
Peter T. King, New York              Loretta Sanchez, California
Mike Rogers, Alabama                 Sheila Jackson Lee, Texas
Paul C. Broun, Georgia               Yvette D. Clarke, New York
Candice S. Miller, Michigan, Vice    Brian Higgins, New York
    Chair                            Cedric L. Richmond, Louisiana
Patrick Meehan, Pennsylvania         William R. Keating, Massachusetts
Jeff Duncan, South Carolina          Ron Barber, Arizona
Tom Marino, Pennsylvania             Dondald M. Payne, Jr., New Jersey
Jason Chaffetz, Utah                 Beto O'Rourke, Texas
Steven M. Palazzo, Mississippi       Tulsi Gabbard, Hawaii
Lou Barletta, Pennsylvania           Filemon Vela, Texas
Chris Stewart, Utah                  Steven A. Horsford, Nevada
Richard Hudson, North Carolina       Eric Swalwell, California
Steve Daines, Montana
Susan W. Brooks, Indiana
Scott Perry, Pennsylvania
Mark Sanford, South Carolina
                       Greg Hill, Chief of Staff
          Michael Geffroy, Deputy Chief of Staff/Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                I. Lanier Avant, Minority Staff Director
                                 ------                                

          SUBCOMMITTEE ON OVERSIGHT AND MANAGEMENT EFFICIENCY

                 Jeff Duncan, South Carolina, Chairman
Paul C. Broun, Georgia               Ron Barber, Arizona
Lou Barletta, Pennsylvania           Donald M. Payne, Jr., New Jersey
Richard Hudson, North Carolina       Beto O'Rourke, Texas
Steve Daines, Montana, Vice Chair    Bennie G. Thompson, Mississippi 
Michael T. McCaul, Texas (Ex             (Ex Officio)
    Officio)
               Ryan Consaul, Subcommittee Staff Director
                   Deborah Jordan, Subcommittee Clerk
           Tamla Scott, Minority Subcommittee Staff Director



                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Jeff Duncan, a Representative in Congress From the 
  State of South Carolina, and Chairman, Subcommittee on 
  Oversight and Management Efficiency:
  Oral Statement.................................................     1
  Prepared Statement.............................................     3
The Honorable Ron Barber, a Representative in Congress From the 
  State of Arizona, and Ranking Member, Subcommittee on Oversight 
  and Management Efficiency:
  Oral Statement.................................................     5
  Prepared Statement.............................................     7
The Honorable Michael T. McCaul, a Representative in Congress 
  From the State of Texas, and Chairman, Committee on Homeland 
  Security.......................................................     8
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security:
  Prepared Statement.............................................     9

                               WITNESSES
                                Panel I

Mr. Rafael Borras, Under Secretary for Management, U.S. 
  Department of Homeland Security:
  Oral Statement.................................................    11
  Prepared Statement.............................................    13
Ms. Michele Mackin, Director, Acquisition and Sourcing 
  Management, U.S. Government Accountabiity Office:
  Oral Statement.................................................    17
  Prepared Statement.............................................    18
Ms. Anne L. Richards, Assistant Inspector General for Audits, 
  Office of Inspector General, U.S. Department of Homeland 
  Security:
  Oral Statement.................................................    28
  Prepared Statement.............................................    29

                                Panel II

Mr. William C. Greenwalt, Visiting Fellow, Marilyn Ware Center 
  for Security Studies, American Enterprise Institute:
  Oral Statement.................................................    47
  Prepared Statement.............................................    48
Mr. Stan Soloway, President and CEO, Professional Services 
  Council:
  Oral Statement.................................................    53
  Prepared Statement.............................................    56
Mr. David J. Berteau, Senior Vice President and Director of 
  International Security Program, Center for Strategic and 
  International Studies:
  Oral Statement.................................................    60
  Prepared Statement.............................................    63

                                APPENDIX

Questions From Chairman Jeff Duncan for Rafael Borras............    83
Questions From Chairman Jeff Duncan for Michelle Mackin..........    85
Questions From Chairman Jeff Duncan for Anne L. Richards.........    85
Questions From Chairman Jeff Duncan for William C. Greenwalt.....    87
Questions From Chairman Jeff Duncan for Stan Soloway.............    88
Questions From Chairman Jeff Duncan for David J. Berteau.........    89


   DHS ACQUISITION PRACTICES: IMPROVING OUTCOMES FOR TAXPAYERS USING 
               DEFENSE AND PRIVATE-SECTOR LESSONS LEARNED

                              ----------                              


                      Thursday, September 19, 2013

             U.S. House of Representatives,
          Subcommittee on Oversight and Management 
                                        Efficiency,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:03 p.m., in 
Room 311, Cannon House Office Building, Hon. Jeff Duncan 
[Chairman of the subcommittee] presiding.
    Present: Representatives Duncan, McCaul, Barletta, Hudson, 
Daines, Barber, and O'Rourke.
    Mr. Duncan. The Committee on Homeland Security, 
Subcommittee on Oversight and Management Efficiency will come 
to order.
    The purpose of this hearing is to examine the DHS's 
acquisition practices to determine if the Department is 
effectively implementing its policies and to assess whether DHS 
could better leverage best practices and lessons learned from 
DoD and the private sector.
    Before we begin, I would like to express my sincere 
sympathy and prayers for the victims and families of those 
involved at the shooting here in Washington down at the Navy 
Yard. Our hearts go out to those who lost loved ones and those 
who were injured.
    I now recognize myself for an opening statement.
    The Department of Homeland Security's acquisitions programs 
have major implications for the American taxpayer, as they 
represent hundreds of billions of dollars in current and future 
cost. As DHS looks to improve acquisition outcomes, it is 
critical to examine lessons learned from the Department of 
Defense and the private sector.
    Although DoD is by no means perfect, the Government 
Accountability Office has found that more DoD programs are 
meeting cost and performance metrics, and 90 percent of major 
defense acquisition programs have conducted analyses that have 
resulted in cost savings.
    The private sector also knows how to create successful 
acquisition strategies through innovation and leadership. DHS 
could use many of these principles. The Department plans to 
spend about $170 billion on major acquisition programs to 
develop new systems to protect the United States border and 
critical infrastructure, improve disaster response, and secure 
cyber infrastructure, among other important issues.
    Since 2005, the GAO has placed DHS acquisition management 
activities on its high-risk list for poor management that 
results in programs coming in late, costing more, and doing 
less than originally envisioned. Programs such as the Secure 
Border Initiative Network, or SBInet, and the Coast Guard's 
Deepwater program continue to haunt DHS leaders as examples of 
colossal acquisition failures.
    DHS has taken several positive steps since these failures 
to improve. Instituting the Office of Program Accountability 
and Risk Management, or PARM, issuing an acquisition policy 
with several key program management practices, and developing a 
way to synthesize cost, schedule and performance data for 
senior decision-makers are all positive steps forward by DHS. 
These initiatives have taken a great deal of effort by DHS, and 
I commend them for their hard work.
    Nevertheless, while it is important to have the right 
policies and processes in place, those alone are not enough to 
ensure good program management. Policies and processes mean 
nothing if they are not followed.
    Unfortunately, GAO has found that DHS routinely violated 
its own policies. Specifically, DHS often allowed acquisition 
programs to move forward without DHS approval of essential 
planning documents. More than half of DHS acquisition programs 
which GAO reviewed awarded contracts without DHS or component 
approval for key planning documents.
    How can DHS plan effectively if it does not know how much 
programs cost, when they will be completed, or what they will 
do? Out of 77 major acquisition programs--those costing 
taxpayers more than $300 million--GAO found that only 12 had 
met most of DHS's criteria for reliable cost estimates in 2011. 
Thirty-two programs had none of their required documentation to 
measure cost, schedule, and performance. The result in 2012 was 
that 42 programs that experienced cost growth, schedule delays, 
or both. From 2008, the cost of 16 of these 42 programs grew 
almost $20 billion to over $50 billion in 2011.
    Think about that. From 2008, the cost of 16 of the 42 
programs grew from $20 billion to over $50 billion. That is 
fairly significant. That is an aggregate increase of 166 
percent. What business in America could manage its finances 
that way and survive?
    During August, I toured factories for BMW, Electrolux, and 
Michelin, in my district, among others, and met with numerous 
small-business owners back home in South Carolina. You don't 
produce the ``ultimate driving machine'' or survive as a small 
business by mismanagement. You don't become successful in the 
private sector by gambling away investor dollars. DHS needs to 
learn from private-sector best practices rather than ignore 
them.
    DHS often states these challenges are behind them, but 
these are not just old problems. Within this year alone, 
Congressional watchdogs have documented significant 
acquisitions problems. In March, GAO found 21 IT programs 
experiencing cost or schedule shortfalls. These programs are 
estimated to cost over $1 billion.
    In May, the Office of Inspector General released a report 
on DHS's H-60 helicopter fleet. The report described how CBP 
and Coast Guard failed to coordinate and found that DHS-level 
oversight of aviation assets was sporadic, and in some cases 
ineffective. Although the Coast Guard successfully converted 27 
helicopters at a cost of about $190 million, CBP converted only 
2 in 4 years at a cost of $44.5 million.
    Also in May, GAO found that TSA did not fully follow DHS 
acquisition policies when acquiring its body scanners. In 
August, the IG released another scathing report with 
acquisition failures, this time on DHS radio communications. 
The report found DHS has mismanaged a $3 billion effort to 
improve the Department's radio systems. This was first brought 
to my attention as I visited the CBP down in Mr. Barber's 
district in Arizona.
    The report described how DHS lacked information on radio 
systems in its inventory. Over 8,000 radio items collected dust 
in warehouses over a year despite radio shortages in some 
locations.
    Thank you.
    Beyond an apathetic management approach to its radios, 
these examples show a total disrespect to taxpayers. At a time 
when we are over $17 trillion in debt, it is unacceptable for 
DHS to continue to allow such mismanagement. Yet, DHS 
management recently absolved numerous programs from past 
acquisition malpractice.
    In May 2013, Under Secretary Borras directed the component 
acquisition executives to waive the acquisition documentation 
requirements for the 42 major acquisition programs that were in 
the sustainment phase prior to 2008, when DHS's acquisition 
policy was issued. The 42 programs listed in this memorandum 
have been allowed to proceed, despite the fact that most 
program costs can occur during this phase, thereby increasing 
risks to taxpayer dollars.
    The memorandum includes several programs that have been 
highlighted by Congressional watchdogs for past failures, such 
as TSA's Transportation Worker Identification Credential, or 
TWIC, and Secure Flight programs, as well as efforts where much 
more work remains until completion, including TSA and U.S. 
Secret Service's IT modernization efforts.
    By condoning past mismanagement, I believe this decision 
allows taxpayer dollars to be put at high risk in the future. I 
am deeply concerned at this message this sends to program 
managers throughout DHS. The American people deserve better. 
This hearing will examine these issues in-depth today.
    [The statement of Chairman Duncan follows:]
                   Statement of Chairman Jeff Duncan
                           September 19, 2013
    The purpose of this hearing is to examine DHS's acquisition 
practices to determine if the Department is effectively implementing 
its policies and to assess whether DHS could better leverage best 
practices and lessons learned from DoD and the private sector. Before 
we begin, I'd like to express my sincere sympathy and prayers for the 
victims and families of those involved at the shooting at the 
Washington Navy Yard. Our hearts go out to those who lost loved ones 
and those injured. I now recognize myself for an opening statement.
    The Department of Homeland Security's acquisitions programs have 
major implications for the American taxpayer as they represent hundreds 
of billions of dollars in current and future costs. As DHS looks to 
improve acquisition outcomes, it's critical to examine lessons learned 
from the Department of Defense (DoD) and the private sector. Although 
DoD is by no means perfect, the Government Accountability Office (GAO) 
has found more DoD programs are meeting cost and performance metrics 
and 90% of major defense acquisition programs have conducted analyses 
that have resulted in cost savings. The private sector also knows how 
to create successful acquisition strategies through innovation and 
leadership.
    DHS could use many of these principles. The Department plans to 
spend about $170 billion on major acquisition programs to develop new 
systems to protect the U.S. border and critical infrastructure, improve 
disaster response, and secure cyber infrastructure, among other 
important missions. Since 2005, however, GAO has placed DHS Acquisition 
Management activities on its ``High-Risk List'' for poor management 
that results in programs coming in late, costing more, and doing less 
than envisioned.
    Programs such as the Secure Border Initiative Network and the Coast 
Guard's Deepwater program continue to haunt DHS leaders as examples of 
colossal acquisition failures. DHS has taken several positive steps 
since these failures to improve. Instituting the Office of Program 
Accountability and Risk Management (PARM), issuing an acquisition 
policy with several key program management practices, and developing a 
way to synthesize cost, schedule, and performance data for senior 
decision makers are all positive steps forward by DHS. These 
initiatives have taken a great deal of effort by DHS; I commend them 
for their hard work.
    Nevertheless, while it is important to have the right policies and 
processes in place, those alone are not enough to ensure good program 
management. Policies and processes mean nothing if they are not 
followed. Unfortunately, GAO has found that DHS routinely violated its 
own policies. Specifically, DHS often allowed acquisition programs to 
move forward without DHS approval of essential planning documents. More 
than half of the DHS acquisition programs GAO reviewed awarded 
contracts without DHS or component approval for key planning documents. 
How can DHS plan effectively if it does not know how much programs 
cost, when they will be completed, or what they will do?
    Out of 77 major acquisition programs (those costing taxpayers more 
than $300 million), GAO found that only 12 had met most of DHS's 
criteria for reliable cost estimates in 2011. Thirty-two programs had 
none of the required documentation to measure cost, schedule, and 
performance. The result in 2012 was 42 programs that experienced cost 
growth, schedule delays, or both. From 2008, the cost of 16 of these 42 
programs grew from almost $20 billion to over $50 billion in 2011. This 
was an aggregate increase of 166%. What business in America could 
manage its finances that way and survive?
    During August, I toured factories for BMW, Electrolux, and 
Michelin, among others, and met with numerous small business owners 
back home in South Carolina. You don't produce ``the ultimate driving 
machine'' or survive as a small business by mismanagement. You don't 
become successful in the private sector by gambling away investor 
dollars. DHS needs to learn from private-sector best practices rather 
than ignore them. DHS often states these challenges are behind them, 
but these are not just old problems. Within this year alone, 
Congressional watchdogs have documented significant acquisitions 
problems. In March, GAO found 21 IT programs experiencing cost or 
schedule shortfalls. These programs are estimated to cost over $1 
billion.
    In May, the Office of Inspector General released a report on DHS's 
H-60 helicopter fleet. The report described how CBP and Coast Guard 
failed to coordinate and found DHS-level oversight of aviation assets 
was ``sporadic,'' and in some cases was ``ineffective.'' Although the 
Coast Guard successfully converted 27 helicopters at a cost of about 
$190 million, CBP converted only 2 in 4 years at a cost of $44.5 
million.
    Also in May, GAO found that TSA did not fully follow DHS 
acquisition policies when acquiring its ``body scanners''. In August, 
the Inspector General released another scathing report with acquisition 
failures, this time on DHS radio communications. The report found DHS 
has mismanaged a $3 billion dollar effort to improve the Department's 
radio systems. The report described how DHS lacked information on radio 
systems in its inventory. Over 8,000 radio items collected dust in 
warehouses for over a year despite radio shortages in some locations. 
Beyond an apathetic management approach to its radios, these examples 
show a total disrespect to taxpayers.
    At a time when we are over $17 trillion in debt, it is unacceptable 
for DHS to continue to allow such mismanagement. And yet, DHS 
management recently absolved numerous programs from past acquisition 
malpractice. In May 2013, Under Secretary Borras directed the Component 
Acquisition Executives to waive the acquisition documentation 
requirements for the 42 major acquisition programs that were in the 
sustainment phase prior to 2008 when DHS's acquisition policy was 
issued. The 42 programs listed in this memorandum have been allowed to 
proceed despite the fact that most program costs can occur during this 
phase thereby increasing risks to taxpayer dollars.
    The memorandum includes several programs that have been highlighted 
by Congressional watchdogs for past failures, such as TSA's 
Transportation Worker Identification Credential (TWIC) and Secure 
Flight programs, as well as, efforts where much more work remains until 
completion including TSA and U.S. Secret Service's IT modernization 
efforts. By condoning past mismanagement, I believe this decision 
allows taxpayer dollars to be put at high risk in the future. I am 
deeply concerned at the message this sends to program managers 
throughout DHS. The American people deserve better. This hearing will 
examine these issues in-depth.

    Mr. Duncan. So the Chairman will now recognize the Ranking 
Minority Member of the subcommittee, the gentleman from 
Arizona, my friend, Mr. Barber, for any statement he may have.
    Mr. Barber. Thank you, Mr. Chairman. Thank you for holding 
this hearing.
    Before we begin, though, I, too, would like to join with 
you in extending our condolences to the families who lost loved 
ones on Monday. To those survivors, you know, as a person who 
has been through a mass shooting myself and see the impact it 
can have on everyone, whether you are injured or not, I know 
what those families are dealing with right now, and I just 
think all of us should be extending our good wishes, our 
prayers and thoughts to them as they deal with this terrible, 
shocking tragedy. So let's remember them always as we think 
about how this situation is going to unfold.
    Now, let me go to the point of today's hearing. I think it 
is important that we have this discussion about how it is that 
the Department of Homeland Security manages its acquisitions so 
that we can find solutions to improve the Department's ability 
to carry out its mission and, I think very importantly, that it 
do so in a cost-effective and highly accountable manner.
    When the Department was stood up almost--a little over 10 
years ago, it was understood that combining 22 different 
agencies into one department could be very challenging and that 
we might, in fact, see 22 silos emerge within a department. I 
think we have certainly seen evidence that that has been an on-
going challenge for the Department.
    In 11 years and later almost, we are still trying to create 
one cohesive Department of Homeland Security. Over the past 3 
years, I do believe the Department has worked to improve its 
acquisition practices and policies and create a more 
streamlined framework aimed at saving costs and requiring each 
component to operate by the same set of rules. While the 
framework may be in place, it is clear that there remain many 
challenges and that we must make sure that these--the 
framework, this framework is fully implemented.
    Without an acquisition strategy that is adhered to by all 
DHS components, the Department simply is not able to achieve 
the economies of scale that help reduce costs and ultimately 
make effective use of our resources and save the taxpayer 
money.
    Now, this is a bit of dated example, but I will--I remember 
early on, when I was working for Congresswoman Giffords, we 
learned that one of the most effective tools that the Border 
Patrol had was the mobile surveillance systems. Yet when we 
looked into it further, we found that 50 percent of them in 
Arizona were out of commission. Why? Because they weren't tough 
enough to withstand the environmental conditions in the harsh 
desert climate.
    It seems to me that at that time--and even still today--we 
could learn a lot about the technology that we intend to use in 
those kinds of environments by looking at what is going on, for 
example, in Afghanistan, where similar conditions in terms of 
the climate exist, and be able to replicate the right kind of 
technology for a desert environment. We didn't do it then, but 
we must continue to try to do better.
    In a recent Office of Inspector General report, it was 
revealed that two components had purchased the same radio 
equipment that was sitting idly in a storage facility, while a 
third component needed the same equipment. The end result was 
one of the components could not get the resources they needed, 
even though they were obviously available. This is just 
unacceptable. When the Department and the Federal Government 
has limited resources, and the taxpayer is watching every penny 
we spend--as they should--we cannot afford to waste these 
resources.
    But while the Department has made some strides in saving 
taxpayer funds through economies of scale, as indicated in this 
OIG report, there is still a long way to go. The most effective 
way to achieve uniformity is to ensure that the Department 
headquarters has the authority to enforce Department-wide 
policies that are aimed at improving governance and efficiency.
    Moreover, it is clear that in order for the Department to 
mature into a gold standard among Federal agencies, its 
acquisition problems must be addressed top-down from 
headquarters and to each component. Additionally, in addressing 
these concerns, I believe it is important for the Department to 
search for best practices, both inside the Government, but also 
in the private sector.
    When working with the private sector, the Department should 
be transparent and user-friendly by making its procurement 
processes clear and easy to follow. This is a key to good 
governance. I can tell you countless times when I have been 
approached by contractors and providers or potential providers 
who have said over and over again how difficult it is to access 
the Department's procurement process.
    For this to work, there must be a buying-in at the 
component level. There must be Department-wide understanding 
that each component is a part of the overall mission to use 
resources efficiently in order to be effectively secure--to 
effectively secure the homeland. I think it is important that 
as we look at using the Department of Defense as a model for 
DHS, as suggested by the title of today's hearing, we must also 
recognize that both the mission and structure of the agencies 
are somewhat different.
    In many cases, the Department of Homeland Security has 
implemented procurement practices that have been successful in 
DoD. But given the differences between these two departments, 
it is also important that DHS examine its current framework and 
system and develop a process that takes best practices from 
both Government and private entities into account. DHS must 
have a system that works for its specific needs and mission and 
one that improves upon its flaws and implements OIG and GAO 
recommendations.
    As a representative of a district that shares over 80 miles 
of border with Mexico, I am very familiar with the amount of 
money that has been spent by the Department on technologies and 
assets that have been procured in an effort to secure the 
border. I am also aware of some of the waste that has gone on 
through those purchases.
    We must ensure that these assets are used to best fulfill 
their mission. We must do this as responsible stewards of the 
American taxpayer. The Department cannot continue to stick the 
American people with the bill for failed technologies and 
poorly-distributed resources.
    The Department should develop, I believe, a central 
acquisition process that fits the needs and mission of the 
Department and its components, one that incorporates the best 
practices both from industry and Government, and the 
Department's acquisition and procurement system should be 
tailored to meet the Department's unique mission, should enable 
the Department to take advantage of economies of scale, to 
ensure that the Department pays a reasonable price and should 
allow us to be responsible, all of us, stewards of taxpayer 
dollars.
    I look forward to hearing from our witnesses and thank them 
for being here today. I look forward to hearing your statements 
and then to have questions.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    [The statement of Ranking Member Barber follows:]
                 Statement of Ranking Member Ron Barber
                           September 19, 2013
    Thank you for holding this very important hearing to discuss the 
manner in which the Department of Homeland Security manages its 
acquisitions and to find solutions that can improve the Department's 
ability to carry out its mission.
    When the Department was stood up more than a decade ago, it was 
understood that combining 22 different agencies into one department 
could create stovepipes and silos.
    Some 11 years later, we are still trying to create one cohesive 
Department of Homeland Security.
    Over the last 3 years, the Department has worked to improve its 
acquisition policies and create a more streamlined framework aimed at 
saving costs and requiring each component to operate by the same rules.
    While the framework may be in place, there remain challenges that 
exist in making sure it is implemented.
    Without an acquisition strategy that is adhered to by all DHS 
components, the Department is not able to achieve economies of scale 
that help reduce costs and, ultimately, make effective use of our 
resources and save the taxpayers' money.
    In a recent Office of Inspector General (OIG) report, it was 
revealed that two components had purchased the same radio equipment 
that was sitting idly in a storage facility while a third component 
needed that same equipment. The end result, one of your components 
couldn't get the resources it needed even though they were available.
    This is unacceptable. When the Department has limited resources we 
cannot afford to waste them.
    While the Department has made some strides in saving taxpayer funds 
through economies of scale, as indicated by this OIG report, they still 
have a ways to go.
    The most effective way to achieve uniformity is to ensure that 
Department headquarters has the authority to enforce Department-wide 
polices that are aimed at improving governance and efficiency.
    Moreover, it is clear that in order for the Department to mature 
into a gold standard among Federal agencies, its acquisition challenges 
should be addressed top-down from headquarters to each component.
    Additionally, in addressing these challenges, I believe it is 
important that the Department search for best practices, both inside 
the Government but also in the private sector.
    And when working with the private sector, the Department should be 
transparent and ``user-friendly,'' by making its procurement processes 
clear and easy to follow. This is key to good governance.
    For this to work, there must be ``buy-in'' at the component level. 
There must be Department-wide understanding that each component is part 
of the overall mission to use resources efficiently in order to 
effectively secure the homeland.
    I think it's important that as we look at using the Department of 
Defense (DoD) as a model for DHS--as suggested by the title of today's 
hearing--we must recognize that both the mission and structure of the 
agencies are different.
    In many instances the Department has implemented procurement 
practices that have been successful at DoD.
    But given the differences between these two departments, it is also 
important that DHS examine its current framework and system and develop 
a process that takes best practices that make sense for DHS from both 
Government and private entities into account. DHS must have a system 
that works for its specific needs and mission, one that improves upon 
its flaws and implements OIG and GAO recommendations.
    As a Representative of a District that shares over 80 miles of 
border with Mexico, I am familiar with the amount of money that has 
been spent by the Department on technologies and assets that have been 
procured in an effort to secure border.
    We must ensure that these assets are used to best to fulfill their 
mission. We must do this to be responsible stewards of the American 
taxpayer. The Department cannot continue to stick the American people 
with the bill for failed technologies and poorly-distributed resources.
    I would argue that the Department should develop a central 
acquisition process that fits the needs and mission of the Department 
and its components, one that incorporates best practices from both 
industry and Government.
    The Department's acquisition and procurement system should be 
tailored to meet the Department's unique mission, should enable the 
Department to take advantage of economies of scale to ensure the 
Department pays a reasonable price, and should allow us to be 
responsible stewards of taxpayer dollars.
    I look forward to hearing from our witnesses on these and other 
issues as we discuss the Department's challenges in fully implementing 
its acquisition management initiatives.

    Mr. Duncan. I thank the gentleman from Arizona.
    The Chairman will now welcome and recognize the Chairman of 
the full committee, gentleman from Texas, Chairman McCaul, for 
any statement he may have.
    Mr. McCaul. I thank the Chairman for having this hearing, 
Ranking Member Barber. Let me say, also, I join with the 
Chairman--our thoughts and prayers are with the victims of the 
Navy Yard tragedy. I have talked to Chairman Duncan about 
holding hearings on the issue of clearances within the Federal 
Government, and the idea that somebody of that caliber could 
hold a clearance and infiltrate our military installations is 
certainly a homeland security issue, as well.
    One of the top priorities I had coming in as the new 
Chairman was management reform. I believe we can do better. I 
believe we can save money. This hearing also fits nicely with 
the work of the Subcommittee on Transportation Security that 
Chairman Hudson has done. Before the August recess, they marked 
up the Transportation Security Acquisition Reform Act that will 
reform the TSA to develop a long-term acquisition plan to 
better deploy proven technology and encourage innovation. I 
expect the full committee to mark up that bill and that 
legislation soon.
    DHS acquisition programs play a critical role in protecting 
the homeland. They include surveillance systems, watching 
terrorists, drug traffickers along our borders, machines 
screening airport passengers for potential threats. These 
programs represent a significant investment for the American 
taxpayer.
    To its credit, DHS has issued a number of directives 
intended to ensure acquisition programs demonstrate critical 
knowledge and documentation at key points in the life cycle of 
a program. However, time and again, we hear that billions of 
taxpayer dollars have been put at high risk, and multiple key 
programs do not fully meet the Department's needs. This must 
stop.
    The GAO has found that DHS has often not followed its own 
policies. The policy, even a good one, that incorporates best 
practices isn't effective if people are not held accountable 
and that doesn't lead to positive outcomes. Overcoming this 
challenge takes strong leadership, something that, in short, is 
in short supply, unfortunately, at times at DHS.
    Eighteen out of the top 44 positions at DHS are vacant or 
are under some sort of temporary leadership. Not included in 
that count, but relevant for purposes of today's hearing is the 
status of the executive director of the Office of Programs 
Accountability and Risk Management. For as often as we are 
likely to hear about that office today, what message does it 
send to the rest of DHS and Congress when it has been under 
acting leadership for nearly a year-and-a-half?
    People are the Department's greatest resource. An 
insightful report released last week by the Professional 
Services Council on Government-wide acquisitions stresses the 
importance of a quality acquisition workforce. So I am looking 
forward to hearing more from the Professional Services Council 
and the testimony here today, and I appreciate you being here.
    I believe it is important for DHS to get beyond viewing 
acquisition as a series of procurement transactions to be 
managed, but rather as investments in capabilities that align 
with the strategic plan that builds capabilities to mitigate 
risk to the homeland.
    I understand that DHS is beginning to bring this approach 
to cybersecurity, biodefense, and screening, but more should be 
done across the board. DHS will always need to procure goods 
and services to achieve their mission, and we need a strong and 
effective department doing what it was created and intended to 
do.
    With that, I yield back.
    Mr. Duncan. I thank the Chairman for being here. I 
understand he had to interrupt a lunch with his beautiful wife 
in order to make it in time, so we are glad he is interested in 
the topic enough to come. If other Members of the----
    Mr. McCaul. That is how important this hearing is to me.
    Mr. Duncan. That is right. We understand that. So, thank 
you, sir.
    Other Members of the subcommittee are reminded that opening 
statements may be submitted for the record.
    [The statement of Ranking Member Thompson follows:]
             Statement of Ranking Member Bennie G. Thompson
                           September 19, 2013
    Each year, the Department of Homeland Security spends approximately 
one-fourth of its entire budget on procuring goods and services.
    Last fiscal year, the Department spent over $12 billion on almost 
100,000 transactions.
    Although they are on track to spend slightly less this fiscal year, 
the manner in which the Department utilized taxpayer funds to procure 
goods and services are of utmost concern.
    Since its inception, acquisition management has been a challenge 
for the Department.
    It has come a long way but until its systems become more 
integrated, stronger line authority exists between headquarters and the 
components, and planning on the front end is improved, the Department 
will continue to face challenges and impede its ability to be removed 
from the Government Accountability Office (GAO) High-Risk List.
    There are approximately 135 programs that are defined by the 
Department as ``major acquisitions.''
    Of these 135 programs, 75% have an estimated life-cycle cost of 
more than $300 million each.
    Moreover, 37 of its major acquisitions are estimated to incur over 
$1 billion each over the course of its life cycle.
    Given these high costs, particular attention must be paid to the 
success of these programs and, where problems exist--and it appears as 
if the Department is continuing to throw good money after bad--programs 
should be immediately stopped to determine the best path forward.
    As we are all aware, the homeland security budget is scarce, and 
with the on-going sequester, the Federal Government has been required 
to do more with less.
    As a result, we must ensure that each dollar is spent wisely, can 
be accounted for, and advances the homeland security mission.
    While I understand that acquisition challenges exist, I do believe 
that for the first time a framework for improvement is in place.
    Yet, this framework will only yield success if silos are eliminated 
and the enforcement mechanisms are in place.
    In 2011, the Department created a new office, the Office of Program 
Accountability and Risk Management (PARM) to ensure that the Department 
does just that.
    The rules and policies created by this new office, however, are 
only as good as the paper they are written on if they are not fully 
implemented throughout the Department and if there are no repercussions 
in place for those offices and components that fail to fall in line.
    According to the Department's Office of Inspector General (OIG), 
PARM has not effectively overseen and managed each acquisition under 
its purview and in some instances when it did, PARM was simply ignored.
    Moreover, for the past 18 months PARM has operated without a 
permanent Executive Director.
    As a result, based on its date of creation, it has functioned 
without permanent leadership guiding its path for longer than it did 
with an Executive Director in place.
    I would urge the Under Secretary to move quickly in filling this 
vacancy.
    As suggested by the hearing title, the Majority has advanced the 
notion that if the Department would follow Department of Defense (DoD) 
and private-sector practices, it could improve the effectiveness of its 
acquisitions practices.
    I disagree that DoD and the private sector are the appropriate 
models.
    While there may be some Government-wide procurement practices that 
DoD has successfully deployed that the Department could benefit from, 
given the differences in both mission and structure, I do not believe 
that DoD is the gold standard.
    Likewise, outsourcing and privatizing Government functions could 
lead to further dysfunction, and even higher costs.
    Both GAO and the OIG have provided the Department with sound 
recommendations for moving forward and building upon its recent 
efforts. I look forward to hearing from them on what the Department has 
achieved and where it should focus its attention.

    Mr. Duncan. We are pleased today to have two distinguished 
panels of witnesses on this important topic. Let me remind the 
witnesses that their entire written statement will appear in 
the record, and I will introduce each of you first and then 
recognize you for your testimony.
    So for the first panel, we have the honorable Rafael 
Borras. He is the under secretary for management at the U.S. 
Department of Homeland Security. He joined the Department in 
April of 2010. Mr. Borras exercises leadership authority over 
all aspects of the Department's management programs and serves 
as the chief management officer and chief acquisition officer.
    As the chief management officer, Mr. Borras oversees 
management of DHS's nearly $60 billion budget. As chief 
acquisition officer, he administers control over approximately 
$19 billion in procurement. Mr. Borras has more than 30 years' 
management experience, including over 20 years on Federal and 
city government and 10 years in the private sector.
    Ms. Michele Mackin is the director of the U.S. Government 
Accountability Office, GAO, and acquisition and sourcing 
management team. Ms. Mackin joined the GAO in 1988 as an 
evaluator in the National security and international affairs 
division, focusing largely on military airlift issues. She has 
led complex reviews of Federal contracting issues, including 
high-risk contract types, the Coast Guard's Deepwater 
recapitalization project, and Navy shipbuilding programs.
    Ms. Anne Richards is the assistant inspector general for 
the Office of Audits in the Office of Inspector General at the 
U.S. Department of Homeland Security. Ms. Richards focuses on 
promoting effectiveness, efficiency, and economy in DHS's 
programs and operations. She joined the Office of Inspector 
General in 2007 after serving as assistant inspector general 
for audits at the U.S. Department of Interior from 2005 through 
2007, regional audit manager for the central region office in 
Denver, Colorado. She also served in a number of positions with 
the United States Army Audit Agency.
    So I want to thank each of you for being here. I will now 
recognize Mr. Borras to testify, and thank you, and the time is 
yours, sir.

  STATEMENT OF RAFAEL BORRAS, UNDER SECRETARY FOR MANAGEMENT, 
              U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Borras. Thank you, Chairman Duncan, Ranking Member 
Barber, and other distinguished Members of the committee.
    I thank you for the opportunity to appear here today before 
you to discuss how the Department identifies, evaluates, and 
adopts best practices in acquisition. I am pleased to be joined 
by my colleagues from the Government Accountability Office and 
the Office of Inspector General. We continue to meet regularly 
with both the GAO and the IG to better understand how we are 
methodically making positive changes to improve acquisition 
management at DHS. I am gratified by their recent comments and 
actions that we have made progress and that we expect to 
sustain progress, given the changes, to make a solid management 
infrastructure, which includes policies, delegations, business 
intelligence, and governance.
    Last year, in fiscal year 2012, the Department procured 
over $12.4 billion in goods and services directly linked to the 
DHS mission to prevent terrorism and enhance security, secure 
and manage our borders, enforce and administer our new 
immigration laws, and many others, to provide essential support 
to the National and economic security of this country.
    I will be talking about some of the best practices that we 
have adopted from private sector and from other Government 
agencies as I proceed. Regarding competition, it is very 
important. I am pleased to report that last year over 72 
percent of our eligible contracts were awarded competitively, 
which far exceeded the Government-wide average of 63 percent.
    We continue to award many of our contracts to small and 
minority businesses. The Small Business Administration recently 
announced that DHS earned its fourth consecutive A rating, 
which makes DHS the only agency among the top 7 Federal 
spenders to achieve that feat.
    Another best practice we have institutionalized is 
strategic sourcing, which improves efficiency by standardizing 
purchases for common goods and services. We are recognized as a 
leader in Federal strategic sourcing by the GAO, OMB, and 
Congress. We have achieved over $1.7 billion of savings from 
strategically sourcing products and services all across DHS.
    Now, over the past 4 years, DHS has adopted many best 
management practices. From the private sector, we have 
institutionalized principles like risk-based oversight, 
evaluation of major investments through portfolio management, 
and access to reliable data from mature business intelligence 
to track the performance and the progress of our investments 
through the life cycle.
    We have a unified acquisition structure for all of our 
major programs, which includes PARM, as well as the CIO and the 
Office of Science and Technology's Office of Test and 
Evaluation. Together, we provide independent assessments and 
monitoring of programs between formal reviews of major 
acquisition programs to identify issues that emerge and be able 
to address them at our acquisition review boards.
    To date, this enhanced oversight has resulted in 136 
acquisition review boards, 250 acquisition decision 
memorandums--these are specific decisions that are a result of 
those acquisition review board meetings, which result in 
specific actions that the programs and the components must take 
in order to proceed. We have canceled three major programs and 
have paused eight. We have also required a change in leadership 
in many programs, as well.
    Since 2011, we have tracked approximately 88 major programs 
at any given time, and I am pleased to report that nearly 42 
percent of those once-troubled programs are now operating 
within an acceptable cost and schedule variance. With regard to 
the 21 IT programs referenced by GAO in their 2012 audit, we 
have worked very closely to address that. Nearly 30 percent of 
these programs are now operating within the acceptable cost and 
variance schedule. Each of the remaining programs has a 
specific comprehensive action plan to reach the acceptable 
targets and goals. We will continue to monitor that through the 
ARB process.
    Regarding best practices from DoD, we have a long history 
of partnering with DoD to leverage best practices and 
methodologies. I have outlined in my written testimony about 15 
or so specific examples. I won't go into them now. But there 
are cases where technology from DoD and other materials have 
proved quite useful to DHS, but not all assets are deemed 
suitable, given the costs and the time it takes to customize it 
for non-combat use.
    I look forward to answering your questions. I think the 
Department has made continued progress in the acquisition 
management discipline. We do have more work to do, but we feel 
that the infrastructure enhancements that we have made to date 
have resulted in considerable progress and have laid a 
foundation which will allow us to continue to improve and 
provide a better return on behalf of the taxpayers.
    So once again, I thank you for the opportunity to be here 
for you today. I, too, have a cold. I actually have bronchitis, 
Mr. Chairman. I look forward to answering your questions.
    [The prepared statement of Mr. Borras follows:]
                  Prepared Statement of Rafael Borras
                           September 19, 2013
    Chairman Duncan, Ranking Member Barber, and other distinguished 
Members of the committee, I thank you for the opportunity to appear 
before you today to discuss how the Department identifies, evaluates, 
and adopts acquisition best practices.
    I wish to express appreciation to my colleagues from the Government 
Accountability Office (GAO) for their work to support the 
transformation of the Department of Homeland Security (DHS). Over the 
past 4 years, we have forged good working relationships and reached 
common ground on many issues. We continue to meet regularly to provide 
GAO officials with a better understanding of how we are methodically 
making positive change to improve acquisition management at DHS. I am 
gratified by their recent comments and actions that recognized the 
substantial progress made and we expect to sustain that progress given 
the changes made to solidify our management infrastructure, which 
includes policies, delegations, business intelligence, and governance.
    To best illustrate the significant progress made in the past 4 
years, the GAO in its 2009 High-Risk report cited the Department as 
High-Risk because it had not developed a ``comprehensive plan to 
address the transformation, integration, management, and mission 
challenges GAO identified in 2003.'' Since 2009, not only have we 
forged a comprehensive integration strategy, we have also demonstrated 
substantial progress, which led GAO to acknowledge in their 2013 High-
Risk report that, ``Significant progress has been made to transform and 
integrate the Department into a more cohesive unit.'' As such, GAO 
decided to narrow the scope of the Department's High-Risk designation. 
In fact, they stated in December 2012 that, ``the Department has made 
substantial progress in many areas and if their Integrated Strategy is 
fully implemented, they are on a path to be removed from the High-Risk 
List.'' Any progress we have made is the direct result of an across-
the-board commitment by Operational Components and Headquarters offices 
to follow a clear and logical strategy. This progress has been 
reinforced by the willingness of our components and Line-of-Business 
Chiefs to leverage best practices in both the procurement and program 
management disciplines.
                 overview of dhs procurement portfolio
    In fiscal year 2012, the Department procured over $12.4 billion in 
goods and services directly linked to the DHS mission--to prevent 
terrorism and enhance security, secure and manage our borders, enforce 
and administer our immigration laws, safeguard and secure cyberspace, 
and ensure resilience to disasters--all of which provide essential 
support to National and economic security. Among the best acquisition 
practices we have adopted from world-class organizations include: 
Increasing the competition rate, enhancing the Nation's industrial base 
by investing in small businesses, and finally, standardizing our 
commodities and services through strategic sourcing.
Competition
    I am pleased to report that in fiscal year 2012 over 72 percent of 
our eligible contracts were awarded competitively, which far exceeded 
the Government-wide average of 63 percent. We were able to do this by 
strengthening the Competition Advocacy structure across the Department, 
establishing annual component goals for increased use of competitive 
processes, carefully monitoring progress against those goals, and 
expanding communications with industry to ensure thorough market 
research is accomplished.
Awards to Small Businesses
    We also continue to award many of our contracts to small and 
minority-owned businesses. The Small Business Administration (SBA) 
recently announced that DHS earned its fourth consecutive ``A'' rating, 
which makes DHS the only agency among the top 7 Federal spenders to 
achieve that feat. In fiscal year 2012 alone, DHS awarded $3.94 billion 
in small business contracts. This included $880 million in contracts to 
veteran-owned small businesses, including $684 million to service 
disabled veteran-owned businesses. DHS also has a strong record of 
supporting small disadvantaged businesses. In fiscal year 2012 alone, 
the Department awarded $1.7 billion in contracts to African American, 
Hispanic, Native American, Asian Pacific, and Subcontinent Asian-owned 
small businesses, including $762 million in awards under the 8(a) 
Business Development Program.
Strategic Sourcing
    Another best practice we have institutionalized is strategic 
sourcing, which improves efficiency by standardizing purchases for 
common goods and services. I recognize that in this budget constrained 
environment, it is increasingly important that agencies focus on fiscal 
responsibility and ensure the Federal Government utilizes taxpayer 
dollars in the most efficient manner possible. Strategic sourcing 
enables this goal and saves the Federal Government money by leveraging 
purchasing volume and focusing on reducing the total cost of ownership.
    The administrator of the Office of Management and Budget's (OMB) 
Office of Federal Procurement Policy recently stated that strategic 
sourcing is the administration's top priority for procurement. DHS is 
recognized as a leader in the Federal strategic sourcing space by GAO, 
OMB, and Congress. DHS has achieved savings of over $1.7 billion from 
strategically sourcing products and services across all DHS components. 
DHS has implemented 56 strategic sourcing initiatives, covering over 
450 separate contracts. Fourteen of these initiatives were awarded in 
fiscal year 2012. This year, DHS has awarded another 12 new 
initiatives. Our strategic sourcing program also benefits small 
business. In fiscal year 2012, over 3,000 strategic sourcing contracts 
were awarded to small businesses, totaling $381 million. This dollar 
value represents 34 percent of the total strategic sourcing dollars 
awarded by DHS, which exceeds the goal established by the SBA.
    DHS shares the strategic sourcing concept of operations, reporting 
and analysis methodologies, and templates, tools, techniques, and other 
best practices learned from our many years of experience and strategic 
sourcing successes. This serves not only as a savings multiplier, but 
it also grows the strategic sourcing capability and knowledge base 
across the entire Federal Government.
                     acquisition program management
    Over the past 4 years, DHS has adopted many program management best 
practices. From the private sector, we've institutionalized principles 
like risk-based oversight, evaluation of major investments through 
portfolio management, and access to reliable data from matured business 
intelligence to track the progress of investments throughout their life 
cycle.
    Each of these principles has resulted in the advancement of 
Integrated Investment Life Cycle Management (IILCM). IILCM is a 
transformational concept to integrate all phases of the Department's 
multi-billion-dollar budget and investment/acquisition management 
process. The framework provides critical linkages between Strategy, 
Capabilities and Requirements, Programming and Budgeting, and 
Investment Oversight phases to ensure the effective execution of 
Federal funds to support strategic priorities.
    IILCM was signed into policy by Secretary Napolitano in February 
2013 and the framework is being piloted through March 2014 using the 
cybersecurity, biodefense, and common vetting portfolios. The best 
practices gained from the pilot experience will inform the Management 
Directives and Instructions that will institutionalize IILCM across the 
Department for the future.
    In order to strengthen Department-wide program management, the 
Office of Program Accountability and Risk Management (PARM) was created 
in 2011 and modeled after best practices in the private sector. It 
continues to provide centralized oversight for all major acquisition 
programs. To date, this oversight has resulted in:
   136 Acquisition Review Boards (ARB);
   249 Acquisition Decision Memoranda (ADM);
   Three (3) cancelled major acquisition programs and eight (8) 
        paused programs.
    PARM also provides independent assessments and monitoring of 
programs between formal reviews of major acquisition programs to 
identify any emerging issues that the ARB needs to address to keep the 
programs on track. Finally, PARM works with the Business Intelligence 
program management office to enhance business intelligence and improve 
ARB decision making.
    Management Directive (MD) 102-01 has been institutionalized and is 
recognized by all component executives as the standard acquisition 
policy roadmap to manage their programs. The ARB has a broad span-of-
control and has authorized low-risk/high-impact programs the authority 
to proceed. The ARB has institutionalized an effective Component 
Acquisition Executive (CAE) structure that serves as the single point 
of accountability for programs within the components and also guides 
managers of major investments through the acquisition governance 
process.
    One of the top priorities during my tenure is to ensure best 
practices are properly evaluated and tested, but only adopted if they 
prove to be cost-effective and contribute to improved efficiency. The 
Department has a long history of partnering with DoD to leverage best 
practices and methodologies to help guide the development of our 
policies, processes, and structures. Further, we have also established 
mechanisms to evaluate the effectiveness of assets and technologies 
that were deemed by DoD to be obsolete or excess for complex military 
usage. In fact, while many DoD processes, assets, and technologies have 
proven quite useful to DHS, in some cases, not all assets and 
technologies are deemed suitable given the cost and time it takes to 
customize it for non-combat use. Before committing to a technology 
exchange or asset transfer, DHS conducts detailed operational 
assessments and cost analyses to understand the cost and technical 
impact(s) these technologies would have on the DHS operations and 
support chain.
    Another aspect of assessing cost impact is to fully understand the 
total cost of ownership, which includes maintenance, operations, and 
upgrades during the remaining operational life of the asset. For 
example, evaluation teams at U.S. Customs and Border Protection (CBP) 
revealed additional unfunded costs associated with recoding software, 
modifying technology, and retrofitting certain assets before deploying 
border sensor equipment. Accordingly, DHS determined the exchange from 
DoD would not be cost-efficient given the externalities involved.
    While DHS and DoD have many similarities, there are key mission-
related differences. For example, DoD's mission is designed to operate 
in hostile combat theaters around the world and, therefore, their 
standards, processes, hardware, and systems often require a more 
rigorous ``military hardening'' standard. Researchers and analysts from 
the Science and Technology (S&T) Directorate have discovered that the 
``military hardening'' standard inherent for the designs and tolerances 
for military ships, aircraft, unmanned aerial systems (UAS), and border 
sensor equipment, sometimes makes what appears to be a simple transfer 
of these assets extremely complex and inordinately expensive.
    Another example of a key difference with DoD is the way people are 
trained and assigned to operate systems. DHS uses front-line Border 
Patrol Agents to operate systems because they know the operational 
environment and can best communicate with the agents responding in the 
field. DHS finds it most effective to have agents who can go back and 
forth between typical agent duties in the field and technology operator 
duties at a station. For high-technology systems, DoD often creates 
specialty codes with specialist training that can last several months. 
This approach does not align with the Department's needs. As a result, 
a part of the DHS evaluation involves determining how operational 
components can adapt the systems so that agents can operate them 
without extensive specialization and training. The following list 
identifies the best practices adopted from DoD by DHS:
    (1) The Chief Acquisition Executive (CAE) model comes directly from 
        DoD's Service Acquisition Executive (SAE) concept.
    (2) The MD-102-01 is modeled after DoD's 5000 series publication.
    (3) DHS' governance structure (ARB/IRB) is modeled directly after 
        DoD's Defense Acquisition Board (DAB) process.
    (4) DHS' acquisition documents (Operational Requirements Document 
        (ORD), Integrated Logistics Support Plan (ILSP), Test and 
        Evaluation Master Plan (TEMP), Analysis of Alternatives (AoAs), 
        Life Cycle Cost Estimates (LCCEs), etc.) come directly from DoD 
        best practices and document the planning and analysis that is 
        required.
    (5) DHS' requirements approval process is modeled directly after 
        DoD practices. For example, ORDs go to our equivalent of DoD's 
        Joint Requirements Oversight Council (JROC). As IILCM is 
        deployed, investment management will expand beyond acquisitions 
        to include; people, structures, systems, and all capital 
        assets.
    (6) The Department's requirement for independent oversight of the 
        Office of Test and Evaluation (OT&E) comes directly from DoD 
        best practices.
    (7) CBP created an operational requirements and OT&E staff 
        organization, modeled after joint staff processes, and 
        interacted directly with DoD personnel to help design the 
        organization and processes.
    (8) CBP participated with DoD in a variety of technology 
        demonstrations to help identify potential systems and assess 
        their effectiveness. One example of this is DoD's Thunderstorm 
        Program. Most recently, joint DHS/DoD demonstrations of various 
        surveillance and C2 technologies were conducted in and around 
        the coast off of the Rio Grande Valley in south Texas.
    (9) The USM, DHS Under Secretary for Science and Technology, and 
        DoD's USD Acquisition Technology and Logistics (AT&L) co-chair 
        the Capability Development Working Group (CDWG), which provides 
        oversight and strategic direction for joint DoD/DHS R&D and 
        acquisition activities. It also allows for sharing and 
        collaboration on best practices--which is a two-way exchange. 
        For example, DHS is providing enhanced capability related to 
        cost-estimating practices to DoD.
    (10) CBP modeled initial Analysis of Alternatives (AoA) activities 
        (especially for SBInet and the successor Arizona Technology 
        Plan) on DoD practices, and had the U.S. Air Force's (USAF's) 
        AoA center of excellence review and assess the completeness and 
        effectiveness of our process and results.
    (11) U.S. Coast Guard (USCG) procures C-130Js through the USAF and 
        equips them with communications and sensor packages that are 
        suitable for the USCG mission set. This enables the USCG to 
        achieve economies of scale with the airframe and follow-on 
        logistics support and parts, while achieving the required 
        capability.
    (12) Acquisition workforce training is an area where implementing 
        DoD models can be a challenge. While DoD has access to the 
        defense acquisition workforce development funds (DWDF) and is 
        subject to DAWIA, civilian agencies have not been resourced at 
        the same level. Additionally, the acquisition certification 
        requirements are diverging between defense and civilian 
        employees.
    (13) The USCG MSAM, DHS D102, Systems Engineering Life Cycle 
        (SELC), Workforce Certification processes are derived from DoD 
        model and tailored to USCG/DHS-specific needs. In addition, 
        USCG leverages DoD best practices for guides and processes, 
        including CG Risk Management (DoD RM guide) and Systems Safety 
        (MIL-STD 882).
    (14) USCG Project Resident Offices (on-site contract oversight) are 
        based on similar Defense Contract Management Agency (DCMA) 
        offices.
    (15) In addition, USCG uses formal agreements (MOAs/MOUs) to obtain 
        U.S. Navy, USAF, U.S. Army (USA), and Defense Agency expertise, 
        practices, and capabilities.
    Examples of these include:
   C-130 contracting for new and upgraded HC-130s with the Air 
        Force.
   NSC Weapons Systems certification from Naval Sea Systems 
        Command (NAVSEA).
   FRC and HC-144A OT&E with Navy Commander Operational Test 
        and Evaluation Force (COMOPTEVFOR).
   RB-M/RB-S & Cutter Boats T&E with Naval Surface Warfare 
        Center, Carderock Division.
   H-60/H-65 Avionics expertise and contracts for equipment 
        purchases from the USA.
   NSC, FRC & OPC life-cycle cost estimates from NAVSEA.
   C4ISR \1\ expertise from the Navy Space and Naval Warfare 
        Systems Command.
---------------------------------------------------------------------------
    \1\ C4ISR--Command, Control, Communications, Computers, 
Intelligence, Surveillance, and Reconnaissance.
---------------------------------------------------------------------------
   Unmanned Aircraft Systems (UAS) development, and aircraft 
        certification from Naval Air Systems Command (NAVAIR).
                               conclusion
    The Department has made steady progress to improve the acquisition 
management discipline. While there is still additional work to do, we 
feel that the infrastructure enhancements position the Department to 
sustain the significant progress made over the past 4 years. As 
indicated by GAO in the February 2013 report, the Department is clearly 
more integrated and operating as a single unit. We will continue to 
focus on reducing risk, building quality controls into our oversight 
function, and leveraging business intelligence to identify problem 
areas before they reach a critical state.
    Once again, I thank you for the opportunity to appear before you 
today, and I look forward to answering your questions.

    Mr. Duncan. Thank you so much, Mr. Borras.
    The Chairman will now recognize Ms. Mackin for her 
testimony.

STATEMENT OF MICHELE MACKIN, DIRECTOR, ACQUISITION AND SOURCING 
        MANAGEMENT, U.S. GOVERNMENT ACCOUNTABIITY OFFICE

    Ms. Mackin. Mr. Chairman, Ranking Member Barber, and 
Members of the subcommittee, good afternoon. I am pleased to be 
here today to discuss the Department of Homeland Security's 
acquisition management. As was mentioned earlier, DHS plans to 
invest almost $170 billion in major programs, and almost every 
component in the Department has at least some of these major 
acquisitions underway.
    Along the lines of the subject of today's hearings, in 
conjunction with our reviews at the Defense Department, we have 
identified best practices of leading commercial firms with 
regard to their acquisition management. The critical component 
is, really, knowledge. By knowledge, I am talking about having 
clear and well-defined requirements up front and a solid 
understanding of anticipated costs, the capabilities to be 
delivered to the end-user, and the time frame it will take to 
get there. For these leading firms, if programs don't 
demonstrate these key knowledge points, they don't proceed.
    Now, we have reported since 2005 that DHS's acquisition 
policy does, in fact, reflect this knowledge-based approach, so 
the programs really do stem from execution. For example, one of 
the most critical acquisition documents is the acquisition 
program baseline. This represents the program manager's 
agreement with the Department about the cost, schedule, and 
performance parameters of a program, and this is important, 
because it allows DHS and Congress to track progress and hold 
programs accountable for outcomes.
    We reported, however, that many of the major programs 
lacked approved baselines. Last year, we reported only about a 
third of 63 major programs had approved acquisition baselines. 
This situation doesn't put the Department in a good position to 
effectively manage its acquisitions. It also complicates 
efforts to track cost and schedule growth.
    As was mentioned, we reported last year that 16 major 
programs had 166 percent cost increase over 3 years. That 
equates to about $30 billion. But perhaps more important was 
that we couldn't make such an assessment of many more programs 
because the underlying data wasn't valid.
    Now, DHS is taking steps to increase the number of approved 
acquisition baselines, and we will continue to work with them 
to assess their progress. In addition, DHS in May of this year 
waived the requirement for acquisition documents for 42 major 
programs that are in the sustainment phase, meaning the systems 
have been fielded for operational use. I would note, however, 
that 60 percent to 70 percent of a program's total costs can be 
in the sustainment phase. So to the extent that those programs 
didn't have these, for example, validated cost estimates or 
approved sustainment plans, they run the risk of running into 
trouble down the road.
    DHS also faces a strategic challenge. Last December, the 
chief financial officer identified a 30 percent gap between the 
money DHS needs to carry out its major acquisitions and the 
funding it expects to receive. I view this acknowledgement as 
positive, and DHS initiated some actions to help mitigate that 
gap.
    For example, it is piloting an overarching model intended 
to help match resource requirements with the Department's 
missions. It is establishing a requirements oversight council, 
intended to make trade-off decisions among individual programs. 
The Defense Department has a similar requirements body in 
place. In fact, we have recommended for several years that DHS 
reinstitute such a body. It could help align the Department's 
portfolio of major investments with its available funding.
    In fact, the focus of our on-going work for this 
subcommittee is to assess DHS's management of its portfolio of 
investments and to determine how individual programs might be 
affected by funding instability that could be caused, at least 
in part, from this 30 percent funding gap the CFO identified.
    In conclusion, DHS has made progress in managing its major 
acquisitions, but we believe they still have a long way to go 
in gaining a clear understanding in practice and on an on-going 
basis of basic costs, schedule, and performance information of 
its major acquisitions. Without this knowledge, DHS's efforts 
to effectively manage its portfolio of investments may be 
impeded.
    Mr. Chairman, this concludes my statement. I would be happy 
to answer any questions.
    [The prepared statement of Ms. Mackin follows:]
                  Prepared Statement of Michele Mackin
                           September 19, 2013
                             gao highlights
    Highlights of GAO-13-846T, a testimony before the Subcommittee on 
Oversight and Management Efficiency, Committee on Homeland Security, 
House of Representatives.
Why GAO Did This Study
    GAO has highlighted DHS acquisition management issues on its high-
risk list, and over the past several years, GAO's work has identified 
significant shortcomings in the Department's ability to manage an 
expanding portfolio of major acquisitions. It is important for DHS to 
address these shortcomings because the Department invests extensively 
in acquisition programs to help it execute its many critical missions. 
DHS is acquiring systems to help secure the border, increase marine 
safety, enhance cybersecurity, and execute a wide variety of other 
operations. In 2011, DHS reported to Congress that it planned to 
ultimately invest $167 billion in its major acquisition programs. In 
fiscal year 2013 alone, DHS reported it was investing more than $9.6 
billion.
    This statement discusses: (1) DHS's acquisition policy and how it 
has been implemented; and (2) DHS's mechanisms for managing emerging 
affordability issues. The statement is based on GAO's prior work on DHS 
acquisition management and leading commercial companies' knowledge-
based approach to managing their large investments. It also reflects 
observations from on-going work for this subcommittee. For that work, 
GAO is reviewing key documentation, and interviewing headquarters and 
component-level acquisition and financial management officials.
What GAO Recommends
    GAO is not making any new recommendations in this statement. It has 
made numerous recommendations in its prior work to strengthen 
acquisition management, and DHS is taking steps to address them.
     homeland security.--observations on dhs's oversight of major 
          acquisitions and efforts to match resources to needs
What GAO Found
    GAO has previously established that the Department of Homeland 
Security's (DHS) acquisition policy reflects many sound program 
management practices intended to mitigate the risks of cost growth and 
schedule slips. The policy largely reflects the knowledge-based 
approach used by leading commercial firms, which do not pursue major 
investments without demonstrating, at critical milestones, that their 
products are likely to meet cost, schedule, and performance objectives. 
DHS policy requires that important acquisition documents be in place 
and approved before programs are executed. For example, one key 
document is an acquisition program baseline, which outlines a program's 
expected cost, schedule, and the capabilities to be delivered to the 
end-user. However, in September 2012, GAO found that the Department did 
not implement the policy consistently, and that only 4 of 66 programs 
had all of the required documents approved in accordance with DHS's 
policy. GAO made five recommendations, which DHS concurred with, 
identifying actions DHS should take to mitigate the risk of poor 
acquisition outcomes and strengthen management activities. Further, GAO 
reported that the lack of reliable performance data hindered DHS and 
Congressional oversight of the Department's major programs. Officials 
explained that DHS's culture had emphasized the need to rapidly execute 
missions more than sound acquisition management practices. GAO also 
reported that most of the Department's major programs cost more than 
expected, took longer to deploy than planned, or delivered less 
capability than promised. DHS has taken steps to improve acquisition 
management, but as part of its on-going work, GAO found that DHS 
recently waived documentation requirements for 42 programs fielded for 
operational use since 2008. DHS explained it would be cost-prohibitive 
and inefficient to recreate documentation for previous acquisition 
phases. GAO plans to obtain more information on this decision and its 
effect on the management of DHS's major acquisitions. DHS's July 2013 
status assessment indicated that, as of the end of fiscal year 2012, 
many major programs still face cost and schedule shortfalls. DHS 
expects to provide another update in the near future.
    In December 2012, DHS's Chief Financial Officer reported that the 
Department faced a 30 percent gap between expected funding requirements 
for major acquisition programs and available resources. DHS has efforts 
underway to develop a more disciplined and strategic approach to 
managing its portfolio of major investments, but the Department has not 
yet developed certain policies and processes that could help address 
its affordability issues. In September 2012, GAO reported that DHS 
largely made investment decisions on a program-by-program and 
component-by-component basis and did not have a process to 
systematically prioritize its major investments. In GAO's work at the 
Department of Defense, it has found this approach hinders efforts to 
achieve a balanced mix of programs that are affordable and feasible and 
that provide the greatest return on investment. DHS's proposed 
Integrated Investment Life Cycle Model (IILCM) is intended to improve 
portfolio management by ensuring mission needs drive investment 
decisions. For example, a high-level oversight body would identify 
potential trade-offs among DHS's component agencies. GAO has 
recommended such an oversight body for several years. Full 
implementation of the IILCM may be several years away. GAO will 
continue to assess the Department's progress in its on-going work.
    Chairman Duncan, Ranking Member Barber, and Members of the 
subcommittee: Thank you for the opportunity to discuss acquisition 
management at the Department of Homeland Security (DHS), as well as to 
discuss some lessons learned from our prior work comparing the 
Department of Defense's (DoD) acquisition practices to those of leading 
commercial companies. As you know, we have highlighted DHS acquisition 
management issues in our high-risk list since 2005.\1\ Over the past 
several years, our work has identified significant shortcomings in the 
Department's ability to manage an expanding portfolio of major 
acquisitions, and in response to our recommendations, DHS has taken 
steps to improve acquisition management.\2\ We believe it is important 
for DHS to continue to address these shortcomings because the 
Department invests extensively in acquisition programs to help it 
execute its many critical missions. DHS and its underlying components 
are acquiring systems to help secure the border, increase marine 
safety, screen travelers, enhance cybersecurity, improve disaster 
response, and execute a wide variety of other operations. In 2011, DHS 
reported to Congress that it planned to ultimately invest $167 billion 
in its major acquisition programs. In fiscal year 2013 alone, DHS 
reported it planned to spend more than $9.6 billion on these programs.
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    \1\ GAO, High-Risk Series: An Update, GAO-05-207 (Washington, DC: 
January 2005).
    \2\ For examples, see GAO, Department of Homeland Security: 
Billions Invested in Major Programs Lack Appropriate Oversight, GAO-09-
29 (Washington, DC: Nov. 18, 2008); Department of Homeland Security: 
Assessments of Selected Complex Acquisitions, GAO-10-588SP (Washington, 
DC: June 30, 2010); Homeland Security: DHS Requires More Disciplined 
Investment Management to Help Meet Mission Needs, GAO-12-833 
(Washington, DC: Sept. 18, 2012).
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    My statement today draws from our prior work on DHS acquisition 
management and leading commercial companies' approach to managing their 
large investments, work we have done in the context of DoD's approach 
to managing its large acquisitions.\3\ The statement also includes 
observations from our on-going review of DHS's acquisition funding 
process, which we are conducting at the request of this subcommittee. 
This statement discusses: (1) DHS's acquisition policy and how it has 
been implemented; and (2) DHS's mechanisms for managing emerging 
affordability issues. For our prior work, we surveyed all 77 major 
acquisition program offices that DHS identified in 2011 and achieved a 
92 percent response rate.\4\ We also reviewed all available Department-
level acquisition decisions from November 2008 to April 2012 and 
interviewed acquisition officials at DHS headquarters and components. 
To determine the extent to which DHS has policies in place to 
effectively manage individual acquisition programs, as well as the 
Department's acquisition portfolio as a whole, we compared our key 
acquisition management practices to DHS acquisition policy, and 
identified the extent to which DHS has implemented its policy.\5\ More 
detailed information on our scope and methodology for our prior work 
can be found in the relevant reports. To support our on-going audit, 
from March to September 2013, we reviewed key documentation and 
interviewed acquisition and financial management officials at DHS 
headquarters and components to understand DHS's affordability issues 
and the Department's plans to address these issues. We are also 
following up on prior recommendations.
---------------------------------------------------------------------------
    \3\ GAO, Best Practices: An Integrated Portfolio Management 
Approach to Weapon System Investments Could Improve DoD's Acquisition 
Outcomes, GAO-07-388, (Washington, DC: March 30, 2007); GAO-09-29; GAO-
10-588SP; Defense Acquisitions: Assessments of Selected Weapon 
Programs, GAO-11-233SP (Washington, DC: March 29, 2011); GAO-12-833.
    \4\ DHS originally identified 82 major acquisition programs in the 
2011 major acquisition oversight list, but five of those programs were 
subsequently canceled in 2011. Seventy-one program managers responded 
to the survey.
    \5\ Appendix II of GAO-12-833 identifies key acquisition management 
practices established in our previous reports examining DHS, the 
Department of Defense, National Aeronautics and Space Administration, 
and private-sector organizations.
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    The work underlying this statement was conducted 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.
                               background
    DHS Acquisition Management Directive 102-01 (MD 102) and an 
accompanying instruction manual establish the Department's policies and 
processes for managing major acquisition programs. While DHS has had an 
acquisition management policy in place since October 2004, the 
Department issued the initial version of MD 102 in 2008.\6\ Further, 
senior leaders in the Department are responsible for acquisition 
management functions, including managing the resources needed to fund 
major programs.
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    \6\ The interim version of MD 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 MD 
102 in January 2010 and subsequently updated the guidebook and 
appendices.
---------------------------------------------------------------------------
   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.\7\
---------------------------------------------------------------------------
    \7\ The Secretary of DHS designated the USM the Department's Chief 
Acquisition Officer in April 2011.
---------------------------------------------------------------------------
   The Acquisition Decision Authority is responsible for 
        approving the movement of programs through the acquisition life 
        cycle at key milestone events.\8\ The USM or Deputy Secretary 
        serve as the decision authority for programs with life-cycle 
        cost estimates of $1 billion or greater, while the cognizant 
        component acquisition executive may serve as the decision 
        authority for a program with a lower-cost estimate.
---------------------------------------------------------------------------
    \8\ See GAO-12-833 for descriptions of the four phases of the 
acquisition life cycle and the documents requiring Department-level 
approval at Acquisition Decision Events.
---------------------------------------------------------------------------
   The DHS Acquisition Review Board (ARB) supports the 
        Acquisition Decision Authority by reviewing major acquisition 
        programs for proper management, oversight, accountability, and 
        alignment with the Department's strategic functions at the key 
        acquisition milestones and other meetings as needed.
   The ARB is supported by the Office of Program Accountability 
        and Risk Management (PARM), which reports to the USM and is 
        responsible for DHS's overall acquisition governance process. 
        In March 2012, PARM issued its first Quarterly Program 
        Accountability Report (QPAR), which provided an independent 
        evaluation of major programs' health and risks. Since that 
        time, PARM has issued two additional QPARs, most recently in 
        July 2013, and plans to issue a fourth by the end of September 
        2013. PARM also prepares the Comprehensive Acquisition Status 
        Reports, which are to be submitted to the appropriations 
        committees with the President's budget proposal and updated 
        quarterly.\9\
---------------------------------------------------------------------------
    \9\ Consolidated and Further Continuing Appropriations Act, 2013, 
Pub. L. No. 113-6, 127 Stat. 198, 343.
---------------------------------------------------------------------------
   The Office of Program Analysis and Evaluation (PA&E), within 
        the Office of the Chief Financial Officer, is responsible for 
        advising the USM, among others, on resource allocation issues. 
        PA&E also oversees the development of the Future Years Homeland 
        Security Program (FYHSP). The FYHSP is DHS's 5-year funding 
        plan for programs approved by the Secretary that are to support 
        the Department's strategic plan.\10\
---------------------------------------------------------------------------
    \10\ 6 U.S.C.  454.
---------------------------------------------------------------------------
     sound acquisition management policy has not been implemented 
          consistently and many programs have performed poorly
    DHS acquisition policy reflects many key program management 
practices intended to mitigate the risks of cost growth and schedule 
slips.\11\ However, we previously found that the Department did not 
implement the policy consistently. Officials explained that DHS's 
culture emphasized the need to rapidly execute missions more than sound 
acquisition management practices, and we found that senior leaders did 
not bring to bear the critical knowledge needed to accurately track 
program performance. Most notably, we found that most programs lacked 
approved acquisition program baselines, which are critical management 
tools that establish how systems will perform, when they will be 
delivered, and what they will cost. We also reported that most of the 
Department's major programs were at risk of cost growth and schedule 
slips as a result.
---------------------------------------------------------------------------
    \11\ The reference to DHS acquisition policy, for purposes of this 
testimony, consists of MD 102-01, and an associated guidebook.
---------------------------------------------------------------------------
   dhs acquisition policy generally reflects key program management 
            practices identified at commercial organizations
    In our past work examining DoD weapon acquisition issues and best 
practices for product development, we have found that leading 
commercial firms pursue an acquisition approach that is anchored in 
knowledge, whereby high levels of product knowledge are demonstrated by 
critical points in the acquisition process.\12\ While DoD's major 
acquisitions have unique aspects, our large body of work in this area 
has established knowledge-based principles that can be applied to 
Government agencies and can lead to more effective use of taxpayer 
dollars.
---------------------------------------------------------------------------
    \12\ GAO-11-233SP.
---------------------------------------------------------------------------
    A knowledge-based approach to capability development allows 
developers to be reasonably certain, at critical points in the 
acquisition life cycle, that their products are likely to meet 
established cost, schedule, and performance objectives. This knowledge 
provides them with information needed to make sound investment 
decisions. Over the past several years, our work has emphasized the 
importance of obtaining key knowledge at critical points in major 
system acquisitions and, based on this work, we have identified eight 
key practice areas for program management. These key practice areas are 
summarized in table 1, along with our assessment of DHS's acquisition 
policy.

        TABLE 1.--GAO ASSESSMENT OF DHS'S ACQUISITION POLICY COMPARED TO KEY PROGRAM-MANAGEMENT PRACTICES
----------------------------------------------------------------------------------------------------------------
                                                                                              GAO Assessment of
      GAO Key Practice Area                        Summary of Key Practices                   DHS's Acquisition
                                                                                                   Policy
----------------------------------------------------------------------------------------------------------------
Identify and validate needs......  Current capabilities should be identified to determine   DHS policy reflects
                                    if there is a gap between the current and needed         key practices.
                                    capabilities. A need statement should be informed by a
                                    comprehensive assessment that considers the
                                    organization's overall mission.
Assess alternatives to select      Analyses of Alternatives should be conducted early in    DHS policy reflects
 most appropriate solution.         the acquisition process to compare key elements of       key practices.
                                    competing solutions, including performance, costs, and
                                    risks. Moreover, these analyses should assess many
                                    alternatives across multiple concepts.
Clearly establish well-defined     Requirements should be well-defined and include input    DHS policy reflects
 requirements.                      from operators and stakeholders. Programs should be      key practices.
                                    grounded in well-understood concepts of how systems
                                    would be used and likely requirements costs.
Develop realistic cost estimates   A cost estimate should be well-documented,               DHS policy reflects
 and schedules.                     comprehensive, accurate, and credible. A schedule        key practices.
                                    should identify resources needed to do the work and
                                    account for how long all activities will take.
                                    Additionally, a schedule should identify relationships
                                    between sequenced activities.
Secure stable funding that         Programs should make trade-offs as necessary when        DHS policy reflects
 matches resources to               working in a constrained budget environment.             key practices.
 requirements.
Demonstrate technology, design,    Capabilities should be demonstrated and tested prior to  DHS policy partially
 and manufacturing maturity.        system development, making a production decision, and    reflects key
                                    formal operator acceptance.                              practices.
Utilize milestones and exit        Milestones and exit criteria--specific accomplishments   DHS policy
 criteria.                          that demonstrate progress--should be used to determine   substantially
                                    that a program has developed required and appropriate    reflects key
                                    knowledge prior to a program moving forward to the       practices.
                                    next acquisition phase.
Establish an adequate workforce..  Acquisition personnel should have appropriate            DHS policy partially
                                    qualifications and experience. Program managers should   reflects key
                                    stay on until the end of an acquisition life-cycle       practices.
                                    phase to assure accountability. Government and
                                    contractor staff should also remain consistent.
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of DHS acquisition policy.

    As indicated in table 1, DHS acquisition policy establishes several 
key program-management practices through document requirements. MD 102 
requires that major acquisition programs provide the ARB documents 
demonstrating the critical knowledge needed to support effective 
decision making before progressing through the acquisition life cycle. 
Figure 1 identifies acquisition documents that must be approved at the 
Department-level and their corresponding key practice areas.

FIGURE 1.--DHS ACQUISITION DOCUMENTS REQUIRING DEPARTMENT-LEVEL APPROVAL
------------------------------------------------------------------------
                                    Key Acquisition
                                  Documents Required    Phase For Which
      GAO Key Practice Area       by DHS Acquisition      Document Is
                                        Policy             Required
------------------------------------------------------------------------
Identify and Validate Needs.....  Mission Need        Analyze/Select.
                                   Statement.
Clearly established well-defined  Operational         Obtain.
 requirements.                     Requirements
                                   Document.
Secure stable funding that        Acquisition         Obtain.
 matches resources to              Program Baseline.
 requirements.
Develop realistic cost estimates  Integrated          Obtain.
 and schedules.                    Logistics Support
                                   Plan.
Demonstrate technology, design,   Test and            Produce/Deploy/
 and manufacturing maturity.       Evaluation Master   Support.
                                   Plan.
------------------------------------------------------------------------
Source.--GAO analysis of DHS acquisition policy.

DHS Has Not Consistently Implemented Its Acquisition Policy
    DHS acquisition policy has required these documents since November 
2008, but in September 2012, we reported that the Department generally 
had not implemented this policy as intended, and had not adhered to key 
program management practices. For example, we reported that DHS had 
only approved 4 of 66 major programs' required documents in accordance 
with the policy. See figure 2. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    In September 2012, we reported that DHS leadership had, since 2008, 
formally reviewed 49 of the 71 major programs for which officials had 
responded to our survey. Of those 49 programs, DHS permitted 43 
programs to proceed with acquisition activities without verifying the 
programs had developed the knowledge required under MD 102. 
Additionally, we reported that most of DHS's major acquisition programs 
lacked approved acquisition program baselines, as required. These 
baselines are critical tools for managing acquisition programs, as they 
are the agreement between program-, component-, and Department-level 
officials, establishing how systems will perform, when they will be 
delivered, and what they will cost.\13\ Officials from half of the 
eight components' acquisition offices we spoke with, as well as PARM 
officials, noted that DHS's culture had emphasized the need to rapidly 
execute missions more than sound acquisition management practices. PARM 
officials explained that, in certain instances, programs were not 
capable of documenting knowledge, while in others, PARM lacked the 
capacity to validate that the documented knowledge was adequate.
---------------------------------------------------------------------------
    \13\ DHS Acquisition Instruction/Guidebook 102-01-001: Appendix K, 
Acquisition Program Baseline; October 1, 2011.
---------------------------------------------------------------------------
    As a result, we reported that senior leaders lacked the critical 
knowledge needed to accurately track program performance, and that most 
of the Department's major programs were at risk of cost growth and 
schedule slips. We also reported that DHS's lack of reliable 
performance data not only hindered its internal acquisition management 
efforts, but also limited Congressional oversight. We made five 
recommendations to the Secretary of Homeland Security at that time, 
identifying specific actions DHS should take to mitigate the risk of 
poor acquisition outcomes and strengthen the Department's investment 
management activities. DHS concurred with all five recommendations, and 
is taking steps to address them, most notably through policy updates.
    Since that time, we have continued to assess DHS's acquisition 
management activities and the reliability of the Department's 
performance data. We currently have a review underway for this 
subcommittee assessing the extent to which DHS is executing effective 
executive oversight and governance (including the quality of the data 
used) of a major effort to modernize an information technology system, 
TECS. TECS is a major border enforcement system used for preventing 
terrorism, providing border security and law enforcement information 
about people who are inadmissible or may pose a threat to the security 
of the United States. We are: (1) Determining the status of the 
modernization effort, including what has been deployed and implemented 
to date, as well as the extent to which the modernization is meeting 
its cost and schedule commitments, including the quality of schedule 
estimates; and (2) assessing requirements management and risk 
management practices. We plan to issue our report in early November.
    According to DHS officials, its efforts to implement the 
Department's acquisition policy were complicated by the large number of 
programs initiated before the Department was created, including 11 
programs that PARM officials told us in 2012 had been fielded and were 
in the sustainment phase when MD 102 was signed.\14\ As part of our on-
going work, we found that, in May 2013, the USM waived the acquisition 
documentation requirements for 42 major acquisition programs that he 
identified as having been already fielded for operational use when MD 
102 was issued in 2008. In a memo implementing the waiver, the USM 
explained that it would be cost-prohibitive and inefficient to recreate 
documentation for previous acquisition phases. However, he stated that 
the programs will continue to be monitored, and that they must comply 
with MD 102 if any action is taken that materially impacts the scope of 
the current program, such as a major modernization or new acquisition. 
We plan to obtain more information on this decision and its effect on 
the Department's management of its major acquisitions.
---------------------------------------------------------------------------
    \14\ Sustainment begins when a capability has been fielded for 
operational use, and it involves the supportability of fielded systems 
through disposal, including maintenance and the identification of cost 
reduction opportunities. System operations, support, and sustainment 
costs tend to approach up to 70 percent of life-cycle costs.
---------------------------------------------------------------------------
Most DHS Major Acquisition Programs Have Experienced Cost Overruns or 
        Schedule Delays
    In September 2012, we reported that most of DHS's major acquisition 
programs cost more than expected, took longer to deploy than planned, 
or delivered less capability than promised. We reported that these 
outcomes were largely the result of DHS's lack of adherence to key 
knowledge-based program management practices. As part of our on-going 
work, we analyzed a recent PARM assessment that suggests many of the 
Department's major acquisition programs are continuing to struggle. In 
its July 2013 quarterly program assessment, PARM reported that it had 
assessed 112 major acquisition programs. PARM reported that 37 percent 
of the programs experienced no cost variance at the end of fiscal year 
2012, but it also reported that a large percentage of the programs were 
experiencing cost or schedule variances at that time. See table 2.

 TABLE 2.--PARM'S ASSESSMENT OF 112 MAJOR ACQUISITION PROGRAMS AS OF THE
                         END OF FISCAL YEAR 2012
------------------------------------------------------------------------
                                                           Percentage of
                                           Percentage of   Programs With
                                           Programs With     Schedule
                                           Cost Variance     Variance
------------------------------------------------------------------------
None....................................              37              21
Minimal (1-3 percent)...................              12               9
Moderate (3-8 percent)..................              14              21
High (8-10 percent).....................               2               2
Significant (over 10 percent)...........              36             47
------------------------------------------------------------------------
Source.--GAO analysis of PARM data.
Note.--Percentages do not add to 100 due to rounding. PARM established
  the variance categories in the July 2013 QPAR.

    However, as we reported in September 2012, DHS acquisition programs 
generally did not have the reliable cost estimates and realistic 
schedules needed to accurately assess program performance. We will 
continue to track DHS's efforts to improve the quality of its program 
assessments moving forward.
dhs is in early stages of developing a portfolio management approach to 
                mitigate gap between resources and needs
    We have previously reported that cost growth and schedule slips at 
the individual program level complicated DHS's efforts to manage its 
investment portfolio as a whole. When programs encountered setbacks, 
the Department often redirected funding to troubled programs at the 
expense of others, which in turn were more likely to struggle. DHS's 
Chief Financial Officer recently issued a memo stating that DHS faced a 
30 percent gap between funding requirements for major acquisition 
programs and available resources. DHS has efforts underway to develop a 
more disciplined and strategic portfolio management approach, but the 
Department has not yet developed key portfolio management policies and 
processes that could help the Department address its affordability 
issues, and DHS's primary portfolio management initiative may not be 
fully implemented for several years.
The DHS Major Acquisition Portfolio Is Unaffordable
    In September 2012, we noted that DHS's acquisition portfolio may 
not be affordable. That is, the Department may have to pay more than 
expected for less capability than promised, and this could ultimately 
hinder DHS's day-to-day operations.\15\ As part of our on-going work, 
we learned that DHS's Chief Financial Officer issued an internal memo 
in December 2012, shortly after our report was issued, stating that the 
aggregate 5-year funding requirements for major acquisitions would 
likely exceed available resources by approximately 30 percent. This 
acknowledgment was a positive step toward addressing the Department's 
challenges, in that it clearly identified the need to improve the 
affordability of the Department's major acquisition portfolio. 
Additionally, the Chief Financial Officer has required component senior 
financial officers to certify that they have reviewed and validated all 
current, prior, and future-year funding information presented in ARB 
materials, and ensure it is consistent with the FYHSP. Additionally, 
through our on-going work, PA&E officials told us that the magnitude of 
the actual funding gap may be even greater than suggested because only 
a small portion of the cost estimates that informed the Chief Financial 
Officer's analysis had been approved at the Department level, and 
expected costs may increase as DHS improves the quality of the 
estimates. This is a concern we share. While holding components 
accountable is important, without validated and Department-approved 
documents--such as acquisition program baselines and life-cycle cost 
estimates--efforts to fully understand and address the Department's 
overall funding gap will be hindered.
---------------------------------------------------------------------------
    \15\ GAO-12-833.
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DHS Policy and Process Initiatives Are Intended to Improve Portfolio 
        Management Efforts and Help Address Affordability Issues
    In September 2012, we reported that DHS largely made investment 
decisions on a program-by-program and component-by-component basis. DHS 
did not have a process to systematically prioritize its major 
investments to ensure that the Department's acquisition portfolio was 
consistent with anticipated resource constraints. In our work at DoD, 
we have found this approach hinders efforts to achieve a balanced mix 
of programs that are affordable and feasible and that provide the 
greatest return on investment.\16\
---------------------------------------------------------------------------
    \16\ GAO-07-388.
---------------------------------------------------------------------------
    In our past work focused on improving weapon system acquisitions, 
we found that successful commercial companies use a disciplined and 
integrated approach to prioritize needs and allocate resources.\17\ As 
a result, they can avoid pursuing more projects than their resources 
can support, and better optimize the return on their investment. This 
approach, known as portfolio management, requires companies to view 
each of their investments as contributing to a collective whole, rather 
than as independent and unrelated.
---------------------------------------------------------------------------
    \17\ GAO-07-388.
---------------------------------------------------------------------------
    With an enterprise perspective, companies can effectively: (1) 
Identify and prioritize opportunities, and (2) allocate available 
resources to support the highest priority--or most promising--
investment opportunities. Over the past several years, we have examined 
the practices that private and public-sector entities use to achieve a 
balanced mix of new projects, and based on this work, we have 
identified key practice areas for portfolio management. One I would 
like to highlight today is that investments should be ranked and 
selected using a disciplined process to assess the costs, benefits, and 
risks of alternative products to ensure transparency and comparability 
across alternatives.
    In this regard, DHS established the Joint Requirements Council 
(JRC) in 2003, to identify cross-cutting opportunities and common 
requirements among DHS components and help determine how DHS should use 
its resources. But the JRC stopped meeting in 2006 after the chair was 
assigned to other duties within the Department.\18\ In 2008, we 
recommended that it be reinstated, or that DHS establish another joint 
requirements oversight board, and DHS officials recognized that 
strengthening the JRC was a top priority. Through our on-going work, we 
have identified that DHS recently piloted a Capabilities and 
Requirements Council (CRC) to serve in a similar role as the JRC. The 
CRC began reviewing a portfolio of cyber capabilities in the summer of 
2013. The pilot is intended to inform the Department's fiscal year 2015 
budget request; therefore, it is too soon to assess the outcomes of 
this new oversight body. It is also unknown at this time how DHS will 
sustain the CRC over time or what its outcomes will be.
---------------------------------------------------------------------------
    \18\ GAO-09-29.
---------------------------------------------------------------------------
    In addition to private and public-sector practices, which we 
discuss above, our prior work at DoD has identified an oversight body 
similar to the CRC's expected function. The Joint Requirements 
Oversight Council (JROC) has a number of statutory responsibilities 
related to the identification, validation, and prioritization of joint 
military requirements. This body, which has been required by law since 
1997, and its supporting organizations review requirements documents 
several times per year, prior to major defense acquisition programs' 
key milestones. Through these reviews, proposed acquisition programs 
are scrutinized prior to their initiation and before decisions are made 
to begin production. The JROC also takes measures to help ensure the 
programs are affordable. In 2011, we reported that the JROC required 
the military services to show that their proposed programs were fully 
funded before it validated requirements for 5 of the 7 proposed 
programs we reviewed.\19\ The two other proposed programs were funded 
at more than 97 and 99 percent, respectively.\20\ This full funding 
requirement is similar to the funding certification requirement DHS's 
CFO established in December 2012. While some DoD acquisition programs 
continue to experience cost growth and schedule delays, as identified 
in our annual report on weapon systems acquisitions, the Department 
does have in place mechanisms that DHS could adopt to improve the 
affordability of its acquisition portfolio, and put its acquisition 
programs in a better position to achieve successful outcomes.\21\
---------------------------------------------------------------------------
    \19\ GAO, DoD Weapon Systems: Missed Trade-off Opportunities During 
Requirements Reviews, GAO-11-502, (Washington, DC: June 16, 2011).
    \20\ In this context, full funding referred to a budgetary 
allocation in the future-years defense program.
    \21\ GAO, Defense Acquisitions: Assessments of Selected Weapon 
Programs, GAO-13-249SP, (Washington, DC: March 28, 2013).
---------------------------------------------------------------------------
    In September 2012, we reported that the CRC is one of several new 
councils and offices that DHS would establish as part of its Integrated 
Investment Life Cycle Model (IILCM), which is intended to improve 
portfolio management at DHS through the identification of priorities 
and capability gaps. This model, which the Department proposed in 
January 2011, would provide a framework for information to flow between 
councils and offices responsible for strategic direction, requirements 
development, resource allocation, and program governance. DHS explained 
that the IILCM would ensure that mission needs drive investment 
decisions.
    While the IILCM, as envisioned, could improve DHS management 
decisions by better linking missions to acquisition outcomes, our on-
going work indicates that its full implementation may be several years 
away. From January 2011 to June 2012, the schedule for initiating IILCM 
operations slipped by a year, and in May 2013, a DHS official 
responsible for the IILCM told us he was unsure when the IILCM would be 
fully operational. We also found that some component acquisition 
officials are not aware of how the IILCM would apply to their own 
acquisition portfolios. Some of the officials we interviewed told us 
that DHS leadership needs to conduct more outreach and training about 
the IILCM and how it is expected to work, and a DHS headquarters 
official told us that the Department is in the process of implementing 
an initial Department-wide IILCM communications strategy. We will 
continue to assess the Department's progress in implementing what it 
views as a very important management model.
    Chairman Duncan, Ranking Member Barber, and Members of the 
subcommittee, this completes my prepared statement. I would be pleased 
to respond to any questions that you may have at this time.

    Mr. Duncan. Well, thank you so much for that.
    The Chairman will now recognize Ms. Richards for her 
testimony. Then we will begin our line of questioning. Ms. 
Richards.

STATEMENT OF ANNE L. RICHARDS, ASSISTANT INSPECTOR GENERAL FOR 
    AUDITS, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF 
                       HOMELAND SECURITY

    Ms. Richards. Good afternoon, Chairman Duncan, Ranking 
Member Barber, and Members of the subcommittee. Thank you for 
inviting me here today to discuss the Department of Homeland 
Security's acquisition practices.
    Acquisition management is a complex, but critical, process 
made more challenging by the magnitude and diversity of the 
Department's procurements. Effective acquisition management 
requires careful planning and oversight. DHS is making progress 
creating a comprehensive acquisition framework to ensure that 
procured goods and services are cost-efficient and meet mission 
needs. Nevertheless, the Department continues to be challenged 
in implementing sound acquisition practices.
    DHS has issued an acquisition management policy and has 
established the Office of Program Accountability and Risk 
Management, called PARM, to oversee all major acquisitions. 
PARM is also responsible for guiding managers and major 
investments through key acquisition decision points.
    Today, I will focus on two recent audits that highlight two 
persistent challenges DHS faces in acquisition management, 
establishing an effective, high-level governing structure that 
can identify mission needs, coordinate assets, and guide 
investment decisions, and gathering reliable data to develop 
acquisition strategies and plans.
    To review acquisitions, the Department has designed a 
process with a governance structure, but this process is not 
always followed. In our audit of the H-60 helicopter program, 
we found that DHS did not ensure CBP addressed concerns about 
its acquisition plans or comply with acquisition guidance. 
Specifically, CBP continued with its acquisition without 
addressing the concerns of the office of the chief procurement 
officer on the areas of noncompliance that PARM had identified 
in a draft acquisition decision memo. Had PARM issued a final 
acquisition decision memo, CBP might have been required to 
address those areas of noncompliance.
    Further, we found that CBP disregarded direction from the 
Department to coordinate its helicopter program with the Coast 
Guard. We estimated that CBP might have saved as much as $126 
million and would finish the modernization of its helicopters 7 
years soon if it coordinated with the Coast Guard to complete 
the project.
    We also recently audited management of radio communication 
programs at four DHS components: CBP, ICE, the Secret Service, 
and the Coast Guard. We determined that DHS cannot make sound 
investment and management decisions on radios and support 
infrastructure because it doesn't have reliable, Department-
wide inventory data or an effective governance structure to 
guide decisions.
    This is due in part to the difficulty of coordinating the 
legacy radio systems brought into the Department when it was 
created. DHS does not have Department-wide policies to identify 
common data elements to standardize definitions and radio 
inventory management requirements, which would allow them 
compare radio equipment across component lines.
    Components use different systems to record and manage 
inventory, and they do not consistently record radio inventory, 
which results in inaccurate and incomplete data.
    Unreliable radio inventory data makes it difficult to plan, 
budget, schedule, and acquire upgrades and replacements, as 
well as identify resources that could be shared to save costs 
or address critical shortages. For example, we found that two 
components purchased radio equipment that was never used, while 
a third component needed that very same equipment.
    Reliable Department-wide data would help DHS prioritize its 
needs, plan cost-efficient investments, and assist in planning 
for future acquisitions. This is a critical issue right now, as 
the Department works to modernize its radio communication 
equipment through a contract that could cost as much as $3 
billion.
    Effective acquisition management requires that the 
Department develop specific, well-defined strategies to 
identify mission needs, gather reliable data on its current 
assets, and coordinate assets where possible to find cost 
efficiencies. DHS must also oversee and review component 
acquisitions to make certain that they are thoroughly planned 
and comply with established processes.
    A strong, centralized governing structure is essential to 
accomplishing these tasks. These are difficult challenges, but 
they are not insurmountable, and DHS has already begun taking 
the steps to implement the recommendations from these two 
audits. We are continuing our efforts to help the Department 
identify ways to improve its acquisition management.
    Mr. Chairman, this concludes my prepared statement. I 
welcome any questions you or the Members of the subcommittee 
may have.
    [The prepared statement of Ms. Richards follows:]
                 Prepared Statement of Anne L. Richards
                           September 19, 2013
    Good afternoon Chairman Duncan, Ranking Member Barber, and Members 
of the subcommittee. Thank you for inviting me here today to discuss 
the Department of Homeland Security's (DHS) acquisition practices.
    Acquisition management is a complex, but critical, process made 
more challenging by the magnitude and diversity of the Department's 
procurements. Effective acquisition management requires careful 
planning and oversight of processes, solid internal controls, and 
compliance with laws and regulations. DHS is making progress in 
creating a comprehensive acquisition framework of policies, procedures, 
and entities to streamline its acquisition practices and ensure that 
procured goods and services meet mission needs cost-efficiently. 
Nevertheless, the Department continues to be challenged in implementing 
sound acquisition practices.
    In my testimony today, I will provide some background information 
on DHS' acquisition management and then focus on two recent audits that 
illustrate challenges facing DHS' acquisition management, that is, the 
Department's ability to establish an effective, high-level governing 
structure to coordinate Department-wide assets and guide investment 
decisions, gather reliable inventory data, develop acquisition 
strategies and plans, and oversee the acquisition process to ensure 
compliance with established policies. Such a governing structure would 
assist DHS in identifying efficiencies, preventing waste, and 
allocating resources across the Department.
           dhs' acquisition management policies and entities
    Acquisition management is a complex process that goes beyond simply 
awarding a contract. It begins with the identification of a mission 
need and continues with the development of a strategy to fulfill that 
need while balancing cost, schedule, and performance. Acquisition 
management also entails managing operational and life-cycle 
requirements--from formulating concepts of operations, developing sound 
business strategies, and exercising prudent financial management to 
assessing trade-offs and managing program risks.
    DHS has issued policies and procedures and established various 
entities to oversee its components' acquisitions. Specifically, 
Acquisition Management Directive 102-01 (MD 102-01) provides overall 
policy and structure for acquisition management in the Department.
    In fiscal year 2011, the Department created the Office of Program 
Accountability and Risk Management (PARM), which is responsible for 
overseeing all of DHS' major acquisitions. PARM reports directly to the 
Under Secretary for Management, manages and implements MD 102-01, 
serves as the Executive Secretariat to the Acquisition Review Board 
(ARB) and the Component Acquisition Executive Council, and guides 
managers of major investments through the acquisition governance 
process. PARM also provides independent assessments of major investment 
programs and works with DHS partners to enhance business intelligence 
to inform ARB decisions. It monitors programs between formal reviews to 
identify emerging issues that DHS needs to address. DHS has established 
a Joint Requirements Council to review high-dollar acquisitions, that 
is, Level 1 acquisitions that exceed $1 billion and Level 2 
acquisitions of $300 million to $1 billion, and to make recommendations 
to the ARB on cross-cutting savings opportunities. DHS also created 
Centers of Excellence to assist in improving performance.
    The Department has also developed the Decision Support Tool to aid 
in monitoring and oversight. This web-enabled tool provides DHS 
leaders, governance boards, and program managers with a central 
dashboard to assess and track the health of major acquisition projects, 
programs, and portfolios. The Department's goal is to improve program 
accountability and to strengthen the ability to make sound strategic 
decisions throughout the life cycle of major acquisitions. On October 
1, 2011, the Decision Support Tool became the official source of 
Acquisition Decision Event (ADE) information and data; it is used to 
provide ARBs with standardized information.
    On February 13, 2012, DHS issued a memorandum to all components and 
programs to ensure that, on a monthly basis, all acquisition program 
information reported in the Department's existing data systems is 
complete, accurate, and valid.
    DHS envisions becoming more data-driven, with emphasis on the 
criticality of maintaining quality data in its source systems. The 
Department created the Comprehensive Acquisition Status Report (CASR), 
which provides the status of DHS major acquisitions listed in the 
Department of Homeland Security Major Acquisition Oversight List. The 
new CASR format increases the quality of information and can be 
produced more quickly. As the Department's business intelligence 
capability and data fidelity efforts continue to mature, the condensed 
time line will leverage Decision Support Tool automation data to feed 
the CASR in real time.
                    acquisition life cycle framework
    The Department classifies acquisitions into three levels to define 
the extent and scope of required project and program management and the 
specific official who serves as the Acquisition Decision Authority. The 
Department oversees level 1 and level 2 acquisition programs. For level 
1 acquisitions, those that equal or exceed $1 billion, the Acquisition 
Decision Authority is the Deputy Secretary. For level 2 acquisitions of 
$300 million to $1 billion, the Acquisition Decision Authority is the 
Chief Acquisition Officer. Components are responsible for the oversight 
and controls for acquisition programs below the $300 million threshold.
    DHS adopted the acquisition life-cycle framework (ALF) to assure 
consistent and efficient acquisition management, support, review, and 
approval throughout the Department. The framework is designed to ensure 
that acquisitions are stable and well-managed; that the program manager 
has the tools, resources, and flexibility to execute the acquisition; 
that the product meets user requirements; and that the acquisition 
complies with applicable statutes, regulations, and policies.
    The DHS ALF is a four-phase process that DHS uses to determine 
whether to proceed with an acquisition:
    (1) Need.--Identify the need that the acquisition will address;
    (2) Analyze/Select.--Analyze the alternatives to satisfy the need 
        and select the best option;
    (3) Obtain.--Develop, test, and evaluate the selected option and 
        determine whether to approve production; and
    (4) Product/Deploy/Support.--Produce and deploy the selected option 
        and support it throughout the operational life cycle.
    Each phase leads to an ADE, a predetermined point within an 
acquisition phase at which the acquisition will undergo a review prior 
to commencing the next phase. The review is designed to ensure that 
needs are aligned with DHS' strategic direction, and that upcoming 
phases are adequately planned.
    Prior to every ADE, components are required to submit acquisition 
documents to the ARB for review, including:
   Mission Needs Statement.--Synopsizes specific functional 
        capabilities required to accomplish the Department's mission 
        and objectives, along with deficiencies and gaps in these 
        capabilities.
   Capability Development Plan.--Defines how critical knowledge 
        to inform decisions will be obtained, defines the objectives, 
        activities, schedule, and resources for the next phase.
   Acquisition Plan.--Provides a top-level strategy for future 
        sustainment and support and a recommendation for the 
        acquisition approach and types of acquisition.
    Each phase ends with a presentation to the ARB, the cross-component 
board in the Department composed of senior-level decision makers. The 
ARB determines whether a proposed acquisition meets the requirements of 
key phases in the ALF and is able to proceed to the next phase and 
eventual full production and deployment.
    The Acquisition Review Process is followed to prepare for an ARB 
and to ensure appropriate implementation of the ARB's decisions.
   dhs' management of its aviation assets and cbp's h-60 acquisition
    In our May 2013 report, DHS' H-60 Helicopter Programs (OIG-13-89, 
Revised), we noted that the United States Coast Guard (USCG) properly 
managed its H-60 helicopter program, but the Department and U.S. 
Customs and Border Protection (CBP) did not effectively oversee or 
manage the acquisition, conversion, and modification of CBP's H-60 
helicopters.
    DHS established processes and procedures to govern its aviation 
assets and provide acquisition oversight. However, these efforts did 
not fully coordinate the acquisition, conversion, and modification of 
DHS aviation assets, and did not control acquisition costs, schedules, 
or performance. Department governance of aviation assets has been 
sporadic, and acquisition oversight in some components has been 
ineffective. As a result, DHS has not implemented a comprehensive 
aviation strategy and did not properly oversee CBP's acquisition of the 
H-60s.
                   dhs governance of aviation assets
    DHS has no formal structure to govern the Department's aviation 
assets and no specific senior official to provide expert independent 
guidance on aviation issues to DHS senior management. Over the past 9 
years, DHS issued policies and established various entities to oversee 
its aviation assets and operations, but it did not sustain these 
efforts.
    Since 2003, senior managers realized the need for a high-level 
structure to integrate the Department's components and help link cross-
component aviation missions and capabilities. Over time, this oversight 
structure included Department-level management, with an Aviation 
Management Council started in 2005. Oversight was inconsistent, and the 
Aviation Management Council stopped meeting in 2007.
    In 2009, Department-level oversight of DHS' aviation assets 
resumed. DHS' Office of Program Analysis and Evaluation (PA&E) ensures 
that components' operational plans align with the Department's needs 
and resources. A PA&E-led Aviation Issue Team reviewed potentially 
collocating component aviation facilities, finding commonality in 
component aviation assets, and combining component aviation-related 
information technology systems. The Under Secretary for Management 
recommended re-establishing the Aviation Management Council to lead 
DHS' efforts to strategically align aviation assets across the 
Department's components to improve effectiveness, efficiency, and 
interoperability.
    In 2011, the Deputy Secretary established an Aviation Working 
Group, but the group did not have a charter, defined roles and 
responsibilities, or an independent aviation expert. It collected data 
on CBP and USCG missions, aircraft inventories, flight hours, and 
aviation resources; reviewed components' funding plans and 
opportunities for joint acquisitions beginning in fiscal year 2019; and 
considered an organizational structure for a Department-wide aviation 
office. However, according to senior PA&E officials, without a 
dedicated, independent aviation expert to lead an authoritative, 
decision-making entity, the Department was relying on unverified, 
component-provided information to make aviation-related decisions.
            dhs oversight of cbp's h-60 acquisition program
    DHS did not properly oversee CBP's acquisition of its H-60s. CBP 
did not take into account guidance from DHS' Office of the Chief 
Procurement Officer (OCPO) on its H-60 acquisition plan. In addition, 
PARM did not conduct a complete review of CBP's H-60 program because 
the Department did not ensure that CBP followed Departmental 
acquisition guidance and properly participated in the ARB process or 
coordinated with the ARB.
    In 2007, CBP's Office of Air and Marine submitted its 
Congressionally-mandated acquisition plan, the CBP Air and Marine 
National Strategic Plan 2007-2012, which outlined how its aviation 
assets and acquisitions would support its mission. CBP approved its 
plan for acquiring 38 new and converted medium-lift helicopters on 
February 7, 2008, and submitted the plan to the OCPO.
    In a March 3, 2008, memorandum to CBP, the OCPO noted that the 
acquisition plan included substantive issues that needed to be 
addressed. According to the OCPO, CBP should have had two separate H-60 
plans, and both plans should independently go through the acquisition 
review process, which includes ARB review. The OCPO was also concerned 
that CBP----
   Had not clearly defined the period of performance for the 
        acquisition;
   Did not have a complete life-cycle cost estimate;
   Had not completed a cost-benefit analysis to compare 
        upgrading its existing fleet to purchasing new helicopters; and
   Had not used various contracting best practices.
    Although they were aware of these concerns, CBP officials continued 
with the acquisition, signing an Interagency Agreement with the Army 3 
days after receiving the OCPO memo.
    According to a PARM official, CBP officials did not consider its 
Strategic Air and Marine Plan (StAMP) to be subject to the acquisition 
review process because the plan existed before the current acquisition 
review process had been established. However, according to MD 102-01, 
dated January 2010, the directive was to apply to all existing 
acquisition programs ``to the maximum extent possible.''
    In addition, in a September 2011 StAMP briefing, CBP acknowledged 
that the conversion and modification of its 16 H-60 Alphas to Limas was 
still in the acquisition phase. Therefore, CBP's StAMP acquisition 
programs were subject to the acquisition review process, and CBP's H-60 
acquisition, conversion, and modification programs should have 
participated more transparently in the ARB process.
    In a March 11, 2010, Acquisition Decision Memorandum (ADM), the ARB 
concluded that CBP and the USCG were both pursuing H-60 conversions, 
and that it was important to understand whether the USCG H-60 
conversion programs were compatible with CBP's prospective conversions 
and modifications. The ARB directed the USCG to collaborate with CBP 
and report on possible helicopter program synergies and present a joint 
review within 75 days.
    The USCG hosted CBP officials at its Aviation Logistics Center, but 
both USCG and CBP officials said that a senior CBP executive canceled 
any reciprocal visits by USCG officials to CBP sites and instructed CBP 
H-60 program personnel not to have any further contact with USCG H-60 
officials. Without CBP's cooperation, the USCG was unable to complete 
the joint review. PARM did not provide any further official direction 
to the components on the incomplete review, and the ARB did not 
determine why the joint review was not presented within the 75 days.
    In a June 17, 2011, ADM, the ARB directed CBP to prepare for a 
program review. The ARB intended for CBP to document its acquisition 
program baselines, as well as present program acquisition 
documentation, to comply with MD 102-01. CBP provided its response to 
the June 17, 2011, ADM on September 23, 2011, and the official ARB 
review was cancelled.
    As a result, PARM sent a draft ADM to CBP that ``found the StAMP 
program to be non-compliant'' for the following reasons:
   CBP's ``inability to submit an acquisition program baseline 
        for approval'';
   CBP's ``failure to submit other acquisition documentation in 
        accordance with MD 102-01 for review and adjudication''; and,
   CBP's ``inability to provide authoritative life cycle costs 
        with supporting documentation for review and adjudication.''
    PARM did not issue a final signed ADM and acknowledged the limited 
effectiveness of providing a draft ADM to CBP. If PARM had issued a 
signed ADM documenting CBP's noncompliance, CBP would have been 
required to respond with an action plan addressing the identified 
issues.
    In July 2012, a PARM official confirmed the need to divide CBP's 
StAMP into separate programs so the Department would have greater 
visibility into the numerous acquisition programs and projects included 
in the plan.
                     conclusion and recommendations
    The Department could better govern its aviation assets under a 
formal entity led by a senior-level DHS employee with appropriate 
authority. In addition, CBP's H-60 programs remain subject to review 
and should participate in the ARB process. Therefore, we recommended 
that the Deputy Secretary direct CBP to apply all the requirements of 
the Acquisition Life Cycle Framework in MD 102-01 to each individual 
program or project within StAMP. DHS concurred with this 
recommendation, and CBP was directed to submit StAMP to PARM, which 
will oversee the plan in accordance with MD 102-01. Certain existing 
projects and new acquisition programs or projects that are currently 
part of StAMP will be required to progress through the acquisition life 
cycle. The ARB will make an acquisition decision as the programs and 
projects progress through the acquisition life cycle.
           dhs' management of its radio communication program
    In our August 2013 report, DHS Needs to Manage Its Radio 
Communication Program Better (OIG-13-113), we noted that DHS is unable 
to make sound investment decisions for radio equipment and supporting 
infrastructure because it is not effectively managing its radio 
communication program. DHS does not have reliable Department-wide 
inventory data or an effective governance structure to guide investment 
decision-making. As a result, DHS risks wasting taxpayer funds on 
equipment purchases and radio system investments that are not needed, 
sustainable, supportable, or affordable. Two DHS components we visited 
stored more than 8,000 radio equipment items valued at $28 million for 
a year or longer at their maintenance and warehouse facilities, while 
some programs faced critical equipment shortages.
    DHS components use different systems to record and manage personal 
property inventory data, including radio equipment. Components' 
inventory data indicates they do not record radio equipment 
consistently into their respective personal property systems. Our 
analysis and on-site testing of CBP, U.S. Immigration and Customs 
Enforcement (ICE), the United States Secret Service (USSS), and the 
USCG radio equipment inventories at technical maintenance facilities 
and warehouses indicated the inventories were inaccurate or incomplete. 
USSS and CBP also did not record new radio equipment in their inventory 
systems.
    The four DHS components we reviewed did not report infrastructure 
real property inventory data consistently in the Real Property 
Inventory System (RPIS), and they also reported incomplete and 
inaccurate infrastructure real property data. The data the system 
captures is not sufficient to manage the radio communication program. 
Although it contains basic data fields for capturing elements needed to 
manage real property, RPIS does not capture the comprehensive data 
needed to manage radio programs. Managing radio programs and 
infrastructure is not limited to real property information, but also 
includes knowing the network, the backhaul (how the signal is 
transmitted), operating frequencies, and the type of equipment 
installed at each radio site. The DHS Office of Emergency 
Communications' System Lifecycle Planning Guide, dated August 2011, 
points out the importance of capturing this type of information in 
managing a radio system.
    DHS does not have an effective governance structure over its radio 
communication program. Specifically, DHS has not implemented a 
governance structure with authority to establish policy, budget and 
allocate resources, and hold components accountable for managing radio 
programs and related inventory. During a prior audit of oversight of 
radio communication interoperability, DHS said that it established a 
structure with authority to ensure components achieve radio 
communications interoperability. However, that authority is limited to 
the acquisition and management of future communication networks. 
Components are independently managing their current radio programs with 
no formal coordination with the Department. As a result, management and 
investment decisions for the current DHS radio communication program 
are made using inconsistent, incomplete, and inaccurate real and 
personal property data.
    Unreliable Department-wide radio inventory data has made it 
difficult for DHS officials to identify radio infrastructure and other 
resources that components could share to achieve cost savings or 
address critical shortages. DHS also risks wasting taxpayer dollars 
because of its ineffective management of radio equipment. For example, 
CBP and ICE stored 8,046 radio equipment items valued at $28 million at 
maintenance facility warehouses for a year or longer, while some CBP 
program offices faced critical equipment shortages. In addition, two 
components purchased radio equipment that was never used in operations, 
while a third component needed the same equipment.
    DHS is managing radio equipment and systems separately as personal 
property and real property rather than as a portfolio. A portfolio 
management approach is key to achieving a balanced mix of executable 
programs and ensuring a good return on investments when determining 
needs and allocating fiscal resources. Portfolio management is also 
central to making informed decisions about the best way to allocate 
available equipment to ensure the right equipment is at the right 
locations and in the quantities needed to conduct mission operations.
                     conclusion and recommendations
    DHS needs a reliable Department-wide inventory to help it plan, 
budget, schedule, and acquire upgrades and replacements of its radio 
systems and equipment. A Department-wide inventory will help DHS 
prioritize its needs and plan its investments to make the most 
efficient use of available resources. It will also assist with planning 
for the acquisition and management of future communication networks. 
DHS also needs a strong governance structure over its radio 
communication program with adequate authority and resources to 
establish policy, make resource allocation and investment decisions, 
and hold components accountable for managing radio programs and related 
inventories. A portfolio management approach to the DHS radio 
communication program would help ensure DHS receives a good return on 
investment when determining needs and allocating fiscal resources.
    DHS estimated that it would need $3.2 billion to modernize its 
radio systems to meet its needs, and awarded a $3 billion Department-
wide strategic sourcing contract in March 2012 for this purpose. 
However, the cost efficiencies that DHS seeks to achieve from a 
strategic sourcing contract for radio equipment may potentially be 
negatively affected by poor procurement or inventory management 
practices.
    DHS concurred with both of our recommendations and began taking 
corrective actions to develop and implement Department-level portfolio 
management of tactical communications. The Joint Wireless Program 
Management Office has also made significant progress in collecting the 
data necessary to develop a single profile of DHS assets, 
infrastructure, and services across components. DHS also said it will 
complete a review of existing policies and procedures and will revise, 
as necessary, its personal property manual to align with the findings.
    Mr. Chairman, this concludes my prepared statement. I welcome any 
questions you or other Members of the subcommittee may have.

    Mr. Duncan. Thank you so much, witnesses.
    Let me just remind the Members that votes are expected, 
according to the Whip update, sometime around 3:05, so we will 
work through it and maybe go past 3:05 a little bit and see how 
far we get and make a decision about finishing the hearing 
after votes at that point in time.
    So the Chairman will now recognize myself for 5 minutes of 
questioning. First off, let me just say that I think Americans 
really are beginning to expect more and more for Government 
agencies to start treating the money that you are given under 
your charge as you would treat your own money, or if you were 
running a business, how you would spend that money within your 
own company.
    The DHS acquisition decision memorandum of May 9, 2013, 
where Under Secretary Borras directs the component acquisition 
executives to waive the acquisition documentation requirements 
for the 42 Level 1 and 2 acquisition programs that were in the 
sustainment phase prior to 2008, when that acquisition decision 
102-01 was issued. The 42 programs listed in this memorandum 
have been allowed to proceed without assurance that they have 
had the appropriate levels of knowledge to be successful.
    So, Mr. Borras, I am going to ask, this memo also stated 
that you planned to monitor the program, and the document 
requirements will be reinstated if the program initiates a 
major modernization or new acquisition. What sort of message do 
you think this memo sends to program and project managers about 
DHS's willingness to ignore accountability and transparency?
    Mr. Borras. Well, Mr. Chairman, I certainly don't view the 
direction that we provided the components as providing for 
license to ignore any of our acquisition policies or 
procedures. Quite frankly, it was made on an assessment, which 
I would be happy to share with the committee.
    We looked at, in this case, those 42 programs--these are 42 
legacy programs, programs that predate when the Department had 
established acquisition policies. Quite simply, most of the 
documentation required to adequately develop acquisition 
program baselines and many of the other official documentation 
that we require programs since 2010 simply do not exist.
    We would be making it up if we tried to recreate--take for 
example a program like ACE, Automated Commercial Environment 
program. That program is probably nearly 20 years old, and it 
has changed so many times, we made a calculated judgment that 
it would be much better to put the effort into rebaselining 
programs as they exist today, rather than have our limited 
resources--and, you know, this committee very well knows we 
don't have a lot of resources--to go back and try to recreate 
documentation where simply the data does not exist.
    Mr. Duncan. Okay. So what unintended consequences do you 
think this memo would have for the remaining 88 major 
acquisition programs that DHS is currently managing?
    Mr. Borras. Well, clearly, I don't believe it has any 
impact. As I have said, we continue to--we have had well over 
100 acquisition review board meetings with 250 acquisition 
decision memorandums. Let me just share very, very briefly with 
the committee what these decision memorandums document.
    So this is where a program will come up for a review. If we 
find deficiencies that have--they have either not complied with 
our governance policies or practices or their cost estimates 
are no longer valid or determined as not valid, that 
acquisition decision memorandum provides specific direction to 
a component program that says, in order to proceed, you must do 
the following.
    We will say, you must submit a validated cost estimate, for 
example, within the next 30 days or 60 days, depending on the 
complexity of the program, in order to proceed. So we put gates 
on the programs now----
    Mr. Duncan. Then that is reviewed by a committee or----
    Mr. Borras. That is reviewed. It is an integrated process, 
so the CFO, the CIO, the chief procurement officer, all of 
those officers participate in the review. Then when I am 
notified and it has been certified to be that, that program has 
met the requirements of the acquisition decision memorandum, 
the ADM, we allow them to proceed. That is taking place every 
day.
    Mr. Duncan. Well, that is encouraging. That is how it 
should happen, but----
    Mr. Borras. We have provided copies of these acquisition 
decision memorandums to the staff when asked.
    Mr. Duncan. Okay, well, thank you so much. We had a joint 
hearing recently, and it comes to mind about TSA, and just 
because they had the policies in place, they weren't actually 
following the policy--that was a disciplinary issue, but it--if 
you have the policies in place, you need to follow the 
policies. From what I am hearing from you, you are trying to do 
that, and so I applaud you for that.
    Mr. Borras. We have canceled programs. We have suspended 
programs. We have directed--I do mean directed--leadership of 
programs to be changed, program managers and their staff.
    Mr. Duncan. Let me just shift gears a minute, because 
something that is interesting to me--when I was out in Arizona, 
understanding from CBP guys out there--that sometimes officers 
were having to trade radios at a shift change. They were 
actually handing radios from one truck to another from the 
truck window.
    So I shared that with Ms. Richards when she was in the 
office, and she lit up, because she was really chasing a whole 
different rabbit, but along the same lines about radio 
communication and the fact that there were a lot of--as we 
heard today, there were a lot of radios in a warehouse, other 
components in a warehouse that were gathering dust.
    So DHS really didn't have a good idea of what was in the 
inventory, how they were dispersed across the agency, and, you 
know, if you are in private sector, you just don't do those 
sort of things or you can't really be effective in your 
business if you do those sort of things.
    So I might ask that we talk a little bit more about that. 
Has DHS taken any steps to hold the program accountable and 
improve its stewardship of taxpayer dollars with regard to 
radios, Ms. Richards? Where are you--where do you stand on that 
investigation?
    Ms. Richards. We published the audit report in August, and 
we are waiting for the 90-day reply letter to get their full 
corrective action plan. We did agree to our recommendations and 
planning on taking action to address it.
    It is a fundamental issue that happens--I have seen it in 
DoD, and I see it in DHS--where the folks on the line don't 
always feel that the paperwork is as important. It is a 
cultural shift that needs to happen to get the data accurate so 
that these decisions can be made so that information can be 
shared so that CBP in Arizona can know that CBP in Maryland has 
those radios, and I am using fictitious locations, had those 
radios in an inventory.
    So it is the fundamentals that they need to take a step 
back and get right, setting up the records so that like radios 
can be identified across components and between components.
    Mr. Duncan. Let me ask you this: Did anybody in the field--
let's say in Arizona and that Tucson sector, who were having 
trouble with radios and having the right kind of equipment--
they may even be radios today and some other components 
tomorrow--but did anybody in the field call back up the chain 
and say, you know what, we need some radios here, we need more 
equipment in order to effectively do our job? Then did you 
discover anybody in the middle or higher level saying, wait a 
minute, we just did an acquisition, we are supposed to have 
plenty of radios to meet all of our officers' needs, and start 
the investigation of where those radios may have been, to 
discover that they were sitting in a warehouse somewhere? Did 
you discover any of that in your investigation?
    Ms. Richards. We did see communications from the field back 
to headquarters requesting radios. We didn't see communication 
between the acquisition groups and the people in the field to 
discuss whether radios were in the warehouse or not. We also 
very specifically did not see information or even requests 
going across component lines, for example, to see CBP ask 
Secret Service, hey, we really need this kind of repeater. Do 
you have one we can use? That is something that has not been 
built into DHS yet. It is something that the Department-level 
is really working to address.
    Mr. Duncan. Okay, well, my time is expired, so I am going 
to recognize the Ranking Member for 5 minutes. We may revisit 
this issue in just a minute. I recognize Mr. Barber for 5 
minutes.
    Mr. Barber. Well, thank you, Mr. Chairman. I want to ask, 
first, a series of questions, Mr. Borras, and see where we go 
with the improvements that apparently have been made and some 
still need to be made. I guess I am going to ask, first of all, 
what specific steps is the Department currently taking to 
ensure that its procurement process within each of its 
components is effective and efficient and that it complies with 
Department regulations?
    We have heard testimony today and we have had reports, of 
course, that suggest that the components basically do their own 
thing. What is being done to bring some control to that kind 
of--what I would call renegade kind of activity or rogue 
activity at the component level?
    Mr. Borras. Mr. Ranking Member, thank you for the question, 
and I appreciate it. I am glad to answer that question, because 
I think it is very important to note that the oversight of 
acquisition can't be done solely by headquarters, not just a 
corporate responsibility. Every single component has to share 
in that responsibility. We simply don't have the people or the 
personnel in the headquarters environment to provide oversight 
for every single transaction in the Department. We have over 
90,000 transactions on average in a year.
    So what have I done to address that? We have created the 
position of what we call component acquisition executive. These 
are individuals that now sit in the components, that are 
assigned by me, or, I should say, by the under secretary for 
management, whoever that person may be, and they sit there, and 
that is now our eyes and ears. They are responsible now. They 
have the responsibilities in delegations to perform component-
level acquisition oversight. It is in their performance plans 
that they are responsible for doing that.
    Let me say something very quickly, because I know time is 
precious and you have votes, about the cooperation of the 
components. I am going to give you two very, very quick 
examples. Recently, we have had a number of acquisition review 
meetings with TSA. At every one of those acquisition review 
board meetings, the deputy administrator, John Halinski, has 
personally attended and sat there and made sure that his folks 
were being responsive. If he didn't feel that the Department 
was getting the right answer, he would chastise his own folks.
    When former deputy commissioner of CPB David Aguilar was in 
place, he attended every single acquisition review board 
meeting, once again, to reinforce the notion that there is one 
acquisition framework in the Department, and the components 
will follow that. I am very, very encouraged by the senior 
leadership commitment to support the acquisition review 
process.
    Mr. Barber. Well, I appreciate that. I think more of that 
is necessary. I think we have to--when we set policies, we have 
to hold people accountable for them.
    But I want to turn to the topic that has been discussed 
here this afternoon a couple of times. As we know, the purchase 
of the helicopters, the H-60 helicopters, the Department's OIG 
found that the DHS Acquisition Review Board did not approve the 
CPB plan, the CPB proceeded with its procurement despite the 
fact that it had a different directive.
    The report further found that DHS Office of Program 
Accountability and Risk Management did not conduct a full 
review of the program as required by the acquisition management 
directive. So what happened here? What was the accountability 
for this kind of, I would say, blatant disregard for the policy 
of the Department?
    Mr. Borras. I would agree. We have had our challenges with 
the Office of Air and Marine and Customs and Border Protection. 
Part of the issue that we have had to deal with is that that 
program, their Air and Marine program, procurement program, had 
never been organized into a comprehensive procurement program 
like, for example, in the Coast Guard, which has a complete, 
organized acquisition program for the identification, for the 
development of requirements for their ships and their aviation.
    So we are dealing again here with a legacy issue. Also, the 
Air and Marine organization has a hybrid program where they 
acquire certain assets and then they acquire hand-me-downs, if 
you will, from the Department of Defense. So it is a very 
fractured, unorganized program.
    So what I have done is I have directed the Office of Air 
and Marine to appear before the Acquisition Review Board to--
before the acquisition review process and structure its program 
to meet our requirements. So you are absolutely right. They 
have not in the past done that. That is a fact. I acknowledge 
that. That is why we have now required them to come before and 
not proceed with any additional acquisitions at all until that 
is done.
    We have put together now an aviation management council in 
the Department, so now there is one council that overlooks, for 
example, at all aviation-required assets acquirement, whether 
it be Coast Guard or Customs and Border Protection.
    Mr. Barber. Were there any consequences taken or actions 
taken against the personnel who basically blew off the 
requirements?
    Mr. Borras. There have been leadership changes in the 
Office of Air and Marine in the past year. I can't tell you 
specifically if personnel actions were taken specifically for 
that, but there is a new leadership team at the Office of Air 
and Marine.
    Mr. Barber. Let me move quickly, because I know I am 
actually over time, but I just want to ask this one question, 
Mr. Chairman, if I could, of Ms. Mackin. As the GAO has found 
components do not always comply--we have been talking about 
this--with the acquisition management directives or the 
recommendations made by the Program Accountability and Risk 
Management, in your view, does the under secretary for 
management possess the appropriate authority to ensure 
compliance with acquisition decisions made at headquarters 
level?
    So what do you--what is your take on this?
    Ms. Mackin. I don't think it is a matter of the authority 
not being in the right place. As he mentioned, the component 
acquisition executives at the components are in place, and that 
is an area we have seen some improvement. It really does get to 
the underlying data in the base lines and other documents, for 
example, life-cycle cost estimates, and that gets down to the 
individual program offices who need to have the capability to 
construct a valid cost estimate and revisit it as needed.
    Even PARM recently reported that about 75 percent of the 
life-cycle cost estimates that reviewed weren't adequate. So if 
I had to hone in on one thing that the Department still faces a 
big challenge with, it is that fundamental cost-estimating 
capability.
    Mr. Barber. Thank you, Ms. Mackin.
    Mr. Chairman, I yield back.
    Mr. Duncan. Thank you for that.
    The Chairman now recognizes the gentleman from 
Pennsylvania, Mr. Barletta, for 5 minutes.
    Mr. Barletta. Thank you, Mr. Chairman.
    Mr. Borras, the 9/11 Commission identified our lack of a 
biometric exit system as a major National security threat. Over 
40 percent of illegal immigrants are people who came here 
legally and overstayed their visas. Why is DHS not moving 
faster to implement this system?
    Mr. Borras. I am not in a position to specifically answer 
that question regarding that particular program. That is an 
operational question. I would be happy to provide you a 
detailed answer to that.
    Mr. Barletta. Is it true that they are actually waiting on 
a cost estimate of such a system? Would that come through the 
acquisition process? I know they maintain that they have their 
planning efforts underway and they are going to report to 
Congress in 2016 on the cost of a system like this. My question 
is: Congress passed the law back in 1996 requiring us to do 
that. Why would it take us 20 years to get that information, 
the cost benefits, to Congress so that we could purchase a 
system that is so critical to our National security?
    Mr. Borras. Again, I don't know the specific answer to that 
issue dating back to 1996. I can tell you that the Office of 
Biometric Identity Management, which is now the new name of 
that office, is doing the work right now. I am not an expert in 
that field, but clearly the technology since 1996 has changed 
significantly.
    I am not expert enough to tell you whether or not we have 
identified, and perhaps our folks in the science and technology 
area can address that, whether or not we have identified, quite 
frankly, the right technology that will give us the level of 
assurance that when somebody says they are who they are, that 
they, in fact, are, and that we can have the proper tools to do 
that.
    That program ultimately will come before our review, when 
it is fully organized into a set of requirements that requires 
approval to move forward through the acquisition process, but 
it is not to us yet.
    Mr. Barletta. Well, technology moves so quickly, in 20 
years, I don't know, you know, how are you--if it is taking 
that long just to come up with a cost-benefit, technology is 
kind of constantly changing, so I don't know if you will ever 
be able to report to Congress, because I think it is critical. 
If the hold-up is just getting the cost-benefit ratio and we 
want to move this to acquisition, how do we ever get ahead of 
that? If it is taking 20 years to come up with a plan and 
technology, obviously, is moving much quicker.
    Mr. Borras. Well, again, it is a very complex issue. I 
don't know the specifics about biometric tools or technology. 
At such point that it comes before the Department for review 
for a specific acquisition, we will thoroughly review that, 
including its cost estimate, and determine whether or not it is 
valid.
    Mr. Barletta. All right. Thank you, Mr. Chairman.
    Mr. Duncan. Thank you. The Chairman will now recognize the 
gentleman from Texas, Mr. O'Rourke, for 5 minutes.
    Mr. O'Rourke. Thank you, Mr. Chairman, and thank you for 
calling this hearing today. In anticipation of potential major 
acquisition related to immigration reform, as you know, the 
Senate bill calls for something like $46 billion in additional 
acquisitions and personnel growth, mainly among the Border 
Patrol.
    I want to revisit a decision that preceded your tenure. In 
2006, the SBInet program, also known as the virtual fence, 
which was billions of dollars' worth of surveillance and 
communications equipment, that was ultimately canceled in 2011, 
because it was costly, it was proven to be ineffective, and it 
essentially allowed the private contractor to oversee basic 
homeland security functions.
    I would add to that, after meeting with Border Patrol 
agents in the El Paso sector this last weekend, I don't think 
those agents were consulted in the development of this plan. It 
was a contract that was let on an indefinite delivery and 
indefinite quantity basis, which in my opinion basically left 
it up to the contractor, which was Boeing in this case, to 
really decide the scope and oversee its implementation.
    The inspector general and the GAO both looked at this, and 
so I would wonder if each of you could perhaps take a minute to 
talk about lessons learned from SBInet and how you will apply 
them to the next major round of purchasing when it comes to 
border security.
    Mr. Borras, why don't we begin with you?
    Mr. Borras. Thank you for the question, Congressman. I will 
be as quick as I can. Certainly, the major lesson that we have 
taken from SBInet and others, Deepwater and others from that 
era, is the absence of an acquisition framework, policies and 
procedures, and directives in the Department allow initiatives 
to go from what I call from concept to procurement without a 
thorough, robust requirements development and cost development.
    It is--I am not going to say it is impossible for it to 
happen today. It would be very, very difficult for something 
like that to happen today, because it would have to pass 
through our acquisition gates to get approval before it 
happened. There was no such approval mechanism in place using 
SBInet as a specific example.
    Mr. O'Rourke. Ms. Mackin, do you agree with that 
assessment, that following that boondoggle, the appropriate 
controls are in place that it would not happen again?
    Ms. Mackin. I think the acquisition policy is more robust 
now, but it was in pretty good shape in the early days of the 
Department, as well. As I mentioned, it did reflect the 
knowledge-based approach, but I think this really gets to 
requirements and having well-defined requirements up front. As 
I mentioned, that is a key practice that commercial firms 
follow. That was a big, enormous program, as was Deepwater, 
kind of a system-of-systems approach, with the contractor 
really driving a lot of the decision-making.
    I think the other thing I would mention is the importance 
of a robust test and evaluation plan, which is also required by 
the Department, before a system is fielded, to make sure that 
the users' requirements will be met, and the user requirements 
really do drive the ultimate decision.
    Mr. O'Rourke. Great. Ms. Richards, I know the Office of the 
Inspector General had a scathing report that I think was useful 
in putting a halt to this waste of money. Do you have anything 
to add to what is already been said?
    Ms. Richards. I don't really have anything to add. I think 
that the issues were correctly identified. It was a failure to 
correctly identify the user requirements and then test what was 
going to be purchased to make sure it would work, meet the user 
requirements and work in that environment. It was a combination 
of those two failures that led to the total issue with the 
SBInet.
    The framework that is in place in the Department has 
specific gates in the acquisition review process to insist on 
valid requirements determination and testing. If those gates 
are enforced, this shouldn't happen again.
    Mr. O'Rourke. When we talk about users, are you talking 
about Border Patrol agents?
    Ms. Richards. Yes.
    Mr. O'Rourke. Okay. It seems as though--and what I hear 
from them is they were not consulted prior to SBInet or these 
virtual fence strategies.
    Ms. Richards. I think the GAO did the majority of that 
work, and Ms. Mackin might be better able to address that 
accurately.
    Ms. Mackin. I think that was part of the concern. I think 
another issue was just the big rush to field this system before 
the testing was done. There was a lot of money invested. There 
was a lot at stake. I am not sure the contract type, per se, 
being an IDIQ, was necessarily the problem, but that could have 
contributed, because the contractor, I believe, really was 
driving some of the decisions, as opposed to the Government 
making some of those calls.
    Mr. O'Rourke. Thank you. I appreciate your answers.
    Thank you, Mr. Chairman.
    Mr. Duncan. Thank you.
    The Chairman will now recognize the gentleman from North 
Carolina, who I know is not going to pull for the Wolfpack 
against my Tigers tonight, but Mr. Hudson for 5 minutes.
    Mr. Hudson. No, sir. My UNC Charlotte 49ers playing their 
fourth game this weekend. We are not a challenger threat yet, 
but maybe one day.
    Thank you for holding this hearing today on this topic. 
This is really important. It is a topic that has become very 
important to me personally. As the Chairman of the full 
committee mentioned, this past July, I introduced H.R. 2719, 
which is the Transportation Security Acquisition Reform Act. 
This bill requires TSA to implement best practices and improve 
transparency with regard to security-based technology 
acquisition programs.
    Ms. Macklin, can you describe which GAO acquisition best 
practices DHS has implemented? Maybe as a second part, are 
there any best practices that you have recommended that have 
not been implemented? I think that maybe helps frame this 
debate a little. If so, which ones are the ones that you are 
most concerned about that are not being implemented?
    Ms. Mackin. I think, as I mentioned, the policy reflects 
the best practices, from validating the user needs to 
establishing the requirements, validating the cost and 
schedule, demonstrating that technologies are mature before 
they are fielded. That is very important. Ensuring that the 
funding is there for the programs and that the program offices 
are in a position with system engineers, cost estimators, and 
so forth, to carry out the acquisition.
    So to the extent that that some of these items would be 
codified in statute, it probably wouldn't be a bad idea, but 
they are already reflected in policy. So, again, the key is the 
program managers themselves, understanding what is needed, 
being structured properly to carry out the existing policy.
    Mr. Hudson. Great. I appreciate that. My bill also requires 
TSA to develop a multi-year technology acquisition investment 
plan in consolidation with the under secretary for management, 
the chief information officer, and the under secretary for 
science and technology.
    I would just open up to any of you. Do you believe this is 
necessary to develop such a plan for the whole Department? 
Please elaborate. I would open up to all the witnesses.
    Mr. Borras. I would be happy to respond to that and perhaps 
make a slightly larger point, but germane, I would hope, to 
your question. The issue of looking at us, the DHS, in 
comparison to other agencies, for example, like DoD, I think it 
is important to note one very significant difference that I 
would like to put on the record.
    DoD by and large, not exclusively--and my friends here can 
correct me if I am wrong--by and large have unified procurement 
accounts. So when they spend money on procurement, they reside 
in procurement accounts, and they are the same pretty much 
across the board. We don't have that in DHS. We don't have a 
unified procurement structure.
    So I would say it would be of great value to us, because 
some of our procurements reside in salaried expense accounts. 
Some of them reside in O&M accounts. We don't have a unified 
account structure in the Department. I know we have asked for 
that from Congress in the past.
    I know that there is no central repository for DHS funds 
for procurement. In the absence of good financial management 
systems, which I think my friends would agree, it is very, very 
difficult, unlike my friends in the private sector where I come 
from, where we had the ability to pull asset information, 
financial information, have unified information. We don't have 
that.
    So I would suggest we look at going even further than that 
in terms of just, you know, can we harmonize the procurement 
accounts which would allow us and Congress, quite frankly, to 
have a better look at where we are spending our procurement 
dollars?
    Ms. Mackin. I think those are valid points. At the Defense 
Department, as was mentioned, there is a procurement account, 
there is an O&M account, there is a personnel account. It is 
easier to track the spending that way across the entire 
Department, so I think those are valid concerns.
    Mr. Hudson. Well, thank you for that. That is some good 
feedback.
    I would ask, also, has DHS developed an agency-wide 
acquisition plan? Is it possible to do that under this current 
structure? Are you saying we need to sort of restructure the 
way those accounts are set up?
    Mr. Borras. Well, it would certainly be, if not ideal, it 
would be extremely helpful to have that in place, because, 
again, the transparency issue is a little difficult, because 
money is appropriated in so many different accounts. Plus, as 
you well know, we don't have flexibility--think about it. TSA 
has a different account structure and a different 
appropriations structure than, for example, CBP. So TSA gets 
largely multi-year money. Other components at DHS get 1-year 
money. Again, it is very difficult to harmonize all of that to 
create one consistent, solid acquisition plan.
    I would love nothing more than to be able to have that. It 
would help industry tremendously to know what we had and what 
we were trying to buy and when.
    Mr. Hudson. Thank you, Mr. Chairman. My time is expired.
    Mr. Duncan. All right. The Chairman will now recognize the 
big sky Congressman, gentleman from Montana, Mr. Daines, for 5 
minutes.
    Mr. Daines. Thank you, Mr. Chairman.
    Prior to coming to Congress--I just was elected last fall--
I spent 28 years in the private sector, so I appreciate, the 
most, private-sector instincts, perhaps, we can bring to make 
our Government run more efficiently. For many of us who stood 
outside the Federal Government and watching the way the Federal 
Government behaved in procurement processes--and I say that as 
having worked for a Fortune 20 company, having worked for a 
family construction company, having worked for a start-up 
company we took public and grew to 1,100 employees, so I got to 
work in small, medium, and large businesses, the word was 
always the best time to buy from the Federal Government--
everybody knows it--is when? We are now prime time.
    In Montana, the elk go into their rut about this time of 
year. So if you are elk-hunting in Montana, it is a special 
time. If you are selling to the Federal Government, it is a 
very special time, because it is--you either spend your budget 
or you lose it.
    I am curious to see--and Mr. Borras, you mentioned you 
spent time in the private sector--what are we doing to break 
that culture, incentives so that managers in DHS are 
incentivized to find ways to underspend their budget and reward 
for that versus spend it or lose it?
    Mr. Borras. Wonderful question. I don't know if I have 
enough time today, let alone over the next week, to answer that 
question. That is a fascinating topic. I, too, came back to the 
public sector because I was confounded and mystified by some of 
these same issues, the way the Government buys--a couple of 
things.
    We have no incentives, truly incentives, to save money. It 
is talked about often in Government that people spend their 
money because they want to obligate everything that was 
appropriated, because if they don't, it will get rescinded and 
taken away. I think that is sort of a negative incentive.
    We should be incentivizing programs and agencies to find 
ways to save money and, as we would do in the private sector, 
you could incentivize them, so if you save X percent of the 
money, you can keep, you know, 1 percent of that savings to 
invest in your people, for example, ways to incentivize people 
to spend less money.
    I want to say this in the most appropriate way. It has been 
very difficult, though, since I have been back in the Federal 
Government--we have operated under 11 continuing resolutions, 
and we are about to enter in another one. I am not here to make 
political statements other than to say it is very, very 
difficult to manage 3 months at a time, because every 
continuing resolution is, in effect, a fiscal year, with 
constraints that says no new starts and other requirements.
    What it has done, for example, this year, it pushes so much 
of the spending into the back end of the year. We don't like 
it, meaning we in Government. Nobody likes to do that. We 
spend, I think at DHS, maybe 40 percent of our dollars in the 
last, you know, couple of months of the year. That is a----
    Mr. Daines. What about the last week?
    Mr. Borras. Well, hopefully not the last week. Hopefully 
the last week we are down--I think we are--we have gotten 
pretty good about getting our work done.
    Mr. Daines. Yes. We just saw some amazing things standing 
on the outside of what was spent the very last week of the 
Federal fiscal year. I think if the taxpayers really saw what 
is going on here, they would be astounded by that. I was struck 
by the comment that--and I appreciate, you know, your fighting 
that battle, and we have got plenty of problems here in 
Congress. We can't pass a budget. We are operating on C.R.s.
    But the statement that there aren't any incentives to 
incentivize staff to find ways to spend under the budget is 
troubling. If businesses, if families ran their budgets that 
way, we wouldn't be in business, and we wouldn't be able to 
keep our family households solvent, and herein lies why we 
probably stand here staring at $17 trillion of debt. It is not 
the only problem. It is just one of many here that we have to 
address, I think, in terms of performance and incentives.
    I am curious. Any other comments from our other witnesses 
in that topic?
    Ms. Mackin. I would just add, we do Federal contracting 
reviews across many Government agencies. The fourth quarter 
spending is certainly not unique to DHS. Every agency is kind-
of faced with those same issues, in part due to C.R.s, in part 
due to other reasons.
    We have reported on this before in several reports, so----
    Mr. Daines. Is there any hope, as a taxpayer--and we are 
all taxpayers--that somehow there would be incentives put in 
place that would reward our public servants for underspending 
their budgets?
    Ms. Mackin. I am not aware of anything coming down the pike 
in that regard.
    Mr. Daines. Then last, on pay and performance, when people 
are not performing up to standards--I am not talking about 
terminations for cause, but for performance--does that happen 
in DHS?
    Mr. Borras. Let me make sure I understand your question 
correctly, because I certainly want to answer you as accurately 
as possible. Are you asking if we have pay-for-performance 
requirements in the Department?
    Mr. Daines. So I jumped to one of the topics. Really, back 
to performance management--we will separate the pay side for a 
moment. Never mind that.
    Mr. Borras. Okay.
    Mr. Daines. But our--do employees in DHS--are there ever 
employees terminated in DHS other than for cause? You 
understand what cause means?
    Mr. Borras. Uh-huh.
    Mr. Daines. Okay, for performance?
    Mr. Borras. Well, that would be cause.
    Mr. Daines. Well, no, cause is, in terms of fundamentally 
where there is usually theft, there is something in terms of 
fundamental policy broken here. Cause means that there has been 
some activity here outside of a standard--performance relates 
to delivering results. So has there ever been--do you know of 
DHS employees that have been terminated because they have not 
performed to standards? Not talking about, again, cause.
    Mr. Borras. Well, I couldn't give you a specific number, 
but we certainly have a sizable number of terminations that 
include performance. There have been recent accounts in the 
newspaper at TSA, for example, where TSOs have been dismissed 
for performance-related issues.
    Mr. Daines. Yes, and just--and I know I am out of time 
here--but the difference is, if they are somehow--if there is 
theft somewhere, that is a cause issue versus performance, but 
I am over my time, Mr. Chairman.
    Mr. Duncan. I thank the gentleman. I would love to have 
another round of questionings here, but in the essence of time, 
with the votes being called this afternoon shortly, we are 
going to go ahead and dismiss the first panel.
    I thank you guys for being here. I know the challenge that 
you have. Twenty-two agencies and a huge budget and trying to 
do acquisitions and bring it all under one roof, and I would 
just ask that, you know, you consider that, you know, they are 
taxpayer dollars. Good stewardship of that money is important. 
That is why we are having this hearing, just to make sure that 
those dollars are spent wisely and that we stay on top of 
things.
    You know, I am encouraged by what I hear, but I look 
forward to furthering this conversation. I think both sides of 
the aisle want to see that we spend those tax dollars wisely, 
efficiently, effectively, with ultimate mission of securing the 
Nation, and so we understand that that is the overarching goal, 
is to keep our homeland secured.
    So with that, I will dismiss the panel, and we will call 
Panel No. 2 up to the podium.
    Okay, the Chairman is going to go ahead and call the second 
panel to order. We are pleased to have additional witnesses 
before us today on this important topic.
    Let me just remind the witnesses that your entire written 
statement will appear in the record. What I would like to do 
is, I am going to introduce you and I am going to go ahead and 
allow the first two panelists to do their opening statements. 
We are not going to have time to go through all three. They 
have just called votes.
    So what we will do is we will recess after the first two 
pending call of the Chairman. About 10 minutes after our votes 
are finished up, come back in, take the opening statement from 
our third panelist, and then get into questions, if you all 
will bear with us on that.
    So the first witness today, Mr. William Greenwalt, is a 
visiting fellow with the Marilyn Ware Center for Security 
Studies and American Enterprise Institute, where he analyzes 
defense and aerospace acquisition issues and industrial-based 
policy. Previously, Mr. Greenwalt served in the Pentagon as 
deputy under secretary for defense for industrial policy and 
advised the under secretary for defense for acquisition 
technology and logistics on all matters relating to the defense 
industrial base.
    Mr. Greenwalt has also served Members of Congress of both 
the House and the Senate. He has worked for Lockheed Martin as 
director of Federal acquisition policy. Prior to joining AEI, 
Mr. Greenwalt was vice president of acquisition policy at the 
Aerospace Industries Association.
    Our second panelist is Mr. Stan Soloway. He is president 
and CEO of Professional Services Council, principal National 
trade association of the Government professional and technical 
services industry. Prior to joining PSC, Mr. Soloway served in 
the Defense Department as deputy under secretary for defense 
for acquisition reform and concurrently as director of 
Secretary of Defense William Cohen's defense reform initiative. 
Before his appointment to DoD, Mr. Soloway was a public policy 
and public affairs consultant for more than 20 years on 
acquisition privatization and outsourcing issues.
    Our third panelist, Mr. David Berteau, is a senior vice 
president and director of the Center for Strategic 
International Studies international security programs, also 
director of CSIS defense industrial initiatives group covering 
defense management, programs, contracting acquisition, and the 
defense industry.
    Prior to joining CSIS, Mr. Berteau was the faculty director 
of Syracuse University's National Security Studies Program and 
has 15 years of senior corporate experience. He has also held 
senior positions in the Defense Department under four defense 
secretaries. Clemson will play Syracuse this year, now that 
they are in the ACC. So I recognize that.
    So we are going to go ahead and recognize the first two 
panelists, as I said. So, Mr. Greenwalt, we will recognize you 
for 5 minutes for your opening statement.

  STATEMENT OF WILLIAM C. GREENWALT, VISITING FELLOW, MARILYN 
WARE CENTER FOR SECURITY STUDIES, AMERICAN ENTERPRISE INSTITUTE

    Mr. Greenwalt. Thank you, Mr. Chairman, and thank you for 
all the Members. I appreciate the opportunity to address the 
acquisition reforms lessons learned from the Department of 
Defense and the private sector and how they may apply to the 
acquisition practices of the Department of Homeland Security.
    The committee's interest in acquisition reform is timely, 
as I believe that a greater focus on these issues not only has 
the potential to enhance National security, but also save 
billions of taxpayer dollars. The last set of meaningful 
comprehensive acquisition reforms coincided with the onset of 
budget austerity at the end of the Cold War. These bipartisan 
reforms result in the incorporation of commercial advances in 
information technology and the adoption of some of the best 
commercial business practices of the time, many of them 
identified by the GAO and the work done by their organization.
    Ironically, the budget increases of the last decade have 
not been kind to that reform effort. The rapid inflow of 
dollars to agencies often led to acquisition practices that 
were not as frugal or commercially-oriented as they should have 
been.
    At the risk of making lemonade out of lemons, sequestration 
and the Budget Control Act offer the opportunity to refocus the 
Government and oversight agencies on the bottom line and to 
implement the acquisition reform goals in the mid-1990s.
    There are many lessons learned that can be gathered from 
studying DoD's acquisition practices since the end of World War 
II. Some of these are good; some of these are bad. I have 
developed--I have tried to develop for the committee's 
consideration what I think are the most significant guiding 
principles and recommendations which I hopefully--you will find 
useful as you look into these acquisition issues.
    The first principle--and one I think is extremely 
important--is Government-unique is expensive. Exquisite 
solutions oftentimes have exquisite price tags. The more you 
have a dedicated industrial base that just serves the 
Government, the more expensive it will be. Any rule or 
requirement that only impacts the Government market and not the 
commercial market will add cost. The lesson here, leverage the 
commercial marketplace wherever you can and those business 
practices wherever you can.
    Principle No. 2, be wary of one-size-fits-all solutions. 
Whenever a problem is found with acquisition--normally in a 
scandal of some sort--there is a tendency to find a one-size-
fits-all solution. You need to determine whether the problem is 
systemic or localized.
    As far as where I would look in issues with acquisition, I 
will put them in a number of different buckets. I would look at 
the acquisition workforce. I would look at requirements. I 
would look at systems acquisition. We spent a lot of time in 
the first panel talking about systems acquisition. I would look 
at research and development, IT and services, and look at 
different best practices in all of these areas.
    The first area that I would spend on would be the 
acquisition workforce, and I think Mr. Soloway is going to have 
a lot to say on that, but there are some lessons learned from 
DoD that you can look at, and one potential lesson learned is 
the establishment of what is called the defense acquisition 
workforce development fund, which allows actually some of those 
incentives to save some money that the Congressman from Montana 
was discussing.
    Second area I would say is don't replicate solutions that 
already exist. One of the most wasteful things the Government 
can do is use its limited research and development dollars in 
things that already exist. The requirements process here has to 
be reformed and to accept an 80 percent solution. To accept a 
commercial solution, to accept a solution that has already been 
developed by the rest of the Government and bring that in.
    There is always the chance, there is always an incentive to 
try to get more. When you do get more, you end up asking for 
those exquisite solutions, which drive costs.
    The third area in the systems acquisition is to try to 
limit the number of large programs, to make it very difficult 
to get through a new program. I think the criteria that GAO 
lays out is the correct one, but those have to be disciplined. 
The requirements have to be disciplined. The budget has to be 
disciplined, and so on.
    Fourth area and a lesson learned that I think DHS can look 
at is to learn from the rapid acquisition process in the 
Department of Defense. That process has taken the users out in 
the field and driven rapid solutions in a 6-month to 24-month 
time frame to get equipment out in the field. Most of those are 
commercially-oriented or very rapid type of things. They are 
smaller, but they are definitely something that the committee 
should possibly take a look at.
    The fifth and final area I would look at is commercial 
services and information technology. GAO has identified a 
number of best practices in that area. The big bottom line is, 
there is a big commercial marketplace out there. I would buy 
commercial wherever you can.
    So in conclusion, these are about a few ideas for the 
committee to consider as it looks to reform the acquisition 
practices of the Department of Homeland Security. I think there 
are many more best practices out there. I commend the committee 
as it first looks for lessons learned to help guide its 
oversight efforts in the area. Thank you.
    [The prepared statement of Mr. Greenwalt follows:]
               Prepared Statement of William C. Greenwalt
                           September 19, 2013
    Thank you for the opportunity to address acquisition reform lessons 
learned from the Department of Defense and the private sector and how 
they may apply to the acquisition practices of the Department of 
Homeland Security. The committee's interest in acquisition reform is 
timely, as I believe that a greater focus on these issues not only has 
the potential to enhance National security, but also save billions of 
taxpayer dollars.
    The last set of meaningful, comprehensive acquisition reforms 
coincided with the onset of budget austerity at the end of the Cold 
War. These bipartisan reforms were led by the Department of Defense and 
the House and Senate Defense Authorization Committees and resulted in 
the incorporation of commercial advances in information technology and 
the adoption of some of the best commercial business practices of the 
time. Ironically, the budgetary increases of the last decade have not 
been kind to that reform effort. The rapid inflow of dollars to 
agencies often led to acquisition practices that were not as frugal or 
commercially oriented as they should have been.
    In the last 5 years, the Department of Defense and the rest of the 
Federal Government have been on an accelerated path to a return to the 
acquisition practices of the 1980s, which were a morass of unique 
Government regulations and rules. This approach, which was later the 
subject of the 1990s acquisition reforms, was not attractive to the 
most creative and innovative companies at the time and did not return 
value to the taxpayer.
    During the 1980s, information technology bought by the Government 
was generations behind what was available in the commercial 
marketplace. Government-unique contractors bid on rigid Government 
requirements and specifications that were drawn up by Federal 
acquisition officials whose main preoccupation seemed to be to avoid a 
bid protest. The result was an adversarial system where low-price 
shoot-outs for mythical programs that could not be executed were the 
norm. Meanwhile, a parallel commercial market existed that refused to 
do business with the Government but could solve many of these ``gold-
plated'' requirements at a fraction of the cost.
    The 1990s acquisition reform initiatives and legislation focused on 
best value and commercial item contracting and tried to change this 
situation. This approach was enshrined in a memo from then Secretary of 
Defense William Perry in 1994, as well as the 1994 Federal Acquisition 
Streamlining Act and the Clinger-Cohen Act of 1996, which all made 
significant progress in the immediate decade after implementation. 
However, the Federal Government's recent shift to LPTA (Low Price 
Technically Acceptable) contracting and the return of a rules-based 
compliance culture that continues to add costs is rolling back the 
advances made in the past 20 years of acquisition reforms.
    Sequestration and the Budget Control Act offer the opportunity to 
refocus the Government and oversight agencies on the bottom line and to 
implement the acquisition reform goals of the mid-1990s tailored to any 
new circumstances from the last 2 decades. Nothing focuses minds faster 
than having to live within a constrained budget--be it your 
household's, company's, or agency's. These kinds of acquisition reforms 
are absolutely necessary at DoD and DHS, as without them and a 
corresponding change in business practices, budget reductions could 
result in a significant decrement to National security. The old adage 
to do more with less has to become a reality and the only way to do 
that is to take advantage of advances in technology and change 
underlying ways of doing business at the National security agencies.
    There are many lessons learned that can be gathered from studying 
DoD's acquisition practices since the end of World War II. The key is 
to identify which best practices could be replicated at DHS and which 
so-called ``best practices'' are really dead-ends that have added costs 
but no value to the taxpayer or to our National security. Based on this 
history, I have developed for the committee's consideration what I are 
think are the most significant two guiding principles and five 
recommendations.
    But before I delve into those, one lesson learned from past 
successful acquisition reform efforts is that they need significant 
Congressional involvement from Members and staff steeped in common 
business sense to gain any traction. Without some kind of Congressional 
interest and sanction, Executive branch bureaucracies will tend to 
ossify the acquisition system into a one-size-fits-all, cookie-cutter, 
rules-based approach that is not nimble enough to execute deals that 
are in the best interest of the taxpayer.
    Acquisition policy is not rocket science but it is complicated. As 
you delve into this issue, if something doesn't meet the common-sense 
test it is probably an area that needs reform or at a minimum a clear 
justification of its existence.
    With that being said, I believe there are two guiding principles 
Congress should use when addressing acquisition reform proposals.
    Principle No. 1.--Government-unique is expensive. Exquisite 
solutions oftentimes have exquisite price tags. The more you have a 
dedicated industrial base that just serves the Government--the more 
expensive it will be. Any rule or requirement that only impacts the 
Government market and not the commercial market will add cost. 
Requirements for information in formats not used in the commercial 
marketplace or for data that is not normally collected by companies all 
have a cost and the taxpayer pays for it--whether it is an increase in 
the costs of goods and services provided or from the reduction in 
competition and innovative ideas from those firms who chose not to 
comply with unique Government or agency requirements and exit the 
business.
    Let me be clear, some level of unique Government procurement rules 
and oversight are necessary, but they have to be carefully assessed to 
ensure that they do not drive perverse incentives in the industrial 
base and in the agency. Congress needs to ensure that the current 
acquisition laws, regulations, policies, and rules are adding value and 
not destroying it and meet a clear cost-benefit test.
    Principle No. 2.--Be wary of one-size-fits-all solutions. Whenever 
a problem is found with acquisition, it first has to be determined if 
it is a systemic problem or a localized one. The acquisition system is 
currently plagued with a lot of legislation, regulations, rules, and 
policies enacted to address a singular scandal or perceived problem 
that are not appropriate to all types of acquisitions. Many solutions 
will likely have to be tailored to specific types of acquisitions--but 
always keep in mind Principle No. 1.
    There are three types of acquisition I would focus on: Large 
Governmental systems similar to DoD weapon systems, services, and 
information technology. Within each of these types there are several 
categories of potential acquisitions depending on the application, the 
industrial base, and whether or not there is a compelling need for 
speed or innovation.
    For example, shipbuilding is different than buying ground vehicles. 
Buying desktop computers will be different than a data analysis system 
that incorporates information from multiple sensors and sources. 
Construction services are different than medical services. Buying a 
vehicle for immediate deployment to protect troops from daily attacks 
from roadside bombs is different than upgrading a truck used on 
domestic military bases. Each category potentially has its own best 
practice that might require a tailored legislative or regulatory policy 
approach. Legislating to address a problem with systems acquisition 
brought on by a shipbuilding issue in the Coast Guard with a sole-
source Government-unique contractor may be counterproductive if applied 
to information technology and services acquisition with plenty of 
competition and commercial alternatives.
    One also has to be deliberate about what you want the acquisition 
system to do. Right now the acquisition system is asked to be 
efficient, effective, transparent, competitive, fair, innovative, and 
accountable--all noble principles but unfortunately all meaning 
different things to different people. Disagreements in what these 
principles mean and how they should apply can lead to oftentimes-
disastrous consequences for the Government. The laws, regulations, and 
processes involved in many of these principles can lead to a trade-off 
between these principles, as they are not necessarily complementary.
    For example, an across-the-board initiative to improve 
accountability triggered by an agency contracting scandal (which might 
seem like a positive thing to do) could see a drop in efficiency, 
effectiveness, and innovativeness in the acquisition system due to new 
administrative burdens placed on the system. Too many of these burdens 
might lead commercial contractors to leave the marketplace or establish 
costly separate Government-unique entities within their firms to comply 
with these new accountability measures. The first question to ask in 
any procurement scandal is whether existing law is working. If law 
enforcement has the tools to deter, identify, and prosecute cases of 
procurement fraud as it did in the recent Army Corp of Engineers 
kickback case, there is probably no reason to act.
    I would propose the following five recommendations to improve 
acquisition at DHS:
    (1) Professionalize the acquisition workforce.--Without a 
professional workforce that can exercise sound business judgment, 
successfully executed programs in the Government will be a rarity. 
DoD's acquisition workforce will face significant challenges ahead; 
particularly as older, more experienced acquisition professionals 
retire. Still, from most observers I have talked to about DHS, it 
appears that DHS' acquisition workforce is far behind the 
professionalism and experience level of the DoD acquisition corps.
    So as a first step the committee may want to consider adopting 
DAWIA (Defense Acquisition Workforce Improvement Act) standards for 
DHS. It also may want to consider a funding mechanism such as found in 
the DAWDF (Defense Acquisition Workforce Development Fund) to pay for 
training and workforce development. Still, questions have been raised 
about the quality and implementation of the DAWIA-required education 
and training provided by the National Defense University. The committee 
may want to look at other outside-the-agency training options for DHS, 
be they from public universities or the private sector.
    As this workforce development will be a long-term project, the 
committee may want to consider in the short-term centralizing the best 
acquisition talent in the Department to specialize in certain types of 
procurements and buy for the entire enterprise. Centralization, 
however, runs the risk of the creation of bureaucratic barriers that 
make it more difficult to award contracts--so only the most difficult 
acquisitions or categories of acquisitions should be considered for 
this option.
    DHS could also consider contracting out for acquisition assistance 
from non-conflicted firms in areas of systemic workforce weakness. The 
National Reconnaissance Office (NRO) since the 1960s has done something 
similar to access non-conflicted (Organizational Conflict of Interest 
or OCI-free) systems integration experience that it lacked to help it 
deal more effectively with its contractors.
    If, after a few years, the committee is still not satisfied with 
the progress in developing an adequate DHS acquisition workforce it 
should follow the progress of a potential British experiment. In the 
United Kingdom, the British Ministry of Defense (MOD) is proposing to 
contract out the entire acquisition function to a private non-
conflicted firm. The British MOD, if it actually does this, would be 
embarking on a grand experiment in government acquisition and if it 
were successful would have significant lessons learned for the U.S. 
Government.
    (2) Don't replicate R&D for solutions that already exist.--One of 
the most wasteful things the Government can do is use its limited 
research and development (R&D) funds on things that already exist. Yet, 
there is a tendency to do exactly that in the Government where a ``not-
invented-here'' syndrome tends to prevail. Replicating has two costs--
duplication but also in opportunity costs from lost R&D that cannot be 
applied to other solutions.
    DHS' contract spend of $12.4 billion in 2012 is unlikely to drive 
many commercial markets. If DoD, which contracted for over $361 billion 
in goods and services in 2012 (or another agency), has already 
developed something that works, DHS should buy it off the shelf. The 
same applies to the commercial marketplace. That this doesn't happen 
(even at DoD) is a problem with the requirements portion of the 
acquisition system. It is a difficult sell within DoD to only accept 
80-90 percent of what they think they might need. Instead DoD tends to 
embark on 15-year development programs and invest billions of dollars 
that never quite meet those requirements when they could have had 
something deployed immediately that meets most of the users needs for a 
fraction of the eventual cost of the ``required'' system.
    As a tool to guard against this, an agency needs to have conducted 
significant pre-program market research before it embarks on a 
procurement to really know what is already out there in the commercial 
market or has been uniquely developed and successfully deployed in the 
other Government agencies. The agency will likely need some kind of 
robust requirements review process charged with disciplining unique 
requirements both prior to and after program initiation. Even when an 
agency does buy ``off the shelf'' there is a real danger that 
subsequent needs for ``minor modifications'' will equate to large 
dollars in development costs. The requirements system needs to be 
effectively disciplined to prevent this from happening. DoD's 
experience with configuration steering boards, while still in its 
infancy, may be one way of trying to enforce this kind of discipline.
    I will digress for a moment to discuss why leveraging other 
people's money is so important. At one time the Federal Government and 
DoD dominated R&D spending. For example, according to figures compiled 
by the National Science Foundation, the Federal Government provided 67% 
of R&D funding in 1964 and served as the driver of innovation in the 
economy. Today, the private sector now provides over 60% of R&D funding 
and accounts for over 70% of its performance and is where innovation is 
concentrated.
    But that is only here in the United States. Global R&D now stands 
at almost $1.5 trillion a year. There has been a significant trend in 
the globalization of R&D in the last several decades so that now U.S. 
R&D is only 28% of global R&D and the U.S. Government's share is now at 
around 11%. And unlike in the past there are now many more avenues for 
solutions out there than just U.S. Government-unique research and 
development. DHS with its limited R&D funds could try to go it alone, 
but a more prudent use of funds would be to only spend its R&D on 
something that no-one else is doing and leverage off of everyone else, 
first by looking at the portion in the U.S. Government's portfolio, 
then U.S. commercial, followed by the R&D conducted by allied 
governments and finally in the global commercial market.
    (3) Make it really hard to start a new ``too big to fail'' program 
and then enact a strong Nunn-McCurdy like system to cancel programs if 
they do not meet goals.--By first buying systems as much as possible 
off the shelf, it would be hoped that there would be very little that 
DHS would be doing that is DHS-unique in systems acquisition. It would 
be expected after comparing contract spending at DoD and DHS, that DHS 
would only have a handful of programs that are equivalent to DoD's 
MDAPs or Major Defense Acquisition Programs. However, the committee may 
want to focus its oversight on programs with a smaller dollar threshold 
than the legislated DoD MDAP threshold.
    Major systems acquisition is one area where there are significant 
lessons to be learned from DoD. DoD has a history of great 
technological innovation and periods of technological evolution that 
involve incremental improvements to existing systems. We are currently 
in one of the latter periods with innovation being primarily driven by 
the commercial market and rapid acquisition programs outside of the 
traditional DoD acquisition process.
    Throughout both types of periods there has been one constant--cost 
overruns, schedule slippages, and performance issues. Ron Fox from the 
Harvard Business School in his aptly titled book ``Defense Acquisition 
Reforms 1960-2009: An Elusive Goal'' sets the stage on the history of 
acquisition reform with regards to large systems development:

``Defense acquisition reform initiatives have been Department of 
Defense perennials over the past fifty years . . . Many notable studies 
of defense acquisition with recommendations for changes have been 
published, and each has reached the same general findings with similar 
recommendations. However, despite the defense community's intent to 
reform the acquisition process, the difficulty of the problem and the 
associated politics, combined with organizational dynamics that are 
resistant to change, have led to only minor improvements. The problems 
of schedule slippages, cost growth, and shortfalls in technical 
performance on defense acquisition programs have remained much the same 
throughout this period.''

    Fox begins his history by referencing the first large-scale 
acquisition reform study of the 1960's--The Weapons Acquisition 
Process: An Economic Analysis, by Merton J. Peck and Frederic M. 
Scherer published in 1962. This study reviewed the results of weapons 
acquisitions of the 1950s and identified six major problems with these 
acquisitions: ``(1) Schedule slippage; (2) cost growth; (3) lack of 
qualified government personnel; (4) high frequency of personnel 
turnover; (5) inadequate methods of cost estimation; and (6) 
insufficient training in the measurement and control of contractor 
performance.'' Fox comments on Peck and Scherer's conclusions: ``Fifty 
years later, acquisition reforms continue to seek remedies to the same 
problems.''
    GAO and others have tended to coalesce around the following 
solutions to cost, schedule, and performance problems at DoD: The need 
for stable requirements; stable budgets; proven and mature 
technologies; and stable personnel. Many of these ideas were 
incorporated for DoD into law in the last couple of years to ensure 
that early on in a program these objectives are met in what is called a 
Milestone B certification (Section 2366b, Title 10 U.S. Code), which is 
at the end of DoD's technology development phase of acquisition. This 
should be a difficult hoop to get through and large programs should not 
be initiated and significant funding brought to bear until there is 
equivalent type of certification at DHS. The committee may also want to 
consider only approving programs at Milestone B that will be completed 
and deployed in less than 3 to 5 years. There is no reason that DHS 
should emulate DoD's overly lengthy 15-20 systems acquisition time 
cycle.
    If a program at the equivalent of Milestone B meets these criteria, 
there should be a better chance of the program to successfully meet its 
cost, schedule, and performance goals. Once this certification by the 
senior acquisition official in the Department is made, you may want to 
consider adopting some type of Nunn-McCurdy reporting and oversight 
requirements for DHS. Because costs estimates for the program should be 
more realistic at Milestone B, this is when I would recommend beginning 
the Nunn-McCurdy baseline. Past practice often had DoD setting this 
baseline earlier without meeting the objectives in what is now 
contained in the Milestone B criteria. These premature baselines 
resulted in unrealistic expectations for the program and subsequent 
Nunn-McCurdy cost breaches. With a more realistic cost estimate 
established at Milestone B, if programs do exceed the ``critical'' cost 
overrun thresholds set in Nunn-McCurdy, the program should be cancelled 
in all but exceptional circumstances.
    (4) Establish an Innovation Fund that allows for the rapid 
deployment of operational prototypes and the maturation of technology 
to support systems acquisition.--To get to the level of technological 
maturity necessary for large programs to meet their Milestone B 
certifications and to continue pushing the technological envelope in 
areas necessary to meet changing National security requirements, the 
committee should look at DoD's informal rapid acquisition system that 
developed to meet wartime needs over the last decade. These programs 
should be relatively small and focused on deploying operational 
capability in parts of the agency in a 6-month to 2-year time frame. 
Because of the inflexibilities usually inherent in agency budget 
systems, I would recommend establishing some type of flexible R&D fund 
that can quickly fund rapid prototyping initiatives similar to the 
rapid equipping initiatives in the military services. These rapid 
operational prototypes could be initiated by a similar requirements 
process developed in DoD known as the JUONS (Joint Urgent Operational 
Needs Statements) process.
    These types of initiatives serve several purposes. The first is to 
get technology out into the field faster and meet user requirements in 
a compelling need situation. The second is to prove technology at a 
smaller unit level that could be potentially scalable and transferred 
into a major systems program. A third outcome is that short time frame 
to deployment forces the agency to incorporate off-the-shelf 
technologies quickly into new types of capabilities. To get some 
commercial companies who might not otherwise participate in DHS 
acquisitions, these rapid prototypes may require the use of DHS' other 
transaction authority.
    (5) Services and IT acquisition: Identify and adopt commercial best 
buying practices.--DoD is a large buyer of services, on which it spends 
more than half of its contract dollars. It also is a large buyer of 
information technology (IT). Needless to say these are different kinds 
of procurements than weapon systems. It would be expected that most of 
DHS' future contract dollars will be spent in these two areas as well.
    Back in the 1990s and early 2000s, Congress asked GAO to go out and 
determine the best commercial practices for these types of 
acquisitions. This was different work for an agency more used to 
compliance auditing, but GAO rose to occasion and created an 
exceptional body of work. Much of it was then incorporated into the 
information management provisions of the Clinger Cohen Act of 1996 and 
the services acquisition management provisions in various National 
Defense Authorization Acts of the early 2000s. These reforms and GAO 
reports currently serve as the basis for ``best practices'' for buying 
IT and services in the Government.
    Since that time, there has not been a lot of ``best practices'' 
oversight to be found in the Government. Since this work is now 10-20 
years old it is probably time to task GAO (or another entity if GAO no 
longer has the right expertise to perform such an evaluation) to re-
look at some of these best practices. It could be assumed that the 
private sector, some U.S. Government agencies and other governments 
(either State or foreign) have developed new ways to better manage the 
purchases of IT and services. These new best practices could be used to 
update the Clinger-Cohen Act, Title 10, and any Government-wide 
services acquisition legislation and regulations.
    In conclusion, these are but a few ideas for the committee to 
consider as it looks to reform the acquisition practices of the 
Department of Homeland Security. I think there are many more ``best 
practices'' out there and I commend the committee as it first looks for 
lessons learned (both good and bad) to help guide its oversight efforts 
in this area. I look forward to any questions the committee might have. 
Thank you.

    Mr. Duncan. Thank you so much.
    Mr. Soloway, you are recognized for 5 minutes.

  STATEMENT OF STAN SOLOWAY, PRESIDENT AND CEO, PROFESSIONAL 
                        SERVICES COUNCIL

    Mr. Soloway. Thank you, Mr. Chairman, Mr. Barber, Members 
of the committee, appreciate the opportunity to be here today.
    Before I get started, if you would permit me, I would like 
to associate myself also with the words of condolences that a 
number of you uttered with regard to the great tragedy at the 
Navy Yard that took the lives of civil servants, law 
enforcement, military, and Government contractor personnel. 
This is a shared loss for all of us in the greater community. I 
was pleased to hear that Mr. McCaul mentioned that there was a 
possibility to be looking into some of the security clearance 
issues and so forth, and we would certainly very much like to 
be a part of that conversation, since the clearance 
requirements for contractors are exactly the same and conducted 
by the same entities as they are for Government employees and 
others. We have a shared responsibility to make sure we have it 
right, and we look forward to having that conversation with 
you.
    With regard to today's hearing, I will just quickly 
summarize the written testimony that we submitted. My testimony 
is largely founded in the report that Mr. McCaul mentioned in 
his comments that we issued on September 9 called ``From Crisis 
to Opportunity.'' This was a commission that we convened of 19 
executives to look at some of the systemic barriers to 
innovation, efficiency, and effectiveness across Government, 
particularly in the acquisition, integration, and utilization 
of professional and technology services, but even more broadly 
than that.
    Although it is designed as a Government-wide review, I 
believe the findings and recommendations we reached are very 
relevant at DHS. In fact, we have already briefed some of the 
DHS officials, and Mr. Borras will be meeting with us shortly 
to go in more deeply into the recommendations that we had.
    Second, as an opening thought, I just want to share the--
while this hearing has in its title ``lessons learned from 
DoD,'' as an individual who sat in that chair at DoD in the 
late 1990s during the last movement towards acquisition reform. 
There are clearly some lessons, but I think they are very 
limited. I think that DoD has a long way to go, and I would 
argue that many of the recommendations of our commission apply 
just as equally to DoD, as they do to DHS and other agencies.
    In fact, DoD has spent $2 billion--with a B--in workforce 
development in just the last 5 years. According to the 
acquisition leadership within DoD, within the services and the 
components, the improvement has been minimal at best.
    Our report is founded in a set of overarching tenets and 
findings that we came to through 6 months of work. Let me just 
summarize them very quickly. The Government is in the midst of 
an all-too-often ignored or underappreciated series of 
interconnected crises. It faces stunning demographic 
imbalances, particularly in the technology workforce, a risk-
averse culture in which real innovation is present, but is 
widely the exception, poor collaboration and communication, not 
just between the Government and industry, but within Government 
functions themselves, an outdated and ineffective approach to 
workforce development and training, particularly in 
acquisition, and, of course, hovering above all, the fiscal 
crisis.
    At the same time, we see these crises as a great 
opportunity. We have made a series of recommendations designed 
to address them--to move towards that opportunity in the areas 
of human capital, innovation, achieving excellence, and the 
role of industry.
    The recommendations are contained in the full commission 
report. With your permission, I would like to ask that it be 
included in the record of the hearing.*
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    * The Professional Services Council's 2013 Leadership Commission 
final report, ``From Crisis to Opportunity: Creating a New Era of 
Government Efficiency, Innovation and Performance'' has been retained 
in committee files, and is also available at http://www.pscouncil.org/
c/p/2013_Commission_Report/2013_Commission_Report.aspx.
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    They are as follows, in general: First, we need to 
fundamentally rethink the way in which the Government develops 
and trains its workforce, particularly in acquisition and 
information technology. The first panel had some very 
interesting and important insights into process and policy 
compliance, but ultimately none of that will matter if we don't 
have the right workforce with the right preparation and the 
right skills at the right place at the right time. We are 
concerned, as are our colleagues in Government, that that is 
not today the case.
    For the acquisition community, the opportunity exists today 
to make massive change because of the generational change 
taking place and to therefore focus like never before on 
critical thinking, business acumen, technology acquisition and 
integration, and other core skills, which, according to our 
2012 survey of Government acquisition officials are in woefully 
short supply. For the technology workforce, the challenge is 
slightly different, and this was one of the more stunning 
revelations that came to us.
    The information technology workforce in Government has 
perhaps the worst demographics of any key workforce. It almost 
nine times as many people over 50 as under 30, less than 5 
percent of the workforce is under 30, the over-60 cohort is the 
highest it has been in 10 years, and the under 30 cohort is the 
lowest it has been in 10 years. That, I would argue, is a 
symbol of the Government's difficulty attracting and retaining 
key technology talent and is a powerful argument for an 
entirely different way of approaching strategic human capital 
planning across the Government.
    When it comes to innovation and collaboration or 
performance, we have made a series of recommendations to 
require such things as all program offices entering into an 
open and collaborative dialogue with their private-sector 
partners to jointly identify sustainable efficiencies, rather 
than just simply chopping or cutting margins. This in the long 
run will achieve--help us achieve success in not only 
sustaining efficiency, but also building partnership.
    We have also developed a new taxonomy designed to help 
guide smart acquisition strategy, particularly for the 
acquisition of complex services, which is lacking today and 
throughout the Government, despite the details of the Federal 
acquisition regulation. We also have an acquisition environment 
overly dominated by a default to low-priced technically-
acceptable awards, which in the end result in a less innovative 
and agile supplier base, higher cost to the taxpayer, and 
offering lower quality. So many of our recommendations around 
workforce development, the creation of business acumen, a 
culture of innovation, collaboration, reward, and incentives is 
designed to overcome that kind of a tendency.
    Finally, we have made a set of commitments from an industry 
perspective where we are going to continue as an organization 
to invest our resources to develop templates that would help 
the Government better distinguish the value of key proposal 
discriminators, so they can comfortably avoid the trap of low 
bids. We are also going to work with the Government on a series 
of training modules designed to help provide the workforce with 
the key tenets of some of the new models of technology 
acquisition, particularly around things like infrastructure as 
a service, like cloud computing, and so forth, which entirely 
change the old models.
    As one CIO put it to us, when we were doing the commission, 
one Federal CIO, he said the world is revolving around apps. We 
don't have an acquisition process for apps. You have the idea, 
and you field in 6 weeks? We are lucky if we can get the first 
requirements done in 6 months.
    So that is the kind of thing that we want to work with the 
agencies on improving, but overall, I think from a homeland 
security perspective, these are opportunities to build on what 
they have already started. The Homeland Security Acquisition 
Institute is an excellent idea, but it needs to be limited in 
its focus so they can open the aperture to a very wide array of 
otherwise available and widely-used best practices training 
across the commercial space.
    DHS leadership has been in the vanguard of pushing greater 
collaboration, greater communication. It is not happening at 
the front line, but we need to continue to push that. They have 
also started a rotation program for acquisition employees which 
needs to be expanded to functional, as well as organizational 
rotation, so people, as you do in the best of the private 
sector, get experience in different parts of the company, in 
different functions to best understand their specialties.
    There are a wide range of opportunities here. The details 
are all contained in our report. We face a very real set of 
challenges and crises, and we look forward to working with the 
committee and the Department on trying to turn those crises 
into a real opportunity, and I thank you very much for the 
opportunity----
    [The prepared statement of Mr. Soloway follows:]
                   Prepared Statement of Stan Soloway
                           September 19, 2013
    Mr. Chairman, Congressman Barber, Members of the subcommittee. 
Thank you for the invitation to testify before you this afternoon on 
behalf of the Professional Services Council's 370 member companies and 
their hundreds of thousands of employees across the Nation.\1\ As DHS 
enters its second decade of existence, the time is right to assess what 
more can be done to improve overall mission outcomes at the Department.
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    \1\ For 40 years, PSC has been the leading National trade 
association of the Government professional and technical services 
industry. PSC's more than 370 member companies represent small, medium, 
and large businesses that provide Federal agencies with services of all 
kinds, including information technology, engineering, logistics, 
facilities management, operations and maintenance, consulting, 
international development, scientific, social, environmental services, 
and more. Together, the association's members employ hundreds of 
thousands of Americans in all 50 States.
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                       the psc commission and dhs
    In fact, such a review is not just suitable for DHS, but for the 
Government as a whole. It was with that intent that PSC launched, in 
January of this year, its Leadership Commission. The PSC Leadership 
Commission, comprised of 19 members of the PSC Board of Directors, was 
spurred to action in large part as a result of the findings of PSC's 
fifth biennial Acquisition Policy Survey, which suggested that after 
more than a decade of trying to address well-documented shortcomings in 
Federal acquisition, including human capital planning and workforce 
training, and despite the investment of unprecedented financial 
resources, little has changed.\2\ The commission was also spurred by a 
series of conversations with Congressional staff who were also 
searching for new ideas to help address seemingly intractable 
challenges.
---------------------------------------------------------------------------
    \2\ See: ``The Unabated Crisis: The 2012 PSC Acquisition Policy 
Survey'' December 2012. Available at http://www.pscouncil.org/i/p/
Procurement_Policy_Survey/c/p/ProcurementPolicy- Survey/
Procurement_Policy_S.aspx?hkey=835b11ac-0fe7-4d23-a0e0-b98529210f7e.
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    Through 6 months of deliberations and dialogue with Federal 
acquisition, information technology, and human capital professionals, 
the commission reached a set of findings and recommendations that will 
significantly inform my testimony today. Indeed, for DHS in particular, 
where nearly 30 percent of the agency's budget goes to acquisition, and 
information technology is key to all of its operational needs, the 
commission's work holds substantial relevance. That relevance is 
heightened by the fact that DHS's acquisition leadership has already 
demonstrated an understanding of these challenges and an openness to 
new strategies for improving the Department's performance.
    Let me therefore start with a brief summary of the commission's 
findings. With your permission, I would like to submit the entire 
commission report for the record.
                   an underappreciated set of crises
    Overall, the commission's findings can be summarized as follows:
   The Government is in the midst of a human capital crisis 
        that is largely being ignored or underestimated. The crisis is 
        marked by astounding demographic imbalances, especially in the 
        technology workforce, a stark struggle in attracting key 
        talent, a quickly escalating pace of retirements, and, 
        according to our Government colleagues, significant gaps in 
        core acquisition competencies;
   Federal acquisition and technology workforce training and 
        development continues to rely on internal mechanisms that do 
        not provide the critical thinking in business and risk acumen 
        so essential in today's marketplace;
   Innovation, while present, remains the exception rather than 
        the rule;
   Collaboration, both within Government and between Government 
        and its private-sector partners, is at low ebb, despite a range 
        of leadership initiatives, including at DHS, to reverse this 
        disturbing trend. In fact, one of the most significant findings 
        was that, according to our Government colleagues, collaboration 
        between acquisition and technology functionals is ineffective 
        and often non-existent, thus contributing to the difficulty in 
        aligning mission needs with that which is ultimately procured;
   While the Federal Acquisition Regulation provides 
        substantial guidance for the establishment of acquisition 
        strategies, the Government lacks a foundational taxonomy that 
        helps inform and drive smart acquisition strategies; and
   Industry must play a role in reforms, including finding ways 
        to address key Government concerns, such as the prominence of 
        award protests, and the difficulty assessing the objective 
        benefits of solutions being proposed.
    Hovering over all of this, of course, is the crisis budgeting 
environment in which every agency is now operating. That environment 
inevitably results in sub-optimization of operations, a wide range of 
procurement impacts, including lengthy delays, and much more.
    I discussed this topic in testimony before the Senate Homeland 
Security and Governmental Affairs Committee in June.\3\ It is a crisis 
and challenge that is simply not adequately appreciated or understood 
by many in the Congress or the general public.
---------------------------------------------------------------------------
    \3\ PSC's testimony from ``The Costs and Impacts of Crisis 
Budgeting'' before the Senate Homeland Security and Government Affairs 
Committee is available at: www.pscouncil.org/PolicyIssues/Legislation/
Appropriations/Testimony_to_HSGAC_on_The_Costs_and_Im- 
pacts_of_Crisis_Budgeting.aspx.
---------------------------------------------------------------------------
    Among the other impacts of this troubling crisis are buying 
strategies and behaviors that sub-optimize results and encourage penny-
wise and pound-foolish decisions. Examples include the over-use of 
lowest price technically acceptable contract awards, the potential 
over-reaching of the Government's otherwise well-intentioned strategic 
sourcing initiative, and acquisition strategies that simply do not 
reflect commercial best practices and that will likely result in simply 
adequate, or worse, outcomes in lieu of excellence.
             imbalanced perspectives on the industrial base
    Further, what might be deemed to be a compliance rather than 
performance and outcomes-focused acquisition process leads to 
strategies that are ultimately destructive to both the Government and 
industry. One good example is the current trend, now evident in many 
agencies, including DHS, to use specific market segments as tools to 
achieving small business contracting goals. We offer this observation 
carefully, since a large percentage of our members are small firms and 
we do not want to, in any way, indicate any lack of support for the 
Government's small business programs. However, what we are seeing today 
is inconsistent with the objectives of those programs and threatens to 
significantly distort what should otherwise be a balanced industrial 
base available to DHS and other Federal agencies.
    This trend is manifest by acquisition decisions to set aside all or 
most of entire categories of work for small businesses largely because 
other categories do not lend themselves to, or have failed to achieve, 
adequate small business participation. Further, at DHS and elsewhere, 
we have seen very sizeable procurements set aside for small business 
even though the sheer size of the procurements--sometimes as much as 
$100 million or more--might well be inappropriate for performance by 
small companies.
    The effects of this type of imbalance is to both constrain 
competition--since significant numbers of providers will be ineligible 
to bid--and exacerbate a market balkanization that is already 
threatening the viability of mid-tier firms and the long-term ability 
of small businesses to grow and thrive beyond the restrictive small 
business size standards. We are aware of cases where customers have 
specifically asked their acquisition counterparts to not set work aside 
because they wanted the fullest and most competitive field possible, 
and have been denied because of other pressures generally unrelated to 
the acquisition involved. And we are well aware of small businesses, 
with ambitions to grow, that are managing their companies to remain 
below the small business thresholds, thus defeating one of the 
fundamental purposes of the small business programs.
    Each of these effects are present throughout the components of DHS. 
In fact, DHS has been considering a variety of ways to address this 
imbalance. Three years ago, at the request of the Department, PSC 
conducted an analysis of the Department's small business programs 
where, among other things, we identified areas for improvement as well 
as the need for a balanced industrial base.
              limited lessons from the defense department
    Given the title of this hearing, it would be a mistake to too 
heavily rely on or look to DoD for solutions to the challenges facing 
DHS. For one thing, the agencies are so vastly different in size and 
need. For another, with the exception of DoD's ability to protect in 
large part the funding needed to train its acquisition workforce, DoD 
is struggling with many of the same challenges facing DHS and also has 
a long way to go. Indeed, DoD has spent nearly $2 billion over the last 
5 years on acquisition workforce development but, according to the 
majority of its own acquisition leaders, has made little progress, 
particularly when it comes to the acquisition of services. In fact, the 
spending trend for DoD has been migrating towards the acquisition of 
services--as opposed to hardware and major systems--for some 15 years, 
yet DoD still does not have within the Defense Acquisition University a 
curriculum to adequately prepare its workforce to effectively acquire 
and integrate professional and technology services.
    With those general findings in mind, I offer a set of 
recommendations, based on the commission's report, which we believe are 
highly relevant to DHS and could be of real benefit to its operations. 
Moreover, we are convinced that the acquisition leadership within DHS 
both understands many of the challenges we have identified and is 
prepared, with the right leadership and Congressional support, to 
pursue a number of these recommendations.
               a new perspective on workforce development
    First, with regard to the workforce, particularly but not solely in 
the acquisition field, we believe it is time to fundamentally rethink 
how this vital resource is trained and developed. It needs to start 
with a more strategic review of the Government's human capital 
realities. No longer can the Government assume, as too many would like 
to, that the Government can simply decide what skills it wants to hire 
and then do so. Instead, due to both its resource limitations and the 
Government's abject difficulty attracting core skills, the Government 
must carefully parcel its precious human capital resources in a 
hierarchical manner that prioritizes the most critical functions, 
rather than attempting to spread those resources on the basis of 
traditional perspectives.
    Acquisition is clearly a critical function in Government and to DHS 
and is absolutely core to its missions. So, too, is information 
technology. But where there are signs that the Government is able to 
attract the requisite young acquisition talent to replace the rapidly 
retiring more senior workforce, the same is not true in technology. 
Thus, in acquisition, the biggest challenges are more in how that 
increasingly youthful workforce is developed and trained, whereas in 
technology the Government needs to address more broadly and 
holistically how and where to deploy its scarce personnel resources. In 
fact, the Federal information technology workforce today arguably has 
the worst demographic imbalance of any Government workforce segment--
fully 8 to 9 times as many workers over 50 as under 30; the largest 
over 60 cohort in a decade; the smallest peak career cohort of 40-50-
year-olds in a decade; and the smallest under-30 cohort in years. In 
other words, the trends are going in precisely the wrong direction. 
That strongly suggests the need for new thinking and action.
    Specifically, the commission's recommendations include 
substantially broadening the aperture of training for the acquisition 
workforce, rather than relying solely on internal, and often overly 
traditional, mechanisms. If the perceptions of Federal acquisition 
leaders are true that the acquisition workforce lacks key skills in the 
acquisition of complex information technology or in negotiations--the 
essence of any business relationship--then something is fundamentally 
wrong with how that workforce has been trained and developed to date, 
no matter the amount of money or time committed to that training.
    For DHS, this recommendation would build on efforts already under 
way. While, on some levels, the creation of the Homeland Security 
Acquisition Institute is a positive development and reflective of the 
commitment of DHS leadership to workforce improvement, it could also 
exacerbate their challenges. The key is to focus the Institute on 
Government-unique processes while opening the door broadly to a wide 
range of sources for much needed business and related training and 
development. This has been a key mistake made by DoD, which continues 
to pour money into and expand its own bricks-and-mortar training 
infrastructure and rely on the same mechanisms for training delivery it 
has for decades. DHS has a great opportunity to do something very 
different.
    Additionally, DHS labors under the same burdens that other civilian 
agencies do--the lack of a clearly-defined, aspirational career field 
for program managers. Across the civilian agency spectrum, there is 
wide variance in the availability of qualified program managers--who 
are absolutely essential to the effective execution of complex 
programs. Thus, our commission has recommended changes to the Office of 
Federal Procurement Policy Act that would both expand OFPP's workforce 
responsibilities and enable the creation of such a technology career 
path, replete with the requisite training, development, and 
certifications.
    Similarly, our commission made recommendations for cross-functional 
rotations of personnel as well as cross-functional training, private-
sector exchanges, and the like. DHS already has in place an Acquisition 
Professional Career Program, in which acquisition personnel do a series 
of rotations in different DHS components. The program is an excellent 
idea but could be substantially enhanced if the workforce were also 
provided functional rotations. As is widely done in the best of 
private-sector companies, such functional rotations build internal 
knowledge, understanding, and long-term collaboration.
    Another area where DHS is to be commended is with regard to its 
recent initiatives to leverage the private sector to assist with its 
training. Though small in scale, the effort recognizes that DHS can 
learn from the experience of the private sector and that will help DHS 
acquisition personnel understand how industry assesses risk and makes 
key business decisions.
         building an environment of collaboration & innovation
    When it comes to collaboration, the DHS acquisition and technology 
leadership have been among the most consistent advocates and 
practitioners of enhanced internal and external collaboration and 
communication. Unfortunately, the consensus among virtually all of our 
member firms that support DHS is that the leadership exhortations are 
not being heeded at the operational level. Given that close 
communication between customer and supplier is widely seen as a key to 
successful partnerships, this trend must be addressed aggressively. 
While it will take time, there are a lot of additional steps that can 
and should be taken.
    Foremost, the current fiscal crisis offers a unique and powerful 
opportunity to build a new culture of collaboration. Our commission has 
recommended that all significant program offices be given, by their 
individual component leadership, a reasonable but real target for 
efficiency and savings, and then be directed to work directly with 
their private-sector partners to collectively identify ways in which 
real, sustainable program savings can be achieved. Both sides know they 
are in this together; this kind of exercise could not only enable the 
achievement of meaningful cost savings, but in the process also enhance 
the internal and external collaborative relationships.
    Additionally, the commission recommended a number of post-award 
steps that can also enhance communications and understanding. For 
example, the commission recommends two key enhancements to the post-
award debriefing process. First, that all debriefings be required to 
include any and all levels of information that would otherwise be 
attainable through a formal discovery process during a protest. This 
will serve to help unsuccessful offerors submit more effective and 
responsive proposals on future procurements and almost certainly reduce 
the likelihood of protests. Second, each major acquisition should be 
followed by a 360-degree debriefing, through which all offerors, and 
internal agency stakeholders--including the operational entity for 
which the acquisition was conducted--be given an opportunity to 
evaluate the quality of the acquisition process itself. These 
evaluations could be conducted on-line and anonymously and provide the 
Government with valuable insights into how it can improve its processes 
and thus its outcomes.
    Connected to the issue of collaboration is that of incentivizing 
innovation. A number of Government officials, including DHS officials, 
have expressed concern that industry proposals are becoming 
increasingly vanilla. Clearly, this is an issue industry needs to 
address. At the same time, companies must continually evaluate the 
degree to which a customer is seriously seeking innovation or simply 
asking for the same service at a lower price. To a great extent, this 
can all be traced to the quality of the statement of work or 
requirements accompanying an RFP. Beyond addressing that core issue, 
which DHS and other agencies openly acknowledge being a problem area, 
we believe it would also be helpful to pursue two additional steps. 
First, include in the evaluation criteria-specific points for 
innovation. Second, PSC has committed to creating a template that 
companies (and agencies) can use as an addendum to an RFP in which they 
can specifically identify not only the innovations they are proposing, 
but also objectively quantify the monetary value of the innovation. 
This should enable much greater clarity in the evaluation of proposals 
and provide the Government with a valuable tool that helps overcome the 
challenges of evaluating widely-divergent proposed solutions--which is 
particularly important in an era of frequent protests and an 
increasingly inexperienced acquisition workforce.
                     industry must step up as well
    As I noted at the outset, we also recognize that industry has 
significant responsibilities. While we cannot dictate behavior to the 
length and breadth of the private sector, there are a number of 
additional steps PSC is committed to taking to help facilitate 
improvements. We have committed to convening a panel that will seek to 
develop recommendations to address the issue of protests. Few issues 
are more contentious in Federal procurement and we recognize the 
importance of addressing it. In addition, with the agreement of key 
Government agencies, PSC will be developing an on-line course covering 
the basic tenets of acquiring infrastructure as a service. As you know, 
the emergence of the ``as a service'' concept, including cloud 
computing, brings with it new and sometimes complex challenges of 
business structure, pricing, and contracting. As such, we will provide 
to the Government, without charge, an on-line course to help orient 
both Government and industry to the key overarching principles and how 
they differ from more traditional approaches to acquisition.
                               conclusion
    Mr. Chairman, Members of the committee, we face a very real set of 
challenges and crises. I hope that the work of our commission and this 
testimony contributes to the identification and pursuit of meaningful 
solutions. With every crisis comes opportunity; and we have rarely had 
the kind of opportunity we have today to make genuine and powerful 
progress. We look forward to working with you and with the Department 
toward that shared goal.
    Thank you for the opportunity to appear here today. I look forward 
to answering any questions you might have.

    Mr. Duncan. I appreciate that. Excuse me. Unfortunately, we 
are going to have to go vote, so without objection, the 
committee--subcommittee will be in recess, subject to call of 
the Chairman. We will reconvene 10 minutes after the conclusion 
of the last vote. I am going to ask the staff to put the vote 
on the monitor, if you all would like to watch that vote, so 
you just kind-of know where we are.
    With that, we will stand adjourned in recess.
    [Recess.]
    Mr. Duncan. Okay, I will call the subcommittee back to 
order and recognize Mr. David Berteau for his 5-minute opening 
testimony. Sir, you are recognized for 5 minutes.

   STATEMENT OF DAVID J. BERTEAU, SENIOR VICE PRESIDENT AND 
    DIRECTOR OF INTERNATIONAL SECURITY PROGRAM, CENTER FOR 
              STRATEGIC AND INTERNATIONAL STUDIES

    Mr. Berteau. Thank you, Mr. Chairman and Mr. Barber.
    I should note, sir, that I grew up in the South, when South 
Carolina was actually still a member of the Atlantic Coast 
Conference, as well. My alma mater, Tulane University, was a 
member of the Southeastern Conference. I teach today at both 
Georgetown and the University of Texas, so I have mixed 
emotions, but I really go back to--you always go back to where 
you grew up.
    Mr. Duncan. Well, tonight I hope you say, ``Go Tigers.''
    Mr. Berteau. I think Clemson is going to do fine in 
football season. It will be a little bit different story when 
it comes to basketball, so, thank you, though, Mr. Chairman. I 
am looking forward to that. Thank you and all of you for 
inviting me here today.
    Even though I work for the Center for Strategic 
International Studies, I need to state that both my oral and 
written views are my own. The center itself does--being a 
nonpartisan center does not take institutional positions on 
matters of policy. You have my background, you have my 
statement, so let me go from there.
    Our statement--my statement is pulled together, really, 
from two different things. One is, we do a substantial amount 
of analysis each year on how Federal agencies in the National 
security arena spend their contract dollars. We put out a 
report for the Department of Homeland Security. It was last 
done for 2011. We haven't done 2012. We plan to wait until 
sequestration numbers are available for 2013 and then update 
and see where we are.
    I am not going to go through the material in my written 
testimony. There is a lot of detailed data in there. I would be 
happy to provide additional material either to Members of the 
committee or your staff as you all see fit.
    Let me, though, make a few overall highlights worth noting. 
One is that overall spending on contracts by the Department of 
Homeland Security is down 14 percent in 2012--that is the last 
year we have data for--compared to 2011. We expect that trend 
to continue coming down when we have 2013 data. More than half 
of that reduction, though, is in the Coast Guard, and it is 
largely tied to fewer ships. As a result, you see spending in 
products is down 34 percent, but spending in services was only 
down 6 percent, which is less than half the overall rate.
    I would note, also, that we look at how DoD uses the 
system. Fifty-five--our numbers are 55 percent of DHS contract 
dollars were obligated after competition with more than one 
bidder, in other words, two bidders or more. You saw that, in 
the opening statement, they have got--DHS's own data shows 72 
percent, I believe, was Mr. Borras' number, but that is a 
different way of measuring than the way we measure. We count 
the competition only if there are two or more bidders. But that 
was actually up 48 percent from 48 percent the year before.
    Fixed-price contracting does remain the norm for DoD. It 
was 63 percent of contract obligations in 2012 were under 
fixed-price contract. That is actually down a little bit more. 
It was 66 percent in 2011. DHS has done a good job of awarding 
more contract dollars to small businesses and to medium-sized 
businesses, in fact, one of the best in the Federal Government 
in many ways. It was over 30 percent in small businesses in 
2012, and for medium-sized businesses. We define medium-sized 
as bigger than small but less than $3 billion in total annual 
revenue, which is a wide range, if you will from just over 
small to $3 billion. But medium-sized businesses, in terms of 
total contracts, was up 20--from 23 percent in 2011 to 26 
percent. We also count only prime contract dollars, so 
companies themselves reflect different numbers.
    Let me turn then to steps that you can take to improve. We 
basically--I have spent most of my career working on improving 
acquisition in DoD and across the Federal Government. My 
colleagues would say, obviously, I haven't done a very good 
job, because there is still plenty of improvement left to go. 
But there really is a lot that DHS could take from DoD's 
history and experience.
    I note a number of caveats in my testimony, but here are 
the five that I think are worth paying attention to. One is a 
strong DHS-wide acquisition management focus. It took DoD 39 
years to get to the point to create a single under secretary 
for acquisition. But DHS shouldn't take that long to have that 
single focus, if you will.
    The second is standardized authorities, including 
certification and training for program managers and 
standardized mechanisms to validate and integrate requirements 
and programs and resources. There are some parts of DHS that 
have this today, but it is certainly not standardized across 
the Department.
    The third is a long-term multi-year plan, similar to the 
Defense Department's Future Year Defense Program, which was 
talked about, but has not yet been manifested. DHS promised it, 
but they are still working on making it better.
    The fourth--and I think this is critical for this 
committee--is standardized and better transparency of reporting 
on their systems to the Congress and the public. There is a lot 
of data that DHS provides to the Congress, but it is a 
committee at a time and it is a piece at a time, and it really 
ought to be standardized, more universal, and more transparent.
    The fifth is that--as DoD has learned a lot of lessons from 
rapid acquisition as a result of the wars. Stan has commented 
about apps take 6 weeks to develop and promulgate, and our 
acquisition process takes months or years. But the Defense 
Department is still wrestling with how it learns from those 
rapid acquisition projects, if you will, and standardize and 
institutionalize that, so we may have to wait a little bit to 
see what they do in order before we know what to do with 
respect to DHS.
    Finally, I think there is one big lesson from the private 
sector, and that is taking advantage of innovation that is 
developed globally. This is similar to the apps issue, only 
writ much larger. The cycle time for commercial global 
technology is so fast and our procurement system is so slow 
that we have barriers there, but there are other barriers, as 
well.
    Intellectual property ownership disputes, questions of 
export controls, questions of forcing companies to comply with 
Government cost accounting standards, even though it is not in 
their commercial interests to do so. Not that we need to change 
these things by getting rid of them, but we need to change them 
by learning how to incorporate them better into Government 
acquisition.
    With that, Mr. Chairman, I will stop and yield to 
questions.
    [The prepared statement of Mr. Berteau follows:]
                 Prepared Statement of David J. Berteau
                           September 19, 2013
    Mr. Chairman, Congressman Barber, and Members of the subcommittee, 
I thank you for the opportunity to appear before you this afternoon as 
part of this distinguished panel to offer my views on the acquisition 
practices of the Department of Homeland Security (DHS) and on some of 
the lessons and best practices from the Defense Department (DoD) and 
the private sector that DHS could benefit from. My statement draws on a 
number of recent studies of the Center for Strategic and International 
Studies (CSIS), but both my written and oral statements are my own. 
They do not necessarily represent the views of CSIS.
    I have been at CSIS for 12 years, the past 6 as a full-time program 
director, but I have been engaged in Federal Government acquisition and 
program management for a third of a century. I have worked on and 
studied the topic of today's hearing from inside the Government, as a 
Government contractor and consultant, as a professor in graduate 
courses, and with fact-based research at CSIS since before DHS was 
created.
                       why lessons learned matter
    The Department of Homeland Security has been in existence just over 
10 years. I have followed with interest this subcommittee's series of 
hearings that look back at the Department's first 10 years and look 
forward to the future. Earlier this afternoon, this subcommittee heard 
from the DHS Under Secretary for Management and the representative of 
the Government Accountability Office (GAO) on the potential for 
improvement in DHS acquisition. The panel on which I am honored to sit 
will expand on their views by drawing from both our research and our 
own experience. As a new department, and DHS is still the newest 
Federal Cabinet agency we have, it is crucial that the leadership of 
the Department learn the lessons of the successes (and the mistakes) of 
other Federal agencies. It is equally crucial, though, that DHS not 
assume that what worked elsewhere will work the same way for DHS. This 
hearing is designed to help DHS move forward on both of those fronts: 
Adopt and adapt good ideas from within the Federal Government and from 
the private sector, but don't blindly assume that what worked somewhere 
else will work the same at DHS.
                      dhs acquisition performance
    In conducting any review of lessons learned that should be applied 
to DHS, it is important to start with the current performance of the 
system. I would like to summarize the results of our research at CSIS. 
Our most recent published report on DHS procurement is the ``U.S. 
Department of Homeland Security Contract Spending and the Supporting 
Industrial Base, 2004-2011''. For this hearing, we updated our data and 
analysis to include 2012.\1\ As is typical in our reports, this 
presentation will use constant dollars, in this case 2012 dollars. When 
2013 data meet our reliability standards, likely early next year, we 
will update and issue a new report that will cover 2004 to 2013.
---------------------------------------------------------------------------
    \1\ CSIS uses for contract data the public information available in 
the Federal Procurement Data System, supplemented by direct examination 
of specific contract documents.
---------------------------------------------------------------------------
    Here are some of the highlights. First, as you can see from Figure 
1, in 2012 total DHS spending was up slightly compared to 2011, but 
contract spending was down significantly. After 7 years in which DHS 
contract obligations were at least $14 billion, spending dropped from 
$14.5 billion in 2011 to $12.4 billion in 2012, a 1-year decline of 
14%.
    Contract spending in 2012 for DHS was only slightly more than 25% 
of total spending, the smallest share of total spending since 2006 (a 
year in which total spending was driven up by Hurricanes Katrina and 
Rita). 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Overall spending in Figure 1 does reflect the first tranche of 
spending reductions from the Budget Control Act of 2011, but this 
figure does not show the impact of sequestration this past March. The 
biggest cause of changes in DHS overall spending is natural disasters, 
and this figure also does not reflect spending on Hurricane Sandy last 
October.
    Figure 2 presents DHS contract obligations in terms of what is 
being obtained by the contracts. It shows contract spending in dollars 
(constant fiscal year 2012 billions) for the three categories of 
Products, Research & Development, and Services. The figure shows that 
from 2011 to 2012 spending on products is down 34%, on R&D is down 29%, 
and on services is down 6%. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The two figures show contract spending for all of DHS combined. The 
next figure breaks down contract spending by the five major DHS 
components of the Coast Guard, the Federal Emergency Management Agency 
(FEMA), Immigration and Customs Enforcement (ICE), the Transportation 
Security Administration (TSA), and Customs and Border Patrol (CBP), 
with the remainder of DHS combined under the domain of ``Other''. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Contract obligations declined from 2011 to 2012 in every DHS 
component. The largest decline in both dollar and percentage terms was 
in the Coast Guard, where contract spending fell from $3.8 billion to 
$2.7 billion, or 28%. One reason for the large decline in Coast Guard 
contract spending was that the National Security Cutter was funded in 
2011. As the figure shows, in 2012 the Coast Guard returned to their 
recent historical level. The ``Other'' category is almost entirely 
services contracts, and is primarily composed of IT services, 
professional services, and facilities-related services at DHS-wide 
level or in smaller DHS components.
    CSIS research analyzes and displays contract spending in many 
additional ways, including six separate categories of services 
contracts, as seen in our 2012 report referenced earlier. We are happy 
to provide this committee with any and all of our additional displays, 
should you find it useful.
    DHS has focused considerable attention on increasing competition 
for contracts, but the results have been mixed. CSIS examines the 
number of bidders as well as whether the contract solicited competitive 
offers. Figure 4 below shows that DHS increased competitive contract 
obligations by 11% in competitions with five or more offers, from $2.7 
billion in 2011 to $3.0 billion in 2012. These contracts now make up 
nearly one-fourth of all DHS contract obligations in 2012, and the 
amount has increased every year for the past 6 years. Competitions with 
three or four bidders represent another 20% of total DHS contract 
obligations, and CSIS found that 55% of total 2012 DHS contract 
obligations were awarded after competition with two or more offers, up 
from 48% in 2011. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    CSIS also tracks contracts by a category that we call 
``Unlabeled''. The unlabeled category includes those entries where data 
fields are left blank, as well as those with obvious errors (such as a 
competitively-awarded contract listed as receiving zero offers). 
Notably, DHS had made dramatic improvements in correcting the data 
entered into the Federal Procurement Data System (FPDS). Accuracy and 
completeness in data entry are essential to transparency and 
accountability. Although most agencies have reduced their totals of 
what CSIS calls ``Unlabeled'' contracts, DHS has made noteworthy 
progress in this regard, reducing problem entries by more than 80% 
since 2009.
    CSIS also analyzes what we refer to as ``Funding Mechanism'' for 
contracts. In general, this characteristic tracks whether a contract is 
fixed price or cost reimbursable. Figure 5 below shows that DHS has 
obligated 63% of contract dollars in 2012 to fixed price contracts, 
down from 66% in 2011. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Figure 5 also shows that cost reimbursable contracts have gone from 
35% of total obligations in 2009 to 36% in 2012. The reduction of 
contract spending entered as ``unlabeled'' or ``combination'' 
represents an increase in accuracy and accountability.
    Finally, CSIS analyzes contract obligations in terms of the types 
of companies that win the contracts. Figure 6 shows that DHS is relying 
less on large firms in 2012 than in 2011. Small businesses were awarded 
31% of contract spending in 2012, up from 28% in 2011. Mid-sized firms, 
with less than $3 billion in total annual revenue, accounted for 
another 26% of 2012 contracts, up from 23% in 2011. Large firms, those 
with more than $3 billion in total annual revenue, fell to 48% in 2012 
from 43% in 2011. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Overall, DHS contract data, for 2012 compared to 2011, show in 
constant 2012 dollars the following key trends:
   Overall spending on contracts is down 14%, with more than 
        half of that reduction in the Coast Guard, tied to fewer ships;
   The decline is seen most heavily in contract obligations for 
        products, down 34%, while services contract obligations fell at 
        just 6%, less than half the rate of the overall DHS decline;
   55% of DHS contract obligations are awarded after 
        competition with two or more bids, up from 48% in 2011;
   Fixed price contracting remains the norm for DHS, accounting 
        for 63% of contract obligations in 2012, down from 66% in 2011;
   Increasing shares of DHS contract obligations are awarded to 
        small and medium-sized firms.
    My team and I would be happy to provide additional information on 
any and all of this material to this committee or any of the Members 
and staff.
                   improving dhs acquisition outcomes
    The previous section of my statement describes the current 
performance of the DHS acquisition system and the recent trends across 
a variety of measures for that performance. Let me turn now to the 
broader concern of this hearing, which is to consider steps that DHS 
can take to help improve its acquisition process and outcomes. This 
section takes a higher-level view of challenges faced by DHS 
acquisition and possible improvements that could help address those 
challenges. As requested by the committee, I focus this section on 
lessons that DHS might learn from DoD and from the private sector.
    Before listing some of those lessons, however, it is useful to step 
back to the creation of the Department of Homeland Security. At the 
very first hearing before the House Select Committee on Homeland 
Security on July 11, 2002, the administration witnesses stated 
unequivocally that joining 22 agencies and departments into the new 
Department of Homeland Security would engender such overhead 
efficiencies that total headquarters staffing and budgets could be 
reduced from the existing structures. Based on this belief, and without 
any publicly-available detailed assessment of requirements, DHS from 
its inception did not create a central mechanism for acquisition 
oversight. While some DHS leaders have provided senior focus on 
acquisition oversight, it has not up to now been institutionalized in 
DHS.
    This is similar to the Defense Department in the decades prior to 
the Packard Commission's recommendations in 1986 and their subsequent 
enactment into law that same year. Congress created a statutory Under 
Secretary of Defense for Acquisition (now Acquisition, Technology, and 
Logistics) with primacy over all others in DoD save the Secretary and 
Deputy Secretary of Defense. While no similar position exists for DHS, 
it is important to note that DoD outspends DHS in total contract 
obligations by a factor of more than 30 to 1. Still, the DHS roles of 
Chief Procurement Officer and Head of Contracting Activity warrant 
institutional support within the DHS organization structure.
    Some DHS components have taken significant steps to correct past 
problems. As part of a study under an acquisition research grant from 
DoD's Naval Postgraduate School, CSIS is examining the governance 
structures for complex systems of systems. One of the systems we are 
investigating is the Coast Guard's Deepwater program, with a view to 
how changes over the past few years in response to Deepwater's 
challenges have made the overall acquisition process better. Based on 
our research to date, the Coast Guard seems to have made important 
strides toward integrating requirements, resources, and program 
milestone decisions in a way that will likely lead to better program 
outcomes. However, more time is needed to verify whether those outcomes 
meet expected needs.
            potential lessons from the department of defense
    There are three areas that, in my view, merit consideration as DHS 
looks to DoD for possible areas of acquisition improvement. I look at 
each of these areas in turn.
    The first area is organization and regulation. At the time of the 
creation of DHS, there was a common theme that this was the largest 
reorganization in the Federal Government since the creation of the 
Defense Department in 1947. From a numbers point of view (both 
personnel and agencies), that statement is largely true. But it's 
important to remember how long it took DoD to evolve into a mature, 
functioning, relatively integrated Cabinet agency. It took 2 years 
before the National Military Establishment set up under the 1947 Act 
even became a single department.
    It was 11 years before President Eisenhower's reforms, pushed 
through Congress over objections by the military, created what we now 
know as the Combatant Commands and began to take the Military 
Departments out of the chain of command for deployed forces. It took 14 
years before the Planning, Programming, and Budgeting System was 
created to provide for an integrated DoD budget and long-range 
projection of the defense program. It was not until 1970, 23 years 
after the original Act, that Deputy Secretary of Defense David Packard 
penned the first DoD directive on the acquisition system that still 
exists, DoD Directive 5000.1; it was 4 pages long. And it was not until 
the Goldwater-Nichols Act of 1986, 37 years after the original Act, 
that the Chairman of the Joint Chiefs of Staff became the single 
principal military advisor to the Secretary of Defense and the 
President. Prior to that, requirements for consensus sometimes stymied 
the need for timely advice and decisions.
    I note this history because we need to recognize that it takes a 
long time to create a new, unified, more efficient organization. It 
took 51 years for the Executive branch and Congress to evolve today's 
process for the Federal budget, from the initial creation of the Bureau 
of the Budget to the passage of the Budget Reform Act of 1974. Big 
changes take time.
    Even so, it's not appropriate to say that what works for DoD will 
work for DHS. The organizations are not parallel or even similar. There 
is not, and likely never will be, the equivalent of DoD's Military 
Departments in DHS, focused on joint and common missions at home and 
around the globe. There is not, and likely never will be, the 
opportunity for single agencies to serve the entirety of DHS in the way 
that the Defense Logistics Agency or the Defense Contract Audit Agency 
does for DoD. In fact, that audit function supports agencies across the 
Federal Government, in a way that is unlikely for DHS in support 
missions.
    Part of the reason for this difference is that DHS does not have 
the entire homeland security mission, either for the Federal Government 
or for the Nation. As Figure 7 below depicts, only 54% of Federal 
spending for homeland security missions is in the DHS budget. The rest 
resides in DoD, the Departments of State, Justice, Energy, and Health 
and Human Services, and numerous other Federal agencies. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    (Note: The figure above lists spending through 2012, the latest 
year for which CSIS has contract spending data. We plan to update this 
chart when we update our report this coming winter.)
    The role of the Federal Government in homeland security is also 
dramatically different than it is for defense. In addition to non-DHS 
Federal spending, significant responsibilities rest with State and 
local governments and in the private sector. There is no equivalent for 
DoD to this wide-spread distribution of responsibilities, which makes 
it more difficult to take DoD solutions and apply them to DHS.
    As one example of that difficulty, look at DoD's acquisition 
regulations, which dwarf those of civilian agencies, including DHS. In 
addition to the Government-wide Federal Acquisition Regulation (the 
FAR), there is a DoD-wide supplement to the FAR (the DFARS), and each 
DoD major component has its own supplement to the supplement (Army, 
Navy, Air Force, and the Defense Logistics Agency, among others). The 
4-page DoD directive from David Packard has grown to hundreds of pages, 
much of which is the result of statutory and regulatory fixes to 
specific problems that have never been internally rationalized or 
reconciled. These layers of regulation often serve potentially useful 
purposes from the point of view of the covered component or the 
Congress, but they add unnecessary complexity to procurements and 
confusion to firms that need compliance systems that can accommodate 
all forms of acquisition regulation.
    In addition, with each passing year, the magnitude of these layers 
of acquisition grows larger. Congress needs to act to integrate and 
rationalize the overall set of acquisition statutory requirements for 
DoD before anyone tries to apply them to other agencies like DHS, and 
DHS should carefully consider whether DoD rules make sense for it. For 
example, in my view, the last thing DHS needs is to force the Coast 
Guard to consider and apply the 29,000 pages of Naval Vessel Rules 
promulgated for ship construction and maintenance by the Naval Sea 
Systems Command.
    The second area for consideration is the structure of incentives 
and disincentives that DoD has in place to reward proper contract 
management and oversight. Ultimately, DoD is its own customer for the 
programs it designs, procures, and operates and maintains. Thus, the 
feedback for successful program execution and acquisition performance 
is reflected in mission accomplishment by the troops in the field. 
While this is often the case for DHS, it is equally likely that the 
ultimate user of a DHS-procured system or program is in another Federal 
agency or tied to first responders at the State or local level or even 
in the private sector. Mission success is harder to measure for the DHS 
acquisition community.
    One of the most significant attempts to create better incentives 
for DoD acquisition system performance was the passage of the Nunn-
McCurdy Act in 1982 as part of the fiscal year 1983 National Defense 
Authorization Act. This statute was designed to force DoD to report on 
major cost and schedule overruns and performance underruns, and its 
namesake authors expected the requirements to lead to better 
acquisition performance in DoD. While CSIS has not explicitly assessed 
the efficacy of the Nunn-McCurdy Act, our work on cost and schedule 
overruns in major defense acquisition programs indicates that few 
programs have been cancelled as a direct result of major Nunn-McCurdy 
breaches. Instead, for 30 years, defense secretaries have rebaselined 
breach programs and certified those new baselines, in some cases only 
to see new breaches arise within just a few years. While some of these 
programs are eventually cancelled, it's not usually because of a Nunn-
McCurdy breach report.
    Still, there has been value in the Selected Acquisition Reports 
that DoD issues each year in compliance with Nunn-McCurdy requirements. 
These reports provide a standardized method of reporting to Congress 
and the interested public on the performance of major acquisition 
programs, with consistency over time and across the various DoD 
Military Departments and components. DHS would do well to consider, and 
Congress should consider requiring, a more standardized and universal 
mechanism for DHS to report to Congress on the cost and schedule 
baselines and performance for major acquisition programs, including IT 
programs. DHS provides Congress much information and material today, 
but it is not standardized, it is not reported equally to the 
interested committees, and it is often not available to the public. 
Congress and DHS should work together to find a useful way to 
standardize and publicize reporting.
    The third area is the recruitment, training, and retention of the 
acquisition workforce. DoD used furloughs in fiscal year 2013 to meet 
sequestration targets for cutting costs. The furlough process and its 
accompanying practice of forcing contracting officers and the 
acquisition workforce to ``work to the rules'' have produced anecdotes 
of reduced output, delayed contracts, and undermined morale in the 
workforce. It is difficult to analyze how widespread these anecdotes 
are, but it is clear from the monthly Treasury Department data that DoD 
spending is down in the fourth quarter to an extent greater than just 
that driven by sequestration. The long-term effects of furloughs on the 
DoD workforce will need to be watched closely.
    The lesson for the acquisition workforce of the last budget 
drawdown in DoD is that it is far easier to get rid of parts of the 
workforce than it is to rebuild it. DoD has been rebuilding the 
acquisition and technical workforce for 12 years now, with a renewed 
focus under Section 852 authority over the last 5 years, but DoD is 
still not back to the sustainable demographic and experience level that 
was present at the end of the Cold War in 1989. DHS needs to pay 
attention to DoD's experience as it works to train and retain its own 
acquisition workforce.
               potential lessons from the private sector
    There has been a long history of attempts to translate and apply 
commercial best practices to Government operations. Many of these 
efforts have failed to produce measureable results, for reasons that 
range from the different legal structures in the Government (such as 
requirements for using cost and pricing data instead of defining 
contract outcomes to obtain the best value) to the lack of equivalent 
management tools (such as no balance sheet, capital budget, or time 
value of money for investments). But one area where the Federal 
Government in general and DHS in particular can learn from the private 
sector is in taking better advantage of technology developed in the 
global commercial sector.
    The DHS Science and Technology office has evolved to focus its 
spending more on the development and application of technology rather 
than investing in basic research. In this way, DHS may have the 
opportunity to match or exceed current DoD efforts to identify 
commercial technology with value for incorporating into Government 
acquisition programs. This is not only true for information systems and 
technology but for a broad array of technologies that range from 
sensors to adaptive manufacturing (also called 3D printing). But DHS 
must find ways to reduce barriers to successful incorporation of 
commercially-developed technology, including the perception that the 
Government does not adequately value or protect proprietary data and 
intellectual property, information that for commercial companies is 
their competitive advantage in a global marketplace.
                               conclusion
    Mr. Chairman, Congressman Barber, Members of the subcommittee, 
there is much more to discuss and address on all of these issues. The 
information presented above provides the highlights of our work at CSIS 
over the past 2 years on these issues. We are happy to provide you with 
additional material on these and other related issues, should you 
desire. Thank you for the opportunity to appear today before the 
subcommittee, particularly along with the other panel members with me 
today. I welcome your comments and questions.

    Mr. Duncan. Thank you so much. The three of you are clearly 
leaders in the acquisition management area. So the first 
question I have for you is a yes-or-no question. Has anyone 
from DHS ever reached out to you and asked for any assistance 
in their acquisition processes?
    Mr. Greenwalt. No.
    Mr. Soloway. Absolutely.
    Mr. Duncan. No.
    Mr. Berteau. Yes, sir, and we work with them pretty closely 
when we do our analysis.
    Mr. Soloway. I would just--if I could just put a little 
add-on to that, not only have they reached out to us, one of 
the things DHS has instituted over the last year-and-a-half is 
a series of roundtables with their front-line workforce and 
industry folks, not talking about programs, but talking about 
best practices. So they are making those efforts.
    The problem is, it is a huge workforce, and there is a long 
way to go. But, yes, they have been reaching out.
    Mr. Duncan. Okay, well, that is great. That is the answer I 
wanted to hear that they have.
    Let me pause just a minute to wish one of the members of 
the OME staff, committee staff, Debbie Jordan a happy birthday 
today. Happy birthday, Debbie.
    I am a big advocate for what was known as the Byrd 
Committee. From 1941 to 1972, the Byrd Committee, named for 
Harry Byrd, was an anti-appropriations committee. It was a 
committee of the House of Representatives that actually was 
charged with looking at every line item, every dollar, every 
period, every comma in the budget looking for programs that 
were wasteful or duplicative or redundant that could be cut.
    It was how we funded World War II in the very beginning, 
before we floated the first bond, we decided to shrink the size 
of Government and use those savings to fund the ramp-up to the 
war effort. It lasted until 1972, and I am an advocate for 
going back to that, but learning about the Nunn-McCurdy 
amendment in 1983 defense authorization act, which was an 
oversight tool for Congress to hold the Defense Department 
accountable for cost growth on major defense acquisition 
programs, when certain thresholds for unit costs are exceeded, 
the DoD is required to notify Congress of the breach.
    Or in order to prevent an acquisition program in violation 
of Nunn-McCurdy from being terminated, the Secretary of Defense 
must restructure the program to address the root causes of cost 
growth, rescind the most recent milestone or key decision point 
approval, and withdraw associated certifications, require a new 
milestone and a key decision point approval before certain 
contracting actions are taken, and report on all funding 
changes resulting from the growth in cost and finally conduct 
regular reviews of the program. That is just smart management.
    I don't want to micromanage every dollar spent by the 
Department of Homeland Security, nor should Congress have to 
have that level of micromanagement oversight. But would you 
agree and would applying a Nunn-McCurdy-type mechanism to DHS 
acquisitions process act as positive stimulus to encourage DHS 
officials to best address cost overruns to effectively save 
American taxpayers?
    Mr. Greenwalt. I would say yes, and I think the key there--
there are some lessons learned from that experience. In the 
beginning, there was a tendency for the Department of Defense 
to have requirements creep in those systems, and they would re-
baseline. So after about 20 years, Congress came back and said, 
no, no, no, you can't re-baseline.
    But the problem is, is that they have established baselines 
that are too--that are premature, and so there is a key thing 
to get here when you do Nunn-McCurdy is to figure out, when is 
the best time to establish a Nunn-McCurdy baseline to hold them 
accountable? It is very hard to hold them accountable for 
something that they set 20 years ago.
    So if you can get them to the point--and I think the--where 
GAO was talking about, meeting all of those best-practice 
requirements and setting your base right there, that is when 
you start a program, that is when you fund it, and then you 
establish the baseline from there, then hold them accountable, 
and then do what Congress did for the Department of Defense, 
which is basically say, if you are over that critical breach, 
the presumption is on termination.
    Mr. Duncan. Yes. Mr. Soloway, you act like you want to add 
in.
    Mr. Soloway. I just would suggest a little bit of caution 
on copying the Nunn-McCurdy model. First of all, Nunn-McCurdy 
was really designed for major weapons systems that have a very, 
very long life cycle, as Bill said, 20 years. Sometimes we are 
in lots 30 and 40 years or 60 years later, and they are still 
out there. But that is a long life cycle. The bulk of what DHS 
buys, it doesn't have that kind of life cycle in the 
procurement----
    Mr. Duncan. Kind of a short--short----
    Mr. Soloway. Much shorter, so it is not clear that a Nunn-
McCurdy would be workable in that kind of an environment.
    One of the things we have recommended in our commission 
report, though, is the creation of an acquisition dashboard, 
which to David's point around transparency would give you as 
the Congress and the public much better insight into progress 
that programs are making against baselines without putting the 
formal overlay of a Nunn-McCurdy-like system, because the 
programs tend to be shorter in length and they are more 
services than they are hardware, anyway.
    Mr. Duncan. Without expanding further, I am going to ask 
Mr. Berteau, you know, the Weapons System Acquisition Reform 
Act of 2009 also sought to improve the organization procedures 
of DoD for the acquisition of major weapons systems. I am sure 
you were there during that time, so do you believe that there 
are aspects of that law maybe taken in context with Nunn-
McCurdy that DHS could use or we could create to improve its 
accountability and transparency? Any other comments you would 
like to make along those lines are fine.
    Mr. Berteau. Thank you, Mr. Chairman. I was actually a 
career civil servant and worked in the Office of the Secretary 
of Defense when Nunn-McCurdy was passed, was very involved in 
the debate. Of course, the Defense Department at the time 
thought it was a horrible idea and that Congress shouldn't 
interpose such oversight. But nonetheless, it did pass by, I 
think, unanimous consent--both in the committee and on the 
floor.
    Nunn-McCurdy has not achieved its actual goal, which was to 
force the Secretary to cancel programs that were over cost or 
behind schedule, if you will. But it did achieve a tremendous 
goal in terms of both focusing the attention of the Department, 
making it harder for them to ignore problems, and providing 
Congress with regular reports, so that Congress could track it 
itself.
    I think that is kind of what Stan is talking about, in 
terms of an alternative mechanism, not necessarily so much 
focused on the breach question, as the reporting of data 
question.
    The Weapons System Acquisition Reform Act, I think its two 
single-most significant contributions for DoD, and it is coming 
up on its fifth anniversary next spring. We are going to issue 
a report card and analysis of that on its 5-year anniversary.
    No. 1 was better emphasis on cost analysis and cost 
assessment up front, so that you have got a truer picture of 
what it is likely to actually cost. Now, this is always a 
matter of dispute. The program always wants the cost to be as 
low as possible, so that you can put into the budget as 
possible. The cost analysts want it to be as accurate as 
possible, so they want it to reflect reality.
    I think the early lessons of DoD, and particularly the 
report since the law took effect and really got implemented, is 
that better costing does lead to better program management. So 
I think that is a very positive outcome that DHS could adopt 
here.
    The second is, in fact, a separate office that is chartered 
to look at the root causes of big problems when they come up. 
This, while each entity inside DHS has varying degrees of 
success in that regard, there is really no entity in DHS that 
is chartered to do that root cause analysis on the most 
significant problems, not on everything. Just pick the three or 
four biggest ones that you have got right now, and that would 
be, in my view, worth looking at for DHS, as well.
    But the broader picture--I think you need to narrow it down 
to the few things that are useful.
    Mr. Duncan. So you say the Weapons System Acquisition 
Reform Act is going to have a report due this spring?
    Mr. Berteau. It has an annual report from the program 
analysis and root cause assessment office, but there is no 
official DoD. My group at the Center for Strategic and 
International Studies is going to be issuing a report card on 
the Weapons System Acquisition Reform Act on its fifth 
anniversary next May.
    Mr. Duncan. Okay, so we will watch closely for that.
    Mr. Berteau. Thank you, sir.
    Mr. Duncan. My time is expired. So I recognize the Ranking 
Member, Mr. Barber, for 5 minutes.
    Mr. Barber. Thank you, Mr. Chairman. Thank you all for your 
very thoughtful testimony. You know, I think we are all 
interested in how we can improve DHS--certainly I am, and I 
know the Chairman is--on many levels. We have discussed them in 
other hearings. But acquisition is really high on my list, 
having been involved with DHS for many years before I came to 
Congress. I see a great need for improvement and transparency 
and accountability.
    So let me ask the first question, Mr. Greenwalt, to you. In 
your testimony, you stated that the Department would benefit by 
adopting Defense Acquisition Workforce Improvement Act 
standards, and you recommended considering a funding mechanism 
similar to the Defense Acquisition Workforce Development Fund 
to pay for training and workforce development.
    I think we all know that, along with other departments, DHS 
has been hit with budget cuts over the last 2 or 3 years, 
requiring, I think, in many cases, for the Department to do the 
same amount of work with less funding.
    How do you recommend or would you recommend that the 
Department implement the measures that you have suggested in 
light of these fiscal challenges?
    Mr. Greenwalt. Yes. The Department of Defense DADF fund, or 
the Defense Acquisition Workforce Development Fund, is kind of 
a unique fund, in that it originates out of expired 
appropriations. So in the sense, you have O&M funds, R&D funds, 
procurement funds expiring, and those are scooped up and paid 
for, for training.
    What is interesting about that mechanism, it has been 
authorized. The appropriators have approved it. It is designed 
to address these acquisition workforce deficiencies.
    Now, there is a big question on implementation how well 
that money has actually been spent, and I think we could have a 
debate on how that money should be spent and what kind of 
training and so on, but the fact that there is a fund like 
that, it has been in place for several years, and it would go 
around, and it also serves as an incentive to not spend money, 
because if you are an acquisition professional and you want to 
hold back money that isn't appropriated, because that could 
actually come back into your workforce and training.
    Mr. Barber. That is very helpful. Thank you. Mr. Soloway, 
you indicated in your written testimony that, given the title 
of this hearing, it would be a mistake, I think you said, to 
too-heavily rely on or look to DoD for solutions to the 
challenges facing DHS. Could you elaborate on that and say what 
practices that DoD uses do you think could be most useful to 
replicate in DHS?
    Mr. Soloway. Certainly. I think it ties directly to Bill's 
comments a moment ago on the defense acquisition workforce 
funds and DAWIA. I did not mean to suggest that DoD does 
nothing right. My suggestion would be that all of our findings 
and our commission applied as equally to them as others, 
despite the resources they have that other agencies have not 
had.
    I think Bill's last point around how the developed 
workforce money is spent is the core issue. DoD has an 
excellent school in certain areas, but it is lacking in others, 
and so forth, so that is one, I think, big difference.
    I think that the preservation of funds and the commitment 
to funding for training is probably the No. 1 thing I would 
say. DoD, the one thing you could say without question, the 
years I was there, since, before, has had a very constitute, 
robust funding mechanism for acquisition training. Again, 
whether the training is right or--that is a different issue. 
There has been a commitment.
    The second thing DoD has had to varying degrees, but 
relatively steadily, is very senior leadership attention to 
acquisition. The under secretary for acquisition technology and 
logistics is essentially the first among equals of the under 
secretaries, but the deputy secretary typically is very 
engaged. Even the various secretaries have taken a personal 
interest.
    When I was there, it was one of the great advantages. We 
had a secretary, a deputy secretary, an under secretary, for 
who all of them these were really critical issues. So having 
that kind of senior leadership involvement, which we don't, 
frankly, have not seen at DHS and other civilian agencies, is a 
big difference. I think it is worth looking at that model.
    The last thing I will say, because I know you want to get 
to other questions, as we talk about the Defense Acquisition 
Workforce Improvement Act, DAWIA, and certifications and so 
forth, we have to be very careful about distinctions between 
the civilian agencies and DoD. It strikes to one of the major 
recommendations in our report.
    In the civilian agencies, when you talk to people about 
acquisition, you are basically talking about contracting. At 
DoD, when you talk about acquisition, what we refer to as the 
big A, you are talking about contracting, you are talking about 
pricing, you are talking about logistics, you are talking about 
program management systems, engineering, a whole set of skills 
that go into a complex program.
    In the civilian agencies, there is no such thing as an 
aspirational, defined, a certified career path for program 
managers, yet the civilian agencies operate largely on 
programs. I think one of the things that we recommended, which 
would be Government-wide, but would certainly apply to DHS, is 
that the Office of Federal Procurement Policy Act be expanded 
so that they actually have cognizance over a program management 
workforce, and can create within the civilian agencies that 
skill set.
    We did work independent of my role at PSC for the former 
Council on Excellence in Government at OMB several years ago, 
and in the survey work of the agencies, we found the vast 
majority of people in civilian agencies who were, ``program 
managers'' had the title merely because of the documents they 
signed, not because of the training they had.
    That is not a criticism of the people. It is a suggestion 
that we don't even have the right career structure to execute 
the programs we are asking them to execute.
    Mr. Barber. Thank you for that. I just have a couple of 
questions, I think, that tie together for Mr. Berteau. By many 
accounts, the Department is further along with its acquisition 
policies and improvements than it has ever been before, and 
some have indicated that in order to succeed, DHS simply needs 
to follow its own procedures. Would you agree with that 
assessment, Mr. Berteau? If not, what more do you think the 
Department can do to improve its outcomes?
    The second question has to do with the under secretary for 
management. Does that person, does that position have adequate 
safeguards in place to ensure that DHS components can acquire 
goods and services in a responsible way, in a way that avoids 
waste?
    Mr. Berteau. Thank you, Mr. Barber. You're correct to raise 
as the first question of: Is the Department even doing that 
which it lays out itself to do? So before you lay on additional 
improvements, make sure you have actually implemented and 
executed the ones that are in place already.
    I note in my written statement the historical fact that DHS 
has really only been there now for just over 10 years. If you 
look at the history of how long it took the Defense Department 
to evolve to the point it is today, with a centralized 
acquisition authority that Stan recommended, with a focus on 
training and career development for the workforce, these are 
things that took DoD 20 and 30 and 40 years before they got 
into place. That was with a structure that by and large already 
existed. You already had a war department. You already had a 
Navy department. You were just merging the two together and 
creating an Air Force.
    DHS is much more complex with a lot more moving parts and I 
think substantially less recognition at the component level of 
the authority, direction, and control of the Secretary. In 
fact, if you look at Title 10, which is the U.S. code that 
controls DoD, it is unambiguous in its delineation that the 
Secretary of Defense has the authority, the direction, and 
control of the Department. There are no other major Cabinet 
agencies that have a similar delineation of responsibility and 
authority in the person of the Secretary. They have a lot of 
more diffuse and separate authorities.
    I think given that, the biggest challenge that DHS has is, 
in addition to following its own processes and making sure they 
are doing them, is looking at how those integrate across a 
whole variety of authorities and circumstances. I know you saw 
in your own time there, individual components in DHS don't 
necessarily wake up in the morning and say, oh, did we get new 
guidance from headquarters today, all right? So that is the 
kind of thing that I think is often going to come into play.
    That leads me to the role of the under secretary, which I 
think is one of the critical places where that needs to start. 
If there is ever going to be a strong focus on that acquisition 
and procurement and overall program management from DHS, it 
needs to be within, I think, the existing structure.
    I think the last thing DHS needs today is another 
reorganization, because, you know, that just ends up being 
different tree, same people. That is not necessarily the 
outcome you want.
    Mr. Barber. Thank you so much.
    Thank you, Mr. Chairman.
    Mr. Duncan. Well, just want to follow up with something Mr. 
Soloway was talking about. You know, the private sector, 
acquisitions have a different meaning and different connotation 
than they do in the public sector in some ways. Private 
businesses think of acquisition as an expenditure of a large 
amount, relatively speaking, of the size of the company of 
capital for the purchase of equipment or maybe other capital 
assets or contracting for certain services.
    When they contract for certain services, those services are 
monitored, that if it is an IT service, that the IT company is 
actually providing the service that the company requires. If it 
is not, then it is terminated, and they find another vendor, 
because they are spending their own money. So they are a little 
more adept at that.
    I want to talk about the human capital of the public 
sector. Professional Services Council leadership commission's 
2013 report sought to address the challenges facing Federal 
human capital with the acquisition process and technology, and 
the report looked at the Federal Government in its entirety and 
concluded that Government's current human capital strategies 
are not delivering the desired results and a fundamental change 
was needed.
    So what can both the Government and private sector do to 
improve performance, efficiency, and quality of Government 
acquisition officials? You touched on that just a little bit a 
minute ago, but that whole, I guess, fraternity of acquisition 
officials. Can you just address that a little bit further?
    Mr. Soloway. Yes, I think there are a number of elements to 
it. We tried to touch on some of them in the report, and there 
are undoubtedly others that we either missed or were just too 
far down the path to get to.
    Mr. Duncan. Let me ask you to touch on the fact that, how 
do we attract the best and brightest human capital out there? 
How do we retain those? I think that is really what I am trying 
to get at.
    Mr. Soloway. I think there are a couple of things. I think 
one of the things that most of the surveys I have seen, the 
partnership for public sector is a great example, because they 
do so much in this area, show that the greatest dissatisfaction 
in Government is--let's leave aside pay freezes and so forth--
but the greatest dissatisfaction right now is around questions 
of reward for performance, I think was a question in the 
earlier panel about performance rewards and so forth, and then 
the private sector, that is sort of the standard, is how it 
operates.
    So I think looking at how we manage human capital, figuring 
out a different kind of incentive structure--I don't want to 
get into a whole personnel reform debate or discussion today--
but I think there are real issues there. I think, second, we 
have to be very careful about how we target who and what skills 
we are trying to hire. The Government is never going to be able 
to hire all of the technology people it wants, so we need to 
take precious dollars and really zero them on for training, for 
development and so forth.
    I mean, what we see, instead, as is often the case even in 
the private sector, and unfortunately, is when times get tough, 
training is the first thing to get cut. I had one agency 
executive tell me about a month ago that their entire 
acquisition workforce training is gone because of the budget.
    Now, that to me is a very, that is bad management because 
of the implications, but work--people in any professional field 
want to know that they are going to have opportunities to 
develop their skills, to do interesting work, and move forward, 
but you can't do it is everything is a sort of peanut butter-
spread approach to workforce as opposed to very targeted and 
very strategic.
    I think the third thing is rethinking even workforce 
structure. We make a recommendation in the report for the 
creation of something called the technology management 
workforce. If you look at companies that do a lot of technology 
work, and I will use, my favorite example is Federal Express, 
because they are essentially an IT company. Everybody who is 
anybody at Federal Express is both a business expert and a 
technology expert, because that is the two things that they do.
    We don't have a lot of that, other than at the very senior 
levels in Government. We don't develop our workforce as 
integrated workforce as we develop them in silos, and that 
inhibits their growth and development, and then they become 
much more susceptible to opportunities to go outside and do 
different things and have that more contemporary kind of work 
experience.
    So I think there is a whole level, a set of things that 
don't require law, that actually DHS or other agencies could 
do, could experiment with to really to drive a better work 
experience, even against some intractable fiscal and other 
issues that are going to prevent compensation, for instance, 
from equaling what you could make elsewhere.
    Mr. Duncan. Well, something that the gentleman from Texas, 
Mr. O'Rourke, and I were talking about on the walk over to the 
Capitol that was brought out in the first committee is the 
systemic problem, and it is really systemic to Government as a 
whole, Federal Government, State government, local government, 
school districts, of spending your entire budget.
    At the end of the fiscal year, if you haven't spent your 
budget, you go out and you buy all those office supplies and 
others, and you spend your budget, because that is how you 
justify getting that budget next year an increase.
    You know, is there a--I think it was brought out in the 
last committee, last panel--there ought to be some sort of 
incentive for spending every dollar, that creating some 
savings, finding those savings, keeping those contracts under 
budget and under cost.
    I know as a business, for business leader, I would be more 
apt to give someone a higher budget request in the next fiscal 
year if they showed some fiscal restraint and common sense 
budgeting and not spending their whole budget just they had to. 
I would be more apt to reward them with maybe a different 
acquisition or different capital purchase or a higher budget in 
subsequent years if they showed that they actually cared about 
being good stewards of those taxpayer dollars.
    So I guess I would just throw this out there. What sort of 
incentive-type programs can Government create for Government 
acquisition officers and officials for doing that sort of 
thing?
    Mr. Soloway. I think--I would let my colleagues address 
this, as well--we tried several different initiatives when I 
was at the Defense Department and had some interesting 
learnings. We did have at one point--looked at putting in place 
a personal incentive program, where program offices really 
achieved some great cost savings that the individuals would 
actually be rewarded, like you might in a company, with a bonus 
or something like that.
    The problem is, people; men and women in uniform aren't 
allowed to get bonuses, so you had an immediate disconnect 
there because you had mixed workforces.
    The Navy experimented for a number of years with--if you 
came up with an improvement plan that could reduce maintenance 
costs or reduce program costs or so forth, a percentage of 
those savings would stay in the organization. The problem is, 
when budgets get tight and the annual resource battles, what 
organization is it staying? Is it staying at the base? Is it 
staying with the command? Is it staying with that section of 
the Navy? Ultimately that didn't work too well.
    So the incentive question is a really, really tough one. I 
think that one of the things we have to get at first is, 
leadership showing real support--and I am talking the kind I 
was mentioning earlier--real support for the workforce that is 
doing this work. Frankly, they don't feel supported.
    I am being very candid and blunt, and I will say it is 
their leadership. There have been issues with Congress and IGs 
and the GAO, not that any of them are doing something that is 
not their job, but the workforce doesn't feel like they get any 
credit when they do things right. The only thing that gets 
noticed is when something goes wrong. Even then, the root 
causes are often misunderstood and so forth.
    So, again, I will go back to our report. One of the things 
that we talked about, and we got this from a lot of Government 
folks, including some young professionals we talked to who were 
really interesting, was leadership, understanding what it means 
to be a risk absorber, to really step up and stand up for your 
folks when things go wrong. So that when they are innovative 
and something goes bad, you are there to protect them. When 
things go right, you are there to celebrate them.
    I don't think folks who work in Government, my experience 
in Government, expect lots and lots of financial incentives and 
so forth. But being recognized and rewarded for great work, 
that is actually not nearly as common as one would think.
    Mr. Duncan. In a lot of instances, that is equal to a 
financial reward in the eyes of their peers.
    Mr. Soloway. Absolutely.
    Mr. Duncan. So I don't have anything further. I will turn 
it over for Mr. Barber for a second round of questions.
    Mr. Barber. Well, thank you, Mr. Chairman. I wanted to pick 
up on this theme of--my question has to do with how the 
Department does or does not encourage creativity, the flow of 
good ideas, both from outside, as well as from inside the 
Department. I have talked to a lot of Border Patrol agents, the 
men and women who are on the ground every single day. They 
really know what is happening. Yet they feel, and I think it 
goes to your last comment, Mr. Soloway, that no one is 
listening or there is no way to be heard.
    The same is true for a lot of really innovative companies, 
small businesses typically, who say I really want to present 
this idea, and I don't even know where the front door is, let 
alone how to go through it.
    It seems to me that DARPA, for example, is a--provides an 
opportunity for creative thinkers, outside-of-the-box thinkers, 
to come up with really important ideas that can result in 
better National defense.
    What can we do to change what I believe is the culture in 
DHS, both in terms of accepting or being open to outside ideas, 
as well as internal ideas?
    I would agree with you, Mr. Soloway, that the employees at 
DHS just feel that there is no recognition of what they do and 
they work hard every single day to get it done. So just all of 
your thoughts, really, on how we can change this culture, 
because I think that, when it comes to border security, we need 
to be as creative and as nimble and as smart as we possibly can 
be, because, quite frankly, the cartels beat us to the punch 
way too often. So your comments, please, gentlemen?
    Mr. Soloway. I will start on that, because I think you 
raise two distinct, but absolutely essential issues. On the 
first one, relative to engaging the Border Patrol or other 
users in the field, if you will, in the process and getting all 
the best ideas together, there are all kinds of models in the 
private sector for what they call change management, in which 
companies really engage with their supplier base and very deep 
levels as to where they are going, what they are thinking. That 
doesn't happen very often in Government.
    I think there are ways that that can be done by following 
some of those models. Again, going back to the report, this 
idea that I mentioned earlier of directed collaboration. We 
want to save money on programs? Rather than just saying to a 
program, ``Go cut 8 percent,'' why not tell our program 
officers directly, from leadership, ``We want you and your 
contractors and your university researchers and your customers 
to go into a room together and figure this out, come up with 
sustainable savings.''
    Companies know they are going to give up revenue. The 
Government may change their requirements. Somebody may say, I 
don't need that report. There are tools that way.
    The other piece is actually a challenge. I think you are 
correct, there are a lot of small businesses that have this 
struggle, but, frankly, a lot of larger businesses have the 
same struggle, because the Government is unique in commerce in 
that the customer is not the one who does the buying. I can go 
talk to a Border Patrol office with a great solution, but then 
they have to go three levels away and maybe thousands of miles 
for somebody to actually execute the acquisition.
    Bridging internal gaps--the internal collaboration, another 
theme we strike in the report, is absolutely essential. We see 
this disconnect in IT all the time, where the technology folks 
have--and they know what they want, but by the time it filters 
over to the acquisition side, it may or may not look anything 
like what they were trying to get, and that is a disconnect 
internally that can be done and dealt with organizationally.
    Mr. Greenwalt. Yes, I think that is one of the reasons why 
I wanted to recommend to the committee that you look at the 
rapid acquisition equipping initiatives in DoD. One of the 
reasons why is that the traditional acquisition system over 
DoD, we just couldn't bridge the gap between the users out in 
the field and the combatant commands to what they really 
needed, so they essentially established an acquisition system, 
actually many, that went around that system and went to the 
users and found it exactly what they wanted and got industry to 
deliver something quickly out in the field as quickly as 
possible.
    I think that is something that you might be looking for in 
Border Patrol and other areas in DHS and to look at how that 
process works. I think, Dave, you might have a couple comments 
on it, as well.
    Mr. Berteau. Mr. Barber, I think--two observations I would 
make, both this and the line of questioning that the Chairman 
was pursuing there. One is that the Defense Department is 
always different than the rest of the Federal Government in the 
following way. Then DHS is sort of caught in the middle, which 
makes this committee's job kind of interesting.
    Stan mentions that the customers don't buy. That is kind of 
true. But in DoD, at least who they are buying for is 
themselves. There is a cycle of the user is there eventually, 
right? Much of the rest of the Federal Government, what they 
spend their money is customers outside that agency. DHS is a 
mix. There are components in DHS that are like DoD in that what 
they build requirements for, what they build budgets for, what 
they acquire is for them to use in executing their mission. In 
that way, they are very much like DoD. That is kind of core to 
much of the National security arena. There are other parts of 
DHS for whom that is not true, but that is not really the 
subject of much of today.
    So I think it is useful to keep that in mind. Who is the 
end-user here? How do they fit into that process?
    The second--and, Mr. Chairman, you mentioned in your 
question--private companies have a capital budget. In fact, in 
your conversation with Mr. O'Rourke, so does every other 
Government entity in America, except for the Federal 
Government. Whenever we talk about can't we copy the States 
from a balanced budget point of view or the cities, because 
they all have to have a balanced budget, yes, but they also 
have a capital budget, which is going to make sure that when 
you are balancing that budget, you are thinking long-term as 
well as today.
    What I would suggest to you--and I have been after this for 
some time--is look at the question of whether or not there is 
an opportunity for a pilot of a capital budget process. Maybe 
it is Customs and Border Protection. Maybe, in fact, the 
incentive is, if you save a little money, you can put it into 
your capital budget, which solves your program of who gets the 
benefit, what level gets the benefit. It is the entity itself. 
Don't let the comptroller steal it. Don't let the appropriator 
steal it. Fold it into the capital budget, and you have got it 
right there. That actually will allow an enhanced career path, 
because now you can see the stuff you work on come to bear and 
have benefits the following year.
    Mr. Duncan. Well, thank you. We are out of time.
    I will just respond to one thing. They do have carry-over 
dollars that they keep in the drawer and they spend on things 
like that, that not really on this year's balance sheet that 
they are aware of.
    Then the other thing is, I think if the Federal Government 
did create capital account, Congress is notorious for raiding 
accounts, such as the Social Security Trust Fund and Highway 
Trust Fund, to spend those dollars in other ways. So although I 
think that is a great idea and I am all for it, because State 
government operates that way, county governments, I am afraid 
the Federal Government would raid those funds and then we would 
be back into a borrowing situation with capital expenditures.
    But that is a question or a conversation for another day. I 
want to thank you gentlemen for being here. The witnesses today 
were great. Your testimony is very valuable. I apologize that 
votes got in the way. I think more Members would have hung 
around for this second panel and they would have benefited from 
what I think is an excellent discussion here today.
    But the Members of the committee may have additional 
questions for the witnesses, and we will ask that you respond 
to those questions in writing, if possible. So without 
objection, the subcommittee will stand adjourned.
    [Whereupon, at 4:46 p.m., the subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              

         Questions From Chairman Jeff Duncan for Rafael Borras
    Question 1. How many of the 88 major acquisition programs have 
clear Acquisition Program Baselines (APBs)? How many do not? What steps 
is DHS taking to address those programs that lack APBs?
    Answer. Response was not received at the time of publication.
    Question 2. In 2012, GAO reported that DHS plans to spend more than 
$105 billion on acquisition programs that do not have basic APBs. Is 
that still accurate? If not, please elaborate.
    Answer. Response was not received at the time of publication.
    Question 3. What steps do you plan to take that will ensure that 
DHS does not award any future contracts without DHS or component 
approval for key planning documents needed to set up operational 
requirements?
    Answer. Response was not received at the time of publication.
    Question 4. In July, GAO reported on several instances of poor DHS 
acquisition management. First, GAO found 35 instances of overlap among 
DHS research and development (R&D) contracts. Second, GAO found that 
DHS has not implemented a biometric exit capability, has failed to show 
the cost-benefit comparison between biometric data and biographic data, 
and does not have accurate time frames because DHS is behind schedule. 
Third, GAO found that the U.S. Coast Guard has not met its goal with 
its C4ISR System and was managing this program without key acquisition 
documents including an APB. What is DHS doing to fix these problems? 
What actions are PARM and the OCPO taking to address these issues?
    Answer. Response was not received at the time of publication.
    Question 5. As outlined in the OIG May report on H-60 helicopters, 
the OCPO and PARM did not conduct a complete review and did not hold 
CBP and USCG accountable for their program management of the H-60 
helicopters. PARM did not issue a final signed Acquisition Decision 
Memorandum requiring CBP to follow DHS policy. What actions have you 
taken to address these failures? Does DHS plan to force CBP to allow 
the USCG to complete the conversions and modifications through the USCG 
Aviation Logistics Center in order to save American taxpayers about 
$126 million and shorten the completion schedule by about 7 years? If 
not, please explain.
    Answer. Response was not received at the time of publication.
    Question 6. As outlined in the OIG August report on DHS radio 
communications, DHS does not have reliable DHS-wide inventory data, and 
DHS lacks an effective governance structure to guide investment 
decision making. What actions do you plan to take to fix these gaping 
problems in acquisition management? What actions to do you plan to take 
to better involve DHS personnel in the field (i.e. CBP agents on the 
border) in crafting acquisition requirements, assisting in the 
acquisition process, and communicating with other components with 
interests or potential inventory to ensure such duplication, overlap, 
and wasteful spending as outlined in this OIG report do not occur 
again?
    Answer. Response was not received at the time of publication.
    Question 7. As outlined in the OIG August report on DHS radio 
communications, several DHS components were at fault for not reporting 
radio equipment stored in their warehouses, new inventory, and 
infrastructure real property inventory data valued in the millions of 
dollars. What disciplinary actions have you taken to address this poor 
management?
    Answer. Response was not received at the time of publication.
    Question 8. Regarding the May 09, 2013 ``Acquisition Decision 
Memorandum,'' please discuss the risks involved with this waiver 
particularly given that acquisition programs realize most of their 
costs during the sustainment phase of a program's life cycle.
    Answer. Response was not received at the time of publication.
    Question 9. The May 09, 2013 memo stated that you plan to monitor 
the program and that the document requirements will be reinstated if a 
program initiates a major modernization or a new acquisition. What is 
your plan for overseeing these sustainment activities? How many people 
have you assigned for compliance activities with these 42 programs 
listed in the memo?
    Answer. Response was not received at the time of publication.
    Question 10. The May 09, 2013 ``Acquisition Decision Memorandum'' 
includes several programs widely known to have serious problems with 
operational effectiveness, cost overruns, or schedule delays including 
CBP's Secure Freight Initiative, TSA's FAMS Mission Scheduling and 
Notification System, TSA's HAZMAT Threat Assessment Program, TSA's 
Information Technology Infrastructure Program, TSA's TWIC Program, 
TSA's National Explosive Detection Canine Training Program, TSA's Air 
Cargo program, and the USCG's Business Intelligence Program. How were 
these programs chosen for inclusion? Can you guarantee that this 
decision as outlined in the May 09, 2013 memo will not result in 
greater cost overruns, schedule, delays, duplication, or wasteful 
spending of American tax dollars? Please provide the analysis and 
consultation you did at the Department level, with your components, and 
with any independent groups to come to this decision.
    Answer. Response was not received at the time of publication.
    Question 11. What is the time line for DHS to achieve the goal of 
full integration of the Integrated Investment Lifecycle Management 
(IILCM)? What are the possibilities for DHS to leverage the IILCM 
across all acquisition investments? How has DHS incorporated private 
sector, other Federal agencies, and independent verification in 
developing the IILCM?
    Answer. Response was not received at the time of publication.
    Question 12. DHS operates its own training center, has 7 
acquisition certification programs, and has a 3-year Acquisition 
Professional Career Program (APCP) with 320 acquisition classes. What 
efforts has DHS taken to consolidate acquisition training with other 
available courses and institutions within the Federal Government?
    Answer. Response was not received at the time of publication.
    Question 13. When was the APCP established? How many instructors 
and students does it have? What is the ratio between instructor and 
student? How many DHS employees have graduated from this program? How 
did DHS develop its catalogue of 70 courses and over 300 classes?
    Answer. Response was not received at the time of publication.
    Question 14. How is DHS planning to address the challenge that the 
increasing proportion of the DHS procurement workforce is retirement 
eligible?
    Answer. Response was not received at the time of publication.
    Question 15. What is DHS doing to promote employee retention? What 
specific actions have you taken that you have seen a measurable result? 
How do you measure employee satisfaction?
    Answer. Response was not received at the time of publication.
    Question 16. Business intelligence tools can be useful to allow DHS 
to have better management and visibility into DHS acquisition programs. 
As it is often the responsibility of DHS components to update the data 
that informs these tools, are you concerned about the quality of the 
data entered into business intelligence tools? Is every contract 
manager required to enter performance evaluations into the Contractor 
Performance Assessment Reporting System? How long has this reporting 
system existed and who manages it? How often does it get updated?
    Answer. Response was not received at the time of publication.
    Question 17. Since the Federal Law Enforcement Training Center 
(FLETC) is the only legacy DHS component that does not require a 
Component Acquisition Executive (CAE) position because of the nature of 
its procurement portfolio, would you explain how FLETC's acquisition 
and procurement policy works? How does DHS do strategic sourcing of its 
ammunition purchases? What are the cost differences in purchasing 
ammunition without strategic sourcing?
    Answer. Response was not received at the time of publication.
    Question 18. The Department's Chief Financial Officer has 
identified a 30% funding gap across the Department's major acquisition 
programs. Can you discuss what that means in terms of the DHS' mission, 
operations, and long-term planning?
    Answer. Response was not received at the time of publication.
    Question 19. One comment made by DHS officials to GAO from the 
Office of Program Accountability and Risk Management (PARM) and the 
Office of Program Analysis and Evaluation (PA&E) was that cost 
estimates provided by program management offices often understate 
likely costs. PA&E officials reported to the GAO that many programs did 
not include operations and maintenance in their cost estimates, which 
can account for at least 60% of a program's total cost. Has DHS at the 
Department level and component level acknowledged this flaw and 
corrected it? Please elaborate.
    Answer. Response was not received at the time of publication.
    Question 20. What capabilities does the Department have in place to 
analyze how much is spent on procurement at an item level? What 
percentage of the workforce is focused on tracking compliance of each 
procurement to negotiated contracts?
    Answer. Response was not received at the time of publication.
    Question 21. Does the Department have full transparency and 
auditability into the purchasing of goods and services? How many laptop 
computers were purchased by the Department in fiscal year 2013 and at 
what price points?
    Answer. Response was not received at the time of publication.
    Question 22. A number of agencies within the Department are 
currently considering utilizing shared-services as a way to reduce 
their overhead costs for back-office functions such as HR and finance. 
However, it is the committee's understanding that the agencies are 
considering independently purchasing divergent systems from different 
sources. Has Department leadership considered using a single shared-
services platform for the entire Department? Has the Department 
considered partnering with the private sector to implement such a 
platform?
    Answer. Response was not received at the time of publication.
    Question 23. Is the Department confident that another Federal 
agency's system is scalable to support your unique requirements? If the 
USCG goes with a Government Shared Service such as the Department of 
Interior, who then will service components, such as TSA? Will TSA then 
need to procure their next system?
    Answer. Response was not received at the time of publication.
    Question 24. This summer DHS awarded a contract for an enterprise 
learning management system. The committee has heard that the chosen 
solution is not a robust solution that is often used in the private 
sector and that the chosen solution will require TSA to undo previous 
work on their learning platform to be compatible with the newly chosen 
solution. Please describe the logic in choosing the solution and 
rationale behind the transition plan.
    Answer. Response was not received at the time of publication.
    Question 25. Describe DHS efforts to implement performance-based 
budgeting and ways to incentivize programs to under-spend their budget. 
What legislative authority does DHS believe it needs to 
institutionalize such an approach?
    Answer. Response was not received at the time of publication.
    Question 26. What account structure does DHS recommend to clarify 
what money is to be used for and provide greater transparency among 
various funds?
    Answer. Response was not received at the time of publication.
        Questions From Chairman Jeff Duncan for Michelle Mackin
    Question 1. What do you see as the greatest challenge DHS faces in 
implementing changes that will improve acquisition outcomes?
    Answer. Response was not received at the time of publication.
    Question 2. What do you believe is the single greatest action that 
DHS could take to improve its acquisition program management?
    Answer. Response was not received at the time of publication.
    Question 3. As GAO has released several DHS acquisition-related 
reports in March, May, July, and August of this year, what has DHS' 
response been to all of these findings and recommendations? Do they say 
that they've already implemented the recommendations before you've 
issued the report?
    Answer. Response was not received at the time of publication.
    Question 4. How many of GAO's five recommendations for executive 
action from the September 2012 report has DHS complied with?
    Answer. Response was not received at the time of publication.
    Question 5. In GAO's March 2013 report, GAO found that almost 90% 
of the current major defense acquisition programs have conducted 
``should cost'' analysis and ``most of those programs noted that they 
had realized or expected to realize some cost savings as a result.'' To 
your knowledge, is DHS employing ``should cost'' analysis? Do you 
recommend that DHS consider it?
    Answer. Response was not received at the time of publication.
        Questions From Chairman Jeff Duncan for Anne L. Richards
    Question 1. Regarding the OIG May 2013 report on H-60 Helicopters, 
what has DHS done to hold the helicopter programs accountable in 
response to your report?
    Answer. According to DHS, the Deputy Secretary has approved a 
proposal from the Management Directorate's Office of the Chief 
Readiness Support Officer (OCRSO) to establish an Aviation Governance 
Board (AGB). The AGB will be chaired and staffed by the OCRSO and will 
be responsible for providing coordinated oversight and management of 
DHS aviation programs. The AGB's first task is to develop a formal 
charter, estimated to be completed by December 31, 2013. As of October 
22, 2013, the OCRSO had begun holding meetings and began to oversee the 
cost-benefit analysis (CBA) of the CBP and USCG H-60 helicopter 
programs. The analysis was originally expected to be completed and 
delivered to DHS OIG on September 30, 2013, but it is still pending.
    The DHS Chief Acquisition Officer also directed CBP to re-submit 
its Strategic Air and Marine Plan (StAMP) for management and 
acquisition to the DHS Office of Program Accountability and Risk 
Management (PARM). To date, PARM's Acquisition Review Board has not 
received complete documentation from CBP, nor has it held another 
Acquisition Decision Event for CBP's StAMP. DHS OIG is closely 
monitoring the progress and evolution of StAMP, and we plan to attend 
in person when it occurs.
    In its 90-day memo updating OIG, dated September 4, 2013, the 
Department reported that it planned to have a senior-level DHS official 
request an H-60 helicopter transfer of ownership from DoD, and thus, 
would elevate this request to the CBP Office of Air and Marine 
Assistant Commissioner. The target date for sending the request to DoD 
was September 30, 2013. DHS OIG is still awaiting confirmation and 
documentation supporting this action.
    As noted above, DHS' OCRSO is facilitating completion of a CBA 
between CBP and the USCG to determine whether there are cost 
efficiencies to completing the remaining CBP H-60 conversions and 
modifications at the USCG's Aviation Logistics Center, as we 
recommended. CBA completion was planned for September 30, 2013. On 
September 29, 2013, an OCRSO representative indicated in writing that 
CBP and the USCG had completed their CBAs, but that OCRSO was still 
reviewing the work and wanted more clarification from DHS OIG on the 
methodology we used to compare the programs. DHS OIG continues to 
coordinate with OCRSO to expedite receipt of the final H-60 helicopter 
CBA so that we can review it as soon as possible.
    Question 2. Regarding the OIG August 2013 report on radio 
communications, what has DHS done to hold the radio communication 
programs and the components in particular accountable in response to 
your report?
    Answer. OIG transmitted the final radio communications audit report 
to the Department and components on September 3, 2013. DHS concurred 
with both recommendations and has begun taking steps to implement them.
    We recommended that the Department establish a single point of 
accountability with the authority, resources, and information to ensure 
it implements a portfolio approach for its radio communication program. 
In response, DHS noted that it is working to develop and implement 
Department-level portfolio management of tactical communications, but 
that the estimated completion had not yet been determined. In response 
to our recommendation to develop a single portfolio of radio equipment 
and infrastructure, the Department reported that the Joint Wireless 
Program Management Office has made significant progress in collecting 
the data necessary to develop a single profile of DHS assets, 
infrastructure, and services across components. DHS also noted that it 
will complete a review of existing policies and procedures and will 
revise its personal property manual as necessary to align with the 
findings. The Department estimated these actions would be implemented 
by June 2014. We consider both recommendations resolved, but open, 
pending documentation of DHS' efforts. We expect to be updated on both 
of these recommendations when we receive the Department's 90-day memo.
    Question 3. What do you see as the greatest challenge DHS faces in 
implementing changes that will improve acquisition outcomes?
    Answer. As noted in my oral statement before the subcommittee, our 
audits in this area continue to show that the Department's greatest 
challenge is establishing an effective, high-level governing structure 
that can identify mission needs, gather reliable data on and coordinate 
assets, and guide investment decisions. This is especially challenging 
considering the complexity and breadth of the acquisitions that DHS 
needs to manage. In 2013, DHS' Major Acquisition Oversight List 
contained more than 125 major acquisitions, each of which had an 
estimated cost of more than $300 million. DHS is currently spending 
more than $158 billion on these programs and projects.
    In a September 2012 report, GAO noted that although DHS recognized 
the need to implement its acquisition policies more consistently, 
significant work remained. DHS has established processes and entities 
to manage acquisitions, but without a strong, centralized authority it 
is hindered in its ability to ensure compliance with its policies and 
processes, as well as properly coordinate and provide effective 
oversight of its planned and on-going acquisitions.
    Question 4. What do you believe is the single greatest action that 
DHS could take to improve its acquisition program management?
    Answer. Going forward, the DHS Office of Program Accountability and 
Risk Management (PARM) and the Acquisition Review Board should not 
allow acquisitions to proceed without ensuring that program managers 
have completed and clearly documented all acquisition life-cycle 
processes, including fully developing program life-cycle cost 
estimates. The Acquisition Review Board must provide a consistent, 
Department-wide method, using a limited set of key acquisition 
documents, to evaluate components' acquisition status and progress at 
programs' key decision points. By fully implementing the Department's 
processes and procedures under the appropriate authority level and 
review, PARM will begin to provide more effective oversight by 
identifying challenges, and controlling cost, schedule, and performance 
within the Department's acquisition programs.
      Questions From Chairman Jeff Duncan for William C. Greenwalt
    Question 1. What do you believe is the biggest frustration or 
challenge from the perspective of the private sector regarding DHS 
acquisition policy and practice?
    Answer. One of the biggest frustrations the private sector has with 
Federal acquisition policy and practice (to include DHS and DoD) is the 
impact that the Government's rules, regulations, and practices have on 
the ability of the private sector to propose best-value solutions. The 
portion of the private sector that bids on Government contracts is 
becoming more Government-unique in its operations as opposed to how it 
would operate in the commercial market. Federal contractors are 
becoming better at complying with Federal rules and regulations and 
meeting the letter of rigid requirements put in place in the contract 
than delivering the best solution to meet the Government's need. 
Contractors are being rewarded on how well they comply with these rules 
and regulations and meeting rigid Government specifications for 
solutions oftentimes already mapped out by the Government rather than 
proposed by the private sector. This combination of rules and rigid 
requirements precludes some of the best contracting talent from ever 
bidding on Government contracts.
    Current Federal procurement practice is targeted at reducing short-
term prices and profits at the expense of long-term value and 
unfortunately in the next several years we are likely to see more 
acquisition failures as was witnessed in the HealthCare.gov rollout as 
this works its way through the system. One of the most egregious 
examples of this trend is the increased use of LPTA (low-priced 
technically acceptable) contracts which are suitable for the purchase 
of commodities but should have no place in buying complex IT and 
service solutions for the Government. Under an LPTA there are no 
incentives for a contractor to propose the best solution but merely to 
bid on whatever the Government thinks it needs (which the Government 
rarely knows with complete certainty) and to try and cut corners 
wherever it can to reduce its price. If the Government is not 100% 
correct in its detailed specifications in the contract and goes with 
the lowest bidder, that contractor may not be qualified to deal with 
requirements changes when the Government realizes it's the mistakes and 
questionable assumptions it had when it originally put out the bid. The 
Government should instead be conducting more performance-based best 
value contracts versus LPTAs but ``best value'' contracts require more 
time, effort, resources, and discretion at the beginning of a program 
that the Government is unwilling or at the present time incapable of 
providing.
    Question 2. In GAO's March 2013 report, GAO found that almost 90% 
of the current major defense acquisition programs have conducted 
``should cost'' analysis and ``most of these programs noted that they 
had realized or expected to realize some cost savings as a result.'' To 
your knowledge, is DHS employing should cost analysis? Do you recommend 
that DHS consider it?
    Answer. ``Should cost'' analysis can be a very effective tool for a 
very narrow case of sole-source cost contracts where some limited 
production has already occurred, large production is expected in the 
future and cost per units have been rising. As outlined in the Federal 
Acquisition Regulations (FAR), ``should cost'' analysis needs to be 
analytically sound and rigorous as a collaborative effort between 
Government and industry with benefits for both. It is only as good as 
the soundness of the method. I am not aware of DHS using this FAR-based 
method or of any of its programs meeting this FAR-based criteria, but 
in the narrow cases where it would be appropriate and DHS had the skill 
set to undertake such an analysis in production, it would be an 
effective tool.
    At DoD, I would be careful what one calls ``should cost'' analysis 
and GAO should be more careful of the definitions it uses in its 
criteria for evaluation. What is now passing for ``should cost'' 
analysis at the Department of Defense is more of an exercise in what 
DoD ``wishes'' things would cost after it has signed a contract and is 
not a product of the analytic process outlined in the FAR. ``Should 
cost'' has now become an exercise in achieving after-the-fact 
negotiation objectives and is an example of the Government using its 
monopoly buying power to reduce industry profit margins based on 
limited analytical work. While short-term ``savings'' may be achieved 
the future impact on the industrial base remains to be seen from this 
``wish cost'' approach. I would not recommend this as a DoD best 
practice until the longer-term impacts are in. While it is a way to 
help the Department's short-term cash flow problems it may not be a way 
to adequately incentivize a dynamic, innovative industrial base in the 
future.
          Questions From Chairman Jeff Duncan for Stan Soloway
    Question 1. What do you believe is the biggest frustration or 
challenge from the perspective of the private sector regarding DHS 
acquisition policy and practice?
    Answer. I do not think you can point to one issue and say it trumps 
all others. Instead, I would answer the question by saying the biggest 
challenge in dealing with DHS acquisition policy and practice is the 
combination of limited collaboration, over-interpretation or mis-
interpretation of guidance, and workforce gaps.
    In terms of collaboration, across Government we have seen a marked 
decrease in the kind of meaningful and substantive dialogue between the 
Government and its industry partners as the Government seeks to 
identify and capitalize on optimal solutions. Communications are 
unnecessarily limited and, sometimes even discouraged or prohibited, 
and, as a result, often prevents bidders from identifying and proposing 
effective innovations. The same lack of communication plagues internal 
collaboration within the Government. PSC's 2013 Leadership Commission 
was surprised to find how deep and broad the disconnects are between 
and within Government organizations and functions, particularly between 
the acquisition and technology communities. If one thinks of the 
technology community as the true ``customer'' and the acquisition team 
as the ``enabler,'' then these disconnects present very serious 
obstacles to DHS for obtaining the capability or solution the 
``customer'' is seeking. And when one combines those disconnects with 
the limited interactions between Government and industry, the problem 
becomes even further exacerbated.
    Second, there is an unfortunate tendency at DHS, and across 
Government, to interpret general guidance as mandated direction, thus 
unintentionally circumventing the flexibilities of the Federal 
Acquisition Regulation that seek to establish an ecosystem where smart 
acquisition and business judgments serve as the foundation. For 
example, as the policy leadership began to put more emphasis on 
increasing the use of fixed-price contracts, the reaction in the field 
became that fixed-price contracts were, in effect, mandatory. This 
tendency has been repeated on the heels of a Government-wide push 
towards the use of lowest price technically acceptable acquisition 
(LPTA) strategies. Under an LPTA award, the Government must, by 
regulation, award a contract to the lowest bidder who is minimally 
technically qualified. The misuse or over-use of LPTA is driven by many 
factors, not the least of which is the continued questioning of--and, 
in fact, prohibition against--allowing any circumstance in which the 
Government opts to spend slightly more money for a superior outcome. 
The risk aversion this trend represents is driven, in large part, by an 
over-interpretation by the workforce of admonitions to not over-spend 
(which is far different from spending wisely) and, as with the 
communications challenges, presents an enormous obstacle to high 
quality and innovative solutions.
    Finally, there are enormous gaps in workforce capacity and 
capabilities at DHS, in both acquisition and technology. The DHS 
leadership is to be commended for its aggressive efforts to address 
those gaps with better and more accessible training and development 
opportunities. But much more needs to be done. The 2013 PSC Leadership 
Commission Report contains a set of recommendations, including the 
dramatic expansion of cross-functional training, organizational 
rotations, a broader array of training opportunities, and much more. We 
have also recommended the creation of a new workforce component--
technology management--which would combine technology and business 
expertise in one functional field, much as is done throughout 
significant parts of the commercial world. We have also recommended the 
creation of a clearly-defined program management career field and path, 
which does not today exist in the civilian agencies but which is 
absolutely essential to the effective management of complex and multi-
faceted programs.
    Question 2. In GAO's March 2013 report, GAO found that almost 90% 
of the current major defense acquisition programs have conducted 
``should cost'' analysis and ``most of those programs noted that they 
had realized or expected to realize some cost savings as a result.'' To 
your knowledge, is DHS employing ``should cost'' analysis? Do you 
recommend that DHS consider it?
    Answer. The extent DHS is utilizing ``should cost'' analyses for 
its major programs is unclear. While the concept deserves 
consideration, DHS should consider several factors in determining how 
to apply it to their own needs, and its use should be limited to the 
most complex, high-risk acquisitions only. Specifically, DHS must 
consider:
    (a) DoD's ``should cost'' process is not without its detractors and 
        many have questioned its effectiveness. Specifically, 
        substantial disagreements as to the baseline assumptions and 
        the causes of changes to the baselines are common and thus the 
        ``results'' are sometimes questionable.
    (b) DoD uses these analyses for major defense programs which exist 
        in a marketplace and environment that is in many ways unique. 
        Thus, normal market research and similar tools are not always 
        adequate and the scope and nature of ``competition'' is 
        somewhat limited. However, in DHS's case, the preponderance of 
        its needs involve commercial capabilities or analogs of 
        commercial capabilities, thereby suggesting strongly that a 
        substantially enhanced market research capability is likely to 
        provide more insight and value than a Government-created, 
        ``should cost'' process.
    (c) The vast preponderance of DHS's needs are procured 
        competitively from a broader marketplace of offerings. As such, 
        the competitive process itself is a highly reliable tool for 
        the determination of both cost and the ``art of the possible.'' 
        To replace or supplant that with a Government-created, ``should 
        cost'' process brings with it the potential for the Government 
        assuming it has all or most of the technical answers, which is 
        increasingly not the case.
    (d) ``Should cost'' analysis is labor-intensive and requires vast 
        acquisition and analytical skills. Given the acquisition 
        workforce challenges outlined in our Commission Report, it must 
        be recognized that significant workforce training would be 
        needed before ``should cost'' analysis could be reliable or 
        broadly utilized.
        Questions From Chairman Jeff Duncan for David J. Berteau
    Question 1. What do you believe is the biggest frustration or 
challenge from the perspective of the private sector regarding DHS 
acquisition policy and practice?
    Answer. Response was not received at the time of publication.
    Question 2. In GAO's March 2013 report, GAO found that almost 90% 
of the current major defense acquisition programs have conducted 
``should cost'' analysis and ``most of those programs noted that they 
had realized or expected to realize some cost savings as a result.'' To 
your knowledge, is DHS employing ``should cost'' analysis? Do you 
recommend that DHS consider it?
    Answer. Response was not received at the time of publication.

                                 
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