Homeland Security: Transformation Strategy Needed to Address	 
Challenges Facing the Federal Protective Service (14-JUL-04,	 
GAO-04-537).							 
                                                                 
With responsibility for protecting thousands of federal 	 
facilities, the Federal Protective Service (FPS), which 	 
transferred from the General Services Administration (GSA) to the
Department of Homeland Security (DHS) in March 2003, plays a	 
critical role in the federal government's defense against the	 
threat of terrorism and other criminal activity. GAO was asked to
determine what challenges, if any, FPS faces now that it has been
transferred from GSA to DHS.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-537 					        
    ACCNO:   A10917						        
  TITLE:     Homeland Security: Transformation Strategy Needed to     
Address Challenges Facing the Federal Protective Service	 
     DATE:   07/14/2004 
  SUBJECT:   Counterterrorism					 
	     Emergency preparedness				 
	     Facility security					 
	     Federal agency reorganization			 
	     Federal facilities 				 
	     National preparedness				 
	     Strategic planning 				 
	     Terrorism						 
	     Internal controls					 
	     Agency missions					 
	     Federal funds					 
	     Homeland Security					 

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GAO-04-537

United States Government Accountability Office

      GAO	Report to the Chairman, Committee on Government Reform, House of
                                Representatives

July 2004

HOMELAND SECURITY

    Transformation Strategy Needed to Address Challenges Facing the Federal
                               Protective Service

                                       a

GAO-04-537

Highlights of GAO-04-537, a report to the Chairman, Committee on
Government Reform, House of Representatives

With responsibility for protecting thousands of federal facilities, the
Federal Protective Service (FPS), which transferred from the General
Services Administration (GSA) to the Department of Homeland Security (DHS)
in March 2003, plays a critical role in the federal government's defense
against the threat of terrorism and other criminal activity. GAO was asked
to determine what challenges, if any, FPS faces now that it has been
transferred from GSA to DHS.

We are recommending that DHS (1) direct FPS to develop a transformation
strategy that addresses its significant challenges; (2) initiate a
dialogue with GSA to resolve disagreement over billing issues; (3) take
immediate steps to ensure that funds collected from agency rents and fees
are used in the future solely for facility protection; and (4) ensure that
DHS is prepared to integrate FPS mission-support functions before these
functions are transferred, even if the target date has to be extended. DHS
concurred with recommendations 1, 3, and 4. DHS and GSA continue to
disagree on whether FPS has the authority to bill agencies for its
services. As such, we added recommendation 2 after receiving comments from
DHS and GSA to encourage a resolution of this disagreement.

www.gao.gov/cgi-bin/getrpt?GAO-04-537.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Mark L. Goldstein at (202)
512-2834 or [email protected].

July 2004

HOMELAND SECURITY

Transformation Strategy Needed to Address Challenges Facing the Federal
Protective Service

FPS faces a number of significant challenges now that it has been
transferred from GSA to DHS. These relate to its expanding mission and
increased responsibility, unresolved issues about how it will be funded in
the future, and the transfer of FPS mission-support functions to DHS.

o  	Expanding mission and increased responsibility. FPS has responsibility
for securing approximately 8,800 GSA government-occupied facilities and as
a result of the transfer, plans to take on additional DHS facilities. FPS
might also seek authority to protect other federal facilities. FPS's
mission has also expanded to include other homeland security functions,
such as support for efforts to apprehend foreign nationals suspected of
illegal activity. In light of these changes, however, FPS does not have a
transformation strategy to address its expanding mission, as well as the
other challenges it is facing.

o  	Unresolved issues related to funding. As part of GSA, FPS was funded
from security fees that were included with tenant agencies' rent payments.
It has not been decided if FPS will begin billing agencies. DHS believes
that FPS lacks the authority to bill agencies for facility protection, but
GSA disagrees with DHS. Also, GSA has historically covered a shortfall
between the cost of security and security fees collected. In commenting on
this report, DHS and GSA said that for fiscal year 2005 the President's
budget includes an increase in the FPS security rate that, if enacted,
will eliminate the shortfall. Related to funding, we also found that FPS's
involvement in homeland security activities not directly related to
facility protection is inconsistent with a requirement in the Homeland
Security Act of 2002 that FPS funding from agency rents and fees be used
solely for the protection of government buildings and grounds.

o  	Transfer of mission-support functions to DHS. FPS still relies on GSA
for mission-support functions, such as travel services, payroll, and
contracting support. DHS plans to assume these functions by the end of
fiscal year 2004. However, assuming these functions prematurely could
affect FPS's ability to accomplish its mission. For example, FPS relies
heavily on contract guards and is dependent on GSA's contracting
management software to write contracts, track costs, and make vendor
payments.

The Federal Protective Service Protects Thousands of Federal Facilities

Contents

  Letter

Results in Brief
Background
Expanding Responsibilities Pose a Challenge for FPS
Issues Related to How FPS is Funded
Successfully Transferring FPS Mission-Support Functions to DHS

Will Be Challenging Considering Key Practices Could Help FPS Address
Challenges and

Achieve a Successful Transformation Conclusions Recommendations for
Executive Action Agency Comments and Our Evaluation

                                                                   1 2 3 6 12

18

22 27 28 29

Appendixes                                                              
                Appendix I:             Scope and Methodology              36 
               Appendix II:    Comments from the Department of Homeland    38 
                                               Security                    
              Appendix III:       Comments from the General Services       43 
                                            Administration                 
                             GAO Legal Analysis of Issues Concerning FPS   
              Appendix IV:                  Activities Not                 
                                    Related to Facility Protection         54 
                                Figure 1: FPS's Location within DHS's         
    Figures                     Organizational Structure Figure 2: FPS      5
                             Officers Engaged in Biological and Chemical   
                                      Weapons Response Training             9 
                             Figure 3: FPS Officers Assisting with Crowd   11 
                                               Control                     
                            Figure 4: Key Practices for Successful Mergers 
                                          and Organizational               
                                           Transformations                 23 

Contents

Abbreviations

DHS U.S. Department of Homeland Security
GSA U.S. General Services Administration
FPS Federal Protective Service
BTS Border and Transportation Security
ICE Immigration and Customs Enforcement
PBS Public Building Service
INS Immigration and Naturalization Service
FAMS Federal Air Marshal Service
NIH National Institutes of Health
OMB Office of Management and Budget

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separately.

A

United States Government Accountability Office Washington, D.C. 20548

July 14, 2004

The Honorable Tom Davis Chairman Committee on Government Reform House of
Representatives

Dear Mr. Chairman:

Attention to the physical security of federal facilities has increased
since the 1995 bombing of the Alfred P. Murrah Federal Building in
Oklahoma City. The September 11, 2001, terrorist attacks further
heightened this concern and led to the consolidation of 22 agencies into
the Department of Homeland Security (DHS). This report responds to your
request for information on the transfer of the Federal Protective Service
(FPS) from the General Services Administration (GSA) to DHS, where FPS is
now part of the Border and Transportation Security Directorate's (BTS)
component known as Immigration and Customs Enforcement (ICE). In creating
DHS, the government's efforts to prevent, protect against, and respond to
potential terrorism were centralized. The establishment of a new federal
department is an enormous undertaking that, in the case of DHS, comes with
significant risk, which is why we designated the implementation and
transformation of DHS as a high-risk area in January 2003. In addition, we
also designated federal real property as a high-risk area affecting
several agencies, due in part to the major challenge of protecting federal
real property from terrorism.

Our objective was to determine what challenges, if any, FPS faces now that
it has been transferred from GSA to DHS. To do this work, we collected and
analyzed agency documents about the transfer. This included policies and
procedures, information about the organizational structure, and
information on other issues related to the transfer, such as funding. We
assessed the reliability of the data we used and found that they were
sufficiently reliable for the purposes of this report. We also interviewed
DHS, FPS, and GSA officials responsible for, and directly affected by, the
transfer. More information on our scope and methodology appears in
appendix I. We conducted our work in Washington, D.C., between September
2003 and May 2004 in accordance with generally accepted government
auditing standards.

Results in Brief	FPS faces a number of significant challenges now that it
has been transferred from GSA to DHS. These relate to its expanding
mission and increased responsibility, unresolved issues about how it will
be funded in the future, and the transfer of FPS mission-support functions
to DHS.

o 	FPS has responsibility for securing approximately 8,800 GSA owned or
occupied federal facilities and plans to take on responsibility for,
according to FPS, approximately 2,500 additional DHS facilities. FPS
officials also discussed the possibility of expanding FPS's
responsibilities to include protection for facilities where GSA had
previously delegated authority to tenant agencies-FPS identified 20
agencies with delegated authority, including the Departments of Defense,
Interior, and State. DHS has also expanded FPS's mission to include other
functions related to homeland security, such as providing backup to other
DHS law enforcement units in the field in efforts to apprehend foreign
nationals suspected of illegal activity and assisting with crowd control
at major protests. Despite these changes and the major transformation FPS
is facing, FPS does not have an overall strategy for how it will carry out
its expanding mission, as well as meet other challenges it faces. For this
reason, we are recommending that FPS develop such a strategy for its own
transformation. In commenting on this report, DHS concurred with our
recommendation to develop a transformation strategy for FPS. DHS said that
it was developing a strategic plan for FPS that would address our
recommendation. Although this plan was not issued when we finalized this
report, it is important to note that a transformation strategy goes beyond
what is typically contained in a strategic plan. Specifically, a
transformation strategy would include overall goals for the transformation
with specific action plans and milestones that would allow FPS to track
critical phases and essential activities.

o 	In addition to these formidable mission-related challenges, there are
unresolved issues related to funding FPS's operations. When FPS was part
of GSA, tenant agencies' rental payments included security fees that GSA
used to fund FPS operations. Now that FPS is part of DHS, determining the
appropriate funding approach for FPS has centered on whether GSA will
continue to bill agencies for FPS's services, which DHS supports, or
whether FPS should take on this function, as GSA would prefer. Comments
from DHS and GSA showed continued disagreement on this issue. As such, we
have added a recommendation to DHS aimed at resolving the disagreement.
Also, GSA has historically

covered a gap that has existed between the cost of protection provided by
FPS and the security fees collected from tenant agencies-GSA said that
this gap was $139 million in fiscal year 2003. In commenting on this
report, DHS and GSA also noted that, for fiscal year 2005, the President's
budget includes an increase in the FPS security rate that, if enacted,
will eliminate the shortfall between FPS collections and the cost of
security. Also related to funding, we found that FPS's involvement in
homeland security activities not directly related to facility protection
is inconsistent with a requirement in the Homeland Security Act of 2002
that FPS funding from agency rents and fees be used solely for the
protection of government buildings and grounds. DHS said that FPS's
involvement in activities not directly related to facility protection did
not affect its primary mission. However, this is still a concern because
of the specific legal requirement that agency rents and fees be used
solely for facility protection. We are recommending that the Secretary of
Homeland Security take immediate steps to ensure that funds collected from
agency rents and fees are used in the future solely for the protection of
government buildings and grounds. DHS concurred with this recommendation
but had concerns about our interpretation of the statute, which are
discussed in more detail in the report.

o 	Another challenge facing FPS is its reliance on GSA for mission-support
functions such as payroll, travel reimbursement, and contracting support.
DHS and GSA did not meet an original goal to transfer these functions by
the end of fiscal year 2003. According to DHS, FPS, and GSA officials, the
delay was caused by issues related to how DHS systems would be integrated,
DHS's focus on integrating larger departmental components, and
difficulties extracting FPS activities from GSA systems. DHS officials
said that they intend to have FPS fully integrated by the end of fiscal
year 2004. However, assuming these functions prematurely could affect
FPS's ability to accomplish its mission. For example, FPS relies heavily
on contract guard services, but according to DHS officials, is dependent
on GSA's contracting management software for tracking costs and managing
vendor payments. As such, we are recommending that the Secretary of
Homeland Security ensure that DHS is prepared to effectively integrate FPS
mission support before these functions are transferred from GSA. DHS
concurred with this recommendation.

Background	FPS was established in 1971 as the uniformed protection force
of GSA government-occupied facilities. FPS has authority, among other
things, to

enforce laws and regulations aimed at protecting federal property and
persons on such property, and to conduct investigations on, federal
property.1 FPS was originally located within GSA's Public Building Service
(PBS). As part of PBS, FPS was responsible for providing law enforcement
and security services to GSA's tenants and the public at about 8,800
federal buildings nationwide. As of September 30, 2003, FPS data show that
FPS had approximately 1,100 uniformed officer full-time equivalents (FTE)2
and 13,000 contract guards to protect GSA-owned or -occupied facilities.
In addition, these data showed that FPS had 353 management and
missionsupport FTE. In addition to managing security at GSA-held
facilities, FPS officers also provide other security services such as
developing risk assessments, installing security equipment, and conducting
criminal investigations.

In response to the 1995 bombing of the Alfred P. Murrah Federal Building
in Oklahoma City, FPS began enhancing its strategy for protecting federal
facilities and making additional security improvements at GSA facilities.
FPS officials said that FPS also began relying more on the use of contract
guards to provide security and law enforcement protection at its
facilities. FPS currently employs approximately 13,000 contract guards.
The level of physical protection services FPS provides at each building
varies. In some cases, FPS has delegated the protection of facilities to
tenant agencies, which may have uniformed officers of their own or may
contract separately for guard services.

The September 11 terrorist attacks resulted in a renewed emphasis on
protecting federal facilities and the nation against terrorist activities.
The attacks prompted Congress to pass the Homeland Security Act, which
created the Department of Homeland Security (DHS). The new department's
mission, among other things, is to prevent terrorist attacks within the
United States, reduce the vulnerability of the United States to terrorism,
and minimize the damage and assist in the recovery from attacks that do
occur. The act combined 22 federal agencies specializing in various
disciplines, such as law enforcement, border security, biological
research, computer security, and disaster mitigation. As a result of the
creation of

140 U.S.C.A. S: 1315.

2Civilian employment in the executive branch is measured on the basis of
full-time equivalents (FTE). One FTE is equal to one work year or 2,080
nonovertime hours. For example, one full-time employee counts as one FTE,
and two half-time employees also count as one FTE.

DHS, FPS was moved from GSA to the new department, effective March 1,
2003. Within DHS, FPS became part of the Border and Transportation
Security Directorate's (BTS) component known as Immigration and Customs
Enforcement (ICE). BTS is tasked with securing the nation's borders and
safeguarding its transportation infrastructure. ICE is the investigative
and law enforcement arm of BTS and is composed primarily of the
investigative components that were formerly part of the U.S. Customs
Service (Customs) and the Immigration and Naturalization Service (INS).
ICE also includes FPS, the Federal Air Marshal Service (FAMS), and a
number of other offices. Figure 1 shows FPS's location within DHS's
organizational structure.

Figure 1: FPS's Location within DHS's Organizational Structure

U.S. Department of Homeland Security

Source: FPS.

The transfer of FPS is only one of a number of organizational transfers
and related changes that DHS is managing. While DHS faces the challenge of
protecting the nation from terrorism, it is also tasked with combining a
disparate group of agencies with multiple missions and unique cultures.
Recognizing that the establishment of a new department is an enormous
undertaking, GAO designated the implementation and transformation of

DHS as high-risk in January 2003. This designation is based on three
factors: (1) the size and complexity of the undertaking, (2) the merging
agencies have an array of existing management challenges, and (3) failure
by DHS has potentially serious consequences.3 In January 2003, GAO also
designated federal real property as a high-risk area in part because of
the major challenges agencies face in protecting federal real property
from terrorism.4

  Expanding Responsibilities Pose a Challenge for FPS

Under the Homeland Security Act, DHS became responsible for protecting
buildings, grounds, and property owned, occupied, or secured by the
federal government that are under GSA's jurisdiction.5 In addition to GSA
facilities, the act also provides FPS with the authority to protect the
buildings, grounds, and property of other agencies whose functions were
transferred to DHS.6 This effectively meant that FPS, which was merged
into DHS, would continue its role as the security and protection force for
GSA real property assets as well as DHS properties not held by GSA, and
would be performing this function as part of DHS.7 A March 2003
operational memorandum of agreement between GSA and DHS made FPS
responsible for the same types of security services for GSA facilities
that FPS provided before the move to DHS. These include performing risk
assessments, managing the installation of security equipment, and
conducting criminal investigations. With regard to non-GSA properties,
this amounts to approximately 2,500 properties that were held by DHS
components and were not part of the GSA real property inventory, according
to the FPS chief of staff. This official said that in fiscal year 2005,
FPS would collect information, determine the risk categories, and identify
existing law enforcement and protective measures at each DHS facility.

3U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119
(Washington, D.C.: January 2003).

4See GAO-03-119 and U.S. General Accounting Office, High-Risk Series:
Federal Real Property, GAO-03-122 (Washington, D.C.: January 2003).

540 U.S.C.A. S: 1315 and 6 U.S.C.A. S: 203.

640 U.S.C.A. S: 1315.

7In technical comments on this report, the U.S. Secret Service said that
FPS plans to take on responsibility for protecting DHS facilities not
otherwise protected by the U.S. Secret Service in connection with its
protective responsibilities under 18 U.S.C. S: 3056, or otherwise under
the control of the U.S. Secret Service.

FPS plans to use this information to develop a strategy that lays out how
FPS can take over responsibility for security at the 2,500 additional DHS
properties. FPS's chief of staff told us that it might take a number of
years before FPS fully assumes control of security at these facilities.

The Director of FPS said that eventually FPS might seek to expand its
responsibilities to include protection for facilities where GSA had
previously delegated authority to tenant agencies, as well as other
facilities where agencies have protective forces with missions similar to
that of FPS. The Director of FPS stressed that expanding FPS's authority
further is a long-term vision and that FPS is still examining the
feasibility of different options. FPS provided information identifying 20
agencies where GSA had previously delegated some of its authority for
facility protection or contract guard services. This included various
facilities occupied by the Departments of Defense, Agriculture, Commerce,
Health and Human Services, Interior, Justice, Labor, State, and
Transportation. The Director of FPS said that, in addition, a number of
agencies have their own security forces and that it does not make sense
for the federal government to have multiple security forces, all charged
with facility protection. An example FPS provided was the National
Institutes of Health (NIH), which has a small police force charged with
protecting NIH's Bethesda, Maryland, campus. FPS officials added that the
Homeland Security Act, in their view, provides FPS with the authority for
extending FPS's protection responsibilities because it provides the
Secretary of Homeland Security with broad authority in implementing
actions deemed necessary to protect against terrorism.8 In commenting on a
draft of this report, DHS said that we took the comments of the Director
out of context. DHS also had concerns with our summary and synthesis of
the relevant statutory requirements FPS has that are related to FPS's
responsibility for protecting federal buildings, grounds, and property.
DHS's comments and our evaluation of them are discussed in more detail in
the agency comments section of this report.

FPS Has New Law In addition to increased responsibility in terms of the
number of buildings
Enforcement Authority and under its control, the Homeland Security Act
gave FPS new law
Assists with Other DHS enforcement authority for use in carrying out its
facility protection mission.
Activities This new law enforcement authority empowers officers and
special agents

86 U.S.C.A. S: 111.

to take action off of federal property to protect the property and the
public.9 It also allows officers to enter into agreements with state and
local law enforcement personnel to carry out activities that promote
homeland security. Previously, FPS officers were not authorized to enforce
laws off of federal property and, for example, would have to contact local
law enforcement personnel to handle illegal activity on the street in
front of federal buildings, if it were to occur. FPS officials said that
the new authority would better allow them to protect facilities and become
more involved in intergovernmental activities aimed at promoting homeland
security, such as biological and chemical weapons response training (see
fig. 2).

940 U.S.C.A. S: 1315.

Figure 2: FPS Officers Engaged in Biological and Chemical Weapons Response
Training

Source: FPS.

DHS has also broadened FPS's responsibilities to include assisting with
homeland security activities that are not directly related to facility

protection. For example, FPS officials said that FPS officers have
provided backup for other DHS law enforcement officers in
immigration-related work, such as "Operation Predator," a program aimed at
arresting foreign nationals involved in child pornography. In addition,
FPS officials said that FPS officers assisted with various DHS
activities-such as crowd control at the free trade protests in Miami,
Florida, and protection for major national events such as the Olympics. At
the time of our review, FPS's Web site also listed other activities,
including support for security at the Kentucky Derby, which did not relate
directly to federal facility protection. We also noted instances where the
press reported on FPS participation in other activities, such as
involvement in sobriety checks and safety patrols in San Francisco,
California. FPS officials said that participation in these activities was
intended to enhance FPS's integration into DHS and that FPS's
participation in these types of activities will likely continue. FPS's
involvement in these activities, and, more specifically, issues related to
how they are funded, will be discussed in more detail later in this report
and in appendix IV. Figure 3 shows FPS officers assisting with crowd
control at a protest.

Figure 3: FPS Officers Assisting with Crowd Control

Source: FPS.

FPS's expanding mission and increased responsibility represent a
formidable change for the agency. Transferring to a new federal department
is a significant undertaking for any organization. Yet FPS-like several
other DHS components-is transferring to DHS while simultaneously focusing
on new issues that reflect fundamental changes since September 11 in how
the government approaches homeland security issues. In our report
designating the establishment of DHS as a high-risk area, we

emphasized that the magnitude of the responsibilities, combined with the
challenge and complexity of the transformation, underscores the
perseverance and dedication that will be required of all DHS's leaders,
employees, and stakeholders in order to achieve success.10 The Director of
FPS agreed with our assessment that the mission-related changes FPS is
facing represent a formidable challenge. However, our work showed that FPS
does not have a strategy for how it will carry out its expanding mission
and increased responsibility, as well as meet the other challenges it is
facing. FPS's need for such a transformation strategy, as well as its
belief that it is embracing these changes as an opportunity for a positive
transformation, are discussed in more detail later in this report.

  Issues Related to How FPS is Funded

Maintaining a means of funding FPS that will ensure the adequate
protection of federal facilities and allow FPS to meet new homeland
security responsibilities is another challenge. When it was part of GSA,
FPS was funded through security fees that were included with the rent
payments GSA received from tenant agencies. In March 2003, just after
FPS's transfer, GSA and DHS agreed that for fiscal year 2004, GSA would
continue to collect security fees on behalf of FPS and transfer these
funds to DHS. DHS's fiscal year 2004 appropriations act identifies about
$424 million to be transferred from the revenue and collections in the
federal buildings fund11 to DHS for FPS operations. According to FPS
officials, the security fees GSA collects are intended to cover security
standards designated for each building. These standards cover perimeter,
entry, and

10GAO-03-119.

11Established by Congress in 1972 and administered by GSA, the federal
buildings fund is a revolving fund in the U.S. Treasury into which federal
agency rent and certain other moneys are deposited. Moneys deposited into
the fund are available, subject to congressional appropriation, for GSA's
real property management and related activities.

interior security and security planning matters.12 Under this process, GSA
would bill agencies for security services on a prorated, square-foot
basis, depending on the amount of space each agency occupied. 13 In
addition to these security services, FPS also provides agencies with
additional services, upon request, under its reimbursable program. For
example, agencies may request additional magnetometers or more advanced
perimeter surveillance capabilities. For fiscal year 2004, FPS's
reimbursable program will provide an estimated $337 million in funding for
these requests, according to FPS's chief of staff.

The President's fiscal year 2005 budget, released in February 2004,
proposes that security fee collections be credited to the FPS account in
the Department of the Treasury and identifies $478 million in funding for
FPS. GSA and FPS officials said that for fiscal year 2005, an approach is
under consideration whereby GSA would send tenant agencies separate bills
for security and rent. Instead of collecting security fees with agency
rental payments, tenant agencies would send the security fees directly to
the FPS account at Treasury. Under this approach, these officials said
that these funds would not pass through the federal buildings fund. In
addition, estimates in the President's 2005 budget for the reimbursable
program remained at $337 million, unchanged from fiscal year 2004. In its
written response to several funding questions we posed to FPS officials,
DHS said

12The Department of Justice's June 1995 report, Vulnerability Assessment
of Federal Facilities, designated security levels I through V into which
federal buildings were classified. Fifty-two minimum standards were
established, with level I having 18 minimum standards and level V having
39 minimum standards. Examples of minimum standards include lighting with
emergency power backup for all buildings (perimeter security), intrusion
detection systems for building levels III through V (entry security),
visitor control systems for building levels II through V (interior
security), and standard armed and unarmed guard qualifications/training
requirements in all buildings (security planning). FPS uses periodic risk
assessments to validate the current security standards and countermeasures
in place at each facility as well as determine additional security
enhancements based on identified threats.

13GSA security fees consisted of two separate components: basic and
building-specific service fees. Basic security fees cover security
services provided by FPS to all GSA tenants and include such services as
patrol and response, security surveys, alarm monitoring, salaries, and
other common cost items. This fee is included in each rent bill on a
cost-persquare-foot basis. Building-specific security fees are for
security measures specific to a particular building based on its
designated security level. For example, a level IV building may have more
guards, magnetometers, and cameras than a level I building.
Buildingspecific fees are also charged to GSA tenants based on the square
feet they occupy in the building. In technical comments on this report,
the U.S. Secret Service pointed out that some agencies occupying
commercial space do not receive services from FPS, but are required to pay
for FPS benefits at a basic charge per square foot.

that FPS was exploring potential future funding strategies that would
better support the expanded mission and revised law enforcement
responsibilities associated with the transfer to DHS. Although no
decisions have been made regarding how FPS will be funded in the future,
DHS, FPS, and GSA officials indicated that discussions to date have
centered on whether GSA would continue its practice of billing agencies
for security services or whether this should be done by FPS. In DHS's
written response on funding issues, DHS took the position that billing
individual agencies for the security services FPS provides for GSA
buildings was GSA's responsibility.

Specifically,

o 	DHS said that the billing process and equitable distribution of
security costs among the occupants of federal buildings is inherently a
real estate function. As such, distributing security costs is similar to
distributing utility costs, operation and maintenance costs of major
building mechanical systems, and other shared costs. For federal buildings
in GSA's inventory, DHS said that this responsibility is specifically
reserved for GSA.

o 	DHS said that the Homeland Security Act made it clear that GSA would
continue to be responsible for all real estate-related functions, such as
collecting rents and fees, including fees collected for protective
services.14

o 	DHS said that the transfer of FPS to DHS makes it clear that the
primary mission of FPS is to protect buildings and grounds owned or
occupied by the federal government and the persons on the property.15
According to DHS, FPS does not have the mission or authority to establish
a separate, duplicative billing and collection process, similar to the one
presently established and operated in support of the GSA real estate
mission.

DHS added that one possible approach would entail FPS providing GSA with
the estimated total costs for its basic law enforcement and protective
services. Under this approach, which amounts to FPS billing GSA in one

146 U.S.C.A. S: 232. 15Pub.L. 107-296, Section 1706(b)(1).

lump sum for its services, GSA would then determine the best method for
distributing these costs equitably among the tenant agencies. FPS would
also provide separate cost estimates for the additional costs that are
associated with specific buildings, and GSA would determine the
appropriate distribution of these costs among the tenants occupying the
building. GSA officials we interviewed had a markedly different view from
that of DHS on whether GSA or FPS should bill agencies for security
services in the future. According to the Deputy Commissioner of the Public
Buildings Service and a GSA budget official, GSA does not want to be
involved in billing agencies for FPS security services. These officials
said that GSA feels very strongly about this because GSA no longer has
control over setting security rates and the level of security required at
each building.

In addition, in commenting on a draft of this report, GSA provided a legal
analysis that disagreed with DHS's position that FPS lacks authority to
bill agencies for security services. GSA said that it considers incorrect
any implication that GSA is responsible for billing and collecting fees
owed to DHS for FPS-furnished services and that FPS does not have the
authority to bill for such services. GSA's complete legal analysis is
included in appendix III. GSA continued that as a matter of government
efficiency, and in the interest of avoiding unnecessary duplicative
systems, GSA could agree to continue to use its systems to produce and
distribute a bill on behalf of FPS. GSA added that while it is authorized
to provide its billing services to FPS on a reimbursable basis, this does
not mean that DHS's billing responsibilities for FPS-provided services
belong to GSA. We did not determine whether DHS or GSA was correct in its
legal analysis of issues related to billing. However, because of the
differing views of DHS and GSA, it would be useful for DHS and GSA to
engage in further dialogue so that agreement can be reached. It would be
appropriate, in our view, for DHS to initiate these discussions, since FPS
is now part of DHS. If, after further discussion, DHS and GSA still
disagree on issues related to authority for billing, it would be
worthwhile to seek resolution from the Office of Management and Budget
(OMB) or the Treasury.

Although issues related to authority for billing agencies were unresolved,
we had the following observations related to various options: having GSA
continue to bill for security fees makes FPS dependent on GSA to implement
a funding mechanism for its operations; in addition to limiting FPS's
control over this process, this could also make it unclear which agency is
accountable to tenant agencies and other stakeholders. On the other hand,
much work would likely be needed for FPS to develop the

expertise, information, and systems for interfacing with GSA and tenant
agencies if FPS were to take over the billing function. For example, on
the basis of our discussions with GSA and FPS officials, FPS would need to
cover the costs of, and develop a method for, collecting up-to-date data
on buildings in the GSA inventory and agency space assignments. FPS would
also need a financial management function for billing and collections, or
DHS would have to integrate such a process into its financial management
systems.

Regarding DHS's suggestion that a possible approach might entail FPS
providing a total estimated cost to GSA, it would be critical for FPS to
develop and provide reliable data and GSA would need assurance that FPS
was doing so. Providing reliable data would be a challenge for FPS
because, as will be discussed in more detail later, DHS faces challenges
related to integrating its component agencies' mission support systems and
producing reliable management information. Nonetheless, DHS emphasized in
its discussion on funding issues that FPS is working to establish the
appropriate level of law enforcement and protective services required and
is developing a plan for phasing these requirements and their related
costs into subsequent budget years. DHS said that this process would
utilize historical costs, workload, benchmarks, and best practices
collected from federal, state, and local agencies that perform similar
functions.

As FPS moves forward, accurately identifying costs would also be important
because of shortfalls GSA has experienced between collections and the cost
of providing security. According to FPS's director of financial management
and a GSA budget official familiar with FPS funding issues, the security
fees GSA charges tenant agencies historically have not been sufficient to
cover FPS operations. To address the past shortfalls, GSA has covered the
additional costs with other funds from the federal buildings fund. For
example, according to a GSA budget official, security fees in fiscal year
2003 generated about $139 million less than it cost to fund the basic
services that FPS provides to tenant agencies. According to these GSA and
FPS officials, the shortfalls have been caused over the years by
increasing security costs and restrictions on tenant agencies' rental
payments that were enacted in legislation. In commenting on this report,
DHS and GSA also noted that for fiscal year 2005 the President's budget
includes an increase in the FPS security rate that, if enacted, will
eliminate the shortfall between FPS collections and the cost of security.
Nonetheless, even if this increase helps close the gap between the cost of
security and tenant payments, the accurate identification of costs still
represents a

challenge that may need to be addressed if the mechanism for funding FPS
were restructured.

    Funding for Some FPS Activities Not Directly Related to Facility Protection

DHS has broadened FPS's responsibilities to include assisting with
homeland security activities that are not directly related to building
protection. FPS officials said that these activities have primarily
included providing backup to other DHS law enforcement units in the field
and that DHS has the authority under the Homeland Security Act to engage
FPS in activities DHS deems necessary to enhance homeland security.
However, engaging FPS in these activities under its current funding
structure is inconsistent with a provision of the act that provides that
funds transferred by GSA to DHS from rents and fees collected by GSA are
to be used solely for the protection of federal buildings and grounds.16
FPS officials said that GSA-transferred funds have been FPS's only source
of funding for the security services it provides and that the reimbursable
funds it receives from agencies are tied to specific agency requirements.
It is our position that DHS's use of FPS staff time and other resources
for activities that are not directly related to the protection of federal
buildings and grounds is inconsistent with the act, which limits the use
of agency funds from rents and fees to the protection of buildings and
grounds owned or occupied by the federal government.

In November 2003, we requested that DHS provide information on the extent
of FPS's involvement in activities not related to building protection, the
legal basis for any such activities, and the reasons these activities
would be permissible in light of the act's prohibition on the use of funds
transferred from GSA to DHS. In a written response from DHS's Under
Secretary for Border and Transportation Security, DHS stated that it did
not keep detailed records of these activities. DHS said that FPS's
involvement in these activities was minor, or de minimus, and that FPS
only performed an assist role. DHS added that the support FPS provided did
not affect the accomplishment of FPS's mission and that its participation
in operations away from federal facilities was minimal. DHS indicated in
its response that these activities were permissible because they had no
impact on FPS operations and because no special equipment was procured for
these activities.

166 U.S.C.A. S: 232.

We understand that FPS's involvement in these activities was, in DHS's
view, minor and may not have had a direct effect on facility protection.
We also understand, as DHS pointed out, that FPS's involvement in such
activities can strengthen interoperability and bonding between FPS and
other DHS law enforcement units. However, the funding of FPS's involvement
in these activities is a concern because of the specific statutory
language contained in the Homeland Security Act related to the use of
funds collected from agency rents and fees. At a minimum, if DHS plans to
continue and perhaps increase FPS's involvement in these activities,
having a means of reimbursing FPS, or funding these activities separately,
would be consistent with the requirement that funds from agency rents and
fees intended for facility protection are used for that purpose. Also,
funding these activities separately would make it necessary for DHS to
track them and develop a way to account for their costs. Having such a
process would, as a result, allow for greater accountability with regard
to the deployment of FPS resources. In its written response to questions
we had during our review on funding issues, DHS said that FPS has an
established process for recouping expenses of a reimbursable nature. DHS
acknowledged that this process could also be used-within DHS-to recoup the
cost of non-facility-protection-related activities currently being
performed by FPS.

In commenting on this report, DHS again expressed its view that such
activities would not have to be reimbursed if they are of limited duration
with local offices, ad hoc, and do not increase the direct costs of FPS
operations and investment in staff. DHS said it proposes to issue guidance
to this effect. We continue to disagree with DHS on this issue and believe
that the proposed guidance would not be appropriate. The agency comments
section of this report and appendix IV contain a complete discussion of
our position.

  Successfully Transferring FPS Mission-Support Functions to DHS Will Be
  Challenging

In addition to challenges associated with expanding responsibilities and
establishing a funding mechanism, FPS still was relying on GSA for many of
its mission-support functions. As part of GSA, FPS was not self-sufficient
with respect to mission-support functions, including payroll, travel
services, and contracting. These functions were performed for FPS by
mission-support staff located in other GSA organizational units. For
example, its contracting functions-which are integral to FPS's mission
because of FPS's extensive use of contract guards-were handled by the
contracting component of GSA's Public Buildings Service. Furthermore, FPS
employees used GSA's centralized, integrated administrative system,

known as FedDesk, to perform many day-to-day functions such as time and
attendance and travel requests and reimbursement. According to FPS
officials, FPS's reliance on staff and systems outside of its organization
was different from other, larger agencies that moved to DHS and had
internal mission-support functions and systems that were transferred to
DHS with the organizations.

Recognizing that FPS faced a challenge, DHS and GSA signed a
missionsupport memorandum of agreement in February 2003 so that GSA could
continue to support FPS after the transfer. Under this agreement, GSA
would provide FPS with reimbursable mission support for human resources,
payroll, information technology, and some contracting functions until
these functions were transferred to DHS. FPS officials said that funds
used to reimburse GSA for these services were to come out of agency rents
and fees originally transferred from GSA. DHS and GSA set a goal of the
end of fiscal year 2003 for this transfer. However, GSA and DHS were
unable to meet this goal and opted to extend the agreement until the end
of fiscal year 2004. According to DHS, GSA, and FPS officials that we
interviewed, the transfer of mission support did not occur for the
following reasons:

o 	DHS was still in the process of determining which mission support
systems it would adopt from agencies and organizations that had
transferred into DHS and how the various systems would be integrated;

o 	DHS management was focusing its efforts on the transfer of larger
agencies, such as INS and Customs, and DHS believed that since FPS was
being supported by GSA, DHS could focus on agencies that were larger and
were a greater priority; and

o 	FPS activities were deeply integrated into GSA's mission-support
systems. For example, FPS's e-mail, telecommunications, travel, time and
attendance, and human resource systems are all part of GSA's FedDesk
system, and extracting them individually for use by DHS would be
difficult.

DHS officials said that they intend to have FPS mission support fully
integrated before the end of fiscal year 2004. Specifically, at the time
of our review, DHS intended to transfer FPS's information technology
support by June 2004 and the remaining administrative systems-human
resources, travel, payroll, and contracting support-by September 2004. We
did not assess the effect that FPS's reliance on GSA for mission support
had on

FPS's effectiveness in protecting facilities. In commenting on this
report's discussion of contracting, DHS stated that the contracting
function does not pose a challenge because it has already transferred from
GSA to DHS. According to DHS, FPS has a senior contracting specialist at
headquarters who oversees policies and standards for the contract guard
program. DHS added that 24 contracting officers are currently managing FPS
contracts throughout FPS's 11 regions. Nonetheless, we still believe that
the contracting area poses a challenge because of FPS's continued reliance
on GSA to support this function. More specifically, although FPS has
contracting staff on line, GSA and FPS officials told us that FPS has
continued to use GSA's contracting management software to write contracts,
track costs, and make vendor payments. Contracting support, at the time of
our review, had not been integrated into DHS's systems. The January 2004
mission-support memorandum of agreement between GSA and DHS specifies that
FPS will pay GSA about $544,000 for these services for fiscal year 2004.
Because contracting support is critical to FPS's ability to accomplish its
mission due to its reliance on contract guards, a smooth transfer of these
functions will be imperative.

During our review, we also found other difficulties that FPS had
encountered related to mission support. FPS officials said that their lack
of in-house mission support resulted in instances where law enforcement
officers had to assume administrative duties. For example, according to
these officials, law enforcement personnel played a large role in
resolving problems FPS was having in October 2003 with government purchase
cards that were issued by DHS. These cards, FPS officials explained, were
not compatible with GSA's financial systems because the DHS cards were
from a different financial institution. FPS officials acknowledged that
having law enforcement officers perform these types of functions could
divert resources from protecting facilities and participating in other
homeland security activities. Furthermore, these officials said that there
has been confusion about whether FPS should adhere to GSA or DHS
administrative policies and procedures, as well as where they should go
for assistance or to get approval for administrative issues. For example,
a senior FPS official said that in October 2003, 7 months after the
transfer, DHS and GSA had not resolved which agency would approve restored
annual leave for officers who were required to be on duty because of
emergencies. In commenting on this report, GSA said that the January 2004
memorandum of agreement between GSA and DHS had resolved many of the
issues related to administrative policies and procedures. Also, DHS said
in its comments that related to travel, ICE has implemented an electronic
travel system to move to a more efficient travel authorization and
vouchering process.

Clearly, FPS faces a major challenge integrating its mission-support
activities with DHS. In fact, FPS's situation is symptomatic of the
broader mission support and information system challenges DHS is facing as
a new federal department. In our January 2003 Performance and
Accountability Series report on DHS, we reported that DHS faces
considerable challenges in integrating the many systems and processes that
provide management with decision information.17 We encouraged DHS to
identify its needs in order to build effective systems that can support
the national homeland security strategy in the future. Furthermore, DHS
would be faced with the challenge of integrating the contracting functions
of its many constituent programs and missions, some of which have had past
deficiencies. For example, in May 2002, we reported that for its import
processing system, Customs lacked important acquisition management
controls.18 In July 2003, we reported that INS did not have the basic
infrastructure-including oversight, information, and an acquisition
workforce-in place to ensure that its contracting activity is effective.19
Customs and INS concurred with our findings and agreed to take action.
These concerns about contracting issues have implications for FPS given
that it relies heavily on contracting, through its contract guard program,
to accomplish its mission. Overall, given the concerns about DHS's ability
to integrate FPS mission-support activities, FPS's ability to accomplish
its mission could be affected if these functions were to be transferred
prematurely. Therefore, it is important for DHS to ensure that it can
effectively integrate these functions before they are transferred from
GSA, even if it is necessary to extend the September 2004 target date.

17U.S. General Accounting Office, Major Management Challenges and Program
Risks: Department of Homeland Security, GAO-03-102 (Washington, D.C.:
January 2003).

18U.S. General Accounting Office, Customs Service Modernization:
Management Improvements Needed on High-Risk Automated Commercial
Environment Project, GAO02-545 (Washington, D.C.: May 13, 2002).

19U.S. General Accounting Office, Contract Management: INS Contracting
Weaknesses Need Attention from the Department of Homeland Security,
GAO-03-799 (Washington, D.C.: July 25, 2003).

  Considering Key Practices Could Help FPS Address Challenges and Achieve a
  Successful Transformation

Despite the challenges it faces, FPS's transfer to DHS presents an
opportunity for a positive transformation. According to FPS officials, the
transfer has given FPS the opportunity to reevaluate its mission and
assess whether it is sufficiently organized and equipped to meet its new
and broader roles. FPS's top management team has embraced the new role in
homeland security and is eager to become fully integrated with a law
enforcement agency. These officials added that they have begun to rethink
FPS's approaches and priorities so that FPS can better protect federal
facilities, the employees who occupy them, and the visiting public. Fully
implementing the transfer into DHS and completing the type of
transformation FPS envisions will be critical to FPS's long-term viability
and success. Yet, given the challenges we identified, carrying out this
transformation will be no easy task. To better ensure a successful
transformation, FPS and its stakeholders could benefit from considering
the experiences of other organizations that have undergone successful
mergers and transformations. GAO's July 2003 report on implementation
steps to assist mergers and transformations identified key practices
followed by public and private sector organizations that have led to
success.20 These key practices are shown in figure 4 and are briefly
described below. A more comprehensive discussion of these practices and
related implementation steps can be found in our July 2003 report.

20U.S. General Accounting Office, Results-Oriented Cultures:
Implementation Steps to Assist Mergers and Organizational Transformations,
GAO-03-669 (Washington, D.C.: July 2, 2003).

Figure 4: Key Practices for Successful Mergers and Organizational
Transformations

Sources: GAO (presentation); Photos: Photo Disc, Dynamic Graphics,
EyeWire, and Ingram Publishing.

o 	Ensure top leadership drives the transformation-Because a merger or
transformation entails fundamental and often-radical change, strong and
inspirational leadership is indispensable. Top leadership must set the
direction, pace, and tone and provide a clear, consistent rationale that
brings everyone together behind a single mission.

o 	Establish a coherent mission and integrated strategic goals to guide
the transformation-The mission and strategic goals of a transformed
organization must become the focus of the transformation, define the
culture, and serve as the vehicle for employees to unite and rally around.
Mission clarity is especially essential to define the purpose of the
transition to employees, customers, and stakeholders. The strategic goals
must align with and support the mission and serve as continuing guideposts
for agency decision making.

o 	Focus on a key set of principles and priorities at the outset of the
transformation-A clear set of principles and priorities serves as a
framework to help the organization create a new culture and drive employee
behaviors. Focusing on these principles and priorities helps

the organization focus on performing mission-related activities while
maintaining its drive toward achieving the goals of the transformation.

o 	Set implementation goals and a timeline to build momentum and show
progress-A merger or transformation is a substantial commitment that could
take years to complete and therefore must be carefully monitored. As a
result, it is essential to establish long-term action-oriented
implementation goals and a timeline with milestones to track the
organization's progress toward its short-and long-term transformation
goals.

o 	Dedicate an implementation team to manage the transformation
process-Dedicating a strong and stable implementation or integration team
that will be responsible for the transformation's day-to-day management is
important to ensuring that the transformation receives the focused,
full-time attention needed to be sustained and successful. Specifically,
the implementation team is important to ensuring that various change
initiatives are sequenced and implemented in a coherent and integrated
way. Top leadership must give the team the necessary authority and
resources to set priorities, make timely decisions, and move quickly to
implement top leadership's decisions regarding the transformation.

o 	Use a performance management system to define responsibility and ensure
accountability for change-An organization's performance management system
is a vital tool for aligning the organization with desired results and
showing how team, unit, and individual performance contribute to overall
organizational results. Performance management systems can help manage and
direct the transformation process. These systems are the basis for setting
employee's expectations in the transformation process and evaluating
individual contributions to the success of the transformation process and
organizational results.

o 	Establish a communication strategy to create shared expectations and
report related progress-Creating an effective internal and external
communication strategy is essential to implementing a merger or
transformation. Communication is most effective when it occurs early and
often and when it is downward, upward, and lateral. Organizations have
found that communicating information early and often helps to build trust
among employees and stakeholders, as well as an understanding of the
purpose of planned changes. Organizations must develop a comprehensive
communication strategy that reaches out to

employees, customers, and stakeholders and seeks to engage them in the
transformation process.

o 	Involve employees to obtain their ideas and gain their ownership for
the transformation-A successful merger and transformation must involve
employees and their representatives from the beginning to gain their
ownership of the changes that are occurring in the organization. Employee
involvement strengthens the transformation process by including frontline
perspectives and experiences. Further, employee involvement helps to
create the opportunity to establish new networks, increase employees'
understanding and acceptance of organizational goals and objectives, and
gain ownership of new policies and procedures.

o 	Build a world-class organization-Successful organizations continually
seek to implement best practices in processes and systems in areas such as
information technology, financial management, acquisition management, and
human capital.

We did not do an in-depth analysis comparing these practices with FPS's
transformation efforts. Nonetheless, FPS officials, including its
Director, agreed that it would be useful for FPS to consider following
these practices. FPS provided examples where it believed its efforts
reflected these practices. These related to areas such as FPS's heavy
involvement on departmentwide teams dedicated to integrating DHS's
components, participating in the development of a strategic plan for DHS,
and improving its core competencies in, for example, law enforcement
training, so that it is better prepared to fulfill its expanding mission
and responsibilities. However, we noted other critical areas reflected in
the key practices where greater attention could, in our view, enhance
FPS's chances of making a successful transformation. For example, although
FPS has provided input to DHS's strategic plan,21 which was released in
February 2004, FPS has not developed a transformation strategy of its own
that reflects key practices. Such a strategy could contain implementation
goals, measures, and a timeline that FPS could use to show progress toward
its transformation. In addition to containing goals and measures related
to progress with its transformation, FPS could use such a plan as a
platform for demonstrating its effectiveness with its mission to protect
federal facilities and

21U.S. Department of Homeland Security, Securing our Homeland: U.S.
Department of Homeland Security Strategic Plan (Washington, D.C.: February
2004).

performance in other homeland security activities. It could also
demonstrate how FPS's transformation links with the broader goals and
objectives that are contained in DHS's strategic plan that relate to
facility protection and FPS's other homeland security activities. To be
more effective, it could also be linked to DHS's ongoing integration
efforts. Incorporating key practices into FPS's ongoing transformation
efforts could be particularly helpful given the significant challenges FPS
is facing. These challenges-FPS's expanding mission and increased
responsibility, unresolved issues related to funding, and the transfer of
mission support from GSA to DHS-will complicate FPS's transformation
efforts until they are addressed or, at a minimum, factored into FPS's
transformation planning efforts.

In commenting on a draft of this report, DHS said that in March 2004 FPS
began developing its own strategic plan, which DHS said would support the
overall goals and objectives of the DHS strategic plan and would be
consistent with GAO's key practices for organizational mergers and
transformations. At the time this report was finalized, FPS's strategic
plan had not been issued. However, it is important to note that a
transformation strategy would contain information beyond what would be
found in a typical strategic plan. The agency comments section of this
report further discusses transformation strategies and what they contain.

Our past work has discussed adopting similar practices for DHS.
Recognizing that the establishment of a new department is an enormous
undertaking, we designated the implementation and transformation of DHS as
high-risk in our January 2003 Performance and Accountability and High Risk
series.22 We reported that in addition to the high risk associated with
developing a new department from a multitude of agencies, DHS is
confronted with a number of existing major management challenges from the
functions and organizations being transferred to it. We encouraged DHS to
implement some of the key practices to assist mergers and organizational
transformations discussed earlier, including clearly defining the mission
and goals of the new department, devoting sustained efforts to transition
planning, and involving employees in the transformation process.

We also recommended adopting similar practices at DHS components such as
the U.S. Coast Guard and FAMS. In our work looking at the transition of
the Coast Guard to DHS, we reported that the Coast Guard was

22GAO-03-119.

experiencing numerous implementation challenges as it transitioned to
DHS.23 These challenges include developing a new strategic plan that
reflects the Coast Guard's wide variety of missions, establishing
effective communication links and partnerships within DHS and with
external organizations, and establishing performance management systems
that incorporate the Coast Guard's new homeland security mission. We
suggested that the Coast Guard could also benefit from implementing the
key practices for mergers and transformations. Lastly, we reported that
FAMS is facing challenges in implementing changes resulting from its
merger into DHS, including issues related to roles and responsibilities,
training, and coordination with external organizations such as
Transportation Security Administration.24 We recommended the
implementation of some of the key practices to help FAMS with such
changes. DHS, FAMS, and the Coast Guard concurred with our
recommendations. For example, in commenting on the recommendations for
FAMS, DHS said that it welcomed our proposals for using key practices that
would ultimately maximize FAMS's ability to protect the American people,
contribute to the protection of the nation's critical infrastructure, and
preserve the viability of the aviation industry.

Conclusions	With its critical role in protecting federal real property
against the threat of terrorism and other criminal activity, it is
imperative that FPS's transfer to DHS and its related transformation are
successful. However, in addition to the inherent challenges any
organization would face in becoming part of a new federal department, FPS
brings a set of unique challenges that have great bearing on its ability
to accomplish its mission. Given the significance of the challenges it is
facing-an expanding mission and increased responsibility; unresolved
issues related to funding, including past shortfalls that were covered by
GSA; and various mission-support issues- FPS could benefit from a
transformation strategy that effectively makes the case for what type of
organization it believes it should become and provides a road map for
getting there. Consideration of key practices that

23U.S. General Accounting Office, Homeland Security: Challenges Facing the
Coast Guard as it Transitions to the New Department, GAO-03-467T
(Washington, D.C.: Feb. 12, 2003).

24U.S. General Accounting Office, Aviation Security: Federal Air Marshal
Service Is Addressing Challenges of Its Expanding Mission and Workforce,
but Additional Actions Needed, GAO-04-242 (Washington, D.C.: Nov. 19,
2003).

others have focused on to successfully transform their organizations could
be an important part of such a strategy.

Related to funding, it would be appropriate for DHS to initiate a dialogue
with GSA aimed at resolving the disagreement concerning FPS's authority to
bill agencies for security services. Regarding FPS's involvement in
homeland security activities not related to facility protection, such
involvement is a concern because of the requirement in the Homeland
Security Act that agency rents and fees be used solely for the protection
of federal buildings and grounds. At a minimum, if DHS plans to continue
and perhaps increase FPS's involvement in these activities, having a means
of reimbursing FPS, or funding these activities separately, would be
consistent with the requirement that funds from agency rents and fees
intended for facility protection are used for that purpose. Also, funding
these activities separately would make it necessary for DHS to track them
and develop a way to account for their costs. Finally, ensuring a seamless
transfer of mission-support functions from GSA to DHS is critical. Given
the concerns about DHS's ability to integrate FPS mission-support
activities, prematurely transferring these functions to DHS could
negatively affect FPS's ability to carry out its mission responsibilities.

  Recommendations for Executive Action

We are making four recommendations to the Secretary of Homeland Security.
First, we recommend that the Secretary direct the Director of FPS-in
consultation with the Under Secretary for Border and Transportation
Security and the Assistant Secretary for Immigration and Customs
Enforcement-to develop and implement a transformation strategy that
reflects FPS's consideration of key practices and addresses the
significant challenges it is facing. In particular, this strategy should
identify implementation goals, measures, and a timeline that FPS could use
to show progress toward its transformation and demonstrate that it is
accomplishing its mission while undergoing changes. It should also link
FPS's goals and measures to the broader goals and objectives contained in
DHS's strategic plan and to DHS's ongoing integration efforts. In serving
as a road map for FPS's transformation, such a strategy should be used by
FPS as a platform to identify strategies and proposals for addressing the
significant challenges that we identified-expanding mission and increased
responsibility, unresolved issues related to funding, and mission-support
challenges related to the eventual transfer of these functions from GSA to
DHS. Second, we recommend that the Secretary initiate a dialogue with GSA
aimed at resolving disagreement between DHS and GSA about whether FPS has
the authority to bill GSA's tenant agencies for security

services. If this issue cannot be resolved, DHS should seek resolution
from OMB or the Treasury. Third, we recommend that the Secretary take
immediate steps to ensure that funds collected from agency rents and fees
are used in the future solely for the protection of buildings and grounds
owned or occupied by the federal government. If FPS continues its
involvement in activities not directly related to facility protection, a
funding process would be needed that is consistent with the requirement
regarding the use of funds from agency rents and fees. In addition, a
means of tracking these activities and determining related costs would
also be needed. Last, we recommend that the Secretary ensure that DHS is
prepared to effectively integrate FPS mission-support functions before
these functions are transferred from GSA, even if it is necessary to
extend the September 2004 goal for the transfer.

  Agency Comments and Our Evaluation

We provided a draft of this report to DHS and GSA for their official
review and comment. DHS provided its comments in a letter from the
Director of Resources, Border and Transportation Security Directorate, on
May 3, 2004. These comments can be found in appendix II. As noted in DHS's
letter, DHS also provided separate technical comments, which we did not
publish but incorporated where appropriate. The U.S. Secret Service also
provided some technical comments, which we incorporated where appropriate.
GSA provided its comments in a letter from the Deputy Commissioner of the
Public Building Service on April 29, 2004. In commenting on this report,
GSA also provided a legal analysis regarding the authority to charge and
collect FPS security fees. GSA's position was discussed earlier in this
report, and its comments and legal analysis can be found in appendix III.
GSA and DHS comments on the historical gap between security fees and costs
were also discussed earlier in this report.

DHS concurred with our recommendations to develop a transformation
strategy, to ensure that agency rents and fees are used solely for
facility protection, and to ensure that DHS can effectively integrate FPS
missionsupport functions before these functions are transferred from GSA.
On the basis of the comments we received from DHS and GSA showing their
continued disagreement on billing issues, we added the recommendation
aimed at resolving this disagreement. As a result, DHS did not comment on
this additional recommendation because it was added after the comment
period. Although DHS generally agreed with the report's message and
concurred with the other recommendations, it took issue with certain
aspects of our analysis. DHS's comments on the challenges FPS faces in the
contracting area were discussed earlier. In addition, DHS had comments on

several other aspects of the report, which are discussed below. These
related to the FPS Director's discussion of delegations of authority for
facility protection, the extent of FPS's authority to protect federal
facilities, the components of FPS security fees, funding for activities
not related to facility protection, and FPS's need for a transformation
strategy.

FPS Director's Comments on Delegation of Authority for Facility
Protection-DHS said that we took certain comments made by the Director of
FPS out of context. DHS was referring to discussions we had with the
Director about expanding FPS's authority to include protection of
facilities where GSA had previously delegated authority to tenant
agencies. DHS said that the Director was referring to efforts by the House
Committee on Transportation and Infrastructure, Subcommittee on Economic
Development, Public Buildings and Emergency Management, to suspend further
delegations of any authority for facility protection to GSA tenant
agencies. While the subject of delegation was discussed with the Director,
we disagree with DHS's assessment that we took the Director's comments out
of context. The discussions dealt specifically with existing delegations
and FPS's desire to expand its responsibilities by "getting back"
authority for protection where it had previously been delegated by GSA.
Furthermore, the Director's comments were not the only instance where the
issue of expanding FPS's authority was raised. On four other occasions
during our review, top FPS officials, including the chief of staff, made
it clear to us that FPS may seek to expand its authority. This was also
discussed by an ICE official. And, because these issues dealt with
possible future plans, we included the Director's caveat, in the report,
that expanding FPS's authority is a long-term vision and that FPS is still
examining the feasibility of different options. GSA commented that it had
no objections to our interpretation of the Homeland Security Act and
agreed that FPS's authority to protect federal property includes
properties under the custody and control of GSA, as well as those under
the custody and control of DHS. GSA also said that while FPS's law
enforcement authority expanded under the Homeland Security Act, it defers
to DHS on the extent of FPS's authority to protect other federal
properties and personnel.

Extent of FPS's Authority for Facility Protection-DHS commented that our
description of its responsibility for protecting buildings, grounds, and
property suggests limitations that are not present in the law. In this
regard, for example, DHS takes issue with our statement that under the
Homeland Security Act DHS is responsible for protecting building, grounds,
and property "that are under GSA's jurisdiction." DHS states that "the
Homeland

Security Act does not mention property controlled by [GSA]." In making
this statement-as well as others cited by DHS-the report summarizes and
synthesizes the relevant statutory requirements, rather than quoting them
verbatim. Thus, while it is true that the particular provision vesting DHS
with protective responsibilities does not mention GSA-controlled property,
DHS clearly acquired responsibility for GSA-controlled property under the
Homeland Security Act because FPS, which was responsible for protecting
federal agencies and previously under GSA's jurisdiction, was among those
agencies whose functions and personnel were transferred to DHS under the
Homeland Security Act. Nonetheless, on the basis of DHS's comments, we
have made technical clarifications to our descriptions of the law, where
appropriate.

In addition to raising technical issues, DHS makes several statements
that, although not entirely clear, could be read as suggesting that DHS
might be taking a broader view of its authority relating to the protection
of federal buildings and grounds than our analysis of the statute would
support. The relevant statutory provision is 40 U.S.C. 1315(a), as amended
by section 1706(b)(1) of the Homeland Security Act, which provides that:
"To the extent provided for by transfers made pursuant to the Homeland
Security Act of 2002, the Secretary of Homeland Security...shall protect
the buildings, grounds, and property that are owned, occupied, or secured
by the Federal Government (including any agency, instrumentality, or
wholly owned or mixed-ownership corporation thereof) and the persons on
the property" [emphasis added]. DHS states that the description of the
facilities under DHS control in the latter part of the statute is "all
inclusive" and that the "intent of the law is far more inclusive than GSA
property and property transferred as part of the establishment of DHS,
none of which are instrumentalities nor mixed ownership corporations." To
the extent that DHS is maintaining that its authority extends beyond
property under the control and custody of GSA and DHS, we disagree with
its interpretation. The statute provides DHS with authority over buildings
and property only to "the extent provided by transfers made pursuant to
the Homeland Security Act," and thus DHS authority is limited to
properties under the control of GSA (through the transfer of FPS to DHS)
and any other agency whose functions were transferred to DHS under the
act.

Security Fees-DHS said that it believes that our explanation for how FPS
is funded requires clarification because the report did not distinguish
between the two components of FPS security fees. According to DHS, FPS was
traditionally funded through rent portions devoted to recovering security
costs collected by GSA for space occupied by GSA tenants. These

"security fees" consisted of two separate components. The basic security
charge covered security services provided by FPS to all GSA tenants and
includes such services as patrol and response, security surveys, alarm
monitoring, salaries, and other common cost items. This fee was charged to
all GSA tenants and was included in each tenant's rent bill as a part of
the rate per square foot. The building-specific security charge is for
security measures specific to a particular building based on the
designated security level that were specified by the Department of Justice
in June 1995 in response to the Oklahoma City bombing. For example, a
Level IV building may have more guards, magnetometers, and cameras than a
Level I building. The charges for building-specific security services are
allocated by GSA to tenants based on the number of square feet they occupy
in the building. DHS commented that our draft report did not clarify that
security fees for specific agencies vary depending upon the building and
its unique security requirements. DHS also noted that FPS uses a
reimbursable program to charge for security services that are in excess of
what FPS determines is sufficient for a building or could not be deferred
for inclusion in the next rent estimate cycle. DHS said that understanding
how FPS security fees are charged is important in understanding the issues
associated with how FPS security fees should be billed in the future.
Finally, DHS added that understanding the elements of the security fee
process is essential to understanding why DHS and GSA disagree as to how
security fees should be billed in the future. On the basis of DHS's
comments, we clarified the information in the report related to the
different components of security fees.

Funding for Activities Not Related to Facility Protection-Although DHS
concurred with our recommendation to ensure that funds collected from
agency rents and fees are used solely for facility protection, DHS again
expressed its view that such activities would not have to be reimbursed if
they are of limited duration with local offices, ad hoc, and do not
increase the direct costs of FPS operations and investment in staff. DHS
said it proposes to issue guidance to this effect. DHS cited Comptroller
General legal decisions as a rationale for this position. DHS also said
that some activities that do not appear to relate to facility protection
actually do because of the proximity of nearby federal buildings. For
example, DHS said that FPS's involvement in the free trade protests in
Miami was critical to protecting the facilities of agencies that were the
focal point of the demonstration. We recognize that there may be
situations, such as the Miami protests, where FPS may engage in activities
that are necessary or incidental to protecting federal buildings.
Furthermore, DHS said that FPS headquarters reviews and approves all FPS
regional special operation plans

and expenditures to ensure the appropriate use of funds. DHS also stated
that in response to our report, ICE would develop guidance for determining
when it is reasonable for FPS to provide security services that are not
directly related to the protection of federal buildings and grounds.

We do not believe that the development of such guidance would be
appropriate. The language in section 422(b)(2) of the Homeland Security
Act of 2002 explicitly restricts the use of funds collected by GSA from
its tenants out of rents and fees "solely" for the protection of
government buildings and grounds.25 Because of this limitation in the
statute, the use of these funds for any purpose other than the protection
of government buildings and grounds would not be permitted absent
reimbursement pursuant to other applicable statutory authority. DHS refers
to two GAO decisions as supporting its proposal to issue guidance
approving the use of funds for unrelated purposes if such activities "are
of limited duration with local offices, ad hoc, and do not increase the
direct costs of FPS operations and investment in staff."26 We do not agree
that these two decisions support guidance sanctioning the de minimis use
of FPS funds for explicitly prohibited purposes. The two decisions, in
allowing nonreimbursable details in certain circumstances, adopted
guidance in the Federal Personnel Manual, which has been rescinded and is
no longer effective. Moreover, to the extent that the two decisions are
read by DHS as setting a de minimis standard of general applicability,
they are not in keeping with the governing law on the de minimis concept.
The legal concept of de minimis typically goes to measure the amount
associated with a legal violation, allowing trivial or inconsequential
amounts to be overlooked, on a case-by-case basis. The concept has not
been applied to, nor would the case law support, the prospective approval
of activities across an organization like FPS, knowing that they
constitute violations of law.

Accordingly, we would object to DHS establishing guidance for prospective
situations that would sanction FPS's use of funds for de minimis
expenditures that are not incidental or necessary to the protection of
federal buildings and grounds. Our full legal analysis of this issue is
contained in appendix IV.

25Public Law 107-296, 116 Stat. 2135, 2184-2185 (2002).
26The two cited decisions are 64 Comp. Gen. 370 (1985) and 65 Comp. Gen.
635 (1986).

The Need For a Transformation Strategy-DHS concurred with our
recommendation that FPS develop a transformation strategy because of its
expanding mission and responsibilities, as well as the other challenges it
is facing. DHS said that in March 2004, FPS began developing its own
strategic plan, which DHS said would support the overall goals and
objectives of the DHS strategic plan and would be consistent with GAO's
key practices for organizational mergers and transformations. At the time
of our review, FPS's strategic plan had not been issued. Although a
strategic plan is an important part of FPS's transformation, a
transformation strategy would contain information beyond what would be
found in a typical strategic plan. More specifically, a transformation
strategy would provide a connection between long-term strategic goals in
its strategic plan and the day-to-day activities of managers and employees
engaged in achieving integration of FPS into DHS.27 Such a transformation
strategy would include overall goals of the transformation with specific
action plans and milestones that would allow it to track transformation
and integration goals identifying critical phases and essential activities
that need to be completed by and on any given date.28 By demonstrating
progress towards reaching these interim goals, FPS can build momentum and
demonstrate that real progress is being made toward full integration into
DHS.

In developing its transformation strategy, it is important that FPS also
consider all the key practices we have identified for effective mergers
and transformations. This would include incorporating a communications
approach that reaches out to employees, customers, and stakeholders and
seeks to genuinely engage them in the transformation process, as well
involving them in various aspects of the transformation to help gain
ownership of the transformation. For example, in our July 2003 report on
mergers and organizational transformations, we stated that according to a
JPMorgan Chase managing director, the chief executive officer and merger
implementation team publicized and reported progress on specific goals for
each phase of its merger to help rally employees and maintain their drive
towards reaching full integration. These goals were connected to overall
themes and particular milestones, and the JPMorgan Chase chief executive
officer reinforced these goals at leadership meetings and

27For example, see U.S. General Accounting Office, Architect of the
Capitol: Management and Accountability Framework Needed for Organizational
Transformation, GAO-03-231 (Washington, D.C.: Jan. 17, 2003).

28GAO-03-669.

employee townhalls and in Web-based messages and other communications.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution of it until 30 days
from the date of this report. We will then send copies to other interested
congressional committees, the Secretary of Homeland Security, DHS's Under
Secretary for Border and Transportation Security, DHS's Assistant
Secretary for Immigration and Customs Enforcement, the Administrator of
GSA, and the Director of OMB. Copies will also be available to other
interested parties on request. In addition, the report will be available
at no charge on the GAO Web site at http://www.gao.gov.

If you have any questions regarding this report, please contact me on
(202) 512-2834 or at [email protected], or David Sausville, Assistant
Director, on (202) 512-5403 or at [email protected]. Other contributors
to this report were Kelly Blado, Casey Brown, Matt Cail, Anne Izod, and
Susan Michal-Smith.

Sincerely yours,

Mark L. Goldstein Director, Physical Infrastructure Issues

Appendix I

Scope and Methodology

To determine what challenges, if any, the Federal Protective Service (FPS)
has faced since it was taken out of the General Services Administration
(GSA) and transferred to the Department of Homeland Security (DHS), we
collected and analyzed agency documents about the transfer. This included
policies and procedures, information about the organizational structure,
and information on other issues related to the transfer, such as funding.
We also interviewed agency officials from DHS, FPS, and GSA headquarters
who were responsible for and directly affected by the transfer. After
identifying the challenges FPS was experiencing, we collected documents
and spoke to DHS and GSA agency officials about each challenge. To better
understand FPS's responsibilities and mission, we reviewed relevant laws
and documents and interviewed DHS and GSA agency officials. Specifically,
we reviewed the laws relating to FPS's authority both before and after the
transfer to DHS and analyzed the Homeland Security Act of 2002 to
determine if FPS has gained any new legal authority under the act. We also
reviewed the operational memorandums of agreement between DHS and GSA (for
fiscal years 2003 and 2004) and other information, which we verified, on
FPS's new Web site. We met with GSA officials to discuss the types of
services FPS provided for GSA before and after its transfer to DHS. We
interviewed DHS headquarters officials about the types of security and
protection activities FPS has been performing since the transfer and their
vision for the agency as part of DHS. Lastly, we spoke with ICE officials
to obtain an understanding of how they envision the role of FPS within
their organization.

With regard to funding issues, we analyzed agency budget documents and
interviewed DHS and GSA budget officials. Specifically, to identify how
the agency would be funded in fiscal years 2004 and 2005, we reviewed the
Homeland Security Act, the 2004 GSA and DHS appropriations acts, and the
President's budget for fiscal year 2005 to determine funding FPS has
received and amounts requested. We corroborated funding data with data
from FPS and GSA, as well as OMB data provided for a related GAO
engagement. Lastly, we spoke with GSA and DHS budget officials about how
the agency was funded during the transition (fiscal years 2003 and 2004),
how the agency would be funded in the upcoming fiscal year (fiscal year
2005), and any alternate funding proposals for future fiscal years,
including fiscal year 2006 and beyond. To better understand FPS
missionsupport issues, we reviewed the operational and mission-support
memorandums of agreement between DHS and GSA (for fiscal years 2003 and
2004) to determine what FPS mission-support systems would transfer to DHS.
We interviewed DHS and FPS mission-support officials in charge of

Appendix I Scope and Methodology

managing all aspects of the transfer, including the transfer of FPS
missionsupport functions from GSA to DHS.

We considered prior GAO work on major management challenges and program
risks of the DHS and challenges facing other DHS components, such as the
Immigration and Naturalization Service, the Federal Air Marshal Service,
and the U.S. Coast Guard. We considered prior GAO work on key practices
used by public and private organizations that have undergone successful
mergers and transformations. We did not do an indepth analysis comparing
these practices with FPS's transformation efforts. However, we held
discussions with FPS officials to obtain their views on whether they were
applicable to FPS.

DHS, FPS, and GSA provided much of the data and other information used in
this report. We noted cases where these officials provided testimonial
evidence, and we were not always able to obtain documentation that would
substantiate the testimonial evidence they provided. In cases where
officials provided their views and opinions on various issues within the
context that they were speaking for the organization, we corroborated the
information with other officials. We assessed the reliability of the
funding data by (1) performing limited electronic testing of the data
elements; (2) corroborating the data with FPS, GSA, and information
obtained from OMB for another GAO review; (3) interviewing knowledgeable
agency budget officials; and (4) comparing the data with other published
data, such as the fiscal year 2004 GSA and DHS appropriations acts.
Overall, we found no discrepancies with these data and therefore
determined that they were sufficiently reliable for the purpose of this
report.

Appendix II

Comments from the Department of Homeland Security

Appendix II Comments from the Department of Homeland Security Appendix II
Comments from the Department of Homeland Security Appendix II Comments
from the Department of Homeland Security Appendix II Comments from the
Department of Homeland Security

Appendix III

Comments from the General Services Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix III
Comments from the General Services
Administration

Appendix IV

GAO Legal Analysis of Issues Concerning FPS Activities Not Related to Facility
Protection

In its comments on this report, DHS stated that it plans to develop
guidance allowing the use of funds for activities unrelated to the
protection of buildings and grounds where the activities are de minimis.
DHS refers to GAO decisions as supporting the use of funds for activities
that "are of limited duration with local offices, ad hoc, and do not
increase the direct costs of FPS operations and investment in staff." We
do not agree with DHS. We do not believe the GAO decisions DHS cites
support the implementation of the de minimis concept through guidance
sanctioning de minimis uses of FPS funds for explicitly prohibited
purposes.

Under the Homeland Security Act, only the costs of services provided by
FPS personnel that are necessary or incidental to the protection of
federal buildings and grounds may be funded out of agency rents and fees.
Specifically, section 422(b)(2) of the Homeland Security Act of 2002
states:

"Any amounts transferred by the Administrator of General Services to the
Secretary out of rents and fees collected by the Administrator shall be
used by the Secretary solely for the protection of buildings or grounds
owned or occupied by the Federal Government."1

The language in section 422(b)(2) explicitly restricts the use of funds
collected by GSA from its tenants out of rents and fees "solely" for the
protection of government buildings and grounds. Because of this limitation
in the statute, the use of these funds for any purpose other than the
protection of government buildings and grounds would not be permitted
absent reimbursement pursuant to other applicable statutory authority.

Section 422(b)(2) recognizes that FPS funds come from rents and fees paid
by other federal agencies to reimburse FPS for services in protecting
their buildings and grounds. To permit DHS to use those funds for purposes
unrelated to the protection of federal buildings and grounds in effect
would burden those agencies with paying part of the costs of DHS's mission
unrelated to the purpose for which they pay rents and fees. This practice
also would result in the unauthorized augmentation of DHS appropriations.
We are not questioning the policy judgment of DHS in making FPS personnel
available for those activities within DHS's mission that are not related
to the protection of federal buildings and grounds. Rather, we are
questioning the use of amounts transferred by GSA to DHS, given the
restriction of section 422(b)(2) of the Homeland Security Act, for these
activities.

1Public Law 107-296, 116 Stat. 2135, 2184-2185 (2002).

Appendix IV GAO Legal Analysis of Issues Concerning FPS Activities Not
Related to Facility Protection

DHS does not contend that the statute itself permits DHS to expend funds
for purposes other than the protection of buildings and grounds and, in
fact, DHS recognizes that if funds are used for unrelated purposes they
must be reimbursed. However, DHS claims that if the unrelated expenditures
are de minimis they need not be reimbursed, and DHS proposes to issue
guidance to this effect.

DHS relies on two GAO decisions, involving inter-and intra-agency details,
as supporting its proposed guidance. In the first decision, 64 Comp. Gen.
370 (1985), we held that, absent specific statutory authority,
nonreimbursable details violate the purpose statute, 31 U.S.C. S: 1301(a),
which provides that appropriations may be spent only on the objects for
which they are appropriated. However, we stated there were limited
exceptions in which non-reimbursable agency details may still be allowed.
Under the first exception, we recognized that non-reimbursable details
would be appropriate, and consistent with the purpose statute, where the
detail furthers a purpose for which the loaning agency receives
appropriations. Under the second exception, which DHS relies upon, we
stated that we would not object to details failing to meet the purpose
test, as long as the detail is de minimis and the fiscal impact on the
appropriation is negligible. In this decision, for purposes of defining de
minimis, we adopted guidance from the Federal Personnel Manual (FPM)
relating to agency details, and said we would permit "details for brief
periods when necessary services cannot be obtained as a practical matter
by other means and the number of persons and cost involved are minimal."
(64 Comp. 370, describing FPM Ch. 300, subchapter 8, Inst. 262, May 7,
1981.) However, in the second decision, 65 Comp. Gen. 635 (1986), we
recognized that this discretion had limits. There, we stated that the
proposed transfer of 15 to 20 National Labor Relations Board
administrative law judges to the Department of Labor "far exceeds the
exception for administrative convenience we intended to establish." We
declined to state the dollar amount or number of people participating in a
detail that would be considered de minimis. In fact, in subsequent cases
regarding the detail of employees under the Economy Act,2 we reiterated
that the reimbursement of the costs of detailed personnel the agency must
recover must be based on actual costs.3

2Where no other authority exists, the Economy Act authorizes inter-or
intra-agency provision of services on a reimbursable basis based on actual
costs. See 31 U.S.C. 1535 and 72 Comp. Gen. 159.

3See, e.g., B-250377, January 28, 1993 and B-257823, January 22, 1998.

Appendix IV GAO Legal Analysis of Issues Concerning FPS Activities Not
Related to Facility Protection

As explained below, our opinion in 64 Comp. Gen. 370 does not support
DHS's proposal to issue guidance authorizing de minimis uses of FPS
personnel and resources. The guidance adopted in our decision-the FPM- has
been rescinded and is no longer effective.4 Moreover, to the extent that
our decision is read as setting a de minimis standard of general
applicability, it is not in keeping with the governing law on this
subject.

The concept of de minimis comes from the legal maxim De Minimis Non Curat
Lex- the law does not concern itself with trifles.5 This maxim, as applied
by courts and by administrative agencies in various contexts, recognizes
that a fact or amount may be so insignificant or trifling that it can be
overlooked in deciding a legal issue. It places intangible injuries, such
as those that are small and difficult to measure, outside the scope of
legal relief.6 In the context of appropriations law, we have occasionally
invoked the de minimis concept to analyze the impact on an appropriation
of past conduct alleged to be in violation of the law. For example, where
agencies have violated anti-lobbying appropriation act restrictions, we
have sometimes found the improper expense to be too small, or too
commingled with proper expenses, to warrant recovery. 7 In those cases we
used the de minimis concept to measure the amount associated with the
violation and not to prospectively sanction what would be a violation of
law. In a similar vein, the Justice Department's Office of Legal Counsel
(OLC) has recognized that some activities may be so minimal, and so

4See 60 Fed. Reg. 3055 (Jan. 13, 1995). The only current material on
details is found at 5 C.F.R. Part 300, Subpart C which states that
agencies may detail employees in accordance with 5 U.S.C. 3341 (allowing
details for not more than 120 days).

5Black's Law Dictionary 443 (7th ed. 1999).

6See 27A Am. Jur. 2d. Equity S: 118 and Swick v. City of Chicago, 11 F.3d
85 (1993) (In action alleging he was deprived of property without due
process of law under the Fourteenth Amendment of the Constitution, police
officer was not entitled to recover claimed damages for injury resulting
from being placed on involuntary sick leave because any injury was de
minimis, i.e., intangible, small, difficult to measure.)

7In this regard, in several GAO decisions we found violations of
anti-lobbying appropriations act restrictions, but determined that the
amount expended was nominal and not readily determinable-e.g., the costs
of preparing a letter or sending an e-mail-and that the efforts to effect
recovery would greatly exceed the amount to be recovered. See B-285298,
May 22, 2000; B-178528, July 27, 1978; and B-116331, May 29,1961.

Appendix IV GAO Legal Analysis of Issues Concerning FPS Activities Not
Related to Facility Protection

difficult to segregate from official activities, that the associated
expenses do not need to be separately tracked or reimbursed.8

To the extent generalities can be drawn from these cases, the de minimis
concept is most appropriately applied where amounts are not readily
determinable and it is clear that it would be difficult or impossible for
the agency to allocate the specific costs of an activity, such as the
costs of reading and signing a letter. However, the concept must be
applied on a case-by-case basis, depending on the unique facts and
circumstances involved, not routinely as DHS suggests. See 65 Comp. Gen.
635.

The guidance proposed by DHS would sanction uses of the FPS for purposes
unrelated to the protection of federal buildings and grounds, and in our
view this is not appropriate. In contrast to the kinds of situations
illustrated above, DHS and FPS should be able to identify costs of FPS
personnel used for such activities, since those types of costs can be
allocated on a daily, hourly, or other periodic basis. For reimbursements
under the Economy Act, recovery of actual costs is required.9 In fact,
those types of costs are commonly allocated when details or the costs of
agency personnel providing services to another agency are reimbursed by
one agency to another.10 While agencies may have flexibility in applying
the actual cost standard, there must be reasonable assurance that the
performing agency is reimbursed for its costs to avoid the ordering or

8In 14 U.S. Op. Off. Legal Counsel 144 (1990), OLC dealt with use of
facilities of the White House Communications Agency (WHCA) for
Presidential travel and communications. The decision observed that
appropriated funds can be used for Presidential media contacts only with
respect to official, as opposed to political communications, but in a
footnote OLC gave an example of a de minimis use of WHCA facilities.
Specifically, OLC noted that "there will always be particular instances
when it will not be evident (and certainly not in advance) whether use of
a WHCA facility will be in furtherance of the President's official, as
distinguished from his political responsibilities. For example, a
presidential aide who returns a reporter's telephone call will not know
until the conversation is over whether the reporter is interested in
political or official matters, or both. We believe that even when it
eventuates that the reporter's inquiry relates more to the President's
political rather than to his official responsibilities, WHCA may pay for
such de minimis use of its facilities and that special logs need not be
maintained nor other monitoring methods employed..." 14 Op. Off. Legal
Counsel 144, at note 18.

9See 31 U.S.C. 1535 and 72 Comp. Gen. 159 (1993).

10See B-257823, January 22, 1998. (Direct and indirect costs of personnel
allocated by standard hourly rates for each general schedule grade level
included salaries, benefits, costs of management and support staff as well
as overhead.) See also B-250377, January 28, 1993. (Recovery of actual
costs of detailed employees should be readily determinable by pay,
personnel and other records that disclose such information.)

Appendix IV GAO Legal Analysis of Issues Concerning FPS Activities Not
Related to Facility Protection

performing agency augmenting its appropriations.11 Furthermore, the de
minimis concept applies on a case-by-case basis. As noted above, the
concept of de minimis typically goes to measure the amount associated with
a violation or damages to be recovered. The concept has not been applied
to, nor would the case law support, the prospective approval of activities
across an organization like FPS knowing fully that they constitute
violations of law.12 Similarly, any violation of a statute, whether it be
characterized as de minimis or technical, is not permissible.13 For these
reasons, we would object to DHS establishing prospective guidance which
would sanction use of FPS funds for expenditures that are not incidental
or necessary to the protection of federal buildings and grounds.

As discussed above, section 422(b)(2) of the Homeland Security Act of 2002
explicitly directs that funds collected from rents and fees be used
"solely" for the protection of buildings and grounds, and the statute
recognizes no exceptions to this restriction. In most situations, it can
be determined prior to the activity whether it falls within FPS's mission
and is necessary or incidental to the protection of federal buildings and
grounds. We recognize that DHS has some flexibility under 422(b)(2) of the
Homeland Security Act of 2002 in determining that certain uses of FPS
funds may be necessary or incidental to the protection of federal
buildings and grounds. For example, if FPS officers were engaged in crowd
control at the World Trade protests in Miami incident to their protection
of federal buildings during demonstrations, the expenditure of funds for
such activities would be allowed as "necessary" or "incidental" to the
protection of federal buildings or grounds. However, as we noted in the
report, there are other situations where the use of the FPS is not related
in any way to the protection of federal buildings and grounds and FPS
funds should not be used for such purposes without reimbursement. For
example, officers assisting other DHS law enforcement personnel in
immigration-related work such as "Operation Predator" or providing
security at the Kentucky

11See B-257823, January 22, 1998.

12For example, when the Air Force proposed a change to a regulation
relating to the shipment of household goods, which would allow an agency
disbursing officer to make a known overpayment, the Comptroller General
disapproved of the change noting that it would essentially approve in
advance violations of the law. 49 Comp. Gen. 359 (1969).

13See, e.g., B-253164, August 23, 1993, in which GAO concluded that a
seemingly "technical" violation of the Anti-Deficiency Act by the National
Labor Relations Board was still a violation of the act and required a
report to Congress and the Office of Management and Budget.

Appendix IV GAO Legal Analysis of Issues Concerning FPS Activities Not
Related to Facility Protection

Derby is not necessary or incidental to the protection of federal
buildings and grounds. If the activity does not fall within FPS mission or
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