Homeland Security: DHS Needs a Strategy to Use DOE's Laboratories
for Research on Nuclear, Biological, and Chemical Detection and  
Response Technologies (24-MAY-04, GAO-04-653).			 
                                                                 
Success in the war against terrorism requires the United States  
to effectively research, develop, and deploy technologies to	 
detect and respond to the use of nuclear, biological, and	 
chemical weapons. The Homeland Security Act of 2002 gave the	 
Department of Homeland Security (DHS) the ability to use	 
laboratories owned by the Department of Energy (DOE) to conduct  
research and development (R&D) of these advanced technologies.	 
GAO was asked to determine (1) whether DHS has completed a	 
strategic R&D plan and coordinated its efforts with other federal
agencies, (2) how DHS plans to use DOE's laboratories to carry	 
out its R&D, and (3) what controls DHS is establishing to monitor
projects at DOE's laboratories. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-653 					        
    ACCNO:   A10133						        
  TITLE:     Homeland Security: DHS Needs a Strategy to Use DOE's     
Laboratories for Research on Nuclear, Biological, and Chemical	 
Detection and Response Technologies				 
     DATE:   05/24/2004 
  SUBJECT:   Counterterrorism					 
	     Emergency preparedness				 
	     Internal controls					 
	     Laboratories					 
	     National preparedness				 
	     Program management 				 
	     Research and development				 
	     Research programs					 
	     Strategic planning 				 
	     Biological warfare 				 
	     Chemical warfare					 
	     Interagency relations				 
	     Homeland security					 
	     NNSA Nonproliferation and Verification		 
	     Research and Development Program			 
                                                                 

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GAO-04-653

United States General Accounting Office

GAO
   	Report to the Chairman, Subcommittee on Emerging Threats and Capabilities, 

                   Committee on Armed Services, U.S. Senate 

May 2004

HOMELAND SECURITY 

DHS Needs a Strategy to Use DOE's Laboratories for Research on Nuclear, Biological, and Chemical Detection and Response Technologies 

a

GAO-04-653 

Highlights of GAO-04-653, a report to the Chairman, Subcommittee on
Emerging Threats and Capabilities, Committee on Armed Services, U.S.
Senate

Success in the war against terrorism requires the United States to
effectively research, develop, and deploy technologies to detect and
respond to the use of nuclear, biological, and chemical weapons. The
Homeland Security Act of 2002 gave the Department of Homeland Security
(DHS) the ability to use laboratories owned by the Department of Energy
(DOE) to conduct research and development (R&D) of these advanced
technologies. GAO was asked to determine (1) whether DHS has completed a
strategic R&D plan and coordinated its efforts with other federal
agencies, (2) how DHS plans to use DOE's laboratories to carry out its
R&D, and (3) what controls DHS is establishing to monitor projects at
DOE's laboratories.

GAO recommends that the Secretary of Homeland Security (1) complete a
strategic R&D plan, (2) ensure that this plan is integrated with homeland
security R&D conducted by other federal agencies, (3) develop criteria for
distributing annual funding and for making long-term investments in
laboratory capabilities, and (4) develop guidelines that detail how DOE's
laboratories would compete for funding with private sector and academic
entities. In commenting on the report, DHS agreed with our recommendation
to complete a strategic R&D plan, but did not explicitly agree or disagree
with our remaining recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-653.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gene Aloise at (202)
512-3841 or [email protected].

May 2004

HOMELAND SECURITY

DHS Needs a Strategy to Use DOE's Laboratories for Research on Nuclear,
Biological, and Chemical Detection and Response Technologies

DHS has not yet completed a strategic plan to identify priorities, goals,
objectives, and policies for the R&D of homeland security technologies,
and some gaps remain in its coordination with other federal agencies.
According to DHS officials, the department has not completed a research
strategic plan because it has spent much of the time since its March 2003
creation organizing the Science and Technology Directorate, developing
policies and procedures, and hiring necessary staff. DHS has worked with
some interagency R&D groups and has signed a memorandum of agreement with
DOE establishing policies for resolving priority conflicts at DOE's
laboratories, but gaps remain in its efforts to coordinate and establish
partnerships with other agencies conducting homeland security R&D. Failure
to complete a strategic plan and to fully coordinate its research efforts
may limit DHS's ability to leverage resources and could increase the
potential for duplication of research.

DHS's research program has concentrated on funding projects at five DOE
laboratories. These five laboratories-Los Alamos, Sandia, Lawrence
Livermore, Pacific Northwest, and Oak Ridge National Laboratories-
received over 96 percent of the $57 million DHS invested in research at
DOE's laboratories in fiscal year 2003 and will receive almost 90 percent
of the $201 million for fiscal year 2004. At the time of our review, the
remaining DOE laboratories would receive DHS R&D funding primarily through
competition with the private sector and academia. Although federal
acquisition regulations generally prohibit DOE's laboratories from
competing with the private sector and academia for federal funding, some
competition can occur under specific circumstances. For example, DOE's
laboratories can respond to R&D solicitations with the private sector and
academia for broad scientific study for advancing the state of the art or
for increasing knowledge. Some DOE laboratory officials feel that if DHS
focuses on short-term, applied research, their laboratories' ability to
attract and retain top scientific talent and build and maintain laboratory
facilities may be threatened. In response to concerns from Members of
Congress and officials from DOE's laboratories, DHS announced in March
2004 that it would review its policies for working with DOE's
laboratories. DHS officials have also agreed that it is necessary to make
long-term investments in laboratory capabilities in order to create an
enduring R&D complex for homeland security.

DHS is making progress developing the project management tools it will use
to monitor project costs, milestones, and deliverables. Monthly reports
will discuss project accomplishments and concerns that could affect the
execution of the project. Quantitative performance metrics are also being
developed for these monthly reports to gauge differences between budgeted
and actual cost and schedules of R&D work performed. Also, DHS plans to
conduct regular peer reviews of projects to assess how technical
approaches being followed by R&D projects match DHS's requirements.

Contents

  Letter

Results in Brief 
Background 
DHS Has Not Completed a Strategic Plan to Determine Its R&D 

Priorities, and Gaps Remain in Its Efforts to Coordinate with 

Other Federal Agencies DHS Faces Challenges Using DOE's Laboratories DHS Is Making Progress in Developing Controls to Manage Its 

Research Efforts at DOE's Laboratories Conclusions Recommendations for Executive Action Agency Comments and Our Evaluation 

1 4 6 

8 13 

20 22 23 23 

Appendixes 

Appendix I: NNSA Has Strengthened Its Project Management Controls 27 

Appendix II: Objectives, Scope, and Methodology 30 

Appendix III: Comments from the Department of Homeland Security 33 

Appendix IV: 	Comments from the National Nuclear Security Administration
38 

Tables               Table 1: DHS's Research Portfolios                10  
           Table 2: DHS R&D Funding Distribution, Fiscal Years 2003-2005  11  
            Table 3: DHS R&D Funding Distribution to DOE's Laboratories,  
                            Fiscal Years 2003 and 2004                    15  

Contents

Abbreviations

DHS Department of Homeland Security
DOE Department of Energy
GAO General Accounting Office
HHS Department of Health and Human Services
HSARPA Homeland Security Advanced Research Projects Agency
NNSA National Nuclear Security Administration
PART Program Assessment Rating Tool
R&D research and development

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
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separately.

A

United States General Accounting Office

Washington, D.C. 20548

May 24, 2004

The Honorable Pat Roberts
Chairman
Subcommittee on Emerging Threats and Capabilities
Committee on Armed Services
United States Senate

Dear Mr. Chairman:

Success in the war against terrorism requires the United States to
effectively research, develop, and deploy advanced technologies-or
countermeasures-to detect and respond to the use of weapons of mass
destruction. The Department of Homeland Security (DHS)-through its 
Science and Technology Directorate-conducts research, development, 
testing, and evaluation of new technologies that are intended to strengthen 
the United States' ability to prevent and respond to nuclear, biological, and 
chemical attacks. Created by Title III of the Homeland Security Act of 2002,
the Science and Technology Directorate is responsible for, among other
things, preparing a strategic plan for developing countermeasures to
chemical, biological, radiological, nuclear, and other emerging terrorist
threats. In addition, the act requires DHS to coordinate the federal
government's efforts to identify and develop these countermeasures.

Before DHS was created in March 2003, much of the R&D of nuclear, 
radiological, biological, and chemical countermeasures was managed by 
the National Nuclear Security Administration's (NNSA) Nonproliferation 
and Verification Research and Development Program.1 In August 2002, we 
reported that NNSA's program faced challenges balancing the short-term
needs of the users of these technologies and looking beyond the horizon at
advanced technologies.2 Specifically, we noted that some users of
technologies developed by NNSA's program were concerned that the 

1NNSA was created under Title 32 of the National Defense Authorization Act for Fiscal Year 2000 as a separately organized agency within the Department of Energy. It is responsible for enhancing the safety, reliability, and performance of the nation's nuclear weapons; maintaining the nation's ability to design, produce, and test nuclear weapons; preventing the proliferation of weapons of mass destruction; and designing, building, and maintaining naval nuclear propulsion systems. 

2U.S. General Accounting Office, Nonproliferation R&D: NNSA's Program
Develops Successful Technologies, but Project Management Can Be
Strengthened, GAO-02-904 (Washington, D.C.: Aug. 23, 2002). 

program's focus was on long-term research, potentially ignoring immediate technology needs for the war on terrorism. We also reported that NNSA's program did not have adequate information on milestones, costs, and deliverables to monitor projects' progress. The Homeland Security Act of 2002 transferred the chemical and biological R&D work of NNSA's program to DHS, along with some of NNSA's nuclear smuggling R&D.3 NNSA retains responsibility for R&D on remote sensing and other technologies that analyze the global spread of nuclear weapons and technology. Similarly, NNSA is responsible for R&D on space- and ground-based sensors that defense and intelligence agencies use to verify and monitor arms control treaties. 

Much of the R&D work previously managed by NNSA and now managed by DHS occurs at laboratories owned by the Department of Energy (DOE). DOE is responsible for the world's largest laboratory system of its kind. The mission of these 22 government-owned and contractor-operated laboratories has evolved.4 Originally created to design and build atomic bombs, DOE's laboratory system has since expanded to conduct basic and applied research in many disciplines, from high-energy physics to advanced computing. While federal, state, local, and private entities traditionally could use the capabilities of DOE's laboratories, DOE research had the highest priority. However, the Homeland Security Act of 2002 gave DHS the right to use DOE's laboratories, and the laboratories the right to accept and perform work for DHS, on an equal priority with DOE research. This parity has led to questions about how DOE and DHS will resolve conflicting priorities, if any, in the use of laboratory staff and resources for R&D. 

Other federal agencies also conduct R&D related to homeland security. The Department of Health and Human Services (HHS) carries out basic and applied research on bioterrorism countermeasures through the National Institutes of Health and the Centers for Disease Control and Prevention. The Department of Defense conducts research on biological and chemical 

3In addition, the act transferred DOE's Environmental Measurements Laboratory, the advanced scientific computing research program and activities at Lawrence Livermore National Laboratory, the National Bio-Weapons Defense Analysis Center of the Department of Defense, and the Plum Island Animal Disease Center of the Department of Agriculture to DHS. 

4Nine of DOE's laboratories are large, multiprogram national laboratories that dominate DOE's science and technology activities. DOE also manages several other, generally smaller, laboratories that conduct specialized research in a particular program area or were created to pursue a single issue. 

countermeasures, primarily
for protection of military forces. The Technical Support Working Group, jointly operated by the departments of State and Defense, oversees an interagency R&D program to rapidly develop and deploy counterterrorism technologies for use by federal, state, and local agencies.

This report examines (1) whether DHS has completed a strategic R&D plan
and coordinated its efforts with other federal agencies conducting
homeland security R&D (2) how DHS plans to use DOE's laboratories to carry out its responsibilities for R&D
on nuclear, biological, and chemical
detection and response technologies; and (3) what controls DHS is
establishing to monitor project milestones, costs, and deliverables for R&D conducted at DOE's laboratories. In addition, you asked us to report on
how NNSA's program has changed its project management controls since
our August 2002 report. NNSA has made several improvements to its
project management controls as a result of our August 2002 report.
Information on these improvements is presented in appendix I.

Because DHS was undergoing its initial organization at the time of our
review and still developing plans, policies, and procedures, our examination of DHS's strategic planning and coordination activities focused on interviews with officials from DHS, NNSA, and DOE's laboratories on their R&D activities and their interactions with one another. To determine how DHS plans to use DOE's laboratories, we obtained the R&D proposal guidance that DHS provided to DOE's
laboratories and the criteria that DHS used to review these proposals. We
also obtained the results of a DHS-sponsored peer review of DOE laboratory proposals. We reviewed federal acquisition regulations and statutory requirements governing the operation of DOE's laboratories. To
obtain DOE's laboratories' views of DHS's plans, we conducted focus groups with program managers and researchers at seven DOE laboratories. We selected five DOE laboratories-Los Alamos, Sandia, Lawrence
Livermore, Pacific Northwest, and Oak Ridge National Laboratories-
because they accounted for most of the funding DHS distributed to DOE laboratories. We selected the remaining two laboratories-Argonne and Brookhaven National Laboratories-because they also conduct homeland security R&D for DHS, NNSA, or other federal agencies. Appendix II
presents our scope and methodology in more detail. We conducted our
review from August 2003 through April 2004 in accordance with generally
accepted government auditing standards.

Results in
Brief	DHS has not yet completed a strategic plan to identify priorities, goals, objectives, and policies for the R&D
of homeland security technologies, and gaps remain in its
efforts to coordinate
with other federal agencies that conduct homeland security R&D. Specifically:

o
   	According to DHS officials, since its March 2003 creation, the department has not completed a strategic plan for R&D because it has
spent much of the time organizing the Science and Technology Directorate, developing policies and procedures, and hiring necessary
staff. When DHS was first organized, many of the staff in the Science
and Technology Directorate were personnel temporarily detailed from other executive branch agencies and from DOE's laboratories.
According to DHS officials, they needed time to bring more permanent staff on board. In the absence of a strategic plan, DHS obligated money
for R&D on nuclear, biological, and chemical countermeasures
for fiscal years 2003 and 2004 and developed a budget request
for fiscal year 2005 based on funding priorities established by DHS program managers, who relied on their knowledge of current threats and capabilities. DHS officials acknowledge that developing the department's plan for R&D is
important for ensuring strategic direction and told us that information
developed through their strategic planning process will be used to develop DHS's annual budget requests to the Congress.

o 	DHS has worked with some interagency R&D groups and has signed a
memorandum of agreement with DOE establishing policies for resolving priority conflicts at DOE's laboratories, but gaps remain in its efforts to
coordinate and establish partnerships with agencies such as NNSA,
HHS, and the Department of Defense. For example, NNSA officials
provided DHS with copies of the fiscal year 2004 project proposals that
NNSA received from DOE's laboratories to develop radiological and nuclear countermeasures. However,
DHS officials awarded 2003 and 2004 funding to DOE's laboratories without taking similar steps to
coordinate with NNSA officials because they had limited time after the department's organization in March 2003 in which to decide on project
funding. In some cases, DHS and NNSA may rely on the same capabilities at DOE's laboratories to conduct similar work on nuclear
and radiological countermeasures. Consequently, failure to
coordinate efforts may limit the agencies' ability to leverage resources and could increase the potential for duplicative research efforts. Furthermore, DHS officials told us the department needs closer partnerships with HHS agencies such as the Centers for Disease Control and Prevention 

and the National Institutes of Health. These agencies are responsible for
much of the basic biological research that DHS will depend upon to
develop its technologies, especially biological countermeasures. The Department of Defense's programs to develop biological and chemical
countermeasures may also be applicable to DHS's efforts.

We are recommending that DHS ensure that it completes its strategic plan and appropriately integrates the plan with research efforts conducted by other federal agencies so that governmentwide priorities can be established, gaps can be identified, duplication can be avoided, and resources can be leveraged.

DHS's research program has concentrated on funding projects at five DOE laboratories. These five laboratories-Los Alamos, Sandia, Lawrence Livermore, Pacific Northwest, and Oak Ridge National Laboratories-
received over 96 percent of the $57 million DHS invested in research at
DOE's laboratories in fiscal year 2003
and will receive almost 90 percent of the $201 million for research at DOE's laboratories for fiscal year 2004. At the time of our review, the remaining DOE laboratories were to receive R&D funding from DHS primarily through competition with
companies and academia. Although federal acquisition regulations generally prohibit DOE's laboratories from competing with companies and academia for federal funding,
some competition can occur
under specific circumstances. For example, DOE's laboratories can respond to R&D solicitations with companies and academia for broad scientific study for advancing the state of the art or increasing knowledge. According to officials from some of
DOE's laboratories, the relationship between their laboratories and DHS has been strained because of inadequate communication and DHS's
lack of
clear and well-defined criteria for designating the five DOE laboratories that receive most of DHS's funding. In response to these concerns, DHS's
Under Secretary for Science and Technology stated in a March 2004 letter
that DHS would conduct an internal review and convene an external panel to reconsider its policies surrounding DHS's interactions with DOE's laboratories. At the time of our review, it was unclear to what extent these
reviews would affect DHS's policies for using DOE's laboratories. Like NNSA, DHS faces the challenge of balancing the immediate needs of users of homeland security technologies with R&D on advanced technologies for the future. DHS intends to focus much
of its R&D efforts on short-term, applied research projects,
although it will dedicate some funds to long-term advanced concepts research. Some DOE laboratory officials believe that a focus on short-term, applied research may threaten their long-term ability
to attract and retain top scientific talent, build and maintain laboratory 

facilities, and develop effective technologies. Furthermore, they are concerned that many of the successes in developing technologies in the short term at DOE's laboratories have relied upon substantial investments
in facilities, personnel, and advanced concepts research over the
long term.
DHS officials agreed that it is necessary to make long-term investments in
certain laboratory capabilities in order to create an enduring complex for
homeland security R&D. We are recommending that DHS develop clear and
well-defined criteria for distributing funding for long-term investments in
laboratory capabilities and develop specific guidelines that detail the circumstances under which DOE's laboratories would
compete for funding with private sector and academic entities.

DHS is making progress in developing the project management tools it will
use to monitor project costs, milestones, and deliverables. DHS officials have told us that
each laboratory will complete a monthly report for each of its R&D
portfolios-such as nuclear and radiological countermeasures, chemical countermeasures, and biological countermeasures.
These reports
are to contain (1) data on project cost, schedule, and scope and (2) discussions of project accomplishments
and concerns that could affect
the execution of the project. DHS is developing quantitative performance metrics for these monthly reports to gauge differences between budgeted
and actual cost and schedules of R&D work performed. DHS also plans to
conduct regular scientific peer reviews of projects to assess how
the technical approaches being followed by R&D projects match DHS's
requirements.

We presented a draft of this report to DHS, NNSA, and the Department of
Defense for comment. With regard to our recommendation to complete a strategic R&D plan, DHS agreed that such a plan is critical to the success of the department. DHS did not explicitly agree or disagree with our
remaining recommendations, but provided additional information on its
strategic planning and coordination activities and on its relationship with DOE's laboratories. NNSA had no comment on the draft report, but noted that it is in contact with DHS to assist the department in its coordination efforts related to the use of DOE's laboratories. The Department of Defense
had no comments on the report.

Background	Title III of the Homeland Security Act of 2002 established a Directorate of Science and Technology within DHS that is headed by an Under Secretary
for Science and Technology. Among other things, the directorate is
responsible for:

o
   	developing, in consultation with other appropriate agencies, a national policy and strategic plan for, identifying priorities, goals, objectives, and policies for, and coordinating the federal government's civilian efforts to identify and develop countermeasures to chemical, biological, radiological, nuclear, and other emerging terrorist threats;

o
   	establishing priorities for, directing, funding, and conducting national basic and applied research, development, testing, evaluation, and procurement of technology and systems for, among other things, detecting and responding to terrorist attacks; and

o
   	developing and overseeing the administration of guidelines for merit review of R&D projects throughout DHS.

The act requires the directorate to conduct its basic and applied research, development, testing, and evaluation through both "extramural" and "intramural" programs. Extramural programs consist of R&D activities
conducted through grants, cooperative agreements, and contracts between DHS and colleges, universities, private research institutes, and/or
companies. Intramural programs draw upon the expertise of federal laboratories. Under the act, the Secretary of Homeland Security may establish or contract with any federally funded research and development
center. In addition, DHS may use the capabilities of DOE's laboratories
through a joint sponsorship agreement between DHS and DOE, a direct
contract between DHS and DOE's laboratory, a "work for others" basis,5 or
any other method provided by law. However, unlike a traditional "work for others" arrangement whereby DOE's
laboratories can accept work only if it
does not interfere with DOE missions, DOE's laboratories are authorized to
accept and perform work for DHS on an equal basis with the laboratories'
other missions.

In February 2003, DOE and DHS issued a memorandum of agreement that, among other things, (1) detailed the procedures under which DHS work would be conducted at DOE laboratories and sites, (2) specified that DHS will not pay more than DOE
pays for administrative or personnel charges

5"Work for others"
is the performance of work, on a reimbursable basis, for non-DOE
entities by a DOE facility and/or DOE or contractor personnel. Work
for others is intended, among other things, to provide assistance
to other federal agencies and nonfederal entities
in accomplishing goals that may otherwise be unattainable, to avoid the possible duplication
of effort at federal facilities, and to provide access for non-DOE entities to highly specialized
or unique DOE technical expertise.

for the work the laboratories conduct, (3) stated that DHS and DOE will
establish appropriate mechanisms to resolve any issues relating to setting priorities
when
conflicts might arise at the site, and (4) stipulated that both departments would jointly determine what long-term arrangements best serve the needs of both departments with respect to DOE's laboratories.

DHS's Science and Technology Directorate is organized into the following
four offices:

o 	Office of Plans, Programs, and Budgets. Establishes overall priorities,
oversees R&D activities across the Science and Technology Directorate, and provides policy guidance for how the Science and Technology Directorate will interact with other DHS entities, such as Customs and Border Protection, the Coast Guard, and the Secret Service.

o 	Office of Research and Development. Manages and executes DHS's
intramural R&D programs.

o 	Homeland Security Advanced Research Projects Agency (HSARPA).
Manages and executes DHS's extramural R&D programs through competitive, merit-reviewed grants, cooperative agreements, or
contracts with public or private entities.

o 	Office of System Engineering and Development.
Takes technologies developed by the Office of Research and Development or HSARPA and prepares deployment strategies to transfer technologies to federal,
state, and/or local governmental users.

  DHS Has Not Completed a Strategic Plan to Determine Its R&D Priorities,
  and Gaps Remain in Its Efforts to Coordinate with Other Federal Agencies

DHS has not completed a strategic plan to identify its research priorities for the R&D of
homeland security technologies. Instead, to fund projects, DHS has relied upon its managers to set priorities based upon their knowledge of current threats and capabilities. In addition, gaps remain in DHS's efforts to coordinate with other federal agencies conducting homeland security
R&D. Lack of coordination could increase the potential for duplication of
research efforts and limit DHS's ability to leverage resources with other federal R&D activities.

    DHS Is Still Developing Its Research Strategy

At the time of our review, DHS was still developing a strategic plan to identify priorities, goals, objectives, and policies for the R&D of
countermeasures to nuclear, biological, chemical, and other emerging terrorist threats. According to DHS officials,
this strategic plan will
establish R&D priorities within and across federal programs and identify
opportunities to leverage the R&D efforts of other agencies.

Completion of this strategic plan has been delayed because, these officials
said, much of the time since DHS's March 2003 creation has been spent organizing the Science and Technology Directorate, developing policies
and procedures, and hiring necessary staff. Unlike other parts of DHS, such as the Coast Guard, Customs Service, and Secret Service, the Science and Technology Directorate did not obtain staff from outside of the department
when DHS was created. According to senior DHS officials, a team of only 12 federal employees was initially responsible for organizing the Science and Technology Directorate. As a result, the directorate initially relied on
personnel temporarily detailed from other executive branch agencies and from DOE's laboratories to carry out day-to-day operations. As of January 2004, the Science and Technology Directorate had grown to a total of 212 staff: 100 DHS employees, 6 Public Health Service Officers, 59 contractors,
and 57 employees temporarily detailed from
other federal agencies and from DOE's laboratories.

The Science and Technology Directorate has organized its R&D around a number of research portfolios: four respond to specific terrorist threats, four address cross-cutting threats, and four support DHS's operational
units. (See table 1.) In addition,
DHS supports other R&D related activities,
including a program that provides fellowships to university students pursuing careers in scientific research
essential
to homeland security and a program to develop capabilities to protect commercial aircraft against
portable anti-aircraft missiles.

Table 1: DHS's Research Portfolios Research portfolios Research portfolios
Research portfolios focused on specific focused on cross-cutting
supporting DHS terrorist threats threats operational units

Biological Countermeasures Threat and Vulnerability Border and
Transportation Chemical Countermeasures Testing and Assessment Security
High Explosives Standards Emergency Preparedness

Countermeasures Emerging Threats and Response Radiological and Nuclear
Rapid Prototyping U.S. Coast Guard Countermeasures U.S. Secret Service

Source: DHS.

Note: In addition to these research portfolios, DHS's Science and
Technology Directorate provides funding for university and fellowship
programs and for research to counter portable anti-aircraft missiles.

In the absence of a strategic research plan, DHS obligated money for fiscal
year 2003 and 2004 and developed a budget request for fiscal year 2005 based on the personal judgment of managers of each of the research portfolios from the Science and Technology Directorate's Office of Plans,
Programs, and Budgets. (See table 2.) According to DHS officials, research
portfolio managers are experts in their respective fields and relied on their
knowledge of current threats and capabilities to independently determine priorities for research needs. In the future, these officials said, portfolio
managers will team with staff from the Science and Technology Directorate's Office of Research and Development, HSARPA, and Office of
System Engineering and Development to identify research needs, determine priorities, and help decide where the appropriate expertise
resides to develop each technology-that is, within DOE's laboratories, companies, or academia. Within each research portfolio, a team will
analyze current threats using information from intelligence assessments,
identify gaps in available technology, and consider how DHS can take advantage of the R&D efforts of other federal agencies. The Science and Technology Directorate's senior management will ultimately set priorities for R&D needs across research portfolios and make final funding decisions.

    Table 2: DHS R&D Funding Distribution, Fiscal Years 2003-2005 Dollars in
                                    millions

                            Research portfolio   2003   2004 2005 (requested) 
                    Biological countermeasures $362.6 $285.0           $407.0 
                      Radiological and nuclear               
                               countermeasures   75.0  126.3            129.3 
                      Chemical countermeasures    7.0   52.0 
               High explosives countermeasures    0.0    9.5 
          Threat and vulnerability testing and               
                                    assessment   36.1  100.1            101.9 
                             Rapid prototyping   33.0   73.0 
                                     Standards   20.0   39.0 
                              Emerging threats   16.8   21.0 
             R&D conducted for DHS operational               
              units (e.g., Coast Guard, Secret               
                                      Service)    0.0   34.0 
                Counter portable anti-aircraft    0.0   60.0 
                                      missiles               
            University and fellowship programs    3.0   68.8 
          R&D consolidation transferred fundsa    0.0    0.0 
                                         Total $553.5 $868.7           $986.7 

Source: GAO presentation of DHS data.

aAs a result of a requirement in the fiscal year 2004 homeland security
appropriations act, DHS's fiscal year 2005 budget request transfers $24.1
million from R&D activities conducted by other DHS entities, such as the
Coast Guard, and consolidates these R&D activities within the Science and
Technology Directorate.

Notes: In fiscal year 2003 and fiscal year 2004, DHS spent $44.2 million
and $52.6 million, respectively, on employee salaries and overhead
expenses.

This table is presented for background purposes only; therefore, we did
not assess the reliability of these data.

    DHS Has Coordinated Its R&D with Other Federal Agencies, but Gaps Remain

The Homeland Security Act of 2002 requires DHS to coordinate its research efforts with other federal agencies conducting homeland security R&D. DHS has coordinated with some interagency groups, including the National
Security Council's Policy Coordinating Committee for Counterterrorism and National Preparedness. DHS also cochairs a standing committee on Homeland and National Security in the White House's Office of Science and Technology Policy. This committee identifies key areas requiring interagency coordination in the
formulation of R&D agendas. DHS has
also worked with the Technical Support Working Group-an interagency 

working group of representatives from over 80 federal agencies that is
jointly overseen by the departments of State and Defense. The Technical
Support Working Group's mission is to facilitate interagency R&D for combating terrorism, primarily through rapid research, development, and prototyping. The Technical Support Working Group managed DHS's initial round of solicitations to private and academic researchers seeking
proposals for chemical, biological, and radiological countermeasures. 

DHS has also coordinated some of its R&D projects with other federal
agencies. For example, DHS is now responsible for BioWatch, a federal
program that monitors about 30 major cities for chemical and biological
threats. BioWatch is executed jointly by DHS, DOE's laboratories, the
Environmental Protection Agency, and the Centers for Disease Control and Prevention. According to DHS officials,
DHS has also coordinated with the
Department of Defense on BioNet, a federal program that links U.S.
military installations with local communities in efforts to detect and
respond to the use of biological agents. DOE and DHS have signed a memorandum of agreement that provides a framework for DHS to access the capabilities of DOE's laboratories and establishes policies for resolving conflicts over research priorities. DHS officials also noted that the Science and
Technology Directorate has a liaison to
DOE who worked for DOE and NNSA for over 20 years and is familiar with their programs.

Although coordination has occurred, gaps remain. The relationship between DHS and NNSA illustrates the potential gaps in coordination. NNSA officials provided DHS with copies of the fiscal year 2004 project
proposals it received from DOE's laboratories to develop radiological and nuclear countermeasures. However,
DHS officials did not provide NNSA
with any feedback on these proposals, and it is unclear how they used this
information during their own processes for reviewing
and funding research proposals. Moreover, DHS officials awarded fiscal year 2003 and 2004 funding to DOE's laboratories without taking similar steps to coordinate
and share proposal information with NNSA officials. Senior DHS officials told us that early efforts to coordinate and share information with NNSA were constrained because they had limited time after the department's
organization in March 2003 in which to make project funding decisions. According to NNSA and DHS officials, although DHS's mission focuses on counterterrorism
and NNSA concentrates more on nonproliferation, it is
important that the two agencies collaborate and share information.
Because both agencies may rely on the same capabilities of DOE's laboratories to conduct similar work, especially on radiological and nuclear countermeasures, the agencies need a stronger partnership in

order to leverage resources and minimize the potential for duplication of research efforts. In a May 12, 2004, letter commenting on our draft report,
DHS noted that DHS and NNSA staff have had numerous meetings to
discuss joint interests in various R&D topics and that NNSA staff participated in a meeting
on DHS's fiscal year 2004 radiological
and nuclear countermeasures program.

DHS still needs to establish formal partnerships with other federal
agencies that conduct homeland security R&D, and DHS officials acknowledge the importance of coordinating and developing partnerships with these federal agencies, as well. For example, DHS officials told us that they will need to
communicate with the Centers for Disease Control and Prevention and the
National Institutes of Health, which will conduct basic research on biological agents in order to develop biological countermeasures. In its May 2004 letter to us, DHS stated that DHS biological countermeasures officials are coordinating with HHS's Office of Emergency Preparedness. Other R&D projects conducted by the Department of Defense-especially
by the Defense Threat Reduction Agency and the Defense Advanced Research Projects Agency-to develop biological and chemical
countermeasures and force protection technologies may also be applicable
to DHS's efforts. In its May 2004 comments on our draft report, DHS noted that the Science and Technology Directorate works closely with the Department of Defense and other federal agencies to coordinate
biodefense research efforts and critical biocontainment laboratory infrastructure at the National Interagency Biodefense Campus at Fort
Detrick, Maryland.

  DHS Faces Challenges Using DOE's Laboratories

DHS's research program has concentrated on funding projects at five DOE laboratories. At the time of our review, the remaining DOE laboratories were to receive DHS R&D
funding primarily through competition with companies and academia. According to officials from some of DOE's laboratories, the relationship between their laboratory and DHS has been
strained because of inadequate communication and the lack of clear and well-defined criteria for designating the five DOE
laboratories that have received the majority of DHS's
R&D funding. DHS also faces the challenge
of balancing the immediate needs of users of homeland security
technologies with the need to conduct R&D on advanced technologies for the future. DHS intends to focus much
of its R&D efforts on
short-term, applied research projects, although some funds will be dedicated to longterm advanced concepts research. Some laboratory officials believe that if
DHS focuses on short-term, applied research, their laboratories' long-term

ability to attract and retain top scientific talent, build and maintain
laboratory facilities, and develop effective technologies may be jeopardized.

    DHS's Intramural R&D Efforts Are Concentrated at
    Five DOE National Laboratories

The Homeland Security Act of 2002 allows DHS to use any of DOE's laboratories; DHS's R&D program has focused on funding homeland security R&D projects at five "intramural" DOE laboratories: Los Alamos, Sandia, Lawrence Livermore, Pacific Northwest, and Oak Ridge National
Laboratories. The intramural program is designed to draw upon the resources of the federal government to conduct work that is
inherently
the federal government's responsibility. Such work includes threat characterization and analysis using classified intelligence information and R&D work using special nuclear materials such as plutonium and highly
enriched uranium.
In these areas of inherent federal responsibility, the private sector lacks the interest or capability to perform certain R&D tasks.

The five intramural laboratories received over 96
percent of the $57 million DHS invested in homeland security research at DOE's laboratories in fiscal
year 2003 and will receive almost 90 percent of the $201 million for fiscal
year 2004. (See table 3.) 

Table 3: DHS R&D Funding Distribution to DOE's Laboratories, Fiscal Years
2003 and 2004

                             DOE laboratory Fiscal year 2003 Fiscal year 2004 
                Argonne National Laboratory       $1,324,185       $2,000,000 
             Brookhaven National Laboratory          400,000        1,400,000 
             Idaho National Engineering and                  
                   Environmental Laboratory                0        1,750,000 
                 Lawrence Berkeley National                0        2,300,000 
                                 Laboratory                  
                Lawrence Livermore National       18,300,000       89,500,000 
                                 Laboratory                  
             Los Alamos National Laboratory       17,100,000       35,200,000 
              Oak Ridge National Laboratory       13,100,000        6,900,000 
                 Pacific Northwest National        2,300,000       12,200,000 
                                 Laboratory                  
         Remote Sensing Laboratory (Bechtel                  
                                    Nevada)                0       13,000,000 
               Sandia National Laboratories        4,900,000       36,400,000 
           Savannah River Technology Center          200,000          500,000 
                                      Total      $57,624,175     $201,150,000 

Source: GAO presentation of DHS data.

Note: Total for fiscal year 2004 based on $233,300,000 available. As of
February 10, 2004, $32,200,000 had not been obligated to any laboratory.

The Office of Research and Development is responsible for managing DHS's intramural program and will coordinate all work that DHS conducts
at DOE's laboratories. DHS officials told us that, in the future, R&D
with the intramural laboratories would be primarily focused on scientific-based threat and vulnerability characterizations, in addition to analysis and design of integrated technology systems. For example, intramural
laboratories may conduct R&D on tools to assist the intelligence
community develop and identify information on emerging threats. An intramural laboratory may also help identify gaps in current detection and response technologies and provide information that DHS and other agencies can incorporate into their R&D programs. DHS officials told us that they also intend to use the intramural laboratories as technical advisers to assist with internal strategic planning and program development. As a result, intramural laboratories will have access to, and may help shape, internal DHS planning documents. In an effort to guard against organizational conflicts of interest and inappropriate use of insider
information, the intramural laboratories will be prohibited from
responding to any competitive solicitations that DHS may sponsor.

DHS designed its extramural program primarily to capitalize on the
strengths of the nonfederal sector. HSARPA and the Office of System Engineering and Development will manage DHS's extramural R&D efforts
through competitive solicitations. DHS's original plans called for the remaining DOE laboratories to compete with companies and academia for
contracts under DHS's extramural R&D program. However, federal
acquisition regulations generally prohibit federally funded research and development centers, such
as DOE's laboratories, from competing with the
private sector for federal contracts. According to DOE laboratory officials,
when DHS decided to include some DOE laboratories in its extramural
program, it initially did not provide guidance to the laboratories that
detailed the restrictions on them competing with
the private sector for DHS R&D contracts. However,
in a March 2004 letter to DOE's laboratories, DHS stated that federal acquisition regulations prohibiting DOE laboratories
from competing with companies and academia will apply to DHS's
extramural program. Accordingly, DOE laboratories are not permitted to
directly respond to or participate as a team member in response to a request for proposals.

Nonetheless, DHS noted that the laboratories will have opportunities to
participate in its R&D efforts. In its March 2004 letter, DHS stated that
federal regulations do allow DOE laboratories to respond to certain kinds of R&D solicitations-known as broad agency announcements. Under federal acquisition regulations, agencies may use broad agency announcements to fulfill their requirements for
scientific study and
experimentation directed toward advancing the state of the art or
increasing knowledge, rather than focusing on a specific system or hardware solution to a particular need. DHS officials told us that the majority of solicitations through the extramural program would be conducted through broad agency announcements, thereby allowing DOE and other federal laboratories
to participate. DOE's laboratories, as well as other federal laboratories, companies, and academia typically respond to
broad agency announcements with "white papers" that detail a specific research proposal. DHS would then competitively evaluate these white papers and determine whether DOE's laboratory, a company, or academia best fulfills a specific R&D need.

Some extramural DOE laboratory officials we spoke with expressed concern with DHS's decision to split DOE's laboratories into intramural and extramural groups. Extramural DOE laboratory officials warned that their laboratories may not be able to maintain certain research capabilities that
could contribute to homeland security R&D if they could not receive 

intramural funding. In addition, the officials were concerned that competition with the private sector could result
in their laboratories
receiving limited homeland security R&D funding. Laboratory officials also said that their particular laboratories should have been included in the
intramural program because of their unique capabilities and history of successfully developing national security technologies that could be applied to DHS's missions. Moreover, DHS failed to provide them with any well-defined criteria that it used to determine which laboratories would
participate in the intramural program. Laboratory officials questioned whether DHS officials' decisions were influenced by personnel temporarily
detailed from DOE's laboratories, pointing out that the laboratories that
sent most of the personnel temporarily detailed to the Science and
Technology Directorate during DHS's initial organization were the same
laboratories that were later selected to participate in the intramural program.

DHS officials we spoke with disagreed with these views, stating that the presence of employees from certain laboratories had no bearing on the selection of those laboratories for the intramural program. Instead, decisions regarding which laboratories would become part of the intramural program were made based on DHS's understanding of each DOE laboratory's core competencies and the laboratory's ability to help meet the intramural program's mission requirements. DHS officials told us that they also considered R&D project proposals that a number of DOE laboratories submitted based on the laboratories' initial understanding of DHS's needs and program requirements. DHS officials added that the decision to split
DOE's laboratories into intramural and extramural groups was a natural choice, given the relative capabilities and expertise of some laboratories
over others. Finally, DHS officials told us that the extramural laboratories may receive direct funding for certain tasks or projects if DHS determines that the laboratory has a critical or unique expertise or capability that
fulfills a specific R&D need. For example, Brookhaven National Laboratory received $1.4 million from DHS in fiscal year 2004 primarily for R&D
on radiological and nuclear countermeasures even though it is an extramural
laboratory.

In letters to the Secretary of Homeland Security, Members of Congress from Idaho and New York-states where two extramural laboratories (Idaho National Engineering and Environmental Laboratory and Brookhaven National Laboratory) are located-expressed concern that
DHS's plan to exclude these laboratories from its intramural R&D activities
would not effectively use each of the laboratories' particular
capabilities in

developing homeland security technologies. In response to the these
concerns, DHS's Under Secretary
for Science and Technology indicated in a March 4, 2004, letter to a Member of Congress that DHS would allow each DOE laboratory to choose whether it wished to be designated as an intramural or extramural laboratory. In addition, DHS would conduct an
internal and external review of its policies for working with DOE's
laboratories. DHS recently conducted, in conjunction with DOE, an internal review of these policies. Additionally, the newly created Homeland Security Science and Technology Advisory Committee, consisting of
experts in homeland security issues, is assessing these policies. At
the time of our review, it was unclear to what extent these reviews would affect
DHS's policies for using DOE's laboratories and whether any of DOE's laboratories would choose to change their designation as an intramural or an extramural
laboratory.

    Some Laboratory Officials
    Believe that a Focus on Short-Term, Applied Research May Threaten the Development of Technologies Over the Long Term

To effectively use DOE's laboratories, DHS has to balance the immediate needs of users of homeland security technologies with the future needs for advanced technologies. DHS officials acknowledged that their initial efforts have focused on near-term applied R&D and helping homeland
security end users (e.g., state and local first responders and federal
agencies such as the Coast Guard) receive existing technologies in a timely
manner. DHS has directed most of its support for long-term R&D
through investments in university programs and fellowships to university students
to increase their interest in pursuing careers in homeland security R&D. According to senior DHS officials, much of the Science and Technology Directorate's funding for homeland security R&D will be channeled through HSARPA and the Office of System Engineering and Development. Both of these offices intend to focus their efforts on short-term applied
R&D and testing and evaluation of technologies. HSARPA plans to spend up to 10 percent of its R&D funds supporting revolutionary advanced concepts research devoted to developing breakthrough homeland security technologies, with the rest of its funding dedicated to developing
prototypes of homeland security technologies with a 6-month to 2-year development horizon. The Office of Research and Development will
conduct both short-and long-term
R&D under its intramural program. However, even long-term
projects will be required to provide short-and medium-term status reports that can be used to assess a project's progress.

DOE laboratory officials pointed out that, traditionally, DOE's laboratories
have specialized in higher risk, longer-term work. They were concerned that DHS is focusing on a short-to medium-term development schedule, 

which some of DOE's laboratories are not accustomed to. Some
laboratories, especially those in DHS's extramural program, which will
work primarily with HSARPA, may find it
challenging to meet these shorter time frames for R&D.

Some laboratory officials are also concerned with what they believe is
DHS's focus on short-term applied research. These officials believe that a
short-term focus may threaten their long-term
ability to attract and retain top scientific talent, build and maintain laboratory facilities, and develop effective homeland security technologies. These officials said that as DHS implements its R&D strategy, it must recognize the need
to make long-term
investments at DOE's laboratories. Furthermore, many of their laboratories' past successes in developing technologies in the short term have relied upon substantial investments in facilities, personnel, and advanced concepts research over
the long term. These officials pointed out
that reaching a scientific breakthrough has often required many years of
funding to develop, test, and refine technologies. In addition, their success in attracting top scientific talent has depended on their laboratory's
ability to provide for job sustainability, sufficient research resources, sophisticated research facilities, and opportunities to do ground-breaking
science over the long term. They are therefore concerned that if DHS is
focusing on short-term research, this could jeopardize their ability to create
an attractive work environment for recruiting and retaining top talent to
work on homeland security R&D. Some laboratory officials pointed out that it is expensive to maintain facilities to conduct homeland security
R&D, especially for chemical countermeasures. They warned that without
adequate investment from DHS, their laboratories may need to focus on
other activities and perform work for other agencies in order to support their laboratory capabilities and personnel, perhaps reducing the
personnel and facilities available for DHS R&D projects. 

DHS officials agreed that it is necessary to make long-term investments in
certain laboratory capabilities in order to create
an enduring R&D complex for federal homeland security. Officials from the Office of Research and
Development told us that they intend to use up to 20 percent of their
intramural program funds
to make long-term investments at DOE and other federal laboratories. Through targeted investments in personnel and research facilities, they hope to create an intellectual base dedicated to
homeland security R&D that the nation can depend upon. DHS recently
created the Office of Enduring Stewardship within the Science and Technology Directorate to consider DHS's long-term investments throughout DOE's laboratory complex. According to DHS officials, this 

office will help determine which capabilities at DOE's laboratories will
require long-term stewardship from DHS.

  DHS Is Making Progress in Developing
  Controls to Manage Its Research Efforts at DOE's Laboratories

To determine whether a project's goals are being met and resources are being used effectively and efficiently, standards for internal control in the federal government require that program managers have access to relevant,
reliable, and timely operational and financial data. For example, managers need (1) operational data to determine whether an agency is in
compliance
with various laws and regulations and (2) financial information to develop financial statements for periodic external reporting, and, on a day-to-day
basis, to make operating decisions, monitor performance, and allocate resources. Internal control standards require such operational and
financial information to be identified, captured, and distributed in a form and time frame that permits staff to perform their duties efficiently.

In this context, DHS's
Science and Technology Directorate is developing management tools to monitor project milestones, costs, and deliverables
for its R&D projects. Using standards developed by the Project Management Institute,6 DHS's objectives for these project management
tools are to, among other things,

o
   	inform DHS managers and other stakeholders of the status of R&D projects during their execution;

o
   	provide a standard, regular channel of communications between DHS and researchers in such a way as to establish trust and transparency between them;

o 	facilitate DHS's and researchers' ability to anticipate and manage
change;

o
   	contribute to DHS's assessment of the overall performance of researchers; and

o 	serve as a formal mechanism to ensure effective and efficient use of
taxpayer funds.

6See Project Management Institute, A Guide to the Project Management Body
of Knowledge (Newtown Square, Pa.: 2000). This guide has been approved by
the American National Standards Institute.

Each laboratory conducting R&D for DHS will complete a monthly report
for each research portfolio in which it is engaged. For example, a laboratory conducting research in the research portfolios for both nuclear
and radiological and chemical countermeasures would produce two separate monthly reports. In addition, an overall report for all of a laboratory's efforts will be produced. DHS is providing funding to organize Centers for Homeland Security that will
house administrative support personnel at DOE's laboratories to help researchers track their projects.

The monthly reports are to contain summary information on a project's costs, schedule, and scope. While the exact form this summary information
will take is still being developed, DHS officials told us that one way the
information could be portrayed is as a red/yellow/green traffic light for
cost, schedule, and scope status. For example, costs would be portrayed as
(1) green, if the laboratory's estimate of the project's total cost is less than or
equal to the project's total
budget, (2) yellow, if the laboratory's estimate of the project's total cost is greater than the project's budget and a corrective action plan has been approved and implemented, and (3) red, if
the project's estimated total cost is greater than its budget and no corrective action plan has been approved. Similar status designations would be made for project schedule and scope.

Quantitative performance metrics are also being developed in a number of areas
and will be used
in reports to track differences between the budgeted and actual costs of the R&D work performed and will measure schedule variances. In addition, the reports are to describe (1) the reasons for cost, schedule, and/or scope variances and
any corrective actions underway;
(2) important accomplishments during the reporting period; and (3) issues
that could affect the execution of a project.

DHS plans to conduct regular merit reviews on a portfolio-by-portfolio
basis-initially twice a year and eventually once a year. For each review, DHS will charter a panel that will include the cognizant portfolio manager
as well as others, such as members of the Homeland Security Science and Technology Advisory Committee that was created by the Homeland
Security Act of 2002. These review panels will assess how the technical
approach being followed by R&D projects matches the research
portfolio's requirements, the projects' progress to date, and remaining risk and ways
of mitigating any identified risk.

Conclusions	The creation of DHS represents the largest reorganization of the federal government in more than 50 years. While we acknowledge DHS officials'
concerns that they have had limited time since the department's initial organization in March 2003, it
is important for DHS to complete its strategic
plan and identify and set priorities for its R&D
efforts as required by the
Homeland Security Act of 2002. The act also requires that DHS coordinate
the federal government's homeland security R&D efforts. More effective
integration of research efforts between DHS, NNSA, and other agencies
during DHS's strategic planning and its annual selection and setting of priorities for R&D projects could increase opportunities to leverage
research efforts and identify gaps in the federal government's efforts to
develop appropriate homeland security technologies. Effective integration
is especially important for chemical and biological countermeasures, where DHS will depend upon basic research conducted by the Centers for
Disease Control and Prevention, the National Institutes of Health, and others. Effective coordination between DHS and DOE is all the more
critical because the departments must share the capabilities of the extensive DOE
laboratory complex equally, and their mechanism for resolving priority conflicts at the laboratories has yet to be tested.

We are concerned that DHS's approach to funding R&D efforts may hinder
its ability to use the full capabilities of the entire DOE
laboratory system. Although DHS's decision to target its long-term investments towards a limited group of DOE laboratories has been explained as a strategic decision to maximize limited resources, we believe that annual project
funding decisions and long-term
investments in laboratory capabilities should be based on using and supporting the best science available. These funding decisions should be made using well-defined criteria that are clearly communicated to every potential contributor. In addition, while DHS has made clear that DOE's laboratories are allowed to compete for
funding with private and academic researchers under specific circumstances, the laboratories may need additional guidance that
details how they can comply with federal acquisition regulations and other restrictions that generally prohibit competition
between federal and private research entities. We
are encouraged by DHS's March 2004 decision to
review its policies for working with DOE's laboratories, but the extent to which these reviews will affect DHS's R&D activities remains unclear.

  Recommendations for Executive Action

To ensure that DHS appropriately integrates its R&D of homeland security
technologies with complementary R&D efforts conducted across the federal government and that the extensive capabilities of DOE's
laboratories can be brought to bear on the R&D of nuclear, biological, and chemical countermeasures, we recommend that the Secretary of Homeland Security direct the Under Secretary for Science and Technology to take the
following four actions:

o
   	Consistent with the Homeland Security Act of 2002, complete a strategic R&D plan that identifies priorities, goals, and objectives to identify and develop countermeasures to chemical, biological, radiological, nuclear, and other emerging terrorist threats.

o
   	Ensure that this strategic plan is integrated with homeland security R&D efforts conducted by other federal agencies, such as NNSA, HHS, and the Department of Defense. This integrated strategic plan should detail
how DHS will work with these agencies to establish governmentwide priorities, identify research gaps, avoid duplication of effort, and leverage resources.

o 	Develop and communicate to DOE's laboratories and other potential
contributors to homeland security R&D efforts well-defined criteria for distributing annual project funding and for making long-term investments in laboratory capabilities for homeland security R&D.

o 	Develop, in cooperation with DOE, specific guidelines that detail the
circumstances under which DOE laboratories and other federal R&D programs would compete for contracts with private sector and academic entities. These guidelines should describe the criteria used to select proposals, detail the method of evaluation, and contain procedures DOE's laboratories should use to ensure compliance with
federal acquisition regulations and statutory requirements.

Agency Comments and 	We
provided NNSA, the Department of Defense, and DHS with draft copies
of this report for their review and comment. DHS's written comments are

Our Evaluation	presented as appendix III. NNSA
had no comments on the draft report, but
noted that NNSA is in contact with DHS to assist it in its coordination efforts related to the use of DOE's laboratories. NNSA's letter is presented as appendix IV. The Department of Defense had no comments on the draft report.

DHS agreed with our recommendation to create a strategic R&D plan and noted that such a plan is critical to the success of the department. DHS stated that its Science and Technology Directorate has launched a formal, structured strategic planning process that will determine specific goals for
the next 5 years, threats and vulnerabilities, and a list of prioritized deliverables for fiscal year 2005 through fiscal
year 2010. DHS stated that it
expected this plan to be completed in the early summer of 2004 and that
the plan will be reviewed and updated annually.

DHS did not explicitly agree or disagree with our recommendation that this
plan be integrated with homeland security R&D
conducted by other agencies. However,
DHS did provide information on the ongoing development of a national plan for homeland security science and technology by the Homeland Security Council, the National Security
Council, the Office of Science and Technology Policy, and DHS. According to DHS, this national plan will highlight the high-priority areas for homeland security in the short-, mid-, and long-term, as well as lay out the roles and responsibilities for each federal department and agency with homeland security R&D programs. DHS also provided additional
information on its interactions with NNSA, HHS, and the Department of Defense that we incorporated into the report as appropriate. We are encouraged that DHS is taking steps to work with other federal agencies and interagency groups to develop an integrated national plan for
homeland security R&D.

DHS also provided information on its strategic planning for long-term investments in DOE's laboratories. For example, as was stated in our draft
report, DHS noted that it requested that the newly formed Homeland
Security Science and Technology Advisory Committee review DHS's
policies for using DOE's laboratories and make recommendations on the most effective long-term policy. However,
DHS did not respond directly to our recommendation that DHS should develop and communicate to DOE's
laboratories well-defined criteria for distributing annual project funding. We
continue to believe that communicating the criteria that will be used to
make funding decisions to DOE's laboratories and other potential
contributors to homeland security R&D efforts would assist them in developing proposals that would best meet DHS's requirements.

Finally, DHS did not agree or disagree with
our recommendation to develop guidelines that detail how
DOE's laboratories would compete for contracts
with private sector and academic entities. As our draft report stated, DHS noted that it asked each laboratory to decide whether to participate in the 

Science and Technology Directorate's strategic planning and program development processes as an intramural laboratory or to respond to broad agency announcements open to the private sector as an extramural
laboratory. According to DHS, Argonne National Laboratory, Bechtel Nevada, Brookhaven National Laboratory, Idaho National Engineering and Environmental Laboratory, Lawrence Livermore National Laboratory, Los
Alamos National Laboratory, Oak Ridge National Laboratory, Pacific Northwest National Laboratory, and Sandia National Laboratories have
since decided to participate in DHS R&D activities as intramural
laboratories. DHS stated in its comments that current regulations cover inclusion of the remaining
DOE laboratories
and other federal laboratories in normal solicitation processes. We agree with DHS, and our draft report stated, that federal acquisition regulations permit DOE and other federal
laboratories to respond to broad agency announcements. However,
laboratory officials told us throughout our review that they have little experience responding to these types of solicitations. Therefore, we
continue to believe that specific guidelines detailing how
the laboratories should respond to DHS's broad agency announcements would help ensure that regulatory requirements governing competition between federal laboratories and private sector researchers are met.

We are sending copies of this report to the Secretary of Homeland
Security; the Secretary of Defense; the Secretary of Energy; the Administrator,
NNSA; the Director, Office of Management and Budget; appropriate congressional committees; and other interested parties. We will also make copies available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-3841. Key contributors to this report were Ryan T. Coles, Jonathan G. Nash, F. James Shafer, Jr., and Ann M. Ulrich.

Sincerely yours,

Gene Aloise Acting Director, Natural Resources and Environment

Appendix I

NNSA Has Strengthened Its Project Management Controls

This appendix discusses changes the National Nuclear Security Administration's (NNSA) Nonproliferation and Verification Research and Development Program has made to the controls it uses to monitor project milestones, costs, and deliverables for R&D conducted at the Department of Energy's (DOE) laboratories since our August 2002 report.1

The mission of NNSA's program
is to conduct needs-driven research, development, testing, and evaluation of new
technologies that are intended to strengthen the United States' ability to detect and analyze the global spread of nuclear weapons and technology. DOE's laboratories carry out
most of the program's research, while officials at NNSA's headquarters and operations offices provide general oversight and contracting support and serve as liaisons to users of the technologies developed. The program manages R&D of space-and ground-based remote sensing and other technologies used by defense and intelligence agencies to verify and monitor
arms control treaties.

The program is currently divided into two specific research areas:

o 	Nuclear Explosion Monitoring.
Develops and manufactures groundand satellite-based sensors and computer software for detecting, locating, identifying, and characterizing nuclear explosions when they occur underground, underwater, in the atmosphere, or in space.

o 	Proliferation Detection.
Develops, demonstrates, and delivers long-and short-range sensor technologies to detect the spread of nuclear, chemical, and biological weapons, materials, and technologies
worldwide.

NNSA and its R&D program are key players in the United States'
nonproliferation efforts. NNSA derives its important role from its unique
understanding and expertise related to nuclear weapons and nuclear
power, based in large measure on the world-class research, design, and engineering capabilities found at DOE's laboratories. Some examples of successful research projects conducted by NNSA's Nonproliferation and Verification R&D Program include:

1U.S. General Accounting Office, Nonproliferation R&D: NNSA's Program
Develops Successful Technologies, but Project Management Can Be
Strengthened, GAO-02-904 (Washington, D.C.: Aug. 23, 2002).

Appendix I
NNSA Has Strengthened Its Project
Management Controls

o 	The development of ground-based technology for detecting in real time
short-lived radioactive gases released during nuclear explosions and satellite-based sensors that are sensitive to x-ray, gamma-ray, and neutron emissions.

o
   	Detection equipment that was fitted into an aircraft and flown over the World Trade Center site following the September 11, 2001, terrorist
attacks to monitor air samples for hazardous chemicals.

o 	A decontamination formulation that was used to assist the cleanup of
congressional office buildings contaminated with anthrax and
equipment to detect the presence of chemical agents in the Washington, D.C., Metro subway system.

The Homeland Security Act of 2002 transferred the chemical and biological
R&D work of NNSA's program
to the Department of Homeland Security (DHS), along with some of NNSA's counter-nuclear smuggling R&D.

To monitor the progress of NNSA
R&D projects by headquarters program managers, participating laboratories are required to submit, on an annual basis, project life-cycle plans. These plans are to contain detailed statements of work that describe the project's contributions to overall
program goals, scientific and technical merit, and the specific tasks to be accomplished. In addition, laboratories are required to submit quarterly reports that indicate all projects' progress to date, issues and problems encountered, milestones and schedules, and cost data. However,
we reported in August 2002 that plans and reports were often missing these
data, and the program management information system used by the program was not designed to track whether projects are on time or within budget, eliminating an important tool that could be used to track projects, improve communications across the
program, and provide transparency to other agencies and to the Congress.

Since our August 2002 report, NNSA has improved the controls it uses to
provide the operational and financial data that its managers use to monitor project costs, milestones, and deliverables. The program has implemented a Web-based project management information system that is designed to contain the information needed for proposal evaluation, budget planning, funding decisions, preparation of work authorizations, responses to
congressional inquiries, and other reports on the status and costs of R&D projects
managed by the program. In addition, the program has
emphasized the importance of performance metrics and the use of the Office of

Appendix I
NNSA Has Strengthened Its Project
Management Controls

Management and Budget's Program Assessment Rating Tool (PART).
PART is a series of diagnostic questions designed to provide a consistent
approach to rating federal programs. Drawing upon available performance and
evaluation information, the
PART questionnaire attempts to determine the strengths and weaknesses of federal programs with a particular focus on individual program results. PART asks, for example, whether a program's long-term goals are specific, ambitious, and focused on outcomes, and whether annual goals demonstrate progress toward achieving long-term goals.2

NNSA's R&D program is also making increased use of project reviews.
Program managers and potential users of technologies developed by the program conduct regular reviews of each project before key decisions are made, such as whether to proceed from exploratory research into product
development. The reviews examine how well the project is linked to user
needs, the strength of the researchers'
scientific or technical approach, and the researchers' ability to carry out the project effectively and efficiently.
The reviews also involve outside experts from the academic or private sector communities with a strong relevant science background.

DOE is in the process of developing a departmentwide project management
system called the E-Government Corporate R&D
Electronic Portfolio Management Environment. This system will, according to DOE, consolidate information currently contained in a myriad of existing program management systems and provide critical project proposal, fund distribution, and performance data to track research projects from proposal submission to project closeout. By the end of fiscal year 2004, DOE plans to deploy a module of the project management system that will
allow DOE's laboratories to electronically submit proposals for new and ongoing R&D. This module will also give DOE managers the ability to
receive, review, and respond to those proposals electronically. The remaining module of the project management system that will provide for,
among other things, electronic merit reviews; project tracking and reporting; and program planning, analysis, and evaluation is scheduled to
be deployed by the end of fiscal year 2006.

2For more information on PART, see U.S. General
Accounting Office, Performance Budgeting: Observations on the Use of OMB's
Program Assessment Rating Tool for the Fiscal Year 2004 Budget, GAO-04-174
(Washington, D.C.: Jan. 30, 2004).

Appendix II

                       Objectives, Scope, and Methodology

This report examines (1) whether DHS has completed a strategic R&D plan
and coordinated its efforts with other federal agencies conducting
homeland security R&D (2) how DHS plans to use DOE's laboratories to carry out its responsibilities for R&D
on nuclear, biological, and chemical
detection and response technologies; and (3) what controls DHS is
establishing to monitor project milestones, costs, and deliverables for R&D conducted at DOE's laboratories. In addition, we report on how NNSA's Nonproliferation and Verification Research and Development program has changed its project management controls since our August 2002 report.1

To determine whether DHS has completed a strategic R&D plan and coordinated its efforts with other federal agencies conducting homeland security R&D, we interviewed officials from DHS, DOE, and NNSA. We
also
received written responses to questions provided to the Office of Science and Technology Policy in the Executive Office of the President. Because
DHS was undergoing its initial organization at the time of our review, and documented plans, policies,
and procedures were still
being developed, our examination of DHS's strategic planning and coordination activities focused on interviews with agency officials and reviewing DHS's
preliminary planning documents. When officials provided their views and opinions on various issues as representatives for their agencies, we attempted to corroborate the information with other agency officials. In
addition, we considered testimony and statements made by several senior
DHS officials during congressional hearings on the status of DHS's R&D programs. We reviewed
the relevant sections of the
Homeland Security Act of 2002 that established the responsibilities of the Directorate of Science
and Technology. To better understand DHS's relationship with DOE, we
reviewed a memorandum of agreement between the two agencies and other documentation that governs DHS's access to DOE's laboratories. We
also interviewed Department of State officials
overseeing the Technology Support Working Group to better understand DHS's relationship and coordination with this interagency group.

To determine how DHS plans to use DOE's laboratories, we obtained R&D proposal guidance that
DHS provided to DOE's laboratories and the
criteria that DHS used to review these proposals. We also obtained the results of a DHS-sponsored peer review of DOE
laboratory proposals. We reviewed

1U.S. General Accounting Office, Nonproliferation R&D: NNSA's Program
Develops Successful Technologies, but Project Management Can Be
Strengthened, GAO-02-904 (Washington, D.C.: Aug. 23, 2002).

Appendix II
Objectives, Scope, and Methodology

federal acquisition regulations and statutory requirements governing the operation of DOE's laboratories to determine the laboratories' ability to
engage in openly competitive solicitations with companies and academia. We collected and analyzed documents and correspondence between Science and Technology Directorate officials and DOE's laboratories that
detailed DHS's plans for using DOE's laboratories. Additionally, we obtained correspondence between Members of Congress and senior DHS staff concerning the DHS use of DOE's laboratories. We examined budget information for the Science and Technology Directorate's R&D portfolios
for fiscal years 2003 and 2004 and its budget request for fiscal year 2005. Additionally, we analyzed the amount of funding each DOE laboratory
received from DHS for fiscal years 2003 and 2004. To assess the reliability of the budgetary information used in this report, we obtained responses from key DHS database officials to a series of questions focused on data
reliability,
covering issues such as data entry access, internal control procedures, and the accuracy and completeness of the data. We added follow-up questions whenever necessary. We also corroborated the budgetary data with other sources, such as congressional testimony from DHS officials, whenever possible. We found no discrepancies with the data
DHS provided. Based on our work, we determined that these data were
sufficiently reliable for the purposes of this report.

To obtain the views of DOE's laboratories on DHS's plans, we conducted focus groups with program managers and individual project researchers at
seven DOE laboratories. We selected five DOE laboratories-Sandia, Los Alamos, Lawrence Livermore, Pacific Northwest, and Oak Ridge National Laboratories-because they received the majority of all funding DHS distributed
to DOE laboratories and were designated by
DHS to participate in its intramural program. We selected the remaining two laboratories-
Argonne and Brookhaven National Laboratories-because they also conduct
homeland security R&D for DHS, NNSA, or other federal agencies
and, at the time of our review, were designated by DHS to participate in its
extramural program. For the focus groups with the program
managers, we selected laboratory officials responsible for overseeing R&D on chemical, biological, radiological, and nuclear countermeasures for NNSA, DHS, and other agencies. We relied upon laboratory directors and program managers to help identify appropriate individuals to participate in our focus groups
with researchers. Those selected to participate in the focus groups tended to be senior principal project investigators responsible for developing homeland security and nonproliferation technologies at their laboratories. During each focus group, we asked targeted questions in order to generate discussion on various issues related to this review, including questions on 

Appendix II
Objectives, Scope, and Methodology

the laboratory proposal development processes, the means of obtaining user input to the R&D process, short-term versus long-term research, and researchers' views on appropriate levels of monitoring/oversight/coordination between the laboratories, DHS, and NNSA. In order to solicit open and candid responses to our questions, we conducted the focus groups for the researchers separately from the focus groups with the program managers. More than 90 individuals participated
in these focus groups.

To determine what controls DHS is establishing to monitor project
milestones, costs, and deliverables for R&D, we examined documents that outline DHS's plans to oversee R&D conducted at DOE's laboratories. We
compared these plans to standards laid out in GAO's Standards for Internal
Control in the Federal Government (GAO/AIMD-00-21.3.1,
November 1999). We analyzed DHS's guidelines for developing R&D execution plans and related documentation on DHS's proposed use of
quantitative performance metrics and merit reviews. To determine
how NNSA's program
has changed its project management controls since our August 2002 report, we interviewed NNSA officials and examined various
polices, procedures, and documents related to NNSA's project management
systems. We considered how NNSA has incorporated the use of
performance metrics and the Office of Management and Budget's Program Assessment Rating Tool. In addition, we examined NNSA's plans to use DOE's departmentwide project management system-the E-Government Corporate R&D Electronic Portfolio Management Environment.

We conducted our review from August 2003 through April 2004 in
accordance with generally accepted government auditing standards.

Appendix III

Comments from the Department of Homeland Security

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

Appendix IV

Comments from the National Nuclear Security Administration

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