Homeland Security: Management and Programmatic Challenges Facing 
the Department of Homeland Security (06-FEB-07, GAO-07-398T).	 
                                                                 
The Department of Homeland Security (DHS) plays a key role in	 
leading and coordinating--with stakeholders in the federal,	 
state, local, and private sectors--the nation's homeland security
efforts. GAO has conducted numerous reviews of DHS management	 
functions as well as programs including transportation and border
security, immigration enforcement and service delivery, and	 
disaster preparation and response. This testimony addresses why  
GAO designated DHS's implementation and transformation as a	 
high-risk area, management challenges facing DHS, programmatic	 
challenges facing DHS, and actions DHS should take to strengthen 
its implementation and transformation efforts.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-398T					        
    ACCNO:   A65586						        
  TITLE:     Homeland Security: Management and Programmatic Challenges
Facing the Department of Homeland Security			 
     DATE:   02/06/2007 
  SUBJECT:   Accountability					 
	     Disaster recovery					 
	     Disaster recovery plans				 
	     Emergency preparedness				 
	     Federal agency reorganization			 
	     Federal procurement				 
	     Financial management				 
	     General management reviews 			 
	     Homeland security					 
	     Human capital management				 
	     Internal controls					 
	     Program evaluation 				 
	     Strategic planning 				 
	     Transportation security				 
	     Program implementation				 
	     High Risk Series 2003				 
	     High Risk Series 2005				 

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GAO-07-398T

   

     * [1]Summary
     * [2]Background
     * [3]DHS's Transformation
     * [4]DHS Must Address Key Management Challenges

          * [5]DHS Transformation and Integration
          * [6]Financial Management and Internal Controls
          * [7]Information Technology
          * [8]Human Capital Systems
          * [9]Acquisition Management

     * [10]Programmatic Challenges Facing DHS

          * [11]Transportation Security
          * [12]Coast Guard Acquisitions and Non-Homeland Security Missions
          * [13]Border Security and the Regulation of Trade
          * [14]Enforcement of Immigration Laws
          * [15]Provision of Immigration Services
          * [16]Disaster Preparedness and Response

     * [17]Actions Needed to Strengthen DHS's Transformation and Integr
     * [18]Contacts and Acknowledgements
     * [19]Implementing and Transforming the Department of Homeland Sec

          * [20]Implementation and Transformation
          * [21]Financial Management and Internal Controls
          * [22]Information Technology
          * [23]Human Capital Systems
          * [24]Acquisition Management
          * [25]Transportation Security
          * [26]Coast Guard Acquisitions and Non-Homeland Security Missions
          * [27]Border Security and the Regulation of Trade
          * [28]Enforcement of Immigration Laws
          * [29]Provision of Immigration Services
          * [30]Disaster Preparedness and Response

     * [31]GAO's Mission
     * [32]Obtaining Copies of GAO Reports and Testimony

          * [33]Order by Mail or Phone

     * [34]To Report Fraud, Waste, and Abuse in Federal Programs
     * [35]Congressional Relations
     * [36]Public Affairs

Testimony before the
Subcommittee on Homeland Security, House Appropriations Committee
United States Government Accountability Office

GAO

For Release on Delivery

10 a.m. EST

Tuesday, February 6, 2007

HOMELAND SECURITY

Management and Programmatic Challenges Facing the Department of Homeland
Security

Statement of David M. Walker
Comptroller General of the United States
U.S. Government Accountability Office

GAO-07-398T

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to appear before the subcommittee to address
management and programmatic challenges facing the Department of Homeland
Security (DHS). I have spoken extensively about the fiscal crisis our
nation faces with the coming retirement of the baby boom generation and
the related growth in entitlement spending. The current financial
condition in the United States is worse than is widely understood and is
not sustainable. Meeting the long-term fiscal challenge will require (1)
significant entitlement reform to change the path of those programs; (2)
reprioritizing, restructuring and constraining other spending programs;
and (3) additional revenues--such as through a reformed tax system. These
efforts will require bipartisan cooperation and compromise.

Irrespective of our fiscal situation, it is important for federal
departments--including DHS--to operate as efficiently and effectively as
possible in carrying out their missions. At the same time, we also face
new and uncertain threats to our security, both overseas and at home, that
require continued attention. Without this focus, the consequences can be
catastrophic. We designated the implementation and transformation of DHS
as a high-risk area in 2003 and continued that designation in our 2005
update. In my testimony today, I will explain why we have decided to
maintain this area on our 2007 high risk list. I will focus on four areas:

           o why we originally designated DHS's implementation and
           transformation as a high-risk area,

           o specific management challenges that DHS continues to face,

           o examples of the program challenges that DHS faces, and

           o actions DHS should take to strengthen its implementation and
           transformation efforts.

My comments today are based on our wide-ranging work on DHS since the 2005
high-risk update, as well as our institutional knowledge of homeland
security and various government organizational and management issues. We
conducted our work in accordance with generally accepted government
auditing standards. A listing of GAO reports related to the
transformation, management, and program challenges discussed in this
statement are contained in Appendix 1.

Summary

We first designated DHS's implementation and transformation as high risk
in 2003 because 22 disparate agencies had to transform into one
department. Many of these individual agencies were facing their own
management and mission challenges. But most importantly, the failure to
effectively address DHS's management challenges and program risks could
have serious consequences for our homeland security as well as our
economy. We kept the DHS implementation and transformation on the
high-risk list in 2005 because serious transformation challenges continued
to hinder DHS's success. Since then, our and the DHS Inspector General's
(IG) reports have documented DHS's progress and remaining challenges in
transforming into an effective, integrated organization. For example, in
the management area, DHS has developed a strategic plan, is working to
integrate some management functions, and has continued to form necessary
partnerships to achieve mission success. Despite these efforts, however,
the DHS implementation and transformation continues to remain on the 2007
high-risk list because numerous management challenges remain. For example,

           o Although DHS has issued guidance and plans to assist management
           integration on a function by function basis, DHS lacks a
           comprehensive management integration strategy with overall goals,
           timelines, and a team dedicated to support its integration
           efforts.
           o The DHS strategic plan addresses five of six Government
           Performance and Results Act required elements and takes into
           account its non-homeland security missions, such as responding to
           natural disasters. However, DHS and its components must also
           improve planning by linking resource needs to its goals and
           promoting greater stakeholder involvement to ensure resource
           investments target the highest priorities.
           o Several DHS programs have not developed outcome-based measures
           to assess performance.
           o While the Secretary of DHS has expressed a commitment to risk
           management, DHS has not performed comprehensive risk assessments
           in transportation, trade, critical infrastructure, or the
           immigration and customs systems to guide resource allocation
           decisions.
           o Since its creation, DHS has been unable to obtain an unqualified
           or "clean" audit opinion on its financial statements. The auditors
           continue to report 10 material internal control weaknesses and
           that DHS's financial systems do not substantially comply with
           federal requirements. These weaknesses highlight the concern that
           DHS, the second-largest government agency, may not be able to
           account for all of its funding and resources or have reliable
           financial information for management and budget purposes. 
           o DHS has not institutionalized an effective strategic framework
           for information management to, among other things, guide
           technology investments, and despite some progress, DHS's human
           capital--the centerpiece of its transformation efforts--and
           acquisition systems will require continued attention to help
           prevent waste and to ensure that DHS can allocate its resources
           efficiently and effectively.

DHS has taken some actions to strengthen program activities in areas such
as cargo, transportation, and border security; Coast Guard acquisition
management; disaster preparedness conducting advance contracting for goods
and services; and immigration services. However, DHS continues to face
programmatic and partnering challenges. To help ensure its missions are
achieved, DHS must overcome continued challenges related to:

           o strengthening cargo and passenger screening, visitor tracking,
           efforts to combat the employment of illegal aliens, and outdated
           Coast Guard asset capabilities;
           o balancing its homeland security and other missions, such as
           disaster preparedness; and
           o clearly defining leadership roles and responsibilities,
           developing necessary disaster response capabilities, and
           establishing accountability systems to provide effective services
           while protecting against waste, fraud, and abuse at the Federal
           Emergency Management Agency (FEMA).

To be removed from GAO's high-risk list,1 agencies must do three things.
First, they have to produce a corrective action plan that defines the root
causes of identified problems, identifies effective solutions to those
problems, and provides for substantially completing corrective measures in
the near term. Such a plan should include performance metrics and
milestones, as well as mechanisms to monitor progress. In the spring of
2006, DHS provided us with a draft corrective action plan that did not
contain key elements we have identified as necessary for an effective
corrective action plan, including specific actions to address identified
objectives. Second, agencies must demonstrate significant progress in
addressing the problems identified in their corrective action plan. To
date, DHS has not been transparent in its efforts in strengthening its
management areas and mission functions. While much of its sensitive work
needs to be guarded from improper disclosure, DHS has not been receptive
towards oversight and its delays in providing Congress and us with access
to various documents and officials have impeded our work. Finally,
agencies, in particular top leadership, must demonstrate a commitment to
achieve any remaining key objectives and sustain various improvements in
their performance over the long term. Although DHS leaders have expressed
their intent to integrate legacy agencies into the new department, they
have not dedicated the resources needed to oversee this effort and have
not been responsive to many directions from Congress and recommendations
from study groups and accountability organizations like the IGs and GAO.

1GAO, Determining Performance and Accountability Challenges and High
Risks, [37]GAO-01-159SP (Washington, D.C.: Nov. 1, 2000).

Background

In an effort to strengthen homeland security following the September 11,
2001, terrorist attacks on the United States, President Bush issued the
National Strategy for Homeland Security in July 2002 and signed
legislation creating DHS in November 2002.2 The strategy set forth the
overall objectives, mission areas, and initiatives to prevent terrorist
attacks within the United States; reduce America's vulnerability to
terrorism; and minimize the damage and assist in the recovery from attacks
that may occur.

DHS, which began operations in March 2003, represented a fusion of 22
federal agencies to coordinate and centralize the leadership of many
homeland security activities under a single department. Although the
National Strategy for Homeland Security identified that many other federal
departments (and other nonfederal stakeholders) are involved in homeland
security activities, DHS has the dominant role in implementing the
strategy. The strategy identified 6 mission areas and 43 initiatives. DHS
was designated as the lead federal agency for 37 of the 43 initiatives,
and has activities under way in 40 of the 43 initiatives.

The Homeland Security Act of 2002, which created DHS, represented a
historic moment of almost unprecedented action by the federal government
to fundamentally transform how the nation thinks of homeland security,
including how it protects itself from terrorism. Also significant was the
fact that many of the 22 departments brought together under DHS were not
focused on homeland security missions prior to September 11, 2001. Rarely
in the country's past had such a large and complex reorganization of
government occurred or been developed with such a singular and urgent
purpose. The creation of DHS represented a unique opportunity to transform
a disparate group of agencies with multiple missions, values, and cultures
into a strong and effective cabinet department whose goals are to, among
other things, protect U.S. borders and infrastructure, improve
intelligence and information sharing, and prevent and respond to potential
terrorist attacks. Together with this unique opportunity, however, came a
significant risk to the nation that could occur if the department's
implementation and transformation efforts were not successful.

2Homeland Security Act of 2002, Pub. L. No. 107-296, 116 Stat. 2135.

Mission areas designated as high risk have national significance, while
other areas designated as high risk represent management functions that
are important for agency performance and accountability. The identified
areas can have a qualitative risk that may be detrimental to public health
or safety, national security, and economic growth, or a fiscal risk due to
the size of the program in question. Examples of high-risk areas include
federal governmentwide problems, like human capital management; large
programs, like Social Security, Medicaid, and Medicare; and more narrow
issues, such as contracting at a specific agency. The DHS transformation
is unique in that it involves reorganization, management, and program
challenges simultaneously.

DHS's Transformation

We first designated DHS's transformation as high risk in January 2003
based on three factors. First, DHS faced enormous challenges in
implementing an effective transformation process, developing partnerships,
and building needed management capacity because it had to effectively
combine 22 agencies with an estimated 170,000 employees into one
department. Second, DHS faced a broad array of operational and management
challenges that it inherited from its component legacy agencies. For
example, many of the major components that were merged into the
department, including the Immigration and Naturalization Service, the
Transportation Security Administration, the Customs Service, the Federal
Emergency Management Agency, and the Coast Guard, brought with them
existing challenges in areas such as strategic human capital, information
technology, and financial management. Finally, DHS's national security
mission was of such importance that the failure to effectively address its
management challenges and program risks could have serious consequences on
our intergovernmental system, our citizens' health and safety, and our
economy.

Our prior work on mergers and acquisitions, undertaken before the creation
of DHS, found that successful transformations of large organizations, even
those faced with less strenuous reorganizations than DHS, can take 5 to 7
years to achieve.3 On the basis of the need for more progress in its
transformation efforts, DHS's implementation and transformation stayed on
our high-risk update for 2005. Further, in November of 2006, we provided
the congressional leadership a listing of government programs, functions,
and activities that warrant further congressional oversight.4 Among the
issues included were DHS integration and transformation efforts.

DHS Must Address Key Management Challenges

Managing the transformation of an organization of the size and complexity
of DHS requires comprehensive planning, integration of key management
functions across the department, and partnering with stakeholders across
the public and private sectors. DHS has made some progress in each of
these areas, but much additional work is required to help ensure
sustainable success. Apart from these integration efforts, however, a
successful transformation will also require DHS to follow through on its
initial actions of building capacity to improve the management of its
financial and information technology systems, as well as its human capital
and acquisition efforts.

DHS Transformation and Integration

Thorough planning is important for DHS to successfully transform and
integrate the management functions of 22 disparate agencies into a common
framework that supports the organization as a whole. Our past work has
identified progress DHS has made in its planning efforts.5 For example,
the DHS strategic plan addresses five of six Government Performance and
Results Act required elements and takes into account its non-homeland
security missions, such as responding to natural disasters. Furthermore,
several DHS components have developed their own strategic plans or
strategic plans for missions within their areas of responsibility. For
example, U.S. Immigration and Custom's Enforcement (ICE) has produced an
interim strategic plan that identifies its goals and objectives, and the
U.S. Customs and Border Protection (CBP) developed a border patrol
strategy and an anti terrorism trade strategic plan. However, deficiencies
in DHS's planning efforts remain. A DHS-wide transformation strategy
should include a strategic plan that identifies specific budgetary, human
capital, and other resources needed to achieve stated goals. The strategy
should also involve key stakeholders to help ensure that resource
investments target the highest priorities. DHS's existing strategic plan
lacks these linkages, and DHS has not effectively involved stakeholders in
the development of the plan. DHS has also not completed other important
planning-related activities. For example, some of DHS's components have
not developed adequate outcome-based performance measures or comprehensive
plans to monitor, assess, and independently evaluate the effectiveness of
their plans and performance.

3GAO, Highlights of a GAO Forum: Mergers and Transformation: Lessons
Learned for a Department of Homeland Security and Other Federal Agencies,
[38]GAO-03-293SP (Washington, D.C.: Nov. 14, 2002).

4GAO, Suggested Areas for Oversight for the 110th Congress,
[39]GAO-07-235R (Washington, D.C.: Nov. 17, 2006).

5GAO, Results Oriented Government: Improvements to DHS's Planning Process
Would Enhance Usefulness and Accountability, [40]GAO-05-300 (Washington,
D.C.: Mar. 31, 2005); Homeland Security: Better Management Practices Could
Enhance DHS's Ability to Allocate Investigative Resources, [41]GAO-06-462T
(Washington, D.C.: Mar. 28, 2006); Border Patrol: Available Data on
Interior Checkpoints Suggest Differences in Sector Performance,
[42]GAO-05-435 (Washington, D.C.: Jul. 22, 2005).

Integrating core management functions like financial, information
technology, human capital, and procurement is also important if DHS is to
transform itself into a cohesive, high-performing organization. However,
DHS lacks a comprehensive management integration strategy with overall
goals, a timeline, and a dedicated team to support its management
integration efforts. In 2005, we recommended that DHS establish
implementation goals and a timeline for its management integration efforts
as part of a comprehensive integration strategy, a key practice to help
ensure success for a merger or transformation. Although DHS has issued
guidance and plans to assist management integration on a function by
function basis, it has not developed a plan that clearly identifies the
critical links that should occur across these functions, the necessary
timing to make these links occur, how these interrelationships will occur,
and who will drive and manage them. In addition, although DHS had
established a Business Transformation Office that reported to the Under
Secretary for Management to help monitor and look for interdependencies
among the individual functional management integration efforts, that
office was not responsible for leading and managing the coordination and
integration itself. In addition to the Business Transformation Office, we
have suggested that Congress should continue to monitor whether it needs
to provide additional leadership authorities to the DHS Under Secretary
for Management or create a Chief Operating Officer/Chief Management
Officer position which could help elevate, integrate, and institutionalize
DHS's management initiatives.

Finally, DHS cannot successfully achieve its homeland security mission
without working with other entities that share responsibility for securing
the homeland. Partnering for progress with other governmental agencies and
private sector entities is central to achieving its missions. Since 2005,
DHS has continued to form necessary partnerships and has undertaken a
number of coordination efforts with private sector entities. These
include, for example, partnering with (1) airlines to improve aviation
passenger and cargo screening, (2) the maritime shipping industry to
facilitate containerized cargo inspection, (3) financial institutions to
follow the money trail in immigration and customs investigations, and (4)
the chemical industry to enhance critical infrastructure protection at
such facilities.6 In addition, FEMA has worked with other federal, state,
and local entities to improve planning for disaster response and recovery.
However, partnering challenges continue as DHS seeks to form more
effective partnerships to leverage resources and more effectively carry
out its homeland security responsibilities. For example, because DHS has
only limited authority to address security at chemical facilities, it must
continue to work with the chemical industry to ensure that it is assessing
vulnerabilities and implementing security measures. Also, while TSA has
taken steps to collaborate with federal and private sector stakeholders in
the implementation of its Secure Flight program, these stakeholders stated
that TSA has not provided them with the information they would need to
support TSA's efforts as they move forward with the program.

Financial Management and Internal Controls

DHS has made limited improvements in addressing financial management and
internal control weaknesses and continues to face significant challenges
in these areas. For example, since its creation, DHS has been unable to
obtain an unqualified or "clean" audit opinion on its financial
statements. The independent auditor's report cited 10 material
weaknesses--i.e., significant deficiencies in DHS's internal
controls--showing no decrease from fiscal year 2005. These weaknesses
included financial management oversight, financial reporting, financial
systems security, and budgetary accounting. Furthermore, the report found
two other reportable conditions and instances of non-compliance with eight
laws and regulations, including the Federal Managers' Financial Integrity
Act of 1982, the Federal Financial Management Improvement Act of 1996, and
the Federal Information Security Management Act of 2002.7 While there
continue to be material weaknesses in its financial management systems,
DHS has made some progress in this area. For example, the independent
auditor's fiscal year 2006 report noted that DHS had made improvements at
the component level to improve financial reporting during fiscal year
2006, although many challenges were remaining. Also, DHS and its
components have reported developing corrective action plans to address the
specific material internal control weaknesses identified.

6GAO, Aviation Security: Significant Management Challenges May Adversely
Affect Implementation of the Transportation Security Administration's
Secure Flight Program, [43]GAO-06-374T (Washington, D.C.: Feb. 9, 2006);
Maritime Security: Enhancements Made, but Implementation and
Sustainability Remain Key Challenges, [44]GAO-05-448T (Washington, D.C.:
May 17, 2005); Homeland Security: Better Management Practices Could
Enhance DHS's Ability to Allocate Investigative Resources, [45]GAO-06-462T
(Washington, D.C.: Mar. 28, 2006); and Homeland Security: DHS Is
Addressing Security at Chemical Facilities, but Additional Authority Is
Needed, [46]GAO-06-899T (Washington, D.C.: June 21, 2006).

In addition to the independent audits, we have done work to assess DHS's
financial management and internal controls. For example, in 2004, we
reviewed DHS's progress in addressing financial management weaknesses and
integrating its financial systems.8 Specifically, we identified weaknesses
in the financial management systems DHS inherited from the 22 component
agencies, assessed DHS progress in addressing these weaknesses, identified
plans DHS had to integrate its financial management systems, and reviewed
whether the planned systems DHS was developing would meet the requirements
of relevant financial management improvement legislation. On the basis of
our work, we recommended that DHS (1) give sustained attention to
addressing previously reported material weaknesses, reportable conditions,
and observations and recommendations; (2) complete development of
corrective action plans for all material weaknesses, reportable
conditions, and observations and recommendations; (3) ensure that internal
control weaknesses are addressed at the component level if they were
combined or reclassified at the departmentwide level; and (4) maintain a
tracking system of all auditor-identified and management-identified
control weaknesses. These recommendations are still relevant today.

7Department of Homeland Security, Office of Inspector General. Independent
Auditors' Report on DHS' FY 2006 Financial Statements. OIG-07-10.
(Washington, D.C.: November 2006).

8GAO, Financial Management: Department of Homeland Security Faces
Significant Financial Management Challenges, [47]GAO-04-774 (Washington,
D.C.: July 19, 2004).

Information Technology

A departmentwide information technology (IT) governance
framework--including controls (disciplines) aimed at effectively managing
IT-related people, processes, and tools--is vital to DHS's transformation
efforts. These controls and disciplines include

           o having and using an enterprise architecture, or corporate
           blueprint, as an authoritative frame of reference to guide and
           constrain IT investments;
           o defining and following a corporate process for informed decision
           making by senior leadership about competing IT investment options;
           o applying system and software development and acquisition
           discipline and rigor when defining, designing, developing,
           testing, deploying, and maintaining systems;
           o establishing a comprehensive information security program to
           protect its information and systems;
           o having sufficient people with the right knowledge, skills, and
           abilities to execute each of these areas now and in the future;
           and
           o centralizing leadership for extending these disciplines
           throughout the organization with an empowered Chief Information
           Officer.9

In early 2006, we testified on DHS's progress regarding its IT management
controls. At the time, we reported that DHS had made efforts during the
previous 3 to 4 years, to establish and implement IT management controls
and disciplines, but progress in these key areas had been uneven, and more
remained to be accomplished. Specifically, DHS had made improvements in
its enterprise architecture by establishing departmentwide technology
standards. It had also developed and initiated the implementation of a
plan to introduce a shared services orientation to the architecture,
particularly for information services, such as data centers and e-mail. In
addition, to strengthen IT investment management, DHS established an
acquisition project performance reporting system, aligned its investment
management cycle and associated milestones with the department's annual
budget preparation process, and linked investment management systems to
standardize and make consistent the financial data used to make investment
decisions. Further, to develop more effective information security
management, DHS completed a comprehensive inventory of its major
information systems and implemented a departmentwide tool that
incorporates the guidance required to adequately complete security
certification and accreditation for all systems. We have ongoing work that
will update the status of DHS's IT management controls.

9GAO, Homeland Security: Progress Continues, but Challenges Remain on
Department's Management of Information Technology, [48]GAO-06-598T
(Washington, D.C.: Mar. 29, 2006).

Despite these efforts, DHS must do more before each of these management
controls and capabilities is fully mature and institutionalized. For
example, our reviews of key nonfinancial systems shows that DHS has not
consistently employed reliable cost-estimating practices, effective
requirements development and test management, meaningful performance
measurement, strategic workforce management, and proactive risk
management, among other recognized program management best practices. In
addition, DHS has not fully implemented a comprehensive information
security program; and goals related to consolidating networks and e-mail
systems, for example, remain to be fully accomplished. More work also
remains in deploying and operating IT systems and infrastructure in
support of DHS's core mission operations. For example, although a system
to identify and screen visitors entering the country has been deployed and
is operating, a related exit capability largely is not. In addition, the
Automated Commercial Environment program has not yet demonstrated that it
can accurately measure progress against its commitments because the data
it uses are not consistently reliable.10 DHS must also ensure that the
Chief Information Officer is sufficiently empowered to extend management
discipline and implement common IT solutions across the department. Until
DHS fully establishes and consistently implements the full range of IT
management disciplines embodied in its framework and related federal
guidance and best practices, it will be challenged in its ability to
effectively manage and deliver programs.

Human Capital Systems

DHS has made some progress in transforming its human capital systems, but
more work remains.11 Some of the most pressing human capital challenges at
DHS include (1) successfully completing its ongoing transformation, (2)
forging a unified results-oriented culture across the department (line of
sight), (3) linking daily operations to strategic outcomes, (4) rewarding
individuals based on individual, team, unit, and organizational results,
(5) obtaining, developing, providing incentives to, and retaining needed
talent, and (6) most importantly, leadership both at the top, to include a
chief operating officer (COO) or chief management officer (CMO). A
strategic workforce plan is integral to defining the level of staffing,
identifying the critical skills needed to mission achievement, and
eliminating gaps to prepare the agency for future needs. In 2005, we
reported that DHS had initiated strategic human capital planning efforts
and published proposed regulations for a modern human capital management
system.12 We also reported that DHS's leadership was committed to the
human capital system design process and had formed teams to implement the
resulting regulations. Since our report, DHS has finalized its human
capital regulations, and although certain labor management provisions are
the subject of litigation, it is vital that DHS implement its human
capital system effectively because strategic human capital management is
the centerpiece of any transformation effort.13 Further, since our 2005
update, DHS has taken some actions to integrate the legacy agency
workforces that make up its components. For example, it standardized pay
grades for criminal investigators at ICE and developed promotion criteria
for investigators and CBP officers that equally recognize the value of the
experience brought to ICE and CBP by employees of each legacy agency. DHS
also made progress in establishing human capital capabilities for the
US-VISIT program, which should help ensure that it has sufficient staff
with the necessary skills and abilities to implement the program
effectively. CBP also developed training plans that link its officer
training to CBP strategic goals.

10 GAO, Information Technology: Customs Has Made Progress on Automated
Commercial Environment System, but It Faces Long-Standing Management
Challenges and New Risks. [49]GAO-06-580 May 31, 2006.

11GAO, Department of Homeland Security: Strategic Management of Training
Important for Successful Transformation, [50]GAO-05-888 (Washington, D.C.:
Sept. 23, 2005); Information on Immigration Enforcement and Supervisory
Promotions in the Department of Homeland Security's Immigration and
Customs Enforcement and Customs and Border Protection, [51]GAO-06-751R
(Washington, D.C.: June 13, 2006); Homeland Security: Visitor and
Immigrant Status Program Operating, but Management Improvements Are Still
Needed, [52]GAO-06-318T (Washington, D.C.: Jan. 25, 2006); and Border
Security: Stronger Actions Needed to Assess and Mitigate Risks of the Visa
Waiver Program, [53]GAO-06-854 (Washington, D.C.: July 28, 2006).

12GAO, Homeland Security: Overview of Department of Homeland Security
Management Challenges, [54]GAO-05-573T (Washington, D.C.: Apr. 20, 2005).

13The Homeland Security Act gave DHS authorization to design a human
capital management system to meet its unique missions. In January 2005,
DHS announced its final human capital management system regulations.
Although DHS intended to implement a new personnel system in 2005, court
decisions have resulted in further delays. According to DHS OIG, these
delays will impact the cost of implementation, the current development and
implementation contract, and the ability to properly manage the workforce.
Department of Homeland Security, Office of Inspector General. Major
Management Challenges Facing the Department Of Homeland Security,
OIG-06-14 (Washington, D.C.: December 2005).

Despite these efforts, however, DHS must still (1) create a clearer
crosswalk between departmental training goals and objectives and DHS's
broader organizational and human capital goals, (2) develop appropriate
training performance measures and targets for goals and strategies
identified in its departmentwide strategic training plan, and (3) address
our earlier recommendations that its new human capital system be linked to
its strategic plan. We have also made recommendations to specific program
offices and organizational entities to help ensure that human capital
resources are provided to improve the effectiveness of management
capabilities, and that human capital plans are developed that clearly
describe how these components will recruit, train, and retain staff to
meet their growing demands as they expand and implement new program
elements. We are completing an updated review of DHS's human capital
efforts and plan to report on our results soon. This report will discuss
information on selected human capital issues at DHS: attrition rates at
DHS; senior-level vacancies at DHS; DHS's use of human capital
flexibilities, the Intergovernmental Personnel Act, and personal services
contracts; and DHS's compliance with the Vacancies Reform Act.

Acquisition Management

DHS continues to face challenges in creating an effective, integrated
acquisition organization. Since its inception in March 2003, DHS has made
progress in implementing a strategic sourcing program to increase the
effectiveness of its buying power and in creating a small business
program. These programs have promoted an environment in which there is a
collaborative effort toward the common goal of an efficient, unified
organization. Strategic sourcing allows DHS components to formulate
purchasing strategies to leverage buying power and increase savings for a
variety of products like office supplies, boats, energy, and weapons,
while its small business program works to ensure small businesses can
compete effectively for the agency's contract dollars. However, DHS's
progress toward creating a unified acquisition organization has been
hampered by policy decisions. In March 2005, we reported that an October
2004 management directive, Acquisition Line of Business Integration and
Management, while emphasizing the need for a unified, integrated
acquisition organization, relies on a system of dual accountability
between the chief procurement officer and the heads of the departments to
make this happen.14 This situation has created ambiguity about who is
accountable for acquisition decisions. We also found that the various
acquisition organizations within DHS are still operating in a disparate
manner, with oversight of acquisition activities left primarily up to each
individual component. Specifically, we reported that (1) there were
components exempted from the unified acquisition organization, (2) the
chief procurement officer had insufficient staff for departmentwide
oversight, and (3) staffing shortages led the office of procurement
operations to rely extensively on outside agencies for contracting
support.15 In March 2005, we recommended that, among other things, the
Secretary of Homeland Security provide the Office of the Chief Procurement
Officer with sufficient resources and enforcement authority to enable
effective departmentwide oversight of acquisition policies and procedures,
and to revise the October 2004 management directive to eliminate reference
to the Coast Guard and Secret Service as being exempt from complying with
the directive. Unless DHS addresses these challenges, it is at risk of
continuing to exist as a fragmented acquisition organization. Because some
of DHS's components have major, complex acquisition programs--for example,
the Coast Guard's Deepwater program (designed to replace or upgrade its
cutters and aircraft) and CBP's Secure Border Initiative--DHS needs to
improve the oversight of contractors and should adhere to a rigorous
management review process.

14GAO, Homeland Security: Success and Challenges in DHS's Efforts to
Create an Effective Acquisition Organization, [55]GAO-05-179 (Washington,
D.C.: Mar. 29, 2005).

Programmatic Challenges Facing DHS

DHS continues to face challenges, many of which were inherited from its
component legacy agencies, in carrying out its programmatic activities.
These challenges include enhancing transportation security, strengthening
the management of U.S. Coast Guard acquisitions and meeting the Coast
Guard's new homeland security missions, improving the regulation of
commercial trade while ensuring protection against the entry of illegal
goods and dangerous visitors at U.S. borders and ports of entry, and
improving enforcement of immigration laws, including worksite immigration
laws, and the provision of immigration services. DHS must also effectively
coordinate the mitigation and response to all hazards, including natural
disaster planning, response, and recovery. DHS has taken actions to
address these challenges, for example, by strengthening passenger and
baggage screening, increasing the oversight of Coast Guard acquisitions,
more thoroughly screening visitors and cargo, dedicating more resources to
immigration enforcement, becoming more efficient in the delivery of
immigration services, and conducting better planning for disaster
preparation. However, challenges remain in each of these major mission
areas.

15GAO, Homeland Security: Challenges in Creating an Effective Acquisition
Organization, [56]GAO-06-1012T (Washington, D.C.: July. 27, 2006).

Transportation Security

Despite progress in this area, DHS continues to face challenges in
effectively executing transportation security efforts. We have recommended
that the Transportation Security Administration (TSA) more fully integrate
a risk management approach--including assessments of threat,
vulnerability, and criticality--in prioritizing security efforts within
and across all transportation modes; strengthen stakeholder coordination;
and implement needed technological upgrades to secure commercial
airports.16 DHS has made progress in all of these areas, particularly in
aviation, but must expand its security focus more towards surface modes of
transportation and continue to seek best practices and coordinated
security efforts with the international community. DHS and TSA have taken
numerous actions to strengthen commercial aviation security, including
strengthening passenger and baggage screening, improving aspects of air
cargo security, and strengthening the security of international flights
and passengers bound for the United States.17 For example, TSA increased
efforts to measure the effectiveness of airport screening systems through
covert testing and other means and has worked to enhance passenger and
baggage screener training. TSA also improved its processes for identifying
and responding to threats onboard commercial aircraft and has modified
airport screening procedures based on risk. Despite this progress,
however, TSA continues to face challenges in implementing a program to
match domestic airline passenger information against terrorist watch
lists, fielding needed technologies to screen airline passengers for
explosives, and strengthening aspects of passenger rail security.18 In
addition, TSA has not developed a strategy, as required, for securing the
various modes of transportation. As a result, rail and other surface
transportation stakeholders are unclear regarding what TSA's role will
ultimately be in establishing and enforcing security requirements within
their transportation modes. We have recommended that TSA more fully
integrate risk-based decision making within aviation and across all
transportation modes, strengthen passenger prescreening, and enhance rail
security efforts. We have also recommended that TSA work to develop
sustained and effective partnerships with other government agencies, the
private sector, and international partners to coordinate security efforts
and seek potential best practices, among other efforts.

16GAO, Aviation Security: Flight and Cabin Crew Member Security Training
Strengthened, but Better Planning and Internal Controls Needed,
[57]GAO-05-781 (Washington, D.C.: Sept. 6, 2005); Aviation Security:
Federal Action Needed to Strengthen Domestic Air Cargo Security,
[58]GAO-06-76 (Washington, D.C.: Oct. 17, 2005; Rail Transit: Additional
Federal Leadership Would Enhance FTA's State Safety Oversight Program,
[59]GAO-06-821 (Washington, D.C.: July 26, 2006); and Aviation Security:
TSA Oversight of Checked Baggage Screening Procedures Could Be
Strengthened, [60]GAO-06-869 (Washington, D.C.: July 28, 2006).

17GAO, Aviation Security: TSA Oversight of Checked Baggage Screening
Procedures Could Be Strengthened, [61]GAO-06-869 (Washington, D.C.: Jul.
28, 2006); Aviation Security: Federal Action Needed to Strengthen Domestic
Air Cargo Security, [62]GAO-06-76 (Washington, D.C.: Oct. 17, 2005); and
Aviation Security: Enhancements Made in Passenger and Checked Baggage, but
Challenges Remain, [63]GAO-06-371T (Washington, D.C.: Apr. 4, 2006).

Coast Guard Acquisitions and Non-Homeland Security Missions

The Coast Guard needs to improve the management of its acquisitions and
continue to enhance its security mission while meeting other mission
responsibilities. We recommended that the Coast Guard improve its
management of the Deepwater program by strengthening key management and
oversight activities, implementing procedures to better ensure contractor
accountability, and controlling future costs by promoting competition.19
In April 2006, we reported the Coast Guard had made some progress in
addressing these recommendations. For example, the Coast Guard has
addressed our recommendation to ensure better contractor accountability by
providing for better input from U.S. Coast Guard performance monitors.20
However, even with these improvements, some Deepwater assets have recently
experienced major setbacks due to design concerns in two classes of
replacement cutters. Further, other Coast Guard acquisition programs--such
as the Rescue 21 emergency distress and communications system--have
experienced major cost increases, schedule delays, and performance
shortfalls.

18GAO, Aviation Security: Management Challenges Remain for the
Transportation Security Administration's Secure Flight Program,
[64]GAO-06-864T (Washington, D.C.: June 14, 2006).

19GAO, Contract Management: Coast Guard's Deepwater Program Needs
Increased Attention to Management and Contractor Oversight, [65]GAO-04-380
(Washington, D.C.: Mar. 9, 2004).

20GAO, Coast Guard: Changes to Deepwater Plan Appear Sound, and Program
Management Has Improved, but Continued Monitoring is Warranted,
[66]GAO-06-546 (Washington, D.C.: Apr. 28, 2006).

The Coast Guard has made progress in balancing its homeland security and
traditional missions. The Coast Guard is unlike many other DHS components
because it has substantial missions not related to homeland security.
These missions include maritime navigation, icebreaking, protecting the
marine environment, marine safety, and search and rescue for mariners in
distress. Furthermore, unpredictable natural disasters, such as Hurricane
Katrina, can place intense demands on all Coast Guard resources. The Coast
Guard must continue executing these traditional missions and balance those
responsibilities with its homeland security obligations, which have
increased significantly since September 11.

Border Security and the Regulation of Trade

DHS has made some progress but still faces an array of challenges in
securing the border while improving the regulation of commercial trade.21
Since 2005, DHS agencies have made some progress in implementing our
recommendations to refine the screening of foreign visitors to the United
States, target potentially dangerous cargo, and provide the personnel
necessary to effectively fulfill border security and trade agency
missions. As of January 2006, DHS had a pre-entry screening capability in
place in overseas visa issuance offices, and an entry identification
capability at 115 airports, 14 seaports, and 154 land ports of entry.
Furthermore, the Secretary of Homeland Security has made risk management
at ports and all critical infrastructure facilities a key priority for
DHS. In addition, DHS developed performance goals and measures for its
trade processing system and implemented a testing and certification
process for its officers to provide better assurance of effective cargo
examination targeting practices. However, efforts to assess and mitigate
risks of DHS's and the Department of State's implementation of the Visa
Waiver Program remain incomplete, increasing the risk that the program
could be exploited by someone who intends harm to the United States.
Further, many of DHS's border-related performance goals and measures are
not fully defined or adequately aligned with one another, and some
performance targets are not realistic. For example, CBP has not yet put
key controls in place to provide reasonable assurance that its screening
system is effective at targeting oceangoing cargo containers with the
highest risk of containing smuggled weapons of mass destruction, nor has
it found a way to incorporate inspection results back into the targeting
system. Other trade and visitor screening systems have weaknesses that
must be overcome to better ensure border and trade security. For example,
deficiencies in the identification of counterfeit documentation at land
border crossings into the United States create vulnerabilities that
terrorists or others involved in criminal activity could exploit. We also
reported that DHS's Container Security Initiative to target and inspect
high-risk cargo containers at foreign ports before they leave for the
United States has not achieved key goals because of staffing imbalances,
the lack of minimum technical requirements for inspection equipment used
at foreign ports, and insufficient performance measures to assess the
effectiveness of targeting and inspection activities.

21GAO, Border Security: US-VISIT Program Faces Strategic, Operational, and
Technological Challenges at Land Ports of Entry, [67]GAO-07-248
(Washington, D.C.: Dec. 6, 2006); Border Security: Key Unresolved Issues
Justify Reevaluation of Border Surveillance Technology Program,
[68]GAO-06-295 (Washington, D.C.: Feb. 22, 2006); Information Technology:
Customs Has Made Progress on Automated Commercial Environment System, but
It Faces Long-Standing Management Challenges and New Risks, [69]GAO-06-580
(Washington, D.C.: May 31, 2006); and Homeland Security: Recommendations
to Improve Management of Key Border Security Program Need to Be
Implemented, [70]GAO-06-296 (Washington, D.C.: Feb. 14, 2006).

Enforcement of Immigration Laws

DHS has taken some actions to improve enforcement of immigration laws,
including worksite immigration laws, but the number of resources devoted
to enforcing immigration laws is limited given that there are an estimated
12 million illegal aliens residing in the United States. DHS has
strengthened some aspects of immigration enforcement, including allocating
more investigative work years to immigration functions than the
Immigration and Naturalization Service did prior to the creation of DHS.
Nevertheless, effective enforcement will require more attention to
efficient resource use and updating outmoded management systems.22 In
April 2006, ICE announced an interior enforcement strategy to bring
criminal charges against employers who knowingly hire unauthorized
workers. ICE has also reported increases in the number of criminal arrests
and indictments for these violations since fiscal year 2004. In addition,
ICE has plans to shift responsibility for identifying incarcerated
criminal aliens eligible for removal from the United States from the
Office of Investigations to its Office of Detention and Removal, freeing
those investigative resources for other immigration and customs
investigations. ICE has also begun to introduce principles of risk
management into the allocation of its investigative resources. However,
enforcement of immigration enforcement laws needs to be strengthened and
significant management challenges remain. DHS's ability to locate and
remove millions of aliens who entered the country illegally or overstayed
the terms of their visas is questionable, and implementing an effective
worksite enforcement program remains an elusive goal. ICE's Office of
Investigations has not conducted a comprehensive risk assessment of the
customs and immigration systems to determine the greatest risks for
exploitation by criminals and terrorists. This office also lacks
outcome-based performance goals that relate to its objective of preventing
the exploitation of systemic vulnerabilities in customs and immigration
systems, and it does not have sufficient systems in place to help ensure
systematic monitoring and communication of vulnerabilities discovered
during its investigations. Moreover, the current employment verification
process used to identify workers ineligible for employment in the United
States has not fundamentally changed since its establishment in 1986, and
ongoing weaknesses have undermined its effectiveness. We have recommended
that DHS take actions to help address these weaknesses and to strengthen
the current process by issuing final regulations on changes to the
employment verification process which will reduce the number of documents
suitable for proving eligibility to work in the United States. Some other
countries require foreign workers to present work authorization documents
at the time of hire and require employers to review these documents and
report workers' information to government agencies for collecting taxes
and social insurance contributions, and conducting worksite enforcement
actions.

22GAO, Information on Immigration Enforcement and Supervisory Promotions
in the Department of Homeland Security's Immigration and Customs
Enforcement and Customs and Border Protection, [71]GAO-06-751R
(Washington, D.C.: June 13, 2006); Immigration Enforcement: Weaknesses
Hinder Employment Verification and Worksite Enforcement Efforts,
[72]GAO-06-895T (Washington, D.C.: June 19, 2006); and Homeland Security:
Better Management Practices Could Enhance DHS's Ability to Allocate
Investigative Resources, [73]GAO-06-462T (Washington, D.C.: Mar. 28,
2006).

Provision of Immigration Services

Although DHS has made progress in reducing its backlog of immigration
benefit applications, improvements are still needed in the provision of
immigration services, particularly by strengthening internal controls to
prevent fraud and inaccuracy.23 Since 2005, DHS has enhanced the
efficiency of certain immigration services. For example, U.S. Citizenship
and Immigration Services (USCIS) estimated that it had reduced its backlog
of immigration benefits applications from a peak of 3.8 million cases to
1.2 million cases from January 2004 to June 2005. USCIS has also
established a focal point for immigration fraud, outlined a fraud control
strategy that relies on the use of automation to detect fraud, and is
performing fraud assessments to identify the extent and nature of fraud
for certain benefits. However, DHS still faces significant challenges in
its ability to effectively provide immigration services while at the same
time protecting the immigration system from fraud and mismanagement. USCIS
may have adjudicated tens of thousands of naturalization applications
without alien files, and adjudicators were not required to record whether
the alien file was available when they adjudicated the application.
Without these files, DHS may not be able to take enforcement action
against an applicant and could also approve an application for an
ineligible applicant. In addition, USCIS has not implemented important
aspects of our internal control standards or fraud control best practices
identified by leading audit organizations. Such best practices would
include (1) a comprehensive risk management approach, (2) mechanisms for
ongoing monitoring during the course of normal activities, (3) clear
communication agencywide regarding how to balance production-related goals
with fraud-prevention activities, and (4) performance goals for fraud
prevention.

23GAO, Immigration Benefits: Additional Efforts Needed to Help Ensure
Alien Files Are Located when Needed, [74]GAO-07-85 (Washington, D.C.: Oct.
27, 2006); Immigration Benefits: Additional Controls and a Sanctions
Strategy Could Enhance DHS's Ability to Control Benefit Fraud,
[75]GAO-06-259 (Washington, D.C.: Mar. 10, 2006); and Immigration
Benefits: Improvements Needed to Address Backlogs and Ensure Quality of
Adjudications, [76]GAO-06-20 (Washington, D.C.: Nov. 21, 2005).

Disaster Preparedness and Response

We have reported that DHS needs to more effectively coordinate disaster
preparedness, response, and recovery efforts.24 Since FEMA became part of
DHS in March 2003, its responsibilities have been dispersed and its role
has continued to evolve. Hurricane Katrina severely tested disaster
management at the federal, state, and local levels and revealed weaknesses
in the basic elements of preparing for, responding to, and recovering from
any catastrophic disaster. Our analysis showed the need for (1) clearly
defined and understood leadership roles and responsibilities; (2) the
development of the necessary disaster capabilities; and (3) accountability
systems that effectively balance the need for fast and flexible response
against the need to prevent waste, fraud, and abuse. In September 2006, we
recommended that Congress give federal agencies explicit authority to take
actions to prepare for all types of catastrophic disasters when there is
warning. We also recommended that DHS (1) rigorously re-test, train, and
exercise its recent clarification of the roles, responsibilities, and
lines of authority for all levels of leadership, implementing changes
needed to remedy identified coordination problems; (2) direct that the
National Response Plan (NRP) base plan and its supporting Catastrophic
Incident Annex be supported by more robust and detailed operational
implementation plans; (3) provide guidance and direction for federal,
state, and local planning, training, and exercises to ensure such
activities fully support preparedness, response, and recovery
responsibilities at a jurisdictional and regional basis; (4) take a lead
in monitoring federal agencies' efforts to prepare to meet their
responsibilities under the NRP and the interim National Preparedness Goal;
and (5) use a risk management approach in deciding whether and how to
invest finite resources in specific capabilities for a catastrophic
disaster.

24GAO, Catastrophic Disasters: Enhanced Leadership, Capabilities, and
Accountability Controls Will Improve the Effectiveness of the Nation's
Preparedness, Response, and Recovery System, [77]GAO-06-618 (Washington,
D.C.: Sept. 6, 2006).

DHS has made revisions to the NRP and released its Supplement to the
Catastrophic Incident Annex--both designed to further clarify federal
roles and responsibilities and relationships among federal, state and
local governments and responders. However, these revisions have not been
tested. DHS has also announced a number of actions intended to improve
readiness and response based on our work and the work of congressional
committees and the Administration. For example, DHS is currently
reorganizing FEMA as required by the fiscal year 2007 DHS appropriations
act.25 DHS has also announced a number of other actions to improve
readiness and response. However, there is little information available on
the extent to which these changes are operational. Finally, in its desire
to provide assistance quickly following Hurricane Katrina, DHS was unable
to keep up with the magnitude of needs to confirm the eligibility of
victims for disaster assistance, or ensure that there were provisions in
contracts for response and recovery services to ensure fair and reasonable
prices in all cases. We recommended that DHS create accountability systems
that effectively balance the need for fast and flexible response against
the need to prevent waste, fraud, and abuse. We also recommended that DHS
provide guidance on advance procurement practices (pre-contracting) and
procedures for those federal agencies with roles and responsibilities
under the NRP so that these agencies can better manage disaster-related
procurement, and establish an assessment process to monitor agencies'
continuous planning efforts for their disaster-related procurement needs
and the maintenance of capabilities.26 For example, we identified a number
of emergency response practices in the public and private sectors that
provide insight into how the federal government can better manage its
disaster-related procurements. These include both developing knowledge of
contractor capabilities and prices and establishing vendor relationships
prior to the disaster and establishing a scalable operations plan to
adjust the level of capacity to match the response with the need.

25Pub. L. No. 109-295, 120 Stat. 303 (2006).

Actions Needed to Strengthen DHS's Transformation and Integration Efforts

To be removed from our high-risk list, agencies need to develop a
corrective action plan that defines the root causes of identified
problems, identifies effective solutions to those problems, and provides
for substantially completing corrective measures in the near term. Such a
plan should include performance measures, metrics and milestones to
measure their progress. Agencies should also demonstrate significant
progress in addressing the problems identified in their corrective action
plan. This should include a program to monitor and independently validate
progress. Finally, agencies, in particular top leadership, must
demonstrate a commitment to sustain initial improvements. This would
include a strong commitment to address the risk(s) that put the program or
function on the high-risk list and provide for the allocation of
sufficient people and resources (capacity) to resolve the risk(s) and
ensure that improvements are sustainable over the long term.

In the spring of 2006, DHS provided us a draft corrective action plan for
addressing its transformation challenges. This plan addressed major
management areas we had previously identified as key to DHS's
transformation--management integration through the DHS management
directorate and financial, information, acquisition, and human capital
management. The plan identified an overall goal to develop and implement
key department wide processes and systems to support DHS's transformation
into a department capable of planning, operating, and managing as one
effective department.

In the short term, the plan sought to produce significant improvements
over the next 7 years that further DHS's ability to operate as one
department. Although the plan listed accomplishments and general goals for
the management functions, it did not contain (1) objectives linked to
those goals that are clear, concise, and measurable; (2) specific actions
to implement those objectives; (3) information linking sufficient people
and resources to implement the plan; or (4) an evaluation program to
monitor and independently validate progress toward meeting the goals and
measuring the effectiveness of the plan.

26See [78]GAO-06-618 .

In addition to developing an effective corrective action plan, agencies
must show that significant progress has taken place in improving
performance in the areas identified in its corrective action plan. While
our work has noted progress at DHS, for us to remove the DHS
implementation and transformation and from our high-risk list, we need to
be able to independently assure ourselves and Congress that DHS has
implemented many of our past recommendations, or has taken other
corrective actions to address the challenges we identified. However, DHS
has not made its management or operational decisions transparent enough so
that Congress can be sure it is effectively, efficiently, and economically
using the billions of dollars in funding it receives annually, and is
providing the levels of security called for in numerous legislative
requirements and presidential directives. Our work for Congress assessing
DHS's operations has been significantly hampered by long delays in
granting us access to program documents and officials, or by questioning
our access to information needed to conduct our reviews. We are troubled
by the impact that DHS's processes and internal reviews have had on our
ability to assess departmental programs and operations. Given the problems
we have experienced in obtaining access to DHS information, it will be
difficult for us to sustain the level of oversight that Congress has
directed and that is needed to effectively oversee the department,
including the level of oversight needed to assess DHS's progress in
addressing the existing transformation, integration, and programmatic
challenges identified in this statement.

Finally, to be removed from our high-risk list, any progress that occurs
must be sustainable over the long term. DHS's leaders need to make and
demonstrate a commitment to implementing a transformed organization. The
Secretary has stated such a commitment, most prominently as part of his
"second stage review" in the summer of 2005, and more recently in remarks
made at George Washington University's Homeland Security Policy Institute.
However, appropriate follow-up is required to assure that transformation
plans are effectively implemented and sustained, to include the allocation
of adequate resources to support transformation efforts. In this regard,
we were pleased when DHS established a Business Transformation Office, but
we believe that the office's effectiveness was limited because the
department did not give it the authority and responsibility needed to be
successful. We understand that this office has recently been eliminated.
Further, department leaders can show their commitment to transforming DHS
by acting on recommendations made by the Congress, study groups, and
accountability organizations such as its Office of the IG and GAO.
Although we have also seen some progress in this area, it is not enough
for us to conclude that DHS is committed to and capable of quickly
incorporating corrective actions into its operations. Therefore, until DHS
produces an acceptable corrective action plan, demonstrates progress
reforming its key management functions, and dedicates the resources
necessary to sustain this progress, it will likely remain on our high-risk
list.

Mr. Chairman and members of the subcommittee, this completes my prepared
statement. I would be happy to respond to any questions that you or other
members of the subcommittee may have at this time.

Contacts and Acknowledgements

For information about this testimony, please contact Norman Rabkin,
Managing Director, Homeland Security and Justice Issues, at (202)
512-8777, or [email protected] . Other individuals making key
contributions to this testimony include Cathleen Berrick, Paul Jones,
Christopher Conrad, Anthony DeFrank, Nancy Briggs, and Aaron Stern.

Appendix I: Related GAO Products

Implementing and Transforming the Department of Homeland Security

Implementation and Transformation

High-Risk Series: An Update. [80]GAO-07-310 . Washington, D.C.: January
31, 2007.

Suggested Areas for Oversight for the 110th Congress. [81]GAO-07-235R .
Washington, D.C.: November 17, 2006.

Homeland Security: DHS Is Addressing Security at Chemical Facilities, but
Additional Authority Is Needed. [82]GAO-06-899T . Washington, D.C.: June
21, 2006.

Homeland Security: Guidance and Standards Are Needed for Measuring the
Effectiveness of Agencies' Facility Protection Efforts. [83]GAO-06-612 .
Washington, D.C.: May 31, 2006.

Homeland Security: DHS Needs to Improve Ethics-Related Management Controls
for the Science and Technology Directorate. [84]GAO-06-206 . Washington,
D.C.: December 22, 2005.

Critical Infrastructure Protection: Department of Homeland Security Faces
Challenges in Fulfilling Cybersecurity Responsibilities. [85]GAO-05-434 .
Washington, D.C.: May 26, 2005.

Homeland Security: Overview of Department of Homeland Security Management
Challenges. [86]GAO-05-573T . Washington, D.C.: April 20, 2005.

Results-Oriented Government: Improvements to DHS's Planning Process Would
Enhance Usefulness and Accountability. [87]GAO-05-300 . Washington, D.C.:
March 31, 2005.

Department of Homeland Security: A Comprehensive and Sustained Approach
Needed to Achieve Management Integration. [88]GAO-05-139 . Washington,
D.C.: March 16, 2005.

Homeland Security: Further Actions Needed to Coordinate Federal Agencies'
Facility Protection Efforts and Promote Key Practices. [89]GAO-05-49 .
Washington, D.C.: November 30, 2004.

Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned for
a Department of Homeland Security and Other Federal Agencies.
[90]GAO-03-293SP . Washington, D.C.: November 14, 2002.

Determining Performance and Accountability Challenges and High Risks.
[91]GAO/OGC-00-12 . Washington, D.C.: August 2000.

Financial Management and Internal Controls

Financial Management Systems: DHS Has an Opportunity to Incorporate Best
Practices in Modernization Efforts. [92]GAO-06-553T . Washington, D.C.:
March 29, 2006.

Financial Management: Department of Homeland Security Faces Significant
Financial Management Challenges. [93]GAO-04-774 . Washington, D.C.: July
19, 2004.

Information Technology

Information Technology: Customs Has Made Progress on Automated Commercial
Environment System, but It Faces Long-Standing Management Challenges and
New Risks. [94]GAO-06-580 . May 31, 2006.

Information Sharing: DHS Should Take Steps to Encourage More Widespread
Use of Its Program to Protect and Share Critical Infrastructure
Information. [95]GAO-06-383 . Washington, D.C.: April 17, 2006.

Homeland Security: Progress Continues, but Challenges Remain on
Department's Management of Information Technology. [96]GAO-06-598T .
Washington, D.C.: March 29, 2006.

Information Technology: Management Improvements Needed on Immigration and
Customs Enforcement's Infrastructure Modernization Program. [97]GAO-05-805
. Washington, D.C.: September 7, 2005.

Information Technology: Federal Agencies Face Challenges in Implementing
Initiatives to Improve Public Health Infrastructure. [98]GAO-05-308 .
Washington, D.C.: June 10, 2005.

Information Technology: Customs Automated Commercial Environment Program
Progressing, but Need for Management Improvements Continues.
[99]GAO-05-267 . Washington, D.C.: March 14, 2005.

Human Capital Systems

Border Security: Stronger Actions Needed to Assess and Mitigate Risks of
the Visa Waiver Program. [100]GAO-06-854 . Washington, D.C.: July 28,
2006.

Information on Immigration Enforcement and Supervisory Promotions in the
Department of Homeland Security's Immigration and Customs Enforcement and
Customs and Border Protection. [101]GAO-06-751R . Washington, D.C.: June
13, 2006.

Homeland Security: Visitor and Immigrant Status Program Operating, but
Management Improvements Are Still Needed. [102]GAO-06-318T . Washington,
D.C.: January 25, 2006.

Department of Homeland Security: Strategic Management of Training
Important for Successful Transformation. [103]GAO-05-888 . Washington,
D.C.: September 23, 2005.

Acquisition Management

Homeland Security: Challenges in Creating an Effective Acquisition
Organization. [104]GAO-06-1012T . Washington, D.C.: July 27, 2006.

Homeland Security: Success and Challenges in DHS's Efforts to Create an
Effective Acquisition Organization. [105]GAO-05-179 . Washington, D.C.:
March 29, 2005.

Homeland Security: Further Action Needed to Promote Successful Use of
Special DHS Acquisition Authority. [106]GAO-05-136 . Washington, D.C.:
December 15, 2004.

Transportation Security

Transportation Security Administration: Oversight of Explosive Detection
Systems Maintenance Contracts Can Be Strengthened. [107]GAO-06-795 .
Washington, D.C.: July 31, 2006.

Aviation Security: TSA Oversight of Checked Baggage Screening Procedures
Could Be Strengthened. [108]GAO-06-869 . Washington, D.C.: Jul. 28, 2006.

Rail Transit: Additional Federal Leadership Would Enhance FTA's State
Safety Oversight Program. [109]GAO-06-821 . Washington, D.C.: July 26,
2006.

Aviation Security: Management Challenges Remain for the Transportation
Security Administration's Secure Flight Program. [110]GAO-06-864T .
Washington, D.C.: June 14, 2006.

Aviation Security: Enhancements Made in Passenger and Checked Baggage
Screening, but Challenges Remain. [111] GAO-06-371T . Washington, D.C.:
April 4, 2006.

Aviation Security: Progress Made to Set Up Program Using Private-Sector
Airport Screeners, but More Work Remains. [112]GAO-06-166 . Washington,
D.C.: March 31, 2006.

Aviation Security: Significant Management Challenges May Adversely Affect
Implementation of the Transportation Security Administration's Secure
Flight Program. [113]GAO-06-374T . Washington, D.C.: February 9, 2006.

Aviation Security: Federal Air Marshal Service Could Benefit from Improved
Planning and Controls. [114]GAO-06-203 . Washington, D.C.: November 28,
2005.

Aviation Security: Federal Action Needed to Strengthen Domestic Air Cargo
Security. [115]GAO-06-76 . Washington, D.C.: October 17, 2005.

Passenger Rail Security: Enhanced Federal Leadership Needed to Prioritize
and Guide Security Efforts. [116]GAO-05-851 . Washington, D.C.: September
9, 2005.

Aviation Security: Flight and Cabin Crew Member Security Training
Strengthened, but Better Planning and Internal Controls Needed.
[117]GAO-05-781 . Washington, D.C.: September 6. 2005.

Aviation Safety: Oversight of Foreign Code-Share Safety Program Should Be
Strengthened. [118]GAO-05-930 . Washington, D.C.: August 5, 2005.

Homeland Security: Agency Resources Address Violations of Restricted
Airspace, but Management Improvements Are Needed. [119]GAO-05-928T .
Washington, D.C.: July 21, 2005.

Aviation Security: Secure Flight Development and Testing Under Way, but
Risks Should Be Managed as System Is Further Developed. [120]GAO-05-356 .
Washington, D.C.: March 28, 2005.

Aviation Security: Systematic Planning Needed to Optimize the Deployment
of Checked Baggage Screening Systems. [121]GAO-05-365 . Washington, D.C.:
March 15, 2005.

Coast Guard Acquisitions and Non-Homeland Security Missions

United States Coast Guard: Improvements Needed in Management and Oversight
of Rescue System Acquisition. [122]GAO-06-623 . Washington, D.C.: May 31,
2006.

Coast Guard: Changes to Deepwater Plan Appear Sound, and Program
Management Has Improved, but Continued Monitoring is Warranted.
[123]GAO-06-546 . Washington, D.C.: April 28, 2006.

Risk Management: Further Refinements Needed to Assess Risks and Prioritize
Protective Measures at Ports and Other Critical Infrastructure.
[124]GAO-06-91 . Washington, D.C.: December 15, 2005.

Maritime Security: Enhancements Made, but Implementation and
Sustainability Remain Key Challenges. [125]GAO-05-448T . Washington, D.C.:
May 17, 2005.

Cargo Security: Partnership Program Grants Importers Reduced Scrutiny with
Limited Assurance of Improved Security. [126]GA0-05-404 . Washington,
D.C.: March 11, 2005.

Coast Guard: Station Readiness Improving, but Resource Challenges and
Management Concerns Remain. [127]GAO-05-161 . Washington, D.C.: January
31, 2005.

Contract Management: Coast Guard's Deepwater Program Needs Increased
Attention to Management and Contractor Oversight. [128]GAO-04-380 .
Washington, D.C.: March 9, 2004.

Border Security and the Regulation of Trade

Border Security: US-VISIT Program Faces Strategic, Operational, and
Technological Challenges at Land Ports of Entry. [129]GAO-07-248 .
Washington, D.C.: December 6, 2006.

Border Security: Stronger Actions Needed to Assess and Mitigate Risks of
the Visa Waiver Program. [130]GAO-06-854 . Washington, D.C.: July 28,
2006.

Information Technology: Customs Has Made Progress on Automated Commercial
Environment System, but It Faces Long-Standing Management Challenges and
New Risks. [131]GAO-06-580 . Washington, D.C.: May 31, 2006.

Border Security: Key Unresolved Issues Justify Reevaluation of Border
Surveillance Technology Program. [132]GAO-06-295 . Washington, D.C.:
February 22, 2006.

Homeland Security: Recommendations to Improve Management of Key Border
Security Program Need to Be Implemented. [133] GAO-06-296 . Washington,
D.C.: February 14, 2006.

Border Security: Strengthened Visa Process Would Benefit from Improvements
in Staffing and Information Sharing. [134]GAO-05-859 . Washington, D.C.:
September 13, 2005.

Border Security: Opportunities to Increase Coordination of Air and Marine
Assets. [135]GAO-05-543 . Washington, D.C.: August 12, 2005.

Border Security: Actions Needed to Strengthen Management of Department of
Homeland Security's Visa Security Program. [136]GAO-05-801 . Washington,
D.C.: July 29, 2005.

Border Patrol: Available Data on Interior Checkpoints Suggest Differences
in Sector Performance. [137]GAO-05-435 . Washington, D.C.: July 22, 2005.

Enforcement of Immigration Laws

Immigration Enforcement: Weaknesses Hinder Employment Verification and
Worksite Enforcement Efforts. [138]GAO-06-895T . Washington, D.C.: June
19, 2006.

Information on Immigration Enforcement and Supervisory Promotions in the
Department of Homeland Security's Immigration and Customs Enforcement and
Customs and Border Protection. [139]GAO-06-751R . Washington, D.C.: June
13, 2006.

Homeland Security: Contract Management and Oversight for Visitor and
Immigrant Status Program Need to Be Strengthened. [140]GAO-06-404 .
Washington, D.C.: June 9, 2006.

Homeland Security: Better Management Practices Could Enhance DHS's Ability
to Allocate Investigative Resources. [141]GAO-06-462T . Washington, D.C.:
March 28, 2006.

Immigration Enforcement: Weaknesses Hinder Employment Verification and
Worksite Enforcement Efforts. [142]GAO-05-813 . Washington, D.C.: August
31, 2005.

Provision of Immigration Services

Immigration Benefits: Additional Efforts Needed to Help Ensure Alien Files
Are Located when Needed. [143]GAO-07-85 . Washington, D.C.: October 27,
2006.

Immigration Benefits: Additional Controls and a Sanctions Strategy Could
Enhance DHS's Ability to Control Benefit Fraud. [144]GAO-06-259 .
Washington, D.C.: March 10, 2006.

Immigration Benefits: Improvements Needed to Address Backlogs and Ensure
Quality of Adjudications. [145]GAO-06-20 . Washington, D.C.: November 21,
2005.

Immigration Services: Better Contracting Practices Needed at Call Centers.
[146]GAO-05-526 . Washington, D.C.: June 30, 2005.

Disaster Preparedness and Response

Catastrophic Disasters: Enhanced Leadership, Capabilities, and
Accountability Controls Will Improve the Effectiveness of the Nation's
Preparedness, Response, and Recovery System. [147]GAO-06-618 . Washington,
D.C.: September 6, 2006.

Disaster Relief: Governmentwide Framework Needed to Collect and
Consolidate Information to Report on Billions in Federal Funding for the
2005 Gulf Coast Hurricanes. [148]GAO-06-834 . Washington, D.C.: September
6, 2006.

Disaster Preparedness: Limitations in Federal Evacuation Assistance for
Health Facilities Should be Addressed. [149]GAO-06-826 . Washington, D.C.:
July 20, 2006.

Expedited Assistance for Victims of Hurricanes Katrina and Rita: FEMA's
Control Weaknesses Exposed the Government to Significant Fraud and Abuse.
[150]GAO-06-655 . Washington, D.C.: June16, 2006.

Hurricane Katrina: Comprehensive Policies and Procedures Are Needed to
Ensure Appropriate Use of and Accountability for International Assistance.
[151]GAO-06-460 . Washington, D.C.: April 6, 2006.

Continuity of Operations: Agency Plans Have Improved, but Better Oversight
Could Assist Agencies in Preparing for Emergencies. [152]GAO-05-577 .
Washington, D.C.: April 28, 2005.

(440581)

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[email protected].

Highlights of [160]GAO-07-398T , a testimony before the Subcommittee on
Homeland Security, Committee on Appropriations, House of Representatives

February 6, 2007

HOMELAND SECURITY

Management and Programmatic Challenges Facing the Department of Homeland
Security

The Department of Homeland Security (DHS) plays a key role in leading and
coordinating--with stakeholders in the federal, state, local, and private
sectors--the nation's homeland security efforts. GAO has conducted
numerous reviews of DHS management functions as well as programs including
transportation and border security, immigration enforcement and service
delivery, and disaster preparation and response. This testimony addresses:

           o why GAO designated DHS's implementation and transformation as a
           high-risk area,
           o management challenges facing DHS,
           o programmatic challenges facing DHS, and
           o actions DHS should take to strengthen its implementation and
           transformation efforts.

[161]What GAO Recommends

This testimony contains no recommendations. However, GAO has made numerous
prior recommendations to DHS in reports addressing the issues identified
in this statement. Although DHS generally concurred with these
recommendations, it has not identified whether it has taken corrective
actions to address most of the recommendations made.

GAO designated implementing and transforming DHS as high risk in 2003
because DHS had to transform 22 agencies--several with existing program
and management challenges--into one department, and failure to effectively
address its challenges could have serious consequences for our homeland
security. Despite some progress, this transformation remains high risk.

Managing the transformation of an organization of the size and complexity
of DHS requires comprehensive planning and integration of key management
functions that will likely span a number of years. DHS has made some
progress in these areas, but much additional work is required to help
ensure success. While DHS has developed a strategic plan, the plan does
not link resource requirements to goals and objectives, and it does not
involve key stakeholders to ensure resource investments target the highest
priorities. DHS has also issued guidance and plans to assist management
integration on a function by function basis, but lacks a comprehensive
integration strategy with overall goals, a timeline, and a dedicated team
to support its efforts. The latest independent audit of DHS's financial
statements revealed 10 material weaknesses and confirmed that DHS's
financial management systems still do not conform to federal requirements.
DHS has also not institutionalized an effective strategic framework for
information management, and its human capital and acquisition systems
require further attention to ensure that DHS allocates resources
efficiently and effectively.

Since GAO's 2005 high-risk update, DHS has taken actions to strengthen
program activities. However, DHS continues to face programmatic and
partnering challenges. To help ensure its missions are achieved, DHS must
overcome continued challenges related to cargo, transportation, and border
security; systematic visitor tracking; efforts to combat the employment of
illegal aliens; and outdated Coast Guard asset capabilities. Further, DHS
and the Federal Emergency Management Agency need to continue to develop
clearly defined leadership roles and responsibilities; necessary disaster
response capabilities; accountability systems to provide effective
services while protecting against waste, fraud, and abuse; and the ability
to conduct advanced contracting for emergency response goods and services.

DHS has not produced a final corrective action plan specifying how it will
address its management challenges. Such a plan should define the root
causes of known problems, identify effective solutions, have management
support, and provide for substantially completing corrective measures in
the near term. It should also include performance metrics and milestones,
as well as mechanisms to monitor progress. It will also be important for
DHS to become more transparent and minimize recurring delays in providing
access to information on its programs and operations so that Congress,
GAO, and others can independently assess its efforts. DHS may ultimately
require a chief management official dedicated to the overall
transformation process in order to expedite and help ensure sustainable
success over time.

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