Department of Homeland Security: Risk Assessment and Enhanced	 
Oversight Needed to Manage Reliance on Contractors (17-OCT-07,	 
GAO-08-142T).							 
                                                                 
In fiscal year 2005, the Department of Homeland Security (DHS)	 
obligated $1.2 billion to procure four types of professional and 
management support services. While contracting for such services 
can help DHS meet its needs, using contractors to provide	 
services that closely support inherently governmental functions  
increases the risk of government decisions being influenced by,  
rather than independent from, contractor judgments. This	 
testimony summarizes our September 2007 report to this Committee 
and others and focuses on (1) the types of professional and	 
management support services DHS has contracted for and the	 
circumstances that drove its contracting decisions, and (2) DHS's
consideration and management of risk when contracting for such	 
services. GAO analyzed 117 statements of work and 9 case studies 
in detail for selected contracts awarded in fiscal year 2005 by  
the Coast Guard, the Office of Procurement Operations, and the	 
Transportation Security Administration. 			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-142T					        
    ACCNO:   A77408						        
  TITLE:     Department of Homeland Security: Risk Assessment and     
Enhanced Oversight Needed to Manage Reliance on Contractors	 
     DATE:   10/17/2007 
  SUBJECT:   Accountability					 
	     Contract administration				 
	     Contract oversight 				 
	     Contract performance				 
	     Federal procurement				 
	     Federal procurement policy 			 
	     Government contracts				 
	     Homeland security					 
	     Procurement planning				 
	     Procurement policy 				 
	     Procurement practices				 
	     Program management 				 
	     Risk management					 
	     Service contracts					 
	     Strategic planning 				 
	     Government agency oversight			 

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GAO-08-142T

   

     * [1]Summary
     * [2]Background
     * [3]DHS Contracting Decisions For A Broad Range Of Activities We

          * [4]DHS Contracts for Selected Services Covered a Broad Range of
          * [5]DHS Contracting Decisions Were Largely Driven by a Lack of S

     * [6]DHS Did Not Consider Risk Or Provide Enhanced Oversight When

          * [7]Selected Cases May Have Been at Risk of Contractors Influenc
          * [8]Officials Did Not Assess Risk or Provide Enhanced Oversight
          * [9]Control and Accountability Were Limited

     * [10]Conclusion and Recommendations
     * [11]Contacts And Acknowledgments
     * [12]GAO's Mission
     * [13]Obtaining Copies of GAO Reports and Testimony

          * [14]Order by Mail or Phone

     * [15]To Report Fraud, Waste, and Abuse in Federal Programs
     * [16]Congressional Relations
     * [17]Public Affairs

Testimony Before the Committee on Homeland Security and Governmental
Affairs, United States Senate

United States Government Accountability Office

GAO

For Release on Delivery
Expected at 10:00 a.m. EDT
Wednesday, October 17, 2007

DEPARTMENT OF HOMELAND SECURITY

Risk Assessment and Enhanced Oversight Needed to Manage Reliance on
Contractors

Statement of John P. Hutton, Director
Acquisition and Sourcing Management

GAO-08-142T

Mr. Chairman and Members of the Committee:

Thank you for inviting me here today to discuss the Department of Homeland
Security's (DHS) continued and increasing use of contractors for
professional and management support services. When DHS was established
over 4 years ago, it faced an enormous challenge to quickly set up
numerous offices and programs that would provide wide-ranging and complex
services critical to ensuring the nation's security. To help address this
challenge, the department relied on contractors to perform many
mission-related services. For example, in fiscal year 2005 DHS obligated
$1.2 billion on four types of professional and management support services
that may closely support the performance of inherently governmental
functions: program management and support, engineering and technical,
other professional, and other management support. The use of these types
of services can increase the risk of contractors unduly influencing the
government's control over programs and accountability for actions, making
them vulnerable to fraud, waste, and abuse. For this reason, long-standing
federal policy requires attention to this risk.

At your request, we reviewed DHS's use of contracts for four selected
services that closely support inherently governmental functions to
identify the types of activities DHS requested through these contracts and
the associated risks. Our findings are discussed in detail in a report
that we are releasing today.^1 My statement will focus on (1) the types of
professional and management support services for which DHS has contracted
and the circumstances that drove its contracting decisions, and (2) DHS's
consideration and management of risk when contracting for such services.
Our findings are based on a review of 117 judgmentally selected statements
of work for professional and management support services for the Coast
Guard, the Office of Procurement Operations (OPO), and the Transportation
Security Administration (TSA) from fiscal year 2005.^2 We selected nine of
the 117 statements as case studies and examined them in detail. These nine
were spread among the three components and represented a variety of
services and dollar values among the three components. We conducted our
work in accordance with generally accepted government auditing standards.

^1GAO, Department of Homeland Security: Improved Assessment and Oversight
Needed to Manage Risk of Contracting for Selected Services, [18]GAO-07-990
(Washington, D.C.: Sept. 17, 2007).

^2Fiscal year 2005 was the most recent year for which complete data were
available at the time we began our review.

Summary

More than half of the 117 statements of work we reviewed included
reorganization and planning activities, policy development, and
acquisition support--services that closely support the performance of
inherently governmental functions according to federal acquisition
guidance. For the nine case studies we conducted, decisions to contract
for these services were largely driven by the need for staff and expertise
to get DHS programs and operations up and running quickly. However, DHS
program officials did not assess the risk that contractor judgments could
influence government decisions and did not provide enhanced oversight,
despite federal procurement guidance requiring such attention. Most
contracting and program officials we spoke to were not only unaware of
federal requirements for enhanced oversight, but did not see a need for it
based on the services provided. While DHS's human capital strategic plan
notes the department has identified core mission critical occupations and
plans to reduce skill gaps in core and key competencies, it is unclear
whether it will inform the department's use of contractors for services
that closely support the performance of inherently governmental functions.

Background

Inherently governmental functions require discretion in applying
government authority or value judgments in making decisions for the
government; as such, they should be performed by government employees--not
private contractors.^3 The Federal Acquisition Regulation (FAR) provides
20 examples of functions considered to be, or to be treated as inherently
governmental (see Appendix I), including

           o determining agency policy and priorities for budget requests,
           o directing and controlling intelligence operations,
           o approving contractual requirements, and
           o selecting individuals for government employment.

^3Federal acquisition policy states that contracts shall not be used for
the performance of inherently governmental functions.

The closer contractor services come to supporting inherently governmental
functions, the greater the risk of their influencing the government's
control over and accountability for decisions that may be based, in part,
on contractor work. Table 1 provides examples of the range of services
contractors provide to the federal government--from basic activities, such
as custodial and landscaping, to more complex professional and management
support services--and their relative risk of influencing government
decision making.

Table 1: Range of Contracted Services and Related Risk Level

Basic services: 
* Custodial; 
* Food; 
* Landscaping; 
* Snow removal; 
* Storage; 
* Trash collection; 
Low Risk Level. 

Professional and management support services[A] that do not closely 
support inherently governmental functions: 
* Advertising; 
* Banking; 
* Parking; 
* Records maintenance. 

Professional and management support services[A] that closely support 
inherently governmental functions: 
* Acquisition support; 
* Budget preparation; 
* Developing or interpreting regulations; 
* Engineering and technical services; 
* Intelligence services; 
* Policy development; 
* Reorganization and planning; 
High Risk Level. 

Source: GAO analysis of selected FPDS-NG and FAR subpart 7.5 categories of
services, and OFPP Policy Letter 93-1.

[a]Professional and management support services consists of 42 codes in the
Federal Procurement Data System - Next Generation (FPDS-NG).

The potential for the loss of government management control and
accountability for decisions is a long-standing governmentwide concern.
For example, in 1981, we found that the level of contractor involvement in
management functions at the Departments of Energy and Defense was so
extensive that the agencies' ability to develop options other than those
proposed by the contractors was limited.^4 More recently, in 2006,
government, industry, and academic participants in GAO's forum on federal
acquisition challenges and opportunities^5 and the congressionally
mandated Acquisition Advisory Panel^6 noted how an increasing reliance on
contractors to perform services for core government activities challenges
the capacity of federal officials to supervise and evaluate the
performance of these activities.

^4GAO, Civil Servants and Contract Employees: Who Should Do What for the
Federal Government?, FPCD-81-43 (Washington, D.C.: June 19, 1981).

^5GAO, Highlights of a GAO Forum: Federal Acquisitions Challenges and
Opportunities in the 21^st Century, [19]GAO-07-45SP (Washington, D.C.:
Oct. 6, 2006).

FAR and Office of Federal Procurement Policy (OFPP) guidance state that
services that tend to affect government decision-making, support or
influence policy development, or affect program management are susceptible
to abuse and require a greater level of scrutiny and an enhanced degree of
management oversight. This would include assigning a sufficient number of
qualified government employees to provide oversight and to ensure that
agency officials retain control over and remain accountable for policy
decisions that may be based in part on a contractor's performance and work
products.^7

DHS Contracting Decisions For A Broad Range Of Activities Were Largely Driven By
A Lack Of Staff And Expertise And Immediacy Of Need

A broad range of program-related and administrative activities was
performed under the professional and management support services contracts
we reviewed. DHS decisions to contract for these services were largely
driven by the need for staff and expertise to get programs and operations
up and running. While DHS has identified core mission-critical occupations
and plans to reduce skill gaps in core and key competencies, it has not
directly addressed the department's use of contractors for services that
closely support the performance of inherently governmental functions.

^6Report of the Acquisition Advisory Panel to the Office of Federal
Procurement Policy and the United States Congress, January 2007; see
Services Acquisition Reform Act of 2003, Pub. L. No. 108-136, Title XIV,
S1423.

^7FAR section 37.114, Special Acquisition Requirements; OFPP Policy Letter
93-1: Management Oversight of Service Contracting, Office of Federal
Procurement Policy, May 18, 1994.

DHS Contracts for Selected Services Covered a Broad Range of Activities Closely
Supporting Inherently Governmental Functions

A broad range of activities related to specific programs and
administrative operations was performed under the professional and
management support services contracts we reviewed. The categories of
policy development, reorganization and planning, and acquisition support
were among the most often requested in the 117 statements of work, as well
as in the nine case studies.

           o For example, TSA obligated $1.2 million to acquire contractor
           support for its Acquisition and Program Management Support
           Division, which included assisting with the development of
           acquisition plans and hands-on assistance to program offices to
           prepare acquisition documents.

           o A $7.9 million OPO human capital services order provided a full
           range of personnel and staffing services to support DHS's
           headquarters offices, including writing position descriptions,
           signing official offer letters, and meeting new employees at DHS
           headquarters for their first day of work.

Contractor involvement in the nine case studies ranged from providing two
to three supplemental personnel to staffing an entire office. Figure 1
shows the type and range of services provided in the nine cases and the
location of contractor performance.

Figure 1: Professional and Management Support Services Closely Supporting
Inherently Governmental Functions in Nine Cases Reviewed

Note: Categories are based on services that approach being inherently
governmental in FAR subpart 7.5 and, therefore, may not include all the
services provided by contractors in each of the nine cases.

^aObligations based on information provided by DHS at the time of our
review.

^bSituations in which contactors might be assumed to be agency employees
or representatives. FAR section 7.503(d)(13).

DHS Contracting Decisions Were Largely Driven by a Lack of Staff and Expertise
and Immediacy of Need

Many of the program officials we spoke with said that contracting for
services was necessary because they were under pressure to get program and
administrative offices up and running quickly, and they did not have
enough time to hire staff with the right expertise through the federal
hiring process. For example:

           o According to officials at TSA, federal staff limitations was a
           reason for procuring employee relations support services.
           Specifically, the agency needed to immediately establish an
           employee relations office capable of serving 60,000 newly hired
           airport screeners--an undertaking TSA Office of Human Resources
           officials said would have taken several years to accomplish if
           they hired qualified federal employees.

           o DHS human capital officials said there were only two staff to
           manage human resources for approximately 800 employees, and it
           would have taken 3 to 5 years to hire and train federal employees
           to provide the necessary services.

In prior work, GAO has noted that agencies facing workforce challenges,
such as a lack of critical expertise, have used strategic human capital
planning to develop long-term strategies for acquiring, developing,
motivating, and retaining staff to achieve programmatic goals.^8 While
DHS's human capital strategic plan notes that the department has
identified core mission-critical occupations and seeks to reduce skill
gaps in core and key competencies, DHS has not determined the right mix of
government performed and contractor performed services or assessed total
workforce deployment across the Department to guide decisions on
contracting for selected services. We have noted the importance of
focusing greater attention on which types of functions and activities
should be contracted out and which ones should not, while considering
other reasons for using contractors, such as a limited number of federal
employees.^9 DHS's human capital plan is unclear as to how this could be
achieved and whether it will inform the Department's use of contractors
for services that closely support the performance of inherently
governmental functions.

^8GAO, Federal Acquisitions and Contracting: Systemic Challenges Need
Attention, [20]GAO-07-1098T (Washington, D.C.: July 17, 2007).

^9 [21]GAO-07-1098T .

DHS Did Not Consider Risk Or Provide Enhanced Oversight When Contracting For
Selected Services

While program officials generally acknowledged that their professional and
management support services contracts closely supported the performance of
inherently governmental functions, they did not assess the risk that
government decisions may be influenced by, rather than independent from,
contractor judgments--as required by federal procurement policy. In
addition, none of the program officials and contracting officers we spoke
with was aware of these requirements, and few believed that their
professional and management support service contracts required enhanced
oversight. Federal guidance also states that agency officials must retain
control over and remain accountable for policy and program decisions. For
the nine cases we reviewed, the level of oversight DHS provided did not
always help ensure accountability for decisions or the ability to judge
whether contractors were performing as required; however, DHS's Chief
Procurement Officer is implementing an acquisition oversight program with
potential to address this issue.

Selected Cases May Have Been at Risk of Contractors Influencing Decisions

To help ensure the government does not lose control over and
accountability for mission-related decisions, long-standing federal
procurement policy requires attention to the risk that government
decisions may be influenced by, rather than independent from, contractor
judgments when contracting for services that closely support inherently
governmental functions. The nine cases we reviewed in detail provided
examples of conditions that we have found need to be carefully monitored
to help ensure the government does not lose control over and
accountability for mission-related decisions.

           o Contractors providing services integral to an agency's mission
           and comparable to those provided by government employees: In seven
           of the nine cases, contractors provided such services. For
           example, one contractor directly supported DHS efforts to hire
           federal employees, including signing offer letters. In another
           case, a contractor provided acquisition advice and support while
           working alongside federal employees and performing the same tasks.

           o Contractors providing ongoing support: In each of the nine case
           studies, the contractor provided services for more than 1 year. In
           some of these cases, the original justification for contracting
           had changed, but the components extended or recompeted services
           without examining whether it would be more appropriate for federal
           employees to perform the service. For example, OPO established a
           temporary "bridge" arrangement without competition that was later
           modified 20 times, and extended for almost 18 months, to avoid
           disruption of critical support including budget, policy, and
           intelligence services. Subsequently, these services were competed
           and awarded to the original contractor under six separate
           contracts.

           o Broadly defined requirements: In four of the case studies, the
           statements of work lacked specific details about activities that
           closely support inherently governmental functions. In addition,
           several program officials noted that the statements of work did
           not accurately reflect the program's needs or the work the
           contractors actually performed. For example, a Coast Guard
           statement of work for a $1.3 million order initially included
           services for policy development, cost-benefit analyses, and
           regulatory assessments, though program officials told us the
           contractors provided only technical regulatory writing and editing
           support. The statement of work was revised in a later contract to
           better define requirements.

Officials Did Not Assess Risk or Provide Enhanced Oversight of Contracts for
Selected Services as Required

Federal acquisition guidance highlights the risk inherent in services
contracting--particularly those for professional and management support
services--and federal internal control standards require assessment of
risks.^10 OFPP staff we met with also emphasized the importance of
assessing the risk associated with contracting for services that closely
support the performance of inherently governmental functions. While
contracting officers and program officials for the nine case studies
generally acknowledged that their professional and management support
services contracts closely supported the performance of inherently
governmental functions, none assessed whether these contracts could result
in the loss of control over and accountability for mission-related
decisions. Furthermore, none were aware of federal requirements for
enhanced oversight of such contracts. Contracting officers and program
officials, as well as DHS acquisition planning guidance, did not cite
services that closely support the performance of inherently governmental
functions as a contracting risk and most did not believe enhanced
oversight of their contracts was warranted.

^10GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

Current DHS initiatives may have the potential to address oversight when
contracting for services that closely support inherently governmental
functions. DHS's Chief Procurement Officer is in the process of
implementing an acquisition oversight program that is intended to assess
contract administration, business judgment, and compliance with federal
acquisition guidance.^11 This program was designed to allow flexibility to
address specific procurement issues and is based on a series of reviews at
the component level that could address selected services.

Control and Accountability Were Limited

Both the FAR and OFPP policy state that when contracting for
services--particularly for professional and management support services
that closely support the performance of inherently governmental
functions--a sufficient number of qualified government employees assigned
to plan and oversee contractor activities is needed to maintain control
and accountability. While most contracting officers and program officials
that we spoke with held the opinion that the services they contracted for
did not require enhanced oversight, we found cases in which the components
lacked the capacity to oversee contractor performance due to limited
expertise and workload demands. For example:

           o One Contracting Officer's Technical Representative (COTR) was
           assigned to oversee 58 tasks, ranging from acquisition support to
           intelligence analysis to budget formulation and planning, across
           multiple offices and locations. Program and contracting officials
           noted the resulting oversight was likely insufficient. To provide
           better oversight for one of the follow-on contracts, the program
           official assigned a new COTR to oversee just the intelligence work
           and established monthly meetings between the COTR and the program
           office. According to program officials, this change was made to
           ensure that the contract deliverables and payments were in order,
           not to address the inherent risk of the services performed.

           o Similarly, a DHS Human Capital Services COTR assigned to oversee
           an extensive range of personnel and staffing services provided by
           the contractor lacked technical expertise, which the program
           manager believed affected the quality of oversight provided. To
           improve oversight for the follow-on contract, the program manager
           assigned a COTR with more human resources experience along with an
           employee with human resources expertise to assist the COTR.

^11GAO, Department of Homeland Security: Progress and Challenges in
Implementing the Department's Acquisition Oversight Plan, [22]GAO-07-900
(Washington, D.C.: June 12, 2007).

DHS components were also limited in their ability to assess contractor
performance, which is necessary to ensure control and accountability, in a
way that addressed the risk of contracting for professional and management
support services that closely support the performance of inherently
governmental functions. Assessing contractor performance requires a plan
that outlines how services will be delivered and establishes measurable
outcomes. However, none of the related oversight plans and contract
documents we reviewed contained specific measures for assessing
contractors' performance of the selected services.

Conclusion and Recommendations

Until the department provides greater scrutiny and enhanced management
oversight of contracts for selected services--as required by federal
guidance--it will continue to risk transferring government responsibility
to contractors. To improve the department's ability to manage the risk
associated with contracting for services that closely support the
performance of inherently governmental functions and help ensure
government control and accountability, the report we are releasing today
recommends that the Secretary of Homeland Security take several actions.
These actions include establishing strategic-level guidance for
determining the appropriate mix of government and contractor employees,
assessing the risk of using contractors for selected services, more
clearly defining contract requirements, assessing the ability of the
government workforce to provide sufficient oversight when using selected
services, and reviewing contracts for selected services as part of the
acquisition oversight program.

DHS generally concurred with our recommendations and provided information
on what actions would be taken to address them. However, DHS partially
concurred with our recommendation to assess the risk of selected services
as part of the acquisition planning process and modify existing guidance
and training, noting that its acquisition planning guidance already
provides for the assessment of risk. Our review found that this guidance
does not address the specific risk of services that closely support the
performance of inherently governmental functions. DHS also partially
concurred with our recommendation to review selected services contracts as
part of the acquisition oversight program. DHS stated that rather than
reviewing selected services as part of the routine acquisition oversight
program, the Chief Procurement Officer will direct a special investigation
on selected issues as needed. We did not intend for the formal oversight
plan to be modified, rather we recognize that the program was designed
with flexibility to address specific procurement issues as necessary. We
leave it to the discretion of the Chief Procurement Officer to determine
how to implement the recommendation.

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

Contacts And Acknowledgments

For further information regarding this testimony, please contact me at
(202) 512-4841 or ( [23][email protected] ). Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this product. Staff making key contributions to this statement
were Amelia Shachoy, Assistant Director; Katherine Trimble; Jennifer
Dougherty; Karen Sloan; Julia Kennon; and Noah Bleicher.

Appendix I: Examples of Inherently Governmental and Approaching Inherently
Governmental Functions

Federal Acquisition Regulation (FAR) section 7.503 provides examples of
inherently governmental functions and services or actions that are not
inherently governmental, but may approach being inherently governmental
functions based on the nature of the function, the manner in which the
contractor performs the contract, or the manner in which the government
administers contractor performance. These examples are listed in tables 1
and 2.

Table 1: Examples of Inherently Governmental Functions

1; 
Directly conduct criminal investigations. 

2; 
Control prosecutions and perform adjudicatory functions other than 
arbitration. 

3; 
Command military forces. 

4; 
Conduct foreign relations and determine foreign policy. 

5; 
Determine agency policy, including regulations. 

6; 
Determine federal program priorities for budget requests. 

7; 
Direct and control of federal employees. 

8; 
Direct and control intelligence and counter-intelligence operations. 

9; 
Select individuals for federal government employment. 

10; 
Approve position descriptions and performance standards for federal 
employees. 

11; 
Determine the disposal of government property. 

12; 
In federal procurement activities with respect to prime contracts: 
Determine the supplies or services acquired by the government; 
participate as a voting member on any source selection boards; approve 
contractual documents, including documents defining requirements, 
incentive plans, and evaluation criteria; award contracts; administer 
contracts; terminate contracts; determine whether contract costs are 
reasonable, allocable, and allowable; and participate as a voting 
member on performance evaluation boards. 

13; 
Approve agency responses to Freedom of Information Act requests. 

14; 
Conduct administrative hearings to determine eligibility for security 
clearances, or that affect personal reputation or eligibility to 
participate in government programs. 

15; 
Approve federal licensing actions and inspections. 

16; 
Determine budget policy, guidance, and strategy. 

17; 
Collect, control, and disburse public funds, unless authorized by 
statute. Does not include: The collection of public charges to mess 
halls, national parks, and similar entities; and routine voucher and 
invoice examination. 

18; 
Control treasury accounts. 

19; 
Administer public trusts. 

20; 
Draft congressional testimony, responses to congressional 
correspondence, or agency responses to audit reports. 

Source: GAO analysis of FAR section 7.503(c).

Table 2: Examples of Services That May Approach Being Inherently
Governmental Functions

1: Involve or relate to budget preparation. 

2: Involve or relate to reorganization and planning activities. 

3: Involve or relate to analyses, feasibility studies, and strategy 
options to be used in developing policy. 

4: Involve or relate to developing regulations. 

5: Involve or relate to evaluating another contractor's performance. 

6: Involve or relate to budget preparation. 

7: Assist in contract management. 

8: Provide technical evaluation of contract proposals. 

9: Assist in developing statements of work. 

10: Support the preparation of responses to Freedom of Information Act 
requests. 

11: Work in situations that may permit access to confidential business 
information. 

12: Provide information regarding agency policies or regulations. 

13: Participate in situations where contractors may be assumed to be 
agency employees or representatives. 

14: Participate as technical advisors to source selection boards or as 
members of a source evaluation board. 

15: Serve as arbitrators or provide alternative methods of dispute 
resolution. 

16: Construct buildings intended to be secure. 

17: Provide inspection services. 

18: Provide legal advice and interpret regulations and statutes for 
government officials. 

19: Provide non-law enforcement security activities that do not 
directly involve criminal investigations. 

Source: GAO analysis of FAR section 7.503(d).

(120682)

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Highlights of [31]GAO-08-142T , a testimony before the Committee on
Homeland Security and Governmental Affairs, United States Senate

October 17, 2007

DEPARTMENT OF HOMELAND SECURITY

Risk Assessment and Enhanced Oversight Needed to Manage Reliance on
Contractors

In fiscal year 2005, the Department of Homeland Security (DHS) obligated
$1.2 billion to procure four types of professional and management support
services. While contracting for such services can help DHS meet its needs,
using contractors to provide services that closely support inherently
governmental functions increases the risk of government decisions being
influenced by, rather than independent from, contractor judgments.

This testimony summarizes our September 2007 report to this Committee and
others and focuses on (1) the types of professional and management support
services DHS has contracted for and the circumstances that drove its
contracting decisions, and (2) DHS's consideration and management of risk
when contracting for such services.

GAO analyzed 117 statements of work and 9 case studies in detail for
selected contracts awarded in fiscal year 2005 by the Coast Guard, the
Office of Procurement Operations, and the Transportation Security
Administration.

[32]What GAO Recommends

Our September 2007 report recommended that DHS take actions to improve its
ability to manage risk and ensure government control over and
accountability for decisions resulting from services that closely support
inherently governmental functions. DHS generally agreed with these
recommendations.

A broad range of program-related and administrative activities was
performed under the four types of professional and management support
services contracts we reviewed--program management and support,
engineering and technical, other professional, and other management
support. DHS decisions to contract for these types of services were
largely driven by the need for staff and expertise to get programs and
operations up and running. While DHS has identified core mission critical
occupations and plans to reduce skill gaps in core and key competencies,
it is unclear whether this will inform the department's use of contractors
for services that closely support the performance of inherently
governmental functions.

Program officials generally acknowledged that their professional and
management support services contracts closely supported the performance of
inherently governmental functions, but they did not assess the risk that
government decisions may be influenced by, rather than independent from,
contractor judgments--as required by federal procurement guidance. In
addition, none of the program officials and contracting officers we spoke
with was aware of these requirements, and few believed that their
professional and management support service contracts required enhanced
oversight. Federal guidance also states that agency officials must retain
control over and remain accountable for policy and program decisions. For
the nine cases we reviewed, the level of oversight DHS provided did not
always help ensure accountability for decisions or the ability to judge
whether contractors were performing as required. DHS's Chief Procurement
Officer is implementing an acquisition oversight program--designed to
allow flexibility to address specific procurement issues--with potential
to address this issue.

Range of Contracted Services and Related Risk Level

Basic services: 
* Custodial; 
* Food; 
* Landscaping; 
* Snow removal; 
* Storage; 
Low Risk Level. 

Professional and management support services that do not closely 
support inherently governmental functions: 
* Advertising; 
* Banking; 
* Parking; 
* Records maintenance. 

Professional and management support services that closely support 
inherently governmental functions: 
* Acquisition support; 
* Budget preparation; 
* Developing and interpreting regulations; 
* Engineering and technical services; 
* Intelligence services; 
* Policy development; 
* Reorganization and planning; 
High Risk Level. 

Source: GAO analysis.

References

Visible links
  18. http://www.gao.gov/cgi-bin/getrpt?GAO-07-990
  19. http://www.gao.gov/cgi-bin/getrpt?GAO-07-45SP
  20. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1098T
  21. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1098T
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-07-900
  23. mailto:[email protected]
  24. http://www.gao.gov/
  25. http://www.gao.gov/
  26. http://www.gao.gov/fraudnet/fraudnet.htm
  27. mailto:[email protected]
  28. mailto:[email protected]
  29. mailto:[email protected]
  30. http://www.gao.gov/cgi-bin/getrpt?GAO-08-142T
  31. http://www.gao.gov/cgi-bin/getrpt?GAO-08-142T
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