Budget Issues
Better Fee Design Would Improve Federal Protective Service's and Federal Agencies' Planning and Budgeting for Security Gao ID: GAO-11-492 May 20, 2011The Federal Protective Service (FPS) is a fee-funded agency in the Department of Homeland Security (DHS) responsible for providing physical security to over 9,000 federal facilities. In 2003 FPS transferred to DHS from the General Services Administration and for the first time was to fully recover its costs. GAO recently reported that stakeholders were concerned about FPS's ability to determine security costs, and the strategies used to address funding challenges had adverse effects on FPS. In this context, Congress directed GAO to evaluate FPS's resource levels. This report (1) analyzes FPS's fee design and proposed alternatives, and (2) examines how FPS's security fees challenge FPS and customer agency budget formulation and execution. GAO reviewed legislation and agency documentation and interviewed FPS and customer agency officials in headquarters and four FPS regions.
FPS increased its basic security fee four times in 6 years to try to cover costs (an increase of over 100 percent). FPS has not reviewed its fees to develop an informed, deliberate fee design. GAO has found that timely, substantive fee reviews are especially critical for fee-funded agencies to ensure that fee collections and operating costs remain aligned. FPS is legally required to charge fees that cover its total costs, but it is not required to align specific fees with specific activities. Nevertheless, in its pricing documents FPS describes an alignment between specific fees and specific activities that does not exist. FPS charges a basic security fee based on facility square footage. In addition, FPS charges facilities that have contractor-provided countermeasures, such as guards, the cost of the countermeasure plus an administrative fee that is a percentage of the countermeasure cost. Federal facilities vary in how much they cost to protect, but FPS does not know to what extent some facilities currently subsidize others. This contributes to expectation gaps with and unknown cross-subsidizations among payers. FPS officials said that basic security costs are meant to be "shared evenly" (i.e., based on square footage) among all payers while administrative fees for FPS-recommended or facility-requested countermeasures are meant to both (1) reflect the increased risk inherent to those facilities requiring or requesting additional countermeasures and (2) subsidize the aggregate cost of basic security services. Charging beneficiaries more or less than actual costs may help achieve policy goals, but FPS lacks data to determine whether this occurs as intended. Modifying the current fee structure or funding FPS through a combination of fees and direct appropriations may address equity and cross-subsidization issues and improve transparency to customers, but without detailed activity cost information and a full fee review the relative trade-offs in any particular proposal are unclear. Further, revising the fee structure alone will not address the variations in service levels reported by FPS's customer agencies or the overall level of services FPS is able to provide. The design and implementation of FPS's fees affect agencies' and FPS's ability to budget for and timely implement security measures in multiple ways. First, FPS lacks a method to propose security fee rates prior to submitting its budget request and cannot finalize its rates each year until it receives congressional instructions about its staffing levels in its appropriation act. As a result, agencies annually request security funding without accurate security cost estimates. Second, FPS makes security recommendations to customer agencies based on current threats, but agencies budget for security costs in advance and therefore must reallocate funds to pay for countermeasures for which they had not planned. Although there are no obvious solutions for these and other budget timing disconnects, alternative budget account structures like a reimbursable account or a revolving fund could help mitigate budgeting and timing challenges for FPS and customer agencies without compromising accountability for federal funds. GAO recommends that the Secretary of Homeland Security direct the Director of FPS to, among other things, conduct and make available regular fee reviews to improve its fee design, include capital investment costs in its rates, and evaluate its current and alternative funding and budget account structures to mitigate budget timing and other issues. DHS concurred with GAO's recommendations.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Susan J. Irving Team: Government Accountability Office: Strategic Issues Phone: (202) 512-9142GAO-11-492, Budget Issues: Better Fee Design Would Improve Federal Protective Service's and Federal Agencies' Planning and Budgeting for Security
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United States Government Accountability Office:
GAO:
Report to Congressional Committees:
May 2011:
Budget Issues:
Better Fee Design Would Improve Federal Protective Service's and
Federal Agencies' Planning and Budgeting for Security:
GAO-11-492:
GAO Highlights:
Highlights of GAO-11-492, a report to congressional committees.
Why GAO Did This Study:
The Federal Protective Service (FPS) is a fee-funded agency in the
Department of Homeland Security (DHS) responsible for providing
physical security to over 9,000 federal facilities. In 2003 FPS
transferred to DHS from the General Services Administration and for
the first time was to fully recover its costs. GAO recently reported
that stakeholders were concerned about FPS‘s ability to determine
security costs, and the strategies used to address funding challenges
had adverse effects on FPS. In this context, Congress directed GAO to
evaluate FPS‘s resource levels. This report (1) analyzes FPS‘s fee
design and proposed alternatives, and (2) examines how FPS‘s security
fees challenge FPS and customer agency budget formulation and
execution. GAO reviewed legislation and agency documentation and
interviewed FPS and customer agency officials in headquarters and four
FPS regions.
What GAO Found:
FPS increased its basic security fee four times in 6 years to try to
cover costs (an increase of over 100 percent). FPS has not reviewed
its fees to develop an informed, deliberate fee design. GAO has found
that timely, substantive fee reviews are especially critical for fee-
funded agencies to ensure that fee collections and operating costs
remain aligned. FPS is legally required to charge fees that cover its
total costs, but it is not required to align specific fees with
specific activities. Nevertheless, in its pricing documents FPS
describes an alignment between specific fees and specific activities
that does not exist.
FPS charges a basic security fee based on facility square footage. In
addition, FPS charges facilities that have contractor-provided
countermeasures, such as guards, the cost of the countermeasure plus
an administrative fee that is a percentage of the countermeasure cost.
Federal facilities vary in how much they cost to protect, but FPS does
not know to what extent some facilities currently subsidize others.
This contributes to expectation gaps with and unknown cross-
subsidizations among payers. FPS officials said that basic security
costs are meant to be ’shared evenly“ (i.e., based on square footage)
among all payers while administrative fees for FPS-recommended or
facility-requested countermeasures are meant to both (1) reflect the
increased risk inherent to those facilities requiring or requesting
additional countermeasures and (2) subsidize the aggregate cost of
basic security services. Charging beneficiaries more or less than
actual costs may help achieve policy goals, but FPS lacks data to
determine whether this occurs as intended. Modifying the current fee
structure or funding FPS through a combination of fees and direct
appropriations may address equity and cross-subsidization issues and
improve transparency to customers, but without detailed activity cost
information and a full fee review the relative trade-offs in any
particular proposal are unclear. Further, revising the fee structure
alone will not address the variations in service levels reported by FPS‘
s customer agencies or the overall level of services FPS is able to
provide.
The design and implementation of FPS‘s fees affect agencies‘ and FPS‘s
ability to budget for and timely implement security measures in
multiple ways. First, FPS lacks a method to propose security fee rates
prior to submitting its budget request and cannot finalize its rates
each year until it receives congressional instructions about its
staffing levels in its appropriation act. As a result, agencies
annually request security funding without accurate security cost
estimates. Second, FPS makes security recommendations to customer
agencies based on current threats, but agencies budget for security
costs in advance and therefore must reallocate funds to pay for
countermeasures for which they had not planned. Although there are no
obvious solutions for these and other budget timing disconnects,
alternative budget account structures like a reimbursable account or a
revolving fund could help mitigate budgeting and timing challenges for
FPS and customer agencies without compromising accountability for
federal funds.
What GAO Recommends:
GAO recommends that the Secretary of Homeland Security direct the
Director of FPS to, among other things, conduct and make available
regular fee reviews to improve its fee design, include capital
investment costs in its rates, and evaluate its current and
alternative funding and budget account structures to mitigate budget
timing and other issues. DHS concurred with GAO‘s recommendations.-
View [hyperlink, http://www.gao.gov/products/GAO-11-492] or key
components. For more information, contact Susan J. Irving at (202) 512-
6806 or irvings@gao.gov.
[End of section]
Contents:
Letter:
Background:
Lack of Informed Fee Design Contributes to Expectation Gaps with
Stakeholders and Unknown Cross-Subsidizations Among Payers:
Poor Communication with Customer Agencies About the Fees and a Lack of
Timely Fee Rate Information Leads to Billing and Budgeting Challenges
for Both FPS and Customer Agencies:
Conclusions:
Recommendations for Executive Action:
Agency Comments & Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Homeland Security:
Appendix III: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: FPS Fee Collection Shortages and Mitigating Measures, Fiscal
Years 2003-2007:
Table 2: FPS's Security Fee Rates, Fiscal Years 2004 to 2012:
Table 3: Activities FPS Associates with the Basic Security, Building-
Specific, and SWA Security Fees:
Table 4: Annual Percent Change in FPS Basic Security Fee Rate:
Figure:
Figure 1: Flow of Funding for FPS Security Fees (Dollars in Millions):
Abbreviations:
ABC: Activity based costing:
CBP: U.S. Customs and Border Protection:
CDC: Centers for Disease Control and Prevention:
CFO: Chief financial officer:
DHS: Department of Homeland Security:
FBF: Federal Building Fund:
FEMA: Federal Emergency Management Agency:
FPS: Federal Protective Service:
FSL: Facility security level:
FTE: Full-time equivalent:
GSA: General Services Administration:
HHS: U.S. Department of Health and Human Services:
ICE: Immigration and Customs Enforcement:
IOAA: Independent Offices Appropriation Act of 1952:
IRS: Internal Revenue Service:
ISC: Interagency Security Committee:
NCR: National Capital Region:
NPPD: National Protection and Programs Directorate:
OMB: Office of Management and Budget:
RAMP: Risk Assessment and Program Management:
SSA: Social Security Administration:
SWA: Security Work Authorization:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
May 20, 2011:
The Honorable Mary Landrieu:
Chairman:
The Honorable Dan Coats:
Ranking Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
United States Senate:
The Honorable Robert Aderholt:
Chairman:
The Honorable David Price:
Ranking Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
House of Representatives:
The Federal Protective Service (FPS) within the Department of Homeland
Security (DHS) is responsible for providing physical security and law
enforcement services to over 9,000 federal facilities.[Footnote 1] FPS
is meant to be fully funded by the security fees it collects from the
agencies it protects.[Footnote 2] We have previously reported on a
number of funding-related challenges FPS faces.[Footnote 3] For
example, in 2008 we found that FPS's fee collections were insufficient
to cover its operational costs, that stakeholders had concerns about
FPS's ability to determine the costs of providing security services,
and that FPS's actions to address budgetary challenges had adverse
effects on the agency.[Footnote 4] More recently, we found that FPS
had not explained how it intended to fund the increase in full-time
equivalents (FTEs) called for in its workforce analysis plan.[Footnote
5] FPS agreed with our findings and recommendations, but generally has
not yet implemented actions to address them.[Footnote 6]
In response to Congress's mandate in the House Report which
accompanied the DHS fiscal year 2009 Appropriations Act[Footnote 7]
requiring GAO to evaluate FPS's resource levels, this report (1)
analyzes FPS's current fee design and proposed alternatives, and (2)
examines how FPS's security fees challenge FPS and customer agency
budget formulation and execution.
To meet our objectives we reviewed relevant legislation, regulation,
guidance, agency documents, and prior reports on user fee design and
implementation characteristics. We also interviewed officials
responsible for managing user fees at FPS, the General Services
Administration (GSA), and selected customer agencies at their
headquarters and in several regions. We selected four customer
agencies with a large representation in GSA's facility inventory
(measured by total rental square footage and total annual rent) and
based on prior GAO work on FPS. We selected the regional locations
based on (1) region size (number of FPS-protected buildings), (2)
geographic diversity, and (3) stakeholder input on successes and
challenges faced by regional management. Within the selected regions,
we interviewed FPS officials and customer agency officials who work
with FPS security fees. Specifically, we interviewed officials from
the Department of Health and Human Services (HHS), Internal Revenue
Service (IRS), Social Security Administration (SSA), and the
Department of Homeland Security (DHS) in the National Capital Region
(Washington, D.C.), Southeast Region (Atlanta, Ga.), Rocky Mountain
Region (Denver, Colo.), and Northwest/Arctic Region (Federal
Way/Seattle, Wash.).
Appendix I provides additional details about our scope and
methodology. We conducted this performance audit from May 2009 through
April 2011 in accordance with generally accepted government auditing
standards.[Footnote 8] Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
Background:
FPS's Mission:
FPS's mission is protect the buildings, grounds, and property that are
under the control and custody of the GSA, as well as the persons on
the property; to enforce federal laws and regulations; and to
investigate offenses against these buildings and persons.[Footnote 9]
FPS conducts its mission by providing security services through two
types of activities: (1) physical security activities--conducting
facility risk assessments and recommending countermeasures aimed at
preventing incidents at facilities--and (2) law enforcement
activities--patrolling facilities, responding to incidents, conducting
criminal investigations, and exercising arrest authority.
In 2007, FPS adopted an inspector-based workforce approach to
protecting GSA facilities. Under this approach, FPS eliminated the
police officer position and uses about 752 inspectors and special
agents to oversee its 15,000 contract guards, provide law enforcement
services, conduct building security assessments, and perform other
duties as assigned. According to FPS, its 15,000 contract guards are
used primarily to monitor facilities through fixed post assignments
and access control.
FPS's facility security assessments and the corresponding recommended
security countermeasures, such as contract security guards, security
cameras, bollards, or magnometers, are based on standards set by the
Interagency Security Committee (ISC). The ISC is composed of 49
federal departments and agencies and is responsible for developing and
evaluating security standards for federal facilities in the United
States.[Footnote 10] The foundation of the ISC standards is the
facility security level (FSL) determination. FSL determinations, which
range from level I (the lowest) to level V (the highest) are based on
criteria including facility size and population, mission criticality,
symbolism, and threat to customer agencies.
FPS's History and Funding:
FPS was created in 1971 and was part of the GSA until 2003, when the
Homeland Security Act of 2002[Footnote 11] transferred it to DHS's
Immigration and Custom's Enforcement (ICE) component.[Footnote 12] In
October 2009 FPS was transferred within DHS from ICE to the National
Protection and Programs Directorate (NPPD).[Footnote 13] During the
period it was within GSA, FPS was under the umbrella of the Federal
Building Fund (FBF), an intragovernmental revolving fund that is part
of GSA's Public Building Service, and received administrative support
services from GSA. During this period, GSA did not know how much it
was charging for facility security and, therefore, how much of the
facility security costs it was recovering. GSA officials said the
security costs were funded by an unknown portion of the facility's
appraised rental rate plus an additional charge of approximately $0.06
per square foot.[Footnote 14] GSA officials said this means there is
no way to know whether, and, if so, how much, the security costs were
subsidized by other revenue in the FBF. When FPS transferred to DHS,
no portion of GSA's rental rate was transferred with FPS. FPS's fees
did not recover its costs during the transition years from GSA to DHS.
FPS is authorized to charge customer agencies fees for security
services and to use those collections for all agency operations.
[Footnote 15] All of FPS's security fees are available to FPS, without
fiscal year limitation, for necessary expenses related to the
protection of federally owned and leased buildings for FPS operations.
[Footnote 16] Currently FPS is a fully fee-funded organization.
Customer agencies use their appropriated funds to pay FPS security
fees, which are credited to FPS as offsetting collections.[Footnote
17] These fees are used for FPS's expenses in providing security
services and for overhead costs and capital investments. Rather than
receiving a direct appropriation each year, FPS receives authority
through the appropriation process to obligate and spend its collected
fees. Since 2007 FPS has had authority to use all of its collections
for necessary expenses.[Footnote 18]
As we will discuss in more detail, FPS charges federal agencies three
fees: (1) a basic security fee, (2) the building-specific
administrative fee, and (3) the security work authorization (SWA)
administrative fee. All customer agencies in GSA-controlled properties
pay a basic security fee. Customer agencies in facilities for which
FPS recommends specific countermeasures pay the building-specific
administrative fee, along with the cost of the
countermeasure.[Footnote 19] Customer agencies that request additional
countermeasures pay the SWA administrative fee, along with the cost of
the countermeasure.
FPS security fees are transferred from customer agencies to FPS's
expenditure account per interagency agreements. FPS retains all
collected fees, using the basic security fee and the building-specific
and SWA administrative fees to cover its operating costs. FPS passes
revenue for the contract costs associated with building-specific and
SWA countermeasures on to the contractors that provide security
equipment or guard services. Figure 1 illustrates the flow of funding
for the three fees.
Figure 1: Flow of Funding for FPS Security Fees:
[Refer to PDF for image: illustration]
FPS customer agencies: Basic security fees ($0.66 per square foot);
FPS treasury account: $305 million in fiscal year 2010.-
FPS customer agencies: Building-specific security administrative fee
(6% of countermeasure cost: $25);
FPS treasury account: $425 million in fiscal year 2010;
Contractors providing security countermeasure services: $400 million.
FPS customer agencies: Security Work Authorizations (SWA)
administrative fee (6% of countermeasure cost: $24);-
FPS treasury account: $402-million in fiscal year 2010;
Contractors providing security countermeasure services: $378 million.
Source: GAO presentation of FPS data.
[End of figure]
FPS's security fees do not neatly fit with a single type of fee or
charge, but aspects of various guidance and criteria may apply,
including GAO's User Fee Design Guide,[Footnote 20] OMB Circular A-25,
and the Chief Financial Officers (CFO) Act of 1990.[Footnote 21]
* We developed a User Fee Design Guide that examines the
characteristics of user fees, and factors that contribute to a well-
designed fee.[Footnote 22] The manner in which fees are set,
collected, used, and reviewed may affect their economic efficiency,
equity, revenue adequacy, and administrative burden. The design guide
principles are used in evaluating fees that are charged to readily
identifiable users or beneficiaries of government services beyond what
is normally provided to the general public. A number of these
principles can serve as good practices for FPS to consider:
- Efficiency: Efficiency refers to requiring identifiable
beneficiaries to pay for the costs of services, allowing user fees to
simultaneously constrain demand and reveal the value that
beneficiaries place on the service.
- Equity: Equity refers to everyone paying his/her fair share, though
the definition of fair share can have multiple facets. For example,
equity could be based on the beneficiary paying for the cost of the
service or equity could be based on the beneficiaries' ability to pay.
- Revenue adequacy: Revenue adequacy refers to the extent to which the
fee collections cover the intended share of costs. It encompasses
variations in collections over time relative to the cost of the
program. Revenue adequacy also incorporates the concept of revenue
stability, which generally refers to the degree to which short-term
fluctuations in economic activity and other factors affect the level
of fee collections.
- Administrative burden: Administrative burden refers to the cost of
administering the fee, including the cost of collection as well as the
compliance burden.
* OMB's Circular A-25 establishes federal policy regarding user fees,
including the scope and types of activities subject to user fees and
the basis upon which the fees are set. It also provides guidance for
executive branch agency implementation of fees and the disposition of
collections. Circulars No. A-25 and No. A-11 both include guidelines
to agencies when determining the amount of user charges to assess.
[Footnote 23]
* The CFO Act of 1990 requires an agency's CFO to review, on a
biennial basis, the fees, royalties, rents, and other charges for
services and things of value and make recommendations on revising
those charges to reflect costs incurred.[Footnote 24] While the CFO
Act generally is applied to fees charged by government agencies to
nongovernmental entities, the act's provision requiring biennial
review provides a useful leading practice for intragovernmental fee
review.
Lack of Informed Fee Design Contributes to Expectation Gaps with
Stakeholders and Unknown Cross-Subsidizations Among Payers:
FPS Does Not Have an Informed Fee Design:
When FPS was a part of GSA, GSA did not charge customer agencies
security fees to recover the full cost of physical security services.
However, since FPS transferred to DHS in 2003, FPS has been required
to recover its full costs through security fees. FPS's initial fee
rates were established without a clear understanding of what FPS's
total costs had been and were likely to be. As a result, FPS did not
initially collect enough in fees to cover its actual costs. Despite a
number of security fee increases and cost-cutting efforts in the 7
years since transferring to DHS, FPS has not conducted a fee review to
develop an informed, deliberate fee design. FPS officials said they
are not required to report on FPS's security fees as part of the DHS
biennial fee review required by the CFO Act because FPS's fees are
paid by government payers. However, the CFO Act does not specify that
fees from government payers are excluded from the biennial reporting
requirement. FPS officials said the annual budget formulation process
and resulting budget justification serve as their fee review. Further,
although FPS is required to annually certify that its collections will
be sufficient to maintain a particular FTE level, in 2008 and 2010,
the years FPS certified its collections, it did not provide detail
about the operations or activity costs.[Footnote 25]
Currently, FPS sets its fee rates for a given year so that its
estimated total collections match the agency's estimated total
operating costs. To do this FPS first estimates collections from the
basic security fee and then adjusts the building-specific and SWA
administrative fees as needed to bridge any difference. Specifically,
(1) FPS estimates the agency's total operating costs for the upcoming
fiscal year, then (2) estimates how much it will likely collect in
basic security fees. FPS estimates the basic security fee collections
by multiplying the current per-square foot basic security fee rate by
the square footage it protected in the last quarter of the prior year.
To set the building-specific and SWA administrative fee rates, FPS
estimates the total cost of the contractor-provided countermeasures in
the aggregate based on the prior year's cost. It then determines the
percentage of the total estimated cost of the countermeasures likely
to generate enough in collections to cover any difference between its
estimated operating costs and its estimated basic fee collections. For
example, if FPS estimates it will need $270 million for total agency
operating costs and estimates it will get $220 million in collections
from the basic security fee, FPS sets the building-specific and SWA
administrative fee rates at a percentage rate of the estimated cost of
countermeasures that it estimates will raise an additional $50
million. FPS officials said the current fee-setting methodology is
simple and shares FPS's costs equitably among its customer agencies in
about 9,000 GSA-controlled facilities.
FPS was expected to fully cover its costs for the first time when it
moved to DHS in 2003, but it did not actually do so until 2007. To
cover the difference, FPS raised fee rates, requested additional funds
from GSA and DHS, and imposed cost-cutting efforts (see table 1). We
have previously reported that these cost-cutting efforts--which
included restricted hiring and travel and limiting training and
overtime had adverse effects on the agency, including effects on
morale, safety, and increased attrition.[Footnote 26]
Table 1: FPS Fee Collection Shortages and Mitigating Measures, Fiscal
Years 2003-2007A:
Fiscal year: 2003;
Shortage amount: $140 million;
Measures taken: Received funding from the FBF.
Fiscal year: 2004;
Shortage amount: $81 million;
Measures taken: Received funding from the FBF for the last time.
Fiscal year: 2005;
Shortage amount: $70 million;
Measures taken: Implemented a number of cost-cutting measures, and
adjusted the security fees.
Fiscal year: 2006;
Shortage amount: $57 million;
Measures taken: Continued cost-cutting measures and DHS transferred
emergency supplemental funding to FPS.
Fiscal year: 2007;
Shortage amount: $0;
Measures taken: Continued the cost-cutting measures, and adjusted the
fees.
Source: GAO analysis of FPS data.
[A] Prior to FPS's transfer to DHS in 2003, FPS was under the umbrella
of the FBF within GSA. GSA officials said they did not know how much
it was charging for facility security at the time and therefore, how
much of the facility security costs it was recovering. Since 2007, FPS
has continued to adjust its fees as needed to cover its costs.
[End of table]
As shown in table 2, to cover its costs FPS has increased its fees
four times from 2004 to 2009. The basic security fee alone has
increased more than 100 percent--from $0.30 cents per square foot in
fiscal year 2004 to $0.66 cents per square foot in fiscal year 2009.
Further, the President's Fiscal Year 2012 Budget proposes an
additional $0.08 increase in the basic security fee to $0.74 per
square foot (see table 2). In March 2008, FPS increased the basic
security fee in midyear and made the increase retroactive to the start
of fiscal year 2008.[Footnote 27] As discussed in more detail later in
this report, customer agency officials we spoke with said the midyear
change created serious budgeting challenges. From 2004 to 2010, FPS's
building-specific and SWA administrative fees have declined from 15
percent in 2007 to 6 percent in 2010, reflecting the collections level
needed (see table 2).
Table 2: FPS's Security Fee Rates, Fiscal Years 2004 to 2012:
Fiscal year: Basic security fee (per sq. ft);
2004 actual: $0.30;
2005 actual: $0.35;
2006 actual: $0.35;
2007 actual: $0.39;
2008 actual: $0.62[A];
2009 actual: $0.66;
2010 actual: $0.66;
2011 actual: $0.66;
Requested 2012: $0.74.
Fiscal year: Building-specific administrative fee (% of countermeasure
cost);
2004 actual: 13.69%;
2005 actual: 14.96%;
2006 actual: 8%;
2007 actual: 15%;
2008 actual: 8%;
2009 actual: 8%;
2010 actual: 6%;
2011 actual: 6%;
Requested 2012: 6%.
Fiscal year: Security Work Authorization (SWA) administrative fee (%
of countermeasure cost);
2004 actual: Ranged from 2 to 12% [B];
2005 actual: Not to exceed 8% [B];
2006 actual: 8%;
2007 actual: 15%;
2008 actual: 8%;
2009 actual: 8%;
2010 actual: 6%;
2011 actual: 6%;
Requested 2012: 6%.
Source: GAO presentation of FPS data.
[A] The basic fee was $0.57 on October 1, 2007, but in March 2008 FPS
increased the basic fee to $0.62, which was retroactively applied to
the beginning of fiscal year 2008.
[B] SWA administrative fee rate was set and retained by region in
fiscal year 2004 and fiscal year 2005.
[End of table]
We have previously reported that fee collections should be sufficient
to cover the intended portion of program costs over time and that
while regular, timely, and substantive fee reviews are critical for
any agency, they are especially important for agencies--like FPS--that
are mostly or solely fee funded in order to ensure that fee
collections and operating costs remained aligned.[Footnote 28] Without
conducting a fee review to develop an informed, deliberate fee design,
fee adjustments are arbitrary and are unlikely to align with actual
agency costs.
FPS Describes an Alignment Between Specific Fees and Specific
Activities That Does Not Exist:
FPS does not know the cost of providing specific security activities
to its customer agencies, although in its Security Services and
Pricing Provision[Footnote 29] document, FPS associates specific
security activities with specific security fees--an alignment that
does not exist (see table 3). That is, FPS uses security fee receipts
for activities other than those it associates with a specific fee. For
example, FPS charges agencies administrative fees for the management
and oversight of contractor-provided countermeasures, but FPS does not
know if those fees recover the management and oversight costs, nor are
they specifically applied to management and oversight activities for
the countermeasures. FPS's Security Services and Pricing Provision
document was created to address stakeholder questions about what
services FPS was providing. By law FPS is required to charge fees that
cover its total operating expenses, but it is not required to have
specific fees match the cost of specific activities.[Footnote 30] FPS
officials acknowledged that customer agencies may assume a tight
linkage between the fees and the services, but they noted they are not
required to keep data at this level of detail.
Table 3: Activities FPS Associates with the Basic Security, Building-
Specific, and SWA Security Fees:
Fee: Basic security fee;
Rate: $0.66 per square foot;
Description of associated activities: Law enforcement and building
security assessments.
Fee: Building-specific administrative fee;
Rate: 6 percent of countermeasure cost;
Description of associated activities: Management and oversight of
countermeasures (e.g., contract guards, security equipment) specific
to a particular building, recommended by FPS.
Fee: SWA administrative fee;
Rate: 6 percent of countermeasure cost;
Description of associated activities: Management and oversight of
additional countermeasures (e.g., contract guards, security equipment)
requested by agency.
Source: GAO analysis of FPS data.
[End of table]
Although FPS is not required to use specific fee collections for
specific security activities, by suggesting an alignment where none
exists FPS is contributing to stakeholder confusion and potential
adverse effects on building security.[Footnote 31] Officials from
several customer agencies we spoke with said their agencies had
procured countermeasures, such as closed circuit television systems,
through private security companies or GSA rather than through
FPS.[Footnote 32] FPS officials said that this can be problematic
because services acquired externally from FPS are frequently
incompatible with FPS's central monitoring system. Officials from
FPS's customer agencies also described confusion or lack of clarity
about the basic security and contract oversight services they receive
in return for the fees they pay. A number of officials from customer
agencies told us that they wanted to know the cost of FPS's services
at their facilities. We have previously reported that effectively
communicating with stakeholders may contribute to an improved
understanding about how the fees work and what activities they fund.
FPS's current activity based costing (ABC) model cannot break out the
costs of the specific FPS inspector-provided services associated with
the different security fees. Officials told us that this is because an
inspector may conduct multiple types of activities in a single
facility visit. For example, FPS officials said that in one facility
visit, a FPS inspector might conduct oversight of the contract guards
and conduct an interview with an agency to inform the facility
security assessment. They said they have an ABC model to help them
better understand their costs but do not yet have the data on the
costs of its activities to populate the model and make activity cost
linkages. FPS expects new systems such as the Risk Assessment and
Management Program (RAMP), when fully implemented, to provide them
with more detailed cost data needed for these kinds of linkages.
[Footnote 33] We believe, however, that even without RAMP, FPS has
data needed to reasonably estimate certain costs. For example,
officials told us that they have estimates for the percentage of time
inspectors spend on standard activities, such as contract oversight,
that could be used to approximate a large portion of its activity
costs.
FPS does not have a detailed understanding of its activity costs,
including information about the cost of providing its security
services at federal facilities of different risk levels, and therefore
has difficulty justifying the rate of the basic security fee to its
customers. The Statement of Federal Financial Accounting Standards
Number 4, Managerial Cost Accounting Concepts and Standards for the
Federal Government, establishes standards for federal agencies to use
in reporting the costs of their products, services, and activities,
including providing reliable and timely information on the full cost
of federal programs, their activities, and outputs.[Footnote 34] We
have found that having accurate cost information--and understanding
the drivers of a program's cost--allows an organization to demonstrate
its cost-effectiveness and productivity to stakeholders, link levels
of performance with budget expenditures, provide baseline and trend
data for stakeholders to compare performance, and provide a basis for
focusing an organization's efforts and resources to improve its
performance.
FPS has developed a workforce analysis plan that is under review by
the Secretary of Homeland Security and OMB.[Footnote 35] Officials
said the model shows that for FPS to fulfill its mission would require
more inspector hours than current resources would cover. Although
staff is the primary cost driver for FPS, FPS officials did not tell
us how the fee structure or rates would be affected.
FPS Does Not Include the Costs of Capital Improvements in Its Fee
Rates, Contributing to Limited or Delayed Critical Investment in
Critical Systems:
According to FPS officials, FPS does not include the cost of planned
systemwide capital investments when estimating its costs and setting
its fee rates. As a result, FPS is unable to fund all of its capital
investment priorities. Instead, FPS relies on any carryover balance to
pay for the systemwide investments.[Footnote 36] Recently, FPS
officials said FPS has used its carryover balance to fund information
technology investments, such as FPS's RAMP, and operational
initiatives, such as overtime associated with FPS's Operation Shield
Program to measure the effectiveness of FPS countermeasures. The
carryover balance comes from two main sources: (1) deobligated funds
from contracts for building-specific countermeasures and (2) unspent
fee collections from prior years. FPS officials said that as a normal
part of its contract management business process it deobligates funds
from contracts when the actual building-specific countermeasure
contract cost is less than the estimated costs FPS charged to customer
agencies. For example, officials said if a contract guard does not
report to his post for 4 hours, FPS's estimated contract cost will be
higher than the actual contract cost and FPS will deobligate the
unused funds.[Footnote 37] According to FPS officials, the second
source of FPS's carryover balance is collections from the basic
security fee and the building-specific and SWA administrative fees
that were not spent in the previous fiscal year. FPS officials told us
that its carryover balance has been about $45 million annually in
recent years.
Since FPS's carryover balance is not large enough to fund all its
systemwide investments, FPS officials said FPS makes investment
decisions annually based on the cost of the various investments and
the availability of carryover funds. As a result, FPS has had to delay
certain critical systemwide capital investments.[Footnote 38] For
example, FPS officials said they have delayed investment in FPS's
$79.5 million radio program in both fiscal years 2009 and 2010, which
would have provided FPS officers with radio communication capabilities
in many locations across the country where it is currently
unavailable. Upgrading FPS's communication infrastructure, which FPS
officials described as in urgent need of replacement, is meant to
address potential officer safety issues. Instead, FPS pays for
maintenance on the old system, which FPS described as less effective
and more expensive in the long term. As we have previously reported,
it is inevitable that resource constraints will prevent some
worthwhile capital investments from being undertaken. However,
decisions about whether any particular capital investment is funded
should reflect the priorities of the administration and Congress.
Ideally, those capital investments that are funded will be ones with
the highest returns or that meet the highest priority mission needs,
rather than those that happen to fit the unplanned carryover.[Footnote
39]
FPS's Current Fee Structure Likely Contributes to Unknown Cross-
Subsidizations:
Despite evidence that customer agencies receive varying levels of
basic security services and therefore do not cost the same amount to
protect, FPS does not know the extent to which some customers are
subsidizing the activities received by other customers. The level--and
therefore the cost--of basic security services FPS provides at each of
the 9,000 GSA facilities for which it is responsible varies depending
on the facility's security risk level and its proximity to FPS. FPS
categorizes buildings in security levels based on its assessment of
the building's risk and size--but the basic security fee rate is the
same for all facilities even though higher-risk facilities receive
more services and cost more to protect. For example, level I
facilities typically face less risk because they are generally small
storefront-type operations or have limited public contact, such as a
Social Security office. A level IV facility may have significant
public contact and may contain high-risk law enforcement and
intelligence agencies and highly sensitive government records. In some
cases, there are known cost variations to providing security services.
For example, ISC standards require facility security assessments--an
activity associated with the basic security fee--every 5 years for
lower risk level, and 3 years for higher risk level facilities. We
have previously reported that in some situations FPS staff are
stationed hundreds of miles from buildings under its responsibility,
with many of these buildings rarely receiving services from FPS staff
and relying mostly on local law enforcement agencies for law
enforcement services.[Footnote 40] However, these customer agencies
are charged the same basic security fee rates as are buildings in
major metropolitan areas where numerous FPS officers and inspectors
are stationed and are available to provide security services. We have
previously reported that a customer in a federally owned building in a
remote location did not know that FPS provided 24-hour alarm-
monitoring services, because FPS had not visited the office in over 2
years.[Footnote 41]
In our design guide we noted that there are trade-offs involved in
deciding between systemwide and user-specific fees. Effectively
setting a fee rate requires determining how much a program costs and
determining how to assign program costs among different users.
[Footnote 42] Since systemwide fees--or fees set at an average rate--
may be higher or lower than the actual costs of providing services to
those users, they can lead to cross-subsidizations among users. User-
specific fees--or fees based on the cost of providing the program or
service from which that user benefits--ensure that each user pays for
the cost of services actually used. However, there are trade-offs
between user-specific and systemwide fees. We have previously reported
that systemwide fees may promote a policy goal such as helping to
support a national system, but user-specific fees may be more
desirable if the fee is seen as a way to support individual entities
or locations or if there is wide variation in the cost of services
among users.
FPS officials said the basic security fee and administrative fees were
designed to spread costs among agencies in two ways. First, FPS
officials said their mission--to ensure safety at GSA-controlled
federal facilities--is a national policy goal and therefore the basic
security costs are intended to be shared evenly among the facilities.
FPS officials compare the basic security fee to a local property tax
paid to maintain police services. Second, FPS officials said the
building-specific and SWA administrative fees are designed to reflect
the increased risk inherent to facilities requiring or requesting
additional countermeasures and therefore the administrative fees
should subsidize the aggregate cost of basic security services. As
noted, facilities implementing recommended or voluntary security
countermeasures pay the basic security fee, the cost of the contractor-
provided countermeasures, and a 6 percent building-specific or SWA
administrative fee. According to the ISC standards security level III
and IV facilities have nearly all of the countermeasures and therefore
also pay nearly all of FPS's building-specific and SWA fees.[Footnote
43]
FPS officials told us their intent is for the administrative fees paid
by facilities with recommended or agency-requested countermeasures to
help fund the basic security costs at higher-risk facilities. FPS
officials said they do this because having security countermeasures
reflects an increased security risk at these facilities, and as a
result, these facilities are also likely to consume more of FPS's
basic security services. In other words, FPS tries to collect more in
building-specific and SWA administrative fees from agencies with
countermeasures than it costs to manage the contracts for the
countermeasures and uses the additional collections for basic security
services at higher-risk facilities. However, because FPS does not know
what it costs to administer these contracts, it does not know whether
the administrative fees are providing the intended subsidy or are
supporting basic security costs as intended. While charging some
beneficiaries more or less than the actual service costs may help
achieve a particular public policy goal, reliably accounting for the
costs and benefits of such a provision is important to ensure that
these provisions are achieving the intended results.[Footnote 44]
Alternate Fee Structures Could Address Concerns About Alignment and
Cross-Subsidizations:
Other security fee structures may address the current equity and cross-
subsidizations and improve transparency to customer agencies. However,
without a full fee review it is difficult to understand fully the
relative trade-offs in any particular proposal. In addition, revising
the funding mechanisms alone would not address the variations in
service levels reported by FPS's customer agencies nor the overall
level of services FPS provides at GSA-controlled facilities.
Alternatives discussed in past GAO work and prior legislative
proposals--which have not been acted on to date--regarding FPS's
current security fee design were (1) modifying the current fully fee-
funded structure to better align fees with facility risk levels and
(2) funding FPS through a combination of fees and direct
appropriations.[Footnote 45]
Modified Fee Structures. Changing the design of the basic fee to
reduce cross-subsidizations could address equity concerns and increase
transparency and acceptance among customer agencies. Two alternative
fee structures discussed were:
* Charging customer agencies for the basic security activities based
on a tiered fee system, where facilities in each tier pay fee rates
based on FPS's average service costs for facilities within the
respective tiers.
* Charging customer agencies using a two-part basic fee consisting of
(1) a flat rate to cover fixed costs and (2) a risk-level-based fee to
cover average marginal costs associated with facility security risk
level.
Both alternatives aim to link more closely each customer's fee rates
to average costs associated with their building risk level. We have
previously reported that setting fees in this way--that is, at a rate
equal to the marginal cost of providing services--maximizes economic
efficiency by ensuring resources are allocated to their highest use.
[Footnote 46] However, in part because it is often difficult to
measure marginal cost, fee rates are sometimes set based on average
costs. When the marginal costs of providing services are measurable
but are low compared to the fixed costs of the program, setting the
fee at marginal cost will lead to collections less than total costs.
If a review of FPS's costs comes to this conclusion, a two-part fee,
where all agencies would pay a portion of fixed costs, including
systemwide capital investments, plus an amount that reflected the
average service costs by facility security level, could make sense.
The amount by which an agency's security costs would change under this
option would depend on the security levels of the buildings in which
the agency is located. Agencies that are more frequently located in
facilities with higher security levels are likely to see their basic
security fee rate increase, while agencies more frequently located in
lower security risk level facilities may see their basic security fee
decrease, stay the same, or increase at a slower rate.
In both alternatives above, revising the basic security fee to reflect
the service cost variation among customer agencies would better align
the fee with the costs of the services received.[Footnote 47] This
would help address concerns about the fee charged considering the
disparity in services that agencies receive. However, the
administrative cost of identifying user-specific costs may outweigh
the benefits. We have previously reported that if a program has
relatively few categories of users and the cost of providing the
service to those groups differs significantly, then user-specific fees
might be both beneficial and feasible. Conversely, if there are
numerous different categories of users or there is a small cost
variation among them, the efficiency gains of a user-specific fee may
be overwhelmed by the added costs of administering a more complicated
fee structure. Without a fee review, it is unclear which type of fee
structure is most appropriate for FPS.
It is important to consider the administrative and collection costs
both to the provider and to the customers when designing a fee. From
the customer agency perspective, a varied fee rate system may
complicate budgeting, space planning, and billing reconciliation. From
FPS's perspective, a varied fee system would require detailed analysis
of activity costs and incorporating a facility security level
component to their billing system.
Combination of Fees and Direct Appropriations. Proposals to fund FPS
through a combination of fees and direct appropriations could also
reduce cross-subsidizations and increase acceptance among customer
agencies, but it would not address the disparity in the service levels
among facilities that are charged similar fees. Proposals to fund FPS
through direct appropriations would:
* Fund FPS's basic security activities and the administrative costs of
implementing building-specific and SWA countermeasures via a direct
appropriation to FPS and charge agencies only for cost of the actual
countermeasures.
FPS officials said a funding model that includes a direct
appropriation to FPS should provide appropriated funds for all of the
agency's fixed costs since it is difficult for FPS to predict agency
demand for voluntary services such as additional countermeasures.
Because the majority of FPS's costs are salary related and must be
paid whether or not agencies "purchase" voluntary services such as
SWAs or building-specific security countermeasures in the amounts for
which FPS planned, FPS officials said funding all of FPS's FTEs with
appropriations would reduce concerns about revenue adequacy. Receiving
an appropriation for their fixed costs would not eliminate the need
for FPS to develop an informed budget request based on estimated
agency needs. Although security-related missions, like FPS's, may be
less vulnerable to budget cuts, it is important to note that
discretionary appropriation decisions are generally made annually and
should not be assumed to remain at a constant funding level--
especially in the current fiscal environment.
Any model that shifts some FPS funding from fees to direct
appropriations must be viewed through the lens of the overall federal
budget. If Congress desires to keep the total federal investment in
facility security at current levels, a direct appropriation to FPS
would mean either (1) an increase in the homeland security
appropriations subcommittee budget allocation and a corresponding
decrease in the allocations for the appropriations subcommittees
responsible for FPS's customer agencies or (2) shifting priorities
within the homeland security committee's current budget allocation and
providing resources to FPS in lieu of other homeland security
activities.[Footnote 48]
Funding FPS with direct appropriations may result in a decline in
interagency payment processing costs. FPS officials said they pay the
ICE's Burlington Finance Center about $3.1 million annually to support
FPS's billing process. Officials said the finance center does about 80
percent of the actual processing for FPS transactions. A direct
appropriation to FPS would mean fewer transactions between FPS and
customer agencies since only facilities with recommended or requested
countermeasures would make payments to FPS. Officials said that if it
received a direct appropriation, FPS's overall budget could be reduced
by the amount it currently spends on the administrative costs
associated with collecting fees.
Funding all or some of FPS's activities with a direct appropriation
may also increase demand for FPS services. That is, when beneficiaries
do not pay for the cost of services they may seek more of the service
than is economically efficient.[Footnote 49] If FPS were to receive
direct appropriations based on its current costs, the amount would not
cover security costs for agencies that currently procure security
services external from FPS if they decide to request them from FPS.
Based on our updated work, any analysis meant to inform decisions
about the type of funding model that would best meet FPS's needs would
be incomplete without discussing the types of funding models discussed
in this report--specifically, both (1) alternative fee structures and
(2) a combination of fees and appropriations.
In 2008 we recommended that FPS evaluate whether its current use of a
fee-based system or an alternative funding mechanism is the most
appropriate manner to fund the agency, and although DHS concurred with
the recommendation, FPS has not begun such an analysis.[Footnote 50]
When we asked whether FPS had considered the benefits and challenges
of other fee designs, FPS officials said that there were probably
other fee designs that could recover all of FPS's costs. However, they
said that they find the current fee structure to be simple,
straightforward, and efficient, and they are not convinced that they
can improve equity among payers within the current structure. FPS
officials said that having specific options for them to consider--such
as the ones discussed above--would help them complete this type of
analysis.
Poor Communication with Customer Agencies About the Fees and a Lack of
Timely Fee Rate Information Leads to Billing and Budgeting Challenges
for Both FPS and Customer Agencies:
FPS and customer agencies identified two key issues that lead to
billing and budgeting challenges. First, FPS lacks points of contact
in its customer agencies for budgeting and billing purposes, which
leads to difficulties and delays in resolving billing discrepancies.
Second, FPS and customer agencies described a lack of timely, reliable
information available for the budget formulation process. This makes
it difficult for agencies to, for example, timely implement security
countermeasures meant to address current and emerging security
threats. Although there are no obvious solutions for many of the
budget timing disconnects described below, alternative budget account
structures could help mitigate these challenges without compromising
accountability.
FPS Lacks Points of Contact for Budget and Billing Purposes:
FPS communicates with customer agencies regarding its security fees
through annual fee rate letters, regional conferences, and Facility
Security Committee meetings; nevertheless, FPS reported difficulties
determining the correct customer agency points of contact for the
fees. Not all customer agencies we spoke with budget and pay for their
FPS security fees centrally. Rather, headquarters and regional offices
have shared responsibility for managing FPS security services and
fees, making it difficult for FPS officials to find the appropriate
officials with whom to discuss security charges and billing issues.
FPS officials in one region said they did not have a complete list of
all appropriate customer agency contacts that budget for FPS security
fees or pay FPS security bills, who may work in different agency
offices. In a different region FPS officials said they have trouble
identifying their target audience and stakeholders at customer
agencies.[Footnote 51] Because officials in security offices and in
budget or finance offices have responsibilities regarding FPS services
and fees, the officials involved in determining which services the
agency purchases from FPS may be different than the officials that
budget for FPS security fees or pay FPS security bills. Determining
the correct points of contacts can be so confusing that even customer
agency officials themselves reported difficulties in getting
information about FPS services and fees from their own agencies.
The confusion goes both ways, as customer agency officials at times
also find it difficult to identify appropriate points of contact in
FPS, even though FPS includes a point of contact on its security
bills. For example, CDC officials said that communicating with FPS
about billing issues is a constant challenge because CDC handles
billing in CDC headquarters but FPS determines customer agencies'
security costs and coordinates with customer agency officials at the
regional level. FPS has a different point of contact for each of its
11 regions and sometimes multiple contacts within a region. CDC
officials said that FPS points of contact vary by facility so they
often do not know whom to contact at FPS with billing questions. GSA
officials said that the FPS staff with whom they work are not always
responsive to problems, which GSA attributed to large workloads.
Some customer agency officials are confused about the roles of GSA and
FPS regarding security fees. GSA officials said that some customer
agencies continue to contact GSA with questions about FPS security
bills even though FPS transferred out of GSA in 2003.[Footnote 52] FPS
officials in one region also said that customer agencies confuse the
roles of FPS and GSA and they sometimes receive questions from
customer agencies on GSA rent charges and services. FPS officials in
another region also said bills can be confusing to customer agency
officials because FPS basic and building-specific security bills are
displayed with GSA rent bills on GSA's Rent on the Web
system.[Footnote 53] Complicating matters, FPS officials explained
that FPS refers agencies to GSA for questions on square footage data
because FPS bills for the basic security fee based on square footage
from GSA's STAR inventory system. FPS and GSA officials said their
agencies need to better educate customers on the different roles of
FPS and GSA in the billing process.
Effectively communicating with stakeholders involves sharing relevant
analysis and information as well as providing opportunities for
stakeholder input; agencies that do not communicate effectively with
stakeholders miss opportunities for meaningful feedback that could
affect the outcome of changes in fees and program implementation.
[Footnote 54] We found that the quality and quantity of FPS's
communication with stakeholders varies by region. Officials in some
FPS regions said they typically wait for client agencies to ask
questions about the fees rather than taking the initiative to push
information out to them. In other regions there is a greater focus on
outreach efforts. For example, in 2009 and 2010 FPS-National Capital
Region (NCR) invited their security points of contact to an annual
security summit to discuss a range of issues, including fees. Although
not all customer agency budget and management officials were aware of
the summits, those that did attend generally found it helpful. For
example, SSA officials who work with FPS security fees said several of
their officials attended the NCR security summit last year and found
it useful. They said FPS explained its procedures, and attendees were
able to ask questions. At FEMA in the NCR, a security official
participated in the summit for 2 years and found it to be beneficial.
However, FEMA budget officials who manage security fees were not
informed by either FEMA's security officials or by FPS of the summit.
Similarly, although FPS provides an annual letter to customer agency
heads and CFOs regarding fee rates for the upcoming fiscal year, in
some customer agencies the rates were not communicated to the agency
officials who are responsible for budgeting. While customer agencies
are responsible for communicating FPS fee rates within their agency,
when all the necessary officials do not receive information on FPS
security fees, it creates implementation challenges for both FPS and
the customer agencies. We have previously reported that agencies
providing services can segment their customers into groups and provide
targeted communication or services to better meet customer needs.
[Footnote 55] When FPS's communication efforts do not reach all of the
customer agency officials working with FPS security fees, important
information on rates and procedures are missed, contributing to
operational challenges, such as overbilling issues, discussed below.
FPS has taken steps to improve communication with customer agencies at
the regional level. FPS officials in two regions said FPS has made
efforts to educate all FPS employees on the security fee rates and the
services they cover, so FPS can address customer agency questions at
all levels of the organization and provide accurate information to its
customers. They said these efforts have reduced the number of
questions on their fees from customer agencies.
In some cases, confusion regarding FPS contacts can lead to
significant challenges in resolving billing issues. For example, in
2008 FDA officials said FPS overbilled FDA $2.1 million because FPS
billed for the same service in both an SWA and the building-specific
charge. FDA officials said it was difficult to locate the appropriate
point of contact and they had to communicate with FPS multiple times
over 6 months to resolve the issue. In another example, HHS
headquarters officials discovered a $100,000 error in their bill for
one facility. FPS had billed HHS as if it was the sole tenant in the
building because another tenant had vacated.[Footnote 56] HHS
officials said it took several months to resolve the problem because
they found it difficult to identify someone at FPS who understood the
problem and could issue them a credit. When we spoke with FPS
officials about these issues they told us that it can take 3 to 6
months to credit customer agencies when they are overbilled because
FPS performs an audit of the account that covers several years and FPS
and the customer agency need to agree on the amount to be credited to
the agency. FPS officials also said they process refunds once a month.
Unresolved billing issues lead to customer agency funds being tied up
and not available for other activities. In times of fiscal constraint
this can be especially challenging. Unresolved billing issues also
lead to wasted customer agency resources in the form of the time spent
to resolve the issue and create bad will. FPS has procedures in place
to prevent under-or overbilling customer agencies. FPS NCR officials
said FPS performs a reconciliation process each month to check for
billing errors as well as a monthly post-by-post report card that
reports which contract guard posts are paid by building-specific
charges and which are tenant-specific charges.
FPS Does Not Have a Practical Way to Provide Rate Information to
Customers in Time to Inform Agency Budget Formulation:
FPS does not have a process to calculate security fee rates prior to
submitting its budget to OMB and therefore does not have timely
information to provide to customer agencies to inform their budget
formulation process. As a result, customer agencies' annual budget
submissions to OMB include security funding requests that are not
based on accurate security cost estimates. OMB Circular No. A-11
states that where possible agencies should include the full cost of a
program and cover all programs and activities in their budget
submissions. In the past, FPS has provided estimates of security fee
rates to customer agencies approximately 9 months after agency budget
requests are submitted. For example, in the fiscal year 2011 budget
cycle, agencies submitted their budget requests to OMB in September
2009 and FPS provided fee rates in July 2010 (after the budget had
gone to Congress). This is because FPS is on the same budget cycle as
its customer agencies.
FPS officials said FPS is working to improve its process to notify
customers of fee rates and security costs. In his fiscal year 2012
budget the President proposed increasing the basic security fee to
$0.74 per square foot. This is the first time FPS has provided its fee
rate for the upcoming fiscal year in its congressional justification
of estimates. FPS officials said they included the proposed fee rate
to allow as much time as possible for agencies to plan for resources
for security fees. While FPS did provide more notice about a potential
fee rate change than in the past, federal agencies all submit their
fiscal year 2012 budget requests to OMB at the same time. The proposed
fee increase is available to Congress for the appropriations cycle, so
Congress does have the opportunity to consider FPS's proposed fee rate
increase at the same time that it considers appropriations for FPS's
customer agencies.
FPS Cannot Finalize Its Fee Rates Until Its Appropriation Is Enacted:
While FPS can indicate a fee increase in its budget documents, it
cannot finalize its fee rates for a given fiscal year until DHS's
appropriation is enacted. This is because FTEs are the largest driver
of FPS's cost and the DHS Appropriations Act specifies the FTE level
at which FPS must operate. According to FPS officials, if requirements
in the DHS Appropriations Act require more resources than FPS
estimated, FPS may need to increase its fee rates midyear. For
example, in March 2008--halfway through the fiscal year--FPS increased
its basic security fee to $0.62 to fund increased FTE levels in the
fiscal year 2008 DHS Appropriations Act.
Mandated changes to FPS's FTE levels also challenge FPS's ability to
provide accurate fee rate information to its customer agencies in a
timely manner. Officials said FPS may have to increase its fee rates
in the middle of fiscal year 2011 because the proposed Senate bill for
the fiscal year 2011 Homeland Security Appropriation[Footnote 57]
included a requirement for FPS to increase FPS's minimum FTEs to
1,348, or 148 FTEs greater than the current required level on which
FPS's budget estimates were based. However, under FPS's final fiscal
year 2011 appropriation, FTE levels were set at 1,250, which is 50
more than the level on which FPS's budget estimates were based. Such
changes are not unusual. For example, during the 111th Congress (2009-
2010) two other bills were introduced that would have required FPS to
increase its FTE level. The proposed Federal Protective Service
Improvement and Accountability Act of 2010[Footnote 58] included a
provision to increase FPS's FTEs to 1,350, while the proposed
Supporting Employee Competency and Updating Readiness Enhancements
(SECURE) for Facilities Act of 2010[Footnote 59] included a provision
to increase FPS's FTEs by 350 over a 4-year period.
Unexpected changes in FPS security fees require customer agencies to
make unplanned trade-offs during the fiscal year. Because customer
agencies do not have FPS security fee estimates in time for budget
formulation, they create their own "rules of thumb," which vary by
agency. Officials from one agency with whom we met said it budgets for
a 2-3 percent increase in security fees, while officials from a
different agency said they budget for a 7 percent increase. In the
past, customer agency rules of thumb might not have provided enough
room to cover fee increases in those fiscal years with large increases
in fee rates. Since 2004, the increase in the basic security fee rate
has varied from 0 to almost 60 percent (see table 4). We have
previously found that changes in FPS's security fees--specifically
notifications about rate increases late in the federal budget cycle
[Footnote 60]--have adverse implications for customer agencies; our
current work confirms this is still an issue. While fee rate increases
are relatively small compared to an agency's overall appropriation,
they can significantly affect an agency's security budget. When faced
with unanticipated fee increases, customer agencies described
unplanned trade-offs they make. FEMA officials said they do not cut
back on security services at any of their facilities. They ask the
budget office to allocate more funds to their area; if they are not
successful they decrease security funding in other areas, such as
employee background investigations or fingerprinting.
Table 4: Annual Percent Change in FPS Basic Security Fee Rate:
Fiscal year: Basic security fee rate;
2004: $0.30;
2005: $0.35;
2006: $0.35;
2007: $0.39;
2008: $0.62;
2009: $0.66;
2010: $0.66;
2011: $0.66;
Proposed 2012: $0.74.
Fiscal year: Percent change from previous year;
2004: N/A;
2005: 16.67%;
2006: 0.00%;
2007: 11.43%;
2008: 58.97%;
2009: 6.45%;
2010: 0.00%;
2011: 0.00%;
Proposed 2012: 9.09%.
Source: GAO analysis of FPS information.
[End of table]
Customer Agencies Do Not Have Timely Information to Inform Budgeting
for Current and Emerging Security Threats:
Customer agencies face challenges in funding recommended building-
specific countermeasures; that is, measures that are meant to address
current and emerging security threats. FPS officials said that the
recommendations in its facility security assessments are made in
response to security risks present at the time the assessment is made.
These costs, FPS officials told us, can change quickly and
unexpectedly depending on external risks in the environment. Given the
budget cycle, however, there is an inherent mismatch in timing. The
budget formulation process for any given fiscal year begins 2 years
prior to the start of that fiscal year. As a result, to respond timely
to current threats, customer agencies must reallocate funds to
countermeasures for which they did not and could not plan. For
example, officials from a facility security committee in Atlanta said
they did not implement a FPS recommendation for security bollards
around the perimeter of the building because of budget timing issues.
This timing issue is not new. In 2009 we reported that the timing of
the assessment process may be inconsistent with customer agencies'
budget cycles.[Footnote 61] Similarly, in 2008 we reported on
instances in which recommended security countermeasures were not
implemented at some of the buildings we visited because facility
security committee members were unable to get a funding commitment
from their agencies, among other reasons.[Footnote 62]
Alternative Account Structures Could Provide Needed Flexibility to
Help Mitigate Budgeting Challenges for FPS and Customer Agencies:
There is no obvious solution for the federal budget timing disconnects
described above, but in our prior work reviewing fee-funded agencies,
we have identified various budget account structures that could help
mitigate budgeting and timing challenges for FPS and customer agencies
without compromising accountability for federal funds.
* A no-year reimbursable appropriation. If FPS were to receive a no-
year reimbursable appropriation account, FPS would receive a direct
annual appropriation based on its estimated total collections that FPS
would later reimburse with its fee collections.[Footnote 63] If
Congress increased FPS's FTEs in a given current fiscal year, thereby
increasing costs, FPS would be able to draw on its direct
appropriation to cover the resulting cost increase. It could then
inform customer agencies of a fee rate increase in time for them to
build the additional cost into their budget requests for the next
fiscal year. FPS would then reimburse its appropriation account with
its future fee collections from its customer agencies. The Customs and
Border Protection (CBP) uses a reimbursable account to mitigate
funding issues caused by the timing of certain fee collections. To
help manage cash flow issues caused by quarterly, rather than more
frequent, fee collections, CBP initially uses appropriations to
"front" the cost of the agriculture quarantine and immigration
inspections and then reimburses its appropriation account from the
immigration and agriculture user fees collected throughout the year.
[Footnote 64], [Footnote 65]
* An intragovernmental revolving fund account. An intragovernmental
revolving fund is an appropriation account authorized to be credited
with collections, including both reimbursements and advances, from
other federal agencies' accounts to finance a cycle of businesslike
operations.[Footnote 66] For example, GSA's real property activities
are financed through the FBF--a revolving fund that includes rent
federal agencies pay for GSA space.[Footnote 67] With respect to
structural improvements, GSA can provide agencies with the option to
delay payments on amortized costs to allow agencies time to build the
costs into their budgets by fronting the costs from its FBF. A similar
approach could provide FPS with greater ability to assist agencies
with obtaining building-specific countermeasures.
FPS already enjoys access to its fee collections without fiscal year
limitation so a no-year reimbursable account or a revolving fund would
not create accountability concerns in that respect. These types of
accounts would, however, provide FPS with the ability to "front" a fee
rate increase and reduce the pressure of unanticipated fee rate
increases on its customers. In addition, the transparency of any fee
increase resulting from changes would facilitate congressional
oversight both of FPS and of the cost of security at various agencies
and buildings.
FPS might also benefit from considering ways other agencies have found
to provide cost information to customer agencies in a more timely
manner:
* An approved fee-setting methodology. An approved methodology by
which to set fees could allow FPS to set its fee rates in advance of
receiving requirements in its appropriation and therefore better align
with the budget formulation needs of its federal customers. For
example, GSA officials told us that having an approved methodology to
calculate rent estimates allows GSA to provide them to customer
agencies in time to inform budget formulation. FPS officials said that
FPS would need new statutory authority to take this approach.
* Estimates of future security costs. FPS's customer agencies do not
receive timely estimates of future costs, impairing agencies' ability
to budget for those costs. FPS has data that could help FPS's customer
agencies with this issue. For example, if customer agencies received
high-level estimates for countermeasure costs--which could be based on
known costs associated with recommended building-specific
countermeasures--they could better develop budget estimates for
unknown future costs. Such information could also help inform
congressional debate about budget priorities and trade-offs. For
example, the Federal Emergency Management Administration (FEMA)
revised its methodology for estimating the cost of disaster response
after we reported that (1) when FEMA excludes costs from catastrophic
disasters in annual funding estimates it prevents decision makers from
receiving a comprehensive view of overall funding claims and trade-
offs, and (2) that especially given the tight resource constraints
facing our nation, annual budget requests for disaster relief may be
improved by including known costs from previous disasters and some
costs associated with catastrophic disasters.[Footnote 68]
Conclusions:
FPS is responsible for protecting some of the nation's most critical
facilities and the people who work in and access these locations every
day. Analyzing and understanding the costs of providing these
important security services, including the costs of systemwide capital
investments, are important so that FPS, customer agencies, and
Congress have the best possible information available to them when
designing, reviewing, and overseeing FPS's fees and operations.
Regular, timely, and substantive fee reviews are critical for any
agency, but especially for agencies--like FPS--that are mostly or
solely fee funded in order to ensure that fee collections and
operating costs remain aligned. FPS has broad authority to design its
security fees, but the current fee structure has consistently resulted
in total collection amounts less than agency costs, is not well
understood or accepted by customer agencies, and continues to be a
topic of congressional interest and inquiry. In 2008 we recommended
FPS evaluate whether its use of a fee-based system or an alternative
funding mechanism is the most appropriate manner to fund the agency.
Although FPS agreed with this recommendation it has not begun such an
analysis. Based on our updated work, we believe that such an analysis
can benefit from the examination of both (1) alternative fee
structures and (2) a combination of fees and appropriations.
Considering the various options in this report--a redesigned fee
structure and funding FPS through a combination of fees and direct
appropriations--can help guide FPS's analysis and Congress's
consideration of the trade-offs among a variety of funding mechanisms.
The success of any fee design depends on complete, reliable, timely
information on which to base decisions and on informed trade-offs that
support program goals. Whenever the formulas for assigning costs to
customer agencies change there will be winners and losers. Whether and
how to change FPS's funding structure--either to develop an alternate
fee structure or a model that includes some amount of direct
appropriations--is largely a policy decision. However, without a
better understanding of the costs of FPS's services, changes to FPS's
funding model are unlikely to address FPS's chronic funding gaps or
the equity concerns and skepticism of FPS's stakeholders.
Further, our analysis shows that in implementing the fee program on a
day-to-day basis, FPS and customer agencies encounter challenges that
are handled by budget and billing officials as well as security
officials. We have previously recommended that FPS collect and
maintain a list of facility designated points of contact for security
issues. Unless FPS also creates a complete and accurate list of
security fee budget and billing contacts in its customer agencies, FPS
and its customers will continue to face budget and billing-related
challenges, and the opportunity costs associated with delays in
returning appropriated funds to customer agencies will persist.
Ideally, security decisions at federal facilities are based on real-
time information about current and emerging threats. However, federal
agencies budget for planned needs--including security needs--about 2
years before the start of each fiscal year. While there is no easy
solution for the mismatch in timing between FPS security costs and the
federal budget formulation process, options such as different account
structures and improved fee estimating procedures could help mitigate
these challenges without compromising accountability over federal
funds.
Recommendations for Executive Action:
The Secretary of Homeland Security should direct the Director of the
Federal Protective Service to take the following six actions:
* conduct regular reviews of FPS's security fees and use this
information to inform its fee setting;
* include systemwide capital investments when estimating costs and
include them when setting basic security fee rates;
* make information on the estimated costs of key activities as well as
the basis for these cost estimates readily available to affected
parties to improve the transparency and credibility--and hence the
acceptance by stakeholders--of the process for setting and using the
fees;
* in implementing our previous recommendation to evaluate the current
fee structure and determine a method for incorporating facility risk,
assess and report to Congress on:
* the current and alternative fee structures, to include the options
and trade-offs discussed in this report, and if appropriate,
* options to fund FPS through a combination of fees and direct
appropriations, to include the options and trade-offs discussed in
this report;
* evaluate and report to Congress on options to mitigate challenges
agencies face in budgeting for FPS security costs, such as:
* an alternative account structure for FPS to increase flexibility,
while retaining or improving accountability and transparency or:
* an approved process for estimating fee rates; and:
* work with customer agencies to collect and maintain an accurate list
of points of contact of customer agency officials responsible for
budget and billing activities as well as facility designated points of
contact as we previously recommended.
Agency Comments & Our Evaluation:
We provided a draft of this report to the Secretary of Homeland
Security and the Administrator of the General Services Administration
for review. The General Services Administration had no comments on the
report. DHS provided written comments that are reprinted in appendix
II. We also provided portions of the report to the four FPS customer
agencies with which we met.
In its written comments, the Director of DHS's GAO/Office Inspector
General Liaison Office concurred with our recommendations and provided
information about steps DHS is taking to address each recommendation.
In responding to our recommendation that the Federal Protective
Service report to Congress on the current and alternative fee
structures, to include the options and trade-offs discussed in this
report, DHS said that it has reviewed the current and alterative
methods to calculate basic security fees in addition to reviewing
alternative funding structures and will use that analysis as a
baseline in developing its alternative analysis. Throughout the course
of our audit work we asked FPS to provide us with any reviews of
current and alternative funding structures it had conducted; FPS did
not provide any evidence of having conducted this type of analysis. As
noted in our report, FPS officials told us that it has not begun such
an analysis. When we asked whether FPS had considered the benefits and
challenges of other fee designs, FPS officials said that having
specific options for them to consider--such as the ones discussed in
this report--would help them with this type of analysis.
We are sending copies of this report to the Secretary of the
Department of Homeland Security, the Directors of the Federal
Protective Service and the Office of Management and Budget, and the
Administrator of the General Services Administration. We are also
sending copies to appropriate congressional committees, and to the
Chairmen and Ranking Members of other Senate and House committees and
subcommittees that have appropriation, authorization, and oversight
responsibilities for FPS. The report also is available at no charge on
the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff members have any questions or wish to discuss the
material in this report further, please contact me at (202) 512-6806
or irvings@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. GAO staff making key contributions to this report are listed
in appendix III.
Signed by:
Susan J. Irving:
Director for Federal Budget Analysis Strategic Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The objectives of this report were to (1) analyze the Federal
Protective Service's (FPS) current fee design and proposed
alternatives, and (2) examine how FPS's security fees challenge FPS
and customer agency budget formulation and execution. To meet these
objectives, we reviewed legislation and guidance, agency documents,
and literature on user fee design and implementation characteristics.
We also interviewed officials responsible for managing user fees at
FPS, General Services Administration (GSA), and selected customer
agencies at their headquarters and in several regional locations.
We selected four of FPS's customer agencies and four regional
locations to illustrate how FPS's security charges benefit and
challenge customer agencies. We selected customer agencies with a
large representation in GSA's facility inventory (measured by total
rental square footage and total annual rent) and based on prior GAO
work on FPS. From these agencies we selected: the Department of Health
and Human Services, Internal Revenue Service, Social Security
Administration, and the Department of Homeland Security. We selected
the regional locations based on (1) a range of region size (number of
FPS-protected buildings), (2) geographic diversity, and (3)
stakeholder input on successes and challenges faced by regional
management. As a result, we selected the following FPS regions for
site visits: National Capital Region (Washington, D.C.), Southeast
Region (Atlanta, Ga.), Rocky Mountain Region (Denver, Colo.), and
Northwest/Arctic Region (Federal Way/Seattle, Wash.). We interviewed
FPS, GSA, and customer agency officials who are familiar with FPS
security fees at both headquarters and in our selected regions.
We conducted this performance audit from May 2009 through April 2011,
in accordance with generally accepted government auditing
standards.[Footnote 69] Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
[End of section]
Appendix II: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
May 12, 2011:
Ms. Susan Irving:
Director, Federal Budget Analysis:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Irving:
Re: GA0-11-492, Draft Report, Budget Issues: Better Fee Design Would
Improve Federal Protective Service's and Federal Agencies' Planning
and Budgeting for Security.
Thank you for the opportunity to review and comment on this draft
report. The U.S. Department of Homeland Security (DHS) appreciates the
U.S. Government Accountability Office's (GAO's) work in planning and
conducting its review and issuing this report. The GAO evaluated the
Federal Protective Service's (FPS's) resource levels. As directed by
Congress, GAO analyzed FPS's fee design and proposed alternatives and
how security fees impact FPS and customer agency budget formulation
and execution.
As described in the draft report, there is work to be done, but the
Department is pleased to note the report's positive acknowledgment of
the recent actions taken that include the development of the Risk
Assessment and Management Program and the formulation of the workforce
analysis plan, currently under review by the Secretary of Homeland
Security and the Office of Management and Budget (OMB).
Technical and sensitivity comments on the draft report have been
provided under separate cover. Following are our detailed responses to
the six recommendations made by GAO.
"The Secretary of Homeland Security should direct the Director of the
Federal Protective Service to take the following 6 actions:
Recommendation 1: conduct regular reviews of FPS's security fees and
use this information to inform its fee setting;"
Response: Concur. As part of its overall financial management and
budgetary activities, FPS is refining its fee setting processes.
During the budget development process, FPS reviews the projected out-
year requirements against the anticipated revenues Changes to fees
and activities are based on decisions in the budget process.
FPS acknowledges that a more robust fee model needs to be available to
properly improve its fee setting. FPS is working to clarify activities
that are included within each service offering (e.g., basic security,
building specific, and Security Work Authorizations) to ensure all
costs related to activities for each service offering are being
captured and appropriately aligned to the service under which they are
provided.
Recommendation 2: "include systemwide capital investments when
estimating costs and include them when setting basic security fee
rates;"
Response: Concur. FPS is currently developing policy and procedures
for an investment review process to align with those of the
Department. The FPS procedures will formalize a method for project
owners/sponsors to provide justification for their projects for FPS
approval, including purpose, scope, lifecycle cost, and gap(s)
addressed by the investment. A formalized review and approval process
will provide FPS the improved ability to estimate long-term costs
resulting from investments in capital improvements.
Additionally, FPS is updating its activity-based costing (ABC) model
to include updates to the rate setting structure. The updated model
will calculate projected rates on the basis of expended costs and
anticipated requirements.
Recommendation 3: "make information on the estimated costs of key
activities as well as the basis for these costs estimates readily
available to affected parties to improve the transparency and
credibility -and hence the acceptance by stakeholders”of the process
for setting and using the fees;"
Response: Concur. FPS is in the process of updating its ABC model to
improve alignment of costs to activities and to determine the
appropriateness of the administrative fee (currently 6 percent)
charged to customer agencies. As part of this update, FPS is reviewing
key activities and the methodology for the allocation of costs as well
as identifying cost drivers and the alignment of activity costs by
customer and risk level. Additional reporting requirements to address
stakeholder requirements for transparency and credibility also will
be included as part of the overall ABC model update requirements.
This information will be standardized so that each region working
with its individual stakeholders will provide the information in a
common format.
Recommendation 4: "in implementing our previous recommendation to
evaluate the current fee structure and determine a method for
incorporating facility risk, assess and report to Congress on:
* the current and alternative fee structures, to include the options
and tradeoffs discussed in this report, and if appropriate,
* options to fund FPS through a combination of fees and direct
appropriations, to include the options and tradeoffs discussed in this
report;"
Response: Concur. FPS has reviewed current and alternative methods to
calculate basic security fees in addition to reviewing alternative
funding structures. Using these initial studies as a baseline, FPS is
developing an alternatives analysis to review the advantages and
disadvantages of these approaches, both directly and in combination,
to better determine the impact and risk potential to FPS operations.
FPS will also continue to assess and report to Congress on our
evaluation of current and alternative fee structures, to include the
options and tradeoffs discussed in this report.
Recommendation 5: "evaluate and report to Congress on options to
mitigate challenges agencies face in budgeting for FPS security costs
such as:
* an alternative account structure for FPS to increase flexibility,
while retaining or improving accountability and transparency or;
* an approved process for estimating fee rates."
Response: Concur. To better serve its customers, FPS continues to
evaluate alternative funding structures, subject to the approval by OMB.
Additionally, as part of the ABC model update and development of FPS-
wide standard operating procedures, FPS is putting processes in place
to better estimate planned requirements and forecast any corresponding
fee rate changes. These updates are intended to improve the
availability, reliability, and timeliness of financial reporting to
support performance analysis, efficient resource use, and management
decision-making. FPS will also continue to assess and report to
Congress on our evaluation of current and alternative fee structures,
to include the options and tradeoffs discussed in this report.
Recommendation 6: "work with customer agencies to collect and maintain
an accurate list of points of contact of customer agency officials
responsible for budget and billing activities as well as facility
designated points of contact as we previously recommended."
Response: Concur. FPS works to strengthen relationships with both
customer agencies and the General Services Administration to ensure
customer requirements are met and adequate funding is received. FPS
continually works with the regional offices to ensure regular
communications with customer agencies. Specifically, for the purpose
of revenue collection, the Financial Management Division of FPS
Headquarters maintains a list of points of contact (POCs) of customer
agency officials to include either the agency Chief Financial Officer
or secondary POC. Headquarters contacts these POCs annually to
communicate square footage fee. Additionally, regional offices
are required to maintain facility designated POCs so that any changes
that impact billings are captured accurately and timely. Within each
region, Facility Security Committees (FSCs) are established for each
building that contains multiple tenant agencies. FPS assigns a
building inspector and Contract Officer Technical Representative
(COTR) to each building, and the FSCs act as the primary liaison point
through which the inspector and COTR communicate. Additionally, each
FPS-generated bill contains contact information for a regional
budgetary POC who customer agencies may contact for any billing-
related questions or issues.
Finally, FPS Headquarters began a recruiting action for a full-time
senior Public Affairs professional who would direct and supervise
public information and community relations activities and support the
Regional Directors nationwide. FPS initiated a separate hiring action
to identify a second highly qualified career professional communicator
who will serve as the front-line supervisor for an expanded
communications office within FPS headquarters.
Again, thank you for the opportunity to review and comment on this
draft report. We look forward to working with you on future Homeland
Security issues.
Sincerely,
Signed by:
Jim H. Crumpacker:
Director:
Departmental GAO/01G Liaison Office:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Susan J. Irving, (202) 512-6806:
Acknowledgments:
In addition to the individual above, Jackie Nowicki, Assistant
Director; Chelsa Gurkin; Lauren Gilbertson; Barbara Lancaster; Felicia
Lopez; Julie Matta; and Jenny Shinn made key contributions to this
report. Donna Miller provided the report's graphics.
[End of section]
Related GAO Products:
Federal User Fees: Additional Analyses and Timely Reviews Could
Improve Immigration and Naturalization User Fee Design and USCIS
Operations. [hyperlink, http://www.gao.gov/products/GAO-09-180].
Washington, D.C.: January 23, 2009.
Federal User Fees: A Design Guide. [hyperlink,
http://www.gao.gov/products/GAO-08-386SP]. Washington, D.C.: May 28,
2008.
Federal User Fees: Substantive Reviews Needed to Align Port-Related
Fees with the Programs They Support. [hyperlink,
http://www.gao.gov/products/GAO-08-321]. Washington, D.C.: February
22, 2008.
Federal User Fees: Key Aspects of International Air Passenger
Inspection Fees Should Be Addressed Regardless of Whether Fees Are
Consolidated. [hyperlink, http://www.gao.gov/products/GAO-07-1131].
Washington, D.C.: September 24, 2007.
Budget Issues: Electronic Processing of Non-IRS Collections Has
Increased but Better Understanding of Cost Structure Is Needed.
[hyperlink, http://www.gao.gov/products/GAO-10-11]. Washington, D.C.:
November 20, 2009.
Homeland Security: Addressing Weaknesses with Facility Security
Committees Would Enhance Protection of Federal Facilities. [hyperlink,
http://www.gao.gov/products/GAO-10-901]. Washington, D.C.: August 5,
2010.
Homeland Security: Preliminary Observations on the Federal Protective
Service's Workforce Analysis and Planning Efforts. [hyperlink,
http://www.gao.gov/products/GAO-10-802R]. Washington, D.C.: June 14,
2010.
Homeland Security: Federal Protective Service's Contract Guard Program
Requires More Oversight and Reassessment of Use of Contract Guards.
[hyperlink, http://www.gao.gov/products/GAO-10-341]. Washington, D.C.:
April 13, 2010.
Homeland Security: Greater Attention to Key Practices Would Improve
the Federal Protective Service's Approach to Facility Protection.
[hyperlink, http://www.gao.gov/products/GAO-10-142]. Washington, D.C.:
October 23, 2009.
Homeland Security: Federal Protective Service Should Improve Human
Capital Planning and Better Communicate with Tenants. [hyperlink,
http://www.gao.gov/products/GAO-09-749]. Washington, D.C.: July 30,
2009.
Homeland Security: The Federal Protective Service Faces Several
Challenges That Hamper Its Ability to Protect Federal Facilities.
[hyperlink, http://www.gao.gov/products/GAO-08-683]. Washington, D.C.
June 11, 2008.
Homeland Security: Transformation Strategy Needed to Address
Challenges Facing the Federal Protective Service. [hyperlink,
http://www.gao.gov/products/GAO-04-537]. Washington, D.C.: July 14,
2004.
[End of section]
Footnotes:
[1] 6 U.S.C. § 203; 40 USC § 1315.
[2] Department of Homeland Security Appropriations Act, 2007, Pub. L.
No. 109-295, title II, 120 Stat. 1355, 1361 (Oct. 4, 2006).
[3] See GAO, Homeland Security: Addressing Weaknesses with Facility
Security Committees Would Enhance Protection of Federal Facilities,
[hyperlink, http://www.gao.gov/products/GAO-10-901] (Washington, D.C.:
Aug. 5, 2010); Homeland Security: Preliminary Observations on the
Federal Protective Service's Workforce Analysis and Planning Efforts,
[hyperlink, http://www.gao.gov/products/GAO-10-802R] (Washington,
D.C.: June 14, 2010); Homeland Security: Federal Protective Service's
Contract Guard Program Requires More Oversight and Reassessment of Use
of Contract Guards, [hyperlink, http://www.gao.gov/products/GAO-10-
341] (Washington, D.C.: Apr. 13, 2010); Homeland Security: Greater
Attention to Key Practices Would Improve the Federal Protective
Service's Approach to Facility Protection, [hyperlink,
http://www.gao.gov/products/GAO-10-142] (Washington, D.C.: Oct. 23,
2009); Homeland Security: Federal Protective Service Should Improve
Human Capital Planning and Better Communicate with Tenants,
[hyperlink, http://www.gao.gov/products/GAO-09-749] (Washington, D.C.:
July 30, 2009); Homeland Security: The Federal Protective Service
Faces Several Challenges That Hamper Its Ability to Protect Federal
Facilities, [hyperlink, http://www.gao.gov/products/GAO-08-683]
(Washington, D.C.: June 11, 2008); Homeland Security: Transformation
Strategy Needed to Address Challenges Facing the Federal Protective
Service, [hyperlink, http://www.gao.gov/products/GAO-04-537]
(Washington, D.C.: July 14, 2004).
[4] [hyperlink, http://www.gao.gov/products/GAO-08-683].
[5] [hyperlink, http://www.gao.gov/products/GAO-10-802R].
[6] As appropriate, we discuss particular recommendations and any
steps taken to address them throughout our report.
[7] H.R. No. 110-862, at 59 (2008).
[8] During this time we discussed information related to FPS's fiscal
year 2010 and 2011 budgets with the committee. We also suspended work
on this engagement for 6 months, as agreed with you, due to competing
priorities.
[9] 40 U.S.C. § 1315(a) & (b).
[10] Exec. Order No. 12977, Interagency Security Committee, 60 Fed.
Reg. 54411 (Oct. 24, 1995), as amended by Exec. Order No. 13286,
Amendment of Executive Orders, and Other Actions, in Connection with
the Transfer of Certain Functions to the Secretary of Homeland
Security, 68 Fed. Reg. 10619 (Mar. 5, 2003).
[11] Homeland Security Act of 2002, Pub. L. No. 107-296, 116 Stat.
2135 (Nov. 25, 2002).
[12] As outlined in a 2006 memorandum of agreement between the two
agencies, both FPS and GSA have a continued role in physical security.
In general, GSA is responsible for security fixtures--or measures that
are part of a building--while FPS is responsible for law enforcement,
security assessments, and non-fixture countermeasures.
[13] Department of Homeland Security Appropriations Act of 2010, Pub.
L. No. 111-83, 123 Stat. 2142, 2156 (Oct. 28, 2009).
[14] This amount was raised slightly each of the 2 years before FPS
transferred from GSA.
[15] 40 U.S.C. 586(c).
[16] Department of Homeland Security Appropriations Act of 2010, Pub.
L. No. 111-83, Stat. 2142, 2156 (Oct. 28, 2009).
[17] Offsetting collections result from businesslike transactions. The
offsetting collections are recorded as offsets to spending. They are
deemed offsetting when the collections are authorized by law to be
credited to expenditure accounts, as in the case of FPS. See A
Glossary of Terms Used in the Federal Budget Process, [hyperlink,
http://www.gao.gov/products/GAO-05-734SP] (September 2005).
[18] See Pub. L. No. 111-83, 123 Stat. 2142, 2156 (Oct. 28, 2009);
Pub. L. No. 111-329, 122 Stat. 3574, 3659 (Sept. 30, 2008); Pub. L.
No. 1110-161, 121 Stat. 1844, 2051 (Dec. 26, 2007); Pub. L. No. 109-
295, 120 Stat. 1355, 1361 (Oct. 4, 2006).
[19] 41 CFR § 102-85.35.
[20] GAO, Federal User Fees: A Design Guide, [hyperlink,
http://www.gao.gov/products/GAO-08-386SP] (Washington, D.C.: May 28,
2008).
[21] Pub. L. No. 101-576, 104 Stat. 2838 (Nov. 15, 1990), codified at,
31 U.S.C. § 902.
[22] [hyperlink, http://www.gao.gov/products/GAO-08-386SP].
[23] Agencies derive their authority to charge fees either from the
Independent Offices Appropriation Act of 1952 (IOAA) or from specific
statutory authority. The IOAA states that regulations prescribed by
the heads of executive agencies establishing a charge for goods or
services are subject to policies prescribed by the President and shall
be as uniform as practicable. Circular A-25 establishes the
President's policy regarding user fees.
[24] 31 U.S.C. § 902(a)(8).
[25] Annually since 2007, the Secretary of Homeland Security has been
required to certify to the House and Senate Appropriations Committees
that FPS's operations will be fully funded in that fiscal year by its
security fees. See Pub. L. No. 109-295, title II, 120 Stat. 1355, 1361
(Oct. 4, 2006). Pub. L. No. 110-161, div. E, title II, 121 Stat. 1844,
2051 (Dec. 26, 2007). Pub. L. No. 110-329, div. D, title II, 122 Stat.
3574, 3659-60 (Sept. 30, 2008). Pub. L. No. 111-83, title III, 123
Stat. 2142, 2156-7 (Oct. 28, 2009).
[26] [hyperlink, http://www.gao.gov/products/GAO-08-683].
[27] Pub. L. No. 110-161, div. E, title II, 121 Stat. 1844, 2051 (Dec.
26, 2008). FPS officials said the midyear increase was necessary to
fund a congressionally-mandated FTE increase.
[28] [hyperlink, http://www.gao.gov/products/GAO-08-386SP].
[29] FPS's Security Services and Pricing Provision is dated September
2007 through June 2008. However, FPS officials said the document has
not been updated.
[30] Pub. L. No. 109-295, title II, 120 Stat. 1355, 1361 (Oct. 4,
2006).
[31] Congress has expressed interest in seeing how fees align with
activities, however. In the 2007 conference report accompanying fiscal
year 2007 DHS appropriations, conferees said they were concerned about
the ability of some agencies', including FPS, ability to effectively
align resource requirements to workload and mission needs. To address
the issue, conferees included specific reporting requirements and/or
realigned the funding structure of select agencies experiencing
difficulty aligning resources to the mission.
[32] Customer agency officials provided varying reasons for procuring
countermeasures from non-FPS sources. For example, officials said they
thought it was less expensive, quicker, or that they have more control
over the services than going through FPS.
[33] As of March 30, 2011, FPS did not have a final date for when RAMP
will have this capability.
[34] Federal Accounting Standards Advisory Board, Statement of Federal
Financial Accounting Standards No. 4: Managerial Cost Accounting
Standards and Concepts (July 31, 1995). Cost information can be used
by Congress and federal executives in making decisions about
allocating federal resources, authorizing and modifying programs, and
evaluating program performance; and can also be used by program
managers in making managerial decisions to improve operating economy
and efficiency.
[35] For more information see, GAO, Homeland Security: Preliminary
Observations on the Federal Protective Service's Workforce Analysis
and Planning Efforts, [hyperlink,
http://www.gao.gov/products/GAO-10-802R] (Washington, D.C.: June 14,
2010).
[36] FPS refers to this as a carry forward balance. Carryover balance
is the portion of obligational authority that has not yet been
obligated. Because FPS's fees are available to it without fiscal year
limitation, unobligated balances are carried forward to future fiscal
years.
[37] Conversely, if actual contract costs are higher than estimated,
FPS, not the customer agency, pays the overage.
[38] We have reported on leading practices for capital budgeting and
planning. See GAO, Executive Guide: Leading Practices in Capital
Decision-Making, [hyperlink,
http://www.gao.gov/products/GAO/AIMD-99-32] (Washington, D.C.:
December 1998).
[39] GAO, Budget Issues: Budgeting for Federal Capital, [hyperlink,
http://www.gao.gov/products/GAO/AIMD-97-5] (Washington, D.C.: Nov. 12,
1996).
[40] [hyperlink, http://www.gao.gov/products/GAO-08-683].
[41] [hyperlink, http://www.gao.gov/products/GAO-09-749].
[42] [hyperlink, http://www.gao.gov/products/GAO-08-386SP].
[43] According to the ISC standards, the objective of the risk
management process is to identify an achievable level of protection
that is commensurate with--or as close as possible to--the level of
risk, without exceeding the level of risk. Levels of risk determined
for each undesirable event should be mitigated by countermeasures that
provide a commensurate level of protection--the higher the risk, the
higher the level of protection. The facility security level
determination is an estimation of the level of risk at a facility. The
baseline level of protection is intended to mitigate that estimated
risk.
[44] [hyperlink, http://www.gao.gov/products/GAO-08-386SP].
[45] [hyperlink, http://www.gao.gov/products/GAO-08-693].
[46] Marginal cost is equal to the cost of providing an additional
unit of the good or service.
[47] This is known as the beneficiary pays principle of equity. See
[hyperlink, http://www.gao.gov/products/GAO-08-386SP].
[48] The budget resolution sets a cap, called a 302a allocation, on
total appropriations for the Appropriations Committees. In turn, the
Appropriations Committees provide caps, or 302b allocations, to their
subcommittees. If a subcommittee were to exceed its 302b allocation,
another subcommittee would have to allocate less. The section 302
allocations refer to relevant sections of the Congressional Budget and
Impoundment Control Act of 1974. 2 U.S.C. §633.
[49] [hyperlink, http://www.gao.gov/products/GAO-08-386SP].
[50] [hyperlink, http://www.gao.gov/products/GAO-08-683].
[51] We previously reported that FPS does not have complete and
accurate security points of contact for the customers in GSA
facilities who are responsible for working with FPS and recommended
that FPS collect and maintain an accurate and comprehensive list of
all facility designated points of contact, as well as a system for
regularly updating the list. FPS has not yet implemented this
recommendation. [hyperlink, http://www.gao.gov/products/GAO-09-749].
[52] Homeland Security Act of 2002, Pub. L. No. 107-296, 116 Stat.
2135 (Nov. 25, 2002).
[53] GSA officials said FPS's security bills are posted on Rent on the
Web at the request of FPS because FPS does not have a system to post
security bills.
[54] [hyperlink, http://www.gao.gov/products/GAO-08-386SP] and Federal
User Fees: Key Aspects of International Air Passenger Inspection Fees
Should Be Addressed Regardless of Whether Fees Are Consolidated,
[hyperlink, http://www.gao.gov/products/GAO-07-1131] (Washington,
D.C.: Sept. 24, 2007).
[55] GAO, Managing for Results: Opportunities to Strengthen Agencies'
Customer Service Efforts, [hyperlink,
http://www.gao.gov/products/GAO-11-44] (Washington, D.C.: Oct. 27,
2010).
[56] Costs for vacant space are not absorbed by the remaining tenants
in a building; rather, GSA pays for these costs.
[57] Department of Homeland Security Appropriations Act. S. 3607,
111TH Cong. (2010).
[58] H.R. 6122, 111thCong. (2010).
[59] S. 3806, 111th Cong. (2010).
[60] [hyperlink, http://www.gao.gov/products/GAO-08-683].
[61] Other reasons we previously reported customer agencies may not
approve FPS security equipment countermeasure recommendations include:
(1) customer agencies may not have the security expertise needed to
make risk-based decisions, (2) consensus may be difficult to build
among multiple customer agencies, (3) customer agencies may find the
associated costs prohibitive, and (4) customer agencies may lack a
complete understanding of why recommended countermeasures are
necessary because they do not receive facility security assessments in
their entirety. GAO, Homeland Security: Greater Attention to Key
Practices Would Improve the Federal Protective Service's Approach to
Facility Protection, [hyperlink,
http://www.gao.gov/products/GAO-10-142] (Washington, D.C.: Oct. 23,
2009).
[62] [hyperlink, http://www.gao.gov/products/GAO-08-683].
[63] See A Glossary of Terms Used in the Federal Budget Process,
[hyperlink, http://www.gao.gov/products/GAO-05-734SP] (September 2005).
[64] [hyperlink, http://www.gao.gov/products/GAO-07-1131].
[65] Such a strategy would limit the amount of budget authority
available to FPS but it should be noted that, as with any direct
appropriation, the choice to make budget authority available to FPS
means that Congress has less budget authority available for other
programs.
[66] [hyperlink, http://www.gao.gov/products/GAO-05-734SP].
[67] GAO, Federal Energy Management: GSA's Recovery Act Program Is on
Track, but Opportunities Exist to Improve Transparency, Performance
Criteria, and Risk Management, [hyperlink,
http://www.gao.gov/products/GAO-10-630] (Washington, D.C.: June 16,
2010).
[68] GAO, Disaster Cost Estimates: FEMA Can Improve Its Learning from
Past Experience and Management of Disaster-Related Resources,
[hyperlink, http://www.gao.gov/products/GAO-08-301] (Washington, D.C.:
Feb. 22, 2008).
[69] During this time we discussed information related to FPS's fiscal
year 2010 and 2011 budgets with the committee. We also suspended work
on this engagement for 6 months, as agreed with you, due to competing
priorities.
[End of section]
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