Transportation Security Administration
High-Level Attention Needed to Strengthen Acquisition Function Gao ID: GAO-04-544 May 28, 2004The Transportation Security Administration (TSA), within the Department of Homeland Security, was established to secure the nation's transportation systems, beginning with commercial airports. To meet its mission, TSA has awarded over $8.5 billion in contracts since its creation in 2001. Spending on contracts accounted for 48 percent of TSA's fiscal year 2003 budget. Because of TSA's reliance on contracts to carry out its mission, its acquisition infrastructure-- including oversight, policies and processes, acquisition workforce, and information about its acquisitions--is critical. GAO was asked to review TSA's acquisition infrastructure to assess how well TSA is positioned to carry out its acquisition function.
Since its inception, TSA has been focused on meeting an urgent mandate to deploy more than 55,000 airport passenger and baggage screening personnel and equipment to secure the nation's airways. To do so, it created basic organizational and acquisition infrastructures. However, our review of TSA's acquisition function and inspector general reports identified a number of challenges in each of the four areas we assessed. Organizational alignment and leadership: TSA's Office of Acquisition is at an organizational level too low to oversee the acquisition process, coordinate acquisition activities, and enforce acquisition policies effectively. The position of the office hinders its ability to help ensure that TSA follows acquisition processes that enable the agency to get the best value on goods and services. Policies and processes: TSA's acquisition policies and processes emphasize personal accountability, good judgment, justifiable business decisions, and integrated acquisition teams. However, effective implementation of TSA's policies and processes has been hindered by several factors. For example, TSA has not effectively communicated its acquisition policies throughout the agency. TSA also lacks internal controls to identify and address implementation issues and performance measures to determine whether acquisition policies are achieving desired results. Human capital: TSA risks an imbalance in the size and capabilities of its acquisition workforce that could diminish the performance of the acquisition function throughout the agency. TSA's Office of Acquisition worked closely with the Department of Homeland Security to develop and begin implementing an acquisition workforce plan. However, TSA's Human Resource Office, which is responsible for recruiting and hiring the acquisition workforce agencywide, did not participate in developing the acquisition workforce plan. Without input from the Human Resources Office, it is not clear that the workforce plan can be effectively implemented throughout the agency. In addition, the Office of Acquisition reports that it is having difficulty attracting, developing, and retaining a workforce with the acquisition knowledge and skills required to accomplish TSA's mission. Knowledge and information management: while TSA is participating in the Department of Homeland Security's efforts to develop requirements for an enterprisewide solution, TSA does not currently have the strategic information needed to support effective acquisition management decisions. To manage on a day-to-day basis, program and acquisition managers are relying on data derived from informal, ad-hoc systems. TSA is in the process of adopting the Coast Guard's procurement and financial systems as interim solutions until the Department of Homeland Security implements a departmentwide system. However, near-term improvement in acquisition outcomes will be difficult because TSA does not have the data needed to analyze and improve its acquisition processes.
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: Team: Phone:GAO-04-544, Transportation Security Administration: High-Level Attention Needed to Strengthen Acquisition Function
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Report to Congressional Requesters:
United States General Accounting Office:
GAO:
May 2004:
Transportation Security Administration:
High-Level Attention Needed to Strengthen Acquisition Function:
GAO-04-544:
GAO Highlights:
Highlights of GAO-04-544, a report to congressional requesters
Why GAO Did This Study:
The Transportation Security Administration (TSA), within the
Department of Homeland Security, was established to secure the
nation‘s transportation systems, beginning with commercial airports. To
meet its mission, TSA has awarded over $8.5 billion in contracts since
its creation in 2001. Spending on contracts accounted for 48 percent of
TSA‘s fiscal year 2003 budget.
Because of TSA‘s reliance on contracts to carry out its mission, its
acquisition infrastructure”including oversight, policies and
processes, acquisition workforce, and information about its
acquisitions”is critical. GAO was asked to review TSA‘s acquisition
infrastructure to assess how well TSA is positioned to carry out its
acquisition function.
What GAO Found:
Since its inception, TSA has been focused on meeting an urgent mandate
to deploy more than 55,000 airport passenger and baggage screening
personnel and equipment to secure the nation‘s airways. To do so, it
created basic organizational and acquisition infrastructures. However,
our review of TSA‘s acquisition function and inspector general reports
identified a number of challenges in each of the four areas we
assessed.
* Organizational alignment and leadership: TSA‘s Office of Acquisition
is at an organizational level too low to oversee the acquisition
process, coordinate acquisition activities, and enforce acquisition
policies effectively. The position of the office hinders its ability
to help ensure that TSA follows acquisition processes that enable the
agency to get the best value on goods and services.
* Policies and processes: TSA‘s acquisition policies and processes
emphasize personal accountability, good judgment, justifiable business
decisions, and integrated acquisition teams. However, effective
implementation of TSA‘s policies and processes has been hindered by
several factors. For example, TSA has not effectively communicated its
acquisition policies throughout the agency. TSA also lacks internal
controls to identify and address implementation issues and performance
measures to determine whether acquisition policies are achieving
desired results.
* Human capital: TSA risks an imbalance in the size and capabilities
of its acquisition workforce that could diminish the performance of
the acquisition function throughout the agency. TSA‘s Office of
Acquisition worked closely with the Department of Homeland Security to
develop and begin implementing an acquisition workforce plan. However,
TSA‘s Human Resource Office, which is responsible for recruiting and
hiring the acquisition workforce agencywide, did not participate in
developing the acquisition workforce plan. Without input from the Human
Resources Office, it is not clear that the workforce plan can be
effectively implemented throughout the agency. In addition, the Office
of Acquisition reports that it is having difficulty attracting,
developing, and retaining a workforce with the acquisition knowledge
and skills required to accomplish TSA‘s mission.
* Knowledge and information management: While TSA is participating in
the Department of Homeland Security‘s efforts to develop requirements
for an enterprisewide solution, TSA does not currently have the
strategic information needed to support effective acquisition
management decisions. To manage on a day-to-day basis, program and
acquisition managers are relying on data derived from informal, ad-hoc
systems. TSA is in the process of adopting the Coast Guard‘s
procurement and financial systems as interim solutions until the
Department of Homeland Security implements a departmentwide system.
However, near-term improvement in acquisition outcomes will be
difficult because TSA does not have the data needed to analyze and
improve its acquisition processes.
What GAO Recommends:
GAO is recommending that the Secretary of the Department of Homeland
Security direct the Administrator of TSA to elevate the Office of
Acquisition, develop adequate internal controls and performance
measures to ensure effective policies and processes, and assess its
current acquisition workforce and proposed knowledge management
systems.
In commenting on a draft of this report, the Department of Homeland
Security generally concurred with this report and its recommendations
and provided additional information.
www.gao.gov/cgi-bin/getrpt?GAO-04-544.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact William T. Woods, (202)
512-8214, woodsw@gao.gov.
[End of section]
Contents:
Letter:
Assessment Summary:
Background:
TSA's Organizational Alignment and Leadership:
TSA's Acquisition Policies and Processes:
TSA's Human Capital Management:
TSA's Knowledge and Information Management:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Key Activities, Roles, and Responsibilities of Key
Personnel Involved in TSA's Acquisition Process:
Appendix III: Inspector General Testimony and Reports Reviewed:
Appendix IV: Contracts Reviewed:
Appendix V: Comments from the Department of Homeland Security:
Tables:
Table 1: Key Personnel Involved in TSA's Acquisition Function:
Table 2: Department of Transportation Audit Reports on Contracting
Issues at TSA:
Table 3: Department of Homeland Security Audit Reports Reviewed That
Include Contracting Issues at TSA:
Figures:
Figure 1: Timeline of TSA's History:
Figure 2: Organization of TSA:
Figure 3: Key Activities in the Acquisition Process:
Abbreviations:
FAA: Federal Aviation Administration:
FAR: Federal Acquisition Regulation:
TSA: Transportation Security Administration:
United States General Accounting Office:
Washington, DC 20548:
May 28, 2004:
The Honorable Tom Davis:
Chairman:
The Honorable Henry A. Waxman:
Ranking Minority Member:
Committee on Government Reform:
House of Representatives:
The Honorable Don Young:
Chairman:
The Honorable James L. Oberstar:
Ranking Minority Member:
Committee on Transportation and Infrastructure:
House of Representatives:
The Honorable Martin Olav Sabo:
Ranking Minority Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
House of Representatives:
Since its creation in November 2001, the Transportation Security
Administration (TSA) has awarded more than $8.5 billion in contracts
for goods and services used to secure the nation's transportation
systems.[Footnote 1] TSA currently has contracts to recruit, hire,
train, and outfit passenger and baggage screeners, as well as contracts
to develop and manufacture screening equipment and to provide the
information technology needed to manage its day-to-day operations. TSA
built its organization while simultaneously concentrating its resources
on meeting tight deadlines for deploying more than 55,000 federal
screeners to all of the nation's commercial airports.
Because of TSA's significant reliance on contracts to carry out its
mission, its acquisition infrastructure--including oversight
mechanisms, policies and processes, acquisition workforce, and
information systems--will in large part determine whether the agency
succeeds in its mission. However, the Inspectors General of the
Departments of Transportation and Homeland Security--the two executive
departments TSA has been a part of since it was created--have
repeatedly criticized the agency's management and oversight of its
contracts.[Footnote 2] As a result, you asked us to review TSA's
acquisition infrastructure to assess how well TSA is positioned to
carry out its acquisition function.
Based on our previous reviews of acquisition management issues
governmentwide, at individual agencies, and at leading private sector
firms, we have identified four broad areas that we believe are critical
to the success of an acquisition organization:
* Organizational alignment and leadership: The appropriate placement
of the acquisition function within an agency can facilitate efficient
and effective management of acquisition activities. In addition, agency
leaders need to create a climate that fosters good acquisition
practices.
* Policies and processes: To facilitate effective planning, award,
administration, and oversight of contracts, and to help ensure the best
value on goods and services, the agency must have clear, consistent,
and enforceable policies and processes. Internal controls and
performance measures help to ensure that policies and processes are
implemented and have the desired outcomes.
* Human capital: Strategic workforce planning--including workforce and
skills assessments and succession planning--is key to recruiting,
training, and rewarding staff and ensuring the acquisition workforce
has the skills needed to carry out their responsibilities effectively.
* Knowledge and information management: To inform strategic decisions
aimed at reducing costs, improving service levels, measuring
compliance, and managing providers, the agency must have knowledge and
information systems that can produce credible, reliable, and timely
data.
We assessed TSA's acquisition infrastructure against what our previous
work has shown to be best practices in these four areas. To do so, we
reviewed agency directives, memorandums, and other documentation;
interviewed agency officials; and analyzed agency systems and
processes. To gain further insight into how TSA's acquisition system is
functioning, we also reviewed 21 judgmentally selected contract files.
For more on our scope and methodology, see appendix I.
We conducted our review from July 2003 through March 2004 in accordance
with generally accepted government auditing standards.
Assessment Summary:
Since its inception, TSA has been focused on meeting an urgent
mandate[Footnote 3] to deploy more than 55,000 airport passenger and
baggage screening personnel and equipment to secure the nation's
airways. To do so, it created basic organizational and acquisition
infrastructures. To date, however, TSA has not developed an acquisition
infrastructure that facilitates successful management and execution of
acquisition activities, helps ensure that the agency acquires quality
goods and services at reasonable prices, and supports informed
decisions about acquisition strategy. Specifically, our review of TSA's
acquisition function and inspector general reports identified a number
of challenges in each of the four areas we assessed.
* Organizational alignment and leadership: TSA's Office of Acquisition
is at an organizational level too low to oversee the acquisition
process, coordinate acquisition activities, and enforce acquisition
policies effectively. The position of the office hinders its ability to
help ensure that TSA follows the acquisition processes that enable the
agency to get the best value on goods and services. Senior acquisition
officials told us that the Office of Acquisition is not appropriately
placed within TSA; however, TSA has not elevated the office to a
position that would enable it to coordinate agencywide acquisition
activities or enforce acquisition policies.
* Policies and processes: Because TSA's acquisition policies and
processes emphasize personal accountability, good judgment,
justifiable business decisions, and integrated acquisition teams,
effective implementation of TSA's policies and processes depends on
clear communication, measures to evaluate performance, and incentives
to reward good acquisition practices. Effective implementation of TSA's
policies and processes has been hindered, however, by several factors:
(1) TSA has not effectively communicated its acquisition policies
throughout the agency; (2) TSA lacks internal controls to identify and
address implementation issues and performance measures to determine
whether TSA's acquisition policies achieve desired outcomes; and
(3) TSA's deadline-driven culture fails to reinforce the importance of
complying with policies.
* Human capital: TSA risks an imbalance in the size and capabilities of
its acquisition workforce that could diminish the performance of the
acquisition function throughout the agency. TSA's Office of Acquisition
worked closely with the Department of Homeland Security to develop and
begin implementing an acquisition workforce plan. However, TSA's Human
Resource Office, which is responsible for recruiting and hiring the
acquisition workforce agencywide, did not participate in developing the
acquisition workforce plan. Without input from the Human Resources
Office, it is not clear that the workforce plan can be effectively
implemented throughout the agency. In addition, the Office of
Acquisition reports that it is having difficulty attracting,
developing, and retaining a workforce with the acquisition knowledge
and skills required to accomplish TSA's mission.
* Knowledge and information management: While TSA is participating in
the Department of Homeland Security's efforts to develop functional
requirements for an enterprisewide solution that supports the
department's resource management functions--including procurement and
finance--TSA does not currently have the strategic information needed
to support effective acquisition management decisions. To manage on a
day-to-day basis, program and acquisition managers are relying on data
derived from informal, ad hoc systems--which are often out-of-date,
incomplete, inaccurate, or otherwise unreliable. TSA is in the process
of adopting the Coast Guard's procurement and financial systems as
interim solutions until the Department of Homeland Security implements
departmentwide systems. However, near-term improvements to TSA's
acquisition outcomes will be difficult until TSA has critical financial
and procurement information systems that allow decision makers to track
spending, manage budgets, and collect detailed data on goods and
services, suppliers, and spending patterns.
We are making four recommendations to the Secretary of Homeland
Security to help improve TSA's acquisition capabilities by elevating
the placement of TSA's Office of Acquisition, developing adequate
internal controls and performance measures, addressing the needs of the
acquisition workforce, and assessing proposed knowledge management
systems. In written comments on a draft of this report, the Department
of Homeland Security generally concurred with our report and
recommendations. They also provided additional information about
various initiatives related to our recommendations.
Background:
Two months after the September 11, 2001, terrorist attacks, the
President signed the Aviation and Transportation Security Act,
establishing TSA as a new administration within the Department of
Transportation responsible for securing the nation's transportation
systems.[Footnote 4] In February 2002, TSA assumed responsibility for
aviation screening, and by November 2002, the agency had deployed a
federal security screener workforce in the nation's 429 commercial
airports. In March 2003, TSA, along with 21 other agencies, began
transferring to the Department of Homeland Security.[Footnote 5] Figure
1 shows the timeline of TSA's brief history.
Figure 1: Timeline of TSA's History:
[See PDF for image]
[End of figure]
When TSA was established in November 2001, the agency had no personnel,
no organizational structure, no policies and processes, and no legacy
systems. To begin operating, TSA adopted some of the Department of
Transportation's infrastructure components, such as the financial
management system, and developed others in-house, such as a procurement
tracking system. In addition, the Aviation and Transportation Security
Act directed TSA to adopt the Federal Aviation Administration's (FAA)
Acquisition Management System, [Footnote 6] which establishes policy,
processes, and guidance for all aspects of the acquisition life cycle.
The act gives TSA's administrator the latitude to make modifications to
FAA's system as appropriate. Because FAA is, by law, generally exempt
from federal acquisition laws as well as the Federal Acquisition
Regulation (FAR),[Footnote 7] and TSA was directed to adopt FAA's
system, TSA is also exempt from these requirements.
TSA has relied on contractors to accomplish much of its mission. In
fiscal year 2002, TSA obligated more than $3.7 billion for goods and
services procured under contracts awarded by TSA, FAA, and the
Department of Transportation. TSA currently has contracts to manage
human resource needs, including recruiting, hiring, training, and
outfitting passenger and baggage screeners; develop and manufacture
screening equipment; and provide the information technology systems the
agency uses to manage its day-to-day operations. These contracts
represent about 48 percent of TSA's fiscal year 2003 budget.
TSA's large expenditures on goods and services have prompted reviews
by the Inspectors General of the Departments of Transportation and
Homeland Security, who found a lack of contractor oversight and
significant cost overruns.[Footnote 8] For example, in January 2004,
the Department of Homeland Security Inspector General reported that
inadequate contractor oversight contributed to TSA's lack of timely
background checks on screeners at airports. Specifically, inadequate
oversight of contractors contributed to more than 500 boxes of
background check documentation remaining unprocessed for
months.[Footnote 9] The Department of Transportation's Inspector
General also found that inadequate oversight and contracts without
clearly defined deliverables caused the cost of TSA's initial contracts
to balloon. For example, TSA's initial human resource contract to
recruit, screen, hire, and train screeners grew from $100 million to
$700 million within 1 year.[Footnote 10]
In late 2003, the Department of Homeland Security's Inspector General
cited integrating the procurement functions of the department's
component organizations as a major management challenge, adding that
some of the procurement functions lacked important management
controls.[Footnote 11] Despite TSA's efforts to resolve initial
problems, the Inspector General cited TSA as an example of an agency
lacking procurement management controls.
In a 2004 update to the previous year's report on management
challenges, the Inspector General's Office reported that TSA was taking
steps to address weaknesses in contract oversight, such as increasing
the size of its contract management staff, devising policies and
procedures that require adequate procurement planning, and arranging
for the Defense Contract Audit Agency to perform over 130 contract
audits and support contract administration.
TSA's Organizational Alignment and Leadership:
Best Practices:
The appropriate placement of the acquisition function within an agency
can facilitate efficient and effective management of acquisition
activities. In our work on best practices, [Footnote 12] we learned
that leading companies elevated or expanded the role of the company's
acquisition organization; designated commodity managers to oversee key
services; and made extensive use of cross-functional teams to help
identify the company's service needs, conduct market research, evaluate
and select providers, and manage performance. To cut across traditional
organizational boundaries that contributed to a fragmented approach to
acquiring services, these companies generally restructured their
procurement organizations, typically assigning them greater
responsibility and authority for strategic planning, management, and
oversight of the companies' service spending. In making such changes,
the companies acknowledged that acquisition is an important strategic
function and that success in this area contributes to the
accomplishment of company missions. These changes transformed the role
of the purchasing unit from one focused on mission support to one that
was strategically important to the company's bottom line.
Recent legislation recognizes the importance of placing the acquisition
function at an appropriate level and mandates that most executive
departments appoint a chief acquisition officer.[Footnote 13] This
official will have the responsibility to monitor the performance of
acquisition activities and programs; evaluate the performance of
acquisition programs; increase the use of full and open competition;
increase the use of performance-based contracting; establish clear
lines of authority, accountability, and responsibility for acquisition
decision making; manage the direction of the agency's acquisition
policies; advise the head of the executive agency regarding the
appropriate business strategy to achieve the mission of the executive
agency; and develop and maintain an acquisition career management
program to ensure that there is an adequate acquisition workforce.
Assessment:
TSA's Office of Acquisition is at an organizational level too low to
oversee the acquisition process, coordinate acquisition activities, and
enforce acquisition policies effectively. As shown in figure 2, the
Office of Acquisition is at a lower level than other key offices
involved in the acquisition process. Its current position within the
organizational structure essentially relegates acquisition to the
status of one of many administrative functions. The placement of the
Office of Acquisition hinders the ability of the office to oversee the
acquisition process and to coordinate with other offices involved in
that process--responsibilities that are particularly critical given
that almost half of TSA's budget is spent on acquisitions.[Footnote 14]
This issue was also noted by senior acquisition officials who told us
that the Office of Acquisition is not appropriately placed within TSA.
Further, the Chief Support Systems Officer said that adjustments to the
placement of the office might be worthy of consideration.[Footnote 15]
Figure 2: Organization of TSA:
[See PDF for image]
[End of figure]
From its current position, the office has not been able to coordinate
the agency's acquisition activities or enforce acquisition policies
throughout the agency. This has resulted in certain inefficiencies, as
the following examples demonstrate:
* Senior acquisition officials told us that some program offices within
TSA bypass the Office of Acquisition at key points in the acquisition
process or fail to consult the contracting officer early enough in the
acquisition process--typically without consequence. For example,
program offices have submitted purchase requests without allowing
adequate time for planning, requiring the contracting officers to spend
additional time on tasks such as rewriting the requirements or
performing additional market research to ensure that the goods or
services purchased satisfy the program offices' needs. Had the program
offices consulted with the Office of Acquisition earlier in the
process, much of the additional work could have been avoided.
* Different support offices involved in managing contracts for the
airport screening function did not coordinate when contracting for
airport screening equipment because, according to a senior operations
official, TSA failed to ensure effective communication between the
support offices. As a result, the number of personnel needed to operate
the additional equipment was not sufficient once the equipment was
installed.
* Reports from the Inspectors Generals of the Department of Homeland
Security and the Department of Transportation also noted that TSA's
program offices failed to plan for and coordinate contractor oversight.
While TSA's Office of Acquisition now requires program offices to have
oversight plans in place before major contracts are awarded, the office
does not have the means to ensure that oversight plans are actually
implemented.
* The lack of recognition of the importance of the acquisition function
was also evident at a senior level of the organization. For example, an
acquisition official told us that a representative from the Office of
Acquisition was not initially consulted when senior TSA officials were
developing strategies for responding to questions following
congressional testimony on TSA's acquisition problems.
TSA's Acquisition Policies and Processes:
Best Practices:
Implementing strategic acquisition decisions to achieve agencywide
outcomes requires clear, transparent, and consistent policies and
processes that govern the planning, award, administration, and
oversight of acquisitions.[Footnote 16] Agency policies and processes,
along with their rationale, need to be clearly communicated to all
involved in the acquisition function. In addition, appropriate actions
are needed to ensure acquisition personnel understand the
organization's acquisition policies and processes, as well as their
roles and responsibilities in adhering to them. Appropriate internal
controls to ensure that acquisition personnel follow policies and
processes, and performance measures to assess the effectiveness of
policies and processes in achieving desired outcomes, also are needed.
In our work on best practices, we learned that maintaining clear lines
of communication among all organizations involved in the acquisition
function, and using performance measures to evaluate acquisition
processes, were critical to successfully implementing strategic
approaches to acquisition. Leading companies also found that the use of
metrics increased the likelihood that acquisition processes would be
successfully implemented. Metrics can be used to assess an
organization's current performance level, identify the critical
processes that require focused management attention, obtain the
knowledge needed to set realistic goals for improvement, and document
results over time.
Assessment:
Since TSA was established, it has issued management directives, policy
letters, and guidance on its acquisition policies and processes. These
have been based on FAA policy and guidance for acquiring goods and
services and on Department of Homeland Security directives. TSA's
policies and processes emphasize personal accountability, good
judgment, justifiable business decisions, and integrated acquisition
teams. However, the following examples indicate that several of these
policies have not been effectively implemented.[Footnote 17]
* Despite acquisition policies regarding contractor oversight, the
Department of Homeland Security's Inspector General reported that a
lack of adequate oversight on TSA's early contracts resulted in airline
passenger screeners being allowed to begin work without completing a
criminal history records check or to continue to work with adverse
background checks. Some screeners who had been hired failed background
checks, were determined to be ineligible, and were subsequently fired.
* TSA also failed to implement policies and processes intended to
ensure coordination of acquisition activities. TSA guidelines call for
integrated product teams--which may include representatives from
program, technical, finance, contracting, and legal offices--to
coordinate key acquisition activities and to work together to make
decisions throughout the acquisition process. According to TSA
acquisition officials, however, such teams are often not formed, and
there is currently no formal process for doing so. Without such teams,
TSA risks having acquisition activities that are not well coordinated
and key decisions that fail to take into account all essential
considerations.
TSA's acquisition policies and processes have not been effectively
communicated throughout the agency. The Office of Acquisition has
implemented training initiatives in an attempt to educate key staff
about their responsibilities, but officials across the agency told us
that they or their staffs are unclear about their roles and
responsibilities in the acquisition process. Because TSA's personnel
were hired from other agencies and from the private sector, which may
have defined their roles and responsibilities differently, it is
critical that personnel throughout TSA have a clear understanding of
the agency's acquisition policies and processes. Personnel must be
properly trained in applying the flexibilities inherent in TSA's
acquisition policies to ensure fair and open competition and effective
procurement practices.
TSA lacks performance measures to determine whether its acquisition
policies are achieving desired outcomes. TSA also lacks internal
controls to identify and address implementation issues. Each office
within TSA is responsible for developing its own performance measures.
TSA's Office of Acquisition has measures to track the number of
contracts awarded and the amount of the awards, but does not have
measures to assess how well personnel carry out acquisition activities,
such as oversight. For example, TSA does not track the number of
contracts awarded that include incentives for performance, such as
performance-based contracts or contracts with fees based on different
levels of performance.[Footnote 18] The Office of Acquisition is
currently considering the use of customer satisfaction measures used by
the U.S. Navy and the Department of Transportation to determine whether
they would be suitable for measuring the office's performance. TSA's
template for individual performance agreements attempts to tie
individual goals to organizational goals. However, the template has no
acquisition-specific goals. Supervisors may add acquisition-specific
goals for individuals. Without such goals it may be difficult to hold
individuals accountable for performance on acquisition activities.
TSA's deadline-driven culture fails to reinforce the importance of
compliance with policies. TSA officials acknowledged, and Inspector
General reports and testimony confirmed, that TSA initially sacrificed
cost concerns and disciplined acquisition practices in order to meet
schedules. As a result, TSA created a culture that prioritized meeting
deadlines at the expense of other acquisition goals. TSA's initial
deadlines for deploying its screener workforce were met. However,
senior officials from multiple TSA offices told us that the agency has
maintained its sense of urgency, and that program offices still expect
acquisition functions to be accomplished quickly, even if the
appropriate acquisition practices are not always followed.
Contract File Reviews:
Our review of 21 contract files showed that TSA did not always use
practices that help to ensure quality and cost efficiency. While some
of the problems we identified in early contracts stemmed from shortcuts
taken to meet urgent deadlines, the persistence of such problems
suggests that TSA did not consistently follow disciplined acquisition
practices. TSA's policies require that the agency perform quality
assurance, but several contract files we reviewed contained little
evidence that contract oversight or quality assurance was performed.
For example, the contract files for background investigations, baggage
screening, and engineering and technical services contained no evidence
of oversight or quality assurance plans. TSA's policies also require
that performance metrics be identified in the requirements of complex
contracts. Our review of the contract files found that TSA failed to
develop performance metrics for the contractor prior to award. Instead,
TSA often asked the contractor to develop these plans or metrics after
award. Because of problems with inadequate contractor oversight,
however, TSA now requires that an oversight plan be in place prior to
award.
Several of the contract files we reviewed were cost
reimbursement[Footnote 19] or time and materials[Footnote 20] contracts
and did not contain evidence of government surveillance to ensure cost
efficiency. Of the 21 contracts we reviewed, 6 were awarded on a fixed-
price basis, and 9 were awarded on a cost-reimbursable or time and
materials basis, while 6 were a combination. Cost-reimbursement and
time and materials contracts are generally only suitable when
appropriate government surveillance during performance will provide
reasonable assurance that efficient methods and effective cost controls
are used. Frequent use of cost-reimbursement and time and materials
contracts, coupled with the inspector generals' findings that TSA
failed to monitor its contracts, diminishes the assurance that
efficient methods and cost controls are being used.
TSA generally used single-source contracts judiciously for the contract
files we reviewed. TSA's policies, which encourage competition as the
preferred method of contracting, state that use of single-source
contracts is permitted when necessary to accomplish TSA's mission and
merely require that a rational basis for the decision be documented.
[Footnote 21] Of the 21 contract files we reviewed, 3 were for single-
source contracts.[Footnote 22] The remaining contracts were awarded
using a variety of procurement methods, including use of existing
government contracts, the Federal Supply Schedule, required government
supply sources, and competitive procedures. In the 3 single-source
contract awards we reviewed, the contract files contained
justifications for using such noncompetitive procedures as required by
TSA's policies. The justifications for awarding contracts on a single-
source basis varied. In one case, for example, the agency identified a
need for additional office furniture to be integrated with furniture
systems already installed at the work site. The justification stated
that the furniture components were not interchangeable between
manufacturers and that it would be more costly to hire a different
contractor to perform follow-on work. (See appendix IV for a
description of the other contracts we reviewed.)
TSA's Human Capital Management:
Best Practices:
A strategic human capital management approach enables an agency to
recruit, develop, and retain the right number of personnel with the
right skills to accomplish its mission effectively. Through our work on
human capital management, we have found that high-performing
organizations identify their current and future human capital needs and
then develop acquisition workforce plans containing strategies--such as
targeted investments in employees or recruiting and retention bonuses-
-to meet these needs.[Footnote 23] These plans enable the organization
to address the critical skills and competencies needed to achieve
results.[Footnote 24] Strategic human capital approaches need
sufficient resources. Senior managers should devote adequate resources
to recruiting, hiring, developing, rewarding, and retaining talented
personnel.[Footnote 25] Succession planning is also needed to ensure
that the workforce is composed of the right number of personnel with
the necessary skills and qualifications to perform the acquisition
function into the future. Changes in the required skill sets of the
acquisition workforce, coupled with the prospect of a decline in
experienced acquisition personnel throughout the government, make the
need for acquisition workforce planning more significant.
Industry and government experts alike recognize that having the right
people with the right skills is key to making a successful
transformation toward a more effective acquisition environment. Over
the last decade, the emergence of several procurement trends, including
a rise in services contracting, has created a need for acquisition
workers with a much greater knowledge of market conditions, industry
trends, and the technical details of the commodities and services they
procure.
Assessment:
TSA risks an imbalance in its acquisition workforce that could diminish
the performance of the acquisition function throughout the agency. With
almost half of TSA's fiscal year 2003 budget devoted to acquisition, a
qualified and trained workforce is critical to ensuring the efficiency
of TSA's acquisition activities.
The Department of Homeland Security has developed a departmentwide
acquisition workforce plan, and TSA began implementing it in February
2004. The plan focuses on formalizing competencies and skill sets;
establishing certification standards;[Footnote 26] and identifying
training requirements, first for contracting specialists and then for
acquisition professionals in other key career fields--including program
management, financial management, engineering, and information
technology.[Footnote 27] Subsequent phases of the plan include
establishing career paths, targeting positions for recruitment,
establishing mentoring programs, and creating a strategy for succession
planning.
TSA's Office of Acquisition contributed significantly to the Department
of Homeland Security's acquisition workforce plan. However, TSA's
Office of Human Resources, which is responsible for recruiting and
hiring and for succession planning throughout TSA--including the
acquisition workforce, did not participate in developing the plan.
Since there are many acquisition-related positions in offices
throughout TSA, the involvement of key TSA personnel offices--
particularly the Human Resources Office--is important to the success of
the acquisition workforce plan. It is not yet clear how effective the
acquisition workforce plan will be, given that an office responsible
for key aspects of implementation did not participate in the plan's
development.
In responding to a draft of this report, TSA officials commented
that the Human Resources Office was unable to participate in
departmentwide acquisition workforce planning because it has been
facing critical day-to-day problems associated with supporting growth
in the workforce throughout TSA. After functioning for just over
1 year, the office has hired a manager who will be working on their
human capital strategic planning in conjunction with the overall
departmental human capital planning effort. They also said that TSA is
drafting a Human Capital Officer Strategy that will focus on
identifying career paths for all occupations, including acquisitions
and contracting.
Effective implementation of the acquisition workforce plan is all the
more important because acquisition officials face challenges in
attaining sufficient staffing levels. Office of Acquisition officials
are concerned that their staff of 61 is not adequate to support the
mission. In January 2003, the Deputy Assistant Administrator of the
Office of Acquisition conducted a study to determine appropriate
staffing levels for TSA's Office of Acquisition. This study assumed
contract awards in excess of $4 billion per year,[Footnote 28] to
estimate staffing requirements. Using three different benchmarks that
attempted to estimate staffing needs based on total awarded value of
contracts,[Footnote 29] the study concluded that the Office of
Acquisition would require a staff of between 179 and 628 employees. We
did not conduct an independent assessment of this TSA study to verify
the validity of the study's results. Further, the Office of Human
Resources has not conducted similar studies to determine appropriate
staffing levels for other acquisition professionals not assigned to the
Office of Acquisition.
TSA's Office of Acquisition has been challenged in trying to maintain
its existing acquisition workforce. According to TSA acquisition
officials, attrition among its contracting workforce has been a
problem. In the time period from March 2002 to December 2003, TSA's
Office of Acquisition experienced attrition of approximately 22 percent
of its contracting workforce. To identify the causes for attrition, the
Office of Acquisition began conducting exit interviews. According to
acquisition officials, attrition is a result of the heavy workload, as
well as a lack of incentives, such as tuition reimbursement and
performance awards.[Footnote 30] TSA's human resource officials have
not monitored the acquisition workforce throughout the agency to
determine if there are similar troubles retaining acquisition
professionals outside the Office of Acquisition. TSA's human resources
officials said they conducted a job satisfaction survey and plan to
begin conducting exit interviews, but acknowledged that the survey and
exit interviews would be concerned primarily with screener
satisfaction.
Efforts to hire acquisition professionals to work in the Office of
Acquisition have been undercut by the limited number of qualified
applicants and possible negative perceptions about TSA. According to
TSA acquisition officials, there is a lack of applicants with adequate
acquisition experience, and TSA is competing with other agencies that
offer more generous benefits, such as tuition reimbursement and clear
career tracks. TSA is authorized to use recruiting and retention
incentives. However, according to officials, the agency has not
provided funding for these types of incentives. Further, qualified
applicants are difficult to recruit because TSA's role within the
Department of Homeland Security is not clearly understood and TSA has a
reputation for long work hours. Human resources officials admitted that
their focus is primarily on screeners, and they do not know whether
other offices are experiencing similar difficulties hiring acquisition
professionals.
In addition, acquisition and training officials told us that training
funds for the acquisition workforce are very limited. Training
officials said that funds are sufficient for meeting federal training
mandates; however, there are no additional training funds for further
professional development. Acquisition officials told us that funding
for training Office of Acquisition personnel is limited to $1,000 per
year per employee--an amount that acquisition officials say is
insufficient to train staff who came to TSA without prior contracting
experience. The Office of Acquisition's training funds do not cover
training of other acquisition professionals outside this office.
Without sufficient training funds, TSA is able to provide few
professional development opportunities for the acquisition workforce--
limiting career growth. To address the most critical training needs for
the acquisition workforce outside the Office of Acquisition--such as
program managers, contracting officers' representatives, and technical
monitors--TSA's Office of Acquisition has proactively developed
workshops in-house. However, these workshops are not mandatory for the
acquisition workforce.
TSA's Knowledge and Information Management:
Best Practices:
To make strategic, mission-focused acquisition decisions,
organizations need knowledge and information management processes and
systems that produce credible, reliable, and timely data about the
goods and services acquired and the methods used to acquire them.
Leading companies use procurement and financial management systems to
gather and analyze data to identify opportunities to reduce costs,
improve service levels, measure compliance and performance, and manage
service providers. For example, organizations need integrated financial
management systems that provide reliable, accurate, relevant, and
timely financial data to help ensure dollars are well spent. Such data
are needed to estimate and control program costs, support funding
decisions, and oversee contract spending. Many leading organizations
have already implemented an enterprisewide system to integrate
financial and operating data to support both management decision-making
and external reporting requirements.
In a 1994 study of fundamental practices that led to performance
improvements in leading private and public organizations, we reported
that electronic business system initiatives must be focused on process
improvements. Information systems that simply use technology to do the
same work the same way, although faster, typically fail, or reach only
a fraction of their potential.[Footnote 31] In May 2000, we reported
that when developing new electronic business processes, it is important
to ensure that current business processes are working well before
applying new technology.[Footnote 32] In fact, agency heads are
required by statute to analyze an agency's mission and revise mission-
related and administrative processes, as appropriate, before making
significant investment in information technology that is to be used in
support of the performance of those missions.[Footnote 33] Not
improving business processes prior to investing in new technology
creates the risk of merely automating inefficient ways of doing
business.
Assessment:
While TSA is participating in the Department of Homeland Security's
efforts to develop functional requirements for an enterprisewide
solution that supports the department's resource management functions-
-including finance and procurement,[Footnote 34] TSA does not currently
have the strategic information needed to support effective acquisition
management decisions. Near-term improvements to TSA's acquisition
outcomes will be difficult until TSA has critical knowledge management
systems, such as financial and procurement information systems, that
allow decision makers to track spending and manage budgets and collect
detailed data on goods and services, suppliers, and spending patterns.
Despite the fact that TSA lacks detailed information on the goods and
services it purchases, some aggregate data is available. TSA is an
active participant in the Department of Homeland Security's strategic
sourcing program, which is using the aggregate data to develop a
strategy that will allow the department to leverage its buying for
particular commodities.
To manage on a day-to-day basis, inform acquisition decisions, and
oversee contracts, program and acquisition managers are relying on data
derived from informal, ad hoc systems--which are often out of date,
incomplete, inaccurate, or otherwise unreliable. TSA's Office of
Acquisition is temporarily relying on an Access database developed in-
house to track manually entered procurement information and make
acquisition decisions. However, the temporary database does not contain
enough information to analyze purchases or measure the acquisition
function's performance. For example, a TSA official told us that when a
congressional committee asked for a list of sole-source contracts, TSA
officials had to compile the list manually, by asking contracting
officers which contracts had been awarded on a sole-source basis,
because this information was not in TSA's database. Further, the
database does not automatically track the status of a procurement
request. Currently, program officials must contact the Office of
Acquisition to determine the progress being made on a procurement
request--relying on manually compiled paper files, which are frequently
incomplete or inaccurate, to track the status of a purchase. TSA is now
voluntarily reporting its contract actions to the Homeland Security
Contract Information System, which feeds into the Federal Procurement
Data System. This system can produce some aggregate data, but lacks
detailed information on goods and services purchased.
Until a departmentwide solution is developed, TSA's Office of
Acquisition is planning to adopt the Coast Guard's procurement
information system as a faster and more cost-efficient way of obtaining
the basic capability to track purchase requests and write
contracts.[Footnote 35] But TSA officials told us that, in its current
configuration, the system does not have all the components necessary to
enhance strategic acquisition decisions or enable effective evaluation
and assessment of acquisition outcomes.
An additional challenge to data collection and analysis is TSA's
financial management system. According to TSA officials, the agency's
current financial management system, run by the Department of
Transportation, does not provide the information needed to track
financial events, summarize financial information, or otherwise provide
critical acquisition-related information. For example, because program
offices do not have access to reliable financial information, program
budget officials cannot certify funds availability to approve a
procurement request. As a result, the Office of Finance must certify
funds availability centrally. According to finance officials, the
inability to track spending has also resulted in difficulties in
processing invoices and procurement requests.
Here too, while the department-level enterprise architecture effort is
proceeding, TSA is in the process of adopting the Coast Guard's
financial management system, which TSA finance officials say is more
user-friendly and provides better reporting capabilities and access
than the system TSA currently uses. It is unclear, however, whether the
Coast Guard's financial management software will facilitate TSA's
financial accountability activities. Independent auditors gave the
Department of Homeland Security's financial statement a qualified
balance sheet opinion based, for the most part, on problems with the
Coast Guard's financial statements. The Coast Guard was unable to
provide sufficient documentation to support certain financial
conditions prior to the completion of the audit.[Footnote 36]
Conclusions:
As a new agency, TSA was tasked to build an organization from the
ground up to meet a critical and demanding mandate. TSA worked
quickly to put a transportation security workforce in place, creating
basic organizational and acquisition infrastructures and subordinating
cost concerns and disciplined acquisition practices to meet deadlines.
With the challenging initial mandate fulfilled, TSA has begun to build
a permanent infrastructure. TSA now has the opportunity to build a
model acquisition function based on best practices. The opportunity may
be lost, however, if TSA fails to think strategically about the
practices it uses to carry out its acquisition function. By assessing
its existing organizational alignment, policies and processes, human
capital approaches, and knowledge and information systems against a
framework of best practices and in coordination with the Department of
Homeland Security, TSA can identify weaknesses and risk areas to target
for improvement.
Attention from TSA's leadership is needed to help TSA's Office of
Acquisition improve acquisition practices agencywide--focusing on all
elements key to a successful acquisition program. Ensuring a strong
workforce and developing well-built procurement and financial
management systems, coupled with a strong message of compliance with
policies and processes and supported by performance measures, would
demonstrate the agency's commitment to effective acquisition practices.
Recommendations for Executive Action:
To help ensure that TSA receives the goods and services it needs at the
best value to the government, we recommend that the Secretary of
Homeland Security direct the Administrator of the Transportation
Security Administration to take the following three actions:
* Elevate the Office of Acquisition to an appropriate level within TSA
to enable it to identify, analyze, prioritize, and coordinate
agencywide acquisition needs.
* Develop an adequate system of internal controls, performance
measures, and incentives to ensure that policies and processes for
ensuring efficient and effective acquisitions are implemented
appropriately.
* Direct the TSA Human Capital Office to do the following in
coordination with key offices in the Department of Homeland Security:
* assess TSA's current acquisition workforce (as defined by the
Department of Homeland Security) to determine the number, skills, and
competencies of the workforce;
* identify any gaps in the number, skills, and competencies of the
current acquisition workforce; and:
* develop strategies to address any gaps identified, including plans to
attract, retain, and train the workforce.
We also recommend that the Secretary of Homeland Security ensure that
its planned departmentwide knowledge management system provides TSA
sufficient data and analytic capability to:
* measure and analyze spending activities and performance--and thereby
highlight opportunities to reduce costs and improve service levels;
* support effective oversight of acquisitions; and:
* facilitate the timely reporting of the agency's acquisition
activities and its compliance with acquisition policies and processes.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, the Department of
Homeland Security generally concurred with our report and
recommendations and stated that our identification of areas for
improvement will help to develop the efficiency and effectiveness of
TSA's Office of Acquisition. In response to our recommendation to
elevate the position of the Office of Acquisition, the department
stated that the office has been elevated once before. We have
acknowledged this in our report and note that the office was elevated
before we began our review of TSA's acquisition function. Our review
found that even after the office was elevated, it remained at an
organizational level too low to oversee the acquisition process,
coordinate acquisition activities, and enforce acquisition policies
effectively. The department further noted that the Department of
Homeland Security's Chief Procurement Officer is on par with the Chief
Financial Officer and Chief Information Officer, stating that TSA will
consider this option along with others as it works toward improving the
efficiency and effectiveness of its acquisition program. Whichever
option is chosen, we maintain that the Office of Acquisition should be
elevated to an appropriate level within TSA to enable it to identify,
analyze, prioritize, and coordinate agencywide acquisition needs.
The department also commented that its Office of Human Resources has
only been functioning as a distinct office for a year and that after
focusing on establishing policies, processes, and effective contract
management services, it has hired a manager for planning. TSA has
committed to providing a more proactive approach to all human capital
planning.
The department also noted that it is moving towards the enterprisewide
implementation of Oracle Financials and Prism starting in October 2004,
stating that the knowledge management tools recommended in the draft
report will be available to provide TSA sufficient data and analytic
capability to evaluate its processes, performance, and spending. Our
report acknowledges that TSA will be using these Coast Guard
procurement and financial systems; however, we maintain that these
systems do not have all the components necessary to enhance strategic
acquisition decisions or enable effective evaluation and assessment of
acquisition outcomes.
As requested by your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of this letter. We will then send copies of this
report to interested congressional committees, the Secretary of
Homeland Security, and the Administrator of the Transportation Security
Administration. We will make copies available to others upon request.
In addition, the report will be available at no charge on the GAO Web
site at http://www.gao.gov.
If you or your staff have any questions regarding this report, please
call me at (202) 512-4841 or Blake Ainsworth, Assistant Director, at
(202) 512-4609. Other major contributors to this report were Lara
Laufer, Gordon Lusby, William Petrick, Shannon Simpson, Karen Sloan,
Adam Vodraska, and Kelli Ann Walther.
Signed by:
William T. Woods:
Director, Acquisition and Sourcing Management:
[End of section]
Appendix I: Scope and Methodology:
To review how well TSA is positioned to carry out its acquisition
function, we used GAO's previous best practices work as our criteria.
Our studies of best business practices show four interrelated elements-
-organizational alignment, policies and processes, human capital, and
information management--that help to promote good acquisition outcomes.
We used each of the elements to assess TSA's acquisition function.
To assess TSA's acquisition function across the four elements, we
interviewed senior agency officials, including the Chief Support
Systems Officer and a representative for the Acting Chief Operating
Officer. We also interviewed management and staff within the Office of
Acquisition regarding acquisition policy and processes, contracting
training, program support, and quality assurance.
To assess how well the organization is aligned to facilitate the
integration of the acquisition function throughout the agency, we
reviewed TSA organizational charts, process flowcharts, and
presentations by agency officials on key roles and responsibilities to
understand how the acquisition process is integrated into TSA's
organization. To assess leadership commitment to good acquisition, we
also reviewed TSA's strategic plan and investment review board meeting
agendas, minutes, and investment criteria. For an understanding of
organizational alignment and coordination, we interviewed the Chief
Support Systems Officer and a representative for the Acting Chief
Operating Officer. To assess how well acquisition activities are
coordinated and carried out throughout the agency, we interviewed
Assistant Administrators of all major Operations offices--Aviation
Operations, Maritime and Land Security, Security Intelligence, and
Operations Policy--and Mission Support offices--Finance and
Administration, Human Resources, Information Technology, and Workforce
Performance and Training.
To determine TSA's current policies and processes, we reviewed
applicable laws and policies that granted TSA the flexibility to use
and modify FAA's system, and we also interviewed a member of TSA's
Legal Counsel. We analyzed FAA's Acquisition Management System and
reviewed TSA's modified version of this guidance. To assess TSA's
progress towards developing and implementing policies and processes, we
reviewed TSA and Department of Homeland Security memoranda, directives,
internal newsletters, handbooks, quality assurance checklists, and
policy documents. To analyze TSA's effectiveness in implementing
policies and processes, we interviewed Assistant Administrators for
each of the Operations offices, as well as the Division Directors
within the Office of Acquisition for each of the contracting support
offices. Additionally, we interviewed management and staff within the
Office of Acquisition regarding acquisition policy and processes,
program support, and quality assurance.
To assess TSA's effectiveness in hiring, developing, and retaining its
acquisition workforce, we interviewed Office of Acquisition management
and staff, the Director and staff of the Workforce Performance and
Training Office, and two Assistant Administrators for Human Resources.
We also interviewed the Department of Homeland Security's Acquisition
Workforce Manager regarding the department's Acquisition Workforce Plan
and TSA's role in its development and implementation. We reviewed
documents and spoke with agency officials about acquisition workforce
training requirements, available courses, and means of tracking
acquisition training and other workforce data. In addition, we reviewed
studies on TSA's acquisition workforce size, one of which was conducted
by a contractor on behalf of TSA.
To help us assess how effectively the existing TSA information
management system enables the agency to track and manage its
acquisition process and facilitate strategic decision-making,
officials from the Office of Acquisitions, Assistant Administrators for
each of the Operations offices, and Division Directors within the
Office of Acquisition explained TSA's existing and planned information
systems and outlined their information needs. The same officials
explained the capabilities of the information management systems to
perform acquisition transactions in support of TSA's mission. Office of
Acquisition staff discussed their data entry and internal control
processes and shared supporting documentation to help us understand
their current systems. To assess the capabilities and limitations of
the financial management system and financial management processes, we
interviewed the Chief Financial Officer and Chief Technology Officer,
as well as additional Finance and Administration staff. To determine
how much knowledge and information is available and accessible to TSA
management, we reviewed the Office of Acquisition's procurement
database, and Strategic Sourcing operations documents. To assess TSA's
plans for future information systems, we reviewed documentation
describing the operations of TSA's systems, proposals for planned
initiatives, and summaries of existing challenges. A representative
from the office of Strategic Management & Analysis provided insight
about TSA's strategic direction.
To gain further insight into how TSA's infrastructure affects its
acquisitions, we judgmentally selected 40 contract files for review.
Using TSA's database of contracts, we identified four types of contract
actions from which to sample--new contracts, task and delivery orders,
blanket purchase agreements, and purchase orders. In each category, we
selected contracts based on award value. Nineteen of the 40 files were
not available or removed from the sample for the following reasons:
they were being closed out at a payment center, FAA awarded the
contract rather than TSA, it represented a duplicate contract, it had
already been reviewed by the Inspector General, they were actually
interagency agreements, or it was being managed by the Defense Contract
Management Agency. We reviewed the remaining 21 pre-and post-award
contract files to assess key aspects of the acquisition process at TSA-
-such as requirements development, market research and analysis,
acquisition planning, procurement method (including use of competitive
procedures and single-source contracting), and contract
administration.
We conducted our review from July 2003 through March 2004 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Key Activities, Roles, and Responsibilities of Key
Personnel Involved in TSA's Acquisition Process:
Figure 3 shows key activities performed during TSA's acquisition
process.
Figure 3: Key Activities in the Acquisition Process:
[See PDF for image]
[End of figure]
Table 1 identifies some of the major acquisition responsibilities
associated with the roles of key personnel.
Table 1: Key Personnel Involved in TSA's Acquisition Function:
Office: Program Office;
Role: Program Manager;
Responsibilities[A]: Leads the planning phase of the process.
Identifies the program needs and works through the investment review
process to justify funding for the acquisition. Together with the
Office of Budget, develops a budget for the acquisition. With
assistance from the Contracting Officer, conducts market research;
develops the technical requirements; and prepares a procurement
request package containing, among other items, a statement of work and
an acquisition plan. Obtains appropriate purchase request approvals.
After solicitation, serves on evaluation panels and selects source for
award. After award, the office is responsible for monitoring and
reporting contractor performance.
Office: Program Office;
Role: Contracting Officer's Technical Representative (member of the
program office);
Responsibilities[A]: In the planning phase, supports the program
manager in defining the requirement, conducting market research, and
developing the acquisition strategy; After award, serves as a liaison
between the government and contractor--monitors and reports on
contractor performance to determine whether contract deliverables and
contractor performance meet expectations.
Office: Program Office;
Role: Program Resource Manager (May be the Program Manager or
Contracting Officer's Technical Representative);
Responsibilities[A]: After award, ensures award documentation is
correctly entered into the financial system and collaborates with the
Office of Acquisition to ensure prompt payment of invoices; Throughout
the process, monitors funds available, spending against the contract,
financial status of the contract, funds obligated for acquisitions, and
status of commitments.
Office: Office of Acquisition;
Role: Chief Acquisition Officer;
Responsibilities[A]: Throughout the acquisition cycle, provides
leadership, vision, and direction to ensure the integrity of the
acquisition function by developing effective relationships with key
acquisition stakeholders. Also serves as the principle interface with
the Department of Homeland Security and other agencies' senior
acquisition executives; In the planning phase, participates in
investment review board decisions for TSA and the Department of
Homeland Security.
Office: Office of Acquisition;
Role: Contracting Officer;
Responsibilities[A]: Collaborates with program officials to advise on
acquisition strategies and alternatives, and participates in
acquisition planning; Participates in market research with the program
office; Ensures that sufficient funds are available for the obligation;
Prepares the solicitation document; Publicizes acquisitions; Issues
and amends solicitations; Conducts negotiations with offerors, and
awards and signs contracts for the government; Performs contract
administration, including delegating certain functions to the assigned
Contracting Officer's Technical Representative; Assists in monitoring
contractor performance where applicable; Terminates contracts.
Office: Office of Finance & Administration;
Role: Chief Financial Officer;
Responsibilities[A]: Participates in investment review decisions to
ensure that program plans are consistent with the budget.
Office: Office of Finance & Administration;
Role: Office of Budget;
Responsibilities[A]: In the planning phase, certifies the availability
of funds for procurement requests. (This is normally the responsibility
of the program office; however, because timely budget information is
not readily accessible from the financial system, the Office of Budget
is performing this function.).
Office: Chief Counsel;
Role: Counsel;
Responsibilities[A]: Primarily before award, responsible for
interpreting and providing legal advice related to applicable
acquisition laws and rules, and providing assistance regarding
contract clauses and justifications for exceptions to applicable rules;
Throughout the process, provides necessary legal assistance.
Office: Information Technology Office;
Role: Chief Technology Officer;
Technology Specialists;
Responsibilities[A]: Before award of goods or services related to
information technology, helps the program office to determine
requirements, conduct market research, assess acquisition alternatives,
and prepare statements of work and other pieces of the solicitation
document; After award, may also assist in monitoring deliverables and
contractor performance. For information technology systems, also
develops, maintains, and facilitates implementation of information
technology.
Office: Information Technology Office;
Small Business Program Manager;
Responsibilities[A]: In the planning and solicitation phases, reviews
and approves purchase requests over $200,000 to facilitate small
business acquisition initiatives that enable the agency to accomplish
socioeconomic goals.
Office: Investment Review Board;
Responsibilities[A]: Reviews and authorizes requests for funding.
Source: GAO.
[A] This is not an all-inclusive list of responsibilities for the role
as indicated.
[End of table]
[End of section]
Appendix III: Inspector General Testimony and Reports Reviewed:
Table 2 shows the Department of Transportation Inspector General
testimony and reports reviewed to identify issues associated with the
contracting process at the TSA.
Table 2: Department of Transportation Audit Reports on Contracting
Issues at TSA:
Report number: CC-2002-098;
Title: Key Issues Concerning Implementation of the Aviation and
Transportation Security Act (Feb. 5, 2002).
Report number: CC-2002-124;
Title: Key Budget Issues Facing the Transportation Security
Administration (Apr. 17, 2002).
Report number: CC-2002-180;
Title: Key Challenges Facing the Transportation Security
Administration (Jun. 20, 2002).
Report number: CC-2002-197;
Title: Progress in Implementing Provisions of the Aviation and
Transportation Security Act (Jul. 23, 2002).
Report number: CC-2002-203;
Title: Progress in Implementing Provisions of the Aviation and
Transportation Security Act (Aug. 7, 2002).
Report number: CC-2003-066;
Title: Aviation Security Costs, Transportation Security Administration
(Feb. 5, 2003).
Report number: FI-2003-025;
Title: Oversight of TSA Security Screener Contracts, TSA (Feb. 28,
2003).
Report number: PT-2003-012;
Title: Top Management Challenges (Jan. 21, 2003).
Report number: QC-2003-016;
Title: Quality Control Review of TSA's Audited FY2002 Financial
Statements (Jan. 27, 2003).
Source: GAO:
[End of table]
Table 3 shows the Department of Homeland Security Inspector General
reports reviewed to identify problems associated with the contracting
process at the Transportation Security Administration.
Table 3: Department of Homeland Security Audit Reports Reviewed That
Include Contracting Issues at TSA:
Report number: None;
Title: Major Management Challenges Facing the Department of Homeland
Security (March 2003).
Report number: None;
Title: Major Management Challenges Facing the Department of Homeland
Security (Dec. 31, 2003).
Report number: OIG-04-08;
Title: A Review of Background Checks for Federal Passenger and Baggage
Screeners at Airports (January 2004).
Report number: OIG-04-21;
Title: Review of the Status of Department of Homeland Security Efforts
to Address Its Major Management Challenges (March 2004).
Source: GAO.
[End of table]
[End of section]
Appendix IV: Contracts Reviewed:
Vendor: Covenant Aviation Security, LLC;
Requirement: Gate, checkpoint, and baggage screener services;
Contract award amount: $71,270,476;
Procurement method: Competed.
Vendor: Cooperative Personnel Services;
Requirement: Human resource services and supplies;
Contract award amount: $553,579,473;
Procurement method: Competed.
Vendor: McNeil Technologies, Inc;
Requirement: Gate, checkpoint, and baggage screener services;
Contract award amount: $7,911,363;
Procurement method: Competed.
Vendor: International Total Services, SMS;
Requirement: Gate, checkpoint, and baggage screener services;
Contract award amount: $29,297,371;
Procurement method: Competed.
Vendor: Garrett Metal Detectors, Inc;
Requirement: Metal detection equipment;
Contract award amount: Not priced, various unit prices recorded;
Procurement method: Federal Supply Schedule. Used qualified vendors
list[A].
Vendor: Accenture, LLP;
Requirement: Human resource services and supplies;
Contract award amount: $214,799,495;
Procurement method: Competed.
Vendor: Deloitte Consulting;
Requirement: Development and support of TSA's eGov operating platform;
Contract award amount: $205,000,000;
Procurement method: Federal Supply Schedule. 4 schedule vendors
considered.
Vendor: L3 Communications Corporation;
Requirement: Explosive detection equipment;
Contract award amount: $352,000,000;
Procurement method: Used Qualified Vendors List from FAA.
Vendor: Unisys Corporation;
Requirement: Security technology systems integration;
Contract award amount: $17,056,153;
Procurement method: Used existing government contract.
Vendor: Grant Thornton, LLP;
Requirement: Accounting services;
Contract award amount: $962,674;
Procurement method: Federal Supply Schedule. 3 schedule vendors
considered.
Vendor: Global Distributors, Inc;
Requirement: Office components-- filing cabinets and installation;
Contract award amount: $22,365;
Procurement method: Federal Supply Schedule.
Vendor: Dozier Technologies;
Requirement: Parts and labor for installation of office furniture;
Contract award amount: $1,750,000;
Procurement method: Noncompetitive award under SBA's 8(a) program[B].
Vendor: Maximus, Inc;
Requirement: Technology evaluation, analysis, and report of test
results for identification credentials;
Contract award amount: $3,776,377;
Procurement method: Existing multiple award contract. Evaluated 3 prime
vendors.
Vendor: Regus Business Center Corporation;
Requirement: Temporary use of workstations and support services;
Contract award amount: $1,260,000;
Procurement method: Limited competition due to urgent and compelling
need. Contacted 3 vendors and analyzed quotes.
Vendor: ManTech, MSM Security Services, Inc;
Requirement: Background investigations and reports;
Contract award amount: $1,579,805;
Procurement method: Federal Supply Schedule. Contacted 4 schedule
vendors. Received 1 response.
Vendor: Planet Associates, Inc;
Requirement: Engineering and technical support services to develop an
interim TSA property and asset management database;
Contract award amount: $499,954;
Procurement method: Single Source--cited "logical follow-on" as
rational basis.
Vendor: Kimball International;
Requirement: Parts and labor for modification of existing furniture
and installation of new furniture;
Contract award amount: $462,039;
Procurement method: Single Source--cited "only one responsible vendor"
as rational basis. Need to integrate with furniture systems already
installed at worksite, and furniture components are not interchangeable
among manufacturers.
Vendor: Unicor Federal Prison Industries, Inc;
Requirement: Chairs and installation;
Contract award amount: $308,000;
Procurement method: Required government source of supply[C].
Vendor: Accenture, LLP;
Requirement: Human resource services and supplies--reduce work backlogs
that remained from the previous vendor;
Contract award amount: $20,754,095;
Procurement method: Single Source--cited "only one responsible source"
as rational basis. Vendor is only vendor that can eliminate backlog and
format data to conform to current database without additional delay.
Vendor: Wackenhut Corporation;
Requirement: Baggage screening services at selected airports;
Contract award amount: Undefinitized at $106,568,616;
Procurement method: Not awarded by TSA; awarded by FAA and later taken
over by TSA. GAO did not review FAA award.
Vendor: Unisys Corporation;
Requirement: Development and maintenance of IT infrastructure;
Contract award amount: $23,300,000;
Procurement method: Used existing government contract.
Source: GAO.
[A] Orders placed against a General Services Administration multiple
award schedule that use the required ordering procedures are considered
to be issued using full and open competition. The policy of the FAA
Acquisition Management System used by TSA permits placing orders
against General Services Administration schedules for recurring
products and services when it is determined to be in the best interest
of the agency.
[B] Section 8(a) of the Small Business Act (15 U.S.C. § 637(a))
established a program that authorizes the Small Business Administration
to enter into all types of contracts with other agencies and let
subcontracts for performing those contracts to firms eligible for
program participation. These subcontractors are referred to as "8(a)
contractors." The purpose of the 8(a) program is to assist eligible
small disadvantaged business concerns to compete in the economy through
business development. The policy of the FAA Acquisition Management
System used by TSA allows individual procurements to be
noncompetitively awarded to 8(a) vendors when the anticipated total
value of the procurement does not exceed a certain threshold
($3 million or, if assigned an industry classification, $5 million).
[C] The policy of the FAA Acquisition Management System used by TSA is
to continue to acquire products and services from required government
supply sources, such as Federal Prison Industries.
[End of table]
[End of section]
Appendix V: Comments from the Department of Homeland Security:
[See PDF for image]
[End of figure]
[End of section]
FOOTNOTES
[1] This figure reflects contract awards through fiscal year 2003.
[2] See appendix III for a list of Inspector General reports on TSA
acquisitions.
[3] The Aviation and Transportation Security Act (Pub. L. No. 107-71,
Nov. 19, 2001) mandated that the Under Secretary of Transportation for
Security (1) deploy at all airports in the United States where
screening is required a sufficient number of personnel to conduct
screening of all passengers and property no later than 1 year from
enactment of the act, and (2) ensure that airports have sufficient
explosive detection systems (or alternative means) to screen all
checked baggage no later than December 31, 2002. The Homeland Security
Act of 2002 (Pub. L. No. 107-296) authorized an extension of the
deadline for explosive detection systems in certain circumstances until
December 31, 2003.
[4] Pub. L. No. 107-71.
[5] The Department of Homeland Security was established in November
2002 under the Homeland Security Act (Pub. L. No. 107-296) to align and
coordinate the nation's efforts to secure the homeland from terrorism.
[6] This requirement is codified at 49 U.S.C. § 114(o) (Supp. I 2001).
[7] The Federal Acquisition Regulation was established to provide
uniform acquisition policies and procedures across the executive branch
of the U.S. Government. The acquisition laws from which FAA is exempt
are listed at 49 U.S.C. § 40110(d)(2) (2000). This statute also exempts
FAA from the FAR, which implements these laws.
[8] See appendix III for a list of inspector general testimony and
reports on TSA acquisitions.
[9] Department of Homeland Security, Inspector General, A Review of
Background Checks for Federal Passenger and Baggage Screeners at
Airports, OIG-04-08 (January 2004).
[10] Department of Homeland Security, Inspector General, Review of the
Status of Department of Homeland Security Efforts to Address Its Major
Management Challenges, OIG-04-21 (March 2004).
[11] Department of Homeland Security, Inspector General, Major
Management Challenges Facing the Department of Homeland Security
(December 31, 2003).
[12] U.S. General Accounting Office, Best Practices: Taking a Strategic
Approach Could Improve DOD's Acquisition of Services, GAO-02-230
(Washington, D.C.: Jan. 18, 2002).
[13] Services Acquisition Reform Act of 2003, tit. XIV of the National
Defense Authorization Act for fiscal year 2004, Pub. L. No. 108-136, §
1421, 117 Stat. 1663, 1666-67 (2003). TSA is not required to appoint a
chief acquisition officer.
[14] TSA officials provided this figure but did not provide additional
verification.
[15] The director of the Office of Acquisition's position was elevated
to Deputy Assistant Administrator for Acquisition before we began our
audit.
[16] Policies provide guidance on how the procurement function should
be managed, while processes outline the actions to be taken to
implement the policies.
[17] We were not able to assess all of the policies because of time
constraints and the fact that some were still in draft at the time of
our review.
[18] Performance-based contracts are intended to ensure that required
performance quality levels are achieved and that total payment is
related to the degree that services performed meet contract standards.
Performance-based contracts generally specify the objective to be
achieved and allow the contractor to determine the best way to meet the
objective.
[19] In a cost-reimbursement contract, the government establishes a
cost ceiling and assumes the cost risk, since the contractor will
receive reimbursement for all reasonable, allocable, and allowable
incurred costs.
[20] Time and materials contracts provide for the acquisition of
supplies or of the actual services on the basis of direct labor hours
at specified fixed hourly rates and materials at cost, plus handling
costs where appropriate.
[21] In comparison, the Federal Acquisition Regulation, applicable to
most other executive agencies, permits the use of other than full and
open competition only for certain specified circumstances, which are:
that only one responsible source and no other supplies or services will
satisfy agency requirements; unusual and compelling urgency; industrial
mobilization, engineering, developmental, or research capability, or
expert services; international agreement; authorized or required by
statute; national security; or public interest. The regulation also
establishes the required content for each justification and requires
approval of the justification at a level above the contracting officer
for contracts above a certain dollar threshold.
[22] One file was for a contract awarded by FAA, not TSA--and was thus
not included in our review.
[23] In December 2003, we issued a report describing principles of
human capital planning that contribute to effective strategic workforce
plans. The five key principles strategic workforce planning should
address include agencywide involvement in implementation of the plan;
determination of critical skills and competencies; development of
strategies to address gaps; building the capability needed to address
administrative, educational, and other requirements; and monitoring and
evaluating the agency's progress towards its human capital goals. U.S.
General Accounting Office, Human Capital: Key Principles for Effective
Strategic Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 11,
2003).
[24] U.S. General Accounting Office, High Risk Series: Strategic Human
Capital Management, GAO-03-120 (Washington, D.C.: Jan, 2003).
[25] U.S. General Accounting Office, A Model of Strategic Human Capital
Management, GAO-02-373SP (Washington, D.C.: Mar. 15, 2002).
[26] Certification refers to the formal process through which the
Department of Homeland Security recognizes an individual for meeting
the standards or achieving the competencies in an acquisition career
field.
[27] The Department of Homeland Security's draft management directive
lists the following career fields as part of the acquisition workforce:
Business, Cost-Estimating, and Financial Management; Contracting;
Facilities Engineering; Industrial and/or Contract Property
Management; Information Technology; Production, Quality, and
Manufacturing; Program Management; and Purchasing and Procurement
Technician.
[28] This was the total value of contracts awarded in fiscal year 2002.
[29] The TSA benchmarking study cited three benchmarks--one developed
by Acquisition Solutions, Inc; another adopted by the Procurement
Executives Council; and a third that was based on other civilian
agencies' contract obligations and staffing levels. These benchmarks
took into consideration whether the contracting function was
centralized, but did not take into consideration other factors, such as
the types of contracts used.
[30] Although the agency did not provide funding for performance awards
in fiscal year 2003, human resources officials stated that in fiscal
year 2004 offices do have funds for performance awards. Agency
officials told us that no funding had been made available for other
retention incentives.
[31] U.S. General Accounting Office, Executive Guide: Improving Mission
Performance Through Strategic Information Management and Technology,
GAO/AIMD-94-115 (Washington, D.C.: May 1994).
[32] U.S. General Accounting Office, Electronic Government: Federal
Initiatives Are Evolving Rapidly But They Face Significant Challenges,
GAO/T-AIMD/GGD-00-179 (Washington, D.C.: May 2000).
[33] 40 U.S.C. § 11313(5) (formerly 40 U.S.C. § 1423(5)), as enacted
and recodified by Pub. L. No. 107-217. This requirement was established
by the Clinger-Cohen Act of 1996.
[34] These efforts are part of a larger effort by the Department of
Homeland Security to develop an enterprise architecture that is
intended to provide a roadmap for reforming mission operations of
business functions and implementing standardized, nonduplicative,
supporting information systems.
[35] TSA's Office of Strategic Management and Analysis has proposed a
"business value analysis" study to identify best technology solutions
to solve organizational business priorities. The study will consolidate
the information requirements of the various organizational units within
TSA so that these requirements can be prioritized based on shared,
strategic, and agencywide business needs. However, TSA has not yet
approved this plan.
[36] The auditors noted that it is "not uncommon for a large
established agency such as the U.S. Coast Guard to require additional
time to get its processes and systems in place to facilitate a
financial statement audit." The auditors also reported that, prior to
their audit, the Coast Guard's financial statements had never been
audited on a stand-alone basis, nor had they been audited at the level
of detail required by the Department of Homeland Security. U.S.
Department of Homeland Security, Independent Auditors Report No. OIG-
04-10.
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