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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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