Department of Homeland Insecurity

Launched with great fanfare in the wake of the September 11, 2001 attacks upon the United States, the U. S. Department of Homeland Security has become something of an inside joke in our nation’s capital. Designed to address the weaknesses made apparent by the terrorist assault, the new federal agency was designed to address problems such as border security and disaster preparedness.

The ongoing waves of border crossings by illegal aliens and the federal government’s haphazard performance in the wake of Hurricane Katrina left Department officials scrambling to explain themselves and not very effectively. Meanwhile, tales of Gucci handbags purchased in mass quantities by the agency led a renegade congressman or two to take to the floor ridiculing the agency.

Somewhat surprisingly, given the agency’s Orwellian-sounding title, the liberal press has largely given the department a pass. The lack of scrutiny is even more surprising as the new law enforcement bureau’s woes promise no end of material.

The 2008 Presidential Budget proposes to increase funding for the Department of Homeland security by 8%, appropriating $46.4 billion for fiscal year 2008. Given the current financial disorganization within the department, the wisdom of pouring more resources into such a high-risk environment seems unclear. The DHS has repeatedly demonstrated problems with both tracking and assessing its own expenditures, and has recently shown only moderate progress.

In July 2006, Michael Chertoff, Secretary of Homeland Security, reiterated this goal when he released his 6-point program to improve the DHS. Among other initiatives, this program placed high priority on improving DHS financial management, appropriations, and human resources, as well as realigning the DHS organizational structure in order to “maximize mission performance.” A year later, the DHS is still plagued with high-risk financial inconsistencies and staffing shortages. The Secretary has not seemed particularly effusive about devoting the new funds toward increased oversight, however, and has only assigned $22.6 million of the $3.44 billion increase toward increasing oversight and strengthening the Chief Procurement Officer’s (CPO) office.

The Government Accountability Office criticized the DHS for its lack of oversight and self-analysis in its June 28, 2007 report, claiming that the DHS “continues to lack clear accountability for the outcomes of acquisition dollars spent.” Since large-scale purchase decisions are shared among agencies, the responsibility of each agency to the expenditure remains somewhat vague.

This is not to say, however, that the Department of Homeland Security is not working to improve its financial management- it just hasn’t shown much progress. The department inherited 30 reportable conditions, 18 of which posed a “more than remote” chance that inaccuracies will not be discovered or corrected. The DHS has successfully reduced this number to 12 reportable conditions, 10 of which contain unacceptable levels of financial risk. The DHS developed a new investment review process in 2003, but it did not include critical reviews and has been under revision since 2005. Similarly, the Department of Homeland Security spent $52 million on eMerge, an integrated financial management system, yet chose to let the contract lapse when it found that the software upgrade would cost the department a total $229 million. The discontinuation of eMerge may have been a prudent business move, and reduced potential government waste, but GAO officials assert that the DHS “has made little progress since that time and as a result has missed an invaluable opportunity to address existing financial management problems.”

Of greater concern is the Department’s inability—or reluctance—to supply documentation of its expenses. DHS officials did not supply GAO auditors with paperwork confirming the $52 million eMerge expenditure. The Transportation Security Administration was also unable to provide the GAO with sufficient evidence of its fiscal year 2005 and 2006 transactions and account balances, and an audit of the TSA revealed “broad based” financial weaknesses. Yet despite TSA’s poor financial performance, the DHS intends to use TSA procedures as a shared baseline for the rest of the department. Adopting this program as a baseline could spread TSA financial weaknesses to other areas.

Staffing shortages exacerbate this already tenuous situation, as oversight personnel can be shifted into procurement duties. In the aftermath of hurricanes Katrina and Rita, CPO staff temporarily left their oversight positions in order to provide additional support to FEMA. In addition, A recent congressional report announced that one-quarter of the top level openings at the DHS are still vacant. While DHS officials argue that these numbers are inflated by the current expansion in staff positions, other non-leadership areas have been experiencing staff shortages for a considerable time. The DHS plans to use the some of the 8% budget increase to expand their personnel, especially along the border.

Like other government organs, the DHS has become reliant on outside contractors to fill key financial management positions normally reserved for internal staff. It devoted $6.5 billion for interagency contracts in 2005, creating ambiguity over which agency was responsible for contract expenses. Part of the original rationale for the DHS is that it would oversee and coordinate the activities of existing federal agencies such as the Immigration and Nationalization Service and the Customs Bureau.
Extensive contracting already carries the risk of government waste, dead-end projects such as eMerge, and security issues. Combine this with significant departmental deficiencies in determining “fund balance with treasury, budgetary accounting, and intergovernmental balances” and the department is faced with a high-risk situation where there is a significant chance financial discrepancies will go unnoticed. If the DHS does receive a funding increase, a larger proportion may be needed to strengthen oversight functions within the department. Otherwise, the expected wide-scale hiring of new personnel may pose a distinct security risk.

Bethany Stotts is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.