Following a year of analyses and reviews of how it goes about buying capital assets and services, the Department of Homeland Security (DHS) last November issued new guidance aimed at instituting a more rigorous approach to how it does roughly $15 billion annually in acquisitions from cradle to grave.
The new directive outlines formal procedures that all emerging requirements and potential programs must go through at several Acquisition Decision Events (ADE) as well as what objectives must be met at those instances. Acquisition Directive 102-01 is dated Nov. 5, 2008 and is marked interim.
“One of the things that it does is it links in the acquisition process to the requirements process and the budgeting process,” Rick Gunderson, acting chief procurement officer (CPO) at DHS, tells TR2 this month. “Early on you didn’t necessarily have all of these things working in tandem. People would say, ‘I have a need,’ and then they would go out and buy it. And we really didn’t have a process in place to say that need is validated.”
Since then DHS has been striving for a “better balance to doing the mission and how we do business,” he said.
Many of the steps in the new process are similar or the same was to what existed in the old investment review process. For example, DHS has had Acquisition Program Baselines (APB) in effect to measure performance such as cost, schedule and capability. But now these program documents will be used to help put some bite into the process.
“This is a document coming out of the Under Secretary for Management saying you will have these or your programs aren’t going forward,” Gunderson says. “It’s instilling more rigor and emphasis where it needs to be.”
Another key piece to the acquisition process is life cycle cost estimates. These aren’t new but weren’t required or widespread previously, Gunderson says. These will be used to “make sure you have a program that you can resource down the line,” he says.
The new acquisition directive supersedes the previous investment review policy, MD 1400. Gunderson says under the old acquisition review process there were oversight meetings being held by DHS headquarters for some contracts and programs but the process in general lacked discipline.
“There were meetings,” he says. “Were they all documented? No.”
Planning for the new directive got underway in November 2007 with the creation of the Acquisition Program Management Division (APMD) within the CPO office by Deputy DHS Secretary Paul Schneider. The APMD reviewed the then current acquisition process, looking for ways to strengthen it, and then with members of the DHS-wide acquisition community created the new process embodied in the 102-01 Directive. In addition, the APMD did a series of “quick looks and deep dives” of major programs for the DHS leadership to alert for any “red flags” that needed to be addressed.
Many of these policy changes began to go in effect last summer, Gunderson said.
Acquisition Milestones
There are several formal steps outlined in the new directive specifying what needs to be accomplished at each milestone, or ADE, in the acquisition process. The decision points are where an Acquisition Review Board (ARB) focuses on the issue at hand. Depending on the size of the acquisition, which is determined by the estimated life-cycle costs, the Acquisition Decision Authority (ADA) can be the deputy secretary, the under secretary for management, or the Component Acquisition Executive (CAE), which is the designated senior official charged with ensuring compliance with the directive at his or her agency.
Prior to ADE 0 is when potential capability needs are identified by a component agency and a Preliminary Mission Needs Statement (P-MNS) may be started.
At ADE 0 the P-MNS is reviewed by both the APMD and the Joint Requirements Council (JRC), providing a basis for a possible MNS as well to request initial funding. That need must be approved by the JRC prior to the next step, ADE 1.
At ADE 1, the ground rules are issued for reviewing alternatives to meet the mission need and to designate a qualified program manager. Also at this point the MNS is validated, an acquisition plan is formulated, the Operational Requirements Document (ORD) is developed, preliminary life-cycle cost estimates for the preferred alternative are developed and the ARB ensures that there are appropriate funding and staffing resources going forward.
Next is ADE 2A and 2B. At ADE 2A is where approves a program based on a review of alternatives, a preliminary APB, ORD and life-cycle cost estimates.
During this phase of the acquisition review process an initial test and evaluation master plan is developed for capital investment acquisitions.
At ADE 2B decisions can be made formally or virtually, although either requires an acquisition decision memorandum, to authorize any supporting projects for the overall acquisition. The ADE 2A and 2B events can be consolidated in one decision. Any low rate production decisions are also accomplished at this step.
The final phase of the review process is ADE 3, where the acquisition decision authority can approve production, deployment and support.
As programs move through the various acquisition phases, the APMD, which is led by John Higbee, ensures that the programs and their component agencies are prepared for the ARB, Gunderson says.
DHS programs are divided into three levels based on their estimated life-cycle costs. Level 1 programs are at or above $1 billion and are ultimately overseen by either the deputy secretary or under secretary for management as the ADA. There are currently about 40 Level 1 programs within DHS.
Level 2 programs are between $300 million and $1 billion and are normally overseen by the under secretary for management, the deputy under secretary for management, and possibly the CAE if delegated to that level. Level 2 programs delegated to the CAE will be mature ones, Gunderson said.
Level 3 programs are less than $300 million and are overseen by the CAE.
Going back to last year there have been 17 ARB meetings, Gunderson says. The program level thresholds were determined based on the manageable throughput at the headquarters level, he says.
Just as critical as the processes and the policy are the people behind these, Gunderson says. When DHS was stood up in March 2003 there were about 600 contracting personnel across the 22 agencies that came together. Now there are over 1,000 and over the next two years that number will climb to between 1,200 and 1,300.
The lack of manpower in the acquisition functions has been previously cited by department officials as a significant reason for some of its struggles in overseeing programs. Gunderson says his office continues to work this issue, noting that one branch of his office is developing standards and certification criteria for the various career fields in acquisition.