Figures Figure 1: FPS's Location within DHS's Organizational Structure 5 Figure 2: FPS Officers Engaged in Biological and Chemical Weapons Response Training 9 Figure 3: FPS Officers Assisting with Crowd Control 11 Figure 4: Key Practices for Successful Mergers and Organizational Transformations 23 This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to GAO Accountability Integrity Reliability United States Government Accountability Office July 14, 2004 The Honorable Tom Davis Chairman Committee on Government Reform Dear Mr. Chairman: Attention to the physical security of federal facilities has increased since the 1995 bombing of the Alfred P. Murrah Federal Building in Oklahoma City. The September 11, 2001, terrorist attacks further heightened this concern and led to the consolidation of 22 agencies into the Department of Homeland Security (DHS). This report responds to your request for information on the transfer of the Federal Protective Service (FPS) from the General Services Administration (GSA) to DHS, where FPS is now part of the Border and Transportation Security Directorate's (BTS) component known as Immigration and Customs Enforcement (ICE). In creating DHS, the government's efforts to prevent, protect against, and respond to potential terrorism were centralized. The establishment of a new federal department is an enormous undertaking that, in the case of DHS, comes with significant risk, which is why we designated the implementation and transformation of DHS as a high-risk area in January 2003. In addition, we also designated federal real property as a high-risk area affecting several agencies, due in part to the major challenge of protecting federal real property from terrorism. Our objective was to determine what challenges, if any, FPS faces now that it has been transferred from GSA to DHS. To do this work, we collected and analyzed agency documents about the transfer. This included policies and procedures, information about the organizational structure, and information on other issues related to the transfer, such as funding. We assessed the reliability of the data we used and found that they were sufficiently reliable for the purposes of this report. We also interviewed DHS, FPS, and GSA officials responsible for, and directly affected by, the transfer. More information on our scope and methodology appears in appendix I. We conducted our work in Washington, D.C., between September 2003 and May 2004 in accordance with generally accepted government auditing standards. Results in Brief FPS faces a number of significant challenges now that it has been transferred from GSA to DHS. These relate to its expanding mission and increased responsibility, unresolved issues about how it will be funded in the future, and the transfer of FPS mission-support functions to DHS. • FPS has responsibility for securing approximately 8,800 GSA owned or occupied federal facilities and plans to take on responsibility for, according to FPS, approximately 2,500 additional DHS facilities. FPS officials also discussed the possibility of expanding FPS's responsibilities to include protection for facilities where GSA had previously delegated authority to tenant agencies-FPS identified 20 agencies with delegated authority, including the Departments of Defense, Interior, and State. DHS has also expanded FPS's mission to include other functions related to homeland security, such as providing backup to other DHS law enforcement units in the field in efforts to apprehend foreign nationals suspected of illegal activity and assisting with crowd control at major protests. Despite these changes and the major transformation FPS is facing, FPS does not have an overall strategy for how it will carry out its expanding mission, as well as meet other challenges it faces. For this reason, we are recommending that FPS develop such a strategy for its own transformation. In commenting on this report, DHS concurred with our recommendation to develop a transformation strategy for FPS. DHS said that it was developing a strategic plan for FPS that would address our recommendation. Although this plan was not issued when we finalized this report, it is important to note that a transformation strategy goes beyond what is typically contained in a strategic plan. Specifically, a transformation strategy would include overall goals for the transformation with specific action plans and milestones that would allow FPS to track critical phases and essential activities. • In addition to these formidable mission-related challenges, there are unresolved issues related to funding FPS's operations. When FPS was part of GSA, tenant agencies' rental payments included security fees that GSA used to fund FPS operations. Now that FPS is part of DHS, determining the appropriate funding approach for FPS has centered on whether GSA will continue to bill agencies for FPS's services, which DHS supports, or whether FPS should take on this function, as GSA would prefer. Comments from DHS and GSA showed continued disagreement on this issue. As such, we have added a recommendation to DHS aimed at resolving the disagreement. Also, GSA has historically Background • covered a gap that has existed between the cost of protection provided by FPS and the security fees collected from tenant agencies-GSA said that this gap was $139 million in fiscal year 2003. In commenting on this report, DHS and GSA also noted that, for fiscal year 2005, the President's budget includes an increase in the FPS security rate that, if enacted, will eliminate the shortfall between FPS collections and the cost of security. Also related to funding, we found that FPS's involvement in homeland security activities not directly related to facility protection is inconsistent with a requirement in the Homeland Security Act of 2002 that FPS funding from agency rents and fees be used solely for the protection of government buildings and grounds. DHS said that FPS's involvement in activities not directly related to facility protection did not affect its primary mission. However, this is still a concern because of the specific legal requirement that agency rents and fees be used solely for facility protection. We are recommending that the Secretary of Homeland Security take immediate steps to ensure that funds collected from agency rents and fees are used in the future solely for the protection of government buildings and grounds. DHS concurred with this recommendation but had concerns about our interpretation of the statute, which are discussed in more detail in the report. Another challenge facing FPS is its reliance on GSA for mission-support functions such as payroll, travel reimbursement, and contracting support. DHS and GSA did not meet an original goal to transfer these functions by the end of fiscal year 2003. According to DHS, FPS, and GSA officials, the delay was caused by issues related to how DHS systems would be integrated, DHS's focus on integrating larger departmental components, and difficulties extracting FPS activities from GSA systems. DHS officials said that they intend to have FPS fully integrated by the end of fiscal year 2004. However, assuming these functions prematurely could affect FPS's ability to accomplish its mission. For example, FPS relies heavily on contract guard services, but according to DHS officials, is dependent on GSA's contracting management software for tracking costs and managing vendor payments. As such, we are recommending that the Secretary of Homeland Security ensure that DHS is prepared to effectively integrate FPS mission support before these functions are transferred from GSA. DHS concurred with this recommendation. FPS was established in 1971 as the uniformed protection force of GSA government-occupied facilities. FPS has authority, among other things, to |