GAO sees rising risks in U.S. Visit

A new report warns that the government's planned effort to overhaul its border controls could easily run over budget and suffer lengthy delays, but that isn't scaring off contractors eyeing the big-ticket project.The General Accounting Office last month red-flagged the U.S. Visit project, saying its huge size and complexity, aggressive schedule and projected cost make it "a very risky endeavor." Congress has given the U.S. Visitor and Immigration Status Indication Technology System a complex and ambitious mission: Track the entry and exit of foreign nationals to the country, and protect against terrorist attacks, illegal immigration and drug trafficking without disrupting the flow of people or trade goods across U.S. borders.The GAO also said the Homeland Security Department, which oversees the project, is a new organization that doesn't yet have all the personnel and processes in place to manage such a large venture."What we saw, what we wanted to get on the record, was to make abundantly clear to everybody that this is fraught with risk. Get on top of it now, or face the consequences," said Randall Hite, GAO's director of information technology architecture and systems issues, who directed the report. In the report, "Homeland Security: Risks Facing Key Border and Transportation Security Program Need to Be Addressed," GAO said projected costs range from $7.2 billion to more than $20 billion over 10 years. The congressional watchdog agency delivered the report Sept. 19 to the Senate and House Appropriations subcommittees on homeland security.Congress requires the new system to use biometrics and other new technologies to confirm individuals' identities.And lawmakers have not only laid out an aggressive timeframe for completing U.S. Visit, they've also promised to keep a tight hold on funding to ensure that project milestones are achieved. Despite the risks, Lockheed Martin Corp. of Bethesda, Md., Computer Sciences Corp. of El Segundo, Calif., and Accenture Ltd. of Hamilton, Bermuda, have each assembled teams to pursue U.S. Visit."Concern over risk is often trumped by the potential revenue. These major programs still bring the big contractors out," said Chip Mather of Acquisition Solutions Inc., Chantilly, Va. Although the request for proposals for U.S. Visit is not due for release until November, lawmakers requested the GAO study to head off problems that agencies have experienced with other large information technology projects, Hite said."Congress basically said, 'We've been through this with the IRS a couple of times, and haven't been successful,' " so they wanted to be proactive in their oversight this time, he said.Congress also might have been thinking of the Navy-Marine Corps Intranet, awarded to Electronic Data Systems Corp., Plano, Texas, three years ago. Wall Street analysts have lowered their ratings of EDS stock in response to problems the company has encountered in the program. EDS has found NMCI to be much more complex than expected, and has had to put more money upfront to get the deal going. Congress has, at times, held up funding for the program pending evidence of success.Analyst Cynthia Houlton, who has followed the fortunes of EDS as NMCI progresses, said she will watch the effect of U.S. Visit on the winning bidder. The prime contractor likely will get an immediate boost in its share price, she said. But if the project encounters any difficulties, the company's stock probably will take a beating."What often occurs in these very, very large procurements is that what happens in year one is so very different in year five," said Houlton, a senior analyst with RBC Capital Markets in New York. "There are delays and overly optimistic initial forecasts. ... We would be most concerned about any contractor going after U.S. Visit."A major risk the winning contractor will face is the tight control Congress intends to wield over the program's funding. Lawmakers plan to approve portions of funding each year, depending upon the progress made. This encourages the department and the prime contractor to meet agreed-upon milestones, but it also means some effort must go into persuading congressional committees to release the money, said Richard Fogel, director of strategic initiatives for transportation and security solutions business area for Lockheed Martin.The congressional plan to release funds as milestones are achieved carries obvious risks for the eventual prime contractor. "If we knew Congress had committed all at once, our financial people would feel more comfortable, but that's not the reality today," Fogel said.But the plan is good from the government's standpoint, Fogel said. "It means we have to collaborate. We have to work with DHS to work up a good funding plan, then communicate it to OMB, GAO, Congress, so they can have assurances that the money is being well spent," he said.Officials from Accenture and CSC declined to be interviewed for this story.U.S. Visit's aggressive schedule also could cause problems for both the contractor and agency. Congress' strict deadlines are rapidly approaching. For example, by Dec. 31, Homeland Security is supposed to track electronically the arrival and departure information of foreign visitors at air and sea ports of entry, match that information against visa expiration dates and establish a single database that can be accessed at all participating ports.By Dec. 31, 2004, Homeland Security must include the 50 highest-volume entry points along the Canada and Mexico borders. All remaining border crossings must have the system one year after that.The department is looking to meet these first three project increments with interim solutions from current contractors that use technologies and, as possible, systems already in place. The fourth increment -- the prize the bidders are pursuing -- is U.S. Visit itself, an integrated, long-term solution that would overhaul all the processes, procedures and systems within a unified architecture.The GAO identified this interim-solution approach as a major risk, arguing that even if the system meets the deadlines, the government hasn't established objective measurements for determining whether the system effectively serves the department's homeland security requirements. Congress also established other performance expectations that present significant challenges, such as a requirement that the new system not impede travel or commerce any more than the current process. GAO examiners said that adding an average of 9 seconds to the time it takes each traveler to get through the border crossing at the Blaine Peace Arch in Washington state would create an 11-hour backup, unless staffing levels and the number of inspection booths are increased.Jim Williams, director of U.S. Visit for the Homeland Security Department and former acquisition chief at IRS, said he already sees some difficulty meeting the Dec. 31, 2004, deadline. He hopes that if the project can attain its early objectives, Congress will grant some flexibility in the later deadlines. The key will be to meet initial budget and schedule requirements. "We used to say at IRS, 'Tell Congress that something is going to cost $600 million and four years or $700 million and three years, they don't know the difference. But they know when you're a dollar over or a day late,'" he said. The department will meet the first end-of-year deadline with an interim solution, he said. Coming up with the metrics to tangibly measure performance -- another shortcoming GAO identified -- is more difficult."Let's make sure we identify one or two terrorists a year -- that's a silly goal," Williams said. "The question is, has the fact that you've built a security system become a deterrent? But how [do you] prove the absence of something?"Beyond the risks inherent in U.S. Visit because of its size and complexity, there is the uncertainty of events beyond any contractor's control, such as another terrorist attack or an economic downturn."Risk you can manage; uncertainty you can't," said James Kane, president of Federal Resources Inc., a market research firm in McLean, Va. Staff Writer Patience Wait can be reached at pwait@postnewsweektech.com.XXXSPLITXXX-November: RFP expected to be released.Dec. 31: Complete Increment One system to gather foreign visitors' entry and exit information electronically in one database for all air and sea ports of entry, using existing contractors, systems and processes. Monitor for suspicious individuals and those who stay beyond their visa expirations.February: Begin issuing construction contracts for interim facilities at 50 highest volume land crossings on the Canada and Mexico borders.May: Award US Visit long-term solution contract.Oct. 26: Create capability to read U.S. and visa waiver travel documents that use biometrics.Dec. 31: Complete Increment Two by expanding interim system to include 50 highest volume land crossings on the Canada and Mexico borders.Dec. 31: Complete Increment Three by expanding interim system to include all remaining land border crossings.2014: Estimated completion of new, fully integrated entry-exit system.XXXSPLITXXX- Estimates range from $7.2 billion to more than $20 billion over 10 years or more Scheduled for November The three companies competing for U.S. Visit have announced their teams.Accenture Ltd.Sprint Communications Co.Computer Sciences Corp.Lockheed Martin Corp., prime contractor Booz Allen Hamilton Inc. Harris Corp. IBM Corp. MSD Inc. Science Applications International Corp. SI International Inc. Unisys Corp.