GAO: DHS Decision to Procure, Deploy Next Generation of Radiation Detection Equipment Not Supported by Cost-Benefit Analysis

March 29, 2007 // Published as a news service by IHS

The U.S. Department of Homeland Security (DHS) cost-benefit analysis does not provide a sound analytical basis for its decision to purchase and deploy new portal monitor technology, according to a report from the U.S. Government Accountability Office (GAO).

The GAOs review of the analysis determined that it had the following problems:

Regarding the performance of the portal monitors:

• Instead of using the results of its own portal monitor tests conducted in 2005, the DHS assumed that the new portal monitor technology would correctly detect and identify highly enriched uranium (HEU) 95% of the time - a performance level that far exceeds the new technology's current capabilities, according to the report.
• To determine the performance of the current generation of portal monitors in detecting HEU, the DHS used data from limited tests carried out in 2004 that test officials concluded were unreliable for such purposes.
• The DHS analysis of the new technology portal monitors was incomplete because the analysis focused on identifying HEU but did not fully consider how well the new portal monitor technology could correctly detect or identify other dangerous radiological or nuclear materials.

Regarding cost estimates

• In comparing the costs of the new and current technologies, the procurement costs of the current generation portal monitors were highly inflated because the DHS assumed a unit cost of about $131,000. However, the contract price at the time of the analysis was about $55,000. According to officials who manage the contract, it was to expire and they expected portal monitor prices to increase but not nearly as much as the DHS assumed, according to the report.
• The DHS stated that the primary benefit of deploying the new portal monitors is reducing unnecessary secondary inspections. However, the DHS's analysis does not fully estimate today's baseline costs for secondary inspections, which makes it impossible to determine whether the use of the new portal monitors as currently planned will result in significant cost savings for these inspections.
• The new portal monitor contract price exceeded the DHS's total cost estimate by about $200M. The cost-benefit analysis shows the total cost for deploying both current and new portal monitors to be about $1B. However, in July 2006, the DHS announced that it had awarded contracts to develop and purchase up to $1.2B worth of the new portal monitors over five years.
• The DHS cost-benefit analysis omitted many factors that could affect the cost of new portal monitors such as understating the life-cycle costs for operating and maintaining the equipment over time.For these reasons, the DHS cost-benefit analysis does not meet the intent of the GAO's March 2006 report recommendation to fully assess the costs and benefits before purchasing any new equipment.

The DHS is responsible for addressing the threat of nuclear smuggling. Radiation detection portal monitors are key elements in the country's national defenses against such threats. The DHS sponsored R&D and testing activities to develop a "next generation" portal monitor known as the advanced spectroscopic portal monitor. However, each one costs six times more than a current portal monitor.

In March 2006, the GAO recommended that the DHS conduct a cost-benefit analysis to determine whether the new portal monitors are worth the additional cost. In June 2006, the DHS issued its analysis. In October 2006, the GAO issued a report that assessed the DHS study.

The GAO's statement, based on its October 2006 report, addresses whether the DHS cost-benefit analysis provides an adequate basis for its decision to purchase and deploy the next generation portal monitors.

Source: U.S. Government Accountability Office (GAO).