Background Federal Budget Process  and Relevant ICE Entities The federal budget process provides the means for the President and  Congress to make informed decisions between competing national needs  and policies, to allocate resources among federal agencies, and ensure  laws are executed according to established priorities. OMB, as part of  the Executive Office of the President, is to guide the annual budget  process, make decisions on executive agencies’ budgets, aggregate  submissions for agencies, and submit the consolidated document for the  executive branch as the President’s Budget Request to Congress. In  support of the President’s budget request, departments are to submit  budget justifications to the congressional appropriations committees,  typically to explain the key changes between the current appropriation  and the amounts requested for the next fiscal year. During the process,  OMB is to ensure that budget requests are consistent with presidential  objectives and issue guidance to federal agencies through OMB Circular  A-11, which provides instructions for submitting budget data and  materials, as well as for developing budget justifications. Various offices within ICE are involved in developing ICE’s annual budget  request for immigration detention (see fig. 1). Two ICE entities integral to  the budget request formulation are the Office of Budget and Program  Performance (OBPP) and Enforcement and Removal Operations (ERO).  Within ICE’s Office of the Chief Financial Officer, OBPP is responsible for  guiding ICE’s annual budget request process, including analyzing and  validating budget projections for all of ICE’s directorates, including ERO.  ERO is responsible for estimating the total amount of funding to cover  costs of immigration detention. For the upcoming budget year, ERO  determines the projected ADP, while OBPP determines the projected bed  rate. ERO then utilizes the two variables of bed rate and ADP in its  estimate of future detention costs. Other offices within ICE, such as  Custody Management, Field Operations, Operations Support,  Management and Administration, and the Office of Policy are involved in  the formulation of other aspects of ICE’s budget or in supervisory roles.  Figure 1 is an organizational chart of ICE offices that are involved in the  annual budget request for immigration detention resources. ICE Formulates Its  Budget Request  According to DHS  Guidance, But Does  Not Have a  Documented Review  Process to Ensure  Accuracy of Budget  Calculations ICE Follows DHS  Guidance and Uses Key  Variables to Formulate its  Budget Request ICE follows budget formulation guidance from DHS, and uses two key  variables—the bed rate and ADP—when formulating its budget request.  Approximately 20 months before the start of a particular fiscal year, the  Secretary of Homeland Security provides its Resource Planning  Guidance to all DHS components. This document works to align the  department’s planning, programming, and budgeting activities and  execution activities over a five-year period, and sets forth the resource  planning priorities of the department as they relate to its mission. The  department planning priorities are to guide the DHS components as they  develop their respective Resource Allocation Plans (RAP). After the  Secretary issues the Resource Planning Guidance, DHS’s Office of the  Chief Financial Officer provides fiscal guidance to ICE that identifies an  estimated allocation amount, which ICE is to budget to in its RAP  submission. In developing its RAP, each of ICE’s program offices determines its  current budget needs and then submits Program Decision Options (PDO)  to ICE leadership for any changes from the prior year’s budget. Every ICE  program and activity submits, in the form of a PDO, any changes that are  to occur, including all programmatic increases, initiatives, reductions, or  eliminations. Once all of the program offices submit their PDOs to ICE  leadership, a council of leadership representatives from across ICE  convenes to approve and prioritize the selected PDOs moving forward to  DHS. ICE submits its RAP to DHS for a final decision with all pertinent  information attached, such as the prioritized PDOs based on mission and  department needs, fiscal changes to programs, and potential capital  investments. During the Resource Allocation Decision (RAD) process,  DHS leadership reviews all of the RAP submissions from across the  department and approves or rejects the PDOs. Individual program offices  work out any changes that may have occurred during the RAD process  prior to the completion of the budget request and submission to OMB. DHS then submits a budget proposal on behalf of the entire department,  inclusive of ICE, to OMB. OMB is to prepare a budget request for all of  the executive departments and agencies, which is submitted to Congress  as the President’s budget. Following OMB decisions on agency budget  requests, DHS submits a budget justification, inclusive of ICE, with more  details to the congressional appropriations committees. Key steps in the  overall process are shown in figure 2. When preparing the budget submission, ICE uses two key variables, the  bed rate and ADP (see sidebar), to calculate a cost estimate for the  resources needed for managing the immigration detention system. In  order to determine the amount necessary to operate the detention system  for adult detainees, ICE multiplies the projected ADP by the projected bed  rate by the number of days in the year (see fig. 3). ICE then includes  these costs as part of its Custody Operations account. ICE Does Not Have a  Documented Review  Process to Ensure the  Accuracy of Budget  Calculations ICE does not have a documented review process to ensure the accuracy  of its budget calculations presented in its yearly congressional budget  justifications (CBJ). Based on our review of CBJs from fiscal year 2014 to  fiscal year 2018, there are a number of inconsistencies and errors in the  numerical calculations pertaining to immigration detention costs. During  our review of ICE’s fiscal year 2014 and fiscal year 2015 budget requests,  we calculated the total amounts requested for ICE’s immigration detention  costs using its formula (see fig. 3) and the ADP and bed rate figures  provided in the budget request and compared it with ICE’s requested  amount. Based on our calculations, the amounts ICE requested are not  consistent (by a difference of $34.7 million for fiscal year 2014 and $129  million for fiscal year 2015) with the figures used to develop their  estimate. ICE officials acknowledged the error. Additionally, ICE’s fiscal year 2017 budget request erroneously applied $2  million in costs from detention beds to transportation and removal,  resulting in a request for $2 million less for detention beds and $2 million  more for transportation and removal, a total of $4 million in errors in the  agency’s estimate. In response to the misapplication of $2 million, ICE  officials stated that the CBJ still provided for the same net total because  the two mistakes offset each other. Officials also stated that the final  appropriation ultimately was not based on its budget request numbers  and ICE’s detention activities were funded at an amount that was greater  than what they requested. The fiscal year 2018 request also contains a  multiplication error that resulted in ICE requesting less funds—$4,000— than using the correct calculation. ICE officials told us that there are multiple reviews of the budget  documents prior to submission to ensure that the numbers presented are  accurate and supportable. However, ICE could not provide us with any  documentation that the reviews were conducted. ICE officials stated that  reviews were typically completed using hard copies and then approval  was verbal and not documented formally. Standards for Internal Control  in the Federal Government states that management should design control  activities to achieve objectives and respond to risks. Such activities  include review processes to ensure the accuracy of budget calculations  prior to official submission and appropriate documentation of the reviews. While the final appropriations that Congress determines for ICE may  ultimately be higher or lower than what ICE requested, generating and  presenting an accurate picture of ICE’s funding needs is necessary to  provide Congress the information needed to make informed decisions. By  developing and implementing a documented review process, it is more  likely that relevant ICE officials are accountable for ensuring the accuracy  of the budget requests and underlying calculations. Without a  documented review process, ICE is not positioned to demonstrate the  credibility of its budget requests. Furthermore, Congress may not have  reliable information to make informed decisions about funding immigration  detention needs. ICE Has Models for  Developing Bed  Rates and ADP But  Could Improve  Projections ICE Uses Historical Costs  to Develop its Projected  Bed Rates But  Underestimated Actual  Bed Rates from Fiscal  Years 2014 through 2017 Bed Rate  ICE’s bed rate is based on four cost  categories.  Bed/guard costs: The contract costs of beds  and guards at U.S. Immigration and Customs  Enforcement’s (ICE) various detention  facilities.  Health care: Medical expenses of the  detainee population.  Other direct costs: All costs that directly  concern detainees, including payments to  detainees for work programs, provisions and  supplies for detainees, and  telecommunications billed to individual  facilities.  Service-wide or indirect costs: Overhead  expenses for ICE’s management of the  detention system, including rent, security,  office equipment, and liability insurance. Although ICE bases its projected adult bed rate on historical costs, from  fiscal year 2014 through fiscal year 2017, ICE underestimated the actual  rate. ICE calculates the adult bed rate by tracking obligations and  expenditures in four categories—bed/guard costs, health care, other  direct costs, and service-wide costs, also known as indirect costs. (See  sidebar for more information.) We found that ICE has improved its  process for collecting this information from its financial management   system since 2014, when we previously reported that limitations in its  data system required ICE personnel to manually enter codes to  categorize relevant data. In fiscal year 2014, ICE introduced a new  financial coding process that allows staff to pull costs—the obligations  and expenditures—directly from its financial management system. This  system is an improvement over the manual workarounds that ICE  previously used and allows staff to pull the necessary data more easily for  the purposes of calculating the projected bed rate. To estimate what ICE’s projected adult bed rate will be two years into the  future, ICE calculates and averages the year-over-year percentage  change in costs since fiscal year 2009 and multiplies the current bed rate  by this figure twice, following the formula outlined in figure 4. ICE calculates the year-over-year percentage change for each cost  category—bed/guard costs, health care, other direct costs, and service- wide costs—and then applies the average of these changes to the current  cost of the category. The final projected bed rate is the sum of the four  cost categories. According to ICE, the average of the year-over-year  percentage change serves as its inflation rate and more accurately  reflects the annual escalation of its detention costs. Given that ICE must  determine the projected bed rate almost two years into the future, ICE  applies its inflation rate twice to the current costs. Although the formula outlined in figure 4 summarizes ICE’s adult bed rate  methodology, ICE’s guidance notes that situations may occur in which it  is advisable to adjust national bed rate projections to account for new  trends or other changes. For example, in response to concerns from  Congress about ICE’s application of indirect costs, and the opportunity to  revise the fiscal year 2017 bed rate, ICE officials told us they changed  some of the methodology for the projected 2017 and 2018 bed rates. Although ICE’s bed rate model is based on historical costs, from fiscal  year 2014 through fiscal year 2017 ICE’s adult bed rate projections  underestimated the actual bed rate. Specifically, ICE underestimated the  bed rate by $2.16 in fiscal year 2014, by $8.08 in fiscal year 2015, by  $5.42 in fiscal year 2016, and by $0.31 in fiscal year 2017 (see fig. 5).  For illustrative purposes, underestimating the bed rate by $5 per day,  assuming an ADP of 34,000, yields a more than $62 million  underestimation in the detention budget request. The bed rate model assumes that operations in the immigration detention  system will continue without drastic changes and that past trends will  continue since it bases its projections on historical costs. According to  ICE officials, the bed rate model cannot anticipate a need to increase the  capacity of the entire system, or anticipate a policy decision to close or  continue operation of a facility. Either of these situations may cause the  bed rate to change. Although certain situations may lead to unanticipated changes in the bed  rate, we identified a number of factors in ICE’s current bed rate model  that have led to inaccuracies, including using incorrect inflation factors  and mixing costs for family and adult facilities. ICE calculates the projected bed rate by using its own inflation rate based  on the escalation of detention costs instead of a standard inflation rate  provided by OMB or DHS, but did not provide documentation of its  rationale. As described previously, ICE’s inflation factor is based on an  average of the year-over-year changes in costs since fiscal year 2009.  OMB guidance states that it will provide agencies with economic  assumptions to be used for budget requests, including inflation rates, and  that agencies can consider price changes, such as bed/guard costs, as a  factor in developing estimates. ICE officials told us that historical costs  more accurately reflect potential increases, but did not provide us with  documentation to support that rationale. According to ICE officials, by  accepting the inflation factor used in ICE’s budget request, OMB has  given tacit, if not direct, approval for its usage. Based on our review of ICE’s adult bed rate projections, historical costs  may not be the best method for predicting future costs and assumes that  past trends will continue, including negative inflation rates. Because the  bed rate model accounts for changes on a per person basis, negative  inflation factors could be due to decreasing costs or an increasing  detainee population, both of which may change in the following year. For  example, ICE’s fiscal year 2018 bed rate model incorporates a negative  inflation factor for health care costs even though in its budget justification  ICE attributes part of the bed rate increase over the prior year to rising  health care costs. Relying on historical costs may lead to inaccuracies if a  deflationary trend does not continue as the model assumes. In our examination of the bed rate model, we also found that ICE did not  calculate the percentage change correctly. Year-over-year percentage  change compares the difference in costs in percentage terms and can be  calculated by dividing the difference in costs by the starting costs. Instead  of following this formula, ICE’s bed rate model calculated the actual  monetary difference between the two years and represented it as a  percentage change. For example, from fiscal year 2009 to fiscal year  2010, the bed/guard rate increased from $77.50 to $81.59. Whereas the  percentage change in the rate is 5.28 percent, ICE calculated the  percentage change by subtracting one rate from the other ($4.09) and  adding a percent sign (4.09%), thereby treating the dollar difference as a  percentage change. (See table 1.) ICE officials stated that they decided to use the actual monetary  difference as a way to account for inflation for the fiscal year 2018 adult  bed rate. However, using the actual monetary difference in costs does not  provide a percentage of change. It misrepresents a difference in price as  a percentage. Further, we found that because ICE did not appropriately  calculate the percentage change for each year, the average of year-over- year changes, which ICE uses as its inflation factor, is not correct. For  example, ICE’s inflation factor for the bed/guard rate is 2.74 percent,  while the appropriate calculation is 3.28 percent. (See table 1.) (See  Appendix I for more information and calculations.) In addition, when calculating the fiscal year 2018 projected bed rate,  rather than following formulas contained in the bed rate model, ICE  manually entered a different inflation factor for two cost categories—other  direct costs and service-wide costs—instead of relying on the historical  data. ICE added together the inflation factors indicated by the model for  other direct costs and service-wide costs and then applied the combined  inflation factor to both categories. By combining and manually entering  the factors, ICE mistakenly introduced an additional error. Officials did  not provide an explanation or documentation of why they manually  entered these numbers or combined the two inflation factors except to  state that it stemmed from the Congressional request to separate the  costs. ICE’s adult bed rate model includes information for family facilities, even  though family facilities are budgeted separately and in a different manner  from adult facilities. For its adult facilities, ICE contracts with the individual  facilities to provide beds and the cost is dependent on the number of  adults detained. ICE’s family detention facilities, however, are operated  by local governments or private companies and are funded through fixed  price contracts that are not dependent on the number of people detained.  (See sidebar for more information.) While ICE budgeted $291.4 million for its family facilities in fiscal year  2018, our analysis showed that ICE also included the population in its  family facilities in the calculations of the adult bed rate. For example, in  fiscal year 2018, ICE divided the obligations and expenditures for health  care, other direct costs, and service-wide costs across the entire detainee  population of adults and families, resulting in an adult bed rate that was  lower than if the costs were divided by the adult population alone. Using  this underestimated bed rate has resulted in a lower cost estimate than  what ICE may need to sustain its adult population. Additionally, ICE double-counted some costs by budgeting for family  facilities in both the adult bed rate and the total cost for family facilities.  Specifically, we found that ICE included “other direct costs” associated  with its family facilities when calculating its adult bed rate. Given that ICE  already budgeted for these family facilities’ costs as a line item within its  budget for family facilities, calculating the adult bed rate in this way  double-counts the costs for family facilities in the budget. ICE officials did  not provide documentation or their rationale for including the family  facilities in their adult bed rate model. (See Appendix I for more  information and calculations.) Standards for Internal Control in the Federal Government states that  management should use quality information to achieve objectives,  defining quality information as appropriate, current, complete, accessible,  and provided on a timely basis. Quality information is based on relevant  data from reliable sources and relatively free from error. According to GAO’s Cost Estimating and Assessment Guide, having a realistic  estimate of projected costs facilitates effective resource allocation.  Because information requirements should consider the expectations of  external users, by basing its detention cost estimates on quality  information, ICE would help ensure they are useful to Congress for  making resource allocation decisions. Additionally, GAO’s cost estimating  guide states that applying correct inflation rates is an important step to  ensure accurate cost estimates and that inflation assumptions should be  well documented. According to ICE officials, ICE’s most substantial change to the bed rate  model since its creation in 2009 was a revision in 2014 to account for the  costs of family facilities. In our review, we found that ICE includes  information for family facilities in the adult bed rate model. By reviewing  its bed rate model and methodology and correcting identified inaccuracies  and other potential issues, ICE could improve its adult bed rate  projections and better ensure its funding requests are credible and  reliable. ICE Reported Using ADP  Numbers Based on Policy  Decisions to Calculate  Budget Needs, But It Is  Unclear How the ADP  Figures Were Developed To calculate its budget needs, ICE reported using ADP figures that are  based on policy decisions, but it is unclear if the ADP figures were based  on statistical analysis. Further, ICE did not provide documentation on how  it calculated the final ADP numbers used in its budget requests. For  example, the fiscal year 2018 budget justification includes a projected  ADP of 48,879 adults, a 63 percent increase over the fiscal year 2017  projected adult ADP (29,953) and a 49 percent increase over the fiscal  year 2016 actual adult ADP (32,770). Although ICE provided a general  explanation of various factors that influence ADP, including policy  changes such as executive orders regarding immigration enforcement,  the agency did not provide documentation quantifying the effect of these  factors nor the calculations or methodology used to arrive at the 48,879  figure. In the absence of documentation, we reviewed ICE’s CBJs from fiscal  year 2014 through fiscal year 2018 and we could not identify a clear  methodology that ICE used across the years for developing the ADP and  using it to calculate its detention-related budget needs. For example, in  the fiscal year 2018 CBJ, ICE did not independently determine the  projected ADP for use as an input into its cost estimate. Rather, officials  started with the prior year’s funding level for detention costs, which  officials told us they were directed to do by OMB, and calculated the ADP  it could house with that amount. In the fiscal year 2017 budget  justification, ICE used its projected ADP numbers from the previous year  as starting points to calculate changes in its budget request. Additionally,  while the appropriations act for fiscal year 2014 included a proviso that  ICE’s funding support at least 34,000 detention beds during the fiscal  year, ICE included a lower number of detention beds (30,539) in its 2015  budget request. According to ICE officials, the ADP figures used in its budget requests are  initially projected by ERO, but may be changed by ICE leadership, DHS  leadership, or OMB. Officials said the final ADP figure is based on policy  decisions that account for factors that could affect the detainee  population—for example, delays in immigration courts or the number of  asylum officers on staff. According to officials, ICE prepares the budget  request two years in advance of the year of execution with the best  knowledge they have available at that time, including ADP projections.  Officials stated that ADP is difficult to estimate given the unpredictable  nature of events such as natural disasters, gang activity, or political  upheaval in another part of the world, which may lead to an unanticipated  increase in migration. Additionally, officials told us that various policy  developments across the administration, DHS, or other agencies may  affect immigration trends or enforcement. ICE officials also stated that  because immigration detention facilities may receive detainees from other  parts of the immigration system, ADP can be affected by actions taken by  other actors involved in immigration enforcement, such as the Executive  Office for Immigration Review, U.S. Customs and Border Protection, and  U.S. Citizenship and Immigration Services. Such events could include, for  example, delays in immigration court cases or an increase in the number  of asylum cases, which could increase ADP. When asked to provide documentation for the fiscal year 2018 ADP  projection of 51,379, ICE provided us a document containing tables and  justification that explained the factors that impact ADP, but did not provide  us the calculations or methodology used to arrive at the projected ADP.  While the ADP used in its budget requests may be developed based on  policy decisions, documenting the calculations and rationale by which the  figure was developed would help to demonstrate how the number was  determined and that it was based on sound decisions. Although ICE officials stated that ADP is difficult to forecast, the agency  has developed a statistical model that may help predict the ADP. ERO’s  Law Enforcement Systems and  Analysis (LESA) Office has developed a  statistical model that uses population data directly pulled from ICE’s  Enforcement Information Database to forecast the ADP in upcoming  years. (See sidebar for more information.) ERO began using the model  in 2014, and according to officials, ICE currently uses it to estimate how  much funding the agency will need for detention costs for the remainder  of the fiscal year. The model describes historical trends, seasonal  fluctuations, and random movement in the ADP, and then uses these  historical patterns to make forecasts. Based on our evaluation, we found  that this type of model was a reasonable method to forecast ADP, and  that LESA’s particular modeling choices were generally consistent with  accepted statistical practices and appropriate for the data and application. Using LESA’s model, ICE can produce a range of ADP forecasts under  different scenarios, as well as confidence intervals for any particular  forecast. Confidence intervals indicate the level of certainty around the  model’s forecast, depending on how wide the range is for the ADP  forecast. Confidence in the model’s forecasts decreases when the ADP  range is smaller and when forecasting for later time periods. Because the  model relies on historical data in making ADP forecasts, LESA is able to  incorporate separate analysis of external or unexpected events to help  inform the effects of similar events on ADP in the future. For example,  according to ICE officials, LESA can conduct ad hoc analysis outside of  the model of how potential policy decisions, such as a change in the  number of field officers, may affect future ADP, if a similar event occurred  in the past. Although new policies, processes, or political or economic  events may cause the dynamics of ICE’s detainee population to change  in ways that historical data would not predict, incorporating this type of  model into ICE’s process to project ADP could potentially help provide  useful and accurate forecasts in instances where ICE does have relevant  historical data. ICE officials stated that ICE has used the LESA model in  the past to inform the budget during the year of execution, but has only  recently used it to provide confidence intervals for the ADP inputs into the  budget projections when revising the projected fiscal year 2017 bed rate. According to GAO’s Cost Estimating and Assessment Guide, having a  realistic estimate of projected costs facilitates effective resource  allocation. In addition, federal standards for internal control state that  management should design control activities to achieve objectives, and  as part of those control activities, management should clearly document  significant events in a manner that allows the documentation to be readily  available for examination. Without documenting the methodology or  rationale behind the ADP numbers ICE uses to develop its budget  request for immigration detention, Congress and other stakeholders do  not have clear visibility into the number upon which ICE is basing its  budget request. Additionally, by considering how or whether the LESA  model could be incorporated into ICE’s process for projecting ADP, ICE  could leverage an existing model and identify potential improvements in  the accuracy of its ADP projections based on historical data. ICE Does Not Fully  Meet GAO Best  Practices For  Estimating Detention  Costs ICE’s cost estimate for immigration detention resources does not fully  meet best practices outlined in GAO’s Cost Estimating and Assessment  Guide. As described earlier, the characteristics of a reliable cost estimate  are comprehensive, well documented, accurate, and credible. As noted in  table 2, ICE’s cost estimate for fiscal year 2018 substantially met the  comprehensive characteristic, partially met the well documented and  accurate characteristics, and minimally met the credible characteristic. By  not sufficiently meeting the best practices in all of the characteristics, the  cost estimate for the immigration detention cannot be considered reliable. Based on our analysis, ICE substantially met the comprehensive  characteristic by including all costs, but has double-counted certain costs,  as described earlier, and has not clearly documented all ground rules and  assumptions. Based on our analysis, ICE’s cost estimate appears to  include all government and contractor labor costs as well as material,  equipment, facilities, and services to fund immigration detention,  accounting for both the salary and expenses categories of the budget.  ICE also adheres to DHS’s Common Appropriations Structure, and  follows the OMB Object Class structure for planning and tracking costs at  a more granular level. Officials stated that they use past execution  reports, historical data, and spend plans to help inform the necessary  distribution of funding for immigration detention by project and object  code. While ICE accounted for all costs, ICE did not directly address how the  agency prevents omissions or double-counting in its cost estimate, and  double-counted costs by including other direct costs for family facilities  when estimating the cost to house adult detainees. Additionally, ICE did  not identify ground rules and assumptions influencing the estimate.  Officials said that several documents list ground rules and assumptions;  however, the ground rules cited are very broad or have not been followed.  For example, ICE guidance states that ICE shall fund sufficient detention  beds to support current enforcement and removal priorities and  mandatory detention requirements, but it does not provide a basis for  determining a sufficient number of detention beds. Another important  factor in determining the bed/guard rate for adult beds is tier utilization.  Tier utilization refers to the use of bed space in detention centers. For  example, at a given detention center, ICE may pay a lower rate if it  houses more detainees. When determining the bed rate based on tier  utilization, ICE did not provide documentation of the ground rules or  assumptions behind the tier utilization percentage used to calculate the  fiscal year 2018 bed rate. Finally, as noted earlier in this report, ICE has  not documented its rationale for not following DHS or OMB guidance for  applying inflation rates to the estimate. According to GAO’s guide, given that cost estimates are based on limited  information, defining ground rules and assumptions is important because  they help identify the risks associated with these assumptions, including  how changes in the assumptions could influence cost. Without clear  documentation and rationale behind ground rules and assumptions, the  estimate will not be able to be reconstructed when the budget staff and  information used to develop the estimate are no longer available. Based on our analysis, ICE partially met the well documented  characteristic by showing that its cost estimate had been reviewed by  management and providing documentation that described its  methodology in general. However, ICE did not show the formulas used to  develop the cost estimate in sufficient detail to enable an outside party to  fully follow its calculations or to re-create the fiscal year 2018 bed rate.  Although the agency provided the bed rate model and showed what  numbers were used as inputs into the model to project the fiscal year  2018 bed rate, it did not provide documentation that described the  formulas used to calculate the projected bed rate. During our review of  the bed rate model, we had to reconstruct the calculations step-by-step to  identify the formulas and variables used to create the fiscal year 2018 bed  rate. Additionally, ICE officials provided conflicting explanations regarding how  they applied inflation to develop the projected fiscal year 2018 adult bed  rate. In one instance, ICE officials said that they applied a 2.66 percent  inflation factor to develop the fiscal year 2017 adult bed rate and then  calculated and applied a cost adjustment to add more than 8,800 new  beds, to produce the fiscal year 2018 bed rate. In another instance, ICE  officials stated that the inflation factor was adjusted to 3.73 percent  overall to develop the fiscal year 2017 bed rate and then they applied the  cost adjustment to develop the fiscal year 2018 projected bed rate. These  two explanations also differ from how the bed rate model applies inflation  as described earlier in this report. ICE also did not document how the cost  adjustment was calculated or the actual costs that the adjustment is  based upon. When asked about documentation, ICE officials stated that the budget  justification was not the appropriate document to cite detailed  methodologies, but did not provide any additional supporting  documentation. Documentation is essential for validating a cost estimate,  including demonstrating that it is a reliable estimate of future costs.  Consistent with GAO’s guide, without a well documented cost estimate,  ICE is not positioned to present the estimate’s validity or answer  questions about its basis. According to GAO’s Cost Estimating and  Assessment Guide, estimates that lack sufficient documentation are not  useful for updates or information sharing and can hinder understanding  and proper use. Based on our analysis, ICE partially met the accurate characteristic by  basing the cost estimate on historical cost data and tracking the  differences between the projected and actual bed rate and ADP. ICE  officials stated that they utilized historical cost data for bed/guard contract  costs, health care costs, overhead expenses, detainee wages and  supplies, and detainee headcount and capacity utilization, among other  categories to estimate detention costs. However, ICE did not provide  evidence that it analyzes the reasons behind the variances between the  cost estimate and actual numbers for each year, and as mentioned  previously, we identified issues with the inflation rates used to project the  bed rate and the inclusion of family facilities in the adult bed rate. While ICE tracks differences between the projected bed rate used in the  cost estimate and the actual numbers for each fiscal year, officials did not  provide evidence that they analyze the reasons for these variances nor  that they use this information to reassess its assumptions or models and  improve them. ICE officials said that variances between the projected and  actual bed rates are documented in a quarterly report that is publicly  available. While these reports track the bed rate in the execution year,  they do not demonstrate that ICE tracks explanations for variances  between that bed rate and the original cost estimate figures presented in  the budget request. ICE provided a document that showed the bed rate  projection and the year-end result for fiscal years 2013 through 2016 and  quarter-end results for fiscal year 2017, but the document did not explain  most of the changes from the projected and actual numbers. ICE officials  also said that they conduct ad hoc analyses to identify and communicate  sources of variance, but did not provide any related documentation. Without a comparison and analysis of the reasons behind the differences  between the actual figures and the original estimates, ICE is not  positioned to assess the quality of its projections and use that information  to improve cost estimates. Tracking the forecast rate against the actual  rate and tracking budget justification assumptions against actual  conditions could offer insight into the quality of the forecasts, according to  GAO’s cost estimating guide. Based on our analysis, ICE minimally met the credible characteristic, and  in particular did not conduct sensitivity or risk and uncertainty analyses to  capture the cumulative effects if variables change. ICE also did not  conduct any cross checks on the major cost elements using alternate  methods to estimate cost. A sensitivity analysis reveals how a change in  a single assumption, or variable, affects the cost estimate. A risk and  uncertainty analysis would provide ICE a clear level of confidence about  the estimate. ICE did not conduct a risk and uncertainty analysis for either  the fiscal year 2018 cost estimate or the fiscal year 2018 bed rate model.  Additionally, ICE’s description of the LESA model to project ADP  discussed forecast confidence levels, but ICE did not quantify the  uncertainty around the ADP projection of 51,379 detainees used in the  fiscal year 2018 budget justification. ICE also did not discuss the range of  potential costs due to uncertainty in the ADP and bed rate projections.  Having a range of costs around a point estimate is useful to decision  makers because it conveys the level of confidence in achieving the most  likely cost. Additionally, ICE did not provide any documentation showing that major  cost elements were cross checked using a different method for  calculating the cost estimate to see if results were similar. According to  GAO’s cost estimating guide, one way to reinforce the credibility of the  cost estimate is to determine whether applying a different method  produces similar results. If so, then confidence in the estimate increases,  leading to greater credibility. ICE officials stated that internal and external  auditors vetted the bed rate model and determined it to be credible, but  this does not constitute an estimate cross check and using an alternate  cost estimating method to cross check its estimate would provide greater  assurance of its credibility. As noted previously, we found ICE’s bed rate  model underestimated the actual bed rates over several years. Unless all characteristics are met or substantially met, the cost estimate  cannot be considered reliable. Additionally, a poor cost estimate can  negatively affect a program by eventually requiring a transfer or  reprogramming of funds. In recent years, ICE has consistently transferred  and reprogrammed millions of dollars of funds to account for budgeting  too little or too much for immigration detention costs. By improving the  budget estimation to better reflect cost estimating best practices, ICE  could ensure a more reliable budget request. Conclusions As an agency, ICE operates the immigration detention system on a  budget of nearly $3 billion. Although estimating immigration detention  costs may be difficult, taking steps to improve ICE’s cost estimating and  budget request processes could help provide Congress with a more  accurate picture of ICE’s funding needs. Developing and implementing a documented review process for its  annual budget request calculations could help ICE better ensure that its  budget requests are consistently credible and reliable. Additionally,  assessing its bed rate model and addressing the identified inaccuracies in  its methodology could help ICE more accurately project the bed rate in  upcoming years. As we noted, a difference of just five dollars in the bed  rate amounts to a difference of tens of millions of dollars in the final  budget calculation. Documenting the methodology or rationale behind the  ADP projections would better position ICE to support the basis for its  budget requests each year, and incorporating the use of a statistical  model may help decision makers by providing more information about the  numbers that ICE presents. Furthermore, taking steps to ensure that ICE  fully addresses cost estimating best practices could ensure a more  reliable overall estimate. Recommendations for  Executive Action We are making the following five recommendations to ICE: The Director of ICE should take steps to document and implement its  review process to ensure accuracy in its budget documents. The Director of ICE should take steps to assess ICE’s adult bed rate  methodology to determine the most appropriate way to project the  adult bed rate, including any inflation rates used. The Director of ICE should take steps to update ICE’s adult bed rate  methodology by incorporating necessary changes based on its  assessment, and ensure the use of appropriate inflation rates and the  removal of family beds from all calculations. The Director of ICE should take steps to determine the most  appropriate way to project the ADP for use in the congressional  budget justification and document the methodology and rationale  behind its ADP projection. As part of that determination, ICE should  consider the extent to which a statistical model could be used to  accurately forecast ADP. The Director of ICE should take steps to ensure that ICE’s budget  estimating process more fully addresses cost estimating best  practices. Agency Comments  and Our Evaluation We provided a draft of this report to DHS for the department’s review and  comment. DHS provided written comments, which are noted below and  reproduced in full in appendix II, and technical comments, which we  incorporated as appropriate. DHS concurred with our recommendations  and described actions underway or the actions it plans to take in  response. To our first recommendation, DHS stated that ICE recently implemented a  more stringent process for the fiscal year 2020 budget cycle, and will  work to more effectively document its review process and decisions  during the budget formulation process. To our second recommendation,  DHS stated that ICE has completed multiple third-party assessments of  its bed rate methodology. We will evaluate any assessments provided  and determine the extent to which those assessments meet the intent of  the recommendation. To our third recommendation, DHS stated that ICE  will provide GAO with documentation demonstrating updates to the adult  bed rate methodology, including the use of an appropriate inflation rate  and removal of family beds from calculation. We will evaluate any  documentation provided and determine the extent to which ICE’s actions  meet the intent of the recommendation. To our fourth recommendation,  DHS stated that ICE ERO developed a statistical modeling capability and  provided that documentation and methodology to GAO. As previously  noted in this report, we found that this type of model was a reasonable  method to forecast ADP, and the particular modeling choices were  generally consistent with accepted statistical practices and appropriate for  the data and application. DHS began leveraging the model for its fiscal  year 2019 budget cycle, and it will be important to see how the model is  used in future budget justifications. To our fifth recommendation, DHS  stated that ICE will implement the best practices for cost estimating to the  degree that it is possible, specifically performing sensitivity and cost risk  and uncertainty analyses to strengthen the credibility of its estimates.  Implementing the best practices should help position ICE to produce a  more reliable cost estimate. If implemented effectively, these actions  should address the intent of our recommendations. We are sending copies of this report to the appropriate congressional  committees and the Secretary of the Department of Homeland Security.  In addition, the report is available at no charge on the GAO website at  http://www.gao.gov. If you or your staff have any questions about this report, please contact  me at (202) 512-8777 or GamblerR@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix III. Appendix I: GAO Analysis of U.S.  Immigration and Customs Enforcement’s  Fiscal Year 2018 Bed Rate Model U.S. Immigration and Customs Enforcement (ICE) calculated a bed rate  for fiscal year 2018 using a bed rate model built in Excel with data from its  Federal Financial Management System and Enforcement Information  Database. To project the fiscal year 2018 bed rate, ICE officials told us  they used a different inflation factor from the ones set forth in guidance  from the Office of Management and Budget (OMB) or the Department of  Homeland Security (DHS). Specifically, ICE used an inflation factor based  on the historical service costs. ICE did not provide a documented  rationale for not using the OMB’s inflation rate, written descriptions of the  calculations within the bed rate model, or detailed ground rules and  assumptions for the bed rate model. In examining the adult bed rate model used by ICE to project the fiscal  year 2018 bed rate, we identified a number of inaccuracies and errors in  the formulas used. Specifically:  Instead of using the average of the percentage change in year-over- year costs, ICE used the average of the actual monetary difference in  year-over-year costs and then applied that figure as a percentage;  ICE added the inflation factors for two cost categories and then  applied the combined rate to each category, which led to additional  negative inflation; and  ICE included information for family facilities, which were already  budgeted as fixed priced contracts, in the calculation of the adult bed  rate. ICE calculates a projected bed rate for two years into the future based on  actual obligations and expenditures for four cost categories—bed/guard  costs, health care, other direct costs, and service-wide or indirect costs.  Table 3 shows ICE’s historical costs since fiscal year 2009 for these  categories. Table 4 shows ICE’s calculations to determine the projected fiscal year  2018 bed rate. To calculate the projected fiscal year 2018 bed rate, ICE  applied its inflation factors twice to the fiscal year 2016 costs and then  added a cost adjustment to account for the cost of adding new beds. ICE notes that the initial projected rate is for fiscal year 2017; however,  this figure follows the formula that ICE would use to determine the fiscal  year 2018 bed rate. With the change in administration during fiscal year  2017, ICE had the opportunity to revise its projected bed rate. ICE  officials told us that they applied their inflation factors to fiscal year 2016 costs once to project the bed rate one year into the future and then  applied their inflation factors a second time in order to account for an  operational adjustment, which they estimated to be approximately 3  percent. ICE officials did not provide us with documentation of their  calculations or analysis showing that compounding the inflation factors  over two years was equivalent to one year’s inflation plus an operational  adjustment. In addition, because the inflation factors used in the bed rate  model are based on historical costs, any operational costs should already  have been accounted for in the model itself. Inflation Factors Using Actual Monetary Difference in Costs Instead of Percentage  Change  ICE’s bed rate model is designed to use the average of year-over-year  percentage change as its inflation rate. However, for the revised fiscal  year 2017 and the projected fiscal year 2018 bed rates, ICE did not  calculate the inflation rate based on year-over-year percentage changes,  but based it on the actual monetary difference in yearly costs. ICE  officials told us that in response to Congress’s concerns about service- wide costs, ICE began separating service-wide costs from other direct  costs in fiscal year 2017. Previously, the two cost categories had been  combined as an “other costs, miscellaneous” cost category. ICE officials  told us that when other direct costs were separated from service-wide  costs, they discovered that the average of year-over-year percentage  changes showed a large decrease (negative 20 percent) for other direct  costs which was not reflected in a separate analysis conducted by ICE.  Therefore, officials decided to use the average of the actual monetary  difference in year-over-year costs instead. ICE officials did not provide  documentation of this separate analysis. According to ICE officials, for  consistency they decided to use the average of the actual monetary  difference in year-over-year costs for all of the cost categories including  bed/guard, health care, and service-wide costs. The bed rate model then  applied these figures as inflation factors. Table 5 shows the results from ICE’s calculation of yearly cost changes  as percentages. In this table, ICE uses the formula of (Year 2 - Year  1)/100 and displays it as a percentage. For example, as noted in table 1, the fiscal year 2010 bed/guard rate was $81.59 and the fiscal year 2009  rate was $77.50. ICE calculated the change in the bed/guard rate for  fiscal year 2010 as $81.59 - $77.50 = $4.09, and then replaced the dollar  sign with a percent sign, thereby treating the dollar difference as a  percentage change. Table 6 shows the results if the year-over-year change were calculated by  comparing the actual percentage difference in costs. In this table, we use  the formula of (Year 2 - Year 1) / Year 1 and display it as a percentage.  For example, for fiscal year 2010, the percentage change in the  bed/guard rate is 5.28 percent (or ($81.59 - $77.50) / $77.50), not 4.09  percent as calculated by ICE. Because of how ICE presented the percentage change for each year, the  average of year-over-year changes, which ICE uses as its inflation  factors, is not correct. For example, ICE’s inflation factor for the  bed/guard rate is 2.74 percent (see table 3), while the appropriate  calculation is 3.28 percent (see table 4). Applying Combined Inflation Factor Twice  In developing its fiscal year 2018 projected adult bed rate, ICE combined  the inflation factors for two cost categories—other direct costs and  service-wide costs—and applied the combined rate to each category. By  using this combined rate, the bed rate model applies an additional -0.54  percent factor to the categories, which it otherwise would not have done if  ICE applied the individual inflation factors for the categories. As noted in Table 7, ICE’s year-over-year average change for other direct  costs was -1.33 percent when ICE calculated it individually for the  category, and was 0.78 percent for service-wide costs. Instead of applying these inflation factors (-1.33 and 0.78 percent) to the  fiscal year 2016 costs for these categories, ICE added the two inflation  factors for a total of -0.54 percent, based on the following calculation: - 1.3267 + 0.7833 = -0.5433. ICE then applied this combined inflation factor  to both categories (see table 2). Officials did not provide us with a  rationale or documentation of why they manually entered these numbers,  or combined the two rates except that it stemmed from the Congressional  request to separate the costs. By applying the combined inflation factor to  both categories, ICE mistakenly introduced an additional error for these  two cost categories. Family Facility  Information in the  Adult Bed Rate Counting Families in the Adult Bed Rate  ICE’s bed rate model divides the obligations and expenditures for health  care, other direct costs, and service-wide costs by the entire detainee  population of adults and families, resulting in an adult bed rate that is  lower than if the costs were divided by the adult population alone. ICE’s  bed rate model is used to calculate a bed rate to estimate detention costs  for the adult population. Family facilities operate on firm fixed price  contracts and all cost categories for the family facilities—bed/guard costs,  health care costs, other direct costs, and service-wide costs—are  budgeted for separately from costs for adult detention in ICE’s budget  request. By dividing adult bed costs across its entire detainee population,  ICE may be underestimating the total detention costs. To calculate the daily per person cost of health care, other direct costs,  and service-wide or indirect costs, the bed rate model divides the total  obligations and expenditures for each category by the number of  mandays. Table 8 shows ICE’s calculations using the formula:  Obligations and Expenditures / Mandays for Adults and Families = Daily  Per Person Rate  By spreading these costs across the entire population, the bed rate model  derives a lower daily per person cost than by considering only the adult  detainee population. For example, ICE calculated the daily per person  cost of health care in fiscal year 2016 as:  $148,186,091 / 9,096,014 = $16.29. Table 9 shows what the daily per person cost of health care would be if  the family population were removed from the calculation. Specifically, the  daily per person health care cost would be $148,186,091 / 8,696,453 =  $17.04  The result of a $0.75 underestimate in health care costs is an overall  underestimation of approximately $13.4 million for the fiscal year 2018  immigration detention system cost estimate based on the calculation:  $0.75 x 48,879 x 365 = $13,380,626. Including Family Facilities in Cost Data  In addition to spreading total costs across the entire population, rather  than just the adult population, ICE’s bed rate model includes obligations  and expenditures for family facilities. In examining ICE’s data for other  direct costs, we found that data from the three family facilities (Berks,  Karnes, and South Texas) were included in the facility cost data. These  three facilities’ other direct costs totaled $222,425. Because these  facilities operate on firm fixed price contracts that include other direct  costs, and these costs were already budgeted at $5.5 million in the  $291.4 million allotted for family facilities, these costs were double- counted in the model and the costs were added to the adult bed rate. It is  unclear if cost data for family facilities are also included in the health care  and in the service-wide costs used to calculate the adult bed rate. ICE  officials did not provide documentation or their rationale for including the  family facilities in their adult bed rate model. Table 10 demonstrates the effect of removing information for family  facilities from the other direct cost data and then dividing by the adult  population alone. This calculation results in a daily per adult rate for other  direct costs of $1.75 for fiscal year 2016, which is 3 cents lower than the  rate if the other direct costs for family facilities are included (and the costs  are divided by the adult population alone). Appendix II: Comments from the Department  of Homeland Security Appendix III: GAO Contacts and Staff  Acknowledgments GAO Contact Staff  Acknowledgments In addition to the contact named above, Kirk Kiester (Assistant Director),  Brian Bothwell, Pamela Davidson, Eric Hauswirth, Susan Hsu, Heather  Keister, Sasan J. “Jon” Najmi, Leah Q. Nash, Karen Richey, Daniela  Rudstein, Jack Sheehan, and Jeff Tessin made significant contributions  to this report.
In fiscal year 2017, ICE operated on a budget of nearly $3 billion to manage the U.S. immigration detention system, which houses foreign nationals whose immigration cases are pending or who have been ordered removed from the country. In recent years, ICE has consistently had to reprogram and transfer millions of dollars into, out of, and within its account used to fund its detention system. The explanatory statement accompanying the DHS Appropriations Act, 2017, includes a provision for GAO to review ICE's methodologies for determining detention resource requirements. This report examines (1) how ICE formulates its budget request for detention resources, (2) how ICE develops bed rates and determines ADP for use in its budget process, and (3) to what extent ICE's methods for estimating detention costs follow best practices. GAO analyzed ICE's budget documents, including CBJs, for fiscal years 2014 to 2018, examined ICE's models for projecting ADP and bed rates, and evaluated ICE's cost estimating process against best practices. U.S. Immigration and Customs Enforcement (ICE) formulates its budget request for detention resources based on guidance from the Office of Management and Budget and the Department of Homeland Security (DHS). To project its detention costs, ICE primarily relies on two variables—the average dollar amount to house one adult detainee for one day (bed rate) and the average daily population (ADP) of detainees. U.S. Immigration and Customs Enforcement's (ICE) Formula to Calculate Detention Costs GAO found a number of inconsistencies and errors in ICE's calculations for its congressional budget justifications (CBJs). For example, in its fiscal year 2015 budget request, ICE made an error that resulted in an underestimation of $129 million for immigration detention expenses. While ICE officials stated their budget documents undergo multiple reviews to ensure accuracy, ICE was not able to provide documentation of such reviews. Without a documented review process for reviewing the accuracy of its budget request, ICE is not positioned to ensure the credibility of its budget requests. ICE has models to project the adult bed rate and ADP for purposes of determining its budget requests. However, ICE consistently underestimated the actual bed rate due to inaccuracies in the model, and it is unclear if the ADP used in the budget justification is based on statistical analysis. GAO identified factors in ICE's bed rate model—such as how it accounts for inflation and double counts certain costs—that may lead to its inaccurate bed rate projections. For example, in fiscal year 2016, ICE's projections underestimated the actual bed rate by $5.42 per day. For illustrative purposes, underestimating the bed rate by $5 per day, assuming an ADP of 34,000, yields a more than $62 million underestimation in the detention budget request. By assessing its methodology and addressing identified inaccuracies, ICE could ensure a more accurate estimate of its actual bed rate cost. Additionally, ICE reported that the ADP projections in its CBJs are based on policy decisions that account, for example, for anticipated policies that could affect the number of ICE's detainees. While ICE's projected ADP may account for policy decisions, documenting the methodology and rationale by which it determined the projected ADP would help demonstrate how the number was determined and that it was based on sound assumptions. ICE's methods for estimating detention costs do not fully meet the four characteristics of a reliable cost estimate, as outlined in GAO's Cost Estimating and Assessment Guide . For example, while ICE's fiscal year 2018 detention cost estimate substantially met the comprehensive characteristic, it partially met the well-documented and accurate characteristics, and minimally met the credible characteristic. By taking steps to fully reflect cost estimating best practices, ICE could better ensure a more reliable budget request.