Report: DHS contracting lacks accountability, controls

Lawmakers today grilled Homeland Security Department procurement officials over consistent poor contract management over the past three years.

House Government Reform Committee chairman Tom Davis (R-Va.) and ranking member Henry Waxman (D-Calif.) released a report at the hearing detailing contract mismanagement that ranged from awarding too many sole-source contracts, lacking requirements planning, having too few qualified contracting personnel, and constant cost, schedule and performance shortfalls.

"The lack of overall accountability and control has spawned a sad succession of disastrous acquisitions," Davis said in his opening statement. "A $104 million [Transportation Security Administration] contract for training airport screeners tumbled out of control, eventually costing more than $700 million. Billion-dollar contracts have yet to deliver basic telecommunications infrastructure to many of our nation's airports. With so much at stake and so little room for error, the size and difficulty of the challenge can be no excuse for a failure to put an effective management structure in place."

The Davis-Waxman report found while DHS' procurement budget has increased by 189 percent since 2003 to $10 billion a year, the number of sole-source contracts has increased by 739 percent to $5.5 billion. The 30-page report looked at 32 DHS contracts worth $34.3 billion since 2003.

Waxman said DHS spending is growing 31 times faster than inflation and 11 times faster the rest of the federal budget. And for that, he said, DHS has awarded "boondoggle contracts" that give large sums of money to contractors and leave the country's "borders unprotected and our ports and airlines vulnerable to attack."

DHS officials and government auditors generally agreed with the report's findings, but offered some hope that the agency is improving its procurement shop.

Elaine Duke, DHS chief procurement officer, said many of the sole-source contracts were in response to the hurricanes last year. She also said DHS has added better internal controls that will improve how it manages contracts.

"We awarded 76 percent of our contracts competitively at the onset of hurricane season," Duke said in response to Davis' questioning. "We had dip in our competitive numbers primarily due to the Katrina contracting at FEMA. What we are doing to contract that is putting contingency contracts in place and improving our planning."

Duke also outlined her top priorities, which include increasing the number of acquisition workers, establishing an acquisition system whereby each requirement has a well-defined mission and a management team, and strengthen contract administration to ensure products and services meet contract requirements and mission needs.

One of the ways DHS is increasing the number of procurement officers is by asking for more funding. In fiscal 2007, Duke said the department requested funding for 2,000 additional contracting officers. And for the 2008 request that DHS is working on now, she said her office is taking a consolidated look across the department of procurement personnel.

The Davis-Waxman report found the contracting shop is understaffed by 42 percent of its authorized contracting officers.

Michael Sullivan, the Government Accountability Office's director of Acquisition and Sourcing Management, testified that staffing shortages is a major reason for the problems. And one quick fix would be to improve their internal controls of cost and schedule.

Lawmakers also blamed the lack of quality internal controls on problematic contracts such as Integrated Surveillance Intelligence System and TSA's $1 billion IT services contract with Unisys.

DHS spent more than $400 million on ISIS, which was supposed to use camera and other surveillance equipment to improve border security. But GAO and the lawmakers found the equipment didn't perform well.

One of the issues legislators pointed to was contract management and the fact DHS outsourced it to the General Services Administration. Sullivan said 90 percent of DHS' contracts were done through other agency vehicles. He did, however, add that with the hiring of 200 contracting officers, that number dropped to 70 percent this year.

"There were program management problems between the border patrol and GSA's contracting officer," said David Zavada, DHS' assistant inspector general for audits.

Rep. Chris Van Hollen (D-Md.) repeatedly asked about the $1 billion estimate of the TSA contract with Unisys.

He wanted to know how TSA could miss the estimate by so much. TSA officials really estimated the contract to be worth $3 billion and $5 billion.

While none of the panel members had answers for Van Hollen, Zavada said TSA spent money in advance of the schedule.

"The problems at DHS are fundamental, changing requirements and a lack of oversight," Zavada said.

Zavada added that the IG's office will review DHS' use of sole-source contracts as well as reports on several ongoing contracts such as the Coast Guard's Deepwater and DHS' Secure Border Initiative.

Jason Miller is assistant managing editor of Washington Technology's sister publication, Government Computer News.