Turbulence ahead

Amid a flurry of marketing events, including a kickoff conference and a small-business meet-and-greet session, the Homeland Security Department finally has pushed its huge new Eagle contracting vehicle out of the nest.

Those who watch DHS find much interest in whether the fledgling program will struggle or soar at a time when Democrats in Congress and government auditors are stepping up criticism of contracting practices at the agency.

The Enterprise Acquisition Gateway for Leading Edge is an IT procurement vehicle valued at up to $7 billion a year for six years. DHS in June awarded prime contracts to 25 companies and in September to 28 small businesses; those companies now are positioned to compete for task orders.

The department held Nov. 9 information session and a Nov. 15 kickoff conference about teaming for Eagle contractors. Task orders, which have been trickling out, are expected to come faster as the agency opens the taps in early 2007.

"I haven't seen this level of [marketing] activity before with other contracts of this type," said Ron Rhodes, director of business development for Eagle contractor Optimal Solutions and Technologies Inc., Washington. "DHS is doing everything it can to make Eagle a success."

Storms brewing

Even so, the whirlwind around Eagle is not happening in a vacuum. Contracting practices at DHS are attracting negative publicity, including reports of recent claims that the agency's procurement shops are understaffed and inadequately managed.

The Washington Post reported Nov. 22 that a private consultant found lax contracting practices at DHS and couldn't locate nearly half of the needed case files for the audit.

DHS Inspector General Richard Skinner warned Nov. 16 of risks associated with another huge DHS contract: the Secure Border Initiative Network border surveillance system, projected to cost nearly $8 billion through 2011. The department has pursued an aggressive schedule without having demonstrated the capacity to adequately manage the schedule and performance and to keep costs under control, Skinner wrote.

Increased scrutiny and oversight over procurement also is expected under a newly elected Democratic Congress when it takes office in January 2007. Reps. Tom Davis (R-Va.) and Henry Waxman (D-Calif.), the current and incoming chairmen, respectively, of the House Committee on Government Reform, in July issued a report identifying $34 billion in alleged wasteful spending and a high rate of noncompetitive contract awards at DHS.

"We are looking at a sea change here," said Richard Moorhouse, a federal contracting attorney at Greenberg and Traurig LLP, Washington. Although Iraq will keep the Democrats busy, homeland security contracting also is on the list of priorities, he said.

The new majority party "wants to see whether contracts were validly awarded and [to] correct deficiencies in procurement," he said.

Should Eagle exceed all expectations, it would quiet the critics. Some in government contracting circles have expressed concern about possible delays of giant contracts, such as Eagle and the Secure Border Initiative, until Congress has more confidence in the efficacy of DHS' contracting practices.

But others said the problems are relatively minor, and the need to go ahead with programs such as Eagle and SBI-Net is too urgent to be postponed.

"The contracting problems at DHS are significant," said David Nadler, a partner at Dickstein, Shapiro LLP, Washington, and a government contracting expert. "These are symptomatic of broader problems including significant turnover and massive integration challenges."

Programs for national security, such as the Secure Border Initiative, have strong political momentum behind them, however.

"The mandate is very strong," Nadler said. "It will be tough to slow it down."

Either way, the stakes are high. Some insiders said that Eagle, because of its heft and lofty goal of consolidating IT spending for efficiency's sake, is viewed as a major test of reform-minded procurement at the agency. The thinking is that DHS is lavishing so much attention on Eagle, the program's success or failure could drive other contracting reform agendas there.

"Eagle is being touted as a Band-Aid to cover for all the other contracting problems at DHS," said a contractor who asked not to be named for fear of offending DHS officials.

Cautious optimism

Despite the high hopes buoying the vehicle, some contractors for Eagle are skeptical that the marketing will pay off.

For Eagle to succeed, procurement officers for the 21 agencies that comprise DHS will have to use it. Although projections are optimistic, thus far, the pace of task orders has been slow.

One contractor blamed the delays on still-pending fiscal 2007 budgets for component agencies. Another was more pessimistic, citing the recent experience of the Commerce Department's Information Technology Services Next Generation, known as Commits NextGen, governmentwide acquisition vehicle that some say has fallen short of expectations. The General Services Administration is taking over its administration.

"The multiple task orders under Commits NextGen never materialized," said a contractor who asked not to be named.

Other Eagle contractors said they are cautiously optimistic that the trickle will turn into a flood after the first of the year.

"Some people expected a windfall, but that will come later," said Matt Collins, teaming coordinator for Eagle contractor Energy Enterprise Solutions LLC, Gaithersburg, Md. "Our expectation was a post-election pickup, and we are starting to see that."

Collins said he is pleased with DHS officials' handling of Eagle thus far, calling it "very well organized."

"DHS is definitely saying and doing all the right things to make Eagle a success," said Dondie McNickle, chief operating officer of Eagle contractor G & B Solutions Inc., McLean, Va. "We're hopeful that some task orders are imminent."

Many Eagle prime contractors, which were selected in June, are satisfied with the pace of task orders to date.

"There is good marketing on Eagle," said Jalaiah Unman, contracts manager for small business Analytical Services and Materials Inc., Hampton, Va. "It's just getting started."

For now, the prospect of Eagle overcoming some of the negative perceptions of contracting at DHS is high. Officials at the kickoff conference addressed some of the negative publicity head on, according to an attendee who asked not to be named, and one speaker promised that DHS would crack down on sole-sourced contracts.

Waxman and Davis' report said that DHS contracts awarded without full competition have increased by 700 percent in two years, from $655 million in fiscal 2003 to $5.5 billion in fiscal 2005. Of those, $2.1 billion were sole-source awards.
DHS officials previously have testified to Congress that much of the increase in sole-source contracting awards at the agency in 2005 was related to contracts for urgent recovery activities following Hurricane Katrina. Department officials did not respond to phone calls requesting comment.

Overall, the Eagle kickoff conference seemed to generate good feelings. With presentations by several DHS senior officials, including Elaine Duke, chief procurement officer, and William Thoreen, program manager for Eagle, attendees said it was a rewarding event that they hope indicates a successful program to come.

"The mood was very upbeat," Rhodes said. "Everyone is anticipating getting a lot of business out of this."

Staff Writer Alice Lipowicz can be reached at alipowicz@postnewsweektech.com.