DHS: Controls, training needed to combat waste

Editor's note: This story was updated at 3:30 p.m. Aug. 4, 2006, to correct that Clark Kent Ervin is a former Homeland Security Department inspector general, not a former procurement official at the company.

Top purchasing officials at the Homeland Security Department went before the House Government Reform Committee today to try to explain a newly released committee report that pinpoints numerous problems in DHS’ procurement and contracting procedures.

The report, prepared by committee chairman Rep. Tom Davis (R-Va.) and ranking member Rep. Henry Waxman (D-Calif.), identified 32 DHS contracts worth $34.3 billion that involved “significant overcharges, wasteful spending or mismanagement.”

Davis described DHS’ purchasing system as acquisition dysfunction.

The report found that procurement spending at DHS has increased 189 percent since the founding of the agency, rising from 14,000 contracts valued at $3.5 billion in 2003 to 63,000 contracts worth $10 billion by 2005. That increase was 11 times faster than the remainder of federal discretionary spending, the report states.

Moreover, sole-source and limited competition contracts have grown even faster than overall DHS procurement spending and have been accompanied by pervasive mismanagement, the report states.

The report shows a pattern of reckless spending at DHS that included several billion dollars spent on airport screening equipment and port facilities radiation-detection systems that did not work, and a $400 million Integrated Surveillance Intelligence System border security monitoring system whose cameras shut down in inclement weather, Waxman said.

The report criticizes the $10 billion contract awarded to Accenture to implement the U.S. Visitor and Immigrant Status Indicator Technology program to amass data on foreign visitors. The committee found the system relies on out-of-date and ineffective technologies, the report states. Even if US-VISIT worked properly, it might not prove to be an efficient or effective border security system, the committee said.

The report also focused on the Transportation Security Agency’s $1 billion contract with Unisys to upgrade airport computer networks. By September 2005, less than halfway through the contract period, TSA had spent 80 percent of the contract.

It cited a DHS inspector general report that found TSA officials had originally estimated the contract would cost between $3 billion and $5 billion, but they “set an artificial ceiling of $1 billion” because senior administration officials wanted a figure that would be more palatable to Congress.

Michael Sullivan, director of acquisition and sourcing management at the Government Accountability Office, told the committee that DHS – which was created by combining some 22 separate agencies – lacks internal controls and clearly defined oversight over its many procurement processes.

He said DHS’ efforts to create a unified, accountable acquisition organization have been hampered by policies that create ambiguity regarding who is accountable for acquisition decisions.

Elaine Duke, DHS’ chief procurement officer, blamed some of the problems on an insufficient number of employees trained to manage the procurement process. She said she has requested 200 more procurement positions in the fiscal 2008 budget.

DHS will enter into sole-source or limited-competition contracts to provide immediate humanitarian needs and to protect life and property, Duke said. “Since DHS operates in a rapid acquisition environment, it must prioritize acquisition planning – beyond that generally expected of an agency that does not have emergency response as a primary responsibility – to ensure that decisions and made properly and timely,” she said.

David Zavada, assistant inspector general for audits at DHS, said poorly defined regulations and little oversight combined with complex contracts have hampered procurement reforms.

Clark Kent Ervin, a former DHS inspector general, suggested several reforms, including requiring all contracts except de facto cost-plus-percentage-of-cost contracts to be competed, giving penalties for contractors that fail to perform or are late, and offering incentives to be paid only when they are actually earned. Waxman said the committee staff would examine the testimony and look into the possibility of more hearings that would consider specific DHS contracts when Congress reconvenes after its summer break.