Vendors defend DHS contracting practices

Defense contractors, information technology providers and industry observers say they have issues with a new House Government Reform Committee report that criticizes the Homeland Security Department’s procurement methods and contracting practices as being rife with “significant overcharges, wasteful spending and mismanagement.”

Investigators, including the Government Accountability Office, identified 32 DHS contracts that had “major problems in administration or performance.” The department awarded the contracts in the past five years, and they are worth $34.3 billion. But industry officials say the report is overkill.

Bob Guerra, a partner at Guerra Kiviat, said DHS is doing much better than it did when it became operational in March 2003. The department is improving its procurement processes and has a greater level of discipline in the process, Guerra said. “It’s just taken time to get the organization together.”

Scot Edwards, chief marketing officer at GTSI, said that because DHS has combined 22 agencies, it has a broad, overarching influence. “The more they get a handle on things, the better off we’ll all be,” Edwards said, adding that industry tries to see past the problems outlined in the DHS report.

Contractors may be turning a blind eye to the agency’s criticism because DHS has increased spending 189 percent since its creation in response to the 2001 terrorist attacks. In fiscal 2003, DHS awarded 14,000 contracts worth $3.5 billion, according to the report. By fiscal 2005, the department had awarded 63,000 contracts worth $10 billion. That increase was 11 times faster than the remainder of federal discretionary spending, the report states.

“It’s impossible to do everything perfect the first time,” said Mark Zelinger, president and founder of Zelinger Associates, a business development and federal marketing services company. When you quickly put together an agency as diverse and as large as DHS, “you’re going to get some mistakes,” he said.

Zelinger added that DHS has done a remarkably good job in its short existence, despite some evident problems.

Rep. Tom Davis (R-Va.), the committee’s chairman, said acquisition dysfunction best describes DHS’ procurement processes, and ranking member Rep. Henry Waxman (D-Calif.) said DHS has a pattern of reckless spending.

But Phil Kiviat, a partner at Guerra Kiviat, said the DHS criticism exemplifies the common adversarial relationship between agencies and congressional committees. Such inquiries are common, he added. “If you make progress, it’s not as good as being finished,” he said. “Therefore, it’s [considered] a deficiency.”

At a July 27 hearing called by Davis and Waxman, Michael Sullivan, director of acquisition and sourcing management at GAO, said DHS’ problem is a lack of internal controls and oversight of its procurement processes.

Elaine Duke, chief procurement officer at DHS, cited several steps DHS is taking to fix its procurement problems, including a centralized recruiting system for hiring contracting officers, a request for funding in the fiscal 2007 budget to hire 200 additional procurement officials, and new oversight and management directives.

DHS operates in a rapid acquisition environment, Duke added. “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 are made properly and timely.”

Waxman told reporters after the session that the committee would examine the testimony and possibly call more hearings in the fall to examine specific contracts. He did not say whether the committee would call any contractors.

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