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Contractors should expect a fourth quarter "spending spree" through the Homeland Security Department's primary information technology procurement vehicle, a market research group said in a recent report.

According to INPUT's report, DHS' Enterprise Acquisition Gateway for Leading Edge contracts, awarded in 2006, have grown popular year-round. But the last quarter of fiscal 2007 was particularly lucrative, and a similar spike is likely this year, the research group said.

In the fourth quarter of fiscal 2007, spending on EAGLE skyrocketed to $2.4 billion, almost quadruple the level from the previous three quarters combined. The jump was driven in part by two large task order contracts, but even when those contracts are not taken into account, fourth quarter fiscal 2007 spending was more than half of the total spending that year. The average agency completes about 34 percent of its annual spending in the last quarter of the fiscal year, which ends Sept. 30.

"Quarter-by-quarter analysis of DHS spending through EAGLE since its inception shows the use of the vehicle has ramped dramatically compared to some other task order vehicles, making EAGLE too important for technology vendors to ignore, especially in fourth quarter fiscal 2008," the report stated.

INPUT expects fourth quarter EAGLE spending to be higher in fiscal 2008 than it was in fiscal 2007. In the second quarter of fiscal 2008, contract spending topped $300 million, compared to $43 million in the second quarter of 2007.

"EAGLE may very well be the place DHS buyers go to 'use it or lose it' in [the] fourth quarter," said Lauren Jones, principal analyst at INPUT.

The firm noted that EAGLE has significantly outpaced similar contract vehicles, such as the Air Force's NETCENTS and the Navy's SeaPort-e, in both number of task orders and dollars spent. The average task order size on EAGLE is $8.8 million, compared to $3.8 million on SeaPort-e and $542,000 on NETCENTS.

DHS spokesman Larry Orluskie said EAGLE's convenience was one reason it has been so successful. "It provides DHS program offices and contracting officers with a fast and flexible procurement vehicle that is consistent with the DHS enterprise architecture," Orluski said. "This allows them to quickly and effectively obligate fourth quarter funds. DHS has several on-going EAGLE procurements that should be awarded prior to the end of the fiscal year."

Four of the seven major agencies within Homeland Security are spending significantly through the contract, INPUT found. The Transportation Security Administration leads other component agencies in total spending with EAGLE so far, but that is due primarily to a $1 billion award to IBM for the outlier Organizational Application Support and Information Services contract. If OASIS is excluded, TSA ranks third in spending through EAGLE. Then the largest spender is Citizenship and Immigration Services, which spent $289 million, followed by Customs and Border Protection at $242 million.

According to INPUT, the most common type of services procured through EAGLE is "operations and maintenance." This category covers data centers, help desks, and network and security operations. Spending in this category is almost three times higher than in the second most common EAGLE category -- management support services, which includes enterprise architecture, security, training and program management office support.

The firm made a number of recommendations for industry in its report, including planning for future participation in EAGLE. In the short term, however, the research group advised contractors to "Run, don't walk, to DHS to look for 4Q EAGLE spending!"

COMMENTS

• Fourth quarter spending is a century old practice within the federal establishment and no President, Congress or regulatory body, including OMB or GAO,has been able to change it. They have tried to impact it by putting in place process driven and paper ridden rules, regulations and reporting requirements, however it has simply not worked. Having a two year budget authorization for agencies would help, however, Congress will never give up their power for annual budget authorizations and pork barrel spending authority. However, what may have an impact, is for either the President, Congress or OMB to require that all fourth quarter spending,that exceeds the average quarterly spending for the first three quarters of the FY, be directed as contract opportunities that will be available only for America's small businesses to compete for. This would make a difference as small businesses would use the additional revenues to grow their businesses and create new jobs. Small Business Advocate Posted September 3, 2008 10:06 AM
• If Mr. Obama wants change, redefining the Federal budget as a "cap" would be a great start. The 20th Century style of 4th quarter spending sprees comes from viewing the authorizations as the "must spend" level. The system penalizes under-obligations instead of rewarding efficient use of tax payer dollars. Returning money to the Treasury on 30 September is NOT a sin. Besides, DHS and DHS IT are about the most egrarious wastes of tax dollars, especially such year end contractor feasts. Mr Obama, Democrats - if you want change, change this! M Onger Posted August 29, 2008 9:18 AM