Clinton asks Homeland Security IG to probe contract bonus payments

Recent reports have led a key U.S. senator to request an investigation into the Homeland Security Department's efforts to link contract award fees to performance.

Sen. Hillary Clinton, D-N.Y., currently the front-runner for her party's presidential nomination, this week called on DHS's inspector general to look into how the department awarded performance-based bonuses to Chenega Technology Services Corp., an Alaska native corporation.

Chenega was hired by the Customs and Border Protection bureau to maintain screening machines at border checkpoints. The $475 million contract was the largest award made by a civilian agency to an 8(a) small disadvantaged business in the history of the Small Business Administration.

The inspector general and lawmakers, however, have questioned the initial sole-source award as well as fees paid to Chenega over the course of the contract. In an October report, IG Richard Skinner said DHS had used an incorrect classification code when determining Chenega's 8(a) status, allowing the company to qualify for the sole-source award. If DHS had used the correct classification, the contract would have surpassed the revenue limit for a noncompeted award.

"Taken together with [the inspector general's] conclusion that the department improperly awarded the underlying contract to Chenega, it is disturbing to hear that DHS has provided an award fee to this corporation," Clinton wrote in a letter to Skinner.

Clinton asked Skinner to investigate the way DHS gave award fees to Chenega and the department's overall practices on linking award fees to contractor performance. Specifically, she wants to know whether award fees to Chenega were "justified and based on successful acquisition outcomes."

This is not the first time DHS's practices on bonus payments have been called into question. In several other cases, IG investigations have found that the department gave award fees without performance evaluations or with evaluations that were subjective or based on contractor self-assessments. DHS came under fire for bonuses in the high-profile Deepwater Coast Guard contract as well. Despite long-standing schedule, performance and cost control problems, the Government Accountability Office found that the contractor on that project had received a "very good" rating in its first year, earning a $4 million award fee.

"In too many cases, DHS appears to be awarding bonuses without evaluating work or, even worse, despite poor performance," Clinton wrote. "Failing contractors should be rooted out, not rewarded.

Steve Charles, executive vice president of the McLean, Va.-based immixGroup, said shifting requirements and performance measures may be partly to blame.

"The problem is defining things like this in advance," Charles said. "Things change and, if not formalized in a contract modification, it looks like the award fee was paid for something that was not performed when, in fact, sometimes, I suspect, the fee is paid because of other factors that are not written down."

Charles said this lack of clarity and reporting can lead to concerns about transparency and potential abuse. Many of the problems, he said, can be explained by a lack of trained acquisition employees.

Elaine Duke, DHS deputy undersecretary for management and former chief procurement officer, has made improving the DHS acquisition workforce one of her top priorities, saying that many contracting problems have stemmed from the need for more and better trained procurement employees.

A DHS spokesman said the department's award fees are administered in accordance with federal acquisition regulations, and the agency will work with the inspector general on any investigation.