New IT agreements may reduce DHS reliance on interagency contracts

Recently awarded internal contracts for information technology equipment, and an award announcement for IT services expected this fall, should help reduce the Homeland Security Department's reliance on interagency contracts, DHS officials said in response to recent criticisms from government overseers.

IT purchases account for a significant share of interagency contracts awarded by DHS' Office of Procurement Operations, the Customs and Border Protection bureau and the Coast Guard -- three components reviewed by the Government Accountability Office where officials rely heavily on contracts placed through other agencies.

Homeland Security spent about $17.5 billion on contracts in fiscal 2005, with about 37 percent of that amount awarded through contracts established by other agencies, the Government Accountability Office stated in a report published Wednesday (GAO-06-996).

GAO found shortcomings in the department's planning and implementation surrounding interagency contracts, and staffing shortages in the oversight offices meant to track acquisition. The findings echo concerns that GAO raised in January 2005, when it placed interagency contracts on its high risk management watch list, over worries that their popularity has grown but agencies have not adequately considered accompanying training and management demands.

Indeed, reviewers found that DHS lacked guidance and training on when to use interagency contracts and how to weigh the costs and benefits associated with different contracting strategies for a given procurement. In some cases, department officials said they placed contracts with other agencies because it was quicker and more convenient than running a competition, without having weighed differences in cost.

DHS officials responded that interagency procurement dollars should drop as DHS agencies begin to place task orders against internally negotiated vehicles such as the recently awarded Enterprise Acquisition Gateway for Leading Edge solution contracts for IT services. Also, they said, costs should drop as they begin buying IT equipment through the First Source program. An agency spokesman said First Source would be awarded this fall. The shift to internal contracts is expected to decrease reliance on the General Services Administration's Federal Supply Schedule and other governmentwide contracts.

Steven Pecinovsky, director of DHS' oversight liaison office, wrote in a response to the report that DHS Secretary Michael Chertoff has declared reliance on other agencies for critical contracts a weakness in the department's internal control structure. Consequently, the department has a goal of reducing the number and value of its interagency agreements.

DHS officials said they also would address GAO's recommendations by introducing training modules on interagency contracting in the coming year, and issuing formal guidance in an upcoming management directive and the acquisition planning guide.

Reviewers found oversight on interagency contracts sorely lacking, in part because as of August, the office charged with monitoring them had only five staff members to manage $17.5 billion in acquisitions.

Agency officials responded that they are working to increase acquisition staffing. Most experts say the government has a shortage of acquisition personnel, however. Paul Denett, OMB's procurement chief, recently described acquisition staffing as a zero-sum game, pointing to new hires at DHS as "robbing Peter to pay Paul," as the few qualified staff move from one short-handed agency to another.

GAO also scolded DHS for failing to enhance the authority of the chief procurement official, as it recommended in March 2005, and urged Congress to demand the secretary report on the matter.

Legislators responded to the report with election-year concerns over the impact of interagency contracting on the DHS budget.

"As someone who is fighting in Congress to secure more scarce federal funding for port security, chemical security, grants to first responders and all the other critical functions of DHS, I am frustrated by the inability of the department to make each dollar stretch as far as it can," said Sen. Joseph Lieberman, D-Conn. "It appears the department routinely enters multimillion-dollar interagency contracts without shopping around to see if there is a better deal, and without even keeping track of the millions of dollars of fees DHS is being charged by other agencies."

A spokeswoman for the Senate Homeland Security and Governmental Affairs Committee said that, following the fall pre-election recess, legislators would discuss implementation of GAO's recommendations.