House panel probes failed Homeland Security contracts

In the past five years, the Homeland Security Department has spent about $15 billion on contracts that failed or were behind schedule and over budget, according to data released Wednesday by Democrats on the House Homeland Security Committee.

Many of these contracts already have been scrutinized by the committee and congressional investigators. They include the US VISIT entry and exit tracking program, the Secure Border Initiative, and installation of baggage screening machines at various airports.

The procurements are managed by some of government's largest contractors, including Boeing Co., Lockheed Martin Corp. and Northrop Grumman Corp. Several of the contracts in question, including one for the Coast Guard's Deepwater modernization program and one for temporary housing following Hurricane Katrina, have been canceled or rebid.

"We've seen billions of taxpayer dollars wasted in failed procurements," said Rep. Chris Carney, D-Pa., chairman of the Subcommittee on Management, Investigations and Oversight, during an afternoon hearing. "It's simply unacceptable."

Democrats blamed ill-defined contract requirements, inadequate management and contractors' failure to follow relevant procurement laws.

DHS officials acknowledged past problems, but testified that oversight and acquisition processes have improved.

"While we have strengthened many aspects of our acquisition program over the first five years of the department, we will continue to seek improvements in our processes, and provide our acquisition professionals the tools they need to both meet our mission and achieve acquisition excellence," said Richard Gunderson, DHS' deputy chief procurement officer.

The department's contract spending increased from $3.4 billion in fiscal 2003 to $12.2 billion, or nearly 40 percent of its budget, in fiscal 2007. DHS could surpass that figure in fiscal 2008, as it already has spent $11 billion on contracts.

One recurring criticism is that the department has an undersized acquisition workforce.

Gunderson said Homeland Security has more than 1,000 contract specialists, but growing demand for mid- and senior-level professionals has made recruitment and retention increasingly difficult. To fill the gap, DHS has established an acquisition intern program and is considering rehiring retired annuitants.

DHS Deputy Inspector General James Taylor said the department desperately needs additional staff to meet its oversight responsibilities. A recent audit of Homeland Security's workforce confirmed that "DHS cannot provide reasonable assurance that qualified acquisition personnel are managing acquisitions," he said.

The Government Accountability Office reported in April 2008 that DHS was at less than 40 percent of its optimal level of contract specialists. Meanwhile, Office of Personnel Management data indicates that more than 40 percent of DHS' contracting officers will be eligible to retire within the next five years.

But other witnesses said the problems run deeper than workforce gaps.

Scott Amey, general counsel for the Project on Government Oversight, said DHS has been burdened by poor contract management policies and procedures, a failure to adequately prepare for emergency situations and an overreliance on purchasing infant technologies.

"As a result, DHS is frequently placed in a position mirroring the Department of Defense in the 1980s," Amey said. "In order to avoid the pitfalls that we have seen through history, Congress and DHS must place a greater emphasis on full and open competition, market research, contractor data, pre-award decisions, and post-award monitoring and administration."

Amey gave DHS credit for addressing a number of early criticisms, particularly the lack of competition for some contracts and its overreliance on large firms.

DHS' use of sole source contracts decreased from about 40 percent in fiscal 2006 to 20 percent in fiscal 2007. Those figures are likely to drop again; so far 14 percent of the agency's fiscal 2008 contracts have been awarded without competition.

Meanwhile, DHS awarded more than 31 percent of its contract dollars to small businesses last year, exceeding the federal statutory goal of 23 percent.

But Rep. Bennie Thompson, D-Miss., chairman of the Homeland Security Committee, remained skeptical. He said DHS has failed to implement a lessons learned approach to contracting and has not exercised adequate oversight.

"Instead, DHS leadership has permitted a system of waste, abuse, mismanagement, vague contractual terms, overspending, bonuses for bad performance, contractors being hired to oversee contractors and the same missteps over and over again," Thompson said.