Interagency Contracting
Improved Guidance, Planning, and Oversight Would Enable the Department of Homeland Security to Address Risks Gao ID: GAO-06-996 September 27, 2006The Department of Homeland Security (DHS) has some of the most extensive acquisition needs within the federal government. In fiscal year 2005, DHS spent $17.5 billion on contracted purchases, $6.5 billion, or 37 percent, of which was through the use of other agencies' contracts and contracting services, a process known as interagency contracting. While these types of contracts offer the benefits of efficiency and convenience, in January 2005, GAO noted shortcomings and designated the management of interagency contracting as a governmentwide high-risk area. Given the department's critical national security mission and the results of our earlier work, GAO reviewed the extent to which DHS manages the risks of interagency contracting and assessed DHS' guidance, planning, and oversight of interagency contracting.
DHS has developed guidance on how to manage the risks of some but not all types of interagency contracts. The department has guidance for interagency agreements--the largest category of interagency contracting at the department--but does not have specific guidance for using other types of contracts such as the General Services Administration (GSA) schedules and governmentwide acquisition contracts (GWAC), which amounted to almost $1.5 billion in fiscal year 2005. Moreover, in some cases we found users may have lacked expertise that could be addressed through guidance and training on the use of these types of contracts. DHS did not always consider alternatives to ensure good value when selecting among interagency contracts. While this contracting method is often chosen because it requires less planning than establishing a new contract, evaluating the selection of an interagency contract is important because not all interagency contracts provide good value when considering timeliness and cost. As of July 2005 DHS has required planning and analysis of alternatives for all acquisitions. In this review, we found that in all four cases for which an analysis of alternatives was required, it was not conducted. DHS officials said benefits of speed and convenience--not total value including cost--have often driven decisions to choose these types of contracts. DHS does not systematically monitor its total spending on interagency contacts and does not assess the outcomes of its use of this contracting method. According to officials, DHS' acquisition oversight program has been hindered by limited resources and authority. As of August 2006, the Office of the Chief Procurement Officer had five staff assigned to departmentwide oversight responsibilities for $17.5 billion in acquisitions. In March 2005, GAO recommended that the Chief Procurement Officer be provided sufficient authority to provide effective oversight of DHS' acquisition policies and procedures. Without this authority, DHS cannot be certain that acquisition improvements are made.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-996, Interagency Contracting: Improved Guidance, Planning, and Oversight Would Enable the Department of Homeland Security to Address Risks
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
September 2006:
Interagency Contracting:
Improved Guidance, Planning, and Oversight Would Enable the Department
of Homeland Security to Address Risks:
Interagency Contracting:
GAO-06-996:
GAO Highlights:
Highlights of GAO-06-996, a report to congressional requesters
Why GAO Did This Study:
The Department of Homeland Security (DHS) has some of the most
extensive acquisition needs within the federal government. In fiscal
year 2005, DHS spent $17.5 billion on contracted purchases, $6.5
billion, or 37 percent, of which was through the use of other agencies‘
contracts and contracting services, a process known as interagency
contracting. While these types of contracts offer the benefits of
efficiency and convenience, in January 2005, GAO noted shortcomings and
designated the management of interagency contracting as a
governmentwide high-risk area. Given the department‘s critical national
security mission and the results of our earlier work, GAO reviewed the
extent to which DHS manages the risks of interagency contracting and
assessed DHS‘ guidance, planning, and oversight of interagency
contracting.
What GAO Found:
DHS has developed guidance on how to manage the risks of some but not
all types of interagency contracts. The department has guidance for
interagency agreements”the largest category of interagency contracting
at the department” but does not have specific guidance for using other
types of contracts such as the General Services Administration (GSA)
schedules and governmentwide acquisition contracts (GWAC), which
amounted to almost $1.5 billion in fiscal year 2005. Moreover, in some
cases we found users may have lacked expertise that could be addressed
through guidance and training on the use of these types of contracts.
DHS did not always consider alternatives to ensure good value when
selecting among interagency contracts. While this contracting method is
often chosen because it requires less planning than establishing a new
contract, evaluating the selection of an interagency contract is
important because not all interagency contracts provide good value when
considering timeliness and cost. As of July 2005 DHS has required
planning and analysis of alternatives for all acquisitions. In this
review, we found that in all four cases for which an analysis of
alternatives was required, it was not conducted. DHS officials said
benefits of speed and convenience”not total value including cost”have
often driven decisions to choose these types of contracts. DHS does not
systematically monitor its total spending on interagency contacts and
does not assess the outcomes of its use of this contracting method.
According to officials, DHS‘ acquisition oversight program has been
hindered by limited resources and authority. As of August 2006, the
Office of the Chief Procurement Officer had five staff assigned to
departmentwide oversight responsibilities for $17.5 billion in
acquisitions. In March 2005, GAO recommended that the Chief Procurement
Officer be provided sufficient authority to provide effective oversight
of DHS‘ acquisition policies and procedures. Without this authority,
DHS cannot be certain that acquisition improvements are made.
Figure: Growth in DHS Contracting:
[See PDF for Image]
Source: GAO analysis of DHS data.
[End of Figure]
What GAO Recommends:
GAO recommends that the Secretary of Homeland Security consider the
adequacy of the Office of the Chief Procurement Officer‘s resources and
develop guidance and training; establish criteria to consider in the
decision to use an interagency contract; and implement oversight to
evaluate the outcomes of interagency contracts. DHS agreed with these
recommendations. In addition, Congress should require the Secretary to
report on efforts to provide the Chief Procurement Officer with
sufficient authority.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-996].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact John Hutton at (202) 512-
4841 or huttonj@gao.gov.
[End of Section]
Contents:
Letter1:
Results in Brief:
Background:
Enhanced Guidance and Expertise Could Help DHS Address Interagency
Contracting Risks:
DHS Did Not Always Assess Total Value When Choosing Interagency
Contracts:
DHS Oversight Program Does Not Assess Outcomes of Interagency
Contracting:
Conclusions:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Department of Homeland Security Interagency Contracting:
Appendix III: Comments from the Department of Homeland Security:
Tables:
Table 1: Department of Homeland Security Interagency Contracting in
Fiscal Year 2005 (dollars in millions):
Table 2: Examples of Need for Improved Training and Expertise:
Table 3: Cases with Limited Planning and No Assurance of Good Value:
Table 4: DHS Acquisition Oversight Program:
Table 5: Fiscal Year 2005 Cases Reviewed at Office of Procurement
Operations, Customs and Border Protection, and Coast Guard:
Table 6: Interagency Contracting Methods Used by DHS:
Figures:
Figure 1: Growth in DHS Contracting:
Abbreviations:
CBP: Customs and Border Protection:
DHS: Department of Homeland Security:
DOD: Department of Defense:
FedSim: Federal Systems Integration and Management Center:
FAR: Federal Acquisition Regulation:
FPDS-NG: Federal Procurement Data System-Next Generation:
GSA: General Services Administration:
GWAC: Governmentwide Acquisition Contract:
OCPO: Office of the Chief Procurement Officer:
OPO: Office of Procurement Operations:
United States Government Accountability Office:
Washington, DC 20548:
September 27, 2006:
The Honorable Susan M. Collins:
Chairman:
The Honorable Joseph I. Lieberman:
Ranking Minority Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Daniel K. Akaka:
Ranking Minority Member:
Subcommittee on Oversight of Government Management, Federal Workforce,
and the District of Columbia:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Bennie G. Thompson:
Ranking Minority Member:
Committee on Homeland Security:
House of Representatives:
The Department of Homeland Security (DHS) performs a comprehensive
homeland security mission encompassing protecting the nation's borders,
airports and critical infrastructure, and response and recovery in the
event of national emergencies. DHS meets these goals with some of the
most extensive acquisitions within the federal government. Now one of
the largest procuring agencies, DHS spent about $17.5 billion on
contracted purchases in fiscal year 2005.[Footnote 1] Over $6.5
billion, or approximately 37 percent of the department's total fiscal
year 2005 contract dollars, was for purchases made through the use of
other agencies' contracts and contracting services, a process known as
interagency contracting.[Footnote 2] While these types of contracts
offer the benefits of efficiency and convenience, in January 2005, GAO
noted shortcomings and designated the management of interagency
contracting as a governmentwide high-risk area. Our work and the work
of others has identified the need for improved guidance and expertise,
planning, and oversight to manage and mitigate the risks of these types
of contracts. In March 2005, we reported that DHS was not effectively
managing acquisition, in particular interagency purchases, of the
multitude of goods and services it needed to meet its mission.[Footnote
3]
Given the department's critical national security mission and the
results of our earlier work, you asked us to review the extent to which
DHS manages interagency contracting. To address this question, we
assessed (1) DHS guidance for the use of interagency contracts; (2) DHS
planning and evaluation of contracting alternatives when using
interagency contracts; and (3) DHS practices for overseeing the
performance of interagency contracts.
To conduct our work, we selected 17 cases totaling $245 million. Each
case represented $5 million or more in orders placed through several
types of interagency contracting arrangements in fiscal year 2005.
These cases represented orders placed by DHS' Office of Procurement
Operations (OPO), Customs and Border Protection (CBP), and Coast Guard,
which were the largest users of interagency contracts in fiscal year
2005. We interviewed senior procurement officials at the three
components and at the Office of the Chief Procurement Officer (OCPO),
interviewed contracting officers and program managers at the three
components, and reviewed the guidance and oversight at the departmental
level and at the components to address the management and planning of
interagency contracting.[Footnote 4] We obtained data on procurement
actions from DHS and compared it with data from the Federal Procurement
Data System-Next Generation (FPDS-NG) and determined that the data were
sufficiently reliable for our purposes. For more information on our
scope and methodology, see appendix I. We conducted our work from
February through August 2006 in accordance with generally accepted
government auditing standards.
Results in Brief:
While DHS continues to rely heavily on interagency contracts to fill
its purchasing needs, the departmentwide guidance on how to effectively
manage and mitigate the risks of interagency contracting could be
improved. These risks include not receiving good value and lack of
expertise of users. DHS has issued specific guidance associated with
the largest area of interagency contracting, which is performed under
interagency agreements, but not for other types, such as GSA schedules
and governmentwide acquisition contracts, which amounted to nearly $1.5
billion in DHS spending in fiscal year 2005. We also found that some
DHS users may have lacked expertise and could benefit from guidance and
training in the use of these types of interagency contracts. For
example, we found that controls, such as the annual review of purchase
agreements for discounts on purchases through the GSA schedules,
required by the Federal Acquisition Regulation to ensure that prices
still represent the best value, were not in place. OCPO officials
explained that their staff are needed to respond to crises at
components, such as the Federal Emergency Management Agency during the
response to Hurricanes Katrina and Rita, taking their attention away
from acquisition policy efforts, such as developing guidance.
According to DHS officials, the department did not always select
interagency contracts based on planning and analysis and instead made
decisions based on the benefits of speed and convenience--not total
value including cost. This contracting method is often chosen because
it requires less planning than establishing a new contract, and users
have typically relied on the servicing agency or the agency that
manages the contracts to conduct planning, ensuring that prices are
competitive and following proper procedures. However, our prior work
has highlighted the importance of evaluating the use of these contracts
for specific purchases because proper planning does not always occur.
In our review, we found that DHS users conducted limited evaluation of
interagency contracting alternatives. In the four cases for which an
analysis of alternatives was required, it was not conducted. As of July
2005, DHS guidance requires planning for all types of purchases,
including those made through interagency contracting, to include a
discussion of alternative methods considered, but this policy does not
include specific criteria to consider when analyzing alternative
contracting methods.
DHS does not yet have in place sound oversight practices that would
enable it to evaluate the outcomes of its use of interagency contracts.
DHS has not been monitoring its use of interagency contracts and could
not readily provide data, such as the total cost including fees paid to
other agencies for the use of these vehicles, which could help in
assessing costs and benefits of interagency contracting. OCPO officials
said they do not know how much DHS pays in fees to other agencies. OCPO
is in the early stages of implementing an Acquisition Oversight
Program. As part of this program, DHS plans to produce data through
assessments and reviews to be conducted by the end of fiscal year 2007;
however, this program is not expected to evaluate whether these
interagency contracts provided good outcomes for the department. OCPO
officials explained that in the few years since the department was
created, their efforts have been focused on procurement execution
rather than oversight due to urgent needs at component agencies and
limited staffing. As of August 2006, OCPO officials said that they had
five staff assigned to departmentwide oversight responsibilities for
$17.5 billion in acquisitions. In March 2005, we recommended that OCPO
be provided sufficient enforcement authority and resources to provide
effective oversight of DHS' acquisition policies and procedures. As of
August 2006, OCPO still lacks authority to perform effective
departmentwide oversight of the acquisition function across the
component procurement organizations, which limits its ability to ensure
that needed improvements are made.
To improve the management of interagency contracting at DHS, we are
making recommendations to the Secretary of Homeland Security to
consider the adequacy of the OCPO's resources and develop consistent,
comprehensive guidance and training; establish criteria to consider in
selecting an interagency contract; and implement oversight to evaluate
the outcomes of using interagency contracts.
Because the Secretary has not taken action to ensure departmentwide
acquisition oversight, Congress should require the Secretary to report
on efforts to provide the Chief Procurement Officer with sufficient
authority over procurement activities at all components.
In written comments on a draft of this report, DHS concurred with our
recommendations and indicated planned actions to address them. DHS
comments are reproduced in their entirety in appendix III.
Background:
In recent years, federal agencies have been making greater use of
interagency contracting--a process by which agencies can use another
agency's contracting services or existing contracts already awarded by
other agencies to procure many goods and services. An agency can enter
into an interagency agreement with a servicing agency and transfer
funds to the servicing agency to conduct the acquisition on its behalf,
or an agency can order directly from a servicing agency's contract,
such as the GSA schedules or GWACs. When funds are transferred to
another agency, the contracting service can be provided through
entrepreneurial, fee-for-service organizations, which are government-
run but operate like businesses. Interagency contracts are designed to
leverage the government's aggregate buying power and simplify
procurement of commonly used goods and services. In this way, the
contracts offer the benefits of improved efficiency and timeliness in
the procurement process.
Determining the value of a particular contracting method includes
considering benefits such as timeliness and efficiency as well as cost-
-including price and fees. Although interagency contracts can provide
the advantages of timeliness and efficiency, use of these types of
vehicles can also pose risks if they are not properly managed. GAO
designated management of interagency contracting a governmentwide high-
risk area in 2005. A number of factors make these types of contracts
high risk, including their rapid growth in popularity along with their
administration and use by some agencies that have limited expertise
with this contracting method, and their contribution to a much more
complex procurement environment in which accountability has not always
been clearly established.[Footnote 5] In an interagency contracting
arrangement, both the agency that holds, and the agency that makes
purchases against, the contract share responsibility for properly
managing the use of the contract. However, these shared
responsibilities often have not been well-defined. As a result, our
work and that of some inspectors general has found cases in which
interagency contracting has not been well-managed to ensure that the
government was getting good value. For example, in our review of the
Department of Defense's (DOD) use of two franchise funds, we found that
the organizations providing these services did not always obtain the
full benefits of competitive procedures, did not otherwise ensure fair
and reasonable prices, and may have missed opportunities to achieve
savings on millions of dollars in purchases.[Footnote 6] In another
review, we found task orders placed by DOD on a GSA schedule contract
did not satisfy legal requirements for competition because the work was
not within the scope of the underlying contract.[Footnote 7] Recent
inspector general reviews have found similar cases. For example, the
Inspector General for the Department of the Interior found that task
orders for interrogators and other intelligence services in Iraq were
improperly awarded under a GSA schedule contract for information
technology services.[Footnote 8]
The Federal Acquisition Regulation (FAR) is the primary regulation
governing how most agencies acquire supplies and services with
appropriated funds. The regulation provides general guidance for
interagency agreements that fall under the authority of the Economy Act
and for the GSA schedules and GWACs. The FAR precludes agency
acquisition regulations that unnecessarily repeat, paraphrase, or
otherwise restate the FAR, limits agency acquisition regulations to
those necessary to implement FAR policies and procedures within an
agency, and provides for coordination, simplicity, and uniformity in
the federal acquisition process. There are several types of interagency
contracting. For more information on those included in our review, see
appendix II.
DHS spends significant and increasing amounts through interagency
contracting--a total of $6.5 billion in fiscal year 2005, including $5
billion through interagency agreements and about $1.5 billion by
placing orders off other agencies' contracts (see fig. 1). DHS' total
spending on interagency contracting increased by about 73 percent in
just 1 year.
Figure 1: Growth in DHS Contracting:
[See PDF for image]
Source: GAO analysis of DHS data.
[End of figure]
DHS was established as of March 1, 2003, by merging the functions of 23
agencies and organizations that specialize in one or more aspects of
homeland security. OCPO is responsible for creating departmentwide
policies and processes to achieve integration and to manage and oversee
the acquisition function but does not have enforcement authority to
ensure that initiatives are carried out.
There are seven acquisition offices within DHS that pre-date the
formation of DHS and continue to operate at the components. OPO was
formed with the new department to serve the newly established entities
and those components that did not have a separate procurement
operation. Of those that pre-date DHS, the Coast Guard and CBP provide
different examples of the types of components that formed DHS. The
Coast Guard, previously under the Department of Transportation, already
had an extensive procurement operation, whereas CBP was created by
combining the United States Customs Service, formerly part of the
Department of the Treasury, Border Patrol and the inspectional parts of
the Immigration and Naturalization Service, and portions of the
Department of Agriculture's Animal Plant and Health Inspection Service.
Thus, CBP has been faced with the added challenge of creating a
procurement organization to meet its new mission. Our prior work has
found that an effective acquisition organization has in place
knowledgeable personnel who work together to meet cost, quality, and
timeliness goals while adhering to guidelines and standards for federal
acquisition.
Enhanced Guidance and Expertise Could Help DHS Address Interagency
Contracting Risks:
While DHS has developed guidance on the use of interagency agreements-
-the largest category of interagency contracting at DHS, which amounted
to $5 billion in fiscal year 2005--it does not have specific guidance
for other types of interagency contracting, including GSA schedules and
GWACs, which accounted for almost $1.5 billion in fiscal year 2005.
Moreover, we found that some DHS users may have lacked expertise in the
proper use of interagency contracts. Although some DHS acquisition
officials believe the FAR provides adequate guidance on the use of
interagency contracts, such as the GSA schedules, our prior work and
inspector general reviews have found numerous cases in which these
contracting methods have not been properly used. For example, users
have requested work that was not within the scope of the contract and
administrators have not ensured fair and reasonable prices. Recognizing
this concern, other large agencies, such as DOD and the Department of
Energy, have identified the need to carefully manage the use of these
contracts and have issued supplemental guidance and emphasized training
programs to mitigate these risks.
DHS Guidance Could be Expanded to All Types of Interagency Contracting:
DHS departmentwide acquisition guidance covers interagency agreements
but not other types of interagency contracting. In December 2003, DHS
issued the Homeland Security Acquisition Regulation and the Homeland
Security Acquisition Manual to provide departmentwide acquisition
guidance. In addition, DHS issued a departmentwide directive on how to
use interagency agreements by which funds are transferred to other
agencies to award and administer contracts or to provide contracting
services on behalf of DHS. However, as we reported in March 2005, the
directive was not being followed for purchases made through these
agreements. For example, there was little indication that required
analyses of alternatives were performed or that required oversight was
in place. Although DHS began revising the directive in fiscal year
2004, the revisions have yet to be issued. According to OCPO officials,
its limited policy and oversight resources provide assistance to the
components as needed, taking time away from acquisition policy efforts,
such as developing guidance. For example, OCPO officials provided
contracting assistance to the Federal Emergency Management Agency in
the response to Hurricanes Katrina and Rita.
To supplement departmentwide DHS guidance on interagency agreements,
each of the components we reviewed has issued some implementing
guidance. OPO issued guidance addressing the appropriate use of
interagency agreements that requires program officials and contracting
officers to research other available contract vehicles. In contrast,
CBP guidance addresses the goals of an analysis of alternatives, but
emphasizes the process and the documentation necessary to execute the
interagency agreement. The Coast Guard's supplemental guidance focuses
mainly on the ordering and billing procedures for interagency
agreements. However, none of the components we reviewed had
implementing guidance for other types of interagency contracts. While
DHS acquisition officials acknowledge the need to manage the risks of
interagency agreements, some do not see other types of interagency
contracting, such as the GSA schedules and GWACs, as needing the same
type of attention and believe sufficient guidance is available in the
FAR. In fiscal year 2005, the three components we reviewed spent a
total of $832 million through GSA schedules, GWACs, and other
interagency contracts (see table 1). This is a 53 percent increase over
the prior year.
Table 1: Department of Homeland Security Interagency Contracting in
Fiscal Year 2005 (dollars in millions):
DHS component: Office of Procurement Operations;
Interagency agreements: $3,463;
GSA schedules, GWACs and other interagency contracts: $280;
Total interagency contracting: $3,743.
DHS component: Bureau of Customs and Border Protection;
Interagency agreements: 427;
GSA schedules, GWACs and other interagency contracts: 341;
Total interagency contracting: 768.
DHS component: U.S. Coast Guard;
Interagency agreements: 483;
GSA schedules, GWACs and other interagency contracts: 211;
Total interagency contracting: 694.
DHS component: Bureau of Immigration and Customs Enforcement;
Interagency agreements: 311;
GSA schedules, GWACs and other interagency contracts: 254;
Total interagency contracting: 565.
DHS component: Federal Emergency Management Agency;
Interagency agreements: 245;
GSA schedules, GWACs and other interagency contracts: 255;
Total interagency contracting: 500.
DHS component: Transportation Security Administration;
Interagency agreements: 49;
GSA schedules, GWACs and other interagency contracts: 82;
Total interagency contracting: 131.
DHS component: U.S. Secret Service;
Interagency agreements: 42;
GSA schedules, GWACs and other interagency contracts: 31;
Total interagency contracting: 73.
DHS component: Federal Law Enforcement Training Center;
Interagency agreements: 12;
GSA schedules, GWACs and other interagency contracts: 17;
Total interagency contracting: 29.
DHS component: Total;
Interagency agreements: $5,032;
GSA schedules, GWACs and other interagency contracts: $1,471;
Total interagency contracting: $6,503.
Source: GAO analysis of DHS data.
Note: GSA schedule amounts include blanket purchase agreements
negotiated by the components to receive volume discounts for repetitive
purchases from the GSA schedule contracts.
[End of table]
Additional Training Could Help Reduce Management Risks:
We have previously reported that use of interagency contracts demands a
higher degree of business acumen and flexibility on the part of users
and administrators than in the past, and acquisition officials need
sufficient training and expertise to ensure the proper use of these
types of contracts in an increasingly complex procurement environment.
During our review, we identified several examples that showed that DHS
may not have obtained a good value for millions of dollars in spending
and indicated a need for improved training and expertise (see table 2).
Table 2: Examples of Need for Improved Training and Expertise:
No assurance of good value: No review of purchase agreements for
competitive prices;
Cases: CBP's contracting officers placed seven orders totaling $51.7
million through two blanket purchase agreements against the GSA
schedules without assurance that these agreements were reviewed
annually as required by the FAR and CBP standard operating procedures
to ensure prices still represent the best value.[A] In one of these
cases, program officials said that they had been using blanket purchase
agreements to acquire information technology services for as long as 15
years, but the contracting officers did not determine whether the
proposed orders were within the scope of the agreement or whether the
agreements were still a good value for the department.
No assurance of good value: Inability to recoup costs;
Cases: CBP terminated an order placed with a GSA schedule contractor
because of lack of performance and sought re-procurement costs in the
amount of $1.3 million. The contractor asserted that its performance
failures were excusable, and CBP failed to refer the dispute to the GSA
contracting officer as required by the FAR. Because of this error, CBP
was unable to pursue recovery of its costs.
No assurance of good value: Contract files missing key documentation;
Cases: OPO had difficulty locating the contract files we requested for
our review, and when the files were found, they lacked key
documentation such as an analysis of alternatives for purchases made
through interagency agreements. This is consistent with OPO's March
2006 internal review of 10 interagency agreements totaling $114.2
million, which found 5 lacked the required analysis of alternatives, 4
lacked a determination and findings, 8 lacked terms and conditions, and
most lacked evidence that adequate contractor oversight was being
performed. The study also found that the required sole source/limited
source justification was missing or was not well documented for orders
off the GSA schedule. The review noted that OPO contracting officials
did not seem to understand the significance of a thorough and complete
evaluation for determining best value.
No assurance of good value: Transferring funds to a franchise fund at
year-end;
Cases: CBP transferred funds to a franchise fund late in fiscal year
2005, and, according to contracting and program officials, as of June
2006, the funds had not been obligated. CBP received $5 million in
additional funding for a vehicle license plate reader program late in
the fiscal year, and there was little time to conduct a competitive
procurement before the end of the fiscal year. CBP used an interagency
agreement to transfer the $5 million to GovWorks, the Department of the
Interior's franchise fund. According to the program manager and
contracting officials, the $5 million in fiscal year 2005 funds was
"parked" with the franchise fund until a contract could be awarded, and
as of June 2006, the funds remained with GovWorks.[B] Franchise funds
are not intended for parking funds. In fact, this practice has been the
subject of recent DOD Inspector General reviews that found
mismanagement of funds transferred to GSA for contracting services
resulted in DOD losing over $1 billion.[C]
Source: GAO analysis of DHS data.
[A] FAR, Subpart 8.405-3(d) and CBP's Office of Procurement Standard
Operating Procedure Number 2004-14.
[B] The term to "park" funds refers to the transfer of appropriated
funds by one agency to another agency's acquisition center for the
procurement of goods and services under circumstances where a bona fide
need determination is in doubt.
[C] Department of Defense, Office of the Inspector General,
Acquisition: DOD Purchases Made through the General Services
Administration, D-2005-096 (Arlington, Va.: July 29, 2005).
[End of table]
Several contracting officials stated that additional training is needed
in the use of interagency contracts but that there was not much
training available. In addition, other contracting officials told us
that they were not aware of the range of available alternatives for
interagency contracting.
Other Large Agencies Have Developed Guidance and Emphasized Training
for all Types of Interagency Contracting:
To ensure the proper use of all types of interagency contracts, other
large procuring agencies, including DOD and the Department of Energy,
have issued guidance to supplement the FAR and have emphasized
specialized training. DOD is the largest user of other agencies'
contracts and the Department of Energy reported that it spent about
$1.7 billion on other agencies' contracts in fiscal year 2005--a
substantial amount, but less than DHS. For example, DOD issued special
guidance to ensure that proper procedures and management practices are
used when using other agencies' contracts including GSA schedules. The
guidance requires DOD acquisition personnel to evaluate, using specific
criteria, whether using a non-DOD contract for a particular purchase is
in the best interest of the department.[Footnote 9] The criteria
include the contract's ability to satisfy the requirements in a timely
manner and provide good value. DOD's guidance also emphasizes using
market research to help identify the best acquisition approach to meet
the requirement and states that the contracting officer should document
this research.[Footnote 10] The Department of Energy also has issued
guidance addressing the proper use of GSA schedules and GWACs. This
guidance emphasizes that these contracts are not to be used to
circumvent agency regulations and that the contracting officer should
ensure that the original order and all future orders are within the
scope of the contract. In the case of the GSA schedules, the
contracting officer should seek and document advice from GSA's
contracting officer on the proper use of the schedules whenever an
issue is in doubt.
In 2004, GSA took a step toward improving the management of GSA
contracts and services by implementing the "Get It Right" program in
part to secure the best value for federal agencies, improve education
and training of the federal acquisition workforce on the proper use of
GSA contracts and services, and ensure compliance with federal
acquisition policies, regulations, and procedures. As part of the
program, DOD and GSA have partnered to offer updated training on the
proper use of GSA schedules. In addition, the Department of Energy has
instituted training to emphasize the proper use and the need for
planning when using the GSA schedules and GWACs.
DHS Did Not Always Assess Total Value When Choosing Interagency
Contracts:
Interagency contracts are intended to offer a simplified procurement
process whereby users commonly rely on planning that has already been
conducted by the agency that established the contract to ensure that
the prices are competitive. However, our recent work, as well as the
work of others, has found that not all interagency contracts provide
good value when considering both timeliness and cost. This suggests the
need for evaluating the selection of an interagency contract. According
to DHS contracting officials the benefits of speed and convenience--not
total value including cost--have often driven decisions to choose
interagency contracting vehicles. As of July 2005, DHS has required an
analysis of alternatives for all purchases. Of the 17 cases in our
review, this analysis was only required for the four interagency
agreements. None of these interagency agreements indicated that the
required analysis was conducted. Without an evaluation of interagency
contracting alternatives, DHS users cannot be sure they are obtaining a
good value.
Speed and Convenience, Rather Than Planning and Analysis, Often
Determined Contract Selection:
A sense of urgency has prevailed in DHS' acquisition decision-making
process, according to officials from the Office of Inspector General.
For example, one official said that expediting program schedules and
contract awards limits time available for adequate procurement
planning, which can lead to higher costs, schedule delays, and systems
that do not meet mission objectives.[Footnote 11] Eight of the 16
contracting officers we interviewed at OPO, CBP, and Coast Guard told
us that using interagency contracts was a quick and convenient way to
acquire needed products and services. A few DHS contracting officers
felt that interagency contracts--in particular, GSA schedules--were the
only viable alternatives given time constraints. In some cases,
officials told us that it could take 4 to 6 months to establish and
obtain goods and services through an in-house contract. In other cases,
officials stated that purchase requests were received too close to the
end of the fiscal year to use anything other than an interagency
contract. None of the contracting officials said they chose to use
interagency contracts because they also provided good value to DHS in
terms of total cost.
Interagency contracts are designed to be convenient to use and require
less planning than entering into a full and open competition for a new
contract, and users commonly rely on planning that has already been
conducted by the agency that established the contract. However, we
found that GSA schedule prices may not always be the most competitive,
and agencies do not always obtain the required competition when using
the schedules, thus, there is no assurance that these contracts are
providing good value.[Footnote 12] In another review, we found that
fees charged by the agency that provides the contracting service may
not make these contracts cost-effective in some cases. Purchasing
agencies also sometimes pay fee on top of fee for the use of another
agency's contract because servicing agencies may be using other
agencies' contracts--including GSA schedules--to make
purchases.[Footnote 13] Fees charged for the use of GWACs also range
between 0.65 and 5 percent. Given these concerns, evaluating the
selection of an interagency contract is a sound management practice
used by other large agencies.
Pursuant to DHS acquisition policy, purchases made through interagency
agreements require an analysis of alternatives to determine that the
approach is in the government's best interest; however, in the four
cases we reviewed that fell under this requirement, there was no
indication that this analysis was performed. In one case, CBP used
FedSim, one of GSA's contracting service providers, to place an order
for $9 million for information technology support for systems security.
In another case, CBP transferred $5 million to a franchise fund for the
purchase of license plate readers. In the two remaining cases, OPO used
FedSim to place orders totaling about $45 million against one contract
to provide information technology support for the Homeland Secure Data
Network. In these examples, there was little evidence that DHS users
determined whether this was the best method for acquiring the needed
services. These findings are consistent with our March 2005 review, in
which we did not find an analysis of alternatives in 94 percent of the
cases where it was required. Recent internal reviews at OPO and CBP
cited similar findings in which evidence that a determination of
findings or an analysis of alternatives was conducted was missing.
In our review of 17 cases, we also found several examples where
contracting officers placed orders to fulfill what were perceived to be
critical needs, for convenience without comparing alternatives, or to
spend funds at the end of the fiscal year without obtaining competing
proposals. While an analysis of alternatives was not required in most
of these cases, performing such an analysis could have helped DHS users
to address some of the known concerns about these types of contracts to
ensure that they obtained good value for the department[Footnote 14]
(see table 3).
Table 3: Cases with Limited Planning and No Assurance of Good Value:
DHS' decision factor: Critical need;
Cases: We found that OPO placed $33.4 million in orders and
modifications against a GSA schedule without obtaining competing
proposals as required by the FAR. In this case, OPO used a GSA schedule
to establish a temporary "bridge" arrangement without competition to
avoid disruption of critical support services. The need for this
arrangement became critical in December 2004 when DHS' general counsel
advised OPO to discontinue the contracting arrangement with the
Department of Veterans Affairs, which provided contracting services to
DHS via an interagency agreement, as the required work was grossly
beyond the scope of the contract. To ensure that critical support
services continued, DHS used GSA schedules to acquire services from the
incumbent on a sole-source basis. This was to be a temporary measure
for an initial amount of $18 million to continue services until OPO
could establish new competitive contracts. However, according to the
contracting officer this order had been modified 20 times; 10
modifications, totaling $15.5 million, occurred in fiscal year 2005. As
of July 2006, this arrangement was still being used to provide some
services to DHS organizations.
DHS' decision factor: Convenience;
Cases: To maintain information technology services and maintain and
upgrade several safety systems, in fiscal year 2002, the Coast Guard
placed two orders with one GWAC because the contracting officer thought
it was convenient, a timely way to complete the purchases, and thought
it was probably less costly than other options. We found that only one
order contained a comparison of contracting alternatives, and according
to the contracting officer, no analysis of fees charged for the use of
the GWAC was performed on either order. Three years later, in fiscal
year 2005, the Coast Guard placed work orders against the original
orders 47 times for a total of $19.5 million.
DHS' decision factor: Year-end spending;
Cases: We found two cases in which orders were placed at the end of the
fiscal year without comparing alternatives. In one case, when placing
an order for $2 million for computer equipment on September 26, 2005,
the CBP program office requested that the contracting officer place the
order against a specific blanket purchase agreement without comparing
alternatives. Both the purchase request and the order were issued near
the end of the fiscal year.
Source: GAO analysis of DHS data.
[End of table]
Recent Planning Requirement Does Not Include Evaluation Criteria:
As of July 2005 DHS has required an analysis of alternatives for all
acquisitions, including all types of interagency contracts. DHS policy
now states that all acquisition plans must include an analysis of
alternatives including a discussion of why the acquisition process was
chosen and the processes considered. The guidance states that the plan
must contain information about the type of contract selected. However,
the guidance does not include factors to consider or specific criteria
for making a good choice among alternative contracting options. We have
found that some agencies have established factors to consider in making
this decision. For example, DOD and the Department of Energy have
established factors that incorporate considerations of value, policy
and regulatory requirements, customer needs, and administrative
responsibilities. Following are some of the factors these agencies
use:[Footnote 15]
* Value: cost (including applicable fees or service charges); whether
using an interagency contract is in the best interest of the
department.
* Policy and regulatory requirements: departmental funding
restrictions; departmental policies on small business, performance-
based contracting, and competition.
* Customer needs: schedule; scope of work; unique terms, conditions and
requirements.
* Contract administration: including oversight, monitoring, and
reporting requirements.
DHS Oversight Program Does Not Assess Outcomes of Interagency
Contracting:
Although DHS' spending through interagency contracting totals billions
of dollars annually and increased by 73 percent in the past year, the
department does not systematically monitor its use of these contracts
to assess whether this method for acquiring goods and services is being
properly managed and provides good outcomes for the department. While
OCPO has established a framework for an acquisition oversight program,
the program is not designed to assess the outcomes of different
contracting methods including interagency contracting. According to
officials, DHS' acquisition oversight program has been hindered by
limited resources and authority.
DHS Does Not Monitor or Assess Use of Interagency Contracting:
DHS does not systematically monitor spending on its interagency
contracts, which totaled $6.5 billion in fiscal year 2005--37 percent
of DHS' procurement spending for that year. This type of monitoring
could provide DHS with useful information to assess its use of this
contracting method. For example, as part of its strategic sourcing
initiative, DHS officials said they reviewed the component's use of
information technology and telecommunications contracts and determined
that the department could achieve savings of $22.5 to $45 million in
fees and reduced prices by establishing its own departmentwide
contracts. However, DHS does not have available information to make
comparable assessments for interagency contracts. For example, DHS
officials were not able to readily provide data on the amounts spent
through different types of interagency contracts. To respond to our
request for information, OCPO prepared a special report on the use of
GSA schedules and GWACs. For information on interagency agreements,
OCPO had to request data from components. Ultimately, however, we had
to compile a summary and clarify information obtained from components.
DHS also does not collect data on the amount of service fees paid to
other agencies for the use of contracting services or vehicles
regarding interagency contracting, such as the amount of service fees
paid to other agencies, and the components, which pay the fees, also do
not collect this data. In prior work in this area, we have found that
these fees can range from less than 1 percent to 8 percent. In March
2005, we found that OPO, the largest user of interagency contracts
among the components, alone paid $12.9 million in service fees in
fiscal year 2004.[Footnote 16] Given that the volume of DHS'
interagency contracting has increased by $2.7 billion, or about 73
percent, since fiscal year 2004, it is likely that the fees paid also
have increased substantially. This lack of data is not unique to DHS.
Although the need to collect and track data on interagency contracting
transactions has become increasingly important governmentwide, there is
no governmentwide system to collect this data.[Footnote 17] In fact,
the Office of Management and Budget has an effort underway to collect
basic information on interagency contracting from all federal agencies.
While each of the components we visited has established its own
internal reviews to evaluate contracting practices, including the use
of interagency contracts, these reviews are compliance-based and are
not designed to evaluate the outcomes of interagency contracting. For
example, OPO, which has taken a comprehensive approach, established
procedures for reviewing and approving procurement actions. The review
includes an assessment of the documentation for compliance with
acquisition regulations or policies; soundness of the acquisition
strategy; use of business judgment; and completeness, consistency, and
clarity. OPO also had a study completed to determine whether its
contracts, task orders, interagency agreements, and other transactions
were awarded and administered in compliance with procurement laws,
regulations, and internal DHS and OPO operating policies and
procedures. While the review found that much improvement was needed to
comply with policies and procedures, it was not designed to address
areas such as timeliness, total cost including price and fees paid, and
customer service to determine whether a particular contract method
resulted in the best outcome.
DHS Has Begun to Develop an Oversight Program, but Is Facing
Challenges:
In December 2005, OCPO issued a policy that provides a framework for a
departmentwide acquisition oversight program. However, the framework
does not evaluate the outcomes of different contracting methods,
including interagency contracting, to determine whether the department
obtained good value. Additionally, the Chief Procurement Officer lacks
the authority needed to ensure the department's components comply with
its procurement policies and procedures that would help to establish an
integrated acquisition function.
The framework includes four key reviews (see table 4). According to DHS
officials, the acquisition planning review was operational as of August
2006, and an on-site review was ongoing at the Federal Emergency
Management Agency. DHS plans to implement the full program in fiscal
year 2007.
Table 4: DHS Acquisition Oversight Program:
Review: Self assessment;
Purpose: The head of contracting for each component assesses the
component's staff, processes, and programs.
Review: Acquisition planning reviews;
Purpose: Each component's contracting activity annually reviews its
programs and assesses the acquisition planning.
Review: Operational status reviews;
Purpose: The Chief Procurement Officer and the head of contracting for
each component assess, on a quarterly basis, the status of the
acquisition function.
Review: On-site reviews;
Purpose: These reviews, conducted triennially, assess each component's
contracting activity, strategic capability to support DHS' mission, and
compliance with acquisition regulations, policies, and guiding
principles.
Source: GAO analysis of DHS data.
[End of table]
According to OCPO officials, while DHS expects to track interagency
contracting through this framework, it will not gather data to
determine whether these contracts were used effectively. For example,
through the operational status reviews, DHS plans to track the number
and dollar value of orders placed using interagency agreements and GSA
schedules and GWACs. However, these reviews will not collect data on
cost including the price of goods and services and fees paid,
timeliness, or customer service, that would help them to evaluate
whether specific interagency contracts were a good value.
In addition, the Chief Procurement Officer, who is held accountable for
departmentwide management and oversight of the acquisition function,
lacks the authority and has limited resources to ensure compliance with
acquisition policies and processes. As of August 2006, according to
OCPO officials, only five staff were assigned to departmentwide
oversight responsibilities for $17.5 billion in acquisitions. According
to OCPO officials, their small staff faces the competing demands of
providing acquisition support for urgent needs at the component level.
As a result, they have focused their efforts on procurement execution
rather than oversight. Officials also noted that limited resources have
delayed the oversight program's implementation.
DHS' acquisition function was structured to rely on cooperation and
collaboration among DHS components to accomplish the department's
goals. While this structure was intended to make efficient use of
resources departmentwide, it has limited the Chief Procurement
Officer's ability to effectively oversee the department's acquisitions,
manage risks, and has ultimately wasted time and other resources. In
our prior work, we have found that in a highly functioning acquisition
organization, the chief procurement officer is in a position to oversee
compliance with acquisition policies and processes by implementing
strong oversight mechanisms. In March 2005, we recommended that OCPO be
provided sufficient enforcement authority and resources to provide
effective oversight of DHS' acquisition policies and procedures. In a
2005 review of the department's organization, the Secretary focused on
mission initiatives and, as of August 2006, has not changed the
structure of the operational functions to provide additional authority
to the Chief Procurement Officer.
Conclusions:
One of the largest procuring agencies in the federal government, DHS
relies on contracts for products and services worth several billions of
dollars to meet its complex homeland security mission. Effective
acquisition management must include sound policies and practices for
managing the risks of large and rapidly increasing use of other
agencies' contracts. While the use of these types of contracts provides
speed and convenience in the procurement process, the agencies that
manage the contracts and DHS users have not always adhered to sound
contracting practices. Guidance and training that could help DHS to
address risks is not in place; planning was not always conducted; and
adequate monitoring and oversight were not performed. While DHS has
developed a framework for an oversight program, until such oversight is
in place, DHS cannot be sure that taxpayer's dollars are being spent
wisely and purchases are made in the best interest of the department.
While the challenges to effective management of an acquisition function
in any organization with a far-reaching mission are substantial, these
challenges are further complicated at DHS by an organizational
structure in which the Chief Procurement Officer lacks direct authority
over the components. Without such authority, the department cannot be
sure that necessary steps to implement improvements to its acquisition
function will be taken.
Recommendations for Executive Action:
To improve the department's ability to manage the risks of interagency
contracting, we recommend that the Secretary of Homeland Security
consider the adequacy of the Office of the Chief Procurement Officer's
resources and implement the following three actions:
* develop consistent, comprehensive guidance, and related training to
reinforce the proper use of all types of interagency contracts to be
followed by all components;
* establish, as part of the department's planning requirement for an
analysis of alternatives, criteria to consider in making the decision
to use an interagency contract; and:
* implement oversight procedures to evaluate the outcomes of using
interagency contracts.
Matter for Congressional Consideration:
Because the Secretary has not taken action to ensure departmentwide
acquisition oversight, Congress should require the Secretary to report
on efforts to provide the Chief Procurement Officer with sufficient
authority over procurement activities at all components.
Agency Comments and Our Evaluation:
We provided a draft of this report to DHS for review and comment. In
written comments, DHS concurred with all of our recommendations and
provided information on what action would be taken to address them. The
department's comments are reprinted in appendix III.
Regarding the recommendation for guidance and training to reinforce the
proper use of all interagency contracts, DHS stated that it will issue
a revised management directive in the near future. This directive will
require the reporting of data on interagency agreements. DHS also will
issue additional direction to the components on reporting the use of
other types of interagency contracts. With regard to training, the OCPO
will introduce specific training with respect to all types of
interagency contracting for all contracting personnel during fiscal
year 2007. With regard to establishing criteria to consider in making
the decision to use an interagency contract, DHS will revise the
acquisition planning guide to address this recommendation. With regard
to implementing oversight procedures to evaluate the outcomes of using
interagency contracts, DHS plans to incorporate oversight procedures
assessing the proper use of interagency contracts and agreements into
its acquisition oversight program.
Concerning the overall use of interagency contracts, the department's
comments stated that it is the goal of the OCPO to reduce the number
and value of contracts awarded through the use of interagency contracts
or agreements. This will be accomplished in part through the use of new
departmentwide contracts for information technology equipment and
services. We believe this is a positive step toward improving DHS'
contract management.
In responding to the Matter for Congressional Consideration that the
Secretary report on efforts to provide the Chief Procurement Officer
with sufficient authority over procurement activities, DHS noted some
steps that the Secretary has taken to improve acquisition oversight.
* revised the investment review process, placing the Chief Procurement
Officer in a key position to review and provide oversight of the
Department's most critical programs;
* supported an increase of 25 OCPO positions to improve acquisition and
management oversight; and:
* directed the Chief Procurement Officer to work with all component
heads to report on departmentwide progress in key acquisition areas.
While these actions should help, they do not provide the Chief
Procurement Officer with sufficient authority to ensure effective
oversight of DHS' acquisition policies and procedures, and we continue
to believe that the Congress should require the Secretary to report on
efforts to address this lack of authority.
We are sending copies of this report to the Secretary of the Department
of Homeland Security, and to other interested agencies and
congressional committees. We will also make copies available to others
upon request. In addition, this report will be available at no charge
on the GAO Web site at [Hyperlink, http://www.gao.gov].
If you have any questions about this report or need additional
information, please contact me at (202) 512-4841 (huttonj@gao.gov).
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Other staff
making key contributions to this report were Amelia Shachoy, Assistant
Director; Greg Campbell; Christopher Langford; Eric Mader; Bill
McPhail; Russ Reiter; Karen Sloan; and Karen Thornton.
Signed by:
John P. Hutton, Acting Director:
Acquisition and Sourcing Management:
[End of section]
Appendix I: Scope and Methodology:
To determine the level of interagency contracting at the Department of
Homeland Security (DHS), we requested data from each component on
fiscal year 2005 purchases made through all types of interagency
contracts. We compiled a summary of purchases made through interagency
agreements, the General Service Administration's schedules and
governmentwide acquisition contracts (GWAC) from the individual reports
we received from each component. We found that the Office of
Procurement Operations (OPO), Customs and Border Protection (CBP), and
Coast Guard were the largest users of interagency contracts in fiscal
year 2005. Based on a review of this data, we selected 17 cases,
totaling $245 million. Interagency contracting actions for these
components represented a sample of GSA schedule, GWAC, and interagency
transactions made through fee-for-service contracting providers. See
table 5. The 17 cases were selected to represent procurement actions of
$5 million or more at three DHS components. Because our findings
included similar problems across these activities, we believe they
represent common problems in DHS' procurement process. To assess the
reliability of this data, we compared the data obtained from DHS to the
data maintained in the Federal Procurement Data System-Next Generation
(FPDS-NG). Based upon the comparison, we determined that the data were
sufficiently reliable for our purposes.[Footnote 18]
To assess the extent to which DHS manages the risks of interagency
contracting, we reviewed guidance and oversight at the departmental
level and at the three components in our sample--OPO, CBP and Coast
Guard, and we interviewed officials in the Office of the Chief
Procurement Officer (OCPO) and senior officials of the components under
review. To determine how other large agencies address the management
risks of interagency contracting, we reviewed relevant guidance and
training at the Departments of Defense and Energy. We also reviewed
relevant GAO and Inspector General reports.
To assess DHS planning for the use of interagency contracts, we
conducted fieldwork at CBP's National Acquisition Center in
Indianapolis, Indiana; National Data Center in Springfield, Virginia;
and at the Coast Guard's procurement office in Norfolk, Virginia, and
reviewed contract files and completed a data collection instrument for
each of the 17 cases we selected. We also interviewed the contracting
officer, program manager and Contracting Officer's Technical
Representative to discuss each case. In conducting our review, we
identified the reasons for using interagency contracts and the reasons
for choosing a particular interagency contract.
We performed our review between February and August 2006 in accordance
with generally accepted government auditing standards.
Table 5: Fiscal Year 2005 Cases Reviewed at Office of Procurement
Operations, Customs and Border Protection, and Coast Guard:
Component program: Office of Procurement Operations: Multi-office
support services;
Type of service: Support services such as financial tracking,
acquisition and human capital planning and budget support;
Interagency contracting method: General Services Administration
schedules: check;
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): $33.4.
Component program: Office of Procurement Operations: Homeland Secure
Data Network;
Type of service: Information technology support for Homeland Secure
Data Network;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: check;
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 23.2.
Component program: Office of Procurement Operations: Homeland Secure
Data Network;
Type of service: Information technology support or Homeland Secure Data
Network;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: check;
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 21.9.
Component program: Office of Procurement Operations: Protective
Security Division Vulnerability Assessment Support;
Type of service: Technical and operational services for vulnerability,
identification and protective measures;
Interagency contracting method: General Services Administration
schedules: check;
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 14.5.
Component program: Office of Procurement Operations: District of
Columbia Rail Security Corridor Pilot System;
Type of service: Security corridor on rail line near Washington, D.C.;
Interagency contracting method: General Services Administration
schedules: check;
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 9.8.
Component program: Office of Procurement Operations: U.S. Visit;
Type of service: Customer service for U.S. Visit program;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: check;
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 9.0.
Component program: Office of Procurement Operations: Domestic Nuclear
Detection Office;
Type of service: Science, engineering, and technical assistance support
services;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: check;
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 6.0.
Component program: Total Office of Procurement Operations orders;
Type of service: [Empty];
Interagency contracting method: General Services Administration
schedules: 3;
Interagency contracting method: General Services Administration's
FedSim: 2;
Interagency contracting method: General Services Administration
governmentwide acquisition contract: 1;
Interagency contracting method: General Services Administration blanket
purchase agreement: 1;
Interagency contracting method: Interior's GovWorks: 0;
Total order amount (in millions): $117.8.
Component program: Customs and Border Protection: CBP Nationwide Onsite
Information Technology Support[A];
Type of service: Information technology technical support services;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: check;
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): $45.9.
Component program: Customs and Border Protection: U.S. Visit and
Automated Commercial Environment (ACE) programs[B];
Type of service: Information technology hardware and software;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: check;
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 5.8.
Component program: Customs and Border Protection: CBP Information
Technology System Security;
Type of service: Enterprise-wide information technology systems
security support;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: check;
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 9.1.
Component program: Customs and Border Protection: mySAP Business Suite
Software;
Type of service: Software license for CBP SAP products;
Interagency contracting method: General Services Administration
schedules: check;
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 8.1.
Component program: Customs and Border Protection: Applied Technology
Division;
Type of service: Inspection system for checking cargo containers;
Interagency contracting method: General Services Administration
schedules: check;
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 7.4.
Component program: Customs and Border Protection: Distributed Systems
Engineering Storage Area Network Enhancement;
Type of service: Mainframe computer storage devices;
Interagency contracting method: General Services Administration
schedules: check;
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 5.2.
Component program: Customs and Border Protection: Northern Border
Initiative;
Type of service: License Plate Reader system;
Interagency contracting method: General Services Administration
schedules: check;
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: [Empty];
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: check;
Total order amount (in millions): 5.0.
Component program: Total Customs & Border Protection orders;
Type of service: [Empty];
Interagency contracting method: General Services Administration
schedules: 3;
Interagency contracting method: General Services Administration's
FedSim: 1;
Interagency contracting method: General Services Administration
governmentwide acquisition contract: 0;
Interagency contracting method: General Services Administration blanket
purchase agreement: 2;
Interagency contracting method: Interior's GovWorks: 1;
Total order amount (in millions): $86.5.
Component program: Coast Guard: Systems Engineering and Technical
Services II;
Type of service: Information technology engineering and technical
services;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: check;
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): $21.0.
Component program: Coast Guard: Maintenance and Technical Support
Program;
Type of service: Maintain & upgrade National VHF-FM Distress System,
Vessel Traffic Systems and Ports and Waterway Safety System;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: check;
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 13.7.
Component program: Coast Guard: Information Technology Engineering and
Technical Services;
Type of service: Information technology engineering and technical
services;
Interagency contracting method: General Services Administration
schedules: [Empty];
Interagency contracting method: General Services Administration's
FedSim: [Empty];
Interagency contracting method: General Services Administration
governmentwide acquisition contract: check;
Interagency contracting method: General Services Administration blanket
purchase agreement: [Empty];
Interagency contracting method: Interior's GovWorks: [Empty];
Total order amount (in millions): 5.8.
Component program: Total Coast Guard orders;
Type of service: [Empty];
Interagency contracting method: General Services Administration
schedules: 0;
Interagency contracting method: General Services Administration's
FedSim: 0;
Interagency contracting method: General Services Administration
governmentwide acquisition contract: 3;
Interagency contracting method: General Services Administration blanket
purchase agreement: 0;
Interagency contracting method: Interior's GovWorks: 0;
Total order amount (in millions): $40.5.
Component program: Total all agencies;
Type of service: [Empty];
Interagency contracting method: General Services Administration
schedules: 6;
Interagency contracting method: General Services Administration's
FedSim: 3;
Interagency contracting method: General Services Administration
governmentwide acquisition contract: 4;
Interagency contracting method: General Services Administration blanket
purchase agreement: 3;
Interagency contracting method: Interior's GovWorks: 1;
Total order amount (in millions): $244.8.
Source: GAO analysis of DHS data.
Note: Total dollars include fiscal year 2005 orders and modifications.
[A] The total for this blanket purchase agreement includes four task
orders issued in fiscal year 2005.
[B] The total for this blanket purchase agreement includes three task
orders issued in fiscal year 2005.
[End of table]
[End of section]
Appendix II: Department of Homeland Security Interagency Contracting:
Table 6: Interagency Contracting Methods Used by DHS:
Contracting method: Interagency agreement;
Description: Any agreement between two federal agencies in which one
agency purchases goods or services from the other. These agreements are
allowed by a number of authorities. In some cases these agreements are
used when obtaining contracting services through government-run, self-
supporting businesslike enterprises managed by federal employees, such
as franchise funds like the Department of Interior's GovWorks.[A] GSA's
Federal Systems Integration and Management Center (FedSim) also
provides contracting services to agencies including access to GWACs and
other types of contracts. These service providers charge a fee for
their contracting services;
Authority: The Economy Act of 1932 (31 U.S.C. 1535). This authority
applies to interagency agreements for which more specific statutory
authority does not exist; The Government Management Reform Act of 1994
(P.L. 103-356, § 403) authorized the Office of Management and Budget to
designate six federal agencies to establish franchise funds; GSA's
FedSim derives its authority from the Brooks Act (40 U.S.C. 1101 et
seq.) as amended.
Contracting method: GSA schedules;
Description: Under the GSA schedules program, GSA negotiates contracts
with vendors for a wide variety of goods and services at varying
prices. These contracts permit other agencies to place orders directly
with the vendors, providing agencies with a simplified process of
acquiring goods and services while obtaining volume discounts;
Authority: Federal Property and Administrative Services Act of 1949
(P.L. 94-519, § 102); Federal Acquisition Regulation Subpart 8.4.
Contracting method: Blanket purchase agreement;
Description: This contracting arrangement provides a simplified method
of filling anticipated repetitive needs for supplies and services,
allowing agencies to establish "charge accounts" with qualified vendors
that can be GSA schedule contractors;
Authority: Federal Acquisition Regulation 8.405-3 and 13.303.
Contracting method: Governmentwide acquisition contract;
Description: A GWAC is a task or delivery order contract for
information technology established by one agency for governmentwide
use. The purchasing agency can either order directly from a GWAC, as
with the GSA schedules, or request the GWAC executive agent to provide
contracting services for a fee. These services can range from limited
contracting assistance to an approach in which the executive agent
handles all aspects of the procurement;
Authority: Clinger-Cohen Act of 1996 (40 U.S.C. 11302). This act gives
the Office of Management and Budget the authority to designate federal
agencies as executive agents for GWACs.
Source: GAO analysis.
[A] Franchise fund enterprises are a type of intragovernmental
revolving fund, all of which have similar legal authority and
operations and are generally created to provide common administrative
services. An intragovernmental revolving fund is established to conduct
continuing cycles of businesslike activity within and between
government agencies. An intragovernmental revolving fund charges for
the sale of goods or services and uses the proceeds to finance its
spending, usually without the need for annual appropriations.
[End of table]
[End of section]
Appendix III: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
September 25, 2006:
Mr. John P. Hutton, Acting Director:
Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Hutton:
Thank you for the opportunity to review and comment on the Government
Accountability Office's (GAO's) draft report entitled Interagency
Contracting: Improved Guidance and Oversight Would Enable the
Department of Homeland Security to Address Risks (GAO 06-996).
The Department of Homeland Security (DHS) concurs with the three
recommendations directed for our action and provides comments on each
recommendation. We also comment on GAO's "Matter for Congressional
Consideration"
Recommendation 1: Develop consistent, comprehensive guidance, and
related training to reinforce the proper use of all types of
interagency contracts to be followed by all components.
The DHS Office of the Chief Procurement Officer (OCPO) accepts this
recommendation. Action on this recommendation will be addressed in two
ways. First, concerning the proper use of Interagency Agreements, as
provided for in the Federal Acquisition Regulation, Part 17, DHS
Management Directive 0710.1 addressing such agreements is planned to be
issued in the near future. This Management Directive will require the
reporting of data, including cost of acquisition on all Interagency
Agreements. Secondly, based upon the GAO recommendation, the DHS OCPO
will issue additional direction to the Heads of Contracting Activities
(HCAs) at DHS with respect to reporting on the use of other types of
Interagency Contracts, such as Federal Supply Schedules, Government
Wide Agency Contracts (GWAC) and Franchise Funds. It is noted, however,
that, as detailed in the report, the Federal Procurement Data System -
Next Generation (FPDS-NG) is not currently suitable for this type of
data collection. The DHS OCPO will explore with the HCAs the
possibility of collecting and providing this information as part of the
quarterly reviews as detailed in the DHS Acquisition Oversight program
guide based on a manual data collection until FPDS-NG is able to
provide it. Regarding training, the DHS OCPO will introduce specific
training modules with respect to all types of Interagency Contracting
for all contracting personnel via the Department's Learning Management
System during FY-07.
The Department also notes that a substantial portion of the contracts
reviewed during this engagement were contracts for Information
Technology equipment and services. The Department has recently awarded
a set of multiple award contracts under the Eagle Program, DHS's
Information Technology Acquisition Program. In the near future, a set
of multiple award contracts for IT Services known as the First Source
program will also be awarded. It is Department policy that mandatory
consideration be given to the use of these DHS contracts for all of the
Department's and component's Information Technology acquisitions. Use
of these DHS contracts should significantly reduce the dependence on
Federal Supply Schedule and GWAC vehicles beginning in FY-07.
The report notes that while the total amount of spending under
Interagency Agreements and Interagency Contracts significantly
increased from FY-04 to FY-05, the proportion of total procurement
spending attributed to such contracting vehicles was reduced. This is
attributed to the increases in staffing experienced at the component
level along with more time and attention paid to Acquisition Planning.
As component procurement staffing is addressed during FY-07, the
Department anticipates a further reduction in the use of all
Interagency Contracts. That this is a Departmental priority is
evidenced by the direction from the Secretary that the CPO report semi-
annually regarding the status of the DHS Acquisition Program including,
specifically, the reliance on other government agencies to award
critical Department contracts (DHS Secretarial Memorandum dated 15 July
2005).
Recommendation 2: Establish, as part of the department's planning
requirement for an analysis of alternatives, criteria to consider in
making the decision to use an interagency contract.
The DHS OCPO accepts this recommendation. The DHS OCPO will issue a
revision to the DHS Acquisition Planning Guide specifically addressing
the analysis of alternatives decisions by the contracting officer in
the selection of the appropriate method and type of contracting and the
documentation of that decision.
Recommendation 3: Implement oversight procedures to evaluate the
outcomes of using interagency contracts.
The DHS OCPO accepts this recommendation. The DHS CPO will incorporate
oversight procedures assessing the proper use of Interagency Contracts
and Agreements into the DHS Acquisition Oversight program guide.
Additionally, it is the goal of the DHS OCPO to reduce the number and
value of contracts awarded through the use of Interagency Contracts or
Agreements. The Secretary has declared that reliance upon other
government agencies to award DHS's critical contracts is a weakness in
the internal control structure. As these changes occur the CPO and the
HCAs will assess methods for evaluating the outcomes of those remaining
interagency contracts.
We also wish to make the following comments regarding procurement
office staffing:
A recurring comment in the report is that DHS staffing of the
contracting offices has been an ongoing problem. The Department
recognizes this shortfall. The chart below displays the staffing of the
component contracting offices over the past and through the President's
Budget submission for Fiscal Year 2007:
Component: TSA;
Authorized FTE FY-05: 67;
On-Board FTE FY-05: 57;
Authorized FTE FY-06: 106;
On-Board FTE as of 31 Mar 06: 71;
President's Budget FTE FY-07: 126.
Component: OPO;
Authorized FTE FY-05: 127;
On-Board FTE FY-05: 87;
Authorized FTE FY-06: 127;
On-Board FTE as of 31 Mar 06: 92;
President's Budget FTE FY-07: 220.
Component: ICE;
Authorized FTE FY-05: 81;
On-Board FTE FY-05: 57;
Authorized FTE FY-06: 64;
On-Board FTE as of 31 Mar 06: 56;
President's Budget FTE FY-07: 96.
Component: USCG;
Authorized FTE FY-05: 336;
On-Board FTE FY-05: 284;
Authorized FTE FY-06: 339;
On-Board FTE as of 31 Mar 06: 294;
President's Budget FTE FY-07: 339.
Component: FLETC;
Authorized FTE FY-05: 31;
On-Board FTE FY-05: 31;
Authorized FTE FY-06: 41;
On-Board FTE as of 31 Mar 06: 31;
President's Budget FTE FY-07: 41.
Component: FEMA;
Authorized FTE FY-05: 55;
On-Board FTE FY-05: 42;
Authorized FTE FY-06: 129;
On-Board FTE as of 31 Mar 06: 98;
President's Budget FTE FY-07: 170.
Component: CBP;
Authorized FTE FY-05: 92;
On-Board FTE FY-05: 90;
Authorized FTE FY-06: 119;
On-Board FTE as of 31 Mar 06: 100;
President's Budget FTE FY-07: 179.
Component: USSS;
Authorized FTE FY-05: 25;
On-Board FTE FY-05: 21;
Authorized FTE FY-06: 25;
On-Board FTE as of 31 Mar 06: 18;
President's Budget FTE FY-07: 25.
Component: Total;
Authorized FTE FY-05: 814;
On-Board FTE FY-05: 669;
Authorized FTE FY-06: 950;
On-Board FTE as of 31 Mar 06: 760;
President's Budget FTE FY-07: 1196.
[End of table]
There has been significant progress made in providing staff for the
component contracting offices, though much work remains to fill these
positions with qualified, trained acquisition professionals. Regarding
the immediate staff of the Office of the Chief Procurement Officer, the
President's Fiscal Year 2007 budget includes the addition of an
additional 25 billets for OCPO, including a significant increase in the
number of billets dedicated to the DHS Acquisition Oversight Program.
If funded through the Appropriations legislation these additional
personnel positions will significantly contribute to continuing
improvement in the DHS acquisition and contracting enterprise.
With respect to GAO's "Matter for Congressional Consideration" as found
on page 24, we offer the following comment:
The Secretary has taken significant action to improve DHS acquisition
oversight including:
1. The Secretary has re-vitalized the Investment Review Process within
the Department, placing the Chief Procurement Officer, along with the
other functional line of business Chiefs, in the key position to review
and provide oversight of the Department's most critical programs.
2. The Secretary supported an increase of 25 positions in CPO staff to
improve acquisition and management oversight.
3. The Secretary directed the CPO to work with all component heads to
ensure the integrity of Department acquisition programs and to report
semi-annually on Department-wide progress in several key areas,
including: acquisition planning; reliance on other government agencies
to award critical Department contracts; appropriate staffing levels in
our contracting offices; increased use of competitive contracting
methods; and integrity and ethics throughout the entire acquisition
process.
Thank you again for the opportunity to comment on this draft report and
we look forward to working with you on future homeland security issues.
Sincerely,
Signed by:
Steven J. Pecinovsky:
Director:
Departmental GAO/OIG Liaison Office:
[End of Section]
FOOTNOTES
[1] This amount includes procurement obligations and interagency
agreements as reported by DHS.
[2] For the purposes of this review, interagency contracting includes
the following: (1) interagency agreements in which one federal agency
transfers funds to another federal agency to make a purchase through a
contractual arrangement, such as purchases made through franchise funds
and other fee-for-service operations; (2) orders placed through the
General Services Administration's (GSA) schedules; and (3) orders
placed through governmentwide acquisition contracts (GWAC) and other
government agencies' contracts.
[3] GAO, Homeland Security: Successes and Challenges in DHS's Effort to
Create an Effective Acquisition Organization, GAO-05-179 (Washington,
D.C.: Mar. 29, 2005).
[4] For the purposes of this review we refer to all DHS agencies and
procurement organizations as components. We refer to those program
managers or contracting officers using interagency contracts as DHS
users.
[5] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.:
Jan. 2005).
[6] GAO, Interagency Contracting: Franchise Funds Provide Convenience,
but Value to DOD Is Not Demonstrated, GAO-05-456 (Washington, D.C.:
July 29, 2005).
[7] GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures
and Management Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004).
[8] U.S. Department of the Interior, Office of the Inspector General,
Review of 12 Procurements Placed Under General Services Administration
Federal Supply Schedules 70 and 871 by the National Business Center, W-
EV-055-0075-2004 (Washington, D.C.: July 16, 2004).
[9] This October 29, 2004, memo, entitled "Proper Use of Non-DOD
Contracts," was issued by the Acting Under Secretary of Defense
(Acquisition, Technology and Logistics) and the Principal Deputy Under
Secretary of Defense (Comptroller).
[10] This requirement applies to procurements above the simplified
acquisition threshold, which is generally $100,000.
[11] Testimony before a joint hearing of the Subcommittee on Economic
Security, Infrastructure Protection, and Cyber-Security, Committee on
Homeland Security, and the Subcommittee on Criminal Justice, Drug
Policy, and Human Resources, Committee on Government Reform, House of
Representatives, on July 20, 2006; and before the Committee on
Government Reform, House of Representatives, on July 27, 2006.
[12] GAO, Contract Management: Opportunities to Improve Pricing of GSA
Multiple Award Schedules Contracts, GAO-05-229 (Washington, D.C.: Feb.
11, 2005).
[13] GAO-05-456.
[14] As of July 2005, DHS required an analysis of alternatives for all
acquisitions. Because our review covered fiscal year 2005, which
extended from October 1, 2004, to September 30, 2005, this requirement
did not apply to most of the cases in our review.
[15] DOD memorandum dated October 24, 2004, entitled "Proper Use of Non-
DOD Contracts" issued by the Acting Under Secretary of Defense
(Acquisition, Technology and Logistics) and the Principal Deputy Under
Secretary of Defense (Comptroller). Department of Energy Acquisition
Letter Number 2005-05 revised, dated April 26, 2005.
[16] GAO-05-179.
[17] GAO, Improvements Needed to the Federal Procurement Data System-
Next Generation, GAO-05-960R (Washington, D.C.: Sept. 27, 2005).
[18] We have previously reported on the shortcomings of the Federal
Procurement Data System--both the legacy and the Next Generation
versions. However, the current system remains the most comprehensive
database on federal procurement actions.
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