Department of Homeland Security
Improvements Could Further Enhance Ability to Acquire Innovative Technologies Using Other Transaction Authority Gao ID: GAO-08-1088 September 23, 2008When the Department of Homeland Security (DHS) was created in 2002, it was granted "other transaction" authority--a special authority used to meet mission needs. While the authority provides greater flexibility to attract and work with nontraditional contractors to research, develop, and test innovative technologies, other transactions carry the risk of reduced accountability and transparency--in part because they are exempt from certain federal acquisition regulations and cost accounting standards. In 2004, GAO reported on DHS's early use of this authority. This follow-up report determines the extent to which nontraditional contractors have been involved in DHS's other transactions, and assesses DHS's management of the acquisition process when using this authority to identify additional safeguards. To conduct its work, GAO reviewed relevant statutes, guidance, and prior GAO reports on other transactions, and interviewed contracting and program management officials, as well as contractors. GAO also reviewed 53 files for agreements entered into from fiscal years 2004 through 2008 and identified those involving nontraditional contractors.
DHS's other transactions documentation indicates that nontraditional contractors played a significant role in over 80 percent of the Science and Technology directorate's other transaction agreements. GAO identified 50 nontraditional contractors who participated in 44 agreements--one-third of them were prime contractors and about half of them were small businesses. These contractors provided a variety of technologies and services that DHS described as critical--including technology designed to detect chemical warfare agents after a suspected or known chemical attack. The proportion of dollars obligated for nontraditional contractors on an agreement did not necessarily indicate the importance of their contributions. For example, only 1 percent of total agreement obligations were allocated to a nontraditional subcontractor that, according to the prime contractor, was specially qualified for developing tests for a hazardous substance detection system. While DHS has continued to develop policies and procedures for other transactions, including some to mitigate financial and program risks for prototype projects, the department faces challenges in systematically assessing its use of other transactions and maintaining a skilled contracting workforce. DHS issued guidance in 2008 and continued to provide training to contracting staff on the use of other transactions. However, DHS does not track information on the amount of funds paid to nontraditional contractors or the nature of the work they performed, which could help the department assess whether it is obtaining the full benefits of other transaction authority. DHS recently updated its procurement database to capture information on other transaction agreements, but the database does not include all of the data DHS would need to assess nontraditional contractor involvement. Further, DHS's ability to maintain a stable and capable contracting workforce remains uncertain due to high staff turnover and the lack of a staff planning method.
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-08-1088, Department of Homeland Security: Improvements Could Further Enhance Ability to Acquire Innovative Technologies Using Other Transaction Authority
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2008:
Department Of Homeland Security:
Improvements Could Further Enhance Ability to Acquire Innovative
Technologies Using Other Transaction Authority:
GAO-08-1088:
GAO Highlights:
Highlights of GAO-08-1088, a report to congressional committees.
Why GAO Did This Study:
When the Department of Homeland Security (DHS) was created in 2002, it
was granted ’other transaction“ authority”a special authority used to
meet mission needs. While the authority provides greater flexibility to
attract and work with nontraditional contractors to research, develop,
and test innovative technologies, other transactions carry the risk of
reduced accountability and transparency”in part because they are exempt
from certain federal acquisition regulations and cost accounting
standards.
In 2004, GAO reported on DHS‘s early use of this authority. This follow-
up report determines the extent to which nontraditional contractors
have been involved in DHS‘s other transactions, and assesses DHS‘s
management of the acquisition process when using this authority to
identify additional safeguards.
To conduct its work, GAO reviewed relevant statutes, guidance, and
prior GAO reports on other transactions, and interviewed contracting
and program management officials, as well as contractors. GAO also
reviewed 53 files for agreements entered into from fiscal years 2004
through 2008 and identified those involving nontraditional contractors.
What GAO Found:
DHS‘s other transactions documentation indicates that nontraditional
contractors played a significant role in over 80 percent of the Science
and Technology directorate‘s other transaction agreements. GAO
identified 50 nontraditional contractors who participated in 44
agreements”one-third of them were prime contractors and about half of
them were small businesses. These contractors provided a variety of
technologies and services that DHS described as critical”including
technology designed to detect chemical warfare agents after a suspected
or known chemical attack. The proportion of dollars obligated for
nontraditional contractors on an agreement did not necessarily indicate
the importance of their contributions. For example, only 1 percent of
total agreement obligations were allocated to a nontraditional
subcontractor that, according to the prime contractor, was specially
qualified for developing tests for a hazardous substance detection
system.
Figure: New and Active Other Transaction Agreements by Fiscal Year:
[Refer to PDF for image]
This figure is a horizontal bar graph depicting the following
information:
Fiscal year: 2004;
New: 18;
Active, enacted in a previous year: 0;
Total: 18.
Fiscal year: 2005;
New: 25;
Active, enacted in a previous year: 17;
Total: 42.
Fiscal year: 2006;
New: 4;
Active, enacted in a previous year: 36;
Total: 40.
Fiscal year: 2007;
New: 3;
Active, enacted in a previous year: 32;
Total: 35.
Source: GAO analysis of DHS data.
[End of figure]
While DHS has continued to develop policies and procedures for other
transactions, including some to mitigate financial and program risks
for prototype projects, the department faces challenges in
systematically assessing its use of other transactions and maintaining
a skilled contracting workforce. DHS issued guidance in 2008 and
continued to provide training to contracting staff on the use of other
transactions. However, DHS does not track information on the amount of
funds paid to nontraditional contractors or the nature of the work they
performed, which could help the department assess whether it is
obtaining the full benefits of other transaction authority. DHS
recently updated its procurement database to capture information on
other transaction agreements, but the database does not include all of
the data DHS would need to assess nontraditional contractor
involvement. Further, DHS‘s ability to maintain a stable and capable
contracting workforce remains uncertain due to high staff turnover and
the lack of a staff planning method.
What GAO Recommends:
DHS concurred with both of GAO‘s recommendations to improve the
information DHS has on its other transactions and to strengthen its
other transaction contracting workforce.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-1088]. For more
information, contact John K. Needham at (202) 512-4841 or
needhamjk1@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Most Agreements Involved Nontraditional Contractors to Provide Key
Technologies and Services:
Policies and Practices Are in Place to Manage Agreements, but
Assessment and Staffing Needs Have Not Been Fully Addressed:
Conclusion:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Description of DHS Projects Supported by Other Transaction
Agreements:
Appendix III: Comments from the Department of Homeland Security:
Table:
Table 1: Identification of Other Transaction Agreements Entered into
from Fiscal Years 2004 through 2008:
Figures:
Figure 1: New and Active Other Transaction Agreements by Fiscal Year:
Figure 2: Nontraditional Contractors by Role and Business Size:
Abbreviations:
DHS: Department of Homeland Security:
DNDO: Domestic Nuclear Detection Office:
DOD: Department of Defense:
FAR: Federal Acquisition Regulation:
FPDS-NG: Federal Procurement Data System-Next Generation:
S&T: Science and Technology directorate:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 23, 2008:
Congressional Committees:
The Department of Homeland Security's (DHS) Science and Technology
directorate (S&T) is responsible for providing state-of-the-art
technology to federal, state, and local governments to improve homeland
security. To help accomplish this mission, Congress granted DHS special
acquisition authority, known as "other transaction"[Footnote 1]
authority for prototype and research and development projects. S&T has
used this authority to increase flexibility in attracting and working
with contractors to research, develop, and test innovative
technologies.[Footnote 2] However, other transactions carry the risk of
reduced accountability and transparency in part because they are exempt
from the Federal Acquisition Regulation (FAR) and the government's cost
accounting standards. DHS has maintained that this authority is a
critical tool in attracting contractors that have not traditionally
done business with the government and that the authority has enhanced
its ability to share the costs of developing certain technologies with
industry. The authority, initially granted for 5 years, was extended
through September 2008 in the Fiscal Year 2008 Appropriations Act.
Section 391(b) of title 6 of the U.S. Code requires that we report on
DHS's use of this authority.
In 2004, we reported on S&T's use of other transaction authority and
made recommendations to improve its use.[Footnote 3] At the time that
work was conducted, S&T was in the early stages of establishing these
agreements, and we have not since assessed the extent of the
involvement of nontraditional contractors[Footnote 4] or the portion of
the funding they receive. For this follow-up report, also in response
to the 2002 statute, and to inform Congress's decision on whether to
further extend this authority, we (1) determined the extent to which
nontraditional contractors have been involved in other transactions
with DHS to fulfill technology and mission needs, and (2) assessed
DHS's management of the acquisition process when using other
transactions to determine if additional safeguards are needed should
the authority be made permanent.
To conduct our work, we reviewed relevant statutes, directives,
guidance, and our prior reports on other transactions and interviewed
S&T's contracting and program representatives, as well as contractors.
We reviewed 53 other transaction agreements entered into from fiscal
years 2004 through 2008 and related documents and identified those
involving nontraditional contractors.[Footnote 5] While we conducted a
search of the Federal Procurement Data System-Next Generation (FPDS-
NG)[Footnote 6] to determine whether these contractors had prior
government work, we did not independently verify contractors' self-
certification as nontraditional, which occurs during agreement
negotiation. We conducted this performance audit from April through
September 2008, in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
For more information on our scope and methodology, see appendix I.
Results in Brief:
DHS's other transactions documentation indicates that nontraditional
contractors, at both the prime and subcontractor levels, played a
significant role in S&T's other transaction agreements, providing
critical technologies or services. Of the 53 agreements we reviewed, 44
involved nontraditional contractors--one-third of which were prime
contractors and about half of which were small businesses. S&T program
managers told us that other transaction authority facilitated the
involvement of nontraditional contractors who may have the most
innovative solutions to homeland security needs. Nontraditional
contractors provided a variety of technologies and services which DHS
described as critical to their projects, including sensor technology
designed to detect chemical warfare agents to help first responders
assess and monitor risks in an area after a suspected or known chemical
attack. We found that the proportion of dollars obligated for
nontraditional contractors did not necessarily indicate the importance
of their contributions. For example, only 1 percent of total agreement
obligations were allocated for work conducted by one nontraditional
subcontractor to develop chemical tests for a hazardous substance
detection system. According to the prime contractor, this
nontraditional contractor was the leading expert in the field and
uniquely qualified to contribute to the project.
Since our 2004 report, DHS has continued to develop policies and
procedures for other transactions but faces additional management
challenges, including the need to systematically assess its use of
other transactions and maintain a contracting workforce skilled in
managing other transactions. In May 2008, DHS issued guidance on the
use of other transactions. DHS also has adopted several practices for
managing other transactions, including the frequent use of firm-fixed
price[Footnote 7] agreements with payable milestones as a means to
mitigate financial and program risks for prototype projects. However,
DHS lacks complete information needed to systematically assess whether
it is obtaining the full benefits of other transaction authority. For
example, DHS does not have the information to determine whether it is
using other transaction authority to effectively negotiate intellectual
property and data rights. DHS has recently updated its procurement
database to include some information on other transaction agreements,
but the capacity to capture information on nontraditional contractors
is limited. For example, DHS does not track information on the amount
of funds paid to nontraditional contractors or the nature of the work
they performed. DHS has implemented training for other transaction
contracting officers; however, the department's ability to maintain a
stable and capable contracting workforce is uncertain due to recent
high staff turnover and the lack of a staff planning method. Our prior
work has noted concerns with regard to the sufficiency of DHS's
acquisition workforce to ensure successful outcomes.
To promote DHS's efficient and effective use of its other transaction
authority in meeting its mission needs, we are recommending DHS collect
relevant data on other transaction agreements and assess and report to
Congress on the use of these agreements, and determine the number of
contracting officers needed to support S&T to help ensure a sufficient
contracting workforce to execute other transaction authority. In
written comments on a draft of this report, DHS concurred with these
recommendations but did not specify how it would address them. DHS's
comments are reprinted in appendix III. DHS also provided technical
comments on our draft report, which we incorporated as appropriate.
Background:
Other transaction authority was created to enhance the government's
ability to acquire cutting-edge science and technology in part through
attracting contractors that typically have not pursued government
contracts because of the cost and impact of complying with government
procurement requirements. Because other transactions are exempt from
certain statutes, they permit considerable latitude by agencies and
contractors in negotiating agreement terms. For example, other
transactions allow the federal government flexibility in negotiating
intellectual property and data rights, which generally stipulate each
party's rights to technology developed under the agreement. Because
these agreements do not have a standard structure based on regulatory
guidelines, they can be challenging to create and administer.
The Homeland Security Act of 2002 authorizes two types of other
transactions: (1) prototype and (2) research and development. Other
transactions for prototypes are used to carry out projects to develop
prototypes used to evaluate the technical or manufacturing feasibility
of a particular technology, process, or system. To use other
transactions for prototypes, federal statute requires that one of three
conditions be met: (1) significant participation by a nontraditional
contractor, (2) parties to the transaction other than the federal
government will pay at least one-third of the total project cost, or
(3) the Chief Procurement Officer determines that exceptional
circumstances justify the use of an other transaction agreement.
[Footnote 8] Other transactions for research and development are used
to perform basic, applied, or advanced research and do not require the
involvement of nontraditional contractors.[Footnote 9] Almost all of
S&T's other transaction agreements have been for prototype projects and
justified based on the involvement of nontraditional contractors.
[Footnote 10]
From fiscal years 2004 through 2008, S&T entered into at least 55 other
transaction agreements to support 17 different projects.[Footnote 11]
(For a description of the projects see app. II.) DHS entered into 45
agreements in fiscal years 2004 and 2005, when it first began using
other transactions to support prototype development projects, based on
the Department of Defense's (DOD) guidance and, in some cases, with
assistance from DOD contracting officers. Currently, DHS's Office of
Procurement Operations provides all contracting support, including that
for other transactions, to S&T.[Footnote 12] S&T contracting officers
explained that they have been more selective in choosing to use other
transaction agreements in recent years. Since 2006, DHS has entered
into fewer new agreements each year, while continuing to fund work
under the initial agreements entered into in 2004 and 2005. (See fig.
1.) As of April 2008, according to DHS data, 21 agreements were active-
-including 1 agreement entered into in fiscal year 2008--and 33
agreements were closed.[Footnote 13]
Figure 1: New and Active Other Transaction Agreements by Fiscal Year:
[See PDF for image]
This figure is a horizontal bar graph depicting the following
information:
Fiscal year: 2004;
New: 19;
Active, enacted in a previous year: 0;
Total: 19.
Fiscal year: 2005;
New: 26;
Active, enacted in a previous year: 17;
Total: 43.
Fiscal year: 2006;
New: 5;
Active, enacted in a previous year: 36;
Total: 41.
Fiscal year: 2007;
New: 4;
Active, enacted in a previous year: 32;
Total: 36.
Source: GAO analysis of DHS data.
Note: Excludes 1 agreement for which we could not determine the end
date of the agreement.
[End of figure]
In fiscal year 2007, other transactions accounted for about $124
million (about 17 percent) of the S&T's total acquisition activity of
$748 million to fund and develop technology in support of homeland
security missions.[Footnote 14] A small proportion of projects account
for the vast majority of the funding for other transactions; in
February 2008, we reported that the seven largest agreements accounted
for over three-quarters of all obligations.[Footnote 15]
Most Agreements Involved Nontraditional Contractors to Provide Key
Technologies and Services:
DHS has used its other transaction authority to leverage the
capabilities of nontraditional contractors in prototyping and research
and development efforts. Most of S&T's agreements have involved
nontraditional contractors, including small businesses, at the prime or
subcontractor level. The majority of the nontraditional contractors
provided technologies or services that DHS described as significant to
the efforts under S&T projects.[Footnote 16] S&T program managers
stated that without the involvement of nontraditional contractors, some
of the research efforts may not have been able to advance.
We identified a total of 50 nontraditional contractors who participated
in 44 (83 percent) of the agreements we examined, with multiple
nontraditional contractors involved on 8 agreements. Half of these
contractors had not recently worked for the government.[Footnote 17]
Sixteen nontraditional contractors were prime contractors on
agreements, while the other 34 were subcontractors.[Footnote 18] Nearly
half of the nontraditional contractors were classified as small
businesses.[Footnote 19] According to some S&T program managers, using
the agreements reduced the administrative burden of working with the
federal government and encouraged small businesses, in particular, to
participate. Figure 2 shows the proportion of prime contractors and
subcontractors by business size.
Figure 2: Nontraditional Contractors by Role and Business Size:
[See PDF for image]
This figure is a pie-chart depicting the following data:
Nontraditional Contractors by Role and Business Size:
Undetermined business size: 11 (22%);
Small business, prime contractor: 10 (20%);
Small business, subcontractor: 12 (24%);
Large business, prime contractor: 5 (10%);
Large business, subcontractor: 12 (24%).
Source: GAO analysis of DHS and Central Contractor Registration data.
[End of figure]
Planned obligations for 25 of the 44 agreements involving
nontraditional contractors total $117 million, which is 40 percent of
the total dollars obligated through these agreements.[Footnote 20]
In describing the roles of the nontraditional contractors, the
agreements and supporting documentation we reviewed identified the
majority of these roles as significant to the project's successful
completion. Program staff, contracting officers, and contractor
representatives also highlighted several technologies and services that
nontraditional contractors provided to S&T through the use of other
transaction authority.
Several agreements that we reviewed identified significant technologies
and services provided by nontraditional contractors. For example, one
agreement with a nontraditional contractor--the sole participant on the
project--noted that the contractor's sensor technology would be used to
develop prototypes designed to detect chemical warfare agents. The
agreement stated that the resulting prototype would help first
responders assess and monitor the risks in an area after a suspected or
known chemical attack. Similarly, one nontraditional subcontractor was
involved under an agreement to develop a prototype for delivering
robust detection and geographic information about bioterror attacks.
The agreement stated this subcontractor would have a significant level
of participation and a substantial role in the project, and possessed
unique skills and expertise in the area of DNA microarrays, which was
identified as a core technology for the system. In addition, the
subcontractor was identified as the leader for all bioagent detection
laboratory testing for the project, as well as for designing and
performing the lab tests for all critical items in the development of
the system.
Program managers said some of the projects pursued under the agreements
could not have advanced without the contributions of nontraditional
contractors. For example, S&T staff told us that one project, the
development and testing of a prototype device to counter the threat of
shoulder-fired missiles to commercial aircraft, required the
participation of nontraditional contractors. They said that the
involvement of major commercial airlines and transport companies
allowed S&T to test whether a certain military technology was suitable
for a commercial application. In another case, the project manager said
that the nontraditional contractor was the only company that held
patent rights for the unique technology needed to develop a type of
foot and mouth disease vaccine. According to the nontraditional
contractor's representative, the company would not have participated in
the project under a FAR-based contract due to concerns about retaining
intellectual property rights.
The proportion of dollars obligated on each agreement for
nontraditional contractors--which ranged from less than 1 percent to
100 percent--did not necessarily indicate the importance of the
contractors' contributions. For example, only 1 percent of one
agreement's obligations was allocated for work by a nontraditional
subcontractor to develop chemical tests for a hazardous substance
detection system. However, the prime contractor told us that this
nontraditional contractor was the leading expert in the field and
uniquely qualified to contribute to the project. In a similar example,
only 3 percent of an agreement's obligations were allocated for work by
a nontraditional contractor to manufacture devices necessary for a
mobile laboratory prototype. However, DHS considered these devices the
heart of the project, and thus a significant contribution.
Policies and Practices Are in Place to Manage Agreements, but
Assessment and Staffing Needs Have Not Been Fully Addressed:
Since we reported in 2004, DHS has continued to develop policies and
practices for managing other transactions, issuing an operating
procedure and a guidebook in May 2008, but has not fully addressed the
need to assess its use of these agreements and maintain a contracting
workforce. DHS has developed guidance and practices to minimize
financial and program risks. However, DHS does not have information to
systematically assess whether it is obtaining the full benefits of its
other transaction authority. Finally, contracting officers with
business acumen and training are critical to entering into and
administering other transactions; however, it is unclear whether the
present workforce is sufficient to support S&T's operation.
DHS Has Adopted Policies and Practices for Managing the Risks of Other
Transactions:
In 2004, we reviewed DHS policies and procedures and found they
provided a foundation for using its other transaction authority, though
refinements were needed. We reported that since the beginning of its
use of other transactions, DHS has applied commonly accepted
acquisition practices, such as using contractor payable milestone
evaluations to manage other transaction agreements.[Footnote 21]
Aspects of DHS's review process for other transaction agreements are
similar to those for contracts subject to the FAR. For example, DHS's
proposed sole source agreements must be explained and approved, and
program and contracting offices, as well as its office of general
counsel, review all proposed agreements.
DHS's guidance for prototype projects also encourages the use of fixed
price agreements with fixed payable milestones to minimize financial
and performance risks. We found that DHS has established fixed price
agreements with fixed payable milestones in 44 of the 53 agreements we
reviewed.[Footnote 22] Fixed price acquisitions generally transfer most
of the financial risk to the contractor. The financial risk for both
parties may be further limited in other transaction agreements by a
provision that allows either the government or contractor to leave the
program without penalty. In addition, the use of fixed price agreements
mitigates concerns regarding cost controls, as the costs are fixed at
the time the agreements are established. Payable milestones mark
observable technical achievements or events that assist program
management and focus on the end goal of the agreement. DHS guidance
states that it is based on commercial best practices, in which the use
of payable milestones gives industry opportunities to provide major
input into milestone descriptions as well as the option to leave the
program. One S&T program manager told us that a contractor opted to
cancel an agreement at a payable milestone after determining it could
no longer meet the goals of the program.
DHS's recent guidance also calls for considering when to include
financial audit provisions in the agreements. Our 2004 report noted
that the department lacked guidance on when to include such provisions-
-other than providing for access to GAO when the agreement is over $5
million.[Footnote 23] In May 2008, DHS issued a guidebook for the use
of other transactions for prototypes, which now includes additional
information on when audits should be conducted. Specifically, it states
that audit provisions should be included when the payment amounts in
the agreement are based on the awardee's financial or cost records, or
when parties other than the government are required to provide at least
one-third of the total costs. The guidebook contains sample audit
clauses that contracting officers should use or tailor to an individual
agreement. The guidance also describes when these requirements apply to
key participants other than the prime contractor.
DHS Lacks Information Needed to Assess Whether It Is Obtaining Full
Benefits of Other Transaction Authority:
Two key benefits of using other transactions are to provide greater
latitude in negotiating the allocation of intellectual property and
data rights and to leverage the cutting-edge technology developed by
nontraditional contractors. Knowledge gained from past projects
supported by other transaction agreements could allow DHS to assess the
extent to which these benefits are being obtained and inform planning
to maximize benefits for future projects. Performance information can
help agency managers to ensure that programs meet intended goals,
assess the efficiency of processes, and promote continuous improvement.
We have previously reported on the benefits of agencies using
systematic methods to collect, verify, store, and disseminate
information on acquisitions for use by their current and future
employees.[Footnote 24] However, DHS does not have the data it needs to
make such assessments and ensure that, in using other transactions, the
benefits outweigh the additional risks.
In our 2004 review, we found that S&T lacked the capacity to
systematically assess its other transactions, and we recommended that
DHS capture knowledge obtained during the acquisition process to
facilitate planning and implementing future projects. While the S&T
directorate now shares knowledge about the benefits derived from
completed projects on an informal basis, DHS does not formally collect
or share information about whether other transactions have been
successful in supporting projects or what factors led to success or
failure. In 2005, DHS hired a consultant to develop a "lessons learned"
document based on the DOD's experience using other transactions, and
DHS has incorporated this into its other transactions training. S&T
program representatives told us that their programs undergo regular
management reviews; however, these reviews are not documented. DHS has
not developed a system for capturing knowledge from its own projects,
which may limit its ability to learn from experience and adapt
approaches going forward.
DHS also lacks the information needed to assess whether it is using
other transaction authority to effectively negotiate intellectual
property and data rights. While some agreements tailored the language
on intellectual property and data rights to the particular needs of the
project, we found that the language in most agreements was similar and
that some of this language is generally applied to FAR-based contracts.
For example, most agreements included:
* standard FAR clauses for allocating intellectual property rights,
such as giving all ownership of an invention to the contractor while
maintaining a paid-up license that allows the government to use the
invention;
* standard FAR language that gives the government the right to require
a contractor to grant a license to responsible applicants or grant the
license itself if the contractor refuses to do so;
* requirements for the contractor to submit a final report on the use
of the inventions or on efforts at obtaining such use; and:
* a standard data rights clause with an added provision that extends
rights to state and local governments.[Footnote 25]
Incorporating these clauses enables DHS to protect the government's
interest, however, the extent to which DHS needed these rights is
unclear because the rationale for using these provisions and the
anticipated benefits were not documented. Concerned that rights may be
overestimated--and ultimately result in the government paying for
unused rights and discouraging new businesses from entering into other
transaction agreements--DOD issued guidance on intellectual property
rights negotiations.[Footnote 26] We reported that DOD's guidance
called for consideration of factors such as the costs associated with
the inability to obtain competition for future production, maintenance,
upgrade, and modification of prototype technology, or the inability of
the government to adapt the developed technology for use outside the
initial scope of the prototype project. DHS's May 2008 guidance for
prototype projects includes similar areas of consideration to assist
contracting officers in negotiating these rights, which could help to
address this concern if implemented as intended. This guidance also
provides that contracting officers, in conjunction with program
managers, should obtain the assistance of the DHS Intellectual Property
Counsel in assessing intellectual property needs.
To better track procurement data from other transaction agreements, DHS
has modified its procurement database to capture additional
information. For example, DHS recently made changes to its database to
allow the user, in part, to identify a prime contractor's
nontraditional status. However, the capacity of the database is limited
as it is not designed to capture data to assess DHS's use of other
transactions--particularly on the extent of nontraditional contractors'
contributions. The procurement database is also limited to including
information on new and active agreements, so DHS may have missed an
opportunity to gather data on experiences from any inactive agreements
not included in the database. As of April 2008, at least 10 agreements--
almost 20 percent of all the agreements we reviewed--were not in the
database. In addition, the database does not contain information on the
nature of the work performed by nontraditional contractors--either
prime or subcontractors--or the funding allocated to nontraditional
contractors. DHS's guidance only recommends reporting expenditures of
government funds if a cost reimbursement agreement is involved or the
agreement involves cost-sharing. Most available data on the
contributions of nontraditional contractors are maintained in hard copy
files, but documentation on 19 of 44 agreements did not contain
sufficient information for us to determine the planned obligations for
nontraditional contractors.
DHS Has Taken Steps to Develop Staff Skills but Has Been Challenged to
Maintain Its Contracting Workforce:
The unique nature of other transaction agreements requires staff with
experience in planning and conducting research and development
acquisitions, strong business acumen, and sound judgment to enable them
to operate in a relatively unstructured business environment. DHS
requires its other transaction contracting officers to hold a
certification for the most sophisticated and complex contracting
activities and to take training on the use of this authority.
DHS has created training courses that provide instruction in the use of
both FAR-based research and development contracting and other
transaction agreements. The topics covered include intellectual
property, foreign access to technology created under other
transactions, and program solicitations. According to DHS
representatives, between January 2005 and March 2008, approximately 80
contracting staff, including contracting officers, had been trained.
DHS representatives also said they are developing a refresher course
for staff who have already completed the initial training. DHS's
recently issued guidance also requires program staff to take training
on other transactions.
When DHS first began entering into other transaction agreements in
fiscal year 2004, it relied upon contracting services from other
agencies, such as the U.S. Army Medical Research Acquisition Activity,
including staff who were experienced in executing other transaction
agreements. Since fiscal year 2005, DHS has been granting warrants
[Footnote 27] to permit its own contracting officers to enter into
other transaction agreements and has issued these warrants to 17
contracting officers. Nine of these contracting officers have been
assigned to support S&T; however, DHS has experienced turnover and 4 of
these S&T contracting officers have left DHS since February 2008. The
Office of Procurement Operations does not have a staffing model to
estimate how many contracting officers are needed to support S&T's
workload on an ongoing basis. Two S&T program managers, who each manage
one agreement, told us that they had difficultly obtaining assistance
from the procurement office for other transactions, and attributed this
to inadequate staffing levels and turnover. Our prior work has noted
ongoing concerns with regard to the sufficiency of DHS's acquisition
workforce to ensure successful outcomes. In 2003, we recommended that
DHS develop a data-driven assessment of the department's acquisition
personnel resulting in a workforce plan that would identify the number,
skills, location, and competencies of the workforce.[Footnote 28] In
2005, we reported on disparities in the staffing levels and workload
imbalances among component procurement offices and recommended that DHS
conduct a departmentwide assessment of the number of contracting staff.
[Footnote 29] This recommendation has not been implemented. As of
February 2008, DHS reported that approximately 61 percent of the
minimum required level and 38 percent of the optimal level of contract
specialists were in place, departmentwide. We have ongoing work on
acquisition workforce issues and initiatives at DHS and plan to report
on the results of these efforts in the final product for that
engagement.
Conclusion:
While other transaction agreements can carry the benefit of tapping
into innovative homeland security technologies through nontraditional
contractors, as they are exempt from federal procurement regulations,
they also carry the risk of reduced accountability and transparency if
not properly managed. DHS has successfully used its other transaction
authority to attract nontraditional contractors to develop innovative
technologies to address homeland security needs, and it continues to
implement the policies and procedures needed to manage the inherent
risks of these agreements. However, DHS continues to lack the
resources--in terms of knowledge and workforce capacity--to ensure that
its agreements are transparent and maximize their potential benefits.
If other transaction authority is made permanent, it will be important
for DHS to take a systematic approach to assessing its experience with
other transaction authority and identifying and addressing contracting
workforce needs. These steps would not only enable DHS to more
strategically manage its agreements in the future, they also would
provide Congress with useful information on the benefits of the
authority.
Recommendations for Executive Action:
To promote the efficient and effective use by DHS of its other
transactions authority to meet its mission needs, we recommend that the
Secretary of Homeland Security direct the Under Secretary for
Management and the Under Secretary for Science and Technology to take
the following two actions:
* Collect relevant data on other transaction agreements, including the
roles of and funding to nontraditional contractors and intellectual
property rights, and systematically assess and report to Congress on
the use of these agreements to ensure that the intended benefits of the
authority are achieved.
* Direct the Office of Procurement Operations to work with the Science
and Technology directorate to determine the number of contracting
officers needed to help ensure a sufficient contracting workforce to
execute other transaction authority.
Agency Comments and Our Evaluation:
We provided a draft of this report to DHS for review and comment. In
written comments, DHS concurred with our recommendations and provided
some information on efforts under way to improve information on its use
of other transaction authority. DHS's comments are reprinted in their
entirety in appendix III. DHS also provided technical comments that
were incorporated where appropriate.
In response to our first recommendation, that DHS collect relevant data
on other transactions agreements, including the roles of and funding to
nontraditional contractors and intellectual property rights, and
systematically assess and report to Congress on the use of these
agreements to ensure that the intended benefits of the authority are
achieved, DHS stated that the Chief Procurement Officer is taking steps
to improve the information DHS has on its other transactions. DHS
reiterated changes it has made to its procurement data system which are
described in our report. DHS also noted the information included in its
annual report to Congress on S&T's other transactions. For example, the
report details the technical objectives of each other transaction
including the technology areas in which the project is conducted. DHS
also stated that it plans to revise its guidance to specify that the
Office of Procurement Operations and S&T program management should
formally collaborate in preparing its annual report to Congress, noting
that this process can serve as a means of sharing "lessons learned" on
the benefits of other transaction authority. While DHS stated that its
report to Congress includes overarching assessment information, DHS
does not systematically evaluate whether it is obtaining the full
benefits of other transaction authority. For example, DHS did not
specify how it will improve the availability of and systematically
assess information related to the nature of the work being performed by
nontraditional contractors, the funding allocated to nontraditional
contractors, or areas considered in the negotiation of intellectual
property rights. We continue to believe that these are key areas in
which DHS should collect and evaluate data to determine whether the
intended benefits of the authority are achieved.
In response to our second recommendation, that the Office of
Procurement Operations work with S&T to determine the number of
contracting officers needed to help ensure a sufficient contracting
workforce to execute other transaction authority, DHS stated that this
issue can only be addressed as part of broader departmentwide
acquisition workforce initiatives. DHS recognized the need to have
contracting personnel, certified in the use of other transactions, in
sufficient numbers to handle S&T's workload as it arises, but noted
that the workload does not lend itself to a static number of personnel.
While we recognize that the workload for other transactions fluctuates,
the Office of Procurement Operations does not have a staffing model
that incorporates workload to estimate what level of contracting
support is needed for other transactions on an ongoing basis. We
continue to believe that this would help DHS managers ensure a
sufficient contracting workforce to execute S&T's other transaction
authority.
We are sending copies of this report to interested congressional
committees and the Secretary of Homeland Security. We will also make
copies available to others upon request. In addition, the report will
be available at no charge on GAO's web site at [hyperlink,
http://www.gao.gov].
If you or your staff have questions regarding this report or need
additional information, please contact me at (202) 512-4841 or
needhamjk1@gao.gov. Contact points for our offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Principal contributors to this report were Amelia Shachoy,
Assistant Director; Alexandra Dew; Russ Reiter; Matthew Voit; Tracey
Graham; John Krump; and Karen Sloan.
Signed by:
John K. Needham, Director:
Acquisition and Sourcing Management:
List of Committees:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Tom Davis:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Bennie G. Thompson:
Chairman:
The Honorable Peter T. King:
Ranking Member:
Committee on Homeland Security:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To determine the extent to which nontraditional contractors have been
involved in other transactions with the Department of Homeland Security
(DHS) to fulfill technology and mission needs, we obtained an initial
list of agreements from DHS's Office of Procurement Operations, the
contracting office responsible for entering into these agreements;
conducted a file review; and interviewed DHS's Science and Technology
(S&T) directorate's program managers. As shown in table 1, we
identified 53 of 55 agreements that we could review.
Table 1: Identification of Other Transaction Agreements Entered into
from Fiscal Years 2004 through 2008:
Agreement files reviewed:
Agreements identified by the Office of Procurement Operations: 44;
Additional agreements identified during contract file review: 4;
Additional agreements identified by program managers: 5;
Total number of agreements identified: 53.
Partial agreement files obtained (not reviewed):
Agreements identified by the Office of Procurement Operations: 1;
Additional agreements identified during contract file review: 0;
Additional agreements identified by program managers: 1;
Total number of agreements identified: 2.
Total number of agreement files:
Agreements identified by the Office of Procurement Operations: 45;
Additional agreements identified during contract file review: 4;
Additional agreements identified by program managers: 6;
Total number of agreements identified: 55.
Source: GAO presentation of data from DHS and GAO file reviews.
Note: S&T identified six additional projects that were entered into
using an other transaction agreement; however, we were not able to
obtain documentation or confirm that agreements were used for these
projects.
[End of table]
Nontraditional contractors were identified in 44 agreement files,
although not all had complete information. For example, 19 of these
files did not include sufficient information to determine how much of
the contract value was proposed to go to nontraditional contractors. We
analyzed all available agreements and the contractors' proposals to
identify the nontraditional contractors, the contribution they plan to
bring to the project, and the nontraditional contractors' shares as
identified in contractors' proposals. However, DHS relies on
contractors to self-certify their status as a nontraditional government
contractor during agreement negotiation. In analyzing DHS's agreements,
we did not independently verify a contractor's reported status as a
nontraditional contractor other than to conduct a search of the Federal
Procurement Data System-Next Generation (FPDS-NG) to determine whether
these contractors had prior government work. Our limited review of FPDS-
NG identified 25 contractors who had worked with the government in the
previous year but found no contract actions that appeared to be subject
to the cost accounting standards or that were for prototype or research
projects in excess of $500,000. We also did not independently verify
the share of costs allocated to nontraditional contractors or their
contributions under the agreements. We determined nontraditional
contractors' business size by reviewing data from the Central
Contractor Registration. With these data, we identified the business
size of 39 of 50 nontraditional contractors. Of the remaining 11 firms,
1 firm did not have a business size identified and 10 were not listed
in the database. In addition, we interviewed DHS contracting officers
and S&T program managers to obtain their views on the contributions
that the nontraditional contractors provided to the project. In
addition, we also interviewed two prime contractors, one traditional
and one nontraditional, to understand their experiences with entering
into other transactions with DHS.
To assess DHS's management of the acquisition process when using other
transactions, we reviewed and analyzed each available agreement file to
assess the process and procedures used to negotiate and enter into the
agreement. We reviewed DHS's Management Directive 0771.1, Other
Transaction Authority, dated July 8, 2005, and Procurement Operating
Procedure 311, Other Transactions for Prototypes and the attached Other
Transaction for Prototype Guidebook, dated May 22, 2008. We also
interviewed contracting officers and program managers as well as a
representative from DHS's legal counsel to obtain an understanding of
the review process. We reviewed each available agreement analysis to
determine how the intellectual property and data rights were
negotiated. We discussed with contracting and program representatives
whether information is collected to assess the effectiveness and
benefits of the use of other transaction authority or what lessons are
learned from its use. We also reviewed DHS's June 30, 2008, report to
Congress on its use of other transaction authority, which includes
information on 38 agreements. During the course of our audit work, we
reviewed 15 additional agreements, including 1 agreement entered into
after DHS's reporting period. We reviewed DHS's training material
provided to contracting officers on the use of the other transaction
authority. We also obtained information on the number of contracting
representatives that have received this training and the number of
those that have left DHS since 2005. We also reviewed our prior reports
on the use of other transaction authority at the Departments of Defense
and Homeland Security.
We conducted this performance audit from April through September 2008,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Appendix II: Description of DHS Projects Supported by Other Transaction
Agreements:
S&T Chemical/Biological Division:
Project: Agriculture Biosecurity Thrust Area Veterinary
Countermeasures;
Description: S&T Chemical/Biological Division: Development of a Foot
and Mouth Disease vaccine that allows for the determination of whether
an animal has been infected.
Project: Autonomous Rapid Facility Chemical Agent Monitor (ARFCAM);
Description: S&T Chemical/Biological Division: Autonomous chemical
detectors.
Project: ARFCAM Millimeter Wave-Terahertz Spectroscopy;
Description: S&T Chemical/Biological Division: Demonstrating the
ability to use spectroscopy as an approach for detecting chemical
warfare agents and toxic industrial chemicals.
Project: BioAgent Autonomous Network Detector (BAND);
Description: S&T Chemical/Biological Division: Biological detection
sensor system.
Project: Food Biological Agent Detection Sensor (FBADS);
Description: S&T Chemical/Biological Division: Rapid, portable
technology to detect "threat agents" in food.
Project: Instantaneous Bio-Aerosol Detection Systems (IBADS);
Description: S&T Chemical/Biological Division: Rapid bio-aerosol
sensors.
Project: Lightweight Autonomous Chemical Identification System (LACIS);
Description: S&T Chemical/Biological Division: Hand-held chemical agent
detectors.
Project: Low-Cost Bio-Aerosol Detection System (LBADS);
Description: S&T Chemical/Biological Division: Low-cost bio-aerosol
sensors.
Project: Portable High-through-put Integrated Laboratory Identification
System (PHILIS);
Description: S&T Chemical/Biological Division: Identifies dangerous
chemical compounds in contaminated areas.
Project: Rapid Automated Biological Identification System (RABIS);
Description: S&T Chemical/Biological Division: Continuous monitoring
for a broad range of potential bio-aerosol threats.
S&T Explosives Division:
Project: Counter Man-Portable Air Defense Systems (CMANPADS);
Description: S&T Chemical/Biological Division: Detects shoulder-
launched surface-to-air missiles, cues a laser to jam weapons' guidance
system.
S&T Infrastructure Protection & Geophysical Science Division:
Project: Kentucky Critical Infrastructure Protection Institute (KCI);
Description: S&T Chemical/Biological Division: Protects critical
infrastructure against terrorist attacks, emergency situations;
community-based program.
S&T Homeland Security Advanced Research Projects Agency:
Project: Prototypes and Technology for Improvised Explosives Device
Detection (PTIEDD);
Description: S&T Chemical/Biological Division: Develops security
systems to screen individuals for explosive trace residue.
Project: Secure Super Grids;
Description: S&T Chemical/Biological Division: Developing a "high
temperature superconductor" power grid.
Domestic Nuclear Detection Office:
Project: Advanced Passive Detection Components;
Description: S&T Chemical/Biological Division: Sensors and detectors to
reduce the risk of radiological and nuclear threats.
Project: Advanced Spectroscopic Portals (ASP);
Description: S&T Chemical/Biological Division: Detects nuclear
materials to prevent nuclear attacks/terrorism.
Project: FAST TRAC;
Description: S&T Chemical/Biological Division: Detects radiological and
nuclear material at the component level.
Source: GAO presentation of data from DHS other transaction agreement
files.
[End of table]
[End of section]
Appendix III: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
[hyperlink, http://www.dhs.gov]
September 19, 2008:
Mr. John Needham:
Director, Acquisition and Sourcing Management:
Government Accountability Office:
Washington, D.C. 20548:
Dear Mr. Needham:
Thank you for the opportunity to review draft report GAO-08-1088,
Department of Homeland Security: Improvements Could Further Enhance
Ability to Acquire Innovative Technologies Using Other Transaction
Authority.
The Department of Homeland Security (DHS) and the Office of the Chief
Procurement Officer (OCPO) concurs with GAO's recommendations. The
following is the Departmental response to the recommendations contained
in the draft report.
Recommendation 1. Collect relevant data on other transaction
agreements, including the roles of and funding to nontraditional
contractors and intellectual property rights, and systematically assess
and report to Congress on the use of these agreements to ensure that
the intended benefits of the authority are achieved.
The Office of the Chief Procurement Officer is taking the following
steps to address GAO's recommendation to improve the information DHS
has on its other transactions (OT): (1) The Office of Procurement
Operations (OPO) has recently developed and implemented an OT module in
PRISM, its contract writing system to ensure that information on OTs is
current, accurate, and complete. OPO uses customized monthly reports to
reconcile the status of OT actions with Science &Technology (S&T). (2)
In addition, DHS is required to provide an annual report to Congress on
its OTs. Information collected includes basic transactional and
overarching assessment information. (i.e., basic transactional data
includes agreement number, effective date, awardee, extent of
competition, estimated completion date, U.S. Government dollars
contributed, non-Government dollars contributed, etc.
Overarching assessment information details the technical objectives of
the OT effort including the technology areas in which the project is
conducted, extent to which the OT has contributed to a broadening of
the technology and industrial base available for meeting DHS needs,
extent to which the OT has fostered, within the technology and
industrial base, new relationships and practices that support the
national security of the U.S., and the rationale for using OT authority
in lieu of Federal Acquisition Regulation-based contracts. The basic
transactional data is collected in the PRISM OT module. DHS guidance
will be revised to specify that the overarching assessment information
identified above is obtained through a formal collaborative effort
between OPO contracting personnel and the S&T OT program management as
part of the preparation of DHS's annual OT report. In addition to
providing the necessary reporting information, the process can serve as
a means of sharing information and "lessons learned" regarding the
realization of benefits of OT authority.
Recommendation 2. Direct the Office of Procurement Operations to work
with the Science & Technology Directorate to determine the number of
contracting officers needed to help ensure a sufficient contracting
workforce to execute other transaction authority.
Because DHS OT contracting officers' workload includes both OTs and
procurement contracts, GAO's comments regarding Office of Procurement
Operations (OPO) Contract Specialist staffing sufficiency for OT
support can only be addressed as part of broader Departmentwide
acquisition workforce initiatives. The specific workload for OT
certified Contracting Specialists and Contracting Officers may vary
from time to time, so OPO recognizes the need to have OT Certified
Contracting personnel in sufficient numbers to handle the S&T workload
as it arises. Such a workload does not lend itself to a static number
of Full Time Equivalent personnel. Any actions determined to be
necessary as a result of GAO's recent DHS Acquisition Workforce study
(GAO Engagement Code 120688) will be implemented in response to the
above recommendation. In addition, to ensure workforce effectiveness in
the planning, award, and administration of OTs, DHS has established
mandatory OT training, successful completion of which is required as a
prerequisite to designation as an OT contracting officer.
We thank you again for the opportunity to review the report and provide
comments.
Sincerely,
Signed by:
Jerald E. Levine:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Footnotes:
[1] Other transactions are agreements other than government contracts,
grants, and cooperative agreements. See 6 U.S.C. § 391(a)(1)
incorporating provisions of 10 U.S.C. § 2371. In this report, we also
refer to other transaction agreements as "other transactions" and as
"agreements."
[2] Other transaction agreements have only been used by two of DHS's
components: the Transportation Security Administration (TSA) and the
Office of Procurement Operations in support of S&T. TSA's authority is
derived from the Aviation and Transportation Security Act (Pub. L. No.
107-71, (2001)) and is not addressed in this report.
[3] GAO, Homeland Security: Further Action Needed to Promote Successful
Use of Special DHS Acquisition Authority, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-136] (Washington, D.C.: Dec.
15, 2005).
[4] According to statute, a nontraditional contractor is a business
unit that has not, for a period of at least one year prior to the date
of entering into or performing an other transaction agreement, entered
into or performed: any contract subject to full coverage under cost
accounting standards; or any contract in excess of $500,000 to carry
out prototype projects or to perform basic, applied, or advanced
research projects for a federal agency subject to compliance with the
FAR. See 6 U.S.C. § 391(d), incorporating the definition at section 845
of the National Defense Authorization Act for Fiscal Year 1994, Pub. L.
No. 103-160 (1993) as amended.
[5] DHS's June 30, 2008 report to Congress reported on 38 agreements.
During the course of our audit work, we reviewed files for these 38
agreements, as well as 15 additional agreements we identified,
including 1 agreement entered into after DHS's reporting period. In
addition, we identified 2 agreements we could not review because the
files were not complete.
[6] FPDS-NG is the federal government's primary data system for
tracking information on procurement actions.
[7] For fixed price contracts, a specified price is paid regardless of
the contractor's costs, minimizing the financial risk to the
government.
[8] 6 U.S.C. § 391(a)(2), incorporating section 845(d) of the National
Defense Authorization Act for Fiscal Year 1994, Pub. L. No. 103-160
(1993).
[9] 6 U.S.C. § 391(a)(1) (incorporating the requirements of 10 U.S.C. §
2371(e)) requires (1) that to the extent practicable, the federal
government may not pay more than all other parties combined and that
(2) the Secretary must ensure that the use of a contract, grant, or
cooperative agreement for such project is not feasible or appropriate.
DHS guidance implementing this requirement states that the contracting
officer should (1) use other transactions for research to develop
innovative approaches to carrying out research projects when a standard
procurement vehicle (contract, grant, or cooperative agreement) is not
appropriate or feasible; and (2) understand that other transactions for
research require, to the maximum extent practicable, a 50 percent
resource sharing of program costs between the government and the
contractor.
[10] We could not review two agreement files because they were
incomplete. Of 53 agreements we reviewed, we determined that 49 were
prototype agreements and 4 were research and development agreements. Of
the prototype agreements, 43 were justified based on the involvement of
nontraditional contractors, 5 were justified based on cost-sharing by
the contractors, and 1 agreement did not specify a justification. Three
agreements involved both nontraditional contractors and cost-sharing
arrangements. In total, 8 agreements proposed that contractors would
contribute over $22 million (almost 14 percent) of the total proposed
costs of these projects.
[11] A single S&T program can result in other transaction agreements
with multiple contractors. Four of the 55 agreements are managed by
DHS's Domestic Nuclear Detection Office (DNDO), and S&T contracting
representatives told us these agreements were entered into by the S&T
directorate before DNDO was created.
[12] Responsibility for the acquisition function at DHS is shared
between the Chief Procurement Officer and each DHS component head.
Eight DHS components have internal procurement offices with a Head of
Contracting Activity who has overall responsibility for the day-to-day
management of the component's acquisition function. The Office of
Procurement Operations provides contracting support to all other
components including S&T. See GAO, Department of Homeland Security:
Progress and Challenges in Implementing the Department's Acquisition
Oversight Plan, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-
900] (Washington, D.C.: June 13, 2007).
[13] DHS could not readily determine the status of one agreement.
[14] In February 2008, we reported that, according to S&T data, S&T's
total obligations in fiscal year 2006 were over $1.16 billion. S&T
explained that the large difference between the reported obligations in
fiscal years 2006 and 2007 was because the fiscal year 2006 total
included obligations for DNDO. Without DNDO obligations, S&T reported
its total obligations in fiscal year 2006 to be about $880 million.
[15] GAO, Department of Homeland Security: Status and Accountability
Challenges Associated with the Use of Special DHS Acquisition
Authority, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-471T]
(Washington, D.C.: Feb. 7, 2008.)
[16] DHS contracting officers told us they exercise professional
judgment in determining whether a nontraditional contractor is making a
significant contribution. DHS guidance provides several examples of
significant contributions, including supplying relevant new technology,
services or products; accomplishing a significant amount of the effort;
or in some other way causing a material reduction in the cost,
schedule, and/or increase in performance.
[17] Based on our limited review of federal procurement data, the 25
contractors who had recently worked for the government appeared to have
no contracting actions in the year prior to entering into the other
transaction agreements that would have subjected them to cost
accounting standards, or that were for prototype or research projects
in excess of $500,000.
[18] The number of prime contractors includes one nontraditional
contractor who also participated as a subcontractor on another
agreement.
[19] We determined business size by reviewing the Central Contractor
Registration, the primary government repository for contractor
information required for the conduct of business with the government.
[20] Documentation on the other 19 agreements did not have enough
information for us to assess the planned obligations for nontraditional
contractors.
[21] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-136].
[22] Five of the six agreements that were cost-reimbursable agreements,
not fixed price, also used payable milestones. The remaining cost-
reimbursable agreement was payable on a monthly basis. Three agreements
were for the exchange of data and had no costs associated with them.
[23] Pursuant to statute, in the instance of actions greater than
$5,000,000, Other Transaction Contracting Officers must include a
provision in the agreement authorizing GAO access to the records of any
party to the agreement under certain circumstances but this statutory
requirement only applies to exercises of the prototype authority, not
to the research authority. 6 U.S.C. § 391(a)(2), incorporating section
845(c)(1) of the National Defense Authorization Act for Fiscal Year
1994, Pub. L. No. 103-160 as amended.
[24] GAO, Best Practices: Highlights of the Knowledge-Based Approach
Used to Improve Weapon Acquisition, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-04-392SP] (Washington, D.C.: January 2004) and NASA:
Better Mechanisms Needed for Sharing Lessons Learned, GAO-02-195
(Washington, D.C.: Jan. 30, 2002).
[25] DHS believes that state and local governments will be the primary
customers and wanted to ensure that products developed under agreements
were available and affordable to them, without needing to pay high
usage rights payments. DHS has extended its rights in many agreements
by defining "government" as including state and local governments.
[26] GAO, Intellectual Property: Information on the Federal Framework
and DOD's Other Transaction Authority, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-01-980T] (Washington, D.C.: July
17, 2001).
[27] Only those employees with specific contracting officer authority
known as a "warrant" may execute contracts on behalf of DHS.
[28] GAO, Contract Management: INS Contracting Weaknesses Need
Attention from the Department of Homeland Security, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-799] (Washington, D.C.: July
25, 2003).
[29] GAO, Homeland Security: Successes and Challenges in DHS's Efforts
to Create an Effective Acquisition Organization, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-179] (Washington, D.C: Mar.
29, 2005).
[End of section]
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Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Ralph Dawn, Managing Director, dawnr@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
