In 2007, the federal Department of Homeland Security entered into more than $3 billion worth of contracts with private companies for goods and services while not requiring that they compete against each other to make sure taxpayers receive the best value possible. That’s a quarter of all contracts awarded by the department and a major jump from 2003 when Congress created the new federal bureaucracy.
It’s known as “sole-source” contracting or non-competitive procurement, and sometimes there are perfectly good reasons for why government bureaucrats would do business with suppliers in such a way. There may be only one company that manufactures a product in demand. Or there’s unusual and compelling urgency, such as during a natural disaster, and the purchase must be made as quickly as possible.
However, government agencies are required to demonstrate why a purchase needs to be exempt from federal guidelines otherwise in place to protect taxpayers.
The Department of Homeland Security’s inspector general says that didn’t happen with dozens of purchases examined for compliance, according to a report released Sept. 15. Inspector General Richard Skinner’s office looked at $417 million worth of spending that took place in 2007 involving sole-source contracts and found that in most cases, contracts were awarded without federal regulations being followed.
The Center for Investigative Reporting found in a story earlier this month that communities in California spent millions of dollars on anti-terrorism equipment and emergency preparedness consultants using federal homeland security grants without following the same types of rules that among other things require competition.
Government auditors concluded in a March report that cities and counties across the Golden State “preferred to avoid the burden of initiating competitive procurement whenever possible” for the purchase of communications systems, night-vision goggles, bomb-disposal robots and more.
California, it turns out, isn’t alone. According to Skinner’s recent report, contract files at the Department of Homeland Security didn’t have documentation to explain why sole-source purchases were necessary. It also wasn’t always clear market research had been done so the best products could be identified. Nor did officials appear to thoroughly plan how they would manage large investments, leading to opportunities for additional waste.
In some instances, files were so disorganized and incomplete, it was impossible for the inspector general’s staff to determine if non-competitive contracts were justified, according to the report. Purchasing documents in two cases listed in the report as examples had to be reconstructed “because contract personnel were unable to locate the original files.”
Forty percent of the department’s annual budget is consumed through contracts with the private sector, but it continues to struggle with high turnover rates of personnel and an inability to hire contract officers who can effectively police major purchases and hold contractors accountable.
Department officials responded in a letter to the inspector general that the report doesn’t mention its “significant strides” in hiring qualified contract overseers. The Department of Homeland Security has doubled its contracting workforce since 2003 and increased its staff by over 20 percent since 2007, according to the letter.
Also, a far greater percentage of contracts are awarded competitively now compared to past years, the letter stated. Whether that’s something to be proud of is a matter of perception. Less than half of contract awards in 2006 were competitively bid out to multiple companies, so any improvements made by the department in saving taxpayer money could be viewed as the federal government simply meeting basic expectations.
When companies do compete for government business, the difference can be extraordinary. Taxpayers benefitted from more than $7 billion in net savings between 2003 and 2007 at the federal level due to competitive contracting, according to the Office of Management and Budget.
Concerns about wasteful spending are nothing new for the Department of Homeland Security. At this time last year, Democratic congressman Bennie Thompson of Mississippi, chair of the House Homeland Security Committee, held a hearing on $15 billion worth of “failed contracts” signed by the department for everything from fences and surveillance equipment on the southwest border with Mexico to new ships and aircraft for the Coast Guard.
According to Thompson’s office:
“Billions of dollars have been spent on contracts for programs that have been delayed, deferred and/or discontinued resulting in a waste of taxpayer money. Unfortunately, the wasting of these funds was not haphazard or as a result of conditions that could not have been foreseen. On the contrary, the department has failed to implement a ‘lessons learned’ approach, which has resulted in the same mistakes being made over and over again.”