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Report Finds DHS Lax on Contracting Procedures

By Robert O'Harrow Jr. and Scott Higham
Washington Post Staff Writers
Wednesday, November 22, 2006

Private consultants hired by the Department of Homeland Security have found widespread problems with its contracting operation, including nearly three dozen contract files that could not be located.

Files that could be found often lacked basic documentation required under federal rules, such as evidence that the department negotiated the best prices for taxpayers, according to a copy of the consultants' report obtained by The Washington Post.

"The inability to locate files and inconsistent file organization puts the government at risk in ensuring the contractor is fulfilling its contractual obligations and the government is meeting its contract administration responsibilities," the consultants wrote in their report.

The assessment underscores complaints by department auditors and outside experts that procurement officials persistently neglected contracting responsibilities as they spent billions of dollars after the Sept. 11, 2001, attacks -- much of it on security systems that do not work as planned.

"This strongly suggests that we're buying the wrong stuff, the wrong way, possibly from the wrong contractors, and failing to check before, during or after," said Charles Tiefer, an expert on government contracting who teaches at the University of Baltimore School of Law.

The confidential report, delivered to department officials in March, focused on spending in fiscal 2005 by the Office of Procurement Operations. During that period, nearly $17.5 billion was spent department-wide on contracts for a variety of goods and services, including security at airports and borders, radiation-detection monitors, and information technology consultants.

Department spokesman Larry Orluskie said procurement officials are following several recommendations made in the report.

"We've acted upon each one of their findings," Orluskie said. "It was an internal look. We are going to bring them in again to make sure we are following up."

Last year, Homeland Security Secretary Michael Chertoff, Deputy Secretary Michael P. Jackson and others at the agency acknowledged having trouble with contracting and promised to do better. They said they had made progress by hiring scores of contracting officials and by tightening rules.

But the confidential report adds weight to critics' contentions that contracting problems persist. Last week, the agency's inspector general, Richard L. Skinner, told a House panel that "expediency, poorly defined requirements and inadequate oversight" are creating "a high risk of cost overruns, mismanagement or failure."

The firm hired to write the report, Acquisition Solutions, examined a sample of 72 contract files for DHS, which wanted to determine whether it was following federal contracting laws and internal policies.

At the outset, the team of acquisition specialists could not locate 33 of the 72 contract files it had selected for the review, so the consultants had to select 33 others.

"The files were extremely difficult to locate and were organized in an inconsistent manner," they wrote.

The consultants sharply criticized an array of contracting procedures. Of the 72 contract files reviewed, only 14 were deemed to be in "excellent" shape. Those files contained evidence that the contracts were awarded with adequate competition and represented the best deal for taxpayers.

Forty-seven files met only "minimum" standards and showed little evidence of fair and reasonable pricing or supervision by contracting officials.

Eleven files were deemed to be "seriously inadequate," with key documents missing or incomplete and little evidence that the contracts were competitively awarded or prices were justified.

The consultants said some information in the files "seems to be just enough to 'get by.' "

Sen. Joseph I. Lieberman (D-Conn.), who is in line to assume chairmanship of the Senate's Homeland Security and Governmental Affairs Committee, said he intends to hold hearings on DHS contracting next year.

"I expect the Homeland Security and Governmental Affairs Committee to conduct vigorous oversight of this issue in the 110th Congress," he said.

Staff writer Spencer S. Hsu contributed to this report.

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