Panel says nearly $15 billion wasted in 11 failed DHS contracts

Published 18 September 2008

A House homeleand security subcommittee charges that there is nearly $15 billion in waste in 11 failed DHS contract

The Project on Government Oversight (POGO), and organization which keeps a jaundiced eye of government spending, is testifying today before the House Committee on Homeland Security’s Subcommittee on Management, Investigations, and Oversight. The hearing is titled “Waste, Abuse, & Mismanagement: Calculating the Cost of DHS Failed Contracts.” The Subcommittee calculated approximately $15 billion worth of waste in eleven DHS programs. Even that figure “illustrates a mere fraction of the costs, which can never be recouped, of homeland security contracts that receive a failing grade,” the subcommittee’s announcement stated.

Scott Amey of POGO writes that POGO’s testimony focuses on the long-term management and contracting errors of the agency and other silent costs of failed contracting, including awarding contracts to non-responsible contractors, and concerns with DHS’s revolving door. POGO highlights the following government-wide contracting problems, which it hopes will be considered by Congress:

  • Cozy negotiations — To make every effort to get the best value for the taxpayer, the government must promote aggressive arm’s-length negotiations with contractors.
  • Inadequate competition — Better to evaluate goods and services and get the best value, the government must encourage genuine competition so that it can correct the trend of entering into non-competitive contracts in 40 percent of federal purchases.
  • Lack of accountability — To ensure that taxpayer dollars are being spent responsibly, the government must regularly monitor and audit contracts after they are awarded.
  • Lack of transparency — To regain public faith in the contracting system, the government must ensure that the contracting process is open to the public, including contractor data and contracting officers’ decisions and justifications.
  • Risky contracting vehicles — To prevent abuse, the government must ensure that risky contract types that have been abused in the past (including performance-based contracts, interagency contracts, “task and delivery orders,” also known as Indefinite Delivery/Indefinite Quantity (ID/IQ) contracts, multiple award and government-wide acquisition contracts (GWACs), time & material contracts, purchase card transactions, commercial item purchases, and other transaction authority) are only used in limited circumstances and are accompanied by audit and oversight controls.

Specifically, POGO asks the subcommittee to consider the following recommendations to improve DHS contracting:

  • Ensure that full and open competition is the rule and restore the definition of “competitive bidding” to require at least two bidders.
  • Require that risky contract vehicles are used in limited circumstances and only when supported by proper justifications and oversight protections.
  • Review DHS commercial item and service acquisitions to ensure that a commercial marketplace exists.
  • Examine the use of ID/IQ and GWAC contracts to ensure that contractors are not receiving improper fees.
  • Investigate how prime contractors bill the government at their own labor rate(s) rather than the rate that they pay their subcontractors on Time and Material or Labor Hour (T&M/LH) contracts.
  • Confirm that contractors are not performing inherently governmental functions, which must be performed by civil servants.
  • Reestablish the taxpayer-protection checks and balances that have been removed from the contracting system.
  • Review DHS’s use of the suspension and debarment system, especially as it has been applied to large contractors with repeated histories of misconduct.
  • Provide a fair playing field for all DHS contractors by requiring public posting of all task and delivery order opportunities on FedBizOpps website, and require copies of contracts and task and delivery orders awards be made public on
  • Examine and improve the conflict of interest and ethics system to ensure that DHS employees comply with all federal conflict of interest laws and regulations.