September 06, 2006

How to Waste $34 Billion on Homeland Security

For some good ideas about what not to do, government procurement officials would do well to read the US House of Representatives Committee on Government Reform report: Waste, Abuse, and Mismanagement in Department of Homeland Security Contracts. With spending rocketing from $3.5b to $10b between 2003 and 2005, and the volume of contracts rising from 14,000 to 63,000 in the same period, the DHS didn't exactly cover itself in glory:

  • 32 contracts valued at over $34b involved significant overcharges, wasteful spending or mismanagement;
  • a $10b contract with Accenture for the US-VISIT border security system was found to rely on out-of-date and ineffective technologies and, even if it worked, might not prove to be very effective; and
  • several billion dollars was spent on airport screening and radiation-detection systems that did not work.
How and why did this happen? It depends who you ask, but the explanations/excuses include:

  • Too much sole-sourcing. By 2005, more than half (55% or $5.5b) of DHS contracts were awarded without full and open competition. By contrast, back in 2003, more than 4 out of 5 DHS contracts followed an open, competitive procurement process. Put another way, uncompetitive contracts grew by over 700% in 3 years.
  • Vague requirements. Too often, the DHS would issue RFPs with vague, fluffy, poorly defined requirements. In one example, bidders were told that "We're asking you to come back and tell us how to do our business..."
  • Too little training. The department simply didn't have enough trained procurement staff to keep up with the rapidly growing spend.
Not a pretty picture. The committee chairman called it "acquisition dysfunction". But the last word goes to former DHS Inspector General Clark Kent Ervin:

Einstein said insanity is doing the same thing over and over again and expecting a different result. They never learn anything. It's just crazy... no wonder costs are out of control.

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