John Croft in Washington DC
The US House of Representatives' committee on government reform pulled no punches when evaluating the contracting practices of the Department of Homeland Security as it neared its fourth birthday. "The growth in DHS contracts has been accompanied by pervasive mismanagement," it said.
Evidence in the July report, compiled for House members Tom Davis and Henry Waxman, came from a study of 32 DHS contracts that were analysed by the Government Accountability Office, Pentagon auditors, agency inspectors general and other government investigators. Contracts included the hiring of airport screeners and installation of explosives detection equipment at airports.
The authors conclude that the projects, totalling $34.3 billion, have been "plagued by waste, abuse and mismanagement". And they say history is about to repeat itself with the forthcoming $2 billion SBInet contract, the first phase of the government's $8 billion Secure Border Initiative (SBI). According to the report, chief inspector Carlton Mann of the DHS Inspector General's office told lawmakers in July that "loose contract requirements" and "unstable operational requirements" are but two of the "tremendous challenges and risks" facing the programme, an effort to secure 12,000km (7,500 miles) of US borders.
But two key government contractors dismiss the criticism and praise what they say is a new and improved DHS. Although issues remain at the department, Boeing and Northrop Grumman say it has turned a corner in its momentous mandate to secure the USA and respond to natural disasters, and that the SBInet programme is a sign that progress is being made. The DHS is an 180,000-employee amalgamation of 22 federal agencies first brought together in early 2003.
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"All around the department, you can find signs of better, more tactical execution," says Bruce Walker, vice-president of strategic planning for Homeland Security at Northrop. The company had previous contracts in place with legacy organisations before the merger, including the US Coast Guard for the Deepwater fleet modernisation programme and other efforts in the Immigration and Customs Enforcement service. Northrop is one of five companies bidding for the SBInet contract.
Walker largely credits DHS secretary Michael Chertoff's Second Stage Review (2SR) last year with bringing about much of the change. Under 2SR, Chertoff, who took over the top slot in February 2005, replacing Tom Ridge, had a team of 250 experts analyse the processes within the department and come up with a six-point agenda to help the agency better protect against threats. The retooling will include knocking down barriers between traditional agencies in terms of purchasing and research and development efforts. Larger procurements for equipment to be used across multiple agencies could also be a boon to contractors.
Boeing's vice-president of homeland security, John Stammreich, echoes Walker's views. "The entire homeland security activity is maturing and settling down," he says. Boeing's homeland security team is best known for its $1.2 billion contract to oversee the rapid installation of explosive detection equipment at 429 commercial service airports after the 9/11 attacks. Stammreich says that while Chertoff and his deputy, Michael Jackson, were providing a "much more focused effort" for the department, it was the aftermath of Hurricane Katrina that ultimately solidified the new DHS. "I believe [Katrina] was a test that they survived as team," he says.
Kind words for the department may not have been so free flowing a year ago. Matthew Farr, senior homeland security analyst for Frost & Sullivan, says contractors had been "burned" by earlier DHS programmes that fizzled before materialising. The American Shield Initiative, the precursor to SBI, was a good example. "DHS got everyone spun up on solutions," he says. "The request for proposals kept getting pushed back, and then it was cancelled." Farr says that while companies are "leery" of SBInet for that reason, there is also a general sense of excitement in the industry because SBInet "is the first billion dollar contract to come out of DHS for a while".
Reasons for contractual sluggishness at the DHS were no secret to contractors or the department itself - the DHS's spending nearly doubled between 2003 and 2005 while its acquisition workforce increased by less than 20%.
The demands were high enough that the DHS farmed out contract support to other government agencies, work it is now pulling back into the department as staffing approaches its required levels. "We've had to be very agile and very patient in terms of contract orders and changes to contracts," says Northrop's Walker.
One area where industry wants more evolution is in research, development, testing and evaluation (RDT&E), work managed by the department's science and technology (S&T) directorate.
Walker suggests it might be more productive to have a co-operative arrangement between the DHS, the S&T directorate and industry that would "involve industry more aggressively" in RDT&E. The idea would be for industry to get an early look at technologies and provide its know-how for making it robust.
As it is, Walker says "a lot" of DHS work is contracted out to national laboratories that are not set up to mass-produce equipment or support that equipment once it is in operation. "It's a transparency issue," he says. "We don't see the activities at the national labs." According to the DHS web site, S&T has strategic partnering relationships with nine national laboratories that "are considered active partners in the directorate's stewardship mission, enabling them to play a greater role in managing RDT&E programmes that are considered inherently federal".
The method by which DHS selects the technologies in which to invest could also be evolving. Stammreich says Boeing has been working with airport industry groups, Airbus, NASA, the Transportation Security Administration (TSA) and others to build a prototype risk model that prioritises the threats and evaluates the various countermeasures. "We've taken the risk prioritisation technologies out of missile defence and other military systems where you have to prioritise countermeasures," he says, adding that the TSA had "given approval to go forward and do the first evaluations".
Technology aside, Stammreich sees SBInet as a fresh start for the DHS. He credits the convergence of "unified procurement" at the DHS and a better understanding of the Safety Act as change agents. "Boeing is feeling very bullish about the Safety Act environment," he says.
Enacted in 2002, the Safety Act creates liability limits for claims arising from acts of terrorism "where qualified anti-terrorism technologies have been deployed", according to the DHS. Under the auspices of the National Defense Industry Association, Stammreich and other industry officials over the past year have worked with the DHS to clear up what he called "mismatches between the procurement process and the Safety Act process".
Both Stammreich and Walker defended what some have called the "loose" contract requirements in the SBInet request for proposal - the government asked for contractors to "determine the optimal mix of personnel, technology and infrastructure" rather than spell out detail specifications for what it wanted. "I think the RFP was very well done," says Stammreich. "It lets industry figure out the best way to do it. We're very comfortable with that process."
Walker agrees: "Having the customer ask us 'what's next?' That's where Northrop Grumman and other competitors shine."