Big Homeland Security Department would spend big dollars

The proposed Department of Homeland Security would become one of the federal government's largest spenders, with a procurement budget that would likely top $5 billion annually, acquisition experts say.

"The new department would be a player in procurement, but I don't know that it will exceed NASA or Energy in civilian spending," said David Litman, a senior procurement executive at the Transportation Department, which stands to lose oversight of several organizations to the new department, including the Coast Guard and the Transportation Security Administration.

Traditionally, NASA and the Energy Department have been the largest federal buyers outside the Defense Department. Energy awarded nearly $17 billion in prime contracts in fiscal 2000, while NASA made more than $10 billion in purchases, according to General Services Administration data.

Corey Rindner, director of procurement at the Treasury Department, says about 100 acquisition workers and well over $500 million in procurement dollars would be transferred from the department's Customs Service and Secret Service to the Homeland Security Department if the Bush administration's plan is approved.

Bob Welch, a partner with the consulting firm Acquisition Solutions Inc., says about 20 percent of the new department's $5 billion annual procurement budget would come from the TSA. The Coast Guard and the Customs Service would account for a large share of the remaining dollars, because they are both in the midst of modernization programs, Welch said.

Under the Bush proposal, the Energy Department, which has the largest procurement budget of any civilian agency, would no longer manage the federal government's $1 billion contract with the University of California to operate the Lawrence Livermore National Laboratory. Between 200 and 300 employees at Energy's Oakland Operations Office oversee all the department's laboratory contracts, including the Livermore arrangement. But, the official says, it is too early to tell if the change would have any impact on that workforce. Steve Kelman, former head of the Office of Federal Procurement Policy in the Clinton administration, said the new department would not merit a new acquisition workforce of its own. Instead, he says, the department would likely follow the structure used by other departments, which have small centralized staffs for setting procurement policy and making department-wide, high-volume purchases, but leave it to individual agencies to handle their own unique needs for products and services. Rindner said he also favors decentralized acquisition operations. However, he argued, the new department should hire a chief acquisition officer-who would have the same clout as a chief financial or information officer-to develop policy and provide guidance. "The most efficient acquisitions occur when an acquisition person is at the table early on to help in the planning," Rinder says. One of the biggest challenges the new department would face is how to write and award multibillion-dollar homeland security contracts. The TSA has already experienced major growing pains in its attempts to award several high-profile airport security contracts, most notably one to hire a general contractor to oversee the deployment of about 1,100 explosive-detection machines to screen the luggage of airline passengers. The contract, worth a potential $5.5 billion over several years, was awarded Friday, months behind schedule, to Boeing Services Co. Sources familiar with the TSA said that internal disputes among agency leaders about how acquisitions should be handled stalled the decision to award the contract. The Bush administration's homeland security proposal stresses the need for innovative acquisition management. "The new department should have flexible procurement policies to encourage innovation and rapid development and operation of critical technologies vital to securing the homeland," the proposal says.