The Buying Game

henever you travel to the front lines of the war on terrorism-seaports where Customs inspectors scan shipping containers for weapons of mass destruction, airports where Immigration and Naturalization officers identify millions of visitors each year, cities where federal and local health officials are bracing for bioterror attacks-you find that technology is the engine and the arm of the Homeland Security Department. The military buys weapons to fight its enemies. The new department will buy scanners, detectors and intelligence software to do the same.

One of the most difficult questions facing senior Homeland Security officials, who are just settling into their Washington headquarters, is how to buy that vast technological arsenal. It will require skills not usually taught to civilian contracting officials.

At the same time, the department also needs to buy the mundane items of everyday office life-paper, pencils and the like. And behind the scenes at Homeland Security, sources say, there's a great deal of confusion over how to organize purchasing, so much that it's kept some good candidates from taking management jobs in the operation.

The issues officials are grappling with and the particulars of the law establishing the department are good indicators of where things are headed. They also show that technology will have significant influence on Homeland Security's purchasing habits.

Government purchasing falls into two main categories-acquisition and procurement. The two terms often are used interchangeably, but shouldn't be. Procurement refers to the contracting portion of purchasing. An agency issues a request for proposals, evaluates them and awards the contract.

Acquisition, though, is a cradle-to-grave process. Acquisition officers have to figure out what an agency needs and the different ways to buy it, and then they must craft a strategy for making the buy. The military often uses this approach to purchase weapons systems.

The Homeland Security Act lays out a major role for acquisition, and places many of those responsibilities in the hands of the undersecretary for science and technology, one of five undersecretaries in the new department. He has wide-ranging authority to establish funding priorities and conduct research, development, testing and procurement of technology.

The undersecretary will set up a program to share security technologies with state and local governments; award contracts to the Energy Department's national laboratories, which research and develop much of the government's technology already; and manage the Homeland Security Advanced Research Projects Agency, a tech shop that, presumably, will be modeled after the Defense Department's R&D unit, which helped create the Internet and stealth aircraft.

Additionally, the undersecretary will establish a centralized federal clearinghouse for technology ideas and proposals. It will seek proposals for what the department wants, then screen them. It will also coordinate its efforts with the Technology Support Working Group, a Defense clearinghouse for counterterrorism technologies.

This is acquisition work. It requires long-term planning, it's focused on technologies that aren't commercially available, and it relies on a broad understanding of program requirements and how a particular item is going to serve them.

As for procurement-that comparatively banal brand of buying-the law gives the undersecretary for management the final say. But the law lacks specifics about that official's powers. It grants more precise responsibilities to the Homeland Security secretary than it does to the undersecretary, mainly to streamline purchasing in times of crises. This lack of legislative guidance doesn't mean procurement won't be a major force, but the real meat of the department's buying strategies is spelled out in the section on technology acquisition. Sources close to the department report officials are considering whether to split the two practices, a prospect that has alarmed some observers.

Many are asking whether separating procurement and acquisition would produce a better-managed department. Steven Kelman, the head of federal procurement during the Clinton administration, thinks that adding such a hefty acquisition component, or appointing someone to be a chief acquisition officer, as has been discussed for months, is unnecessary. He points out that the department will buy a wide range of goods and services, not just cutting edge technologies. It makes more sense, Kelman argues, to let agencies run their own acquisition strategies for their specific program needs, rather than to establish overly broad policies.

Take the Coast Guard. Its needs are unique, and the agency already has a multibillion-dollar acquisition program-known as Deepwater-to replace its aging fleet and electronics systems. Does it really need a different policy? Adding a new acquisition layer to Homeland Security just creates a "fifth wheel," Kelman argues.

On the other side of the debate are those who believe acquisition is essential to the department's mission, because it helps government get the best buy. Such agencies as the Coast Guard and the Transportation Security Administration have awarded creative, flexible contracts that have broken the mold of traditional government procurement. TSA's purchasing is based on an acquisition model that puts responsibility for the contract's success more on the vendor than on the agency. White House officials have heralded it as a model for Homeland Security.

Yet acquisition advocates say the department would squander the benefits of the practice by confining it to the science and technology arena. While there's been no decision, there have been suggestions that the administration might place a chief acquisition officer in the division, and that he would report to the undersecretary. Not giving the acquisition official broad authority over all the divisions would dilute his influence, some say.

The advocates of a more straightforward procurement approach are supported by history. Many civilian agencies haven't done well at acquisition, particularly in the IT area. Many of the agencies merged into the Homeland Security Department have run aground while attempting to use long-term acquisition strategies to build everything from networks to databases. Acquisition requires a different set of skills that have been institutionalized in the military, they say.

Many observers have argued that Homeland Security ought to take on a military management style, at least in its first few years. It seems lawmakers and departmental planners agree, at least in principle.

The next question, of course, is who will lead the charge? In January, President Bush picked Charles McQueary as his choice for undersecretary of science and technology. McQueary isn't well known beyond Washington, and the White House won't allow interviews with him until after his confirmation. But his background is more confirmation that military-style purchasing will hold much sway. McQueary is the past president of General Dynamics, one of the largest Defense contractors, and a former board member of the National Defense Industrial Association, a Washington-area trade group of more than 950 companies.

Arguably more pressing matters, such as integrating databases of terrorist suspects and securing a Homeland Security budget, will take precedence over the debate on how to structure purchasing. But officials will have to settle the matter soon. The department's ability to pursue the war on terror will depend largely on its ability to buy the technology with which it fights. Many weeks may pass until it's all sorted out. Meanwhile, the kind of buyer the department will be remains to be seen.