Homeland Security urged to audit use of special procurement rules

The Homeland Security Department should be a little more careful in using special acquisition rules, the Government Accountability Office has concluded.

DHS has the authority to use exemptions from standard procurement rules to acquire high-tech products, such as mobile laboratories to analyze dangerous chemicals and systems to defend commercial airplanes from shoulder-fired missiles.

In a report (GAO-05-136) released last week, GAO found that while DHS has used the authority effectively, it falls short in the areas of auditing contracts, training employees on acquisition rules, and recording information gained during the procurement process.

Under the 2002 Homeland Security Act, DHS is allowed to use a special category of procurements called "other transactions," which also are used by the Transportation Department, the Defense Advanced Research Projects Agency and NASA.

Rules governing "other transactions" differ from standard procurement rules outlined in the Federal Acquisition Regulation in two main respects, said William Woods, director of GAO's acquisition and sourcing management team and lead author of the report. First, they have provisions related to intellectual property rights that resemble those in typical contracts between private companies. This makes it easier for DHS to work with companies unfamiliar with government contracting.

The second main difference, said Woods, involves cost accounting rules, which can also be a challenge for contractors unfamiliar with the federal procurement process.

"Because DHS is trying to deploy cutting-edge technologies to enhance homeland security, the department hopes to attract the most innovative companies, and do it relatively quickly," said Woods.

One company that benefited from DHS' use of "other transactions" is United Airlines, which was selected to work on the effort to counter shoulder-fired missiles. The company worked with DHS on research into a new technology, according to a United spokesman, but was not selected to move forward into the development phase.

While using "other transactions" likely helps DHS reach out to firms that don't usually work with the government, another solution might be to teach contracting officers more about how to work within the FAR, said Bob Welch, a partner at Acquisition Solutions Inc., which consults with federal agencies on acquisition issues.

"People just don't understand the flexibilities in the FAR," he said.

A DHS spokeswoman said no one who could answer questions about acquisition was in the office Wednesday.