Homeland Security weighs change to procurement directive

Homeland Security officials will consider requiring the Coast Guard and Secret Service to comply with a policy designed to better integrate purchasing practices across the department, a DHS spokesman said Tuesday.

But there is "no immediate plan" to change the October 2004 management directive in response to recent criticism that it will be ineffective unless exemptions for the Coast Guard, which in fiscal 2004 handled nearly 22 percent of the department's $9.8 billion in acquisitions, and the Secret Service are lifted, said spokesman Larry Orluskie. There also is no plan to alter the power structure mandated in the directive, though officials will weigh recommendations to do so, he said.

Under the directive, DHS' chief procurement officer and bureau heads must collaborate to standardize policies across the department's eight contracting shops. They also must look for opportunities to pool purchases and coordinate on strategies for hiring, training and certifying procurement professionals.

The Coast Guard and Secret Service are exempt by statute, though both are "part of the larger DHS team" and should participate in integration efforts, the directive states. But in a report published last week, the Government Accountability Office argued that there's no legal basis for the exemption.

The 2002 law creating the Homeland Security Department does require the Coast Guard and Secret Service to remain "distinct entities within the department," GAO said. That, however, shouldn't preclude them from following the "Acquisition Line of Business Integration and Management" directive, the report (GAO-05-179) stated.

Exemptions from the directive are "likely to hamper efforts to effectively integrate" purchasing practices within DHS, GAO argued. The department's procurement shops are, "to a great extent . . . still operating in a disparate manner, with oversight of acquisition activities left primarily up to each individual organization," the report stated.

The Coast Guard is accustomed to "doing business its own way," but should fall under the directive, said Bob Welch, a partner at the Oakton, Va.-based consulting firm Acquisition Solutions Inc. and a former senior procurement executive at the Treasury Department. The Secret Service is "small potatoes" in comparison, but should also be included, he said.

The Secret Service purchased $68 million worth of goods and services in fiscal 2004, while the Coast Guard logged $2.1 billion in acquisitions that same year. Both have some unique procurement needs, but none that would prevent them from following the directive, Welch said.

The Coast Guard is, however, "unique within the DHS structure in terms of its military organization and the statutory authority of the commandant," said Coast Guard spokesman Lt. Ronald Mench. By law, the commandant of the agency reports directly to the DHS secretary-"not through subordinate officers of the department," he said.

The Coast Guard also is "organized, trained and equipped to transfer to the Navy when called to do so," Mench said, and must be able to "report to the Navy intact, with certain inherent capability to support its operations, personnel and management functions." This requires the Coast Guard to be "managed differently, in some respects," than other parts of DHS.

Regardless, the Coast Guard has been "fully complying with most of the provisions" in the acquisition directive, Mench said. Another DHS official, who requested anonymity, noted that Coast Guard officials participate on the department's commodities and acquisition chiefs councils.

The official also noted that the Coast Guard and Secret Service are exempt from four other October 2004 management directives. These govern efforts to integrate the department's technology, administrative services, financial management and personnel "lines of business." Each grants the line of business chief and bureau heads dual accountability for implementation.

This creates an ambiguous power structure, GAO stated in its report. Former Inspector General Clark Kent Ervin expressed similar concerns in a December 2004 report summarizing the department's major management challenges.

Critics say dual accountability leaves the line of business chiefs, including the chief procurement officer, with too little authority. For example, the directive assigns the procurement chief and bureau heads shared responsibility for "recruiting and selecting key acquisition officials, preparing performance ratings for the top manager of the contracting office, and providing appropriate resources to support the chief procurement officer's initiatives," GAO said.

Bureau directors only need to "consider" allocating resources as suggested by the DHS procurement czar. "The policy leaves unclear how the responsibilities will be implemented or what enforcement authority the chief procurement officer has to ensure that initiatives are carried out," the report stated.

Rep. Tom Davis, R-Va., chair of the House Government Reform Committee, urged Homeland Security officials to grant the procurement chief "direct-line authority," as recommended by GAO.

"The committee expects DHS senior leadership to implement GAO's recommendations," Davis said in a written response to the report. "We'll leave it up to DHS as to what's the best way to carry out that recommendation," said spokesman Drew Crockett. "The committee will be monitoring the situation to see if DHS is making the necessary changes."