TSA contracting exemption to end next month

Next month, the Transportation Security Administration will be required to adhere to the same procurement regulations imposed on almost all other federal agencies.

Since its creation in November 2001, TSA has been exempt from the Federal Acquisition Regulation. The exemption was designed to allow the agency to quickly install security screening equipment at airports after the Sept. 11 attacks. Lawmakers, however, ended the exemption last year, citing the lack of urgency in TSA's procurement operations and the agency's ongoing problems with contract management.

As of June 23, TSA must follow the FAR, as well as the Homeland Security Department's internal purchasing regulations, according to a final notice published Tuesday in the Federal Register.

Members of Congress have fought for nearly two years to bring TSA in compliance with the FAR, the standard governmentwide acquisition rules followed by most federal agencies, including all other DHS components.

In 2006, Sens. John Kerry, D-Mass., and Olympia Snow, R-Maine, offered an amendment to the Homeland Security appropriations bill that would have ended the exemption. That language was eliminated in committee.

An identical amendment sponsored by Kerry and Snowe, the chairman and ranking member of the Senate Small Business and Entrepreneurship Committee, respectively, was signed into law last December as part of the omnibus appropriations package.

"After years of exemptions to get the agency up and running after September 11, it's fair to expect TSA be held accountable just like the rest of the federal government," Kerry told Government Executive. "By repealing TSA's exemptions, we've leveled the playing field for small businesses and increased accountability to help prevent future mismanagement and waste of taxpayer dollars. My committee will work to ensure that TSA complies with the laws and that small businesses are treated fairly."

TSA procurement officials said they have been preparing for the transition for six months and expect it to go smoothly.

Daryl Shall, TSA's acting assistant administrator for acquisition, said all of the agency's contracting officials are trained and certified in FAR procedures. Nonetheless, TSA has begun hosting two-day mandatory refresher courses for the roughly 100 agency workers who handle or manage contracts.

For the past seven years, TSA has managed its contracts through the Federal Aviation Administration's Acquisition Management System. The FAA is exempt from using the FAR and other major procurement laws such as the Competition in Contracting Act, which mandates that agencies use full and open competitive procedures for procurements.

TSA officials said they preferred the AMS system because it provides the agency with the flexibility and tools necessary to make quick and sensible contracting decisions.

But critics claim that AMS limits competition, discourages opportunities for small businesses and reduces contract transparency. Similar to the FAR, AMS allows agencies to enter into sole-source contracts if they can document a rationale for such a decision.

Richard Gunderson, TSA's former assistant administrator for acquisition, told a House Homeland Security Subcommittee last August that "competition is the preferred method of procuring technology and services" but that AMS allows them to concentrate on "managed competitions" that focus on the firms most likely to be considered for a contract.

"As a result, industry and government resources are not wasted by including firms that are not likely to receive an award," Gunderson said at the time.

The AMS system also is exempt from the 1953 Small Business Act, which provides assistance and sets aside certain contracts for small businesses. The act also does not place a dollar value cap on the purchase of commercially-available goods and services and opts out of the Government Accountability Office's protest process. TSA has used the FAA's Office of Dispute Resolution for Acquisition to settle contracting disputes.

Earlier this month, TSA invited GAO attorneys to their offices to brief contracting officers on their protest regulations.

While TSA officials had urged lawmakers to continue the exemption, the agency did not have the support of industry. The Professional Services Council, a trade group that represents contractors, endorsed the change, arguing that it would standardize procurement processes, increase competition and expand opportunities for small businesses that may have difficulty learning multiple acquisition systems.