IG: Homeland Security isn’t awarding noncompetitive contracts by the book

Homeland Security Department acquisition workers don't always comply with federal regulations when awarding contracts through other than full and open competition, the DHS inspector general found in a recent audit.

By failing to follow procedure or to properly document justifications for taking noncompetitive contract actions, procurement personnel prevented the department from ensuring it received the best possible value on these acquisitions, the IG reported.

The Obama administration's focus on noncompetitive and other high-risk contracts is part of a broader procurement reform effort. Office of Management and Budget Executive Associate Director Jeff Liebman said that while these types of contracts have their place, agencies must ensure they are not overused.

"We're telling agencies that they need to make sure they have the proper balance and that they should work hard not to use these authorities in cases where they're not appropriate," Liebman said.

According to the audit report, DHS obligated about $3.4 billion for procurements awarded through other than full and open competition in fiscal 2009. The inspector general's office reviewed 39 contract files, with a reported value of more than $196 million, and found that the files did not always contain sufficient evidence of market research or adequate acquisition planning to support awarding the contracts noncompetitively.

Two of the files lacked a written justification and approval for using other than full and open competition. The report stated that, because of this missing paperwork, the IG was unable to determine whether the procurements were properly awarded noncompetitively or whether they were miscoded in the Federal Procurement Data System.

The inspector general issued two recommendations for DHS' top procurement official aimed at strengthening internal controls and ensuring noncompetitive contracts provided the best value for taxpayers.

The chief procurement officer should strengthen an oversight review process to ensure all files on noncompetitive contracts contain adequate documentation to show compliance with federal acquisition regulations, auditors advised.

Richard Gunderson, acting DHS chief procurement officer, said he agreed with the intent of the recommendation, but believed the department does have a viable oversight program in place. Gunderson said his office will conduct a follow-up review on specific contracting actions over a certain dollar threshold, and if that review does not show significant improvement in file documentation, he will take additional remedial actions.

Gunderson concurred with the second recommendation -- to develop and implement agency-level guidance requiring acquisition personnel to include advanced acquisition planning information in procurement files. He said he will amend the Homeland Security acquisition manual to include that requirement.

Rep. Bennie Thompson, D-Miss., chairman of the House Homeland Security Committee, said ensuring the government gets the best value out of noncompetitive contracts is particularly crucial in today's tight budget environment.

"The department must conduct increased internal oversight of sole-source contracting before these awards are made," Thompson said. "I urge the department to reform its contracting process and procedures in a way that not only provides a fair process, but also affords true opportunity to small and minority businesses."