GAO designated  management of interagency contracting a governmentwide high-risk area  in 2005. Enhanced Guidance and Expertise Could Help DHS Address Interagency Contracting Risks

While DHS has developed guidance on the use of interagency  agreements—the largest category of interagency contracting at DHS,  which amounted to $5 billion in fiscal year 2005—it does not have specific  guidance for other types of interagency contracting, including GSA  schedules and GWACs, which accounted for almost $1.5 billion in fiscal  year 2005. Moreover, we found that some DHS users may have lacked  expertise in the proper use of interagency contracts. However, our recent work, as well as the work of  others, has found that not all interagency contracts provide good value  when considering both timeliness and cost. According to DHS  contracting officials the benefits of speed and convenience—not total  value including cost—have often driven decisions to choose interagency  contracting vehicles. Recent Planning Requirement Does Not Include Evaluation Criteria

As of July 2005 DHS has required an analysis of alternatives for all  acquisitions, including all types of interagency contracts. DHS Oversight Program Does Not Assess Outcomes of Interagency Contracting

Although DHS’ spending through interagency contracting totals billions of  dollars annually and increased by 73 percent in the past year, the  department does not systematically monitor its use of these contracts to  assess whether this method for acquiring goods and services is being  properly managed and provides good outcomes for the department. According to  officials, DHS’ acquisition oversight program has been hindered by limited  resources and authority. This type of monitoring could  provide DHS with useful information to assess its use of this contracting  method. As of August 2006, according to OCPO  officials, only five staff were assigned to departmentwide oversight  responsibilities for $17.5 billion in acquisitions. In March 2005, we recommended that OCPO be provided  sufficient enforcement authority and resources to provide effective  oversight of DHS’ acquisition policies and procedures. While the use of these types of contracts provides speed and  convenience in the procurement process, the agencies that manage the  contracts and DHS users have not always adhered to sound contracting  practices. Recommendations for Executive Action

To improve the department’s ability to manage the risks of interagency  contracting, we recommend that the Secretary of Homeland Security  consider the adequacy of the Office of the Chief Procurement Officer’s  resources and implement the following three actions:    develop consistent, comprehensive guidance, and related training to  reinforce the proper use of all types of interagency contracts to be  followed by all components;    establish, as part of the department’s planning requirement for an  analysis of alternatives, criteria to consider in making the decision to  use an interagency contract; and  implement oversight procedures to evaluate the outcomes of using  interagency contracts.
Why GAO Did This Study

The Department of Homeland Security (DHS) has some of the most extensive acquisition needs within the federal government. In fiscal year 2005, DHS spent $17.5 billion on contracted purchases, $6.5 billion, or 37 percent, of which was through the use of other agencies' contracts and contracting services, a process known as interagency contracting. While these types of contracts offer the benefits of efficiency and convenience, in January 2005, GAO noted shortcomings and designated the management of interagency contracting as a governmentwide high-risk area. Given the department's critical national security mission and the results of our earlier work, GAO reviewed the extent to which DHS manages the risks of interagency contracting and assessed DHS' guidance, planning, and oversight of interagency contracting.

What GAO Found

DHS has developed guidance on how to manage the risks of some but not all types of interagency contracts. The department has guidance for interagency agreements--the largest category of interagency contracting at the department--but does not have specific guidance for using other types of contracts such as the General Services Administration (GSA) schedules and governmentwide acquisition contracts (GWAC), which amounted to almost $1.5 billion in fiscal year 2005. Moreover, in some cases we found users may have lacked expertise that could be addressed through guidance and training on the use of these types of contracts. DHS did not always consider alternatives to ensure good value when selecting among interagency contracts. While this contracting method is often chosen because it requires less planning than establishing a new contract, evaluating the selection of an interagency contract is important because not all interagency contracts provide good value when considering timeliness and cost. As of July 2005 DHS has required planning and analysis of alternatives for all acquisitions. In this review, we found that in all four cases for which an analysis of alternatives was required, it was not conducted. DHS officials said benefits of speed and convenience--not total value including cost--have often driven decisions to choose these types of contracts. DHS does not systematically monitor its total spending on interagency contacts and does not assess the outcomes of its use of this contracting method. According to officials, DHS' acquisition oversight program has been hindered by limited resources and authority. As of August 2006, the Office of the Chief Procurement Officer had five staff assigned to departmentwide oversight responsibilities for $17.5 billion in acquisitions. In March 2005, GAO recommended that the Chief Procurement Officer be provided sufficient authority to provide effective oversight of DHS' acquisition policies and procedures. Without this authority, DHS cannot be certain that acquisition improvements are made.