[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
PLAYING BY ITS OWN RULES: TSA'S EXEMPTION FROM THE FEDERAL ACQUISITION
REGULATION,
AND HOW IT IMPACTS PARTNERSHIPS WITH THE PRIVATE SECTOR
=======================================================================
HEARING
before the
SUBCOMMITTEE ON MANAGEMENT,
INVESTIGATIONS, AND OVERSIGHT
of the
COMMITTEE ON HOMELAND SECURITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
AUGUST 1, 2007
__________
Serial No. 110-65
__________
Printed for the use of the Committee on Homeland Security
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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__________
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COMMITTEE ON HOMELAND SECURITY
BENNIE G. THOMPSON, Mississippi, Chairman
LORETTA SANCHEZ, California, PETER T. KING, New York
EDWARD J. MARKEY, Massachusetts LAMAR SMITH, Texas
NORMAN D. DICKS, Washington CHRISTOPHER SHAYS, Connecticut
JANE HARMAN, California MARK E. SOUDER, Indiana
PETER A. DeFAZIO, Oregon TOM DAVIS, Virginia
NITA M. LOWEY, New York DANIEL E. LUNGREN, California
ELEANOR HOLMES NORTON, District of MIKE ROGERS, Alabama
Columbia BOBBY JINDAL, Louisiana
ZOE LOFGREN, California DAVID G. REICHERT, Washington
SHEILA JACKSON LEE, Texas MICHAEL T. McCAUL, Texas
DONNA M. CHRISTENSEN, U.S. Virgin CHARLES W. DENT, Pennsylvania
Islands GINNY BROWN-WAITE, Florida
BOB ETHERIDGE, North Carolina MARSHA BLACKBURN, Tennessee
JAMES R. LANGEVIN, Rhode Island GUS M. BILIRAKIS, Florida
HENRY CUELLAR, Texas DAVID DAVIS, Tennessee
CHRISTOPHER P. CARNEY, Pennsylvania
YVETTE D. CLARKE, New York
AL GREEN, Texas
ED PERLMUTTER, Colorado
Jessica Herra-Flanigan, Staff Director & General Counsel
Rosaline Cohen, Chief Counsel
Michael Twinchek, Chief Clerk
Robert O'Connor, Minority Staff Director
______
SUBCOMMITTEE ON MANAGEMENT, INVESTIGATIONS, AND OVERSIGHT
CHRISTOPHER P. CARNEY, Pennsylvania, Chairman
PETER A. DeFAZIO, Oregon MIKE ROGERS, Alabama
YVETTE D. CLARKE, New York TOM DAVIS, Virginia
ED PERLMUTTER, Colorado MICHAEL T. McCAUL, Texas
VACANCY PETER T. KING, New York (Ex
BENNIE G. THOMPSON, Mississippi (Ex Officio)
Officio)
Jeff Greene, Director & Counsel
Brian Turbyfill, Clerk
Michael Russell, Senior Counsel
(ii)
C O N T E N T S
----------
Page
STATEMENTS
The Honorable Christopher P. Carney, a Representative in Congress
From the State of Pennsylvania, and Chairman, Subcommittee on
Management, Investigations, and Oversight:
Oral Statement................................................. 1
Prepared Statement............................................. 2
The Honorable Mike Rogers, a Representative in Congress From the
State of Alabama, and Ranking Member, Subcommittee on
Management, Investigations, and Oversight:
Oral Statement................................................. 3
Prepared Statement............................................. 3
The Honorable Bennie G. Thompson, a Representative in Congress
From the State of Mississippi, and Chairman, Committee on
Homeland Security:
Oral Statement................................................. 4
Prepared Statement............................................. 5
WITNESSES
Mr. David Bodenheimer, Esq., Partner, Crowell & Moring LLP:
Oral Statement................................................. 14
Prepared Statement............................................. 16
Mr. Alan Chvotkin, Senior Vice President and Counsel,
Professional Services Council:
Oral Statement................................................. 23
Prepared Statement............................................. 24
Ms. Elaine Duke, Chief Procurement Officer, U.S. Department of
Homeland Security:
Oral Statement................................................. 6
Prepared Statement............................................. 8
Mr. Rick Gunderson, Assistant Administrator for Acquisition,
Transportation Security administration, U.S. Department of
Homeland Security:
Oral Statement................................................. 10
Prepared Statement............................................. 12
APPENDIX
Additional Questions and Responses:
Responses from Mr. David Bodenheimer........................... 37
Responses from Mr. Alan Chvotkin............................... 44
Responses from Ms. Elaine Duke................................. 49
Responses from Mr. Rick Gunderson.............................. 51
PLAYING BY ITS OWN RULES: TSA'S
EXEMPTION FROM THE FEDERAL
ACQUISITION REGULATION, AND HOW IT
IMPACTS PARTNERSHIPS WITH THE PRIVATE SECTOR
----------
Wednesday, August 1, 2007
U.S. House of Representatives,
Committee on Homeland Security,
Subcommittee on Management, Investigations,
and Oversight,
Washington, DC.
The subcommittee met, pursuant to call, at 10:04 a.m., in
Room 311, Cannon House Office Building, Hon. Christopher Carney
[chairman of the subcommittee] presiding.
Present: Representatives Carney, DeFazio, Thompson, and
Rogers.
Mr. Carney. [Presiding.] The subcommittee will come to
order.
The subcommittee is meeting today to receive testimony on
``Playing by Its Own Rules: TSA's Exemption from the Federal
Acquisition Regulation and How It Impacts Partnerships with the
Private Sector.''
Government contracting is by no means a sexy subject. That
said, in this day and age, government alone is not going to
keep us safe. Instead, we need government and the private
sector working together. One of the main ways this happens is
through contracts.
Today we are looking at TSA's partnership with the private
sector and how its exemption from the Federal Acquisition
Regulation impacts that cooperation.
Frankly, I am struggling to understand why TSA currently
plays by its own set of rules. I look at the rest of the
federal government: intelligence agencies trying to protect us
from terrorists; the Department of Justice enforcing our laws;
the Department of Defense fighting a war. They are all governed
by the Federal Acquisition Regulation. I look within the
Department of Homeland Security itself: CBP working to secure
our borders; FEMA responding to catastrophes; Secret Service
protecting the president. They are all governed by the FAR.
Simply put, the FAR is the norm.
Yet TSA is different. It uses the Federal Aviation
Administration's Acquisition Management System, or AMS.
If this were just a benign difference, perhaps it wouldn't
matter. The DHS is an agency that is struggling to integrate
numerous disparate components into a cohesive entity. Having
two distinct contracting systems in one department necessarily
makes that process more complicated.
I am also concerned about what would happen if TSA had a
sudden need for contracting officers due to a terrorist threat
or an attack. Where would the surge capacity come from? The
rest of the contract professionals in the department know the
FAR, not TSA's AMS.
And finally, as we are going to hear today, I am concerned
about the challenges AMS poses for TSA's private-sector
partners.
In the face of these concerns, it really comes down to a
simple question: If the FAR is good enough for the overwhelming
majority of the federal government, why not for TSA?
Before I close, I would like to thank Ms. Duke and Mr.
Gunderson and their staff for submitting their testimony on
time. It really helps; it makes a huge difference. We have had
a hard time getting the department to submit their testimony on
a timely basis, and I do appreciate your efforts. I hope that
this is a sign of things to come.
Thank you very much.
Good. The note just given to me means we actually have some
time for this hearing, given the schedule.
I now recognize the ranking member of the subcommittee, the
gentleman from Alabama, my friend, Mr. Rogers, for an opening
statement.
[The statement of Mr. Carney follows:]
Prepared Opening Statement of the Honorable Christopher P. Carney,
Chairman, Subcommittee on Management, Investigations, and Oversight
Government contracting is by no means a sexy subject.
That said, in this day and age, government alone is not
going to keep us safe. Instead, we need government and the private
sector working together.
One of the main ways this happens is through contracts.
Today we are looking at TSA's partnership with the private
sector, and how its exemption from the Federal Acquisition Regulation
impacts that cooperation.
Frankly, I am struggling to understand why TSA currently
plays by its own set of rules.
I look at the rest of the federal government--
intelligence agencies trying to protect us from
terrorists;
the Department of Justice enforcing our laws;
the Defense Department fighting a war.
They are all governed by the Federal Acquisition
Regulation.
I look within the Department of Homeland Security itself--
CBP working to secure our borders;
FEMA responding to catastrophes;
Secret Service protecting the President.
They are all governed by the FAR.
Simply put, the FAR is the norm.
Yet TSA is different--it uses the Federal Aviation
Administration's Acquisition Management System, or AMS.
If this were just a benign difference, perhaps it wouldn't
matter.
But DHS is an agency that is struggling to integrate
numerous disparate components into one cohesive entity.
Having two distinct contracting systems in one department
unnecessarily makes that process more complicated.
I'm also concerned about what would happen if TSA had a
sudden need for contracting officers due to a terrorist threat or an
attack.
Where would the surge capacity come from? The rest of the
contract professionals in the Department know the FAR, not TSA's AMS.
And, finally, as we're going to hear today, I'm concerned
about the challenges AMS poses for TSA's private sector partners.
In the face of these concerns, it really comes down to a
simple question: if the FAR is good enough for the overwhelming
majority of the federal government, why not for TSA?
Before I close, I'd like to thank Ms. Duke and Mr.
Gunderson, and their stuff, for submitting their testimony on time.
We've had a hard time getting the Department to submit
their testimony on a timely basis, and I appreciate your efforts. I
hope that it is a sign of things to come.
Mr. Rogers. Thank you, Mr. Chairman. I appreciate you
calling this important hearing.
And I want to thank the witnesses for taking the time out
of their busy schedules to be here with us today.
We welcome back three of our witnesses to the subcommittee,
including the chief procurement officer of the Department of
Homeland Security, one of my personal favorites.
Today the subcommittee will examine the Acquisition
Management System, which TSA uses in its contracting process.
Specifically, the subcommittee will evaluate why TSA still uses
this system instead of the process used by the rest of DHS. The
system is the Federal Acquisition Regulation, commonly known as
the FAR, which applies to agencies throughout the federal
government.
Shortly after the terrorist attacks of September 11, 2001,
TSA was established within the Department of Transportation.
The agency inherited the same acquisition system used by
another agency in that department, namely, the Federal Aviation
Administration.
When the Department of Homeland Security was created in
2003, TSA was one of the agencies which was moved into the new
department. Today, the FAR applies to all of DHS except the
Transportation Security Administration, which still uses its
original Acquisition Management System.
Our hearing will examine whether this distinction still
makes sense after over 4 years since the creation of DHS. We
will explore with our witnesses a number of questions,
including: What are the implications of having one DHS agency
with a separate acquisition process, compared to the process
used by the rest of the department? What are the pluses and
minuses of TSA's original acquisition process, as compared with
the FAR? How well does the private sector work with a major
Cabinet department that operates two different acquisition
systems? Does DHS have the necessary contracting staff to
effectively manage these two systems? And wouldn't it be better
to apply the FAR uniformly throughout all of DHS?
I look forward to hearing from our witnesses on these
issues and, again, thank them for being here today.
And I yield back to the chairman.
[The statement of Mr. Rogers follows:]
Prepared Statement of the Honorable Mike Rogers, Ranking Member,
Subcommittee on Management, Investigations, and Oversight
Thank you, Chairman Carney, for holding this important hearing on
the acquisition process at the Transportation Security Administration.
First, I would like to thank our witnesses for taking time out of
their busy schedules to be here today.
We also welcome back three of our witnesses to this Subcommittee,
including the Chief Procurement Officer for the Department of Homeland
Security.
Today the Subcommittee will examine the Acquisition Management
System which TSA uses in its contracting process.
Specifically, the Subcommittee will evaluate why TSA still uses
this system. . .instead of the process used by the rest of DHS.
That system is the Federal Acquisition Regulation, commonly known
as the FAR--which applies to agencies throughout the Federal
Government.
Shortly after the terrorist attacks of September 11, 2001, TSA was
established within the Department of Transportation.
The agency inherited the same acquisition system used by another
agency in that Department--namely, the Federal Aviation Administration.
When the Department of Homeland Security was created in 2003, TSA
was one of the agencies which was moved into the new department.
Today, the FAR applies to all of DHS--except the Transportation
Security Administration--which still uses its original Acquisition
Management System.
Our hearing will examine whether this distinction still makes sense
after over four years since the creation of DHS.
We will explore with our witnesses a number of questions,
including--
What are the implications of having one DHS agency with a
separate acquisition process. . .compared to the process used by the
rest of the department?
What are the pluses and minuses of TSA's original
acquisition process, as compared to the FAR?
How well does the private sector work with a major Cabinet
department that operates two different acquisition systems?
Does DHS have the necessary contracting staff to
effectively manage these two systems?. . .and,
Wouldn't it be better to apply the FAR uniformly
throughout all of DHS?
I look forward to hearing from our witnesses on these issues, and
again thank them for being here today.
Thank you, Chairman Carney.
I yield back.
Mr. Carney. Thank you, Mr. Rogers.
The chair now recognizes the chairman of the full
committee, the gentleman from Mississippi, Mr. Thompson, for an
opening statement.
Mr. Thompson. Thank you very much, Mr. Chairman and Ranking
Member.
And, our witnesses, we are glad to have you.
As you know, TSA was created in a time of high anxiety, and
it was in that environment that it was exempted from the
traditional government contracting rules. Instead of the
Federal Acquisition Regulation, TSA used the Federal Aviation
Administration's Acquisition Management System, or AMS.
We are not here to second-guess that decision. Instead, we
are looking at whether this makes sense for the future.
Does it make sense for contractors who want to work with
TSA to have a master set of contracting rules? TSA tells us
that this is not a problem. Its partners in the industry,
however, say it differently. They tell us that this is
difficult for large, sophisticated contractors to keep track of
two different procurement regimes.
If the Fortune 500 companies struggle, imagine how hard it
is for the little guy. The simple reality is that a small
business to obtain expertise in a different set of contracting
rules costs money. And added costs are added barriers to entry.
Another question is whether it makes sense for the TSA to
be exempt from the Competition in Contracting Act. TSA says
that, under AMS, competition is the preferred method. But the
FAR and the Competition in Contracting Act require more. They
require full and open competition. And our friends in the
industry tell us that ``preferred'' falls far short of ``full
and open.''
Finally, does is make sense for the Department of Homeland
Security to oversee two distinct contracting systems? The
department says it supports the exemption, but I am concerned
about the cost of having two systems, in terms of training
staff, conducting oversight, and fostering departmental
integration.
The FAR is not perfect, but it is used by virtually the
entire federal government and it is well-known to industry.
Moreover, it has been refined and improved over the past 30-
plus years.
Removing TSA's exemption will not magically solve all the
contracting problems it has had, but it seems to me that it is
a good start.
And I yield back, Mr. Chairman. And I look forward to the
witnesses' testimony and the questions to follow.
[The Statement of Mr. Thompson follows:]
Prepared Statement of the Honorable Bennie G. Thompson, Chairman
Committee on Homeland Security
TSA was created in a time of high anxiety.
And it was in that environment that it was exempted from
the traditional government contracting rules.
Instead of the Federal Acquisition Regulation, TSA uses
the Federal Aviation Administration's ``Acquisition Management
System,'' or AMS.
We are not here to second-guess that decision.
Instead, we are looking at whether this makes sense for
the future.
Does it make sense for contractors who want to work with
TSA to have to master a new set of contracting rules?
TSA tells us that this is not a problem.
Its partners in the industry, however, say differently.
They tell us that it is difficult for large, sophisticated
contractors to keep track of two different procurement regimes.
If the Fortune 500 companies struggle, imagine how hard it
is for the little guy.
The simple reality is that asking a small business to
obtain expertise in a different set of contracting rules costs money.
And added costs are added barriers to entry.
Another question is whether it makes sense for the TSA to
be exempt from the Competition in Contracting Act?
TSA says that under AMS, ``competition is the preferred
method.''
But the FAR and the Competition in Contracting Act require
more--they require ``full and open competition.''
And our friends in the industry tell us that ``preferred''
falls far short of ``full and open.''
Finally, does it make sense for the Department of Homeland
Security to have to oversee two distinct contracting systems?
The Department says it supports the exemption.
But I'm concerned about the cost of having two systems, in
terms of training staff, conducting oversight, and fostering
departmental integration.
The FAR is not perfect.
But it is used by virtually the entire Federal Government,
and it is well known to industry
Moreover, it has been refined and improved over the past
30-plus years.
Removing TSA's exemption will not magically solve all the
contracting problems it has had.
But it seems to me that it is a good start.
Mr. Carney. Thank you, Mr. Chairman.
Other members of the subcommittee are reminded that, under
committee rules, opening statements may be submitted for the
record.
I welcome the witnesses this morning. I really appreciate
you being here.
Our first witness is Elaine Duke, chief procurement officer
for the Department of Homeland Security. Ms. Duke is a career
executive with 23 years of public service. Before coming to
DHS, she spent the majority of her career in acquisition with
the U.S. Navy. She became DHS chief procurement officer in
January of 2006.
Our second witness is Rick Gunderson, assistant
administrator for acquisition at the Transportation Security
Administration. Mr. Gunderson is a career executive, with
almost 19 years of public service. Mr. Gunderson joined TSA in
2002, after 14 years with the Naval Sea Systems Command. He
took his current position in November of 2005.
Our next witness is David Bodenheimer. Mr. Bodenheimer is a
partner at the law firm of Crowell & Moring, where he is head
of the Homeland Security Practice Group and specializes in
government contracts. He is also co-chair of the American Bar
Association's Special Committee on Homeland Security. Prior to
joining the firm, Mr. Bodenheimer spent 6 years as a civilian
lawyer in the Navy, where he handled a broad spectrum of
government contract matters.
Our final witness is Alan Chvotkin. Mr. Chvotkin is a
senior vice president and counsel of the Professional Services
Corporation. PSC, a national trade association for companies
that provide services to virtually every agency of the federal
government, has more than 220 member companies. Prior to
joining PSC, Mr. Chvotkin had a career in both the private
sector and in the staff of the United States Senate. Most
important, however, Mr. Chvotkin had the privilege of being
born and raised in Scranton, and his father now lives in Clarks
Summit.
Welcome, Mr. Chvotkin.
Tip of the hat to the homies here.
[Laughter.]
Without objection, the witnesses' full statements will be
inserted into the record.
I now ask each witness to summarize his or her statement
for 5 minutes, beginning with Ms. Duke.
STATEMENT OF ELAINE DUKE, CHIEF PROCUREMENT OFFICER, DEPARTMENT
OF HOMELAND SECURITY
Ms. Duke. Good morning, Chairman Thompson, Chairman Carney
and Ranking Member Rogers. Thank you for having me here this
morning.
Before addressing the issue at hand, I would like to
restate my top three priorities, which are not only my
priorities but adopted by all the head of contracts in the
eight contracting activities throughout DHS, including at TSA.
And those are, first, to build the DHS acquisition workforce;
second, to make good business deals; and third, to perform
effective contract administration.
As the chief procurement officer for DHS, I provide
oversight and support to the eight procurement offices within
DHS, and my primary responsibility is to manage and oversee the
DHS acquisition program: provide the acquisition infrastructure
that includes the policies, procedures, training and workforce
initiatives to make the department effective in acquisition.
Mr. Chairman, I appreciate your interest in the DHS
acquisition program and, in particular, TSA's procurement
system, the Transportation Security Administration Acquisition
Management System, or TSAAMS.
While TSA's procurement system offers some process
flexibilities beyond those offered by the Federal Acquisition
Regulation, or FAR, both systems competition and the use of
small business, and both systems require the procurement of
goods and services at a fair and reasonable price. The
differences are the mechanics of how goods and services are
purchased.
Regardless of the procurement system, however, all
components, including TSA, are subject to the same level of
oversight. For example, TSA's capital investments, a major
acquisition program, are subject to the department's investment
review board, and their contracting operations are subject to
the department's acquisition oversight program.
My office reviews the acquisition plans and justifications
for procurements that are done by other than full and open
competition over $50 million.
Additionally, TSA must adhere to key elements of the DHS
acquisition program, which include: advanced acquisition
planning; appointment of a competition advocate for TSA;
establishing a small-and-disadvantaged-business utilization
office; adherence to federal-wide acquisition certification
programs for contracting officers and program managers; and the
policies regarding issuing contracting officer warrants, which
allow actual individuals to find contracts on behalf of TSA.
TSA is an active participant in my Chief Acquisition
Officers Council and shares the resources available to the
other seven component contracting activities. As I will explain
in more detail later, TSA participates in department-wide
recruiting efforts, training opportunities, and our newly
established intern program.
I support the TSA's continued use of TSAAMS. The system
stood up when TSA was created and is now an integral part of
TSA's infrastructure.
TSA's procurement system serves as one example of how the
component's contracting activity possesses unique
characteristics for the purpose of achieving its mission. While
TSA conducts its procurements using AMS, the Coast Guard
conducts its procurement through decentralized contracting
offices--another example of the differences between the
components. When responding to disasters, FEMA awards this
contract, pursuant to the Stafford Act, which gives preferences
to local businesses--a statute unique to FEMA.
My responsibility as the chief procurement officer is to
understand the unique needs of each contracting activity and to
provide appropriate infrastructure in support.
One of the ways we are doing this is through the
acquisition workforce. Three major initiatives in that area:
The first is establishing a centralized hiring initiative. We
are now issuing and managing hiring of acquisition workforce
professionals through a centralized approach through my office
in concert with our chief human capital officer, Marta Perez.
This is to ensure both that we get the ramp-up of personnel we
need and that they are appropriately trained and qualified for
DHS acquisition.
The red light is on. Am I back too far? Okay.
The second initiative is establishing an acquisition intern
program. And this will be a centrally managed program, where
the interns will rotate for 3 years through the components and
will be placed in a DHS component at the completion of their
intern program.
The third initiative is establishing a centralized
acquisition workforce training fund to ensure all our
acquisition professionals are trained appropriately and meet
the federal certification standards.
The underlying principles of FAR and TSAAMS support my goal
in building a world-class acquisition program. And this morning
I look forward to answering your questions in this regard.
And, again, I thank you for the opportunity to testify
before you this morning. Thank you.
[The statement of Ms. Duke follows:]
Prepared Statement of Elaine Duke
Chairman Carney, Ranking Member Rogers, and Members of the
Subcommittee, thank you for this opportunity to appear before you to
discuss the Department of Homeland Security (DHS) acquisition program.
I am the Chief Procurement Officer (CPO) for the Department of Homeland
Security. I am a career executive and I have spent most of my 23 years
of public service in the procurement profession.
Before addressing DHS' procurement systems, I would like to convey
my top three priorities, which are essential elements to achieving the
DHS mission:
First, to build the DHS acquisition workforce.
Second, to make good business deals.
Third, to perform effective contract administration.
As the CPO, I provide oversight and support to eight procurement
offices within DHS--Customs and Border Protection (CBP), Federal
Emergency Management Agency (FEMA), Immigration and Customs Enforcement
(ICE), Transportation Security Administration (TSA), United State Coast
Guard (USCG), United States Secret Service (USSS), Federal Law
Enforcement Training Center (FLETC), and the Office of Procurement
Operations (OPO). As the CPO, my primary responsibility is to manage
and oversee the DHS acquisition program. I provide the acquisition
infrastructure that includes acquisition policies, procedures, training
and workforce initiatives that allow DHS contracting offices, as
appropriate, to operate in a uniform and consistent manner.
Mr. Chairman, I appreciate your interest in the DHS acquisition
program and in particular TSA's procurement system, the Transportation
Security Administration Acquisition Management System (TSAAMS). TSA was
authorized under the Aviation and Transportation Security Acct (ATSA)
of 2001 to utilize the procurement system of the Federal Aviation
Administration (FAA), known as FAA Acquisition Management System (AMS).
While TSA's procurement system offers some process flexibilities
beyond those offered by the Federal Acquisition Regulation, the two
systems' underlying principles are the same--to acquire quality goods
and services at a fair and reasonable price with integrity fairness and
transparency. Both systems promote competition and the use of small
businesses. Both systems also require the procurement of goods and
services at a fair and reasonable price. The differences are the
mechanics of how goods and services are purchased.
Regardless of the procurement system, however, all Components,
including TSA, are subject to the same level of oversight. For example,
TSA's capital investments are subject to the Department's investment
review board and their contracting operations are subject to the
Department's acquisition oversight program. My office reviews
acquisition plans and justifications for procurements that exceed $50
million. Furthermore, TSA must adhere to the key elements of the DHS
acquisition program which included
Advanced acquisition planning,
The appointment of a Competition Advocate,
Adherence to Federal-wide acquisition certification
requirements for contracting professionals and program/project
managers, and
The issuance of contracting officer warrants to
certified contracting professionals.
TSA is an active participant in the DHS Chief Acquisition Officers
Council. This council, composed of the head of each contracting
activity, was established for the purpose of integrating contracting
functions while maintaining each component's ability to meet their
customers' unique needs. Further, TSA also shares in the resources
available to the other seven Component-contracting activities. As I
will explain in more detail later, TSA participates in Department-wide
recruiting efforts, training opportunities, and our newly established
intern program.
I support the TSA's continued use of TSAAMS. The system ``stood
up'' when TSA was created and hence is now an integral part of TSA's
infrastructure. Most notable regarding the TSA procurement system,
however, is that it serves as one example of how each component's
contracting activity possesses unique characteristics for the purpose
of achieving its mission. While TSA conducts its procurements using
AMS, the Coast Guard, for example, conducts its procurement through
decentralized contracting offices; and when responding to disasters,
FEMA, pursuant to the Stafford Act, is to give preference to local
businesses when awarding contracts.
WORKFORCE
My responsibility as the Chief Procurement Officer is to understand
the unique needs of each contracting activity and to provide the
appropriate infrastructure to support each of these offices. While each
contracting official is necessarily unique, they also share the common
objective of acquiring goods and services to meet the mission's need at
a fair and reasonable price, with integrity and transparency. To ensure
we meet our collective objective, my goal, as the CPO, is to develop a
``best in class'' acquisition workforce. To do this I am focusing on
three workforce initiatives:
My first initiative is the establishment of a centralized hiring
initiative. A successful acquisition program requires a team of
integrated acquisition professionals who manage the entire lifecycle of
a major procurement effort. However, the competition for highly
qualified acquisition and procurement professionals is intense both
within the Federal government and the private sector. Therefore, in
partnership with the Office of the Chief Human Capital Officer, we have
initiated an aggressive staffing solution to resolve personnel
shortages and have centralized recruiting activities to better manage
similar needs across the Department.
The centralized recruiting efforts include department-wide vacancy
announcements, print advertisements in major media publications as well
as attendance at key acquisition recruiting events. In addition, for
Contract Specialists, one of our most critical staffing shortages, we
received the authority to maximize the use of hiring flexibilities such
as Direct Hire Authority and Re-Employed Annuitants. While these
authorities are extremely helpful to our recruiting efforts, given the
complexity of our acquisition programs, the recruitment of talented
acquisition professionals will take time and I appreciate your
continued support of these initiatives.
My second initiative is the establishment of an Acquisition Intern
Program. In order to satisfy the long term need for qualified
acquisition personnel, my office sought centralized funding in order to
attract, hire, and train exceptional new talent. Beginning in fiscal
year 2008, my office is centrally funding an Acquisition Intern Program
that will start with 66 participants and grow to a total of 300
participants by fiscal year 2011. Our objective is to grow our talent
and develop a pipeline for our future acquisition leaders. Interns
would participate in a three-year program, rotating through three
contracting offices within DHS, and would graduate from the program as
journeyman-level professionals. This program is modeled after highly
successful Department of Defense (DoD) programs and is especially
critical for contracting. Unlike engineering, IT or finance,
contracting is a field that is essentially learned. That is why DoD and
others have relied on intern programs to develop the leadership
pipeline for this profession and why it is perhaps the most critical
initiative for strengthening the acquisition workforce.
My third initiative is the establishment of a centralized
acquisition workforce training fund. By centralizing or training
program, the Department is better positioned to deliver a unified
training program that enables our acquisition professionals to achieve
the appropriate certification levels and to develop the necessary
skills and competencies to negotiate good business deals. We will
maximize the use of the training resources available to federal
agencies from the Federal Acquisition Institute. In May, the Under
Secretary for Management signed a partnership agreement with the Under
Secretary of Defense (Acquisition, Technology, and Logistics) and the
President of the Defense Acquisition University to leverage existing
DoD training and development opportunities. This agreement will enable
DHS to use DoD's capabilities and talent pool to help develop our
workforce on a long-term partnership basis. We will supplement these
resources with specialized targeted training in areas such as the
Safety Act, Performance Based Acquisition, and Buy American Processes
and Compliance. Based on the results of reviews conducted by my
Oversight Division, our training program will develop or purchase, as
needed, training aides to close identified competency gaps.
SUMMARY
The underlying principles of FAR and TSAAMS ensure the Department
meets its goal of acquiring goods and services at a fair and reasonable
price, while accommodating the mission of the organization. Both
systems support my goal in building a world-class acquisition program
and workforce integrating the necessary disciplines of program
management, risk assessment, engineering, cost analyses, and logistics.
This will take time, but building a solid infrastructure to include the
appropriate mix of skilled acquisition professionals will enable DHS to
achieve mission success while being good stewards of the tax payer's
money.
Thank you, Mr. Chairman for your interest in and continued support
of the DHS Acquisition Program.
Thank you for the opportunity to testify before the Subcommittee
about DHS contracting procedures. I am glad to answer any questions you
or the Members of the Subcommittee may have for me.
Mr. Carney. Thank you.
Mr. Gunderson?
STATEMENT OF RICK GUNDERSON, ASSISTANT ADMINISTRATOR FOR
ACQUISITION, TRANSPORTATION SECURITY ADMINISTRATION, DEPARTMENT
OF HOMELAND SECURITY
Mr. Gunderson. Thank you. Chairman Thompson, Chairman
Carney, Ranking Member Rogers, thank you for the opportunity to
discuss TSA's acquisition program and, specifically, our use of
the Acquisition Management System.
As the assistant administrator for acquisition, I provide
direction and oversight of TSA's acquisition program. My office
negotiates, awards and manages TSA's $2.5 billion acquisition
program.
In addition to awarding contracts, we focus on
strengthening program management and ``Big A'' acquisition.
``Big A'' acquisition requires the integration of numerous
disciplines, including program management, engineering,
budgeting, test and evaluation, and logistics, to name a few.
This contrast to the typical contract shop is important, as
it reflects one of the key differences between TSA's
Acquisition Management System and the Federal Acquisition
Regulation.
Like the FAR, AMS provides guidance around how to negotiate
and manage contracts. In contrast, AMS also establishes a
framework to drive sound business decisions throughout the
acquisition lifecycle, from concept exploration through
sustainment and disposal.
I believe TSA's Office of Acquisition is a model in the
department for centralizing lifecycle acquisition management.
As a result, we have the highest program management
certification rate in the department.
Congress authorized TSA's use of AMS through the Aviation
and Transportation Security Act in 2001, with the initial goal
of federalizing checkpoints and rolling out screening
technology at airports on an aggressive timeline. We
accomplished that goal. But the greatest value of AMS is not to
speed the contract; rather, it is the lifecycle framework that
allows my office to develop business solutions that align with
TSA's mission.
The tenants of AMS are the same as FAR. Competition is our
standard way of doing business. TSA's small-business program is
important to our success in the business community, and our
increasing statistics demonstrate our commitment to the
program. The program has trended positively each year,
increasing over 25 percent in the past fiscal year alone.
Our procurements are transparent to the public. We provide
public notice of opportunities on Fed Biz Opps, the
government's single point of entry. My team frequently conducts
industry days with interested firms throughout the process.
These open communications provide industry with greater insight
into our mission and allow us to better understand their
capabilities.
So what is different about AMS that warrants its use at
TSA? Our intent is to make common-sense, effective business
decisions that support our mission. AMS leverages the best
practices of industry. It was developed following a full-up
review of the best in business.
Whereas the FAR requires full and open competition, AMS is
based on managed competition. This is consistent with how
industry conducts its own purchasing and supply chain
management. As a result, government resources are not spent on
firms that have no chance of receiving award, and industry
maximizes the impact of their bid and proposal costs.
Our interactions with industry under AMS are also a
differentiator. AMS encourages frequent and open communications
with industry throughout the lifecycle of an acquisition,
without giving any of them a competitive advantage.
Communications, especially during the solicitation phase,
are highly regulated under the FAR, so much that the terms
clarifications, discussions and communications have unique
meaning. The FAR requires an agency to conduct discussions with
all offerors in a competitive range. But AMS allows TSA to
focus on those most likely to receive awards.
If there is a dispute during solicitation and selection,
AMS offers alternative dispute resolution, which is another
best business practice. AMS recognizes that effective
communication is the key to good relationships, and
relationships are the key to good business.
In addition, I believe AMS has enhanced TSA's ability to
recruit outstanding acquisition professionals. My office has a
comprehensive human capital strategy that ensures we recruit
and retain a highly qualified workforce that is certified by
DHS and empowered to negotiate good deals. Our staffing has
significantly increased over the last 3 years, including the
establishment of a fellows program for entry-level contracting
professionals.
While we face challenges similar to the federal acquisition
corps, the diversity of training and exposure to alternative
systems benefits TSA and the workforce as a whole.
During my career, I have conducted acquisitions in both AMS
and FAR. At its most basic level, I believe AMS continues to
deliver positive results for TSA, even as a unique system in
the department, because its framework sets the stage for good
business.
While AMS does not differ vastly from the FAR, TSA and its
industry partners do benefit from its flexibilities.
I look forward to answering your questions. Thank you.
[The statement of Mr. Gunderson follows:]
Prepared Statement of Richard Gunderson
Chairman Carney, Ranking Member Rogers, and members of the
Subcommittee, thank you for the opportunity to discuss the
Transportation Security Administration's acquisition and contracting
programs. I am the Assistant Administrator for Acquisition and the
Chief Procurement Executive for the Transportation Security
Administration (TSA). I am a career executive and have nearly 19 years
of public service in the acquisition profession. I joined TSA in
December 2002 after 14 years of service in the Department of Defense's
Naval Sea Systems Command. Since joining TSA, I served as a Division
Director and Deputy Chief Procurement Executive prior to my selection
as the Assistant Administrator for Acquisition in November 2005.
As the Assistant Administrator for Acquisition, I provide direction
and oversight of TSA's acquisition program, including award and
administration of contracts and other agreements. At TSA, the Office of
Acquisition is more than a contracts organization. Not only do we award
contracts, we focus on strengthening program management and what we
call ``Big A'' Acquisition across the TSA organization. Acquisition
encompasses much more than the procurement aspect of conducting
business. It is a life cycle approach to investments and requires the
integration of numerous disciplines, including program management,
engineering, budgeting, logistics, and contracting to name a few. This
contrast to the ``typical'' federal contracts office is important to
note, as it is similar to one of the key differences between TSA's
Acquisition Management System (AMS) and the Federal Acquisition
Regulation (FAR).
As you know, the Aviation and Transportation Security Act (P.L.
107-71) authorized TSA to utilize the FAA's AMS for our acquisitions.
AMS provides TSA with flexibility to support security screening
operations and address new security challenges. AMS allows TSA's
acquisition office to provide timely contract support that is fully
integrated with program development and program management needs. But
the value of AMS should and does not focus on expediency, rather it
emphasizes sound business decision making. AMS not only provides
procurement policy and guidelines, but establishes an acquisition
lifecycle framework that drives sound business decisions from concept
exploration through sustainment of operations.
It is important to note that AMS shares the fundamental tenets
found in the FAR:
Competition--Competition is the preferred method of
procuring technology and services under TSA's AMS and the FAR.
While there may be cases where market analysis results in a
determination not to compete, TSA continuously strives to
develop requirements and procurement strategies that maximize
competition. Similar to the FAR's list of exceptions to full
and open competition, the AMS requires single source
procurements to be documented and approved at the appropriate
levels, identifying the rational basis for such a
determination.
Small Business--TSA's small and disadvantaged business
utilization program has steadily grown since 2003. The program
has trended positively each year, and we are currently running
significantly higher again this year versus Fiscal Year 2006.
Transparency--TSA's acquisition and procurement
processes are transparent to the public.
TSA publicly announces its business
opportunities on Fed Biz Opps, the Government's single
point of entry for government procurements. As a
result, commercial vendors have visibility into the
product and service needs of TSA.
AMS encourages frequent and open
communications with industry and offerors, from market
analysis through contract award and administration. It
is common practice for TSA to conduct ``industry days''
with interested firms prior to and/or after release of
a solicitation. These open communications provide
industry with greater insight into TSA's needs as well
as allowing TSA to better understand the capabilities
of our industry partners.
Procurement Integrity--The Procurement Integrity Act
applies to TSA and DHS equally.
While AMS shares these common tenets and principles, it does
provide some important flexibilities or differences from the FAR that
enable TSA to perform its mission efficiently and with value to the
taxpayer:
Competitive Screening Process--As I mentioned earlier,
competition is the preferred way of business for TSA. Where the
FAR emphasizes ``full and open'' competition, AMS is based on
managed competitions which focus on firms that are most likely
to be considered for award. Additionally, following market
analysis, and through a series of screening information
requests, AMS provides TSA with the flexibility to determine
the best candidates for award. As a result, industry and
government resources are not wasted by including firms that are
not likely to receive an award. Also, the communication process
with industry differs slightly from the FAR in a positive way
in that AMS provides for flexible communications with industry
throughout the process with one or more of the firms without
giving any of them a competitive advantage. The FAR requires an
agency to conduct discussions with all offers not eliminated if
the Government has discussions with one vendor.
Commercial Contracting--While the FAR allows
commercial contracting procedures to be used only on
procurements under $5 million, AMS allows their use for
commercially-available goods and services at any level. The use
of commercial contracting procedures streamlines the
procurement process and applying its use to commercial
contracts that exceed $5 million makes good business sense.
Disputes Resolution--Whereas FAR-based organizations
fall under the Government Accountability Office (GAO) protest
process (and the board of contract appeals or U.S. Court of
Federal Claims for all contractor claim appeals), TSA uses the
FAA's Office of Dispute Resolution for Acquisition (ODRA) to
resolve protests and contract disputes. For protests and
contract disputes, the ODRA process encourages resolution at
the agency level, but if not feasible, it offers Alternative
Dispute Resolution (ADR) approaches to possibly reach mutual
resolution. If the ADR effort does not result in resolution
then ODRA fully adjudicates the matter. Although the courts and
contract appeal boards also provide for ADR, the ODRA actively
utilizes ADR in protests and contract disputes with its
immediate offer to the parties to resolve a matter under ADR.
When this does not occur, the ODRA continuously encourages the
parties to employ ADR processes during the numerous litigation
stages. This streamlined process facilitates timely
resolutions, resulting in a more efficient use of industry and
government resources in protests and contract disputes. The
ODRA process has worked extremely well for TSA, the contracting
community, and the taxpayers. Based on our experience over five
years with numerous cases, this ODRA dispute system under the
AMS allows TSA to maintain business relationships with our
industry partners with less animosity and lower litigation
costs usually encountered when resolving matters through formal
litigation.
IPT Structure--Under AMS, the use of Integrated
Product Teams (IPTs) is fundamental to doing business. While
many FAR based organizations use IPTs to get the job done, they
do not use it to the extent that we do under TSA's AMS. The use
of formal IPTs facilitates the communication between
organizations and ensures participation from the various
disciplines throughout the acquisition life cycle. My
organization leads workshops on IPTs for TSA, bringing together
program office, legal counsel, budget, and finance personnel to
develop strategies and execute them, resulting in reduced costs
and accelerated schedules to meet the mission.
Acquisition vs. Procurement--While the FAR provides a
prescriptive procurement framework, AMS provides lifecycle
management guidance for acquisition. Sound procurements are the
product of a strong acquisition program. AMS guides programs
through the acquisition lifecycle and drives sound business
decisions. These decisions are based on a mission need and
requirement, alternatives analysis and investment reviews,
planning, execution and oversight.
Since TSA awarded its early contracts to
support the stand up of operations, the Office of
Acquisition has continuously reviewed our business
models to identify more effective strategies. Working
within the AMS framework, TSA has implemented new
business strategies that have resulted in lower costs,
increased competition, and increased small business
opportunities.
The Office of Acquisition includes a division
dedicated to strengthening ``Big A'' Acquisition across
TSA. This group provides outreach to the various
programs, providing support in the areas of planning
and program oversight. Their work was recently
recognized in an award from the Chief Acquisition
Officer's Council. The award citation stated: ``TSA's
Acquisition and Program Management Support Division
built a framework of certification and training, and
implemented program management support tools such as
the TSA Acquisition Program Status Report system--an
executive-level tool to monitor key program metrics
such as Program Manager Certification.''
With respect to staffing and training, TSA has invested in the
development of our employees to allow them to operate in both an AMS
and FAR environment. While the significant portion of our funding is
obligated via AMS, our contracting professionals do use pre-established
federal schedules such as GSA and DHS's EAGLE and First Source
programs. These government-wide or department-wide contracts are FAR-
based, and our personnel are trained and certified to utilize such
procedures.
For those unfamiliar with AMS, my organization routinely holds
training classes on acquisition subjects that span the range of AMS,
from ``Big A'' workshops on how to conduct market analysis to specific
topics like the Office of Dispute Resolution procedures. Attendees
include customer and program personnel, legal advisors, budget
professionals, and contracting employees.
In addition, I believe AMS has assisted in our ability to recruit
employees. The Office of Acquisition has a comprehensive Human Capital
Strategy Plan, focused on recruiting, developing, and retaining highly
qualified people. Our staffing has significantly increased over the
last two years, including the establishment of a novel intern program
for entry-level contracting professionals. The challenges we face in
staffing are not significantly different from those faced across the
Federal Government acquisition corps. It is merely a function of supply
and demand for contracting professionals. However, TSA senior
leadership has continued to support the acquisition function and has
increased our hiring authority. We continue to aggressively hire to
meet our targets.
We believe that for an individual with a FAR background, AMS
provides career broadening opportunities. Many of our mid and senior
career level staff came to us from FAR-based organizations. The
environment is attractive to individuals looking to exercise sound
business judgment to get the best value for the Government, not just
comply with a prescriptive rule set.
In summary, AMS authority has provided TSA with the ability to
conduct business efficiently and effectively. While AMS does not differ
vastly from the FAR, TSA does benefit from its flexibilities. TSA
complies with DHS policies and directives and I share the Chief
Procurement Officer's (CPO) priorities. After five years of conducting
business within the AMS framework, I am confident that TSA will
continue to utilize AMS to develop and implement sound business
strategies in support of our mission.
Mr. Chairman, thank you for the opportunity to testify before the
Subcommittee about TSA's acquisition program. I am glad to answer any
questions you or the Members of the Subcommittee may have for me.
Mr. Carney. Thank you, Mr. Gunderson.
We are going to take a quick technical timeout while we
replace the microphone.
[Laughter.]
That is the kind of cooperation we like to see.
Okay. Mr. Bodenheimer, you are recognized for 5 minutes.
Thank you.
STATEMENT OF DAVID BODENHEIMER, ESQ., PARTNER, CROWELL & MORING
LLP
Mr. Bodenheimer. Good morning, Mr. Chairman and members of
the committee. Thank you for holding these hearings on TSA's
exemption from fundamental procurement laws requiring
competition, external oversight, and due process protection.
After nearly 6 years with TSA's exemption from procurement
laws governing the rest of DHS and other federal agencies, it
is time to ask some basic questions: Does TSA still need an
emergency exemption when procurement laws already have built-in
flexibility? Does the history of TSA acquisition show the
benefit of continued exemption?
And finally, does the TSA exemption justify forgoing full
and open competition, government-wide efficiency and
uniformity, and other laws assuring accountability,
transparency, and oversight? I believe the answer is no.
Ending this exemption will be a win-win for everyone,
promoting competition and procurement best practices within
TSA, reducing fragmentation within DHS, improving congressional
and GAO oversight, and reducing compliance burdens on
contractors.
I am David Bodenheimer, a partner in the law firm of
Crowell & Moring, where I head the Homeland Security Committee
and specialize in government contracts. I spent 6 years with
the Navy as a civilian attorney in the field, at the commands,
and as assistant to the general counsel.
My comments today are my own.
TSA has a tough job for protecting the transportation
infrastructure and deserves our gratitude for their efforts.
However, TSA's exemption from competition rules and the FAR
have not yielded the hoped-for payoff: faster, more efficient
contract awards and on-time deliveries within budget.
In fact, TSA procurement history has been disheartening.
Experience tells us that following the rules, including
competition and the FAR, will yield better acquisition results
than continuing with the TSA exemption.
I would like to address four points.
First, TSA no longer needs a special exemption. This
exemption arose out of emergency legislation in the aftermath
of the 9/11 terrorist attacks. This exemption is no longer
necessary because existing procurement law already builds in
the flexibility for responding to urgent needs. Furthermore,
the rest of DHS, as well as the military departments, handle
emergency contracting without having TSA's wholesale exemption.
And finally, TSA's procurement history over the last 6 years
does not show the real benefits of this exemption.
Second, full and open competition is the right standard for
TSA. TSA's exemption from the Competition in Contracting Act
means that TSA is operating under the old competition standard
that Congress long ago found to be ineffective and inadequate.
Bringing CICA's full and open competition to TSA
procurements would not only benefit TSA but the taxpayers as
well, with the undeniable benefits of competitive savings,
controlled cost growth, technological innovations, and fair
play.
In addition, the Competition in Contracting Act assures
accountability and transparency through statutory notices,
high-level justifications, and public access relating to sole-
source contracting.
Three, aligning TSA with the procurement mainstream will
promote greater efficiency and uniformity. With this exemption,
TSA is isolated in some ways from the rest of DHS and the
federal acquisition community, denying it the efficiencies and
uniformity of government-wide regulations, policies and
training specified in the OFPP act and the FAR.
Fragmented regulations, policies and clauses magnify the
compliance burden for contractors and government personnel
alike. Small businesses, in particular, bear the greatest brunt
of trying to track, update and train to two different and
sometimes inconsistent sets of rules.
Fourth and finally, effective GAO oversight assures greater
accountability. TSA's exemption cuts off GAO oversight through
the protest process. With more than 80 years of experience in
reviewing agency acquisitions, GAO brings unparalleled
experience, established precedent, and unquestioned
independence to the protest process, all of which bring greater
due process to the contractors and oversight for TSA
procurements. Such GAO oversight would be particularly
effective in promoting greater competition, with all of its
benefits, in TSA procurements.
In conclusion, I thank you for your leadership on this
issue, and I welcome your questions.
[The statement of Mr. Bodenheimer follows:]
Prepared Statement of David Z. Bodenheimer, Esq.
Introduction
Mr. Chairman and Members of the Committee. Thank you for holding
these hearings today on the Transportation Security Administration's
(TSA) exemption from fundamental federal procurement rules requiring
competition, external oversight, and due process protections. As part
of the national mobilization to combat terrorism after the attacks on
September 11, 2001, TSA received exemptions from such rules in order to
expedite procurement of critical anti-terrorism needs. Nearly six years
later, the time is ripe to ask how TSA's continued exemption from basic
procurement rules can be justified. In particular,
Payoff. What successful TSA acquisitions demonstrate
the need for, and benefits of, continued TSA exemptions?
Uniqueness. Why does TSA need special emergency
authority that no other part of the Department of Homeland
Security (DHS) has?
Cost/Benefit. Do the benefits of TSA's exemption
outweigh the costs and risks of forgoing competition,
oversight, and other bedrock procurement rules?
I am David Bodenheimer, a partner in the law firm of Crowell &
Moring LLP in Washington, DC where I am head of the Homeland Security
practice and specialize in government contracts. As part of this
practice, I have advised clients, published articles, and lectured
extensively on Homeland Security and government contract matters. In
addition, I serve as Co Vice-Chair of the ABA Science and Technology
Section's Special Committee on Homeland Security. Prior to entering
private practice, I served six years (1982--88) as a civilian attorney
for the United States Department of the Navy where I handled a broad
spectrum of government contract matters in the field, at the Commands,
and as Assistant to the General Counsel. However, I appear before your
Committee today in my personal capacity and the views that I express
are my own.
Since its inception in 2001, TSA has borne heavy responsibilities
for establishing and implementing security measures for protecting our
transportation systems from terrorist attacks and other catastrophic
threats. The magnitude of this task is underscored by the sheer size of
the transportation infrastructure, its geographic dispersion, and the
non-stop movement of passengers and cargo both domestically and
internationally. For undertaking these Herculean tasks, the TSA team
deserves our gratitude for its efforts to make our transportation
system safer.
In the acquisition arena, TSA's exemption from competition rules
and the Federal Acquisition Regulation (FAR) have not yielded the
anticipated payoff--faster, more efficient contract awards producing
on-time deliveries, within-budget costs, and concrete results meeting
the TSA mission. To the contrary, TSA procurements have a disheartening
history of schedule delays, cost overruns, and performance shortfalls,
as documented in Congressional hearings, Government Accountability
Office (GAO) reviews, and Inspector General and audit reports. History
tells us that following the rules--including competition and the FAR--
will yield faster, cheaper, and better acquisition results than will
continuing with TSA's exemption.
As a starting point, we need to look at the scope of TSA's
exemption from acquisition statutes and regulations. The next step is
to consider the need for, and benefits of, continuing this exemption.
Finally, the exemption should be weighed against the fundamental
procurement principles that TSA may disregard under its current
authority. By returning TSA to the acquisition fold applicable to
nearly every other procuring agency, both TSA and the taxpayers should
benefit in all of the following areas:
Assuring ``full and open'' competition;
Enhancing efficiency and consistency for DHS and TSA
acquisitions;
Improving GAO oversight of TSA procurements; and
Avoiding ``emergency exemption'' creep beyond TSA
needs.
The Scope of TSA's Acquisition Exemption
TSA and its exemption from federal acquisition rules arose out of
the emergency legislation enacted in the wake of the 9/11 terrorist
attacks.\1\ This exemption states:
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\1\ Aviation and Transportation Security Act, Pub. L. No. 107-71
(2001) codified at 49 U.S.C. Sec. 114(o); see Resource Consultants,
Inc., B-290163, June 7, 2002, 2002 CPD para. 94 (``In the
aftermath of the terrorist hijackings and crashes of passenger aircraft
on September 11, 2001, the Congress passed and the President signed,
the Aviation and Transportation Security Act'').
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The acquisition management system established by the
Administrator of the Federal Aviation Administration
under section 40110 shall apply to acquisitions of
equipment, supplies, and materials by the
Transportation Security Administration, or, subject to
the requirements of such section, the Under Secretary
may make such modifications to the acquisition
management system with respect to such acquisitions of
equipment, supplies, and materials as the Under
Secretary considers appropriate, such as adopting
aspects of other acquisition management systems of the
Department of Transportation.\2\
---------------------------------------------------------------------------
\2\ See Pub. L. No. 109-90, Title V, Sec. 515, 119 Stat. 2084 (Oct.
18, 2005) (extending exemption to acquisition of services; Knowledge
Connections, Inc., B-298172, Apr. 12, 2006, 2006 CPD para.
67 (applying exemption to services).
---------------------------------------------------------------------------
The scope of this exemption is specifically defined in the
referenced ``section 40110'' allowing the Federal Aviation
Administration (FAA) to issue procurement rules ``notwithstanding
provisions of Federal acquisition law.'' This exemption cuts through a
wide spectrum of acquisition statutes and regulations, including the
following: (1) Competition in Contracting Act; (2) Office of Federal
Procurement Policy Act (except for Procurement Integrity Act
provisions); (3) Federal Acquisition Streamlining Act (except for
whistleblower provisions); (4) Small Business Act (except for a general
duty to provide ``reasonable opportunities'' to small businesses); (5)
procurement protest system provisions (31 U.S.C., Chapter 35(V)); and
(6) the Federal Acquisition Regulation (FAR). 49 U.S.C. Sec. 40110(d).
As Senator Snowe explained, TSA ``is exempt from every major
procurement law'' and may ``sidestep normal competitive bidding
practices'' under this authority.\3\
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\3\ Sen. Snowe's News Release, ``Snowe Brings Increased
Transparency, Accountability to Transportation Security Administration
Contracting'' (July 13, 2006).
Assessing the Need for, and Benefits of, TSA's Exemption
TSA received its acquisition exemption in the midst of a national
emergency in 2001. This raises key questions of whether (1) TSA still
needs this emergency acquisition authority; and (2) this emergency
authority has produced faster, cheaper, and better acquisitions.
Assessing the Need for Continued Exemption
In times of war or national emergency, exceptions to major
procurement laws may be necessary in order to meet urgent needs of the
troops, disaster victims, or other public exigencies. However,
wholesale exemptions are no longer necessary for TSA because the major
procurement statutes and regulations incorporate built-in safeguards to
allow emergency contracting to meet urgent needs of the agency and the
public. For example, both the Competition in Contracting Act (CICA) and
the FAR carve out special exceptions to the requirement for ``full and
open competition'' when the agency determines that ``an unusual and
compelling urgency'' exists. 41 U.S.C. Sec. 253(c)(2); FAR Sec. 6.302-
2.
Indeed, the revisions to the FAR in 2006 now assist agencies in
meeting urgent needs by devoting an entire section of the regulation to
``emergency acquisitions.'' 71 Fed. Reg. 38247 (2006); FAR Part 18. In
particular, this recent FAR revision ``identifies acquisition
flexibilities that are available for emergency acquisitions.'' As a
result, agencies have sufficient authority within the existing
statutory and regulatory framework without the need for any broad
exemption like that applicable to TSA.
In addition, the question arises as to why TSA alone needs a
special emergency exemption not available to any other part of DHS--or
even to the military departments. As Senator Snowe stated, ``TSA is one
of the few federal agencies and the only agency within the Department
of Homeland Security that is exempt from federal procurement laws.''
\4\ TSA should be able to achieve its critical mission as readily under
the FAR as the rest of the DHS contracting community and the military
departments.
---------------------------------------------------------------------------
\4\ Id.
Weighing the Benefits of the TSA Exemption
If TSA's emergency exemption had contributed to a record of
acquisition successes, a continuation of this exemption might be a
worthy consideration. However, the past six years do not readily
demonstrate the benefits of TSA's exemption. To the contrary, TSA's
acquisitions not only have drawn bipartisan criticism, but also have
accumulated a history of delays, overruns, and other problems
documented in GAO and DHS reports, as illustrated below.
TSA Procurements Generally
Sen. Snowe. ``TSA has a record of
mismanagement and lack of transparency in its
acquisitions that provide little justification for a
permanent exemption from the FAR.'' \5\
---------------------------------------------------------------------------
\5\ Id.
---------------------------------------------------------------------------
Sen. Kerry. ``The TSA has been the subject of
several Department of Transportation and DHS Inspector
General investigations regarding the mismanagement of
contracts that have cost taxpayers hundreds of millions
of dollars.'' \6\
---------------------------------------------------------------------------
\6\ Sen. Kerry's Letter to Kip Hawley (TSA Administrator) (Dec. 13,
2005).
---------------------------------------------------------------------------
DHS IG. ``[W]e conducted audits and reviews of
individual DHS contracts, such as the Transportation
Security Administration's (TSA's) screener recruiting
and TSA's information technology services. . . . Common
themes and risks emerged from these audits, primarily
the dominant influence of expediency, poorly defined
requirements, and inadequate oversight that contributed
to ineffective or inefficient results and increased
costs.'' \7\
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\7\ Procurement Practices of the Department of Homeland Security:
Hearings Before the House Comm. on Oversight and Government Reform,
110th Cong., 1st Sess. (2007) (statement of DHS IG Richard Skinner).
IT Managed Services
DHS IG. ``Another example of where an
expedited schedule led to DHS acquisition deficiencies
is TSA's information technology managed services
contract with Unisys. . . . By the beginning of fiscal
year 2006, TSA had spent most of the contract ceiling,
83 percent, without receiving many of the contract
deliverables critical to airport security and
communications.'' \8\
---------------------------------------------------------------------------
\8\ Code Yellow: Is the DHS Acquisition Bureaucracy A Formula for
Disaster? Hearings Before House Comm. on Government Reform, 109th
Cong., 2nd Sess. 69 (2006) (statement of DHS Asst. IG David Zavada)
(hereinafter ``2006 House Code Yellow Hearings'').
Secure Flight
o GAO. ``TSA has not followed a disciplined
life cycle approach to manage systems development, or
fully defined system requirements. Rather, TSA has
followed a rapid development method to develop the
program quickly. This process has been ad hoc,
resulting in project activities being conducted out of
sequence, requirements not being fully defined, and
documentation containing contradictory information or
omissions.''\9\
---------------------------------------------------------------------------
\9\ GAO, Aviation Security: Significant Management Challenges May
Adversely Affect Implementation of the Transportation Security
Administration's Secure Flight Program 1 (Feb. 9, 2006) (GAO-06-374T);
see also GAO, Homeland Security: Progress Continues, but Challenges
Remain on Department's Management of Information Technology 30 (Mar.
29, 2006) (GAO-06-598T).
Transportation Security Operations Center
House Report. ``Moreover, an unnecessary
decision to accelerate the construction deadline cost
TSA between $400,000 and $600,000, not including
approximately $575,000 in unjustified approved
construction change orders.' ''\10\
---------------------------------------------------------------------------
\10\ 2006 House Code Yellow Hearings 25 (House Comm. on Government
Oversight Report, Waste, Abuse, and Mismanagement in Department of
Homeland Security Contracts (July 2006) citing DHS IG Report).
---------------------------------------------------------------------------
Transportation Worker Identification Credential
Program (TWIC)
GAO. ``TSA experienced problems in planning
for and overseeing the contract to test the TWIC
program, which contributed to a doubling of TWIC
testing contract costs and a failure to test all key
components of the TWIC program.'' \11\
---------------------------------------------------------------------------
\11\ GAO, Transportation Security: TSA Has Made Progress in
Implementing the Transportation Worker Identification Credential
Program, but Challenges Remain 12 (Apr. 12, 2007) (GAO-07-681T).
---------------------------------------------------------------------------
In summary, the proven benefits of the exemption from major
acquisition laws is not readily apparent from TSA's six years of
acquisition experience with this exemption.
Assuring ``Full and Open'' Competition
The Competition in Contracting Act (CICA) does not apply to TSA. 49
U.S.C. Sec. Sec. 114(o) and 40110. Instead, TSA may award
noncompetitive contracts based upon its ``best interest'' and a
``rational basis'' standard.\12\ TSA's threshold for sole-source
contracts is even lower than the old competition standard--maximum
``practical'' competition--that Congress found to be inadequate and
ineffective prior to the enactment of CICA.\13\
---------------------------------------------------------------------------
\12\ See TSA Acquisition Management System (linking to FAA
Acquisition Management Policy Sec. 3.2.2.4) (http://www.tsa.gov/join/
business/index.shtm); GAO, Transportation Security Administration:
High-Level Attention Needed to Strengthen Acquisition Function 14 (May
2004) (GAO-04-544).
\13\ See Defense Acquisition Regulation (DAR) Sec. 3-101(d);
Federal Procurement Regulation (FPR) Sec. 1-3.101.
---------------------------------------------------------------------------
In support of CICA's mandate for competition, Congress established
an overwhelming case for how competitive procurements serve the public
interest:
Cost Savings. ``First, competition in contracting
saves money. Studies have indicated that between 15 and 50
percent can be saved through increased competition.''
Cost Control. ``In addition to potential cost savings,
competition also curbs cost growth. According to an October
1979 Rand Corporation analysis . . ., competitive procurement
has led to improvements in system performance and on-schedule
delivery by contractors, which have subsequently lowered real
cost growth.''
Innovation. ``Competition may also promote significant
innovative and technical changes. In some cases, competition
serves as an incentive for firms to be more progressive in
developing cost-reducing design changes and improvements in
manufacturing technology in order to gain advantage over their
competitors.''
Fair Play. ``The last, and possibly the most
important, benefit of competition is its inherent appeal of
`fair play.' Competition maintains the integrity in the
expenditure of public funds by ensuring that government
contracts are awarded on the basis of merit rather than
favoritism.'' \14\
---------------------------------------------------------------------------
\14\ S. REP. NO. 98-50, at 3 (1983).
---------------------------------------------------------------------------
More than twenty years later, the case for competition pursuant to
CICA remains equally compelling, as Congress continues to find in
recent hearings:
Experience has proven that there is a direct connection between
an agency failing to adequately compete a contract and poor
performance on that contract. The billions wasted in no-bid,
sole-source contracts awarded after Hurricane Katrina stand as
a testament to that fact.\15\
---------------------------------------------------------------------------
\15\ Responsibility in Federal Homeland Security Contracting:
Hearings Before House Comm. on Homeland Security, 110th Cong., 1st
Sess. (2007) (statement of Chairman Thompson).
Competition in federal contracting protects the interests of
taxpayers by ensuring that the government gets the best value
for the goods and services it buys. Competition also
discourages favoritism by leveling the playing field for
competitors while curtailing opportunities for fraud and
abuse.\16\In fact, DHS officials have agreed that ``competitive
contracting is the preferred way to go'' and that
noncompetitive contract modifications have contributed to cost
overruns.\17\
---------------------------------------------------------------------------
\16\ 2006 House Code Yellow Hearings 11 (incorporating House Comm.
on Government Reform's on Report Waste, Abuse, and Mismanagement in
Department of Homeland Security Contracts).
\17\ 2006 House Code Yellow Hearings 87 (statement of Elaine Duke)
(agreeing that ``competitive contracting is the preferred way to go'');
id. (statement of Rick Gunderson) (agreeing that when a $104 million
contract ``grows to $700 million, it is not competitive all the way
through'').
CICA not only mandates competition, but also
establishes concrete requirements to enforce
transparency and accountability. In particular, CICA
requires high-level review and written justifications
for high-dollar sole-source procurements. 41 U.S.C.
Sec. 253(f). In addition, such justifications must be
available for public review, thus enhancing effective
oversight. Id.\18\ Such requirements may not only
facilitate GAO and DHS IG oversight, but also assist
TSA in performing its acquisition functions.\19\
---------------------------------------------------------------------------
\18\ CICA's legislative history confirms that Congress viewed the
mandate for written justifications to be ``necessary to permit
effective oversight of the use of noncompetitive procedures.'' S. REP.
NO. 98-297, at 5 (1983).
\19\ See Sen. Snowe's News Release, ``Snowe Brings Increased
Transparency, Accountability to Transportation Security Administration
Contracting'' (July 13, 2006) (``GAO conducted an investigation into
TSA's acquisition office which required staff to rummage through boxes
of files to piece together the details of 21 contracts it was
reviewing''); GAO, Transportation Security Administration: High-Level
Attention Needed to Strengthen Acquisition Function 13--14 (May 2004)
(GAO-04-544).
---------------------------------------------------------------------------
In summary, a powerful case exists for Congressionally-established
``full and open'' competition under CICA. Given that CICA specifically
allows flexibility for urgent procurements and emergencies, TSA should
be able to accomplish its mission and obtain the undeniable benefits of
competition--including cost savings, controlled cost growth,
innovation, and fair play--without any need for a special ``TSA-only''
exemption from CICA.
Enhancing Efficiency and Consistency Within DHS
With its exemption, TSA is also not subject to the Office of
Federal Procurement Policy Act and the Federal Acquisition Regulation
that establish government-wide rules offering economy-of-scale
efficiencies and cross-cutting consistency. 49 U.S.C. Sec. Sec. 114(o)
and 40110.
Congress established the Office of Federal Procurement Policy
(OFPP) ``to provide overall direction of Government-wide procurement
policies, regulations, procedures, and forms for executive agencies and
to promote economy, efficiency, and effectiveness in the procurement of
property and services by the executive branch of the Federal
Government.'' 41 U.S.C. Sec. 404(a). Indeed, a ``uniform procurement
system'' represented one of the key objectives of the OFPP Act, as
amended.\20\ These key Congressional objectives for efficiency and
uniformity are undermined when the ``Government-wide'' procurement
system is fragmented and TSA may play by its own unique acquisition
rules.
---------------------------------------------------------------------------
\20\ S. REP. NO. 98-50, at 6 (1983).
---------------------------------------------------------------------------
This fragmentation of the procurement system creates two parallel
sets of rules with differences and conflicts--ranging from subtle to
significant--between the FAR and the separate TSA Acquisition
Management System (TSAAMS) set of clauses. Examples include:
Cost or Pricing Data. The FAR establishes a
uniform threshold of $650,000 for obtaining cost or
pricing data. FAR Sec. 15.403--4(a). In contrast,
TSAAMS 3.2.2.3-27 sets a $1,000,000 threshold, while
TSAAMS 3.2.2.3-26 imposes yet another threshold of
$550,000.
Environmental. The FAR includes the Pollution
Prevention and Right-to-Know Information clause (FAR
52.223-5), but not Clean Air & Clean Water clause
(deleted over 5 years ago). The TSAAMS has the
opposite--the outdated Clean Air & Clean Water clause
(3.6.3-2), but no Pollution Prevention clause.
Buy American. The FAR recognizes certain
exceptions to honor international trade agreements (FAR
Sec. 25.1101), but the TSAAMS does not mention them
(3.6.4-2).
Other differences include TSAAMS provisions (3.6.4-2 and 3.2.2.3-
27) that omit FAR provisions recognizing commercial item exceptions
(FAR Sec. 25.1101(a)(1) and Sec. 15.403-3(c)).
This fragmentation cuts against the OFPP and FAR objectives of
efficiency and uniformity in such areas as contract administration,
compliance, training, and research. For contract administration,
contractors--particularly small businesses--bear a heavy burden of
tracking, updating, implementing, and flowing down not just one, but
two, separate regulatory regimes if TSA is to have the benefit of
competition from companies with government-wide experience. For
compliance, contractors need a system of policies, procedures, and
training to assure that their personnel are following the rules; this
burden multiplies when contractors must address two separate sets of
regulatory requirements. For training and research, separate FAR and
TSA systems undermine the OFPP objectives of ``development of a
professional acquisition workforce Government-wide'' and coordination
of ``Government-wide research and studies.'' With TSA's exemption, such
training and research must be done twice--once to cover the FAR's
general rules and then again for the unique aspects of TSA
acquisitions.
Improving GAO Oversight Over TSA Procurements
With its exemption, TSA is not subject to the procurement protest
system provisions (31 U.S.C., Chapter 35(V)) applicable to other
agencies. 49 U.S.C. Sec. Sec. 114(o) and 40110. As a result, GAO lacks
jurisdiction to oversee TSA acquisitions through the protest
process.\21\
---------------------------------------------------------------------------
\21\ See, e.g., Knowledge Connections, Inc., B-298172, Apr. 12,
2006, 2006 CPD para.67 (dismissing protest against TSA for
lack of jurisdiction).
---------------------------------------------------------------------------
For TSA acquisitions, the only protest option is the FAA's Office
of Dispute Resolution for Acquisitions (ODRA).\22\ While the ODRA
protest process is available, the GAO protest process offers compelling
advantages:
---------------------------------------------------------------------------
\22\ 14 C.F.R. Sec. Sec. 17.11--17.21; FAA ODRA website
(procedures, cases, and background) (http://www.faa.gov/about/
office_org/headquarters_offices/agc/pol_adjudication/agc70/).
---------------------------------------------------------------------------
Unparalleled Experience. For more than 80
years, GAO has served an a forum for resolving protests
involving federal agencies; \23\
---------------------------------------------------------------------------
\23\ H.R. REP NO. 98-1157, at 23 (1984) (nearly 60 years of
experience in the 1980s).
---------------------------------------------------------------------------
Established Precedent: Over the many decades
of its protest review, GAO has generated thousands of
precedent-setting decisions informing both agencies and
contractors of what conduct passes muster; \24\
---------------------------------------------------------------------------
\24\ Id. (GAO's ``decisions are relied upon for guidance by
Congress, the courts, and the procurement community, including
executive branch contracting agencies'').
---------------------------------------------------------------------------
Unquestioned Independence. GAO has a well-
earned reputation for independence and objectivity.
As one of the critical reforms established by CICA, Congress
determined that an effective protest function required additional
teeth.\25\ First, because many agencies rendered protests meaningless
by proceeding with contract performance pending protest resolution,
Congress established a statutory stay of performance to assure
effective relief. 31 U.S.C. Sec. 3553(c). In contrast, protests under
ODRA generally do not stay contract performance.\26\ Second, CICA
generally provides for payment of successful protest costs (31 U.S.C.
Sec. 3554(c)), while ODRA procedures place significant restrictions on
such recovery. 14 C.F.R. Sec. 17.21(c). Third, Congress must receive
notification if agencies fail to implement corrective action specified
by GAO. 31 U.S.C. Sec. 3554(b)(2) & (e). In contrast, ODRA includes no
such mechanism for Congressional or GAO notification and oversight for
TSA acquisitions.
---------------------------------------------------------------------------
\25\ Id. at 25.
\26\ J.A. Jones Management Services, 99-ODRA-00140 (Sept. 29, 1999)
(``The FAA's Acquisition Management System (`AMS') includes a
presumption in favor of continuing procurement activities and contract
performance during the pendency of bid protests''); accord Glock, Inc.,
03-TSA-003 (Oct. 28, 2003).
---------------------------------------------------------------------------
While comparative assessments of GAO and ODRA effectiveness are
complex undertakings, one measure would be the advancement of
competition in federal procurements. By this yardstick, the ODRA
protest function has had limited success.
Denied Protests. As a general rule, ODRA
protests against sole source procurements have
failed.\27\
---------------------------------------------------------------------------
\27\ J&J Electronic Systems, ODRA-05-346 (June 3, 2005) (denied);
Aviation Research Group, ODRA-99-138 (Oct. 28, 1999) (summary
dismissal); Raisbeck Commercial Air Group, Inc., ODRA-99-117 (May 14,
1999) (summary dismissal); Wilcox Electric, Inc., ODRA-96-8 (Oct. 9,
1996) (denied).
---------------------------------------------------------------------------
No Remedy. Even while sustaining the protest,
ODRA has declined to overturn the award and reopen the
competition.\28\
---------------------------------------------------------------------------
\28\ Haworth Incorp., ODRA-98-74 (June 2, 1998) (holding that ODRA
did not have to follow CICA and recommend termination of improperly
awarded contract).
---------------------------------------------------------------------------
Limited Success. In over a decade, ODRA has
apparently sustained only two protests against sole-
source procurements.\29\
---------------------------------------------------------------------------
\29\ Hasler, Inc., ODRA-07-404 (Jan. 16, 2007) (finding rejection
of lower-priced, technically compliant offer to be improper); Raytheon
Co., ODRA-01-177 (June 15, 2001) (sustaining protest against sole-
source award after FAA requested independent review by the General
Services Board of Contract Appeals (GSBCA) that had developed great
experience and expertise in protests at that time).
---------------------------------------------------------------------------
In general, GAO has applied greater scrutiny, with greater success,
in enforcing competition in federal contracting.\30\ As a result, the
availability of the GAO protest process would not only assure greater
due process protections for competing contractors, but also benefit
both TSA and the taxpayer by spurring greater, more vigorous
competition.
---------------------------------------------------------------------------
\30\ See, e.g., eFedBudget Corp., B-298627, Nov. 15, 2006, 2006 CPD
para. 159; Europe Displays, Inc., B-297099, Dec. 5, 2005,
2005 CPD para. 214; WorldWide Language Resources, Inc., B-
296984.2, Nov. 14, 2005, 2005 CPD para. 206; Sabreliner
Corp., B-288030, Sept. 13, 2001, 2001 CPD para. 170;
Lockheed Martin Systems Integration--Owego, B-289190.2, May 25, 2001,
2001 CPD para. 110.
Avoiding ``Emergency Exemption'' Creep
For good reason, emergency exemptions have been extended to
procuring agencies in times of war and national emergency. However,
history has repeatedly underscored the risks of leaving such emergency
authority in place too long. Too often, the emergency becomes the
routine and the exemption swallows the governing procurement rules. The
emergency authorities during the Korean War and the Katrina aftermath
illustrate these risks.
Korean War Emergency Authority. In the Armed Services Procurement
Act of 1947, Congress established a statutory ``emphasis. . .upon
formal advertising as a proven method and upon competition as a means
of procuring Government supplies, with a fair and equal opportunity for
suppliers and at prices brought about by competition in the market.''
\31\
---------------------------------------------------------------------------
\31\ H.R. REP. NO. 87-1638, at 2 (1962).
---------------------------------------------------------------------------
Then came the Korean hostilities, and, on December 15,
1950, the President issued a national emergency
proclamation, which has not since been revoked.
Immediately upon its issuance, the Secretary of Defense
directed that all procurement be undertaken under the
authority of section 2304(a)(1) of the Armed Services
Procurement Act of 1941. This section permits
negotiation of contracts during the period of a
national emergency proclamation of the President. Such
use of the national emergency authority in subsection
(a)(1) effectively suspended the duties, limitations,
and requirements specified in the other 16 exceptions
where negotiation is permitted by the act of 1947.
* * *
In 1955 and 1956, this committee, on inquiry, developed
the fact that 94.19 percent of the defense procurement
dollar was contracted for under the authority of the
Presidential Korean National Emergency Proclamation
(sec. 2304(a)(1)).\32\
---------------------------------------------------------------------------
\32\ Id.
---------------------------------------------------------------------------
Congress ultimately had to intervene by amending the Armed Services
Procurement Act and reaffirming ``the congressional intent and policy
that formal advertising, the proven method of public procurement, shall
be the rule, where it is feasible and practicable.''\33\
---------------------------------------------------------------------------
\33\ Id. at 3; see Pub. L. No. 87-653.
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Katrina Authority. After Hurricane Katrina, federal agencies
quickly employed available emergency authority in order to
respond more quickly to urgent needs of the Katrina victims.
In the case of Hurricane Katrina, full and open
competition has been the exception, not the rule. The
urgent needs in the immediate aftermath of Hurricane
Katrina provided a compelling justification for the
award of noncompetitive contracts. Yet as the immediate
emergency receded, the percentage of contract dollars
awarded without full and open competition actually
increased. In September 2005, the month after Hurricane
Katrina, 51% of the contract dollars awarded by the
Federal Emergency Management Agency were awarded
without full and open competition. Rather than
declining after September, the percentage of contract
dollars awarded noncompetitively increased to 93% in
October.\34\
---------------------------------------------------------------------------
\34\ House Comm. on Government Reform--Minority Staff: Waste,
Fraud, and Abuse in Hurricane Katrina Contracts 2 (Aug. 2006).
---------------------------------------------------------------------------
TSA Exemptions. Even if TSA procurements were not currently far out
of the federal procurement mainstream, history warns that ``emergency
exemption'' creep will drive an ever widening gap between TSA and the
rest of the federal contracting community. As discussed above, such
disharmony will further undermine some of the most fundamental
Congressional directives, including CICA's ``full and open
competition'' mandate, the OFPP Act's ``Government-wide'' initiatives
for efficiency and uniformity in federal contracting, and GAO's
oversight through the protest process for enforcing competitive fair
play in the public marketplace.
Conclusion
Six years have passed since TSA received its emergency exemption
from the major procurement laws governing other federal agencies. With
the passage of time, bipartisan Congressional investigations, GAO
reviews, and DHS IG audits have yet to identify tangible benefits
resulting from TSA's sweeping exemption. On the other hand, both TSA
and the taxpayer stand to gain from the Congressionally recognized
values flowing from ``full and open competition,'' ``Government-wide''
efficiencies of common regulations and training, and effective GAO
protest oversight. Accordingly, the time is ripe to end TSA's exemption
from major procurement laws and to bring TSA acquisitions into the
federal procurement mainstream.
Thank you for your leadership on the TSA acquisition process that
directly affects one of the most visible and vital components of
America's critical infrastructure--our transportation system. Bringing
greater competition, efficiency, and oversight to the TSA acquisition
process will serve not only the interests of TSA and DHS, but the
public at large.
This concludes my statement and I would be happy to answer any
questions you might have.
Mr. Carney. Thank you, Mr. Bodenheimer.
Now I recognize Mr. Chvotkin for 5 minutes.
STATEMENT OF ALAN CHVOTKIN, SENIOR VICE PRESIDENT AND COUNSEL,
PROFESSIONAL SERVICES COUNCIL
Mr. Chvotkin. Thank you, Mr. Chairman and Chairman
Thompson, Ranking Member Rogers. On behalf of the more-than-
220-member company of the Professional Services Council, many
of whom do business with the Transportation Security
Administration and other components of the Department of
Homeland Security, thank you for the invitation and the
opportunity to provide our views.
Today, federal spending on the purchase of goods and
services exceeds $400 billion, representing nearly 40 percent
of the total discretionary budget for the federal government.
Spending on services contracts represents nearly 60 percent of
that spending. Thus, federal procurement must be a core
competency of the federal government and prioritized as such.
And by any measure, TSA is a major procurement organization.
There is no doubt that the federal government generally,
and the Department of Homeland Security in particular, faces
many difficult challenges in the acquisition arena. The human
capital challenge is real and impacts the acquisition workforce
as much as, if not more so, than the rest of the federal
workforce.
PSC members believe strongly that an experienced, smart and
well-prepared customer makes the best customer. We see many
examples in the private sector where companies take special
effort to ensure that their procurement workforces are well-
prepared for the significant work that they are assigned.
Yet, across the board, workforce development in the federal
government is a glaring weakness and has been for a long time.
Training funds for the acquisition workforce remain relatively
flat and are far from adequate.
To this committee's credit, and yours, Mr. Chairman, Title
4 of H.R. 1684, the 2008 Department of Homeland Security
Authorization Act, provides for important workforce development
improvements for the Department of Homeland Security.
And we support these initiatives, but more needs to be
done.
If we want to improve the quality of federal acquisition,
we should not start by layering an already-beleaguered
workforce with more regulations and process demands. Rather,
TSA has called for an ``Acquisition Marshall Plan'' that
aggressively addresses the hiring, retention, training, reward
and development of the acquisition workforce on a government-
wide basis.
This would involve recognizing, as most high-performing
companies do, that those elements of the workforce that are
most directly critical to the functioning or the success of the
institution receive special and appropriate focus.
In addition, PSC has called for the creation of a
government-wide contingency contracting corps, drawn from
across the government workforce.
And I note, Mr. Chairman, that to make these important
reforms a reality will require Congress to be the catalyst. We
were pleased that, today, your counterpart committee, the
Senate Homeland Security and Governmental Affairs Committee,
will adopt this recommendation as part of its markup of a
broader government-wide contracting accountability bill.
With respect to TSA's exemptions, there were valid reasons
for exempting TSA from the acquisition laws and regulations
when it was created in late 2001, even while good arguments
also existed at that time to treat TSA as most other agencies,
particularly with respect to federal acquisition policy.
To be sure, the TSA acquisition system works, as has been
demonstrated over the past 5 years. It has built on the
principles of the FAR, even though some of the obvious
differences exist in implementation.
The flexibilities that TSA has used to meet past threats
and may need to respond fully and promptly to emerging and
future threats need to be carefully considered. Although, in
our view, the current acquisition statutes, the FAR and the DHS
authorities also provide broad flexibility for agencies,
including TSA, to meet emergency situations.
This committee and others have reviewed many of the
procurements entered into by TSA. Many of them have achieved
exactly the goals that TSA has had, and have been implemented
as intended. Others have raised issues regarding performance by
both federal officials and contractors, with examples of
problems at all phases of the acquisition system.
I cannot say that TSA's exemptions from the FAR was the
cause for any of these problems. Nor can I say with certainty
that bringing them under those laws and regulations will ensure
that there will not be problems in the future.
But I can say with confidence that bringing TSA at least
under the common rules applicable to the Department of Homeland
Security will increase competition, expand opportunities for
greater small-business participation, provide greater
accountability and transparency in the procurement process, and
provide greater options for addressing the challenges of the
department's acquisition workforce.
Mr. Chairman, as you noted in your opening statement, these
unique processes make it difficult to share acquisition
resources across the department, let alone on a government-wide
basis, as we suggested in our proposed contingency contracting
corps. It puts an added burden on the responsibility of the
department's chief procurement officer to provide training and
to meet the higher needs of the department.
But from an industry perspective, this separate-but-unequal
system creates other challenges. We encourage you to look
carefully at those challenges and for solutions.
In conclusion, we believe that bringing TSA at least under
the common rules applicable to the Department of Homeland
Security will increase competition, expand small-business
participation, and provide accountability and transparency.
Thank you for the opportunity to provide the views of the
Professional Services Council on this important public policy
issue. We look forward to responding to any questions you may
have.
[The statement of Mr. Chvotkin follows:]
Prepared Statement of Alan Chvotkin
Introduction
Mr. Chairman, Ranking Member Rogers, members of the Subcommittee, I
am Alan Chvotkin, Senior Vice President and Counsel of the Professional
Services Council (PSC). PSC is the principal national trade association
for companies providing services to virtually every agency of the
Federal government. Many of our member companies now do business with
the Transportation Security Administration (TSA) and other components
of the Department of Homeland Security. On behalf of the more than 220
member companies, thank you for the invitation and the opportunity to
provide our views on TSA's acquisition policies.
Growth in Federal Procurement
Since 9/11, federal procurement spending on goods and services has
grown dramatically. This should not come as a surprise. Among other
things, 9/11 significantly changed many of the government's missions
and created requirements for new technologies and innovative solutions
to improve our homeland security and fight the war on terror. Needless
to say, the wars in Iraq and Afghanistan have also contributed
significantly to this growth.
Today, federal spending on the purchase of goods and services
exceeds $400 billion, representing nearly 40% of the total
discretionary budget of the federal government. Spending on services
contracts represents nearly 60% of that federal spending. Thus, federal
procurement must be a core competency of the federal government and
prioritized as such.
But this growth has not occurred in a vacuum. During the same
period, the discretionary budget has grown nearly 65%. Thus, while
significant and clearly growing, spending on services has increased
about 15% as a proportion of the government's operations.
Given the central role that acquisition plays in the proper
functioning of our government, it is important that Congress, as part
of its oversight role, continually assess federal acquisition policies
and performance and explore changes to policy or practice that might be
needed. We appreciate the thoughtful leadership of this Subcommittee
and its continued vigilance in this complicated field that is too often
dominated by myths and hyperbole. However, it is important to recognize
that workforce challenges, honest mistakes, or other structural
problems, while serious, do not equate to fraud or abuse. As such, we
appreciate your seriousness of purpose and the openness of the
discussion we are having today.
Acquisition Workforce Challenges
There is no doubt that the Federal government generally, and the
Department of Homeland Security in particular, faces many difficult
challenges in the acquisition arena. The human capital challenge is
real and impacts the acquisition workforce as much as, if not more
than, the rest of the federal workforce. PSC members believe strongly
that an experienced, smart, and well-prepared customer makes the best
customer. We see many examples in the private sector where companies
take special effort to ensure that their procurement workforces are
well prepared for the significant work they are assigned.
Yet across the board, workforce development in the federal
government is a glaring weakness and has been for a long time. When
federal agency budgets get tight, the first thing cut is training. That
is why five years ago PSC recommended to Congress, and the Congress
enacted, what is now known as the Federal Acquisition Workforce
Training Fund.\1\ While initially available only to the civilian
agencies, Congress acted to bring the Defense Department fully into the
Fund; \2\ in addition, the House-passed version of the fiscal year 2008
National Defense Authorization Act recommends, and PSC strongly
supports, making this training fund permanent.\3\ Although the fund is
growing and the resources are being put to use to benefit the federal
acquisition workforce, training funds for the acquisition workforce
remain relatively flat and it is far from adequate.
---------------------------------------------------------------------------
\1\ Enacted as Section 4307(a) of the Services Acquisition Reform
Act of 2003 (P.L. 104-106) and codified in Section 37(h)(3) of the
Office of Federal Procurement Policy Act (41 U.S.C. 433(h)(3))
\2\ Section 821 of the FY 06 National Defense Authorization Act
P.L. 109-163 (1/6/06), available at: http://frwebgate.access.gpo.gov/
cgi-bin/getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ163.109.pdf
\3\ Section 802(a) of the FY 08 National Defense Authorization Act
(HR 1585), as passed by the House of Representatives on May 17, 2007,
available at: http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=110_cong_bills&docid=f:h1585eh.txt.pdf
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To this Committee's credit, title IV of HR 1684, the FY 08
Department of Homeland Security Authorization Act, provides for
important workforce development improvements for the Department of
Homeland Security, including addressing homeland security procurement
training and authority to appoint retired annuitants,\4\ and we support
these initiatives. We were surprised that the Administration opposed
those changes on the grounds that it would undermine efforts by the
Office of Federal Procurement Policy to standardize government-wide
competency and training requirements so that the government can recruit
and retain the best talent.\5\
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\4\ Sections 401 and 402 of the FY 08 Homeland Security Authority
Act (HR 1684), as passed by the House of Representatives on May 9,
2007, available at: http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=110_cong_bills&docid=f:h1684eh.txt.pdf
\5\ See OMB Statement of Administration Policy on HR 1684,
available at http://www.whitehouse.gov/omb/legislative/sap/110-1/
hr1684sap-h.pdf
PSC Acquisition ``Marshall Plan''
But more needs to be done. It is our belief that if we want to
improve the quality of federal acquisition, we should not start by
layering an already beleaguered workforce with more regulations and
process demands. Rather, as PSC President Stan Soloway testified on
July 17, 2007 before the Senate Homeland Security and Governmental
Affairs Committee,\6\ we need an ``Acquisition Marshall Plan'' that
aggressively addresses the hiring, retention, training, reward and
development of the acquisition workforce on a government-wide basis.
This would involve recognizing, as most high performing companies do,
that those elements of the workforce that are most directly critical to
the functioning and success of the institution must receive special and
appropriate focus and support.
---------------------------------------------------------------------------
\6\ Available on the PSC website at: http://www.pscouncil.org/pdfs/
solowaystatementhsgac07-17-07.pdf
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In addition, in keeping with other models for emergency relief, PSC
called for the creation of a government-wide ``Contingency Contracting
Corps'' drawn from across the government contracting workforce, with
special training in emergency and contingency contracting, to be
deployable when the need arises. When not deployed, the individuals
populating this vital cadre would continue to perform their regular
functions at their home agencies. To make these important reforms a
reality will require Congress to be the catalyst.
TSA's Current Procurement Authority
As you know, in 2001, before the Department of Homeland Security
was created, the Aviation and Transportation Security Act \7\
established the TSA as a new agency within the Department of
Transportation with security responsibility for all modes of
transportation then overseen by the Department of Transportation and
other related activities. Pursuant to Section 101(o) of that 2001
Act,\8\ TSA procurements were to be governed by the Federal Aviation
Administration's Acquisition Management System (AMS) and were
specifically exempt from most of the Federal procurement laws and the
Federal Acquisition Regulations (FAR), in the same manner as the FAA
was and remains exempt from the FAR. I was privileged to play a small
role representing industry in meetings with the FAA's Blue Ribbon panel
that provided recommendations to the FAA on the AMS.
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\7\ See P.L. 107-71, enacted 11/19/01, available at: http://
frwebgate.access.gpo.gov/cgi-bin/
useftp.cgi?IPaddress=162.140.64.183&filename=publ071.pdf&directory=/
diska/wais/data/107_cong_public_laws
\8\ Codified at 49 U.S.C. 114(o)
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Section 101(o) provides:
Acquisition Management System.-The acquisition management
system established by the Administrator of the Federal Aviation
Administration under section 40110 shall apply to acquisitions
of equipment, supplies, and materials by the Transportation
Security Administration, or, subject to the requirements of
such section, the Under Secretary (for the TSA) may make such
modifications to the acquisition management system with respect
to such acquisitions of equipment, supplies, and materials as
the Under Secretary considers appropriate, such as adopting
aspects of other acquisition management systems of the
Department of Transportation.
Instructively, the 2001 Act did not explicitly cover the
acquisition of services. Subsequently, TSA adopted the FAA's AMS as its
procurement regulations (TSAAMS) with modifications to address TSA
unique requirements.
Although the 2002 Homeland Security Act transferred TSA to the
Department of Homeland Security (DHS), the 2002 Act did not alter or
amend the exemption from either the procurement laws or the FAR.
In 2005, Congress enacted the fiscal year 2006 Department of
Homeland Security Appropriations Act \9\ and reaffirmed that the TSA
acquisition management system, and the exemptions from the procurement
laws and regulations of the FAR, is the appropriate acquisition model.
The statute also closed the gap in the coverage of the 2001 statute
relating to services.\10\ Section 515 of that 2005 Act provides:
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\9\ HR 2360, enacted as Public Law 109-90, and available at: http:/
/frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=109_cong_bills&docid=f:h2360enr.txt.pdf
\10\ See the decision of the Comptroller General of the United
States in the bid protest filed by Resource Consultants, Inc. (B-
290163; B-290163.2 (6/7/02) 2007 CPD 94 at 5), holding that the ATSA
limited the bid protest exemption at GAO to acquisitions involving
``equipment, supplies, and materials.''
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For fiscal year 2006 and thereafter, the acquisition management
system of the [TSA] shall apply to the acquisition of services
as well as equipment, supplies and materials (emphasis added).
GAO subsequently affirmed that the 2005 Act now exempts TSA's
services procurements from its bid protest jurisdiction.\11\
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\11\ See the decision of the Comptroller General of the United
States in the bid protest Knowledge Connections, Inc., B-298172 (4/12/
06), holding that the solicitation for services by TSA is expressly
exempt from GAO's bid protest jurisdiction.
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While in 2006 the Senate adopted an amendment to the fiscal year
2007 Department of Homeland Security Appropriations Act offered by
Senators Kerry, Snowe and Lautenberg to repeal the TSA procurement
exemption,\12\ the conference report failed to adopt that
provision.\13\ Again last week, the Senate adopted an amendment by
Senators Kerry and Snowe to repeal the TSA exemption 180 days after
enactment.\14\ In a July 24, 2007 letter to Senators Kerry and Snowe,
PSC was pleased to support that amendment.\15\
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\12\ See Senate Amendment 4552 to H.R. 5441, the fiscal year 2007
Homeland Security Appropriations Act, available at: http://
frwebgate.access.gpo.gov/cgi-bin/
getpage.cgi?dbname=2006_record&page=S7387&position=all However, it is
not clear that simple repeal of the underlying authority would, by
operation of law, bring TSA under the FAR.
\13\ While the TSA exemption was deleted, Section 542 of the Act
provides that the TSA acquisition management system is subject to the
provisions of the Small Business Act; the conference report is
available at: http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ163.109.pdf
\14\ See Senate Amendment 2463 to HR 2368, the fiscal year 2008
Homeland Security Appropriations Act, adopted 7/26/07, available at:
http://frwebgate.access.gpo.gov/cgi-bin/
getpage.cgi?position=all&page=S10109&dbname=2007_record
\15\ The PSC letter was printed in the Congressional Record and is
available at: http://frwebgate.access.gpo.gov/cgi-bin/
getpage.cgi?dbname=2007_record&page=S9909&position=all
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By any measure, TSA is a major procurement organization. According
to statistics from DHS,\16\ in the last fiscal year TSA issued almost
two thousand actions with a value in excess of $1.55 billion dollars.
In PSC's analysis, over 80% of TSA's spending has been for the purchase
of services; TSA has identified information technology, administrative
support services, guard services and program management support
services as among the top five categories of services purchased; the
top five services categories accounted for over $610 million in agency
purchases in the last fiscal year. Overall, in fiscal year 2006, DHS
obligated over $15.7 billion, of which 83 percent was for services,\17\
making it the third largest government agency in terms of annual
procurement spending, behind the Defense Department and the Department
of Energy.
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\16\ As reported by DHS and recorded in the Federal Procurement
Data System, current as of 2/2007, available at: http://www.dhs.gov/
xlibrary/assets/opnbiz/cpo--acquisitionreportfy2006.pdf. Data does not
include grants and purchase card transactions.
\17\ Id. See also testimony of DHS Inspector General Richard
Skinner before the House Oversight and Government Reform Committee's
Subcommittee on Government Management, Organization, and Procurement,
July 18, 2007, available at: http://
governmentmanagement.oversight.house.gov/documents/20070718162847.pdf
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Mr. Chairman, there were valid reasons for exempting TSA from the
acquisition laws and regulations when it was created in late 2001, even
while good arguments also existed to treat TSA as most other agencies
– particularly with respect to federal acquisition policy. There
was a second opportunity to review that decision in 2002 when Congress
created the Department of Homeland Security and transferred TSA from
the Department of Transportation into the Department of Homeland
Security, but the provision was not changed. There was yet a third
reaffirmation of the procurement authority applicable to TSA provided
for in the 2005 Appropriations Act.
To be sure, the FAA's acquisition system works for TSA, as has been
demonstrated over the past five years. It is built on the principles of
the federal acquisition system, even though there are some obvious
differences in implementation. Further, the flexibilities TSA has used
to meet past threats, and may need to respond fully and promptly to
emerging and future threats, need to be carefully considered, although
the current acquisition statutes, the FAR and the DHS authorities also
provide broad flexibility for agencies to address emergency situations.
This committee and others have reviewed many of the procurements
entered into by TSA. Many of them have achieved exactly the goals the
TSA had and have been implemented as intended; others have raised
issues regarding performance by both federal officials and contractors,
with examples of problems at all phases of the acquisition system.
I cannot say that TSA's exemptions from the key federal acquisition
statutes and government-wide Federal Acquisition Regulations was the
cause for any of these problems; nor can I say with certainty that
bringing them under those laws and regulations will ensure that there
will not be problems in the future. But I can say with confidence that
bringing TSA at least under the common rules applicable to the
Department of Homeland Security will increase competition, expand
opportunities for greater small business participation, provide greater
accountability and transparency in their procurement processes, and
provide greater options for addressing the challenges of the
department's acquisition workforce. Indeed, there are clear advantages
for all parties when agencies operate under common, government-wide
rules and procedures. Moreover, as TSA seeks to train its current
workforce and expand its acquisition workforce, the degree of
commonality between its acquisition procedures and other federal agency
practices will have a real effect on the cost and efficiencies of
bringing in skilled professionals from other agencies.
What Acquisition System Should the TSA Be Under?
If TSA were not authorized to retain the current explicit authority
to maintain its own acquisition systems, what system should it be
under?
On July 18, 2007, the DHS Inspector General testified before the
House Oversight and Government Reform Committee \18\ and spelled out
five elements of an efficient, effective and accountable acquisition
process, relying on the September 2005 Government Accountability Office
``Framework for Assessing the Acquisition Function at Federal Agencies'
\19\ and the July 2005 DHS Acquisition Oversight Program Guidebook \20\
as a baseline. The DHS IG identified five interrelated elements
essential to an efficient, effective and accountable acquisition
process:
---------------------------------------------------------------------------
\18\ IG testimony, note 17 supra
\19\ GAO 2005 Report 05-218G (September 1, 2005), available at:
http://www.gao.gov/new.items/d05218g.pdf
\20\ DHS, Acquisition Oversight Program Guide, available at: http:/
/www.dhs.gov/xlibrary/assets/DHS_ACQ_Planning_Guide_Notice_05-02.pdf
---------------------------------------------------------------------------
1. Organizational alignment and leadership
2. Policies and processes
3. Financial accountability
4. Acquisition workforce
5. Knowledge management and information systems
He concluded that, within DHS: (1) an integrated acquisition system
does not exist; (2) full partnership of acquisition offices with other
department functions has not been realized; (3) comprehensive program
management policies and processes are needed; (4) staffing levels and
trained personnel are not sufficient; (5) financial and information
systems are not reliable or integrated; and (6) timely, corrective
actions have not been taken in response to the IG's and GAO's
recommendations.\21\ While we take issue with some elements of the IG's
testimony, we concur in the overarching conclusions he reached.
---------------------------------------------------------------------------
\21\ IG testimony note 17 supra at page 5.
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We believe that several of these conclusions result from the fact
that TSA has its own procurement system, its own policies and
processes, its own workforce with separate needs for training, and its
own financial and information systems based on its unique acquisition
system.\22\ Furthermore, these unique processes make it difficult to
share acquisition resources across the department, let alone on a
government-wide basis as we suggested in our proposed Contingency
Contracting Corps; it puts an added burden on the responsibility of the
Department's Chief Procurement Officer to provide the training for them
and makes rotational assignments across the department to meet higher
priority needs of the department more difficult. It also calls into
question whether their performance statistics match with the rest of
the government.
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\22\ The Coast Guard, also now part of the Department of Homeland
Security, is governed by the ``standard'' federal procurement system
except when called into service as part of the Department of Navy, when
it will be governed by the ``standard'' Defense Department procurement
system. Of course, the FAA retains its separate procurement system
while remaining part of the Department of Transportation.
---------------------------------------------------------------------------
From an industry perspective, this separate but unequal system
creates other challenges. Since TSA uses a unique acquisition process,
doing business with the TSA requires a thorough understanding of a
different procurement system, built upon, but separate from, the
standard civilian agency procurement system for the rest of the
Department and even most of the Federal government, which acts as a
market limiting factor for those firms who do not have the resources to
master and navigate through multiple systems. There are also other
significant procedural differences between TSA and other departmental
procurements, such as access to the GAO protest process for stand alone
contracts, even though TSA relies on the FAA's agency-based Office of
Dispute Resolution for Acquisition (ODRA) as an independent review
forum.\23\
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\23\ Information on the ODRA process is available at: http://
www.faa.gov/about/office_org/headquarters_offices/agc/pol_adjudication/
agc70/index.cfm?print=go
What Acquisition System is the Department of Homeland Security Now
Under?
It is also fair to carefully inspect the current procurement system
for DHS. As you know, Section 101 of the Homeland Security Act \24\
established the Department as an ``executive department.'' Subtitle D
of title VIII of that Act also provides the Department with specific
exemptions to government-wide procurement rules: one for ``personal
services,'' one providing ``other transaction authority,'' coupled with
other flexibilities related to the regular acquisition process \25\
plus additional flexibilities for emergency procurements.\26\ These
exemptions help the Department meet its specialized mission and have
proven to add valuable flexibilities to meet the department's needs.
There is transparency in the department's procurement rules and both
internal and external accountability and oversight for procurement
actions. At a minimum, TSA should be held to the same procurement rules
as applicable to the Department of Homeland Security.
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\24\ Section 101(a) of P.L 107-296 (Nov. 25, 2002), codified in 6
U.S.C. 111
\25\ See Subtitle D of title VIII of the Homeland Security Act of
2002, codified in 6 U.S.C. 391, et. seq.
\26\ See Subtitle F of title VIII of the Homeland Security Act of
2002, codified in 6 U.S.C. 431, et. seq.
Conclusion
Mr. Chairman, we are coming up on six years since 9/11 and almost
six years since TSA was established. TSA has accomplished an enormous
mission under some of the most trying circumstances. But it is
appropriate to again ask what the best acquisition policy for TSA
should be going forward. For PSC, we believe that bringing TSA at least
under the common rules applicable to the Department of Homeland
Security will increase competition, expand opportunities for greater
small business participation in the Department's procurements, provide
greater accountability and transparency to all stakeholders in their
procurement processes, and provide greater options for Congress and for
the Secretary and the Under Secretary for Management of the Department
to address the challenges of TSA's and the department's acquisition
system and workforce.
Thank you again for the invitation to provide the Professional
Services Council's views on this important procurement policy issue. I
look forward to responding to any questions you may have.
Mr. Carney. I thank you, Mr. Chvotkin, for your testimony.
And I want to thank all the witnesses.
I will remind each member that he or she will now have 5
minutes to question the panel. I will recognize myself for 5
minutes. I think maybe we will get one round of questions in.
You hear the summons sounding right now. And then we will
suspend until we get back. We will probably do a couple rounds
anyway.
Okay, all right, let's start the questions. I will
recognize myself for 5 minutes.
Mr. Bodenheimer, in your prepared testimony, you list
several examples of how AMS creates parallel sets of rules that
sometimes conflict with FAR. Could you describe these examples
and explain in layman's terms, please, the kinds of
difficulties they pose for contractors?
Mr. Bodenheimer. I will be glad to, Mr. Chairman.
One of the examples is the requirement to provide cost or
pricing data in non-competitive contracts--the so-called
``Truth in Negotiations Act'' requirement. The FAR exempts
smaller procurements, those under $650,000, and says, ``You do
not need to furnish cost or pricing data because it is
burdensome and costly.''
Under the TSA system, there is both a lower and a higher
threshold. So one of the clauses provides for a lower
threshold, meaning that there are certain contracts for which
the government doesn't get the cost or pricing data that it
perhaps needs to do the job. And then, as well, you have a
higher threshold.
These inconsistencies create certain compliance burdens for
contractors, you know, when they are trying to determine, what
is the rule, what do I need to follow?
When I teach the defective pricing course in this area, I
teach the general rule, the one in the FAR. And, for small
businesses, knowing that there are different rules that they
have to follow, it is a real challenge.
Mr. Carney. Thank you.
Ms. Duke, most of the department uses the FAR. Do you
believe that the FAR offers enough flexibility for CBP, ICE,
FEMA, the Coast Guard and the rest of the department to fulfill
their missions, even in time of crisis?
Ms. Duke. I do believe that the FAR does provide
flexibilities in times of crisis. I think the tenants
underlying the AMS and FAR are very similar. It is really
process and procedural issues; that both systems do allow for
special practices for urgent reasons.
Mr. Carney. Okay.
Mr. Gunderson, I guess a similar question: You say that AMS
gives you more flexibility than you would have under FAR. Do
you believe that there is not sufficient flexibility under FAR
for TSA to fulfill a mission?
Mr. Gunderson. With respect to urgent procurements, I agree
with what has been said, that there is not a significant
difference between the FAR and the AMS.
What I do believe is that, having worked in both a FAR and
AMS environment, that the Acquisition Management System
provides a framework to make sound business decisions,
efficient contracting practices, that mirror the commercial
business practice.
Mr. Carney. Can you give us some concrete examples where
AMS allows you to do something that FAR would not allow you to
do?
Mr. Gunderson. Okay. A couple of key differentiators
between the two systems: First is the extent of communications
that AMS provides for throughout the acquisition lifecycle.
Under a FAR environment, communications are very regulated,
very structured, and they can, I believe, slow down and drag
out the procurement process, which takes away from government
resources as well as industry resources.
AMS encourages those communications throughout the process
to create a better understanding between the government's
requirements and the industry capabilities. The communications
throughout the process and how we conduct our discussions with
industry is a difference.
The second one is how we go about screening our
contractors. And this gets to the heart of competition.
Where the FAR offers what is called a multi-step advisory
process, which doesn't necessarily narrow the playing field
effectively, the AMS does provide the ability to have those
communications, get information and proposals from the
contractors, and be able to focus on those companies that are
most likely to be eligible for award.
Mr. Carney. In your testimony, you implied that AMS uses
industry best practices. Does FAR not use industry best
practices, as well?
Mr. Gunderson. I believe that AMS goes farther than FAR
does, with respect to mirroring commercial practices.
When AMS was established by FAA, they went out and looked
at best of business and said, ``How should we do business
better?'' And I have also seen some recent reports done that
talk about, what are commercial best practices when it comes to
competition? And I don't believe that your corporations out
there are going with full and open competition. They go with
effective competition.
Mr. Carney. Okay, thank you.
I will revisit this question again on my next round for Mr.
Bodenheimer and Mr. Chvotkin.
The chair now recognizes the ranking member from Alabama,
Mr. Rogers, for 5 minutes.
Mr. Rogers. I thank the chairman.
Just a couple of questions.
In listening to Mr. Bodenheimer's comments, I was curious,
Ms. Duke, when you talked about both programs had sufficient
latitude, what do you feel about Mr. Bodenheimer's perspective
about the exemptions being unreasonable given the exigent
circumstances that seem to have passed?
Ms. Duke. I don't think the premise for AMS and its
benefits is really speed. That is not the underlying principle.
The underlying principle of why AMS is better and was used in
FAA is managed acquisition as a whole. The procurement is one
piece. In fact, the whole section on procurement is just one
chapter out of all of AMS. And AMS seeks to manage acquisition
programs, from requirements all the way through disposal at the
end. And that is a key principle in why it is more effective
for acquisition.
And then the second reason is it has some of the basic
principles, but rather than dictating steps of processes, it
allows the contracting officer more judgment in coming to
decisions.
And so, I think you can still use speed. For instance,
under CICA, you can go sole-source rather than pulling off the
cogitation for ``urgent and compelling.'' Under AMS, it is for
a rational basis. And the rational basis, again, can be an
urgency or another reason.
So I think the focus on it just for speed is really an
inappropriate focus.
Mr. Rogers. Mr. Bodenheimer, can you give me a practical
example of how a company would be disadvantaged because of the
exemption staying in place?
Mr. Bodenheimer. One of the examples would be compliance.
As Oliver Wendell Holmes said, ``When you deal with the
government, you have to turn square corners.'' And one of those
square corners that contractors have to have in place are
compliance programs, which provide procedures, training and
monitoring in accordance with the requirements with which they
have to meet to do business.
By having two sets of rules, particularly for a small
business that struggles with one set of compliance procedures,
rules and training, having two is really a difficult and
expensive process.
Mr. Rogers. Which brings me to Mr. Chvotkin.
You are not from Alabama, are you?
[Laughter.]
Mr. Chvotkin. North Alabama.
Mr. Rogers. North Alabama.
[Laughter.]
You made reference to the common rules. Tell me, what are
the common rules that you think should be adhered to?
Mr. Chvotkin. The point I was trying to make is that the
Department of Homeland Security itself has a set of unique
regulations and statutory authorities that separate it from the
rest of the government. And the question we were posing, the
position that we are taking at the Professional Services
Council is, at a minimum, TSA ought to be brought in under the
same set of rules and regulations as the rest of the Department
of Homeland Security is for its procurements.
And there are flexibilities in emergency procurements,
simplified acquisition thresholds in response to emergency
circumstances, that exist only for DHS and not for the rest of
the government.
So when we talk about the FAR, the government-wide
regulations, just to give you a sense, that is what they look
like. These are not simple, in and of themselves. It is to at
least recognize that TSA becomes part of the rest of the
department.
Mr. Rogers. I understand. Thank you.
I yield back.
Mr. Carney. Thank you.
We are going to suspend now until we complete our votes.
And we will readjourn--your guess is as good as mine.
[Laughter.]
Stand by.
[Recess.]
Mr. Carney. We will reconvene now.
Is Mr. Gunderson available? Oh, okay.
It is going to be one of those days. We just got called
back to vote. But let's ask some questions anyway.
[Laughter.]
Let's just have a little conversation.
Mr. Chvotkin, in your prepared testimony, you say that
TSA's use of AMS ``acts as a market-limiting factor for those
firms who do not have the resources to master and navigate
through the multiple systems.''
Can you explain what you mean by that and tell me how that
impacts small and disadvantaged businesses?
Mr. Chvotkin. I would be happy to, Mr. Chairman. Thank you.
As we have talked earlier today, the federal government's
procurement system, as you know, is a rule-based system. It
contracts and sets the terms and conditions between the
government, who acts as a purchaser, actually the buyer, and
the private sector, who acts as the seller.
And so, what this separate-but-unequal provides is
increased cost to learning, as we talked about, the increased
compliance cost, added barriers of knowledge because of those
rules and the inconsistencies between the AMS and others in the
procurement area.
There are really three types of companies that are out
there: those that are already doing business with the TSA and
have either mastered the rules or felt comfortable with them;
those that are already government contractors somewhere else
and know the FAR a little bit but don't know the AMS system and
maybe think they could learn that; and those that are not
government contractors today, who don't know anything about
even the government-wide system and find this very daunting.
And so, when you tell people that there are really several
systems--if you want to do business only with TSA, you can
learn one rule. But if you have any interest in doing business
elsewhere in the government, those multiple systems really
present a daunting task, particularly for small businesses. It
is a cost, it is a compliance, it is a knowledge base--all
three of those factors.
Mr. Carney. I would like to return back to the conversation
we were having before we broke to go vote. We were talking
about some of the issues--I think you addressed them, Mr.
Chvotkin.
But, Mr. Bodenheimer, would you care to re-engage on that
discussion we were having?
Mr. Bodenheimer. Thank you. With respect to the
difficulties of trying to comply with two sets of rules?
Mr. Carney. Correct.
Mr. Bodenheimer. One of the most sophisticated contractors
that I deal with and one of the attorneys with the most
experience in the business was commenting on the challenges of
trying to follow not only the TSA clauses, which are somewhat
different from some of the FAA clauses, which are different
from the FAR clauses. And when you put them all together, it
becomes an alphabet soup of trying to figure out, ``What
clauses am I complying with today?''
That was very persuasive to me, when somebody with that
level of sophistication and experience said what a challenge it
is trying to comply with these multiple sets of clauses. He
said he was old enough; he would like to have one rule.
[Laughter.]
Mr. Carney. Understood.
Ms. Duke, I am trying to understand the justification for
having only TSA under AMS. What is different or special about
TSA that only it should be exempt from the FAR?
Ms. Duke. Actually, there is nothing currently that--I
think TSA was stood up with AMS, and it was given that
authority at the beginning. And we have not asked for that
authority for the rest of the department. But there is nothing
specifically unique about TSA.
It is nice for TSA to have that flexibility of authority
because it does give some good flexibilities in the procedures
for TSA. So really, it was given it, and it is a matter of
there has not been a discussion of giving it to the rest of the
department but, rather, taking it away from TSA.
Mr. Carney. Are you, then, sort of advocating, because of
the flexibility issue, that AMS be extended to the rest of the
department? If not, why not?
Ms. Duke. I think there are benefits to AMS. With the
qualified workforce, it allows the contracting officers to make
good judgment calls; it allows them to have more open
discussions with industry; and it allows for, really, better
business deals, a more closer meeting of the minds at the time
the contract is signed.
At this point, we are not arguing for it for the
department, I would say principally because, with all the
procurement and acquisition legislation going on, it really
doesn't seem like one that would be entertained with any
earnest. And I guess it is a matter of picking the battles.
Mr. Carney. So we get to pick the battles here.
Ms. Duke. Yes.
Mr. Carney. All right. I mean, just from the outside,
somebody who is kind of looking at it, it doesn't quite jibe.
If you are so sold on it, why would you not advocate that it be
spread throughout the entire department, in fact, indeed, the
government?
Does FAR not give you the flexibility you need? Is that the
issue?
Ms. Duke. I think for us, Mr. Chairman, it is a maturity
issue. Right now we are developing the basics of our workforce,
and I think, to appropriately use the flexibilities and the
judgments that AMS gives, that, as we grow the maturity of our
workforce, we would be better positioned to use that overall as
a department.
And so, that would be principally why I am not arguing for
it now, is I really think that, with the flexibilities comes
responsibilities. And I would like to grow our workforce and
make sure they have the basic competencies before I advocate
for the additional flexibilities and authority.
Mr. Carney. Okay. We will come back to that.
Mr. Chvotkin, in your testimony, you state that you can
``say with confidence that bringing TSA at least under the
common rules applicable to the Department of Homeland Security
will increase competition, expand opportunities for greater
small-business participation, provide greater accountability
and transparency in their procurement processes, and provide
greater options for addressing the challenges of the
department's acquisition workforce.''
Can you expand on that and tell us the basis of that
belief, please?
Mr. Chvotkin. Yes, sir.
Many of our member companies--and we have had the
opportunity to participate in broad procurement fairs with
members of Congress, hosted by the Professional Services
Council. The companies tell us that their understandings--they
put systems in place; they want them to apply government-wide.
They want to address those issues on a government-wide basis.
We comment frequently on rules and regulations and on
legislation that move us farther and farther away from that
uniform set of regulations. And so, as we have talked before,
from a cost standpoint, from a compliance standpoint, and from
an education standpoint, all of these factors tend to drive
people away from a marketplace that they don't know, don't know
whether they can be successful, from the company's standpoint.
Couple that with an acquisition system where there is no
predictability and consistency, and there is no way for
companies to know that they can be successful. They will
husband their resources carefully and go look for opportunities
where their chances of success are greater.
Mr. Carney. Thank you. Thank you.
Mr. Bodenheimer, can you describe the FAR process for
resolving protests and disputes and compare it to the AMS
process, please?
Mr. Bodenheimer. I would be glad to, Mr. Chairman.
The technology is obviously overwhelming to me.
[Laughter.]
I would be glad to answer the question.
With respect to the difference between the two processes,
certainly the TSA protest process has experienced people, well-
respected people who hear the disputes and the protests and
make the decisions. However, when you compare that to GAO, GAO
has over 80 years in deciding protests, has thousands of
precedents that tell you what the rules are, and they have
unquestioned independence.
So if we gave a choice to the companies I talk with,
``Would you rather use the TSA protest process or the GAO
protest process?'', they would almost uniformly pick the GAO
protest process.
In addition, the GAO protest process has certain teeth that
come with it, such as the stay of performance, the protest
costs.
And finally, the last thing I would like to add, as a Navy
attorney, one of the things that really got my attention were
GAO protests and the concern about getting one. So with that
hanging over my head, we tried to build the quality in upfront
in the procurement process so we wouldn't have that later.
Mr. Carney. Right. Between the two processes, the FAR and
the AMS, which do you think private industry prefers?
Mr. Bodenheimer. My understanding is they would like to
have one system, which would be the FAR system, that works,
particularly the competition component.
Mr. Carney. Okay.
Anybody else care to comment on that question?
Mr. Chvotkin. I would concur, as that has been the
experience from our member companies.
Mr. Carney. Thank you.
Ms. Duke?
Mr. Gunderson?
Okay, I have to go vote----
Mr. Gunderson. Mr. Chairman?
Mr. Carney. Yes?
Mr. Gunderson. If I could just make one comment on that.
When you look at the industry base that we deal with, these
companies deal in business not only with the federal government
but they are dealing in business in the commercial world, as
well as with states.
So these firms are used to dealing in multiple
environments. So for them to be able to adapt to an AMS
environment, I do not see that as a significant issue.
Mr. Carney. Elaborate. Why?
Mr. Gunderson. As I have addressed before, again, the
fundamental tenants are the same. And while I recognize that
there are some differences in maybe how the clauses are worded
from the FAR, the tenants are the same. We have, over the past
5, 6 years, spent about $2.5 billion a year dealing with large
firms and small firms. We have had an open dialogue. We engage
with them before we issue solicitations, through the
solicitation process, providing every opportunity for them to
express a concern, ask a question, receive guidance on how to
deal with our system.
I have not had one person address me, say that they have
had an issue with this. So I think that open dialogue has, you
know, provided them an opportunity to say that AMS is causing
them problems. And I have not seen it.
Mr. Carney. I understand. But it seems to me, if the
tenants are the same and we are not in an emergency environment
any longer, having duplicative systems, well, is duplicating
efforts.
In any event, I am going to go vote, and I will adjourn
this hearing for the day.
I appreciate all of your testimony. And I imagine there
will be questions that you will be asked to submit in writing.
Please do so promptly. And we appreciate you showing up today.
The committee stands adjourned.
Appendix: Additional Questions and Responses
----------
Questions from the Honorable Bennie G. Thompson, Chairman, Committee on
Homeland Security
Responses from David Z. Bodenheimer
Question 1.: Please explain what ``requirements definition'' is,
why it is important in government contracts, and whether you believe
that the FAR results in better defined requirements than AMS?
Response: Requirements definition represents one of the most
critical steps in the acquisition process in which the agency specifies
its minimum needs clearly, fully, and openly so that the government
gets what it must have, the contractor delivers what it promises, and
the taxpayers get what they pay for. Well-defined requirements
establish the baseline against which offerors will compete for contract
award, the agency will measure the progress and performance of the
contractor who wins the competition, and the winning contractor
assesses whether it is meeting its contractual duties on time and
within budget. Poorly-defined requirements too often foretell schedule
delays, cost overruns, and disappointing contract performance.
Sound requirements definition stands as one of the cornerstones of
the Competition in Contracting Act. Consistent with the duty to
maximize ``full and open competition,'' the Competition in Contracting
Act requires that the agency:
``specify the agency's needs and solicit bids or
proposals in a manner designed to achieve full and open
competition for the procurement'' and
``develop specifications in such manner as is
necessary to obtain full and open competition with due regard
to the nature of the property or services to be acquired.''
10 U.S.C. Sec. 2305(a)(1)(C); see Competition in Contracting Act of
1983, S. REP. NO. 98-50, at 14 (1983) (duty to develop requirements and
specifications that promote competition); MadahCom, Inc., B-298277,
Aug. 7, 2006, 2006 CPD para. 119 at 3 (agency ``is generally
required to specify its needs and solicit offers in a manner designed
to achieve full and open competition'').
Ill-defined, incomplete, or ambiguous statements of agency
requirements undermine this Congressional mandate for ``full and open
competition'' because contractors cannot compete fairly and equally
against a common set of ground rules if the rules are not clear. See
National Aerospace Group, Inc., B-282843, Aug. 30, 1999, 99-2 CPD
para. 43 at 7--8 (sustaining protest where agency failed to
disclose its requirements fully and openly); Businessland, Inc., GSBCA
No. 8586-P-R, 86-3 BCA para. 19,288 at 97,514 (sustaining
protest where ``requirements . . . had never been articulated to the
protester''). In sustaining a protest where the agency failed to
communicate its requirements and concerns clearly to a potential
competitor, the Government Accountability Office (GAO) explained that
``it was the Air Force's duty to make its essential requirements clear
to potential offerors and allow them an opportunity to demonstrate
their ability to comply before rejecting them as potential sources of
supply.'' Masstor Systems Corp., B-215046, Dec. 3, 1984, 84-2 CPD
para. 598 at 3. Making TSA subject to the Competition in
Contracting Act would provide the statutory discipline for assuring the
timely preparation of well-defined, pro-competitive requirements that
promote ``full and open competition.''
In addition to the Competition in Contracting Act, the Federal
Acquisition Regulation (FAR) establishes sound rules for defining
agency requirements. In particular, the FAR defines multiple factors
and steps necessary for acquisition planning and requirements
definition, including:
Assuring that the agency planners ``address the
requirement to specify needs, develop specifications, and to
solicit offers in such a manner to promote and provide for full
and open competition'' [FAR Sec. 7.103(c)];
Structuring ``contract requirements to facilitate
competition by and among small business concerns'' [FAR
Sec. 7.103(s)(1)];
Engaging in early acquisition planning to ``avoid
issuing requirements on an urgent basis'' that ``restricts
competition and increases prices'' [FAR Sec. 7.104(b)];
Coordinating the acquisition with ``all those who will
be responsible for significant aspects of the acquisition, such
as contracting, fiscal, legal, and technical personnel'' [FAR
Sec. 7.104(a)];
Considering critical factors in requirements
definition and planning, including cost, life-cycle cost,
required capabilities, delivery requirements, trade-offs, and
risks [FAR Sec. 7.105].
In addition, FAR Part 11 devotes an entire section of the
regulation to ``Describing Agency Needs'' and developing the necessary
requirements.
By following the Competition in Contracting Act and FAR rules for
planning acquisitions and defining requirements, TSA would have a more
structured, better defined process that would enhance the likelihood of
developing requirements that are clear, firm, and pro-competitive.
While proper requirements definition alone does not guarantee program
success, TSA and its contractors would both benefit from the statutory
and regulatory steps prescribed by the Competition in Contracting Act
and the FAR. In short, a solid requirements baseline increases the
probability of meeting the TSA mission and reduces the risk of schedule
delays, cost overruns, and performance shortfalls.
Question 2. In your prepared testimony you compare the AMS
``preference'' for competition with the FAR requirement for full and
open competition. Could you describe the two, and say which you believe
best maximizes competition?
Response: TSA's standard for competition is even lower than the old
standard--maximum ``practical'' competition--that Congress found to be
inadequate and ineffective prior to the enactment of the Competition in
Contracting Act (CICA). Examples of the differences include the
following:
``Rational Basis'' Test. TSA only needs a ``rational''
basis to avoid competition,\1\ meaning that virtually any non-
frivolous reason can justify a sole source. In contrast, CICA
mandates competition unless the agency can justify
noncompetitive actions based upon one of the limited number of
Congressionally-defined exceptions. 10 U.S.C. Sec. 2304(b),
(c).
---------------------------------------------------------------------------
\1\ See TSA Acquisition Management System (TSAAMS) (linking to FAA
Acquisition Management Policy Sec. 3.2.2.4) (http://www.tsa.gov/join/
business/index.shtm).
---------------------------------------------------------------------------
No Legal Duty. The TSA system (TSAAMS) only provides
``policy and guidance'' \2\ which generally imposes no
enforceable legal duty to comply. However, CICA mandates
competition: ``The award of a contract on a sole-source basis
would for the first time constitute a clear violation of
statute unless permitted by one of the following exceptions.''
\3\
---------------------------------------------------------------------------
\2\ TSAAMS (http://www.tsa.gov/join/business/business_tsaams.shtm).
\3\ Competition in Contracting Act of 1983, S. REP. NO. 98-50, at
21 (1983).
---------------------------------------------------------------------------
No Certified Justification. While TSAAMS does
contemplate a documented basis for a sole source,\4\ CICA
requires a written justification certified as accurate and
complete by the contracting officer. 10 U.S.C.
Sec. 2304(f)(1)(A).
---------------------------------------------------------------------------
\4\ TSAAMS (linking to FAA Acquisition Management Policy
Sec. 3.2.2.4) (see note 1 above).
---------------------------------------------------------------------------
No High-Level Statutory Approval. Unlike TSAAMS, CICA
specifically requires high-level approvals by the agency's
competition advocate ($500,000 to $10 million), head of
procuring activity ($10--$50 million), or senior procurement
executive (over $50 million), thus assuring high-level
accountability. 10 U.S.C. Sec. 2304(f)(1)(B).
No Duty to Promote Competition. Unlike the TSA system
that includes no express duty to promote competition, CICA
explicitly requires agencies to take affirmative steps to seek
and obtain competition.\5\
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\5\ The duty to take affirmative steps to promote competition under
CICA is well-established. See 10 U.S.C. Sec. 2304(f)(5); Competition in
Contracting Act of 1983, S. REP. NO. 98-50, at 18 (1983) (requiring
agencies to make an affirmative effort to obtain effective
competition); eFedBudget Corp., B-298627, Nov. 15, 2006, 2006 CPD
para. 159 at 7 (sustaining protest where agency had no
record of taking affirmative steps to promote competition by resolving
issue relating to restricted access to software source code); Test
Systems Associates, Inc., B-244007.2, Oct. 24, 1991, 91-2 CPD
para. 367 at 7, n.8 (sustaining protest where ``the Air
Force has had a duty to take practicable steps to avoid a
noncompetitive follow-on contract,'' but failed to do so).
---------------------------------------------------------------------------
No Effective Enforcement. The Office of Dispute
Resolution that oversees TSA protests lacks an aggressive
history of challenging sole-source procurements. In contrast,
GAO has a long history of effectively enforcing CICA and
challenging sole-source actions.\6\
---------------------------------------------------------------------------
\6\ See Written Statement of David Z. Bodenheimer, p. 10 (notes 27-
30).
---------------------------------------------------------------------------
In stark contrast to TSA's permissive ``rational'' basis standard
and unenforceable ``preference,'' the Competition in Contracting Act
offers a far superior means for maximizing competition with its ``full
and open competition'' mandate, ``absolute preference for
competition,'' and effective teeth for oversight and enforcement.\7\
---------------------------------------------------------------------------
\7\ Competition in Contracting Act of 1983, S. REP. NO. 98-50, at
17-18 (1983).
Question 3.: During your time as a lawyer in the Navy, did you ever
encounter a situation where the Navy was unable to buy something it
critically needed because of FAR requirements, or was the FAR flexible
enough to allow for emergency contracts?
Response: During my tenure with the Navy, we had ample flexibility
under the FAR (and its predecessor regulations) to handle urgent
demands for critically needed requirements. In one instance at the
Washington Navy Yard, we received direction from the Pentagon to award
a contract within 30 days. We issued the solicitation, called in
industry, explained the urgency, answered questions, received and
evaluated proposals, and made award--all within 30 days. While we had
to work hard and partner closely with industry, we met the requirement.
Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee
on Management, Investigations, and Oversight
Question 4.: From your perspective, what are some of the major
differences between the Acquisition Management System (AMS) and the
Federal Acquisition Regulation (FAR)?
Response: While a wealth of differences exist between TSA's system
(TSAAMS) and the FAR that governs nearly all other agencies, TSA's
exemption goes well beyond the FAR itself. The exemptions for TSA also
nullify: (1) the Competition in Contracting Act, (2) the Office of
Federal Procurement Policy (OFPP) Act (except for Procurement Integrity
Act provisions); (3) Federal Acquisition Streamlining Act (except for
whistleblower provisions); and (4) the procurement protest system (31
U.S.C., Chapter 35(V)). Some of the major differences between TSAAMS
and the exempted statutes and FAR include the following:
Effective Competition. In contrast to TSAAMS, both
CICA and FAR are far superior in maximizing competition. See
Answer No. 2 above.
Effective Requirements Definition. In contrast to
TSAAMS, CICA and FAR both more effectively enforce requirements
definition. See Answer No. 1 above.
Accountability. Unlike TSAAMS, both CICA and FAR
establish express requirements for certified justifications,
high-level approvals, and public transparency for sole-source
procurements. 10 U.S.C. Sec. 2304(f)(1); FAR Sec. Sec. 6.303 &
6.304; see Answer No. 2 above.
Enforceability. While TSAAMS merely provides ``policy
and guidance,'' \8\ the FAR has the force and effect of law and
can be enforced in court if the agency fails to comply.\9\
---------------------------------------------------------------------------
\8\ TSAAMS (http://www.tsa.gov/join/business/business_tsaams.shtm).
\9\See Beta Systems, Inc. v. United States, 838 F.2d 1179, 1185
(Fed. Cir. 1988) (enforcing regulations relating to economic price
adjustment); Chris Berg, Inc. v. United States, 192 Ct. Cl. 176, 183
(1970) (enforcing regulations regarding correction of pre-bid
mistakes).
---------------------------------------------------------------------------
Consistency. The TSAAMS conflicts with FAR provisions
in such areas as cost or pricing data thresholds, Buy American
protections, environmental requirements, and commercial item
provisions. See Bodenheimer Written Statement, p. 8.
Oversight. Unlike TSAAMS where the FAA ODRA system
handles protests, CICA and FAR recognize GAO authority to
decide protests based upon more than 80 years of expertise,
experience, and precedent.
Question 5.: What are the implications of having one Department
agency with a separate acquisition process compared to the process used
by the rest of the Department?
Response: With a set of regulations comes a host of agency
responsibilities. During my tenure as Assistant to the General Counsel,
I served on one of the regulatory subcommittees and also assisted the
Office of the Assistant Secretary of the Navy (Shipbuilding and
Logistics) with compliance reviews for a number of Navy procuring
commands and activities. In order to keep an acquisition system going,
an agency must perform multiple functions:
Upkeep. Regulations must be maintained, reviewed, and
updated as external requirements and internal agency needs
evolve.
Documented History. The history of regulatory
revisions needs to be documented and published for the same
reasons that legislative history is important--to understand
the drafter's intent and assure consistent implementation.
Compliance. The agency needs to establish procedures
and conduct periodic reviews to assure that agency personnel
(contracts, program, technical, etc.) understand and comply
with the governing acquisition rules.
Training. Any effective compliance program requires
regular training to ensure that acquisition personnel--
particularly in agencies with high turnover rates--understand
the rules and apply them consistently and properly.
The OFPP Act, as amended, seeks to reduce the burdens of these
essential regulatory duties by establishing a ``uniform procurement
system'' to promote efficiency, economy, and effectiveness in federal
procurement. S. REP. NO. 98-50, at 6 (1983). When an agency must
maintain two separate acquisition processes, it loses the economies of
scale inherent in a ``uniform procurement system'' and must therefore
duplicate the cost and burden of maintaining, documenting, and updating
its two regulatory systems (TSAASM and FAR), as well as creating
dissimilar compliance and training programs.
Question 6.: What are the pluses and minuses of TSA's Acquisition
Management System (AMS) and the Federal Acquisition Regulation (FAR)
that applies to the rest of DHS?
Response: TSA's overview of its acquisition system states that
``TSAAMS mirrors acquisition goals of other federal agencies of
streamlining, and integrating processes that result in time and cost
reduction, and quality products and services.'' However, as Congress,
GAO, and the DHS Inspector General have all found, TSA has fallen well
short of these objectives, instead accumulating a history of delays,
overruns, and performance problems that are documented in many
Congressional hearings and other official reports.
As Congress noted in the history of the Competition in Contracting
Act, federal procurement policy dates back to 1792. S. REP. NO. 98-50,
at 4 (1983). However, the FAR traces most of its lineage to regulations
(such as the Armed Services Procurement Regulation (ASPR)) largely
written since the 1940s. In other words, the FAR reflects decades of
effort, thought, and input that carefully balance the need for
efficient and timely acquisition with the necessity for accountability,
transparency, and oversight. While the FAR is not perfect (and never
will be), it has been built steadily, publicly, and often
painstakingly, based upon decades of hard ``lessons learned'' that
should not be lightly discarded. Many of the ``pluses'' of the FAR are
described in Answer Nos. 4 and 5 above. See Bodenheimer Written
Statement, pp. 4-5.
Question 7.: In your view, do you believe the historical reasons
that existed in 2001 when TSA inherited the acquisition system used by
the FAA, instead of the FAR, still exist today?
Response: No. Congress created TSA in the midst of national crisis
and those historical reasons for providing the exemption from various
statutes and the FAR no longer exist.
Question 8.: How well does the private sector work with a major
Cabinet department that operates two different acquisitions systems?
Response: Just like agencies, contractors must track regulatory
requirements and changes, keep compliance programs up-to-date, and
conduct regular training based upon the governing regulations. See
Answer No. 5 above. When facing two separate--and sometimes
inconsistent--sets of acquisition rules within one agency, contractors
(particularly small businesses) bear a heavy burden of tracking,
updating, implementing, and flowing down not just one, but two,
separate regulatory regimes. In addition, two sets of rules create the
risk of confusion, misunderstanding, and accidental noncompliance,
especially for new contract administrators and thinly staffed small
businesses that may be more vulnerable to the predictable blurring of
the systems (e.g., misapplying TSAAMS to non-TSA acquisitions and the
FAR to TSA acquisitions). Uniform regulations reduce this likely--and
unnecessary--risk of noncompliance resulting from two sets of rules.
Question 9.: Do you believe the Department has the necessary
contracting staff to effectively manage these two systems?
Response: Various GAO reports have identified DHS personnel as a
risk area due to high turnover and continuing vacancies. See, e.g.,
GAO, Department of Homeland Security: Progress Report on Implementation
of Mission and Management Functions 20-21 (GAO-071081T) (Sept. 6, 2007)
(DHS has ``Generally not achieved'' its objective to ``Develop an
acquisition workforce to implement and monitor acquisitions''); GAO,
Homeland Security: DHS's Actions to Recruit and Retain Staff and Comply
with the Vacancies Reform Act 14 (GAO07-758) (July 2007) (DHS senior-
level attrition rate nearly twice the federal average).
Similarly, GAO concluded that the DHS Chief Procurement Officer
(CPO) ``has limited oversight resources to implement the [acquisition
oversight] plan.'' GAO, Department of Homeland Security: Progress and
Challenges in Implementing the Department's Acquisition Oversight Plan
3 (GAO-07-900) (June 2007). In combination, these factors--high
turnover, continued vacancies, and limited personnel resources--all
illustrate the challenges that DHS faces in accomplishing its most
basic missions. These problems can only be exacerbated when DHS must
operate two separate--and sometimes inconsistent--acquisition systems
within a single agency.
Question 10.: In your view, should Congress consider applying the
FAR uniformly throughout all of the Department? If so, why? If not, why
not?
Response: Yes. By applying the FAR and various statutes (including
the Competition in Contracting Act) to TSA, Congress can maximize
competition, improve requirements definition, increase accountability
and transparency, enhance oversight, and promote acquisition uniformity
and efficiency. See Answer Nos. 1, 2, 4 and 5 above; Bodenheimer
Written Statement, pp. 5--12.
Question 11.: In your view, does one system compared to the other
promote more competition? Promote fairer competition? Ensure greater
financial accountability?
Response: The Competition in Contracting Act and its implementing
FAR provisions offer a superior ``full and open competition'' standard
backed by far more robust statutory tools to require affirmative steps
to seek competition and to assure enforcement and compliance with the
``full and open'' competition standard. See Answer No. 2 above;
Bodenheimer Written Statement, pp. 5--7, 9--10.
Question 12.: Under each system, how are contract disputes
resolved? In your view, does one system provide greater fairness than
the other?
Response: For TSA, contract disputes are resolved under the Federal
Aviation Administration's (FAA) Dispute Resolution System.\10\ In
contrast, contract disputes for other agencies are subject to the
Contract Disputes Act of 1978, as implemented by the FAR. See 41 U.S.C.
Sec. Sec. 601--613; FAR Subpart 33.2.
---------------------------------------------------------------------------
\10\ See TSAAMS (linking to FAA Acquisition Management Policy
Sec. Sec. 3.9.4, 3.9.5, and 3.9.6) (http://www.tsa.gov/join/business/
index.shtm).
---------------------------------------------------------------------------
Both the FAA Dispute Resolution System and the Contract Disputes
Act encourage early dispute resolution short of litigation. For
example, the FAR establishes the following obligation for such dispute
resolution:
The Government's policy is to try to resolve all contractual
issues in controversy by mutual agreement at the contracting
officer's level. Reasonable efforts should be made to resolve
controversies prior to the submission of a claim. Agencies are
encouraged to use ADR [alternate dispute resolution] to the
maximum extent practicable.
FAR Sec. 33.204; compare FAA AMS Sec. 3.9.5.
When disputes cannot be resolved by the contracting officer, the
TSAAMS provides for resolution by the FAA Office of Dispute Resolution
(ODRA). See AMS Sec. 3.9.4. As stated on the FAA Office of the Chief
Counsel's website, ``Components of the Office also serve as the FAA
Administrator's adjudicative forums for civil penalty and acquisition
disputes.'' \11\
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\11\ FAA Office of the Chief Counsel's Office of Dispute Resolution
for Acquisition (http://www.faa.gov/about/office%5Forg/
headquarters%5Foffices/agc/).
---------------------------------------------------------------------------
In many ways, the FAA's ODRA system is similar to the old method of
agency dispute resolution that pre-existed the Contract Disputes Act of
1978. In particular, the head of the agency would appoint agency
personnel to an agency board to resolve disputes against the agency.
Not surprisingly, Congress found that agency personnel deciding agency
disputes ``often fail to provide the procedural safeguards and other
elements of due process that should be the right of litigants.'' S.
REP. NO. 95-118, at 2 (1978), reprinted in 1978 U.S.C.C.A.N 5235, 5236.
In justifying the waiver of sovereign immunity for contract disputes
under the Tucker Act, Congress explained that ``the Government subjects
itself to judicial scrutiny when it enters the marketplace, and should
not be the judge of its own mistakes nor adjust with finality any
disputes to which it is a party.'' Id. at 12, reprinted in 1978
U.S.C.C.A.N. 5235, 5246.
For constitutional due process reasons alone, the Contract Disputes
Act of 1978 offers a dispute resolution process superior to FAA's ODRA
process: ``Contractors should not be denied a full judicial hearing on
a claim they deem important enough to warrant the maximum due process
available under our system.'' Id. In addition, both the courts and the
Boards of Contract Appeals now have nearly three decades of experience
in applying the Contract Disputes Act process itself--and even greater
experience in deciding contract disputes of every type and size.
Finally, these decades of judicial and administrative decisions offer a
firm baseline of precedent that offers greater certainty and
predictability to the parties who can then adjust their actions and
expectations to resolve disputes and avoid litigation altogether. As a
result, the Contract Disputes Act of 1978 provides the parties with a
depth of experience, wealth of precedent, and level of due process
protection that FAA's ODRA cannot match.
Question 13.: Over the past 2-1/2years, this Subcommittee has
examined a number of problematic DHS contracts. In your view, is this a
problem with the particular acquisition management system being used or
the failure of a contracting officer to follow the rules or under-
staffing, or a combination of factors?
Response: No one at the hearing disputed the fact that TSA has
experienced numerous problems with its acquisitions over the last six
years. See, e.g., Sen. Snowe's News Release, ``Snowe Brings Increased
Transparency, Accountability to Transportation Security Administration
Contracting'' (July 13, 2006); Sen. Kerry's Letter to Kip Hawley (TSA
Administrator) (Dec. 13, 2005); Procurement Practices of the Department
of Homeland Security: Hearings Before the House Comm. on Oversight and
Government Reform, 110th Cong., 1st Sess. (2007) (statement of DHS IG
Richard Skinner); Code Yellow: Is the DHS Acquisition Bureaucracy A
Formula for Disaster? Hearings Before House Comm. on Government Reform,
109th Cong., 2nd Sess (2006); GAO, Progress Continues, but Challenges
Remain on Department's Management of Information Technology 30 (GAO-06-
598T) (Mar. 29, 2006); Bodenheimer Written Statement, pp. 4--5.
While no single factor explains all of these TSA acquisition
problems, the TSA acquisition process (TSAASM) certainly elevates the
risk and exacerbates the procurement problems by deemphasizing
competition, requirements definition, accountability, transparency,
consistency, and oversight. See Answer Nos. 1, 2, 4 and 5 above;
Bodenheimer Written Statement, pp. 4--5. Even if the application of the
Competition in Contracting Act, FAR, and other procurement statutes do
not solve all of TSA's acquisition problems, ending TSA's exemption
represents an essential first step towards improving a system plagued
for years with schedule delays, cost overruns, and performance
shortfalls.
Question 14.: In your testimony (page 5), you state that the
``proven benefits of the exemption from major acquisition laws is not
readily apparent from TSA's six years of acquisition experience with
this exemption.'' What are some of the benefits we could expect to see
if TSA were truly benefiting from the exemption?
Response: On its website, TSA suggests that ``TSAAMS mirrors
acquisition goals of other federal agencies of streamlining, and
integrating processes that result in time and cost reduction, and
quality products and services.'' However, TSA has not met these
objectives, as underscored by its procurement history documented in
numerous Congressional hearings, GAO reports, and DHS Inspector General
audits. See Answer 13 above; Bodenheimer Written Statement, pp. 4--5.
Question 15.: Do you believe the FAA has ``proven benefits'' from
its exemption? If so, why do you think TSA has not realized ``proven
benefits'' after six years?
Response: No. FAA has a procurement history that rivals TSA's
acquisition troubles. Again, Congressional hearings, GAO reports, and
Inspector General audits describe the problems.
Representative Mica. ``Since I joined the House of
Representatives in 1993 the FAA has had a reputation as being
one of the Federal Government's most dysfunctional agencies.
Its record in modernizing air traffic control has been the
poster child of how to not run a government program.
Unfortunately, year after year, the FAA allowed its major
modernization programs to falter. What began in 1983 as a 13-
year, $2.5 billion effort has ballooned into a $35 billion
enterprise that is still some 10 years away from completing its
original mission.'' \12\
---------------------------------------------------------------------------
\12\ Transforming the Federal Aviation Administration: A Review of
the Air Traffic Organization and the Joint Planning and Development
Office: Hearing Before House Subcomm. on Aviation of Comm. on
Transportation and Infrastructure, 109th Cong., 1st Sess. 1 (2005)
(statement of Rep. Mica).
---------------------------------------------------------------------------
GAO. ``According to these reviews, issued from 1997
through 2004, the same problems have persisted over many years,
despite various initiatives to address them, and FAA needs to
strengthen its management controls. For example, a key FAA
review of eight major ATC acquisitions, published in 1999, 3
years after AMS was implemented, found that these acquisitions,
though on track to meet their performance goals, were not
meeting their cost and schedule baselines.'' \13\
---------------------------------------------------------------------------
\13\ GAO, Air Traffic Control: FAA's Acquisition Management Has
Improved, but Policies and Oversight Need Strengthening to Help Ensure
Results 29 (GAO-05-23) (Nov. 2004).
---------------------------------------------------------------------------
Inspector General. ``In fact, half of the contracts
were awarded without any competition.'' \14\
---------------------------------------------------------------------------
\14\ Department of Transportation (DOT) Inspector General, Audit of
the FAA's Results National Contracting Service 5 (Sept. 21, 2006).
---------------------------------------------------------------------------
In another report, the DOT Inspector General warned that the FAA's
Air Traffic Modernization programs ``continue to be plagued by
requirements changes, technical difficulties, or reduction in
performance capabilities'' and ``it is not clear how much these
programs will cost, how long it will take to complete them, or what
capability will finally be delivered.'' \15\ In summarizing the FAA's
problems with these programs, the DOT Inspector General provided the
following table:
---------------------------------------------------------------------------
\15\ DOT Inspector General, Status of FAA's Major Acquisitions:
Cost Growth and Schedule Delays Continue to Stall Air Traffic
Modernization 5 (May 26, 2005).
Table 1. Programs Requiring Key Agency Decisions before FAA Completes Implementation
----------------------------------------------------------------------------------------------------------------
Estimated program Implementation Schedule
Costs (in Millions) Percent ---------------------------- Schedule
Program * ------------------------ Cost Delay
Original Current Growth Original Current
----------------------------------------------------------------------------------------------------------------
Wide Area $892.4 $3,339.6* 274% 1998--2001 2005--2013 12 years
Augmentation
System
----------------------------------------------------------------------------------------------------------------
Standard Terminal Automation $940.2 $2,760.4*** 194% 1998--2005 2002--2012 7 years
Replacement System
----------------------------------------------------------------------------------------------------------------
FAA $205.5 $310.2 51% 2002--2008 2004--2008 2 years
Telecommunication
Infrastructure
----------------------------------------------------------------------------------------------------------------
Airport Surveillance Radar-11 $743.3 $1,003.0 35% 2000--2005 2003--2013 8 years
----------------------------------------------------------------------------------------------------------------
Integrated $276.1 $286.1 4% 2002--2003 2003--2009 6 years
Terminal Weather System
----------------------------------------------------------------------------------------------------------------
En Route $2,154.6 $2.141.9 N/A 2009--2010 2009--2010 N/A
Automation
Modernization
----------------------------------------------------------------------------------------------------------------
*A detailed listing of cost and
schedule variances of all 16 systems
can be found in Exhibit B.
**Cost includes $1.2 billion to acquire
geostationary satellites.
***Cost of preferred STARS solution to
deploy to 162 sites.
This FAA acquisition history of huge cost overruns and multi-
year schedule delays offers strong reasons for why Congress should not
allow TSA to continue with the AMS acquisition system.
Question 16.: If TSA took certain steps, do you believe it could
realize ``proven benefits'' from its exemption? If so, what steps would
those be?
Response: No. If TSA could deliver ``proven benefits'' from TSAAMS,
it would have done so by now. Second, the FAA experience predicts that
TSA will not solve its procurement problems so long as it remains under
TSAAMS. See Answer No. 15 above.
Question 17.: In your testimony (page 9), you point out that TSA is
not subject to the procurement protest system that other agencies
follow, and that GAO does not have jurisdiction to oversee TSA
acquisitions through the protest process. Could you please discuss the
implications of GAO's lack of jurisdiction in this area?
Response: With no protest jurisdiction, GAO cannot review protests
against TSA procurements. Without the GAO protest oversight, many TSA
acquisition problems will never be uncovered, thus allowing TSA to
continue the cycle of awarding poorly defined, ill-conceived,
noncompetitive acquisitions that will reinforce the current cycle of
schedule delays, cost overruns, and performance problems that have
characterized TSA procurements for six years.
Question 18.: What impact does this have on companies that file bid
protests?
Response: With no GAO protest jurisdiction, contractors are
deprived of GAO's unparalleled experience (over 80 years), established
precedent (thousands of decisions), and unquestioned independence in
resolving bid protests. In addition, the Competition in Contracting Act
established additional protest enforcement mechanisms that Congress
found to be critical to an effective protest remedy, including stay of
contract performance (31 U.S.C. Sec. 3553(c)), payment of successful
protest costs (31 U.S.C. Sec. 3554(c), and Congressional notification
of agency noncompliance with recommended corrective action (31 U.S.C.
Sec. 3554(b)(2) & (e)). Finally, GAO has more aggressively enforced
competition through its protest jurisdiction. See Bodenheimer Written
Statement, pp. 9--10. For all of these reasons, GAO bid protest
jurisdiction will better serve Congressional objectives, protect
contractors, and encourage greater TSA compliance due to closer
scrutiny and greater oversight.
Questions from the Honorable Bennie G. Thompson, Chairman, Committee on
Homeland Security
Responses from Alan Chvotkin
Question 1.: Do you have a recommendation as to what acquisition
system the TSA should be under if Congress was to repeal the separate
statutory procurement authority?
Response: As I said in my written testimony [page 8], and in my
oral statement, PSC believes that Congress should bring TSA under the
common rules applicable to the Department of Homeland Security. The
Department is already generally subject to the FAR, but Congress has
provided specific additional authority and flexibility to the
Department to manage its specific mission requirements. For example,
DHS has specific statutory authority to use special streamlined
acquisition authorities set forth in Section 833 of the Homeland
Security Act (6 U.S.C. 393), for any procurement that takes place
before September 30, 2007, if the Secretary determines that the mission
of the Department would be seriously impaired without the use of such
authorities. In addition, DHS is restricted by statute from permitting
certain companies to compete for departmental opportunities. In our
view, if TSA's underlying procurement authority is changed, it should
be given access to the same flexibilities as all other agencies within
the Department of Homeland Security. Nevertheless, there are several
acquisition policy provisions now applicable to DHS that we find
troubling and counter-productive.
Question 2.: In your testimony, you talk about the need for an
``Acquisition Marshall Plan.'' Could you explain what this is, and why
the need is so great?
Response: PSC has recommended an ``Acquisition Marshall Plan'' to
address, on a government-wide basis, the critical short-term and long-
term shortfalls in the federal acquisition workforce, with a focus on
the need to recruit, retain, compensate and develop that workforce.
Today, the Federal government spends more than $400 billion on the
purchase of goods and services, almost one-quarter of the entire
federal discretionary budget. In fiscal year 2006, the Department of
Homeland Security spent almost $14 billion on the purchase of goods and
services and TSA's share of those awarded contracts was valued at more
than $1.4 billion. By any measure, procurement should be a core
competency of the agencies and among the highest priority areas of
attention for its workforce. Regrettably, the acquisition workforce has
not received the attention it deserves--unless there are problems.
Study after study, from PSC's own work to the often-repeated
conclusions of the Government Accountability Office, to the July 2007
report of the congressionally chartered Acquisition Advisory Panel,
have documented the shortfalls in the federal acquisition workforce and
the need for aggressive, comprehensive action to support them. While
there has been plenty of analysis done on the issues and problems, and
numerous recommendations made, little action has been taken. For these
reasons PSC calls on Congress and the Executive agencies to undertake
efforts to rebuild this workforce. Several bills are pending in both
the House and Senate that offer specific provisions to address this
federal acquisition workforce issue.
As non-exclusive elements of that Plan, PSC has endorsed internship
and rotational programs to attract qualified individuals into the
acquisition workforce, expanding authority to hire selective retired
annuitants to maintain workforce skills levels and facilitate critical
knowledge transfer, and creating government-industry exchange programs
with robust conflict of interest controls. We support the provision in
title IV of HR 1684, the fiscal year 2008 Department of Homeland
Security Authorization Act, approved by this Committee and passed by
the House earlier this year, that would provide important workforce
development improvements, including requiring department-wide
procurement training and providing authority to selectively hire
retired federal annuitants.
We also recommend the permanent extension of the government-wide
Acquisition Workforce Training Fund, which was created by Congress in
2003 based on a recommendation made by PSC to provide comprehensive
training opportunities. Finally, we have recommended creating a
``Contingency Contracting Corps'' to increase the Federal government's
ability to respond to homeland security or natural disasters through a
standing, organized and trained cadre of federal resources. We are very
pleased that both of these latter two recommendations have been
endorsed by the Senate Homeland Security and Governmental Affairs
Committee and included in legislation (S. 680) favorably reported by
that Committee.
These PSC recommendations for action are certainly not the whole
answer to the many challenges agencies face in attracting, maintaining
and deploying their acquisition personnel, and many more actions must
be taken; but individually and collectively they are significant steps
forward.
Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee
on Management, Investigations, and Oversight
Question 3.: From your perspective, what are some of the major
differences between the Acquisition Management System (AMS) and the
Federal Acquisition Regulation (FAR)?
Response: While there are many similarities between the two sets of
regulations, since the TSA AMS was drawn from the FAA's system and the
FAR, there are notable differences. There are three primary areas that
demonstrate these differences in regulations--although not necessarily
in practice in any specific application. With respect to competition,
the FAR requires full and open competition with exceptions in narrowly
specified categories; the TSA AMS standard is ``effective competition''
based on market research. With respect to communications, the FAR
generally limits communications between the agency and bidders except
through the contracting officer and then only on a structured, narrow
range of information; the TSA AMS is more flexible and encourages
communications throughout the process with the strongest competitors.
Finally, with respect to disputes and protests, the FAR provides a
formal and time-specific regime for challenges to the contracting
officer, with options of further pursuing action in appropriate
circumstances at either the Civilian Agencies Board of Contract Appeals
or at the Government Accountability Office. At TSA, protests are
handled through the FAA's Office of Dispute Resolution for Acquisition,
with alternative dispute resolution techniques the norm, and with very
limited jurisdiction for further review outside the Office.
Question 4.: What are the implications of having one Department
agency with a separate acquisition process compared to the process used
by the rest of the Department?
Response: In my view, having a procurement system for TSA
completely separate from the procurement system used by the rest of the
Department, and from virtually every other agency of the Federal
government, creates several issues and missed opportunities. Among the
issues raised is the ability to provide uniformity in the department's
management, the capability of the information reporting systems to
produce consistent data across the department, the oversight of the
procurement systems, and providing effective uniform training for the
workforce. Among the missed opportunities is an inability to maximize
information sharing for small business about the department's business
practices and limiting competition and cross-fertilization of the
supplier base across multiple agency needs. However, it is important to
note that TSA participates in DHS-wide procurements, such as EAGLE and
First Source, which originated in and are managed by other components
of DHS.
Question 5.: What are the pluses and minuses of TSA's Acquisition
Management System (AMS) and the Federal Acquisition Regulation (FAR)
that applies to the rest of DHS?
Response: On the plus side of the TSA AMS, TSA has demonstrated
that it is able to execute its critical homeland and transportation
security missions in a timely manner with general success; in rare
cases are the problems with TSA activities associated with problems in
their procurement system. With its focus on effective competition, TSA
has been able to tailor its system to ensure that critical procurements
can be awarded and implemented within tight timeframes. Finally, many
PSC member companies doing business with TSA have found its systems
workable and sufficiently flexible in awarding and executing contracts.
On the negative side of the TSA AMS, the published system has
numerous terms and conditions that differ from the standard procurement
system; some of the differences are minor while others are significant;
some of these terms and conditions are merely out of sync with the FAR
updates while others are intentionally inconsistent with the FAR. Each
of these differences imposes challenges and risks for both government
acquisition officials and contractors. Each difference also requires
bidders and successful TSA contractors who want to do business with
agencies other than TSA to understand the differences, and the business
and the compliance responsibilities, when seeking to do business with
multiple agencies.
On the plus side of using the FAR, it is the uniform regulation
governing the overwhelming proportion of all federal procurements. As a
result, there are federal employees across the government who work
within that system every day to ensure that it operates to provide the
goods and services each federal agency needs. Similarly, there are
contractors providing goods and services to other federal agencies who
would be able to compete effectively for TSA work if TSA used the same
rules. The FAR is designed to ensure meaningful opportunities and
fundamental fairness to all actual and potential competitors. Finally,
there is clear contract administration and government oversight regimes
to ensure that the procurement eco-system works as intended.
On the negative side of using the FAR, the FAR must provide tools
and techniques that are flexible enough to address the needs of the
entire federal government, but it still anticipates that agencies will
tailor the rules to meet agency-specific requirements. In addition,
agencies are also expected to supplement these core regulations with
any agency-specific statutory or regulatory requirements.
Question 6.: In your view, do you believe the historical reasons
that existed in 2001 when TSA inherited the acquisition system used by
the FAA, instead of the FAR, still exist today?
Response: Although PSC did not support excluding TSA from the FAR
when TSA was created, we did not question the need for TSA to have the
maximum appropriate flexibility to execute some of the most challenging
federal missions assigned to any federal agency at that time. However,
six years after the tragic events of 9/11, TSA is not (and should not
be) in a crisis response mode and there is little evidence that TSA
needs its own unique procurement system to achieve its current and
future mission requirements. Nor is there any evidence that the
government-wide FAR-based system, with its flexibilities, would not be
able to support achieving all of TSA's current and future missions.
Question 7.: How well does the private sector work with a major
Cabinet department that operates two different acquisition systems?
Response: All federal acquisition is based on the laws passed by
Congress and the implementing regulations adopted by the agencies and
many agencies have specialized procedures that tailor some portion of
the ``standard,'' government-wide, procedures to unique aspects of an
agency's acquisition system. In fact, in addition to the standard,
government-wide, Federal Acquisition Regulations, there are numerous
agency-specific supplements, most notably for the Departments of
Defense, Energy, and Homeland Security and for NASA and GSA. Any
private sector firm that seeks to do business with an agency has an
obligation to understand and comply with the specialized rules that are
applicable to that procuring entity. For some firms, that effort is
part of the business development cost when pursuing business; for too
many others, particularly smaller firms, finding out and mastering that
information is a significant barrier to seeking out and successfully
competing for opportunities. Even when a firm does understand an
agency's specialized procedures, the firm may still be unwilling or
unable to modify its products or services to meet those unique
requirements; again, those agency-specific provisions act as a barrier
to commercial suppliers and smaller firms. Limiting the competitive
landscape disadvantages the agency in both the short and the long term.
Question 8.: Do you believe the Department has the necessary
contracting staff to effectively manage these two systems?
Response: There are eight procurement organizations in the
Department of Homeland Security and each has their own staff. Each of
the eight procurement organizations have specialized procurement
provisions to meet their unique mission requirements. However, seven of
the eight organizations follow the core requirements of the government-
wide Federal Acquisition Regulation; only TSA has a separate core
procurement system. Attracting and retaining qualified contracting
resources is a challenge for many of the procurement components within
the Department; beyond absolute numbers of contracting resources, it is
essential that each agency have the ``right'' resources with the
``right'' skills to procure the goods and services the component needs,
at the ``right'' time. The DHS Human Capital strategy is addressing the
current skills capabilities and future skills needs of its acquisition
workforce. The unique nature of the TSA acquisition system adds
complexities to ensuring a properly sized, well-trained, acquisition
workforce, providing promotion or lateral opportunities into or out of
TSA, leveraging broader training, and drawing on temporary resources
from outside TSA for high-priority, short-term, needs.
Question 9.: In your view, should Congress consider applying the
FAR uniformly throughout all of the Department? If so, why? If not, why
not?
Response: We favor such an approach. As I noted earlier, the FAR
already applies to all other procurement organizations in the
Department, although each of the procuring components have specialized
additional supplemental laws and regulations that govern their
procurement functions. For example, FEMA must address the specialized
requirements of the Stafford Act and the required reliance on local
small businesses for certain functions when contracting for disaster
recovery. The Coast Guard must be prepared to operate as an element of
the Navy in certain narrow circumstances. DHS has specific restrictions
on whom it is able to do business with or the amount of subcontracting
that is appropriate; we oppose these latter provisions because they
drive the Department further and further from the government-wide FAR.
We believe Congress and the agencies should carefully assess and
justify adopting any provisions that require an agency to divert from
the government-wide regulations. Nevertheless, application of a
consistent set of procurement rules even across the Department, to the
maximum extent, provides benefits for both the Department and the
private sector. For the Department, it facilitates cross-agency
training, promotes greater consistency and uniformity in
implementation, and permits temporary re-assignments to meet higher
priority department needs. For the private sector, it increases
competition for goods and services to meet the department's needs,
expands opportunities for small and small disadvantaged businesses
across a broader range of departmental procurement opportunities, and
improves company familiarity and thus compliance with commonly used
contract terms and conditions.
Question 10.: In your view does one system compared to the other
promote more competition? Promote fairer competition? Ensure greater
financial accountability?
Response Both the FAR and the TSA AMS have the capability to
promote full and fair competition and ensure financial accountability.
Similarly, there are regrettable examples where both systems have
failed to provide sufficient competition for goods and services or
demonstrated financial accountability. However, the FAR is premised on
the concept of full and open competition with flexibility to use
alternative contracting techniques in specific circumstances while the
TSA AMS is premised on the concept of ``effective'' competition. In our
view, while either system has the potential for success or failure, we
support the common use of the FAR.
Question 11.: Under each system, how are contract disputes
resolved? In your view, does one system provide greater fairness than
the other?
Response: The primary authority for addressing contract disputes
under the FAR is the Contract Disputes Act (41 U.S.C. 601) which is
implemented in FAR Part 33. There are very specific rules requiring
contractors to take action to raise disputes with the contracting
officer. If the contracting officer denies a claim, the FAR provides
very specific requirements for challenging the contracting officer's
decision at the Board of Contract Appeals or, occasionally, at the U.S.
Court of Federal Claims. Under the FAR, there are very clear lines of
precedent governing disputes and both the government and the
contractors know what is expected, what is available, and how to
proceed.
By contrast, contract disputes for all of TSA's acquisitions of
equipment, supplies and materials are resolved by the FAA's Office of
Dispute Resolution for Acquisition (ODRA) under a delegation from TSA.
The goal of the ODRA is to ``resolve acquisition-related controversies
in a prompt, amicable fashion, utilizing consensual alternative dispute
resolution techniques--primarily through neutral evaluation and
mediation techniques.'' Appeals from a final decision are made to the
U.S. Court of Appeals for the D.C. Circuit or the U.S. Court of Appeals
where the business is located. Since most of the decisions of the ODRA
are resolved through alternative dispute resolution, there is little
precedent gained from those techniques that can be applied to future
challenges or by other participants.
Question 12.: Over the past 2-1/2 years, this Subcommittee has
examined a number of problematic DHS contracts. In your view, is this a
problem with the particular acquisition management system being used or
the failure of a contracting officer to follow the rules or under-
staffing, or a combination of factors?
Response: It is difficult to generalize about the cause for
``problematic'' DHS contracts the Subcommittee has examined; some of
those awards may have been from TSA while others were from other
components of the department. By the same token, hundreds of contracts
have been successfully awarded by TSA and by other DHS components over
its five year lifespan, and contractors have fully and successfully
provided the Department with the goods and services sought. As a
general matter, PSC does not believe that more laws are needed. Most of
our experience demonstrates that problems arise in contracting because
of a combination of factors--some based on the challenge in fully and
accurately describing an agency's needs, some based on the lack of a
well-trained federal workforce, some because of staffing limitations or
good faith efforts to respond to crisis situations, and some because of
poor contractor performance. The concerns we have raised with TSA's use
of the TSA AMS relate to how to improve future procurements within TSA
and across the Department.
Question 13.: Can you quantify the burden placed on the private
sector, especially small business, in having to be familiar with two
sets of contracting rules when they work with TSA and DHS?
Response: While I am not aware of any study that has tried to
quantify the burden on the private sector, and particularly smaller
firms, we believe it stands to reason that smaller companies will face
a greater burden becoming familiar with two sets of contracting rules.
Question 14.: You stated in your written testimony that simply
repealing TSA's separate statutory procurement authority may not, by
operation of law, bring TSA under the government-wide regulations.
Would you elaborate on those concerns?
Response: While I have not done the thorough legal research to
answer the question of the effect of repealing the special legislative
authority in the Aviation Act that now governs TSA's procurement, I
simply wanted to highlight that repealing TSA's existing statutory
exemption may not automatically revert TSA to either the DHS
procurement system or to the FAR system. If Congress intends for TSA to
be subject to the FAR, its intent and effect should be explicitly
mandated in any legislation.
Question 15.: You pose the question of which acquisition system the
TSA should be under if Congress was to repeal the separate statutory
procurement authority. Do you have a recommendation?
Response: As I said in my written testimony [page 8], and in my
oral statement, PSC believes that Congress should bring TSA under the
common rules applicable to the Department of Homeland Security. The
Department is already generally subject to the FAR, but Congress has
provided specific additional authority and flexibility to the
Department to manage its specific mission requirements. For example,
DHS has specific statutory authority to use special streamlined
acquisition authorities set forth in Section 833 of the Homeland
Security Act (6 U.S.C. 393), for any procurement that takes place
before September 30, 2007, if the Secretary determines that the mission
of the Department would be seriously impaired without the use of such
authorities. In addition, DHS is restricted by statute from permitting
certain companies to compete for departmental opportunities. In our
view, if TSA's underlying procurement authority is changed, it should
be given access to the same flexibilities as all other agencies within
the Department of Homeland Security. Nevertheless, there are several
acquisition policy provisions now applicable to DHS that we find
troubling and counter-productive.
Question 16. Your testimony notes that many companies in the
private sector take additional steps to ensure the capabilities of
their core workforce, such as their procurement staffs. What other
primary differences exist between the public and the private sectors
when looking at the acquisition systems?
Response: There are differences in just about every phase of the
acquisition cycle, from requirements generation, to market research, to
contract solicitation and formation, and post-award contract
administration. In the area of market research, there is no requirement
that commercial firms open their procurement opportunities to all
interested parties. In the area of contract solicitation, there is no
prohibition on the private sector company sharing its own ``procurement
sensitive'' information with competitors and, in large opportunities,
many private sector companies freely disclose significant information
to qualified competitors to maximize the success of the procurement. In
the area of contract formation, private sector companies adopt a
contract format that is best for the transaction, governed by the
common framework and interpretations of the Uniform Commercial Code.
Finally, in post-award oversight, a private sector company will partner
with the provider on contract administration oversight to ensure
fairness and full implementation. If necessary, failures are dealt with
through civil litigation and by exercising the private sector company's
right to refuse to do future business with that firm. Finally, while
there is no legal requirement to conduct a competition, make a specific
percentage of awards to small business, or provide post-award contract
adjustments, many private sector companies employ these techniques as
part of good commercial procurement practices. Of course, the public
sector is not the private sector and there are often good policy
reasons why some of the rules are and should be different.
Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee
on Management, Investigations, and Oversight
Responses from Elaine Duke
Question 1.: Do you have two different training programs for
contracting officers at TSA, who will use AMS, and those for the rest
of the Department, who will use the FAR?
Response: There are two different entry level contracting
specialist training programs, neither includes formal training on AMS.
Any AMS training is informal, on the job training provided by higher
level contracting specialists and contracting officers experienced in
AMS. TSA's Acquisition Fellows Program is designed for incoming, entry
level (equivalent to GS 719) contract specialists. The training these
employees receive is in accordance with DHS Management Directive 0781.1
Contracting Professional (GS1102) Career Information. and an interim
directive that transitions from the DHS Acquisition Certification
Program to the Federal Acquisition Certification Program in Contracting
Program.(FAC-C). In the interim management directive all required
courses are listed. Informal in-house training and on the job training
on AMS is provided to these employees. Contracting courses required for
certification for all contracting specialists are the same and FAR-
based. The TSA Acquisition Fellows Program welcomed its first Fellows
class in FY06 and a second class began in FY07. This program is a three
year program and after successful completion, the participants may hold
more advanced contracting specialist positions at TSA. The Department
will welcome its new class in FY08 and differs from TSA in that the
participants, upon successful completion of coursework and one year
rotations in the various component contracting activities, are assigned
to a component contracting activity. TSA has worked closely with the
Department on its Acquisition Fellows Program and the qualifications
for contracting officers at TSA are, in fact, the qualifications set
forth for certification and warranting by the Department.
What is the additional cost of having to maintain two different
training regimens?
Response: The training costs incurred by all contracting activities
include the cost of providing the required contracting courses and any
additional courses such as costlprice analysis, negotiation skills, or
public speaking. The cost differences are based on how the required
courses are provided to the participant (on-line versus classroom or
on-site) and any additional courses which a participant may take.
Contracting staff under both systems attend periodic training as
necessary for their career paths.
Question 2.: What is the relationship between your office and the
procurement office of the Transportation Security Administration?
Response: The relationship between the two offices is one of mutual
cooperation and respect. Both offices freely share information and
collaborate as needed. As I mentioned in my testimony, TSA is an active
participant in the DHS Chief Acquisition Officers Council and shares in
the resources available to the other seven component contracting
activities. TSA adheres to the key elements of the DHS acquisition
program and its capital investments are subject to the Department's
investment review board and their contracting operations are subject to
the Department's acquisition oversight program.
Question 3.: Under the current organizational structure of DHS,
your position does not have direct line authority over TSA's chief
procurement officer. How do you exercise effective oversight of TSA's
procurements?
Response: Other than headquarter's, I do not have direct line
authority over any component's Head of Contracting Activity (HCA). I
exercise my oversight authority with TSA in the same manner as I
exercise it with the other HCA's. TSA must adhere to the key elements
of the DHS acquisition program which include:
Advanced acquisition planning
The appointment of a Competition Advocate
The establishment of a Small and Disadvantaged
Business Utilization Office
Adherence to Federal-wide acquisition certification
requirements for contracting professionals and prograrnlproject
managers, and
Policies regarding the issuance of contracting officer
warrants to certified contracting professionals.
TSA's capital investments are subject to the Department's
investment review board and their contracting operations are subject to
the Department's acquisition oversight program. My office reviews
acquisition plans and justifications for procurements that are done by
other components which exceed $50 million.
Question 4.: DHS has two acquisition systems -the AMS utilized by
TSA and the FAR utilized by the rest of the department.
a. How do you ensure your staffs are properly trained to understand
both systems well?
Response: All contracting professionals (GS-1102) in all DHS
contracting activities are trained under the FAR, and are certified and
warranted based upon the same qualifications set forth in our interim
policy on professional certification and training issued April 16,2007.
At TSA 1102s operate in AMS and the FAR--they use the FAR environment
and therefore receive training on contracting systems. Use of AMS
provides TSA contracting staff with additional training and experience.
Those experiences broaden their skill set and enhance the diversity of
the Department's program. When the Department has a need to redirect
acquisition resources, given that TSA contracting professionals receive
the same training on FAR contracting procedures as their counter-parts
in other DHS contracting offices, DHS can mobilize TSA's resources. An
example of this is the month following Hurricane Katrina, when roughly
five TSA Office of Acquisition personnel were temporarily detailed to
DHS Headquarters and the Federal Emergency Management Agency to support
the recovery effort.
b. Wouldn't it be more efficient if DHS has one uniform system so
you would not have to maintain expertise in two systems?
Response: By definition, one system is a more efficient way to
operate. However, operating one system does not ensure greater
effectiveness or, for that matter, efficiency, if the flexibilities
that an organization feels it needs are not readily available. All
contracting specialists and contracting officers are trained on the
FAR, which serves as the basis for AMS. DHS values the diversity of
experience and expertise across its acquisition workforce. Knowledge
and experience in AMS broadens the skill set of our contracting
officers. TSA fully complies with the Department's policies on
acquisition--most notably on investment review and certification of our
Program Managers, Contracting Officers, and Contracting Officer
Technical Representatives. The Department exercises the same review and
oversight program on TSA as the other DHS components.
c. From a training perspective, is one system easier to learn than
another?
Response: No.
Question 5.: How many staff do you currently have, and what is the
projected growth of your staffing level in the coming years?
Response: The Office of the Chief Procurement Officer has 71
appropriated FTE in FY07. There are 100 FTE in the President's budget
for FY08 and a 120 FTE in the Department's submission for FY09. In
addition to that staff, there are 66 interns in the President's budget
for FY08 and 100 interns in the Department's submission for FY09.
Department-wide, in the contracting activities there are 1,220 funded
contract specialist positions (GS-1102) and there are 956 FTE GS-1102s
on board as of July 31,2007. The total number of 1 102 positions
desired Department-wide is 2,553. This figure is based on an FY04
independent study recommending workforce size be determined based on
procurement dollars spent.
Questions from the Honorable Michael D. Rogers, Ranking Member,
Subcommittee on Management, Investigations, and Oversight
Responses from Rick Gunderson
Question 1.: From your perspective, what are some of the major
differences between the Acquisition Management System (AMS) and the
Federal Acquisition Regulation (FAR)?
Response: The Acquisition Management System (AMS) was established,
in large part, to provide policy and guidance for all aspects of the
acquisition lifecycle, from the determination of mission needs to the
procurement and lifecycle management of products and services to
satisfy those needs. It was intended to simplify, integrate, and unify
the elements of lifecycle acquisition management into an efficient and
effective system that increases quality, reduces time, and decreases
cost for delivering services to the customer. The AMS serves as a
building block of the Transportation Security Administration's (TSA's)
culture, and fosters good acquisition management by embodying
effectiveness, flexibility, efficiencies, checks and balances and
public trust in implementing established industry best practices.
Within the guidelines of established law, TSA strives to implement the
best business solutions that meet our mission, within realistic
constraints. The AMS procurement system enables TSA to be innovative
and creative so that the right vendor is selected to implement the
right solution in a timely, cost-effective manner.
A number of important changes have been made to the Federal
Acquisition Regulation (FAR) over the past decade to improve
contracting practices and the tools available for achieving best value
for the taxpayer. Despite these improvements, however, there are three
main categories of distinction from the FAR that TSA believes warrant
continued application of AMS:
1. Communications--AMS encourages frequent and open
communications with industry and offerors, from market analysis
through contract award and administration. While communications
with industry are also encouraged by FAR, communications after
receipt of proposals and prior to award are highly regulated by
FAR. By contrast, AMS encourages frequent one-on-one
communications with industry throughout the process. This
ensures mutual understanding of the Government's requirement
and the offeror's proposed solution, and helps ensure award to
the company likely to deliver the best solution to meet TSA's
mission. Communications are facilitated by the contracting
officer, especially during the solicitation phase, to ensure
impartiality is maintained.
2. Lifecycle Management--The FAR is primarily focused on the
procurement part of the process. By contrast, AMS provides more
comprehensive guidance from the earliest stages of acquisition
through disposal. The AMS lifecycle management approach is
important to TSA, as our Office of Acquisition has a broader
focus than contracts. Not only do we award contracts, we focus
on strengthening program management and what we call ``Big A''
Acquisition across the TSA organization. Acquisition
encompasses much more than the procurement aspect of conducting
business. It is a life cycle approach to investments and
requires the integration of numerous disciplines, including
program management, engineering, budgeting, logistics, and
contracting.
3. Managed Competitions--The FAR provides limited opportunities
for agencies to reduce the burden associated with conducting
initial screenings of sources. As a result, sources who may not
be the most competitive may effectively compel an agency to
review a full proposal, which can be burdensome and inefficient
for both parties. By contrast, AMS provides for managed
competitions where, through multiple screens, detailed
negotiations are conducted with the companies most likely to
receive award. Under the AMS's multiple screening process, TSA
publicizes its initial screening information request (SIR) in
FedBizOpps with a statement of the particular requirements and
a request for specific preliminary qualifying proposal
materials. This announcement also advises that, subsequent to
its evaluation of received proposals, TSA intends to then send
a more detailed SIR only to those vendors whose proposals met
the initial qualifying requirements. In this multiple screen
approach, TSA can conduct a series of SIRs and vendors do not
have to invest the resources normally required when submitting
a comprehensive proposal as required under FAR. Also, the AMS
multiple screen process starts with open competitions--where
all interested firms may submit a response to the initial
screening request. In cases where TSA, through market research,
has determined that a limited number of firms could reasonably
provide the required products, equipments, or services, AMS
allows TSA to conduct its competition amongst this limited
field of vendors. This process saves offerors the wasted effort
of developing proposals that would not likely be selected and
TSA the cost of evaluating them. Instead, TSA is able to focus
its attention on the most promising sources, allowing them to
perform due diligence and enabling TSA to identify the best fit
between agency needs and marketplace capabilities. Even in
those cases, for transparency and competition, TSA publicizes
the requirements in FedBizOpps to encourage all vendors to
pursue subcontracting opportunities. Additionally, throughout
its multiple-screening process, AMS allows TSA to eliminate
offers that stand no chance for award. FAR offers similar
flexibility through the setting of a competitive range, but
this involves a more formal and time-consuming process. Managed
competitions save Government resources and allow firms to
direct bid and proposal budgets at the opportunities for which
they are most likely to win.
While the FAR and underlying statutes encourage the use of
alternative dispute resolution (ADR), AMS places an even greater
reliance on these processes to resolve protests and contract claims.
ADR is a best practice across industry, and delivers benefits when
compared to costly litigation. Protests and contract disputes involving
TSA AMS acquisitions fall under the jurisdiction of the Federal
Aviation Administration's Office of Dispute Resolution for Acquisition
(ODRA). The ODRA process is less about formalities, as occasioned by a
Board of Contract Appeals (Board) or the Government Accountability
Office (GAO), and more directed to effective, timely and relatively
inexpensive legal proceedings. As an example, the ODRA rules allow for
intervention by ODRA prior to a full-blown dispute or contracting
officer's final decision in order to resolve the matter.
If the parties are unable to resolve their differences through ADR,
the ODRA provides a Default Adjudicative Process under which a member
of the ODRA or a Special Master (Board of Contract Appeal Judge/sitting
or retired in most instances) is appointed to develop and review the
record to make factual findings and a recommendation for final agency
action to the Assistant Secretary.
Whether under ADR or the default adjudicative process, the ODRA
rules provide for discovery (e.g., depositions, interrogatories,
exchange of documents, among others) as well as evidentiary hearings.
In this vein, the ODRA encourages the parties to negotiate the terms of
discovery as well as to limit the scope of discovery, avoiding
unnecessary costs and resources commonly incurred under the guise of
discovery purposes.
Question 2.: What are the implications of having one Department
agency with a separate acquisition process compared to the process used
by the rest of the Department?
Response: The implications of having one Department agency with a
separate acquisition process are minimal, if at all. My priorities as
the Chief Procurement Officer are in no way affected by the fact that
one Department agency, TSA, utilizes a separate acquisition process
from the rest of the Department. My goals to build the DHS acquisition
workforce, make good business deals, and perform effective contract
administration do not have to be adjusted because of TSA's procurement
system. The authority I exercise regarding TSA is identical to the
authority I have over the other components. My efforts to build an
acquisition program and workforce integrating the disciplines of
program management, risk assessment, engineering, cost analyses, and
logistics will serve as an infrastructure throughout the Department
allowing DHS to achieve mission success regardless of the mechanics of
the procurement system used.
Question 3.: What are the pluses and minuses of TSA's Acquisition
Management System (AMS) and the Federal Acquisition Regulation (FAR)
that applies to the rest of DHS?
Response: From the Transportation Security Administration's (TSA's)
perspective, the Acquisition Management System (AMS) is about doing the
whole business of acquisition better. AMS is part of our culture and
creates an environment within TSA which allows us to engage in good
business practices. In addition to the distinctions noted below, it
takes less time to conduct our procurements under the AMS than under
the FAR, which prescribes specific steps for the source selection
process. The AMS allows communications with vendors/offerors throughout
the entire process, which enables TSA to conduct its source selections
much quicker. The main advantages of AMS are:
1. Communications--AMS encourages frequent and open
communications with industry and offerors, from market analysis
through contract award and administration. While communications
with industry are also encouraged by FAR, communications after
receipt of proposals and prior to award are highly regulated by
FAR--so much so that there are multiple distinct names for
talking with industry during that period (e.g., communications,
discussions, clarifications). AMS encourages frequent one-on-
one communications with industry throughout the process. This
ensures mutual understanding of the Government's requirement
and the offeror's proposed solution, and results in an award to
the company likely to deliver the best solution to meet TSA's
mission.
2. Lifecycle Management--AMS provides guidance from the
earliest stages of acquisition through disposal. The FAR is
primarily focused on the procurement part of the process. The
AMS lifecycle management approach is important to TSA, as our
Office of Acquisition has a broader focus than contracts. Not
only do we award contracts, we focus on strengthening program
management and what we call ``Big A'' Acquisition across the
TSA organization. Acquisition encompasses much more than the
procurement aspect of conducting business. It is a life cycle
approach to investments and requires the integration of
numerous disciplines, including program management,
engineering, budgeting, logistics, and contracting.
3. Managed Competitions--AMS provides for managed competitions
where, through multiple screens, detailed negotiations are
conducted with the companies most likely to receive award.
Under the AMS's multiple screening process, TSA publicizes its
initial screening information request (SIR) in FedBizOpps with
a statement of the particular requirements and a request for
specific preliminary qualifying proposal materials. This
announcement also advises that, subsequent to its evaluation of
received proposals, TSA intends to then send a more detailed
SIR only to those vendors whose proposals met the initial
qualifying requirements. In this multiple screen approach, TSA
can conduct a series of SIRs and vendors do not have to invest
resources normally required when submitting a comprehensive
proposal as required under FAR. Also, the AMS multiple screen
starts with open competitions--where all interested firms may
submit a response to the initial screening request. In cases
where TSA through market research has determined that a limited
number of firms could reasonably provide the required products,
equipments, or services, AMS allows TSA to conduct its
competition amongst this limited field of vendors. Even in
those cases, for transparency and competition, TSA publicizes
the requirements in FedBizOpps to encourage all vendors to
pursue subcontracting opportunities. Additionally, throughout
its multiple-screening process, AMS allows TSA to eliminate
offers that stand no chance for award. FAR offers similar
flexibility through the setting of a competitive range, but
this involves a more formal and time-consuming process. Managed
competitions save Government resources, and also allow firms to
redirect bid and proposal budgets elsewhere.
4. Alternative dispute resolution--AMS encourages parties to
use alternative dispute resolution, or ADR, to resolve protests
as well as contract claims. ADR is a best practice across
industry, and delivers benefits when compared to costly
litigation. Protests and contract disputes involving TSA AMS
acquisitions fall under the jurisdiction of the Federal
Aviation Administration's Office of Dispute Resolution for
Acquisition (ODRA). The ODRA process is less about formalities,
as occasioned by a Board of Contract Appeals (Board) or the
Government Accountability Office (GAO), and more directed to
effective, timely and relatively inexpensive legal proceedings.
As an example, the ODRA rules allow for intervention by ODRA
prior to a full-blown dispute or contracting officer's final
decision in order to resolve the matter. If the parties are
unable to resolve their differences through ADR, the ODRA
provides a Default Adjudicative Process under which a member of
the ODRA or a Special Master (Board of Contract Appeal Judge/
sitting or retired in most instances) is appointed to develop
and review the record to make factual findings and a
recommendation for final agency action to the Assistant
Secretary.
Whether under ADR or the default adjudicative process, the ODRA
rules provide for discovery (e.g., depositions, interrogatories,
exchange of documents, among others) as well as evidentiary hearings.
In this vein, the ODRA encourages the parties to negotiate the terms of
discovery as well as to limit the scope of discovery, avoiding
unnecessary costs and resources commonly incurred under the guise of
discovery purposes.
Question 4.: In your view, do you believe the historical reasons
that existed in 2001 when TSA inherited the acquisition system used by
the FAA, instead of the FAR, still exist today?
Response: Yes, we continue to operate in a highly volatile arena
where the Transportation Security Administration (TSA) must protect the
public from future terrorist attacks. The greatest value of the
Acquisition Management System (AMS) is not expediency or speed to
contract. Rather it's the flexibility it affords TSA to assess the
market and fashion our requirements in a way for the market to provide
the appropriate solution in a timely manner. While important strides
have been made to strengthen FAR policies and practices for identifying
and acquiring best value solutions, several unique features of AMS,
including the ability to conduct more efficient communications and
phased acquisitions, have enabled TSA to create a business environment
that is even more efficient and effective for dealing with the
increased complexities of a post-9/11 world. The AMS allows TSA's
Office of Acquisition to be innovative and flexible to develop business
solutions that align with TSA's mission. AMS helps ensure that we are
making good deals in support of the deployment of technology and
services to ensure the Nation's security.
Question 5.: How well does the private sector work with a major
Cabinet department that operates two different acquisition systems?
Response: In FY06, DHS obligated over $15.7 billion, of which 83
percent was for services, making it the third largest government agency
in terms of annual procurement spending, behind the Defense Department
and the Department of Energy. These were figures used by Richard
Skinner, DHS Inspector General in his testimony before the House
Oversight and Government Reform Committee's subcommittee on Government
Management, Organization, and Procurement, July 18, 2007, as well as
Alan Chvotkin, Senior Vice President and Counsel Professional Services
Council in his testimony on August 1, 2007. I believe that a company
can propose and win a contract following both processes with minimal
difficulty. Not until the scheduling of this hearing was I aware that
some companies find it challenging to conduct business with the
Department under both the FAR and AMS. I am in constant communication
with industry and I will solicit their feedback on this issue.
Fundamentally, the terms and conditions of both systems are the same,
though clauses can more easily be tailored to needs of the government
under AMS. In addition to being more timely, communication between the
government and a company under AMS' rules, can be more direct and
specific, which I would expect to be of great benefit to any company in
the bidding and negotiating process.
Do you believe the Department has the necessary contracting staff
to effectively manage these two systems?
Response: I do not believe managing two procurement systems is the
cause of requests for additional staff. The requests for staffing has
been based on a cost to spend ratio metric which was recommended in an
independent study conducted in FY04. The study recommended workforce
size be determined based on the procurement dollars spent, not the type
of procurement system used. We have contracted for another study to
assess staffing needs, and I do not believe the procurement system to
be used will be a factor in determining staffing needs.
Question 6.: In your view, should Congress consider applying the
FAR uniformly throughout all of the Department? If so, why? If not, why
not?
Response: The AMS system used by TSA allows some valuable
flexibility not available in the FAR. Inasmuch as TSA contracting
personnel rely directly on these flexibilities to meet mission needs, I
do not believe Congress should apply the FAR uniformly throughout the
Department. Taking away AMS' flexibilities would be unnecessarily
disruptive. While we appreciate the general benefits of a uniform
system, the Department is committed to ensuring that TSA acquisition
personnel are adequately trained on AMS processes and use the
additional flexibilities offered to them appropriately and effectively.
In your view, does one system compared to the other promote more
competition? Promote fairer competition? Ensure greater financial
accountability?
Response: In my view both systems encourage and promote competition
in a fair and transparent manner. Both systems recognize that
competition, wherever possible, is in the best interests of the
government to successfully meet its mission while being good stewards
of the taxpayer's money. However, I believe AMS has the ability to
facilitate more efficient use of competition by giving contracting
officers tools to focus their attention more effectively on the vendors
who are most likely to be able to perform and conduct more meaningful
communications. I also believe one system does not ensure greater
financial accountability than the other. All contracting officers are
required to conduct a responsibility determination prior to award, and
it is the responsibility of all involved, from the program manager to
the contract administrator to ensure that cost, schedule, and
performance requirements are met.
Under each system, how are contract disputes resolved? In your
view, does one system provide greater fairness than the other?
Response: Both systems offer vendors mechanisms to dispute a
requirement or action. The process to be followed under each system is
similar, however, utilizing the disputes system under AMS is considered
by many to be more efficient for all parties involved and possibly more
cost effective considering the time savings. In fact, alternative
dispute resolution (ADR) is considered a best practice by industry.
Protests under FAR are filed before the agency or before the Government
Accountability Office (GAO) and may result in an automatic suspension
of the contracting process until resolution. A protest may also be
filed before a federal court. Contract claims may be failed before the
Civilian Board of Contract Appeals or federal court. These options are
formal and may be time consuming. Under AMS parties are encouraged to
use ADR to resolve protests as well as contract claims. TSA uses the
Office of Dispute Resolution for Acquisition (ODRA) of the Department
of Transportations / FAA. The ODRA process is less about formalities,
filings, and timeframes as occasioned by the Board or GAO and more
directed to effective, timely and relatively inexpensive legal
proceedings. ADR is also available under the FAR system but it is not
as frequently and regularly used. If a company has a complaint about a
particular source selection, it has the option to protest to the ODRA
if it cannot resolve the issue at TSA. If the parties are unable to
resolve their differences through ADR, the ODRA provides an efficient
Default Adjudicative Process under which a member of the ODRAs or a
Special Master (Board of Contract Appeal Judge/sitting or retired in
most instances) is appointed to develop and review the record to make a
factual findings and recommendation for final agency action to the
Assistant Secretary.
NOTE: The Board of Contract Appeals is only for contract claims
which are contract administration issues. The Board does not entertain
protests which are contract formation issues.
Question 7.: Over the past 2-1/2 years, this Subcommittee has
examined a number of problematic DHS contracts. In your view, is this a
problem with the particular acquisition management system being used or
the failure of a contracting officer to follow the rules or under-
staffing, or a combination of factors?
Response: ``Problematic'' contracts of DHS have been brought about
by a number of factors, none of which relate to the procurement systems
used. Depending on the contract being discussed, the contributing
factor(s) have been one or a combination of the following: under
staffing in the areas of contract award or oversight, change in
requirements as a result of change in direction, the circumstances
under which contracts were put in place, incorrect data in existing
databases which were used in determining or verifying a vendor's
eligibility, and last, but not least, the lack of the appropriate mix
of skilled acquisition professionals in the disciplines of program
management, risk assessment, engineering, cost analyses, and logistics.
As I testified, the competition for highly qualified acquisition and
procurement officials is intense.
I am addressing the staffing issues and skill mix with three
workforce initiatives currently underway. My office has initiated an
aggressive staffing solution to resolve personnel shortages and have
centralized recruiting activities to better manage similar needs across
the Department. We have received authority to maximize the use of
hiring flexibilities such as Direct Hire Authority and Re-employed
Annuitants to address our most critical staffing shortages--contracting
officers. The Acquisition Intern Program is my second initiative to
satisfy the long term need for qualified acquisition personnel by
developing a pipeline for our future acquisition leaders. Beginning in
FY 2008, my office is centrally funding an Acquisition Intern Program
with 66 participants which will grow to a total of 300 participants by
fiscal year 2011. The third initiative is the establishment of a
centralized acquisition workforce training fund. Based on the results
of reviews conducted by the Oversight Division, our training program
will develop or purchase additional training to close identified
competency gaps. By centralizing the training program, the Department
is better positioned to deliver a unified training program that enables
our acquisition professionals to achieve the appropriate certification
levels and develop the necessary skills and competencies to negotiate
good business deals. We will maximize the use of the training resources
available to the federal agencies from the Federal Acquisition
Institute.
Question 8.: Mr. Gunderson, Congress exempted FAA contracting from
the FAR in 1995 primarily to address FAA's need to modernize the air
traffic control system. Given TSA's mission in DHS, what rationale is
there to continue to use FAA's acquisition management system, rather
than the FAR?
Response: From the Transportation Security Administration's (TSA)
perspective, the Acquisition Management System (AMS) offers broader
guidance than the FAR to address the complete acquisition life cycle
and certain tailored flexibilities not available in the FAR that TSA
uses strategically to achieve better results than can be achieved
without these flexibilities. AMS is part of our culture and creates an
environment within TSA which allow us to engage in good business
practices. TSA remains a new agency that must attempt to protect the
public from terrorist attacks. TSA faces new challenges everyday to
assess and identify new technology, new services, and address new
challenges set by Congress. AMS allows flexibility to better meet these
challenges--allowing TSA to exercise good, sound business practices in
meeting our mission and goals.
Question 9.: Do you find it difficult to attract and retain an
acquisition workforce at TSA, when the skills those employees develop
with the AMS as TSA contracting officers would not be transferable
outside of TSA, FAA, and a small number of firms that specialize in AMS
contracting?
Response: The Transportation Security Administration (TSA) is an
exciting place to be for acquisition professionals, and our skills are
not only transferable outside of TSA, but are highly valued. People
have come to TSA from industry and Federal Acquisition Regulation (FAR)
organizations--most notably the Department of Defense. During Hurricane
Katrina, the Department of Homeland Security leveraged TSA's staff--
through temporary reassignment and via after hours support in a war
room to help the Federal Emergency Management with its contracting--
which is FAR based. For interagency agreements through the General
Services Administration, our contract specialists use the FAR. TSA
faces the same supply and demand challenges as the acquisition
workforce, but the TSA Office of Acquisition developed a comprehensive
Human Capital Strategy in 2005 to ensure we continue to recruit and
retain the most highly qualified employees.
Question 10.: Did application of the Acquisition Management System
contribute to TSA's early contract problems?
Response: No; in fact, the majority of contracts awarded by the
Transportation Security Administration (TSA) in its startup were
Federal Acquisition Regulation (FAR)-based contracts. The early
challenges were driven by limited staff and an incomplete view of the
ultimate requirements. TSA was building its agency infrastructure at
the same time it was required to federalize all U.S. airports and roll
out security technology on an aggressive, mandated schedule. Since
then, TSA's Office of Acquisition has developed capabilities that
provide program management support and outreach across the agency and
significantly increased staffing.
Question 11.: AMS provides additional flexibility to the contract
specialist. How do you ensure that award and administration of
contracts is executed in a way consistent with Federal acquisition
principles?
Response: Increased flexibility does not mean there are no rules.
In addition to the Acquisition Management System (AMS) framework, the
Transportation Security Administration's (TSA's) Office of Acquisition
has developed policies about contract administration and oversight such
as our Contracting Officer Technical Representative program. The
Defense Contract Audit Agency has an onsite representative that
supports our contracts, and we have an agreement with the Defense
Contract Management Agency for ongoing administration support.
Additionally, TSA complies with Department of Homeland Security
Management Directives and guidance (other than the Federal Acquisition
Management (FAR) and its Homeland Security Supplement). TSA's business
opportunities are publicized via the standard Government website,
FedBizOpps. We leverage the U.S. Coast Guard financial system and
report our contract actions via the Federal Procurement Data System.
Question 12.: What feedback have you received from industry about
the Acquisition Management System TSA uses?
Response: The Transportation Security Administration has not
received any negative feedback from industry on its Acquisition
Management System (AMS), but we have heard from industry that they
appreciate the open dialogue employed throughout the process. To our
knowledge, the hearing on August 1, 2007 was the first time that
industry representatives voiced concerns about the AMS.
Question 13.: Are there factors that justify TSA/FAA having a
separate procurement system from the rest of the government? Especially
given the fact that other agencies that purchase high dollar items and
need emergency authorities like the Department of Defense use the
Federal Acquisition Regulations (FAR)?
Response: The Transportation Security Administration's (TSA)
mission does not demand a different procurement system, but use of the
Acquisition Management System (AMS) and its guidance is built into our
culture. It is not about doing things faster or responding to
emergencies; it is about continually improving our acquisition
practices similar to the private industry. It is important to note that
in the Government Accountability Office's (GAO) review of AMS at the
Federal Aviation Administration (FAA) (Report Number GAO-05-23), it did
not recommend that it convert to FAR. The GAO's recommendations focused
on strengthening requirements, software development, and investment
decision making.
Question 14.: You mentioned that all TSA procurement personnel are
trained to use the FAR, as well as the AMS. So there would not be a
significant cost to transitioning these AMS procurement officers to the
FAR contracting system, would there?
Response: There would not be significant training costs, though the
Transportation Security Administration's Office of Acquisition would
provide some refresher training on the Federal Acquisition Regulation
Part 15--Source Selection.