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Study finds extensive DHS waste, misspending

Thu., July 27, 2006

WASHINGTON – The multibillion-dollar surge in federal contracting to bolster the nation’s domestic defenses in the wake of the Sept. 11, 2001, attacks has been marred by extensive waste and misspent funds, according to a new bipartisan congressional report.

Lawmakers say that since the Department of Homeland Security’s formation in 2003, an explosion of no-bid deals and a critical shortage of trained government contract managers have created a system prone to abuse. Based on a comprehensive survey of hundreds of government audits, 32 homeland security contracts worth a total of $34 billion have “experienced significant overcharges, wasteful spending, or mismanagement,” according to the report, which is slated for release today.

The value of contracts awarded without full competition increased 739 percent from 2003 to 2005, to $5.5 billion, more than half the $10 billion awarded by the department that year. By comparison, the agency awarded a total of $3.5 billion in contracts in 2003, the year it was created.

Among the contracts that went awry were deals for hiring airport screeners, inspecting airport luggage, detecting radiation at the nation’s ports, securing the borders and housing Hurricane Katrina evacuees. Investigators looking into those contracts turned up whole security systems that needed to be scrapped, contractor bills for luxury hotel rooms and Homeland Security officials who bought personal items with government credit cards.

While many of those problems have been previously disclosed, today’s report is the first comprehensive survey of the government’s own investigations into contracting mismanagement in the domestic war against terrorism.

“Every dollar that is wasted on a contract is a dollar less that could be used to make Americans more secure,” said former department inspector general Clark Kent Ervin. “This kind of abuse constitutes a security gap all its own in America’s defense.”

Ervin said that though an undue reliance on contractors might have been excused when the agency was launched, it “is not understandable or justified all these years after the creation of the department.” The private sector, he said, has had the opportunity “time and time again to take the department – and thereby taxpayers – for a ride.”

Homeland Security spokesman Russ Knocke said the report faulted contracts made by the Transportation Security Administration before it became part of the Homeland Security Department, adding, “It’s hard to imagine that the report can criticize the department for a contract made before the department was created.”

Knocke said, “We continue to work very aggressively to strengthen our contracting procedures, maximize oversight and ensure that what are ultimately limited resources are applied in the most effective way.”

The Homeland Security Department was cobbled from 22 agencies after the Sept. 11, 2001, attacks as part of the largest reshuffling of federal responsibilities in a half-century.

With limited resources in-house, department officials made an early decision to lean heavily on the private sector to deliver technology, infrastructure and personnel. But the department struggled to launch the massive contracts deemed necessary to upgrade the country’s defenses. In the first major test of the department’s emergency systems, Homeland Security officials and contractors alike came under harsh criticism for their response to Hurricane Katrina last summer.

“We all assumed they would get better with age,” said Keith Ashdown, vice president for the watchdog group Taxpayers for Common Sense. “But now the evidence is overwhelming that they’ve gotten much, much worse.”

The report warns that the department is on the verge of making more mistakes by giving contractors too much latitude. It points to a planned multibillion-dollar contract for border security that has only the vaguest of requirements. “We’re asking you to come back and tell us how to do our business,” Homeland Security Deputy Secretary Michael Jackson told industry leaders in January.


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