Homeland Security Watch

News and analysis of critical issues in homeland security

July 27, 2006

A misleading new report on DHS contracts

Filed under: Business of HLS,DHS News — by Christian Beckner on July 27, 2006

The House Government Reform Committee released a report this morning entitled “Waste, Abuse and Mismanagement in Department of Homeland Security Contracts”, in conjunction with a hearing on the topic. The report earned front-page treatment in the Washington Post today – surprising given that it contains little new information. The report make a number of attention-getting claims, but many of these are misleading when you look at the underlying data and check the sources cited in the footnotes.

For example, one of the report’s banner claims is that it “identifies 32 DHS contracts collectively worth $34.3 billion that have been plagued by waste, abuse, or mismanagement.” Sounds shocking, right? If I was reading this quickly, I would think that DHS has wasted $34 billion of the taxpayers’ money. But take a look at the distribution of this “$34.3 billion.” Nearly half of it – $17 billion – is for the Coast Guard’s Deepwater program, their effort to modernize their fleet of ships and planes – a program that usually ranks up there with mom and apple pie. While projected costs have risen for this program, the most likely reason for this is not waste or fraud, but the Coast Guard’s transformed requirements after 9/11. And keep in mind that this $17 billion includes spending out into the next decade – as is the case with the next largest item on the list, the US-VISIT program (at $10 billion, only a small fraction of which has been spent to date).

The remaining $7.3 billion of this total largely consists of two things: first, TSA contracts back in 2002 before the creation of DHS, which were no doubt flawed (something that the Congress itself deserves a share of responsibility for, given the deadlines that it set for complying with ATSA mandates). And second, post-Katrina FEMA contracts which were also flawed (and which I’ve also frequently criticized).

The list does include one additional recent contract – the acquisition of Radiation Portal Monitors – but the report’s treatment of this contract makes a very erroneous claim. The report states that:

According to press reports, on an average day at the combined ports of New York and Newark, only 6% to 7% of the shipments are run through the radiation portals.

…linking to the transcript of a 60 Minutes report in March 2006, which clearly states that the 6%-7% applies to the VACIS x-ray imaging equipment – not the radiation portal monitors.

Finally, the report makes the claim that “Procurement spending at DHS has surged 189% since the creation of the new Department, rising from $3.5 billion in 2003 to $10 billion in 2005.” I’d like to see the underlying data that supports that claim. Since 2003 I’ve tracked DHS spending as closely as anyone outside of government, and this doesn’t square with my prior analysis, which would suggest that the % growth in contracts between 2003 and 2006 is actually quite small. I suspect that the Committee is using a source that has incomplete data for DHS’s first year or two, given the lack of reliable public data on contracts for this period. Or perhaps this increase is due to the fact that DHS was heavily reliant on contracting through other agencies in its first 2-3 years, and the database that the Committee used credits this spending to other agencies (this is why it’s important to cross-check with budget documents). Or perhaps the report uses one-time post-Katrina contracts to falsely denote a meaningful trend. My sense is that that this “increase” is actually an indicator that the DHS procurement shop has done a better job in the last two years of accounting for all DHS contracts.

There no doubt have been problems with homeland security-related procurement in the past few years, especially during TSA’s first year of existence and the post-Katrina spending spree. But this report is an error-filled and misleading account of this record.

Update (7/27): Overheard on the DC metro this afternoon, confirming my contention that this report and the Washington Post story give misleading impressions: “You won’t believe this story…it says that DHS has wasted 34 billion dollars in the last two or three years!”

Update 2 (7/28): More misleading press coverage of this report, this time from AP:

The Homeland Security Department spent $34 billion in its first two years on private contracts that were poorly managed or included significant waste or abuse, a congressional report concluded Thursday.

As I mentioned earlier in the post, $27 billion of this total is for full costs of the Deepwater and US-VISIT programs, out over the next 10-15 years. The vast majority of this total – at least 75% of the $27 billion – has not yet been spent by DHS.

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