Homeland Security Lays Procurement Foundation

January 2008
By Maryann Lawlor
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Electronics Technician 1st Class James French, USCG, monitors radio frequencies inside a U.S. Coast Guard mobile communications center during the fall 2007 wildfires in Southern California. Radio frequencies were patched together for communications as well as to establish telephone and Internet connectivity in the Incident Command Center. Approximately 25 percent of the U.S. Department of Homeland Security’s (DHS’) $15 billion budget is spent on information technology.
Department building on lessons learned from the past to ensure success in the future.

The architects of the U.S. Department of Homeland Security’s procurement office are refining the organization’s blueprints for acquisition. Leaders are renovating the past procedures to fix problems and introducing new ideas that firmly yet flexibly establish best business practices for the future. More will be expected from companies, but at the same time more opportunities to work with the department will be available.

To understand the significance of the changes under way and the ones about to take place, Tom Essig, acting chief procurement officer for the Department of Homeland Security (DHS), says it is important to take a look at where procurement processes stood just a few years ago. In 2003, after the merger of 22 different departments and agencies under the DHS umbrella, approximately 30 additional offices within the DHS were newly created, which represented between 30 and 40 different requirements offices that had no independent contracting authority. Eight of the former departments came with their contracting organizations intact. Each of those had a head of the contracting activity, or HCA, assigned to them, Essig explains. One of the first decisions the department made was to create an HCA at the activities that did not have one.

Significant changes have taken place at the higher levels of the organization as well. For example, in 2003 the Office of Procurement Operations was staffed by three people; today, it employs 180, and the department is planning to hire an additional 70 people during the next year.

“We’ve seen very, very significant growth in the organization and, as you can imagine, very significant changes in the way we’re doing business. When there were three people in the department, they largely went elsewhere for contracting support. So what you saw was a heavy use of interagency agreements,” Essig relates.

During its first few years, the DHS’ Office of the Chief Procurement Officer (CPO) was primarily responsible      for contracting policy, overseeing contracting within the department and delegating contracting authority to the HCAs. This approach was not successful when it came to program management, logistics or systems engineering, so that is changing, he states.

 In 2006, the CPO established three top-level goals for its contracting community to begin bringing about some much-needed change. The first goal was to develop and maintain an acquisition work force of the right size, skill mix and talent. Essig explains that while the office knew it needed to grow, it also needed to be careful about how it proceeded to make sure that it was getting more staff members and increasing the number of available skill sets. In addition, the organization wanted to ensure that it was developing its people so they could be fully functional contracting personnel.

Essig admits that the second goal may sound simple, but it is the direct result of being a new organization. The goal, to make good business deals, is in response to some of the shortfalls in the department’s procurement processes identified during the past several years. The combination of a small staff and numerous urgent needs led to fast but not always wise business arrangements with companies, he admits. “People were awarded [contracts] for being able to get things in place fast, but sometimes fast was at the expense of a good business deal. Last year we recognized that we are now staffed enough and we are mature enough to move to the next level, where we need to meet mission requirements while we are still good stewards of taxpayer dollars,” he offers.

The office’s third goal also is one that would appear to be obvious for long-established government departments. While performing contract administration has long been a job of government agencies, at DHS, the contract specialists are responsible for both pre-award and post-award activity. Because so many capabilities had to be purchased quickly to respond to urgent needs, the contract specialists would get a contract in place and then move on to the next pre-award action, leaving contract administration behind.

“So even though we might have done a great job negotiating a contract—we put a good deal in place—we really weren’t doing a good job of making sure we got what we thought we got; we got what was needed. That’s critical, and now we want everybody to enforce that,” Essig maintains.

The HCAs of each of the components of DHS have been developing their performance goals for themselves and their subordinates based on these three goals. “We are still working on that. I’m not going to tell you that we are at all done. We still have room for improvement,” he states.

 
Sherice Price watches a monitor as Rick Smith’s fingerprints are scanned into a computer at the port in Wilmington, Delaware. Electronic fingerprinting is part of the application process for a Transportation Worker Identification Credential, one of the many programs DHS administers using new biometric technologies.
In addition to these three goals, the office has identified a fourth objective that reflects the CPO’s expanded mission. The office’s responsibilities recently expanded to include program management, systems engineering, test and evaluation, cost analysis and estimation, and life-cycle logistics. In essence, the department picked up the responsibility for policy and oversight for acquisition in addition to its contracting responsibilities.

To address the additional requirements of these new responsibilities, the CPO created the Acquisition Program Management Division. The goal is to improve the quality of program management within the DHS. Essig emphasizes that the CPO is not responsible for determining requirements, and it is not responsible for the budget. It is responsible only for monitoring interfaces of acquisition with those two systems.

Although significant improvements have taken place during the past four years, Essig admits, more work remains. In 2004, DHS had 603 contracting specialists on board. Today, the department has grown by 67 percent to 1,005. “That’s tremendous growth and unfortunately not even close to what we think we need,” he states.

A study conducted several years ago to help the department determine how many contracting specialists it needed estimated that, given its mission and additional contracting administration responsibilities, the department still needed an additional 600 to 1,500 contracting specialists for due diligence alone. As a result of its maturation, it is time to take another look at that number and obtain a more refined estimate, Essig notes. To that end, the DHS late last year contracted with Jefferson Solutions, a division of the Jefferson Consulting Group, to conduct another study. The final report is due out this month.

In addition to the study, the DHS is taking several other measures to ensure that its acquisition community is adequate. For example, the 2008 budget request includes funding for 66 positions for a new acquisition professional community. Essig states that eventually the department will have a total of 300 personnel in this newly formed community, and it plans to train this group in a rather innovative way. The 300 new staff members will be hired over a three-year period. During each of three years, 100 new employees will be hired and will begin an assignment with one of the DHS’ component organizations. The groups will then rotate through each of the component organizations, and after the third year, individual members will be hired by one of the components as permanent employees.

The second initiative the department is introducing involves people who have retired from government service. Late last year, the DHS requested and received authority to hire re-employed annuitants. These experienced personnel will ensure that new employees obtain the training they require. “As we bring in bunches of new people in large numbers—66 this year and 100 the year after—we need to have the ability to mentor them once they are onboard,” Essig relates. In addition to programs to bring in new personnel and bring back retired workers, the department is actively recruiting mid-level government workers, including those at the GS 11, 12 and 13 levels, he adds.

Even with all of these new initiatives, Essig admits that more work remains, and the department is establishing the baseline about what it needs in terms of personnel. For example, certified program managers administer its programs that are valued at more than $100 million. Now, the department is in the process of redoing each of these Level 1 programs through a quick-look process. “We’re looking at two things: program documentation and the program office itself. Is there an acquisition program baseline? Is there requirements documentation? Does the program have a life-cycle cost estimate? And under the program office itself, where is it placed organizationally? How many people are assigned? What are the skill sets and functional expertise areas of the people in the program office?” he says. Assessments are being made based on whether a program in a particular phase of a life cycle, considering both the program’s complexity and size, is adequately staffed in terms of numbers and skill sets. This will establish the baseline, he adds.

Aside from changes to its personnel processes, the DHS also is continuing the transformational efforts in procurement brought about by its two multiple award contracts, the Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) and FirstSource. The department currently spends about $15 billion a year; approximately 75 percent of that amount is spent on services, while the remaining 25 percent is spent by and large on information technology. One of the benefits of primarily using the EAGLE and FirstSource contract vehicles is consistency, which supports the department’s goal for an enterprise architecture, Essig notes.

“The systems that are on FirstSource, for example, are approved for use. We know they’re going to work with other systems and give us the compatibility that our  chief information officer is looking for. Those two vehicles, EAGLE and FirstSource, were a joint effort between the chief procurement office and the chief information officer to help us get where we need to get to as a department,” he adds.

Despite the preference for these two contract vehicles, the DHS is making every effort to reach out to the commercial community. At its first Industry Day in November, representatives from the department communicated their requirements to the companies in attendance.

In addition, the department has set up a Web site as a single point of entry that Essig describes as “everything to do about doing business with DHS.” Included on the Web site are the department’s advanced acquisition plans, which include a forecast of business opportunities for the upcoming fiscal year.

Regarding opportunities for small business, the department has initiated a vendor outreach program. Meetings are arranged between prime contractors and potential subcontractors so that large firms have the opportunity to learn what small companies are doing and small firms have the opportunity to be heard.

Essig emphasizes that one area the DHS will focus on in the future is consistency of process. While the department is looking for mistakes it has made, it is not conducting the search to fix them after the fact. Instead, it is looking for the errors so that it can improve the process. “What we want to do is make sure that if we’re seeing the same mistake made repeatedly, we know why. Is it because the policy is unclear? Is it because people were overworked? Or is it because basically people weren’t trained? If people weren’t trained, we want to put together a training program to get them there,” he explains.

On the program management side, the department is looking at a program that was developed by the military to look at a project status and use the data from cost and schedule reports and earned-value systems to see how likely it is that the program is going to run into problems. Additionally, the department is setting competition goals for its HCAs to make sure that where more than a single source is available, work is being adequately competed in an effort to make the best business deals.

In terms of future spending in the science and technology field, Essig explains that the department is examining how to emulate the technology readiness levels the U.S. Defense Department currently uses. It is determining the best approach to handling the work that goes on between basic research and a mature technology.

During these first years as a new department, the DHS has gone through a whirlwind of changes, and it has been the commercial sector that has helped the procurement office stay ahead of the curve. Because of a shortage of staff, the chief procurement office has relied heavily on companies for acquisition support services, and this has led to the concern that the DHS has had too much contractor help. “We’re taking a close look at that now to make sure that the work that is contracted out is appropriately contracted out and the work that is retained is also appropriate. But we are getting a lot of help in that area now simply because we need it,” Essig states.

During an all-hands meeting late last year, employees raised the concern about whether the department’s progress has been quick enough. Essig asked attendees that were new to the CPO organization since the last all-hands meeting to stand. “Half the audience stood up. It was a perfect demonstration of how far we’ve come in six months. There are many times when I read the Washington Post about what DHS did wrong today, and I look at them and say yes; but I’m finding now that ‘found it, fixed it already, moved on to the next thing’ is the answer to that. Finally we’re at the point I think we’re over the top of the hill, and yes, there’s a lot to fix. But we now have the people—we have the resources—to start doing that,” he states.

Web Resources
U.S. Department of Homeland Security business opportunities: www.DHS.gov/openforbusiness
Federal Interagency Databases Online: www.fido.gov
DHS Advance Acquisition Plan: www.fido.gov/dhs/aap/publicview.asp