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Agency Snapshot: Department of Homeland Security
In FY 2010, the Department of Homeland Security (DHS) spent $14 billion on contracting. Like other agencies, DHS is working to improve how they contract to ensure that they spend money wisely and eliminate waste and abuse in taxpayer dollars.
Key Initiatives
Spending on contracts grew tremendously over the past decade, averaging 12 percent annually from FY 2000 to FY 2008, according to Federal Procurement Data System (FPDS). Recognizing this growth was unsustainable, the President directed agencies to save $40 billion annually by FY 2011. Responding to the President’s mandate, agencies have been working to eliminate waste and apply fiscally responsible acquisition practices. While more work remains to be done, the efforts have already successfully reversed the previous unsustainable growth. For the first time since 1997, overall contract spending declined last year. FY 2010 spending was $535 billion versus $550 billion in the prior year. Moreover, agencies spent nearly $80B less in FY 2010 than they would have spent had contract spending continued to grow at the same rate it had under the prior Administration.
Agencies are making concerted efforts to reduce the money spent through high-risk contracts – contracts that are not fixed price or are awarded without receiving more than one bid – so that the government faces no greater financial risk than necessary in its contracting. There are two dimensions of contracting risk. First, there is the risk of overspending if agencies contract without the benefit of competition. Second, there is risk of wasteful spending when agencies pay for expenses as incurred rather than setting a fixed price upfront for the delivery of a completed product or service. President Obama has directed agencies to reduce risk on both of these dimensions in order to ensure that agencies get the best value for each taxpayer dollar.
The government needs talented and trained individuals who can plan, manage and oversee acquisitions to provide the government with the goods and services it needs at the best value to taxpayers. The inflation-adjusted dollar value of contracting has increased much faster than the number of contract specialists between FY 2000 and FY 2008. As a result, the acquisition workforce spends less time on critical steps in the acquisition process such as planning, requirements development, market research, competition, and contract administration – increasing the chances of cost overruns, delays, and other poor outcomes. The Administration is working to ensure both the right acquisition workforce size and appropriate ongoing training for personnel so that the government has the necessary workforce to manage the government’s acquisitions efficiently.
Agency spending is typically fragmented across multiple departments, programs, and functions. As a result, agencies often rely on hundreds of separate contracts for many commonly used items, with prices that vary widely. This often prevents agencies from receiving the best price they could, leading to an unacceptable waste of taxpayer dollars. To address this waste, agencies are reviewing their internal buying patterns and identifying opportunities to combine contracts to achieve significant savings for recurring requirements. OMB is building on these efforts by pulling agencies together to identify commodities that all agencies need and are likely to buy with similar terms and conditions.
