Homeland Security:

Further Action Needed to Promote Successful Use of Special DHS Acquisition Authority

GAO-05-136: Published: Dec 15, 2004. Publicly Released: Dec 15, 2004.

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The Homeland Security Act of 2002 authorized the Department of Homeland Security (DHS) to establish a pilot program for the use of acquisition agreements known as "other transactions." Because they are exempt from many of the requirements that apply to government contracts, other transactions can be useful in acquiring cutting-edge technologies from entities that traditionally have declined to do business with the government. The act requires GAO to report to Congress on the use of other transactions by DHS. To fulfill this obligation, GAO (1) determined if DHS has developed policies and established a workforce to manage other transactions effectively and (2) evaluated how effectively DHS has used its other transactions authority to attract nontraditional government contractors.

The Department of Homeland Security has issued policy and is developing a workforce to implement its other transactions authority, but the department's policies need further development and its contracting workforce needs strengthening to promote the successful use of the authority in the future. Soon after it was established, DHS issued other transactions solicitations using some commonly accepted acquisition practices and knowledge-based acquisition principles. Subsequently, the department issued a management directive and drafted guidance for using other transactions, loosely modeled on the practices of the Department of Defense (DOD), one of several other agencies with other transactions authority and the one with the most experience with using these agreements. Unlike DOD, however, DHS has not specified in its policies or guidance when its contracting staff should consider the use of independent audits to help ensure, for example, that payments to contractors are accurate. Similarly, DHS has not established training requirements to aid staff in understanding and leveraging the benefits of other transactions. The DHS contracting workforce is limited in size and capacity, which could impede the department's ability to manage a potential increase in its other transactions workload. DHS is taking steps to enhance the capacity of its contracting workforce. The DHS Science and Technology Directorate included nontraditional government contractors in its first two other transactions projects. The Directorate engaged in extensive outreach efforts, such as conducting briefings on its mission and research needs to industry and academic institutions and using a number of Web-based tools to publicize its solicitations. But DHS has not yet developed mechanisms to capture and assess the knowledge gained about the use of other transactions. As a result, DHS may not be able to leverage information from current projects for use in future solicitations that use other transactions.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To promote the efficient and effective use by DHS of its other transactions authority to meet its mission needs, the Secretary of Homeland Security should direct the Under Secretary for Management and the Under Secretary for Science and Technology to capture knowledge obtained during the acquisition process for use in planning and implementing future other transactions projects.

    Agency Affected: Department of Homeland Security: Directorate of Management

    Status: Closed - Implemented

    Comments: In response to this recommendation, DHS representatives told us there is a new draft guide for the use of Other Transaction Agreements (OTA) which includes guidance that project managers and contracting officers meet at the completion of an OTA to develop lessons learned for use in future projects. Representatives said the guidance states that highlights and recommendations from these assessments should be documented and copies provided to the project manager maintained in the file. In addition, suggestions for revising agreement articles or terms and conditions should be maintained in an automated library for review and consideration in future projects. The department has not yet finalized this guidance and DHS representatives said they will provide a copy to GAO when it is final. Previously, DHS contracting representatives stated that they are applying lessons learned through changing policies and practices. For example, the guidance issued by the Office of Procurement Operations in May, 2008 incorporated lessons learned. However, they had not developed a formal process to capture knowledge obtained from using other transaction authority. Other transaction contracting officers within the Science and Technology Directorate share acquisition knowledge on an informal basis, for example, in discussions at staff meetings.

    Recommendation: To promote the efficient and effective use by DHS of its other transactions authority to meet its mission needs, the Secretary of Homeland Security should direct the Under Secretary for Management and the Under Secretary for Science and Technology to develop a training program for DHS staff in the use of other transactions to help ensure the appropriate use of this authority.

    Agency Affected: Department of Homeland Security: Directorate of Science and Technology

    Status: Closed - Implemented

    Comments: DHS has developed a training program for the use of other transaction authority. All other transaction contracting officers must successfully complete the course prior to receiving a warrant for other transaction agreements. The course covers prototype project and assistance other transaction agreements. Additionally, the course examines topics including intellectual property rights, the acquisition of property, and foreign access to technology under other transaction agreements. The training provided by DHS meets GAO's recommendation to develop a training program for DHS staff in the use of other transactions to help ensure the appropriate use of this authority.

    Recommendation: To promote the efficient and effective use by DHS of its other transactions authority to meet its mission needs, the Secretary of Homeland Security should direct the Under Secretary for Management and the Under Secretary for Science and Technology to develop a training program for DHS staff in the use of other transactions to help ensure the appropriate use of this authority.

    Agency Affected: Department of Homeland Security: Directorate of Science and Technology

    Status: Closed - Implemented

    Comments: DHS has developed a training program for the use of other transaction authority. All other transaction contracting officers must successfully complete the course prior to receiving a warrant for other transaction agreements. The course includes prototype projects under other transaction agreements. Additionally, the course examines topics including intellectual property rights, the acquisition of property, and foreign access to technology under other transaction agreements. The training provided by DHS addresses GAO's recommendation to develop a training program for DHS staff on the use of other transactions to help ensure the appropriate use of this authority.

    Recommendation: To promote the efficient and effective use by DHS of its other transactions authority to meet its mission needs, the Secretary of Homeland Security should direct the Under Secretary for Management and the Under Secretary for Science and Technology to establish guidance on when it is appropriate to include audit provisions in other transactions agreements.

    Agency Affected: Department of Homeland Security: Directorate of Management

    Status: Closed - Implemented

    Comments: On August 16, 2005, DHS's Chief Procurement Office issued a guidebook for use by DHS contracting officers, program managers, and other staff when utilizing the Other Transaction procurement authority. This guidebook, "Other Transactions for Prototype Projects," includes instructions on when DHS must include audit requirements in its other transaction agreements. DHS's provision of this guidance addresses our recommendation that DHS establish guidance on when it is appropriate to include audit provisions in its other transaction agreements.

    Recommendation: To promote the efficient and effective use by DHS of its other transactions authority to meet its mission needs, the Secretary of Homeland Security should direct the Under Secretary for Management and the Under Secretary for Science and Technology to establish guidance on when it is appropriate to include audit provisions in other transactions agreements.

    Agency Affected: Department of Homeland Security: Directorate of Management

    Status: Closed - Implemented

    Comments: On May 22, 2008, DHS's Office of Procurement Operations issued Procurement Operating Procedure (POP) #311, which establishes procedures for preparing Other Transactions for Prototypes. POP #311 included an Other Transaction Guidebook developed by DHS. The guidebook directs other transaction contracting officers (OTCOs) to include audit access clauses in an other transaction agreement when amounts generated from the awardee's financial or cost records are relied upon as the basis of payment. The guidance also provides direction on when to include audit access clauses for key participants. Finally, the guidance specifies circumstances in which the Defense Contract Audit Agency or an Independent Public Accountant should be used to perform audits on participants in an other transaction agreement. The action taken by DHS addresses GAO's recommendation to establish guidance on when it is appropriate to include audit provisions in other transaction agreements.

    Recommendation: To promote the efficient and effective use by DHS of its other transactions authority to meet its mission needs, the Secretary of Homeland Security should direct the Under Secretary for Management and the Under Secretary for Science and Technology to capture knowledge obtained during the acquisition process for use in planning and implementing future other transactions projects.

    Agency Affected: Department of Homeland Security: Directorate of Science and Technology

    Status: Closed - Implemented

    Comments: In response to this recommendation, DHS representatives told us there is a new draft guide for the use of Other Transaction Agreements (OTA) which includes guidance that project managers and contracting officers meet at the completion of an OTA to develop lessons learned for use in future projects. Officials said the guidance states that highlights and recommendations from these assessments should be documented and copies provided to the project manager maintained in the file. In addition, suggestions for revising agreement articles or terms and conditions should be maintained in an automated library for review and consideration in future projects. The department has not yet finalized this guidance and DHS representatives said they will provide a copy to GAO when it is final.

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