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Report Finds Abuse of Homeland Security Contracts

July 27, 2006 at 6:45 PM EST
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RAY SUAREZ: The Department of Homeland Security was created
three years ago to consolidate the work of 22 federal agencies under one
cabinet-level executive. It was seen as the best way to coordinate and oversee
all of the increased spending on domestic security in the wake of the 9/11
attacks.

Now, a new congressional survey of spending by the
department reveals big problems with the way homeland security contracts have
been priced and awarded.

Among its findings, 32 department contracts, totaling $34
billion, were plagued by waste, abuse or mismanagement. The value of no-bid
contracts DHS awarded over the past three years increased by 739 percent, and
55 percent of all DHS contracts awarded in 2005 were no-bid.

For more, we’re joined by Griff Witte of the Washington
Post, who reported on the congressional findings in this morning’s edition.

Welcome to the program. In the report and in the hearings
that followed, did they get at how this all happened, in addition to counting
up the eye-popping numbers involved?

GRIFF WITTE, The Washington Post: They did. They looked at
specifically, as you said, about 32 contracts overall, collectively worth about
$34 billion. And what they found in those contracts, which covered a myriad of
areas of homeland security, ranging from border security, to the response to
Hurricane Katrina, to screening passengers, to screening baggage at the
airports, and what they found essentially was that there were a few different
things that went on.

One was that you had programs that just simply did not work.
You had, for instance, a border security contract in which there were supposed
to be some very high-tech cameras mounted along the border that would detect
whether illegal immigrants were trying to cross.

But those cameras, in actuality, did not work. They would
malfunction in cases where there was extreme heat or extreme cold, where there
was ice, snow, where there was humidity. So in these cases, which are, as you
can imagine, pretty common along the borders, the systems just simply broke
down. They did not do the job.

RAY SUAREZ: In example of cases like the one you just cited,
is anyone punished? Is anyone made to account for the fact that a product was
sold that simply did not work?

GRIFF WITTE: That’s one of the troubling things that
Congress is very interested in right now, is that the government doesn’t have a
whole lot of tools at its disposal to go after contractors when things like
this occur. And there are some cases where award fees were withheld, where the
contractors did not get the bonuses they were expecting to get.

But in many cases, the contractor simply got the money that
they were supposed to get, and in cases — in quite a few cases, actually, they
got a lot more money than initially was expected. And whether the system worked
or not, the contractors were paid.

Getting our dollar's worth

RAY SUAREZ: Well, FEMA comes in for some heavy treatment inboth in the report and in the hearings. What were some of the ways that moneywas spent on, for instance, Gulf Coast recovery thatattracted the committee's attention?

GRIFF WITTE: In the immediate aftermath of HurricaneKatrina, one of the biggest questions was, where do you put all of theevacuees? And what we learned very quickly was that FEMA, while it has someplans for that, did not have in place all of the contingency contracts that itwas going to need in order to place the evacuees in safe places outside of thedanger zone.

And so FEMA bought thousands and thousands of trailers rightafter Katrina made landfall on the Gulf Coast. And what happenedwas a lot of those trailers simply did not get used. They have been sittingidle for months and months now. They were never used.

FEMA also contracted with Carnival cruise lines to bring insome cruise ships where it was expected that evacuees would be spending thenights. But unfortunately, in those cases, the costs were just exorbitantcompared to what they could have done had they used other means.

RAY SUAREZ: Well, what are the kind of price tags we'retalking about, in the case of the mobile homes and the cruise ships?

GRIFF WITTE: In those cases -- well, for instance, with theCarnival cruise line, they found that a single night stay averaged out overallof the people who were staying there, worked out to about $300 a night, whichobviously is not a very good value for taxpayers when you consider that youcould find other options that are considerably less expensive.

And in terms of the trailers, the numbers have not beenadded up yet, but it's safe to say the government spent quite a few milliondollars on those contracts and did not end up using the trailers that theybought.

RAY SUAREZ: Why are so many of the contracts let by thisgovernment department non-competitive contracts, not put out to bid?

GRIFF WITTE: That's one of the really intriguing things aboutthis report. The report documents how the Department of Homeland Security hascontracted over the last three years, ever since its creation in 2003.

In the beginning, the department was using a lot ofcontracts that were not fully competitively bid, but there was an understandingthat that was reasonable in some cases because the department was getting offthe ground. It was being created in a time of great national emergency, greaturgency.

Now the department has had time to get its legs underneathit, it has had time to work out how it's going to do its contracting, and yetyou see the value of these no-bid contracts and these contracts, where only alimited number of firms are allowed to compete, you see the value of thosecontracts actually going up. You do not see it going down. And it's actuallyrising far faster than even the overall growth of contracting at the Departmentof Homeland Security.

Answering to the taxpayers

RAY SUAREZ: Well, leaders of the Department of HomelandSecurity were at today's hearings and testifying. What did they have to say forthe operation of their department?

GRIFF WITTE: They say that they're working on improving thecontracting. They say that they need time. They say that they want patience outof lawmakers because this is a department that is new. It's only three yearsold.

When it was created, it marked the largest transformation offederal government organization in the past half-century. And it really was avery, very difficult operation. You had essentially the merger of 22 differentagencies all coming together, all with different ways of buying products andservices. And they just have not gotten out all of the kinks yet of thatprocess; they still have a system that is, in many ways, dysfunctional.

RAY SUAREZ: Well, you cover government contracting as partof your beat in Washington,and you mention all with different ways of buying things. FEMA existed beforethe Department of Homeland Security. The Coast Guard did, Immigration andNaturalization. Why did they move to such a large percentage of no-bidcontracts just because they were now under a different departmental umbrella?

GRIFF WITTE: Well, what they will say is that a lot of thoseno-bid contracts came in the immediate aftermath of Katrina. And what you had,essentially, was a situation where they had to move very quickly to respond tothe needs of the people who were displaced along the Gulf Coast,and so they did not have the contracts in place that they needed.

They felt like they needed to act fast, and so theyessentially gave the contracts to the companies that they knew could do the jobor that they hoped could do the job without competition in many cases.

What critics have said since is that essentially thedepartment needs to have those contracts in place before the emergency strikes.They need to have contingency contracts so that, the moment an emergency setsin, they'll be ready, the companies will be ready, everyone will know whatthey're doing, and the taxpayer won't get gouged, that the prices will be setin advance.

RAY SUAREZ: On the taxpayer gouging, did the DHSrepresentatives hold out any hope for the government to be able to recoup someof the losses, either get the things that they bought properly, get theservices completed properly, or get money returned?

GRIFF WITTE: Well, I don't know that they have a whole lotof hope of that, no. In some cases, as I mentioned, they are withholding awardfees, but overall a tremendous amount of money has been lost that is simply notcoming back.

And what particularly concerns lawmakers is that they feelthat the Department of Homeland Security has not learned its lessons yet, thatessentially they have, in fact, ordered up a new contract for border securitythat gives contractors a tremendous amount of latitude and essential tells thecontractors, "You tell us and the government how to do our business."

Lawmakers are very nervous that that contract is going tolead to the same kind of mismanagement and waste that we saw in these othercontracts over the past three years.

RAY SUAREZ: Griff Witte of the Washington Post, thanks forbeing with us.

GRIFF WITTE: Thank you, Ray.