Report: DHS Spent $34 Billion on Bad Contracts

Published July 27, 2006

| Associated Press

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.

Faulty airport screening machines, unused mobile homes for hurricane victims and lavish employee office space — complete with seven kitchens, a gym and fancy artwork — were among 32 contracts on which Homeland Security overspent, the report found.

"The cumulative costs to the taxpayer are enormous," concluded the report, which was prepared for Reps. Tom Davis, R-Va., and Henry Waxman, D-Calif., who head the House Government Reform Committee.

The House report was a comprehensive study of more than 350 earlier-reported government audits and investigations of Homeland Security contracts between 2003, when the department was created, and 2005.

Still, the broad look found that Homeland Security's procurement spending ballooned from $3.5 billion, on 14,000 contracts, to $10 billion for 63,000 contracts during the two-year period. The report also concluded that half of what the department spent on contracts in 2005 was awarded without full and open competition — creating potential waste and mismanagement.

Over the two-year period, spending on noncompetitive contracts jumped from $655 million to $5.5 billion, the report concluded.

Questionable contracts highlighted in the report included:

—$1.2 billion to install and maintain luggage screening equipment at commercial airports that had a high false alarm rate.

—$915 million on nearly 26,000 mobile homes and trailers to house hurricane victims and relief workers — none of which could be sent to disaster zones in Louisiana and Mississippi because of prohibitions on their use in flood plains.

-$19 million for Transportation Security Administration office space for 140 employees that includes 12 conference rooms, seven kitchens, a fitness center, and $500,000 worth of artwork and decorative items.

Homeland Security chief procurement officer Elaine Duke told the House Government Reform Committee that part of the problem stemmed from a lack of department officers to oversee the contracts. In 2004, congressional investigators concluded that each procurement employee was responsible for overseeing an average of $101 million worth of contracts.

"Balancing the appropriate number of DHS contracting officials with the growth of DHS contracting requirements has been a challenge," Duke said in written testimony to the committee.

She said department has since begun recruiting and hiring additional procurement officers.

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