Disaster procurement rules are clear, but agencies are not always prepared

These internal control plans will increase checks and balances on contracts requiring more strict oversight, including having the higher authorities sign off on contracts at a certain dollar threshold, OFPP's Robert Burton said.

Olivier Douliery

The government's ability to quickly recover from a disaster is, in part, reflected in how fast and how aptly agencies procure goods and services. And in turn, their speed and success depends on how well contracting officers understand the flexibilities built into the Federal Acquisition Regulations and whether agencies have enough people in place to fulfill emergency needs.

The means for emergency procurements exist, officials say. The key is in preparation.

Recent criticism over the Defense and Homeland Security departments' handling of contracts in Iraq or for the spate of hurricanes that hit the U.S. this year have caused lawmakers, administration officials and private-sector experts to question whether there is a need for reform.

While most experts agree that the problems weren't in the policy or laws, most of the troubles that agencies encountered had to do with how agencies used the acquisition flexibilities.

Adequate preparation

'The regulations are sufficient, we can operate within and get the job done with the regulations as they are currently written,' said Richard Skinner, DHS inspector general.

The troubles highlighted by hurricanes Katrina and Rita, and even in Iraq, have more to do with whether agencies are adequately prepared to use them during a crisis.

'[DHS officials] were not prepared' for a disaster of Katrina's magnitude, Skinner said.

The rules themselves give agencies such as DHS, the Federal Emergency Management Agency, the General Services Administration and others ample direction and authority to procure basic necessities within the bounds of law and policy, officials said.

These tools were the progeny of earlier government procurement failures. After FEMA was chastised for its lackluster, slow and disorganized response to hurricanes Hugo and Andrew in 1989 and 1992, respectively, the Office of Federal Procurement Policy made changes to the Federal Acquisition Regulations and created the National Response Plan so government procurement officials could swiftly and surely acquire goods and services quickly and cost-effectively.

Additionally, lawmakers built measures such as the Stafford Act and the Service Acquisition Reform Act to supplement the FAR and the National Response Plan.

The FAR lists rules for emergency contracting and lets contracting officers know when to sign a sole-source contract and conduct expedited competitions under certain circumstances.

'In a certain environment, it's a matter of reality that traditional forms of business can't be used,' said Stan Soloway, president of the Professional Services Council, an industry association in Arlington, Va.

OFPP, for example, took inventory of the FAR after Sept. 11, 2001, and determined that the regulation as structured gives agencies the authority to take whatever steps necessary during a crisis, OFPP's associate administrator Robert Burton said last month at a conference sponsored by the Contract Services Association of America, an industry association in Arlington, Va.

These flexibilities let OFPP temporarily increase the micropurchase threshold for warranted contracting officers with purchase credit cards from $15,000 to $250,000, Burton said, even though he does not believe that was a necessary step.

'Maybe for the first couple of weeks,' raising the threshold was appropriate, Burton said. 'But what we see now is agencies do not need that authority at that level. Current statute provides for contingency operations of $15,000 of the micropurchase threshold. After my discussions with agencies involved with Katrina relief, we find that $15,000 is adequate.'

Just because the rules appear clear, though, does not mean all agencies are educated on how they are expected to conduct business during a crisis. Some steps agencies can take are obvious'such as signing contracts in anticipation of a natural disaster so relief workers are mobilized well ahead of time'while others are more obscure.

For example, the Commerce Department takes special care in reviewing and overseeing purchases made on government purchase cards, said Mike Sade, Commerce's procurement executive and director for acquisition management.

Whenever there is an emergency situation and Commerce must acquire certain services immediately, the agency's acquisition shop assesses the situation, ascertains which employees can exercise expanded procurement authority and determines what the agency needs to buy, Sade said.

The agency's chief acquisition officer must approve these determinations and every purchase is closely monitored, he added.

OFPP and GSA also provide rigorous oversight.

Since Katrina hit, OFPP has been working with other agencies to implement internal control plans 'so that agencies can really double-check what they are doing,' Burton said.

These plans will increase checks and balances on contracts, requiring more strict oversight including having the higher authorities sign off on contracts at a certain dollar threshold, Burton said. OFPP has received internal control plans from seven agencies, including FEMA, GSA and the departments of Defense, Health and Human Services and Transportation.

On the other hand, if an agency's procurement workforce is not prepared, the end result can be expensive and embarrassing.

For example, Homeland Security and OFPP officials have made no secret that FEMA's procurement workforce needs improvement. Burton said FEMA had only 36 contracting officers in place when Katrina hit and was looking to hire 200 more over the next five years.

Skinner, DHS' inspector general, said FEMA did not have enough pre-existing contracts for disaster relief in place before Katrina, leaving procurement officials scrambling to buy water, ice, food and home repair services.

'We know there's going to be destruction of people's property, we know we're going to need temporary housing,' he said. But the agency purchased 'trailers that were nothing but a shell because we didn't have a defined contract of what the trailers should have.'

Some of these contracts were done orally with little discussion of price and details of what was to be provided, Skinner said.

And while many emergency IT needs already are on GSA's Federal Acquisition Service schedule, not all contracting officers knew that, he said.

'Our contracting officers should be working closer with GSA to know what exactly is on that schedule,' he said.

Burton said OFPP was looking specifically at 'very high-dollar Katrina contracts' with $500 million ceilings that FEMA awarded just after the storm hit.

'That is a lot of money and we will go back and take a look at these contracts,' he said.

Emily Murphy, GSA's chief acquisition officer, said her agency is helping OFPP review many of the contracts it signed for and with FEMA. 'We are taking our procurement management review team [and] are now looking at Katrina contracts,' she said.

OFPP is reviewing contracts FEMA signed under a no-bid process, a DHS spokesman said. These are indefinite-delivery indefinite- quantity type contracts with $500 million ceilings.

The spokesman said that none of these contracts have hit the $500 million limit and that many of the task orders under the contracts will be competed for in future solicitations.

The Professional Services Council's Sol- oway said government could help FEMA and others improve their procurement by amending the FAR so emergency regulations scattered throughout the different statutes are in one place.

GCN assistant managing editor Jason Miller contributed to this story.

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