[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
PLAYING BY ITS OWN RULES: TSA'S EXEMPTION FROM THE FEDERAL ACQUISITION 
                              REGULATION,
        AND HOW IT IMPACTS PARTNERSHIPS WITH THE PRIVATE SECTOR

=======================================================================

                                HEARING

                               before the

                      SUBCOMMITTEE ON MANAGEMENT,
                     INVESTIGATIONS, AND OVERSIGHT

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             AUGUST 1, 2007

                               __________

                           Serial No. 110-65

                               __________

       Printed for the use of the Committee on Homeland Security
                                     
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  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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                     COMMITTEE ON HOMELAND SECURITY

               BENNIE G. THOMPSON, Mississippi, Chairman

LORETTA SANCHEZ, California,         PETER T. KING, New York
EDWARD J. MARKEY, Massachusetts      LAMAR SMITH, Texas
NORMAN D. DICKS, Washington          CHRISTOPHER SHAYS, Connecticut
JANE HARMAN, California              MARK E. SOUDER, Indiana
PETER A. DeFAZIO, Oregon             TOM DAVIS, Virginia
NITA M. LOWEY, New York              DANIEL E. LUNGREN, California
ELEANOR HOLMES NORTON, District of   MIKE ROGERS, Alabama
Columbia                             BOBBY JINDAL, Louisiana
ZOE LOFGREN, California              DAVID G. REICHERT, Washington
SHEILA JACKSON LEE, Texas            MICHAEL T. McCAUL, Texas
DONNA M. CHRISTENSEN, U.S. Virgin    CHARLES W. DENT, Pennsylvania
Islands                              GINNY BROWN-WAITE, Florida
BOB ETHERIDGE, North Carolina        MARSHA BLACKBURN, Tennessee
JAMES R. LANGEVIN, Rhode Island      GUS M. BILIRAKIS, Florida
HENRY CUELLAR, Texas                 DAVID DAVIS, Tennessee
CHRISTOPHER P. CARNEY, Pennsylvania
YVETTE D. CLARKE, New York
AL GREEN, Texas
ED PERLMUTTER, Colorado

        Jessica Herra-Flanigan, Staff Director & General Counsel

                     Rosaline Cohen, Chief Counsel

                     Michael Twinchek, Chief Clerk

                Robert O'Connor, Minority Staff Director

                                 ______

       SUBCOMMITTEE ON MANAGEMENT, INVESTIGATIONS, AND OVERSIGHT

             CHRISTOPHER P. CARNEY, Pennsylvania, Chairman

PETER A. DeFAZIO, Oregon             MIKE ROGERS, Alabama
YVETTE D. CLARKE, New York           TOM DAVIS, Virginia
ED PERLMUTTER, Colorado              MICHAEL T. McCAUL, Texas
VACANCY                              PETER T. KING, New York (Ex 
BENNIE G. THOMPSON, Mississippi (Ex  Officio)
Officio)

                    Jeff Greene, Director & Counsel

                         Brian Turbyfill, Clerk

                    Michael Russell, Senior Counsel

                                  (ii)


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Christopher P. Carney, a Representative in Congress 
  From the State of Pennsylvania, and Chairman, Subcommittee on 
  Management, Investigations, and Oversight:
  Oral Statement.................................................     1
  Prepared Statement.............................................     2
The Honorable Mike Rogers, a Representative in Congress From the 
  State of Alabama, and Ranking Member, Subcommittee on 
  Management, Investigations, and Oversight:
  Oral Statement.................................................     3
  Prepared Statement.............................................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Chairman, Committee on 
  Homeland Security:
  Oral Statement.................................................     4
  Prepared Statement.............................................     5

                               WITNESSES

Mr. David Bodenheimer, Esq., Partner, Crowell & Moring LLP:
  Oral Statement.................................................    14
  Prepared Statement.............................................    16
Mr. Alan Chvotkin, Senior Vice President and Counsel, 
  Professional Services Council:
  Oral Statement.................................................    23
  Prepared Statement.............................................    24
Ms. Elaine Duke, Chief Procurement Officer, U.S. Department of 
  Homeland Security:
  Oral Statement.................................................     6
  Prepared Statement.............................................     8
Mr. Rick Gunderson, Assistant Administrator for Acquisition, 
  Transportation Security administration, U.S. Department of 
  Homeland Security:
  Oral Statement.................................................    10
  Prepared Statement.............................................    12

                                APPENDIX

Additional Questions and Responses:
  Responses from Mr. David Bodenheimer...........................    37
  Responses from Mr. Alan Chvotkin...............................    44
  Responses from Ms. Elaine Duke.................................    49
  Responses from Mr. Rick Gunderson..............................    51


                    PLAYING BY ITS OWN RULES: TSA'S
                       EXEMPTION FROM THE FEDERAL
                   ACQUISITION REGULATION, AND HOW IT
              IMPACTS PARTNERSHIPS WITH THE PRIVATE SECTOR

                              ----------                              


                       Wednesday, August 1, 2007

             U.S. House of Representatives,
                    Committee on Homeland Security,
                Subcommittee on Management, Investigations,
                                             and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:04 a.m., in 
Room 311, Cannon House Office Building, Hon. Christopher Carney 
[chairman of the subcommittee] presiding.
    Present: Representatives Carney, DeFazio, Thompson, and 
Rogers.
    Mr. Carney. [Presiding.] The subcommittee will come to 
order.
    The subcommittee is meeting today to receive testimony on 
``Playing by Its Own Rules: TSA's Exemption from the Federal 
Acquisition Regulation and How It Impacts Partnerships with the 
Private Sector.''
    Government contracting is by no means a sexy subject. That 
said, in this day and age, government alone is not going to 
keep us safe. Instead, we need government and the private 
sector working together. One of the main ways this happens is 
through contracts.
    Today we are looking at TSA's partnership with the private 
sector and how its exemption from the Federal Acquisition 
Regulation impacts that cooperation.
    Frankly, I am struggling to understand why TSA currently 
plays by its own set of rules. I look at the rest of the 
federal government: intelligence agencies trying to protect us 
from terrorists; the Department of Justice enforcing our laws; 
the Department of Defense fighting a war. They are all governed 
by the Federal Acquisition Regulation. I look within the 
Department of Homeland Security itself: CBP working to secure 
our borders; FEMA responding to catastrophes; Secret Service 
protecting the president. They are all governed by the FAR.
    Simply put, the FAR is the norm.
    Yet TSA is different. It uses the Federal Aviation 
Administration's Acquisition Management System, or AMS.
    If this were just a benign difference, perhaps it wouldn't 
matter. The DHS is an agency that is struggling to integrate 
numerous disparate components into a cohesive entity. Having 
two distinct contracting systems in one department necessarily 
makes that process more complicated.
    I am also concerned about what would happen if TSA had a 
sudden need for contracting officers due to a terrorist threat 
or an attack. Where would the surge capacity come from? The 
rest of the contract professionals in the department know the 
FAR, not TSA's AMS.
    And finally, as we are going to hear today, I am concerned 
about the challenges AMS poses for TSA's private-sector 
partners.
    In the face of these concerns, it really comes down to a 
simple question: If the FAR is good enough for the overwhelming 
majority of the federal government, why not for TSA?
    Before I close, I would like to thank Ms. Duke and Mr. 
Gunderson and their staff for submitting their testimony on 
time. It really helps; it makes a huge difference. We have had 
a hard time getting the department to submit their testimony on 
a timely basis, and I do appreciate your efforts. I hope that 
this is a sign of things to come.
    Thank you very much.
    Good. The note just given to me means we actually have some 
time for this hearing, given the schedule.
    I now recognize the ranking member of the subcommittee, the 
gentleman from Alabama, my friend, Mr. Rogers, for an opening 
statement.
    [The statement of Mr. Carney follows:]

  Prepared Opening Statement of the Honorable Christopher P. Carney, 
  Chairman, Subcommittee on Management, Investigations, and Oversight

    Government contracting is by no means a sexy subject.
     That said, in this day and age, government alone is not 
going to keep us safe. Instead, we need government and the private 
sector working together.
     One of the main ways this happens is through contracts.
     Today we are looking at TSA's partnership with the private 
sector, and how its exemption from the Federal Acquisition Regulation 
impacts that cooperation.
     Frankly, I am struggling to understand why TSA currently 
plays by its own set of rules.
     I look at the rest of the federal government--
         intelligence agencies trying to protect us from 
        terrorists;
         the Department of Justice enforcing our laws;
         the Defense Department fighting a war.
     They are all governed by the Federal Acquisition 
Regulation.
     I look within the Department of Homeland Security itself--
         CBP working to secure our borders;
         FEMA responding to catastrophes;
         Secret Service protecting the President.
     They are all governed by the FAR.
     Simply put, the FAR is the norm.
     Yet TSA is different--it uses the Federal Aviation 
Administration's Acquisition Management System, or AMS.
     If this were just a benign difference, perhaps it wouldn't 
matter.
     But DHS is an agency that is struggling to integrate 
numerous disparate components into one cohesive entity.
     Having two distinct contracting systems in one department 
unnecessarily makes that process more complicated.
     I'm also concerned about what would happen if TSA had a 
sudden need for contracting officers due to a terrorist threat or an 
attack.
     Where would the surge capacity come from? The rest of the 
contract professionals in the Department know the FAR, not TSA's AMS.
     And, finally, as we're going to hear today, I'm concerned 
about the challenges AMS poses for TSA's private sector partners.
     In the face of these concerns, it really comes down to a 
simple question: if the FAR is good enough for the overwhelming 
majority of the federal government, why not for TSA?
     Before I close, I'd like to thank Ms. Duke and Mr. 
Gunderson, and their stuff, for submitting their testimony on time.
     We've had a hard time getting the Department to submit 
their testimony on a timely basis, and I appreciate your efforts. I 
hope that it is a sign of things to come.

    Mr. Rogers. Thank you, Mr. Chairman. I appreciate you 
calling this important hearing.
    And I want to thank the witnesses for taking the time out 
of their busy schedules to be here with us today.
    We welcome back three of our witnesses to the subcommittee, 
including the chief procurement officer of the Department of 
Homeland Security, one of my personal favorites.
    Today the subcommittee will examine the Acquisition 
Management System, which TSA uses in its contracting process. 
Specifically, the subcommittee will evaluate why TSA still uses 
this system instead of the process used by the rest of DHS. The 
system is the Federal Acquisition Regulation, commonly known as 
the FAR, which applies to agencies throughout the federal 
government.
    Shortly after the terrorist attacks of September 11, 2001, 
TSA was established within the Department of Transportation. 
The agency inherited the same acquisition system used by 
another agency in that department, namely, the Federal Aviation 
Administration.
    When the Department of Homeland Security was created in 
2003, TSA was one of the agencies which was moved into the new 
department. Today, the FAR applies to all of DHS except the 
Transportation Security Administration, which still uses its 
original Acquisition Management System.
    Our hearing will examine whether this distinction still 
makes sense after over 4 years since the creation of DHS. We 
will explore with our witnesses a number of questions, 
including: What are the implications of having one DHS agency 
with a separate acquisition process, compared to the process 
used by the rest of the department? What are the pluses and 
minuses of TSA's original acquisition process, as compared with 
the FAR? How well does the private sector work with a major 
Cabinet department that operates two different acquisition 
systems? Does DHS have the necessary contracting staff to 
effectively manage these two systems? And wouldn't it be better 
to apply the FAR uniformly throughout all of DHS?
    I look forward to hearing from our witnesses on these 
issues and, again, thank them for being here today.
    And I yield back to the chairman.
    [The statement of Mr. Rogers follows:]

   Prepared Statement of the Honorable Mike Rogers, Ranking Member, 
       Subcommittee on Management, Investigations, and Oversight

    Thank you, Chairman Carney, for holding this important hearing on 
the acquisition process at the Transportation Security Administration.
    First, I would like to thank our witnesses for taking time out of 
their busy schedules to be here today.
    We also welcome back three of our witnesses to this Subcommittee, 
including the Chief Procurement Officer for the Department of Homeland 
Security.
    Today the Subcommittee will examine the Acquisition Management 
System which TSA uses in its contracting process.
    Specifically, the Subcommittee will evaluate why TSA still uses 
this system. . .instead of the process used by the rest of DHS.
    That system is the Federal Acquisition Regulation, commonly known 
as the FAR--which applies to agencies throughout the Federal 
Government.
    Shortly after the terrorist attacks of September 11, 2001, TSA was 
established within the Department of Transportation.
    The agency inherited the same acquisition system used by another 
agency in that Department--namely, the Federal Aviation Administration.
    When the Department of Homeland Security was created in 2003, TSA 
was one of the agencies which was moved into the new department.
    Today, the FAR applies to all of DHS--except the Transportation 
Security Administration--which still uses its original Acquisition 
Management System.
    Our hearing will examine whether this distinction still makes sense 
after over four years since the creation of DHS.

    We will explore with our witnesses a number of questions, 
including--
     What are the implications of having one DHS agency with a 
separate acquisition process. . .compared to the process used by the 
rest of the department?
     What are the pluses and minuses of TSA's original 
acquisition process, as compared to the FAR?
     How well does the private sector work with a major Cabinet 
department that operates two different acquisition systems?
     Does DHS have the necessary contracting staff to 
effectively manage these two systems?. . .and,
     Wouldn't it be better to apply the FAR uniformly 
throughout all of DHS?
    I look forward to hearing from our witnesses on these issues, and 
again thank them for being here today.
    Thank you, Chairman Carney.
    I yield back.

    Mr. Carney. Thank you, Mr. Rogers.
    The chair now recognizes the chairman of the full 
committee, the gentleman from Mississippi, Mr. Thompson, for an 
opening statement.
    Mr. Thompson. Thank you very much, Mr. Chairman and Ranking 
Member.
    And, our witnesses, we are glad to have you.
    As you know, TSA was created in a time of high anxiety, and 
it was in that environment that it was exempted from the 
traditional government contracting rules. Instead of the 
Federal Acquisition Regulation, TSA used the Federal Aviation 
Administration's Acquisition Management System, or AMS.
    We are not here to second-guess that decision. Instead, we 
are looking at whether this makes sense for the future.
    Does it make sense for contractors who want to work with 
TSA to have a master set of contracting rules? TSA tells us 
that this is not a problem. Its partners in the industry, 
however, say it differently. They tell us that this is 
difficult for large, sophisticated contractors to keep track of 
two different procurement regimes.
    If the Fortune 500 companies struggle, imagine how hard it 
is for the little guy. The simple reality is that a small 
business to obtain expertise in a different set of contracting 
rules costs money. And added costs are added barriers to entry.
    Another question is whether it makes sense for the TSA to 
be exempt from the Competition in Contracting Act. TSA says 
that, under AMS, competition is the preferred method. But the 
FAR and the Competition in Contracting Act require more. They 
require full and open competition. And our friends in the 
industry tell us that ``preferred'' falls far short of ``full 
and open.''
    Finally, does is make sense for the Department of Homeland 
Security to oversee two distinct contracting systems? The 
department says it supports the exemption, but I am concerned 
about the cost of having two systems, in terms of training 
staff, conducting oversight, and fostering departmental 
integration.
    The FAR is not perfect, but it is used by virtually the 
entire federal government and it is well-known to industry. 
Moreover, it has been refined and improved over the past 30-
plus years.
    Removing TSA's exemption will not magically solve all the 
contracting problems it has had, but it seems to me that it is 
a good start.
    And I yield back, Mr. Chairman. And I look forward to the 
witnesses' testimony and the questions to follow.
    [The Statement of Mr. Thompson follows:]

   Prepared Statement of the Honorable Bennie G. Thompson, Chairman 
                     Committee on Homeland Security

     TSA was created in a time of high anxiety.
     And it was in that environment that it was exempted from 
the traditional government contracting rules.
     Instead of the Federal Acquisition Regulation, TSA uses 
the Federal Aviation Administration's ``Acquisition Management 
System,'' or AMS.
     We are not here to second-guess that decision.
     Instead, we are looking at whether this makes sense for 
the future.
     Does it make sense for contractors who want to work with 
TSA to have to master a new set of contracting rules?
     TSA tells us that this is not a problem.
     Its partners in the industry, however, say differently.
     They tell us that it is difficult for large, sophisticated 
contractors to keep track of two different procurement regimes.
     If the Fortune 500 companies struggle, imagine how hard it 
is for the little guy.
     The simple reality is that asking a small business to 
obtain expertise in a different set of contracting rules costs money.
     And added costs are added barriers to entry.
     Another question is whether it makes sense for the TSA to 
be exempt from the Competition in Contracting Act?
     TSA says that under AMS, ``competition is the preferred 
method.''
     But the FAR and the Competition in Contracting Act require 
more--they require ``full and open competition.''
     And our friends in the industry tell us that ``preferred'' 
falls far short of ``full and open.''
     Finally, does it make sense for the Department of Homeland 
Security to have to oversee two distinct contracting systems?
     The Department says it supports the exemption.
     But I'm concerned about the cost of having two systems, in 
terms of training staff, conducting oversight, and fostering 
departmental integration.
     The FAR is not perfect.
     But it is used by virtually the entire Federal Government, 
and it is well known to industry
     Moreover, it has been refined and improved over the past 
30-plus years.
     Removing TSA's exemption will not magically solve all the 
contracting problems it has had.
     But it seems to me that it is a good start.

    Mr. Carney. Thank you, Mr. Chairman.
    Other members of the subcommittee are reminded that, under 
committee rules, opening statements may be submitted for the 
record.
    I welcome the witnesses this morning. I really appreciate 
you being here.
    Our first witness is Elaine Duke, chief procurement officer 
for the Department of Homeland Security. Ms. Duke is a career 
executive with 23 years of public service. Before coming to 
DHS, she spent the majority of her career in acquisition with 
the U.S. Navy. She became DHS chief procurement officer in 
January of 2006.
    Our second witness is Rick Gunderson, assistant 
administrator for acquisition at the Transportation Security 
Administration. Mr. Gunderson is a career executive, with 
almost 19 years of public service. Mr. Gunderson joined TSA in 
2002, after 14 years with the Naval Sea Systems Command. He 
took his current position in November of 2005.
    Our next witness is David Bodenheimer. Mr. Bodenheimer is a 
partner at the law firm of Crowell & Moring, where he is head 
of the Homeland Security Practice Group and specializes in 
government contracts. He is also co-chair of the American Bar 
Association's Special Committee on Homeland Security. Prior to 
joining the firm, Mr. Bodenheimer spent 6 years as a civilian 
lawyer in the Navy, where he handled a broad spectrum of 
government contract matters.
    Our final witness is Alan Chvotkin. Mr. Chvotkin is a 
senior vice president and counsel of the Professional Services 
Corporation. PSC, a national trade association for companies 
that provide services to virtually every agency of the federal 
government, has more than 220 member companies. Prior to 
joining PSC, Mr. Chvotkin had a career in both the private 
sector and in the staff of the United States Senate. Most 
important, however, Mr. Chvotkin had the privilege of being 
born and raised in Scranton, and his father now lives in Clarks 
Summit.
    Welcome, Mr. Chvotkin.
    Tip of the hat to the homies here.
    [Laughter.]
    Without objection, the witnesses' full statements will be 
inserted into the record.
    I now ask each witness to summarize his or her statement 
for 5 minutes, beginning with Ms. Duke.

STATEMENT OF ELAINE DUKE, CHIEF PROCUREMENT OFFICER, DEPARTMENT 
                      OF HOMELAND SECURITY

    Ms. Duke. Good morning, Chairman Thompson, Chairman Carney 
and Ranking Member Rogers. Thank you for having me here this 
morning.
    Before addressing the issue at hand, I would like to 
restate my top three priorities, which are not only my 
priorities but adopted by all the head of contracts in the 
eight contracting activities throughout DHS, including at TSA. 
And those are, first, to build the DHS acquisition workforce; 
second, to make good business deals; and third, to perform 
effective contract administration.
    As the chief procurement officer for DHS, I provide 
oversight and support to the eight procurement offices within 
DHS, and my primary responsibility is to manage and oversee the 
DHS acquisition program: provide the acquisition infrastructure 
that includes the policies, procedures, training and workforce 
initiatives to make the department effective in acquisition.
    Mr. Chairman, I appreciate your interest in the DHS 
acquisition program and, in particular, TSA's procurement 
system, the Transportation Security Administration Acquisition 
Management System, or TSAAMS.
    While TSA's procurement system offers some process 
flexibilities beyond those offered by the Federal Acquisition 
Regulation, or FAR, both systems competition and the use of 
small business, and both systems require the procurement of 
goods and services at a fair and reasonable price. The 
differences are the mechanics of how goods and services are 
purchased.
    Regardless of the procurement system, however, all 
components, including TSA, are subject to the same level of 
oversight. For example, TSA's capital investments, a major 
acquisition program, are subject to the department's investment 
review board, and their contracting operations are subject to 
the department's acquisition oversight program.
    My office reviews the acquisition plans and justifications 
for procurements that are done by other than full and open 
competition over $50 million.
    Additionally, TSA must adhere to key elements of the DHS 
acquisition program, which include: advanced acquisition 
planning; appointment of a competition advocate for TSA; 
establishing a small-and-disadvantaged-business utilization 
office; adherence to federal-wide acquisition certification 
programs for contracting officers and program managers; and the 
policies regarding issuing contracting officer warrants, which 
allow actual individuals to find contracts on behalf of TSA.
    TSA is an active participant in my Chief Acquisition 
Officers Council and shares the resources available to the 
other seven component contracting activities. As I will explain 
in more detail later, TSA participates in department-wide 
recruiting efforts, training opportunities, and our newly 
established intern program.
    I support the TSA's continued use of TSAAMS. The system 
stood up when TSA was created and is now an integral part of 
TSA's infrastructure.
    TSA's procurement system serves as one example of how the 
component's contracting activity possesses unique 
characteristics for the purpose of achieving its mission. While 
TSA conducts its procurements using AMS, the Coast Guard 
conducts its procurement through decentralized contracting 
offices--another example of the differences between the 
components. When responding to disasters, FEMA awards this 
contract, pursuant to the Stafford Act, which gives preferences 
to local businesses--a statute unique to FEMA.
    My responsibility as the chief procurement officer is to 
understand the unique needs of each contracting activity and to 
provide appropriate infrastructure in support.
    One of the ways we are doing this is through the 
acquisition workforce. Three major initiatives in that area: 
The first is establishing a centralized hiring initiative. We 
are now issuing and managing hiring of acquisition workforce 
professionals through a centralized approach through my office 
in concert with our chief human capital officer, Marta Perez. 
This is to ensure both that we get the ramp-up of personnel we 
need and that they are appropriately trained and qualified for 
DHS acquisition.
    The red light is on. Am I back too far? Okay.
    The second initiative is establishing an acquisition intern 
program. And this will be a centrally managed program, where 
the interns will rotate for 3 years through the components and 
will be placed in a DHS component at the completion of their 
intern program.
    The third initiative is establishing a centralized 
acquisition workforce training fund to ensure all our 
acquisition professionals are trained appropriately and meet 
the federal certification standards.
    The underlying principles of FAR and TSAAMS support my goal 
in building a world-class acquisition program. And this morning 
I look forward to answering your questions in this regard.
    And, again, I thank you for the opportunity to testify 
before you this morning. Thank you.
    [The statement of Ms. Duke follows:]

                   Prepared Statement of Elaine Duke

    Chairman Carney, Ranking Member Rogers, and Members of the 
Subcommittee, thank you for this opportunity to appear before you to 
discuss the Department of Homeland Security (DHS) acquisition program. 
I am the Chief Procurement Officer (CPO) for the Department of Homeland 
Security. I am a career executive and I have spent most of my 23 years 
of public service in the procurement profession.
    Before addressing DHS' procurement systems, I would like to convey 
my top three priorities, which are essential elements to achieving the 
DHS mission:
         First, to build the DHS acquisition workforce.
         Second, to make good business deals.
         Third, to perform effective contract administration.
    As the CPO, I provide oversight and support to eight procurement 
offices within DHS--Customs and Border Protection (CBP), Federal 
Emergency Management Agency (FEMA), Immigration and Customs Enforcement 
(ICE), Transportation Security Administration (TSA), United State Coast 
Guard (USCG), United States Secret Service (USSS), Federal Law 
Enforcement Training Center (FLETC), and the Office of Procurement 
Operations (OPO). As the CPO, my primary responsibility is to manage 
and oversee the DHS acquisition program. I provide the acquisition 
infrastructure that includes acquisition policies, procedures, training 
and workforce initiatives that allow DHS contracting offices, as 
appropriate, to operate in a uniform and consistent manner.
    Mr. Chairman, I appreciate your interest in the DHS acquisition 
program and in particular TSA's procurement system, the Transportation 
Security Administration Acquisition Management System (TSAAMS). TSA was 
authorized under the Aviation and Transportation Security Acct (ATSA) 
of 2001 to utilize the procurement system of the Federal Aviation 
Administration (FAA), known as FAA Acquisition Management System (AMS).
    While TSA's procurement system offers some process flexibilities 
beyond those offered by the Federal Acquisition Regulation, the two 
systems' underlying principles are the same--to acquire quality goods 
and services at a fair and reasonable price with integrity fairness and 
transparency. Both systems promote competition and the use of small 
businesses. Both systems also require the procurement of goods and 
services at a fair and reasonable price. The differences are the 
mechanics of how goods and services are purchased.
    Regardless of the procurement system, however, all Components, 
including TSA, are subject to the same level of oversight. For example, 
TSA's capital investments are subject to the Department's investment 
review board and their contracting operations are subject to the 
Department's acquisition oversight program. My office reviews 
acquisition plans and justifications for procurements that exceed $50 
million. Furthermore, TSA must adhere to the key elements of the DHS 
acquisition program which included
         Advanced acquisition planning,
         The appointment of a Competition Advocate,
         Adherence to Federal-wide acquisition certification 
        requirements for contracting professionals and program/project 
        managers, and
         The issuance of contracting officer warrants to 
        certified contracting professionals.
    TSA is an active participant in the DHS Chief Acquisition Officers 
Council. This council, composed of the head of each contracting 
activity, was established for the purpose of integrating contracting 
functions while maintaining each component's ability to meet their 
customers' unique needs. Further, TSA also shares in the resources 
available to the other seven Component-contracting activities. As I 
will explain in more detail later, TSA participates in Department-wide 
recruiting efforts, training opportunities, and our newly established 
intern program.
    I support the TSA's continued use of TSAAMS. The system ``stood 
up'' when TSA was created and hence is now an integral part of TSA's 
infrastructure. Most notable regarding the TSA procurement system, 
however, is that it serves as one example of how each component's 
contracting activity possesses unique characteristics for the purpose 
of achieving its mission. While TSA conducts its procurements using 
AMS, the Coast Guard, for example, conducts its procurement through 
decentralized contracting offices; and when responding to disasters, 
FEMA, pursuant to the Stafford Act, is to give preference to local 
businesses when awarding contracts.

WORKFORCE
    My responsibility as the Chief Procurement Officer is to understand 
the unique needs of each contracting activity and to provide the 
appropriate infrastructure to support each of these offices. While each 
contracting official is necessarily unique, they also share the common 
objective of acquiring goods and services to meet the mission's need at 
a fair and reasonable price, with integrity and transparency. To ensure 
we meet our collective objective, my goal, as the CPO, is to develop a 
``best in class'' acquisition workforce. To do this I am focusing on 
three workforce initiatives:
    My first initiative is the establishment of a centralized hiring 
initiative. A successful acquisition program requires a team of 
integrated acquisition professionals who manage the entire lifecycle of 
a major procurement effort. However, the competition for highly 
qualified acquisition and procurement professionals is intense both 
within the Federal government and the private sector. Therefore, in 
partnership with the Office of the Chief Human Capital Officer, we have 
initiated an aggressive staffing solution to resolve personnel 
shortages and have centralized recruiting activities to better manage 
similar needs across the Department.
    The centralized recruiting efforts include department-wide vacancy 
announcements, print advertisements in major media publications as well 
as attendance at key acquisition recruiting events. In addition, for 
Contract Specialists, one of our most critical staffing shortages, we 
received the authority to maximize the use of hiring flexibilities such 
as Direct Hire Authority and Re-Employed Annuitants. While these 
authorities are extremely helpful to our recruiting efforts, given the 
complexity of our acquisition programs, the recruitment of talented 
acquisition professionals will take time and I appreciate your 
continued support of these initiatives.
    My second initiative is the establishment of an Acquisition Intern 
Program. In order to satisfy the long term need for qualified 
acquisition personnel, my office sought centralized funding in order to 
attract, hire, and train exceptional new talent. Beginning in fiscal 
year 2008, my office is centrally funding an Acquisition Intern Program 
that will start with 66 participants and grow to a total of 300 
participants by fiscal year 2011. Our objective is to grow our talent 
and develop a pipeline for our future acquisition leaders. Interns 
would participate in a three-year program, rotating through three 
contracting offices within DHS, and would graduate from the program as 
journeyman-level professionals. This program is modeled after highly 
successful Department of Defense (DoD) programs and is especially 
critical for contracting. Unlike engineering, IT or finance, 
contracting is a field that is essentially learned. That is why DoD and 
others have relied on intern programs to develop the leadership 
pipeline for this profession and why it is perhaps the most critical 
initiative for strengthening the acquisition workforce.
    My third initiative is the establishment of a centralized 
acquisition workforce training fund. By centralizing or training 
program, the Department is better positioned to deliver a unified 
training program that enables our acquisition professionals to achieve 
the appropriate certification levels and to develop the necessary 
skills and competencies to negotiate good business deals. We will 
maximize the use of the training resources available to federal 
agencies from the Federal Acquisition Institute. In May, the Under 
Secretary for Management signed a partnership agreement with the Under 
Secretary of Defense (Acquisition, Technology, and Logistics) and the 
President of the Defense Acquisition University to leverage existing 
DoD training and development opportunities. This agreement will enable 
DHS to use DoD's capabilities and talent pool to help develop our 
workforce on a long-term partnership basis. We will supplement these 
resources with specialized targeted training in areas such as the 
Safety Act, Performance Based Acquisition, and Buy American Processes 
and Compliance. Based on the results of reviews conducted by my 
Oversight Division, our training program will develop or purchase, as 
needed, training aides to close identified competency gaps.

SUMMARY
    The underlying principles of FAR and TSAAMS ensure the Department 
meets its goal of acquiring goods and services at a fair and reasonable 
price, while accommodating the mission of the organization. Both 
systems support my goal in building a world-class acquisition program 
and workforce integrating the necessary disciplines of program 
management, risk assessment, engineering, cost analyses, and logistics. 
This will take time, but building a solid infrastructure to include the 
appropriate mix of skilled acquisition professionals will enable DHS to 
achieve mission success while being good stewards of the tax payer's 
money.
    Thank you, Mr. Chairman for your interest in and continued support 
of the DHS Acquisition Program.
    Thank you for the opportunity to testify before the Subcommittee 
about DHS contracting procedures. I am glad to answer any questions you 
or the Members of the Subcommittee may have for me.

    Mr. Carney. Thank you.
    Mr. Gunderson?

   STATEMENT OF RICK GUNDERSON, ASSISTANT ADMINISTRATOR FOR 
ACQUISITION, TRANSPORTATION SECURITY ADMINISTRATION, DEPARTMENT 
                      OF HOMELAND SECURITY

    Mr. Gunderson. Thank you. Chairman Thompson, Chairman 
Carney, Ranking Member Rogers, thank you for the opportunity to 
discuss TSA's acquisition program and, specifically, our use of 
the Acquisition Management System.
    As the assistant administrator for acquisition, I provide 
direction and oversight of TSA's acquisition program. My office 
negotiates, awards and manages TSA's $2.5 billion acquisition 
program.
    In addition to awarding contracts, we focus on 
strengthening program management and ``Big A'' acquisition. 
``Big A'' acquisition requires the integration of numerous 
disciplines, including program management, engineering, 
budgeting, test and evaluation, and logistics, to name a few.
    This contrast to the typical contract shop is important, as 
it reflects one of the key differences between TSA's 
Acquisition Management System and the Federal Acquisition 
Regulation.
    Like the FAR, AMS provides guidance around how to negotiate 
and manage contracts. In contrast, AMS also establishes a 
framework to drive sound business decisions throughout the 
acquisition lifecycle, from concept exploration through 
sustainment and disposal.
    I believe TSA's Office of Acquisition is a model in the 
department for centralizing lifecycle acquisition management. 
As a result, we have the highest program management 
certification rate in the department.
    Congress authorized TSA's use of AMS through the Aviation 
and Transportation Security Act in 2001, with the initial goal 
of federalizing checkpoints and rolling out screening 
technology at airports on an aggressive timeline. We 
accomplished that goal. But the greatest value of AMS is not to 
speed the contract; rather, it is the lifecycle framework that 
allows my office to develop business solutions that align with 
TSA's mission.
    The tenants of AMS are the same as FAR. Competition is our 
standard way of doing business. TSA's small-business program is 
important to our success in the business community, and our 
increasing statistics demonstrate our commitment to the 
program. The program has trended positively each year, 
increasing over 25 percent in the past fiscal year alone.
    Our procurements are transparent to the public. We provide 
public notice of opportunities on Fed Biz Opps, the 
government's single point of entry. My team frequently conducts 
industry days with interested firms throughout the process. 
These open communications provide industry with greater insight 
into our mission and allow us to better understand their 
capabilities.
    So what is different about AMS that warrants its use at 
TSA? Our intent is to make common-sense, effective business 
decisions that support our mission. AMS leverages the best 
practices of industry. It was developed following a full-up 
review of the best in business.
    Whereas the FAR requires full and open competition, AMS is 
based on managed competition. This is consistent with how 
industry conducts its own purchasing and supply chain 
management. As a result, government resources are not spent on 
firms that have no chance of receiving award, and industry 
maximizes the impact of their bid and proposal costs.
    Our interactions with industry under AMS are also a 
differentiator. AMS encourages frequent and open communications 
with industry throughout the lifecycle of an acquisition, 
without giving any of them a competitive advantage.
    Communications, especially during the solicitation phase, 
are highly regulated under the FAR, so much that the terms 
clarifications, discussions and communications have unique 
meaning. The FAR requires an agency to conduct discussions with 
all offerors in a competitive range. But AMS allows TSA to 
focus on those most likely to receive awards.
    If there is a dispute during solicitation and selection, 
AMS offers alternative dispute resolution, which is another 
best business practice. AMS recognizes that effective 
communication is the key to good relationships, and 
relationships are the key to good business.
    In addition, I believe AMS has enhanced TSA's ability to 
recruit outstanding acquisition professionals. My office has a 
comprehensive human capital strategy that ensures we recruit 
and retain a highly qualified workforce that is certified by 
DHS and empowered to negotiate good deals. Our staffing has 
significantly increased over the last 3 years, including the 
establishment of a fellows program for entry-level contracting 
professionals.
    While we face challenges similar to the federal acquisition 
corps, the diversity of training and exposure to alternative 
systems benefits TSA and the workforce as a whole.
    During my career, I have conducted acquisitions in both AMS 
and FAR. At its most basic level, I believe AMS continues to 
deliver positive results for TSA, even as a unique system in 
the department, because its framework sets the stage for good 
business.
    While AMS does not differ vastly from the FAR, TSA and its 
industry partners do benefit from its flexibilities.
    I look forward to answering your questions. Thank you.
    [The statement of Mr. Gunderson follows:]

                Prepared Statement of Richard Gunderson

    Chairman Carney, Ranking Member Rogers, and members of the 
Subcommittee, thank you for the opportunity to discuss the 
Transportation Security Administration's acquisition and contracting 
programs. I am the Assistant Administrator for Acquisition and the 
Chief Procurement Executive for the Transportation Security 
Administration (TSA). I am a career executive and have nearly 19 years 
of public service in the acquisition profession. I joined TSA in 
December 2002 after 14 years of service in the Department of Defense's 
Naval Sea Systems Command. Since joining TSA, I served as a Division 
Director and Deputy Chief Procurement Executive prior to my selection 
as the Assistant Administrator for Acquisition in November 2005.
    As the Assistant Administrator for Acquisition, I provide direction 
and oversight of TSA's acquisition program, including award and 
administration of contracts and other agreements. At TSA, the Office of 
Acquisition is more than a contracts organization. Not only do we award 
contracts, we focus on strengthening program management and what we 
call ``Big A'' Acquisition across the TSA organization. Acquisition 
encompasses much more than the procurement aspect of conducting 
business. It is a life cycle approach to investments and requires the 
integration of numerous disciplines, including program management, 
engineering, budgeting, logistics, and contracting to name a few. This 
contrast to the ``typical'' federal contracts office is important to 
note, as it is similar to one of the key differences between TSA's 
Acquisition Management System (AMS) and the Federal Acquisition 
Regulation (FAR).
    As you know, the Aviation and Transportation Security Act (P.L. 
107-71) authorized TSA to utilize the FAA's AMS for our acquisitions. 
AMS provides TSA with flexibility to support security screening 
operations and address new security challenges. AMS allows TSA's 
acquisition office to provide timely contract support that is fully 
integrated with program development and program management needs. But 
the value of AMS should and does not focus on expediency, rather it 
emphasizes sound business decision making. AMS not only provides 
procurement policy and guidelines, but establishes an acquisition 
lifecycle framework that drives sound business decisions from concept 
exploration through sustainment of operations.

    It is important to note that AMS shares the fundamental tenets 
found in the FAR:
         Competition--Competition is the preferred method of 
        procuring technology and services under TSA's AMS and the FAR. 
        While there may be cases where market analysis results in a 
        determination not to compete, TSA continuously strives to 
        develop requirements and procurement strategies that maximize 
        competition. Similar to the FAR's list of exceptions to full 
        and open competition, the AMS requires single source 
        procurements to be documented and approved at the appropriate 
        levels, identifying the rational basis for such a 
        determination.
         Small Business--TSA's small and disadvantaged business 
        utilization program has steadily grown since 2003. The program 
        has trended positively each year, and we are currently running 
        significantly higher again this year versus Fiscal Year 2006.
         Transparency--TSA's acquisition and procurement 
        processes are transparent to the public.
                 TSA publicly announces its business 
                opportunities on Fed Biz Opps, the Government's single 
                point of entry for government procurements. As a 
                result, commercial vendors have visibility into the 
                product and service needs of TSA.
                 AMS encourages frequent and open 
                communications with industry and offerors, from market 
                analysis through contract award and administration. It 
                is common practice for TSA to conduct ``industry days'' 
                with interested firms prior to and/or after release of 
                a solicitation. These open communications provide 
                industry with greater insight into TSA's needs as well 
                as allowing TSA to better understand the capabilities 
                of our industry partners.
         Procurement Integrity--The Procurement Integrity Act 
        applies to TSA and DHS equally.

    While AMS shares these common tenets and principles, it does 
provide some important flexibilities or differences from the FAR that 
enable TSA to perform its mission efficiently and with value to the 
taxpayer:
         Competitive Screening Process--As I mentioned earlier, 
        competition is the preferred way of business for TSA. Where the 
        FAR emphasizes ``full and open'' competition, AMS is based on 
        managed competitions which focus on firms that are most likely 
        to be considered for award. Additionally, following market 
        analysis, and through a series of screening information 
        requests, AMS provides TSA with the flexibility to determine 
        the best candidates for award. As a result, industry and 
        government resources are not wasted by including firms that are 
        not likely to receive an award. Also, the communication process 
        with industry differs slightly from the FAR in a positive way 
        in that AMS provides for flexible communications with industry 
        throughout the process with one or more of the firms without 
        giving any of them a competitive advantage. The FAR requires an 
        agency to conduct discussions with all offers not eliminated if 
        the Government has discussions with one vendor.
         Commercial Contracting--While the FAR allows 
        commercial contracting procedures to be used only on 
        procurements under $5 million, AMS allows their use for 
        commercially-available goods and services at any level. The use 
        of commercial contracting procedures streamlines the 
        procurement process and applying its use to commercial 
        contracts that exceed $5 million makes good business sense.
         Disputes Resolution--Whereas FAR-based organizations 
        fall under the Government Accountability Office (GAO) protest 
        process (and the board of contract appeals or U.S. Court of 
        Federal Claims for all contractor claim appeals), TSA uses the 
        FAA's Office of Dispute Resolution for Acquisition (ODRA) to 
        resolve protests and contract disputes. For protests and 
        contract disputes, the ODRA process encourages resolution at 
        the agency level, but if not feasible, it offers Alternative 
        Dispute Resolution (ADR) approaches to possibly reach mutual 
        resolution. If the ADR effort does not result in resolution 
        then ODRA fully adjudicates the matter. Although the courts and 
        contract appeal boards also provide for ADR, the ODRA actively 
        utilizes ADR in protests and contract disputes with its 
        immediate offer to the parties to resolve a matter under ADR. 
        When this does not occur, the ODRA continuously encourages the 
        parties to employ ADR processes during the numerous litigation 
        stages. This streamlined process facilitates timely 
        resolutions, resulting in a more efficient use of industry and 
        government resources in protests and contract disputes. The 
        ODRA process has worked extremely well for TSA, the contracting 
        community, and the taxpayers. Based on our experience over five 
        years with numerous cases, this ODRA dispute system under the 
        AMS allows TSA to maintain business relationships with our 
        industry partners with less animosity and lower litigation 
        costs usually encountered when resolving matters through formal 
        litigation.
         IPT Structure--Under AMS, the use of Integrated 
        Product Teams (IPTs) is fundamental to doing business. While 
        many FAR based organizations use IPTs to get the job done, they 
        do not use it to the extent that we do under TSA's AMS. The use 
        of formal IPTs facilitates the communication between 
        organizations and ensures participation from the various 
        disciplines throughout the acquisition life cycle. My 
        organization leads workshops on IPTs for TSA, bringing together 
        program office, legal counsel, budget, and finance personnel to 
        develop strategies and execute them, resulting in reduced costs 
        and accelerated schedules to meet the mission.
         Acquisition vs. Procurement--While the FAR provides a 
        prescriptive procurement framework, AMS provides lifecycle 
        management guidance for acquisition. Sound procurements are the 
        product of a strong acquisition program. AMS guides programs 
        through the acquisition lifecycle and drives sound business 
        decisions. These decisions are based on a mission need and 
        requirement, alternatives analysis and investment reviews, 
        planning, execution and oversight.
                 Since TSA awarded its early contracts to 
                support the stand up of operations, the Office of 
                Acquisition has continuously reviewed our business 
                models to identify more effective strategies. Working 
                within the AMS framework, TSA has implemented new 
                business strategies that have resulted in lower costs, 
                increased competition, and increased small business 
                opportunities.
                 The Office of Acquisition includes a division 
                dedicated to strengthening ``Big A'' Acquisition across 
                TSA. This group provides outreach to the various 
                programs, providing support in the areas of planning 
                and program oversight. Their work was recently 
                recognized in an award from the Chief Acquisition 
                Officer's Council. The award citation stated: ``TSA's 
                Acquisition and Program Management Support Division 
                built a framework of certification and training, and 
                implemented program management support tools such as 
                the TSA Acquisition Program Status Report system--an 
                executive-level tool to monitor key program metrics 
                such as Program Manager Certification.''
    With respect to staffing and training, TSA has invested in the 
development of our employees to allow them to operate in both an AMS 
and FAR environment. While the significant portion of our funding is 
obligated via AMS, our contracting professionals do use pre-established 
federal schedules such as GSA and DHS's EAGLE and First Source 
programs. These government-wide or department-wide contracts are FAR-
based, and our personnel are trained and certified to utilize such 
procedures.
    For those unfamiliar with AMS, my organization routinely holds 
training classes on acquisition subjects that span the range of AMS, 
from ``Big A'' workshops on how to conduct market analysis to specific 
topics like the Office of Dispute Resolution procedures. Attendees 
include customer and program personnel, legal advisors, budget 
professionals, and contracting employees.
    In addition, I believe AMS has assisted in our ability to recruit 
employees. The Office of Acquisition has a comprehensive Human Capital 
Strategy Plan, focused on recruiting, developing, and retaining highly 
qualified people. Our staffing has significantly increased over the 
last two years, including the establishment of a novel intern program 
for entry-level contracting professionals. The challenges we face in 
staffing are not significantly different from those faced across the 
Federal Government acquisition corps. It is merely a function of supply 
and demand for contracting professionals. However, TSA senior 
leadership has continued to support the acquisition function and has 
increased our hiring authority. We continue to aggressively hire to 
meet our targets.
    We believe that for an individual with a FAR background, AMS 
provides career broadening opportunities. Many of our mid and senior 
career level staff came to us from FAR-based organizations. The 
environment is attractive to individuals looking to exercise sound 
business judgment to get the best value for the Government, not just 
comply with a prescriptive rule set.
    In summary, AMS authority has provided TSA with the ability to 
conduct business efficiently and effectively. While AMS does not differ 
vastly from the FAR, TSA does benefit from its flexibilities. TSA 
complies with DHS policies and directives and I share the Chief 
Procurement Officer's (CPO) priorities. After five years of conducting 
business within the AMS framework, I am confident that TSA will 
continue to utilize AMS to develop and implement sound business 
strategies in support of our mission.
    Mr. Chairman, thank you for the opportunity to testify before the 
Subcommittee about TSA's acquisition program. I am glad to answer any 
questions you or the Members of the Subcommittee may have for me.

    Mr. Carney. Thank you, Mr. Gunderson.
    We are going to take a quick technical timeout while we 
replace the microphone.
    [Laughter.]
    That is the kind of cooperation we like to see.
    Okay. Mr. Bodenheimer, you are recognized for 5 minutes. 
Thank you.

STATEMENT OF DAVID BODENHEIMER, ESQ., PARTNER, CROWELL & MORING 
                              LLP

    Mr. Bodenheimer. Good morning, Mr. Chairman and members of 
the committee. Thank you for holding these hearings on TSA's 
exemption from fundamental procurement laws requiring 
competition, external oversight, and due process protection.
    After nearly 6 years with TSA's exemption from procurement 
laws governing the rest of DHS and other federal agencies, it 
is time to ask some basic questions: Does TSA still need an 
emergency exemption when procurement laws already have built-in 
flexibility? Does the history of TSA acquisition show the 
benefit of continued exemption?
    And finally, does the TSA exemption justify forgoing full 
and open competition, government-wide efficiency and 
uniformity, and other laws assuring accountability, 
transparency, and oversight? I believe the answer is no.
    Ending this exemption will be a win-win for everyone, 
promoting competition and procurement best practices within 
TSA, reducing fragmentation within DHS, improving congressional 
and GAO oversight, and reducing compliance burdens on 
contractors.
    I am David Bodenheimer, a partner in the law firm of 
Crowell & Moring, where I head the Homeland Security Committee 
and specialize in government contracts. I spent 6 years with 
the Navy as a civilian attorney in the field, at the commands, 
and as assistant to the general counsel.
    My comments today are my own.
    TSA has a tough job for protecting the transportation 
infrastructure and deserves our gratitude for their efforts. 
However, TSA's exemption from competition rules and the FAR 
have not yielded the hoped-for payoff: faster, more efficient 
contract awards and on-time deliveries within budget.
    In fact, TSA procurement history has been disheartening. 
Experience tells us that following the rules, including 
competition and the FAR, will yield better acquisition results 
than continuing with the TSA exemption.
    I would like to address four points.
    First, TSA no longer needs a special exemption. This 
exemption arose out of emergency legislation in the aftermath 
of the 9/11 terrorist attacks. This exemption is no longer 
necessary because existing procurement law already builds in 
the flexibility for responding to urgent needs. Furthermore, 
the rest of DHS, as well as the military departments, handle 
emergency contracting without having TSA's wholesale exemption. 
And finally, TSA's procurement history over the last 6 years 
does not show the real benefits of this exemption.
    Second, full and open competition is the right standard for 
TSA. TSA's exemption from the Competition in Contracting Act 
means that TSA is operating under the old competition standard 
that Congress long ago found to be ineffective and inadequate.
    Bringing CICA's full and open competition to TSA 
procurements would not only benefit TSA but the taxpayers as 
well, with the undeniable benefits of competitive savings, 
controlled cost growth, technological innovations, and fair 
play.
    In addition, the Competition in Contracting Act assures 
accountability and transparency through statutory notices, 
high-level justifications, and public access relating to sole-
source contracting.
    Three, aligning TSA with the procurement mainstream will 
promote greater efficiency and uniformity. With this exemption, 
TSA is isolated in some ways from the rest of DHS and the 
federal acquisition community, denying it the efficiencies and 
uniformity of government-wide regulations, policies and 
training specified in the OFPP act and the FAR.
    Fragmented regulations, policies and clauses magnify the 
compliance burden for contractors and government personnel 
alike. Small businesses, in particular, bear the greatest brunt 
of trying to track, update and train to two different and 
sometimes inconsistent sets of rules.
    Fourth and finally, effective GAO oversight assures greater 
accountability. TSA's exemption cuts off GAO oversight through 
the protest process. With more than 80 years of experience in 
reviewing agency acquisitions, GAO brings unparalleled 
experience, established precedent, and unquestioned 
independence to the protest process, all of which bring greater 
due process to the contractors and oversight for TSA 
procurements. Such GAO oversight would be particularly 
effective in promoting greater competition, with all of its 
benefits, in TSA procurements.
    In conclusion, I thank you for your leadership on this 
issue, and I welcome your questions.
    [The statement of Mr. Bodenheimer follows:]

            Prepared Statement of David Z. Bodenheimer, Esq.

Introduction
    Mr. Chairman and Members of the Committee. Thank you for holding 
these hearings today on the Transportation Security Administration's 
(TSA) exemption from fundamental federal procurement rules requiring 
competition, external oversight, and due process protections. As part 
of the national mobilization to combat terrorism after the attacks on 
September 11, 2001, TSA received exemptions from such rules in order to 
expedite procurement of critical anti-terrorism needs. Nearly six years 
later, the time is ripe to ask how TSA's continued exemption from basic 
procurement rules can be justified. In particular,
         Payoff. What successful TSA acquisitions demonstrate 
        the need for, and benefits of, continued TSA exemptions?
         Uniqueness. Why does TSA need special emergency 
        authority that no other part of the Department of Homeland 
        Security (DHS) has?
         Cost/Benefit. Do the benefits of TSA's exemption 
        outweigh the costs and risks of forgoing competition, 
        oversight, and other bedrock procurement rules?
    I am David Bodenheimer, a partner in the law firm of Crowell & 
Moring LLP in Washington, DC where I am head of the Homeland Security 
practice and specialize in government contracts. As part of this 
practice, I have advised clients, published articles, and lectured 
extensively on Homeland Security and government contract matters. In 
addition, I serve as Co Vice-Chair of the ABA Science and Technology 
Section's Special Committee on Homeland Security. Prior to entering 
private practice, I served six years (1982--88) as a civilian attorney 
for the United States Department of the Navy where I handled a broad 
spectrum of government contract matters in the field, at the Commands, 
and as Assistant to the General Counsel. However, I appear before your 
Committee today in my personal capacity and the views that I express 
are my own.
    Since its inception in 2001, TSA has borne heavy responsibilities 
for establishing and implementing security measures for protecting our 
transportation systems from terrorist attacks and other catastrophic 
threats. The magnitude of this task is underscored by the sheer size of 
the transportation infrastructure, its geographic dispersion, and the 
non-stop movement of passengers and cargo both domestically and 
internationally. For undertaking these Herculean tasks, the TSA team 
deserves our gratitude for its efforts to make our transportation 
system safer.
    In the acquisition arena, TSA's exemption from competition rules 
and the Federal Acquisition Regulation (FAR) have not yielded the 
anticipated payoff--faster, more efficient contract awards producing 
on-time deliveries, within-budget costs, and concrete results meeting 
the TSA mission. To the contrary, TSA procurements have a disheartening 
history of schedule delays, cost overruns, and performance shortfalls, 
as documented in Congressional hearings, Government Accountability 
Office (GAO) reviews, and Inspector General and audit reports. History 
tells us that following the rules--including competition and the FAR--
will yield faster, cheaper, and better acquisition results than will 
continuing with TSA's exemption.
    As a starting point, we need to look at the scope of TSA's 
exemption from acquisition statutes and regulations. The next step is 
to consider the need for, and benefits of, continuing this exemption. 
Finally, the exemption should be weighed against the fundamental 
procurement principles that TSA may disregard under its current 
authority. By returning TSA to the acquisition fold applicable to 
nearly every other procuring agency, both TSA and the taxpayers should 
benefit in all of the following areas:
         Assuring ``full and open'' competition;
         Enhancing efficiency and consistency for DHS and TSA 
        acquisitions;
         Improving GAO oversight of TSA procurements; and
         Avoiding ``emergency exemption'' creep beyond TSA 
        needs.

The Scope of TSA's Acquisition Exemption
    TSA and its exemption from federal acquisition rules arose out of 
the emergency legislation enacted in the wake of the 9/11 terrorist 
attacks.\1\ This exemption states:
---------------------------------------------------------------------------
    \1\ Aviation and Transportation Security Act, Pub. L. No. 107-71 
(2001) codified at 49 U.S.C. Sec. 114(o); see Resource Consultants, 
Inc., B-290163, June 7, 2002, 2002 CPD para. 94 (``In the 
aftermath of the terrorist hijackings and crashes of passenger aircraft 
on September 11, 2001, the Congress passed and the President signed, 
the Aviation and Transportation Security Act'').
---------------------------------------------------------------------------
                The acquisition management system established by the 
                Administrator of the Federal Aviation Administration 
                under section 40110 shall apply to acquisitions of 
                equipment, supplies, and materials by the 
                Transportation Security Administration, or, subject to 
                the requirements of such section, the Under Secretary 
                may make such modifications to the acquisition 
                management system with respect to such acquisitions of 
                equipment, supplies, and materials as the Under 
                Secretary considers appropriate, such as adopting 
                aspects of other acquisition management systems of the 
                Department of Transportation.\2\
---------------------------------------------------------------------------
    \2\ See Pub. L. No. 109-90, Title V, Sec. 515, 119 Stat. 2084 (Oct. 
18, 2005) (extending exemption to acquisition of services; Knowledge 
Connections, Inc., B-298172, Apr. 12, 2006, 2006 CPD para. 
67 (applying exemption to services).
---------------------------------------------------------------------------
    The scope of this exemption is specifically defined in the 
referenced ``section 40110'' allowing the Federal Aviation 
Administration (FAA) to issue procurement rules ``notwithstanding 
provisions of Federal acquisition law.'' This exemption cuts through a 
wide spectrum of acquisition statutes and regulations, including the 
following: (1) Competition in Contracting Act; (2) Office of Federal 
Procurement Policy Act (except for Procurement Integrity Act 
provisions); (3) Federal Acquisition Streamlining Act (except for 
whistleblower provisions); (4) Small Business Act (except for a general 
duty to provide ``reasonable opportunities'' to small businesses); (5) 
procurement protest system provisions (31 U.S.C., Chapter 35(V)); and 
(6) the Federal Acquisition Regulation (FAR). 49 U.S.C. Sec. 40110(d). 
As Senator Snowe explained, TSA ``is exempt from every major 
procurement law'' and may ``sidestep normal competitive bidding 
practices'' under this authority.\3\
---------------------------------------------------------------------------
    \3\ Sen. Snowe's News Release, ``Snowe Brings Increased 
Transparency, Accountability to Transportation Security Administration 
Contracting'' (July 13, 2006).

Assessing the Need for, and Benefits of, TSA's Exemption
    TSA received its acquisition exemption in the midst of a national 
emergency in 2001. This raises key questions of whether (1) TSA still 
needs this emergency acquisition authority; and (2) this emergency 
authority has produced faster, cheaper, and better acquisitions.

    Assessing the Need for Continued Exemption
    In times of war or national emergency, exceptions to major 
procurement laws may be necessary in order to meet urgent needs of the 
troops, disaster victims, or other public exigencies. However, 
wholesale exemptions are no longer necessary for TSA because the major 
procurement statutes and regulations incorporate built-in safeguards to 
allow emergency contracting to meet urgent needs of the agency and the 
public. For example, both the Competition in Contracting Act (CICA) and 
the FAR carve out special exceptions to the requirement for ``full and 
open competition'' when the agency determines that ``an unusual and 
compelling urgency'' exists. 41 U.S.C. Sec. 253(c)(2); FAR Sec. 6.302-
2.
    Indeed, the revisions to the FAR in 2006 now assist agencies in 
meeting urgent needs by devoting an entire section of the regulation to 
``emergency acquisitions.'' 71 Fed. Reg. 38247 (2006); FAR Part 18. In 
particular, this recent FAR revision ``identifies acquisition 
flexibilities that are available for emergency acquisitions.'' As a 
result, agencies have sufficient authority within the existing 
statutory and regulatory framework without the need for any broad 
exemption like that applicable to TSA.
    In addition, the question arises as to why TSA alone needs a 
special emergency exemption not available to any other part of DHS--or 
even to the military departments. As Senator Snowe stated, ``TSA is one 
of the few federal agencies and the only agency within the Department 
of Homeland Security that is exempt from federal procurement laws.'' 
\4\ TSA should be able to achieve its critical mission as readily under 
the FAR as the rest of the DHS contracting community and the military 
departments.
---------------------------------------------------------------------------
    \4\ Id.

    Weighing the Benefits of the TSA Exemption
    If TSA's emergency exemption had contributed to a record of 
acquisition successes, a continuation of this exemption might be a 
worthy consideration. However, the past six years do not readily 
demonstrate the benefits of TSA's exemption. To the contrary, TSA's 
acquisitions not only have drawn bipartisan criticism, but also have 
accumulated a history of delays, overruns, and other problems 
documented in GAO and DHS reports, as illustrated below.

         TSA Procurements Generally
                 Sen. Snowe. ``TSA has a record of 
                mismanagement and lack of transparency in its 
                acquisitions that provide little justification for a 
                permanent exemption from the FAR.'' \5\
---------------------------------------------------------------------------
    \5\ Id.
---------------------------------------------------------------------------
                 Sen. Kerry. ``The TSA has been the subject of 
                several Department of Transportation and DHS Inspector 
                General investigations regarding the mismanagement of 
                contracts that have cost taxpayers hundreds of millions 
                of dollars.'' \6\
---------------------------------------------------------------------------
    \6\ Sen. Kerry's Letter to Kip Hawley (TSA Administrator) (Dec. 13, 
2005).
---------------------------------------------------------------------------
                 DHS IG. ``[W]e conducted audits and reviews of 
                individual DHS contracts, such as the Transportation 
                Security Administration's (TSA's) screener recruiting 
                and TSA's information technology services. . . . Common 
                themes and risks emerged from these audits, primarily 
                the dominant influence of expediency, poorly defined 
                requirements, and inadequate oversight that contributed 
                to ineffective or inefficient results and increased 
                costs.'' \7\
---------------------------------------------------------------------------
    \7\ Procurement Practices of the Department of Homeland Security: 
Hearings Before the House Comm. on Oversight and Government Reform, 
110th Cong., 1st Sess. (2007) (statement of DHS IG Richard Skinner).

         IT Managed Services
                 DHS IG. ``Another example of where an 
                expedited schedule led to DHS acquisition deficiencies 
                is TSA's information technology managed services 
                contract with Unisys. . . . By the beginning of fiscal 
                year 2006, TSA had spent most of the contract ceiling, 
                83 percent, without receiving many of the contract 
                deliverables critical to airport security and 
                communications.'' \8\
---------------------------------------------------------------------------
    \8\ Code Yellow: Is the DHS Acquisition Bureaucracy A Formula for 
Disaster? Hearings Before House Comm. on Government Reform, 109th 
Cong., 2nd Sess. 69 (2006) (statement of DHS Asst. IG David Zavada) 
(hereinafter ``2006 House Code Yellow Hearings'').

         Secure Flight
                 o GAO. ``TSA has not followed a disciplined 
                life cycle approach to manage systems development, or 
                fully defined system requirements. Rather, TSA has 
                followed a rapid development method to develop the 
                program quickly. This process has been ad hoc, 
                resulting in project activities being conducted out of 
                sequence, requirements not being fully defined, and 
                documentation containing contradictory information or 
                omissions.''\9\
---------------------------------------------------------------------------
    \9\ GAO, Aviation Security: Significant Management Challenges May 
Adversely Affect Implementation of the Transportation Security 
Administration's Secure Flight Program 1 (Feb. 9, 2006) (GAO-06-374T); 
see also GAO, Homeland Security: Progress Continues, but Challenges 
Remain on Department's Management of Information Technology 30 (Mar. 
29, 2006) (GAO-06-598T).

         Transportation Security Operations Center
                 House Report. ``Moreover, an unnecessary 
                decision to accelerate the construction deadline cost 
                TSA between $400,000 and $600,000, not including 
                approximately $575,000 in unjustified approved 
                construction change orders.' ''\10\
---------------------------------------------------------------------------
    \10\ 2006 House Code Yellow Hearings 25 (House Comm. on Government 
Oversight Report, Waste, Abuse, and Mismanagement in Department of 
Homeland Security Contracts (July 2006) citing DHS IG Report).
---------------------------------------------------------------------------
         Transportation Worker Identification Credential 
        Program (TWIC)
                 GAO. ``TSA experienced problems in planning 
                for and overseeing the contract to test the TWIC 
                program, which contributed to a doubling of TWIC 
                testing contract costs and a failure to test all key 
                components of the TWIC program.'' \11\
---------------------------------------------------------------------------
    \11\ GAO, Transportation Security: TSA Has Made Progress in 
Implementing the Transportation Worker Identification Credential 
Program, but Challenges Remain 12 (Apr. 12, 2007) (GAO-07-681T).
---------------------------------------------------------------------------
    In summary, the proven benefits of the exemption from major 
acquisition laws is not readily apparent from TSA's six years of 
acquisition experience with this exemption.

    Assuring ``Full and Open'' Competition
    The Competition in Contracting Act (CICA) does not apply to TSA. 49 
U.S.C. Sec. Sec. 114(o) and 40110. Instead, TSA may award 
noncompetitive contracts based upon its ``best interest'' and a 
``rational basis'' standard.\12\ TSA's threshold for sole-source 
contracts is even lower than the old competition standard--maximum 
``practical'' competition--that Congress found to be inadequate and 
ineffective prior to the enactment of CICA.\13\
---------------------------------------------------------------------------
    \12\ See TSA Acquisition Management System (linking to FAA 
Acquisition Management Policy Sec. 3.2.2.4) (http://www.tsa.gov/join/
business/index.shtm); GAO, Transportation Security Administration: 
High-Level Attention Needed to Strengthen Acquisition Function 14 (May 
2004) (GAO-04-544).
    \13\ See Defense Acquisition Regulation (DAR) Sec. 3-101(d); 
Federal Procurement Regulation (FPR) Sec. 1-3.101.
---------------------------------------------------------------------------
    In support of CICA's mandate for competition, Congress established 
an overwhelming case for how competitive procurements serve the public 
interest:
         Cost Savings. ``First, competition in contracting 
        saves money. Studies have indicated that between 15 and 50 
        percent can be saved through increased competition.''
         Cost Control. ``In addition to potential cost savings, 
        competition also curbs cost growth. According to an October 
        1979 Rand Corporation analysis . . ., competitive procurement 
        has led to improvements in system performance and on-schedule 
        delivery by contractors, which have subsequently lowered real 
        cost growth.''
         Innovation. ``Competition may also promote significant 
        innovative and technical changes. In some cases, competition 
        serves as an incentive for firms to be more progressive in 
        developing cost-reducing design changes and improvements in 
        manufacturing technology in order to gain advantage over their 
        competitors.''
         Fair Play. ``The last, and possibly the most 
        important, benefit of competition is its inherent appeal of 
        `fair play.' Competition maintains the integrity in the 
        expenditure of public funds by ensuring that government 
        contracts are awarded on the basis of merit rather than 
        favoritism.'' \14\
---------------------------------------------------------------------------
    \14\ S. REP. NO. 98-50, at 3 (1983).
---------------------------------------------------------------------------
    More than twenty years later, the case for competition pursuant to 
CICA remains equally compelling, as Congress continues to find in 
recent hearings:
        Experience has proven that there is a direct connection between 
        an agency failing to adequately compete a contract and poor 
        performance on that contract. The billions wasted in no-bid, 
        sole-source contracts awarded after Hurricane Katrina stand as 
        a testament to that fact.\15\
---------------------------------------------------------------------------
    \15\ Responsibility in Federal Homeland Security Contracting: 
Hearings Before House Comm. on Homeland Security, 110th Cong., 1st 
Sess. (2007) (statement of Chairman Thompson).

        Competition in federal contracting protects the interests of 
        taxpayers by ensuring that the government gets the best value 
        for the goods and services it buys. Competition also 
        discourages favoritism by leveling the playing field for 
        competitors while curtailing opportunities for fraud and 
        abuse.\16\In fact, DHS officials have agreed that ``competitive 
        contracting is the preferred way to go'' and that 
        noncompetitive contract modifications have contributed to cost 
        overruns.\17\
---------------------------------------------------------------------------
    \16\ 2006 House Code Yellow Hearings 11 (incorporating House Comm. 
on Government Reform's on Report Waste, Abuse, and Mismanagement in 
Department of Homeland Security Contracts).
    \17\ 2006 House Code Yellow Hearings 87 (statement of Elaine Duke) 
(agreeing that ``competitive contracting is the preferred way to go''); 
id. (statement of Rick Gunderson) (agreeing that when a $104 million 
contract ``grows to $700 million, it is not competitive all the way 
through'').

                CICA not only mandates competition, but also 
                establishes concrete requirements to enforce 
                transparency and accountability. In particular, CICA 
                requires high-level review and written justifications 
                for high-dollar sole-source procurements. 41 U.S.C. 
                Sec. 253(f). In addition, such justifications must be 
                available for public review, thus enhancing effective 
                oversight. Id.\18\ Such requirements may not only 
                facilitate GAO and DHS IG oversight, but also assist 
                TSA in performing its acquisition functions.\19\
---------------------------------------------------------------------------
    \18\ CICA's legislative history confirms that Congress viewed the 
mandate for written justifications to be ``necessary to permit 
effective oversight of the use of noncompetitive procedures.'' S. REP. 
NO. 98-297, at 5 (1983).
    \19\ See Sen. Snowe's News Release, ``Snowe Brings Increased 
Transparency, Accountability to Transportation Security Administration 
Contracting'' (July 13, 2006) (``GAO conducted an investigation into 
TSA's acquisition office which required staff to rummage through boxes 
of files to piece together the details of 21 contracts it was 
reviewing''); GAO, Transportation Security Administration: High-Level 
Attention Needed to Strengthen Acquisition Function 13--14 (May 2004) 
(GAO-04-544).
---------------------------------------------------------------------------
    In summary, a powerful case exists for Congressionally-established 
``full and open'' competition under CICA. Given that CICA specifically 
allows flexibility for urgent procurements and emergencies, TSA should 
be able to accomplish its mission and obtain the undeniable benefits of 
competition--including cost savings, controlled cost growth, 
innovation, and fair play--without any need for a special ``TSA-only'' 
exemption from CICA.

    Enhancing Efficiency and Consistency Within DHS
    With its exemption, TSA is also not subject to the Office of 
Federal Procurement Policy Act and the Federal Acquisition Regulation 
that establish government-wide rules offering economy-of-scale 
efficiencies and cross-cutting consistency. 49 U.S.C. Sec. Sec. 114(o) 
and 40110.
    Congress established the Office of Federal Procurement Policy 
(OFPP) ``to provide overall direction of Government-wide procurement 
policies, regulations, procedures, and forms for executive agencies and 
to promote economy, efficiency, and effectiveness in the procurement of 
property and services by the executive branch of the Federal 
Government.'' 41 U.S.C. Sec. 404(a). Indeed, a ``uniform procurement 
system'' represented one of the key objectives of the OFPP Act, as 
amended.\20\ These key Congressional objectives for efficiency and 
uniformity are undermined when the ``Government-wide'' procurement 
system is fragmented and TSA may play by its own unique acquisition 
rules.
---------------------------------------------------------------------------
    \20\ S. REP. NO. 98-50, at 6 (1983).
---------------------------------------------------------------------------
    This fragmentation of the procurement system creates two parallel 
sets of rules with differences and conflicts--ranging from subtle to 
significant--between the FAR and the separate TSA Acquisition 
Management System (TSAAMS) set of clauses. Examples include:
                 Cost or Pricing Data. The FAR establishes a 
                uniform threshold of $650,000 for obtaining cost or 
                pricing data. FAR Sec. 15.403--4(a). In contrast, 
                TSAAMS 3.2.2.3-27 sets a $1,000,000 threshold, while 
                TSAAMS 3.2.2.3-26 imposes yet another threshold of 
                $550,000.
                 Environmental. The FAR includes the Pollution 
                Prevention and Right-to-Know Information clause (FAR 
                52.223-5), but not Clean Air & Clean Water clause 
                (deleted over 5 years ago). The TSAAMS has the 
                opposite--the outdated Clean Air & Clean Water clause 
                (3.6.3-2), but no Pollution Prevention clause.
                 Buy American. The FAR recognizes certain 
                exceptions to honor international trade agreements (FAR 
                Sec. 25.1101), but the TSAAMS does not mention them 
                (3.6.4-2).
    Other differences include TSAAMS provisions (3.6.4-2 and 3.2.2.3-
27) that omit FAR provisions recognizing commercial item exceptions 
(FAR Sec. 25.1101(a)(1) and Sec. 15.403-3(c)).
    This fragmentation cuts against the OFPP and FAR objectives of 
efficiency and uniformity in such areas as contract administration, 
compliance, training, and research. For contract administration, 
contractors--particularly small businesses--bear a heavy burden of 
tracking, updating, implementing, and flowing down not just one, but 
two, separate regulatory regimes if TSA is to have the benefit of 
competition from companies with government-wide experience. For 
compliance, contractors need a system of policies, procedures, and 
training to assure that their personnel are following the rules; this 
burden multiplies when contractors must address two separate sets of 
regulatory requirements. For training and research, separate FAR and 
TSA systems undermine the OFPP objectives of ``development of a 
professional acquisition workforce Government-wide'' and coordination 
of ``Government-wide research and studies.'' With TSA's exemption, such 
training and research must be done twice--once to cover the FAR's 
general rules and then again for the unique aspects of TSA 
acquisitions.

    Improving GAO Oversight Over TSA Procurements
    With its exemption, TSA is not subject to the procurement protest 
system provisions (31 U.S.C., Chapter 35(V)) applicable to other 
agencies. 49 U.S.C. Sec. Sec. 114(o) and 40110. As a result, GAO lacks 
jurisdiction to oversee TSA acquisitions through the protest 
process.\21\
---------------------------------------------------------------------------
    \21\ See, e.g., Knowledge Connections, Inc., B-298172, Apr. 12, 
2006, 2006 CPD para.67 (dismissing protest against TSA for 
lack of jurisdiction).
---------------------------------------------------------------------------
    For TSA acquisitions, the only protest option is the FAA's Office 
of Dispute Resolution for Acquisitions (ODRA).\22\ While the ODRA 
protest process is available, the GAO protest process offers compelling 
advantages:
---------------------------------------------------------------------------
    \22\ 14 C.F.R. Sec. Sec. 17.11--17.21; FAA ODRA website 
(procedures, cases, and background) (http://www.faa.gov/about/
office_org/headquarters_offices/agc/pol_adjudication/agc70/).
---------------------------------------------------------------------------
                 Unparalleled Experience. For more than 80 
                years, GAO has served an a forum for resolving protests 
                involving federal agencies; \23\
---------------------------------------------------------------------------
    \23\ H.R. REP NO. 98-1157, at 23 (1984) (nearly 60 years of 
experience in the 1980s).
---------------------------------------------------------------------------
                 Established Precedent: Over the many decades 
                of its protest review, GAO has generated thousands of 
                precedent-setting decisions informing both agencies and 
                contractors of what conduct passes muster; \24\
---------------------------------------------------------------------------
    \24\ Id. (GAO's ``decisions are relied upon for guidance by 
Congress, the courts, and the procurement community, including 
executive branch contracting agencies'').
---------------------------------------------------------------------------
                 Unquestioned Independence. GAO has a well-
                earned reputation for independence and objectivity.
    As one of the critical reforms established by CICA, Congress 
determined that an effective protest function required additional 
teeth.\25\ First, because many agencies rendered protests meaningless 
by proceeding with contract performance pending protest resolution, 
Congress established a statutory stay of performance to assure 
effective relief. 31 U.S.C. Sec. 3553(c). In contrast, protests under 
ODRA generally do not stay contract performance.\26\ Second, CICA 
generally provides for payment of successful protest costs (31 U.S.C. 
Sec. 3554(c)), while ODRA procedures place significant restrictions on 
such recovery. 14 C.F.R. Sec. 17.21(c). Third, Congress must receive 
notification if agencies fail to implement corrective action specified 
by GAO. 31 U.S.C. Sec. 3554(b)(2) & (e). In contrast, ODRA includes no 
such mechanism for Congressional or GAO notification and oversight for 
TSA acquisitions.
---------------------------------------------------------------------------
    \25\ Id. at 25.
    \26\ J.A. Jones Management Services, 99-ODRA-00140 (Sept. 29, 1999) 
(``The FAA's Acquisition Management System (`AMS') includes a 
presumption in favor of continuing procurement activities and contract 
performance during the pendency of bid protests''); accord Glock, Inc., 
03-TSA-003 (Oct. 28, 2003).
---------------------------------------------------------------------------
    While comparative assessments of GAO and ODRA effectiveness are 
complex undertakings, one measure would be the advancement of 
competition in federal procurements. By this yardstick, the ODRA 
protest function has had limited success.
                 Denied Protests. As a general rule, ODRA 
                protests against sole source procurements have 
                failed.\27\
---------------------------------------------------------------------------
    \27\ J&J Electronic Systems, ODRA-05-346 (June 3, 2005) (denied); 
Aviation Research Group, ODRA-99-138 (Oct. 28, 1999) (summary 
dismissal); Raisbeck Commercial Air Group, Inc., ODRA-99-117 (May 14, 
1999) (summary dismissal); Wilcox Electric, Inc., ODRA-96-8 (Oct. 9, 
1996) (denied).
---------------------------------------------------------------------------
                 No Remedy. Even while sustaining the protest, 
                ODRA has declined to overturn the award and reopen the 
                competition.\28\
---------------------------------------------------------------------------
    \28\ Haworth Incorp., ODRA-98-74 (June 2, 1998) (holding that ODRA 
did not have to follow CICA and recommend termination of improperly 
awarded contract).
---------------------------------------------------------------------------
                 Limited Success. In over a decade, ODRA has 
                apparently sustained only two protests against sole-
                source procurements.\29\
---------------------------------------------------------------------------
    \29\ Hasler, Inc., ODRA-07-404 (Jan. 16, 2007) (finding rejection 
of lower-priced, technically compliant offer to be improper); Raytheon 
Co., ODRA-01-177 (June 15, 2001) (sustaining protest against sole-
source award after FAA requested independent review by the General 
Services Board of Contract Appeals (GSBCA) that had developed great 
experience and expertise in protests at that time).
---------------------------------------------------------------------------
    In general, GAO has applied greater scrutiny, with greater success, 
in enforcing competition in federal contracting.\30\ As a result, the 
availability of the GAO protest process would not only assure greater 
due process protections for competing contractors, but also benefit 
both TSA and the taxpayer by spurring greater, more vigorous 
competition.
---------------------------------------------------------------------------
    \30\ See, e.g., eFedBudget Corp., B-298627, Nov. 15, 2006, 2006 CPD 
para. 159; Europe Displays, Inc., B-297099, Dec. 5, 2005, 
2005 CPD para. 214; WorldWide Language Resources, Inc., B-
296984.2, Nov. 14, 2005, 2005 CPD para. 206; Sabreliner 
Corp., B-288030, Sept. 13, 2001, 2001 CPD para. 170; 
Lockheed Martin Systems Integration--Owego, B-289190.2, May 25, 2001, 
2001 CPD para. 110.

    Avoiding ``Emergency Exemption'' Creep
    For good reason, emergency exemptions have been extended to 
procuring agencies in times of war and national emergency. However, 
history has repeatedly underscored the risks of leaving such emergency 
authority in place too long. Too often, the emergency becomes the 
routine and the exemption swallows the governing procurement rules. The 
emergency authorities during the Korean War and the Katrina aftermath 
illustrate these risks.
    Korean War Emergency Authority. In the Armed Services Procurement 
Act of 1947, Congress established a statutory ``emphasis. . .upon 
formal advertising as a proven method and upon competition as a means 
of procuring Government supplies, with a fair and equal opportunity for 
suppliers and at prices brought about by competition in the market.'' 
\31\
---------------------------------------------------------------------------
    \31\ H.R. REP. NO. 87-1638, at 2 (1962).
---------------------------------------------------------------------------
                Then came the Korean hostilities, and, on December 15, 
                1950, the President issued a national emergency 
                proclamation, which has not since been revoked. 
                Immediately upon its issuance, the Secretary of Defense 
                directed that all procurement be undertaken under the 
                authority of section 2304(a)(1) of the Armed Services 
                Procurement Act of 1941. This section permits 
                negotiation of contracts during the period of a 
                national emergency proclamation of the President. Such 
                use of the national emergency authority in subsection 
                (a)(1) effectively suspended the duties, limitations, 
                and requirements specified in the other 16 exceptions 
                where negotiation is permitted by the act of 1947.

                           *       *       *

                In 1955 and 1956, this committee, on inquiry, developed 
                the fact that 94.19 percent of the defense procurement 
                dollar was contracted for under the authority of the 
                Presidential Korean National Emergency Proclamation 
                (sec. 2304(a)(1)).\32\
---------------------------------------------------------------------------
    \32\ Id.
---------------------------------------------------------------------------
    Congress ultimately had to intervene by amending the Armed Services 
Procurement Act and reaffirming ``the congressional intent and policy 
that formal advertising, the proven method of public procurement, shall 
be the rule, where it is feasible and practicable.''\33\
---------------------------------------------------------------------------
    \33\ Id. at 3; see Pub. L. No. 87-653.
---------------------------------------------------------------------------
        Katrina Authority. After Hurricane Katrina, federal agencies 
        quickly employed available emergency authority in order to 
        respond more quickly to urgent needs of the Katrina victims.
                In the case of Hurricane Katrina, full and open 
                competition has been the exception, not the rule. The 
                urgent needs in the immediate aftermath of Hurricane 
                Katrina provided a compelling justification for the 
                award of noncompetitive contracts. Yet as the immediate 
                emergency receded, the percentage of contract dollars 
                awarded without full and open competition actually 
                increased. In September 2005, the month after Hurricane 
                Katrina, 51% of the contract dollars awarded by the 
                Federal Emergency Management Agency were awarded 
                without full and open competition. Rather than 
                declining after September, the percentage of contract 
                dollars awarded noncompetitively increased to 93% in 
                October.\34\
---------------------------------------------------------------------------
    \34\ House Comm. on Government Reform--Minority Staff: Waste, 
Fraud, and Abuse in Hurricane Katrina Contracts 2 (Aug. 2006).
---------------------------------------------------------------------------
    TSA Exemptions. Even if TSA procurements were not currently far out 
of the federal procurement mainstream, history warns that ``emergency 
exemption'' creep will drive an ever widening gap between TSA and the 
rest of the federal contracting community. As discussed above, such 
disharmony will further undermine some of the most fundamental 
Congressional directives, including CICA's ``full and open 
competition'' mandate, the OFPP Act's ``Government-wide'' initiatives 
for efficiency and uniformity in federal contracting, and GAO's 
oversight through the protest process for enforcing competitive fair 
play in the public marketplace.
Conclusion
    Six years have passed since TSA received its emergency exemption 
from the major procurement laws governing other federal agencies. With 
the passage of time, bipartisan Congressional investigations, GAO 
reviews, and DHS IG audits have yet to identify tangible benefits 
resulting from TSA's sweeping exemption. On the other hand, both TSA 
and the taxpayer stand to gain from the Congressionally recognized 
values flowing from ``full and open competition,'' ``Government-wide'' 
efficiencies of common regulations and training, and effective GAO 
protest oversight. Accordingly, the time is ripe to end TSA's exemption 
from major procurement laws and to bring TSA acquisitions into the 
federal procurement mainstream.
    Thank you for your leadership on the TSA acquisition process that 
directly affects one of the most visible and vital components of 
America's critical infrastructure--our transportation system. Bringing 
greater competition, efficiency, and oversight to the TSA acquisition 
process will serve not only the interests of TSA and DHS, but the 
public at large.
    This concludes my statement and I would be happy to answer any 
questions you might have.

    Mr. Carney. Thank you, Mr. Bodenheimer.
    Now I recognize Mr. Chvotkin for 5 minutes.

STATEMENT OF ALAN CHVOTKIN, SENIOR VICE PRESIDENT AND COUNSEL, 
                 PROFESSIONAL SERVICES COUNCIL

    Mr. Chvotkin. Thank you, Mr. Chairman and Chairman 
Thompson, Ranking Member Rogers. On behalf of the more-than-
220-member company of the Professional Services Council, many 
of whom do business with the Transportation Security 
Administration and other components of the Department of 
Homeland Security, thank you for the invitation and the 
opportunity to provide our views.
    Today, federal spending on the purchase of goods and 
services exceeds $400 billion, representing nearly 40 percent 
of the total discretionary budget for the federal government. 
Spending on services contracts represents nearly 60 percent of 
that spending. Thus, federal procurement must be a core 
competency of the federal government and prioritized as such. 
And by any measure, TSA is a major procurement organization.
    There is no doubt that the federal government generally, 
and the Department of Homeland Security in particular, faces 
many difficult challenges in the acquisition arena. The human 
capital challenge is real and impacts the acquisition workforce 
as much as, if not more so, than the rest of the federal 
workforce.
    PSC members believe strongly that an experienced, smart and 
well-prepared customer makes the best customer. We see many 
examples in the private sector where companies take special 
effort to ensure that their procurement workforces are well-
prepared for the significant work that they are assigned.
    Yet, across the board, workforce development in the federal 
government is a glaring weakness and has been for a long time. 
Training funds for the acquisition workforce remain relatively 
flat and are far from adequate.
    To this committee's credit, and yours, Mr. Chairman, Title 
4 of H.R. 1684, the 2008 Department of Homeland Security 
Authorization Act, provides for important workforce development 
improvements for the Department of Homeland Security.
    And we support these initiatives, but more needs to be 
done.
    If we want to improve the quality of federal acquisition, 
we should not start by layering an already-beleaguered 
workforce with more regulations and process demands. Rather, 
TSA has called for an ``Acquisition Marshall Plan'' that 
aggressively addresses the hiring, retention, training, reward 
and development of the acquisition workforce on a government-
wide basis.
    This would involve recognizing, as most high-performing 
companies do, that those elements of the workforce that are 
most directly critical to the functioning or the success of the 
institution receive special and appropriate focus.
    In addition, PSC has called for the creation of a 
government-wide contingency contracting corps, drawn from 
across the government workforce.
    And I note, Mr. Chairman, that to make these important 
reforms a reality will require Congress to be the catalyst. We 
were pleased that, today, your counterpart committee, the 
Senate Homeland Security and Governmental Affairs Committee, 
will adopt this recommendation as part of its markup of a 
broader government-wide contracting accountability bill.
    With respect to TSA's exemptions, there were valid reasons 
for exempting TSA from the acquisition laws and regulations 
when it was created in late 2001, even while good arguments 
also existed at that time to treat TSA as most other agencies, 
particularly with respect to federal acquisition policy.
    To be sure, the TSA acquisition system works, as has been 
demonstrated over the past 5 years. It has built on the 
principles of the FAR, even though some of the obvious 
differences exist in implementation.
    The flexibilities that TSA has used to meet past threats 
and may need to respond fully and promptly to emerging and 
future threats need to be carefully considered. Although, in 
our view, the current acquisition statutes, the FAR and the DHS 
authorities also provide broad flexibility for agencies, 
including TSA, to meet emergency situations.
    This committee and others have reviewed many of the 
procurements entered into by TSA. Many of them have achieved 
exactly the goals that TSA has had, and have been implemented 
as intended. Others have raised issues regarding performance by 
both federal officials and contractors, with examples of 
problems at all phases of the acquisition system.
    I cannot say that TSA's exemptions from the FAR was the 
cause for any of these problems. Nor can I say with certainty 
that bringing them under those laws and regulations will ensure 
that there will not be problems in the future.
    But I can say with confidence that bringing TSA at least 
under the common rules applicable to the Department of Homeland 
Security will increase competition, expand opportunities for 
greater small-business participation, provide greater 
accountability and transparency in the procurement process, and 
provide greater options for addressing the challenges of the 
department's acquisition workforce.
    Mr. Chairman, as you noted in your opening statement, these 
unique processes make it difficult to share acquisition 
resources across the department, let alone on a government-wide 
basis, as we suggested in our proposed contingency contracting 
corps. It puts an added burden on the responsibility of the 
department's chief procurement officer to provide training and 
to meet the higher needs of the department.
    But from an industry perspective, this separate-but-unequal 
system creates other challenges. We encourage you to look 
carefully at those challenges and for solutions.
    In conclusion, we believe that bringing TSA at least under 
the common rules applicable to the Department of Homeland 
Security will increase competition, expand small-business 
participation, and provide accountability and transparency.
    Thank you for the opportunity to provide the views of the 
Professional Services Council on this important public policy 
issue. We look forward to responding to any questions you may 
have.
    [The statement of Mr. Chvotkin follows:]

                  Prepared Statement of Alan Chvotkin

Introduction
    Mr. Chairman, Ranking Member Rogers, members of the Subcommittee, I 
am Alan Chvotkin, Senior Vice President and Counsel of the Professional 
Services Council (PSC). PSC is the principal national trade association 
for companies providing services to virtually every agency of the 
Federal government. Many of our member companies now do business with 
the Transportation Security Administration (TSA) and other components 
of the Department of Homeland Security. On behalf of the more than 220 
member companies, thank you for the invitation and the opportunity to 
provide our views on TSA's acquisition policies.

Growth in Federal Procurement
    Since 9/11, federal procurement spending on goods and services has 
grown dramatically. This should not come as a surprise. Among other 
things, 9/11 significantly changed many of the government's missions 
and created requirements for new technologies and innovative solutions 
to improve our homeland security and fight the war on terror. Needless 
to say, the wars in Iraq and Afghanistan have also contributed 
significantly to this growth.
    Today, federal spending on the purchase of goods and services 
exceeds $400 billion, representing nearly 40% of the total 
discretionary budget of the federal government. Spending on services 
contracts represents nearly 60% of that federal spending. Thus, federal 
procurement must be a core competency of the federal government and 
prioritized as such.
    But this growth has not occurred in a vacuum. During the same 
period, the discretionary budget has grown nearly 65%. Thus, while 
significant and clearly growing, spending on services has increased 
about 15% as a proportion of the government's operations.
    Given the central role that acquisition plays in the proper 
functioning of our government, it is important that Congress, as part 
of its oversight role, continually assess federal acquisition policies 
and performance and explore changes to policy or practice that might be 
needed. We appreciate the thoughtful leadership of this Subcommittee 
and its continued vigilance in this complicated field that is too often 
dominated by myths and hyperbole. However, it is important to recognize 
that workforce challenges, honest mistakes, or other structural 
problems, while serious, do not equate to fraud or abuse. As such, we 
appreciate your seriousness of purpose and the openness of the 
discussion we are having today.

Acquisition Workforce Challenges
    There is no doubt that the Federal government generally, and the 
Department of Homeland Security in particular, faces many difficult 
challenges in the acquisition arena. The human capital challenge is 
real and impacts the acquisition workforce as much as, if not more 
than, the rest of the federal workforce. PSC members believe strongly 
that an experienced, smart, and well-prepared customer makes the best 
customer. We see many examples in the private sector where companies 
take special effort to ensure that their procurement workforces are 
well prepared for the significant work they are assigned.
    Yet across the board, workforce development in the federal 
government is a glaring weakness and has been for a long time. When 
federal agency budgets get tight, the first thing cut is training. That 
is why five years ago PSC recommended to Congress, and the Congress 
enacted, what is now known as the Federal Acquisition Workforce 
Training Fund.\1\ While initially available only to the civilian 
agencies, Congress acted to bring the Defense Department fully into the 
Fund; \2\ in addition, the House-passed version of the fiscal year 2008 
National Defense Authorization Act recommends, and PSC strongly 
supports, making this training fund permanent.\3\ Although the fund is 
growing and the resources are being put to use to benefit the federal 
acquisition workforce, training funds for the acquisition workforce 
remain relatively flat and it is far from adequate.
---------------------------------------------------------------------------
    \1\ Enacted as Section 4307(a) of the Services Acquisition Reform 
Act of 2003 (P.L. 104-106) and codified in Section 37(h)(3) of the 
Office of Federal Procurement Policy Act (41 U.S.C. 433(h)(3))
    \2\ Section 821 of the FY 06 National Defense Authorization Act 
P.L. 109-163 (1/6/06), available at: http://frwebgate.access.gpo.gov/
cgi-bin/getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ163.109.pdf
    \3\ Section 802(a) of the FY 08 National Defense Authorization Act 
(HR 1585), as passed by the House of Representatives on May 17, 2007, 
available at: http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=110_cong_bills&docid=f:h1585eh.txt.pdf
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    To this Committee's credit, title IV of HR 1684, the FY 08 
Department of Homeland Security Authorization Act, provides for 
important workforce development improvements for the Department of 
Homeland Security, including addressing homeland security procurement 
training and authority to appoint retired annuitants,\4\ and we support 
these initiatives. We were surprised that the Administration opposed 
those changes on the grounds that it would undermine efforts by the 
Office of Federal Procurement Policy to standardize government-wide 
competency and training requirements so that the government can recruit 
and retain the best talent.\5\
---------------------------------------------------------------------------
    \4\ Sections 401 and 402 of the FY 08 Homeland Security Authority 
Act (HR 1684), as passed by the House of Representatives on May 9, 
2007, available at: http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=110_cong_bills&docid=f:h1684eh.txt.pdf
    \5\ See OMB Statement of Administration Policy on HR 1684, 
available at http://www.whitehouse.gov/omb/legislative/sap/110-1/
hr1684sap-h.pdf

PSC Acquisition ``Marshall Plan''
    But more needs to be done. It is our belief that if we want to 
improve the quality of federal acquisition, we should not start by 
layering an already beleaguered workforce with more regulations and 
process demands. Rather, as PSC President Stan Soloway testified on 
July 17, 2007 before the Senate Homeland Security and Governmental 
Affairs Committee,\6\ we need an ``Acquisition Marshall Plan'' that 
aggressively addresses the hiring, retention, training, reward and 
development of the acquisition workforce on a government-wide basis. 
This would involve recognizing, as most high performing companies do, 
that those elements of the workforce that are most directly critical to 
the functioning and success of the institution must receive special and 
appropriate focus and support.
---------------------------------------------------------------------------
    \6\ Available on the PSC website at: http://www.pscouncil.org/pdfs/
solowaystatementhsgac07-17-07.pdf
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    In addition, in keeping with other models for emergency relief, PSC 
called for the creation of a government-wide ``Contingency Contracting 
Corps'' drawn from across the government contracting workforce, with 
special training in emergency and contingency contracting, to be 
deployable when the need arises. When not deployed, the individuals 
populating this vital cadre would continue to perform their regular 
functions at their home agencies. To make these important reforms a 
reality will require Congress to be the catalyst.

TSA's Current Procurement Authority
    As you know, in 2001, before the Department of Homeland Security 
was created, the Aviation and Transportation Security Act \7\ 
established the TSA as a new agency within the Department of 
Transportation with security responsibility for all modes of 
transportation then overseen by the Department of Transportation and 
other related activities. Pursuant to Section 101(o) of that 2001 
Act,\8\ TSA procurements were to be governed by the Federal Aviation 
Administration's Acquisition Management System (AMS) and were 
specifically exempt from most of the Federal procurement laws and the 
Federal Acquisition Regulations (FAR), in the same manner as the FAA 
was and remains exempt from the FAR. I was privileged to play a small 
role representing industry in meetings with the FAA's Blue Ribbon panel 
that provided recommendations to the FAA on the AMS.
---------------------------------------------------------------------------
    \7\ See P.L. 107-71, enacted 11/19/01, available at: http://
frwebgate.access.gpo.gov/cgi-bin/
useftp.cgi?IPaddress=162.140.64.183&filename=publ071.pdf&directory=/
diska/wais/data/107_cong_public_laws
    \8\ Codified at 49 U.S.C. 114(o)
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Section 101(o) provides:
        Acquisition Management System.-The acquisition management 
        system established by the Administrator of the Federal Aviation 
        Administration under section 40110 shall apply to acquisitions 
        of equipment, supplies, and materials by the Transportation 
        Security Administration, or, subject to the requirements of 
        such section, the Under Secretary (for the TSA) may make such 
        modifications to the acquisition management system with respect 
        to such acquisitions of equipment, supplies, and materials as 
        the Under Secretary considers appropriate, such as adopting 
        aspects of other acquisition management systems of the 
        Department of Transportation.
    Instructively, the 2001 Act did not explicitly cover the 
acquisition of services. Subsequently, TSA adopted the FAA's AMS as its 
procurement regulations (TSAAMS) with modifications to address TSA 
unique requirements.
    Although the 2002 Homeland Security Act transferred TSA to the 
Department of Homeland Security (DHS), the 2002 Act did not alter or 
amend the exemption from either the procurement laws or the FAR.
    In 2005, Congress enacted the fiscal year 2006 Department of 
Homeland Security Appropriations Act \9\ and reaffirmed that the TSA 
acquisition management system, and the exemptions from the procurement 
laws and regulations of the FAR, is the appropriate acquisition model. 
The statute also closed the gap in the coverage of the 2001 statute 
relating to services.\10\ Section 515 of that 2005 Act provides:
---------------------------------------------------------------------------
    \9\ HR 2360, enacted as Public Law 109-90, and available at: http:/
/frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=109_cong_bills&docid=f:h2360enr.txt.pdf
    \10\ See the decision of the Comptroller General of the United 
States in the bid protest filed by Resource Consultants, Inc. (B-
290163; B-290163.2 (6/7/02) 2007 CPD 94 at 5), holding that the ATSA 
limited the bid protest exemption at GAO to acquisitions involving 
``equipment, supplies, and materials.''
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        For fiscal year 2006 and thereafter, the acquisition management 
        system of the [TSA] shall apply to the acquisition of services 
        as well as equipment, supplies and materials (emphasis added).
    GAO subsequently affirmed that the 2005 Act now exempts TSA's 
services procurements from its bid protest jurisdiction.\11\
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    \11\ See the decision of the Comptroller General of the United 
States in the bid protest Knowledge Connections, Inc., B-298172 (4/12/
06), holding that the solicitation for services by TSA is expressly 
exempt from GAO's bid protest jurisdiction.
---------------------------------------------------------------------------
    While in 2006 the Senate adopted an amendment to the fiscal year 
2007 Department of Homeland Security Appropriations Act offered by 
Senators Kerry, Snowe and Lautenberg to repeal the TSA procurement 
exemption,\12\ the conference report failed to adopt that 
provision.\13\ Again last week, the Senate adopted an amendment by 
Senators Kerry and Snowe to repeal the TSA exemption 180 days after 
enactment.\14\ In a July 24, 2007 letter to Senators Kerry and Snowe, 
PSC was pleased to support that amendment.\15\
---------------------------------------------------------------------------
    \12\ See Senate Amendment 4552 to H.R. 5441, the fiscal year 2007 
Homeland Security Appropriations Act, available at: http://
frwebgate.access.gpo.gov/cgi-bin/
getpage.cgi?dbname=2006_record&page=S7387&position=all However, it is 
not clear that simple repeal of the underlying authority would, by 
operation of law, bring TSA under the FAR.
    \13\ While the TSA exemption was deleted, Section 542 of the Act 
provides that the TSA acquisition management system is subject to the 
provisions of the Small Business Act; the conference report is 
available at: http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ163.109.pdf
    \14\ See Senate Amendment 2463 to HR 2368, the fiscal year 2008 
Homeland Security Appropriations Act, adopted 7/26/07, available at: 
http://frwebgate.access.gpo.gov/cgi-bin/
getpage.cgi?position=all&page=S10109&dbname=2007_record
    \15\ The PSC letter was printed in the Congressional Record and is 
available at: http://frwebgate.access.gpo.gov/cgi-bin/
getpage.cgi?dbname=2007_record&page=S9909&position=all
---------------------------------------------------------------------------
    By any measure, TSA is a major procurement organization. According 
to statistics from DHS,\16\ in the last fiscal year TSA issued almost 
two thousand actions with a value in excess of $1.55 billion dollars. 
In PSC's analysis, over 80% of TSA's spending has been for the purchase 
of services; TSA has identified information technology, administrative 
support services, guard services and program management support 
services as among the top five categories of services purchased; the 
top five services categories accounted for over $610 million in agency 
purchases in the last fiscal year. Overall, in fiscal year 2006, DHS 
obligated over $15.7 billion, of which 83 percent was for services,\17\ 
making it the third largest government agency in terms of annual 
procurement spending, behind the Defense Department and the Department 
of Energy.
---------------------------------------------------------------------------
    \16\ As reported by DHS and recorded in the Federal Procurement 
Data System, current as of 2/2007, available at: http://www.dhs.gov/
xlibrary/assets/opnbiz/cpo--acquisitionreportfy2006.pdf. Data does not 
include grants and purchase card transactions.
    \17\ Id. See also testimony of DHS Inspector General Richard 
Skinner before the House Oversight and Government Reform Committee's 
Subcommittee on Government Management, Organization, and Procurement, 
July 18, 2007, available at: http://
governmentmanagement.oversight.house.gov/documents/20070718162847.pdf
---------------------------------------------------------------------------
    Mr. Chairman, there were valid reasons for exempting TSA from the 
acquisition laws and regulations when it was created in late 2001, even 
while good arguments also existed to treat TSA as most other agencies 
– particularly with respect to federal acquisition policy. There 
was a second opportunity to review that decision in 2002 when Congress 
created the Department of Homeland Security and transferred TSA from 
the Department of Transportation into the Department of Homeland 
Security, but the provision was not changed. There was yet a third 
reaffirmation of the procurement authority applicable to TSA provided 
for in the 2005 Appropriations Act.
    To be sure, the FAA's acquisition system works for TSA, as has been 
demonstrated over the past five years. It is built on the principles of 
the federal acquisition system, even though there are some obvious 
differences in implementation. Further, the flexibilities TSA has used 
to meet past threats, and may need to respond fully and promptly to 
emerging and future threats, need to be carefully considered, although 
the current acquisition statutes, the FAR and the DHS authorities also 
provide broad flexibility for agencies to address emergency situations.
    This committee and others have reviewed many of the procurements 
entered into by TSA. Many of them have achieved exactly the goals the 
TSA had and have been implemented as intended; others have raised 
issues regarding performance by both federal officials and contractors, 
with examples of problems at all phases of the acquisition system.
    I cannot say that TSA's exemptions from the key federal acquisition 
statutes and government-wide Federal Acquisition Regulations was the 
cause for any of these problems; nor can I say with certainty that 
bringing them under those laws and regulations will ensure that there 
will not be problems in the future. But I can say with confidence that 
bringing TSA at least under the common rules applicable to the 
Department of Homeland Security will increase competition, expand 
opportunities for greater small business participation, provide greater 
accountability and transparency in their procurement processes, and 
provide greater options for addressing the challenges of the 
department's acquisition workforce. Indeed, there are clear advantages 
for all parties when agencies operate under common, government-wide 
rules and procedures. Moreover, as TSA seeks to train its current 
workforce and expand its acquisition workforce, the degree of 
commonality between its acquisition procedures and other federal agency 
practices will have a real effect on the cost and efficiencies of 
bringing in skilled professionals from other agencies.

What Acquisition System Should the TSA Be Under?
    If TSA were not authorized to retain the current explicit authority 
to maintain its own acquisition systems, what system should it be 
under?
    On July 18, 2007, the DHS Inspector General testified before the 
House Oversight and Government Reform Committee \18\ and spelled out 
five elements of an efficient, effective and accountable acquisition 
process, relying on the September 2005 Government Accountability Office 
``Framework for Assessing the Acquisition Function at Federal Agencies' 
\19\ and the July 2005 DHS Acquisition Oversight Program Guidebook \20\ 
as a baseline. The DHS IG identified five interrelated elements 
essential to an efficient, effective and accountable acquisition 
process:
---------------------------------------------------------------------------
    \18\ IG testimony, note 17 supra
    \19\ GAO 2005 Report 05-218G (September 1, 2005), available at: 
http://www.gao.gov/new.items/d05218g.pdf
    \20\ DHS, Acquisition Oversight Program Guide, available at: http:/
/www.dhs.gov/xlibrary/assets/DHS_ACQ_Planning_Guide_Notice_05-02.pdf
---------------------------------------------------------------------------
        1. Organizational alignment and leadership
        2. Policies and processes
        3. Financial accountability
        4. Acquisition workforce
        5. Knowledge management and information systems
    He concluded that, within DHS: (1) an integrated acquisition system 
does not exist; (2) full partnership of acquisition offices with other 
department functions has not been realized; (3) comprehensive program 
management policies and processes are needed; (4) staffing levels and 
trained personnel are not sufficient; (5) financial and information 
systems are not reliable or integrated; and (6) timely, corrective 
actions have not been taken in response to the IG's and GAO's 
recommendations.\21\ While we take issue with some elements of the IG's 
testimony, we concur in the overarching conclusions he reached.
---------------------------------------------------------------------------
    \21\ IG testimony note 17 supra at page 5.
---------------------------------------------------------------------------
    We believe that several of these conclusions result from the fact 
that TSA has its own procurement system, its own policies and 
processes, its own workforce with separate needs for training, and its 
own financial and information systems based on its unique acquisition 
system.\22\ Furthermore, these unique processes make it difficult to 
share acquisition resources across the department, let alone on a 
government-wide basis as we suggested in our proposed Contingency 
Contracting Corps; it puts an added burden on the responsibility of the 
Department's Chief Procurement Officer to provide the training for them 
and makes rotational assignments across the department to meet higher 
priority needs of the department more difficult. It also calls into 
question whether their performance statistics match with the rest of 
the government.
---------------------------------------------------------------------------
    \22\ The Coast Guard, also now part of the Department of Homeland 
Security, is governed by the ``standard'' federal procurement system 
except when called into service as part of the Department of Navy, when 
it will be governed by the ``standard'' Defense Department procurement 
system. Of course, the FAA retains its separate procurement system 
while remaining part of the Department of Transportation.
---------------------------------------------------------------------------
    From an industry perspective, this separate but unequal system 
creates other challenges. Since TSA uses a unique acquisition process, 
doing business with the TSA requires a thorough understanding of a 
different procurement system, built upon, but separate from, the 
standard civilian agency procurement system for the rest of the 
Department and even most of the Federal government, which acts as a 
market limiting factor for those firms who do not have the resources to 
master and navigate through multiple systems. There are also other 
significant procedural differences between TSA and other departmental 
procurements, such as access to the GAO protest process for stand alone 
contracts, even though TSA relies on the FAA's agency-based Office of 
Dispute Resolution for Acquisition (ODRA) as an independent review 
forum.\23\
---------------------------------------------------------------------------
    \23\ Information on the ODRA process is available at: http://
www.faa.gov/about/office_org/headquarters_offices/agc/pol_adjudication/
agc70/index.cfm?print=go

What Acquisition System is the Department of Homeland Security Now 
Under?
    It is also fair to carefully inspect the current procurement system 
for DHS. As you know, Section 101 of the Homeland Security Act \24\ 
established the Department as an ``executive department.'' Subtitle D 
of title VIII of that Act also provides the Department with specific 
exemptions to government-wide procurement rules: one for ``personal 
services,'' one providing ``other transaction authority,'' coupled with 
other flexibilities related to the regular acquisition process \25\ 
plus additional flexibilities for emergency procurements.\26\ These 
exemptions help the Department meet its specialized mission and have 
proven to add valuable flexibilities to meet the department's needs. 
There is transparency in the department's procurement rules and both 
internal and external accountability and oversight for procurement 
actions. At a minimum, TSA should be held to the same procurement rules 
as applicable to the Department of Homeland Security.
---------------------------------------------------------------------------
    \24\ Section 101(a) of P.L 107-296 (Nov. 25, 2002), codified in 6 
U.S.C. 111
    \25\ See Subtitle D of title VIII of the Homeland Security Act of 
2002, codified in 6 U.S.C. 391, et. seq.
    \26\ See Subtitle F of title VIII of the Homeland Security Act of 
2002, codified in 6 U.S.C. 431, et. seq.

Conclusion
    Mr. Chairman, we are coming up on six years since 9/11 and almost 
six years since TSA was established. TSA has accomplished an enormous 
mission under some of the most trying circumstances. But it is 
appropriate to again ask what the best acquisition policy for TSA 
should be going forward. For PSC, we believe that bringing TSA at least 
under the common rules applicable to the Department of Homeland 
Security will increase competition, expand opportunities for greater 
small business participation in the Department's procurements, provide 
greater accountability and transparency to all stakeholders in their 
procurement processes, and provide greater options for Congress and for 
the Secretary and the Under Secretary for Management of the Department 
to address the challenges of TSA's and the department's acquisition 
system and workforce.
    Thank you again for the invitation to provide the Professional 
Services Council's views on this important procurement policy issue. I 
look forward to responding to any questions you may have.

    Mr. Carney. I thank you, Mr. Chvotkin, for your testimony.
    And I want to thank all the witnesses.
    I will remind each member that he or she will now have 5 
minutes to question the panel. I will recognize myself for 5 
minutes. I think maybe we will get one round of questions in. 
You hear the summons sounding right now. And then we will 
suspend until we get back. We will probably do a couple rounds 
anyway.
    Okay, all right, let's start the questions. I will 
recognize myself for 5 minutes.
    Mr. Bodenheimer, in your prepared testimony, you list 
several examples of how AMS creates parallel sets of rules that 
sometimes conflict with FAR. Could you describe these examples 
and explain in layman's terms, please, the kinds of 
difficulties they pose for contractors?
    Mr. Bodenheimer. I will be glad to, Mr. Chairman.
    One of the examples is the requirement to provide cost or 
pricing data in non-competitive contracts--the so-called 
``Truth in Negotiations Act'' requirement. The FAR exempts 
smaller procurements, those under $650,000, and says, ``You do 
not need to furnish cost or pricing data because it is 
burdensome and costly.''
    Under the TSA system, there is both a lower and a higher 
threshold. So one of the clauses provides for a lower 
threshold, meaning that there are certain contracts for which 
the government doesn't get the cost or pricing data that it 
perhaps needs to do the job. And then, as well, you have a 
higher threshold.
    These inconsistencies create certain compliance burdens for 
contractors, you know, when they are trying to determine, what 
is the rule, what do I need to follow?
    When I teach the defective pricing course in this area, I 
teach the general rule, the one in the FAR. And, for small 
businesses, knowing that there are different rules that they 
have to follow, it is a real challenge.
    Mr. Carney. Thank you.
    Ms. Duke, most of the department uses the FAR. Do you 
believe that the FAR offers enough flexibility for CBP, ICE, 
FEMA, the Coast Guard and the rest of the department to fulfill 
their missions, even in time of crisis?
    Ms. Duke. I do believe that the FAR does provide 
flexibilities in times of crisis. I think the tenants 
underlying the AMS and FAR are very similar. It is really 
process and procedural issues; that both systems do allow for 
special practices for urgent reasons.
    Mr. Carney. Okay.
    Mr. Gunderson, I guess a similar question: You say that AMS 
gives you more flexibility than you would have under FAR. Do 
you believe that there is not sufficient flexibility under FAR 
for TSA to fulfill a mission?
    Mr. Gunderson. With respect to urgent procurements, I agree 
with what has been said, that there is not a significant 
difference between the FAR and the AMS.
    What I do believe is that, having worked in both a FAR and 
AMS environment, that the Acquisition Management System 
provides a framework to make sound business decisions, 
efficient contracting practices, that mirror the commercial 
business practice.
    Mr. Carney. Can you give us some concrete examples where 
AMS allows you to do something that FAR would not allow you to 
do?
    Mr. Gunderson. Okay. A couple of key differentiators 
between the two systems: First is the extent of communications 
that AMS provides for throughout the acquisition lifecycle.
    Under a FAR environment, communications are very regulated, 
very structured, and they can, I believe, slow down and drag 
out the procurement process, which takes away from government 
resources as well as industry resources.
    AMS encourages those communications throughout the process 
to create a better understanding between the government's 
requirements and the industry capabilities. The communications 
throughout the process and how we conduct our discussions with 
industry is a difference.
    The second one is how we go about screening our 
contractors. And this gets to the heart of competition.
    Where the FAR offers what is called a multi-step advisory 
process, which doesn't necessarily narrow the playing field 
effectively, the AMS does provide the ability to have those 
communications, get information and proposals from the 
contractors, and be able to focus on those companies that are 
most likely to be eligible for award.
    Mr. Carney. In your testimony, you implied that AMS uses 
industry best practices. Does FAR not use industry best 
practices, as well?
    Mr. Gunderson. I believe that AMS goes farther than FAR 
does, with respect to mirroring commercial practices.
    When AMS was established by FAA, they went out and looked 
at best of business and said, ``How should we do business 
better?'' And I have also seen some recent reports done that 
talk about, what are commercial best practices when it comes to 
competition? And I don't believe that your corporations out 
there are going with full and open competition. They go with 
effective competition.
    Mr. Carney. Okay, thank you.
    I will revisit this question again on my next round for Mr. 
Bodenheimer and Mr. Chvotkin.
    The chair now recognizes the ranking member from Alabama, 
Mr. Rogers, for 5 minutes.
    Mr. Rogers. I thank the chairman.
    Just a couple of questions.
    In listening to Mr. Bodenheimer's comments, I was curious, 
Ms. Duke, when you talked about both programs had sufficient 
latitude, what do you feel about Mr. Bodenheimer's perspective 
about the exemptions being unreasonable given the exigent 
circumstances that seem to have passed?
    Ms. Duke. I don't think the premise for AMS and its 
benefits is really speed. That is not the underlying principle. 
The underlying principle of why AMS is better and was used in 
FAA is managed acquisition as a whole. The procurement is one 
piece. In fact, the whole section on procurement is just one 
chapter out of all of AMS. And AMS seeks to manage acquisition 
programs, from requirements all the way through disposal at the 
end. And that is a key principle in why it is more effective 
for acquisition.
    And then the second reason is it has some of the basic 
principles, but rather than dictating steps of processes, it 
allows the contracting officer more judgment in coming to 
decisions.
    And so, I think you can still use speed. For instance, 
under CICA, you can go sole-source rather than pulling off the 
cogitation for ``urgent and compelling.'' Under AMS, it is for 
a rational basis. And the rational basis, again, can be an 
urgency or another reason.
    So I think the focus on it just for speed is really an 
inappropriate focus.
    Mr. Rogers. Mr. Bodenheimer, can you give me a practical 
example of how a company would be disadvantaged because of the 
exemption staying in place?
    Mr. Bodenheimer. One of the examples would be compliance. 
As Oliver Wendell Holmes said, ``When you deal with the 
government, you have to turn square corners.'' And one of those 
square corners that contractors have to have in place are 
compliance programs, which provide procedures, training and 
monitoring in accordance with the requirements with which they 
have to meet to do business.
    By having two sets of rules, particularly for a small 
business that struggles with one set of compliance procedures, 
rules and training, having two is really a difficult and 
expensive process.
    Mr. Rogers. Which brings me to Mr. Chvotkin.
    You are not from Alabama, are you?
    [Laughter.]
    Mr. Chvotkin. North Alabama.
    Mr. Rogers. North Alabama.
    [Laughter.]
    You made reference to the common rules. Tell me, what are 
the common rules that you think should be adhered to?
    Mr. Chvotkin. The point I was trying to make is that the 
Department of Homeland Security itself has a set of unique 
regulations and statutory authorities that separate it from the 
rest of the government. And the question we were posing, the 
position that we are taking at the Professional Services 
Council is, at a minimum, TSA ought to be brought in under the 
same set of rules and regulations as the rest of the Department 
of Homeland Security is for its procurements.
    And there are flexibilities in emergency procurements, 
simplified acquisition thresholds in response to emergency 
circumstances, that exist only for DHS and not for the rest of 
the government.
    So when we talk about the FAR, the government-wide 
regulations, just to give you a sense, that is what they look 
like. These are not simple, in and of themselves. It is to at 
least recognize that TSA becomes part of the rest of the 
department.
    Mr. Rogers. I understand. Thank you.
    I yield back.
    Mr. Carney. Thank you.
    We are going to suspend now until we complete our votes. 
And we will readjourn--your guess is as good as mine.
    [Laughter.]
    Stand by.
    [Recess.]
    Mr. Carney. We will reconvene now.
    Is Mr. Gunderson available? Oh, okay.
    It is going to be one of those days. We just got called 
back to vote. But let's ask some questions anyway.
    [Laughter.]
    Let's just have a little conversation.
    Mr. Chvotkin, in your prepared testimony, you say that 
TSA's use of AMS ``acts as a market-limiting factor for those 
firms who do not have the resources to master and navigate 
through the multiple systems.''
    Can you explain what you mean by that and tell me how that 
impacts small and disadvantaged businesses?
    Mr. Chvotkin. I would be happy to, Mr. Chairman. Thank you.
    As we have talked earlier today, the federal government's 
procurement system, as you know, is a rule-based system. It 
contracts and sets the terms and conditions between the 
government, who acts as a purchaser, actually the buyer, and 
the private sector, who acts as the seller.
    And so, what this separate-but-unequal provides is 
increased cost to learning, as we talked about, the increased 
compliance cost, added barriers of knowledge because of those 
rules and the inconsistencies between the AMS and others in the 
procurement area.
    There are really three types of companies that are out 
there: those that are already doing business with the TSA and 
have either mastered the rules or felt comfortable with them; 
those that are already government contractors somewhere else 
and know the FAR a little bit but don't know the AMS system and 
maybe think they could learn that; and those that are not 
government contractors today, who don't know anything about 
even the government-wide system and find this very daunting.
    And so, when you tell people that there are really several 
systems--if you want to do business only with TSA, you can 
learn one rule. But if you have any interest in doing business 
elsewhere in the government, those multiple systems really 
present a daunting task, particularly for small businesses. It 
is a cost, it is a compliance, it is a knowledge base--all 
three of those factors.
    Mr. Carney. I would like to return back to the conversation 
we were having before we broke to go vote. We were talking 
about some of the issues--I think you addressed them, Mr. 
Chvotkin.
    But, Mr. Bodenheimer, would you care to re-engage on that 
discussion we were having?
    Mr. Bodenheimer. Thank you. With respect to the 
difficulties of trying to comply with two sets of rules?
    Mr. Carney. Correct.
    Mr. Bodenheimer. One of the most sophisticated contractors 
that I deal with and one of the attorneys with the most 
experience in the business was commenting on the challenges of 
trying to follow not only the TSA clauses, which are somewhat 
different from some of the FAA clauses, which are different 
from the FAR clauses. And when you put them all together, it 
becomes an alphabet soup of trying to figure out, ``What 
clauses am I complying with today?''
    That was very persuasive to me, when somebody with that 
level of sophistication and experience said what a challenge it 
is trying to comply with these multiple sets of clauses. He 
said he was old enough; he would like to have one rule.
    [Laughter.]
    Mr. Carney. Understood.
    Ms. Duke, I am trying to understand the justification for 
having only TSA under AMS. What is different or special about 
TSA that only it should be exempt from the FAR?
    Ms. Duke. Actually, there is nothing currently that--I 
think TSA was stood up with AMS, and it was given that 
authority at the beginning. And we have not asked for that 
authority for the rest of the department. But there is nothing 
specifically unique about TSA.
    It is nice for TSA to have that flexibility of authority 
because it does give some good flexibilities in the procedures 
for TSA. So really, it was given it, and it is a matter of 
there has not been a discussion of giving it to the rest of the 
department but, rather, taking it away from TSA.
    Mr. Carney. Are you, then, sort of advocating, because of 
the flexibility issue, that AMS be extended to the rest of the 
department? If not, why not?
    Ms. Duke. I think there are benefits to AMS. With the 
qualified workforce, it allows the contracting officers to make 
good judgment calls; it allows them to have more open 
discussions with industry; and it allows for, really, better 
business deals, a more closer meeting of the minds at the time 
the contract is signed.
    At this point, we are not arguing for it for the 
department, I would say principally because, with all the 
procurement and acquisition legislation going on, it really 
doesn't seem like one that would be entertained with any 
earnest. And I guess it is a matter of picking the battles.
    Mr. Carney. So we get to pick the battles here.
    Ms. Duke. Yes.
    Mr. Carney. All right. I mean, just from the outside, 
somebody who is kind of looking at it, it doesn't quite jibe. 
If you are so sold on it, why would you not advocate that it be 
spread throughout the entire department, in fact, indeed, the 
government?
    Does FAR not give you the flexibility you need? Is that the 
issue?
    Ms. Duke. I think for us, Mr. Chairman, it is a maturity 
issue. Right now we are developing the basics of our workforce, 
and I think, to appropriately use the flexibilities and the 
judgments that AMS gives, that, as we grow the maturity of our 
workforce, we would be better positioned to use that overall as 
a department.
    And so, that would be principally why I am not arguing for 
it now, is I really think that, with the flexibilities comes 
responsibilities. And I would like to grow our workforce and 
make sure they have the basic competencies before I advocate 
for the additional flexibilities and authority.
    Mr. Carney. Okay. We will come back to that.
    Mr. Chvotkin, in your testimony, you state that you can 
``say with confidence that bringing TSA at least under the 
common rules applicable to the Department of Homeland Security 
will increase competition, expand opportunities for greater 
small-business participation, provide greater accountability 
and transparency in their procurement processes, and provide 
greater options for addressing the challenges of the 
department's acquisition workforce.''
    Can you expand on that and tell us the basis of that 
belief, please?
    Mr. Chvotkin. Yes, sir.
    Many of our member companies--and we have had the 
opportunity to participate in broad procurement fairs with 
members of Congress, hosted by the Professional Services 
Council. The companies tell us that their understandings--they 
put systems in place; they want them to apply government-wide. 
They want to address those issues on a government-wide basis.
    We comment frequently on rules and regulations and on 
legislation that move us farther and farther away from that 
uniform set of regulations. And so, as we have talked before, 
from a cost standpoint, from a compliance standpoint, and from 
an education standpoint, all of these factors tend to drive 
people away from a marketplace that they don't know, don't know 
whether they can be successful, from the company's standpoint.
    Couple that with an acquisition system where there is no 
predictability and consistency, and there is no way for 
companies to know that they can be successful. They will 
husband their resources carefully and go look for opportunities 
where their chances of success are greater.
    Mr. Carney. Thank you. Thank you.
    Mr. Bodenheimer, can you describe the FAR process for 
resolving protests and disputes and compare it to the AMS 
process, please?
    Mr. Bodenheimer. I would be glad to, Mr. Chairman.
    The technology is obviously overwhelming to me.
    [Laughter.]
    I would be glad to answer the question.
    With respect to the difference between the two processes, 
certainly the TSA protest process has experienced people, well-
respected people who hear the disputes and the protests and 
make the decisions. However, when you compare that to GAO, GAO 
has over 80 years in deciding protests, has thousands of 
precedents that tell you what the rules are, and they have 
unquestioned independence.
    So if we gave a choice to the companies I talk with, 
``Would you rather use the TSA protest process or the GAO 
protest process?'', they would almost uniformly pick the GAO 
protest process.
    In addition, the GAO protest process has certain teeth that 
come with it, such as the stay of performance, the protest 
costs.
    And finally, the last thing I would like to add, as a Navy 
attorney, one of the things that really got my attention were 
GAO protests and the concern about getting one. So with that 
hanging over my head, we tried to build the quality in upfront 
in the procurement process so we wouldn't have that later.
    Mr. Carney. Right. Between the two processes, the FAR and 
the AMS, which do you think private industry prefers?
    Mr. Bodenheimer. My understanding is they would like to 
have one system, which would be the FAR system, that works, 
particularly the competition component.
    Mr. Carney. Okay.
    Anybody else care to comment on that question?
    Mr. Chvotkin. I would concur, as that has been the 
experience from our member companies.
    Mr. Carney. Thank you.
    Ms. Duke?
    Mr. Gunderson?
    Okay, I have to go vote----
    Mr. Gunderson. Mr. Chairman?
    Mr. Carney. Yes?
    Mr. Gunderson. If I could just make one comment on that.
    When you look at the industry base that we deal with, these 
companies deal in business not only with the federal government 
but they are dealing in business in the commercial world, as 
well as with states.
    So these firms are used to dealing in multiple 
environments. So for them to be able to adapt to an AMS 
environment, I do not see that as a significant issue.
    Mr. Carney. Elaborate. Why?
    Mr. Gunderson. As I have addressed before, again, the 
fundamental tenants are the same. And while I recognize that 
there are some differences in maybe how the clauses are worded 
from the FAR, the tenants are the same. We have, over the past 
5, 6 years, spent about $2.5 billion a year dealing with large 
firms and small firms. We have had an open dialogue. We engage 
with them before we issue solicitations, through the 
solicitation process, providing every opportunity for them to 
express a concern, ask a question, receive guidance on how to 
deal with our system.
    I have not had one person address me, say that they have 
had an issue with this. So I think that open dialogue has, you 
know, provided them an opportunity to say that AMS is causing 
them problems. And I have not seen it.
    Mr. Carney. I understand. But it seems to me, if the 
tenants are the same and we are not in an emergency environment 
any longer, having duplicative systems, well, is duplicating 
efforts.
    In any event, I am going to go vote, and I will adjourn 
this hearing for the day.
    I appreciate all of your testimony. And I imagine there 
will be questions that you will be asked to submit in writing. 
Please do so promptly. And we appreciate you showing up today.
    The committee stands adjourned.


             Appendix:  Additional Questions and Responses

                              ----------                              


Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                  Responses from David Z. Bodenheimer

    Question 1.: Please explain what ``requirements definition'' is, 
why it is important in government contracts, and whether you believe 
that the FAR results in better defined requirements than AMS?
    Response: Requirements definition represents one of the most 
critical steps in the acquisition process in which the agency specifies 
its minimum needs clearly, fully, and openly so that the government 
gets what it must have, the contractor delivers what it promises, and 
the taxpayers get what they pay for. Well-defined requirements 
establish the baseline against which offerors will compete for contract 
award, the agency will measure the progress and performance of the 
contractor who wins the competition, and the winning contractor 
assesses whether it is meeting its contractual duties on time and 
within budget. Poorly-defined requirements too often foretell schedule 
delays, cost overruns, and disappointing contract performance.
    Sound requirements definition stands as one of the cornerstones of 
the Competition in Contracting Act. Consistent with the duty to 
maximize ``full and open competition,'' the Competition in Contracting 
Act requires that the agency:
         ``specify the agency's needs and solicit bids or 
        proposals in a manner designed to achieve full and open 
        competition for the procurement'' and
         ``develop specifications in such manner as is 
        necessary to obtain full and open competition with due regard 
        to the nature of the property or services to be acquired.''
    10 U.S.C. Sec. 2305(a)(1)(C); see Competition in Contracting Act of 
1983, S. REP. NO. 98-50, at 14 (1983) (duty to develop requirements and 
specifications that promote competition); MadahCom, Inc., B-298277, 
Aug. 7, 2006, 2006 CPD para. 119 at 3 (agency ``is generally 
required to specify its needs and solicit offers in a manner designed 
to achieve full and open competition'').
    Ill-defined, incomplete, or ambiguous statements of agency 
requirements undermine this Congressional mandate for ``full and open 
competition'' because contractors cannot compete fairly and equally 
against a common set of ground rules if the rules are not clear. See 
National Aerospace Group, Inc., B-282843, Aug. 30, 1999, 99-2 CPD 
para. 43 at 7--8 (sustaining protest where agency failed to 
disclose its requirements fully and openly); Businessland, Inc., GSBCA 
No. 8586-P-R, 86-3 BCA para. 19,288 at 97,514 (sustaining 
protest where ``requirements . . . had never been articulated to the 
protester''). In sustaining a protest where the agency failed to 
communicate its requirements and concerns clearly to a potential 
competitor, the Government Accountability Office (GAO) explained that 
``it was the Air Force's duty to make its essential requirements clear 
to potential offerors and allow them an opportunity to demonstrate 
their ability to comply before rejecting them as potential sources of 
supply.'' Masstor Systems Corp., B-215046, Dec. 3, 1984, 84-2 CPD 
para. 598 at 3. Making TSA subject to the Competition in 
Contracting Act would provide the statutory discipline for assuring the 
timely preparation of well-defined, pro-competitive requirements that 
promote ``full and open competition.''
    In addition to the Competition in Contracting Act, the Federal 
Acquisition Regulation (FAR) establishes sound rules for defining 
agency requirements. In particular, the FAR defines multiple factors 
and steps necessary for acquisition planning and requirements 
definition, including:
         Assuring that the agency planners ``address the 
        requirement to specify needs, develop specifications, and to 
        solicit offers in such a manner to promote and provide for full 
        and open competition'' [FAR Sec. 7.103(c)];
         Structuring ``contract requirements to facilitate 
        competition by and among small business concerns'' [FAR 
        Sec. 7.103(s)(1)];
         Engaging in early acquisition planning to ``avoid 
        issuing requirements on an urgent basis'' that ``restricts 
        competition and increases prices'' [FAR Sec. 7.104(b)];
         Coordinating the acquisition with ``all those who will 
        be responsible for significant aspects of the acquisition, such 
        as contracting, fiscal, legal, and technical personnel'' [FAR 
        Sec. 7.104(a)];
         Considering critical factors in requirements 
        definition and planning, including cost, life-cycle cost, 
        required capabilities, delivery requirements, trade-offs, and 
        risks [FAR Sec. 7.105].
    In addition, FAR Part 11 devotes an entire section of the 
regulation to ``Describing Agency Needs'' and developing the necessary 
requirements.
    By following the Competition in Contracting Act and FAR rules for 
planning acquisitions and defining requirements, TSA would have a more 
structured, better defined process that would enhance the likelihood of 
developing requirements that are clear, firm, and pro-competitive. 
While proper requirements definition alone does not guarantee program 
success, TSA and its contractors would both benefit from the statutory 
and regulatory steps prescribed by the Competition in Contracting Act 
and the FAR. In short, a solid requirements baseline increases the 
probability of meeting the TSA mission and reduces the risk of schedule 
delays, cost overruns, and performance shortfalls.

    Question 2. In your prepared testimony you compare the AMS 
``preference'' for competition with the FAR requirement for full and 
open competition. Could you describe the two, and say which you believe 
best maximizes competition?
    Response: TSA's standard for competition is even lower than the old 
standard--maximum ``practical'' competition--that Congress found to be 
inadequate and ineffective prior to the enactment of the Competition in 
Contracting Act (CICA). Examples of the differences include the 
following:
         ``Rational Basis'' Test. TSA only needs a ``rational'' 
        basis to avoid competition,\1\ meaning that virtually any non-
        frivolous reason can justify a sole source. In contrast, CICA 
        mandates competition unless the agency can justify 
        noncompetitive actions based upon one of the limited number of 
        Congressionally-defined exceptions. 10 U.S.C. Sec. 2304(b), 
        (c).
---------------------------------------------------------------------------
    \1\ See TSA Acquisition Management System (TSAAMS) (linking to FAA 
Acquisition Management Policy Sec. 3.2.2.4) (http://www.tsa.gov/join/
business/index.shtm).
---------------------------------------------------------------------------
         No Legal Duty. The TSA system (TSAAMS) only provides 
        ``policy and guidance'' \2\ which generally imposes no 
        enforceable legal duty to comply. However, CICA mandates 
        competition: ``The award of a contract on a sole-source basis 
        would for the first time constitute a clear violation of 
        statute unless permitted by one of the following exceptions.'' 
        \3\
---------------------------------------------------------------------------
    \2\ TSAAMS (http://www.tsa.gov/join/business/business_tsaams.shtm).
    \3\ Competition in Contracting Act of 1983, S. REP. NO. 98-50, at 
21 (1983).
---------------------------------------------------------------------------
         No Certified Justification. While TSAAMS does 
        contemplate a documented basis for a sole source,\4\ CICA 
        requires a written justification certified as accurate and 
        complete by the contracting officer. 10 U.S.C. 
        Sec. 2304(f)(1)(A).
---------------------------------------------------------------------------
    \4\ TSAAMS (linking to FAA Acquisition Management Policy 
Sec. 3.2.2.4) (see note 1 above).
---------------------------------------------------------------------------
         No High-Level Statutory Approval. Unlike TSAAMS, CICA 
        specifically requires high-level approvals by the agency's 
        competition advocate ($500,000 to $10 million), head of 
        procuring activity ($10--$50 million), or senior procurement 
        executive (over $50 million), thus assuring high-level 
        accountability. 10 U.S.C. Sec. 2304(f)(1)(B).
         No Duty to Promote Competition. Unlike the TSA system 
        that includes no express duty to promote competition, CICA 
        explicitly requires agencies to take affirmative steps to seek 
        and obtain competition.\5\
---------------------------------------------------------------------------
    \5\ The duty to take affirmative steps to promote competition under 
CICA is well-established. See 10 U.S.C. Sec. 2304(f)(5); Competition in 
Contracting Act of 1983, S. REP. NO. 98-50, at 18 (1983) (requiring 
agencies to make an affirmative effort to obtain effective 
competition); eFedBudget Corp., B-298627, Nov. 15, 2006, 2006 CPD 
para. 159 at 7 (sustaining protest where agency had no 
record of taking affirmative steps to promote competition by resolving 
issue relating to restricted access to software source code); Test 
Systems Associates, Inc., B-244007.2, Oct. 24, 1991, 91-2 CPD 
para. 367 at 7, n.8 (sustaining protest where ``the Air 
Force has had a duty to take practicable steps to avoid a 
noncompetitive follow-on contract,'' but failed to do so).
---------------------------------------------------------------------------
         No Effective Enforcement. The Office of Dispute 
        Resolution that oversees TSA protests lacks an aggressive 
        history of challenging sole-source procurements. In contrast, 
        GAO has a long history of effectively enforcing CICA and 
        challenging sole-source actions.\6\
---------------------------------------------------------------------------
    \6\ See Written Statement of David Z. Bodenheimer, p. 10 (notes 27-
30).
---------------------------------------------------------------------------
    In stark contrast to TSA's permissive ``rational'' basis standard 
and unenforceable ``preference,'' the Competition in Contracting Act 
offers a far superior means for maximizing competition with its ``full 
and open competition'' mandate, ``absolute preference for 
competition,'' and effective teeth for oversight and enforcement.\7\
---------------------------------------------------------------------------
    \7\ Competition in Contracting Act of 1983, S. REP. NO. 98-50, at 
17-18 (1983).

    Question 3.: During your time as a lawyer in the Navy, did you ever 
encounter a situation where the Navy was unable to buy something it 
critically needed because of FAR requirements, or was the FAR flexible 
enough to allow for emergency contracts?
    Response: During my tenure with the Navy, we had ample flexibility 
under the FAR (and its predecessor regulations) to handle urgent 
demands for critically needed requirements. In one instance at the 
Washington Navy Yard, we received direction from the Pentagon to award 
a contract within 30 days. We issued the solicitation, called in 
industry, explained the urgency, answered questions, received and 
evaluated proposals, and made award--all within 30 days. While we had 
to work hard and partner closely with industry, we met the requirement.

Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee 
              on Management, Investigations, and Oversight

    Question 4.: From your perspective, what are some of the major 
differences between the Acquisition Management System (AMS) and the 
Federal Acquisition Regulation (FAR)?
    Response: While a wealth of differences exist between TSA's system 
(TSAAMS) and the FAR that governs nearly all other agencies, TSA's 
exemption goes well beyond the FAR itself. The exemptions for TSA also 
nullify: (1) the Competition in Contracting Act, (2) the Office of 
Federal Procurement Policy (OFPP) Act (except for Procurement Integrity 
Act provisions); (3) Federal Acquisition Streamlining Act (except for 
whistleblower provisions); and (4) the procurement protest system (31 
U.S.C., Chapter 35(V)). Some of the major differences between TSAAMS 
and the exempted statutes and FAR include the following:
         Effective Competition. In contrast to TSAAMS, both 
        CICA and FAR are far superior in maximizing competition. See 
        Answer No. 2 above.
         Effective Requirements Definition. In contrast to 
        TSAAMS, CICA and FAR both more effectively enforce requirements 
        definition. See Answer No. 1 above.
         Accountability. Unlike TSAAMS, both CICA and FAR 
        establish express requirements for certified justifications, 
        high-level approvals, and public transparency for sole-source 
        procurements. 10 U.S.C. Sec. 2304(f)(1); FAR Sec. Sec. 6.303 & 
        6.304; see Answer No. 2 above.
         Enforceability. While TSAAMS merely provides ``policy 
        and guidance,'' \8\ the FAR has the force and effect of law and 
        can be enforced in court if the agency fails to comply.\9\
---------------------------------------------------------------------------
    \8\ TSAAMS (http://www.tsa.gov/join/business/business_tsaams.shtm).
    \9\See Beta Systems, Inc. v. United States, 838 F.2d 1179, 1185 
(Fed. Cir. 1988) (enforcing regulations relating to economic price 
adjustment); Chris Berg, Inc. v. United States, 192 Ct. Cl. 176, 183 
(1970) (enforcing regulations regarding correction of pre-bid 
mistakes).
---------------------------------------------------------------------------
         Consistency. The TSAAMS conflicts with FAR provisions 
        in such areas as cost or pricing data thresholds, Buy American 
        protections, environmental requirements, and commercial item 
        provisions. See Bodenheimer Written Statement, p. 8.
         Oversight. Unlike TSAAMS where the FAA ODRA system 
        handles protests, CICA and FAR recognize GAO authority to 
        decide protests based upon more than 80 years of expertise, 
        experience, and precedent.

    Question 5.: What are the implications of having one Department 
agency with a separate acquisition process compared to the process used 
by the rest of the Department?
    Response: With a set of regulations comes a host of agency 
responsibilities. During my tenure as Assistant to the General Counsel, 
I served on one of the regulatory subcommittees and also assisted the 
Office of the Assistant Secretary of the Navy (Shipbuilding and 
Logistics) with compliance reviews for a number of Navy procuring 
commands and activities. In order to keep an acquisition system going, 
an agency must perform multiple functions:
         Upkeep. Regulations must be maintained, reviewed, and 
        updated as external requirements and internal agency needs 
        evolve.
         Documented History. The history of regulatory 
        revisions needs to be documented and published for the same 
        reasons that legislative history is important--to understand 
        the drafter's intent and assure consistent implementation.
         Compliance. The agency needs to establish procedures 
        and conduct periodic reviews to assure that agency personnel 
        (contracts, program, technical, etc.) understand and comply 
        with the governing acquisition rules.
         Training. Any effective compliance program requires 
        regular training to ensure that acquisition personnel--
        particularly in agencies with high turnover rates--understand 
        the rules and apply them consistently and properly.
    The OFPP Act, as amended, seeks to reduce the burdens of these 
essential regulatory duties by establishing a ``uniform procurement 
system'' to promote efficiency, economy, and effectiveness in federal 
procurement. S. REP. NO. 98-50, at 6 (1983). When an agency must 
maintain two separate acquisition processes, it loses the economies of 
scale inherent in a ``uniform procurement system'' and must therefore 
duplicate the cost and burden of maintaining, documenting, and updating 
its two regulatory systems (TSAASM and FAR), as well as creating 
dissimilar compliance and training programs.

    Question 6.: What are the pluses and minuses of TSA's Acquisition 
Management System (AMS) and the Federal Acquisition Regulation (FAR) 
that applies to the rest of DHS?
    Response: TSA's overview of its acquisition system states that 
``TSAAMS mirrors acquisition goals of other federal agencies of 
streamlining, and integrating processes that result in time and cost 
reduction, and quality products and services.'' However, as Congress, 
GAO, and the DHS Inspector General have all found, TSA has fallen well 
short of these objectives, instead accumulating a history of delays, 
overruns, and performance problems that are documented in many 
Congressional hearings and other official reports.
    As Congress noted in the history of the Competition in Contracting 
Act, federal procurement policy dates back to 1792. S. REP. NO. 98-50, 
at 4 (1983). However, the FAR traces most of its lineage to regulations 
(such as the Armed Services Procurement Regulation (ASPR)) largely 
written since the 1940s. In other words, the FAR reflects decades of 
effort, thought, and input that carefully balance the need for 
efficient and timely acquisition with the necessity for accountability, 
transparency, and oversight. While the FAR is not perfect (and never 
will be), it has been built steadily, publicly, and often 
painstakingly, based upon decades of hard ``lessons learned'' that 
should not be lightly discarded. Many of the ``pluses'' of the FAR are 
described in Answer Nos. 4 and 5 above. See Bodenheimer Written 
Statement, pp. 4-5.

    Question 7.: In your view, do you believe the historical reasons 
that existed in 2001 when TSA inherited the acquisition system used by 
the FAA, instead of the FAR, still exist today?
    Response: No. Congress created TSA in the midst of national crisis 
and those historical reasons for providing the exemption from various 
statutes and the FAR no longer exist.

    Question 8.: How well does the private sector work with a major 
Cabinet department that operates two different acquisitions systems?
    Response: Just like agencies, contractors must track regulatory 
requirements and changes, keep compliance programs up-to-date, and 
conduct regular training based upon the governing regulations. See 
Answer No. 5 above. When facing two separate--and sometimes 
inconsistent--sets of acquisition rules within one agency, contractors 
(particularly small businesses) bear a heavy burden of tracking, 
updating, implementing, and flowing down not just one, but two, 
separate regulatory regimes. In addition, two sets of rules create the 
risk of confusion, misunderstanding, and accidental noncompliance, 
especially for new contract administrators and thinly staffed small 
businesses that may be more vulnerable to the predictable blurring of 
the systems (e.g., misapplying TSAAMS to non-TSA acquisitions and the 
FAR to TSA acquisitions). Uniform regulations reduce this likely--and 
unnecessary--risk of noncompliance resulting from two sets of rules.

    Question 9.: Do you believe the Department has the necessary 
contracting staff to effectively manage these two systems?
    Response: Various GAO reports have identified DHS personnel as a 
risk area due to high turnover and continuing vacancies. See, e.g., 
GAO, Department of Homeland Security: Progress Report on Implementation 
of Mission and Management Functions 20-21 (GAO-071081T) (Sept. 6, 2007) 
(DHS has ``Generally not achieved'' its objective to ``Develop an 
acquisition workforce to implement and monitor acquisitions''); GAO, 
Homeland Security: DHS's Actions to Recruit and Retain Staff and Comply 
with the Vacancies Reform Act 14 (GAO07-758) (July 2007) (DHS senior-
level attrition rate nearly twice the federal average).
    Similarly, GAO concluded that the DHS Chief Procurement Officer 
(CPO) ``has limited oversight resources to implement the [acquisition 
oversight] plan.'' GAO, Department of Homeland Security: Progress and 
Challenges in Implementing the Department's Acquisition Oversight Plan 
3 (GAO-07-900) (June 2007). In combination, these factors--high 
turnover, continued vacancies, and limited personnel resources--all 
illustrate the challenges that DHS faces in accomplishing its most 
basic missions. These problems can only be exacerbated when DHS must 
operate two separate--and sometimes inconsistent--acquisition systems 
within a single agency.

    Question 10.: In your view, should Congress consider applying the 
FAR uniformly throughout all of the Department? If so, why? If not, why 
not?
    Response: Yes. By applying the FAR and various statutes (including 
the Competition in Contracting Act) to TSA, Congress can maximize 
competition, improve requirements definition, increase accountability 
and transparency, enhance oversight, and promote acquisition uniformity 
and efficiency. See Answer Nos. 1, 2, 4 and 5 above; Bodenheimer 
Written Statement, pp. 5--12.

    Question 11.: In your view, does one system compared to the other 
promote more competition? Promote fairer competition? Ensure greater 
financial accountability?
    Response: The Competition in Contracting Act and its implementing 
FAR provisions offer a superior ``full and open competition'' standard 
backed by far more robust statutory tools to require affirmative steps 
to seek competition and to assure enforcement and compliance with the 
``full and open'' competition standard. See Answer No. 2 above; 
Bodenheimer Written Statement, pp. 5--7, 9--10.

    Question 12.: Under each system, how are contract disputes 
resolved? In your view, does one system provide greater fairness than 
the other?
    Response: For TSA, contract disputes are resolved under the Federal 
Aviation Administration's (FAA) Dispute Resolution System.\10\ In 
contrast, contract disputes for other agencies are subject to the 
Contract Disputes Act of 1978, as implemented by the FAR. See 41 U.S.C. 
Sec. Sec. 601--613; FAR Subpart 33.2.
---------------------------------------------------------------------------
    \10\ See TSAAMS (linking to FAA Acquisition Management Policy 
Sec. Sec. 3.9.4, 3.9.5, and 3.9.6) (http://www.tsa.gov/join/business/
index.shtm).
---------------------------------------------------------------------------
    Both the FAA Dispute Resolution System and the Contract Disputes 
Act encourage early dispute resolution short of litigation. For 
example, the FAR establishes the following obligation for such dispute 
resolution:
        The Government's policy is to try to resolve all contractual 
        issues in controversy by mutual agreement at the contracting 
        officer's level. Reasonable efforts should be made to resolve 
        controversies prior to the submission of a claim. Agencies are 
        encouraged to use ADR [alternate dispute resolution] to the 
        maximum extent practicable.
    FAR Sec. 33.204; compare FAA AMS Sec. 3.9.5.
    When disputes cannot be resolved by the contracting officer, the 
TSAAMS provides for resolution by the FAA Office of Dispute Resolution 
(ODRA). See AMS Sec. 3.9.4. As stated on the FAA Office of the Chief 
Counsel's website, ``Components of the Office also serve as the FAA 
Administrator's adjudicative forums for civil penalty and acquisition 
disputes.'' \11\
---------------------------------------------------------------------------
    \11\ FAA Office of the Chief Counsel's Office of Dispute Resolution 
for Acquisition (http://www.faa.gov/about/office%5Forg/
headquarters%5Foffices/agc/).
---------------------------------------------------------------------------
    In many ways, the FAA's ODRA system is similar to the old method of 
agency dispute resolution that pre-existed the Contract Disputes Act of 
1978. In particular, the head of the agency would appoint agency 
personnel to an agency board to resolve disputes against the agency. 
Not surprisingly, Congress found that agency personnel deciding agency 
disputes ``often fail to provide the procedural safeguards and other 
elements of due process that should be the right of litigants.'' S. 
REP. NO. 95-118, at 2 (1978), reprinted in 1978 U.S.C.C.A.N 5235, 5236. 
In justifying the waiver of sovereign immunity for contract disputes 
under the Tucker Act, Congress explained that ``the Government subjects 
itself to judicial scrutiny when it enters the marketplace, and should 
not be the judge of its own mistakes nor adjust with finality any 
disputes to which it is a party.'' Id. at 12, reprinted in 1978 
U.S.C.C.A.N. 5235, 5246.
    For constitutional due process reasons alone, the Contract Disputes 
Act of 1978 offers a dispute resolution process superior to FAA's ODRA 
process: ``Contractors should not be denied a full judicial hearing on 
a claim they deem important enough to warrant the maximum due process 
available under our system.'' Id. In addition, both the courts and the 
Boards of Contract Appeals now have nearly three decades of experience 
in applying the Contract Disputes Act process itself--and even greater 
experience in deciding contract disputes of every type and size. 
Finally, these decades of judicial and administrative decisions offer a 
firm baseline of precedent that offers greater certainty and 
predictability to the parties who can then adjust their actions and 
expectations to resolve disputes and avoid litigation altogether. As a 
result, the Contract Disputes Act of 1978 provides the parties with a 
depth of experience, wealth of precedent, and level of due process 
protection that FAA's ODRA cannot match.

    Question 13.: Over the past 2-1/2years, this Subcommittee has 
examined a number of problematic DHS contracts. In your view, is this a 
problem with the particular acquisition management system being used or 
the failure of a contracting officer to follow the rules or under-
staffing, or a combination of factors?
    Response: No one at the hearing disputed the fact that TSA has 
experienced numerous problems with its acquisitions over the last six 
years. See, e.g., Sen. Snowe's News Release, ``Snowe Brings Increased 
Transparency, Accountability to Transportation Security Administration 
Contracting'' (July 13, 2006); Sen. Kerry's Letter to Kip Hawley (TSA 
Administrator) (Dec. 13, 2005); Procurement Practices of the Department 
of Homeland Security: Hearings Before the House Comm. on Oversight and 
Government Reform, 110th Cong., 1st Sess. (2007) (statement of DHS IG 
Richard Skinner); Code Yellow: Is the DHS Acquisition Bureaucracy A 
Formula for Disaster? Hearings Before House Comm. on Government Reform, 
109th Cong., 2nd Sess (2006); GAO, Progress Continues, but Challenges 
Remain on Department's Management of Information Technology 30 (GAO-06-
598T) (Mar. 29, 2006); Bodenheimer Written Statement, pp. 4--5.
    While no single factor explains all of these TSA acquisition 
problems, the TSA acquisition process (TSAASM) certainly elevates the 
risk and exacerbates the procurement problems by deemphasizing 
competition, requirements definition, accountability, transparency, 
consistency, and oversight. See Answer Nos. 1, 2, 4 and 5 above; 
Bodenheimer Written Statement, pp. 4--5. Even if the application of the 
Competition in Contracting Act, FAR, and other procurement statutes do 
not solve all of TSA's acquisition problems, ending TSA's exemption 
represents an essential first step towards improving a system plagued 
for years with schedule delays, cost overruns, and performance 
shortfalls.

    Question 14.: In your testimony (page 5), you state that the 
``proven benefits of the exemption from major acquisition laws is not 
readily apparent from TSA's six years of acquisition experience with 
this exemption.'' What are some of the benefits we could expect to see 
if TSA were truly benefiting from the exemption?
    Response: On its website, TSA suggests that ``TSAAMS mirrors 
acquisition goals of other federal agencies of streamlining, and 
integrating processes that result in time and cost reduction, and 
quality products and services.'' However, TSA has not met these 
objectives, as underscored by its procurement history documented in 
numerous Congressional hearings, GAO reports, and DHS Inspector General 
audits. See Answer 13 above; Bodenheimer Written Statement, pp. 4--5.

    Question 15.: Do you believe the FAA has ``proven benefits'' from 
its exemption? If so, why do you think TSA has not realized ``proven 
benefits'' after six years?
    Response: No. FAA has a procurement history that rivals TSA's 
acquisition troubles. Again, Congressional hearings, GAO reports, and 
Inspector General audits describe the problems.
        Representative Mica. ``Since I joined the House of 
        Representatives in 1993 the FAA has had a reputation as being 
        one of the Federal Government's most dysfunctional agencies. 
        Its record in modernizing air traffic control has been the 
        poster child of how to not run a government program. 
        Unfortunately, year after year, the FAA allowed its major 
        modernization programs to falter. What began in 1983 as a 13-
        year, $2.5 billion effort has ballooned into a $35 billion 
        enterprise that is still some 10 years away from completing its 
        original mission.'' \12\
---------------------------------------------------------------------------
    \12\ Transforming the Federal Aviation Administration: A Review of 
the Air Traffic Organization and the Joint Planning and Development 
Office: Hearing Before House Subcomm. on Aviation of Comm. on 
Transportation and Infrastructure, 109th Cong., 1st Sess. 1 (2005) 
(statement of Rep. Mica).
---------------------------------------------------------------------------
         GAO. ``According to these reviews, issued from 1997 
        through 2004, the same problems have persisted over many years, 
        despite various initiatives to address them, and FAA needs to 
        strengthen its management controls. For example, a key FAA 
        review of eight major ATC acquisitions, published in 1999, 3 
        years after AMS was implemented, found that these acquisitions, 
        though on track to meet their performance goals, were not 
        meeting their cost and schedule baselines.'' \13\
---------------------------------------------------------------------------
    \13\ GAO, Air Traffic Control: FAA's Acquisition Management Has 
Improved, but Policies and Oversight Need Strengthening to Help Ensure 
Results 29 (GAO-05-23) (Nov. 2004).
---------------------------------------------------------------------------
         Inspector General. ``In fact, half of the contracts 
        were awarded without any competition.'' \14\
---------------------------------------------------------------------------
    \14\ Department of Transportation (DOT) Inspector General, Audit of 
the FAA's Results National Contracting Service 5 (Sept. 21, 2006).
---------------------------------------------------------------------------
    In another report, the DOT Inspector General warned that the FAA's 
Air Traffic Modernization programs ``continue to be plagued by 
requirements changes, technical difficulties, or reduction in 
performance capabilities'' and ``it is not clear how much these 
programs will cost, how long it will take to complete them, or what 
capability will finally be delivered.'' \15\ In summarizing the FAA's 
problems with these programs, the DOT Inspector General provided the 
following table:
---------------------------------------------------------------------------
    \15\ DOT Inspector General, Status of FAA's Major Acquisitions: 
Cost Growth and Schedule Delays Continue to Stall Air Traffic 
Modernization 5 (May 26, 2005).

              Table 1. Programs Requiring Key Agency Decisions before FAA Completes Implementation
----------------------------------------------------------------------------------------------------------------
                                           Estimated program                 Implementation Schedule
                                          Costs (in Millions)    Percent  ----------------------------  Schedule
               Program *               ------------------------    Cost                                  Delay
                                         Original    Current      Growth     Original       Current
----------------------------------------------------------------------------------------------------------------
Wide Area                                  $892.4   $3,339.6*        274%    1998--2001    2005--2013   12 years
Augmentation
System
----------------------------------------------------------------------------------------------------------------
Standard Terminal Automation               $940.2  $2,760.4***       194%    1998--2005    2002--2012    7 years
 Replacement System
----------------------------------------------------------------------------------------------------------------
FAA                                        $205.5    $310.2           51%    2002--2008    2004--2008    2 years
Telecommunication
Infrastructure
----------------------------------------------------------------------------------------------------------------
Airport Surveillance Radar-11              $743.3  $1,003.0           35%    2000--2005    2003--2013    8 years
----------------------------------------------------------------------------------------------------------------
Integrated                                 $276.1    $286.1            4%    2002--2003    2003--2009    6 years
Terminal Weather System
----------------------------------------------------------------------------------------------------------------
En Route                                 $2,154.6  $2.141.9           N/A    2009--2010    2009--2010        N/A
Automation
Modernization
----------------------------------------------------------------------------------------------------------------

*A detailed listing of cost and 
schedule variances of all 16 systems 
can be found in Exhibit B.
**Cost includes $1.2 billion to acquire 
geostationary satellites.
***Cost of preferred STARS solution to 
deploy to 162 sites.
    This FAA acquisition history of huge cost overruns and multi-
year schedule delays offers strong reasons for why Congress should not 
allow TSA to continue with the AMS acquisition system.

    Question 16.: If TSA took certain steps, do you believe it could 
realize ``proven benefits'' from its exemption? If so, what steps would 
those be?
    Response: No. If TSA could deliver ``proven benefits'' from TSAAMS, 
it would have done so by now. Second, the FAA experience predicts that 
TSA will not solve its procurement problems so long as it remains under 
TSAAMS. See Answer No. 15 above.

    Question 17.: In your testimony (page 9), you point out that TSA is 
not subject to the procurement protest system that other agencies 
follow, and that GAO does not have jurisdiction to oversee TSA 
acquisitions through the protest process. Could you please discuss the 
implications of GAO's lack of jurisdiction in this area?
    Response: With no protest jurisdiction, GAO cannot review protests 
against TSA procurements. Without the GAO protest oversight, many TSA 
acquisition problems will never be uncovered, thus allowing TSA to 
continue the cycle of awarding poorly defined, ill-conceived, 
noncompetitive acquisitions that will reinforce the current cycle of 
schedule delays, cost overruns, and performance problems that have 
characterized TSA procurements for six years.

    Question 18.: What impact does this have on companies that file bid 
protests?
    Response: With no GAO protest jurisdiction, contractors are 
deprived of GAO's unparalleled experience (over 80 years), established 
precedent (thousands of decisions), and unquestioned independence in 
resolving bid protests. In addition, the Competition in Contracting Act 
established additional protest enforcement mechanisms that Congress 
found to be critical to an effective protest remedy, including stay of 
contract performance (31 U.S.C. Sec. 3553(c)), payment of successful 
protest costs (31 U.S.C. Sec. 3554(c), and Congressional notification 
of agency noncompliance with recommended corrective action (31 U.S.C. 
Sec. 3554(b)(2) & (e)). Finally, GAO has more aggressively enforced 
competition through its protest jurisdiction. See Bodenheimer Written 
Statement, pp. 9--10. For all of these reasons, GAO bid protest 
jurisdiction will better serve Congressional objectives, protect 
contractors, and encourage greater TSA compliance due to closer 
scrutiny and greater oversight.

Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                      Responses from Alan Chvotkin

    Question 1.: Do you have a recommendation as to what acquisition 
system the TSA should be under if Congress was to repeal the separate 
statutory procurement authority?
    Response: As I said in my written testimony [page 8], and in my 
oral statement, PSC believes that Congress should bring TSA under the 
common rules applicable to the Department of Homeland Security. The 
Department is already generally subject to the FAR, but Congress has 
provided specific additional authority and flexibility to the 
Department to manage its specific mission requirements. For example, 
DHS has specific statutory authority to use special streamlined 
acquisition authorities set forth in Section 833 of the Homeland 
Security Act (6 U.S.C. 393), for any procurement that takes place 
before September 30, 2007, if the Secretary determines that the mission 
of the Department would be seriously impaired without the use of such 
authorities. In addition, DHS is restricted by statute from permitting 
certain companies to compete for departmental opportunities. In our 
view, if TSA's underlying procurement authority is changed, it should 
be given access to the same flexibilities as all other agencies within 
the Department of Homeland Security. Nevertheless, there are several 
acquisition policy provisions now applicable to DHS that we find 
troubling and counter-productive.

    Question 2.: In your testimony, you talk about the need for an 
``Acquisition Marshall Plan.'' Could you explain what this is, and why 
the need is so great?
    Response: PSC has recommended an ``Acquisition Marshall Plan'' to 
address, on a government-wide basis, the critical short-term and long-
term shortfalls in the federal acquisition workforce, with a focus on 
the need to recruit, retain, compensate and develop that workforce. 
Today, the Federal government spends more than $400 billion on the 
purchase of goods and services, almost one-quarter of the entire 
federal discretionary budget. In fiscal year 2006, the Department of 
Homeland Security spent almost $14 billion on the purchase of goods and 
services and TSA's share of those awarded contracts was valued at more 
than $1.4 billion. By any measure, procurement should be a core 
competency of the agencies and among the highest priority areas of 
attention for its workforce. Regrettably, the acquisition workforce has 
not received the attention it deserves--unless there are problems. 
Study after study, from PSC's own work to the often-repeated 
conclusions of the Government Accountability Office, to the July 2007 
report of the congressionally chartered Acquisition Advisory Panel, 
have documented the shortfalls in the federal acquisition workforce and 
the need for aggressive, comprehensive action to support them. While 
there has been plenty of analysis done on the issues and problems, and 
numerous recommendations made, little action has been taken. For these 
reasons PSC calls on Congress and the Executive agencies to undertake 
efforts to rebuild this workforce. Several bills are pending in both 
the House and Senate that offer specific provisions to address this 
federal acquisition workforce issue.
    As non-exclusive elements of that Plan, PSC has endorsed internship 
and rotational programs to attract qualified individuals into the 
acquisition workforce, expanding authority to hire selective retired 
annuitants to maintain workforce skills levels and facilitate critical 
knowledge transfer, and creating government-industry exchange programs 
with robust conflict of interest controls. We support the provision in 
title IV of HR 1684, the fiscal year 2008 Department of Homeland 
Security Authorization Act, approved by this Committee and passed by 
the House earlier this year, that would provide important workforce 
development improvements, including requiring department-wide 
procurement training and providing authority to selectively hire 
retired federal annuitants.
    We also recommend the permanent extension of the government-wide 
Acquisition Workforce Training Fund, which was created by Congress in 
2003 based on a recommendation made by PSC to provide comprehensive 
training opportunities. Finally, we have recommended creating a 
``Contingency Contracting Corps'' to increase the Federal government's 
ability to respond to homeland security or natural disasters through a 
standing, organized and trained cadre of federal resources. We are very 
pleased that both of these latter two recommendations have been 
endorsed by the Senate Homeland Security and Governmental Affairs 
Committee and included in legislation (S. 680) favorably reported by 
that Committee.
    These PSC recommendations for action are certainly not the whole 
answer to the many challenges agencies face in attracting, maintaining 
and deploying their acquisition personnel, and many more actions must 
be taken; but individually and collectively they are significant steps 
forward.

Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee 
              on Management, Investigations, and Oversight

    Question 3.: From your perspective, what are some of the major 
differences between the Acquisition Management System (AMS) and the 
Federal Acquisition Regulation (FAR)?
    Response: While there are many similarities between the two sets of 
regulations, since the TSA AMS was drawn from the FAA's system and the 
FAR, there are notable differences. There are three primary areas that 
demonstrate these differences in regulations--although not necessarily 
in practice in any specific application. With respect to competition, 
the FAR requires full and open competition with exceptions in narrowly 
specified categories; the TSA AMS standard is ``effective competition'' 
based on market research. With respect to communications, the FAR 
generally limits communications between the agency and bidders except 
through the contracting officer and then only on a structured, narrow 
range of information; the TSA AMS is more flexible and encourages 
communications throughout the process with the strongest competitors. 
Finally, with respect to disputes and protests, the FAR provides a 
formal and time-specific regime for challenges to the contracting 
officer, with options of further pursuing action in appropriate 
circumstances at either the Civilian Agencies Board of Contract Appeals 
or at the Government Accountability Office. At TSA, protests are 
handled through the FAA's Office of Dispute Resolution for Acquisition, 
with alternative dispute resolution techniques the norm, and with very 
limited jurisdiction for further review outside the Office.

    Question 4.: What are the implications of having one Department 
agency with a separate acquisition process compared to the process used 
by the rest of the Department?
    Response: In my view, having a procurement system for TSA 
completely separate from the procurement system used by the rest of the 
Department, and from virtually every other agency of the Federal 
government, creates several issues and missed opportunities. Among the 
issues raised is the ability to provide uniformity in the department's 
management, the capability of the information reporting systems to 
produce consistent data across the department, the oversight of the 
procurement systems, and providing effective uniform training for the 
workforce. Among the missed opportunities is an inability to maximize 
information sharing for small business about the department's business 
practices and limiting competition and cross-fertilization of the 
supplier base across multiple agency needs. However, it is important to 
note that TSA participates in DHS-wide procurements, such as EAGLE and 
First Source, which originated in and are managed by other components 
of DHS.

    Question 5.: What are the pluses and minuses of TSA's Acquisition 
Management System (AMS) and the Federal Acquisition Regulation (FAR) 
that applies to the rest of DHS?
    Response: On the plus side of the TSA AMS, TSA has demonstrated 
that it is able to execute its critical homeland and transportation 
security missions in a timely manner with general success; in rare 
cases are the problems with TSA activities associated with problems in 
their procurement system. With its focus on effective competition, TSA 
has been able to tailor its system to ensure that critical procurements 
can be awarded and implemented within tight timeframes. Finally, many 
PSC member companies doing business with TSA have found its systems 
workable and sufficiently flexible in awarding and executing contracts.
    On the negative side of the TSA AMS, the published system has 
numerous terms and conditions that differ from the standard procurement 
system; some of the differences are minor while others are significant; 
some of these terms and conditions are merely out of sync with the FAR 
updates while others are intentionally inconsistent with the FAR. Each 
of these differences imposes challenges and risks for both government 
acquisition officials and contractors. Each difference also requires 
bidders and successful TSA contractors who want to do business with 
agencies other than TSA to understand the differences, and the business 
and the compliance responsibilities, when seeking to do business with 
multiple agencies.
    On the plus side of using the FAR, it is the uniform regulation 
governing the overwhelming proportion of all federal procurements. As a 
result, there are federal employees across the government who work 
within that system every day to ensure that it operates to provide the 
goods and services each federal agency needs. Similarly, there are 
contractors providing goods and services to other federal agencies who 
would be able to compete effectively for TSA work if TSA used the same 
rules. The FAR is designed to ensure meaningful opportunities and 
fundamental fairness to all actual and potential competitors. Finally, 
there is clear contract administration and government oversight regimes 
to ensure that the procurement eco-system works as intended.
    On the negative side of using the FAR, the FAR must provide tools 
and techniques that are flexible enough to address the needs of the 
entire federal government, but it still anticipates that agencies will 
tailor the rules to meet agency-specific requirements. In addition, 
agencies are also expected to supplement these core regulations with 
any agency-specific statutory or regulatory requirements.

    Question 6.: In your view, do you believe the historical reasons 
that existed in 2001 when TSA inherited the acquisition system used by 
the FAA, instead of the FAR, still exist today?
    Response: Although PSC did not support excluding TSA from the FAR 
when TSA was created, we did not question the need for TSA to have the 
maximum appropriate flexibility to execute some of the most challenging 
federal missions assigned to any federal agency at that time. However, 
six years after the tragic events of 9/11, TSA is not (and should not 
be) in a crisis response mode and there is little evidence that TSA 
needs its own unique procurement system to achieve its current and 
future mission requirements. Nor is there any evidence that the 
government-wide FAR-based system, with its flexibilities, would not be 
able to support achieving all of TSA's current and future missions.

    Question 7.: How well does the private sector work with a major 
Cabinet department that operates two different acquisition systems?
    Response: All federal acquisition is based on the laws passed by 
Congress and the implementing regulations adopted by the agencies and 
many agencies have specialized procedures that tailor some portion of 
the ``standard,'' government-wide, procedures to unique aspects of an 
agency's acquisition system. In fact, in addition to the standard, 
government-wide, Federal Acquisition Regulations, there are numerous 
agency-specific supplements, most notably for the Departments of 
Defense, Energy, and Homeland Security and for NASA and GSA. Any 
private sector firm that seeks to do business with an agency has an 
obligation to understand and comply with the specialized rules that are 
applicable to that procuring entity. For some firms, that effort is 
part of the business development cost when pursuing business; for too 
many others, particularly smaller firms, finding out and mastering that 
information is a significant barrier to seeking out and successfully 
competing for opportunities. Even when a firm does understand an 
agency's specialized procedures, the firm may still be unwilling or 
unable to modify its products or services to meet those unique 
requirements; again, those agency-specific provisions act as a barrier 
to commercial suppliers and smaller firms. Limiting the competitive 
landscape disadvantages the agency in both the short and the long term.

    Question 8.: Do you believe the Department has the necessary 
contracting staff to effectively manage these two systems?
    Response: There are eight procurement organizations in the 
Department of Homeland Security and each has their own staff. Each of 
the eight procurement organizations have specialized procurement 
provisions to meet their unique mission requirements. However, seven of 
the eight organizations follow the core requirements of the government-
wide Federal Acquisition Regulation; only TSA has a separate core 
procurement system. Attracting and retaining qualified contracting 
resources is a challenge for many of the procurement components within 
the Department; beyond absolute numbers of contracting resources, it is 
essential that each agency have the ``right'' resources with the 
``right'' skills to procure the goods and services the component needs, 
at the ``right'' time. The DHS Human Capital strategy is addressing the 
current skills capabilities and future skills needs of its acquisition 
workforce. The unique nature of the TSA acquisition system adds 
complexities to ensuring a properly sized, well-trained, acquisition 
workforce, providing promotion or lateral opportunities into or out of 
TSA, leveraging broader training, and drawing on temporary resources 
from outside TSA for high-priority, short-term, needs.

    Question 9.: In your view, should Congress consider applying the 
FAR uniformly throughout all of the Department? If so, why? If not, why 
not?
    Response: We favor such an approach. As I noted earlier, the FAR 
already applies to all other procurement organizations in the 
Department, although each of the procuring components have specialized 
additional supplemental laws and regulations that govern their 
procurement functions. For example, FEMA must address the specialized 
requirements of the Stafford Act and the required reliance on local 
small businesses for certain functions when contracting for disaster 
recovery. The Coast Guard must be prepared to operate as an element of 
the Navy in certain narrow circumstances. DHS has specific restrictions 
on whom it is able to do business with or the amount of subcontracting 
that is appropriate; we oppose these latter provisions because they 
drive the Department further and further from the government-wide FAR. 
We believe Congress and the agencies should carefully assess and 
justify adopting any provisions that require an agency to divert from 
the government-wide regulations. Nevertheless, application of a 
consistent set of procurement rules even across the Department, to the 
maximum extent, provides benefits for both the Department and the 
private sector. For the Department, it facilitates cross-agency 
training, promotes greater consistency and uniformity in 
implementation, and permits temporary re-assignments to meet higher 
priority department needs. For the private sector, it increases 
competition for goods and services to meet the department's needs, 
expands opportunities for small and small disadvantaged businesses 
across a broader range of departmental procurement opportunities, and 
improves company familiarity and thus compliance with commonly used 
contract terms and conditions.

    Question 10.: In your view does one system compared to the other 
promote more competition? Promote fairer competition? Ensure greater 
financial accountability?
    Response Both the FAR and the TSA AMS have the capability to 
promote full and fair competition and ensure financial accountability. 
Similarly, there are regrettable examples where both systems have 
failed to provide sufficient competition for goods and services or 
demonstrated financial accountability. However, the FAR is premised on 
the concept of full and open competition with flexibility to use 
alternative contracting techniques in specific circumstances while the 
TSA AMS is premised on the concept of ``effective'' competition. In our 
view, while either system has the potential for success or failure, we 
support the common use of the FAR.

    Question 11.: Under each system, how are contract disputes 
resolved? In your view, does one system provide greater fairness than 
the other?
    Response: The primary authority for addressing contract disputes 
under the FAR is the Contract Disputes Act (41 U.S.C. 601) which is 
implemented in FAR Part 33. There are very specific rules requiring 
contractors to take action to raise disputes with the contracting 
officer. If the contracting officer denies a claim, the FAR provides 
very specific requirements for challenging the contracting officer's 
decision at the Board of Contract Appeals or, occasionally, at the U.S. 
Court of Federal Claims. Under the FAR, there are very clear lines of 
precedent governing disputes and both the government and the 
contractors know what is expected, what is available, and how to 
proceed.
    By contrast, contract disputes for all of TSA's acquisitions of 
equipment, supplies and materials are resolved by the FAA's Office of 
Dispute Resolution for Acquisition (ODRA) under a delegation from TSA. 
The goal of the ODRA is to ``resolve acquisition-related controversies 
in a prompt, amicable fashion, utilizing consensual alternative dispute 
resolution techniques--primarily through neutral evaluation and 
mediation techniques.'' Appeals from a final decision are made to the 
U.S. Court of Appeals for the D.C. Circuit or the U.S. Court of Appeals 
where the business is located. Since most of the decisions of the ODRA 
are resolved through alternative dispute resolution, there is little 
precedent gained from those techniques that can be applied to future 
challenges or by other participants.

    Question 12.: Over the past 2-1/2 years, this Subcommittee has 
examined a number of problematic DHS contracts. In your view, is this a 
problem with the particular acquisition management system being used or 
the failure of a contracting officer to follow the rules or under-
staffing, or a combination of factors?
    Response: It is difficult to generalize about the cause for 
``problematic'' DHS contracts the Subcommittee has examined; some of 
those awards may have been from TSA while others were from other 
components of the department. By the same token, hundreds of contracts 
have been successfully awarded by TSA and by other DHS components over 
its five year lifespan, and contractors have fully and successfully 
provided the Department with the goods and services sought. As a 
general matter, PSC does not believe that more laws are needed. Most of 
our experience demonstrates that problems arise in contracting because 
of a combination of factors--some based on the challenge in fully and 
accurately describing an agency's needs, some based on the lack of a 
well-trained federal workforce, some because of staffing limitations or 
good faith efforts to respond to crisis situations, and some because of 
poor contractor performance. The concerns we have raised with TSA's use 
of the TSA AMS relate to how to improve future procurements within TSA 
and across the Department.

    Question 13.: Can you quantify the burden placed on the private 
sector, especially small business, in having to be familiar with two 
sets of contracting rules when they work with TSA and DHS?
    Response: While I am not aware of any study that has tried to 
quantify the burden on the private sector, and particularly smaller 
firms, we believe it stands to reason that smaller companies will face 
a greater burden becoming familiar with two sets of contracting rules.

    Question 14.: You stated in your written testimony that simply 
repealing TSA's separate statutory procurement authority may not, by 
operation of law, bring TSA under the government-wide regulations. 
Would you elaborate on those concerns?
    Response: While I have not done the thorough legal research to 
answer the question of the effect of repealing the special legislative 
authority in the Aviation Act that now governs TSA's procurement, I 
simply wanted to highlight that repealing TSA's existing statutory 
exemption may not automatically revert TSA to either the DHS 
procurement system or to the FAR system. If Congress intends for TSA to 
be subject to the FAR, its intent and effect should be explicitly 
mandated in any legislation.

    Question 15.: You pose the question of which acquisition system the 
TSA should be under if Congress was to repeal the separate statutory 
procurement authority. Do you have a recommendation?
    Response: As I said in my written testimony [page 8], and in my 
oral statement, PSC believes that Congress should bring TSA under the 
common rules applicable to the Department of Homeland Security. The 
Department is already generally subject to the FAR, but Congress has 
provided specific additional authority and flexibility to the 
Department to manage its specific mission requirements. For example, 
DHS has specific statutory authority to use special streamlined 
acquisition authorities set forth in Section 833 of the Homeland 
Security Act (6 U.S.C. 393), for any procurement that takes place 
before September 30, 2007, if the Secretary determines that the mission 
of the Department would be seriously impaired without the use of such 
authorities. In addition, DHS is restricted by statute from permitting 
certain companies to compete for departmental opportunities. In our 
view, if TSA's underlying procurement authority is changed, it should 
be given access to the same flexibilities as all other agencies within 
the Department of Homeland Security. Nevertheless, there are several 
acquisition policy provisions now applicable to DHS that we find 
troubling and counter-productive.

    Question 16. Your testimony notes that many companies in the 
private sector take additional steps to ensure the capabilities of 
their core workforce, such as their procurement staffs. What other 
primary differences exist between the public and the private sectors 
when looking at the acquisition systems?
    Response: There are differences in just about every phase of the 
acquisition cycle, from requirements generation, to market research, to 
contract solicitation and formation, and post-award contract 
administration. In the area of market research, there is no requirement 
that commercial firms open their procurement opportunities to all 
interested parties. In the area of contract solicitation, there is no 
prohibition on the private sector company sharing its own ``procurement 
sensitive'' information with competitors and, in large opportunities, 
many private sector companies freely disclose significant information 
to qualified competitors to maximize the success of the procurement. In 
the area of contract formation, private sector companies adopt a 
contract format that is best for the transaction, governed by the 
common framework and interpretations of the Uniform Commercial Code. 
Finally, in post-award oversight, a private sector company will partner 
with the provider on contract administration oversight to ensure 
fairness and full implementation. If necessary, failures are dealt with 
through civil litigation and by exercising the private sector company's 
right to refuse to do future business with that firm. Finally, while 
there is no legal requirement to conduct a competition, make a specific 
percentage of awards to small business, or provide post-award contract 
adjustments, many private sector companies employ these techniques as 
part of good commercial procurement practices. Of course, the public 
sector is not the private sector and there are often good policy 
reasons why some of the rules are and should be different.

Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee 
              on Management, Investigations, and Oversight

                       Responses from Elaine Duke

    Question 1.: Do you have two different training programs for 
contracting officers at TSA, who will use AMS, and those for the rest 
of the Department, who will use the FAR?
    Response: There are two different entry level contracting 
specialist training programs, neither includes formal training on AMS. 
Any AMS training is informal, on the job training provided by higher 
level contracting specialists and contracting officers experienced in 
AMS. TSA's Acquisition Fellows Program is designed for incoming, entry 
level (equivalent to GS 719) contract specialists. The training these 
employees receive is in accordance with DHS Management Directive 0781.1 
Contracting Professional (GS1102) Career Information. and an interim 
directive that transitions from the DHS Acquisition Certification 
Program to the Federal Acquisition Certification Program in Contracting 
Program.(FAC-C). In the interim management directive all required 
courses are listed. Informal in-house training and on the job training 
on AMS is provided to these employees. Contracting courses required for 
certification for all contracting specialists are the same and FAR-
based. The TSA Acquisition Fellows Program welcomed its first Fellows 
class in FY06 and a second class began in FY07. This program is a three 
year program and after successful completion, the participants may hold 
more advanced contracting specialist positions at TSA. The Department 
will welcome its new class in FY08 and differs from TSA in that the 
participants, upon successful completion of coursework and one year 
rotations in the various component contracting activities, are assigned 
to a component contracting activity. TSA has worked closely with the 
Department on its Acquisition Fellows Program and the qualifications 
for contracting officers at TSA are, in fact, the qualifications set 
forth for certification and warranting by the Department.

    What is the additional cost of having to maintain two different 
training regimens?
    Response: The training costs incurred by all contracting activities 
include the cost of providing the required contracting courses and any 
additional courses such as costlprice analysis, negotiation skills, or 
public speaking. The cost differences are based on how the required 
courses are provided to the participant (on-line versus classroom or 
on-site) and any additional courses which a participant may take. 
Contracting staff under both systems attend periodic training as 
necessary for their career paths.

    Question 2.: What is the relationship between your office and the 
procurement office of the Transportation Security Administration?
    Response: The relationship between the two offices is one of mutual 
cooperation and respect. Both offices freely share information and 
collaborate as needed. As I mentioned in my testimony, TSA is an active 
participant in the DHS Chief Acquisition Officers Council and shares in 
the resources available to the other seven component contracting 
activities. TSA adheres to the key elements of the DHS acquisition 
program and its capital investments are subject to the Department's 
investment review board and their contracting operations are subject to 
the Department's acquisition oversight program.

    Question 3.: Under the current organizational structure of DHS, 
your position does not have direct line authority over TSA's chief 
procurement officer. How do you exercise effective oversight of TSA's 
procurements?
    Response: Other than headquarter's, I do not have direct line 
authority over any component's Head of Contracting Activity (HCA). I 
exercise my oversight authority with TSA in the same manner as I 
exercise it with the other HCA's. TSA must adhere to the key elements 
of the DHS acquisition program which include:
         Advanced acquisition planning
         The appointment of a Competition Advocate
         The establishment of a Small and Disadvantaged 
        Business Utilization Office
         Adherence to Federal-wide acquisition certification 
        requirements for contracting professionals and prograrnlproject 
        managers, and
         Policies regarding the issuance of contracting officer 
        warrants to certified contracting professionals.
    TSA's capital investments are subject to the Department's 
investment review board and their contracting operations are subject to 
the Department's acquisition oversight program. My office reviews 
acquisition plans and justifications for procurements that are done by 
other components which exceed $50 million.

    Question 4.: DHS has two acquisition systems -the AMS utilized by 
TSA and the FAR utilized by the rest of the department.
    a. How do you ensure your staffs are properly trained to understand 
both systems well?
    Response: All contracting professionals (GS-1102) in all DHS 
contracting activities are trained under the FAR, and are certified and 
warranted based upon the same qualifications set forth in our interim 
policy on professional certification and training issued April 16,2007. 
At TSA 1102s operate in AMS and the FAR--they use the FAR environment 
and therefore receive training on contracting systems. Use of AMS 
provides TSA contracting staff with additional training and experience. 
Those experiences broaden their skill set and enhance the diversity of 
the Department's program. When the Department has a need to redirect 
acquisition resources, given that TSA contracting professionals receive 
the same training on FAR contracting procedures as their counter-parts 
in other DHS contracting offices, DHS can mobilize TSA's resources. An 
example of this is the month following Hurricane Katrina, when roughly 
five TSA Office of Acquisition personnel were temporarily detailed to 
DHS Headquarters and the Federal Emergency Management Agency to support 
the recovery effort.

    b. Wouldn't it be more efficient if DHS has one uniform system so 
you would not have to maintain expertise in two systems?
    Response: By definition, one system is a more efficient way to 
operate. However, operating one system does not ensure greater 
effectiveness or, for that matter, efficiency, if the flexibilities 
that an organization feels it needs are not readily available. All 
contracting specialists and contracting officers are trained on the 
FAR, which serves as the basis for AMS. DHS values the diversity of 
experience and expertise across its acquisition workforce. Knowledge 
and experience in AMS broadens the skill set of our contracting 
officers. TSA fully complies with the Department's policies on 
acquisition--most notably on investment review and certification of our 
Program Managers, Contracting Officers, and Contracting Officer 
Technical Representatives. The Department exercises the same review and 
oversight program on TSA as the other DHS components.

    c. From a training perspective, is one system easier to learn than 
another?
    Response: No.

    Question 5.: How many staff do you currently have, and what is the 
projected growth of your staffing level in the coming years?
    Response: The Office of the Chief Procurement Officer has 71 
appropriated FTE in FY07. There are 100 FTE in the President's budget 
for FY08 and a 120 FTE in the Department's submission for FY09. In 
addition to that staff, there are 66 interns in the President's budget 
for FY08 and 100 interns in the Department's submission for FY09. 
Department-wide, in the contracting activities there are 1,220 funded 
contract specialist positions (GS-1102) and there are 956 FTE GS-1102s 
on board as of July 31,2007. The total number of 1 102 positions 
desired Department-wide is 2,553. This figure is based on an FY04 
independent study recommending workforce size be determined based on 
procurement dollars spent.

    Questions from the Honorable Michael D. Rogers, Ranking Member, 
       Subcommittee on Management, Investigations, and Oversight

                     Responses from Rick Gunderson

    Question 1.: From your perspective, what are some of the major 
differences between the Acquisition Management System (AMS) and the 
Federal Acquisition Regulation (FAR)?
    Response: The Acquisition Management System (AMS) was established, 
in large part, to provide policy and guidance for all aspects of the 
acquisition lifecycle, from the determination of mission needs to the 
procurement and lifecycle management of products and services to 
satisfy those needs. It was intended to simplify, integrate, and unify 
the elements of lifecycle acquisition management into an efficient and 
effective system that increases quality, reduces time, and decreases 
cost for delivering services to the customer. The AMS serves as a 
building block of the Transportation Security Administration's (TSA's) 
culture, and fosters good acquisition management by embodying 
effectiveness, flexibility, efficiencies, checks and balances and 
public trust in implementing established industry best practices. 
Within the guidelines of established law, TSA strives to implement the 
best business solutions that meet our mission, within realistic 
constraints. The AMS procurement system enables TSA to be innovative 
and creative so that the right vendor is selected to implement the 
right solution in a timely, cost-effective manner.
    A number of important changes have been made to the Federal 
Acquisition Regulation (FAR) over the past decade to improve 
contracting practices and the tools available for achieving best value 
for the taxpayer. Despite these improvements, however, there are three 
main categories of distinction from the FAR that TSA believes warrant 
continued application of AMS:
        1. Communications--AMS encourages frequent and open 
        communications with industry and offerors, from market analysis 
        through contract award and administration. While communications 
        with industry are also encouraged by FAR, communications after 
        receipt of proposals and prior to award are highly regulated by 
        FAR. By contrast, AMS encourages frequent one-on-one 
        communications with industry throughout the process. This 
        ensures mutual understanding of the Government's requirement 
        and the offeror's proposed solution, and helps ensure award to 
        the company likely to deliver the best solution to meet TSA's 
        mission. Communications are facilitated by the contracting 
        officer, especially during the solicitation phase, to ensure 
        impartiality is maintained.

        2. Lifecycle Management--The FAR is primarily focused on the 
        procurement part of the process. By contrast, AMS provides more 
        comprehensive guidance from the earliest stages of acquisition 
        through disposal. The AMS lifecycle management approach is 
        important to TSA, as our Office of Acquisition has a broader 
        focus than contracts. Not only do we award contracts, we focus 
        on strengthening program management and what we call ``Big A'' 
        Acquisition across the TSA organization. Acquisition 
        encompasses much more than the procurement aspect of conducting 
        business. It is a life cycle approach to investments and 
        requires the integration of numerous disciplines, including 
        program management, engineering, budgeting, logistics, and 
        contracting.

        3. Managed Competitions--The FAR provides limited opportunities 
        for agencies to reduce the burden associated with conducting 
        initial screenings of sources. As a result, sources who may not 
        be the most competitive may effectively compel an agency to 
        review a full proposal, which can be burdensome and inefficient 
        for both parties. By contrast, AMS provides for managed 
        competitions where, through multiple screens, detailed 
        negotiations are conducted with the companies most likely to 
        receive award. Under the AMS's multiple screening process, TSA 
        publicizes its initial screening information request (SIR) in 
        FedBizOpps with a statement of the particular requirements and 
        a request for specific preliminary qualifying proposal 
        materials. This announcement also advises that, subsequent to 
        its evaluation of received proposals, TSA intends to then send 
        a more detailed SIR only to those vendors whose proposals met 
        the initial qualifying requirements. In this multiple screen 
        approach, TSA can conduct a series of SIRs and vendors do not 
        have to invest the resources normally required when submitting 
        a comprehensive proposal as required under FAR. Also, the AMS 
        multiple screen process starts with open competitions--where 
        all interested firms may submit a response to the initial 
        screening request. In cases where TSA, through market research, 
        has determined that a limited number of firms could reasonably 
        provide the required products, equipments, or services, AMS 
        allows TSA to conduct its competition amongst this limited 
        field of vendors. This process saves offerors the wasted effort 
        of developing proposals that would not likely be selected and 
        TSA the cost of evaluating them. Instead, TSA is able to focus 
        its attention on the most promising sources, allowing them to 
        perform due diligence and enabling TSA to identify the best fit 
        between agency needs and marketplace capabilities. Even in 
        those cases, for transparency and competition, TSA publicizes 
        the requirements in FedBizOpps to encourage all vendors to 
        pursue subcontracting opportunities. Additionally, throughout 
        its multiple-screening process, AMS allows TSA to eliminate 
        offers that stand no chance for award. FAR offers similar 
        flexibility through the setting of a competitive range, but 
        this involves a more formal and time-consuming process. Managed 
        competitions save Government resources and allow firms to 
        direct bid and proposal budgets at the opportunities for which 
        they are most likely to win.
    While the FAR and underlying statutes encourage the use of 
alternative dispute resolution (ADR), AMS places an even greater 
reliance on these processes to resolve protests and contract claims. 
ADR is a best practice across industry, and delivers benefits when 
compared to costly litigation. Protests and contract disputes involving 
TSA AMS acquisitions fall under the jurisdiction of the Federal 
Aviation Administration's Office of Dispute Resolution for Acquisition 
(ODRA). The ODRA process is less about formalities, as occasioned by a 
Board of Contract Appeals (Board) or the Government Accountability 
Office (GAO), and more directed to effective, timely and relatively 
inexpensive legal proceedings. As an example, the ODRA rules allow for 
intervention by ODRA prior to a full-blown dispute or contracting 
officer's final decision in order to resolve the matter.
    If the parties are unable to resolve their differences through ADR, 
the ODRA provides a Default Adjudicative Process under which a member 
of the ODRA or a Special Master (Board of Contract Appeal Judge/sitting 
or retired in most instances) is appointed to develop and review the 
record to make factual findings and a recommendation for final agency 
action to the Assistant Secretary.
    Whether under ADR or the default adjudicative process, the ODRA 
rules provide for discovery (e.g., depositions, interrogatories, 
exchange of documents, among others) as well as evidentiary hearings. 
In this vein, the ODRA encourages the parties to negotiate the terms of 
discovery as well as to limit the scope of discovery, avoiding 
unnecessary costs and resources commonly incurred under the guise of 
discovery purposes.

    Question 2.: What are the implications of having one Department 
agency with a separate acquisition process compared to the process used 
by the rest of the Department?
    Response: The implications of having one Department agency with a 
separate acquisition process are minimal, if at all. My priorities as 
the Chief Procurement Officer are in no way affected by the fact that 
one Department agency, TSA, utilizes a separate acquisition process 
from the rest of the Department. My goals to build the DHS acquisition 
workforce, make good business deals, and perform effective contract 
administration do not have to be adjusted because of TSA's procurement 
system. The authority I exercise regarding TSA is identical to the 
authority I have over the other components. My efforts to build an 
acquisition program and workforce integrating the disciplines of 
program management, risk assessment, engineering, cost analyses, and 
logistics will serve as an infrastructure throughout the Department 
allowing DHS to achieve mission success regardless of the mechanics of 
the procurement system used.

    Question 3.: What are the pluses and minuses of TSA's Acquisition 
Management System (AMS) and the Federal Acquisition Regulation (FAR) 
that applies to the rest of DHS?
    Response: From the Transportation Security Administration's (TSA's) 
perspective, the Acquisition Management System (AMS) is about doing the 
whole business of acquisition better. AMS is part of our culture and 
creates an environment within TSA which allows us to engage in good 
business practices. In addition to the distinctions noted below, it 
takes less time to conduct our procurements under the AMS than under 
the FAR, which prescribes specific steps for the source selection 
process. The AMS allows communications with vendors/offerors throughout 
the entire process, which enables TSA to conduct its source selections 
much quicker. The main advantages of AMS are:
        1. Communications--AMS encourages frequent and open 
        communications with industry and offerors, from market analysis 
        through contract award and administration. While communications 
        with industry are also encouraged by FAR, communications after 
        receipt of proposals and prior to award are highly regulated by 
        FAR--so much so that there are multiple distinct names for 
        talking with industry during that period (e.g., communications, 
        discussions, clarifications). AMS encourages frequent one-on-
        one communications with industry throughout the process. This 
        ensures mutual understanding of the Government's requirement 
        and the offeror's proposed solution, and results in an award to 
        the company likely to deliver the best solution to meet TSA's 
        mission.

        2. Lifecycle Management--AMS provides guidance from the 
        earliest stages of acquisition through disposal. The FAR is 
        primarily focused on the procurement part of the process. The 
        AMS lifecycle management approach is important to TSA, as our 
        Office of Acquisition has a broader focus than contracts. Not 
        only do we award contracts, we focus on strengthening program 
        management and what we call ``Big A'' Acquisition across the 
        TSA organization. Acquisition encompasses much more than the 
        procurement aspect of conducting business. It is a life cycle 
        approach to investments and requires the integration of 
        numerous disciplines, including program management, 
        engineering, budgeting, logistics, and contracting.

        3. Managed Competitions--AMS provides for managed competitions 
        where, through multiple screens, detailed negotiations are 
        conducted with the companies most likely to receive award. 
        Under the AMS's multiple screening process, TSA publicizes its 
        initial screening information request (SIR) in FedBizOpps with 
        a statement of the particular requirements and a request for 
        specific preliminary qualifying proposal materials. This 
        announcement also advises that, subsequent to its evaluation of 
        received proposals, TSA intends to then send a more detailed 
        SIR only to those vendors whose proposals met the initial 
        qualifying requirements. In this multiple screen approach, TSA 
        can conduct a series of SIRs and vendors do not have to invest 
        resources normally required when submitting a comprehensive 
        proposal as required under FAR. Also, the AMS multiple screen 
        starts with open competitions--where all interested firms may 
        submit a response to the initial screening request. In cases 
        where TSA through market research has determined that a limited 
        number of firms could reasonably provide the required products, 
        equipments, or services, AMS allows TSA to conduct its 
        competition amongst this limited field of vendors. Even in 
        those cases, for transparency and competition, TSA publicizes 
        the requirements in FedBizOpps to encourage all vendors to 
        pursue subcontracting opportunities. Additionally, throughout 
        its multiple-screening process, AMS allows TSA to eliminate 
        offers that stand no chance for award. FAR offers similar 
        flexibility through the setting of a competitive range, but 
        this involves a more formal and time-consuming process. Managed 
        competitions save Government resources, and also allow firms to 
        redirect bid and proposal budgets elsewhere.

        4. Alternative dispute resolution--AMS encourages parties to 
        use alternative dispute resolution, or ADR, to resolve protests 
        as well as contract claims. ADR is a best practice across 
        industry, and delivers benefits when compared to costly 
        litigation. Protests and contract disputes involving TSA AMS 
        acquisitions fall under the jurisdiction of the Federal 
        Aviation Administration's Office of Dispute Resolution for 
        Acquisition (ODRA). The ODRA process is less about formalities, 
        as occasioned by a Board of Contract Appeals (Board) or the 
        Government Accountability Office (GAO), and more directed to 
        effective, timely and relatively inexpensive legal proceedings. 
        As an example, the ODRA rules allow for intervention by ODRA 
        prior to a full-blown dispute or contracting officer's final 
        decision in order to resolve the matter. If the parties are 
        unable to resolve their differences through ADR, the ODRA 
        provides a Default Adjudicative Process under which a member of 
        the ODRA or a Special Master (Board of Contract Appeal Judge/
        sitting or retired in most instances) is appointed to develop 
        and review the record to make factual findings and a 
        recommendation for final agency action to the Assistant 
        Secretary.
    Whether under ADR or the default adjudicative process, the ODRA 
rules provide for discovery (e.g., depositions, interrogatories, 
exchange of documents, among others) as well as evidentiary hearings. 
In this vein, the ODRA encourages the parties to negotiate the terms of 
discovery as well as to limit the scope of discovery, avoiding 
unnecessary costs and resources commonly incurred under the guise of 
discovery purposes.

    Question 4.: In your view, do you believe the historical reasons 
that existed in 2001 when TSA inherited the acquisition system used by 
the FAA, instead of the FAR, still exist today?
    Response: Yes, we continue to operate in a highly volatile arena 
where the Transportation Security Administration (TSA) must protect the 
public from future terrorist attacks. The greatest value of the 
Acquisition Management System (AMS) is not expediency or speed to 
contract. Rather it's the flexibility it affords TSA to assess the 
market and fashion our requirements in a way for the market to provide 
the appropriate solution in a timely manner. While important strides 
have been made to strengthen FAR policies and practices for identifying 
and acquiring best value solutions, several unique features of AMS, 
including the ability to conduct more efficient communications and 
phased acquisitions, have enabled TSA to create a business environment 
that is even more efficient and effective for dealing with the 
increased complexities of a post-9/11 world. The AMS allows TSA's 
Office of Acquisition to be innovative and flexible to develop business 
solutions that align with TSA's mission. AMS helps ensure that we are 
making good deals in support of the deployment of technology and 
services to ensure the Nation's security.

    Question 5.: How well does the private sector work with a major 
Cabinet department that operates two different acquisition systems?
    Response: In FY06, DHS obligated over $15.7 billion, of which 83 
percent was for services, making it the third largest government agency 
in terms of annual procurement spending, behind the Defense Department 
and the Department of Energy. These were figures used by Richard 
Skinner, DHS Inspector General in his testimony before the House 
Oversight and Government Reform Committee's subcommittee on Government 
Management, Organization, and Procurement, July 18, 2007, as well as 
Alan Chvotkin, Senior Vice President and Counsel Professional Services 
Council in his testimony on August 1, 2007. I believe that a company 
can propose and win a contract following both processes with minimal 
difficulty. Not until the scheduling of this hearing was I aware that 
some companies find it challenging to conduct business with the 
Department under both the FAR and AMS. I am in constant communication 
with industry and I will solicit their feedback on this issue. 
Fundamentally, the terms and conditions of both systems are the same, 
though clauses can more easily be tailored to needs of the government 
under AMS. In addition to being more timely, communication between the 
government and a company under AMS' rules, can be more direct and 
specific, which I would expect to be of great benefit to any company in 
the bidding and negotiating process.

    Do you believe the Department has the necessary contracting staff 
to effectively manage these two systems?
    Response: I do not believe managing two procurement systems is the 
cause of requests for additional staff. The requests for staffing has 
been based on a cost to spend ratio metric which was recommended in an 
independent study conducted in FY04. The study recommended workforce 
size be determined based on the procurement dollars spent, not the type 
of procurement system used. We have contracted for another study to 
assess staffing needs, and I do not believe the procurement system to 
be used will be a factor in determining staffing needs.

    Question 6.: In your view, should Congress consider applying the 
FAR uniformly throughout all of the Department? If so, why? If not, why 
not?
    Response: The AMS system used by TSA allows some valuable 
flexibility not available in the FAR. Inasmuch as TSA contracting 
personnel rely directly on these flexibilities to meet mission needs, I 
do not believe Congress should apply the FAR uniformly throughout the 
Department. Taking away AMS' flexibilities would be unnecessarily 
disruptive. While we appreciate the general benefits of a uniform 
system, the Department is committed to ensuring that TSA acquisition 
personnel are adequately trained on AMS processes and use the 
additional flexibilities offered to them appropriately and effectively.

    In your view, does one system compared to the other promote more 
competition? Promote fairer competition? Ensure greater financial 
accountability?
    Response: In my view both systems encourage and promote competition 
in a fair and transparent manner. Both systems recognize that 
competition, wherever possible, is in the best interests of the 
government to successfully meet its mission while being good stewards 
of the taxpayer's money. However, I believe AMS has the ability to 
facilitate more efficient use of competition by giving contracting 
officers tools to focus their attention more effectively on the vendors 
who are most likely to be able to perform and conduct more meaningful 
communications. I also believe one system does not ensure greater 
financial accountability than the other. All contracting officers are 
required to conduct a responsibility determination prior to award, and 
it is the responsibility of all involved, from the program manager to 
the contract administrator to ensure that cost, schedule, and 
performance requirements are met.

    Under each system, how are contract disputes resolved? In your 
view, does one system provide greater fairness than the other?
    Response: Both systems offer vendors mechanisms to dispute a 
requirement or action. The process to be followed under each system is 
similar, however, utilizing the disputes system under AMS is considered 
by many to be more efficient for all parties involved and possibly more 
cost effective considering the time savings. In fact, alternative 
dispute resolution (ADR) is considered a best practice by industry. 
Protests under FAR are filed before the agency or before the Government 
Accountability Office (GAO) and may result in an automatic suspension 
of the contracting process until resolution. A protest may also be 
filed before a federal court. Contract claims may be failed before the 
Civilian Board of Contract Appeals or federal court. These options are 
formal and may be time consuming. Under AMS parties are encouraged to 
use ADR to resolve protests as well as contract claims. TSA uses the 
Office of Dispute Resolution for Acquisition (ODRA) of the Department 
of Transportations / FAA. The ODRA process is less about formalities, 
filings, and timeframes as occasioned by the Board or GAO and more 
directed to effective, timely and relatively inexpensive legal 
proceedings. ADR is also available under the FAR system but it is not 
as frequently and regularly used. If a company has a complaint about a 
particular source selection, it has the option to protest to the ODRA 
if it cannot resolve the issue at TSA. If the parties are unable to 
resolve their differences through ADR, the ODRA provides an efficient 
Default Adjudicative Process under which a member of the ODRAs or a 
Special Master (Board of Contract Appeal Judge/sitting or retired in 
most instances) is appointed to develop and review the record to make a 
factual findings and recommendation for final agency action to the 
Assistant Secretary.
    NOTE: The Board of Contract Appeals is only for contract claims 
which are contract administration issues. The Board does not entertain 
protests which are contract formation issues.

    Question 7.: Over the past 2-1/2 years, this Subcommittee has 
examined a number of problematic DHS contracts. In your view, is this a 
problem with the particular acquisition management system being used or 
the failure of a contracting officer to follow the rules or under-
staffing, or a combination of factors?
    Response: ``Problematic'' contracts of DHS have been brought about 
by a number of factors, none of which relate to the procurement systems 
used. Depending on the contract being discussed, the contributing 
factor(s) have been one or a combination of the following: under 
staffing in the areas of contract award or oversight, change in 
requirements as a result of change in direction, the circumstances 
under which contracts were put in place, incorrect data in existing 
databases which were used in determining or verifying a vendor's 
eligibility, and last, but not least, the lack of the appropriate mix 
of skilled acquisition professionals in the disciplines of program 
management, risk assessment, engineering, cost analyses, and logistics. 
As I testified, the competition for highly qualified acquisition and 
procurement officials is intense.
    I am addressing the staffing issues and skill mix with three 
workforce initiatives currently underway. My office has initiated an 
aggressive staffing solution to resolve personnel shortages and have 
centralized recruiting activities to better manage similar needs across 
the Department. We have received authority to maximize the use of 
hiring flexibilities such as Direct Hire Authority and Re-employed 
Annuitants to address our most critical staffing shortages--contracting 
officers. The Acquisition Intern Program is my second initiative to 
satisfy the long term need for qualified acquisition personnel by 
developing a pipeline for our future acquisition leaders. Beginning in 
FY 2008, my office is centrally funding an Acquisition Intern Program 
with 66 participants which will grow to a total of 300 participants by 
fiscal year 2011. The third initiative is the establishment of a 
centralized acquisition workforce training fund. Based on the results 
of reviews conducted by the Oversight Division, our training program 
will develop or purchase additional training to close identified 
competency gaps. By centralizing the training program, the Department 
is better positioned to deliver a unified training program that enables 
our acquisition professionals to achieve the appropriate certification 
levels and develop the necessary skills and competencies to negotiate 
good business deals. We will maximize the use of the training resources 
available to the federal agencies from the Federal Acquisition 
Institute.

    Question 8.: Mr. Gunderson, Congress exempted FAA contracting from 
the FAR in 1995 primarily to address FAA's need to modernize the air 
traffic control system. Given TSA's mission in DHS, what rationale is 
there to continue to use FAA's acquisition management system, rather 
than the FAR?
    Response: From the Transportation Security Administration's (TSA) 
perspective, the Acquisition Management System (AMS) offers broader 
guidance than the FAR to address the complete acquisition life cycle 
and certain tailored flexibilities not available in the FAR that TSA 
uses strategically to achieve better results than can be achieved 
without these flexibilities. AMS is part of our culture and creates an 
environment within TSA which allow us to engage in good business 
practices. TSA remains a new agency that must attempt to protect the 
public from terrorist attacks. TSA faces new challenges everyday to 
assess and identify new technology, new services, and address new 
challenges set by Congress. AMS allows flexibility to better meet these 
challenges--allowing TSA to exercise good, sound business practices in 
meeting our mission and goals.

    Question 9.: Do you find it difficult to attract and retain an 
acquisition workforce at TSA, when the skills those employees develop 
with the AMS as TSA contracting officers would not be transferable 
outside of TSA, FAA, and a small number of firms that specialize in AMS 
contracting?
    Response: The Transportation Security Administration (TSA) is an 
exciting place to be for acquisition professionals, and our skills are 
not only transferable outside of TSA, but are highly valued. People 
have come to TSA from industry and Federal Acquisition Regulation (FAR) 
organizations--most notably the Department of Defense. During Hurricane 
Katrina, the Department of Homeland Security leveraged TSA's staff--
through temporary reassignment and via after hours support in a war 
room to help the Federal Emergency Management with its contracting--
which is FAR based. For interagency agreements through the General 
Services Administration, our contract specialists use the FAR. TSA 
faces the same supply and demand challenges as the acquisition 
workforce, but the TSA Office of Acquisition developed a comprehensive 
Human Capital Strategy in 2005 to ensure we continue to recruit and 
retain the most highly qualified employees.

    Question 10.: Did application of the Acquisition Management System 
contribute to TSA's early contract problems?
    Response: No; in fact, the majority of contracts awarded by the 
Transportation Security Administration (TSA) in its startup were 
Federal Acquisition Regulation (FAR)-based contracts. The early 
challenges were driven by limited staff and an incomplete view of the 
ultimate requirements. TSA was building its agency infrastructure at 
the same time it was required to federalize all U.S. airports and roll 
out security technology on an aggressive, mandated schedule. Since 
then, TSA's Office of Acquisition has developed capabilities that 
provide program management support and outreach across the agency and 
significantly increased staffing.

    Question 11.: AMS provides additional flexibility to the contract 
specialist. How do you ensure that award and administration of 
contracts is executed in a way consistent with Federal acquisition 
principles?
    Response: Increased flexibility does not mean there are no rules. 
In addition to the Acquisition Management System (AMS) framework, the 
Transportation Security Administration's (TSA's) Office of Acquisition 
has developed policies about contract administration and oversight such 
as our Contracting Officer Technical Representative program. The 
Defense Contract Audit Agency has an onsite representative that 
supports our contracts, and we have an agreement with the Defense 
Contract Management Agency for ongoing administration support. 
Additionally, TSA complies with Department of Homeland Security 
Management Directives and guidance (other than the Federal Acquisition 
Management (FAR) and its Homeland Security Supplement). TSA's business 
opportunities are publicized via the standard Government website, 
FedBizOpps. We leverage the U.S. Coast Guard financial system and 
report our contract actions via the Federal Procurement Data System.

    Question 12.: What feedback have you received from industry about 
the Acquisition Management System TSA uses?
    Response: The Transportation Security Administration has not 
received any negative feedback from industry on its Acquisition 
Management System (AMS), but we have heard from industry that they 
appreciate the open dialogue employed throughout the process. To our 
knowledge, the hearing on August 1, 2007 was the first time that 
industry representatives voiced concerns about the AMS.

    Question 13.: Are there factors that justify TSA/FAA having a 
separate procurement system from the rest of the government? Especially 
given the fact that other agencies that purchase high dollar items and 
need emergency authorities like the Department of Defense use the 
Federal Acquisition Regulations (FAR)?
    Response: The Transportation Security Administration's (TSA) 
mission does not demand a different procurement system, but use of the 
Acquisition Management System (AMS) and its guidance is built into our 
culture. It is not about doing things faster or responding to 
emergencies; it is about continually improving our acquisition 
practices similar to the private industry. It is important to note that 
in the Government Accountability Office's (GAO) review of AMS at the 
Federal Aviation Administration (FAA) (Report Number GAO-05-23), it did 
not recommend that it convert to FAR. The GAO's recommendations focused 
on strengthening requirements, software development, and investment 
decision making.

    Question 14.: You mentioned that all TSA procurement personnel are 
trained to use the FAR, as well as the AMS. So there would not be a 
significant cost to transitioning these AMS procurement officers to the 
FAR contracting system, would there?
    Response: There would not be significant training costs, though the 
Transportation Security Administration's Office of Acquisition would 
provide some refresher training on the Federal Acquisition Regulation 
Part 15--Source Selection.

                                 
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