Agencies' Use of Procurement Flexibilities Provided in the	 
Homeland Security Act of 2002 (P.L. 107-296) (31-MAR-04,	 
GAO-04-447R).							 
                                                                 
In the wake of September 11, 2001, Congress enacted the Homeland 
Security Act of 2002. Title VIII, subtitle F, section 852 of the 
act provided for a temporary set of emergency procurement	 
flexibilities intended to address the immediate needs for	 
procurement of property (other than real property) or services to
be used to defend against or recover from terrorist threats,	 
including nuclear, biological, chemical, or radiological attacks.
These flexibilities, which expired on November 24, 2003, included
(1) increasing the threshold for simplified acquisition 	 
procedures in support of humanitarian, peacekeeping, or 	 
contingency operations from $100,000 to $200,000 for contracts	 
awarded and performed within the United States and, for contracts
awarded and performed, or purchases to be made outside the United
States, to $300,000; (2) increasing the micro-purchase threshold 
from $2,500 to $7,500 to allow agencies the use of purchase cards
above the current limit; (3) waiving certain provisions of law	 
and the dollar threshold related to commercial item procurements;
and (4) requiring the head of an agency, when appropriate, to use
streamlined acquisition authorities and procedures authorized by 
law for a procurement referred to in section 852. Section 852 of 
the Homeland Security Act directed us to report no later than	 
March 31, 2004, on the extent to which federal agencies have used
the flexibilities.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-447R					        
    ACCNO:   A09640						        
  TITLE:     Agencies' Use of Procurement Flexibilities Provided in   
the Homeland Security Act of 2002 (P.L. 107-296)		 
     DATE:   03/31/2004 
  SUBJECT:   Defense procurement				 
	     Emergency preparedness				 
	     Federal procurement				 
	     National preparedness				 
	     Procurement policy 				 
	     Procurement practices				 
	     Counterterrorism					 
	     Homeland security					 

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GAO-04-447R

United States General Accounting Office Washington, DC 20548

March 31, 2004

The Honorable Susan M. Collins
Chairman
The Honorable Joseph I. Lieberman
Ranking Minority Member
Committee on Governmental Affairs
United States Senate

The Honorable Tom Davis
Chairman
The Honorable Henry A. Waxman
Ranking Minority Member
Committee on Government Reform
House of Representatives

Subject: Agencies' Use of Procurement Flexibilities Provided in the
Homeland Security Act of 2002 (P.L. 107-296)

In the wake of September 11, 2001, Congress enacted the Homeland Security
Act of 2002. Title VIII, subtitle F, section 852 of the act provided for a
temporary set of emergency procurement flexibilities intended to address
the immediate needs for procurement of property (other than real property)
or services to be used to defend against or recover from terrorist
threats, including nuclear, biological, chemical, or radiological attacks.
These flexibilities, which expired on November 24, 2003, included:

o  	Increasing the threshold for simplified acquisition procedures in
support of humanitarian, peacekeeping, or contingency operations from
$100,000 to $200,000 for contracts awarded and performed within the United
States. For contracts awarded and performed, or purchases to be made
outside the United States, the threshold was $300,000. In addition, the
small business set-aside threshold was raised to be consistent with the
increased simplified acquisition threshold.1 (Section 853)

1 Simplified acquisition procedures refer to the methods prescribed in the
Federal Acquisition Regulation (FAR) Part 13 for making purchases of
supplies or services valued below the simplified acquisition threshold.
These procedures are designed to: (1) reduce administrative costs; (2)
improve opportunities for small, disadvantaged, and women-owned businesses
to obtain a fair proportion of government contracts; (3) promote
efficiency and effectiveness in contracting; and (4) avoid unnecessary
burdens for agencies and contractors. Federal Acquisition Regulation, at
13.002 [hereinafter FAR], (January 2004).

                   GAO-04-447R Homeland Security Procurement

o  	Increasing the micro-purchase threshold from $2,500 to $7,500 to allow
agencies the use of purchase cards above the current limit.2 (Section 854)

o  	Waiving certain provisions of law and the dollar threshold related to
commercial item procurements.3 (Section 855)

o  	Requiring the head of an agency, when appropriate, to use streamlined
acquisition authorities and procedures authorized by law for a procurement
referred to in section 852. It also waived certain dollar thresholds for
small business procurements.4 (Section 856)

Section 857 of the Homeland Security Act directed us to report no later
than March 31, 2004, on the extent to which federal agencies have used the
flexibilities. As agreed with your staff, we contacted the Departments of
Defense (DOD), Energy, Homeland Security, Justice, Transportation, and the
National Aeronautics and Space Administration (NASA) to determine if they
had used the temporary procurement flexibilities and, if so, (1) which
flexibilities were used; (2) how much was spent; and (3) what was
procured.

Of the six agencies, four (the Departments of Energy, Homeland Security,
Justice, and Transportation) reported no use of the procurement
flexibilities. Justice and Energy indicated they did not use the
flexibilities because existing procurement rules provided sufficient
flexibility. Homeland Security responded that this might also explain why
it did not use the flexibilities. Transportation reported it did not use
the procurement flexibilities because no requirement was received for the
purchase of products and/or services designed for the defense and recovery
from terrorist threats, including nuclear, biological, chemical, or
radiological attacks.

NASA indicated that the statute did not levy a reporting requirement or
require establishment of a formal financial or procurement tracking system
to account for use of the flexibilities authorized by the law and that it
would have to conduct a labor-intensive data call in order to answer our
questions. NASA did, however, conduct an informal survey of the three
procurement activities that would be most likely to use the flexibilities
afforded under the act (Johnson Space Center, Kennedy Space Center, and
Goddard Space Flight Center), and, according to NASA, these activities
responded that

2 Micro-purchase refers to an acquisition of supplies or services valued
at or below the micro-purchase threshold. FAR Part 13 states the purchase
card is the preferred method for purchasing and paying for goods and
services below the micro-purchase threshold. FAR, supra note 1, at 13.201
(b).

3 Section 855 provided the head of an executive agency with the authority
to make section 852 procurements without regard to whether the property or
services are commercial items. In addition, it waived the $5,000,000
limitation on such procurements. P.L. 107-296 (2002).

4 Section 856 waived the Small Business Act dollar thresholds for
contracts awarded to disadvantaged small business concerns. P.L. 107-296
(2002). The dollar thresholds are $5,000,000 for contracts assigned a
standard industrial classification code for manufacturing and $3,000,000
for all other contracts. 15 U.S.C. 637 (a)(1)(D)(i)(II) (2003). Section
856 also waived the Small Business Act HUBZone dollar thresholds of
$5,000,000 for contracts assigned a standard industrial classification
code for manufacturing and $3,000,000 for all other contracts. 15 U.S.C.
657a(b)(2)(A) (2003).

                  2 GAO-04-447R Homeland Security Procurement

they had not used the flexibilities. NASA also indicated a willingness to
conduct a more thorough review but warned that such a review would take
considerable time to complete.

In April 2003, DOD's Director of Defense Procurement and Acquisition
Policy encouraged the military services and defense agencies to take
advantage of the flexibilities. However, in responding to our inquiry, DOD
indicated that, because the law did not levy a formal reporting
requirement, it did not implement a tracking system and, therefore, could
not quantify use of these flexibilities. DOD also indicated that
responding to the survey questions would require a labor-intensive,
time-consuming manual data call. Considering that the authority for these
flexibilities expired on November 24, 2003, DOD did not believe it was a
wise expenditure of public funds to conduct a manual data call to obtain
the information we requested.

                                AGENCY COMMENTS

The Departments of Justice, Transportation, and Homeland Security had no
comment on
our correspondence. We received e-mail comments from the Department of
Energy and
NASA and oral comments from DOD. All indicated that they agreed with the
contents of
the correspondence.

We conducted our review from December 2003 to March 2004 in accordance
with
generally accepted government auditing standards.

We are sending copies of this letter to other interested congressional
committees and to
the Secretaries of DOD, Energy, Homeland Security, Justice, and
Transportation; and the
Administrator, NASA. This letter will also be available at no charge on
the GAO Web site
at http://www.gao.gov.

If you have any questions regarding this report, please contact me at
(202) 512-4841 or
Michele Mackin, Assistant Director, at (202) 512-4309. Other major
contributors to this
correspondence were Susan Tindall and Najeema Washington.

David E. Cooper
Director
Acquisition and Sourcing Management

(120257)

                  3 GAO-04-447R Homeland Security Procurement
*** End of document. ***