Department of Homeland Security's Use of Special Streamlined	 
Acquisition Authorities in Section 833 of the Homeland Security  
Act of 2002 (20-JUN-06, GAO-06-783R).				 
                                                                 
In creating the Department of Homeland Security (DHS) in the wake
of September 11, 2001, some in Congress were concerned that the  
Department might not be able to conduct acquisitions with	 
sufficient speed, particularly in an emergency. To that end,	 
Congress enacted section 833 of the Homeland Security Act of	 
2002, which provides DHS with special streamlined acquisition	 
authorities. Before those authorities could be used, however, the
Secretary of Homeland Security or a delegate would have to	 
determine in writing that the DHS mission would be seriously	 
impaired without the use of the authorities. The special	 
streamlined acquisition authorities including the following three
items. First, increasing the micro-purchase threshold from $2,500
to $7,500. Purchases below the micro-purchase threshold do not	 
require competitive quotes or compliance with the "Buy America"  
act. Only certain employees would be authorized to make 	 
procurements under this authority. Second, increasing the limit  
on the use of simplified acquisition procedures from $100,000 to 
$200,000 for contracts awarded and performed within the United	 
States, and to $300,000 for contracts awarded and performed	 
outside the United States. Simplified acquisition procedures	 
permit agencies to use streamlined techniques to acquire good and
services. Third, increasing from $5,000,000 to $7,500,000 the	 
ceiling on the use of special simplified procedures to acquire	 
property and services the Secretary deems to be "commercial	 
items" under federal procurement laws. These authorities are	 
scheduled to expire on September 30, 2007. Section 833 of the act
directed us to report on the Department's use of these special	 
streamlined acquisition authorities. Our objectives were to	 
determine (1) the extent to which DHS has used the special	 
authorities and (2) whether DHS sees a need to extend the	 
authorities beyond September 2007.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-783R					        
    ACCNO:   A55785						        
  TITLE:     Department of Homeland Security's Use of Special	      
Streamlined Acquisition Authorities in Section 833 of the	 
Homeland Security Act of 2002					 
     DATE:   06/20/2006 
  SUBJECT:   Buy national policy				 
	     Emergency preparedness				 
	     Federal procurement				 
	     Federal procurement policy 			 
	     Procurement law					 
	     Procurement practices				 

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GAO-06-783R

June 20, 2006

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

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

The Honorable Peter T. King

Chairman The Honorable Bennie G. Thompson

Ranking Member Committee on Homeland Security

House of Representatives

Subject: Department of Homeland Security's Use of Special Streamlined
Acquisition Authorities in Section 833 of the Homeland Security Act of
2002

In creating the Department of Homeland Security (DHS) in the wake of
September 11, 2001, some in Congress were concerned that the Department
might not be able to conduct acquisitions with sufficient speed,
particularly in an emergency. To that end, Congress enacted section 833 of
the Homeland Security Act of 2002, which provides DHS with special
streamlined acquisition authorities. Before those authorities could be
used, however, the Secretary of Homeland Security or a delegate would have
to determine in writing that the DHS mission would be seriously impaired
without the use of the authorities. The special streamlined acquisition
authorities included:

           o  Increasing the micro-purchase threshold from $2,500 to $7,500.
           Purchases below the micro-purchase threshold do not require
           competitive quotes or compliance with the "Buy America" act. Only
           certain employees would be authorized to make procurements under
           this authority.
           o  Increasing the limit on the use of simplified acquisition
           procedures from $100,000 to $200,000 for contracts awarded and
           performed within the United States, and to $300,000 for contracts
           awarded and performed outside the United States. Simplified
           acquisition procedures permit agencies to use streamlined
           techniques to acquire good and services.1 
           o  Increasing from $5,000,000 to $7,500,000 the ceiling on the use
           of special simplified procedures to acquire property and services
           the Secretary deems to be "commercial items" under federal
           procurement laws.

These authorities are scheduled to expire on September 30, 2007.

Section 833 of the act directed us to report on the Department's use of
these special streamlined acquisition authorities. Our objectives were to
determine (1) the extent to which DHS has used the special authorities and
(2) whether DHS sees a need to extend the authorities beyond September
2007. We conducted our review from April to May 2006 in accordance with
generally accepted government auditing standards.

RESULTS

The Department of Homeland Security has never used the special streamlined
acquisition authorities provided in section 833. According to the Director
of Acquisition Oversight at DHS, use of the special authorities has not
been needed because existing authorities have been sufficient to meet DHS
requirements. For example, the Department makes frequent use of the
current $2,500 micro-purchase threshold and that threshold may increase up
to $15,000 for domestic purchases made in support of a contingency
operation if certain determinations are made. With respect to simplified
acquisition procedures, the Department currently uses these procedures for
nearly 2,000 procurements annually up to $100,000, and according to DHS,
increasing the limit to $200,000 would make only 100 additional
procurements eligible for these procedures. For these or other
procurements, including those involving commercial items, there is
authority under Part 16.603 of the Federal Acquisition Regulation (FAR) to
award letter contracts in emergencies or other appropriate circumstances,
up to the warranted level of the procurement official. Finally, DHS can
use the flexibility provided by FAR Part 6.3, which provides for
contracting without full and open competition if the required
justifications and approvals are obtained.

Agency officials also said that the increased authorities provided for
under section 833 are not worth the time and effort required to justify
their use given the relatively modest increase in flexibility those
authorities provide. Specifically, officials said that the approval
procedures for using the authorities are time consuming and noted that
approval can only be delegated to a presidential appointee who has been
confirmed by the Senate. At this time, this limits the approving officials
within the Department to just the Secretary, the Deputy Secretary, and the
Under Secretary for Management.

1 While simplified acquisition procedures promote competition to the
maximum extent practicable, they 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.

DHS officials told us that the Department has no interest in extending the
special acquisition authorities of section 833. They believe the
authorities should be allowed to expire at the end of September 2007.

AGENCY COMMENTS

We provided a draft of this letter to the Department of Homeland Security
for its review and comment. Department officials indicated in an e-mail
message that the letter was accurate and that the Department had no
additional comments.

We are sending copies of this letter to other interested congressional
committees and Members, and to the Secretary of Homeland Security. We will
make copies available to others upon request. In addition, it will be
available at no charge on the GAO Web site at http://www.gao.gov .

If you have any questions regarding this letter, please contact me at
(202) 512-4841 or John Needham, Assistant Director, at (202) 512-5274.
Contact points for our Office of Congressional Relations and Public
Affairs may be found on the last page of this letter. Other contributors
to this effort include Myra Watts Butler, John Krump, and Robert
Swierczek.

William T. Woods

Director

Acquisition and Sourcing Management

(120534)

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