Subject: RELEASE: Senator Clinton Calls for Investigation of Homeland Security Contractor Bonuses
From: "Clinton, Press Office (Clinton)" <[email-masked]>
Date: Mon, 26 Nov 2007 16:36:54 -0500

For Immediate Release

November 26, 2007

Contact:

Clinton Press Office 202-224-2243 or 

[email-masked]

 

SENATOR CLINTON CALLS FOR INVESTIGATION OF HOMELAND SECURITY CONTRACTOR
BONUSES 

Washington, DC - Senator Hillary Rodham Clinton today called on the
Inspector General of the United States Department of Homeland Security
(DHS) to expand an investigation of federal contracting practices to
investigate the practice of award fees by DHS, especially when it comes
to no-bid contracts.  Senator Clinton's call comes in light of a recent
report by DHS Inspector General Richard Skinner that DHS improperly
awarded a $475 million no-bid contract to Chenega Technology Services
Corporation, which according to the report "likely did not provide the
government the best value" and that DHS "did not comply with federal
regulations".  According to the IG's office, the agency also provided
award fees to the company as part of its contract.  In calling for the
investigation, Senator Clinton underscored that despite federal law
requiring DHS to link award fees with successful acquisition outcomes,
there have been a number of reports of DHS providing award fees
regardless of performance.    

"This disconnect between performance and award fees appears to be part
of a troubling pattern," said Senator Clinton.  "In too many cases, DHS
appears to be awarding bonuses without evaluating work or, even worse,
despite poor performance.  Failing contractors should be rooted out not
rewarded."

The following is Senator Clinton's letter to DHS Inspector General
Richard L. Skinner requesting an investigation:

 

November 26, 2007

 

Mr. Richard L. Skinner

Inspector General

United States Department of Homeland Security

Washington, D.C. 20528

Dear Mr. Skinner:

I write regarding a disturbing report you issued last month that raises
serious questions about contracting practices at the Department of
Homeland Security (DHS).  The report -  Customs and Border Protection
Award and Oversight of Alaska Native Corporation Contract for
Enforcement Equipment Maintenance and Field Operations Support
(OIG-08-10) - details how DHS improperly awarded a $475 million, no-bid
contract to Chenega Technology Services Corporation to maintain X-ray,
radiation and other screening machines at U.S. border checkpoints.  Your
report concludes the contract "award likely did not provide the
government the best value" and that DHS "did not comply with federal
regulations."

Additionally, your staff informs me that award fees were given to
Chenega as a part of its contract with DHS.  Given that your report did
not focus on award fees to Chenega, the details of these fees are
unclear.  However, taken together with your conclusion that the
Department improperly awarded the underlying contract to Chenega, it is
disturbing to hear that DHS has provided an award fee to this
corporation.  

This disconnect between performance and award fees appears to be part of
a troubling pattern.  The Federal Acquisition Regulations (FAR) state
clearly that cost-based award fee contracts are intended to motivate
excellent contractor performance in areas such as quality, timeliness,
technical ingenuity, and cost-effective management.  Despite this
guidance, during the course of the past several years there have been a
number of reports documenting how award fees are being doled out by DHS
to contractors regardless of performance:

*	Evaluation of TSA's contract for the installation and
maintenance of explosive detection equipment at United States Airports
(DHS Inspector General, September 2004) - TSA awarded a contract to
Boeing for the installation and maintenance of explosive detection
equipment at airports.  TSA paid more than $44 million to Boeing without
any evaluation of Boeing's performance. 

*	Transportation Security Administration Review of the TSA
Passenger and Baggage Screening Pilot Program (DHS Inspector General,
September 2004) - TSA awarded four pilot program contracts to determine
whether private companies could provide and maintain passenger screening
performance at levels equal to or greater than the TSA screener force.
The Inspector General found the award fee determinations lacked
performance criteria, were highly subjective and based primarily on
contractor self-assessments and input from TSA officials. 

*	Observations on the Department of Homeland Security's
Acquisition Organization and on the Coast Guard's Deepwater Program
(GAO-07-453T) (February 8, 2007) - GAO found that despite documented
problems in schedule, performance, cost control, and contract
administration throughout the first year of the Deepwater contract, the
contractor had received a rating of 87 percent, which fell in the "very
good" range and resulted in an award fee of $4 million. 

In too many cases, DHS appears to be awarding bonuses despite poor
performance, or worse, without even evaluating work.  Failing
contractors should be rooted out, not rewarded.  Given your report of
what appears to be noncompliant federal contracting practices on the
part of the DHS and a pattern of providing award fees to contractors
without justification, I request that you expand your investigation into
the practice of award fees by the Department, especially when it comes
to no-bid contacts.  Specifically, I would ask that your investigation
review the following questions:

*	Section 3501 of the U.S. Troop Readiness, Veterans' Care,
Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (P.L.
110-28) states, "The Secretary of Homeland Security shall require that
all contracts of the Department of Homeland Security that provide award
fees link such fees to successful acquisition outcomes (which outcomes
shall be specified in terms of cost, schedule, and performance)."  DHS
has engaged in a number of contracts in Fiscal Year 2007.  How many of
these contracts included award fees and were these award fees based on
successful acquisition outcomes?  What was the total amount of these
award fees? 

*	Did the Department of Homeland Security violate P.L. 110-28 in
providing award fees to contractors Fiscal Year 2007? 

*	Were award fees given to Chenega Technology Services Corporation
justified and based on successful acquisition outcomes? 

*	What mechanisms are currently in place at DHS to ensure that
award fees are awarded in a proper manner?  Are these mechanisms
enforced in providing award fees for DHS contracts?  What can the
Department of Homeland Security do to ensure that award fees are
justified and based on successful acquisition outcomes? 

Thank you for attention to this matter.  

Sincerely,

Hillary Rodham Clinton

 

###