Good update on this story (10/6) from the New York Times (registration required).
With more than $2 billion already spent on Katrina aid, FEMA procurement officials are still rushing to find supplies. As a result, many items are being purchased at full price and with no bidding–outside the normal low bid process.
Laura Sullivan, Morning Edition, 9/29/05, NPR reports that FEMA is supposed to arrange contracts in advance so details (including special pricing deals) are worked out before an order is placed. Most supplies are being lined up after the storm–not before. In fact, FEMA’s purchasing department is so overwhelmed it has called in GSA representatives to help.
When asked by Congress about this change in procedure, former FEMA head Michael Brown could not explain why decisions were being made at the last minute, thus forcing the agency to buy things like body bags at full price. He admitted the mistake, and said, “We should have had the contract in place before Katrina made landfall.”
Most of the no-bid contracts are inexcusable and have led to huge amounts of waste where money could have been better spent. To make matters worse, FEMA didn’t even have the money to be adequately prepared for the storm. What lesson was learned from this? You can’t do homeland security on the cheap.
Last year, auditors found FEMA’s procurement office to be an organizational nightmare. “Only one of 45 employees could document they could fulfill the requirements showing eligibility to be a government purchaser. The report also showed the department was using a 12 year old manual that relied on a law that was repealed in 1996.”
Scott Tong, Marketplace, 9/28/05 notes, that auditors have promised to be vigilant in terms of policing spending, but many are skeptical. The government’s acquisition workforce has had dramatic cuts throughout the 1990s, and those who remained, saw workloads double and become more complicated. They’re not just buying pencils and other supplies anymore, now they’re buying IT, consulting, and other services that they’re not really qualified to purchase.
Steven Schooner, procurement expert during Clinton administration says, “Frankly, a significant number of professional buyers for the government came into procurement as a career ladder out of the secretarial pool many years ago.”
Inexperience was demonstrated post 9/11 with the rush to hire new airport screeners; short staffing situations made it impossible to scrutinize the spending. The same problem has also been blamed for failures in Iraq contracts.
Large amounts of money are being spent too quickly without proper exploration of competition. In the rush to purchase, staffers are just picking familiar, well connected firms.
The mega contract is also being seen as time saver, but it has many pitfalls since it bundles deals for those who can provide all services. What’s the biggest problem? The mega contractor farms everything out to other contractors who may farm out to other contractors, so there’s no quality control or ultimate person in charge or willing to take responsibility.
Bundling contracts are easy to write, but hard to monitor. Only a few mega contrators currently exist–Halliburton and its services arm Kellogg Brown & Root are some of the most familiar names. Not many other companies can compete.
Some agencies like FEMA are even hiring outside companies like Acquisition Solutions to write the contracts. To some degree this makes sense, because it doesn’t make sense to be staffed for Katrina-like situations that don’t happen often. Still, it must be monitored. Some agencies can handle the extra monitoring and others can’t. When a contract goes unmanaged or problems go unnoticed, it can lead to much larger issues.