United States Government Accountability Office

GAO Report to Congressional Requesters

INTERAGENCY 

CONTRACTING 

Improved Guidance, 

Planning, and 

Oversight Would 

Enable the 

Department of 

Homeland Security to 

Address Risks 

September 2006 

 

GAO-06-996 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2006

INTERAGENCY CONTRACTING

Improved Guidance, Planning, and 

Oversight Would Enable the Department 

of Homeland Security to Address Risks 

Highlights of GAO-06-996, a report to 

congressional requesters 

DHS has developed guidance on how to manage the risks of some but not all 

types of interagency contracts. The department has guidance for interagency

agreements—the largest category of interagency contracting at the 

department— but does not have specific guidance for using other types of 

contracts such as the General Services Administration (GSA) schedules and 

governmentwide acquisition contracts (GWAC), which amounted to almost 

$1.5 billion in fiscal year 2005. Moreover, in some cases we found users may 

have lacked expertise that could be addressed through guidance and training 

on the use of these types of contracts. 

DHS did not always consider alternatives to ensure good value when 

selecting among interagency contracts. While this contracting method is 

often chosen because it requires less planning than establishing a new 

contract, evaluating the selection of an interagency contract is important 

because not all interagency contracts provide good value when considering 

timeliness and cost. As of July 2005 DHS has required planning and analysis 

of alternatives for all acquisitions. In this review, we found that in all four 

cases for which an analysis of alternatives was required, it was not 

conducted. DHS officials said benefits of speed and convenience—not total 

value including cost—have often driven decisions to choose these types of 

contracts. 

DHS does not systematically monitor its total spending on interagency 

contacts and does not assess the outcomes of its use of this contracting 

method. According to officials, DHS’ acquisition oversight program has been 

hindered by limited resources and authority. As of August 2006, the Office of 

the Chief Procurement Officer had five staff assigned to departmentwide 

oversight responsibilities for $17.5 billion in acquisitions. In March 2005, 

GAO recommended that the Chief Procurement Officer be provided 

sufficient authority to provide effective oversight of DHS’ acquisition 

policies and procedures. Without this authority, DHS cannot be certain that 

acquisition improvements are made. 

Growth in DHS Contracting 

Fiscal year 

Source: GAO analysis of DHS data.

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 

2004

2005

DHS contracts

Interagency agreements

GSA schedules, GWACs, and other interagency contracts

Dollars in millions

10,957 5,032 1,471 

6,043 2,988 778

The Department of Homeland

Security (DHS) has some of the 

most extensive acquisition needs 

within the federal government. In 

fiscal year 2005, DHS spent 

$17.5 billion on contracted 

purchases, $6.5 billion, or 

37 percent, of which was through

the use of other agencies’ contracts

and contracting services, a process

known as interagency contracting. 

While these types of contracts offer 

the benefits of efficiency and 

convenience, in January 2005, GAO 

noted shortcomings and designated 

the management of interagency 

contracting as a governmentwide

high-risk area. Given the 

department’s critical national 

security mission and the results of 

our earlier work, GAO reviewed the 

extent to which DHS manages the 

risks of interagency contracting

and assessed DHS’ guidance, 

planning, and oversight of

interagency contracting.

What GAO Recommends

GAO recommends that the

Secretary of Homeland Security

consider the adequacy of the Office

of the Chief Procurement Officer’s

resources and develop guidance 

and training; establish criteria to 

consider in the decision to use an

interagency contract; and

implement oversight to evaluate the 

outcomes of interagency contracts. 

DHS agreed with these

recommendations. In addition, 

Congress should require the

Secretary to report on efforts to 

provide the Chief Procurement 

Officer with sufficient authority.

www.gao.gov/cgi-bin/getrpt?GAO-06-996.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact John Hutton at 

(202) 512-4841 or huttonj@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 4

Enhanced Guidance and Expertise Could Help DHS Address 

Interagency Contracting Risks 7 

DHS Did Not Always Assess Total Value When Choosing 

Interagency Contracts 12 

DHS Oversight Program Does Not Assess Outcomes of Interagency 

Contracting 16

Conclusions 19

Recommendations for Executive Action 20 

Matter for Congressional Consideration 20 

Agency Comments and Our Evaluation 21 

Appendix I Scope and Methodology 24 

Appendix II Department of Homeland Security Interagency 

Contracting 28 

Appendix III Comments from the Department of Homeland 

Security 29 

Tables 

Table 1: Department of Homeland Security Interagency 

Contracting in Fiscal Year 2005 (dollars in millions) 9 

Table 2: Examples of Need for Improved Training and Expertise 10 

Table 3: Cases with Limited Planning and No Assurance of Good 

Value 15 

Table 4: DHS Acquisition Oversight Program 18 

Table 5: Fiscal Year 2005 Cases Reviewed at Office of Procurement 

Operations, Customs and Border Protection, and Coast 

Guard 26 

Table 6: Interagency Contracting Methods Used by DHS 28 

Page i GAO-06-996 Interagency Contracting
Figures 

Figure 1: Growth in DHS Contracting 6 

Abbreviations 

CBP Customs and Border Protection 

DHS Department of Homeland Security 

DOD Department of Defense 

FedSim Federal Systems Integration and Management Center 

FAR Federal Acquisition Regulation 

FPDS-NG Federal Procurement Data System-Next Generation 

GSA General Services Administration 

GWAC Governmentwide Acquisition Contract 

OCPO Office of the Chief Procurement Officer 

OPO Office of Procurement Operations 

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page ii GAO-06-996 Interagency Contracting
United States Government Accountability Office

Washington, DC 20548 

September 27, 2006 

The Honorable Susan M. Collins 

Chairman 

The Honorable Joseph I. Lieberman 

Ranking Minority Member 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable Daniel K. Akaka 

Ranking Minority Member 

Subcommittee on Oversight of Government Management, 

Federal Workforce, and the District of Columbia 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable Bennie G. Thompson

Ranking Minority Member 

Committee on Homeland Security 

House of Representatives 

The Department of Homeland Security (DHS) performs a comprehensive 

homeland security mission encompassing protecting the nation’s borders, 

airports and critical infrastructure, and response and recovery in the event 

of national emergencies. DHS meets these goals with some of the most 

extensive acquisitions within the federal government. Now one of the 

largest procuring agencies, DHS spent about $17.5 billion on contracted 

purchases in fiscal year 2005.1

 Over $6.5 billion, or approximately 

37 percent of the department’s total fiscal year 2005 contract dollars, was 

for purchases made through the use of other agencies’ contracts and 

contracting services, a process known as interagency contracting.2

 While 

 1

This amount includes procurement obligations and interagency agreements as reported by

DHS. 

2

For the purposes of this review, interagency contracting includes the following: 

(1) interagency agreements in which one federal agency transfers funds to another federal 

agency to make a purchase through a contractual arrangement, such as purchases made 

through franchise funds and other fee-for-service operations; (2) orders placed through the 

General Services Administration’s (GSA) schedules; and (3) orders placed through 

governmentwide acquisition contracts (GWAC) and other government agencies’ contracts.

Page 1 GAO-06-996 Interagency Contracting
these types of contracts offer the benefits of efficiency and convenience, 

in January 2005, GAO noted shortcomings and designated the management 

of interagency contracting as a governmentwide high-risk area. Our work 

and the work of others has identified the need for improved guidance and 

expertise, planning, and oversight to manage and mitigate the risks of 

these types of contracts. In March 2005, we reported that DHS was not 

effectively managing acquisition, in particular interagency purchases, of 

the multitude of goods and services it needed to meet its mission.3

Given the department’s critical national security mission and the results of 

our earlier work, you asked us to review the extent to which DHS manages 

interagency contracting. To address this question, we assessed (1) DHS 

guidance for the use of interagency contracts; (2) DHS planning and 

evaluation of contracting alternatives when using interagency contracts; 

and (3) DHS practices for overseeing the performance of interagency

contracts. 

To conduct our work, we selected 17 cases totaling $245 million. Each 

case represented $5 million or more in orders placed through several types 

of interagency contracting arrangements in fiscal year 2005. These cases 

represented orders placed by DHS’ Office of Procurement Operations 

(OPO), Customs and Border Protection (CBP), and Coast Guard, which 

were the largest users of interagency contracts in fiscal year 2005. We

interviewed senior procurement officials at the three components and at 

the Office of the Chief Procurement Officer (OCPO), interviewed 

contracting officers and program managers at the three components, and 

reviewed the guidance and oversight at the departmental level and at the 

components to address the management and planning of interagency 

contracting.4 We obtained data on procurement actions from DHS and 

compared it with data from the Federal Procurement Data System-Next 

Generation (FPDS-NG) and determined that the data were sufficiently 

reliable for our purposes. For more information on our scope and 

methodology, see appendix I. We conducted our work from February 

through August 2006 in accordance with generally accepted government 

auditing standards. 

 3

GAO, Homeland Security: Successes and Challenges in DHS’s Effort to Create an

Effective Acquisition Organization, GAO-05-179 (Washington, D.C.: Mar. 29, 2005). 

4

For the purposes of this review we refer to all DHS agencies and procurement 

organizations as components. We refer to those program managers or contracting officers

using interagency contracts as DHS users. 

Page 2 GAO-06-996 Interagency Contracting
While DHS continues to rely heavily on interagency contracts to fill its 

purchasing needs, the departmentwide guidance on how to effectively 

manage and mitigate the risks of interagency contracting could be 

improved. These risks include not receiving good value and lack of 

expertise of users. DHS has issued specific guidance associated with the 

largest area of interagency contracting, which is performed under 

interagency agreements, but not for other types, such as GSA schedules 

and governmentwide acquisition contracts, which amounted to nearly 

$1.5 billion in DHS spending in fiscal year 2005. We also found that some 

DHS users may have lacked expertise and could benefit from guidance and 

training in the use of these types of interagency contracts. For example, 

we found that controls, such as the annual review of purchase agreements 

for discounts on purchases through the GSA schedules, required by the 

Federal Acquisition Regulation to ensure that prices still represent the best

value, were not in place. OCPO officials explained that their staff are 

needed to respond to crises at components, such as the Federal 

Emergency Management Agency during the response to Hurricanes 

Katrina and Rita, taking their attention away from acquisition policy 

efforts, such as developing guidance.

Results in Brief 

According to DHS officials, the department did not always select 

interagency contracts based on planning and analysis and instead made 

decisions based on the benefits of speed and convenience—not total value

including cost. This contracting method is often chosen because it requires

less planning than establishing a new contract, and users have typically

relied on the servicing agency or the agency that manages the contracts to

conduct planning, ensuring that prices are competitive and following 

proper procedures. However, our prior work has highlighted the 

importance of evaluating the use of these contracts for specific purchases

because proper planning does not always occur. In our review, we found 

that DHS users conducted limited evaluation of interagency contracting 

alternatives. In the four cases for which an analysis of alternatives was 

required, it was not conducted. As of July 2005, DHS guidance requires 

planning for all types of purchases, including those made through 

interagency contracting, to include a discussion of alternative methods 

considered, but this policy does not include specific criteria to consider 

when analyzing alternative contracting methods. 

DHS does not yet have in place sound oversight practices that would 

enable it to evaluate the outcomes of its use of interagency contracts. DHS 

has not been monitoring its use of interagency contracts and could not 

readily provide data, such as the total cost including fees paid to other 

agencies for the use of these vehicles, which could help in assessing costs 

Page 3 GAO-06-996 Interagency Contracting
and benefits of interagency contracting. OCPO officials said they do not 

know how much DHS pays in fees to other agencies. OCPO is in the early

stages of implementing an Acquisition Oversight Program. As part of this 

program, DHS plans to produce data through assessments and reviews to 

be conducted by the end of fiscal year 2007; however, this program is not 

expected to evaluate whether these interagency contracts provided good

outcomes for the department. OCPO officials explained that in the few 

years since the department was created, their efforts have been focused on

procurement execution rather than oversight due to urgent needs at 

component agencies and limited staffing. As of August 2006, OCPO 

officials said that they had five staff assigned to departmentwide oversight

responsibilities for $17.5 billion in acquisitions. In March 2005, we 

recommended that OCPO be provided sufficient enforcement authority 

and resources to provide effective oversight of DHS’ acquisition policies

and procedures. As of August 2006, OCPO still lacks authority to perform 

effective departmentwide oversight of the acquisition function across the 

component procurement organizations, which limits its ability to ensure 

that needed improvements are made. 

To improve the management of interagency contracting at DHS, we are 

making recommendations to the Secretary of Homeland Security to 

consider the adequacy of the OCPO’s resources and develop consistent, 

comprehensive guidance and training; establish criteria to consider in 

selecting an interagency contract; and implement oversight to evaluate the

outcomes of using interagency contracts. 

Because the Secretary has not taken action to ensure departmentwide 

acquisition oversight, Congress should require the Secretary to report on 

efforts to provide the Chief Procurement Officer with sufficient authority 

over procurement activities at all components. 

In written comments on a draft of this report, DHS concurred with our 

recommendations and indicated planned actions to address them. DHS 

comments are reproduced in their entirety in appendix III. 

In recent years, federal agencies have been making greater use of 

interagency contracting—a process by which agencies can use another 

agency’s contracting services or existing contracts already awarded by 

other agencies to procure many goods and services. An agency can enter 

into an interagency agreement with a servicing agency and transfer funds 

to the servicing agency to conduct the acquisition on its behalf, or an 

agency can order directly from a servicing agency’s contract, such as the 

Background 

Page 4 GAO-06-996 Interagency Contracting
GSA schedules or GWACs. When funds are transferred to another agency, 

the contracting service can be provided through entrepreneurial, fee-forservice organizations, which are government-run but operate like 

businesses. Interagency contracts are designed to leverage the 

government’s aggregate buying power and simplify procurement of 

commonly used goods and services. In this way, the contracts offer the 

benefits of improved efficiency and timeliness in the procurement process. 

Determining the value of a particular contracting method includes 

considering benefits such as timeliness and efficiency as well as cost--

including price and fees. Although interagency contracts can provide the 

advantages of timeliness and efficiency, use of these types of vehicles can

also pose risks if they are not properly managed. GAO designated 

management of interagency contracting a governmentwide high-risk area 

in 2005. A number of factors make these types of contracts high risk, 

including their rapid growth in popularity along with their administration

and use by some agencies that have limited expertise with this contracting 

method, and their contribution to a much more complex procurement 

environment in which accountability has not always been clearly 

established.5

 In an interagency contracting arrangement, both the agency 

that holds, and the agency that makes purchases against, the contract 

share responsibility for properly managing the use of the contract. 

However, these shared responsibilities often have not been well-defined. 

As a result, our work and that of some inspectors general has found cases 

in which interagency contracting has not been well-managed to ensure 

that the government was getting good value. For example, in our review of 

the Department of Defense’s (DOD) use of two franchise funds, we found 

that the organizations providing these services did not always obtain the 

full benefits of competitive procedures, did not otherwise ensure fair and 

reasonable prices, and may have missed opportunities to achieve savings 

on millions of dollars in purchases.6

 In another review, we found task 

orders placed by DOD on a GSA schedule contract did not satisfy legal 

requirements for competition because the work was not within the scope 

of the underlying contract.7

 Recent inspector general reviews have found

similar cases. For example, the Inspector General for the Department of 

 5

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: Jan. 2005). 

6

GAO, Interagency Contracting: Franchise Funds Provide Convenience, but Value to 

DOD Is Not Demonstrated, GAO-05-456 (Washington, D.C.: July 29, 2005). 

7

GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and Management

Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004). 

Page 5 GAO-06-996 Interagency Contracting
the Interior found that task orders for interrogators and other intelligence 

services in Iraq were improperly awarded under a GSA schedule contract

for information technology services.8

The Federal Acquisition Regulation (FAR) is the primary regulation 

governing how most agencies acquire supplies and services with 

appropriated funds. The regulation provides general guidance for 

interagency agreements that fall under the authority of the Economy Act 

and for the GSA schedules and GWACs. The FAR precludes agency

acquisition regulations that unnecessarily repeat, paraphrase, or otherwise 

restate the FAR, limits agency acquisition regulations to those necessary 

to implement FAR policies and procedures within an agency, and provides

for coordination, simplicity, and uniformity in the federal acquisition 

process. There are several types of interagency contracting. For more 

information on those included in our review, see appendix II.

DHS spends significant and increasing amounts through interagency 

contracting—a total of $6.5 billion in fiscal year 2005, including $5 billion

through interagency agreements and about $1.5 billion by placing orders 

off other agencies’ contracts (see fig. 1). DHS’ total spending on 

interagency contracting increased by about 73 percent in just 1 year. 

Figure 1: Growth in DHS Contracting

 

Fiscal year 

Source: GAO analysis of DHS data.

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 

2004

2005

DHS contracts

Interagency agreements

GSA schedules, GWACs, and other interagency contracts

Dollars in millions

10,957 5,032 1,471 

6,043 2,988 778 

8

U.S. Department of the Interior, Office of the Inspector General, Review of 12 

Procurements Placed Under General Services Administration Federal Supply Schedules

70 and 871 by the National Business Center, W-EV-055-0075-2004 (Washington, D.C.: 

July 16, 2004). 

Page 6 GAO-06-996 Interagency Contracting
DHS was established as of March 1, 2003, by merging the functions of 

23 agencies and organizations that specialize in one or more aspects of 

homeland security. OCPO is responsible for creating departmentwide 

policies and processes to achieve integration and to manage and oversee 

the acquisition function but does not have enforcement authority to 

ensure that initiatives are carried out. 

There are seven acquisition offices within DHS that pre-date the formation 

of DHS and continue to operate at the components. OPO was formed with

the new department to serve the newly established entities and those 

components that did not have a separate procurement operation. Of those 

that pre-date DHS, the Coast Guard and CBP provide different examples of 

the types of components that formed DHS. The Coast Guard, previously 

under the Department of Transportation, already had an extensive 

procurement operation, whereas CBP was created by combining the 

United States Customs Service, formerly part of the Department of the 

Treasury, Border Patrol and the inspectional parts of the Immigration and 

Naturalization Service, and portions of the Department of Agriculture’s 

Animal Plant and Health Inspection Service. Thus, CBP has been faced 

with the added challenge of creating a procurement organization to meet 

its new mission. Our prior work has found that an effective acquisition 

organization has in place knowledgeable personnel who work together to 

meet cost, quality, and timeliness goals while adhering to guidelines and 

standards for federal acquisition. 

While DHS has developed guidance on the use of interagency 

agreements—the largest category of interagency contracting at DHS, 

which amounted to $5 billion in fiscal year 2005—it does not have specific 

guidance for other types of interagency contracting, including GSA 

schedules and GWACs, which accounted for almost $1.5 billion in fiscal 

year 2005. Moreover, we found that some DHS users may have lacked 

expertise in the proper use of interagency contracts. Although some DHS

acquisition officials believe the FAR provides adequate guidance on the 

use of interagency contracts, such as the GSA schedules, our prior work 

and inspector general reviews have found numerous cases in which these 

contracting methods have not been properly used. For example, users 

have requested work that was not within the scope of the contract and 

administrators have not ensured fair and reasonable prices. Recognizing 

this concern, other large agencies, such as DOD and the Department of 

Energy, have identified the need to carefully manage the use of these 

contracts and have issued supplemental guidance and emphasized training 

programs to mitigate these risks. 

Enhanced Guidance 

and Expertise Could 

Help DHS Address 

Interagency 

Contracting Risks 

Page 7 GAO-06-996 Interagency Contracting
DHS departmentwide acquisition guidance covers interagency agreements 

but not other types of interagency contracting. In December 2003, DHS 

issued the Homeland Security Acquisition Regulation and the Homeland 

Security Acquisition Manual to provide departmentwide acquisition 

guidance. In addition, DHS issued a departmentwide directive on how to

use interagency agreements by which funds are transferred to other 

agencies to award and administer contracts or to provide contracting 

services on behalf of DHS. However, as we reported in March 2005, the 

directive was not being followed for purchases made through these 

agreements. For example, there was little indication that required analyses 

of alternatives were performed or that required oversight was in place. 

Although DHS began revising the directive in fiscal year 2004, the revisions 

have yet to be issued. According to OCPO officials, its limited policy and

oversight resources provide assistance to the components as needed, 

taking time away from acquisition policy efforts, such as developing 

guidance. For example, OCPO officials provided contracting assistance to 

the Federal Emergency Management Agency in the response to Hurricanes 

Katrina and Rita. 

DHS Guidance Could be 

Expanded to All Types of 

Interagency Contracting 

To supplement departmentwide DHS guidance on interagency agreements, 

each of the components we reviewed has issued some implementing 

guidance. OPO issued guidance addressing the appropriate use of 

interagency agreements that requires program officials and contracting 

officers to research other available contract vehicles. In contrast, CBP 

guidance addresses the goals of an analysis of alternatives, but emphasizes 

the process and the documentation necessary to execute the interagency

agreement. The Coast Guard’s supplemental guidance focuses mainly on

the ordering and billing procedures for interagency agreements. However, 

none of the components we reviewed had implementing guidance for 

other types of interagency contracts. While DHS acquisition officials 

acknowledge the need to manage the risks of interagency agreements, 

some do not see other types of interagency contracting, such as the GSA 

schedules and GWACs, as needing the same type of attention and believe 

sufficient guidance is available in the FAR. In fiscal year 2005, the three 

components we reviewed spent a total of $832 million through GSA 

schedules, GWACs, and other interagency contracts (see table 1). This is a 

53 percent increase over the prior year. 

Page 8 GAO-06-996 Interagency Contracting
Table 1: Department of Homeland Security Interagency Contracting in Fiscal Year 2005 (dollars in millions) 

DHS component 

Interagency 

agreements

GSA schedules, GWACs and other

interagency contracts

Total interagency 

contracting

Office of Procurement Operations $3,463 $280 $3,743

Bureau of Customs and Border Protection 427 341 768

U.S. Coast Guard 483 211 694

Bureau of Immigration and Customs Enforcement 311 254 565

Federal Emergency Management Agency 245 255 500

Transportation Security Administration 49 82 131

U.S. Secret Service 42 31 73

Federal Law Enforcement Training Center 12 17 29

Total $5,032 $1,471 $6,503

Source: GAO analysis of DHS data. 

Note: GSA schedule amounts include blanket purchase agreements negotiated by the components to

receive volume discounts for repetitive purchases from the GSA schedule contracts. 

Additional Training Could 

Help Reduce Management 

Risks 

We have previously reported that use of interagency contracts demands a 

higher degree of business acumen and flexibility on the part of users and 

administrators than in the past, and acquisition officials need sufficient 

training and expertise to ensure the proper use of these types of contracts 

in an increasingly complex procurement environment. During our review, 

we identified several examples that showed that DHS may not have 

obtained a good value for millions of dollars in spending and indicated a 

need for improved training and expertise (see table 2). 

Page 9 GAO-06-996 Interagency Contracting
Table 2: Examples of Need for Improved Training and Expertise 

No assurance of good value Cases 

No review of purchase agreements for 

competitive prices 

CBP’s contracting officers placed seven orders totaling $51.7 million through two blanket

purchase agreements against the GSA schedules without assurance that these 

agreements were reviewed annually as required by the FAR and CBP standard 

operating procedures to ensure prices still represent the best value.a

 In one of these 

cases, program officials said that they had been using blanket purchase agreements to 

acquire information technology services for as long as 15 years, but the contracting 

officers did not determine whether the proposed orders were within the scope of the 

agreement or whether the agreements were still a good value for the department. 

Inability to recoup costs CBP terminated an order placed with a GSA schedule contractor because of lack of 

performance and sought re-procurement costs in the amount of $1.3 million. The 

contractor asserted that its performance failures were excusable, and CBP failed to refer

the dispute to the GSA contracting officer as required by the FAR. Because of this error, 

CBP was unable to pursue recovery of its costs. 

Contract files missing key documentation OPO had difficulty locating the contract files we requested for our review, and when the

files were found, they lacked key documentation such as an analysis of alternatives for 

purchases made through interagency agreements. This is consistent with OPO’s March 

2006 internal review of 10 interagency agreements totaling $114.2 million, which found 5 

lacked the required analysis of alternatives, 4 lacked a determination and findings, 8

lacked terms and conditions, and most lacked evidence that adequate contractor 

oversight was being performed. The study also found that the required sole

source/limited source justification was missing or was not well documented for orders off 

the GSA schedule. The review noted that OPO contracting officials did not seem to 

understand the significance of a thorough and complete evaluation for determining best 

value. 

Transferring funds to a franchise fund at 

year-end 

CBP transferred funds to a franchise fund late in fiscal year 2005, and, according to 

contracting and program officials, as of June 2006, the funds had not been obligated. 

CBP received $5 million in additional funding for a vehicle license plate reader program 

late in the fiscal year, and there was little time to conduct a competitive procurement 

before the end of the fiscal year. CBP used an interagency agreement to transfer the 

$5 million to GovWorks, the Department of the Interior’s franchise fund. According to the 

program manager and contracting officials, the $5 million in fiscal year 2005 funds was 

“parked” with the franchise fund until a contract could be awarded, and as of June 2006, 

the funds remained with GovWorks.b

 Franchise funds are not intended for parking funds. 

In fact, this practice has been the subject of recent DOD Inspector General reviews that 

found mismanagement of funds transferred to GSA for contracting services resulted in

DOD losing over $1 billion.c

 

Source: GAO analysis of DHS data. 

a

FAR, Subpart 8.405-3(d) and CBP’s Office of Procurement Standard Operating Procedure Number

2004-14. 

b

The term to “park” funds refers to the transfer of appropriated funds by one agency to another 

agency’s acquisition center for the procurement of goods and services under circumstances where a 

bona fide need determination is in doubt. 

c

Department of Defense, Office of the Inspector General, Acquisition: DOD Purchases Made through 

the General Services Administration, D-2005-096 (Arlington, Va.: July 29, 2005). 

Page 10 GAO-06-996 Interagency Contracting
Several contracting officials stated that additional training is needed in the

use of interagency contracts but that there was not much training 

available. In addition, other contracting officials told us that they were not 

aware of the range of available alternatives for interagency contracting.

Other Large Agencies Have 

Developed Guidance and 

Emphasized Training for 

all Types of Interagency 

Contracting 

To ensure the proper use of all types of interagency contracts, other large

procuring agencies, including DOD and the Department of Energy, have 

issued guidance to supplement the FAR and have emphasized specialized 

training. DOD is the largest user of other agencies’ contracts and the 

Department of Energy reported that it spent about $1.7 billion on other 

agencies’ contracts in fiscal year 2005—a substantial amount, but less than 

DHS. For example, DOD issued special guidance to ensure that proper 

procedures and management practices are used when using other 

agencies’ contracts including GSA schedules. The guidance requires DOD 

acquisition personnel to evaluate, using specific criteria, whether using a 

non-DOD contract for a particular purchase is in the best interest of the 

department.9

 The criteria include the contract’s ability to satisfy the 

requirements in a timely manner and provide good value. DOD’s guidance 

also emphasizes using market research to help identify the best acquisition 

approach to meet the requirement and states that the contracting officer 

should document this research.10 The Department of Energy also has 

issued guidance addressing the proper use of GSA schedules and GWACs. 

This guidance emphasizes that these contracts are not to be used to 

circumvent agency regulations and that the contracting officer should 

ensure that the original order and all future orders are within the scope of

the contract. In the case of the GSA schedules, the contracting officer 

should seek and document advice from GSA’s contracting officer on the 

proper use of the schedules whenever an issue is in doubt. 

In 2004, GSA took a step toward improving the management of GSA 

contracts and services by implementing the “Get It Right” program in part 

to secure the best value for federal agencies, improve education and 

training of the federal acquisition workforce on the proper use of GSA 

contracts and services, and ensure compliance with federal acquisition 

 9

This October 29, 2004, memo, entitled “Proper Use of Non-DOD Contracts,” was issued by 

the Acting Under Secretary of Defense (Acquisition, Technology and Logistics) and the

Principal Deputy Under Secretary of Defense (Comptroller).

10This requirement applies to procurements above the simplified acquisition threshold,

which is generally $100,000. 

Page 11 GAO-06-996 Interagency Contracting
policies, regulations, and procedures. As part of the program, DOD and 

GSA have partnered to offer updated training on the proper use of GSA 

schedules. In addition, the Department of Energy has instituted training to 

emphasize the proper use and the need for planning when using the GSA 

schedules and GWACs. 

Interagency contracts are intended to offer a simplified procurement 

process whereby users commonly rely on planning that has already been 

conducted by the agency that established the contract to ensure that the 

prices are competitive. However, our recent work, as well as the work of 

others, has found that not all interagency contracts provide good value 

when considering both timeliness and cost. This suggests the need for 

evaluating the selection of an interagency contract. According to DHS 

contracting officials the benefits of speed and convenience—not total 

value including cost—have often driven decisions to choose interagency 

contracting vehicles. As of July 2005, DHS has required an analysis of 

alternatives for all purchases. Of the 17 cases in our review, this analysis 

was only required for the four interagency agreements. None of these 

interagency agreements indicated that the required analysis was 

conducted. Without an evaluation of interagency contracting alternatives,

DHS users cannot be sure they are obtaining a good value. 

A sense of urgency has prevailed in DHS’ acquisition decision-making 

process, according to officials from the Office of Inspector General. For 

example, one official said that expediting program schedules and contract 

awards limits time available for adequate procurement planning, which 

can lead to higher costs, schedule delays, and systems that do not meet 

mission objectives.11 Eight of the 16 contracting officers we interviewed at 

OPO, CBP, and Coast Guard told us that using interagency contracts was a 

quick and convenient way to acquire needed products and services. A few 

DHS contracting officers felt that interagency contracts—in particular, 

GSA schedules—were the only viable alternatives given time constraints. 

In some cases, officials told us that it could take 4 to 6 months to establish 

and obtain goods and services through an in-house contract. In other 

DHS Did Not Always 

Assess Total Value 

When Choosing 

Interagency Contracts 

Speed and Convenience, 

Rather Than Planning and 

Analysis, Often 

Determined Contract 

Selection 

 11Testimony before a joint hearing of the Subcommittee on Economic Security, 

Infrastructure Protection, and Cyber-Security, Committee on Homeland Security, and the

Subcommittee on Criminal Justice, Drug Policy, and Human Resources, Committee on 

Government Reform, House of Representatives, on July 20, 2006; and before the Committee 

on Government Reform, House of Representatives, on July 27, 2006. 

Page 12 GAO-06-996 Interagency Contracting
cases, officials stated that purchase requests were received too close to 

the end of the fiscal year to use anything other than an interagency 

contract. None of the contracting officials said they chose to use 

interagency contracts because they also provided good value to DHS in 

terms of total cost. 

Interagency contracts are designed to be convenient to use and require 

less planning than entering into a full and open competition for a new 

contract, and users commonly rely on planning that has already been

conducted by the agency that established the contract. However, we found 

that GSA schedule prices may not always be the most competitive, and

agencies do not always obtain the required competition when using the 

schedules, thus, there is no assurance that these contracts are providing 

good value.12 In another review, we found that fees charged by the agency 

that provides the contracting service may not make these contracts costeffective in some cases. Purchasing agencies also sometimes pay fee on 

top of fee for the use of another agency’s contract because servicing 

agencies may be using other agencies’ contracts—including GSA 

schedules—to make purchases.13 Fees charged for the use of GWACs also 

range between 0.65 and 5 percent. Given these concerns, evaluating the

selection of an interagency contract is a sound management practice used 

by other large agencies. 

Pursuant to DHS acquisition policy, purchases made through interagency 

agreements require an analysis of alternatives to determine that the 

approach is in the government’s best interest; however, in the four cases 

we reviewed that fell under this requirement, there was no indication that

this analysis was performed. In one case, CBP used FedSim, one of GSA’s 

contracting service providers, to place an order for $9 million for 

information technology support for systems security. In another case, CBP 

transferred $5 million to a franchise fund for the purchase of license plate 

readers. In the two remaining cases, OPO used FedSim to place orders 

totaling about $45 million against one contract to provide information 

technology support for the Homeland Secure Data Network. In these 

examples, there was little evidence that DHS users determined whether 

this was the best method for acquiring the needed services. These findings 

are consistent with our March 2005 review, in which we did not find an 

 12GAO, Contract Management: Opportunities to Improve Pricing of GSA Multiple Award

Schedules Contracts, GAO-05-229 (Washington, D.C.: Feb. 11, 2005).

13GAO-05-456. 

Page 13 GAO-06-996 Interagency Contracting
analysis of alternatives in 94 percent of the cases where it was required. 

Recent internal reviews at OPO and CBP cited similar findings in which 

evidence that a determination of findings or an analysis of alternatives was 

conducted was missing. 

In our review of 17 cases, we also found several examples where 

contracting officers placed orders to fulfill what were perceived to be 

critical needs, for convenience without comparing alternatives, or to 

spend funds at the end of the fiscal year without obtaining competing 

proposals. While an analysis of alternatives was not required in most of 

these cases, performing such an analysis could have helped DHS users to 

address some of the known concerns about these types of contracts to 

ensure that they obtained good value for the department14 (see table 3). 

 14As of July 2005, DHS required an analysis of alternatives for all acquisitions. Because our 

review covered fiscal year 2005, which extended from October 1, 2004, to September 30, 

2005, this requirement did not apply to most of the cases in our review. 

Page 14 GAO-06-996 Interagency Contracting
Table 3: Cases with Limited Planning and No Assurance of Good Value

DHS’ decision factor Cases

Critical need We found that OPO placed $33.4 million in orders and modifications against a GSA schedule without 

obtaining competing proposals as required by the FAR. In this case, OPO used a GSA schedule to 

establish a temporary “bridge” arrangement without competition to avoid disruption of critical support 

services. The need for this arrangement became critical in December 2004 when DHS’ general counsel 

advised OPO to discontinue the contracting arrangement with the Department of Veterans Affairs, which 

provided contracting services to DHS via an interagency agreement, as the required work was grossly 

beyond the scope of the contract. To ensure that critical support services continued, DHS used GSA 

schedules to acquire services from the incumbent on a sole-source basis. This was to be a temporary 

measure for an initial amount of $18 million to continue services until OPO could establish new 

competitive contracts. However, according to the contracting officer this order had been modified 20 

times; 10 modifications, totaling $15.5 million, occurred in fiscal year 2005. As of July 2006, this 

arrangement was still being used to provide some services to DHS organizations. 

Convenience To maintain information technology services and maintain and upgrade several safety systems, in fiscal 

year 2002, the Coast Guard placed two orders with one GWAC because the contracting officer thought 

it was convenient, a timely way to complete the purchases, and thought it was probably less costly than

other options. We found that only one order contained a comparison of contracting alternatives, and 

according to the contracting officer, no analysis of fees charged for the use of the GWAC was performed

on either order. Three years later, in fiscal year 2005, the Coast Guard placed work orders against the 

original orders 47 times for a total of $19.5 million. 

Year-end spending We found two cases in which orders were placed at the end of the fiscal year without comparing 

alternatives. In one case, when placing an order for $2 million for computer equipment on September 

26, 2005, the CBP program office requested that the contracting officer place the order against a 

specific blanket purchase agreement without comparing alternatives. Both the purchase request and the

order were issued near the end of the fiscal year. 

Source: GAO analysis of DHS data. 

Recent Planning 

Requirement Does Not 

Include Evaluation Criteria 

As of July 2005 DHS has required an analysis of alternatives for all 

acquisitions, including all types of interagency contracts. DHS policy now 

states that all acquisition plans must include an analysis of alternatives 

including a discussion of why the acquisition process was chosen and the 

processes considered. The guidance states that the plan must contain 

information about the type of contract selected. However, the guidance 

does not include factors to consider or specific criteria for making a good

choice among alternative contracting options. We have found that some 

agencies have established factors to consider in making this decision. For 

example, DOD and the Department of Energy have established factors that 

incorporate considerations of value, policy and regulatory requirements, 

Page 15 GAO-06-996 Interagency Contracting
customer needs, and administrative responsibilities. Following are some of 

the factors these agencies use:15

• Value: cost (including applicable fees or service charges); whether 

using an interagency contract is in the best interest of the department. 

• Policy and regulatory requirements: departmental funding 

restrictions; departmental policies on small business, performancebased contracting, and competition. 

• Customer needs: schedule; scope of work; unique terms, conditions 

and requirements. 

• Contract administration: including oversight, monitoring, and 

reporting requirements. 

Although DHS’ spending through interagency contracting totals billions of 

dollars annually and increased by 73 percent in the past year, the 

department does not systematically monitor its use of these contracts to 

assess whether this method for acquiring goods and services is being 

properly managed and provides good outcomes for the department. While 

OCPO has established a framework for an acquisition oversight program, 

the program is not designed to assess the outcomes of different 

contracting methods including interagency contracting. According to 

officials, DHS’ acquisition oversight program has been hindered by limited

resources and authority. 

DHS does not systematically monitor spending on its interagency 

contracts, which totaled $6.5 billion in fiscal year 2005—37 percent of 

DHS’ procurement spending for that year. This type of monitoring could 

provide DHS with useful information to assess its use of this contracting 

method. For example, as part of its strategic sourcing initiative, DHS 

officials said they reviewed the component’s use of information 

technology and telecommunications contracts and determined that the 

department could achieve savings of $22.5 to $45 million in fees and 

reduced prices by establishing its own departmentwide contracts. 

However, DHS does not have available information to make comparable 

assessments for interagency contracts. For example, DHS officials were 

DHS Oversight 

Program Does Not 

Assess Outcomes of 

Interagency 

Contracting 

DHS Does Not Monitor or 

Assess Use of Interagency 

Contracting 

 15DOD memorandum dated October 24, 2004, entitled “Proper Use of Non-DOD Contracts” 

issued by the Acting Under Secretary of Defense (Acquisition, Technology and Logistics) 

and the Principal Deputy Under Secretary of Defense (Comptroller). Department of Energy

Acquisition Letter Number 2005-05 revised, dated April 26, 2005. 

Page 16 GAO-06-996 Interagency Contracting
not able to readily provide data on the amounts spent through different 

types of interagency contracts. To respond to our request for information, 

OCPO prepared a special report on the use of GSA schedules and GWACs. 

For information on interagency agreements, OCPO had to request data 

from components. Ultimately, however, we had to compile a summary and 

clarify information obtained from components. 

DHS also does not collect data on the amount of service fees paid to other 

agencies for the use of contracting services or vehicles regarding 

interagency contracting, such as the amount of service fees paid to other 

agencies, and the components, which pay the fees, also do not collect this 

data. In prior work in this area, we have found that these fees can range 

from less than 1 percent to 8 percent. In March 2005, we found that OPO, 

the largest user of interagency contracts among the components, alone 

paid $12.9 million in service fees in fiscal year 2004.16 Given that the 

volume of DHS’ interagency contracting has increased by $2.7 billion, or 

about 73 percent, since fiscal year 2004, it is likely that the fees paid also 

have increased substantially. This lack of data is not unique to DHS. 

Although the need to collect and track data on interagency contracting 

transactions has become increasingly important governmentwide, there is 

no governmentwide system to collect this data.17 In fact, the Office of 

Management and Budget has an effort underway to collect basic 

information on interagency contracting from all federal agencies. 

While each of the components we visited has established its own internal 

reviews to evaluate contracting practices, including the use of interagency

contracts, these reviews are compliance-based and are not designed to 

evaluate the outcomes of interagency contracting. For example, OPO, 

which has taken a comprehensive approach, established procedures for 

reviewing and approving procurement actions. The review includes an 

assessment of the documentation for compliance with acquisition 

regulations or policies; soundness of the acquisition strategy; use of 

business judgment; and completeness, consistency, and clarity. OPO also 

had a study completed to determine whether its contracts, task orders, 

interagency agreements, and other transactions were awarded and 

administered in compliance with procurement laws, regulations, and 

internal DHS and OPO operating policies and procedures. While the 

 16GAO-05-179. 

17GAO, Improvements Needed to the Federal Procurement Data System-Next Generation, 

GAO-05-960R (Washington, D.C.: Sept. 27, 2005). 

Page 17 GAO-06-996 Interagency Contracting
review found that much improvement was needed to comply with policies 

and procedures, it was not designed to address areas such as timeliness, 

total cost including price and fees paid, and customer service to determine 

whether a particular contract method resulted in the best outcome. 

DHS Has Begun to 

Develop an Oversight 

Program, but Is Facing 

Challenges 

In December 2005, OCPO issued a policy that provides a framework for a 

departmentwide acquisition oversight program. However, the framework 

does not evaluate the outcomes of different contracting methods, 

including interagency contracting, to determine whether the department 

obtained good value. Additionally, the Chief Procurement Officer lacks the 

authority needed to ensure the department’s components comply with its 

procurement policies and procedures that would help to establish an 

integrated acquisition function. 

The framework includes four key reviews (see table 4). According to DHS 

officials, the acquisition planning review was operational as of August 

2006, and an on-site review was ongoing at the Federal Emergency

Management Agency. DHS plans to implement the full program in fiscal 

year 2007. 

Table 4: DHS Acquisition Oversight Program 

Review Purpose 

Self assessment The head of contracting for each component assesses the 

component’s staff, processes, and programs.

Acquisition planning 

reviews 

Each component’s contracting activity annually reviews its 

programs and assesses the acquisition planning. 

Operational status 

reviews 

The Chief Procurement Officer and the head of contracting for 

each component assess, on a quarterly basis, the status of the 

acquisition function. 

On-site reviews These reviews, conducted triennially, assess each 

component’s contracting activity, strategic capability to support 

DHS’ mission, and compliance with acquisition regulations,

policies, and guiding principles. 

Source: GAO analysis of DHS data. 

According to OCPO officials, while DHS expects to track interagency

contracting through this framework, it will not gather data to determine 

whether these contracts were used effectively. For example, through the 

operational status reviews, DHS plans to track the number and dollar 

value of orders placed using interagency agreements and GSA schedules 

and GWACs. However, these reviews will not collect data on cost 

Page 18 GAO-06-996 Interagency Contracting
including the price of goods and services and fees paid, timeliness, or 

customer service, that would help them to evaluate whether specific 

interagency contracts were a good value. 

In addition, the Chief Procurement Officer, who is held accountable for 

departmentwide management and oversight of the acquisition function, 

lacks the authority and has limited resources to ensure compliance with 

acquisition policies and processes. As of August 2006, according to OCPO 

officials, only five staff were assigned to departmentwide oversight 

responsibilities for $17.5 billion in acquisitions. According to OCPO 

officials, their small staff faces the competing demands of providing 

acquisition support for urgent needs at the component level. As a result, 

they have focused their efforts on procurement execution rather than 

oversight. Officials also noted that limited resources have delayed the 

oversight program’s implementation.

DHS’ acquisition function was structured to rely on cooperation and 

collaboration among DHS components to accomplish the department’s 

goals. While this structure was intended to make efficient use of resources 

departmentwide, it has limited the Chief Procurement Officer’s ability to 

effectively oversee the department’s acquisitions, manage risks, and has 

ultimately wasted time and other resources. In our prior work, we have 

found that in a highly functioning acquisition organization, the chief 

procurement officer is in a position to oversee compliance with 

acquisition policies and processes by implementing strong oversight 

mechanisms. In March 2005, we recommended that OCPO be provided 

sufficient enforcement authority and resources to provide effective

oversight of DHS’ acquisition policies and procedures. In a 2005 review of 

the department’s organization, the Secretary focused on mission initiatives 

and, as of August 2006, has not changed the structure of the operational 

functions to provide additional authority to the Chief Procurement Officer. 

One of the largest procuring agencies in the federal government, DHS 

relies on contracts for products and services worth several billions of 

dollars to meet its complex homeland security mission. Effective 

acquisition management must include sound policies and practices for 

managing the risks of large and rapidly increasing use of other agencies’ 

contracts. While the use of these types of contracts provides speed and 

convenience in the procurement process, the agencies that manage the 

contracts and DHS users have not always adhered to sound contracting 

practices. Guidance and training that could help DHS to address risks is 

not in place; planning was not always conducted; and adequate monitoring 

Conclusions 

Page 19 GAO-06-996 Interagency Contracting
and oversight were not performed. While DHS has developed a framework 

for an oversight program, until such oversight is in place, DHS cannot be

sure that taxpayer’s dollars are being spent wisely and purchases are made 

in the best interest of the department. While the challenges to effective 

management of an acquisition function in any organization with a 

far-reaching mission are substantial, these challenges are further 

complicated at DHS by an organizational structure in which the Chief 

Procurement Officer lacks direct authority over the components. Without 

such authority, the department cannot be sure that necessary steps to 

implement improvements to its acquisition function will be taken. 

To improve the department’s ability to manage the risks of interagency 

contracting, we recommend that the Secretary of Homeland Security 

consider the adequacy of the Office of the Chief Procurement Officer’s 

resources and implement the following three actions: 

• develop consistent, comprehensive guidance, and related training to 

reinforce the proper use of all types of interagency contracts to be 

followed by all components; 

• establish, as part of the department’s planning requirement for an 

analysis of alternatives, criteria to consider in making the decision to 

use an interagency contract; and 

• implement oversight procedures to evaluate the outcomes of using 

interagency contracts. 

Because the Secretary has not taken action to ensure departmentwide 

acquisition oversight, Congress should require the Secretary to report on 

efforts to provide the Chief Procurement Officer with sufficient authority 

over procurement activities at all components. 

Recommendations for 

Executive Action 

Matter for 

Congressional 

Consideration 

Page 20 GAO-06-996 Interagency Contracting
We provided a draft of this report to DHS for review and comment. In 

written comments, DHS concurred with all of our recommendations and 

provided information on what action would be taken to address them. The 

department’s comments are reprinted in appendix III. 

Agency Comments 

and Our Evaluation 

Regarding the recommendation for guidance and training to reinforce the 

proper use of all interagency contracts, DHS stated that it will issue a 

revised management directive in the near future. This directive will require 

the reporting of data on interagency agreements. DHS also will issue 

additional direction to the components on reporting the use of other types

of interagency contracts. With regard to training, the OCPO will introduce 

specific training with respect to all types of interagency contracting for all 

contracting personnel during fiscal year 2007. With regard to establishing 

criteria to consider in making the decision to use an interagency contract, 

DHS will revise the acquisition planning guide to address this 

recommendation. With regard to implementing oversight procedures to 

evaluate the outcomes of using interagency contracts, DHS plans to 

incorporate oversight procedures assessing the proper use of interagency

contracts and agreements into its acquisition oversight program. 

Concerning the overall use of interagency contracts, the department’s 

comments stated that it is the goal of the OCPO to reduce the number and 

value of contracts awarded through the use of interagency contracts or 

agreements. This will be accomplished in part through the use of new 

departmentwide contracts for information technology equipment and 

services. We believe this is a positive step toward improving DHS’ 

contract management. 

In responding to the Matter for Congressional Consideration that the 

Secretary report on efforts to provide the Chief Procurement Officer with 

sufficient authority over procurement activities, DHS noted some steps 

that the Secretary has taken to improve acquisition oversight. 

• revised the investment review process, placing the Chief Procurement 

Officer in a key position to review and provide oversight of the 

Department’s most critical programs; 

• supported an increase of 25 OCPO positions to improve acquisition and 

management oversight; and 

• directed the Chief Procurement Officer to work with all component 

heads to report on departmentwide progress in key acquisition areas. 

While these actions should help, they do not provide the Chief

Procurement Officer with sufficient authority to ensure effective oversight 

Page 21 GAO-06-996 Interagency Contracting
of DHS’ acquisition policies and procedures, and we continue to believe 

that the Congress should require the Secretary to report on efforts to 

address this lack of authority. 

We are sending copies of this report to the Secretary of the Department of 

Homeland Security, and to other interested agencies and congressional 

committees. We will also make copies available to others upon request. In

addition, this report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

If you have any questions about this report or need additional information, 

please contact me at (202) 512-4841 (huttonj@gao.gov). Contact points for 

our Offices of Congressional Relations and Public Affairs may be found on

the last page of this report. Other staff making key contributions to this 

report were Amelia Shachoy, Assistant Director; Greg Campbell; 

Christopher Langford; Eric Mader; Bill McPhail; Russ Reiter; Karen Sloan;

and Karen Thornton. 

John P. Hutton, Acting Director 

Acquisition and Sourcing Management 

Page 22 GAO-06-996 Interagency Contracting
Page 23 GAO-06-996 Interagency Contracting
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To determine the level of interagency contracting at the Department of 

Homeland Security (DHS), we requested data from each component on 

fiscal year 2005 purchases made through all types of interagency 

contracts. We compiled a summary of purchases made through 

interagency agreements, the General Service Administration’s schedules 

and governmentwide acquisition contracts (GWAC) from the individual

reports we received from each component. We found that the Office of 

Procurement Operations (OPO), Customs and Border Protection (CBP), 

and Coast Guard were the largest users of interagency contracts in fiscal 

year 2005. Based on a review of this data, we selected 17 cases, totaling 

$245 million. Interagency contracting actions for these components 

represented a sample of GSA schedule, GWAC, and interagency 

transactions made through fee-for-service contracting providers. See table 

5. The 17 cases were selected to represent procurement actions of 

$5 million or more at three DHS components. Because our findings 

included similar problems across these activities, we believe they 

represent common problems in DHS’ procurement process. To assess the 

reliability of this data, we compared the data obtained from DHS to the 

data maintained in the Federal Procurement Data System-Next Generation

(FPDS-NG). Based upon the comparison, we determined that the data 

were sufficiently reliable for our purposes.1

To assess the extent to which DHS manages the risks of interagency

contracting, we reviewed guidance and oversight at the departmental level 

and at the three components in our sample—OPO, CBP and Coast Guard, 

and we interviewed officials in the Office of the Chief Procurement Officer 

(OCPO) and senior officials of the components under review. To 

determine how other large agencies address the management risks of 

interagency contracting, we reviewed relevant guidance and training at the

Departments of Defense and Energy. We also reviewed relevant GAO and 

Inspector General reports. 

To assess DHS planning for the use of interagency contracts, we 

conducted fieldwork at CBP’s National Acquisition Center in Indianapolis, 

Indiana; National Data Center in Springfield, Virginia; and at the Coast 

Guard’s procurement office in Norfolk, Virginia, and reviewed contract 

files and completed a data collection instrument for each of the 17 cases 

 1

We have previously reported on the shortcomings of the Federal Procurement Data

System—both the legacy and the Next Generation versions. However, the current system 

remains the most comprehensive database on federal procurement actions. 

Page 24 GAO-06-996 Interagency Contracting
Appendix I: Scope and Methodology 

we selected. We also interviewed the contracting officer, program 

manager and Contracting Officer’s Technical Representative to discuss 

each case. In conducting our review, we identified the reasons for using 

interagency contracts and the reasons for choosing a particular 

interagency contract. 

We performed our review between February and August 2006 in 

accordance with generally accepted government auditing standards. 

Page 25 GAO-06-996 Interagency Contracting
Appendix I: Scope and Methodology 

Table 5: Fiscal Year 2005 Cases Reviewed at Office of Procurement Operations, Customs and Border Protection, and Coast 

Guard

Component program Type of service

Office of Procurement Operations

Multi-office support services Support services such as financial tracking, acquisition and

human capital planning and budget support 

Homeland Secure Data Network Information technology support for Homeland Secure Data 

Network 

Homeland Secure Data Network Information technology support or Homeland Secure Data 

Network 

Protective Security Division Vulnerability Assessment Support Technical and operational services for vulnerability, 

identification and protective measures 

District of Columbia Rail Security Corridor Pilot System Security corridor on rail line near Washington, D.C. 

U.S. Visit Customer service for U.S. Visit program 

Domestic Nuclear Detection Office Science, engineering, and technical assistance support 

services 

Total Office of Procurement Operations orders

Customs and Border Protection

CBP Nationwide Onsite Information Technology SupportaInformation technology technical support services 

U.S. Visit and Automated Commercial Environment (ACE) programsbInformation technology hardware and software 

CBP Information Technology System Security Enterprise-wide information technology systems security 

support 

mySAP Business Suite Software Software license for CBP SAP products 

Applied Technology Division Inspection system for checking cargo containers 

Distributed Systems Engineering Storage Area Network 

Enhancement 

Mainframe computer storage devices 

Northern Border Initiative License Plate Reader system

Total Customs & Border Protection orders

Coast Guard 

Systems Engineering and Technical Services II Information technology engineering and technical services 

Maintenance and Technical Support Program Maintain & upgrade National VHF-FM Distress System, Vessel 

Traffic Systems and Ports and Waterway Safety System 

Information Technology Engineering and Technical Services Information technology engineering and technical services 

Total Coast Guard orders

Total all agencies

Source: GAO analysis of DHS data. 

Page 26 GAO-06-996 Interagency Contracting
Appendix I: Scope and Methodology 

Interagency contracting method 

General Services

Administration

schedules

General Services

Administration’s

FedSim 

General Services

Administration governmentwide

acquisition contract 

General Services

Administration blanket 

purchase agreement 

Interior’s

GovWorks

Total order

amount

(in millions)

z $33.4

z 23.2

z 21.9

z 14.5

z 9.8

z 9.0

z 6.0

3 2 1 1 0 $117.8

z $45.9

z 5.8

z 9.1

z 8.1

z 7.4

z 5.2

z 5.0

3 1 0 2 1 $86.5

z $21.0

z

13.7

z 5.8

0 0 3 0 0 $40.5

6 3 4 3 1 $244.8

Note: Total dollars include fiscal year 2005 orders and modifications. 

a

The total for this blanket purchase agreement includes four task orders issued in fiscal year 2005. 

b

The total for this blanket purchase agreement includes three task orders issued in fiscal year 2005. 

Page 27 GAO-06-996 Interagency Contracting
Appendix II: Department of Homeland Appendix II: Department of Homeland Security Interagency Contracting

Security Interagency Contracting 

Table 6: Interagency Contracting Methods Used by DHS 

Contracting method Description Authority

Interagency agreement Any agreement between two federal agencies in which 

one agency purchases goods or services from the other. 

These agreements are allowed by a number of 

authorities. In some cases these agreements are used 

when obtaining contracting services through governmentrun, self-supporting businesslike enterprises managed by 

federal employees, such as franchise funds like the 

Department of Interior’s GovWorks.a

 GSA’s Federal 

Systems Integration and Management Center (FedSim) 

also provides contracting services to agencies including 

access to GWACs and other types of contracts. These 

service providers charge a fee for their contracting 

services. 

The Economy Act of 1932 (31 U.S.C. 

1535). This authority applies to 

interagency agreements for which more 

specific statutory authority does not 

exist. 

The Government Management Reform 

Act of 1994 (P.L. 103-356, § 403) 

authorized the Office of Management 

and Budget to designate six federal 

agencies to establish franchise funds. 

GSA’s FedSim derives its authority from 

the Brooks Act (40 U.S.C. 1101 et seq.) 

as amended. 

GSA schedules Under the GSA schedules program, GSA negotiates 

contracts with vendors for a wide variety of goods and 

services at varying prices. These contracts permit other 

agencies to place orders directly with the vendors, 

providing agencies with a simplified process of acquiring 

goods and services while obtaining volume discounts. 

Federal Property and Administrative 

Services Act of 1949 (P.L. 94-519, 

§ 102); Federal Acquisition Regulation 

Subpart 8.4. 

Blanket purchase agreement This contracting arrangement provides a simplified 

method of filling anticipated repetitive needs for supplies 

and services, allowing agencies to establish “charge 

accounts” with qualified vendors that can be GSA 

schedule contractors. 

Federal Acquisition Regulation 8.405-3

and 13.303. 

Governmentwide acquisition 

contract 

A GWAC is a task or delivery order contract for 

information technology established by one agency for 

governmentwide use. The purchasing agency can either 

order directly from a GWAC, as with the GSA schedules, 

or request the GWAC executive agent to provide 

contracting services for a fee. These services can range 

from limited contracting assistance to an approach in

which the executive agent handles all aspects of the 

procurement. 

Clinger-Cohen Act of 1996 (40 U.S.C. 

11302). This act gives the Office of 

Management and Budget the authority 

to designate federal agencies as 

executive agents for GWACs. 

Source: GAO analysis.

a

Franchise fund enterprises are a type of intragovernmental revolving fund, all of which have similar 

legal authority and operations and are generally created to provide common administrative services. 

An intragovernmental revolving fund is established to conduct continuing cycles of businesslike 

activity within and between government agencies. An intragovernmental revolving fund charges for 

the sale of goods or services and uses the proceeds to finance its spending, usually without the need 

for annual appropriations. 

Page 28 GAO-06-996 Interagency Contracting
Appendix III: Comments from the Department Appendix III: Comments from the of Homeland Security

Department of Homeland Security 

Page 29 GAO-06-996 Interagency Contracting
Appendix III: Comments from the Department 

of Homeland Security

Page 30 GAO-06-996 Interagency Contracting
Appendix III: Comments from the Department 

of Homeland Security

Now on page 20 

Page 31 GAO-06-996 Interagency Contracting
Appendix III: Comments from the Department 

of Homeland Security

Page 32 GAO-06-996 Interagency Contracting (120526) 
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