DEPARTMENT OF HOMELAND SECURITY 

Office of Inspector General 

DHS’ Management of 

Automated Procurement Systems 

Needs Improvement 

Office of Information Technology 

OIG-06-46 July 2006
Office of Inspector General 

U.S. Department of Homeland Security 

Washington DC 20528

 July 10, 2006 

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment 

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

effectiveness, and efficiency within the department. 

This report assesses the effectiveness of the information technology systems being used 

by the DHS Office of Chief Procurement Officer to provide oversight of Hurricane 

Katrina-related procurements. It is based on interviews with employees and officials of 

relevant agencies and institutions, direct observations, and a review of applicable 

documents. 

The recommendations herein have been developed to the best knowledge available to our 

office, and have been discussed in draft with those responsible for implementation. It is 

our hope that this report will result in more effective, efficient, and economical 

operations. We express our appreciation to all of those who contributed to the preparation 

of this report. 

Richard L. Skinner 

Inspector General 
Table of Contents/Abbreviations 

Executive Summary...................................................................................................... 1 

 Background................................................................................................................... 2 

Results of Audit ............................................................................................................ 3

DHS Needs an Effective IT System to Monitor 

Procurements Department-wide............................................................................3 

Recommendations.................................................................................................6 

Weaknesses In Internal Control Processes For 

Procurement Related Information Technology Systems ..................................... 8 

Recommendations...............................................................................................10 

Appendices 

Appendix A: Purpose, Scope, and Methodology .................................................... 11 

Appendix B: Management’s Response to Draft Report ......................................... 13 

 Appendix C: Procurement Reporting Requirements .............................................. 16 

Appendix D: Major Contributors to the Report ...................................................... 18 

Appendix E: Report Distribution............................................................................ 19 

Abbreviations 

CPO Chief Procurement Officer 

DHS Department of Homeland Security 

eMerge2 Electronically Managing Resources for Government Efficiency 

and Effectiveness 

FAR Federal Acquisition Regulation 

FEMA Federal Emergency Management Agency 

FPDS-NG Federal Procurement Data System – Next Generation 

FY Fiscal Year 

GAO Government Accountability Office 

GSA General Services Administration 

HCIC Hurricane Contracting Information Center 

HHS Department of Health and Human Services 

HSAM Homeland Security Acquisition Manual 

HSCIS Homeland Security Contract Information System

HSOC Homeland Security Operations Center 

IT Information Technology 

OCIO Office of Chief Information Officer 

OCPO Office of Chief Procurement Officer 

OIG Office of Inspector General 

DHS’ Management of Automated Procurement Systems Needs Improvement 
Table of Contents/Abbreviations 

OMB Office of Management and Budget 

OSDBU Office of Small and Disadvantaged Business Utilization 

USG United States Government 

DHS’ Management of Automated Procurement Systems Needs Improvement 
OIG 

Department of Homeland Security 

Office of Inspector General 

Executive Summary 

We audited the Department of Homeland Security (DHS) Office of 

the Chief Procurement Officer (OCPO) to determine the 

effectiveness of the information technology (IT) systems used to 

oversee Hurricane Katrina-related procurements. We also 

performed a limited review of internal control processes associated 

with information security as well as capital planning and 

investment control requirements. This audit included a review of 

applicable DHS policies, procedures, and other appropriate 

documentation. 

We determined that DHS does not have a comprehensive IT 

system that can provide reliable information on procurements 

related to DHS’ response to Hurricane Katrina. DHS is required to 

collect and report procurement data, including data related to 

Hurricane Katrina, to the Federal Procurement Data System – Next 

Generation (FPDS-NG).1 However, DHS has not completed its 

plans to provide timely and accurate procurement data to 

FPDS-NG. Responding to requests for real-time reporting of 

procurement data, the OCPO implemented a management process 

to capture procurement data related to DHS’ response to Hurricane 

Katrina. This management process resulted in a series of electronic 

spreadsheets that the OCPO provided as weekly reports, titled 

Katrina USG Direct Presidential Report.2

 However, we 

determined that the OCPO could not assure the validity of the data 

in these spreadsheets. Therefore, DHS management and the public 

could not depend on the information in these spreadsheets for an 

accurate accounting of the Hurricane Katrina recovery efforts. 

1 The General Services Administration (GSA) is the system steward for FPDS-NG. 2

 The OCPO developed spreadsheets, Katrina United States Government (USG) Direct Presidential Report, 

were provided to the Hurricane Contracting Information Center (HCIC), the public, the Under Secretary for 

Management, DHS-Office of Inspector General (OIG), and the Homeland Security Operations Center 

(HSOC). The HSOC used these spreadsheets to develop briefing documents that were provided to the DHS 

Secretary and the White House. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 1 
We also identified weaknesses in internal controls related to 

information security as well as capital planning and investment 

control requirements. Specifically, DHS has not established the 

required interconnection security agreements for the connections 

between contract-writing systems and the Homeland Security 

Contract Information System (HSCIS).3 By not establishing 

interconnection security agreements, the OCPO is increasing the 

risk to the confidentiality, integrity, and availability of agency 

procurement data. Additionally, the DHS OCPO is issuing 

guidance and strategic plans that establish a specific 

contract-writing system as the enterprise-wide solution without 

having performed the required benefit-cost analysis. Without a 

benefit-cost analysis, DHS risks spending money on projects that 

have a projected return on the investment that is not equal to or 

better than alternative uses of available public resources. 

Background 

The Chief Procurement Officer (CPO) is responsible for the 

collection of accurate, timely, and complete acquisition and 

financial assistance data.4 Additionally, DHS assigned to the CPO 

the responsibility for ensuring that DHS procurement data is 

reported timely and accurately to FPDS-NG. The CPO also has the 

shared responsibility and accountability for designing optimum 

Department-wide integrated systems to continuously improve 

mission support. Further, the CPO is responsible for developing an 

integrated procurement system based on human resources, 

enhanced business processes, and automation across the 

Department. 

Hurricane Katrina struck the Gulf Coast in late August 2005 as an 

extraordinarily powerful and deadly hurricane that carved a wide 

swath of catastrophic damage and inflicted a large loss of life. 

Hurricane Katrina was the costliest, and one of the five deadliest, 

hurricanes to ever strike the United States. Since September 2005, 

the OCPO has collected and reported on contracts awarded to 

assist with the Hurricane Katrina recovery efforts. DHS senior staff 

and other stakeholders requested data on contracts that had been 

awarded to expedite the Hurricane Katrina recovery efforts. The 

OCPO collected procurement data and produced weekly reports to 

satisfy these requests. We reviewed these weekly reports on 

3

 The Department of Health and Human Services (HHS) operates the HSCIS. 4

 Delegation Number 0700, Delegation To The Chief Procurement Officer For Acquisition And Financial 

Assistance Management 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 2 
Hurricane Katrina-related contracts to assess the accuracy of the 

data in DHS’ procurement systems. 

Results of Audit 

DHS Needs an Effective IT System to Monitor Procurements 

Department-wide 

DHS senior staff need accurate and timely procurement data in 

order to provide oversight of the billions of dollars spent on the 

Hurricane Katrina recovery efforts. However, DHS does not have a 

comprehensive IT system that provides reliable real-time reporting 

of Hurricane Katrina-related procurements. In response to requests 

from DHS senior staff, the OCPO developed ad hoc electronic 

spreadsheets to provide the most current information on 

procurements related to the Hurricane Katrina recovery efforts. 

However, we identified errors in these spreadsheets that suggest 

that the procurement data reported was not reliable. As a result, the 

OCPO could not ensure the validity of Katrina-related procurement 

data in its report to DHS senior staff and the public. 

FPDS-NG Participation Efforts 

DHS does not have a comprehensive IT system for procurement 

because it has not completed its FPDS-NG participation efforts. 

These participation efforts are to include (1) the direct connection 

of DHS contract writing systems to FPDS-NG and (2) the enabling 

of real-time information gathering and access by FPDS-NG. 

However, not all DHS components have a direct connection to 

FPDS-NG and the OCPO has not taken sufficient steps to ensure 

that data is entered accurately and timely into FPDS-NG. 

Therefore, FPDS-NG could not be used for real-time reporting of 

DHS procurement actions. 

Government agencies are required to have contract-writing 

systems that are capable of electronic transfer of procurement data 

directly to FPDS-NG. However, only two DHS procurement 

offices had contract-writing systems that were transferring data 

directly to FPDS-NG.5 Other DHS contract-writing systems were 

not directly connected to FPDS-NG because DHS had mandated 

the use of HSCIS as a feeder system to FPDS-NG.6

 Further, the 

5

 The United States Coast Guard and the Federal Air Marshal Service 6

 In August 2003, the DHS CPO mandated the use of HSCIS as a transitional step towards standardized 

reporting procedures and in preparation for directly reporting procurement information to FPDS-NG 

beginning in Fiscal Year (FY) 2005. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 3 
Federal Law Enforcement Training Center, the Transportation 

Security Administration, and Customs and Border Protection have 

not directly connected their contract-writing systems to either 

HSCIS or FPDS-NG. Contracting staff for these three components 

are required to manually enter contract information into HSCIS. 

This additional step may cause delays in reporting of procurement 

data to FPDS-NG. 

The DHS plan to transfer data directly to FPDS-NG included the 

implementation of a single, agency-wide contract-writing system 

that would be directly connected to FPDS-NG. The 

implementation of an agency-wide contract-writing system was a 

part of the DHS Electronically Managing Resources for 

Government Efficiency and Effectiveness (eMerge2) project. 

eMerge2 is DHS’ effort to integrate over 100 systems used to 

support a variety of administrative activities such as accounting, 

acquisition, budgeting, and procurement. However, the efforts of 

the eMerge2 prime contractor were canceled in January 2006 and 

an enterprise-wide contract writing system has not yet been 

implemented. 

Additionally, the CPO had not taken all available actions to ensure 

that DHS data was entered into FPDS-NG in a timely fashion. For 

example, the CPO had not established performance measures to 

ensure that procurement actions are entered into FPDS-NG in a 

timely fashion.7 Further, the OCPO also has not updated the 

Homeland Security Acquisition Manual (HSAM) to require that 

(1) contracts to be entered into the collection system within 3 days 

of contract award and (2) contract-writing systems to be connected 

directly to FPDS-NG.8 

Reporting of Hurricane Katrina Related Procurements 

The OCPO developed ad hoc spreadsheets on Katrina-related 

contracts in response to DHS management requests, and because 

the FPDS-NG could not be relied upon for up-to-date information 

on DHS procurements. These spreadsheets were based on 

procurement information that DHS components provided on a 

weekly basis from their separate paper-based and contract-writing 

systems. The OCPO instituted a process to consolidate this 

procurement data into a series of spreadsheets that they forwarded 

to various stakeholders in a weekly email titled Katrina USG 

7

 Management Directive 0003, Acquisition Line of Business Integration and Management, provides the

CPO with the authority to establish performance metrics in the acquisition area. 8 FPDS-NG Reporting Manual, Version 1, 2005, Section 1.1.1 requires procurement data to be entered into

FPDS-NG within 3 days of contract award.

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 4 
Direct Presidential Report. For example, the spreadsheets for the 

week of January 23, 2006 showed a total of $9.294 billion in 

Hurricane Katrina-related contracts that had been awarded by the 

Federal government since August 2005. DHS awarded $4.919 

billion (53%) of these Hurricane Katrina-related contracts. 

We reviewed the OCPO’s efforts to consolidate the procurement 

data from the components into the weekly spreadsheets. Based 

upon our review, we identified errors in these weekly spreadsheets, 

including the inconsistent reporting of data and the double 

counting of some procurement transactions. As a result, the OCPO 

could not ensure the validity of Katrina-related procurement data 

in its report to DHS and the public. 

Reporting of Data in the Spreadsheets Needs to be Consistent 

The OCPO did not consistently report all Katrina-related 

procurements in spreadsheets provided to DHS and the public. 

Specifically, the OCPO did not report all Hurricane Katrina-related 

contracts identified as purchase card transactions. For example, in 

the January 23, 2006 weekly spreadsheet, the OCPO included a 

total of $6,863,019 in purchase card transactions.9 However, in the 

same weekly report, the OCPO excluded a total of $25,872,504 in 

purchase card transactions.10 The OCPO did not report all purchase 

card transactions because those developing the spreadsheets lacked 

adequate guidance for reporting transactions, thus leading to 

inconsistent interpretations. 

A reason that the weekly spreadsheets were not consistent is due to 

the lack of standard definitions for the data in these documents. For 

example, identification of small business contractors was not 

always consistent. Specifically we identified approximately 

$521 million in contracts that were listed as being awarded to a 

small business starting in September 2005. However, this 

contractor was reclassified as ‘other than small business’ in 

January 2006. We also identified numerous examples in the 

weekly spreadsheets where the same contractor had varying names 

or addresses. 

9

 This $6,863,019 was the total of $6,578,344 and $284,675 in purchase card transactions from Customs 

and Border Protection and Immigration and Customs Enforcement, respectively. 10 This $25,872,504 was the total of $20,614,502 and $5,258,002 in purchase card transactions from the 

Federal Emergency Management Agency (FEMA) and the United States Coast Guard, respectively. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 5 
Double Counting of Procurements in the Spreadsheets 

We identified 241 contracts, totaling $242 million, which were 

counted twice in the January 23, 2006 weekly spreadsheets. 

Specifically, the OCPO double counted contracts awarded by the 

General Services Administration (GSA), acting as Federal 

Emergency Management Agency’s (FEMA) contracting officer. 

These contracts had been separately reported to both FEMA and 

FPDS-NG. 

OCPO staff are aware of the types of problems we identified with 

the spreadsheets and have implemented a quality assurance process 

to remediate the errors in the spreadsheets. According to OCPO 

officials, this remediation process identified additional duplicate 

entries in the weekly reports. For example: 

• FEMA had reduced the dollar amount of its Katrina-related 

contracts in the weekly reports from $4.048 billion for the 

week of October 28, 2005 to $3.124 billion for the week of 

November 4, 2005. This reduction included the elimination 

of $777 million in duplicate transactions. 

• In November 2005, the United States Coast Guard also had 

identified duplicates and reduced the dollar amount of its 

procurements from $85 million to $55 million. 

• From January to March 2006, the OCPO has been engaged 

in discussions with GSA to identify and remove data on 

contracts that were counted twice. 

Recommendations 

We recommend that the DHS CPO establish a process to: 

1. Ensure that procurement information is entered accurately into 

FPDS-NG within three days of contract award so that the 

OCPO can discontinue the use of the ad hoc spreadsheets. 

2. Discontinue the use of HSCIS as a feeder system to FPDS-NG. 

3. Update the HSAM to be consistent with government-wide 

procurement policy guidance. 

Management Comments and OIG Analysis 

DHS concurs with recommendation 1 that information should be 

entered into the FPDS-NG accurately and within a timely manner. 

However, according to DHS, the HSAM 3004.601 requirement for 

data to be entered within 30 days is compatible with the Federal 

Acquisition Regulation (FAR). In their response, DHS cites 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 6 
FAR 4.601(d), stating that this section of the FAR requires that 

data be transmitted to FPDS in accordance with agency policy. 

While FAR.4.601(d) does not address this topic, FAR 4.601(f) 

requires that “Agencies must transmit this information to the 

Federal Procurement Data System in accordance with its 

procedures,” that is, procedures of the FPDS-NG. We disagree 

with DHS’ interpretation that the term “its procedures” refers to 

the agencies’ procedures. Accordingly, we continue to believe that 

procurement information should be entered into FPDS-NG within 

3 days of contract award. 

DHS concurs with recommendation 2. The OCPO intends to 

discontinue the use of HSCIS in Fiscal Year (FY) 2007. According 

to the OCPO, HSCIS as a system has never been an impediment to 

efficient, timely reporting of DHS procurement actions. Further, 

the OCPO states that HSCIS has provided DHS with reliable data 

extraction and report tools for numerous management reports and 

external information requests when this critical, basic functionality 

was missing in FPDS-NG. OCPO stated that recent enhancements 

to FPDS-NG are now providing this capability and OCPO’s intent 

is to discontinue using HSCIS effective October 1, 2006. 

DHS did not agree with recommendation 3. While the OCPO 

stated that the HSAM 3004.601 is compatible with the 

FAR 4.601(d), this section of the FAR does not address this topic. 

Additionally, DHS noted that our report cites a draft version of the 

FPDS-NG Reporting Manual (Version 1, 2005) as the source for 

the 3-day data entry requirement. However, the OCPO also stated 

that the HSAM would be updated to reflect a 3-day entry 

requirement when the draft FPDS-NG Manual is officially 

updated. 

Subsequent to our receipt of DHS’ management comments on this 

report, the OCPO acknowledged that the FPDS-NG Reporting 

Manual has been officially issued with the requirement that 

procurement actions be entered into FPDS-NG within 3 days of 

contract award. Accordingly, we expect that DHS will take the 

necessary steps to ensure that FPDS-NG can and will be used for 

real-time reporting of DHS procurement actions. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 7 
Weaknesses In Internal Control Processes For Procurement Related 

Information Technology Systems 

We identified weaknesses in internal controls related to 

information security as well as capital planning and investment 

control requirements that impact procurement oversight. 

Specifically, the OCPO did not complete the required 

interconnection security agreements for system interconnections 

between contract-writing systems and HSCIS. The OCPO also did 

not conduct a benefit-cost analysis when selecting an agency-wide 

contract-writing system. 

Lack of Interconnection Security Agreements 

OCPO did not establish interconnection security agreements prior 

to connecting DHS procurement computer systems to HSCIS. 

Specifically, interconnection security agreements did not exist for 

the connection between HSCIS and contract-writing systems 

operated by the OCPO and FEMA. The interconnection security 

agreements were not established because (1) the OCPO was 

unaware of this security requirement and (2) HSCIS was not in the 

Office of the Chief Information Officer’s (OCIO) system inventory 

because it is a Department of Health and Human Services (HHS) 

system. 

An OCIO official told us that the OCPO contract-writing system is 

undergoing the certification and accreditation process, and the 

interconnection security agreements will be established as part of 

that process. Similarly, HHS officials told us that HSCIS was also 

undergoing certification and accreditation, and that the required 

interconnection security agreements would be established. 

Office of Management and Budget (OMB) Circular A-130, 

Management of Federal Information Resources, states that 

agencies are to obtain written management authorization before 

connecting their IT systems to other systems. Furthermore, DHS 

Sensitive Systems Policy Publication 4300A, Information 

Technology Security Program, and the National Institute of 

Standards and Technology Special Publication 800-47, Security 

Guide for Interconnecting Information Technology Systems, state 

that the interconnection with other networks is to be documented 

with an interconnection security agreement. The written 

authorization should define the rules of behavior and controls that 

must be sustained for the information system interconnection. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 8 
By not establishing interconnection security agreements, the 

OCPO is increasing the risk to the confidentiality, integrity, and 

availability of agency procurement data. For example, if the 

interconnection is not properly designed, security failures could 

compromise the connected systems and the data that they store, 

process, or transmit. Similarly, if one of the connected information 

systems is compromised, the interconnection could be used as a 

conduit to compromise the other system and its data. The potential 

for compromise is underscored by the fact that, in most cases, the 

participating organizations have little or no control over the 

operation and management of the other party’s system. Thus, if 

information system security oversight roles and responsibilities are 

not clearly defined, there is an increased risk to the confidentiality, 

integrity, and availability of DHS procurement data. 

Benefit-Cost Analysis Was Not Performed Prior to Selection of 

a Procurement-Related System 

The OCPO selected an enterprise-wide contract-writing system 

without performing a benefit-cost analysis prior to making the 

selection.11 By not completing a benefit-cost analysis, the OCPO 

cannot ensure that it has selected the most cost-effective solution 

for its procurement system requirements. 

OCPO officials told us that a benefit-cost analysis was not required 

because several DHS components had independently selected the 

same contract-writing system. However, OMB Circular A-130 

requires a benefit-cost analysis to be commensurate with the size 

of the procurement. Therefore, a benefit-cost analysis for a 

component level system would not be sufficient for an 

enterprise-wide system such as that proposed for DHS. OCPO 

officials also told us that the contract-writing system was a part of 

the eMerge2 contract. However, on January 11, 2006 DHS 

cancelled the eMerge2 contract before the implementation of a 

contract-writing system. Additionally, OCIO officials told us that 

while the eMerge2 contractor had recommended the contractwriting system for eMerge2, the proposed solution was not 

selected, and a benefit-cost analysis was not performed. 

OMB Circular A-130 requires that agencies establish and maintain 

a capital planning and investment control process that links 

mission needs, information, and information technology in an 

effective and efficient manner. The Department’s processes are 

11 We have previously reported on other capital planning and investment control deficiencies at DHS in 

Management of the DHS Wide Area Network Needs Improvement (Report Number OIG-06-20, December 

2005), page 11. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 9 
detailed in the DHS Guide to Information Technology Capital 

Planning and Investment Control, dated May 2003. Both 

OMB Circular A-130 and the DHS guide require a benefit-cost 

analysis to be performed prior to selection of a solution. 

Recommendations 

We recommend that the DHS CPO, in coordination with the Chief 

Information Officer: 

4. Develop the required interconnection security agreements for 

DHS’ contract-writing systems and have them signed by the 

appropriate Designated Approving Authorities. 

5. Develop an appropriate benefit-cost analysis prior to the 

selection of an enterprise-wide contract-writing system. 

Management Comments and OIG Analysis 

OCPO concurred with recommendation 4 and has referred this 

recommendation to the Office of the Chief Information Officer for 

joint consideration. OCPO has also concurred with 

recommendation 5 and stated that the eMerge2 OMB 300 and 

corresponding business case includes PRISM, and will fully 

address the benefit-cost analysis. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 10 
Appendix A 

Purpose, Scope, and Methodology 

Purpose, Scope, and Methodology 

Following discussions with the Secretary of DHS, we updated our 

annual performance plan to include a review of information 

technology procurement systems.

 12 Following the Hurricane 

Katrina disaster, the objective of this planned audit was modified 

to focus on the procurement related IT systems involved in the 

Katrina recovery effort. 

The objective of this audit was to evaluate the effectiveness of the 

IT systems being used by the OCPO to provide oversight of 

Hurricane Katrina-related procurements. Specifically, we focused 

our efforts on determining whether the OCPO is effectively and 

efficiently: (1) compiling its inventory of Hurricane 

Katrina-related procurements; (2) tracking these procurements; and 

(3) reporting the status of these procurements. 

During our audit fieldwork, the OCPO was compiling spreadsheets 

to report on Katrina-related procurements. We analyzed these 

spreadsheets to determine if they were accurate and complete. We 

also performed fieldwork to determine why DHS could not rely on 

FPDS-NG for these reports. In addition, we reviewed the status of 

the OCPO’s plans to fully participate in FPDS-NG. 

During our audit work we also identified weaknesses in two areas 

of internal controls associated with the operation and development 

of IT procurement systems. We expanded our fieldwork in order to 

confirm and document our initial observations. This expanded 

fieldwork included contacts with the OCIO, HHS and GSA. We 

also identified a DHS contract specialist that reported having a 

problem since December 2004 with a contract-writing system. We 

contacted the OCIO, reported the problem, and confirmed that the 

identified resolution was successfully implemented. 

We reviewed DHS policies, procedures, documentation, and prior 

audit reports. We analyzed various procurement reports and 

spreadsheets. We interviewed key government and contractor 

personnel, and reviewed Government-wide rules and regulations 

that were relevant to this audit. Fieldwork was performed at DHS 

facilities in the Washington, DC area. 

12 Department of Homeland Security Office of Inspector General Fiscal Year 2005 Annual Performance 

Plan (Revised May 2005), Chapter 6, Special Performance Initiatives: DHS Procurement Systems 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 11 
Appendix A 

Purpose, Scope, and Methodology 

We provided the OCPO and FEMA with briefings concerning the 

results of fieldwork, including the identified deficiencies in 

internal controls, as well as the other information summarized in 

this report. We conducted this audit between November 2005 and 

March 2006. 

We performed our work according to generally accepted 

government auditing standards and pursuant to the Inspector 

General Act of 1978, as amended. 

We appreciate the efforts by DHS management and staff to provide 

the information and access necessary to accomplish this audit. The 

Office of Inspector General (OIG) points of contact for this report 

are Frank Deffer, Assistant Inspector General for Information 

Technology (202) 254-4100 and Roger Dressler, Director for 

Information Systems and Architectures (202) 254-5441. Major 

OIG contributors to the audit are identified in Appendix D. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 12 
Appendix B 

Management’s Response to Draft Report 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 13
Appendix B 

Management’s Response to Draft Report 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 14
Appendix B 

Management’s Response to Draft Report 

Now recommendation #4: 

Now recommendation #5: 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 15
Appendix C 

Procurement Reporting Requirements 

The Federal Acquisition Regulation, Volume 1, Section 4.602 

states that FPDS-NG will be used as the basis for recurring and 

special reports to the President, the Congress, the Government 

Accountability Office (GAO), Federal executive agencies and the 

general public. FPDS-NG became operational October 1, 2003. 

OCPO, through Acquisition Alert 03/02A, required all DHS 

components to connect their contract-writing systems to HSCIS, 

which also became available October 1, 2003.13 Acquisition 

Alert 03/02A further stated that the deployment of HSCIS was a 

transitional step to prepare DHS components for direct reporting of 

procurement information to FPDS-NG beginning in FY 2005. 

While Acquisition Alert 03/02A was only effective until 

September 30, 2004, the requirement to use HSCIS as a feeder 

system to FPDS-NG is still included in HSAM Section 3004.602. 

In December 2003, GAO expressed concerns about the accuracy of 

procurement data in FPDS-NG.14 This report also stated that: 

“Reliable information is critical to informed decision making 

and to oversight of the procurement system. FPDS has been the 

federal government’s central database of information on 

federal procurement actions since 1978. Congress and 

executive branch agencies rely on FPDS to assess the impact 

that governmentwide acquisition policies and processes are 

having on the system generally, as well as with respect to 

specific geographical areas, markets, and socio-economic 

goals.” 

In August 2004, OMB requested that Government agencies 

(1) designate a person responsible for ensuring full participation in 

FPDS-NG and (2) develop plans and schedules to ensure the 

timely and accurate reporting of procurement data to FPDS-NG.15 

In response, DHS designated the CPO to be responsible for full 

participation in FPDS-NG. DHS also provided a plan that included 

the implementation of a single, agency-wide, contract-writing 

system capable of electronic transfer of all procurement 

information in real-time to FPDS-NG by the end of FY 2005. 

13 Acquisition Alert – Number 03/02A: Homeland Security Contract Information System (HSCIS) and 

Federal Procurement Data System-Next Generation (FPDS-NG), states that DHS components are to report 

contract/procurement actions, with the exception of purchase card transactions, via HSCIS until such time 

as DHS makes a determination for the agency and any of its organizational elements to report to FPDS-NG 

directly. 14 GAO-04-295R, Reliability of Federal Procurement Data, December 30, 2003 15 OMB Memorandum: Timely and Accurate Procurement Data, August 25, 2004 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 16
Appendix C 

Procurement Reporting Requirements 

However, HSCIS and FPDS-NG collection systems were not able 

to provide timely information on procurements. Therefore the 

OCPO requested that DHS components provide weekly 

spreadsheets that documented their Katrina-related procurements. 

The Office of Small and Disadvantaged Business Utilization 

(OSDBU) also provided a chart that shows sub-contracting 

information related to only four large contractors.16 

The procurement data provided by the DHS components is then 

consolidated by the OCPO and FEMA into a weekly report that 

contains (1) a spreadsheet with detailed information about FEMA 

contracts awarded, (2) a spreadsheet summarizing all DHS awards 

(including FEMA), and (3) the sub-contracting information 

provided by OSDBU. The DHS spreadsheets and the OSDBU 

chart are then forwarded to the Hurricane Contracting Information 

Center (HCIC). In addition, the OCPO publishes the FEMA 

spreadsheet on a publicly accessible website.17 

The HCIC adds the DHS information into a spreadsheet 

summarizing the Government-wide Katrina-related procurements. 

This new spreadsheet is then provided to the DHS OCPO. The 

OCPO then provides the Government-wide, DHS-wide, and the 

FEMA spreadsheets, along with the OSDBU chart, as the weekly 

Katrina USG Direct Presidential Report to the Under Secretary for 

Management, DHS OIG auditors, and the Homeland Security 

Operations Center (HSOC). The HSOC includes this weekly report 

in briefing documents that are provided to the Secretary of DHS 

and the President. 

16 Bechtel, CH2M Hill, Fluor Enterprises, and Shaw Group 17 http://www.dhs.gov/interweb/assetlibrary/CPO-KatrinaContracts.pdf. 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 17
Appendix D 

Major Contributors to the Report 

Information Systems and Architectures Division 

Roger Dressler, Director 

Kevin Burke, Audit Manager 

Beverly Dale, Senior Auditor 

Domingo Alvarez, Auditor 

Matthew Worner, Program Analyst 

Steve Ressler, Referencer 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 18 
Appendix E 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Assistant Secretary, Policy 

Under Secretary, Management 

Assistant Secretary, Public Affairs 

Assistant Secretary, Legislative and Intergovernmental Affairs 

Chief Procurement Officer 

DHS GAO OIG Audit Liaison 

Chief Procurement Officer, Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

DHS’ Management of Automated Procurement Systems Needs Improvement 

Page 19
Additional Information and Copies 

To obtain additional copies of this report call the Office of Inspector General 

(OIG) at (202) 254-4100; fax your request to (202) 254-4285; or, visit the 

OIG web site at www.dhs.gov/oig. 

OIG Hotline 

To report alleged fraud, waste, abuse or mismanagement, or any other kind 

of criminal or noncriminal misconduct relative to department programs or 

operations, call the OIG Hotline at 1-800-323-8603; write to DHS Office of 

Inspector General/MAIL STOP 2600, Attention: Office of Investigations – 

Hotline, 245 Murray Drive, SW, Building 410, Washington, DC 20528; fax 

the complaint to (202) 254-4292; or, email DHSOIGHOTLINE@dhs.gov. The 

OIG seeks to protect the identity of each writer and caller.