DEPARTMENT OF 

HOMELAND 

SECURITY

Further Action 

Needed to Improve 

Management of 

Special Acquisition 

Authority

Report to Congressional Committees

May 2012

GAO-12-557

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-557, a report to 

congressional committees 

May 2012 

DEPARTMENT OF HOMELAND SECURITY 

Further Action Needed to Improve Management of 

Special Acquisition Authority

Why GAO Did This Study

When DHS was created in 2002, 

Congress granted it special acquisition 

authority to use “other transaction” 

agreements, which are special vehicles 

used for research and development or 

prototype projects. Unlike conventional 

contracts, other transaction 

agreements offer flexibilities to reach 

entities that traditionally have not done 

business with the government. They 

have risks, however, because they are 

exempt from the Federal Acquisition 

Regulation and other requirements. 

The Homeland Security Act of 2002 

required GAO to report on the use of 

other transactions by DHS. In 2004 

and 2008, GAO reported on challenges 

DHS faced. This report covers (1) the 

DHS Science and Technology 

Directorate’s use of other transactions, 

(2) DHS’s progress in addressing 

challenges, and (3) the information 

collected on the use of the authority 

and reported to Congress. GAO 

examined all 27 available other 

transaction agreement files, reviewed 

DHS’s other transaction policies and 

procedures, and interviewed cognizant 

officials. 

What GAO Recommends

GAO recommends that DHS 

(1) develop an action plan with specific 

time frames for fully implementing 

GAO’s prior recommendation on data 

collection and congressional reporting, 

(2) ensure full implementation of its 

guidance regarding documentation, 

and (3) establish a policy for reviewing 

the circumstances that permit the use 

of other transaction authority

throughout the life of the agreement. 

DHS agreed with these 

recommendations.

What GAO Found

In the last 8 years, the Department of Homeland Security’s (DHS) Science and 

Technology Directorate has used its special acquisition authority to enter into 58 

“other transaction” agreements. Use of the authority has declined since 2005. 

DHS officials said the decline is due to uncertainty about the agency’s continuing 

authority to enter into these agreements, among other things. 

Use of Other Transactions, Fiscal Years 2004-2011 

DHS has made progress in addressing challenges and prior GAO 

recommendations related to its use of other transaction agreements in five areas. 

Steps Taken to Address Challenges and Prior GAO Recommendations

Include audit 

provisions 

Document 

lessons 

learned

Identify 

workforce 

training

Conduct a 

workforce 

assessment 

Collect 

relevant data

Status in 2008 ◐  ◐ First cited in 2008

First cited 

in 2008

Status in 2012  ◐ ◐  

Legend: Implemented; ◐Steps taken, but not fully implemented;  No action. 

Source: GAO analysis. 

GAO’s analysis of DHS’s files and reports to Congress found gaps in the 

collection and reporting of information on other transactions. Specifically: 

• DHS does not consistently document the rationale for entering into an 

other transaction agreement in the agreement analysis document, 

although DHS guidance requires it to do so.

• Recent annual reports to Congress did not contain information on all 

other transaction agreements.

• DHS does not collect information on the circumstances that permit the 

use of other transaction authority throughout the life of the agreement. 

Without complete information about the universe of other transaction 

agreements, neither Congress nor DHS can have full visibility into the use of this 

authority.

View GAO-12-557. For more information, 

contact William T. Woods at (202) 512-4841 or 

woodsw@gao.gov. 
Page i GAO-12-557 Department of Homeland Security

Letter 1 

Background 3

Use of Other Transaction Authority Has Declined 5

DHS Has Taken Steps to Address Challenges, but Actions Are Not 

Fully Implemented 7

Gaps in the Collection and Reporting of Information on the Use of 

Other Transactions 9

Conclusions 12

Recommendations for Executive Action 13

Agency Comments 14

Appendix I Objectives, Scope, and Methodology 16

Appendix II Steps DHS Has Taken to Address Prior GAO Recommendations and 

Related Challenges 19

Appendix III Comments from the Department of Homeland Security 21

Appendix IV GAO Contact and Staff Acknowledgments 23

Table

Table 1: Steps DHS Has Taken to Address Prior GAO 

Recommendations and Related Challenges 19

Figures

Figure 1: Prototypes Developed by the Science and Technology 

Directorate 4

Figure 2: Length of All Science and Technology Directorate Other 

Transaction Agreements by Fiscal Year 5

Figure 3: Science and Technology Directorate’s Other Transaction 

Agreements by Fiscal Year 6

Figure 4: Steps DHS Has Taken to Address Prior GAO 

Recommendations and Related Challenges 8

Contents
Page ii GAO-12-557 Department of Homeland Security

Figure 5: Agreements Included in Annual Reports to Congress, 

Fiscal Years 2009-2010 11

Abbreviations

DOD Department of Defense

DHS Department of Homeland Security 

FAR Federal Acquisition Regulation 

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Page 1 GAO-12-557 Department of Homeland Security

United States Government Accountability Office 

Washington, DC 20548

May 8, 2012

Congressional Committees

With the creation of the Department of Homeland Security (DHS) in 2002, 

Congress granted DHS special acquisition authority, known as “other 

transaction” authority, to help accomplish its mission of providing state-ofthe-art technology to improve homeland security.1 An other transaction 

agreement is a special vehicle used for obtaining or advancing research 

and development or prototypes. This authority provides the DHS Science 

and Technology Directorate the flexibility to reach nontraditional 

contractors, that is, those that traditionally have not done business with 

the government.2 However, other transaction agreements carry the risk of 

reduced accountability and transparency, in part because they are 

exempt from the Federal Acquisition Regulation (FAR) and the 

government’s cost accounting standards. Congress recently authorized 

the use of this authority through September 2012.3 Congress required 

that we report on DHS’s use of this authority to help determine if its use 

attracts nontraditional contractors, results in the acquisition of needed 

technologies, and whether additional safeguards are needed if the 

authority were to be made permanent.4

In 2004, we reported on the Science and Technology Directorate’s use of 

other transaction authority and made recommendations to improve its 

 

1 Congress provided other transaction authority to three of DHS’s components: the 

Transportation Security Administration (TSA), the Domestic Nuclear Detection Office

(DNDO), and the Office of Procurement Operations (OPO). This report only addresses 

OPO’s use of other transaction authority in support of the Science and Technology 

Directorate. TSA and DNDO have their own other transaction authority and are not 

covered in this report.

2

 According to statute, a nontraditional contractor is an entity that is not currently 

performing and has not performed within a period of at least 1 year prior to the date of 

soliciting for an other transaction agreement, any contract subject to full coverage under 

cost accounting standards or any contract in excess of $500,000 for which the contractor 

was required to submit certified cost and pricing data. See 6 U.S.C. § 391(d). 

3 Consolidated Appropriations Act, 2012, Pub. L. No. 112-74, Div. D, Title V, § 527, 125 

Stat. 786, 974 (2011).This section repealed the requirement for future GAO reviews of 

DHS’s use of other transaction agreements.

4 Homeland Security Act of 2002, Pub. L. No. 107-296 § 831(b) (2001).

 
 

Page 2 GAO-12-557 Department of Homeland Security

use.5 In 2008, we reported that nontraditional contractor involvement in 

DHS other transaction agreements provided a variety of technologies and 

services described by DHS as critical, and that DHS continued to develop 

policies and procedures for other transaction agreements. We also found 

that DHS faced challenges in systematically assessing its use of these 

agreements and maintaining a skilled contracting workforce and made 

recommendations to address these and other challenges.6

To address our objectives, we analyzed other transaction agreement data 

provided by DHS and interviewed program and acquisition officials 

regarding any trends in use from fiscal years 2004 through 2011. We 

drew upon our prior reports on other transactions, annual reports to 

Congress by DHS, and relevant statutes, directives, and guidance. We 

also reviewed the files for 27 of the 28 other transaction agreements that 

were active on or after April 2008 through September 2011 and 

interviewed DHS representatives as needed. DHS could not locate one 

agreement file before we drafted this report. Additional information on our 

scope and methodology can be found in appendix I.

For this report, 

we reviewed (1) the Science and Technology Directorate’s use of other 

transaction authority, (2) the extent to which DHS has addressed 

challenges we previously identified with its use of the authority, and 

(3) the information DHS collects and reports on the use of other 

transaction authority.

We conducted this performance audit from August 2011 through May 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 

5 GAO, Homeland Security: Further Action Needed to Promote Successful Use of Special 

DHS Acquisition Authority, GAO-05-136 (Washington, D.C.: Dec. 15, 2004). 

6

 GAO, Department of Homeland Security: Improvements Could Further Enhance Ability 

to Acquire Innovative Technologies Using Other Transaction Authority, GAO-08-1088

(Washington, D.C.: Sept. 23, 2008). 
 

Page 3 GAO-12-557 Department of Homeland Security

The acquisition function plays a critical role in helping federal agencies 

fulfill their missions. Other transaction authority provides the ability to 

acquire cutting-edge science and technology, in part through attracting 

entities that typically have not pursued government contracts because of 

the cost and impact of complying with government procurement 

requirements. This authority, when used selectively, is a tool intended to 

help the Science and Technology Directorate leverage commercial 

technology to reduce the cost of homeland security items and systems. 

Other transaction agreements are distinct from procurement contracts, 

grants, or cooperative agreements because of the flexibilities that they 

offer to both awardees and the government. For example, they allow the 

federal government and awardees flexibility in negotiating intellectual 

property and data rights, which stipulate each party’s rights to technology 

developed under the agreements. The flexibility of other transaction 

agreements is an important characteristic to attract nontraditional 

contractors. We previously reported, however, that because these 

agreements do not have a standard structure based on regulatory 

guidelines, they can be challenging to create and administer.7

The Homeland Security Act of 2002 originally authorized DHS to carry out 

a 5-year pilot program to exercise other transaction authority.8

• supports basic, applied, and advanced research and development;

Beginning 

in 2007, other transaction authority has been extended annually through 

appropriations legislation. The Homeland Security Act of 2002 authorizes 

DHS to enter into an other transaction agreement that

• advances the development, testing, and evaluation of critical 

technologies; and

• carries out prototype projects.

Other transaction agreements for prototypes require one of three 

conditions: (1) there is at least one nontraditional government contractor 

participating to a significant extent, (2) at least one-third of the total cost 

of a prototype project is to be paid out of funds provided by parties to the 

transaction other than the federal government, or (3) the DHS Chief 

Procurement Officer determines, in writing, that exceptional 

circumstances justify the use of a transaction that provides for innovative 

 

7 GAO-08-1088. 

8 Pub. L. No. 107-296, § 831(a).

Background
 

Page 4 GAO-12-557 Department of Homeland Security

business arrangements or structures that would not be feasible or 

appropriate under a procurement contract. Other transaction agreements 

for research do not require the involvement of a nontraditional contractor.

One Science and Technology Directorate program funded other 

transaction agreements to promote homeland security by advancing the 

development and testing of rapid biological detectors. This “detect-toprotect” system would monitor a facility and detect the presence of 

biological agents in time to provide sufficient warning to facility occupants 

to limit their exposure (see left image in fig. 1). A different Science and 

Technology Directorate program used an other transaction agreement to 

develop and test a new high-voltage transformer that helps provide power 

during the recovery time following blackouts or outages resulting from 

severe natural disasters or terrorist attacks (see right image in fig. 1).

Figure 1: Prototypes Developed by the Science and Technology Directorate

The period of performance for other transaction agreements varies and 

may last longer than a traditional FAR contract. Other transaction 

agreements are generally structured in successive phases, so each 

project may have several phases. At the end of a phase, the awardees 

submit a statement of work and technical and cost proposals for the next 

phase. Continuation between phases may be based on an independent 

technical evaluation and is not guaranteed. Unlike FAR contracts, which 

are generally limited to a length of 5 years, an other transaction 

agreement may continue as long as funding is available and work is 
 

Page 5 GAO-12-557 Department of Homeland Security

required under a phase. As a result, other transaction agreements can 

vary in length, from 3 months to over 7 years, as shown in figure 2.

Figure 2: Length of All Science and Technology Directorate Other Transaction Agreements by Fiscal Year

Further, the funding for other transaction agreements may grow over 

time. For example, in one other transaction agreement, the Science and 

Technology Directorate obligated $200,000 in the first phase with an 8-

month period of performance. This agreement has been in existence for 

almost 7 years with at least $5.3 million obligated on it. Another two 

agreements were funded for $2 million at the time of award, but at 

completion, each other transaction agreement had obligations of 

approximately $100 million.

The use of other transaction authority by the Science and Technology 

Directorate has declined since its peak in fiscal years 2005 and 2006. 

From fiscal year 2004 through fiscal year 2011, the Science and 

Technology Directorate entered into 58 other transaction agreements, 

totaling $583 million in obligations. Fourteen agreements remained active 

in fiscal year 2011 and the directorate has not entered into a new other 

Use of Other 

Transaction Authority 

Has Declined
 

Page 6 GAO-12-557 Department of Homeland Security

transaction agreement since fiscal year 2010. The Science and 

Technology Directorate’s use of other transaction authority has declined 

since 2005 when it entered into 28 new agreements. Total obligations 

also have declined since peaking at $151 million in 2006 (see fig. 3).

Figure 3: Science and Technology Directorate’s Other Transaction Agreements by Fiscal Year

DHS officials offered reasons for the decline in use of other transaction 

authority. DHS acquisition officials told us that recently they have noted a 

decrease in the number of nontraditional contractors submitting proposals 

to use other transaction agreements while the use of FAR contracts has 

increased. Further, one official explained that as DHS’s requirements 

have changed over time, the requirements have targeted different 

industries. Finally, DHS officials have been uncertain about renewal of 

other transaction authority. For example, in fiscal year 2011, there was a 

gap in DHS’s other transaction authority because the continuing 

resolution did not extend the authority until April 2011. DHS officials 

explained that they were unsure if DHS had the authority to enter into 

new agreements or modify existing agreements under continuing 

resolutions. However, while use has declined, DHS officials said the 
 

Page 7 GAO-12-557 Department of Homeland Security

flexibility provided by other transaction authority to conduct business with 

nontraditional contractors is still important to the directorate’s research 

needs. For example, one program manager explained that without other 

transaction authority, DHS would be required to go through a traditional 

contractor to reach a nontraditional contractor, and this could affect the 

Science and Technology Directorate’s ability to directly obtain the 

necessary technology.

DHS has made some progress in addressing challenges and the related 

recommendations we previously made regarding its use of other 

transaction agreements (see fig. 4). DHS has faced challenges 

overseeing its use of other transaction authority and establishing 

safeguards in the following five areas:

1. developing guidance for the use of audit provisions,9

2. updating policies related to documentation of lessons learned,10

3. identifying workforce training requirements,11

4. conducting a workforce assessment,12

5. collecting relevant data on other transaction agreements.

and

13

 

9 GAO-05-136. 

10 GAO-05-136. 

11 GAO-05-136. 

12 GAO-08-1088. 

13 GAO-08-1088. 

DHS Has Taken Steps 

to Address 

Challenges, but 

Actions Are Not Fully 

Implemented
Page 8 GAO-12-557 Department of Homeland Security

Figure 4: Steps DHS Has Taken to Address Prior GAO Recommendations and Related Challenges

Source: GAO analysis.

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Page 9 GAO-12-557 Department of Homeland Security

DHS has taken steps to address these challenges, as outlined in figure 4, 

but has more work ahead. Specifically, in response to our prior 

recommendation, DHS has updated its guidance on lessons learned. 

However, we found that DHS is not documenting lessons learned in 

accordance with its guidance. Therefore, DHS is missing the opportunity 

to apply knowledge gained from completed other transaction agreements 

that could be used to plan future awards. Also, DHS has not completed a 

contracting workforce assessment to determine the number of agreement 

officers needed to ensure a sufficient workforce to execute other 

transaction authority. Given the reduced use of other transaction 

authority, it may not be necessary to conduct a formal workforce 

assessment at this time. However, should DHS increase its use of this 

authority we continue to believe a formal workforce assessment is 

important. DHS has more to do to improve data collection on other 

transaction agreements, such as collecting more information about the 

role of the nontraditional contractor, in response to our prior 

recommendation.

Based on our review of all 27 available DHS agreement files, we found 

three gaps in the collection and reporting of information on its use of other 

transaction authority: (1) DHS does not consistently document the 

rationale for entering into an other transaction agreement in an 

agreement analysis document, despite DHS guidance to do so; 

(2) discrepancies between DHS’s data sources result in an incomplete 

picture of other transaction agreements activity, including an inaccurate 

annual report to Congress; and (3) DHS does not track the circumstances 

that permit the use of other transaction authority, such as the involvement 

of a nontraditional contractor, through the phases of an other transaction 

agreement. Involving nontraditional contractors is one of the benefits of 

having other transaction authority, yet without knowing how many are 

involved or for how long, DHS is not in a position to measure the benefits 

of using the special acquisition authority.

While DHS’s guidance requires it to document the rationale for using 

other transaction authority, DHS does not do this consistently. One of the 

following three conditions must be met to use an other transaction 

agreement for prototypes: (1) there is at least one nontraditional 

government contractor participating to a significant extent, (2) at least 

one-third of the total cost of a prototype project is to be paid out of funds 

provided by parties to the transaction other than the federal government, 

or (3) the DHS Chief Procurement Officer determines, in writing, that 

exceptional circumstances justify the use of a transaction that provides for 

Gaps in the Collection 

and Reporting of 

Information on the 

Use of Other 

Transactions
 

Page 10 GAO-12-557 Department of Homeland Security

innovative business arrangements or structures that would not be feasible 

or appropriate under a procurement contract. Since 2005, DHS other 

transaction guidance requires that this rationale be documented in an 

agreement analysis that should be maintained in the other transaction 

agreement file.14 We found that the agreement analysis is not consistently 

documented in the files. In our review of 11 other transaction for prototype 

agreement files, we found inconsistent documentation of the agreement 

analysis—7 other transaction agreement files contained an agreement 

analysis document for the initial award and 4 did not contain an 

agreement analysis document.15

Recent annual reports to Congress on other transaction activity have 

been incomplete. DHS is required to provide an annual report to 

Congress detailing the projects for which other transaction authority was 

used, the rationale for its use, the funds spent using the authority, the 

outcome of each project, and the results of any audits of such projects.

These 4 other transaction agreement 

files that do not contain any agreement analysis documentation were 

awarded recently, from 2007 to 2009. DHS other transaction agreement 

officers said they rely on the agreement analysis to learn the background 

on agreements they have inherited from previous other transaction 

agreement officers. Given the high turnover of acquisition staff, the 

agreement analysis document is an important tool to capture information 

about the rationale for use of other transaction authority.

16

We previously reported that DHS’s June 30, 2008 report to Congress did 

not include 14 agreements from the reporting period.17

 

14 An agreement analysis is required for other transaction agreements for prototypes and 

is similar to a price negotiation memorandum found in a FAR-based contract file. In 

addition to documenting the reasonableness of the negotiated price, the agreement 

analysis must also document the circumstances permitting the use of other transaction 

authority, such as the significant contribution of a nontraditional contractor.

Based on our 

current analysis of DHS’s fiscal year 2010 congressional report and other 

transaction agreement files, we found that DHS did not report three 

agreements that received funding totaling over $3.2 million in obligations, 

15 We reviewed a total of 27 other transaction agreement files. We identified 1 additional

agreement that was active from April 2008 to September 2011, which DHS could not 

locate before we drafted this report. Twenty-four of the other transaction agreements were 

for prototypes. Of these 24, we reviewed all 11 that were awarded by DHS after the 2005 

agreement analysis documentation guidance was in place. 

16 6 U.S.C. § 391(d)(2). 

17 GAO-08-1088. 
 

Page 11 GAO-12-557 Department of Homeland Security

or 22 percent of other transaction obligations for the year. In addition, 

DHS does not include information on open agreements that did not 

involve the exercise of an option or the award of a new phase during the 

reporting period. While this information is not expressly required by the 

legislation, without it DHS is not providing a complete picture of the use of 

its authority. Based on our file review, we found the following other 

transaction agreements which were not reported in DHS’s 2009 and 2010 

annual congressional reports (see fig. 5).

Figure 5: Agreements Included in Annual Reports to Congress, Fiscal Years 2009-2010

For example, one open other transaction agreement, which was not 

reported in the fiscal year 2009 annual report, included a payment 

schedule with four dates during fiscal year 2009 totaling about 

$10 million. Without accurate information about the universe of other 

transaction agreements, Congress may be unable to oversee DHS’s use 

of its other transaction authority.

Further, we found that DHS does not track information to measure the 

benefits of other transaction authority, which include reaching 

nontraditional contractors. DHS’s guidance states that the government 
 

Page 12 GAO-12-557 Department of Homeland Security

team, which includes acquisition and program officials, should establish 

and track metrics that measure the value or benefits directly attributable 

to the use of other transaction authority. But DHS officials told us they 

have not established metrics.

In addition, DHS does not collect information at each phase of an other 

transaction agreement to determine if the original circumstances 

permitting the use of other transaction authority still exist. Specifically, 

DHS does not track the involvement of a nontraditional contractor 

throughout the various phases of the other transaction agreement. Based 

on our file review, we identified 11 other transaction agreements that cited 

the significant contribution of a subawardee nontraditional contractor as 

the circumstance permitting the use of other transaction authority. 

However, we found that six of these agreement files did not include 

documentation to demonstrate that the subawardee nontraditional 

contractor was involved during one or more phases of the agreement. For 

example, one nontraditional contractor was involved as a subawardee for 

14 months, but the other transaction agreement lasted 40 months. While 

circumstances frequently change when conducting research or prototype 

development, the Science and Technology Directorate does not have 

visibility into the impact of these changes over time.

In contrast, the Department of Defense (DOD) has determined that 

tracking information about participants, which includes nontraditional 

contractors, is important to managing its other transaction authority.18 In 

its guidance, DOD requires defense agencies and military departments to 

report significant changes to key participants involved in the agreement. 

This information is used to track the number of nontraditional contractors 

involved in other transaction agreements, which DOD officials use to 

measure the benefit of its other transaction authority.

Even with the recently reduced use of other transaction authority, the 

Science and Technology Directorate continues to identify this as an 

important tool that provides the flexibilities needed to develop critical 

technologies. However, while other transaction agreements may carry the 

benefit of reaching nontraditional contractors to develop and test 

 

18 DOD, Office of the Under Secretary of Defense for Acquisition, Technology and 

Logistics, “Other Transactions” (OT) Guide for Prototype Projects (Dec. 21, 2000). 

Conclusions
 

Page 13 GAO-12-557 Department of Homeland Security

innovative homeland security technology, they also carry the risk of 

reduced accountability and transparency because they are exempt from 

federal procurement regulations. While DHS has responded to our prior 

recommendations, it still faces challenges addressing our 

recommendation to develop a mechanism to collect and track relevant 

data. Without consistent information on the universe of other transaction 

agreements, DHS continues to report inaccurate or incomplete 

information on the use of its other transaction authority in its annual report 

to Congress. This may undermine Congress’s ability to obtain a full 

picture on the use of this special acquisition authority. DHS has taken 

steps by updating its guidance to require documentation of lessons 

learned; however, the guidance is not being implemented. In particular, 

we found that DHS does not document lessons learned from completed 

other transaction agreements nor has it consistently documented the 

agreement analysis, as required by guidance. Other transaction 

agreements may be in place for an extended time period and obligate a 

significant amount of funds, yet DHS does not have full information on 

other transaction activity at each phase of the award. Involving 

nontraditional contractors is one of the circumstances permitting the use 

of other transaction authority, yet without knowing how many are involved 

or for how long, DHS is not in a position to determine whether the 

continued use of the other transaction authority is still the best approach 

through the life of the agreement. If other transaction authority is made 

permanent, it is important for DHS to have complete information to 

understand and track its use of other transaction authority over time.

To promote the efficient and effective use by DHS of its other transaction 

authority to meet its mission needs, we recommend that the Secretary of 

Homeland Security direct the Under Secretary for Management to take 

the following three actions:

• Establish an action plan with specific time frames for fully 

implementing the prior GAO recommendation to establish a 

mechanism to collect and track relevant data on other transaction 

agreements, including the role of the nontraditional contractor, and 

systematically assess the data and report to Congress.

• Establish an action plan with specific time frames to help ensure full 

implementation of DHS other transaction guidance, regarding

• documentation of lessons learned and

• documentation of the agreement analysis.

• Establish a policy to review and document the circumstances 

permitting the use of other transaction authority at each new phase, 

Recommendations for 

Executive Action
 

Page 14 GAO-12-557 Department of Homeland Security

throughout the life of the agreement, to determine if the continued use 

of an other transaction agreement is appropriate.

We provided a draft of this report to DHS for comment. In written 

comments, DHS agreed with our recommendations and described actions 

under way or planned to address them. DHS also provided technical 

comments, which we have incorporated into the report as appropriate. 

DHS’s comments are reprinted in appendix III.

We are sending copies of this report to interested congressional 

committees and the Secretary of Homeland Security. In addition, the 

report is available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-4841 or woodsw@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix IV.

William T. Woods

Director, Acquisition and Sourcing Management

Agency Comments 
 

Page 15 GAO-12-557 Department of Homeland Security

List of Committees

The Honorable Joseph I. Lieberman

Chairman

The Honorable Susan M. Collins

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Darrell E. Issa

Chairman

The Honorable Elijah Cummings

Ranking Member

Committee on Oversight and Government Reform

House of Representatives

The Honorable Peter T. King

Chairman

The Honorable Bennie G. Thompson

Ranking Member 

Committee on Homeland Security

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 16 GAO-12-557 Department of Homeland Security

The objectives for this report were to review (1) the Department of 

Homeland Security’s (DHS) Science and Technology Directorate’s use of 

other transaction authority, (2) the extent to which DHS has addressed 

challenges we previously identified with its use of the authority, and 

(3) the information DHS collects and reports on the use of other 

transaction authority.

To review the Science and Technology Directorate’s use of other 

transaction authority, we analyzed data provided by DHS’s Office of 

Procurement Operations Science and Technology Acquisitions Division

on all other transaction agreements it has entered into since 2004. These 

data included agreement award date, agreement end date, annual 

obligations, and information on nontraditional contractors’ roles as prime 

awardees or subawardees. DHS officials compiled these data from DHS’s 

procurement system,19

To determine the extent to which DHS has addressed challenges with its 

use of other transaction authority, we drew upon prior GAO reports on 

DHS’s use of other transaction authority, reviewed DHS other transaction 

agreement policies and procedures, conducted interviews with DHS 

officials, and reviewed other transaction agreement files that were active 

on or after April 1, 2008, through September 2011. To determine the 

steps taken to encourage the use of audit provisions, we reviewed DHS’s 

May 2008 guidance and its October 2009 updated guidance, Other 

Transactions for Research and Prototype Projects Guide. We identified 

and reviewed 4 other transaction agreements that were awarded after 

May 2008 to determine if DHS has included audit provisions as 

encouraged by the guidance. To determine the steps taken by DHS to 

document lessons learned, we identified DHS’s policy to document 

lessons learned in the October 2009 guidance, reviewed the files of 10 

agreements that ended after October 2009, and interviewed acquisition 

and program officials to determine if they had participated in lessons 

learned discussions or documented lessons learned, as described in the 

guidance. To determine the steps taken by DHS to identify and implement 

annual reports to Congress on other transaction 

authority, and hard copy agreement files. To understand reasons for its 

trends in use of other transaction authority, we interviewed Science and 

Technology Directorate program officials and DHS acquisition officials.

 

19 In order to assess the reliability of DHS’s procurement system, we reviewed DHS 

documentation of the procurement system and interviewed DHS officials familiar with the 

data. We determined that the data were sufficiently reliable for our purposes. 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 17 GAO-12-557 Department of Homeland Security

workforce training requirements, we reviewed DHS’s Management 

Directive 0771.1, Procurement Operating Procedure 311, and the 

associated June 2011 cancellation; we obtained acquisition official 

training certifications; and interviewed program staff to determine if they 

had attended training. We also reviewed training materials to determine if 

other transaction authority was covered in the contract officer technical 

representative training attended by program officials. To identify steps 

taken by DHS to conduct a workforce analysis to determine if it has the 

appropriate number of agreement officers to execute other transaction 

authority, we interviewed DHS officials and requested workforce 

assessments addressing DHS’s acquisition workforce. To determine 

whether DHS collects relevant data on other transaction authority, we 

analyzed information that DHS collected from its review of the hard copy 

files, its procurement system, and annual reports to Congress on other 

transaction authority.

To assess the information DHS collects and reports on its use of other 

transaction authority, we obtained an initial list of agreements from DHS’s 

Office of Procurement Operations Science and Technology Acquisitions 

Division; reviewed annual reports to Congress on other transaction 

authority; and interviewed program, acquisition, and general counsel 

officials. We also contacted officials at the Department of Defense to 

understand its policies and procedures to manage its other transaction 

authority. We identified 28 agreements that were active on or after April 1, 

2008, through September 30, 2011. We conducted an in-depth file review 

for 27 of these 28 agreements; DHS was unable to locate one agreement 

file prior to the date we drafted this report. To determine the accuracy of 

DHS’s annual report to Congress, we reviewed the requirements for the 

report and compared the information included in these reports to the 

requirements and information from the other transaction agreement files. 

To identify information documenting the circumstances permitting the use 

of other transaction authority, such as information collected on 

nontraditional contractors, we looked at several documents in the 

agreement files. Specifically, we reviewed preaward documentation, such 

as awardee proposals, determination and findings, and agreement 

analysis documents, and postaward documentation, such as the signed 

other transaction agreement, all modifications, and statements of work. 

We interviewed program, acquisition, and general counsel officials to 

determine the process for verifying a nontraditional contractor’s status 

and significant contribution. In analyzing DHS’s agreements, we did not 

independently verify a contractor’s reported status as a nontraditional 

contractor.
Appendix I: Objectives, Scope, and 

Methodology

Page 18 GAO-12-557 Department of Homeland Security

We conducted this performance audit from August 2011 through May 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: Steps DHS Has Taken to Address 

Prior GAO Recommendations and Related 

Challenges 

Page 19 GAO-12-557 Department of Homeland Security

Table 1 presents the information in figure 4 in a noninteractive format.

Table 1: Steps DHS Has Taken to Address Prior GAO Recommendations and Related Challenges

Appendix II: Steps DHS Has Taken to 

Address Prior GAO Recommendations and 

Related Challenges

Challenge Prior GAO recommendation or steps taken by DHS

Use of audit provisions Prior GAO recommendation

In 2004, we recommended that DHS establish guidance on when it is appropriate to 

include audit provisions in other transaction agreements.

Status in 2008: DHS has updated its guidance, but the related actions in the 

guidance are not being implemented.

DHS updated its guidance to encourage the inclusion of audit provisions when an other 

transaction agreement for prototype uses amounts that are generated from the 

awardee’s financial or cost records as the basis for payment or requires that at least 

one-third of the total cost be provided by nonfederal parties. 

Status in 2012: DHS has updated its guidance and it is implemented.

DHS has entered into four new agreements since its audit provision guidance was put 

into place, two of which met the criteria for including audit provisions. Both agreements 

include audit provisions as specified in the guidance. 

Documentation of lessons learned Prior GAO recommendation

In 2004, we recommended that DHS capture knowledge obtained during the acquisition 

process for use in planning and implementing future other transaction projects.

Status in 2008: DHS has not taken steps to address this challenge.

DHS had taken steps to share knowledge about benefits derived from completed 

projects, but did not have a system to document or share this information.

Status in 2012: DHS has updated its guidance, but the related actions in the 

guidance are not being implemented.

In October 2009, DHS updated its guidance to require program officials to meet with 

other transaction agreement officers at the completion of the agreement to develop 

lessons learned for use in future other transaction projects. The guidance specified that 

highlights and recommendations from these lessons learned discussions should be 

documented and maintained in the other transaction file. These discussions may include 

information about performance by nontraditional contractors, funding allocated to 

nontraditional contractors, and the ultimate benefit of using other transaction authority to 

accomplish the particular requirement.

Of the 10 agreements completed since October 2009, none of the files contained 

documentation of lessons learned. A program and an acquisition official cited informal 

efforts to share lessons learned, but none of the program officials or other transaction 

agreement officers that we spoke with had participated in a “lessons learned”

discussion. 
Appendix II: Steps DHS Has Taken to Address 

Prior GAO Recommendations and Related 

Challenges 

Page 20 GAO-12-557 Department of Homeland Security

Source: GAO analysis.

Identifying workforce training Prior GAO recommendation

In 2004, we recommended that DHS develop a training program for DHS officials in the 

use of other transactions to help ensure the appropriate use of this authority.

Status in 2008: DHS has updated its guidance, but the related actions in the 

guidance are not being implemented.

DHS had developed other transaction authority training courses, including a yearly 

refresher course for warranted other transaction agreement officers. It also updated its 

policy to require program officials to attend the recurring DHS other transaction training 

developed for the contracting workforce.

Status in 2012: DHS has updated its guidance, but the related actions in the 

guidance are not being implemented.

All four of the other transaction agreement officers we spoke with have attended the 

mandatory other transaction training. The eight program officials we interviewed had not 

attended any other transaction-specific training. Prior to June 2011, DHS required 

program officials to take other transaction-specific training. Some of the program 

officials stated that they attend contracting officer technical representative training, 

which they felt may have covered other transaction agreements briefly. However, the 

curriculum is more broadly focused and does not cover other transaction agreements.

Conducting a workforce assessment Prior GAO recommendation

In 2008, we recommended that DHS determine the number of contracting officers

needed to help ensure a sufficient contracting workforce to execute other transaction 

authority.

Status in 2008: This issue was first identified in the 2008 GAO review.

This challenge was identified and we made a related recommendation.

Status in 2012: DHS has not taken steps to address this challenge.

DHS has not conducted a workforce analysis to determine the number of agreement 

officers needed to execute other transaction authority, but DHS acquisition officials 

believe that its current other transaction workforce of four other transaction agreement 

officers is sufficient for the current level of workload.

Collecting relevant data Prior GAO recommendation

In 2008, we recommended that DHS collect relevant data on other transaction 

agreements, including the roles of and funding to nontraditional contractors and 

intellectual property rights, and systematically assess and report to Congress on the use 

of these agreements to ensure that the intended benefits of the authority are achieved.

Status in 2008: This issue was first identified in the 2008 GAO review.

This challenge was identified and we made a related recommendation.

Status in 2012: DHS has not taken steps to address this challenge.

We previously reported in 2008 that DHS had updated its procurement system to collect 

information about the prime awardees’ nontraditional status and their business size. But 

this update did not provide insight into the nontraditional contractors that are 

subcontractors or members of a team. More generally, the data available on other 

transaction agreements are fragmented and inconsistent among DHS’s procurement 

system, the hard copy agreement files, and DHS’s annual congressional report. 
Appendix III: Comments from the Department 

of Homeland Security

Page 21 GAO-12-557 Department of Homeland Security

Appendix III: Comments from the 

Department of Homeland Security 
Appendix III: Comments from the Department 

of Homeland Security

Page 22 GAO-12-557 Department of Homeland Security
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 23 GAO-12-557 Department of Homeland Security

William T. Woods, (202) 512-4841 or woodsw@gao.gov

In addition to the contact named above, Penny Berrier, Assistant Director; 

Kristin Van Wychen; Beth Reed Fritts; Anne McDonough-Hughes; John 

Krump; Kenneth Patton; Mary Quinlan; Roxanna Sun; Robert Swierczek; 

Keo Vongvanith; and Rebecca Wilson made key contributions to this 

report.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(120987)
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