GAO-04-447R Homeland Security Procurement 

United States General Accounting Office

Washington, DC 20548 

March 31, 2004 

The Honorable Susan M. Collins 

Chairman 

The Honorable Joseph I. Lieberman 

Ranking Minority Member 

Committee on Governmental Affairs 

United States Senate 

The Honorable Tom Davis 

Chairman 

The Honorable Henry A. Waxman 

Ranking Minority Member 

Committee on Government Reform 

House of Representatives 

 

Subject: Agencies’ Use of Procurement Flexibilities Provided in the Homeland Security 

Act of 2002 (P.L. 107-296) 

In the wake of September 11, 2001, Congress enacted the Homeland Security Act of 2002. 

Title VIII, subtitle F, section 852 of the act provided for a temporary set of emergency 

procurement flexibilities intended to address the immediate needs for procurement of 

property (other than real property) or services to be used to defend against or recover 

from terrorist threats, including nuclear, biological, chemical, or radiological attacks. 

These flexibilities, which expired on November 24, 2003, included: 

• Increasing the threshold for simplified acquisition procedures in support of 

humanitarian, peacekeeping, or contingency operations from $100,000 to $200,000 

for contracts awarded and performed within the United States. For contracts 

awarded and performed, or purchases to be made outside the United States, the 

threshold was $300,000. In addition, the small business set-aside threshold was 

raised to be consistent with the increased simplified acquisition threshold.1

(Section 853) 

 

1

 Simplified acquisition procedures refer to the methods prescribed in the Federal Acquisition Regulation 

(FAR) Part 13 for making purchases of supplies or services valued below the simplified acquisition 

threshold. These procedures are designed to: (1) reduce administrative costs; (2) improve opportunities 

for small, disadvantaged, and women-owned businesses to obtain a fair proportion of government 

contracts; (3) promote efficiency and effectiveness in contracting; and (4) avoid unnecessary burdens for 

agencies and contractors. Federal Acquisition Regulation, at 13.002 [hereinafter FAR], (January 2004). 
GAO-04-447R Homeland Security Procurement 2

• Increasing the micro-purchase threshold from $2,500 to $7,500 to allow agencies 

the use of purchase cards above the current limit.2

 (Section 854) 

• Waiving certain provisions of law and the dollar threshold related to commercial 

item procurements.3

 (Section 855) 

• Requiring the head of an agency, when appropriate, to use streamlined acquisition 

authorities and procedures authorized by law for a procurement referred to in 

section 852. It also waived certain dollar thresholds for small business 

procurements.4 (Section 856)

Section 857 of the Homeland Security Act directed us to report no later than March 31, 

2004, on the extent to which federal agencies have used the flexibilities. As agreed with 

your staff, we contacted the Departments of Defense (DOD), Energy, Homeland Security, 

Justice, Transportation, and the National Aeronautics and Space Administration (NASA) 

to determine if they had used the temporary procurement flexibilities and, if so, (1) 

which flexibilities were used; (2) how much was spent; and (3) what was procured. 

Of the six agencies, four (the Departments of Energy, Homeland Security, Justice, and 

Transportation) reported no use of the procurement flexibilities. Justice and Energy 

indicated they did not use the flexibilities because existing procurement rules provided 

sufficient flexibility. Homeland Security responded that this might also explain why it 

did not use the flexibilities. Transportation reported it did not use the procurement 

flexibilities because no requirement was received for the purchase of products and/or 

services designed for the defense and recovery from terrorist threats, including nuclear, 

biological, chemical, or radiological attacks. 

NASA indicated that the statute did not levy a reporting requirement or require 

establishment of a formal financial or procurement tracking system to account for use of 

the flexibilities authorized by the law and that it would have to conduct a labor-intensive 

data call in order to answer our questions. NASA did, however, conduct an informal 

survey of the three procurement activities that would be most likely to use the 

flexibilities afforded under the act (Johnson Space Center, Kennedy Space Center, and 

Goddard Space Flight Center), and, according to NASA, these activities responded that 

 

2

 Micro-purchase refers to an acquisition of supplies or services valued at or below the micro-purchase 

threshold. FAR Part 13 states the purchase card is the preferred method for purchasing and paying for 

goods and services below the micro-purchase threshold. FAR, supra note 1, at 13.201 (b). 

3

 Section 855 provided the head of an executive agency with the authority to make section 852 

procurements without regard to whether the property or services are commercial items. In addition, it 

waived the $5,000,000 limitation on such procurements. P.L. 107-296 (2002). 

4

 Section 856 waived the Small Business Act dollar thresholds for contracts awarded to disadvantaged 

small business concerns. P.L. 107-296 (2002). The dollar thresholds are $5,000,000 for contracts assigned a 

standard industrial classification code for manufacturing and $3,000,000 for all other contracts. 15 U.S.C. 

637 (a)(1)(D)(i)(II) (2003). Section 856 also waived the Small Business Act HUBZone dollar thresholds of 

$5,000,000 for contracts assigned a standard industrial classification code for manufacturing and 

$3,000,000 for all other contracts. 15 U.S.C. 657a(b)(2)(A) (2003). 
GAO-04-447R Homeland Security Procurement 3

they had not used the flexibilities. NASA also indicated a willingness to conduct a more 

thorough review but warned that such a review would take considerable time to 

complete. 

In April 2003, DOD’s Director of Defense Procurement and Acquisition Policy 

encouraged the military services and defense agencies to take advantage of the 

flexibilities. However, in responding to our inquiry, DOD indicated that, because the law 

did not levy a formal reporting requirement, it did not implement a tracking system and, 

therefore, could not quantify use of these flexibilities. DOD also indicated that 

responding to the survey questions would require a labor-intensive, time-consuming 

manual data call. Considering that the authority for these flexibilities expired on 

November 24, 2003, DOD did not believe it was a wise expenditure of public funds to 

conduct a manual data call to obtain the information we requested. 

AGENCY COMMENTS 

The Departments of Justice, Transportation, and Homeland Security had no comment on 

our correspondence. We received e-mail comments from the Department of Energy and 

NASA and oral comments from DOD. All indicated that they agreed with the contents of 

the correspondence. 

We conducted our review from December 2003 to March 2004 in accordance with 

generally accepted government auditing standards. 

We are sending copies of this letter to other interested congressional committees and to 

the Secretaries of DOD, Energy, Homeland Security, Justice, and Transportation; and the 

Administrator, NASA. This letter will also be available at no charge on the GAO Web site 

at http://www.gao.gov.

If you have any questions regarding this report, please contact me at (202) 512-4841 or 

Michele Mackin, Assistant Director, at (202) 512-4309. Other major contributors to this 

correspondence were Susan Tindall and Najeema Washington. 

David E. Cooper 

Director 

Acquisition and Sourcing Management 

 (120257)