Few issues in homeland security have beenof more interest to industry than the ultimate form of the Departmentof Homeland Security’s procurement system. Secretary Tom Ridge isdetermined that 2004 will be the year in which a working system isfinally established.
At the center of this effort is Greg Rothwell, who became the first chief procurement officer of theDepartment of Homeland Security in July 2003, after a stint as deputychief of agencywide services at the Internal Revenue Service (IRS). Hisappointment was greeted with praise from legislators and procurementprofessionals familiar with his work.
A career civil servant, Rothwellcame to the IRS in 1990 and served as the assistant commissioner forprocurement until his promotion to deputy chief of agencywide servicesin July 1999. Prior to working at the IRS, Rothwell worked in theOffice of Thrift Supervision, the Federal Home Loan Bank Board and theDepartment of the Interior. As DHS chief procurement officer, Rothwellreports to Janet Hale, the undersecretary for management.
Mickey McCarter of HSToday recently asked Rothwell about institutional changes occurring in DHS procurement as well as upcoming contracting opportunities for private businesses.
HST: Many comparisons have been made betweenprocurement systems at the Department of Defense [DoD] and theDepartment of Homeland Security. Is it fair or accurate to compare DHSprocurement systems to DoD procurement systems?
GR: As the acquisition executive or senior procurementexecutive, I report directly to the undersecretary for management, Ms.Hale. The [office of the] undersecretary for management also includesthe CFO [chief financial officer], CIO [chief information officer], andchief human capital officer, which are organizational equivalents to myposition. In DoD, the procurement executive is the undersecretary foracquisition, technology and logistics and is also designated as theacquisition executive for defense. As it is throughout the federalgovernment, each agency has organizational alignments and structuresunique to their particular circumstance.
Within DHS, I have a dotted line relationshipwith seven of the eight operational procurement components. What thismeans is that I have responsibility for establishing policy andprocedures and for conducting oversight to ensure proper stewardship;however, I do not have direct line authority over these organizations.The one exception is the Office of Procurement Operations, whichsupports DHS headquarters elements, such as the Office of theSecretary, Deputy Secretary, and other HQ elements such as the CIO,CFO, etc.
HST: What are your main goals as DHS procurement chief?
GR: Seven of our incomingagencies came with inherent acquisition capability, some more robustand accomplished than others. The remaining 15 organizations weretransferred without this infrastructure, so the immediate goal was toprovide for continued acquisition support. Since we also haveexperienced challenges related to systems and data, we are workingtoward a departmental solution. These are the short-term goals. In thelong term, we are working toward building a world-class 21st centuryacquisition organization.
My long-term goal is to create that worldclass acquisition program—one that supports the mission of DHS,supports internal customers, is readily understood and accessible tothe private sector and is compliant with all laws, regulations and goodbusiness practices.
HST: How do the DHSagencies that came with their procurement operations intact compare tothose that did not? Will you establish contracting performance metricsto bring each of them up to an equal level?
GR: There are ones thatcame intact, like Coast Guard, Secret Service and FEMA [the FederalEmergency Management Agency], but some of them we just got pieces.Internally, we are calling those “tear agencies,” because they werekind of torn away. It’s an internal slang thing.
There is absolutely a plan to put metricsinto place to compare these guys to each other. Nothing has been doneonthat yet, but it is on our strategic plan. All that has been donehas been to identify and come up with the performance standards,metrics, for those. We are trying to do them all this fiscal year.
DHS started an aggressive program to developan integrated finance, accounting, acquisition and asset managementprogram. The program, called eMERGE2, or Electronically ManagingEnterprise Resources for Government Efficiency and Effectiveness, is astrategic program that will be used across DHS.
eMERGE2 is going to be the departmentwidefinancial management system that every part of DHS will follow. When wecame together as 22 agencies, they all brought different financialmanagement systems. eMERGE2 is going to create the one and onlyDepartment of Homeland Security financial management system. Part ofthat will be an automated procurement system that is a significantmodel of it so that there will not be two systems that are beingcreated and then later have to interface. We are creating one uniformsystem that will have procurement and finance embedded in it.
We have a procurement that we are puttingtogether right now that will go out and buy eMERGE2. It’s an activeprocurement that is on the street. We are going to get a company tobuild that for us, using as much off-the-shelf software as we possiblycan. We are in the process of preparing the RFP [request for proposals]right now.
HST: When will DHS release the RFP for eMERGE2?
GR: I have been advisednot to say because we want to do it right. I don’t really know. Itcould be March or it could be April. I really don’t know exactly when.
HST: Ashley Lewis, onceacting chief procurement officer and now a member of your staff, wrotein a DHS response to a General Accounting Office report that DHS wouldinstitute standards for its acquisition corps based on the DefenseAcquisition Workforce Improvement Act (DAWIA) [Contract Management: INSContracting Weaknesses Need Attention From the Department of HomelandSecurity, July 2003]. Is that something to which you have givenpriority?
GR: That speaks to careerdevelopment. When it says “an acquisition corps,” that is an issuearound career development. In other words, how we are going to getcontract officer warrants to people? How we are going to authorize themto sign contracts and how we are going to train them so that they canactually get those awards?
We are going to follow the DoD trainingmodel, which they follow because of the DAWIA Act. It was actually anact passed by Congress that establishes their training program and setsthe model for all of government. We are following that.
We will absolutely make progress on that. Wehave already started. We have hired a program manager for our careerdevelopment program, a lady named Karen Pica. She is already startingto go out and establish that program. Within a year, we will be wellalong.
HST: How do theacquisition needs of the Science and Technology Directorate differ fromthe Management Directorate? Can you explain the reasons why S&Tneeds were outsourced to the U.S. Army Medical Research AcquisitionActivity (USAMRAA)?
GR: The basic nature ofthe S&T organization will require extensive investment in researchand development efforts. This type of work necessitates a more complexacquisition strategy because of the unknowns associated with actualperformance. It also requires specialized program management andcontracting expertise. It is important to note that there are other DHSelements, for instance the CIO, that will have requirements that areequally complex. I would not attempt to differentiate acquisitionrequirements within DHS byconsidering only organizational placement.
Science and Technology basically was acombination of several things. When you talk about the 22 agenciesbecoming one, the agencies under Science and Technology are the onecalled Plum Island, which came from the Department of Agriculture, andone called NBDAC, the National Bioweapons Defense Analysis Center. Twocame from Energy. One is called the Chemical, Biological, Radiologicaland Nuclear Countermeasures subgroup. The other one that came fromEnergy was the Environmental Measurements Lab. Then there is a bunch ofnew stuff like the Homeland Security Advanced Research Project Agency.
All of these pieces came to form Science andTechnology, but there was no procurement office created to supportthose. Science and Technology was created as part of Homeland Security.Four agencies became a part of it. A new kind of entity was created,but the other piece is that there is no procurement office internal tohomeland security to actually support those.
So the decision in ’03—and unfortunately in’04—is, in order to support Science and Technology, we are going tohave to continue using procurement shops that used to support thempre-Homeland Security.
HST: To what extent willcontracts include performance incentives developed by a contractor anda DHS agency? Will contractors play leading roles in developingrequirements for future contracts?
GR: While developingrequirements for contracts is primarily a government function, weencourage program managers to exchange information with all interestedparties through the conduct of presolicitation conferences, briefingsto industry, draft RFPs and other similar techniques. We also stronglyencourage the use of performance-based contracting where outcomes aredefined, but the specifics of performance are left to the discretion ofthe contractor. As I’m sure you are aware, performance-basedcontracting relies heavily on incentives to maximize the probability ofexcellent contractor performance and delivery.
The profit motive is the primary incentivewhen a company sells to the government. Whether there will beadditional incentives will be determined on a case-by-case basis. Inmany ways, it is not much different than any contract where a companytries to sell and they bid into their pricing profit. That in and ofitself is a large incentive. The question then becomes: Do you incentthem even more? That depends. If you are buying research, you may notdo that because you have really no guarantee that you are going to getanything. It would very much be on a case-by-case basis.
Some of the contracts have cost sharing wherethe company—or whoever we are doing business with—actually contributesto the cost of doing it, so it will be all over the board case by case.
HST: What are the major contract awards anticipated by the DHS in the coming year?
GR: The ResourceManagement Transformation Office (RMTO) will release the RFP foreMERGE2. An industry day was held in December 2003. [Others include]the Homeland Security Data Network, with procurement through existingGSA Federal Technology Services contracts; US VISIT; and theConsolidated Enforcement Environment, a collaborative law enforcementsoftware tool; the Automated Commercial Environment. HST
TheSmall Business Forecast, which includes an extensive list of upcomingDHS contracting opportunities, is available atwww.dhs.gov/interweb/assetlibrary/forecast2004.pdf.