RELEASE: Senator Clinton Calls for Investigation of Homeland Security Contractor Bonuses

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Immediate Release November 26, 2007 Contact: Clinton Press Office 202-224-2243 or [email protected] SENATOR CLINTON CALLS FOR INVESTIGATION OF HOMELAND SECURITY CONTRACTOR BONUSES Washington, DC - Senator Hillary Rodham Clinton today called on the Inspector General of the United States Department of Homeland Security (DHS) to expand an investigation of federal contracting practices to investigate the practice of award fees by DHS, especially when it comes to no-bid contracts. Senator Clinton's call comes in light of a recent report by DHS Inspector General Richard Skinner that DHS improperly awarded a $475 million no-bid contract to Chenega Technology Services Corporation, which according to the report "likely did not provide the government the best value" and that DHS "did not comply with federal regulations". According to the IG's office, the agency also provided award fees to the company as part of its contract. In calling for the investigation, Senator Clinton underscored that despite federal law requiring DHS to link award fees with successful acquisition outcomes, there have been a number of reports of DHS providing award fees regardless of performance. "This disconnect between performance and award fees appears to be part of a troubling pattern," said Senator Clinton. "In too many cases, DHS appears to be awarding bonuses without evaluating work or, even worse, despite poor performance. Failing contractors should be rooted out not rewarded." The following is Senator Clinton's letter to DHS Inspector General Richard L. Skinner requesting an investigation: November 26, 2007 Mr. Richard L. Skinner Inspector General United States Department of Homeland Security Washington, D.C. 20528 Dear Mr. Skinner: I write regarding a disturbing report you issued last month that raises serious questions about contracting practices at the Department of Homeland Security (DHS). The report - Customs and Border Protection Award and Oversight of Alaska Native Corporation Contract for Enforcement Equipment Maintenance and Field Operations Support (OIG-08-10) - details how DHS improperly awarded a $475 million, no-bid contract to Chenega Technology Services Corporation to maintain X-ray, radiation and other screening machines at U.S. border checkpoints. Your report concludes the contract "award likely did not provide the government the best value" and that DHS "did not comply with federal regulations." Additionally, your staff informs me that award fees were given to Chenega as a part of its contract with DHS. Given that your report did not focus on award fees to Chenega, the details of these fees are unclear. However, taken together with your conclusion that the Department improperly awarded the underlying contract to Chenega, it is disturbing to hear that DHS has provided an award fee to this corporation. This disconnect between performance and award fees appears to be part of a troubling pattern. The Federal Acquisition Regulations (FAR) state clearly that cost-based award fee contracts are intended to motivate excellent contractor performance in areas such as quality, timeliness, technical ingenuity, and cost-effective management. Despite this guidance, during the course of the past several years there have been a number of reports documenting how award fees are being doled out by DHS to contractors regardless of performance: * Evaluation of TSA's contract for the installation and maintenance of explosive detection equipment at United States Airports (DHS Inspector General, September 2004) - TSA awarded a contract to Boeing for the installation and maintenance of explosive detection equipment at airports. TSA paid more than $44 million to Boeing without any evaluation of Boeing's performance. * Transportation Security Administration Review of the TSA Passenger and Baggage Screening Pilot Program (DHS Inspector General, September 2004) - TSA awarded four pilot program contracts to determine whether private companies could provide and maintain passenger screening performance at levels equal to or greater than the TSA screener force. The Inspector General found the award fee determinations lacked performance criteria, were highly subjective and based primarily on contractor self-assessments and input from TSA officials. * Observations on the Department of Homeland Security's Acquisition Organization and on the Coast Guard's Deepwater Program (GAO-07-453T) (February 8, 2007) - GAO found that despite documented problems in schedule, performance, cost control, and contract administration throughout the first year of the Deepwater contract, the contractor had received a rating of 87 percent, which fell in the "very good" range and resulted in an award fee of $4 million. In too many cases, DHS appears to be awarding bonuses despite poor performance, or worse, without even evaluating work. Failing contractors should be rooted out, not rewarded. Given your report of what appears to be noncompliant federal contracting practices on the part of the DHS and a pattern of providing award fees to contractors without justification, I request that you expand your investigation into the practice of award fees by the Department, especially when it comes to no-bid contacts. Specifically, I would ask that your investigation review the following questions: * Section 3501 of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (P.L. 110-28) states, "The Secretary of Homeland Security shall require that all contracts of the Department of Homeland Security that provide award fees link such fees to successful acquisition outcomes (which outcomes shall be specified in terms of cost, schedule, and performance)." DHS has engaged in a number of contracts in Fiscal Year 2007. How many of these contracts included award fees and were these award fees based on successful acquisition outcomes? What was the total amount of these award fees? * Did the Department of Homeland Security violate P.L. 110-28 in providing award fees to contractors Fiscal Year 2007? * Were award fees given to Chenega Technology Services Corporation justified and based on successful acquisition outcomes? * What mechanisms are currently in place at DHS to ensure that award fees are awarded in a proper manner? Are these mechanisms enforced in providing award fees for DHS contracts? What can the Department of Homeland Security do to ensure that award fees are justified and based on successful acquisition outcomes? Thank you for attention to this matter. Sincerely, Hillary Rodham Clinton ###