Security contract smorgasbord - View from the Hill - Homeland Security procurement budget - Brief Article

Chief Executive, The, March, 2003 by Sonja Sherwood

Five billion dollars is up for grabs. That's roughly the procurement budget of the department of Homeland Security, branded with the Bush stamp of approval in late November.

For would-be government contractors, the new department is messy but potentially lucrative. In Congress' haste to fortify the nation against terrorism, it granted Homeland Security a kind of "fast-track" authority to purchase from the private sector and assign grants. This means Homeland Security can behave like a free-market enterprise. It can enter into joint ventures and conduct or sponsor cooperative research.

At the same time, Congress exempted the department from the strict rules that regulate federal contracts. Unlike most agencies, Homeland Security needn't adhere to the General Services Administration schedule. It can procure goods or services "off budget," meaning without a line item on its budget, for reasons of secrecy, much like the CIA does.

"It's a dramatic departure from traditional procurement rules," concludes Manik Rath, associate general counsel at the technology-oriented IIT Research Institute in Chicago, who authored a white paper on the subject titled, A Chief Executive's Guide to Piloting the Company through the New Department of Homeland Security. Rath argues that the government reorganization will "present challenges and confusion to the procurement community for some time," but that the department will "have great flexibility in marshaling federal resources and in acquiring goods and services."

Already, a number of law firms have opened special legal divisions in Washington, D.C., to help federal contractors adapt to the changes. Cities and organizations across the country, meanwhile, are hosting conferences to help local businesses exploit the opportunity.

Most of the department's $40 billion budget reportedly has already been allocated, but the department plans to grant between $3 and $5 billion in new contracts, primarily for technology.