Budget Crunch Sharply Reducing the Amount DHS Spends on Contracts

By Stew Magnuson
The amount of money the Department of Homeland Security spends on contracts for goods and services is falling by about $2 billion per year, according to one industry analyst.

The department in fiscal year 2011 issued $14.2 billion in contracts. The following year saw that amount drop to $12.4 billion. And with only a couple weeks remaining in fiscal year 2013, DHS and its agencies had only spent $10.7 billion, said John Hernandez, Frost & Sullivan senior industry analyst.

“I see a downward trend as far as contracts awarded. The [agencies] are tightening their belts,” he said. The delays are seen as a way for the department to contend with Congress passing continuing resolutions.

The Coast Guard and its efforts to modernize its fleets will take the biggest hit in the coming years, he predicted. Overall, the department has been delaying awarding contracts for big-ticket items, of which the Coast Guard has several.

A contract for 25 offshore patrol cutters is a long time in coming, and worth up to $12 billion over its lifetime. “Whether that is going to take place, personally I doubt that very much,” Hernandez said.

The fast response cutter contract has been reduced to 30 from the original planned buy of 58. “I think they are going to get what they can get and the rebid may not come until 2015, once all the dust settles,” he said.

A big spender on technology in the past, the Transportation Security Administration is also slowing down its equipment buys. Hernandez saw only software upgrades for existing scanning equipment. Most of the money TSA spends is on manpower, he noted.

Another large, high profile contract is the Integrated Fixed Towers program for southwest border security. An announcement was also expected by the end of the fiscal year on a contract worth some $78 million, but by press time, it had not been made.

Hernandez didn’t believe the program would be scrapped, but the department may change the parameters on it to draw the program out.

Customs and Border Protection has had a leadership void for several years, he noted. No nominee has been named since Alan Bersin left at the end of 2011 after he was installed as a recess appointment.

“It is absolutely ridiculous that so much time has been spent on this area and they haven’t found a technology yet. It’s kind of insane. The only explanation for that is that they don’t have someone who can stand firm against the other agencies and say, ‘Hey, look this is key. This is what we need and this is how we solve this issue.’ I don’t think anyone is doing that right now.”

Many other leadership positions remain unfilled.

“It hurts these guys when they are trying to justify trying to get their piece of the budget pie,” he said.

The wild card will be the next DHS secretary, whoever that may be. That person will want to make his or her own budget priorities, Hernandez said. At press time, no nominee had been put forward.

Topics: Homeland Security, DHS Budget, DHS Policy, MaritimePort Security, Shipbuilding, Surface Ships

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