In the pantheon of American bureaucratic boondoggles, the relatively new Department of Homeland Security already occupies a hallowed space. It has been criticized as too big, too slow, too unaccountable and too secretive. Fairly or not, it is associated in the public consciousness with meaningless color-coded threat warnings, airport strip searches and the bungled response to Hurricane Katrina. But in truth, DHS’s strongest claim to bureaucratic inadequacy may be its degree of reliance on contractors. Commercial firms do not simply provide DHS with the procurement of high-tech equipment or ancillary services like garbage collection. To an unusual extent, they also supply the professional staff members who perform the core work of government: drafting budgets and plans, briefing senior staff, organizing meetings and analyzing policy. In DHS facilities scattered around the District of Columbia and its suburbs, contractors and Federal employees sit side by side in their offices and cubicles, working in teams.By provisioning DHS offices with some of their most capable staffers, professional-services firms raked in about $5 billion in fiscal year 2006 alone. Most of these companies have backgrounds in management consulting or engineering. Their headquarters are concentrated in the northern Virginia suburbs of Washington, DC, where leases and land are affordable. They save even more by seating the bulk of their staff in government offices. What these “body shops” offer amounts to long-term temporary staffing services. Imagine Kelly Girls (and boys) with MA, MS, MPA and doctoral degrees, not to mention top-secret security clearances. In its rough outlines, this situation is hardly unique within the U.S. government. For decades, Federal agencies have relied on contract employees to stake a claim to efficiency based on competitive procurement of services, and to hold the line against “big government” by keeping down the numbers of civil servants, whose jobs are so secure that they are often said to be “tenured.” Critics and congressional oversight committees have raised questions about these claims, often pointing to the growth of non-competitive “sole-source” contracts. Some have also questioned the higher expense of hiring by proxy. (By one estimate, the average professional hired on contract costs the government about twice what an equivalent Federal employee would.) So it is all the more interesting, and perhaps surprising, that the newest department of government also appears to be the most dependent on contract staff in carrying out its core functions. This puzzle has already caught the attention of Congress. In 2007, the Homeland Security and Government Affairs Committee, chaired by Senator Joe Lieberman (I-CT), directed the Government Accountability Office (GAO) to investigate DHS contracting practices and produce a report. The Committee released the finished GAO report and held hearings that October. For the Committee, the main concern about contracts boiled down to “waste, fraud, and abuse.” In his opening statement, Senator Lieberman rehearsed a number of the GAO’s findings, including “profound concern” about the risks of over-reliance on contractors whose work borders on “inherently governmental functions”:
First, is the risk that the Department is not creating the institutional knowledge within itself that is needed to be able to judge whether contractors are performing as they should. That could mean vulnerability to overcharges and other forms of fraud and abuse.Second is, of course, the risk that the Department may lose control of some of its own decisionmaking. The danger is that the Department may become so dependent on private contractors that it simply does not anymore have the in-house ability to evaluate the solutions its private contractors propose or to develop options on its own accord. In that sense, the Department may lose some of the critical capability to think and act on its own for we the people of the United States.
Joined by his colleagues, Lieberman depicted a department held hostage to virtually parasitic contractors, who naturally would seek opportunities for self-aggrandizement.But this was a bit odd, because the GAO presented no evidence that contractors actually had corrupted or seized control of government offices. If anything, the public record suggests that the corruption involved with contracting goes through members of Congress. The most egregious case to date is that of Mitchell Wade, who bribed Rep. Randall “Duke” Cunningham (R-CA) to secure Pentagon contracts for his company. Of course, most influence is far subtler. Many contracting firms have established political action committees that send campaign contributions to Capitol Hill. Anyone who sincerely fears that contractors might be exerting undue influence should look first at congressional campaign finance. Beyond the seasonal run of red herrings is a more fundamental point about contractors that is too easily and too often overlooked. DHS is a demoralized and dysfunctional agency. The unusual extent of its reliance on contractors is both an enabler of its problems and a symptom of its general disorder. The DHS contracting morass simply cannot be understood in isolation from the larger difficulties that envelop the Department. I have seen DHS at close range—so close, in fact, that it has sometimes made me cross-eyed with frustration. Let me be blunt: The regular activity of much of the Department is urgent busywork. Entire offices serve mainly to produce and coordinate impenetrable official plans: the National Response Framework, the National Infrastructure Protection Plan, the National Preparedness Guidelines, the Target Capabilities List, and the National Infrastructure Protection Research and Development Plan, to name some of the more egregious examples. A great deal of the work consists of “coordination”, the sharing of draft documents across government offices in search of concurrence, so the drafts can be submitted to a higher level of the pyramid without dissent. It is difficult to explain what purposes these documents serve. Few contain any clear milestones or means of implementation, and none relates clearly to the others, despite addressing overlapping areas such as disaster preparedness, disaster response and the protection of “critical infrastructure” from the effects of disaster. Often, in fact, these documents conflict with each other. The results would be comical, or suitable material for a new Franz Kafka novel, were they not taxpayer-funded. After the typical DHS plan is drafted, painstakingly coordinated, revised and finally approved for release, it rarely leads to any identifiable actions. Every year or two, when a new appointee takes office or when the organizational charts are reshuffled, the inadequacy (or sheer irrelevance) of the current plan comes to light and the responsible office is instructed to rewrite it, sometimes under a new name. But the results are similar each time around. The reason is straightforward: DHS is not really an integrated organization with agreed, prioritized goals that conform to a realistic budget under the control of senior Departmental officials. It’s more of a Frankenstein’s monster, stitched together from many odd-sized parts—but Igor’s gone missing, so there is no brain. This cycle of futility helps to explain the scale of homeland security business available to the government-services firms, which have been able to hire some of the brightest and most dedicated of aspiring homeland security professionals. But few of those hired to draft and redraft meaningless documents could have anticipated the banality of their work. After a year or two, most lose track of how often they have heard (or uttered) the words—delivered with a rueful shake of the head—“Good for us, bad for the country.” Their Sisyphean labors produce a steady outflow of disillusioned young people, as well as wasted paper and ink. Much of the human capital that could have been the foundation of national public service in the coming decades has moved on to law school or business school. (In some cases, DHS contractor dropouts have turned to local government, or to work in other Federal sectors.) Despite what is often said in other contexts about a “revolving door” relationship between contractors and government, only a handful of DHS contract employees seek positions inside the Department itself. That alone says plenty. If the attractions of “working on site” as a contractor at DHS dim with time, the appeal of contract staff to government managers is steady enough. The civil service enjoys strong job protections; an attempt to loosen up civil-service job protections inside DHS died in the courts in 2005. As a result, the Federal workforce contains both some highly dedicated and energetic public servants and some “on-the-job retirees.” While the “dead wood” is typically in the minority, under the wrong circumstances it can obstruct the rest, with devastating effects on the work of an entire organization. This is all too often the case in short-staffed DHS offices. Contractors, on the other hand, pose no such difficulties. Individuals who do not perform satisfactorily can be replaced with a phone call. If more drastic action is required, entire teams can be replaced; competitors are always hungry for a bite at the apple. In the worst case, if an office is poorly led for too long, the dead wood among the Federal employees tends to drive out the living, who typically seek positions elsewhere within the bureaucracy. But there will always be skilled contractors to write documents and briefings, prepare congressional testimony and continue to justify the existence of questionable bureaucratic niches. And because contractors depend on government offices for their livelihood, they have every reason to salute smartly and carry out whatever instructions they receive. An insidious dynamic results. Contractors have strong incentives to curry favor with their customers, to promise the moon, and to work their staff past the point of burnout to make good on that promise. Because the “customer relationship” is the dearest treasure of the government-services firm, the “customer mission” becomes its highest value. The result is that contractors become enablers. If a government office is not contributing effectively to the larger mission of the Department, or if a government manager has set a foolhardy course, it is not the responsibility of contract staff members to sound the tocsin. Nor it is in their interest. The word least often heard in the world of government professional services is “no.” Just how contractors’ eagerness to please can facilitate dysfunction was illustrated in the Washington Post during the course of the GAO’s 2007 investigations in a front-page article describing the role of Booz Allen Hamilton, the largest of the professional-services firms active in DHS. In 2003, according to the GAO’s research, the firm won a $2 million contract to help establish the new Information Analysis and Infrastructure Protection Directorate (IA/IP). By the end of 2004, through a series of contract modifications, Booz Allen had received more than $30 million, and the effort continued to expand by many millions of dollars thereafter. According to a DHS procurement official, the managers of the program had no plan; they “were unable to provide clear guidance about what they needed to buy.” A Booz Allen official explained that the cost grew as the customer added demands. “What happened was the hours that people were working.”1 Lacking any vision or managerial discipline, the customer kept asking for more work to be done, and the contractors kept saying “yes.” But what was that work? Even as components of DHS go, IA/IP was notable for its confusion of purpose. It was soon duplicated by a separate intelligence-coordination body outside DHS, leaving it without any clear mission. In early 2005, IA/IP was split in two. Both of its former components reorganized, but remained as dependent on contractors as ever. Through no fault of Booz Allen, its work had led to a business success—and facilitated a government failure. DHS’s dysfunction does not arise from manipulation by narrowly self-interested business contractors. Nor is it simply a matter of the undeniable daily realities of government turf battles and incompetence. Rather, DHS is broken at its core. To an extent that may be difficult to appreciate from the outside, its ailments are the product of institutional circumstances, ordained by Congress and the White House, that guide the choices of bureaucrats and contractors alike. Someday, when the proportions of the error are more generally recognized and DHS is considerably diminished in scale, if not abolished outright, it will make a fascinating case study: What happens when an entire department of the Federal government is established by anti-government ideologues? For the time being, we can at least outline some of that future study’s probable conclusions. From the contracting perspective, the most important single issue is the deliberate and systematic understaffing of the Department. Its annual budgets impose strict limits on the “full-time equivalents”, or Federal jobs, that each office can support. In theory, these limits keep the Department lean and mean. In practice, they lead a staff-starved Department to binge on professional services contracts to get much of anything done. Especially problematic is the understaffing of contracting offices: If a Federal department must operate through hired hands, it should at least be able to manage its contracts effectively. In general, though, DHS has not been able to do so. One result of this problem is government managers’ reluctance to rely on their own contracting offices to set up and oversee competitions on a time-consuming, by-the-book basis. Mostly, in the face of urgent demands, they are tempted to make a series of quick modifications to existing contracts. This inclination encourages the sort of “mission creep” discovered by the GAO. Once again, the contractors themselves have no imaginable incentive to resist these practices. A second issue has been the micromanagement of DHS by the White House, which has maintained a special staff for that purpose, called the Homeland Security Council (HSC). Most of the redundant and conflicting plans, frameworks and guidelines described above were originally mandated in a series of Presidential directives issued by the HSC. Each new directive, formulated far from the “trenches” of government, has set into motion another of the cycles of busywork that are the contractor’s boon and bane. Some element of the Department or another must grow in response to each directive, and it does so by signing up one or more contract shops. (The Bush Administration produced 25 Homeland Security Presidential Directives, although some generated more activity than others.) A related problem is the congenital weakness of DHS’s headquarters, notorious in Washington for its anemic policy and management functions. These offices are sharply restricted in their resources and authority, in part by congressional fiat, and in part because they are duplicative of the White House’s HSC staff. The result is a department that is less than the sum of its parts. An analysis of the first five DHS budgets found no evidence of a strong managerial hand: The shares of funds allocated between major operating units of the Department remained virtually constant.2 The effective independence of the operating units from headquarters has frustrated efforts at consolidation and internal coordination, encouraging waste, duplication and rivalry. Finally, DHS lacks the authority to “coordinate” other parts of the Federal government, let alone state or local governments or the private sector. Even more than DHS itself, these others are the “stakeholders” who would carry out the various plans developed by the Department and its hired staff. But the plans have been developed with only pro forma outside input, and they carry scant authority. A case in point is the bemusingly titled National Infrastructure Protection Plan, or NIPP, which, spoken aloud, sounds indistinguishable from an ethnic slur. The plan was mandated by a Presidential directive dated December 2003, and assigned to the very same IA/IP Directorate mentioned above. The directive gave DHS one year to create and release “a comprehensive, integrated National Plan” to establish what sensitive facilities around the country had the highest priority for protection and how that protection would be established. But when December 2004 rolled around, no plan appeared. In February 2005, an “Interim NIPP” did arrive, but at fifty pages including appendices, it was something less than comprehensive. In 2006, the final NIPP arrived on the scene, although it was instantly apparent to readers that it was largely a plan for the development of further plans. These so-called Sector-Specific Plans, 17 in number, were to be created in collaboration with other Federal departments and agencies, state and local governments, and of course the private sector, which happens to control most of the nation’s sensitive facilities. Various working groups slowly worked out the Sector-Specific Plans, most of which also seemed like plans for the development of further plans. The NIPP of 2006 has lately been replaced by a 2009 NIPP. The new version is meant to highlight “resiliency”, reflecting a belated realization that it is often more sensible to duplicate a given piece of “critical infrastructure” than it is to try to turn it into Fort Knox—which DHS lacks the authority to demand in the first place. In response to other, loosely related directives, hauntingly similar processes took place elsewhere in the Department during the same years. Multiple versions of the National Response Plan (or Framework) and the National Preparedness Goal (or Guidelines) were developed through poorly attended interagency, inter-governmental working groups, all in isolation from one another, all seemingly disconnected from any real means of implementation. Each of these plans and its supporting documents were drafted, redrafted and redrafted yet again by teams of energetic but increasingly demoralized young contract staffers, often racing to meet artificial deadlines. Each master document asserts a rival framework to govern the planning of related and overlapping areas of homeland security. And now the good news: Each such plan has been largely ignored by the community of stakeholders it is supposed to guide. There are specks of light deep in the gloom; there always are. But the overall picture remains very dark. Unless a day dawns when DHS has somehow developed internal competencies, vision, confidence, and managerial strength and autonomy, its managers will continue to rely on people who are paid to say yes to them. And the contractors? Well, in an economy like ours today, a job is a salary, plus benefits.
1 Robert O’Harrow, Jr., “Costs Skyrocket As DHS Runs Up No-Bid Contracts: $2 Million Security Project Balloons to $124 Million”, Washington Post, June 28, 2007.
2 See Cindy Williams, “Paying for Homeland Security: Show Me the Money”, MIT Center for International Studies Audit of the Conventional Wisdom (May 2007).