The Homeland Security Department Act of 2002 was signed into law on November 25, 2002. The new department will be "born" on January 24, 2003.
In this 5th installment of our series "Selling to the Department of Homeland Security," we take a look at department procurement rules, focusing on four key areas.
1. Other Transactions
The act authorizes the Department of Homeland Security to engage in transactions other than contracts, grants, and cooperative agreements for research and development and prototype efforts.
This is the so-called "other transaction" authority that the Defense Advance Research Projects Agency (DARPA) enjoys. The policy behind the authority is to attract the business of non-traditional contractors that offer innovative technology -- i.e., high tech companies that typically avoid federal contracting.
As we noted in Installment 43 of our "Doing Business with Government" series, there are two types of other transactions (OTs):
- Research or Science and Technology, and
- Prototype Authority.
Contracting officers may use the first type, research OTs, only when it is not feasible to use a standard contract, grant or cooperative agreement. Research OTs cannot be procurement contracts.
The second type, prototype OTs, CAN be procurement contracts. The primary restrictions on the use of prototype OTs are:
- No duplication of research
- Competitive procedures must be used to the maximum extent practicable
- Annual reporting to Congress
Although they're procurement contracts, prototype OTs are not be subject to the Federal Acquisition Regulation (FAR) and its supplements, the Competition in Contracting Act or the Contract Disputes Acts.
2. Personal Service Contracts
The act authorizes the new department to contract directly for private sector services, such as consultants and experts, using contracting methods that allow for the creation of an employer-employee relationship. This is an exception to the general FAR rule that says federal agencies may not acquire personal services.
For more on the general rule, the so-called nonpersonal services rule, see Installment 49 of our "Doing Business" series.
3. Authority to Waive Procurement Laws
The act authorizes the department to avoid the application of any procurement statute or regulation that would impair the accomplishment of the department’s mission. The department has three primary missions:
- Prevent terrorist attacks within the United States,
- Reduce America's vulnerability to terrorism, and
- Minimize the damage from potential attacks and natural disasters.
This exemption provides authority for necessary purchases or disposals that otherwise might not be allowed under existing law. The same statutory authority exists for the Central Intelligence Agency and the Atomic Energy Commission.
4. Higher Thresholds
The micropurchase threshold is raised from $2,500 to $7,500 for "certain employees of the Department." The simplified acquisition threshold is $200,000 within the U.S. and $300,000 outside the country. The commercial item limitation is $7.5 million for the department, rather than $5 million.
More Information
Homeland Security Act of 2002
http://www.whitehouse.gov/deptofhomeland/bill/index.html
Office of Personnel Management and the Office of Homeland Security
http://www.dhs.gov/employees/index.cfm
