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Scripps Howard News Service May 20, 2004

Homeland Security spent $5 billion on private contracts in first year

By Thomas Hargrove

- The Department of Homeland Security during its first, hectic year of operation paid private contractors at least $5 billion to make America safer from terrorist attack.

The nation's newest and third-largest federal department signed at least 18,505 contracts for an astonishing array of goods and services, ranging from almost $800 million on airport bomb-detection devices to $14.8 million on hotel rooms.

Many of these contracts were signed during a crisislike atmosphere following the Sept. 11, 2001, terrorist attacks, according to the private contractors who filled the orders.

The agency already has spent money in all 50 states and five U.S. territories, according to a study by Scripps Howard News Service of recently released federal files. The information from the General Services Administration provides America's first detailed glimpse into the department's day-to-day operations. The $5 billion in contracts was about one-eighth of the department's $38 billion expenditure.

"It's very difficult to understand how Homeland Security is spending money," said John Pike, director of GlobalSecurity.org, a nonpartisan research organization. "Their publicly released budget information is incoherent. I like to call it a budgetlike object."

Homeland Security Secretary Tom Ridge, while appearing before the 9/11 commission this week, said his department's mission "is about the integration of people and technology to make us smarter, safer, more sophisticated and better protected."

Certainly the technology acquisitions by Ridge's staff have been enormous.

The largest category of expenditure by Homeland Security was at least $792 million for chemical-detection and automated alarm systems, according to the Scripps Howard study. The largest single payment made by Homeland Security officials last year was a $294 million payment to Boeing Service Co., part of a multiyear, $2 billion commitment to install and maintain thousands of explosive-detection systems (EDS) and chemical-trace detectors in 443 airports.

"That contract was let in June of 2002 to install about 6,000 machines. There had been an original plan (before the Sept. 11 attacks) to have deployments of systems like these over a six- to nine-year period. We were able to do this in about 180 days," said Greg Deiter, chief engineer at Boeing's Airport Security Program in Richardson, Texas.

"We brought a lot of resources to bear. Peak employment in this program was about 30,000 people. We even employed every truck that was available for rent on Christmas Day 2002 for equipment deliveries."

Homeland Security's second-largest payment was a $276 million check to Pearson Government Solutions of Arlington, Va., part of a $700 million contract to hire and screen 64,000 employees for the new Transportation Security Administration who now screen baggage and check passengers at major airports.

"There certainly was a lot of pressure to federalize that work force in a very compressed time period," said Pearson Vice President David Hakensen. "We did the hiring in about 100 days. TSA said it was the largest hiring effort by the federal government since World War II."

Homeland Security last year paid at least $256.6 million in 1,609 separate contracts or amendments to contracts to hire what the GSA described as "security guards and patrol services" at hundreds of federal and private plants and installations.

"This was something that happened throughout America. There are rent-a-cops everywhere now," Pike said.

The sudden shuffling of federal personnel immediately after the 2001 terrorist attacks also prompted Homeland Security officials to sign nearly 700 contracts with individual hotels to provide temporary living quarters. The largest single hotel order was a $480,000 payment to the 160-room Holiday Inn Park Central of Port Arthur, Texas.

"That was for the Coast Guard. They all came here right after 9/11, about 100 of them or so," said Phyllis Montis, the Holiday Inn's manager. "They were involved in security and would go out to meet all of the ships before they came into the port. But they've all gone now. They've all rented apartments around here."

The federal department also purchased $13 million worth of small-caliber ammunition, much of it coming from the Federal Cartridge Co. of Anoka, Minn.

"We are the largest supplier of small-caliber ammunition to the federal government, and the volume that we manufacture is going up dramatically," said manufacturer spokesman Bryce Hallowell.

Four years ago, Federal Cartridge produced 350 million rounds of ammunition. This year it expects to manufacture 1.2 billion rounds and expects to produce 1.5 billion next year. But the needs of Homeland Security's armed agents are responsible for only a fraction of this boom in bullet production, Hallowell said.

"It's called the 'Jessica Lynch effect.' Troops who were once not considered to be front-line now need to be qualified riflemen," he said. "The Army has gone through a change in doctrine so that every soldier must qualify (on the rifle and pistol range) for small-caliber arms regularly. ..."

Even U.S. territories like Puerto Rico and Guam have become sites of Homeland Security contract work.

However, more than half of the money is being expended in the area around the nation's capital, with $1.3 billion spent in Virginia, $1.1 billion in the District of Columbia and $219.8 million in Maryland.

But other states, especially those along the Mexican border or areas with sensitive federal facilities, also are receiving considerable amounts of Homeland Security expenditures, led by Texas at $866.5 million, California at $277.6 million and Washington state at $104.8 million.


Copyright 2004, Scripps Howard News Service