The Risks of Homeland Security
Since 2003, DHS contract values have increased by 189%, with the number of contracts rising from 14,000 in 2003 to 63,000 in 2005, according to a 2006 House Gov. Reform Committee Report.
Like other wars, the war on terrorism propels dramatic increases in spending, such as the $10 billion US VISIT, $2 billion SBInet, and $2 billion FirstSource programs. Historically, such spending increases have come with intense governmental oversight and scrutiny – followed by investigations, audits, and charges of “war profiteering,” fraud, waste, and abuse.
In the relatively short lifetime of Homeland Security, major risk areas have emerged, forcing radical changes in the ways that both the public and private sectors do business.
Liability & Risk of Loss. The 9/11 terrorist attacks shattered traditional risk allocation models, hurling the insurance market into disequilibrium and creating catastrophic risks for entire sectors of industry. To rebalance such risks, the private sector may have a variety of strategies, including the SAFETY Act, Public Law 85-804 indemnification, and special Congressional legislation.
Information Risks. Information sharing – a core Homeland Security mission – poses unprecedented challenges in the information arena, such as privacy, cybersecurity, and international data exchanges.
- Privacy: Concerns about privacy have caused delays, restructuring, and even termination of Homeland Security programs, including Total Information Awareness, Secure Flight, CAPPS II, and MATRIX.
- Cybersecurity: Both federal agencies and private companies face heightened duties for information security, including our critical infrastructure, such as the energy sector.
- International: Domestic laws, like the USA PATRIOT Act, increasingly clash with international privacy requirements.
Oversight Risks. Congressional committees, Inspector Generals, fraud investigators, whistleblowers, and the press are all poised to publicize missteps and seek to hold governmental agencies and private entities accountable. A few examples offer a flavor of such oversight risks:
- House Government Reform Committee (July 2006): “Predictably, this lack of accountability and control has unleashed a seemingly endless succession of disastrous acquisitions at [DHS]. These include: a $104 million Transportation Security Administration contract to train airport screeners that ballooned into a cost of more than $700 million; airport bomb-detection machines that continually produce false alarms; billion-dollar technology contracts that have yet to provide basic information technology and a telecommunications infrastructure for many of our nation’s airports; and of course, the Federal Emergency Management Agency’s Katrina-related fiascos.”
- DHS IG (Nov. 2006): “At the same time, the urgency and complexity of the [DHS] mission create an environment in which many programs have acquisitions with a high risk of cost overruns, mismanagement, or failure.”
- Charleston Post and Courier (July 27, 2006): “But it has become glaringly apparent that some also consider DHS a cash cow, there for the milking.”
Acquisition Risks. A host of Homeland Security acquisitions have hit the buzz-saw, as Congress, GAO and others have reported a lack of requirements definition, information security, reliable cost estimating, test management, and risk management. As a result, major Homeland Security programs (US VISIT, ACE, ISIS, ASI, and others) have been investigated, delayed, downsized, or even canceled due to cost overruns, missed milestones, and/or performance shortfalls.
How We Can Help
We are Committed. As the General Counsel of one of our major clients stated, “We must be in the Homeland Security business because it is the right thing to do.” We agree.
We are Fully Interoperable. Just as the creation of the Department of Homeland Security (DHS) and the reorganization of the Intelligence community sought to tear down smokestacks and fully integrate these functions into a working whole, our Homeland Security team cuts across Crowell & Moring practice groups to bring you targeted and tailored solutions.
We are Deeply Experienced. Our world-class experience in Government Contracts, Aviation, Privacy, White Collar, Government Relations, False Claims Act, and other areas means that you have ready access to a deep bench of expertise to handle Homeland Security risks.
Whom to Contact
For information on how Crowell & Moring LLP can help you, contact David Z. Bodenheimer, the head of the Homeland Security practice.