Order Code RS21315
September 20, 2002
CRS Report for Congress
Received through the CRS Web
Special Acquisition Authorities Contained in
the House and Senate Proposals to Create a
Department of Homeland Security
John R. Luckey
American law Division
H.R.5005, as passed the House, and Senate Amendment 4471, each of which
propose the creation of a Department of Homeland Security, would grant special
acquisition authorities generally aimed at speeding up and/or simplifying certain
acquisitions during an organizational or transition period (five years in the House
proposal and one year in the Senate proposal). These authorities would affect the
procurement of research and development, personal services, and anti-terrorist
technologies. Procurement would be streamlined through expanded use of the micropurchase threshold, simplified acquisition procedures, and an amended definition of
“commercial item.” The House bill would only grant these authorities to the new
Department, whereas the Senate proposal would grant most of them to all executive
Both the House1 and Senate2 bills under consideration to create the Department of
Homeland Security (DHS) would grant special acquisition authorities generally aimed at
speeding up and/or simplifying certain acquisitions during an organizational or transition
period. These authorities would affect the procurement of research and development,
personal services, and anti-terrorist technologies. Procurement would be streamlined
through expanded use of the micro-purchase threshold, simplified acquisition procedures,
and an amended definition of “commercial item.” The House bill generally grants these
authorities to the new DHS for a period of five years. The Senate bill generally grants
these authorities to all executive agencies for a period of one year.
H.R. 5005 as passed the House on July 26, 2002 (hereinafter referred to as the House bill).
Senate Amendment 4471, 148 Cong. Rec. S8100 (September 3, 2002) (hereinafter referred to
as the Senate bill).
Congressional Research Service ˜ The Library of Congress
“Other Transaction” Authority for Research and Development
The House3 and Senate4 bills would grant the Secretary of DHS authority similar to
that enjoyed by the Secretary of Defense under 10 U.S.C. § 2371 to enter into “other
transactions.” The transactions would be required to be for the purpose of carrying out
certain basic, applied, and advanced research and development projects for response to
existing or emerging terrorist threats. Such authority would expire after five years and
would not be subject to two Defense Department specific administrative provisions.5
An “other transaction” is by definition not a contract, cooperative agreement, or
grant.6 Therefore, such a transaction is not limited by the statutory, regulatory or other
requirements imposed on these more traditional forms of agreement.7 Removal of these
requirements would give DHS greater flexibility in acquiring R&D in this area.
Procurement of Temporary and Intermittent Services
Both bills8 authorize the procurement of temporary (not to exceed one year) or
intermittent personal services including experts or consultants in accordance with 5
U.S.C. § 3109. The pay cap of § 3109 may be exceeded whenever necessary due to
“urgent homeland security need.” Explicit authorization is required to utilize § 3109 and
to exceed its salary limits,9 thus the need for these provisions.
Special Streamlined Acquisition Authority or Emergency
The House and Senate bills contain special authorities in the areas of micro
purchases, simplified acquisition procedures, and designation of commercial items. The
House10 bill would grant to the Secretary of DHS (for a five-year period) certain special
streamlined acquisition authority for procurements whenever a determination has been
made that the mission of the Department would be seriously impaired without the use of
the authority. The Senate bill would grant to all executive agencies11 special emergency
procurement flexibility authorities in these areas. The authorities would limited to
procurements determined to facilitate defense against or recovery from terrorism or
10 U.S.C. § 2371(b) requires “other transaction” authority be exercised through the Defense
Advance Research Projects Agency and subsection (f) established and requires utilization of
certain special accounts in Treasury for funding such transactions.
10 U.S.C. § 2371(a).
See Richard N. Kuyath, The Untapped Potential of the Department of Defense’s “Other
Transaction” Authority, 24 Public Contract Law Journal 521 (Summer 1995).
House bill § 732 and Senate bill § 195.
5 U.S.C. § 3109(b).
nuclear, biological, chemical or radiological attack. Solicitation for a qualified
procurement must be issued within one year of enactment of the provision.12
Micro-Purchase Threshold. The current micro-purchase threshold is $2,500.13
If the aggregate amount of a procurement is under the threshold it may be from any source
using any simplified procedure.14 Most procurement restrictions, such as competition,
Small Business set asides or the Buy American Act, are not applied to micro-purchases.15
The House16 bill would increase the micro-purchase threshold for qualifying
purchases by DHS to $5,000 and allow the designation of up to 7 employees to make such
purchases. The Senate17 bill would raise the micro-purchase threshold for qualifying
purchases by all executive agencies to $10,000.
Simplified Acquisition Procedures. Simplified acquisition procedures are
utilized for procurements of aggregate value of more than the micro-purchase threshold
and less than the simplified acquisition threshold ($2,500 and $100,000).18 These
simplified procedures are intended to reduce administrative costs, improve opportunities
for small business, promote efficiency and economy in contracting, and avoid unnecessary
burdens for agencies and contractors.19
The House20 bill would increase the simplified acquisition threshold for qualifying
purchases by DHS to $175,000. The Senate 21 bill would raise the simplified acquisition
threshold for qualified contracts (which are carried out in support of a humanitarian or
peacekeeping operation or a contingency operation) by all executive agencies to $250,000
for contracts carried out in the United States and $500,000 for contracts carried out
outside the United States.
Commercial Item Designation. If a good or service is a “commercial item” then
special rules and streamlined purchasing procedures are utilized. These procedures may
be used for purchases of up to $5,000,000.22 “Commercial item” means: (1) any item,
other than real property, that is of a type customarily used for non-governmental purposes
and that has been sold, leased, or licensed to the general public; or has been offered for
sale, lease, or license to the general public; (2) any item that evolved from an item
41 U.S.C.§ 428 and FAR § 2.101.
See, FAR § 13.3.
41 U.S.C. § 428(b).
41 U.S.C. § 403 and FAR § 13.
FAR § 13.003.
41 U.S.C. § 427 and FAR § 12.00.
described in paragraph (1) of this definition through advances in technology or
performance and that is not yet available in the commercial marketplace, but will be
available in the commercial marketplace in time to satisfy the delivery requirements under
a Government solicitation; (3) any item that would satisfy a criterion expressed in
paragraphs (1) or (2) of this definition, but for modifications of a type customarily
available in the commercial marketplace; or minor modifications of a type not customarily
available in the commercial marketplace made to meet Federal Government requirements;
(4) any combination of items meeting the requirements of paragraphs (1), (2), (3), or (5)
of this definition that are of a type customarily combined and sold in combination to the
general public; (5) installation services, maintenance services, repair services, training
services, and other services if such services are procured for support of an item referred
to in paragraphs (1), (2), (3), or (4) of this definition, and if the source of such services
offers such services to the general public and the Federal Government contemporaneously
and under similar terms and conditions; and offers to use the same work force for
providing the Federal Government with such services as the source uses for providing
such services to the general public; (6) Services of a type offered and sold competitively
in substantial quantities in the commercial marketplace based on established catalog or
market prices for specific tasks performed under standard commercial terms and
conditions; (7) any item, combination of items, or service referred to in paragraphs (1)
through (6) of this definition, notwithstanding the fact that the item, combination of items,
or service is transferred between or among separate divisions, subsidiaries, or affiliates
of a contractor; or (8) A non-developmental item, if the procuring agency determines the
item was developed exclusively at private expense and sold in substantial quantities, on
a competitive basis, to multiple State and local governments.23
The House bill authorizes the Secretary of DHS to deem as a “commercial item”
purchase any procurement for which a determination has been made that the mission of
the Department would be seriously impaired without the use of the authority. For these
deemed commercial items the threshold would be raised to $7,500,000.24
The Senate bill authorizes the head of any executive agency to apply the
“commercial items laws” for procurements determined to facilitate defense against or
recovery from terrorism or nuclear, biological, chemical or radiological attack. For these
procurements, the $5,000,000 threshold would not be applied.
FAR § 2.101.