Government contracts under review causing job losses at DHS
Homeland Security Department's New Contract Approval Requirements Cause Uncertainty and Disruptions
The Homeland Security Department (DHS) has implemented a new requirement for secretary's office approval for contract awards and modifications worth more than $100,000. This change, which was announced in June, has caused a ripple effect across vendors, DHS components, and small businesses.
The new requirement has led to a decrease in the number of Request for Proposals (RFPs) issued by DHS for major contract vehicles in 2025 compared to 2024, with a 30% reduction observed so far. This decrease in RFPs has resulted in a significant decrease in contract awards, as reported by Deltek, a market research firm, for the period of July 1 through July 28.
The delays in contract approvals and invoice payments have real consequences for companies. One small business executive has already laid off more than 10 employees due to the agency's delays and may shut down by the end of 2025. The uncertainty caused by this requirement is unprecedented in the Homeland Security Department in the last 20 years.
The delays are causing disruptions that risk a delay in the delivery of mission-essential solutions. DHS components are in danger of having services turned off due to delays in approval. The TSA's budget and finance support services contract expired at the end of July, and an award is expected in mid-October, but the delays in contract approvals could potentially disrupt these services.
To mitigate the impacts, the Homeland Security Defense and Business Council advises companies to stay the course and play by the rules during this time of uncertainty. Industry executives also advise companies to avoid making side deals outside the scope of the contract, as it offers no legal protections if performance objectives are not met.
The DHS Office of Small and Disadvantaged Business Utilization has reduced the number of employees, which could further exacerbate the backlog of contract approvals. The acquisition process, including requests for information or sources sought notices, have almost stopped.
While the specific details of the approval requirement for contract awards over $100,000 are not explicitly detailed, some relevant information can be derived from recent DHS documentation and regulatory updates. For instance, FAR Class Deviation 25-15 affects FAR Part 36, which pertains to construction and architect-engineer contracts, and HSAR Part 3036 Updates align with this deviation to enhance clarity and align with the new FAR framework while preserving essential governmentwide acquisition standards.
Despite these updates, the focus remains on the broader procurement changes and their potential implications. The DHS, which traditionally received an "A" grade from the Small Business Administration for its support of small businesses, is now facing a backlash from the small businesses, especially those in the DHS space, due to the delays and lack of communication.
As the situation unfolds, it is crucial for the DHS to address these concerns and find a balance between ensuring accountability and maintaining a smooth and efficient procurement process to avoid further disruptions and potential closures of small businesses.
[1] FAR Class Deviation 25-15: https://www.federalregister.gov/documents/2021/06/14/2021-12480/contracting-for-construction-and-architect-engineer-services-class-deviation-25-15 [2] HSAR Part 3036 Updates: https://www.federalregister.gov/documents/2021/06/14/2021-12480/contracting-for-construction-and-architect-engineer-services-class-deviation-25-15
The Homeland Security Department's new contract approval requirement has significantly impacted small businesses, leading to a potential reevaluation of their acquisition policy. The delays in contract approvals and invoice payments,plus the reduction of employees in the Office of Small and Disadvantaged Business Utilization, have created financial challenges for small businesses.
