 Good morning. Welcome to the Center for Strategic and International Studies. My name is David Burto. I am the Director of our National Security Program on Industry and Resources. With me on the stage here this morning is Jesse Elman, who is a research associate in the program. And he is one of the two people most responsible for the report that you have this morning. I'd also like to welcome our viewers on the web. Thank you for joining us this morning. If you're on the web, you should be able to find on the right-hand side of the page that has the video, the slides that we're going to be using this morning. You can download those slides. If we're true to our notes, we will tell you which slide number we're on so that you can flip through them yourself. For those of you with us in the room here, the report is available. And most of the slides are in the report, you know, a couple of methodological slides and some backup slides we have that are not in the report. The report also should be available for download if you're on the website with us this morning. For those of you in the room, I'd like to remind you to silence your cell phones and other noisy electronic devices. I have duly silenced mine. And for those of you on the web, when we get to the end for questions, I'll give you my email if you want to email questions in, you can do that. For those in the room, we'll follow our normal questions procedure using microphones. I mentioned Jesse Elman. I also want to thank Greg Sanders. He is our research fellow for much of our federal procurement data system work, work on this report. Meredith Boyle for organizing the event this morning. And our interns who are pulling it all off Madison Riley, Ben Chang, Megan Dowdy, and Geneva Smith. Special thanks to the CSIS Homeland Security Encounterterrorism Program, Rob Wise, who is the director of the, I mean, program manager in that program, given us a lot of technical advice. And particular thanks to Stephanie Sanicastro, who has been the head of that program for about a year and a half. Now she is on a well-deserved maternity leave with baby Catherine and husband Rich, who made it home from Afghanistan in time, or just about in time anyway. Is there an hour? That's much more in time. This is the fourth year we've been looking at the Department of Homeland Security contract spending. And in that time, there have been a number of interesting changes inside it. We're going to walk you through our slides this morning. I'm going to break at about the, oh, 15th slide or so for questions. I'm reminded of when I'm lecturing my students. If there are no questions, I have plenty more lecture. So we'll try to break for questions about 15 slides in and return to the material if you want. So let me have the next slide if you would, Jesse. The Department of Homeland Security, of course, was created by statute in late 2002, stood up initially in 2003. So it was already part way through fiscal year 2003 at the beginning. Fiscal year 2004 is the first full year of DHS data, both from an outlays and spending perspective and from a contracts obligation perspective. So we use this slide, if you will, to put it in context. We've got all 10 years of DHS's history up here, and this report will focus, the report focuses on all 10 years. Our conversation this morning, though, will probably focus primarily on the last year, the impact of sequester year, if you will, because that's of the most interest, both from the point of view of historically what happened and also to begin to answer to question what's going to happen in 14, what's going to happen in 15 and 16. So the historical record from 10 years back is not necessarily a predictor of the future, if you will. This slide gives you the context for overall DHS spending. Each of the bars has four elements to it. The bottom is contract obligations. We're on the you've already moved past the methodology slide. That's because actually I have slides on both sides of my paper, and I was skipping over the methodology slide. But we're going to come back to methodology if we need to. I'll mention a couple of things along the way. This slide is converted to constant dollars in FY $13. So if you look back at previous years, you won't recognize the numbers at all. That's not what the numbers look like in those fiscal years, but it gives you a comparison over time, if you will. The bottom we have contract obligations. I would note that the contract obligations in 2013 were the lowest total in DHS since its first year, since 2004. It's the fewest dollars obligated under contract since the department was first stood up. The second is a category that we've broken out this year for the first time, and that's grant award data. Jesse, you might say a little bit about where we get our grant data and some of the problems that we found there. We get our grant data from the Federal Assistance Award data system, which is similar to where we get our contract data, the Federal Procurement Data System. The Federal Assistance Award data system, or FADS, is a relatively immature database relative to FPDS. And you'll see that when we get to that data in that we've encountered significant issues with data fields not properly filled in, data fields not filled in at all, significant amounts of grant awards that we know should be in the database that are not in the database. And so we tried to do with this data is not so much analyze trends. It's just set a baseline and identify issues that we think can be correctly going forward to improve the data. What we found, especially with FPDS, is as the database is used more, the data tends to improve, and we hope that's going to be the case with the grants data. For example, with the Federal Procurement Data System, beginning with this administration, they actually started tracking and reporting using numbers in the Federal Procurement Data System as a means of OMB evaluating agency performance against some of the President's guidance, if you will. It's remarkable how much better data get when, in fact, they're being paid attention to by the chain of command and we expect to see a similar dynamic coming out of FADS going forward, if you will. So that's our grant data, and that's the second element of it. We then break down, again, this year for the first time, noncontract outlays into two categories, FEMA and non-FEMA. So you have the marvelous title of the third element of this bar of non-FEMA, noncontract, non-grant outlays. What that means is all the dollars that DHS spent that was not on a grant, not on a contract, and not spent by FEMA. And then we break out FEMA separately because by and large, the biggest swings of difference year to year in DHS spending is in FEMA, and of course it's obviously driven by major natural disasters and FEMA's response to those disasters. From a sequester year point of view, you'll notice that you won't pick it up exactly on this chart, but you'll see the differences at the bottom, if you will, of what happened between 2012, the last year before sequester, and 2013, the impact of sequester. What we had for contract obligations is a decline of about 5 percent between fiscal year 12 and fiscal year 13. And these are obligations, not outlays, so obviously outlays lag a little bit from obligations. For grant awards, they were actually up 6 percent between 12 and 13. So sequester impact was negative there, but some of the grant awards are actually tied to sandy, so that's not a surprise. For FEMA outlays, they were actually up 227 percent between 12 and 13. That's almost all due to, was it called winter storm sandy or something by the time it actually got labeled, if you will. I think of it as a hurricane. And non-FEMA, non-contract, non-grant outlays down 4 percent. That's roughly equal to what the sequester share would be. And as you know, the guidance for a sequester was everybody pays their fair share, and so by and large, that's what you see outside of that. It's interesting because non-contract outlays that are not in FEMA, if you will, have been fairly stable since 2009, swinging only about 6 or 8 or 10 percent per year across the board year over year, if you will, so they've been relatively stable there. Jesse, you want to add anything on that? The one interesting thing to note, and which was a little bit unexpected when we first approached this data, if you look in 2005 and 2006, when you see the impact of Hurricane Ivan and Hurricane Katrina, you not only see a big jump in FEMA outlays, you also see large jumps in both contracts and grants. But if you look between 2012 and 2013, where you see the impact of Hurricane Sandy, you see the big jump in FEMA outlays, but you don't see the same kind of increase in contracts or grants. Part of this may be just the differences in the kind of impact you saw between Ivan and Katrina and Sandy, but we think partly this reflects a slightly differing approach to how FEMA approaches disaster response, less through contracts and grants, or at least less through direct contracts and grants administered and funded by FEMA, and more through direct aid. We suspect some of this is direct aid to states which then contract out. We suspect some of this is money transferred to other agencies like DoD, specifically the Army Corps of Engineers, some of which is then contracted out. But DHS is not doing the same level of disaster response contracting for Sandy in recent years as you saw in the wake of Ivan and Katrina. One of the things I should note about data in the Federal Procurement Data System is it doesn't give us the source of funding, if you will. So appropriated dollars that are in the regular appropriations for DHS are joined together with appropriated dollars from emergency supplementals, which of course tend to be the source of funding for hurricane relief, and the FPDS itself does not separate those. There are beginnings of some new data that does track to appropriations. We are going to wait until those are a little more mature before we bring them into our trend analysis. Let me go to slide four then, Jesse, if you would. This next set of slides focuses now purely on contract obligations. So that's basically what we're going to focus on for the next six or eight slides, if you will. We array DHS data by five major components, the Customs and Border Protection, the U.S. Coast Guard, the Federal Emergency Management Agency, Immigration and Customs Enforcement, and TSA, as well as something called the Office of Procurement Operations, which is a nice lumping of essentially the science and technology contracts and IT contracts across DHS. And then we have a fairly decent chunk, which we call other, which is all the other little pieces of DHS lumped together, Secret Service, et cetera. So this chart gives you the breakdown by those five components plus Office of Procurement Operations and other. One thing to note here in the year-to-year changes, and particularly the sequester impact changes, is the impact of a single contract on DHS. So the total contract obligation in DHS, just under $13 billion for the year, down from a high of around $15 billion, a single $500 million award for a Coast Guard cutter is a big chunk. It actually moves the needle on a number of categories, if you will. So this particular year, for instance, where Coast Guard is actually up in sequester year, it's up because of a cutter, which is about a $500 million contract, a little under $500 million in the actual contract, but total obligations are there. So that one swing, if you will, makes a fairly substantial difference. But look at the sequester impact from some of the others. So all of DHS is down about 3 percent in contract obligations for the sequester year. If you took the cutter out of the baseline, in other words, if the cutter had not occurred in the sequester year, it's down about 5.5 percent. That's kind of our benchmark over the next few charts of comparing relative impact from sequester year against aggregate impact of sequester year. So with that in mind, Coast Guard is actually up. FEMA is actually up, not surprised. That's a sandy impact. Immigrations is down by 13 percent, so that's more than triple what the fair share of sequester impact would be. This is contract obligations. TSA down 15 percent, and Customs and Border Protection roughly average with sequester. So what you see is the sequestration impact is not evenly distributed, at least in terms of contracts across the components of DHS. In fact, the distribution is quite varied, if you will. Jesse, you want to add anything on this? Two brief methodological notes. One, you may notice that in 2010 FEMA contract obligations look particularly low. That's because FEMA had an $800 million de-obligation in that year of prior year disaster relief contracts. We haven't been able to track down, FPDS does not give us the visibility to track down what years that money comes from. We suspect it's related to hurricanes Ivan and Katrina, primarily Katrina. The other thing to note with this chart and the charts going forward, you'll notice that our main number is, for overall DHS, is negative 3 percent. You may have noticed on the context chart that it was negative 4 percent. That's just a difference of how we look at contracts. The initial chart looks at ads in contracts funded by DHS, but administered by everywhere else. For all of our other charts, we're only looking at contracts that are actually administered by DHS. So from the point of view of Department of Homeland Security is your customer market. This is the relevant portion, if you will. This is funded by DHS, administered by DHS, not funds from elsewhere. So let's look at contract obligations by area. This is slide 5 if you're following along on the web, if you will. We break down our contract obligations in a way that's slightly different than the Federal Procurement Data System. The Federal Procurement Data System basically categorizes all contracts as either products or services. We break out services by our own definitions of categories, if you will. First, we lump R&D together separately. And for many areas, we like to compare products and R&D because R&D is more of an investment than it is a service in terms of where the government gains its benefits, if you will. And then inside the remainder of the services, we have professional administrative and management services called PAMS on this chart. We have equipment-related services, ERS. We have facilities-related services and construction, that's FRS. And we have medical and ICT, which is Information and Communications Technology. So this slide gives you those seven areas, if you will, and allows you to look at the breakdown both over time by actual dollars and then the relative changes in FY13 as a result of sequestration impact. One of the relative constants is that DHS back to 2008 has been roughly $3 in services spending contract obligations for every dollar in products. And that's been almost a constant. It's ranged from like 77 to 22 percent to 75 to 25 percent. And since R&D is only about 3 percent, it roughly keeps that same even if you take R&D out of the picture, if you will. So if you're in the product business, DHS is not exactly your area of future market growth, if you will. Within that, though, the sequester year impact was not nearly as stable. What you saw was that equipment-related services, facilities-related services, Information and Communications Technology-related services were all down at more than twice the average of the sequester decline. So in terms of overall market share, all of those services areas declined considerably. And then by component it varies a whole lot as well. For instance, some of the components professional administrative and management services actually went up during the sequester year. Others went down considerably. Some of this had to do, for instance, in the case of Coast Guard, it appears that Congress didn't appropriate exactly all the funding they needed for the cutter. So they had to go find that money elsewhere. And as a result, contract spending on other contracts went down inside the Coast Guard, and you can sort of see the effect of that. Jesse, you want to add anything to that? Primarily here, you'll see in the next few slides that there's an issue of data labeling. That isn't really an issue here because we go off of government product and service codes. Also, these categories are crosswalkable with government categories. DoD has their own categories. DHS, I believe, has their own system of categorization. We can crosswalk with the government classification of products and services. We essentially group these into categories we think make sense from an analytical point of view to reveal trends that in certain segments of the market. Now we want to look at competition. So let's look at slide 6. This is not in your report. For those of you who do your own FPDS analysis, we provide you the crosswalk from the 17 categories of competition that the federal procurement data system allows entry into to the four categories that we use for our reporting purposes, if you will. Those four categories are competitive solicitation with multiple offers, and we sometimes break that down into two, three, or four, or five, or more. Competitive solicitations with a single offer, and we believe that frequently the soliciting organization has a pretty good idea that they're only going to get a single offer when they do a competitive solicitation that has a single bid. Then we do the sole source awards, which are any competitions or any contract that are entered using one of the exceptions for competition under the Competition and Contracting Act. And then finally we have what we call unlabeled, which basically means confusing entries that are inconsistent with one another. For instance, a competitive solicitation that was awarded but had no bids from our perspective. That's a little bit of a non-sequitur, so we call that category. Unlabeled, what it really is, is badly mislabeled, if you will. So this is our crosswalk. Let's go to the next slide and let's look at what the results are there. So now I'm on slide 7. For those of you who have the slide deck at home, across DHS, keep in mind, we've got roughly a 3% decline in contract obligations, discounting for the CUTR award about a 5.5% decline. So that's kind of your benchmark, if you will, in terms of competition. What we saw in sequester year was a very significant jump in sole source awards, a 15% growth in a single year as contract obligations were actually declining. In fact, sole source awards in DHS have gone from about 1 7th of total contract obligations back in 2009 to 2 7th of total contract obligations in 2013. However, that was done in part because of a decline in competition with a single offer. And we believe there's actually a correlation there because in an awful lot of times you actually know you're only going to get one bid. If you wanted to go to the trouble of a sole source justification for a sole source award, you probably have the basis for doing so under a CECA exception. And what looks like probably happened in DHS in 2013 is in fact a recognition of that and a movement in that direction, if you will. Because if you look at the total award combination, if you will, of no competition of sole source awards and competition with a single offer, it was 44% of total contract obligations back in 2009, those two categories together, 45% of total contract obligations in 2013. So there's a fair element of stability in that regard, if you will. What we did see the increase, if you will, was in competition with three to four offers where the chart shows 0% difference, but keep in mind overall contract obligations down about 5.5%. So what you saw, what you would expect to see as a result of sequestration is in fact more competition in the areas where competition was already in place. And that's exactly what you end up seeing in this area here. In places where in fact there's only a single source, you see less competition under sequestration. Jesse, you want to add anything? You'll notice the bottom bar for unlabeled. Back in 2009, that was almost $2.7 billion, which was 15% or 17% of total DHS contract obligations. We couldn't identify the degree of competition because the data labeling was not there. They've made significant strides to that effect. It's down to less than 2%. What we've seen is what we suspect is that as unlabeled has gone down, there have been increases both in no competition and competition with 5 plus offers. This is a bit anomalous in most agencies we've looked at when the data labeling has improved for competition. Just no competition has increases kind of concurrently. So what we suspect is that the unlabeled was masking both some no competition and some highly competitive contract awards, oddly enough. The other thing to note here is that this is not a coincidence. The Chief Procurement Officer, Nick Nyack at DHS, has a team that looks at the DHS entries every single day. They pull the FPDS entries from DHS every single day, looks at them over a certain threshold to see if something looks off, some data is mislabeled. We suspect as a result of this, they've made very significant strides in the quality of their data entry. Thank you, Jesse. It's worth pointing out we've seen tremendous results from that in our data as we've watched over the last few years. Nick Nyack and his team deserve a big shout out in that regard. Let's go to slide 8 now. This is another methodological piece. If you will, you won't find it in your report. This basically walks you through the 17 different FPDS categories of what we call pricing mechanism to the five categories that we use, fixed price, cost reimbursable, time and materials, combination and unlabeled. Now, a word of caution here. Combination in the guidance for the Federal Procurement Data System entry. And keep in mind every one of these 700,000 contract actions a year being entered by a human being sitting down at a computer entering data into the Federal Procurement Data System. Basically what combination means is you have a combination of contract line item numbers of cleanse, some of which are fixed price in their basis and some of which are cost reimbursable. And it's too hard for the interurer to determine which of the two categories they should be put into. That doesn't mean that in the fixed price category there aren't some contracts with cleanse that are in fact on a cost reimbursable basis or that in the cost reimbursable category there aren't some cleanse that are fixed price. It's the predominance of the expected obligations that drive this, if you will. But we believe that over time these differences tend to mask themselves from trend analysis point of view so they don't actually skew the trend data one way or the other. Let's go then to slide 11. I'm sorry. Slide 9, right? So if you look then at this basis you'll see, and again using the sequester year of a minus 3% as your benchmark, fixed price contracts dramatically increased as a percentage of total DHS spending in the sequester year. Up 5% in terms of contract obligations between 2012 and 2013 as overall contract obligations were declining 3%. Cost reimbursable down 18% in that time period. Time in materials down 10%. This indicates to us a very serious push for fixed price contracting across DHS. The anecdotes that we've heard from the companies in the business certainly reinforce that if you will. A lot more focus on fixed price contracts as part of this. Pretty dramatic reduction in the other categories but they're so small that they don't even show up on the bar graph. So the 56% reduction in combination is rounds off to not much difference one way or the other if you will. We also look at spending or contract spending by contract vehicle. Slide 10 if you will. And here we break down into a variety of categories. The bottom one with a blue part with the 2.7 billion is definitive contracts. That was up 3% year over year. However, keep in mind there's a $500 million contract for a cutter in there and so that skews that number if you will. Purchase orders which is only down to about $300 million now declined by 10% over the year. Single award IDCs up 3% and this is actually a huge chunk of DHS spending across all components now. Multiple award IDCs down considerably. Now we think this is actually the result of obviously thousands of task orders being issued on these IDC contracts and so there's no one particular set of actions that drives these numbers if you will. And significantly less spending now on the Federal Supply Schedule down from $4 billion 3 years ago to $3 billion last year. Jesse you want to add anything on this? With both this chart and the last chart you again see the improvements in data quality and the decline in the unlabeled which were at the bottom. One note on the last chart the contract pricing mechanism chart. The decline in the unlabeled was concurrent with a rise in fixed price contracting. We suspect that the unlabeled and the combination were masking the degree to which there was fixed price contracting within DHS. Also note that the increase in fixed price in 2013 a lot of the cutter was awarded under a fixed price incentive fee contract so part of that increase was due to the fact that you had that $500 million contract for the cutter. Thanks. Let's go to slide 11 now. We also break out our data by contract size because and we actually have in the backup material some interesting analysis of the levels of competition based upon contract size and we may bring that up before we finish here this morning. Starting at the bottom so we've got basically the six categories of contracts are under $250,000 and keep in mind Federal procurement data system captures theoretically every contract action of $2,500 or more. So this is about $1 billion in FY13 down about 10% year over year so slightly bigger than average about double the average of what the sequester impact would be. Contracts between $250,000 and a million down about 10% roughly its fair share of sequester impact. Similarly with contracts between $1 million and $25 million which is half of total DHS contract obligations fall into contracts of that size, $1 million to $25 million and that spread almost equally across all DHS components in terms of the volume of contract actions of that size. About $3 billion in the $25 million to $100 million category and this actually was flat year over year which basically indicates that it did very well under sequester impact with no negative impact at all. And then the $100 million to $500 million range substantial drop, 29% drop year over year. This is about three or four contracts is all it takes to create that level of fall if you will. And then of course you can see on the top the orange Coast Guard Cutter in 2011 and the orange Coast Guard Cutter in 2013. Those are your only greater than $500 million contracts since Hurricane Katrina back in 2006 if you will. We then look at vendor size, slide 12 if you will. We break down the size of vendor into three basic categories. One is we call small and that's any company that the data are entered into the Federal Procurement Data System using a small business set aside category if you will. We track this by DUNS codes and so we actually have cases of some vendors hundreds of DUNS codes that we sort out and align with the company if you will. We define large as any company the amalgamation of which all of their revenue from all sources government, non-government, domestic and international is $3 billion a year or more. And then we define medium as everything in between. This is a little bit misleading because a chunk of your medium-sized companies are those that have just graduated from small business category and you're clearly not a billion-dollar a year company. Others are in that $500 million a year, $1 billion a year, $1.5 billion a year range and they're clearly a very different type of company especially in a DHS market than a company that's just graduated from small business. We're wrestling with that methodologically in terms of how we might proceed going forward but our trend analysis for years has been into these categories. And then just for convenience sake we break out what we have been calling the Big Six. These are your largest Federal contractors if you will Lockheed Martin General Dynamics, Boeing Northrop Grumman Raytheon and BAE Systems. And so we break those down. Even inside the Department of Homeland Security they have a non-trivial portion of the total contract spend. It's interesting what happened in sequester year though. Small businesses essentially stable a decline of 3 percent which is roughly their share of a 3 percent overall decline. Medium business actually gained a bit up 1 percent for the year. So a slight improvement in the position overall of medium-sized businesses even as sequester spending was down 3 percent. Large businesses actually also did a little better than average with a decline of only 1 percent. And the biggest impact was in the Big Six where they lost 1 fourth of their dollar value if you will in FY13 as a result of the sequester. I think if you went back one chart Jesse, you'd see probably a fairly high degree of correlation between that significant drop in the $100 million to $500 million contract range on this slide and go forward and the reduction in in fact the share of the Big Six. I don't think we've done the contract by contract comparison but I suspect you'd see a high correlation between those two going forward. So let's look at the vendors now. I should add here from a physiological point of view the Federal Procurement Data System lists only prime contract dollars. We do not have good public data that allows us to break out subcontract dollars. And so these numbers do not match what companies report as revenue. In fact they don't even come close to what companies report as revenue. They are however what the public data says the prime contract dollar value obligations were for the top 20 DHS vendors. We've got actually 4 sets of data here. On the left hand side we have the top 20 vendors in 2008 ranked 1 through 20 and then next to it we show their dollar obligations in 2013 constant dollars. Then we also show their 2007 ranks. So you can see the change year over year between 7 and 8. Then on the right hand side we have the top 20 vendors in 2013 and we show the 2012 rank and the amounts associated with those as well. I'll turn to some of my notes on this chart. One interesting point of course the companies do change and they change in part due to the types of contracts being awarded. When you're only awarded between 12 and 15 billion a year a single large contract can move you up or down this list fairly rapidly if you will. The second thing you would see particularly if you had for instance the 2006 list is you see a huge impact from contracts as a result of Hurricane Katrina. Those are all gone and you don't really see much of a Sandy impact in the 2013 list or Sandy impact in changes from 12 to 13. This reflects what Jesse pointed out earlier is that the response to Hurricane Sandy was largely not in the form of contracts. It was much more in the form of direct spending or of money transferred to other agencies. What you do see though is that the share of the top 5 in 2008 was about 43 percent that 2.441 billion dollars of their obligations in 2008 was about 43 percent of total DHS spending. By 2013, I'm sorry, that's the share of the top 20. So the top 5 share of the top 20 not of total DHS spending. By 2013 the top 5 actually had 51 percent of the top 20 total contract obligations. So you do see a bit more of a concentration amongst those top 5. I would note, however, that the top 5 have all changed in that period of time. And so I would read too much into that if you will. The other thing is the overall share of DHS contract obligations that are gathered by these top 20. It was 37 percent in 2008. It's 36 percent in 2013. That looks like for the point of view of the market a fairly stable and competitive market going forward if you will. Let's turn now to slide 14 and look at grants. Jesse, you want to describe our grants data a little bit? So what we've done here, all the FADS database uses the catalog of Federal Direct Assistance assignments for program titles and program numbers. We've taken each of the grant programs within DHS and assigned them into purpose categories with the exception of the Homeland Security Grant Program, which is a grouping of several large grant programs within DHS. That gets its own category because it's so much money. We've grouped them into counterterrorism and infrastructure security, disaster preparedness, disaster response, transportation security, and other which is just a catch-all for a few small programs. One thing to note here is that several of these programs have elements within them that may cross over into two or more of these categories but the FADS database doesn't give us any visibility beyond the top level program of any sub programs within that grant program. So we've done our best to assign these programs to one of these categories based on what we felt investigating it was the main purpose of that grant. Be aware though that there is some money that could be classified into two or more of these categories. What you do see here and the one thing that we were hesitant to do trend analysis there are some very serious data gaps, the ones we identified primarily with the Homeland Security Grant Program. You'll notice that in 2010 the Homeland Security Grant Program disappears. That's not because there was no money. There was $1.8 billion in awards for the Homeland Security Grant Program in 2010. In FADS there was negative $1 million in awards. We have no indication that they stopped awarding money under this program in 2010. The data is just missing from the database. Similarly in 2012 and 2013 about half of the awards under the Homeland Security Grant Program about 300 million to 500 million each year are just missing from the database. Based on this we're hesitant to do any sort of trend analysis because we're just not confident that the data in the database is robust and complete. But what we are doing is using this as a baseline to go forward to A track improvements in the data and B just see kind of where the money is going. The one thing you will see is the vast majority of grants within DHS do go to disaster response in one form or another. I should note that DHS is fully aware of this. They're working on it and we expect that by the time we stand up in front of you next year with our DHS contract trends report this will have been fixed at least to the point where we've got numbers that seem to match reality. So we're excited about that possibility. The things we get excited about here at CSIS are somewhat small in nature sometimes when it comes to contract and grant data. Nonetheless what this does is allows us to get a picture first of how much money is going into these grant programs and they've changed dramatically over time and Congress continues to fiddle with the boundaries of the programs and their purposes if you will. And if we look at slide 15 you'll see who's getting them. So if you're in the business of working for a state or local government in a disaster area you're excited to see these numbers. If you're actually trying to pursue contracts these are pretty meaningless to you because although almost all of these recipients then turn around and spend the money a good chunk of this money is spent under contracts. So as a secondary market for businesses it's a very large market if you will but it's not a very concentrated market, it's not a very centralized market and it's not a very market and not a market that you can target very well from Washington. Let me pause there. Let's see, in fact why don't you go ahead and put the next slide up. Yeah this looks like a suitably good place to pause. We do have some additional material we could walk you through in terms of level of competition by component in terms of contract size by DHS component and competition by contract size and size of vendor. But let me pause there and invite questions if you will. If you're in the room you want to ask a question just raise your hand. One of our staff will bring you a microphone and you would in fact speak into the microphone, identify yourself and your affiliation and then ask your question and we'll do our best to respond to it. Anybody have a question? If you're watching from the web you can email them to me at dberteu.csis.org and I'll pick the good ones and I like questions by email because I can filter them a little better than questions from the room. Let's start on the back here if you would Geneva. How are you doing? I'm at the Homeland Security Studies and Analysis Institute. It's a federally funded research and development center. So my question is did you consider FFRDCs in your data collection? Thank you. I do FFRDCs if I recall correctly and Greg please correct me if I'm wrong on this would show up in our list of top vendors if they made it into the top 20. We don't break out that data separately but the FEDS data with some work would theoretically allow us to identify contracts going to the FFRDCs. In addition we have looked over time at the award there and the competition contracting exception of course is pretty diligently followed in that regard. That's not only true for DHSSAI but for FFRDCs across government contracting. But it's probably not worth breaking out separately because it's not a significant enough portion that it skews the rest of the data I don't think. There's often a debate as to whether spending with FFRDCs federally funded R&D centers should somehow be spent in open competition with other sources as well. Every study that I've been on that looks at that finds a very strong, valid area if you will of reason to maintain separate federally funded R&D centers and other similar entities across the government. The issues are all on the boundaries and the edges rather than on the core question if you will. Other questions in the room? My name is Joe Karahi. I am a consultant with McConnell International Consulting on DHS Affairs and the DHS alumni. I was wondering if you were able to look at the effect of the significant delays to the EGLE II competition in DHS contracting and how it might have affected dollars spent in one year or another and perhaps how it led to an increase in no competition activities. I think you mentioned that you only looked at DHS contracts that were administered by DHS and not other parts of the government and I think there was a significant movement away from DHS contracting to other parts of the government with the delay in EGLE II. I think you are absolutely right. There certainly was evidence of that in a lot of the stories that were in the trade press at the time. The difficulty of tracking that in the Federal Procurement Data System is often it will not have the actual contract that was used if you will. You can track back by contract number but the transactions if you will of going from an individual contract inside FPDS back to the original contract and particular decisions that were made to use that as opposed to a different one. I think it is probably a little bit beyond our analytical reach with the staff and the time that we have. But I think it is a very valid question and one of the interesting dynamics particularly in the services contract business is the individual impacts that particular decisions are having in terms of either delays or decisions to use other vehicles if you will. I think that is a question we will take and look at for our next version. I should also point out that we will have significant additional data posted on our website if you will following the release of this. And our plan this year is to update that regularly as the year goes along rather than wait. The cycle time for data, the fiscal year starts October 1st. Typically the Federal Procurement Data System updates for the previous fiscal year are relatively mature by about the end of the calendar year so about a three month lag time and we start doing our analysis if you will. There is one exception to that the Defense Department doesn't actually even begin it has its data internally but it doesn't begin making the data publicly available until after 90 days and that lags behind a little bit if you will. But inside the Federal Procurement Data System there is constant change of data entry and constant updates if you will. For instance, the Coast Guard Cutter contract that we talked about here when we initially began doing our analysis in February was listed as a contract for radio equipment. I am delighted that they are buying radios but it was hard for me to see $500 million worth in a single year. It turns out it is a radio equipped platform that the $500 million contract was for. We watched that closely but I think your question about basically the delay in the EGLE award is a valid question. I am not sure we can get at it but we will take a look at that. Let me turn to a couple of the charts that I think I want to go through here very quickly in terms of the additional breakdown Jesse if you could flip through this. These are not in your report but they are in the charts I believe that we posted on the Web. So what we have is contract obligations, component by level of competition if you will. The colors if you will, the darker red is no competition and the darker blue is three or more offers. So what that allows you to do is to see the two ends if you will of competitive environment. That is sole source awards and multiple offers, three or more offers if you will. What you see with the Coast Guard is in fact a dominance of those two categories. There is either a lot of competition in terms of the total percentage of money being spent, roughly 40% in 2013, or there isn't any competition at all. Again roughly 40% of contract obligations is non-competitive in the Coast Guard. Much of that is in fact the cutter. The next slide, slide 20. In FEMA you see a categorization I think that you will see over and over again if you will which is again in the middle you see single offer and sole source awards. At the very bottom two offers and at the very top three or more offers. Next slide. You see somewhat of a parallel dynamics with immigration. You see a very substantial amount, over 50% of contract obligations by ICE were three or more offers. This is a highly competitive environment and has skyrocketed in the last three years in terms of immigration's customer enforcement. I have to reflect back. I think this is about a little under $2 billion total contract obligations. So it is a very competitive environment if you will. The next slide. TSA equally a very competitive environment. Dramatic increase in competitive solicitations with three or more offers. It is now over 50% of TSA is slightly more than a billion and a half dollars if you will. And in the Office of Procurement Operations which again is S&T and IT contracts again you are over 40% in terms of competitive environment. So once you get away from the big sole source contract awards in CBP which are actually not large. There is a lot of small sole source awards in CBP and the large sole source awards in Coast Guard you see a very very competitive environment at the component level across DHS similar with the other DHS category in slide 24. Looking at the size of contract by component. Again these are in the order I think I am on slide 26 here. CBP contract obligations by size of contract. You see the vast majority of CBP contracts are in the million to $25 million range roughly $1 billion a year and in the $25 to $100 million range and since 2009 almost no contracts over $100 billion. I should note that CBP has never awarded a contract to any of the firms that we labeled as big six in our chart of the major government contractors. Coast Guard again huge chunk in the million to $25 million range. The larger contracts tend to be driven by individual programs and individual years in which they are spent. Next slide, slide 28. FEMA by and large is in the categories of the 1 to $25 million range keeping in mind that FEMA contracts are down considerably and much of FEMA's response to Hurricane Sandy was in direct spending. Next Immigrations again the vast majority in the 1 to $25 million contract range and if you go back and compare this you will find that the levels of competition that is the three or more competitive solicitations or competitive offers against solicitations are by and large in this $25 million contract range similarly with TSA on slide 30. In fact, I think you can skip past the next couple because they are pretty much the same. Now we look at level of competition by size of contract. I am on slide 34 for those of you following along at home and not necessarily at home. You are probably in your office. I suspect you put on a coat and tie to watch us this morning. If you look at level of competition for contracts under $250,000 you see the pattern that we have seen elsewhere. Either a lot of competition that is three or more offers and over 30% of total contract obligations in this category or in that or in fact a very large number of contracts with either a single offer or a sole source award in the 20 to 30% range if you will. That is for small contracts for the $250,000 to $1 million which is slide 35. You see the same pattern if you will. Single largest share is in competition with three or more offers and the smallest share is in competition with in fact only two offers with the sole source of the single offer in between. Similarly for contracts $1 to $25 million on slide 36 for contracts of $25 to $100 million on slide 37. This was actually a bit of a surprise to me because I expected to see a difference based on the size of the contract in terms of the level of competition. Where it begins to break down is obviously when you get to the really large contracts of $100 million or more where a single contract award or a single contract that has only two bidders can skew the data considerably if you will and on the level of competition for contracts over $500 million obviously some years they are none and other years they are a single source award. So that is almost not worth the chart but in the interest of completion we look forward. Then we look at size of contract by size of vendor so this is where you are going after if you are in the business if you will. I am on slide 41. This is a little tough to read from where you are because of the changes in colors and the scale if you will. By and large what you see is a pretty high correlation between small businesses tend to dominate the contracts of under $1 million. I have the largest share roughly 50% of all those contract obligations are going to small set-aside businesses. In the $1 to $25 million range you see essentially a really large competition or share between small businesses and medium size businesses and it isn't until you get to the contracts of $25 million or more that large businesses begin to dominate in terms of share. None of that is counterintuitive and in fact is exactly what you would expect. There is not necessarily any policy guidance in that regard but it is interesting to see the data by and large support that if you will. Then we look at level of competition by size of vendor. I am on slide 43 here and as you can see more than half of all contracts awarded to small businesses have three or more bids. Very competitive environment. Next slide. For medium size businesses it is equally competitive but only in the last couple of years. It has been a dramatic increase in terms of competitive solicitations with three or more offers. It is now over half of total contracts obligated to medium size businesses. Then on slide 45 large businesses here you have a much bigger dominance of in fact sole source offers. Nearly 40% of all contract obligations to large businesses are sole source awards and another 15% are single offer competitions if you will. And a little bit of a decline in terms of competition both with two offers and with three or more offers for large businesses. And then the Big Six, the largest government contractors if you will shows actually a surprisingly competitive environment well over half of dollars awarded to the Big Six or awarded with two or more offers. And that was a bit of a surprise to me. This is not dominated by sole source obligations. So that is a quick tour through the kinds of data that you will see not necessarily in the report but that you will see in additional charts and data on the website if you will and we can break that down. We are happy to not only take questions now but as you go through the data we are happy to take your emails and questions on what is inside here as well and we wish you all great success in increasing your share of this declining market. Any other questions or comments? Make sure I have none on the web and we have a couple but I think we have already covered one of them and the other I will answer separately offline. Thank you very much for joining us this morning.