On February 20, 2020, the Department of Homeland Security (DHS) announced that, effective immediately, it is waiving procurement laws related to the U.S. border wall construction. The unprecedented step is the Trump administration’s latest effort to expedite construction of 177 miles of wall along the southern U.S. border, in part by preventing lengthy protest litigation. The procurement waivers enable DHS to take “immediate action” to construct and repair border wall infrastructure. In a notice published in the Federal Register, DHS cited “border security and the detection and prevention of illegal entry into the United States” as motivating factors for the first-of-its-kind decision.
Application and Statutory Impact of the Waivers
The waivers impact 10 procurement-related statutes and effectively eliminate the right to protest, the use of justification and approvals in sole-source contracting, and the use of sealed bidding. In addition, the waivers may benefit contract awardees by removing requirements that contractors adhere to Department of Labor wage and labor rates and post-performance bonds before beginning work.
Specifically, the waiver applies to U.S. Army Corps of Engineers construction projects in six Border Patrol sectors: San Diego and El Centro, California; Tucson and Yuma, Arizona; Del Rio, Texas; and El Paso, which spans areas in both Texas and New Mexico. Waivers will apply to 12 contractors vetted by the Army Corps in May 2019 and named eligible to compete for Pentagon-funded contracts.
To implement the waiver decision, Acting Secretary of Homeland Security Chad Wolf cites legal authority under several laws, including section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA). The IIRIRA permits DHS to install additional fencing, barriers and roads along the border to deter illegal entry into the U.S. The Real ID Act, an amendment to section 102(c) of the IIRIRA, grants the Secretary of DHS sole discretion to waive compliance with federal law to “ensure expeditious construction” of border barriers and supporting infrastructure.
While other presidents have relied on IIRIRA to issue waivers largely of environmental laws and regulations, the Trump administration has already issued more waivers than any other, and this marks the first time such waivers have been applied to federal procurement law. Previously, the Trump administration had exercised its waiver authority for border wall and roads construction to avoid compliance with environmental regulations. DHS has been permitted to proceed with the planned wall construction despite litigation challenging those waivers.
Uncertain Implications for Contractors
The unprecedented move raises several questions about procurement oversight and accountability as well as the appropriate spending of billions of taxpayer dollars. Further, as the impacts of the procurement lapses relating to recent hurricane relief and recovery in Puerto Rico have demonstrated, interference by the president in the procurement process and an overall lack of accountability tends to benefit less qualified contractors and those with political connections. The waivers permit DHS to avoid two core tenets of U.S. federal procurement: open competition to the greatest extent possible and transparency. DHS may now bypass the justification and approval process required to directly award to a contractor. This, in turn, will likely result in increased sole-source awards for these projects (and, potentially, flexibility after award to exercise options without scrutiny). Not only does this decrease market oversight of border wall procurements, but it also arguably limits incentives for selected contractors to provide best value. Competitors, for their part, should expect more difficulty in challenging such awards given the new limitations on bid protests.
Moreover, existing law already enables the federal government to forego full and open competition if the government can demonstrate urgent and compelling circumstances. The waivers at issue here similarly aim to expedite the procurement process, albeit by removing scrutiny from the front end through the elimination of bid protests. As such, the full impact of this latest addition to the president’s border wall strategy remains to be seen. Nevertheless, the move could result in future industry-wide ramifications, particularly as it pertains to sole-source contract awards and procurement oversight.
The unprecedented waiver of procurement law and regulation should also be viewed in the context of the border wall controversy and its political ramifications in an election year. Given the amount of environmental litigation the border wall has attracted, the recent lawsuit from veterans groups regarding the reallocation of funds from critical Department of Defense building projects, and concerns expressed by Congress relating to the appropriations process, the seemingly unlimited use of IIRIRA waiver authority potentially creates a path for the Executive Branch to circumvent legislative and judicial review on projects it deems most important.
For questions regarding the DHS procurement waivers, please do not hesitate to contact any members of Faegre Drinker’s government contracts team.