Setting collision in the Static Mesh Editor
When you convert BSP to a StaticMesh, and when you import a new model from an external source, the mesh will have no collision calculated. UDK provides an easy way to automatically generate collision geometry for imported StaticMesh assets. Collision geometry can be calculated from the actual mesh, but that is seldom efficient. It is better to use a proxy mesh with far fewer polygons, encasing the visible model. Instead of bumping into the visible model while playing, you'd instead be bumping into the low res collision model linked to it. Without collision you'd run right through the model, though that may be desirable for some models, such as grass, flowers, the canopies of trees, and things that would otherwise be troublesome to snag against when moving.
How to do it...
For the base meshes that come with UDK, it isn't a good idea to try changing them. However, you can Create a Copy and edit that instead.
In a new scene, open the Content Browser...