[Senate Hearing 107-928]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-928

                PROTECTING THE HOMELAND: THE PRESIDENT'S
                     PROPOSAL FOR REORGANIZING OUR
                    HOMELAND SECURITY INFRASTRUCTURE

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON TECHNOLOGY, TERRORISM,
                       AND GOVERNMENT INFORMATION

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 25, 2002

                               __________

                          Serial No. J-107-89

                               __________

         Printed for the use of the Committee on the Judiciary


86-893              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
EDWARD M. KENNEDY, Massachusetts     ORRIN G. HATCH, Utah
JOSEPH R. BIDEN, Jr., Delaware       STROM THURMOND, South Carolina
HERBERT KOHL, Wisconsin              CHARLES E. GRASSLEY, Iowa
DIANNE FEINSTEIN, California         ARLEN SPECTER, Pennsylvania
RUSSELL D. FEINGOLD, Wisconsin       JON KYL, Arizona
CHARLES E. SCHUMER, New York         MIKE DeWINE, Ohio
RICHARD J. DURBIN, Illinois          JEFF SESSIONS, Alabama
MARIA CANTWELL, Washington           SAM BROWNBACK, Kansas
JOHN EDWARDS, North Carolina         MITCH McCONNELL, Kentucky
       Bruce A. Cohen, Majority Chief Counsel and Staff Director
                  Sharon Prost, Minority Chief Counsel
                Makan Delrahim, Minority Staff Director
                                 ------                                

   Subcommittee on Technology, Terrorism, and Government Information

                DIANNE FEINSTEIN, California, Chairwoman
JOSEPH R. BIDEN, Jr., Delaware       JON KYL, Arizona
HERBERT KOHL, Wisconsin              MIKE DeWINE, Ohio
MARIA CANTWELL, Washington           JEFF SESSIONS, Alabama
JOHN EDWARDS, North Carolina         MITCH McCONNELL, Kentucky
                 David Hantman, Majority Chief Counsel
                Stephen Higgins, Minority Chief Counsel


                            C O N T E N T S

                              ----------                              

                           COMMITTEE MEMBERS

Feinstein, Hon. Dianne, a U.S. Senator from the State of 
  California.....................................................     1
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, 
  prepared statement.............................................    88
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama....    11
Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania...................................................    25

                               WITNESSES

Daalder, Ivo H., Senior Fellow, Foreign Policy Studies, Brookings 
  Institution, Washington, D.C...................................    26
Eland, Ivan, Director, Defense Policy Studies, Cato Institute, 
  Washington, D.C................................................    28
Gilmore, Hon. James S., III, Former Governor of the Commonwealth 
  of Virginia, and Chairman, Advisory Panel to Assess Domestic 
  Response Capabilities for Terrorism Involving Weapons of Mass 
  Destruction, Richmond, Virginia................................     6
Light, Paul C., Vice President and Director of Governmental 
  Studies, Brookings Institution, Washington, D.C................    24
Rudman, Hon. Warren B., Co-Chair, U.S. Commission on National 
  Security in the 21st Century, Washington, D.C..................     3
Walker, Hon. David, Comptroller General, U.S. General Accounting 
  Office, Washington, D.C........................................     8

                       SUBMISSIONS FOR THE RECORD

Daalder, Ivo H., Senior Fellow, Foreign Policy Studies, Brookings 
  Institution, Washington, D.C., prepared statement..............    36
Davis Richard J., Partner, Weil, Gotshal and Manges LLP, New 
  York, New York, prepared statement.............................    44
Eland, Ivan, Director, Defense Policy Studies, Cato Institute, 
  Washington, D.C., prepared statement...........................    53
Gilmore, Hon. James S., III, Former Governor of the Commonwealth 
  of Virginia, and Chairman, Advisory Panel to Assess Domestic 
  Response Capabilities for Terrorism Involving Weapons of Mass 
  Destruction, Richmond, Virginia, prepared statement............    63
Light, Paul C., Vice President and Director of Governmental 
  Studies, Brookings Institution, Washington, D.C., prepared 
  statement......................................................    90
Walker, Hon. David, Comptroller General, U.S. General Accounting 
  Office, Washington, D.C., prepared statement...................   102

 
PROTECTING THE HOMELAND: THE PRESIDENT'S PROPOSAL FOR REORGANIZING OUR 
                    HOMELAND SECURITY INFRASTRUCTURE

                              ----------                              


                         TUESDAY, JUNE 25, 2002

   U.S. Senate, Subcommittee on Technology,
             Terrorism, and Government Information,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 10:10 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Dianne 
Feinstein, Chairman of the subcommittee, presiding.
    Present: Senators Feinstein, Hatch, Specter, DeWine, and 
Sessions.

OPENING STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM 
                    THE STATE OF CALIFORNIA

    Chairperson Feinstein. I would like to call this hearing to 
order. The ranking member, Senator Kyl, should be here in about 
5 minutes, but I thought we might start in the interim, and I 
think other members are going to drift in from time to time.
    It is really my pleasure to be able to welcome everyone to 
this hearing this morning. This is the Subcommittee on 
Technology, Terrorism and Government Information, and the 
hearing this morning is to give this aspect of the Judiciary 
Committee the opportunity to take a good look at the 
President's proposal for a reconstituted merger of several 
departments into a Department of Homeland Security.
    This subcommittee has held a number of hearings on the need 
for more consolidation and coordination in the agencies that 
combat terrorism. For example, we held a hearing on the report 
of the United States Commission on National Security in the 
21st Century, more popularly known as the Hart-Rudman report, 
and I am delighted to see that the Co-Chair of that Commission, 
Senator Rudman, is here today.
    We also held a hearing on the second annual report of the 
Advisory Panel to Assess Domestic Response Capabilities for 
Terrorism Involving Weapons of Mass Destruction. That 
Commission was known simply as the Gilmore Commission, and I am 
pleased that the Chairman of that Commission, Mr. Gilmore, will 
testify also today.
    It is good to see the Comptroller General, David Walker, 
here this morning, as well.
    As we all know, President Bush has proposed a new 
Department of Homeland Security, and this agency would consist 
of some 22 Federal agencies and a total of 170,000 Federal 
employees. this would make it one of the very biggest in all of 
the Federal Government. The department's initial annual budget 
would be $37.5 billion.
    As we consider this proposal, I think it is important that 
we look at some issues. First, we need to take a good hard look 
at what agencies the President has proposed to include in the 
new department and what agencies are left out.
    Senator Rudman, in his March 2001 report, recommended that 
Customs, Coast Guard, Border Patrol and FEMA be included in a 
single, consolidated agency. But the President's proposal 
includes much more, including agencies concerned with disease 
control, eradicating boll weevils from cotton crops, issuing 
flood insurance, cleaning up oil spills, and trade inspection. 
Other agencies, including those that specifically protect us 
from terrorism, are not included. Those, in the main, are the 
intelligence agencies--CIA, FBI, NSA, and so on. So we need to 
take a good look at that.
    Some questions have been raised about the Coast Guard. The 
Coast Guard conducts search and rescue. What would happen with 
that? As part of its mission, the Coast Guard has been very 
effective in intercepting the go-fast boats which bring 
narcotics into this country through the Gulf and up the Pacific 
corridor. What would happen with that?
    The Immigration Department, and certainly Border Patrol, is 
suitable agency for inclusion, but what the service aspects of 
INS, naturalization and other aspects? Would that create a kind 
of mixed mission for the department similar to what some of us, 
including myself, have been critical of Customs about?
    Customs is both a law enforcement agency as well as a trade 
expedition agency, and many of us have said in the past that 
lax customs on the borders of our country have allowed for more 
narcotics to come into the country. Part of the problem was 
because the agency had a mixed mission. You can't stop the 
trucks from coming in adequately to search them because it 
creates an economic disadvantage and the economy would suffer. 
That is the kind of mixed mission I am talking about. So moving 
agencies out of their current homes into a new department can 
result in some confusion and some dislocation that could take 
years to sort out.
    We need to take a look at the collection, analysis, and 
dissemination of intelligence and its impact on homeland 
security. Does the clearinghouse part of this bill help or 
hinder data collection and analysis, now done primarily by the 
CIA?
    Some have suggested that the department would be destined 
for failure if it could not gain access to all relevant raw 
intelligence and law enforcement data. One of the things I have 
learned as a member of the Intelligence Committee is that all-
source analysis is really critical to the intelligence 
function; in other words, the ability take the bits and pieces 
and have very skilled people be able to interpolate, collate, 
and put those bits and pieces together so that they become 
meaningful and corroborated pieces of intelligence.
    We also know we have major problems with the so-called 
stovepipe aspects of many agencies, the inability of State, 
INS, CIA, NSA, and FBI to coordinate their intelligence data so 
that it gets from one place to another.
    We held a very interesting hearing in this subcommittee 
with Ms. Burns, who is head of the Division of Consular Affairs 
at the State Department, on the granting of visas to the 
hijackers. One of the things she pointed out to us was that 
they didn't have intelligence data on which to really base a 
denial of the visa applications in Saudi Arabia.
    So these are all real questions, and I am delighted that we 
have people who are seasoned in this area, who have worked with 
these issues, and who have considered them, and we look forward 
to their testimony.
    I think I will interrupt you, Senator Rudman, because you 
are going to be first up, when Senator Kyl comes and allow him 
to make his basic remarks, but let me begin by introducing you.
    During his 12 years in the Senate, very accomplished years, 
Senator Rudman served on a number of committees, including the 
Senate Select Committee on Intelligence, the Appropriations 
Committee, and Governmental Affairs.
    He has maintained a very active career since leaving the 
Senate, including serving as the Chairman of the President's 
Foreign Intelligence Advisory Board and as Vice Chairman of the 
Commission on Roles and Capabilities of the United States 
Intelligence Community. He is the recipient of numerous awards 
in honor of his years of devoted public service, including the 
Department of Defense' Distinguished Service Medal, which is 
the agency's highest civilian award.
    So if we could begin with you, Senator Warren Rudman, 
welcome to the subcommittee.

  STATEMENT OF HON. WARREN B. RUDMAN, CO-CHAIR, UNITED STATES 
     COMMISSION ON NATIONAL SECURITY IN THE 21ST CENTURY, 
                        WASHINGTON, D.C.

    Mr. Rudman. Senator Feinstein, thank you very much. I am 
very pleased to be here again and pleased to be here with the 
gentlemen sitting to my right. I have great respect for what 
they have both done. In particular, I have been a student of 
what the Gilmore Commission did.
    All of these efforts came coincidentally at the right time. 
They were conceived of some time ago. In our case, the idea was 
to replicate Truman's Marshall Commission of 1947, which 
totally reorganized the U.S. Government and created DOD, the 
Joint Chiefs of Staff, the CIA, and the United States Air 
Force. It was a major undertaking to look at the security 
challenges of the last half of the 20th century.
    This was precisely our charge, to look at the first 25 
years of the 21st century. Congress mandated that we do this. 
The reports started in 1998. This report is the third of three, 
one in 1999, one in 2000, and one in 2001.
    The Commission, as some of you may know, was blessed with 
an extraordinary array of people including Jim Schlesinger, 
Norm Ornstein, Don Rice, Les Gelb; people from the media; 
people from Congress, Newt Gingrich, Lee Hamilton, Gary Hart, 
and myself; two former CINCs, Jack Galvin from NATO, and Harry 
Trane. So, we had a pretty experienced group of folks.
    The most striking thing we did was at the end of about a 
year-and-a-half. We came to the conclusion that of all the 
security challenges to the United States, the most serious 
security challenge is precisely what happened on September 11. 
In fact, we laid out a scenario similar to what occured on 
Sept. 11 in some detail. We believed that thousands of 
Americans would be killed on American soil by acts of 
terrorism. Unfortunately, our prediction came true too soon.
    Thus, our report contains 50 recommendations covering the 
entire Government. Seven of those recommendations pertain to 
the subject of your hearing this morning, and one in 
particular. We said that the President should propose to 
Congress that the Customs Service, the Border Patrol, the Coast 
Guard, and FEMA be transfered to the National Homeland Security 
Agency, while also being preserved as distinct entities.
    I want to pause there because I think there is some 
confusion, and this is the third hearing at which I have 
testified. Although the stovepipe nature of these agencies has 
to be changed, the Coast Guard will remain the United States 
Coast Guard, the Customs Service the Customs Service, et 
cetera.
    The difference is that right now, as we discovered in our 
three-and-a-half years these agencies in many ways will take 
umbrage at this, and did during our hearings. But, I will be 
blunt with you; they are orphans where they are. They don't get 
the kind of attention that they should.
    For instance, all of a sudden earlier this year we 
discovered that the United States Coast Guard, one of the most 
extraordinary and able parts of our Government, has been 
underfunded and undercapitalized for years. It shouldn't have 
taken September 11 to prove that, but it did. We believe that 
in a department devoted to border security and homeland 
security, the Coast Guard will be getting the attention it 
needs. The same goes for Customs in Treasury, the Border Patrol 
and INS in Justice.
    The difference between our proposal and the President's 
proposal, which includes additional agencies, is that we 
determined whether the overwhelming task of the agency was 
border security. If that was their task, then they belonged 
there.
    We also thought that in addition to prevention, we had to 
have response as well as protection. Therefore, FEMA, an 
extraordinarily able Government agency, small, but very good--
and most people who have dealt with them will tell you they do 
a good job in natural disasters--was the proper response team. 
We saw Joe Albaugh bring his agency to bear and be of 
tremendous help during the Sept. 11 crisis, particularly in the 
area of the World Trade Center. So, that was what we proposed.
    Now, how do we feel about this proposal? We support it. I 
think your opening statement reveals a few just concerns, and 
you are going to have to sort those things out. For instance, 
we had said in our report that you might retain the so-called 
trade and revenue aspects of the Customs Department at Treasury 
and move the law enforcement sector over.
    We are told by many people now that that probably would not 
work as well, that there is a lot of connectivity there as well 
as in Border Patrol and INS. That is why the President decided 
to go the way he went. They are probably right. They probably 
deserve to be brought in toto, preserving their identity. The 
one big difference from where they are now is that they will 
have a common mission. They will have a common command and 
control and a common chain of command. That is very important.
    In terms of information exchange, it is no wonder that an 
agency in Transportation, Coast Guard----
    Chairperson Feinstein. Excuse me. I see this light blinking 
and I neglected to say that if it is possible to get the bulk 
of what you would like to say in 5 minutes said, that is great. 
I am going to be very liberal with this, so don't worry about 
it.
    Mr. Rudman. Well, I only need a couple more, actually.
    In terms of Customs and the other agencies, they don't 
belong where they are. They are there for historic reasons. 
They have a common border security function, that is where they 
belong.
    Now, just two other comments. Madam Chairman, this is not 
going to solve the intelligence problem. I can tell you from 
being on the committee you now serve on and having chaired the 
PFIAB for four years and been on it for 8 years, this will not 
solve the intelligence problem. That is a separate problem. It 
is being addressed by the Select Committee and hopefully they 
will come up with answers.
    What is proposed for this agency is not a collection, but 
an analysis unit. That is probably a good idea, but let me say 
at the outset that it will be several years before that unit 
will be up to speed. It takes time to get people.
    Second, on the FBI, people say, well, maybe the FBI should 
be here. Well, that would be a terrible mistake. The FBI has 
literally hundreds, if not thousands, of congressionally 
mandated responsibilities to enforce the United States Code. 
Homeland security is now a major part of that, but you could 
not take that away from Justice, in my view, and have anything 
but chaos.
    Some have proposed creating an MI5, a British type of a 
unit, and separating that from the Bureau. But, that will take 
a lot of study. I would not be ready to endorse that this 
morning.
    So by and large--and I am happy to take your questions. We 
believe that this is a sound proposal. It has a common thread 
of homeland security and border security. It ought to be 
enacted, but obviously it can be improved by the Congress and 
it probably will be.
    Chairperson Feinstein. Thank you very much, Senator. I 
appreciate it.
    Mr. Gilmore, let me make a little formal introduction here.
    James Gilmore, III, is the former Governor of Virginia. As 
Governor, he created the Nation's first Secretariat of 
Technology, established a statewide technology commission, and 
signed into law the Nation's first comprehensive State Internet 
policy.
    Governor Gilmore is also the Chairman of the Congressional 
Advisory Panel to Assess Domestic Response Capabilities for 
Terrorism Involving Weapons of Mass Destruction. This national 
panel was established by Congress in 1999, and its purpose was 
to assess Federal, State and local governments' capability to 
respond to the consequences of a terrorist act, and this was 
essential in developing the Office of Homeland Security.
    We are delighted to welcome you, Governor Gilmore.

STATEMENT OF HON. JAMES S. GILMORE, III, FORMER GOVERNOR OF THE 
   COMMONWEALTH OF VIRGINIA, AND CHAIRMAN, ADVISORY PANEL TO 
 ASSESS DOMESTIC RESPONSE CAPABILITIES FOR TERRORISM INVOLVING 
        WEAPONS OF MASS DESTRUCTION, RICHMOND, VIRGINIA

    Mr. Gilmore. Madam Chairman, I want to thank you for the 
chance to be here today in my capacity as Chairman of the 
Advisory Panel to Assess Domestic Response Capabilities for 
Terrorism Involving Weapons of Mass Destruction. I have 
submitted a written submission which is quite comprehensive. 
Let me give you some summary remarks, hopefully as close to the 
5-minutes as possible.
    Congress created this Panel in 1999 as part of the National 
Defense Authorization Act. It was clear then, and remains so 
today, that our national efforts to deter and prevent and 
respond and recover from terrorist acts, while up to this point 
have been considerable and laudable and well-meaning, we still 
need a cogent focus to ensure a higher level of safety and 
security for our citizens. That is still true today. In the 
aftermath of the September 11 attacks, Congress extended the 
work of our Panel for an additional 2 years.
    Senator this past week we met in Indianapolis and spent the 
majority of our meeting time hearing from a lot of the key 
stakeholder groups representing State and local officials who 
are working around the clock in partnership with Federal 
agencies to make the Nation more secure.
    Our Panel has benefited from a unique composition. The same 
disciplines at the local, State and Federal levels that are now 
wrestling with homeland security issues have been represented 
around our table for the past three-and-a-half years. I think 
this is critical in terms of input and the reports themselves.
    The challenges that we face are not Federal issues, simply. 
Beginning with the first annual report that we did in 1999, the 
Panel noted that the nature of the threat we faced and how it 
would be manifested against our citizens and how as a Nation 
would respond required a national approach. And by 
``national,'' we mean the combined efforts of local, State, 
Federal and private sector organizations working toward this 
common end.
    So the perspective of our members, I think, is even more 
salient today, as many of us are directly engaged with actions 
in communities, States, and businesses. So the perspective of 
what is happening on the front lines, combined with the 3-year 
experience of our Panel, I think, is going to give us some 
insight that will be of benefit to the Senate.
    As you have stated, you have invited me to address this 
issue of the Department of Homeland Security. This type of 
major restructuring was not what our Panel recommended. We 
recognize the issue that you raised in your opening remarks 
regarding mixed missions of all the different agencies, which 
is why we did not adopt this model.
    Our recommendation provided for the creation of an office 
in the Executive Office of the President to better 
strategically integrate the activities of a wide range of 
agencies with responsibilities in this area. This 
recommendation was informed, in part, by a recognition that 
attacks on the Nation could cause profound strategic, economic, 
and health and safety problems. It could take the form of 
conventional or weapons of mass destruction or cyber attacks.
    The plethora of scenarios and the needed focus on 
prevention and deterrence was not within the single mandate of 
any one Federal agency or level of government. Our Panel, 
Senator, viewed the issue as one of management and 
organization, which is different from the issue today, which 
is, of course, structure.
    We believe that the needed coordination could be more 
effectively done at a higher level than Cabinet agencies to 
minimize the potential for turf wars that are inevitable when 
it comes to competition for resources, human and financial, and 
even prestige within the Government.
    Now, this is not to say that what the administration is 
proposing now isn't the right answer. Clearly, as a nation, we 
now have the benefit of the September 11 experience. Our Panel, 
the Hart-Rudman Commission, and the National Commission on 
Terrorism made our recommendations without the benefit of this 
painful knowledge that we gained from September 11, and I think 
that the experience will allow us to be stronger in our 
conclusions.
    Now, let me offer several points very quickly. First, the 
proposal to create the Department of Homeland Security has been 
described as the largest reorganization since World War II. But 
the proposal you have before you today has implications beyond 
the Federal Government.
    In local communities and States across America, public 
officials and the private sector are engaged in securing the 
homeland and protecting against the lawlessness of terrorists 
who would seek to do our citizens harm. A major reorganization 
at the Federal level will have to be very carefully 
implemented. I can't stress this enough. There is a real 
concern here in the local communities that the whole idea of 
the reorganization could break the momentum on program delivery 
that is just beginning to catch full speed right now.
    Second, we need to have a clear understanding of what 
problems reorganization is attempting to solve. Our Panel noted 
a wide range of problems with national preparedness efforts, 
and I say national, not Federal. The Federal Government must 
play a leadership role, but solving the problems is going to 
need integration of local, State, Federal and private. As a 
Nation, we have to be clear in defining what those problems 
are.
    We noted in our second and third annual reports the problem 
with the ability to collect, analyze, and disseminate critical 
intelligence. You have noted in your opening statement that 
there was a stovepipe problem.
    Senator it is a horizontal stovepipe, not a vertical 
stovepipe. You were addressing the issues of CIA, FBI, DEA, 
NSA. The issue is beyond that. It is Federal, State, and local, 
and how that information goes up and down in the vertical 
stovepipe, not just the horizontal one.
    Third, there are issues about the role of State and local 
governments in defining the problem. The administration's 
proposal provides for State and local coordination with the new 
entity, but it is critical that the State and local partners 
are engaged in the design and implementation phases, the need 
for communication back and forth with the Senate and the 
Governors, for example, not to mention the key local people 
around the country.
    One of our local members that has served on our commission 
suggested that we leave the Federal business to the Federal 
authorities from time to time. This may not be the best model 
at this point in time. It may be that the States and the locals 
must participate.
    Local responders, it must be remembered, are not helping 
the feds out. They are taking on the front-line responsibility 
in this war on terrorism. They are helping out the feds; it is 
not the feds that are necessarily helping out the locals.
    The fourth part concerns the continuing need for a clear 
national strategy that continually articulates what we as a 
Nation are seeking to accomplish. The proposed department is 
not the national strategy, but will become the engine to 
implement the national strategy once it is developed.
    So we can't afford an exclusive focus on discussions about 
the new department and not address the large strategic needs 
that will define the long-term national and international 
success in countering this terrorist threat. The national 
strategy is key to the efforts in determining how the proposal 
for the Department of Homeland Security can best be structured.
    We have confidence, of course, that the U.S. Congress, 
though the budget and the legislative process, will take a 
considerable role in this structure, and the States and the 
locals must also be a part of that process.
    Thank you, Senator.
    [The prepared statement of Mr. Gilmore appears as a 
submission for the record.]
    Chairperson Feinstein. Thanks very much, Governor.
    Now, I would like to introduce David Walker, the 
Comptroller General of the United States and head of the 
General Accounting Office. Mr. Walker is head of the premier 
agency dedicated to improving the performance and ensuring the 
accountability of the Federal Government.
    The GAO has done really a fine job helping the Judiciary 
Committee, and in particular this subcommittee, and I want him 
to know I am very grateful. Mr. Walker began his 15-year term 
in 1998, following extensive executive-level experience in both 
government and private industry.
    Welcome, Mr. Walker.

  STATEMENT OF HON. DAVID WALKER, COMPTROLLER GENERAL, UNITED 
       STATES GENERAL ACCOUNTING OFFICE, WASHINGTON, D.C.

    Mr. Walker. Thank you, Madam Chair, members of the 
subcommittee. I am pleased to be here this morning to testify 
on the President's proposal to establish a new Department of 
Homeland Security.
    As you know, Madam Chair, last Friday afternoon we were 
asked to testify before this subcommittee. As a result, while 
time was limited, a number of GAO professionals have worked 
very hard to prepare a comprehensive statement that we believe 
will be of interest to this subcommittee and the Congress as a 
whole. I would respectfully request that that entire statement 
be entered into the record.
    Chairperson Feinstein. That is this statement of June 25?
    Mr. Walker. It is.
    Chairperson Feinstein. Thank you very much. It will be.
    Mr. Walker. Thank you. I will now move to summarize the 
major points.
    The President's proposal represents the largest proposed 
restructuring of the Federal Government since 1947. His 
proposal is in some ways consistent with other homeland 
security-related legislative proposals, such as Senator 
Lieberman's, and past homeland security-related recommendations 
by various commissions, including those of the two Chairs 
seated to my left, and the GAO. It is, however, more 
comprehensive than most people expected.
    While most people will probably agree that the 
establishment of some new Department of Homeland Security has 
merit, reasonable people can and will disagree regarding which 
entities and functions should be consolidated into the new 
department.
    The President's proposal is premised, in part, on the 
notion that it is desirable to consolidate certain homeland 
security-related entities and functions in order to improve 
efficiency and effectiveness over time in this critically 
important area. He also recognizes that a number of other 
Federal entities and functions that have important roles to 
play in protecting our homeland will not be consolidated into 
any new Department of Homeland Security.
    As a result, additional steps will be necessary to improve 
communication and coordination between these entities and with 
DHS in a number of areas, including knowledge-sharing and 
operational execution.
    Irrespective of which entities and functions Congress 
ultimately decides to include in any new Department of Homeland 
Security, there are a number of critical planning and 
implementation factors that must be addressed in order to 
maximize the likelihood of success and manage any related risk.
    Realistically, any proposal to create a new Department of 
Homeland Security likely will take a considerable amount of 
time and will cost significant amounts of money above the 
status quo baseline.
    While consolidation and integration of certain entities and 
activities into a new Department of Homeland Security can serve 
to improve economy, increase efficiency, and enhance 
effectiveness over time, it can have the opposite effect in the 
short term during the transition and transformation period, 
which is likely to take a considerable period of time.
    One major factor in this regard is the human element. Many 
employees of the new department will naturally be concerned 
with how any proposed reorganization will affect them 
personally. This can cause a reduction in productivity and 
effectiveness.
    Timely and effective communication of both the proposal and 
related implementation efforts are critical to minimizing any 
related adverse effects. We have seen this both in public 
sector and private sector mergers and consolidations, and I 
have a fair amount of personal experience with both.
    Past large-scale government and private sector 
reorganizations and consolidations have disclosed a number of 
important implementation challenges. Effective design, planning 
and implementation can help to reduce the related costs and 
risks.
    In order to assist the Congress address this important and 
complex issue, GAO has developed a proposal organizational and 
accountability framework for considering the President's 
proposal and addressing key related implementation 
recommendations.
    Specifically, we have identified certain key criteria that 
Congress may wish to consider in connection with establishing 
any new department, determining which entities and functions 
should be consolidated into it, and assuring effective 
implementation and related reorganization over time, and that 
starts on page 6 of my testimony.
    In my full statement, I have noted a number of key comments 
and questions that the Congress should consider in connection 
with the President's proposal and I would like to comment on a 
few at this time.
    For example, GAO previously noted the need for a 
comprehensive threat and risk assessment and an overall 
national homeland security strategy. While the administration 
has committed to perform and provide these, ideally they should 
have been completed prior to any proposed realignment. In any 
event, these should be completed as soon as possible and used 
as a basis for any final design and implementation issues 
associated with any Department of Homeland Security.
    Other key implementation issues will also be of critical 
importance. For example, short-term priorities must be set, 
including the need to pull the new department together and 
focus on a range of common elements from the outset.
    For example, clearly defining the department's overall 
mission, core values, and primary objectives, filling key 
leadership positions, determining key skills and competencies 
that will be required, integrating key communications systems, 
and aligning institutional unit and individual performance 
measurement systems will be critical to success.
    Any related consolidation will take years to implement and 
involve a range of transformation challenges. In this regard, 
the new Department of Homeland Security should be subject to 
all the major management reform legislation such as GPRA, the 
CFO Act, and Clinger-Cohen, and could benefit from having a 
chief operating officer who would be appointed on a term basis 
to focus on the many important planning and implementation 
issues that will span key players both within and between 
administrations.
    In the final analysis, the key to any successful 
reorganization will not be the new organization chart, but the 
quality and commitment of the leadership and the people who 
must carry out the missions of the department.
    While planning, processes, technologies, and environmental 
factors are important, people, policies, and practices will be 
the key to success. The creation of this new department 
provides us with an opportunity to create a model high-
performing organization in this critically important area. In 
order to achieve this, the new department should be given 
reasonable management flexibility to be able to reorganize, 
realign, and transform itself to best achieve its mission.
    At the same time, there need to be appropriate safeguards 
to prevent abuse of Federal employees and adequate transparency 
and accountability mechanisms in place to monitor progress and 
assess effectiveness over time. Periodic congressional 
oversight and independent GAO reviews will play critically 
important roles in this regard.
    Madam Chair, that summarizes my statement and I would be 
more than happy to answer any questions you may have.
    [The prepared statement of Mr. Walker appears as a 
submission for the record.]
    Chairperson Feinstein. Thank you very much, Mr. Walker.
    We are joined by Senators DeWine and Sessions, and I trust 
that they have received a copy of the GAO testimony, dated June 
25. It is relatively new--well, it is very new. I would like to 
ask Senator DeWine and Senator Sessions if they would like to 
make an opening statement at this time.
    Senator DeWine. No, thank you, Madam Chairman.
    Chairperson Feinstein. Senator DeWine does not.
    Senator Sessions, would you like to make an opening 
statement?
    Senator Sessions. Thank you, Madam Chairman. I will have to 
slip out. I hope to be able to return, but I would just say a 
couple of things.

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE 
                           OF ALABAMA

    When, early on, people began to discuss a homeland security 
agency, I asked myself how can a new, junior agency expect to 
order Treasury to do A, B, C, and D, Justice to do this, 
Defense to do this. I didn't see that they would have the 
clout.
    But President Bush's move here is really historic. He is 
moving almost everything that is within an agency related to 
homeland defense to homeland defense, and I had to take a new 
look at that.
    Frankly, as a person who served in the Federal Government, 
in the Department of Justice, for almost 15 years, I know that 
in that great agency there are bureaucracies, there are 
inefficiencies. There are problems of unhealthy competition 
even within Justice, and certainly between Justice and other 
agencies. It is just an exceedingly difficult thing to make 
this huge Government agency function as one.
    It is one Government, but it doesn't act that way. 
Oftentimes, it acts as independent nations. They send 
emissaries between one another. They cannot communicate, except 
with memoranda of understanding, and treaties get cut when 
disagreements occur. So it is very difficult.
    Having Mr. Ridge as the President's person, with the 
President's clout behind him, he has some ability to bend 
agencies because if they don't agree with his idea he can 
simply say, Secretary Rumsfeld, why don't you and Secretary 
Mineta meet with me and the President next week and we will 
discuss this little disagreement? And if the President is 
backing up Mr. Ridge, he can get some things done that way. I 
am inclined to think this would work.
    Mr. Walker, I appreciate your report and insight and 
commitment to reforming Government. Maybe in the process of 
making this move, we would not create additional bureaucracies, 
but if we use our imagination and if we are creative, maybe we 
can make this one of the best-run agencies in the Government.
    Certainly, I have no doubt it would enhance our ability to 
protect the homeland. I do think there is a concern that we not 
diminish the other duties these great agencies have, such as 
the Coast Guard and Customs.
    They have other responsibilities, too, Madam Chairman, so 
we don't want to diminish them and just undermine them 
excessively. So it will be a challenge. I think it is probably 
healthy. The American people want to see us do something. The 
President has boldly proposed a program to make some changes. 
If we all work together, I believe we can make it work.
    Thank you for this hearing.
    Chairperson Feinstein. Thank you very much, Mr. Sessions.
    I would like to begin with the questions now and I would 
like to ask each one of you to answer this question. I think 
the original thrust for the department started because many 
were concerned about the absence of statutory and budgetary 
authority for the new homeland security person.
    Just putting that individual within the Office of the 
President created problems. One was he couldn't come and 
testify before Congress, which kind of took on an expanding 
role as things went on. Now, I almost wonder if it isn't in the 
process of being created an agency which is so big that there 
will be so many mixed missions within it and so many 
bureaucratic problems that if you take one agency--for example, 
INS, and I serve on the Immigration Subcommittee of this--many 
of us have felt that this was an agency with severe mission 
overload, without the ability of a modern management system 
which enabled it to make crucial errors; for example, printing 
up 5 million biometric border-crossing cards, and yet not 
having the readers in place to read them when they came across 
the border, or, second, not checking a data base when you sent 
out visa renewals and actually renew the visas of two dead 
hijackers.
    Now, those may be just small indications, but maybe of us 
that have watched this agency have become very concerned. Here 
in this, you transfer the service elements. We have 5,000 
unaccompanied alien children a year. Do they belong in a 
Department of Homeland Security? I don't think so.
    What about the naturalization process? Is it best served by 
being in a Department of Homeland Security?
    So I guess my question is this: Would it not be more 
efficient and effective just to take those functions of an 
agency, like from INS Border Patrol, and place it into an 
agency and leave the other aspects of the agencies that deal 
with the non-security-related issues to function?
    The same thing would go for FEMA; you know, leave out the 
flood, the earthquake kinds of activities of that agency, and 
yet transfer those elements which you might want in a border 
security type of situation into homeland defense.
    That is my first question and I would like you to answer 
it. My second involves several very serious personnel issues, 
but let's begin with you, Senator Rudman.
    Mr. Rudman. You raise probably the most vexing issue when 
you handle any government reorganization. Let me say to you 
that you probably, in some cases, would cause more harm than 
good by splitting them. That was our conclusion.
    Now, there is a reason why our proposal was as limited as 
it was. Our proposal, and we have testified on it before, took 
Customs, Border Patrol, and Coast Guard. We split Border Patrol 
from INS, for the very reasons that you mentioned. The 
President has decided, and probably with good reason, that it 
needs reform and it can be reformed with a new agency as well 
as where it is. In fact, it might get more attention in a 
smaller Cabinet agency with a particular mission.
    Now, take the Coast Guard. It is probably the best example 
I can give you of why the splitting probably won't work. It is 
an extraordinarily able organization. I have had a lot of 
personal experience with it on the New England coast. They do a 
wonderful job of water safety, of inspection of buoys, and of 
channel-marking. They do drug interdiction, and they are now 
going to do homeland security.
    But the same people that do many of those functions will do 
all of those functions. A Coast Guard cutter that is working on 
a drug intercept tomorrow may be working on an intercept of a 
vessel that is suspicious off the coast of New England. So the 
same people are going to do the same thing.
    If you tried to split it and say; you are going to do 
harbor safety; you are going to do boating safety; you are 
going to do drug interception; you are going to do something 
else, you would end up with a terrible mess. So, after talking 
to all of the people involved, and we did have three-and-a-half 
years to look at it, we came to the conclusion that if they had 
an overwhelming border security mission, then you ought to put 
it in this agency and the other missions would be carried out 
as they are.
    The words ``separate entity'' are important in our report. 
The Coast Guard, in our view, would be transferred as the Coast 
Guard. It would then be reorganized within the new department 
however they decided to reorganize it, but it would still be 
the same entity.
    Now, let me make one last comment. When you look at these 
various agencies, Customs does a wonderful job at what they do. 
I have had a lot of experience both here and in the private 
sector with Customs. FEMA is outstanding. The Coast Guard is a 
very good agency. They are three of the best small Government 
agencies that we have being transferred.
    INS you have got some big problems with, and you know you 
have got big problems with them. Merely transferring them won't 
fix those problems, but we think that splitting them could 
cause problems.
    Now, for some of the other things, animal and vegetable, I 
don't know about those. We haven't recommended those. We didn't 
recommend the Secret Service. The President must have a reason 
for that. If you split the agencies that we recommended, you 
might be getting more problems resulting than you would 
anticipate.
    Chairperson Feinstein. Thanks, Senator.
    Governor Gilmore?
    Mr. Gilmore. Senator Feinstein, our proposal in our report 
was for the national coordinating office in the Office of the 
President, the current Ridge office--our thought was that the 
goal here was to achieve management and coordination between 
the different agencies with a person who was, if anything, 
elevated a little above the Cabinet to avoid some of the 
conflicts and turf wars.
    I thought that Senator Sessions laid out the philosophy of 
this very eloquently a few moments ago with respect to the way 
that that office could work.
    We also recommended that it have congressional authority 
and congressional approval, Senatorial approval of the position 
so that there would be more interdiction and more buy-in from 
the Senate; and, second, that there be budget certification 
authority in order to provide that office with greater tools.
    This proposal addresses the issue of the split function 
issue. This was actually what we were trying to avoid, but the 
split function issue has been addressed. I am aware that 
Attorney Richard Davis submitted a different memo to a 
different committee, I believe, in which he suggested that 
there be split functions in order to make this happen. That 
would divide the bureaucracy in two so that you have homeland 
security concentrated in one place and non-homeland security 
remaining where they are now, and I think that theoretically 
that could work.
    Other than that, it will be a management challenge which is 
still achievable if, in fact, the agencies go all together into 
one unit. As Senator Rudman says, it is probably achievable, 
but it will require an enormous management challenge to do 
that.
    One more point that I would make, Senator Feinstein, is let 
us not lose sight of the fact that what we are really talking 
about here is the creation of the national strategy and 
coordination of the different organizations. When the times 
comes to deal with the actual response itself, that is an 
entirely different model. That goes to the issue of 
coordinating the Federal, State, and local people, because the 
people who are actually going to respond are by and large going 
to be the local responders, and only the local responders in 
the first hours.
    Then after that, there can be a partnership between FEMA 
within this organization and the State emergency operation 
centers, which probably should be in charge, as a partnership 
coordinating with the locals. But this is an entirely different 
function that the Congress should not lose sight of as they 
work on the organizational and coordination functions of this 
new department.
    Chairperson Feinstein. Thank you very much.
    I would like to acknowledge that we have been joined by the 
distinguished ranking member of the overall committee, Senator 
Hatch.
    Senator prior to Mr. Walker answering the question, would 
you like to make an opening statement?
    Senator Hatch. No. I will just put my statement in the 
record and welcome our three witnesses. All three of them are 
good friends and very important people in my eyes.
    Chairperson Feinstein. Thank you very much.
    Mr. Walker?
    Mr. Walker. Senator, I would recommend that you consider 
doing the following: first, start with the Hart-Rudman 
Commission proposal which was more focused, compare the 
differences between the Hart-Rudman Commission proposal with 
regard to those entities and functions that it recommended to 
consolidate versus the President's proposal, which is much more 
comprehensive, as Senator Sessions mentioned, and use the GAO's 
proposed criteria as a way to evaluate those differences.
    I also think that no matter what the Congress ultimately 
decides to do, the implementation elements that we have 
outlined in our testimony will be critical to success.
    Chairperson Feinstein. That is on pages 6, 7, and 8?
    Mr. Walker. Right, 6, 7, and 8.
    Furthermore, I also would respectfully suggest that in the 
final analysis the Congress may decide that you not only need a 
secretary of a new Department of Homeland Security, but also a 
Presidentially appointed, Senate-confirmed head of the Office 
of Homeland Security who will end up being focused on 
coordinating those activities that go beyond the Department of 
Homeland Security.
    It has already been acknowledged that there are a number of 
activities that are not going to be addressed by this 
Department of Homeland Security. This is to a great extent 
focused more on the operational aspects, trying to pull 
together a lot of the operational aspects at the Federal level, 
at least. I totally agree with Governor Gilmore that it is a 
national effort, which is Federal, State, local, public sector, 
private sector, not just Federal.
    Thank you.
    Mr. Rudman. Senator, if I could just add just 30 seconds--
--
    Chairperson Feinstein. Go ahead, Senator Rudman.
    Mr. Rudman. We totally agree with the Gilmore Commission's 
recommendation that there ought to be somebody in the White 
House who heads up the office. We said it would be more like 
the National Security Advisor, not confirmed by the Senate, 
because it would be a Presidential aide. However, if you 
decided to do it the other way, it does the same thing.
    We fully agree that this does not supplant the need for the 
national strategy to be developed in the White House by an 
Office of Homeland Security. This is precisely what we say in 
our report.
    Chairperson Feinstein. Thank you very much. I think my time 
is up.
    Senator Hatch, do you have questions?
    Senator Hatch. Thank you, Madam Chairperson.
    Welcome to all three of you here, and the other witnesses 
as well. This is an important hearing and I appreciate having 
you all here. I might say that certainly, Senator Rudman, and 
you and Governor Gilmore and your commissions have certainly 
proven to be very accurate and very, very persuasive and very 
helpful to this administration, and I think all of us up here 
on Capitol Hill.
    Although some thought the Hart-Rudman report was a little 
too much at the time, you have certainly been vindicated, it 
seems to me, with what you decided and what you recommended to 
us. Both of you have done excellent work and I really 
appreciate it. Of course, I appreciate Mr. Walker and the 
continual service he gives to our country.
    Senator Rudman, I believe that in your testimony before the 
Governmental Affairs Committee last week you suggested that 
separating the Immigration and Naturalization Service's various 
functions could reduce its effectiveness in enforcing our 
immigration laws and facilitating immigration services.
    Do you believe that this administration's proposal to 
transfer INS in its entirety--I don't know if the distinguished 
Senator from California has asked this question, but I wonder 
if transferring it in its entirety and including it under the 
umbrella of the Border and Transportation Security Division is 
the proper approach.
    Could you see any benefit to transferring INS in its 
entirety as a separate fifth division rather than making it 
part of the Border and Transportation Security Division in the 
new Department of Homeland Security?
    Mr. Rudman. Senator Hatch, it is a pleasure to see you this 
morning. We did a lot of work together over the years.
    Senator Hatch. That we have.
    Mr. Rudman. I must tell you that we labored over that 
particular issue for some time, and you will note our proposal 
does not include the INS. That is not to say it shouldn't be 
included. I will tell you that we decided, for a lot of 
reasons, that we would take the Border Patrol, which is, if you 
will, the uniformed part of INS, and we would move that to a 
purely law enforcement function. We came to the conclusion that 
we would try to keep our recommendation very focused, as Mr. 
Walker has said.
    Now, having said that, I think, listening to Governor Ridge 
and his testimony before ours last week, before the 
Governmental Affairs Committee, that he makes a strong case. In 
order to secure the border, you have got to have the people who 
oversee immigration report to the same person and have the same 
intelligence and the same information technology.
    It may well be that part of it ought to be left where it 
is. I just don't know the answer to that question, but I can 
tell you that our Commission, after three-and-a-half years, 
decided not to transfer it. We just thought it would probably 
better be left where it is. But I would hasten to add, Senator 
Hatch, that it surely needs reform. It needs reform to be 
brought into not only the 21st century, but also into the 20th 
century in terms of technology.
    Senator Hatch. Well, you have suggested that the collection 
and analysis of intelligence information should be kept 
separate from the policy decisionmaking process that results 
from the collection and analysis of intelligence information.
    Do you believe that the administration's current proposal 
would achieve the separation you recommend?
    Mr. Rudman. I believe so, because my understanding is that 
there is no collection in this new agency, nor should there be. 
I mean, to set up a collection regimen, as the Chairman or 
anyone else who serves on the Intelligence Committee knows, is 
enormously complex.
    We already have very good collection. What we probably need 
is a very good analysis unit that can work with other analysis 
coming out of all-source analysis at the agency and the FBI. By 
the way, we did not recommend quite what the President did in 
terms of an intelligence analysis unit, but I think it probably 
is a very sound idea.
    The other interesting idea--you may have read in the paper 
that one of the foremost scientific organizations in the 
country has proposed that there be a homeland defense institute 
of technology to work on the technology that must be developed 
to protect our borders--a very interesting proposal. Query: 
Where does that belong?
    So you have got your plate full. In addition to the 
President's proposal, you have got our proposal, others that 
are being made, and, of course, the work that the Gilmore 
Commission did.
    Senator Hatch. Your Commission emphasized the importance of 
including the National Guard.
    Mr. Rudman. We did, but not in the Homeland Security 
Agency. What we said, Senator Hatch, was that----
    Senator Hatch. Can you tell us a little bit of how you 
think it would function under the administration's proposal?
    Mr. Rudman. They are doing the Guard separately. Our 
proposal is that the National Guard be duly trained as a first 
local responder in the event of a major disaster in a major 
area. They are first-rate people. They are highly motivated, 
and they do a great job. They have a combat support role, but 
we believe they ought to have a secondary role. My 
understanding is, that is under active consideration.
    Incidentally, Senator Hatch, we also recommended the 
creation of a commander-in-chief for homeland security at the 
Pentagon, CINC North, if you will, which Secretary Rumsfeld has 
now implemented.
    Senator Hatch. Governor Gilmore, I believe we all agree 
that in fashioning an overall national security strategy that 
we have to tap into the resources and expertise of the private 
sector. Private businesses own and operate most of our 
infrastructure, our telecommunications, energy, financial 
systems. So input from the private sector is essential to arm 
our agencies with the best technologies available.
    You mentioned in your written testimony that your Advisory 
Panel intends to consider ways to better integrate America's 
private sector. Recognizing that this is an issue you have just 
recently begun to consider in depth, do you have any immediate 
suggestions as to how we can further this goal as we consider 
the administration's proposal?
    Mr. Gilmore. Senator Hatch, the challenge, it seems to me, 
is to find the right model to make sure that the private sector 
is appropriately at the table in terms of planning and 
coordination of the national strategy.
    This is not easy. The design of a national strategy is 
difficult enough as it is. We have great confidence that the 
Ridge office is going to bring forward a good national 
strategy, but then the question is what mechanisms can get the 
private sector involved.
    It is very challenging because there is really not a market 
solution to this. It is very difficult in defense preparation 
to use market forces, but there are two that I can think of.
    One is that there is a frenzy right now to sell products, 
and people want to offer their products and offer their systems 
as part of the national homeland security strategy and they are 
dying to find ways to make their case as to why this would fit 
into the national strategy. So that is a market force that 
actually might work to our benefit as people have the 
opportunity to make their case, and a mechanism needs to be 
found to do that.
    The second is that there is a defensive position for the 
private sector that is a very serious one, and that is that 
they themselves must do something to protect their critical 
infrastructure and their continuing operations and their 
information technology systems. Failure to do that exposes them 
under the civil liability system, and creates therefore serious 
market and legal reasons why they must, in fact, come to the 
table and cooperate.
    The challenge, though, is not so much the creation of those 
market forces which I have just articulated; they are there. 
The interesting question is how do we put into place the 
ability to coordinate them with a Government operation which is 
entirely different from the private sector. Probably the best 
way to do that is to create some councils and some strategic 
thinking types of organizations. But this is a real management 
challenge and a serious issue.
    By the way, in terms of the actual homeland organization 
itself, one of the management challenges is the ability to get 
information through a large bureaucracy like the one that is 
being suggested, and that will require very careful 
implementation and structuring as the Congress goes forward.
    Senator Feinstein, you raised the issue in your opening 
remarks about how INS didn't get the word and sent out visa 
approvals very late in the game after the incident had already 
occurred. There is no blame here, it seems to me. This is 
simply the process that occurs of large bureaucracies set up in 
large, difficult structures. The management challenge here is 
to find a way to make sure that this is streamlined in a way 
and managed in a way to maximize the passage of information up 
and down the line.
    Senator Hatch. Madam Chairperson, I know my time is up, but 
could I ask one question of Mr. Walker?
    Chairperson Feinstein. Certainly. If Senator DeWine doesn't 
mind, I certainly don't.
    Senator Hatch. Do you mind, Senator DeWine?
    Senator DeWine. No.
    Chairperson Feinstein. Go ahead.
    Senator Hatch. Thank you, and I also want to thank you very 
much for this hearing. I am going to be watching and reading 
all of the record here today.
    I just have one question for you, Mr. Walker. Your 
testimony contains an in-depth discussion of the Federal 
Government's role in preventing and protecting against 
terrorism. Could you elaborate a little bit more on the role 
you believe the Federal Government should assume in interacting 
with and supplementing efforts of State and local governments, 
non-governmental organizations, and the private sector?
    Mr. Walker. As Governor Gilmore has mentioned, in order for 
us to be successful in this effort to try to protect our 
homeland, it is going to take the combined efforts of a variety 
of Federal Government entities, State and local government 
entities, as well as the private sector and NGO's.
    We have found in the dealings that GAO has had in doing 
work in the area of homeland security over the last several 
years, including the last year, that there has been a fair 
amount of frustration on behalf of State and local government 
officials and private sector officials at not being able to 
play as interactive and constructive a role as they would like 
to in trying to help define the national strategy and in trying 
to understand what the appropriate division of responsibilities 
would be.
    So that is why I think it is important that we not just 
focus on this Department of Homeland Security, which is to a 
great extent more the operational aspects of it, but also focus 
on this national strategy which is going to come out of 
Governor Ridge's office, I would imagine, in the near future, 
and making sure that all the key stakeholders are buying into 
that national strategy in order to be able to effectively 
implement it.
    Senator Hatch. Thank you.
    Chairperson Feinstein. Thank you.
    Senator DeWine?
    Senator DeWine. Thank you, Madam Chairman.
    Let me thank all of you for being here. Mr. Gilmore and 
Senator Rudman, your reports are certainly very, very helpful. 
Mr. Walker, I look forward to having the chance to fully read 
your recommendations and, your warnings about the perils that 
lie ahead of us.
    Senator Rudman, you pointed out in your testimony that 
while the President's proposal to some extent mirrors what you 
recommended, there are some differences. But you also pointed 
out that this does not solve all of our intelligence problems.
    It seems to me that we face a very difficult job here in 
this Congress and in our country--how to move forward with the 
homeland security proposal, while at the same time trying to 
deal with our intelligence issues, our FBI issues, our CIA 
issues.
    I just would like to know, in the 4-minutes that you have 
remaining, if you would give us a little advice on how we can 
proceed and do this. You have really a unique perspective and 
background because of your former positions here in the U.S. 
Senate and we would welcome your comments.
    Mr. Rudman. Senator DeWine, I think it is a daunting 
problem. Let me describe the problem and then what I think is 
the potential solution.
    I am convinced after serving on the Senate Intelligence 
Committee, chairing the PFIAB and serving there for 8 years, 
having almost daily contact with the intelligence community, 
that the problem is not that we don't have enough information. 
We have too much information.
    Our collection modalities are extraordinary. We have both 
human intelligence and electronic intelligence, as well as the 
various mapping agencies and other covert operations we run to 
gather intelligence. The challenge is how do you analyze it and 
how do you get it in the right place in a timely fashion.
    We are a huge country. When you look at the intelligence 
agencies of other countries, they are so much smaller and they 
have so much less to deal with. Even they have enormous 
problems preventing--Shin Vet, which is the civilian part of 
Mosad in Israel, is having an incredibly difficult time 
pinpointing terrorist activities and where they will take 
place.
    I believe that the two committees now studying this in 
closed and soon to be open session are going to have to find a 
way to establish extraordinarily technical linkage between 
these agencies in a way that we have never done it before.
    For instance, as you know, without getting into classified 
areas, the National Security Agency has computers that have 
what is called an artificial intelligence. This automatically 
detects certain things in which we are interested. Now, we are 
going to have to do that, both with the FBI counterterrorism 
department, which is a whole new division being expanded by 
Director Mueller, as well as at the CIA. We are going to have 
to turn a giant search light onto some of these issues, so that 
when information arises, such as the information that arose the 
FBI about certain activities at flight training schools, it 
immediately gets on somebody's screen who is responsible for 
looking at it and can put the pieces together. The challenge is 
finding the technology to put the pieces together.
    Having said that, they have been trying at the agency to do 
that. The FBI has been vastly underfunded in terms of--or what 
technology reason, I don't know. They are in 1970's technology 
in some of their field offices and in their headquarters.
    Having said all of that, I want to just make one other 
statement. I really worry when I hear people saying that if we 
just have better intelligence, we are going to solve the 
problem. We are not going to solve the problem with better 
intelligence. We are facing, as the President says, a war 
against a group of people that want to do us grave harm. It is 
not the physical damage they want; it is the terror they want 
to strike in the hearts of Americans. We are going to have to 
find a way to deal with that, but intelligence alone is not 
going to solve the problem.
    I have developed a line lately that I guess explains it. 
What I have been saying is that if you batted .500 in baseball, 
you would be in the Hall of Fame. If you bat .750 in 
intelligence, you are a loser. You are not, through 
intelligence, going to be able to detect all of the bad things 
that are going to happen, but that doesn't mean we can't try.
    The first thing we have to do is to find a solid way to 
exchange information that deals with terrorist activities both 
here and abroad. I certainly hope that that is the result that 
the congressional committees will finally reach.
    Senator DeWine. Thank you, Madam Chairman. Thank you, 
Senator.
    Chairperson Feinstein. Thank you very much.
    Just for one quick second round--and I want to move on, but 
I have to ask you this question. I frankly don't see how we 
avoid just creating one massive bureaucracy which makes the 
chain of command even more convoluted than it already is.
    The more I think about it, the more I think the way to 
really go is along the lines that you propose, Senator Rudman, 
of limited agencies that come together where the main mission 
revolves around enforcement or homeland defense kinds of 
issues; in other words, maybe adding to Border Patrol; whether 
it is Coast Guard or National Guard, having a military adjunct 
certainly involving Customs, and maybe taking certain precise 
parts of a few other agencies.
    One of the things that gives me the greatest concern in 
terms of the morale issue that Mr. Walker alluded to in his 
comments is that the President's proposal would really give the 
administration extraordinary and unprecedented powers to 
terminate unilaterally existing labor agreements and do away 
with civil service and whistleblower protections for employees 
in this new department. It seems to me that that is going to 
create the very morale problem that Mr. Walker indicated we 
should try to avoid.
    Could each of you comment briefly on that?
    Mr. Rudman. Madam Chairman, I am very supportive of the 
President's proposal. I understand it is very complex. We 
thought we submitted an extraordinarily major proposal with the 
one that we did. In fact, we were told so back before September 
11.
    I believe that Customs, the Border Patrol, the Coast Guard, 
and FEMA could keep their identities, could have a single 
command and control, and could be very effective in a homeland 
security agency. I cannot speak for the others because we did 
not study them in any great depth, but I will say this: when I 
quickly looked at the submission, there is one thing that 
concerned me, and I am sure it will concern Members of 
Congress.
    I think there were too many assistant secretaries and too 
many under secretaries, if you look at the organizational 
chart. I think Mr. Walker's point really plays into this. I 
think this has got to be lean and tough. I think if you have 
too many layers of accountability, you end up with no 
accountability.
    I hope that the organizational structure, whatever it is, 
is modeled after a good management structure, without all of 
the layers of reporting which will frustrate both 
accountability, reporting to Congress, and budgetary 
considerations.
    So I do support the President's proposal. Ours is easier to 
implement, but that is a decision that you will all have to 
make.
    Chairperson Feinstein. Mr. Gilmore, do you have a comment 
on that, particularly the personnel aspects of it?
    Mr. Gilmore. Senator Feinstein, I think it is a real 
challenge. I think that within the agencies, if the agencies go 
over in their entireties and stay together, that probably helps 
the issues of personnel and morale instead of hurts them, would 
be my first reaction.
    I think, and I believe our Commission believes that we need 
to really be focused on perhaps a little different issue, which 
is the issue of civil liberties in the country and making 
absolutely sure that no changes that we make in any way impinge 
upon the civil liberties of the people of the United States. 
That is, I think, something that we focused in on very 
carefully.
    As far as our Commission, we believe that the national 
strategy is the touchstone and that points the direction, and 
then at that point you examine the question of what management 
model you really want to implement. We don't come to the table 
today in opposition to the President's plan at all, but we 
obviously recognize many of these challenges.
    In our meeting in Indianapolis, we concluded that accepting 
that the administration and the Congress are going to do an 
agency like this, we want to be as helpful as we can in terms 
of thinking about these issues. We solicited this data from our 
commission members as to what they see as the challenges and 
what potential solutions are. And if it is constructive, we may 
very well put it into a document for this committee in the very 
near future.
    I think the logical conclusion is if you are going to 
transfer the whole agencies, however, which is under discussion 
right now before the committee, you are going to need some 
additional assistant secretaries to handle homeland security 
issues and non-homeland security issues. But perhaps that would 
be the solution of the managerial challenge that you are 
facing.
    Chairperson Feinstein. Mr. Walker?
    Mr. Walker. My sense is if you started with the Hart-Rudman 
Commission and you looked at those elements that were proposed 
by the President that were not in Hart-Rudman, you may find 
that a lot of those elements make sense to be incorporated and 
some may not make sense.
    Chairperson Feinstein. Like taking the nuclear aspects of 
Energy, for example, and putting them into----
    Mr. Walker. There are a number of different ones. As was 
mentioned before, there are 22 different entities that are 
proposing to be consolidated. It is clearly a very 
comprehensive proposal, and so to be able to look at the more 
focused approach was, or targeted, versus the President and to 
analyze the differences based upon some clearly defined and 
reasonably applied criteria.
    Second, with regard to management issues, I think you 
absolutely need to minimize the number of layers and levels, 
minimize the number of entities that you have got to deal with. 
The more of those you have, the more problem you are going to 
have in effectuating the transformation over a reasonable 
period of time, the more problem you are going to have in 
empowering people and having adequate accountability.
    I think you also have to focus that this new organization 
is focused more horizontally rather than vertically, other 
Federal, State, and local, and externally, which will be part 
of the State, local, and private sector. It has got to be 
focused horizontally and externally in order to be successful.
    Last, I would say I think this new entity will need 
additional human capital flexibilities for hiring, especially 
in areas of critical skills and occupations, and additional 
authorities for potentially being able to offer targeted early 
outs and buy-outs to realign the agency.
    Obviously, one of the issues that you raised was the 
representation issue. I think there are some areas where there 
could be bona fide national security concerns that would have 
to come to bear, but I think hopefully those will be minimized 
because I think part of the problem we have right now is in the 
absence of more clarity and in the absence of more 
communication with regard to some of the details about this 
proposal, people speculate the worst. And when they speculate 
the worst, by that I mean unions speculate they are going to be 
cut out. Employees speculate they may not be able to be handled 
in the way that they would like to be handled.
    Part of the key of any consolidation and transformation--
public sector, private sector, not-for-profit sector--is 
communication, communication, communication. You want to 
absolutely minimize any expectation gaps and minimize 
speculation that can undermine achieving your ultimate 
objective, and that is getting the job done and getting it done 
as quickly and effectively as possible.
    Mr. Gilmore. Senator, would you object if I just added 30 
seconds' worth of analysis on that?
    Chairperson Feinstein. Not at all.
    Mr. Gilmore. What is being talked about here is shaving 
this down and making it clearer and smaller. That is really 
what we have been talking about for the last three or 4 
minutes. That raises a different issue, however, I just thought 
I would point out, and that is if you have agencies that are 
involved with homeland security--take the Coast Guard, for 
example, which has a major non-homeland security function. What 
if you don't put them in? Then what happens if an incident 
occurs that is part and parcel of the responsibilities and 
duties of the Coast Guard and they are not in?
    Chairperson Feinstein. I think that is why Mr. Rudman's 
commission recommended the National Guard.
    Mr. Gilmore. Sure, but the point is that no matter what 
agency--Coast Guard, National Guard, INS, or anything else--if 
you have an incident that involves that agency and it wasn't 
put in, then the question is what kind of challenge does that 
create for us post-attack?
    Chairperson Feinstein. Do either of you have additional 
questions?
    Senator Hatch. No.
    Senator DeWine. No.
    Chairperson Feinstein. If not, then let me say thank you 
very much. This has been very useful and we are very 
appreciative.
    I would ask the next panel to come forward and hopefully we 
will be able to move on from here. I will introduce the three 
panelists seriatim here and then call on each of you, and then 
perhaps we can have kind of an open discussion.
    Mr. Paul Light, of the Brookings Institution, is the Vice 
President and Director of Governmental Studies at Brookings. He 
currently teaches at Harvard University's Kennedy School of 
Government and he has written 13 books on government and public 
service. He is currently directing four major studies efforts 
at Brookings, including studies on organizational effectiveness 
and the Federal Government's greatest achievements.
    Mr. Ivo Daalder, of the Brookings Institution, is a Senior 
Fellow in foreign policy studies. He holds the Sidney Stein 
Chair in International Security. He is a specialist in national 
security affairs. He has written extensively on the subject and 
is a frequent commentator on current affairs.
    Mr. Ivan Eland is the Director of Defense Policy Studies at 
the Cato Institute. In that capacity, he has written reports 
and articles on numerous topics, such as terrorism and homeland 
defense. Before coming to Cato, he developed a strong career in 
the public sector, as well, serving as a principal defense 
analyst at the Congressional Budget Office, an investigator for 
the GAO in national security and intelligence, and as an 
investigator on the House Foreign Affairs Committee.
    I would like to begin, if I can, with Mr. Light and then 
just go right across the spectrum. If we could kind of take up 
where we left off, obviously the major point of reference here 
is whether the mission would be better served by a smaller, 
leaner, tougher, less bureaucratic entity than the one proposed 
by the President.
    Mr. Light, would you like to begin?

  STATEMENT OF PAUL C. LIGHT, VICE PRESIDENT AND DIRECTOR OF 
 GOVERNMENTAL STUDIES, THE BROOKINGS INSTITUTION, WASHINGTON, 
                              D.C.

    Mr. Light. Absolutely. I appreciate the invitation to 
testify. You have my statement. I will focus on that question, 
as well as the waiver authorities embedded in this legislation.
    This is an extraordinarily bold proposal. I am told by 
sources at the White House that they wanted it to be shorter, 
only 20 pages rather than 35, but there is an awful lot in it 
by implication.
    As I say at the beginning of my statement, history suggests 
humility as we do these kinds of reorganizations. This is a 
very large reorganization. It is larger than the President 
indicated. We are talking about 200,000 employees, probably 
210,000, not 170,000. The President's estimates were based on 
the current work force at Transportation Security of 41,000. 
Transportation Security is already talking about 70 to 75,000 
as their ultimate work force size. We are talking about a very 
large Federal entity here.
    In my testimony, I talk about whether this should be done. 
I will skip that question.
    The second question is, is it too broad? The answer depends 
entirely on whether it can be managed, I believe. I am going to 
leave the question of breadth to Ivo. I argue here in my 
testimony that it might be better to focus more on border 
security, but I am going to defer to my colleague, who has 
taught me more about that and can teach all of us a little bit 
more.
    I should note that it is nice to have a Brookings colleague 
next to me. We have got a Cato colleague. I am assuming that 
doesn't mean it takes two Brookings fellows to equal one Cato. 
I am hoping it means we have got twice as much to say, but I 
will leave that to the subcommittee.
    The question I bring to bear here is can this entity be 
managed. The White House is saying yes and no. The bill itself 
has an extraordinary number of significant waivers from 
contemporary statute in order to help the secretary manage this 
entity. Let me talk about three.
    The reorganization authority under Section 733 would give 
the Secretary of Homeland Security the ability to consolidate, 
establish, terminate, basically move any entity within the 
homeland security department, even ones established by statute, 
with 90 days of notice to the U.S. Congress. That is a far 
broader reorganization authority than anything we have seen in 
statute since the Department of Education, and the White House 
rightly notes that the Department of Education did have this 
authority.
    The Department of Education has less than 500 employees and 
has a very, very targeted mission, and we saw a lot of its pre-
performance as part of the old HEW before we created it.
    I am very concerned about this reorganization authority. I 
would refer the Senator to proposals being discussed in 
Governmental Affairs, particularly by Senator Thompson, on 
giving the President reorganization authority, properly 
circumscribed.
    The second issue is on the number of appointees. There is a 
large number of appointees in this department. As a staff 
member of Senate Governmental Affairs back in the late 1980's 
when we elevated the Veterans Administration to Cabinet status, 
we put a number of caps in the statute to reduce the potential 
thickening of the department. I would recommend a quick return 
to that statute, the Department of Veterans Affairs Act, to see 
how we managed to constrain the number of appointees.
    I would also note that there are a number of appointees 
here in this department that are not subject to Senate advice 
and consent. There are ten assistant secretaries, for example, 
that are appointed by the President and serve at the pleasure 
of the President, and I do not believe the Senate can allow 
that particular waiver to stand. That would be the first time 
we have appointed assistant secretaries in history without 
Senate confirmation.
    The third waiver is on civil service. I have great 
confidence in the Office of Personnel Management, in Kay Coles 
James and her deputy, Dan Blair. They are deeply committed to 
improving the civil service system, but I do not believe this 
waiver can be left in statute. It is extraordinarily vague.
    I believe that employees in the new department would spend 
far too much time trying to interpret just what it means to 
have a flexible and contemporary personnel system. Congress is 
fully capable of writing into law the appropriate waivers to 
allow the Secretary of Homeland Affairs to have the needed 
flexibility to move quickly in hiring, to have the needed 
flexibility for critical pay authority, which we gave the 
Internal Revenue Service in 1998, and to provide for voluntary 
buy-outs.
    Much as I applaud the notion that we should give the 
secretary maximum flexibilities, I think Congress is fully 
capable of writing those flexibilities with more precision so 
that we don't spend the first year of this department trying to 
sort it all out and so that employees focus on the mission, not 
on figuring out what kind of personnel system they will, in 
fact, have.
    Thank you very much.
    [The prepared statement of Mr. Light appears as a 
submission for the record.]
    Chairperson Feinstein. Thank you very much, Mr. Light.
    Prior to going to Mr. Daalder, we would like to welcome 
Senator Specter. Senator, do you have a statement you would 
like to make at this time or would you rather wait?

STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM THE STATE 
                        OF PENNSYLVANIA

    Senator Specter. Well, thank you very much, Madam Chairman. 
I commend you for convening these hearings. I am not a member 
of this subcommittee, although in prior Congresses I had 
chaired the subcommittee.
    I do think it is a matter of enormous importance, and the 
full committee is going to be hearing from Governor Ridge 
tomorrow and it is my hope that we will be able to bring within 
homeland security the analysis functions of all of the 
intelligence agencies so that in one spot there will be a focus 
on all of the available intelligence, because as factors are 
developing it is becoming more and more likely that had 
everything which was known prior to 9-11 been in one spot and 
under one focus, that event might well have been prevented.
    I commend Senator Feinstein for her work here, as usual. I 
had wanted to come earlier, but we have many, many competing 
committees, but my staff and I will be reviewing the 
transcript.
    Thank you for the opportunity to say a word or two.
    Chairperson Feinstein. Thanks, Senator Specter.
    Mr. Daalder?

  STATEMENT OF IVO H. DAALDER, SENIOR FELLOW, FOREIGN POLICY 
      STUDIES, THE BROOKINGS INSTITUTION, WASHINGTON, D.C.

    Mr. Daalder. Thank you very much for inviting me here. Let 
me sum up the prepared statement that you have before you and 
focus, in particular, on the question, Senator Feinstein, that 
you asked at the outset, whether the mission should be narrower 
and the number of agencies should be narrower than the 
President has proposed. I would answer that question, yes, for 
sure.
    There are four pillars in the President's proposal. I think 
one of those ought to be the immediate focus; that is, the 
border and transportation security function. That is the pillar 
which everybody agrees needs to be coordinated and 
consolidated, from the Hart-Rudman Commission to the bill that 
Senator Lieberman and Senator Specter introduced in late 
October last year and again reintroduced in May, to the 
Brookings Institution.
    In our study, which came out in April, we proposed the 
creation of a border agency at the Cabinet level which would 
combine Customs, the Coast Guard, the enforcement arms of INS, 
the agriculture quarantine inspection agency, APHIS, as well as 
the Consular Affairs Bureau of the State Department, which for 
some inexplicable reason the President has left out of his 
proposal.
    We would support and go further with the President and also 
include the Transportation Security. After all, borders and 
transportation are inextricably linked. It is the people and 
the goods moving over transportation routes that cross borders. 
So the idea that the President has proposed of linking 
transportation and border security is a good one. Including the 
transportation Security Administration is something that I 
think is exactly the right way to go.
    That, by the way, would get you 90 percent of the personnel 
and two-thirds of the budget of the proposed new department. 
Border control and transportation security account for 
virtually every person that is going to be in this new 
department, 92 percent of the people, and something like 66, 67 
percent of the budget.
    The other agencies that are to be part of this, the other 
three pillars--the response pillar, the chemical, biological, 
radiological and nuclear countermeasure pillar, and then the 
information and critical infrastructure analysis pillar--only 
account for about 8 percent of the people to be put into this 
department. The question is: Should we move those into this 
agency? The answer, in most cases is going to be no.
    Take, for example, FEMA, which I know the Hart-Rudman 
Commission----
    Chairperson Feinstein. Are you saying you shouldn't move 
those parts of Energy that you were talking about? I didn't 
understand.
    Mr. Daalder. The parts of Energy, the parts of HHS, the 
parts of the Agriculture Department that have some role in 
homeland security, but also have many other things to do. For 
example, the Plum Island animal disease facility has a 
particular role in bioterrorism. They also make sure that zoo 
animals and circus animals don't have particular diseases.
    Putting them all under the Department of Homeland Security 
brings within that department multiple functions that have 
nothing to do with homeland security and might as well stay 
where they are. In fact, moving them over, in general, is 
probably going to create more problems than it is worth.
    Chairperson Feinstein. But you are saying with respect to 
Energy, take those functions that are related?
    Mr. Daalder. I would leave those where they are.
    Chairperson Feinstein. You would not take the nuclear part 
of this?
    Mr. Daalder. I would not take the nuclear part. I would not 
take the bioterrorism part out or HHS and split what is now a 
unified, consolidated whole. These are problems that are larger 
in some ways than homeland security.
    The problem of the proliferation of weapons of mass 
destruction and the way we are going to prevent those weapons 
falling in the wrong hands and then dealing with them if they 
come into our country, if they get stolen and if they get used, 
are massive problems that I am not convinced ought to be part 
of the Department of Homeland Security.
    Doing border and transportation security is going to take a 
major, major effort. Getting that one right in the first 
instance ought to be something that one ought to focus on. If, 
over time, it turns out that you want to add to this, I think 
Congress may well want to consider this. But to move in the 
next months, which is what we are talking about, weeks really, 
and take 22 very disparate agencies and put them all into this 
one department without really having gone through what the 
consequences are, I think, is a bridge too far, and I would 
stick with the border and transportation security for the 
moment.
    If I may, two other points to add to that. On the 
information analysis piece, a lot has been said about it. If 
you are not going to share raw intelligence and law enforcement 
data, then fusing the intelligence is not going to work.
    The proposal that the President has put forward is to give 
this agency, this new analytical unit, not the raw intelligence 
data, but analytical product, analytical product that is by 
definition based on less than all the data that is available.
    As Senator Specter, rightly said and as Senator Rudman said 
earlier, if you are going to get people to look at the whole 
set of data, they have to look at the whole set of data. And 
unless you are going to find a way to get these people together 
and analyze all the data, it may be better not to move----
    Chairperson Feinstein. So what would you do in that regard?
    Mr. Daalder. Well, you really need to create a much larger 
unit than is being considered under the legislation. Some 1,000 
people, the President has proposed, are going to come into this 
pillar, almost all of whom are related to critical 
infrastructure protection, almost none of whom are the kind of 
skilled intelligence analysts that you would need.
    I think that the CIA and the FBI and the other parts of the 
intelligence community ought to have the data handed over to a 
single unit that has all the data, scrubbed for sources and 
methods of course, and for law enforcement and civil liberties 
reasons in the way that it needs to be, but raw data, not 
analytical product, and then allow technology and people to 
really sift through it and try to connect the dots in the way 
that hopefully would have happened if we had shared the data. 
But to share only analytical product, assessments and reports 
that are in themselves based on incomplete sets of data, is not 
going to solve our problem.
    Finally, if I may, just to concur with what Governor 
Gilmore said earlier. However big this department is, whether 
it is as small as I would like to have it or as large as the 
President is proposing, there are going to be far more agencies 
dealing with homeland security outside of it than inside.
    One hundred agencies in the U.S. Government in some way or 
other have a role in homeland security. Twenty-two of those are 
being proposed to be put into the department, which means 
three-quarters are being left out. Somebody needs to coordinate 
that. That ``somebody'' has to sit in the White House. The 
Office of Homeland Security will maintain and continue to have 
a role, but for reasons that Governor Gilmore laid out, that 
person, that office, and indeed the Homeland Security Council 
ought to have statutory authority so that the person who is 
drawing up the national strategy, who is putting together the 
homeland security budget, can come before the Congress and be 
held accountable and explain to the Congress how all of this is 
supposed to work.
    With that, let me end my statement.
    [The prepared statement of Mr. Daalder appears as a 
submission for the record.]
    Chairperson Feinstein. Thank you very much.
    Mr. Eland?

STATEMENT OF IVAN ELAND, DIRECTOR, DEFENSE POLICY STUDIES, CATO 
                  INSTITUTE, WASHINGTON, D.C.

    Mr. Eland. Thank you for allowing me to have input at this 
hearing. It is a pleasure to be here.
    The short answer to your question of whether a smaller, 
leaner, less bureaucratic entity is better than the Bush plan--
is ``yes''. I think we are in an age where we face a threat 
from Al-Qaeda and other terrorist groups that is unlike the 
threat from nation states.
    The advantage that we had when battling nation states such 
as the Soviet Union and Iraq, was that they had governments 
that were probably more bureaucratic than ours. Terrorist 
groups are very agile and nimble. They are on the offensive. 
They know where, when, and how they will attack. So I think 
more government is worse than less government in this case. So 
anything that we can do to increase the agility of our 
Government and reduce the bureaucracy is good.
    The problem with the Bush plan, and history bears this out, 
is that consolidation of agencies doesn't necessarily mean less 
government or more efficiency. When you have a large 
department, you have to build a superstructure on top of all 
the disparate agencies you are bringing together. The more 
agencies you put in there and the wider variety of functions, 
the more bureaucracy you have to have on top to control the 
cacophony of interests. I think this happened in the 1947 
Defense Department restructuring. This was held up by President 
Bush as a good example. I am not so sure that it is.
    Now we have an Office of Secretary of Defense that has a 
bloated bureaucracy itself. The efficiency of the Defense 
Department has been compared to Soviet Central Planning by the 
Secretary of Defense himself. The OSD does not rein in the 
military services. It is still a very weak bureaucracy but it 
is a big bureaucracy nonetheless.
    So I think the Bush plan has the potential to actually 
increase government. And when we increase government and the 
amount of people involved, we of course develop coordination 
problems, which seem to be the main problem that we have seen 
so far. I do stress that that is a preliminary determination I 
think, based on what has been happening in the Intelligence 
Committees. We are in a rush here to solve a problem which does 
not seem to be the main problem--that is the intelligence 
problem.
    Now what does the Bush Plan do about the intelligence 
problem? Well, it creates another bureaucracy within the 
Department of Homeland Security, which will probably be a rival 
bureaucracy to the CIA and the FBI. Of course, the new agency 
is are not getting raw intelligence data, but they will be 
another competing analysis center.
    What we are doing is pasting before cutting, and what we 
need to do is cut before pasting. When you get the super 
bureaucracy, you are going to have, as I mentioned before, a 
super structure on top. You are also going to have a very 
powerful agency head who has one of the largest departments in 
the government. He is going to be an advocate more personnel 
and more funding. Whether that money will be efficiently spent 
or wise is another matter.
    So I think what we need to do is pare layers of 
bureaucracy. Maybe, perhaps, get some of these 100 agencies out 
of homeland security. When we have an incident involving 
weapons of mass destruction, I think we are going to have 
chaos. God help us if we ever have that, which we hope we do 
not. I think consolidation of agencies is fine, to a certain 
extent. I am certainly not opposing that, but I think the 
President is very coy about the cost of his plan, and I think 
most analysts would say that it is probably going to cost more, 
rather than less--given all of the assistant secretaries, and 
under secretaries in the bureaucracy.
    So, in the President's plan, we may have fewer agencies, 
but more government. Of course, the more government we have, 
the more stodgy and nonagile we are going to be in fighting 
these terrorists.
    In intelligence, I think the main problem is not that we do 
not have the collection resources. We collect huge amounts of 
data. Someone on the earlier panel said--I think it was Senator 
Rudman, who has been on the Intelligence Committee--we have too 
much information. What we need to do is put it in one place, 
and analyze it, and get it to the people who can do something 
about this.
    The other problem I see with the Bush plan is that it puts 
an intelligence function in a policy agency. I think there are 
inherent conflicts of interest there, as we have seen with DIA 
's excessive threat assessments justifying Defense Department 
weapons. Furthermore, we are not getting rid of the White House 
Office of Homeland Security, the Homeland Security adviser or 
the Homeland Security Council. We seem to be piling new 
bureaucracy on top of new bureaucracy.
    So, in short, I think the answer to your question is that 
the leaner and less bureaucratic that we can be, the better. 
But I think that is going to probably go beyond just creating a 
smaller department. I think we actively need to ask whether 
some of these agencies need to be in homeland security and 
exactly what they are doing, and I think we need to go agency-
by-agency to determine whether they need to go into this new 
department. Some of them, like the Coast Guard, may go in, but 
keep their other functions. The Coast Guard has a fleet of 
ships doing multiple missions. Other agencies may have parts 
that you can take out for the new department. But perhaps we 
should determine whether some of the agencies need to be in the 
new department at all doing the homeland security mission.
    Thank you.
    [The prepared statement of Mr. Eland appears as a 
submission for the record.]
    Chairperson Feinstein. Well, I thank the three of you.
    I am beginning to really look at this proposal with a great 
deal of skepticism as to whether it can really work or not, 
whether it is not so big that the time it will take to work out 
the wrinkles is extraordinary, and combined with the personnel 
issues, kind of sets it up as almost an impossible agency with 
respect to governance.
    I repeat what I said before, and that is that the original 
thrust of this was to give the Director of Homeland Security 
the ability to move chessmen across the board and the ability 
to have some strength to set certain missions, and that was the 
budgetary and statutory authority that we talked about. Now we 
have got this huge mega, mega agency, but what really surprises 
me, Mr. Daalder, is that you do not think that there are 
elements of the Energy Department that should be in the Agency.
    We are going to be transporting high-level nuclear waste 
all around this country. Our nuclear facilities are a real 
problem in terms of providing defense against attack, and I, 
for one, as I look at this, have a hard time conceiving of a 
Homeland Defense structure that does not include this part, 
which obviously it needs defense against some kind of terrorist 
attack. Why do you come to the conclusion that one should not 
include this?
    Mr. Daalder. There are many vulnerabilities in our country 
that terrorists can exploit. If every Government agency that 
has some responsibility for these vulnerabilities is to be 
included in the----
    Chairperson Feinstein. But I am talking about the nuclear 
one which has a much greater impact on people.
    Mr. Daalder. But there are many Government agencies, from 
DOD to DOE to the labs, that have responsibility for nuclear, 
both weaponry and energy sites, with all of the materials that 
are there. There are many ones that have responsibility for 
dangerous pathogens which, if released under the right 
circumstances, will kill more people than nuclear. There are 
many, many, many agencies involved in homeland security, and it 
is wrong to believe that the only way you can get them to work 
together is by putting them in a single building with a new 
seal on it.
    Coordination is the name of the game--a single national 
strategy that sets out the clear priorities, one of which will 
clearly be the safety, and security, and protection of nuclear 
energy waste sites, and particularly if we are ever going to 
start moving this stuff around the country, the protection of 
the transportation routes and the transportation systems that 
are going to move this stuff, that is going to be a top 
priority for the country.
    It is not clear to me that you have to have a department 
that takes control of it. I have been a strong supporter from 
the very beginning of having a Tom Ridge-like organization 
inside the White House, somebody who sits there, as Governor 
Gilmore rightly said, who can coordinate the Cabinet people, 
can use the power of the presidency to get things done. I am 
distressed, in some sense, that 9 months after September 11th, 
we still do not have a national strategy. We still do not have 
clear priorities about where it is that we need to focus our 
resources, our abilities to deal with threats and 
vulnerabilities, but now we have this massive reorganization 
plan completely unrelated to our prioritization, which we have 
not had, and that is----
    Chairperson Feinstein. Let me stop you here and ask each 
one of you because I think Mr. Daalder has raised a good point. 
We are supposed to have a strategy. Is this putting the cart 
before the horse; in other words, are we repositioning 
departments before we have a strategy? That has not yet been 
forthcoming, and you are right, it is a substantial period of 
time.
    Could each of you respond to that. Should we have the 
strategy prior to making these organizational changes.
    Mr. Light?
    Mr. Light. Well, that is the ideal case. Twenty-five years 
after creating the Department of Energy to coordinate and deal 
with the moral equivalent of war for energy independence, we 
still do not have an energy strategy. We are looking for one. 
The Vice President spent a good deal of last year apparently 
looking for one. We would, ideally, have that. That does not 
mean you cannot get benefits from reorganization, but there is 
an implied sort of undertow in this statute and in this 
conversation that if you build it, the strategy will come. I am 
not saying that is the cart before the horse. That is more a 
notion that we have got to get some coordination and that our 
agencies are not working very well, particularly INS, and that 
we need to do something about our organizational capacity even 
before we have the strategy in place.
    Chairperson Feinstein. Thank you.
    Mr. Daalder and then Mr. Eland.
    Mr. Daalder. Clearly, in the ideal situation, you have a 
clear strategy with clear priorities and you organize 
accordingly. That is what we did when we put our study out at 
the Brookings Institution. We do have a strategy. We have a 
vulnerability assessment, and we have organizational 
consequences that flow from that.
    I would note that is not how this administration has gone 
about it. This proposal, which Mr. Ridge told the National 
Journal just a month ago he would veto or recommend the 
President to veto, has come very suddenly, very hastily, I 
believe in response to particular political developments that 
have very little to do with the organizational questions. 
Therefore, it is incumbent on all of us, including, in 
particular, you here on Capitol Hill, to take a very close look 
at this, whether it really makes sense and at least demand from 
Mr. Ridge to see the strategy that underlies it. He says there 
is a strategy. That is what he told the House 10 days ago, but 
we have not seen it. The President has not seen it. He has not 
delivered it to the President.
    I think, before you can make final judgment about whether 
this agency or that agency ought to go into a new department, 
you have to have some sense whether the administration is 
barking up the right tree or the wrong tree when it comes to 
its strategy.
    Chairperson Feinstein. Thank you.
    Mr. Eland?
    Mr. Eland. Well, certainly, in the ideal case you want a 
national strategy first, and I think we should make this the 
ideal case. We have been attacked by terrorists and taken mass 
casualties. If there was ever a time for the government to do 
the right thing, this is it. Whether we will do the right thing 
remains in doubt.
    I think, as Mr. Daalder just said, they are trying to solve 
a different problem than the main problem--the coordination 
within intelligence agencies and between them. I think the 
government reorganization is designed to divert attention from 
the real problem that we need to solve first of all, We need to 
wait until the Intelligence Committees has finished their work 
before we start proposing grandiose schemes like this.
    That said, maybe we do eventually need to consolidate some 
of the agencies in homeland security. But I think we need to 
figure out what the main problem is. Naturally, we know that we 
are being attacked by terrorists, but what was the specific 
problem that allowed them to surprise us so much? That is what 
we need to find out. Then we need to develop a national 
strategy, and I think we need to take it much slower than we 
are taking it. We may need to eventually address the problem 
that the Bush administration is addressing--consolidation of 
the homeland defense sector--but we need to work on the 
intelligence side first I think.
    So the answer to your question is, yes, we do need to know 
what we are doing before we do it and why we are doing it.
    Chairperson Feinstein. See, I am very concerned because we 
are really creating two additional intelligence-type functions, 
and the FBI now, in this new department, we have got 12-plus 
departments that deal with intelligence matters. They are all 
under the director of so-called DCI, who cannot run the CIA, 
run all of the intelligence community and be in the Middle East 
negotiating a peace agreement, it seems to me.
    So I think we have got a very fragmented kind of system, 
with respect to intelligence, and my concern is that we are 
making it more fragmented, rather than less fragmented, because 
the bits and pieces a day are in the tens of thousands that 
have to be looked at. Therefore, if you just add two other 
agencies--FBI and now Homeland Defense--what is achieved? It 
seems to me it is just simply a signal that there has not been 
the communication, and everybody is going to try to get around 
it by not improving the communication and integration of 
computer systems, but by doing their own thing. I am not sure 
the Nation is necessarily benefited by that.
    So I think you have raised some very, very good points. I 
think it is so easy to let a proposal slip by because of the 
prestige of the President and the fact that we all want to be 
together, without really taking the kind of look at it that we 
need to look and letting time settle some of these things down 
a bit.
    Do any of you have any other comments you would like to 
make before we adjourn?
    Mr. Light. I think that the point about legislative time is 
right on target. I mean, I worked up here, and there is a sense 
that when a proposal like this comes forward, it just carries a 
locomotive velocity, and then it gets tied to a date. People 
start to say it has got to be passed by September 11th because 
that is the way to honor the victims of that terrible day.
    It is hard to resist that pressure, but I think that that 
is the job of the U.S. Congress, and I often say that that is 
the particular job of the U.S. Senate. You are responsible in 
this chamber for confirming all of these people. And it has 
always been the Senate--and I hate to say this--that has been 
the place where the buck on reorganization stops. It tends to 
come over from the House or down Pennsylvania Avenue, and it 
comes over to you all, and it is a tough one here because of 
the national visibility attached to it, but once you create one 
of these things, there is a certain immortality attached to it.
    So I applaud you for this hearing and for asking the right 
questions, I think.
    Chairperson Feinstein. I have not had a chance to see your 
remarks, but do you go into the specifics on the waivers in 
your remarks?
    Mr. Light. Yes.
    Chairperson Feinstein. I will pull it and take a look at 
it. Thank you.
    Mr. Daalder, any?
    Mr. Daalder. Let me make two points. One is I think there 
is widespread agreement, even on Capitol Hill, there certainly 
is in the outside community, and there is inside the 
administration, that on the border and transportation side, 
something needs to be done. It is what Hart-Rudman came out 
with, it is what everybody has agreed on, and it might be the 
element you can move quicker on, than on the whole thing.
    One way to resolve the political tension that I think Paul 
has rightly put before you is say, we are going to move on 90 
percent of what you asked, Mr. President, which has to be the 
border and transportation side. It makes sense. We are going to 
do it. We are going to make it a Cabinet department, but all of 
this other stuff, we are going to spend some time thinking 
about it. On the information side, we are going to wait to see 
what the Intelligence Committees come up. Some of us still 
believe we need a national commission to look at this in some 
great detail before we start making new decisions and pouring 
new concrete about how to resolve those issues.
    The second point is I am concerned, and deeply concerned, 
about the fact that the White House is right now spending all 
of its time trying to get you to pass this piece of legislation 
and none of its time on what is Tom Ridge's day job, which is 
leading, coordinating, and mobilizing this Government to make 
sure that this country remains secure.
    I think that if Tom Ridge is going to lead the transition 
effort on convincing Capitol Hill, on convincing the outside 
world that the proposal that the President put forward on June 
6 is the right way to go, somebody else, a senior official at a 
high level needs to be in charge of the Office of Homeland 
Security because the terrorists are not going to wait until we 
have figured out how we are going to rearrange the boxes on an 
organizational chart. In fact, they may well exploit the 
opportunity, as we are busily figuring out where to build our 
new buildings and who should and should not be in it, in order 
to look at that vulnerability, and we should not lose sight of 
that. If we are, indeed, in a war, that war is still ongoing. 
It is not going to wait until we figure out our final decisions 
and reorganization.
    Mr. Eland. I would echo some of Ivo's comments. I think we 
cannot get too diverted from the main tasks. I do think the 
intelligence task is probably the most urgent--to figure out 
what happened there so we can correct any problems. The other 
stuff can probably wait, although I think we need to be very 
vigilant. There is currently a lot of effort in Washington. 
Whenever the President proposes something like this, all of the 
attention focuses on moving organizational boxes: but that does 
not necessarily mean that we are going to have better security 
or better security quickly.
    I do applaud the Congress for looking at this. The urge to 
be together is certainly high after a tragic event like this, 
but if we are, I think we may be in great peril.
    Some people have to ask questions, for example, is this the 
right thing to do. We cannot be afraid to ask those questions 
just because we have had a horrendous event occur. Our country 
is based on discussion and determining what we should do--both 
the executive branch and the Congress together debating the 
issues.
    So I think we need to definitely take more time to look at 
some of these issues. We need to solve the things like 
intelligence that really matter in the short term, but slow it 
down a bit on the government reorganization.
    Chairperson Feinstein. Right. Well, let me thank you very 
much. I, for one, am becoming increasingly convinced that we 
should have at least one alternative proposal, which is 
smaller, which is more discrete, which is more concentrated, 
which is doable quickly, which does not have personnel 
implications that can create the climate that we all know can 
be created in a bureaucracy that makes the mission more 
difficult. So I am going to try to work in that direction and 
would appreciate any advice that you might be able to provide, 
the three of you, as we approach this.
    I think the point is that, to a great extent, parts of INS 
should go in this, certainly, the enforcement parts, most 
probably the visa parts. We ought to look certainly at part of 
the State Department Consular Affairs with respect to visas. If 
you want to protect the homeland, let us keep hijackers out, if 
we can. Ergo, perhaps adding that.
    Certainly, whether it is National Guard or Coast Guard, 
there needs to be one element there, and I think you are right 
about the transportation agencies, certainly Customs. I am 
still undecided on the nuclear aspects of it because I think 
protection of reactors, protections of waste, all of those 
things become vital, maybe even some parts with respect to 
biological and chemical weapons. I think there has to be some 
role for this.
    So that it is probable that a more discrete, in terms of 
size, agency might make sense, and I am going to try to see 
what I can do to work on that and appreciate any input that you 
could provide.
    In the meantime, thank you so much for being here, and the 
hearing is adjourned.
    [Whereupon, at 12:04 p.m., the subcommittee was adjourned.]
    [Submissions for the record follow.]

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