    [Senate Hearing 108-772]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 108-772

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2005

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 SECOND SESSION

                                       on

                               H.R. 4754/S. 2809

    AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF COMMERCE, JUSTICE,
      AND STATE, THE JUDICIARY, AND RELATED AGENCIES FOR THE FISCAL YEAR
               ENDING SEPTEMBER 30, 2005, AND FOR OTHER PURPOSES

                                   __________

                            Department of Commerce
                             Department of Justice
                              Department of State
                           Nondepartmental Witnesses

                                   __________

             Printed for the use of the Committee on Appropriations

     Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                     senate

                                   __________

                        U.S. GOVERNMENT PRINTING OFFICE
    92-134                      WASHINGTON : 2005
    _____________________________________________________________________________
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                          COMMITTEE ON APPROPRIATIONS

                         TED STEVENS, Alaska, Chairman
    THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
    ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
    PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
    CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
    MITCH McCONNELL, Kentucky            TOM HARKIN, Iowa
    CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
    RICHARD C. SHELBY, Alabama           HARRY REID, Nevada
    JUDD GREGG, New Hampshire            HERB KOHL, Wisconsin
    ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
    BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
    LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
    KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
    MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
    SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
                        James W. Morhard, Staff Director
                     Lisa Sutherland, Deputy Staff Director
                  Terrence E. Sauvain, Minority Staff Director
                                     ------

       Subcommittee on Commerce, Justice, and State, the Judiciary, and
                                Related Agencies

                      JUDD GREGG, New Hampshire, Chairman
    TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
    PETE V. DOMENICI, New Mexico         DANIEL K. INOUYE, Hawaii
    MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland
    KAY BAILEY HUTCHISON, Texas          PATRICK J. LEAHY, Vermont
    BEN NIGHTHORSE CAMPBELL, Colorado    HERB KOHL, Wisconsin
    SAM BROWNBACK, Kansas                PATTY MURRAY, Washington
                                         ROBERT C. BYRD, West Virginia
                                           (ex officio)
                               Professional Staff
                                  Scott Gudes
                              Katherine Hennessey
                                 Dennis Balkham
                               Jill Shapiro Long
                                Shannon O'Keefe
                                Jessica Roberts
                             Lila Helms (Minority)
                            Kate Eltrich (Minority)
                            Chad Schulken (Minority)

                                C O N T E N T S

                                  ----------

                             Tuesday, March 2, 2004

                                                                       Page
    Department of Commerce: Office of the Secretary..................     1

                            Tuesday, March 23, 2004

    Department of Justice: Federal Bureau of Investigation...........    53

                            Thursday, March 25, 2004

    Department of State: Office of the Secretary.....................   119
    Nondepartmental Witnesses........................................   167

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2005

                                  ----------

                             TUESDAY, MARCH 2, 2004

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:03 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg, Stevens, Hollings, Inouye, Leahy,
    and Kohl.

                             DEPARTMENT OF COMMERCE

                            Office of the Secretary

    STATEMENT OF HON. DONALD L. EVANS, SECRETARY

                                OPENING REMARKS

        Senator Gregg. We will begin the hearing of the Commerce,
    Justice and State Subcommittee of the Appropriations Committee.
    We are honored today to have with us the Secretary of Commerce,
    Secretary Don Evans. I don't have an opening statement. Do you
    have an opening statement?
        Senator Hollings. No, Mr. Chairman.
        Senator Gregg. We will proceed right to Secretary Evans.
    Make whatever statement you wish, Mr. Secretary, and we will
    proceed to questions.
        Senator Leahy. Are there going to be no statements?
        Senator Gregg. I would rather get to the testimony, if you
    don't mind.
        Senator Leahy. I appreciate that. I would ask consent to
    put a statement in the record and I will use some of it in my
    questions.
        Senator Gregg. Absolutely. We will have plenty of time for
    questions and you can work it in there.
        Senator Leahy. Thank you.
        [The statement follows:]

                 Prepared Statement of Senator Patrick J. Leahy

        Mr. Secretary, we thank you for coming to testify before this
    subcommittee today. It is good to see you again. You have an especially
    difficult job at the moment, and none of us envy you for it.
        Whether they have lost their jobs, or worry about losing their
    jobs, or feel frozen in place, so many American workers and their
    families have been hurting for the last three years, and they are still
    hurting in what has been called this ``jobless recovery.'' Job cuts
    have disrupted millions of households, and the effects have rippled
    through our entire economy.
        We have lost nearly three million manufacturing jobs in the past
    three years, and the economic outlook is less than encouraging. In
    fact, more than 2,400 employers reported laying off 50 or more workers
    in January, the third highest number of so-called mass layoffs since
    the government began tracking them a decade ago. Overall, the number of
    manufacturing jobs in the United States is now at its lowest level
    since 1950.
        At the same time our manufacturing numbers are tumbling, our trade
    deficit is spiraling. The Department recently announced that the U.S.
    trade deficit reached a record $489 billion in 2003. While the trade
    report shows strong domestic consumption, it also highlights serious
    problems with our economy's productivity--particularly our lack of
    employment growth.
        Back in September, the Commerce Department announced a broad
    proposal to help the nation's ailing manufacturers. Among other
    elements of that plan, the department proposed creating a new assistant
    secretary of commerce for manufacturing, forming an unfair-trade-
    practices team to track and confront unfair foreign competition, and
    supporting the Manufacturing Extension Partnership (MEP) program.
        I join many manufacturing and trade experts in being puzzled by
    that announcement. The Commerce Department already has hundreds of
    employees tasked with tracking unfair labor practices. And it seems
    that the creation of a new assistant secretary for manufacturing really
    may just be boiling down to changing the name and expanding the reach
    of the existing assistant secretary for trade development. On top of
    that, no one has yet been named to fill this new position.
        And then there's the matter of the Manufacturing Extension
    Partnership Program, which offers technical assistance to manufacturing
    firms to improve their performance in production techniques, marketing
    and exports. It does not help the Administration's credibility to cite
    the value of this program and to pledge resources for it, but then to
    repeatedly fail to actually support the MEP program--both in the
    President's budget requests and in the White House's final negotiations
    on this year's appropriations bill.
        You have repeatedly asked that MEP receive around $13 million each
    year, but Congress has deemed it important enough to provide more than
    $106 million. It is disingenuous now for the Administration to say you
    support the MEP program by requesting a mere $39 million this year. And
    while I appreciate your announcement that MEP would be eligible to
    compete for up to $45.4 million in fiscal year 2005 economic adjustment
    assistance, this effort will not provide the funds our MEP centers need
    to continue operations and services to small manufacturers, especially
    after July 1, when the majority of centers face contract renewal under
    the drastically reduced fiscal year 2004 funding.
        I am also concerned about a plan to identify federal rules that
    they believe impede competitiveness in the domestic manufacturing
    sector. Given the Administration's record to date, it is no wonder that
    so many workers are concerned that this is just another Administration
    attempt to roll back health and safety standards that are designed to
    keep American workers safe. Many see this as a backhanded and backdoor
    attack on hardworking, dedicated workers. And I see their point.
        The Administration's lack of follow-through and attention to the
    hemorrhaging of manufacturing jobs amounts to what could charitably be
    called a disconnect between rhetoric and reality. And after so much of
    this, the Administration's credibility becomes a real problem and a
    real issue with the Congress and with the American people.
        Mr. Secretary, that brings us to the Trifecta of controversial
    sections of President Bush's recently released annual ``Economic Report
    of the President.''
        First, it suggested that the movement of U.S. jobs overseas--
    commonly referred to as offshoring--is beneficial to consumers. The
    President asserts that American customers will benefits from lower
    costs of the products and services they buy because of cheaper labor
    costs overseas. And the President's top economist said that the
    migration of service jobs overseas ``is just a new way of doing
    international trade.''
        That comment was tossed off with a flippancy that seems to take no
    account of the real pain American families are suffering as more and
    more companies close their U.S. facilities and send their work
    overseas, throwing hardworking Americans onto the unemployment lines.
        Second, the Report predicts that non-farm payroll employment will
    average 132.7 million in 2004, reflecting a 2.6 million increase in
    jobs over its estimated average of 130.1 million in 2003. A joint
    analysis released by the Economic Policy Institute and the Center on
    Budget and Policy Priorities shows that to achieve the 2004 estimate,
    an average of 460,000 jobs a month would need to be created from
    February through December of 2004. In other words, about five million
    jobs will need to be created between now and the end of the year to hit
    that projection.
        Finally, and perhaps most unbelievably, the Report questions
    whether fast-food restaurants should continue to be counted as part of
    the service sector or should be reclassified as manufacturers.
    Specifically, the report asks: ``When a fast-food restaurant sells a
    hamburger, for example, is it providing a `service' or is it combining
    inputs to `manufacture' a product?''
        Two decades ago, another administration wanted to start calling
    ketchup a vegetable for the purposes of the school lunch program.
    Redefining ketchup as a vegetable did nothing for the nutrition of our
    kids, and redefining every Taco Bell as a manufacturing factory would
    do nothing for American workers and real American manufacturers. If
    that is this Administration's idea of thinking outside the bun, then
    this Administration has a lot more thinking to do.
        Mr. Secretary, for the past three years we have heard many
    predictions and forecasts from the Administration that have not been
    anywhere close to reality. We were told that the President's tax cuts
    would stimulate the economy--and instead the economy has weakened and
    tax receipts are at some of their lowest levels ever. We were told that
    there would be 3.4 million more jobs in 2003 than there were in 2000--
    and instead the economy ended up losing 1.7 million jobs over that
    period. We were told that budget surpluses would continue on for as far
    as the eye could see--and instead we have gone from a record $239
    billion surplus under President Clinton to a record $521 billion
    deficit under President Bush, and if the President's budget were
    actually enacted, it's those deficits that would proliferate as far as
    the eye can see. And we were told that the Iraq mission would be swift
    and easy--and instead it has dragged on with no end in sight and with
    costs that are so astronomical that the President did not even dare put
    the numbers in his budget.
        These are difficult times for American manufacturers and American
    workers, and the job of answering to them for this Administration's
    policies is a tough one. I hope you take a serious look at the
    questions we pose because there are millions of American workers out
    there counting on you.
        Thank you very much, Mr. Chairman. I ask consent that my full
    statement and written questions be submitted for the record.

        Secretary Evans. Thank you, Mr. Chairman. I have a brief
    opening statement and I will ask for my written remarks to be
    submitted for the record please, sir.
        Senator Gregg. Absolutely.
        Secretary Evans. Mr. Chairman, Senator Hollings, members of
    the subcommittee, it is a pleasure to have this opportunity to
    testify in support of the President's budget request for the
    Department of Commerce for fiscal year 2005.
        Before I do that, let me just take a moment to thank
    Senator Hollings, who is retiring, for his service to this
    country for many, many years, in this body since 1966. I
    can't----
        Senator Hollings. I want you to retire with me.
        Secretary Evans. I have another plan.
        And that just goes to show you that we don't agree on
    absolutely everything, but we agree on a lot and one thing we
    absolutely agree on is your love for America----
        Senator Hollings. Thank you, sir.
        Secretary Evans [continuing]. And your service to America,
    your integrity that you served this body with for so many
    years, and I just wanted to take a moment to say thank you on
    behalf of all Americans.
        I want to say thank you to your wife, as well, because as
    somebody that has just been in public service in Washington for
    3 years, it is very clear to me that it is not just a sacrifice
    of those serving here. It is a sacrifice for the entire family,
    and for Peatsy and your entire family, I thank you.
        Senator Hollings. That is mighty generous. Thank you, sir.
        Secretary Evans. Yes, you bet. We appreciate and have
    benefitted from Senator Hollings' focus on so many areas of the
    Commerce Department. You know, a lot of people said he put the
    ``O'' in NOAA, which is absolutely the truth.
        The central mission of the Department of Commerce is to
    promote American jobs and values by creating the conditions for
    long-term economic growth. To fulfill this essential charge, we
    are requesting a budget of $5.8 billion. This budget reflects
    the President's commitment to advancing our Nation's economic
    and homeland security.
        To help American industry and workers meet unprecedented
    global challenges, we are reorganizing the International Trade
    Administration. I want to thank Chairman Gregg and members of
    this committee for their assistance in moving this process
    forward. We are creating a new Manufacturing and Services
    Office, to be headed by an assistant secretary. This official
    will be charged with ensuring that these critical sectors get a
    full hearing when policies are formulated. We are establishing
    an Office of Investigations and Compliance to monitor
    enforcement of trade agreements, and we are also creating an
    Unfair Trade Practices Task Force.
        For the Census Bureau, we are requesting an increase of
    $217 million to reengineer the decennial census and improve
    other data collection.
        For the Bureau of Economic Analysis, we are requesting an
    increase of $15 million for the improvements of GDP data and
    other economic indicators.
        The NIST budget includes $31 million to equip and operate a
    new advanced measurement laboratory and $25 million for
    continued renovation of the NIST laboratories in Boulder,
    Colorado.
        At this time, we are requesting level funding for the
    Manufacturing Extension Partnership. To leverage current
    funding and help small manufacturing firms, we are directing
    EDA to focus economic adjustment grants on areas experiencing
    job losses in the manufacturing sector. MEP centers serving
    these communities can compete for these grants. In the next
    fiscal year, MEP centers will be eligible to compete for up to
    $45.4 million of the EDA grants. We are also looking at
    establishing partnerships with other Federal programs and
    agencies to maintain and strengthen this national manufacturing
    network.
        In fiscal year 2005, the administration proposes giving the
    Patent and Trademark Office full access to its fees. An
    increase of over $310 million will allow the hiring of
    additional examiners and faster processing of applications.
        Our NOAA budget includes an increase of $56 million for
    next-generation weather satellites, $34 million to complete the
    third fisheries vessel, and $24 million to better assess
    climate change.
        Also included in this budget is funding to enhance the
    safety of Department personnel and visitors. Mr. Chairman, new
    challenges to our Nation's security necessitate new responses.
        We have had to make some difficult choices. This includes
    discontinuing funding for the Advanced Technology Program, the
    Technology Opportunity Program, and for the Public
    Telecommunications Facilities Program. I am sure that there are
    members of this committee and other Members of Congress who
    would like to make other funding decisions. Please know that I
    respect those views and I look forward to working with all of
    you through the budget process.

                               PREPARED STATEMENT

        Mr. Chairman, I want to thank you and the members of this
    committee for your continued support of Commerce programs and
    initiatives. I welcome your comments and will be pleased to
    answer any questions that you may have.
        Senator Gregg. Thank you, Mr. Secretary.
        [The statement follows:]

                     Prepared Statement of Donald L. Evans

        Thank you for the opportunity to appear before you to present the
    Department of Commerce's fiscal year 2005 budget request. In the fiscal
    year 2005 President's Budget, the Department of Commerce request of
    $5.8 billion reflects its continuing commitment to creating conditions
    for economic growth and opportunity by strengthening American
    manufacturing and, promoting innovation, entrepreneurship,
    competitiveness, and stewardship. America's manufactures provide our
    nation and our people good jobs, a better quality of life and
    inventions that have established our national identity. To that end,
    the Department has partnered with U.S. businesses to maintain a
    prosperous, productive America. We have a record of innovation in
    manufacturing, transportation, communications, and measurement that has
    helped sustain U.S. leadership of the international marketplace.
        Consistent with the President's Management Agenda, for fiscal year
    2005, the Department presents a performance integrated budget based
    upon the Department's Strategic Plan. The plans goals fully reflect the
    Department's mission and vision and its commitment to promoting
    ``American Jobs and American Values.''

    Goal 1: Provide the information and tools to maximize U.S.
            competitiveness and enable economic growth for American
            industries, workers and consumers
        Economic growth is a central theme for the fiscal year 2005
    President's Budget and to the missions of the Department of Commerce's
    bureaus. To enhance the competitiveness of U.S. businesses in the
    global economy, the President's 2005 Budget focuses the International
    Trade Administration (ITA) on promoting U.S. exports, fighting unfair
    foreign trade barriers, and negotiating and implementing multilateral
    and bilateral trade agreements. ITA has created a new unit called
    Manufacturing and Services, focusing on the domestic and international
    aspects of U.S. industrial competitiveness; working with U.S. industry
    to evaluate the needs of American manufacturers; assessing the economic
    impact of new and existing government rules and regulations on U.S.
    manufacturers; and representing and advocating for the interests of the
    U.S. manufacturing and services sectors.
        For fiscal year 2005, ITA has three new initiatives. ITA requests
    an increase of $4.5 million for the Administration's Capital Security
    Cost Sharing Program (CSCSP) to cover the State Department's capital
    security costs associated with building new embassy compounds. CSCSP is
    scheduled to begin in fiscal year 2005 and continue through fiscal year
    2018 and all agencies represented in embassies will be charged on a
    worldwide per capita basis. ITA requests an increase of $0.5 million
    for the Activity-Based Cost Accounting and Management System to allow
    for more precise management and planning of resources as well as a
    better understanding of ITA's performance and commitment to priority
    activities. ITA has begun implementing this system with existing
    resources and requires these funds to complete the project. ITA also
    requests an increase of $0.2 million for the Free Trade Agreement
    Secretariats to enable ITA to meet a requirement under the Singapore
    and Chile Free Trade Agreements.
        The Minority Business Development Agency (MBDA) will continue to
    focus on accelerating the competitiveness and growth of minority-owned
    businesses by closing the gap in economic opportunities and capital
    access. The President's 2005 Budget requests an increase of $3 million
    for MBDA to conduct an annual survey of minority owned business
    enterprises (SMOBE). The SMOBE will provide more timely, frequent and
    comprehensive statistical data about the minority business universe
    than the current 5-year SMOBE. The President's 2005 Budget also
    requests an increase of $2.1 million for the Business Development
    Centers and Minority Business Opportunity Committees programs to
    improve opportunities for minority businesses in areas with the highest
    minority business density. Finally, the President's 2005 Budget
    requests an increase of $0.5 million for MBDA to establish trade
    activities in response to the President's and the Secretary of
    Commerce's initiative on trade promotion for U.S. minority businesses
    with Asian Americans and Pacific Islanders. This activity will increase
    the access of minority business enterprises to global markets.
        The President's 2005 Budget request for Economic Development
    Administration (EDA) will help accelerate the Nation's economic growth
    by promoting a favorable business environment to attract private
    capital investments and higher-skill, higher-wage jobs. The President's
    2005 Budget requests an increase of $5 million for EDA to assist areas
    that demonstrate a high level of economic distress from long-term
    economic deterioration or that are suffering from sudden and severe
    dislocation to their economies.
        The Bureau of Economic Analysis (BEA) seeks to strengthen the
    understanding of the United States economy and its competitive
    position. BEA accomplishes this task by providing accurate economic
    accounts data in a timely and cost-effective manner, and by supplying
    the Nation's key economic statistics, including Gross Domestic Product
    (GDP). The President's 2005 Budget requests an increase of $15 million
    for BEA over fiscal year 2004 for two initiatives. The first initiative
    will continue to generate more timely economic data, meet U.S.
    international obligations in complying with international standards for
    reporting statistics, and acquire real-time data to improve the quality
    of BEA measures. The second initiative will produce up-to-date annual
    estimates on business investment spending and employment and
    compensation data by industry.
        The President's 2005 Budget requests an increase for the Bureau of
    the Census of $217 million over fiscal year 2004. These additional
    funds will be used in the Bureau's multi-year effort to reengineer the
    Decennial Census by implementing the American Community Survey,
    modernizing its geographic database information, and developing plans
    for the Decennial Census in 2010 using only a short form. Census also
    plans initiatives to improve the quality and timeliness of trade
    statistics, to improve the measurement of services by expanding the
    number of industries covered, to develop a stronger presence in
    electronic government services by allowing businesses to file survey
    information electronically, and to strengthen its measurement of
    migration within the United States.
        As part of our ongoing efforts to improve the review and
    enforcement of export license conditions, the President's 2005 Budget
    is requesting funding for the Bureau of Industry and Security (BIS) to
    develop a comprehensive export license condition, compliance and
    enforcement program. This program will enhance the enforcement of
    license conditions by working with exporters to ensure that they have
    in place appropriate export management systems and devoting dedicated
    resources to detect and prosecute violations of license conditions. The
    President's 2005 Budget is also requesting funding for BIS to establish
    an Office of Technology Evaluation that will enable the Department to
    implement and maintain a more effective system of dual-use export
    controls that better protects U.S. national and economic security. The
    new Office's duties will include identifying new technologies for
    potential inclusion on the Commerce Control List and the comprehensive
    review of items already on the list to ensure that items are
    appropriately controlled for the protection of U.S. national security.

    Goal 2: Foster science and technological leadership by protecting
            intellectual property, enhancing technical standards, and
            advancing measurement science
        Important priorities for the National Institute of Standards and
    Technology (NIST) in fiscal year 2005 are to upgrade facilities and
    laboratories, to protect critical research data from degradation, and
    to maintain employee safety and security. The President's 2005 Budget
    provides increased funding to NIST laboratories for continuing
    construction projects and high priority research areas. The request
    includes $31 million to equip and operate the Advanced Measurement
    Laboratory and $25 million for continued renovations of NIST's Boulder,
    Colorado facilities. Consistent with the Administration's continuing
    emphasis on shifting resources to reflect changing needs, the fiscal
    year 2005 budget proposes to terminate the Advanced Technology Program
    and to commit stable funding for the Manufacturing Extension
    Partnership.
        The President's 2005 Budget request for the U.S. Patent and
    Trademark Office (PTO) will support the third year of the PTO strategic
    plan to keep pace with workload growth and to enhance the quality of
    products and services. In fiscal year 2005, the Administration proposes
    giving PTO full access to its fees. An increase of $310.9 million will
    allow the PTO to improve processing capacity by hiring additional
    patent examiners, deliver an operational electronic patent application
    processing system, continue moving to an electronic trademark
    operation, expand quality reviews to all stages of patent and trademark
    examination, and cover the full accrual of retirement costs for its
    employees.
        The President's 2005 Budget increase request of $7.1 million for
    the National Telecommunications and Information Administration (NTIA)
    will provide the resources necessary to improve dramatically the
    overall capabilities of NTIA to research, manage and represent
    internationally the government's and industry's spectrum usage. These
    funds will increase the efficiency of radio spectrum usage through a
    paperless system, explore alternative incentive systems, meet
    increasing demand for Federal wireless systems; improve our Nation's
    preparation for and representation of U.S. interests at International
    spectrum usage conferences; and upgrade NTIA's lab facilities used to
    support this important work. The fiscal year 2005 Budget continues the
    proposal to terminate the Public Telecommunications Facilities,
    Planning and Construction and Technology Opportunity Program grants.

    Goal 3: Observe, protect and manage the earth's resources to promote
            environmental stewardship
        This budget supports the core activities of the National Oceanic
    and Atmospheric Administration (NOAA), including fisheries and ocean
    programs, climate research activities, and weather forecasting
    capabilities, as well as the satellite infrastructure necessary to
    support these functions. In addition, the request continues to focus on
    maintenance and safety issues associated with NOAA facilities, vessels,
    and aircraft.
        The 2005 Budget makes investments in critical fisheries and ocean
    programs. The Department continues to work to improve the management
    and economic sustainability of the Nation's marine fisheries with a
    continued focus on fisheries science and stock assessments. To this
    end, the Budget invests $34 million to complete NOAA's third fisheries
    survey vessel. This vessel will meet international standards for
    research surveys and will substantially improve the quality of NOAA
    fisheries research. Additional investments are requested this year to
    maintain safe and efficient maritime commerce through enhanced
    electronic navigational charts and improved collection of data on
    coastal water levels.
        This budget continues the Administration's focus on climate
    research and devotes $23.7 million of new funding to expand climate
    observing capabilities. This funding will allow NOAA to help fill
    critical knowledge gaps identified in the recently released Climate
    Change Science Program Strategic Plan, including research on aerosols,
    oceans and the natural carbon cycle. NOAA's funding is one component of
    a government-wide initiative which will provide $103 million over two
    years to accelerate climate observations. The Administration will
    continue to work with the international community to develop a
    comprehensive, global earth observation system.
        Continuing to seek improvements in weather forecasting, the
    Administration requests funding to expand air quality forecasts
    nationwide. This program will help mitigate the estimated 40,000 deaths
    and $147 billion spent treating air pollution-related illnesses by
    providing advance warning of poor air quality. Also included are
    investments in improved long-range weather forecasting, as well as
    continued improvement of NOAA's NEXRAD radar system, replacement of the
    communications gateway through which all weather-related data flows to
    local weather forecasters, and modernization of the cooperative
    observer network.
        To support NOAA's weather and climate programs, the Administration
    requests an additional $56 million for the continued development of
    next-generation geosynchronous and polar-orbiting satellite programs.
    To support current and future satellite operations, the Administration
    requests funds to occupy and operate NOAA's new satellite operations
    facility. This budget also includes investments to maintain and repair
    current NOAA facilities, for operations and maintenance of the OSCAR
    DYSON, NOAA's first new fisheries research vessel, and for the
    HI'IALAKAI, a vessel acquired from the Coast Guard for research in the
    Hawaiian Islands.

    Management Integration Goal: Achieve organizational and management
            excellence
        The Administration places a high priority on the protection of our
    employees and guests. The Herbert C. Hoover Building (HCHB) is in close
    proximity to multiple high-profile locations in downtown Washington
    D.C., but lacks adequate protection against an explosive blast in the
    vicinity. This request proposes a blast mitigation project for the
    facility. The upgrades will reduce the degree of injury due to glass
    fragments and, in the event of a chemical/biological/radiological
    attack, will significantly reduce the air infiltration of toxic
    substances. This will provide the employees with precious minutes to
    escape the building or to enable them to ``shelter-in-place,'' if
    required. The funding request for the Security Management Application
    will provide for the development and integration of a new corporate
    management application system to enhance the Department's personnel
    security management capabilities.
        The Department is also requesting an increase in resources for the
    Inspector General's Office of Investigation to provide adequate
    coverage for all Commerce activities. This increase will allow the
    Office to strategically deploy its investigative resources, thereby
    enhancing its ability to detect and prevent fraud. The projected $11
    billion cost for the 2010 Census necessitates the OIG to increase its
    level of oversight to improve planning and lower risks, particularly in
    the areas of statistics and systems evaluations.
        The Department of Commerce has a rich history, and after traveling
    the country meeting with both the Commerce employees and the customers
    we serve I am confident it will have a rich future. I look forward to
    working with the committee to ensure that together we are providing the
    best services possible.

        Senator Gregg. Again, we thank you for taking time to come.
    It was very nice of you to acknowledge Senator Hollings' great
    service to this country, which we have done on a number of
    occasions in this committee. It is totally appropriate,
    especially relative to the Commerce Department, where he has
    played an extraordinary role. What is it, 33 years?
        Senator Hollings. I've been on the subcommittee since 1971
        Senator Gregg. And chairman or ranking member of this
    subcommittee, I think, for 27 years or something like that.
        Senator Hollings. Yes, sir.

                            NOAA'S N-PRIME SATELLITE

        Senator Gregg. Nothing has happened at the Commerce
    Department that Senator Hollings hasn't been involved in. One
    of the things that he can take a lot of credit for and which we
    think is appropriate is a strong NOAA program. We congratulate
    the Department for its efforts in this area but we are
    concerned about the funding levels in a number of accounts
    there. Overall, this committee is totally committed to the NOAA
    efforts and we will have some issues with our House members on
    that, but we enjoy that little tussle every year and we usually
    do pretty well in it.
        I did have a question about the satellite program. I
    understand one of the critical satellites was dropped on the
    floor.
        What is the status of that? Is it the N Prime?
        Secretary Evans. Yes, N Prime, that is correct.
        Senator Gregg. And who is liable for what appears to have
    been some negligence possibly?
        Secretary Evans. Mr. Chairman, we don't have that complete
    report yet. We are in the process of working with Lockheed
    Martin, and NASA and NOAA are working together to look very
    carefully at the issues of cause and liability as well as what
    it is going to take to make sure we have the service needed to
    deliver the weather forecasts to this country in the out-years.
        We are close, they tell me, to having a final report that
    we will deliver to Congress, but we are not there yet.
        Senator Gregg. If we conclude that the cause was outside of
    NOAA and NASA but it was the responsibility of a private
    contractor, that the damage occurred as a result of their
    potential negligence, and I don't know whether it was
    negligence or not----
        Secretary Evans. Right.
        Senator Gregg [continuing]. But potential negligence. When
    you drop a satellite on the floor, it does seem to lead to that
    concern. Are we going to pursue legal remedies to get recovery
    of, what is it, about $400 million?
        Secretary Evans. I am certain that we will, Mr. Chairman. I
    am absolutely certain that we will. We have our lawyers looking
    at this very carefully and that is our conclusion. I am sure we
    will be pursuing the total recovery of the loss as well as, at
    the same time, we need to make sure we are putting a plan
    together to cover the gap that this might be creating as it
    relates to satellite coverage during the period that N Prime
    was scheduled to be launched.

               INTERNATIONAL TRADE ADMINISTRATION REORGANIZATION

        Senator Gregg. You spent a lot of time on ITA's
    reorganization. Could you tell us the status of that and how it
    is going?
        Secretary Evans. Well, Mr. Chairman, it is going well, and
    we have spent a lot of time on it. I appreciate the support of
    this committee. We have been very focused on the manufacturing
    sector of this economy, spent 1\1/2\ years on travel around
    America, across America, talking to manufacturers all across
    America, listening to their concerns, their challenges,
    something I know a fair amount about since I spent 30 years of
    my life in the manufacturing sector of this economy. So I am
    very familiar with many of the challenges that they deal with
    on a day-to-day basis.

                            DOC MANUFACTURING REPORT

        We have made significant progress. We presented to the
    country a manufacturing report in January. It laid out over 50
    recommendations that we feel will help create an environment
    for our manufacturers to continue to succeed in the global
    economy. That is the goal. We need to continue to improve the
    conditions so it is easier for American manufacturers to
    succeed in this ever-changing economy.
        One of the central pieces of it is to establish a new
    Office of Manufacturing Services that will have an assistant
    secretary that is a Senate-confirmed position, of course. We
    hope to have a name up to the Senate within the next few weeks.
    We certainly have a candidate that we are very focused on.
        But we are not resting there. I mean, it is time to move on
    with the many recommendations that are a part of this report.
    One of the areas where we are going to spend a lot of energy, a
    lot of resources, and a lot of focus, is in the area of
    enforcement, not only when it comes to enforcing other trade
    agreements around the world, but just focusing on making sure
    that the countries are focused on enforcing their own laws. We
    are doing that through market access and compliance. We have
    beefed up the resources there.
        We beefed up the resources in the Import Administration
    within the International Trade Administration. We have done
    that. We have established what we call an Unfair Trade
    Practices Task Force. This is a task force that will be focused
    on being a proactive task force. In fact, part of their
    responsibility will be monitoring 30 products that are coming
    in from China, just monitoring those products and making sure
    they are in compliance with our trade laws.
        So I would say we have made great progress. You don't put a
    report out that is not the end, that is the start. That is the
    beginning. I have traveled across America, continue to do that,
    letting all manufacturers know that they have one place they
    can go to express their concerns. They can provide their
    challenges. So we look forward to working with the
    manufacturing sector of our economy. We will continue to do so.
        I think one last thing I would say, Mr. Chairman, is, as I
    say, there are 50 recommendations, over 50, so there are lots
    of recommendations, but I will be responsible for a working
    group, an interagency working group, where we will bring all of
    the agencies together to stay focused on the manufacturing
    sector. This will ensure that we have ongoing communications
    across agencies and across departments, because, obviously,
    many of the agencies and departments within the administration
    have responsibilities that relate to creating an environment
    for manufacturers to succeed.
        And so we are going to make sure that there is very active
    communication among the agencies as well as setting up a
    President's Manufacturing Council, Advisory Council, which will
    be individuals from the private sector, small, medium, and
    large manufacturers will have a seat at the table so that we
    can hear their views and hear their concerns as we continue to
    consider policy in this administration in this town.
        So we are making good progress. Thank you again for your
    support, but we have a lot more work to do. We know that.
        Senator Gregg. Thank you, Mr. Secretary.
        Senator Hollings?

               ASSISTANT SECRETARY FOR MANUFACTURING AND SERVICES

        Senator Hollings. I thank the distinguished Secretary and
    our chairman for their kind comments. It has been a privilege
    to work with both of you.
        With respect to manufacturing, when is this office of the
    manufacturing services, the gentleman or lady to be appointed?
    It was announced months ago.
        Secretary Evans. It was. It was, Senator, but this is a
    Senate-confirmed position and we really didn't have the
    authority to move forward on it until you passed the 2004
    budget. The authorization is within that budget. The budget
    passed. We have been moving aggressively. We have an individual
    that we have selected. Now we are just going through the
    process and I believe that we will have that name to the Senate
    within the next couple of weeks.
        But in the meantime, Grant Aldonas, who is the Under
    Secretary of International Trade, it is his responsibility to
    make sure we are moving forward on these recommendations that
    are within the report within the Import Administration. We are
    moving forward with monitoring products coming in from China
    with the Market Access and Compliance Office. We are moving
    forward on putting a task force together to make sure that
    other countries are enforcing their laws.
        So we are not slowing down. We are not waiting for the
    confirmation of one individual. We have a report that has over
    50 recommendations in it and I expect our Department to
    deliver.

                                 AMERICAN JOBS

        Senator Hollings. Do you think the Department should be
    leading efforts to export jobs, for the elimination of American
    jobs specifically, for sending jobs to, let us say, China?
        Secretary Evans. I think we ought to lead for creating jobs
    in America. I want everybody----
        Senator Hollings. You and I agree on that, and that is why
    I was wondering about reading articles on Under Secretary
    Juster or Juster--how do you pronounce that?
        Secretary Evans. Juster.
        Senator Hollings. Juster. He has these innovation forums at
    the Ronald Reagan Building and last year with the United
    States-India Business Council and otherwise coming right on
    down all year long to December. I refer specifically to an
    article in the New York Times, December 10, and let me read
    just a couple of lines.

        ``After the opening speeches, the 50 or so American
    executives gathered at the Hotel Pennsylvania in Manhattan were
    invited to divide up. Those interested in investing in China,
    putting an operation there and hiring Chinese workers were to
    go across the hall to the Penntop North Conference Room. Those
    who wanted help in exporting to China were to stay seated in
    Penntop South. Half or more went across the hall.''

        It was stated that across the hall, most of the speakers
    were Chinese promoting what Shen Liguo, Vice Governor of
    Heilongjiang Province in Northeastern China, described as,
    quote, ``Northeast China's beautiful prospects.'' Quote, ``We
    are going to absorb a lot of foreign investment to bring about
    development in this area.'' A big blue banner over the thing
    says, ``Go global.'' The Commerce Department was described by
    the Chinese as a sponsor and its representative, Mr. Spencer
    Ross, acted as moderator.
        Now, there you go. You folks are working to get rid of the
    jobs and we here in the Congress are doing our best to hold on
    to the jobs. What is your comment about this?
        Secretary Evans. Sure, Senator. I think, in fact, I know
    and I am very clear, that it is the responsibility of the
    Commercial Service, the Export Assistance Centers that we have
    across America, and the Foreign Commercial Service Offices that
    we have around the world to promote the export of American-made
    goods and products and services and that is----
        Senator Hollings. I agree with you on that. That is on
    exports of goods. But how about exports of jobs? You just said
    we are trying to maintain jobs and create them in the United
    States.
        Secretary Evans. Right. I want everybody to hire American
    workers. I want foreign companies to hire American workers. I
    want small, medium, and large companies to hire American
    workers. I want to continue to create an environment in America
    where everybody wants to hire our workers and buy our products
    and----
        Senator Hollings. The Under Secretary Juster and Spencer
    Ross and all, are they carrying out the policy of the
    Department of Commerce?
        Secretary Evans. Yes, sir, indeed, I believe that they are.
    They are continuing----
        Senator Hollings. Well, the policy is, then, to export the
    jobs, because I am just reading here where that is what they
    are doing.
        Secretary Evans. Well, I would take issue with the article,
    Senator. I would say that we were there promoting the export of
    our goods and our products and our services. If there are
    people that want to export equipment to China from the United
    States, we want to be supportive of that. We have to be there
    to explain to them how it is that you go through customs and
    the procedures necessary to export equipment and goods and
    services around the world.
        Senator Hollings. Well, the Commerce Department often
    sends, and I am quoting, its representatives to events like
    this one at the Hotel Pennsylvania last month, but it dulls
    their pro-export message by delivering it at conferences
    dominated by the Chinese delegations urging American companies
    to invest in China, not export.
        Secretary Evans. Well, if they----
        Senator Hollings. You have been in the business 30 years.
    If you went to an oil conference to try and export your oil and
    all of a sudden foreign delegations were taking over the
    majority of the activities and the speakers and everything
    else, we are going to import the oil and put you out of
    business down in Texas, after 30 years' experience, you would
    do something about it, wouldn't you?
        Secretary Evans. Well, I would be there encouraging them to
    buy a Caterpillar engine and take it with them to drill the
    well. I would be there encouraging them to purchase equipment
    from the United States to use wherever they might be going. And
    so we are there in the capacity of American capital, and
    American capital does invest in other parts of the world. As we
    continue to work with the world, I want to encourage these
    American companies to take American equipment with them when
    they go, and that means more jobs here in America.
        Senator Hollings. Mr. Secretary, just one other question
    and I will yield because I have got other questions relative
    to----
        Senator Gregg. We can go around again. No, go ahead for
    your second question.

                      MANUFACTURING EXTENSION PARTNERSHIP

        Senator Hollings. It is the National Institute of Standards
    and Technology. We reduced this some $177 million.
    Specifically, we just practically eliminate the Advanced
    Technology Program and the Manufacturing Extension Partnership
    Program. You just close out the MEP with only a recommended
    appropriation of $39.1 million. Just year before last, we had
    it up to $107 million. The Advanced Technology Program, there
    is no question that we have had 200 new technologies
    commercialized as three-quarters of the ATP programs are
    awarded to small businesses, and I could go down the success
    story because it has won the Council on Competitiveness Award.
        It was really fashioned with caveats by myself, but Senator
    Danforth wanted to make sure it wasn't a pork program and just
    giving out awards. So the application has to be vetted by the
    National Academy of Engineering. After it is found to be a
    unique kind of technology, then you have to bring 50 percent of
    the financing and then on a competitive basis over at the
    Department itself stand in line for that particular award.
        I have been on the Appropriations Subcommittee here for
    quite a while and we never have given out any pork projects. I
    don't have--if I have one in South Carolina, I don't know about
    it, but I do know about its success because the Council on
    Competitiveness and Young from Hewlett Packard and all have
    come and attested.
        But now you just red-line it and we are talking about
    getting jobs and helping manufacturing and we are going to
    appoint an Office of Manufacturing Services, and yet we are
    eliminating the services.
        Secretary Evans. Well, Mr. Chairman, Senator, I would say
    to you that these are programs that have delivered an important
    service through the years. I would also say to you that we are
    at war and there are very tough choices that have to be made
    and priorities that have to be set. I would say to you that
    these have been two good programs that have been of good
    service, but given the current environment of making tough
    choices in the middle of a war, they are just not two that made
    the list for us.
        Senator Hollings. You believe both should be eliminated?
        Secretary Evans. No, I didn't say that, because----
        Senator Hollings. But you are eliminating them. Are you
    supporting the budget or not?
        Secretary Evans. No. What we are supporting is to fund MEP
    at the same level that it was funded in the current budget. We
    are supporting funding MEP in the year 2005 at the same $39.2
    million that is in the 2004 budget.
        And also, Mr. Chairman, what I would say to you is we are
    looking for ways, as I mentioned earlier, to work across
    administration lines to make sure that all of the resources
    that are available to manufacturing are being delivered or they
    are aware of them. We will spend in the 2005 budget about $132
    billion on research and development. We said that one of the
    areas that have additional funding possibly available to MEP
    programs is in the Economic Development Administration. There
    are some $45 million there that Manufacturing Extension
    Partnership Centers can compete for with others that might be
    competing for the same funds in an area of our country that is
    distressed because it has been hit hard by the downturn of
    manufacturing in that particular community.
        Senator Hollings. Since you mentioned it, the $45 million
    of the EDA, $40 of that $45 million has already been committed
    and now EDA is distressed. You have got high unemployment and
    everything else like that. Over here, there is a highly
    technological program in the development of manufacturing and
    what you have done, having them compete for the same monies, it
    is like tying two cats by the tails and throwing them over the
    clothesline and saying, claw each other and see who can get the
    money, but that is about the way we are on that. Thank you.
        Senator Gregg. Senator Stevens? Traditionally, we recognize
    the chairman of the full committee whenever he arrives, and it
    was my error not to recognize you earlier. I should have
    recognized you before I recognized myself if I want to keep my
    job.
        Senator Stevens. Mr. Secretary, they do this all the time.
    It is all right.
        I am happy to be here with you, Mr. Secretary. I have got
    just three questions I would like to ask. I would like to just
    submit some technical ones to you, if I may.
        Secretary Evans. Sure.
        Senator Stevens. The first is personal. Are you going to
    come up and go fishing with me this year?
        Secretary Evans. You are trying to get me on the record,
    aren't you?
        I sure hope to.

                         ASSISTANCE TO ALASKA FISHERMEN

        Senator Stevens. In 2002, we put some amendments on the
    Trade Promotion Act that would assist the Alaska salmon
    fishermen who had been really harmed by the importation of farm
    salmon, particularly from Chile. It provided that for 5 years,
    there would be a $15 million item to assist these people to
    transition to other forms of employment, to develop other
    economic opportunities in their areas.
        So far, there has only been a portion of the first $15
    million made available. Could you comment on that or tell me
    you will look into it and see what is happening? It should have
    been $15 million a year, and there are some growing
    opportunities now in tourism in particular and in small
    business development along the coastline that they might be
    able to move into if they had the kind of assistance that EDA
    could provide through that $15 million.
        Secretary Evans. Yes, I know how important those areas are.
    We are supporting those areas, Mr. Chairman, and we obviously
    will continue to support them. I am familiar with the $15
    million commitment. I know that it is not all in there yet. I
    will tell you that I will look into it further to see what it
    is we can do to make sure that we fund that at that level.
        Senator Stevens. I hope you will, because with half the
    coastline of the United States, some of those villages and
    communities are located literally hundreds of miles from other
    communities. But we have found now with the advent of
    telecommunications and with the Internet capability, they can
    start businesses like answering the telephones for some motel
    chain. You would be surprised what is there if they have the
    funding to transition into sort of modern global commerce. So I
    think that $15 million is well spent if we can find some way to
    put the money up. I would hope you would help us find it.

                          CRAB RATIONALIZATION PROGRAM

        Second, I met with the Administrator of NOAA concerning the
    crab rationalization plan recently. I think Bill Hogarth is
    doing a marvelous job for you. This is a program that was
    enacted this year and we are trying to make certain that the
    regulations and actions that are necessary to implement this
    crab program are in effect by the crab fishery, which will take
    place in early 2005. This is a crab fishery that has had the
    highest death rate of any industrial activity in the country
    for a period of years.
        We have enacted a program which will take the race for that
    crab out of the system and allocate firm amounts of crab to a
    boat owner so he or she may harvest the crab when the weather
    is good. But if the regulations aren't in effect come January,
    they will be back racing for the crab again and lose more
    boats. We lost one this January, a very sad loss.
        I would hope that you would help us find a way to implement
    this by the end of this year. Are you familiar with the
    program, Mr. Secretary?
        Secretary Evans. I am, Senator. I am very familiar with it.
    I know Bill Hogarth, as you said, is very focused on the issue.
    He is working with the North Pacific Fishery Management Council
    to implement the regulations. I haven't had anybody tell me
    that we won't be able to be in full compliance of our charge of
    having those regulations in place by the end of the year, so we
    are hopeful that we are able to accomplish that.

                            OCEANS POLICY COMMISSION

        Senator Stevens. Thank you. Last, Senator Hollings and I
    have been involved with carrying out the policies of the
    Stratton Commission that was a commission from the 1960s,
    really. We have now a new Oceans Policy Commission expected to
    release its report either this month or no later than next
    month. I wonder, are you keeping pace with them? Will you be
    able to appear before us and give us some recommendations based
    on that report for possible action this year?
        Secretary Evans. I sure would be delighted to do that,
    Senator, if I am invited up to do that. We have been working
    very close with Admiral Watkins and Robert Ballard and others
    on the Commission. It is my understanding that the draft of the
    report will be out within the next few weeks and then there
    will be a chance for individuals to comment, give information
    back to the committee.
        I would say to you our best guess is we probably will have
    a completed report by mid-summer, and so I am looking forward
    to the report and I salute you and Senator Hollings both for
    really being instrumental in providing the framework for this
    Commission. I think it is going to be a very valuable resource
    for us to review and understand what there is to explore in the
    oceans. But I am hopeful that we will have this report
    presented to Congress, to the President, in its final form, by
    mid-summer.
        Senator Stevens. My good friend from South Carolina is
    going to pursue other activities after this year, and since we
    have been partners in this for so long, I would hope we would
    have a chance to review it here in this committee and to make
    some recommendations to Congress to implement that report while
    he is still here.
        The Stratton Commission has been, as I said, our guiding
    light, but we are going to have a new series of recommendations
    that I think should be implemented as rapidly as possible and I
    am hopeful this committee, Mr. Chairman, will see fit to have a
    hearing as soon as we can after that final report is presented
    to us by you and the President.
        Secretary Evans. Thank you, Senator.
        Senator Stevens. Thank you very much, my friend. Thank you,
    Mr. Chairman.
        Senator Gregg. We will certainly do exactly that. It is a
    very important issue.
        Senator Leahy?
        Senator Leahy. Thank you, Mr. Chairman.

                                   PATRIOTISM

        Mr. Secretary, when you began your remarks here this
    morning, you commended Senator Hollings' patriotism, and I
    think every one of us would agree with that. We should also
    commend yours. I know in your case coming into Government also
    involved your personal friendship with the President. It is not
    an easy task. Whether we agree or disagree with policies you
    might carry out, I don't think there is anybody, Republican or
    Democrat, who disagrees with your own sense of patriotism and
    your own commitment to this country.
        Secretary Evans. Thank you, Senator. Thank you very much.

                                  U.S. ECONOMY

        Senator Leahy. What I worry about, we have families that
    are hurting. They see a jobless recovery, 3 million
    manufacturing jobs lost in the past 3 years. Our manufacturing
    jobs in the United States are now at the lowest level since
    1950 and I am worried about that, whether it is in my State or
    yours or any other State. This is such a major part of the
    economic engine of this country and probably one of the reasons
    why our trade deficit is so high. Our trade deficit was almost
    half-a-trillion dollars in 2003, $489 billion to be exact.
    These things bother me.
        I look at the Commerce Department's proposal to help the
    Nation's ailing manufacturers, the proposal of a new Assistant
    Secretary of Commerce for Manufacturing, as we have talked
    about, supporting the MEP program that you and Senator Hollings
    just talked about. I am not sure how a new assistant secretary
    does anything. You already have hundreds of people doing this
    at Commerce, and they are supposed to be doing that job to
    begin with.
        Senator Hollings said on MEP, which I think is a very, very
    good program, it has gotten strong bipartisan support. The
    President's budget doesn't really match the rhetoric. The
    reality doesn't match the rhetoric. The money is not in there.
    I was here with the final negotiations on the appropriations
    bill, where the rubber really reaches the road, and the White
    House was not pushing for the extra money on MEP. We are not
    going to have the money for our centers to continue operations
    and service our small manufacturers. And those small
    manufacturers are in every one of our States. So that is a
    bother.

                          PRESIDENT'S ECONOMIC REPORT

        I look at sort of the trifecta of sections in the recently
    released Economic Report of the President. First, it suggests
    that the movement of U.S. jobs overseas, commonly referred to
    as offshoring, is beneficial to consumers. The President's top
    economist said this migration is just ``a new way of doing
    international trade.'' Well, that is kind of a flippant way for
    somebody to speak who has a job.
        If you know you have 2 months left on your job because you
    have to train somebody to do the same work in India or
    Indonesia, you don't think this is a great, new way of doing
    jobs. If you worked hard going through school, you have learned
    the trade and suddenly it is leaving. The administration's
    rhetoric is not going to do very much if you want to send your
    kids to school.
        The report also predicts that non-farm payroll employment
    will average 132.7 million workers in 2004. That would be a 2.6
    million increase in jobs over the estimate in 2003. But then
    you have an analysis from the Economic Policy Institute and the
    Center for Budget and Policy Priorities that says that you
    would have to create something like 460,000 jobs a month to do
    this. You would have to have 5 million jobs between now and the
    end of the year added.
        That is not going to happen unless you do the other thing
    in the report, and that is the question they raised, whether
    fast food restaurants should continue to be counted as part of
    the service sector or part of the manufacturing sector. They
    say specifically, ``When a fast food restaurant sells a
    hamburger, for example, is it providing a service or is it
    combining inputs to manufacture a product?''
        I remember about 20 years ago, and Senator Hollings, you
    were here, and Senator Stevens and Senator Inouye were too, I
    had taken a bunch of reports back to Vermont with me to read
    them over the weekend at my farmhouse. I also serve on the
    Agriculture Committee. And I am reading something in there and
    I remember calling one of the lawyers on the committee. I said,
    ``Am I reading this right?'' They hadn't seen it. They read it
    and they called me back and said, you are absolutely right. The
    administration is reclassifying catsup as a vegetable. I do
    have a 5-year-old grandson who probably believes it is. He
    loves it.
        I mean, the only way you are going to get some of these
    jobs, as I see it, is to do the catsup as a vegetable thing, to
    say if you work at Taco Bell, you really have a manufacturing
    job.
        These are just some thoughts of mine. I have a number of
    questions I will submit for the record.
        Mr. Secretary, I see good news and bad news in my own State
    as some areas were able to get jobs, but I just see so many
    manufacturing jobs fleeing. I see it in South Carolina, in
    Alaska, and in Hawaii, Wisconsin and everywhere else. I don't
    think just reclassifying some of these things is going to do
    it, just my thought.

                             FOCUS ON CREATING JOBS

        Secretary Evans. Senator, thank you for those comments and
    observations. Let me just begin by saying I think at the very
    center of America, the very center of the American experience
    is a job, because that is where people go to get a paycheck to
    put a roof over their family's head, to feed their children, to
    educate their children, to provide health care for their
    children.
        I spent 30 years of my life in the private sector doing
    everything I could to create jobs. I measured the success of
    our company by are we creating jobs in our community? The most
    painful thing, the most painful thing I have ever done in my
    life is tell somebody they didn't have a job, which I did. The
    best thing, the most enjoyable thing I ever did in my life was
    telling somebody they had a job.
        So I agree with you, when you put your focus on jobs and
    how important it is to create the environment for creating more
    jobs in America, because there is nothing more painful than
    somebody not having work to be able to provide for their
    families. That is where a lot of our focus should be, is on
    those individuals that are in transition from one job to
    another.
        And in the economy that we are going into as we move into
    the 21st century, as we work more closely in the world in a
    growing global economy, it is going to be an ever-changing
    economy. We are going to be creating new industries in this
    country, as we have been for years. We are going to be creating
    new jobs in this country, as we have been for years. But we are
    also going to be losing them along the way, as we have been for
    years.
        As we move into the 21st century, we are going to see this
    rapidly-changing economy. Individuals that enter it today,
    instead of just having maybe four or five different jobs in
    their lifetime, they may have four or five different careers
    and----
        Senator Leahy. But Mr. Secretary, what are the kind of jobs
    we are going to create? I mean, I look at MEP, which is
    something that helps so many of our small businesses create
    jobs around this country. But that is being cut. I mean, where
    are these jobs going to be? We told kids over the past few
    years to get your math skills, get your work skills and all
    because we are going into this service area of computers and so
    on and that is the place to go. They did it, and now they are
    training people to do their jobs in Asia or in India.
        I understand some things change, but what are we doing? We
    have got a half-a-trillion dollar trade deficit. Doesn't this
    ring alarm bells that we are not creating jobs, we are just
    importing everything?
        Secretary Evans. Well, Senator, first of all, where are the
    jobs going to be created? As you mentioned, manufacturing jobs
    have been declining in this country and in this world for the
    last 40 years because of the higher productivity in the
    manufacturing sector of the global economy.
        Today only 11 percent of the jobs in this country are
    manufacturing-specific jobs. So almost 90 percent of the jobs
    in America today, where people are going to get a paycheck, to
    feed their children, to put a roof over their family's head,
    are jobs that are outside of the manufacturing sector of our
    economy, and we are going to continue to create new industries
    and new jobs.
        I have traveled all across America the last couple of
    years. I was in Portland, Oregon last week at Portland
    Community College, and I heard story after story after story of
    individuals that were there in their 30's or 35 and changing,
    moving from one career to another, learning new skills, having
    the task to meet the ever-growing demand of jobs in America.
        So it is education and job training. We have 1,100
    community colleges across the country, 11 million people in
    those community colleges developing these new skills and new
    talents that will meet the demands in these ever-new industries
    that we are creating in this country every year. It has been
    going on for years.
        In specific areas, you are obviously going to see a lot in
    the biotechnology area, in the whole technology area, in health
    care and services. You are going to see tremendous growth there
    in the years ahead.
        And so this is an economy that since its beginning has
    always shown a remarkable ability to create new industries and
    new jobs. You go back to 1900. About 70 percent of the jobs
    were in the agriculture community. Now, 2 percent. So it is
    just the economy, because it is so dynamic and because we allow
    the free markets to work----

                                 TRADE DEFICIT

        Senator Leahy. Mr. Chairman, if I might, Mr. Secretary, and
    my time is up, I know, but half-a-trillion dollars in 1 year in
    trade deficit, we are still not doing something right.
        Secretary Evans. Well----
        Senator Leahy. My time is up. You may want to respond to
    that for the record.
        Secretary Evans. I will just respond real quick. I think it
    is the others in the world who are not doing something right in
    that their economies are not growing as they should be. And as
    we travel the world, we tell other countries, you need to
    implement the kind of policies, economic policies, fiscal
    policies, monetary policies, regulatory policies that provide
    the environment for growth in your own countries and so you can
    create more jobs and that will benefit American workers and
    American businesses. We need more global economic growth. We
    can't be the only engine of growth in the world.
        Senator Gregg. Senator Kohl?
        Senator Kohl. Thank you very much, Mr. Chairman and
    Secretary Evans.

                      MANUFACTURING EXTENSION PARTNERSHIP

        I know the purpose of these hearings is to bring
    information to the table and hopefully to educate from one side
    to the other, from you to us and from us to you so that good
    things can happen. They are, as you know and I am sure you
    agree, not intended for just one side or the other to mouth
    previously held positions and both sides leave having learned
    nothing. That is the purpose of our hearings. We listen to each
    other and we hopefully learn and grow.
        It is in connection with that that I would like to come
    back at least once, perhaps finally at this hearing, to the MEP
    program. As you know, the MEP program is Manufacturing
    Extension Partnerships, a program which helps small and medium-
    size manufacturing firms around the country to streamline their
    operations, shorten production time, lower costs to enable them
    to better compete here and around the world, and as a result,
    increase their employment.
        And, as you know, and I don't say this in any way less than
    complimentary fashion, in your best judgment, that program
    deserves to be cut. It is not fully funded. It is fully funded
    as of last year, but it is not fully funded as to where it was
    2 and 3 and 4 years ago. So to say it is fully funded is not
    accurate. It is a program which your Department has made a
    decision deserves to be cut.
        To say that it can compete for other funds elsewhere is to
    rather obfuscate the fact that it is a program which does not
    deserve, in your Department's judgment, does not deserve to be
    funded at its level of 2 years ago and 3 years ago and 4 years
    ago. It deserves to be cut by almost two-thirds, and then go
    out and compete for funds and probably not be very successful
    because the competition is really, really tough among many,
    many different well-qualified operations to compete for a
    limited amount of funding, and they are not going to get fully
    funded relative to where they were 2 and 3 and 4 years ago.
        But it really is a good program, Secretary Evans. You know,
    during this last break, I visited at least two programs around
    Wisconsin, MEP programs, and heard from many, many others, and
    I visited one program with James Haney, who is the President of
    the Wisconsin Manufacturers and Commerce Organization. It is
    Wisconsin's preeminent organization of its kind. They have
    4,300 members representing business around the State. It is
    really a good organization. It politically happens to be an
    organization which is totally supportive of Republicans in
    terms of political, but they are really not that. They try and
    be and they are an effective bipartisan organization.
        So I visited the Bernston International Company in Madison,
    Wisconsin, the manufacturing operation with him, and he wrote
    back to me. He said, ``Senator Kohl, it was a pleasure to tour
    Bernston International with you last week in Madison. This
    company is just one example of many MEP successes that I have
    personally witnessed in Wisconsin. I completely agree with you
    that MEP is one of the best Government investments around and
    it should be fully supported at the State and at the Federal
    level.''
        He goes on to conclude that, ``We need to prioritize our
    economic development initiatives and judiciously place taxpayer
    dollars in those investments that provide the best return for
    our State and our country and there are many programs that
    should not make this cut. However, MEP is one Government
    investment that ranks at the top when evaluated against
    criteria of national need, effectiveness, and results. We
    should not shortchange or undercut this excellent program.''
        ``I understand the Senate Commerce, Justice, and State
    Appropriations Subcommittee will be reviewing the manufacturing
    support program this week. Please urge the Secretary to do what
    he can to restore MEP funding at the level of $106 million,''
    where it was. This is from a longtime, experienced, highly
    respected businessman in Wisconsin.
        Tell us why you have concluded that MEP does not deserve to
    be funded at its previous level. Thirty-nine-point-six million
    dollars, which is its new level of funding, for a national
    program in terms of Federal support is virtually an
    evisceration. This is not for one State, this is for all 50
    States, $39.6 million. It is not hard to imagine that this is a
    small, small level of support.
        Our opinion is it is for a really good program and there
    are thousands of businesses around the country that would
    attest to it. So one last time, explain to us why does this
    program deserve to be significantly minimized in terms of its
    direct Federal support?

                                 BUDGET CHOICES

        Secretary Evans. Senator, again, it is about tough choices.
    I agree with you in that it has served many small and medium
    manufacturers well over its period of existence. It will
    continue to serve many small and medium-size manufacturers well
    at a reduced level.
        I would say to you that while we have made the decision,
    the tough decision of saying we need to, because of the tough
    times that we are in and the priorities that must be set within
    our own Department, we are doing all we can to make sure that
    if there are other funding sources available to Manufacturing
    Extension Partnership Centers, we want to make sure they are
    conscious of those opportunities.
        I would just go back to my other remark, that we are
    spending about $132 billion on research and development. We are
    spending $20 billion on economic development. Within these two
    large pools of money, maybe there are opportunities for
    Manufacturing Extension Partnerships to compete. We have
    identified some already that I have referred to. We are talking
    to the Department of Defense. We are encouraged by some of the
    discussions that are going on there because of their interest
    in making sure that small manufacturers are participating in
    their programs. We don't have anything definitive yet. We are
    just talking to them.
        We are doing the same thing with Homeland Security.
    Homeland Security has about, as I understand it, $800 million
    for research and development kinds of programs. Maybe there is
    opportunity there, so we are talking to them.
        We are trying to look across Government to see where there
    may be additional funding that these centers can compete for. I
    know the challenges these manufacturers face because I was in
    that business. I know that industry. I know the kind of
    challenges they deal with every day.
        So again, I continue to acknowledge that I think the
    program has functioned well, but it is time for tough choices
    and this is one of those very difficult choices that we made
    and acknowledge that doesn't mean we are all going to agree
    with our two choices. I respect, obviously, your view on it,
    but we felt like this was one of those tough choices where we
    were going to--and saying fully funded, I would agree, it is
    what I meant to imply was funding in 2005 at the same level
    that Congress approved for 2004, which is, and I acknowledge,
    below the funding of previous years.

                                SUPPORT FOR MEP

        Senator Kohl. All right. One of the companies I visited was
    the Risota Tool Company of Chippewa Falls, Wisconsin, and we
    toured the company, talked to the owners of the company and
    people who work there. MEP had been in and they had done a lot
    of scheduling and efficiency improvements and profit
    improvements in the company. Those people who worked there were
    totally complimentary, totally supportive of what MEP had done
    and they felt that MEP had contributed significantly to the
    company's ability to continue to exist, employ, and compete.
    There are dozens and dozens of companies around Wisconsin that
    will attest to the same thing and I am certain that this is
    true around the country.
        Now, as I said at the outset, we all hope that these
    hearings serve to educate one another or else they have no
    purpose, and so I am finally suggesting to you that you take
    one last look. It is policy we are talking about, that is the
    most important thing, but it is also political. Everything we
    do here has a political aspect to it. Although not the most
    important, it is part of what we do here in Washington.
        I can assure you that in my State, and this goes back to
    when you were in the State several months ago touring the
    State, you visited Harley-Davidson, you remember that----
        Secretary Evans. You bet.
        Senator Kohl. I saw it on C-SPAN. And, of course, people at
    Harley-Davidson, many of them were very concerned and upset
    about their jobs. One individual stood up at that meeting that
    you had with the workers there and asked about MEP. I don't
    know why or whether they did it out of their own knowledge or
    someone prompted them, I don't know, but talked about MEP and
    how important MEP was. James Haney, who is the President of
    Wisconsin Manufacturers, talks about MEP.
        It would be very, very well received in Wisconsin, which is
    an important State in November, but it has nothing to do with
    policy--I mean with politics. Policy is the most important
    thing we do. I recognize that and I am sure you do, too. People
    in Wisconsin are really concerned about the loss of
    manufacturing jobs and are looking for every shred of help they
    can get at the Federal level to assure them that we are doing
    everything in their power to help them maintain jobs at the
    manufacturing level in Wisconsin and MEP is a recognized and
    accepted part of that effort in our State.
        So I am asking you as well as Chairman Gregg, as we go
    through and figure out our funding levels for this year, and,
    of course, Senator Hollings, who I know is supportive of MEP,
    that we give it another look to see whether or not there is
    something in the interest of our country that we can do with a
    program which is small in terms of its funding, but very
    important in terms of what it does accomplish in many States
    throughout our great country.
        And with that, I am finished.
        Secretary Evans. Thank you, Senator.
        Senator Kohl. Thank you.
        Senator Gregg. Your counsel is taken very seriously,
    Senator, and we will certainly be addressing it. The opinion
    has been expressed, obviously, by the committee. But as the
    Secretary said, he had to set priorities in his budget. We will
    maybe adjust and tweak those priorities a bit and send him back
    a budget he will be very comfortable with but will certainly
    address some of the concerns of the committee.
        Senator Inouye?

                       CLIMATE CHANGE RESEARCH INITIATIVE

        Senator Inouye. Thank you very much, Mr. Chairman.
        I would like to discuss two matters with you, Mr.
    Secretary. In 2001, the President of the United States launched
    the U.S. Climate Change Research Initiative and that was hailed
    by the people in the Pacific for obvious reasons. Climate is
    part of our way of life. More than ever, it is pleasant and
    beautiful, but there are times when it can be devastating.
        So the matter of climate change is very essential to our
    way of life, and I note that in this budget the President has
    suggested $24.7 million. But in analyzing this, we somehow feel
    that to make this up, there were cuts of $11 million from the
    same program. I would like to submit a few questions with that
    in mind, sir.

                                TOURISM INDUSTRY

        The other question I have, sir, is the tourism industry.
    Today, I think it employs about 1 million. It brings in about
    $83 billion. It has been declining, and especially since 9/11
    it has gone further down. But the World Trade and Tourism
    Council just predicted that 2004 may be the year for tourism to
    start going up, provided Government took the initiative to be
    proactive and put out a hand to bring them in.
        My questions would be, what is Government doing, or what
    can Government do, or what can we do to increase this industry,
    because it is a good, clean, potentially productive industry.
    That is all I have, Mr. Chairman. Thank you very much.
        Senator Gregg. Thank you very much, Senator.
        Senator Inouye. May I submit the questions?

                             GLOBAL CLIMATE CHANGE

        Secretary Evans. I would like to respond. First of all, let
    me just touch on global climate change real quick, if you don't
    mind. When I arrived here a little over 3 years ago, that was
    an issue that the President was very focused on, as was our
    Department, and we started to try and understand the scope of
    the global climate change commitment from Government, which is
    significant.
        First, I was told that on global climate change we spend
    about $800 million a year. And then we found some other money
    that really is focused on global climate change and it took us
    up to about $1.6 billion a year. And then as you looked around
    some more, you found some others that would, you know. The end
    of the story is that we commit about $4.5 billion a year to
    global climate change in this country, more than everybody else
    combined, global climate change science and research and
    technology.
        We put together an organizational structure to oversee that
    $4.5 billion. Within the Department of Commerce is the
    responsibility of the oversight of the science portion of
    global climate change, which is about $1.8 billion across the
    Government. We have put out a report for the science community
    to review and consider. We did that last year a couple of
    times. We just recently put out a final report that focuses on
    the science side, the science research side of global climate
    change, which got some favorable comments, from the National
    Research Council.
        In June in Japan, we are going to bring together the global
    community. This will be for the third time, but it continues to
    expand. We will have the global community there to sign an
    accord, a framework that focuses on a global monitoring system,
    a global observation system for the climate so that we can
    develop the kind of data, kind of information we need in this
    world to understand the world, this Mother Earth that we all
    live on, but also make sure globally we are collecting the data
    to make good policy decisions.
        So just know that we are very focused on that very
    important issue, not only for the good people of the islands of
    Hawaii, but the entire world, and I feel the world coming
    together to say, you know what? That is a good idea. We ought
    to have a global observation and monitoring system. The reason
    we know so much about El Nino and La Nina is because we happen
    to have an observation system out there so we measure out
    there. So why don't we measure the world and understand what is
    going on in the world. So that is my basic thoughts on global
    climate change.
        Your second question was on----
        Senator Inouye. Tourism.

                                    TOURISM

        Secretary Evans. Tourism. We had hoped that we were going
    to receive $50 million in the budget to promote tourism in
    America. We have put together a Tourism Council that is focused
    on promoting America around the world. As it turned out in the
    2004 budget, there was only $6 million allocated for that
    account, for that program, and so what we have made the
    determination that we will do, working with the Tourism
    Council, is to focus a pilot program on Great Britain and
    commit those $6 million to Great Britain and look at the
    results of that program, and based on the results of that
    program, we will make a determination as to what to ask for in
    subsequent budgets.
        But you are right. It is a vital part of our economy.
    Eighteen million people, when you count the entire travel and
    tourism industry, have a job there, and so it is a critical
    part of our economy and we will continue to do all we can to
    promote it. Thank you, Senator.
        Senator Inouye. Thank you very much.

                                  PTO INCREASE

        Senator Gregg. Mr. Secretary, there is a 25 percent
    increase here for the Patent and Trademark Office, which is
    basically taking all the patent fees and putting them into the
    Patent and Trademark Office, which is a legitimate
    philosophical position. In light of the Patent and Trademark
    Office's track record, which is to say at the least spotty, do
    you think they can absorb that type of an increase?
        Secretary Evans. Well, Mr. Chairman, I hope they can
    because I think it is critical to manufacturing in this
    country. What we certainly are learning in this ever-changing
    economy that we are moving into is that the manufacturing
    sector is growing or becoming less mechanical and more driven
    by biotechnology and electrical kinds of issues. It is much
    more complicated. It is much more complex. Patents just simply
    take longer, take more resources, take more hours, take more
    time to review and then make a judgment on.
        It is our determination, as we look at this important area
    that if we don't hire additional examiners--in fact, in our
    plan right now, we talk about hiring an additional 900
    examiners. That is on top of about 3,600 examiners. But if we
    don't hire at that kind of level, which I agree, a 25 percent
    increase is a significant increase, but we see the prospects of
    the pendency continuing to climb. It was a little over 20 weeks
    in 2003. We estimate in 2004 it is going to be 21 weeks. We see
    it continuing to climb but for a plan that will indeed give us
    the examiners, and the training of the examiners that are
    needed in this ever-changing economy.
        So we believe we can absorb them. I have asked that same
    question. I realize that is a big management challenge, but I
    also understand how critical the Patent and Trademark Office is
    to this economy. As rapidly as it is changing and as it
    continues to move in highly technical areas and highly
    complicated areas that require examiners with skills in
    electronics and biotechnology and all the rest. It is a
    challenge, but it is an area we focused on very hard.
        Senator Gregg. Well, I think it is a challenge. It has been
    this committee's experience that when we have put a lot of
    money into a Department to hire a large amount of expert staff,
    for example, we did it with the SEC, we did it with the FBI, we
    did it with the State Department, we have found that it has
    created real problems. We have ended up with some breakdowns in
    the hiring practices. We have ended up either not hiring up as
    quickly as we wanted or hiring up with real problems, like the
    Border Patrol.
        I have serious reservations about putting this much money,
    this quickly, into the Patent and Trademark Office. I readily
    acknowledge your premise, which is that there is a serious
    problem there, that we are not getting the patents approved
    fast enough. I think the problem is expertise and management,
    systems management. We would be interested in further
    information on how you really do plan to find 900 new people
    who have the expertise to do this job in one year's cycle. I
    think it is----
        Secretary Evans. A good question.
        [The information follows:]

                      PTO's Hiring Plan for 900 New Staff

        On a percentage basis, the USPTO has increased its staff by
    even more in the recent past. Hiring 900 examiners in fiscal
    year 2005 represents an increase of about 25 percent over end
    of fiscal year 2004 staff levels. In prior years, the Office
    has successfully hired similar numbers: In 1998, they hired 728
    examiners, an increase of about 34 percent over the previous
    end-of-year staff; in 1999, they hired 799 examiners, an
    increase of about 31 percent over the previous end-of-year
    staff; and in 2002, they hired 769 examiners, an increase of 25
    percent over the previous end-of-year staff.
        The USPTO maintains an automated job application database
    to facilitate the hiring of patent examiners. The database
    currently contains about 3,700 applications. We have a
    strategic recruitment plan in place to build awareness of
    examiner job opportunities through a variety of print media
    that target high-demand technologies, and planned participation
    in about 60 recruiting events this fiscal year that are
    dedicated to engineering and science disciplines.
        The agency has had a special hiring unit in place for
    several years that is dedicated exclusively to bringing in
    patent examiners. In years when the agency had high-volume
    hiring, the unit has brought on board an average of 37
    examiners per bi-week (962 per year), with the ability to
    process and train up to 60 examiners per bi-week (1,500 per
    year).

                      MANUFACTURING EXTENSION PARTNERSHIP

        Senator Gregg. Senator Hollings?
        Senator Hollings. On that particular point, that dovetails
    with the observation of the distinguished Secretary relative to
    Senator Kohl's concern about the Manufacturing Extension
    Partnership. Specifically, the Secretary says there are hard
    choices. Respectfully, I think it is a very easy choice, not a
    hard choice at all. You want jobs, I want jobs, we all want
    jobs, and that Patent Office, $310 million, let us just say
    $210 million, give the $100 million to MEP and we would be back
    up to snuff with the Manufacturers Extension Partnership small
    business services.
        Senator Gregg. You only need $67 million.
        Senator Hollings. Don't start cutting me. Wait until we get
    to conference.

                                 BUDGET CHOICES

        The Office of Manufacturing and Services, heck, we are
    going to get us a big super-duper secretary of services and we
    cut down the services, and when we get to a real service, as
    pointed out and emphasized by Senator Kohl, you say hard
    choice. That is not a hard choice, that is an easy choice. Give
    the money where it is producing jobs.
        Now, I don't accuse you, Mr. Secretary, but I have been
    through a dozen Secretaries. Now, Census is a honey pot that
    doesn't need as much funding as you propose because you are
    ramping up 7 to 6 years ahead of time the 2010 census. So we
    can take $100 million of that and restore MEP, an easy choice.
    I could go through this budget and really get the things.
        I really am disturbed, and you mentioned technology. The
    Advanced Technology Program, that is one where all that high
    tech is really there and vetted by the National Academy of
    Engineering, and decisions are made on a competitive basis and
    they have to bring 50 percent of the money.
        Let me get to the point given our limited time here,
    because we are going to have a rollcall, you and I both agree
    that our job is to create, not to export jobs. Export products,
    but create jobs. Would you object to a provision under this
    particular appropriation that no monies be expended to
    encourage or expedite the export of jobs? You wouldn't object
    to that provision in the budget?

                               EXPORTING OF JOBS

        Secretary Evans. I am not for the exporting of jobs----
        Senator Hollings. That is what I mean. So you are not doing
    it, so it wouldn't have any effect, then.
        Secretary Evans. Right.
        Senator Hollings. And that would include the pay of these
    staff cheerleaders that go to these Chinese conferences. We
    don't want to pay those fellows, Ross and all the rest, the
    assistant secretaries who run around to these Chinese
    conferences in New York and elsewhere promoting the export of
    jobs. I am sure you and I agree on that.
        Secretary Evans. Well, they are promoting the export of
    goods and services from America and equipment.
        Senator Hollings. Good, and you and I agree on that. They
    ought to do that, but not the export of jobs.
        Secretary Evans. No. It would be exporting the goods and
    services from America.
        Senator Hollings. That is right, and so we don't want to
    pay them to export jobs.
        Secretary Evans. Just the export of goods and services and
    products from America.
        Senator Hollings. And we don't want to pay them to export
    jobs.
        Secretary Evans. We want to pay them to export Caterpillar
    engines and John Deere tractors and----
        Senator Hollings. A 30-year outstanding business success
    and you keep saying export goods and services, which we all
    agree on. I am questioning on whether or not we can agree on
    the export of jobs.
        Secretary Evans. No. We should not. We are not supporting
    the export of jobs.

                                 OCEAN PROGRAMS

        Senator Hollings. Now, with respect to the oceans program
    that Senator Stevens, our distinguished chairman, emphasizes we
    are going to have to get into those issues because we have an
    outstanding commission appointed by President Bush and they are
    reporting henceforth here, like you say, around mid-summer.
        Secretary, under the leadership of Chairman Gregg, we have
    been developing, and it has been a struggle in this
    Appropriations Subcommittee, in that we put in, generally
    speaking, about $15 million for seven-tenths of the Earth's
    surface, namely the oceans, and $15 billion for Mars and moons.
    We know way more about the surface of the Moon than we know
    about the surface of the Earth.
        And yet the Ocean Exploration Initiative, the Ocean Health
    Initiative, the Coastal Estuarine Land Acquisition Program, the
    Coastal Observation Initiative, NOAA's infrastructure for the
    multiple lawsuits and all, you terminate or cut the funding.
    You cut NOAA as we are going into a wonderful venture and
    really find out, like you say, about the weather and the
    climate all the way around the world.
        I have been down to McMurdo Station in the South Pole. That
    is where the beginning of the hole in the ozone layer is. You
    can look up and see it. All of these initiatives are through
    NOAA, but their budget is being cut $308 million just as we are
    going to hear from the Watkins Commission. Please comment on
    that.
        Secretary Evans. Senator, what I would say to you is I
    think we all share the same view that we are looking forward to
    the report that comes from the commission. I think it will
    provide a very important and valuable framework for us in
    determining what the priorities should be and what the funding
    level should be. I think these are some of the finest
    scientists and leaders we have in our country that are focused
    on this invaluable resource of the Earth and it will give us
    good guidance and some important guidelines as to what
    priorities should be and what funding levels should be in NOAA
    or as it relates to the oceans.
        You mentioned this is not a large sum of money, but when we
    showed up here 3 years ago, there was, I understand, zero
    dollars for ocean exploration. This last year, there was $25
    million that included a one-time center in the Smithsonian. But
    now this year in our budget, I think there is $11.7 million for
    ocean exploration.
        I realize, I take your point, this is a small amount of
    money, but what I would say to you, when we showed up, it was
    zero and now it is $12 million. But I think it is a wise thing
    to wait for the Ocean Commission report and look at that and
    see what kind of priorities this country should place on
    funding levels for NOAA.
        Senator Hollings. We want to work together to be able to
    implement that commission's recommendations next year. Thank
    you, Mr. Chairman.
        Senator Gregg. Senator Kohl, do you have anything further?
        Senator Kohl. No.
        Senator Gregg. Senator Inouye?
        Senator Inouye. No, Mr. Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Gregg. Mr. Secretary, we certainly thank you for
    your time. You have been very generous with it this morning.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                   Questions Submitted by Senator Judd Gregg

                             NOAA SPACE INITIATIVES

        Question. Mr. Secretary, since our hearing, you've had a chance to
    review the N Prime situation in further detail. First, could you
    explain/document how the N Prime satellite was damaged and the impact
    on NOAA's satellite program? Second, would you provide an update on
    what the Department is doing to recover losses and get the program back
    on schedule.
        Answer. The NOAA-N Prime spacecraft fell from a turnover cart on
    September 6, 2003 at the Lockheed Martin Sunnyvale, California plant as
    technicians rotated the satellite from vertical to horizontal to
    perform an alignment operation on one of the instruments onboard. The
    root cause of the accident was that the satellite was not properly
    secured to the turnover cart. The accident caused significant damage to
    the satellite structure and varying degrees of damage to the
    instruments, including three provided by International partners.
    Fortunately, many flight components were not on the satellite at the
    time of the accident. Spares are available for most of the spacecraft
    components and three of the five U.S. instruments. Two instruments will
    need to be repaired.
        The impact to NOAA's Polar-orbiting satellite program is currently
    under review. NOAA has formed an interagency team with its partners at
    NASA and the Department of Defense to develop and recommend recovery
    options that will ensure NOAA's responsibility to provide continuous
    global environmental measurements given the NOAA-N Prime accident. The
    Under Secretary of Commerce for Oceans and Atmosphere will make a final
    recommendation to me regarding the way forward from the NOAA-N Prime
    accident. I will render a final decision in the Spring 2004. The
    Department of Commerce and NOAA will brief Congress at that time.
        The Department of Commerce, NOAA and NASA legal staff are
    investigating the government's options for recovering losses from
    Lockheed Martin.
        Question. Mr. Secretary, the President's budget calls for major new
    space initiative to return to the moon and explore Mars. But, it is
    NOAA in your Department, not NASA, that is responsible for exploration
    here at home. Yet, the Budget proposes to cut or terminate ocean
    research, ocean exploration, undersea research and such programs here
    on our planet. Why such uneven treatment, Mr. Secretary? Why do NOAA's
    oceanic and ecosystem programs fare so badly in this budget?
        Answer. The Administration recognizes the importance of both space
    and ocean exploration. Given the tight fiscal environment, the
    Administration is required to develop priorities and make difficult
    choices. The fiscal year 2005 President's budget reflects these
    priorities. The Administration does place value in exploring the oceans
    and is continuing support for the ocean exploration program at a level
    of $11.2 million. We will continue to work hard to ensure the success
    of the ocean exploration program, and we thank the Congress for its
    continued interest in this area.
        Question. Mr. Secretary, as I look at your budget, it appears that
    the Commerce Department decided to cut NOAA and use the savings--over
    $300 million--to fund other bureaus like the Census Bureau, ESA and
    International Trade Administration. Many have argued that as a natural
    resource and science agency NOAA will never flourish inside the
    Commerce Department. Doesn't your 2005 budget support their arguments?
        Answer. The $300 million net reduction to NOAA's request reflects
    the elimination of one-time projects and programs added by Congress to
    the fiscal year 2004 request. The fiscal year 2005 budget request is
    supportive of NOAA's mission. The budget maintains current services and
    provides over $146.9 million in new program increases.

         ADVANCED TECHNOLOGY PROGRAM AND HOMELAND SECURITY TECHNOLOGIES

        Question. Mr. Secretary, the fiscal year 2004 Conferees agreed that
    a focused competition on homeland security technologies should be held
    out of ATP's funding provided for new awards. Will the Department of
    Commerce support ATP's involvement in this type of R&D? Can you provide
    detail for the Committee on the design and implementation of this
    competition?
        Answer. The fiscal year 2004 solicitation process for ATP
    applications is currently being undertaken. It is expected that a
    significant number of the enabling technologies ATP will fund this year
    will have homeland security applications. In the recent seven-city ATP
    ``Proposers Conferences'' that are designed to attract potential
    applicants, the Director of the Program conveyed Congressional interest
    in funding homeland security technologies.
        After the fiscal year 2004 Omnibus Appropriations Bill became law
    on January 23, 2004, the 2004 competition was initiated on February 11,
    2004, with a Federal Register announcement stating the availability of
    funds in the amount of $60.7 million for new ATP awards.
        Given the compressed fiscal year 2004 budget calendar, ATP was
    unable to run an entirely separate competition that focused solely on
    homeland security technologies in addition to its general solicitation.
    Notwithstanding, ATP takes its obligation to follow the intent of
    Congress seriously, especially with regard to homeland security. ATP
    expects to receive a number of applications and fund a number of new
    awards for homeland security technologies. NIST has also offered to
    provide assistance and expertise to the Department of Homeland Security
    in conducting their own competitions that fund homeland security
    research.

                    NIST/MANUFACTURING EXTENSION PARTNERSHIP

        Question. Mr. Secretary, in the Administration's manufacturing
    report there is a recommendation to ``support a newly coordinated
    manufacturing extension partnership.'' What is meant by ``newly
    coordinated''? Your budget doesn't support this, does it?
        Answer. One of the recommendations in the DOC Manufacturing Report
    is to ``Support a Newly Coordinated MEP and Create a National Network
    of Centers of Manufacturing Excellence'' by: coordinating MEP fully
    with other Commerce Department programs that are helping manufacturers
    to be more competitive and expand markets; focusing all MEP centers on
    effectiveness and cost efficiency; exploring the concept of receiving
    funding from private sector entities; encouraging applicants to
    identify areas of sector-specific expertise that could qualify them as
    a ``center of excellence''; and encouraging co-location with
    universities, community colleges, and ITA assistance centers to foster
    cooperation, knowledge transfer, greater efficiency, and manufacturing
    exports.
        All of these efforts comprise the ``newly coordinated'' MEP. The
    fiscal year 2005 budget request supports this effort.
        Question. Mr. Secretary, there has been some discussion that MEP
    might be reduced to the network of regional centers. Are you aware that
    this past January another State decided that the New Hampshire MEP
    would close down due to lack of funding? Who made the decision? Can you
    inform the Committee what the process is for closing centers?
        Answer. Three years ago, the New Hampshire (NH) Center was
    experiencing management problems so the NH Board removed the director,
    reconstituted the board, and brought in the Maine-based MEP Management
    Services Incorporated (MSI) as managing agent.
        Since NH received about $420,000 in Federal cost share annually and
    only received about $150,000 from the state three years ago, the excess
    Maine cost share was used to cover the NH center.
        The Maine MSI's excellent management team was able to bring the NH
    performance up and NH is now the highest performing MSI center.
        However, the NH center had approximately $300,000 in debt which the
    Maine MSI assumed as managing agent. The Maine MSI managed to reduce
    this debt down to $180,000. But as fiduciary agents, the Maine MSI and
    the NH board are responsible for the remaining debt. In light of the
    reductions to MEP funding in the fiscal year 2004 Consolidated
    Appropriations Act, the Maine MSI decided that, even in a best case
    scenario, they would not have enough cash flow to manage the NH debt.
        The Maine MSI will still provide a minimal level of service by
    keeping one NH staffer and assigning other staff from Massachusetts and
    Maine to serve NH companies.

                           INFRASTRUCTURE PROTECTION

        Question. Mr. Secretary, you have the sole responsibility to issue
    Federal Information Processing Standards which are standards developed
    by NIST and used by federal agencies and the commercial sector to
    protect their computer systems. As the Nation's infrastructure is
    increasingly linked by the internet, its vulnerabilities are being
    subjected to daily attacks. Given this fact, is the Nation, and in
    particular the Department of Commerce, investing enough resources to
    protect our computer systems and networks? Does this portfolio of
    investment contain enough forward looking R&D to allow us to be
    proactive and not reactive to these threats?
        Answer. Information security is one of the most critical issues
    facing industry and government. The Department of Commerce and
    especially NIST, takes very seriously our responsibilities to
    strengthen information security in the Federal government and the
    Nation as legislatively mandated in the Federal Information Security
    Management Act (FISMA) of 2002 and other legislation.
        As a Nation, we have made progress in securing our legacy systems,
    but ``bad guys'' continue to find new ways around or through our
    defenses. While we focus on current implementations, new technology
    developments in IT systems and in other disciplines that increasingly
    rely on IT systems are coming on-line at an accelerating pace. Thus, in
    cyber security, we continue to be challenged.
        That is why the President's fiscal year 2005 budget request
    includes a proposed increase of $6 million for NIST to address key
    National needs in cyber security. With this proposed increase to NIST's
    base funding of approximately $10.9 million, NIST will be able to more
    effectively work with industry and government agencies to accelerate
    solutions to critical cyber security issues, including the development
    of security and critical infrastructure application protocols;
    expanding the NIST Cryptographic Toolkit to include developing
    technologies, such as limited power, small-sized computing
    environments, fixing insecure wireless security standards; and
    producing metrics to build secure networks and systems from
    individually understood components.

                                  PTFP GRANTS

        Question. Mr. Secretary, can you tell us why the PTFP Construction
    account and the Information Infrastructure Grants are no longer needed
    and why the funding request is shifted to the Public Broadcasting
    budget? Since CPB funds cannot be used for repairs, where will rural
    stations turn for assistance?
        Answer. The Information Infrastructure Grant program was created as
    an awareness program to promote the widespread use and availability of
    telecommunications and information technology in the non-profit and
    public sector. The Department believes that this mission has been
    fulfilled and recommends redirecting the funds to new priorities.
        With the assistance of Federal funds appropriated to PTFP, the
    Corporation for Public Broadcasting (CPB), and the Rural Utilities
    Service (RUS), 90 percent of the Nation's public television stations
    will be broadcasting in digital by the end of the year. As we near the
    end of the digital transition, the Administration proposes to continue
    funding the digital conversion of public television during fiscal year
    2005 through funds already appropriated to CPB.
        PTFP also does not pay for equipment repairs or other operating
    costs. PTFP, however, does pay for the replacement and installation of
    replacement equipment in circumstances of urgent need. We understand
    that these expenses could be supported through the equipment programs
    now in place at CPB and RUS.

                     LONG-TERM PLAN FOR SPECTRUM MANAGEMENT

        Question. Can you tell us what your overall long-term game plan is
    for spectrum management and how you will work with the FCC in this
    endeavor? What are your priorities and what are the most significant
    impacts on the commercial industry?
        Answer. On May 29, 2003, the President established the ``Spectrum
    Policy Initiative'' to develop and implement a U.S. spectrum policy for
    the 21st century. The Secretary of Commerce was directed to chair the
    initiative. The initiative involves an interagency task force to
    develop recommendations for improving spectrum management policies and
    procedures for the Federal Government, as well as an examination of
    ways to improve spectrum management for state, local, and private
    sector spectrum use. A report containing recommendations will be
    provided to the President in early summer.
        The National Telecommunications and Information Administration
    (NTIA) within the Department of Commerce is the President's principal
    advisor on telecommunications and carries out the function of providing
    spectrum to the Federal agencies. NTIA works directly with the FCC
    regarding spectrum allocation and spectrum policy development and
    implementation. In addition, the NTIA and FCC have agreed via a
    memorandum of understanding to meet twice a year at the Chairman and
    Assistant Secretary level and monthly at the Bureau level to discuss
    plans and spectrum management issues.
        Our major priorities include: (a) foster economic growth; (b)
    ensure our National and homeland security; (c) maintain U.S. global
    leadership in communications technology development and services; and
    (d) satisfy other vital U.S. needs in areas such as public safety,
    scientific research, Federal transportation infrastructure, and law
    enforcement.
        In the fiscal year 2005 budget, the President requested funding for
    NTIA for the development of incentives to increase efficient use of
    spectrum; the continuance of a prior year initiative to make the
    spectrum management process more efficient and effective through the
    application of information technology; the expansion of our
    International radio-communication outreach program; and development of
    the necessary analytical engineering tools and methods that will
    improve spectrum efficiency.
        The Administration has strongly supported the creation of a
    ``spectrum relocation fund,'' which would have a significant impact on
    the commercial industry by substantially speeding the opening of
    spectrum to commercial use. Passage by the House of H.R. 1320, the
    Commercial Spectrum Enhancement Act, without amendment, would
    significantly improve spectrum management for both Government spectrum
    users and for commercial wireless users. The relocation fund
    legislation strikes a proper balance in three key policy objectives.
    First, the Bill fully funds Government spectrum relocation, providing
    certainty essential to Federal users including the Department of
    Defense. Second, the legislation will result in timelines that are
    workable for Government incumbents and commercial wireless users.
    Third, the legislation provides certainty and accountability in
    developing and adhering to relocation cost estimates and relocation
    timetables.
        Failure to enact this legislation this year could have an adverse
    impact on the timing of the Third Generation (3G) wireless auction and
    the deployment of new 3G wireless services. Industry and the Government
    are in strong agreement that the reimbursement fund mechanism would
    streamline the relocation of Government agencies. The President's
    budget for fiscal years 2003, 2004 and 2005 contained a legislative
    proposal to create a spectrum relocation fund for Federal agencies
    required to relocate their communications systems to allow the spectrum
    to be auctioned by the Federal Communications Commission (FCC) for
    private sector uses. H.R. 1320 passed the House 408-10 on June 11,
    2003. At the time, the Administration issued a Statement of
    Administration Position strongly supporting the bill as passed by the
    House.

                 ITA REORGANIZATION AND COLLABORATION WITH USTR

        Question. Mr. Secretary, at the hearing you gave us an overview of
    how the ITA reorganization is progressing. Will you now provide a more
    comprehensive status of this complex reorganization? Also, can you
    offer some insight on how the Commerce Department will leverage this
    new office in cooperation with the United States Trade Representative
    to protect U.S. interest?
        Answer. The Reprogramming was sent to the House and Senate
    Appropriations Committees on May 7th. In addition, the Department
    Organization Orders necessary to formally make the changes need to be
    signed by the Secretary. Once the orders are signed, the staff will be
    formally moved and the management processes (accounting, personnel and
    other logistics) will be completed.
        Our reorganization will provide increased attention to the
    problems, both domestic and international, facing the manufacturing
    sector through the creation of an Assistant Secretary for Manufacturing
    and Services. We will consolidate and strengthen our export promotion
    functions under the Assistant Secretary for Trade Promotion (and
    Director General of the U.S. and Foreign Commercial Service) and
    improve the operations of our Import Administration.
        The Department of Commerce will continue to work closely with the
    U.S. Trade Representative in fulfilling the requirements of U.S. law,
    assisting exporters in overcoming foreign trade barriers and ensuring
    foreign countries comply with their commitments to the United States.

                              IRAQ RECONSTRUCTION

        Question. Mr. Secretary, I would like to commend the dedication of
    the Senior Commercial Officers around the world. They are doing an
    outstanding job. With reference to the emerging need and increased
    workload in the Middle East, specifically related to Iraq
    reconstruction, can you tell us where Iraq is within the priorities of
    the Foreign Commercial Service? What is FCS's basis for the resource
    allocation for the various locations around the world? Do you have a
    plan to increase the FCS presence in the areas serving as gateways into
    Iraq? When the government is turned over to the Iraqi provisional
    government on July 1, what is the plan for the FCS presence?
        Answer. ITA has conceived and developed several initiatives to
    facilitate and assist U.S. business interest in Iraq.
        Our Middle East-based Iraq Reconstruction Regional Initiative is a
    joint effort by Commercial Services posts in Egypt, Jordan, Kuwait,
    Saudi Arabia, Turkey and the UAE to assist interested U.S. companies by
    highlighting and supporting a series of specific events and activities
    such as conferences, seminars and training programs, webcasts, virtual
    (video) trade missions and videoconferences.
        As part of this initiative, we have undertaken an extensive series
    of activities, a schedule of which is attached. As a further complement
    to these activities, we plan to open a Middle East Business Information
    Center, which will showcase private sector development and serve as a
    one-stop shop for U.S. companies seeking opportunities in the region.
        Similarly, the Central and Eastern Europe Regional Initiative seeks
    to provide our Central and Eastern European Coalition allies with the
    necessary information required for their companies to compete for Iraq
    Reconstruction contracts on a level playing field. This initiative is a
    one time commitment to provide a delegation of experts to disseminate
    information and answer questions from the local business communities in
    Poland, Hungary, Czech Republic, Romania, Albania, Bulgaria, Slovakia
    and Ukraine.
        Commerce is also gearing up with a U.S.-based Iraq Reconstruction
    Project Team. This initiative builds on our successful ``sector team''
    approach to assemble a small, highly focused group of sector
    specialists from around the country, each focused on a specific
    priority development sector in Iraq. Each sector specialist will be
    responsible for developing contacts with Iraq experts, handling
    questions from interested companies, and disseminating information on
    their particular sector.
        Since the end of official hostilities, we have had commercial
    service officers in Iraq assisting the Coalition Provisional Authority
    with private sector development and Iraq reconstruction efforts. We now
    are in the process of establishing a Commercial Service (CS) operation
    in Baghdad in the new Embassy scheduled to open by July 1, 2004. CS
    Baghdad will be staffed by 2 commercial officers and 8 Foreign Service
    nationals. CS has begun hiring staff for the new Baghdad operation and
    has assigned a seasoned officer to arrive in Baghdad in advance of the
    July 1 opening.
        The CS overseas resource allocation model takes into consideration
    Administration priorities, as well as market potential and cost/benefit
    analysis. Historically, the U.S. and Foreign Commercial Service has
    responded to national crisis with all available resources. We are using
    existing resources for this effort.

    IRAQ RECONSTRUCTION REGIONAL INITIATIVE (IRRI) LIST OF TRADE PROMOTION
                                EVENTS (BY DATE)

    January 2004
        January 13-15--Iraqi Ministry of Trade training by the Government
    of Jordan on the Company Registration System. COMPLETED.
        January 5--Live Web Broadcast through the World Trade Center (WTC)
    in Ankara, Turkey. COMPLETED.
        January 6-8--Iraq Reconstruction Seminars in Ankara (Jan. 6), Izmir
    (Jan. 7) and Istanbul (Jan. 8). COMPLETED.
        January 11-13--``Outreach 2004 Exhibition'', Amman, Jordan on Iraq
    Reconstruction. Recruit an Iraqi delegation to attend the event. FCS
    Turkey to send Turkish delegation. COMPLETED.
        January 19-23--``Rebuild Iraq'', Exhibition in Kuwait City. Bring
    Iraqi delegation. CS Kuwait to host Iraqi Reconstruction Council
    Meeting. COMPLETED.
        January 18-22--``Arab Health Exhibition'', Dubai, U.A.E. Joint
    United States/United Kingdom initiative to bring an Iraqi delegation.
    CS Baghdad staff to provide CPA/CS Baghdad briefing. COMPLETED.
        January--Proposed Ar'ar Border opening press event in Saudi Arabia.
    U.S. Embassy Saudi Arabia to highlight beneficial aspects of the
    opening for future Saudi-Iraqi business relations. POSTPONED UNTIL CPA/
    GC HAND-OVER OF SOVEREIGNTY 6/30/2004.
    February 2004
        February--Preparation of Arabic language quick reference sheet on
    ``Doing Business in Iraq''. COMPLETED.
        February 17--CS Kuwait and CS Riyadh supported and accompanied
    delegation from the American Business Council of Kuwait to Basra and Um
    Qasr for business meetings and briefings by the Basra Chamber of
    Commerce and CPA South. COMPLETED.
        February 17-20--Assistant Secretary Lash visits Baghdad to meet CPA
    officials, U.S. and Iraqi companies to discuss reconstruction and
    investment. COMPLETED.
    March 2004
        March--Iraq Central Organizations for Standards and Quality Control
    (COSQC) delegation to Saudi Arabia for training in establishing
    industry standards, organized by NIST. POSTPONED DUE TO NIST FUNDING
    ISSUE.
        March 20--A/S Lash meets Iraqi and U.S. business groups in Abu
    Dhabi and Dubai regarding Iraqi Reconstruction and Investment.
    COMPLETED.
        March 21-22--``Iraq-Arab Alliance Conference for Reconstruction,
    Trade and Investment in Iraq'' to be held in Bahrain. Conference and
    exhibition focused on Iraq Reconstruction opportunities with
    participation from throughout the Gulf region. COMPLETED.
    April 2004
        April 5-8--Conference and exhibition organized by Iraqi American
    Chamber of Commerce and Industry entitled ``DBX: Destination Baghdad
    Expo'' at Baghdad International Fairgrounds. POSTPONED.
        April 10--Iraq Conference by the Council of Saudi Chambers of
    Commerce & Industry in Riyadh. FCS to present business opportunities
    through Saudi-U.S. business relationships. USAID/CPA contractor and USG
    officials to participate as speakers.
        April 4--Iraq Reconstruction seminar at the American Turkish
    Council's Annual Conference, Washington, D.C. COMPLETED.
        April 18-19--Oil and Gas Conference in Basra actively supported by
    CS Kuwait. POSTPONED.
        April 20--Dubai--Conference on Subcontracting Opportunities in Iraq
    with high level DOC and PMO participation. COMPLETED.
        April 25--Amman--Conference on Subcontracting Opportunities in Iraq
    with high level DOC and PMO participation. COMPLETED.
        April 29--Istanbul--Conference on Subcontracting Opportunities in
    Iraq with high level DOC and PMO participation. COMPLETED.
    June 2004
        June 2-3--International Investment Conference in Basra, actively
    supported by CS Kuwait. POSTPONED.
        June 6-7--Conference on Iraq's Oil and Gas Industry in Abu Dhabi.
    ``Doing Business in Iraq'' Outreach Seminars
        Assistant Secretary Lash--February 24, Cleveland, OH; February 25,
    Kansas City, MO; March 23, Detroit, MI; March 24, Minneapolis, MN;
    March 25, New Orleans, LA; and May 6, Houston, TX.
        Senior Advisor on Iraq, Sue Hamrock--March 9, Los Angeles, CA;
    March 10, San Diego, CA; March 18, Boston, MA; March 19, New York, NY;
    April 13, Chicago, IL; and April 14, San Francisco, CA.
              2010 decennial census and american community survey
        Question. Mr. Secretary, this is an extraordinary request for funds
    with six years to go until the census. Could you give us a status
    overview of the preparation for the 2010 census and how the requested
    funds will be used?
        Answer. Things are going very well, thanks to the support of the
    Administration and Congress in these efforts. With these early
    investments in the 2010 census, we are well on our way to achieving our
    goals to improve the relevance and timeliness of census long-form-type
    data, reducing operational risk, improving the accuracy of census
    coverage, and containing costs over the 2010 decennial cycle.
        In the fourth quarter of fiscal year 2004, the American Community
    Survey (ACS) will expand to a sample of 250,000 addresses each month
    spread across every county in the United States and Puerto Rico. Fiscal
    year 2005 will be the first full year of data collection at this sample
    size. The successful implementation of the ACS serves as the
    replacement of the long-form component of the decennial census,
    providing the United States not only more timely data, but also the
    added efficiencies of administering a short-form only decennial census.
        The MAF (Master Address File)/TIGER (geographic reference file)
    Enhancements Project is on schedule to be completed for all counties in
    the United States, Puerto Rico, and island areas by fiscal year 2008.
        Key mailout, field, and special purpose studies have been completed
    in developing a short-form census for 2010. Additional tests and
    development efforts are on track for conducting a dress rehearsal
    census in fiscal year 2008.
        Specifically:

    American Community Survey
        Ongoing support for the ACS will allow the Census Bureau to publish
    detailed social and economic data every year for all places with a
    population of 65,000 or more beginning in fiscal year 2006.
        The increased budget is for the annualization of the program that
    will have begun in the fourth quarter of fiscal year 2004. The largest
    cost drivers are questionnaire mailing and collection, following up on
    nonresponses, information technology and data processing/dissemination
    activities.
        After three years of data collection and every year thereafter,
    accumulated data can be used to make such annual estimates for all
    places of size 20,000 or more.
        After five years of data collection and every year thereafter,
    accumulated data can be used to make annual estimates for all places
    and tracts comparable in content and reliability to decennial long-form
    data.

    MAF/TIGER Enhancements Project (MTEP)
        By the end of fiscal year 2004, approximately 26 percent of the
    counties in the Master Address File (MAF) and geographic database
    (TIGER) will be brought into alignment with global positioning system
    (GPS) coordinates.
        In fiscal year 2005, improvements will be completed for an
    additional 700 counties. By the end of fiscal year 2005, this work will
    have been completed for nearly half of all counties in the United
    States, Puerto Rico, and the island areas.
        The MAF/TIGER enhancements project is on schedule to be completed
    for all counties in the United States, Puerto Rico, and the island
    areas by the end of fiscal year 2008.
        Work will continue on converting our MAF/TIGER processing
    environment to one based on commercial, off-the-shelf software. This
    effort began in fiscal year 2003 and is planned to be completed in
    fiscal year 2006.

    Short-Form Only 2010 Census
        The development and testing of a dramatically revised process for
    conducting the short form Census is key to the strategy for cost
    containment for the 2010 census. We will complete 2004 Census Test
    evaluations by the third quarter of fiscal year 2005 and use the
    results to inform/revise planning, testing, and development for the
    rest of the decade.
        We will begin conducting the National Content Survey and the 2005
    National Census Test in the fourth quarter of fiscal year 2005 and
    complete evaluations in the third quarter of fiscal year 2006.
        We will begin preparations, and conduct early operations, for the
    2006 Census Test in fiscal year 2005.
        We will begin planning for the 2006 Overseas Test in fiscal year
    2004 and prepare for the test during fiscal year 2005.
        We will continue other long-term planning, testing, and development
    for the 2008 Dress Rehearsal and 2010 Census.
        Question. Mr. Secretary, in addition, as this is the first time you
    are implementing the American Community Survey, can you tell us how you
    expect the implementation to go?
        Answer. After almost a decade of research and testing, the American
    Community Survey (ACS) will begin Nationwide data collection in the
    fourth quarter of fiscal year 2004, at a sample size of 3 million
    addresses per year. We feel confident this program will be successful
    given the experience of the staff overseeing the project in
    headquarters, the processing center, the three telephone centers, and
    the 12 regional offices. The testing on the ACS from 1996 to the
    present supports our confidence. The ACS has exceeded our quality goals
    each year. We anticipate continuing this success into full
    implementation.
        There are three major challenges we anticipate and are monitoring
    closely:
      --Full implementation of the ACS requires a significant increase in
            sample size (from 800,000 to 3 million annually) and requires a
            significant increase in the overall ACS staff. The one-time
            classroom training and on the job observation will fully tax
            the regional office staff working on the ACS program during
            October through December. However, the experience of the
            regional office staff will ensure that the staff is well
            trained and ready to conduct the ACS successfully.
      --The American Community Survey is expanding into Puerto Rico as part
            of full implementation. We have limited experience in
            collecting survey data in Puerto Rico. Our Boston Regional
            Office will manage the personal visit data collection in Puerto
            Rico. We are working together to hire and train an adequate
            staff in October 2004 to ensure the data collection is a
            success.
      --Lastly, although the American Community Survey tested data
            collection of persons living in group quarters (prisons,
            college dormitories, nursing homes, etc.) in 1999 and 2001, the
            National level implementation of group quarters data collection
            is a major challenge. This operation will require separate
            training for the regional office field staff and close
            monitoring to ensure the quality of the data meet the ACS
            standards.
        While the start-up challenges are significant, the U.S. Census
    Bureau places high priority on the American Community Survey and we are
    confident the program will continue to be successful.

                          FUNDING FOR CENSUS PROGRAMS

        Question. Mr. Secretary, I am concerned about budget reductions in
    the areas of Economic Census, Census of Governments and the Intercensal
    Demographic Estimates. Can you explain how you plan to provide the same
    level of service the government has come to count on?
        Answer. The fiscal year 2005 Congressional request for the
    Intercensal Demographic Estimates is an increase of $1.2 million to
    improve the measurement of migration across U.S. borders. It is
    imperative to accurately assess the size, characteristics, and impact
    of International migration, as it is a critical factor in our
    population growth.
        Reduced funding levels for other programs reflect the cyclical
    nature of these programs. For example, 2005 is the final year of the
    2002 Economic Census Cycle and the first year of the 2007 Economic
    Census. If fully funded, the Census Bureau will carry out all
    activities scheduled for fiscal year 2005 as originally planned. As the
    census programs transition from one phase of the cycle to another,
    activities in fiscal year 2005 are different in nature from fiscal year
    2004. Given the differences in the nature and scope of the planned
    activities for fiscal year 2005, the Census Bureau can, at the
    requested funding level, continue to provide the high level of service
    our customers and stakeholders have come to expect.

                        PTO FUNDING AND REDUCED PENDANCY

        Question. Mr. Secretary, during the hearing we discussed the
    significant increases for PTO in your budget submission. In past years,
    the correlation between funding increases on the one hand and reduced
    patent pendancy and higher patent quality on the other has not been
    demonstrated. Will you provide a more detailed explanation on how such
    a large budget increase in fiscal year 2005 will help achieve these
    goals? Can the PTO actually execute such a large increase in one year?
        Answer. Although the USPTO has received significant budget
    increases, over the past 10 years patent applications filed, patent
    examiners and enacted budget--in constant dollars--have increased at
    about the same rate (applications at 81 percent and budget and patent
    examiners at about 90 percent). The primary reason for pendency
    increases over this period is that the Office has been confronted by an
    overwhelming shift in technology from the traditional chemical and
    mechanical applications to the significantly more complex applications
    in the computer, biotechnology and telecommunications areas. Ten to 15
    years ago only 11-12 percent of the USPTO's work was in the complex
    technologies; today almost 35 percent is. On the average, examiners
    have 18 hours to handle an application in the traditional chemical and
    mechanical areas as opposed to 31 hours in the high tech/emerging
    areas. This shift in technology and the corresponding increase in time
    needed translates to a need of over 600 examiners, before even
    addressing the high annual growth rates in applications received. A
    number of policy changes and International obligations have also
    shifted significant amounts of work to areas that do not reduce
    pendency. For example, from 1993 to 2003 filings pursuant to the Patent
    Cooperation Treaty increased by over 300 percent, from 13,310 to
    44,282. Examiners must be given production credit for resolving these
    cases even though they grant no property rights. Since passage of the
    American Inventors Protection Act in 2000, examiners have been assigned
    classification duties related to pre-grant publication, a task that
    absorbed 36 examiner-FTEs in fiscal year 2003 but did not contribute to
    pendency reduction.
        In the recent past, many have urged the USPTO to stop trying to
    ``hire its way out of this problem.'' While the agency continues to
    work on ways to improve efficiency, there is simply no substitution for
    the human mind for making determinations of patentability. As a result,
    the Strategic Plan anticipates continued examiner hiring as a critical
    element of achieving targeted pendency improvements. It also proposes a
    number of efficiency gains, including taking advantage of searches of
    identical or similar applications submitted to other competent patent
    offices and introducing market competition for some of the tasks facing
    the Office. The Strategic Plan initiatives to use non-examiner
    resources to perform search and classification functions will enable
    the agency to focus more examiner attention on making patentability
    decisions and will contribute to pendency improvements.
        The USPTO's fiscal year 2005 budget request includes an increase of
    $311 million over the fiscal year 2004 enacted level. Of this $311
    million, $38 million is for adjustments to base (pay raises and other
    inflationary costs), and another $38 million would be transferred to
    the Office of Personnel Management for post-retirement benefits of
    USPTO employees. The remaining $233 million increase would be dedicated
    to implementing Strategic Plan by fully funding delayed initiatives,
    and continuing to fund those that were implemented at a reduced level,
    as follows:
      --$19 million would enable the USPTO to continue its high priority
            focus on quality initiatives and fully fund training to address
            the new electronic workplace. With primarily base resources,
            the USPTO has made positive progress in implementing key
            programs to improve quality, such as certification of patent
            examiners before promotion to grade 13, continuing legal
            education for all patent professionals, and an expanded, in-
            depth review of the work product of one-third of all senior
            patent professionals.
      --$39 million would be used to continue e-Government initiatives,
            including availability of automated systems and recovery in the
            event of catastrophic disaster. This funding is critical
            because IT has brought to the examiner's fingertips
            capabilities not realized 15 years ago, such as:
        --Increased reliance on non-patent literature for prior art
                searches: Automation funding has provided access for
                examiners to the hundreds of non-patent literature
                databases that are needed to perform a quality search.
        --Internet searching: In some technologies, Internet searching is a
                mandatory primary search requirement.
        --Complexity of applications: Patent applications now include
                subject matter that requires IT solutions simply to examine
                them; for example, the newer technologies such as
                biotechnology applications with complex sequences, and
                proteins claimed by three dimensional spatial coordinates.
                Some applications come in on CDs with the equivalent of
                millions of pages of data.
        --Also included in this amount, and consistent with the fee bill
                passed by the House, are funds to test the concept of
                competitive sourcing for prior-art searches by conducting a
                limited scope proof of concept during fiscal year 2005. The
                USPTO is analyzing the amendments in the fee bill to
                determine their implication on operations.
      --$61 million would address, among other things, patent application
            inventories and workload by hiring 900 new patent examiners.
            This represents 650 new positions, compared to new positions of
            67 in fiscal year 2003 and a planned zero increase in fiscal
            year 2004. Funds also would be allocated to new Trademark
            examining attorney hires and changes needed to implement the
            Strategic Plan initiatives of multi-track and accelerated
            examination, and post-grant review in patents.
      --$106 million would be used to address workload increases by
            aligning funding needed for activities impacted by the growing
            examination workloads and the volume of application and search
            data. Included in this amount is $65 million for patent
            workload increases in initial examination review, pre-grant
            publication, patent publication, commercial data bases and
            examiner search support, and information technology support
            throughout examination; $35 million for IT upgrades, staff for
            responding to an increased number of customer assistance and
            issue resolution incidents, increase and enhancement of mass
            storage and infrastructure platforms; and $6 million for
            administrative support, such as mail center and warehousing,
            and related workload and human resources processing costs

                             TAKING PTO OFF BUDGET

        Question. Mr. Secretary, there is currently legislation moving
    through the House that would take PTO ``off budget''. Can you tell me
    what your position is on this legislation? Can you tell me some reasons
    why this might or might not be good for PTO?
        Answer. The fee revisions and related provisions included in the
    USPTO fee bill (H.R. 1561) were originally introduced at the request of
    the Administration and did not include a proposal to take the USPTO
    off-budget. When the off-budget language was added by amendment in
    subcommittee markup, the Administration indicated in a letter signed by
    Theodore W. Kassinger, General Counsel, on June 12, 2003, to the full
    Judiciary Committee that it could not support the bill as amended
    because, in part, it would have removed the USPTO from the
    appropriations process. The Administration has not yet developed a
    formal position on H.R. 1561, the ``United States Patent and Trademark
    Fee Modernization Act of 2004,'' as passed by the House (on a 379-28
    vote on March 3, 2004) and reported favorably by the Senate Judiciary
    Committee on April 29, 2004.

                           BIS MISSION AND ACTIVITIES

        Question. Mr. Secretary, it seems BIS has an expansive mission for
    a small agency. Can you explain how BIS plans to prioritize it many
    missions and how you plan to apply these few resources to accomplish
    that goal? Also, can you share with us how BIS works with other
    agencies outside of Commerce and any jurisdictional issues that affect
    your operations?
        Answer. The mission of the Bureau of Industry and Security (BIS) is
    to advance U.S. National security, foreign policy, and economic
    interests. BIS's activities include regulating the export of sensitive
    goods and technologies in an effective and efficient manner; enforcing
    export control, antiboycott, and public safety laws; cooperating with
    and assisting other countries on export control and strategic trade
    issues; assisting U.S. industry to comply with International arms
    control agreements; and monitoring the viability of the U.S. defense
    industrial base.
        To assist the Bureau in fulfilling these critical missions, BIS
    published its Guiding Principles in October 2002. These Principles
    represent the philosophy of BIS in approaching its activities and
    fulfilling its responsibilities. A copy of these Principles is
    attached.
        BIS focuses its activities and resources on eight key areas:
      --Export control policy and regulation.--BIS ensures that controls on
            exports and reexports of U.S.-origin items meet U.S. National
            security objectives without unnecessarily burdening U.S.
            industry.
      --Export licensing.--BIS is continually streamlining and updating its
            processes to increase capacity and better serve exporters.
      --Enforcement.--BIS vigorously enforces U.S. export control,
            antiboycott, and public safety laws, while working to improve
            exporter and end-user compliance with export license
            conditions.
      --Multilateral regimes.--BIS plays a major role in the development,
            interpretation, and refining of control lists and operational
            guidelines for the four major nonproliferation regimes--the
            Nuclear Suppliers Group, the Australia Group, the Missile
            Technology Control Regime, and the Wassenaar Arrangement.
      --International Cooperation.--In coordination with other federal
            agencies, BIS participates in a number of International
            cooperation and enforcement programs to enhance compliance with
            and enforcement of U.S. export controls worldwide. BIS also
            assists in the development of effective indigenous
            infrastructures for export controls in other countries.
      --Treaty Compliance.--BIS assists U.S. industry in compliance with
            the Chemical Weapons Convention and will assist industry in
            compliance with the Additional Protocol to the United States-
            IAEA nuclear safeguards agreement.
      --U.S. defense industrial base.--BIS monitors and supports the U.S.
            defense industrial and technological base through advocacy for
            U.S. firms competing for foreign defense contracts. BIS also
            exercises its authority under the Defense Priorities and
            Allocations System to require preferential acceptance and
            performance of certain contracts supporting the U.S. military.
      --Outreach.--BIS keeps United States and foreign firms informed of
            U.S. export control regulations through an aggressive program
            of seminars, meetings, and other outreach activities.
        To accomplish its mission, BIS works cooperatively with other parts
    of the U.S. Government including the National Security Council, the
    Department of State, the Department of Defense, the Department of
    Energy, the Department of Homeland Security, and the Intelligence
    Community. In many cases, BIS circulates license applications to other
    agencies for review prior to a decision. In addition, BIS manages an
    extensive license application escalation process that enables senior
    U.S. Government officials to consider particularly sensitive
    applications before a final decision is made.
        Most items on the Commerce Control List (CCL) are derived from the
    control lists of the multilateral regimes. BIS works closely with other
    U.S. Government agencies to strengthen these regimes and improve treaty
    compliance. BIS also works with the Departments of State, Defense, and
    other agencies to ensure that the CCL adequately captures all dual-use
    items that potentially could be used to harm the National security of
    the United States, and to clarify the allocation of commodity
    jurisdiction between the Department of Commerce and the Department of
    State, which has responsibility for licensing defense articles.
        In addition, BIS participates in a number of International
    cooperation and enforcement programs in coordination with other federal
    agencies. BIS leverages its capabilities by forming strong working
    relationships with other law enforcement agencies, including the
    Federal Bureau of Investigation (FBI), the Bureau of Immigration and
    Customs Enforcement (ICE), and the military law enforcement groups. BIS
    also has productive and cooperative relationships with the Central
    Intelligence Agency and the National Security Agency.
        These cooperative efforts with U.S. industry and other agencies in
    the U.S. Government have enabled BIS to achieve significant success in
    accomplishing our important mission. Our efforts are guided by the
    principle that protecting security and promoting trade are mutually
    reinforcing objectives. Indeed, legitimate trade is based on the
    foundation of sound security. We look forward to building on this
    success as we address new challenges in the years ahead.

                                     ______

                   Questions Submitted by Senator Ted Stevens

                         ASSISTANCE TO ALASKA FISHERMEN

        Question. Does the department intend to provide full funding of the
    $15 million in economic development assistance each of the five years
    to these fishermen?
        Answer. The Department of Commerce is very concerned about Alaska's
    fishing-dependent communities and is committed to ensuring that these
    communities are economically prosperous and remain viable communities
    with a strong economy.

                 CRAB RATIONALIZATION PROGRAM AND OCEAN POLICY

        Question. Do you perceive any problems with meeting the
    implementation date of January 1, 2005 for Bering Sea crab
    rationalization?
        Answer. Congressional language in the fiscal year 2004 Omnibus Act
    (Public Law 108-199) requires Secretary of Commerce approval of a crab
    rationalization program by January 1, 2005. NOAA is committed to
    meeting this deadline, and it is one of NOAA's top priorities. NOAA
    Fisheries is working with the North Pacific Fishery Management Council,
    the State of Alaska, and interested constituency groups to design an
    expedited process that would lead to Secretarial approval by the
    prescribed date.
        Question. Is the Department of Commerce prepared to receive and
    consider the findings of the Commission on Ocean Policy?
        Answer. The Administration is prepared to receive the report and
    looks forward to considering the Commission's findings. The report of
    the U.S. Commission on Ocean Policy (USCOP) certainly has significant
    ramifications for the Department of Commerce, especially for the
    National Oceanic and Atmospheric Administration (NOAA). The Commission
    released its draft report on April 20, 2004. Following a 44-day public
    and gubernatorial review, the Commission will amend the draft report as
    necessary and release its final report, probably sometime in the early-
    to-mid summer. The President then has 90 days to review the report and
    provide a report to Congress. The interagency effort being led by the
    Council on Environmental Quality (CEQ) in the Executive Office of the
    President is now reviewing the draft report and developing timely and
    appropriate responses to the recommendations. The Department will
    consider the findings of the Commission as part of the interagency
    effort being led by the Council on Environmental Quality (CEQ) in the
    Executive Office of the President. This interagency approach will
    ensure an integrated response consistent with the Oceans Act of 2000,
    which requires the President to provide a unified response to Congress.
    NOAA has been assisting CEQ in preparing for this review.

                                  NOAA FUNDING

        Question. Mr. Secretary, do you believe the significant reductions
    in NOAA's budget and specifically in fisheries and ocean research will
    allow for the necessary management of our Nation's marine resources?
        Answer. The NOAA budget requests a total of $3,380.8 million in
    discretionary budget authority, a net decrease of $309.5 million, or
    8.4 percent below the fiscal year 2004 enacted level. While this is a
    reduction from the fiscal year 2004 enacted level, the fiscal year 2005
    NOAA budget ensures that we continue to sustain healthy marine
    habitats, ocean research, robust ecosystems, and coastal environments,
    and address safety and environmental compliance issues impacting NOAA.
        The reductions requested within the fiscal year 2005 budget request
    are included in order to support high priority increases for the NOAA
    Fisheries Program within a constrained budget environment. For example,
    the fiscal year 2005 budget request includes an increase of $6.0
    million for a total of $20.9 million for fisheries stock assessments
    and surveys, $1.0 million for protected resources stock assessments, an
    increase of $1.2 million for a total of $5.2 million for socio-economic
    data collection and analysis, an increase of $0.5 million for a total
    of $2.0 million for research to understand and predict the effects of
    climate change on major marine and coastal ecosystems in the Bering Sea
    and Gulf of Alaska, $1.0 million to scientifically determine the
    population status of humpback and bowhead whales, and $1.0 million for
    fisheries oceanography which will analyze data to determine basin-wide
    changes in atmospheric and oceanic circulation and their effect on
    marine populations.
        The NOAA budget request provides funds to enhance our scientific
    understanding of the oceans and atmosphere. NOAA conducts research and
    gathers data about the global oceans, atmosphere, space and solar
    activities, and applies this knowledge to science and services.
    Specifically, the National Ocean Service (NOS) fiscal year 2005 budget
    request will promote a wide range of research activities to create the
    strong science foundation required to sustain use of our coastal
    systems. Overall, the fiscal year 2005 request for NOS is $394.3
    million. Specifically, the NOS fiscal year 2005 budget requests an
    increase of $6.5 million (above the current program level) for a total
    of $47.9 million to continue conducting Harmful Algal Bloom and
    Pfiesteria research as mandated by the Harmful Algal Bloom and Hypoxia
    Research and Control Act (HABHRCA). In addition, the fiscal year 2005
    NOS budget includes increases for navigation services, White Water to
    Blue Water.

                                     ______

                Questions Submitted by Senator Pete V. Domenici

                               ITA REORGANIZATION

        Question. Mr. Secretary, Congress approved the restructuring of the
    International Trade Administration (ITA) as part of the fiscal year
    2004 Consolidated Appropriations Act. I understand that this
    reorganization is now underway and that the Department will establish
    an Assistant Secretary for Manufacturing and Services. I am pleased
    that the Department of Commerce is renewing its focus on domestic
    manufacturing. An essential part of manufacturing is our ability to
    produce and obtain basic raw materials, such as refined metals, and
    semi-fabricated raw materials, such as copper and steel mill products
    and castings, at reasonable prices and in adequate quantities. I am
    concerned that under the reorganization the Metals Division is being
    eliminated. How does the Department plan to cover this important
    industrial sector?
        Answer. We fully recognize the importance of the metal sector to
    our manufacturing base. While we are planning to streamline management
    layers, we plan to provide full coverage of the metals sector as we
    have prior to the reorganization.
        Question. How does the Department plan to address the raw material
    sector issues?
        Answer. We will address these important issues as they arise and in
    the same manner as we have done in the past. Since the reorganization
    provides us a mandate to address many domestic issues of importance to
    manufacturing, we believe our support of the raw materials sector will
    be enhanced.
        Question. Will adequate staff and funding be allocated to this
    activity?
        Answer. We believe that we will be able to cover this sector on a
    basis comparable to our current level of support.

                       PARTICIPATION IN COMMODITY PRICES

        Question. Mr. Secretary, most raw materials are priced on
    International commodity exchanges and all are subject to International
    supply and demand factors. Our domestic metal industry is global in the
    classic sense. Organizations such as the International Copper Study
    Group have made significant progress in improving market transparency
    and statistics. A stated objective of the reorganization is to focus on
    domestic competitive issues. Will the Department of Commerce continue
    to participate in International commodity or raw material
    organizations?
        Answer. Yes. We intend to continue our active participation in the
    International Copper Study Group, as well as the UNCTAD negotiations on
    commodities, APEC Nonferrous Dialogue, OECD Steel Committee and other
    forums as appropriate.
        Question. Will the Department continue to address International
    issues directly affecting the materials industry?
        Answer. Yes. We will continue to cover these issues as in the past.
        Question. Under the ITA reorganization, what unit will cover these
    issues?
        Answer. The reorganization will not change unit responsibilities.
    ITA's Import Administration will continue to cover dumping and
    countervailing duty issues, our Market Access and Compliance Unit will
    cover trade negotiations and our new Manufacturing and Services Unit
    will cover various International and domestic trade and competitive
    issues.
        Question. Is this unit adequately funded and staffed? What would
    those staffing and funding levels be for fiscal year 2004 and fiscal
    year 2005?
        Answer. We are currently in the process of allocating resources.
    Staffing and funding levels will not be reduced as a result of the
    reorganization.
        Question. Finally, Mr. Secretary, the raw material industry must
    address sustainable development and environmental issues on a domestic
    and International scale in order to be competitive in world markets.
    The Department of Commerce has hosted conferences to assist industry in
    meeting these challenges. Would the Department continue such efforts
    after the reorganization?
        Answer. The Department of Commerce will remain actively involved in
    sustainable development and environmental issues, domestically as well
    as internationally. These issues are relevant to the competitiveness of
    practically all sectors in the U.S. industry.
        Question. What unit within the Department would be involved in
    these activities?
        Answer. The Department's activities in these area will involve the
    resources of several offices in the International Trade
    Administration's (ITA) manufacturing and services units. These would
    include, for example, ITA's offices dealing with energy, chemicals,
    metals and materials, and environmental technologies industries. In
    addition, the Department's National Oceanic and Atmospheric
    Administration (NOAA) will continue its active involvement in
    environmental issues and work closely with ITA.

                                     ______

             Questions Submitted by Senator Ben Nighthorse Campbell

                            NOAA/NIST BOULDER CAMPUS

        Question. I understand that NOAA has proposed to construct a fence
    around the NOAA/NIST facilities on South Broadway in Boulder. I have
    heard from a number of residents in Boulder that are opposed to the
    fence because it would (a) be an eyesore; (b) bicycle and foot traffic
    which currently crosses the campus would be restricted; and (c) the
    area surrounding the facilities is home to a wide variety of wildlife.
    The impacts of a fence on the wildlife habitat has not been addressed.
        What exactly is the nature of the security risk at this campus,
    what security measures are currently in place, and what additional
    security gain can be achieved with this fence given the assessed
    threats? Has DOC thoroughly examined other security measures short of a
    fence? Has DOC consulted with the City of Boulder and local law
    enforcement authorities on other alternatives?
        Is the entire site considered a high level security risk (Level 4)
    requiring all buildings and facilities to be enclosed by a fence? If
    not, why is the fence being proposed around buildings and facilities
    that do not possess this level of risk?
        Has DOC already decided that this fence is necessary? If so, who
    made this decision and what was the process by which it was made? Was a
    cost-benefit analysis conducted? How much will the fence cost, what
    funds are identified to pay for it, and what is the construction/
    installation timeline?
        Are other federal facilities across the country required to install
    fences? If not, why not? What is DOC's legal position regarding the
    City of Boulder's easement across the site? Can this easement be
    superceded by the fence? How will the fence provide the security
    envisioned if the City of Boulder refuses to allow the fence on its
    easement?
        Answer. A task team, headed by the Department of Commerce's Office
    of Security, met in August 2003 to assess the security risk at the
    Boulder Labs facility. That task team concluded that:
      --The security risk will be mitigated with effective perimeter
            security.
      --The most effective and cost-efficient perimeter security
            countermeasure based on industry averages is the installation
            of a fence around the main facilities.
      --A Boulder site task force should lead the design and coordination
            of the perimeter security solution.
        A Boulder site task force was established under the leadership of
    the National Institute for Standards and Technology (NIST) Boulder Lab
    Director, Zelda Bailey. That task force continues to develop possible
    designs and options for the perimeter security solution. No final
    decision regarding the design of the perimeter security solution has
    been made. A creative design should effectively address the elements of
    the security risk--criticality, vulnerability and threat--while also
    preserving valuable attributes such as easements, protected areas, bike
    paths and open areas. The final design will likely combine several
    security options to provide a measured response to the security risk.
        In a meeting on February 26, 2004, between officials of the City of
    Boulder and the Department of Commerce, it was agreed that a
    representative from the City would be added to the task force, to
    ensure that local interests are considered. We are confident that we
    will be able to develop a final solution that will address the
    interests of both the City of Boulder and the Department of Commerce in
    providing a safe and secure working environment for our employees.

                                     ______

               Questions Submitted by Senator Ernest F. Hollings

                  PUBLIC TELECOMMUNICATIONS FACILITIES PROGRAM

        Question. Secretary Evans, the Public Telecommunications Facilities
    Program, which is a longstanding part of the public television funding
    picture, plays a critical role in public television's federally
    mandated digital conversion. PTFP is a relatively small investment that
    is paying tremendous dividends by unleashing millions of dollars in new
    services and products. Despite this, the President's fiscal year 2005
    budget proposal terminates this critical program. What was the
    Department's request to OMB with regard to this program?
        Answer. The Department's request to OMB eliminated funding for PTFP
    and proposed to continue funding of the digital conversion of public
    television through funding already available from the Corporation for
    Public Broadcasting.
        Question. Secretary Evans, there is no doubt that we are in fiscal
    crisis at the moment--we face a deficit and we are at war. However, a
    strong Nation depends on strong infrastructure. PTFP is critical to the
    well being of our public broadcasting infrastructure--the only
    broadcast medium that reaches virtually every household in the United
    States.
        We discussed at length during the hearing the loss of jobs and the
    exporting of critical manufacturing jobs in particular to other
    Nations. You stated that those workers can be trained in new areas and
    for new industries. One proven entity in the area of education,
    including adult education, is public television.
        Why is the Administration cutting a program like PTFP that is so
    vital to the daily work of public television, especially at a time when
    public television's role in adult education and workforce skills has
    never been more vital?
        Answer. The Administration appreciates public television's
    contribution to education, especially adult education. The
    Administration believes, however, that during this period of steady
    economic growth, public broadcasting's equipment needs can be met more
    efficiently through the funding already available through the
    Corporation for Public Broadcasting.

                                     ______

                Questions Submitted by Senator Daniel K. Inouye

                            CLIMATE CHANGE PROGRAMS

        Question. The President launched his U.S. Climate Change Research
    Initiative in June of 2001 to improve the integration of science with
    policy and management decisions. The President's budget claims that
    $23.7 million in new funds will be devoted to climate research in order
    to expand climate observing capabilities. However, the budget also
    calls for more than $11 million in cuts to the existing climate and
    global change programs that currently provide these very climate
    observing capabilities.
        I would appreciate receiving a breakdown of the reductions and
    increases of all climate specific programs within the National Oceanic
    and Atmospheric Administration (NOAA). Does the budget request actually
    call for $23.7 million in new funding, or will this ``increased
    funding'' come at the expense of programs?
        Answer. The $23.7 million increase for climate research relative to
    the fiscal year 2005 base funding in the Climate Change Research
    Initiative activities has been reallocated from lower priority
    activities. It is being partially offset by reductions that were taken
    from to Climate and Global Change, NOAA's National Environmental, Data,
    and Information Service (NESDIS) Environmental Data Systems
    Modernization program, and other internal programs, which includes $1
    million from the baseline observatories as well as reductions from the
    weather-climate connection.
        Funding has been directed towards activities that will contribute
    to reducing scientific uncertainty in three key areas identified in the
    Climate Change Science Strategic Plan: (1) aerosols-climate
    interaction; (2) ocean climate observations; and (3) carbon sources and
    sinks.

                       OAR CLIMATE PROGRAM BUDGET SUMMARY
                            [In millions of dollars]
    ------------------------------------------------------------------------
                         Budget Summary                            Total
    ------------------------------------------------------------------------
    Laboratories & Joint Institutes.........................            +623
    Climate & Global Change.................................          -9,152
    Climate Obs. & Services:
        Other Programs......................................          -1,870
        CCRI................................................         +23,735
    NESDIS-EDSM.............................................          -2,191
                                                             ---------------
          Total.............................................          11,145
    ------------------------------------------------------------------------

        Question. I would also appreciate receiving a geographically
    specific breakdown of the research and observation projects in the
    President's fiscal year 2005 climate budget for the Pacific Ocean.
        Answer. Tropical Atmosphere Ocean (TAO) array: $2.6 million funded
    through NOAA Research. The array provides real-time data from moored
    ocean buoys for improved detection, understanding and prediction of El
    Nino and La Nina. The Japan Marine Science and Technology Center, in
    Yolsutia, Japan, operates the western TRITON portion of the array. NOAA
    Research's Pacific Marine Environmental Laboratory in Seattle operates
    the eastern TAO portion of the array.
        Pacific Regional Integrated Sciences and Assessment (RISA) Program:
    about $0.15 million funded through the NOAA Research Climate & Global
    Change and Climate Observations & Services budget lines. The program
    assists fisheries, agriculture, and tourism in enhancing resilience in
    the face of climate-related extreme events, such as droughts, floods,
    and hurricanes. The Pacific RISA is operated out of the East-West
    Center in Honolulu, HI.
        Mauna Loa and Samoa Baseline Observatories: $2.0 million funded
    through the NOAA Research Climate Observations & Services budget line.
    The baseline observatories provide valuable time series data on various
    atmospheric and solar radiation measurements that are critical to
    NOAA's monitoring of climate. The observatories, though located in the
    South Pacific, are operated by NOAA Research's Climate Monitoring and
    Diagnostics Laboratory in Boulder.
        North Pacific Climate Regimes and Ecosystem Productivity: $2.0
    million funded through the National Marine Fisheries Service. A growing
    component of NOAA's climate program, this Climate and Ecosystems
    project seeks to link NOAA climate information with NOAA models,
    observations and new ecosystem indicators, resulting in better resource
    management by NOAA. These efforts will include projections of the
    status of living marine resources under future climate scenarios. This
    project is operated out of the NOAA/NMFS Alaska Fisheries Science
    Center in Seattle.
        University of Hawaii Sea Level Center (UHSLC): about $0.5 million
    funded through the NOAA Research Climate Observations & Services budget
    line. The Center is operated out of the University of Hawaii/NOAA Joint
    Institute for Marine and Atmospheric Research (JIMAR) within the School
    of Ocean and Earth Science and Technology (SOEST). The UHSLC operates
    37 tide gauge stations in the global sea level network and collaborates
    with host countries in the operation of 7 more stations. The
    measurements are used for the evaluation of numerical models (e.g.,
    those in operation at the National Centers for Environmental Prediction
    (NCEP), joint analyses with satellite altimeter datasets, the
    calibration of altimeter data, the production of oceanographic products
    through the World Meteorological Organization Sea Level Program in the
    Pacific (SLP-Pac) program, and research on inter-annual to decadal
    climate fluctuations.
        Question. Is the Commerce Department researching the economic
    impacts of climate change on Pacific island and Pacific Rim Nations? Do
    you believe that the research effort commensurate with the economic
    stakes of climate change in the Pacific region?
        Answer. The Department of Commerce is working to better understand
    the economic impacts of climate change and helping to manage climate
    risks for the Pacific Islands. The following are some examples of the
    Department's efforts. In a recent press release, VADM Conrad C.
    Lautenbacher, Under Secretary for Oceans and Atmosphere and NOAA
    Administrator recognized the dependence of Pacific island economies on
    accurate climate information. He stated that, ``Understanding and
    effectively responding to changes in climate are critical elements of
    planning and economic development in Hawaii and other Pacific Islands.
    Their economies are dependent on climate-sensitive sectors like
    agriculture, tourism and fisheries, and the region is home to some of
    the world's most valuable marine resources such as coral reefs.''
        The press release highlights a new program that begins development
    of climate services for the Pacific Islands. NOAA's Office of Global
    Programs recently awarded a three-year grant of $535,487 to the East-
    West Center in Honolulu, Hawaii, an educational and research
    organization, for a project entitled ``Managing Climate Risks in the
    Pacific: A Pacific Islands Regional Integrated Sciences and Assessment
    (Pacific RISA) Program.''
        The Pacific RISA program assists key economic sectors (e.g.
    fisheries, agriculture, and tourism) in enhancing their resilience in
    the face of climate-related extreme events such as droughts, floods,
    and hurricanes. The project represents a significant step towards the
    creation of a new program of climate information services designed to
    meet the needs of decision makers and policy officials in the American
    Flag Pacific Islands (Hawaii, American Samoa, Guam, Commonwealth of the
    Northern Mariana Islands) and the United States-Affiliated Pacific
    Islands of the Federated States of Micronesia, the Republic of the
    Marshall Islands and the Republic of Palau.
        NOAA's Coastal Services Center is complementing the work of the
    Pacific RISA with a climate assessment outreach and education program.
        NOAA has also supported studies of the socio-economic impacts of El
    Nino events in the Pacific through the work of the Pacific ENSO
    Applications Center and related socio-economic research funded through
    NOAA's Office of Global Programs.
        Through these types of research efforts, NOAA's expansion and
    development of climate services in the Pacific Islands is working to
    address the rising economic stakes of climate change in the Pacific
    region.

                   INTERNATIONAL TRAVEL TO THE UNITED STATES

        Question. International travel to the United States is a vital
    component of our Nation's economy. International visitors account for
    one million jobs and $83 billion in spending annually. Visitation
    levels have declined by some twenty percent during the past two years.
    U.S. market share of global travel had already been declining since
    1998 and was only exacerbated by the September 11, 2001, terrorist
    attacks. Since September 11, many necessary changes have been made to
    make U.S. ports of entry safe and secure, but little or no measures
    have been taken to reach out to legitimate International travelers.
        Although the World Travel and Tourism Council recently predicted
    that tourism to the United States will rise in 2004, the Council warned
    that relying on excellent products and service alone will not be
    sufficient to guarantee the future growth of tourism to the United
    States. To remain competitive, the Council recommended that we be
    proactive and work with government authorities to ensure that our
    tourism industry is protected and nurtured.
        What steps are being taken by your department to reach out to
    International travelers and work with government authorities to
    encourage travel to the United States? What do you believe the federal
    role should be in promoting travel to the United States?
        Answer. The Department is launching a $6 million promotional
    campaign in the United Kingdom, our largest overseas market to increase
    market share. We are working with the Department of Homeland Security
    and the Department of State to encourage the development of visa
    policies and travel security systems that facilitate travel while
    providing for the safety of the traveler and security for our Nation. I
    believe that the role of the federal government is three fold: (1) to
    assist in ensuring competitiveness in this sector; (2) to measure the
    industry through collection and dissemination of statistical data on
    the volume, flow and characteristics of travelers, through assessments
    on the economic benefits and impact of travel and tourism industries on
    the U.S. economy, and through production of the balance of trade in
    travel and tourism; and (3) to advocate for the United States' tourism
    interests in International service sector trade agreements and
    represent the U.S. tourism policy positions in International tourism
    development and intergovernmental fora.
        Question. The Visa Waiver Program allows International travelers to
    visit the United States for up to 90 days without going through the
    time consuming and often costly process of obtaining a nonimmigrant
    visitor visa. There are currently 27 countries in the program. Current
    rules require that by October, 2004, International visitors entering
    the United States on the Visa Waiver Program possess a machine-readable
    passport. In addition, all Visa Waiver countries must certify that the
    new passports they are issuing contain biometric identifiers, to help
    ensure that the person seeking entry into the United States is the same
    person documented in the passport.
        There is great concern in the visitor industry that only a few of
    the 27 Visa Waiver countries will be able to meet the October, 2004,
    deadline, and that this will result in major disruptions in inbound
    travel to the United States from key markets in Europe and Asia.
        Do you have any suggestions on how we can encourage foreign
    countries to expend the resources necessary to produce passports in
    compliance with U.S. requirements for the Visa Waiver Program?
        Answer. The issue, I believe, is not a lack of willingness by Visa
    Waiver Program countries to comply by the October, 2004 deadline, but
    their ability to do so. Legislated requirements specify that the
    biometric passport identifiers must meet International Civil Aviation
    Association standards. These standards were not established until May
    of 2003. Therefore, technologies are not yet fully developed. The
    United States will also not issue passports that meet these standards
    by the current deadline.
        Sixty-five percent of our overseas visitors come from Visa Waiver
    Program (VWP) countries. All but two VWP countries have indicated to
    the Department of State that they will not be able to meet the
    deadline. If nothing is done to alter the situation, the Department of
    State estimates that there will be approximately five million
    additional visa applicants, of which they have the capacity to process
    only six percent, which may create substantial disruptions in travel to
    the United States. Economic losses across sectors could be substantial,
    and our relationships with our allies could be damaged.
        A legislative remedy is the only option to postpone this deadline.
    Should a legislative postponement be approved, the Department of
    Homeland Security and the Department of State could provide for safety
    and security in keeping with the intent of the legislation through
    existing biometric systems to ensure that travel documents and visitors
    match. During this period, the United States could work with other
    Nations to establish agreement on interoperable systems to produce and
    read passports with biometric identifiers.

                                     ______

                Questions Submitted by Senator Patrick J. Leahy

                      MANUFACTURING EXTENSION PARTNERSHIP

        Question. With last week's announcement that MEP will be eligible
    to apply for EDA funds, I am greatly concerned that we are nearly half
    way through the fiscal year and it is still unclear how the program
    will be funded and re-competed. Will there be funds set aside for MEP
    Centers to compete for? Will each MEP Center be responsible for
    applying for these funds? How will this help ``leverage'' the limited
    funds available to MEP in fiscal year 2004?
        Answer. EDA is ready, willing and able to assist eligible MEP
    Centers with resources as NIST develops its plans for the MEP going
    forward. Secretary Evans has directed EDA to focus its remaining fiscal
    year 2004 Economic Adjustment program funds on manufacturing-related
    communities and initiatives. EDA will welcome MEP Centers to apply for
    EDA funds. These EDA funds will augment funds provided to the MEP from
    NIST and will be focused on highest performing Centers. These funds
    will be administered in accordance with EDA's competitive grant program
    guidelines. In addition, EDA staff is prepared to work with MEPs in
    developing EDA applications in order to make the process as streamlined
    as possible.
        Question. Given the immediate need for MEP services, what other
    mechanisms would the Administration consider to increase MEP funding in
    fiscal year 2004 and 2005, so small manufacturers can continue to
    receive the assistance they so desperately need?
        Answer. We are doing all we can to make sure that the MEP centers
    are fully aware of any funding opportunities that may exist across the
    Federal government. We have identified some possible sources already
    and are in discussions with others to determine if there are additional
    opportunities for MEP centers to compete for available funding from
    other Federal programs that support U.S. manufacturing. Also, MEP has
    considered foundation-type funding which is typically raised as
    principal to be kept intact, while the earnings from the principal are
    used to capitalize activities. For MEP to develop a steady stream of
    funding of any significance to substitute for some of the Federal
    funding, the foundation would need to be capitalized at $400 to $500
    million. Otherwise, the capital would be rapidly depleted and the
    foundation would need to be in a continuous fundraising mode. However,
    the actual level of funding that could be generated would depend in
    large part on the support of Administration officials, Congress, and
    industry leaders. This is particularly true given these tight economic
    times during which it will be even more difficult to garner significant
    contributions.
        Question. Why ``improve'' MEP and cut its budget when we clearly
    see its effectiveness in building stronger companies that retain high-
    skill, high-pay American workers and repay our relatively small federal
    investment with a healthier tax base?
        Answer. Budget constraints have forced the Administration to make
    some tough budget decisions this year. The fiscal year 2005 budget
    request reflects the Administration's policy and funding priorities to
    address the Nation's most pressing needs. Support for MEP is maintained
    at the fiscal year 2004 enacted level.
        Question. The manufacturing strategy, budget documents, and
    comments by Commerce officials suggest ITA and other federal agencies
    can take over functions of MEP. Do you really think that Trade experts
    can discuss, sell, and deliver the technical engineering services that
    MEP provides to manufacturers?
        Answer. It makes sense for all bureaus in the Department engaged in
    improving our Nation's manufacturing to work together. The MEP and ITA
    programs are complementary, and MEP and ITA staff are working together
    to increase coordination. This coordination will link the technical and
    business staff employed by the MEP centers located around the country
    with ITA trade promotion specialists who are working with ITA on behalf
    of the future Assistant Secretary for Manufacturing and Services.
        ITA has experts with in-depth knowledge of and connections with
    various sectors of industry including the automotive, textiles and
    apparel, energy, aerospace, machinery, metals, and microelectronics,
    industries.
        The direct teaming of MEP field agents with the ITA sector experts
    will make the program a more effective National resource to help small
    manufacturers compete and succeed in the global marketplace.
        MEP and EDA are also exploring mutual opportunities to coordinate
    their support of small manufacturers through the local economic
    development infrastructure.
        Question. In the manufacturing strategy, you suggest that savings
    can be found by enhanced partnering. Yet OMB's PART analysis gives MEP
    high marks for collaboration. Tell me how you plan to get significant
    savings from synergies they have already accomplished.
        Answer. The principal purpose of effective partnering is to better
    serve America's manufacturers and provide them with the wide range of
    assistance that the Federal government can provide through its many
    assistance and support activities. Although the MEP is performing well
    it still had room for improvements. Efforts are being made to expand on
    existing partnerships and enhance the benefit to MEP participants.
        Question. How will you ensure that small manufacturers will
    continue to receive the services they need when your ``improvements''
    will actually cut the availability of MEP services?
        Answer. The MEP program will continue to serve as many
    manufacturers as possible and will continue to explore every avenue
    possible to find new and innovative ways to maximize whatever level of
    Federal investment is made in this program. Improving the effectiveness
    and efficiency of the MEP National manufacturing network is the primary
    goal. In addition to the MEP program, NIST laboratories also support
    manufacturers both large and small by providing the measurements and
    standards needed to improve quality, productivity, and reduce
    manufacturing costs. The NIST Advanced Technology Program (ATP) has
    provided cost-sharing support of improved manufacturing in many U.S.
    industries. NIST laboratories provide calibration standards that ensure
    quality of manufactured products and improve efficiencies. The NIST
    fiscal year 2005 budget proposal includes a request for budget
    increases to support advances in manufacturing. The work proposed in
    the fiscal year 2005 budget initiative will help overcome technical
    barriers facing U.S. industry that will enable it to thrive in nano-
    manufacturing, particularly in the key areas of electronics and
    semiconductor manufacturing, and advanced medical technologies. It will
    also promote access to global markets by ensuring that the measurements
    and standards that U.S. manufacturers rely upon are internationally
    accepted.
        Question. Has the Department of Commerce done any studies to
    determine what impact re-competing the entire MEP network would have on
    its ability to serve small manufacturers?
        Answer. The series of manufacturing round tables conducted over the
    past year, while not specifically focusing on the MEP, gave the
    Administration a real sense of what manufacturers want and need. There
    has not been a formal study of the possible impact of a re-competition,
    but such a competition is expected to result in excellent service to
    small manufacturers in the region served by the selected centers.
        Question. One of the strengths of MEP is its partnership with state
    governments and local service providers. Have the state agencies and
    other partners been informed of your re-competition plans and will they
    continue to provide roughly a third of the funding support to the MEP
    system?
        Answer. Additionally, the MEP Director has had preliminary
    discussions with the Centers about the impacts of the funding level.
    Those Centers with agreements that are expiring have been informed that
    their renewals will be on a month-to-month basis. Until the individual
    Centers give us specific information, it is hard to determine which
    states will continue to provide a third of the funding support to the
    MEP system.
        Question. Do you really want to hamstring this program by pushing
    each and every Center to spend its time developing a proposal during a
    time of urgent need for this type of hands-on assistance for our small
    manufacturers?
        Answer. For fiscal year 2004, MEP is exploring the options for
    providing some funding to all Centers in the network through the end of
    the fiscal year.
        Question. Many groups, such as Harvard's Kennedy School, the
    National Academy of Public Administration, NAM and National business
    publications commend the program for its effectiveness and efficiency.
    Doesn't it make better sense to re-compete only those Centers that do
    not meet minimum performance standards? Why should we consider re-
    competition for a system that is not broken?
        Answer. The vast majority of MEP centers perform admirably, so only
    isolating those few relatively poorer performers recognizes no
    significant cost savings. Each of those few, poorer performers have
    been addressing their weaknesses.

                           NATIONAL SEA GRANT PROGRAM

        Question. In the President's request for the National Sea Grant
    Program, how much of the funding would be allocated to new programs? If
    we set a goal of bringing all the programs up to $1.2 million in base
    funding a year in $250,000 increments over the next several fiscal
    years, how much additional funding would be needed in fiscal year 2005
    and which Sea Grant programs would receive funds to increase their base
    level?
        Answer. The fiscal year 2005 President's Budget request includes
    $57.5 million for Sea Grant, this amount does not include any funding
    for new programs. The National Sea Grant program currently funds 30
    established college and institutional programs and 4 developing
    institutional programs. Of these 34 programs, 19 currently have a base
    funding level of less than $1,200,000. The Sea Grant Program
    authorization requires that amounts appropriated over the fiscal year
    2003 level be allocated by merit and competition. To bring these 19
    programs up to $1.2 million in base funding in $250,000 increments over
    the next five years would cost a total of $7,723,000 and would require
    additional funding in the amount of $3,759,000 in fiscal year 2005, the
    first year:

    ------------------------------------------------------------------------
                              Year                                Amount
    ------------------------------------------------------------------------
    1st Year................................................      $3,759,000
    2nd Year................................................       2,041,000
    3rd Year................................................       1,000,000
    4th Year................................................         723,000
    5th Year................................................         200,000
    ------------------------------------------------------------------------

        The 19 Sea Grant colleges, institutions, and developing
    institutions that currently have a base funding level of less than
    $1,200,000 would receive the additional funds. These programs are:
    Connecticut, Delaware, Georgia, Illinois/Indiana, Maine, Michigan,
    Minnesota, Mississippi/Alabama, New Hampshire, New Jersey, Ohio, Puerto
    Rico, South Carolina, California (University of S. California),
    Massachusetts (Woods Hole Oceanographic Institution), Vermont,
    Pennsylvania, Guam, and Western Pacific.

                                     ______

                    Questions Submitted by Senator Herb Kohl

                         MEP FUNDING AND RECOMPETITION

        Question. Mr. Secretary, in addition to the drastic cuts to the MEP
    program, it appears only $29.6 million or 75 percent of the funding is
    going directly to grants to help small and medium sized manufacturers.
    The remaining $10 million is going to administration. When the MEP
    centers were funded at $106.5 million, $90 million or 85 percent of the
    funding was directed to MEP programs.
        It appears that there is a loss of efficiency coinciding with cuts:
    When the program was funded at $106.5 million, administrative costs
    were $16.5 million, as opposed to $10 million in administrative costs
    for a $39.6 million program. Can you provide me a breakdown on where
    the requested funding will be directed?
        Answer. By the end of fiscal year 2004, MEP staff will be reduced
    by 24 positions, from 51 to 27 while maintaining its function of
    overseeing the National manufacturing network. In addition, NIST
    institutional support activities previously supported by MEP will also
    be reduced, including an institutional support staff reduction of an
    additional 24 positions by the end of fiscal year 2004 (from 38 to 14).
    These staff reductions are expected to be accomplished through a
    combination of resignations, Voluntary Early Retirement Authority
    (VERA), buyouts, and Reduction-In Force (RIF). Remaining MEP staff will
    focus on center operations and center support. Center operations will
    focus on stewardship issues, such as panel and annual reviews, cost
    share approvals, and other compliance-related issues. This unit will
    also conduct a more limited level of program data collection and
    program evaluation. Staff conducting center support will focus on
    essential system-level functions, National accounts, partnership
    development, and a minimal manufacturing research component. All
    product development, marketing support, and most IT support will be
    discontinued. Manufacturing research, center and client impact
    evaluation, corporate university training of the system, and National
    sales are all being significantly scaled back.
        Question. In my state of Wisconsin, we lost 13,000 manufacturing
    jobs last year and, just last week, two more Milwaukee companies
    announced plans to send jobs overseas. We must fund initiatives that
    yield tangible results now, programs that help small- and medium-sized
    manufacturing firms, boosting productivity and increasing
    competitiveness as these firms face increasing pressure from global
    markets. We need to fund programs like MEP. Through MEP efforts, more
    than 35,000 manufacturing jobs were created or retained during the last
    fiscal year. MEP was recently selected by Harvard's Institute of
    Government Innovation as one of the Nation's ``most creative, forward
    thinking, results-driven government program.'' MEP has also just been
    named one of the 100 best resources for small businesses under the
    category of Operations by the BIZBEST 100 publication.
        MEP has worked, and worked well due to its decentralized but well
    coordinated networks. Offices are conveniently located such that
    business owners can take advantage of services without drastically
    increasing precious time away from their business. The local nature of
    the offices allows for flexibility and an ability to respond quickly to
    changing needs in different communities.
        I understand the Commerce Department is about to launch a major
    recompetition of the entire MEP program at a time when this program is
    sorely needed. I am concerned that a national recompete could bring
    serious harm to this critical program. In the interest of saving time,
    energy, and scarce resources, is it necessary that the recompete occur
    across all 400 MEP offices? Why not just focus on those centers that
    have not lived up to expectations? Should a nationwide recompete go
    forward, is it expected that MEP will continue to have a physical
    presence in all 50 states?
        Answer. Maintaining the National manufacturing network is a
    priority. Just as the 21st Century manufacturing needs are continuing
    to evolve, a recompetition of the network will allow MEP to effectively
    meet those new challenges with whatever funding levels Congress
    provides. Understanding the possible effect of a recompetition upon the
    Centers, for fiscal year 2004, MEP is exploring options for providing
    funding to all Centers in the network through the end of the fiscal
    year.

                            JOB LOSSES IN WISCONSIN

        Question. Most of the job losses in my state have been experienced
    in small- and medium-sized enterprises. Nationally, small- and medium-
    sized manufacturers account for 68 percent of all manufacturing jobs.
    These firms are the best source for manufacturing job creation--and
    these are good jobs--and these firms are far less likely to outsource
    jobs. I have heard from many constituents who are concerned that the
    Administration is focusing its efforts on large firms, leaving small-
    and medium-sized firms behind.
        There is a tension here between small and medium-sized
    manufacturers and large manufacturers. For example, there are well-
    respected critics of the ``Manufacturing in America'' report who say
    that this plan does not substantially make a difference for small and
    medium-sized firms. Do you agree that you have had to balance the
    interests of these two groups as you pursue initiatives to respond to
    the crisis facing our manufacturing sector?
        Answer. From the very beginning of the Manufacturing Initiative
    through today, the Department of Commerce has kept the interests of
    small- and medium-sized manufacturers (SMMs) foremost in developing
    policy recommendations for the challenges confronting U.S.
    manufacturing.
        As you may be aware, as an initial step, we organized roundtable
    outreach meetings to hear directly from U.S. manufacturers and
    manufacturing workers. The manufacturers attending these open meetings
    represented a broad mix of small- and medium-sized manufacturers, as
    well as minority-owned and women-owned enterprises. During these two-
    hour meetings, we had in-depth conversations with many such
    manufacturers and workers about their particular challenges and issues
    as distinct from larger manufacturers. In addition, as we developed the
    list of panelists for these roundtables, we took great care to balance
    the panel members by size of companies and manufacturing sectors. A
    majority of the panels were formed by SMMs.
        The views of SMMs are strongly represented in the ``Manufacturing
    in America'' report we developed. Chapter Two of this report is
    representative of the detailed input we received from SMMs as well as
    larger companies. The discussion of issues is representative of the
    diversity in sectors, size of companies and regions.
        The recommendations that we put forward in Chapter Three of our
    report continue this commitment. For example, we are creating an
    advocate for U.S. manufacturers in the Department of Commerce who can
    ensure that the voices of SMMs are reflected in USG policy-making.
    Moreover, we created a Manufacturing Council on April 4, 2004, which
    will be representative of small-, medium- and large-manufacturers. The
    Chairman and Vice Chairman have been selected, appointed, and
    announced. We anticipate completing selection and appointment of the
    members the week of May 24, 2004, or shortly thereafter. We expect to
    hold the inaugural meeting of the Council by the end of June. We hope
    this important body representing the interests of manufacturers
    institutionally in U.S. policy-making will enjoy longevity and maintain
    an established voice particularly for SMMs. Many other recommendations
    in the report are also of particular benefit to SMMs. For example, tax
    relief will be particularly helpful for our SMMs that operate as S-
    corporations and partnerships. Also, the establishment of Association
    Health Plans will afford small manufacturers greater leverage in
    negotiating the cost of health insurance with providers.
        Two programs of particular benefit to SMMs are the Small Business
    Innovation Research (SBIR) and the Small Business Technology Transfer
    (SBTT). We call attention to these programs and recommend that SBIR and
    SBTT place a higher priority on manufacturing R&D topics that would
    greatly leverage innovation in SMMs. We also focus on the MEP program
    and recommend ways in which that program can deliver greater benefits
    to SMMs by strengthening partnerships with other government programs.
        An owner of a small manufacturing company told us at our Milwaukee,
    Wisconsin roundtable that he, like other SMMs, does not have the
    resources to hire the lawyers to bring forward a dumping/countervailing
    duty case. Pursuant to the manufacturing initiative, we have created at
    the Department of Commerce an Unfair Trade Practices Task Force within
    the Import Administration. This team will take on the burden of
    proactively seeking out and addressing unfair trade practices. To help
    SMMs identify potential customers, we are also developing a Global
    Supply Chain Initiative. Through this initiative, we will help SMMs
    expand their reach and identify new customers they may not otherwise be
    aware of.
        As you can see, we focused significantly on the needs of small- and
    medium-sized manufacturers and will continue to bring resources to bear
    on their needs and challenges. I look forward to continuing this
    dialogue with you on such an important matter.

                    NEW ASSISTANT SECRETARY OF MANUFACTURING

        Question. While I have praised the Administration's efforts to
    organize a President's Manufacturing Council and appoint a new
    Assistant Secretary of Manufacturing, I am concerned that is taking so
    long to get these efforts off the ground. These initiatives were
    announced last September and I understand your staff has said not to
    expect anything before June--at the earliest. My constituents are
    understandably skeptical.
        Given the problems already facing the new Assistant Secretary of
    Manufacturing and the expected lag time, are there plans to place MEP
    under the jurisdiction of the Assistant Secretary of Manufacturing?
        Answer. There are synergies between ITA and MEP that we should use
    to provide better support to MEP's private sector clients. MEP and ITA
    staff are already working together to increase coordination. For
    example, our sectoral experts in the new Manufacturing and Services
    unit will benefit from enhanced coordination with NIST's technical
    experts. Similarly, our Commercial Service staff across the United
    States can help in marketing MEP's programs to the business community,
    particularly small and medium-sized business.

                    PATENT AND TRADE COMPLAINTS AND BACKLOG

        Question. I have had complaints from constituents about the backlog
    of manufacturers' complaints in both the Patent Office and the
    International Trade Administration concerning both patents and trade
    violations. We have heard stories from constituents regarding American
    manufactured products that have been copied, sometimes down to a
    stamped company emblem, and then produced overseas, undercutting the
    price of the original American producer. What is the Department doing
    to respond to these complaints? How soon can we expect reductions in
    the current backlog?
        Answer. The USPTO supports ITA in providing expert advice on trade
    dispute matters. Trade disputes are principally handled within ITA
    itself. The USPTO also responds proactively to trade issues through
    support of bilateral efforts undertaken by ITA, USTR, Customs, USDOJ,
    State and other agencies involved in IPR matters. We also provide
    support to training programs, which are intended to support foreign
    government's efforts to achieve WTO compliance. Through our
    participation in the National Intellectual Property Law Enforcement
    Coordination Council, we provide guidance on law enforcement matters
    involving intellectual property issues, including encouraging enhanced
    criminal enforcement. In certain instances, piracy and counterfeiting
    issues are attributable in part to delays and procedures by foreign
    patent and trademark offices themselves. Through office-to-office
    discussions as well as meetings in multilateral fora, such as the World
    Intellectual Property Organization, APEC/Intellectual Property Experts
    Group, and the United Nations Economic Commission for Europe, the USPTO
    encourages additional compliance with International standards.

                                     ______

                 Questions Submitted by Senator Robert C. Byrd

                     EMERGENCY STEEL GUARANTEE LOAN PROGRAM

        Question. President Bush's fiscal year 2005 budget proposes to
    rescind $35 million from the Emergency Steel Guarantee Loan Program.
    This rescission will effectively kill the program, despite the fact
    that Congress has extended the program for two more years, through
    December 31, 2005. In recent testimony before the Senate Budget
    Committee, OMB Director Bolten stated that the Department of Commerce
    was ``not planning to pursue rescissions from the steel loan guarantee
    fund.'' How does the Department reconcile this statement with the
    proposed rescission contained in the President's fiscal year 2005
    budget? How does the President reconcile this statement with its
    numerous prior pledges to support the U.S. steel industry?
        Answer. The Administration has supported a number of initiatives
    that have strengthened the steel industry, and will continue to do so.
    The statement of Director Bolten, to which you refer was made with
    regard to a rescission contained in the fiscal year 2004 omnibus
    appropriations bill. For fiscal year 2005, the Administration has
    proposed to fund the Emergency Steel Loan Guarantee Program (ESLGP) at
    a level of $17 million. Enactment of the Administration's proposal
    would provide sufficient money in the ESLGP's account to accommodate
    current and anticipated demand while also permitting funds to be
    utilized for other priorities. Nevertheless, we remain concerned
    regarding the effectiveness of the ESLGP. There has been a very low
    level of utilization of the program; during its existence, only three
    loans have closed with the benefit of a guarantee, and one of those has
    defaulted.

             WTO RULING ON CONTINUED DUMPING AND SUBSIDY OFFSET ACT

        Question. Congress included language in the fiscal year 2004
    omnibus appropriations bill, which directs the Administration to
    negotiate a solution to the World Trade Organization's (WTO) ruling
    against the Continued Dumping and Subsidy Offset Act. When will the
    United States present its negotiating position on this matter to the
    WTO? In report language accompanying the fiscal year 2004 omnibus
    appropriations bill, Congress directed the Administration to report to
    the Senate Appropriations Committee every 60 days on the progress of
    these negotiations. Given the Congressional directive to negotiate a
    solution to this matter, what is the Administration doing to initiate
    these negotiations? Can you confirm that the first update will be
    provided to the Appropriations Committee 60 days from enactment of the
    omnibus appropriations bill, which would be on or about March 23, 2004?
        Answer. The Administration has defended the Continued Dumping and
    Subsidy Offset Act of 2000 (CDSOA) throughout a long WTO dispute
    settlement process. The Administration has raised this issue in the
    context of the WTO's ongoing Doha Round of multilateral trade
    negotiations. Within WTO Rules Negotiations Group, we have raised the
    issue of WTO member's authority to distribute Anti-Dumping and
    Countervailing Duties. Consultations with the Congress on these and
    other trade negotiations are led by the Office of the U.S. Trade
    Representative and are ongoing.
        As required in Senate Report language, the Department of Commerce
    and the Office of the U.S. Trade Representative are consulting for the
    purpose of ensuring proper implementation of the requirements of U.S.
    law regarding negotiations over the distribution of antidumping and
    countervailing duties. The Administration intends to comply with all
    such requirements, including reporting requirements. The Administration
    will complete these consultations as soon as possible and will continue
    to work to advance Congressional objectives in the Doha Round
    negotiations.

                      SECTION 201 DUTIES AND STEEL IMPORTS

        Question. It is my understanding that the U.S. Commerce Department
    is considering whether to adopt a policy that would deduct import
    duties imposed under Section 201-203 of the Trade Act of 1974
    (``Section 201 duties'') from the U.S. price that is calculated in
    determining the margin of dumping in U.S. antidumping cases.
        This is an important issue that is critical to the future of many
    U.S. companies and workers who rely on the effective enforcement of the
    U.S. trade laws. Several of my constituents and other interested
    parties submitted comments to the U.S. Commerce Department in support
    of this deduction of 201 duties last year. I understand that Commerce
    currently has a large number of administrative reviews pending in which
    this issue has been raised.
        Is there any additional information that would assist the
    Department in deciding to endorse this policy of deducting 201 duties
    in antidumping duty cases? What will be the first case in which the
    Department will deduct 201 duties when calculating an antidumping duty
    margin?
        Answer. On April 6, Import Administration announced its decision
    not to treat safeguard tariffs (201 duties) as a cost in the dumping
    margin calculations.
        The issue was raised in several cases, including the ongoing
    administrative review of the antidumping duty order on stainless steel
    wire rod from South Korea. In this case, the U.S. importer, whose price
    to an unaffiliated U.S. buyer was used to calculate export price, was
    required to pay 201 duties. The petitioner argued that these tariffs
    constituted a cost that should be deducted from the U.S. price.
        In September 2003, the Department published a Federal Register
    notice requesting public comment on the treatment of 201 duties (and
    the related issue of whether to deduct countervailing duties) in the
    antidumping duty calculations. The Department received extensive
    comments from a variety of parties, including domestic producers, U.S.
    importers, U.S. consumers, and foreign producers.
        After fully and carefully reviewing the legal and policy questions
    involved in this issue, the Department concluded that the U.S.
    antidumping law does not intend for the deduction of safeguard tariffs
    from U.S. prices in calculating dumping margins.
        Although the law clearly requires the deduction of normal import
    duties for dumping calculations, the Department believes that safeguard
    tariffs cannot be considered import duties. These tariffs are imposed
    only under special circumstances for the express purpose of providing
    relief from serious injury due to increased imports. Deducting
    safeguard tariffs from the export price in calculating dumping margins
    would effectively increase the safeguard remedy; in some cases
    providing a double remedy. Further, it would create a situation where
    fairly traded imports could become liable for antidumping duties simply
    due to the imposition of safeguard tariffs.
        The Department's decision on this issue is articulated in our
    Notice of Final Results of Administrative Review/Decision Memorandum,
    which may be found on Import Administration's website:
    www.ia.ita.doc.gov.
        Question. On December 4, 2003, the White House Office of
    Communications issued ``The President's Determination on Steel,'' which
    stated that President Bush ``is committed to America's steel workers
    and to the health of our steel industry.'' It also stated that,
    ``[s]teel import licensing, established when the safeguard measures
    were imposed, will continue to provide WTO-consistent data collection
    and monitoring of steel imports. This will enable the Administration to
    quickly respond to future import surges that could unfairly damage the
    industry.''
        The President's Proclamation of the same date similarly stated that
    ``the licensing and monitoring of imports of certain steel products
    remains in effect and shall not terminate until the earlier of March
    21, 2005, or such time as the Secretary of Commerce establishes a
    replacement program.''
        Secretary Evans, you made several comments to the media on December
    4, 2003, regarding your commitment to the U.S. steel import monitoring
    and licensing system and indicated that it would be expanded to include
    steel products that were not subject to 201 tariffs and quotas. I want
    to be certain that you remain fully committed to this effort. Could you
    please advise me as to whether the Commerce Department has a plan to
    expedite the adoption of these expanded regulations? Could you also
    please advise me as to when the Commerce Department intends to request
    public comment with respect to its new import monitoring and licensing
    system? When would you estimate that it will be up and running? What
    assurances can you provide that the system will be operational by that
    date?
        Answer. The Commerce Department is continuing to monitor closely
    the imports of those steel products for which the President implemented
    import relief pursuant to Section 201, as well as general market
    conditions. As a result, accurate information regarding such imports is
    being made available to the public on an expedited basis. We have been
    meeting with representatives of the steel industry and other
    stakeholders to get their input on improvements to the current system.
    The Administration is continuing to evaluate possible modifications to
    the current system and will ensure that it remains an effective
    monitoring tool.
        Question. The U.S. Commerce Department currently does not pursue
    trade remedies under our countervailing duty law against non-market
    economies like China even though: (1) the U.S. negotiated subsidy
    disciplines with China as part of its accession to the WTO; (2) the
    United States has worked to see that China participates in the ongoing
    OECD steel subsidy negotiations; and (3) USTR reports various
    agricultural industries are experiencing ongoing export subsidies by
    China. Can you tell me whether the Commerce Department is reexamining
    this issue? If not, why not?
        Answer. Commerce does not currently apply the CVD law to non-market
    economies, and this practice has been upheld in the courts in
    Georgetown Steel Corp. v. United States. In that case, the court
    affirmed Commerce's view of NME's as devoid of the kinds of market
    benchmarks necessary to identify a subsidy. Congress enacted
    substantial amendments to the CVD law in 1988 and 1994 without
    disturbing Commerce's practice in this area.
        The Department recognizes that the reasoning underlying the
    Georgetown decision may not apply to China today to the extent that it
    did 20 years ago. However, applying the CVD law to non-market economies
    would raise complex issues of policy and methodology that the
    Department has not fully considered, including implications for
    antidumping policy and practice. Any such shift away from 20 years of
    trade practice should therefore only be implemented after careful
    consideration and review.

                               U.S. DUMPING LAWS

        Question. Concerns exist about the adequacy of existing practices
    in administering the U.S. antidumping duty law against imports from
    NMEs, but particularly China. With the extraordinary trade deficit that
    the United States is running with China, can you provide details of
    what changes in the administration of the U.S. dumping law are being
    considered for NME cases and when the agency will be implementing such
    changes?
        Answer. The Department will be giving priority attention to issues
    related to trade with China, which has been the object of a significant
    number of trade complaints. In fact, during the last three years, we
    have initiated more antidumping investigations and issued more
    antidumping duty orders against products from China than any other
    country, more than twice as many as the next leading country. In 2003,
    more than 50 percent of all new antidumping orders put in place were
    against China (8 of 15 total orders).
        The Department will soon establish an office that will focus on
    cases involving Chinese imports, further cultivating the expertise
    necessary to address the unique problems encountered in that market.
        We have developed practices that allow us to more rigorously
    examine requests for new shipper reviews before initiation, and to
    continue to scrutinize eligibility for the reviews after initiation. As
    a result of these practices, in 2003, we declined to initiate
    approximately one-third of all new shipper requests, and we rescinded
    the initiation of several new shipper reviews. We have also increased
    our scrutiny of fraud and circumvention issues in the context of new
    shipper reviews. In addition, we are working closely with U.S. Customs
    and Border Protection to ensure that adequate financial security is
    provided in connection with merchandise imported during new shipper
    reviews and that--if our initiation of a new shipper review is
    ultimately rescinded--we will be able to require in appropriate cases
    that interest be assessed on merchandise imported during the review.
        Single DAS for AD/CVD Operations: By placing all antidumping and
    countervailing duty case work under a single Deputy Assistant Secretary
    for Operations, we will facilitate case specialization.
        Unfair Trade Practices Team: A new Unfair Trade Practices team will
    report to the DAS for Antidumping/Countervailing Duty Policy &
    Negotiations. This new unit will strengthen the Department's ability to
    advance U.S. trade policies and negotiations and address the root
    causes of unfair trade.
        Efforts to Address Possible Fraudulent Activity: We have been
    developing more expertise within the Department on how to uncover
    potentially fraudulent activities, and through the Bilateral Task Force
    with the Bureau of Customs and Border Protection and the Bureau of
    Immigration and Customs Enforcement, we are developing new procedures
    for sharing information that will help us identify problems earlier and
    deal with them more effectively. For example, we now regularly request
    samples of actual entry documentation from Customs to compare with the
    documentation submitted by the foreign respondent or obtained at
    verification to ensure that the same documentation is provided to both
    agencies. We also conduct independent research into the foreign
    respondent's ownership, as well as the U.S. importer's ownership, to
    determine whether the information about affiliations is accurately
    reported in the questionnaire responses.

                              SUBCOMMITTEE RECESS

        Senator Gregg. This subcommittee will convene next Tuesday,
    to hear from the Attorney General. We are recessed.
        [Whereupon, at 11:19 a.m., Tuesday, March 2, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2005

                                  ----------

                            TUESDAY, MARCH 23, 2004

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:28 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg and Kohl.

                             DEPARTMENT OF JUSTICE

                        Federal Bureau of Investigation

    STATEMENT OF ROBERT S. MUELLER, III, DIRECTOR

                     OPENING REMARKS OF SENATOR JUDD GREGG

        Senator Gregg. We will begin the hearing. It is my
    understanding that, unfortunately, Senator Hollings had a close
    friend pass away and so he is not going to be able to be in
    attendance today. No other members are planning to be here.
        This hearing will have two panels. The first will involve
    the Federal Bureau of Investigation (FBI) Director and the
    second will include the Inspector General of the Department of
    Justice and also two members of the GAO who have spent a
    considerable amount of time working on issues that are related
    to national security and counterterrorism and the Bureau
    specifically.
        We very much appreciate your coming here today, Director,
    and we congratulate you for the effort you have made and the
    successes you have had. America has not been attacked since 9/
    11, almost 2 years, and that is an impressive record. In part,
    a lot of it is due to the efforts of the FBI's counterterrorism
    capabilities and your focus on this issue. Having arrived a
    week before 9/11, you had a lot on your plate very quickly and
    you have certainly tried to address it in a very aggressive
    way.
        The FBI has always been a law enforcement agency, a
    reaction agency by definition, one which sees a crime and then
    solves it. Yet, the role of the FBI has changed fundamentally.
    Instead of being a reactionary agency, it is now a preemptive
    agency which has to anticipate an event, find out when the
    event and who the perpetrators of the event might be, and stop
    the event before it occurs, which is extremely difficult. It
    involves counterterrorism and counterintelligence at a level
    that has never been exercised before domestically, maybe during
    World War II, but certainly not at this level.
        So there has been a huge adjustment for the FBI and we all
    recognize that. This committee has tried to be of assistance as
    the FBI has gone through the adjustment in changing the
    culture, changing the structure, changing the technology, and
    we want to continue to be of assistance.
        But we do have concerns, which I know you are familiar
    with, and today's hearing is going to address the areas where
    those concerns take priority. The first is the issue of the FBI
    adjusting from being a police agency, a reactive agency, to
    being a proactive intelligence agency and the change of the
    culture, whether or not the manpower adjustments have
    resulted--have accomplished what you thought. It is a concern
    of this committee that there are still too many people who are
    only temporarily assigned to counterterrorism who come out of
    different divisions of the FBI and the numbers that you hope to
    meet haven't yet been fulfilled in the area of getting the
    Counterterrorism Division up and running.
        The second area is the issue of technology, very serious
    issues which we recognize with the operational aspects,
    especially bringing online Trilogy. It is $200 million over
    budget right now. Unfortunately, the hardware and the software
    do not appear to have been made operable. We are also concerned
    about the delay, whether there is a plan for the future and
    enterprise architecture that works, and also, obviously, the
    cost.
        Trilogy is one area. Another area is the IAFIS
    interrelationship with the IDENT program at the Department of
    Homeland Security and the question of how people coming into
    the country are identified and whether the database that we
    paid for can be adequately used by people coming into the
    country.
        And the third major area is this issue of communications
    between different agencies which have responsibility for
    counterterrorism, the relationship with Homeland Security, the
    relationship with CIA, the relationship with the Defense
    Department. The setting up of these various cross-agency
    initiatives and how they are working and where they can be
    improved is a major concern and has been for many years, long
    before 9/11, ironically, of this committee.
        I would, just for the sake of refreshing people's
    recollection, and I am sorry Senator Hollings isn't here
    because he has been on this committee now for over 30 years and
    he has overseen this agency, the Bureau, for over 30 years and
    played a major role in trying to get the issue of how we
    address the Justice Department question of terrorism and
    fighting terrorism up and coming long before 9/11. This
    committee was the initial energizer for trying to get an
    orchestrated approach toward fighting terrorism in the Justice
    Department. We were resisted, regrettably, by the prior
    administration in that effort when we tried to set up the
    National Domestic Preparedness Office (NDPO) and a number of
    other initiatives.
        But the bottom line which we always were stressing was lack
    of communication between various agencies and the inability of
    people who have concerns, the first responders, to get the
    information they need quickly. We continue to be concerned
    about that.
        With that as a background, Director, your statement will be
    made part of the record. I would be happy to get your input and
    then we can go on to questions.
        Mr. Mueller. Thank you, Mr. Chairman. I know you asked for
    it and you will get a brief statement. I do want to start
    before giving my opening remarks, I do want to thank you for
    your leadership in this committee, for the leadership of
    Senator Hollings and for the strong support that you have
    accorded the FBI, certainly during my tenure and even before
    that time.
        I will tell you that the funding that you have committed to
    the Bureau has been critical to our mission and to our efforts
    to transform the FBI in the wake of September 11. As you have
    indicated, our mission has changed dramatically since September
    11 and our budget figures reflect this change.
        As you, I believe, have requested, I am going to focus on
    three areas in my short remarks. I want to talk for a moment
    about training, second, about management, and third, about
    information technology.

                                    TRAINING

        Turning first to the training, for us to go through a
    period of transformation such as we have and to continue to go
    through that transformation, we need relevant and timely and
    effective training. Since the terrorist attacks of September
    11, the new agents' curriculum has been completely revised.
    Counterterrorism and counterintelligence training is now woven
    into every facet of our new agents' training. Indeed, an
    additional week of training has been added in order to
    accommodate the expanded curriculum.
        Our counterterrorism modules now include financial
    investigative techniques, source development strategies,
    terrorist groups and domestic terrorism. We have also developed
    a number of practical problems that have greatly enhanced our
    counterterrorism training. For example, we have developed a
    white collar practical set of problems focusing on terrorist
    fundraising. This enables new agent trainees to experience one
    of the areas, means, and techniques of identifying and
    dismantling terrorist networks before they can strike.
        Of course, we also include practical problems where the
    trainees must respond to terrorist events, such as an anthrax
    attack or an attack involving a substance such as cyanide. In
    the past, our practical exercises have focused primarily on
    criminal applications, such as bank robberies and kidnappings,
    and while these remain an important part of our program, we
    have refocused our training efforts to address our number one
    priority of protecting the United States against a terrorist
    attack.
        We also have expanded our legal instruction to include
    application of the PATRIOT Act, the Attorney General
    guidelines, the Foreign Intelligence Surveillance Act law, as
    well as the impact of the Fourth and Fifth Amendments,
    particularly in the context of overseas investigations.
        As well, we now provide cultural diversity training,
    including a block of instruction on Middle Eastern culture and
    values to our new agents.
        Working with our partners in the intelligence community, we
    have developed a curriculum to provide relevant training for
    our analysts. In fiscal year 2003, the FBI's new College of
    Analytical Studies provided training to 880 analysts during 89
    analytical training sessions, a substantial increase from the
    193 analysts and 10 courses provided in fiscal year 2002.
        And last, in the past year, working with the Kellogg School
    of Management at Northwestern University, we educated our
    executive staff on the FBI's intelligence mission, and to date,
    approximately 250 FBI executives and senior managers have
    received management training at the Kellogg School.

                                   MANAGEMENT

        Let me turn to the second piece, and that is the questions
    and concerns you have about the ability of the FBI to adapt to
    change. The FBI has always risen to the challenge and adjusted
    to meet the intelligence and law enforcement needs of the
    American people. From organized crime to civil rights, from the
    savings and loan crisis to espionage, from the war on drugs to
    the war on terror, the men and women of the FBI have
    demonstrated the strength, demonstrated the flexibility, and
    demonstrated the enthusiasm to get the job done.
        The September 11 terrorist attacks further defined the need
    for the FBI to remain flexible, agile, and mobile in the face
    of the threats to the homeland. As a result, we refocused our
    mission and shifted priorities. We realigned our workforce to
    address our new priorities. We restructured management
    responsibilities at headquarters. And we developed projects to
    re-engineer our internal business practices and processes.
        Mr. Chairman, the FBI's commitment to hard work, integrity,
    and dedication to protecting the United States is precisely the
    attribute a workforce needs to embrace and implement the
    transformation demanded of it. This is especially true in
    today's FBI, where crimes as diverse as terrorism, corporate
    fraud, identity theft, human trafficking, trafficking in
    illegal weapons, and money laundering reach across global
    boundaries.

                             INFORMATION TECHNOLOGY

        Last, let me return for a moment to the challenge of
    information technology. As this subcommittee is well aware,
    providing appropriate training and workforce flexibility is
    only part of the solution. Today, more than ever, the FBI's
    successes rely upon having integrated information technology
    systems. This past year, we improved our data warehousing
    technology to dramatically reduce stovepiping and cut down on
    man-hours that used to be devoted to manual searches.
        As an example, during the Super Bowl earlier this year,
    data warehousing tools were used to conduct over 65,000 queries
    in 3 days. In the past, an analyst would have worked 3 months
    to accomplish this task. We have made strides in information
    technology, but as I am sure we will discuss, we have a ways to
    go.
        We have not been able to fully implement all aspects of
    Trilogy because of delays with the Government contractor
    regarding the deployment of Full Site Network Capability. This,
    in turn, has delayed our ability to deploy the Virtual Case
    File. And no one is more disappointed about this than I am.
    However, we are working closely with the contractor to ensure
    that we have the network Full Site Capability by this summer
    and the program is ongoing now and it is promising, but I know
    the subcommittee has questions regarding the Trilogy program.
        In the interest of time, I will conclude at this point and
    be happy to respond to any questions that you may have, Mr.
    Chairman.

                               PREPARED STATEMENT

        Senator Gregg. Thank you. Thank you for being concise and
    giving us a chance to ask you some questions.
        [The statement follows:]

                  Prepared Statement of Robert S. Mueller, III

                                  INTRODUCTION

        Good morning Mr. Chairman, Senator Hollings, and members of the
    Subcommittee. Before I begin, I want to take a moment to thank you for
    your leadership and strong support of the FBI. The funding you have
    provided has been critical to our mission and our efforts to transform
    the FBI. Over the past two and a half years, we have moved from an
    organization that was primarily focused on traditional criminal
    investigations to one that is actively investigating and disrupting
    terrorist operations. I welcome the opportunity to come before you
    today to discuss this transformation and specifically address three
    areas that have been key to it--information technology, management, and
    training.

                                    TRAINING

        Training is essential for the FBI to achieve its strategic goals.
    It is the basis for the success of each individual employee, from
    Special Agents to analysts, and for the FBI as a whole. As threats
    based on terrorism and technology increase, the FBI must prepare its
    employees to meet these threats by providing high-quality training. The
    cornerstone of this training is the FBI Academy at Quantico, Virginia.
    As you know, new agents complete a 17-week training program at the FBI
    Academy. All analysts receive training at the College of Analytical
    Studies, also located at Quantico. In addition, the FBI provides
    training to state, local, and international law enforcement officials
    at the National Academy and hosts numerous training conferences.
        Over the past few years, the FBI has made significant progress in
    improving the training we provide to agents, support personnel, and our
    law enforcement partners.
        To prepare Special Agents to meet our highest priority--terrorism
    prevention--our Counterterrorism modules now include financial
    investigative techniques, source development strategies, terrorist
    groups, and domestic terrorism. We have also developed a number of
    practical problems that have greatly enhanced our counterintelligence
    and counterterrorism training. For example, we have developed white-
    collar practical problems focusing on terrorist fundraising that
    enables New Agent trainees to experience one of the means of
    identifying and dismantling terrorist networks before they strike. Of
    course, we also include practical problems where the trainees must
    respond to a terrorist event such as the release of cyanide or anthrax.
    In the past, our practical exercises focused exclusively on criminal
    applications, such as bank robberies and kidnappings. While these
    remain an important part of our program, we have refocused our training
    efforts to address our number one priority of protecting the United
    States against terrorist attack.
        We established the College of Analytical Studies (CAS) in October
    2001 to provide analysts with a formal training program in support of
    our counterterrorism mission. The CAS includes a basic course of six
    weeks for FBI analysts, as well as Joint Terrorism Task Force (JTTF)
    analysts, who may be Department of Justice (DOJ) employees, state and
    local law enforcement officials, or analysts from other federal
    agencies. The CAS trained 880 students in fiscal year 2003--a four-fold
    increase over the 193 students in fiscal year 2002.
        The FBI also provides training to its state, local, and
    international partners through the National Academy, the National
    Executive Institute, and the Law Enforcement Executive Development
    Seminar. In addition, we have partnered with the Department of Justice
    to provide a comprehensive ``Train the Trainer'' program, at the FBI
    Academy, to teams of agents from each FBI field office. After
    completing their training, these teams will train state and local
    police officers in their territory on pre-incident awareness,
    preparation, and prevention in the areas of antiterrorism and extremist
    criminal activity. The goal is for each FBI field office to train 120
    police officers per quarter, resulting in the annual training of at
    least 26,800 first responders in basic CT. As of March 9, 2004, one
    ``Train the Trainer'' course had been taught, and a second was offered
    last week, resulting in certification of approximately 55 trainers.
    Through the University Education Program (UEP), we are providing
    funding for employees to pursue advanced degrees in critical skills
    areas as identified by the FBI's list of priorities. This will allow
    FBI employees to readily adapt to changes in mission and keep pace with
    rapid advances in technology. In fiscal year 2004, 147 employees were
    approved to work toward their degrees. Eighty-four are pursuing master
    degrees or Ph.D.'s. We have also invested in executive management and
    leadership training, developed by the Kellogg School of Management in
    Chicago. Approximately 250 Senior Executive Service (SES) managers have
    already received training at the Kellogg School.
        Although the FBI Academy at Quantico supports a tremendous amount
    of the training the FBI provides, it is over 30 years old and not in a
    condition conducive to 21st century training. It has become clear that
    a substantial investment is needed in our infrastructure now in order
    to prevent further deterioration. The fiscal year 2005 President's
    budget request includes $21.3 million in nonpersonnel funding in order
    to renovate the FBI Academy and provide for operations and maintenance
    of the facility, so we can ensure the future of law enforcement has the
    best possible training environment.

                             INFORMATION TECHNOLOGY

        We have made substantial progress in the information technology
    (IT) area since I arrived at the FBI in September 2001, eight days
    before the terrorist attacks of September 11th. At that time, the FBI's
    technology systems were several generations behind industry standards,
    existing legacy systems were approaching 30 years old. IT equipment was
    inadequate. For example, our personnel were working on hand-me down
    computers from other federal agencies. We had little to no Internet
    connections in our field offices, and our networks could not do
    something as simple as transmit a digital photo.
        Much of the progress the FBI has made on the investigative front
    rests upon a strong foundation of information technology. Nearly 500
    counterterrorism and counterintelligence FBI Headquarters employees
    have been provided with access to Top Secret/Sensitive Compartmented
    Information (TS/SCI) at their desks. We implemented the Wide Area
    Network on schedule in March 2003. We improved data warehousing
    technology to dramatically reduce stove piping and cut down on man-
    hours that used to be devoted to manual searches. We have deployed
    nearly 30,000 new computers for FBI Headquarters and field offices.
        Following the September 11th terrorist attacks, we were required to
    make an in-depth assessment of our information technology systems. This
    assessment determined that we needed to address some key areas
    including the lack of databases that contained current information,
    limited analytical tools, continual dependency on Automated Case
    Support (ACS), and outdated equipment.
        I have taken specific steps to address our deficiencies in
    information technology. I made it a top priority that we establish
    required databases and develop analytical tools. In a post-Robert
    Hanssen environment, it was critical that we implement new security
    protocols. I also completely replaced the management team responsible
    for Trilogy. I brought onboard a new Chief Information Officer (CIO),
    as well as a project manager from the IT community to monitor the
    progress of the project.
        As you know, during the past year we encountered some setbacks
    regarding the deployment of Full Site Capability (FSC) and the Virtual
    Case File, and we are moving quickly to address them. We are working to
    resolve each issue, and will continue deployment throughout the
    country.
        I believe that we are now on the right track, and we are closing in
    on the goal of completion. We are being diligent in our efforts to
    complete this project within the resources available, and I am
    committed to ensuring the successful completion of this project.
        For fiscal year 2005, the FBI requests increases of $20 million in
    technology investments to continue moving forward. A portion of these
    resources will allow the FBI to install the TS/SCI Operational Network
    in up to 10 field offices and add users to the Headquarters TS/SCI
    Local Area Network (LAN). Expanding the TS/SCI network will provide
    every agent and analyst with classified e-mail and message delivery, as
    well as an electronically searchable archive on their desktop. I will
    continue to seek your help and support as the FBI moves forward into an
    increasingly high-tech future.

                                  FBI CULTURE

        The culture of the FBI is now--and always has been--a culture of
    hard work, integrity, and dedication to protecting the United States,
    no matter what challenges we face. The FBI was created 96 years ago to
    fight the spread of traditional crime across county and state lines.
    Today's FBI faces a world in which crimes as diverse as terrorism,
    corporate fraud, identity theft, human trafficking, illegal weapons
    trade, and money laundering traverse easily back and forth across
    international boundaries. Today, we are dealing with organized crime
    groups that launder money for drug groups, which sell weapons to
    terrorists, who commit white-collar crime to fund their operations. In
    the wake of the September 11, 2001, attacks, it became clear that the
    FBI must be more flexible, agile, and mobile in the face of these new
    threats. As a result, the FBI has: refocused its mission and revised
    its priorities; realigned its workforce to address these priorities;
    shifted its management and operational environment to strengthen
    flexibility, agility, and accountability; restructured FBI
    Headquarters; and undertaken dozens of projects aimed at reengineering
    our internal business practices and processes.
        We are building a workforce for the future by: expanding the FBI's
    applicant base for critical skills and diversity; updating new agent
    training to reflect our revised priorities; establishing new career
    tracks for counterterrorism, counterintelligence, cyber, security, and
    for analysts; and improving management and leadership development.
        We are modernizing FBI technology by implementing Trilogy and
    developing cutting-edge technology. We have opened and strengthened
    lines of communication between the FBI and our partners in the federal,
    state, local, and international law enforcement and intelligence
    communities. We amended our original core values to accountability for
    our actions and leadership through example--both at work and in our
    communities.
        In short, we have overhauled the FBI, transforming it into a
    stronger, more flexible, more proactive, and more modern organization,
    better equipped to confront the myriad of threats we face in a post-
    September 11th world. We will continue to evolve and make comprehensive
    changes in the overall structure, organization, and business practices
    of the FBI to ensure that we remain the very best law enforcement and
    intelligence agency in the world.

                                   CONCLUSION

        We have made great progress, but our work is not yet finished. The
    FBI has a duty to protect the United States, secure freedom, and
    preserve justice for all Americans. The FBI has always answered--and
    will always answer--this call with fidelity, bravery, and integrity.
    The men and women of the FBI work tirelessly each and every day to
    fulfill the FBI's mandate to protect the United States. With the
    support of this Subcommittee, we can give the men and women of the FBI
    the resources they need to carry out their mission.
        Thank you.

                                TRILOGY PROGRAM

        Senator Gregg. Let us start where you ended, which is a
    tangible item. Some of the other issues of culture and
    interchange between various agencies of information are less
    tangible, but let us begin with the Trilogy program and the
    problem.
        This committee has dedicated a massive amount of dollars
    and a huge amount of time to trying to assist the Bureau in
    getting this right, and yet it continues to not work. It is
    $200 million over budget, months, literally years, really, out
    of sync on its timetable. The problem, as you mentioned, is
    that the onsite capability hardware didn't work, and hasn't
    been brought online on time and the software, Virtual Case
    File, first round, I guess, was declared to be ineffective.
        Now we have got a new time line and a new date to have the
    onsite capability up and running. Virtual Case File appears to
    be still very much a question. And there doesn't appear to be
    an enterprise architecture plan, something that looks into the
    future and says, this is where we are going with all this
    technology.
        I guess the first question is, give us specifics as to when
    you expect this to work. Second, I understand that one of our
    problems is that we basically have had contracts which haven't
    put penalties in place and now there is some penalty language.
    Tell us what the penalty language is and how it is going to
    create an enforcement of both the Virtual Case File and the
    onsite capability language and what the game plan is for an
    enterprise architecture plan.
        Mr. Mueller. If I could, Mr. Chairman, reflect a bit on the
    history of the program, and I understand this committee's
    concern. But by way of history, the----
        Senator Gregg. I think we should start by making it clear
    to those who may be listening that the purpose here was to give
    the agent, all agents, the ability to have access to the
    database in real time that would be extremely usable and user
    friendly and would be almost an off-the-shelf capability to
    allow them to have a computer at their desk where they could
    communicate with each other and we wouldn't have things happen
    like happened prior to 9/11.
        Mr. Mueller. Absolutely. And if I can, let me just start
    with a history. Then I will focus on the specific questions you
    asked, not the least of which, what is the bottom line? When do
    you expect this to go online?
        But going back a little bit of the history. As, Mr.
    Chairman, you pointed out, contracts were entered into early on
    speedily without the language that perhaps we would have liked
    in retrospect and there were two contracts. One was for
    basically the hardware side of the house and the other was for
    the software side of it. These were let in the year 2001, prior
    to September 11.
        After September 11--and the contracts proposed a certain
    revamping of the archaic, and I have to say archaic,
    information technology infrastructure of the FBI. But what was
    proposed in the contracts prior to September 11 was not what
    the Bureau needed in the wake of September 11.
        And when we did a review in the wake of September 11 as to
    what we would get as a Bureau from these two contracts, we
    realized they were lacking in a number of ways, the principal
    area of which was a tremendous concern to me was that given
    what Trilogy proposed, we were to retain exactly the same
    database structure that we had had before but put a graphical
    user interface or a web-based interface on it, and retaining
    that database would preclude us from doing exactly what you
    have intimated, having a database that would be accessible to
    all and upon which would sit the search tools that would help
    not just our analysts, but all our agents and support staff.
        So we made changes to Trilogy in the wake of September 11.
    I think you are aware of those changes. They cost substantial
    additional sums of money, but they are, I believe, well spent.
        Over a period of time, you could look at Trilogy and the
    four areas of upgrade. The first is the hardware deployment.
    Before September 11, the computers that were on the desks of
    many agents were, 486s, rejects from the Department of Defense.
    Part of the contract was to replace all of these computers. In
    the last 2 years, we have replaced anywhere from 28,000 to
    30,000 computers for all of our agents and our support staff.
    So the first part was the hardware, replacing the computers,
    the printers, scanners, and the like.
        The second part was the Local Area Networks and Wide Area
    Networks. We have 622 sites around the United States,
    everything from a one- or two-person resident agency to the New
    York Field Office. Part of the program was to replace the Local
    Area Networks and the Wide Area Networks. The same contractor
    that had the responsibility for the upgrades, which I will talk
    about in a moment, had the responsibility for completing, or
    not completing, that on schedule and that was completed on
    schedule March 28, in fact, a couple days before schedule, last
    year. That is the backbone, the Local Area Networks and the
    Wide Area Networks.
        The third piece was the upgrade of those computer operating
    systems, what we call a full site capability, which was to be
    completed in October of last year. We came to find out that the
    contractor could not do it. We are in the process of doing it
    now. My expectation is that that will be done by May of this
    year. We have migrated over 25,000 users from the old operating
    system to the newer operating system on which you can place the
    Virtual Case File.
        And last, Virtual Case File. We are now negotiating with
    the contractor who has the responsibility for Virtual Case File
    on the date of completion of that and changes that we had
    wanted to improve its capability. My expectation is that
    sometime, and I can't get a firm date, after we finish with the
    full site upgrade at the end of April, beginning of May of this
    year, it will take another 2 months probably to go and get
    Virtual Case File on board.
        Let me, if I could, just make another point about where we
    will be when we do get Virtual Case File. I had a very real
    concern when I looked at where the Bureau was going in the wake
    of September 11 as to what would be the appropriate mechanism
    for the Bureau to upgrade its capabilities, its investigative
    capabilities for all agents, and there basically were two
    options. One is, take something off the shelf and modify it.
    Another one is to develop our own set of procedures or our own
    software using contractors and the like, but adopt and build a
    software capability that would be usable, user friendly, and
    transform the Bureau.
        I have had a number of persons outside the Bureau look at
    the decision to develop our own, persons, I call them the gray
    beards, who are from a number of private concerns who would
    look at the choice we have made and the product we have come up
    with. I think the reviews are very good for the product we have
    come up with.
        The last point I would make, Mr. Chairman, is that in
    transforming the upgrade to Virtual Case File, while it
    absolutely has its risks, as we complete this process, we will
    upgrade not only the computers, and our investigative
    capability, but also will change the way we have done business
    for 95 years of our existence, going from a paper-driven
    organization to a digital organization.
        It has cost money. There have been delays. There have been
    mistakes that I have made. There have been areas where I could
    have moved faster and there are areas where I urged people to
    move faster that have rebounded and tended to produce a delay
    as opposed to the speed that I had requested. But I do believe
    we are on track. I do believe that we will have a state-of-the-
    art system when we are through.
        Senator Gregg. What penalties do you have in place to
    enforce the April 30 deadline on Full Site Capability?
        Mr. Mueller. If either the costs or the schedule are
    missed, there will be no award fee, which is in the sum of $5
    million, and the FBI and the contractor will pay 50 percent
    each of any cost overruns past that date.
        Senator Gregg. And how about with the Virtual Case File, if
    it doesn't work? The first Virtual Case File just didn't work.
        Mr. Mueller. Well, there were glitches in it. I wouldn't go
    so far as to say it didn't work.
        Senator Gregg. Well, the GAO said it. The Inspector General
    said it didn't.
        Mr. Mueller. Yes. We are negotiating with the contractor
    right now. We are in the course of negotiations with the
    contractor on the date and the cost.
        Senator Gregg. I hope there will be some sort of an
    enforcement mechanism in that contract, too, because I think
    one of the things we have learned is that without penalties and
    without enforcement mechanisms, we just end up with the
    taxpayers paying huge cost overruns here.
        Mr. Mueller. I am in hearty agreement.
        Senator Gregg. The enterprise architecture concept of a
    plan for the future, you didn't address that. That was part of
    my question.
        Mr. Mueller. Yes, and I apologize for not having embraced
    that in my remarks. As I believe you are aware, I had my Chief
    Information Officer (CIO), a very experienced individual, from
    July 2002 through May 2003. Quite obviously, one of the
    challenges for him was the enterprise architecture. I
    understand the necessity for it, the need for it. He left in
    May 2003. I hired Zalmai Al Azmi, who is here today in November
    2003, after an extensive search. One of the first things on his
    plate was the architecture. We have just in the last few days
    entered into a contract to have the architecture developed and
    we expect that by the end of the year, the first phase of that
    will be done.
        In the meantime, I have given Zalmai Al Azmi the
    responsibility for approving any IT project as well as the
    funding for any IT project. As anybody who has reviewed the FBI
    has known, we have been stovepiped over the many years. We have
    had any number of IT projects grow up to meet a particular need
    and there has not been an overarching architecture. By placing
    the responsibility for both the funding as well as the
    development of projects in his shop, as well as developing or
    contracting to have the architecture developed on a very short
    timeframe, I think we are moving to address that.
        Senator Gregg. I have a number of other questions, but I
    want to yield to the Senator from Wisconsin.
        Senator Kohl. Thank you, Senator Gregg.
        Director Mueller----
        Mr. Mueller. Senator.

                            TRANSPORTATION SECURITY

        Senator Kohl [continuing]. In lieu of the recent terrorist
    attacks at four train stations in Madrid, the security of our
    own mass transportation system has been called into question.
    Yesterday, Secretary Ridge announced a new plan to secure our
    rail system. This effort would include rapid deployment teams,
    which could be deployed to vulnerable rail systems and stations
    with bomb sniffing dogs. In addition, the Department of
    Homeland Security will accelerate a pilot program to test
    equipment for screening passengers and luggage for explosives.
        How much confidence do you have in the effectiveness of
    this proposal to protect against terrorist attacks? How long do
    you believe it will take to get this program up and running?
    And what role will the FBI be playing to help protect the
    transportation infrastructure, Director Mueller?
        Mr. Mueller. The plan proposed by the Department of
    Homeland Security will go some ways in hardening our
    transportation, the rail transportation. I will tell you that
    in the past, even prior to the announcement of the new
    initiative yesterday from the Department of Homeland Security,
    the Department of Homeland Security, ourselves, and others have
    worked closely with both the railroads, but most particularly
    with the subway systems, particularly New York, Washington, DC,
    Boston, Los Angeles, and Chicago, to assure heightened
    protection of those particular targets.
        So as to the first part of the question, yes, the new
    initiative yesterday will go some ways again to deterring
    terrorists from attacking the rail systems because of the
    heightened security. We have learned, both from our experience
    from gathering information from around the world and more
    particularly from our discussions with detainees who are
    familiar with al Qaeda's thinking that enhanced deterrence
    deters terrorist attacks and they look for the softer targets,
    so yes. Yesterday is yet another step in protecting the rail
    systems as well as the subways, but the fact of the matter is,
    while it goes some substantial ways, one cannot have a failsafe
    system, as we saw in Madrid 2 weeks ago.
        So yes, we are protecting the subways in the various cities
    I mentioned in conjunction with the transit authorities and the
    local police, but it is not a failsafe system. As we develop
    these proposals, we work with the Department of Homeland
    Security to assure that we have the integrated response to
    assure that whatever threat information we have is immediately
    passed on to not only the Department of Homeland Security, but
    to the transit authorities or the police departments in the
    cities that may be threatened.
        If there is a more general threat, that also is basically
    provided through two means of communication. The one means is
    through the Department of Homeland Security advisors throughout
    the United States and in each of our major cities, and the
    second is through the FBI and law enforcement to each of our
    joint terrorism task forces, of which there are 84 around the
    country.

                                   EXPLOSIVES

        Senator Kohl. Thank you. Director Mueller, current law
    requires all domestic manufacturers of explosives to mark their
    products with identifying information. This allows
    investigators to determine the origin of the explosives and
    aids them in tracking down criminals. Imported explosives,
    however, do not have to carry such markings.
        In 2002, the United States imported 14,900 metric tons of
    prepared explosives. Without markings, law enforcement has a
    distinct disadvantage in investigating crimes involving
    foreign-made explosives. The Justice Department has been
    working on regulations that would require importers to mark
    explosives when they enter the country, but these regulations
    have not been finalized.
        What effect does this loophole have on our ability to
    effectively investigate crimes involving explosives, and would
    you support legislation that would require appropriate markings
    to be placed on all imported explosives?
        Mr. Mueller. Well, I do believe markings assist
    investigators in solving the crime, so to speak, and
    determining the sourcing of the components to any explosive
    device will assist you in determining who was responsible for
    any act using such a device. And so, yes, I think markings are
    helpful.
        I will tell you that in many cases, overseas and actually
    domestically, our laboratory can identify a sourcing of a
    particular explosive just because of the vast knowledge that
    they have gained over a number of years as to the manufacturers
    of various components and their identifying data. But that is
    not the same as the markings we have domestically.
        With regard to the support of that, again, that would be an
    administration position and I would have to defer to the
    Department as to exactly what position they are taking on a
    specific piece of legislation.
        Senator Kohl. Would you like to see personally all imported
    explosives to be marked?
        Mr. Mueller. I think markings are helpful to the
    investigator and the laboratory technician who is trying to
    identify the sourcing of that explosive.

                           TERRORIST SCREENING CENTER

        Senator Kohl. All right. Director Mueller, the media has
    reported that biological threats may have played a role in the
    cancellation of numerous commercial flights in December and
    January. When asked at a hearing last month, Secretary Ridge
    admitted that our airline security procedures cannot currently
    protect against these types of biological threats. Secretary
    Ridge suggested that the best way to prevent such attacks is to
    concentrate on going after the people who may launch such an
    attack.
        A terrorist watch list is vital to our national security.
    The FBI, through the creation of the Terrorist Screening
    Center, known as TSC, is partially responsible for creating a
    single integrated terrorist watch list. In a recent interview,
    you said that this integrated list would be completed by March.
    Is this list fully operational today with a completely
    integrated watch list, and if it is not, when can we expect
    such a list to be fully integrated and operational?
        Mr. Mueller. The Terrorist Screening Center was first
    established on December 1, 2003, and what it brought together
    was individuals' access to the databases of all of the watch
    lists, and there are approximately 12, in a variety of agencies
    in the Government. What it brought together at that time was
    the ability, when there was a hit on the watch list, to
    thereafter determine whether it was valid and then to follow up
    with action through the joint terrorism task forces or through
    the border agencies.
        In the meantime, since December 1, 2003, the Terrorist
    Screening Center has been working with each of the agencies
    that had a relevant watch list to import its data in a way that
    assures that the name of the person is a valid name, that there
    is identifying information that supports it, and there is a
    basis for having the person on a Terrorist Watch List.
        I can tell you that the State Department has a list of
    easily over 100,000, not just terrorists, but others whom they
    want to bar from the country. So extracting those names is a
    substantial process, and assuring that there is a basis for
    that name going into the watch list is also a very extensive
    process.
        We are about halfway through that process at this point. We
    have a consolidated watch list, but we do not have all of the
    watch list names in it because we are going through that
    screening process. I expect it to be finished by this summer.
        Senator Kohl. Thank you. Mr. Chairman, I thank you.
        Senator Gregg. Thank you, Senator.

      DUPLICATION OF EFFORTS/TERRORIST EXPLOSIVE DEVICE ANALYTICAL CENTER

        Following up on Senator Kohl's point on the Terrorist
    Screening Center, we have been setting up these new initiatives
    that I presume are trying to get away from stovepipes and
    cross-fertilize the different agencies involved, such as the
    Foreign Terrorist Tracking Task Force and the Terrorist
    Screening Center and the Terrorist Threat Integration Center
    and the Terrorist Explosive Device Analytical Center (TEDAC)
    and the Joint Intelligence Coordination Council.
        I guess my question is, are we spinning here? Are we
    duplicating? Are some of these groups ending up being redundant
    and not adding value but actually just shifting deck chairs
    around? I would take, for example, the Terrorist Explosive
    Device Analytical Center, which as I understand it is
    essentially taking over the role, or attempting to take over
    the role, or attempting to duplicate the role that already
    exists at ATF, where they have two databases on explosive
    devices and where they have had the role of overseeing
    explosive devices for quite a while.
        Mr. Mueller. Let me start with TEDAC, which the ATF quite
    obviously participates in. It was an idea that came from the
    Saudi Arabia bombings of May 12, 2003, and our participation in
    helping the Saudis on that case, and most recently what we have
    come to find in Iraq.
        There was not a worldwide effort to in develop a database
    in one place with an expertise associated with it to identify
    explosive devices from around the world used by various
    terrorist groups. So the idea came out of our work in Iraq,
    where we along with the Department of Defense (DOD), the
    British, and a number of others, are developing the database
    related to the various incidents occurring in Iraq.
        We have expanded that under the auspices of the FBI
    laboratory to include devices from around the world. Now, the
    first step was to get our own house in order to make certain
    that we are working together with DOD, the CIA, with ATF, and
    NSA to cooperatively develop this database.
        And so it was an idea borne out of our experiences in Iraq
    and elsewhere----
        Senator Gregg. Let me get specific, Director. ATF has
    something called the X-Base, I believe it is called, and then
    they have something called the Bomb and Arson Tracking System.
    You are saying that TEDAC is not going to be duplicative of
    those but will have more of an international flavor than those
    have?
        Mr. Mueller. I believe it will, but I would have to get
    back to you on how they can or should be integrated.
        [The information follows:]

                   Possible Integration of X-Base Into TEDAC

        The mission of the TEDAC is to forensically and technically
    analyze terrorist explosive devices used against U.S. interests
    anywhere in the world and to develop actionable intelligence.
    As such, the TEDAC will require a very robust database with
    state of the art link analysis software that will enable
    computers to compare Improvised Explosive Device (IED)
    components sent in from a variety of sources. This
    functionality will allow the TEDAC to rapidly recognize
    otherwise non-observable connections between IEDs that exist
    with a tremendous volume of detailed technical and forensic
    information and intelligence. The ultimate goal will be to
    identify those individuals associated with the IED and the
    unique signature used to manufacture the bomb. All intelligence
    gathered from the forensic and technical analyses of IEDs will
    be disseminated among the military and law enforcement
    explosives community for technical and tactical purposes.
        Currently, the Department of Justice is conducting a review
    of all explosives-related databases. The Department will, upon
    completion of the review, advise the relevant committees of the
    Department's final conclusions.

        Senator Gregg. And the other question that goes into that
    issue is that I understand the FBI is considering taking over
    all of the explosive activity that was traditionally with ATF.
    Is that true?
        Mr. Mueller. That is not true.
        Senator Gregg. The investigative activity in the area of
    explosives?
        Mr. Mueller. That is not true.
        Senator Gregg. Well, then maybe I am misinformed. It is my
    understanding that in this budget, we have a shift of that
    responsibility from ATF over to FBI.
        Mr. Mueller. There is a differentiation of responsibilities
    between the FBI and ATF. We do have the responsibility for
    addressing terrorist, or possible terrorist incidents within
    the United States, and generally, the ATF has a responsibility
    for most other explosive incidents that you have within the
    United States.
        In terms of training, our training focuses on render safe,
    that is, how persons render safe the explosive device prior to
    there being an explosion and the ATF has the expertise in
    training what you do and how you investigate explosive devices
    that have gone off.
        I can tell you that there is a division of responsibility.
    There are occasionally tensions, both in the field and here,
    now that ATF is within the Department of Justice, the
    Department of Justice has a task force that is looking at that
    allocation of responsibility.
        Senator Gregg. That must be what I was informed of, and I
    guess I was misinformed, because our impression was that they
    had gone much further than just looking at it, that there had
    been sort of a preliminary move to have ATF move explosive
    activity over to FBI. I am glad to hear that is not the case,
    because I understand only about 1 percent of the explosions
    that occur are terrorist related.
        Mr. Mueller. There is no move for us to take over ATF's
    responsibility when it comes to investigating incidents
    involving explosions----
        Senator Gregg. That are not terrorist.
        Mr. Mueller [continuing]. Beyond the terrorism field.
        Senator Gregg. We have had this Madrid incident----
        Mr. Mueller. Yes.
        Senator Gregg [continuing]. And my question to you is,
    Europe is now starting to expedite its efforts in the area of
    counterterrorism and the European Union is talking about
    setting up a Europe-wide database that is counterterrorism
    oriented. I guess they had one, but they are talking about
    significantly improving it and increasing it.
        To what extent have you had discussions post-Madrid as to
    the role of ourselves and the FBI specifically in this new
    effort by the Europeans to become more sensitive to and more
    knowledgeable about the threat?
        Mr. Mueller. Since the Madrid explosions I have not had
    much opportunity to talk to counterparts overseas other than my
    counterpart in the Spanish National Police, and the discussion
    there was not addressed to what Europe could do as a whole
    itself to integrate terrorism information, and then a subpart
    of that, involvement of the United States.
        For the most part, our relationships with our European
    counterparts are very good on a bilateral basis and we share a
    great deal of information, depending on the country, with our
    counterparts overseas. The European Union has what is called
    Europol, which is an entity established by the European Union
    to address law enforcement, terrorism issues and it, I would
    say, is in its opening stages.
        I have had discussions within the FBI, some outside, with
    regard to a proposal suggested by Congressman Wolf about our
    participating in an international terrorism information
    exchange and we are exploring the possibility of doing that
    under the auspices of NATO. One of the problems you have in
    terms of exchanging information is having everyone on the same
    security level so that one is given access to meaningful
    information. And one of the problems that one has where you
    have a group of countries working together, you wonder what the
    security level may be. Who gets the information? One has to
    work through that. Our thought is that NATO may give us the
    vehicle to do that because there are security levels, and
    persons seconded to NATO with the appropriate security
    clearances. This is a vehicle that we are currently exploring.
        Senator Gregg. So right now, there is no formal structure
    or communication process other than personal relationships
    between the Director of the CIA and yourself that causes
    information to move back and forth efficiently?
        Mr. Mueller. No, I would say there is a lot more, a great
    deal more than that. Ourselves and the agency, we have legal
    attache offices in most European capitals, not every one of
    them, and it is that legal attache office that meets daily with
    our counterparts, whether it be in France or the United Kingdom
    or Spain. So there is an exchange of information between our
    legal attaches overseas and our counterparts overseas on a
    daily basis.
        We also have the foreign Embassies in Washington, DC. You
    also have Scotland Yard, MI-5, MI-6, and others who will have
    persons here who have exchanges with our people daily. And so
    there is a network of exchange of information that is ongoing
    that people don't often hear much about but has been
    tremendously effective since September 11.
        What you do not have is Europol, which has been established
    by the European Union. While we have persons that have spent
    time at Europol, it is just getting established and whether it
    will be an effective information exchange for the European
    Union is still to be seen. In the meantime, we are going to
    explore this other option of exchanging with a number of
    countries information relating to terrorism under the umbrella
    of NATO.
        Senator Gregg. Is there compatible Terrorist Screening
    Center in Europe yet?
        Mr. Mueller. No, there is not at this point.
        Senator Gregg. Would you presume that if there were, that
    we would integrate with it?
        Mr. Mueller. Yes. I think we would exchange lists, yes.
        Senator Gregg. Should we help them get that going? It seems
    to me that a lot of our threat is going to be based there, and
    granted, you have got your Legats all over the place who I am
    sure are developing names, but that is a pretty ad hoc
    approach.
        Mr. Mueller. I met with a representative of Europol maybe 2
    to 3 weeks ago in terms of what they have established in terms
    of capability and it is relatively small at this juncture.

                                     TOPOFF

        Senator Gregg. What did you learn from the TOPOFF events
    that you could impart to us that we need to do in order to
    improve communication between the various parties who
    participated? I mean, the purpose of TOPOFF was to simulate an
    event and see where the weaknesses are. What was the FBI's
    weakness and what should we do to address it?
        Mr. Mueller. It has been some time since I have looked at
    TOPOFF. I think one of the basic lessons we learned out of it
    was the Seattle aspect of it, that is, the necessity of
    identifying the relative chain of command and the authorities
    beforehand. Since that time, I know the Department of Homeland
    Security has identified individuals in most cities, I believe,
    who would be the representative of the Department of Homeland
    Security on scene and is training those individuals. I think
    that was a weakness that I saw.
        There were certain weaknesses that we saw out of the TOPOFF
    exercise in Chicago, which was a chem-bio attack, and I would
    have to go back and refresh my memory on what those weaknesses
    were in terms of responding to that attack.
        Senator Gregg. Is there a formal structure for responding
    to the weaknesses that were identified?
        Mr. Mueller. Yes. I know there is an after-action report
    and that the various items on that after-action report were
    identified and are being addressed by Homeland Security.
        Senator Gregg. Maybe you could give us a summary of what is
    being addressed for the record.
        Mr. Mueller. I will be happy to do that.
        [The information follows:]

                    Summary of TOPOFF 2 After-Action Report

        Since the publication of the ``TOPOFF 2 After-Action Summary
    Report,'' the Department of Homeland Security (OHS) has used the
    conclusions from this analytical document to lead the federal
    government's national effort to revamp, centralize, and unify a range
    of pre-existing federal and other incident response contingency plans.
    Among the actions undertaken by the DHS in response to TOPOFF 2 arc:
      --Enhanced interagency coordination for incident management.--At the
            time of TOPOFF 2, DHS had instituted a Crisis Action Team (CAT)
            to address incident management requirements. TOPOFF 2 After-
            Action comments suggested that the DHS develop more formal
            standard operating procedures with incident-specific
            interagency staffing requirements. These suggestions led to the
            transformation of the CAT into the Interagency Incident
            Management Group (IIMG), which was formed to address decision
            and coordination processes in elevated threat environments
            through bringing together federal, state, local, and private
            sector agencies as one functional entity to address specific
            contingencies, threats, or events.
      --Enhanced Principal Federal Official (PFO) capabilities.--The PFO
            concept, which was first tested in TOPOFF 2, has been enhanced
            through the establishment of training courses with curriculum
            that clarifies the mission, roles, and functions of these
            senior DHS officials in response operations.
      --Improved emergency public information coordination.--The DHS has
            led an intensive interagency effort that has resulted in the
            creation of an interagency incident communications strategy,
            emergency communications protocols, and vastly improved
            federal, state, and local coordination.

        Senator Gregg. Where do you see the status of training
    first responders relative to the FBI role, to the extent there
    is any in that?
        Mr. Mueller. Well----
        Senator Gregg. And how do you see our first responder
    capability these days?
        Mr. Mueller. We do a tremendous amount of training in
    evidence recovery throughout the country, throughout the world
    now in crime scene exploration. That is not what traditionally
    is called first responder, but it is our niche that we will
    continue to address.
        We have a render safe capability that we have continued to
    grow over the years and we will continue to grow that
    capability.
        In terms of the response from the fire or the ambulances
    and that form of first responder, as with the TOPOFF exercises,
    there have been other exercises. Every one of our special
    agents in charge in each of our cities is integrated now, both
    through our joint terrorism task forces, but also through
    various exercises in various cities with those first responders
    so the communication, the ability to stand up quickly and
    respond to a devastating attack, is much enhanced since
    September 11.
        Senator Gregg. So you think we are making progress on
    training first responders?
        Mr. Mueller. Yes.
        Senator Gregg. Do you think it should be threat based,
    where we choose to put the money for this?
        Mr. Mueller. I am going to have to leave that to others.
    That is a little bit out of my bailiwick. I think that is more
    in Tom Ridge's. I am not that familiar with the financing----
        Senator Gregg. Okay. I will----
        Mr. Mueller [continuing]. Structure, I will just put it
    that way, of allocating the funds.
        Senator Gregg [continuing]. Okay, onto other topics, then.
    Three, just quickly. Do you believe al Qaeda was responsible
    for the Madrid attack?
        Mr. Mueller. From what we have seen to date, I believe so.
    Now, when you say al Qaeda, let me just qualify that to a
    certain extent. There may well have been a group of individuals
    who have adopted and believe in Bin Laden's philosophy,
    theology, who are responsible for this, but may not have had,
    either sought or had the approval of those remaining leaders of
    al Qaeda. But I think it is fair to say that the evidence tends
    to point to individuals who were supportive of the radical
    fundamentalism and would be supporters of al Qaeda's mission.

                            COUNTERTERRORISM AGENTS

        Senator Gregg. In changing the culture of the FBI, how many
    agents are you planning to put into the Counterterrorism
    Division?
        Mr. Mueller. Well, we had----
        Senator Gregg. Approximately?
        Mr. Mueller. I moved 518 in fiscal year 2002. I would
    expect that at the end of 2004, we are authorized 2,418 agents.
    That is up from 1,351 agents in fiscal year 2001. With the
    additional increases sought in the 2005 budget, we will be up
    to 2,592 agents.
        Senator Gregg. As I understand it, there are still about
    380 agents who are assigned to the Criminal Division that are
    being used in counterterrorism, is that correct?
        Mr. Mueller. I believe it is about 380 at the end of this
    year, yes. We are actually overburdening some more than that at
    this point. But with the 2004 budget increases, I believe we
    will be 389, is what we anticipate at the end of this year.
        Senator Gregg. I guess the obvious question is, and I am
    sure you have a strong answer to it, but the obvious question
    is, if counterterrorism is your number one responsibility now
    and if you have got 12,000 agents overall, approximately,
    first, why are we only dedicating 2,500 to the effort?
        And number two, why haven't we been able to move the full
    complement into this arena, and is that a reflection of the
    fact that there is still some significant--resistance is the
    wrong term, but some significant desire or feeling amongst the
    line agents that they want to do things other than
    counterterrorism, that they were trained, they were brought up
    for 20 years, 30 years, 15 years in white collar crime and
    chasing the mafia and finding out who robbed the bank and they
    like that?
        Mr. Mueller. It is not a reflection--of what a particular
    agent or group of agents want to do. I have sought, as we have
    discussed before, to request additional resources in
    counterterrorism, to move additional resources when I thought
    it was necessary. I moved in excess of 500 agents in fiscal
    year 2002 and I have sought additional enhancements so that if
    we get the 2005 budget, that 389 figure should be down above,
    just a little above 230.
        I am also considering making a move of additional agents to
    counterterrorism. You will see that in the budget, we are
    looking at--in the budget submission, we are looking at a
    number of agents who in the past have been working on
    Government fraud cases where I believe the Inspector Generals
    can take up some of those cases. And I am looking for other
    ways to transfer agents to counterterrorism.
        I have looked to see what our continuous level of
    assignment of agents to counterterrorism would be absent the
    peaks. We have, as we have discussed before, we have had two
    peaks in the past, certainly with regard to--in the wake of 9/
    11 and then in anticipation of the hostilities in Iraq. I do
    believe that one of the benefits from having a number who are
    still being reassigned from criminal in some offices reflects
    the desire to have flexibility in the system.
        In the savings and loan crisis, when we were given
    additional resources, whether it be prosecutors or agents, we
    identified where the problem was and the agents were put in the
    particular city and they are there to this date. What we found
    in terrorism is that terrorism cells can arise anyplace in the
    United States, and when they arise, we have to do a combination
    of pushing resources to those particular offices as well as
    taking persons from those offices who are addressing another
    priority. Part of the reason that you have the statistics you
    have as to the overburn is attributable to that desire to be
    flexible.
        The bottom line is I am continuously looking at it. I will
    look at the end of this year, or as we go through this year, at
    the feasibility of reassigning agents from other programs to
    counterterrorism.
        Senator Gregg. I noticed you dropped a couple of
    activities. There were two specific areas that you decided----
        Mr. Mueller. The first one was fraud on the Government. The
    other one was assistance of EPA.
        Senator Gregg. We put a lot of things on the FBI's table
    over the years before 9/11. There is probably a list that is
    longer than that that you could drop, isn't there?
        Mr. Mueller. There are areas that I have looked at. I mean,
    there are some areas that are relatively insignificant that
    don't make a big cut. The one area where I have reassigned the
    most agents was from the drug program and we have continued to
    underburn in the drug program as a result of those agents being
    reassigned to do counterterrorism.
        One of the things, and it may be--I don't think it is that
    different than what happened in the past, but each of the
    special agents in charge are directed to expend the resources
    to do the job in counterterrorism, even if it cuts into other
    programs. So if you have a terrorism lead that has gone
    unaddressed and agents assigned to counterterrorism are busy
    with terrorism matters, then you have to take them from
    someplace else. That is the type of flexibility that we have
    not necessarily used in the past that I think is important to
    use in the future where we have terrorism not limited to one
    city or two cities, but it can pop up anyplace around the
    country. And I say not just international terrorism, but
    domestic terrorism.

                              LANGUAGE TRANSLATION

        Senator Gregg. I understand that. I noticed that you have
    something like 65 people who are now trained in language who
    are fluent in Arabic languages, is that right?
        Mr. Mueller. We have 24 Arabic speakers in the agent
    population. Now, we have dramatically increased our linguists
    and our translators in the Bureau, as I think you are aware.
        Senator Gregg. That is maybe where the 65 came from. That
    seems like an awfully small number.
        Mr. Mueller. We are pushing training. We are recruiting as
    hard as we can for those who speak Arabic. We have had some
    success, but not as much success as I would like. We are
    enhancing the language training for our agents and those who
    receive the training will now be in a position where they can
    use that training, which has not always been the case.
        Senator Gregg. How can we help you get more people on
    board? Do you need a pay differential?
        Mr. Mueller. We have gotten in our request last year in the
    2004 budget as well as in the 2005 budget. You have increased
    our budget to assist in sending agents as well as analysts and
    others for language training, not only in Arabic but Mandarin
    Chinese and other languages that we need to have an agent cadre
    fluent in.
        Senator Gregg. I would hope if there is something further
    we could do, we would like to do it.

                                  IDENT SYSTEM

        In talking with Director Hutchinson at Homeland Security
    about the new IDENT system, US VISIT, where they are
    fingerprinting people coming into the United States, he advises
    us that they are using a flat screen, two index fingers,
    printing system for the sake of speed, basically was what it
    came down to, because using all five fingers or a roll system
    just took too long.
        We now built IAFIS, which cost us a huge amount of money,
    before you arrived. We had the same problems with that that we
    have had with Trilogy, except I think it even cost more in
    overruns.
        Mr. Mueller. But it is also, if I can interject, it has
    been tremendously successful.
        Senator Gregg. Well, it took a long time to get there,
    believe me. It has been successful, and that is my point. It
    has been successful. It has got 44 million fingerprints on
    file, and yet it is not compatible with IDENT. This seems to be
    one of those things which is very hard to explain to a
    taxpayer, that we are putting in place a system at the State
    Department and Homeland Security to identify people coming into
    the country. We have 44 million fingerprints over here. Sure,
    most of them may be domestic, but there are certainly a lot
    that aren't and the two systems can't talk to each other. The
    next terrorist event, we may find out a fellow got through the
    IDENT system but his fingerprints were over at IAFIS.
        Mr. Mueller. Well, this has been a matter of much
    discussion, not just recently, but over the last year. Quite
    obviously, the 10-print roll prints is the gold standard. I
    know that the Department of Homeland Security was faced with
    the necessity of establishing very quickly a biometric system
    that was affordable and could be put up quickly and opted for
    the two-print system in the meantime. There are discussions
    about how that can be expanded to a 10-print flat as opposed to
    a 10-print rolled, which would take a long time for everybody
    and I don't think we would want at our borders with the fact
    that 1 million persons go in or out of the country every day.
        So it is a combination of, on the one hand, you have the
    gold standard. On the other hand, you have the practicality of
    identifying persons coming in swiftly in such a way that you
    can identify terrorists. The way we do it now is we have a file
    that we provide to the Department of Homeland Security that
    includes all the fingerprints and they strip off the two index
    fingerprints and utilize that to identify persons who may be
    terrorists, on the wanted list, coming through the country, or
    coming through the border. We are working with State and the
    Department of Homeland Security to improve that system.
        Senator Gregg. I appreciate that but what are we actually
    doing?
        Mr. Mueller. We are meeting to decide what the standard
    will be down the road, taking into account that the 10-rolled
    print is the gold standard which everybody would like and
    looking at the practicality both of the software, the hardware
    and what it would mean to allowing persons through our borders
    of having a system that is more substantial than the two-
    fingerprint system that we currently have at the borders.
        Senator Gregg. Is it doable to integrate the two systems?
        Mr. Mueller. I think it is. I do believe so. Just in the
    two-print system, I do think it is doable down the road. We are
    exploring----
        Senator Gregg. What do you need to do to do it?
        Mr. Mueller. Developing the technology, and I am not
    intimately familiar with the technology that is being used
    currently, the two in the VISIT system at the borders, but
    developing the technology and the communications capability so
    that given just the two-print system, there can be a timely
    search against the FBI database by a communications carrier.
        Senator Gregg. Maybe you could have somebody in your group
    meet with Mr. Hutchinson and----
        Mr. Mueller. We are.
        Senator Gregg. Well, I know you are, daily, I am sure, and
    with State and get back to this committee with a proposal as to
    how you plan to do this and a timeframe.
        Mr. Mueller. Yes, sir.
        Senator Gregg. It just seems to us, to me, anyway, that we
    are wasting our resources. We have put a lot of money into it
    and we should be trying to figure out a way to get the two to
    talk to each other. It may not be doable if you have got a
    condition that you are going to have to get people through the
    checkpoint in 13 seconds or whatever the condition is, but it
    would seem to me that if there is a way to do it and we need
    money to do it from a technology standpoint, we could find the
    money, because we would hate to see that database just sit
    there and not be accessed.
        I appreciate it. You have been very courteous with your
    time today. Is there anything further you wish to add?
        Mr. Mueller. The only item I didn't address is the concern
    that you raised, and that is about the adaptability of the
    Bureau to the new mission. You read these books about taking a
    corporation or an agency or a large organization through a
    transformation. The books will tell you that there are 30
    percent that welcome the transformation and see the future,
    there are 30 percent that have to be persuaded, and there are
    30 percent that like the old ways.
        There are agents in the FBI, without a question of a doubt,
    who enjoyed what they were doing before, perhaps enjoyed doing
    it more than some of the things they are called upon to do at
    this point, and there will be for a number of years. But I do
    believe that just about every FBI agent understands the
    responsibility that the Bureau has, along with other agencies,
    to prevent another terrorist attack, they understand that
    responsibility, the necessity of transforming the organization,
    the new mission, and are pursuing that new mission as we have
    missions in the past.
        It was something new for us to develop a game plan to
    address La Cosa Nostra or the Mob, to change from doing bank
    robberies and bank embezzlements to an extended multi-year
    integrated multi-agency plan to address a threat against the
    United States and we adapted then. I do believe we are
    adapting, and will continue to adapt with this new challenge
    thanks to the dedication and loyalty of FBI agents and analysts
    and support staff to the Bureau, the Government, the American
    people, and their understanding the importance of our role in
    protecting the national security of the United States.
        With that, thank you, sir.
        Senator Gregg. We thank you for your service and thank your
    agents for their service and the people who work at the FBI and
    do an extraordinary job. It is very much appreciated. To the
    extent we criticize you, we hope it is taken as constructive.
    That is our goal. Thank you.
        Mr. Mueller. Thank you, sir.

    STATEMENT OF GLENN A. FINE, INSPECTOR GENERAL,
                DEPARTMENT OF JUSTICE
        Senator Gregg. Our next panel will include members of the
    Government Accountability Office and the Inspector General.
        We have with us Glenn Fine, who is the Inspector General
    for the Department of Justice; Dr, Randolph Hite and Dr. Laurie
    Ekstrand, who both work for the Government Accountability
    Office. All of them specialize, obviously, in making sure that
    various agencies function efficiently and effectively and focus
    especially on the issue of the FBI and other agencies
    responsible for counterterrorism.
        We appreciate you taking the time to come and testify. You
    all were here to hear, I believe, Director Mueller's thoughts
    and what we would like to do is get your thoughts on the
    specific issues of technology and how it is being put in place
    at the FBI and what we can do to make sure we don't have these
    continued cost overruns, and more importantly, what we can do
    to make sure the technology works the way it is supposed to
    work.
        We will start with Mr. Fine, anything you wish to say, or
    if you want to submit a statement, that is fine, too.
        Mr. Fine. Thank you, Mr. Chairman. Thank you for inviting
    me to testify about the FBI's efforts to modernize its
    information technology systems. Within the past 2 years, the
    Office of the Inspector General has issued several reports that
    examined IT issues in the FBI, including a review of the FBI's
    management of its IT investments as well as the implementation
    of the FBI's most important IT project, Trilogy.
        My written statement provides a detailed description of the
    history of delays and cost overruns in Trilogy. My statement
    also describes other reviews that the OIG recently has
    completed or has ongoing in the FBI, including a report
    describing the delays in integrating IDENT, the Department of
    Homeland Security's automated fingerprint identification
    database, with IAFIS, the FBI's fingerprint database; a review
    of the FBI's use of investigative resources before and after
    the September 11 attacks; a report examining the FBI's failure
    to detect the espionage of Robert Hanssen for more than 20
    years; and ongoing reviews of other important FBI programs,
    such as the FBI laboratory's DNA unit, the FBI's Language
    Translation Services Program, and the FBI's Foreign Legats,
    among others.
        You have asked me in my oral remarks this morning to
    briefly focus on the OIG's assessment of the Trilogy project.
    Trilogy is essential to modernizing the FBI's archaic and
    inadequate computer systems. The FBI's current systems do not
    permit FBI employees to readily access and share information
    throughout the FBI. Without this capability, the FBI cannot
    efficiently investigate criminal cases, effectively analyze
    intelligence information, and bring together all the
    investigative information in the FBI's possession to solve
    crimes and help prevent future terrorist attacks.
        The Trilogy project, as you know, has three main
    components: One, the upgrade of the FBI's hardware and
    software; two, the upgrade of the FBI's communications network;
    and three, the upgrade and consolidation of the FBI's five most
    important investigative applications.
        Our reviews have found that Trilogy has grown from what in
    the year 2000 was estimated to be a 3-year, $379 million
    project to what is now a $581 million project that may not even
    be fully completed before the end of this calendar year. Senior
    FBI IT managers recently told OIG auditors that the
    infrastructure components, the first two components of Trilogy,
    should be completed by April 30. However, there is still a
    significant risk of missing even the latest deadline.
        The third component of Trilogy, upgrading and consolidating
    the investigative applications, is still ongoing. The most
    important part of this component is the Virtual Case File,
    which will replace the FBI's inadequate Automated Case Support
    System.
        In our view, the reasons for the repeated delays and the
    increased costs in the Trilogy project include poorly defined
    requirements as Trilogy was developed, the lack of firm
    milestones and penalties to the contractors for missing
    deadlines, the FBI's weak IT investment management structure
    and processes, the lack of a qualified project integrator to
    manage the two main Trilogy contractors and take responsibility
    for the overall integrity of the final product, and the lack of
    FBI management continuity and oversight, due in part to the
    frequent turnover of senior FBI IT managers.
        These problems with Trilogy were consistent with the OIG's
    repeated warnings about the FBI's IT systems and its management
    processes in general. A variety of OIG reports have identified
    significant deficiencies in the FBI's IT program, including
    fragmented management, inadequate training, and a failure to
    adequately respond to recommendations regarding IT
    improvements.
        Although the FBI has had a difficult time developing and
    deploying Trilogy, at this juncture the completion of at least
    the initial phase of Trilogy is in site. Director Mueller has
    made Trilogy a priority and has focused personal attention on
    this project, to his credit. In addition, the FBI recently
    appears to have focused its attention on addressing many of the
    weaknesses we have described. Both the FBI and the Department
    of Justice now have Chief Information Officers who appear
    committed to a no-nonsense approach to managing the Trilogy
    project.
        Once completed, Trilogy will significantly enhance the
    FBI's ability to manage its cases and share information. But
    more progress is still needed on Trilogy's user applications,
    particularly the Virtual Case File, and completion of Trilogy
    will not signal the end of the FBI's IT modernization effort.
    Trilogy will only lay the foundation for future IT
    advancements.
        The FBI must focus sustained attention on ensuring that it
    has state-of-the-art information technology systems to permit
    FBI employees to effectively process and share information. As
    the FBI looks to the future to meet the continuing threat of
    terrorism and the increased sophistication of domestic and
    international crime, it must give its employees the IT tools
    they need to perform their mission effectively and efficiently.
    Given the importance of this issue, the OIG will continue to
    review and report on the FBI's progress or lack of progress in
    this critical area.
        That concludes my prepared statement and I would be happy
    to answer any questions, Mr. Chairman.

                               PREPARED STATEMENT

        Senator Gregg. I have got a lot of questions, but I want to
    hear from the whole panel first.
        [The statement follows:]

                      Prepared Statement of Glenn A. Fine
        Mr. Chairman, Senator Hollings, and Members of the Subcommittee on
    Commerce, Justice, State and the Judiciary:

                                  INTRODUCTION

        I appreciate the opportunity to testify before the Subcommittee as
    it examines the Federal Bureau of Investigation's (FBI) fiscal year
    2005 budget request. I have been asked to speak about the FBI's
    progress in modernizing its information technology (IT) systems,
    specifically its agency-wide IT modernization project known as Trilogy.
    Within the past two years, the Office of the Inspector General (OIG)
    has issued several reports that examined IT-related issues at the FBI,
    including the FBI's responsiveness to previous OIG recommendations
    dealing with IT issues and a review of the FBI's IT Investment
    Management process. As part of the latter review, issued in December
    2002, we examined the FBI's implementation of Trilogy. In addition,
    last month we opened a new audit that is currently examining the
    overall management of the Trilogy project and the extent to which
    Trilogy will meet the FBI's current and longer-term IT requirements.
        Our overall assessment is that the FBI has had a difficult time
    trying to modernize its information technology systems, and has
    experienced a series of delays, missed deadlines, and cost increases.
    However, at this juncture, the completion of Trilogy is in sight.
    Director Mueller has made Trilogy a priority and has focused personal
    attention on this project, to his credit. Although more progress is
    needed on Trilogy's user applications, particularly the Virtual Case
    File, once completed Trilogy will significantly enhance the FBI's
    ability to manage its cases and share information.
        Trilogy and the first version of the Virtual Case File system are
    just the start of the FBI's information technology modernization
    effort. In the years ahead, the FBI will need to focus even greater
    attention to ensure that it implements state-of-the-art information
    technology to allow its employees to effectively perform their critical
    mission.
        In the first section of my statement, I will provide a brief
    overview of the Trilogy project, describe the history of the FBI's
    progress in developing Trilogy, and summarize the OIG's preliminary
    assessment of the reasons for the delays in its implementation. In the
    next section, I will discuss the results of other, recent OIG reviews
    of the FBI's IT management process. I will conclude the statement by
    providing a brief overview of recently completed and ongoing OIG
    reviews that examine other important FBI issues that may be useful to
    this Committee.

                              THE TRILOGY PROJECT

    Overview
        Trilogy is the largest of the FBI's IT projects and has been
    recognized by the FBI and Congress as essential to modernizing the
    FBI's archaic and inadequate computer systems. One component of
    Trilogy, the Virtual Case File, will replace one of the FBI's
    inadequate database systems, the Automated Case Support (ACS) system,
    which is used as a case tracking system. Among its many shortcomings,
    ACS does not permit FBI agents, analysts, and managers to readily
    access and share case-related information throughout the FBI. Without
    this capability, the FBI cannot efficiently investigate criminal cases,
    analyze intelligence information, and bring together all of the
    investigative information in the FBI's possession to help prevent
    future terrorist attacks.
        The Trilogy project has three main components:
      --Information Presentation Component (IPC)--intended to upgrade the
            FBI's hardware and software;
      --Transportation Network Component (TNC)--intended to upgrade the
            FBI's communication networks; and
      --User Applications Component (UAC)--intended to upgrade and
            consolidate the FBI's five most important investigative
            applications.
        The first two components of Trilogy provide the infrastructure
    needed to run the FBI's various user applications. The User Application
    component of Trilogy will upgrade and consolidate the FBI's
    investigative applications, beginning with the five most critical.
    However, it is important to note that Trilogy will not replace the 37
    other less-critical investigative applications or the FBI's
    approximately 160 other non-investigative applications. Rather, Trilogy
    is intended to lay the foundation so that future enhancements will
    allow the FBI to achieve a state-of-the-art IT system that integrates
    all of the agency's investigative and non-investigative applications.

    Project Schedule and Costs
        In the last several years, the FBI's Trilogy project has suffered a
    continuing series of missed completion estimates and associated cost
    growth. In November 2000, Congress appropriated $100.7 million for the
    initial year of what was estimated to be a 3-year, $379.8 million
    project. The FBI hired DynCorp in May 2001 (in March 2003, DynCorp was
    merged into Computer Sciences Corporation (CSC)) as the contractor for
    the IPC/TNC infrastructure components of Trilogy. At that time, the
    scheduled completion date for the Trilogy infrastructure was May 2004.
    In June 2001, the FBI hired Science Applications International
    Corporation (SAIC) to complete the user applications component of
    Trilogy--including the Virtual Case File--with a scheduled completion
    date of June 2004.

                Infrastructure Components
        A stable schedule for Trilogy was never firmly established for much
    of the project's history. Beginning in 2002, the FBI's estimated dates
    for completing the Trilogy project components began to swing back and
    forth and were revised repeatedly. The FBI moved up the completion date
    for deploying the Trilogy infrastructure to June 2003 from the original
    date of May 2004 because the September 11, 2001, terrorist attacks had
    increased the urgency of completing Trilogy. Later, the FBI said the
    infrastructure would be completed by December 31, 2002. In February
    2002, the FBI informed Congress that with an additional $70 million,
    the FBI could accelerate the deployment of Trilogy. According to the
    FBI, this acceleration would include completion of the two
    infrastructure components by July 2002 and rapid deployment of the most
    critical analytical tools in the user applications component. Congress
    therefore supplemented the FBI's fiscal year 2002 Trilogy budget by $78
    million, for a total of $458 million, to accelerate the completion of
    all three components.
        The promised milestone for completing the infrastructure components
    slipped from July 2002 to October 2002 and then to March 2003. On March
    28, 2003, CSC completed the Wide Area Network for Trilogy. In April
    2003, Director Mueller reported to Congress that more than 21,000 new
    desktop computers and nearly 5,000 printers and scanners had been
    deployed. He also reported that the Trilogy Wide Area Network--with
    increased bandwidth and three layers of security--had been deployed to
    622 sites. While this deployment improved the hardware available to FBI
    staff, it provided no new software capability.
        In April 2003, the FBI and CSC agreed to a statement of work for
    the remaining infrastructure components of Trilogy, including servers,
    upgraded software, e-mail capability, and other computer hardware, with
    final engineering change proposals and a completion date of October 31,
    2003. In August 2003, CSC informed the FBI that the October 2003
    completion date would slip another two months to December 2003. In
    October 2003, CSC and the FBI agreed that the December 2003 date again
    would slip.
        The General Services Administration's Federal Systems Integration
    and Management Center, known as FEDSIM, competes, awards, and manages
    contracts for its federal agency clients. FEDSIM had used its Millennia
    contracting vehicle to award contracts for Trilogy on behalf of the
    FBI. In November 2003, the General Services Administration formally
    announced that CSC failed to meet the deadline for completing work on
    the infrastructure portions of Trilogy that are required to support the
    user applications, including the Virtual Case File.
        On December 4, 2003, CSC signed a commitment letter agreeing to
    complete its infrastructure portions of the Trilogy project by April
    30, 2004, for an additional $22.9 million, including an award fee of
    over $4 million. An award fee is used when the government wants to
    motivate a contractor with financial incentives. The FBI covered these
    additional costs by reprogramming funds from other FBI appropriations.
    In January 2004, the FBI converted the agreement with CSC to a revised
    statement of work providing for loss of the award fee if the April 30,
    2004, deadline is not met. In addition, the revised statement of work
    provides for cost sharing at a rate of 50 percent for any work
    remaining after the April 30 deadline.
        As of early March 2004, CSC was in the process of installing in the
    FBI's field offices the remaining computer hardware infrastructure
    needed to use the previously deployed Wide Area Network. If completed
    by April 30, 2004, the original target set in 2001 for the
    infrastructure components of Trilogy will be met, but the accelerated
    schedule funded by Congress will be missed by some 22 months.
        Senior FBI IT managers recently told OIG auditors that the
    infrastructure components appear to be on target for meeting the latest
    milestone of April 30, 2004, although they cautioned that there is a
    risk of missing this latest deadline because the schedule is ambitious
    and there is no slack time. However, other FBI officials involved in
    the project believed that CSC's ability to complete the remaining
    engineering work by April 30, 2004, is an open question. A contractor
    recently hired by the FBI's Chief Information Officer to facilitate
    solutions with the two Trilogy contractors described the April 30
    deadline as ``a real management challenge.''

                User Applications
        With respect to development of the Virtual Case File, the first of
    three system deliveries for the Virtual Case File occurred in December
    2003. However, it was not functional and therefore was not accepted by
    the FBI. FBI officials told our auditors that, as of January 2004, 17
    issues of concern pertaining to the functionality and basic design
    requirements of the Virtual Case File needed to be resolved before the
    Virtual Case File could be deployed. According to FBI personnel working
    on the resolution of these problems, the 17 issues were corrected as of
    March 7, 2004. However, significant work still remains on addressing
    security aspects and records management issues in the Virtual Case
    File.
        The FBI is now requiring the contractor, SAIC, to provide a new,
    realistic completion date and cost estimate for delivery of a usable
    Virtual Case File. Based on this information, expected within the next
    week or two, the FBI intends to renegotiate the contract for the user
    applications component to include firm, verifiable milestones and
    penalties for missing the milestones.
        The remaining work required to actually deploy a usable and
    functional initial version of the Virtual Case File appears
    significant. The Virtual Case File will be installed in stages, with
    the first stage including the migration of the ACS database. However,
    our conversations with FBI IT managers suggest uncertainty about the
    completion dates for each stage. As noted above, the timetable is
    currently being negotiated with SAIC.
        No one interviewed by our auditors in the FBI, the Department, or
    the General Services Administration thought the Virtual Case File would
    be ready when the supporting infrastructure for the system is scheduled
    to be in place as of April 30, 2004. They said that to speed the
    delivery of at least a basic functional Virtual Case File system, it is
    possible that some features initially intended as part of the first
    delivery of the system will have to be deferred until later. Many FBI
    managers told us that they are uncertain whether a functional, complete
    version of the VCF will be deployed before the end of calendar year
    2004.

    Trilogy Cost
        In addition to frequent schedule slippages, Trilogy costs have
    grown considerably. To accelerate the project, the original estimated
    project cost of $380 million increased by $78 million to $458 million.
    Through reprogramming and other funding in fiscal year 2003, the
    currently authorized total funding level is $581 million. According to
    an FBI report, as of January 2004 the remaining available funds were
    about $12 million. As of March 19, 2004, the FBI's Chief Information
    Officer believed that current funding appears to be adequate to
    complete Trilogy. However, in our view, until the user applications
    contractor provides an updated cost estimate, it will be difficult to
    gauge the approximate total cost of the Trilogy project, particularly
    since enhanced versions are planned sometime after the initial
    deployment.
        Further, the FBI's ability to track Trilogy costs adequately was
    questioned by a March 3, 2004, FBI inspection report. The report
    recognized internal control weaknesses and said that Trilogy-related
    financial records are fragmented and decentralized with no single point
    of accountability. Because the FBI's Financial Management System does
    not capture detailed Trilogy-related expenditures, FBI auditors could
    not ascertain a ``global financial profile'' of Trilogy.

    Problems in Trilogy's Development
        Based on the OIG's previous audit work that examined the FBI's IT
    management process, together with the preliminary results of our
    ongoing audit of Trilogy, we believe the reasons for the delays and
    associated increased costs in the Trilogy project include: lack of firm
    milestones and penalties for missing milestones; lack of a qualified
    project integrator who would manage the interfaces between the two
    contractors and would have responsibility for the overall integrity of
    the final product; weak IT investment management structure and
    processes; until recently, lack of management continuity and oversight
    due, in part, to the frequent turnover of FBI IT managers and the FBI's
    focus on its other important law enforcement challenges; poorly-defined
    requirements that evolved as the project developed; and unrealistic
    scheduling of tasks by the contractors.

                Contract Weaknesses
        The FBI's current and former Acting Chief Information Officers told
    us that the primary reason for the schedule and cost problems
    associated with the infrastructure components of Trilogy is a weak
    statement of work in the contract with CSC. In addition, despite the
    use of two contractors to provide three major project components, until
    recently the FBI did not hire a project integrator to manage contractor
    interfaces and take responsibility for the overall integrity of the
    final product. According to FBI IT managers, FBI officials acted as the
    project integrator even though they had no experience to perform such a
    role.
        According to FBI IT and contract managers, the ``cost plus'' award
    fee type of contracts used for Trilogy did not require specific
    completion milestones, did not include critical decision review points,
    and did not provide for penalties if the milestones were not met. Under
    cost plus award fee contracts, the contractors are only required to
    make their best effort to complete the project. Furthermore, if the FBI
    does not provide reimbursement for the contractors' costs, under these
    agreements the contractors can cease work. Consequently, in the view of
    the FBI managers with whom we spoke, the FBI was largely at the mercy
    of the contractors.
        FEDSIM representatives explained that a cost-plus contract is used
    for large projects where the requirements and the costs are not defined
    sufficiently to allow for a firm fixed-price contract. The FEDSIM's
    Millennia contracting vehicle currently has nine ``industry partners''
    who are eligible to bid on federal projects. Under Millennia, contracts
    can be awarded relatively quickly because of the limited number of
    potential bidders. Because the FBI wanted a quick contract and did not
    have highly defined requirements, it used the cost plus award fee
    contract vehicle.
        In our ongoing audit of Trilogy, we plan to evaluate the effect of
    the contractual terms on the schedule, cost, and performance of the
    project.

                IT Investment Management Weaknesses
        In addition to the lack of controls built into the statements of
    work for Trilogy, the FBI's investment management process was not well
    developed. Had the FBI developed a mature IT investment management
    process, the Trilogy project likely could have been completed more
    efficiently and timely. The investment management process at the FBI is
    still in the early stages of development. Absent a mature IT investment
    process, FBI IT investment efforts are at risk for significant
    developmental problems.

                Management Continuity and Oversight
        Part of the problem acknowledged by the FBI for not acting timely
    on IT recommendations from the OIG over the years has been the turnover
    of key FBI managers. Similarly, we believe that turnover in key
    positions affected the FBI's ability to manage and oversee the Trilogy
    project.
        Since November 2001, 14 different key IT managers have been
    involved with the Trilogy project, including 5 Chief Information
    Officers or Acting Chief Information Officers and 9 individuals serving
    as project managers for various aspects of Trilogy. This lack of
    continuity among IT managers contributed to the problems of ensuring
    the effective and timely implementation of the Trilogy project.
    According to contractor personnel who are advising the FBI on Trilogy,
    the FBI also suffered from a lack of engineering expertise, process
    weaknesses, and decision-making by committees instead of knowledgeable
    individuals. In the contractors' opinion, weak government contract
    management has created more of the problem with Trilogy than the terms
    of the contracts.
        We have spoken to many officials in the FBI, the Department of
    Justice, and FEDSIM who believe that the FBI has recently improved its
    management and oversight of Trilogy and of information technology in
    general. The FBI appears to have hired from other federal agencies and
    from private industry capable individuals, including the current Acting
    Chief Information Officer and several key project management personnel.
    Officials within both the Department of Justice and the FBI now are
    optimistic that the FBI's current information technology management
    team has the talent to solve the FBI's problems in this area. We also
    have been impressed with the quality of the FBI's current managers of
    Trilogy, including the Acting Chief Information Officer. However, we
    believe it essential for the FBI to maintain continuity in the
    management of Trilogy.

                Lack of Defined Design Requirements
        One of the most significant problems with managing the schedule and
    costs of the Trilogy project was the lack of a firm understanding of
    the design requirements by both the FBI and the contractor. Not only
    were Trilogy's requirements ill defined and evolving as the project
    progressed, but certain events triggered the need to change initial
    design concepts. For example, after September 11, 2001, Director
    Mueller recognized that the initial concept of simply modifying the old
    Automated Case Support system would not serve the FBI well over the
    long run, and the FBI created the plans for the Virtual Case File.
    Other changes to the design occurred because of the experiences and
    lessons learned from the response to the September 11 terrorist
    attacks, the Hanssen espionage case, and the belated production of
    documents to defense attorneys in the Oklahoma City bombing case.
        However, during the initial years of the project, the FBI had no
    firm design baseline or roadmap for Trilogy. The FBI also may have
    overly relied on contractor expertise to help define the requirements,
    while the contractor may have overly relied on the FBI to provide
    direction for the Trilogy design.

                Unrealistic Scheduling of Tasks
        According to an FBI official monitoring development of the Trilogy
    infrastructure, CSC has had problems producing an appropriate resource-
    driven work schedule. Furthermore, SAIC is using a scheduling tool for
    development of the user applications component with which the FBI is
    unfamiliar. In our view, unrealistic scheduling of project tasks has
    led to a series of raised expectations, followed by frustration when
    the completion estimates were missed. We intend to examine the
    schedules more closely in our ongoing audit of the Trilogy project.

    Prior OIG Audits on FBI IT Investment Management Practices and FBI's
            Implementation of IT Recommendations
        The problems demonstrated by the Trilogy project were consistent
    with our concerns about the FBI's IT systems and management process in
    general. Since 1990, various OIG reports have identified significant
    deficiencies with the FBI's IT program, including outdated
    infrastructures, fragmented management, ineffective systems, and
    inadequate training. Within the past 18 months, the OIG completed two
    reviews that looked at these and other aspects of the FBI's efforts to
    modernize its IT systems, one issued in December 2002 and the other
    issued in September 2003.
        The first audit, issued in December 2002, examined the FBI's IT
    investment management practices. The OIG found that, in the past, the
    FBI had not effectively managed its IT investments because it failed
    to: (1) effectively track and oversee the costs and schedules of IT
    projects; (2) properly establish and effectively use IT investment
    boards to review projects; (3) inventory the existing IT systems and
    projects; (4) identify the business needs for each IT project; and (5)
    use defined processes to select new IT projects. We concluded that
    despite efforts to improve its IT management, the FBI had not fully
    implemented the above five critical processes associated with effective
    IT investment management. Consequently, the FBI continued to spend
    hundreds of millions of dollars on IT projects without adequate
    assurance that the projects would meet their intended goals.
        Our audit made eight recommendations with respect to Trilogy,
    including urging the FBI to establish cost, schedule, technical, and
    performance baselines and track significant deviations from these
    baselines, and taking corrective action as necessary. The FBI agreed
    with all eight of the Trilogy-related recommendations, with one minor
    exception, and to date has taken corrective action on three.
        In a September 2003 audit, the OIG comprehensively examined the
    FBI's implementation of the OIG's prior IT-related recommendations.
    While the FBI had made substantial progress on many of the
    recommendations, implementing 93 of 148 total recommendations, we
    concluded that full implementation of the remaining recommendations was
    needed to ensure that the FBI's IT program effectively supported the
    FBI's mission.

    OIG Conclusions on Trilogy
        In sum, we found various reasons for Trilogy's delays and problems.
    Initially, the FBI did not have a clear vision of what the FBI's
    Trilogy modernization project should achieve, let alone specific design
    requirements, and the contractors were not held to a firm series of
    achievable milestones. The FBI's investment management process also
    left it ill equipped to ensure that all three components of Trilogy
    were developed in an integrated fashion. Moreover, at the outset, the
    FBI and others did not provide consistent or effective management of
    Trilogy, leading to technical and scheduling problems.
        The FBI recently appears to have focused attention on addressing
    much of these weaknesses. Our preliminary assessment is that both the
    FBI and the Department of Justice now have Chief Information Officers
    who are committed to a successful implementation of Trilogy, with a no-
    nonsense approach to managing the Trilogy contracts and a commitment to
    closely monitor its progress. The FBI also appears to be attempting to
    ensure that Trilogy is completed as soon as possible, and the General
    Services Administration also is participating fully in this oversight
    role. In addition, the Department of Justice Chief Information Officer
    meets regularly with FBI and GSA staff to oversee progress on Trilogy.
    However, significant work remains, particularly on the Virtual Case
    File, which may not be fully implemented by the end of this year.
    Because of the importance of the Trilogy project, the OIG will continue
    to monitor the FBI's implementation of Trilogy.

                       ADDITIONAL OIG REVIEWS IN THE FBI

        In addition to these IT reviews, the OIG continues to conduct wide-
    ranging reviews of other priority issues in the FBI. The following are
    a few examples of recently completed reviews in the FBI, as well as
    ongoing OIG reviews, that may be of interest to the Committee.

    Recently Completed OIG Reviews
        IDENT/IAFIS: The Batres Case and the Status of the Integration
    Project.--In early March 2004, the OIG issued a special report that
    examined the status of efforts to integrate IDENT, the Department of
    Homeland (DHS) Security's automated fingerprint identification
    database, with IAFIS, the FBI's automated fingerprint identification
    database. The OIG review described the tragic consequences that can
    result because these immigration and criminal fingerprint
    identification systems are not integrated. Victor Manual Batres, an
    alien who had an extensive criminal history, was caught two times by
    the Border Patrol attempting to enter the United States illegally. Both
    times the Border Patrol voluntarily returned him to Mexico without
    checking his criminal record. He came back into the United States,
    where he raped and murdered a nun. During this period, the Border
    Patrol never learned of his extensive criminal history, which should
    have subjected him to detention and prosecution, partly because IDENT
    and IAFIS are not linked.
        The OIG has reported extensively on the slow pace of the
    integration of IDENT and IAFIS in several reports over the past few
    years. In the Batres report, we noted that according to the Department
    and DHS timetable provided to us by integration project managers, full
    integration of the two systems was not scheduled to be completed for
    many years. Since issuance of our Batres report several weeks ago, DHS
    leaders have publicly stated that the integration process will be
    expedited, and that hardware to allow Border Patrol agents to check
    detained aliens in both IDENT and IAFIS will be provided to Border
    Patrol stations on an expedited timetable. However, additional issues
    remain to be resolved, such as access to DHS's immigration databases by
    the FBI and state and local officials and questions about what
    fingerprint information will be made available to immigration
    inspectors at ports of entry.
        The FBI's Efforts to Improve the Sharing of Intelligence and Other
    Information.--A December 2003 OIG audit examined the FBI's efforts to
    enhance its sharing of intelligence and law enforcement information
    with federal, state, and local officials. The audit noted that
    fundamental reform with regard to sharing this information is under way
    at the FBI. The audit also found that the FBI has taken a series of
    actions to improve its ability to communicate information within the
    FBI, analyze intelligence, and disseminate information outside the FBI.
    However, the OIG audit described continued obstacles to the FBI's
    reform efforts and cited the need for: (1) improving information
    technology; (2) improving the FBI's ability to analyze intelligence;
    (3) overcoming security clearance and other security issues concerning
    the sharing of information with state and local law enforcement
    agencies; and (4) establishing policies and procedures for managing the
    flow of information.
        FBI Casework and Human Resource Allocation.--A September 2003 OIG
    audit examined the FBI's use of resources in its investigative programs
    over a 7-year period--6 years prior to September 11, 2001, and 9 months
    after that date. The audit provided detailed statistics on the FBI's
    allocation of resources to its ten program areas during this period. It
    also examined the FBI's planned allocation of resources during this
    same period compared to the actual allocation of resources. In
    addition, the OIG audit detailed the types and numbers of cases the FBI
    investigated in these program areas. Using data from the FBI's systems,
    the OIG found that although the FBI had identified combating terrorism
    as its top priority in 1998, until the September 11 attacks it devoted
    significantly more of its agent resources to traditional law
    enforcement activities, such as white-collar crime, organized crime,
    drug, and violent crime investigations, than to its counterterrorism
    programs.
        In a current follow-up review examining the FBI's use of resources,
    the OIG is examining in greater detail the operational changes in the
    FBI resulting from this ongoing reprioritization effort, including the
    types of offenses that the FBI is no longer investigating at pre-
    September 11 levels and the changes in the types of cases worked at
    individual field offices. After completing this follow-up review, the
    OIG plans to open an additional audit to obtain feedback from federal,
    state, and local law enforcement agencies regarding the impact of the
    FBI's reprioritization on their operations.
        Review of the FBI's Performance in Deterring, Detecting, and
    Investigating the Espionage Activities of Robert Philip Hanssen.--In a
    comprehensive special report released in August 2003, the OIG examined
    the FBI's efforts to detect, deter, and investigate the espionage of
    Robert Hanssen, the most damaging spy in FBI history. The OIG review
    concluded that Hanssen escaped detection not because he was
    extraordinarily clever and crafty in his espionage, but because of
    long-standing systemic problems in the FBI's counterintelligence
    program and a deeply flawed FBI internal security program. The review
    also found that the FBI has taken important steps to improve its
    internal security program since Hanssen's arrest, including the
    implementation of a counterintelligence-focused polygraph examination
    program, development of a financial disclosure program, and creation of
    a Security Division. However, the OIG review concluded that some of the
    most serious weaknesses still had not been remedied fully. The OIG is
    continuing to monitor the FBI's response to the recommendations in this
    report.

    Ongoing Reviews
        In addition to these recently issued reports, the OIG has
    additional reviews under way that are examining other critical issues
    in the FBI. Examples of these ongoing reviews include the following.
        Terrorist Screening Center.--On September 16, 2003, the President
    established the Terrorist Screening Center (TSC) to consolidate
    terrorist watch lists and provide 24/7 operational support for
    thousands of federal officers who need access to such watch lists. The
    FBI was assigned responsibility to administer the TSC and is working
    with the DHS, the Department of State, the Central Intelligence Agency,
    and other agencies to make the TSC operational. Last week, the OIG
    initiated an audit to examine whether the TSC: (1) has implemented a
    viable strategy for accomplishing its mission; (2) is effectively
    coordinating with participating agencies; and (3) is appropriately
    managing the terrorist-related information to ensure that a complete,
    accurate, and current watch list is developed and maintained.
        Attorney General Guidelines.--In May 2002, the Attorney General
    issued revised guidelines that govern general crimes and criminal
    intelligence investigations. The OIG review is examining the FBI's
    implementation of the four sets of guidelines: Attorney General's
    Guidelines Regarding the Use of Confidential Informants; Attorney
    General's Guidelines on FBI Undercover Operations; Attorney General's
    Guidelines on General Crimes, Racketeering Enterprise and Terrorism
    Enterprise Investigations; and Revised Department of Justice Procedures
    for Lawful, Warrantless Monitoring of Verbal Communications. The OIG
    review seeks to determine what steps the FBI has taken to implement the
    Guidelines, examine how effective those steps have been, and assess the
    FBI's compliance with key provisions of the Guidelines.
        Terrorism Task Forces.--The OIG is examining how the law
    enforcement and intelligence functions of the Department's Terrorism
    Task Forces support their efforts to detect, deter, and disrupt
    terrorism. The review is specifically evaluating the purpose,
    priorities, membership, functions, lines of authority, and
    accomplishments for the FBI's Joint Terrorism Task Forces, National
    Joint Terrorism Task Force, Foreign Terrorist Tracking Task Force, the
    United States Attorneys' Offices' Anti-Terrorism Advisory Councils, and
    the Deputy Attorney General's National Security Coordination Council.
        DNA Laboratory.--The OIG is completing a review that examines the
    failure of a former technician in the FBI Laboratory DNA Analysis Unit
    to complete steps designed to detect contamination in the analysis
    process. In addition, with the assistance of nationally known DNA
    scientists, the OIG is completing a broader assessment of the DNA
    Analysis Unit to determine if vulnerabilities exist in its DNA
    protocols and procedures.
        Language Translation Services.--The OIG is reviewing the FBI's
    language translation services program in light of the FBI's efforts
    after the September 11 terrorist attacks to hire linguists and to use
    technology to handle the increasing backlog of counterterrorism and
    foreign counterintelligence translation work. The OIG review will
    examine the extent and causes of any FBI translation backlog; assess
    the FBI's efforts to hire additional translators; and evaluate whether
    FBI procedures ensure appropriate prioritization of work, accurate and
    timely translations of pertinent information, and proper security of
    sensitive information.
        Intelligence Analysts.--One of the FBI's primary initiatives after
    the September 11 terrorist attacks was to enhance the FBI's analytical
    ability and intelligence capabilities. An OIG audit is examining how
    the FBI hires, trains, and staffs the various categories of FBI
    intelligence analysts. The OIG is reviewing the FBI's progress toward
    meeting hiring, retention, and training goals as well as how analysts
    are used to support the FBI's counterterrorism mission.
        Legal Attache Program.--The FBI's overseas operations have expanded
    significantly in the last decade. The FBI operates offices known as
    Legal Attache or Legats in 46 locations around the world. The primary
    mission of Legats is to support FBI investigative interests by
    establishing liaison with foreign law enforcement agencies. Through
    interviews and visits to several Legats, an OIG review is examining the
    type of activities performed by Legats, the effectiveness of Legats in
    establishing liaison with foreign law enforcement agencies and
    coordinating activities with other law enforcement and intelligence
    agencies overseas, the criteria used by the FBI to determine the
    placement of Legat offices, and the process used for selecting and
    training FBI personnel for Legat positions.
        Smith/Leung Case.--At the request of FBI Director Mueller, the OIG
    is conducting a review of the FBI's performance in connection with
    former FBI Supervisory Special Agent James J. Smith, who recently was
    charged with gross negligence in his handling of national defense
    information. The OIG's review will examine Smith's career at the FBI
    and his relationship with Katrina Leung, an asset in the FBI's Chinese
    counterintelligence program with whom Smith allegedly had a long-term
    intimate relationship. The OIG also will examine a variety of
    performance and management issues related to the Smith/Leung case.

                                   CONCLUSION

        The FBI is making significant strides in reevaluating and
    reengineering many of its historic processes and procedures. Central to
    this transformation is the FBI's critical need to modernize its archaic
    IT systems. Development and deployment of the Trilogy system--the
    centerpiece of the agency's IT modernization project--has until
    recently been frustratingly delayed and costly. The delays have left
    FBI managers, agents, analysts, and other employees without the modern
    tools they need. Considering the antiquated information technology
    environment in which they have had to operate for many years, FBI
    employees deserve much credit for what they have been able to
    accomplish.
        Trilogy, when it is finally implemented, will greatly enhance the
    FBI's information technology capabilities. Much of the Trilogy upgrade
    is nearing completion, although the Virtual Case File still needs
    significant effort. However, implementation of Trilogy will not signal
    the end of the FBI's information technology modernization effort. The
    project will lay the foundation for future information technology
    advancements, but constant effort will be needed to ensure that the FBI
    implements and maintains cutting edge technology that permits its
    employees to effectively process and share information. This must
    remain a critical priority for the FBI. The FBI needs to provide
    sustained and careful management of the continuing upgrades to ensure
    that FBI employees have the tools they need to perform their mission.
    The FBI's ability to perform its functions effectively, including
    counterterrorism, counterintelligence, and criminal law enforcement,
    depends to a large degree on the success of the FBI's information
    technology projects. Given the importance of this issue, the OIG will
    continue to review and monitor the FBI's progress in these efforts.

    STATEMENT OF LAURIE E. EKSTRAND, DIRECTOR, HOMELAND
                SECURITY AND JUSTICE ISSUES, GOVERNMENT
                ACCOUNTABILITY OFFICE
    ACCOMPANIED BY RANDOLPH HITE, DIRECTOR, INFORMATION TECHNOLOGY
                ARCHITECTURE AND SYSTEMS ISSUES, GOVERNMENT ACCOUNTABILITY
                OFFICE

        Senator Gregg. Dr. Ekstrand?
        Ms. Ekstrand. Thank you, Mr. Chairman. I have a statement,
    a brief oral statement for both Mr. Hite and myself, and this
    statement covers overall progress in transformation,
    specifically in the areas of strategic planning and human
    capital planning, information technology management, and the
    realignment of staff resources to priority areas.
        Let me start with transformation. Overall, we are
    encouraged by the progress that the FBI has made in several
    areas, and of particular note, we want to focus on the
    completion of a new strategic plan and of a human capital plan.
    While for both of these plans we can cite areas where they
    could be improved, on the whole, we believe they contain a
    number of elements of best practice.
        Among the positive elements of the strategic plan include a
    comprehensive mission statement, results-oriented long-term
    goals and objectives, and it delineates priorities. But it
    could be improved by discussions of several additional topics,
    including how success in achieving goals is going to be
    measured. We understand that the FBI is going to augment their
    plan and include some of the information that we are
    recommending and we certainly commend that effort.
        In terms of strategic human capital planning, this also
    includes a number of the principles of sound human capital
    planning. Our main concerns in this area are that, first, the
    FBI has not hired a human capital officer as yet, and second,
    the performance management system for non-SES staff is not
    adequately linked to performance.
        Now let me turn your attention to the FBI's effort to
    leverage the vast potential of information technology, IT, to
    assist the Bureau in transforming how it operates. While the
    FBI has long recognized the potential, as evidenced by sizeable
    sums of money that it has invested in IT projects, not the
    least of which is Trilogy, what it has not recognized, as well,
    as is this: How well the Bureau manages IT will ultimately
    determine how well the Bureau leverages IT as a transformation
    tool.
        Our research has shown that organizations that successfully
    exploit IT as a change agent employ similar approaches in
    managing, including adopting a corporate or agency-wide
    approach to managing IT, having an enterprise architecture, and
    having portfolio-based investment management processes.
        Unfortunately, the FBI has yet to manage its IT efforts in
    this way. As we have previously reported, the absence of such
    an approach to IT management results in IT investments that are
    duplicative, not interoperable, do not support mission goals
    and objectives, and cost more and take longer to implement than
    they should. In the case of the FBI, such cost, schedule, and
    performance problems can be seen in Trilogy.
        Now, to the FBI's credit, its strategic plan and its recent
    proposals and actions recognize longstanding IT management
    shortcomings. That is the good news. The bad news is that until
    these recent steps become institutionalized, the prognosis for
    the FBI's ability to effectively use IT to transform itself is
    uncertain, at best.
        Now, just briefly, let me turn to the staffing of priority
    areas, that is, counterterrorism, counterintelligence, and
    cyber, and the effects on more traditional crime areas,
    specifically drugs, white collar crime, and violent crime.
        The FBI's three top priority areas now deploy about 36
    percent of field agent positions, and this is the largest
    single category of agents. But despite the growth in agents in
    the area, agents from traditional crimes are still needed to
    work all leads, and this is fairly substantial, as Director
    Mueller indicated.
        Now, as would be suspected, the number of counterterrorism
    matters have increased substantially since 9/11. Conversely,
    the number of open matters in drugs, violent crime, and white
    collar crime has diminished. We have ongoing work to develop
    further information concerning potential effects of these
    shifts, particularly in the drug area, and we expect to report
    our findings later this year.
        This concludes our oral statement. Mr. Hite and I would be
    happy to answer any questions.
        Senator Gregg. Did you want to add anything, Mr. Hite?
        Mr. Hite. No, sir. We are fully integrated and
    interoperable up here.

                               PREPARED STATEMENT

        Senator Gregg. That is a first. We appreciate that.
        [The statement follows:]

                    Prepared Statement of Laurie E. Ekstrand

                               FBI TRANSFORMATION

    FBI CONTINUES TO MAKE PROGRESS IN ITS EFFORTS TO TRANSFORM AND ADDRESS
                                   PRIORITIES

    What GAO Found
        We commend the FBI for its progress in some areas of its
    transformation efforts since we last testified on this subject in June
    2003. We believe that commitment from the top, a dedicated
    implementation team, involvement of employees in the process, and the
    achievement of key milestones are encouraging signs of progress.
    However, we continue to encourage the development of a comprehensive
    transformation plan that would consolidate the crosswalks between the
    various aspects of transformation. This could help management oversee
    all aspects of the transformation.
        The FBI's strategic plan has been completed. Overall we found the
    plan has important strengths as well as some areas in which
    improvements could be made. For example, the plan includes key elements
    of successful strategic plans (i.e. a comprehensive mission statement
    and results-oriented, long-term goals and objectives). However, the
    plan is missing some elements that could have made it more informative.
    Officials advised us that some of these elements are available
    elsewhere (i.e. lists of stakeholders and performance measures). The
    absence of these elements makes the plan less comprehensive and useful.
        The FBI has also developed a strategic human capital plan that
    contains many of the principles that we have laid out for an effective
    human capital system (i.e. the need to fill identified skill gaps by
    using personnel flexibilities). However, the FBI has yet to hire a
    human capital officer to manage the implementation of this process and
    the performance management system for the bulk of FBI personnel remains
    inadequate to discern meaningful distinctions in performance.
        The FBI recognizes the importance of information technology (IT) as
    a transformation enabler, making it an explicit priority in its
    strategic plan and investing hundreds of millions of dollars in
    initiatives to expand its systems environment and thereby improve its
    information analysis and sharing. However, FBI's longstanding approach
    to managing IT is not fully consistent with the structures and
    practices of leading organizations. A prime example of the consequences
    of not employing these structures and practices is the cost and
    schedule shortfalls being experienced on Trilogy, the centerpiece
    project to modernize infrastructure and case management applications.
    Recent FBI proposals, plans, and initiatives indicate that it
    understands its management challenges and is focused on addressing
    them.
        Another key element of the FBI's transformation is the realignment
    of resources to better focus on the highest priorities--
    counterterrorism, counterintelligence and cyber investigations. The FBI
    resources allocated to priority areas continue to increase and now
    represent its single largest concentration of field agent resources--36
    percent of its fiscal year 2004 field agent positions.
        Mr. Chairman and Members of the Subcommittee: We are pleased to be
    here today to address this committee regarding GAO's work assessing the
    Federal Bureau of Investigation's (FBI) transformation efforts. As you
    are well aware, the September 11, 2001, terrorist attacks were the most
    destructive and costly terrorist events that this country has ever
    experienced. The event precipitated a shift in how the FBI uses its
    investigative resources to prevent future terrorist incidents and
    ultimately led to FBI's commitment to reorganize and transform itself.
    Today's testimony follows up on our June 2003 testimony before the
    House Appropriations Subcommittee on Commerce, Justice, State and the
    Judiciary and Related Agencies on the FBI's transformation efforts.\1\
    ---------------------------------------------------------------------------
        \1\ See U.S. General Accounting Office, FBI Reorganization:
    Progress Made in Efforts, but Major Challenges Continue, GAO-03-759T
    (Washington, D.C.: June 18, 2003).
    ---------------------------------------------------------------------------
        It also draws on continuing work for the same subcommittee, the
    House Select Committee on Intelligence and several individual
    requestors.
        We will discuss the FBI's: overall progress in transformation,
    efforts to update its strategic plan, development of a strategic human
    capital plan, information technology management capabilities, and
    realignment of staff resources to priority areas and the impact of the
    realignments on the FBI's drug and other criminal investigation
    programs.
        In brief, we commend the FBI for its progress in its transformation
    efforts. We believe that commitment from the top, a dedicated
    implementation team, involvement of employees, and the development of
    strategic and human capital plans are encouraging signs of FBI's
    reorganization progress. However, we want to note some activities that
    may enhance the value of future planning efforts, reiterate the
    importance of developing and tracking measures of progress toward
    achieving goals, discuss the history and future of IT efforts, and the
    shift in resources from the traditional crime areas to the new priority
    areas.
        Our testimony today is based on interviews with management and
    program officials at FBI headquarters during the last 2 years. We also
    interviewed management personnel in FBI field offices; \2\ and obtained
    input from special agents and analysts in FBI field offices last
    spring.\3\ Additionally, to assess the progress that the FBI has made
    in its transformation efforts, we reviewed information from an October
    2003 and March 2004 briefing that the FBI provided to GAO on its
    transformation efforts and FBI's recent strategic plan and strategic
    human capital plan. We compared these documents against GAO's leading
    practices in the areas of organizational mergers and transformations,
    strategic planning, and strategic human capital management.
    ---------------------------------------------------------------------------
        \2\ We judgmentally selected field offices with the largest number
    of special agent positions to be reallocated either away from drug
    enforcement or to the counterterrorism program areas based on the FBI's
    May 2002 reallocation plans. As a result, we visited the FBI's Atlanta,
    Chicago, Dallas, Denver, Detroit, Los Angeles, Miami, Newark, New York
    City, Phoenix, Sacramento, San Antonio, San Francisco, and Washington
    field offices in 2003 and the Dallas, Miami, and Washington field
    offices in 2004.
        \3\ We obtained input from 176 special agents and 34 analysts.
    These FBI investigative resources were not randomly selected from all
    agents and analysts in the 14 offices we visited. In addition, we did
    not specifically choose the agents who completed our questionnaire. FBI
    field office managers selected agents and analysts to participate in
    our inquiry. Consequently, we consider the questionnaire and interview
    results to be indicators of the FBI's transformation efforts but they
    cannot be generalized to all agents and analysts in these offices or to
    the FBI nationwide.
    ---------------------------------------------------------------------------
        We focused on assessing the FBI's strategic plan for key elements
    required by the Government Performance and Results Act of 1993
    (GPRA).\4\ GPRA provides a set of practices for developing a useful and
    informative strategic plan that can be applied to any level of the
    federal government to improve the quality and informative value of
    strategic plans to Congress, other key stakeholders, and the staff
    charged with achieving the agency's strategic goals. To make this
    assessment we used criteria we developed for assessing agency strategic
    plans under GPRA.\5\ Our assessment is based on a review of the FBI's
    strategic plan with limited information about the process the FBI
    undertook to develop the plan. We acknowledge that the FBI may be
    addressing these elements in other ways.
    ---------------------------------------------------------------------------
        \4\ Pub. L. No. 103-62, 107 Stat. 285 (1993).
        \5\ U.S. General Accounting Office, Agencies' Strategic Plans Under
    GPRA: Key Questions to Facilitate Congressional Review, GAO/GGD-10.1.16
    (Washington, D.C.: May 1, 1997). U.S. General Accounting Office,
    Executive Guide: Effectively Implementing the Government Performance
    and Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1996).
    ---------------------------------------------------------------------------
        We reviewed FBI's strategic plan to see how it addressed six key
    elements: mission statement, long-term goals and objectives,
    relationship between the long-term goals and annual performance goals,
    approaches or strategies to achieve the goals and objectives, key
    external factors that could affect achievement of goals, and use of
    program evaluation to establish or revise strategic goals.
        Our analysis of the FBI's information technology (IT) management
    capabilities is based on our prior work on the FBI's enterprise
    architecture efforts and follow-up work to determine recent progress,
    information from the Justice Inspector General's work on evaluating the
    FBI's IT investment management process, and recent work on the
    organizational placement and authority of the FBI's Chief Information
    Officer (CIO). We also used our prior research of CIO management
    practices of successful organizations and our evaluations of large IT
    modernization efforts similar to the Trilogy program. Further, we
    conducted follow up work with the FBI's program management office to
    determine the cost and schedule overruns for Trilogy.
        To address the effect of the FBI's resource realignments on drug
    and other traditional law enforcement efforts, we analyzed FBI
    budgetary, staffing, and caseload data and interviewed selected FBI,
    Drug Enforcement Administration (DEA), and local law enforcement
    officials.\6\
    ---------------------------------------------------------------------------
        \6\ We interviewed officials from the National Sheriffs'
    Association, National Association of Chiefs of Police, International
    Association of Chiefs of Police, and local police agencies located in
    most of the cities in which we made FBI field office visits in 2003.
    ---------------------------------------------------------------------------
        We performed our audit work in accordance with generally accepted
    government auditing standards.
    FBI Continues to Make Progress in its Transformation Efforts but Needs
            a Comprehensive Transformation Plan to Guide Its Efforts
        In our June 2003 testimony on the FBI's reorganization before the
    House Appropriations Subcommittee on Commerce, Justice, State, the
    Judiciary and Related Agencies, we reported that the FBI had made
    progress in its efforts to transform the agency, but that some major
    challenges continued \7\. We also noted that any changes in the FBI
    must be part of, and consistent with, broader, government-wide
    transformation efforts that are taking place, especially those
    resulting from the establishment of the Department of Homeland Security
    and in connection with the intelligence community. We also noted that
    to effectively meet the challenges of the post-September 11,
    environment, the FBI needed to consider employing key practices that
    have consistently been found at the center of successful transformation
    efforts.\8\ These key practices are to ensure that top leadership
    drives the transformation; establish a coherent mission and integrated
    strategic goals to guide the transformation; focus on a key set of
    principles and priorities at the outset of the transformation, set
    implementation goals and a time line to build momentum and show
    progress from day one; dedicate an implementation team to manage the
    transformation process; use the performance management system to define
    responsibility and ensure accountability for change; establish a
    communication strategy to create shared expectations and report related
    progress; involve employees to obtain their ideas and gain their
    ownership for the transformation; and build a world-class organization
    that continuously seeks to implement best practices in processes and
    systems in areas such as information technology, financial management,
    acquisition management, and human capital.
    ---------------------------------------------------------------------------
        \7\ U.S. General Accounting Office, FBI Reorganization: Progress
    Made in Efforts to Transform, but Major Challenges Continue GAO-03-759T
    (Washington, D.C.: June 18, 2003).
        \8\ For more information, see U.S. General Accounting Office,
    Results-Oriented Cultures: Implementation Steps to Assist Mergers and
    Organizational Transformation GAO-03-669 (Washington, D.C.: July 2,
    2003).
    ---------------------------------------------------------------------------
        Today, we continue to be encouraged by the progress that the FBI
    has made in some areas as it continues its transformation efforts.
    Specifically worthy of recognition are the commitment of Director
    Mueller and senior-level leadership to the FBI's reorganization; the
    FBI's communication of priorities; the implementation of core
    reengineering processes to improve business practices and assist in the
    bureau's transformation efforts \9\; the dedication of an
    implementation team to manage the reengineering efforts; the
    development of a strategic plan and a human capital plan; the efforts
    to involve employees in the strategic planning and reengineering
    processes; and the FBI's efforts to realign its activities, processes,
    and resources to focus on a key set of principles and priorities.
    ---------------------------------------------------------------------------
        \9\ The FBI has core-reengineering processes under way in the
    following areas: (1) strategic planning and execution, (2) capital
    (human and equipment), (3) information management, (4) investigative
    programs, (5) intelligence, and (6) security management. There are
    about 40 business process-reengineering initiatives under these six
    core areas. Appendix I outlines the various initiatives under each core
    area.
    ---------------------------------------------------------------------------
        While the FBI has embedded crosswalks and timelines in their
    various transformation plans that relate one plan to another, we still
    encourage the development of an overall transformation plan that will
    pull all of the pieces together in one document. This document can be
    both a management tool to guide all of the efforts, as well as a
    communication vehicle for staff to see and understand the goals of the
    FBI. It is important to establish and track intermediate and long-term
    transformation goals and establish a timeline to pinpoint performance
    shortfalls and gaps and suggest midcourse corrections. By demonstrating
    progress towards these goals, the organization builds momentum and
    demonstrates that real progress is being made. We will continue to
    review this issue.

    FBI Has Developed a Strategic Plan with a Mission, Strategic Goals, and
            Approaches That Reflect Its New Priorities
        When we last testified in June 2003, the FBI was in the process of
    compiling the building blocks of a strategic plan. At that time it was
    anticipated that the plan would be completed by the start of fiscal
    year 2004. Although delayed by about 5 months, the FBI has since
    completed its strategic plan.\10\ FBI officials indicated that the
    implementation of two staff reprogrammings and delays in the
    appropriation of its fiscal year 2003 and fiscal year 2004 budget, as
    well as initiatives undertaken to protect the homeland during the war
    in Iraq, delayed the completion of the strategic plan.
    ---------------------------------------------------------------------------
        \10\ Strategic planning is one of about 40 ongoing reengineering
    projects the FBI has undertaken to address issues related to its
    transformation efforts.
    ---------------------------------------------------------------------------
        Overall we found the plan has some important strengths as well as
    some areas in which improvements could be made. The strategic plan
    includes key elements of successful strategic plans, including a
    comprehensive mission statement; results-oriented, long-term goals and
    objectives; and approaches to achieve the goals and objectives. The FBI
    plan presents 10 strategic goals that appear to cover the FBI's major
    functions and operations, are related to the mission, and generally
    articulate the results in terms of outcomes the FBI seeks to achieve.
    For example, one of the plan's strategic goals is ``protect the United
    States from terrorist attack;'' another goal is ``reduce the level of
    significant violent crime.'' The plan also lists strategic objectives
    and performance goals for each long-term strategic goal. However, the
    performance goals do not appear to be outcomes against which the FBI
    will measure progress; rather they appear to describe approaches or be
    key efforts that FBI will undertake to achieve its long-term strategic
    goals and objectives.
        Importantly, the plan acknowledges that the FBI faces competing
    priorities and clearly articulates its top 10 priorities, in order of
    priority. The strategic plan also frequently discusses the role
    partnerships with other law enforcement, intelligence, and homeland
    security agencies will play in achieving the plan's goals. The plan
    discusses the FBI's approach to building on its internal capacity to
    accomplish its mission-critical goals by improving management of human
    capital, information technology, and other investigative tools. The
    plan also discusses the external factors, such as global and domestic
    demographic changes and the communications revolution, which have
    driven the development of its strategic goals.

                Strategic Plan Could Be Improved by Discussing Other Key
                        Elements
        Although the FBI has addressed several key elements in its
    strategic plan, the plan needs more information on other elements of
    strategic planning that we have identified as significant to successful
    achievement of an organization's mission and goals. FBI officials
    indicated that some of these elements are available in other documents
    and were not included in the plan for specific reasons. As the FBI
    moves forward with its new strategic planning and execution process, it
    should consider addressing in its strategic plan the following key
    elements:
        Involving Key Stakeholders.--As we have previously testified, any
    changes at the FBI must be part of, and consistent with, broader
    governmentwide transformation efforts that are taking place, especially
    those resulting from the establishment of the Department of Homeland
    Security and in connection with changes in the intelligence community.
    Successful organizations we studied based their strategic planning, to
    a large extent, on the interests and expectations of their
    stakeholders. Federal agency stakeholders include Congress and the
    administration, other federal agencies, state and local governments,
    third-party service providers, interest groups, agency employees, and,
    of course, the American public. Involving customers served by the
    organization--such as the users of the FBI's intelligence--is important
    as well. The FBI strategic plan does not describe which stakeholders or
    customers, were involved or consulted during the plan's development or
    the nature of their involvement. Such information would be useful to
    understanding the quality of the planning process FBI has undertaken
    and the extent to which it reflect the views of key stakeholders and
    customers. Consultation provides an important check for an organization
    that they are working toward the right goals and using reasonable
    approaches to achieve them.
        Relationship between Strategic and Annual Goals.--Under GPRA,
    agencies' long-term strategic goals are to be linked to their annual
    performance plans and the day-to-day activities of their managers and
    staff. OMB guidance states that a strategic plan should briefly outline
    (1) the type, nature, and scope of the performance goals being included
    in annual performance plans and (2) how these annual performance goals
    relate to the long-term, general goals and their use in helping
    determine the achievement of the general goals. Without this linkage,
    it may not be possible to determine whether an agency has a clear sense
    of how it will assess the progress made toward achieving its intended
    results.
        It is not clear from the plan how the FBI intends to measure its
    progress in achieving the long-term strategic goals and objectives
    because the plan's strategic objectives and performance goals are not
    phrased as performance measures and the plan does not describe or make
    reference to another document that contains annual performance
    measures. The plan also lacks a discussion of the systems FBI will have
    in place to produce reliable performance and cost data needed to set
    goals, evaluate results, and improve performance. According to an FBI
    official and documents the FBI provided, the FBI has developed
    ``performance metrics'' for each of its strategic goals.
        External and Internal Factors that Could Affect Goal Achievement.--
    While the plan clearly communicates how its forecast of external
    drivers helped to shape the FBI's strategy, the plan does not discuss
    the external and internal factors that might interfere with its ability
    to accomplish its goals. External factors could include economic,
    demographic, social, technological, or environmental factors. Internal
    factors could include the culture of the agency, its management
    practices, and its business processes. The identification of such
    factors would allow FBI to communicate actions it has planned that
    could reduce or ameliorate the potential impact of the external
    factors. Furthermore, the plan could also include a discussion of the
    FBI's plans to address internal factors within its control that could
    affect achievement of strategic goals. The approach the FBI plans to
    take to track its success in achieving change within the agency should
    be an integral part of FBI's strategy. A clear and well-supported
    discussion of the external and internal factors that could affect
    performance could provide a basis for proposing legislative or
    budgetary changes that the FBI may need to accomplish the FBI's goals.
        Role of Program Evaluation in Assessing Achievement of Goals and
    Effectiveness of Strategies.--Program evaluations can be a potentially
    critical source of information for Congress and others in ensuring the
    validity and reasonableness of goals and strategies, as well as for
    identifying factors likely to affect performance. Program evaluations
    typically assess the results, impact, or effects of a program or
    policy, but can also assess the implementation and results of programs,
    operating policies, and practices. The FBI's strategic plan does not
    explicitly discuss the role evaluation played in the development of its
    strategic plan or its plans for future evaluations (including scope,
    key issues, and time frame), as intended by GPRA. The FBI has
    redesigned its program evaluation process and updated the performance
    metric for each program. This information could have been, but was not
    included in the strategic plan. As discussed elsewhere in this
    testimony, the FBI has a series of reengineering efforts under way that
    relate to six core processes they are seeking to transform. A
    discussion of how these reengineering efforts relate to and support the
    achievement of the FBI's strategic goals would be a useful addition to
    the FBI's strategic plan.
        We believe that an organization's strategic plan is a critical
    communication tool and the credibility of the plan can be enhanced by
    discussing, even at a summary level, the approach the organization took
    in addressing these elements.

                FBI Has Involved Employees in the Strategic Planning
                        Process and Communicated its Priorities
        As noted earlier, employee involvement in strategic planning, and
    transformation in general, is a key practice of a successful agency as
    it transforms. FBI executive management seems to have recognized this.
    Field office managers and field staff we spoke with last year generally
    reported being afforded the opportunity to provide input. For example,
    field management in the 14 field offices we visited in 2003 reported
    that they had been afforded opportunities to provide input into the
    FBI's strategic planning process. In addition, 68 percent of the
    special agents and 24 of the 34 analysts who completed our
    questionnaire in 2003 reported that they had been afforded the
    opportunity to provide input to FBI management regarding FBI
    strategies, goals, and priorities by, among others, participating in
    focus groups or meetings and assisting in the development of the field
    offices' annual reports. FBI managers in the field offices we visited
    and 87 percent of the special agents and 31 of the 34 analysts who
    completed our questionnaire indicated that FBI management had kept them
    informed of the FBI's progress in revising its strategic plan to
    reflect changed priorities.
        FBI management also seems to have been effective in communicating
    the agency's top three priorities (i.e., counterterrorism,
    counterintelligence, and cyber crime investigations) to the staff. In
    addition to the awareness of management staff in FBI headquarters and
    field offices, nearly all of the special agents and all of the analysts
    who answered our questionnaire indicated that FBI executive management
    (i.e., Director Mueller and Deputy Director Gebhardt) had communicated
    the FBI's priorities to their field offices. Management and most of the
    agents we interviewed in the field were aware of the FBI's top three
    priorities.\11\ Further, over 90 percent of special agents and 28 of
    the 34 analysts who completed our questionnaire generally or strongly
    agreed that their field office had made progress in realigning its
    goals to be consistent with the FBI's transformation efforts and new
    priorities.
    ---------------------------------------------------------------------------
        \11\ Over 80 percent of the special agents and 24 of the 34
    analysts who completed our questionnaire in 2003 ranked
    counterterrorism, counterintelligence, and cyber crime investigations
    as the FBI's first, second, and third priorities, respectively.
    ---------------------------------------------------------------------------
    FBI Has Developed a Strategic Human Capital Plan
        In prior testimony, we highlighted the importance of the
    development of a strategic human capital plan to the FBI's
    transformation efforts, noting that strategic human capital management
    is the centerpiece of any management initiative, including any agency
    transformation effort. We noted that a strategic human capital plan
    should flow from the strategic plan and guide an agency to align its
    workforce needs, goals, and objectives with its mission-critical
    functions. We also noted that human capital planning should include
    both integrating human capital approaches in the development of the
    organizational plans and aligning the human capital programs with the
    program goals. In a September 2003 letter to the FBI director, we
    specifically recommended that the FBI: (1) hire a human capital officer
    to guide the development of a strategic human capital plan and the
    implementation of long-term strategic human capital initiatives and (2)
    replace its current pass/fail performance management system with one
    that makes meaningful distinctions in employee performance.
        Although the FBI has not yet hired a human capital officer, it has
    developed a strategic human capital plan. This plan contains many of
    the principles that we have laid out for an effective human capital
    system.\12\ For example, it highlights the need for the FBI to fill
    identified skill gaps, in such areas as language specialists and
    intelligence analysts, by using various personnel flexibilities
    including recruiting and retention bonuses.\13\ Concerning the hiring
    of a human capital officer, the FBI has efforts under way to recruit
    and hire a qualified candidate.
    ---------------------------------------------------------------------------
        \12\ U.S. General Accounting Office A Model of Strategic Human
    Capital Management, GAO-02-373SP, Washington, D.C.: (March 2002).
        \13\ U.S. General Accounting Office Human Capital: Effective Use of
    Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
    2, Washington, D.C.: (Dec. 6, 2002).
    ---------------------------------------------------------------------------
        The FBI said that it recognizes the need to review and revise its
    performance management system to be in line with its strategic plan,
    including desired outcomes, core values, critical individual
    competencies, and agency transformation objectives. It also recognizes
    that it needs to ensure that unit and individual performance are linked
    to organizational goals. A key initiative that has been undertaken by
    the FBI in this regard is the planning of a system for the Senior
    Executive Service that is based on, and distinguishes, performance. We
    have not reviewed the Senior Executive performance management system,
    but it should include expectations to lead and facilitate change and to
    collaborate both within and across organizational boundaries are
    critical elements as agencies transform themselves.\14\ As yet, the
    performance management system for the bulk of FBI personnel remains
    inadequate to identify meaningful distinctions in performance. The
    FBI's human capital plan indicates that the FBI is moving in the
    direction of addressing this need, and we are encouraged by this.
    ---------------------------------------------------------------------------
        \14\ U.S. General Accounting Office, Results-Oriented Cultures:
    Using Balanced Expectations to Manage Senior Executive Performance,
    GAO-02-966 (Washington, D.C.: Sept. 27, 2002).
    ---------------------------------------------------------------------------
        Clearly, the development of a strategic human capital plan is a
    positive step in this direction. However, the FBI, like other
    organizations, will face challenges as it implements its human capital
    plan. As we have noted before, when implementing new human capital
    authorities, how it is done, when it is done, and the basis on which it
    is done can make all the difference in whether such efforts are
    successful.

    Effective Information Technology Management Is Critical to the FBI's
            Ability to Successfully Transform
        Information technology can be a valuable tool in helping
    organizations transform and better achieve mission goals and
    objectives. Our research of leading private and public sector
    organizations, as well as our past work at federal departments and
    agencies, shows that successful organizations' executives have embraced
    the central role of IT as an enabler for enterprise-wide
    transformation.\15\ As such they adopt a corporate, or agencywide,
    approach to managing IT under the leadership and control of a senior
    executive--commonly called a chief information officer (CIO)--who
    operates as a full partner with the organizational leadership team in
    charting the strategic direction and making informed IT investment
    decisions.
    ---------------------------------------------------------------------------
        \15\ U.S. General Accounting Office, Maximizing the Success of
    Chief Information Officers: Learning from Leading Organizations, GAO-
    01-376G (Washington, D.C.: February 2001) and U.S. General Accounting
    Office, Architect of the Capitol: Management and Accountability
    Framework Needed for Organizational Transformation, GAO-03-231
    (Washington, D.C.: January 2003).
    ---------------------------------------------------------------------------
        In addition to adopting centralized leadership, these leading
    organizations also develop and implement institutional or agencywide IT
    management controls aimed at leveraging the vast potential of
    technology in achieving mission outcomes. These include using a systems
    modernization blueprint, commonly referred to as an enterprise
    architecture,\16\ to guide and constrain system investments and using a
    portfolio-based approach to IT investment decision making. We have also
    observed that without these controls, organizations increase the risk
    that system modernization projects (1) will experience cost, schedule,
    and performance shortfalls; (2) will not reduce system redundancy and
    overlap; and (3) will not increase interoperability and effective
    information sharing.
    ---------------------------------------------------------------------------
        \16\ An architecture is a set of descriptive models (e.g., diagrams
    and tables) that define, in business terms and in technology terms, how
    an organization operates today, how it intends to operate in the
    future, and how it intends to invest in technology to transition from
    today's operational environment to tomorrow's.
    ---------------------------------------------------------------------------
        FBI currently relies extensively on the use of IT to execute its
    mission responsibilities, and this reliance is expected to grow. For
    example, it develops and maintains computerized systems, such as the
    Combined DNA (deoxyribonucleic acid) Index System to support forensic
    examinations, the Digital Collection System to electronically collect
    information on known and suspected terrorists and criminals, and the
    National Crime Information Center and the Integrated Automated
    Fingerprint Identification System to identify criminals. It is also in
    the midst of a number of initiatives aimed at (1) extending data
    storage and retrieval systems to improve information sharing across
    organizational components and (2) expanding its IT infrastructure to
    support new software applications. According to FBI estimates, the
    bureau manages hundreds of systems and associated networks and
    databases at an average annual cost of about $800 million. In addition,
    the bureau plans to invest about $255 million and $286 million in
    fiscal years 2004 and 2005, respectively, in IT services and systems,
    such as the Trilogy project. Trilogy is the bureau's centerpiece
    project to (1) replace its system infrastructure (e.g., wide area
    network) and (2) consolidate and modernize key investigative case
    management applications. The goals of Trilogy include speeding the
    transmission of data, linking multiple databases for quick searching,
    and improving operational efficiency by replacing paper with electronic
    files.
        The FBI Director recognizes the importance of IT to transformation,
    and as such has made it one of the bureau's top 10 priorities.\17\
    Consistent with this, the FBI's strategic plan contains explicit IT-
    related strategic goals, objectives, and initiatives (near-term and
    long-term) to support the collection, analysis, processing, and
    dissemination of information. Further, the FBI's newly appointed CIO
    understands the bureau's longstanding IT management challenges and is
    in the process of defining plans and proposals to effectively execute
    the FBI's strategic IT initiatives. Nevertheless, the bureau's
    longstanding approach to managing IT is not fully consistent with
    leading practices, as has been previously reported by us and others.
    The effect of this, for example, can be seen in the cost and schedule
    shortfalls being experienced on Trilogy.
    ---------------------------------------------------------------------------
        \17\ For example, see Federal Bureau of Investigation, Statement of
    Robert S. Mueller, III, Federal Bureau of Investigation before the
    Subcommittee for the Departments of Commerce, Justice, and State, the
    Judiciary, and Related Agencies, Committee on Appropriations, House of
    Representatives, (Washington, D.C.: June 2002).
    ---------------------------------------------------------------------------
                FBI Has Not Had Sustained IT Management Leadership with
                        Bureauwide Authority
        Our research of private and public sector organizations that
    effectively manage IT shows that they have adopted an agencywide
    approach to managing IT under the sustained leadership of a CIO or
    comparable senior executive who has the responsibility and the
    authority for managing IT across the agency.\18\ According to the
    research, these executives function as members of the leadership team
    and are instrumental in developing a shared vision for the role of IT
    in achieving major improvements in business processes and operations to
    effectively optimize mission performance. In this capacity, leading
    organizations also provide these individuals with the authority they
    need to carry out their diverse responsibilities by providing budget
    management control and oversight of IT programs and initiatives.
    ---------------------------------------------------------------------------
        \18\ For example, see GAO-03-231 and GAO-01-376G.
    ---------------------------------------------------------------------------
        Over the last several years, the FBI has not sustained IT
    management leadership. Specifically, the bureau's key leadership and
    management positions, including the CIO, have experienced frequent
    turnover. For instance, the CIO has changed five times in the past 24
    months. The current CIO, who is also the CIO at the Department of
    Justice's Executive Office of the U.S. Attorneys (EOUSA), is
    temporarily detailed to the FBI for 6 months and is serving in an
    acting capacity while also retaining selected duties at EOUSA. In
    addition, the IT official responsible for developing the bureau's
    enterprise architecture, the chief architect, has changed five times in
    the past 16 months. As a result, development and implementation of key
    management controls, such as enterprise architecture, have not
    benefited from sustained management attention and leadership and thus
    have lagged, as described in sections below.
        In addition, the FBI has not provided its CIO with bureauwide IT
    management authority and responsibility. Rather, the authority and
    responsibility for managing IT is diffused across and vested in the
    bureau's divisions. As our research and work at other agencies has
    shown, managing IT in this manner results in disparate, stove-piped
    environments that are unnecessarily expensive to operate and maintain.
    In the FBI's case, it resulted, as reported by Justice's Inspector
    General in December 2002,\19\ in 234 nonintegrated applications,
    residing on 187 different servers, each of which had its own unique
    databases, unable to share information with other applications or with
    other government agencies. According to the acting CIO, the FBI is
    considering merging bureauwide authority and responsibility for IT in
    the CIO's office with the goal of having this in place in time to
    formulate the bureau's fiscal year 2006 budget request. In our view,
    this proposal, if properly defined and implemented, is a good step
    toward implementing the practices of leading organizations. However,
    until it is implemented, we remain concerned that the bureau will not
    be positioned to effectively leverage IT as an bureauwide resource.
    ---------------------------------------------------------------------------
        \19\ U.S. Department of Justice, Office of the Inspector General,
    Federal Bureau of Investigation's Management of Information Technology
    Investments, Report 03-09 (Washington, D.C.: December 2002).
    ---------------------------------------------------------------------------
                FBI Does Not Have an Enterprise Architecture but Is Taking
                        Steps to Develop One
        As discussed in our framework for assessing and improving
    enterprise architecture management,\20\ an architecture is an essential
    tool for effectively and efficiently engineering business operations
    (e.g., processes, work locations, and information needs and flows) and
    defining, implementing, and evolving IT systems in a way that best
    supports these operations. It provides systematically derived and
    captured structural descriptions--in useful models, diagrams, tables,
    and narrative--of how a given entity operates today and how it plans to
    operate in the future, and it includes a road map for transitioning
    from today to tomorrow. Managed properly, an enterprise architecture
    can clarify and help optimize the interdependencies and
    interrelationships among a given entity's business operations and the
    underlying systems and technical infrastructure that support these
    operations; it can also help share information among units within an
    organization and between the organization and external partners. Our
    experience with federal agencies has shown that attempting to modernize
    systems without having an enterprise architecture often results in
    systems that are duplicative, not well integrated, unnecessarily costly
    to maintain, and limited in terms of optimizing mission
    performance.\21\
    ---------------------------------------------------------------------------
        \20\ U.S. General Accounting Office, Information Technology: A
    Framework for Assessing and Improving Enterprise Architecture
    Management (Version 1.1), GAO-03-584G (Washington, DC: April 2003).
        \21\ See for example, U.S. General Accounting Office, DOD Business
    Systems Modernization: Improvements to Enterprise Architecture
    Development and Implementation Efforts Needed, GAO-03-458, (Washington,
    D.C.: February 2003); Information Technology: DLA Should Strengthen
    Business Systems Modernization Architecture and Investment Activities,
    GAO-01-631 (Washington, D.C.: June 2001); and Information Technology:
    INS Needs to Better Manage the Development of Its Enterprise
    Architecture, GAO/AIMD-00-212 (Washington, D.C.: August 2000).
    ---------------------------------------------------------------------------
        We reported in September 2003, that the FBI did not have an
    enterprise architecture to guide and constrain its ongoing and planned
    IT investments.\22\ We also reported that the necessary management
    structures and processes--the management foundation, if you will--to
    develop, maintain, or implement an architecture were not in place. At
    the time, the bureau was beginning to build this foundation. For
    instance, the bureau had designated a chief architect, established an
    architecture governance board as its steering committee, and chosen a
    framework to guide its architecture development. However, it had yet to
    complete critical activities such as ensuring that business partners
    are represented on the architecture governance board, establishing a
    formal program office, adopting an architecture development
    methodology, and defining plans for developing its architecture.
    Further, it had not addressed other important activities, including
    developing written and approved architecture policy and integrating
    architectural alignment, into its IT investment management process. FBI
    officials told us then that the architecture was not a top priority and
    it had not received adequate resources and management attention.
    Consequently, we recommended, among other things, that the FBI director
    immediately designate development, maintenance, and implementation of
    an enterprise architecture as a bureau priority and manage it as such.
    ---------------------------------------------------------------------------
        \22\ U.S. General Accounting Office, Information Technology: FBI
    Needs an Enterprise Architecture to Guide Its Modernization Activities,
    GAO-03-959 (Washington, D.C.: September 2003) and U.S. General
    Accounting Office, Federal Bureau of Investigation's Comments on Recent
    GAO Report on its Enterprise Architecture Efforts, GAO-04-190R
    (Washington, D.C.: November 2003).
    ---------------------------------------------------------------------------
        Since our report, the FBI has made architecture development an
    explicit imperative in its strategic plan, and it has made progress
    toward establishing an effective architecture program. For instance,
    the FBI director issued a requirement that all divisions identify a
    point of contact that can authoritatively represent their division in
    the development of the architecture. In addition, a project management
    plan has been drafted that identifies roles and responsibilities and
    delineates plans and a set of actions to develop the architecture. The
    FBI is also in the process of hiring a contractor to help develop the
    architecture. Current plans call for an initial version of the
    architecture in June 2004. However, until the enterprise architecture
    is developed, the FBI will continue to manage IT without a bureauwide,
    authoritative frame of reference to guide and constrain its continuing
    and substantial IT investments, putting at risk its ability to
    implement modernized systems in a way that minimizes overlap and
    duplication and maximizes integration and mission support.

                FBI Is Working to Establish Control over IT Resources and
                        Investments
        Federal IT management law provides an important framework for
    effective investment management. It requires federal agencies to focus
    more on the results they have achieved through IT investments, while
    concurrently improving their acquisition processes. It also introduces
    more rigor and structure into how agencies are to select and manage IT
    projects. In May 2000, GAO issued \23\ a framework that encompasses IT
    investment management best practices based on our research at
    successful private and public sector organizations. This framework
    identifies processes that are critical for successful IT investment,
    such as tracking IT assets, identifying business needs for projects,
    selecting among competing project proposals using explicit investment
    criteria, and overseeing projects to ensure that commitments are met.
    ---------------------------------------------------------------------------
        \23\ U.S. General Accounting Office, Information Technology
    Investment Management: A Framework for Assessing and Improving Process
    Maturity, Exposure Draft, GAO/AIMD-10.1.23 (Washington, D.C.: May
    2000). In March 2004, GAO updated this version: U.S. General Accounting
    Office, Information Technology Investment Management: A Framework for
    Assessing and Improving Process Maturity, Version 1.1, GAO-04-394G
    (Washington, D.C.: March 2004).
    ---------------------------------------------------------------------------
        Using GAO's framework, the Inspector General evaluated the FBI's IT
    investment management process in 2002, including a case study of
    Trilogy, and concluded that the process at that time was immature and
    had hindered the bureau's ability to effectively manage IT.\24\
    Specifically, the Inspector General reported that the bureau lacked a
    basic investment management foundation. For instance, the bureau did
    not have fully functioning investment boards that were engaged in all
    phases of investment management. In addition, the bureau had not yet
    developed an IT asset inventory, the first step in tracking and
    controlling investments and assets. In a January 2004 follow-on
    report,\25\ the Inspector General credited the bureau with developing a
    plan to implement the recommendations and assigning responsibility to
    the Project Management Office to execute it, but noted that the office
    had not been granted authority to carry out this task. Project
    Management Office officials stated that as of February 24, 2004, they
    had not yet been provided such authority. According to the acting CIO,
    the FBI is currently in the process of hiring a contractor to assist
    with implementing all IT investment management processes bureauwide,
    including addressing remaining Inspector General recommendations. Until
    these steps are completed and mature investment processes are in place,
    the FBI will remain challenged in its ability to effectively minimize
    risks and maximize the returns of investments, including ensuring
    projects do not experience cost, schedule, and performance shortfalls.
    ---------------------------------------------------------------------------
        \24\ Department of the Justice, Office of the Inspector General
    Report 03-09.
        \25\ U.S. Department of Justice Office of the Inspector General,
    Action Required on the Federal Bureau of Investigation's Management of
    Information Technology Investments, Audit Report Number 03-09,
    (Washington, D.C.: January 2004).
    ---------------------------------------------------------------------------
                Until Effective IT Leadership and Management Controls are
                        Implemented, Projects Remain at Risk
        As discussed in the previous sections, the FBI has efforts
    proposed, planned and under way that, once implemented, are intended to
    establish an IT leadership and management controls framework that is
    consistent with those used by leading organizations. Until this is
    accomplished, however, the bureau will largely be relying on the same
    management structures and practices that it used in the past and that
    produced its current IT environment and associated challenges. As
    previously stated, these practices increase the risk that system
    modernization projects will not deliver promised capabilities on time
    and within budget. A prime example is Trilogy, the FBI's ongoing effort
    to, among other things, modernize its systems infrastructure and
    investigate case management applications. It consists of three
    components:
      --Transportation Network Component, which is communications network
            infrastructure (e.g., local area networks and wide area
            networks, authorization security, and encryption of data
            transmissions and storage),
      --Information Presentation Component, which is primarily desktop
            hardware and software (e.g., scanners, printers, electronic
            mail, web browser), and
      --User Applications Component, which includes the investigative case
            management applications \26\) that are being consolidated and
            modernized. This component is commonly referred to as the
            Virtual Case File, which when completed, is to allow agents to
            have multimedia capability that will enable them to among other
            things scan documents and photos into electronic case files and
            share the files with other agents electronically.
    ---------------------------------------------------------------------------
        \26\ According to the FBI, the existing applications are Integrated
    Intelligence Information Application (a database of over 20 million
    records supporting collection, analysis and dissemination of
    intelligence for national security and counterterrorism
    investigations); Criminal Law Enforcement Application (a repository for
    storing, searching, and linking investigative data about people,
    organizations, locations, vehicles, and communications); Telephone
    Application (FBI's central repository supporting collection, analysis,
    correlation and processing of telephone records for investigations);
    and Automated Case Support (a suite of integrated applications for
    managing, storing and searching information and documents for FBI
    investigations and administrative cases).
    ---------------------------------------------------------------------------
        To date, the FBI's management of Trilogy has resulted in multiple
    cost overruns and schedule delays. The table below details the cost and
    schedule shortfalls for each of the three components that comprise
    Trilogy. In summary, the FBI established its original project
    commitments in November 2000 but revised them in January 2002 after
    receiving additional funding ($78 million) to accelerate the project's
    completion. About this time, the FBI also revised the Trilogy design to
    introduce more functionality and capability than original planned.
    Based on the January 2002 commitments, the first two components of
    Trilogy were to be completed in July 2002, and the third was to be
    completed in December 2003. However, the project's components have
    collectively experienced cost overruns and schedule delays totaling
    about $120 million and at least 21 months, respectively.

                                                   TABLE 1.--TRILOGY COST AND SCHEDULE SHORTFALLS BY COMPONENT
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Variance between                    Variance between
                                                                                                          November 2000                     January 2002 and
                                                                      November 2000     January 2002    and January 2002     March 2004        March 2004
                            Trilogy Component                          commitments       commitments       commitments       commitments       commitments
                                                                    (date/funding in  (date/funding in    (schedule in    (date/funding in    (schedule in
                                                                        millions)         millions)      months/funding       millions)      months/funding
                                                                                                          in millions)                        in millions)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Transportation Network Component..............................          \1\ 5/04          \1\ 7/02   \2\ (22 months)    Completed 3/03          8 months
                                                                          \1\ $238.6        \1\ $288.1             $49.5              $0.0  ................
    Information Presentation Component............................          \1\ 5/04          \1\ 7/02   \2\ (22 months)              4/04         21 months
                                                                          \1\ $238.6        \1\ $288.1             $49.5            $339.8             $51.7
     User Applications Component..................................              6/04             12/03    \2\ (6 months)          \3\ 6/04          6 months
                                                                              $119.2            $139.7             $20.5        \3\ $170.0             $30.3
    Project management and other funding..........................             $22.0             $30.0              $8.0             $71.3             $41.3
                                                                   -----------------------------------------------------------------------------------------
          Total funding...........................................            $379.8            $457.8             $78.0            $581.1            $123.3
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Commitment date and funding amount is for both Transportation Network Component and Information Presentation Component.
    \2\ Months the schedule commitment was accelerated.
    \3\ According to a key Trilogy project official, new schedule and cost commitments are being developed for the User Applications Component.

    Source: GAO based on FBI data.

        These Trilogy shortfalls in meeting cost and schedule commitments
    can be in part attributed to the absence of the kind of IT management
    controls discussed earlier. Specifically, in its study of the FBI's
    investment management processes which included a case study of Trilogy,
    the Inspector General cited the lack of an enterprise architecture and
    mature IT investment management processes as the cause for missed
    Trilogy milestones and uncertainties associated with the remaining
    portions of the project. In our view, a major challenge for FBI going
    forward will be to effectively manage the risks associated with
    developing and acquiring Trilogy and other system modernization
    priorities discussed in its strategic plan, while the bureau is
    completing and implementing its enterprise architecture and other IT-
    related controls and is adopting a more centralized approach to IT
    management leadership.

    FBI Continues to Realign Staff Resources to Address Counterterrorism
            Related Priorities
        As we pointed out in our June 2003 testimony and our follow-up
    letter to the FBI in September 2003, a key element of the FBI's
    reorganization and successful transformation is the realignment of
    resources to better ensure focus on the highest priorities. Since
    September 11, the FBI has permanently realigned a substantial number of
    its field agents from traditional criminal investigative programs to
    work on counterterrorism and counterintelligence investigations.
    Additionally, the bureau has had a continuing need to temporarily
    redirect special agent and staff resources from other criminal
    investigative programs to address higher-priority needs. Thus, staff
    continue to be redirected from other programs such as drug, white
    collar, and violent crime to address the counterterrorism-related
    workload demands. The result of this redirection is fewer
    investigations in these traditional crime areas.
        We want to make clear that we in no way intend to fault the FBI for
    the reassignment of agents from drug enforcement, violent crime, and
    white collar crime to higher-priority areas. Indeed, these moves are
    directly in line with the agency's priorities and in keeping with the
    paramount need to prevent terrorism.\27\ In 2002, the FBI Director
    announced that in keeping with its new priorities, the agency would
    move over 500 field agent positions from its drug, violent crime, and
    white collar crime programs to counterterrorism. The FBI has
    transferred even more agent positions than it originally announced and
    has augmented those agents with short-term reassignment of additional
    field agents from drug and other law enforcement areas to work on
    counterterrorism.\28\ As figure 1 shows, about 25 percent of the FBI's
    field agent positions were allocated to counterterrorism,
    counterintelligence, and cyber crime programs in prior to the FBI's
    change in priorities. Since that time, as a result of the staff
    reprogrammings \29\ and funding for additional special agent positions
    received through various appropriations, the FBI staffing levels
    allocated to the counterterrorism, counterintelligence, and cyber
    program areas have increased to about 36 percent and now represent the
    single largest concentration of FBI resources and the biggest decrease
    is in organized crime and drugs.
    ---------------------------------------------------------------------------
        \27\ We currently have work under way for the House Appropriations
    Subcommittee to assess the impact of the FBI's realignment of resources
    away from drug and other traditional criminal programs, including an
    assessment of changes in price, purity, and use of illegal drugs. We
    expect to report out on this effort later in the year.
        \28\ The FBI later in fiscal year 2003 initiated another
    reprogramming to permanently reallocate about an additional 160 agent
    positions from its drug program to one of the priority areas.
        \29\ The FBI has the authority to reprogram funds (i.e., move funds
    between activities within a given account) without notifying the
    relevant Appropriations Committees unless a specific purpose is
    prohibited or the amount of the reprogramming exceeds a dollar
    threshold ($500,000 or a 10-percent change in funding level, whichever
    is less). Any other reprogramming action requires notification of the
    relevant Appropriations Committee 15 days in advance of the
    reprogramming.

        \30\ These percentages differ from those reported in our June 18,
    2003 testimony (GAO-03759T), which were limited to direct funded field
    ---------------------------------------------------------------------------
    agent positions.

        The FBI's staff reprogramming plans, carried out since September
    11, have now permanently shifted 674 field agent positions \31\ from
    the drug, white collar crime, and violent crime program areas to
    counterterrorism and counterintelligence. In addition, the FBI
    established the Cyber program, which consolidated existing cyber
    resources.
    ---------------------------------------------------------------------------
        \31\ The figure of 674 positions excludes 11 supervisory positions
    that were returned to the drug program.
    ---------------------------------------------------------------------------
        Despite the reprogramming of agent positions in fiscal year 2003
    and the additional agent positions received through various
    supplemental appropriations since September 11, agents from other
    program areas continue to be temporarily redirected to work on leads in
    the priority areas, including counterterrorism-related leads.\32\ This
    demonstrates a commitment on the part of the FBI to staff priority
    areas.
    ---------------------------------------------------------------------------
        \32\ The FBI has certain managerial flexibilities to temporarily
    redirect staff resources to address critical needs and threats.
    ---------------------------------------------------------------------------
        As figure 2 shows, the average number of field agent workyears
    charged to investigating counterterrorism-related matters has
    continually outpaced the number of agent positions allocated to field
    offices for counterterrorism since September 11.\33\ The FBI's current
    policy is that no counterterrorism leads will go unaddressed even if
    addressing them requires a diversion of resources from other criminal
    investigative programs such as the drug, violent, and white collar
    crime.
    ---------------------------------------------------------------------------
        \33\ A workyear represents the full-time employment of one worker
    for 1 year. For this statement, a matter is an allegation that is being
    or has been investigated by the FBI.

        As we previously reported, as the FBI gains more experience and
    continues assessing risk in a post-September 11 environment, it should
    gain more expertise in deciding which matters warrant additional
    investigation or investment of investigative resources. However, until
    the FBI develops a mechanism to systematically analyze the nature of
    leads and their output, the FBI will have to continue its substantial
    investment of resources on counterterrorism-related matters to err on
    the side of safety. We are not intending to imply that, even with more
    information from past experience, that all leads should not be
    investigated, but more analytical information about leads could help
    prioritize them.
        Neither the FBI nor we were in a position to determine the right
    amount of staff resources needed to address the priority areas.
    However, the body of information that might help to make these
    determinations is growing. Since the September 11 attacks, the FBI has
    updated its counterterrorism threat assessment and has gained
    additional experience in staffing priority work. This development,
    along with an analysis of the nature of all leads (those that turn out
    to be significant and those that do not) and the output from them,
    could put the bureau in a better position to assess the actual levels
    of staff resources that the agency needs in counterterrorism,
    counterintelligence, and cyber programs. Of course, any new terrorist
    incidents would again, upset the balance and require additional staff
    in the priority areas.
        An FBI counterterrorism manager we spoke with during a recent field
    office visit said that to develop a system to determine which terrorist
    leads to pursue and which ones to not pursue would be a complex task.
    He noted that in the past there would have been some citizen contacts
    that the FBI may not have generally pursued, but said that now any
    lead, regardless of its nature, is followed up. He observed that
    following up on some of these leads have resulted in the arrests and
    convictions of terrorists. For example, the FBI manager recounted a
    telephone lead from a tour boat operator who reported concerns about a
    passenger who was taking photographs of bridges and asking unusual
    questions about infrastructure. That lead started an investigation that
    led to the arrest of, and criminal charges against, the suspect, who
    was alleged to be plotting a terrorist attack.
        According to FBI officials, information from leads is collected in
    a database that can be searched in a number of ways to help in
    investigations. To the extent that more systematic and sophisticated
    analysis routines can be developed and applied to these data (or any
    expansions of this data set) the FBI may be able to develop richer
    information about the relative risk of leads. This information could
    help prioritize work and manage scarce resources. While we agree with
    the FBI counterterrorism manager we cited above who labeled this a
    complex task, the potential value of the output, given that resources
    are always limited, seems worth the investment.

                Counterterrorism Matters Have Continued to Increase

        The level of effort in counterterrorism is further reflected in the
    number of counterterrorism matters that have been opened following
    September 11. As figure 3 shows, the number of newly opened
    counterterrorism matters has remained significantly above the pre-
    September 11 levels, peaking in the second quarter of fiscal year 2003
    and dropping somewhat in the most recent quarters.

                Reallocation of FBI Resources Has Affected the FBI's Drug
                        Enforcement and Other Traditional Law Enforcement
                        Efforts
        Use of field agent staff resources in other traditional criminal
    investigative programs (such as drug enforcement, violent crime, and
    white collar crime) has continuously dropped below allocated levels as
    agents from these programs have been temporarily reassigned to work on
    counterterrorism-related matters. As would be expected, the number of
    newly opened drug, violent crime, and white collar crime cases has
    fallen in relation to the decline in the number of field agent
    positions allocated or assigned to work on these programs.
        The change in priorities and the accompanying shift in
    investigative resources have affected the FBI's drug program the most.
    Nearly half of the FBI field agent drug positions have been permanently
    reallocated to priority program areas. Since September 11, about 40
    percent of the positions allocated to FBI field offices' drug program
    have been reallocated to counterterrorism and counterintelligence
    priority areas. As figure 4 shows, just prior to September 11, about
    two-thirds (or 890) of the 1,378 special agent positions allocated to
    FBI field offices for drug program matters were direct-funded.\34\ The
    remaining one-third (or 488) of the special agent positions was funded
    by the Organized Crime and Drug Enforcement Task Force program
    (OCDETF). As of the first quarter of fiscal year 2004, the number of
    direct-funded positions allocated to FBI field offices for the drug
    program had decreased over 60 percent, going from 890 to 337. OCDETF-
    funded agent positions, which have remained constant, now account for
    about 60 percent of the FBI field offices' drug program staff
    resources.
    ---------------------------------------------------------------------------
        \34\ FBI's drug program workforce is composed of field agent
    positions funded through direct FBI appropriations and those supported
    with OCDETF funds. The OCDETF Program was established in 1982 to focus
    federal, state, and local law enforcement efforts against organized
    crime drug-trafficking organizations that pose the most serious threat
    to our national interests.

        While this reduction represents a substantial decline in the number
    of field agent positions allocated to drug work, in fact, the reduction
    in drug enforcement workyears was actually larger than these figures
    reflect. Specifically, as needs arose for additional agents to work
    counterterrorism leads, field agents assigned to drug program squads
    were temporarily reassigned to the priority work. As figure 5 shows, at
    the extreme, during the first quarter of fiscal year 2002 (just after
    the events of September 11), while 1,378 special agent positions were
    allocated to drug work, only about half of these staff resources worked
    in the FBI drug program. In mid-fiscal year 2003, the allocated number
    of drug agent positions and the average number of field agent workyears
    charged to drug matters started to converge toward the new targeted
    levels. Since that time, however, the FBI has had to redirect
    additional field agents allocated to its drug program to
    counterterrorism and other priority areas. As of the second quarter of
    fiscal year 2004, about a quarter (225 of 825) of the agents assigned
    to the FBI's drug program were actually working in higher-priority
    areas. The reduction in drug enforcement resources has reduced both the
    number of drug squads in FBI field offices as well as the number of FBI
    agents supporting the High-Intensity Drug Trafficking Area (HIDTA)
    program initiatives, according to FBI officials.\35\
    ---------------------------------------------------------------------------
        \35\ The HIDTA program began in 1990 to provide federal assistance
    to help coordinate and enhance federal, state, and local drug
    enforcement efforts in areas of major illegal drug production,
    manufacturing, distribution, transportation, and use.

        The significant reduction in agent strength in the drug enforcement
    area is likely to be an important factor in the smaller number of FBI
    drug matters opened in fiscal year 2003 and the first quarter of fiscal
    year 2004. As figure 6 shows, the number of newly opened drug matters
    went from 2,420 in fiscal year 1998 to 950 in fiscal year 2002 and to
    587 in fiscal year 2003.
        The openings for the first quarter of fiscal year 2004 indicate a
    rate for the entire year at about fiscal year 2003 levels.

        Similarly, as figures 7 and 8 show, the average number of field
    agent workyears charged to violent crime and white collar crime matters
    also declined below the number of allocated agent workyears as these
    agents too have been temporarily redirected to counterterrorism-related
    matters.

        As figures 9 and 10 show, the number of newly opened violent crime
    and white collar crime matters has declined since September 11.

                                  CONCLUSIONS

        The FBI's transformation effort is driven in part by challenges
    facing the federal government as a whole to modernize business
    processes, information technology, and human capital management. It is
    also driven by the need to make organizational changes to meet changes
    in its priorities in the post-September 11 environment. This effort
    will require a structure for guiding and continuously evaluating
    incremental progress of the FBI's transformation. It must also be
    carried out as part of, and consistent with, broader government-wide
    transformation efforts that are taking place, especially those
    resulting from the establishment of DHS and in connection with the
    intelligence community. The FBI has made substantial progress, as
    evidenced by the development of both a new strategic plan and a
    strategic human capital plan, as well as its realignment of staff to
    better address the new priorities. Although the new strategic plan and
    strategic human capital plans include cross walks to each other, we
    still believe that an overall transformation plan is more valuable in
    managing the transformation process. The FBI is also making progress in
    strengthening its management of IT, including establishing
    institutional IT management controls and considering changes to the
    scope of CIO's authority over IT spending.
        Impacts of the FBI shift in field agent resources on crime programs
    including the FBI's drug, white collar, and violent crime programs
    should be monitored. Our ongoing work, which we expect to complete
    later this year, will provide information on whether other federal and
    state resources are replacing lost FBI resources in the traditional
    crime areas and on whether reductions in FBI drug program field agents
    have had an impact on the price, purity, availability, and use of
    illegal drugs.
        Mr. Chairman and Members of the Subcommittee, this concludes my
    prepared statement. I would be pleased to answer any questions you and
    the Subcommittee members may have.
         Appendix 1.--FBI Reengineering Projects Completed and Underway

    ------------------------------------------------------------------------
                  Core processes                   Reengineering projects
    ------------------------------------------------------------------------
    Strategic planning and execution (6)......  HQ organizational structure
                                                Strategic planning process
                                                Communication strategy
                                                Executive secretariat
                                                Project management
                                                Inspection process
    Capital (human and equipment) (17)........  Career development/
                                                 succession planning
                                                Executive development and
                                                 selection program (EDSP)
                                                File/clerical support
                                                Office of Professional
                                                 Responsibility
                                                Training
                                                Hiring and recruiting
                                                Fitness test/height-weight
                                                 standards
                                                Preparation for legal
                                                 attache assignment
                                                Administrative officer
                                                 position upgrade
                                                Analyst professionalism
                                                Culture/values
                                                Time utilization record
                                                 keeping system (TURK)
                                                Asset Management
                                                Financial audit streamlining
                                                Management of supplies
                                                 purchase and distribution
                                                Field office reorganization
                                                Resident agency
                                                 consolidation
    Information management (4)................  Trilogy
                                                Top secret/sensitive
                                                 compartment information (TS/
                                                 SCI) local area network
                                                Records management division
                                                 reorganization
                                                Rapid start/ICON
    Investigative programs (6)................  Counterterrorism strategy
                                                Counterintelligence strategy
                                                Cyber strategy
                                                Criminal investigation
                                                 division strategy
                                                Manual of Investigative
                                                 Operations and Guidelines
                                                 (MIOG)/Manual of
                                                 Administrative Operations
                                                 and Procedures (MAOP)
                                                 Project
                                                Foreign Intelligence
                                                 Surveillance Act
    Intelligence (2)..........................  Review criminal informant
                                                 program (CIP) and asset
                                                 program issues
                                                Analytical tools for
                                                 intelligence analysts
    Security Management (5)...................  Continuity of operations
                                                 planning (COOP)
                                                FBI headquarters space
                                                 strategy
                                                Vital records
                                                Security manual pilot
                                                 project
                                                Repository for Office of
                                                 Professional Review (OPR)
                                                 appeals/security violations
    ------------------------------------------------------------------------
    Source: FBI.

                            ENTERPRISE ARCHITECTURE

        Senator Gregg. Dr. Ekstrand, what should the enterprise
    architecture plan be?
        Ms. Ekstrand. I defer to my counterpart.
        Mr. Hite. An enterprise architecture is not a one-size-
    fits-all proposition. It is a function of what the organization
    is about, its complexity, its size, its mission, and it is also
    a function of what it is intended to be used for.
        So in the case of FBI, you have a very large organization,
    huge in scope, important mission, and the intended purpose
    ultimately is to drive IT modernization and these are very
    demanding goals. So, therefore, it would argue to have a very
    well-defined, robust enterprise architecture.
        So having said that, what it would be is a set of
    interrelated models, diagrams, tables and narrative that define
    what the FBI does, where it does it, how it does it, when it
    does it, who does it, defines all these things both in business
    terms, in mission or logical terms, and also in terms of the
    technology that is going to be employed in order to exercise
    those kinds of operations. So it would include the standards
    and the protocols and the rules that are going to govern the
    types of technology that are going to be employed, both from an
    application standpoint and from a supporting infrastructure
    standpoint. It is like the mother of all system change tools.
        Senator Gregg. How should it be developed? Should it be
    developed by outside consultants or should it be developed
    internally, and how do you perceive that the FBI intends to
    develop it?
        Mr. Hite. It could be developed either way. We recently did
    a survey of the state of enterprise architecture across the
    Government and looked to see how agencies were doing this. The
    vast preponderance hire a contractor to assist them in doing
    this and they work with the contractor. There are very few who
    actually contract out the entire operation to a contractor, and
    there are a few that do it in-house.
        My understanding of how the FBI is going to proceed is to--
    and they have, I believe as of yesterday, awarded a contract
    for development of its enterprise architecture. It has a draft
    plan to set up an organization to lead this effort and to
    manage the contractor. So it will be done largely by a
    contractor under the FBI's direction and guidance. The FBI
    will, in essence, be acquiring its enterprise architecture
    product from a contractor.
        Senator Gregg. Have you looked at the contract that they
    have developed and signed and do you think that this is a game
    plan that makes sense? Have they outlined a game plan that
    makes sense?
        Mr. Hite. No, sir, I have not. I have not seen that. That
    is a fair question to ask.
        Senator Gregg. Since you have been actively involved in
    this, wouldn't it have been logical that they would have come
    to you and said, does this make sense, before they signed the
    contract?
        Mr. Hite. That is certainly a service that we would be
    willing to work with them on. We----
        Senator Gregg. Did they do that?
        Mr. Hite. We have had FBI-initiated dialogue by the acting
    CIO for him to share with us what his plans and proposals are
    going forward and it allowed us to provide feedback. We have
    not spoken specifically about the contractual terms for this
    enterprise architecture development area.
        Senator Gregg. Well, I would like to ask you if you could
    take a look at what they have proposed as to how they are going
    to develop this enterprise zone conceptually and then in the
    specifics of the contract and get back with this committee with
    your assessment of whether it is an approach that is going to
    work.
        Mr. Hite. Yes, sir.
        Senator Gregg. I don't want to do another thing where we--I
    mean, we have got a track record here of approaches that don't
    work.
        Mr. Hite. Understood.
        Senator Gregg. Although I have to admit, this Director has
    really tried to address the issue aggressively.

        FEDERAL BUREAU OF INVESTIGATION/DRUG ENFORCEMENT ADMINISTRATION
                                  RELATIONSHIP

        You mentioned that you have been looking at the effect that
    the reallocation of FBI people has had on drug enforcement
    efforts. Have you looked at the relationship between DEA and
    FBI and whether we should have DEA even take a--obviously, it
    is their name, it is what they should be doing. Why is the FBI
    in drug enforcement at all? Where are we going here? Have you
    done a study of that at all?
        Ms. Ekstrand. We haven't done a study of that, but when we
    testified last June before House Appropriations, we had had a
    substantial amount of interaction with DEA in terms of how they
    perceived their role changing with the withdrawal, to some
    extent, of FBI presence in the area. We are planning to do some
    additional work in that area and report out this summer for
    House Appropriations.
        Senator Gregg. I would be very interested in an assessment
    of, as FBI migrates over to counterterrorism and has to give up
    some of its portfolio, the Director was quite up front. He said
    most of the portfolio they are giving up is in drug
    interdiction. What is DEA's role in picking that up? Can it do
    more? In other words, could DEA step in and do more of what the
    FBI has been doing in this arena so the FBI could actually free
    up more agents? Are you looking at that?
        Ms. Ekstrand. We are looking at some of that. We do know
    that as of last June, there had been a number of new positions
    authorized at DEA and that even more were requested for the
    following year. So we do know that DEA's resources, number in
    terms of agents, has been growing. But we haven't had the
    opportunity as yet to get into this in detail.
        Senator Gregg. To the extent you could, that would be
    useful to us because this committee has the unique position of
    being able to move resources and we don't mind doing that if it
    is constructive, but we would like to have some substance upon
    which to make those decisions. But it seems logical to me that
    DEA's role has got to significantly increase and you have got
    to give them more resources and we have got to then expect the
    FBI to move resources out of drug enforcement and into
    counterterrorism as a result of freeing those up.
        Mr. Fine, there are so many areas I would like to talk to
    you about, but I will focus on this IT issue. I thought it was
    good that everybody said the FBI appears to be getting on the
    right track here and things are moving well. How do we sustain
    that as we move forward and especially with the Virtual Case
    File issue? We have got all this hardware and we have got the
    communications capability, but if you don't have anything to
    put on the hardware or the communications capability that
    works, what good is it?
        Mr. Fine. I do think the FBI is making progress in
    improving things, but it does need to do more. It has to ensure
    that they have definitive milestones that the contractors have
    to meet. They have to hold them accountable for those
    milestones. They have to keep sustained attention on this. They
    have to define their requirements right up front so that the
    contractor knows what it has to deliver and be held accountable
    if it doesn't deliver that.
        I think there has also been, unfortunately, a fair amount
    of turnover and not necessarily stability in the senior FBI IT
    management structure, so that people are moving on and not
    having responsibility, sustained responsibility, to assure a
    project through to completion. I do think they have a new
    acting CEO that is technically astute and seems committed to
    this. But there has to be that constant attention on that, as
    well.
        So I think there has to be a hard-nosed approach to this
    that perhaps in the past the FBI has not fully implemented.

                           VIRTUAL CASE FILE CONTRACT

        Senator Gregg. Have you looked at what they are doing now
    in the Virtual Case File contract that they are negotiating
    right now? Have you been involved in that process to put in
    place that type of a discipline?
        Mr. Fine. Yes. We have an audit opened. We recently opened
    it. We have done it in the past and recently opened a new audit
    on Trilogy, on all the aspects of Trilogy. So our auditors are
    talking to the FBI IT managers every day and trying to find out
    where they are going, how they are doing it, and ensuring that
    there is this aggressive approach to ensuring that it comes in
    without excessive cost overruns or delays.
        Senator Gregg. If I understood the Director correctly, and
    maybe I didn't hear him correctly, but my impression was that
    he said, with regard to the Virtual Case File, that they were
    in the process of developing a new contract, essentially, to
    get the program into the next phase and that it had not been
    agreed to and that he agreed that disciplines should be put
    into it. He didn't necessarily say they were going to be put
    into it. And I would be interested in getting your current
    assessment, not now, but as this moves forward as to how
    effectively that is being done.
        Mr. Fine. We would be happy to do that. Our understanding
    is that there was a contract, but they are negotiating and
    renegotiating the requirements of it and when to do it, and
    they are in the process of defining that now. And we will be
    involved with monitoring and overseeing it because of the
    importance of this issue.

                            IDENT/IAFIS INTEGRATION

        Senator Gregg. You mentioned IAFIS and you have done an
    IDENT/IAFIS paper.
        Mr. Fine. Report, yes.
        Senator Gregg. Report.
        Mr. Fine. We have done a number of studies on that, but
    most recently, a report on the Batres case and the status of
    the IDENT/IAFIS integration.
        Senator Gregg. Is this possible? I mean, the Director
    seemed to think it was possible to integrate these two. But,
    the IDENT people want to have a very short timeframe to get the
    person through and IAFIS is built on the concept of what he
    refers to as the gold standard, which takes 20 minutes probably
    to take fingerprints under that scenario. Is there some
    capacity to resolve this?
        Mr. Fine. I think there is and I think it is
    technologically possible. I think there are three main issues
    with the IDENT/IAFIS integration. One, along the border, having
    the Border Patrol ensure that it checks detained aliens against
    IAFIS. And they are getting the machines out there but they
    don't have the machines out there, the 10-print machines that
    would connect IAFIS at all the border stations. As a result, or
    after our report, the Department of Homeland Security said it
    would expedite a process of getting----
        Senator Gregg. Is that an issue of money or just an issue
    of the machines not being available or bureaucracy----
        Mr. Fine. I think it is an issue of money, to some extent,
    but also attention and urgency to the process. I think there is
    an urgency now, and there needs to be that urgency. That is the
    first issue.
        The second issue is ensuring that the FBI and State and
    local law enforcement has access to IDENT and access to the
    information in IDENT, and going that way, as opposed to simply
    having the immigration authorities have access to the FBI
    system.
        And the third issue is the issue that you raised, at ports
    of entry, US VISIT, and what information is going to be taken
    from people who are coming to enter the country and what it is
    going to be bounced off against. I don't believe they have
    determined what they intend to do and how they intend to do it.
    And part of the issue is getting the parties together and
    determining what they can do and what they should do. Prior to
    this, I don't think there has been that focus on that issue.
        Senator Gregg. How do we get that focus? I have raised it
    now at two different hearings and I have gotten very nice
    responses, but is there actually something happening?
        Mr. Fine. I think there is something happening. I have
    spoken to Director Mueller. I speak with him regularly and he
    has indicated that they are talking with the Department of
    Homeland Security, with the State Department, and even, my
    understanding, the National Security Council is also involved
    in the process. It is a cross-agency issue, but there needs to
    be that focus on it and a decision made on a government-wide
    basis how they are going to do it.
        It was hard enough when the INS was in the Department of
    Justice, getting them on the same page with the FBI. It is even
    harder now that they are in separate agencies, but that is what
    needs to happen. There needs to be clear terms. There needs to
    be memoranda of understanding, and they need to decide how they
    are going to go forward with this.
        Mr. Hite. Mr. Chairman----
        Senator Gregg. Yes?
        Mr. Hite [continuing]. If I could just add a couple of
    comments on that, I testified last week on US VISIT and we have
    issued a number of reports on it. We actually have one coming
    out for the Appropriations Committee next month, which is an
    update on the status of US VISIT, and the way US VISIT is being
    developed and deployed. It is going to be in increments and
    some of these near-term increments are designed to meet
    legislative requirements for deployment of a capability to
    certain ports of entry by a certain time.
        The initial deployment that has occurred at airports and
    seaports does provide for a biweekly download of certain files
    from IAFIS to the IDENT component of US VISIT. It is not a
    real-time download of information, but it is every 2 weeks.
    That is all part of an interim solution approach to US VISIT
    that is needed in order to meet these very aggressive
    milestones.
        They are also in the process of bringing on an integration
    contractor and one of the responsibilities of that integration
    contractor will be to develop the long-term solution for US
    VISIT, which will get into some of these other issues about how
    many fingerprints are necessary, and I know they are working
    with NIST and the other agencies on that. There was talk about
    whether eight fingerprints would be a sufficient standard, and
    I think there has been talk that maybe dropping back to two
    prints for the intended purpose of US VISIT will be enough. But
    there is this dialogue. There are memorandums of understanding
    and working groups among all these agencies involved in US
    VISIT.
        Senator Gregg. Well, I hope you are right. I have the
    feeling this is deja vu all over. This committee has been down
    this road before 9/11, when we tried to get these various
    agencies to talk to each other. As Mr. Fine points out, we
    couldn't even get Border Patrol and FBI to talk to each other
    when we had them both under our jurisdiction.
        There is a real frustration in seeing 44 million
    fingerprints sitting over here and setting up a system which is
    supposed to fingerprint people coming into the country and
    knowing that the ones you are doing as you fingerprint people
    coming into the country does not have the capability of
    accessing that database. I hope that there is some greater
    being up there that is straightening this out, but I don't
    really sense it. I haven't seen any reaction that gives me that
    impression.
        Mr. Hite. We did, in our issued report 6 months ago, we
    made a recommendation about having a government-wide governing
    structure for US VISIT because it is a government-wide program,
    and based on the steps that have been taken in the last 6
    months, we have closed out that recommendations as having been
    satisfied. They have a three-tiered approach to establishing
    this government-wide governance structure.
        Senator Gregg. That is good news. I hope it translates into
    results. It is always nice to hear that there is movement.

                                 LEGAT PROGRAM

        You also, Mr. Fine, have a report coming out, I think, on
    the Legat program. I would be interested in just your reaction
    to it. It has expanded dramatically with this committee's very
    strong support, although sometimes occasional words of caution
    from our most senior member, Senator Hollings. But it has been
    expanded. It was a priority of the prior Director and has been
    proven to be, I think, an invaluable resource in light of what
    our present threat is and the changed personality of the FBI
    and the international role it has.
        But I would be interested in where you see the weaknesses
    are and where are the strengths, or aren't you going to be able
    to tell us yet?
        Mr. Fine. Well, we haven't issued the report, so I don't
    want to get into all of it, but I do agree with you that it has
    been an important component of the FBI's efforts. With the
    globalization of crime, with the increase of international
    terrorism, it had to do this and I think it deserves credit for
    moving forward in that regard.
        I think it is working generally well. I do think there are
    some issues, particularly with training of the people who are
    going abroad, with language training, with training of them to
    pursue their roles in foreign countries immediately. So I think
    that is an important issue. But beyond that, I think we should
    wait for the report. But I think it is a critical issue that
    the FBI has taken on and that we need to follow up on.
        Senator Gregg. What about the language issue? The Director
    said they have 24 agents who speak Arabic. I think there are 65
    who are in the backup who aren't agents who speak Arabic. There
    are 250 or something like that as I recall that speak Mandarin.
    Not a lot of people. There is a lot of information floating
    around for that few people to be on top of.
        Mr. Fine. I think that is absolutely right. We do have an
    ongoing review of that issue. We have a review of the FBI's
    efforts to hire and train linguists, for example, to ensure
    that they are able to translate all the information they have.
    There are backlogs. There are backlogs of translations. And
    when that happens and they have information in the FBI in their
    files, in their transcripts that they can't translate, it
    undermines their mission. So I think it is a critical issue
    that the FBI has to focus on.
        I know that the Director is focused on that. It is not
    easy. But we are going to review how they can improve their
    efforts to be able to translate all that they have and to
    expand the pool of agents who have foreign language
    capabilities.

                                   LINGUISTS

        Senator Gregg. Has GAO looked at this issue of an
    overriding centralized translation center capability?
        Ms. Ekstrand. We have not. We had reported last June in
    terms of the number of linguists hired and they are
    substantially the same numbers that Director Mueller just gave.
    But we have not had a renewed opportunity to look at that----
        Senator Gregg. So you haven't discussed whether we should
    have basically a translation capability that is independent of
    the Bureau?
        Ms. Ekstrand. No, sir, we have not looked at that.
        Senator Gregg. Have you looked at that?
        Mr. Fine. I think we are sort of involved in the issue, but
    I don't think that is the focus of our review, how government-
    wide to address this issue.
        Senator Gregg. Is there something else this committee
    should know about specifically the technology area or the
    personnel allocations that would help us as we try to make sure
    we have a more effective and aggressive Bureau?
        Mr. Fine. I think the committee's efforts in this regard
    are very important. It is important to monitor and ensure that
    the FBI does upgrade its technology. I think that the FBI
    recognizes this. But it is important to point out that even
    when Trilogy is online, and it is not clear when it will be
    online, I am not completely optimistic that it will happen, the
    first two components at the end of April and then a Virtual
    Case File, as the Director said, 2 months later.
        To have a real operating system that works, that the agents
    know about and are trained on and accept is, in my view, going
    to take longer than that. But I do think it is important to
    focus attention on the fact that Trilogy itself is not the end
    of the road. It is only a portion. It is only the foundation.
    As one, I think, FBI manager has said, it gets the FBI out of
    the ditch and gets them on the road, but it doesn't get them on
    the highway. And the FBI needs to sustain its attention on
    these efforts because without it, FBI employees can't do the
    job that they are assigned to do. It is actually a credit to
    them that they have done well with the archaic systems they
    have. But we need to give them better systems.
        Senator Gregg. Isn't that what the enterprise architecture
    should do, give them the road map to getting on the highway?
        Mr. Hite. That will be part of the--one variable in the
    equation, to that end. I would echo what Mr. Fine said and use
    a different metaphor, that Trilogy is the beginning of a long
    marathon of systems modernization. It is not a sprint. And in
    order to finish a marathon, you have got to be trained and
    equipped to finish it. You have got to be ready to finish it.
        And being ready means you have the tools at your disposal
    to effectively execute a modernization. Enterprise architecture
    is one of those tools. Mature investment processes are another.
    There is a whole host of things that need to be in place, and
    unfortunately, the FBI historically has not been a favorable
    poster child for good IT management. Now you have got some
    people in place----
        Senator Gregg. It has been behind.
        Mr. Hite [continuing]. I believe who understand that and
    are trying to change that. But changing that is not going to be
    an overnight endeavor, so there is going to be hundreds of
    millions of dollars to modernize systems. There is going to be
    hundreds of millions of dollars going into operating and
    maintaining existing systems, and it is not going to change
    overnight.
        Senator Gregg. Should we have a more disciplined approach
    from the appropriations side in funding IT at the FBI so there
    is not a peak and a valley approach, or are we approaching it
    appropriately as appropriators?
        Mr. Fine. It is hard to answer that question, but I do
    believe and appreciate the fact that the committee is asking
    these questions, is keeping the pressure on the FBI. In my
    understanding, it is regularly asking for updates from the FBI
    and I think that is important rather than to appropriate the
    money and wait to see what happens. So I think the committee's
    efforts are instrumental in this regard.
        Mr. Hite. There are mechanisms that other subcommittees use
    with regard to IT modernization programs like US VISIT. The
    CBP's, Custom and Border Protection's, Automated Commercial
    Environment, which is an import-export processing system, for
    the IRS, what has the Tax Systems Modernization, now the
    Business Systems Modernization, where the Appropriations
    Committees ask, or actually direct in their appropriation
    language that the agency develop each year a plan of
    expenditure, how they plan to invest the money, which gets into
    what they are going to spend it on, when, and how are they
    going to ensure that the money is spent wisely and there is
    adequate control surrounding the use of that money.
        They require that the expenditure plan be approved by the
    head of the Department for that agency, to be approved by OMB,
    and to be reviewed by GAO, and then we support the committee in
    reviewing it and giving them information to make decisions
    about their oversight of the use of that money. I am not
    advertising----
        Senator Gregg. Is the FBI at the level where it can do
    that? I mean, right now, we are just trying to get it up and
    running.
        Mr. Hite. And so that would be the focus of any plan for
    how they are going to invest the funds, to deal with how they
    are going to get it up and running, the near-term priorities as
    well as setting the groundwork for the long-term disciplined
    approach to wholesale systems modernization.
        Senator Gregg. I don't think the FBI is the only
    organization that needs to be disciplined and systematized. I
    think we do, too, as appropriators. So I would be interested in
    getting that information. Maybe you could sit down with our
    staff and review how that is done in other committees. I am
    sure they are probably familiar with it. I think we should have
    a systematized approach, also.
        I thank you very much. This hearing has been very
    informative. I appreciate the work you folks do in keeping
    these various agencies on track. It is very constructive and
    very much appreciated.

                              SUBCOMMITTEE RECESS

        The next hearing is scheduled for this Thursday. It will be
    with the Secretary of State, Colin Powell, at the office in the
    Capitol Building at 10 o'clock. Thank you.
        [Whereupon, at 12:14 p.m., Tuesday, March 23, the
    subcommittee was recessed, to reconvene at 10 a.m., Thursday,
    March 25.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2005

                                  ----------

                            THURSDAY, MARCH 25, 2004

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:01 a.m., in room S-146, the
    Capitol, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg, Stevens, Domenici, Hollings, Kohl,
    and Byrd.

                              DEPARTMENT OF STATE

                            Office of the Secretary

    STATEMENT OF COLIN L. POWELL, SECRETARY OF STATE
        Senator Gregg. First off, we want to thank the Secretary
    for coming before the subcommittee today. He certainly had a
    hectic schedule, just back from Spain and we very much
    appreciate your time, Mr. Secretary, in light of all the
    responsibilities you have and especially in light of your
    extraordinary travel schedule. You have got to be a little
    tired and we appreciate that, but we do thank you for taking
    time to come in.
        This subcommittee has a lot of involvement obviously in the
    State Department. We have tried and we are going to continue to
    try to be supportive of the State Department. There are a lot
    of issues I know we want to get to so I am going to reserve an
    opening statement so we can get your statement and then move to
    questions. But I will obviously yield to Senator Hollings for
    any statement he wishes to make.
        Senator Hollings. I think that is the best approach and I
    yield also.
        Senator Gregg. Then we will start right out unless, Senator
    Byrd, did you want to say anything?
        Senator Byrd. I will follow the same standard here.
        Secretary Powell. I am almost reluctant to say anything
    after that.
        Senator Gregg. We came to hear you.
        Secretary Powell. Mr. Chairman, I thank you and Senator
    Hollings, and Senator Byrd. I am just back from Madrid. I flew
    overnight the night before last, attended a very moving
    memorial service for the Spaniards who were killed in the
    terrible tragedy of
    3/11, had meetings with outgoing Prime Minister Aznar and with
    the new incoming Prime Minister, Mr. Zapatero. Although we have
    some disagreements with Mr. Zapatero on Iraq and we will work
    through that, one thing there is no disagreement on is that the
    United States and Spain will be united in this fight against
    terrorism. Spain has been fighting terrorism long before 3/11
    or 9/11. They have had to face the ETA terrorists, so I am
    confident that we will find ways to cooperate in this battle
    against terrorism.
        It is always a pleasure to appear before this subcommittee.
    This is not like the old army story like we are always glad to
    see the inspector general. But in this case really it is true
    because, Mr. Chairman, you and the members of the committee
    have been supportive of what we have been trying to do in the
    Department for the last 3 years. I remember during my
    transition pre-confirmation period when we talked about some of
    the problems that you saw in the Department with respect to
    management, with respect to construction of our Embassies and
    things of that nature. I have tried in the 3 years I have been
    Secretary to be responsive to your concerns.
        Before I go further, let me take this opportunity to
    especially acknowledge Senator Hollings, since this may well be
    the last chance we will have to see each other in this
    particular capacity, to thank you for your support, your
    prodding, and your friendship for so many years, Dr. Hollings.
        Senator Hollings. Thank you. He and I got honorary degrees
    at Tuskegee together. That is Dr. Powell.
        Senator Gregg. Very appropriate.
        Senator Hollings. We had Cappy James and the Air Force down
    there. The Tuskegee flyers trained in South Carolina.
        Secretary Powell. Tuskegee Airmen.
        Mr. Chairman and members of the subcommittee, I thank you
    for the opportunity to testify on the State Department's
    portion of the President's budget request for fiscal year 2005.
    I have a longer statement I would submit for the record, Mr.
    Chairman, with your permission.
        Senator Gregg. Absolutely.
        Secretary Powell. While I know that this subcommittee's
    specific oversight deals with that part of the request that
    involves State Department operations, I want to give you as
    well an overview of what those operations will support in the
    way of foreign policy. So let me give you the overall budget
    picture first and then touch on foreign operations. Finally I
    will deal with the top priorities of our specific funding
    request before you.
        The 2005 international affairs budget for the Department of
    State, USAID, and other foreign affairs agencies totals $31.5
    billion broken down as follows, foreign operations $21.3
    billion, State operations of principal interest to this
    subcommittee, $8.4 billion, Public Law 480, food aid, $1.2
    billion, international broadcasting $569 million and the
    Institute of Peace $22 million.
        President Bush's top foreign policy priority reflected in
    this budget is winning the war on terrorism. Winning on the
    battlefield with our superb military forces is just one step in
    this effort. To eradicate terrorism altogether, the United
    States must help create stable governments and nations that
    once supported terrorism like Iraq and Afghanistan. I visited
    both of those places last week and I hope in the course of our
    questioning I can say a word about what I saw.
        We must go after terrorist support mechanisms as well as
    the terrorists themselves, and we must help alleviate
    conditions in the world that enable terrorists to bring in new
    recruits. To these ends, the 2005 budget will support our
    foreign affairs agencies as they focus on the reconstruction of
    Iraq and Afghanistan. We will continue to support our coalition
    partners to further our counterterrorism, law enforcement and
    intelligence cooperation, and we will continue to expand
    democracy and help generate prosperity, especially in the
    Middle East.
        Forty-eight percent of the President's foreign affairs
    budget supports the war on terrorism. For example, $1.2 billion
    supports Afghanistan reconstruction, security and democracy
    building in 2005. More than $5.7 billion provides assistance to
    countries around the world that have joined us in the war on
    terrorism. And $3.5 billion indirectly supports our war on
    terrorism by strengthening our ability to respond to emergency
    and conflict situations. And finally, $190 million is aimed at
    expanding democracy in the greater Middle East; crucial if we
    are to attack successfully the motivation to terrorism.
        Two of the greatest challenges facing us today are the
    reconstruction of Iraq and the reconstruction of Afghanistan.
    With respect to Iraq, the Coalition Provisional Authority and
    the Iraqi Governing Council, in my judgment have made great
    strides in the areas of security, economic stability and
    growth, and democratization. Iraqi security forces are now in
    the forefront of our security efforts, and you can see that
    they are taking casualties as they go about securing their
    country for their people.
        In addition, the CPA has established a new Iraqi army,
    issued a new currency, and refurbished schools, hospitals, the
    sanitary infrastructure, working on the oil infrastructure. So
    much good work is going on with respect to reconstruction that
    it is unfortunate that the continuing security situation we
    face tends to drown out or put a black cloud over the good work
    that is being done.
        But much work remains to be done. Working with our
    coalition partners we will continue to train Iraqi police,
    border guards, the civil defense corps and the army in order to
    ensure the country's security. At the same time, as I noted, we
    are going to work on these critical infrastructure needs.
        But there is progress taking place. The definitive example
    of that progress, on March 8 the Iraqi Governing Council
    adopted a transitional administrative law, which is essentially
    an interim constitution for Iraq. This was a remarkable
    milestone. You will recall that Friday when we thought it was
    going to be signed and suddenly there was a signing table, 25
    pens and nobody showed up because there was a problem over it.
    And over the weekend that problem was solved, through argument,
    through debate, through democratic process; something that they
    had never had experience with before. But it happened.
        This administrative law recognizes freedom of religion and
    puts the judiciary on an independent track. It puts the
    military firmly under civilian control. It gives women the
    access to civil society and the political life of the country.
    It is a huge step for the Iraqi people and we should not sell
    short what an accomplishment this is.
        The U.N. Secretary General's special advisor Mr. Brahimi,
    Ambassador Brahimi, has been invited back to Iraq by the
    Governing Council in order to work with the Council and the CPA
    to put in place a revised interim government that will take
    sovereignty from the CPA on the first of July. In my visit with
    Ambassador Bremer last week we talked about the transition from
    the CPA to a very large State Department chief of mission
    operation, a very large Embassy. Already I have four
    Ambassadors over there working with Ambassador Bremer and
    trying to make this transition as smooth as possible.
        Mr. Chairman, Afghanistan is another high priority and I
    was there last week. We are committed to helping build a stable
    and democratic Afghanistan. They had a very fine constitutional
    process at the end of last year where they adopted a
    constitution for this country that just a few years ago was a
    basket case, a despotic basket case. Now it has a constitution,
    and as you saw in press reporting this morning, President
    Karzai has scheduled elections for early September for both a
    new president as well as for a legislature.
        Still there are problems along the Afghan-Pakistan border,
    still problems out in Herat but as I drove through Kabul last
    week you could see buildings going up, you could see women who
    felt secure enough in their life now to remove the burkha;
    about 50 percent covered and 50 percent not covered. I visited
    a registration place in a school where women were registering
    to vote, filling out the forms, stepping forward, getting their
    registration card and proudly showing it to me that they are
    now part of the life of the new Afghanistan. So we have
    accomplished a lot in Afghanistan, but here too there is much
    more work to do.
        I was watching some footage yesterday that we are going to
    use at the Donors' Conference next week that shows some of our
    reconstruction efforts in Afghanistan, and one shot on this
    video is of the new blacktop road, complete with markers that
    goes from Kabul to Kandahar. We will continue that road around
    to Herat, in working with our Saudi partners, our Japanese
    partners, and provide a beltway for this country. But it is
    more than just a beltway. It is a road that will link the
    country together, give the central government the ability to
    control the regions a little more effectively. It will
    contribute to the economic life of the country. But more
    importantly, it will also link Afghanistan with the other
    nations of central Asia.
        Pakistan is looking at this and is starting to readjust its
    infrastructure, its port activities, to take into account that
    there will be peace in this part of the world as we go into the
    years ahead. The old silk route of 2,000 years ago is going to
    be recreated, except this time it will be with hard roads and
    ports, with an information infrastructure, and hope eventually
    with pipelines that criss-cross this area and move oil and
    natural gas from central Asia to the east and not just to the
    west.
        So the opportunities here are enormous. We have to deal
    with security. We have got to get rid of those remaining
    Taliban and al Qaeda elements. But we should not sell short not
    only our accomplishments of the last couple of years, but the
    potential that lies ahead for a region, the Caucuses, central
    Asia, south Asia all being linked in a new hub of
    transportation and trade as long as we can keep the peace and
    security, and that is what we are committed to.
        The 2005 budget, as I said, includes $1.2 billion in
    assistance for Afghanistan, which is on top of the $2.2 billion
    in 2004; $1.2 billion already out there and I will make a
    public announcement of the other $1 billion at the Afghan
    Donors' Conference in Berlin next week.
        As important as waging the war on terrorism is to America,
    we have other priorities in our foreign affairs budget; HIV/
    AIDS, 8,000 people a day are dying of this terrible disease. It
    is extremely difficult to make economic improvements in a
    country if you are not working on these kinds of problems, and
    the President is with his HIV/AIDS program. Over the past year
    we have worked with Congress to pass legislation laying the
    groundwork for this fight.
        In marking our progress, earlier this month, Ambassador
    Tobias who heads the program for us, Secretary Thompson,
    Administrator Natsios of AID, and I rolled out the strategy for
    the HIV/AIDS plan and announced the first dispensation of
    dollars for these programs; $350 million in contracts will roll
    out to some of the NGOs and PDOs. As a crucial next step, the
    2005 budget request expands on the President's plan with $2.8
    billion to combat AIDS in the most affected countries in Africa
    and the Caribbean. Together, the Department of State, USAID,
    and the Department of Health and Human Services, will use the
    significantly increased resources quickly and effectively to
    achieve the President's ambitious goals in the fight against
    global AIDS.
        Just as a digression, we are also seeing polio back in
    certain parts of Africa, and this has to be part of our health
    efforts as well, coming out of the Department of State and
    coming out of USAID.
        Of course, there are other dimensions of economic success
    in Africa, and the program that we are pushing forward and you
    know a great deal about, the Millennium Challenge Corporation.
    The corporation has now been formed. I am the chairman of the
    board. We have sent a nominee to the Senate to be the CEO of
    this board, Mr. Paul Applegarth. The Millennium Challenge
    Corporation will fund infrastructure and other similar
    proposals to those countries that are committed to democracy,
    the free enterprise system, individual rights of men and women,
    the rule of law, and the end of corruption. We have other
    foreign assistance accounts, but the millennium challenge
    account will invest in those countries that are moving in the
    right direction.
        Let me turn now, gentlemen, to the part of the budget
    request that is of particular interest to you, State
    operations. As you recall, we created the diplomatic readiness
    initiative in 2002 to address staffing and training gaps that
    had become very averse to the conduct of America's diplomacy.
    The goal of the diplomatic readiness initiative was to hire
    1,158 new foreign and civil service employees over a 3-year
    period. These new hires, the first over-attrition hires in
    years, would allow us to provide training opportunities for our
    people and greatly improve the Department's ability to respond
    to crises, to ramp up when we needed to, such as we have had to
    do in Iraq and Afghanistan.
        I cannot say strong enough what a dynamic impact this
    program has had on the Department. The Department sees that its
    leadership, but more importantly its leadership in Congress
    cares about the Department. Your are willing to invest in the
    readiness of our people, bring in new people. I got a report
    from the Under Secretary for Management yesterday that close to
    30,000 people have already signed up for the next giving of the
    foreign service exam. We have been averaging 50,000 people a
    year for the last 2 years wanting to become part of this new
    team, which I think has been energized by the support we have
    been receiving from the Congress and for that I am very
    appreciative.
        We also created new mandatory leadership and management
    training. It is great for our people to learn how to speak
    different languages and learn all about foreign policy and to
    be experts and write papers. But they also have to be able to
    lead and manage people in these very, very complicated missions
    that we have around the world. So beginning from the first day
    that you come into the foreign service and go to the junior
    officers' course, the entry level course, you will receive
    leadership and management training and will continue throughout
    your whole career. If this bears a marked similarity to the way
    they do it in the military, it is not coincidental or
    accidental. We are essentially adopting what I learned in the
    military and bringing it over to the foreign service and to the
    civil service. We are giving leadership training to our senior
    civil service employees as well.
        The other thing I am very proud of, of course, is the
    information technology investment that we have made with your
    support. It has paid off. Every desk in the State Department,
    everywhere in the State Department now has an Internet capable
    computer sitting there. We did it in-house for the most part.
        Senator Gregg. And it worked.
        Secretary Powell. It works.
        Senator Gregg. Not like some of our other agencies.
        Secretary Powell. Frankly, we looked outside and then we
    decided, we can do this ourselves. You may recall, gentlemen,
    that you had a real problem with the way we were running our
    Diplomatic Telecommunications Service for years, and Mr. Tenet
    and I sat down and said, let us figure out who can deliver the
    capacity best, and we solved that. Mr. Tenet provides the
    capacity, and the person working for Mr. Tenet to do that also
    works for me. So we have a good deal and it is working. Our
    capacity has increased, the cost has gone down considerably,
    and everybody is happy. Therefore, I can put broadband
    capability in every mission around the world.
        Just a little war story on how this works, as you know,
    part of our effort to reach out to the Congress was to create a
    State Department office up here to respond to Members of
    Congress. I was able to get an office in the House. I do not
    want to point any fingers but I have not yet been able to get a
    room on the Senate side. Be that as it may, 30 percent of the
    work of my House office comes from the Senate side. I was in
    there the other day waiting for a hearing to begin and just
    talking to my folks who work there. There are three people in
    there. I said, what kind of requests are you getting?
    Constituent requests, visa problems, all this, hundreds and
    hundreds--the volume is going up 300 percent in the last year.
        I said, give me an example of how you solve a problem that
    a Member of Congress brings to you. They said visa problems are
    common ones. Somebody will come in and say, why didn't a friend
    of mine get a visa when they applied in New Delhi or Mumbai or
    somewhere like that? I said, how do you handle that? Do you go
    to the Department and ask Consular Affairs? They said, no, we
    go right to the Embassy. How do you go right to the Embassy?
    Information technology. I said, show me. Sandra Shipshock, the
    officer who was working in the office, went to her computer and
    in 10 seconds she had not only gotten to the Embassy, she got
    into the Embassy's consular section data base. And in less than
    20 seconds she had pulled up the specific visa application with
    a picture of the individual who had applied for the visa and
    why the visa was denied.
        This data base is all secure. We have firewalls. Not
    anybody can just go in like you are going to Google. But the
    fact of the matter is that the kind of information technology
    system we have put in place allows us to provide that kind of
    service, not only to Members of Congress but to the public.
        In that same vein, now that we have this information
    technology system coming along, we have to change the way we do
    business. We cannot just be an information system without a
    change in the process and the thinking of the Department. That
    is what our SMART Project is all about that we are asking for
    your support. We want to get rid of cables. Get rid of the way
    we used to do it in World War II. My staff gave me a chart the
    other day and it was recognizing that the last Wang computer
    left the Department 3 months ago. I am pleased to hear that. It
    should have left 10 years ago. But we are now in the
    information age and I ask for your support for our SMART
    program so that we can change the thinking in the Department as
    well as just put new computers and software into place.
        Mr. Chairman, the Department has the responsibility to
    protect more than 60,000 Government employees who work in
    Embassies and consulates abroad. I know how interested you have
    been in this program over the years. You know that we have
    reorganized our efforts. We reorganized the Office of Overseas
    Building Operations to manage the effort with speed, efficiency
    and effectiveness under the leadership of General Chuck
    Williams. At the beginning of this administration we were
    building one new secure Embassy a year. Today we are building
    10 new secure Embassy compounds a year. Many of these compounds
    also have separate facilities for USAID. They are also
    deserving of protection.
        Moreover, we have reduced the Embassy's program cost by 20
    percent using modern management techniques, using common
    components among our Embassy projects. Within the budget we are
    watching a plan to replace the remaining 150 Embassies and
    consulates that do not meet current security standards over the
    next 14 years for a total cost of $17 billion.
        To fund construction of these compounds we will begin the
    capital security cost-sharing program in 2005. Not everybody is
    crazy with this cost-sharing program, but it has to be done and
    I am working with my Cabinet colleagues on it. Each agency with
    staff overseas will contribute annually toward construction of
    new facilities based on the number of positions that that
    Department or agency wants in the type of space that we are
    preparing for them. We arrived at the cost shares in the 2005
    President's budget request in consultation with each agency and
    Department.
        Along with securing our facilities we have focused on
    assuring that overseas staffing is deployed where they are
    mostly needed to serve U.S. interest. As agencies assess the
    real cost of maintaining staff overseas I hope they will adjust
    their overseas staffing levels to the minimum absolutely
    necessary since they will now have to contribute to the cost of
    maintaining them overseas.
        Our budget request also, I might say, touches on physical
    security improvements to those soft targets in our missions,
    schools, recreational facilities. You know that we have an
    extensive plan to go after the soft targeting possibility,
    providing physical security improvements to overseas schools
    attended by dependents of Government employees and other
    citizens. Our 2005 request includes $27 million for this
    effort, including $10 million for the schools, $5 million to
    improve security at employee association facilities, and $12
    million for residential security upgrades. Protection of
    Americans living and working overseas is one of our highest
    priorities.
        We also appreciate the ongoing support from this committee
    for our peacekeeping budget. U.N. peacekeeping operations in
    troubled and fragile regions have been and remain critical to
    ensuring that such places are given stability and the time they
    need to work on long-term solutions to their underlying
    conflicts and problems. UNAMSIL in Sierra Leone and UNMISET in
    East Timor have been effective in helping new governments to
    establish themselves. We are also supporting peacekeeping
    missions in Liberia and Ivory Coast, and I would just ask for
    your continued support.
        I am going to have difficulty meeting all of the
    peacekeeping financial responsibilities that I expect to arise
    over the next year, but the 2005 submission is certainly a good
    start on meeting those responsibilities. We will just have to
    see how the cost flows out in the course of the fiscal year.

                               PREPARED STATEMENT

        Mr. Chairman, Senator Hollings, Senator Byrd, thank you for
    this opportunity to present our case. I thank you for your past
    support and I will thank you in advance for your future
    support.
        [The statement follows:]

                     Prepared Statement of Colin L. Powell

        Mr. Chairman, members of the subcommittee, thank you for the
    opportunity to testify on the State Department's portion of the
    President's Budget Request for fiscal year 2005. While I know that your
    specific oversight is of the State Department operations portion of
    that budget request, I want to give you as well an overview of what
    those operations will support in the way of foreign policy. So let me
    give you the overall budget picture first and, then, touch on foreign
    operations. Finally, I will deal with highlights of our funding request
    for State Department operations.
        The President's fiscal year 2005 International Affairs Budget for
    the Department of State, USAID, and other foreign affairs agencies
    totals $31.5 billion, broken down as follows: Foreign Operations--$21.3
    billion; State Operations--$8.4 billion; Public Law 480 Food Aid--$1.2
    billion; International Broadcasting--$569 million; and U.S. Institute
    of Peace--$22 million.
        Mr. Chairman, the President's top foreign policy priority is
    winning the war on terrorism. Forty-eight percent of the President's
    budget for foreign affairs directly supports that priority by assisting
    our allies and strengthening the United States' diplomatic posture. For
    example: $1.2 billion supports Afghanistan reconstruction, security and
    democracy building, and more than $5.7 billion is provided for
    assistance to countries around the world that have joined us in the war
    on terrorism, and $3.5 billion indirectly supports the war on terrorism
    by strengthening our ability to respond to emergencies and conflict
    situations. Moreover, $190 million is aimed at expanding democracy in
    the Greater Middle East, in part to help alleviate the conditions that
    spawn terrorists.
        In addition, $5.3 billion is targeted for the President's bold
    initiatives to fight HIV/AIDS and create the Millennium Challenge
    Corporation, both of which will support stability and improve the
    quality of life for the world's poor--and, again, help to relieve
    conditions that cause resentment and despair.
        Mr. Chairman, let me elaborate a bit on how some of these dollars
    will be spent.

                          WINNING THE WAR ON TERRORISM

        Winning on the battlefield with our superb military forces is just
    one step in defeating terrorism. To eradicate terrorism, the United
    States must help create stable governments in nations that once
    supported terrorism, go after terrorist support mechanisms as well as
    the terrorists themselves, and help alleviate conditions in the world
    that enable terrorists to bring in new recruits. To this end, in fiscal
    year 2005 the State Department and USAID will continue to focus on the
    reconstruction of Iraq and Afghanistan, support our coalition partners
    to further our counterterrorism, law enforcement and intelligence
    cooperation, and expand democracy and help generate prosperity,
    especially in the Middle East.
    Building a Free and Prosperous Iraq
        The United States faces one of its greatest challenges in
    developing a secure, free and prosperous Iraq. The USG is contributing
    almost $21 billion in reconstruction funds and humanitarian assistance
    to this effort. The World Bank and the International Monetary Fund are
    expected to provide another $4 to 8 billion in loans and grants over
    the next three years. These resources, coupled with the growing
    assistance of international donors, will ease the transition from
    dictatorship to democracy and lay the foundation for a market economy
    and a political system that respects human rights and represents the
    voices of all Iraqis.
        The Coalition Provisional Authority (CPA) and the Iraqi Governing
    Council (IGC) have made great strides in the areas of security,
    economic stability and growth, and democratization. Iraqi security
    forces now comprise more than half of the total security forces in the
    country. In addition, the CPA has established a New Iraqi Army, issued
    a new currency and refurbished and equipped schools and hospitals. And,
    as you know, the CPA is taking steps to help the Iraqis form a fully
    sovereign government this summer.
        Much work remains to be done. Working with our coalition partners,
    we will continue to train Iraqi police, border guards, the Civil
    Defense Corps and the Army in order to ensure the country's security as
    we effect a timely transition to democratic self-governance and a
    stable future.
        At the same time, we are helping provide critical infrastructure,
    including clean water, electricity and reliable telecommunications
    systems which are essential for meeting basic human needs as well as
    for economic and democratic development. Thousands of brave Americans,
    in uniform and in mufti, are in Iraq now working tirelessly to help
    Iraqis succeed in this historic effort. Alongside their military
    colleagues, USAID, State Department and the Departments of the Treasury
    and Commerce are working to implement infrastructure, democracy
    building, education, health and economic development programs. These
    efforts are producing real progress in Iraq.
        As a definitive example of this progress, on March 8, the IGC
    formally signed the Transitional Administrative Law (TAL)--essentially
    an interim constitution for Iraq. This was a remarkable milestone. The
    TAL recognizes freedom of religion and expression, the right to
    assemble and to organize political parties, and other fundamentally
    democratic principles, as well as prohibiting discrimination based on
    gender, nationality or religion. This is a huge step for the people of
    Iraq and for the region--a step toward constitutional democracy. It is
    a step that just a year ago, Iraqis would not have imagined possible.
        The U.N. Secretary General's Special Advisor, Lakhdar Brahimi, was
    invited back to Iraq by the IGC last week. He will help the Iraqis to
    determine what sort of transitional Iraqi government will be developed
    and to prepare for elections at the end of this year or early in the
    next. Creating a democratic government in Iraq will be an enormous
    challenge. But Ambassador Bremer, working with the Iraq Governing
    Council and with the United Nations and our coalition partners, is
    committed to success. And when the CPA, funded and directed by the
    Department of Defense, goes out of business on June 30 and the State
    Department assumes the lead role in representing and managing U.S.
    interests in Iraq, we will carry on that commitment. We are already
    thoroughly involved. I was just in Baghdad last week meeting with
    Ambassador Bremer, members of the IGC, and talking to some of our
    troops. I know how thoroughly involved we are. And we will all succeed.

    Winning the Peace in Afghanistan
        Mr. Chairman, Afghanistan is another high priority for this
    Administration. The United States is committed to helping build a
    stable and democratic Afghanistan that is free from terror and no
    longer harbors threats to our security. After we and our coalition
    partners defeated the Taliban government, we faced the daunting task of
    helping the Afghan people rebuild their country. We have demonstrated
    our commitment to this effort by providing over $3.7 billion in
    economic and security assistance to Afghanistan since 2001.
        Through our assistance and the assistance of the international
    community, the government of Afghanistan is successfully navigating the
    transition that began in October 2001. Afghanistan adopted a
    constitution earlier this year and is preparing for democratic national
    elections this summer. With technical assistance from the United
    States, Afghanistan successfully introduced a new stable currency in
    October 2002 and is working to improve revenue collection in the
    provinces. The lives of women and girls are improving as women pursue
    economic and political opportunities and girls return to school. Since
    2001, the United States has rehabilitated 205 schools and 140 health
    clinics and trained fifteen battalions of the Afghan National Army
    (ANA). Also, President Bush's commitment to de-mine and repave the
    entire stretch of the Kabul-Kandahar highway was fulfilled. The road
    had not been functional for over 20 years. What was once a 30-hour
    journey can now be accomplished in 5 or 6 hours.
        While the Afghanistan of today is very different from the
    Afghanistan of September 2001, there is still much left to accomplish.
    In the near-term, the United States will assist the government of
    Afghanistan in its preparations for elections this summer to ensure
    that they are free and fair. To demonstrate tangible benefits to the
    Afghan people, we will continue to implement assistance on an
    accelerated basis. The fiscal year 2005 Budget contains $1.2 billion in
    assistance for Afghanistan that will be focused on education, health,
    infrastructure, and assistance to the ANA, including drawdown authority
    and Department of Defense ``train and equip''. For example, U.S.
    assistance efforts will concentrate on rehabilitation and construction
    of an additional 275 schools and 150 health clinics by June 2004, and
    complete equipping of the fifteen army battalions. The United States
    will also extend the Kabul-Kandahar road to Herat so that people and
    commerce will be linked East and West across Afghanistan with a ground
    transportation link between three of the largest cities.
        Last week, when I was in Kabul to meet with President Karzai and
    his team, I had the chance to visit a voter registration site. I saw
    how far Afghanistan has progressed, in only two years, along the path
    to constitutional democracy. I saw also clear evidence of the Afghan
    people's commitment to continue on that path despite the many
    challenges ahead. I met 9 or 10 women at the site and they knew what
    was at stake in their country. They were eager for the free and fair
    elections called for in the Bonn Agreement and I assured them that
    America was solidly behind them. I told them that as long as they are
    committed to building a new, democratic Afghanistan, we will stand
    shoulder to shoulder with them.

    Support for Our Coalition Partners
        As part of the war on terrorism, President Bush established a clear
    policy to work with other nations to meet the challenges of defeating
    terror networks with global reach. This commitment extends to the
    front-line states that have joined us in the war on terrorism and to
    those nations that are key to successful transitions to democracy in
    Iraq and Afghanistan.
        Our assistance enables countries cooperating closely with the
    United States to prevent future attacks, improve counter-terrorism
    capabilities and tighten border controls. As I indicated earlier, the
    fiscal year 2005 Budget for International Affairs provides more than
    $5.7 billion for assistance to countries around the world that have
    joined us in the war on terrorism, including Turkey, Jordan,
    Afghanistan, Pakistan, Indonesia and the Philippines.
        U.S. assistance has also resulted in unparalleled law enforcement
    and intelligence cooperation that has destroyed terrorist cells,
    disrupted terrorist operations and prevented attacks. There are many
    counterterrorism successes in cooperating countries and international
    organizations. For example:
      --Pakistan has apprehended more than 500 al Qaeda terrorists and
            members of the Taliban through the leadership of President
            Musharraf, stronger border security measures and law
            enforcement cooperation throughout the country. I talked with
            President Musharraf when I was in Islamabad last week. As you
            know, his military forces were over the weekend hotly engaged
            with Taliban and al Qaida fighters in the border areas. More of
            the terrorists were being killed or captured. Fighting will
            likely continue.
      --Jordan continues its strong counterterrorism efforts, including
            arresting two individuals with links to al Qaeda who admitted
            responsibility for the October 2002 murder of USAID Foreign
            Service officer Lawrence Foley in Amman.
      --The North Atlantic Treaty Organization has endorsed an ambitious
            transformation agenda designed to enhance its capabilities by
            increasing deployment speed and agility to address new threats
            of terrorism.
      --Colombia has developed a democratic security strategy as a
            blueprint for waging a unified, aggressive counterterror-
            counternarcotics campaign against designated foreign terrorist
            organizations and other illegal, armed groups.
        The United States and its Southeast Asian allies and friends have
    made significant advances against the regional terrorist organization
    Jemaah Islamiyah which was responsible for the Bali attack in 2002 that
    killed more than 200 people. In early August 2003, an Indonesian court
    convicted and sentenced to death a key figure in that bombing.
        Since September 11, 2001, 173 countries have issued orders to
    freeze the assets of terrorists. As a result, terror networks have lost
    access to nearly $200 million in more than 1,400 terrorist-related
    accounts around the world. The World Bank, International Monetary Fund
    and other multilateral development banks have also played an important
    role in this fight by strengthening international defenses against
    terrorist finance.
        While progress has been made attacking terrorist organizations both
    globally and regionally, much work remains to be done. The fiscal year
    2005 President's Budget strengthens our financial commitment to our
    coalition partners to wage the global war on terror. Highlights of the
    President's request include $700 million for Pakistan to help advance
    security and economic opportunity for Pakistan's citizens, including a
    multi-year educational support program; $461 million for Jordan to
    increase economic opportunities for Jordanian communities and
    strengthen Jordan's ability to secure its borders; and $577 million for
    Colombia to support President Uribe's unified campaign against drugs
    and terrorism.
        In September 2003, at the United Nations, President Bush said:
    ``All governments that support terror are complicit in a war against
    civilization. No government should ignore the threat of terror, because
    to look the other way gives terrorists the chance to regroup and
    recruit and prepare. And all nations that fight terror, as if the lives
    of their own people depend on it, will earn the favorable judgment of
    history.'' We are helping countries to that judgment.
        Mr. Chairman, one of the aspects of the War on Terrorism that gives
    us a particular sense of urgency is proliferation of weapons of mass
    destruction. These terrible weapons are becoming easier to acquire,
    build, hide, and transport.
        On February 11, President Bush spoke at the National Defense
    University (NDU) and outlined the Administration's approach to this
    growing danger. The President described how we have worked for years to
    uncover one particular nefarious network--that of A.Q. Khan.
        Men and women of our own and other intelligence services have done
    superb and often very dangerous work to disclose these operations to
    the light of day. Now, we and our friends and allies are working around
    the clock to get all the details of this network and to shut it down,
    permanently.
        We know that this network fed nuclear technology to Libya, Iran,
    and North Korea.
        At NDU, President Bush proposed seven measures to strengthen the
    world's efforts to prevent the spread of WMD:
      --Expand the Proliferation Security Initiative (PSI) to address more
            than shipments and transfers; even to take direct action
            against proliferation networks.
      --Call on all nations to strengthen the laws and international
            controls that govern proliferation, including passing the UNSCR
            requiring all states to criminalize proliferation, enact strict
            export controls, and secure sensitive materials.
      --Expand our efforts to keep Cold War weapons and other dangerous
            materials out of the hands of terrorists--efforts such as those
            accomplished under Nunn-Lugar.
      --Close the loophole in the Nuclear Nonproliferation Treaty that
            allows states such as Iran to produce nuclear material that can
            be used to build bombs under the cover of civilian nuclear
            programs.
      --Univeralize the IAEA Additional Protocol.
      --Create a special committee on the IAEA Board of Governors to focus
            on safeguards and verification.
      --And, finally, disallow countries under investigation for violating
            nuclear nonproliferation treaties from serving on the IAEA
            Board of Governors.
        As the President said at NDU, the nexus of terrorists and WMD is a
    new and unique threat. It comes not with ships and fighters and tanks
    and divisions, but clandestinely, in the dark of the night. But the
    consequences are devastating. No President can afford to ignore such a
    threat. And President Bush will not ignore it.

    Expansion of Democracy in the Middle East
        We believe that expanding democracy in the Middle East is critical
    to eradicating international terrorism. But in many nations of the
    Middle East, democracy is at best an unwelcome guest and at worst a
    total stranger. The United States continues to increase its diplomatic
    and assistance activities in the Middle East to promote democratic
    voices--focusing particularly on women--in the political process,
    support increased accountability in government, assist local efforts to
    strengthen respect for the rule of law, assist independent media, and
    invest in the next generation of leaders.
        As the President emphasized in his speech last November at the
    National Endowment for Democracy (NED), reform in the Middle East is of
    vital importance to the future of peace and stability in that region as
    well as to the national security of the United States. As long as
    freedom and democracy do not flourish in the Middle East, resentment
    and despair will continue to grow--and the region will serve as an
    exporter of violence and terror to free nations. For the United States,
    promoting democracy and freedom in the Middle East is a difficult, yet
    essential calling.
        There are promising developments upon which to build. The
    government of Jordan, for example, is committed to accelerating reform.
    Results include free and fair elections, three women holding Cabinet
    Minister positions for the first time in Jordan's history, and major
    investments in education. Positive developments also can be found in
    Morocco, which held parliamentary elections last year that were
    acclaimed as free, fair and transparent.
        In April 2003, the Administration launched the Middle East
    Partnership Initiative (MEPI), an intensive inter-agency effort to
    support political and education reform and economic development in the
    region. The President continues his commitment by providing $150
    million in fiscal year 2005 for these efforts.
        To enhance this USG effort with a key NGO, the President has
    doubled the NED budget to $80 million specifically to create a Greater
    Middle East Leadership and Democracy Initiative. NED is a leader in
    efforts to strengthen democracy and tolerance around the world through
    its work with civil society. We want that work to flourish.
        As President Bush said in his November speech at NED: ``The United
    States has adopted a new policy, a forward strategy of freedom in the
    Middle East. This strategy requires the same persistence and energy and
    idealism we have shown before. And it will yield the same results. As
    in Europe, as in Asia, as in every region of the world, the advance of
    freedom leads to peace.''

    Public Diplomacy in the Middle East
        And the advance of freedom is aided decisively by the words of
    freedom.
        Democracy flourishes with freedom of information and exposure to
    diverse ideas. The President's fiscal year 2005 Budget promotes
    expansion of democracy in the Middle East by providing public access to
    information through exchange programs and the Middle East Television
    Network.
        New public diplomacy efforts including the Partnerships for
    Learning (P4L) and Youth Exchange and Study (YES) initiatives have been
    created to reach a younger and more diverse audience through academic
    and professional exchange programs. In fiscal year 2005, the P4L and
    the YES programs, funded at $61 million, will focus more on youth of
    the Muslim world, specifically targeting non-traditional, non-elite,
    often female and non-English speaking youth.
        U.S. broadcasting initiatives in the Middle East encourage the
    development of a free press in the American tradition and provide
    Middle Eastern viewers and listeners access to a variety of ideas. The
    United States revamped its Arabic radio broadcasts in 2002 with the
    introduction of Radio Sawa, which broadcasts to the region twenty-four
    hours a day. As a result, audience size for our Arabic broadcasting
    increased from under 2 percent in 2001 to over 30 percent in 2003.
    Based on this successful model, the United States introduced Radio
    Farda to broadcast to Iran around the clock. Building on this success,
    the fiscal year 2005 President's Budget Request provides over $70
    million for Arabic and Persian radio and television broadcasts to the
    Middle East. Last month, the United States launched the Middle East
    Television Network, an Arabic language satellite network that will have
    the capability of reaching millions of viewers and will provide a means
    for Middle Easterners to better understand democracy and free market
    policies, as well as the United States and its people. This network
    kicked off on February 14 with nine hours per day of broadcasting.
    Today, the broadcasting is 24/7. The network--Al-Hurra, or ``the Free
    One''--reaches 22 countries, including Iraq. President Bush has already
    appeared on the network and I did an interview several weeks ago.

                     OUR NEW APPROACH TO GLOBAL PROSPERITY

        President Bush's approach to global economic growth emphasizes
    proven American values: governing justly, investing in people, and
    encouraging economic freedom. President Bush has pledged to increase
    economic engagement with and support for countries that commit to these
    goals through an ambitious trade agenda and new approaches to
    development assistance focusing on country performance and measurable
    results.

    The Millennium Challenge Account (MCA)
        In February of 2003, we sent the Congress a budget request for the
    MCA and legislation to authorize the creation of the Millennium
    Challenge Corporation (MCC), the agency designed to support innovative
    development strategies and to ensure accountability for results.
        The MCC will fund only proposals for grants that have clear,
    measurable objectives, a sound financial plan and indicators for
    assessing progress.
        The Congress appropriated $1 billion for MCA for fiscal year 2004.
    The fiscal year 2005 budget request of $2.5 billion makes a significant
    second year increase to the MCA and paves the way to reaching the
    President's commitment of $5 billion in fiscal year 2006.

    Trade Promotion Authority (TPA)
        President Bush recognizes that the fastest, surest way to move from
    poverty to prosperity is through expanded and freer trade. America and
    the world benefit from free trade. For this reason, one of his first
    actions upon taking office in 2001 was to seek TPA, allowing him to
    negotiate market-opening agreements with other countries. The President
    aims to continue vigorously to pursue his free trade agenda in order to
    lift developing countries out of poverty, while creating high-paying
    job opportunities for America's workers, businesses, farmers and
    ranchers and benefiting all Americans through lower prices and wider
    choices. As the President said in April, 2001 at the Organization of
    American States: ``Open trade fuels the engines of economic growth that
    creates new jobs and new income. It applies the power of markets to the
    needs of the poor. It spurs the process of economic and legal reform.
    It helps dismantle protectionist bureaucracies that stifle incentive
    and invite corruption. And open trade reinforces the habits of liberty
    that sustain democracy over the long term.''
        Since receiving TPA in 2002, the President has made good on his
    promise, completing free trade agreements with Chile and Singapore,
    which were quickly approved by Congress and went into effect on January
    1. We have recently completed negotiations with five Central American
    countries on the Central America Free Trade Agreement (CAFTA) and our
    work to bring the Dominican Republic (DR) into that agreement concluded
    successfully on March 14 with the signing of an FTA with that country.
    Now, the DR can join CAFTA. In February, we announced the conclusion of
    an agreement with Australia. More recently, negotiations have been
    completed with Morocco and an agreement announced, and negotiations are
    ongoing with the Southern African Customs Union (SACU), Bahrain, and on
    the Free Trade Agreement of the Americas (FTAA). We are concluding
    comprehensive agreements that include market access for goods and
    services, strong intellectual property and investment provisions, and
    include commitments for strong environmental and labor protections by
    our partners. These arrangements benefit Americans and our trading
    partners.
        Building on this significant progress, the President intends to
    launch free trade negotiations with Thailand, Panama, and the Andean
    countries of Colombia, Ecuador, Bolivia and Peru. The President has
    also stated his vision for a Middle East Free Trade Area by 2013, to
    ignite economic growth and expand opportunity in this critical region.
    Finally, the President is committed to wrapping up successfully the
    World Trade Organization's Doha agenda. The United States has taken the
    lead in re-energizing these negotiations following the Cancun
    Ministerial.

                 CARING FOR THE WORLD'S MOST VULNERABLE PEOPLE

    Emergency Plan for AIDS Relief
        When President Bush took office in January 2001, the HIV/AIDS
    pandemic was at an all time high, with the estimated number of adults
    and children living with HIV/AIDS globally at 37 million, with 68
    percent of those individuals living in sub-Saharan Africa. From fiscal
    years 1993 to 2001 the total U.S. Government global AIDS budget was
    about $1.9 billion. As part of the Emergency Plan for AIDS Relief, the
    President proposed $2 billion in fiscal year 2004 as the first
    installment of a five-year, $15 billion initiative, surpassing nine
    years of funding in a single year. The President's Emergency Plan for
    AIDS Relief represents the single largest international public health
    initiative ever attempted to defeat a disease. The President's Plan
    targets an unprecedented level of assistance to the 14 most afflicted
    countries in Africa and the Caribbean to wage and win the war against
    HIV/AIDS. In addition, programs will continue in 75 other countries.
        By 2008, we believe the President's Plan will prevent seven million
    new infections, treat two million HIV-infected people, and care for 10
    million HIV-infected individuals and those orphaned by AIDS in
    Botswana, Cote d'Ivoire, Ethiopia, Guyana, Haiti, Kenya, Mozambique,
    Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda and Zambia.
        Announced during President Bush's State of the Union address on
    January 28, 2003, the Emergency Plan provides $15 billion over five
    years for those countries hardest hit by the pandemic, including $1
    billion for the Global Fund to Fight AIDS, Tuberculosis and Malaria.
    The fiscal year 2005 Budget provides $2.8 billion from State, USAID,
    and the Department of Health and Human Services (HHS) to combat global
    AIDS, more than tripling funding for international HIV/AIDS since the
    President took office.
        Over the past year, we have worked with the Congress to pass
    legislation laying the groundwork for this effort and to appoint a
    senior official at the State Department to coordinate all U.S.
    Government international HIV/AIDS activities. Ambassador Randall Tobias
    has been confirmed by Congress and has now taken steps to assure
    immediate relief to the selected countries.
        Earlier this month, Ambassador Tobias, Secretary Thompson, USAID
    Administrator Andrew Natsios, and I rolled out the strategy for this
    plan and announced the first dispensation of dollars--$350 million in
    contracts to some of the NGOs and PVOs who will be carrying out the
    fight at the grass-roots level. It was a thrilling moment, I can assure
    you.
        As a crucial next step, the fiscal year 2005 Budget Request expands
    on the Emergency Plan. By working together as a highly collaborative
    team, and placing primary ownership of these efforts in the hands of
    the countries that we are helping--just as you will recall the Marshall
    Plan did so successfully in post-WWII Europe--the Department of State,
    USAID and HHS can use significantly increased resources quickly and
    effectively to achieve the President's ambitious goals in the fight
    against global AIDS.
        Mr. Chairman, President Bush summed it up this way in April of last
    year, ``There are only two possible responses to suffering on this
    scale. We can turn our eyes away in resignation and despair, or we can
    take decisive, historic action to turn the tide against this disease
    and give the hope of life to millions who need our help now. The United
    States of America chooses the path of action and the path of hope.''
    These dollars put us squarely on that path.

    Emergency Humanitarian Assistance--Helping Others in Need
        The President's Budget Request reflects a continued commitment to
    humanitarian assistance. The request maintains U.S. leadership in
    providing food and non-food assistance to refugees, internally
    displaced persons, and other vulnerable people in all corners of the
    world. In addition, the budget reflects the findings of the Program
    Assessment Rating Tool (PART) evaluations completed for the United
    Nations High Commissioner for Refugees and for USAID's Public Law 480
    Title II international food assistance, which confirmed a clear purpose
    for these programs.
        In 2003, the Administration provided funding to several
    international and non-governmental organizations to assist nearly
    200,000 Angolan refugees and internally displaced persons return home
    after decades of civil war.
        In an Ethiopia enveloped by drought, the Administration led
    international efforts to prevent widespread famine among 13 million
    vulnerable people, providing over one million metric tons of emergency
    food aid (valued at nearly half a billion dollars) to the World Food
    Program and NGOs, funding immunizations for weakened children, and
    supplying emergency seeds to farmers.
        In Sudan, the Administration worked with the United Nations and the
    Government of Sudan so that vital assistance could be delivered to the
    Sudanese people. This year the United States will provide about $210
    million in vital assistance to the people in the south, including
    approximately 125,000 metric tons (valued at nearly $115 million) in
    food aid, as well as non-food assistance, such as sanitation and water.
    We anticipate that a comprehensive peace agreement in Sudan will allow
    us to expand significantly our development assistance to help the
    Sudanese people in effecting a long-awaited recovery following decades
    of civil war. The fiscal year 2005 Budget includes $436 million in
    humanitarian and development, economic, and security assistance
    funding, much of which will be contingent upon a peace settlement
    between the government and the south.
        The fiscal year 2005 Budget ensures that the Administration can
    continue to respond quickly and appropriately to victims of conflict
    and natural disasters and to help those in greatest need of food,
    shelter, health care and other essential assistance, including those in
    areas starting to recover from conflict and war, such as Liberia. In
    particular, the budget requests funding for a flexible account to give
    the President the ability to respond to unforeseen emergency needs, the
    Emergency Fund for Complex Foreign Crises, funded at $100 million.
        Now, Mr. Chairman, let me turn to the State Department operations
    portion of the President's Budget Request which, as you will recall,
    totals $8.4 billion.

                   KEEPING AMERICANS SAFE AT HOME AND ABROAD

        The State Department has the responsibility to protect more than
    60,000 U.S. Government employees who work in embassies and consulates
    abroad. Since the 1998 bombings of two U.S. embassies in East Africa,
    the State Department has improved physical security overseas; however,
    as many of you are well aware, many posts are still not secure enough
    to withstand terrorist attacks and other dangers. To correct this
    problem, in 1999, the State Department launched a security upgrade and
    construction program to begin to address requirements in our more than
    260 embassies and consulates.

    Capital Security Cost Sharing Program
        Working with the Congress, President Bush has accelerated the pace
    of improving and building new secure facilities. Moreover, we have
    reorganized the Overseas Buildings Office to manage the effort with
    speed, efficiency, and effectiveness. Within the budget, we are
    launching a plan to replace the remaining 150 embassies and consulates
    that do not meet current security standards over the next 14 years, for
    a total cost of $17.5 billion. To fund construction of these new
    embassy compounds, we will begin the Capital Security Cost Sharing
    (CSCS) Program in fiscal year 2005. We will implement this program in
    phases over the next five years.
        Each agency with staff overseas will contribute annually towards
    construction of the new facilities based on the number of positions and
    the type of space they occupy. We arrived at the cost shares in the
    fiscal year 2005 President's Budget Request in consultations with each
    agency and the State Department's Overseas Buildings Office.
        CSCS is also a major component of the President's Management Agenda
    Initiative on Rightsizing. Along with securing facilities, we have
    focused on assuring that overseas staffing is deployed where they are
    most needed to serve U.S. interests. As agencies assess the real cost
    of maintaining staff overseas, they will adjust their overseas staffing
    levels. In this way, new embassies will be built to suit appropriate
    staffing levels. The program is already producing rightsizing results.
    Agencies are taking steps to eliminate unfilled positions from their
    books to reduce any unnecessary CSCS charges, which in turn is leading
    to smaller embassy construction requirements.

    Border Security
        Prior to September 11, 2001, the State Department's consular
    officers focused primarily on screening applicants based on whether
    they intended to work or reside legally in the United States. In
    deciding who should receive a visa, consular officers relied on State
    Department information systems as the primary basis for identifying
    potential terrorists. The State Department gave overseas consular
    officers the discretion to determine the level of scrutiny that should
    be applied to visa applications and encouraged the streamlining of
    procedures.
        Today, Consular Affairs at the State Department, working with both
    Customs and Border Protection and the Bureau of Citizenship and
    Immigration Services at the Department of Homeland Security, are
    cooperating to achieve our goals more effectively by sharing
    information and integrating information systems.
        The Department of State has invested substantial time, money, and
    effort in revamping its visa and passport process as well as its
    provision of American Citizen Services. The Department has more than
    doubled its database holdings on individuals who should not be issued
    visas, increased training for all consular officers, established
    special programs to vet applications more comprehensively, increased
    the number of skilled, American staff working in consular sections
    overseas, and improved data-sharing among agencies. The State
    Department, along with the Department of Homeland Security, is
    currently developing biometrics, such as fingerprints, digital
    photographs or iris scans, for both visas and passports in order to
    fulfill requirements of the Patriot and Border Security Acts and the
    International Civil Aviation Organization.
        As a part of the State Department's efforts to screen visa
    applicants more effectively, and in particular to ensure that a
    suspected terrorist does not receive a visa to enter the United States,
    we will be an active partner in the Terrorist Screening Center (TSC).
    The TSC, established in December 2003, will maintain a single,
    consolidated watchlist of terrorist suspects to be shared with Federal,
    state, local and private entities in accordance with applicable law.
    The Department of State will also participate in the Terrorist Threat
    Integration Center (TTIC), a joint-effort aimed at reducing the
    potential of intelligence gaps domestically and abroad.
        To achieve our goal of secure borders and open doors, in fiscal
    year 2005 the State Department plans to expand the use of biometrics to
    improve security in the visa and passport processes; more effectively
    fill gaps worldwide by hiring people with specific skills including
    language expertise; improve and maintain all consular systems; and more
    broadly expand data sharing with all agencies with border control or
    immigration related responsibilities. The budget in fiscal year 2005
    includes $175 million for biometric projects including photographs and
    fingerprints to comply with Border Security and Patriot Acts.
        The Border Security program underwent a PART analysis in the
    development of the fiscal year 2004 and fiscal year 2005 budgets and
    this budget request reflects the results of those analyses. The
    Department is moving ahead on program management improvements that
    clearly link to the Department of Homeland Security goals related to
    visa policy.

    The Critical Importance of Diplomatic Readiness
        You will recall, Mr. Chairman, members of the subcommittee, that we
    created the Diplomatic Readiness Initiative (DRI) in 2002 to address
    staffing and training gaps that had become very adverse to the conduct
    of America's diplomacy. The goal of DRI was to hire 1,158 new foreign
    and civil service employees over a three-year period. These new hires,
    the first over-attrition hires in years, would allow us to provide
    training opportunities for our people and greatly improve the
    Department's ability to respond to crises and emerging priorities
    overseas and at critical domestic locations. To bring these new people
    on board--and to select the best men and women possible--we
    significantly improved Department hiring processes, to include
    recruiting personnel from more diverse experience and cultural
    backgrounds and people who could fill critical skill gaps. In the
    process, we broke records in recruiting and thus had the best and the
    brightest from which to select. The Department of State will be reaping
    the benefits from this process for many years to come. We also created
    new mandatory leadership and management training, enhanced public
    diplomacy and consular training, and made significant increases in the
    amount of language training available for new Foreign Service Officers.
    DRI hiring has supported the Department's efforts in responding to
    crises since September 11th and provided the additional resources
    necessary to staff overseas locations that truly represent the front
    line in the war on terrorism.
        Some of these positions, however, are being diverted to support new
    requirements not envisioned by DRI, such as permanently staffing new
    embassies in Afghanistan, Iraq, Sudan, and possibly in Tripoli. Because
    of this, the fiscal year 2005 Budget Request provides additional
    resources to continue our DRI commitment.
        DRI has allowed the Department to focus on recruiting, training and
    retaining a high quality work force, sized to requirements that can
    respond more flexibly to the dynamic and demanding world in which we
    live. We need to continue it.
        USAID has begun a similar effort to address gaps in staffing in
    technical skills, calling it the Development Readiness Initiative.
    USAID plans to hire approximately 40 Foreign Service Officers in fiscal
    year 2004 under this initiative. This Budget Request includes authority
    for USAID to hire up to 50 additional Foreign Service Officers in
    fiscal year 2005, in order to fill critical skill gaps identified
    through a comprehensive workforce analysis.

    Information Technology
        Mr. Chairman, with your help and support, last year was a watershed
    year for the Department of State in the field of Information
    Technology. Shortly after assuming my position, I identified
    Information Technology as one of my highest priorities. Our objective
    was faster, smarter, simpler, and more effective diplomacy at every
    level. Three years later, we now have worldwide Internet access on
    desktops, as well as classified communications at every appropriate
    post. This has changed the way the State Department does business and
    could not have been accomplished without your support and that of the
    other members of the subcommittee, as well as the full Appropriations
    Committee. As we move forward with our efforts to replace our decades
    old cable system with the SMART program, the Committee's continued
    support of our IT modernization efforts will be as important as ever.

    Soft Target Protection
        Mr. Chairman, I also want to tell you that your subcommittee's
    leadership in ensuring the protection of so-called ``overseas soft
    targets'' including overseas American schools is greatly appreciated.
    The Department has established a three-phased, multi-year program to
    provide physical security improvements to overseas schools attended by
    the dependents of U.S. government employees and other U.S. citizens.
    Our fiscal year 2005 request includes $27 million for this effort
    including $10 million for the schools, $5 million to improve security
    at employee association facilities, and $12 million for residential
    security upgrades. The protection of Americans living and working
    overseas is our highest priority.

    Peacekeeping Operations
        We also appreciate the ongoing support from this Committee for our
    peacekeeping budget. U.N. Peacekeeping Operations in troubled and
    fragile regions has been and remains critical to ensuring that such
    places are given the stability and time they need to work on long-term
    solutions to their underlying conflicts. UNAMSIL in Sierra Leone, and
    UNMISET in East Timor have been effective in helping the new
    governments to establish themselves. We also supported peacekeeping
    missions in Liberia and Ivory Coast to assist their fragile
    transitional governments to implement peace agreements in those war-
    torn states. Your support in meeting these important needs has been
    indispensable. We look forward to working with you on helping us meet
    additional peacekeeping obligations as they emerge.

                            CONCLUSION AND QUESTIONS

        Mr. Chairman, I have focussed your attention for long enough. There
    is more in the President's Budget Request for fiscal year 2005; but
    what I have outlined above represents the top priorities for the State
    Department. I will be pleased to answer any questions you have about
    these priorities or about any other portion of the budget request in
    which you are interested. If I cannot answer the question myself, I
    have a Department full of great people who can; and I will get you an
    answer for the record.
        Thank you.

        Senator Gregg. Thank you, Mr. Secretary. We will try to be
    helpful. There are so many issues that we would like to take
    up, and I know each of us has a series of areas. Let me just do
    a couple and then turn it over to Senator Hollings and Senator
    Byrd and then we will go around again.

                FAILURE OF CLINTON ADMINISTRATION WITH TERRORISM

        The first one is, I think you ought to be given the
    opportunity to respond to what Mr. Clarke said yesterday,
    although you were in Madrid. This committee dealt a great deal
    with the prior administration on the way it ramped up for
    terrorism and therefore with Mr. Clarke directly and
    indirectly, and we had some issues which are fairly well
    documented, with the failure of the prior administration to
    really get its act together and get coordinated.
        One of the big problems we had was the terrible stovepipe
    approach in the other administration. We tried to set up
    something called the National Domestic Preparedness Office
    (NDPO), and we tried to set up a number of major initiatives, a
    Deputy Attorney General to focus activity on terrorism, and
    quite honestly we ran into a lot of resistance and most of it
    came out of Mr. Clarke's shop, because I think he had much more
    of a centralized rather than cross-fertilization approach. So,
    I personally have reservations about his own track record in
    this area, but his criticism is there and he is a professional
    in this area.
        However you came into the office of Secretary of State and
    he has stated essentially that this administration did not put
    a high priority on terrorism. It focused primarily on China and
    Russia and the relationship on the Korean peninsula. Of course,
    the attack on the American observer ship, was the first major
    foreign crisis of this administration, and that terrorism was a
    backburner issue, to paraphrase from his viewpoint, once this
    administration came into office. I think you are probably the
    fairest broker around here, to be very honest. I think the
    American public views you as a straight shooter who has seen it
    all, both as, obviously, the Chairman of the Joint Chiefs of
    Staff and as Secretary of State, and Chairman of Joint Chiefs
    under both Republican and Democratic Presidents.

                            TERRORISM--HIGH PRIORITY

        So I would be honest in your assessment as a fair broker as
    to what level of interest you folks put into terrorism, what
    the priority was when you took office as Secretary of State,
    and do you agree with Mr. Clarke's characterizations?
        Secretary Powell. No, I do not. Terrorism was an important
    issue for President Bush and for all of us coming in. We were
    not unmindful of the fact that the Cole had just been attacked.
    We were not unmindful of the fact that our Embassies had been
    blown up, and terrorism was a danger. As I testified before the
    commission the other day, the very first briefing I received
    during my transition period, some 4 days after President Bush
    announced me, was from Mr. Clarke. The other colleagues that he
    had and that were becoming my colleagues, and the outgoing
    administration were involved in intelligence and terrorism.
    This is not the sign of somebody who did not have an interest
    in terrorism. It was also something the President made clear we
    had to be interested in.
        But you cannot ignore when a China problem comes along or a
    Russia problem. All of these are important issues, and
    terrorism was an important issue.
        I did not have adequate opportunity in my presentation the
    other day to describe all of the things that the State
    Department was doing in the name of the President throughout
    the spring and summer of 2001 to warn and alert American
    citizens around the world, to warn and alert our Embassies, all
    the things that Mr. Rumsfeld was doing to make sure that our
    military forces were secure, sending fleets to sea, taking our
    ships and our other military forces out of areas of
    vulnerability. The CIA was hard at work. We saw the threat. We
    did not ignore the threat. We responded to the threat.
        The suggestion, however, that there was one magic moment or
    one magic bullet or one moment in time when you could connect
    two dots and say, we know that these individuals are in our
    country and we know that they are planning to fly planes into
    the World Trade Center is not right. We never connected the
    dots like that, and I am not sure that except in hindsight
    could one have seen that the dots might have been connected in
    that way. So I think all of us were working hard.
        The question about, you did not have enough meetings, I had
    all kinds of meetings in the Department. But the whole thing
    did not rest on all the principals getting together every day
    to talk to one another or to stare at one another. You do that
    when something is unfolding in a crisis atmosphere, as Mr.
    Clarke makes reference to, just before the millennium Y2K
    period. That is different. That is when you were in a real-time
    mode and you were expecting something to happen over New Year's
    Eve Y2K.
        But I can tell you that the President was interested in
    this. He gave instructions to the chiefs of mission. The
    President sends a letter to every Ambassador who is taking over
    as a chief of mission, and one of the elements in that letter
    was, you are responsible for the security of your Embassy. I
    was charged by the President to work with those Ambassadors.
        We did not see, to the best of my knowledge and you have
    heard from Mr. Tenet, and the FBI will be presenting before the
    commission next week, we did not see enough information to say
    that we knew that there was a threat already inside the
    country, nor did I see in my first several months until 9/11
    came along, those first 7 months--the previous administration
    had 7, 8 years. But in our first 7 months I never saw a case
    come together that was of sufficient power of persuasion that
    you could say, we know enough about al Qaeda and we know enough
    about the Taliban that we could simply on our own, without
    getting Pakistan on our side, to go and invade Afghanistan and
    look for Osama bin Laden. It would not have been possible
    without the support and cooperation of the countries in the
    region, Uzbekistan, Pakistan, and not just say what we had to
    work out with the Russians and others in the region.
        So I have thought about this. I have listened to the
    testimony. Mr. Clarke says that he tried to get access to
    various people in the administration. Dr. Rice has responded to
    this. She was available to him. He worked directly for her.
    There has been a discussion of memos sent, memos not sent, e-
    mails sent, e-mails not sent. I hope all of this will be
    balanced by the commission as they complete their work. I will
    wait for the commission's final report as opposed to daily
    comments that come from members of the commission in the press.

                         UPDATE ON IRAQ AND AFGHANISTAN

        Senator Gregg. Thank you for that evaluation. You mentioned
    that you have been to Afghanistan and Iraq, and of course, that
    is the future of how we fight terrorism. You said you wanted to
    give us an update on what is going on there. Tell us what your
    thoughts are.
        Secretary Powell. Yes, sir. Afghanistan, it has been 2
    years since I was there. I was there shortly after the Taliban
    was booted out, when there was only one telephone available for
    the whole government and money was being moved around by the
    half-ton in order to pay for something. I went back this time
    and we have a functioning government. We have a government that
    is slowly extending its reach out to the provinces. It is still
    difficult but it is slowly moving in that direction. We have a
    government that now rests on a solid constitution, and we
    should be proud of our effort in making that happen.
        We have buildings going up all over. The Pakistanis were
    noting to me that 95 percent of the capacity of their cement
    industry has been reached because of construction that is
    taking place next door in Afghanistan. They are very delighted
    with that, of course. We have a road that has been rebuilt. We
    have restored hope to a people, and we have got to stay the
    course. We have got to stay the course with our NATO allies,
    who are now taking an active role under the leadership of NATO
    for security in Kabul and for putting it place more provincial
    reconstruction teams. I think it is up to 12 now.
        So Afghanistan has shown a lot of progress over the last 2
    years. Even though there are problems that remain, we should
    not sell ourselves short on what we have been able to
    accomplish. This is a country that 3 years ago had every woman
    walking around covered, that had nothing but the most despotic
    regime imaginable on the face of the Earth. That was the home
    office for al Qaeda and the home office for international
    terrorism. Now it has a government resting on a constitution,
    rights for the people, people are registering to vote. If there
    are remaining al Qaeda elements in the country or along the
    border with Pakistan, they are running and hiding. The remnants
    of the Taliban are causing trouble but they are also running
    and hiding.
        We have gotten Pakistan to completely reverse its strategy
    from being a supporter of the Taliban to being an enemy of the
    Taliban; losing men in the fight along the border now to go
    after these remnants. So we have got to stay the course, and
    because we have created a better life for the Afghan people, we
    have got to finish the job.
        With respect to Iraq, Ambassador Bremer and I spent a long
    time going over the progress that has been made. I see in the
    future an interim government coming in place, a full
    constitution being written. I see a new national assembly
    coming into being, a new national government coming into being.
    I see the United Nations getting involved. The major problem is
    security. Remnants of the old regime, terrorists and criminals
    who are operating inside of Iraq, and it is a problem for us, a
    serious problem. We have got to get on top of it.
        But we cannot say that just because we are having this
    security problem that this therefore makes this a mission that
    should not have been undertaken. It was the right mission to be
    undertaken. We have freed 25 million people. We have given them
    the beginning of a democratic system, and what we have to do
    now is not shrink back from the fight that is ahead of us but
    to fight this fight, fight it well with our friends and allies,
    and work with the Iraqi people who by any poll that anyone has
    taken, wants us to be involved. Wants us to leave, of course,
    but wants us to help them get the kind of country and the kind
    of system we are talking about, and then leave. And create a
    place, a country that we will not be arguing about with respect
    to weapons of mass destruction, who will be living in peace
    with its neighbors. This is a sound objective for us to pursue
    and we should pursue it.

                              STATE BUDGET IN IRAQ

        Senator Gregg. One more question and then I will turn to
    Senator Hollings. On that point, the Coalition Provisional
    Authority is using approximately $1 billion this year,
    projected to basically try to reconstruct Iraq. This gets
    handed off from the DOD to you on July 1, as you mentioned. Yet
    as we look at the budget that was sent up, there does not
    appear to be any funding to support the State Department on
    this. The question is obvious.
        Secretary Powell. Yes, there is not a specific line item in
    2005. We believe that, and Ambassador Bremer and I had very
    candid talks about this because, you are quite right, it
    becomes the responsibility of the State Department on the first
    of July. But right now we believe that there will be sufficient
    funds available to the Department on the first of July that
    will carry us through the end of the year.

                      FUNDS FROM THE DEPARTMENT OF DEFENSE

        Senator Gregg. Will they be coming from DOD?
        Secretary Powell. Yes, the funds that are available to the
    CPA do not suddenly disappear on the first of July. A lot of
    the things that are being done now for the CPA will continue be
    done for the State Department. Just a brief example. The
    Program Management Office that the Department of the Army runs
    now, that is getting policy direction from the CPA as well as
    from the Department of Defense, that the same Program
    Management Office will continue to provide that contracting,
    administrative fund flow service, but now it will be getting
    its policy direction and its supervision from the chief of
    mission.

                    DEPARTMENT OF DEFENSE SHARING WITH STATE

        Senator Gregg. Have you ever found the DOD to be very
    generous about sharing funds with the State Department?
        Secretary Powell. No, nor has the State Department been
    very generous about sharing funds with DOD. But when both
    Departments know what they have to do and the President wants
    done, I have found that both Departments over time will what
    the President wants. In this case, the funds that are going to
    be used are funds that are for this purpose.

                  WHO PAYS THE COALITION PROVISIONAL AUTHORITY

        Senator Gregg. Will the CPA employees become State
    employees? Will you be paying them directly or will their
    payment continue to flow through DOD?
        Secretary Powell. It will be a combination. Some of them
    are State employees now working within the CPA, and of course,
    they remain on my rolls when we change over to the chief of
    mission. But a lot of people who are there we hope will
    continue to do their work on non-reimbursable details from
    their Department. I am not going to pay the Army Program
    Management Office.
        Senator Gregg. Can we get a projection as to how this is
    going to be handled?
        Secretary Powell. Yes.
        [The information follows:]

        Secretary Powell asked me to respond to your question at his March
    25, 2004, hearing about how the State Department plans to fund
    personnel costs as operations transition from the Coalition Provisional
    Authority (CPA) to U.S. Embassy Baghdad.
        We are currently working with our colleagues in the Department of
    Defense (DOD), the CPA, and many other U.S. Government agencies to
    address this question.
        We plan to establish, by July 1, 2004, a U.S. Ambassador and U.S.
    Embassy staff and U.S. Mission facilities that will house the USG
    agencies in Iraq serving under Chief of Mission authority. The State
    Department has announced positions for 142 American employees. On
    average, the cost to establish a new State Department position overseas
    is about $350,000. Of course, in Iraq, a number of additional cost
    factors are thrown into the mix that are not considered within this
    average.
        We do not yet have refined cost estimates for how much the U.S.
    Mission will cost the State Department in fiscal year 2004. Estimates
    of personnel costs must include not only base salaries, but also
    certain additive costs for being posted in Iraq (e.g., allowances and
    differentials), locally engaged staff costs, travel, and rough order of
    magnitude logistics/life support costs for the currently planned State
    Department staffing. Estimates must also include certain staffing
    assumptions for provincial teams.
        However, as you are aware, the big ticket costs for our Iraq
    presence will be incurred to provide security, facilities, logistics/
    life support, and information technology/communications for the U.S.
    Mission complex. The cost of these requirements in fiscal year 2004
    will depend on the total size of the U.S. Mission, including USG
    agencies other than State, and the support arrangements now being
    discussed with CPA, DOD, and other agencies.
        As of April 15, ten other agencies have requested a presence in
    Embassy Baghdad, for a total of 254 American positions. In the long
    term, we estimate a total of 350-400 permanently assigned Americans
    from some 12-15 other agencies will serve under the Chief of Mission in
    Iraq.
        Together with other agencies, we continue to refine plans and
    budget estimates for our operations in Baghdad after June 30. We should
    soon have more accurate estimates to share with you.

        Senator Gregg. Because it does seem to us that you are
    going to end up getting the ball handed to you but it will not
    have any air in it.
        Secretary Powell. We will have air in it, sir. I have
    Ambassador Ricciardone, our Ambassador from Manila has been
    working this for me. He stayed on in Baghdad after I left last
    week with retired General Mick Kicklighter, representing
    Secretary Rumsfeld, so that we can have a smooth baton pass.

                                    TRANSFER

        Senator Gregg. Maybe your staff could brief our staff on
    how the baton pass is coming along.
        Secretary Powell. Yes, it is coming along.
        Senator Gregg. Senator Hollings.

                       ARMED SERVICES WILL NOT GIVE MONEY

        Senator Hollings. The Armed Services Committee has already
    provided in law that DOD shall not pay you. Did you know that?
        Secretary Powell. They shall not----
        Senator Hollings. The Armed Services authorization bill,
    the defense authorization bill, there is a proviso in there
    that they shall not pay you.
        Secretary Powell. Shall not pay me?
        Senator Hollings. Any money into the cost sharing program.
        Secretary Powell. Cost sharing. I thought we were still on
    Iraq.
        Senator Hollings. That is what I am talking about too. So
    you better get it straightened out. I think we are getting a
    policy where all departments are going to take care of cost
    sharing and I am worried about State Department ending up
    holding the bag for all of these departments. Even though the
    President, the White House has set out that policy and it is
    understood, we are signing legislation into law that says, none
    of these monies can be used for cost sharing.
        Secretary Powell. But I do not think that relates directly
    to Iraq. That relates to our worldwide effort to get cost
    sharing in our facilities.
        Senator Hollings. That is right.
        Secretary Powell. We will push back on that provision of
    law, and maybe some people who are not willing to participate
    in cost sharing will not find that we provide facilities for
    them.

                          CLARKE AND STATE CONNECTION

        Senator Hollings. I think you are the gentleman to push
    back on it. Now I was not even going to get into Clarke, but
    how many times did he meet with you? Was he in your loop at the
    Department of State?
        Secretary Powell. I saw Mr. Clarke at various meetings that
    were held, interagency fora, whenever the subject of terrorism
    was being discussed or counterterrorism, and we were in the
    White House meetings and Mr. Clarke was there. I know Mr.
    Clarke very well. I have known him for many years. The day he
    briefed me he came over to the Department on the 20th of
    December with his colleagues at my invitation.

                                 CLARKE LACKING

        Senator Hollings. And he did brief you on counterterrorism.
    Did you find him wanting in his task as a terrorism czar as
    they call him?
        Secretary Powell. Wanting in his task?
        Senator Hollings. Yes.
        Secretary Powell. He knew the subject well. He had been
    working on the subject for many years. He was engaged in it and
    he was pushing it. But I have no reason to believe that he was
    not able to press his case to his immediate supervisors in the
    White House.
        Senator Hollings. But you could not know.
        Secretary Powell. I cannot tell you what he did day to day
    in the White House.
        Senator Hollings. You cannot tell me what went on with him
    and Condoleezza Rice and the National Security--you are over at
    the Department of State.
        Secretary Powell. Yes.

                            SECRETARY WITNESS CLARKE

        Senator Hollings. I love the effort here, because you do
    have the credibility. I agree with the distinguished chairman
    that you have got credibility with us all. It is nice to try to
    superimpose your understanding and everything else about this
    situation with the Clarke matter, but in truth you are not a
    witness about all of that, are you?
        Secretary Powell. I am a witness to the extent that I
    participated in discussions on terrorism and counterterrorism
    matters, and my Department and people working for me
    participated in this on a very, very regular basis, and
    interacted on a regular basis with Mr. Clarke. It is not just
    principals meetings that were being held, but counterterrorism
    security group meetings were held on a regular basis. My
    intelligence officials, I have my own intelligence bureau, I
    have my own counterterrorism coordinator in the Department, and
    they all worked on a regular basis with Mr. Clarke and with the
    CIA and with the FBI. That is why whenever the threat level was
    modified, it went up or went down, it was a matter of immediate
    interest to us. We put out warnings and advisories. We
    sometimes told Embassies to close down for a couple days. We
    responded on a constant, continuous basis to the threat
    information that we had.
        Senator Hollings. I am totally familiar with your
    intelligence operation because some people have questioned it.
    But I investigated it in 1954 when it was run by Scott MacLeod
    and Park Armstrong. They were the individuals in the Department
    of State.
        Be that as it may, I want to commend you--we were together
    Friday night in Islamabad and you really did the country credit
    in your little presentation at that dinner. We were very proud
    of you, and later on on CNN going into it that night.
        Secretary Powell. Thank you, Senator.
        Senator Hollings. With relation, and that is why I am
    asking on Afghanistan. You take Iraq and you take Afghanistan,
    Afghanistan has got 4 million more people than Iraq. And
    different than Iraq, we have got the people with us. They are
    solid with us in Afghanistan. You got the Taliban there, but
    the people are with us. We have got a history of having helped
    defeat the Soviets and so they are glad to have us.
    Specifically when they tell us about weapons and cache of
    weapons and any kind of munitions and everything else, we go
    there and find it. In Iraq, we have got 11,000 leads and come
    up dry on 11,000 leads with nothing.

                              MONEY TO AFGHANISTAN

        We have got NATO there in Afghanistan and we do not have
    NATO or really an alliance in Iraq. I cannot, for the life of
    me watching and listening and working with both of them, here
    we have got over $100 billion, they say $125 billion on Iraq. I
    know they requested only $1.2 billion for Afghanistan and we
    got it up to $2 billion. And that was the big meeting that we
    had with your folks, with the Ambassador and all of his folks,
    even with Karzai and everyone else. They just needed more help.
    The opportunities were galore. The AID fellow was slipping me
    one card with $600 million and all. It just seemed to me that
    we were not following through.
        Specifically, I want you to comment on it and see if you
    cannot help it. Let us get right to helicopters. And I will
    name the gentleman, General Stone. General Stone, he came on
    board last June and they had no attack operations whatsoever.
    It took him until about September and October to train them,
    and the first one they pulled off was in the end of November,
    December. Now as you and I both know, they are doing darn good
    up there on the border. They are putting their lives on the
    line and everything else like that.
        We were told with respect to helicopters they had yet to
    arrive. He says, you know my word is my success out here. If I
    cannot give my word and follow through with it, he says, I am
    nothing. I told him back in September, and in fact the
    contractor has already been manufacturing the helicopters and
    everything else of that kind, but the State Department has not
    authorized the Defense Department or the Defense Department--I
    never could get it exactly straight, but there is some snarl in
    the bureaucracy. When you and I were there they did not have
    any, and the next say, on Saturday they brought over a couple
    of them from Nepal so they could make some raids.
        So here, 2\1/2\ years later we have yet to equip them with
    night goggles. They said they were on the way. But I am 2\1/2\
    years behind looking for Osama and I am finally getting some
    operations, and I still do not have the helicopters, and you
    can help us there.
        And as you indicate with that election coming off, we ought
    to be putting way more in the National Endowment for Democracy.
    We got it up to $30 billion and then we added another $60
    billion and everything else, but relatively nothing in
    Afghanistan.
        I learned with the foreign minister in Tunis, because we
    took that in World War II, and I was amazed coming out of
    Morocco where they had 65 percent illiteracy, they had 65
    percent literacy in Tunis, 80 percent homeownership and
    everything else of that kind. The foreign minister said, the
    secret, Senator, is let the women vote. In Muslim countries,
    you let the women vote, they want good schools, they want good
    homes. Karzai is doing just as you have attested, getting the
    women to participate in that September election. But he does
    not have the money to follow through and everything else of
    that kind.
        We are pennypinching. We are just throwing, like you say,
    the largest State Department facility in history, almost $900
    billion to go into Baghdad where the jury is out. I am not as
    sanguine as you are. I am worried about it.

                        PUTTING MORE AID IN AFGHANISTAN

        But we know, and you and I both agree on Afghanistan, but
    let us put the money to it. Karzai needs about $5 billion to
    really follow through. General Jones, as you know, the
    commander of NATO says, one, two, three, he will have three
    areas secured by September and the fourth area where the
    Taliban is, there are about 1,300 there and he can get rid of
    those by the end of the year. So we are on course. I am very
    hopeful about Afghanistan. Like I saw, the jury is out on the
    other. That is one of the main things. I have got two or three
    other questions, but if you would like to comment----
        Secretary Powell. Let me just touch on a few, if I may,
    Senator. With respect to Pakistan, we are working the
    helicopter issue. They need more helicopter capacity in that
    part of the tribal areas. On night vision goggles, when we were
    there last week they had not----
        Senator Hollings. They had not arrived.
        Secretary Powell. They had not signed the letter of
    agreement (LOA). They are working on it.
        Senator Hollings. Whatever the snarl is, good God, you and
    I are trying to get Osama for 2\1/2\ years and we just had not
    signed the papers to get----
        Secretary Powell. No, they had not signed the LOA.
        Senator Hollings. They had not signed or whatever it is.
        Secretary Powell. It is being worked now.
        One other indicator of how things are going in Afghanistan,
    and we should not dismiss the fact that this is an example of
    what we can do if we stick with it, and it is an example that
    might apply to Iraq, 3 million refugees have come home from the
    largest refugee population in the world. Three million people
    who are being accommodated, slowly but surely, but they will be
    accommodated.
        With respect to NATO in Afghanistan, I think ultimately
    there will be a NATO role in Iraq as well as an alliance. But
    most of the nations of NATO are already involved in Iraq as
    part of our coalition efforts. We should not dismiss that. So
    they have expressed their support for what we are trying to do.
        There is a difference in the funding that has been made
    available to Afghanistan and the funding that is made available
    to Iraq, but I think we have determined that our needs in Iraq
    are far greater than the needs in Afghanistan, even if we had
    double or triple the amount available.

                             AFGHANISTAN OVER IRAQ

        Senator Hollings. The opportunity is greater in
    Afghanistan. The needs are greater in Iraq. You and I agree.
    But let us take the opportunity that is there where you put
    just--the President has asked for $1.2 billion, for God's sake,
    and hundreds of millions over there for the needs in Iraq. But
    here are the opportunities. You could take $20 million and put
    in what we call a VOIP, a voice over Internet provider, and we
    could get the Internet going and communications going and we
    could have that by the end of the year if you got a good
    contractor in there, and then we would have communications in a
    friendly country where they like us, they support us, they
    support NATO and everything else, and they are working with us
    to try to get rid of the Taliban. That is an opportunity.
        Secretary Powell. The only other thing I would mention is,
    as you know, we have asked for doubling of the NED funds this
    year.
        Senator Hollings. In Iraq.
        Secretary Powell. No, overall. The overall account, we have
    asked for a doubling of the National Endowment for Democracy
    (NED).
        And I congratulate the Tunisians for what they have done
    with respect to literacy. That is what we would like to see in
    all these other places as well.
        Senator Hollings. Let me yield.
        Senator Gregg. Senator Byrd.
        Senator Byrd. Thank you, Mr. Chairman.
        Mr. Secretary, I am an ex-officio member of this committee.
    I take this opportunity to thank the chairman and the ranking
    member of this subcommittee. They are very learned and
    experienced, dedicated members of the Appropriations Committee.
    I also want to thank you for your long service to your country.
    I have observed your service from my vantage point of several
    positions going back over a number of years, and I share the
    encomiums that have been expressed already by the chairman and
    the ranking member.
        There has been some discussion here about foreign aid and
    the Pentagon. Press reports indicate that the Pentagon will
    continue to handle foreign aid in Iraq even after a new U.S.
    Embassy is established on July 1, 2004. I never understood why
    the CPA should be under the control of the Defense Department
    in the first place. DOD is responsible for fighting wars and
    protecting national security. Getting the Pentagon into the
    foreign aid business is a mistake, and I have been fighting
    that, and I have been fairly effective as the ranking member
    and as the chairman from time to time of the Appropriations
    Committee of the Senate, but not in the case of Iraq. I have
    been opposed to shifting monies over to the Defense Department,
    money for foreign aid. It distracts the Department from its
    core mission. I am talking about the Defense Department now.
        Moreover, in every major postwar situation during the last
    50 years, the State Department and USAID have been in charge of
    reconstruction efforts. Even in the case of Vietnam where the
    war was still being fought, the State Department and USAID were
    primarily in charge of economic and development assistance
    efforts. After June 30, the case for the State Department to
    manage the aid will be even more compelling. There will be an
    Iraqi government, there will be a U.S. mission in Iraq. I
    cannot understand why the Defense Department will still be in
    the business of managing foreign aid.

       WHY DOES THE DEPARTMENT OF DEFENSE FUND THE COALITION PROVISIONAL
                                   AUTHORITY

        You are a former chairman of the Joint Chiefs of Staff.
    Should we not be getting the Defense Department out of the
    foreign aid business and letting the State Department do the
    job that it is supposed to do?
        Secretary Powell. Mr. Chairman, a couple of observations.
    The Defense Department is superb at fighting wars, but they
    also have a record of dealing with the situation that one finds
    in a country in the immediate aftermath of a conflict. We all
    can remember very well General MacArthur in Japan after World
    War II and military officers in Germany after World War II
    until such time as we were able to transition over to other
    agencies of government.
        In the case of Iraq, it was logical and made sense that the
    Defense Department should be prepared for the immediate
    aftermath of the war and to be responsible for the country as
    it is being stabilized and as the reconstruction effort got
    underway. But it was always anticipated that once a point had
    been reached when we are ready to return sovereignty and we
    were ready to continue with the reconstruction effort, it would
    all transfer over to the chief of mission, the Ambassador and
    the State Department. That is on track.
        Even so, during this period where Defense has had the
    direct responsibility for CPA, USAID has been intimately
    involved. We have a very large USAID mission there, contracting
    for and undertaking reconstruction efforts. In fact they have
    been the bulk of the reconstruction efforts.
        On the first of July when this transfers over, if we are
    able to keep that schedule, and I hope and think we will be
    able to keep that schedule, everything comes under the chief of
    mission. So you might still, after that point, have an Army
    Program Management Office for the simple reason that the State
    Department is not equipped to program manage the sums of money
    that are going to be available from the supplemental. So I want
    that Army Program Management Office to contribute to provide
    contracting support, all the other things required to handle
    that sum of money.
        What will change is that they will get all policy direction
    and all instructions will come from the chief of mission, the
    Ambassador, who will work for me in the name of the President.
    He ultimately works for the President.
        When I talk to Secretary Rumsfeld and Mr. Bremer about
    this, they all understand this. As I said to Secretary Rumsfeld
    in a conversation we had last week to make sure there is no
    confusion, there is not any confusion between us, on first of
    July, anybody who is doing things that belong to the Pentagon
    now becomes a supporting organization to the chief of mission
    and to the State Department. There are some things that they do
    very, very well and it would be not wise of the State
    Department to say, we do not want you to do this anymore
    because you belong to the Pentagon. We want you to continue to
    do it, but you will be doing it under the authority of the
    chief of mission, and when you need policy guidance as to
    whether a dollar should go here or go there, or whether this
    project is approved or that project is approved, that decision
    will come from the chief of mission reporting to the State
    Department. And the State Department back in Washington will,
    of course, discuss this on an interagency basis with all
    relevant agencies in the Government and we will get our overall
    direction from the President.
        Senator Byrd. Here, Mr. Secretary, in my hands I hold two
    different declassified versions of the national intelligence
    estimate on Iraq. Now I read from a version that was released
    in July 2003 after the war. This passage is part of the
    dissenting view of the State Department's Bureau of
    Intelligence and Research. Here is what it says.

        ``The Assistant Secretary of State for Intelligence and
    Research believes that Saddam continues to want nuclear weapons
    and that available evidence indicates that Baghdad is pursuing
    at least a limited effort to maintain and acquire nuclear
    weapons related capability. The activities we have detected do
    not, however, add up to a compelling case that Iraq is
    currently pursuing what INR would consider to be an integrated
    and comprehensive approach to acquire nuclear weapons. Iraq may
    be doing so, but INR considers the available evidence
    inadequate to support such a judgment.
        ``Lacking persuasive evidence that Baghdad has launched a
    coherent effort to reconstitute its nuclear weapons program,
    INR is unwilling to speculate that such an effort began soon
    after the departure of U.N. inspectors or to project a timeline
    for the completion of activities it does not now see happening.
    As a result, INR is unable to predict when Iraq could acquire a
    nuclear device or weapon.''

        Secretary Powell. Sir, what was the date you said that was,
    July?
        Senator Byrd. This is the declassified version of the
    national intelligence estimate on Iraq. This version was
    released in July 2003 after the war. It is the declassified
    version.
        Also, here is the declassified version of the national
    intelligence estimate on Iraq that was released in October
    2002. That was when the Senate of the United States did the
    most shameful thing that it has done. It washed its hands of
    its responsibility to declare war, and it shifted that
    constitutional power to the President of the United States, to
    one man, to declare war, to decide when to declare war, and how
    and when to use the military.
        This is the declassified version of the national
    intelligence estimate on Iraq that was released in October
    2002. That was when our Senators were misled into casting a
    vote to declare war, to shift that power to one man to declare
    war. This version was released in October 2002, before the war.
        I looked through every page of this version, and the State
    Department's dissenting views from which I just read have been
    omitted from this version. In other words, the intelligence
    views that did not agree, the intelligence views from your
    Department, Mr. Secretary, that did not agree with the White
    House's political agenda were cut out in the version released
    before the war. They were cut out.
        Let me read just one sentence in the State Department's
    alternative views of Iraq's nuclear weapons. One sentence.
    ``The activities we have detected do not, however, add up to a
    compelling case that Iraq is currently pursuing what INR would
    consider to be an integrated and comprehensive approach to
    acquire nuclear weapons.'' That language was left out at the
    time when it should have been left in for the American people
    and all to see.
        I know that you have confidence in the Department's
    intelligence bureau. You just stated it today. You just made
    reference to the intelligence bureau. You expressed confidence
    in your own intelligence bureau. And I have confidence in it.
    Yet, it was left out of this document about Iraq's weapons of
    mass destruction program.
        So can you explain why the State Department's views were
    not included in this document right here, that were so
    important to the President's case to go to war in Iraq? Did it
    concern you that the State Department's views were left out in
    the document that was released publicly before the war?
        Secretary Powell. Senator, I do not have the benefit of
    having read or studied those two documents recently. Are you
    saying these are declassified versions of the same document
    separated in time?
        Senator Byrd. Yes.
        Secretary Powell. I would have to read what the overall NIE
    said. I know that the presentation I made on the fifth of
    February tried to carefully balance and put forward to the
    international community what we believed about at the time.
        Senator Byrd. There it is.
        Secretary Powell. I cannot respond to this, Senator,
    because I am not the author of either document, and I do not
    have an opportunity to read what the basic document says, not
    just the footnote. The fact is that, as the INR footnote says
    and I am sure the basic document says, there was never any
    doubt that he wanted to have nuclear weapons. As I testified
    before the world on the fifth of February, he was keeping in
    place the knowledge infrastructure, he was keeping in place the
    capacity to have such weapons, or plans to have such weapons,
    and that there was some indication that he was undertaking
    procurement activities. There was a difference of opinion with
    respect to some of the procurement activities concerning
    centrifuges, and I made that point when I made my presentation.
        So I think it was clear this is something he wanted to
    have, but there were legitimate differences of opinion as to
    how far he was on the road to having such a capability. One
    thing that I have never doubted is that if he had been released
    from the pressure of the international community or if he had
    been released from the sanctions policy that was in effect, all
    of which he was trying to do, there is no doubt in my mind that
    he would have gotten right back on track with the intellectual
    infrastructure and with the money available to him and with the
    plans that he had.
        Senator Gregg. Senator, if you have completed that line of
    questions, could we go on and get to other Senators and then
    come back for another round?
        Senator Byrd. I had not completed it. I will try to be
    brief.
        Based on the declassified national intelligence estimate,
    the State Department's assessments on Iraq appear to be more
    accurate than the assessments of other agencies. But these
    conclusions regarding Iraq's nuclear weapons program were all
    but ignored by senior administration officials. Vice President
    Cheney said virtually the opposite on national television when
    he stated, ``we know [Saddam Hussein] has been absolutely
    devoted to trying to acquire nuclear weapons and we believe he
    has in fact reconstituted nuclear weapons.'' Mr. Secretary, the
    world heard from the National Security Advisor who warned of
    nuclear weapons and mushroom clouds. These statements were
    absolute and unequivocal, but there is no mention whatsoever
    that the nuclear issue was hotly debated within the
    intelligence community. There is no mention of the questions
    raised by the State Department's intelligence service. Those
    concerns did not match the administration's case for war, so
    those concerns were brushed aside, brushed over, and brushed
    away.
        In your view, Mr. Secretary, why were the State
    Department's conclusions, which ended up being the most
    accurate of all, ignored by other senior officials in the
    administration, especially the Vice President?
        Secretary Powell. Sir, I cannot track each statement. All I
    can say is that the position put forward by me and with Mr.
    Tenet behind me, having approved every word of my presentation
    of the fifth of December, reflected the best judgment of the
    intelligence community. Now where there are differences of
    opinion and nuance, you have to make a judgment as to what the
    preponderance of evidence supports, and Mr. Tenet is the one
    who makes that judgment. I think he put a balanced judgment
    into the overall NIE that was available to the Congress, that
    was available to me as I prepared my presentation and which
    reflected the best judgment of the community when I made my
    presentation. And I had qualifiers in my presentation to
    suggest that there were differences of opinion.
        Senator Byrd. I thank you, Mr. Secretary, and I thank you,
    Mr. Chairman.
        Senator Gregg. It is the tradition of this subcommittee at
    least to recognize the chairman of the full committee whenever
    he arrives.
        Senator Stevens.
        Senator Stevens. I would take just a few minutes, if I may.
    There are five hearings this morning. I have tried to visit
    each one of them, Mr. Chairman.
        Mr. Secretary, my first report to you is that my Flat
    Stanley got home all right.
        Secretary Powell. I am pleased to hear that.
        Senator Stevens. We met the Secretary in Jordan and he was
    kind enough to----
        Secretary Powell. We are still looking for the digital
    pictures so we can put it up in the State Department.
        Senator Stevens. I have got one. I hope you know what a
    Flat Stanley is. If you do not have a grandchild----
        Secretary Powell. You do not know what a Flat Stanley is?

           FUNDING FOR THE COALITION PROVISIONAL AUTHORITY POST-JULY

        Senator Stevens. Mr. Secretary, first, I come primarily
    because I am worried about the funding for the CPA in the
    transition after July 1. I do hope that we can get your
    guidance on what will take place there. As I understand it, it
    is fairly certain that the current funding of CPA will run out,
    and I do not know whether we are going to get to the 2005 bill
    in time to start October 1. There may be a gap there. Are you
    prepared to deal with that?
        Secretary Powell. We believe and we are still grinding down
    on this, Senator, in conversations with Ambassador Bremer and
    Secretary Rumsfeld and our two staffs working with each other,
    we will not walk in on the first of July and find no money
    there. There will be sufficient funds that should be able to
    carry the new operations under the chief of mission through
    certainly the end of the year and the end of 2005. But we
    really need to drill down on those numbers to make sure we have
    got it right.
        Senator Stevens. I hope we can visit later on in the year
    here about that funding, because very clearly----
        Secretary Powell. We have got to make sure we have got it
    right.
        Senator Stevens. Senator Hollings and I have met with
    members of the provisional council that did urge that we go
    forward and did urge that they want that authority at the end
    of June, so I think we ought to be sure that the funding is
    there until we do get the 2005 bill approved.
        Having said that, I know of no one I admire more than the
    two gentlemen on my right here, Senator Byrd and Senator
    Hollings. We disagreed of the vote on the war resolution, and I
    still maintain that based upon the briefings that I had as
    chairman of the Defense Subcommittee and as President pro tem I
    had reached the same conclusions that you announced, and I
    still believe that there are weapons of mass destruction. We
    found their airplanes that they were not supposed to have after
    the first gulf war buried in the sand. It took us more than 1
    year to find them, and we only found them by virtue of an
    informant that told us where they were. Now if they can bury
    airplanes, they can bury weapons of mass destruction.

                     READINESS OF IRAQI SELF-DEFENSE FORCES

        But in any event, the problem now is winning the peace. I
    have one other question to ask you about the status of the
    training of their self-defense force. I hope that we will call
    it a self-defense force rather than an army because I do not
    believe they should have an army yet.
        But in any event, the self-defense force and the police
    that will take over the major responsibility will be in Baghdad
    immediately. Do you have information on the status of that?
    Will they be ready and are they trained sufficiently to
    maintain that security to allow us to pull our forces out of
    Baghdad and have them--and the perimeter outside of Baghdad?
        Secretary Powell. I would like to provide a more fulsome
    answer from Ambassador Bremer and the Pentagon, but based on
    what I heard last week the training that the State Department
    is responsible for with respect to police is going well. We are
    producing in two places trained policemen coming through with 8
    weeks of solid training. We have got to make sure they are
    getting equipped with cars, with uniforms, with weapons, with
    the forensic infrastructure that a police department needs. The
    military is now also training police. So I think the volume of
    trained police will increase very significantly in the months
    ahead. Getting them fully equipped is the challenge.
        With respect to the army, there is an army that is being
    trained now, and battalions are starting to come out of that
    flow, and I think General Abazaid is anxious to speed that up.
    There is a huge amount of effort going into training of the
    civil defense units as they are called, but not civil defense
    in the old context that we remember, Senator Stevens, but
    militia--not even militia. A national guard is the closest
    parallel I think that would be located in the different regions
    to provide security.
        Mr. Rumsfeld says that up to 200,000 Iraqi personnel are
    now in uniform helping us with security and putting themselves
    at risk. Eleven of them were killed the other day. So it is not
    as if they are not wanting to go out there and fight for their
    country and protect their country. But we still have challenges
    ahead to fully equip and train this force in a competent way.
        [The information follows:]

        Public security and law enforcement are critical priorities in Iraq
    and key to the new Iraqi government's ability to establish the
    institutions necessary to effectively govern after June 30th. The
    Department of State has been providing extensive support to the
    Coalition Provisional Authority since May of 2003 to achieve these
    goals. These efforts will continue beyond the transition, and will
    enable the Iraqis to ultimately assume full responsibility for security
    and public safety. As more and more Iraqi police are trained and can
    take up regular duties, coalition forces will be able to reduce their
    efforts in this area. Due to the neglect and abuses of the past 35
    years, the security forces must be rebuilt, and it will take time
    before they reach full operational capacity and can operate
    independently.
        It is encouraging to note that there are nearly 200,000 Iraqis
    working with coalition military forces and providing security for their
    country, serving as part of institutions such as the New Iraqi Army,
    Iraq Police Service, Border and Customs, and the Iraq Civil Defense
    Corp (ICDC).
        The Iraqi Civil Defense Corps--which is similar to an internal
    self-defense force--is supporting Coalition operations throughout Iraq.
    Approximately 35,000 troops in 36 ICDC battalions are trained,
    deployed, and operating side-by-side with Coalition companies and
    battalions. CJTF-7 plans to stand up 9 more battalions by June,
    bringing the total number of ICDC to about 41,000 personnel either on
    duty or in training. ICDC training should be completed by August. In
    the Baghdad area, there are currently 6,300 trained and equipped ICDC
    troops. They are fully integrated into the operations of 1 Armored
    Division, which is assigned to the Baghdad area of responsibility.
        Four battalions of the Iraqi Armed Forces have completed recruit
    training. The fifth battalion will enter training in mid-May, and by
    October we expect to have 27 battalions of IAF trained and equipped.
    Their mission will be defense against external threats.
        With respect to the police, the CPA has determined that an Iraq
    Police Service (IPS) of approximately 75,000 personnel will be needed,
    and in order to reach this number, over 35,000 new recruits must be
    selected and trained. The Bureau for International Narcotics and Law
    Enforcement Affairs (INL) is funding necessary construction and
    renovations at a site offered in Jordan for the training, which began
    in November 2003. The training program consists of 8 weeks of intensive
    basic policing skills training that stresses modern, democratically
    based policing methods under the instruction of up to 400 United States
    and other international police instructors trained to deliver the
    course.
        With INL funding, the curriculum for this training was developed by
    the Department of Justice International Criminal Investigative Training
    Assistance Program (ICITAP), and is based largely on the successful
    model used in Kosovo and other post-conflict areas. In a few months,
    the Jordan site will be at full capacity, and will be able to support
    up to 3,000 recruits and 1,000 instructors and staff at any given time.
        As follow-on to the basic training, recruits will then complete a
    structured field-training program over a twenty-four week period
    administered by International Police Advisors who will focus on the
    practical application of the course work and will further develop their
    skills in core policing areas. So far, nearly 1,500 Iraqi police
    recruits have graduated from basic skills training and are deployed
    back at home. In addition, there are approximately 2,300 recruits in
    training in Jordan and Iraq.
        ICITAP has also developed a three week Transition and Integration
    Program (TIP) for delivery to the approximately 46,000 existing IPS
    personnel. The program focuses on international standards of human
    rights, modern police patrol procedures, the applicable Iraqi criminal
    laws and firearms proficiency. This course is designed to facilitate a
    change in outlook, behavior, action and activities of all Iraqi police
    regardless of assignment or rank.
        This course is being conducted country wide and has been
    prioritized to be delivered to those officers who will function as
    field training officers to the new recruits who will soon be graduating
    from basic training. The delivery of this course will continue until
    all existing IPS officers have successfully completed this training. So
    far, over 10,000 Iraqi police have received this training.
        The CPA training plan also calls for further development of three
    police academies in Iraq--in Baghdad, Arbil and Basra, to also deliver
    the 8-week basic course. These three facilities, when fully renovated,
    will, together be able to train approximately 2,000 students at any one
    time. One hundred Iraqi police trainers have already been given a
    ``train-the-trainer'' course at the Jordan facility and have returned
    to Iraq. In addition, 230 U.S. military police trainers have been given
    the ``train-the-trainer'' course and will work with the Iraqi trainers
    in the three Iraq academies.
        Our efforts are directed at enabling the Iraqi police to achieve
    the capacity to provide public security and law enforcement, and
    thereby allowing coalition forces to withdraw as soon as practical and
    safe.

        Senator Stevens. One last question Mr. Chairman. When we
    look at the plans now for the period past June 30, it is my
    understanding that the largest Embassy we have will be the
    Embassy that is in Baghdad.
        Secretary Powell. Yes, sir.
        Senator Stevens. Are we going to appoint an Ambassador
    there?
        Secretary Powell. Yes, sir.
        Senator Stevens. I am hard-pressed to understand why it is
    going to be that large. Could you just describe the need for
    that big an Embassy and its staff?
        Secretary Powell. A lot of things have to be done in Iraq.
    First and foremost, we have to make sure that we have the
    people in place to manage a very large sum of money made
    available by the Congress through the supplemental.
        Second, we have got to help the Iraqis develop a
    sophisticated government with ministries that are answerable to
    political authorities, and that is going to take some effort.
    We will have a very large USAID presence in the country. We
    will have representatives of the chief of mission in different
    parts of the country to represent our interests. There will be
    a very large security component, because we expect that it will
    still be not a safe environment.
        So when you add all of these things up, we think it will
    take a fairly large mission staff to do all these things. There
    will be an Office of Security and Cooperation, and we continue
    to work to improve the capabilities of Iraqi police and
    military personnel and the civil defense units that I spoke of.
    And there will be a lot of contracting people who may work for
    other departments but will be answerable to the chief of
    mission, and therefore become part of the overall mission size.
        Senator Stevens. Will any of the funding for that come from
    the supplemental or what's available to the new government?
        Secretary Powell. Yes, there are opportunities to tap into
    the funding stream of the supplement to support this overhead
    for managing of the supplemental money.
        Senator Stevens. Last item, my friend. Any bricks and
    mortar involved in that? Are we going to build a new building?
        Secretary Powell. We are looking now--yes, we are examining
    sites now for a new Embassy facility, and there is wedge money
    in the program now to begin that work.
        Senator Stevens. That is to permanently house that many
    people or will it come down?
        Secretary Powell. I certainly hope it will come down over
    time, but in the first year or two there is a massive amount of
    work that has to be done. The Embassy is not being scaled for
    that large a presence over time. It will take some years to
    build the Embassy and we are still figuring out what to scale
    it for. But it will be a major facility.
        Senator Stevens. Will the provisional authority be there at
    the same time in that building?
        Secretary Powell. The provisional authority will go away.
        Senator Stevens. Is the new government going to be in the
    green zone?
        Secretary Powell. I assume initially it will be, but I do
    not know the answer to that question. I will get it for the
    record.
        Senator Stevens. Thank you.
        Thank you, Mr. Chairman. I do appreciate your courtesy.
    Gentlemen, appreciate your courtesy.
        Senator Gregg. Thank you, Mr. Chairman.

                             HMONG REFUGEES IN LAOS

        Senator Kohl, I appreciate your patience.
        Senator Kohl. Thank you, Senator Gregg. I would like to
    change briefly to another area of the world which my staff has
    told you I was going to inquire about and that is Laos. Mr.
    Secretary, I am deeply concerned about reports coming from Laos
    on the status of the Hmong. My State of Wisconsin is the home
    to 33,000 former Hmong refugees, many of whom are concerned
    about the status of their family and friends in Laos who have
    been living in the jungle since the end of the Vietnam War.
    Estimates are that there are as many as 17,000 still in the
    jungles.
        As you know, Mr. Secretary, the United States is indebted
    to these former Hmong insurgents who fought valiantly with us
    during the Vietnam war. In recent weeks there have been reports
    that hundreds of Hmong have been emerging from the jungle to
    take advantage of an unofficial Lao government amnesty program.
    The Lao government denies that there is such a program. We have
    been receiving reports that many of these Hmong have not
    surrendered willingly, but they have been captured and are
    being severely mistreated.
        Last week Senator Feingold and myself, along with other
    Senators, sent a letter to Ambassador Negroponte asking for his
    assistance in urging the United Nations to send a high level
    U.N. representative or a fact-finding mission to Laos to
    monitor the treatment of the Hmong. To ensure the safety of
    this Hmong population we need to do all we can to shed light on
    the situation there. Unfortunately, as you know, there is
    virtually no international access to the areas where the Hmong
    live. So can I ask for your support in this request for a high
    level U.N. representative or fact-finding mission to Laos?
        Secretary Powell. Sir, we will be answering your letter in
    the next day or so, but we believe the United Nations can play
    an important role. There are U.N. agencies working in the area
    now. I really do need to talk to Kofi Annan as to whether he
    wants to designate another new special representative for this,
    but we will consider this request.
        Our initial look into the issues raised in your letter
    suggest that they are coming out, but we have not yet got any
    evidence to suggest they are being abused in the way that some
    people have said they are being abused. I do not say it has not
    happened or is not happening, but we still have to do more work
    to establish the facts. We are trying to get greater access to
    them, and we are in touch with the Lao government about the
    need for greater access, and we are about pushing the United
    Nations to achieve greater access.
        As a separate matter, as you know, there is a Hmong
    population that is in Thailand and we are working hard to see
    if we can settle them as refugees as part of our refugee
    resettlement program here in the United States.
        [The information follows:]

        I would like to respond on behalf of the Secretary regarding the
    Department's position on normal trade relations (NTR) for Laos which
    you raised during the March 25 Commerce, Justice, State Appropriations
    hearing.
        The Administration supports granting NTR status for Laos and
    bringing into force the bilateral trade agreement negotiated in 1997
    and signed in 2003. Laos is one of only three countries worldwide (the
    other two being Cuba and North Korea), and the only lesser-developed
    country, subject to tariff rates generally far higher than those
    available under NTR. Extending NTR to Laos could help open Laos to the
    outside world, which could in turn lead to more internal openness and
    transparency. Progress toward a more open and democratic society will
    help us achieve our foreign policy objectives across the board. While
    some opponents of NTR argue that it should be used as a reward for a
    completed democratic reform process, we believe that granting NTR to
    Laos will benefit the Lao people, and will create a more cooperative
    environment in which the United States can effectively pursue key human
    rights and democratization objectives.
        The United States Government remains deeply concerned about human
    rights in Laos, including treatment of the Hmong minority. We have
    repeatedly made clear to the Lao government the strong concern of the
    American people and government about the poor human rights situation
    and will continue to do so. In regard to recent reports of Hmong living
    in remote areas seeking to resettle in Laos, reports so far indicate
    that the Lao Government has treated those seeking resettlement
    humanely. We have offered assistance for this population, but the Lao
    Government has not responded. Also, Secretary Powell has written to the
    Lao Foreign Minister supporting Ambassador Hartwick's urging that the
    Lao Government allow our Embassy or international organizations access
    to these people so that we can assess their conditions first hand. We
    do have reports that fighting continues between some Hmong groups and
    the Lao Government, and we have urged that the Lao take a humanitarian
    approach.
        I hope this answers your questions. Please feel free to contact me
    if we may be of further assistance.

                                          United States Senate,
                                        Washington, DC, March 15, 2004.
    Ambassador John D. Negroponte,
    U.S. Ambassador to the United Nations, United States Mission to the
            United Nations, 799 UN Plaza, New York, NY.
        Dear Ambassador Negroponte: We are writing to ask for your
    assistance in urging the United Nations to send a U.N. representative
    or fact-finding mission to Laos to monitor the treatment of hundreds of
    Hmong-Lao, many of whom are former insurgents and their families, who
    have recently emerged from the jungles of Laos. A high-level U.N.
    presence is essential in securing the safety of these individuals, as
    well as in providing greater transparency regarding Lao governmental
    actions to the international community.
        Over the past several weeks, hundreds of Hmong-Lao and their
    families have left the jungles of Laos. Many of these former insurgents
    fought with the Central Intelligence Agency during the Vietnam War to
    rescue downed American pilots, to thwart supply lines along the Ho Chi
    Minh trail and to hold off North Vietnamese troops. When the Vietnam
    War ended and the communist Pathet Lao took over the government,
    thousands of Hmong were killed and sent to reeducation camps. Most
    Hmong fled Laos or hid in the jungles of Laos, fearing for their lives.
    Some estimate that as many as 17,000 Hmong have been living in the
    jungles since 1975. The United States remains indebted to these
    courageous individuals and their families.
        The U.S. government claims that these individuals have surrendered
    to the Lao government and are participating in an unofficial and
    ``unstated'' amnesty program organized by the government of Laos. Yet,
    our offices have heard contradictory information. Reports indicate that
    the Laotian government denies the existence of any amnesty program for
    these individuals. In addition, many of our constituents claim that
    these former insurgents have been captured by the Lao military and did
    not surrender. Our constituents fear that these people are in serious
    danger and allege that many have already been killed, including women
    and children. Amnesty International in a report on March 4, 2004
    states, ``Amnesty International has received conflicting reports as to
    their [the Hmong's] reception and treatment by Lao authorities.''
        The restrictions imposed by the Lao government on international
    access have prevented policymakers, journalists and humanitarian groups
    from knowing the reality on the ground and understanding the needs. The
    United Nations can play a crucial role in shedding light on the
    situation. We ask you, therefore, to urge the United Nations to send a
    U.N. representative or fact-finding mission to ensure that these former
    insurgents are treated humanely and that the Lao government respects
    its obligations under international law.
        We thank you for your consideration.
                                       Senator Russ Feingold,
                                       Senator Herb Kohl,
                                       Senator Barbara Boxer,
                                       Senator Mark Dayton,
                                       Senator Dianne Feinstein,
                                       Representative Ron Kind,
                                       Representative Mark Green,
                                       Representative Devin Nunes,
                                       Representative George Radanovich,
                                       Representative Dana Rohrabacher,
                                                   Members of Congress.

        Senator Kohl. Thank you. Mr. Secretary, an AP story earlier
    this week based on information from the Hmong leader in the
    jungle reported that 6,000 Laotian troops using machine guns,
    grenades, mortars, and helicopter gunships had launched a new
    attack against a group of 2,000 Hmong insurgents and their
    families. At least seven women and children were killed.
    Amnesty International reported in October that the Lao
    government has used starvation as a weapon of war against
    thousands of Hmong in the jungle. We have seen reports, such as
    photos in a Time Asia piece last summer that Hmong in the
    jungle are living in deplorable conditions.
        What can we do to press the Laotians on the human rights
    situation? Senator Feingold and myself contacted the Lao
    government about the Amnesty report. They have denied the
    report. Our ambassador industry has been pressing for normal
    trade relations with Laos, and that bill was recently
    introduced in the Finance Committee.
        My question is, is this the time for us to be rewarding
    that government with normal trade relations when we are
    supposedly, and I believe should be, so concerned about their
    human rights treatment?
        Secretary Powell. We are concerned about the human rights
    treatment. We have received reports of this military operation
    and we are trying to confirm or get a denial of it; to find out
    what the fact are. The Embassy is working hard to establish the
    facts. While I have seen the same reports that you have, I just
    do not know the real facts yet.
        The Lao government does have an amnesty policy with respect
    to the trade relief legislation. Let me take another look at it
    because I really am not familiar with it.
        Senator Kohl. I would appreciate that very much.
        Secretary Powell. I would be delighted, Senator.
        Senator Kohl. Finally, you refer to the Buddhist temple in
    Thailand and resettlement efforts. I would like to know what
    the State Department plans are to ensure the humane treatment
    of those Hmong Lao who do not qualify for resettlement in the
    United States. In the interest of time I will submit the
    question and I look forward to some response from you.
        Secretary Powell. Yes, sir. Thank you, Senator.
        Senator Kohl. I thank you, Mr. Secretary.
        Senator Gregg. Thank you, Senator Kohl. I know the
    Secretary has to leave but there are number of issues we would
    still like to take up with you, and maybe we could all take
    maybe 5 minutes, 10 minutes at the most to go over those.

                         CHARLES TAYLOR BEFORE TRIBUNAL

        There are a series of issues that deal with peacekeeping
    and activities in Africa. One of my concerns, as you know, is
    how we get Charles Taylor over to be tried before the tribunal,
    so I would ask you a series of questions. One is, do you expect
    the UNMIL process to be successful if Charles Taylor is not
    tried? If your answer is no, then how do we get him tried?
        Number two, it appears that there is going to be an
    expanded peacekeeping effort throughout Africa, especially in
    Sudan eventually, what are you projecting that we are going to
    have to come up with for peacekeeping in Africa?
        Secretary Powell. The best I can do with respect to
    projections is what we have now in the 2005 budget, but I want
    to put down a cautionary word that we do have these other
    demands coming along. I hope they are coming along. I hope we
    will be able to work on peacekeeping forces for the Sudan. As
    you know, we are in a very intense, delicate period of
    negotiations with the Sudanese and the SPLN to try to get a
    comprehensive peace agreement. So we may well have to come back
    to the Congress at some point in the future during 2005 for
    additional support for peacekeeping efforts.
        With respect to Mr. Taylor, he is still subject to the
    court. I believe he should come before that court. As you know,
    he is in Nigeria and the circumstances of him being moved to
    Nigeria was that the Nigerian government would not come under
    pressure in this immediate period to turn him over to the
    court. The Nigerian government has said, however, that when
    Liberia has a functioning government that is recognized and
    makes a request for Mr. Taylor, then it can be looked at at
    that time.
        This was not a perfect solution, but last year when we were
    facing this problem we needed to get the violence ended, and we
    needed to get some control of this country and over the
    population. We needed to get Charles Taylor out. We found a way
    to do that and it required us to make a compromise with respect
    to letting him remain in Nigeria without the Nigerians being
    under pressure to turn him over right now, or else we would not
    have been able to----
        Senator Gregg. But the understanding was that he would not
    stay in Nigeria----
        Secretary Powell. He is.
        Senator Gregg [continuing]. And not be a force.
        Secretary Powell. He is not much of a force.
        Senator Gregg. He is. He is agitating. There are reports
    that he has got an army up and running in the Ivory Coast.
        Secretary Powell. He does not have an army up and running.
    He is an annoyance. I have followed this very carefully because
    the last thing I wanted to see was to have Charles Taylor
    trying to create armies or stop what we are trying to do in
    Liberia. I have seen the reports about creating an army but I
    have never been able to verify that one exists.
        Senator Gregg. How can we justify this tribunal if the
    first person they indicted will not be brought before them? We
    brought Milosevic in. Why should we not bring in Taylor?
        Secretary Powell. We will. It took a long while to get
    Milosevic in, and we finally had to apply different kinds of
    pressure and wait for a different set of circumstances in
    Belgrade before we could get Milosevic in. We still believe
    Charles Taylor belongs before this tribunal and we hope that
    that is where he will end up.
        But last year the challenge we were facing was to get food
    into the people of Liberia who were starving and to get the
    killing ended. And we succeeded. We succeeded by getting
    Charles Taylor out, and the way we got Charles Taylor out was
    to send him to Nigeria with an understanding with the Nigerians
    that they would not be pressured. The Nigerians know that
    ultimately Charles Taylor has to be dealt with, and they have
    set out the circumstances under which he could be dealt with.
    That is when there is a functioning government in Liberia and a
    request for his return. I think eventually he will stand before
    the bench of justice.
        Senator Gregg. Before I turn it over to Senator Hollings I
    do what to thank your Department. You are doing a lot of things
    right. You are doing the IT right, and I think General Williams
    has done an excellent job of getting Embassy construction under
    control. I hope he is going to take a serious look at the new
    U.N. building on the security side. This is a big dollar item
    and I think his expertise and his shop's expertise in that
    would be very important on the security side.
        Senator Hollings.

                             MIDEAST-WEST DIALOGUE

        Senator Hollings. Mr. Secretary, we can use your help on
    that International Center for Mideast-West Dialogue. I had the
    pleasure of talking with the president of Austria some 7, 8
    years ago and he allowed how we ought to have better relations
    between the Christian and the Muslim world, or the Western and
    the Mideast world, and that he talked to the Ayatollah Khomeini
    by phone every week, and other leaders there. At that
    particular time we were looking there at the facility--I am
    rushing along because I do not want to use your time--at
    Istanbul that was given to us by the former Ambassador and
    everything else in a card game, and he lost a bet. He bought it
    and gave us a magnificent facility, presently on loan to the
    British.
        I said, wait a minute now, we have gone along and we have
    got a wonderful consulate there, really a well-appointed
    facility, but why not start an East-West Center where you have
    got a secular state, Turkey, and everything else of that kind.
    We put in $7 million, Senator Byrd, in the bill and everything
    else, and we are ongoing. Now all of a sudden, Assistant
    Secretary Frank Taylor in your Department says it is not safe.
    This is not an Inman facility; we do care whether it is safe
    obviously. But we would not be loaning it to the Brits if we
    were not sure of its safety, you know what I mean? If you get
    those entire in there, and this particular facility, they want
    to move it into the United Nations, move it into New York, we
    would have questions about some of the people in the dialogue
    even getting visas to come into New York under the present
    circumstance and turmoil and what have you.
        Now you can get right in behind us and help us. We will put
    some more money and we will get it going. I think it is the
    Council for American Overseas Research Center, and they are a
    private group that is an NGO that takes and gets all these
    things working together and what have you. They have got
    credibility, and they will all join in. I have seen the success
    of the North-South Center, the East-West Center. We have got to
    get something going in the Mideast. Looking at the morning
    headlines, we are getting worse and worse.
        Otherwise, I have got to comment on Iraq, because I am
    worried about you and that big facility that you have taken.
    After all, the largest facility we have ever built for the
    Department of State, and you have got General Williams and he
    is tip-top and we have worked closely together--$450 million
    here. We have got $900-some million set aside and you say they
    have not--the State Department says we expect to have 1,000
    American personnel in there and 2,000 Iraqis working. So they
    are going to have 3,000 in the thing, and here we do not have
    security.
        My friend Senator Stevens said we differ voting for the
    resolution. Let me level, because I did with my own people back
    home and the press and everything else like that, I knew what
    it was doing when I voted for that authority for the President
    to go into Iraq. He had stated amongst all the build-up on
    October 7 in Cincinnati, facing present danger of evil, we
    cannot wait until the smoking gun is a mushroom cloud. When
    your Commander-in-Chief says that, and you know he has got
    availability with the Mossad. We all yap about the
    intelligence. We act like we are the only ones--whether it was
    good or bad, and distorted, twisted, blah, blah, blah. Israel
    depends on knowing what is going on in downtown Baghdad. Their
    survival depends on it. They have got the best of intelligence.
        So when the Commander-in-Chief said that, I voted for the
    resolution. I was misled, and we all were misled and we can see
    it in the morning news. Now we have got to do the best we can
    in there.
        What happens is that we still do not have enough troops. It
    was the same thing--I thought I was back in Saigon with
    Westmoreland talking to General Abazaid. He in the one breath
    said to me we needed 90 more days to train the police. We do
    not have the police trained sufficiently for June 30. We have
    not secured the borders. We have got green troops in the
    turmoil of trying to not have enough troops, bringing in Guard
    and Reserve with the greens, so a fellow lights a hibachi in
    the backyard and that there gives us a radar, a heat signal and
    we shoot and kill the family and the kids. We see another
    photographer and he aims a camera and we think it is a rocket
    and we kill the Reuters newsman.
        I had a good friend that has been in Baghdad for years off
    and on and he said, I shopped in downtown Baghdad in September.
    I went back in November and it was taking my life in my hands.
        So that train--we are doing the work for the Iraqis, and we
    have got the constitution. You feel good about it, but they
    say, wait a minute, that is an open-ended document. It subject
    to amendment. It gives the Kurds autonomy so the rest of them
    want autonomy. And Ambassador Bremer says we are not going to
    have an Islamic democracy, yet you have got a majority vote,
    and the majority vote is going to vote an Islamic democracy.
        With all of that, Bremer is gone come June 30. Abazaid is
    gone. They are all leaving, and they are leaving it for you.
    And you are building up a temple even bigger than Saddam ever
    built, $1 billion, $900 some million for 3,000 personnel, and
    then you say that the AID people are going to--they are. They
    are going to have to go up with their security. They are
    insecure all over the place. And it is going to be open sesame
    come June 30, and we ought to know at this committee level,
    ought not to be planning a $900 million facility. Maybe $90
    million, or take over one of the--they have got them all over
    the place, all those palaces and everything, and we are in
    them, in many of them.
        We can take where they have got--and that is off the beaten
    track and a good facility, and move that crowd that is in
    there, all computerized, looking for WMD. Just move them out
    and move you in, and we have got a facility and everything else
    and we will see how things go. That is a secure place and
    everything else of that kind.
        But I find the Defense Department--look, I asked about all
    those troops everywhere. I got to General McKernan and I said,
    General, I know you and you know me, you need some more troops.
    I said, I could have used more troops in June last year. I
    said, what for? He said, I could have gotten better security in
    the Sunni Triangle. I said, why not more troops now to get the
    Sunni Triangle, get the borders and everything else secure and
    what have you? The de-Baathification under Chalabi--and he will
    need the Secret Service by this time next year--Chalabi in
    charge of that has knocked off the leadership of the army, he
    has knocked off the leadership of the Sunnis and made some of
    them hostile and joined with Saddam loyalists, and they have
    joined with a lot of the insurgency coming in and terrorists
    and what have you, and the movement is--there is a definite
    movement going against us there, and you are going to end up
    holding the bag. That is what I am worried about.
        Senator Gregg. Senator, we are going to run out of time
    here with the Secretary.
        Senator Hollings. That is all right. He can comment or not.
        Senator Gregg. You can comment on that, then we will go to
    Senator Domenici, then to Senator Byrd.
        Senator Hollings. Help us on that Mideast-West Center.
        Secretary Powell. You are right, security is a problem
    there. Remember, the British just had a horrible situation with
    one of their consulates being blown up. I think we have to be
    careful about using that facility.
        Senator Hollings. That is right, we are in trouble.
        Senator Gregg. Senator Domenici, and then we will go to
    Senator Byrd.

                          IRAQ RECONSTRUCTION, COST OF

        Senator Domenici. Thank you very much, Mr. Chairman. Mr.
    Secretary, fellow members on the subcommittee, first I
    apologize for being late, particularly to you, Mr. Chairman. I
    had three committee hearings at the same time.
        I want to talk just for a minute about Iraq reconstruction
    and then I want to change the subject to non-proliferation. It
    still remains an issue. First on reconstruction, I hope that
    the experts that are going to use the $18 billion for
    reconstruction in Iraq will consider the fact that this
    reconstruction money ought to go as far as it can. By that I
    mean if there is any way that you can use it for guarantees and
    the like, so that less dollars get more accomplished, I think
    that would be a very good way to handle it.
        Now I am not familiar with how you plan to reconstruct
    Iraq, and how you plan to bring this economy into being, but I
    would suggest that you have some finance experts advising the
    Department on how to stretch the $18.5 billion. We know here
    that when we do guarantees, their cost on our budget is
    tremendously less than the amount of the loans. I leave that
    with you, and I hope that you will take every opportunity. If
    the $18.5 billion does not permit that and you see some places
    where more is needed, I would hope you would ask us.

                  MOX PROGRAM; STATUS OF LIABILITY WITH RUSSIA

        I want to change the subject. It seems almost trivial with
    what we are doing, but I think non-proliferation of nuclear,
    and chemical, and biological weapons remains a terrific problem
    for the world. I want to ask you again about the MOX program.
    You know what that is. That is the program with the Russians
    that caused America to change its policy and start building a
    plant for MOX, which is a new way to convert some of the
    radioactive consequences of nuclear build-up.
        I am very concerned about the Russian-United States program
    that will remove 34 million tons of plutonium from the
    respective stockpiles. As you know, I have been involved with
    this effort beginning way back when we put it into effect.
    Frankly, I do not blame you, but I am very disappointed that
    the negotiations regarding this issue of liability has not yet
    been resolved. I tell you, Mr. Secretary, that it is a matter
    that deserves your attention. The Russians have negotiated a
    deal like this with another group, the G-8 partners and they
    have done it at a level of protection that is different from
    what we are talking about in this United States. I do not think
    we ought to let them get away with treating us differently.
        In other words, they are making the liability question
    harder for our country than they did for the G-8. I would hope
    that again, Mr. Secretary, that you would find the very, very
    best people and get on with this. We must not lose the momentum
    of this huge deal that we made at the same time we got that
    highly enriched uranium. I think you are aware of that. They
    made a deal. We got enough highly enriched uranium that we
    bought that could make thousands of bombs, and it was bought
    and it is here in America. It is being fixed up to where it can
    be used in nuclear powerplants.
        But the MOX program deals with a more dangerous compound.
    It deals with what nuclear weapons are made of. Or put it this
    way, you cannot make them without this. For the Russians to
    give us under an agreement 34 million tons--I believe that my
    staff is wrong. I think it is 34 tons.
        Secretary Powell. It is a lot.
        Senator Domenici. It is a lot and it could make a lot of
    bombs, and they will not be able to be made. Could I have your
    comments on this?
        Secretary Powell. I am familiar with the program and I am
    familiar with the liability issue. Our responsibility in this
    is outside of Russia, so I have got to take the question back
    to other colleagues in the administration and get back to you
    on it, and talk to my friends at DOE and my own staff to see
    what we can do about the liability problem.
        Senator Domenici. It would be done if you solve that
    problem. Thank you, and thank you, Mr. Chairman.
        [The information follows:]

        On March 25 at the hearing on CJS appropriations, you and Secretary
    Powell discussed the status of the liability issues with Russia and how
    it affects progress in United States and other G-8 partners'
    participation in Russia's plutonium disposition program. The Secretary
    promised to follow-up with you on this matter. This is an interim
    reply.
        State and other interested agencies remain engaged at senior levels
    on the issues you raised. We will provide a substantive response as
    soon as those deliberations are completed. We appreciate your strong
    interest in this issue and this critical initiative.

        Senator Gregg. Senator Byrd.
        Senator Byrd. Let me thank you again, Mr. Chairman, and
    Senator Hollings for your patience, and for your many
    courtesies to me. I am not a member of the subcommittee.
        Let me thank you again, Mr. Secretary, for the good work
    you do. When I came to Congress, we had Secretary Dulles as our
    Secretary of State. My first trip out of this country was a
    trip around the world. I remember that in high school I was
    assigned a book to read, Jules Verne's ``Around the World in
    Eighty Days.'' We went around the world in 68 days, I believe
    it was, in an old Constellation. Of course, that would have
    been called a junket in these days.
        We visited Afghanistan, where they went into the town
    square there, the men wore leggings and looked as though they
    wore secondhand clothing. The time of day was announced in the
    town square. There was no warm water in the hotel where we
    stayed. Mrs.--I am trying to remember the name of the lady from
    Illinois who was a member of the delegation. There were seven
    on the delegation, among whom was a member from Minnesota, a
    former missionary to China. We visited Afghanistan. We also
    visited Iraq and visited the king of Iraq, as it was at that
    time. I sometimes think that I would like to go back to
    Afghanistan and see what changes have been made.

          ISRAEL FENCE STATUS AND COST AND ISRAEL-PALESTINIAN CONFLICT

        While I was in Iraq, I decided to go down to Babylon, the
    old Biblical city of Babylon, sitting on the banks of the
    Euphrates River, and my memory carried me back to that chapter
    in the Bible where Daniel was called in before the king to
    interpret the handwriting on the wall, mini, mini, tiki,
    euphrasi. The meaning as Daniel interpreted it, God hath
    numbered thy Kingdom and finished it. Thou art weighed in the
    balance and art found wanting. Thy kingdom is divided and given
    to the Meads and Persians. That night the king was killed, and
    his dominions were indeed given to the Meads and the Persians.
        I marvel at the prophesies that we have heard and read from
    the Bible, and have seen them come true, and are seeing them
    come true.
        I agree with Richard Clarke's statement, and I paraphrase
    it, in that the war in Iraq has distracted us from the war
    against those who attacked us on 9/11 and the war in
    Afghanistan. I believe that, and believed it before he stated
    it. I am against that war in Iraq, I was against it, am against
    it, and will continue to be against it. I made no bones about
    that. I think that it has been a terrible distraction from our
    homeland security, our own security of this country. I think
    that we are lacking, and I think that something terrible will
    happen again in this country. I think that it is only a matter
    of time. I believe that these people are patient and that they
    will come back. I do not think that this country is being made
    more secure by our being in Iraq. I do not fall for that
    baloney. I was sold lots of that in my time, having been an old
    meat cutter, bologna.
        I think that the war in Iraq has also been a great
    distraction from the handling of the Israeli-Palestinian
    conflict. I think that is where the basic problems have arisen.
    There has been a lot written in the press about the wall that
    the Israeli government is building inside the 1967 boundaries.
    Every country has that right of self-defense. I do not question
    that right. I am sure that you do not agree with those who
    criticize the administration for abandoning the Middle East
    peace process, but for all practical purposes, the Bush road
    map, which was never really anything more than words on paper,
    is dead.
        The fact is that neither Israelis nor Palestinians have any
    reason to believe that this administration is going to expend
    any political capital to move the process forward anytime soon.
    Real progress was being made before this administration took
    office, but since that day, the situation has slid steadily
    backwards and bloodshed has spun out of control. Hundreds, if
    not thousands, of deaths could have been avoided. This
    administration's disengagement from the Israeli-Palestinian
    conflict is a major impediment to what we are trying to do to
    promote democracy and combat terrorism in the Middle East.
        The issue with respect to the wall is where this wall is
    located. It has already cut off hundreds of thousands of
    Palestinians from their land, from their neighbors, and even
    from their family members. Does not this action violate the
    policy that the location of boundaries should be decided
    through negotiation, not by unilateral action by the parties?
    My question would be, what is the administration's position on
    this? What are we going to do about it?
        Secretary Powell. We have problems with the wall and we
    have expressed those problems to the Israelis. They are free to
    protect themselves against the kind of terrorist activities
    that have so frustrated our peace efforts and frustrated the
    peace efforts of the previous administration. We have expressed
    our concern where the wall moves away from what could be seen
    as something that is clearly Israeli into Palestinian
    territory, taking into the wall large numbers of Palestinians
    on their land. There have been adjustments made to the fence,
    or the wall, as you prefer to call it. We just call it a fence.
    Adjustments have been made to the fence that take this into
    account, and we are continuing to work with the Israelis on
    this matter.
        But it is mostly a fence and not a wall, and for that
    reason the Israelis do not believe, and they think this with
    good merit, that it is not necessarily a defining feature that
    cannot be changed in the future as a result of negotiations
    between the two sides. A fence can be put up. A fence can be
    taken down. We have seen that over the past few months where
    some parts of the fence have already been taken down.
        The road map is not dead, and the President did invest
    considerable political capital in it. He went to Sharmel Sheikh
    and he went to Akuba last year. That was an investment of his
    personal prestige, and political energy of this administration.
    President Clinton invested enormous political capital, only to
    see it all come crashing down in the last week of his
    administration because of the intransigence of Yasser Arafat,
    and the same problem we have faced with Yasser Arafat and his
    unwillingness to do what should be done, what we believe can be
    done to bring terror under control.
        For this reason, the President put forward of the two
    states living side by side in peace. He made it clear; called
    one of them Palestine and the other one Israel and worked
    toward that end. We tried to get new people into positions of
    authority in the Palestinian Authority. Prime Minister Abumaz
    in the last year, we invested in him. We put political capital
    on him. But he was frustrated by Mr. Arafat's unwillingness to
    yield any authority over security forces. He stepped down, and
    now Prime Minister Karai, we are ready to help him. We are
    working with the Egyptians, we are working with our British
    colleagues, we are working with the Israelis.
        The President said yesterday we were prepared to send
    another team over. We have had teams going back and forth
    trying to get some traction, trying to see if we can use the
    Israelis' recent idea for moving out of Gaza as a way to get
    this thing going forward, depending on what the Israelis are
    also planning at the same time with respect to the West Bank at
    the route of the fence.
        So we are not disengaged, Senator Byrd. But perhaps the
    most difficult portfolio that we have to manage begins and ends
    with terror. As long as terror continues, as long as the
    Palestinian leaders and the Palestinian people do not crack
    down on terror then we are going to continue to have problems
    getting this peace process moving forward. Israel has a right
    of self-defense. Israel cannot participate with a partner that
    has really no leader to that partnership.
        Senator Hollings. Would you yield just one second? The MLR,
    you and I understand that, the main line of resistance to
    terrorism is Palestine-Israel. General Musharraf just said,
    look, if you folks can go and settle that, terrorism the world
    around will disappear. What you need--if I were king for a day,
    is I would reconstitute you as the general in charge of an
    international peacekeeping force and move right in between the
    two.
        When you have got Sharon, the Bull Connor of Israel--if you
    look on page 152 of the Seven Day War and then Prime Minister
    Levi Eschov turned to Major Ari Sharon when Sharon said, we are
    going to eliminate Egypt, just like he is trying to eliminate
    Palestine. He says, Ari, victory in war settles nothing. The
    Arabs will still be there. You have got a hardhead. He cannot
    learn, and we cannot just put our future in his hands. We have
    got to move in with some kind of international peacekeeping
    force and get something going. Not maps and talking and every
    other darn thing. We know what is necessary, separate the two
    of them. The only object to that is the United States and
    Israel. The free world is for that. I will bet you on it.
        Thank you.
        Senator Byrd. Mr. Chairman, may I just close with this
    thought, with this question? The United States provided $480
    million to Israel in this current fiscal year. How much is
    Israel spending to build this wall? Since money is fungible and
    our aid goes to Israel in the form of a big check, can it be
    said that America is paying for this wall?
        Secretary Powell. Money is fungible, but I cannot give you
    an answer off the top of my head as to what the wall
    expenditures are. As you know with respect to loan guarantees,
    we do dock those loan guarantees in response to Israeli
    activities with response to settlement activities.
        [The information follows:]

        This is in response to your March 25 inquiry of Secretary Powell
    regarding Israeli expenditures on the seam-line fence, and whether U.S.
    assistance to Israel is being used in that effort.
        U.S. assistance to Israel serves multiple purposes--relieving the
    impact of economic burdens Israel has incurred due to its regional
    isolation; maintaining Israel's qualitative military edge; preventing
    regional conflict; and building the confidence necessary for Israel to
    take calculated risks for peace.
        Economic Support Funds (ESF)--$477 million in fiscal year 2004,
    with $360 million requested for fiscal year 2005--may only be used for
    balance-of-payments support. At the discretion of the Israeli
    Government, ESF can be used to (a) purchase goods and services from the
    United States; (b) service debt owed to, or guaranteed by, the U.S.
    Government; (c) pay to the U.S. Government any subsidies or other costs
    associated with loans guaranteed by the USG; (d) service Foreign
    Military Sales debt, both current and refinanced; and (e) finance other
    uses as agreed upon by both sides. Use of ESF money for military
    purposes--including the procurement of commodities or services for
    military purposes--is explicitly ruled out.
        Foreign Military Financing (FMF)--$2.15 billion in fiscal year
    2004, with $2.22 billion requested for fiscal year 2005--represents
    about 25 percent of the Israeli defense budget and is crucial to
    Israel's multi-year defense modernization plan. 26.3 percent of this
    FMF (approximately $580 million in fiscal year 2004) may be used for
    Off-Shore Procurement. Most of this amount is spent in Israel, which
    supports their maintenance of a strong domestic defense industry.
        In addition to ESF and FMF, the Emergency Wartime Supplemental
    Appropriations Act, 2003, authorized $9 billion in loan guarantees for
    Israel, to be made available in fiscal years 2003-2005. The Act states
    that the loan guarantees may be issued only to support activities in
    the geographic areas that were subject to the administration of the
    Government of Israel before June 5, 1967. The Act further states that
    the guarantees shall be reduced by an amount equal to Israeli
    expenditures (between March 1, 2003, and the date of issue of the
    guarantee) for activities which the President determines are
    inconsistent with the objectives and understandings reached between the
    United States and the Government of Israel regarding the implementation
    of the loan guarantee program.
        Thus, on November 25th, the United States Government announced a
    deduction of $289.5 million from the total of $3 billion in loan
    guarantees available to Israel in fiscal year 2003. This deduction
    reflects issues of concern to the United States, including settlement
    activities and the route of the security fence. As the President has
    stated clearly and consistently, ``Israel should freeze settlement
    construction, dismantle unauthorized outposts, end the daily
    humiliation of the Palestinian people, and not prejudice final
    negotiations with the placements of walls and fences.''
        As for costs incurred by the GOI in construction of the separation
    barrier, publicly available estimates are on the order of $2 million
    per kilometer. With the Government of Israel having built nearly 200
    kilometers of fence so far, total costs are approximately $400 million.
    The planned route of the fence calls for another 400 kilometers to be
    built, bringing the total, on completion, to approximately $1.2
    billion. These, of course, are only estimates.
        I hope that this addresses your concerns. If we can be of
    assistance in the future on this or any other matter, please do not
    hesitate to contact us.

        Senator Hollings. We need Secretary Powell to go there and
    say, Mr. Sharon, pull down this wall, just like Reagan. Go
    ahead and do it. We can stop some terrorism. Iraq has no
    terrorism. We started it there. We know where the terrorism is
    and we know the MLR, you and me. You can do it. Thank you.
        Senator Byrd. Thank you, Mr. Chairman.
        Senator Gregg. Do you want to respond?
        Secretary Powell. Terrorism will emanate from those places,
    even with an international force there, until such time as the
    Palestinian leaders decide that it is not serving their
    interest any more and they stop it.
        Senator Hollings. But you do not have any leaders. They are
    a basket case after 35 years of occupation. Anybody with get up
    and go has got up and gone.
        Secretary Powell. There are people who claim they are
    leaders, and there are people who are invested with leadership
    by the people themselves. They are the ones that are not
    acting.
        Senator Hollings. But if you want a democracy in the
    Mideast you would have gone to Syria where Lebanon is a sort of
    50-50 democracy, get the Syrian army out of Lebanon and then
    you would solve the Hezbollah and Hamas problem. Not Iraq.
        Senator Gregg. I wish we could solve the Israeli-
    Palestinian issue at this conference table this morning.
        Senator Hollings. I think you can. We have got the man to
    do it.
        Senator Gregg. I suspect that even with our unique talents
    it may be beyond our capacity.
        Mr. Secretary, we appreciate your generous commitment of
    time, especially after all your flying the past few days.
        Secretary Powell. Thank you, Mr. Chairman.

                             CONCLUSION OF HEARINGS

        Senator Gregg. If there is nothing further, the
    subcommittee will stand in recess.
        [Whereupon, at 12 noon, Thursday, March 25, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2005

                                  ----------

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.

                           NONDEPARTMENTAL WITNESSES

        [The following testimonies were received by the
    Subcommittee on Commerce, Justice, and State, the Judiciary,
    and Related Agencies for inclusion in the record. The submitted
    materials relate to the fiscal year 2005 budget request for
    programs within the subcommittee's jurisdiction.]

          Prepared Statement of the American Museum of Natural History

                  ABOUT THE AMERICAN MUSEUM OF NATURAL HISTORY

        The American Museum of Natural History [AMNH] is one of the
    nation's preeminent institutions for scientific research and public
    education. Since its founding in 1869, the Museum has pursued its
    mission to ``discover, interpret, and disseminate--through scientific
    research and education--knowledge about human cultures, the natural
    world, and the universe.'' It is renowned for its exhibitions and
    collections of more than 32 million natural specimens and cultural
    artifacts. With nearly four million annual visitors, its audience is
    one of the largest, fastest growing, and most diverse of any museum in
    the country. Museum scientists conduct groundbreaking research in
    fields ranging from zoology, comparative genomics, and informatics to
    earth, space, and environmental sciences and biodiversity conservation.
    Their work forms the basis for all the Museum's activities that seek to
    explain complex issues and help people to understand the events and
    processes that created and continue to shape the Earth, life and
    civilization on this planet, and the universe beyond.
        More than 200 Museum scientists, led by 46 curators, conduct
    laboratory and collections-based research programs as well as fieldwork
    and training. The Museum's research programs are organized under five
    divisions (Anthropology; Earth, Planetary, and Space Sciences;
    Invertebrate Zoology; Paleontology; and Vertebrate Zoology), along with
    the Center for Biodiversity and Conservation (CBC). The Museum also
    conducts graduate training programs, supports doctoral and postdoctoral
    scientists with research fellowships, and offers talented
    undergraduates an opportunity to work with Museum scientists.
        The Museum's Center for Biodiversity and Conservation, founded in
    1993, is dedicated to enhancing the use of scientific data to mitigate
    threats to global biodiversity, and integrating this information into
    the conservation process and to disseminate it widely. It conducts
    conservation-related field projects around the world, trains
    scientists, organizes scientific symposia, presents public programs,
    and produces publications geared toward scientists, policy makers, and
    the lay public. Each spring, the CBC hosts symposia that focus on
    conservation issues. In 2002, the symposium, ``Sustaining Seascapes:
    the Science and Policy of Marine Resource Management,'' was co-
    sponsored by NOAA's Marine Protected Areas Center, along with other
    federal and private organizations, and examined the large-scale
    conservation of marine ecosystems, giving special consideration to
    novel approaches to the sustainable management of biodiversity and
    fisheries. The focus of 2003's symposium was on conservation issues
    related to increased ecotourism in Southeast Asia, and 2004's symposium
    examines the role of invertebrates in environmental systems.
        The Museum's vast collections provide the foundation for the
    Museum's interrelated research, education, and exhibition missions.
    They often include endangered and extinct species as well as many of
    the only known ``type specimens''--examples of species by which all
    other finds are compared. Collections such as these are historical
    libraries of species and artifacts, providing an irreplaceable record
    of life on earth. They provide vital data for Museum scientists as well
    for more than 250 national and international visiting scientists each
    year.
        The Museum's renovated Hall of Ocean Life, reopened in Spring 2003,
    is a major focal point for public education on marine science issues.
    Drawing on the Museum's world-renowned expertise in Ichthyology as well
    as other areas of vertebrate as well as invertebrate zoology, the Hall
    is pivotal in educating visitors about the oceans' key role in
    sustaining life on our planet. The renovated Hall of Ocean Life,
    together with the new Halls of Biodiversity, Planet Earth, and the
    Universe and the rebuilt Hayden Planetarium (part of the new Rose
    Center for Earth and Space) provide visitors a seamless educational
    journey from the universe's beginnings to the formation and processes
    of Earth to the extraordinary diversity of life on our planet.
        In its Halls of Biodiversity, Planet Earth, and the Universe, the
    Museum presents current science news through Science Bulletins--
    multimedia productions that bring the latest science news and
    discoveries to the public using high-definition video documentaries,
    kiosks, and the web. The Bulletins present features on such issues as
    marine biodiversity, ocean life discoveries, and more. In addition, the
    Museum's comprehensive education programs attract more than 400,000
    students and teachers and more than 5,000 teachers for professional
    development opportunities. The Museum also takes its resources beyond
    its walls with Moveable Museums, an after-school program, online
    resources, and through the National Center for Science Literacy,
    Education, and Technology, launched in 1997 in partnership with NASA.

                  COMMON GOALS OF NOAA AND THE AMERICAN MUSEUM

        Today, as throughout its history, the National Oceanic and
    Atmospheric Administration [NOAA] is committed to managing and
    conserving the nation's living marine resources and their environments,
    forecasting environmental changes, providing decision makers with
    reliable scientific information, and fostering global environmental
    stewardship, especially of coastal and marine resources. The American
    Museum shares NOAA's commitment to these environmental goals and to the
    scientific research, technologies, and public education that support
    them. Indeed, informed environmental stewardship and preservation of
    our planet's biodiversity and resources--in marine, coastal, and other
    natural environments and habitats--are integral to the Museum's most
    fundamental purposes.
        The Museum has also long been at the forefront of developing new
    research tools--including molecular technologies, new collection types,
    innovations in computation, and GIS and remote sensing--that are
    revolutionizing the way research can be conducted and data analyzed, as
    well as the way museum collections can be used. The Museum has
    significant resources in these areas, which it would bring to bear in
    continued partnership with NOAA. These include:
        Remote Sensing and Geographical Information Systems Technologies.--
    The CBC launched the Remote Sensing/Geographical Information Systems
    (RS/GIS) lab in the fall of 1998. Wise conservation policy requires
    effective knowledge of the distribution of species and ecological
    communities at local, regional, and global scales. Without this
    information, it is difficult to decide where to allocate scarce
    conservation resources. Remote sensing technologies can provide
    essential data on such things as land-cover and land-use, as well as
    sea surface temperatures and chlorophyll content. GIS makes it possible
    for scientists to compare and visualize the relationships among
    satellite and legacy data, raw standardized samples, and data obtained
    through ground truthing. Because it provides the database backbone than
    can connect field work to analysis, GIS is becoming an indispensable
    component in environmental data analysis and is thus revolutionizing
    work in conservation.
        The CBC uses its RS/GIS technologies in biodiversity and marine
    reserve research in various ways--for example, to identify sites
    suitable for biological inventory; to provide supplementary
    quantitative and qualitative data in and around study sites; and to
    develop visual depictions and digital presentations for reports,
    publications, and meetings. RS/GIS is also key for predictive modeling,
    which when coupled with groundtruthing significantly enhances
    understanding of aquatic habitats.
        Molecular Research Program.--The Museum is also home to a
    distinguished molecular systematics program that is at the leading edge
    of comparative genomics and the analysis of DNA sequences for
    biological research. In its laboratories, more than 40 researchers in
    molecular systematics, conservation genetics, and developmental biology
    conduct their research on a variety of terrestrial and aquatic study
    organisms. Their work is supported by the Museum's new frozen tissue
    collection of biological tissues and isolated DNA stored in a super-
    cold storage facility, which preserves genetic material and gene
    products from rare and endangered organisms that may become extinct
    before science fully exploits their potential. These researchers also
    have onsite access to a 700-processor supercomputing cluster--the
    fastest parallel computing cluster in an evolutionary biology
    laboratory and one of the fastest installed in a non-defense
    environment.

                         MARINE ENVIRONMENTS INITIATIVE

        The explosion of research technologies has created an opportunity
    for the Museum to integrate these state-of-the-art analytical tools
    into its biological and environmental research, as well as to present
    results to the public in its exhibition halls, websites, and
    educational programs. This intersection of research capability and
    technological opportunity underlies the Museum's marine environments
    initiative. The Museum proposes to continue, in partnership with NOAA,
    this basic and applied research initiative in areas of shared concern,
    such as the following:
        Biodiversity and Conservation Research.--AMNH investigators are
    exploring applications of GIS and remote sensing technologies to
    advance research pertinent to conservation and protecting threatened
    species and habitats. For example, Museum vertebrate and invertebrate
    zoologists carry out ambitious field work and collection expansion
    programs throughout the tropical freshwaters of the globe, conduct
    biotic surveys, and explore marine ecosystems. In addition to the
    discovery and classification of many still unknown species, Museum work
    concerns the protection and conservation of many species whose habitats
    and survival are at risk. These researchers rely on the capacities of
    GIS/RS to develop finer, tighter, more precise datasets. Also, GIS
    analysis enables researchers to ask more sophisticated and flexible
    questions, and to discover patterns, series, and gradations. Projects
    include the following:
      --Marine reserve networks.--Analyzing the physical, biological, and
            cultural processes affecting coral reef systems in the Bahamas.
            GIS allows the researchers to integrate maps with sets of
            biophysical and socioeconomic data and to create dynamic models
            for testing hypotheses about marine reserve networks in a
            spatially realistic framework.
      --Humpback whales in Madagascar.--Researchers from the American
            Museum and the Wildlife Conservation Society are using GIS to
            track the migrations of humpback whales in the western Indian
            Ocean region and create a database that contains identification
            photos, biopsies, DNA sequences, and sighting information for
            hundreds of whales.
      --Aquatic ecosystem research.--Aquatic ecosystems research includes
            predictive modeling and riparian ecosystems research, and
            focuses on questions of restoration, management, and
            monitoring, drawing on resources of the Museum and facilities
            of the Southwestern Research Station.
      --Biotic surveys and inventories.--The CBC has conducted floral and
            faunal surveys in Bolivia and Vietnam, providing data on the
            distribution and abundance of species, and enabling researchers
            to analyze the role of climate change on land cover and develop
            plans to reduce threats to biodiversity. Researchers are also
            experienced in training local field biologists and conservation
            managers how to conduct surveys using RS data and biophysical
            measures and how to apply results to the long-term conservation
            of biodiversity.
        Collections data and access.--Museum researchers use GIS to bring
    the Museum's vast collections alive and to increase exponentially the
    analyses that researchers can carry out for conservation research and
    decision-making. By coupling GIS with the Museum's increasingly strong
    web presence, researchers worldwide are able to pose more sophisticated
    questions and uncover new connections and relationships among the
    collections data.
        Public education and outreach.--The Museum features current NOAA-
    related science and discovery in the Hall of Ocean Life as well as in
    its other educational programs and resources. For example, the Museum
    is collaborating with partners such as the New York State Marine
    Education Association and the New York Sea Grant on an annual
    conference, scheduled for Summer 2004, to promote marine awareness and
    encourage the growth and exchange of instructional resources within the
    scientific, commercial, and educational communities.
        These applications for GIS and other technologies demonstrate the
    Museum's unique capabilities to advance environmental forecasting,
    provide decision makers with reliable scientific information, and
    foster global environmental stewardship.
        We therefore request $1 million to continue in partnership with
    NOAA to build its marine environmental sciences initiative.
    Contributing its participatory share with funds from nonfederal as well
    as federal sources, the Museum will use cutting-edge technologies to
    advance basic and applied research, integrated with education and
    access efforts, related to marine environments. In so doing, we seek to
    increase scientific understanding and public awareness of vital
    environmental resource management issues.

                                     ______

     Prepared Statement of the National Association of State Universities
     and Land-Grant Colleges (NASULGC) and the University Corporation for
                          Atmospheric Research (UCAR)

        On behalf of the 235 institutions that constitute the University
    Corporation for Atmospheric Research (UCAR) and the National
    Association of State Universities and Land-Grant Colleges (NASULGC), we
    thank the Subcommittee for your support of weather and climate research
    and education within the National Oceanic and Atmospheric
    Administration (NOAA). Under your leadership, Congress has taken
    important steps to recognize NOAA's contribution to our nation's
    quality of life, national security, public health, and economic well-
    being. However, UCAR and NASULGC have grave concerns that the fiscal
    year 2005 President's budget request places that progress in serious
    jeopardy by recommending significant reductions or eliminations of
    funding compared to the fiscal year 2004 appropriated amount.
        The proposed reductions in funding for extramural research and
    education programs are very worrisome and seem in direct contradiction
    to the atmospheric science community's repeated request to establish a
    significant peer-reviewed NOAA extramural research fund to strengthen
    NOAA research by creating strong partnerships between the agency and
    the academic and private sectors. Enabling such collaborations among
    the country's best scientists is warranted given the statement
    contained in the fiscal year 2005 Budget Request that, ``Weather- and
    climate-sensitive industries, directly or indirectly, account for
    approximately $2.7 trillion of the Nation's gross domestic product.''
    We urge the Subcommittee to return NOAA to its fiscal year 2004
    appropriated level of $3.689 billion at the very minimum.
        Currently, NOAA is undergoing a congressionally mandated evaluation
    of its research enterprise. During this time of change and uncertainty,
    it is critical that Congress continue to support, and use any
    restructuring to enhance, NOAA's core research programs and competitive
    programs and partnerships with the academic community. These
    partnerships leverage research and research applications expertise,
    bring the best talent to bear in addressing high priority technology
    development requirements, and serve to train a new generation of
    scientists that NOAA and the rest of the scientific community will
    desperately need as present employees retire. As NOAA research
    activities are strengthened, we urge the Subcommittee to keep in mind
    the concept of the competitive, peer-reviewed Collaborations Fund, an
    external, peer-reviewed grants program to accelerate progress in the
    nation's weather research, for which the atmospheric sciences community
    has been advocating for several years.
        We would like to offer the following specific NOAA program
    recommendations:

    Office of Oceanic and Atmospheric Research (OAR)
        Climate and Global Change Program.--The fiscal year 2005 budget
    request includes a reduction of $9.15 million and 12 FTE for the
    Climate and Global Change program. We understand that this is a partial
    offset to fund climate increases for observation programs, but we
    question the choice of programs, all involving the external research
    and education communities, that will be diminished greatly or
    eliminated. Each of the targeted programs has much to do with the
    nation's basic climate research and the future of the atmospheric
    science in this country. They include NOAA's entire post doctoral
    program in climate science; NOAA's entire participation in the inter-
    agency funded, Presidential award-winning Significant Opportunities in
    Atmospheric Research and Science (SOARS) program for undergraduate
    students who are underrepresented in the atmospheric sciences;
    university climate research grants that enable this country to
    participate in international field programs, such as the Climate
    Variability and Predictability World Climate Program (CLIVAR), designed
    to improve our ability to observe, understand, predict, and respond to
    changes in the global environment; and the entire Human Dimensions of
    Global Change Research Program that funds competitively awarded social
    sciences research grants to advance understanding of the human response
    to and planning for the effects of climate variability. NOAA is the
    only agency funding this applied social sciences research examining how
    social and economic systems are influenced by fluctuations in short-
    term climate (seasons to years), and how human behavior can be affected
    by variability in the climate system, and it is the only agency funding
    this country's participation in CLIVAR. We urge the Subcommittee to
    restore the fiscal year 2005 Climate and Global Change funding and
    personnel levels to the fiscal year 2004 enacted level of $69.66
    million and current FTE level.
        Climate Observations and Services.--We urge the Subcommittee to
    support the requested amount of $72.82 million, particularly the
    increases requested for the Global Ocean Observing System (increased by
    $10.7 million over current program levels) and Carbon Cycle Atmospheric
    Observing System (increased by $6.5 million over current program
    levels). The increases for these programs will build the climate
    observing system required to support the research, modeling, and
    decision support activities for the Administration's Climate Change
    Research Initiative. We ask that the Subcommittee urge NOAA to expand
    partnerships with academia in this area, as we understand that most of
    the research is slated to be conducted internally.
        Educational Partnership Program for Minority-Serving Institutions
    (EPPMSI).--We urge the Subcommittee to support the fiscal year 2005
    $15.0 million request for EPPMSI, and to support the requested transfer
    of the program from Program Support to OAR. The under-representation of
    minorities in the earth science disciplines continues to be a glaring
    problem, and NOAA's outreach initiatives provide vital contributions
    toward correcting the imbalance. EPPMSI also has the full support of
    NASULGC's Office for the Advancement of Public Black Colleges.
    National Weather Service (NWS)
        The U.S. Weather Research Program (USWRP) is an interagency program
    that is dedicated to making forecasts of high-impact weather more
    specific, accurate, and reliable, thereby saving lives and property,
    and helping regional economies. It is a program that engages in basic
    research, the societal applications of that research, and to moving
    these applications into operations. It therefore straddles the missions
    of OAR (research and applications oriented) and NWS (operations
    oriented). Within the President's fiscal year 2005 request, USWRP is
    moved from OAR to NWS. Before this is accomplished, we ask that the
    Subcommittee take into consideration relevant recommendations of the
    NOAA Research Review Team, of a current internal USWRP study, of the
    OAR and NWS administration, and of congressional authorizers. We
    support any plan that is carefully considered and that strengthens
    NOAA's leadership role in this interagency program. We urge the
    Subcommittee to support the fiscal year 2005 request of $4.25 million
    for USWRP.
        THORPEX.--A Global Research Program is a component of the USWRP
    that has its own line in the fiscal year 2005 request. THORPEX is an
    interagency, international program the goal of which is to provide, for
    the benefit of society and the economy, 7-14 day forecasts that are as
    reliable and useful as are current 2-3 day forecasts. We urge the
    Subcommittee to support the fiscal year 2005 THORPEX request of $2.3
    million.
        The Space Environment Center (SEC) is the national and world
    warning center for solar disturbances that can affect people and
    equipment working in the space environment as well as the
    communications network of the nation. We agree with the
    Administration's conclusions that the operational nature of SEC is a
    good fit with the NWS mission and that the Center should therefore be
    transferred from OAR. We urge the Subcommittee to support the $7.5
    million requested for the Space Environment Center, as well as the
    proposed SEC transfer to NWS from OAR.
        The Cooperative Observer Network Modernization (COOP) will
    eventually provide the country with a network of accurate surface
    weather data that is critical to the maintenance of the country's
    climate record as well as to work of NWS local field offices and
    university research laboratories. We urge the Subcommittee to support
    the reinstatement and modernization of the Cooperative Observer Network
    by appropriating the requested fiscal year 2005 funding level of $1.4
    million.
        The NOAA Profiler Network is zeroed out in the fiscal year 2005
    request, terminating the nation's 35 stations that provide hourly wind
    profiles from the ground to 53,000 feet to operational weather
    forecasters and weather models. These data provide invaluable support
    in the forecasting of tornadoes, winter storms and flash floods. The
    Network saves lives and helps mitigate the destruction of property in
    severe weather. The fiscal year 2004 enacted funding for the Network
    was $4.1 million, an amount that allowed continued operation of the
    stations while the NWS prepared a report, requested by Congress,
    analyzing the need for a profiler network and producing a plan for
    implementation of a modernized system. This report has not been
    completed. We strongly urge the Subcommittee to restore in fiscal year
    2005 $4.1 million plus inflation for the continued operation of the
    Profiler Network, and to urge the NWS to produce, as soon as possible,
    the detailed plan requested by Congress for the replacement of the
    current Network with a much-needed state-of-the-art system.

    National Environmental Satellite, Data, and Information Service
            (NESDIS)
        National Polar-orbiting Operational Environmental Satellite System
    (NPOESS).--We support the requested increase of $30.9 million for
    NPOESS, and urge you to ensure that the necessary resources are
    provided to guarantee the system's capability to utilize, manage,
    store, and make available the data from this critical observing
    program. Resources are necessary also for education and training
    activities that are critical to encourage and enable the efficient and
    effective use of these data. This service is provided through the
    Cooperative Program for Operational Meteorology, Education and Training
    (COMET) program. We urge the Subcommittee to support the requested
    fiscal year 2005 amount of $307.6 million for NPOESS.
        Regional Climate Centers.--The President's budget terminates
    funding for these centers, which are located on university campuses and
    continue to provide detailed climate and related products essential to
    private sector economic activities specific to each of the regions.
    They are needed to address the expanding demand for climate services,
    currently growing at a rate of 25 percent per year. We urge the
    Subcommittee to restore funding for Regional Climate Centers to the
    fiscal year 2003 level of $2.98 million.

    Facilities
        Boulder Facilities Operations.--Six OAR laboratories, one NESDIS
    Data Center, one OAR Joint Institute, and the Denver Forecast Office of
    the National Weather Service are all housed in Boulder at the David
    Skaggs Research Center. The rent for this important facility should
    definitely be paid out of facilities operating costs and not have to be
    taken from research funding as has been forced upon NOAA in past years.
    We urge the Subcommittee to support the $4.56 million fiscal year 2005
    request for Boulder Facilities Operations.

    About UCAR
        UCAR is a consortium of 68 universities that manages and operates
    the National Center for Atmospheric Research and additional atmospheric
    and related sciences programs. In addition to its member universities,
    UCAR has formal relationships with approximately 100 additional
    undergraduate and graduate schools including several historically black
    and minority-serving institutions, and 40 international universities
    and laboratories.

    About NASULGC
        NASULGC is the nation's oldest higher education association.
    Currently the association has 213 member institutions--including the
    historically black Land-Grant institutions--located in all fifty
    states. Its members constitute the major public research institutions
    in the nation. The Association's overriding mission is to support high
    quality public education through efforts that enhance the capacity of
    member institutions to perform their traditional teaching, research,
    and public service roles.

    Conclusion
        The academic community is cognizant of the serious budgetary
    constraints that face the Congress in the coming fiscal year. However,
    short-term savings achieved by cutting funding for extramural research
    and education programs will surely result in long-term degradation of
    NOAA's ability to meet its core mission requirements which are critical
    to the economic health, safety, and security of the nation. We thank
    you for your past support for atmospheric science and look forward to
    working with you to restore and stabilize the funding base for NOAA's
    extramural research and education programs.
                                     ______

        Prepared Statement of the Association for Enterprise Opportunity

        Chairman Gregg, Ranking Member Hollings and other Members of the
    Subcommittee: On behalf of the Association for Enterprise Opportunity
    (AEO), thank you for the opportunity to submit comments to the
    Commerce-Justice-State Appropriations Subcommittee regarding the
    proposed termination of the Small Business Administration (SBA)
    Microloan Program and the Program for Investments in Microentrepreneurs
    (PRIME) in the President's fiscal year 2005 budget. My name is Bill
    Edwards, and I am Executive Director of AEO. AEO is the national trade
    and membership association for microenterprise development in the
    United States with nearly 500 member organizations nationwide. The vast
    majority of AEO's membership consists of microenterprise practitioner
    agencies, including over half of all Microloan Intermediaries and PRIME
    grantees. AEO is requesting $30 million in lending capital for the SBA
    Microloan Program, $25 million for SBA Microloan Technical Assistance,
    and $15 million for the SBA PRIME Program.
        The Administration's proposed elimination of the SBA Microloan and
    PRIME Programs threatens to wipe out two essential federal funding
    sources for microenterprise development in the United States,
    effectively terminating the only available sources of business
    assistance for thousands of underserved entrepreneurs across the
    country.
        AEO respectfully requests that this Subcommittee fund these crucial
    SBA programs at the following levels: $30 million for Microloan Lending
    (requiring a $2.8 million appropriation), $25 million for Microloan
    Technical Assistance, $15 million for PRIME, and $14.5 million for
    Women's Business Centers.

    The SBA Microloan Program
        The SBA Microloan Program, the single largest source of funding for
    microenterprise development in the nation, was created in 1992 to help
    small business owners in need of small amounts of capital (less than
    $35,000) that are not yet ``bankable'' in the private sector lending
    community. Since 1992, SBA Microloan Intermediaries have made nearly
    19,000 Microloans totaling over $213 million, primarily to women,
    minority, and low-income entrepreneurs. In fiscal year 2003,
    Intermediaries made 2,422 loans, totaling $29,932,410.49, well
    exceeding the SBA's stated goal of $28 million in new loans.
        The Administration contends that banks will now lend to Microloan
    borrowers through 7(a) loan programs such as SBA Express, Community
    Express, and Lowdoc. This is not true. While banks may at times make
    business loans under $35,000, these programs serve entirely different
    borrowers, using entirely different criteria. Microloan borrowers often
    have FICO credit scores as low as 550, past credit problems, little or
    no collateral, and a lack of business experience. Traditional banks
    will simply not lend to these borrowers, with or without a SBA
    guarantee. Also, it is important to note that 40 percent of SBA
    Microloans go to start-ups while 7(a) loan guarantees require that
    individuals already be in business anywhere from 1 to 3 years.
        Despite lending to the riskiest borrowers, the Microloan Program
    has experienced a default rate of less than 1 percent. This
    accomplishment can be primarily attributed to the countless hours of
    intensive technical assistance that Intermediaries provide to Microloan
    borrowers. The technical assistance acts as a driver for business
    success and greatly improves the chances for successful business
    repayment.
        Finally, the Administration claims that the Microloan Program costs
    taxpayers $.97 per $1.00 loaned, but fails to recognize that this cost
    is directly related to the high level of technical assistance that
    borrowers receive and, thus, to the success of the program itself.
    Without technical assistance, these borrowers would be ill-equipped to
    manage a business! AEO is awaiting the SBA's response to a question
    posed by the Senate Small Business Committee regarding the methods by
    which the $.97 per $1.00 loaned were calculated.

    The SBA PRIME Program
        PRIME is the only federal microenterprise program that provides
    intensive training and technical assistance to low- and very low-income
    entrepreneurs. For many entrepreneurs, lack of access to capital is
    only one of the barriers to starting or growing a successful small
    business. PRIME provides grants to microenterprise organizations
    throughout the country to offer this invaluable assistance. In
    addition, PRIME is unique in that at least 50 percent of all grant
    award dollars must be used to provide these services to very low-income
    individuals.
        The Administration has proposed the elimination of the PRIME
    Program for the past four years. However, Congress has continued to
    fund PRIME each year and in doing so has recognized that by investing
    in very low-income entrepreneurs, the program succeeds in creating jobs
    and income in communities that need it most. PRIME is just that--an
    investment. PRIME clients create and retain jobs, move off of public
    assistance and pay increased taxes as their businesses and incomes
    grow.

    The SBA Women's Business Center Program
        The Women's Business Centers (WBC) of the Office of Women's
    Business Ownership provide training and technical assistance to women
    starting or expanding their businesses. In 2003 alone, Women's Business
    Centers across the country trained and counseled over 104,000 women in
    core business areas such as marketing, bookkeeping and finance. The
    Centers serve an invaluable role in meeting the special needs of female
    entrepreneurs across the country.
        America's 9.1 million women-owned businesses employ 27.5 million
    people and contribute $3.6 trillion to the economy. However, women
    continue to face unique obstacles in the world of business and greatly
    need the specialized services that Women's Business Centers provide.
        Again, we ask that the Subcommittee do what is truly best for small
    business in America and appropriate: $30 million for Microloan Lending
    (requiring a $2.8 million appropriation), $25 million for Microloan
    Technical Assistance, $15 million for PRIME, and $14.5 million for
    Women's Business Centers.
                                     ______

     Prepared Statement of the National Association of State Universities
    and Land-Grant Colleges (NASULGC) and the Consortium for Oceanographic
                         Research and Education (CORE)

        On behalf of the 256 institutional members of the Consortium for
    Oceanographic Research and Education and the National Association of
    State Universities and Land-Grant Colleges, thank you for your support
    of ocean sciences within the National Oceanic and Atmospheric
    Administration (NOAA). Under your leadership, Congress has taken
    important steps to recognize NOAA's contributions to our nation's
    quality of life, national security, public health, and economic well-
    being. However, CORE and NASULGC have serious concerns that the
    Administration budget request for fiscal year 2005 puts that progress
    in jeopardy by recommending significant cuts in funding for NOAA's
    extramural ocean research programs.
        As you are aware, NOAA is the third largest source of federal
    funding for marine academic research, oversees the nation's coastal and
    ocean monitoring networks, and participates in several important
    climate research programs. In that capacity, NOAA provides support for
    scientists at many of our member institutions to conduct research that
    provides critical information to policy-makers. This external research
    offers important benefits to NOAA, leveraging limited resources to meet
    ever-expanding needs for scientific support of its missions.
        University research funds are awarded through peer-reviewed,
    competitive processes, ensuring that tax dollars support the best
    science and that duplication is minimized. In addition to grants
    awarded by NOAA, the states and universities themselves support
    academic research through their contributions to scientists' salaries
    and research facilities. This reduces NOAA's personnel and
    infrastructure costs, and gives the agency greater flexibility to make
    rapid changes in order to address emerging issues and priorities.
        NOAA-sponsored extramural research also is essential to support the
    training of the next generation of ocean scientists and engineers.
    Because the competitive review process ensures that funding is awarded
    to the highest-priority science, graduate students have the opportunity
    to work on cutting edge research. These students will provide the
    foundation upon which our nation's future ability to understand and
    manage marine issues is built. University partnerships will also be the
    best remedy for the large number of anticipated NOAA retirements in the
    coming years. Currently NOAA is undergoing a congressionally mandated
    evaluation of its research enterprise. During this time of change and
    uncertainty, it is critical that Congress continue to support, and use
    any restructuring to enhance NOAA's competitive research programs and
    partnerships with the academic community. These partnerships will allow
    NOAA to bring the best talent to bear in addressing high priority
    research and development requirements.
        The academic community recognizes the serious budgetary constraints
    that Congress faces in the coming fiscal year. However, short term
    savings achieved by cutting funding for extramural research programs
    could seriously jeopardize NOAA's long term capacity to meet its core
    mission requirements.
        We thank you for your past support for ocean science and look
    forward to working with you to restore and stabilize the funding base
    for NOAA's extramural programs. A list of recommended funding levels
    for specific programs is below.
        Thank you for your consideration.

    National Ocean Service
        Competitive programs of the National Centers for Coastal Ocean
    Science (NCCOS).--The Administration's fiscal year 2005 budget request
    includes reductions of approximately $10 million from the competitive
    research programs of the National Centers for Coastal Ocean Science.
    These programs support important peer-reviewed, multi-disciplinary
    research in three goal areas: coastal ecosystem studies, cumulative
    coastal impacts, and harmful algal blooms and hypoxia. The proposed
    cuts would have devastating impacts on ongoing research and threaten
    the viability of future science plans, and we urge you to restore
    funding to the previously appropriated level of $23.5 million.
        National Estuarine Research Reserve System (NERRS).--We support the
    National Estuarine Research Reserve Association's requested level of
    $20 million for NERRS, an increase of $3.6 million over the fiscal year
    2005 President's request. This level is necessary to maintain support
    for the system's basic operating requirements and core programs, and to
    provide support for one new site in Texas. NERRS operates the only
    national monitoring program for estuaries, identifying short-term
    variability and long-term trends in coastal environmental quality and
    health at national, regional, and local levels. These funds would also
    support the NERRS graduate fellowship program that brings academic
    research expertise to bear upon coastal and estuarine research data
    gaps and trains the next generation of scientists.

    Oceanic and Atmospheric Research
        Climate and Global Change Program.--The fiscal year 2005 budget
    request includes a reduction of $9.15 million for the Climate and
    Global Change program. This important competitive grants program helps
    further our understanding of how the oceans control Earth's climate and
    enhances our predictive capability with respect to forecasting climate
    cycles affecting the United States. We urge you to restore the program
    to the fiscal year 2004 enacted level of $69.7 million.
        Global Ocean Observing System.--For fiscal year 2005, NOAA is
    requesting an increase of $10.7 million to continue building a global
    ocean observing system. These funds bring the completion of the system
    to 53 percent, establishing a global network of ocean reference
    stations to document long-term ocean/atmosphere variability and provide
    validation points for climate forecast models. This funding is an
    important step towards completion of a multi-year plan to fully
    implement the ocean climate observing system by 2010.
        Oceans and Human Health.--The fiscal year 2004 omnibus
    appropriations bill provided $10 million to continue an important new
    program in NOAA studying the role of the oceans in human health. This
    developing effort is composed of three key elements: establishment of
    NOAA centers of excellence, implementation of a competitive external
    research grants, and support for traineeships and distinguished
    scholars. NOAA's program, which complements the joint National Science
    Foundation and the National Institute of Environmental Health Sciences
    initiative, is particularly important given the agency's unique
    leadership position with respect to ocean and coastal stewardship. We
    urge the Committee to continue the program and provide a modest
    increase of $2 million in fiscal year 2005.
        National Sea Grant College Program.--For over 35 years, Sea Grant
    has proven its value to U.S. taxpayers as a program that supports
    rigorous, high-quality research that is directly responsive to the
    concerns of coastal constituents. Over 300 Sea Grant institutions
    across 31 programs collaborate to respond to issues of national and
    regional importance using federal, state and industry partnerships that
    provide an extraordinary return on a modest federal investment.
    Congress recognized the value of Sea Grant when it reauthorized the
    program in 2002 at funding levels 25 percent higher than before.
    However, Sea Grant has lost significant opportunities to respond to
    critical national issues simply because actual program funding has not
    kept pace with inflation and needs. For this reason, we urge you to
    provide $68.4 million for Sea Grant in fiscal year 2005.
        Ocean Exploration.--The Administration's fiscal year 2005 budget
    requests a decrease of $1.8 million for the Ocean Exploration program
    which funds partnerships with public and private institutions to search
    for new ocean resources, assess and explain the diversity of marine
    organisms, survey and explore historic shipwrecks, monitor ocean
    acoustics, and support educational efforts and outreach. This reduction
    will lead to a 20 percent decline in funding available for the academic
    community and other partners to engage with NOAA's program on specific
    projects. We urge you to restore this funding so that the ocean science
    community will be able to continue their participation in efforts to
    promote ocean exploration and research.
        National Undersea Research Program (NURP).--Each year, NOAA's
    undersea research program supports over 200 research projects focused
    on developing the tools and expertise needed to work in the undersea
    environment. Projects are carried out primarily through the six
    regional NURP Centers, and are chosen on the basis of a merit-based
    peer-review process. This open, competitive process ensures a variety
    of high quality research projects directed towards pressing national
    and regional problems. We urge you to provide funding of $15 million in
    fiscal year 2005 to support the work of the NURP centers.
        Educational Partnership Program for Minority-Serving Institutions
    (EPPMSI).--We support the request of $15 million for EPPMSI, and
    support the requested transfer of the program from Program Support to
    OAR. The under-representation of minorities in the earth science
    disciplines continues to be a glaring problem, and NOAA's outreach
    initiatives are vital steps towards correcting the imbalance. This
    program also has the support of NASULGC's Office for the Advancement of
    Public Black Colleges.

    National Marine Fisheries Service
        Marine Mammals.--Sound is an essential tool for ocean researchers
    to penetrate the otherwise opaque waters of the sea. However, in recent
    years, concerns have grown about the impact of many types of noise on
    marine mammals, including acoustic research. One of the primary
    challenges to addressing this issue is our current, very limited
    scientific understanding of the effects of sound on marine mammals.
    Increasing this understanding would clarify and guide NOAA managers in
    developing administrative policies to allow the conduct of ocean
    research in compliance with applicable environmental laws as well as
    making it easier for researchers to include effective mitigation
    measures in their experimental plans. We urge that $4 million be made
    available to NOAA for its participation in an independent, peer-
    reviewed interagency research program on the effects of sound on marine
    mammals. In addition, we urge that $1 million be provided to NOAA
    Fisheries to strengthen its permitting capabilities and develop more
    efficient and effective criteria and guidance for ocean researchers
    with respect to marine mammals.

    NOAA Education Programs
        National Ocean Sciences Bowl (NOSB).--Since its establishment in
    1997, the National Ocean Sciences Bowl has reached more than 8,200
    students and teachers in 24 regions, bringing the oceans into high
    school classrooms. The NOSB, an academic competition for high school
    students who excel in math and science, is funded through a partnership
    with NOAA and other federal agencies, academia, foundations and
    industry. The Committee's past support for the NOSB has supported
    important program enhancements including a pilot program to introduce
    the NOSB in inner-city schools with high numbers of disadvantaged
    students, the National Ocean Scholars program in which students who
    have participated in the NOSB compete for two-year college
    scholarships, and increased regional support. To continue and expand
    the NOSB program, $1.5 million is requested for fiscal year 2005.

    Program Support--Marine Operations and Maintenance
        Oceanographic Fleet Support.--For fiscal year 2005, NOAA has
    requested $2.5 million from the University-National Oceanographic
    Laboratory System fleet to support work in the Pacific Ocean. The time
    at sea would be used to support long-time series research for
    Fisheries-Oceanographic Coordination Investigations (FOCI), studies of
    deep-sea vents and the maintenance of tsunami moorings in the Gulf of
    Alaska and the Pacific Ocean. Increased utilization of the UNOLS fleet
    by our federal colleagues helps to lower the overall costs of fleet
    support, leaving more funding for agency operations and research and
    experimentation.
                                     ______

    Prepared Statement of the National Association of University Fisheries
                             and Wildlife Programs

        The National Association of University Fisheries and Wildlife
    Programs (NAUFWP) appreciates the opportunity to submit testimony
    concerning the fiscal year 2005 budget of the National Oceanic and
    Atmospheric Administration (NOAA). NAUFWP represents approximately 55
    university programs and their 440 faculty members, scientists, and
    extension specialists, and over 9,200 undergraduates and graduate
    students working to enhance the science and management of fisheries and
    wildlife resources.
        The National Sea Grant College Program provides essential academic
    research, education, and extension services for the oceans community.
    Sea Grant research is critical to the maintenance and improvement of
    the nation's marine resources, such as in the areas of combating
    aquatic nuisance and marine invasive species. The program is an
    excellent example of collaboration between federal and state
    governments and universities. Unfortunately, the Sea Grant program has
    been undermined by project terminations and a requested decrease in
    fiscal year 2005. Therefore, NAUFWP strongly urges Congress to
    appropriate $62.4 million for this program in fiscal year 2005, which
    is $5 million above the President's request.
        NAUFWP supports the National Invasive Species Act (NISA) Program to
    prevent and control invasive species, and the Marine Aquaculture
    Program. These partnership programs within NOAA provide information to
    support policy and management decisions, increase knowledge of coastal
    and marine ecosystems, and provide the scientific basis for enhancing
    the Nation's marine economic sector. NAUFWP supports the
    Administration's request of $500,000 for NISA/Prevent and Control, and
    $1.612 million the Marine Aquaculture Program. We urge Congress to
    appropriate these amounts for fiscal year 2005.
        Thank you for considering the views of universities with fisheries
    and wildlife programs. We look forward to working with you and your
    staff to ensure adequate funding for fish and wildlife research,
    education, and conservation. Please include this testimony in the
    official written record.
                                     ______

                  Prepared Statement of The Ocean Conservancy

        The Ocean Conservancy (TOC) is pleased to share its views regarding
    the marine conservation programs in the budgets of the National Oceanic
    and Atmospheric Administration (NOAA), the Department of State's Bureau
    of Oceans and International Environmental and Scientific Affairs and
    the Marine Mammal Commission and requests that this statement be
    included in the official record for the fiscal year 2005 Commerce,
    Justice, State, the Judiciary and Related Agencies bill.
        TOC cannot overstate the importance of this Subcommittee in
    advancing marine conservation and appreciates the funding provided in
    fiscal year 2004. TOC is deeply troubled by the severe cuts totaling
    over $237 million to the National Ocean Service and the National Marine
    Fisheries Service proposed in the Administration's fiscal year 2005
    budget request. If enacted, these cuts will cripple the agency's
    ability to properly manage our oceans. TOC recognizes the constraints
    this Subcommittee faces, but with the upcoming release of the U.S.
    Commission on Ocean Policy's draft report, we urge that you reject
    these cuts and make ocean conservation a top priority.

                NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

    Conservation Trust Fund
        Passed by Congress in 2000, the Conservation Trust Fund is a
    groundbreaking bipartisan accomplishment and represents a major
    advancement in conservation funding. TOC is grateful that this
    Subcommittee has upheld its commitment to funding the Conservation
    Trust Fund over the last four fiscal years and calls for your continued
    commitment in fiscal year 2005 by dedicating $560 million for critical
    ocean and coastal conservation activities within NOAA. We also urge you
    to protect the integrity of the trust fund by limiting its uses to net
    increases, rather than using the fund as a substitute for base funding.

    Coral Reef Conservation
        NOAA plays a critical role in protecting coral reefs, serves on the
    Interagency Coral Reef Task Force and has major responsibilities for
    implementing the National Action Plan to Conserve Coral Reefs. Through
    monitoring, mapping, restoration and outreach activities, NOAA works
    with state, territorial, local and other parties to reduce land-based
    pollution, overfishing, diseases, and other threats to coral reefs. TOC
    urges the Subcommittee to provide $2 million above the Administration's
    request, which will leverage an additional $2 to $4 million in matching
    resources, to support local action strategies to protect coral reefs
    through partnerships with local, state and territorial governments,
    universities and the private sector.

    National Ocean Service
                National Marine Sanctuary Program
        The 13 U.S. national marine sanctuaries encompass more that 18,000
    square miles of our most significant marine resources. TOC applauds the
    Subcommittee's recognition of the importance of the Sanctuary program
    by providing $49 million for operations in fiscal year 2004 and urges
    at least level funding in fiscal year 2005. Continued funding at this
    level will reduce staffing shortages, support conservation, community
    outreach, research, and education programs, as well as provide the
    necessary funds for updating sanctuary management plans as required by
    law. TOC also supports $10 million for construction, particularly for
    interpretive facilities to educate the public about the federal
    government's role in managing our nation's ocean and coastal resources.

                Marine Protected Areas (MPAs)
        TOC appreciates this Subcommittee's continued support of NOAA's MPA
    initiative and requests $5 million in fiscal year 2005. This $0.5
    million increase will allow NOAA to work more effectively with federal
    and state agencies and other partners to acquire data for the ongoing
    MPA inventory, support the Marine Protected Areas Advisory Committee
    and better assist stakeholders, including states and the National Park
    Service, by holding regional workshops and providing training and
    technical assistance.

                Nonpoint Pollution Implementation Grants
        Polluted runoff continues to be the nation's largest source of
    water pollution. TOC urges the Subcommittee to reject the
    Administration's proposed termination of this program and maintain
    level funding in fiscal year 2005 to help coastal states and
    territories continue to implement their approved nonpoint pollution
    control plans.

    National Marine Fisheries Service
                Expanding Fisheries Stock Assessments
        The status of roughly two-thirds of our commercially caught ocean
    fish populations is unknown due in large part to lack of funding for
    basic research and regular stock assessments. We applaud the
    Subcommittee's decision to increase stock assessment funding to $18
    million in fiscal year 2004 and urge that this trend continue with
    $33.9 million in fiscal year 2005, $15 million above the
    Administration's request. Regular stock assessments will give managers
    baseline information critical to managing our fisheries and help reduce
    the backlog in research days-at-sea, which currently exceeds 3,800 days
    according to NMFS's current 10-year plan. This funding is one of The
    Ocean Conservancy's highest priorities.

                Fisheries Observers
        Along with stock assessments, reliable, objective information about
    how many fish and marine wildlife are being caught, directly and as
    bycatch, is crucial to responsible management of our ocean resources.
    Observers are a key means of collecting such information. TOC
    recommends $35 million for fisheries observers in fiscal year 2004,
    $12.5 million above the Administration's request, and encourages the
    Subcommittee to prioritize the following programs.
      --West Coast Observers.--TOC respectfully requests that the
            Subcommittee fund west coast observers at $5 million in fiscal
            year 2005, $120,000 above fiscal year 2004 enacted.
      --Pelagic Longline Observers.--TOC strongly supports $3 million in
            funding for Atlantic and $4 million in funding for Western
            Pacific pelagic longline fisheries observers. High interaction
            rates with endangered sea turtles have resulted in partial
            closures in both fisheries in recent years to avoid
            jeopardizing the continued existence of these species. In 2004,
            fishermen will return to the closed areas with gear and bait
            modifications expected to reduce the number and severity of sea
            turtle interactions. Adequate observer coverage is essential to
            determine the effectiveness of these modifications in each
            fishery. NMFS will require 100 percent observer coverage in the
            reopened longline swordfish fishery in the Western Pacific. TOC
            believes that a minimum of 20 percent observer coverage should
            be required throughout the Atlantic, with 100 percent coverage
            for any further gear research. Since 2001, Atlantic observer
            coverage has not met even the 5 percent level required by NMFS
            in order to comply with the ESA. As a result, NMFS estimates
            that several hundred endangered sea turtles were captured in
            excess of authorized levels before the agency took action to
            require further protections.
      --New England Observers.--TOC appreciates this Subcommittee's
            inclusion of report language and $9.3 million for New England
            groundfish observers in fiscal year 2004 and requests level
            funding and the inclusion of the following report language in
            fiscal year 2005: ``The Subcommittee expects NMFS to allocate
            sufficient funds to achieve ten percent observer coverage in
            the New England groundfish fishery, and in the non-directed
            fishery to the extent practicable.''
      --Bycatch Observers.--TOC respectfully requests the Subcommittee
            support level funding at $4.9 million in fiscal year 2005.
                Endangered Species Act--Other Species
        TOC urges the Subcommittee to restore funding in fiscal year 2005
    for Endangered Species Act (ESA) recovery planning and implementation.
    This funding is vital for NMFS to support the recovery of endangered
    marine species like the smalltooth sawfish, respond to listing
    petitions in a timely fashion, conduct Section 7 consultations,
    designate critical habitat and implement recovery plans. Of the 52 ESA-
    listed species managed by NOAA, less than one-third have recovery plans
    in place, most of which are critically out of date. We implore the
    Subcommittee to address this problem and provide $5.7 million in fiscal
    year 2005, $2.0 million above the Administration's request.

                Marine Mammal Protection
        A lack of adequate resources has severely hampered NMFS's ability
    to effectively implement the Marine Mammal Protection Act. TOC is
    deeply disappointed that the Subcommittee cut funding in fiscal year
    2004 and strongly urges the Subcommittee to provide at least $15
    million in fiscal year 2005. This will allow NMFS to fund top priority
    studies identified by the take reduction teams; design and implement
    fishery management plans that will not endanger marine mammals; conduct
    research on population trends, health, and demographics; and carry out
    education and enforcement programs. This funding is one of The Ocean
    Conservancy's highest priorities. In addition, we urge the Subcommittee
    to restore funding for the Marine Mammal Health and Stranding Response
    Program, which was cut in fiscal year 2004, and provide $2 million in
    fiscal year 2005. Die-offs of large numbers of marine mammals,
    including a recent bottlenosed dolphin event in Florida, are of
    significant conservation importance. Determining the cause of these
    events requires not only expertise, but also financial resources.

                Protected Resources Stock Assessments
        The MMPA and the ESA require NMFS to regularly evaluate the status
    of approximately 230 stocks of marine mammals, sea turtles, and other
    marine and anadromous species. Accurate and precise biological
    information is necessary to carry out effective conservation programs,
    promote recovery, evaluate listing status, and authorize scientifically
    defensible incidental take permits. Unfortunately, over 130 marine
    mammal stocks and all U.S. sea turtle populations lack the necessary
    data required under MMPA or ESA. TOC urges the Subcommittee to consider
    providing $5 million in fiscal year 2005, which will begin to address
    the problem.

                National Environmental Policy Act (NEPA) Implementation
        TOC supports the Administration's $8.0 million request for
    implementing NEPA. This funding is critical, as NMFS is required by law
    to consider and document potential environmental impacts of agency
    actions, ranging from complex rulemakings to controversial research
    permits. Of these funds, we urge the committee to dedicate $2 million
    to ensure robust NEPA analyses for marine mammal permitting.

                Highly Migratory Shark Fisheries Research Program
        This effective multi-regional collaborative effort conducts vital
    research on shark and ray populations in the Gulf of Mexico, the
    Atlantic, and the Pacific. This research provides NMFS with critical
    information necessary for effective management and conservation of
    shark fishery resources. TOC appreciates the Subcommittee's rejection
    of the Administration's proposed cut in fiscal year 2004 and requests
    level funding at $2.0 million in fiscal year 2005.

                              DEPARTMENT OF STATE

    Bureau of Oceans and International Environmental and Scientific Affairs
                International Fisheries Commission Account
        TOC requests $200,000 for the State Department to implement the
    landmark Inter-American Convention for the Protection and Conservation
    of Sea Turtles and the Memorandum of Understanding on the Conservation
    and Management of Marine Turtles and their Habitats of the Indian Ocean
    and South East Asia. The United States played a leading role in the
    establishment of these conservation instruments and our continued
    leadership and support will ensure that momentum continues.

                            MARINE MAMMAL COMMISSION

        TOC requests that the Subcommittee support the Marine Mammal
    Commission's base program at $2.25 million in fiscal year 2004,
    $350,000 above the Administration's request.

                           ANTI-ENVIRONMENTAL RIDERS

        TOC urges the Subcommittee to not attach any anti-environmental
    rider to this or any other appropriations bill. In the past, riders
    have been used by Members of Congress to roll back environmental
    protections and prevent NOAA from advancing marine conservation.
        These programs and issues are of the utmost importance to the
    stewardship of the nation's living marine resources. We greatly
    appreciate your support for these programs in the past and look forward
    to continued, responsible funding for these programs in fiscal year
    2005. Thank you for considering our requests.
                                     ______

    Prepared Statement of the National Federation of Community Broadcasters
        Thank you for the opportunity to submit testimony to this
    Subcommittee requesting a $55 million appropriation for the Public
    Telecommunications Facilities Program (PTFP) in fiscal year 2005. As
    the President and CEO of the National Federation of Community
    Broadcasters, I speak on behalf of nearly 250 community radio stations
    and related organizations across the country. This includes the new Low
    Power FM service that has recently been authorized by the FCC. NFCB is
    the sole national organization representing this group of stations,
    which provide service in both the smallest communities and largest
    metropolitan areas of this country. Nearly half of our members are
    rural stations, and half are minority controlled stations.
        In summary, the points we wish to make to this Subcommittee are
    that NFCB:
      --Supports funding for PTFP that will cover the on-going needs of
            public radio and television stations.
      --Supports funding for conversion of public radio and television to
            digital broadcasting.
      --Requests report language to ensure that PTFP utilizes any digital
            funds it receives for radio as well as television needs.
        Community radio supports $55 million in funding for the Public
    Telecommunications Facilities Program in fiscal year 2005. Federal
    support distributed through the PTFP is essential to continuing and
    expanding the public broadcasting service throughout the United States.
    It is particularly critical for rural stations and for those stations
    serving minority communities. PTFP funds new stations, expanding the
    reach of public broadcasting to rural areas and to audiences that are
    not presently served by existing stations. In addition, it replaces
    obsolete and worn out equipment so that the existing stations can
    continue to broadcast high quality programming. Finally, with the
    advent of digital broadcasting, PTFP funding will help with the
    conversion to this new technology.
        We support $55 million in funding to ensure that both the on-going
    program--currently funded in fiscal year 2004 at $22 million--will be
    continued, and that the increase to $55 million will be available to
    help cover the cost of radio and television converting to digital
    transmission. This increase in funding is urgent because the FCC has
    now endorsed a standard for digital radio broadcasting and the
    television conversion deadline is imminent. In addition, commercial
    radio stations are converting to digital transmission and public radio
    should not be left behind.
        Funding from PTFP has been essential to keep public radio stations
    on the air by funding replacement of equipment, often after 20 or more
    years of use. The program is administered carefully to be sure that
    stations are acquiring the most appropriate type of equipment. They
    also determine that equipment is being properly maintained and will not
    fund the replacement of equipment before an appropriate length of time.
    PTFP has also helped bring public radio service to rural areas where it
    is not available. Sometimes they fund translators to expand the
    coverage of an existing station and sometimes they help with the
    planning and equipment needs of a new station. Recently, many of these
    new projects have been for Native American controlled stations on
    Indian Reservations or new local Low Power FM installations.
        Federal funding is particularly critical to stations serving rural
    and underserved audiences which have limited potential for fundraising
    because of sparse populations, limited number of local businesses, and
    low income levels. Even so, PTFP funding is a matching program so that
    the federal money is leveraged with a local commitment of funds. This
    program is a strong motivating factor in raising the significant money
    necessary to replace, upgrade and purchase expensive broadcast
    equipment.
        Community radio supports funding for conversion to digital
    broadcasting for public radio and television. While public television's
    digital conversion is mandated by the Federal Communications
    Commission, public radio is converting to digital to provide more
    public service and to keep up with the market. The digital standard for
    radio has been approved. The initial conversion of radio stations is
    being concentrated in 13 seed markets and it is important that public
    radio be part of this project. Most exciting to public radio is the
    encouraging results of tests that National Public Radio has conducted
    that indicate that stations can broadcast two high quality signals,
    even while they continue to provide the analog signal. The development
    of 2nd digital audio channels will potentially double the public
    service that public radio can provide, particularly to unserved and
    underserved communities.
        We appreciate Congress' direction to the Corporation for Public
    Broadcasting that it utilize its digital conversion fund for both radio
    and television and ask that you ensure that the PTFP funds are used for
    both media. Congress stated, with regard to the fiscal year 2000
    digital conversion funds:

        ``The required (digital) conversion will impose enormous costs on
    both individual stations and the public broadcasting system as a whole.
    Because television and radio infrastructures are closely linked, the
    conversion of television to digital will create immediate costs not
    only for television, but also for public radio stations. Therefore, the
    Committee has included $15,000,000 to assist radio stations and
    television stations in the conversion to digitization . . .'' (S. Rpt.
    105-300)

        Thank you for your consideration of our testimony. If the
    Subcommittee has any questions or needs to follow-up on any of the
    points expressed above, please contact: Carol Pierson, President and
    CEO, National Federation of Community Broadcasters, 1970 Broadway,
    Suite 1000, Oakland, CA 94612. Telephone: 510-451-8200. Fax: 510-451-
    8208. E-mail: carol@nfcb.org.
        The NFCB is a twenty-nine year old grassroots organization which
    was established by and continues to be supported by our member
    stations. Large and small, rural and urban, NFCB member stations are
    distinguished by their commitment to local programming, community
    participation and support. NFCB's nearly 250 members come from across
    the United States, from Alaska to Florida; from every major market to
    the smallest Native American reservation. While urban member stations
    provide alternative programming to communities that include New York,
    Minneapolis, San Francisco and other major markets, rural members are
    often the sole source of local and national daily news and information
    in their communities. NFCB's membership reflects the true diversity of
    the American population: 41 percent of members serve rural communities,
    and 46 percent are minority radio services.
        On community radio stations' airwaves examples of localism abound:
    on KWSO in Warm Springs, Oregon, you will hear morning drive programs
    in their Native language; throughout the California farming areas in
    the central valley, Radio Bilingue programs five stations targeting
    low-income farm workers; in Chevak, Alaska, on KCUK you will hear the
    local weather reports and public service announcements in Cup'ik/Yup'ik
    Eskimo; in Dunmore, West Virginia, you will hear coverage of the local
    school board and county commission meetings; KABR in Alamo, New Mexico
    serves its small isolated Native American population with programming
    almost exclusively in Navajo; and on WWOZ you can hear the sounds and
    culture of New Orleans throughout the day and night.
        In 1949 the first community radio station went on the air. From
    that day forward, community radio stations have been reliant on their
    local community for support through listener contributions. Today, many
    stations are partially funded through the Corporation for Public
    Broadcasting grant programs. CPB funds represent under 10 percent of
    the larger stations' budgets, but can represent up to 50 percent of the
    budget of the smallest rural stations. PTFP funding is a critical
    source of matching funds for these essential community resources.

                                     ______

           Prepared Statement of the Marine Fish Conservation Network

        The Marine Fish Conservation Network (Network) is pleased to share
    its views regarding National Marine Fisheries Service (NMFS) programs
    in the National Oceanic and Atmospheric Administration's (NOAA) fiscal
    year 2005 budget request. We ask that this statement be included in the
    hearing record for the fiscal year 2005 Commerce, Justice, State, and
    the Judiciary Appropriations Bill. We are requesting a budget increase
    of $40.75 million for NMFS programs in the fiscal year 2005 budget to
    be allocated for stock assessments ($15 million), observer programs
    ($12.5 million), essential fish habitat ($10.15 million), and vessel
    monitoring systems ($3.1 million) as described below.
        The Network is a national coalition of more than 160 environmental
    organizations, commercial and recreational fishing associations,
    aquariums, and marine science groups dedicated to conserving marine
    fish and promoting their long-term sustainability. We greatly
    appreciate the funding this Subcommittee has provided for the marine
    fish conservation programs within NMFS in the past and we look forward
    to working with the Subcommittee to enact adequate levels of funding
    for the coming fiscal year.
        There are four areas of the NMFS budget where we believe the
    requested funding levels need to be increased to help the agency
    fulfill its obligations as the federal government's fish management
    agency.

                               STOCK ASSESSMENTS

    Request: Total of $33.9 million
        While we are pleased that NMFS has requested an $800,000 increase
    in the expanding stock assessments line item, we remain concerned that
    funding in this area is insufficient. There currently is a gap of over
    $40 million between what NMFS needs to conduct stock assessments of
    federally managed fish populations and the funding that is available.
    Also, NMFS estimates that under current funding levels it has a deficit
    of 3,811 days at sea, many of which are used to conduct stock
    assessments. The impact of this deficit is demonstrated by the fact
    that the status of three-quarters of all fish species managed by NMFS
    is unknown, largely due to a lack of funding for basic research and
    stock assessments. An additional $15 million, for a total appropriation
    of $33.9 million for expanding stock assessments, would further this
    essential work.

                               OBSERVER PROGRAMS

    Request: Total of $35 million
        As stated by NOAA in their budget summary, the current level of
    funding will only provide observers for 43 fisheries and adequate
    coverage for only 29 of those. Last year Congress took a strong
    positive step to improve the management of America's fish populations
    when it increased the overall fisheries observer budget by almost $11
    million. Observers are an essential fish management tool because they
    provide critical data on the amount and type of ocean wildlife killed
    due to fishing. However, the proposed fiscal year 2005 budget would
    decrease this funding by $2.3 million. A nationwide observer program
    for all federal fisheries would cost approximately $118 million. A
    smart investment toward the sustainability of our nation fisheries
    would be to fully fund a national observer program. Increasing funding
    for observers by $12.5 million to a total of $35 million, would be a
    down payment on that effort.

                             ESSENTIAL FISH HABITAT

    Request: Total of $15 million
        Essential fish habitats (EFH) are those waters and substrate upon
    which fish depend for reproduction and growth. Land-based activities
    and destructive fishing practices threaten the viability of these
    habitats and the sustainability of the fish populations that depend on
    them. While the Sustainable Fisheries Act of 1996 gave NMFS a clear
    mandate to identify and protect EFH, too little has been done to
    protect these habitats. NMFS has approximately $4.85 million in its
    base budget for EFH. This level of funding is not nearly adequate for
    protecting the EFH for the almost 1,000 federally managed fish, nor for
    the research necessary to understand the relationship between habitat
    and healthy fish populations. Increasing funding by $10.15 million to a
    total of $15 million would better equip NMFS to gain the information
    necessary to further refine EFH designations and take action to protect
    EFH from the adverse impacts of fishing.

                           VESSEL MONITORING SYSTEMS

    Request: Total of $12.4 million
        Increasing funding for vessel monitoring systems (VMS) to $12.4
    million would allow for the establishment and implementation of VMS, as
    well as placing VMS transponders on many of the estimated 10,000
    vessels in the U.S. commercial fishing fleet. This represents a $3.1
    million increase over the President's request. VMS programs enhance
    data collection and safety at sea. VMS is beneficial to regulators
    because it will allow officials to know when a fishing vessel is
    violating closed areas or is fishing beyond the end of a regulated
    fishing season.
        Thank you for considering our request for increasing funding for
    these important fish management programs. These increases will go a
    long way toward ensuring that NMFS can better manage and protect our
    nation's fish resources now and for the future.
                                     ______

         Prepared Statement of the Honorable Jimmie Kerr, Pinal County
                                   Supervisor

        Chairman Gregg, Ranking Member Hollings, and distinguished members
    of the Subcommittee, thank you for allowing me to testify today in
    support of a $9 million Cooperative Assistance Grant (CAP) from the
    U.S. Marshals Service (USMS) for expansion of the Pinal County
    detention facility in the fiscal year 2005 Senate Commerce, Justice,
    State and the Judiciary Appropriations bill.
        As you may know, Mr. Chairman, Arizona is the second fastest
    growing state in the nation. And, Pinal County is the fastest growing
    county per capita in the state. Unfortunately, with increased
    population comes increased crime. Simply put, our jails and prisons are
    grossly overcrowded and each and every year this problem is only
    exacerbated by our growing population. Our county has come up with a
    unique proposal that will repay the federal government, help the
    Marshals Service obtain much needed additional bed space, and, at the
    same time, relieve our county's overcrowded prison population. This
    proposal would be a win-win for the federal government and Pinal
    County.
        Under the proposal, the CAP grant would enable Pinal County to
    build an additional 500 unit pod onto its new detention facility. In
    return, the USMS would be guaranteed an additional 200 beds in the
    Pinal County facility.
        Pinal County would reduce the established USMS per diem rate for
    all inmates in the facility by $18.60 per day until the grant is fully
    repaid to the USMS. It is estimated that USMS would recover the entire
    $9 million in less than seven years, which would save the USMS the
    total annual operating cost equivalent of approximately 153,577
    prisoner days over this roughly seven year period.
        The reduced per diem rate, while working to pay back the USMS,
    would also help fund the additional operating costs of the new facility
    to the tune of about $2.92 million per year (200 inmates  $40
     365 days = $2,920,000). In addition, the USMS would save
    nearly $1.4 million per year over the next seven years for operating
    expenditures under this unique proposal ($18.60  200
    365 = $1,357,800).
        Again, our detention center facilities are way too overcrowded and
    Pinal County's approach to this problem benefits both the federal
    government and the county. At a time when the federal deficit threatens
    fiscal solvency, this plan responds to those fiscal demands by repaying
    the federal government for all the money that is borrowed.
        Therefore, I strongly urge the Subcommittee to support Pinal
    County's request for a $9 million CAP grant to expand its overcrowded
    facility. Thank you in advance for your consideration of this request.
                                     ______

     Prepared Statement of the Regional Information Sharing Systems (RISS)
                                    Program

        The Regional Information Sharing Systems (RISS) Program
    respectfully requests that Congress appropriate for fiscal year 2005,
    $50 million to continue their support in combating terrorism, drug
    trafficking, and organized crime.
        These funds will enable RISS to continue services to state and
    local law enforcement agencies to identify, target, prosecute, and
    remove criminal conspirators involved in terrorism activity, drug
    trafficking, organized criminal activity, criminal gangs, and violent
    crime that span multijurisdictional boundaries. Funds will allow RISS
    to continue to support the investigation and prosecution efforts of
    over 6,600 local, state, tribal, and federal law enforcement member
    agencies across the nation comprising over 744,000 sworn law
    enforcement personnel.
        Through funding from Congress, RISS has implemented and operates
    the only secure Web-based nationwide network--called riss.net--for
    communications and sharing of criminal intelligence by local, state,
    tribal, and federal law enforcement agencies. Funds will allow RISS to
    upgrade the technology infrastructure and resources to support
    increased use and reliance on the system by member law enforcement
    agencies and support the integration of other systems connected to
    riss.net for information sharing and communication. Using Virtual
    Private Network technology, the law enforcement users access the public
    Internet from their desktops and have a secure connection over the
    private riss.net intranet to all RISS criminal intelligence databases
    and resources. RISS member law enforcement agencies accessed riss.net
    an average of 3.6 million times per month during fiscal year 2003.
    Riss.net is a proven, highly effective system that improves the quality
    of criminal intelligence information available to law enforcement
    officers to make key decisions at critical points in their
    investigation and prosecution efforts.
        The Office of Justice Programs (OJP), Regional Information Sharing
    Systems (RISS) is a federally funded program comprised of six regional
    intelligence centers. The six centers provide criminal information
    exchange and other related operational support services to local,
    state, tribal, and federal law enforcement agencies located in all
    fifty states, the District of Columbia, U.S. territories, Canada,
    Australia, and England. These centers are:
      --Middle Atlantic-Great Lakes Organized Crime Law Enforcement Network
            (MAGLOCLEN).--Delaware, District of Columbia, Indiana,
            Maryland, Michigan, Pennsylvania, Ohio, New Jersey, and New
            York, as well as Australia, Canada, and England.
      --Mid-States Organized Crime Information Center (MOCIC).--Illinois,
            Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota,
            South Dakota, and Wisconsin, as well as Canada.
      --New England State Police Information Network (NESPIN).--
            Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island,
            and Vermont, as well as Canada.
      --Regional Organized Crime Information Center (ROCIC).--Alabama,
            Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi,
            North Carolina, Oklahoma, South Carolina, Tennessee, Texas,
            Virginia, and West Virginia, as well as Puerto Rico and the
            U.S. Virgin Islands.
      --Rocky Mountain Information Network (RMIN).--Arizona, Colorado,
            Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming, as well
            as Canada.
      --Western States Information Network (WSIN).--Alaska, California,
            Hawaii, Oregon, and Washington, as well as Canada, Guam, and
            Australia.
        RISS is a force multiplier in fighting increased violent criminal
    activity by terrorists, drug traffickers, sophisticated cyber
    criminals, street gangs, and emerging criminal groups that require a
    cooperative effort by local, state, tribal, and federal law
    enforcement. There is an increasing communications sophistication by
    the criminal networks, including terrorists, and a rising presence of
    organized and mobile narcotics crime. Interagency cooperation in
    sharing information has proven to be the best method to combat the
    increasing criminal activity in these areas. The RISS centers are
    filling law enforcement's need for rapid, but controlled, sharing of
    information and intelligence pertaining to known or suspected
    terrorists, drug traffickers, and other criminals. Congress funded the
    RISS Program to address this need as evidenced by its authorization in
    the Anti-Drug Abuse Act of 1988.
        The success of RISS has been acknowledged and vigorously endorsed
    by the International Association of Chiefs of Police (IACP), as well as
    other national law enforcement groups such as the National Sheriffs'
    Association (NSA) and the National Fraternal Order of Police (NFOP).
        RISS is operating current state-of-the-art technical capabilities
    and systems architecture that allow local, state, tribal, and federal
    law enforcement member agencies to interact electronically with one
    another in a secure environment. The RISS system has built-in
    accountability and security. The RISS secure intranet (riss.net)
    protects information through use of encryption, smart cards, Internet
    protocol security standards, and firewalls to prevent unauthorized
    access. The RISS system is governed by the operating principles and
    security and privacy standards of 28 CFR Part 23 (Criminal Intelligence
    Systems Operating Policies). The technical architecture adopted by RISS
    requires proper authorization to access information, but also provides
    flexibility in the levels of electronic access assigned to individual
    users based on security and need-to-know issues. Riss.net supports
    secure e-mail and is easily accessible using the Internet. This type
    system and architecture is referenced and recommended in the General
    Counterdrug Intelligence Plan (GCIP) and is endorsed by the National
    Criminal Intelligence Sharing Plan (NCISP).
        The FBI Law Enforcement Online (LEO) system and the RISS system
    achieved interconnection of the two systems in 2002 for distribution of
    sensitive but unclassified homeland security information to authorized
    users of both LEO and RISS. The value of this interconnection was
    recognized in 2003 by the National Criminal Intelligence Sharing Plan,
    which is sponsored by the U.S. Department of Justice. The Plan
    designates the RISS/LEO interconnection as the initial sensitive but
    unclassified communications backbone for implementation of a nationwide
    criminal intelligence sharing capability. This nationwide sensitive but
    unclassified communications backbone supports fully functional,
    bidirectional information sharing capabilities that reuse existing
    local, state, tribal, regional, and federal infrastructure investments.
    The Plan recommends that interoperability of existing systems with the
    RISS/LEO communications capability proceed immediately to leverage
    information sharing systems and expand intelligence sharing. The
    International Association of Chiefs of Police, the U.S. Attorney
    General, and other federal agency administrators endorse the Plan and
    have adopted it as a national model for all law enforcement agencies,
    organizations, and associations. RISS officials are working to
    implement the Plan recommendations within current budgetary restraints.
        In addition, RISS has recognized that the need for exchange of
    information extends beyond law enforcement and the RISS/LEO virtual
    single system. During 2003, RISS implemented a service available over
    riss.net to link law enforcement with the public safety and first
    responder agencies involved in securing our nation from terrorism. The
    service is known as the RISS Anti-Terrorism Information Exchange, or
    RISS ATIX, and includes a secure Web site, secure bulletin board, and
    secure e-mail. Through this capability, users can post timely threat
    information, view and respond to messages posted by government, police,
    fire, emergency, and infrastructure security personnel, and collaborate
    with law enforcement partners. These additional groups of users include
    public service, public safety, emergency management, utility, and other
    critical infrastructure personnel that have traditionally not been
    served by RISS. RISS began this service with limited funding to provide
    a rapid, secure means for first responder agencies to share
    information.
        RISS has entered into a partnership with the High Intensity Drug
    Trafficking Areas (HIDTA) to electronically connect all of the HIDTAs
    to riss.net for communications and information sharing. Currently, 16
    HIDTAs are electronically connected as nodes to riss.net, and RISS is
    working to complete the connection of the remaining HIDTAs. Twelve
    state agencies are currently connected as nodes on riss.net. An
    additional nine state law enforcement agencies are pending connection
    as nodes to share information, including terrorism and homeland
    security information, using riss.net.
        The Executive Office for United States Attorneys (EOUSA) has
    connected staff to riss.net at each of the 93 U.S. Attorneys' Offices
    (USAO) Anti-Terrorism Task Forces throughout the United States. Staff
    at the U.S. Department of Justice, Criminal Division, has connected to
    riss.net. RISS and the El Paso Intelligence Center (EPIC) officials
    entered into a partnership and have electronically connected EPIC as a
    node to riss.net to capture clandestine laboratory seizure data from
    RISS state and local law enforcement member agencies. Other systems
    connected to riss.net include the Law Enforcement Intelligence Unit
    (LEIU), the National Drug Pointer Index (NDPIX), the National White
    Collar Crime Center (NW\3\C), the National Law Enforcement
    Telecommunication System (NLETS), and the Criminal Information Sharing
    Alliance (CISA), formerly the Southwest Border States Anti-Drug
    Information System (SWBSADIS). The United States Postal Inspection
    Service (USPIS) is currently pending connection to riss.net as a node.
    The National Drug Intelligence Center (NDIC) uses the RISS network as a
    communications mechanism for publishing counterdrug intelligence
    products to federal, state, local, and tribal law enforcement members.
        The integration of the above-mentioned state and federal agencies
    and systems with the riss.net secure nationwide communications backbone
    has increased the sharing of criminal intelligence and alerts and
    homeland security information within their own agencies and among the
    other agencies. The operation of RISS ATIX provides first responders
    and critical infrastructure personnel with a secure means via riss.net
    to communicate, share information, and receive terrorist threat
    information.
        Due to the interest of many law enforcement agency systems to
    electronically connect to the RISS/LEO backbone, RISS has developed a
    security architecture solution to allow users with various types of
    security credentials to connect and traverse riss.net to share
    information and access resources without being required to use the RISS
    specific security credentials. Adequate funding is needed to implement
    the technology.
      --RISS is operating an unprecedented nationwide network for
            communicating critical information in a secure environment to
            both law enforcement and other first responders. To support the
            increased needs of these personnel and continue to maintain the
            RISS system and demand for RISS services and resources, RISS is
            requesting an increase in funding to $50 million for 2005.
        In view of today's increasing demands on federal, state, local, and
    tribal law enforcement budgets, requests for RISS services have risen.
    This support of law enforcement has had a dramatic impact on the
    success of their investigations. Over the three-year period 2001-2003,
    RISS generated a return by member agencies that resulted in 11,701
    arrests, seizure of narcotics valued at over $189 million, seizure of
    over $9.8 million in currency, and recovery or seizure of property
    valued at over $31 million.
        RISS continues to work with federal, state, local, and tribal
    agencies in their efforts to combat the menace of drugs on our street,
    and the significant influence of youth gangs in the distribution and
    sale of drugs. RISS is working to foster relationships with public
    safety and first responder agencies to increase information sharing on
    terrorism and critical infrastructure matters among those groups and
    with law enforcement.
        The Bureau of Justice Assistance administers the RISS Program and
    has established guidelines for provision of services to member
    agencies. The RISS regional intelligence centers are subject to
    oversight, monitoring, and auditing by the U.S. Congress; the General
    Accounting Office, a federally funded program evaluation office; the
    U.S. Department of Justice, Bureau of Justice Assistance; and state and
    local governmental units. The Bureau of Justice Assistance also
    monitors the RISS centers for 28 CFR Part 23 compliance. This
    regulation emphasizes adherence to individual constitutional and
    privacy rights and places stricter controls on the RISS intelligence
    sharing function than those placed on most federal, state, or local
    agencies. RISS firmly recognizes the need to ensure that individuals'
    constitutional rights, civil liberties, civil rights, and privacy
    interests are protected throughout the intelligence process. In this
    regard, RISS officials recently adopted a RISS Privacy Policy to
    further strengthen their commitment and support of 28 CFR Part 23 and
    protection of individual privacy rights.
        It is respectfully requested that the Congress fully fund the RISS
    Program as a line item in the Congressional budget, in the requested
    amount of $50 million. Local and state law enforcement, who depend on
    the RISS centers for information sharing, training, analytical support,
    investigative funding, and technical assistance, are experiencing
    increased competition for decreasing budget resources. It would be
    counterproductive to require the RISS members from state and local
    agencies to self-fund match requirements, as well as to reduce the
    amount of BJA discretionary funding. The state and local agencies
    require more, not less, funding to fight the nation's crime/drug
    problem. The RISS Program cannot make up the decrease in funding that a
    match would cause, and it has no revenue source of its own. Cutting the
    RISS appropriation by requiring a match should not be imposed on the
    program.
        We are grateful for this opportunity to provide the committee with
    this testimony and appreciate the support this committee has
    continuously provided to the RISS Program.
                                     ______

          Prepared Statement of the Institute of Makers of Explosives
    Interest of the Institute of Makers of Explosives (IME)

        The IME is the safety and security association of the commercial
    explosives industry. Our mission is to promote safety and the
    protection of employees, users, the public and the environment; and to
    encourage the adoption of uniform rules and regulations in the
    manufacture, transportation, storage, handling, use and disposal of
    explosive materials used in blasting and other essential operations.
    ATF is one of the agencies that plays a primary role in assuring that
    explosives are identified, tracked, and stored only to and by
    authorized persons. The ability to manufacture, distribute and use
    these products safely and securely is critical to this industry. With
    this perspective, we have carefully reviewed the Administration's
    fiscal year 2005 budget request and have the following comments.
    Performance Measures Fall Short of Strategic Goals
        The commerce of explosives is one of the nation's most heavily
    regulated activities. ATF plays a key role in this regulatory scheme
    through its implementation of Federal Explosives Law. To ensure that
    the Bureau meets its statutory responsibilities, ATF has identified
    goals and performance standards that can measure areas of progress or
    areas needing attention. With regard to its explosives mission, the
    Bureau states that its strategic goals are to ``counter crimes of
    violence'' by effective enforcement of Federal Explosives Law (FEL) and
    to ``protect public safety'' through regulation of the explosives
    industry and explosives safety efforts.\1\ To accomplish these goals,
    ATF sets a number of performance measures.\2\ Regrettably, with two
    exceptions, these measures do not identify outcome measures as required
    by Government Results and Performance Act.
    ---------------------------------------------------------------------------
        \1\ DOJ Fiscal Year 2005 Budget Summary, page ATF-29.
        \2\ DOJ Fiscal Year 2005 Budget Summary, page ATF-35.
    ---------------------------------------------------------------------------
        The two exceptions are the measures to ``investigate all reported
    explosives thefts'' and to respond to all ``telephone inquiries from
    industry [within] 72 hours.'' \3\ We support these measures. However,
    we question ATF's determination to limit its efforts to timely respond
    to inquiries from industry to those inquiries received by telephone.
    This measure should be expanded to include other electronic forms of
    communication, as well as letter correspondence.
    ---------------------------------------------------------------------------
        \3\ DOJ Fiscal Year 2005 Budget Summary, page ATF-35.
    ---------------------------------------------------------------------------
        This leaves a number of measures with questionable outcomes. Under
    its goal to ``counter crimes of violence,'' the Bureau states that it
    will open some yet to be determined number of explosives investigations
    and related to this the ``number of [explosives] defendants
    convicted.'' However, if ATF's enforcement initiatives were working, a
    more meaningful outcome measure should be the number of investigations
    closed or otherwise resolved, irrespective of whether a conviction was
    obtained. Under its goal to ``protect public safety,'' the Bureau
    states that it will conduct 33 percent of its universe of explosives
    licensee/permittees, which it projects to be about 4,000, and that it
    will resolve up to 850 unsafe explosives conditions discovered by its
    inspectors. In fact, the statutory standard for inspection of licensee/
    permittees is, with the exception of ``limited permittees,'' to inspect
    all licensee/permittee applicants prior to the issuance of such license
    or permit.\4\ Thus the appropriate inspection measure should be the
    percentage of inspections performed within the timeframe required by
    law. ATF's standard to resolve up to 850 unsafe explosives conditions
    is also inadequate. ATF has used this estimate at least since the
    Administration's fiscal year 2003 budget request when it suggested that
    850 corrective actions were less than half the Bureau's current
    workload.\5\ The Administration's fiscal year 2005 request does not
    disclose what the Bureau's current corrective action workload is.
    Without this context, the 850 corrective action standard has no basis.
    If ATF's compliance initiatives are working, however, a more meaningful
    outcome measure should be to show a decreasing trend in the percent of
    non-compliance practices that industry fails to rectify after
    corrective actions have been issued.
    ---------------------------------------------------------------------------
        \4\ 18 U.S.C. 843(b)(4)(A).
        \5\ Statement of Bradley A. Buckles, Director, ATF, Subcommittee on
    Treasury, Postal Service and General Government, House Appropriations
    Committee, February 28, 2002, page 17. (Fiscal year 2001--1,813
    violations; 1st quarter fiscal year 2002--1,763 violations.)
    ---------------------------------------------------------------------------
    Concerns about the Adequacy of Budget Resources
        To accomplish the missions of ATF's explosives and arson program,
    the Administration requests $231.2 million, an increase of $16.1
    million over fiscal year 2004, but only $2.6 million over current
    services.\6\ Nearly half of this new money, $1.1 million is for partial
    funding of 62 new positions (31 FTE).\7\ All of these FTP would be
    brought in as inspectors.\8\ Still, the fiscal year 2005 budget request
    raises questions about ATF's ability to perform assigned functions.
    ---------------------------------------------------------------------------
        \6\ DOJ Fiscal Year 2005 Budget Summary, page ATF 29. About 9
    percent of this request, $20.7 million, is programmed for information
    and technology enhancements, basically a level funding of the fiscal
    year 2004 allocation for these functions.
        \7\ DOJ Fiscal Year 2005 Budget Summary, page ATF-A6
        \8\ DOJ Fiscal Year 2005 Budget Summary, page ATF-A5.
    ---------------------------------------------------------------------------
      --Baseline Data.--We cannot comment on the adequacy of ATF's services
            to industries other than our own. Still, the budget request is
            difficult to evaluate in terms of resources because it does not
            disclose information about its current workload, with the
            exception of reports due to Congress. Even that is incomplete
            as noted below. To better justify the Bureau's budget
            submission, ATF should be asked to provide information on: the
            number of investigations that are open, the date of the oldest
            and the number of new cases opened in the last fiscal year; the
            number of inspections that will be required to be preformed do
            to permit/license renewals; the number of times ATF failed and
            for what reason to issue a permit or license within the 90-day
            timeframe required by law; the number of background checks that
            ATF has performed, within what average timeframe, and of those,
            how many individuals failed to receive clearance, and of those,
            how many appealed the Bureau's findings; the number of
            rulemakings outstanding and their priority; turnover rates
            among agents and inspectors; and the number of persons and from
            what agencies that are trained through ATF programs. Absent
            information of this type, it is unclear how Congress can
            effectively oversee ATF's explosives operations and determine
            the adequacy of its budget request.
      --Inspections.--As noted above, the statutory standard for inspection
            of licensee/permittees is, with the exception of ``limited
            permittees,'' to inspect the licensee/permittee applicant prior
            to the issuance of such license or permit. ATF has not met this
            standard in all instances. We would hope, with the addition of
            62 inspector positions, that this situation will improve.
      --Rulemakings.--The last publication of a ``final'' rule of
            consequence to the explosives industry was in 1998.\9\
            Currently, ATF has six open rulemakings of interest and concern
            to the explosives industry.\10\ The oldest of these was
            proposed in 1997. Several are a result of the enactment of the
            Safe Explosives Act (SEA) in 2002. Our primary interface with
            ATF is through efforts to comply with the Bureau's regulations.
            Two of these rulemakings, which implement the SEA, were issued
            as ``interim final rules,'' which allows rules to be enforced
            without standard input as to the effect of the rule on the
            regulated community. Subsequently, IME raised a number
            interpretative questions and concerns about these rules which
            are critical to the continued commerce of commercial
            explosives. Yet, ATF does not project finalizing these rules
            until February 2005.
    ---------------------------------------------------------------------------
        \9\ 63 FR 44999 (August 24, 1998).
        \10\ Semiannual Agenda, 68 FR 73169-72 (December 22, 2003).
    ---------------------------------------------------------------------------
          Another pending rulemaking deserving of comment stems from a
            loophole in current regulations that allows the importation of
            explosives with no marks of manufacture identification.
            Conversely, ATF regulations require domestic manufacturers to
            mark all explosive materials they manufacture for sale or
            distribution for reasons of security and safety.\11\ ATF has
            emphasized that the failure to apply these markings inhibits
            law enforcement from tracking explosives to the source, and
            proving criminal activity. The marks enhance safety because
            some explosives deteriorate over time and the code allows users
            to keep inventory fresh. Additionally, the marks are one of
            industry's ``QA/QC'' tools, allowing the manufacturer the
            ability to trace product quality problems back to the point of
            manufacture and distribution. In 2000, IME petitioned ATF for a
            rulemaking to close this loophole as it applies to high
            explosives and blasting agents.\12\ Our petition would make it
            unlawful for any licensee to import such explosive materials
            without marking all explosives materials in the same manner
            prescribed by the ATF for domestic manufacturers. ATF finally
            published a proposed rulemaking on this issue in October
            2002.\13\ In light of the priority given to strengthening
            homeland security, we have not understood the lack of urgency
            given to this rulemaking. In the latest edition of the
            Administration's semi-annual regulatory agenda, ATF has pushed
            back for the third time its ``deadline'' for completing this
            rulemaking.\14\ Now, four years after the filing of our initial
            petition, we ask you to insist that ATF not let this target
            release date slip.
    ---------------------------------------------------------------------------
        \11\ 27 CFR 55.109(a).
        \12\ March 7, 2000 and August 2, 2000.
        \13\ 67 FR 63862 (October 16, 2002).
        \14\ Semiannual Agenda, 68 FR 73170 (December 22, 2003).
    ---------------------------------------------------------------------------
      --Reports.--ATF acknowledges three reports that are due to House and
            Senate Appropriations Committees.\15\ Two of the reports are
            required ``prior'' to the obligation of the $14 million fiscal
            year 2004 allocation to implement the SEA or the National
            Explosives Licensing Center which will process the SEA license/
            permit applications. The release of these funds is crucial to
            the effective and efficient implementation of the SEA. We are
            concerned by ATF's lack of timeliness in submitting these
            reports given that the provisions of the SEA have been
            effective since May 24, 2003. According to ATF's estimate,
            nearly a year will have passed between the effective date of
            the SEA and the ``target'' date of the delivery of these
            reports to Congress. We find this delay without
            justification.\16\ There are other reports due Congress from
            the ATF and are not mentioned in the Bureau's budget request of
            particular concern to IME. The Antiterrorism and Effective
            Death Penalty Act of 1996 charged ATF, which was delegated the
            authority, to report on the feasibility of tagging explosive
            materials for purposes of detection and/or identification,
            rendering common chemicals used to manufacture explosive
            materials inert, and imposing controls on certain precursor
            chemicals used to manufacture explosive materials.\17\ We
            understand that ATF intends to provide two reports to meet this
            mandate. One will address issues related to the tagging, and in
            particular ``identification'' tagging, of explosive materials.
            The other will address issues related to the enhanced control
            of ammonium nitrate (AN)--a precursor chemical used to
            manufacture explosives. We have been told by ATF that the
            ``AN'' report is pending at DOJ and that the ``Taggant'' report
            has yet to clear the Bureau. We are particularly concerned
            about the content and recommendations potentially contained in
            the Taggant report. ATF initially planned to submit the report
            to Congress by the end of fiscal year 2001. IME had worked with
            ATF to ensure that the Bureau had the industry data required.
            Throughout the process ATF made efforts to keep us informed of
            the work on the study and preliminary findings. As late as
            August 2001, we were led to believe that ATF's research had
            concluded, as did contemporary assessments by the National
            Academy of Sciences, that identification taggants cannot be
            supported with current technology. However, following the
            events of September 11, 2001, ATF informed us that the report
            had been pulled back and its conclusions are being reassessed.
            As tragic and sobering as the events of September 11th are, it
            does not alter the fact that current technology does not
            support identification taggants. In the Subcommittee's
            oversight capacity, ATF should be asked about the release date
            of the 1996-mandated report and, after seven years of study,
            what if any of the reports recommendations have been changed
            due to the events of September 11th.
    ---------------------------------------------------------------------------
        \15\ DOJ Fiscal Year 2005 Budget Summary, page ATF-A10.
        \16\ While the President did not enact the law requiring these
    reports until January 23, 2004, ATF was aware of congressional
    intentions with regard to such reports as early as September 5, 2003.
    In view of the fact that the Bureau has been enforcing the SEA since
    May 2003, we would have thought that by September 2003 and certainly
    January 2004, ATF would have a clear idea of its implementation funding
    needs and priorities.
        \17\ Public Law 104-132, Section 732.
    ---------------------------------------------------------------------------
          ATF has also from time to time, but we hoped annually, reported
            on arson and explosives incidents. IME uses this data to inform
            the industry and the public about these incidents, trends they
            may suggest, and lessons we may learn. However, ATF's last
            published version of this document is dated, reporting
            incidents occurring in 1997. A similar, though not identical,
            report is issued by the Federal Bureau of Investigation (FBI).
            Since ATF released its 1997 report, the FBI has released a 1998
            and a 1999 bombing incident report. When IME last asked ATF
            about the anticipated release date of its report, we were told
            that it was being held up pending a reconciliation of data
            between the Bureau and the FBI. It begs the questions of
            whether the ATF report will continue in its current or a
            revised form now that the Bureau has been transferred to DOJ,
            home of the FBI, and the FBI has been, with more regularity,
            producing a type of explosives incident report.
          The future of the ATF Arson and Explosives Incident Report is but
            a small example of overlaps and duplications that may exist
            between the Bureau and other law enforcement programs at DOJ,
            and provides a segway to a report we are all anxious to review.
            In the conference report to the fiscal year 2004 Consolidated
            Appropriations Act, Congress directed DOJ to submit with its
            fiscal year 2005 budget request ``a proposal to better blend
            and eliminate duplication of explosives training and other law
            enforcement programs at the [DOJ].'' \18\ In this regard, we
            note that the Administration's fiscal year 2005 budget request
            continues to carry forward language from earlier budget
            requests that ``no funds made available by this or any other
            Act may be used to transfer the functions, missions, or
            activities of the [ATF] to other agencies or Departments in
            fiscal year 2005.'' \19\ This language appears to be at odds
            with any attempt to consolidate and streamline programs.
            Meanwhile, we are anxious to understand what, if any,
            recommendations in this report may impact how commercial
            explosives are overseen, regulated and enforced within DOJ, and
            once understanding these recommendations, reserving the
            opportunity to provide additional comment to the Subcommittee.
    ---------------------------------------------------------------------------
        \18\ Conf. Rept. 108-401, to accompany H.R. 2673 (Public Law 108-
    199).
        \19\ DOJ Fiscal Year 2005 Budget Summary, page ATF-13.
    ---------------------------------------------------------------------------
    Conclusion
        The manufacture and distribution of explosives is accomplished with
    a remarkable degree of safety. We recognize the important role played
    by ATF in helping our industry achieve and maintain safe and secure
    workplaces. Industry and the public trust that ATF has the resources to
    fulfill its regulatory responsibilities. We, therefore, strongly
    recommend full funding for ATF's explosives program.
                                     ______

       Prepared Statement of the Confederated Tribes of the Warm Springs
                             Reservation of Oregon

        Mr. Chairman, I, Garland Brunoe, Chairman of the Tribal Council of
    the Confederated Tribes of the Warm Springs Reservation of Oregon,
    hereby submit this testimony regarding the fiscal year 2005
    appropriation for the U.S. Department of Justice. All of our fiscal
    year 2005 requests address programs in the Justice Department's Office
    of Justice Programs, and are summarized below: (1) Restore State and
    Local Law Enforcement Assistance funding for Indian tribes in the
    amount of $15 million; (2) increase Tribal COPS funding by $10 million
    to $30 million; and (3) provide $20 million for Tribal Juvenile Justice
    programs for fiscal year 2005.
        Our requests are more fully discussed below.

    Restore State and Local Law Enforcement Assistance funding for Indian
            tribes in the amount of $15 million
        The fiscal year 2005 Department of Justice budget proposes to
    completely eliminate funding for the State and Local Law Enforcement
    Assistance program, which in fiscal year 2004 included $2 million for
    tribal jail construction, $8 million for tribal courts, and $5 million
    for tribal alcohol and substance abuse prevention and treatment
    programs. All of these programs are critical to public safety and
    stability on Indian reservations. Our own jail, designed and built by
    BIA, is out of compliance with federal standards and needs to be
    substantially remodeled or rebuilt. Tribal courts are a key link in
    tribal justice systems and essential to tribal sovereignty, and this
    funding has been the only steady source of federal support, even as
    small as it has been, for our court systems. And alcohol and substance
    abuse plague our communities and significantly contribute to crime.
    Accordingly, we request that fiscal year 2005 funding for Indian tribes
    in the State and Local Law Enforcement Assistance program be restored
    to at least their fiscal year 2004 levels.

    Increase Tribal COPS funding by $10 million to $30 million
        Indian tribes face significant difficulties in providing law
    enforcement. Reservations are often rural and sparsely populated across
    great distances. Unemployment is often high and infrastructure
    inadequate. Many tribal economies are modest, and cannot on their own
    support much in the way of law enforcement. The Bureau of Indian
    Affairs law enforcement budget is also insufficient. As a result,
    crime, including violent crime, is often exceptionally high in Indian
    Country. Within the last ten years, alarming reports on reservation law
    enforcement and public safety prompted support increases within BIA law
    enforcement and also within the Department of Justice's Community
    Oriented Policing Systems programs. The COPS program is a vital
    component of law enforcement on many reservations, as demonstrated by
    its retention within the drastically cut-back fiscal year 2005 national
    COPS program. Accordingly, we request that the Tribal COPS program be
    increased to $30 million for fiscal year 2005, an increase of $5
    million over fiscal year 2004 and $10 million over the Administration's
    fiscal year 2005 request.

    Provide $20 million for Tribal Juvenile Justice programs for fiscal
            year 2005
        The fiscal year 2005 Department of Justice budget proposes to
    completely eliminate funding for the Juvenile Justice Program, which in
    fiscal year 2004 included $10 million for tribal youth. Tribal youth
    often must confront joblessness and poverty, which can lead to despair
    and delinquency. Today across the United States, Native American young
    people already are among the most troubled, and particular care and
    supervision are essential. A recent audit of Juvenile-related programs
    and services at Warm Springs revealed a dramatic lack of services and
    resources available to work with our troubled youth and correct
    delinquent behavior. Without assistance to address these problems, the
    already devastating circumstances for the young people in our
    communities will only accelerate. Accordingly, we request that the
    Tribal Youth funding in Juvenile Justice be doubled from its fiscal
    year 2004 amount of $10 million to $20 million.
        Mr. Chairman, that concludes the Confederated Tribes of the Warm
    Springs Reservation's appropriations requests of your Subcommittee for
    fiscal year 2005. Thank you.
                                     ______

                   Prepared Statement of The Asia Foundation

        Mr. Chairman: The Asia Foundation is grateful for the strong
    support of the Congress, including the appropriation of $13 million for
    fiscal year 2004. Past committee report language has commended our
    grant making role in Asia and the Appropriations Committees have
    encouraged the Foundation to expand its programs in predominantly
    Muslim countries, including Afghanistan, Indonesia, Pakistan and
    Mindanao in the Philippines. Regrettably, the Administration decided to
    use their fiscal year 2004 requests as the baseline for their fiscal
    year 2005 requests. That resulted in a low fiscal year 2005 request for
    the Foundation. We respectfully urge the Committee to sustain its
    support for the vital work of the Foundation on behalf of U.S.
    interests in this uniquely complex region, particularly as we deepen
    our involvement in front line states, such as Afghanistan, Pakistan and
    Indonesia and India, a regional power of increasing importance to U.S.
    interests in South Asia. The Asia Foundation is requesting a modest
    increase to $15 million, below the $18 million authorized by the State
    Department authorization bill recently passed by the House.
        An appropriation of $15 million would allow The Asia Foundation to
    strengthen programs it has begun in recent years with Congressional
    encouragement, notably in the areas of protecting women and children
    against trafficking, promoting women's political and economic
    participation, strengthening Constitutional democracy and restoring a
    functioning educational system in Afghanistan, promoting tolerance in
    predominantly Muslim nations like Indonesia, protecting human rights,
    and strengthening civil society throughout the region.
        We are cognizant of the fiscal year 2005 budgetary pressures on the
    Committee. However, any cut below the current funding level for the
    Foundation would curtail important work, in some cases, just as the
    program investments over the past few years have reached maturity, and
    positive results are attainable. The Asia Foundation is the only
    American organization with a distinctive history of fifty years of
    presence and engagement in Asia, delivering concrete programs that
    address some of Asia's most pressing needs. Curtailment of Foundation
    programs in these key areas could wrongly signal to people in the
    region a loss of U.S. commitment to democratic governance, civil
    society and human rights in Asia.

                                    OVERVIEW

        The United States and Asia face new challenges, complicated by the
    war on terrorism and fragile democracies in Afghanistan, Indonesia,
    Pakistan, and even in Thailand and Korea. More than ever, we must
    support political stability and economic reform, and give attention to
    countries where recent events have complicated bilateral relations,
    specifically in countries that have been traditional allies of the
    United States, and in countries with predominantly Muslim populations.
    Challenges to governance in the newly democratic countries of Asia,
    including Thailand, the Philippines, Indonesia, and Korea, require
    different approaches than in countries struggling to attain democracy,
    peace and stability, such as Afghanistan, Nepal, and Pakistan.
    Continued political instability in Indonesia, lack of a peace
    settlement in the Southern Philippines, and the emergence of regional
    terrorist networks threaten regional stability. Human rights abuses,
    and impunity for perpetrators continue throughout the region. Even
    though women in Asia have made gains in many places, such as Cambodia,
    Thailand and Nepal, they are still subject to economic and political
    inequities. In the worse cases, they are victims of trafficking and
    abuse.
        Working together with Asian organizations as a trusted partner
    through a network of 17 offices in Asia, The Asia Foundation is a
    nongovernmental, nonpartisan American asset combining local
    credibility, a nuanced understanding of the issues facing each country,
    and unparalleled access and relationships with government,
    nongovernmental groups, and the private sector. The Asia Foundation is
    a well recognized American organization, but its programs are grounded
    in Asia, helping to solve local problems in cooperation with Asian
    partners. The Foundation combines a long-term view of policy reform and
    development in Asia, and a rapid response capacity through grant making
    and expert staff to deliver short-term, high impact programs. In
    addition to the importance of these programs to the lives of people in
    Asia, the Foundation's efforts also make an important and tangible
    contribution to public diplomacy for the United States.

                         THE ASIA FOUNDATION'S MISSION

        The Asia Foundation's core objectives are central to U.S. interests
    in the Asia-Pacific region:
      --Democracy, human rights and the rule of law: developing and
            strengthening democratic institutions and encouraging an
            active, informed and responsible nongovernmental sector;
            advancing the rule of law; and building institutions to uphold
            and protect human rights;
      --Open trade and investment: supporting trade, investment and
            economic reform at the regional and national levels;
      --Women's political participation: encouraging women's participation
            in public life; protecting women's rights and supporting
            advocacy training; prevention of trafficking and supporting
            efforts to protect and provide shelter to victims;
      --Peaceful and stable regional relations: promoting United States-
            Asian dialogue on security, regional economic cooperation, law
            and human rights.
        The Foundation remains faithful to its grant-making role, steadily
    building institutions and strengthening Asian leadership. Foundation
    assistance supports training, technical assistance, and seed funding
    for new, local organizations, all aimed at promoting reform, building
    Asian capacity and strengthening United States-Asia relations.
    Foundation grantees can be found in every sector in Asia, leaders of
    government and industry and at the grassroots level, in an increasingly
    diverse civil society.
        The Foundation provides necessary technical assistance, and grants
    that cover nuts and bolts necessities to support reform efforts. For
    example, in the case of the drafting of the Afghan Constitution, the
    Foundation provided expert advice on the drafting process, reference
    materials, equipment and administrative support costs for the
    Constitutional Commission, and later, the operational and logistical
    support for the Constitutional Loya Jirga (CLJ). The Asia Foundation
    was awarded a medal for its contribution at the closing ceremony of the
    Loya Jirga by President Karzai. Special Representative of the U.N.
    Secretary General for Afghanistan Brahimi stated at the end of the
    Constitutional Loya Jirga: ``The Asia Foundation staff are the unsung
    heroes of the CLJ process. Without the creativity, intellectual insight
    and flexibility of The Asia Foundation, much that has been accomplished
    would not have been done.''

                                    PROGRAMS

        The Asia Foundation makes over 800 grants per year. The Foundation
    also facilitates programs, provides technical assistance and leverages
    funding from public and private donors, to increase program impact and
    sustainability. With additional funding in fiscal year 2004, the
    Foundation's expanded activities include:
        Human Rights, Conflict and Islam: in Indonesia, establishment of
    the International Center for Islam and Pluralism (ICIP) the only
    regional center for progressive Muslim scholarship and exchange in
    Southeast Asia; education reform in 1,000 schools including training on
    pluralism, human rights and civic education for 160 madrassa (day
    schools) teachers through the Center for Human Resources Development
    (PPSDM) at the State Islamic University; curriculum reform for 800
    pesantren (boarding schools), part of the Foundation's education reform
    of 625 Islamic schools nationwide, with over 215,000 students; in
    Cambodia, Sri Lanka and Nepal, human rights education, monitoring, and
    documentation through new information technology networking; in
    Mindanao in the Philippines Local Peace Monitors for the cessation of
    hostilities agreement and madrassa education research for the first
    time in 15 years;
        Civil Society: in Pakistan, public awareness and media campaigns
    promoting democracy, human rights and access to education for women and
    women's rights under the law, civil society development through
    capacity building and training; in Afghanistan, girls education and
    journalism training for women; in Cambodia, human rights and legal
    services; in Indonesia, promote pluralism, tolerance and moderation by
    mainstream Muslim organizations through public education, media through
    radio talk shows and education reform;
        Women's Programs: regionwide, with particular emphasis on
    Indonesia, Cambodia, Thailand, Vietnam and Mongolia, anti-trafficking
    programs including prevention, services for victims, legal drafting and
    advocacy to support increased prosecutions; services and advocacy for
    women victims of domestic violence; in India, Pakistan, Bangladesh, Sri
    Lanka and Indonesia, Thailand, Malaysia and Mindanao projects to
    advance women's rights within an Islamic framework through analysis,
    public education and outreach; in Afghanistan and Cambodia, support for
    scholarships for girls' education;
        Legal Reform: in Afghanistan, constitutional drafting technical
    assistance and operations and logistics for the Constitutional Loya
    Jirga in support of the UNAMA effort, technical support for the
    Constitutional Secretariat and logistics for the delegate selection
    process in Afghanistan; access to justice programs and public
    consultation in lawmaking in East Timor; legal aid services and legal
    education for migrant women workers in China; in Indonesia reform of
    the Supreme Court including civil society input into the reform
    process; in Nepal, mediation programs, legal reform within the courts,
    establishment of legal information systems and watchdog citizens'
    groups to raise awareness on corruption and official misconduct;
        Economic Reform: In Indonesia, Vietnam, Nepal, Bangladesh, small
    and medium enterprise policy reform; in Korea, Japan, China, Mongolia
    and the Philippines, corporate governance reform and e-government
    efforts to counter corruption;
        International Relations: In China, Vietnam and India, scholarships
    for young Ministry of Foreign Affairs leaders, study programs for
    Southeast Asian young leaders to the United States, and support for
    Track II programs on cross-straits relations and Council for Security
    Cooperation in the Asia Pacific (CSCAP).

                                   CONCLUSION

        As these examples of our work emphasize, The Asia Foundation is
    first and foremost a field based, grant-making organization. The
    Foundation has consistently received national recognition for its
    efficient grant-to-operating ratio, reflecting its commitment to
    maximizing program impact in Asia while keeping costs low. We are not a
    research organization or academic institution, nor are we Washington
    based. We operate on the ground in Asia as an accepted, trusted partner
    and supporter of Asian reform efforts that simultaneously support and
    reinforce American political, economic and security interests.
        Public funding is essential to our mission. While the Foundation
    continues to expand its private funding, the flexibility and
    reliability that public funding lends to the Foundation's efforts are
    critical. As an organization committed to U.S. interests in Asia, we
    can only be successful if potential private donors understand that the
    U.S. government continues to support our efforts in the region.
    Furthermore, private funds are almost always tied to specific projects,
    as are USAID funds for which the Foundation competes. These funds do
    not replace public funding, either in scale or flexibility. Moreover,
    the flexibility afforded by appropriated funds enables the Foundation
    to respond quickly to fast breaking developments and program
    opportunities. For example, we were the first American organization in
    Kabul to assist the Emergency Loya Jirga process, having re-opened our
    office in January 2002.
        Now more than ever, the Foundation and its supporters believe that
    its most important asset is its field office network in Asia, enabling
    the Foundation to address critical development and reforms on the
    ground. Maintaining offices overseas costs more than maintaining
    operations within the United States and new demands to ensure adequate
    security have added to the cost. Today, we continue to face budgetary
    constraints. We must protect our staff, but at the same time, we are,
    as always, committed to ensuring the maximum possible amount of
    appropriated funds are dedicated to programs in Asia.
        In closing, the Foundation has an opportunity and the obligation to
    demonstrate America's strong commitment to working with Asian leaders
    to assure the security, rights and well being of the people of Asia.
    The Asia Foundation's programs represent a distinctive and positive
    American response to the challenges facing Asia today, contributing to
    the development of stable societies and advancing the interests of the
    United States in the region. Additional funding would enable the
    Foundation to sustain and expand its efforts to meet these goals. Thank
    you.

                                     ______

      Prepared Statement of the Association of Small Business Development
                                    Centers

        The Association of Small Business Development Centers (ASBDC) urges
    the Subcommittee to provide an appropriation of $100 million for the
    U.S. Small Business Administration's Small Business Development Center
    (SBDC) grant program in the fiscal year 2005 Commerce-Justice-State
    appropriations bill. This is the funding level recommended by the
    Senate Budget Committee for federal SBDC grants in fiscal year 2005.
        Small businesses are struggling. BusinessWeek Online points out
    that small businesses, which usually create most of the new jobs in the
    initial stages of an economic recovery, are increasingly going bankrupt
    and extinguishing jobs. America's SBDC network can help small
    businesses lead the nation's economic recovery and create new jobs--as
    well as generate the additional revenues needed to reduce the budget
    deficit. But we need the resources to do the job.
        Based on its record during the past decade, with an appropriation
    of $100 million our nation's SBDC network could help SBDC in-depth
    counseling clients to: create an estimated 88,846 new full time jobs;
    increase sales by an estimated $7.1 billion; generate an estimated $211
    million in additional revenue for the federal government; and, create
    an estimated $315 million in additional tax revenues for state
    governments.
        Since fiscal year 2001, when Congress appropriated $88 million for
    SBDC grants, the President's budget proposal has not called for an
    increase in funding for SBDC grants, despite the effects of inflation
    and a growing demand for SBDC services. As a result, federal funding
    for our nation's SBDC network has decreased in real terms since fiscal
    year 2001. The SBDCs in 24 states (including Kansas, Kentucky,
    Maryland, New Mexico, West Virginia and Wisconsin) are operating with
    less federal funding than they received in fiscal year 2002. The SBDCs
    in the fifteen least populated states (including Alaska, Hawaii, New
    Hampshire and Vermont) have not had an increase in federal funding
    since fiscal year 1998. This year, SBDC grantees will receive less
    federal funding than they received in fiscal year 2003, and OMB has
    crafted a budget for fiscal year 2005 that proposes to reduce SBDC
    grant funding even further.
        There is room in the budget to provide a needed increase in funding
    for SBDC grants. The Senate Budget Committee has recommended that
    federal SBDC grants be funded in fiscal year 2005 at $100 million. In
    addition, the Senate passed an amendment to increase the SBA's fiscal
    year 2005 budget by $121 million, to fund increases in a range of
    programs including the SBDCs. Moreover, while the SBA's fiscal year
    2005 Congressional Budget Request proposes to cut funding for SBDC
    grants, it calls for the total cost of the SBDC program to increase by
    nearly $9 million--presumably for the SBA's expenses associated with
    administering the SBDC program. The ASBDC would respectfully suggest
    that any additional funding for the SBA to administer the SBDC program
    would be better spent on the delivery of counseling and training
    services to small businesses and aspiring entrepreneurs, by increasing
    funding for grants instead of administration.
        The Association of Small Business Development Centers (ASBDC)
    represents the 63 State, Regional and Territorial SBDC programs
    comprising America's SBDC network. SBDC programs are located in all 50
    states, the District of Columbia, Puerto Rico, The Virgin Islands, Guam
    and American Samoa. America's SBDC network is the most productive
    federal management and technical assistance program for small business.
    It is a unique partnership that includes Congress, the SBA and the
    private sector, as well as the colleges, universities and state
    governments that receive SBDC grants and manage the SBDC network.
        Nationwide, SBDCs provided management and technical assistance to
    more than 1.3 million small business owners and aspiring entrepreneurs
    last year. In 2003, SBDC services included face-to-face counseling of
    an hour or more for 279,281 clients; 1.6 million total hours of
    counseling; 25,970 group training sessions; training of two hours or
    more for 408,254 clients; and more than two million total hours of
    training for small businesses and aspiring entrepreneurs.
        The SBDC program was designed to create a lasting partnership among
    federal, state and local governments and institutions of higher
    learning, to disseminate the very best practical business management
    and technical knowledge to our nation's small business owners and
    aspiring entrepreneurs, and grow the American economy. The plan has
    worked remarkably well:
      --SBDCs help create and save jobs. In the recession of 2001, as big
            businesses downsized, SBDC in-depth counseling for small
            businesses generated 46,688 new full time jobs and helped save
            an additional 34,215 jobs.
      --SBDC counseling clients create more jobs than average businesses.
            Businesses that received in-depth SBDC counseling experienced
            10 times the job growth of average businesses (8.4 percent
            compared to 0.8 percent for U.S. businesses in general in
            2001).
      --SBDCs help small businesses increase sales. SBDC in-depth
            counseling helped small businesses generate $3.9 billion in new
            sales and save $4.3 billion in sales in 2001.
      --SBDC clients' sales grow faster than other businesses' sales.
            Established businesses that received in-depth SBDC counseling
            experienced sales growth of 12.1 percent in 2001--compared to
            3.1 percent for businesses in general.
      --SBDC clients create new businesses. 50 percent of pre-venture SBDC
            in-depth counseling clients start businesses within one year of
            receiving assistance. In 2001, SBDC in-depth counseling clients
            started 12,872 new businesses.
      --SBDC clients make investments in our economy. SBDCs helped small
            businesses obtain an estimated $2.7 billion in financing in
            2001. Every dollar spent on the SBDC network helped small
            businesses invest $15.89 in capital.
        Outstanding institutions of higher education such as the University
    of New Hampshire, the University of Alaska Anchorage, Santa Fe
    Community College, the University of Kentucky, the University of
    Houston, the Dallas County Community College District, Texas Tech
    University, the University of Texas at San Antonio, Fort Hays State
    University (Kansas), the University of South Carolina-Columbia, the
    University of Hawaii at Hilo, the University of Maryland, the Vermont
    State Colleges, the University of Wisconsin-Extension and Washington
    State University, to name a few, are among the hosts of the SBDC
    program. Many host institutions house the great business schools and
    entrepreneurial programs in our nation, such as the Wharton School, the
    Kenan-Flagler School of Business, the Robert H. Smith School of
    Business, the Isenberg School of Management and the Terry College of
    Business. SBDC hosts also include state governments such as the State
    of Colorado and the West Virginia Development Office. These state
    governments, like the institutions of higher learning that host SBDC
    programs, bring to the SBDCs resources, relationships and unparalleled
    leadership in their respective states.
        Among the management and technical assistance services they
    provide, SBDCs provide services in several areas that are of particular
    concern to small businesses, and to members of the Subcommittee,
    including export assistance, procurement and manufacturing.
        Many SBDCs host specialized International Trade Centers, where
    small business owners and aspiring entrepreneurs receive
    individualized, in-depth counseling and specialized training from
    experts in international trade and export expansion. And because the
    SBDC International Trade Centers are part of the larger SBDC network,
    small businesses and aspiring entrepreneurs that seek international
    trade assistance can also access the many other types of assistance--
    from marketing to research--that they need to make their export
    businesses succeed. In 2003, SBDCs trained 8,592 small business owners
    and aspiring entrepreneurs in international trade, and provided
    counseling on international trade matters to 9,378 clients.
        SBDCs offer assistance with government procurement and are often
    co-located with Procurement and Technical Assistance Centers (PTACs).
    Services include help with registrations, identifying solicitations and
    special programs, preparing certification documents and bids,
    submitting applications, contract administration and contract close-
    outs. In 2003, SBDCs provided government procurement counseling to
    12,784 clients.
        America's SBDC network is also responding to the need for
    management and technical assistance among small manufacturers. Ninety-
    five percent of American manufacturers are small and medium-size
    businesses, employing half of all manufacturing workers in the United
    States, and many of them rely on their local SBDCs for assistance. In
    2003, SBDCs provided manufacturing counseling to 22,267 clients.
        SBDCs serve women, minorities and America's veterans. In 2003, 37
    percent of SBDC counseling clients nationwide were women, 35 percent
    were minorities and 10.4 percent were veterans. Forty-five percent of
    SBDC training clients were women, 25 percent were minorities and 8.2
    percent were veterans.
        SBA statistics for the SBDC program show that SBDC counseling cases
    and training attendees combined increased from 650,000 to 685,000
    between fiscal year 2002 and fiscal year 2003. Counseling hours
    increased from 1.47 million to nearly 1.57 million. Training attendees
    increased from 384,000 to 408,000. Training hours increased from 1.58
    million to 2.08 million. These figures clearly demonstrate that
    America's small business owners know they need help and are
    increasingly seeking it from the SBDC network. However, there is a
    limit to the increases in services that the SBDC network can provide
    with flat, or declining, federal funding.

        Finally, SBDCs have a positive revenue impact on the federal
    budget. The President's fiscal year 2004 Budget pointed out that an
    independent evaluation of the SBDC program indicated that each $1 spent
    on SBDC counseling resulted in $2.78 in tax revenues. The federal SBDC
    budget of $88 million generated an estimated $182.9 million in federal
    revenue in 2001. SBDCs also leverage federal, state, local and private
    resources. For an SBDC to receive federal funding, it must first raise
    an equal amount of funding from non-federal sources. The SBDCs raise a
    minimum of $88 million a year in non-federal resources to serve small
    business owners and aspiring entrepreneurs.
        The ASBDC appreciates the Subcommittee's consideration of the
    Association's views. We urge the Subcommittee to provide an
    appropriation of $100 million for the SBDC grant program in the fiscal
    year 2005 Commerce-Justice-State appropriations bill, as recommended by
    the Senate Budget Committee.
                                     ______

               Prepared Statement of the Doris Day Animal League

        Mr. Chairman and members of the Appropriations Subcommittee on
    Commerce, Justice, State, the Judiciary and Related Agencies, thank you
    for the opportunity to submit testimony on behalf of the 350,000
    members and supporters of the Doris Day Animal League in support of our
    request that the Federal Bureau of Investigation assign the crime of
    animal cruelty its own classification in the agency's crime data
    reporting system.
        Law enforcement agencies already collect and submit data on animal
    cruelty crimes, but those data are combined with other crimes in a
    miscellaneous category where it is irretrievable and therefore useless.
    Local law enforcement agencies and many others want this information to
    help them better understand and respond to animal abuse and other
    offenses. To minimize the cost of making this change, we are suggesting
    that this category be added only as reporting agencies switch from the
    original Uniform Crime Reporting Program (UCR) to the current National
    Incident-Based Reporting System (NIBRS, currently used by only 18
    percent of reporting agencies) or to the new system (the ``national
    indices initiative'') the FBI has just started to develop. Thus, we
    estimate the cost to the FBI to add this category to NIBRS would be
    minimal (less than $90,000, based on a comparable FBI estimate) to
    modify materials and computer programs, with no additional costs to
    local agencies beyond the costs they would incur anyway in the
    changeover. There would, of course, be no incremental costs at all
    associated with including this category from the start in the new
    reporting system. Since the FBI has already started updating its crime
    data reporting system, this is the perfect opportunity to ensure that
    this serious category of crimes is handled in a way that makes the data
    usable.

    The Significance of Animal Cruelty as a Crime: ``The Violence
            Connection''
        Animal cruelty was once viewed as an offensive behavior unrelated
    to other crimes. Now it is recognized as a serious crime with important
    implications for human society. A growing body of research, produced
    over the last 30 years, establishes a clear link between animal abuse
    and human violence. One comprehensive study of data from a 20-year
    period found that adults convicted of animal cruelty were more likely
    than their peers to engage in other forms of criminal activities,
    including violent crimes against humans, property crimes, and drug and
    disorderly offenses. In addition to the association between animal
    cruelty and criminal behavior, there is also evidence that the severity
    of violence against animals can indicate the degree of aggressiveness
    toward humans. Research on incarcerated adult males found that the most
    aggressive inmates had the most violent histories of animal cruelty. It
    is worth noting that in dangerous situations such as a hostage-taking,
    the FBI has included a history of animal cruelty among the factors used
    to determine an individual's threat level.
        Another important link with serious policy implications is the co-
    occurrence of family violence and animal abuse. In interview studies
    with domestic violence victims, between 54 and 71 percent of the women
    report that their partners also harmed or killed the family pet. Child
    abuse and animal abuse also are linked: animal abuse was confirmed in
    88 percent of families being supervised by a child welfare agency for
    physically abusing their children.
        In addition to being linked to other types of criminal activity and
    family violence, animal abuse by children signals an important warning.
    In fact, the FBI was one of the first to recognize the significance of
    juvenile animal cruelty when it reported that many serial killers had
    abused animals as children. It also has been reported that many of the
    school shooters in the late 1990s had engaged in various forms of
    animal cruelty.
        The National Crime Prevention Council, the Department of Education,
    and the American Psychological Association all list animal cruelty as
    one of the warning signs for at-risk youth. Furthermore, researchers
    agree that persistent aggressive behavior in childhood, termed
    ``conduct disorder,'' tends to be a fairly stable trait throughout life
    and is the single best predictor of later criminal behavior. Animal
    cruelty is one of the symptoms for a diagnosis of conduct disorder and
    therefore can be one of the earliest indicators that a child is at
    risk.
        Not all children who abuse animals will become serial killers,
    school shooters, or criminals as adults. However, research clearly
    suggests that engaging in childhood animal cruelty conditions an
    individual to accept, or engage in, interpersonal violence as an adult.

    Responses to ``The Violence Connection''
        Government agencies, professional organizations, and communities
    have responded to the growing body of evidence of the animal abuse-
    human violence connection. For example, before 1990, only seven states
    had felony provisions in their animal anticruelty statutes; that number
    is now 41 states and the District of Columbia. As of this date, 24
    state animal anticruelty statutes permit or mandate psychological
    counseling for offenders.
        In addition to these changes in state cruelty laws, awareness of
    the significance of animal abuse as a crime has resulted in the
    development of a number of initiatives. ``Safe Pet'' programs, which
    provide safekeeping for the pets of domestic violence victims so that
    they feel free to leave dangerous situations, are being instituted in
    communities throughout the United States. Animal control officers are
    being trained to ``cross report,'' that is, to look for signs of child
    and spousal abuse when investigating an animal abuse or neglect
    complaint; likewise, social workers are taught to report animal abuse.
    Intervention strategies for children and adults who abuse animals have
    been developed and mental health professionals are being trained in
    this area of treatment.

    Modifying the Categories of the FBI's Crime Data Reporting Program
        The FBI's crime data reporting program is a nationwide effort that
    collects crime statistics from nearly 17,000 local and state law
    enforcement agencies. During 2000, the participating agencies
    represented 94 percent of the U.S. population. Reported crimes vary
    from criminal homicide in Part I to curfew and loitering under Part II.
    Law enforcement, criminologists, legislators, sociologists, municipal
    planners, the media, and others interested in criminal justice use the
    statistics for research and planning purposes. However, under the
    current system, there is no separate category for reporting crimes of
    animal cruelty, and thus no way to use those data, even though animal
    abuse often is an indicator of other types of criminal behavior,
    including family violence.
        Assigning the crime of animal cruelty to its own classification
    would have a number of advantages. Its inclusion in NIBRS would allow
    precise identification of ``. . . when and where crime takes place,
    what form it takes, and the characteristics of its victims and
    perpetrators.'' (National Incident-Based Reporting System, p. 2, U.S.
    Department of Justice, August 2000). Law enforcement agencies,
    researchers, policy planners, and others would be better able to
    understand the factors associated with animal abuse, track trends at
    the state and national levels, and determine the demographic
    characteristics associated with animal abuse--which is useful in
    developing more effective intervention and prevention strategies to
    interrupt the cycle of violence.
        Designating a separate category for animal cruelty crimes in the
    national indices initiative now being developed would add considerably
    more data analysis capabilities: ``. . . variables such as felony
    animal abuse arrests could be linked with a vast array of other
    statistics to develop useful demographic information.'' (Letter from
    Michael D. Kirkpatrick, FBI, Sept. 30, 2003). The expanded databases of
    the new system would enable law enforcement agencies to identify and
    track individuals with histories of violence.

    Categorize Under ``Crime Against Society''
        Animal cruelty is most appropriately categorized as a ``crime
    against society.'' Like other crimes in this category (which include
    family offenses, as well as gambling, drugs, and pornography), animal
    cruelty offenses threaten the general order of society. Animal abusers
    have often committed violent crimes against persons and been arrested
    for property crimes, disorderly conduct, and substance abuse. Most
    significantly, animal abuse is highly correlated with child, spousal,
    and elder abuse; and juvenile animal cruelty is a leading indicator of
    the development of aggressive behavioral disorders, which are
    predictive of future violence. Although animals are often considered
    ``property'' under some laws, classification as a ``crime against
    property'' is not appropriate because the nature of animal abuse is
    qualitatively different from property crimes. It involves neglect or
    violence toward a sentient being, often leading to serious injury or
    death; it frequently involves an intimate relationship, as in family
    violence; and it is associated with other crimes.

    Proposed Report Language for the Senate Appropriations Subcommittee on
            Commerce, Justice, State, the Judiciary and Related Agencies
        We respectfully request that the Subcommittee include the following
    language in the Commerce, Justice, State, Judiciary and Related
    Agencies Appropriations bill report:

        ``The Committee directs the FBI to provide the necessary resources
    to assign the crime of animal cruelty, defined as the violation of laws
    or ordinances that prohibit cruelty to animals, its own classification
    under the category `Crime Against Society' in the agency's current or
    any future crime reporting data collection system by adding this
    category to its software and other reporting mechanisms. The Committee
    expects the FBI to establish this classification as quickly as possible
    so that state and local law enforcement agencies will be able to plan
    for its inclusion as they upgrade to the National Incident-Based
    Reporting System, the upcoming national indices system, or any future
    system.
        ``This will enable law enforcement agencies and researchers to
    track crime rates, better understand the factors associated with animal
    abuse and the characteristics of perpetrators, and identify with
    precision when and where the crimes take place, thus facilitating more
    effective interventions. Eventually, the capabilities envisioned for
    the new National Indices Initiative now in development will allow
    animal cruelty to be linked to other crimes, such as domestic violence,
    child abuse, and other violence directed at humans.
        ``The Committee further directs the FBI to report to the Committee
    by March 2005 on the integration of this category into its crime data
    reporting program.''
                                     ______

     Prepared Statement of the Alliance for International Educational and
                               Cultural Exchange

        As Chair of the Board of the Alliance for International Educational
    and Cultural Exchange, I appreciate the opportunity to submit testimony
    in support of an overall appropriation of $400 million for the
    educational and cultural exchange programs administered by the
    Department of State's Bureau of Educational and Cultural Affairs (ECA)
    in fiscal year 2005. This level of spending will allow robust funding
    for ECA's core exchange programs, restore funding to the former Soviet
    Union and Eastern Europe through the FSA/SEED programs, and provide
    funding for an Islamic Exchange Initiative.
        The Alliance is the leading policy voice of the U.S. exchange
    community, and has worked closely with the Subcommittee on exchange
    issues. We note with gratitude the Subcommittee's role in increasing
    exchange appropriations in recent years, and its consistent support for
    exchanges.
        The Alliance comprises 65 nongovernmental organizations, with
    nearly 8,000 staff and 1.25 million volunteers throughout the United
    States. Through its members, the Alliance supports the international
    interests of 3,300 American institutions of higher education.
        By engaging a very broad array of American individuals and
    institutions in the conduct of our foreign affairs, exchange programs
    build both enhanced understanding and a web of productive contacts
    between Americans and the rest of the world.
        Despite widespread support for exchanges in Congress, this account
    still lags well behind its historic levels in constant dollars due both
    to the deep cuts of the mid-nineties and to the significant reductions
    in fiscal year 2004 funding. Coupled with the increases in fixed
    program costs such as airfare and accommodation, reduced appropriations
    have resulted in significantly diminished participant levels in
    programs consistently cited by our embassies as one of their most
    effective means of advancing U.S. policy interests.
        The incorporation of funding for programs provided for under the
    Freedom Support Act (FSA) and Support for East European Democracy Act
    (SEED) into the ECA budget in the fiscal year 2004 budget cycle, at a
    substantially lower level than previously allocated, has resulted in a
    significant reduction in funding for those programs.
        As our experiences since September 11, 2001, demonstrate clearly,
    we need public diplomacy and exchanges more now than ever. We need to
    build trust and understanding for our people and our policy goals not
    just in the Muslim world--an effort that is of critical importance--but
    around the globe. To win the war on terrorism and to rebuild Iraq, we
    will need the help of our friends and allies in every region of the
    world. This is a time to intensify and expand our public diplomacy, and
    we believe there is strong bipartisan support in Congress to do exactly
    that.
        We therefore urge the Subcommittee to fund the Department of
    State's exchange budget at $400 million in fiscal year 2005. This
    amount would provide for targeted, meaningful growth in every region of
    the world in support of our most important foreign policy objectives.
    Core exchange programs
        An appropriation of $400 million would allow for meaningful growth
    in the Department of State's traditional exchange programs, programs
    that remain at the core of our efforts to build mutual understanding
    and respect between the United States and critical nations around the
    world. These well-established programs--Fulbright and other academic
    programs, International Visitor, and citizen exchanges--continue to
    demonstrate their relevance and effectiveness as changing threats,
    challenges, and opportunities present themselves in a rapidly evolving
    world.
        Among State's academic exchange programs, the Fulbright Program
    continues to demonstrate its unique value in deepening mutual
    understanding between the United States and 140 partner governments. A
    record 5,700 U.S. students and young professionals applied for
    Fulbright grants in 2003, demonstrating the desire of U.S. citizens and
    communities to be internationally engaged.
        Fulbright exchange programs in Iraq and Afghanistan were revived in
    2003, bringing young leaders to study in U.S. graduate programs in
    fields critical to the development of those societies. Other program
    changes include: the cutting-edge research conducted by New Century
    Scholars, which provides deep focus on a single global problem by
    leading scholars from around the world; the Islamic Civilization
    Initiative that incorporates outreach activities upon the American
    student's return to the United States to increase knowledge of the
    Muslim world on the campus and in local communities; and a conflict
    resolution initiative for young leaders from the Middle East, South
    Asia, and the Great Lakes region of Africa.
        Other critical academic exchange programs include the Educational
    Partnerships Program, which fosters substantive, ongoing relationships
    between American universities and their counterparts in high priority
    countries; the Humphrey Fellowships Program, which provides powerful
    academic and professional training experiences for professionals in the
    developing world; Overseas Educational Advising, through which
    prospective foreign students receive reliable information about
    American higher education and professional assistance in the
    application process; the Gilman Fellowship Program, which enables
    American students with financial need to study abroad; and English
    teaching and U.S. Studies programs, designed to enhance understanding
    of American society and values.
        The International Visitor program continues to be ranked by many
    U.S. ambassadors as their most effective program tool. This results-
    oriented program allows our embassies to address directly their highest
    priority objectives by bringing emerging foreign leaders to the United
    States for intensive, short-term visits with their professional
    counterparts. The program also exposes visitors to American society and
    values in homes and other informal settings. An increase in funding for
    the International Visitor program would allow the program to make an
    even greater impact on such key issues as regional security in
    Northeast Asia, counter-terrorism, international trade, and global
    health.
        Citizen exchanges continue to engage American citizens across the
    United States in productive international activities. In addition,
    these programs leverage their relatively modest federal dollars into
    significantly more funding through the participation of local
    communities, schools, businesses, and nongovernmental organizations.
    Increased funding for citizen exchanges would permit an expansion of
    these highly cost-effective activities, particularly in the critical
    area of capacity building in communities across the United States. To
    be globally competitive, American communities must be globally engaged,
    and this enhanced capacity will allow for more extensive connections
    and impact in support of U.S. interests in high priority countries
    around the world.

    Exchanges with the countries of the former Soviet Union and Central
            Europe
        As noted above, funding for exchange programs authorized by the FSA
    and SEED Acts was shifted to the CJS bill for the first time last year.
    The transfer has resulted in dramatic cuts for these programs,
    estimated to exceed 50 percent from previous levels.
        Exchanges under FSA and SEED provide opportunities to expose future
    leaders to American civil society and values, and foster personal and
    professional relationships between Americans and citizens of these
    developing regions. We must continue this engagement with future
    leaders of these important nations that are still emerging from decades
    of totalitarian leadership. The recent election of Georgian President
    Mikheil Saakashvili is a testament to the value of these programs.
    Saakashvili benefited from a Muskie/FSA Graduate Fellowship, earning an
    LL.M. degree from Columbia University in 1994. He also participated in
    a 1999 International Visitor exchange on ``Judicial Reform.'' Members
    of Saakashvili's cabinet are also alumni of U.S.-funded exchanges; for
    example, Irakli Rekhviashvili, a participant in the Eurasian
    Undergraduate Student Exchange Program, was recently appointed the
    Georgian Minister of Economy.
        While obstacles to exchange remain, interest in exchanges in the
    region continues to grow. In recent years, professional and collegiate-
    level programs with these countries have attracted many more applicants
    than the programs can sustain. The Contemporary Issues Fellowship
    Program, targeting influential policymakers and mid-level
    professionals, receives nearly 1,300 applicants for 100 scholarships.
    The Future Leaders Exchange Program (FLEX) for high school students
    receives more than 50,000 applications for 1,300 slots.
        We hope the Subcommittee will agree that a reduction in these
    programs is unwise in a region of the world of such strategic
    importance to the United States. This is particularly true when one
    considers the effectiveness and impact of these exchange programs.

    Islamic Exchange Initiative--Building Cultural Bridges
        While the need for increased funding is worldwide, increased
    exchanges with the Islamic world are particularly critical as we pursue
    the war on terrorism. To defeat terrorism, the United States will need
    more than the might and skill of our armed forces. To ultimately defeat
    terrorism, we must also engage the Muslim world in the realm of ideas,
    values, and beliefs.
        Changing minds--or merely opening them--is a long, painstaking
    process. There are no quick fixes. If we are to win the war on
    terrorism, there will be no avoiding the need to build bridges between
    the American people and the people of the Muslim world. We must begin
    this process now.
        In the Islamic world, we envision this initiative engaging the full
    range of programs and activities managed by ECA: Fulbright and Humphrey
    exchanges that will stimulate broader cultural understanding, joint
    research and teaching, and foster positive relationships with a new
    generation of leaders; the Partnerships for Learning Undergraduate
    Studies Program (PLUS), that allows undergraduates from the Islamic
    world to complete their B.A. degrees at U.S. universities; university
    affiliations targeted toward key fields such as mass media and economic
    development; International Visitor and other citizen exchange programs
    designed to bring emerging leaders into significant and direct contact
    with their professional counterparts and the daily substance of
    American life; youth and teacher exchanges and enhanced English
    teaching programs, all designed to bring larger numbers of young people
    a direct and accurate picture of our society, based on personal
    experience rather than vicious stereotyping.
        Increasing the State Department's exchanges with the Islamic world
    will give us the means to develop productive, positive relationships.
    This initiative will engage the American public--in our communities,
    schools, and universities--in an effort to project American values. We
    will find no better or more convincing representatives of our way of
    life.
        And the engagement of the American public will leverage significant
    additional resources to support this effort.
        We commend the Subcommittee for funds made available in the fiscal
    year 2002 supplemental for Islamic exchanges. The $10 million
    appropriated by this Subcommittee has been put to good use by the
    Department of State in key programs such as Fulbright, International
    Visitors, and English teaching.
        Strengthening exchanges with the Islamic world has strong
    bipartisan support, evidenced by legislation sponsored in the 107th
    Congress by Senators Edward Kennedy and Richard Lugar, and
    Representatives Henry Hyde and Tom Lantos. These bills led to $20
    million in appropriations funding, some of which was used to fund what
    would become the Youth Exchange and Study Program (YES). YES has
    brought approximately 138 Muslim high school students to the United
    States for the 2003-2004 school year, and will bring an additional 365
    students next year. To build on the YES program's very successful
    beginning, the program requires a sustained funding commitment.

    Conclusion
        We recognize that a meaningful and effective Islamic exchange
    initiative, restored funding for the FSA and SEED programs, and
    sufficient funding for robust traditional exchange programs will
    require a significant increase in the State Department exchanges
    budget. We believe that a $400 million funding level is necessary and
    appropriate given the importance of the tasks at hand.
        The U.S. exchange community stands ready to assist you in these
    efforts, and is grateful for your support.
                                     ______

               Prepared Statement of Sister Cities International

        On behalf of the 700 U.S. cities partnered with more than 1,700
    international cities in 122 countries, I want to thank the subcommittee
    for its continued support of international educational, cultural and
    development exchanges that continue to impact U.S. foreign policy goals
    throughout the world. Sister Cities International is a nonprofit,
    citizen diplomacy network that creates and strengthens partnerships
    between U.S. and international communities at the local level. Sister
    Cities International works to promote sustainable development, youth
    involvement, cultural understanding, and humanitarian assistance
    through citizen diplomacy. Citizen diplomacy is a peaceful way to
    promote American foreign policy by establishing links between people
    within the international community. Sister Cities International works
    to create citizen-to-citizen connections by promoting peace through
    mutual respect, understanding, and cooperation at the local, county and
    state level. I urge you to promote the ideals of citizen diplomacy by
    carefully considering the critical legislation currently before the
    subcommittee.
        In the two years since September 11, 2001, the need to eliminate
    global terror and institute avenues of intercultural understanding has
    grown. Today, citizen diplomacy programs hold the highest incentive for
    governments who are interested in establishing goodwill between states.
    International education and exchange programs are critical elements in
    the conduct of U.S. foreign policy and advance national security. The
    United States must make deliberate efforts to forge sustainable,
    mutually cooperative relationships between the United States and the
    Islamic world in order to rebuild global security. Sister Cities
    International is well positioned to play an integral role by supporting
    long-term community partnerships through reciprocal exchange programs.
        We believe that the Department of State, through the support and
    encouragement of the subcommittee and Congress, should be strategically
    investing in two key areas of international exchange: support for long-
    term, ongoing programs such as Fulbright and the International Visitors
    Program and building the capacity of public-private partnerships like
    Sister Cities International. An investment in the capacity of
    organizations like Sister Cities International makes good fiscal sense,
    given the fact that Sister Cities International leverages significant
    non-federal, community-based resources in support of international
    exchange with the small amount of federal dollars we receive every
    year. Nevertheless, from 1995-2001, core funding from the Department of
    State's Bureau of Educational and Cultural Affairs (ECA) declined
    dramatically, reducing our efforts to reach out to many regions of the
    world. Without additional core resources, Sister Cities International
    will find it increasingly difficult to expand the number of
    partnerships between U.S. and international communities and promote
    active citizen involvement in international affairs.
        Annually, 6,750 to 13,300 citizen exchanges occur between sister
    city programs. With a federal investment of $370,440, each exchange
    costs the U.S. government approximately $25 to $50. Moving into our
    48th year as a leader in the citizen diplomacy arena, Sister Cities
    International pledged in 2002 to double the number of partnerships in
    underserved regions of the world over the next five years. New
    partnerships will be established in the Middle East, Africa, Eurasia,
    Latin America, and the Caribbean. However, this new endeavor can only
    be accomplished with increased core grant support. Therefore, Sister
    Cities International is working with key Congressional supporters on
    our first initiative to increase our core grant by $164,000 to $534,000
    for fiscal year 2005.
        An increase in Sister Cities International's core grant of $164,000
    will specifically lead to the following results:
      --Expansion the Sister Cities International network by 100
            partnerships a year over three years.
      --An increase in the number of exchanges conducted under the Sister
            Cities International umbrella by 3,000 over the three-year
            period at a cost to the federal government of $55 per exchange.
      --Expansion of the network in underserved regions of the world,
            focusing on Islamic countries, Africa, Central and Eastern
            Europe, and Eurasia.
      --More capacity for local sister city partnerships to undertake
            exchange programs focused on economic development, youth and
            education, women in leadership, sustainable development, and
            humanitarian assistance.
        The second initiative seeks to alleviate the tension between the
    United States and the Islamic World is the ``U.S.-Islamic Sister City
    Partnership Program.'' Currently, there are 62 United States-Islamic
    partnerships and with Congress' support, we hope to expand the number
    of United States-Islamic partnerships by 38 to 100 over the next two
    years. Through ``Islamic Friendship Grants,'' new and existing
    partnerships would receive $25,000 each to develop humanitarian
    assistance, international exchange, and community and economic
    development programs in the region. Each ``Islamic Friendship Grant''
    will be leveraged at least one-to-one, bringing in an additional
    $25,000 in non-federal resources to each partnership, for an additional
    investment of $5 million. For this particular initiative, we are asking
    for $2.75 million through the expansion of the Islamic Exchange
    Initiative funded by Congress in the fiscal year 2002 Supplemental
    Appropriations.
        I want to thank the members of the subcommittee for their
    leadership and consideration of this important matter. Given the
    growing global challenges in which U.S. diplomacy is called upon to
    protect American national interests and security, now, more than ever,
    it is important to fully fund the International Affairs budget.
    Although the 150 account only reflects approximately one percent of the
    total federal budget, notwithstanding increases for the Millennium
    Challenge Account (MCA), HIV/AIDS, and illicit drugs, 58 percent of
    core mainline programs receive flat or decreased funding. Support for
    the 150 Account is crucial for improving America's image abroad and
    protecting our interests at home. I ask you to support the Presidential
    requests for funding for the 150 Account and our requests to increase
    funding for Sister Cities International.
        Sister city and other international exchange programs are time-
    tested and uniquely cost effective. They help ensure a prosperous
    future for the United States and a more democratic world. Americans who
    participate in citizen diplomacy programs experience a profound change
    in the way they think about the world, leading to greater
    understanding, mutual respect and cooperation around the complex issues
    affecting our global community. This is the vision that drove President
    Dwight D. Eisenhower to establish our organization in 1956 and it
    remains the vision today by which we hope to promote peace--one
    individual, one community at a time.
                                     ______

                 Prepared Statement of Florida State University

        I am writing to tell you about two projects Florida State
    University is pursing through the Department of Justice. The first is a
    Juvenile Justice Education Program Model Study. The request is for $2.5
    million through the Juvenile Justice Programs Office, Part C. The
    second deals with Extreme Security for the Critical Infrastructure. The
    funding level is $2.5 million and is being requested through the Byrne
    Discretionary Grant Program.
        Mr. Chairman, I would like to thank you and the Members of the
    Subcommittee for this opportunity to present testimony before this
    Committee. I would like to take a moment to briefly acquaint you with
    Florida State University.
        Located in Tallahassee, Florida's capitol, FSU is a comprehensive
    Research I university with a rapidly growing research base. The
    University serves as a center for advanced graduate and professional
    studies, exemplary research, and top quality undergraduate programs.
    Faculty members at FSU maintain a strong commitment to quality in
    teaching, to performance of research and creative activities and have a
    strong commitment to public service. Among the current or former
    faculty are numerous recipients of national and international honors
    including Nobel laureates, Pulitzer Prize winners, and several members
    of the National Academy of Sciences. Our scientists and engineers do
    excellent research, have strong interdisciplinary interests, and often
    work closely with industrial partners in the commercialization of the
    results of their research. Florida State University had over $162
    million this past year in research awards.
        FSU recently initiated a new medical school, the first in the
    United States in over two decades. Our emphasis is on training students
    to become primary care physicians, with a particular focus on geriatric
    medicine--consistent with the demographics of our state.
        Florida State University attracts students from every county in
    Florida, every state in the nation, and more than 100 foreign
    countries. The University is committed to high admission standards that
    ensure quality in its student body, which currently includes some 345
    National Merit and National Achievement Scholars, as well as students
    with superior creative talent. We consistently rank in the top 25 among
    U.S. colleges and universities in attracting National Merit Scholars to
    our campus.
        At Florida State University, we are very proud of our successes as
    well as our emerging reputation as one of the nation's top public
    research universities.
        Mr. Chairman, let me tell you about a two projects we are pursuing
    this year through the Department of Justice. The first project is a
    Juvenile Justice Education Program Model Study.
        In 1996, the U.S. Department of Justice reported that the cost of
    criminal victimization in this country is $450 billion a year. Given
    that delinquent youth constitute a major part of the crime problem,
    such promising methods of crime reduction as providing delinquent youth
    high quality education that can serve as a positive turning point in
    their delinquent to adult crime life course should be vigorously
    pursued. This is the intent of the 2001 No Child Left Behind Act which
    mandates the receipt of ``best education'' services for the country's
    incarcerated delinquent youth to ensure their successful community
    reintegration following release from juvenile justice institutions.
        The USDOE as well as the U.S. Department of Justice's Office of
    Juvenile Justice and Delinquency Prevention and the American
    Correctional Association have recognized Florida's system of juvenile
    justice education as an exemplary state system. This recognition
    reflects Florida's commitment to accountability and its implementation
    of an approach to the identification and validation of best practices
    in juvenile justice education. In 1998, to fulfill this commitment, the
    Florida Department of Education awarded funding for the Juvenile
    Justice Educational Enhancement Program (JJEEP) to FSU's School of
    Criminology and Criminal Justice. During the subsequent years of
    JJEEP's operations, Florida's system of best practices and
    accountability have become recognized as a model for providing juvenile
    justice youth quality and accountable education services that embodies
    the major components of NCLB.
        During JJEEP's early years of implementing both best practices and
    an accountability system for Florida's juvenile justice education
    system, a number of implementation impediments were experienced and
    ultimately overcome. JJEEP's experiences in overcoming these
    implementation impediments should not be repeated but rather used to
    benefit other states as they attempt to successfully implement NCLB.
    Most importantly, JJEEP has conclusively documented that the receipt of
    best education practices as envisioned in NCLB well-served numerous
    Florida juvenile justice youth as they exited juvenile justice
    institutions and reentered their communities. With the successful
    nationwide implementation of NCLB, every juvenile justice student,
    regardless of state residence, will be able to receive accountable
    juvenile justice education best practices that increase the likelihood
    of their successful community reintegration and thereby reduce the
    incidence of crime, criminal victimization and associated costs.
        This project's methodology will be centered upon the development
    and maintenance of effective working partnerships in each state between
    those responsible for juvenile justice education, the national project
    staff, and USDOE. These partnerships will involve collaboration
    throughout all phases of the project to ensure consensus and
    appropriate implementation of the NCLB requirements. Following the
    initial assessment of each state's juvenile justice education system,
    the findings will be compared to Florida's system and experiences and
    the requirements of NCLB to develop each state's NCLB implementation
    plan. Moreover, and throughout the process, ongoing training, technical
    assistance, and evaluation will be provided to ensure successful
    implementation of the NCLB requirements in each state's juvenile
    justice education systems.
        We believe this is an outstanding program and will reap very
    positive outcomes for Florida and the Nation.
        The second project we are pursuing deals with Cybersecurity. The
    Cybersecurity Research Institute of Florida (CRIF) at Florida State
    University is seeking funding to support the implementation of extreme
    security through the development of a new model of a cybersecurity
    management infrastructure. Extreme security refers to protection
    against a previously unanticipated attack on cyberinfrastructure. The
    work will focus on the protection of the cybersecurity component of
    this critical infrastructure. The critical infrastructure can be
    identified as elements of the national/international infrastructure
    such as the national power or water system, the international
    telecommunication system, and the international banking system.
        CRIF is in a unique position to research and develop a
    cybersecurity protection model and management infrastructure through
    its links with: the Florida Cybersecurity Institute (FCI) which was
    recently established as a cooperative effort of Florida State
    University, the Florida Department of Law Enforcement, and the National
    White Collar Crime Center to conduct research and education activities
    in the areas of cybercrime; and the Security and Assurance in
    Information Technology Laboratory (SAIT) at Florida State University
    which was established in 1999 to promote research, education, and
    outreach.
        The Florida State University (FSU) has been designated as a Center
    of Academic Excellence in Information Assurance Education by the
    National Security Agency. Some of the world's top researchers in
    cryptography, information security, and infrastructure protection work
    in the Computer Science Department at FSU. Coupled with the
    relationships and contacts of the FCI founding partners in academia,
    government, and industry, CRIF is particularly capable of developing
    and implementing a comprehensive model for extreme cybersecurity.
        Our cybersecurity management model addresses such issues as cost of
    the system, the implementability of the model in the critical
    infrastructure, and definition of new risk models that focus on the
    types of extreme attacks previously discussed. Our goal is the
    survivability of the cybersecurity critical infrastructure under
    extreme conditions.
        CRIF will conduct research related to the development of the
    cybersecurity management model, and then implement it in one of the
    critical infrastructure environments--the banking system in the state
    of Florida. The banking system in Florida is a particularly important
    system as Florida is one of the states with the largest number of small
    businesses. These small businesses are notorious for not having
    technical assistance that larger companies use for cyberinfrastructure
    protection. If the banking system is disrupted for these small
    businesses, many would fail, having an incredibly negative effect on
    lives, livelihoods, and the State's short- and longer-term economy.
    This work will provide proof of concept of our approach to assist in
    protecting the cyberinfrastructure of the banking industry in Florida.
    We will develop a range of extreme security levels, based on costs and
    capabilities that can be incrementally implemented by the various
    critical infrastructure groups. Lessons learned could be transferred
    nationally.
        Mr. Chairman, these are just of couple of the many exciting
    activities going on at Florida State University that will make
    important contributions to solving some key concerns our nation faces
    today. Your support would be appreciated, and, again, thank you for an
    opportunity to present these views for your consideration.
                                     ______

     Prepared Statement of the California Industry and Government Central
                    California Ozone Study (CCOS) Coalition

        Mr. Chairman and Members of the Subcommittee: On behalf of the
    California Industry and Government Central California Ozone Study
    (CCOS) Coalition, we are pleased to submit this statement for the
    record in support of our fiscal year 2005 funding request of $500,000
    from the National Oceanic and Atmospheric Administration (NOAA) for
    CCOS as part of a Federal match for the $9.4 million already
    contributed by California State and local agencies and the private
    sector. We greatly appreciate your past support for this study
    ($500,000 in fiscal year 2001, $250,000 in fiscal year 2002, and
    $250,000 in fiscal year 2003) as it is necessary in order for the State
    of California to address the very significant challenges it faces as it
    seeks to comply with air pollution requirements of the federal Clean
    Air Act.
        Most of central California does not attain federal health-based
    standards for ozone and particulate matter. The San Joaquin Valley has
    recently requested redesignation to extreme and is committed to
    updating their 1-hour ozone State Implementation Plan (SIP) in 2004,
    based on new technical data. In addition, the San Joaquin Valley,
    Sacramento Valley, and San Francisco Bay Area exceed the new federal 8-
    hour ozone standard. SIPs for the 8-hour standard will be due in the
    2007 timeframe--and must include an evaluation of the impact of
    transported air pollution on downwind areas such as the Mountain
    Counties. Photochemical air quality modeling will be necessary to
    prepare SIPs that are approvable by the U.S. Environmental Protection
    Agency.
        The Central California Ozone Study (CCOS) is designed to enable
    central California to meet Clean Air Act requirements for ozone SIPs as
    well as advance fundamental science for use nationwide. The CCOS field
    measurement program was conducted during the summer of 2000 in
    conjunction with the California Regional PM10/PM2.5 Air Quality Study
    (CRPAQS), a major study of the origin, nature, and extent of excessive
    levels of fine particles in central California. This enabled leveraging
    of the efforts of the particulate matter study in that some equipment
    and personnel served dual functions to reduce the net cost. From a
    technical standpoint, carrying out both studies concurrently was a
    unique opportunity to address the integration of particulate matter and
    ozone control efforts. CCOS was also cost-effective since it builds on
    other successful efforts including the 1990 San Joaquin Valley Ozone
    Study.
        CCOS includes an ozone field study, data analysis, modeling
    performance evaluations, and a retrospective look at previous SIP
    modeling. The CCOS study area extends over central and most of northern
    California. The goal of the CCOS is to better understand the nature of
    the ozone problem across the region, providing a strong scientific
    foundation for preparing the next round of State and Federal attainment
    plans. The study includes five main components: Designing the field
    study; conducting an intensive field monitoring study from June 1 to
    September 30, 2000; developing an emission inventory to support
    modeling; developing and evaluating a photochemical model for the
    region; and evaluating emission control strategies for upcoming ozone
    attainment plans.
        The CCOS is directed by Policy and Technical Committees consisting
    of representatives from Federal, State, and local governments, as well
    as private industry. These committees, which managed the San Joaquin
    Valley Ozone Study and are currently managing the California Regional
    PM10/PM2.5 Air Quality Study, are landmark examples of collaborative
    environmental management. The proven methods and established teamwork
    provide a solid foundation for CCOS. The sponsors of CCOS, representing
    state, local government, and industry, have contributed approximately
    $9.4 million for the field study. The federal government has
    contributed $4,874,000 to support some data analysis and modeling. In
    addition, CCOS sponsors are providing $2 million of in-kind support.
    The Policy Committee is seeking federal co-funding of $2.5 million to
    complete the data analysis and modeling portions of the study and for a
    future deposition study. California is an ideal natural laboratory for
    studies that address these issues, given the scale and diversity of the
    various ground surfaces in the region (crops, woodlands, forests, urban
    and suburban areas).
        For fiscal year 2005, our Coalition is seeking funding of $500,000
    from the National Oceanic and Atmospheric Administration (NOAA). This
    request will be used to continue NOAA's involvement in developing
    meteorological simulations for CCOS episodes, which are also being used
    as inputs to SIP-related photochemical modeling. NOAA has a direct
    stake in the CCOS because the extensive meteorological data collected
    as part of the field study can be used by NOAA to improve its
    meteorological forecasting abilities, particularly by providing NOAA
    with a new database for use in the evaluation of U.S. western boundary
    conditions for weather forecasting models. As you know, NOAA is also at
    the scientific forefront of the development of meteorological models
    including the Weather Research and Forecasting (WRF) model that is
    viewed as a future replacement for the current Mesoscale Meteorology
    Model, Version 5 (MM5). Thus, NOAA's involvement in the CCOS would
    facilitate the use of CCOS measurements in the development of WRF. In
    addition, the CCOS includes atmospheric airflow research, and data were
    collected on sea breeze circulations, nocturnal jets and eddies,
    airflow bifurcation, convergence and divergence zones, up-slope and
    down-slope flows, and up-valley and down-valley airflows. This research
    provides fundamental data needed to understand airflows over complex
    terrain, and has national applicability.
        Thank you very much for your consideration of our request.

                          CURRENT CCOS STUDY SPONSORS

    Private Sector
        Western States Petroleum Association
        Pacific Gas and Electric Company
        Electric Power Research Institute
        NISEI Farmers League and Agriculture
        Independent Oil Producers' Agency
        California Cotton Ginners and Growers Associations
    Local Government
        San Joaquin Valley Unified Air Pollution Control District (on
    behalf of local cities and counties)
        Bay Area Air Quality Management District
        Sacramento Metro Air Quality Management District
        San Luis Obispo County Air Pollution Control District
        Mendocino County Air Pollution Control District
    State Government
        California Air Resources Board
        California Energy Commission
    Federal Government
        National Oceanic and Atmospheric Administration
        Environmental Protection Agency
        Department of Agriculture
        Department of Transportation
                                     ______

        Prepared Statement of the National American Indian Court Judges
                                  Association

        On behalf of the National American Indian Court Judges Association
    (NAICJA), I am pleased to submit this testimony on the proposed fiscal
    year 2005 budget for the Justice Department's Indian Country Law
    Enforcement Initiative and the Indian Tribal Justice Technical and
    Legal Assistance Act of 2000 (Public Law 106-559). We request $73.4
    million for Tribal Courts including $15 million for Indian Country Law
    Enforcement Initiative and $58.4 million in funding for the Indian
    Tribal Justice Technical and Legal Assistance Act of 2000 (Public Law
    106-559). In addition, we request full funding for the following areas
    or, at minimum, proportional increases in keeping with economic growth.
    Specifically, this includes:
      --Increase by $4.74 million Administration proposed cuts in Law
            Enforcement under the COPS program in DOJ.
      --Increase by $7.59 million Administration proposed cuts in Tribal
            Courts under DOJ.
      --Increase by $2 million Administration proposed cuts in BIA for
            ``contract support costs'' to $135,314,000.
      --Increase by $2.46 million Administration proposed cuts in DOJ for
            Indian Country Prison grants.
        The National American Indian Court Judges Association (NAICJA),
    www.naicja.com, was incorporated in 1969. NAICJA is the largest
    organization representing Tribal Judges and Tribal Courts in the United
    States. The mission of NAICJA is to strengthen and enhance all Tribal
    justice systems through improvement and development of Tribal Courts
    and Tribal Court Judges.

    Justice Department Funding: Indian Country Law Enforcement Initiative
            and Indian Tribal Justice Technical and Legal Assistance Act of
            2000 (Public Law 106-559)
        $15 million for Indian Country Law Enforcement Initiative.--NAICJA
    strongly supports full funding for the Indian Country Law Enforcement
    Initiative. NAICJA would like to specifically emphasize our support for
    the funding of the Indian Tribal Court Fund at a level of at least $15
    million (Please note that this fund was formally authorized by the
    106th Congress--see Public Law 106-559, section 201). Through the
    increased funding for law enforcement under the Indian Country Law
    Enforcement Initiative, more police officers have been added throughout
    Indian Country. Without substantial additional funding, tribal courts
    will be unable to handle the increased caseloads generated by this
    increased law enforcement.
        $58.4 million in funding for the Indian Tribal Justice Technical
    and Legal Assistance Act of 2000 (Public Law 106-559).--When the 106th
    Congress enacted Public Law 106-559 in December 2000, it recognized the
    vital legal and technical assistance needs of tribal justice systems--
    finding in part that ``there is both inadequate funding and inadequate
    coordinating mechanism to meet the technical and legal assistance needs
    of tribal justice systems and this lack of adequate technical and legal
    assistance funding impairs their operation'' and promised three grant
    programs to address these Congressional recognized needs. It is vital
    that Congress provide adequate funding for Public Law 106-559 (see the
    Act itself for more specific information). NAICJA strongly supports
    funding of Public Law 106-559 at the level of at least $58.4 million.
    Failure to provide this funding level would make the Indian Tribal
    Justice Technical and Legal Assistance Act of 2000 (Public Law 106-559)
    a hollow recognition of tribal justice systems needs without providing
    needed resources.
        We further express our concern with the Administration's fiscal
    year 2005 Budget proposals regarding Tribal Courts. Decreases in these
    areas will severely hinder effective law enforcement and Tribal Courts
    in Indian Country.
        We request full funding for the following areas or, at minimum,
    proportional increases in keeping with economic growth. Specifically,
    this includes: Cuts in Law Enforcement under the COPS program by $4.74
    million in DOJ; cuts in Tribal Courts under DOJ by $7.59 million; cuts
    in BIA for ``contract support costs'' by $2 million down to
    $133,314,000; and cuts in DOJ for Indian Country Prison grants by $2.46
    million.

                          IMPORTANCE OF TRIBAL COURTS

        Tribal justice systems are the primary and most appropriate
    institutions for maintaining order in Tribal communities.

        ``Tribal courts constitute the frontline tribal institutions that
    most often confront issues of self-determination and sovereignty, while
    at the same time they are charged with providing reliable and equitable
    adjudication in the many and increasingly diverse matters that come
    before them. In addition, they constitute a key tribal entity for
    advancing and protecting the rights of self-government. . . . Tribal
    courts are of growing significance in Indian Country.'' (Frank
    Pommersheim, Braid of Feathers: American Indian Law and Contemporary
    Tribal Law 57 (1995)).

        Tribal Courts must deal with the very same issues state and Federal
    courts confront in the criminal context, including, child sexual abuse,
    alcohol and substance abuse, gang violence and violence against women.
    Tribal Courts, however, must address these complex issues with far
    fewer financial resources than their Federal and state counterparts.
    Judicial training that addresses the existing problems in Indian
    Country, while also being culturally sensitive, is essential for Tribal
    Courts to be effective in deterring and solving crime in Indian
    communities.

                  INADEQUATE FUNDING OF TRIBAL JUSTICE SYSTEMS

        There is no question that Tribal justice systems are, and
    historically have been, underfunded. The 1991 United States Civil
    Rights Commission found that ``the failure of the United States
    Government to provide proper funding for the operation of tribal
    judicial systems . . . has continued for more than 20 years.'' The
    Indian Civil Rights Act: A Report of the United States Civil Rights
    Commission, June 1991, p. 71. The Commission also noted that
    ``[f]unding for tribal judicial systems may be further hampered in some
    instances by the pressures of competing priorities within a tribe.''
    Moreover, they opined that ``If the United States Government is to live
    up to its trust obligations, it must assist tribal governments in their
    development . . .'' More than ten years ago, the Commission ``strongly
    support[ed] the pending and proposed congressional initiatives to
    authorize funding of tribal courts in an amount equal to that of an
    equivalent State court'' and was ``hopeful that this increased funding
    [would] allow for much needed increases in salaries for judges, the
    retention of law clerks for tribal judges, the funding of public
    defenders/defense counsel, and increased access to legal authorities.''
        With the passage of the Indian Tribal Justice Act, 25 U.S.C.  3601
    et seq. (the ``Act''), Congress found that ``[T]ribal justice systems
    are an essential part of tribal governments and serve as important
    forums for ensuring public health, safety and the political integrity
    of tribal governments.'' 25 U.S.C.  3601(5). Congress found that
    ``tribal justice systems are inadequately funded, and the lack of
    adequate funding impairs their operation.'' 25 U.S.C.  3601(8). In
    order to remedy this lack of funding, the Act authorized appropriation
    of base funding support for tribal justice systems in the amount of
    $50,000,000 for each of the fiscal years 1994 through 2000. 25 U.S.C.
    3621(b). An additional $500,000 for each of the same fiscal years was
    authorized to be appropriated for the administration of Tribal Judicial
    Conferences for the ``development, enhancement and continuing operation
    of tribal justice systems . . .'' 25 U.S.C.  3614.
        Nine years after the Act was enacted into law, and even after
    reauthorization, no funding has been appropriated. Only minimal funds,
    at best, have been requested. Yet, even these minimal requests were
    deleted prior to passage. Even more appalling is the fact that BIA
    funding for Tribal Courts has actually substantially decreased
    following the enactment of the Indian Tribal Justice Act in 1993.

               BIA-DOJ INDIAN COUNTRY LAW ENFORCEMENT INITIATIVE

        Full funding is requested for the Joint BIA-DOJ Law Enforcement
    Initiative proposal to improve law enforcement in Indian Country. The
    Final Report of the Executive Committee for Indian Country Law
    Enforcement Improvements documents the ``stark contrast between public
    safety in Indian Country and the rest of the United States.'' (Final
    Report, p. 4.) ``While law enforcement resources have been increased
    and deployed throughout the United States, BIA resources actually have
    been reduced in Indian Country during the past few years.'' It is
    axiomatic that ``as a consequence of improvements to law enforcement
    services, a corresponding increase in funds is needed for judicial
    services, especially tribal courts.'' (Final Report, p. 8).
        The Initiative includes funding to continue the Department of
    Justice Indian Tribal Court Program. We urge the Committee to support
    full funding of the Tribal Court Program to assist in the development,
    enhancement and continued operation of tribal judicial systems. While
    funding has fallen far short of the $58 million in annual funding
    promised by the Indian Tribal Justice Act, the Initiative will fail
    without it. Without well-staffed, competent Tribal judiciaries to
    handle the influx of the new criminal prosecutions flowing from the Law
    Enforcement Initiative, the goal of providing service to 1.4 million
    Native Americans who live on or near Indian lands the same ``protection
    of their basic rights, a sense of justice, and freedom from fear''
    enjoyed by Americans at large, will not be attained. (Final Report, p.
    4).

                                   CONCLUSION

        Tribal justice systems are the primary and most appropriate
    institutions for maintaining order in tribal communities. They are key
    to Tribal economic development and self-sufficiency. Any serious
    attempt to fulfill the federal government's trust responsibility to
    Indian nations, must include increased funding and enhancement of
    Tribal justice systems.
        We welcome the opportunity to comment on the Justice Department's
    Budget Request for the fiscal year 2004 funding of the Indian Country
    Law Enforcement Initiative and the Indian Tribal Justice Technical and
    Legal Assistance Act of 2000 (Public Law 106-559).
        Please contact me at (715) 478-7255, or NAICJA Executive Director
    Chuck Robertson, at (605) 342-4804 or naicja@rushmore.com with
    questions or comments. Thank you.
                                     ______

          Prepared Statement of the American Sportfishing Association

        The American Sportfishing Association (ASA) recommends the
    following as the Subcommittee considers appropriations for the National
    Marine Fisheries Service (NMFS) for fiscal year 2005. The American
    Sportfishing Association is a non-profit trade association whose 600
    members include fishing tackle manufacturers, sport fishing retailers,
    boat builders, state fish and wildlife agencies, and the outdoor media.
    The ASA makes these recommendations on the basis of briefings with
    agency staff and from years of experience with fisheries management in
    this Nation. It is important to note that sportfishing provides $116
    billion in economic output to the economy of the United States each
    year. Sportfishing in marine waters alone provides a $31 billion impact
    each year to coastal states.

       NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION--NATIONAL MARINE
                               FISHERIES SERVICE

        An important but often underrepresented NOAA constituency is the
    Nation's 34 million sportfishing anglers, who collectively provide
    billions of dollars in economic impact each year to the U.S. economy.
    The importance of adequately including this group and their activities
    in management decisions cannot be overstated.

    Recreational Fisheries
        With over nine million participants and 91 million fishing days,
    saltwater recreational fishing is the fastest growing segment of
    sportfishing in the United States. NOAA-Fisheries has a responsibility
    to recreational anglers. Sportfishing in marine waters alone provides
    $8.1 billion in salaries and wages to nearly 300,000 wage earners in
    coastal areas. Good socio-economic information is critical for
    effective marine resources management efforts, and the ASA applauds the
    Administration's requested increase of $1,200,000 (for a total of $5.2
    million) for additional economic and social science research, data
    collection and analysis. But, the ASA asks Congress to require NOAA-
    Fisheries to provide adequate data for sportfishing in marine waters
    and that an additional $1.7 million be provided for economic and social
    science research and data collection.

    Stock Assessment and Monitoring
        Our nation's valuable marine fish resources are under intense
    pressure from coastal population growth, increasing fishing effort and
    accompanying declines in habitat quality. These pressures demand well-
    documented information on marine fish stocks. NOAA-Fisheries has not
    fully demonstrated an ongoing and comprehensive commitment to
    modernization and improvement of fisheries stock assessment and
    management of marine systems. It will take a sustained commitment on
    the part of the Administration, Congress and partner agencies to ensure
    that these initiatives are in place, sustained and effective over the
    long-term.
        The ASA recognizes and supports the fiscal year 2005 President's
    budget request to increase funds for fisheries stock assessments,
    cooperative research, and management by $4 million to a total of $18.9
    million, but the NOAA-Fisheries stock assessment program needs to build
    to the $100 million level over the next five years if it is to be
    effective in providing data for proper management of marine stocks. The
    ASA recommends an additional $10 million to begin building this program
    to the necessary level.
        NOAA-Fisheries has developed successful joint programs in
    statistics, including the RecFIN, and ComFIN programs and, most
    recently, the Atlantic Coastal Cooperative Statistics Program. The ASA
    recommends that Congress fund GulFIN at $4.5 million and RecFIN at $3.9
    million, and urges NOAA-Fisheries to use the RecFIN funding for
    cooperative data collection for recreational fisheries consistent with
    statutory directives. The ASA is pleased with the President's request
    of $3.0 million for PacFIN, the proposed $6.7 million for the Alaska
    groundfish monitoring effort, and the recommended funding levels for
    AKFIN at $3.2 million.
        The ASA strongly urges Congress to address the statistics gaps on
    the Atlantic Coast by supporting the Atlantic Coastal Cooperative
    Statistics Program (ACCSP.) NOAA-Fisheries and the Atlantic states
    share a commitment through and Memorandum of Understanding to proceed
    with this program. The ASA urges Congress to appropriate the funds
    necessary for success by adding a $5 million appropriation in fiscal
    year 2005 for ``Fish Statistics--Atlantic States Marine Fisheries
    Commission'' as the ACCSP is fully prepared to utilize this amount
    immediately as stated in their planning document.
        Cooperative research programs, including the SEAMAP and MARFIN
    programs, support fishery-independent research on high priority
    species. MARFIN continues to provide funds for Congressionally mandated
    shrimp bycatch studies. SEAMAP is building a long-term fishery-
    independent database needed for managing heavily exploited species and
    for identifying and protecting critical habitat. The ASA is concerned
    with the decline in funding for these critical information-gathering
    programs; therefore, the ASA recommends that the MARFIN competitive
    grant program be funded at $6.0 million (with $4 million for the
    Southeast and $2 million for the Northeast) and SEAMAP at $6.0 million.

    Habitat Loss
        The Administration has proposed the elimination of several habitat-
    related programs including important work being carried out on the
    Charleston Bump. The Charleston Bump is an important nursery habitat
    for Atlantic Highly Migratory Fish species (HMS), and the ASA supports
    continuation of this program at fiscal year 2004 levels.
        The ASA supports the fiscal year 2005 request of $13.2 million for
    Fisheries Habitat Restoration. This program provides funding to
    foundations that awards grants to restore fish habitat. Specifically,
    the ASA is pleased with the $1.5 million increase for the Community-
    based Restoration Program (CRP) that has funded over 800 vitally
    important restoration projects that entail volunteers and educational
    opportunities to promote stewardship and public involvement. The ASA
    recommends an additional $2 million for CRP grants that are regularly
    matched by a 3-5 ratio and completed by many groups including regional
    or national partners, non-profit organizations, communities, and
    industry.

    Interagency Efforts
        The ASA strongly recommends that Congress appropriate $10.0 million
    for the Atlantic Coastal Fisheries Cooperative Management Act. It
    provides the Atlantic States Marine Fisheries Commission with the
    financial resources to carry out their Congressional mandates and the
    program continues to accomplish goals, such as the continuing successes
    in striped bass and weakfish management.
        The ASA urges Congress to appropriate adequate funding for all
    cooperative programs with state agencies, including ESA Section 6
    cooperative programs and to implement restoration programs under the
    authority granted in the Endangered Species Act. These agreements would
    provide funding on a matching basis to accomplish conservation
    activities and to protect candidate species at risk of extinction. It
    is essential to protect the species important to recreational anglers
    and to sustain populations through sound management. The ASA recommends
    an additional $4 million be included in the fiscal year 2005
    appropriation to provide funding for cooperative agreements with states
    to enhance the states' roles under the Endangered Species Act.
        Addressing the significant shortfalls in financial assistance to
    accomplish mandated and timely fisheries management needs is critical
    to allow for implementation of the Magnuson-Stevens Fisheries
    Conservation and Management Act. The ASA supports the additional
    $800,000 in funding for NOAA-Fisheries Regional Fishery Management
    Councils that will allow the Councils to provide a more timely response
    to regional problems as fishing pressures continue to grow in many
    areas.
        Reliable fishery statistics provide the foundation upon which all
    fishery management decisions are based. State participation in the
    development and implementation of fishery statistics programs is
    critical to ensure the validity, comparability, and usefulness of data.
    The States and NOAA-Fisheries are each authorized to collect and
    interpret statistics for marine fisheries. Therefore, it is essential
    that States and the Interstate Marine Fisheries Commissions participate
    in cooperative statistics programs.

    Other NOAA-Fisheries Issues
        The ASA is pleased with the increase of $10.9 million for the
    Pacific Coastal Salmon Recovery Fund and the inclusion the state of
    Idaho for salmon funding. We urge the Subcommittee to support funding
    for this program that is essential to recovery efforts of endangered
    and at-risk salmon species that are so critically important to the
    Pacific Northwest. The Pacific Coastal salmon fisheries provide
    outstanding opportunities for recreational anglers and the ASA
    appreciates all efforts designated to restore these recreational
    species.
        The ASA is concerned over the continuing low level of funding for
    implementation of the Anadromous Fisheries Act. The Anadromous
    Fisheries Act budget line has traditionally been used to fund
    activities that cannot be supported through other federal and state
    funds, and the fisheries management community has been unable to
    adequately address the needs of most anadromous fish stocks. Therefore,
    the ASA urges Congress to fund the Anadromous Fisheries Act grants to
    States at $8.0 million.
        The ASA strongly recommends that Congress appropriate $30 million
    for cooperative law enforcement arrangements with the states for fiscal
    year 2005. Additionally, the ASA urges Congress to insist that NOAA-
    Fisheries work with the Department of Justice to streamline the
    reimbursement process to states prosecuting federal fisheries
    violations, as was intended by Congress.

    Other National Oceanic and Atmospheric Administration (NOAA) Programs
        The ASA urges Congress to aggressively support the development of
    new technologies to help address critical marine resource issues.
    Several ongoing efforts, including the Hollings Marine Laboratory (HML)
    and the Fish Cooperative Institute, are funded through the Oceanic and
    Coastal Research line of the National Ocean Service budget. The ASA is
    pleased with the Administration's recognition of this important work in
    marine environmental health and the included funding level of $4.0
    million for the HML and $0.750 for the Fish Cooperative Institute.
        The National Estuarine Research Reserve (NERR) and Coastal Zone
    Management (CZM) programs are two highly successful examples of state-
    federal partnership efforts to improve the quality of our natural
    resources. The ASA is pleased with the proposed $16.4 million for NERR
    operations as well as with the Administration's request of $7.25
    million for construction of research and educational facilities at NERR
    sites. Additionally, the ASA is pleased that the Administration
    recognizes the efforts of coastal states to address issues ranging from
    public access to non-point source pollution to development and urban
    sprawl. Increased development continues to have detrimental impacts on
    the quality of life in our communities, and states and local
    communities are in the best position to develop sound solutions to
    these pressures. Therefore, the ASA strongly urges Congress to support
    the nation's coastal zone management enterprise at a level of $85
    million for Coastal Zone Management grants to help states and local
    communities work to improve the quality of our coastal natural
    environment.
        The ASA is pleased with the Administration's acknowledgement of the
    problems posed by pfiesteria and other harmful algal blooms. However,
    the ASA is concerned over the proposed termination of work carried out
    in concert with the states. The Administration has proposed to
    terminate the $600,000 for pfiesteria work being carried out by the
    South Carolina Harmful Algal Bloom Task Force. This effort is
    especially important in evaluating the risks of harmful algal blooms in
    tidal-dominated high flow systems, and the ASA urges Congress to
    restore funding for this effort.
                                     ______

     Prepared Statement of the American Council of Young Political Leaders

        Mr. Chairman, distinguished members of the Subcommittee on
    Commerce, Justice, and State, the Judiciary and Related Agencies,
    ladies and gentlemen:
        The American Council of Young Political Leaders (ACYPL) welcomes
    this opportunity to present testimony as you consider the U.S.
    Department of State's fiscal year 2005 appropriations for cultural and
    educational exchange programs. My name is Brad Minnick, and as the
    ACYPL's executive director, I oversee nearly 30 annual exchange
    programs funded in part by a core grant from the State Department's
    Bureau of Educational and Cultural Affairs (ECA). Today I offer some
    perspectives about the value of exchanges like ours against the
    backdrop of global terrorism and rising anti-Americanism around the
    world. In my view, citizen exchanges are a critical component in the
    war against terrorism and the promotion of democratic ideals.
    Background and History of ACYPL
        Since its founding in 1966 as an outgrowth of the Fulbright-Hays
    Act, ACYPL has introduced nearly 6,500 select emerging leaders from
    around the globe to international diplomacy and to each other. ACYPL
    prepares in-depth study tours for young leaders, aged between 25 and 40
    years old, to give them much-needed international exposure early in
    their political careers. U.S. participants travel overseas to study the
    political system and culture of another nation. Reciprocal visits bring
    young leaders here from abroad for an introduction to American
    democracy and culture and our federalist form of government.
        We target young politicians likely to assume future positions of
    responsibility and leadership. Here at home, our delegates are
    typically state legislators, mayors, city council members and other
    state and local elected officials. Many have never before traveled
    outside the United States.
        ACYPL programs are strictly bipartisan; our delegates are drawn
    from all 50 states and equally from both major political parties. We
    take particular care in putting together our delegations to demonstrate
    to the world that this nation has diverse opinions, cultures,
    ethnicities, religions, and politics. Similarly, ACYPL's overseas
    delegations are chosen by our partners and U.S. Embassies abroad to
    represent the political and cultural diversity of their home countries.
        Here in the United States ACYPL can claim nearly 40 sitting members
    of Congress among its distinguished alumni; six sitting state
    governors; several current and former Cabinet secretaries and many
    leaders in business, finance, community affairs, and education.
    Overseas, our distinguished alumni include prime ministers, cabinet
    officers, ambassadors and parliamentarians. The current Hungarian prime
    minister and the current Hungarian ambassador to the United States were
    roommates on an ACYPL exchange in 1983.

    A Model for Experience and Understanding
        ACYPL is but one of many international organizations actively
    engaged in citizen diplomacy. Why are we unique and why are we
    effective?
        ACYPL is cost-efficient. For practically every dollar we receive in
    federal funding, we turn it into at least two dollars through cost-
    share, in-kind contributions and outside fundraising. Overall, we will
    leverage nearly 160 percent of our base federal grant in corporate and
    private funding support this year--a $1.2 million return on a federal
    investment of $800,000.
        ACYPL exchanges are bilateral. Appearing recently before the House
    Appropriations Subcommittee on Commerce, Justice, and State, Ambassador
    Edward Djerejian noted that ``the most effective programs of public
    diplomacy--the ones most likely to endure and have long-term impact--
    are those that are mutually beneficial . . .'' We host the same number
    of delegates from each country that we send to those countries. Our in-
    country counterpart organizations willingly organize and underwrite the
    visits of our American delegates because we reciprocate.
        We focus only on emerging political leaders. We believe
    passionately in the need to identify, educate and introduce to each
    other tomorrow's global leaders today. Through familiarity and
    relationships comes knowledge and understanding. The earlier in one's
    political career we can make these connections, the better.
        As Assistant Secretary of State Patricia de Stacy Harrison is fond
    of saying, ``if you don't go, you don't know.'' ACYPL brings young
    leaders here to see for themselves the multicultural, pluralistic
    nation of friendly and generous people that is the United States. A
    delegation from Indonesia visiting Dearborn, Michigan was shocked to
    see that Muslims here not only worship openly but are assimilated into
    the fabric of American society. A Chinese delegation didn't know until
    they met him that a Chinese-American could be and was elected one of
    our nation's 50 governors.
        American delegates make similar discoveries. Delegates to India and
    Tanzania had never before seen such rampant poverty. Through their
    meetings in Egypt, Jordan and Morocco delegates experienced first-hand
    the intensity of anti-American sentiment among young adults. Delegates
    in Vietnam saw the deep bitterness many government officials still hold
    over the ``American war.'' In Australia delegates learned about the
    true strength and history of our alliance.
        ACYPL continues to engage its alumni. We view the initial exchange
    as only the beginning of our delegates' experience as citizen
    diplomats. And we tap these well connected alumni at home and abroad to
    give current delegates access to leaders at the highest levels of
    government. A recent Chinese delegation learned about the rule of law
    directly from Supreme Court Justice Sandra Day O'Connor and White House
    Counsel Alberto Gonzales, who is himself an alumnus of ACYPL.
    Palestinian delegates quizzed Ambassador Dennis Ross and Secretary of
    State Colin Powell about Middle East peace. Israelis met with former
    Defense Secretary William Perry. In Jordan, U.S. delegates met with
    King Abdullah; in Romania they talked NATO membership with Prime
    Minister Nastase and Foreign Minister Geoana; in Uruguay, delegates
    questioned President Battle about Iraq and international cooperation in
    the war on terrorism.
        Many alumni can testify about the deep impact the program had on
    them as they rose through the ranks to their current position of
    national or international leadership. The phrase most frequently used
    in describing their ACYPL experience is ``life-changing.'' Here is a
    typical comment from our delegate evaluations: ``As a state legislator,
    I was never focused on foreign issues before this trip. This trip and
    access to the political leaders has opened my eyes forever on our
    responsibility as a nation.'' Said a recent foreign delegate: ``I have
    come to realize that actually I know less about the United States than
    I thought I did before going on this trip.'' Another wrote that going
    forward ``I'll be able to avoid the fallacy of oversimplifying
    America.''
        U.S. Embassies abroad widely speak of the positive results ACYPL
    visits generate. For example, a recent delegation spent time in
    Malaysia, ACYPL's first visit there in over 10 years, where they were
    introduced to some of the new political leadership elected just one
    week before the delegates' arrival. We were told that this could not
    have been a better time for the ACYPL delegation to come to Malaysia
    because the visit allowed Embassy staff to meet many key contacts in
    the major political parties, government officials and non-governmental
    organizations for the first time. One notable contact was with the
    executive director and secretary of the International Movement of
    Muslim Youth (ABIM), based in Malaysia, who attended the ACYPL
    welcoming reception hosted by the Embassy's deputy chief of mission.
    This was the first time ABIM had ever accepted an Embassy invitation to
    any event, and the occasion allowed Embassy staff and the ABIM to
    discuss how they could work together in the future in places like Iraq.

    Why Exchanges Are Needed
        Current events around the world speak of the tragedy of the
    increasing lack of understanding between the United States and some of
    its traditional allies; it also speaks volumes to the deeply-rooted
    mistrust of the United States felt by millions around the globe.
    Citizen-to-citizen exchanges offer unique opportunities for learning
    from one another about commonly-shared solutions to problems, as well
    as about different perspectives on forms of government and the
    aspirations other nations have for their citizens. This is especially
    true when it applies to emerging democracies, post-conflict nations, or
    in countries where the United States has a critical focus.
        Worldwide, ACYPL has succeeded in addressing immediate national
    public diplomacy interests. When U.S. relations with the People's
    Republic of China were normalized in 1979, ACYPL was one of the first
    exchange programs established between our two nations. This year we are
    celebrating the 25th anniversary of the first ACYPL visit to mainland
    China. We are proud to be in the vanguard of exchange programs that
    seek to promote peace, reconciliation, and friendship among former
    adversaries.
        Our experience with China illustrates the benefits that come when
    exchanges are sustainable over a quarter of a century. Since 1979
    nearly 400 young leaders on both sides have gained valuable
    understanding about the other; indeed, many of these alumni have risen
    to high levels of leadership in both countries. This exchange never
    fell victim to the ebb and flow of funding or of relations between our
    two governments, even during Tiananmen Square or the downing of a U.S.
    Air Force plane over Hainan Island. I remember vividly arriving in
    Beijing as an ACYPL delegate myself the day martial law was declared in
    1989. Despite the Tiananmen Square protests, both nations agreed our
    visit should proceed. It was an experience I shall never forget.
        With regard to public diplomacy in the Middle East and other areas
    of focus by the State Department, ACYPL has strengthened its exchanges
    to promote current priorities. While 25 percent of State Department
    funding for exchanges this year will go to programs in the Middle East
    and South Asia, fully 37 percent of ACYPL's exchanges in 2004 are with
    nations with predominant Muslim populations. We have already brought to
    the United States approximately 100 delegates from the Near East.
    Recent inbound exchanges have included parliamentarians from Indonesia,
    where it has been stated in a September 2003 General Accounting Office
    report that only 15 percent of Indonesians view the United State
    favorably. We are also hosting Egyptian parliamentary staffers who are
    witnessing first-hand how representative government works in the U.S.
    Congress; and later this summer a delegation from Jordan (where only 1
    percent view the United States favorably, according the same GAO
    report) will visit schools, citizen groups, and local legislators to
    learn about a civil society. We feel these visits offer more than just
    education, but an opportunity to expose mutual misconceptions; create
    goodwill that promotes understanding and dialogue; and engage young
    leaders in public diplomacy efforts with lasting results.

    Where We Are Today and Challenges for the Future
        Unfortunately, like many of our exchange program colleagues, ACYPL
    does not have the resources to conduct and maintain exchanges worldwide
    on the scale appropriate for the world's only super power. America's
    national leaders agree on the value of educational and cultural
    exchanges, yet those of us who organize these exchanges typically
    operate on shoestring budgets. The United States spends less than one
    percent of the annual Defense budget on all of its public diplomacy
    programs combined. Because resources are so limited, my organization
    must constantly choose between maintaining existing relationships or
    establishing new ones. We cannot do both under existing funding.
        The international exchange community understands the severe budget
    pressures facing this subcommittee. But we also understand what America
    gains from these exchanges. Government-to-government dialogue and
    military strength can only reach so far and do so much. Public
    diplomacy efforts underscore or compliment government-to-government
    achievements while imparting personal experience and developing mutual
    understanding among future leaders. Yet, without sustained or new
    funding for programs like ours, progress towards impressing upon other
    nations the blessings of democracy and freedom cannot be made fully;
    nor will we reach those who need to hear our message the most. Indeed,
    as Ambassador Djerejian notes in Changing Minds, Winning Peace, ``the
    importance of public diplomacy in meeting the strategic challenge that
    America faces in the Arab and Muslim world requires a dramatic increase
    in funding.''
        Our organization could facilitate exchanges with 100 emerging young
    political leaders in Afghanistan and/or Iraq that focus on democracy,
    rule of law, openness in government, civil society, women's rights, and
    the importance of public service for $600,000. We could double the
    number of countries we exchange with for $2 million. With $300,000 more
    we could add enhanced follow-on activities and better communicate with
    our global alumni.
        Thank you for this opportunity to share my thoughts about why
    public diplomacy programs like ours must be strengthened in a post 9/11
    world. As you deliberate how best to allocate limited resources I
    encourage you to consider the important role that ACYPL and its sister
    exchange organizations can play in fostering improved understanding
    among emerging leaders, combating global terrorism and changing
    perceptions abroad about America. Thank you.
                                     ______

         Prepared Statement of the National Center for Victims of Crime

        The National Center for Victims of Crime submits this testimony to
    urge members of the Subcommittee on Commerce, Justice, State and the
    Judiciary to approve the President's budget request and release $675
    million from the Victims of Crime Act (VOCA) Fund for fiscal year 2005.
    In addition, we urge Subcommittee members to prevent the creation of
    additional earmarks from the VOCA Fund and to discontinue the use of
    earmarks from the VOCA Fund for federal positions.
        The National Center for Victims of Crime is the leading resource
    and advocacy organization for victims of crime. From our work with
    crime victims and service providers across the country, we are well
    acquainted with the funding needs of those who assist victims of crime.
    Since our founding in 1985, the National Center has worked with public
    and private non-profit organizations and agencies across the country,
    and has provided information, support, and technical assistance to
    hundreds of thousands of victims, victim service providers, allied
    professionals, and advocates. Our toll-free information and referral
    Helpline keeps us in touch with the needs of crime victims nationwide.
    Through our day-to-day interactions with our members and with the 8,300
    crime victim service providers in our referral network, we stay
    informed of the work they do and of the impact that funding decisions
    at the federal level have on their ability to meet the needs of
    victims. We also interact with crime victim service providers through
    our regional Training Institute, which offers training on a variety of
    issues to service providers throughout the country. In short, we hear
    from victims and service providers every day about the impact and
    importance of the VOCA Fund.

    About the VOCA Fund
        The VOCA Fund was created twenty years ago to provide ongoing
    federal support for state and local crime victim programs. It is funded
    by criminal fines and penalties imposed on federal offenders. Since
    fiscal year 2000, the VOCA Fund has carried over money from year to
    year, with each year's VOCA Fund disbursement reflecting a cap on the
    amount of money released from the Fund. The bulk of the funds are
    distributed each year by formula grants to the states to fund: (a)
    crime victim compensation programs, which pay many of the out-of-pocket
    expenses incurred by victims; and (b) crime victim assistance. The VOCA
    Assistance funding supports rape crisis centers, domestic violence
    shelters, victim assistants in law enforcement and prosecutor offices,
    and other direct services for victims of crime.

    VOCA funding for victim assistance has decreased since fiscal year 2002
        For the last two years, a cursory look at the federal
    appropriations might indicate that VOCA funding for victim services has
    increased. In fact, it has fallen since fiscal year 2002. The decrease
    in VOCA funding for victim assistance has resulted from changes in the
    statutory formula for disbursement of VOCA dollars and from the
    disproportionate impact of the budgetary rescission on VOCA assistance
    spending. While the total VOCA disbursement has increased, from $550
    million in fiscal year 2002 to $625 million in fiscal year 2004, VOCA
    assistance spending has dropped in that time, from $383 million in
    fiscal year 2002 to approximately $356 million in fiscal year 2004.
    This seven percent decrease has had a significant impact on rape crisis
    centers, homicide survivor groups, and victim/witness programs that are
    already suffering steep declines in support from states and private
    funders.
        Under the terms of the VOCA statute (42 U.S.C.  10601), there are
    certain set asides for federal programs that are funded according to
    their need. These programs are victim/witness coordinators in the
    offices of U.S. Attorneys, victim assistants in FBI field offices, and
    the federal automated victim notification system. Another set aside
    exists for children's justice programs. From the remaining VOCA
    dollars, five percent is allocated to the Office for Victims of Crime
    for additional federal programs and for national-scope projects.
    Payouts from the VOCA Fund to state crime victim compensation programs
    are then made, based on a partial reimbursement of each state payments
    to victims. The amount of funds remaining becomes that year's VOCA
    assistance figure. Thus, any change in earmarks from the fund or in the
    needs of the funded federal programs, any reduction in overall VOCA
    spending, and any budgetary rescission, disproportionately impacts VOCA
    assistance spending.

    The importance of VOCA funding to state and local victim services
        VOCA assistance money provides the crucial federal support for core
    services to crime victims. Through the VOCA fund, the federal
    government supports services for survivors of homicide victims and for
    victims of assault, robbery, gang violence, hate and bias crimes,
    intoxicated drivers, bank robbery, fraud, elder abuse, child abuse and
    neglect, domestic violence, and sexual assault. VOCA assistance dollars
    fund services that help victims in the immediate aftermath of crime,
    including accompaniment to hospitals for examination; hotline
    counseling; emergency food, clothing and transportation; replacing or
    repairing broken locks; filing restraining orders; and more. This
    program also funds assistance as victims move through the criminal
    justice system, including notification of court proceedings,
    transportation to court, help completing a victim impact statement,
    notification about the release or escape of the offender, and
    assistance in seeking restitution.
        Organizations receiving VOCA assistance grants include sexual
    assault and rape treatment centers, domestic violence programs and
    shelters, child abuse programs, centers for missing children, mental
    health services, and other community-based victim coalitions and
    support organizations including those who serve homicide survivors.
    Also funded are victim service programs operated by other types of
    organizations, including criminal justice agencies, faith-based
    organizations, emergency medical facilities, and others.

    The need far outpaces the funds
        Victims from around the country call our toll-free Helpline,
    looking for the assistance that can help them rebuild their lives. Too
    often we have had to tell rural domestic violence victims that the
    closest services are 200 miles away, to tell mothers of sexual abuse
    victims that they will have to drive over an hour to get to special
    children's services, and to tell rape victims that there are no longer
    services in their county and they will have to call the state coalition
    for help. Immigrant victims find there are no service providers with
    available interpreters; victims with disabilities can't locate
    specialized services. Because the recent decrease in federal funding
    follows decreases in state and private giving, any additional cuts come
    at the expense of core services to victims.
      --Service providers tell us they have long waiting lists for services
            that victims need immediately. When a teenage sexual assault
            victim turns to a rape crisis center, telling her she can come
            back in three months isn't good enough.
      --Program directors tell us they have had to chose between retaining
            a volunteer coordinator who can provide the necessary
            professional oversight to volunteers who inform victims about
            their rights and assist them as they apply for compensation,
            and a counselor who can provide in-depth counseling and group
            therapy.
      --Programs that formerly served multiple counties through satellite
            offices have had to contract their services to a single
            location. Not only does this change directly affect the
            accessibility of their services, but it also means a lessening
            of ties to others in the community who can collaborate to
            respond to victims.
      --Programs that have spent years making inroads into immigrant
            communities are now faced with discontinuing their services
            because they can no longer afford bilingual advocates.
      --Services for ``secondary'' victims have been cut. While service
            providers understand the need to provide services to children
            of domestic violence victims, to non-offending mothers in cases
            of child sexual abuse, and to family members of victims of
            other violent crime, the combined budget cuts have often
            resulted in eliminating those services.
      --As programs have had to cut back, they report that experienced but
            overworked staff are leaving the field. Where new staff have
            been hired, directors report a lack of funding to train them.
        Victim service providers understand the needs in their community.
    With additional funding, they could increase their community
    collaborations to reach out to underserved victims, including elderly
    victims, teen victims, immigrant victims, victims with disabilities,
    and victims in rural areas. They can also expand their core services to
    meet the needs of those victims of crime, to help them rebuild their
    lives. They also report a need for funding for technology that can
    increase their efficiency and effectiveness--such as automated victim
    notification systems, databases to enable service providers to
    coordinate their efforts for a single victim, and Web technology to
    improve their outreach to the community.

    There must be no additional earmarks from VOCA
        Finally, while our first priority is to see the cap on the VOCA
    Fund raised to $675 million for fiscal year 2005, we also urge you to
    prevent the creation of additional earmarks from the VOCA Fund, even
    for projects that serve crime victims. VOCA formula grants are designed
    to let each state fund victim services based on the needs and strategic
    plans of that state. Money from the general VOCA Fund must not be set
    aside for additional specific purposes.
        We also urge that earmarks for federal positions from the VOCA Fund
    be discontinued. New earmarks on the Fund have been enacted over the
    last several legislative sessions, limiting the amount of money
    ultimately available to states to fund local programs. These earmarks
    result in a significant decrease in funding available to help the vast
    majority of crime victims--victims whose cases are prosecuted and who
    are served at the state and local levels. Such federal positions may be
    warranted, but surely Congress can find other sources of revenue to
    support federal employees. Moreover, because of the statutory
    construction of those earmarks, they are immune from any budgetary
    actions that restrict VOCA spending overall, and so are
    disproportionately favored.
        The most important action Congress can take to help this nation's
    victims of crime is to provide the funding for services and
    compensation programs that help them rebuild their lives. Congress'
    creation of the VOCA Fund in 1984 was a landmark action that
    fundamentally changed the way our society responds to victims of crime.
    We urge you to continue this great effort, by approving the President's
    budget request of $675 million for VOCA and holding fast against
    pressure to earmark the Fund.
                                     ______

        Prepared Statement of the Great Lakes Indian Fish and Wildlife
                                   Commission

        Summary of GLIFWC's Fiscal Year 2005 Testimony.--The Commission
    requests that Congress restore funding for the COPS Tribal Resources
    Grant Program to $40 million in fiscal year 2005 in the Department of
    Justice. The Administration is proposing to reduce funding for this
    essential program to $20 million.
        Disclosure of DOJ Grants Contracted.--The Commission is an
    intertribal organization which, under the direction of its member
    tribes, implements federal court orders governing tribal harvests of
    off-reservation natural resources and the formation of conservation
    partnerships to protect and enhance natural resources within the 1836,
    1837, and 1842 ceded territories. Under COPS Tribal Resources Grant
    Program, the Commission contracted:
      --$172,924 in fiscal year 2000 for the purposes of replacing obsolete
            radio equipment and to improve the capacity of GLIFWC's
            officers to provide emergency services throughout the Chippewa
            ceded territories;
      --$292,190 in fiscal year 2001 for the purposes of replacing obsolete
            patrol vehicles (boats, ATVs, and snowmobiles), purchasing
            portable defibrillators, and training GLIFWC officers;
      --$302,488 in fiscal year 2002 for the purposes of replacing obsolete
            patrol vehicles (ATVs and snowmobiles), improving officer
            safety (in-car video cameras), increasing computer
            capabilities, and expanding training of GLIFWC officers in
            interagency emergency response; and
      --$280,164 in fiscal year 2003 for the purposes of hiring 3
            additional officers, providing basic recruit training, and
            supplying standard issue items.
        Ceded Territory Treaty Rights and GLIFWC'S Role.--GLIFWC was
    established in 1984 as a ``tribal organization'' within the meaning of
    the Indian Self-Determination Act (Public Law 93-638). It exercises
    authority delegated by its member tribes to implement federal court
    orders and various interjurisdictional agreements related to their
    treaty rights. GLIFWC assists its member tribes in: securing and
    implementing treaty guaranteed rights to hunt, fish, and gather in
    Chippewa treaty ceded territories; and cooperatively managing and
    protecting ceded territory natural resources and their habitats.
        For the past 19 years, Congress and Administrations have funded
    GLIFWC through the BIA, Department of Justice and other agencies to
    meet specific federal obligations under: (a) a number of U.S./Chippewa
    treaties; (b) the federal trust responsibility; (c) the Indian Self-
    Determination Act, the Clean Water Act, and other legislation; and (d)
    various court decisions, including a 1999 U.S. Supreme Court case,
    affirming the treaty rights of GLIFWC's member Tribes. GLIFWC serves as
    a cost efficient agency to conserve natural resources, to effectively
    regulate harvests of natural resources shared among treaty signatory
    tribes, to develop cooperative partnerships with other government
    agencies, educational institutions, and non-governmental organizations,
    and to work with its member tribes to protect and conserve ceded
    territory natural resources.
        Under the direction of its member tribes, GLIFWC operates a ceded
    territory hunting, fishing, and gathering rights protection/
    implementation program through its staff of biologists, scientists,
    technicians, conservation enforcement officers, and public information
    specialists.
        Community-based Policing.--GLIFWC's officers carry out their duties
    through a community-based policing program. The underlying premise is
    that effective detection and deterrence of illegal activities, as well
    as education of the regulated constituents, are best accomplished if
    the officers live and work within tribal communities that they
    primarily serve. The officers are based in 10 satellite offices located
    on the reservations of the following member tribes: In Wisconsin--Bad
    River, Lac Courte Oreilles, Lac du Flambeau, Red Cliff, Sokaogon
    Chippewa (Mole Lake) and St. Croix; in Minnesota--Mille Lacs; and in
    Michigan--Bay Mills, Keweenaw Bay and Lac Vieux Desert.
        Interaction With Law Enforcement Agencies.--GLIFWC's officers are
    integral members of regional emergency services networks in Minnesota,
    Michigan and Wisconsin. They not only enforce the tribes' conservation
    codes, but are fully certified officers who work cooperatively with
    surrounding authorities when they detect violations of state or federal
    criminal and conservation laws. They also are certified medical
    emergency first responders, including CPR, and in the use of
    defibrillators, and are trained in search and rescue, particularly in
    cold water rescue techniques. When a crime is in progress or
    emergencies occur, local, state, and federal law enforcement agencies
    look to GLIFWC's officers as part of the mutual assistance networks of
    the ceded territories. This network includes the Wisconsin Department
    of Natural Resources, Minnesota Department of Natural Resources,
    Michigan Department of Natural Resources, U.S. Coast Guard, USDA-Forest
    Service, State Patrol and Police, county sheriffs departments,
    municipal police forces, fire departments and emergency medical
    services.
        GLIFWC Programs Currently Funded by DOJ.--GLIFWC recognizes that
    adequate communications, training, and equipment are essential both for
    the safety of its officers and for the role that GLIFWC's officers play
    in the proper functioning of interjurisdictional emergency mutual
    assistance networks in the ceded territories. GLIFWC's COPS grants for
    the past four years have provided a critical foundation for achieving
    these goals. Significant accomplishments with Tribal Resources Grant
    Program funds include:
      --Improved Radio Communications and Increased Officer Safety.--GLIFWC
            replaced obsolete radio equipment to improve the capacity of
            officers to provide emergency services throughout the Chippewa
            ceded territories. GLIFWC also used COPS funding to provide
            each officer a bullet-proof vest, night vision equipment, and
            in-car videos to increase officer safety.
      --Emergency Response Equipment and Training.--Each GLIFWC officer has
            completed certification as a First Responder and in the use of
            life saving portable defibrillators. In 2003, GLIFWC officers
            carried First Responder kits and portable defibrillators during
            their patrol of 275,257 miles throughout the ceded territories.
            In remote, rural areas the ability of GLIFWC officers to
            respond to emergencies provides critical support of mutual aid
            agreements with federal, state, and local law enforcement
            agencies.
      --Ice Rescue Capabilities.--Each GLIFWC officer was certified in ice
            rescue techniques and provided a Coast Guard approved ice
            rescue suit. In addition, each of GLIFWC's 10 reservation
            satellite offices was provided a snowmobile and an ice rescue
            sled to participate in interagency ice rescue operations with
            county sheriffs departments and local fire departments.
      --Wilderness Search and Rescue Capabilities.--Each GLIFWC officer
            completed Wilderness Search and Rescue training. The COPS
            Tribal Resources Grant Program also enabled GLIFWC to replace
            many vehicles that were purchased over a decade ago including
            10 ATV's and 16 patrol boats and the GPS navigation system on
            its 25 foot Lake Superior Patrol Boat. These vehicles are used
            for field patrol, cooperative law enforcement activities, and
            emergency response in the 1837 and 1842 Chippewa Ceded
            Territories. GLIFWC officers also utilize these vehicles for
            boater, ATV, and snowmobile safety classes taught on
            Reservations as part of the Commission's Community Policing
            Strategy.
      --Hire, train, and supply 3 additional officers.--Funding has been
            contracted to provide 3 additional officers to ensure tribes
            are able to meet obligations to both enforce off-reservation
            conservation codes and effectively participate in the myriad of
            mutual assistance networks located throughout a vast region
            covering 60,000 square miles.
        Consistent with numerous other federal court rulings on the
    Chippewa treaties, the United States Supreme Court recently affirmed
    the existence of the Chippewa's treaty-guaranteed usufructuary rights
    (Minnesota v. Mille Lacs Band, Case No. 97-1337, March 24, 1999). As
    tribes have re-affirmed rights to harvest resources in the 1837 ceded
    territory of Minnesota, workloads have increased. This expanded
    workload, combined with staff shortages would have limited GLIFWC's
    effective participation in regional emergency services networks in
    Minnesota, Michigan and Wisconsin. The effectiveness of these mutual
    assistance networks is more critical than ever given: National homeland
    security concerns; State and local governmental fiscal shortfalls; and
    staffing shortages experienced by local police, fire, and ambulance
    departments due to the call up of National Guard and military reserve
    units.
        Examples of the types of assistance provided by GLIFWC officers are
    provided below: as trained first responders, GLIFWC officers routinely
    respond to, and often are the first to arrive at, snowmobile accidents,
    heart attacks, hunting accidents, and automobile accidents (throughout
    the ceded territories); search and rescue for lost hunters, fishermen,
    hikers, children, and elderly (Sawyer, Ashland, Bayfield, Burnett, and
    Forest counties in Wisconsin and Baraga, Chippewa, and Gogebic counties
    in Michigan); being among the first to arrive on the scene where
    officers from other agencies have been shot (Bayfield, Burnett, and
    Polk counties in Wisconsin) and responding to weapons incidents
    (Ashland, Burnett, Sawyer, and Vilas counties in Wisconsin); assist
    with drowning incidents (St. Croix River on the Minnesota/Wisconsin
    border, Sawyer county in Wisconsin, Gogebic county in Michigan) and
    searching for lost airplanes (Ashland, Forest and Washburn counties in
    Wisconsin); organize and participate in rescues of ice fishermen on
    Lake Superior (Ashland and Bayfield counties in Wisconsin) and
    assisting with Lake Superior boat rescues (Baraga county in Michigan
    and with the U.S. Coast Guard in other parts of western Lake Superior);
    and assist sheriffs departments with natural disasters (e.g. floods in
    Ashland County and a tornado in Siren, Wisconsin).
        Simply put, adding three additional officer positions will not only
    assist GLIFWC in meeting its obligations to enforce tribal off-
    reservation codes, but it will enhance intergovernmental efforts to
    protect public safety and welfare throughout the region by the states
    of Wisconsin, Minnesota, and Michigan.
                                     ______

         Prepared Statement of the American Foreign Service Association

        Mr. Chairman and members of the Subcommittee: On behalf of the
    American Foreign Service Association (AFSA) and the 23,000 active-duty
    and retired members of the Foreign Service, I express our appreciation
    for the opportunity to share our views and concerns with you regarding
    the 2005 fiscal year funding request for the Department of State and
    its programs.
        Our country is facing the most serious threat to its well-being
    since the Cold War. Foreign Service personnel are working long hours,
    in difficult circumstances with uncommon courage, to advance our
    bilateral and multilateral relationships, fight the battle against
    international terrorism, stop the flow of illegal drugs, uncover
    international crime and illegal financing networks, and work for the
    kind of development that will remove safe havens for international
    terrorists. On July 1, the State Department will take on a task that
    may reverberate for decades in the Middle East. The United States will
    be turning over sovereignty to the Iraqi people and the Department of
    State will be establishing one of the largest diplomatic missions in
    its history. The United States will become a partner with the Iraqi
    people in bringing peace and justice to their wartorn nation.
        As the United States takes on these ever-expanding diplomatic
    responsibilities, this Subcommittee's actions are vital to their
    success. Your decisions determine whether we will have the resources
    necessary to support the foreign affairs infrastructure and many of the
    tools of diplomacy needed to implement our foreign policy.
        The Subcommittee's and the Congress' past support of the
    Administration's request in meeting staffing needs, improving
    information technology systems, making posts and missions more secure,
    and providing for an active exchange program is very much appreciated.
    Certainly Secretary of State Colin Powell and his staff also must be
    thanked for their hard work on our behalf. For over three years, the
    Secretary has successfully served our Nation and the President as both
    his principal foreign policy advisor and as the effective and inspiring
    CEO of the Department of State.

                         PERSONNEL FUNDING REQUIREMENTS

        With the fiscal year 2004 funding, the Department completed its
    three-year Diplomatic Readiness Initiative (DRI) and by September 2004
    will have hired 1,158 new employees above attrition into the Foreign
    and Civil Services. Because of DRI, the majority of the Department's
    long vacant overseas positions will be filled. Further, the Department
    will be able to staff new operations in Iraq and Afghanistan, and in
    new offices like MEPI and HIV/AIDS without ``robbing Peter to pay
    Paul'' as had been the practice.
        However, the 1,158 additional Foreign and Civil Service personnel
    target was chosen prior to the changes in the world brought about by
    the September 11, 2001, attacks on the United States. When the numbers
    were selected, it was a different time and a different world. For
    fiscal year 2005 the Administration has requested an additional $76
    million to fund 317 new positions which would include 183 individuals
    for new staffing requirements, 63 positions for the Consular Associates
    Replacement Program, and 71 new security positions.
        AFSA supports this additional personnel request. Through
    reprioritization, DRI allowed the Department to meet unforeseen
    demands. However, this reprioritization also meant that current needs
    are not being met. The additional personnel ``float'' that was needed
    so that training could take place or positions will be covered while
    our personnel move from one post to another, take home leave, or the
    myriad other reasons for people to be in motion has not materialized.
    This personnel float must be replaced. Also additional security
    staffing is required to meet an increasingly dangerous world. Last
    year, Mr. Chairman, the Foreign Service experienced the most mandatory
    evacuations of posts than ever before, and we do not see this trend
    abating soon.
        Without the additional requested funding for staffing, the gains
    made by DRI could be lost. With the lack of appropriate funding in the
    decade of the 1990s, our foreign affairs infrastructure fell into a
    state of near crisis. This cannot be allowed to happen again, and we
    urge the Congress to meet the Administration's personnel request.
        There is one other matter in terms of the funding request that AFSA
    wishes to call to the Subcommittee's attention. In the State Department
    authorization bill, there is a provision in the House and Senate bills
    that would increase the hardship and danger pay differentials from a
    maximum of 25 percent to 35 percent. AFSA requests that if this
    increase is authorized, sufficient funding be included in this
    appropriations bill to accommodate this increase in differentials. The
    world has become a much more dangerous and difficult place to live. An
    increasing number of posts have hit the maximum but there still is a
    difference of ``worse and worst'' among these posts. An increase in the
    differential would help acknowledge the greater hardship that is
    required to live in the worst posts.

                PERSONNEL ISSUES FOR SUBCOMMITTEE CONSIDERATION

        Mr. Chairman, there is another issue to be considered is the
    treatment of our personnel. The Foreign Service is very fortunate in
    that we continue to attract from the best and brightest of our nation.
    Today, because of DRI and increased funding, hiring finally has began
    to increase. Currently nearly one-third of the State Department's
    Foreign Service has been hired since 1998, which creates a new dynamic
    for our institution. We ask for the Congress' attention in this matter
    because it can create personnel problems that work against retention
    and the morale of the Foreign Service.
        The newer members of the Foreign Service have much in common with
    their older colleagues. They, too, are the best that our nation has to
    offer. They, too, are hard working, dedicated, patriotic individuals
    who are willing to serve in dangerous and remote places. But one major
    difference is the importance of the spouse and family concerns in their
    consideration of their employment satisfaction level. In line with
    societal trends, our new Foreign Service members are marrying well-
    educated, career oriented spouses. These spouses do not see themselves
    continually sacrificing their career and serving as part of a ``two-
    fer'' couple. For many, spousal employment options and the attitudes of
    the spouse constitute the single most important factor in determining
    both mobility of the Foreign Service members and whether a person will
    make the Foreign Service a career. The efforts made by the Department
    in this area are noteworthy, but the problems have yet to be solved.
    AFSA urges the Committee to work with the Department in seeking ways to
    improve the career opportunities and the personal satisfaction of
    spouses for the long-term health of the Foreign Service.
        Another issue that should be addressed revolves around training and
    the per diem provided. As DRI concept continues to succeed and more
    individuals take additional training to learn new skills regarding
    their next assignment or to learn new hard language skills, AFSA
    believes that the per diem levels provided for those assigned to
    training need to be revised. Current allowances do not accommodate
    increased cost of living in the Washington, D.C. metropolitan area.
    AFSA asks that the Subcommittee provide funding to the Department of
    State so that appropriate support levels for those in long-term
    training can be provided.

                                EMBASSY SECURITY

        Mr. Chairman, AFSA continues to thank both the Congress and the
    Department of State for the impressive work they have been doing
    together in improving the security of our posts and missions abroad
    since the U.S. embassy bombings in East Africa in 1998.
        When Secretary Powell testified before this Subcommittee on March
    25, he discussed the vast improvements being made in terms of embassy
    security brought on by changes in management. He testified that at the
    beginning of this Administration, one new secure embassy was being
    built each year. Today, the Department is building 10 new secure
    embassy compounds a year. Moreover, the embassy's program costs have
    been reduced by 20 percent.
        However, the threats to Americans and the historic number of
    mandatory evacuations of our posts and missions abroad last year both
    attest to the need to continue our efforts in this area. It must be
    remembered that despite significant upgrades to the security of our
    facilities around the world, the General Accounting Office reported in
    its March 20, 2003 testimony before the Senate Committee on Foreign
    Relations that:

        ``. . . even with these improvements, most office facilities do not
    meet security standards. As of December 2002, the primary office
    building at 232 posts lacked desired security because it did not meet
    one or more of State's five key current security standards . . .. Only
    12 posts have a primary building that meets all 5 standards. As a
    result, thousands of U.S. government and foreign national employees may
    be vulnerable to terrorist attacks.''

        Mr. Chairman, the Foreign Service does not seek hilltop fortresses.
    Such would be counterproductive to our purpose for being in a country.
    We accept that dangers are part of our profession. But we also expect
    that our government, should provide for our safety as much as possible.
    AFSA urges that funding continue at its current, if not an accelerated
    pace, to complete the work of securing our posts and missions abroad.
        In this regard, we are aware of the proposed Capital Security Cost
    Sharing (CSCS) program to help provide additional funding to increase
    the speed in which secure embassy compounds can be built. Given the
    situation in the world today, no one can argue against building secure
    facilities faster. However, we wish to express our hope that the
    participating departments and agencies will be provided additional
    funding to meet the additional CSCS building costs. It is our concern
    that the mission that overseas staff were doing would be lost due to a
    strictly budget driven decision.

                                  SOFT TARGETS

        Mr. Chairman, for the past few years, AFSA expressed its concerns
    to this Subcommittee regarding the lack of attention the Department of
    State seemed to give to the protection of soft targets. We have always
    been appreciative of your and the Subcommittee's efforts to direct the
    Department's attention to that area. As you know, this was a particular
    concern to the Foreign Service because we believed that the term ``soft
    targets'' was nothing more than a euphemism for attacks against our
    spouses and children as we try and lead a somewhat normal life of going
    to school, to church, and on other family outings.
        It was thus particularly gratifying when the Secretary said to this
    Subcommittee:

        ``Our budget request also, I might say, touches on physical
    security improvements to those soft targets in our missions: schools,
    recreational facilities. And you know that we have an extensive plan to
    go after this soft targeting possibility, providing physical security
    improvements to overseas schools attended by dependents of government
    employees and other citizens. Our 2005 request includes $27 million for
    this effort, including $10 million for the schools, $5 million to
    improve security at employee association facilities, and $12 million
    for residential security upgrades. Protection of Americans living and
    working overseas is one of our highest priorities.''

          PAY DISPARITIES BETWEEN SERVICE OVERSEAS AND SERVICE AT HOME

        Finally Mr. Chairman, we wish to bring to your attention a concern
    that grows each year and seriously damages the morale of those in the
    Foreign Service. Because of prohibitions in the Federal Employees Pay
    Comparability Act, federal employees under Title V cannot receive
    locality pay when they go abroad. This means that currently when a
    member of the Foreign Service is posted abroad, that person will take a
    13 percent cut in base pay. Further, because of the ``rest of U.S.
    concept'' in locality pay, there is no federal employee of the same
    grade serving in the United States who will receive less than 8 percent
    more than a member of the Foreign Service member posted abroad.
        This difference has devalued the concept of differentials for
    serving in hardship and danger posts, it devalues the concept of equal
    pay for equal work, and it harms the individual because it affects the
    amount a person serving abroad can contribute to his or her retirement.
        There are now several pay disparities afflicting a member of the
    Foreign Service serving abroad caused by locality pay. Two people of
    the same rank, one serving in Washington and the other serving abroad,
    will have a difference of more than 13 percent because of locality pay.
    Since the adjustments in pay procedures for the Senior Executive
    Service and the Senior Foreign Service, due to personnel changes in
    last year's Defense Authorization bill, a member of the Senior Foreign
    Service will receive 13 percent more than a colleague at the same post
    but who is not at the Senior level. Finally, it is our understanding
    those in this nation's intelligence services receive an overseas
    adjustment similar to locality pay.
        Mr. Chairman, AFSA believes the current situation needs to be
    corrected, and we will seek that end. The laws will have to be changed,
    but when that happens, we urge this Subcommittee to provide the
    necessary funds to eliminate this pay disparity.

                                   CONCLUSION

        Again, Mr. Chairman and members of the Subcommittee, thank you for
    the opportunity to share the views of the American Foreign Service
    Association.
        Ultimately, our security cannot be won on the battlefield alone.
    Rather, it will turn on our ability to make foreign governments,
    international organizations, and the people of the world understand the
    threats that confront all of us and then face those threats with us. In
    the long run, our best defense will be convincing others to work toward
    an international society that is tolerant and just, as well as vigilant
    against common threats. This is the work of diplomacy, and we trust
    that you and your subcommittee will want to assign our diplomatic
    efforts the same strategic priority and funding that is assigned to
    this nation's military efforts.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Alliance for International Educational and Cultural Exchange,
      Prepared Statement of..........................................   198
    American Council of Young Political Leaders, Prepared Statement
      of.............................................................   210
    American Foreign Service Association, Prepared Statement of......   217
    American Museum of Natural History, Prepared Statement of........   167
    American Sportfishing Association, Prepared Statement of.........   208
    Association for Enterprise Opportunity, Prepared Statement of....   172
    Association of Small Business Development Centers, Prepared
      Statement of...................................................   193

    Byrd, Senator Robert C., U.S. Senator From West Virginia,
      Questions Submitted by.........................................    49

    California Industry and Government Central California Ozone Study
      (CCOS) Coalition, Prepared Statement of........................   204
    Campbell, Senator Ben Nighthorse, U.S. Senator From Colorado,
      Questions Submitted by.........................................    40
    Confederated Tribes of the Warm Springs Reservation of Oregon,
      Prepared Statement of..........................................   189
    Consortium for Oceanographic Research and Education (CORE),
      Prepared Statement of..........................................   174

    Domenici, Senator Pete V., U.S. Senator From New Mexico,
      Questions Submitted by.........................................    39
    Doris Day Animal League, Prepared Statement of...................   196

    Ekstrand, Laurie E., Director, Homeland Security and Justice
      Issues, Government Accountability Office.......................    84
        Prepared Statement of........................................    86
    Evans, Hon. Donald L., Secretary, Office of the Secretary,
      Department of Commerce.........................................     1
        Prepared Statement of........................................     5

    Fine, Glenn A., Inspector General, Department of Justice.........    74
        Prepared Statement of........................................    76
    Florida State University, Prepared Statement of..................   202

    Great Lakes Indian Fish and Wildlife Commission, Prepared
      Statement of...................................................   215
    Gregg, Senator Judd, U.S. Senator From New Hampshire:
        Opening Remarks of...........................................    53
        Questions Submitted by.......................................    28

    Hite, Randolph, Director, Information Technology Architecture and
      Systems Issues, Government Accountability Office...............    84
    Hollings, Senator Ernest F., U.S. Senator From South Carolina,
      Questions Submitted by.........................................    41

    Inouye, Senator Daniel K., U.S. Senator From Hawaii, Questions
      Submitted by...................................................    41
    Institute of Makers of Explosives, Prepared Statement of.........   186

    Kerr, Honorable Jimmie, Pinal County Supervisor, Prepared
      Statement of...................................................   182
    Kohl, Senator Herb, U.S. Senator From Wisconsin, Questions
      Submitted by...................................................    47

    Leahy, Senator Patrick J., U.S. Senator From Vermont:
        Prepared Statement of........................................     1
        Questions Submitted by.......................................    44

    Marine Fish Conservation Network, Prepared Statement of..........   181
    Mueller, Robert S., III, Federal Bureau of Investigation,
      Department of Justice..........................................    53
        Prepared Statement of........................................    57

    National American Indian Court Judges Association, Prepared
      Statement of...................................................   205
    National Association of State Universities and Land-Grant
      Colleges (NASULGC), Prepared Statements of...................170, 174
    National Association of University Fisheries and Wildlife
      Programs, Prepared Statement of................................   176
    National Center for Victims of Crime, Prepared Statement of......   213
    National Federation of Community Broadcasters, Prepared Statement
      of.............................................................   180

    Powell, Colin L., Secretary of State, Office of the Secretary,
      Department of State............................................   119
        Prepared Statement of........................................   126

    Regional Information Sharing Systems (RISS) Program, Prepared
      Statement of...................................................   183

    Sister Cities International, Prepared Statement of...............   200
    Stevens, Senator Ted, U.S. Senator From Alaska, Questions
      Submitted by...................................................    38

    The Asia Foundation, Prepared Statement of.......................   190
    The Ocean Conservancy, Prepared Statement of.....................   177

    University Corporation for Atmospheric Research (UCAR), Prepared
      Statement of...................................................   170

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF COMMERCE

                            Office of the Secretary

                                                                       Page

    Additional Committee Questions...................................    28
    Advanced Technology Program and Homeland Security Technologies...    29
    American Jobs....................................................    11
    Assistance to Alaska Fishermen...................................14, 38
    Assistant Secretary for Manufacturing and Services...............    10
    BIS Mission and Activities.......................................    37
    Budget Choices...................................................20, 26
    Climate Change Programs..........................................    41
    Climate Change Research Initiative...............................    22
    Crab Rationalization Program.....................................    14
        And Ocean Policy.............................................    38
    DOC Manufacturing Report.........................................     9
    Emergency Steel Guarantee Loan Program...........................    49
    Exporting of Jobs................................................    26
    Focus on Creating Jobs...........................................    17
    Funding for Census Programs......................................    35
    Global Climate Change............................................    23
    ITA Reorganization...............................................    39
        And Collaboration With USTR..................................    31
    Infrastructure Protection........................................    30
    International Trade Administration Reorganization................     9
    International Travel to the United States........................    43
    Iraq Reconstruction..............................................    32
    Job Losses in Wisconsin..........................................    47
    Long-term Plan for Spectrum Management...........................    30
    MEP Funding and Recompetition....................................    47
    Manufacturing Extension Partnership......................12, 19, 25, 44
    NIST/Manufacturing Extension Partnership.........................    29
    NOAA:
        Funding......................................................    39
        N-Prime Satellite............................................     8
        NIST Boulder Campus..........................................    40
        Space Initiatives............................................    28
    National Sea Grant Program.......................................    46
    New Assistant Secretary of Manufacturing.........................    49
    Ocean Programs...................................................    27
    Oceans Policy Commission.........................................    15
    PTFP Grants......................................................    30
    PTO:
        Funding and Reduced Pendancy.................................    35
        Hiring Plan for 900 New Staff................................    25
        Increase.....................................................    24
    Participation in Commodity Prices................................    39
    Patent and Trade Complaints and Backlog..........................    49
    Patriotism.......................................................    16
    President's Economic Report......................................    16
    Public Telecommunications Facilities Program.....................    41
    Section 201 Duties and Steel Imports.............................    50
    Support for MEP..................................................    21
    Taking PTO Off Budget............................................    36
    Tourism..........................................................    24
        Industry.....................................................    23
    Trade Deficit....................................................    19
    2010 Decennial Census and American Community Survey..............    33
    U.S. Dumping Laws................................................    51
    U.S. Economy.....................................................    16
    WTO Ruling on Continued Dumping and Subsidy Offset Act...........    50

                             DEPARTMENT OF JUSTICE

                        Federal Bureau of Investigation

    Additional OIG Reviews in the FBI................................    81
    Counterterrorism Agents..........................................    70
    Duplication of Efforts/Terrorist Explosive Device Analytical
      Center.........................................................    65
    Enterprise Architecture..........................................   109
    Explosives.......................................................    63
    FBI Culture......................................................    59
    Federal Bureau of Investigation/Drug Enforcement Administration
      Relationship...................................................   110
    IDENT:
        System.......................................................    72
        IAFIS Integration............................................   112
    Information Technology...........................................56, 58
    Language Translation.............................................    72
    Legat Program....................................................   114
    Linguists........................................................   115
    Management.......................................................    56
    Possible Integration of X-Base Into TEDAC........................    66
    Summary of TOPOFF 2 After-Action Report..........................    69
    TOPOFF...........................................................    68
    Terrorist Screening Center.......................................    64
    The Trilogy Project..............................................    77
    Training.........................................................55, 57
    Transportation Security..........................................    63
    Trilogy Program..................................................    59
    Virtual Case File Contract.......................................   111

                              DEPARTMENT OF STATE

                            Office of the Secretary

    Afghanistan Over Iraq............................................   144
    Armed Services Will not Give Money...............................   140
    Caring for the World's Most Vulnerable People....................   132
    Charles Taylor Before Tribunal...................................   156
    Clarke Lacking...................................................   141
    Clarke and State Connection......................................   141
    Department of Defense Sharing With State.........................   139
    Failure of Clinton Administration With Terrorism.................   135
    Funding for the Coalition Provisional Authority Post-July........   149
    Funds From the Department of Defense.............................   139
    Hmong Refugees in Laos...........................................   153
    Iraq Reconstruction, Cost of.....................................   159
    Israel Fence Status and Cost and Israel-Palestinian Conflict.....   161
    Keeping Americans Safe at Home and Abroad........................   133
    MOX Program; Status of Liability With Russia.....................   160
    Mideast-West Dialogue............................................   157
    Money to Afghanistan.............................................   142
    Our New Approach to Global Prosperity............................   131
    Putting More Aid in Afghanistan..................................   143
    Readiness of Iraqi Self-defense Forces...........................   150
    Secretary Witness Clarke.........................................   142
    State Budget in Iraq.............................................   139
    Terrorism--High Priority.........................................   136
    Transfer.........................................................   140
    Update on Iraq and Afghanistan...................................   137
    Who Pays the Coalition Provisional Authority.....................   139
    Why Does the Department of Defense Fund the Coalition Provisional
      Authority......................................................   145
    Winning the War on Terrorism.....................................   127