[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
    MANAGEMENT CHALLENGES FACING THE DEPARTMENT OF HOMELAND SECURITY

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

                                HEARING

                               before the

         SUBCOMMITTEE ON MANAGEMENT, INTEGRATION, AND OVERSIGHT

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 20, 2005

                               __________

                           Serial No. 109-12

                               __________

       Printed for the use of the Committee on Homeland Security
                                     
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                     COMMITTEE ON HOMELAND SECURITY

                 Christopher Cox, California, Chairman

Don Young, Alaska                    Bennie G. Thompson, Mississippi
Lamar S. Smith, Texas                Loretta Sanchez, California
Curt Weldon, Pennsylvania, Vice      Edward J. Markey, Massachusetts
Chairman                             Norman D. Dicks, Washington
Christopher Shays, Connecticut       Jane Harman, California
Peter T. King, New York              Peter A. DeFazio, Oregon
John Linder, Georgia                 Nita M. Lowey, New York
Mark E. Souder, Indiana              Eleanor Holmes Norton, District of 
Tom Davis, Virginia                  Columbia
Daniel E. Lungren, California        Zoe Lofgren, California
Jim Gibbons, Nevada                  Sheila Jackson-Lee, Texas
Rob Simmons, Connecticut             Bill Pascrell, Jr., New Jersey
Mike Rogers, Alabama                 Donna M. Christensen, U.S. Virgin 
Stevan Pearce, New Mexico            Islands
Katherine Harris, Florida            Bob Etheridge, North Carolina
Bobby Jindal, Louisiana              James R. Langevin, Rhode Island
Dave G. Reichert, Washington         Kendrick B. Meek, Florida
Michael McCaul, Texas
Charlie Dent, Pennsylvania

                                 ______

         SUBCOMMITTEE ON MANAGEMENT, INTEGRATION AND OVERSIGHT

                     Mike Rogers, Alabama, Chairman

Christopher Shays, Connecticut       Kendrick B. Meek, Florida
John Linder, Georgia                 Edward J. Markey, Massachusetts
Tom Davis, Virginia                  Zoe Lofgren, California
Katherine Harris, Florida            Sheila Jackson-Lee, Texas
Dave G. Reichert, Washington         Bill Pascrell, Jr., New Jersey
Michael McCaul, Texas                Donna M. Christensen, U.S. Virgin 
Charlie Dent, Pennsylvania           Islands
Christopher Cox, California (Ex      Bennie G. Thompson, Mississippi 
Officio)                             (Ex Officio)

                                  (II)


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Mike Rogers, a Representative in Congress From the 
  State of Alabama, and Chairman, Subcommittee on Management, 
  Integration, and Oversight.....................................     1
The Honorable Kendrick B. Meek, a Representative in Congress From 
  the State of Florida, and Ranking Member, Subcommittee on 
  Management, Integration, and Oversight.........................     2
The Honorable Christopher Cox, a Representative in Congress From 
  the State of California, and Chairman, Committee on Homeland 
  Security.......................................................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security..............................................     4
The Honorable Charlie Dent, a Representative in Congress From the 
  state of Pennsylvania..........................................    52
The Honorable Sheila Jackson-Lee, a Representative in Congress 
  From the State of Texas........................................    65
The Honorable Michael McCaul, a Representative in Congress From 
  the State of Texas.............................................    54
The Honorable Dave G. Riechert, a Representative in Congress From 
  the State of Washington........................................    50

                               WITNESSES

Mr. Clark Kent Ervin, Director, Homeland Security Initiative, The 
  Aspen Institute
  Oral Statement.................................................    38
  Prepared Statement.............................................    40
The Honorable James S. Gilmore, III, Chairman, National Council 
  on Readiness and Preparedness
  Oral Statement.................................................    35
  Prepared Statement.............................................    37
The Honorable Asa Hutchison, Chairman of the Homeland Security 
  Practice, Venable, LLC
  Oral Statement.................................................    32
  Prepared Statement.............................................    34
Mr. Norman Rabkin, Managing Director, Homeland Security and 
  Justice, Government Accountability Office,
  Oral Statement.................................................    20
  Prepared Statement.............................................    22
Mr. Richard L. Skinner, Acting Inspector General, Office of 
  Inspector General, Department of Homeland Security
  Oral Statement.................................................     5
  Prepared Statement.............................................     7


    MANAGEMENT CHALLENGES FACING THE DEPARTMENT OF HOMELAND SECURITY

                              ----------                              


                       Wednesday, April 20, 2005

                          House of Representatives,
                        Subcommittee on Management,
                        Integration, and Oversight,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 2261, Rayburn House Office Building, Hon. Mike Rogers 
[chairman of the subcommittee] presiding.
    Present: Representatives Rogers, Reichert, McCaul, Dent, 
Cox, Meek, Jacksn-Lee, Pascrell, and Thompson.
    Mr. Rogers. [Presiding.] The hearing will come to order.
    I would like to first thank all of our witnesses for taking 
the time out of their full schedules to be with us today. I am 
looking forward to the testimony and your answers to various 
questions.
    We are holding this hearing to review the major management 
challenges facing the Department of Homeland Security. We also 
will consider what steps need to be taken to improve the 
overall management of the Department and its programs.
    The Department is just over 2 years old, and it is the 
third largest department in the Federal government.
    When it was stood up in March 2003, the Department 
inherited 180,000 employees and 22 separate agencies. Many of 
these agencies had their own separate systems for personnel, 
procurement, budgeting and communications.
    Today, we will hear from the Department's Office of 
Inspector General and the Government Accountability Office on 
audits and reviews they recently conducted of the Department's 
major management challenges.
    We will also hear from the Department's former 
Undersecretary for Border and Transportation Security and the 
former Inspector General, as well as the Chairman of the 
Gilmore Commission regarding their views and recommendations on 
the Department's management functions.
    One issue of special interest is how we ensure that the 
Department is fully coordinating its training efforts to 
support our first responders and firefighters. In my hometown 
of Anniston, Alabama, we have the Center for Domestic 
Preparedness, which is supported by the Department's Office of 
Domestic Preparedness. Just a stone's throw away, we have the 
Noble Training Center operated by the Department's Federal 
Emergency Management Agency. Those facilities provide 
invaluable training to first responders.
    We need to ensure that Federal officials in Washington are 
talking to each other so that these and other centers get the 
support they need to provide adequate constituent services.
    I look forward to hearing from our witnesses, what they 
think about the current organization of our training within the 
Department of Homeland Security and what more the Department 
can do to improve the coordination and delivery of training 
programs.
    And, once again, I want to thank the witnesses for joining 
us, and the Chair now recognizes the Ranking Member, my 
colleague from Florida, Mr. Meek.
    Mr. Meek. Thank you, Mr. Chairman, and I am excited, just 
as you are, about this morning's hearing.
    At this moment in time, the Department of Homeland Security 
stands at important crossroads. Since the Department was 
established over 2 years ago, DHS is doing a better job of 
keeping our country secure. But when it comes down to homeland 
security, better is just simply not enough.
    This hearing serves as a great opportunity to discuss the 
management challenges at the Department. The experiences of the 
witnesses are fresh, and we are looking forward to their 
testimony.
    Mr. Ervin was engaged in auditing the Department just a few 
months ago, which produced the first airport screener report in 
2003.
    Secretary Hutchinson was still the head of the Border and 
Transportation Security doctrine in February.
    And both Mr. Skinner and Mr. Rabkin are actively engaged in 
auditing DHS right now.
    I continue to stress the importance of your testimony 
today. However, I cannot continue to stress the importance of 
your testimony today for the committee to execute its oversight 
responsibilities. We need people like you to come before this 
committee and to be not only truthful but very blunt, if I can 
add that.
    We need to hear from you, Mr. Ervin, on how the Department 
responded when the report was produced, that there were 
problems in airport screening performance.
    We need to hear, Mr. Hutchinson, what steps that TSA took 
to address those issues that were identified in that September 
2003 report.
    We need to understand from you, Mr. Skinner, why, despite 
the actions TSA may have taken to address the September 2003 
report, screening performance still remains poor. Assuring that 
the skies are secure is a vital national security issue and 
deserves the kind of attention that we are giving it this 
morning.
    Secretary Chertoff testified before this committee about 
his plans to move into a second stage of evaluation of DHS. If 
DHS, the Department of Homeland Security, is ever to be able to 
become the department that the Congress wanted it to be and the 
American people deserve, we would have to take a constant focus 
of oversight.
    So I look forward to hearing the witnesses, and I want to 
thank you and commend you for coming before us this morning. 
Thank you so very much.
    Mr. Rogers. The gentleman yields back.
    The Chair now recognizes the chairman of the full 
committee, Mr. Cox, from California.
    Mr. Cox. Thank you very much, Mr. Chairman. I want to thank 
both you and the Ranking Member for convening this 
extraordinarily expert panel of witnesses to help us today 
address the fundamental question of the management challenges 
facing the Department of Homeland Security.
    I would also like to welcome our witnesses. Thank you for 
the time, energy and preparation that you have devoted to not 
only today's hearing but these questions themselves over a long 
period of time.
    It has been roughly 2 years since the Department of 
Homeland Security was asked to accomplish the largest 
reorganization of the Federal government in more than half a 
century. It is either the third or the second largest cabinet 
department, depending on how you do the accounting; 180,000 
employees, $40 billion budget and critically, for purposes of 
today's hearing, 22 legacy components but each had different 
daily missions prior to the creation of DHS.
    Together, they are now possessed of a mission no less than 
protecting our nation against another terrorist attack. These 
are big challenges but DHS has made significant strides in its 
department-wide integration effort.
    For example, the Department has reduced 22 different Human 
Resource servicing centers to 7. We have gone from 8 payroll 
systems to 2. Where once there were 19 financial management 
service providers, now there are 8. And personal property 
management systems have been cut from 22 to 3.
    But integrating the legacy components into a single, 
efficient and cost-effective department remains a formidable 
challenge, and what is at stake is more than improved back-
office functions. This kind of integration is essential to 
supporting the new counterterrorism mission of this Department. 
The management challenges have been highlighted in a number of 
recent reports that our witnesses will address today.
    The specifics of these reports vary, but they all 
consistently point to the need for the Department to establish 
a comprehensive integration strategy tied to clear and 
measurable benchmarks to progress and centered upon the key 
homeland security missions of the Department.
    With these challenges in mind, the new Secretary of the 
Department of Homeland Security, Mike Chertoff, has initiated, 
as we all know, a 90-day review of the Department's policies, 
programs and operations. They are examining exactly the sort of 
issues that our witnesses will highlight today. We look forward 
to working with Secretary Chertoff as part of our DHS 
authorization process to ensure that the Department overcomes 
the obstacles that remain in achieving an overarching, 
comprehensive management integration strategy for the 
Department.
    Again, thank you, Mr. Chairman, and thanks to our 
witnesses. I look forward to learning a great deal this 
morning.
    Mr. Rogers. The gentleman yields back.
    The Chair now recognizes the Ranking Member of the full 
committee, the gentleman from Mississippi, Mr. Thompson, for 
any statement he may have.
    Mr. Thompson. Thank you very much, Mr. Chairman.
    And I welcome our witnesses to the hearing this morning.
    The one thing that I am excited about is, as most of you 
know, we now have oversight responsibility. So unlike being a 
select, we now have at least the authority to look and try to 
point us in the right direction, pat us on the back when we are 
doing good and do some other things when you are not doing so 
good. So we are happy to have you.
    Mr. Ervin, I am glad to see you again. Unfortunately, 
sometimes when we do our job well, we lose it. But, 
nonetheless, I am convinced that this country will be better 
because you did the honorable thing in what you were charged 
with.
    As we know, the Department of Homeland Security was created 
to be the focal point in the fight against terrorism. When the 
Department was first established it was understood that a 
government reorganization of this magnitude would require 
overcoming significant challenges and difficult obstacles.
    Americans have a very personal stake in seeing the 
Department be successful in fulfilling its mission. Our 
nation's security depends on it.
    The witnesses we have before us today are among the most 
knowledgeable of the state of the Department. While the 
Department has made substantial strides to enhance our nation's 
security, it has many outstanding challenges that still have 
not been addressed.
    Repeatedly, Mr. Ervin, Mr. Skinner, GAO and this very 
committee have identified structural problems within the 
Department and gaps in our security apparatus. GAO alone has 
issued more than 100 reports that have identified problems in 
immigration enforcement, border protection and lax cargo 
security as DHS enters its third year of existence and 
Secretary Chertoff undertakes this top-down review.
    This committee has a vital role to play in ensuring 
accountability from the highest levels of Department. 
Identifying and systematically addressing organizational and 
management changes must be top priority for the President on 
down.
    If this is one message that has to be taken away from this 
hearing, it is the Department is not getting the job done of 
protecting America's security. We have to do it right.
    I have a stack of GAO and other reports to my left here 
that if we will just take them for what they are worth and 
implement them, the Department would be much better off and 
this country would be far safer.
    In addition, there are over 125 congressionally mandated 
deadlines that have not been fulfilled, I am concerned about 
it. The Secretary has been made aware of this last week. There 
is a letter that is some 5 weeks overdue raising the issue of 
overdue reports to Congress. And from a management and 
oversight responsibility, we cannot really do our job unless 
the Department fulfills its responsibilities.
    So I am happy to have the people who know before us today. 
I look forward to their testimony, Mr. Chairman, and I look 
forward to helping keep America safe. Thank you.
    Mr. Rogers. I thank the gentleman.
    The other members are reminded that their statements may be 
submitted for the record later in the day.
    We are pleased to have this distinguished panel with us 
today, and first the Chair would like to recognize Mr. Richard 
Skinner, Acting Inspector General, Department of Homeland 
Security, for your testimony.
    Mr. Skinner?

STATEMENT OF RICHARD SKINNER, ACTING INSPECTOR GENERAL, OFFICE 
          OF INSPECTOR GENERAL, DEPARTMENT OF HOMELAND

    Mr. Skinner. Good morning. Thank you for the opportunity to 
be here, especially with such a distinguished panel. I have 
provided the committee with a written statement for the record. 
I will try to summarize it here very briefly.
    In December 2004, our office issued its annual report on 
the major management challenges facing the Department. The 
report covers a broad range of issues. First, I would like to 
talk about the issue of integration.
    We have reported that structural and resource problems 
continue to inhibit progress in certain support functions. Most 
of the critical support personnel are distributed throughout 
the components and are not directly accountable to the 
functional line of business chiefs, such as the Chief Financial 
Officer or the Chief Information Officer. We are concerned that 
these officers may not have sufficient resources or authority 
to ensure that Departmentwide goals and their respective 
functions are addressed appropriately or that available 
resources can be marshaled to address emerging problems.
    The Secretary as you say, is examining selected operations 
in what he refers to as a second-stage review. The review will 
cover where the Department has been, where it is headed and 
what changes, if any, need to be made.
    Second, I would like touch upon some program challenges 
with regards to border security. We reported that the 
Department must address security concerns identified in the 
Visa Waiver Program. The program enables citizens of 27 
countries to travel to the U.S. for tourism or business for 90 
days or less without obtaining a visa. These travelers are 
inspected at a U.S. port of entry, but they have not undergone 
the more rigorous background investigations associated with 
visa applications.
    We also reported weaknesses that allowed ABC to twice 
smuggle depleted uranium into the country in seagoing cargo 
containers. The Department has since enhanced its ability to 
screen the targeted containers for radioactive emissions by 
deploying more sensitive technology at seaports, revising 
protocols and procedures and improving training of personnel. 
We are following up as we speak on those actions.
    The Coast Guard also faces significant problems in 
improving and sustaining its readiness mission. It suffers from 
declining experience levels among its personnel and reported 
that sustaining its mission is at risk due to cutters and 
aircraft that are aging or are obsolete, resulting in operating 
restrictions.
    With regards to transportation security, as you know, our 
undercover test of screener performance in late 2003 revealed 
that improvements are needed in the screening process to ensure 
that dangerous, prohibited items are not carried into the 
sterile areas of heavily used airports. We attributed the test 
failures to four areas that needed improvement: training, 
equipment and technology, policy and procedures, and management 
and supervision.
    We recently completed a follow-up review of screener 
performance at the same airports. We just issued our report 
this week. We began our review at the end of November of 2004 
and completed our field work in early February 2005. Our test 
showed no overall improvement, leading us to believe that 
significant improvements in performance may not be possible 
without greater use of technology.
    Finally, I would like to highlight the Department's 
administrative challenges. With regard to financial management, 
the Department does not have a consolidated financial 
management system. This, coupled with staffing constraints and 
accounting deficiencies that it inherited from its legacy 
agencies, contributes to the Department's inability to produce 
accurate, timely, and meaningful financial statements. It may 
take years for the Department to develop a consolidated system 
free of material weaknesses, which will produce financial data 
that managers can rely on to guide their decisions.
    With regards to contract management, there are seven 
procurement shops outside the direct control of the Chief 
Procurement Officer. These seven procurement shops negotiate 
their own contracts, which represent about 80 percent of the 
Department's $11 billion in planned obligations for this year, 
2005. Until the procurement functions are consolidated or 
brought under the control of the Chief Procurement Officer, 
accountability will continue to be murky, and opportunities for 
efficiencies will continue to be lost.
    With regards to grant management, although the Department 
has made progress in improving the delivery and oversight of 
grant funds, questions linger whether grants are risk based, 
whether grant funds are being spent wisely, and whether the 
billions being awarded or invested are having a measurable 
impact on our ability to protect against and respond to another 
terrorist attack.
    With regard to Human Resource management, the Department 
faces the formidable challenge of designing and implementing a 
new pay for performance personnel system. This system will have 
a significant and profound effect on the Department's culture 
and personnel. The design phase of this system is essentially 
complete. Implementation, which will take at least 4 years, 
begins in January 2006. Getting employees to accept changes in 
a way in which they are evaluated, paid, and classified is not 
going to be an easy task.
    With regards to information security, the Department's 
organizational components have not yet fully aligned their 
respective security programs with departmental policies and 
procedures. The Department must inventory and accredit its 
systems, formalize the reporting structure between the CIO and 
the organizational components, and develop a verification 
process to ensure that all information security weaknesses have 
been identified.
    In conclusion, I would like to point out that the 
Department recognizes these challenges and has been responsive 
to and implemented a number of our recommendations. The 
Department anticipates that the results of its ongoing 
initiatives should enable it to report significant progress 
next year.
    Mr. Chairman, this concludes my remarks. I will be happy to 
answer any questions you or the committee may have.
    [The statement of Mr. Skinner follows:]

                Prepared Statement of Richard L. Skinner

    Good morning Mr. Chairman and Members of the Committee:
    I am Richard L. Skinner, Acting Inspector General for the 
Department of Homeland Security (DHS). Thank you for the opportunity to 
be here today to discuss the work of the Office of Inspector General 
(OIG) regarding major management challenges facing DHS.
    During its first two years of existence, DHS worked to accomplish 
the largest reorganization of the federal government in more than half 
a century. Creating the third largest Cabinet agency with the critical, 
core mission of protecting the country against another terrorist 
attack, presented an inordinate number of challenges to the 
department's managers and employees. The Government Accountability 
Office (GAO) noted that successful transformations of large 
organizations, under even less complicated situations, could take from 
five to seven years. While DHS has made great strides toward improving 
homeland security, it still has much to do to establish a cohesive, 
efficient, and effective organization.
    Based on our work, as well as assessments by Congress, GAO, and DHS 
itself, the OIG identified ``major management challenges'' facing the 
department. These challenges, included in the department's Performance 
and Accountability Report issued on November 15, 2004, are a major 
factor in setting our priorities for audits and inspections of DHS 
programs and operations. As required by the Reports Consolidation Act 
of 2000, we update our assessment of management challenges annually.
    Our latest major management challenges report covers a broad range 
of issues, including both program and administrative challenges. A copy 
of that report is provided for the record. In its response to the 
report, the department recognized the challenges and the potential 
impact the challenges could have on the effectiveness and efficiency of 
its programs and operations if not properly addressed. The department 
anticipates that the results of initiatives to address the challenges 
during FY 2005 should enable it to report significant progress next 
year.
    Before I discuss the challenges and the details of our work, I 
believe it is important that we give credit to the thousands of 
dedicated, hard working DHS employees who are genuinely committed to 
securing our homeland and making the department a model for the entire 
federal government. No one here can deny that our nation is more secure 
today than it was prior to September 11, 2001.
    I also wish to point out that the department has been responsive to 
and implemented a number of the recommendations made by our office. We 
look forward to establishing a positive working relationship with the 
new Secretary, and continuing the momentum toward building an 
effective, efficient, and economical homeland security operation--one 
that is free of fraud, waste, and abuse.

BORDER SECURITY
    A primary mission of DHS is to reduce America's vulnerability to 
terrorism by protecting the borders of the U.S. and safeguarding its 
transportation infrastructure. Within DHS, these responsibilities fall 
to the Border and Transportation Security (BTS) Directorate.
    Two organizations within BTS are responsible for enforcing the 
nation's immigration and customs laws. Customs and Border Protection 
(CBP) inspects visitors and cargoes at the designated U.S. ports of 
entry (POE), and secures the borders between the POE. CBP's primary 
mission is to prevent terrorists and terrorist weapons from entering 
the U.S., while also facilitating the flow of legitimate trade and 
travel. Immigration and Customs Enforcement (ICE) is the investigative 
arm of BTS that enforces immigration and customs laws within the U.S. 
While CBP's responsibilities focus on activities at POEs and along the 
borders, ICE's responsibilities center on enforcement activities 
related to criminal and administrative violations of the immigration 
and customs laws of the U.S., regardless of where the violation occurs. 
Additionally, CBP and ICE have employees assigned outside the U.S. to 
enhance the security of our borders.
    In December 2004, the Heritage Foundation recommended merging CBP 
and ICE and eliminating the Border and Transportation Security 
directorate. According to the Foundation, the merger would bring 
together all of the tools of effective border and immigration 
enforcement--inspectors, border patrol agents, special agents, 
detection and removal officers, and intelligence analysts--and realize 
the objective of creating a single border and immigration enforcement 
agency. Eliminating BTS would remove a middle management layer allowing 
the combined CBP-ICE to report directly to the Secretary via the Deputy 
Secretary. On January 26, 2005, Chairman Collins asked our office to 
study this proposal and to report our conclusions and recommendations 
in 180 days. We are in the midst of our field work now and expect to 
meet this deadline.
    The third organization within BTS which plays a major role in 
protecting the borders of the U.S. and safeguarding its transportation 
infrastructure is the Transportation Security Administration (TSA). 
TSA's primary security improvements have focused on aviation, with the 
hiring of over 60,000 passenger and baggage screeners, installation of 
electronic passenger and baggage screening technology at the nation's 
airports, and expansion of the Federal Air Marshals program, which is 
located now in ICE.
    Other organizations within BTS have border security related 
responsibilities as well, such as the US-VISIT Program Office and the 
Federal Law Enforcement Training Center (FLETC). The US-VISIT Program 
Office is responsible for the development and fielding of the U.S. 
Visitor and Immigrant Status Indicator Technology (US-VISIT) program, 
DHS' entry-exit system. It coordinates the integration of two 
fingerprint systems: DHS' Automated Biometric Identification System 
(IDENT) and the Federal Bureau of Investigation's (FBI) Integrated 
Automated Fingerprint Identification System (IAFIS). FLETC, another BTS 
component, provides career-long law enforcement training to 81 federal 
partner organizations and numerous state, local, and international law 
enforcement agencies.
    And, the U.S. Citizenship and Immigration Services (USCIS), 
although not organizationally housed within BTS, plays an important 
part in DHS border security. USCIS is responsible for reviewing and 
approving applications for immigration benefits. While not a law 
enforcement agency, USCIS ensures that only eligible aliens receive 
immigration benefits and identifies cases of immigration benefit fraud 
and other immigration violations that warrant investigation.
    As expected, DHS faces several formidable challenges in securing 
the nation's borders. Our audit and inspection program has attempted to 
address some of the challenges, including: developing effective visa 
issuance programs; tracking the entry and exit of foreign visitors; 
and, preventing terrorist weapons from entering the United States.

Visa Issuance Programs
    As the Heritage Foundation's report aptly pointed out, our nation's 
homeland security does not stop at America's geographic borders. DHS 
faces international challenges in protecting our borders, too. 
Provisions in the visa issuance process and other programs to promote 
international travel create potential security vulnerabilities, which 
may allow terrorists, criminals, and other undesirables to enter the 
U.S. undetected.
    For example, DHS must address security concerns identified in the 
Visa Waiver Program (VWP). The VWP enables citizens of 27 countries to 
travel to the U.S. for tourism or business for 90 days or less without 
obtaining a visa. These travelers are inspected at a U.S. POE, but they 
have not undergone the more rigorous background investigations 
associated with visa applications. In an April 2004 inspection, we 
reported our concerns regarding the exclusion from the US-VISIT program 
of travelers under the VWP. In September 2004, BTS began requiring that 
travelers from VWP countries enroll in the US-VISIT program, and 
renewed its efforts to conduct required country reviews.
    However, DHS continues to experience problems in identifying and 
detecting aliens who present lost or stolen passports from VWP 
countries at ports of entry. Shortcomings in procedural and supervisory 
oversight permitted some aliens presenting stolen Visa Waiver Program 
passports to enter the United States even after their stolen passports 
were reported, watch-listed, and detected. New information on lost and 
stolen passports provided by Visa Waiver Program governments was not 
routinely checked against U.S. entry and exit information to determine 
whether the stolen passports have been used to enter the U.S. In 
addition, there was no formal protocol for providing information 
concerning the use of stolen passports to ICE for investigation and 
apprehension of the bearer.
    Problems with lost and stolen passport are complicated by the lack 
of international standardization in passport numbering systems that can 
result in a failure to identify mala fide travelers using stolen Visa 
Waiver Program passports - even when the theft has been reported and 
the information is available in DHS lookout systems. This occurs 
because stolen passports are reported using the passports' inventory 
control numbers (ICNs), which are entered into the lookout systems. 
However, when inspectors routinely enter just the passports' issuance 
numbers into the lookout systems and do not match the reported stolen 
ICNs, the result is undetected stolen passports. While we applaud BTS' 
efforts to promote a change in the International Commercial Aviation 
Organization standard to a one-number passport system, it will take 
years once the new standard is adopted for the two-number passports to 
be removed from service. Interim measures are needed to reduce this 
vulnerability. In response to these concerns, BTS is conducting 
systematic reviews of admission records to check for previous uses of 
newly-stolen passports.
    Further, DHS must address issues identified with its visa security 
program, under which DHS stations officers at U.S. embassies and 
consular offices overseas to review visa applications and perform other 
law enforcement functions. Because of limited resources, BTS used 
temporary duty officers in its pilot effort who often did not have the 
required background or training, including language skills, to perform 
effectively as visa security officers. For example, nine of the ten 
temporary duty officers who served or are serving in Saudi Arabia did 
not read or speak Arabic. This limits their effectiveness and reduces 
their contribution to the security of the visa process. In response to 
our report, BTS advised that it would stop using temporary duty 
officers and begin using permanently assigned officers at its visa 
security offices; develop a staffing model to ensure only qualified 
officers serve in these positions; and, develop a training program for 
visa security officers. While BTS agreed with us in principle regarding 
the need for language training, BTS officials said that because of 
funding concerns, it could provide language training only ``as 
necessary and to the extent possible.''
    As a result, the full intelligence and law enforcement value that 
visa security officers could add to the existing inter-agency country 
teams has not been achieved. In response to our report, DHS advised 
that it has developed a near-term plan for deploying visa security 
officers for FY 2005 and was planning for additional deployments.
    With respect to international travelers, two major border security 
challenges confront the department: the divergence in the biometric 
systems used to identify travelers; and, the substantial differences in 
the levels of scrutiny given to different classes of travelers.

Biometric Systems
    We have all seen the glaring deficiencies of name-based lookout 
lists. For every known terrorist there are many innocent people with 
the same name. And for every name, there are variants and misspellings. 
Biometric identifiers are the only reliable and practical way to tell 
people apart.
    The FBI uses ten rolled fingerprints in the IAFIS to document 
criminal activities. The former INS, now within DHS, used only two 
index finger prints to create retrievable records for travelers in its 
Automated Biometric Identification System (IDENT). As reported, the two 
systems have not yet been integrated, so some travelers are run through 
one system--and then sometimes the other--at ports of entry. The CBP 
agents are required to check both systems when illegal aliens are 
apprehended.
    The international standards for passports are developed through 
ICAO. The United States is one of several countries whose citizens are 
not fingerprinted routinely for licenses or identification cards. In 
the past, the U.S. has lobbied ICAO to use facial recognition rather 
than fingerprints as the required primary biometric identifier in 
passports. Public accounts suggest that the experiments to date using 
facial recognition (at Logan Airport, among others) yielded meager 
results. At our borders, meanwhile, we increasingly rely upon 
fingerprint scans to tell people apart. The difficulties in achieving 
international consensus on this subject are daunting. Far more obvious, 
however, is the fact that the United States cannot afford to implement 
both biometric capabilities at each port of entry, it must settle on 
one. We--the United States Government--need to decide soon which 
biometric is the most reliable. Then we need to apply that standard to 
our own identity and travel documents, as well as for foreign 
travelers. We cannot do this in a vacuum, however. We need 
international cooperation to establish a global standard.

Levels of Scrutiny
    The second challenge relates to the inconsistent levels of scrutiny 
to which travelers are subjected. Everyone knows that some non-
immigrants need visas, but others do not. Less well known is that some 
do not even require passports. Immigrants, some of whom spend little 
time in the U.S., receive medical examinations and background checks, 
but non-immigrants, some of whom remain here legally for many years, do 
not.
    Usually, travelers from visa waiver countries do not require visas 
but, depending on the claimed purpose of their trip, they sometimes do. 
Most citizens of Canada and Mexico do not need visas or passports to 
enter the United States. We do not always record their names, or check 
them against our databases, though we do check their automobile license 
plates at land POEs. During FY 2002, 104 million visa-exempt Mexicans 
constituted 24 percent, and 52 million visa-exempt Canadians 
constituted 12 percent, of all admissions.
    U.S. citizens reenter the country with the least scrutiny of all, 
and frequently require no passport. Foreign travelers who can 
successfully pretend to be Americans get the same special treatment, as 
documented by the GAO in its May 2003 report, ``Counterfeit Documents 
Used to Enter The United States From Certain Western Hemisphere 
Countries Not Detected'' (03-713T).
    The US-VISIT system screens only non-immigrants with visas, or 
visitors using the provisions of the Visa Waiver Program. According to 
fiscal year 2002 statistics, the approximately 15 million VWP visitors 
accounted for three percent of U.S. admissions, while 19 million 
travelers with nonimmigrant visas accounted for five percent. In 
essence, US-VISIT screens fewer than nine percent of the people 
entering the United States. In our review of the implementation of US-
VISIT at land POEs, issued in February 2005, we noted that at land 
borders, where travelers with visas or using the VWP are a rarity, the 
percentage of crossers screened by US-VISIT is very small: less than 
three percent.
    No one designing a border security system from the ground up would 
create such a hodge-podge of processes with so many potential security 
gaps. If we are to be serious about border security, we will need to 
rationalize our border crossing processes. People are not always who 
they claim to be, and terrorists and criminals will try to assume 
whichever false identity will get them the least scrutiny as they enter 
and depart our country.

Tracking the Entry and Exit of Foreign Visitors
    Keeping track of people entering and leaving the U.S. is necessary 
to prevent terrorism, narcotics smuggling, and illegal alien smuggling, 
as well as to enforce trade laws and collect revenue, all while 
facilitating international travel. Over the next five years, DHS will 
invest billions of dollars to modernize the passenger processes and 
systems inherited from the legacy agencies, including the US-VISIT 
system. Concerted efforts are now being made to realign certain 
operations and systems within the newly created DHS.
    However, DHS did not analyze or re-examine its strategy, processes, 
technology, and organization for the overall federal passenger 
processing requirements before proceeding with US-VISIT. Further, DHS 
did not have an overall modernization acquisition strategy for the 
legacy Customs, INS, TSA, or the Animal and Plant Health Inspection 
Service (APHIS) systems related to passenger processing. An acquisition 
strategy based on a re-engineered vision of how DHS will process 
international travelers, in alignment with the department's enterprise 
architecture, should result in better and more definitive contract 
requirements.
    We recommended that BTS initiate a business process reengineering 
effort to establish a clear vision of the overall federal operations 
that will be used to clear people entering and leaving the U.S. Based 
on those results, BTS should work with the Chief Acquisition Officer 
(CAO) and Chief Information Officer (CIO) to develop an overall 
departmental acquisition strategy for passenger information technology 
systems. BTS advised that it plans to initiate a business process 
reengineering effort, and develop an overall department acquisition 
strategy in coordination with the CAO and CIO.
    Finally, in a report issued in June 2004, we raised concerns about 
the Secure Electronic Network for Travelers Rapid Inspection (SENTRI) 
program. This program permits pre-screened and enrolled low risk 
travelers to enter the U.S. from Mexico in designated lanes with 
minimal inspection by CBP officers, thereby avoiding the lengthy 
waiting times in the regular inspection lanes. The SENTRI program is 
open to both U.S. citizens and certain non-citizens. We determined that 
the program is generally achieving the two basic objectives for which 
it was established: accelerating the passage of participating travelers 
through land ports of entry; and, maintaining border integrity, 
security, and law enforcement responsibilities.
    However, we noted inconsistencies in the way land ports of entry 
applied eligibility criteria for criminal offenses, financial solvency, 
and residency, and approved or denied applications. In addition, we 
noted weaknesses in the procedures by which SENTRI system records are 
kept current, and how alerts are disseminated to CBP officers. Taken as 
a whole, our findings indicate weak program management that could 
jeopardize the program's integrity and border security. In response to 
these concerns, CBP has moved to merge all of its trusted travelers 
programs and centralize the enrollment process to standardize 
enrollment procedures and criteria.

Preventing Terrorist Weapons from Entering the U.S.
    Since September 11, 2001, CBP's priority mission is detecting and 
preventing terrorists and terrorist weapons from entering the U.S. A 
major component of its priority mission is to ensure that oceangoing 
cargo containers arriving at seaports of entry are not used to smuggle 
illegal or dangerous contraband. To test controls over importing 
weapons of mass destruction, ABC News was successful twice at smuggling 
depleted uranium into the country. On September 11, 2002, ABC News 
reported that a steel pipe containing a 15-pound cylinder of depleted 
uranium was shipped from Europe to the U.S. undetected by CBP. On 
September 11, 2003, ABC News reported that the same cylinder was 
smuggled--again undetected--to the U.S. from Jakarta, Indonesia.
    In the first smuggling event, ABC News reported that a steel pipe 
containing a 15-pound cylinder of depleted uranium, which was shielded 
with lead, was placed in a suitcase and accompanied by reporters by 
rail from Austria to Turkey. In Istanbul, Turkey, the suitcase was 
placed inside an ornamental chest, which was crated and nailed shut. 
The crate containing the suitcase was placed alongside crates of huge 
vases and Turkish horse carts in a large metal shipping container, and 
then loaded onto a ship, which left Istanbul. Based on data contained 
in the Automated Targeting System, the crate was targeted as high-risk 
for screening by the U.S. Customs Service. ABC News broadcast on 
September 11, 2002, that Customs failed to detect the depleted uranium 
carried from Europe to the United States.
    During the second smuggling event, ABC News placed the same 
cylinder of depleted uranium into a suitcase, and then placed the 
suitcase into a teak trunk. The trunk, along with other furniture, was 
loaded into a container in Jakarta, Indonesia, and then transshipped to 
the U.S. from Tanjung Pelepas, Malaysia. This shipment, which was 
targeted as high-risk for screening and subsequently inspected by CBP 
personnel, was then allowed to proceed from the port by truck.
    In a classified September 2004 report, we cited several weaknesses 
that occurred at the time of the two incidents, which made the 
container inspection process ineffective. The protocols and procedures 
that CBP personnel followed at the time of the two smuggling incidents 
were not adequate to detect the depleted uranium. CBP has since 
enhanced its ability to screen targeted containers for radioactive 
emissions by deploying more sensitive technology at its seaports, 
revising protocols and procedures, and improving training of CBP 
personnel.
    We are currently conducting a follow-up audit on the issue of 
radiation detection. The audit will determine to what extent CBP has a 
complete and workable plan for deploying and effectively operating 
radiation portal monitors at major U.S. seaports, and how the new 
technologies that CBP is deploying will impact operations at the ports.

TRANSPORTATION SECURITY
    DHS faces significant challenges in ensuring the security of the 
nation's transportation systems. TSA and the Coast Guard spearhead the 
department's transportation security efforts. While TSA has made 
progress in implementing the Aviation and Transportation Security Act 
(ATSA) and securing the nation's airways, improvements are still needed 
in aviation, rail, and transit security. Similarly, the Coast Guard has 
made progress in securing the nation's maritime transportation system 
but the deteriorating condition of its aircraft and cutter fleets 
places its current and future mission performance at risk.

Aviation Security
    The success of TSA in fulfilling its aviation security mission 
depends heavily on the quality of its staff and the capability and 
reliability of the equipment to screen passengers and cargo to identify 
terrorists and terrorists' weapons, while minimizing disruption to 
public mobility and commerce.
    Providing qualified and trained personnel has been a substantial 
challenge for TSA. ATSA mandated that the TSA hire and train thousands 
of screeners for the nation's 429 commercial airports by November 19, 
2002. As a result, TSA hired over 60,000 screeners. Our undercover 
tests of screener performance, about which we first reported in 2004, 
revealed that improvements are needed in the screening process to 
ensure that dangerous prohibited items are not carried into the sterile 
areas of heavily used airports, or do not enter the checked baggage 
system. We attributed the test failures to four areas that needed 
improvement: training; equipment and technology; policy and procedures; 
and, management and supervision. TSA agreed with our recommendations 
and took action to implement them, particularly in the areas of 
training, policies and procedures, and management practices. We 
recently completed a follow-up review of screener performance at the 
same airports. We began our review at the end of November 2004 and 
completed our fieldwork in early February 2005. Despite the fact that 
the majority of screeners with whom our testers came in contact were 
diligent in the performance of their duties and conscious of the 
responsibility those duties carry, the lack of improvement since our 
last audit indicates that significant improvement in performance may 
not be possible without greater use of new technology.
    We recommended in our previous report that the TSA administrator 
aggressively pursue the development and deployment of innovations and 
improvements to aviation security technologies, particularly for 
checkpoint screening. TSA is currently testing several such 
technologies, including backscatter x-ray, Explosive Trace Detection 
(ETD) portals, and document scanners. We encourage TSA to expedite its 
testing programs and give priority to technologies, such as backscatter 
x-ray, that will enable the screening workforce to better detect both 
weapons and explosives.
    Furthermore, TSA has come under criticism for not moving quickly 
enough to address the vulnerability of the nation's air traffic to 
suicide bombers. The 9-11 Commission recommended that TSA and the 
Congress must give priority attention to improving the ability of 
screening checkpoints to detect explosives on passengers. As noted 
above, TSA is in the process of testing several of these technologies, 
including backscatter x-ray, vapor detection, and document scanner 
machines, to address concerns regarding detection of explosives on 
individuals. Pending the testing and deployment of these advanced 
technologies, TSA instituted a process of more extensive pat-down 
procedures to find explosives hidden on a traveler. Since travelers and 
interest groups protested the use of these more thorough examination 
procedures, they have already been refined by TSA. We are currently 
reviewing the implementation of these procedures to ensure they are 
strictly followed, as well as TSA's process for responding to passenger 
complaints.

Rail and Transit Security
    While TSA continues to address critical aviation security needs, it 
is moving slowly to improve security across other modes of 
transportation. More than 6,000 agencies provide transit services 
through buses, subways, ferries, and light-rail to about 14 million 
Americans. Terrorist experiences in Madrid and Tokyo highlight 
potential vulnerabilities in transit systems. Recently, several 
congressional leaders expressed concern that the federal government has 
not responded strongly enough to the threat to public transit. 
Furthermore, the 9/11 Commission reported that over 90 percent of the 
nation's $5.3 billion annual investment in TSA goes to aviation, and 
that current efforts do not reflect a forward-looking strategic plan 
systematically analyzing assets, risks, costs, and benefits so that 
transportation security resources can be allocated where the risks are 
greatest in a cost effective way. TSA's FY 2005 budget still focuses 
its resources on aviation.
    TSA has lead responsibility for coordinating the development of a 
transportation sector plan, which it plans to complete later this year. 
TSA, however, has not finalized the memoranda of understanding with 
various Department of Transportation agencies to determine how it will 
coordinate work in the future. We are evaluating TSA's actions to 
assess and address potential terrorist threats to the mass transit 
systems of U.S. metropolitan areas.

Maritime Security
    The Coast Guard's willingness to work hard and long hours, use 
innovative tactics, and work through partnerships in close inter-agency 
cooperation has allowed it to achieve mission performance results. 
However, to improve and sustain its mission performance in the future, 
the Coast Guard faces a significant barrier in overcoming the 
deteriorating readiness of its fleet assets. The Coast Guard faces 
three major barriers to improving and sustaining its readiness to 
perform legacy missions:
        1. The lack of a comprehensive and fully defined performance 
        management system impedes the Coast Guard's ability to gauge 
        its performance, allocate resources effectively, and target 
        areas for improved performance.
        2. The workload demands on the Coast Guard will continue to 
        increase as it implements the Maritime Transportation Security 
        Act of 2002 (MTSA). This complex work requires experienced and 
        trained personnel; however, the Coast Guard has suffered from 
        declining experience levels among its personnel in recent 
        years.
        3. Sustaining a high operating tempo due to growing homeland 
        security demands--such as added port, waterway, and coastal 
        security patrols--will tax the Coast Guard's infrastructure, 
        particularly its aging cutter and aircraft fleet.
    The lack of a comprehensive and fully defined performance 
management system impeded the Coast Guard's ability to gauge its 
performance, allocate resources effectively, and target areas for 
improved performance. The Coast Guard has yet to define a performance 
management system that includes all the input, output, and outcomes 
needed to gauge results or target performance improvements, balance its 
missions, and ensure the capacity and readiness to respond to future 
crises or major terrorist attacks. For example, for search and rescue, 
the number of mariners in distress saved is a good indicator of 
outcome. However, resource hours under-represent the effort put into 
this mission by omitting the many hours of watch standing at stations. 
Without more complete information, the Coast Guard has limited ability 
to identify and target cost effective improvements to its mission 
performance.
    The workload demands on the Coast Guard will continue to increase 
as it implements the MTSA. Under MTSA, the Coast Guard must conduct 
risk assessments of all vessels and facilities on or near the water; 
develop national and area maritime transportation security plans; and, 
approve port, facility, and vessel security plans. This complex work 
requires experienced and trained personnel, presenting a major 
challenge for the Coast Guard, which suffers from declining experience 
levels among its personnel. Since the Coast Guard largely relies on 
experienced senior personnel to coach and train junior personnel and 
new recruits on the job, mission performance is at risk.
    In addition to implementing MTSA, growing homeland security demands 
the agency, such as added port, waterway, and coastal security patrols, 
result in a continued high operating tempo. Sustaining this high 
operating tempo will be a major challenge for Coast Guard personnel and 
will tax its infrastructure, especially its aged cutter and aircraft 
fleet. The Coast Guard reported that sustaining its mission is at risk 
due to cutters and aircraft which are aging, technologically obsolete, 
or those which require replacement and modernization. Currently, the 
Coast Guard is experiencing serious cracking in the hulls of the 110-
foot cutters and engine power loss on the HH-65 Dolphin helicopters, 
resulting in operating restrictions. These problems adversely affect 
the Coast Guard's mission readiness and ultimately mission performance.

Maintaining and Replacing Deepwater Assets.
    In June 2002, the Coast Guard awarded a $17 billion contract to 
Integrated Coast Guard Systems to maintain and replace its Deepwater 
assets. This contract called for replacing or modernizing, by 2022, all 
assets used in missions that occur more than 50 miles offshore, 
including approximately 90 cutters and 200 aircraft as well as assorted 
sensors and communications systems. According to the Coast Guard, the 
greatest threat to its missions continues to be the operational 
capability of its legacy aircraft, cutter, and small boat fleet. These 
assets are aging and are more expensive to maintain. In some instances, 
the Coast Guard is experiencing difficulty maintaining and upgrading 
existing critical deepwater legacy assets including the HH-65, HH-60, 
HC-130 aircraft, and its coastal patrol boat fleets.
    As an example, the number of in-flight loss of power mishaps 
involving the HH-65 helicopter grew from about a dozen annual mishaps 
before September 11, 2001, to more than 150 in FY 2004, requiring the 
immediate re-engining of the entire HH-65 fleet. The Coast Guard 
recently accelerated its acquisition of the Multi-Mission Cutter 
Helicopter under development by the Integrated Deepwater System 
acquisition project, in addition to initiating engine replacement for 
its HH-65 helicopter fleet. Also, in 2003, the Coast Guard experienced 
676 unscheduled maintenance days for its cutters--a 41 percent increase 
over 2002. This was the equivalent of losing the services of over three 
and a half cutters. These lost cutter days include the coastal patrol 
boats, which are suffering from accelerated hull corrosion and breached 
hull casualties.

INTEGRATING THE DEPARTMENT'S COMPONENTS
    Integrating its many separate components into a single, effective, 
efficient, and economical department remains one of DHS' biggest 
challenges. To help meet this challenge, DHS established an Operational 
Integration Staff to assist departmental leadership with the 
integration of certain DHS missions, operational activities, and 
programs at the headquarters level and throughout the regional 
structure.
    Much remains to be done in integrating DHS programs and functions. 
We have reported that structural and resource problems continue to 
inhibit progress in certain support functions. For example, while the 
department is trying to integrate and streamline support service 
functions, most of the critical support personnel are distributed 
throughout the components and are not directly accountable to the 
functional Line of Business (LOB) Chiefs such as the Chief Financial 
Officer, Chief Information Officer, Chief Human Capital Officer, Chief 
of Administrative Services, and Chief Procurement Officer.
    In August 2004, the Secretary and Deputy Secretary directed the DHS 
LOB chiefs to design and implement systems to optimize functions across 
the entire department. The LOB chiefs were instructed to develop 
Management Directives to guide the department's management of those 
business functions, too. The Directives were to be built on a concept 
of ``dual accountability,'' where both the operational leadership and 
the LOB chiefs are responsible for the successful preparation of the 
Directives and their implementation. This concept has been described as 
a ``robust dotted line'' relationship of agency or component functional 
heads to the LOB chiefs for both daily work and annual evaluation. In 
October 2004, the Secretary signed Final Management Directives to 
institutionalize the arrangements before FY 2005. In addition, the 
department's Management Council signed charters for each LOB, which 
establish a formal governance and advisory board structure to ensure 
that the objectives and intent of the Directives are executed.
    While the concept underlying the Management Directives may work in 
some environments, we are concerned that the DHS LOB chiefs may not 
have sufficient resources or authority to ensure that department-wide 
goals and challenges in their respective functions are addressed 
effectively, efficiently, or economically--or that available resources 
can be marshaled to address emerging problems. These concerns were 
heightened by the department's experience this past fiscal year in 
reorganizing the former Immigration and Naturalization Service (INS) 
and the U.S. Customs Service into three new bureaus--Immigration and 
Customs Enforcement (ICE), Customs and Border Protection (CBP), and 
U.S. Citizenship and Immigration Services (USCIS)--referred to as the 
``tri-bureaus''--and the consolidation of accounting services for many 
small programs outside of DHS into ICE. Since the department and ICE 
did not prepare a thorough, well-designed plan to guide the transition 
of accounting responsibilities, ICE fell seriously behind in the 
performance of basic accounting functions, such as account 
reconciliations and analysis of abnormal balances. The pervasiveness of 
errors in ICE's accounts prevented completion of audit work at ICE for 
the FY 2004 DHS financial statement.
    Additionally, the department faces a structural problem in its 
financial management organization. The bureaus control most of DHS' 
accounting resources, but the DHS Chief Financial Officer (CFO) has 
responsibility for DHS' consolidated financial reporting, which is 
dependent on those resources. Although coordination mechanisms are in 
place, the monitoring controls at the DHS CFO's level are insufficient 
to ensure the accuracy of consolidated financial information. The 
seriousness of these material weaknesses and reportable conditions at 
DHS demands strong oversight and controls.
    Similarly, creating a single infrastructure for effective 
communications and information exchange remains a major management 
challenge for DHS. We reported in July 2004, that the DHS CIO is not 
well positioned to meet the department's IT objectives. The CIO is not 
a member of the senior management team with authority to strategically 
manage department-wide technology assets and programs. No formal 
reporting relationship is in place between the DHS CIO and the CIOs of 
major component organizations, which hinders department-wide support 
for central IT direction. Further, the CIO has limited staff resources 
to carry out the planning, policy formation, and other IT management 
activities needed to support departmental units. These deficiencies in 
the IT organizational structure are exemplified by the CIO's lack of 
oversight and control of all DHS' IT investment decision-making, and a 
reliance instead on cooperation and coordination within DHS' CIO 
Council to accomplish department-wide IT integration and consolidation 
objectives.\1\ The department would benefit from following the 
successful examples of other federal agencies in positioning their CIOs 
with the authority and influence needed to guide executive decisions on 
department-wide IT investments and strategies.
    In this regard, the Secretary is reexamining selected operations in 
what he refers to as a ``second stage review.'' The review will cover 
where DHS has been, where it's headed, and what changes, if any, need 
to be made.
    We will be monitoring and evaluating the progress made in each LOB 
area very closely, not only during FY 2005, but also for years to come.

INFORMATION SECURITY
    The DHS Chief Information Officer (CIO) oversees the information 
security program. The CIO has developed an Information Security Program 
Strategic Plan to provide the foundation for an agency-wide, 
consolidated information security program. The DHS Chief Information 
Security Officer (CISO) developed the Information Security Program 
Management Plan, which is the blueprint for managing DHS' information 
security program. At the same time, the CISO developed an Information 
Security Risk Management Plan, which documents DHS' plan to develop, 
implement, and institutionalize a risk management process in support of 
its information security program. Based on our review of these plans, 
DHS has an adequate structure, blueprint, and process to implement and 
manage its information security program.
    Our office performs a yearly review of the DHS information security 
program as required by the Federal Information Security Management Act 
of 2002 (FISMA). During our FY 2004 review, we noted that DHS made 
significant progress over the last two years to develop, manage, and 
implement its information security program. However, DHS' 
organizational components have not fully aligned their respective 
security programs with DHS' overall policies, procedures, or practices. 
Factors which have kept the department from having an effective 
information security program include: lack of a system inventory; lack 
of a formal reporting structure between the CIO and the organizational 
components; lack of a verification process to ensure that all 
information security weaknesses have been identified; and, all of the 
department's major information systems have not been certified and 
accredited.
    Overall, DHS is on the right track to create and maintain an 
effective information security program. However, the department and its 
components still have much work to do to get to the point where DHS has 
a mature information security program.

INTELLIGENCE
    Under the Homeland Security Act of 2002,\1\ the department is 
responsible for receiving, integrating, and coordinating the sharing of 
federal information to help ensure border security and protect the U.S. 
from terrorist threats. Specifically, the Homeland Security Act of 2002 
gave DHS significant responsibility to coordinate the sharing of 
information to protect the U.S. from terrorist threats. The law 
requires that the DHS Under Secretary for Information Analysis and 
Infrastructure Protection (IAIP) consult with the Director of Central 
Intelligence and other appropriate intelligence and law enforcement 
elements of the federal government to establish collection priority and 
strategy for information relating to threats of terrorism against the 
U.S.\2\ Additionally, the law directs the IAIP Under Secretary to 
review, analyze, and make recommendations to improve the policies and 
procedures governing the sharing of law enforcement, intelligence, 
intelligence-related, and other information relating to homeland 
security.\3\.
---------------------------------------------------------------------------
    \1\ Public Law 107-296 (Nov. 25, 2002), codified at 6 USC 101 et 
seq.
    \2\ 6 USC 121 (d)(10).
    \3\ 6 USC 121 (d)(8).
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    However, the role and responsibilities of IAIP for intelligence 
collection, analysis, and dissemination has been abated with the 
creation of the Terrorist Threat Integration Center under the Director 
of Central Intelligence and the Terrorist Screening Center under the 
Director of the FBI. Creation of the new Director of National 
Intelligence position makes the DHS intelligence coordination role even 
more uncertain, calling for prompt clarification of federal lines of 
authority in this area.

PREPAREDNESS
    To date, our office focused on examining the programs and 
mechanisms that enhance preparedness at the federal, state, and local 
levels of government, including the utility of IAIP data on port 
security grant award decisions. In its December 2004 report, the 
Heritage Foundation recommended consolidating DHS critical 
infrastructure protection and preparedness, as well as state, local, 
and private coordination efforts, under an Undersecretary for 
Protection and Preparedness. According to the Foundation, consolidating 
these disparate efforts would provide the DHS Secretary with a stronger 
platform from which to lead national efforts, determine priorities, 
identify critical vulnerabilities, work with state, local, and private 
sector entities on securing those vulnerabilities and preparing for 
attacks, and make grants to help get the job done and to induce 
cooperation. Again, on the surface, this proposal appears to have 
merit. However, since we have not studied the implications of this 
proposal, we are not in a position to address the pros and cons of such 
a consolidation. Nevertheless, we do have reservations about separating 
FEMA's preparedness functions from its response and recovery 
responsibilities. Disaster preparedness, response, and recovery are 
intricately related, each relying on the other for success. This 
proposal should be carefully studied before it is put into practice.
    Also, the Department just completed TOPOFF3, said to be one of the 
largest incident response exercises in the world, involving three 
nations and over 10,000 participants. Our office monitored the exercise 
here and at two venues in New Jersey and Connecticut. The after-action 
reports are not final. It is important that we learn from these 
exercises and put the lessons to work in new preparedness strategies 
and exercises as quickly and aggressively as possible.

Infrastructure Protection
    One of the significant challenges facing the new DHS Secretary is 
the need to base the department's business decisions, such as its grant 
awards, on information relating to nationally critical infrastructure 
and key assets. We learned from two surveys completed in 2004 and a 
more recent review of DHS' Port Security Grant program issued in 
January 2005, that the department lags in integrating critical asset 
data and its ``preparedness'' initiatives into its business decisions. 
We concluded in 2004, too, that if IAIP did not produce a condensed 
list of most sensitive critical assets other elements within DHS would 
be at risk of failing to direct their grant resources toward national 
critical infrastructure protection and preparedness. This concern 
materialized in port security grant awards: administrators designed and 
operated the program as a sector-specific grant program and conducted 
at least three rounds of grants, totaling $560 million, without 
definitive national priorities for securing the seaport infrastructure 
of the nation. Poor integration of critical asset information meant 
that port security grant award decisions were made without sufficient 
information about our national priorities. DHS components need to 
strengthen their working relationships with IAIP, which has primary 
responsibility within DHS for critical asset identification, 
prioritization, and protection. The department's investments in new 
technologies, systems, and grant-making programs must reflect national 
priorities as determined by IAIP's risk management activities.
    A lack of coordination between the Science and Technology 
Directorate (S&T) and other DHS components slowed S&T's long-term plan 
to invest in threat vulnerability and risk assessment tools, too. S&T 
is required to coordinate with other executive agencies, particularly 
those within DHS, to: (1) develop an integrated national policy and 
strategic plan for identifying and procuring new technologies; (2) 
reduce duplication and identify unmet needs; and, (3) support IAIP in 
assessing and testing homeland security vulnerabilities and possible 
threats. TSA, the Coast Guard, and IAIP have developed risk assessment 
tools and performed analyses of critical infrastructure. It is critical 
for the S&T to have a clear understanding of the terrorist threat 
picture facing the nation and the current technical capabilities and 
ongoing research and development initiatives of other DHS elements. To 
be effective, it must be able to prioritize its investment decisions, 
and avoid duplicating technology initiatives by other DHS components, 
especially in the area of risk assessment. To that end, the extent that 
the Secretary oversees these efforts and makes intra-agency 
coordination a reality, will determine his effectiveness in ensuring 
that DHS' investments are adequately matched to risk.
    We are seeing signs that IAIP is becoming more involved in risk 
assessment activity and grant decision-making across the department as 
agencies are increasingly seeking assistance from IAIP. S&T has 
intensified efforts to obtain terrorist threat information from IAIP 
and incorporate it into S&T's selection of new technologies. The Coast 
Guard is working closer with IAIP on maritime risk assessments and 
programs. Grant officials signaled their intention to consult IAIP and 
make better use of critical infrastructure information in future rounds 
of port security grants.
    The Secretary needs to ensure that this progress continues and 
becomes a regular part of DHS's business decision-making. DHS 
components must share information, assimilate data to better coordinate 
risk management activities, and subscribe to a single concept of 
national priorities and interests. These actions are the foundation of 
solid business judgments now and in the future. Without this 
leadership, DHS risks having multiple, confusing, and possibly 
conflicting sources of priority for its investments.

CONTRACT MANAGEMENT
    DHS obligated about $13 billion to procure goods and services 
during FY 2003 and 2004. In addition to the challenge of integrating 
the procurement functions of its component organizations, DHS must 
provide contract management to the departmental components, which came 
into the agency without accompanying procurement staff. These 
components include the Science & Technology Directorate, the 
Information Analysis & Infrastructure Protection Directorate, the 
Office of State and Local Government Coordination and Preparedness, 
U.S. VISIT, and other offices.
    DHS formed the Office of Procurement Operations (OPO) to provide 
procurement support for these components. But, the office has 
insufficient staff to manage over $2.5 billion in procurements. 
Therefore, DHS contracted with other federal agencies to provide the 
contract management support needed while it addresses the resource 
issues in OPO. However, providing consistent contract management 
throughout DHS remains a formidable challenge. The OPO developed and 
negotiated with its customer organizations a staffing plan that would 
bring OPO's staffing level to 127 by the end of FY 2005. The cost of 
these positions would be reimbursed by customer organizations through 
the Working Capital Fund.
    DHS' efforts to provide a sufficiently detailed and accurate 
listing of its procurement information proved difficult. While DHS has 
migrated all of its procurements under the umbrella of one 
comprehensive reporting system, the department still lacks sufficiently 
detailed and validated data to manage the procurement universe and 
ensure accurate or consistent reporting.
    While the DHS organizational components face continuing challenges 
in contract management, they have made some progress. For example, the 
Transportation Security Administration (TSA) relies extensively on 
contractors to accomplish its mission, although it provided little 
contract oversight during its first year of operation. As a result, the 
cost of some of those initial contracts ballooned. For example, TSA 
improperly administered one of these contracts as cost-plus-percent-of-
cost and paid at least $49 million in excessive profit to the 
contractor. In 2004, however, TSA began implementing policies and 
procedures to provide adequate procurement planning, contract 
structure, and contract oversight.
    Several other components of the department have large, complex, 
high-cost procurement programs under way that need to be closely 
managed, too. For example, CBP's Automated Commercial Environment 
project will cost $5 billion, and the Coast Guard's Deepwater 
Capability Replacement Project will cost $17 billion and take two-three 
decades to complete. Further, the department recently awarded a $10 
billion contract for the development of a system to support the United 
States Visitor and Immigrant Status Indication Technology (US-VISIT) 
program to track and control the entry and exit of all aliens through 
U.S. air, land, and sea ports of entry. It is anticipated that this 
program will be implemented over the next ten years. Also, TSA's 
managed information technology services contract will cost over $1 
billion.
    We will continue to review these major procurements. Recently, 
Secretary Chertoff expressed concerns regarding the vulnerability of 
DHS procurements to fraud, waste, and abuse. At his request, the OIG 
and Office of the Chief Procurement Officer are working together to 
develop a report detailing procurement integrity vulnerabilities and 
recommendations for reducing those vulnerabilities. In addition to this 
endeavor and our efforts to review major procurements on an ongoing 
basis, we plan to systemically assess the effectiveness of internal 
controls and project management at each organizational component to 
assure that major acquisitions are well thought out and well managed.

FINANCIAL MANAGEMENT
    DHS continues to face significant financial management challenges, 
with some of the most critical at ICE. DHS' Chief Financial Officer is 
well aware of these challenges and is working to address them, although 
he has had limited resources to deal with these issues. DHS also faces 
a major challenge in implementing the Department of Homeland Security 
Financial Accountability Act, which requires that an audit of internal 
controls over DHS' financial reporting be performed next year.

Summary of the FY 2004 Financial Statement Audit Report
    FY 2004 was the first full year of operation for the Department. 
Because the financial statement auditor, KPMG LLP, was able to perform 
more audit procedures compared to FY 2003 additional material 
weaknesses surfaced. Unfortunately, KPMG was unable to provide an 
opinion on the Department's FY 2004 statements. This disclaimer of 
opinion was due to circumstances at ICE, the inability to complete 
audit procedures over certain costs and budgetary transactions at the 
Coast Guard, the lack of reconciliations for intra-governmental 
balances, and the accelerated reporting deadline of November 15th that 
prevented an extension of audit procedures.
    ICE presented the Department with the most critical problems. ICE's 
financial reporting environment underwent significant change in FY 
2004. Its legacy agency, the Immigration and Naturalization Service, 
and the former U.S. Customs Service, were reorganized into three 
bureaus: ICE, Customs and Border Protection (CBP), and Citizenship and 
Immigration Services (CIS). ICE experienced significant budget 
difficulties during the year due at least in part to the late 
preparation of agreements to reimburse it for costs incurred on others' 
behalf. In FY 2004 ICE became the accounting services provider for 
several other Department components, as well as supporting its own and 
CIS' accounting needs. ICE also experienced significant staff turnover. 
As a result, it fell seriously behind in basic accounting functions, 
such as account reconciliations, analysis of material abnormal 
balances, and proper budgetary accounting. The auditors observed a void 
in the financial management infrastructure at ICE that would likely 
continue to jeopardize the integrity of DHS' financial reporting until 
the fundamental issues of internal control, including proper staffing 
and oversight, were addressed. We are continuing to review the 
circumstances leading to these problems, and the effects they have had 
on ICE operations.
    KPMG was unable to complete audit procedures over certain costs and 
budgetary transactions at the Coast Guard due to the accelerated 
deadlines. The Coast Guard factors significantly in many of the 
material weaknesses identified in the auditors' report. These material 
weaknesses made it much more difficult for both the Coast Guard and the 
auditors to complete the audit by the deadline.
    The Department had significant out-of-balance conditions with other 
federal entities, which were not reconciled; therefore, it could not 
support certain balances on its own books. The most significant out-of-
balance conditions existed at ICE. A lack of resources in the OCFO 
prevented the accountant responsible for intra-governmental 
reconciliations from researching and reconciling these differences in a 
timely manner during the year and at year-end.
    The financial statement audit had to be completed three months 
earlier than the prior year due to the accelerated reporting deadline 
of November 15th. The Department had little time to focus on correcting 
deficiencies from KPMG's last report before it was subjected to another 
financial statement audit. To have a high likelihood of meeting an 
accelerated reporting deadline successfully, the Department's internal 
controls needed to be much better. The Department entered this audit 
with seven material weaknesses and seven other reportable conditions 
related to financial reporting.

Material Weaknesses and Other Reportable Conditions
    KPMG identified 10 material weaknesses in internal control at DHS 
in FY 2004 related to:
         oversight;
         ICE;
         financial statement preparation;
         system security;
         fund balance with Treasury;
         property, plant and equipment;
         operating materials and supplies;
         accounts payable and disbursements;
         budgetary accounting; and
         intra-governmental; and,
         intra-departmental balances.
    The auditors noted three additional reportable conditions related 
to deferred revenue, environmental liabilities, and custodial activity 
at CBP.
    The most critical material weaknesses dealt with the need for 
additional technical resources to support the CFO in his financial 
reporting and oversight responsibilities, and the void in ICE's 
financial management infrastructure. The CFO has obtained additional 
resources for his office through hiring and a contractor. He has 
assured us that steps are underway to address the financial management 
issues at ICE. A new budget director at ICE was recently designated.

Additional Challenges in the Upcoming Year
    The Department of Homeland Security Financial Accountability Act 
requires that an annual audit of the Department's internal control over 
financial reporting be performed beginning next year. Recently, OMB 
revised its Circular A-123, Management's Responsibility for Internal 
Control, which the Department is using to prepare for this audit. 
However, the success of this effort will require time given the 
Department's limited resources, its already significant number of 
material weaknesses, and the additional documentation and monitoring 
procedures that must be put in place.

Revenue Collection
    Annually, CBP collects more that $22 billion in duties, excise 
taxes, fines, penalties and other revenue. CBP has had an active 
program to monitor trade compliance, but in the face of critical 
homeland security responsibilities, counter-terrorism activities have 
begun to claim a higher share of border resources. CBP faces a 
challenge in protecting trade revenue and enforcing trade laws at a 
time when the terrorist threat demands much more from CBP's border 
resources.
    CBP is responsible for collecting user fees from air passengers 
arriving in the U.S. These fees are designed to pay for the costs of 
inspection services provided by CBP (which now includes the former INS 
and the Animal and Plant Health Inspection Service (APHIS) inspection 
processes). Between FYs 1998 and 2002, the former U. S. Customs Service 
collected $1.1 billion from the airlines. Now that CBP's inspection 
workforce has expanded to include the former INS and APHIS inspection 
services, it is important that CBP ensure that revenues collected are 
accounted for and are adequate to cover the costs of services provided.
    CIS generates more than $2 billion in revenues through collection 
of application fees from non-citizens seeking entry into the U.S. In 
fulfilling its mission, CIS processes millions of actions and requests 
that are documented in paper files. The systems that track these 
applications are non-integrated, and many are ad hoc. Deferred revenue 
is a financial measure of pending applications and is material to DHS' 
financial statements. The challenge for CIS is to move from paper based 
and non-integrated processes to an integrated case management system.

GRANTS MANAGEMENT
    DHS inherited a variety of grant programs, which provide money for 
disaster preparedness, prevention, response, and recovery. Significant 
shortcomings have been identified in many of these programs in the 
past. The potential for overlap and duplication has grown as the number 
of grant programs has grown. In an effort to achieve better 
coordination, the Office for Domestic Preparedness and Office of State 
and Local Coordination were consolidated into the Office of State and 
Local Government Coordination and Preparedness (SLGCP). That office now 
manages most of DHS' preparedness and first responder grant programs. 
The consolidation represents progress toward the one-stop shop that 
states and local jurisdictions have long sought.
    In developing and implementing a national program to enhance the 
capacity of state and local agencies to respond to incidents of 
terrorism, DHS has integrated numerous distinct, yet related, 
preparedness grant initiatives and programs into a single program under 
the auspices of SLGCP. Under the $2.6 billion fiscal year 2005 Homeland 
Security Grant Program, SLGCP consolidated the application process and 
administration of six programs: State Homeland Security Program, Urban 
Areas Security Initiative, Law Enforcement Terrorism Prevention 
Program, Citizen Corps, Emergency Management Performance Grants, and 
Metropolitan Medical Response System Program Grants.
    However, much work remains to be done. In March 2004, we issued An 
Audit of Distributing and Spending ``First Responder'' Grant Funds, 
OIG-04-15. The report identified problems at the state and local level 
that were causing grant fund distribution and spending to be slow. The 
problems included too many large grant programs that had to be 
processed in too short a time by inadequate state and local staffing, a 
lack of federal guidance on preparedness standards, complex and time-
consuming state and local planning processes, and burdensome state and 
local procurement and grant approval processes. These problems were 
verified by work done by GAO and the Department's Homeland Security 
Advisory Counsel Task Force.
    The Department has taken action to implement the recommendations in 
our March report and to respond to GAO and task force concerns. Efforts 
are under way to identify and disseminate best practices, including how 
states and localities manage legal and procurement issues that affect 
grant distribution. SLGCP has established a new Homeland Security 
Preparedness Technical Assistance Program service to enhance the grant 
management capabilities of state administrative agencies. Also, DHS 
established a password protected web site, Lessons Learned Information 
Sharing, which allows states, local governments, and first responder 
organizations to share best practices.
    In addition, SLGCP has improved grantee reporting requirements. 
Beginning in fiscal year 2004 and continuing in fiscal year 2005, 
states are required to submit Initial Strategy Implementation Plans 
which show how planned grant expenditures are linked to larger 
projects, which in turn support specific goals and objectives in the 
state homeland security strategy. In addition to these plans, SLGCP 
requires states to submit biannual strategy implementation reports 
showing how the actual expenditure of grant funds is linked to strategy 
goals and objectives.
    In response to our recommendation that the Department accelerate 
the development of federal guidelines for first responder capabilities, 
equipment, training, and exercises, SLGCP is developing a standardized 
Weapons of Mass Destruction awareness training program and national 
performance standards for assessing domestic preparedness capabilities 
and identifying gaps in those capabilities. Homeland Security 
Presidential Directive-8 called for a new national preparedness goal 
and performance measures, standards for preparedness assessments and 
strategies, and a system for assessing the nation's overall 
preparedness. DHS issued an Interim National Preparedness Goal on April 
1, 2005. This goal is a product of a capabilities-based planning 
process that led to the identification of core capabilities that the 
nation and its states, communities, and citizens need to possess. By 
mid-April 2005, DHS plans to issue detailed instructions on how 
communities can use this goal to manage federal preparedness 
assistance.
    For FY 2006, states and urban areas are to update their Homeland 
Security Preparedness strategies to reflect seven national priorities 
in order to receive continued federal preparedness assistance. These 
priorities include: (1) implement the National Incident Management 
System and National Response Plan; (2) expand regional collaboration; 
(3) implement the Interim National Infrastructure Protection Plan; (4) 
strengthen information sharing and collaboration capabilities; (5) 
strengthen interoperable communications capabilities; (6) strengthen 
capabilities for detection, response, and decontamination of chemical, 
biological, radiological, nuclear, or explosive materials; and, (7) 
strengthen medical surge and mass prophylaxis capabilities. For FY 
2007, states and urban areas will need to revise their Homeland 
Security Preparedness strategies to align with the Final National 
Preparedness Goal in order to receive further federal preparedness 
assistance. DHS plans to issue the Final National Preparedness Goal and 
a target capabilities list, updated to include the target levels of 
capabilities, on October 1, 2005.
    Finally, in response to our reporting that a formal grant 
monitoring system was lacking, DHS updated its grant-monitoring 
guidance in fiscal year 2004 and established new monitoring goals. 
According to the guidance, at least one office file review and one on-
site visit should be completed for each state each fiscal year. In 
addition, the requirements for Initial Strategy Implementation plans 
and biannual strategy implementation reports, discussed earlier, should 
improve monitoring. As of September 2004, SLGCP filled 138 staff 
positions, as compared with 63 filled positions at the end of fiscal 
year 2003. That should help alleviate the staffing shortages, which 
contributed to DHS's inability to conduct frequent grantee monitoring.
    Although SLGCP has program management and monitoring responsibility 
for its grants, it relies on the Justice Department's Office of the 
Comptroller for grant fund distribution and assistance with financial 
management support. In the department's 2004 financial statement audit 
report, the independent auditors noted that SLGCP management was not 
actively involved in the financial reporting of its activities and had 
not obtained a thorough understanding of the control activities over 
its financial reporting process performed by the Justice Department. As 
a result, SLGCP lacks assurance that the processing of its financial 
activities coincides with its business operations, are reported 
accurately, and controlled properly.
    We are currently conducting audits of individual states' management 
of first responder grants, state and local governments' first responder 
grant spending, and analyzing the effectiveness of DHS' system for 
collecting data on state and local governments' risk, vulnerability and 
needs assessments. We are also continuing our audits of FEMA's disaster 
relief programs as well as beginning an audit of the Urban Area 
Security Initiative grants.
    Mr. Chairman, this concludes my prepared statement. I will be 
pleased to answer any questions you or the members may have.

    Mr. Rogers. Thank you, Mr. Skinner.
    The Chair now recognizes Mr. Norman Rabkin, Managing 
Director of Homeland Security and Justice issues for the 
Government Accountability Office, for your statement.
    Mr. Rabkin?

    STATEMENT OF NORMAN RABKIN, MANAGING DIRECTOR, HOMELAND 
     SECURITY AND JUSTICE, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Rabkin. Mr. Chairman, Mr. Meek, I appreciate the 
opportunity to be here this morning to talk about the 
management challenges. My statement, the full statement, and my 
summary are going to echo a lot of what you just heard. So I 
think the consistency of the message is a message in itself.
    I would like to address two topics. First, why GAO has 
designated DHS' transformation as a high-risk area, and, 
secondly, the specific management challenges that the 
Department faces.
    GAO designated DHS' transformation as high risk in January 
2003, even before the Department opened its doors, for three 
reasons. First, DHS was going to combine 22 agencies with over 
170,000 employees carrying out a wide variety of missions, 
ranging from law enforcement and border security to biological 
research, computer security, disaster mitigation, et cetera.
    Secondly, DHS was going to inherit a broad array of 
operational and management challenges from those legacy 
agencies.
    And, finally, DHS' national security mission was of such 
importance that the failure to effectively address its 
management challenges and program risks could have serious 
consequences.
    Since our 2003 designation of DHS' transformation as high 
risk, DHS leadership has provided a foundation for maintaining 
critical operations while undergoing transformation. DHS has 
worked to protect the homeland and secure transportation and 
borders, it has funded emergency preparedness improvements and 
emerging technologies, it has assisted law enforcement 
activities against suspected terrorists, and it has issued its 
first strategic plan.
    However, despite real and hard-earned progress, when we 
reconsidered our high-risk areas earlier this year, we 
concluded that DHS still had significant challenges to overcome 
in all of its management areas. Therefore, we continue to 
believe that implementation and transformation of DHS is still 
high risk.
    Here is a summary of the specific management challenges 
that we think DHS has to overcome. First, it has to keep a 
departmentwide focus on management issues. One way to do this 
is by having a chief management position that is elevated at a 
Deputy Secretary level.
    DHS has to integrate the varied management processes, 
systems and people. Last week, we reported that while DHS has 
made some progress in these efforts, its transformation would 
be aided if it had overall goals and a timeline to guide it and 
if it gave its Business Transformation Office the 
responsibility and authority to implement the integration 
strategy.
    In the area of strategic planning, we have just completed 
our evaluation of DHS' strategic planning process and its 
development of its first strategic plan, and we expect to issue 
that report in the next couple of weeks.
    In the area of human capital management, DHS' system 
includes many proven principles and concepts, but DHS has 
considerable work ahead to define the details of that system, 
to begin to implement it and then to evaluate how well it is 
working.
    Regarding financial management, DHS continues to work to 
acquire and deploy an integrated financial enterprise solution, 
a costly and time-consuming project that has proven quite 
challenging for many other agencies.
    In the area of information technology, DHS has developed an 
enterprise architecture to guide its IT investments and a 
structure for managing those investments. However, it still 
needs to focus on ensuring that it manages specific major IT 
investments and acquisitions, like US-VISIT and ACE, according 
to these plans and procedures.
    In terms of acquisition management, the Department faces 
the challenge of holding its various procurement organizations 
accountable for complying with procurement policies and 
regulations and ensuring that taxpayer dollars are well spent.
    Finally, in the area of research and development, DHS has 
not yet completed a strategic plan to identify its goals and 
priorities and to propose timelines and expected funding levels 
to guide the implementation of that strategy.
    Overcoming these challenges will be critical to better 
enable the Department to succeed in its efforts to lead the 
implementation of the President's homeland security strategy.
    Mr. Chairman, this concludes my statement, and I will be 
glad to answer questions as well.
    [The statement of Mr. Rabkin follows:]

             UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE

                           HOMELAND SECURITY

   Overview of Department of Homeland Security Management Challenges

                     Statement of Norman J. Rabkin

    Mr. Chairman and Members of the Subcommittee:
    I appreciate the opportunity to appear before this subcommittee to 
address management challenges facing the Department of Homeland 
Security (DHS). The department plays a major role in the protection of 
the homeland against terrorist and other threats. In addition to 
managing its own affairs, the department also has a key role in 
implementing the National Strategy for Homeland Security and 
coordinating the larger homeland security efforts of the entire nation, 
to include other stakeholders in the federal, state, local, and private 
sectors. While GAO has conducted numerous reviews of specific DHS 
mission areas--including border and transportation security, 
information analysis and infrastructure protection, emergency 
preparedness and response, and defending against catastrophic threats--
my statement is limited to overall management issues. These generally 
cut across many if not all of the DHS agencies and mission areas. In my 
testimony today, I will address two topics:
         Why has GAO designated DHS's transformation as a high-
        risk area?
         What specific management challenges does the 
        department face?
    This testimony continues GAO's long-standing efforts to provide 
Congress with information on homeland security strategies and programs. 
In February of last year, we testified on the desired characteristics 
of national strategies, and whether various strategies--including the 
National Strategy for Homeland Security--contained those desired 
characteristics.\1\ In March of last year, we summarized strategic 
homeland security recommendations by GAO and selected congressionally 
chartered commissions.\2\ In July of last year, we reported on GAO 
recommendations to DHS and the department's progress in implementing 
such recommendations.\3\ In January of this year, we provided a 
comprehensive report on DHS and other federal agency efforts and 
challenges related to implementing the National Strategy for Homeland 
Security.\4\ And just last month in March, we reported on DHS progress 
in management integration.\5\ Together, these baseline efforts are 
intended to aid congressional oversight in assessing the effectiveness 
of federal homeland security activities.
---------------------------------------------------------------------------
    \1\ GAO, Combating Terrorism: Evaluation of Selected 
Characteristics in National Strategies Related to Terrorism, GAO-04-
408T (Washington, D.C.: Feb. 3, 2004).
    \2\ GAO, Homeland Security: Selected Recommendations from 
Congressionally Chartered Commissions and GAO, GAO-04-591 (Washington, 
D.C.: Mar. 31, 2004).
    \3\ GAO, Status of Key Recommendations GAO Has Made to DHS and Its 
Legacy Agencies, GAO-04-865R (Washington, D.C.: July 2, 2004).
    \4\ GAO, Homeland Security: Agency Plans, Implementation, and 
Challenges Regarding the National Strategy for Homeland Security, GAO-
05-33 (Washington, D.C.: Jan. 14, 2005).
    \5\ GAO, Department of Homeland Security: A Comprehensive and 
Sustained Approach Needed to Achieve Management Integration, GAO-05-139 
(Washington, D.C.: Mar. 16, 2005).
---------------------------------------------------------------------------
    My comments are based on our wide-ranging, completed, and ongoing 
work, and our institutional knowledge of homeland security and various 
government organizational and management issues. We conducted our work 
in accordance with generally accepted government auditing standards.

Summary
    GAO designated DHS's transformation as high-risk in January 2003, 
based on three factors. First, DHS faced enormous challenges in 
implementing an effective transformation process, developing 
partnerships, and building management capacity because it had to 
transform 22 agencies into one department. Second, DHS faced a broad 
array of operational and management challenges that it inherited from 
its component legacy agencies. Finally, DHS's failure to effectively 
address its management challenges and program risks could have serious 
consequences for our national security. As we reported earlier this 
year, the implementation and transformation of DHS remains high-
risk.\6\ Overall, DHS has made some progress, but significant 
challenges remain to transform DHS into a more effective organization 
with robust planning, management, and operations while maintaining and 
improving readiness for its highly critical mission to secure the 
homeland. Failure to effectively carry out its mission continues to 
expose the nation to potentially serious consequences.
---------------------------------------------------------------------------
    \6\ GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
Jan. 2005).
---------------------------------------------------------------------------
    DHS faces a number of specific management challenges to improving 
its ability to carry out its homeland security missions. Among these 
challenges are ensuring departmentwide focus on management issues 
through the establishment of a Chief Operating Officer or Chief 
Management Officer position; coordinating its varied management 
processes, systems, and people through the development of an 
overarching management integration; improving strategic planning; 
effectively managing strategic human capital; strengthening its 
financial management infrastructure; developing a comprehensive 
strategic management framework that addresses key information 
technology disciplines; properly managing acquisitions; and 
coordinating research and development among its components and with 
other entities.

Background
    In an effort to increase homeland security following the September 
11, 2001, terrorist attacks on the United States, President Bush issued 
the National Strategy for Homeland Security in July 2002 and signed 
legislation creating DHS in November 2002.\7\ The strategy set forth 
the overall objectives, mission areas, and initiatives to prevent 
terrorist attacks within the United States, reduce America's 
vulnerability to terrorism, and minimize the damage and assist in the 
recovery from attacks that may occur. The strategy also called for the 
creation of DHS. The department, which began operations in March 2003, 
represented a fusion of 22 federal agencies to coordinate and 
centralize the leadership of many homeland security activities under a 
single department.
---------------------------------------------------------------------------
    \7\ Homeland Security Act of 2002, Pub. L. No. 107-296 (Nov. 25, 
2002).
---------------------------------------------------------------------------
    Although the National Strategy for Homeland Security indicated that 
many federal departments (and other nonfederal stakeholders) will be 
involved in homeland security activities, DHS has the dominant role in 
implementing the strategy. The strategy identified six mission areas 
and 43 initiatives.\8\ DHS was designated the lead federal agency for 
37 of the 43 initiatives.\9\ In addition, DHS had activities underway 
in 40 of the 43 initiatives.\10\ In addition, DHS has the dominant 
share of homeland security funding. Figure 1 shows the proposed fiscal 
year 2006 homeland security funding for federal departments and 
agencies, with DHS constituting about 55 percent of the total.
---------------------------------------------------------------------------
    \8\ The six mission areas are Intelligence and Warning, Border and 
Transportation Security, Domestic Counterterrorism, Protecting Critical 
Infrastructures and Key Assets, Defending Against Catastrophic Threats, 
and Emergency Preparedness and Response. Each of these has several 
initiatives. For example, under the Border and Transportation Security 
mission area, the initiatives include ensuring accountability in border 
and transportation security, creating smart borders, and reforming 
immigration services.
    \9\ The strategy itself, or subsequent Homeland Security 
Presidential Directives, designated lead agencies for most of the 
initiatives. In some cases, agencies shared leadership.
    \10\ For a more complete analysis of the strategy's mission areas, 
initiatives, lead agencies, and implementation, see GAO-05-33.
[GRAPHIC] [TIFF OMITTED] T2956.001

GAO Designated DHS's Transformation As High-Risk
    The November 2002 enactment of legislation creating DHS represented 
a historic moment of almost unprecedented action by the federal 
government to fundamentally transform how the nation protects itself 
from terrorism.\11\ Rarely in the country's past had such a large and 
complex reorganization of government occurred or been developed with 
such a singular and urgent purpose. This represented a unique 
opportunity to transform a disparate group of agencies with multiple 
missions, values, and cultures into a strong and effective cabinet 
department whose goals are to, among other things, protect U.S. 
borders, improve intelligence and information sharing, and prevent and 
respond to potential terrorist attacks. Together with this unique 
opportunity, however, came a significant risk to the nation that could 
occur if the department's implementation and transformation was not 
successful.
---------------------------------------------------------------------------
    \11\ Pub. L. No. 107-296 (Nov. 25, 2002).
---------------------------------------------------------------------------
    GAO designated DHS's transformation as high-risk in January 
2003based on three factors.\12\ First, DHS faced enormous challenges in 
implementing an effective transformation process, developing 
partnerships, and building management capacity because it had to 
effectively combine 22 agencies with an estimated 170,000 employees 
specializing in various disciplines--including law enforcement, border 
security, biological research, computer security, and disaster 
mitigation--into one department. Second, DHS faced a broad array of 
operational and management challenges that it inherited from its 
component legacy agencies. In fact, many of the major components that 
were merged into the new department, including the Immigration and 
Naturalization Service, the Transportation Security Administration, 
Customs Service, Federal Emergency Management Agency, and the Coast 
Guard, brought with them at least one major problem such as strategic 
human capital risks, information technology management challenges, or 
financial management vulnerabilities, as well as an array of program 
operations challenges and risks. Finally, DHS's national security 
mission was of such importance that the failure to effectively address 
its management challenges and program risks could have serious 
consequences on our intergovernmental system, our citizen's health and 
safety, and our economy. Overall, our designation of DHS's 
transformation as a high-risk area and its inclusion on the 2003 High-
Risk List was due to the failure to transform the diverse units into a 
single, efficient, and effective organization would have dire 
consequences for our nation.
---------------------------------------------------------------------------
    \12\ GAO, High-Risk Series: An Update, GAO-03-119 (Washington, 
D.C.: Jan. 2003); and Major Management Challenges and Programs Risks: 
Department of Homeland Security, GAO-03-102 (Washington, D.C.: Jan. 
2003).
---------------------------------------------------------------------------
    Since our 2003 designation of DHS's transformation as high-risk, 
DHS leadership has provided a foundation for maintaining critical 
operations while undergoing transformation. DHS has worked to protect 
the homeland and secure transportation and borders, funded emergency 
preparedness improvements and emerging technologies, assisted law 
enforcement activities against suspected terrorists, and issued its 
first strategic plan. According to DHS's performance and accountability 
report for fiscal year 2004 and updated information provided by DHS 
officials, the department has accomplished the following activities as 
part of its integration efforts:
         reduced the number of financial management service 
        centers from 19 to 8,
         consolidated acquisition support for 22 legacy 
        agencies within 8 major procurement programs,
         consolidated 22 different human resources offices to 
        7, and
         consolidated bank card programs from 27 to 3.
    As described in the next section, despite real and hard-earned 
progress, DHS still has significant challenges to overcome in all of 
its management areas. It is because of these continuing challenges that 
we continue to designate the implementation and transformation of DHS 
as high-risk.\13\
---------------------------------------------------------------------------
    \13\ GAO, High Risk Series: An Update, GAO-05-207 (Washington, 
D.C.: Jan 2005).

DHS Management Challenges
    DHS faces a number of management challenges to improving its 
ability to carry out its homeland security missions. Among these 
challenges, which are discussed in more detail in the following 
sections, are
         providing focus for management efforts,
         monitoring transformation and integration,
         improving strategic planning,
         managing human capital,
         strengthening financial management infrastructure,
         establishing an information technology management 
        framework,
         managing acquisitions, and
         coordinating research and development.

Providing Focus for Management Efforts
    One challenge that DHS faces is to provide focus on management 
efforts. The experience of successful transformations and change 
management initiatives in large public and private organizations 
suggests that it can take 5 to 7 years until such initiatives are fully 
implemented and cultures are transformed in a substantial manner. 
Because this timeframe can easily outlast the tenures of managers, 
high-performing organizations recognize that they need to have 
mechanisms to reinforce accountability for organization goals during 
times of leadership transition.
    Focus on management efforts needs to be provided at two levels of 
leadership. The first level is that of the political appointees in top 
leadership positions. These leaders are responsible for both mission 
and management support functions. Although DHS has been operating about 
2 years, it has had two Secretaries, three Deputy Secretaries, and 
additional turnover at the Undersecretary and Assistant Secretary 
levels. The problem of turnover in top leadership is not unique to DHS. 
The average tenure of political leadership in federal agencies--
slightly less than 3 years for the period 1990-2001--and the long-term 
nature of change management initiatives can have critical implications 
for the success of those initiatives. The frequent turnover of the 
political leadership has often made it difficult to obtain the 
sustained and inspired attention required to make needed changes. 
Similarly, the recent turnover in DHS's top leadership raises questions 
about the department's ability to provide the consistent and sustained 
senior leadership necessary to achieve integration over the long term.
    Another level for focus on management efforts is those leaders 
responsible for day-to-day management functions. As we have reported, a 
Chief Operating Officer (COO)/Chief Management Officer (CMO) may 
effectively provide the continuing, focused attention essential to 
successfully completing these multiyear transformations in agencies 
like DHS.\14\ At DHS, we have reported that the COO/CMO concept would 
provide the department with a single organizational focus for the key 
management functions involved in the business transformation of the 
department, such as human capital, financial management, information 
technology, acquisition management, and performance management, as well 
as for other organizational transformation initiatives.\15\ We have 
also recently testified that a COO/CMO can effectively provide the 
continuing, focused attention essential to successfully complete the 
implementation of DHS's new human capital system, a large-scale, 
multiyear change initiative.\16\
---------------------------------------------------------------------------
    \14\ On September 9, 2002, GAO convened a roundtable of government 
leaders and management experts to discuss the COO concept and how it 
might apply within selected federal departments and agencies. See GAO, 
Highlights of a GAO Roundtable: The Chief Operating Officer Concept: A 
Potential Strategy to Address Federal Governance Challenges, GAO-03-
192SP (Washington, D.C.: Oct. 4, 2002).
    \15\ GAO, The Chief Operating Officer Concept and its Potential Use 
as a Strategy to Improve Management at the Department of Homeland 
Security, GAO-04-876R (Washington, D.C.: June 28, 2004).
    \16\ GAO, Human Capital: Observations on Final DHS Human Capital 
Regulations, GAO-05-391T (Washington, D.C.: March 2, 2005), and GAO, 
Human Capital: Preliminary Observations on Final Department of Homeland 
Security Human Capital Regulations, GAO-05-320T (Washington, D.C.: Feb. 
10. 2005).
---------------------------------------------------------------------------
    The specific implementation of a COO/CMO position must be 
determined within the context of the particular facts, circumstances, 
challenges and opportunities of each individual agency. As the agency 
is currently structured, the roles and responsibilities of the Under 
Secretary for Management contain some of the characteristics of a COO/
CMO for the department. According to Section 701 of the Homeland 
Security Act, the Under Secretary for Management is responsible for the 
management and administration of the Department in such functional 
areas as budget, accounting, finance, procurement, human resources and 
personnel, information technology, and communications systems.\17\ In 
addition, the Under Secretary is responsible for the transition and 
reorganization process and to ensure an efficient and orderly transfer 
of functions and personnel to the Department, including the development 
of a transition plan.
---------------------------------------------------------------------------
    \17\ Other responsibilities of the Under Secretary for Management 
under section 701 include financial management, procurement, human 
resources and personnel, information technology and communications 
systems, facilities and property management, security, performance 
measurements, grants and other assistance management programs, internal 
audits, and maintenance of immigration statistics.

Monitoring Transformation and Integration
    While the protection of the homeland is the primary mission of the 
department, critical to meeting this challenge is the integration of 
DHS's varied management processes, systems, and people--in areas such 
as information technology, financial management, procurement, and human 
capital--as well as in its administrative services. The integration of 
these various functions is being executed through DHS's management 
integration initiative. The success of this initiative is important 
since the initiative provides critical support for the total 
integration of the department, including its operations and programs, 
to ultimately meet its mission of protecting the homeland. Last week, 
we released a report on DHS's management integration efforts to date as 
compared against selected key practices consistently found to be at the 
center of successful mergers and transformations.\18\
---------------------------------------------------------------------------
    \18\ GAO, Department of Homeland Security: A Comprehensive and 
Sustained Approach Needed to Achieve Management Integration, GAO-05-139 
(Washington, D.C.: Mar. 16, 2005).
---------------------------------------------------------------------------
    Overall, we found that while DHS has made some progress in its 
management integration efforts, it has the opportunity to better 
leverage this progress by implementing a comprehensive and sustained 
approach to its overall integration efforts. First, key practices show 
that establishing implementation goals and a timeline is critical to 
ensuring success and could be contained in an overall integration plan 
for a merger or transformation. DHS has issued guidance and plans to 
assist its integration efforts, on a function-by-function basis 
(information technology and human capital, for example); but it does 
not have such a comprehensive strategy to guide the management 
integration departmentwide. Specifically, DHS still does not have a 
plan that clearly identifies the critical links that must occur across 
these functions, the necessary timing to make these links occur, how 
these critical interrelationships will occur, and who will drive and 
manage them.
    Second, it is important to dedicate a strong and stable 
implementation team for the day-to-day management of the 
transformation, a team vested with the necessary authority and 
resources to help set priorities, make timely decisions, and move 
quickly to implement decisions. In addition, this team would ensure 
that various change initiatives are sequenced and implemented in a 
coherent and integrated way. DHS is establishing a Business 
Transformation Office, reporting to the Under Secretary for Management, 
to help monitor and look for interdependencies among the individual 
functional integration efforts. However, this office is not currently 
responsible for leading and managing the coordination and integration 
that must occur across functions not only to make these individual 
initiatives work but also to achieve and sustain the overall management 
integration of DHS.
    To address this challenge, we recommended, and DHS agreed, that it 
should develop an overarching management integration strategy and 
provide its recently established Business Transformation Office with 
the authority and responsibility to serve as a dedicated integration 
team and also help develop and implement the strategy.

Improving Strategic Planning
    Effective strategic planning is another challenge for DHS. We have 
previously identified strategic planning as one of the critical success 
factors for new organizations. This is particularly true for DHS, given 
the breadth of its responsibility and need to clearly identify how 
stakeholders? responsibilities and activities align to address homeland 
security efforts. Without thoughtful and transparent planning that 
involves key stakeholders, DHS may not be able to implement its 
programs effectively. In 2004, DHS issued its first departmentwide 
strategic plan. We have evaluated DHS's strategic planning process, 
including the development of its first departmentwide strategic plan, 
and plan to release a report on our findings within a few weeks. This 
report will discuss (1) the extent to which DHS's planning process and 
associated documents address the required elements of the Government 
Performance and Results Act of 1993 (GPRA) and reflect good strategic 
planning practices and (2) the extent to which DHS's planning documents 
reflect both its homeland security and nonhomeland security mission 
responsibilities.

Managing Human Capital
    Another management challenge faced by DHS is how to manage its 
human capital. Our work in identifying key practices for implementing 
successful mergers and transformations indicates that attention to 
strategic human capital management issues should be at the center of 
such efforts. DHS has been given significant authority to design a new 
human capital system free from many of the government's existing civil 
service requirements, and has issued final regulations for this new 
system. We have issued a series of reports on DHS's efforts to design 
its human capital system.\19\ First, we found that the department's 
efforts to design a new human capital system was collaborative and 
facilitated the participation of employees from all levels of the 
department, and generally reflected important elements of effective 
transformations. We recommended that the department maximize 
opportunities for employees? involvement throughout the design process 
and that it place special emphasis on seeking the feedback and buy-in 
of front line employees in the field. Second, we found that DHS's human 
capital management system, as described in the recently released final 
regulations, includes many principles that are consistent with proven 
approaches to strategic human capital management. For example, many 
elements for a modern compensation system--such as occupational 
cluster, pay bands, and pay ranges that take into account factors such 
as labor market conditions--are to be incorporated into DHS's new 
system. However, these final regulations are intended to provide an 
outline and not a detailed, comprehensive presentation of how the new 
system will be implemented. Thus, DHS has considerable work ahead to 
define the details of the implementation of its system, and 
understanding these details is important to assessing the overall 
system.\20\
---------------------------------------------------------------------------
    \19\ GAO, Human Capital: Preliminary Observations on Proposed DHS 
Human Capital Regulations, GAO-04-479T (Washington, D.C.: February 25, 
2003); Posthearing Questions Related to Proposed Department of Homeland 
Security (DHS) Human Capital Regulations, GAO-04-570R (Washington, 
D.C.: March 22, 2004); Additional Posthearing Questions Related to 
Proposed Department of Homeland Security (DHS) Human Capital 
Regulations, GAO-04-617R (Washington, D.C.: April 30, 2004); Human 
Capital: DHS Faces Challenges in Implementing Its New Personnel System, 
GAO-04-790 (Washington, D.C.: June 18, 2004); and Human Capital: DHS 
Personnel System Design Effort Provides for Collaboration and Employee 
Participation, GAO-03-1099 (Washington, D.C.: September 30, 2003).
    \20\ GAO, Human Capital: Preliminary Observations on Final 
Department of Homeland Security Human Capital Regulations, GAO-05-320T 
(Washington, D.C.: Feb. 10, 2005).

Strengthening Financial Management Infrastructure
    DHS faces significant financial management challenges. 
Specifically, it must address numerous internal control weaknesses, 
meet the mandates of the DHS Financial Accountability Act,\21\ and 
integrate and modernize its financial management systems, which 
individually have problems and collectively are not compatible with one 
another. Overcoming each of these challenges will assist DHS in 
strengthening its financial management environment, improving the 
quality of financial information available to manage the department day 
to day, and obtaining an unqualified opinion on its financial 
statements.
---------------------------------------------------------------------------
    \21\ Pub. L. No. 108-330 (Oct. 16, 2004).
---------------------------------------------------------------------------
    DHS's independent auditors were unable to issue an opinion on any 
of the department's financial statements for fiscal year 2004. This was 
a substantial setback in DHS's financial management progress, 
compounded by continued challenges in resolving its internal control 
weaknesses. The number of material internal control weaknesses at the 
department has increased from 7 as of September 30, 2003 to 10 as of 
September 30, 2004. With the passage of the Department of Homeland 
Security Financial Accountability Act (the Accountability Act), DHS is 
now subject to the Chief Financial Officers Act of 1990 (the CFO Act) 
\22\ and the Federal Financial Management Improvement Act of 1996 
(FFMIA).\23\ The Accountability Act also requires that in fiscal year 
2005 the Secretary of Homeland Security include an assertion on 
internal controls over financial reporting at the department, and in 
fiscal year 2006 requires an audit of internal controls over financial 
reporting. We will continue to monitor the steps DHS is taking to meet 
the requirements of the Accountability Act as part of our audit of the 
consolidated financial statements of the United States government.
---------------------------------------------------------------------------
    \22\ Pub. L. No. 101-576 (Nov. 15, 1990).
    \23\ Division A, Section 101(f), Title VIII, of Public Law 104-208 
is entitled the Federal Financial Management Improvement Act of 1996. 
FFMIA requires the major departments and agencies covered by the CFO 
Act to implement and maintain financial management systems that comply 
substantially with (1) federal financial management systems 
requirements, (2) applicable federal accounting standards, and (3) the 
U.S. Government Standard General Ledger at the transaction level.
---------------------------------------------------------------------------
    We reported in July 2004 that DHS continues to work to reduce the 
number of financial management service providers and to acquire and 
deploy an integrated financial enterprise solution.\24\ At that time, 
DHS reported that it had reduced the number of financial management 
service providers for the department from the 19 providers at the time 
DHS was formed to 10. DHS planned to consolidate to 7 providers. 
Additionally, DHS hired a contractor to deploy an integrated financial 
enterprise solution. This is a costly and time consuming project and we 
have found that similar projects have proven challenging for other 
federal agencies. We will therefore continue to monitor DHS's progress 
on overcoming this serious challenge.
---------------------------------------------------------------------------
    \24\ GAO, Financial Management: Department of Homeland Security 
Faces Significant Financial Management Challenges, GAO-04-774 
(Washington: D.C.: July 19, 2004).
---------------------------------------------------------------------------
Establishing an Information Technology Management Framework
    DHS has recognized the need for a strategic management framework 
that addresses key information technology disciplines, and has made a 
significant effort to make improvements in each of these disciplines. 
For example, DHS is implementing its information technology (IT) 
investment management structure, developing an enterprise architecture, 
and has begun IT strategic human capital planning. However, much 
remains to be accomplished before it will have fully established a 
departmentwide IT management framework. To fully develop and 
institutionalize the management framework, DHS will need to strengthen 
strategic planning, develop the enterprise architecture, improve 
management of systems development and acquisition, and strengthen 
security. To assist DHS, we have made numerous recommendations, 
including (1) limiting information technology investments until the 
department's strategic management framework is completed and available 
to effectively guide and constrain the billions of dollars that DHS is 
spending on such investments; (2) taking appropriate steps to correct 
any limitations in the Chief Information Officer's ability to 
effectively support departmentwide missions; and (3) ensuring the 
department develops and implements a well-defined enterprise 
architecture to guide and constrain business transformation and 
supporting system modernization. The development of this framework is 
essential to ensuring the proper acquisition and management of key DHS 
programs such as U.S. Visitor and Immigrant Status Indicator Technology 
(US-VISIT), Automated Commercial Environment, and Secure Flight.\25\ To 
this end, we have recently reported on key management challenges and 
weaknesses for each of the programs that an effective DHS-wide 
framework for managing systems investments would be instrumental in 
addressing.\26\
---------------------------------------------------------------------------
    \25\ For information about the challenges these programs face, see 
GAO, Homeland Security: Some Progress Made, but Many Challenges Remain 
on U.S. Visitor and Immigrant Status Indicator Technology Program, GAO-
05-202 (Washington, D.C.: Feb. 23, 2005); Information Technology: 
Customs Automated Commercial Environment Program Processing, but Need 
for Management Improvements Continues, GAO-05-267 (Washington, D.C.: 
Mar. 14, 2005); and Aviation Security: Secure Flight Development and 
Testing under Way, but Risks Should Be Managed as System Is Further 
Developed, GAO-05-356 (Washington, D.C.: Mar. 28, 2005).
    \26\ GAO, Department of Homeland Security: Formidable Information 
and Technology Management Challenge Requires Institutional Approach, 
GAO-05-702 (Washington, D.C.: Aug. 27, 2004).

Managing Acquisitions
    Our work has indicated that managing acquisitions is also a major 
management challenge for DHS. The department faces the challenge of 
structuring its acquisition organization so that its various 
procurement organizations are held accountable for complying with 
procurement policies and regulations and ensuring that taxpayer dollars 
are well-spent. In addition, the department has in place a number of 
large, complex, and high-cost acquisition programs, such as US-VISIT 
and the Coast Guard's Deepwater program, which will need to be closely 
managed to ensure that they receive the appropriate level of oversight 
and that acquisition decisions are made based on the right level of 
information. For example, we reported in March 2004 that the Deepwater 
program needed to pay more attention to management and contractor 
oversight in order to avoid cost overruns.\27\ We have also reported on 
contract management problems at the former Immigration and 
Naturalization Service, now a part of DHS, and TSA.\28\ We will issue a 
report at the end of the this month that addresses (1) areas where DHS 
has been successful in promoting collaboration among its various 
organizations, (2) areas where DHS still faces challenges in 
integrating the acquisition function, and (3) the department's progress 
in implementing an effective review process for its major, complex 
investments.
---------------------------------------------------------------------------
    \27\ GAO, Contract Management: Coast Guard's Deepwater Program 
Needs Increased Attention to Management and Contractor Oversight, GAO-
04-380 (Washington, D.C.: Mar. 9, 2004).
    \28\ GAO, Contract Management: INS Contracting Weaknesses Need 
Attention from the Department of Homeland Security, GAO-03-799 
(Washington, D.C.: Jul. 25, 2003) and Transportation Security Agency: 
High-Level Attention Needed to Strengthen Acquisition Function, GAO-04-
544 (Washington, D.C.: May 28, 2004).

Coordinating Research and Development
    DHS also faces management challenges in coordinating research and 
development (R&D). Our work has recently found that DHS has not yet 
completed a strategic plan to identify priorities, goals, objectives, 
and policies for the R&D of homeland security technologies and that 
additional challenges remain in its coordination with other federal 
agencies. Failure to complete a strategic plan and to fully coordinate 
its research efforts may limit DHS's ability to leverage resources and 
could increase the potential for duplication of research. In addition, 
DHS faces challenges with regard to its use of DOE laboratories. These 
challenges include the development of a better working relationship 
through better communication and the development of clear, well-defined 
criteria for designating the DOE laboratories to receive the majority 
of DHS's R&D funding. Moreover, DHS faces the challenge of balancing 
the immediate needs of the users of homeland security technologies with 
the need to conduct R&D on advanced technologies for the future.\29\
---------------------------------------------------------------------------
    \29\ GAO, Homeland Security: DHS Needs a Strategy to Use DOE's 
Laboratories for Research on Nuclear, Biological, and Chemical 
Detection and Response Technologies, GAO-04-653 (Washington, D.C.: May 
24, 2004).
---------------------------------------------------------------------------
    Similarly, conducting R&D on technologies for detecting, 
preventing, and mitigating terrorist threats is vital to enhancing the 
security of the nation's transportation system. In our report on the 
Transportation Security Administration's (TSA) and DHS's transportation 
security R&D programs, we found that although TSA and DHS have made 
some efforts to coordinate R&D with each other and with other federal 
agencies, both their coordination with the Department of Transportation 
(DOT) and their outreach to the transportation industry have been 
limited.\30\ For example, officials from the modal administrations of 
DOT, which continue to conduct some transportation security R&D, said 
they had not provided any input into TSA's and DHS's transportation 
security R&D project selections. Consequently, DOT's and the 
transportation industry's security R&D needs may not be adequately 
reflected in TSA's and DHS's R&D portfolios. Therefore, we recommend 
that TSA and DHS (1) develop a process with DOT to coordinate 
transportation security R&D, such as a memorandum of agreement 
identifying roles and responsibilities and designating agency liaisons 
and (2) develop a vehicle to communicate with the transportation 
industry to ensure that its R&D security needs have been identified and 
considered. DHS generally concurred with our report and its 
recommendations.
---------------------------------------------------------------------------
    \30\ GAO, Transportation Security R&D: TSA and DHS Are Researching 
and Developing Technologies, but Need to Improve R&D Management, GAO-
04-890 (Washington, D.C.: Sep. 30, 2004).

Importance of Focusing on Management Issues
    Given the dominant role that DHS plays in securing the homeland, it 
is critical that DHS be able to ensure that its management systems are 
operating as efficiently and effectively as possible. While it is 
understood that a transformation of this magnitude takes time and that 
DHS's immediate focus has been on its homeland security mission, we see 
the need for DHS to increase its focus on management issues. This is 
important not only to DHS itself, but also to the nation's homeland 
security efforts, because, in addition to managing its own 
organization, DHS plays a larger role in managing homeland security and 
in coordinating with the activities of other federal, state, local, and 
private stakeholders. This larger DHS role presents its own unique 
challenges.
         For example, DHS faces the challenge of clarifying the 
        role of government versus the private sector. In April 2002, we 
        testified that the appropriate roles and responsibilities 
        within and between the levels of governments and with the 
        private sector are evolving and need to be clarified.\31\ New 
        threats are prompting a reassessment and shifting of long-
        standing roles and responsibilities. These shifts have been 
        occurring on a piecemeal and ad hoc basis without the benefit 
        of an overarching framework and criteria to guide the process.
---------------------------------------------------------------------------
    \31\ GAO, Homeland Security: Responsibility and Accountability for 
Achieving National Goals, GAO-02-627T (Washington, D.C.: Apr. 11, 
2002).
---------------------------------------------------------------------------
         As another example, DHS faces a challenge in 
        determining how federal resources are allocated to non-federal 
        stakeholders. We have long advocated a risk management approach 
        to guide the allocation of resources and investments for 
        improving homeland security.\32\ Additionally, OMB has 
        identified various tools, such as benefit-cost analysis, it 
        considers useful in planning such as capital budgeting and 
        regulatory decisionmaking.\33\ DHS must develop a commonly 
        accepted framework and supporting tools to inform cost 
        allocations in a risk management process. Although OMB asked 
        the public in 2002 for suggestions on how to adjust standard 
        tools to the homeland security setting,\34\ a vacuum currently 
        exists in which benefits of homeland security investments are 
        often not quantified and almost never valued in monetary 
        terms.\35\
---------------------------------------------------------------------------
    \32\ GAO, Homeland Security: Key Elements of a Risk Management 
Approach, GAO-02-150T (Washington, D.C.: Oct. 12, 2001); and Homeland 
Security: A Risk Management Approach Can Guide Preparedness Efforts, 
GAO-02-208T (Washington, D.C.: Oct. 31, 2001).
    \33\ OMB Circulars A-11 and A-94.
    \34\ OMB, 2003 Report to Congress on Combating Terrorism 
(Washington, D.C.: Sept. 2003).
    \35\ OMB Circular A-11.
---------------------------------------------------------------------------
         As a final example, DHS faces a challenge in sharing 
        information among all stakeholders. DHS has initiatives 
        underway to enhance information sharing (including the 
        development of a homeland security enterprise architecture to 
        integrate sharing between federal, state, and local 
        authorities). However, our August 2003 report noted that these 
        initiatives, while beneficial for the partners, presented 
        challenges because they (1) were not well coordinated, (2) 
        risked limiting participants? access to information, and (3) 
        potentially duplicated the efforts of some key agencies at each 
        level of government.\36\ We also found that despite various 
        legislation, strategies, and initiatives, federal agencies, 
        states, and cities did not consider the information sharing 
        process to be effective.
---------------------------------------------------------------------------
    \36\ GAO, Homeland Security: Efforts to Improve Information Sharing 
Need to be Strengthened, GAO-03-760 (Washington, D.C.: Aug. 27, 2003).
---------------------------------------------------------------------------
    A well-managed DHS will be needed to meet these larger homeland 
security challenges. As DHS continues to evolve, integrate its 
functions, and implement its programs, we will continue to review its 
progress and provide information to Congress for oversight purposes.
    Mr. Chairman, this concludes my prepared statement. I will now be 
pleased to respond to any questions that you or other members of the 
subcommittee have.

GAO Contacts and Staff Acknowledgments
    For further information about this testimony, please contact Norman 
J. Rabkin at 202-512-8777.
    Other key contributors to this statement were Stephen L. Caldwell, 
Wayne A. Ekblad, Carole J. Cimitile, Ryan T. Coles, Heather J. Dunahoo, 
Kimberly M. Gianopoulos, Randolph C. Hite, Robert G. Homan, Casey L. 
Keplinger, Eileen R. Larence, Michele Mackin, Lisa R. Shames, and Sarah 
E. Veale.
    This is a work of the U.S. government and is not subject to 
copyright protection in the United States. It may be reproduced and 
distributed in its entirety without further permission from GAO. 
However, because this work may contain copyrighted images or other 
material, permission from the copyright holder may be necessary if you 
wish to reproduce this material separately.

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    Mr. Rogers. Thank you, Mr. Rabkin.
    The Chair now recognizes the Honorable Asa Hutchinson, 
Chairman of the homeland security practice at Venable, LLC, and 
the former Undersecretary of Border and Transportation Security 
at the Department Homeland security and one of our former 
colleagues.
    It is good to have you here, Mr. Hutchinson, and the Chair 
now recognizes you for your statement.

  STATEMENT OF THE HONORABLE ASA HUTCHINSON, CHAIRMAN OF THE 
            HOMELAND SECURITY PRACTICE, VENABLE, LLC

    Mr. Hutchinson. Chairman, Mr. Meek, it is a pleasure to 
appear before you today. I have appeared before you a number of 
times as Undersecretary at the Department of Homeland Security, 
and I always appreciate the courtesies you have extended and 
also the leadership you have provided on the important issues 
of security of our nation.
    As you know, I am now in the private sector and perhaps 
that lends me a little bit more freedom as I make my remarks 
before this committee. And after investing over 2 years of my 
public career in helping shape the new department, I am pleased 
to continue my involvement in homeland security as head of the 
Homeland Security Group at Venable.
    Today, I will comment on the organizational structure of 
homeland security, and the focus of this hearing is very timely 
in view of the 90-day review of Secretary Chertoff on 
organizational changes that may be needed in order to more 
effectively address the risks we face.
    I compliment Secretary Chertoff on this approach. It 
reflects the need for a review but does not make changes simply 
in reaction to perceived shortcomings within the Department.
    First, with the 22 agencies making up the new department, 
Congress wisely gave broad latitude to the administration in 
reorganizing the functions and missions of the old entities. A 
new mission was mandated and old structures were ill-equipped 
to accomplish the objectives of integration, information 
sharing and security. The changes have been tough, as change 
always is. The 180,000 men and women of Homeland Security 
should receive the thanks of the American people for their 
determination to successfully set up the new department.
    As a result of the statutory flexibility given to the 
Secretary in reorganizing the 22 agencies, notable differences 
between the Homeland Security Act and the current structure of 
the Department are noticeable. For example, the Bureau of 
Border Security is established in Section 442 of the act but 
those functions are organized as the Immigration and Customs 
Enforcement Agency. At some point, and I know the committee is 
working on this, the Congress may wish to conform the 
authorizing legislation to the reality of the Department.
    Second, I would offer the following areas that should be 
considered in the reorganization review of the Department. 
First, strengthening the Policy Office of the Secretary. The 
Policy Director at the departmental level should be elevated to 
an Assistant Secretary position or Undersecretary level to 
enhance the ability of the Secretary to forge policy changes 
and to drive those changes within the executive branch.
    The second area I would address is that the formation of a 
Screening Coordination Office should be expedited. This office 
is set forth in the President's 2006 budget submitted to 
Congress. It is important to prevent further stovepiping of the 
programs that are brought together in the Screening 
Coordination Office. This can only be done by implementing some 
coordination oversight role at the departmental level in 
anticipation of the approval of such office in the 2006 
appropriation process.
    So, first, I would certainly urge Congress to adopt the 
president's creation of the Screening Coordination Office that 
will integrate many of the stovepipe functions in the 
Registered Traveler Program, the Transportation Worker 
Identification Credential Program and others. And then, 
secondly, I would certainly urge Congress to support a movement 
toward this, even prior to the adoption of the budget.
    Thirdly, in the change, I would encourage enhancing the 
role of the Chief Information Officer by raising the Office to 
be a direct report to the Secretary or Deputy Secretary. The 
integration of the information technology systems is critical 
and must have the immediate support of the highest levels of 
the Department. Direct access of the CIO to the Secretary is 
essential in driving this important mission.
    Fourthly, I would urge that the Department move forward 
with the creation of the regional leadership structure for the 
Department with a pilot region being created this year. The 
regional team would enhance relationships with local 
governments, be prepared to manage and coordinate responses to 
any terrorist incident and to be more effective in monitoring 
homeland security grant spending.
    And let me just say I have an interest in Arkansas these 
days, as always, and from an Arkansas perspective the funds 
that are given by the Department should be used effectively 
with accountability, but the concept that all the Federal money 
should go to high-risk areas is short-sighted. There needs to 
be a robust base level of funding in every area of the country. 
And I think that is important, and a regional concept will help 
provide the accountability, help coordinate the spending of the 
homeland security funds and also to make sure it is targeted 
base level of funding plus the higher risk areas.
    And of course, finally, the regional concept would help 
oversee regional planning in homeland security exercises.
    These are items that I think and would hope the Department 
will consider and Congress will look at supporting to increase 
the security and effectiveness of our homeland security 
efforts.
    Thank you very much.
    [The statement of Mr. Hutchinson follows:]

           Prepared Statement of the Honorable Asa Hutchison

    Mr. Chairman, Members of the Committee, it is my privilege to 
appear once again before the Congress but in a new capacity. I have 
appeared before this Committee a number of times as Undersecretary at 
the Department of Homeland Security and I appreciate the courtesies you 
have always extended and for your leadership on the challenges we face 
as a nation and as a government.
    As you know I am now in the private sector and as a citizen I have 
more freedom to comment on our security challenges. After investing 
over two years of my public career in helping shape the new Department, 
I am pleased to continue my involvement in homeland security as head of 
the Homeland Security Group at Venable LLP This firm had the wisdom and 
foresight to build an inter disciplinary group of professionals to help 
educate and guide the business community through the new world of 
homeland security and I am delighted to have joined such a team.
    Today, I will comment on the organizational structure of DHS and 
the focus of this hearing is very timely in view of the 90 day review 
of Secretary Chertoff on organizational changes that may be needed in 
order to more effectively address the risks we face. I compliment 
Secretary Chertoff on this approach. It reflects the need for review 
but does not make changes simply in reaction to perceived shortcomings 
within the department
    First, with the 22 agencies making up the new Department, Congress 
wisely gave broad latitude to the Administration in reorganizing the 
functions and mission of the old entities. A new mission was mandated 
and old structures were ill equipped to accomplish the objectives of 
integration, information sharing and security. The changes have been 
tough, as change always is, but the 180,000 men and women of homeland 
security should receive the thanks of the American people for their 
determination to successfully set up the new Department. As a result of 
the statutory flexibility given to the Secretary of Homeland Security 
in reorganizing the 22 agencies there are notable differences between 
the Homeland Security Act and the current structure of the department. 
For example, the Bureau of Border Security is established in Section 
442 of the Act but those functions are organized as the Immigration and 
Customs Enforcement Agency. At some point Congress may wish to conform 
the authorizing legislation to the reality of the department.
    Second, I would offer the following areas that should be considered 
in the reorganization review of the department:
        1. Strengthening the policy office of the Secretary. The policy 
        director at the departmental level should be elevated to an 
        Assistant Secretary position or Undersecretary level to enhance 
        the ability of the Secretary to forge policy changes and to 
        drive those changes within the executive branch.
        2. Expedite the formation of the Screening Coordination Office 
        that is set forth in the President's 2006 budget submission to 
        Congress. It is important to prevent further stove-piping of 
        the programs brought together in the Screening Coordination 
        Office. This can only be done by implementing some coordination 
        oversight role at the department level now in anticipation of 
        the approval of such office in the 2006 appropriation process.
        3. Enhance the role of the Chief Information Officer by raising 
        the office to be a direct report to the Secretary and Deputy 
        Secretary. The integration of the information technology 
        systems is critical and must have the immediate support of the 
        highest levels of the department. Direct access of the CIO to 
        the Secretary is essential in driving this important mission.
        4. Move forward with the creation of regional leadership for 
        the Department with a pilot region being created this year. The 
        regional team would enhance relationships with local 
        governments; be prepared to manage and coordinate responses to 
        any terrorist incident; and to more effectively monitor 
        homeland security grant spending; and finally to oversee 
        regional planning and homeland security exercises.
    Thank you for the opportunity to testify today and I would be happy 
to respond to any questions.

    Mr. Rogers. Thank you, Mr. Hutchinson.
    The Chair now recognizes the Honorable James Gilmore, III, 
Chairman of the National Council on Readiness and Preparedness 
and former Governor of the Commonwealth of Virginia.
    Welcome, and we look forward to your statement.

  STATEMENT OF THE HONORABLE JAMES S. GILMORE III, CHAIRMAN, 
         NATIONAL COUNCIL ON READINESS AND PREPAREDNESS

    Mr. Gilmore. Thank you, Mr. Chairman.
    Mr. Chairman, Mr. Meek, thank you for the opportunity to be 
here today, particularly with my good friend, the chairman, 
Chris Cox.
    Thank you very much, Mr. Chairman, for being here today.
    Let me just say a few things. You will find my remarks 
extended in the record that I have asked to be placed into the 
record. You will find that they do some description of the work 
that has been done by the Commission but it is focused on the 
organizational aspects, touches on the intelligence sharing 
aspects, the need for enterprise solutions as opposed to just 
the rifle shot type of tasks by individual agencies, the need 
for a risk-based analysis in order to direct and focus money, 
the need for an overall culture of homeland security and the 
focus on civil liberties.
    Let me, if I could, expand on several of the key points. 
Like Congressman Hutchinson, Secretary Hutchinson, I am now in 
private business. I Chaired the Commission for this Congress, 
the advisory panel that you established for a period of 5 
years. It was established at the beginning of 1999. We actually 
published two reports and completed a third prior to the 9/11 
attack.
    I was Governor of the State of Virginia during the time of 
attack and therefore was involved with the response across the 
river in Virginia at the Pentagon. Following that, we did two 
additional reports as well, and you will find that these 
reports dealt with the risk assessment, the way that you are 
supposed to structure and handle the nation's response by way 
of a structure and organization of developing homeland 
security, the issues of intelligence concerns, specific areas 
on how to develop a national strategy, the focus on stovepiping 
and intelligence sharing and then finally some type of 
visionary approach of what we are supposed to be doing here in 
Homeland Security.
    If you would like to look at those reports, you will find 
them on the RAND Corporation Web page, rand.org, with the 
search window being Gilmore Commission.
    Let me just add a few additional points in the remaining 
few minutes that I have. Number one, I think that the 
Department has got to focus on a more thorough plan. They have 
put forward some good plans, but if I were to add a suggestion 
to them for improvement it would be to do a plan thorough 
enough so the states and locals, which must be folded into this 
process on a national plan, have a feel for how they are 
supposed to spend money.
    Asa suggested an approach on that, but I think at some 
point we have to really try to understand how we are supposed 
to spend money. The states and local do not fully appreciate 
that yet.
    And you have to be able to fold in the private sector, 
which I am trying to do, by the way, through the INCORP 
organization, USA Secure and other private organizations that I 
am trying to develop in order to give vehicles for private 
people to participate.
    Secondly, the simple truth is that vulnerability in this 
country is not threat, and that is a challenge, because we have 
focused almost entirely upon vulnerability in our 
communications to the American people. Threat is instead the 
intentions and capabilities of the enemy. That is all it is.
    And so we have to try to understand that better, and that 
means a greater focus on intelligence and making sure that the 
Department has access to good intelligence, which we hope that 
these reforms now will give the Secretary an opportunity to 
have. Because unless he knows what the capabilities of the 
enemy are, what they might want to do, then at that point you 
are trying to protect everything, which means, of course, as we 
know, you protect nothing.
    Third of all, let me just remark, in terms of organization, 
I certainly applaud Secretary Chertoff in his effort at this 
point to look more toward risk-based type of assessment and 
spending of money. I think that is the right approach, and it 
is different from the old approach, and I think that it will be 
better.
    Organizationally, when I was both Commonwealth Attorney and 
Attorney General of the State of Virginia, I reorganized both 
of those departments, and it was from the point of view of 
trying to develop direction of what needed to be accomplished 
instead of just simply taking old structures and having them do 
the same things over and over again. This is what we mean by an 
enterprise-based type of approach.
    Fourthly, public communication, and I would say public 
education. I think we could do more of that. Right now we are 
not really putting the terrorist threat into a very good, I 
think, perspective for the American people. They are puzzled as 
to what to expect and what to fear or what to be concerned 
about or what to be confident of, and I think that we need to 
have an opportunity for greater public communication.
    A policy office which has been recommended by different 
groups, which I think that Secretary Chertoff is thinking 
about, might help to develop the better message, which, by the 
way, cannot be a message that says we are going to protect 
everything and that one attack by the enemy means the end of 
the Republic. It just does not, and we need to find a way to 
get that communication out so that we are not misleading the 
American people about what we are trying to accomplish and the 
accomplishments we are doing.
    And, five, the civil freedoms issue. This has been alluded 
to in many places. A Privacy Office has been set up in the 
Department, but it is mostly about data and privacy security. A 
new department is coming out of the White House, a new group to 
really focus on civil freedoms. I think it is essential that 
this be done. Otherwise, we just are not going to be able to 
win this battle if we give up the issue of civil liberties and 
civil freedoms in this country.
    And so now I will close by congratulating the people in the 
Department. I think that in setting up a new structure our 
Commission always believed it was going to be a heartbreak and 
a difficulty and a challenge and maybe divisionary of the real 
goals and mission. I think that they have labored very mightily 
in new structures and new efforts under good leadership, and I 
am confident that under the leadership of Secretary Chertoff 
that it will even be more refined and focused and better in the 
future.
    [The statement of Mr. Gilmore follows:]

       Prepared Statement of the Honorable James S. Gilmore, III

Introduction
    Chairman Rogers, Mr. Ranking Member Meek, and members of this 
Subcommittee on Management, Integration, and Oversight. Thank you for 
the opportunity to appear today to discuss the evolution of management 
issues within the Department of Homeland Security. This is timely. Both 
the Department and our national efforts to improve the safety and 
security of the nation have reached a pivotal crossroads.
    I bring three perspectives today. From 1999 to 2003, I Chaired the 
Advisory Panel to Assess Domestic Response Capabilities for Terrorism 
Involving Weapons of Mass Destruction, the only national commission to 
transcend both the pre and post 9-11 environments. Also, I was the 
Governor of one of the three states viciously attacked on 9-11 and 
finally, as Governor I understand the phenomenal challenges of 
organizational management under a charged atmosphere of politics and 
perception.
    I will begin today by underscoring, that in the broadest of terms, 
we have much to celebrate in terms of the progress made at the federal, 
state and local levels and with the private sector and our citizens 
since 9-11. Have we been perfect. No. But we did not have perfect 
conditions under which to change our national priorities and create the 
Department following the 9-11 attacks.
    I believe, however, that we are at the logical point where scrutiny 
is needed and is appropriate to chart a clearer path that will empower 
future progress, free from the ambiguity that has begun to creep into 
our national efforts. This is essential if we are to continue the 
forward momentum needed to keep America safe.
    There are four key challenges that the Department of Homeland 
Security and its new Secretary must overcome in the days ahead.
    First. What is the right organization for the Department. There was 
great debate in the Executive Branch, Congress, media and elsewhere in 
developing the legislation that provides the basis for DHS's structure. 
The end result is the structure of the Department--not its mission 
became the overriding theme of much of the debate. Consequently, then 
Secretary Ridge and his team were forced to implement a design by 
Committee. Unfortunately less attention was given to ensuring more 
flexibility in what I would offer has been one of the most rapidly 
evolving public policy issues in recent memory. There was no road map 
for our national journey in the post 9-11 World and our zeal to address 
all the twists and turn along the way may have kept us from solidly 
establishing the desired destination.
    Second. Information and intelligence sharing--whether internal to 
the Department among major components or sub-components and with 
external stakeholder groups is essential for success. The Department is 
a series of stovepipes. That is not necessarily all bad IF and the 
operative word is IF there is a culture and structure within the 
Department that promotes and instills internal and external sharing of 
information and intelligence in a logical pattern with defined 
objectives between and beyond these stovepipes. Clearly one of the key 
issues highlighted by the Gilmore Commission and re-stated by the 9-11 
and the Robb-Silverman Commissions is having the sound business rules 
and practices in-place to promote sharing of information and 
intelligence. Sometimes the desire for the latest technological tool 
pre-empts the more basic discussion of who needs what, what is the best 
way to get it to them and how do we ensure quality of information--not 
quantity of information is the driving factor.
    Third. The Department must be focused on enterprise solutions that 
actively engage local and state governments and the private sector in 
their implementation. Much of the Departments efforts since 9-11 has 
been in trying to conceptualize, develop and implement protective 
measures for facilities, communities, sectors and the nation--and doing 
much of it by themselves. There has been state, local and private 
sector engagement--but not in a holistic manner that will achieve 
optimal progress. A good parallel is the nation's interstate 
transportation system. If the federal government were responsible for 
designing and building every bridge, exit ramp and mile of federal road 
then we would not have the system that is in-place today. A deliberate 
system was put in-place that the federal government would facilitate 
the creation of broad goals and standards and it has been up to states 
and communities to construct the national federal aid road system. 
Federal level conceptualization--state and local implementation.
    Finally, the Department is but one component of a national effort. 
Unfortunately they get the blame for anything negative related to 
homeland security. Homeland security is more than terrorism. Homeland 
security is more than physical impacts. Homeland security is more than 
a department or profession.
    Homeland security must be a culture of managing risk. The Gilmore 
Commission said repeatedly that our efforts to prevent and deter and 
respond and recover must focus on all hazards and do so in a manner 
that balances the likelihood of each relative to the others. But 
creating a comprehensive risk management approach across all federal 
agencies and with states, communities and the private sector is beyond 
the Departments purview. They are a new bureaucracy operating on a 
playing field with larger, more mature and powerful federal 
organizations. This is not right or wrong. It just is.
    Addressing cultural change, beyond the Department, will impact how 
Congress will monitor and oversee, how the Homeland Security Council in 
White House will coordinate and adjudicate and how states, communities 
and the private sector will implement. Our first National Strategy for 
Securing the Homeland was good for its point in the effort. It must be 
updated to reflect the phenomenal advances since 9-11 and the issues 
that have emerged since it was published. A solid and updated National 
Strategy should drive the Departments organization--and those of other 
federal departments and agencies as a matter of fact as they implement 
their responsibilities for homeland security--not the other way around.
    Mr. Chairman if I had one point that I would ask be remembered 
today it is this. We cannot keep micro-managing the Department if it is 
going to succeed. Homeland security is not the department--clearly DHS 
is an integral component but this is a shared responsibility. Let me be 
clear I am not implying that it should not have oversight. DHS must be 
held accountable by this Congress, the President, the nations 
Governor's, local officials, corporate CEO's and ultimately the 
American people. Let's focus less on telling them how to do their job 
and more on defining and articulating what there job is in relation to 
the other government and private sector players as part of a culture of 
homeland security. Constant micro directed adjustments will not produce 
momentum--it will only add to confusion.
    I am convinced, based on my discussions around America that DHS has 
talented doers and leaders in its ranks capable of accomplishing great 
things. The Department needs our guidance and suggestions on the what 
needs to be done--but given the level of professional competence of its 
employees I believe they have achieved a level of maturity needed to 
decide how to best specifically organize to accomplish the mission. We 
do not tell battlefield commanders how to fight a War--we give them the 
guidance on the objectives and parameters--they do the rest.
    In closing let me say that the number one objective that DHS, any 
other federal, state and local organization should seek to achieve as 
we seek to secure our homeland is the preservation of civil liberties. 
The debate should not be about blocks on an organizational chart. It 
should be what is the mission and what are the parameters that will 
guide the accomplishment of that mission and how do we do so in a 
manner that preserves our civil liberties and strengthens the values of 
our democracy.
    Thank you and I look forward to the Subcommittee's questions.

    Mr. Rogers. Thank you, Governor Gilmore.
    The Chair now recognizes the Honorable Clark Kent Ervin, 
Director of the Homeland Security Initiative at the Aspen 
Institute and former Inspector General of the Department of 
Homeland Security, for any statement you might have.

  STATEMENT OF CLARK KENT ERVIN, DIRECTOR, HOMELAND SECURITY 
                INITIATIVE, THE ASPEN INSTITUTE

    Mr. Ervin. Thank you, Mr. Chairman and Mr. Ranking Member, 
members of the subcommittee. Thank you very much for this 
opportunity to testify on the major management challenges 
facing the Department of Homeland Security.
    This being relatively early in the new year, the new 
presidential term and the tenure of the new leadership team at 
DHS, now is a good time to assess what the Department has 
achieved in its first 2 years of operation and what remains to 
be done to secure the homeland.
    Like my colleagues, I am sure, as I speak to various 
audiences around the country, I am often asked whether the 
nation is safer than we were on 9/11. The good news is that the 
answer to that question, in my judgment, is an unequivocal yes. 
Since America was attacked on 9/11 by means of airplanes, it is 
not surprising that the greatest strides have been made in the 
area of aviation security.
    Today, for example, cockpit doors are hardened, some pilots 
are armed, the number of air marshals covering flights has been 
significantly increased, airports are better protected, and, 
generally, airport screeners are better trained and more 
sensitized to the critical role that they play as a key line of 
defense against would-be terrorists.
    But the bad news is that whether we are safer today than we 
were 4 years ago is not the only question, and, in that scheme 
of things, it is not really the most important question. Seems 
to me that the key questions are: Are we as safe as we need to 
be, are we as safe as we can be, and are we as safe as we think 
we are? The answer to all these questions, I am afraid, is no.
    Even in the area where the most time, attention and 
resources have been invested, aviation security, serious 
vulnerabilities remain, as you have heard. Just yesterday, in 
fact, confirming my fears, the DHS Office of Inspector General 
released a report indicating it is still far easier to sneak 
guns, knives and explosives past the screener workforce than it 
should be, and GAO is expected to release a report to the same 
effect later this week.
    As was alluded to by Mr. Skinner, as demonstrated so 
graphically by an ABC news team, which managed to smuggle 
undetected the same shipment of deplete uranium into two 
different American ports on two different occasions, our ports 
remain vulnerable to terrorist penetration. And as demonstrated 
by an OIG report released in January, monies intended to secure 
the ports have, on occasion, been directed to projects of 
dubious value.
    Despite the attack on a train station in Spain, in March of 
last year, which Europe considerers to be its 9/11, relatively 
little has been done in our country to secure mass transit and 
rail transportation.
    In the area of border security, the Department is to be 
applauded for the progress that it has made on the US-VISIT 
entry-exit biometrics-based immigration system. For the first 
time in our history, we are moving toward keeping track of who 
is entering our country through legal immigration channels and 
where they are leaving when they are supposed to. But a 
February OIG report points out most visitors who enter our 
country by land do so from Mexico and Canada, and most of those 
country's citizens are not subjected to US-VISIT.
    And while the system has, to the Department's credit, been 
extended to the busiest land crossings, it is perhaps even more 
important that it be made operational as soon as possible at 
the least busy and most remote border crossings since it is 
there that terrorists are likeliest to try to enter. Moreover, 
the exit feature is only in the pilot stage.
    And, finally, as pointed out in a recent Justice Department 
Office of Inspector General report, 99 percent of foreign 
visitors to the United States do not have their fingerprint 
checked against an FBI database that contains 47 million 
prints, including those of non-American citizens suspected of 
terrorism, because DHS and FBI biometrics system are not fully 
interoperable.
    Moving on to talk for a minute about critical 
infrastructure, media reports from a few months ago noted that 
the present version of the list contains things like municipal 
golf courses and amusement parks that are obviously not 
critical to the security of the United States and items that 
are and should be on the list, like nuclear power plants and 
oil and gas refineries, are not prioritized according to which 
are most at risk of attack.
    Two other quick things to note. With regard to intelligence 
matters, I want to underscore what Governor Gilmore said about 
the importance of that. I had concerns a year or so ago after 
the creation of TTIC and TSC as to whether the Department would 
have access to the intelligence that it needs to secure the 
homeland. The recent Silberman-Robb Commission points out that 
DHS itself does not always share information with its federal 
and state and local partners. CIA and FBI continue, on 
occasion, to keep information from DHS, and there was even a 
quotation that DHS and the FBI cannot e-mail each other.
    With regard to the Department's organization and finances, 
it is critical, as you have heard already, that the CIO, the 
CPO and the CFO have the ability to direct the work of their 
nominal subordinates, their component counterparts. And it is 
critical that the Department get a handle on both its 
accounting practices and its financial spending so that we have 
the money that we need to make the kinds of investments in 
technology and equipment that had been alluded to here with 
regard to closing the security gaps that we all know exist.
    That said, I applaud Secretary Chertoff for the threat-
based, risk-based and consequences-based approach that he is 
taking with regard to the Department, and I am very hopeful 
that this new leadership team will make significant strides 
with regard to homeland security.
    Many thanks for this opportunity to testify.
    [The statement of Mr. Ervin follows:]

                 Prepared Statement of Clark Kent Ervin

    Mr. Chairman, Mr. Ranking Member, and Members of the Committee, 
thank you for inviting me to appear today to share my thoughts with you 
on the topic, Management Challenges Facing the Department of Homeland 
Security.'' This being relatively early in the new year, the new 
presidential term, and the tenure of the new leadership team at DHS, 
now is a good time to assess what the department has achieved in its 
first two years of operation and what remains to be done to secure the 
homeland.
    As I speak to various audiences, I'm often asked whether the nation 
is safer than it was on 9-11. The good news is that the answer to that 
question is an unequivocal yes. Since America was attacked on 9-11 by 
means of airplanes, it is not surprising that the greatest strides have 
been made in the area of aviation security. Today, cockpit doors are 
hardened, some pilots are armed, the number of air marshals covering 
flights has been significantly increased, airports are better 
protected, and airport screeners are better trained and more sensitized 
to the critical role that they play as the first line of defense 
against would-be terrorists.
    But, the bad news is that whether we're safer today than we were 
four years ago isn't the only question. And, in the scheme of things, 
it's not the most important question. The key questions are--are we as 
safe as we need to be; are we as safe as we can be; and are we as safe 
as we think we are. The answer to all these questions, sadly, is no.
    Even in the area where the most time, attention, and resources have 
been invested, aviation security, serious vulnerabilities remain. Just 
yesterday, in fact, confirming my worst fears, the GAO and the DHS 
Office of Inspector General released reports showing that, for all 
their training and sensitization, screeners are still no better able to 
detect guns, knives, and explosives concealed on passengers themselves 
or hidden in passenger luggage than they were on 9-11.
    As demonstrated so graphically by an ABC News investigative team 
which managed to smuggle undetected the same shipment of depleted 
uranium into two different American ports on two different occasions, 
our ports remain vulnerable to terrorist penetration. And, as 
demonstrated by a recent OIG report, monies intended to secure the 
ports have on occasion been directed to projects of dubious value.
    Despite, the attack on a train station in Spain in March of last 
year, which Europe considers to be its 9-11, relatively little has been 
done in this country to secure mass transit and rail transportation.
    In the area of border security, the department is to be applauded 
for the progress that it has made on the U.S. VISIT entry-exit 
biometrics based immigration system. For the first time in our history, 
we are moving toward keeping track of who is entering our country 
through legal immigration channels and whether they are leaving when 
they are supposed to. But, as a recent OIG report points out, most 
visitors who enter our country by land do so from Mexico and Canada, 
and most of those countries' citizens aren't subjected to U.S. VISIT. 
And, while the system has been extended to the 50 busiest land 
crossings, it is perhaps even more important that it be made 
operational as soon as possible at the least busy and most remote 
crossings, since it is there that terrorists are likeliest to try to 
enter. Moreover, the exit feature is only in the pilot stage. Finally, 
as pointed out in a recent report by the Justice Department's Inspector 
General, 99% of foreign visitors to the United States do not have their 
fingerprints checked against an FBI database that contains 47 million 
prints, including those of non-American citizens suspected of terrorism 
because the FBI and DHS/State Department biometric systems are not 
fully interoperable.
    And, shockingly, according to another recent OIG report, aliens 
carrying stolen passports are usually permitted to enter the United 
States, even when the department's Customs and Border Protection 
inspectors are advised by ``lookouts'' posted in their computer systems 
that the passports are stolen.
    Of course, the foregoing comments relate solely to vulnerabilities 
in border security that can be exploited by people who are attempting 
to enter our country legally. So, it is to say nothing of the ease with 
which millions of illegal aliens continue to enter our country, among 
whom even the former DHS Deputy Secretary acknowledged in recent 
congressional testimony could be operatives of Al-Qa'ida. It is 
critical that the new leadership team at DHS make closing these various 
security gaps the urgent national priority that it should be.
    Another challenge is to complete the list of the nation's most 
critical infrastructure. Media reports from just a few months ago 
suggest that the present version of the list contains things like 
municipal golf courses and amusement parks that are obviously not 
critical to the security of the United States, and items that are and 
should be on the list, like nuclear power plants and oil and gas 
refineries, are not prioritized according to which are most risk of 
terrorist attack.
    A third challenge is ensuring that the department has access to the 
intelligence it needs to protect the homeland. When I raised concerns 
last year that the creation of the CIA-led Terrorist Threat Integration 
Center and the FBI-led Terrorist Screening Center supplanted roles that 
were to have been and should be played by DHS and, that as a 
consequence, DHS would be marginalized, I was told that I didn't know 
what I was talking about and I was assured that DHS would have access 
to the information it needed. The recently released Silberman-Robb 
report shows otherwise. The commission found that the CIA and the FBI 
continue to keep information from DHS; that DHS and the FBI can't email 
each other; and, even, that DHS itself doesn't always share information 
with its federal, state, and local partners.
    Finally, just a word about the department's organization, finances, 
and contracting practices. Part of the reason why the department 
remains so ineffective is that it is not yet fully integrated. To a 
significant degree, it remains merely a collection of variously 
dysfunctional components operating under a common name, logo, and 
motto. The CFO, the CIO, and the CPO need to be given the authority to 
hire, fire, and direct their nominal subordinates at the component 
level. The department needs to take accounting and financial management 
seriously, so that, for example, ICE, for lack of money, does not have 
to prematurely release detained illegal aliens. And, to ensure that 
there's adequate money to meet the nation's counterterrorism needs, the 
department needs to put common sense contracting policies and 
procedures in place like competitively bidding all contracts, deciding 
on contract requirements itself and not relying on contractors 
themselves to do so; not contracting with ``middle men'' contractors 
who provide little or no services themselves; and not entering into 
contracts where the contractor has an incentive to overcharge.
    I want to end, happily, on an optimistic note. I applaud the 
approach that the new Secretary of Homeland Security has taken. His 
emphasis on analyzing programs and operations and policies and 
procedures on a threat, risk, and consequences related basis, and then 
allocating scarce homeland security related dollars accordingly, is 
exactly the right direction in which to move. I have been impressed by 
his strategic approach to homeland security, and he appears to be 
serious about addressing the many problems that cry out for attention, 
while duly respecting civil rights and civil liberties.
    With that, thank you again for this invitation, and I look forward 
to answering your questions.

    Mr. Rogers. Thank you, Mr. Ervin.
    I want to thank all on the panel for your statements. They 
are very insightful and helpful.
    I would like to start off with a couple of questions. I 
noted what Mr. Rabkin had indicated was going to be the case, a 
pretty uniform message from all of the panelists in that we 
need to strengthen some of these Department heads 
organizationally.
    If we were to raise the CIO to an Undersecretary level or 
the Policy Office, how long do you think it would take if we 
were to implement the recommendations mostly outlined by Asa in 
his statement to see a significant transformation and 
enhancement of the management structure?
    I will start with Mr. Skinner.
    Mr. Skinner. I do not think it would take long at all. For 
one thing, the Department does have the resources, but they are 
at the component level. What is lacking now is the oversight 
and the authority to direct those resources. So it is not going 
to require major reorganization, per se. You could embed those 
IT types in the components, but now they would have a direct 
line reporting responsibility to the CIO as opposed to their 
component heads. So it should not take long at all. You are not 
talking about a major reorganization.
    Mr. Rogers. So by that, you mean 6 months, 12 months?
    Mr. Skinner. I would not want to speculate dealing with any 
bureaucracy to get the message across, but, yes, I would say 
within a year.
    Mr. Rogers. Is there a particular area--and I would like to 
get you all to give me your thoughts on that question, but 
before I get your answer I would like for you to also think--is 
there a particular area that you already see the kind of 
management structure and strength of that chief officer that we 
should replicate in these other departments? Or is it just non-
existent anywhere within the Department.
    Let's go with Mr. Rabkin and then Asa.
    Mr. Rabkin. We have talked about the concept of a Chief 
Management Officer to provide focus, and I think that the 
Department of Defense is moving in that direction, and it is 
going to be done legislatively. And I think the committee ought 
to consider whether it is appropriate to, through legislation, 
direct the Department to move in the same direction.
    While the time this would take to implement change based on 
these changes might not be all that long, as Mr. Skinner 
suggested, I think what we really have to worry about is the 
inertia. There are a lot of changes that are being proposed at 
the bottom and the middle of the organization and moving their 
way up, and either because of inertia or because of all the 
changes in the leadership of the organization, not many 
decisions are being made.
    So I would be concerned about having some continuity and 
leadership to be able to ensure that the changes that are going 
to be instituted, either administratively or legislatively, 
would be able to bear fruit.
    Mr. Rogers. Okay.
    Asa?
    Mr. Hutchinson. I believe there are some good examples in 
the Department of success and management and leadership, one of 
them being the US-VISIT Program, which I appreciate Clark Kent 
Ervin mentioning in positive terms. This is where you set up a 
strong program office that managed an at-risk program and have 
been successful in it.
    And I think that points up the greatest need for the 
Department of Homeland Security is to have greater resources, 
greater strength at the oversight level. And you can put it in 
an Undersecretary of Management or a Deputy Secretary of 
Management. You can put it in the CIO, you can put in a 
Screening Coordination Office, but right now you have 
extraordinarily strong stovepiped agencies. That is where the 
strength is.
    And as Congress looks at adding maybe 2,000 new border 
patrol agents, do not do that without adding a higher level of 
strength and capability for oversight. You have the American 
Shield Initiative to add technology and integrate technology on 
our borders. Well, you cannot implement a successful national 
integrated program of surveillance and technology without a 
strong program office to oversee that. And that is where the 
needs are, and so it can be successful. We have done it in a 
quick amount of time, but the resources have got to be brought 
to that oversight departmental level to accomplish that 
integration.
    Mr. Rogers. Thank you.
    Governor?
    Mr. Gilmore. I think so far the comments have been 
technical. For example, technology, we have always got to 
remember that tech is only in service to policy. If you know 
what you are trying to do, then you can figure out how to do 
it. Same for management structures. If you know what you are 
trying to do, you can figure out how to manage your way through 
it. And I certainly think that the Congress would want to hear 
from Secretary Chertoff as he goes through these management 
analyses in order to figure out what to do.
    I would second Mr. Hutchinson's view that things are 
somewhat stovepiped. Certainly, if you take 22 preexisting 
agencies, all of whom, many of whom--all of whom, I guess, 
responded to some other secretary someplace and had been in 
their niche for years and years and had been working very hard 
to become more and more efficient, now all of a sudden you put 
them someplace else, paired up with partners they have never 
seen before, naturally, their tendency is going to be focus on 
what they are doing.
    I think that the goal of Homeland Security, which I think 
they are headed for, is more enterprise concerns. What is it 
that all these people can be made to partner together to do? 
And that can be certainly done technologically and 
managerially, but first you have to determine what your policy 
goals are, and I think that that is in process.
    Mr. Rogers. I see my time has expired.
    I want to get back to you, Mr. Ervin, in a little bit, but 
right now I would like to recognize my colleague from Florida, 
the Ranking Member, Mr. Meek.
    Mr. Meek. Thank you, Mr. Chairman. I really appreciate the 
written testimony, and, Mr. Secretary, I do want to get a copy 
of your testimony, because I think you have put forth some 
great ideas that we definitely need to consider.
    We know that Secretary Chertoff is going through a second 
phase of his 90-day review. How many of you have been a part of 
or asked to give input to that review? Anyone?
    Mr. Skinner. We are not officially part of the review, per 
se, because, of course, as the IG, cannot be involved in an 
operational sense, but we have had several meetings with 
Secretary Chertoff and the Deputy Secretary where they have in 
fact asked for our input as to areas that we think should be 
addressed, for example, the issue of the placement of the CFO, 
the CIO, and the issue of the integrity of procurement 
programs, things of that nature.
    So in that regard, we are participating. We have also 
brought to his attention the reports that we have issued over 
the last 2 years in which we have raised issues. And I am sure 
he is going to be taking those into consideration as he goes 
through this process.
    Mr. Gilmore. If I could?
    Mr. Meek. Go ahead, Governor.
    Mr. Gilmore. Mr. Meek, if I could respond also. We 
communicated with the Secretary and offered to bring over the 
key leadership of our Commission, our 5-year Commission, 
including our Executive Director, our Vice Chairman, our 
Chairman, to brief him on the 5 years work. That meeting is in 
fact scheduled for this week.
    Mr. Hutchinson. And, likewise, I had a great opportunity to 
visit with Secretary Chertoff before leaving the Department and 
sharing these ideas with him, but I do want to second what 
Governor Gilmore said in terms of Secretary Chertoff should be 
given broad latitude in the recommendations. There are a lot of 
different structures that can work. I have put forth some 
ideas, but whatever he comes forward with I think is something 
that can be made to work if we give it the resources that are 
needed.
    Mr. Meek. I have a couple of more questions, especially for 
you, Secretary Hutchinson. The issue of the functions of the 
Department and airport screening, it is an ongoing issue. We 
were talking prior to the meeting, I mean, there is always a 
news report about something getting through to screeners. 
Following up on the 2003 report that Mr. Ervin put together for 
consideration by the agency, what was the follow through on it 
and what is left to be done?.
    Mr. Hutchinson. Well, there was substantial follow through 
on the first report, both from the GAO and the IG, and the 
follow through was a very extensive retraining of the 
screeners, retesting, trying to improve their ability to detect 
these items. More red testing of the screeners' performance as 
well. So those steps were taken.
    And I think the most recent results that have been 
discussed where there are still deficiencies in screener 
performance, I think the conclusion is that you need to 
continue to enhance training but you are going to have to move 
to better technology as well. You are going to get to an 
optimum result for the screeners, but the detection capability 
sometimes is a deficiency of our technology.
    And also the constraints of privacy. I think back to some 
policy changes that we made while I was there really got an 
uproar because of the intrusive nature of it. We have also a 
backscatter technology that can do a real good job of detecting 
more weapons that might be secreted onto an aircraft, but it is 
very revealing in terms of invasion of privacy.
    And so you have to make judgments there, and we are looking 
at ways to screen that, to make it effective, not invade the 
privacy but also accomplish the objectives.
    Mr. Meek. What is important here is to make sure that we 
are able to not only provide--I mean, in this process of 
protecting the homeland and definitely airport security, there 
has to be some sensitivity but also there will be some toes 
stepped on along the way. We have two ways of doing this: 
either now, while the waters are somewhat calm, or after where 
we have made decisions in haste and they may not be the best 
decisions.
    And I think we are going through that process, and this is 
a great opportunity for the Department to be able to change 
some of the things we legislated in haste in trying to respond 
to a gap.
    Mr. Skinner, as you know, Reverend Joseph Dantica was a 
Haitian gentleman who came through MIA Airport. He did the 
right thing, he had a visitor's visa, he told the ICE officer, 
or the inspection officer, Customs officer when he came into 
the country that he was claiming political asylum due to the 
fact that he was in Port-au-Prince and was helping U.N. troops. 
The gangs were threatening his life. He left. They used his 
church to observe these gangs. His medicine was taken.
    Mr. Rangel and I asked Mr. Ervin and then it passed on to 
you to do a review. You all responded back saying that you are 
doing a review. Where is that review right now, because the 
reason why I am asking the question is the fact that he tried 
to do the right thing, and if he was just to leave the airport 
and go to his home and then call the Department and say, ``Hey, 
guess what, I want to stay.''
    That is the wrong thing to do, and so what we are trying to 
do, like the Governor mentioned, train the public on homeland 
security and also train those who want to claim political 
asylum or ask for political asylum when they come into our 
country so that we can review them in the proper process, but 
in this case he lost his life.
    Mr. Skinner. Yes, Congressman Meek, you are absolutely 
right. This is something that does merit a review, and we thank 
you for bringing it to our attention.
    In response to your request, we have in fact initiated an 
investigation, which is currently ongoing. We are coming very 
close to bringing that investigation to closure, and hopefully 
within the next month to 2 months we should be able to produce 
a report outlining the results of that particular incident, sad 
as it may be, resulting in a death. We will be happy to provide 
you a copy of the Public report or come up and brief you 
personally once the report is finalized.
    Mr. Meek. Thank you. I would appreciate both.
    Thank you, Mr. Chairman.
    Mr. Rogers. Gentleman's time has expired.
    The Chair now recognizes the gentleman from California, the 
Chairman of our full committee, Mr. Cox.
    Mr. Cox. Thank you, Mr. Chairman.
    This panel has given us an extraordinary number and breadth 
of recommendations. I just want to go over some of them that I 
think are salient, and make sure that we have a clear 
understanding.
    Mr. Hutchinson and Mr. Ervin both recommended, I believe, 
that we strengthen the role of the CIO. Are we straight on 
that? We had a hearing last week on some of the vulnerabilities 
and the lack of achievement of milestones in the IT structure 
at DHS.
    Anybody else on the panel disagree with this, or is this 
something that this subcommittee and the full committee ought 
to be moving forward on?
    Mr. Skinner?
    Mr. Skinner. Congressman, we have reports in the past 
raising this as an issue. I agree both with Mr. Hutchinson and 
Mr. Ervin in their observations that the CIO does in fact need 
to be elevated within the Department.
    The IT transcends all of the Department's operations, and 
someone needs to be in a management position to provide the 
proper oversight and direction as to where we want to go as a 
department.
    Mr. Cox. Appreciate that.
    Mr. Rabkin, you counseled us, if I can put it in the 
vernacular, to look before we leap on our IT investments. We 
have billions of dollars that we are investing in technology, 
and you cautioned that we need to have a strategy as we go 
forward with this. I think that is sound counsel.
    And, Mr. Gilmore, you have told us in this hearing and 
repeatedly in previous hearings that when it comes to 
information sharing, and specifically intelligence, that you 
can have all the IT you want, but if there is not a plan in 
place to share, if you do not know what you are trying to 
achieve, then technology is not a silver bullet. On the other 
hand, if you know what you want to achieve, then the technology 
solutions tend more to suggest themselves.
    And, Mr. Ervin, you focused on this as well, on the need 
for us to do a better job in sharing intelligence information. 
We have in this committee, not always in our public hearings, 
but in other ways that we collect information, been able to see 
that this many years after September 11 and the creation of the 
Department, we are now drifting away from the sharing culture 
that everyone seemed to sign on to early on.
    For IA within the Department of Homeland Security it is now 
routinely difficult to get information from the FBI when they 
are tracking terrorism that starts overseas and transits by air 
or by sea. It lands here in America. Once it is in America it 
becomes a fog. What can we do, and does anyone on this panel 
want to make specific management recommendations to address 
this problem of inadequate sharing of information between DHS 
and FBI?
    Mr. Ervin?
    Mr. Ervin. Mr. Chairman, if I could say a word about that? 
I am glad that you have focused on that, as I did in my 
remarks.
    I am hopeful, given Secretary Chertoff's experience and his 
tendency to be very aggressive in interagency counsels from his 
time at the Justice Department. I am hopeful that he will make 
an urgent priority of talking to Director Negroponte in making 
sure that going forward this new reorganization, this further 
reorganization of the intelligence community, will not result 
in further marginalization of DHS IA and that DHS has access to 
the intelligence information that it needs.
    I think it is terrific that DHS analysts are seated with 
FBI and CIA personnel at these entities but it is clear from 
the Silberman-Robb Commission, as I said, that proximity alone 
is not sufficient. The information simply must be shared with 
DHS, and, likewise, DHS must do a better job of sharing 
information itself with the FBI, CIA, other Federal partners 
and state and local partners.
    Mr. Cox. Mr. Gilmore and Mr. Hutchinson.
    Mr. Gilmore. Let me add this: When our Commission addressed 
this managerial point, which we did for about a year, our 
concern was that if the homeland security function were simply 
placed on an equal basis with all the other players in the 
government, that he would not have the superiority to change 
culture. That is the challenge. At the end of the day, it is 
hard to get a traffic cop over top of everything to direct the 
different secretaries to play on the same team and to overcome 
some of these stovepiping cultures that occur.
    Nonetheless, if the Secretary of Homeland Security is 
property empowered and told that he has in fact the authority 
to go to his colleagues and suggest to them that they all need 
to be on a team to break down some of these cultural barriers, 
I think that it can happen even within the managerial structure 
that exists today. But I think that he has to be empowered to 
do that.
    Mr. Cox. Mr. Hutchinson?
    Mr. Hutchinson. Two things on that point.
    First of all, I think we have primarily overcome the 
cultural reluctance for sharing information. I think the 
challenges are more technical in nature in making the systems 
communicate and continuing to drive that sharing of 
information.
    I think also what has changed is the original concept, as 
Governor Gilmore knows, which was that Homeland Security was 
going to be the big dog in intelligence. It was going to be the 
key recipient of the intelligence, analysis and communicator of 
it, and that structure has changed. And so I think you have 
to--it is on a different footing than it was when the 
Department was created.
    The one specific thing I would mention is that the key 
sharing of terrorist-related information is through the Joint 
Terrorism Task Forces all across this country where we have all 
of the agencies participating. Homeland Security is 
participating there. I think because of the role of Homeland 
Security, it would be good if Homeland Security were given a 
Deputy Director position in the JTTF. I think that would help 
build that alliance with Justice Department and communicate in 
the field that we are equal partners in this endeavor.
    Mr. Cox. Thank you.
    Mr. Chairman, I see that my time is expired.
    Just in conclusion, I would like to congratulate Mr. 
Skinner for bringing to our attention the need for us to settle 
on a biometric for the various screening programs that the 
Department of Homeland Security is administering.
    And I would strongly suggest that we pursue a fingerprint 
biometric as one that is more readily acceptable to the public, 
that is a mature technology, and that prevents us from being an 
early adopter which, as the virtual case file shows us, is 
sometimes a problem. It is the broadest possible international 
participation. All the police forces around the world tend to 
keep this biometric, and it is the most easily integrated 
database.
    But my time has expired, and so maybe we will pursue that 
in a subsequent round.
    I thank you, Mr. Chairman.
    Mr. Rogers. Thank you. The gentleman's time has expired.
    The Chair now recognizes the Ranking Member of the full 
committee, the gentleman from Mississippi, Mr. Thompson.
    Mr. Thompson. Thank you, Mr. Chairman.
    And let me thank the members of the panel for a very 
wonderful presentation.
    Mr. Hutchinson, while you were Undersecretary--nice to see 
you again, remember when we were together in another body--you 
talked about the Arizona Border Control Initiative, and lately 
we have been talking about this Minutemen militia, 400 
volunteers.
    How do we call that initiative a success when volunteers go 
to that area because the borders are unprotected and all of a 
sudden our Border Patrol dispatches 500 agents to that area to 
compensate for it? What is your analysis of that situation?
    Mr. Hutchinson. Of the Minutemen Project?
    Mr. Thompson. Well, the Arizona Border Patrol Project and 
the fact that it was supposed to be a success. Then the 
Minutemen go in and then we respond to the Minutemen coming in 
by sending 500 people to that area.
    Mr. Hutchinson. Well, I guess we would all like to view 
success as being perfect, but I think success can also be 
progress, and whenever you look at the fact that because of the 
Arizona Border Patrol Initiative we increased our apprehensions 
by 42 percent. To me that makes it a very successful program. 
Now, does that mean that there is still not a problem there? 
No, absolutely. We have to do more.
    What we recognize is the challenge is greater than even the 
resources that we devoted to the initiative. And so I was 
delighted that the Department followed up by increasing again 
the number of Border Patrol agents assigned to that project, 
continuing to invest in technology and other solutions.
    So it is an ongoing effort. I think what both the intel 
bill has done, which called for thousands of new Border Patrol 
agents, authorized, not funded, has been helpful, and of course 
the public outcry and concern will I think demand additional 
action and support for these efforts.
    Mr. Thompson. Well, you lead me into my next question, 
which is the fact that the intel bill calls for 2,000 Border 
agents over the next few years annually, and we can only fund 
210 in the president's budget. So is your testimony that we 
need to fully fund the 210 agents that is identified in the 9/
11 bill?
    Mr. Hutchinson. I think that we need to fully fund the 
2,000 increase in the Border Patrol identified in the intel 
bill over a period of years. I think its very difficult for an 
agency to absorb that kind of increase immediately. And so I 
think that needs to be funded over a period of time. I think 
the Congress needs to debate how quickly that should be 
accelerated and that time period. I think we need to move 
forward with that increase as quickly as possible, because it 
is necessary and very critical.
    Mr. Thompson. Thank you.
    Mr. Ervin, would you care to comment on that?
    Mr. Ervin. Well, I support the notion of full funding for 
this. I was disappointed that full funding was not sought for 
it. Certainly, the issue of the borders cannot be solved by 
personnel alone. It is a huge border, both in the South and in 
the North, but it seems to me there needs to be more personnel 
at the same time greater use of technology and we cannot afford 
to scrimp with regard to either.
    Mr. Thompson. Thank you. Another issue is this notion of 
privatizing the security within TSA at the airports.
    Mr. Skinner, I think you all have kind of looked at that. 
There are some real problems with the management of TSA 
identified in the San Francisco area, specifically, and the 
fact that one of the private contractors has already come into 
question as to the propriety of their practices. Have you all 
started looking at that as an issue, moving from TSA to the 
private employing of guards?
    Mr. Skinner. No, Congressman, we have not. We have in fact, 
however, included the private screening workforce in our 
sampling as we did our penetration testing, and what we found 
there is that the private sector does no better or no worse 
than the Federal sector with regards to screening. But, no, we 
have not focused on that issue, per se, as to whether there 
should be a transition from public to private or private to 
public.
    Mr. Thompson. Well, the other issue maybe you can help me 
on is, have we fully identified how many full-time DHS 
employees we have versus contractors and who is supervising the 
contractors within DHS? Have you all looked at that?
    Mr. Skinner. I think we have marginally. I know we have not 
done any assessment, per se, of the numbers that are required 
within DHS to provide oversight or to manage the private 
sector. I believe there are five airports that are being 
managed in the private sector. We have not done anything in 
that regard that would answer your question.
    Mr. Thompson. If I might, Mr. Chairman, it is really more 
looking at the Department as a whole, not within just TSA. We 
have an inordinate number of contractors who are not employees 
of DHS, and as I understand earlier testimony, to go to the 
personnel system that we are talking about will take about 4 
years. And within this 4-year period of time, if we are lucky, 
we will still have a number of contractors working. Are we 
getting, in your estimation, our money's worth with private 
contractors versus DHS employees?
    Mr. Skinner. Congressman, now that is something that we are 
going to be looking at. As a matter of fact, we just initiated 
a project within the last 30 days. We have tripled the staffing 
in our procurement shop. We had not looked at procurement other 
than two or three major contracts. In the last 30 days, we 
realized when we were assessing what we wanted to do and where 
we wanted to go in the next 2 to 3 years, we realized that the 
Department spends 25 percent of its budget on contracts. We 
could not operate without the support of contractors.
    So what we have done is tripled our procurement staff from 
6 to 18. We have a review underway right now looking at the 
integrity of our procurement program throughout the Department, 
and this will be an ongoing, long-term effort looking at how 
the Department is managing its contracts, whether we are 
getting our money's worth.
    I know there are cases, for example, the Boeing contract 
and the Pearson contract at TSA, sworded in its early years, 
the Department did not provide the oversight that it should 
have, and as a result, I think the costs were exorbitant and 
wasteful.
    The Department is now starting to tighten up considerably, 
particularly in TSA. They have a very strong procurement 
operation there now, but we want to take a look and see how 
well it is in fact working. This is not something that we can 
do in 3 months, 6 months, 9 months. This is something we need 
to do over the next 2 to 3 years and produce reports as we 
progress.
    Mr. Thompson. Thank you.
    Mr. Gilmore. I wonder if I might be able to answer Mr. 
Thompson's previous question for just 30 seconds. Congressman, 
it would seem to me that the policy decision is what is the 
role and value of border security in the overall effort of 
homeland security, and I think it is very significant. We are 
placing so much of our money at--we are really talking about 
ports of entry, legal ports of entry at airplane terminals, we 
are talking about ports of entry at seaports, and we are 
talking about ports of entry with illegal border crossings. And 
that is really why we are looking at the border types of 
issues.
    So it is clear that it is important. And if it is, then I 
think that it would be proper for the Department, with the 
advice and guidance of the Congress, to make a policy decision 
that it is important, and then I would not necessarily feel 
like you have to have more money. There is a lot of money in 
this Department.
    Redeploy money. Require that the types of efficiencies that 
are being discussed across the table be evaluated closely and 
that value judgments be made on what kinds of monies are being 
spent and then redeploy the money back where it belongs, 
exactly where I think you are suggesting that it belongs, 
Congressman.
    Mr. Rogers. Gentleman's time has expired.
    The Chair now recognizes the gentleman from Washington, Mr. 
Reichert, for any questions he may have.
    Mr. Reichert. Thank you, Mr. Chairman.
    Welcome, gentlemen, and thank you for your testimony. I 
have to mention that I did have the opportunity to work with 
Secretary Hutchinson a couple of occasions as I was sheriff in 
Seattle--once as he was the Administrator of DEA and also in 
his position in Homeland Security.
    I want to take this down to the street level. That is where 
I came from in my police experience. My Sheriff's office had 
1,100 employees and just a $110 million budget, and it first 
came into existence in 1852. Well, today, we still have 
stovepipes and we still have silos, so that is going to be a 
continual challenge that your organization has. I cannot 
imagine bringing together 22 huge departments with 180,000 or 
so employees.
    We can talk about training, you can talk about equipment, 
you can talk about technology, and these things you 
havementioned in management, supervision and integrated systems 
and consolidated financial systems and restructuring of 
management, and those things are important, and as 
administrators we need to talk about those things.
    But a few weeks ago, we had another hearing and witnesses 
testified about the reorganization the Department of Homeland 
Security, and really what we heard from them was, there is no 
leadership, there is no mission, there is no vision, there are 
no goals, and they have low morale. And that was their focus. 
And I think that sometimes we might lose the whole concept of 
really how operations, in general, work, and that is employees 
are the number one asset.
    And somehow in breaking down those silos--and this is 
editorializing just a little bit, some philosophical comments--
by really getting the employees involved in your restructuring, 
reorganizing process and building your mission, you achieve 
your vision and your goals through including your employees. 
And I know that sounds like a pie-in-the-sky kind of idea with 
as many employees as you have, but I think it is important.
    The other thing that goes along with that is the mention of 
public communication and education. I think that is so 
critical. Coming from the Seattle area, our community is really 
not very well up to speed on what the Department of Homeland 
Security does, how they integrated and work with local law 
enforcement, the FBI, DEA, ATF and others in our community. I 
think it is important for you to get your message out, so to 
speak.
    I think there are some important things that you talked 
about. Intelligence gathering is, in my opinion, number one. I 
continually harp on this in each one of these meetings in 
sharing not only between your agencies within DHS and CIA and 
FBI but also with the locals. Asa Hutchinson mentioned that 
JTTF is so important.
    Here is a question for you: Secretary Hutchinson, you 
mentioned that you thought a risk-based approach as far as 
allocating monies could be short-sighted, and, Governor, you 
were really focused on the risk-based analysis in allocating 
finances and how they might be spent. We are having trouble 
with that. There is money out there. In Washington State, $234 
million, but only 27 percent of that has been spent.
    So there seems to be a little bit of a disagreement there. 
Did I read that right or are you really in line with each 
other?
    Mr. Hutchinson. I think we are probably in line with each 
other. I think it is a matter of emphasis. What I said was that 
the concept that all--so I would underline all--the federal 
money should go to high-risk areas is short-sighted, because I 
do believe there needs to be, first of all, risk-based 
assessments and a risk-based allocation of the money.
    But the fact is that there is a basic level of risk and 
vulnerability in every area of the country. Whenever you look 
at Nuradin Abdi being caught outside of Columbus, Ohio in a 
traditionally rural area of the country, whenever you look at 
the vulnerabilities that we have seen and the connections in 
rural areas of the country, you have to have a base level of 
response capability and homeland security everywhere in the 
country.
    So that is a risk base, but then the substantial bulk of 
the money should be specifically allocated on threats and risk 
and those assessments being done.
    So my admonition is, let us not take all of the money and 
say it has got to go to the high-risk urban areas. We have got 
to have that base level of funding in even the rural areas of 
the country.
    Mr. Gilmore. Congressman, as I said I was Governor at the 
time of the 9/11 attack, and I watched what happened that day 
and helped to carry out what happened that day. And what 
happened that day was done by police, fire, rescue, emergency 
services, sheriff's offices, hospitals, people at the local 
scene at the Pentagon, and it was even more true in New York, 
and that is the heart of the matter. And our Commission has--if 
there was one thing that we have preached in our Commission 
over the 5 years it is the absolute essential nature of the 
states and locals being folded in the national effort, which 
means there has to be proper direction, there has to be proper 
funding and proper training.
    When we held our last committee meeting, I was invited to 
go to Seattle, as a matter of fact, for a conference of all 
local responders. It was a sudden spontaneous conference that 
was held in Seattle to address the frustrations that they were 
feeling.
    Now, I think that under the good work of Pat Hughes and 
others in the Department, much effort has been made to open up 
those lines of communication between the Department and the 
states and the locals.
    But if I wanted to focus on one last point I want to 
reemphasize, and, again, I think that Asa and I are pretty much 
in agreement, if you determine through analysis and 
intelligence that the enemy's capabilities and intentions might 
strike a rural target, for example, agriculture, then you have 
to begin to address that financially and with direction and 
training and focus. You simply have to do that.
    So I agree, I think it would be a mistake to just simply 
take all the money and throw it into New York and Washington, 
because that almost guarantees that the opposition with the 
enemy will go elsewhere and do it in some other method. The key 
is the threat is the intentions and capabilities of the enemy, 
and that means that you have to really put a great deal of 
focus on intelligence and analysis.
    Mr. Reichert. Great. Thank you.
    Mr. Rogers. Gentleman's time has expired.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Dent, for any questions he may have.
    Mr. Dent. Thank you, Mr. Chairman.
    And I guess my question is to Governor Gilmore, and I think 
you began to answer my question in your last statement. But 
beginning in 1999 I know you served as the Chair of the 
Congressional Advisory Panel that later became known as the 
Gilmore Commission. You did an outstanding job in assessing the 
capabilities of the Federal, state and local governments and 
responding to the consequence of a terrorist attack. And I know 
your panel released five reports. I think the last one was 
released in December of 2003.
    And I know that your Commission made 164 recommendations, 
142 of which have been implemented by Congress and DHS. Could 
you summarize what recommendations have been adopted, and of 
those remaining recommendations, what would you encourage us to 
consider?
    Mr. Gilmore. Congressman, thank you, and I thought about 
that as we had mentioned to the Congress the various numbers 
and statistics. We are going to ask the RAND Corporation to do 
up an actual matrix for the Congress. We have actually done 
that in each of the books, but in terms of the implementation 
we have not, and I think that we should prepare a matrix for 
you, Mr. Dent, and others in the Congress, and we shall do 
that.
    The direct answer is that we suggested that there be a 
structure for the establishment of a strategy. That has been 
done. We suggested that there be a center for intelligence 
gathering and intelligence communication to begin to eliminate 
stovepiping. That became the TTIC. We suggested that there be 
contacts with states and locals, which previous to 9/11 
probably did not exist very much other than through perhaps 
some effort through the JTTFs and others. That has improved 
dramatically.
    There should be a national planning process. That has 
occurred, but still has further to go. We have suggested that 
the civil freedoms and the privacy issues be focused on. It is 
being begun now to address those kinds of issues, although 
quite frankly there will be no substitute for the Congress in 
this matter--zero, no substitute for the Congress in that 
policy determination of civil freedoms and civil liberties.
    We have suggested intelligence rules reforms like the old 
reform rule that said that you could not recruit people who had 
necessarily broken the law into intelligence organizations. 
Silly rules like that, which now have been eliminated. These 
are examples.
    I think that if there is one place that we believe that we 
need to go, once again it would be the places that I tried to 
emphasize in my opening remarks, which is a sharper strategy 
that gives better policy and spending direction and training 
direction to the locals, integrated them into a complete team, 
has a better focus on exactly what we are telling the American 
people in terms of the context of terrorism within their daily 
lives and not exaggerating it--not minimizing it but not 
exaggerating it either--and the supreme focus on privacy and 
civil freedoms. And we will try to get you something in writing 
that is more of a matrix.
    Mr. Dent. Finally, one of those recommendations of your 
Commission was to establish a National Counterterrorism Center, 
which of course is now a reality. Could you just share your 
thoughts and views on the development of that center, how it is 
progressing, what you envision for the future?
    Mr. Gilmore. Well, the intention of it was to create some 
actual physical place where you could force people from the 
CIA, the FBI and the NSA and the others to actually sit 
together and develop some sense of rapport between each other 
and then to begin to break down the cultural problems.
    The reason that we had recommended it was because of our 
perception that the problem was less administrative than it was 
structural and cultural. Intelligence organizations by their 
very nature do not want to share anything, for heaven sakes, 
and you have got to find some way to break that down. So that 
was the goal.
    It has been done but I do not think it is emphasized very 
much. I do not know that it has been discussed very much. I 
believe that as a matter of fact that you have seen a need for 
more, and that is why they developed this National Intelligence 
Director. Let's hope that he is given the appropriate power and 
authority to make all the others play under his coaching and 
that it will all come together.
    Mr. Rogers. Gentleman yields back.
    The gentleman from Texas, Mr. McCaul, is recognized for any 
questions he may have.
    Mr. McCaul. Thank you, Mr. Chairman.
    I want to first welcome my former colleague, Clark Kent 
Ervin. We both served under then Attorney General John Cornyn. 
It is good to have you here today.
    Mr. Ervin. Thank you, Congressman.
    Mr. McCaul. I have two questions and I will try to be brief 
because my time is limited. As a freshman, by the time they 
usually get to you every conceivable question has already been 
asked, so I hope I am not redundant.
    First one has to do with the funding issue. I was at the 
Houston Port Authority last week with Senator John Cornyn. He 
has introduced a bill in the Senate, and we have one in the 
House to make it more risk based. In my state, as in California 
and New York, we rank in terms of funding per capita just about 
dead last. And so that is obviously a big issue for some of 
these states like my own that has the largest port in the 
country and an international border.
    And that is for you, Clark.
    And if I could point my second question to Governor Gilmore 
and to Secretary Hutchinson, and it has to do with the border. 
I view probably the paramount mission of the Department of 
Homeland Security as protecting the border.
    Secretary Hutchinson, I know you had a lot of oversight in 
that area. I worked in the Justice Department on 
counterterrorism issues, I worked with the JTTFs. I testified 
yesterday in support of the Patriot Act, which, by the way, if 
that is sunsetted, the National Counterterrorism Center is 
probably going to be dissolved, essentially, and so I think it 
is very imperative. That is another issue for another day.
    Currently, we have a situation on the border where 1.2 
million people were arrested last year. The Border Patrol 
estimates two to three more are getting in. That is about three 
million people illegally. It is not so much those from Mexico 
who come here to work as it is the ones other than Mexico. We 
do not have the detention space to the lock them up and they 
are given a notice to appear and they disappear into our 
society. I think that is a serious threat to the United States. 
It is the way Ramzi Yusef got in this country, the perpetrator 
of the World Trade Center bombing.
    I think something needs to be done. I sent a letter to the 
Appropriations Committee with the support of 45 members to get 
the funding that was authorized in the intelligence bill but 
not yet appropriated. I would hope that it would be requested 
at some point. I hope we can appropriate those dollars.
    So I know those are two big issues, and I will just go 
ahead and turn it over to all three of you in the interest of 
time.
    Mr. Ervin. Well, Congressman, thank you for that. As you 
know, I am from Houston myself so I completely agree with what 
you say about the importance of that particular port, and of 
course that is true for all the major ports like that 
throughout the country.
    I want to associate myself with Governor Gilmore's last 
comments, and that is I really do support the notion of a 100 
percent threat-based, risk-based, consequences-based allocation 
of scarce Homeland Security dollars. That is not to say, 
though, that that money would wind up necessarily in urban 
centers. As the Governor just pointed out, many of those 
centers, if it is done on a threat basis, could well be in 
rural areas given the nature of the threat, given the nature of 
the vulnerability, and given the nature of the consequences.
    Houston happens to be one area that is critical to the 
infrastructure of the United States and happens to be a major 
urban center, but to the extent there is any conflict between 
the two, I think we need to do both.
    With regard to port security grants, as you know, I am sure 
there was a recent Office of Inspector General report pointing 
out that port security grants were sometimes made to projects 
of dubious value. It is critical that only the projects that 
are of real counterterrorism value are funded since these 
dollars are scarce.
    Mr. McCaul. Thank you.
    Mr. Hutchinson. In reference to the border, I think you 
really captured the challenge, that it is not just simply a 
matter of putting Border Patrol agents at the border. You also 
have to increase the detention space, because if they apprehend 
someone from Central America and they do not have the detention 
space, they have to release them into society and they may not 
appear in court.
    And so you have to be able to have a comprehensive look at 
our security, both in terms of detention space, resources for 
processing through court when that is necessary and also 
putting pressure, as appropriate, on the other nations to 
receive the repatriation of these aliens that are apprehended.
    And I believe that there is a point that you can get over 
where it actually will start discouraging the illegal flow of 
those, because they know that they will likely get apprehended. 
Secondly, they are not going to be released. They are going to 
be sitting in a detention cell until they are returned home. 
That will discourage the flow.
    And then, of course, the employer side is important to 
reduce the strength of the magnet. We need comprehensive reform 
and stronger resources for employers and employer sanctions to 
stop that illegal flow.
    Mr. McCaul. As the former Under Secretary who was over that 
specific issue, would you support fully funding what was 
authorized in the intelligence bill?
    Mr. Hutchinson. Absolutely. I think it is the right 
direction to go, that it needs to be fully funded, and 
Congress, I hope, will do that.
    McCaul. Thank you.
    Governor Gilmore?
    Mr. Gilmore. I think I would only add that I think that 
there is a political debate going on in the country about 
immigration and that still has to be resolved, probably by the 
Congress, ultimately, as to what the proper policy is. But once 
you have decided that policy, then you are in the business of 
implementation.
    And I agree that I think that emphasis should be placed on 
Border Patrol. I know that the Department of Homeland Security, 
Bob Bonner's office, is looking very closely at this issue, 
both on the North and South borders.
    In my private organization that I work with, I have worked 
with Batel and CSC, and I know that they are just two of many 
companies that are focused on the border issues and trying to 
find private solutions to market to the Federal government. 
These are going to involve personnel, they are going to involve 
sensors, they are going to involve integrating all these kinds 
of biometrics in order to actually begin to secure the borders.
    Because as Asa points out, if you have 3 million people 
coming across the border, it becomes a whole different problem 
of how you are going to deal with them once they are in the 
confines of the United States.
    So probably controlling the borders better is ultimately 
where this country is headed, and I believe that that would be 
a good deployment of funding.
    Mr. McCaul. And I agree that technology gives a more 
comprehensive view and answer to the problem. Would you also 
support funding what was authorized under the intelligence 
bill?
    Mr. Gilmore. Yes, sir, I would.
    Mr. McCaul. Thank you.
    Thank you, Mr. Chairman.
    Mr. Rogers. The gentleman's time has expired.
    The Chair recognizes the Ranking Member, Mr. Meek.
    Mr. Meek. Thank you, Mr. Chairman.
    Secretary Hutchinson, I wanted to ask you, because I know 
that you have dealt with this quite a bit and now you are in 
the private sector. What we are hearing time and time again in 
these subcommittee meetings and even the full committee 
meetings and when we served on the Select Committee last year, 
there was an ever-changing face on the Department of Homeland 
Security. Attrition is just--I mean, it will make you dizzy of 
the names that go through senior management positions within 
the Department.
    What will slow down the attrition that we are experiencing 
now? The reason why this is an issue is because as soon as we 
start to get a policy maker--well, an administrator educated on 
the politics of one of the largest departments in the Federal 
government and they gain the knowledge, they are gone.
    And I do not know if it is one or two things. Is it they do 
not have the authority that they should have in certain 
positions or they feel that they do not want to be in the 
position when something happens here in the homeland? And that 
is just a practical question I want to ask you as a manager, or 
a past manager.
    Mr. Hutchinson. Well, first of all, I think we ought to be 
grateful as a nation that there are so many who take up the 
mantel and are willing to serve in very tough positions and are 
very dedicated to it, and there has never been a lack of 
commitment or a lack of people who are willing to take on those 
positions. And I think that speaks well of folks in law 
enforcement but also in higher levels.
    In terms of the turnover, I think it is fairly--obviously, 
there is more pressure in the arena of homeland security than 
other areas, and it is a pressure cooker environment. I was 
there a little over 2 years and in the second term of an 
administration there is natural change in leadership. Secondly, 
there is probably a limited amount of time that somebody can 
serve in those top positions in today's environment.
    So I do not know that there is anything they can change 
about that. I think we just ought to be grateful for those 
people who are willing to take on that, and they are bringing 
in the expertise that is needed.
    Perhaps I can end with that, that that is probably a need 
of the Department is to develop at both the political level and 
the career level, a stronger culture of leadership in the 
Homeland Security arena so that we can train people to fill 
these positions so there is not a gap whenever someone does 
leave.
    Mr. Meek. Well, you have about three or four of the most 
vital, I think, positions within the Department that are vacant 
and acting. It's no reflection on you, Mr. Skinner, the IG is 
outside the Department. But I am saying, just like the 
information officer who came before us, he is on his way out, 
and the Department has received an F as it relates to its IT 
security, which we are trying do something about actively as 
the Oversight Committee.
    This is a great concern. Once in my life I was a state 
trooper and if the Colonel changed every 8 months, it is hard 
to be able to receive the kind of leadership vision that one 
needs to, in my case, protect the highways and byways of 
Florida. But in this case, it is protecting the homeland, and 
that is the reason why I think that we have oversight and 
accountability problems with our contractors.
    Mr. Skinner is right. Contracting and procurement--well, 
that end of the Department of Homeland Security is vital. It is 
an agency of unique expertise and you need to be able to bring 
individuals on quickly so it will be able to stand up. But the 
accountability is just not there because the principals keep 
changing.
    Mr. Hutchinson. Congressman, you are right on target. I 
think the only thing that can be addressed is that, one, we 
need to train and have good quality people to fill these slots, 
and, second, we need to fill them very quickly. The time that 
is in transition is harmful to the movement of the agency, the 
growth of it, the security of our nation. So these positions 
need to be filled. That is partly the role of the 
administration and partly the role of Congress to move them 
through confirmation.
    Mr. Meek. Do you think during your time there was there any 
discussion about if someone was to be hired--I know that the 
White House has a lot to do with the appointments of 
Undersecretaries and Assistant Secretaries--some level of 
commitment of service to the Department of Homeland Security, a 
period of 2 years or greater?
    You remember Congress and sometimes we even ask staffers 
through that interview process, how long do you expect to be 
here? Of course you cannot get them to tell a secret. But is 
there any discussion there? Because this is not the average 
job, in my opinion. These individuals receive the highest level 
of security clearance when they come into these jobs and they 
walk away with a great deal of knowledge. Not saying that they 
are walking away and sharing that knowledge but to give away 
that expertise is going to be counterproductive to what we are 
trying to achieve here.
    Mr. Hutchinson. Well, you look, the leadership of the 
Department was established mid-term of the first Bush term, and 
that leadership team carried on through into the second term. 
So I think it is a natural transition. I think, again, we serve 
at the pleasure of the President. There are times that you move 
on, you just need to fill those positions quickly.
    Mr. Meek. Okay. Thank you.
    Mr. Rogers. Gentleman's time is expired.
    I would like to go back to Mr. Rabkin. Earlier in your 
remarks you talked about the need for restructuring management, 
but you described that as high risk. What did you mean that 
being high risk?
    Mr. Rabkin. GAO evaluates all the Federal programs and 
identifies every 2 years at the beginning of a Congress a list 
of programs that we think are most vulnerable, susceptible to 
fraud, waste, abuse, mismanagement of funds, et cetera--areas 
that the Congress, that the executive branch, the American 
people ought to focus on in terms of improving management, and 
improving performance of the program.
    And as I said, 2 years ago, we put the transformation of 
DHS on that list because of the problems I outlined. When we 
redid that list in January, we decided to keep this 
transformation on. As we said when DHS started, transformations 
of this magnitude take 5 to 7 years to work themselves out. In 
the case of DHS, they are making progress, but they are nowhere 
near where they need to be for us to consider them as not high 
risk.
    Mr. Rogers. Okay. Thank you.
    Governor Gilmore, I am thinking about our first responders. 
I understand and fully appreciate your emphasis on intelligence 
and trying to assess threat, but I think we also all recognize 
we have to have a baseline level of capability in responding in 
the event of an attack.
    Did your Commission come up with a report--or what was your 
position on the level of first responder training that we have? 
Is it adequate? How can we better improve it? What is the most 
glaring inadequacy there?
    Mr. Gilmore. Mr. Chairman, we address that continuously for 
many years, be we think that the preparedness of the states and 
locals, structurally and with their capabilities, is the key to 
this. And, frankly, history has borne that out that that is the 
key.
    I think the heart of the training issue would be standards. 
I think that to get the heart of training you have to ask 
yourself, what are we training for and is there something 
consistent across the country that we should be training people 
to do. Train to what is really the question.
    We, of course, took an all-hazards approach with our 
Commission report. We believe that it was cost effective to the 
Congress to think in terms of not only terrorist attack but 
also hurricane, fire and flood, the theme which so effectively 
works with the states now.
    So I think that you have to address what is the threat? 
What is it that we are training people to do? What should we 
expect them to do? I would emphasize that culture and 
management structures are everything in terms of getting ready 
to go, and then at that point you can begin to implement with 
proper equipment and the proper training.
    Mr. Rogers. With the current structure that we have?
    Mr. Gilmore. Well, no. I think that we do not yet have the 
standards fully assessed as to what exactly the training 
requirements ought to be. I am working with ANSI, the American 
Standards Institute, to try to put together something that the 
Congress could look at with respect to standards. But then 
after that then I think we--no, I think it is very loose.
    I think we have to address the block grants that are 
presently going to the states which are in such a risk of 
dripping down into pork barrel. The real question is, should it 
be spent on training, what kind of training and to what 
standards? And I think that that probably needs to be sharpened 
up a great deal more, and then I think--but, look, you cannot 
train somebody if you do not know what you are trying to train 
for.
    Mr. Rogers. Thank you.
    And, Mr. Hutchinson, you talked about earlier when you made 
your introductory remarks that now you are on the outside you 
might be able to share a different perspective. We held a 
hearing a month or so ago in this subcommittee about the 
possible merger of ICE and Customs and Border Protection, and 
uniformly we heard from everybody who testified before us that 
merger was long overdue. And, frankly, we have heard from 
others before and after that hearing that merger was long 
overdue.
    I read an article in preparation for that hearing that you 
had made a clear statement that you were completely opposed to 
that merger. Could you elaborate a little bit now that you are 
on the outside? Are you still opposed to it and why?
    Mr. Hutchinson. Absolutely and fundamentally I would be 
opposed to it. I think that to merge ICE and CBP you would be 
recreating the old INS with all the problems attendant to it. 
You would have a 65,000 person agency with multiple missions, 
with difficulty of oversight and I think that you have to have 
integration between the agencies but you integrate by 
facilitating the communication, by memoranda of understanding. 
You do not do it by simply merging everything. We have to be 
able to accomplish in Homeland Security integration without 
simply making everything one uniform agency. That is the 
objective, and that should be the test.
    And so as has been pointed out, it takes 5 to 7 years for a 
successful reorganization. We are trying to measure this 
reorganization after 2 years. And, sure, there is some pain out 
there, absolutely, and we need to address it and we need to do 
better, but I think the original decisions were fundamentally 
sound, and I think that to remedy this by the merging of those 
two agencies would again recreate the old problems of the old 
INS.
    Mr. Rogers. All right. Thank you very much.
    Mr. Reichert, did you have additional questions?
    Mr. Reichert. Yes, sir. Thank you, Mr. Chairman.
    Just one more question. Back to the border issue, I noticed 
in the Washington Times there is a mention of 11 Mexican 
nationals who were stopped by a local police officer, turned 
over to Department of Homeland Security's Immigration and 
Customs Enforcement Bureau and then released and told to come 
back later for court. Of course, they did not appear.
    At the same time, the Department of Homeland Security has 
announced a national gang initiative focused on MS-13, 50,000 
members involved in all kinds of drug trafficking and other 
crimes, operating throughout South America and through this 
country.
    One of the comments made by an ICE spokesperson was that, 
``We are committed to enforcing immigration law but do we go 
after terrorists or gangs or do we go after day laborers?'' 
Anybody like to comment on the difficulty in trying to balance 
the job that you have in this area?
    Mr. Hutchinson. Well, you have two issues there. You have 
the security of our nation, which obviously has to be the top 
priority, but the other issue is the integrity of immigration 
laws, and I think that is a fundamental purpose as well of the 
Department of Homeland Security and US-VISIT Program. And so I 
think that both objectives are important, but obviously the 
higher priority is the security of our nation.
    Mr. Gilmore. Congressman, I guess I would add that I, first 
of all, would agree exactly with Asa with respect to security. 
Remember there is a political issue still to be debated in the 
nation, and that is the economic issues, that is your day 
worker issue. You alluded to it. The country at some point has 
to make up its mind what it is going to do with respect to 
other economic issues and then it can go forward on the 
enforcement side with a much more centrality of purpose, it 
seems to me.
    But that being said, I lean to the support of the border 
initiatives. I believe you get control of your borders and you 
know who is coming in and going out. And you do that 
effectively and then you are okay on all those goals that you 
raised. Border security will allow you to focus on all those 
issues--the economic, the gangs, the drugs, the terrorists.
    Mr. Ervin. I might just add one thing, Congressman, if I 
might on that. I have alluded to this earlier. I think it is 
absolutely critical that ICE get a handle on its financial 
accounting and on its finances, that it get a handle on exactly 
how much is coming in and how much is going out. Because ICE 
was not able to do that last fiscal year, ultimately, there was 
not enough money to continue to house illegal aliens. I think 
that probably accounts for the scenario that you mentioned.
    That, by the way, also is why I, too--I do not know that I 
am opposed, I am going to keep an open mind about the notion of 
a merger between ICE and CBP until the Office of Inspector 
General completes the review that the Senate asked it to do, 
but my inclination is not to support it because of the problems 
like this that ICE has. CBP has its own problems, and like 
Secretary Hutchinson, I am afraid that putting the two together 
might just compound the problem rather than attempt to solve 
it.
    Mr. Reichert. Great.
    Thank you, Mr. Chairman.
    Mr. Rogers. Thank you.
    Earlier we talked about the first responders and the 
Governor talked about the need to incorporate state and local 
government officials. And Mr. Rabkin talked about integration 
problems among the 22 agencies.
    And I would like to ask anybody who would offer their 
thoughts on this to share it with us--I agree, I think there is 
an integration problem among the agencies. I think there is a 
glaring problem of inadequate integration between Homeland and 
the states and the local governments. Is that your opinion? 
And, if so, what is the best way to remedy that?
    Start with Mr. Skinner.
    Mr. Skinner. When you say integration with the Department 
of Homeland and the states, we are talking about?
    Mr. Rogers. Going back to what Governor Gilmore was talking 
about. They need to have a clear vision of what we are trying 
to accomplish. What are we doing, if anything, to incorporate 
their infrastructure into our larger Federal infrastructure?
    Mr. Skinner. And I agree with Governor Gilmore 
wholeheartedly. Our message has been a very poor message. In 
the early going, I would say 2003 and into 2004, the Department 
received billions of dollars, which they had to get out to the 
states, and it was not afforded the opportunity to actually 
plan on how these monies could be best spent. We dispersed the 
money under these grant programs before we had the opportunity 
to think about, well, what should our message be?
    Just recently the Department has published some terrorist 
goals, and they will be publishing later this month or early 
next month, some guidelines which the states then can use, for 
example, to prioritize how they should best use federal monies 
to address different terrorist type threats--agriculture 
threats, urban threats, landmark threats, things of that 
nature.
    That message then will help I believe the state and local 
governments crystallize their vulnerabilities and decide where 
best to invest its grant monies. And it also helps the 
Department make better decisions on how the funds should be 
dispersed, because now they will have a set of priorities, 
goals, and objectives on how best to target that money.
    It is not going to make everyone happy. There will be 
losers, but there will be winners. It is not an issue of rural 
areas versus urban areas, because we have to deal with threats 
to both agricultural communities and the urban communities. But 
I think we do need to address where is the risk and where 
should those monies go, because we only have a finite amount of 
money.
    This year, for the first time, I think we will in fact have 
a clear message. The first 2 years we did not have a clear 
message at all. We simply identified very broad areas where we 
could spend the money and, as a result, it was a spending spree 
out there. When the states received their grants, or the 
locals, I should say, some spent it wisely, some did not. We 
are currently in the process of blanketing the country and 
looking at how some of those monies were spent, so that we can 
identify lessons learned, and make recommendations to the 
Department on how it can improve its internal controls over its 
grant programs.
    Mr. Rogers. Now you say we have a poor message.
    Mr. Skinner. Initially.
    Mr. Rogers. See, I did not think we had a message at all 
that they were receiving.
    Mr. Skinner. The message was simply too broad. Here is 
several billion dollars, we want to protect our homeland, and 
you are allowed to spend them in these seven categories: 
Training, exercise, equipment, things of that nature. I guess 
you can call that a message, but it is not a very clear or 
focused message.
    Mr. Rogers. Asa?
    Mr. Hutchinson. There is a requirement that before the 
funds are dispersed each state has to have a homeland security 
strategy and plan as to how they are going to spend that money, 
and it is to be reviewed. So there are some priorities that are 
set. I agree that there are problems that can be refined.
    I would add that in my testimony I mentioned the regional 
concept. I think when you are talking about partnerships, when 
you are talking about improving our communication and messaging 
with our state and local partners, that if we had regional 
Directors and moved in that direction, that that would be a 
tool that could be used to help us localize and communicate our 
message more effectively.
    Mr. Rogers. Excellent. Anybody else?
    Mr. Rabkin?
    Mr. Rabkin. Mr. Chairman, it is my sense that there is a 
lot of communication taking place in both directions, but there 
are some obvious things that the Federal government can do. We 
have talked about providing money. Governor Gilmore has 
mentioned about setting standards and doing that in a 
cooperative way.
    We have also made recommendations dealing with 
interoperable communications, for example, where each of the 
local units that would be responding, reacting to either a 
disaster or a terrorist act, need to communicate with each 
other to define the requirements for communications. The 
federal government can play a role by stepping in and helping 
to coordinate all that.
    Mr. Rogers. Excellent.
    Governor Gilmore?
    Mr. Gilmore. I would only add, Congressman, some good news 
here. There are a series of scenarios that have just come out 
of Homeland Security and been sent down to the states, a series 
of scenarios, which begins to give you a feel for what kinds of 
challenges might have to be met. And that is pretty good. Now, 
that is better.
    And I might say, by the way, that since Secretary Chertoff 
just arrived, that that scenario program was probably developed 
under Governor Ridge's tutelage earlier, so he ought to 
probably get some credit for that because it just came down the 
pike. But that is the kind of thing we need to do, and that 
means that you begin to minimize pork barrel and get your money 
where it belongs, into a national strategy with some direction.
    Mr. Rogers. My time has expired.
    The Chair recognizes the Ranking Member.
    Mr. Meek. Mr. Chairman, I think you have raised an 
interesting point.
    Governor Gilmore, you talked about in your opening 
testimony of education as it relates to homeland security. And 
I think it is worth just a little bit further discussion, 
because I know at the state and local level that when municipal 
governments think of homeland security they think of grant 
opportunities. And I think that we may very well run into a 
problem about how much money is going to the Department of 
Homeland Security. I know that the budget will increase versus 
decrease.
    As you know, both chairmen of the committees in question on 
the appropriations end saying that they were thinking about 
taking a 2-year moratorium on earmarking projects within the 
Appropriations Act by Members of Congress to fund local 
programs.
    Has this been a discussion? I have not had an opportunity 
to read your work or the committee's work in talking about what 
we should do, but what--and, Mr. Secretary, you can probably 
respond to this too--what do you think we need to do as a 
Federal oversight committee or as the Department of Homeland 
Security in sending that message out that protecting the 
homeland is more than a grant or a fire truck.
    But even though that is important, do not get me wrong, 
what are we doing now, what can we do in the future? Some of 
that is needed, but it should not be the only reason why people 
are coming to the table.
    Mr. Gilmore. Is this addressed to me?
    Mr. Meek. Yes.
    Mr. Gilmore. I think I am sorry about that.
    Mr. Meek. I was looking at you the whole time.
    Mr. Gilmore. Yes, I know. I know. I was afraid maybe you 
were.
    I think that you have to get back to trying to decide what 
you are trying to do and get that done with specificity and 
then the Congress itself has a better feel for how you can 
direct money, in what places you can place your money and in 
what places it is not valuable.
    You know, Congress might very well--if you had a real clear 
picture about what was trying to be done, maybe an earmark 
might actually be appropriate in border control, for example, 
in some places like that.
    But on the other hand, if the Congress people are 
earmarking for things that do not fit within the national plan, 
a national prioritization of the expenditure of money, then it 
is just pork barrel. And I guess you can put as much money on 
it as you want to to keep adding pork barrel, but at some 
point, I imagine, the taxpayer will run out and you have to be 
very effective.
    So I would think there has to be a really good partnership 
between the new administration at the Department and the 
Congress to really come to an agreement as to what the 
strategic value of money is and where the money has to be spent 
in order to be most effective and then work together through 
whatever processes the Congress has, like the budgetary 
processes, to get that decision made. I hope that is responsive 
to you.
    Mr. Meek. Hold on before we go to you, Mr. Secretary.
    I think, Governor, you are 110 percent right as it relates 
to the Congress and I think even the Department, making sure 
that we have some parental guidance. Because we can do it does 
not mean necessarily that we should do it.
    This is very, very important, because when you have these 
cases of the $30,000 dealing with flowers and things of that 
nature, I mean it really makes it--it hurts the culture that we 
are trying to build now. Members of Congress are, I know I am, 
getting better educated because we have a committee on the 
topic that has oversight authority. Soon you are going to have 
Members of Congress that you do not have to start from in the 
beginning in genesis. We will be able to move on to further 
chapters.
    Mr. Secretary?
    Mr. Hutchinson. I would just add, and I certainly agree 
with the Governor and his comments, but if you put this 
historically in perspective, after 9/11, particularly after the 
Department was set up, you recall the funding level was 
increased dramatically, but the criteria and the use of the 
money was not changed any.
    And then, secondly, when the money came to the Department 
and we wanted to spend the money carefully in accordance to the 
state plan, the pressure was, get the money out the door. The 
money is not getting out the door, it is not being spent, and 
the pressure has been constantly to get the money spent.
    And so I think that we support your leadership with a 
balanced message on that that, one, maybe we ought to look at 
the criteria but then, secondly, we ought to be making sure 
that we have those state plans in place and that we are 
emphasizing the accountability side as much as the speed and 
the process in that funding.
    Mr. Meek. Mr. Chairman, I do not know if the Secretary--I 
mean, my mom once told me that the game warden cannot be the 
lead poacher--but I just want to say that I know that I was a 
part of that chorus of members saying that. When you start 
looking at what is in the Department and what is bottlenecked 
and what is actually getting down to where it is supposed to 
be, I think there was a chorus of members here saying that that 
should happen.
    Now we have gone through those growing pains, hopefully, 
that we can start targeting these dollars.
    I just want to add to the panel that the committee has done 
something in my opinion, the chairman, also with the bigger 
chairman on the full committee and Ranking Member. We have 
resisted from earmarking projects even in our authorization 
bills. Both sides have not put projects within that bill. So we 
are trying to slow the roll a little bit as it relates to just 
pushing not only projects but money out the door because they 
are critical issues that are out there. We talked about border 
officers, we are talking about checking containers, getting a 
higher level there. There are some meat and potato issues that 
we have to address.
    So I just wanted to hear what was happening in the states 
and the local level and are they thinking in those terms, 
because I know that they are looking at cuts in other places, 
and I know my cities are saying, ``Well, I think that is 
Homeland Security,'' you know, the sidewalk, it is important. 
So we have to watch ourselves there.
    Mr. Chairman, thank you.
    Mr. Rogers. Gentleman's time has expired.
    We have been very blessed to have you here for these 2 
hours. It has been very helpful.
    We have had one more member come in and for these of you 
who cannot stay for 5 more minutes, I would understand, but if 
you could indulge us, I would like to recognize the gentlelady 
from Texas, Ms. Jackson-Lee, for any questions that she may 
have.
    Ms. Jackson-Lee. Yes. Thank you very much, Mr. Chairman, 
for your indulgence and the committee and the Ranking Member. 
Thank you very much.
    This is a very important committee. We are in the midst of 
markup in Judiciary, Mr. Chairman and Ranking Member, and as 
you well know, sometimes we do have responsibilities that are 
overlapping.
    I am delighted to see a fellow Texan, Mr. Ervin, and thank 
him for his service. I think we should acknowledge at all times 
when people are committed and dedicated to public service. We 
may disagree with them but we should give full airing to the 
vitality of their work.
    And Governor Gilmore, of course, we have worked together, 
and my colleague on Judiciary, he probably could attest to the 
fact that I am legitimately delayed.
    To the other gentlemen, thank you so very much.
    Let me just say two points and then do directly--I am 
trying to focus on a narrow aspect of what we are doing. I said 
earlier, and Mr. Hutchinson has worked in the committee some 
couple of sessions ago, that I am beginning to sense that 
180,000 people is a very large managerial challenge. And so 
many facets of it require a greater integration.
    I just left Judiciary but also just left a Science 
Committee hearing dealing with technology and NASA, and what I 
am finding out is that Homeland Security probably more than any 
other department in its responsibilities overlaps from Justice 
to Health and Human Services. There is a great deal of overlap. 
So integration is key to be able to eliminate redundancy.
    If I can make one question, in as much as I know that I may 
have missed the inquiries of my colleagues and I may be posing 
some redundancy but I am quarreling with myself as a policy 
maker on the size and whether or not we can ever integrate to 
be safe.
    The second point is a more narrow point, and that has to do 
with what I have been hearing pronouncements and since we are 
regular travelers through the nation's airports, who, by the 
way, encounter members frequently, whether or not they are in 
your congressional district. I have the Houston 
Intercontinental Airport in my district, one of the largest in 
the nation and certainly one of those very vulnerable sites. 
But the point is, is that as we listen to the consumer side of 
it, we are hearing different reports on the screeners. One 
member has made a point of suggesting that we return to private 
screeners because of a report that was given.
    I do not think you can throw the baby out with the bath 
water. I am willing to listen, but it seems to me if you have 
an orderly system of people who are vetted, who are trained and 
we are still on the training curve, if you will, does it make 
sense now to return back to a system that clearly drove us 
toward 9/11?
    So those are questions of integration of this Department, 
its largeness and its many facets that you all could respond 
to.
    Mr. Ervin, you know I am responding to you on the TSA, and 
I am looking for the GAO--I did not look at my--thank you very 
much. You know that I would love your report and assessment, if 
you will, on these private screeners versus the staff that we 
are now utilizing in the Transportation Security 
Administration.
    I thank both my colleagues and the Ranking Member for the 
importance of this hearing, and I will continue to try to 
grapple and get an answer about the largeness of this 
Department.
    Mr. Ervin. Well, I will start, Congresswoman, I suppose--
whomever you would like.
    Ms. Jackson-Lee. Let me go with Mr. Hutchinson. I assume he 
is going to take the larger point and then we thank you, Mr. 
Ervin and Mr. Rabskin and Mr.--Rabkin--my glasses are not with 
me this morning, thank you. I apologize to you.
    Mr. Hutchinson. Thank you, Congresswoman.
    In terms of the size of the Department, I think the key 
issue is the centrality or the focused mission of the 
Department, and I think that it is created with 22 agencies 
that all have a major role in homeland security so it naturally 
fits within the Department, and I think it is appropriate.
    I think we should resist wholesale changes for a longer 
period of time before we make judgments on whether there needs 
to be some tinkering and some adjustments to it. That is my 
judgment. It is certainly a challenge, but I think it is a 
focused mission that has added great value to the security of 
our nation.
    Mr. Chairman, if I might, I do need to step out. So thank 
you for your hospitality today and your leadership on this.
    Mr. Rogers. Thank you for being here. It has been very 
helpful.
    Ms. Jackson-Lee. Thank you.
    Mr. Rogers. Mr. Ervin?
    Mr. Ervin. Just three quick things, Congresswoman, to talk 
briefly about each of the areas that you mentioned. As far as 
integration is concerned, of course it is difficult to 
integrate an agency with 180,000 or so employees and 22 
different components that are very different from each other. 
But more than radical changes in the organizational structure 
of the Department, I think, as I said in my testimony, simply 
giving the Chief Financial Officer, the Chief Information 
Officer and the Chief Procurement Officer at the headquarters 
level the authority to hire, fire and otherwise direct the work 
of their counterparts at the component level, would do more, it 
seems to me, within the existing legal framework to make the 
Department more integrated, point one.
    Two, with regard to the screener report that was just 
released yesterday by the Office of Inspector General, it is 
disappointing that there has not been improvement since 2003 in 
the ability of screeners, as shown by these tests to detect 
these deadly weapons. That report, as you know, noted the 
importance of equipment and technology, and there were three 
kinds of equipment that were laid out and recommended in the 
2003 report that I am hopeful the new leadership team will 
embrace fully and with the support of the Congress deploy at 
airports throughout the country.
    Finally, on the notion of returning to the private screener 
workforce, I would be opposed to that. Mr. Skinner said some 
time ago that the results show that there is really no 
difference in the ability of the five private airports and the 
federalized airports in terms of their ability to detect these 
deadly weapons.
    And, further, as you know, there was recently a lawsuit 
filed, and it is just a lawsuit, so we do not know whether it 
is true, by someone who used to work at the San Francisco 
Airport, which is another of the five privatized airports 
alleging that there were problems there in the private sector. 
It is so profit driven that Federal tests were compromised and 
the training actually did not take place, even though it was 
claimed to have taken place. So I would have real concerns 
about that.
    Ms. Jackson-Lee. Yes, sir.
    Mr. Rabkin. Ms. Jackson-Lee, in terms of the performance of 
screeners, we have issued recently two reports. One is 
classified secret, one is classified as a security sensitive 
report to the Transportation and Infrastructure Committee. We 
intend to issue a public report in the next week or so, and we 
are going through final deliberations with TSA on what we can 
say in that public report.
    But let me just say that there are issues beyond that 
simple testing of how the screeners do with the red team for 
the covert test. There are issues about how many screeners 
there are at each airport, and how many there should be, there 
are issues about how they interact with the public, there are 
issues about the technology that they have, the training that 
they have received, the time that they have to absorb this 
training, et cetera. And we would urge that all these factors 
be considered when reaching conclusions about their 
performance.
    Ms. Jackson-Lee. Governor?
    Mr. Gilmore. Congresswoman, good to see you again, by the 
way.
    Ms. Jackson-Lee. Thank you.
    Mr. Gilmore. Let me, if I could, answer two things very 
quickly. Number one, in the last 10 days I have traveled to 
California, Colorado and Houston. So I know very well about 
going through TSA screening processes, and it is, I must say, a 
very titillating experience.
    I do not know. My impression is that it is not the people 
or even their training, because I think they are doing probably 
what they are trained to do, to tell you the truth. Probably 
doing it pretty well. But the question is, what are they being 
trained to do, and is the system really appropriate to provide 
security and be respectful of people who go through and suspect 
one more go-over on them would probably be productive. I could 
talk to you more about that in detail.
    The second is the more pertinent point. Our Commission 
addressed your key issue in the year 2000 and that key issue 
was how do you manage homeland security? How do you do it? And 
we always understood that if you put together a department 
which was an equal player with everybody else at HHS, 
Department of Defense, Department of State, FBI and these other 
equals, it was going to be very, very difficult for one person 
to manage it all.
    Now, to be sure, 22 agencies were thrown into it that all 
have a homeland security component. By the way, they do things 
sometimes that do not have anything to do with homeland 
security. And that was a very big managerial challenge. We did 
not actually think that it would work in the Department, but we 
have a department and we have been supportive of trying to help 
make that work.
    I think there is no substitute for the maximum possible 
authority of Secretary of Homeland Security to be able to 
coordinate his fellows in government into an overarching 
strategy.
    Ms. Jackson-Lee. Chairman, my time is up. May I just say 
this for the record, thanking both you and the Ranking Member. 
To our surprise, this may be one of the more important 
committees of this larger Homeland Security committee. I think 
we have got to get a way that there is synergistic work. I am 
not sure whether I am hearing from Governor Gilmore a redebate 
on civil service versus his other approaches and deployment, 
but I am hearing from him that we have got to give the 
Secretary that kind of authority to sort of purge through and 
find out a solution.
    My last point, I hope we will hear from him again, meaning 
the Secretary of Homeland Security, is that although we all can 
support entities like Lockheed Martin and Covenant Aviation 
Security, I heard two strong points.
    We have not nailed down what that problem is. We do not 
know whether or not it is training or technology. I think we 
need to give TSA and the trained Federal employees which you 
can closely vet and supervise, the resources, the training, the 
numbers at the appropriate airport and the balanced training 
dealing with civil liberties and civil rights before we make 
any judgment as to whether or not we should move back to where 
we came from. And I hope we will have an opportunity to review 
this question more extensively.
    I thank you, and I yield back.
    Mr. Rogers. Gentlelady's time has expired.
    Again, I want to thank all the witnesses. You have provided 
very valuable testimony. Your insights and perspectives have 
been very helpful to this committee.
    There may be some additional questions that members have 
that they would submit to you. We are going to hold the record 
open for 10 days. If you could reply to those in writing if 
they do have any questions I would appreciate that.
    And with that, this committee stands adjourned.
    [Whereupon, at 12:04 p.m., the subcommittee was adjourned.]

                                 
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