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


 
                    RETENTION, SECURITY CLEARANCES,
                     MORALE AND OTHER HUMAN CAPITAL
                         CHALLENGES FACING DHS

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

                                HEARING

                               before the

                      SUBCOMMITTEE ON MANAGEMENT,
                       INTEGRATION, AND OVERSIGHT

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 18, 2006

                               __________

                           Serial No. 109-78

                               __________

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



                   Peter T. King, New York, Chairman

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

                                 ______

         Subcommittee on Management, Integration, and Oversight



                     Mike Rogers, Alabama, Chairman

John Linder, Georgia                 Kendrick B. Meek, Florida
Mark E. Souder, Indiana              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                Bennie G. Thompson, Mississippi 
Peter T. King, New York (Ex          (Ex Officio)
Officio)


                            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 Meek, a Representative in Congress From 
  the State of Florida, and Ranking Member, Subcommittee on 
  Management, Integration, and Oversight.........................     2
The Honorable Peter T. King, a Representative in Congress From 
  the State of New York, and Chairman, Committee on Homeland 
  Security.......................................................     4
The Honorable G. Thompson, a Representative in Congress From the 
  State of Mississippi, and Ranking Member, Committee on Homeland 
  Security.......................................................     5
The Honorable Sheila Jackson-Lee, a Representative in Congress 
  From the State of Texas........................................    30
The Honorable Bill Pascrell, Jr., a Representative in Congress 
  From the State of New Jersey...................................    28

                               WITNESSES

Ms. Kathy L. Dillaman, Associate Director, Federal Investigations 
  Processing Center, Office of Personnel Management:
  Oral Statement.................................................    17
  Prepared Statement.............................................    19
Mr. K. Gregg Prillaman, Chief Human Capital Officer, U.S. 
  Department of Homeland Security:
  Oral Statement.................................................     6
  Prepared Statement.............................................     9
Mr. Dwight Williams, Director, Office of Security, Department of 
  Homeland Security:
  Oral Statement.................................................    13
  Prepared statement.............................................    14

                                PANEL II

Mr. John Gage, National President, American Federation of 
  Government Employees:
  Oral Statement.................................................    51
  Prepared Statement.............................................    53
Ms. Colleen M. Kelley, President, National Treasury Employees 
  Union:
  Oral Statement.................................................    42
  Prepared Statement.............................................    44
Professor Charles Tiefer, Professor of Law, University of 
  Baltimore School of Law:
  Oral Statement.................................................    68
  Prepared Statement.............................................    69

                                APPENDIX
                             For the Record
                        Questions and Responses

Mr. Gregg Prillaman and Mr. Dwight Williams......................    95


                    RETENTION, SECURITY CLEARANCES,
                     MORALE AND OTHER HUMAN CAPITAL
                       CHALLENGES FACING THE DHS

                              ----------                              


                         Thursday, May 18, 2006

             U.S. House of Representatives,
                    Committee on Homeland Security,
                                Subcommittee on Management,
                                Integration, and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:34 a.m., in 
Room 311, Cannon House Office Building, Hon. Mike Rogers 
[chairman of the subcommittee] presiding.
    Present: Representatives Rogers, King (Ex Officio), Meek, 
Jackson-Lee, Pascrell, and Thompson (Ex Officio).
    Mr. Rogers. This meeting of the Subcommittee on Management, 
Integration and Oversight of the Committee on Homeland Security 
will come to order.
    Today we are holding a hearing on a wide range of personnel 
challenges facing the Department of Homeland Security. 
Specifically, these include numerous vacancies in key 
positions, high turnover among senior officials, staff 
shortages in critical areas, inadequate training for certain 
employees, and potential lapses in security.
    First let me welcome the witnesses and thank them for 
taking the time to be here today. We look forward to your 
testimony and your answers to our questions.
    It has been over three years since the Department was 
established, yet senior officials continue to leave after short 
periods of time. I raised this issue with Secretary Chertoff 
over a year ago during a full committee hearing. At that time 
the Secretary agreed the number of vacancies is a growing 
problem. Yet today, we continue to see a number of key 
vacancies, including the Undersecretary for Science and 
Technology, the Assistant Secretary for Cyber Security, the 
Chief Financial Officer, the Chief Privacy Officer, and the 
Commissioner for Customs and Border Protection. Other key 
resignations are expected soon.
    I am concerned this high turnover undermines the 
Department's effectiveness. It could also very well weaken our 
efforts to integrate the Department's many agencies and further 
erode employee morale.
    Another personnel issue we will examine today is the 
Department's security clearance process. The Brian Doyle 
situation and criminal charges brought against other DHS 
employees raise a number of serious questions regarding the 
Department's background investigation procedures and its 
monitoring employees' use of electronic equipment.
    The recent controversy over the Shirlington Limousine 
contract revealed the Department does not conduct background 
checks on contractors. The result was that a convicted felon 
with poor past job performance received two separate contracts 
totalling $25 million. The Department's former Inspector 
General called this process, quote, ``textbook poor'', because 
it, quote, ``failed to turn up readily available information 
about Shirlington Limousine's finances and performance.'' The 
Ranking Member and I submitted a document request to the 
Department regarding its contract with Shirlington Limousine, 
and we intend to hold a separate hearing on limousine contracts 
early next month.
    During the past year, DHS employees have been charged with 
various offenses, including smuggling and harboring illegal 
aliens, kidnapping, drug trafficking, bribery, and assault with 
a deadly weapon. Given its critical role in helping secure our 
Nation, I believe the Department should have a higher standard 
when it comes to screening and monitoring its employees.
    Today, we will hear just how secure the Department of 
Homeland Security is. And with that, I will now yield to my 
friend and colleague, the Ranking Member, the gentleman from 
Florida, Mr. Meek, for any statement he may have.
    Mr. Meek. Thank you, chairman. And I want to welcome our 
first panel and the second panel. And I am glad that we are 
having this hearing, this is something that we have talked 
about doing, and having the support of the chairman and the 
ranking member here this morning I think is very, very 
important. And I think it sends a very strong message that we 
are serious about what we are meeting on here today, and that 
is dealing with the morale at the Department and also 
management.
    I requested this hearing, and I look forward to, Mr. 
Chairman, working with you. We both mutually came together and 
said this was very, very important.
    I strongly believe that the personnel problems at the 
Department of Homeland Security deserve this committee's 
attention. I am not alone in this view. In the last few days, I 
have received dozens of letters from rank-and-file employees 
that have written us already prior to the hearing thanking us 
for having this hearing.
    And Mr. Chairman, I have these letters right here. This is 
prior to the hearing. This is not even after the hearing, 
thanking us for having this hearing because it is the reason 
why this is so important towards our national security and 
morale at the Department.
    Here are some of the things that they have said in these 
letters, and I have just taken a few of the excerpts from it. 
Individuals are saying, what worries me the most is that the 
Department of Homeland Security has created a Department that 
is driving away talented and committed employees. Morale is 
lower than it has ever been before. DHS management doesn't seem 
to have a clue about motivating employees. And employees are 
not receiving the right and fair treatment regarding the 
discipline, and their standard of living has been cut.
    They tell me, also, that the training is inadequate; this 
is Department of Homeland Security employees. They also tell me 
that they lack the tools needed to fulfill the Homeland 
Security mission.
    As a former law enforcement officer, I know firsthand how 
vital it is to be able to have the tools to execute your 
mission. Good morale is also critical for effective law 
enforcement in any organization, be it sworn or not sworn.
    Good morale just doesn't happen. It certainly hasn't 
happened at the Department. Instead, the Department's workforce 
regularly express anxiety. The major source of this anxiety, to 
sum up it in a catchy name, is MAX HR. Under the new personnel 
program, workers have already had to adjust to a merge of 22 
agencies into one and will have to see their long-standing 
civil service protection stripped away. In its place, they are 
calling this so-called new program Pay For Performance, in an 
appeals process that is totally housed within the Department of 
Homeland Security. I am well aware of the home court advantage. 
This strikes me as not only having home court advantage, but 
also having all the referees on the payroll.
    Like many of the Department of Homeland Security employees, 
I have deep concerns about how fair these policies are and will 
be executed. I also, as a member of the Armed Services 
Committee, have authored legislation which will protect 
employees' rights at the Department of Defense based on their 
pay-for-performance personnel system. Fortunately, the courts 
have stepped in to block the Department of Defense from 
implementing their system as well. We cannot deny collective 
bargaining rights by ignoring Congressional intent. What is to 
stop a manager from treating an employee that they don't want 
to give a raise to from shifting from a volunteer to a worker 
in an extra shift?
    I think it is very, very important, Mr. Chairman, that we 
continue to focus on these issues as not only you outlined in 
your opening statement, but we also focus on making sure that 
we have morale. Morale, in my opinion, will equal individuals 
staying at the Department, working on behalf of the American 
people and protecting our country in a way that they sought out 
to do in the beginning, not have in-house personnel issues, not 
have mismanagement, and a lack of oversight that has not only 
embarrassed the Department of Homeland Security, but the 
employees that work within the Department.
    As we look at it as Members of Congress, and definitely in 
the Oversight Committee, it is very, very important that we do 
not let these rank-and-file employees down, and we work on the 
issue of attrition at the Department because it is not good for 
national security. It is not good for the Department of 
Homeland Security, and it is not good for the American people.
    So I look forward to hearing from our first panel and our 
second panel as we start to get into the workings of the 
Department of Homeland Security, and hopefully, we will get our 
questions answered in this hearing and in future hearings. 
Thank you, Mr. Chairman.
    Mr. Rogers. I thank the gentleman.
    The chair is now pleased to have with us and pleased to 
recognize the chairman of the full committee, the gentleman 
from New York, Mr. King, for any statement he may have.
    Mr. King. Thank you very much, Chairman Rogers.
    Let me commend you at the beginning for all the work you 
have done as chairman, especially on this very vital issue that 
we are dealing with today, because to me it goes to the very 
heart of some very, very significant issues affecting the 
Department of Homeland Security. For instance, there are just 
three of the matters that we covered today that I have a 
particular interest in. One was the New York City subway alert 
last year in which, to me, the Department acted in many ways 
extremely improperly. As the City of New York was acting in a 
very appropriate way to increase surveillance on the subways, 
alerting the people to what possibly could be happening, we had 
members of the Homeland Security Department selectively leaking 
to newspapers, undermining the Police Commissioner and the 
Mayor of New York, trying to diminish the nature of the threat, 
and speaking against them in a way which created dissension. It 
created confusion among the people, and it was entirely 
inappropriate. At the same time they were doing that, there 
were other officials in the Department of Homeland Security who 
were advising their neighbors and friends and relatives to 
leave the city and alerted them because of the serious nature 
of the threat. I realize that two employees have been suspended 
for that, and there are proceedings against them. I think it 
goes again to the heart of the Department, where you have, on 
the one hand, senior employees undermining the conduct of the 
Police Commissioner of New York and the Mayor of New York, and 
at the same time having employees of the Department improperly 
and illegally notifying their friends and neighbors as to what 
they thought was going to be a serious threat. That, apart from 
the fact that there was selective consideration being given to 
relatives of employees of the Department, also ran the risk of 
alerting terrorists that we were on to what was happening. This 
was classified information which should not have been released, 
and to me, it is very important we find out exactly how that 
happened and why, and what action ultimately is going to be 
taken against those who did leak that information.
    Also, in the case of Brian Doyle, you are talking about a 
person in a very senior position who has been charged with very 
serious sexual offenses which are bad enough in themselves, but 
also, it would have left him open--if he had in fact been 
dealing with someone who was a foreign agent or somebody 
involved with organized crime or somebody involved with the 
criminal syndicate--to blackmail where he could have provided 
very important information. Yet it turns out that in his prior 
employment he also had similar experiences as far as dealing 
with pornography. I want to know what the hiring practices 
were, why that previous experience was not revealed, and how he 
was allowed to be hired.
    Thirdly, of course, is the whole case of Shirlington 
Limousine, which is bad enough when we have the backdrop of 
kickbacks, gambling, prostitution, and bribery. But it is 
problematic that a company such as this, owned by someone with 
a criminal background, with a very poor performance record in 
its previous contracts, could have been given a contract where 
they would have access to top ranking officials in the 
Department of Homeland Security whom they would be driving 
around. They would be able to overhear conversations, have 
access to what was going on, where they were going, whom they 
were meeting with. All of this, again, raises very serious 
questions.
    I look forward to the testimony this morning to see what 
procedures will be in place to prevent similar instances from 
happening in the future, because again, the Department of 
Homeland Security is different from many other Federal 
departments in that the nature of what you are dealing with 
literally involves the life and death of American citizens. We 
can't be allowing people with known sexual histories who have 
been removed from previous jobs to get high-ranking jobs and 
security clearances in the Department of Homeland Security. We 
can't allow people in the Department to be undermining local 
police officials while at the same time other members of the 
Department are leaking classified information. And we certainly 
can't be allowing companies who are owned by criminals and have 
a poor performance record to be given contracts where they 
would have access to high-ranking officials in the Department 
of Homeland Security.
    So I look forward to the testimony. And to Chairman Rogers, 
again, I thank you for the effort and initiative that you have 
shown in this matter. And I yield back the balance of my time.
    Mr. Rogers. I thank the gentleman. And we are similarly 
happy to have the Ranking Member of the full committee with us 
today, the gentleman from Mississippi, Mr. Thompson. And I now 
recognize him for any statement he may have.
    Mr. Thompson. Thank you very much, Mr. Chairman. And like 
the Chairman of the full committee, I am happy that we have 
finally gotten around to this subcommittee hearing which I know 
my ranking member has been very anxious on having.
    There is no question that the procurement process at DHS is 
flawed. There is no question the morale of its employees is a 
real concern of ours. I hope that from the testimony offered 
today, we can look at preparing some solutions for it.
    I would hate for this committee to have to get in the 
business of micromanaging DHS in its personnel and procurement 
practices, but unless we can see greater improvement, Mr. 
Chairman, I am not real certain that we won't have to get into 
that business.
    I am concerned about the number of vacancies that continue 
to exist in FEMA. We are 13 days from a new hurricane season, 
and we have only 73 percent of the appropriated staff of FEMA 
on board at this point. So when I am told that we are prepared 
for the next hurricane season, I wonder, how can we be prepared 
with only 73 percent of the staff that is required to run the 
agency?
    So I am concerned about it. I am concerned that every 
survey of employees I see ranks DHS at or next to the bottom of 
every survey in terms of employee morale; something is wrong 
with that picture. I hope we can get some insight as to why 
employee morale is where it is.
    I can go on and talk about individual turnover and other 
things related to TSA and other things, but Mr. Chairman, let 
me compliment you and the ranking member of the subcommittee 
for putting together the hearing. I look forward to the 
testimony of both panels. I am sure it will be enlightening at 
best, and I yield back.
    Mr. Rogers. I thank the gentleman.
    And he is right, we don't want to have to be micromanaging, 
but as we have assured Department officials over the last year 
and a half and want to continue to assure everybody, we will be 
zealous in our oversight in this committee. This is a very real 
problem that is alarming to us, and we look forward to hearing 
some substantive ideas as to how we are going to resolve these 
concerns.
    So with that, I would like to tell any other Members that 
we will allow their opening statements to be submitted for the 
record.
    We are pleased to have with us today two panels of 
distinguished witnesses. Let me remind the witnesses that your 
entire statements will be submitted for the record, and we 
would ask that if you would like to summarize those,to try to 
keep your remarks within 5 minutes so that we can spend as much 
time as possible probing specific questions that Members may 
have for you after your statements.
    Mr. Rogers. The Chair now calls up the first panel and 
recognizes Mr. Gregg Prillaman, Chief Human Capital Officer for 
the U.S. Department of Homeland Security. We look forward to 
your statement, and thank you for being here, Mr. Prillaman.

                STATEMENT OF K. GREGG PRILLAMAN

    Mr. Prillaman. Thank you, Chairman Rogers, Ranking Member 
Meek, and members of the committee. I do appreciate being here 
and having the opportunity to talk with you today about the 
Department's human capital initiatives and programs.
    I was appointed at the Department as the Chief Human 
Capital Officer on September 7th of last year after more than 
30 years in the human capital field as a professional in the 
government and, in the private sector, as an executive and as a 
management consultant. Through the years, I have worked with 
more than 30 government agencies in a wide array of private 
sector firms, not-for-profits and State and local governments 
in every area of human capital management. That is my field. 
That is my area of specialty. And even though I have only been 
with DHS now for 8 months, I think I have a pretty good sense 
of the complexity of the organization and many of the issues 
and challenges that DHS is confronting.
    As a Chief Human Capital Officer, I provide direction and 
oversight for all elements of the Department's human capital 
programs, including policy, strategic planning, learning and 
development, recruitment, performance management, compensation, 
benefits, employee relations and other areas. I also lead the 
Department's Human Capital Council, which is made up of all the 
human capital directors of all the various components. And I am 
active as well in the government-wide Council of Capital 
Officers as sponsored by the Office of Personnel Management.
    DHS is a very complex organization from a human capital 
perspective. It is the third largest Federal department with 
nearly 185,000 employees located across the United States and 
around the world. Each of our components has a very different 
culture and character, and our work force is more varied than 
most other agencies. We have employees in more than 220 
different occupations, ranging from law enforcement officers 
and firefighters to doctors, economists, intelligence officers, 
pilots, scientists, airport screeners, accountants, Secret 
Service agents, systems integrators, plant and animal 
inspectors, and we even have morticians. It is a very complex 
organization.
    As you can imagine, recruiting, managing and retaining high 
quality talent is a major challenge for us, and the overarching 
goal in human capital--the organization that I lead--is to 
support our managers and employees by providing an environment 
where they have clear roles and responsibilities, challenging 
assignments, the tools and training they need to perform their 
work, opportunities to grow, and rewards that are commensurate 
with their contributions.
    DHS was created, as you all know, by the combination of 22 
different organizations, which makes it one of the largest 
mergers and acquisitions in the history of the Federal 
Government. I believe most corporate mergers and acquisition 
specialists would say that it takes 5 to 7 years or longer to 
work through the throws of a merger to end up with a smooth-
running, well-integrated organization. Accordingly, at this 
point, DHS is about 3 years into a 7-year journey. While the 
Department has made great progress in many areas, it still has 
challenges to overcome before it becomes a fully integrated 
organization.
    One of our major challenges involves the disruption any 
merger creates and the resulting impact on employee morale. It 
was apparent from the results of OPM's 2004 Federal Human 
Capital Survey that a number of employees at DHS were concerned 
about the organization. As you know, about 150,000 employees 
government-wide responded to a survey that was designed to 
measure their satisfaction with their departments and agencies 
across government.
    The survey results for DHS showed many areas of strength, 
including employee commitment to the Department's mission and 
goals, but it also showed significant opportunities for 
improvement, especially in the areas of performance culture, 
leadership and work experience. DHS's score placed it 29th out 
of 30 large agencies in the survey.
    We believe that time and becoming comfortable with the new 
organization will reduce some of the concerns that the 
employees voiced. But we also believe that improving 
organizational understanding, communications, management skills 
and a support infrastructure will also help. To this end, we 
have created a Federal Human Capital Survey Response Team 
within DHS which is comprised of representatives of each 
component. As we examine the survey results, we are reviewing 
leading practices inside and outside the Department and 
developing a plan of action for each component to improve staff 
satisfaction within the organization.
    We also believe that the elements of MAX HR, a new human 
capital system we are implementing, will have a positive impact 
on morale. For example, the new performance management system 
is designed to clarify each employee's role and responsibility 
and give them a set of clear performance objectives that are 
tied to the Department's overall mission objectives. The 
emphasis of the program is on clarity and line of sight so 
employees understand exactly where they fit in the organization 
and what their priorities should be.
    More importantly, the system also requires that managers 
and supervisors go through a training program to improve their 
skill in communicating with employees, making assignments, 
setting performance objectives, providing feedback and coaching 
to employees, receiving feedback from employees, and providing 
fair and balanced evaluations at the end of the year about 
employee performance. There is an old adage that employees join 
an organization and they leave a manager. Our intention is to 
train our managers and supervisors in how to better manage 
employees so that we don't have employees leaving because their 
first-line supervisors aren't doing a good job. To date, we 
have put more than 8,000 managers and supervisors through the 
training program and should train another 6,000 employees by 
the end of 2006.
    We have also made progress across the Department. We have--
and progress particularly in integrating those 22 organizations 
into one organization. We have a Human Capital Council that 
meets regularly, which is made up of the human capital 
representatives of all the various components. We are working 
together to try to solve our collective problems. We are 
integrating technology across the Department, replacing some 
144 Legacy HR systems that didn't talk to each other very well 
with organization-wide systems. We have a single payroll system 
at this point which in fact replaced eight that were across the 
Department. We are putting in a web-enabled time and attendance 
system, a new Microsoft empower system which is going to be our 
core for HR IT, a new e-recruitment system, learning management 
system, performance management system. We are doing what 
Fortune 500 corporations have been doing for the last 15 years, 
and that is trying to create an integrated technology-based 
human capital system.
    We have also improved communications I believe across the 
Department. We are doing better on the President's Management 
Agenda. I think we are making progress in a number of areas 
there. And we are also making progress on MAX HR. The 
performance management elements of MAX HR have already been 
deployed for 4,500 managers, supervisors and employees at the 
headquarters, Coast Guard, Immigration and Customs Enforcement, 
and our plan is to continue rolling out performance management 
through this new system that we think will link employees 
better to the organization's objectives in training managers. 
We plan to have that system in place for as many as 15,000 
employees during fiscal year 2007. And we are making progress 
also on building a pay-for-performance system and a broadband 
classification system that we think will provide managers 
better flexibility in hiring and motivating employees and will 
give employees a chance to be rewarded in more commensurate 
fashion with their contributions across the organization.
    I see that I am out of time, but I would be happy to answer 
any questions that the committee may have.
    [The statement of Mr. Prillaman follows:]

                Prepared Statement of K. Gregg Prillaman

    Chairman Rogers, Ranking Member Meek and members of the Committee: 
Thank you for the opportunity to be here today to discuss the current 
state of the Department's human capital initiatives and programs.
    I was appointed as the Department's Chief Human Capital Officer on 
September 7, 2005 after more than 30 years in the Human Capital field 
as a professional, an executive, and a management consultant. I spent 
the first thirteen years of my career as a career Federal employee with 
the U.S. Information Agency and the Voice of America, five years as the 
Corporate Director of Human Resources with a federally-funded 
corporation, two and one-half years as the Director of Human Resources 
for a county government, and ten years as a management consultant with 
leading Human Capital consulting firms. Through the years I have worked 
with a wide array of Federal, state and local governments, corporate, 
and not-for-profit organizations and have gained significant experience 
in every major area of Human Capital management.
    As the Chief Human Capital Officer, I provide direction and 
oversight for all elements of the Department's Human Capital programs, 
including policy, strategic planning, learning and development, 
recruitment, performance management, compensation, benefits, union and 
employee relations, and other areas. I also lead the Department's Human 
Capital Council which is made up of the Human Capital Directors for the 
various Department components, and am an active participant on the 
government-wide Council of Chief Human Capital Officers. Even though I 
have only been with the Department a few months, I believe I have 
gained a sound understanding of the complexities of the organization 
and the challenges we face in recruiting, retaining, and supporting the 
high-quality workforce this Department needs to achieve its critical 
mission.

The Complexity of the Workforce
    I would like to first address the complexity of the DHS workforce.
    DHS is the third-largest Federal Department, with nearly 185,000 
employees located across the United States and around the world. Each 
of our components--large and small--has a distinct culture and 
character. The DHS workforce is also more varied than most other 
federal agencies, with employees in more than 220 different 
occupations--ranging from law enforcement officers and firefighters to 
doctors, economists, intelligence officers, pilots, scientists, airport 
screeners, accountants, Secret Service agents, systems integrators, 
plant and animal inspectors, and many, many others--even morticians.
    As of April 1, 2006, we have more than 40,000 Coast Guard military 
personnel; 40,500 transportation screeners; 17,800 customs and border 
protection officers; 11,500 border patrol agents; 9,600 criminal 
investigators; 2,000 IT professionals; 1,700 police officers; 1,300 
attorneys; 800 engineers; and 700 contract specialists.

    Last fiscal year, our workforce:
 Processed more than 430 million pedestrians and passengers 
into the United States; 560,000 of who were denied entry,
 Processed 29 million trade entries and collected $31.4 billion 
in revenue,
 Seized nearly 600 lbs of narcotics at ports of entry and 
nearly 1.2 million lbs of narcotics between ports of entry,
 Apprehended over 15,000 aliens who were either fugitives or in 
violation of immigration law.
 Since 2003, arrested more than 6,600 child predators as part 
of Operation Predator; deporting more than 3,400 from the U.S.,
 Arrested more than 2,600 human smuggler and traffickers,
 Effectively trained over 47,000 law enforcement agents at the 
Federal Law Enforcement Training Center,
 Conducted more than 26,800 port security patrols, 5,800 air 
patrols, and 26,000 security boardings,
 Processed 7.3 million immigration benefits applications, and
 Performed 35 million background security checks on persons 
seeking immigration benefits.
    Recruiting and staffing for this varied workforce continues to be a 
major challenge. In fiscal year 2005, we processed thousands of job 
applications and hired more than 11,500 new employees. In fiscal year 
2006 to date, DHS has hired over 3,500 employees.
    The dedicated men and women who make up the Department's incredibly 
wide-ranging workforce are essential to achieving the organization's 
mission on a daily basis. Our overarching goal in human capital is to 
support them by providing an environment where they have clear roles 
and responsibilities, challenging assignments, the tools and training 
they need to perform their work, opportunities to grow, and rewards 
that are commensurate with their contributions.

Organizational Transformation
    We have to remember that when DHS was created by combining 22 
different organizations, it was one of the largest ``mergers & 
acquisitions'' to ever take place in the Federal government. I believe 
most corporate merger and acquisition specialists would say that it 
takes five to seven years (or longer) to work through the throes of a 
merger to end up with a smooth-running, well-integrated organization. 
Accordingly, at this point DHS is only three years into a seven-year 
journey. While the Department has made great progress, it still has 
challenges to overcome before it becomes a fully-integrated 
organization.
    One of our major challenges involves the disruption a merger 
creates and the resulting impact on employee morale. It was apparent 
from the results of the 2004 Federal Human Capital Survey (FHCS) that a 
number of employees at DHS were concerned about the organization. As 
you know, about 150,000 employees, government-wide, responded to a 
survey designed to measure their satisfaction with their departments 
and agencies. The survey results for DHS showed many areas of strength, 
including employee commitment to the department's mission and goals, 
but also significant opportunities for improvement, especially in the 
areas of performance culture, leadership, and work experiences. DHS' 
scores placed it twenty ninth out of the thirty large agencies in the 
survey.
    We believe that time will reduce some of the concerns that 
employees voiced, but we also believe that improving organizational 
understanding, communications, management skills, and the support 
infrastructure will help. To this end, we created a Federal Human 
Capital Survey Response Team comprised of representatives from each DHS 
component to examine the survey results, to review leading practices 
inside and outside the Department, and to develop a plan of action for 
each component to improve staff satisfaction with the organization.
    We also believe that elements of MAXHR, the new human 
capital system we are implementing, will have a positive impact on 
morale. For example, the new performance management system is designed 
to clarify each employee's roles and responsibilities and give them a 
set of clear performance objectives that are tied to the Department's 
overall objectives. The emphasis of the program is on clarity and 
``line of sight'' so employees understand exactly where they fit in the 
organization and what their priorities should be.
    The system also requires all managers and supervisors to go through 
a training program to improve their skills in communications with 
employees, making assignments, setting performance objectives, 
providing feedback and coaching to employees, receiving feedback from 
employees, and providing a fair and balanced evaluation of the 
employee's strengths and weaknesses at the end of the year.

Areas of Progress
    Given the enormity of the Department's day-to-day operations, the 
Chief Human Capital Office is striving to implement innovative human 
capital policies and processes designed to better support the 
workforce. I am pleased to report that we have made significant 
progress in integrating our human capital priorities, programs and 
systems.
    FY 2005 marked the first full performance year under the DHS Human 
Capital Strategic Plan. Significant progress was made on each of the 
four major goals included in the plan:
         Optimizing shared services
         Improving hiring
         Fostering a ``team DHS'' culture
         Implementing robust human capital programs
    In addition, we have created a formal, replicable business process 
for validating and updating the plan's goals and strategies to ensure 
that they are responsive to the rapidly changing environment that is 
today's world. As a result of this business process, we developed a 
comprehensive set of human capital activities for FY 2006, and progress 
toward them is well underway.

    Specific examples of our accomplishments include:
         Human Capital Council: we established the Human 
        Capital Council to represent component interests and provide 
        strategic guidance and support for all human capital priorities 
        and initiatives.
         Technology: we are at the forefront of technology 
        solutions, and are among the first Federal agencies to roll out 
        the eOPF (Official Personnel File), under the auspices of the 
        e-Gov initiative. We have also successfully consolidated 
        duplicative human capital management and tracking systems, 
        including reducing eight legacy payroll systems to one. In 
        addition, we are making significant progress in implementing 
        several new, enterprise-wide systems, including WebTA, EmpowHR 
        and a Learning Management System. We are currently soliciting 
        proposals for an e-Recruitment solution.
         Communications: we centralized human capital 
        communication efforts to ensure employees receive consistent 
        messaging on human capital priorities. We established a new 
        intranet web page for the Chief Human Capital Office. This new 
        site provides detailed information on a variety of program 
        areas within the office and includes the latest information on 
        the development of the MAXHR: program.
         Progress on the PMA: we have made important progress 
        on the human capital elements of the President's Management 
        Agenda, including:
                 Human Capital Strategy: In FY 2004, the 
                Department issued its first Human Capital Strategic 
                Plan (HCSP), which was aligned with the Department's 
                Strategic Plan. The HCSP identified four primary 
                objectives: realizing operational and hiring 
                efficiencies and effectiveness, optimizing shared 
                services, fostering a ``Team DHS'' organizational 
                culture, and implementing robust HC programs. These 
                objectives were based largely on input from the 
                employees, supervisors, and managers across the 
                Department as well as from the HC community. On an 
                annual basis, the Department's HC Council reviews the 
                progress that has been made towards these objectives 
                and identifies very specific goals for the upcoming 
                year, ensuring that the entire line of business is 
                engaged in the realization of these goals. These are 
                not only my goals, and those of the employees of the 
                Office of the Chief Human Capital Officer, they are the 
                shared goals of the entire DHS HC community.
                 Talent: DHS developed a Workforce Plan in FY05 
                and we have conducted a comprehensive analysis of the 
                staffing and competency gaps within our Information 
                Technology (IT) workforce and developed an 
                implementation plan with milestones and performance 
                measures to close those gaps. Currently we are 
                assessing the competencies within our Human Resources 
                (HR) workforce and will develop a plan by the end of 
                June to close targeted competency gaps within that 
                occupation.
                 Leadership and Knowledge Management: DHS is in 
                the process of hiring an SES-level Chief Learning 
                Officer within the CHCO to coordinate and oversee the 
                Department's learning and development programs and 
                infrastructure. In addition, DHS has selected a vendor 
                to develop a common Learning Management System for the 
                Department, which will improve our ability to monitor 
                learning and development activities. The CHCO is also 
                working to design a homeland security professional 
                development program to unify training and readiness 
                throughout the public and private sectors.
                 Performance Culture: DHS expanded deployment 
                of its new performance management program beyond 
                Headquarters to managers and supervisors in the U.S. 
                Coast Guard and Immigration and Customs Enforcement 
                last month--the latest milestone in implementing a 
                performance-based culture throughout the Department.
         Progress on MAXHR: we have made progress in 
        implementing a new, performance-based human capital system, 
        called MAXHR, to drive results across the 
        Department.
                 Performance management: a new MAXHR 
                Performance Management Program has been designed and is 
                now deployed to more than 4,500 employees in 
                headquarters, the U.S. Coast Guard, and Immigration and 
                Customs Enforcement. A cornerstone of the MAXHR 
                Performance Management Program is the link between 
                individual employee performance goals and the strategic 
                goals of their component and the department. Under 
                MAXHR, individual performance goals are 
                identified and documented in the Performance Plan and 
                Appraisal using the MAXHR e-Performance 
                Tool. By the end of 2006, coverage should be expanded 
                to a total of 18,000 employees across the department.
                 Broadband compensation system: the design of 
                the new pay banding system is nearing completion, with 
                proposed occupational clusters and pay bands developed 
                for each cluster. The design is currently being vetted 
                by the Human Capital Council and others.
                 Pay-for-performance: the new pay system is on 
                track for implementation beginning in February 2007. 
                Rollout of the pay system will continue in phases 
                through calendar year 2008.
                 Labor relations/Adverse actions and Appeals: 
                the U.S. District Court for the District of Columbia 
                enjoined DHS from implementing the labor relations 
                provisions of the MAXHR regulations and a 
                new mitigation standard. We remain hopeful that the 
                Court will allow us to move forward with these 
                provisions, which will help us to manage, recognize and 
                reward our employees more effectively, while preserving 
                their fundamental rights and due process.
         Providing high quality and effective training for our 
        staff, supervisors, managers, and executives: we have 
        successfully trained a critical mass of DHS employees.
                 In fiscal year 2005, DHS trained (directly or 
                via distance learning) approximately 3 million people, 
                including DHS employees, firefighters and other 
                federal, state and local government employees.
                 In fiscal year 2006, approximately 8,000 
                supervisors and managers have received performance 
                leadership training to prepare them for the transition 
                to MAXHR, with an additional 6,000 to be 
                trained by October 2006.

Organizational Challenges
    Managing the Department's human capital infrastructure and building 
the MAXHR system are not without challenges. In line with 
the DHS Human Capital Strategic Plan, we continue to forecast and plan 
for the challenges we will face moving forward--and develop innovative 
ways to manage our human capital resources to respond to these issues. 
Some of these key challenges we face include:
         Continuing the integration of a diverse workforce with 
        strong legacy cultures into one, cohesive team with a shared 
        culture
         Recruiting and retaining a high-performing workforce
                 In fiscal year 2005, DHS hired over 11,500 
                employees.In fiscal year 2006 to date, DHS has hired 
                over 3,500 employees.
                 DHS' average performance against the OPM 45-
                day hiring model during FY 2005 was 44 days. (This 
                includes 3 steps: rating, ranking to certificate 
                delivery (1-15 days); selection (2-7 days); and 
                extension of job offer (1-3 days).
         Managing the impending ``Retirement Wave'' at DHS
                 By 2009, 14% of the DHS workforce will be 
                eligible to retire. While the overall number is lower 
                than other agencies, the alarming fact is that 49% of 
                SES level employees and 37% of GS-15 level employees 
                will be eligible to retire. This ``leadership drain'' 
                is an issue that we are addressing in partnership with 
                OPM.
                 Some components have much higher retirement 
                eligibility rates, including the U.S. Secret Service. 
                By 2010, 91% of their SES level employees will be 
                eligible to retire, and 75% of their GS-15s.
                 The average age of DHS employees is 42 vs. the 
                federal average of 46.
         Improving morale and commitment across the 
        organization
         Improving the quality and speed of HR servicing across 
        the Department
         Leveraging technology to improve operational efficiencies and 
        economies of scale in the Human Capital area
                 Implementing enterprise-wide, core HR systems, 
                including EmpowHR, eOPF, WebTA, ePerformance, eLearning 
                and eRecruitment
                 Standardizing business processes where 
                appropriate
                 Maximizing resources through shared service 
                initiatives
                 Eliminating/reducing redundancies
                 Clarifying roles and responsibilities
         Continuing to drive toward creating a high-performance 
        culture that can be a model for the rest of the government

Conclusion
    Although we still have a lot of challenges before us, DHS has made 
real progress in integrating human capital programs and advancing 
innovative, new ways of both managing and supporting the Department's 
most valuable assets--its people. Moving forward, our strategic human 
capital priorities include:
         Playing a key role in achieving the Department's 
        mission objectives
         Driving high-quality HC customer service across the 
        Department
         Implementing MAXHR, focusing on creating a 
        high-performance culture across the Department
         Expanding functional integration and fostering a 
        ``Team DHS'' culture
         Creating efficiencies through shared services and 
        streamlined business processes
         Leveraging technology to improve access, service, 
        speed and efficiency
         Driving innovation and change
         Creating a model CHCO office and healthy relationships 
        with clients and stakeholders, both internal and external
    Thank you for your leadership and your continued support of the 
Department of Homeland Security and its human capital management 
programs. I would be happy to answer any questions you may have.

    Mr. Rogers. Thank you, Mr. Prillaman, for your statement.
    The Chair now recognizes Mr. Dwight Williams, Director of 
the Office of Security for the U.S. Department of Homeland 
Security for any statement he may have.

                  STATEMENT OF DWIGHT WILLIAMS

    Mr. Williams. Chairman Rogers, Congressman Meek and 
distinguished members of the subcommittee, I appreciate the 
opportunity to appear before you today to discuss the process 
and procedures by which the Department of Homeland Security 
issues security clearances.
    My name is Dwight Williams, and I am a career executive 
serving as a chief security officer for the Department. My 
office's two primary responsibilities are to provide security 
policy oversight and guidance to DHS, and to provide direct 
security, support and services to those DHS components without 
a dedicated security office.
    Prior to becoming the DHS chief security officer, I spent 4 
years at U.S. Customs and CPB as a director of the Security 
Programs Division, and more than 20 years with the Washington, 
D.C., Metropolitan Police Department in a variety of 
assignments culminating in the director of the Office of 
Professional Responsibility.
    The Department's mission to lead the National Effort to 
Secure America requires that only trustworthy, reliable 
individuals granted access to classified information are placed 
in sensitive positions. DHS therefore vets all of its employees 
to a level appropriate to their duties and responsibilities. 
Like other executive branch agencies, DHS conducts its vetting 
process in accordance with numerous executive orders and 
regulations. Through the DHS Chief Security Officers Council, 
which is comprised of the CSOs from the major components, as 
well as other key security officials, my office ensures that 
the policy formulation and implementation are consistent with 
these regulations.
    The CSO Council also provides a forum for senior security 
officials to address issues affecting the DHS security 
community, and to develop and implement a common vision and 
strategic direction for security within the Department.
    Prior to giving you an overview of the Department's 
security clearance process, I would like to briefly distinguish 
between Federal employees and contractors.
    DHS vets all contractors with staff-like access to its 
facilities. With respect to contractor clearances, DHS 
participates in the National Industrial Security Program under 
which the Office of Personnel Management conducts background 
investigations in connection with DHS classified contracts. I 
would also like to point out the difference between suitability 
for government employment and eligibility to hold a security 
clearance.
    Suitability, which considers an individual's character, 
reputation and trustworthiness in relation to the specific job 
position, is a requirement for all government employment, 
regardless of whether the employee is eligible to access 
classified information. Although specific suitability standards 
vary according to component mission and position, some factors, 
such as criminal or dishonest conduct, apply across the board.
    Obtaining a security clearance at DHS, as elsewhere in the 
executive branch, involves several steps. First, employees must 
have a need for access. Second, they must successfully undergo 
a comprehensive background investigation appropriate for their 
level of access. With the exception of the Secret Service, CPB, 
ICE and the components serviced by the Office of Security, 
other DHS components are required to use OPM to conduct these 
various background investigations. For components with 
delegated background investigation authority, DHS has 
contracted with several companies to provide this service, 
enabling us to reduce the time it takes to complete 
investigations without compromising quality or 
comprehensiveness.
    Third, the investigation is adjudicated according to the 13 
government-wide adjudicated guidelines. Trained and experienced 
adjudicators review the entire investigative file, take into 
account mitigating information and, in some cases, request a 
follow-up interview before deciding whether to recommend 
denying, granting or revoking a security clearance.
    Finally, employees are briefed on the responsibilities for 
protecting classified information, sign a nondisclosure 
agreement acknowledging those responsibilities and agree to 
abide by all appropriate security requirements.
    Reciprocity, which is mandated by both statute and 
executive order, requires DHS to accept an individual's current 
security clearance without reviewing the file or performing 
additional checks, only limited exceptions to this policy are 
permitted. It is important to emphasize, however, that 
reciprocity does not apply to suitability determinations. New 
suitability determinations can appropriately be made if an 
employee of another agency applies for a position at DHS or if 
an employee changes positions within the Department.
    Over the past 3 years, the demands within the Department 
and across the executive branch for personnel security 
clearances have increased significantly. The Department is 
continuing working to evaluate and assess ways to approve the 
process, such as by applying enhanced continuing evaluation 
measures to our cleared population. Through this and similar 
initiatives, DHS is committed to providing the most effective 
and highest quality personnel security services.
    Thank you, again, Mr. Chairman, for the opportunity to 
speak to you today. And I will be happy to answer any questions 
from you or the other members of the subcommittee.
    [The statement of Mr. Williams follows:]

                Prepared Statement of Dwight M. Williams

Introduction
    Chairman Rogers, Congressman Meek, and distinguished Members of the 
Subcommittee:
    I appreciate the opportunity to discuss the process and procedures 
used by the Department of Homeland Security (DHS) for determining 
employee suitability and issuing security clearances. My name is Dwight 
Williams, and I am a career executive serving as the Chief Security 
Officer (CSO) for the Department. My office's two primary 
responsibilities are to provide (1) security policy oversight and 
guidance to DHS and (2) direct security support and services to DHS 
components without dedicated security offices. Prior to becoming DHS 
CSO, I spent four years at legacy U.S. Customs and Customs and Border 
Protection (CBP) as the Director of the Security Programs Division, and 
more than 20 years with the Washington, D.C. Metropolitan Police 
Department in a variety of assignments culminating as the Director of 
the Office of Professional Responsibility.
    The Department's mission to lead the unified national effort to 
secure America requires that only trustworthy and reliable individuals 
are granted access to classified information or placed in sensitive 
positions. The Department owes this duty to its employees, other 
government agencies, and the American people. As a result, the 
Department imposes the highest personnel security standards for its 
employees and has established first-rate programs to meet these 
standards.

Background
    The efficiency and effectiveness of the personnel security vetting 
processes directly affects each DHS component. The Department 
thoroughly vets all of its employees as well as state, local, and 
private-sector partners who require access to classified information.
    Various executive orders and regulations govern the process by 
which DHS and all other executive branch agencies determine employee 
suitability and grant access to classified information. The DHS Office 
of Security, through the Chief Security Officers' Council--which is 
comprised of the chief security officers of the Department's major 
components as well as other key DHS security officials--ensures that 
policy formulation and implementation are consistent with applicable 
regulations. The CSO Council also provides a forum for these senior DHS 
security officials to address issues affecting the DHS security 
community and to develop and implement a common vision and strategic 
direction for security within the Department.

The Clearance Process
    Prior to discussing the Department's security clearance process, it 
is important to briefly note two distinctions: between federal 
employees and contractors and between suitability for government 
employment and eligibility to hold a security clearance.

Employee vs. Contractor Clearances
    DHS vets all contractors with staff-like access to its facilities. 
With to respect to contractor clearances, DHS is a signatory to and 
participates in the National Industrial Security Program (NISP). The 
NISP was established by Executive Order 12829 to serve as a single, 
integrated program for the protection of classified information 
released to or accessed by industry. The President designated the 
Secretary of Defense as the Executive Agent for the NISP. Until the 
recent transfer of its personnel security investigative mission to the 
Office of Personnel Management (OPM), the Defense Security Service 
(DSS) conducted investigations for personnel security clearances in 
support of DHS classified contracts, grants, or related activities and 
monitored compliance with safeguarding requirements. OPM has now 
largely assumed that responsibility. The Defense Industrial Security 
Clearance Office (DISCO), a field element of DSS, continues to 
adjudicate and issue personnel security clearances to DHS contractors.

Suitability vs. Eligibility
    A suitability determination, which considers an individual's 
character, reputation, and trustworthiness in relation to the specific 
job position, is a requirement for all government employment, 
regardless of whether access to classified information is involved. The 
Office of Security ensures that components meet minimum suitability 
requirements; specific suitability standards beyond those requirements 
are the prerogative of the individual agency, enabling it to tailor 
them to its missions and positions. Although DHS's myriad missions and 
components preclude a single one-size-fits-all approach to suitability, 
some specific factors such as criminal or dishonest conduct apply 
across the board.

Criteria for Establishing Eligibility to Access Classified Information
    As mandated by executive branch agencies, the primary criterion for 
granting access to classified information is an employee's ``need for 
access,'' which is defined as a determination that an employee requires 
access to a particular level of classified information in order to 
perform or assist in a lawful and authorized governmental function..
    In addition to possessing a ``need for access'' on a regular, on-
going basis, employees must be granted a security clearance based upon 
a favorable adjudication of an appropriate background investigation, be 
briefed on their responsibilities for protecting classified 
information, sign a nondisclosure agreement acknowledging those 
responsibilities, and agree to abide by all appropriate security 
requirements.

Background Investigations
    Each DHS employee with a clearance is subject to a comprehensive, 
thorough background investigation, although different clearance levels 
require different levels of review. For example, to be eligible for a 
Top Secret clearance an employee must undergo a Single Scope Background 
Investigation (SSBI). For a Secret clearance and below, the scope of 
the investigation varies, but includes various database checks, 
criminal history record checks, and other sources as necessary to cover 
specific areas of an individual's background. In addition to the 
initial investigation, employees with clearances are required to submit 
to periodic reinvestigations. (Periodic reinvestigations are conducted 
every 5 years for Top Secret and 10 years for Secret clearances.) With 
the exception of the Secret Service, CBP, Immigration and Customs 
Enforcement (ICE), and the DHS components serviced by the Office of 
Security, all other components are required to use OPM to conduct these 
various background investigations for their employees. The Secret 
Service uses its own employees to perform these investigations while 
CBP, ICE, and the OS have contracted with several companies to provide 
this investigative service. Process improvements and other management 
efficiencies have enabled my office to reduce the amount of time it 
takes to complete investigations without compromising quality and 
comprehensiveness.

Security Clearance Adjudication
    The DHS component security offices plus the Office of Security 
adjudicate background investigations for the employees they service 
according to the 13 government-wide adjudicative guidelines listed in 
32 CFR Part 147. The adjudication process is designed to allow the 
careful weighing of these guidelines known as the ``whole person 
concept.'' In other words, adjudicators review the investigative file, 
take into account mitigating information, and in some cases request a 
follow-up interview before deciding whether to recommend denying, 
granting, or revoking a security clearance. Adjudicative decisions are, 
to a certain extent, unavoidably subjective; however, decisions are 
based on the interpretation of the adjudicative guidelines noted above. 
These standards include an assessment of the individual's allegiance to 
the United States, personal conduct, involvement with drugs and 
alcohol, and financial stability. My office has instituted several 
measures to help ensure adjudicative quality and consistency. 
Adjudicators receive both in-house and external training, and are 
mentored by senior personnel security specialists. In addition, DHS has 
established adjudicator roundtables to share information among 
components. Finally, the executive branch is currently reviewing the 
adjudicative process and actions of 23 agencies to identify training 
gaps or other variances that could adversely affect determinations.

Reciprocity
    The principle of reciprocity has been mandatory for executive 
branch agencies for more than a decade. The Intelligence Reform and 
Terrorism Prevention Act recently reiterated and expanded upon this 
requirement. Reciprocity mandates acceptance of equivalent personnel 
security clearances and accesses across federal agencies. In other 
words, if a prospective employee holds a current clearance as a result 
of previous military or other government service, the Department is 
required to accept this clearance without additional investigation. The 
reciprocity principle also governs personnel transfers among DHS 
components. In fact, recently issued executive agency-wide guidance 
prohibits agencies from requesting that individuals with existing 
security clearances complete a new security questionnaire; reviewing 
the existing questionnaire; reviewing the existing background 
investigation for the individual; or initiating any new investigative 
checks. Only limited exceptions to this policy are permitted, such as 
clearances granted by waiver or on a temporary or interim basis; when 
an individual is being considered for access to a program of a 
sensitivity level different from that of the existing program; or if 
there is known or existing derogatory information. It is important to 
emphasize that reciprocity does not apply to suitability 
determinations. As mentioned above, agencies are permitted to match 
specific suitability standards to their missions and positions. As a 
result, new suitability determinations can appropriately be made if an 
employee of another agency applies for a position at DHS (or if a DHS 
employee changes positions within the Department).

Conclusion
    Over the past three years, the demands within the Department (and 
across the executive branch) for personnel security clearances have 
increased significantly. Through internal DHS coordination initiated by 
my office as well via the inter-agency Security Clearance Oversight 
Group, the Department is continually working to evaluate and assess 
ways to improve the process of conducting and adjudicating background 
investigations and granting security clearances. For example, we are 
exploring ways to apply enhanced continuing evaluation measures to our 
cleared population. To this end, the Department is conducting pilot 
testing of the Defense Department's Automated Continuing Evaluation 
System (ACES). ACES provides automated database checks on cleared 
individuals between their regularly scheduled periodic 
reinvestigations. Through this and similar initiatives, DHS is 
committed to providing the most efficient and highest-quality personnel 
security services.
    Thank you again, Mr. Chairman, for the opportunity to speak to you 
today. I will be happy to answer any questions from you or the other 
Members of the Subcommittee.

    Mr. Rogers. Thank you thank you very much, Mr. Williams.
    The Chair will now recognize Ms. Kathy Dillaman, Associate 
Director for the Federal Investigations Processing Center at 
the Office of Personnel Management.
    Welcome, Ms. Dillaman. We look forward to your statement.

                 STATEMENT OF KATHY L. DILLAMAN

    Ms. Dillaman. Mr. Chairman, and members of the 
subcommittee, thank you for the opportunity to testify before 
you today on the services the Office of Personnel Management 
(OPM) provides to the Department of Homeland Security (DHS) in 
support of their personnel security clearance process and the 
DHS' Human Capital Strategic Plan.
    OPM's mission is to ensure the Federal Government has an 
effective civilian workforce. As part of this mission, OPM is 
responsible for conducting different levels of background 
investigations for the various types of positions in the 
Federal Government to ensure the individuals meet the 
Government's suitability and security clearance requirements.
    At OPM, the division responsible for conducting background 
investigations is our Federal Investigative Services Division, 
headquartered in Boyers, Pennsylvania. This division supports 
over a hundred Federal agencies with thousands of security 
offices worldwide. Our automated processing systems and vast 
network of field investigators handle a high volume of 
investigations. In fact, we processed over 1.4 million 
investigations last year.
    OPM currently conducts 90 percent of the background 
investigations for the Federal Government. The remaining 
investigations are conducted by agencies who assume this 
responsibility pursuant to law or through a delegation approved 
by the Office of Management and Budget. OPM and DHS share 
responsibility for the background investigations required by 
DHS. Under an OMB approved delegation, DHS conducts background 
investigations on specific positions within the agency. For 
other departments or positions within DHS, OPM conducts various 
levels of investigation. All levels or investigation include 
searches of national record repositories. The minimum level 
includes letters of inquiry to employers, local police 
departments, schools and personal references to confirm the 
subject's background claims and to obtain information on the 
person's suitability for employment. More extensive 
investigations are conducted on DHS employees who require Top 
Secret Security clearances or are in positions of higher risk 
to Public Trust. These investigations include personal 
interviews conducted by a field agent with the subject of the 
investigation and personal sources, as well as record checks of 
local police departments and other State or local record 
repositories. OPM conducted over 700 minimum-level 
investigations, and over 18,000 extensive investigations for 
DHS for the last fiscal year.
    Investigators are instructed to identify and interview the 
best sources available at each location with extensive 
knowledge of the subject's background and character. The 
investigations conducted by OPM are designated to identify 
issues that may raise a concern about the subject's suitability 
for employment or eligibility for a security clearance.
    The Office of Personnel Management works with agencies to 
implement the Human Capital Initiative of the President's 
Management Agenda. We help agencies align human capital 
management strategies with mission, goals, and organizational 
objectives and integrate human capital planning into agency 
strategic and performance plans.
    The Homeland Security Act of 2002 authorized the Secretary 
of Homeland Security and the Director of OPM to develop a new 
human resources management system for the Department, providing 
specific flexibilities in the areas of pay, performance 
management, classification, disciplinary matters, labor-
management relations and appeals. Flexibilities granted to DHS 
comprise the largest transformation of civil service 
regulations in 40 years.
    MAX HR, as the new human resource management system is 
designated, represents a major organizational and cultural 
change for DHS employees, and DHS has invested heavily in 
training and communication. To date, DHS has trained over 7,700 
managers and supervisors on the new performance management 
system. The training focused on establishing clear performance 
expectations aligned with organizational goals that are 
cascaded throughout the organization; creating a stronger link 
between performance and pay; promoting a continuous learning 
environment; creating new opportunities for leadership 
development; and enabling the Department to continue to attract 
the best and brightest, to reduce skills gaps in mission-
critical occupations, and to sustain and improve diversity.
    OPM will continue to work with DHS and support the 
Department every step along the way to ensure successful 
implementation of MAX HR. As we do so, we remain ever mindful 
of our Government-wide responsibility to ensure compliance with 
merit system principles and to hold agencies accountable for 
their human capital practices. That is why our new Strategic 
Plan calls for OPM to conduct an independent program evaluation 
of the Department's new HR system with the assessment beginning 
this fiscal year and extending into fiscal year 2007.
    Mr. Chairman, I would like to note that I am joined this 
morning by Marta Perez, OPM's Associate Director for Human 
Capital Leadership and Merit Systems Accountability Division 
who will be available to answer any questions the subcommittee 
may have for OPM on human capital issues at DHS.
    That concludes my remarks. I am happy to answer any 
questions you may have.
    [The statement of Ms. Dillaman follows:]

                Prepared Statement of Kathy L. Dillaman

Background
    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to testify before you today on the services the Office of 
Personnel Management (OPM) provides to the Department of Homeland 
Security (DHS) in support of their personnel security clearance process 
and the DHS? Human Capital Strategic Plan.
    OPM's mission is to ensure the Federal Government has an effective 
civilian workforce. As part of this mission OPM is responsible for 
conducting different levels of background investigations for the 
various types of positions in the Federal Government to ensure the 
individuals meet the Government's suitability and security clearance 
requirements. The investigations range from the minimum level of 
investigation required for low risk public trust positions or positions 
that require a Confidential or Secret clearance, to extensive field 
investigations for high risk public trust positions or those that 
require a Top Secret clearance.
    At OPM, the division responsible for conducting background 
investigations is our Federal Investigative Services Division (FISD), 
headquartered in Boyers, Pennsylvania. This division supports over 100 
Federal agencies with thousands of security offices worldwide. Its 
automated processing systems and vast network of field investigators 
handle a high volume of cases. In fact, we processed over 1.4 million 
investigations last year.
    Currently, OPM conducts 90% of the background investigations for 
the Federal Government. The remaining investigations are conducted by 
agencies who assume this responsibility pursuant to law or through a 
delegation approved by the Office of Management and Budget (OMB).

Background Investigations for the Department of Homeland Security
    OPM and DHS share responsibility for the background investigations 
required by DHS. Under an OMB approved delegation, DHS conducts 
background investigations on specific positions within the agency. For 
example, Customs and Border Protection and the U.S. Secret Service 
conduct investigations on positions within their agencies. DHS also 
conducts investigations that are required by regulation for such 
positions as airport workers who need access to secure areas of the 
airport, HAZMAT drivers, and, more recently, port workers operating at 
major U.S. ports. OPM has no role in these investigations.
    For other departments or positions within DHS, OPM conducts various 
levels of investigation ranging from the minimum National Agency Checks 
with Inquiries (NACI) investigation to the most extensive field 
investigation, the Single-Scope Background Investigation (SBI). All 
levels of investigation include searches of national record 
repositories, such as the national fingerprint-based criminal history 
check through the FBI, a search of the FBI and DoD investigative 
indexes, review of military records, credit checks, birth verification, 
and a check of immigration and naturalization records. The minimum 
level includes letters of inquiry to employers, local police 
departments, schools, and personal references to confirm the subject's 
background claims and to obtain information on the person's suitability 
for employment. More extensive investigations are conducted on DHS 
employees who require Top Secret security clearances or are in 
positions of higher risk to Public Trust. These investigations include 
personal interviews conducted by a field agent with the subject of the 
investigation and personal sources at previous employment locations, 
residences and educational institutions. Agents in the field also 
conduct record checks of local police departments and other state or 
local record repositories. OPM conducted approximately 700 minimum 
level investigations and over 18,000 more extensive investigations for 
DHS so far this fiscal year.
    Investigators are instructed to identify and interview the best 
sources available at each location with extensive knowledge of the 
subject's background and character.
    The investigations conducted by OPM routinely identify individuals 
with unsatisfactory employment records, criminal records, chronic 
financial problems, drug or alcohol problems, or a history of violent 
behavior.
    From April 1, 2005, through March 31, 2006, OPM conducted over 
72,000 investigations for DHS.

DHS' Human Capital Strategic Plan
    The Office of Personnel Management works with agencies to implement 
the Human Capital initiative of the President's Management Agenda. We 
help agencies align human capital management strategies with mission, 
goals, and organizational objectives and integrate human capital 
planning into agency strategic and performance plans.
    DHS' Human Capital Strategic Plan addresses the Department's human 
resource management challenges and provides a sound foundation for 
managing a workforce of some 180,000 employees. It also establishes the 
framework for the Department's human resources modernization effort, 
known as MAX HR.
    The Homeland Security Act of 2002 authorized the Secretary of 
Homeland Security and the Director of OPM to develop a new human 
resources management system for the Department, providing specific 
flexibilities in the areas of pay, performance management, 
classification, disciplinary matters, labor-management relations, and 
appeals. Flexibilities granted to DHS comprise the largest 
transformation of civil service regulations in 40 years.
    MAX HR began in early 2003 with the formation of a joint design 
team comprised of agency, OPM, and labor union representatives. A 
comprehensive two-year design and outreach effort culminated in the 
February 1, 2005, publication of final regulations for the new human 
resource management system. Since February 2005, detailed 
implementation plans have been developed for each of the six human 
capital areas. Certain labor relations, adverse actions, and appeals 
provisions of the MAX HR program have been challenged in a lawsuit 
filed by a consortium of DHS labor unions. On August 12, 2005, the U.S. 
District Court for the District of Columbia enjoined DHS from 
implementing the labor relations portion of the new regulations, as 
well as a new mitigation standard established by the regulations. The 
case was recently argued on appeal before the U.S. Court of Appeals for 
the DC Circuit.
    Pay and performance management provisions of the new system are not 
covered by the unions' lawsuit and continue to move forward. The 
performance management program under MAXHR has been deployed 
to non-bargaining unit employees in headquarters, supervisors and 
managers in Immigration and Customs Enforcement (ICE), and the U.S. 
Coast Guard. In July of this year, coverage will be expanded to 
supervisors and managers in the Federal Law Enforcement Training Center 
(FLETC). By the fall, supervisors and managers in the Customs and 
Border Protection and U.S. Citizenship and Immigration Services (USCIS) 
will be covered as will employees in the U.S. Secret Service. Finally, 
supervisors and managers in the Federal Emergency Management Agency 
(FEMA) will be covered in spring of 2007.
    MAX HR represents a major organizational and cultural change for 
DHS employees, and DHS has invested heavily in training and 
communication. To date, DHS has trained over 7,700 managers and 
supervisors on the new performance management system. The training 
focuses on:
         establishing clear performance expectations aligned 
        with organizational goals that are cascaded throughout the 
        organization;
         creating a stronger link between performance and pay;
         promoting a continuous learning environment;
         creating new opportunities for leadership development; 
        and
         enabling the Department to continue to attract the 
        best and brightest, to reduce skills gaps in mission-critical 
        occupations, and to sustain and improve diversity.
    OPM will continue to work with DHS and support the Department every 
step along the way to ensure successful implementation of MAX HR. As we 
do so, we remain ever-mindful of our government-wide responsibility to 
ensure compliance with merit system principles and to hold agencies 
accountable for their human capital practices. That is why our new 
Strategic Plan calls for OPM to conduct an independent program 
evaluation of the Department's new HR system with the assessment 
beginning this fiscal year and extending into FY2007.
    Mr. Chairman, this concludes my remarks. I am happy to answer any 
questions you or the members of the Subcommittee may have.

    Mr. Rogers. I want to thank all of you for your statements.
    As was represented earlier in opening statements by me and 
the Ranking Member, this hearing was announced at the request 
of the Ranking Member a couple of months ago. He recognized, as 
did I, that we have a very real problem in DHS with 
recruitment, retention, and morale, and it is disturbing. That 
was the purpose for this hearing being called. And we would 
like to--I know he and I have talked extensively about this--we 
would like to keep the focus of this hearing on that. Although, 
as you are all aware, since this hearing was scheduled, we have 
had some really noteworthy examples of security problems in 
DHS. I have referenced them in my opening statement--Doyle case 
and the Shirlington Limousine case, and I am sure you will have 
some questions about that. But my threshold area of inquiry has 
to do with recruitment and retention, particularly at the upper 
level positions.
    You heard me say some of the positions where we are having 
problems retaining folks. A few others where we have vacancies 
right now are the Undersecretary for Management, the 
Undersecretary for Science and Technology, the Assistant 
Secretary for Cyber Security, the Chief Financial Officer, the 
Privacy Officer, the Commissioner for Customs and Border 
Protection, the Assistant Secretary for Legislative and 
Intergovernmental Affairs, and the Chief Information Officer in 
Immigration and Customs Enforcement.
    I read all of your statements. I didn't see anywhere any 
answers as to why we have this problem. Are we not paying 
enough? Are we working people too hard? Somebody tell me in 
plain language, why it is happening and what we can do I am 
also on the Armed Services Committee and DHS runs a close 
second to DOD's ability to give bureaucratese. I want to speak 
plainly about, how we got here, and what we do to get out of 
this situation. And let's start left to right and just hear 
your thoughts in plain language about how we got here and what 
we can do to get out of this hole.
    Mr. Prillaman.
    Mr. Prillaman. Thank you.
    DHS is a very interesting organization. Before I came back 
to the government, I was a management consultant. I worked with 
a lot of corporations and government agencies and other places, 
and recruitment and retention in the executive branch is always 
hard in any organization.
    Mr. Rogers. Why?
    Mr. Prillaman. Well, it is mostly hard if you have an 
organization in transition; it is hard to attract and keep 
people in an organization that is going through the kind of 
disruption that has occurred at DHS because of the amalgamation 
3 years ago. As I said earlier, we are only 3 years into this.
    What I see, as a relative newcomer of DHS, is a lot of very 
tired people. I think there are rank-and-file employees who 
were charged up. They had high energy. They had their 
adrenaline pumping. After 9/11, they were highly motivated. And 
they are tired. They worked very hard the last 3 years. Janet 
Hale, the Undersecretary of Management, is leaving after 3 
difficult years of trying to pull that Department together.
    The Department is trying to fill vacancies, and I think we 
are filling them with very talented people. There is a new CFO, 
David Norquist, who is pending confirmation. Ralph Basham, as 
you know, the head of Secret Service, has been selected to be 
the commissioner of CPB; he is pending confirmation. Dave 
Paulison, who is acting right now as the head of FEMA, is 
pending confirmation.
    Mr. Rogers. And I would make the point that that position 
was offered to three people who turned it down before Dave 
Paulison came back and said, I will take it. It is hard to get 
people to take these jobs. Why? Go ahead, I am sorry.
    Mr. Prillaman. Well, it is a very good question. It is a 
hard organization to work in. DHS has a wonderful mission that 
I think attracts a great many people to come to it. Why I came 
to DHS is the mission of the organization, the opportunity to 
make a difference; I think that is what attracts a lot of 
people in. But it is a hard organization because the 
infrastructure is not yet complete; it is still feeling its way 
in terms of the amalgamation.
    My sense is that DHS will do much better during the next 3 
years than it has done during the last 3 years. As people are 
now becoming--my sense anyway, again, as a consultant, coming 
and looking at the organization initially, I think people are 
beginning to become stabilized. The organization is beginning 
to become more stable. The bad press that DHS has gotten during 
the course of the last year post-Katrina has not made it a more 
attractive place for many people.
    The kind of people you will get to come to DHS are people 
who want a challenge, that are willing to come in and take on 
an organization that needs to have significant additional 
change made. People who are maintenance managers won't be 
interested because it is not comfortable. But if you want 
people to come in who will make a difference who are willing to 
take a challenge, I think that is the kind of talent we are 
going to find for our positions.
    Mr. Rogers. I can see my time is expired.
    The Chair now recognizes the Ranking Member, Mr. Meek, for 
any questions he may have.
    Mr. Meek. Thank you very much, Mr. Chairman.
    And I can tell you, there are a number of issues, Mr. 
Prillaman, that we have to deal with, not only here in this 
committee. One good step is that this committee has moved from 
a select committee in the last Congress to a standing 
committee, and there was bipartisan support for it to happen. 
And hopefully, as we educate ourselves as Members of Congress, 
just not stepping in and out of the Department of Homeland 
Security functions, I think the American people will be better 
served in the borders and everything, the airports, you name 
it, the mission will become a lot stronger. We know that many 
of you signed up for defending the country. It is almost like 
enlisting and being deployed in some instances.
    But I wanted to ask you a question about MAX HR. As you 
know, in my opening statement--and I am glad the Chairman made 
it abundantly clear that we will have a hearing on some of the 
other issues that are facing the Department of Homeland 
Security and this Congress, because we have the obligation of 
oversight here, so we have to ask the uncomfortable questions, 
but hopefully, the outcome will bring about some change.
    You said in your statement--I had an opportunity to read 
all of your statements--but Mr. Prillaman, you mentioned, on 
page 4 and page 5, you were talking about the revolution of 
this MAX HR, and I think that it is important. You mention 
something as it relates to training to improve the skills and 
communications with employees, making assignments and setting 
performance objectives. And you mentioned this Human Capital 
Council. Can you please elaborate very quickly on who sits on 
that Human Capital Council?
    Mr. Prillaman. The human capital representatives from all 
the various components around DHS. There are seven human 
capital offices that provide day-to-day services, plus many of 
the components who don't have their own human capital office 
have human capital representatives. And it is a body of 18 to 
20 people there, and we meet on a regular basis, at least every 
2 weeks.
    Mr. Meek. I am sorry, because my time is limited, I am 
going to cut in and out, but you will keep up; you are doing 
good.
    Human capital, 20 representatives, are there any rank-and-
file folks a part of this council?
    Mr. Prillaman. No, they are not part of the council.
    Mr. Meek. Okay. I know the Chairman said that he is 
concerned with the managers, and the reason why we can't keep 
managers is that they feel that they have a lack of training. 
When I talked about the letters--and I know that you are going 
towards the training issue. When I talked about the letters 
before the hearing--that I have right here for the perusal of 
anyone that wants to see them--saying thank you for having the 
hearing because this is a major problem, and we are trying to 
work through a--I would just say a human resources issue at the 
Department of Homeland Security and we don't have the folks 
that account for the over a hundred-plus thousand employees at 
the Department of Homeland Security, and there is a council 
that is making some decisions and implementing plans on how we 
are going to build morale, and they are not represented there, 
I think really sets a major problem and maybe something the 
Department wants to look into and re-evaluate because it may be 
a problem, may be uncomfortable for someone to be sitting there 
at the table and ask a question saying, well, you know, I know 
we are getting all this training and we have 7,700 individuals 
and managers that are trained, but for those of us that you are 
trying to help to keep us on, this is how we feel, and this is 
the reason why this won't work or this could work better. And I 
am pretty sure that all the Department folks are willing, no 
matter if they punch in and punch out, they sign in or sign out 
or they come in at 10:30 in the morning--if you know what I am 
talking about--and leave at 4, they all jointly believe in the 
mission of the Department of Homeland Security.
    So it may be helpful as you look at this MAX HR that I have 
a lot of questions about--the chairman and I serve on Armed 
Services. I just watched the Department of Defense go through a 
major court issue with their similar program because of the 
application of it and the unfairness of it. So when we talk 
about attrition, I think that we have to talk about the whole 
management question.
    I want to ask you also another question. You have been on 
for eight months in your capacity; am I correct?
    Mr. Prillaman. Yes.
    Mr. Meek. Your predecessor, how long?
    Mr. Prillaman. 3 years.
    Mr. Meek. So from the beginning, you are the second person. 
That is good. I hope you are able to stay to see the 
implementation of the program, maybe not MAX HR--I mean, I have 
my personal opinions about that--but making sure that we cut 
down on attrition.
    One last question, 7,700 people train, managers, how many 
of those individuals still with the Department? Have you all 
looked at that? Training in MAX HR.
    Mr. Prillaman. I don't have that exact number, but I would 
say 95 percent at least would still be with the Department.
    Mr. Meek. When did the training start?
    Mr. Prillaman. It started last September.
    Mr. Meek. So it is fairly new.
    Mr. Prillaman. Yes.
    Mr. Meek. I will wait until the second round of questions.
    Mr. Chairman, thank you, I yield back.
    Mr. Rogers. Thank you.
    The Chair now recognizes the chairman of the full 
committee, Mr. King, for any questions he may have.
    Mr. King. Thank you, Chairman Rogers.
    And I will follow with your request that we deal more with 
the practices, procedures, and policies than with actual 
details of individual cases. But I would like to refer to the 
Doyle and the Shirlington cases, not so much the detail of 
those cases per se but what they say about the Department 
itself. My concern is that there is not a full appreciation of 
the unique role, of the unique mission that the Department of 
Homeland Security has. For instance, when an employee is 
screened for a security clearance, unlike the FBI and the CIA, 
my understanding is that there are no polygraph tests given at 
the Department of Homeland Security. And for instance, a man 
like Doyle who in his previous employment--reports are he was 
asked to leave because of an experience of using pornography in 
the work site. Now maybe that in and of itself would not keep 
him from getting a subsequent job, but we are talking about 
somebody with a security clearance. It seems to me that that is 
the type of thing that should be looked into with great detail, 
and I am wondering how something like that would not have been 
found. If he had been given a polygraph test, is that something 
that would have come up? Again, because to me primarily, not to 
address the personal nature or the actual nature of what he 
supposedly did, but given how in his position he could be 
vulnerable to blackmail, susceptible to blackmail, would the 
FBI or CIA have conducted a polygraph? And if they would have 
done that, why doesn't Homeland Security since you are dealing 
with issues of life and death?
    Similarly with the limousine case, just using that as 
another example, from what I understand, there were serious 
problems with previous contracts that the company had. The 
owner of the company has a criminal record, and yet the company 
is given access to driving all but the two highest officials in 
the Department of Homeland Security. So it seems to me there is 
not enough of an appreciation of the unique security demands 
that should be on employees at the Department of Homeland 
Security. I mean, not to minimize any other Federal employee, 
but you are talking about a Department which is entrusted with 
preserving the lives of millions of Americans. It seems to me 
you should have higher standards as far as how you give 
somebody a clearance, how you give them access, whether they 
are employees or even contractors, where you have people with 
criminal records driving around and having access and listening 
to conversations of high-ranking DHS officials. To me, it just, 
unless you can convince me otherwise, shows there is not a real 
appreciation of just how serious this job is and the standards 
that employees, certainly those given security clearances, 
should be held to. And I really would ask any of the three of 
you to try to respond to that.
    Mr. Williams. Well, briefly, I think discussing 
contractors, we do investigate contractors with staff-like 
access, and that is access similar to what I have or any other 
employee. That would not include necessarily the owner of a 
company who may not have any real access to DHS or the compound 
or the people involved. Traditionally--
    Mr. King. If I could just interrupt you there for a moment, 
please. Even if the owner himself does not have access, if he 
is a criminal, it would, to me, be reflected in the type of 
people he would be hiring and the type of operation he may be 
running, or the type of person who himself could be susceptible 
to being reached by someone who is trying to obtain 
information. So I would ask you, why don't you look into the 
background of the owners?
    Mr. Williams. Traditionally, I don't think that has been 
done. I don't know that we do have the authorities to do that--
    Mr. King. Again, if I could interrupt you there. Let's 
assume that everything you have done up until now has been done 
by the book. Should the book be changed? Should you in the 
future look into--and if you need authority, should you ask us 
to give you that authority?
    Mr. Williams. I am not sure if there is a real security 
concern. Again, I think everything we do we take a measure of 
risk and we have to decide how far we want to take the 
security. For instance, if J.W. Marriott provides the cafeteria 
employees at the DHS lunch hall, do we have to do background 
investigations on the board of directors? I don't know. 
Traditionally that has not been the road that we have taken 
with security. Again, it has pretty much been focused on those 
with access to the specific individuals.
    Mr. King. Well, if I could just say, as Chairman of the 
full committee--and I think there is concurrence on both sides 
of the aisle--I think the standards should be raised. To me, 
there is somewhat of a difference between a cafeteria employee 
and someone who is driving the highest-ranking officials of the 
Department around from meeting to meeting, knowing whom they 
are meeting with, knowing what their agenda is, listening to 
their conversations in the car. That to me is a little 
different from persons working behind the counter in the 
cafeteria. And to me, this is not rocket science. I mean, cab 
drivers can probably bring down governments if they kept track 
of what Officials are doing. If you have someone who knows the 
schedules--I mean, if they are told who they are driving, where 
they are driving them to, where and who they are going to be 
meeting with, they hear conversations on the phone--to me, this 
is something that should be looked at. And I wouldn't 
trivialize it by saying, well, traditionally, we haven't done 
it. I mean, we are talking about, as we see in this case now, 
this involves kickbacks, gambling, prostitution, and we are 
talking about people who drove highest--all but the two 
highest-ranking members of the Department around. To me, that 
is a clear security breach. And to me, the fact that it was 
always done this way in the past is no reason it should be done 
this way in the future. And I recommend to the Chairman and the 
Ranking Member of both sides of the aisle that we just take a 
new perspective and a new look at what security procedures 
should be and what security attitudes should be at the 
Department.
    Mr. Rogers. I thank the Chairman.
    And I do assure him and everybody today, we are going to 
have a hearing on this Shirlington Limousine case and talk 
broadly, not only about the case, but broadly about our 
background checks, our procurement policies and things that we 
need to do better, because we certainly can do a lot better 
than what we have seen in recent weeks with that case as well 
as with the Brian Doyle case.
    With that, I am now proud to recognize the Ranking Member 
of the full committee, Mr. Thompson, for any questions he may 
have.
    Mr. Thompson. Thank you very much.
    Mr. Prillaman, I am told that we have seven entities within 
DHS that have their own personnel systems. Is that reasonably 
correct?
    Mr. Prillaman. Seven entities that have their own personnel 
offices that provide services.
    Mr. Thompson. So in your position how much authority from 
the human capital side do you have over those departments?
    Mr. Prillaman. I have authority to oversee their work in 
terms of evaluating the quality of the work that is done, and I 
have the authority to write policies that could have 
departmentwide application, but I did not have day-to-day 
supervision of those departments. We have a dotted line 
relationship in DHS from the individual human resources office 
to the CHCO as opposed to a hard line.
    Mr. Thompson. So those seven agencies do their own thing.
    Mr. Prillaman. They operate pretty independently.
    Mr. Thompson. Yet they are within DHS.
    Mr. Prillaman. They are.
    Mr. Thompson. I guess the next question is have you 
recommended change in that?
    Mr. Prillaman. No, I have not.
    Mr. Thompson. Do you plan to recommend change in that? You 
have got seven chiefs out there.
    Mr. Prillaman. There are seven chiefs, but not seven 
unguided missiles. The Human Capital Council I mentioned a 
while agoSec. 
    Mr. Thompson. We are trying to put an organization 
together, and I can't see seven different personnel chiefs 
accountable to no one really making the organization as robust 
as we want. But I appreciate your candor on it.
    Ms. Dillaman, explain to me the limit to which you deal 
with security clearances or anything and whether or not you 
contract that process out at all.
    Ms. Dillaman. Yes, sir. First of all, we provide the 
background investigation, which is one element of the agency's 
security clearance process. OPM's configuration, I have six 
companies under contract who provide investigative services, 
plus I have a broad base of Federal employees who also provide 
the same services. In total, I have 9,000 resources devoted to 
the background investigations program.
    The Department of Homeland Security would identify the 
individuals who require a background investigation, and then, 
depending on whether it was a position where they have a 
delegation to conduct their own or OPM provides the 
investigative service, the product is exactly the same. The 
investigation, if OPM is going to conduct it, would be 
requested by my agency. We would conduct the required level, 
and there are different levels of investigation depending on 
the level of clearance or access.
    Mr. Thompson. Thank you. So if a guy--not a guy, a person 
had a previous sexual problem, as we know, would the contractor 
have pick it up, or would you have picked it up?
    Ms. Dillaman. If it were an investigation that included 
field coverage, an agent would conduct interviews of the 
individuals who had close association with the subject at 
places of employment, or the residence.
    Mr. Thompson. If a person were being considered for 
employment, and your shop would do it or contract it out?
    Ms. Dillaman. My shop would do it. I may use a contracted 
agency, but that agent would be reporting to OPM, cleared and 
trained the same as his Federal counterpart.
    Mr. Thompson. So the reference that Chairman King made 
about the case we know so much about, how could we miss someone 
with a history of felonies?
    Ms. Dillaman. Sir, with a history of felonies, the law 
enforcement records checks include a check of the FBI's 
criminal base records. They also include records checks of 
State and local law enforcement agencies wherever the subject 
lived, worked or went to school during the coverage period of 
the investigation.
    I would like to say felonies could not be missed because it 
is a biometric check of the FBI if the record is on file with 
the FBI. With all the investigations OPM conducts, almost 10 
percent of the background investigations identify a criminal 
history record on file with the FBI for the subject.
    Mr. Thompson. So if you identified for the Shirlington 
Limousine contract--or you wouldn't look at that?
    Ms. Dillaman. If we were conducting the background 
investigation on individuals who were employed under that 
contract, then every investigation we would do would include a 
fingerprint-based criminal history check, and the results would 
be provided to the adjudicating agency.
    Mr. Thompson. Did you do one on the owner of the 
Shirlington Limousine contract?
    Ms. Dillaman. I have no idea, sir.
    Mr. Thompson. Can you check for the committee to see 
whether or not you did one and report back to us?
    Ms. Dillaman. Yes, sir.
    [The information follows:]
    Ms. Dillaman. Upon further review of our files, we were unable to 
locate a record on Christopher D. Baker, owner of Shirlington 
Limousine, in our system. It does not appear that the Department of 
Homeland Security requested an investigation of this individual.
    Mr. Thompson. One more question, Mr. Chairman.
    Mr. Williams, I have a very colorful chart--are you the 
author of this chart, or is that Mr. Prillaman--which kind of 
lists the major vacancies within DHS.
    Staff created it. The red indicates major vacancies within 
DHS, and what I am concerned about is the inordinate amount of 
red associated with major vacancies within DHS. How do you 
propose to reduce the number of vacancies within DHS from a 
human capital standpoint?
    Mr. Prillaman. What concerns me, Congressman, in part it 
looks like Secretary Chertoff and Deputy Secretary Jackson's 
box is red, too, which worries me.
    Mr. Thompson. I am glad you asked because the Labor 
Relations Board, as you know, is vacant. The Office of Deputy 
Secretary, that person just resigned May 1, the Homeland 
Security Operations Center person resigned March 2. The Office 
of Chief Privacy Officer, that person resigned September 28 of 
last year and was replaced by an acting person who is still 
acting to this date. And Pam Turner, who we already know, head 
of leg affairs, resigned March 4th. So it kinds of speaks for 
itself. We have a lot of people leaving, gone, have not been 
replaced.
    Mr. Chairman, I would like to have unanimous consent to 
enter this document into the record.
    Mr. Rogers. Without objection, it is admitted.
    Mr. Thompson. I yield back.
    Mr. Rogers. I thank the gentleman.
    The Chair now recognizes the gentleman, my friend from New 
Jersey, who has no accent, as you will all learn shortly, Mr. 
Pascrell.
    Mr. Pascrell. Even in New Jersey we have an accent.
    Good morning. Thank you for your service to your country. 
That is the good part.
    Let me get into this. I want the rank-and-file members of 
the Department of Homeland Security to know that we on the 
committee understand their problems, and we are going to work 
to improve upon the issues.
    Having said that, we have not had oversight of the Homeland 
Security Department until this committee sought to move in that 
direction, so God knows what went on before this was an act of 
committee. So you have got a lot of problems. You are doing 
your best to face those problems.
    You have vacancies at the top, you have vacancies at Newark 
Airport, TSA has a problem getting people and keeping people 
there, and this happens all across the country. We have 
problems with some of your contracts. Although we are going to 
have a separate hearing on Shirlington Limousine, we all know 
that at this point Shirlington Limousine and Transportation, 
Inc., holds a $21.2 million contract with the DHS. Its owner 
Christopher Baker has a rap sheet that runs 62 pages long. So, 
Ms. Dillaman, you would have to trip over that. It is very easy 
to trip over his record, this outstanding American citizen. 
Among the convictions on Baker's record are attempted petty 
larceny, attempted robbery, possession of drug paraphernalia, 
and receiving stolen property.
    It is completely bewildering to me that anyone who has this 
kind of a rap sheet could ever get a penny from the Department 
of Homeland Security. You would expect to see the contractor 
possibly on a list of excluded parties, meaning that they might 
be temporarily suspended or even permanently dropped or 
debarred from doing business with the Federal Government.
    Now, we sent a letter to Homeland Security. We sent that 
letter on May 11th, Mr. Chairman, Mr. Ranking Member, and we 
asked some questions about this particular company. And I want 
to point out something about the answers that we got because 
this is serious business, very serious business. If you want us 
to have oversight and this is the responsibility of the 
Congress of the United States, then we sure as heck better have 
oversight. So whatever happens in DHS that goes wrong and we 
don't correct it, we are just as responsible. That is my 
feeling, that is my attitude, and nothing less is acceptable.
    We asked a question about would they verify this company 
that was hired; in fact, we pointed specifically to part of the 
contract which was let in April of 04 for $3.8 million. We were 
concerned that this company may not meet the criteria which was 
established. Your criteria people, for the most part.
    They answered in part that the contract files indicate that 
upon receipt of the proposals, the contract specialist verified 
the designation of each vendor as being a hub zone vendor. In 
other words, you had to be in a hub zone. You know what a hub 
zone is, right? Something that the administration has been 
trying to do with.
    But let's get back to what they said. The contract files 
indicate that upon receipt of the proposals, the contract 
specialist verified the designation of each vendor as being a 
hub zone vendor. That is part of the answer to the first 
question.
    Then we asked very specifically it is reported that this 
limousine service was the sole bidder. No, they said there were 
four bidders. Four companies responded to the solicitation. Two 
companies were determined to be ineligible for the hub zone. 
This guy must think we are drunk when we read this.
    The question--before they say that they are all okay, this 
question is saying two companies were determined to be 
ineligible based on their small business status. The third 
company was issued a question requesting a classification on 
its hub zone small business status, which was unclear to its 
proposed teaming arrangement.
    So now the only company left standing is, slowly I turn, 
Shirlington Limousine. They are the only ones left standing. So 
what we have done is--what we have done is--is by process of 
elimination, never thinking, I guess, to go out for bid again; 
oh, that is something different which we ask local officials to 
do and the State officials. The Federal Government doesn't have 
to do that; at least they didn't do that in this case.
    I would like your response, Mr. Williams, since you are the 
Director of Office of Security, and you have taken a look at 
these things. I was astonished by the responses which obviously 
are honest to the questions before. What do you think about 
this?
    Mr. Williams. As far as the Shirlington Limousine contract, 
the drivers have all had background investigations and passed 
those background investigations.
    Mr. Pascrell. We heard you say that before.
    Mr. Williams. Okay. I am not sure--as far as how the 
procurement went, I have a very limited background in Federal 
procurement.
    Mr. Pascrell. It is kind of odd though. If all the people 
are eliminated except one, would you go out to bid again? None 
of you are in the procurement office.
    Is that what you would do, Ms. Dillaman?
    Ms. Dillaman. Sir, I have no experience in the procurement 
area.
    Mr. Pascrell. Okay. I would like to ask this question--can 
I ask one more question?
    Mr. Rogers. Sure.
    Mr. Pascrell. Because I want to have a second round. We 
just got started here, warmed up. I want to ask this question 
to Mr. Prillaman. I want to know how many private contractors 
there are in the Department of Homeland Security. I want to 
know how many private contractors are employed by the 
Department of Homeland Security. Can you give me that answer?
    Mr. Prillaman. I am sorry to ask a question, but do you 
mean contractors or the actual individuals working at Homeland, 
the actual individuals?
    Mr. Pascrell. Well, this is why I am asking the question. 
There is a payroll for the 180-some-odd-thousand people that 
work for you, and then there are contractors, contracts which 
you let, and you choose to go out of the public domain and hire 
private folks to do the job. How many are there, and what is 
their budget?
    Mr. Prillaman. I don't have that information, but I can 
certainly get it for you.
    Mr. Pascrell. Would you please do that?
    Mr. Pascrell. I would like to make a comparison between the 
private contract payrolls and how much money that adds up to 
compared to what the payroll is of the staff. I want to get 
back eventually to the question about what--low morale, and I 
thank you for your cooperation.
    Mr. Chairman, I would like to come back again for the 
second round.
    Mr. Rogers. Absolutely.
    I told you he didn't have an accent.
    The Chair now recognizes the gentlelady from Texas Ms. 
Jackson-Lee, for any statement she may have. She sounds a lot 
like me, so I know she doesn't have an accent.
    Ms. Jackson-Lee. Thank you, Mr. Chairman, very much, and 
thank you for this important hearing.
    One of the crucial roles and responsibilities of this 
Congress is oversight and investigatory responsibilities that 
serve the American people. I have no regrets in the original 
premise of this Department. I think Congress did the right 
thing. I think we responded with dispatch to organize an entity 
that would be unique in its seamless responsibility for 
securing this Nation and addressing the question of natural 
disasters.
    But this hearing signals a cry for help. In fact, this red-
designed graph is an SOS call, and I am delighted that the 
Chairman and the Ranking Member and the Ranking Member of the 
full committee have highlighted this subcommittee's 
responsibility of digging into what is going on.
    I would say I had great hopes for the Secretary of this 
Department. As I recall, he offered recommendations for 
overhaul and change, but we are now in May 2006, and the only 
change I see is the proliferation of red, which is obviously 
symbolized by this design, but, more importantly, the lack of 
personnel in strategic responsibilities.
    Now, let me, first of all, thank the employees, because I 
know every day that those who do work for this Department are 
committed and dedicated because I have seen them on the front 
lines.
    But let me point to a crisis, in particular to 
Mr.Prillaman. Prillaman, is that correct?
    Mr. Prillaman. Prillaman.
    Ms. Jackson-Lee. Let me point to one that is really, I 
think, indicting. You heard the list of executives that are 
missing out of this Department. Let me recite for you the fact 
that the Office of the Chief Medical Officer is also serving as 
the Under Secretary for Science and Technology. The Assistant 
Secretary for Cyber and Telecommunications is vacant. Now, I 
don't know whether they would have the authority to provide me 
with information why the Federal Government is collecting 
billions of telephone data of citizens who are innocent of any 
acts of terrorism, but it would be nice to have someone in that 
position.
    But we are in the midst of a very vocal and vibrant 
discussion on immigration, and lo and behold, one of these is 
the Immigration and Customs Enforcement. An argument that I 
made over a number of years is that we needed to reenforce the 
staffing of ICE, we needed to add the 15,000 border patrol 
agents that the 9/11 Commission asked us to do. Of course, 
Congress has some burden on that.
    But can I point you directly to that question, and as I do 
that, let me share this other concern as well. And that would 
be for those who are able to answer that is, of course, as I 
compliment the staff. We are all embarrassed by the performance 
of FEMA and Hurricane Katrina, but we are more embarrassed and 
more incensed by the waste of taxpayers' dollars. I don't think 
if we began to trace a dollar, contractual dollar, that came 
out of the Department of Homeland Security and tried to find 
where it wound up in it; most of the people in New Orleans 
might say it wound up in a barrel of garbage, because we can't 
find the results of the dollars that Congress expended and for 
you to expend to help the people in New Orleans. We can't find 
where it is.
    So my question is I would like to know this whole issue of 
delegating a lot of the responsibilities to other Federal 
agencies, particularly contractual, and as a result millions of 
scarce Federal dollars were wasted, and the Government did not 
get the performance needed out of its contractors. What are you 
doing so that we don't have the same kind of fiasco, layering 
of contractors, and waste of taxpayer dollars in light of what 
happened in Katrina?
    So if you can focus on the landscape that we have, but, 
more importantly, if you can answer this question of what 
pointedly are you doing with respect to Immigration and Customs 
where there is a high vacancy, and then what are you doing with 
the failed contractual efforts that we had in Hurricane 
Katrina?
    Mr. Prillaman. With respect to Immigration and Customs 
Enforcement, I think this chart may actually be in error. Julie 
Myers is the head of Immigrations and Customs Enforcement, if 
that is the position that we are talking about.
    Ms. Jackson-Lee. We are not talking about that, because I 
didn't call her name. We are talking about the fact that there 
are a great deal of vacancies in that Department.
    Mr. Prillaman. I apologize.
    Ms. Jackson-Lee. We are talking about major immigration 
reform. When we throw to you the reform package that I hope 
this Congress will pass, which will include benefits and border 
security issues that really fall a lot in this area, what are 
you going to do, throw up your hands and say, we have no 
personnel? I mean, there are leadership roles; I know there are 
funding issues that Congress has to deal with, but I am talking 
about leadership roles.
    Mr. Prillaman. All I can say is the Department is moving as 
quickly as it possibly can to fill positions in all our 
critical areas, including Immigration and Customs Enforcement. 
Recruitment is probably our highest priority right now, 
recruitment and retention of talent across the Department. It 
takes time. It is an old saw, but it takes time to hire people, 
especially when security clearances are required, security 
background investigations.
    We have thousands of applications. We are screening those 
applications and hiring people as fast as we possibly can.
    Ms. Jackson-Lee. If you could indulge me, Mr. Chairman. If 
you can provide this committee a specific report, because we 
are in the middle of immigration on the specific vacancies that 
you see in that area, so that we can be accurate.
    Ms. Jackson-Lee. I know that Ms. Myers, as I understand, 
she is a recess appointment at this time, but I understand she 
is there, but that is really crucial. Do we have any plans to 
fix this broken contractual relation where taxpayer dollars are 
wasted.
    Mr. Prillaman. FEMA as a whole is one of the Secretary's 
chief priorities to retool FEMA and its operations. How it 
contracts with other agencies is an area that I know is of 
critical, critical interest and concern right now. I am not 
engaged in the contracting process, but I do know that there 
are people at Homeland Security who are focusing 100 percent of 
their attention on exactly that problem.
    Ms. Jackson-Lee. Well, I welcome you to convey the interest 
here, and I would welcome a response back through the 
appropriate persons on that very question.
    Mr. Prillaman. Certainly.
    Ms. Jackson-Lee. Thank you. I yield back.
    Mr. Rogers. I thank the gentlelady.
    I want to pick back up where I left off. Mr. Prillaman, I 
don't want to ask leading questions, I know this is not a 
courtroom, but would you acknowledge that there is a morale 
problem that is arising out of this problem with retention, 
particularly in the upper-level positions, that is filtering 
down into the ranks of these various agencies?
    Mr. Prillaman. Yes, sir, I think that is true.
    Mr. Rogers. In your opening statement you made the point 
that you are making progress. Tell me how you measure that 
progress. How can you objectively measure what you say is 
progress in fighting this morale concern as well as these 
retention concerns?
    Mr. Prillaman. As we said earlier, there is an old adage 
that most employees join an organization, and they leave 
managers. As I said earlier, a lot of what we are trying to do 
is get our line managers, the people that employees deal with 
on a day-to-day basis, better trained, better able to deal with 
employee issues and to be better managers and supervisors. That 
is a critical function, and we have already trained, I 
mentioned earlier, 8,000 in the course of the last 8 months, 
and we are going to train 6,000 more in the course of the next 
7 or months. We will be covering the entire Department with a 
training program.
    I think employees, many employees, are concerned about 
vacancies at the top of the organization and they--
    Mr. Rogers. Do you think that is the primary reason for 
their low morale? That was the gist I got in the briefing 
document. Do you think it is something else?
    Mr. Prillaman. My personal sense is that employees are 
still wrestling with the fact that we are a new organization 
that was put together--it was a hostile takeover, essentially; 
it was not something they voted on. I think a lot of employees 
are still trying to feel their way and understand the new 
organization.
    Mr. Rogers. Let me ask Mr. Williams the same question. You 
have been around the block in DHS. What do you think about this 
morale problem, and what can we do to combat it? What are we 
doing?
    Mr. Williams. I would say it is an organization for the 
high-performance employee. We have so many challenges. There is 
a burn-out rate. Again, when you have a burn-out rate at the 
higher levels, it does affect the other levels of the 
organization when they have constant turnover above them. I 
just think it is going to go with the territory though, this 
building DHS. It is a difficult job, and it is not for the weak 
at heart.
    Mr. Rogers. So you don't see changes taking place that are 
measurable at present?
    Mr. Williams. I think that we are seeing progress because 
it is not as fluid of an organization as it was even 18 months 
ago. As time goes on, we are gaining stability, but we are not 
there yet. We have a way to go.
    Mr. Rogers. Ms. Dillaman, your thoughts.
    Ms. Dillaman. Yes, sir. I am not really familiar with the 
inner workings of the Department of Homeland Security. I 
provide a service to them. But I can tell you with any 
organization, stabilizing the leadership team and developing 
the leadership team goes a long way to improving the morale of 
an organization.
    Mr. Rogers. Let's talk about that service. Oscar Antonio 
Ortiz, arrested August 4th of 2005, charged with conspiracy to 
bring in illegal aliens, false claims of United States 
citizenship, false statement in acquisition of a firearm, 
illegal alien in possession of a firearm, guilty plea January 
26, 2006, awaiting citizenship. You all conducted the 
investigation on this gentleman?
    Ms. Dillaman. Yes, sir, we did.
    Mr. Rogers. How did this happen?
    Ms. Dillaman. Sir, I am prohibited from discussing the 
specifics of the investigation under the Privacy Act in this 
forum, but I can talk to you in general of how it works. 
Information is collected on an individual. If they claim they 
were born in this country, independent confirmation is made at 
the Bureau of Vital Statistics. The information is gathered and 
turned over to the Department of Homeland Security for 
adjudication.
    Again, I can't talk about the specifics of what was found, 
but I personally reviewed this investigation. It was complete, 
it was thorough, and it was accurate.
    Mr. Rogers. And it didn't work.
    Ms. Dillaman. I didn't say that, sir.
    Mr. Rogers. The facts say that.
    Let me ask, in your investigations are you allowed to 
inquire whether or not people that you are doing background 
checks are U.S. citizens?
    Ms. Dillaman. Yes, sir.
    Mr. Rogers. Do you check them against terrorist watch 
lists?
    Ms. Dillaman. Yes, sir.
    Mr. Rogers. Same question to you, Mr. Williams. In looking 
at contractors that you are talking about giving approval to be 
brought in as a contractor for DHS, are you allowed to check 
whether or not they are a U.S. citizen?
    Mr. Williams. Yes, sir. We go through the same process as a 
Federal employee.
    Mr. Rogers. Same thing with the terrorist watch list.
    Mr. Williams. That is correct.
    Mr. Rogers. What about the company? You make that check on 
the business entity, or do you look behind the company to the 
officers and/or directors of that company?
    Mr. Williams. No, we are looking at, again, the individual 
folks that will be on that contract working as staff, like as 
Federal employees, but we aren't looking into the management 
structure of that company.
    Mr. Rogers. Most of the contractors that provide services 
to the 22 agencies that make up DHS are what we would call 
small businesses. Granted, from the Federal perspective--those 
are some pretty big contracts, at least in east Alabama we 
think they are big contracts but still, we would view them as 
small businesses. Virtually all of these small businesses are 
going to be a corporate entity or LLC or some variation of 
that. And if you don't look behind that entity to whoever the 
officers and the directors are, you are really not doing a 
diligent job in security. Would you agree with that?
    Mr. Williams. I think there are a number of circumstances 
where that would be important to do. If that was a requirement 
of the procurement office, we would vet whoever they request be 
vetted within that corporation.
    Mr. Rogers. Do you have the legal authority to do that?
    Mr. Williams. With nonindustrial security contracts--again, 
I am not an attorney, so I think it is a little questionable. I 
don't know.
    Mr. Rogers. I am told by the procurement office you do not 
have that legal authority, and I am also told you do not have 
the legal authority to inquire as to whether or not they are a 
U.S. citizen. I am told that the procurement office does not 
check their names against the terrorist watch list.
    I offer this because I go back to the Shirlington 
contract--and I really don't want to get immersed in this, but 
I think it is important in light of Ms. Dillaman's statement 
and some of the inferences from this testimony to make this 
point--we aren't doing due diligence in these contracts. If we 
don't look to who the officers and directors of some of these 
small businesses are, then we are setting ourselves up to have 
somebody who is truly a bad guy. It could be somebody like the 
Chairman of the full committee was referencing, it could be 
some organized crime figures who are actually the officers or 
directors or manipulating them, or it could be the terrorist 
who owns that small business. If we are not checking to see if 
they are a U.S. citizen or checking them against the terrorist 
watch list--it could be Mr. Baker who actually is hiring the 
drivers, and the drivers may pass the background check, but 
they are working for him, and we don't know what his ulterior 
motives are.
    I think it is important in looking at our security 
practices for contractors and personnel that we look at being 
broader in scope and more practical in what we research and 
what we don't research. It is a new day, and folks, at a 
minimum, expect DHS to be held to a high standard when it comes 
to the security of its personnel.
    I see my time has expired and now turn to the Ranking 
Member for any additional questions he may have.
    Mr. Meek. Thank you, Mr. Chairman. I am glad we are able to 
do a second round of questioning. Based on your questioning and 
the responses that I have heard, Mr. Chairman, I think as we go 
through approaching this hearing, that we must have a closed 
hearing with some of the same panelists so we can really get 
down to the nitty-gritty of why we are in the position that we 
are in now with these kinds of things happening, because I can 
tell you right now, in open hearing we may get confused or who 
is on first and who is on second.
    Again, I will take from my good friend Mr. Pascrell from 
New Jersey, we want to thank you for your service to the 
country, and I know it has to be quite uncomfortable to answer 
these questions on behalf of the Department where the ball has 
obviously been dropped. You want to talk about a paper-shaking 
experience in the morning when you pick up the paper or you 
watch a news story day after day, and it is riddled with 
incompetence at the Department of Homeland Security. That has a 
lot to do with attrition. And we are in this battle to make 
sure that we work towards straightening that all you out, so 
all of this is constructive.
    I just also want to say that this subcommittee is on record 
to give, Mr. Prillaman, line authority to people like yourself 
so that when you are dealing with other human resources, I am 
just going to say human resources, human capital managers, the 
seven that you deal with, and you have a mission, you have MAX 
HR--I keep saying that, and it is not my work product, but I am 
going to say you have MAX HR to carry out, it is not a decision 
by committee on implementation. I mean, if you have to do it, 
you have to do it, and you have to have oversight to make sure 
that it is implemented in a way it is supposed to be 
implemented.
    Of course, we want the Council to be more inclusive, but at 
the same time, when it comes down to it, guess who is at the 
hearing? You. Same thing with the information officer. We 
passed legislation just a couple of months ago to give line 
authority in areas at your level.
    So I think it is important that you understand that we are 
part of the solution and not a part of the problem, but we have 
to ask about the problem. We established a record on the issue 
of human capital, and I am resisting from going into the whole 
contract issue because a part of these hearings is developing a 
record and hopefully moving on to some legislation. Because I 
can tell you right now, Mr. Chairman, members of this 
committee, I don't believe that the Department has the ability, 
even though I have a great deal of respect for one of the 
greatest managers that I believe over at the Department, Under 
Secretary Michael Jackson, who I have met with several times, I 
am glad he is still hanging with the Department, but it is hard 
when you have few people trying to do the right thing, and we 
have managers that are coming in and out, rotating door, they 
get their security clearance, they go to the private sector, 
they leave. How would you like going to the private sector 
with, on your resume, Department of Homeland Security, leave 
alone FEMA? It is almost like some of us going to an election 
season this year saying we are part of the 109th Congress, but 
that is another editorial.
    So I am saying that we are in this thing together. And so I 
think it is important that we look at it from the standpoint of 
establishing the record on this human capital issue.
    I just want to point to a document that I was looking at a 
little earlier. As you know, the rankings, I know that we try 
to recruit individuals from institutions of higher learning, we 
try to recruit individuals from other ranks of the Federal 
Government, but the Partnership for Public Service and 
Institute for the Study of Public Policy Implementation, the 
School of Public Affairs over at American University has a 
ranking of who--I mean, where to go, the best places to work. 
It is entitled: The Best Places to Work in the Federal 
Government 2005. It is a ranking from 1 to 30, and The 
Department of Homeland Security is number 29, 46.7 percent 
rating, only beating out the Small Business Administration.
    I think it is important that we take this very seriously, 
and I want to thank you, Mr. Prillaman, for being brutally 
obvious of the honest, that we do have a problem. So if we have 
a problem, we have to, A, admit it. And we don't go to 
Wednesday meetings like the AA meetings and say, hi, my name is 
Gregg; we go to the meetings--we come to this meeting and start 
to say, maybe, Congressman, we need to do this or do that.
    We don't want you to make a career decision here today, but 
we want to send a strong message to Department of Homeland 
Security you have to share the information with us, because 
eventually we are going to get it, and it is going to be on the 
front doorsteps of our constituents' front door. And then we 
are going to have to be accountable.
    I take from my good friend Mr. Pascrell once again, we are 
responsible. If you are riding in first class, and we are in 
coach, if the plane is going down, we are going down together. 
If I can do anything about it, which we all can as Americans, 
let's do something about it.
    I asked the chief procurement officer--we keep uttering her 
position here today--we met, and we have been trying to work 
through these issues leading up to the hearing to get a better 
understanding of what we should do, because we have a genuine 
responsibility to make sure that we see it through--if there 
are in-house documents that will help push us in the right 
direction and break down this attrition. MAX HR may be the 
thing hanging on the wall saying we will do it, or what is the 
slogan here around the Capitol? I am trying to remember; it 
will come back to me a little later, I know, after the hearing. 
But the whole--we must stick with a philosophy when there is 
litigation right now within the Department of Homeland Security 
as relates to MAX HR.
    So my question is, before we run out of time, we may get 
another round before votes if we have any additional comments, 
what is the shining example within the Federal Government of 
MAX HR to show that it has worked and that it has been fair 
across broad application? Because we are asking a number of 
people, matter of fact thousands of people, to carry out 
practices of goodwill and understanding of MAX HR.
    Mr. Prillaman. The part that most employees find 
controversial are a broadband compensation system and pay for 
performance. One of the best examples out there is the General 
Accounting Office. David Walker is a strong believer in having 
employees have a clear understanding of what their 
responsibilities are and where they fit in the organization. He 
has built a compensation system where he can reward his best 
talent, differentiate them from the better performers and 
lesser performers, and motivate people. He may have it right.
    Mr. Meek. Good question, because now my time ran out. How 
big is the General Accounting Office?
    Mr. Prillaman. Relatively small; 3,000 employees perhaps.
    Mr. Meek. How many people are in MAX HR right now?
    Mr. Prillaman. We have in the performance management part 
of it about 10,000, 12,000 so far.
    Mr. Meek. So you are now in the front seat of this MAX HR, 
far beyond the numbers of the greatest example that can be 
pointed to, to say that it actually works; am I correct?
    Mr. Prillaman. Yes, sir.
    Mr. Meek. So I think it is important if we look at this 
whole attrition issue that we have to look at it from the 
standpoint of making sure that we have got to get it right. And 
it is very hard to go through the whole guinea pig piece of 
saying we already have a problem that we have admitted, and now 
we are going to step into another possible sinking boat. We 
have litigation, we have employees that are saying thank you 
for having a hearing because we have issues that are not being 
addressed that I think may end up hurting us more than helping 
us.
    What do you think--and this is for the panel, and this is 
my last question for this round. What do you think your chances 
are in court that MAX HR will get an injunction like the 
Department of Defense similar program they have as relates to 
pay for performance?
    Mr. Prillaman. It right now is already enjoined by the 
district court. We are appealing that decision, and there 
should be a decision by the court of appeals in, I would say, 
late May, early June, maybe late June.
    Mr. Meek. What do you think are the chances of the 
Department prevailing in that?
    Mr. Prillaman. My official position is, of course, we are 
going to win. My sense is it will be an interesting decision.
    Mr. Meek. Then we are going to have to come up with another 
program, correct?
    Mr. Prillaman. There might be a need to change direction, 
yes, sir.
    Mr. Meek. I don't want to get into I am going to buy my 
lunch, you are going to buy my lunch, but I can tell you right 
now this issue is so serious. I know we are making some fun of 
it, but there are some people that are being affected by the 
decisions that have been made as relates to personnel, and I 
think it becomes a point when folks say that there are things 
that we can do now, and there are things we can do later, 
things that we can pilot at a small number and research to make 
sure that it is right before we start getting into broad 
application, and this may very well be one of those things.
    Again, we don't want to micromanage, but we are the 
oversight committee for management and oversight, and I think 
that it is an integration, and it is important that we have an 
ongoing conversation about some of these issues. So my 
questions and my statements were along the line of building the 
record so that hopefully we can get to the bottom of trying to 
do what we can. This is preventive maintenance, not a one-fix 
thing to deal with our HR issues at the Department. I will 
leave it at that.
    Does anyone else on the panel have anything to say to 
address any of my questions?
    Mr. Williams. No, sir.
    Mr. Meek. Good. With that, Mr. Chairman, I will yield back 
the balance of my time that I have already gone over.
    Mr. Rogers. I thank the gentleman.
    The Chair now recognizes the gentleman from Mississippi, 
the Ranking Member of the full committee, for any questions he 
may have.
    Mr. Thompson. Thank you very much, Mr. Chairman.
    Mr. Prillaman, my staff made a request of some information 
relative to vacancies and what have you, and to some degree you 
provided it, but there are some additional items that I need, 
and it is around training cost of officers and a number of 
things.
    Mr. Chairman, if you remember, from time to time we have 
been given some astronomical numbers for which we find hard to 
believe for training many of the people. Can I get assurance 
from you that we can get that information as to the training 
cost associated with our law enforcement people?
    Mr. Prillaman. Yes, sir.
    Mr. Thompson. The Chairman also indicated, in a timely 
manner.
    We have the seven personnel systems. We have already talked 
about that. Now your shop is in the management section; am I 
correct?
    Mr. Prillaman. Yes, sir.
    Mr. Thompson. So now as of today who do you report to?
    Mr. Prillaman. The Under Secretary for Management.
    Mr. Thompson. That is who?
    Mr. Prillaman. It would be Janet Hale.
    Mr. Thompson. Now, you know she has resigned?
    Mr. Prillaman. Yes, sir.
    Mr. Thompson. All right. Effective May 1.
    Mr. Prillaman. She actually has remained with the 
Department. I think her effective date of separation now will 
be this coming Sunday.
    Mr. Thompson. Okay. Maybe she changed it.
    Mr. Prillaman. She did.
    Mr. Thompson. What I am getting at is this committee's 
continuing concern about so many vacancies in so many critical 
positions, and you are charged with trying to make the system 
work. It is utterly impossible, in some of our minds, that you 
can ever elevate morale with what is going on around you. You 
have my sympathies. It is a difficult task, but also we have to 
somehow help fix it.
    I am not sure if MAX HR created this dilemma. A lot of 
people say that created it, but we really need a system that 
works. I accept the notion that it takes 5 to 7 years to get it 
right, but to some degree some of the missteps along the way, 
there should be systems in place for those things not to 
happen.
    I look forward to working with you and doing whatever. Mr. 
Chairman. As you know, we are going to, based on what the 
Chairman of the full committee said, take up a full authorizing 
piece of legislation, and I think some of this we can try to 
fix within that legislation, but we have to absolutely do 
something.
    My district was touched by Hurricane Katrina, and when I 
see 73 percent, only 73 percent, of the employees in FEMA on 
board this close to hurricane season, I am concerned. When I 
see the number of complaints filed by employees in terms of 
grievances and personnel actions, that tells me we have a 
problem.
    So, Mr. Chairman, in the interest of time, and wanting to 
get to the second panel, I have the commitment to get the 
training cost information that we did not get with our initial 
request. And with that, I will yield back.
    Mr. Rogers. I thank the gentleman.
    I also would like to reemphasize to the panelists and the 
panel that follows what the Ranking Member says is exactly 
accurate. We want to be partners in this process. As I said in 
my opening statement, we intend to be vigorous in our oversight 
activities, but we are doing it because we are trying to glean 
from you all what we can do to try to help. We want to see this 
Department become very successful. We want to see these 
retention problems eliminated and recruitment problems 
resolved, but we need to know what we can do to help you. In 
addition to shedding light on this problem and holding you to a 
higher standard, we want to be held to a higher standard. So, 
we ask you to at all times share with us what you see as far as 
policy changes we can make that would facilitate your dealing 
with these problems.
    With that, we will recognize the gentleman from New Jersey 
for any additional questions he may have.
    Mr. Pascrell. Thank you, Mr. Chairman.
    I would like to ask Director Williams a question. I thought 
it was revealing testimony, Mr. Chairman, when you were 
asking--Members were asking questions about morale within the 
Department, and I listened very carefully to what Mr. Williams 
had to say. People finding their way, kind of. But if you look 
at the Federal human capital survey, which was conducted by the 
Office of Personnel Management, a majority--they found a 
majority of the DHS employees participated did not answer 
favorably when asked about promotions based on merit.
    Mr. Williams, do you promote people based on merit?
    Mr. Williams. Yes, we do merit-based promotions.
    Mr. Pascrell. So, in other words, these folks, the majority 
of whom say that you don't, they are mistaken. Your employees 
are mistaken?
    Mr. Williams. I don't know that they are mistaken, and 
again, I don't have all the details of the survey. I can only 
be anecdotal based on the experience within my office.
    Mr. Pascrell. They also say that personnel empowerment with 
respect to work, that there is no empowerment in the job 
responsibilities that they have. Do you agree with that?
    Mr. Williams. Again, I would like to think that I do 
empower the employees within my office to get the job done.
    Mr. Pascrell. They say in response to fairness and 
performance appraisals, they don't find fairness in those 
appraisals. They are mistaken there also?
    Mr. Williams. The performance appraisal systems that we 
have used up to date I think have minimal impact. I don't know 
that they give you the full picture of the employees. I, for 
one, was looking forward to MAX HR to have more of an 
opportunity to fully assess someone. The assessments used prior 
to that are nominal. It is not a very in-depth assessment of 
their abilities.
    Mr. Pascrell. Looking at your employees are responding and 
listening to what you are saying, there is kind of a disconnect 
here, and I think it is worth looking at and addressing. I 
would make that recommendation. We haven't even heard from 
employees yet.
    I would like to ask another question, Mr. Williams. Do you 
believe that an overreliance on contractors leads to 
ineffective due diligence on the part of the Department of 
Homeland Security? What point are you overrelying upon--relying 
too much on contractors rather than internal personnel? And do 
you see that as a problem.
    Mr. Williams. In my office it has not been a problem. My 
office is almost a 50-50 split between contractual staffs and 
Federal employees. I think a lot of it was developed in the way 
Homeland Security was evolved and a high reliance on contractor 
staff. Over time I think the percentage is shifting to more of 
a Federal workforce as opposed to contractual workforce, but, 
quite frankly, in my office I think I would have a difficult 
time telling who are the Feds and who are the contractors. We 
work pretty much hand in hand.
    Mr. Pascrell. Do you think that contributes to more 
stability if you can rely on your employees day to day rather 
than moving out to private contractors outside the 
recommendation of the Federal Government?
    Mr. Williams. I think we have a higher degree of a 
stability among the employers in the contractual.
    Mr. Pascrell. Why?
    Mr. Williams. I think it probably has to do with, in fact, 
a lot of the contractual staff, a number of them eventually 
become Federal employees, and I think it has to do with 
benefits. Then you have others that their interests are more 
job-specific, and they are more willing to move for increased 
benefits.
    Mr. Pascrell. Thank you.
    Mr. Prillaman, I would like to ask you one question. 
Hurricane Katrina was a catastrophe on many levels. For our 
purpose I would like to talk about the lessons it taught us, 
taught the Department, Department capabilities to execute its 
procurement program and management responsibilities. The 
Department of Homeland Security pretty much threw up its arms 
and delegated much of the responsibility, as we have learned, 
to other Federal agencies during that catastrophe. As a result, 
millions of scarce Federal dollars were wasted, and the 
Government did not get the performance that it needed out of 
its contractors.
    What are you doing to create and maintain a competent 
procurement shop in the Department? Because that is going to be 
part of the discussions that we have next week. This will be my 
final question.
    Mr. Prillaman. The procurement is recognized as a serious 
problem within Homeland Security, and we have established at 
FEMA alone more than 19 new positions for procurement 
specialists and are filling those positions as fast as 
possible. It is hard to find procurement specialists, quite 
frankly, around the Washington community, but we are trying to 
fill those as fast as possible. Across the Department's 
procurement office, including the main office in the Bureau of 
Management where I work, I know they are providing considerable 
more oversight to the procurement officers located in the 
various components.
    Mr. Pascrell. Just how serious is the problem? Just how 
serious is the procurement problem?
    Mr. Prillaman. Finding qualified procurement talent is a 
problem governmentwide. I think OPM could speak to that. And we 
are in the same boat that many other agencies are.
    Mr. Pascrell. Mr. Chairman, through the Chair I want to ask 
this question and all of us to be on board on this question. I 
am going to ask a question, and if it is out of order, tell me 
it is out of order, through the Chair, to Mr. Prillaman.
    I want to know out of every $50--you have taken a review 
since you have been there for 1 year?
    Mr. Prillaman. EightSec.  months.
    Mr. Pascrell. Eight months, I am sorry. You have taken a 
review of contracts, taken a look at them? I am going to make a 
statement; you tell me whether I am using hyperbole, or whether 
it is pretty accurate in terms of what you are found. I have 
not done a universal check. I would say out of every $5 spent, 
$2 is wasted. Is that, in your estimation, an exaggeration?
    Mr. Prillaman. It is going to sound evasive, but I honestly 
have not made that kind of a study.
    Mr. Pascrell. Thank you, Mr. Chairman.
    Mr. Rogers. I thank the gentleman.
    We are about to be called for a series of votes. I want to 
ask one more question, not a series. I do want to follow up on 
the question I had of Ms. Dillaman about Mr. Ortiz and ask you, 
Mr. Williams, do you feel like the ball was dropped when it was 
handed off to you?
    Mr. Williams. I would have to look further into that 
particular case. I don't think it was a DHS headquarters case. 
Again, we have seven or eight individuals, security officers, 
and I have to examine the case within those offices.
    Mr. Rogers. I would ask you after the hearing to submit for 
the record your thoughts on where the ball was dropped with 
regard to that specific case.
    Mr. Rogers. With that, what I would point out to the 
witnesses is that one of my many failings is I don't do what my 
staff tell me to do enough. I am sure that my colleagues on the 
other side probably suffer from the same problem, in that the 
staff gives me a series of questions they really want me to ask 
for the record, and I always wind up going down my own little 
pig trail of questions that never include theirs.
    So I would remind you that for the next 10 days the record 
will be left open. If any of the Members suffer from the same 
problem I suffer from and didn't get the questions they really 
need to have asked for the record, I ask that when you receive 
these questions from us, respond in writing within 10 days so 
we can get those memorialized for the record.
    Mr. Rogers. There being no further questions, this panel is 
excused. Thank you for being here.
    Mr. Rogers. I would like to call up the second panel now.
    This panel will consist of John Gage, National President of 
the American Federation of Government Employees; Colleen 
Kelley, President, National Treasury Employees Union; and 
Professor Charles Tiefer, Professor of Law at the University of 
Baltimore School of Law.
    Thank you for being with us. Please be seated.
    What we would like to do, given that we know that we are 
going to be called for votes pretty soon, is to try to get in 
your opening statements before we have to recess briefly. So 
the Chair now calls Ms. Colleen Kelley, President of the 
National Treasury Employees Union, for any statement you may 
have. And again, I remind you to try to keep your statement 
within 5 minutes because your full statement will be submitted 
for the record so you don't have to offer the whole thing, 
unless you just want to.
    Ms. Kelley.

                 STATEMENT OF COLLEEN M. KELLEY

    Ms. Kelley. Thank you very much, Chairman Rogers, Ranking 
Member Meek. I appreciate the opportunity to testify on human 
capital issues at the Department of Homeland Security.
    NTEU represents over 150,000 Federal employees, and 15,000 
of those employees work for Customs and Border Protection in 
Homeland Security.
    The Homeland Security Act that created the Department 
required that any new human resource management system would 
ensure that employees could organize, bargain collectively and 
participate through labor organizations of their own choosing 
in decisions that affect them. Because the final personnel 
regulations failed to meet these statutory requirements, NTEU 
challenged those regulations in court.
    Last August the Federal district court ruled that the 
regulations did not provide for collective bargaining or fair 
treatment of the employees as required by the act, and DHS, as 
we heard, has appealed that decision.
    Despite the court's injunction, the President's 2007 budget 
request has more money requested for designing and implementing 
Homeland Security's proposed personnel system, MAX HR, than it 
does for frontline, port and border security personnel and for 
trade facilitation employees.
    The President's request is $32 million to increase for 
frontline positions at the 317 ports of entry, but he has asked 
for $42 million for implementation of MAX HR. Now, NTEU is very 
gratified that House appropriators, at NTEU's urging, has 
rejected this new funding request for MAX HR.
    NTEU had a preview of what the proposed MAX HR pay-for-
performance system would look like when Customs and Border 
Protection unilaterally eliminated the union-management-
administered performance award system this past year. The prior 
performance award program was a transparent committee process 
with labor and management represented, and every award and 
every reason for the award was made public. Under the system 
that CBP management has now unilaterally implemented, decisions 
were made behind closed doors, and those receiving awards and 
the reasons for the awards were to be kept secret. NTEU 
objected, and an arbitrator ruled in our favor, ordering the 
performance awards program to be redone in an open and 
transparent manner. Homeland Security has appealed that 
arbitrator's decision.
    Another area of concern for Customs and Border Protection 
officers is the One Face at the Border initiative, which was 
designed to eliminate the separation of immigration, customs 
and agriculture functions at the ports of entry. Congress must 
ensure that expertise is retained with respect to these 
functions. The One Face at the Border initiative does not do 
that, and thereby it jeopardizes our national security. In 
addition, air, land and seaports are woefully understaffed.
    The Senate has proposed adding at least 2,500 Customs and 
Border Protection officers in an immigration bill being debated 
this week. While the House called for the addition of 1,200 new 
CBP officers over 6 years in both the safe ports bill and its 
border security and immigration bill, that number is far short 
of what is needed. And CBP officers carry weapons, and at least 
three times a year they must qualify and maintain proficiency 
on a firearm range. CBP officers have the authority to 
apprehend and to detain those who are engaged in smuggling 
drugs and violating other civil and criminal laws, yet they 
have been denied law enforcement status and benefits.
    NTEU strongly supports H.R. 1002, the bipartisan Law 
Enforcement Officers Equity Act, that has 151 cosponsors 
including Homeland Security Committee chair Peter King, and 
full committee and subcommittee Ranking Members Bennie Thompson 
and Kendrick Meek. This legislation would treat CBP officers as 
law enforcement officers and provide them with a 20-year 
retirement benefit, long overdue for these employees who 
perform critical law enforcement duties every day.
    CBP employees are loyal and dedicated, but they are 
extremely disturbed by the agency's recent misuse of national 
and internal security arguments to justify actions that have no 
security implications, while they are ignoring real threats to 
our national security. This issue was dramatically highlighted 
when it became known that CBP had to raise no security 
questions about the United Arab Emirates-owned Dubai Ports 
World buying port facilities in the United States. Yet the list 
of actions that CBP has raised security concerns about with 
regard to its employees is long, and it is ridiculous.
    For example, CBP claimed that wearing uniforms with shorts 
threatens security. The Federal Services Impasses Panel found 
no security issue. CBP also outlawed beards and implemented 
strict restrictions on hairstyles, claiming security needs. An 
arbitrator found no merit to this argument. CBP discontinued a 
practice of allowing pregnant officers to use shoulder holsters 
rather than waist holsters, claiming security concerns. 
Unfortunately, this needless and discriminatory policy has been 
upheld. These are just a few examples of how CBP continues to 
misuse security considerations to try to justify the 
unjustifiable.
    It is particularly disturbing to CBP employees that 
security concerns are falsely raised on these types of minor 
issues, yet issues with real security implications like the 
Dubai Ports issue and the lack of staffing go unquestioned by 
CBP.
    I look forward to continuing to work with this committee to 
help the Department of Homeland Security to meet its critical 
missions, and I would be happy to answer any questions that you 
have. Thank you.
    Mr. Rogers. Thank you, Ms. Kelley.
    [The statement of Ms. Kelley follows:]

                Prepared Statement of Colleen M. Kelley

    Chairman Rogers, Ranking Member Meek, I would like to thank the 
subcommittee for the opportunity to testify on human capital issues at 
the Department of Homeland Security (DHS).
    As President of the National Treasury Employees Union (NTEU), I 
have the honor of representing over 150,000 federal employees, 15,000 
of whom are Customs and Border Protection (CBP) employees at the 
Department of Homeland Security. I am also pleased to have served as 
the representative of NTEU on the DHS Senior Review Committee (SRC) 
that was tasked with presenting to then-DHS Secretary Tom Ridge and 
then-OPM Director Kay Coles James, options for a new human resources 
(HR) system for all DHS employees. NTEU was also a part of the 
statutorily mandated ``meet and confer'' process with DHS and OPM from 
June through August 2004.
    It was unfortunate that after two years of ``collaborating'' with 
DHS and OPM on a new personnel system for DHS employees that NTEU was 
unable to support the final regulations. While some positive changes 
were made because of the collaboration between the federal employee 
representatives and DHS and OPM during the meet and confer process, 
NTEU was extremely disappointed that the final regulations fell 
woefully short on a number of the Homeland Security Act's (HSA) 
statutory mandates. The most important being the mandates that DHS 
employees may, ``organize, bargain collectively, and participate 
through labor organizations of their own choosing in decisions which 
affect them,'' (5 U.S.C. 9701(b)(4)) as well as the mandate that any 
changes to the current adverse action procedures must ``further the 
fair, efficient and expeditious resolutions of matters involving the 
employees of the Department.'' (5 U.S.C. 9701(f)(2)(C)).
    Because the final personnel regulations failed to meet the 
statutory requirements of the HSA in the areas of collective 
bargaining, due process and appeal rights, NTEU, along with other 
federal employee unions, filed a lawsuit in Federal court. On August 
12, 2005, the federal district court ruled the labor-management 
relations and appeals portions of the DHS final personnel regulations 
illegal and enjoined their implementation by DHS. The court found that 
the regulations did not provide for collective bargaining or fair 
treatment of employees as required by the Act. DHS appealed the 
district court's decision to the U.S. Court of Appeals for the District 
of Columbia Circuit. Oral arguments were heard by the appeals court on 
April 6, 2006. If NTEU's challenge is sustained, as we expect, DHS will 
be required to rewrite the regulations to conform to law. If not, 
Congress should act to ensure that DHS complies with its clear 
directives regarding collective bargaining, due process and appeal 
rights.
    As the subcommittee is aware, the HSA allowed the DHS Secretary and 
the OPM Director to make changes in certain sections of Title 5 that 
have governed the employment rights of federal employees for over 20 
years. In the first part of my testimony, I will focus my comments on 
three areas of the final personnel regulations that fell short of 
protecting federal employees' rights: labor relations/collective 
bargaining, due process rights, and the pay for performance system.

DHS PERSONNEL REGULATIONS ISSUES
    The Homeland Security Act requires that any new human resource 
management system ``ensure that employees may organize, bargain 
collectively, and participate through labor organizations of their own 
choosing in decisions which affect them.'' NTEU believes that the final 
regulations do not meet this statutory requirement in the following 
ways.

Labor Relations/Collective Bargaining
    Under the final personnel regulations, the responsibility for 
deciding collective bargaining disputes will lie with a three-member 
DHS Labor Relations Board appointed by the Secretary of the Department 
of Homeland Security. Senate confirmation will not be required, nor is 
political diversity required among the Board members. Currently, 
throughout the federal government, collective bargaining disputes are 
decided by the Federal Labor Relations Authority (FLRA), an independent 
body appointed by the President and confirmed by the Senate. A true 
system of collective bargaining demands independent third party 
determination of disputes. The final regulations do not provide for 
that, instead creating an internal system in which people appointed by 
the Secretary will be charged with deciding matters directly impacting 
the Secretary's actions. The district court ruled this section of the 
regulations illegal.
    Under the final regulations, not only will management rights 
associated with operational matters (subjects that include deployment 
of personnel, assignment of work, and the use of technology) be non-
negotiable, but even the impact and implementation of most management 
actions will be non-negotiable. In other words, employee 
representatives will no longer be able to bargain on behalf of 
employees concerning the procedures that will be followed when DHS 
management changes basic conditions of work, such as employees' 
rotation between different shifts or posts of duty, or scheduling of 
days off.
    The final regulations further reduce DHS' obligation to 
collectively bargain over the already narrow scope of negotiable 
matters by making department-wide regulations non-negotiable. 
Bargaining is currently precluded only over government-wide regulations 
and agency regulations for which a ``compelling need'' exists. The new 
DHS personnel system would also allow management to void existing 
collective bargaining agreements, and render matters non-negotiable, 
simply by issuing a department-wide regulation. The district court 
ruled this section of the regulations illegal.
    A real life example of the adverse effect of the negotiability 
limitations on both employees and the agency will be in the area of 
determining work shifts. Currently, the agency has the ability to 
determine what the shift hours will be at a particular port of entry, 
the number of people on the shift, and the job qualifications of the 
personnel on that shift. The union representing the employees has the 
ability to negotiate with the agency, once the shift specifications are 
determined, as to which eligible employees will work which shift. This 
can be determined by such criteria as seniority, expertise, volunteers, 
or a number of other factors.
    CBP Officers around the country have overwhelmingly supported this 
method for determining their work schedules for a number of reasons. 
One, it provides employees with a transparent and credible system for 
determining how they will be chosen for a shift. They may not like 
management's decision that they have to work the midnight shift but the 
process is credible and both sides can agree to its implementation. 
Two, it takes into consideration lifestyle issues of individual 
officers, such as single parents with day care needs, employees taking 
care of sick family members or officers who prefer to work night 
shifts. The new personnel system's elimination of employee input into 
this type of routine workplace decision-making has had a negative 
impact on morale.

Due Process and Appeal Rights
    One of the core statutory underpinnings of the HSA was Congress' 
determination that DHS employees be afforded due process and that they 
are treated in a fair manner in appeals they bring before the agency. 
In fact, the HSA clearly states that the DHS Secretary and OPM Director 
may modify the current appeals procedures of Title 5, Chapter 77, only 
in order to, ``further the fair, efficient, and expeditious resolution 
of matters involving the employees of the Department.'' (5U.S.C. 9701 
(f) (2) (C)). Instead the final regulations undermine this statutory 
provision in a number of ways.
    The final regulations undercut the fairness of the appeals process 
for DHS employees by eliminating the Merit Systems Protection Board's 
(MSPB) current authority to modify agency-imposed penalties. The result 
is that DHS employees will no longer be able to challenge the 
reasonableness of penalties imposed against them, and the MSPB will now 
only be authorized to modify agency-imposed penalties under very 
limited circumstances where the penalty is ``wholly unjustified,'' a 
standard that will be virtually impossible for DHS employees to meet.
    The final regulations exceed the authority given in the HSA to the 
Secretary and OPM Director, by giving the Federal Labor Relations 
Authority (FLRA) and the MSPB new duties and rules of operation not set 
by statute. The FLRA and the MSPB are independent agencies, and DHS and 
OPM are not authorized to impose obligations on either independent 
agency, or dictate how they will exercise their jurisdiction over 
collective bargaining and other personnel matters.
    In the final regulations, the FLRA is assigned new duties to act as 
an adjudicator of disputes that arise under the new labor relations 
system and the regulations also dictate which disputes the FLRA will 
address and how they will address them.
    In addition, the final regulations conscript the Merit System 
Protection Board as an appellate body to review, on a deferential 
basis, findings of the new Mandatory Removal Panel (MRP). Chapter 12 of 
Title 5, which sets out MSPB's jurisdiction, does not authorize this 
kind of action by the Board and the DHS Secretary and OPM Director are 
not empowered to authorize it through regulation. A similar appellate 
role is given to the FLRA. It is tasked with reviewing decisions of the 
Homeland Security Labor Relations Board (HSLRB) on a deferential basis. 
There is no authority for assigning such a role to the FLRA and the 
district court has ruled these provisions illegal.
    The final regulations also provide the Secretary with unfettered 
discretion to create a list of Mandatory Removal Offenses (MRO) that 
will only be appealable on the merits to an internal DHS Mandatory 
Removal Panel (MRP) appointed by the Secretary.
    The final regulations include a preliminary list of seven potential 
mandatory removal offenses but are not the exclusive list of offenses. 
The final regulations also provide that the Secretary can add or 
subtract MRO's by the use of the Department's implementing directive 
mechanism and that the Secretary has the sole, exclusive, and 
unreviewable discretion to mitigate a removal penalty.
    By going far beyond the statutory parameters of the HSA, and 
drastically altering the collective bargaining, due process and appeal 
rights of DHS personnel, the district court ruled these sections of the 
proposed regulations illegal. The overreaching by DHS in formulating 
these personnel regulation and the subsequent court ruling leaves CBP 
employees with little or no confidence that they will be treated fairly 
by the agency with respect to labor-management relations, appeals or 
pay by the department.

MaxHR Pay-for-Performance Proposal
    While not a part of the lawsuit filed by NTEU and other federal 
employee representatives, the final regulations as they relate to 
changes in the current pay, performance and classification systems of 
DHS employees must be brought to the attention of this subcommittee. 
While the final regulations lay out the general concepts of a new pay 
system, they remain woefully short on details.
    Too many of the key features of the new system have yet to be 
determined. The final regulations make clear that the agency will be 
fleshing out the system's details in management-issued implementing 
directives while using an expensive outside contractor that will cost 
the agency tens of millions of dollars that could be used for 
additional front line personnel. Among the important features yet to be 
determined by the agency are the grouping of jobs into occupational 
clusters, the establishment of pay bands for each cluster, the 
establishment of how market surveys will be used to set pay bands, how 
locality pay will be set for each locality and occupation, and how 
different rates of performance-based pay will be determined for the 
varying levels of performance.
    And, much to the consternation of short staffed frontline CBP 
employees, the President's FY 2007 Budget requests an additional $41.7 
million for implementation of MaxHR. This request is a 133% increase 
from $29.7 million in FY 2006 to $71.4 million in FY 2007 including $15 
million for establishment of pay pools; $22 million in implementation 
and operational costs; and $4.75 million to fund the Homeland Security 
Labor Relations Board, the creation of which the District Court ruling 
has enjoined. The President's budget funds an additional 16 FTEs to 
administer MaxHR. In contrast, the FY 07 budget request for salaries 
and expenses for Border Security, Inspection and Trade Facilitation at 
the understaffed 317 Ports of Entry (POEs) is $32 million--adding only 
21 FTEs.
    NTEU is especially mindful of the fact that the more radical the 
change, the greater the potential for disruption and loss of mission 
focus, at a time when the country can ill-afford DHS and its employees 
being distracted from protecting the security of our homeland. However, 
before any changes are made to tie employees' pay to performance 
ratings, DHS must come up with a fair and effective performance system.
    CBP employees got a preview this past winter as to how DHS will 
administer a new pay-for-performance program when it unlawfully 
terminated the negotiated Awards and Recognition procedures and 
unilaterally imposed its own awards system. At the conclusion of the FY 
2005 awards process, CBP, contrary to the parties' seven year practice 
of publicizing the names and accomplishments of award recipients as 
determined by a joint union-management committee, embarked on a policy 
of refusing to reveal the results of its awards decisions, the amount 
of the awards, and the accomplishments that resulted in the granting of 
the award so that employees in the future could emulate these 
accomplishments and too win an award.
    Not only were the unilaterally decided award results not 
publicized, but NTEU Chapters report that some employees were 
specifically told not to reveal that they had received an award. CBP 
has refused to provide NTEU at the national level with the results of 
its awards decisions. NTEU has informed DHS that CBP's strenuous 
efforts to hide its awards decisions make a mockery of DHS's promise 
that any pay-for-performance system it implements will be transparent 
and trusted by its employees.
    NTEU has received a favorable arbitration decision concluding that 
CBP unlawfully terminated the joint union-management Awards and 
Recognition program and unilaterally imposed its own awards system. The 
arbitrator ordered CBP to return to the prior joint awards process and 
to rerun the fiscal year 2005 awards process using the negotiated 
procedure. CBP has delayed the ultimate resolution of this issue by 
appealing the arbitrator's decision to the FLRA asking the Authority to 
overturn the arbitrator's decision ``in order to improve employee 
morale.''
    The disarray in the formulation of the new pay-for-performance 
program at DHS continues. DHS was slated to move headquarters, 
Information Analysis and Infrastructure Protection, Science and 
Technology, Emergency Preparedness and Response and Federal Law 
Enforcement Training Center employees into the MaxHR pay-for-
performance system by February 2006, but has delayed this move until 
January 2007. MaxHR initial pay changes have been bumped from January 
2007 to January 2008.
    The proposed pay system lacks the transparency and objectivity of 
the General Schedule. If the proposed system is implemented, employees 
will have no basis to accurately predict their salaries from year to 
year. They will have no way of knowing how much of an annual increase 
they will receive, or whether they will receive any annual increase at 
all, despite having met or exceeded all performance expectations 
identified by the Department. The ``pay-for-performance'' element of 
the proposal will pit employees against each other for performance-
based increases. Making DHS employees compete against each other for 
pay increases will undermine the spirit of cooperation and teamwork 
needed to keep our country safe from terrorists, smugglers, and others 
who wish to do America harm.
    One thing is clear. The proposed pay system will be extremely 
complex and costly to administer. A new bureaucracy will have to be 
created, and it will be dedicated to making the myriad, and yet-to-be 
identified, pay-related decisions that the new system would require.
IMPEDIMENTS TO MISSION ACCOMPLISHMENT
    The second part of my testimony addresses DHS staffing and 
personnel policies that have deleteriously affected CBP employee morale 
and threaten the agency's ability to successfully meet its critical 
missions.

OPM Survey Results
    A recent OPM survey of federal employees revealed that employees 
rated DHS 29th out of 30 agencies considered as a good place to work. 
On key areas covered by the survey, employees' attitudes in most 
categories were less positive and more negative than those registered 
by employees in other federal agencies. Employee answers on specific 
questions revealed that 44% of DHS employees believe their supervisors 
are doing a fair to a very poor job; less than 20% believe that 
personnel decisions are based on merit; only 28% are satisfied with the 
practices and policies of senior leaders; 29% believe grievances are 
resolved fairly; 27% would not recommend DHS as a place to work; 62% 
believe DHS is an average or below average place to work; only 33% 
believe that arbitrary action, favoritism, and partisan political 
action are not tolerated; over 40% are not satisfied with their 
involvement in decisions that affect their work; 52% do not feel that 
promotions are based on merit; and over 50% believe their leaders do 
not generate high levels of motivation and commitment. On the other 
hand, most employees feel there is a sense of cooperation among their 
coworkers to get the job done.
    The results of this OPM survey raise serious questions about the 
department's ability to recruit and retain the top notch personnel 
necessary to accomplish the critical missions that keep our country 
safe. According to OPM, 44 percent of all federal workers and 42 
percent of non-supervisory workers will become eligible to retire 
within the next five years. If the agency's goal is to build a 
workforce that feels both valued and respected, the results from the 
OPM survey clearly show that the agency needs to make major changes in 
its treatment of employees.

Staffing Shortages at the Ports of Entry
    The President's FY 2007 budget proposal requests about $4.4 billion 
for the Department of Homeland Security's (DHS) U.S. Customs and Border 
Protection Bureau. This is a 12 percent increase in CBP's budget, but 
the bulk of the new money is to fund the hiring of 1,500 Border Patrol 
agents. For salaries and expenses for Border Security, Inspection and 
Trade Facilitation at the 317 Ports of Entry (POEs), the budget calls 
for an increase of only $32 million, adding just 21 Full Time 
Equivalents (FTEs).
    According to the GAO, ``as of June 2003, CBP has not increased 
staffing levels [at the POEs]'' (see GAO-05-663 page 19) and ``CBP does 
not systematically assess the number of staff required to accomplish 
its mission at ports and airports nationwide or assure that officers 
are allocated to airports with the greatest needs. . .CBP is developing 
a staffing model. . .however the new model. . .will not be used assess 
optimal level of staff to ensure security while facilitating travel at 
individual port and port facilities, including airports.''
    It is instructive here to note that the former U.S. Customs 
Service's last internal review of staffing for Fiscal Years 2000-2002 
dated February 25, 2000, known as the Resource Allocation Model or 
R.A.M., shows that the Customs Service needed over 14,776 new hires 
just to fulfill its basic mission--and that was before September 11. 
Since then the Department of Homeland Security was created and the U.S. 
Customs Service was merged with the Immigration and Naturalization 
Service and parts of the Agriculture Plant Health Inspection Service to 
create Customs and Border Protection and given an expanded mission of 
providing the first line of defense against terrorism, but also to make 
sure trade laws are enforced and trade revenue collected.
    Staffing Shortages at the Airports: According to GAO-05-663: 
International Air Passengers Staffing Model for Airport Inspections 
Personnel Can Be Improved, July 2005, there is much evidence that 
airports are experiencing staffing shortages. This report was prepared 
at the request of the House Subcommittee on Immigration, Border 
Security and Claims, Committee on Judiciary.
    CBP has two overarching and sometimes conflicting goals: increasing 
security while facilitating trade and travel. Prior to 9/11 there was a 
law on the books requiring INS to process incoming international 
passengers within 45 minutes. The Enhanced Border Security and Visa 
Protection Act of 2002 repealed the 45 minute standard; however, ``it 
added a provision specifying that staffing levels estimated by CBP in 
workforce models be based upon the goal of providing immigration 
services within 45 minutes (page 12-13).'' NTEU believes that staffing 
levels are not adequate to meet the 45 minute rule while enforcing 
necessary security measures.
    Staffing Shortages at the Seaports: The Dubai Ports sale has 
recently put a spotlight on the issue of seaport security. The 
Administration states that the Container Security Initiative (CSI) and 
the Customs-Trade Partnership Against Terrorism (C-TPAT) program are 
ensuring that 100% of foreign cargo is being scanned for WMD or other 
terrorist contraband either at the foreign departure port or at the 
POE. According to GAO-05-557 on Container Security, ``CBP has developed 
a staffing model to determine staffing needs but has been unable to 
fully staff some ports. . .As a result, 35 percent of these shipments 
were not targeted and were therefore not subject to inspection 
overseas.'' (see highlights page.)
    In another GAO report (GAO-05-466T) on Key Cargo Security Programs, 
GAO found ``several factors limit CBP's ability to successfully target 
containers to determine if they are high-risk. One factor is staffing 
imbalances. . .'' (see highlights page.) At port security hearings in 
both the House and Senate last month, GAO testified that staffing 
issues continue to impede the effectiveness of CSI and C-TPAT.
    NTEU is gratified and wholeheartedly supports the provisions in the 
House-passed immigration and border security bill and SAFE Ports Act 
that authorize the hiring of 1250 new CBPOs at the POEs over the next 
five years. Without an appropriation to fund these new positions, CBP 
will continue to be plagued with staffing shortages at the POEs.
    Staffing Shortages in Trade Enforcement: When CBP was created, it 
was given a dual mission of not only safeguarding our nation's borders 
and ports from terrorist attacks, but also the mission of regulating 
and facilitating international trade; collecting import duties; and 
enforcing U.S. trade laws. In 2005, CBP processed 29 million trade 
entries and collected $31.4 billion in revenue..
    Section 412(b) of the Homeland Security Act of 2002 (P.L.107-296) 
mandates that ``the Secretary [of Homeland Security] may not 
consolidate, discontinue, or diminish those functions. . .performed by 
the United States Customs Service. . .on or after the effective date of 
this Act, reduce the staffing level, or reduce the resources 
attributable to such functions, and the Secretary shall ensure that an 
appropriate management structure is implemented to carry out such 
functions.''
    When questioned on compliance with Sec. 412(b), then-CBP 
Commissioner Bonner stated in a June 16, 2005 letter to Representative 
Rangel that ``While overall spending has increased, budget constraints 
and competing priorities have caused overall personnel levels to 
decline.'' The bottom line is that DHS is non-compliant with Section 
412(b) of the HSA. As stated in the June 16, 2005 letter, ``CBP 
employed 1,080 non-supervisory import specialists in FY 2001 and 948 as 
of March 2005.'' CBP's most recent data shows 892 full-time, plus 21 
part-time Import Specialists--913 total employed by CBP.
    On March 30, 2006, NTEU-supported legislation was introduced in the 
House and Senate, S. 2481 and H.R. 5069, that would require the 
Department of Homeland Security to comply with Section 412(b) of the 
Homeland Security Act (P.L. 107-296). NTEU urges the Committee to 
inquire of CBP their plans to become compliant with Section 412(b) and 
their timeline to become compliant.

One Face at the Border Initiative
    The One Face at the Border (OFAB) initiative was designed to 
eliminate the pre-9/11 separation of immigration, customs, and 
agriculture functions at US land, sea and air ports of entry. In 
practice the OFAB initiative has resulted in diluting customs, 
immigration and agriculture inspection specialization and the quality 
of passenger and cargo inspections.
    Under OFAB, former INS officers that are experts in identifying 
counterfeit foreign visas are now at seaports reviewing bills of lading 
from foreign container ships, while expert seaport Customs inspectors 
are now reviewing passports at airports. The processes, procedures and 
skills are very different at land, sea and air ports, as are the 
training and skill sets needed for passenger processing and cargo 
inspection.
    It is apparent that CBP sees its One Face at the Border initiative 
as a means to ``increase management flexibility'' without increasing 
staffing levels. Congress, in the Immigration and Border Security bill 
passed by the House last year, HR 4437, section 105, requires the 
Secretary of Homeland Security to submit a report to Congress 
``describing the tangible and quantifiable benefits of the One Face at 
the Border Initiative. . .outlining the steps taken by the Department 
to ensure that expertise is retained with respect to customs, 
immigration, and agriculture inspection functions. . .'' NTEU believes 
such a report will reveal the serious negative impact on national 
security of this misguided program.

Law Enforcement Status
    The most significant source of consternation for CBPOs, is the lack 
of law enforcement officer (LEO) status for CBP officers. LEO 
recognition is of vital importance to CBP officers, CBP Officers 
perform work every day that is as demanding and dangerous as any member 
of the federal law enforcement community, yet they have long been 
denied LEO status.
    Within the CBP there are two classes of federal employees, those 
with law enforcement officer status and its benefits and those without. 
Unfortunately, CBP officers and Canine Enforcement Officers fall into 
the latter class and are denied benefits given to other federal 
employees in CBP who they work with at 317 ports-of-entry across the 
country.
    A remedy to this situation exists in an important piece of 
legislation involving the definition of law enforcement officer 
introduced in this Congress, H.R. 1002, Law Enforcement Officers Equity 
Act of 2005. NTEU strongly supports this bipartisan legislation 
introduced by Representatives Bob Filner (D-CA) and John McHugh (R-NY) 
and has 151 cosponsors to date, including Homeland Security Committee 
Chairman Peter King (R-NY) and full Committee and Subcommittee Ranking 
Members Bennie Thompson (D-MS) and Kendrick Meek (D-FL). This 
legislation would treat CBP Officers as law enforcement officers for 
the purpose of 20-year retirement.
    When law enforcement officers from different agencies join forces 
on a drug raid or to search a boat for armed smugglers or terrorists, 
CBP officers are often the only officers on the scene who are not 
considered law enforcement personnel for retirement purposes. They all 
face the same dangers and the risk of death or injury, but they don't 
all have the same rights and status.
    CBP Officers carry weapons, and at least three times a year, they 
must qualify and maintain proficiency on a firearm range. CBP Officers 
have the authority to apprehend and detain those engaged in smuggling 
drugs and violating other civil and criminal laws. They have search and 
seizure authority, as well as the authority to enforce warrants. All of 
which are standard tests of law enforcement officer status.
    Every day, CBP Officers stand on the front lines in the war to stop 
the flow of drugs, pornography and illegal contraband into the United 
States. It was a legacy Customs Inspector who apprehended a terrorist 
trying to cross the border into Washington State with the intent to 
blow up Los Angeles International Airport in December 1999.
    On February 28, 2006, another deadly shooting occurred at a U.S. 
border crossing, the third in a little more than a month, at 
Brownsville, Texas, when CBPOs were forced to open fire on the driver 
of a stolen vehicle who was attempting to flee across the border. At 
least two CBPOs were involved as the suspect turned the vehicle toward 
them and tried to run them down in an effort to escape. Earlier in 
2006, similar shootouts occurred between CBPOs and fugitives at the 
U.S.-Canada border in Blaine, Washington, and at the southwest border 
in Douglas, Arizona.
    As in the case of the other two recent border shootings, when local 
law enforcement officers needed help to capture or stop a suspect, they 
reached out to CBPOs. CBPOs at our borders are required to carry 
firearms, are trained in their use and have arrest authority, there is 
simply no justification for continuing to deny them law enforcement 
officer status. Terrorists, drug smugglers and fugitives do not 
hesitate to use violence to avoid being caught and arrested.
    Many people do not recognize the sacrifices that CBPOs and Canine 
Enforcement Officers make for the CBP. Their lives are controlled by 
their jobs. They rarely work regular 9 to 5 schedules and they have 
little control over the schedules they do work in any given two-week 
period. Staffing levels are not adequate to meet the needs of most 
ports, so Inspectors are frequently asked to work on their days off or 
to work beyond their regular shifts. The constant strain of performing 
dangerous, life-threatening work on an irregular and unpredictable 
schedule has a profound impact on the health and personal lives of many 
CBPOs. They must maintain control and authority, sometimes for 16 hours 
a day, knowing that a dangerous situation could arise at any moment.
    Given the significance of these jobs, it is vitally important for 
CBP to be competitive with other state and local law enforcement 
agencies in the recruitment and retention of first-rate personnel. 
Recruitment and retention of capable personnel was a preeminent 
consideration behind Congress' establishment of the twenty-year 
retirement option for other law enforcement officers and firefighters. 
NTEU believes the same compelling reasons exist here.
    Newer hires to CBP are highly susceptible to the pull of twenty-
year retirement benefits and higher salaries offered by state and local 
law enforcement agencies. They have received costly training and on-
the-job experience within CBP, but they know they deserve to be 
rewarded for the dangers and risks they are exposed to every day. All 
too often, talented young officers treat Customs as a stepping-stone to 
other law enforcement agencies with more generous retirement benefits.
No Pay for Saturday Training
    Customs Inspectors and CBPOs who received basic training at the 
Federal Law Enforcement Training Center (FLETC) between January 1, 
2002, and October 1, 2004, were not compensated for the sixth day of 
training for each week during that period. After four years of 
persistent efforts, NTEU has reached a favorable financial settlement 
with CBP that will provide appropriate compensation to employees who 
worked unpaid Saturdays during their basic training at FLETC. But, why 
would CBP want to get its new recruits off to such a negative start? It 
is this kind of unnecessarily cavalier treatment of employees that has 
earned DHS the distinction of being one of the worst places to work in 
the federal government.

Misuse of National Security Considerations
    CBP employees are extremely disturbed by the agency's misuse of 
national and internal security arguments to justify actions that have 
no security implications, while ignoring real threats to our nation's 
security. This issue was dramatically highlighted when it became known 
that CBP had raised no security questions about the United Arab 
Emirates owned, Dubai Ports World, buying port facilities in the U.S. 
Yet, the list of actions that CBP has raised security concerns about is 
long and ridiculous. Some examples of CBP's misuse of security 
considerations include:
    Warm weather uniforms: CBP argued that wearing uniforms with shorts 
in very warm climates threatened internal security. The Federal Service 
Impasses Panel (FSIP) found there was no security issue.
    Awards: CBP argued that continuing to implement separate negotiated 
agreements on awards, rather than its preferred single policy would 
``increase the risk that potential terrorist, terrorist weapons or 
components would be undeterred and go undetected resulting in real or 
perceived harm to our nation's economic stability and /or its 
citizens.'' An arbitrator found no merit to CBP's argument.
    Grooming Standards: CBP unilaterally imposed new personal grooming 
standards that prohibit beards, limit the length, style and color of 
hair, set standards for fingernail grooming and the amount and type of 
jewelry. CBP argued that these rules were based on internal security 
needs and necessary for the successful functioning of the Agency. An 
arbitrator ruled against CBP. CBP has appealed the decision.
    Alternative Holsters for Pregnant Officers: CBP discontinued a 
practice of allowing pregnant CBP officers to use shoulder, rather than 
waist holsters, arguing it was a matter of internal security. CBP's 
action was upheld.
    These are just a few examples of how CBP continues to misuse 
security considerations to try to justify the unjustifiable. It is 
particularly disturbing to CBP employees that security concerns are 
falsely raised on these types of minor issues, yet issues with real 
security implications, like the Dubai Ports World issue and lack of 
staffing go unquestioned by CBP.

CONCLUSION
    Each year, with trade and travel increasing at astounding rates, 
CBP personnel have been asked to do more work with fewer personnel, 
training and resources. The more than 15,000 CBP employees represented 
by the NTEU are capable and committed to the varied missions of DHS 
from border control to the facilitation of trade into and out of the 
United States. They are proud of their part in keeping our country free 
from terrorism, our neighborhoods safe from drugs and our economy safe 
from illegal trade. These men and women are deserving of more resources 
and technology to perform their jobs better and more efficiently.
    The American public expects its borders and ports be properly 
defended. Congress must show the public that it is serious about 
protecting the homeland by fully funding the staffing needs of the 
CBPOs at our 317 POEs. I urge each of you to visit the land, sea and 
air CBP ports of entry in your home districts. Talk to the CBPOs, 
canine officers, and trade entry and import specialists there to fully 
comprehend the jobs they do and what their work lives are like.
    Again, I would like to thank the committee for the opportunity to 
be here today on behalf of the 150,000 employees represented by NTEU to 
discuss these extremely important federal employee issues.

    Mr. Rogers. The Chair now recognizes Mr. John Gage, 
National President of the American Federation of Government 
Employees, for your statement. Thank you, Mr. Gage.

                     STATEMENT OF JOHN GAGE

    Mr. Gage. Thank you, Mr. Chairman. I just--in my travels I 
visited Anniston two weeks ago, and I must say it was very 
heartening to see a strong labor relations commitment there, 
and my 2,700 members down there, and the president, Everett 
Kelly, wanted me to thank you for your staff work and your just 
great support for the mission and the employees of Anniston.
    Now, DHS. I am beyond giving this Department the benefit of 
the doubt. I have traveled the country, talked to hundreds of 
officers, and there is no question, there really shouldn't be 
any question, why morale is so bad. It starts off with the 
stupid.
    You know, there was a guy--I was out in Houston, and they 
just did a 10 percent--put up on the board 10 percent of the 
people have to go over to Customs, 10 percent of the Customs 
have to go to Immigration. Okay, they put all the senior people 
on the list, or they went in seniority the wrong way. So a guy 
comes up to me and says, I am retiring in a month, I am the 
senior guy on immigration, I am training my replacement on the 
specific thing that I do. So I said, let me see what I can do.
    I had a meet-and-greet with the boss, and so I brought it 
up with him, and I said, did you know-why did you do this on 
this inverse seniority? No reason. I said, you know, a guy is 
retiring in a month, another guy is retiring in 2 months, the 
training won't even be over before they are retiring, and you 
have volunteers to do this. And he goes, no, I didn't know 
that. I said, well, you know it now; can we work something out 
with this? I have made my decision, that is it. And that was 
just the story that went around the whole port about how dumb 
this type of management is.
    But the real issues are on money. This agency is nickel and 
diming these employees every chance it gets. For instance, 
senior inspectors, they had a provision, AUO, an overtime 
provision, because they, off their tour, they are investigating 
and the prosecution of detainees, et cetera, and they have had 
this benefit for years. And the agency comes in when the 
Department was formed and said, well, we are taking that away, 
but we are going to give you this thing called LEAP, which is 
similar. Then they go and they completely renege on it, give 
them no AUO, no LEAP. These guys are taking a 15-to 30,000 hit 
in their yearly earnings.
    Now, why the agency goes on these things--for instance, 
FLAP, which is bilingual pay, and some of our Immigration and 
Customs people, especially on the southern border, I mean, that 
is an integral part of their work. They do it more than any 
other employee, I would say, in the Federal Government. Well, 
the Customs people have had bilingual pay; the Immigration 
people did not. We are in litigation with the agency fighting 
every step of the way not to give this benefit. Similarly, the 
Immigrations people have a Saturday overtime provision which 
NTEU and Customs do not, and they dragged NTEU through long 
litigation, which they finally won, to get this benefit.
    These ``other than permanent people'' who they use for--
some of them have worked at the agency 12, 15 years; they are 
paid a grade 7, yet they are used to do the full range of the 
job of Immigration Customs, and they say, well, we can't pay 
you because you are not qualified, but we can order you to do 
the work. Now, these folks are saying, if I can do the work, 
and I have been doing it for 12 years, why am I not being paid 
for it?
    And the inadequate pay that we see across the board, 
especially when see get to San Diego, Fort Lauderdale, these 
high-rent places, we are seeing our officers having their 
families 100 to 200 miles away doubling up and getting small 
apartments during the week because they cannot afford the price 
of a house, and yet they are essential employees, and they just 
can't afford it. The same goes for our agriculture technicians 
and our agriculture specialists.
    But the real answer that has to be put in right now, which 
our people don't understand, here is my gun, here is my badge, 
here is my arrest record, tell me why I am not afforded law 
enforcement status in 6(c) coverage. Now, that one thing would 
improve morale tremendously, and that one thing would really 
stop the turnover because that is what the officers are going 
for. We can't compete in pay with local law enforcement, and 
they have the benefit of the 6(c) retirement coverage.
    And if there is one thing that should be done is that 
Congresswoman Jackson-Lee's bill really ought to move. This 
agency can do it right now. They have the authority, and they 
just bring up nickel, dime reasons why they are not providing 
these benefits to these very valuable people.
    So, Mr. Chairman, I think these three or four issues, 
really, more communication with people about why decisions are 
made, and quit fighting them on true law enforcement pay issues 
that the agency should be willingly giving to these folks 
instead of making the unions fight, you know, go through 
lengthy litigation.
    So finally I just to want say, this is before MAX HR is 
instituted. I dread to think what is going to happen when they 
have increased rights and especially a pay-for-performance 
scheme that has never worked in law enforcement, and our law 
enforcement officers, as well supervisors, dread the day when 
that is going to break up their teamwork in the way they get 
business done.
    Thank you, Mr. Chairman. I would be happy to answer any 
questions.
    Mr. Rogers. Thank you, Mr. Gage. That was very worthwhile.
    [The statement of Mr. Gage follows:]

                    Prepared Statement of John Gage

    Mr. Chairman and Subcommittee Members: My name is John Gage, and I 
am the National President of the American Federation of Government 
Employees, AFL-CIO (AFGE). On behalf of the more than 600,000 federal 
employees represented by AFGE, including 60,000 who work in the 
Department of Homeland Security (DHS), I thank you for the opportunity 
to testify here today on the current serious problems at DHS.
    As you know, the Office of Personnel Management (OPM) conducted its 
Human Capital Survey of Federal Agencies from August to December 2004 
and released the results in May 2005. An analysis of the results of 
that survey by the Center for American Progress found that DHS came in 
dead last of the 30 agencies for employee satisfaction, adequate 
resources, leadership, working conditions and many other factors. DHS 
employees have the lowest morale of any group of Federal employees.
    This does not come as a surprise to AFGE. In 2004, we had the Peter 
D. Hart Research Associates conduct a survey of CBP employees for us. 
That survey found that:
        1. Most frontline CBP personnel do not believe they have been 
        given the tools to fight terrorism.
        2. Most believe that DHS could be doing more to protect the 
        country.
        3. Most have serious concerns about DHS strategies related to 
        their jobs; the majority felt that the ``One Face at the 
        Border'' initiative has had a negative impact.
        4. Most believe that the changes in personnel regulations will 
        make it harder to accomplish their mission.
        5. Three in five respondents say that morale is low among their 
        co-workers.
    We shared these findings with DHS, but our survey was dismissed as 
just a union survey--not important. Instead of being alarmed by the 
results and working with us to address the concerns, DHS instead 
ignored us and its own frontline employees. The OPM Human Capital 
Survey reinforced and validated what we already knew from our own poll 
of the people we represent and from our ongoing communication with 
them. In addition to the concerns above, CBP employees feel strongly 
that there are significant inequities within the Department, including 
the disparity in DHS? recognition of Law Enforcement Officer status.

INTRODUCTION
    Since its inception, DHS has not been straightforward or honest in 
its dealings with its employees, the public, or the Congress. Looking 
back, we cannot point to a single thing DHS has done right regarding 
its frontline employees.
    Since September 11, 2001, the Bush Administration has taken every 
opportunity available to advocate for a profound erosion of civil 
service protections and collective bargaining rights for federal 
employees. In 2002, the Bush Administration reluctantly agreed with 
Senator Joseph Lieberman (D-CT) that the creation of a Department of 
Homeland Security (DHS) was necessary. However, the Bush Administration 
insisted on a quid pro quo for that acquiescence; specifically, that 
federal employees who were transferred into the new department would 
not be guaranteed the collective bargaining rights they had enjoyed 
since President Kennedy was in office. In addition, the Bush 
Administration insisted that the legislation that was eventually signed 
into law exempt the DHS from compliance with major chapters of Title 5 
of the U.S. Code, including pay, classification, performance 
management, disciplinary actions and appeal rights, as well as 
collective bargaining rights.

DEPARTMENT OF HOMELAND SECURITY
    On November 25, 2002, President Bush signed the bill creating the 
Department of Homeland Security (DHS). This law has combined 22 federal 
agencies and 170,000 employees, 60,000 of whom are represented by AFGE. 
Most of these employees had been working for the Immigration and 
Naturalization Service (INS) as Border Patrol Agents, Immigration 
Inspectors, Special Agents, and Detention and Deportation Officers. 
AFGE-represented employees from the Coast Guard, the Federal Emergency 
Management Agency, the Animal and Plant Health Inspection Service 
(formerly under the Department of Agriculture), the Federal Protective 
Service, the Chemical, Biological, Radiological and Nuclear Response 
Assets division of the Department of Health and Human Services, and the 
Plum Island Animal Disease Center were also brought into DHS.

The Right to Organize
    One of the most contentious issues in the Congressional debate on 
the creation of the DHS related to the authority of the President to 
deny collective bargaining rights to employees, subdivisions and 
agencies engaged in national security work. President Bush used this 
authority early in 2002 to prevent employees of the U.S. Attorneys' 
offices from organizing. Both because of this action, and fears that 
the President would abuse this power by excluding all unions from the 
DHS, AFGE spearheaded an effort in Congress to limit this authority. 
After a protracted debate, the Congress agreed with the 
Administration's position on this matter. Since enactment, President 
Bush has exercised the power to exclude unions from all or part of the 
Department through his December 2005 Executive Order eliminating 
collective bargaining rights for all employees of the Office of 
Investigation in Immigration and Customs Enforcement (ICE).

Personnel Flexibility Provisions
    An equally contentious issue during the debate on homeland security 
in 2002 concerned the supposed need for additional personnel 
flexibilities in connection with managing employees of the DHS. Section 
841 of the Act authorizes the establishment of a new Human Resource 
Management System and provides the Administration with the ability to 
modify Chapter 5 of the United States Code in each of the following 
areas: pay, classification, performance, disciplinary actions, appeals, 
and labormanagement relations. The rationale was to put all 
170,000 of the agency's employees under one set of rules and policies. 
Conveniently ignored was that 60,000 of the 170,000 (more than a third) 
of those employees, the TSA screeners, would be outside the supposedly 
department-wide system.
    The new law created a process for employee collaboration in the 
development of the new system, but left the Secretary of DHS with the 
final authority to impose changes over objections from unions or other 
employee representatives. In 2003, AFGE and representatives from OPM 
and DHS spent six months exploring options and debating proposals to 
address pay, classification, performance, disciplinary actions, appeals 
and labor-management relations. This was followed by a statutory ``meet 
and confer'' process over the regulations DHS proposed. DHS published 
its final regulations, called ``MAXHR,'' on February 1, 
2005. AFGE and others sued to block implementation, and in August 2005, 
Federal Judge Rosemary Collyer ruled that major portions of the DHS 
regulations, including those involving collective bargaining, were an 
illegal violation of the terms set forth in the Homeland Security Act. 
DHS has appealed the judge's rulings, and thus the fate of the DHS 
personnel system remains unknown.

Pay System
    The DHS personnel regulations provide very little detail about the 
new pay system for DHS employees, and leave broad discretion in every 
area. DHS has not yet issued any directives about pay. This raises the 
real possibility that the salaries of some employees will unfairly lag 
behind those of other employees in the Federal Government, making it 
extremely difficult to attract and retain high-quality employees.
    Everything we have seen to date indicates that this is a ploy to 
reduce pay for most DHS employees, resulting in lower standards of 
living and lower morale. Once this system is implemented and 
experienced employees start heading for the exit doors, it will be 
impossible to replace their expertise. The employees of the DHS will 
quietly, one by one, leave to pursue careers in other agencies that 
will treat them with the dignity and fairness that they deserve. The 
real losers in this ill-advised experiment will be the American 
citizens who are looking to their government for protection. We call on 
this Committee to revoke DHS' authority for MAXHR and use 
the funds for better purposes--to increase staff and strengthen 
frontline border protection.

Collective Bargaining
    Under the DHS personnel regulations, the scope of bargaining is so 
limited that unions will no longer be permitted to bargain over any 
issues that are even remotely related to operational matters, even 
though they often profoundly affect these employees who possess a great 
deal of knowledge about them. In addition, the final DHS personnel 
regulations reduce DHS' obligation to collectively bargain over the 
already narrowed scope of negotiable matters by making department-wide 
regulations non-negotiable. Collective bargaining is currently 
precluded only over government-wide regulations and agency regulations 
for which a ``compelling need'' exists. The final DHS personnel 
regulations would allow management to void existing collective 
bargaining agreements, and render matters non-negotiable, simply by 
issuing any department-wide regulation. The result is that employees 
will be deprived of their voice in most workplace decisions.
    In addition, the DHS personnel regulations transfer responsibility 
for adjudicating collective bargaining disputes from the Federal Labor 
Relations Authority (FLRA) and the Federal Service Impasses Panel 
(FSIP) to an internal DHS Labor Relations Board, whose members are 
hand-picked by the DHS Secretary with no Senate confirmation. These 
members are removable only by the Secretary. Meaningful collective 
bargaining must have independent review and resolution of disputes.
    Judge Rosemary Collyer ruled against DHS and found that the final 
regulations impermissibly limit bargaining and do not provide for an 
independent third party for dispute resolution, and, therefore, do not 
ensure collective bargaining as required by the Homeland Security Act.

Employee Appeal Rights
    The Homeland Security Act gave the Secretary and OPM Director 
authority to modify the appeals procedures of Title 5, but only in 
order ``to further the fair, efficient and expeditious resolution of 
matters involving the employees of the Department.'' Instead, the final 
regulations virtually eliminate due process by limiting the current 
authority of the Merit System Protections Board (MSPB), arbitrators and 
adjudicating officials to modify agency-imposed penalties in DHS cases 
to situations where the penalty is ``wholly without justification,'' a 
new standard for DHS employees that will rarely, if ever, be met.

DHS Went Beyond Congressional Authorization
    As mentioned earlier, District Court Judge Collyer agreed that DHS 
has gone beyond the latitude that the law allowed in both labor 
relations and appeals. That decision is currently being appealed by 
DHS.
    DHS has claimed that it created a new personnel system that ensured 
collective bargaining, as required by Congress. But the Court has ruled 
that it has not ensured collective bargaining, but eviscerated it. DHS 
has claimed that its regulations are fair, as required by Congress. But 
the Court has ruled that they are not fair, because they would 
improperly prevent the MSPB from mitigating a penalty it considered to 
be too harsh or out of proportion to the offense.
    AFGE has no confidence that DHS will be less deceptive or do a 
better job with the other parts of MAXHR and create and 
implement fair, credible and workable pay, performance management and 
classification systems. DHS employees also have no confidence and a 
great deal of anxiety and distrust about these new systems.

COLLABORATION WITH UNIONS
    This distrust did not happen overnight. Let me give you a little 
background on our involvement in the whole process of developing 
MAXHR. As you will see, the process was a charade in which 
employees? views, and the views of their representatives, were 
collected, and then ignored.
    Under the Homeland Security Act, the Secretary of Homeland Security 
and the Director of OPM were authorized to issue regulations jointly 
that would establish and describe the new personnel system.
    The development of the personnel system involved both a formal 
statutory collaborative process between unions representing the 
agencies' rank-and-file employees and agency operational managers and 
an earlier design process created by the Secretary and the Director.

The Statutory Collaboration Process
    The Homeland Security Act required that the new personnel system be 
created with full participation by elected representatives of the 
employees.
    Under section 9701(e)(1)(A), the Director and Secretary were 
required to provide their proposal to the employee representatives. The 
unions would then have 30 days to review the proposal and make 
recommendations to improve it. After receiving these recommendations, 
the Director and Secretary were required to give them ``full and fair 
consideration in deciding whether or how to proceed with the 
proposal.''
    After deciding how much of the employee representatives' 
recommendations to adopt and how much to reject, the Secretary and 
Director were required to tell Congress what recommendations were 
rejected. The Secretary and Director then were to meet and confer for 
at least 30 days with the unions, in order to attempt to reach 
agreement on the points in dispute. The Federal Mediation and 
Conciliation Service was to assist.
    Ultimately, the Secretary and Director adopted regulations over the 
employees' objections.

The Pre-statutory Design Process
    Rather than launch right into the statutory process, the Secretary 
and Director established a preliminary design process, which included 
substantial union involvement from April through approximately October 
2003.
    During this time, AFGE participated in developing options for the 
new personnel system along with management representatives from DHS, 
OPM, and other unions. The group, called the Design Team, divided into 
two sub groups--one focused on Pay, Performance and Classification 
while the other focused on Labor Relations, Adverse Actions and 
Appeals. Over the six months that the group operated, it heard from 
experts in personnel system design from academic institutions, federal 
agencies, non-profits, and private firms. The members of the group read 
from the extensive body of literature on human resource systems and 
contacted organizations in the private sector, the non-profit sector, 
federal agencies, and state and local governments to learn more about 
their personnel systems.
    In addition to the Design Team, a Field Review Team was 
established, comprised of union representatives and managers from DHS 
facilities around the country. The Field Review Team and the Design 
Team shared ideas and criticisms of the developing materials at these 
times.

Site Visits, Focus Groups, and Town Hall Meetings
    During the summer of 2003, members of the Design Team and top DHS, 
OPM and union officials traveled to eight cities around the country to 
hold Town Hall meetings for DHS employees in the area and to conduct 
focus groups with both management and non-management employees. These 
visits took place in Norfolk, New York, Detroit, Seattle, Los Angeles, 
El Paso, Miami, and Atlanta. During the Town Hall meetings, employees 
were free to ask questions, make comments or express their concerns. 
And they did, in city after city, speak up and say what was on their 
minds.
    In the focus groups, DHS workers were asked to discuss pay, 
classification, performance management, labor relations, adverse 
actions, and appeals--specifically to talk about what works, what 
doesn't and what might be an improvement. Employees shared their ideas, 
told us about rumors circulating in their workplaces, and voiced their 
deep concerns about radically changing a system the vast majority felt 
needed only small changes to work better.
    In fact, the Design Team heard over and over again, both in the 
Town Hall meetings and in the focus groups, that if the current system 
were properly funded and carried out, it would work well. DHS employees 
said it was important for working people to be able to have some 
confidence in the stability of their income so they could plan for 
their families? futures. They said that their performance appraisal 
systems did a poor job of accurately and fairly making distinctions 
among employees about their performance. They said that favoritism and 
poor management were big problems where they worked and that giving 
supervisors and managers more control over their pay was a bad idea. 
They said they feared what pay-for-performance would do to cooperation, 
teamwork, and the sense of pulling together for a common mission. They 
said they wanted to be protected from erroneous or vengeful management 
actions against them.
    While the members of the Design Team were in these eight cities, 
they also visited several DHS workplaces in the area. This gave the 
Team insights into the variety of jobs DHS employees perform and an 
increased appreciation of the vital work done by the Department. At 
several of the sites, Team members had an opportunity to talk with 
employees. Once again, the overriding themes were concerns about 
putting pay decisions, based on subjective performance evaluations, 
into the hands of managers, pitting employee against employee to win 
the prize of a higher payout, losing protections against wrongful 
management actions, and losing the right to have a meaningful say about 
conditions in their workplaces.

Personnel System Options
    Once the Design Team members were back home, work on developing the 
options started in earnest. The Team brainstormed ideas for options, 
grouped similar ideas together, and set up committees to begin the 
work. Out of this process came the fifty-two options that went forward 
to the Senior Review Committee and then to the Secretary of DHS and the 
Director of OPM. Regrettably, there was no rigorous attempt to derive 
the options from the actual research that was done nor to show evidence 
that such options were likely to be successful or solve real problems 
in the Federal workplace.
    The Senior Review Committee (SRC) included me in my capacity as 
AFGE National President, as well as the presidents of the National 
Treasury Employees Union (NTEU) and the National Association of 
Agricultural Employees (NAAE), top officials from DHS and OPM and 
technical advisors from universities and the private sector. The SRC 
met first in July to approve the guiding principles and the process 
developed by the Design Team. In October, we held a two-and-a-half-day 
facilitated meeting to discuss the options and various ideas and 
concerns we all had about personnel reform. While the discussions were 
lively and informative, there was no attempt to winnow down the number 
of options to those most palatable to the SRC as a whole; rather, all 
fifty-two went forward to the Secretary and the Director. In other 
words, this high level committee was not asked to do the real work of 
collaboration and try to come up with ideas we could all live with. 
Instead, it was all for show.
    AFGE insisted on being able to participate in this endeavor, as we 
were assured that the work of the Design Team and the Senior Review 
Committee would be heeded when DHS and OPM made decisions regarding the 
new DHS personnel system. In fact, both DHS and OPM involved AFGE well 
before the statutory collaboration process began. Substantial resources 
were devoted to establishing and supporting the Design Team, the Field 
Review Team, and the Senior Review Committee, as well as carrying out 
the ambitious schedule of Town Hall meetings and focus groups around 
the country. During the Design Team process there was a genuine sense 
of collaboration.
    That is why we are so angry with the outcome of the process. This 
anger goes beyond our fundamental disagreement with many of the 
decisions that made their way into the regulations. We also are 
outraged that the regulations do not reflect the research that was done 
by the Design Team, the views and preferences of the overwhelming 
majority of Town Hall and focus group participants, the bulk of 
academic research in the field, the more than 3500 comments (a record 
at the time) sent in by employees and members of the public, or the 
ideas and objections raised by the Unions during the Meet and Confer 
process. Ultimately, none of this mattered to DHS and OPM when they 
developed their regulations.

Employees' Views
    As mentioned above, the Design Team heard over and over again, both 
in the Town Hall meetings and in the focus groups, that if the current 
system were properly funded and carried out, it could achieve 
everything the advocates of change professed to want. Both managers and 
non-managers made it clear that they did not believe that there were 
terrible problems that could only be solved by radical change. If 
anything, DHS employees said they feared that problems and disruptions 
would result from, not be resolved by, such change. Employees said it 
would harm morale and recruitment for workers to have no stability in 
their income. By far the vast majority of workers did not believe their 
appraisal systems or their managers could do a fair and accurate job of 
paying good employees different amounts based on their performance. 
They feared that such a system would create a cutthroat environment 
among employees and harm the Department's ability to carry out its 
mission. There was absolutely no call from the employees the Design 
Team researched to make the changes found in the regulations.

Review of Other Employers
    Even if one looks hard, one would find little, if anything, in the 
research done by the Design Team that supports the proposed or final 
regulations. It is telling that in the introductory explanations to the 
proposed regulations, the authors do not even pretend that any 
proposals were drawn from the research or cite any research to support 
them. Instead they allude to undocumented and unproven allegations 
about the inability of federal managers to do their jobs under the 
current system. Indeed, the regulations reinforce the fears employees 
expressed to us during the site visits and in other communications, 
namely that the outcome was, for the most part, predetermined and based 
on the ideological wish lists of certain segments of management and the 
Administration rather than on any study of the facts.
    What does the research documented by the Design Team actually show? 
It shows that in all the organizations researched by the Team, only New 
York State has any system in place to evaluate the success of its labor 
relations program. It shows that the Australian Customs Service has a 
pay-banding system in which pay, performance and classification plans 
are negotiated with the employees' unions and become part of the 
contract. It shows that in Great Britain's Her Majesty's Customs and 
Excise, there is a pay banding system with 11 bands and pay increases 
are negotiated with the two unions that represent the employees.
    The Design Team research shows that the Kings County Washington 
Sheriff's Department Personnel Manager does not recommend pay-for-
performance for public sector employees. He says it creates three or 
four months of chaos and resentment and there is no return on 
investment. It is hard to measure things objectively and counting 
things like arrests can backfire. It is often the luck of the draw--one 
employee can have many cases that each take only a short time while 
another gets a case that takes years to resolve. How do you equalize 
employees' opportunities to do the things that get them pay increases?
    In North Carolina, the Design Team learned that the State 
Department of Transportation implemented a competence-based system. 
Unfortunately, the state legislature failed to provide a general 
increase for state workers so everyone in the Department was given a 
one-time bonus of $550 and 10 bonus leave days. The research showed 
that in New York State, pay is negotiated with the employees' unions 
and there is no pay-for-performance system. In Philadelphia, four 
different unions negotiate the systems for white collar, blue collar, 
police, and fire fighters. Classification and pay changes are subject 
to review by a joint labor-management committee. In the state of 
Pennsylvania, bargaining unit pay is negotiated and, while employees 
are not required to join the union, they must pay a fair share if they 
do not join. There are no pay-for-performance systems.
    In Hampton, VA, there is a pay-for-performance system, but it 
doesn't include police, fire or rescue employees, jobs similar to the 
core jobs in DHS. They get increases based on training and 
certification in required skills. In Pierce County in Washington State, 
half of an employee's pay increase is based on seniority and half on 
performance. Here too, however, police and firefighters get competency 
adjustments instead. Riverside County, California has a competency-
based pay system for 500 Information Technology employees, which must 
be negotiated prior to implementation in bargaining units. Employees 
with more than five years on the job are eligible for a ?Historical 
Knowledge? competency, similar to a longevity increase, in order to 
recognize the importance of experience and loyalty.
    St. Paul, Minnesota has 26 bargaining units that negotiate pay, 
performance appraisal systems, and other conditions of employment. Most 
employees are under a step system similar to the current General 
Schedule system. Attorneys, however, are under a collectively bargained 
performance progression system. The Washington State Legislature 
recently passed a law that expands the scope of bargaining to include 
economic issues. At the same time, the legislation called for changing 
the civil service system. They have rejected the idea of a pure pay-
for-performance system as too onerous and contrary to their culture. 
They plan instead to have a mix of performance awards, incentives, 
skill-based systems, gainsharing, etc. They said that pay-for-
performance should be the last thing implemented, if at all. First you 
have to have sound classification, pay and performance management 
systems in place.
    According to the Design Team research, the Federal Aviation 
Administration has a Core Compensation Plan, which is negotiated in 
bargaining units, including pay. Since the completion of the Design 
Team process an additional bargaining unit reached agreement on the 
Plan, but it calls for any Organizational Success Increase determined 
by the Administrator to be divided equally among the employees rather 
than more being given to some based on their appraisals. Employees may 
grieve virtually all pay-setting actions through the MSPB, negotiated 
grievance procedures for bargaining unit employees, or through what FAA 
calls its ``Guaranteed Fair Treatment Process,'' in which the employee 
and management jointly select a neutral third party. We have since 
learned that 2000 FAA employees filed a lawsuit because they had not 
received a pay increase for three years.
    The Bureau of Alcohol, Tobacco, Firearms and Explosives has a pay-
banding, pay-for-performance demonstration project that involves only 
its scientific, technical and engineering positions. The FBI has a 
pass/fail system and no pay banding.
    The Federal Deposit Insurance Corporation (FDIC) has a pay system 
that is collectively bargained. They used to have a pay-for-performance 
system tied to appraisals but abandoned it and replaced it with a pass/
fail system. They found that the amount of pay differences based on 
differences in performance was too small to justify the administrative 
costs of running the program. They are replacing it with a program in 
which at least one-third of the employees will be recognized as top 
contributors and receive additional 3% increases. The Board of 
Governors of the Federal Reserve System has a pay-for-performance 
system that covers mostly professional employees. The Government 
Accountability Office has a pay banding system in which employees are 
evaluated on their performance in core competencies. They have since 
moved to a market-based system. There have been recent reports in the 
press of dissatisfaction among GAO employees, with some leaving the 
Office. The Internal Revenue Service has a pay-banding system for 
managers.
    Several small independent agencies have pay-for-performance 
systems, such as the National Credit Union Administration, the National 
Security Agency, and the Comptroller of the Currency, the Office of 
Thrift Supervision, and the Securities and Exchange Commission. Some of 
the employees of these agencies are represented by unions while others 
are not. The Design Team research has no information about whether or 
not any of these systems are successful. The Transportation Security 
Administration has a core compensation system for non-screeners based 
on the FAA system. Because of problems with the performance appraisal 
system, employees received increases equivalent to the GS increase in 
January 2003 rather than increases based on performance.
    The Boys and Girls Clubs of America aims for a bell curve 
distribution of their performance ratings and bases its employees' pay 
on them. Boeing has broad bands, with merit pay increases based on 
performance. In bargaining units, the unions negotiate how much of the 
increase is guaranteed and how much is subject to performance pay. 
General Electric has a pay-for-performance banding system for 
managers--the bulk of the workforce is not included. IBM has a market-
driven pay system that allows the top 20% of performers to get 
increases as much as three times the amount given to the bottom 20%. 
IBM told the Design Team that it is easy to differentiate the top and 
bottom performers but it is very difficult to make distinctions among 
their good employees in the middle. In the Union Pacific Railroad, 
about 70% of employees get performance cash awards. At PepsiCo, 
executives and non-union employees are in a pay-for-performance system. 
The research for Verizon only deals with managers who are in a pay-for-
performance system.
    None of the research backs up the final DHS regulations or shows 
that pay-for-performance works in the sense of improving employee 
performance, lowering costs, and improving recruitment or retention. 
Not surprisingly, there was no attempt to try to demonstrate any of the 
alleged virtues of pay for performance. In fact, in response to AFGE 
requests for any evidence that pay-for-performance improves the quality 
or productivity of an organization, we were told that this was not the 
goal. OPM claimed that performance pay was a ``fairness'' issue. 
Apparently, according to both OPM and DHS senior leaders on the Design 
Team, employees resent working hard and having a co-worker, who they 
believe is not working quite as hard get the same amount of pay.
    Maybe this is a problem in headquarters offices. We don't hear this 
concern from our members who work at the ports and borders, and other 
federal facilities. Most employees don't waste time stewing about their 
co-workers. People at the frontlines know who can't do the job (very 
few) and who can. Beyond that, they know who is better at certain 
things, who is the go-to person for certain questions, etc. They know 
that some days you do something heroic and weeks can go by just doing 
routine things. Add pay for performance to most frontline jobs, and you 
WILL make that belief that workers resent each other come true.
    Why implement an entire pay system whose sole justification is to 
accommodate employees who pout about what a co-worker is paid? What 
about teamwork and agency mission? Even OPM admits that adopting 
agency-wide pay for performance is not a solution to managers' 
disinclination to address the much-hyped problem of poor performers. 
However, they are basing their recommendations on good employees' 
supposed belief that they are better than other employees and grousing 
about not getting a little more money.
    AFGE does not believe that poor performers should continue in jobs 
they cannot or will not do right. Our members do not want to work with 
poor performers. We believe that managers should bring sub-par 
performance to an employee's attention, try to find out what is causing 
it, provide training or other resources, and give the employee time and 
encouragement to improve. Ultimately, however, if the employee is 
unwilling or unable to improve, action should be taken to demote, 
reassign or terminate that employee. We don't see anything in 
MAXHR that gives us confidence that this will happen any 
better than it does currently. Of course, there should be fair and 
independent appeals processes for the employee to challenge the 
decision. But it is wrong to make the kind of radical and disruptive 
change DHS is planning because it believes that some good employees 
worry about what other good employees are making. This is an absurd and 
puerile basis for imposing a potentially destructive pay system on an 
entire agency.

Meet and Confer
    As required by Congress, DHS and OPM met with the three unions in 
order to attempt to reach agreement on the points in dispute with the 
proposed regulations. Rather than enumerate those things that DHS 
agreed with the unions about and those that were in dispute, DHS chose 
to withhold that information, thus making the Meet and Confer process 
less efficient--we weren't able to focus on the most important 
disagreements. In addition, we weren't able to use the time to deal 
with the details of the new pay, performance management and 
classification systems, because DHS had put only vague ideas in the 
proposed regulations. Ultimately, the final regulations did not reflect 
the ideas, concerns or suggestions of the unions in any meaningful way. 
Once again, the process was a sham.

ANALYSIS OF THE PAY, PERFORMANCE MANAGEMENT AND CLASSIFICATION SYSTEMS
    Any new pay and classification system should support, not 
undermine, the mission of DHS. This is only possible with a system that 
promotes teamwork, rather than penalizes it. Unfortunately, the DHS 
system fails this basic test.
    DHS plans to establish occupational clusters composed of four 
bands--(1) entry and developmental, (2) full performance, (3) senior 
expert, and (4) supervisory. With proper design and safeguards we see 
potential benefits in the establishment of an entry and developmental 
band. Although it is not clearly specified how such a band would 
function, we believe that it could be modeled after the current career 
ladder system, which also is an entry and developmental system leading 
to a full performance level. With negotiated safeguards, which ensure 
fairness in moving within and between bands, availability of 
appropriate training and assignments to demonstrate competence, we 
could support flexibilities that allow faster movement for those who 
demonstrate readiness for the next level sooner than a year. If 
bargained collectively, this is the type of reform AFGE would support 
as a means of enhancing the operation of DHS.
    The current classification system provides a good framework for 
insuring the important principle of equal pay for substantially equal 
work. There is absolutely no indication of how these new clusters and 
bands will meet this important goal. To date, we have not seen even a 
draft management directive regarding clusters or bands. We do know that 
the regulations propose that an employee's assignment to a particular 
cluster or band will not be subject to an as yet unspecified DHS 
reconsideration process. The regulations also state these matters will 
be barred from collective bargaining. Whether this system will be fair 
and equitable is anyone's guess--based on what we have seen so far from 
DHS, we have grave doubts.
    We have many concerns about the system of pay adjustments, but 
foremost is whether or not the adjustments will be funded. Will the 
Administration and the Congress fund the increases next year? If they 
do, will they fund them in the succeeding years? As we all know, 
today's Congress cannot bind the next one. This is especially 
troublesome in the DHS proposal for annual performance based pay 
increases, which, if not properly funded, will only produce a ruinous 
zero sum game with the perverse incentive to promote a coworker's 
failure.
    The payout system described in the regulations would establish a 
point system for each employee depending upon his or her appraisal. The 
system is set up in such a way that one employee does better if more of 
his or her co-workers do poorly. The value of a payout point is 
determined after employees have been evaluated. If the aggregate amount 
of ``performance'' is high, the value of a point is low. If the 
aggregate amount of ``performance'' is low, the value of a point is 
high. The incentive is both perverse and clear: The lower the 
performance of the organization as a whole, the bigger the raise an 
employee judged to be a high performer will receive. Someone motivated 
to work hard for the promise of a big raise will only achieve his goal 
if management judges the majority of his coworkers to be losers.
    The example given in the proposed regulations describes a group of 
100 employees for whom the performance pay pool is determined to be 
$84,390. In this hypothetical group, 30 employees receive a ``meets 
expectations'' rating valued at 1 point, 46 employees receive an 
``exceeds expectations'' rating valued at 2 points, and 24 employees 
receive a ``meets excellence'' rating valued at 3 points. The total 
number of points for the group is 194, which is divided into the 
performance pay pool to come up with $435 as the value of a point. Thus 
a ``meets expectations'' employee would get $435, an ``exceeds 
expectations'' employee would get $870, and a ``meets excellence'' 
employee would get a $1,305 pay increase. But what if there were more 
``meets expectations'' employees or employees who fail to meet 
expectations and fewer ``meets excellence'' employees or those who 
``exceed expectations''? We call this system ``compensation 
cannibalism.'' It is a dysfunctional environment that encourages 
backstabbing rather than teamwork, and fairness is nowhere to be found.
    We are still waiting for more of the actual details. To date, DHS 
has only issued a draft Management Directive (MD) on Labor Relations, 
which was put on hold due to the Court decision, and a final Management 
Directive on Performance Management, which will not affect bargaining 
unit employees. We submitted extensive comments on the draft MD and 
made numerous suggestions that were largely ignored. We can only 
speculate that the MD that will affect our bargaining units will be 
similar to the first MD. At this point, we have little confidence that 
our ideas and concerns about the system as it will apply to bargaining 
unit members will receive any more serious consideration from DHS than 
we have seen since we first became involved.
    Human Resource literature is full of articles about how difficult 
and counter-productive pay-for-performance is. Bob Behn of Harvard 
University's John F. Kennedy School of Government wrote about the 
pitfalls of pay-for-performance, particularly for government agencies, 
which cannot promise that their systems will be consistently and 
adequately funded over time. Behn argues that one risks demoralizing 
the majority of good workers by singling out a few for rewards--and 
then finds that, usually, employers cannot pay those employees enough 
to make it worth the problems. Behn says further, ``Government needs to 
pay people enough to attract real talent. Then, to motivate them, it 
needs to use not money but the significance of the mission they are 
attempting to achieve.''
    The DHS regulations also call for market-based pay. DHS has had a 
hard time attracting law enforcement officers because often the local 
police and sheriff's departments offer higher pay, so we understand the 
attractiveness of the idea to agency management. Our support for the 
Federal Employees Pay Comparability Act (FEPCA) is well known, and it 
is above all a market-based system. Indeed, it is odd that the 
crusaders for pay for performance routinely introduce ``market-based'' 
factors as if they were a ``new'' or ``modern'' idea that that the 
current system lacks. But what is the principle of comparability if not 
market-based pay? And why do pay for performance zealots disparage 
comparability and then suggest market-based pay as its alternative?
    The answer is that market comparability is expensive, and difficult 
to administer with accuracy because so many federal jobs are unique to 
the government. One crucial and costly administrative factor is the 
collection of data that matches federal jobs with jobs in the private 
sector. Notwithstanding the Administration's insistence that half of 
all federal jobs are ``commercial'' in nature and ought to be 
contracted out since firms already doing similar work are listed in the 
Yellow Pages, the truth is that job matches for federal jobs are 
extremely scarce. Most federal jobs are not ``commercial,'' they are 
inherently governmental and simply do not exist outside the government. 
For example, the FAA has a market-based system that excludes its core 
employees, the air traffic controllers, because, of course, there is no 
comparable job outside the federal government.
    The market also is volatile. The Design Team saw systems in which 
an employee, whose job is no longer valued as highly in the market as 
it once was, is left to languish, with little or no pay increases until 
the market changes, the employee drops below it and needs an increase 
to catch up, or decides to seek employment elsewhere.
    Market studies also can be manipulated to get the results an 
employer wants. DHS chose not to use the United States Bureau of Labor 
Statistics (BLS) to do the studies, we believe, because it feared it 
would not get the answers it wanted. Instead, DHS is using a private 
contractor to do these studies. The studies are made even more complex 
because so many diverse jobs are put in the same clusters and bands. 
Deciding which benchmark jobs to study can skew a band higher or lower 
in the market.
    While AFGE strongly opposes so-called pay for performance, the fact 
is that it can actually be made worse by allowing some employees to 
move ahead in terms of pay because of high appraisals, while other 
employees, with equally high appraisals, are held back because they or 
their entire occupation are considered to be ``over market.'' This is a 
worst of all worlds outcome, and one the DHS system seems designed to 
create.

CONTINUING COLLABORATION
    Since the final regulations were published, AFGE has participated 
in periodic continuing collaboration meetings. These meetings are 
primarily briefings during which DHS Human Resource staff and 
contractors tell us where they are in developing the new performance 
management, classification and pay systems. We were given the 
opportunity to involve our members in part of the validation process 
for core competencies in the performance management system last year, 
and appreciate that involvement. There should, however, be more genuine 
participation.
    Last October, we were invited to attend workshops during which the 
market matching of benchmark jobs to the private sector were to be 
validated. These benchmark jobs would be used for the labor market 
studies that would help inform the determinations of the rate ranges of 
pay bands, future adjustments of those ranges, and local supplements.
    We were eager to be involved and to communicate with our members 
who hold the jobs in question, because this is such an important key 
factor in their future compensation and we have a lot at stake in 
ensuring that it be done right. We were told that we would be advised 
of when the workshops would be held. After that meeting in October, 
there was no continuing collaboration meeting until January of this 
year. At that meeting, we were shocked to find that the workshops had 
taken place without us, and that the validation process was going 
forward without our involvement or the involvement of the employees who 
actually do the benchmarked jobs.
    We were told that the decision to involve us directly in the 
validation process had been reversed. I wrote to the Chief Human 
Capital Officer objecting to this decision and said:
        Not only is this necessary to carry out Congress' mandate that 
        the new DHS personnel systems be designed and implemented in 
        collaboration with us, but the credibility of the validation 
        process itself is gravely compromised by the lack of 
        involvement of frontline workers. DHS employees already are 
        wary and skeptical about the big changes coming in their pay 
        system. Excluding them is the wrong way to get their buy-in and 
        the wrong way to ensure a valid and credible product.
    In response, the Chief Human Capital Officer wrote, ``When the time 
is appropriate, we will share information with AFGE. . .''
    Our disappointment and anger with the process of developing 
MAXHR goes back over three years now. We participated 
energetically on the Design Team, the Field Review Team, Focus Groups, 
Town Hall Meetings, and the Senior Review Committee, only to find 
proposed regulations published in the Federal Register that ignored 
almost all of the research, our ideas, and the views expressed by 
management and non-management employees alike.
    We participated vigorously in the Meet and Confer process required 
by the law, only to find our proposals almost entirely ignored in the 
final regulations. DHS employees, their unions, other employee 
organizations, and the public sent over 3500 comments in response to 
the proposed regulations--it has been acknowledged by DHS that the vast 
majority of them were negative--only to find their views almost 
entirely ignored in the final regulations. This has been collaboration 
in name only.
Homeland Security Compensation Committee
    As we have stated, our experience with the continuing collaboration 
since publication of the final regulations has been that it is cordial 
and informative, but not the substantive involvement we believe 
Congress meant for this process. In addition to our disappointment at 
not being involved in the early stages of market matching, we are 
deeply concerned about the failure to establish the joint committee 
that was supposed to be overseeing the entire process of designing 
these systems. The final regulations call for a Homeland Security 
Compensation Committee, which includes four Union Officials as members 
that will:
        . . .provide options and/or recommendations for consideration 
        by the Secretary or designee on strategic compensation matters 
        such as Departmental compensation policies and principles, the 
        annual allocations of funds between market and performance pay 
        adjustments, and the annual adjustment of rate ranges and 
        locality and special rate supplements.
    This Compensation Committee has not yet been established--we have 
not even been made aware of any draft Management Directive establishing 
its rules or membership. AFGE understands that some of the 
responsibilities of the Committee will come into play later, such as 
the annual decisions regarding pay adjustments and allocations. But we 
do not understand how or why the Department has been able to spend 
time, resources and money working on compensation matters before a 
Homeland Security Compensation Committee, including the four Union 
Officials, has been established and has recommended to the Secretary 
the compensation policies and principles that will be the foundation of 
the system.
    The MSPB submitted a report to the President and Congress earlier 
this year entitled Designing an Effective Pay for Performance 
Compensation System. The MSPB report discusses the importance of an 
agency evaluating its readiness for pay for performance, including key 
decision points the agency should consider. These essentially equate to 
the policies and principles of the system, such as goals--is it to 
improve organizational and individual performance? Is it to better 
recruit and retain employees? Is it to have a fairer compensation 
system? Who should be covered by the system and will the same system 
work in all components of the organization? Where in the market does 
the organization want to pay--in the middle or be a market leader? 
These are just some of the policies and principles the Compensation 
Committee should have considered and made recommendations to the 
Secretary prior to so much work going into designing the system.
    We fear that as we have seen so many times before with the 
Department's approach to involving its employees' representatives, the 
Homeland Security Compensation Committee will just be a body that 
rubber stamps the work of the contractors and Human Resources staff, 
with the union members allowed to submit a minority report that will be 
ignored.

DHS EMPLOYEE MORALE AT DEVASTATING LOW
    The MSPB report outlines important factors necessary for an 
organization to succeed in pay for performance. In assessing their 
readiness for pay for performance, the Report suggests that agencies 
look at whether:
                 Open, two-way communication is valued and 
                pursued.
                 Trust exists between employees and 
                supervisors/managers.
                 Human resources management (HRM) systems such 
                as selection, training, and performance evaluation have 
                clear and consistent objectives and support pay for 
                performance.
                 Employee efforts support organizational goals.
                 Work assignment, evaluation of performance, 
                and distribution of awards are fair.
                 Assessment of employees is fair and accurate.
                 Employees receive timely, accurate, and 
                meaningful feedback.
    During the Design Team process, the focus groups and Town Hall 
meetings, the comments to the proposed regulations, and in our own more 
recent meetings with our bargaining units, employees of DHS have 
answered a resounding ``NO''! And, in OPM's Human Capital Survey of 
Federal Agencies in 2004, DHS came in last of the 30 agencies surveyed 
on these very factors. The Center for American Progress, which analyzed 
the OPM data, said:
        Less than 40% of the department's employees agreed or strongly 
        agreed with the statement, ``My organization's leaders maintain 
        high standards of honesty and integrity.'' Less than one-third 
        of the employees agreed that ``Arbitrary action, personal 
        favoritism and coercion for partisan political purposes are not 
        tolerated,'' while only a little more than a quarter concurred 
        with the statement, ``In my Organization, leaders generate a 
        high level of motivation and commitment in the workplace.''

        Only four in 10 DHS employees felt that they could ``disclose a 
        suspected violation of any law, rule or regulation without fear 
        of reprisal'' while less than one-third felt that ``Complaints, 
        disputes or grievances are resolved fairly. . .'' Less than 
        half of DHS employees felt that ``Discussions with my 
        supervisor/team leader about my performance are worthwhile.''
    It is hard to imagine an organization less well suited to moving to 
a pay for performance system. Clearly, gutting collective bargaining 
and diminishing employee rights will only push DHS even further in the 
wrong direction. The Center for American Progress goes on to say:
        Managers at DHS appear to have failed completely in developing 
        rapport with the agency workforce. The level of employee 
        discontent evidenced by this survey creates the type of 
        situation in which those federal workers with the highest skill 
        levels, who are most attractive to other employers, are likely 
        to leave the department and perhaps the federal workforce.

    Concerning the revised personnel rules, the Center said:
        Whatever one might think about the merits of these proposals in 
        theory, it is painfully obvious that the enhanced 
        administrative authorities that were granted to departmental 
        administrators were handled poorly, not only to the detriment 
        of DHS employees, but the public, and in particular the 
        taxpayer.
    As mentioned above, our own survey of CBP employees showed the same 
results as the OPM survey. Is it any wonder that morale is so low among 
DHS employees?

RECRUITMENT AND RETENTION
    When all is said and done, what matters most to the American people 
is that the Department of Homeland Security carry out its critical 
mission and prevent further terrorist attacks on U.S. soil. The details 
of how that mission gets accomplished must be worked out here: in the 
halls of Congress and at DHS. And we need to get it right.
    In our view, most of what has been discussed in connection with the 
MAXHR program will have the effect of forcing out the 
longest serving, most experienced and most capable individuals now 
serving in the U.S. government. They will be replaced by young and 
inexperienced people, whose most important skill will be the ease with 
which they fit into the ``command and control'' environment DHS 
management seeks to emulate. Such a structure may breed good soldiers, 
but on U.S. borders, the war on terrorism is fought best by 
experienced, independent thinking law enforcement officers.
    AFGE proposes a different approach. Instead of forcing a system on 
employees without their agreement, why not try creating a system that 
maximizes the talent and experience of front line workers? Instead of 
treating people like inanimate gears in a machine, why not utilize the 
common sense, on the ground, day-to-day experience of these men and 
women to create a truly effective model of government efficiency and 
effectiveness? Unless there are fundamental changes in the 
Administration's approach to managing its employees, both hiring new 
employees and keeping valuable, experienced workers on the front lines 
will become impossible. These people are free to leave an 
unsatisfactory situation. It is our job to keep their jobs competitive.
    In that context, it should be noted that as recently as March 27, 
in an article entitled ``Police Finding it Hard to Fill Jobs,'' the 
Washington Post reported that Police departments around the country are 
contending with a shortage of officers and trying to lure new 
applicants with signing bonuses, eased standards, house down payments 
and extra vacation time. These benefits and bonuses are all in addition 
to the law enforcement retirement benefits most state and local police 
departments offer.
    In my own travels around the country meeting with DHS employees, I 
have been struck by the extreme difficulty many are encountering in 
trying to live and raise their families in high cost areas on pay that 
is not competitive. Dedicated employees, who work for DHS, have told me 
that in order to find affordable housing for their families, they are 
forced to live so far away from their duty stations that they live out 
of their cars for days in order to be at work on time. This is a 
critical problem that needs immediate solutions, such as housing 
allowances to attract and retain the workers we need.
    As a first step, AFGE urges this committee to take a hard look at 
legislation introduced last year by Rep. Sheila Jackson-Lee (D-TX). 
This bill, H.R. 4044, the Rapid Response and Border Protection Act of 
2005, would address long-standing problems that have hampered the 
effectiveness of front line Border Patrol Agents, CBP Officers and 
other federal law enforcement employees. It also would allow for a new 
beginning in labor relations with the Department of Homeland Security 
by repealing those sections of the Homeland Security Act that called 
for the promulgation of the MAXHR regulations. This would 
provide all parties with a fresh start in developing a system that can 
truly be called a visionary plan for the 21st century.

Law Enforcement Officer Status
    The bill includes the text of legislation long advocated by Rep. 
Bob Filner (D-CA) in H.R. 1002 to provide full law enforcement 
retirement benefits (6c Coverage) to all federal officers required to 
carry a gun and wear a badge. In the case of DHS Customs and Border 
Protection Officers, I can assure you their role goes far beyond that.
    According to statistics released by CBP in 2004, in 2003 CBP 
Officers intercepted 483 suspected terrorist/security violators, 
arrested 17,618 criminal aliens, and seized 72,398 fraudulent 
documents. In all, CBP Officers arrested and detained over one million 
people seeking to enter the U.S. illegally in that year. Every one of 
those detentions and arrests is fraught with the risk of physical 
danger, which is why CBPOs are armed and fully trained to handle 
dangerous situations. It is also why the names of forty-three 
courageous U.S. INS and Customs Inspectors are on the wall 
memorializing federal law enforcement officers killed in the line of 
duty. It is unconscionable for CBPOs, who are armed, enforce federal 
law, and have arrest powers, to be denied law enforcement officer 
status for retirement purposes.

Equipment, Training, and Working Effectively
    H.R. 4044 also includes a long list of items that will guarantee 
that U.S. Border Patrol Agents and CBP Officers are the best equipped, 
best trained, most experienced and most motivated work force in the 
U.S. Government. These include:
         Improved body armor, weapons, night vision goggles and 
        other equipment necessary to carry out the work of federal law 
        enforcement officers responsible for defending the borders;
         Improved training and operational facilities designed 
        to effectively integrate the large numbers of new hires 
        expected in both the Border Patrol and among CBP Officers;
         Repeal of the Administration's failed ``One Face at 
        the Border'' initiative, which is based on the false assumption 
        that the complex laws and regulations for customs, immigration, 
        and agriculture products can be easily administered by the same 
        people; and
         Elimination of the fixed deployment strategy in which 
        Border Patrol Agents are deployed to fixed positions and 
        required to remain in place regardless of what they observe in 
        their area of operation.

Other Than Permanent (OTP)
    OTPs are employees of long-standing, who work part-time schedules 
and fill in when needed because of high workloads or to allow full-time 
employees to take vacations or deal with family needs. Some of them 
came out of Customs while others were former Immigration and 
Naturalization Service employees. There are about 500 of these 
employees across the country. They are paid at a lower grade than the 
full-time employees, and some have other jobs. They are experienced and 
dedicated and provide an invaluable service by coming on board when 
needed to relieve full-time employees or augment their number. CBP is 
attempting to do away with these employees, forcing them to be 
retrained for jobs they are already doing and putting them in permanent 
jobs that many do not want. By doing this, CBP is hurting these 
valuable employees, making it harder for full-time employees to take 
vacations when it works for them and their families, and removing a 
workforce that actually helps CBP be more flexible. This is wrong. OTPs 
should be kept on and allowed to continue to do the work they have been 
doing.
    Taken together, these provisions will move us a long way toward 
what we need to achieve at the Department of Homeland Security ? a 
Federal agency that carries out its most critical mission and prevents 
future terrorist attacks on U.S. soil.

``One Face at the Border''
    CBP has attempted to establish what it calls ``One Face at the 
Border.'' The idea was to take the experience and skills of former INS, 
Customs and Agriculture employees and combine them into one position. 
In reality, this has been difficult to do--each discipline is very 
complex--combining them threatens to weaken expertise in all three. In 
fact, we are starting to see CPB Officer positions offered with 
specialties in, for example, Immigration law--a tacit recognition of 
the need for the experience and education of these legacy 
organizations.
    Although on paper DHS advocates for ``one face'' at the border, 
many of its actual personnel practices continue to emphasize the 
differentiation between ``legacy INS'' and ``legacy Customs'' officers. 
Instead of raising CBP employees to the best of the various benefits 
they enjoyed before, DHS has created a confusing morass of procedures 
and policies that take away income and rights without replacing them 
with anything of comparable value. CBP Officers may be called ``One 
Face at the Border,'' but they are acutely aware that they are not 
treated equally, nor do they share the same benefits. For example:
         Foreign Language Award Program (FLAP)--AFGE recently 
        filed two grievances on behalf of employees who are not 
        receiving additional pay for having foreign language skills. 
        The Foreign Language Award Program guarantees foreign language 
        proficiency pay for those employees who use language skills on 
        the job in languages other than English. While many officers 
        from legacy Customs have been awarded foreign language pay, the 
        majority of legacy INS officers have not.
         Administratively Uncontrollable Overtime (AUO)--When 
        DHS consolidated different groups of employees it re-classified 
        former INS Senior Inspectors as CBP Officers and eliminated 
        their right to a lump sum payment for working overtime. 
        Although the Senior Inspectors? duties have remained the same, 
        their pay has been drastically reduced.
    These are just a couple of examples of the differences CBP 
employees continue to see in their work places, while they are told 
they are ``One Face on the Border.''

TRANSPORTATION SECURITY ADMINISTRATION (TSA)
    After September 11, 2001, the Bush Administration reluctantly 
agreed that the terrorist attacks necessitated federalizing airport 
security functions, but they also insisted that the legislation not 
allow security screeners the protections normally provided to federal 
employees. Consistent with this position, then Under Secretary of TSA 
Admiral James Loy issued a decision on January 8, 2003 which denied the 
right to collective bargaining to all federal airport security 
screeners. AFGE subsequently filed suit in federal district court to 
protest this action, but the courts have to date upheld the Bush 
Administration. TSA was given the ability to prevent independent 
oversight of decisions affecting employees, which has left workers with 
no alternative but to seek remedies from the very management that 
created the problem in the first place. The power of TSA management is 
almost totally unchecked.
    A statutory footnote in the legislation creating TSA and 
federalizing the jobs of airport screeners, the Aviation and 
Transportation Security Act (ATSA), allows the TSA Administrator to 
create unique personnel policies for the largest portion of the TSA 
workforce?42,000 airport screeners. Striking examples of the 
pervasiveness and extent of airport screeners? lack of labor rights 
include:
         TSA's refusal to honor the First Amendment right of 
        freedom of association, resulting in screeners being fired for 
        simply talking about the union and posting and distributing 
        AFGE union literature during break times.
         TSA has refused to hold itself accountable to the 
        Rehabilitation Act and is therefore not required to make 
        reasonable accommodations for workers with disabilities. This 
        results in discrimination against workers on the basis of their 
        disability.
         Although Congress clearly indicated that the veteran's 
        preference honored by the rest of the federal government also 
        applied to screeners, the TSA has failed to apply veteran's 
        preference in promotion and reduction-in-force decisions. 
        Moreover, even though other federal agencies apply the 
        veteran's preference to both those who retired from the 
        military and those who leave active duty, TSA has redefined 
        what it means to be a veteran--only retired military personnel 
        are awarded whatever veteran's preference TSA management 
        chooses to give.
         Disciplining screeners for using accrued sick leave 
        benefits for documented illnesses.
         Paying screeners thousands of dollars less than 
        promised at the time of hire, because screeners do not have an 
        employment ?contract? with the government, and therefore, no 
        contract protections.
         Denial of enforceable whistleblower protections.
    TSA has argued in federal court, before the Federal Labor Relations 
Authority, and before the MSPB that the language of the footnote does 
not require the agency to follow the FAA personnel policy or later, 
after becoming part of DHS, the DHS personnel system with respect to 
airport security screeners, the overwhelming percentage of the agency's 
workforce. It is impossible that any legitimate security consideration 
precludes airport screeners from enforcing their labor rights when 
current law allows privately--employed airport screeners performing the 
same duties the protection of the very labor laws denied federal 
airport screeners, including the right to bargain collectively. Even 
though federal airport screeners are denied the ability to bring 
workplace disputes before the MSPB for a fair hearing by a neutral 
third party, their management supervisors--from screening managers to 
Deputy Federal Security Directors to Federal Security Directors 
themselves--can readily avail themselves of the due process afforded by 
the MSPB.
    Screeners should be guaranteed the same workplace securities that 
other DHS employees and other federal employees enjoy. Denial of the 
meaningful ability to enforce the most basic of worker rights and 
persistent inadequate staffing have taken their toll on the screener 
workforce. Screeners are subject to extensive mandatory overtime, 
penalties for using accrued leave and constant scheduling changes 
because of the failure of the TSA to hire adequate numbers of 
screeners. It is not surprising that TSA has among the highest injury, 
illness and lost time rates in the federal government. In fiscal year 
2004, TSA employees? injury and illness rates were close to 30%, far 
higher than the 5% average injury and illness rate for all federal 
employees. As a result of continuing mistreatment of the screener 
workforce, the ability of screeners to do their jobs is greatly 
hampered, and public safety jeopardized. Without the comprehensive 
protections offered by labor laws--including the right to bargain 
collectively, an established personnel system, and the right to an 
independent review of adverse personnel actions--airport screeners are 
subject to the often arbitrary and constantly changing personnel 
policies dictated by the Federal Security Directors working at 425 
airports across the country. Congress should repeal immediately the 
ATSA footnote and restore to federalized screeners the labor rights 
afforded to all other federal workers--at the very least, they should 
have the same rights as all other DHS employees.

FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA)
    Currently, FEMA is bearing the brunt of harsh criticism for its 
response to Hurricane Katrina. There are even calls for it to be 
dismantled. In 1992, FEMA came under attack for its handling of 
Hurricane Andrew. Instead of being dismantled then, a professional 
emergency manager, James Witt, was appointed to rebuild the agency. 
Witt turned the agency around. In fact, the name ``FEMA,'' which had 
come to symbolize incompetence and bureaucracy at its worst, soon came 
to denote excellence in the public's mind. FEMA was used as an example 
of a high-performance agency and Witt was invited to speak about the 
remarkable transformation of his agency at conferences.
    What are the factors that Witt used to build an effective, 
responsive agency that worked so well? Here are a few:
         Disaster prevention, preparedness, response, and 
        recovery were grouped together in one agency so that staff of 
        those functions could quickly work together in a crisis.
         The top positions at FEMA were held by experienced 
        emergency managers.
         The Federal Response Plan was clearly written in plain 
        English and allowed FEMA to draw on every agency of the Federal 
        Government in an emergency.
         The FEMA Director had direct access to the President.
         An emphasis was placed on training and keeping 
        experienced staff who would be ready to respond to an emergency 
        on a moment's notice.
    There is no doubt that more recently there has been a crisis of 
leadership at FEMA. It is this crisis that led to the woefully 
inadequate response to Hurricanes Katrina, Rita and Wilma last summer. 
It is also true that many FEMA employees are demoralized and some have 
left. But the agency still is staffed by some of the most dedicated, 
motivated, and talented professionals in government, who want to be 
able to do their jobs and protect American lives and property.
    We know what works. We saw what was able to be done in the 1990's. 
Rather than do away with FEMA, we should restore it to its past 
excellence by getting it out of Homeland Security, making it an 
independent agency, and giving it the leadership and resources it needs 
to once again be a model government agency.

CONCLUSION
    AFGE calls on Congress to restore to DHS employees the important 
rights and protections eliminated by the new personnel regulations 
promulgated by the Department. In particular, we urge you to restore 
due process and collective bargaining rights to DHS employees. In 
addition, Congress must ensure that overall pay levels for DHS 
employees are not reduced compared to those under the General Schedule 
in other federal agencies.
    It would be a grave mistake to view the new DHS personnel system 
regulations simply as an arcane set of rules governing such mundane 
issues as pay rates, civil service protections and collective 
bargaining rights for employees. To do so greatly diminishes the 
importance of these changes on the readiness of the nation to prevent 
another terrorist attack or respond to natural disasters like Hurricane 
Katrina. Unlike most federal agencies, the core mission of DHS is the 
safety of the American public, and the fundamental changes to the 
personnel system for DHS workers must be viewed through that prism. The 
funds going to develop and implement MAXHR would be far 
better spent ensuring adequate staffing, training, and equipment to 
protect public safety.
    Without a doubt, dedicated and experienced personnel are America's 
most invaluable resource in the war on terror. No technology can 
replace their perseverance, expertise, and ingenuity. Keeping these 
employees motivated to remain in the service of our country is not 
simply a matter of fairness to them, but is also absolutely essential 
to the protection of our nation against the threat of terrorism and the 
consequences of natural disasters. The new DHS personnel system 
completely fails to achieve that goal and it must be repealed or 
substantially modified by Congress in the interest of homeland 
security.

    Mr. Rogers. The Chair now recognizes Mr. Charles Tiefer, 
professor of law at the Baltimore School of Law, for his 
statement. Welcome.

                  STATEMENT OF CHARLES TIEFER

    Mr. Tiefer. Thank you, Mr. Chairman, and I thank the 
committee for the opportunity to testify.
    I have written on Federal personnel and procurement policy 
as a professor for the last 11 years, and for the 11 years 
before then I was acting general counsel and solicitor of the 
U.S. House of Representatives and took part in oversight on 
personnel and procurement such as you are doing today.
    For this testimony I reviewed many studies, including the 
scholarly studies about pay-for-performance implementation, and 
these showed four major ways that the problem of creating an 
entirely new procurement system, MAX HR, from scratch sets back 
integrating DHS. And some of them have been talked about by the 
first panel already today.
    First, MAX HR throws away one of the few aspects that the 
diverse unit that came together in this Department had in 
common. To the extent relevant, they were all under the same 
governmentwide personnel system, the General Schedule, the GS, 
and that was and has been a unifying element. MAX HR will take 
away the unity, the transparency and the security of having 
that particular consistent personnel system, and, instead, the 
employees will receive a bewildering and insecure for them 
personnel policy situation.
    Second, DHS has larger organizational problems that it 
should be paying attention to, and that will keep it from being 
able to implement anything as challenging as MAX HR. The 
statements about the high level of management vacancy by the 
Chair and by the Ranking Member and the questions of the first 
panel show that you are already on top of this, and I don't 
even need to say what I have intended to say. They have a big 
problem in filling management vacancies, and they should be 
paying attention to that rather than changing their personnel 
system.
    Third, MAX HR is trying to launch pay-for-performance 
without many of the elements that are needed for success of 
such a system. I have cited in my testimony the leading survey 
by the Kennedy School of Government of the literature on the 
subject of pay-for-performance. These are elements like a 
period of mission stability to develop a set of performance 
criteria and to work them out between managers and employees so 
that they will address the employees' very natural concerns of 
shifting to this. DHS is the opposite of a stable situation 
where that can be worked out.
    And fourth, MAX HR is drawing away the vital, but limited, 
attention and funding that DHS managers can devote to personnel 
needs. And the questioning by the members of this committee of 
Mr. Prillaman brought that out very strongly. The particular 
example that I focus on is procurement officers. It is the area 
of law that I specialize in.
    During your questioning, Mr. Prillaman admitted that they 
are trying to find procurement officers to hire. I will tell 
you I have been hearing this for years now. DHS has been saying 
for years--it is going to almost sound like they have been 
saying it before it was DHS. Let's just say for as many years 
as it has been DHS, they have been saying, we are trying to 
hire, we are trying to hire, and they have not made progress. I 
have some statistics I brought together in my testimony that 
show that they are extremely thin, that they have a much lower 
ratio of procurement officers to millions of dollars spent on 
procurement than comparable agencies. So they can't do 
oversight, they can't do competition when they let out 
contracts, they can't do oversight when they bring them in. 
That is what they need to be spending their personnel attention 
on.
    I ticked off a few of the striking examples of procurement 
problems in DHS. The fact that FEMA had to partly abdicate its 
procurement to the Department of Defense after Hurricane 
Katrina. The eMerge2 problem that this committee studied; the 
TSA's billion-dollar telecom contract with Unisys that was 
ended last December because, in short, it was a flop, and the 
$3.3 billion ACE system for Customs, which is long overdue and 
has cost overruns, that is what they need be to turning their 
attention to.
    Thank you, Mr. Chairman.
    Mr. Rogers. I thank you.
    [The statement of Mr. Tiefer follows:]

             Prepared Statement of Professor Charles Tiefer

   CONTINUING ON WITH MaxHR WOULD FURTHER SET BACK THE CHALLENGE OF 
                          PULLING DHS TOGETHER

    Thank you for the opportunity to testify on the subject of the 
human capital issues in the Department of Homeland Security (DHS). I am 
Professor of Law at the University of Baltimore Law School since 1995, 
and the author of a number of pertinent law review and journal studies, 
and book sections, on federal personnel and procurement policy.\1\
---------------------------------------------------------------------------
    \1\ These include sections of GOVERNMENT CONTRACT LAW: CASES AND 
MATERIALS (Carolina Academic Press 2d edition 2004)(co-authored with 
William A. Shook). In 1984-1995 I was Solicitor and General Counsel 
(Acting) of the U.S. House of Representatives, and participated in 
numerous oversight investigations of federal personnel and procurement 
policy.

        I. Executive Summary
        II. MaxHR Will Set Back DHS Integration
        III. Hiring and Training at DHS, Especially As to DHS's 
        Troubled Procurement, Could Use the Attention and Funding 
        Overly Diverted to MaxHR.

I. Executive Summary
    DHS faces a central daunting challenge of ``integrating'' itself--
pulling itself together from many units--in just a few years. DHS is 
the largest department to come together since the Department of Defense 
in the late 1940s, and it consists of almost a dozen principal units of 
different natures originating in many different departments. Recent 
developments have made increasingly clear how seriously it sets DHS 
back in this goal of integrating itself, to saddle DHS also with the 
problem of creating a wholly new personnel system, MaxHR, based on pay-
for-performance, from scratch.
    For this testimony, I have reviewed a number of studies of DHS by 
the DHS Inspector General, the General Accounting Office, and outside 
observers, as well as the scholarly studies of pay-for-performance 
implementation. These show that MaxHR and DHS have recently shown many 
problematic aspects which mean that implementing MaxHR has been, and 
will be, particularly setting back the task of integrating DHS. First, 
MaxHR throws away one of the few aspects that all the diverse precursor 
units of DHS have in common: all those units, to the extent relevant, 
were hitherto under the same government-wide personnel system, the 
``General Schedule'' (GS) for the civil service.\2\ By continuing on 
with MaxHR, DHS throws away that one unifying constant, and obliges its 
employees to set off on a bewildering and insecure personnel policy 
venture. Second, MaxHR tries to launch pay-for-performance in a 
situation missing many of the elements needed to have any chance for 
even minimal success, like a period of mission stability to carefully 
develop performance criteria, and to work them out between managers and 
employees so as to damp down the employees' very natural concerns about 
the dangers of arbitrary and even punitive pay changes.
---------------------------------------------------------------------------
    \2\ A good review of how the General Schedule works is in Major 
John P. Stimson, Unscrambling Federal Merit Protection, 150 Mil. L. 
Rev. 165 (1995).
---------------------------------------------------------------------------
    Third, MaxHR draws away precisely those resources--the vital but 
limited attention and funding that DHS managers can devote to personnel 
matters--that DHS desperately needs to use, not to redo the existing 
pay system, which is not a particular priority, but to fill serious 
shortfalls in training and hiring, which should have the highest 
priority. Fourth, the increasingly delays as the courts throw out some 
flatly illegal aspects of MaxHR mean it has become an even more long-
lasting source of uncertainty and morale damage in DHS than ever 
imagined.
    These problems and drains by MaxHR fall upon a department 
experiencing many other problems, doubling the downsides. For example, 
DHS, particularly in certain of its most critical subunits, is 
suffering a major problem with management vacancies. Take a look at the 
FEMA organization chart and count the boxes essentially vacant and just 
occupied by acting figures, from the (Acting) FEMA Director himself not 
yet confirmed by the Senate, and his empty chief of staff post, to the 
acting directors of the recovery and response divisions and five of the 
ten regions. Who can afford attention and funding to reinvent the pay 
system in a department when there are so many vital posts that do not 
even have anyone with more than ``acting'' status occupying them?
    To address DHS's situation concretely, I have chosen to use the 
big-money subject of DHS's procurement, and how it has fallen prey to 
dysfunctional management and workforce problems, to illustrate how 
little DHS can afford to squander its limited personnel policy 
resources on MaxHR and how much it should focus instead on the urgent 
needs of hiring and training. A number of studies and investigations of 
DHS's procurement have shown the prevalence of those urgent needs: 
shortages of personnel, inadequacies of training, weak project 
management, and a feeble Central Procurement Office. The procurement 
problems particularly show up from reviewing some particular examples: 
FEMA's having had to abdicate procurement, partially, after Katrina; 
the fiasco of e-Merge2, the department's computerized finance system, 
as to which the contractor was recently discontinued; excessive 
contracts with Alaska Native Corporations, which reflect at best a 
slack attitude toward competition, if not a thinly-disguised effort at 
sole-sourcing; and the delay and schedule overruns with ACE, Customs' 
$3.3 billion long-overdue IT system. These all reflect a department 
struggling, with a lot of failures, to do its own competitive 
procurement. What DHS procurement shows is that if ever a new and 
struggling department could ill afford to squander the attention and 
funding on an ideological venture like MaxHR that ought to be going to 
hiring and training in needy areas like procurement, DHS now is that 
department.

II. MaxHR Will Set Back DHS Integration

    A. Deployment of MaxHR Will Do the Opposite of Its Main Claim: Far 
From Helping to Unify a Diverse Department, It Will Fragment One of 
DHS's Existing Unities

    The proponents of MaxHR argue that it will help unify a diverse 
department. By making its nine occupational clusters, such as technical 
or law enforcement, the unit of pay-banded personnel treatment, MaxHR 
is supposed to ``build a unified DHS culture,'' as the DHS Chief Human 
Capitol Officer puts it.
    There was always less to this claim than meets the eye. Before 
units came from different departments into DHS, there were many 
disparate aspects of their culture and nature. But, they had an 
existing unity by their civil service being classified on the 
government-wide General Schedule. To be specific: units such as what is 
now Customs and Border Protection, and what is now Immigration and 
Customs Enforcement, were created by merging elements of the Justice 
Department and the Treasury Department. These elements certainly had 
many dissimilarities. But, their managers and employees shared the 
common understanding of how the General Schedule worked, what it meant 
for their prospects for pay increase and promotion, and how to compare 
status when put together on assignments. In other words, a GS-12 from 
one unit might have many challenges figuring out how to work with a GS-
13 from another unit, but at least they each understood relatively well 
where the other fit in the personnel system, and what it would take for 
the GS-12 to ascend in pay to be in line with the GS-13. MaxHR does not 
create unity and integration, it fractures one of DHS's existing 
unities. The predictability and structure of the existing personnel 
systems, which could translate via the GS's universal language, will 
now yield to a babble of uncertainty and confusion both within and 
between units.
    Now, however, the plan for deployment of MaxHR prepared by the DHS 
CHCO shows that MaxHR will not even replace the existing unity of the 
General Schedule with a new unity, but only with disunited pieces. Of 
185,000 DHS employees (when the department was formed), MaxHR will only 
apply to about 84,000.\3\ It will not apply to the TSA screeners; some 
staff at FEMA; the Secret Service's uniformed division; or the Coast 
Guard's military personnel. Moreover, it will not apply to the SES 
employees, who have an existing system separate from the General 
Schedule. So, MaxHR will ``unify'' less than half of DHS. That is more 
fragmenting than unifying.
---------------------------------------------------------------------------
    \3\ From DHS, ``Overview of the MaxHR Human Capital Program'' (May 
2006).
---------------------------------------------------------------------------
    For those provisions involved in the pending litigation, the 
disunity is even greater. Most observers assume that Judge Collyer's 
ruling, which I found fairly straightforward as statutory 
interpretation, will be largely affirmed on appeal. In that event, the 
rollout of MaxHR's aspects related to labor bargaining, and adverse 
actions and appeals, will be limited. The Phase I rollout of MaxHR in 
2006-2008 to HQ, FLET, ICE, and USCG will extend those limited aspects 
(the ones struck down by Judge Collyer) only to 15,000, with the 
aspects that apply more generally including pay-banding, extending to 
25,000. The Phase II rollout of MaxHR in 2007-2009 to CBP, CIS, FEMA, 
and USSS will extend those limited aspects (again, the ones struck down 
by Judge Collyer) only to 20,000, with all aspects, including pay-
banding, extending to 59,000--for a total over the two phases, as to 
the more generally applying aspects, including pay-banding, of 84,000. 
Thus, of the less than half of DHS which will have MaxHR, only a 
fraction will have the aspects challenged in the litigation; and all 
this will be coming in different ways to different units at different 
times. MaxHR is an engine for disunity.

    B. DHS Increasingly Shows Itself the Worst Place to Experiment with 
Pay-for-Performance on a Large, Unheralded Scale
    The policy studies on pay-for-performance show many reasons for 
caution, and many specific conditions needed for it to succeed, while 
DHS increasingly shows itself the worst place to experiment with 
meeting those conditions. A comprehensive review of the literature was 
done in 2003 at the Kennedy School of Government at Harvard by two 
leading professors.\4\ The Kennedy School review concluded that the 
``conditions'' for ``[p]ay for performance'' to be effective ``are 
often not met in the public sector, in part because of the complexity 
of the typical government product. . . .the increasing role of. . . 
cross-agency collaboration, and the social comparisons and internal 
motivational dynamics of. . .public employees in particular.'' \5\ What 
could provide more ground for doubting the conditions for pay for 
performance to be effective will be met, than the conditions today at 
DHS? DHS has an immensely complex product to produce--not goods or even 
simple services, but the complex balance of multiple missions of, say, 
a customs inspector (who will now have immigration duties too) or a 
Secret Service officer. Cross-agency collaboration is a basic part of 
the work of many in DHS. And, the motivational dynamics at DHS depend 
heavily, not upon a pure piecework-minded interest in wages, but upon 
precisely the ``public service motivation'' as to which the Kennedy 
School review said ``the reduction of intrinsic motivation through 
performance-based pay will be a correspondingly bigger problem.''\6\ 
DHS is the poster-child example of the place not to launch a sweeping 
experiment with pay-for-performance.
---------------------------------------------------------------------------
    \4\ Iris Bohnet & Susan C. Eaton, Does Performance Pay Perform? 
Conditions for Success in the Public Sector, in John D. Donahue and 
Joseph S. Nye Jr., eds., For the People: Can We Fix Public Service? 
(2003).
    \5\ Id. at 250.
    \6\ Id. at 246.
---------------------------------------------------------------------------
    Let us look at just how DHS plans to implement MaxHR. DHS holds out 
no promise that it will obtain large appropriated sums to provide MaxHR 
performance bonuses, and also offers no protection against denials of 
bonuses or even individual pay cuts. Moreover, DHS units include a fair 
fraction of relatively senior personnel who are already at the upper 
end of their civil service pay. This gives little reason for DHS's 
vital experienced echelons to think that pay scale conversion to MaxHR 
will precede pay raises. If anything, MaxHR could well generate an 
exodus from DHS of such experienced employees. That exodus might be the 
kind of development welcomed in the private sector, where offloading 
experienced employees from denial of pay raises, and even pay cuts, can 
raise profit margins by cutting payrolls and replacing senior better-
paid employees with junior low-pay ones. However, I seriously doubt 
whether America will feel safer if MaxHR has that same effect, i.e., 
less and less experience, and more and more turnover, in its customs 
and immigration inspectors or in those backing up its Coast Guard or 
handling emergencies at FEMA.
    The current implementation process for MaxHR is particularly 
worrisome because it is so divorced from employees. DHS has been 
devoting about $30 million/year to the contract with Northrop Grumman 
and others to devise the system, an amount cut back from what it 
requests from appropriators--leaving little reason to think it will 
have large amounts in hand left over for bonuses. Incidentally, this 
particular contract was set up as a BPA, a very open-ended basis which 
means it may well siphon off an increasing share of the funds needed to 
try to reduce MaxHR's intrinsic unattractive risks for DHS employees. 
Northrop Grumman is, of course, one of the Big 3 defense contractors. 
It has been trying to parlay its experience just as a producer of 
hardware like airplanes for federal defense into handling other matters 
as well. So it does not bring any long history of experience, or a rich 
network of contacts, with the personnel systems of Immigration and 
Customs Enforcement, or Customs and Border Protection, or FEMA.
    The Kennedy School review found that ``[e]mployees feel losses with 
disproportionate intensity,'' just as they feel about comparisons with 
peers whose pay rises while theirs does not. There is a grave risk in 
public organizations that ``performance can be negatively affected if 
the process through which the outcomes are achieved is perceived as 
unfair.'' \7\ Two press reports just this week highlight this problem 
in trying to have pay-for-performance for federal agencies. The new 
pay-for-performance system at GAO received adverse comment, because of 
the negative evaluations: ``25-year GAO veterans feel insulted and 
unappreciated by a ranking system that implies that half of the 
analysis in his cohort are performing below a satisfactory level 
despite receiving good performance evaluations.'' \8\ At the Department 
of Defense, according to a report in the Washington Post's Federal 
Diary column, the pay conversion tables have created a ``tricky'' 
problem about ``the perception of equity in the workplace'' because it 
limits some converted GS-14s (supervisors) to $106K while other 
converted GS-14s (technical experts) may earn close to $125K.\9\ In 
sum, the Kennedy School review was on solid ground in foreshadowing 
that the shift to pay-for-performance being devised by Northrop Grumman 
may do more harm than good to DHS employee morale and performance.
---------------------------------------------------------------------------
    \7\ Id. at 248.
    \8\ Florence Olsen, ``Ticked Off'' About Pay at GAO, Federal 
Computer Week, May 15, 2006.
    \9\ Stephen Barr, Pentagon Workers Able to Get a Boost Under New 
Pay Tables, Wash. Post, May 11, 2006.

    III. Hiring and Training at DHS, Especially As to DHS's Troubled 
Procurement, Could Use the Attention and Funding Overly Diverted to 
MaxHR.
    A. Training, Hiring, and Other Personnel Needs as to DHS 
Procurement Compete with MaxHR
    The real cost of MaxHR to DHS can only be appreciated from seeing 
DHS's other, more pressing needs for the scarce attention and funding 
for personnel matters spent on changing the pay system. Let us start 
with the training shortage. DHS did accomplish the making of a human 
capital strategic plan, in October 2004, and a departmental training 
plan, in July 2005.\10\ However, this dealt largely in generalities: as 
a GAO evaluation found, ``The DHS training strategic plan contains few 
specific performance measures for its goals or strategies and all of 
these are output measures.'' \11\
---------------------------------------------------------------------------
    \10\ Department of Homeland Security Learning and Development 
Strategic Plan.
    \11\ General Accounting Office, Department of Homeland Security: 
Strategic Management of Training Important for Successful 
Transformation (Sept. 2005).
---------------------------------------------------------------------------
        Meanwhile, a tour through DHS turns up many training or hiring 
        shortfalls:
        --A 2005 report by the DHS Inspector General said the Transport 
        Security Administration must improve its training for airport 
        screeners.\12\ A TSA training program for screeners was 
        handicapped, a GAO study found, by insufficient staffing at 
        many airports coupled with a lack of high-speed Internet 
        availability.\13\
---------------------------------------------------------------------------
    \12\ Airport Screeners Need to Be Empowered, Not Privatized, 
Government Employee Union Says, 47 Gov't Cont. 243 (May 25, 2005).
    \13\ GAO, Aviation Security: Screener Training and Performance 
Measurement Strengthened, but More Work Remains (May 2005).
---------------------------------------------------------------------------
        --The GAO found bomb-making materials could be sneaked thru all 
        21 airports tested, suggesting screeners were not receiving the 
        right kind of training (or equipment).\14\
---------------------------------------------------------------------------
    \14\ The GAO report was classified. It was first aired on NBC 
Nightly News on March 16, 2006, followed by a number of print press 
discussions. See http://www.msnbc.msn.com/id/11878391/; Critics: 
Mismanagement to Blame for TSA Lapses, Federal Times, March 27, 2006, 
at 8.
---------------------------------------------------------------------------
        --A report in December 2005 report by the DHS Inspector General 
        on DHS's major management challenges found that DHS had ``a 
        shortage of certified program managers to manage the 
        Department's 110 major programs.'' \15\
---------------------------------------------------------------------------
    \15\ DHS OIG, Major Management Challenges Facing the Department of 
Homeland Security (Dec. 2005), at 112.
---------------------------------------------------------------------------
        --Studies by the GAO, the DHS IG, Congressional committees,\16\ 
        and the press \17\ all found striking training deficiencies 
        underlying FEMA's flawed response to Hurricane Katrina. 
        Notably, an April 2006 comprehensive IG study found a steep 
        decline in FEMA top-level training: ``Overall, FEMA enrollments 
        in professional developed courses, which include leadership and 
        managerial training, decreased significantly in the past ten 
        years. For example, in 2005 only 25 percent of its employees 
        were enrolled in such programs when compared to 1995 levels.'' 
        \18\
---------------------------------------------------------------------------
    \16\ Aimee Curl, Senate Panel Unlikely to Recommend Taking FEMA Out 
of DHS, Federal Times, March 13, 2006, at 9 (discussing testimony at 
Senate hearing about the need for better FEMA training); Stephen Losey, 
FEMA Ignored '04 Memo, Lost Ground in Katrina Response, Federal Times 
(Dec. 12, 2005), at 4 (discussing testimony that a FEMA coordinating 
officers had circulated a June 2004 memo that ``raised concerns that 
FEMA's national emergency response teams were unprepared and ill-
trained'').
    \17\ Mollie Ziegler, Federal Volunteers Cite Flaws in Katrina 
Effort, Federal Times, Jan. 30, 2006, at 1 (about faulty training given 
to volunteers from DHS and from other agencies to help after Katrina).
    \18\ DHS OIG, A Performance Review of FEMA's Disaster Management 
Activities in Response to Hurricane Katrina 122 (March 2006).
---------------------------------------------------------------------------
    Procurement is a legitimate focus for looking at personnel problems 
at DHS, considering the scale of DHS's procurement activity--DHS 
purchased almost $9.8 billion of goods and services in fiscal year 
2004, in almost 60,000 procurement actions (not including credit card 
buys).\19\ The DHS IG found: ``DHS's close relationship with the 
private sector resulting from its many partnership arrangements, raises 
concerns that the minimal initial and annual Government ethics training 
may be insufficient to address standards of conduct issues as they 
apply to procurement.'' \20\
---------------------------------------------------------------------------
    \19\ DHS OIG, Department of Homeland Security's Procurement and 
Program Management Operations (Sept. 2005), at 2, 20.
    \20\ Id. at 3.
---------------------------------------------------------------------------
    A well-known former senior procurement figure of the current 
Administration, Angela Styles (formerly administrator of the Office of 
Federal Procurement Policy), told of an experience as to how weak DHS 
training was leading to weak DHS ethics:
        Styles recounted her experience with an employee from a large 
        IT firm who, while meeting to discuss the company's bid for a 
        Department of Homeland Security contract, mentioned casually 
        that he had drafted the DHS statement of work. ``Everybody in 
        the room except this person was shocked,'' Styles said. ``They 
        knew it was a problem for the same company to draft the 
        statement of work and bid on the contract.'' . . . . DHS needed 
        the contractor to draft its statement of work, according to 
        Styles, because no federal employee was capable of drawing 
        specifications for the particular IT project.\21\
---------------------------------------------------------------------------
    \21\ Developments: Rules on Blended Workforce Lack Clarity, 
Acquisition Experts Say, 42 Gov't Cont. para. 473 (Nov. 9, 2005).
---------------------------------------------------------------------------
    Some may question whether to view MaxHR as truly competing with 
hiring and training for scarce personnel resources at DHS. 
Unfortunately, there is no other way to view the radical step of 
replacing the existing personnel system with a new one, particularly a 
new one that is intensely draining, both permanently and especially in 
its initial years, of supervisors' attention. MaxHR requires both 
supervisors and employees to be quite re-trained, the supervisors in 
how to rate and to communicate with employees so that the pay-
controlling performance ratings will generate the least friction, the 
employees so that they will accommodate themselves to the strange new 
system.
    Moreover, as it goes into effect, MaxHR requires supervisors to 
give high levels of attention to the kind of rating and communication 
required for pay decisions. In fact, an article this week noted that 
supervisors at the Defense Department thought they should get a pay 
raise just for the increased amount of such supervisory work the new 
system demanded. Supervisors and employees alike have just so many 
hours in the week for training and personnel matters apart from their 
regular work. They can either spend them training and dealing with 
MaxHR, or, they could spend them on training and hiring for such needs 
as screeners' need for more security training on bomb-making materials, 
FEMA officials' needs for more training on emergency handling, or 
contract managers' need for more training on competitive and ethically 
honest procurement.

    B. Dysfunctional Procurement
    A few concrete examples will show the kinds of dysfunctional 
procurement at DHS resulting from its deficit of hiring and training.
    Quite a number of hearings have already been held just on the 
procurement problems in FEMA's response to Hurricane Katrina. In the 
week after the hurricane, FEMA awarded a series of large no-bid 
contracts (on the order of $100 million) to companies with political 
connections. Thereafter, FEMA began shifting the burden of a sizable 
amount of its contracting to Defense Department personnel, in two 
respects. It immediately turned $1.5 billion in contracting over to the 
Army Corps of Engineers,\22\ ostensibly involving engineering, although 
it also turned out to involve basic commodities and even portable 
classrooms.\23\ And, the Army Corps tapped into contracts of other 
military services.\24\ Second, the Defense Department assigned some 
contract management support staff to FEMA.\25\ FEMA simply could not do 
its procurement job; it had to turn its job over to the Defense 
Department.
---------------------------------------------------------------------------
    \22\ Leslie Wayne, Expedited Contracts for Cleanup Are Testing 
Regulations, New York Times (Sept. 13, 1005), at C4.
    \23\ Kevin McCoy, Contract for Portable Classrooms Scrutinized, USA 
Today (Oct. 21, 2005), at 6b (contract review requested of GAO for 
$39.5 million no-bid Katrina contract; Army Corps passed up local 
contractors willing to supply the classrooms for half the price, in 
favor of Alaska Native Company).
    \24\ Renae Merle, 4 Firms Hired to Clear Debris in Gulf Coast, 
Wash. Post (Sept 16, 2005), at A20.
    \25\ Chris Gosier, OMB Eyes Hurricane Relief Contracts, Federal 
Times (Oct. 17, 2005), at 4.
---------------------------------------------------------------------------
    Some might excuse that as just a super-emergency situation, not 
representing a DHS problem with broader implications. However, the 
indications in the studies by the DHS Inspector General of the 
procurement personnel problem are that this problem is hardly isolated. 
For its September 2005 study of procurement operations, the DHS IG 
compared levels of procurement staffing among the different units of 
DHS, and between DHS and other departments. It found average 
procurement spending per employee ratios, according to two outside 
studies, of $5.3 million (one study), or alternatively $6.3 million to 
$8.8 million (another study), in other federal agencies with similar 
buying profiles. ``DHS' average spending per procurement employee of 
$12--$13 million is significantly higher than either of these studies 
with some DHS offices spending an average of $25--30 million per 
person.'' \26\ That is an alarmingly thin level of DHS procurement 
personnel.
---------------------------------------------------------------------------
    \26\ DHS OIG, Department of Homeland Security's Procurement and 
Program Management Operations (Sept. 2005), at 7.
---------------------------------------------------------------------------
    The DHS IG confirmed the disturbing implications of this inadequate 
level of DHS procurement personnel from what he had been repeatedly 
told by the procurement personnel themselves. ``Many procurement 
offices have reported that their lack of staffing prevents proper 
procurement planning and severely limits their ability to monitor 
contractor performance and conduct effective contract administration.'' 
\27\
---------------------------------------------------------------------------
    \27\ Id. at 7.
---------------------------------------------------------------------------
    Adding to the dangers of DHS's inadequate procurement workforce is 
DHS's inadequate Office of Chief Procurement Officer (OCPO). The 
subheading of the September 2005 DHS report on this subject says it 
all: ``OCPO Lacks Sufficient Staff and Authority to Conduct Effective 
Oversight.'' \28\ At one recent time, the GAO found that OCPO had only 
two people to conduct oversight on the eight separate procurement 
offices in DHS. It was supposed to obtain five more, but even if that 
occurs, both GAO and IG found that OCPO ``has unclear authority to 
ensure compliance with DHS procurement policies and procedures.''\29\ 
So, the move to MaxHR means DHS management must devote its precious 
capacity to exert central leadership to changing the department's 
personnel/pay system, instead of trying to get oversight over a set of 
overwhelmed very-high-risk non-centrally-supervised procurement offices 
handling large sums of money.
---------------------------------------------------------------------------
    \28\ Id. at 7.
    \29\ Id. at 8.

    C. Examples of Procurement Workforce Problems, Outside FEMA
eMerge2
    A detailed press article this year entitled ``Security for Sale,'' 
had the subheading: ``The Department of Homeland Security has a Section 
on Its Web Site Labeled `Open for Business.' It Certainly Is.'' \30\ 
The article assembled many examples, some well-known within the 
procurement community, of contractor exploitation, often facilitated by 
lobbyists, of lax standards at DHS. Its examples draw on, and mesh 
with, the previously-quoted studies by the DHS IG, GAO, and 
Congressional Committees. For example, earlier a recent IG report was 
quoted about the inadequate controls and personnel in DHS's central 
procurement office. Security for Sale quotes Clark Kent Ervin, who 
served as DHS inspector general until the end of 2004 as follows:
---------------------------------------------------------------------------
    \30\ By Sarah Posner, in The American Prospect (Jan. 2006).
---------------------------------------------------------------------------
        The controls recommended by Ervin included hiring more 
        procurement staff with deeper experience. The DHS procurement 
        office, he said, had ``so few people expert in contract 
        procurement, the private sector was able to take the department 
        for a ride.'' Referring specifically to contracting abuses at 
        TSA, Ervin added that there was a ``loose attitude regarding 
        money.'' \31\
---------------------------------------------------------------------------
    \31\ Id.
---------------------------------------------------------------------------
    Security for Sale develops usefully one particular example about 
which this Committee has recently held important hearings. It describes 
how the company BearingPoint, formerly known as KPMG Consulting, 
obtained the `eMerge2' contract. ``In 2004, after signing on with Blank 
Rome, the company won three major DHS deals: a $229 million contract 
for its `eMerge2' software, designed to integrate the financial 
management of the department's 22 component agencies [and 2 other 
contracts].'' \32\ Blank Rome was a Philadelphia lawyer-lobbyist firm 
extremely well connected to the DHS Secretary, Tom Ridge of 
Pennsylvania.\33\
---------------------------------------------------------------------------
    \32\ Id.
    \33\ Id.
---------------------------------------------------------------------------
    There was reason from the beginning to be skeptical of the 
BearingPoint contract. At the very moment that DHS awarded the eMerge2 
contract to BearingPoint, another federal agency, the Department of 
Veterans Affairs, was canceling a computer systems integration contract 
with BearingPoint for a Florida VA medical center after paying 
BearingPoint $117 million, and the State of Florida was canceling a 
similar $173 million with BearingPoint and Accenture.\34\ More broadly, 
the technical procurement world grouped BearingPoint's eMerge2, as an 
enterprise resource project (ERP), as one of the ``well-known ERP 
implosions'' as to which ``the history of failed ERP projects [are] 
dotting the federal landscape.'' \35\
---------------------------------------------------------------------------
    \34\ Paul de law Garza, Critics Question Federal Contract, St. 
Petersburg Times, Oct. 7, 2004
    \35\ Wilson P. Dizard III & Mary Mosquera, ERP's Learning Curve, 
TechNews (Feb. 16, 2006).
---------------------------------------------------------------------------
    It seems rather blithe for DHS just to walk away from that failure 
without asking some hard questions of BearingPoint and of its own 
project workforce. DHS has a painful history of material weaknesses in 
its component financial statements and financial management systems 
precisely in the context that the BearingPoint contract was to fix, as 
GAO reported to this Committee at its March 29, 2006 hearing.\36\ DHS 
depended on that contract for a solution, having chosen the 
BearingPoint proposal over a rival proposal by established solution-
provider IBM--and over simply implementing the internal solution of the 
Coast Guard's much-praised system. It seems BearingPoint's failure was 
apparent ``within weeks,'' \37\ yet DHS, having stayed several years 
with BearingPoint, now finds itself having lost years in this key 
effort. The failure points up the need for more of its personnel 
efforts to be devoted to hiring and training so that it can make wise 
procurements and then manage them effectively, rather than devoting its 
personnel attention and funding to MaxHR.
---------------------------------------------------------------------------
    \36\ Statement of McCoy Williams Before the Jt. Hearing of the 
Subcomm. On Government Management, Finance and Accountability of the 
House Government Reform Comm. and the Subcom. On Management, 
Integration, and Oversight of the House Homeland Security Comm. (March 
29, 2006).
    \37\ U.P.I., DHS Financial Management Plan Collapses (April 3, 
2006).

Alaska Native Corporations
    There has been an emerging problem--some would call it a scandal--
in several government departments, as the exception to competitive 
bidding for Alaska Native Corporations (ANCs), some of which would not 
be considered true ``small'' businesses, is overused as a loophole for 
these departments to make noncompetitive, even sole-source awards. 
Unfortunately, there are signs that the DHS procurement workforce, with 
its shortfalls in staffing and training and with some evident 
vulnerability to political and lobbying pressure, has been yielding to 
the temptation to make excessive use of the ANC loophole in 
competition.
    Examples include a $500 million Customs Service contract awarded to 
Chenaga Technological Services Corp., for maintenance of scanning 
machines at ports and borders; \38\ and the $39.5 million no-bid post-
Katrina contract for portable classrooms by Akima Site Operations 
(technically arranged by the Army Corps, because FEMA abdicated).\39\
---------------------------------------------------------------------------
    \38\ Investigation of Alaska Native Corporation Contracts Sought, 
47 Gov't Cont. 114 (March 9, 2005).
    \39\ Kevin McCoy, Contract for Portable Classrooms Scrutinized, USA 
Today (Oct. 21, 2005), at 6B.
---------------------------------------------------------------------------
    Interestingly, the GAO recently reported on a particular example, a 
sole-source award by the immigration service to an ANC for operation 
and maintenance of a detention facility. Apparently, ``the contracting 
officer [said] that awarding to an ANC firm was the quickest and 
easiest method and avoided competition.'' \40\ That comment speaks 
volumes about the workforce problems underlying the procurement 
problem.
---------------------------------------------------------------------------
    \40\ GAO, Contract Management: Increased Use of Alaska Native 
Corporations' Special 8(a) Provisions Calls for Tailored Oversight 
(April 2006), at 18.

TSA-Unisys
    Another recently completed audit concerns the Transportation 
Security Administration (TSA)'s billion-dollar airport 
telecommunications contract with Unisys Corp. This was the vital 
contract to rollout an infrastructure so TSA could operate at 
headquarters and airports nationwide. Unisys' performance was so 
disappointing that the IG recommended, and TSA agreed, to terminate the 
contract at the end of the base period and re-bid it.\41\ The IG 
reported that ``TSA officials said that they originally estimated that 
the contract could exceed $3-5 billion, but set the contract ceiling at 
$1 billion.'' The contractor ran through 83% of the contract ceiling 
($834 million) in less than half the allotted time, and failed to 
provide TSA with many of the critical deliverables. The shortfalls in 
procurement officer capacity to oversee the contract are only too 
clear.
---------------------------------------------------------------------------
    \41\ DHS OIG, Transportation Security Administration's Information 
Technology Managed Services Contract (Feb. 2006), at 2.

ACE
    Customs and Border Protection (CBP) has a program to modernize 
trade processing for border security called Automated Commercial 
Environment (ACE), with a lifecycle estimate of $3.3 billion, and which 
had received almost $1.7 billion by March 2006. ACE has a history of 
cost and schedule overruns, with GAO examinations in past years 
identifying the likelihood that the program would continue to fall 
short of expectations.\42\ A recent GAO overview in March 2006 of DHS's 
lagging IT showed the ACE problems persist due to weak DHS program 
oversight. To meet deadlines--ACE had just come out with its release 
#4--increments (releases) that were supposed to be successive were 
being developed and deployed with what GAO called ``significant 
concurrency'' (i.e., more overlap in time than is advisable).
---------------------------------------------------------------------------
    \42\ GAO, Information Technology: Customs Automated Commercial 
Environment Program Progressing, but Need for Management Improvements 
Continues (March 14 2005).
---------------------------------------------------------------------------
    GAO explained the risks with both this ``concurrency'' and the 
problem that ``the ACE program was passing key milestones with known 
severe system defects--that is, allowing development to proceed to the 
next stage even though significant problems remained to be solved.'' 
Both of these lead to ``schedule delays and cost overruns,'' 
``premature deployment,'' and ``a groundswell of user complaints and 
poor user satisfaction scores with the release. \43\ That means that 
ACE will end up costing more billions, and taking more years, that 
planned for. A trade association once made the comment about ACE: ``Is 
it ever going to get done? It's beginning to look like the Big Dig in 
Boston.'' \44\ Now it appears that while it may get done, the 
shortfalls in procurement oversight will lead to overruns, delays, and 
customer dissatisfaction.
---------------------------------------------------------------------------
    \43\ GAO, Homeland Security: Progress Continues, but Challenges 
Remain on Department's Management of Information Technology (March 
2006).
    \44\ R. G. Edmonson, Slow Going: Funding and post-Sept. 11 Security 
Features Slow Completion of Customs Computer System, J. of Commerce, 
June 28, 2004, at 12 (quoting official of Retail Industry Leaders 
Association, Jonathan Gold).

    Mr. Rogers. Those were great opening statements. I hate 
that we have to go vote. We will be back in 30 minutes to begin 
the question and answer period. So thank you very much, and I 
apologize for the inconvenience. We are in recess.
    [Recess.]
    Mr. Rogers. I apologize again for the delay.
    Ms. Kelley, I understand that you have a plane that you 
need to catch, so we will let you address questions first.
    And I would just generically throw at you the question I 
posed first and foremost to the first panel, and that is, what 
do you think we can do to deal with retention problems in 
particular, recruitment problems in particular, and morale 
problems generally?
    Ms. Kelley. You know, I think staffing and the need for 
more funding for staffing is a huge issue. Everywhere I go 
employees are working a lot of extra shifts, a lot of extra 
hours with not much relief--
    Mr. Rogers. So it is the volume of staff--
    Ms. Kelley. Yes, the quantity.
    Mr. Rogers. You need a larger volume of staff.
    Ms. Kelley. And I actually see not so much the recruiting 
problem as the retention problem. Once employees begin to work 
at CBP, they recognize a couple of things pretty quickly. They 
feel that they are not supported in the work they are trying to 
do, they feel that their ideas and their suggestions of how the 
Department can do its work better are not tapped into and not 
listened to. They find themselves in an environment where they 
are told to do what they are told to do when they are told do 
to it and how to do it without any recognition of the expertise 
that they have. And just the zeal and commitment and love of 
the job that they do--I mean, these are just very dedicated, 
talented and committed employees with a wealth of background 
that they bring to this agency, and it is not tapped into. They 
feel that they are treated not with dignity or respect by their 
line managers, they are treated more as--
    Mr. Rogers. Do you have objective data to verify that, or 
is that just anecdotal?
    Ms. Kelley. Well, I have a lot of anecdotal, and I would 
say it is consistent. If this was coming from one or two 
places, I would not be making it as a general statement. I 
travel a lot, and I meet with frontline employees a lot, and 
everybody I go, without exception, they tell me they are 
looking for another job, they are actively looking for other 
jobs where they will be provided with the law enforcement 
officer retirement status, the 20-year retirement that they 
look around and see so many others having, and while they have 
the same responsibilities, they are not given that. They are 
given the title of law enforcement officer in death if they are 
killed in the line of duty, and they are given--they are called 
law enforcement officers all the time. You will hear the 
Department refer to them as law enforcement officers, but they 
do not give them the designation under the law.
    So they would also tell you that the job they were hired to 
do is not the job they are being asked to do today. They are 
being--the Department has decided to cross-train them on 
Customs and Immigration and agriculture work and expecting them 
to be an expert in all. And each of them came into the 
Department with an interest in and an application for a certain 
kind of work, and it is a large body of law that each of those 
encompasses, so they consider themselves, rightly so, experts 
in their fields, and they see that expertise being diluted.
    And the training they are being given to do these other 
responsibilities is not proper training. They are given a 2-
week course, in some cases they are given a CD to go and watch 
on a computer, and then they are expected to be experts in 
immigration law. And if their body of knowledge is Customs law, 
it is absolutely inappropriate to expect them to be experts in 
everything. And they don't feel like they are being given the 
tools and the resources to do the job that they know the 
country is depending on them to do. They are very frustrated.
    Mr. Rogers. Tell me what category these Border Patrol folks 
you are saying don't qualify for the pension fall into.
    Ms. Kelley. Actually, Border Patrol employees do, the 
agents do. These are called Customs and Border Protection 
officers, CBPOs. They were formerly Customs inspectors, 
immigration inspectors. Now they are called CBPOs--
    Mr. Rogers. How many of them are there?
    Ms. Kelley. There are over 14,000 of them. And like I said, 
the Department refers to them as law enforcement officers all 
the time very conveniently, but they do nothing to give them 
the status that they deserve.
    Mr. Rogers. And what role do they fill. What functions do 
you generally see them pursuing?
    Ms. Kelley. They do everything at every port of entry in 
the country, whether it is a seaport, airport or a land border 
crossing. They do primarily inspections; they do secondary 
inspections. They are all armed. They apprehend those who are 
trying to run the borders. They catch the drug smugglers, they 
catch the drugs and the individuals, whether it is human 
smuggling down on the Southwest border. I mean, they are 
involved in all of those law enforcement activities.
    Mr. Rogers. And there are 14,000 of them?
    Ms. Kelley. Over 14,000. That is just the front line, then 
you have the supervisors; but, yes, over 14,000.
    Mr. Rogers. Thank you.
    The Ranking Member is recognized for any questions he may 
have.
    Mr. Meek. Thank you very much, Ms. Kelley. What I will do 
is--President Kelley, I am sorry, this is a building where 
people believe in titles.
    But let me just run along the lines of what the Chairman 
was asking because I think it is very, very important that 
people understand the difference. I have had the taste of both 
worlds, being a member of the Florida Highway Patrol, being on 
the road for 3 years, being a member of the PBA at that time, 
hearing ``gripe sessions'' out on the road when two or three 
people get together to talk about what is wrong. I am glad that 
you brought about some clarity as it relates to what one may 
say chatter out there, to say it is a legitimate concern 
geographically and across the board. And this is the kind of 
stuff that is hard to really--once the study comes out, I mean, 
once we get the professor in--and I to want ask him some 
questions--once we start going along those lines, 9 times out 
of 10 it is too late.
    Now we are looking to expand Custom-border protection as it 
relates to more officers. And we have individuals that are 
carrying out law enforcement functions--I am getting ready to 
ask you a loaded question because we are about solutions here, 
hopefully, at this committee.
    In State government you have a number of wildlife officers, 
you name it, across the board, outside of what you may call 
State troopers, uniformed State police or what have you. In the 
Federal Government you have different tiers of law enforcement 
agencies. One may say that the threat level--and it is usually 
a collective bargaining unit--I mean, just everyone that falls 
into that category moves up to the next ladder. Some folks may 
argue that--and I don't want to call an agency's name out, but 
one agency's level may not be as high as the next.
    And I think it is important as we start looking at this 
debate of making sure not only if a person is carrying out law 
enforcement functions--badge, gun, handcuffs, immigration, 
pocket field guide of statutes to enforce and policies, writing 
reports, going to court, testifying, quote/unquote, law 
enforcement professional, but not seen as a law enforcement 
officer because you have folks that will leave, A, for more 
money; B, for the respect that they are a law enforcement 
officer; and retirement.
    So we are asking people to commit--because, you know, as we 
speak right now, 11,000 National Guard troops are being trained 
to go just to the Southwest border, but that is another 
editorial for a different day.
    I want to ask you, is there a discussion within groups that 
are--and, Mr. President, you can answer this, too, if you care 
to do so--is there a discussion amongst those that want to move 
it up? I am not familiar--I am familiar with it, but I am not 
familiar with the debate within the 150 law enforcement 
agencies to bring them up to the level of parity. Is there a 
debate there? Because usually one agency may carry another 
agency's will to move up and get the status.
    Ms. Kelley. As far as I know, there has not been that 
debate; no one has opposed or said that these CBPOs do not 
deserve the law enforcement officer status. I mean, they are--
from one day to the next, you see incidents of shootings, and 
in the last 2 months there have been 3 shootings that CBPOs 
were involved in at the northern border in Blaine, Washington--
    Mr. Meek. Let me just say, when you say CBPOs, just for the 
folks who don't understand what that means.
    Ms. Kelley. The Customs and Border Patrol officers. And 
these are different than the Border Patrol agents. The CBP 
officers work at the ports of entry, land border crossings, 
seaports, airports, the authorized ports of entry. The Border 
Patrol agents cover the area between the ports of entry.
    Mr. Meek. I am sorry if I misstated. I understand that 
part; I am sorry if I misstated that. I am just saying as it 
relates to increasing those numbers there, when we talk about 
the parity, is it just for those officers only?
    Ms. Kelley. Well, at this point the CBPOs are the only ones 
who do not have it. The Border Patrol agents have law 
enforcement status, the ICE agents have law enforcement status. 
So within the Department of Homeland Security, the only 
employees who are armed and conducting law enforcement officer 
duties every day who do not have that status are the CBP 
officers. And that is why they are the focus of the legislation 
that I mentioned in my testimony and that everybody is working 
towards.
    I mean, I have not heard of any dispute that they don't 
serve it. What I have heard, and what the administration has 
proposed, is an interest in looking at a different kind of law 
enforcement officer designation that would change the 
definition that exists today.
    Mr. Meek. Okay. I guess what I am trying to get down to--
because I am doing what the Chairman does, I am asking my own 
question versus the questions they have written down to ask. 
Who are they comparing themselves to?
    Ms. Kelley. They are comparing themselves to local and 
State police officers that they work with every day conducting 
their duties, with the Border Patrol agents, with the ICE 
agents--
    Mr. Meek. Okay. Now, that is where I am going. As it 
relates to the parity issue, I know that out there, like we 
have this debate in Armed Services, an enlisted marine versus a 
reservist or a National Guard Army person versus an enlisted 
person, they are getting two sets--two different sets of 
benefits, but if you ask the enlisted person should the 
National Guard person, soldier, get what they--get the same, 
they would say yes; but when you get up here as it relates to 
policymaking, there is a price tag on that. And so I am just--
so they are comparing themselves. The officers are comparing 
themselves to border protection--Border Patrol protection 
officers saying that we do the same--pretty much the same job 
that they are doing; am I correct?
    Ms. Kelley. Yes.
    Mr. Meek. Okay. So that is what I am trying to get to. I am 
sorry if I was going around, singing without my song sheet, but 
I want to make sure that that is clear and we have clarity 
there. Because the missions are very similar; am I correct?
    Ms. Kelley. Yes, they are.
    Mr. Meek. Okay. Now, one other question I want to ask 
here--and, Professor, if I can, you mentioned something on 
procurement, and I think it is very important, and I know that 
we have--Mr. Chairman, I want to ask for a little latitude here 
because I want to get this question out before Ms. Kelley 
leaves because I may--President Kelley--because I may have 
another question there.
    In your testimony you indicated that outside studies have 
shown an average procurement spending per employee ratio from 
5.3 million to 6.3 million to 8.8 million in other Federal 
agencies with similar profiles to DHS; but you also stated DHS 
average spending per procurement employee is at 12 million. And 
I guess I want to ask the question, why does this matter? 
Because--if you can tell me in a short blast, that would be 
good, because we have to set forth all of this for the record.
    And I think it goes hand in hand with--what I am trying to 
do, Madam President and Mr. President, what I am trying to do 
is build the record because we have wasteful spending that is 
going on in the Department, and folks better yet are saying 
that we can't upgrade these officers to build morale and stop 
attrition. If we were to put a stop to the wasteful spending, 
then maybe, just maybe, there would be dollars available to be 
able to say this is a reward as we start to lift our whole 
Department up, especially our frontline people.
    Mr. Tiefer. You have the numbers exactly right. And the 
numbers were developed by the inspector general of DHS, who I 
guess is used to looking at failed procurements and was doing 
an overall study to show why is it occurring on a general basis 
rather than procurement by procurement.
    The comparison, the fact that DHS--each DHS procurement 
officer has many more millions of dollars in procurement that 
he is both doing the initial awarding of the contracts out, and 
later on doing the supervising, the oversight of the contract 
as it is performed, much more than comparable contracting 
officers, say, for the armed services. That affects both those 
stages. At the awarding stage it means that the contracting 
officer is under great pressure to do things the quick and easy 
way, which is less competitive, to use one of these methods of 
which the simplest is when you just go to an existing 
interagency contract, and instead of saying, I will put this 
out for bids and I will get some competition, you just say, let 
me see, does the Interior Department buy this kind of thing, 
does some other department buy this kind of thing? I will jump 
on their governmentwide contract, and I will just take it under 
their contract, missing out on the chance to compete. So that 
is one thing is there is--there is it means much less 
competition.
    And then at the stage of the actual performance of the 
contract--and this is true at contracts this committee has 
looked at like eMerge, when they are being performed, the 
contractor gets away with not meeting the milestones, not 
meeting the schedule, having cost overruns, and maybe not even 
performing in the end, providing the deliverable to a contract 
that it was supposed to, because the contracting officer has 
too many things to do, too many balls in the air, too many of 
these to watch over, and can't give it the attention that would 
bring it in as expected.
    You saw this in eMerge2. I gave an example of ACE, this 
$3.3 billion crucial contract by which Customs is going to try 
to keep track at the borders of incoming trade. There have been 
complaints about this all along: It keeps missing its schedule, 
it keeps coming in at high charges. That is because the 
contracting officers are not able to sit on top of it, they 
don't have enough of them.
    Mr. Meek. Thank you, Professor Tiefer.
    I guess we get one more round.
    I really want to go down the road of the whole contracting 
and how does that kick into the lack of morale there at the 
Department, because I know that it must be difficult. You heard 
me say in the first panel that it is hard to say that, you 
know, I am looking--I would love to work for you, private 
sector or public sector, and coming from the Department of 
Homeland Security, because the black eye, the big black eye, is 
in the area of procurement, and it has to have something--
beating down employees as they go to serve; they want to come 
out with a good name, they want to be in with the good name.
    And I am thinking of some of the cost savings if we were to 
deal with the issue of making sure--we are going to have a 
procurement chief hopefully before this committee soon. That is 
going to be one of my questions based on your testimony, which 
I had an opportunity to read prior to the hearing, to hopefully 
be used along with the inspector general's report, that can 
talk about how we can save money and be more efficient and not 
have some at the next hearing or the hearing that we are going 
to have on this whole limo issue.
    The bottom line is if we had the people that really would 
take the time to do the job, maybe, just maybe, we will be able 
to save money. Maybe we will be able to show a cost savings 
where we will be able to upgrade our officers to law 
enforcement status. So I will leave it at that.
    And, Mr. Chairman, I just want to prepare Madam President, 
Mr. President, my next question is going to be about the merger 
of the department of ICE and department of Customs and Border 
Protection. I just want to ask you what you may be hearing out 
there amongst the rank and file, because I know there is 
chatter out there on it.
    With that I yield back.
    Mr. Rogers. I thank the gentleman.
    The Chair now recognizes the gentlelady from Texas Ms. 
Jackson-Lee for any questions she may have.
    Ms. Jackson-Lee. Thank you very much.
    If I have not said it before, let me thank the Chairman and 
the Ranking Member. I frankly believe that this subcommittee is 
probably one of the more pointed cornerstones of the success or 
failure of this Department. The oversight, so that we can 
construct a functional securing band around America, clearly 
will come about when we eliminate the warps, the confusion, the 
disjointedness and the frustration.
    Let me thank all of the witnesses on this panel, 
particularly because they do represent a different perspective, 
and one that deals with the base employees, both Mr. John Gage 
and Ms. Colleen Kelley, and Professor Tiefer for your focus.
    I do want to spend my time engaging you, Mr. Cage--and 
thank you for your testimony. In fact, allow me to put on these 
glasses, that symbolize wisdom and not age, to be able to read, 
if you will, the points that you made and I think are extremely 
important.
    Most frontline CBP personnel do not believe they have been 
given the tools to fight terrorism. Most believe the Department 
of Homeland Security could be doing more to protect the 
country. Most have serious concerns about the DHS strategies 
related to their jobs, and the majority feel that the One Face 
at the Border initiative has had a negative impact, and that 
will go to the question I think that the Ranking Member will 
ask. Most believe that the changes in the personnel regulations 
will make it harder to accomplish their mission, and three out 
of five respondents say that morale is low among their 
coworkers.
    I think one of the points that I want to emphasize is there 
seems there is no tension between Ms. Kelley and who she is 
representing and some of the issues that she has concern with 
and what you have, and I think we need to make that point. And 
I think that the various entities, the personnel, they want to 
work together, they want to make things work. And I support the 
Filner legislation; and, Mr. Gage, you can tell me whether you 
oppose it, but I support it. I think that those who I have seen 
at the front lines, who I have watched as the inspectors have 
worked as I have been at the various entry ports around the 
nation, certainly there is that kind of merit.
    But I want to go through, Mr. Gage, and I want this 
committee--because I would like in particular--and I thank you 
for studying the rapid border protection legislation. And I 
would commend to the Chairman and the Ranking Member, I really 
would like the pieces that are addressing the concerns that Mr. 
Gage has raised and also this whole issue of second-class 
citizenship for Homeland Security Department professionals and 
staff really to be addressed in this committee. I would like a 
hearing, because we made this a partisan issue when we were 
confronting this in the last election about collective 
bargaining for Homeland Security. It became a cause for the 
defeat and the victory of some various candidates.
    But what I want to do is what we have said. We work in a 
bipartisan manner here. If we believe this is a constructive 
approach to help rebuild morale, if we believe that these 
personnel, as others, have not taken advantage--right now the 
controllers, the air traffic controllers, have said blatantly, 
we are not going to strike. We are engaged in negotiations; we 
know that we cannot. And I believe our Federal employees are 
not going to engage in anything that would undermine the 
security of this Nation, but we have undermined them.
    Mr. Gage, tell me specifically as we talk to--I am looking 
at section 307. I think that specifically restores in this 
particular legislation those rights to the employees, I think, 
that you are mentioning. But I--as you are talking about that, 
I want to go to your testimony. I want you to talk more 
directly about the pay system and why that is confusing to you. 
I want you to talk about the difficulty of employees not having 
appeal rights, or the fact that they don't have any collective 
bargaining provisions, and then the fact that the Department of 
Homeland Security has actually violated court law, they have 
actually gone beyond a decision by a Federal court, as I 
understand it. Help us understand how this committee can be 
effective in at least fixing some of the terrible morale 
problems in the individuals that we are asking to be on the 
front line of border security and immigration reform in 
America.
    Mr. Gage. That is a wonderful question. First of all, I 
think on the litigation, we said that what Homeland Security 
was doing in the area of labor relations and employee rights 
and civil service protections was wrong, and we have proven it 
illegal, and I think that will stand up on appeal, the way I 
read the judge's decision.
    But if you really get down to it, Congresswoman, about what 
these people need on the front line, the TSA employees I hadn't 
mentioned. Now, the agency--the Department has the right that 
you all gave them to determine what rights TSA employees would 
have on the job, and they have determined that they will have 
no rights. And when you talk to these folks about how their 
shifts are changed from day to day, and there is no way that 
they can have a normal life; that their leave is restricted, 
for 6-month periods they are told that they can take no leave; 
now, collective bargaining clearly would address that without 
harming in any way the mission in TSA.
    But I think the frustration comes by when people say, for 
instance, bilingual pay, they ought to have it, they don't have 
it, why don't we have it? And the Department will say 
absolutely nothing and force the issue into litigation, when 
senior inspectors see their overtime just taken away. And these 
are law enforcement provisions that you all have passed, that 
an agency is to use these as a tool for employees who have 
these tours of duties that run over normal tools. And the 
Department doesn't try to solve it, they simply wipe it out.
    And these officers are not children. I think you go a long 
way when you sit down and you talk to them and you have 
reasons, they all want to do a good job, they all really are 
trying to love their jobs. There is a lack of communication; it 
is my way or the highway. They post something on the bulletin 
board, that is it. People talk, can't understand it, and it 
just builds, it festers.
    But I think what you all could really do is correct these 
pay problems, FLAP, AUO, overtime, the grades right now in that 
Department. As well as your bill on the 6(c); this is something 
that I think cures a lot of problems, but you can't even get 
the Department to address it. They simply say no, and the 
employees say, well, you are asking me to do all these extra 
things, and you are nickel and diming me on these paid benefits 
that I should have.
    So I think they understand a certain amount of stupidity in 
some of the Department's policies, but they don't understand 
how they are asked to do so much. They are cooperating, they 
are doing their part, and the Department is fighting against 
them on these pay benefits that they absolutely deserve.
    Ms. Jackson-Lee. Mr. Chairman, if I could follow on this 
last line of thinking and share with you a comparable 
situation.
    Across America local police departments and fire 
departments have collective bargaining. In the city of Houston 
we meet and confer, and other aspects, to have our public 
employees the opportunity for discussion give and take. I can't 
recall a shutdown in my city--I know there have been a number 
of other incidences, but by and large you will find that 
everyday public employees on the local level get up, put on 
their uniform and do their job. And I can't imagine that we 
would not have the same semblance of situation, given the 
opportunity to review this. I think a hearing would be 
appropriate.
    And I would just add that in H.R. 4044, sections also 
include establishment of specialized inspector occupations, the 
language training, the language awards, professional 
development that goes on that gives the incentive for 
employees, and as well, I think, fixing this merit system that 
I hope maybe in our next line of questioning you will get.
    But the idea, if you could just finish, that what we think 
enhances performance in this stressful responsibility of 
homeland security, is it your view that what the Department may 
feel enhances performance actually turns down or dumbs down 
excellent performance, including what you said about TSA? 
Because I would prefer the TSA staffing to be trained at such 
an acute level that they don't have to be examining people with 
metal hips or stripping down elderly people in wheelchairs, 
though we want them to be secure; but they have the finite 
training that they need that they can actually make sure they 
get the guns and the knives and whatever else that they are 
supposed to be trying to get, the bombs, as opposed to what 
they are being made to do now. Can you just finish on that 
point?
    I thank the Chairman.
    Mr. Gage. I think you are hitting on something there. I 
know when I was out in one place and the officers got together 
and they said, they publish these shift schedules, they don't 
ask us about anything. Someone might have a graduation, be able 
to get a co worker who could take that shift for him. And that 
really is a part of collective bargaining, an employee voice. 
And they just rule all that out. It is, this is your 
assignment, that is it. And it really destroys the teamwork in 
law enforcement.
    And that is the fear that I have, that they are taking all 
the good things that we have developed about these officers 
working together, really looking out for each other, doing the 
job, and they are killing the good things and replacing it 
with, you know, a management style that is coercive and 
intimidation. And I scratch my head why? It would certainly be 
a lot easier and a lot more profitable and, I think, efficient 
to go the other way and recognize the employees' voices and how 
that could be a very positive thing on the work site. By this 
Department is very disjointed, and just basic things like that 
seem to be lost in the shuffle, and I think it is really 
hurting them.
    And all these officers, most of them, have criminal justice 
degrees. These are not inexperienced people that you have to 
treat like they are children and that they are stealing 
something. And that is what a lot of the officers feel; they 
feel like they are the enemy.
    Ms. Jackson-Lee. I thank the Chairman and Ranking Member.
    Mr. Rogers. I thank you.
    I would like to, again, remind Ms. Kelley, we hope you can 
stay, but if you have got a flight, we will understand if you 
have to part company with us. But I hope can you stay.
    We would like to pick up with Mr. Gage and Professor Tiefer 
about the same subject matter I was talking about with Ms. 
Kelley. That is, what do you suggest--she talked about staffing 
concerns that affect retention. What do you suggest are some 
areas where we can make improvements that would deal with this 
morale? I know in your opening statement you made some pretty 
good observations, but generically with that, and retention in 
general.
    I was surprised to hear--I cannot remember which one of you 
said that you didn't really think it is as big a problem as 
recruitment. Border Patrol folks are telling us the opposite. 
They are trying to get folks in these training programs, they 
are spending huge sums of money to try to get applicants, and 
they are having trouble. But in any event, tell me, Mr. Gage, 
what do you think?
    Mr. Gage. I think the first thing that has to be done is 
these inconsistencies in the Department have to be cured right 
away. Some of these pay differentials where some people get it, 
some people don't, completely arbitrary, these officers don't 
understand that. The bilingual pay, getting the overtime 
straightened out, getting the grades really looked at.
    Mr. Rogers. I am sorry to interrupt you, but you brought up 
something I wanted to ask earlier when I heard Ms. Kelley 
talking. Talk about the pay--the pay that we are offering 
Border Patrol agents and Customs and Border Protection 
Officers. How does it compare with what they see in other areas 
of law enforcement, and does it have an effect at all on their 
retention?
    Mr. Gage. I think it has a huge effect. The ones who do get 
hired and trained by the Department are now looking to move 
quickly with that training into--
    Mr. Rogers. Where could they go?
    Mr. Gage. Look at San Diego, I think they start off their 
police force there at something like $65,000 and our agents and 
our CBP officers can be started off at a grade 5. Now there is 
about a $25,000 change right there, and it is just simply not 
competitive. Now the Department clearly can start these people. 
Now, the Department can clearly start their people at it a 
career ladder, 5, 7, 9, 11, the grades that currently exist. 
They can hire at a higher rate. Why they don't, I don't know.
    Mr. Rogers. Let me ask, and again, excuse my ignorance 
here, don't they get additional pay?
    Mr. Gage. Locality pay.
    Mr. Rogers. A $45,000 base salary then what would they get 
on top of that? Locality and scheduling?
    Mr. Gage. It is an extra percentage they get on their 
structural pay raise that you all give them at the end of the 
year. If you are in a high rate, high rent district like San 
Diego or Ft. Lauderdale, you may get 2, 3, 4 percent more on 
your raise. Congressman, it doesn't even touch the real estate. 
It is just completely ineffectual.
    There was a woman out there who runs the Federal managers 
association who did a study of this thing and interviewed 
people, officers who were living in their cars, family were 200 
miles away and her solution is a housing allowance similar to 
the military. Now that may sound a little way out there, but 
when you look at this problem, those people have to be agent 
those essential ports.
    Now the other stupid thing that the Department just did, 
and these affect our people up on the northern border. Some of 
them live in Canada. They come out and say all right, by July 
1st, you have to live in the United States. And I talked to one 
woman, she said I have to quit. I am an 18-year employee, I am 
a veteran of the military, I have nothing but outstanding 
appraisals. Now they are saying because I live in Canada, and I 
just bought a new house, I can't work on my job. And she said 
what is the nexus, what is the connection with working in 
Canada or living in Canada a couple miles from the border and 
working there, and the agency just puts out this blast that you 
can't do it any more with no grandfathering in, no 
consideration for the people who are really affected and no 
relocation expenses, nothing.
    Now that woman is going to get the agency, and there they 
just drove off another valuable employee.
    Mr. Rogers. I would like to hear from Mr. Tiefer as well. 
What would you suggest we could do to combat this morale 
problem, and retention in particular?
    Mr. Tiefer. There is supposed to be, there has, for years, 
been a pay comparability statutory structure that the Federal 
Government has committed to doing surveys and getting the page 
in a locality in a specialty paid under the general schedule, 
the GS comparable to the local pay. That is why there as 
locality pay system. What you are, in effect, trying to do in 
this room here is make up for what hasn't been done by the 
systematic process.
    I would say that the big problem for the Department of 
Homeland Security is that its statutory commitment to MAX HR 
takes it off of the comparability process. The contractor who 
is doing MAX HR is trying to do, if I understand what he is 
trying to do, Northrop Grumman, what it is trying to do, it is 
trying to reinvent a different form of locality pay 
comparability that will make the pay bands comparable to what 
is paid locally. That is a disaster.
    If the government simply went back to what it was doing, 
which was trying to achieve parity, that would go a long way.
    Mr. Rogers. Thank you. My time is up. I now yield to the 
Ranking Member for any additional questions he may have.
    Mr. Meek. You know, President Gage, I have the question on 
the merger of Custom Border Protection and ICE. I just want to 
ask you, because we are talking about morale, because we have 
had--did we have two hearings or one? We had a hearing on it 
and I think we have had a couple of hearings on this issue of 
Custom Border Protection versus ICE. We just had one last week. 
Three hearings, thank you for correcting me. We have heard 
testimony that there is a 50-50 assessment out there on making 
it happen, and mainly it has been surrounded around some of the 
things that you and Madam President Kelley mentioned earlier, 
individuals having a very low morale and also as relates to 
investigations, ICE not willing to take some Custom Border 
Protection investigations. They go outside the Department of 
Homeland Security for follow-up on cases.
    What are you hearing? There has to be some chatter out 
there amongst the rank and file on this.
    Mr. Gage. I think that what I am hearing is that from the 
rank and file they definitely all feel there has to be more 
communications between CBP and ICE, and they feel that there 
isn't. They look at it really as a management problem.
    I think our ICE personnel are a little hesitant about going 
into CBP simply because they are afraid they are going to lose 
their law enforcement status and some of the benefits that they 
have.
    But from what I have been hearing is that they really see--
and you get anecdotal stuff on the snafus between but really a 
basic lack of communication between the two agencies and the 
Department. Now whether merging one into the other corrects 
that, I don't know. I don't see why--first of all, they ought 
to communicate a hell of a lot better, and I think that would 
go a long way to really answering the logical and operational 
problem that they are experiencing.
    Mr. Meek. There is an attempt. There are some memorandum of 
understanding. They have a similar working group as you heard 
in the panel before you as relates to MAX HR. They call it 
their human capital council. They have something similar within 
the Department. It seems to be a breathing philosophy in the 
Department of having top level managers sitting there kind of 
coming up with an interpretation of what is best for the rank 
and file.
    I wanted to ask you, do you think that there is a place for 
rank and file individuals or some representative on this human 
capital council to give the kind of input that must be needed 
at that level?
    Mr. Gage. I think it is crucial. There has been really a 
lack of communications between this Department and the unions. 
It has just been shut off. And just time and time again, you 
can see decisions that are made that really don't take in any 
type of voice of the employee. And I would say that it is--I 
mean, in trying to deal with them like this whole MAX HR, 
Colleen and I both had some very good suggestions on how labor 
management could be done better, how the pay system could be 
done better, and they were just summarily kicked aside.
    We are following some HR theory approach to this thing, 
which really doesn't get down on the ground in practical 
application. I really have a problem with it. I think they are 
really heading for disaster by not taking employees into the 
design and implementation of whatever they do.
    Mr. Meek. So, President Gage, will it be an accurate 
statement to say that if that offer was made, and obviously you 
are saying that both of you have offered your expertise, if you 
are saying yeah, we are fighting on this thing but meanwhile, 
while you are carrying out your mission, here is a better way 
to do it that will be useful and that you are willing to do 
that, and lawyers won't keep you from doing that on behalf of 
the employees. I want to make sure that is there.
    Mr. Gage. I feel frustrated that we aren't given that 
opportunity.
    Mr. Meek. What the Department individuals came before us 
and said, our whole thing is to make sure communications work 
as it relates to the implementation of our MAX HR initiative, 
and I think that we need to make sure that everything is on the 
table. If we don't have to legislate, fine, in my opinion.
    Professor, I want to go back quickly, and I know you have 
been sitting there thinking about what I kind of put out there 
in the first round, on this cost savings of the whole 
procurement issue if we were to have accountability. Do you 
have any recommendations, reading the different studies and 
reports, on what will be a good ratio for the Department of 
Homeland Security based on its history of not being able to 
keep up with these contracts, ratio that we pulled out of the 
Inspector General's report, similar agencies that have better 
staffing than Homeland Security?
    Mr. Tiefer. I think it should be looking for what the armed 
services do. I want to add another comment about this, that is 
that in many ways, in many respects, Homeland Security 
Department buys things like the armed services. It buys 
information technology systems which, in some sense, are 
private sector products, but in other senses, have to be tailor 
made for the security environment and security needs. It is 
buying the things the armed services needs. In many cases, it 
buys them from the same contractors who sell it to the armed 
services. It needs something like the same level of procurement 
officers.
    I wanted to make the comment that there is something in the 
bill that was marked up here, that I think is very good, which 
is that you are looking to create a training--Homeland 
Security's Acquisition University. I saw that and I saw how 
very much that picked up on the advantages that in the armed 
services, you have for the Defense Acquisition University, and 
I think that would be a real step toward having topnotch 
procurement in the Department because that is why we have a 
Defense Acquisition University, you have trained people and 
that is how you move them up the scale. They get better because 
you train them and so they are ready to take on the bigger 
assignments.
    Mr. Meek. Thank you both, and I am sorry President Kelley 
had to leave. She waved to us as she was leaving. I hope she 
makes her flight.
    I want to thank all of you for coming before the committee. 
I know this will be my last time saying anything, the chairman 
will get to close out, and of course, Ms. Jackson-Lee has 
something to say. We are going to continue to work on this 
issue, it is a work in progress, but whenever we can come to 
these common ground and these hearings can bring some sort of 
new revelation out of saying we are willing, without 
legislation, to sit at the table and work through these issues 
as relates to the human capital council, even though our 
members may have issues with it and with MAX HR, we do know 
that it will be in existence for some time, and if we can head 
off additional frustration, fine.
    If that wouldn't be used against you as relates to 
litigation and would hurt your ability to be able to hold on to 
the decision that has already been made, then maybe that needs 
to be put on the table too.
    I want to let you know as this member, I will encourage the 
first panel to engage those that are on the front line, and I 
did propose that as an idea. Hopefully, I know someone from the 
Department is listening, but hopefully, they will take some 
steps where they can report back to this committee and say 
based on the hearing, these are the things we have I 
implemented to even make our program better while we still have 
it. Thank you so very much. Appreciate your service to the 
country.
    Mr. Rogers. I thank the gentleman.
    The gentlelady from Texas is recognized for any further 
questions she may have.
    Ms. Jackson-Lee. Thank you very much. I hope as I listened 
to both the chairman and the ranking member, that there is 
someone who understands the concept of a word to the wise, 
because as I listened to both panels, I see permeating through 
the discussion the frustration of not having a seamless team 
that is working on really, as Americans, have described the 
number one priority, and that is our security.
    Americans turn off their lights at night, close their 
doors, some of them have their own personal security alarm 
system, but their overall view is that I sleep in a country 
that is protecting me from the next terrorist or I sleep in a 
country that if there was a natural disaster that overtook all 
of my community, that I would have at least one life line, and 
that is the United States of America.
    It frustrates me to know that there are employees that 
sense that they are not part of the team, there are employees 
like Transportation Security Administration employees that 
don't have whistle blower protections. That is frustrating. And 
don't have basic accommodations so that a team is built.
    I am disturbed, Professor, about this MAX HR. Sounds to me 
like a new video game, and one that you might lose. I am trying 
to understand, and this may be off the mark, but I am still 
understanding whenever you start getting into layers of 
confusion and naming names and putting categories, I am seeing 
something with four bands, I don't know if this was your 
terminology, Mr. Gage, or what, but entry and development, full 
performance, senior expert, or supervisory. I don't know if we 
are in the Olympics or whether this is some form of 
incarceration.
    So help me understand, Professor, the MAX HR and then build 
into it what is so important is the team building. I would want 
to join with Chairman Rogers and Ranking Member Meek to, if you 
will, really go at this, because I think you are right, your 
expertise with a State system and on the front lines as an 
officer and the various expertise that we bring as a member of 
the Houston City Council, though a small microcosm of what we 
do here, we were constantly engaged in public employee issues 
and law enforcement issues.
    But, Professor, this MAX HR, I am tempted to try to go at 
it and to bring some reform to it. What is your view of that?
    Mr. Tiefer. I understand the name has many overtones, some 
of them not so positive. The idea is to eliminate the GS 
system. No longer will people be known, if you ask them, are 
you a GS-6 or GS-8, instead you will have 9 or so occupational 
clusters; technical people, that is one occupation; law 
enforcement personnel, that is another, and then within the pay 
scale for that occupation, there will be just four levels sort 
of depending on whether they are entry level or higher level, 
which is much less structured than the existing GS system.
    So it is basically eliminating the structure and then 
saying we will have performance criteria and the supervisors 
will give people the amount of pay that they rate on their 
performance. It is not a bonus system where they are sort of 
assured of a level pay and good performance gets you a bonus, 
it is all their pay is going to--
    Ms. Jackson-Lee. Up and down, sliding back and forth. So it 
is a great frustration. Again, what you are pointing out is it 
seems to have no structure and certainly it seems to have 
people more focused on their daily needs than doing their job. 
They have got to constantly be worrying about am I keeping up 
with the supervisors view of my getting a living versus let me 
see what innovative view, or how I can work with my team.
    Let me throw this out so I can have it on the table. I want 
to join in the theory that you have heard about a lot of 
expended dollars on really faulty and just abuse of contractual 
situations. I only say that because money spent on contracts 
that don't work certainly impact resources that the Homeland 
Security Department has in general. So I want this committee as 
well to attack, if you will, what I thought was enormous abuse 
in Hurricane Katrina, and that is huge outsourcing of work and 
no results.
    I talked to law enforcement officers who were asked to come 
in, and I guess they should have been under the Homeland 
Security umbrella, DEA, and I am sort of off, but I want you to 
hear this, DEA, U.S. Marshals, et cetera, and they sat idly by 
because they had no one to allow them to come under the 
umbrella and say we are all working because we have got this 
tragedy. They were kept in the box.
    I only use that as an example to say it looks like you are 
keeping employees under this system in the box. You have people 
hesitant to work together, and in your words, Mr. Gage, you say 
that this is only possible with a system that promotes 
teamwork, but any new pay and classification system should 
support, not undermine the mission of the Department of 
Homeland Security. Explain that.
    Mr. Gage. There is a saying out there that certainly with 
law enforcement, and as people have worked for supervisors, 
these are not rookies to the Federal sector, and there is an 
old thing out there that some supervisors will rate you 
outstanding if you can drink water and other supervisors won't 
rate you outstanding if you can walk on water. People see that 
as the type of system that is coming down that is going to 
govern not just a bonus, their base pay, and it is a formula 
for abuse and cronyism and bringing people into the Government 
who might be friends, they can bring these people in at 
whatever rate they want.
    So I guess you might say that I am pretty down on this type 
of system, especially with law enforcement. It has never been 
proven to work in any law enforcement setting and I think this 
is a formula for disaster that is going to ruin all the good 
things we have developed among our people and their teamwork 
and looking out for each other.
    Ms. Jackson-Lee. If I may, you just hit upon a point. The 
Federal Government has always attempted to be above cronyism. 
In fact, for many of us in the African American community, 
Hispanic community and other diverse communities, the Federal 
Government was the first resort or the last resort because of 
its alleged non-bias in hiring individuals. You now throw this 
to the wind for women, for people from regional differences. 
That bothers me. And I don't think MAX HR has convinced me or 
the way it is structured that we won't fall back into and be 
victimized in a department that we don't need any of that.
    My last point is, if you could, both of you, I see that 
there is a meet and confer. I try to suggest that you unions 
certainly were sitting around the table when they were in the 
design process, and you might comment to me whether there was a 
contractor that did that. Apparently they messed that up.
    In any event, are you saying that the meet and confer is 
working or what are you saying about that, and what are you 
saying about the design process or design team or whatever this 
was called that got you to where you are today.
    Mr. Gage. There is no question this was done before any 
meet and confer, designed process. There was a canned personnel 
system that they had ready. They were going to put it in come 
hell or high water, and when you sit down and try to offer 
suggestions on how this would work better on the ground, they 
were just run over. I don't think Colleen or I had one 
suggestion that was adopted by the design team or certainly not 
by the contractors in implementing this.
    So I think at DOD, as well as Homeland Security, they went 
through some motions and sat down, but there was really not 
true dialog. These were people who said we are going to follow 
this formula we have and that is it.
    I wanted to bring one point up that is really a morale 
issue and that is the shortcomings in security. End of shifts, 
San Usedro and another one in Houston, the officers will be 
told wave them through. And you will see a line of people 
coming through and suddenly the officer just stopped doing his 
check, wave people through. Why? To avoid overtime pay.
    In Houston ships come in at the end of a shift, and we have 
this documented, and instead of a Customs guy and an 
immigration guy being the first ones up that gangplank, if it 
is the end of the shift, they say get them tomorrow morning and 
allow the ship to go through its unloading operations over the 
night.
    What kind of security is this is what our officers are 
asking us. The horse is completely out of the barn in these 
type of situations on the land borders waving them through and 
in ships letting them unload before they are inspected by 
customs and immigration. And I think that has to stop. And it 
is about one reason, overtime budget is it.
    Ms. Jackson-Lee. Mr. Chairman, if I may just finish my 
sentence by simply saying again, I applaud this committee and 
the leadership that both of you have given. These folks here 
are not the enemy. And I think though you are particularly well 
coifed, I know your hair just stood on your head right now. And 
that is in my city.
    And I know there are people on the ground that mean well, 
meaning my port officials and a variety of other people who are 
counting on the job being done. One of the largest ports in the 
nation. We have just been told that for overtime reasons that 
Americans who are turning their lights out at night have reason 
to fear.
    I think that you have just added maybe hopefully another 
agenda item for us for a hearing and as well, let me extend an 
invitation to my colleagues to visit the Houston Port and some 
other sites that are facing these kinds of obstacles because 
when your port management relies upon your Federal authorities, 
they are not out there picking at them, they are not out there 
at the time of the opportunity for ships to be unloaded or to 
be docked. They are relying upon who we have vested this 
responsibility.
    I would simply say you are not the enemy, Ms. Kelley is not 
the enemy, and I would hope that we would have an opportunity 
in this committee and the full committee to do the job that the 
American people have asked us to do. And I yield back. I thank 
the chairman and the ranking member very much.
    Mr. Rogers. I thank the gentlelady for her questions. I 
thank the panelists for being here. I am very proud. Our 
Committee has done a good job on staying focused on what we 
called this hearing about and that is the human capital 
concerns that exist in DHS.
    Having said that, I want to backslide slightly with the 
last question that I ask before we close the hearing. In 
hearing Professor Tiefer talk about his background, you 
mentioned you have a specialty in procurement law. I can't let 
you get away without asking your thoughts about the Shirlington 
Limousine contract and why--I hope you know the facts, if you 
don't, that is fine, then just pass--but why do you think that 
contract wasn't rebid when it was determined that three of the 
four HUBZone contractors did not qualify and Shirlington was 
the only supposedly qualified contractor left standing? Is that 
a standard procurement practice? Tell me your thought.
    Mr. Tiefer. Mr. Chairman, you have a nose for things that 
don't seem exactly right. The fact that that contract was let 
to a particular contractor while the other three potential 
competitors were brushed away looks not just negligent, I think 
the agency's position, although it wouldn't say this, is maybe 
we were negligent. It looks more than negligent, it looks 
suspicious.
    I can tease a few of the clues out of here. The contracting 
agency is saying look, we checked the responsibility of the 
contractor as much as we were supposed to. We looked on the 
list of exclusive bidders and we looked up their references. 
This is a very minimal job, less than a minimal job. It is 
someone sort of trying to sort of blinker their eyes.
    The fact that this contractor had had a prior contract 
terminated is something that you would think the contracting 
officer would surface. They don't have to be on the list of 
those who are never to be allowed any contracts in the 
Department, which is the excluded list, as soon as you surface 
that, and they haven't said whether they looked for that, 
whether they looked and didn't find it. There is sort of a 
silence in DHS about whether they knew or didn't know that it 
had a previous contract terminated.
    Once one has any reason to check, there is this--the 
Department is giving this notion that well, we looked at 
whether the contractor could do the job and that is all we look 
at. That is not true. Under responsibility they are supposed to 
look into the integrity, the business integrity of the 
contractor. That is the phrase in the Federal acquisition 
regulation. Once they knew that it had previously been 
terminated on doing a contract, they should have looked at the 
things that have now turned up about the contractor.
    Again it sort of looks like their vision was blinkered, 
that they were trying not to look. This pattern is entirely 
consistent, let's put it that way, with a contributing officer 
who has been given the signal that this particular bidder is 
going to give--is favored, is going to give a kind of service 
that maybe other contractors wouldn't give. We want you to 
check the boxes on this form and award the contract to them.
    Mr. Rogers. Thank you very much.
    Ms. Jackson-Lee. Mr. Chairman, just one sentence.
    Mr. Rogers. Certainly.
    Ms. Jackson-Lee. Because he was so eloquent. The same thing 
happened and is still happening with Hurricane Katrina in terms 
of contracts being let. I would just ask if the professor would 
kindly assess that not in writing or maybe give us some 
assessment if he has either some studies, particularly in the 
large what we call trash collecting contracts, if he would have 
the opportunity to review them, Mr. Chairman, I would 
appreciate if that could be provided for our review.
    Mr. Rogers. Absolutely.
    Ms. Jackson-Lee. I thank the chairman and yield back.
    Mr. Rogers. The Ranking Member and I have talked about this 
circumstance and this is a good way to end this hearing. Our 
next hearing will be on this particular contract and it will be 
a very in-depth look at what happened. But, more importantly, 
as the ranking member and I have been discussing, there is a 
broader procurement policy problem that this exemplifies that 
we are going to have to address, and it affects all areas of 
DHS. One of the most glaring examples is the one that you just 
referenced. We intend to learn a lot more about procurement, 
and particularly this contractor.
    Thank you very much for being here. You have been very 
helpful. I would remind you that the record remains open for 10 
days. If any members submit questions that they didn't get to 
today or because they weren't here, I would ask that you reply 
to those in writing so we can preserve them for the record. And 
with that, we are adjourned.
    [Whereupon, at 1:25 p.m., the subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              


                             For the Record

    Questions from Representative Mike Rogers of Alabama for Gregg 
                     Prillaman and Dwight Williams

Question: 1. What can you identify as the single greatest personnel 
challenge contributing to low morale at DHS and how do you intend to 
address the problem going forward?
Response: One of the greatest challenges identified by the Federal 
Human Capital Survey (FCHS) in 2004 was the lack of employee trust in 
senior leadership within the Department.
    While the lack of trust cannot be attributed to any single 
interaction or cause, it can manifest itself because of misperceptions 
brought about by a lack of communication, the short tenure of senior 
leaders and other less tangible factors. DHS created a Human Capital 
Survey response team which is addressing employee morale issues at a 
grass roots level by sponsoring employee focus groups to identify 
specific action plans for improving DHS morale and fostering a climate 
of mutual respect.
    We believe one way to address low morale is to provide employees 
with an opportunity to learn and develop professionally. Therefore, a 
Chief Learning Officer position has been established to increase our 
focus on training and development opportunities across the Department. 
In addition, MAXHR performance leadership training, 
involving a single performance system for the entire Department, has 
been completed by over 7,700 DHS managers to heighten their skills and 
awareness of employee issues and create a strong performance culture. 
An additional 4,300 managers are scheduled for training this year.
    Also, we are striving for better internal communications, for which 
all SES members of the Department received specific training in August 
of last year that included how to improve communications and coaching 
skills within the workforce, and how to create a better alignment 
between organizational priorities and individual performance 
expectations. Additionally, the Secretary has recently taken steps to 
improve communications between senior leadership and all DHS employees 
through a Secretarial web cast which provided responses to employees' 
frequently asked questions. The Secretary plans to continue this and 
other efforts aimed at improving communications with our leaders and 
our workforce.
    The Federal Human Capital Response Innovations Team (I-Team) was 
formed in June 2005 and charged with the responsibility of designing, 
implementing and evaluating the overall DHS response to the FHCS 
results. This team is comprised of CHCO staffers and Component 
representatives who take a two-tiered approach, looking at overall 
issues of the Department as well as specific issues within the 
components. It has the responsibility for analyzing survey data, 
designing action plans, implementing best practices, providing employee 
educational communications and evaluating strategic outcomes.

Question: 2. What steps has your office taken to bring the diverse 
cultures of DHS components together in a cohesive organization with a 
common sense of mission?
Response: Many steps have been taken to foster a ``Team DHS'' 
organizational climate. One important step was supporting the 
implementation of the Secretary's Second Stage Review which changed the 
Department's organizational structure. This Second Stage Review was 
intended to improve our capabilities to protect and safeguard the 
nation by integrating and coordinating areas of intelligence, policy, 
operations, and preparedness efforts; flattening the organization; and 
creating new and stronger Components.
    From a human capital standpoint, we have established and expanded a 
multi-Component shared services center; moved from 8 different payroll 
providers to 1; and developed a Department-wide recruitment brand as 
well as broad scope workforce analysis and recruitment plans to address 
gaps in several mission-critical occupations. We have also designed and 
robustly deployed a DHS leadership competency framework which has 
served as the basis for Department-wide performance leadership training 
and as the basis for leadership training in the Components, ensuring 
the development of a common set of leader competencies throughout the 
Department. In addition, continued implementation of the MAXHR 
performance management program, supported by a robust, enterprise-wide 
ePerformance support tool, will drive the establishment of clear 
employee performance expectations that are aligned with organizational 
goals that are cascaded throughout the Department. The Chief Human 
Capital Office conducts bi-monthly meetings with the Component human 
resource directors to provide a forum for discussing diverse human 
resource issues. These are just a few examples of the active steps that 
the CHCO has undertaken recently to move toward a ``Team DHS'' climate.

Question: 3. It has been projected that the Federal government will 
experience a retirement bubble in 2007 and 2008. What has DHS done to 
prepare for this retirement wave and its impact on DHS' workforce?
Response: To prepare for the retirement wave, DHS is focusing on 
strategies in three areas: recruitment, retaining talent and fostering 
continuity of leadership and knowledge through learning and 
development.

Recruitment
    The Department is conducting workforce analyses that include 
strategies to close hiring and competency gaps in mission critical 
occupations across DHS. To assist in the recruitment effort, DHS has 
established a corporate branding initiative resulting in recruiting 
materials such as portfolios, slipsheets, a recruitment video, and CD's 
that may be utilized throughout the Department at a variety of 
recruitment events. A Recruitment Taskforce has been established to 
leverage Component-specific recruitment activities throughout the 
Department. Components are making use of recruitment flexibilities such 
as outreach, the student loan repayment program and hiring bonuses.

Retaining Talent
    DHS is fostering a results-oriented workforce through the 
implementation of the new pay and performance management system that 
links individual/team/unit performance to organizational goals and 
results. The DHS Chief Human Capital Office links specific Component 
results from the Federal Human Capital Survey to results gained from 
workforce analysis. Components are encouraged to actively develop 
internal strategies to track and improve retention for those segments 
of their workforce where losses are above the normal rate by making use 
of retention flexibilities such as retention bonuses, performance 
awards, telework and alternative work schedules. We will continue to 
develop approaches to retention based on exit interviews, grievance/
complaint trend analysis, and/or focus groups.

Learning and Development
    All Components must foster continuity of leadership and knowledge 
by applying the DHS Leadership Competency Framework and a succession 
planning approach to their workforce planning efforts. Learning and 
development opportunities must be continually funded through 
centralized (Departmental) and Component-sponsored activities. This 
ensures that the executives and those in the leadership pipeline 
strengthen their ability to direct and manage the work of others, 
evaluate and analyze results, and implement process improvement 
techniques. The Leadership Competency Framework provides the necessary 
standards to ensure learning is also aligned with organization goals. 
Components' will use the results gained from the workforce planning 
process to identify appropriate attendees for programs such as the 
newly established DHS-wide Senior Executive Service (SES) Candidate 
Development Program, Component-specific Candidate Development Programs, 
Department of Labor's SES Forum Series, The Graduate School, USDA's 
Executive Potential Program and Aspiring Leaders Program among others.
    Components will continue to share resources through programs such 
as the tri-bureau (ICE, CIS, CBP) Supervisory Leadership Training 
Program; USCG's Midlevel Managers Course, Mentoring, and Executive 
Development Programs; and FEMA's Leadership Development Programs. It 
will be through these efforts that DHS? leadership cadre will better be 
able to effectively manage people, ensure continuity of leadership, and 
sustain a continuous learning environment.

Personnel Challenges at Customs and Border Protection
Question: 4. Is there concern about an exodus of pilots from CBP Air 
and Marine when the retirement wave hits the Department in 2007 and 
2008?
Response: In preparation for the possible departure of those pilots who 
will be eligible for retirement in 2007 and 2008, U.S. Customs and 
Border Protection Air and Marine is presently assessing the number of 
pilots who are likely to retire immediately upon reaching eligibility. 
Additionally, CBP Air and Marine is developing a follow-on to the 
former Office of Border Patrol pilot-trainee program that will provide 
approximately forty-eight seasoned Border Patrol Agents, who have 
appropriate pilot certificates, the opportunity to become CBP Air and 
Marine pilots. Lastly, CBP Air and Marine has developed a strategic 
plan to identify its future requirements and seek appropriate funding 
to meet those needs.

Question: 5. In an effort to bring about pay and grade parity between 
Border Patrol aviators and legacy Customs pilots, Border Patrol 
aviators were initially given an 8% premium. Has pay and grade parity 
been achieved? Are Border Patrol aviators still receiving the 8% 
premium?
Response: Former Border Patrol aviators are receiving special rates as 
GS-1881 Air Interdiction Agents, which currently are approximately 6-7 
percent above the basic salary of a similar employee at the same grade 
and step on the General Schedule. They are also entitled to Law 
Enforcement Availability Pay (LEAP). The special rates were not 
provided to achieve parity with legacy Customs pilots. Rather, the 
special rates were provided to avoid staffing problems that might have 
otherwise occurred when the legacy Border Patrol pilots were converted 
to the new Air Interdiction Agent position and lost eligibility for 
Fair Labor Standards Act (FLSA) overtime pay. The conversion to the new 
position provided parity by ensuring the pilots were in the same 
position with the same grade structure and with the same entitlement to 
availability pay. The legacy Customs pilots were already FLSA exempt; 
therefore a similar change in pay as a result of the conversion to the 
new GS-1881 Air Interdiction Agent position was not considered.

Question: 6. President Bush promised that 6,000 Border Patrol agents 
will be hired by 2008. Does the Border Patrol have the capacity to 
train that many agents with its current recruitment methods and 
training structure? If not, how much will it cost and low long will it 
take to create a more robust recruitment and training capacity?
Response: Funding provided in the supplemental (P.L. 109-234), together 
with funding proposed in the President's budget for FY 2007, will be 
sufficient to increase the number of Border Patrol Agents by 6,000 by 
the end of 2008. The supplemental provides an additional $50 million 
and the President's budget includes an additional $23.291 million.

Question: 7. Is it accurate that only one in 30 Border Patrol agent 
applicants complete training at the Border Patrol Academy?
Response: No. An average of one out of every thirty applicants makes it 
through the Border Patrol hiring process (including an entry 
examination, oral structured interview, fitness test, medical, drug 
screening, and background investigation) required prior to reporting to 
training. Only one out of every thirty-seven applicants successfully 
completes the entire process, from application through graduation from 
the Border Patrol Academy.

Question: 8. What is the reasoning behind requiring all new Border 
Patrol agents to spend their first five years on the southwest border? 
Does this policy affect retention and morale for new employees? What is 
being done to improve retention for Border Patrol agents?
Response: There is no policy mandating that new Border Patrol Agents 
serve a five-year tour on the Southwest Border. In order to meet the 
National Strategic Plan's goal of improving the operational 
effectiveness of the Border Patrol, and to facilitate the movement and 
transfer of agents to different locations throughout the country, CBP 
has sought to reach an agreement with the National Border Patrol Union 
on a new Voluntary Reassignment Program. A nationwide voluntary 
reassignment opportunity bulletin opened June 26, 2006 and will solicit 
applications for reassignment through July 17, 2006.

Question: 9. CBP Air and Marine currently owns and maintains DHS's only 
command and control facility in the United States that is capable of 
monitoring all airspace within the U.S. and areas leading up to its 
borders. However, DHS, and specifically CBP, has failed to adequately 
staff and fund its Air and Marine Operations Center (AMOC) facility 
thereby degrading its potential capabilities. The AMOC is currently 
staffed at approximately 60%. Has CBP or DHS made any plans to correct 
this situation?
Response: CBP defined the mission requirements and force structure for 
the newly formed CBP Office of Air and Marine in the Customs and Border 
Protection Strategic Air Plan, which was recently provided to Congress 
in a report. The Plan addresses the need to enhance the border 
monitoring missions at the AMOC by supplementing the eighty-eight 
personnel currently assigned. Our preliminary staffing estimate is that 
200 total personnel are required to take on the additional border 
missions. We also estimate that the facility itself may need to be 
doubled in size to accommodate the personnel and equipment required to 
meet the various new missions, such as monitoring the DHS unmanned 
aircraft systems and coordinating the operations of the combined CBP 
Air and Marine fleet. Specific expansion and hiring plans derived from 
the strategic plan and Department of Homeland Security initiatives will 
be reflected in future budget requests for staffing the AMOC.

Question: 10. Several sections within the AMOC, including the 
intelligence office, are well below targeted staffing levels. How have 
the shortages affected operations?
Response: Personnel shortages have led to a reduction in operating 
hours in the Communications Room, a reprioritizing of areas of 
responsibility to be monitored by radar surveillance, and a reduction 
in tactical support to the field units.

Personnel Challenges in the Directorate of Science and Technology
11. It is the Committee's understanding that the Directorate of Science 
and Technology (S&T) has experienced high attrition rates.
a) Please describe the attrition rates for S&T during the past two 
years.
Response: Between May 2004 and June 2006, the S&T Directorate increased 
its federal employee staff by 132 individuals. The following chart 
details the number of federal staff that were on board between this 
period at the S&T Directorate.

------------------------------------------------------------------------
                Date                       Number of  Federal Staff
------------------------------------------------------------------------
                  May 2004                                  108
------------------------------------------------------------------------
                 June 2005                                  184
------------------------------------------------------------------------
                 June 2006                                  240
------------------------------------------------------------------------

    Between May 2004 and June 2006 there was a net loss of 41 federal 
positions, but please note there was a gain throughout this period. 
Losses are replaced as timely as possible within the challenges of 
hiring federal employees. In addition, federal laboratories such as the 
Environmental Measurements Laboratory, Transportation Laboratory and 
the Plum Island Animal Disease Center became a part of the S&T 
Directorate; the federal employees at these laboratories are included 
in the June 2006 total.

b) To what does S&T attribute this loss of qualified and experienced 
personnel?
Response: The S&T Directorate has not experienced an above-normal 
attrition rate for qualified and experienced personnel during the past 
two years. Normal attrition is expected in a new organization and 
particularly in a scientific organization. A robust turnover of 
personnel and the injection of new scientific technical professionals 
helps staff maintain scientific credibility and remain abreast of new 
scientific technology.
    During the start up of the S&T Directorate, there was difficulty in 
finding and hiring qualified federal employees because of the lack of 
an approved and flexible DHS federal hiring system. To appropriately 
staff its operations, the S&T Directorate arranged for qualified 
personnel from other agencies to be detailed to the S&T Directorate or 
recruited under the Intergovernmental Personnel Act Mobility Program 
(IPA). The S&T Directorate also established staffing contracts and 
actively sought to hire federal employees.
    Detailees are assigned to the S&T Directorate by their parent 
organizations and must return when requested. IPA's serve under 
stipulated contract time-limits, and contractors are assigned based on 
the terms-of-the?contract. The wind-down of these contracts and detail 
assignments contributes most to perceptions of significant attrition.

c) What steps are being taken to address this issue?
Response: We are using every mechanism available to retain our best and 
brightest, including retention initiatives, communication, advancement 
opportunities, attendance at conferences, training and ensuring that 
our personnel know how valuable they are to DHS and the Nation.

Question: 12. S&T relies on a number of experts from the national 
laboratories hired under the Intergovernmental Personnel Act (IPA) and 
other authorities. It has come to the Committee's attention that 
Lawrence Livermore National Laboratory receives more than half of all 
S&T funds distributed to national laboratories.

a) How are the decisions directing funding to national laboratories 
made?
Response: As discussed in the Report to Congress (RTC) titled 
``Utilization of the National Laboratories'' October, 2004, the 
assignment of work to the national laboratories is based on a variety 
of factors including whether the work is efficiently accomplished by 
the private sector and/or whether DHS has a strategic reason in 
investing in development of a particular capability . The S&T 
Directorate program requirements are reviewed annually and specific 
goals and budgets are formulated by S&T Integrated Product Teams (IPT). 
For those requirements which are determined appropriate for national 
laboratories and federally funded research and development centers 
(FFRDCs), the S&T Directorate executes a rigorous annual management 
cycle for program planning, execution, and review. That process 
includes these component parts:
         Program Planning: Each fiscal year Program Execution 
        Plans (PEP) are developed in a program planning meeting 
        involving relevant technical area experts from Strategic 
        Partner National Laboratories. These meetings identify 
        qualified performers per the requirements that DHS establishes. 
        Within the PEP, S&T Directorate program managers assign tasks 
        to the most qualified performers.
         Program Execution: Scopes of work are executed by 
        individual laboratories or multi-laboratory teams, as 
        determined in the PEP.
         Program Review: Program reviews are held annually 
        using a team of external experts to evaluate project 
        performance based on three primary criteria:
                 Mission and user relevance;
                 Technical competency; and
                 Management effectiveness.
    Many S&T Directorate programs are of multi-year duration and the 
above process is used to manage program execution as well as to 
initiate new programs.

b) Are employees formerly employed by the national laboratories 
involved in funding decisions? Please assess whether the conflict of 
interest issues identified in the December 2005 Government 
Accountability Office report, entitled ``DHS Needs to Improve Ethics-
Related Management Controls for the Science and Technology 
Directorate''--or other conflicts of interest relating to DHS employees 
who are former employees of the national laboratories--account for the 
disproportionate amount of research and development funding being 
directed to Lawrence Livermore.
Response: As the Committee noted, the S&T Directorate relies on a 
number of experts from the national laboratories hired under the 
Intergovernmental Personnel Act (IPA) and other authorities. In 
addition, the S&T Directorate has employed a number of experts who were 
formerly employed by the national laboratories, including one former 
employee of the Lawrence Livermore National Laboratory.
    The S&T Directorate recognizes the need for ethics-related 
management controls to prevent actual, or the appearance of, conflicts-
of-interest as discussed by the Government Accountability Office. 
Consequently, management controls are in place to shield IPA and former 
laboratory employees from actual, or the appearance of, conflicts-of-
interest in the performance of their duties. In particular, consistent 
with the criminal conflicts of interests provision, 18 U.S.C. 
Sec. 208(a), every IPA assigned to the S&T Directorate operates under a 
recusal statement that they will not take any official action or become 
personally and substantially involved in a particulate matter in which 
the IPA detailee knows the ultimate outcome of which will impact his 
financial interests or those of his spouse, minor child, general 
partner or organization in which he is an officer, director, trustee, 
general partner, or employer. In the case of personnel employed by a 
national laboratory, the general prohibition extends to both the entity 
that operates the laboratory as well as corporate affiliates. All IPAs 
are instructed orally in writing that if they become aware of a matter 
that calls for their involvement in their official capacity that 
involves their sending institution, or an affiliate (or which otherwise 
implicates 18 U.S.C. Sec. 208) that they are supposed to refer the 
matter to a person designated by name in their recusal statement. The 
S&T Directorate has no direct evidence that an IPA--regardless of 
assignment--was specifically involved in directing work to his/her 
sending institution or helping shape requirements that would directly 
flow to the benefit of his/her sending institution. If this were the 
case, it is something which of great concern and will not be tolerated 
by the current leadership. It is also noteworthy that the recently 
approved realignment of S&T has a significant number of checks and 
balances and would prevent this from occurring. If credible evidence or 
allegations of improper behavior is brought to the S&T leadership's 
attention, full and immediate investigation(s) will result.
    In the case of former employees of the national laboratories, the 
S&T Directorate employs numerous management controls to help ensure 
that personnel follow the requirements in 5 CFR Sec. 2635.502 relative 
to former employees acting on behalf of the government in matters with 
a ``person'' with whom they have a covered relationship (the 
institution in which they were a former employee within one year) or in 
which they have a financial interest.
    New IPAs are pre-screened by the S&T Directorate's designated 
ethics advisor and are also required to complete new employee and 
annual ethics training as appropriate. Also, IPA personnel are bound by 
disqualification agreements, which they execute prior to their arrival 
at the S&T Directorate, in which they are disqualified from taking any 
official action in matters that involve their parent institution or one 
of its affiliates. An IPA's supervisor is responsible for overseeing 
compliance with these agreements and resolving all questionable cases.
    Given these procedures, the S&T Directorate believes that the 
amount of research and development funding being directed to Lawrence 
Livermore National Laboratory is based on the need for the labs' 
specialized capabilities and facilities, rather than the result of 
undue influence by IPA personnel or former employees of that 
laboratory.

Security Challenges
Question: 13. It is the Committee's understanding that labor unions and 
other groups have criticized DHS classification policies as overly 
broad and subjective. Is there a written policy on the classification 
of documents? If not, what guidelines does your office provide to DHS 
officials regarding classification determinations?
Response: The Department maintains substantial written policy governing 
classification management to include management directives, 
classification guides and instructions for Original Classification 
Authorities. Various Management Directives (MD) prescribe the policies 
and procedures related to classification of documents, the marking, 
storage, and transmission of classified documents, and the standards 
for identifying, reporting, and conducting inquiries and investigations 
into incidents involving the mishandling or compromise of classified 
information. All of these MDs are in accordance with the requirements 
of Executive Order 12958, as amended as well as 32 C.F.R. Part 2001 and 
2004.

Question: 14. When an individual with a security clearance is 
transferred to DHS, what type of paperwork is transferred to the 
Department for its adjudication decision? Following the adjudication 
decision, what information is kept on file while the individual is 
employed with DHS? Please explain the process from start to finish.
Response: The principle of reciprocity has been mandatory for executive 
branch agencies for more than a decade. The Intelligence Reform and 
Terrorism Prevention Act recently re-emphasized and expanded upon this 
requirement. Reciprocity mandates acceptance of equivalent personnel 
security clearances and accesses across federal agencies. In other 
words, if a prospective employee holds a current clearance as a result 
of previous military or other government service, the Department is 
required to accept this clearance without additional investigation. 
Government--wide reciprocity procedures, to include narrowly defined 
exceptions are outlined in the Office on Management and Budget 
Memoranda (OMB) on ``Reciprocal Recognition of Existing Personnel 
Security Clearances'' dated December 12, 2005 and July 17, 2006. The 
reciprocity principle also governs personnel transfers to and among DHS 
components.
    Pursuant to the Recent OMB memoranda referenced above, it is no 
longer necessary to transfer paper files. Instead, the appropriate 
Security office verifies the individual's clearance using one of 
several electronic databases: OPM's Clearance Verifications Systems 
(CVS), Department of Defense's Joint Personnel Adjudication System 
(JPAS), and the Intelligence Communities Scattered Castles Database. 
The security office at the DHS Component then creates and maintains a 
DHS security file consisting of the documentation confirming the 
clearance, and reviews the information to ensure completeness and 
accuracy Pursuant to reciprocity requirements, the Department does not 
re-adjudicate the investigation unless it is aware of new derogatory 
information.

Question: 15. What types of security clearances are conducted by DHS, 
its component entities, and contractors acting on their behalf? Are 
these investigations comparable to those required by the Department of 
Defense?
Response: Executive orders and regulations govern the process by which 
DHS and other executive branch agencies grant access to classified 
information. Accordingly, background investigation types are standard 
throughout the Executive Branch, including the Department of Defense.
    Each DHS employee with a national security clearance has undergone 
a comprehensive, thorough background investigation. With the exception 
of the Secret Service, Customs and Border Protection (CBP), Immigration 
and Customs Enforcement (ICE), and the DHS components serviced by the 
Office of Security, all other components are required to use the Office 
of Personnel Management to conduct these various background 
investigations for their employees. The Secret Service uses its own 
employees to perform these investigations while CBP, ICE, and the 
Office of Security have contracted with several companies to provide 
this investigative service.
    In accordance with Executive Order 12968, as amended, ``Access to 
Classified Information,'' different clearance levels require different 
levels of investigation. For example, an employee requiring access to 
Top Secret and Sensitive Compartmented Information must undergo a 
Single Scope Background Investigation (SSBI). This investigation 
consists of various database and criminal history record checks 
covering the most recent 10 years of the individual's life, or since 
his or her 18th birthday. The SSBI also includes an interview of the 
subject, interviews with references and database checks on their spouse 
or cohabitant. For a Secret clearance, the minimum investigative 
requirement is a Minimum Background Investigation, which covers the 
most recent 5 years of the individual's life and includes various 
database checks, criminal history record checks, and other sources as 
necessary to cover specific areas of an individual's background.

Question: 16. What are some of the reasons a clearance might be denied?
Response: DHS security offices adjudicate background investigations 
according to the 13 government-wide adjudicative guidelines listed in 
32 C.F.R. Part 147. These standards and guidelines were originally 
issued in 1997 and were modified in December 2004 and December 2005 
respectively. The December 2005 revisions to the adjudicative 
guidelines, issued by the Assistant to the President for National 
Security Affairs, recommend that the criteria be elaborated, both in 
terms of the actions that could raise security concerns and the factors 
that could mitigate such concerns.
    The government-wide adjudicative guidelines include an evaluation 
of factors such as: the individual's allegiance to the United States, 
personal conduct, involvement with drugs and alcohol, financial 
stability criminal conduct, security violations, and foreign influence. 
The adjudication process is an examination of a sufficient period of a 
person's life to make an affirmative determination that the person is 
eligible for a security clearance. The adjudicative process is the 
careful weighing of a number of variables known as the ``whole person'' 
concept. Available, reliable information about the person is considered 
in reaching a determination. In evaluating the relevance of an 
individual's conduct, the adjudicator considers factors such as the 
nature, extent, and seriousness of the conduct; its frequency and 
recency; and the likelihood of continuation or recurrence. Each 
individual case is judged on its own merits. Adjudicators review the 
investigative file and take into account context and mitigating 
information before deciding whether to recommend granting or denying a 
security clearance. Adverse information in any one area does not 
necessarily result in a denial of a clearance. However, DHS will deny a 
clearance if available information reflects a recent or recurring 
pattern of questionable judgment, irresponsibility, or emotionally 
unstable behavior. Any doubt concerning whether an individual should be 
granted access to classified information is resolved in favor of the 
national security.

Question: 17. How many security clearances has DHS sponsored for non-
Federal employees? Please break this information down by security 
clearance level and year. How many are pending?
Response: In accordance with the National Industrial Security Program 
(NISP), established by Executive Order 12829 to serve as a single, 
integrated program for the protection of classified information 
released to or accessed by industry, security clearances for federal 
contractors are issued by the Department of Defense. DHS, however, does 
sponsor and grant clearances to state, local, tribal, and private-
sector officials as a part of the DHS information sharing mission.

                                 DHS Clearances Granted to Non-Federal-Employees
----------------------------------------------------------------------------------------------------------------
        DESCRIPTION              Level         FY2003        FY2004        FY2005        FY2006      Grand Total
----------------------------------------------------------------------------------------------------------------
                                 INTERIM
          PRIVATE SECTOR          SECRET             0             0            14            55            69
                                  SECRET             4           208           216            30           458
                              TOP SECRET             0            11            35             3            49
----------------------------------------------------------------------------------------------------------------
    PRIVATE SECTOR Total                             4           219           265            88           576
----------------------------------------------------------------------------------------------------------------
                                 INTERIM
              STATE AND LOCAL     SECRET             1            18            21            70           110
                                  SECRET             6            39           269            60           374
                              TOP SECRET            66           133            64             2           265
----------------------------------------------------------------------------------------------------------------
              STATE AND LOCAL Total                 73           190           354           132           749
----------------------------------------------------------------------------------------------------------------
             Grand Total                            77           409           619           220          1325
----------------------------------------------------------------------------------------------------------------


    As of July 17, 2006 there were 166 pending state, local, tribal, 
and private-sector cases.

Shirlington Limousine Contract
    The Committee has learned that DHS screened the car and bus drivers 
employed by Shirlington Limousine and Transportation, Inc., but did not 
screen the owner of the company before awarding the contracts.

Question: 18. From a security standpoint, would it make sense for DHS 
to alter this protocol in order to avoid a similar situation in the 
future?
Response: The contract for van and shuttle services with Shirlington 
Limousine and Transportation, Inc. does not involve access to 
classified information. DHS policy for vetting contractors on 
unclassified contracts is based on an assessment of the risk associated 
with access to personnel, facilities, and information required for 
satisfactory contract performance. DHS security and contracting policy 
requires all contractor personnel with unescorted access to be screened 
consistent with this assessment of the risk. This policy balances the 
appropriate level of security while enabling DHS to fulfill its 
mission. The Chief Security Officer and Chief Procurement Officer are 
continually exploring ways to enhance security associated with the 
unclassified acquisitions process.

Question: 19. Several other Federal departments and agencies, including 
the Department of Defense, lease their own vehicles and hire their own 
drivers. Has DHS reviewed the feasibility of leasing its own vehicles 
and hiring drivers as employees?
Response: When the Department initiated a sedan and shuttle operation 
in January 2003, it leased its sedans and contracted for the shuttle 
buses as well as drivers for both the sedans and shuttles. Limited 
available FTE made this the preferable option not only from a cost 
standpoint, but also by allowing existing FTE to be used to fill more 
essential mission needs. This has been periodically reviewed and 
continues to be the most effective practice.
    The Department has recently issued a request for information (RFI) 
to gather industry comments and best practices on sedan/shuttle 
transportation services DHS-wide in the National Capitol Region. This 
will include a cost/benefit and efficiency analysis of contract versus 
Federal employee drivers.

Question: 20. Is DHS strengthening existing screening procedures by 
requiring background reviews of not only employees of potential 
contractors, but the business owners themselves, particularly in cases 
where the company is a sole proprietorship or limited liability 
corporation?
Response: Please see response above. In accordance with the National 
Industrial Security Program, business owners who will have access to 
classified information as part of their DHS contract are investigated 
by the Defense Security Service. However, expanding the requirement for 
mandatory background investigations for business owners who will not 
have access to classified information would affect security and 
procurement practices across the Federal government and therefore would 
require a government-wide response. Additional resources would also be 
required as it is expected that the number of investigations would 
increase significantly. The Department is continually working with its 
Federal partners to identify methods for enhancing security while 
maintaining the efficiency and integrity of the procurement process.

Question: 21. With the understanding that different positions require 
different background checks, please articulate what steps are taken 
during the background checks of contract employees. Please discuss the 
specific steps that are taken during the background check for the 
positions of shuttle or limo driver, private security guards, and 
cafeteria workers.
Response: To ensure the protection of DHS facilities and information 
all personnel on contracts that do not require access to classified 
information are screened to determine their suitability to work under 
contract with DHS. DHS policy for vetting these contractors is based on 
an assessment of the risk associated with access to personnel, 
facilities, and information. DHS officials are responsible for making 
this assessment, which will determine the appropriate background 
investigation.
    The chart below summarizes the specific steps taken for the 
positions of shuttle or limo driver, private security guard, and 
cafeteria worker.

----------------------------------------------------------------------------------------------------------------
        Position                 Risk Level               Investigation             Investigation Coverage
----------------------------------------------------------------------------------------------------------------
            Shuttle/Limo Driver       Moderate        Minimum Background                 Security Form Review
                                                     Investigation (MBI)                    Fingerprint Check
                                                                                                 Credit Check
                                                                                        National Agency Check
                                                                              Inquiries and record searches for
                                                                                                past 5 years:
                                                                                     --Current/past employers
                                                                                           --Schools attended
                                                                                           --Reference Checks
                                                                                                           --Local Law Enforcement Checks
                                                                              --Face-to-Face Subject Interview
----------------------------------------------------------------------------------------------------------------
Private Security Guard                Moderate                          Limited BackgrounSecurity Form Review
                                                         Investigation (LBI).               Fingerprint Check
                                                    Added coverage because                       Credit Check
                                                    this is a gun carrying    Inquiries and record searches for
                                                               position.                        past 5 years:
                                                                                     --Current/past employers
                                                                                           --Schools attended
                                                                                           --Reference Checks
                                                                                                           --Local Law Enforcement Checks
                                                                               Face-to-Face Subject Interview
                                                                              Field investigation of subject's
                                                                              background for previous 3 years
----------------------------------------------------------------------------------------------------------------
    Cafeteria Worker                          Low   National Agency Check                Security Form Review
                                                    with Inquiries (NACI)                   Fingerprint Check
                                                                                                 Credit Check
                                                                                        National Agency Check
                                                                              Inquiries and record searches for:
                                                                                     --Current/past employers
                                                                                           --Schools attended
                                                                                           --Reference Checks
                                                                                                           --Local Law Enforcement Checks
----------------------------------------------------------------------------------------------------------------

Question: 22. Does DHS or any of its component agencies confirm the 
citizenship or immigration status of contract employees prior to 
granting facility access or clearance? Please identify which components 
do or do not confirm citizenship of contract employees.
Response: In accordance with the National Industrial Security Program, 
security clearances for federal contractors are issued by the 
Department of Defense. The Defense Security Service (DSS) guidelines 
indicate that only U.S. citizens are eligible for security clearances.
    DHS policy is to confirm citizenship or immigration status prior to 
granting access to facilities. All DHS components are in compliance 
with this policy.

Oscar Antonio Ortiz Case
    On January 26, 2006, Oscar Antonio Ortiz, a former Border Patrol 
agent pled guilty to smuggling illegal aliens and to a false claim to 
U.S. Citizenship, among other things.

Question: 23. Please explain how Mr. Ortiz, or any other illegal alien, 
might be able to receive a security clearance and become a DHS 
employee?
Response: Pursuant to Executive Order 12968, as amended, ``Access to 
Classified Information,'' non-U.S. citizens are not eligible for 
security clearances, except under limited conditions. DHS policy is 
designed to ensure that security clearances are only granted to 
eligible employees for whom an appropriate investigation has been 
completed.
    Oscar Antonio Ortiz entered on duty with the U.S. Border Patrol, 
U.S. Immigration and Naturalization Service (INS), on October 28, 2002, 
following a Single Scope Background Investigation conducted by the U.S. 
Office of Personnel Management (OPM). The OPM investigation, dated 
August 12, 2002, reported that there was No Record of Mr. Ortiz' birth 
on file with the state Bureau of Vital Statistics in the State he 
claimed as his place of birth. The security specialist for INS sent Mr. 
Ortiz a letter requesting a faxed copy of his birth certificate. In 
response, Mr. Ortiz provided documentation he claimed verified his 
citizenship. At that time, there was no authentication made of these 
documents. Subsequent investigation determined the documents to be 
fraudulent.

Question: 24. What steps have been taken at DHS, and specifically CBP, 
to ensure this does not happen again? How can the Border Patrol be 
certain that it does not currently have other illegal aliens employed 
as agents?
Response: The Department is committed to ensuring that only those 
employees eligible for access to classified information are granted a 
security clearance. After the arrest of Mr. Ortiz, CBP ran more than 
42,000 employees (legacy U.S. Customs, U.S. Border Patrol, INS, and 
Department of Agriculture Plant and Animal Inspectors) through the U.S. 
Citizenship and Immigration Services Central Index System (CIS) \1\ to 
verify U.S. citizenship. During the course of running these employees 
through CIS, CBP identified another Border Patrol Agent who had 
fraudulently obtained a delayed birth certificate in the State of 
California. It was later determined that the Agent is actually a 
Mexican national. This case is currently under investigation by 
Immigration and Customs Enforcement.
---------------------------------------------------------------------------
    \1\ The Central Index System is a records management system that 
contains automated biographical information on certain classes of 
aliens and naturalized citizens. The system includes information 
concerning apprehended aliens lawfully admitted for permanent residence 
(LAPR), those under adjusted immigration status, and those seeking or 
obtaining immigration benefits.

             Questions from Representative Bennie Thompson

Question: 1. Please expand on the One-Face-At-The-Border. Under this 
initiative, how many weeks of immigration training are legacy Customs 
and Agriculture officers given before assigning passenger processing 
duties? How many weeks of inspection training are legacy Immigration 
and Agriculture officers given before they are assigned cargo and 
baggage inspection duties? How many weeks of training are legacy 
Customs and Immigration officers given before being assigned 
agriculture duties?
Response: All CBP Officers and Agriculture Specialists, no matter their 
background, receive extensive Anti-terrorism and fraudulent document 
training while working in the passenger-processing environment.
    New CBP Officers receive two years of On the Job Training (OJT) 
that includes thirty-three weeks of principally classroom instruction 
during the first year, and approximately twelve weeks of training in 
the second year. This training includes exposure to all environments 
within the CBP structure at their particular port of entry.
    CBP Officers and Agriculture Specialists are not allowed to perform 
new functions or be transferred to other assignments without first 
receiving the mandatory cross-training associated with that function.
    Legacy Customs officers receive over eighty hours of training 
though a combination of CD-ROM (8-10 hours) and classroom training. 
Thereafter, officers begin an extensive OJT program that includes 
working primary passenger processing with an assigned mentor. Before 
being asked to process more complex immigration cases in the secondary 
area, they are given an additional 136-plus hours of training in 
Unified Immigration Secondary Processing. Additional training is also 
received in Agriculture Fundamentals and Bio-Agro Terrorism.
    Legacy Agriculture officers, while not allowed to work primary 
passenger inspection (admissibility issues), receive approximately 
forty hours of familiarization training designed to instill in them an 
understanding of the laws and regulations applicable in the other CBP 
passenger areas. As part of this training, officers are instructed in 
immigration and customs fundamentals, immigration and customs law, and 
Customs Secondary, and receive shadowing assignments in primary.
    Legacy Immigration officers receive forty hours of training through 
a combination of CD-ROM (8-10 hours) and classroom training before 
beginning an extensive OJT program in the Customs Secondary area, 
working in baggage inspectional areas.
    Legacy Immigration officers and Agriculture officers also receive 
thirty-two hours of training before beginning an extensive OJT program 
in Cargo processing.

     What is the nature of this training? Is it classroom 
training? Is it CD-ROMs and booklets? Are these officers self-trained?
    Response: CBP officers are not ``self-trained.'' Incumbent 
officers, which include those officers who were employed prior to the 
March 1, 2003 merger, are required to participate in structured and 
specific cross-training courses prior to being assigned to complete a 
particular task or responsibility.
    As of December 31, 2005, CBP has identified, built and distributed 
more than thirty-seven cross-training modules that range from a six-
hour CD-ROM awareness course on Customs/Immigration Fundamentals to an 
eight day classroom session with many required pre-requisites and job-
aids. All of the classroom sessions are followed by an on-the-job 
training component that requires both the supervisor and employee to 
assert that the employee is ready to perform those functions prior to 
being permitted to work unsupervised.
    Under the current cross-training plan, legacy Customs officers must 
receive up to 31.7 weeks of training, which includes a combination of 
CD-ROM, classroom, and on the job training. A legacy Immigration 
Officer will receive up to 33.1 weeks of training, which also includes 
a combination of CD-ROM, classroom, and on the job training.

 How often are these legacy officers given a refresher course 
in the inspections functions area that they were not initially 
operating in?
Response: Under CBP's ``just in time'' / as needed philosophy, the 
instruction of all CBP officers must be meaningful and useful to 
officers. Therefore, CBP has developed training modules that are 
provided to officers just before they are assigned to new duties. They 
are then asked to remain assigned to those new functions for a 
significant period of time that is sufficient to learn the job and 
retain that knowledge.
    CBP has instructed the field offices to retrain Officers who have 
rotated away from specific duties for more then six months. Last year 
our goal was to finish building thirty-six cross-training modules. CBP 
is currently restructuring the existing curriculum to incorporate 
``refresher courses'' for CBP Officers who are experienced in a 
particular area. Officer assignments to such courses will depend on the 
complexity of the assignment, the length of time away from the 
assignment, and the individual officer.

 Do you work with the human capital officer at CBP to insure 
that the Department has a strategy to maintain inspections or 
immigration expertise? If so, please elaborate.
Response: Yes, CBP is part of the DHS Training Leadership Council and 
works to coordinate human capital issues, including training, across 
the Department.

2. Some federal agencies are making good use of their ability to repay 
employee student loans as a recruitment and retention technique. Under 
the federal student loan program, agencies can repay student loans up 
to a maximum of $10,000 in a calendar year to a total of $60,000 per 
employee. In return, the employee must sign a service agreement to work 
at the agency for at least three years. At a time when about half of 
all government employees are within five years of retirement, agencies 
must come up with innovative succession strategies. Using the student 
loan repayment program, along with other benefits such as flexible work 
schedules and telework, are way agencies can compete for younger 
applicants. At Secretary Chertoff's confirmation hearing, he stated, 
``I understand that the Department of Homeland Security provided 
guidance last year on the use of incentive programs for recruitment and 
retention, including repayment of student loans, but the student loan 
program has received little to no use. If confirmed, I will ensure that 
the Department reviews the adequacy of the guidance and the criteria 
used to remove any unnecessary restrictions limiting its use.''

     Is there today, over a year since his confirmation as 
Secretary, a student loan repayment program at DHS?
Response: Yes. During fiscal year 2005 (FY 2005), 18 of these 
incentives, totaling $160,000, were provided to employees by DHS 
Components. Additional loan repayments have been authorized in FY 2006, 
and will be included in an annual report to OPM.

 How much has DHS set aside to fund the student loan repayment 
program?
Response: Funds for incentive programs, such as student loan repayment, 
are not budgeted independently, but are included with other benefit 
costs (object class 12.1), some of which--such as the student loan 
repayment program--can be used optionally.

 How many DHS applicants have applied for the DHS student loan 
repayment program?
Response: DHS has not established an application process. The 
Department uses the student loan repayment program as a recruitment and 
retention incentive; it is offered to employees by DHS Component 
managers when it is determined to be an appropriate tool to recruit or 
retain desired employees.

How many applicants have been accepted in the DHS student loan 
repayment program in 2005 and 2006?
Response: Please refer to the response above (Q03738). A total of 24 
employees have been approved for the program in FY 05 and year-to-date 
in FY 2006.

     What is the average loan amount for each successful 
student loan repayment applicant?
Response: The average payment is $9,100.

3. On August 17, 2005, DHS issues a Management Directive establishing 
DHS policy regarding telework.
 How many DHS employees today participate in the DHS telework 
program?
Response: The latest numbers available from the Office of Personnel 
Management (OPM) are from FY04. In FY 2004, 1,938 DHS employees 
participated in the telework program. Data to confirm FY05 will not be 
available until OPM completes its agency-wide survey for FY05. These 
data are expected to be released from OPM in September and are expected 
to have increased.

 How many employees are eligible to participate?
Response: In FY04, 38,574 DHS employees were eligible to participate in 
telework. Data to confirm how many DHS employees are currently eligible 
to telework will not be available until OPM completes its agency-wide 
survey for FY05. We are expecting OPM to release this data in 
September.

4. I know that a letter dated February 27, 2006, from nine (9) Members 
of Congress from the DC metro area sent a letter to DHS regarding 
arbitrary restrictions on use of an existing telework agreement with 
the staff attorneys and other professional employees at the Customs and 
Border Protection Office of Rules and Regulations (ORR).
 What is the status of the telework program at ORR?
Response: The CBP Office Regulations and Rulings (OR&R) Flexiplace 
Program was established on August 4, 1997, and continues to be an 
active program today within the OR&R.

 How many employees were indicated by their supervisors as able 
to telework without affecting the Office's mission?
Response: Thirty employees, out of a total of seventy-four eligible 
employees, were approved by their respective supervisors for 
participation in the 2006 Flexible Program. These approvals, however, 
were based not upon consideration of the overall Office's mission, but 
the rather particular needs of the individual branch units at the time. 
Attorneys in CBP Office of Regulations and Rulings (OR&R) are covered 
by a rotation policy under which they may be rotated from one branch to 
another from year to year. Therefore, the individual branch chief's 
approval is not necessarily indicative of the impact of the total 
program upon the Office's mission. On May 15, 2006, Acting Commissioner 
Spero addressed this issue to the (9) Members of Congress from the DC 
metro area. Attached, for your information, is a copy of the signed 
letter by the Acting Commissioner.

 How many eligible employees were denied telework opportunities 
at ORR because of a cap limiting telework to only 25% of eligible 
staff?
Response: OR&R does not prescribe an arbitrary percentage cap limiting 
the number of employees eligible to participate in its Flexiplace 
Program. There are, however, limits on participation based upon 
availability of resources to equip and maintain what are essentially 
dual workstations (home and office) required for participation in OR&R 
's Flexiplace Program. On May 15, 2006, Acting Commissioner Spero 
addressed this issue to the (9) Members of Congress from the DC metro 
area. Attached, for your information, is a copy of the signed letter by 
the Acting Commissioner.

5. This Subcommittee has been keenly interested in strengthening the 
authority of the chiefs in the Management Directorate to ensure that 
they get the cooperation they need on Department-wide initiatives. This 
authority can be enhanced through the ability to influence performance 
reviews and decisions about raises and promotions for human capital 
officers in component entities. Below is the legislative language our 
Subcommittee approved in March that sets out all the authorities.

    AUTHORITY OF CHIEF OPERATING OFFICERS OVER DEPARTMENTAL 
COUNTERPARTS
    (1) IN GENERAL.--The Under Secretary for Management shall ensure 
that chief operating officers of the Department, including the Chief 
Financial Officer, the Chief Procurement Officer, the Chief Information 
Officer, and the Chief Human Capital Officer, have adequate authority 
over their respective counterparts in component agencies of the 
Department to ensure that such component agencies adhere to the laws, 
rules, regulations, and departmental policies which the chief operating 
officers are responsible for implementing.
    (2) INCLUDED AUTHORITIES.--The authorities of a chief operating 
officer pursuant to paragraph (1) shall include, with respect to the 
officer?s counterparts in component agencies of the Department, the 
following:
        (A) Making recommendations regarding the hiring and termination 
        of individuals.
        (B) Developing performance measures.
        (C) Submitting written performance evaluations during the 
        performance evaluation process that shall be considered in 
        performance reviews, including recommendations for bonuses, pay 
        raises, and promotions.
        (D) Withholding funds from the relevant component agency that 
        would otherwise be available for a particular purpose until the 
        relevant component agency complies with the directions of the 
        chief operating officer or makes substantial progress towards 
        meeting the specified goal.''

     After reviewing the provision, can you tell us, as the 
Chief Human Capital Officer, would you like this authority if it was 
statutorily granted? What impact will this authority have on your 
ability to execute your overall mission?
Response: I do not believe that the authority needs to be statutorily 
granted. Currently the Department issues Management Directives (MDs) 
and the MD 0006, Human Capital Line of Business Integration and 
Management sufficiently addresses the activities identified above.
6. By all accounts, the formation of the Department has not been a 
painless exercise. We hear more than the run-of-the mill grumblings 
from workers about problems with management and cultural problems 
within the organization. We are in the middle of commencement time--
when college students are looking around, trying to figure out what 
they want to do for a career. Why should they want to come to the 
Department and make a career there as a border patrol agent or screener 
or any other area where there's a need for new staff?
Response: The mission of homeland security is the most compelling 
reason why people seek employment with the Department.
    Working for the Department of Homeland Security provides an 
opportunity to directly serve the citizens of the United States in a 
very tangible way--leading the unified national effort to secure 
America; preventing and deterring terrorist attacks and protecting 
against and responding to threats and hazards to the Nation. Our 
mission of ensuring safe and secure borders, welcoming lawful 
immigrants and visitors, and promoting the free-flow of commerce 
remains compelling--despite our growing pains.

7. DHS's employees claim that they are left in the dark about major 
changes in the operations, structure and management. Specifically, they 
say that the Department did not adequately prepare them for 2SR and all 
the organizational changes that followed. What proactive actions do you 
take, at the headquarters level, to communicate to rank-and-file 
employees about structural or management changes at the Department?
Response: When communicating major structural or management 
initiatives, the Department continues to review and improve how best to 
provide timely and relevant information to employees. Currently, DHS 
tailors its approach based on the nature of the information to be 
communicated. The issues involved may impact the entire Department, a 
specific Component or Components, or specific segments of the 
Department. Therefore, each issue is addressed in a different manner.
    For issues determined to be of Department-wide interest, employees 
are typically communicated with directly using tools such as: an 
internal electronic newsletter (DHS Today), targeted email messages to 
all employees (cascaded through the Components), DHS-wide 
correspondence from the Secretary or Deputy Secretary, as well as 
posting of information to the DHS intranet site (DHS Online). If deemed 
necessary for the situation, key leaders from the Department meet 
directly with employees in interactive forums (i.e. town halls) or are 
shown live on Web casts and/or satellite broadcasts. Supporting the 
DHS-wide efforts are cross-Component committees such as the Internal 
Communications Committee which help streamline and coordinate the 
communication of departmental information.
    For those issues that do not have broad, DHS-wide impact, the 
Department works with specific Component or organizational segments to 
provide targeted communications, using such tools as: unit-specific 
websites, ``all hands'' meetings, ``muster meetings'', unit-wide emails 
and hard copy memorandums or announcements. The Department often 
assists by providing Components with standard language or templates 
that can be used or modified as needed.
    By leveraging all of these channels, it is the Department's goal to 
provide timely information on current initiatives to all impacted 
employees. We feel we are communicating with all levels of DHS 
employees on a regular basis, but we are always looking for new ways to 
improve our outreach and our messages to employees.

8. GAO has long been seen as the one example of a pay-for-performance 
system that works. Yet, a recent article indicated that some employees 
at GAO are unhappy with the pay-for-performance system. The Department 
of Defense has stumbled, much like DHS, with trying to establish a fair 
and equitable system. What proof do you have that pay-for-performance 
will really work for this Department as a practical matter?
Response: Performance-based salary-increases are virtually universal 
for white-collar employees in the private sector and have been shown to 
be a key driver of organizational success and retention of high-
performing employees. In addition, alternative pay systems with 
performance-based pay have existed in the federal government for 25 
years and today cover over 90,000 employees. Taken together, these 
systems represent a steady progression away from the current 
government-wide classification and pay systems toward alternative 
approaches where market rates and performance are central drivers of 
pay. These include DoD demonstration projects and independent systems 
currently in place at several large federal agencies--FAA, NIST and IRS 
to name a few. On August 28, 2006, the Department of Commerce expanded 
its pay for performance program to include up to 3500 employees in the 
National Oceanic Atmospheric Administration. The Department evaluated 
and analyzed the successes and shortcomings of several of these 
programs and best practices from the private sector in developing the 
MAXHR7 program.
    OPM's recent publication entitled, Alternative Personnel Systems in 
the Federal Government and a Guide to the Future states:
        Reviewing what happened when agencies implemented performance-
        based alternative pay systems surfaces five significant 
        conclusions about their common experience:
                 Agencies discarded the General Schedule in 
                favor of more practical classification and market 
                sensitive pay.
                 Performance--not time--drives pay.
                 Success depends on effective implementation.
                 Employees have come to support alternative pay 
                systems.
                 Agencies funded their systems out of existing 
                budgets.
        These observations are supported by many years of cumulative 
        data found in both internal and external evaluation reports. 
        That support is not unqualified, and progress in some 
        organizations has been slower, as would be expected with 
        experiments. Nonetheless, the evidence presents clearly 
        positive trends.
    In addition to analyzing research that suggests that pay for 
performance can work at DHS, the Department has taken steps to ensure 
that it does. For this reason, Component and union representatives and 
employees have played significant roles in the design of the 
performance management program. DHS recognizes the integral role that a 
sound performance management program plays in ensuring an effective pay 
for performance system. To that end, the Department has put 
considerable effort into the design and implementation of the program, 
prior to linking it to pay and is requiring all managers and 
supervisors take a Performance Leadership Workshop and have access to a 
Coaching Hotline to ensure that they are adequately prepared to execute 
their performance management responsibilities.
    As we move forward, we will continue to examine and evaluate our 
progress, as well as the effectiveness of our programs. We have learned 
that no one system is right for the culture of every organization. In 
addition, we must make a significant investment in training, 
communicate constantly with employees, and continually evaluate and 
adjust to ensure that we obtain the desired results. 
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