[Senate Hearing 109-15]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 109-15

                    DEPARTMENT OF HOMELAND SECURITY:
                             THE ROAD AHEAD

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION




                               __________

                            JANUARY 26, 2005

                               __________

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs


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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia

           Michael D. Bopp, Staff Director and Chief Counsel
                David Kass, Chief Investigative Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
         Michael Alexander, Minority Professional Staff Member
                      Amy B. Newhouse, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Collins..............................................     1
    Senator Lieberman............................................     4
    Senator Akaka................................................     7
    Senator Domenici.............................................     9
    Senator Pryor................................................    10
    Senator Warner...............................................    10
    Senator Coburn...............................................    11
    Senator Coleman..............................................    12
    Senator Stevens..............................................    34

                               WITNESSES
                      Wednesday, January 26, 2005

Richard L. Skinner, Acting Inspector General, Department of 
  Homeland Security..............................................    13
James Jay Carafano, Ph.D., Senior Fellow, The Heritage Foundation    16
Michael Wermuth, Senior Policy Analyst, RAND Corporation.........    19
Stephen E. Flynn, Ph.D., Jeane J. Kirkpatrick Senior Fellow in 
  National Security Studies, Council on Foreign Relations........    23
Richard Falkenrath, Ph.D., Visiting Fellow, Foreign Policy 
  Studies, The Brookings Institution.............................    26

                     Alphabetical List of Witnesses

Carafano, James Jay, Ph.D.:
    Testimony....................................................    16
    Prepared statement...........................................    68
Falkenrath, Richard, Ph.D.:
    Testimony....................................................    26
    Prepared statement...........................................   103
Flynn, Stephen E., Ph.D.:
    Testimony....................................................    23
    Prepared statement...........................................    98
Skinner, Richard L.:
    Testimony....................................................    13
    Prepared statement...........................................    51
Wermuth, Michael:
    Testimony....................................................    19
    Prepared statement...........................................    79

                                Appendix

``Major Management Challenges Facing the Department of Homeland 
  Security,'' Office of Audits, OIG-05-06, December 2004, Office 
  of Inspector General, Department of Homeland Security..........   118
``DHS 2.0: Rethinking the Department of Homeland Security,'' SR-
  02, December 13, 2004, by James Jay Carafano, Ph.D., and David 
  Heyman, The Heritage Foundation................................   143
``Evaluating the Security of the Global Containerized Supply 
  Chain,'' Technical Report by Henry H. Willis and David S. 
  Ortiz, RAND....................................................   168
``Protecting Commercial Aviation Against the Shoulder-Fired 
  Missile Threat,'' Occasional Paper by James Chow, James Chiesa, 
  Paul Dreyer, Mel Eisman, Theordore W. Karasik, Joel Kvitky, 
  Sherrill Lingel, David Ochmanek, and Chad Shirley, RAND........   211
Responses from Mr. Skinner to Post-hearing questions for the 
  Record from:
    Senator Collins..............................................   267
    Senator Akaka................................................   272
    Senator Coleman..............................................   282
    Senator Lautenberg...........................................   285
Responses from Mr. Carafano to Post-hearing questions for the 
  Record from:
    Senator Collins..............................................   294
    Senator Coleman..............................................   297
    Senator Akaka................................................   305
Responses from Mr. Flynn to Post-hearing questions for the Record 
  from:
    Senator Collins..............................................   309
    Senator Coleman..............................................   312
    Senator Lautenberg...........................................   316
Responses from Mr. Wermuth to Post-hearing questions for the 
  Record from:
    Senator Collins..............................................   318
    Senator Coleman..............................................   322
Responses from Mr. Falkenrath to Post-hearing questions for the 
  Record from:
    Senator Collins..............................................   327
    Senator Coleman..............................................   330

 
                    DEPARTMENT OF HOMELAND SECURITY:
                             THE ROAD AHEAD

                              ----------                              


                      WEDNESDAY, JANUARY 26, 2005

                                       U.S. Senate,
                       Committee on Homeland Security and  
                                      Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
SD-342, Dirksen Senate Office Building, Hon. Susan M. Collins, 
Chairman of the Committee, presiding.
    Present: Senators Collins, Lieberman, Stevens, Coleman, 
Coburn, Chafee, Domenici, Warner, Akaka, and Pryor.

             OPENING STATEMENT OF CHAIRMAN COLLINS

    Chairman Collins. The Committee will come to order. As I 
convene the Committee's first hearing of the 109th Congress, I 
want to express my appreciation to the Committee's Ranking 
Member, Senator Lieberman, who will be here shortly. I also 
want to express my appreciation to our other veteran Members 
for their commitment to the Committee's work and for choosing 
to return during this Congress.
    The Committee also has four new Members: Senators Warner, 
Domenici, Chafee, and Coburn, and we look forward to working 
with them as well. Along with new Members, our Committee has a 
new name, Homeland Security and Governmental Affairs. While the 
new name will not win praise for its brevity or its style, it 
does reflect the Committee's expanded jurisdiction, and so it 
is appropriate that the Committee's first meeting of this year 
is an oversight hearing focusing on the Department of Homeland 
Security, evaluating the progress made so far and the 
challenges that remain.
    As we prepare for the confirmation hearing of a new DHS 
Secretary, this assessment is especially timely. The title of 
our hearing today, ``Department of Homeland Security: The Road 
Ahead,'' has a deeper meaning than might be immediately 
apparent. The Homeland Security Act of 2002 established a clear 
destination for the new Department. It was to prevent terrorist 
attacks within the United States, to reduce our vulnerability 
to terrorism, and to assist in recovery should an attack occur.
    The precise route toward that destination, however, remains 
under construction. We are here to continue building a road 
that is as efficient, effective, and durable as possible. After 
the attacks of September 11, 2001, the security of America 
could not wait until this road was mapped out precisely and 
built to perfection.
    The Department began operating under the constraints of a 
paradox. It had to meet immediately the new threat of the 21st 
Century with 20th Century components, all or part of some 22 
existing Federal agencies with 180,000 employees, and it had to 
do so without neglecting the traditional missions of those 
agencies.
    Any fair assessment will conclude that the Department under 
the leadership of Secretary Tom Ridge has made considerable 
progress. Our borders and transportation systems are more 
secure. Our critical infrastructure is better protected, and 
our emergency response capabilities are improved. But other 
reforms, such as the transportation worker identification 
credential, have lagged and it has been a daunting challenge 
for DHS leaders to integrate the 22 agencies while at the same 
time developing new policies that will make us safer.
    The Homeland Security Act was not the last word on how we 
can best marshal our resources. As we proceed with this 
assessment, I am sure we will confront and I hope address the 
broad issue of better integration within the Department as well 
as a great many specific issues related to efficiency and 
effectiveness, accountability and authority.
    Some observers may find it difficult to envision that a 
Department so large and with so many responsibilities could 
ever develop the efficiency, effectiveness, accountability, and 
durability to meet this challenge.
    Yet, the Goldwater-Nichols Department of Defense 
Reorganization Act of 1986 proves otherwise. As a result of 
this act, the military's organizational culture has shifted 
dramatically over the last 20 years toward jointness and the 
combatant commands have produced far greater cohesion among the 
military services. I believe the Department of Homeland 
Security should strive for that same organizational culture and 
integration.
    Today, we will hear from five witnesses, all of whom have 
scrutinized the Department. These witnesses will discuss 
several common problems that they have identified at DHS 
including a lack of strategic planning. Our witnesses today 
will discuss the Department's focus on managing daily crises 
and whether, as a result, it is not engaged in the necessary 
strategic planning.
    Such planning is needed to ensure that we are directing the 
resources to the right places and that we are making the 
decisions today that will serve us well into the future.
    Structural problems. Two years into the Department's life, 
we are now able to assess whether it is configured properly. 
The Heritage Foundation and CSIS have concluded that there are 
unnecessary layers of bureaucracy at DHS. They recommend, for 
example, the merger of two separate entities, the Customs and 
Border Protection, CBP, and the Immigration and Customs 
Enforcement, known as ICE, into ``one unit with one uniform.''
    The need for clearer authorities. Some of our witnesses 
will discuss their belief that in a number of areas, there is a 
muddled division of responsibility between DHS and other 
agencies and departments. We will hear about the effects of 
such confusion as well as some possible solutions. These three 
problems and others our witnesses will discuss are obstacles in 
the road ahead and they must be cleared. I am particularly 
interested in the thoughts our witnesses have on how these 
problems relate to several key areas of concern.
    Border and transportation security were at the heart of the 
September 11 attacks. We were reminded of our vulnerability 
again just last week by what proved to be a false alarm in 
Boston regarding possible terrorists entering our country from 
Mexico.
    In the hours and days after the September 11 attacks, we 
saw the vital role that emergency preparedness and response can 
play in reducing damage and loss of life. And we have done much 
to improve our capabilities at all levels of government since 
September 11. The identification of critical infrastructure and 
the hardening of targets or other forms of preparedness in 
which we have made some progress, but they remain a weakness in 
our homeland defense.
    The Department of Homeland Security also plays an important 
role in our newly reorganized intelligence community. Because 
of the connections that it has already forged with our first 
responders, the Department is perhaps our strongest link with 
State and local authorities. This is an invaluable asset in 
intelligence that must be maximized. The integration of 22 
agencies with thousands of employees in different cultures, 
practices, and areas of expertise into one cohesive entity 
remains a work in progress.
    In fact, we were reminded just yesterday by the Government 
Accountability Office's list of high risk areas that this 
integration remains incomplete and information sharing among 
the Department's components and many other agencies and levels 
of government is inadequate.
    We must improve department-wide management from procurement 
and contracting to information sharing and technology. We must 
eliminate unnecessary layers of bureaucracy and the barriers to 
communication that remain from the Department's creation. But 
we must do these things, always in the interest of reaching our 
destination with a minimum of detours.
    Our witnesses today have studied the issues related to a 
stronger, more effective and efficient Department and a more 
secure homeland with great expertise and thoroughness, and I 
appreciate their joining us.
    Finally, now that we have more Members present, let me say 
how proud I am of the very heritage and the record of this 
Committee. Our bipartisan collaboration and hard work last year 
produced landmark legislation, strengthening our intelligence 
community. It is my intention that we approach our work in the 
same spirit this year.
    I am very fortunate to have an outstanding Ranking Member 
in that regard, and it is my pleasure now to recognize Senator 
Lieberman for his comments. I would note that we also are very 
pleased to have Senator Domenici returning to the Committee 
after a space of a couple of years and to welcome the 
distinguished Chairman of the Armed Services Committee, Senator 
Warner, who is joining the Committee, I believe, for the first 
time, and, of course, our stalwart Member, Senator Akaka, who 
plays such an important role, and it is wonderful to have you 
here today.
    Let me also--I did it at the beginning of my comments--but 
welcome Senator Coburn for joining us and we have the 
distinguished Member from Alaska, Senator Stevens, the Chairman 
of the Commerce Committee now, also joining us. I always like 
to recognize Senator Stevens because if he chose he could bump 
me as Chairman. [Laughter.]
    So I am grateful that he has not chosen to exercise that 
prerogative and instead is chairing the Commerce Committee.
    Senator Lieberman, welcome.

             OPENING STATEMENT OF SENATOR LIEBERMAN

    Senator Lieberman. Thank you very much, Madam Chairman. 
Thank you for your kind words. I must say that working with you 
on this Committee has been one of the great pleasures of my 16 
years in the U.S. Senate. You really set a standard for 
bipartisan leadership and I do think ultimately the Nation has 
benefitted from that and the work that we have done together. I 
look forward to this new session and continuing that work.
    I also want to welcome the new Members of the Committee, 
those two promising rookies, Senators Warner and Domenici. 
[Laughter.]
    It is like calling Roger Clemens a rookie. I only wish, 
John, that you were being compensated to the same level that 
Clemens is. [Laughter.]
    It is quite a tribute to this Committee really that as you 
look around it we have Senator Stevens, Senator Domenici, 
Senator Warner, and on our side Senator Levin and Senator 
Carper. We have some real stature in the Senate. This may have 
become in some sense the Committee of Committees, but anyway I 
am honored by the two senior Members who have joined us and 
also particularly want to welcome Senator Coburn. It has been a 
pleasure to get to know you and I look forward to working with 
you.
    Madam Chairman, as you well know, this is the first hearing 
of our newly named Committee, the Homeland Security and 
Governmental Affairs Committee, and it is quite appropriate 
that we are considering, as a matter of oversight, the state of 
our Homeland Security Department and looking at the road ahead.
    We had substantial accomplishments over the last 3 years, 
and I think one of the most important tasks we can perform in 
these 2 years is to oversee the implementation of what we have 
started. Even before our jurisdiction was formally expanded in 
name, this Committee took the lead in restructuring our 
government post-September 11, to make our people safer.
    We have had, I am proud to say, some historic and far-
reaching successes. Last Congress obviously ended with the 
Intelligence Reform and Terrorism Prevention Act, remaking, we 
hope, an intelligence structure designed originally to fight 
the Cold War into one that is designed now to address the 21st 
Century challenges outlined by the 9/11 Commission.
    Before the 9/11 Commission reported, we acted to address 
glaring weaknesses in our homeland defense revealed by the 
tragic events of September 11 by creating the Department of 
Homeland Security. Scores of Federal agencies had some 
responsibility for our homeland defense, but no single agency 
was clearly in charge. Our homeland defenses were disorganized 
because everyone was responsible but no one was accountable; 
the American people were left vulnerable.
    Since its creation, the Department of Homeland Security has 
become the focal point in the fight against terrorism here at 
home and is now the place where citizens, State and local 
officials, first responders, and the private sector can look 
for leadership and resources in protecting the American people 
from terrorist attack.
    But the Department of Homeland Security, which just 
celebrated its second birthday on January 23, is still 
obviously just a toddler. Those of us who worked to bring the 
Department into existence did not expect that the difficult job 
of creating a cohesive whole from so many different parts could 
be accomplished overnight or without some bumps.
    This was, after all, the largest reorganization in our 
government in over half a century. We knew there would be 
significant challenges and difficult obstacles to overcome, but 
because the Department's mission is so vital to securing our 
Nation from attacks that are a clear and present danger, 
identifying and systematically removing those obstacles must be 
a top priority for the Administration and for Congress.
    The Department has made real progress, but as we will hear 
today, there is much still left undone. And as a consequence, 
the American people remain simply not as safe as they should 
be. The absence of a well-designed strategy, a homeland 
security strategy, is one of the Department's most significant 
shortcomings. I was struck by the comment in the CSIS and 
Heritage report that Secretary Ridge was too often consumed by 
what was on his in-box, the immediate crisis of the day, 
understandable but troubling, because beyond the crisis of the 
day, this Department needs to stand up and defend us from the 
crisis of tomorrow.
    The report's recommendation that a new Under Secretary, 
that is the CSIS and Heritage report recommendation that a new 
Under Secretary is needed to develop a homeland security policy 
and strategy for the longer term is, I think, a good one. It is 
critical that we have such a coherent plan so that our national 
priorities are known and everyone's responsibilities and roles 
are clear.
    Encouraging news is that legislation we passed at the end 
of the last session requires the Department of Homeland 
Security to lay out its overall strategy as part of its long-
term budgeting process. At the time this legislation passed, 
Senator Collins and I emphasized how important we thought it 
was to our homeland security efforts and what we expected to be 
included in the plan, and we will follow work on that plan very 
closely.
    Second, DHS needs the most focused leadership and skilled 
management to address the shortcomings that we are going to 
hear about today from our witnesses. The Department must make 
certain that those officials responsible for integrating 
disparate systems and processes, the CIO, the CFO, and others, 
have sufficient authority to get the job done.
    We cannot tolerate a Department where lines of authority do 
not align with responsibilities. From the reports that some of 
our witnesses will present today, that seems to be precisely 
and disconcertingly what we have in DHS. Nor can we tolerate a 
Department where the officials responsible for overseeing and 
managing do not have adequate resources at their disposal to 
get the job done because if we give them authority but not 
resources to get the job done, we are still setting them up for 
failure.
    And their failure, of course, is at our peril. Thus far, we 
simply have not made the necessary investments in homeland 
security. That is not just my conclusion, but a string of 
highly regarded, totally nonpartisan reports have agreed.
    We have not invested enough in securing our ports or our 
rail systems, in defending our borders, or in preparing for 
bioterrorism attacks. Last year I proposed a budget that was 
$14 billion above the Administration's budget to address these 
homeland security needs, and I honestly feel that every one of 
those dollars could have been spent in a way that was efficient 
and effective to our national homeland security.
    In fact, there were some areas of homeland defense that 
actually had their appropriations and their allocations cut, 
and I know we are operating in a resource constrained 
environment, but we simply cannot go in this direction and 
expect that the people in DHS are going to do the job we want 
them to do.
    Today, we are going to hear some proposals for reform. As 
we consider them, I want to note that the Intelligence and 
Terrorism Prevention law that was adopted last year, that the 
Chairman and I like to refer to as the Collins-Lieberman 
legislation, also contains some very significant measures to 
bolster our homeland security and will hopefully provide the 
Department and our government more tools with which to succeed.
    I look forward to working with Members of this Committee 
and with the Administration to make sure that we faithfully 
implement these new provisions. Madam Chairman, again, thank 
you for convening this important hearing as the first of this 
session for this newly named and newly empowered Committee and 
for convincing so distinguished and experienced and 
knowledgeable a group of witnesses to come before us.
    I look forward to working with you and other Members of the 
Committee and the Administration so that we can strengthen our 
Homeland Security Department, so that we can strengthen our 
homeland defense. I thank you very much.
    Chairman Collins. Thank you. We have a quorum right now, 
and by January 31, we have to approve the Committee's funding 
resolution. So with the indulgence of our witnesses, I am going 
to interrupt the hearing very briefly to have a very brief 
business meeting so that we can do just one item of business, 
and that is to approve the Committee's funding resolution.
    [Recess.]
    Chairman Collins. We now return to the hearing, and I thank 
the indulgence of our witnesses. We need to have the money to 
keep going with these hearings. So thank you.
    I have promised Members to have an opportunity for brief 
opening remarks today, but I would ask the Members to be very 
brief so that we can get to our witnesses. Senator Stevens.
    Senator Stevens. I merely wish to announce that the 
Commerce Committee will not hold a hearing on the nominee to be 
Secretary of Homeland Security. We will attend your meeting for 
that purpose, and I urge Members to be brief also. We have a 
series of votes starting at 11:30.
    Chairman Collins. Thank you. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Madam Chairman, I have some comments here 
and a statement. I ask that my full written statement be 
included in the hearing record.
    Chairman Collins. Without objection.
    Senator Akaka. I wanted to say that I join you in welcoming 
the new Committee Members, now the Senate's lead panel on 
oversight of the Department of Homeland Security. I say this 
with pride because over the 15 years that I have served on our 
Committee, we have considered and Congress has enacted such 
landmark bills like the Chief Financial Officers Act, the 
Government Performance and Results Act, and the Clinger-Cohen 
Act, all of which I was proud to support. And our Committee 
enjoys a strong history of bipartisanship, inclusiveness and 
cooperation which I know will continue under your leadership 
and that of Senator Lieberman.
    I have some concerns here that I will submit for the record 
that are very important, that have come about in the 2 years 
since the Department of Homeland Security was established. But 
I want to take time to thank Secretary Ridge, the outgoing 
Secretary of the Department, for his leadership during the 
agency's infancy. He undertook, as we know, an enormous and 
historic task, and I thank him for his service. And I think we 
can all agree there have been many successes under his 
leadership.
    There is, however, much more room for growth which is the 
focus of today's hearing. And so I look forward to hearing our 
witnesses and want to place my full statement in the record.
    Chairman Collins. Thank you very much, Senator.
    [The prepared statement of Senator Akaka follows:]

                  PREPARED STATEMENT OF SENATOR AKAKA

    Thank you, Chairman Collins. I join you in welcoming the new 
Members to our Committee, now the Senate's lead panel on the oversight 
of the Department of Homeland Security (DHS). I say this with pride 
because over the 15 years that I have served on our Committee, we have 
considered, and Congress has enacted, such landmark bills as the Chief 
Financial Officers Act, the Government Performance and Results Act, and 
the Clinger-Cohen Act, all of which I was proud to support. Our 
Committee enjoys a strong history of bipartisanship, inclusiveness, and 
cooperation, which I know will continue under the leadership of 
Chairman Collins and Ranking Member Lieberman.
    Today we will review how well the Department of Homeland Security 
has defined and carried out its mission to protect the Nation. We must 
ask how well DHS has integrated the disparate cultures and management 
priorities of the 22 legacy agencies that were brought together under 
the most massive reorganization of the Federal Government since World 
War II. Before I go any further, I would be remiss if I did not thank 
Secretary Ridge, the outgoing secretary of the Department, for his 
leadership during the agency's infancy. He undertook an enormous and 
historic task, and I thank him for his service. I think we can all 
agree there have been many successes under his leadership. There is, 
however, still much room for growth, which is the focus of today's 
hearing.
    Throughout the debate over the creation of DHS, I had four primary 
concerns. The first was the erosion of our constitutional freedoms 
through the collection, coordination, and storage of personal data. I 
am pleased that the Department has a strong privacy office in place and 
has replaced the proposed CAPPS II, a computer-assisted passenger pre-
screening system which was widely criticized for a lack of privacy 
protection, with Secure Flight, which has more built in privacy 
safeguards.
    Our Committee has also taken steps to improve coordination of 
activities between the Privacy Officer and the Officer for Civil Rights 
and Civil Liberties. However, the fact that the Department is 
reportedly operating, or planning to operate, 11 data mining activities 
that use personal information, troubles me. What are the safeguards in 
place to protect an individual's privacy rights? How is the Department 
ensuring the quality and accuracy of the information mined from the 
private sector? We must guarantee that the privacy of all Americans is 
protected as these activities are implemented.
    The second issue was ensuring funding and support for the critical 
non-homeland security missions of those agencies merged into DHS, such 
as search and rescue, invasive species protection, and natural disaster 
emergency response. The unique multi-mission nature of these entities, 
such as the Coast Guard, the Federal Emergency Management Agency 
(FEMA), and the Animal and Plant Health Inspection Service, requires 
that special attention be paid to their non-homeland security 
functions. The hurricanes that slammed into Florida and surrounding 
States last year underscore the importance of FEMA's assistance to 
States and localities. To make certain that non-homeland security 
functions were not diminished, I introduced S. 910, the Non-Homeland 
Security Mission Performance Act, in April 2003. My bill required the 
Department of Homeland Security to identify and report to Congress on 
the resources, personnel, and capabilities used to perform non-homeland 
security functions, as well as the management strategy needed to carry 
out these missions. I will continue to monitor the critical non-
homeland security responsibilities within the Department to ensure they 
are not shortchanged.
    My third concern was how to protect the rights of the men and women 
who would staff the new Department because I feared that the new 
personnel authorities granted to DHS could erode worker protections. My 
initial fears were confirmed last year when DHS and the Office of 
Personnel Management (OPM) issued proposed regulations on the 
Department's new human resources system. This morning, DHS and OPM 
announced the final personnel regulations. While I am pleased that some 
of my recommendations to strengthen employee rights were included in 
the final regulations, I am afraid that changes to the proposed rules 
do not go far enough. The final regulations make dramatic changes in 
the way DHS hires, fires, classifies, and pays employees. The 
regulations call for the creation of an internal appeals panel for 
certain offenses, severely restrict the labor rights of employees, and 
tie the hands of the Merit Systems Protection Board to ensure that 
penalties for misconduct are just.
    I look forward to working with my colleagues on the Committee and 
DHS to increase employee input, to provide opportunities for meaningful 
and independent oversight of labor and employee appeals, and to 
increase bargaining opportunities for employees. Together we can 
improve agency efficiency while protecting employee rights.
    And lastly, I was concerned that the collective failure to respond 
to intelligence reports suggesting threats against America prior to 
September 11, 2001 was not being addressed.
    Madam Chairman, I believe my fourth concern was addressed through 
the hard work of this Committee which successfully guided last year's 
intelligence reform bill through Congress. However, I do remain 
concerned about whether the true intent of our legislation will be 
realized in the execution phase.
    There are a number of other management challenges that must be 
remedied for the Department to execute its many missions. For example, 
I remain deeply concerned about the budgetary and morale issues that 
plague Immigration and Customs Enforcement (ICE). ICE and Customs and 
Border Protection (CBP) personnel have expressed their concerns to me 
regarding the seemingly arbitrary manner in which the Immigration and 
Naturalization Service was split between ICE and CBP. The result has 
been mismanaged budgets, which prompted a hiring freeze for ICE and CBP 
in the spring of 2004; an ongoing overall budget freeze for ICE; and 
low staff morale.
    The ICE agents also consider themselves disadvantaged because they 
have been separated from their former colleagues at CBP with whom they 
developed collaboration. The Center for Strategic and International 
Studies-Heritage Foundation Report, ``DHS 2.0,'' recommends merging the 
two entities. I will review this proposal carefully because the Border 
and Transportation Security Directorate must eliminate the existing 
barriers to be an effective guardian of our Nation's borders.
    Attention must also be given to the disjointed manner in which 
international affairs is handled in DHS. The Office of International 
Affairs (OIA), which was created and placed in the Office of the 
Secretary by the Homeland Security Act, failed to live up to its 
intended vision for a number of reasons, not the least of which is 
funding. The OIA has an annual budget of approximately $1 million and a 
staff of 10, the majority of whom are detailees. These resources are 
inadequate for an office expected to promote information sharing, 
organize training exercises, plan conferences, and manage the 
international activities of DHS. As a result, much of the international 
coordination has been left to the individual directorates which sends a 
disjointed message to the international community.
    International cooperation, whether it is in the area of cargo 
security or the prevention of illegal immigration, is crucial to the 
security of the United States. Having the appropriate structure in 
place in the Department to facilitate and foster that cooperation 
should not be overlooked.
    We in the Congress often speak of an agency's success in terms of 
funding levels and overarching policy. These issues are important. But 
I submit that internal structural, financial management, and personnel 
concerns matter just as much, if not more, in the effectiveness of an 
entity as mammoth as DHS. I hope we can use today's hearing as an 
opportunity to explore how to improve DHS in these critical areas. I 
thank our witnesses for being here with us today, and I look forward to 
your testimony.

    Chairman Collins. Usually we follow the early-bird rule, 
but today I am just going to go in order of seniority. Senator 
Domenici.

             OPENING STATEMENT OF SENATOR DOMENICI

    Senator Domenici. I will be very brief. Actually I did not 
read your analysis or your testimony, but I think the biggest 
problem we have is not the problem of what we are not doing, 
but what we are doing, because I believe there is a significant 
lack of risk prioritization. We cannot cover every risk that 
people dream up. If we did, we would spend more on this than 
the defense of our Nation, and we would give everybody what 
they want. Every small fire department across the country would 
want new fire trucks because they are part of homeland 
security, and that is not disparaging of the fire departments. 
There are many other groups just like them.
    I am very worried that this process could lead to the 
funding for homeland security to be the most recent piggy-bank, 
Christmas tree, whatever you want to call it, for congressional 
wish lists. And I do not know what this Committee can do about 
it because it is principally an appropriations item. But when 
the good senator, Senator Lieberman, said we have to do more, 
and then he talked about making sure that things did not get in 
here by ships and trains and the like, I believe, we cannot do 
all of that and do all the other things we are asking to be 
done with this funding.
    I do not know, Mr. Wermuth, if you addressed that issue. 
Did you?
    Mr. Wermuth. I did, sir.
    Senator Domenici. I think this issue is really paramount 
because 2 or 3 years from now people may look back and say, we 
thought we were doing homeland security, but essentially we did 
not address a big need because we were doing so many things we 
should not have been doing. Every city in America is not under 
risk of attack by terrorists. They might think they are; they 
might be worried about it. But somebody has to determine which, 
why and what for every item that we fund.
    Madam Chairman, I believe that you and the Ranking Member 
have a very serious responsibility in this regard. Everybody is 
going to be asking you to put every type of project in homeland 
security. I regret to say it is very hard to turn people down, 
but the truth of the matter is we cannot be a risk-free 
America. Something has to be at risk or we just cannot afford 
homeland security.
    I thank you for giving me time.
    Chairman Collins. Thank you. Senator Pryor, we are 
delighted to have you back.
    Senator Pryor. Thank you.
    Chairman Collins. I know given your seniority on the 
Committee and the change in ratios that you had to work to 
remain on the Committee and we are very happy that you did.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. Thank you so much. And thank you, Madam 
Chairman. I look forward to working with you over the next 2 
years, Senator Lieberman and the entire Committee, including 
our new Members here, but I look forward to hearing from the 
panel today and hope we will focus on making America more 
secure in a very real and meaningful way. I would like to get 
your thoughts and insights on that. Thank you. And I have a 
statement for the record.
    Chairman Collins. All statements will be entered into the 
record as if read.
    [The prepared statement of Senator Pryor follows:]

              OPENING PREPARED STATEMENT OF SENATOR PRYOR

    Thank you Madam Chairman and Senator Lieberman for convening this 
hearing.
    I would also like to thank the witnesses who are testifying here 
today for providing their expertise and insight as we look at some of 
the challenges at DHS over the last couple of years as well as the 
potential changes to be made in order to address those challenges.
    As the 9/11 Commission discussed in its report, since its creation 
in 2002, DHS has had the ``lead responsibility for problems that 
feature so prominently in the September 11 story, such as protecting 
borders, securing transportation and other parts of our critical 
infrastructure, organizing emergency assistance, and working with the 
private sector to assess vulnerabilities.'' (9/11 Report, p. 395) Such 
responsibility is monumental.
    We are here today to review the challenges and opportunities at 
DHS. Our Committee has worked together in its commitment to making our 
country safer. We most recently, guided by the leadership and tenacity 
of Madam Chairman and our Ranking Member, worked in a bipartisan manner 
to evaluate and implement the recommendations of the 9/11 Commission, 
which resulted in the recent passage of the Intelligence Reform and 
Terrorism Prevention Act.
    Today we are here, guided by that same commitment as we consider 
and address the development of DHS.

    Chairman Collins. Senator Warner.

              OPENING STATEMENT OF SENATOR WARNER

    Senator Warner. Madam Chairman and the Ranking Member, I 
thank you for the opportunity of serving with both of you. We 
have had long associations on the Armed Services Committee, and 
I view the work of this Committee as being parallel in many 
respects to the overall responsibility to protect our Nation, 
and I think that I can work with you in carefully following the 
existing law with regard to the separation between the powers 
of the military abroad and the powers to take and exercise in 
the continental limits, but we have got to have a seamless 
concept of protecting this country.
    Also, I was privileged to be a member of the Armed Services 
Committee working with Senator Goldwater when Goldwater-Nichols 
was drawn up. It took us a year to really finalize that very 
vital piece of law. It has proven its value, and I think it was 
important that you used that as a benchmark today.
    So I thank you. And lastly, I do not know that I can depart 
without saying what a magnificent chair this is as compared to 
the wooden benches we use in the Armed Services Committee.
    Chairman Collins. Just another advantage of this Committee. 
[Laughter.]
    Senator Warner. A very distinct advantage.
    Senator Lieberman. I do want to say, Senator Warner, that 
this is a legacy of the Fred Thompson Administration. 
[Laughter.]
    Chairman Collins. Senator Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Well, I just wanted to thank you for the 
opportunity to serve with each and every Member of this 
Committee. I do have a statement for the record, and ask 
unanimous consent that it be in the record.
    Chairman Collins. Without objection. Thank you.
    [The prepared statement of Senator Coburn follows:]

                  PREPARED STATEMENT OF SENATOR COBURN

    Thank you Chairman Collins. I am pleased to join you as one of the 
newest Members of the Homeland Security and Governmental Affairs 
Committee. I look forward to working with you and Members of this 
Committee on rigorous oversight of the Department of Homeland Security 
and other Federal programs, as well as on initiatives that will reduce 
and eliminate wasteful government spending.
    I commend your leadership, Chairman Collins, for holding this 
hearing on the future direction of the Department of Homeland Security 
as the Committee's first hearing of the 109th Congress. As this 
Department--with approximately 190,000 employees and a budget of over 
$33 billion--enters its third year with new leadership, it is fitting 
that this Committee examine the current status of the Department's 
operations and proposals to increase its effectiveness.
    One such proposal entitled, ``DHS 2.0: Rethinking the Department of 
Homeland Security,'' was issued jointly last month by the Heritage 
Foundation and the Center for Strategic and International Studies. I 
look forward to hearing today from Dr. Carafano, a co-author of the 
report, on his call for a full assessment of the Department's 
organizational structure to improve efficiency and to prevent existing 
homeland security grant programs from turning into another Federal pork 
barrel program.
    In addition, the Department's Office of Inspector General, from 
which we will also hear today, issued a report last month on major 
management challenges facing the Department. Some of these challenges 
include the potential for overlapping grant funding, inadequate 
staffing for program administration, structural problems in the 
Department's financial management organization, and deficiencies in the 
Department's IT organizational structure.
    Yesterday, the Government Accountability Office (GAO) issued its 
biennial assessment of Federal programs, and again for the second 
consecutive time, listed the Department of Homeland Security on its 
``High Risk List.'' The GAO recognized the steps the Department has 
taken over the past 2 years, but is concerned whether the Department 
will follow through on its initial efforts, whether the Department has 
made enough progress in forming partnerships with governmental and 
private sector entities, and whether the Department has sustained 
leadership to complete the transformation.
    It is clear that much work needs to be done to improve the 
organization structure, reduce bureaucratic overlap, and strengthen the 
financial accountability of the Department of Homeland Security. I look 
forward to hearing the recommendations from our witnesses to address 
these issues.
    Thank you, Chairman Collins.

    Chairman Collins. Senator Chafee, you were not present when 
I welcomed you to the Committee so let me do so again now. We 
are delighted to have you as a Member.
    Senator Chafee. I look forward to serving with you and look 
forward to the witnesses' testimony on this important subject. 
Thank you.
    Chairman Collins. Thank you. Senator Coleman.

              OPENING STATEMENT OF SENATOR COLEMAN

    Senator Coleman. Thank you. It is great to be back. I 
appreciate your great leadership and appreciate, as the new 
Members will see, the incredible strength of the bipartisan 
relationship on this Committee with great respect for the work 
of the Ranking Member also. So it is a pleasure to be here and 
I look forward to the testimony, Madam Chairman. Thank you.
    [The prepared statement of Senator Coleman follows:]

                 PREPARED STATEMENT OF SENATOR COLEMAN

    Madam Chairman, I want to thank you for holding this important 
hearing on the future of the Department of Homeland Security. I want to 
join in thanking all the members on the panel for appearing this 
morning before the Committee to discuss what lies ahead on this 
important issue.
    My home State of Minnesota has a wide range of Homeland Security 
interests given that we share an international border with Canada, we 
have two major cities in Minneapolis and St. Paul and we have a major 
port in the city of Duluth. Unfortunately, however, this year Minnesota 
witnessed an average 48 percent reduction in the allocation of Federal 
homeland security dollars, including a 71 percent reduction to our 
urban area security initiative alone. As the Department of Homeland 
Security evolves, Members on this Committee will have to provide 
effective oversight to ensure that policies and strategies pursued are 
well thought out and provide the best security possible.
    On that note, the Permanent Subcommittee on Investigations is 
currently pursing three areas of oversight regarding the response of 
the Department of Homeland Security to the threat of nuclear terrorism: 
The Container Security Imitative, the Customs Trade Partnership Against 
Terrorism and the deployment of radiation portal monitors. I am also 
interested in ways we can remove unnecessary bureaucratic hurdles for 
students wishing to study in the United States and reverse the 
perceptions about America being unwelcome to foreign students.
    I am very interested to hear the panelist's thoughts on these 
issues and their feelings on the long term development of the 
Department of Homeland Security.

    Chairman Collins. Thank you. You have been one of our most 
active Members and we are delighted to have you back as well. 
Thank you.
    I would now like to turn to our patient witnesses. Our 
first witness today is Richard L. Skinner, the Acting Inspector 
General at the Department of Homeland Security. Mr. Skinner 
will discuss the report issued last month by his office on the 
management challenges facing DHS.
    Next, we will hear from James Carafano, a Senior Research 
Fellow at the Heritage Foundation in Defense and Homeland 
Security. Dr. Carafano is the co-author of the study that we 
will be discussing today.
    Following him will be Michael Wermuth, a Senior Policy 
Advisor Analyst in Domestic Terrorism at the RAND Corporation. 
I had the pleasure of having dinner recently with Mr. Wermuth 
in Los Angeles and I was so impressed with the work that RAND 
had done that I asked him to join us today.
    Stephen Flynn is not new to this Committee. He has been an 
expert witness for us before and we are delighted to have him 
back. He is the Jeanne J. Kirkpatrick Senior Fellow for 
National Security Studies at the Council on Foreign Relations. 
He is also a retired Coast Guard Commander and a foremost 
expert on transportation and border security.
    Last, but certainly not least, we will hear from Richard 
Falkenrath, a Visiting Fellow in Foreign Policy Studies at The 
Brookings Institution. His background includes serving as 
Deputy Homeland Security Advisor to the President and as Senior 
Director for Policy at the Office of Homeland Security.
    I welcome all of you. I appreciate your being here. Mr. 
Skinner, we will start with you.

 TESTIMONY OF RICHARD L. SKINNER,\1\ ACTING INSPECTOR GENERAL, 
                DEPARTMENT OF HOMELAND SECURITY

    Mr. Skinner. Good morning, Madam Chairman, Ranking Member 
Lieberman, and Members of the Committee. Thank you for the 
opportunity to be here today especially with such a 
distinguished panel. I have submitted a written statement for 
the record. If I may, I could just summarize that statement in 
my remarks here today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Skinner appears in the Appendix 
on page 51.
---------------------------------------------------------------------------
    Chairman Collins. Please do so.
    Mr. Skinner. First, however, if I can take this 
opportunity, I would like to commend Dr. Carafano and the 
Heritage Foundation for the outstanding report, ``Rethinking 
Department of Homeland Security.'' While we may not be able to 
address each and all those recommendations in that report, you 
can be sure that we will consider that report and use it as a 
guidepost as we plan our work in the future.
    Over the past 2 years, I have personally visited with 
departmental employees at our land ports of entry, at our 
seaports, airports, detention facilities, enforcement offices, 
Coast Guard facilities, and in our disaster field offices. I 
can assure you that at each and every site that I visited I 
found dedicated, hardworking employees who are genuinely 
committed to securing this country or servicing those affected 
by disasters and making the Department a model for the entire 
Federal Government.
    There is no question that the Department has made great 
strides toward improving homeland security. No one here today 
can deny that our Nation is more secure today than it was 2 
years ago. That said, the Department still has much to do 
before it can be called a cohesive, efficient, and effective 
organization.
    It will not be easy and it cannot be done in 1, 2 or 3 
years. GAO has noted that successful transformations of large 
organizations under even less complicated situations could take 
from 5 to 7 years. The Committee has asked me to focus on 
challenges related to border and transportation security, 
integration, intelligence, and preparedness.
    I would like to highlight the significant issues that we 
have reported on in the past 2 years. First, I would like to 
talk about border security. Our Nation's homeland security does 
not stop at our geographic borders. Programs to promote 
international travel create potential security vulnerabilities 
that may allow terrorists, criminals, or other undesirables to 
enter this country undetected.
    For example, the Department must address security concerns 
identified in the Visa Waiver Program. The Visa Waiver Program 
enables citizens from 27 countries to travel in the United 
States for tourism or business for 90 days or less without 
obtaining a visa. These travelers are inspected at a U.S. port 
of entry but have not undergone the more rigorous background 
investigations associated with visa applications.
    Also, the Department continues to experience problems in 
identifying and detecting aliens presenting lost or stolen 
passports from visa waiver countries. Procedural shortcomings 
permitted some aliens presenting stolen passports to enter the 
United States even after the stolen passports were detected.
    Information on lost and stolen passports provided by visa 
waiver governments was not routinely checked against U.S. entry 
and exit information to determine whether stolen passports had 
been used to enter the United States.
    In addition, there was no formal protocol for providing 
information concerning the use of stolen passports to the 
Department's Office of Immigration and Customs Enforcement.
    Further, the Department also must address issues with its 
visa security program, which stations officers at U.S. 
embassies and consular offices overseas to review visa 
applications and perform other law enforcement functions. The 
Department used temporary duty officers who often did not have 
the required background or training including language training 
or skills to perform effectively as visa security officers.
    With respect to international travels, two major border 
security challenges confront the Department and that is, one, 
the divergency in the biometric system used to identify 
travelers and, two, the disparity in the level of scrutiny 
given to the different types or classes of travelers entering 
the United States.
    With respect to terrorist weapons, one of the primary 
responsibilities of the Department's Office of Customs and 
Border Patrol is to detect and prevent terrorist weapons from 
entering the United States. This includes ensuring that 
oceangoing cargo containers arriving at our seaports are not 
used to smuggle illegal contraband.
    As you may recall, ABC News was successful in two attempts 
at smuggling depleted uranium into the country. In a September 
2004 classified report, we cited several weaknesses that 
occurred at the time of the two incidents that made the 
container protection inspection process less effective. We are 
now following up to ensure that the Department has taken 
corrective actions.
    With regards to transportation security, the success of the 
Transportation Security Administration, that is TSA, depends 
heavily on the quality of its staff and the capability and 
reliability of equipment to screen passengers and cargo while 
at the same time minimizing disruption to public mobility and 
commerce.
    Our undercover audits of screener performance reveal that 
improvements are needed in the screening process to ensure that 
prohibited items are not being carried onto airplanes or do not 
enter the checked baggage system. We plan to complete another 
round of undercover tests. We should have that review completed 
within the next 2 months.
    While TSA continues to address critical aviation security 
needs, it is moving slowly to improve security across other 
modes of transportation. About 6,000 agencies provide transit 
services through buses, subways, ferries, and light rail 
service to about 14 million Americans daily. The terrorist 
experiences in Madrid and Tokyo highlight potential 
vulnerabilities in our transit systems.
    Although it is currently coordinating the development of a 
national transportation sector plan, which is expected to be 
completed later this year, TSA's 2005 budget still focuses its 
resources on aviation.
    Also, the Coast Guard's willingness to work hard and long 
hours, use innovative tactics and work through interagency 
partnerships has allowed it to achieve its performance goals. 
However, to improve and sustain this mission performance in the 
future, the Coast Guard faces significant barriers, most 
importantly the deteriorating readiness of its fleet assets.
    Finally, with regard to integration and preparedness, we 
reported that structural and resource problems continue to 
inhibit progress in certain support functions. For example, 
while the Department is trying to create integrated and 
streamlined support service functions, most of the critical 
support personnel are distributed throughout the Department's 
components and are not directly attributable to the functional 
chiefs. That is, the Chief Financial Officer, the Chief 
Information Officer, and the Chief Procurement Officer.
    The Deputy has structured the functions based on a concept 
of dual accountability where both the operational leadership 
and the functional chiefs are responsible for the preparation 
of operational directives and their ensuing implementation. 
This concept has been described as a robust dotted line 
relationship.
    While the concept may be workable in some environments, we 
have concerns that within the Department the functional chiefs 
may not have sufficient resources or authority to ensure that 
Department-wide goals are addressed in an effective, efficient 
or economical manner or that available resources can be 
marshalled to address emerging problems.
    Furthermore, on the program side of the house, the 
Department's Information Analysis and Infrastructure Protection 
directorate, or IAIP, which has primary responsibility for 
critical asset identification, prioritization and protection 
has yet to produce a condensed list of most sensitive critical 
assets.
    Consequently, other elements within the Department are at 
risk of failing to direct their scarce resources toward 
national critical infrastructure protection and preparedness 
priorities. For example, in its Port Security Grant Program, 
the Department awarded three rounds of grants totaling $560 
million without definitive national priorities for securing the 
seaport infrastructure of the Nation.
    Poor integration of critical asset information with the 
Department's Protection and Preparedness Initiatives meant that 
the port security grants were awarded without sufficient 
information about our national seaport priorities.
    Department components need to integrate better their 
decision-making processes with the infrastructure protection 
component of the Department's IAIP directorate.
    Regarding preparedness, I would like to comment briefly on 
the Heritage Foundation's recommendations to consolidate the 
Department's preparedness function under an Under Secretary for 
Protection Preparedness. Based on my own experiences while I 
was Acting Inspector General at FEMA and the Deputy Inspector 
General at FEMA from 1991 to 2003, I have reservations about 
segregating FEMA's preparedness function from its response and 
recovery responsibilities.
    Disaster response, preparedness response, and recovery are 
integrally related, each relying on the other for success. The 
proposal should be studied very carefully before it is put into 
practice.
    Madam Chairman, this concludes my remarks. I will be happy 
to answer any questions you or Members of the Committee may 
have.
    Chairman Collins. Thank you. Dr. Carafano.

 TESTIMONY OF JAMES JAY CARAFANO, PH.D.,\1\ SENIOR FELLOW, THE 
                      HERITAGE FOUNDATION

    Mr. Carafano. Thank you, Madam Chairman. I would like to 
commend the Committee for having these very important hearings 
and for its leadership on either the Lieberman-Collins bill, or 
the Collins-Lieberman bill, or the intelligence reform bill, 
but I mean your leadership was outstanding, and we certainly 
would not have had the legislation that we did without your 
leadership.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Carafano appears in the Appendix 
on page 68.
---------------------------------------------------------------------------
    I have submitted a statement for the record, and I would 
just like to briefly cover three points. I will talk briefly 
about the report, three of the major recommendations, and then 
a suggestion of a way ahead that the Congress and Department 
might consider.
    This began really with my prejudice both as a historian and 
25 years in the Army, about a dozen of those working in and 
around the Pentagon. And the lesson, when what became the 
Department of Defense was created in 1947, there were 
fundamental things in its structure and organization that 
prevented the effective coordination between the services and 
oversight of the services.
    Eisenhower talked about them as Chief. He talked about them 
as Acting Chairman. He talked about them as President. They 
simply did not get fixed and you are absolutely right. They did 
finally get fixed in the Goldwater-Nichols Act of 1986, a mere 
3 years before the end of the Cold War. And I think quite 
honestly the lesson we can learn is we can do much better.
    We can recognize the operational challenges that have 
presented themselves since the Department was created and fix 
them now. With that, the Center for Strategic International 
Study and the Heritage Foundation put together a team of about 
30 young professionals, which I define as anybody under 50, who 
did a terrific job looking at--we tasked them in four different 
areas: Management, resources, authority, and roles and 
missions. And they produced a report that had about 40 
recommendations, and we could debate the merits of each of the 
recommendations, but I think on the whole what they represent 
is a pretty substantive argument that it is worthwhile to go 
back and rethink the fundamental structure of the Department 
and its roles and missions and fix obvious things now before 
they become stovepipes and stakeholders take hold and it just 
becomes too hard to do.
    Reviewing the report, in retrospect, three principles 
evolved for me in terms of to guide further reform, and I would 
just like to cover those very quickly and illustrate them with 
an example of each.
    The first one is do management first. I mean the IG report 
which came out very close to ours, I thought, was very 
instructive. It talked about a number of programmatic issues, 
but I think at the root of all of those were a cleaner 
management structure, clear responsibilities, the ability to 
establish priorities and set authorities would be the first 
step in addressing many of these challenges. And I think one 
good example of that is policy. The Department, and our 
recommendation was, simply needs an Under Secretary for Policy.
    This is no more clearly illustrated than in international 
affairs. I mean right now there are arguably two centers of 
gravity. There is an Office of International Affairs. There is 
a policy advisor to the Secretary. They are competing to make 
policy and all the subordinate agencies who have international 
affairs, basically they get a choice. They can go to whoever 
they like who has the right answer. And you do not have an 
international affairs policy that is coherent across the 
Department.
    That particularly reflects badly in the Department's 
dealings with other agencies and in international forums. It 
does not have the gravitas. It does not have the long-term 
experience. It does not have the cohesive position of the 
Department behind it to really work well in these environments.
    The second guiding principle that I really call is 
envisioning the future and there is lots of debate about do we 
have the roles and missions exactly right; do we have the split 
exactly right? And how do you really determine that? And I 
think the right answer to the question is you have to decide 
where you want to be in 5 years? What do you really want this 
function to be doing? And if you could make that strategic 
decision, then the answer is what the organization ought to 
look like ought to be pretty clear.
    Now, one of our probably most controversial recommendations 
is to merge the Customs and Border Protection and Immigrations 
and Customs Enforcement into a single agency. That was really 
based on two observations. One is we could not find a good 
argument for splitting them, and what you are intentionally 
doing is creating opportunities for disconnects and gaps 
between investigative operations and ongoing operations in one 
and the other. And why are you creating a need for coordination 
when you do not need one?
    And the second one is--is really the management challenge--
is in ICE and CBP. You know, ICE, for example, when INS would 
split, it was the budget of INS was basically split among three 
different functions. That has created an enormous budgetary 
challenge and we all know that ICE had enormous financial 
challenges. I think the last figures I saw were upwards of $300 
million, to the point that operations simply cannot be 
conducted at the end of the year. People cannot use credit 
cards. People cannot go on travel. Hiring freezes. Now, is that 
the right answer? Well, quite honestly, I do not know if 
merging CBP and ICE will solve a lot of these problems or if 
that is the best way to solve these problems or if there are 
other solutions.
    But I do think that the right answer is to sit back and 
strategically ask what do we want border and internal 
enforcement security to do--how do we want that done 5 years 
from now? And if we can decide that, then I think the 
organizational answer ought to present itself.
    And the third point or principle I would argue for is the 
clear division of responsibilities between operators and 
supporters, and I think here the DOD model, Defense model 
serves very well. I mean in Defense we have warfighters. We 
have combatant commanders whose job it is to go out there 
everyday and find the bad guy and get rid of him.
    And then we have services which are basically force 
providers. It is their job to provide trained and ready forces 
for the warfighter. I think that model has a lot of merit to 
it, and I think there are many areas where it could be applied 
within DHS.
    Preparedness and response, I think, is one of them. 
Response is clearly an operational function. You want the guy 
who is in charge of response to be ready to respond, to be 
thinking about responding, and have that be the sole focus of 
the organization's mission.
    Preparedness, on the other hand, you could argue is a 
support function, and there is a lot more to preparedness than 
preparing to respond. There are protection functions. As a 
matter of fact, you go through all the six critical functions 
outlined in the homeland security strategy. Many of them have a 
preparedness function to it, and so what we argued for in the 
report is splitting them, going back and basically having a 
FEMA which does the traditional things FEMA does, and then 
grouping preparedness really with all the outreach activities 
of the Department, State and local coordination, the domestic 
preparedness, the grants, the private sector coordination, 
critical infrastructure, transportation policy, and putting it 
under a single Secretary of Protection and Preparedness.
    So above all, what you could get is somebody who is really 
looking coherently at the whole picture and really making 
decisions on where are we going to get the biggest bang for the 
buck? Where can we really get our best investment? How can we 
really make these things work together?
    So those are the three principles that I would propose that 
should guide the next steps, and very quickly. I think there 
are two courses of action. We recommended in our report was to 
create a Presidential commission. I think that was kind of 9/11 
Commission stars. But quite frankly that recommendation was 
made before both Houses made a decision to have a permanent 
committee to focus on the management of the Department. I think 
having that now provides a new opportunity to maybe do things 
differently, and what I might propose is a three-step process.
    One is fix management first, create the Under Secretary for 
Policy, create an Under Secretary for Protection and 
Preparedness. Create strong COO functions in the Deputy 
Secretary, so we get rid of the dotted line thing which I think 
is simply not working. Abolishing the Under Secretary for 
Management. Abolishing the Under Secretary for Preparedness and 
Response. Cleaning up the management structure, making it very 
tight.
    The second step is maybe we should steal a page from 
Goldwater-Nichols and establish a QSR, Quadrennial Security 
Review. And in the first Quadrennial Security Review, we should 
task the Department to review not just its resources and 
missions, but to do that in light of making assessment about 
envisioning the future, tell us where the Department is going 
to be 4 years from now, so we can make smart decisions about 
should we merge CBP and ICE and other things like that.
    Now, in conjunction with that, I would also recommend that 
the Congress establish a national security review panel, much 
like we did the national defense panel when we did the first 
QDR, and it would have two missions. One mission would be to 
review the work of the QSR so we have an independent assessment 
about if their vision in the future is right, if their 
recommendations for organizational change are right, and also 
to look at how DHS fits in conjunction with all our other 
initiatives and all the other departments. And how it works in 
an interagency context and provide that report back to the 
Congress.
    Then I think in 2006, the Department and the Congress could 
sit down and make some very far-reaching decisions about 
further organizational changes and perhaps other things that 
need to be changed. And with that, I look forward to your 
questions. Thank you.
    Chairman Collins. Thank you. Mr. Wermuth

 TESTIMONY OF MICHAEL WERMUTH,\1\ SENIOR POLICY ANALYST, RAND 
                          CORPORATION

    Mr. Wermuth. Madam Chairman, Mr. Ranking Member, 
distinguished Committee Members, thank you for the opportunity 
to be here and I am particularly pleased to be on this panel 
with so many distinguished colleagues and friends. Within the 
context of those four functional areas that you have asked us 
to address this morning, I am going to discuss six critical 
challenges facing DHS.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Wermuth appears in the Appendix 
on page 79.
---------------------------------------------------------------------------
    The first, as has already been mentioned several times, is 
this lack of robust strategic planning and analysis 
capabilities in the Department.
    The second, and this is one of the items that goes to the 
very heart of what Senator Domenici was mentioning, is the lack 
of fully comprehensive performance metrics for the way we are 
spending homeland security dollars.
    The third is the structure of the organization. We have 
already heard some of that. The fourth clearly is intelligence, 
particularly as it relates to the fulfillment of the DHS 
operational mission. And the last two, almost entirely external 
to DHS, have to do with some missed opportunities of both 
strategic guidance and oversight on the part of the White House 
and the Congress.
    First, on border security. In our global economy, the 
United States is dependent on a variety of supply chains of 
both goods and services from all over the world. One that was 
not created with security at its core and we will hear more I 
am sure on that from Steve Flynn.
    These supply chains involve government agencies, the global 
transportation and communications networks, the suppliers, 
marketers and users, but there is as yet no comprehensive 
approach to address all these various aspects of supply chains, 
not only in security terms but also the impacts that they have 
on economies, diplomacy, government stability, societal well-
being, and much more.
    RAND recently published a report entitled ``Evaluating the 
Security of the Global Containerized Supply Chain,'' \1\ which 
reflects in its analysis of that issue the need for a more 
holistic approach to the entire spectrum of supply chain 
matters, and it is just one example of the way some of these 
issues need to be addressed in a more comprehensive fashion. 
And we respectfully request that this report be included in the 
record of hearing, Madam Chairman.
---------------------------------------------------------------------------
    \1\ The report entitled ``Evaluating the Security of the Global 
Containerized Supply Chain,'' appears in the Appendix on page 168.
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    Chairman Collins. Without objection.
    Mr. Wermuth. We are in full agreement with James Carafano 
and others who have made recommendations for the Department to 
have a more robust capability to engage in long-range strategic 
thinking and only suggest that the entity that is created be 
called an Under Secretary for Policy and Planning to make it 
clear that its responsibilities include both of those important 
and somewhat different functions.
    As we get better with security at the designated official 
ports of entry, for example, we would push terrorists and other 
criminal enterprises to unregulated points, and we must have a 
system in place to consider those second order effects and 
develop long-range plans and strategies that are flexible 
enough to meet the changing threats.
    We have been asked to comment on recommendations for 
organizational change including the one that Jim Carafano just 
mentioned on the potential merger of CBP and ICE. We are not 
yet convinced that such a move is necessarily indicated and 
would be more flexible. Consider, if you will, that they do 
have fairly separate disparate functions. CBP performs 
ministerial tasks at the border points of entry. ICE performs 
critical law enforcement functions to identify actual or 
potential lawbreakers and engage in the arrest and seizure. 
That is not to say that those entities should not be in a 
central organization as BTS was originally envisioned and that 
they do not have a requirement in order to communicate with 
each other and to perform tasks that sometimes overlap.
    But the skills required for the performance of those tasks 
may require different recruiting, retention, training, 
performance evaluations, operational procedures and the like 
and such a change without further comprehensive analysis of all 
the issues, structures and dynamics involved may not result in 
the intended consequences of more efficient and effective 
border security.
    And in my written testimony, I have drawn some other 
analogies about the way other parts of our government are 
organized.
    Second, in the area of transportation security, there must, 
and we argue can be, more holistic approaches that cut across 
old bureaucratic lines in various missions, and again to 
address Senator Domenici's concern, we believe that one of 
those needs to be a move toward a more risk management approach 
to decisionmaking including better prioritization for resource 
allocations in the development of future strategies, plans and 
programs based on that risk management approach.
    I mentioned TSA as an example in my written testimony and 
the rationale that would apply in that case. And there are many 
other examples about this strategic holistic approach to 
planning. Yesterday, RAND released a report that is in the news 
this morning on defending our commercial airline fleet against 
attacks using shoulder fired missiles, and there are some 
important conclusions in here about how to approach very 
difficult issues like that. We have sent electronic copies of 
that report to the Committee staff in preparation for today's 
hearing, and we would also ask that that report be included in 
the record of the hearing today.\1\
---------------------------------------------------------------------------
    \1\ The report appears in the Appendix on page 168.
---------------------------------------------------------------------------
    Chairman Collins. Without objection.
    Mr. Wermuth. These better, more comprehensive, more 
authoritative measures of performance and effectiveness--a 
valid metrics program for the Department must be developed more 
completely than they have been and implemented, and that 
program will include clearly identified targets for specific 
performance at designated points in time or other proven 
techniques for evaluating the effectiveness of resource 
expenditures and other criteria.
    For the structural side of transportation security, on the 
same rationale expressed above in connection with the proposed 
merger of CBP and ICE. It is still not clear without much 
further analysis that major changes should be made in other 
parts of the transportation and border security directorate.
    Third, on emergency preparedness and response. Existing 
structures may not work and a thorough analysis is required in 
this area. DHS must have tighter geographic links to the field 
for closer coordination and more comprehensive collaborative 
arrangements with other Federal partners. And again, in the 
written testimony, drawing on both the issue of FEMA that Jim 
Carafano mentioned and the prevention piece of responsibilities 
as well as the preparedness piece, we have laid out some that 
we think should be considered in the deliberations of this 
Committee and others.
    DHS should move quickly to implement its regional structure 
given the critical importance of closer cooperation with States 
and localities and the acknowledged differences in preparedness 
and response issues based on U.S. geographical diversity.
    In the written testimony, I have offered other examples for 
external coordination including enhanced relationships with 
other Federal entities such as DOD and a long discussion about 
the better, more formal relationship that needs to be 
established between those two departments.
    Fourth, for intelligence, clearly the Chairman and Ranking 
Minority Member have had an important role in the leadership of 
better intelligence across our entire government. I only hope 
that the vision that you have had for that new structure and 
process will prove to be effective in actual practice.
    Clearly, DHS needs to have intelligence to help support its 
operational missions, but it is not yet completely clear what 
parts of intelligence DHS is expected to obtain for itself and 
what it receives from others.
    In my written statement, I note important differences in 
strategic, operational and tactical intelligence, and some of 
the entities that have been established that will hopefully 
provide some more strategic approach to intelligence, but DHS 
clearly must have its own robust intelligence capabilities to 
perform fusion analysis and dissemination functions that will 
enable effective implementation of its own operational 
missions.
    I also discuss in the written testimony the issue of closer 
coordination with entities at the State and local level who can 
help feed that entire intelligence process as well as issues 
related to security clearances and classifications, and I have 
offered some important discussion and recommendations that were 
contained in the fourth report to the President and Congress of 
the Gilmore Commission in December 2003 to support those 
suggestions.
    Let me close on two points dealing with DHS oversight. It 
is a fact, of course, that DHS does not own everything related 
to homeland security. The Secretary has no authority to direct 
other Cabinet officials to do anything nor directly to command 
or control any assets other than those belonging to DHS.
    The Executive Office of the President has important 
responsibilities to provide continuing strategic guidance and 
ensure proper coordination of all Federal resources through the 
development of national strategies and policies even beyond the 
Department of Homeland Security.
    DHS should not be expected to develop the overall national 
strategy even though an important player. That is clearly a 
function for the White House. And Madam Chairman, respectfully, 
Congress is still part of the problem. It is still perplexing 
to me and I think to others that the Congress has not yet 
achieved a coherent logical process for handling these issues.
    It does not seem to make sense to us that the Department of 
Homeland Security does not get its primary authorization in its 
entirety from a single committee in each House of the Congress. 
No other Cabinet agency is subjected to the same treatment. 
Madam Chairman and Members, thanks again for this opportunity. 
In our view, neither the Congress nor DHS should rush to any 
judgment about major changes in structure or authority without 
cautious, deliberate, well-informed circumspect debate and 
consideration.
    Clearly, there are some changes that we and others have 
proposed that should rise to the top of the list for 
consideration. But please consider the fact that the Department 
of Homeland Security is relatively new, still just barely 2 
years old, and men and women of goodwill both inside and 
outside of DHS are struggling to make the Department work more 
effectively.
    DHS has already gone through much turmoil in its first 2 
years of existence and it would be well to consider in that 
context the impact of yet more changes. I will, of course, be 
happy to answer any questions from the Committee and thank you 
again, Madam Chairman.
    Chairman Collins. Thank you. Dr. Flynn.

 TESTIMONY OF STEPHEN E. FLYNN, PH.D.,\1\ JEANE J. KIRKPATRICK 
SENIOR FELLOW IN NATIONAL SECURITY STUDIES, COUNCIL ON FOREIGN 
                           RELATIONS

    Mr. Flynn. Yes, good morning, Madam Chairman and 
distinguished Senators. It is an honor to be back here in front 
of your Committee testifying on this important issue and on 
this historic occasion of the first hearing of the Homeland 
Security and Governmental Affairs Committee. Like so many of us 
at this table and I know around the podium who were doing these 
issues before they were fashionable, it really says something 
about where we are to have you leading this Committee and to 
have such a distinguished group of Senators participating in 
it.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Flynn appears in the Appendix on 
page 98.
---------------------------------------------------------------------------
    I would like to have my written testimony submitted for the 
record, but I would like to spend a few moments highlighting, I 
think, the rationale of how to keep ourselves focused on this, 
and then two or three items that I have that I think need to 
reinforce the messages that have been presented here.
    In assessing where we are after 2 years, I think we really 
have to keep in mind what the challenge really is and where we 
started from. And there is no question, it is so important that 
we get this right because I maintain the position that what we 
saw on September 11 quite simply is how warfare will be 
conducted against the United States in the 21st Century.
    The use of catastrophic terrorism directed at the non-
military elements of our power, our civil society, and the 
critical infrastructure that underpins that power is how our 
enemies will confront us in the 21st Century. And when we, 
therefore, think about the allocation of resources for the 
defense of this Nation, we have to think about homeland 
security in tandem with the tremendous investment and sacrifice 
we have been willing to make in the national security arena.
    In this context, we have a very daunting challenge if we 
talk about the asymmetric threat particularly dealing with 
something like a weapon of mass destruction coming into our 
society, and as we focus our attention and decide about the 
structure of this Department and how we resource it, and 
ultimately what emphasis and level of urgency we give this 
mission, I think we have to keep clear in our minds that we are 
dealing with a tenacious adversary. It has grown from probably 
an organization to a movement operating in about 60 nations 
around the world, who has shown that it has tremendous 
organizational capabilities to exploit the cracks in our 
globalized society.
    Part of the thing that makes it such a daunting challenge 
is that, of course, homeland security just cannot be done at 
home. At the end of the day, the opportunities for exploitation 
and targeting is of global networks, of transportation and 
logistics, of energy, of finance, of information, that were 
driven in the globalization era of the last 20 years with four 
imperatives of the marketplace: How to make them as open as 
possible; how to make them as efficient as possible; how to 
make the network's use as low cost as possible; and as reliable 
as possible. And these were cascading. The lower the cost, the 
more users, the greater the reliability and efficiency, the 
more people were willing to depend upon them, but security was 
viewed as raising costs, undermining efficiency, undermining 
reliability, and putting pressure to close the networks.
    We are dependent on our power, on global networks, that 
essentially have virtually no security built in. The job of 
this Committee overseeing the job of homeland security is, one, 
getting the nodes in the United States right, but also dealing 
with this in a globalized context that clearly expands beyond 
the jurisdiction of this one Department.
    The second issue--so we have a daunting challenge that we 
have to sort of really keep our eye on when we look about what 
structure and the resource we put here. The other issue is that 
we have to really recognize how poor the starting line was we 
started from. The agencies that we have pulled together into 
this Department a little over 2 years ago were not in the 
strong state really for a decade or more. They did not get a 
lot of care and feeding from their parent departments at the 
time. That was one of the rationales for consolidating. They 
routinely did not get much in the way of appropriations either 
from OMB and so forth.
    They started off hobbling to do their non-security mission, 
and now all of a sudden we have asked them to play this 
enormously important role of securing our Nation on the backs 
of basically broken agencies. So we start from a very weak 
baseline, and Coast Guard is a perfect illustration of 
operating an ancient fleet of ships and aircraft which we knew 
a long time ago we should be investing in. Now, their 
operations tempo is expanding enormously, and yet we have a 2 
to 4 year plan to try to replace this capital plan. It simply 
will not be around in 3 to 4 years in most instances because we 
have run it into the ground. We are asking too much of it in 
the context of what this new mission requires and the 
traditional missions it must do.
    All these other agencies have similar sort of legacy 
problems. And I ask us to keep in mind when we use the 
Goldwater-Nichols Act as an example, as it really is, of 
bringing things together, that was after 5 years of growth in 
the Department of Defense, when essentially those independent 
armed services were made whole after years of neglect after the 
Vietnam War made the opportunity for coming together something 
they could take on.
    I do not think it would have worked so well in 1979 or 
1980. It probably would have been a food fight then if they 
were all struggling just to do their core mission to try to get 
them to come together.
    The final issue is that we are obviously dealing with 
merger and acquisition problems which any sort of 101 
consultant will tell you that when you have for the first 18 
months to 2 years of a merger even of just two companies, you 
are going to find rising costs, reductions in efficiency and 
losing good people. The public sector obviously makes that even 
more complicated. So we have to be willing to give a grace 
period obviously as we struggle to work through these because 
these are just practical challenges that we know from all 
elements of efforts to organize and manage.
    But as we look ahead at the Department, while there are 
things that are sort of inevitable, this huge mission they are 
charged with, the low baseline they start from, the challenges 
of merging 22 agencies together, I would like to highlight, I 
think, particular problems that I think we can attend to 
relatively quickly and need to.
    One is just simply the staff; there is no cadre of senior 
executives essentially being developed for this development. 
There is just one Senior Executive Service employee in this 
Secretariat for the Department of Homeland Security. If we had 
a presidential transition this time around, we would have had a 
mass exodus of those political appointees and the remaining 
players are detailees, people from the agencies who are 
essentially operating and trying to manage this environment. 
Now these are very dedicated people but all of us know we are a 
little bit of a bureaucracy. You tend to be more loyal to where 
you came from and where you are going back to than where you 
are at when it is in the context of a short-term assignment. We 
need to build a cadre of people who are basically providing 
some of the core base of capability.
    The second--and this is just nuts--we do not have enough 
staff support for these senior managers. The Department, the 
Deputy Secretary of the Department of Homeland Security, the 
third biggest Federal Department, has a staff of five people to 
support his mission. The Chief Operating Officer of the third 
biggest Department undertaking the most daunting merger and 
acquisition has five people, and some of the lousiest office 
space in Washington.
    We obviously need to give these players the tools to do the 
job right. There is no wonder why they are stuck in the in-box. 
Staff support is important and trying to professionalize this.
    Next on the list is an issue I would argue of training 
these folks. This is an enormous new task we are asking people 
to do, and we are doing it with no training backbone in their 
system. Senator Warner certainly knows the Navy particularly 
puts a lot of investment in a naval officer. We do it because 
the stakes are enormous and because it is a very technically 
demanding environment. You do not want a guy in a ballistic 
missile submarine getting it wrong.
    Forty percent of a naval officer's career is in training or 
education. Compare that to the Customs and Border Protection, 
training billets, zero, no time to do any training except 
during operations at a time when we are asking them to step up 
those operations.
    We are asking people to do an increasingly complicated job. 
The Commissioner of Customs and Border Protection has this 
daunting job of one face at the border. All of us are relieved 
to not have to run through the gauntlet coming into our 
airports or coming across the borders, a very sensitive move, 
but you are asking a front-line agent, usually a very low pay 
grade, to be an expert on customs law, an expert on animal and 
plant health, to be an expert on immigration law, where your 
adversary is tenacious. It is trying to play around the gaps of 
that, and you do it with on-the-job training by a senior 
inspector who has also got a very full in-box.
    We really need to look at how we resource the training of 
these people that we are depending upon to be our front line in 
this new war on terror.
    Next, I would highlight the international dimension. I 
spent quite a bit of time overseas in various places. We do not 
have a lot of coherence. There are a lot of issues that are 
roused by various activities of government. There are just not 
enough people in the Department to respond to these queries and 
to be able to handle real policy issues that are rising, nor 
are the State Department, USTR, those assigning people to the 
Department to do liaison.
    And so what we end up with are crises that end up in the 
in-box and absorb a lot of senior management time to sort out 
when they could have been managed in advance without conflict.
    The last thing I would raise is the fuzzy line issue, 
particularly with Department of Defense, over this issue of 
homeland defense and homeland security. The definition 
operationally does not work so well. The bad guys are not going 
to advertise they are coming from outside the United States to 
attack the United States. It is likely we will have an event 
here and then we are worried about follow-on attacks. If we 
have not merged more aggressively the homeland security 
activities and the Department of Defense activities, instead of 
having DOD essentially operating independently, we are worried 
about coming from the outside and DHS working from the inside. 
I just do not think operationally the threat is going to play 
out that way.
    We need an ongoing, a very hard look at how we make that 
together. I know I am out of time, and with many of these 
issues we go on for a long time. I am honored that I have the 
chance to appear before this first hearing on this important 
topic and look forward to questions. Thank you, Madam Chairman.
    Chairman Collins. Thank you. Dr. Falkenrath.

TESTIMONY OF RICHARD A. FALKENRATH,\1\ VISITING FELLOW, FOREIGN 
           POLICY STUDIES, THE BROOKINGS INSTITUTION

    Mr. Falkenrath. Madam Chairman and Members of the 
Committee, I am very grateful for the invitation to be here 
this morning. I am particularly honored since this Committee 
has been the cradle of two of the most important pieces of 
legislation since the end of the Cold War, the Homeland 
Security Act and then the Intelligence Act of last year.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Falkenrath appears in the 
Appendix on page 103.
---------------------------------------------------------------------------
    I will be very brief so we have a little time for questions 
before you have to go vote. My direct experience with the 
management of the Department ended in May of last year, when I 
left the White House and so I am really most knowledgeable 
about that period. But I will address some of the criticisms 
about the internal management of the Department. I am a little 
surprised by some of them, and I think some perspective is 
worthwhile here.
    This is probably the hardest management task that any 
Cabinet member has ever been asked to take on. Not only are we 
in a war, not only are we asking these agencies to do more than 
they have ever done before, but we are asking them to conduct 
the largest reorganization in 50 years. And so, yes, there are 
some troubles with the management of this organization, but I 
will say, as someone who was involved in the initial design of 
the Department, that the performance of the Department's 
leaders has exceeded my expectations. I will agree with what 
Senator Lieberman said in the beginning, that no one thought 
this was going to be easy at the beginning and we were all 
right. This is very difficult.
    But I think that Secretary Ridge and Deputy Secretary Loy 
have done a very fine job, and I am grateful, Senator Akaka, 
for your kind words about Secretary Ridge. I think they really 
deserve more commendation than criticism for what they have 
done. There are some difficulties, of course. Another bit of 
perspective, however, is to identify one Federal Department or 
agency that has not had difficulties. They all do in various 
ways and it is sort of inherent in public sector management. 
Frankly, the studies that have been done, and my own experience 
with the Department, I am not persuaded that the management of 
DHS is substantially worse than any other department or agency 
in the Federal Government.
    None of the other departments and agencies, by the way, 
have to deal with the reorganizational challenge that DHS has 
had to deal with. So that was my impression at least watching 
things from the White House. The Department does have a 
strategic plan. There is a public document that has been 
released by the Secretary that all of you, I am sure, have seen 
and your staffs have seen. And there is an internal set of 
milestones and goals, over 900 milestones and goals, all of 
which have a timetable and all of which have presidential 
appointees associated with every single goal who meet on a 
regular basis with the Deputy Secretary to go over how the 
Department is doing.
    These goals were developed in consultation with the Office 
of Management of Budget and the Homeland Security Council, and 
so I think they are a pretty good strategic plan. I am not 
going to say everything is perfect in the Department. There are 
lots of difficulties, but these are extremely difficult choices 
and challenges that we have asked these appointees to take on, 
and I think on the whole they have done a pretty fine job.
    With respect to Congress, I really think we should commend 
what the Appropriations Committee has done. They did exactly 
the right thing by reorganizing the subcommittees in the 
Appropriations Committee. Those two subcommittees have passed 
really fine bills on time, both years, with a minimum of 
earmarks and really following quite closely the President's 
request.
    The Appropriations Subcommittees for DHS have become 
genuine partners in the Congress on how the Department has to 
perform because they know that this is now how it goes. There 
is going to be an appropriations bill done every year. It is 
taken extremely seriously. The Department needs to be highly 
responsive to their requests for information and consultation. 
The same could not be said for the authorizing committees. I am 
not going to belabor the point.
    The 9/11 Commission made it, but it is really unfair 
circumstance to put the Department in on the authorizing side. 
The authorizing committee should do what the Appropriations 
Committee did in my judgment.
    The third point: Reorganization. Heritage and CSIS have 
released a report recommending major internal changes in how 
DHS is organized. I think there is nothing sacrosanct about how 
DHS is organized internally, and there may well be changes that 
need to occur, but I think it is exactly the wrong time for a 
statutorily driven internal reorganization of DHS for four main 
reasons.
    First, we are about to get a new Secretary in place. Give 
him the opportunity to get familiar with his new agency and his 
job and let him form an opinion and work with him in terms of 
what he thinks needs to be done.
    Second, I think we need to follow through on the 
organization that we have established for DHS, not redo it all 
from the beginning.
    Third, reorganization imposes a near-term penalty on 
performance. We know this very well. We have imposed a lot on 
various different parts of our government since September 11. 
Let us not impose any more is my judgment.
    And fourth, the Secretary has certain limited 
reorganization authorities already, so he can unilaterally do 
things that he needs to do based on the authorities that were 
conferred in the Homeland Security Act. If Congress really 
wants to help him in the near term, I would recommend that you 
increase his unilateral reorganization authority, his ability 
to manage his Department flexibly.
    He could use some additional reprogramming authority. He 
could use a better working capital account. He could use 
greater flexibility about the names and the number of under 
secretaries, and he could use a stronger reorganization 
authority, Section 872 of the original Homeland Security Act, 
which we worked on a lot. There are things that, if conferred 
on him, would help him right now, today, do his job. He does 
not need another statutorily driven internal reorganization. 
Now I think management of the Department is an important issue, 
and the overseers need to watch it very carefully. The 
Inspector General does. The GAO does. But I do not think it is 
the most important issue. I do not think it is his highest 
priority. I think the highest priority is what he does with his 
power. The Secretary of Homeland Security is one of the most 
powerful officers in the entire country, vested with vast 
regulatory authority and budgetary authority to do things out 
in the country.
    And he has done a lot, I think. I am not going to give the 
laundry list of accomplishments, but there are a few things 
still that need to be done--which I have reflected on, and I 
wish I had managed to get more of them done when I was in 
government--but which I think are the highest priorities.
    I will just tick them off. First, credentials and 
identification standard. This is a glaring gap, a systemic gap 
in our overall security system. The intel bill has a good 
provision about Federal standards for driver's licenses, but it 
does not go far enough. What we need is a national voluntary 
standard for secure identification that would become mandatory 
for all federally-controlled portals.
    These issues I discuss in a little bit greater length in my 
written statement.
    Second, we need to dramatically expand the amount of watch 
list screening that we do. We have two kinds of watch lists, 
name-based watch lists, which is lists of names and date of 
birth and that sort of thing, and biometric watch list. The 
name-based watch list is now consolidated at the terror 
screening center so that was a problem pre-September 11, now 
fixed.
    Biometric watch lists are still divided. Eventually they 
need to be consolidated. We spend billions of dollars trying to 
get terrorist identifying information. We need to use it. We 
need to use it at every possible opportunity. This expansion of 
screening against watch lists needs to be inside the United 
States primarily the Secretary of Homeland Security's job, and 
I urge you to encourage him to do that and to enable him to do 
it. Abroad, many officers are involved in it. He needs to 
assist.
    Third, the defining characteristic of the September 11 
attack was that al-Qaeda attacked a system in our midst that 
was inherently dangerous that we had become complacent about--
airplanes--and was able to have catastrophic secondary effects 
on that attack. We have now taken care of that. Airplanes are 
no longer in that category.
    Fortunately, there are a finite number of other such 
targets that are in that category. One, in my judgment stands 
out above the rest as uniquely dangerous and acutely 
vulnerable, and that is hazardous chemicals, in particular 
toxic-by-inhalation chemicals, ammonium, methyl bromine, 
phosgene, and chlorine.
    These are basically World War I era chemical weapons which 
we move through our cities in extraordinary large quantities 
and quite low security. I am sorry to say since September 11, 
we have essentially done nothing in this area and made no 
material reduction in the inherent vulnerability of our 
chemical sector. If a terrorist were to attack that sector, 
there is the potential for casualties on the scale or in excess 
of September 11. I hope it does not happen, but it is just a 
fact that this is the case.
    This needs to be the next big push in critical 
infrastructure protection. The Executive Branch has the 
authority to regulate this area when it is in transport, when 
it is being transported. It needs no new statutory authority 
there. It just needs executive action.
    We do need new statutory authority if we are going to take 
care of the facilities because we cannot currently regulate the 
facilities, but we can if it is in transport. It is my biggest 
single concern for critical infrastructure protection. It is 
the one target which I think fits exactly into what Senator 
Domenici said, priorities. This should be the highest priority. 
The other ones do not matter nearly as much. This one does.
    Fourth, we have made great progress on securing our air 
transportation system, substantial progress securing our 
maritime transportation system, very little on ground 
transportation systems, very little on rails, mass transit 
systems, trains and trucks. There is no silver bullet. There is 
nothing we can do, but we need a coherent program to deal with 
these vulnerabilities. It will involve some combination of 
access control sensors, telematic tracking, and geo-fences. 
There are things to be done. We need a push there. DHS needs to 
lead it.
    Finally, and I apologize, terrorism insurance. The 
Terrorism Insurance Act will expire this year. Primary insurers 
have dropped terrorism insurance from their general commercial 
policies and so now there is basically no buildings in all of 
America that are ensured against terrorism risk. We should 
reauthorize the Terrorism Insurance Act and mandate that all 
general commercial insurance policies include terrorism risk 
coverage.
    Thank you very much for your attention and I am happy to 
take any questions.
    Chairman Collins. Thank you for your testimony and thank 
you all for excellent statements. Dr. Flynn, you made a very 
good point in your comments about the legacy problems that some 
agencies brought to the new Department. The Coast Guard despite 
the strong support of many of us here had been underfunded for 
years. The INS was possibly one of the worst managed agencies 
in the Federal Government. And those problems did not disappear 
when the new Department was created.
    The Department has, however, now been in existence for 
almost 2 years. Looking at the record of the Department and 
evaluating its success and integrating the various components 
and pursuing policies to make us safer, what overall grade 
would you give the Department if you had to assign a grade to 
it?
    Mr. Flynn. I was always a hard marker. My students 
complained about it. Again, one thing I highlight in my written 
testimony here, the people who are in Nebraska Avenue working 
these problems are the most selfless hardworking people in this 
town. But I think because of the reasons of what I lay out here 
I think we are in a C minus kind of state right now, and again 
it would be almost impossible not to be given the challenges 
that are confronting them, but this is a war on terror.
    We are treating the overseas dimension of this with a 
tremendous level of urgency and with a real commitment of 
resources and we are treating this a bit like we are going 
through Social Security reform stuff. It is like an ongoing 
process, better government kind of thing, and I do not think we 
are adapting to the nature of warfare moving in this direction.
    It clearly has worked, when we first deliberated this in 
the Hart-Rudman Commission about the need for consolidation, it 
was really because the parent agencies were not very good 
advocates for particularly the security mission, but often most 
of the other missions of these particular departments, whether 
it was Customs at Treasury or INS at Justice or Coast Guard at 
DOT, particularly. I think the Secretary has been an enormously 
strong advocate for his organization, but he clashes with other 
competing budget priorities and his issues are not looked at in 
the same budget column, of course, of our national security 
investments are made.
    His are looked at vis-a-vis other domestic priorities, and 
if we are saying that the nature of warfare has changed and 
that line has blurred, then I think we really need to look 
hard. Is another weapon system vis-a-vis what needs to be 
recapitalization of the Coast Guard? How do we have that 
conversation right now because clearly there is security value 
to both, but how do we carry on the conversations of inevitable 
tradeoffs of the setting of priorities?
    Chairman Collins. Dr. Falkenrath, you have a different 
vantage point. What overall grade would you give the Department 
for its first 2 years?
    Mr. Falkenrath. Well, I, too, was a very hard grader when I 
was on the faculty and I would give it an incomplete. I do not 
think I would give it a grade. It depends what the curve is. 
And here, whose curve do you want to use? There is a lot more 
to be done. No question about it, but a lot has been done as 
well.
    And if you want to look at the glass half full or half 
empty is sort of perspective. I think half empty tells us all 
the things that still need to be done.
    Chairman Collins. Let me ask you this then. If you look 
over the Department's record, what would you say has been its 
greatest accomplishment during the past 2 years and what do you 
think has been its most disappointing failure?
    Mr. Falkenrath. The greatest accomplishment, I think, is to 
create a presence and an entity to which we can give missions 
that previously did not have homes. So we now have a place to 
go and say we need a domestic protection plan for America as we 
go to war with Iraq. Before we did not have anywhere to do 
that. We now have a Cabinet Secretary who wakes up every 
morning with vast authority who has security in his job title 
and knows his job is to advance this cause whenever he had the 
opportunity.
    Previously to September 11, we did not have that. We, at 
the White House, could go to a place and say we need to develop 
a plan to deal with problem X, which previously did not fit 
into any coherent boundaries, and so that now exists and I 
think it is a major accomplishment that they became responsive 
to those sort of unconventional requests.
    The major disappointment--there are a number of them that I 
have. I think it is the third thing that I mentioned, which is 
the chemical security system. We took a lot of action to secure 
air transportation systems, we have done a bit on ports, and 
containers. I think this one stands out as an enormous 
vulnerability that we had the authority to address. It exists 
already, at least for transportation, and we failed to do so. I 
certainly take some responsibility for that.
    Chairman Collins. Dr. Carafano, same question for you. 
Greatest accomplishment of the Department in the last 2 years 
and most disappointing failure?
    Mr. Carafano. I think the grading question is actually the 
greatest question, and the reason for that is because you can 
not give the Department a grade because there are lots of 
things going on in the Department, some of them going extremely 
well, and some of them going extremely poorly, so if you give a 
grade of C minus, that is an average of 15 different things, 
and that is exactly the point. The Department is not moving 
forward as a coherent entity. It is moving forward as a bunch 
of individual programs.
    Basically what we have done is create four demi-departments 
who are moving along at various different stages depending upon 
how they are run and how they are organized and how they are 
funded. The biggest problem is the inability to answer the 
question of where do I get the biggest bang for the buck? If I 
have 5 bucks to invest tomorrow, where I can invest it and get 
the most security? The Department cannot answer that question. 
The great success, of course, is that we have created the 
Department. It is a place full of absolutely wonderful men and 
women who work very hard every day to make us safe, and I love 
them all dearly, and they are doing a terrific job.
    But they need to be able to do their job more efficiently 
and effectively and they need as a coherent body to be able to 
answer the question. If we have $10 to invest tomorrow, explain 
to me how I can make this investment and get the most for the 
$10 I am investing, and they simply cannot do that right now.
    Chairman Collins. Senator Lieberman.
    Senator Lieberman. Thanks, Madam Chairman. I apologize to 
the witnesses whose testimony I missed. I had to go to the 
floor, but I have read most of them and will read the rest. 
Chairman Collins asked you to grade the Department. I want to 
in some sense ask you what you think the plans for the next 
semester should be, which is to say that Judge Chertoff is 
going to be coming before the Committee soon, nominee for 
Secretary of the Department of Homeland Security.
    I want to ask each of you, if you were coming before us as 
the nominee, knowing all that you know about the Department, 
what would be your top two priorities that you would state to 
us? Mr. Skinner.
    Mr. Skinner. The new Secretary certainly is going to have 
many challenges. I think the most important thing that he is 
going to have to address, though, is reaching a consensus among 
all the elements within the Department, each with their own set 
of priorities and each competing for the limited resources that 
are provided the Department of Homeland Security, on exactly 
what are the department-wide priorities, what do we want to 
accomplish this year, what we want to accomplish in 5 years, 
with the resources that we know that we have available.
    Now this is going to require development of a strategic 
plan. I know the Department has a strategic plan, but I am 
talking about an operational plan that is developed at the 
highest level, possibly under an Under Secretary of Planning 
and Policy as the Heritage Foundation has suggested, but 
somewhere at that level, a plan that clearly sets forth what 
the priorities are, a plan that clearly articulates what our 
goals are.
    Senator Lieberman. Right.
    Mr. Skinner. A plan that specifies the costs associated 
with the goals, with milestones, that is time frames when 
should we attain those goals, with performance measures and 
related evaluation tools, so that we can gauge progress and so 
that we can assign accountability.
    Senator Lieberman. I appreciate the answer. In some sense 
it is a response to what Senator Domenici asked earlier which 
is we cannot do it all, but----
    Mr. Skinner. Yes.
    Senator Lieberman. And we know that. We cannot cover every 
risk, but we need the Department to help us with a plan that 
sets priorities, and the plan that they have now which was 
adopted in I believe 2002 is very vague and lacks any 
specifics. Dr. Carafano, what would your top two priorities be?
    Mr. Carafano. Well, first, I would create a management 
structure that would allow the Secretary to impose his will on 
the Department much in the way the Secretary of Defense can 
impose his will on the Department of Defense to make it do what 
he wants.
    The second thing I would do is create that strategic vision 
of where do you want the Department to be in 5 years, and what 
do you want it to be doing, and then I would use that vision to 
drive my resourcing and organizational decisions.
    Senator Lieberman. So statutorily now, you think the 
Secretary of Homeland Security is weaker than he ought to be?
    Mr. Carafano. Absolutely in terms of his ability to create 
and disassemble under secretaries. I think he needs authority 
to do that because I think there is some movement there. I 
think in the Chief Operating Officer realm, I think there is 
sufficient legislative authority now for him to coalesce more 
power under the Chief Operating Officer and to create more 
authority under the deputy, and I would urge him to do that and 
not wait for legislative, although you could see where creating 
a Chief Operating Officer legislative authority in the 
Department that would permanently be there, I do not think 
would necessarily be a bad thing.
    Senator Lieberman. Thank you. Mr. Wermuth.
    Mr. Wermuth. You were not here for Richard Falkenrath's 
statement but it picks up on the point that Jim Carafano was 
just making. Clearly, the Secretary, if the Secretary were here 
asking this Committee what it could do to help, this capability 
and authority to do some reorganizational structure, whether it 
is the Under Secretary for Policy and Planning that some of us 
have recommended or some of these other things that Jim was 
talking about.
    That is the first one. More authority to do things on his 
own as he sees priorities unfolding and then not to sound like 
a broken record, but on another point that I strongly agree 
with Richard Falkenrath about and I mentioned in my statement, 
that Congress provide a single source oversight and 
authorization authority for the Secretary to come to, and I 
know this Committee is making great strides in that direction, 
but even this Committee does not yet have authority over all of 
the programs and processes of the Department of Homeland 
Security.
    Senator Lieberman. Thank you. I think maybe CSIS and 
Heritage did a chart of the various committees involved in 
homeland security and it compares with the legendary Arlen 
Specter chart on health care in America and we ought to blow it 
up at some point for interest. Dr. Flynn.
    Mr. Flynn. Senator, I think there are two things that I 
would put on top of his list. One is to deal with the issue of 
complacency. I mean it really is the focal point in the U.S. 
Government to remind the American people about the ongoing 
threat that confronts us and the need for us all to work 
together as a collective society and work towards that, and 
that sort of public function I think he has to really make sure 
he continues to play the role that Secretary Ridge, I think, 
provided a very fine example of how you try to do that.
    The second one is, I think, he simply has to come in and 
ask his organization and push across the U.S. Government, let 
us assume there is a bump in the night. A lot of the thinking 
that permeates the Department is if we have an event, we have 
failed. I think we have to act more grown-up than this. Our 
intelligence services are just not up to speed to give us a 
level of tactical information that is going to give us the 
threat-based with managed approach we are taking today. It will 
probably be a decade or so. Thanks to your law, we will get 
there probably in a decade.
    This is a long time coming. You do not throw a switch and 
get the human intelligence to probe these networks and so 
forth. So we will not have the advanced warning likely to 
prevent these. So I think the thing that can help drive change 
is you say what if this goes off, what is your plan, and force 
the players to see. That is what brings them together.
    And just a quick example of that: We have a plan to close 
all our seaports and our borders should we have an incident 
involving a dirty bomb or something worse in our society. But 
the Federal Government today still does not have a plan how to 
turn them back on. They have not sat down and played it out how 
to do that. Well, trying to do that in a crisis, that can be 
done. That is not a cost issue. That is a planning and focus 
issue, but as soon as you begin that process of saying how do 
we turn it back on, you get people--the light bulbs go on, why 
we have to communicate, why we have to set the priorities, and 
the rest of it. So forcing the folks to really confront the 
reality of this threat and play back from it is something that 
I think could be very constructive.
    Senator Lieberman. Thank you very much. I am over time, but 
Dr. Falkenrath, would you give me a brief response?
    Mr. Falkenrath. Sure. Most of the important things that 
need to be done are outside of his direct unilateral ability to 
make happen, so people--all the under secretaries and the 
assistant secretaries--need to be appointed. He does not select 
them. The President does, and they are confirmed by the Senate.
    Budget. It is decided by OMB, passed by the appropriators. 
Relationship with other Cabinet agencies, subject to the will 
of the other Cabinet agencies. Relationships with authorizing 
committees subject to the structure of the--within his domain, 
two most important things: Chemical security, as I talked 
about, and expansion of terrorist watch list screening.
    Senator Lieberman. Thank you. Thank you all. It has been 
extremely helpful.
    Chairman Collins. Thank you. Senator Stevens.

              OPENING STATEMENT OF SENATOR STEVENS

    Senator Stevens. Well, I am glad I came to listen to this 
panel. I am not sure but what you ought to listen to 
yourselves. Having been through 7\1/2\ years now of being 
Chairman of the Appropriations Committee and reviewing all the 
money that is spent by the United States on a discretionary 
basis, what I am hearing is more and more of the Federal 
Government ought to be in homeland security.
    Homeland security affects every single agency in the 
government and you seem to be saying more staff in the 
Department of Homeland Security. We would much rather see them 
cooperate with the people who are out there now that know what 
they are doing. Should we put all the Department of Agriculture 
into Homeland Security because of the problem about importation 
of beef or importation of various substances?
    Should we follow through in terms of this chemical problem 
which is a vast problem and travel, put more and more authority 
in the Department of Homeland Security or all interstate 
transportation or anything that is hazardous?
    Now, guys, I think you ought to settle back. You should 
have been through World War II. The people of this country 
jumped in and lot more people got involved from the grassroots 
and made the thing work very quickly. You seem to think 
everything has to come to Washington and be in Homeland 
Security in order to make this country secure.
    I would urge that you go back and think a little bit more. 
You are all very brilliant men, but we have a government that 
is involved in AIDS, now $15 billion in 5 years; in the 
tsunami, we are spending more than 50 percent of the money is 
being spent on that tsunami out there.
    We have got more and more problems as far as terrorism in 
Indonesia, Philippines, etc. Money outside the Department of 
Defense and outside of Homeland Security is being spent over 
there in ways that you probably do not even know. I think Mr. 
Wermuth may. But as a practical matter, homeland security ought 
to be a concept that every single individual in the United 
States is part of.
    And you are not going to do it by bringing it all to 
Washington and putting them in a new agency called Homeland 
Security. I hope that we can plan to diversify this agency and 
have it be the advisors to every entity in the government, 
whether it is the local police or the local fire department or 
the county sheriff or the FBI.
    Now, this problem, each one of you has mentioned more 
money. Mr. Skinner, you did. I can tell you Homeland Security 
has had as much money as we could possibly afford in the period 
since September 11. More money than anyone ever thought they 
would get. And to have you tell us now that we have to have 
more money, I do not think is going to be there, and I urge you 
to help us find ways to do the money, use the money we have got 
to improve the system. And part of this jurisdiction is down in 
Commerce, by the way, and I understand what you are saying.
    You seem to think that it ought to come here because we 
have jurisdiction of all transportation. Why should we have 
to--we will still have jurisdiction over transportation, but 
this Committee wants jurisdiction over transportation security. 
Can you split the line and tell me where it stops? Where is the 
problem about transportation and the problem of transportation 
security?
    And the same thing exists throughout our system here. All 
the committees of this Congress have jurisdiction over entities 
that this Committee, that I am privileged to serve on, is 
involved with, too. I think you should help us find ways to 
coordinate the existing functions of government, where the 
money is already, and not say let us bring more of it out of 
those entities and put into Homeland Security to make sure we 
have enough money there.
    I would be happy to visit with any of you along those lines 
privately personally, but I do not think there is going to be 
more money. Matter of fact, I know there is not going to be 
more money. [Laughter.]
    So I would urge you to review your situation from the point 
of view how we can get the job done better with the money that 
is there now? Thank you very much.
    Chairman Collins. Senator Warner.
    Senator Warner. Well, as my distinguished senior colleague 
is leaving, I think we have to find a midpoint for this 
pendulum. Mr. Flynn brought it home to me. I was once an under 
secretary of a department of the government and had well over 
100 on my staff alone.
    I think we have to consider--first, I think Tom Ridge ought 
to get an A for effort. He has tried hard with what he has done 
and his team. But, folks, I think only by the grace of God have 
we been spared another attack here at home, and we cannot allow 
these expenditures to be directed in other areas without 
thinking, first and foremost, of our own security.
    So I come somewhere between my dear friend and colleague of 
many years--a quarter of a century--here in the Senate, Senator 
Stevens, and I think we have to augment. But to a couple of a 
specific questions, we are likely to be faced in this Congress 
with a decision of a national ID card. Is this an agenda item 
the new Secretary ought to put on and begin to address? It is a 
divisive issue I want to think through very carefully. I 
frankly lean towards--I have not any reluctance--but I think 
the voices of those who do should be heard. But it is an 
important part of our security.
    Do you have a view on that?
    Mr. Falkenrath. Yes, Senator, a national ID card is 
typically a mandatory card that the national government says 
every citizen must have and I do not think that is necessary 
here.
    Senator Warner. You do not think what?
    Mr. Falkenrath. I do not think that is necessary here. What 
is, I think, necessary and prudent, would be standards, a 
national standard for secure identification that would be 
voluntary and that any provider of identification documents 
could build to if they met the proper standards.
    Senator Warner. I think that is a very interesting idea. I 
would then turn to Mr. Flynn. You, I think, were right on 
target with your thoughts that we have to bring all of our 
assets to this Nation, but the military, active duty military 
and the homeland first responders to work together as a team. 
They are doing it now. It has got to be strengthened, but there 
is this famous old law, posse comitatus. I do not know whether 
you have ever studied the history, but it emanated from, I 
think, Grant trying to send some Federal people down to monitor 
an election in the South in the 1860's or something like that, 
and it has been very rigid. Does this need reexamination in the 
light of this allocation of responsibilities?
    Mr. Flynn. I think Michael Wermuth can probably speak most 
directly because of his experience at the Defense Department at 
the time when this was being worked on the drug war. I think 
there is enough wiggle room in it right now that it does not 
require us to make too much of an issue of it.
    The real issue is the Department of Defense has basically 
said homeland defense is when the threat comes outside. Then 
they take the lead role and then preparing for that 
contingency. But everything we know about this adversary is 
that they are going to try to blend in. They are going to look 
like a passenger. They are going to look like an operator and 
so forth.
    So the challenge here is really how does the Department of 
Defense get more engaged in the ongoing efforts with the 
Homeland Security to talk to the first responders, and do it in 
a real collaborative way, not that we have got a mission, DHS, 
you have got a mission.
    Senator Warner. Did you wish to make a comment, Mr. 
Wermuth, on the posse comitatus?
    Mr. Wermuth. I would certainly agree that there is not a 
lot that needs to be done in terms of authority for the 
Department to be able to do significant things. We have got the 
Stafford Act, which not only authorizes the military to be used 
for natural disasters, but little known in the Stafford Act is 
also the capability to use the military in the event of an 
intentionally perpetrated attack. We have got the insurrection 
statutes. We have got two very specific statutes, one dealing 
with chemical and biological terrorism, another dealing with 
nuclear terrorism in Title 10, Section 382 in one case, in 
Title 18, Section 831 in another. So there is plenty of 
authority there.
    We just need to do what I think you were suggesting, what 
Steve has also suggested. And articulate that more clearly so 
that we understand the roles and missions of the Department of 
Defense juxtaposed with the Department of Homeland Security so 
that everybody knows when and where those capabilities and 
authorities will be used.
    Senator Warner. Thank you. One of the principal inducements 
for me to join this Committee was, of course, first and 
foremost to work to get the maximum effect of both our forces 
abroad and the forces at home.
    But I am privileged in my State to have one of the largest 
ports in America, Norfolk. And this issue of port security, 
where on the scale of resolving some of this, who is the expert 
on this? Because just start with this, what appears to be an 
insoluble problem, of what is the 8 million containers, what is 
the statistic a day that will land on our shores?
    Mr. Flynn. It is just about 20,000, about 9 million that 
came in last year, up to 30 tons of material per container. The 
basic challenge, Senator, is that I think we are really 
struggling to adapt to it. We have a process right now that if 
we target a container we want to look at, we now have the means 
to check it.
    Believe it or not, on September 11 we could not do that. 
There wasn't gamma X-ray equipment in any of our seaports but 
one in Fort Lauderdale looking for stolen cars going out of the 
country. And we just did not have the manpower and resources. 
So we have made a big step forward with that.
    The problem is that the intelligence that underpins our 
targeting is very frail because the quality of the manifests 
and so forth, and we are basically taking on 95 percent of the 
universe as low risk. I worry about for this adversary, if they 
spent 3 years acquiring a weapon of mass destruction, they will 
game out who we have defined as a low risk universe, and it 
turns out not to be rocket science.
    They have things like Wal-Mart and Ford and GM written on 
them. And in that universe if something happens, the real risk 
is not that it will just get into the streets of Norfolk but 
the whole rest of the system would be contaminated. If it came 
from the 95 percent low risk, every mayor and governor would 
see every container as a high risk. In 2 weeks, we would shut 
down the global trade system.
    So along with the chemical industry, that is a huge one for 
loss of life. Is our global manufacturing and retailing sector 
an incident away, potentially, from a real problem?
    Senator Warner. Thank you very much. I thank the Chairman. 
I just conclude by saying in the misfortune of another 
incident, this Committee will be held accountable for whether 
or not we did provide adequate funding for the various 
responsibilities. I want to give the support to the Chairman 
and the Ranking Member to achieve those dollars that are 
necessary.
    Chairman Collins. Thank you. I would note that both the 
Chairman and the Ranking Member held a hearing on port security 
last year. We do expect to do more work in that area. I think 
it is our greatest vulnerability.
    I would note that we have less than 5 minutes left in the 
vote. I would inform Senator Coburn that unlike the House we do 
not end votes on time. So I think there is time for you to 
question. I am going to go vote and I would ask you to put the 
hearing in recess after your questions, and I will get a full 
report on what you asked. And we will come back and allow any 
other Members who wish to come back to question and plus you 
will be shocked to know I have a few more for you as well. So 
thank you.
    Senator Coburn. Thank you, Madam Chairman. I am sorry I 
missed some of your testimony. One of the things that strikes 
me--and if I missed this in your testimony, please bring it 
forward--but individuals talked about the Visa Waiver Program 
and substitute visas and port security and chemical risk.
    But nobody is really focusing on our borders where millions 
of people come through illegally every year. You can do all you 
want on ports and you can do all you want on chemicals. But if 
you do not stop the transient crossing of the borders where we 
do not see them, where we do not stop them--or we have made the 
effort to make the difference, for we impact people who are 
coming across the border--why would you come through on a false 
visa when you can walk across either the northern or southern 
border almost without harm?
    Do we have the technology to control our borders and what 
do we see happening on that to truly control our borders? 
Because we can do all these other things, every other 
interface. But I cannot imagine, my imagination of some 
chemical or some biological weapon coming into this country is 
not through one of our ports. It is coming across on somebody's 
shoulder walking across either the northern or southern border 
of this country, and anybody that would like to answer that, I 
would love to hear.
    Mr. Flynn. Well, Senator, I spent--before I got to 
September 11--I had a 2-year project where I essentially went 
along our borders, both in the Southwest border and the 
Canadian border and also visited our seaports asking front-line 
agents basically how you filter in the bad from the good given 
the volume and velocity.
    And the short answer was we are not. At the ports of entry, 
we are just facing a tidal wave without the capacity. And the 
in between spots, particularly on the U.S.-Canadian border, we 
are talking a total of 300 Border Patrol agents that were then 
working there. That is about 1 every 5 miles. It is a challenge 
to think about in the broader context.
    My basic conclusion was that you certainly need border 
capability, but it has to be just one of the layers and levers. 
What we really have, at least I think the opportunity in the 
North American context, is we have certainly a friendly 
neighbor to the north. The real threats are likely to emanate 
from outside the hemisphere. So it becomes important to think 
about the level of cooperation and intelligence sharing that 
you have with RCMP and other players on that side and 
development in Mexico.
    We have got to put that in the context. The port of entry 
issue is about facilitating legitimate trade and travel. There 
is no issue on frontiers, the in between places, except for 
resources, if you want to police it. It is obviously a daunting 
challenge with 5,000 miles of real estate, a third of it water 
on the northeast, to think it would get adequately controlled. 
I started my career as a Coast Guard officer trying to patrol 
our coastline, and it is a huge task to imagine we have the 
means without tremendous resources.
    Some tools are available, the UIVs and other kinds of 
stuff, but without the intelligence to decide where to look, 
there is a move afoot to say, well, let us monitor all the 
small vessels that are moving in our waters. Well, there are 6 
million of them on the Great Lakes, 2 million Canadian, 4 
million American. On a busy holiday weekend, there may be 2 
million out there.
    So monitoring with technology 2 million blips does not 
probably give you a whole lot of capability. You need the gum 
shoe, the guy who is out there seeing so many fish where there 
is no fish, and you need to have an intelligence apparatus.
    So we certainly see at the border a real set of challenges, 
but most of those challenges emanate from beyond that border. 
We need a layer there. We need to push out and think and I 
think that is something that the Administration should be 
applauded on is the extent to which they recognize that we need 
a strategic depth and be able to work their way through that.
    Senator Coburn. Dr. Carafano.
    Mr. Carafano. If your goal is to reduce illegal entry and 
unlawful presence in the United States, you have to have a 
comprehensive solution that addresses internal enforcement, 
border security, and your relations with Latin America. And the 
point I will come back to, again from the report, is the 
Department of Homeland Security simply lacks the structure to 
create an efficient strategy to implement those three legs and 
effectively allocate resources against those three legs. And 
you have to do all three. Otherwise, it is really like trying 
to bail out the bottomless boat. I mean if you put resources 
into one without addressing the other two, then the problem 
simply will move other places.
    Senator Coburn. OK. Anybody else? Well, the Committee will 
stand in recess until after the vote.
    [Recess.]
    Chairman Collins. The Committee will come back to order. 
Mr. Skinner, I want to ask your opinion of a very interesting 
recommendation that is in the CSIS and Heritage Foundation 
report concerning the potential merger or recommendation to 
merge the Customs and Border Protection agencies with ICE, 
Immigration and Customs Enforcement.
    The testimony of Dr. Carafano makes the case that it would 
bring together under one roof all of the tools of affected 
border and immigration enforcement--inspectors, border patrol 
agents, special agents, detention and removal officers, and 
intelligence analysts, and realize the objective of creating a 
single border and immigration enforcement agency.
    When I was in Los Angeles recently, I was very interested 
in the favorable reaction to this proposal among law 
enforcement officials from several different levels of 
government and different agencies including the FBI agent-in-
charge, the sheriff of LA county, the director of the terrorist 
early warning center. All of them saw advantages from their 
perspectives in having this merger.
    As someone who has studied the Department closely, what 
would your recommendation be? Do you think this is a good idea 
or not?
    Mr. Skinner. First, I would just like to point out we have 
not really studied the implications of such a recommendation so 
we cannot offer an informed opinion as to whether such a merger 
would be worthwhile or not.
    I would caution, however, because we are in our infant 
stages, the Department is in its infant stages, and to 
reorganize again, in an area such as CBP and ICE, for example, 
may do more harm than good, but again that is just pure 
speculation on my part. It is something that I think should be 
studied very carefully as to what the impact would be on 
operations up and down the chain before a decision is made to 
do something to that effect.
    Chairman Collins. Dr. Carafano, I discussed your resolution 
recently with a high level official at the Department because I 
am very intrigued by it and also because it did receive such a 
positive response from these law enforcement officials in 
California. He expressed to me the concern that it would have a 
very negative impact on employee morale if the two agencies 
were to be merged into one. What is your response to that?
    Mr. Carafano. Well, I think that we are going to find all 
kinds of good reasons not to do something. I mean you really 
cannot counsel your fears. You have to have a vision of where 
you want to go. I really think that needs to be the driving 
force. I mean we need to decide how we want to do border and 
transportation security in this country and once we have 
reached that goal, then we need to structure to get there. This 
is very similar to the debate we had about should we split off 
and have a separate Air Force from the Army. It was based in 
large part on a vision of where warfare is going to be in the 
21st Century, and the answer was, well, air power is going to 
be such a significant function, a domain, that it necessitates 
being its own separate identity.
    And we live with the grace that people made that correct 
decision. I think we need to take the same intellectual energy 
to this. We need to take counsel of our fears and say where do 
we want to be in 5 years, and then let that drive our decision.
    Chairman Collins. Mr. Wermuth, you mentioned that you 
thought that this should be studied more thoroughly. Is that 
something the RAND Corporation could undertake or how would you 
suggest that we determine whether this is a good idea?
    Mr. Wermuth. Well, without giving the Committee an 
advertisement for the work of the RAND Corporation, certainly 
we and others have done this in different contexts for some of 
our defense clients as well as for other government agencies.
    But without further study, I tried to highlight in my 
testimony the potential that with the different skill sets 
involved in inspectors at border ports of entry, and law 
enforcement people who actually go out and arrest folks, with 
those differences in skill sets, the recruiting and retention 
that backs that up, the training that applies differently to 
those different kinds of skill sets, without looking at that 
more closely, as I said, we are not yet convinced that the 
merger of those two is an essential requirement at this point.
    And I used the analogy in the written testimony, in the 
military we have combat forces and we have combat support and 
combat service support forces. The skill sets are different. 
The training regimes are different. The recruiting and 
retention methods are different. The professional development 
to a very great extent in those two different kinds of 
functions is different.
    We think that the same might apply. That is not to say this 
may not be the solution when you really dig into it and 
consider all those issues and balance the advantages or 
disadvantages of one particular structure or not. We just 
happen to think that it needs a great deal more attention and 
that is not to take anything away from the great work these 
guys did sitting around and based on their own great wealth of 
experience come up with some potential pathways ahead. We just 
think it needs more study.
    Chairman Collins. Dr. Flynn, you have a lot of experience 
in this area. Do you think merging those two agencies would 
improve the operation of the Department?
    Mr. Flynn. It is a bit like, I think, where we were on 
September 11 when we first talked about merging. I cannot 
imagine how things would be any worse. I mean ICE is in a total 
disarray, and I do not know how it could be more demoralized 
than it is right now. It is an agency in search of a mission. 
But when I think functionally, and I go back to the Hart-Rudman 
rubbing which was about the course of national security in the 
21st Century, the commissioners could have talked about how to 
reconfigure the national security establish to handle these 
threats.
    What they recognized, though, was it was the non-military 
elements of these agencies that often gave them the particular 
skill set to deal with this kind of adversary. It was their 
regulatory role, their enforcement role, the relationships that 
gave them in these sectors that were critical, the Coast Guard 
is an illustration where you have both regulatory enforcement 
and military all in one organization, and you get a lot of 
value from that.
    If you tried to break that up in the maritime arena, it 
would be very dysfunctional and very expensive to try to 
achieve it. I think we went in the wrong direction separating 
ICE from the Customs Service initially, primarily the 
immigration enforcement arm, because the intelligence, the 
incidence of criminality helps you set your framework for the 
risk analysis that is being done on your prevention and front-
line players' expertise there.
    And they, in turn--the enforcement folks--often need the 
leverage of the regulatory player to create the incentives. 
Wal-Mart plays by rules as other good companies do, not because 
of fear of criminal investigations. They happen very rarely and 
the fines are not that big and so forth. The driver is the 
regulatory arm of that agency that says if you do not behave 
this way, we might have to slow things down, and so you really 
want that all, I think, under one roof versus separated from 
it. It is where it used to be. Of course, we are merging both 
Immigration and Customs but as we know with Immigration, we 
could not make things worse there.
    But this decision to parse off I do not think was well 
considered. ICE is just not a functional entity today. That is 
what I hear from U.S. attorneys. It is what I see when I go out 
and talk to seaports and so forth. Nobody knows what their job 
is.
    Chairman Collins. Dr. Falkenrath, what is your opinion of 
that recommendation?
    Mr. Falkenrath. I would not support it. First, I am not 
sure what problem it is trying to solve. There are serious 
problems in ICE. I agree with Steve. It is a troubled agency 
and has a lot of work still to do. There are some problems at 
CBP also. There are some problems within BTS also with the 
relationship with TSA. I am not sure what this reorganization 
solves.
    Second, I think by doing it, you create new performance 
problems in the near term and you should give these agencies 
the opportunity to complete the reorganization they have been 
set to do and so forth. But the two most important reasons are, 
I think, the missions hang together pretty well as currently 
configured. CBP is our face to the traveling public and to the 
trade. And they enforce many different statutes and many 
different regulations at the border. And it is a law 
enforcement function, but it is one that deals with an enormous 
throughput every day.
    ICE are investigators, mostly 1811s, mostly undercover. 
They can get Federal wiretaps. They are part of the JTTFs. They 
are part of our drug task force that deal with things, and they 
run investigations against criminal behavior across borders, in 
the United States or in some cases abroad. Their core 
relationships are not with the traveling public or with the 
trade. It is with other Federal law enforcement agencies like 
the Secret Service or ATF or DEA or FBI.
    So I actually think they hang together pretty well, and 
their missions are sufficiently distinct to justify the current 
configuration. Oddly, I think the bigger problem within BTS is 
between CBP and TSA, where there is a serious seam and a sort 
of dysfunctionality. Look at an international airport. You have 
on the top floor TSA screeners screening people going in. And 
on the bottom floor, you have CBP screeners screening people 
coming out. They both work for the Secretary of Homeland 
Security, but they have completely different backroom support 
structures.
    That is where I would rather see integration, where we 
could save some money, get a little more flexibility. Both of 
them have targeting systems. TSA has the Office of National 
Risk Assessment. CBP has the National Targeting Center. They do 
basically the exact same thing. They have different 
contractors, different methods. ONRA has taken more out of the 
box approach and has gotten off the ground much more slowly. 
NTC is working right now today. They really should not be 
separate. They should be merged.
    Chairman Collins. Dr. Carafano.
    Mr. Carafano. I would just like to add one follow-up point.
    Chairman Collins. That would be helpful.
    Mr. Carafano. I do think we have to recognize that 
organization is really--and I am not saying that, again, 
merging this is necessarily absolutely the right answer, but 
all we have done is trade one set of problems for another. 
Before border inspectors and special agents worked together in 
one agency and that seemed very effective. The problem was that 
we split people from goods. Now, all we have done is created a 
new seam. Now, all the border inspectors work together, but all 
of a sudden somehow it is not appropriate for those people to 
work with investigators anymore.
    So I do not know, I do not understand the advantage of what 
we have done, and I do agree with both Mike and Richard. I do 
think that this does require careful study, but I think the 
presumption that this is any better off than we have had before 
is certainly wrong, and I certainly agree with Stephen's point 
that these are agencies which are deeply troubled and I do not 
think we should just leave them alone and assume they are just 
going to get better.
    Chairman Collins. Mr. Skinner, we clearly have differing 
views on the desirability of this merger, and I would like to 
ask you as the Acting IG to do a study of this issue and report 
back to the Committee, say, in 3 months or if that is too 
aggressive, maybe we would give you a little bit longer.
    We do hope ultimately to do an authorization bill. For 
example, we have heard today about the desirability and there 
seemed to be unanimity on the need for an Under Secretary for 
Policy, and there are other changes that would require legal 
revisions, so it would be very helpful for us, and I would ask 
you to undertake that task to assist the Committee.
    Mr. Skinner. Madam Chairman, we will be happy to do that, 
and if I can I'll work with your staff so that we can set some 
time frames and milestones to report back to you.
    Chairman Collins. That would be great. Thank you. Senator 
Lieberman.
    Senator Lieberman. Thanks, Madam Chairman. Thanks to you, 
Mr. Skinner, for your response to the Chairman's request which 
I appreciate and support. Dr. Flynn, I wanted to ask you a 
question about critical infrastructure, 85 percent of which is 
owned by the private sector. I know you have really focused on 
this and in your book you talk some about it.
    There is a feeling, I think, among some people, maybe more 
than some, that the market forces that normally affect the 
private sector are essentially enough to get the private sector 
to do what it needs to do to protect itself and the country. I 
am talking about the critical infrastructure part of it.
    I know that you feel, I believe you feel otherwise, and I 
wanted you to talk about that distinction a bit and evaluate 
where you think the Department of Homeland Security is now in 
its interactions with the private sector in regard to homeland 
security?
    Mr. Flynn. Thank you very much, Senator. This is an issue 
that I probably find myself focusing the most on of late, 
taking that our adversary, the one we need to worry about the 
most, is interested in economic disruption, not just loss of 
life. Our critical infrastructure has clearly become their 
target and 85 percent of them are privately owned, and we are 
talking about how we create the incentives for that 
infrastructure to become more secure, again recognizing its 
baseline was it started off as open, low cost, efficient and 
reliable as those market drivers. Security was essentially 
pushed to the sidelines because there did not seem to be a 
threat that warranted making those investments.
    So now we are having to integrate it in, and we should be 
doing it with some level of urgency. The Administration has 
stated in its homeland security strategy that there is 
sufficient market incentive for the private sector to protect 
itself. The data though after 3 years is that there has been 
very little investment by the private sector, particularly in 
an industry like the chemical industry but also in areas like 
food supply and so forth.
    And I think the explanation for it is pretty 
straightforward. It is one I have talked with a number of CEOs 
about. And it is a tragedy of the commons problem. That is no 
single entity owns all of the critical infrastructure. And 
security is base line costs. If they therefore decide on their 
own to absorb those costs, protect their one element of it, it 
does not solve the problem because these folks will stake out 
the other players who are free-riders, exploit, but the whole 
infrastructure will be affected. There is also the practical 
issues. When it happens, Congress typically jumps in then, and 
the prescriptions may look different from the initial 
investments.
    And I also think there is a liability concern. There is an 
issue that it is very difficult for the private sector to 
define how much security is enough, because it is the ultimate 
public good. And the fear is unlike other things like quality 
control and so forth, we say we agree as a trade association 
this is sufficient security, and we have an event, and the 
post-mortem is it failed. It was not enough.
    Then there is some liability exposure. You acknowledged the 
threat but you did not do sufficient. Now the only way to 
vaccinate them from this is essentially when the public sector 
says that is a good judgment. We are willing to, knowing that 
this is a tradeoff issue, as we have been talking about all 
morning, we agree that that is an adequate level to achieve and 
we will hold the industry to it, so it is not a free-rider 
problem. The market playing field gets leveled.
    The challenge here is that this is not going to happen by 
just illustrating best practices because you are not affecting 
that structure and that has been the focus of the Department's 
approach to try to garner the best experiences and then share 
that with the private sector.
    The incentive structure is carrots and sticks typically. I 
think the issue is how do you form the standards? It has to be 
arrived at with their input because there are very few people 
in government who understand the sector sufficiently to make 
good calls about how much security is enough and what will work 
and not.
    I advocate a very ambitious plan, something modeled on the 
Federal Reserve System which I am calling the Federal Security 
Reserve System. Just like in the financial sector, we had to 
find a way in which we had common rules, but we allowed it to 
largely keep it apolitical, and we want to make sure the 
expertise was resident to make good decisions. We found a 
framework that basically allowed that private folks agree how 
to clear checks and set up rules, the government to bound the 
risks that if something went wrong, that we would not see the 
system failure historically with the panics that lead to the 
requirement for that Reserve System. We need to similarly adopt 
that, I think, kind of thinking into thinking about critical 
infrastructure.
    The role for the Department then would be the public face 
that would interact with those I would argue regionally based 
to nationally based to make sure that government sanctioning of 
that is a good call, and the information that comes out of the 
Justice Department or that comes out of DHS informed it. But we 
have got to think about a structure and we have to think about 
incentives. And what we have is almost 3 years of data that 
shows that investments, real investments, making a big 
difference on protecting what is the basis for our way of life 
and is the most likely target is, in fact, getting the kind of 
investment that we need to make ourselves a more secure, more 
resilient society when we face this threat.
    Senator Lieberman. Very important and leaves a lot for us 
to think about doing in this authorization. Mr. Wermuth, I 
share your concern that the existence of the Department of 
Homeland Security does not alleviate the need for 
intergovernmental coordination because there is obviously a lot 
of other agencies of the Federal Government and beyond that 
have to be involved that are not part of the Department of 
Homeland Security.
    There is, as you well know, the White House office dealing 
with homeland security. I wonder how you would assess the 
performance of that office, what it has or has not been able to 
do, and what if any recommendations you would make to the 
Committee about how to strengthen the office, if that is 
necessary, or to create some other entity to perform those 
intergovernmental outside of DHS functions?
    Mr. Wermuth. Thank you very much, Senator Lieberman, for 
the opportunity to address that, and I do some of that in 
greater detail in my testimony than I did in my oral remarks.
    Senator Lieberman. Right.
    Mr. Wermuth. And at the risk, of course, perhaps offending 
one of my colleagues at the table who was involved in that 
process, but I think Richard will agree, first, I mention 
things about just doing a better job of conceptualizing 
homeland security and explaining what that means. What is 
homeland security? Is it a subset of national security or is it 
something all out there by itself?
    What is homeland defense as a component of that? Is that a 
subset of homeland security? Is that more a subset of national 
security? We have the principal architect, of course, of the 
2002 National Strategy on Homeland Security sitting at this 
table, and we happen to think in evaluating that shortly after 
it came out that that was a very good start.
    It is now 2\1/2\ years old and unfortunately it still only 
talks about combating terrorism, and we now know that certainly 
in the case of the Department of Homeland Security there is 
more to what DHS does, natural disasters and a whole lot of 
other things, than just combating terrorists.
    So we have suggested, I suggested again in the testimony, 
that maybe it is now time to take a look at the national 
strategy for homeland security again and tie up some of these 
loose ends including such simple things as terminology, which 
we happen to feel very strongly about.
    In addition, suggested in the testimony and in other RAND 
publications that, perhaps understandably, the Homeland 
Security counsel staff and the White House has also been 
focused a little bit too much on current exigencies and not in 
that longer range strategic focus that we have talked about in 
terms of the Department itself. But in the case of the HSC 
staff and the White House, it clearly has a broader role.
    Senator Stevens, of course, is right in several of the 
things that he says. The Department of Homeland Security cannot 
be responsible for everything. There are important pieces 
elsewhere in government that have responsibilities for some 
elements of homeland security, lower case, if you will, rather 
than Department of Homeland Security, upper case.
    So there has got to be better strategic focus on the White 
House of bringing together all of those entities of the rest of 
the Federal Government and including some of our international 
considerations in the same way that we are suggesting that the 
Department itself needs to have a better strategic focus for 
its own operational elements.
    I would argue that it is time that the HSC staff now 
perhaps move beyond being involved in perhaps more of the day-
to-day operations of the Department and focus a little bit more 
on the strategic planning, the intergovernmental/interagency 
coordination functions that are called for here.
    Senator Lieberman. Thanks. Helpful answer. I am going to 
ask Dr. Carafano to comment on something that Dr. Flynn said 
and maybe he wants to respond, which is about the relationship 
between the Department of Homeland Security and the Department 
of Defense. His language was very good here. I thought he said 
the Pentagon has been keen to maintain its autonomy--we have 
seen that--by assigning itself the mission of homeland defense, 
which it defines as involving terrorist acts that emanate only 
from outside the United States.
    And then he goes on and makes some points, and basically 
says that the artificial line drawn between homeland defense 
and homeland security needs to be--in some ways it picks up on 
what Mr. Wermuth has just said--needs to be reexamined with an 
eye toward expanding the operational support role the DOD will 
play in carrying out DHS's mission. What do you think about 
that
    Mr. Carafano. I think Steve and I, exactly agree on that 
point. The creation of the term ``homeland defense'' was done 
by the Department of Defense so they could define what they 
want to do and what they did not want to do. It is an 
artificial line that has absolutely no utility as a doctrine or 
in terms of the deciding roles and missions.
    And they should really be forced to get rid of it and we 
should have a term which is homeland security. So I think Steve 
and I exactly agree on that point. I think there are three 
areas where the Department of Defense needs to be a much better 
team player. Maritime security is clearly one. There should not 
be a gap between what the Coast Guard does and what the 
Department of Defense does. It should be seamless and it should 
be complementary. It is not.
    Two is catastrophic terrorism. I mean no matter how much 
money we put in State and local governments, they are never 
going to have the capacity to deal with catastrophic terrorism, 
nor is it, and we are talking the tsunami style, tens of 
thousands of casualties, nor should they do that kind of 
investment. There is an appropriate, and Mike and I disagree on 
some of this, but there is an appropriate role here for the 
Department of Defense. They have always said that they will do 
that.
    The last thing I want to see is the Department of Defense 
figure out how they are going to do catastrophic terrorism on 
the day after the catastrophic terrorist attack.
    Senator Lieberman. Right.
    Mr. Carafano. We need structures and forces in place now 
that are designed to do this and do this well. I have argued in 
other places that if you built that kind of capability right in 
the National Guard that you would actually have a very useful 
force that could be useful for a range of homeland security 
missions and would also be very useful for post-conflict 
operations overseas and would also be used for theater support 
operations overseas.
    So if you had it large enough and organized correctly, it 
would actually be a multi-purpose force which would have a wide 
range of utility and would prepare us well for the day that we 
all do not want to think about.
    And then the third area really is in S&T. Quite frankly, 
there is just too much S&T going on in the Department of 
Defense which marries up very well, not in the specifics, but 
conceptually, and in terms of research and development and 
testing with what is being done, what needs to be done in 
homeland security. Weapons of mass destruction research, for 
example, is one classic example.
    The fact that they are not welded at the hip in terms of 
gaining the efficiencies of what they are both doing is just 
wrong. So those are three areas that I think that much more 
could be done.
    Senator Lieberman. Excellent. You want to add anything, Dr. 
Flynn?
    Mr. Flynn. No, I completely agree, I guess. I think that 
captures it so well. And it has gotten so just where it is at 
in terms of dysfunctionality, shortly after the Department was 
created, Secretary Rumsfeld said that any request from the 
Department of Homeland Security for any asset of the Department 
of Defense would have to be cleared through his office. So this 
has made it very difficult. Unless Tom Ridge personally got on 
the phone and pleaded, you could not have any lateral kinds of 
connection, and it has been very structured under the Assistant 
Secretary of Defense, even where the Northern Command cannot 
talk to, they have to go through the Pentagon in order to deal 
with the Department of Homeland Security even though they play 
that critical role.
    There is no question on the maritime that this is, and 
there is a distortion towards collecting of information and 
patrolling, but without thinking about incidence management or 
capitalizing on the kind of assets that we have with the 
homeland security agency. So it deserves a very good look.
    Senator Lieberman. Thank you all for the time you took to 
prepare your testimony and for your responses to our questions. 
Madam Chairman, this has been an excellent first hearing for 
the Committee and it really does say to us loud and clear that 
even though the oversight has not been as consolidated in this 
Committee or any Committee, as we would have liked, we kept 
saying during the floor debate put it somewhere else, but at 
least consolidate it somewhere.
    We have a very important role here to play, whether the 
rules exactly say it as much as we would like or not, in 
leading the Congress in oversight, and further implementing the 
laws that are on the books now and improving them because we 
have come a long way, as you have all said since September 11 
in raising our defenses. We have got a long way to go against a 
threat that is clear and present and potentially devastating. 
So thank you all very much.
    Chairman Collins. Thank you, Senator. I am going to ask 
just a couple more quick questions, but you do not have to stay 
and hear them. Thank you. I would like to ask each of you if 
there is any agency or program that is now within the 
Department of Homeland Security that you think should be moved 
out of the Department and does not belong there?
    Sort of the opposite question from what we have been 
discussing. Mr. Skinner.
    Mr. Skinner. Right at the moment nothing comes to mind. But 
I would like to give that some more thought. I never looked at 
it from that perspective. I have always been looking outside to 
see what should be coming in. I have never thought about that.
    Chairman Collins. Thank you. Dr. Carafano.
    Mr. Carafano. Yes, I would just like to add for the record 
that nowhere in our report to we advocate increasing the size 
of the Department, increasing the funding to the department or 
adding authorities to the Department. I do think one area which 
still requires some fine-tuning is in the area of bioterrorism 
response. I think the notion to try to split response of police 
between HHS and DHS has largely not been helpful. I am not 
really sure DHS needs a role in bio-shield at all. I am not 
sure that it needs much of a role--I know they have already 
moved the pharmaceutical stockpile back. But I just think that 
other than kind of a general supervisory role in terms of the 
overall response effort, I am not sure DHS needs to have much 
involvement in this area.
    Thank you. And I appreciate your response to Senator 
Stevens' comments. I have a feeling I would hear that repeated 
across the panel.
    Mr. Wermuth.
    Mr. Wermuth. As I was just getting ready to repeat them, 
Madam Chairman, because certainly our focus, the focus in this 
testimony and the focus in other contexts is not necessarily--
in fact, I say very clearly the best measure of performance 
cannot be how much more money we are spending.
    It has got to be a rationalization and a prioritization of 
resources. I have to agree nothing particular comes to mind 
that we would think should be moved outside the Department of 
Homeland Security, but it certainly requires a close look to 
see whether that is the case.
    Chairman Collins. Dr. Flynn.
    Mr. Flynn. I have to swim against the stream on the 
resource pitch. A lonely business here, but this is about 
national security. The President said we have a two-front war. 
And we are talking about a nickel on a dollar in terms of what 
we are spending on homeland security vis-a-vis what we are 
defending on national security. So if we are talking about 
resources, I think we have to look at the totality of the 
investment the American people are making.
    They think national security is about protecting the 
Nation, and homeland security is clearly an element of that. So 
that is a big challenge that is out there. It is not that 
bigger is better. Most of what I have been advocating actually 
is much more push it out, but there needs to be a competent 
Department where we consolidate this.
    In terms of pushing out, I do not see that and also I do 
not want this huge entity to take over, as Senator Stevens was 
sort of alluding that might happen ultimately, but it is 
recognizing that it is the non-security dimensions of these 
agencies that often give them the most value-added. It gives 
them the authorities. It gives them the relationships with the 
citizenry and the public sector. In a way that a Navy SEAL 
never can, a Coast Guard cutter can.
    There is a much different sort of flavor to that 
interaction when that sort of thing happens, and it gives them 
the presence in terms of where they are in a space that we know 
the bad guys are going to pursue. So at the end of the day, we 
are really thinking about not saying rob Peter to pay Paul. If 
these agencies are--if Customs is incompetent in managing its 
trade rules, it will not spot a bad guy who is exploiting those 
trade rules to hide what he is up to, whether it is to launder 
or to potentially bring something in.
    If the Coast Guard basically is not doing its job of 
fisheries patrols and so forth, it is not going to spot the 
terrorist who is pretending to be a fisherman but he is fishing 
where there are no fish. We are drawing on skills that we have 
to value and invest in, but we need to make sure we tether it 
into our national security framework because the threat 
requires it.
    I think that is the kind of thinking we have to bring to 
the table versus stop doing this--public health--do not do 
public health, only bioterror. That is not a sustainable 
approach and it is a wrong-minded approach.
    Chairman Collins. Dr. Falkenrath.
    Mr. Falkenrath. Senator, to your question, Plum Island. We 
should give it back to USDA.
    Chairman Collins. Thank you. My final question I am 
actually just going to submit to you for the record, but just 
so you know what the issue is. We still have a coordination 
problem, and bioterrorism is a perfect example, between DHS and 
other departments, DHS and HHS in this case. We also have the 
problem with the two fingerprinting systems, one the FBI's, the 
other is DHS's, not being compatible.
    I would like you to think and for the record respond to how 
do we deal with the problems, the coordination problems that 
involve other departments? Because I think those are at least 
as daunting as the ones within the Department. When I think of 
how long it has taken to get a consolidated watch list and when 
you look at the investment in the Justice Department and DHS 
fingerprinting systems, and the fact that they are two 
different systems and the inefficiencies that produces, it 
seems to me we need to look at those issues as well, as well as 
what is going on within the Department.
    So I will formulate a more precise question for the record 
for you on that.
    But I do want to thank each of you for being here today and 
for sharing your expertise. I cannot imagine a more expert and 
interesting panel to start off the hearings of this new 
Congress. So I thank you very much for your contributions. The 
Committee has no more important mission than an oversight 
responsibility for homeland security, and that is why I wanted 
to begin the new year focusing on that issue.
    I hope we can continue to call upon you for your expertise 
and I thank you for your participation today. The hearing 
record will remain open for 15 days, and this hearing is now 
adjourned.
    [Whereupon, at 12:50 p.m., the Committee adjourned.]


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