[Senate Hearing 109-871]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-871
 
                    NOMINATION OF PAUL A. SCHNEIDER

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                 ON THE

 NOMINATION OF PAUL A. SCHNEIDER TO BE UNDER SECRETARY FOR MANAGEMENT, 
                  U.S. DEPARTMENT OF HOMELAND SECURITY


                               __________

                            DECEMBER 6, 2006

                               __________

        Available via http://www.access.gpo.gov/congress/senate


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

        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

                   Brandon L. Milhorn, Staff Director
                  Jennifer L. Tarr, Associate Counsel
             Michael L. Alexander, Minority Staff Director
              Kristine V. Lam, Minority Research Assistant
                  Trina Driessnack Tyrer, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Collins..............................................     1
    Senator Akaka................................................     2
    Senator Voinovich............................................     4
Prepared statement:
    Senator Lieberman............................................    19

                                WITNESS
                      Wednesday, December 6, 2006

Paul A. Schneider to be Under Secretary for Management, U.S. 
  Department of Homeland Security:
    Testimony....................................................     7
    Prepared statement...........................................    21
    Biographical and professional information....................    22
    Responses to pre-hearing questions...........................    29
    Letter from U.S. Office of Government Ethics.................    62
    Responses to post-hearing questions..........................    63


                    NOMINATION OF PAUL A. SCHNEIDER

                              ----------                              


                      WEDNESDAY, DECEMBER 6, 2006

                                       U.S. Senate,
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 3:02 p.m., in 
room 342, Dirksen Senate Office Building, Hon. Susan M. 
Collins, Chairman of the Committee, presiding.
    Present: Senators Collins, Voinovich, and Akaka.

             OPENING STATEMENT OF CHAIRMAN COLLINS

    Chairman Collins. The Committee will come to order.
    Today, the Committee will consider the nomination of Paul 
Schneider to be the Under Secretary for Management at the 
Department of Homeland Security.
    The mission of DHS is to provide a unifying core of 
leadership and expertise for the national network of 
organizations and institutions that work to secure our Nation 
and to prepare for and respond to disasters of all types. The 
Management Directorate is responsible for ensuring that the 
Department's workforce has the resources and systems in place 
to carry out this vital mission. The directorate works in a 
variety of critical areas, from human resources and 
administration to budgeting, procurement, and information 
technology. The collective aim is for DHS components to have an 
effective means of working with each other and with their 
homeland security partners at the State and local levels.
    In addition to its responsibilities for allocating human 
and material resources, the directorate is charged with 
identifying and tracking performance measures. This would be a 
daunting assignment under the best of circumstances. In our 
current situation, the phrase ``herding cats'' comes to mind.
    As the Department of Homeland Security nears the end of its 
fourth year of operations, the unifying core has not yet fully 
taken shape. As the Committee's investigation of Hurricane 
Katrina made so terribly clear, the goals of effective resource 
allocation and coordination across all levels of government 
continue to elude us. Grant programs remain mired in conflict 
and controversy. The right balance between safe and secure 
borders and the lawful movement of people and commerce has yet 
to be realized. To be sure, progress is being made on all of 
these fronts, but not at the pace our times demand.
    The Committee's hearing just this morning on the enormous 
waste, fraud, and abuse plaguing the recovery from Katrina 
provided a stark reminder of what is at stake. As the reform 
and strengthening of FEMA within DHS moves forward, the need 
for effective resource allocation will become ever more urgent, 
as will the need for solid and verifiable performance measures.
    The Management Directorate will need a strong hand at the 
helm. Paul Schneider appears to bring strong credentials to 
this challenge. He began his career in public service in 1965 
at the Portsmouth Naval Shipyard, which despite its name is 
located in Kittery, Maine. He was a project engineer, and I am 
sure that was indeed a very good start for his career.
    He was appointed to the Senior Executive Service in 1981 
and served as the Deputy Director of NAVSEA's Auxiliary Systems 
Subgroup. He later served as the Executive Director and senior 
civilian of the Naval Sea Systems Command and as the Principal 
Deputy Assistant Secretary of the Navy for Research, 
Development, and Acquisition. In 2002, he became the Senior 
Acquisition Executive of the National Security Agency. Most 
recently, Mr. Schneider served as a defense and aerospace 
consultant.
    He holds a degree in nuclear engineering--I guess that 
would make him a rocket scientist after all, perhaps--and has 
been recognized with Distinguished Civilian Service Awards from 
the Department of Defense, the Navy, and National Security 
Agency, as well as receiving various Presidential Rank awards.
    I welcome Mr. Schneider to the Committee today, and I look 
forward to hearing his testimony.
    We are very pleased to have the Senator from Hawaii, 
Senator Akaka, substituting for Senator Lieberman as the 
Ranking Minority Member today. Welcome, Senator.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Madam Chairman. I am 
honored to be in this position today. Before I get on with my 
statement, I would like to, Madam Chairman, thank you so much 
for your 4 years of leadership here as Chairman of this 
Committee and guiding the Committee with the success of the 
Department of Homeland Security. I really appreciate your 
dedicated leadership, your promptness in action with issues of 
the Committee, as well as your organization of the Committee. I 
have enjoyed working with you----
    Chairman Collins. Thank you very much.
    Senator Akaka [continuing]. And look forward to continuing 
to work with you, Madam Chairman.
    I am pleased to join you, Madam Chairman, in welcoming Mr. 
Paul Schneider, who has been nominated to serve as the Under 
Secretary of Management for DHS. This is a pivotal position, 
perhaps even more important than the Secretary's job because 
the Under Secretary has line responsibility for ensuring the 
Department performs its mission. Merging 22 agencies with 
180,000 employees into a Department to carry out a common 
mission is the single biggest challenge in the government 
today.
    As the Ranking Member of the Armed Services Readiness 
Subcommittee and the Oversight of Government Management 
Subcommittee here, I know that without sustained leadership 
neither incremental changes nor wholesale transformation will 
be integrated into an agency's management culture. That is why 
I have sponsored legislation with my friend, Senator Voinovich, 
to create a Deputy Secretary for Management at DHS, which I 
believe will help the new Department avoid the same long-term 
management problems currently plaguing the Department of 
Defense.
    Mr. Schneider, you will be coming into an agency with deep 
divisions between labor and management, most of which stem from 
the personnel regulations issued by DHS last year that I 
believe will severely erode employee rights and protections. 
Strong employee protections enhance security by helping attract 
and retain the most skilled employees and by ensuring that they 
feel free to bring concerns about management actions that could 
adversely affect our national security to senior leaders 
without fear of retaliation.
    I urge you to work with the DHS Chief Human Capital 
Officer, who I know from her tenure at the Office of Personnel 
Management, and with union leaders, management associations, 
and the Senior Executives Association to develop a personnel 
system for the Department that is flexible, transparent, and 
ensures collective bargaining and a fair appeals process.
    I want to mention an issue that came up during the 
Committee's work on your nomination concerning your stewardship 
of a classified program at the National Security Agency called 
Trailblazer. We have examined this issue in both open and 
closed briefings, and there is nothing that we have discovered 
which should adversely affect your nomination to this position.
    Mr. Schneider, you have a reputation and a record of 
getting things done, of hiring and rewarding capable people and 
supporting them in their mission. Your talents are sorely 
needed, given the critical roles played by and challenges 
facing the Chief Information Officer, the Chief Procurement 
Officer, the Chief Financial Officer, and the Chief Human 
Capital Officer (CHCO), all of whose offices fall under the 
Management Directorate. I hope you will not hesitate to reach 
out to the Committee should problems arise.
    Thank you very much, Madam Chairman.
    [The prepared statement of Senator Akaka follows:]

                  PREPARED STATEMENT OF SENATOR AKAKA

    Today we are here to consider the nomination of Mr. Paul Schneider 
to be the Under Secretary for Management at the Department of Homeland 
Security (DHS). However, before we turn to Mr. Schneider's nomination, 
I would like to thank you, Chairman Collins, for your work over the 
past 4 years as Chairman to ensure the success of DHS. I appreciate 
your dedicated leadership and the comity with which you have led this 
Committee. I look forward to working with you in the next Congress.
    I am pleased to join you today in welcoming Mr. Schneider to the 
Committee. The position to which he has been nominated is pivotal, 
perhaps even more important than the Secretary's job because the Under 
Secretary has line responsibility for ensuring the Department performs 
its mission. Merging 22 agencies with 180,000 employees into a 
department to carry out a common mission is the single biggest 
challenge in the government today.
    As the Ranking Member of the Oversight of Government Management 
Subcommittee and the Armed Service Readiness Subcommittee, I know that 
without sustained leadership neither incremental changes nor wholesale 
transformation will be integrated into an agency's management culture. 
That is why I have sponsored legislation with Senator Voinovich to 
create a Deputy Secretary for Management at DHS, which I believe will 
help the new department avoid the same long-term management problems 
currently plaguing the Department of Defense.
    Mr. Schneider, you will be coming into an agency with deep 
divisions between labor and management, most of which stem from the 
personnel regulations issued by DHS last year that I believe will 
severely erode employee rights and protections. Strong employee 
protections enhance security by helping attract and retain the most 
skilled employees and by ensuring that they feel free to bring concerns 
about management actions that could adversely affect our national 
security to senior leaders without fear of retaliation.
    I urge you to work with the DHS Chief Human Capital Officer (CHCO), 
who I know from her tenure at the Office of Personnel Management, and 
with union leaders, management associations, and the Senior Executives 
Association to develop a personnel system for the Department that is 
flexible, transparent, and ensures collective bargaining and a fair 
appeals process.
    I want to mention an issue that came up during the Committee's work 
on your nomination concerning your stewardship of a classified program 
at the National Security Agency called Trailblazer. We have examined 
this issue in both open and closed briefings, and there is nothing that 
we have discovered which should adversely affect your nomination to 
this position.
    Mr. Schneider, you have a reputation and a record of getting things 
done, of hiring and rewarding capable people, and supporting them in 
their mission. Your talents are sorely needed given the critical roles 
played by and challenges facing the Chief Information Officer, the 
Chief Procurement Officer, the Chief Financial Officer, and the CHCO 
all of whose offices fall under the Management Directorate. I hope you 
will not hesitate to reach out to the Committee should problems arise.
    Thank you again Madam Chairman.

    Chairman Collins. Thank you very much, Senator Akaka.
    I am now pleased to call upon Senator Voinovich, who is 
this Committee's leading expert on issues involving human 
capital, and I know that is one of the reasons he is here 
today. Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Thank you, Madam Chairman. First of all, 
I know this is the last hearing that this Committee is going to 
have in the 109th Congress, and I want to publicly acknowledge 
the great leadership that you have provided to this Committee 
and the bipartisanship that you have emphasized during your 
Chairmanship. I know that because of the wonderful relationship 
that you have developed with Senator Lieberman, this Committee 
will continue to make a real contribution to our country. This 
Committee has been the most productive of any of the committees 
that we have in Congress, and that is due to your hard work, 
tenacity, and your ability to work with Senator Lieberman.
    Chairman Collins. Thank you.
    Senator Voinovich. I would also like to acknowledge Senator 
Akaka. We have worked together for 8 years. Senator Akaka, I 
really appreciate the cooperation and, more importantly, the 
friendship that we have developed over the years. I am so glad 
you are going to be back for the next six. You and I are going 
to be working together on lots of issues, and so I look forward 
to the 110th Congress.
    Chairman Collins. Thank you.
    Senator Voinovich. The Under Secretary for Management at 
the Department of Homeland Security serves as the principal 
administrator and manager for the Department, although as 
Senator Akaka pointed out, we really don't like the positions 
placement on the DHS organizational chart. We think the 
position should be elevated and be reporting directly to the 
Secretary.
    Though the Under Secretary for Management does not serve on 
the front line, the position is critical to our Nation's 
homeland security. With the Department still in its formative 
years, which I think people have forgotten, the Under Secretary 
must provide consistent direction and coordinate numerous 
interrelated management systems so that they complement the 
operational components' activities. The guidance must be 
flexible and durable over time and eliminate stovepipes that 
continue to hinder development of a unified culture.
    As my colleagues know, the Homeland Security Act of 2002 
initiated the Federal Government's largest restructuring since 
the creation of the Department of Defense in 1947. In 
hindsight, I think a lot of us believe we bit off a whole lot 
more than maybe we should have and perhaps should have started 
out with the consolidation of fewer agencies.
    While carrying out its critical mission of securing the 
Nation from terrorism and natural hazards, the leadership of 
DHS must be mindful of the major organizational, operational, 
and cultural issues associated with large mergers. It is indeed 
a challenge to unify 180,000 employees from 22 different 
Federal agencies and programs. This is not meant to be as a 
criticism of the Secretary or any single individual at DHS, but 
rather to acknowledge the fact that the Department faces 
significant hurdles as it matures. The Department must be 
honest with itself about its management challenges and must 
devote focused, high-level attention to overcoming them.
    I am concerned that DHS continues to face a high rate of 
vacancies and turnover in key leadership positions, including 
within the Management Directorate. This issue could be further 
complicated as this administration finishes its elected term.
    As the Chairman of the Oversight of Government Management 
Subcommittee, improving the management focus at DHS remains one 
of my top priorities. During my long career in public service, 
including as mayor and governor, I have repeatedly observed 
that the path to organizational success lies in adopting best 
practices in management, including strategic planning, 
performance, and accountability measures, and effectively 
leveraging human capital.
    When instituting reforms as mayor and governor, individuals 
involved with implementation would tell me they did not have 
time for Total Quality Management because they were too busy 
putting out fires. I appreciate that DHS is also busy putting 
out fires, but the connection between good management practices 
and operational success should not be lost. That is why the 
position of Under Secretary for Management is so vital to the 
success of the Department of Homeland Security.
    Mr. Schneider, if confirmed, your job will be to tackle the 
formidable management challenges at the Department of Homeland 
Security and institutionalize long-term changes that will last 
way beyond your tenure. After reviewing your significant 
experience in senior management positions at the Department of 
Defense and the National Security Agency, I believe that you 
are well qualified for the position of Under Secretary for 
Management. I appreciate your willingness to return to Federal 
service and make a contribution to our Nation's homeland 
security, and I applaud your courage in accepting this 
nomination and the challenges it brings.
    I look forward to learning of your vision for fulfilling 
the duties of the Under Secretary for Management. If you are 
confirmed, this Committee will be closely monitoring your 
progress. We also want to help ensure you have the necessary 
visibility and leverage within the Department to get the job 
done. Accordingly, I encourage you to be as candid as possible 
with us about the Management Directorate's resource needs and 
its concerns.
    Thank you, Madam Chairman.
    [The prepared statement of Senator Voinovich follows:]

                PREPARED STATEMENT OF SENATOR VOINOVICH

    Thank you, Madam Chairman, for holding this important hearing. The 
Under Secretary for Management at the Department of Homeland Security 
serves as the principal administrator and manager for the Department. 
Though the Under Secretary for Management does not serve on the 
frontline, the position is critical to our Nation's homeland security. 
With the Department still in its formative years, the Under Secretary 
for Management must provide consistent direction and coordinate 
numerous interrelated management systems so they complement the 
operational components' activities. The guidance must be flexible and 
durable over time, and eliminate stovepipes that continue to hinder 
development of a unified culture.
    As my colleagues know, the Homeland Security Act of 2002 initiated 
the federal government's largest restructuring since the creation of 
the Department of Defense in 1947. While carrying out its critical 
mission of securing the Nation from terrorism and natural hazards, the 
leadership of DHS must be mindful of the major organizational, 
operational, and cultural issues associated with large mergers. It is 
indeed a challenge to unify 180,000 employees from 22 different federal 
agencies and programs.
    It is not meant as a criticism of the Secretary or any single 
individual at DHS to acknowledge the fact that the Department faces 
significant hurdles as it matures. The Department must be honest about 
its management challenges, and must devote focused, high-level 
attention to overcoming them. I am concerned that DHS continues to face 
a high rate of vacancies and turnover in key leadership positions, 
including within the Management Directorate. This issue could be 
further complicated as this Administration finishes its elected term.
    As the Chairman of the Oversight of Government Management 
Subcommittee, improving the management focus at DHS remains one of my 
top priorities. During my long career in public service, including as a 
Mayor and Governor, I have repeatedly observed that the path to 
organizational success lies in adopting best practices in management, 
including strategic planning, performance and accountability measures, 
and effectively leveraging human capital.
    When instituting reforms as Mayor and Governor, individuals tasked 
with implementation would tell me, ``We don't have time for Total 
Quality Management, we are too busy putting out fires.'' I appreciate 
that DHS is also busy putting out fires. But the connection between 
good management practices and operational success should not be lost. 
That is why the position of Under Secretary for Management is so vital 
to the success of the Department of Homeland Security.
    Mr. Schneider, if confirmed, your job will be to tackle the 
formidable management challenges at the Department of Homeland Security 
and institutionalize long-term changes that will last beyond your 
tenure.
    After reviewing your significant experience in senior management 
positions at the Department of Defense and the National Security 
Agency, I believe you are well qualified for the position of Under 
Secretary for Management. I appreciate your willingness to return to 
Federal service and make a contribution to our Nation's homeland 
security, and applaud your courage in accepting this nomination and the 
challenges it brings.
    Mr. Schneider, I look forward to learning of your vision for 
fulfilling the duties of the Under Secretary for Management. If you are 
confirmed, this Committee will be closely monitoring your progress. We 
will also help ensure you have the necessary visibility and leverage 
within the Department to get the job done. Accordingly, I encourage you 
to be as candid as possible with us about the Management Directorate's 
resource needs and concerns. Thank you, Madam Chairman.

    Chairman Collins. Thank you.
    Mr. Schneider has filed responses to a biographical and 
financial questionnaire, answered pre-hearing questions 
submitted by this Committee, and has had his financial 
statements reviewed by the Office of Government Ethics. Without 
objection, this information will be made part of the hearing 
record, with the exception of the financial data, which are on 
file and available for public inspection in the Committee 
offices.
    Our Committee rules require that all witnesses at 
nomination hearings give their testimony under oath, so Mr. 
Schneider, if you would please stand and raise your right hand.
    Do you swear that the testimony you are about to give to 
the Committee will be the truth, the whole truth, and nothing 
but the truth, so help you, God?
    Mr. Schneider. I do.
    Chairman Collins. Please be seated.
    Mr. Schneider, I understand that you have family members 
present with you today, and I would invite you to introduce 
them to the Committee at this time, if you would like to do so.

  TESTIMONY OF PAUL A. SCHNEIDER\1\ TO BE UNDER SECRETARY FOR 
        MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Schneider. Sure, Senator. Right behind me on my left is 
my wife, Leslie, and cousin Carolyn Griffin, and a row of many 
family friends.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Schneider appears in the Appendix 
on page 21.
---------------------------------------------------------------------------
    Chairman Collins. That is great. We welcome you all to this 
hearing today. We know that public service involves the entire 
family and that there are many sacrifices involved, so we 
welcome you to the hearing today.
    You may proceed with your statement.
    Mr. Schneider. Chairman Collins, Senator Lieberman, and 
distinguished Members of the Committee, it is an honor to 
appear before you today as you consider my nomination by the 
President to be the next Under Secretary for Management at the 
U.S. Department of Homeland Security. I am deeply honored and 
humbled that President Bush has nominated me to serve this 
great country and its people, and I thank Secretary Chertoff 
for his support throughout this process. If confirmed, I look 
forward to the opportunity and privilege of serving under his 
direction with the dedicated men and women who are working to 
secure our homeland and defend our freedoms.
    I owe this country a lot. I started at the Portsmouth Naval 
Shipyard in Kittery, Maine, as a 21-year-old GS-5 engineer who 
was obsessed with building nuclear submarines. At that point in 
time in history, naval shipyards actually built nuclear 
submarines. As I progressed up through the ranks, I was 
afforded a number of opportunities to serve in positions of 
increased responsibility, seeing and doing things that one 
could only have dreamed of as a kid fresh out of school.
    More than 40 years later, on September 11, I was in the 
Pentagon. I saw firsthand the devastation to which our enemies 
commit themselves. As I lay in the grass by the river, as we 
were told to do because we were advised another airplane was 
inbound, I saw the fire and the smoke rising from the building 
and I saw two F-16s flying combat air patrol over the Pentagon 
and the District of Columbia. Three things came to my mind.
    First, I was a kid who grew up in the Cold War, practicing 
duck-and-cover drills. I could not believe that this was 
happening in our country.
    Second, the ``battle space'' to which those in the military 
frequently refer to now, was not in Europe, not in the Middle 
East, not in the Far East, but right here in U.S. airspace.
    Third, I realized that our lives would never really be the 
same.
    I hope that my integrity, competence, continued willingness 
to serve the public trust, and ability to accomplish 
significant and challenging objectives demonstrate the skill 
set and experience needed to meet the significant 
responsibility required by the Under Secretary for Management's 
charge.
    If confirmed, I commit to working with you and your staff, 
other governmental departments and agencies, businesses, both 
large and small, and our international partners to make a 
contribution to securing our homeland for today and tomorrow.
    Thank you very much for this opportunity to appear here 
today. I am happy to answer any questions you may have.
    Chairman Collins. Thank you.
    I will start my questioning with the three standard 
questions that we ask of all nominees. First, is there anything 
that you are aware of in your background that might present a 
conflict of interest with the duties of the office to which you 
have been nominated?
    Mr. Schneider. No.
    Chairman Collins. Second, do you know of anything personal 
or otherwise that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office?
    Mr. Schneider. No.
    Chairman Collins. And third, do you agree without 
reservation to respond to any reasonable summons to appear and 
testify before any duly constituted Committee of Congress if 
you are confirmed?
    Mr. Schneider. Yes.
    Chairman Collins. We will now start with a round of 
questions, limited to 6 minutes each, and there will be a 
second round, just so that my colleagues know that.
    Mr. Schneider, as you are well aware, the success of any 
enterprise, including that of the Department of Homeland 
Security, depends upon the people, the employees. Recently, a 
U.S. Court of Appeals for the D.C. Circuit upheld the District 
Court's opinion striking down part of DHS's new personnel 
system, the pay-for-performance plan for those DHS employees 
subject to collective bargaining. This is the MaxHR Pay-for-
Performance Plan. It is my understanding that the Department of 
Justice is unlikely to appeal that decision to the Supreme 
Court, so the result is that the labor representatives and DHS 
officials will have to go back to the drawing board to design a 
new plan.
    If you are confirmed, what do you plan to do to ensure that 
this time a personnel system that is acceptable to both the 
employees and the management of the Department can be designed 
and successfully implemented?
    Mr. Schneider. Senator, I am aware in general of the issue 
with the Court of Appeals. I am also aware that MaxHR has six 
elements of the plan. Probably the most important that needs to 
be addressed initially is a solid performance management plan. 
My understanding is the court specifically struck down the 
segment having to do with pay.
    Now, I have had a lot of experience in personnel management 
in large organizations and especially in the Navy, where the 
Navy was the lead in instituting the pay-for-performance plan 
that has sort of served as a model for the Department of 
Defense as well as Homeland Security. What we learned in the 
Navy was you need to spend a lot of time up front in the 
performance management aspects because that is where many of 
the current pay plans, performance plans, fall apart. There 
needs to be conveyed between supervisor or manager and employee 
a clear understanding of what their responsibilities are, what 
they are supposed to accomplish. There needs to be frequent 
communications and feedback. In my experience, most plans fall 
apart when this is not properly communicated.
    It is my understanding talking to the Chief Human Capital 
Officer at DHS that the emphasis now is on developing and 
instituting a solid performance management plan across the 
Department. At the same time, what I have found to be very 
instructive is to work with the workforce, work with the 
unions, and have constant communications and articulate what 
the objectives of management are. Too often, in my experience 
in the Navy with dealing with labor relations, too often, you 
don't have that communication. There is a lack of sensitivity 
to the issues that the workforce and unions have.
    So what I would do, if confirmed, was to focus on getting a 
solid performance management plan instituted, establishing the 
appropriate forums to have that constant dialogue, and working 
with the workforce and the unions on structuring the pay 
aspects as well as grievance procedures, adverse action, and 
the classification elements, which are also key to making MaxHR 
successful.
    Chairman Collins. DHS also faces unusual financial 
management challenges that need to be addressed as it continues 
to integrate the components of the 22 Federal agencies into a 
single Department. One of the difficulties is that each agency 
is still dealing with a lot of legacy systems, and in many 
cases these are poorly-designed systems, and there, in general, 
is inadequate financial management.
    Now, there are some agencies that have worked hard. I know 
one has hired the consultant Deloitte, for example, and has 
made real progress in reducing the number of material problems 
identified in audits. But in general, what do you see your role 
as being to bring more uniformity, more consistency, and higher 
quality across the Department in the financial management area?
    Mr. Schneider. Senator, I am aware of the issues with 
financial management. Internal controls, which there have been 
numerous IG and GAO reports on that fault the Department for 
the lack of internal controls, I have gone through them. I have 
analyzed what the issues are. As you pointed out, you mentioned 
Deloitte. ICE hired Deloitte, I believe, to help them go look 
at these internal controls. They were one of the major problem 
areas. ICE has been turned around.
    I guess the largest number of internal control deficiencies 
are currently attributed to the Coast Guard. And so I have 
talked to the Chief Financial Officer, and I am aware of the 
plans underway, working with the appropriate leadership in the 
Coast Guard, with help, I believe, from Deloitte, to go tackle 
these internal control issues. My opinion is that if ICE was 
able to successfully address these issues in a timely manner, 
then there is no reason why the Coast Guard wouldn't be able to 
do the same thing. So from an internal control deficiency 
standpoint, I am optimistic that the Coast Guard will make 
great progress, and overall, that would, frankly, eliminate 
probably the biggest offenders relative to having weak internal 
controls.
    On the migration of financial management systems, my 
understanding is that there are several systems within the 
operating components that are good, that are satisfactory. 
There are some that are weak. So if confirmed, what I would do 
would be to see why those that are good can't be used as the 
model, and rather than starting off and trying to create a 
brand new system from whole cloth, why not migrate these poorer 
systems to those that are known to be satisfactory?
    Chairman Collins. My time has expired, so I want to yield 
to Senator Akaka, but I would just tell you to take a hard look 
at FEMA, as well. We held a hearing this morning that confirmed 
that the GAO has found that due to lack of good management and 
an absence of internal controls, that FEMA had some $1 billion 
in improper and fraudulent payments in the wake of Hurricane 
Katrina, clearly a completely unacceptable situation. So I 
would add FEMA to the top of your priority list in that area.
    Senator Akaka.
    Senator Akaka. Thank you very much, Madam Chairman.
    Before getting to my question, I just want to add to my 
statement that I have enjoyed working with Senator Voinovich in 
Committee and the Subcommitte he chairs. We did a lot on 
government management and the Federal workforce issues, as well 
as with the District of Columbia. I just want him to know that 
I look forward to working with him. And also to add to the 
Chairman's comments that I made, that I have really appreciated 
the comity in which she led this Committee and has done a great 
job with that.
    Mr. Schneider, I want to thank you for your statement. I 
felt your statement was heartfelt and demonstrates how you will 
be handling your responsibilities. This is a good beginning for 
me.
    Senator Collins has mentioned the DHS court decision. The 
Homeland Security Act of 2002 ensured that DHS employees would 
continue to have collective bargaining rights. However, the 
regulations issued by the Department last year were found to 
violate that requirement by the U.S. Court of Appeals for the 
District of Columbia.
    My question to you is will you commit to this Committee 
that you will comply fully with the statutory obligation and 
ensure collective bargaining rights at DHS, if confirmed as 
Under Secretary for Management?
    Mr. Schneider. Senator, if confirmed, I will commit to 
carrying out the collective bargaining responsibilities as 
required by law, regulation. I think that is an inherent part 
of good management, if you will, because this workforce is 
absolutely key to securing the homeland and protecting our 
borders. That is part of the world I have come from in the 
Navy, where whether it is at naval shipyards, aviation depots, 
laboratories, etc., and I believe that I have a reputation for 
frank and open communications with the leadership of the 
collective bargaining units.
    Senator Akaka. Thank you. Mr. Schneider, much of your 
professional experience is with the Department of Defense, so 
you understand DOD's management culture, which generally 
retains reporting authority within the component or service. 
There are some real pluses to such a chain of command approach, 
and there are some real minuses that unfortunately lead to 
significant inefficiencies, mismanagement, and internal system 
failures. Too many times, Congress has had to mandate 
structural changes by statute, and too many times, these 
requirements have been ignored by DOD.
    Last year, Deputy Secretary England stood up the Business 
Transformation Agency, which is a step in the right direction 
and one that I hope will lead to broader control department-
wide. You have provided this Committee with the areas that you 
will focus on to lead change. What I would like to know is what 
immediate steps you will take to review the current 
organization structure within the Management Directorate and 
whether you believe a BTA approach for DHS could work.
    Mr. Schneider. Senator, first, I am very familiar with 
DOD's Business Transformation Office. I worked for Secretary 
England when he was the Secretary of the Navy, and I guess, 
when Secretary Rumsfeld took over as Secretary of Defense 
across the services, we were asked to put together, if you 
will, to actually start the business transformation operation. 
A large portion of the, I will call it the core team that was 
put in place were people that worked for me in the Navy. It had 
the management attention directly of Secretary England, who 
then had to report to the Secretary of Defense. It has been 
subsequently institutionalized in its current form.
    One of the things I would do, if I confirmed, is I would 
look at--there is, from what I understand, a Business 
Transformation Office in the Department of Homeland Security. I 
would look at the structure of that. I would look at the areas 
that they are currently looking at. And based on my experience 
in terms of the areas that the business transformation 
operation ought to look at, see if, in fact, these efforts are 
properly focused and, if not, take whatever action was required 
to get them on track.
    Senator Akaka. I am glad to hear your approach. From all of 
your experiences, I look forward to you being successful in 
doing that. My time has just expired.
    Chairman Collins. Thank you. Senator Voinovich.
    Senator Voinovich. Mr. Schneider, I question whether the 
Under Secretary for Management has sufficient authority to 
direct overreaching management integration and strategy across 
the Department. In fact, I heard through the grapevine that 
your predecessor felt rather frustrated in terms of getting the 
job done, and that is one of the reasons why she decided to 
leave.
    As Senator Akaka has mentioned, we introduced the Homeland 
Security Restructuring Act of 2000, which would elevate the 
management responsibilities within the Department to the Deputy 
Secretary level.
    From what you have observed of the Under Secretary for 
Management position and the various chief officers within the 
Management Directorate, do you think the office to which you 
have been nominated possesses adequate authority to effect 
change throughout the Department? If confirmed, how will you 
work within the existing dual-accountability command structure 
to ensure that influence of the Management Directorate is 
robust enough to ensure a common culture of management 
excellence throughout the Department? Finally, what other 
positions have you held in the past in which you have not had 
sufficient authority but you were nevertheless able to 
accomplish your objectives?
    Mr. Schneider. Senator, on the first part, when you 
mentioned the deputy--recommending elevating to a Deputy 
Secretary, was that in S. 1712? I reviewed that proposed 
legislation that proposes elevating the position to the Deputy 
Secretary for Management, and I compared it very closely to the 
Homeland Security Act, and it appears that there are some very 
specific changes, one in terms of tenure. I believe it proposes 
a 5-year tenure.
    I envision the Under Secretary for Management by the 
authorities that are invested in that position by law, that 
Homeland Security Act, and by my detailed discussions with the 
Secretary and Deputy Secretary that in practice, even though I 
would not be called a Deputy Secretary, but in practice, there 
is absolutely no doubt in my mind that I am like a Chief 
Operating Officer of a department.
    And part of that has to do with the law is very helpful 
because that Act very clearly specifies what authorities I 
would have. What is even more helpful is the obvious confidence 
that the Secretary and the Deputy Secretary have in me, and 
that will become very obvious to the leadership in the 
Department.
    I think the third element that makes this work and why I 
believe that on the surface I would have all the authorities 
that I need is because of the power of the personality, and I 
am not a shy person. I know how to take action and to be 
aggressive, and I think between what is specified in law, the 
relationship that I would have with the Secretary, and the 
nature of how I do business, that those are sufficient tools 
for me to be successful.
    On your second part of this question regarding dual 
accountability, DOD, in fact, does have dual accountability. I 
mean, you have a comptroller, you have an acquisition 
executive, you have the Under Secretary of Defense for 
Personnel, and they do not have, with one exception and that is 
on the acquisition side, in general, line authority over the 
service components. They basically effect control by policy and 
procedures and exercising oversight where it is needed. I have 
lived in that process. I know from the service standpoint the 
kind of help that I used to get from the DOD at the DOD level, 
and I think that the business unit chiefs, whether it is the 
CIO, the Human Capital Officer, and the Chief Financial 
Officer, by policy and by procedures and oversight appear to me 
to have sufficient authority to go do their jobs.
    I think in the case of the Chief Procurement Officer, she 
has even stronger control. She can do several things. She can 
pull the warrant of a contracting officer in one of the 
operating components. She can specify her review of any 
procurement above within a certain threshold. She can issue 
policies that say, I don't want you to use these types of 
contracts in these situations. She, today, has a tremendous 
amount of authority.
    Regarding the third part of your question, my past 
experience, I have always pushed, if you will, the edge of the 
envelope, and I believe the secret to success has been my 
competence, but more importantly, the confidence that my 
leadership has shown in me and the latitude that they have 
given for me to basically define the job. You are always going 
to have a give and take, and that is part of the way business 
gets done, but I don't recall, frankly, anything where I was 
really limited, if you will.
    Senator Voinovich. Thank you.
    Chairman Collins. Mr. Schneider, many of the Federal 
Government's more experienced acquisition personnel are now 
eligible for retirement. Reforms are also placing new demands 
on the acquisition workforce. Acquisition staff must have a 
greater knowledge than ever before of technology, of market 
conditions, of industry trends, of the technical details of the 
services and commodities that they procure. At the same time, 
we have seen the number of procurement actions increase by 12 
percent with the greatest amount of work coming on contracting 
actions over the simplified acquisition threshold of $100,000. 
In other words, the procurement workforce is being asked truly 
to do more with less.
    I am concerned that we are rapidly losing the personnel 
workforce that is needed to manage procurement of increasing 
complexity. In addition, we are not seeing an influx of younger 
people to replace the procurement staff that are eligible for 
retirement or about to retire. We have also seen the problems 
that have occurred at FEMA because of understaffing in the 
procurement workforce, understaffing that in the end ends up 
costing us far more than if those positions had been filled.
    What additional tools do you believe are necessary at DHS 
to ensure the recruitment and retention of highly qualified 
individuals to the acquisition workforce?
    Mr. Schneider. Senator, I think for starters I have 
reviewed the recent FEMA Act. I was encouraged to see a couple 
of really major incentives in there where FEMA was granted the 
authority to pay bonuses for recruitment as well as for 
retention up to about roughly 25 percent of salary. That goes a 
long way in trying to make FEMA, if you will, a desired place 
to work.
    I think the other aspect of it, and that is not to say that 
is going to solve the large number of vacancies, there needs to 
be aggressive recruiting programs. I have spoken to the 
Director of Management at FEMA, somebody I have known for a 
long time, and the Chief Human Capital Officer. They have a 
series of what I would consider to be very aggressive actions 
to initiate intern programs in the critical disciplines, 
aggressive hiring with teams of people that target specific 
geographic areas, and so I think I am satisfied that from the 
interim standpoint that they can make great progress.
    I think a bigger problem, quite frankly, is at the mid-
level, especially on the contracting officers. From the time a 
boot intern walks in the door until the time they are a 
journeyman contracting officer takes a long time. So what is 
really needed is that we need to have an influx at the mid-
level. That is going to require, I believe, getting the word 
that the Department of Homeland Security is the place to be.
    In the 1970s and the 1960s when I grew up, it was either 
Defense or Space. I think the place where the action is for 
this time and for the near-term future is in Homeland Security, 
and I think the Department has to do a better job of 
advertising why Homeland Security is the place to work, and 
frankly, I believe a lot of personal recruiting at the mid-
level would help go a long way.
    Chairman Collins. Certain of DHS components, certain 
agencies within the Department, in order to carry out their 
mission, must compile and maintain personal information on 
American citizens. We have seen earlier this year very 
disturbing incidents where, for example, at the Veterans 
Administration a computer containing personal data on millions 
of veterans was stolen. What can you do and what will you do to 
minimize the risk that personal information stored on DHS 
computers and in DHS information systems is not compromised? In 
other words, have you looked at the computer security policies 
of the Department?
    Mr. Schneider. Senator, I have not looked at the computer 
security policies of the Department, but from my previous 
experience, I know there are things you can do, starting with 
the encryption of hard drives and the like. I think in this 
particular area, and I recognize the sensitivity, I believe 
that the Deputy Director of the Office of Management and Budget 
for Management, Clay Johnson, III, has issued three memos, 
which I have read, one in May, one in June, and most recently 
in September 2006, that talk about very specific policies, 
procedures, and what happens in the case of, I believe it is 
called, personal identifiable information. So I believe there 
is a blueprint out there of steps that need to be taken for 
prevention and specific actions in terms of notifications, 
both--if, in fact, there is a loss of PII.
    Chairman Collins. Thank you. Senator Akaka.
    Senator Akaka. Thank you very much, Madam Chairman.
    Mr. Schneider, as a retired Federal employee who returned 
to Federal service after September 11, you appreciate the need 
to attract and retain skilled and trained workers, especially 
those safeguarding the Nation against manmade and natural 
disasters. Many of these jobs are inherently governmental, 
which is why it is so important that DHS ensures that it has 
the personnel and resources to carry out its mission. As an 
example, the Chairman spoke on FEMA and the champion of Federal 
employees, Senator Voinovich.
    Mr. Schneider, I would appreciate your assurance that 
Congress will receive regular updates on the Department's use 
of training funds, retention bonuses, student loan repayments, 
and other efforts to recruit and retain a skilled workforce. I 
also ask that the DHS Chief Human Capital Officer regularly 
meet with this Committee's staff to keep us informed of the 
agency's use of personnel flexibilities. Do you have any 
comment on that?
    Mr. Schneider. Senator, no. I support that. I have met with 
the Chief Human Capital Officer. She has been in the job, I 
think, about 60 days. She is a dynamo, and she has had 
tremendous experience, if you will, both at the State level in 
OPM, she has had extensive experience in how to use these types 
of incentives, and I am personally thrilled that, if confirmed, 
I would have the opportunity to work for her in these types of 
efforts. And I would commit, if confirmed, to provide you and 
the staff any information that you would want in this 
particular type of area.
    These are some of the metrics, Senator, that if I was 
confirmed that I would use to gauge how well are we using these 
tools that are available and is there some measure of 
effectiveness of what it is costing versus what the return is.
    Senator Akaka. Thank you for that response. I think we can 
both agree, Mr. Schneider, how important it is for DHS to have 
strong recruitment and retention policies. With this in mind, I 
would like to discuss a situation that has arisen with the 
Federal Protective Service at DHS. The press reports that FPS 
faces a $42 million shortfall. To address this financial 
problem, DHS announced it will offer early retirement to FPS 
personnel and end retention bonuses, which would save about $3 
million.
    I am wondering if human capital decisions are adequately 
factored into this funding decision. I would appreciate your 
looking into this situation and getting back to the Committee 
on this.
    Mr. Schneider. Senator, if confirmed, I would do that.
    Senator Akaka. Are you aware of that situation?
    Mr. Schneider. Somebody briefly mentioned it to me the 
other day, but I did not probe into it.
    Senator Akaka. Mr. Schneider, a Gallup survey released 
yesterday found that although government employment is 
attractive to young adults, there are many obstacles to 
overcome in the recruitment of younger employees. I was 
interested to see, however, that agencies involved in national 
security, including DHS, scored high with those surveyed. In 
fact, DHS scored number four out of 25 agencies in terms of 
employment interest. Nonetheless, DHS scored second to last in 
employee satisfaction of the 30 agencies ranked by a 2005 
survey of employed Federal workers.
    Given these two surveys I have just mentioned, how would 
you address the perception of those who might be interested in 
working for DHS versus those who currently work for DHS?
    Mr. Schneider. Well, on the first survey, it is encouraging 
because it shows that DHS is where the action is for the 
future, so if you want to make a contribution, that is the 
place to work. So I would expand on that.
    On the second survey that you mentioned, I think it is a 
responsibility of leadership to convey--to make the workforce a 
place where people want to come to, and that is where they like 
it. It is not just the work that they like, but they trust 
their management, they feel that the management listens, and 
there is an environment of open communications back and forth. 
I think this is a leadership issue, and if confirmed, I believe 
I can be of help, if you will, in energizing the leadership to 
focus on that type of an issue. Unless the Department or any 
agency has a reputation as a good place to work because the 
leadership listens, you are not going to attract people and 
this Department would be down in the cellar. I think it is 
really a leadership issue, and the employees have to have the 
confidence that their management listens and that they can 
trust them.
    Senator Akaka. I thank you very much for your responses, 
Mr. Schneider. Thank you.
    Chairman Collins. Thank you. Senator Voinovich.
    Senator Voinovich. Mr. Schneider, building on what Senator 
Akaka just discussed with you, I would like to have in writing 
your plan to change the attitude of the people in the 
Department in terms of their job satisfaction. This will enable 
the Committee to monitor the program that you are going to 
institute and revisit the issue a year from now to see whether 
or not it has made a difference.
    Second, before I forget it, I would like to say that I am 
very much impressed with your familiarity with the Department. 
I have sat through a lot of these hearings, and you seem to be 
more familiar with the operation and the job to which you have 
been nominated than anyone that I have heard in recent times. I 
congratulate you, and if your preparation for today's hearing 
is any indication of the success you are going to have, I think 
you are going to do a good job.
    Mr. Schneider. Thank you very much, Senator.
    Senator Voinovich. Mr. Schneider, you have the 
responsibility for overseeing the Department's budget and 
appropriation requests and expenditure of funds. Since 2002, 
the Federal Government has more than tripled government-wide 
spending related to non-defense homeland security, a big 
increase. I continue to believe that DHS needs to do a better 
job of conducting risk assessments and allocating our limited 
budgetary resources based upon risk and strategic planning 
priorities. Do you agree?
    Mr. Schneider. Yes, I do. I think, frankly, Senator, one of 
the reasons I believe that Secretary Chertoff and the Deputy 
Secretary found me as an attractive candidate for this position 
is my ability to take a look at an entire effort, and it is 
what is the objective, what are the requirements, how is it 
going to be used, what are the cost trades relative to 
different levels of performance, understanding what the total 
cost of the effort is as opposed to this fiscal year it is 
going to cost X-number of dollars and next fiscal year it is 
going to cost Y-number of dollars. That is the world I come 
from. I have been responsible for making a lot of those types 
of decisions where resources are limited and the number of 
opportunities are great.
    What I would do is to look at the current processes. There 
are several that are in place right now. A Joint Requirements 
Board is an investment requirements review board. I have 
already talked to the Deputy Secretary about this. This is one 
of his priorities for me, and I believe we are on a common 
mindset of what needs to be done.
    There needs to be a total understanding of what the major 
expenditure is going to be and what the options are. There is 
usually more than one option, and a lot has to do with maybe 
the 99 percent solution 10 years from now at X-number of 
dollars is not the right answer. Maybe the 70 percent solution 
5 years from now with substantially less dollar investment is 
the right answer.
    That is the type of process that I have lived in and grown 
up in. That is the process that I believe has instilled 
discipline in the Defense Department, and what I would try to 
do is to see how the existing processes within the Department 
would need to be strengthened in order to give management a 
better insight into the decisionmaking process.
    Senator Voinovich. Well, I must say to you that DOD leaves 
a lot to be desired.
    Mr. Schneider. Yes, sir.
    Senator Voinovich. Of the items on GAO's high-risk list, I 
believe eight of them are Department of Defense programs and 
six of them are government-wide programs for which the 
Department of Defense shares some responsibility. We are doing 
oversight on the supply chain management and security clearance 
procurement process. So I hope that you don't look at that 
operation as a model. As a matter of fact, I think that if you 
were to look at the most recent high-risk list, you would find 
that DHS is very high on Comptroller General Walker's list. So 
I guess I am saying to you I am not that impressed with what 
the Department of Defense has done in the past. I think we can 
do better than that.
    Mr. Schneider. Yes, sir. If I may, I think one of the 
things when I was at NSA that we did was we tailored the DOD 
process where we thought it had some strengths and we discarded 
some of those areas where we thought it was weak.
    Senator Voinovich. In terms of the budget process, what 
concerns me, and maybe this is because I am an old mayor and a 
governor, is the Department's allocation of resources. The 
Department has had a continued increase in terms of their 
budget as contrasted to some of the other non-defense 
discretionary spending. But if you examine current spending, 
you can identify items that may not be as high a priority as 
something else that the Department has been asked to do. You 
will also find that this Committee is going to have all kinds 
of ideas about other things that you ought to fund that 
unfortunately come with a very large price tag. You can't do it 
all.
    One of the things that is of concern to me right now is our 
spending on border security. If you talk to Judd Gregg, who is 
head of the Appropriations Committee for Homeland Security, he 
will tell you that there isn't enough money for us to get the 
job done. You are going to be asked to get the job done, and 
the issue then becomes, how much money are you going to really 
need to get the job done, are you going to request those 
dollars in the 2008 budget, or are you going to be told by OMB 
that you will have to decrease funding for another priority in 
order to have the resources necessary for the task at hand?
    There has got to be a point where you make the 
determination that what we are going to have to depend upon is 
the intelligence to decrease our vulnerability to attack.
    I plan to spend a lot of time on the Department's budget 
because I think part of our problem here is that we don't have 
a broad picture of our homeland security activities, of the 
associated allocation of resources, and on understanding how we 
can get the best return on our investment. I am hoping to talk 
with you more about that as you take on this job.
    Mr. Schneider. Yes, sir.
    Senator Voinovich. Thank you, Madam Chairman, for the time.
    Chairman Collins. Thank you.
    I would like to thank Mr. Schneider for appearing before 
the Committee today. It is my hope that this Committee will act 
on your nomination before we adjourn so that you can be 
considered by the full Senate. I think your position is a very 
important one, and given the widespread support for your 
nomination and your excellent performance today, my hope is 
that we can take the Bob Gates model and act that quickly to 
approve you and get you on the job because the Department 
really does need you.
    You can facilitate that by returning very quickly the 
additional questions that I and others may have for you. 
Without objection, the record will be kept open until noon 
tomorrow for the submission of any additional written questions 
or statements for the record. The sooner you turn those around, 
the happier I will be because then we can move to considering 
your nomination.
    I want to join Senator Voinovich in thanking you for your 
public service, for returning to public service. I think that 
your background is exactly what the Department needs, and I am 
pleased to lend my voice in support of your nomination, as 
well.
    This hearing is now adjourned. Thank you.
    [Whereupon, at 4:05 p.m., the Committee was adjourned.]

                            A P P E N D I X

                              ----------                              


                PREPARED STATEMENT OF SENATOR LIEBERMAN

    Thank you, Madam Chairman and welcome to you Mr. Schneider. The 
position for which you have been nominated--Department of Homeland 
Security Under Secretary for Management--is unusual, if not unique, in 
the Federal Government. If confirmed, you will be responsible for core, 
cross-Department functions such as budget and financial management, 
procurement, IT systems, and human resources, and the Management 
Directorate that you will lead will be central to addressing some of 
the key challenges facing DHS.
    When we created DHS 4 years ago, it was with the intent to bring 
together the Federal Government's previously balkanized antiterrorism 
resources in one Department and to take advantage of the synergies that 
resulted. By doing so, I am confident that we have made the country 
safer. As the Department matures, however, there continue to be growing 
pains, and the Under Secretary for Management plays a central role in 
ensuring that a coherent Department emerges out of DHS's many component 
entities.
    Moreover, if the Department is to succeed in its ultimate mission 
of protecting the Nation from man-made and natural disasters, it must 
be run well, with its resources managed wisely and an ability to 
attract a sufficient and talented workforce. It will fall in large 
measure to you--if you are confirmed--to ensure that is so.
    I am interested in hearing from you today how you will address some 
of the most pressing management challenges faced by the Department.
    For example, how are you going to help the Department build the 
stable and experienced workforce it needs to carry out vital homeland 
security missions. The Department continues to face major challenges in 
recruiting, training, and retaining personnel to ensure that the 
workforce contains the skills needed by the diverse components of the 
Department. Much work remains in establishing the human resources 
management system that Congress authorized in the Homeland Security 
Act, especially now that a Federal court has blocked portions of the 
Department's regulations establishing that system. I am also interested 
in hearing your ideas about how to establish a performance management 
system that inspires the best effort and performance from our 
workforce, that is objective, reliable, and transparent, and that 
contains other safeguards to ensure that the system is fair and 
effective.
    I am also interested in your ideas for ensuring effective 
implementation of the FEMA restructuring legislation that Senator 
Collins and I introduced and that was signed into law as part of the 
Homeland Security appropriations bill this fall. As I'm sure you know, 
the organizational changes mandated by that legislation are required to 
be in place by March 31, 2007, and other provisions of the law take 
effect earlier. I would like to hear from you what steps you will take 
and what your role will be in ensuring that the changes mandated by the 
law are implemented effectively and on time.
    Another critical area for which you will be responsible is 
procurement. The Washington Post recently publicized an outside study 
of the Department's procurement operations that found glaring and 
systematic deficiencies in many of the contract files it reviewed. The 
Department since its inception also has been embarrassed by a series of 
cost overruns on large contracts totaling hundreds of millions of 
dollars. Furthermore, the Department's increasing reliance on less-
than-fully-competitive contracting procedures is depriving the 
Department--and the U.S. taxpayers--of the best value for its dollars. 
I am interested in hearing from you what actions you intend to take to 
improve the Department's acquisition management system and ensure that 
the Department is spending its contracting funds wisely and engaging in 
effective oversight of its contracts.
    Improving and integrating the Department's information technology 
systems is another significant challenge. In FY07, the budget for DHS's 
IT investments will reach $4.16 billion. Yet, according to a report 
released by the President's Management Council in October, DHS could 
defend less than half of its IT investments. I would like to hear how 
you would work with the Chief Information Officer to improve IT 
management at the Department.
    Mr. Schneider, you have a formidable record of 40 years of 
experience, largely in the Federal government, including as Principal 
Deputy Assistant Secretary of the Navy for Research, Development and 
Acquisition and Senior Acquisition Executive for the National Security 
Agency, and I am hopeful this considerable experience will serve you 
well if you are confirmed in this post. Certainly, the myriad 
management challenges of the still-new Department can be daunting. But 
it is also essential that these challenges be met and conquered if the 
Department is to live up to its potential and effectively protect the 
nation's citizens.

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