[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
 THE DEPARTMENT OF HOMELAND SECURITY'S MANAGEMENT  DIRECTORATE: GOALS  
               AND OBJECTIVES OF THE NEW UNDER  SECRETARY

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


                                HEARING

                               before the

                      SUBCOMMITTEE ON MANAGEMENT,
                     INVESTIGATIONS, AND OVERSIGHT

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 1, 2007

                               __________

                           Serial No. 110-11

                               __________

       Printed for the use of the Committee on Homeland Security
                                     
[GRAPHIC] [TIFF OMITTED] 

                                     

  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html

                               __________



                  U.S. GOVERNMENT PRINTING OFFICE
35-270                    WASHINGTON : 2009
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office  Internet: bookstore.gov Phone: toll free (866) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 20402-0001



                     COMMITTEE ON HOMELAND SECURITY

 BENNIE G. THOMPSON, Mississippi, 
             Chairman
LORETTA SANCHEZ, California,
EDWARD J. MARKEY, Massachusetts
NORMAN D. DICKS, Washington
JANE HARMAN, California
PETER A. DeFAZIO, Oregon
NITA M. LOWEY, New York
ELEANOR HOLMES NORTON, District of 
    Columbia
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
DONNA M. CHRISTENSEN, U.S. Virgin 
    Islands
BOB ETHERIDGE, North Carolina
JAMES R. LANGEVIN, Rhode Island
HENRY CUELLAR, Texas
CHRISTOPHER P. CARNEY, Pennsylvania
YVETTE D. CLARKE, New York
AL GREEN, Texas
ED PERLMUTTER, Colorado
VACANCY                              PETER T. KING, New York
                                     LAMAR SMITH, Texas
                                     CHRISTOPHER SHAYS, Connecticut
                                     MARK E. SOUDER, Indiana
                                     TOM DAVIS, Virginia
                                     DANIEL E. LUNGREN, California
                                     MIKE ROGERS, Alabama
                                     BOBBY JINDAL, Louisiana
                                     DAVID G. REICHERT, Washington
                                     MICHAEL T. McCAUL, Texas
                                     CHARLES W. DENT, Pennsylvania
                                     GINNY BROWN-WAITE, Florida
                                     MARSHA BLACKBURN, Tennessee
                                     GUS M. BILIRAKIS, Florida
                                     DAVID DAVIS, Tennessee
 Jessica Herrera-Flanigan, Staff 
    Director & General Counsel
      Todd Gee, Chief Counsel
   Michael Twinchek, Chief Clerk
 Robert O'Connor, Minority Staff 
             Director
_________________________________________________________________

        SUBCOMMITTEE ON MANAGEMENT, INVESTIGATIONS,AND OVERSIGHT

      CHRISTOPHER P. CARNEY, 
      Pennsylvania, Chairman
PETER A. DeFAZIO, Oregon
YVETTE D. CLARKE, New York
ED PERLMUTTER, Colorado
VACANCY
BENNIE G. THOMPSON, Mississippi (Ex 
    Officio)                         MIKE ROGERS, Alabama
                                     TOM DAVIS, Virginia
                                     MICHAEL T. McCAUL, Texas
                                     PETER T. KING, New York (Ex 
                                         Officio)
  Jeff Greene, Director & Counsel
      Brian Turbyfill, Clerk
  Michael Russell, Senior Counsel

                                  (ii)


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Christopher P. Carney, a Representative in Congress 
  From the State of Pennsylvania, and Chairman, Subcommittee on 
  Management, Investigations, and Oversight......................     1
The Honorable Rogers, a Representative in Congress From the State 
  of Alabama, and Ranking Member, Subcommittee on Management, 
  Investigations, and Oversight..................................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Chairman, Committee on 
  Homeland Security..............................................     3
The Honorable Yvette D. Clarke, a Representative in Congress From 
  the State of New York..........................................    16
The Honorable Eleanor Holmes Norton, a Delegate in Congress From 
  the District of Columbia.......................................    18

                                Witness

The Honorable Paul A. Schneider, Under Secretary for Management, 
  Department of Homeland Security:
  Oral Statement.................................................     4
  Prepared Statement.............................................     6

                                Appendix

Additional Questions and Responses:
  Responses from Hon. Paul A. Schneider..........................    23


THE DHS'S MANAGEMENT DIRECTORATE: GOALS AND OBJECTIVES OF THE NEW UNDER 
                               SECRETARY

                              ----------                              


                        Thursday, March 1, 2007

             U.S. House of Representatives,
                    Committee on Homeland Security,
                Subcommittee on Management, Investigations,
                                             and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:02 p.m., in 
Room 311, Cannon House Office Building, Hon. Christopher Carney 
[chairman of the subcommittee] presiding.
    Present: Representatives Carney, Clarke, Norton, Thompson, 
and Rogers.
    Mr. Carney. [Presiding.] The Subcommittee on Management 
Investigations Oversight will come to order.
    Under Secretary Schneider, I would like to thank you for 
agreeing to appear before us today. Today is actually the first 
time I am officially wielding a gavel. Although I met you 
informally a few weeks ago, I really appreciated that meeting.
    Although you and I have each served our country in various 
capacities in the past, including in the Navy--thank you for 
your service, by the way--we are both relatively new to the 
world of the Department of Homeland Security. In fact, we were 
both sworn in on our roles on the same day. Congratulations 
again on your new job.
    I think I speak for many in this subcommittee when I say 
that I have been shocked with several issues still afflicting 
DHS at the management level. These include hardships affecting 
recruitment efforts, wasteful procurement issues, like 
Deepwater, troubling failed efforts to unify multiple 
information systems and dizzying staff departures for the 
private sector, and the list goes on.
    It seems as if you have inherited quite a beleaguered 
directorate over at DHS. In fact, I am sure many of my 
colleagues are wondering why someone of your outstanding 
background would want to take on such a job. We appreciate you 
doing it, certainly.
    From what I understand, your predecessor left with, at 
best, mixed reviews for both inside and outside DHS.
    During our conversation a few weeks back, I found your 
candor very welcome. I walked away from the meeting looking 
forward to a productive relationship between you, your staff 
and this subcommittee, as well as the overall committee.
    I hope we can continue with such frank dialogue. It was 
heartening to hear you discuss a number of the management 
shortcomings that now fall under your purview. That said, it is 
very common for people to run when they hear the word, 
``oversight,'' but I think you know from your prior service 
that with the right people, both solving problems and 
overseeing those solutions, the best interests of the taxpayers 
and the government are both addressed.
    This subcommittee looks forward to hearing from you about 
what you have already proposed and begun to implement at DHS, 
as well as how your solutions are fairing. In the coming 
months, the subcommittee is planning a number of hearings where 
the input of your directorate will be invaluable.
    I look forward to continued cooperation between your 
organization and the MI&O Subcommittee.
    I hear from Pennsylvanians who have not only suffered from 
the so-called 100-year floods, a couple of them, actually, in 
the last couple years, they again suffered at the hands of a 
lethargic federal response to each of the floods. They expect 
oversight into these issues and others.
    I am sure you are already hearing from individual offices 
along the southern border about the SBInet and from coastal 
communities about Deepwater. While many in Congress see these 
as regional problems, these are issues that affect all of us. 
Our dialogue and cooperation is essential to ensuring that DHS 
is meeting its responsibilities to the American people.
    Neither secrets nor partisanship, nor antagonism will help 
us accomplish our ultimate goal, which is keeping our country 
safe, preparing for, preventing and responding to disasters.
    I would be remiss if I did not take a moment to recognize 
Mr. Rogers, the ranking Republican on this subcommittee, as 
well. While I did not yet have the privilege of being a member 
of Congress during the 109th, I have heard that Mr. Rogers 
worked tirelessly on management issues and laid a great 
foundation upon which we can continue to build. I look forward 
to working closely with him as well.
    I would also like to recognize Chairman Thompson--perfect 
timing--and thank him for the opportunity to sit as the chair 
on this subcommittee. His willingness and encouragement to let 
MI&O determine its own course is certainly welcome.
    I would also like to thank him for the support he has given 
us to accomplish our goals, as well as to restore more regular 
and vigorous oversight of DHS to this body.
    This subcommittee had a very productive joint hearing 
yesterday with the Subcommittee on Emergency Communications, 
Preparedness and Response. We heard from FEMA director, the 
director of the former Directorate of Preparedness and one of 
the deputy inspector generals. I am hopeful that today's 
hearing will provide us with similar meaningful insight into 
the Directorate of Management.
    Under Secretary Schneider, I cannot stress to you enough 
how much I am looking to working with you in the future and 
hearing your testimony today.
    Thank you.
    Mr. Rogers?
    Mr. Rogers. Thank you, Chairman Carney, and I too want to 
congratulate you on your new chairmanship. Thank you for 
calling this hearing and giving us a chance to hear from 
Undersecretary Schneider.
    I want to thank you for taking the time to be here. I know 
you're busy, and I appreciate your effort. And congratulations 
on your new appointment.
    The department became operational 4 years ago today--so a 
lot of things happened on today recently--in the largest 
reorganization of the federal government in 50 years. DHS now 
has approximately 207,000 employees and a budget of $43 
billion.
    When the department was created from 22 separate agencies, 
challenges and problems were expected. The Government 
Accountability Office has acknowledged that, ``Successful 
transformations of large organizations, even those faced with 
less strenuous reorganizations than DHS, can take years to 
achieve.''
    Improving the management of DHS remains one of the top 
priorities facing the department today. While much progress has 
been made over the past 4 years, there is much more work to do.
    In the 109th Congress, this subcommittee held a number of 
hearings on the management structure at DHS. Through our in-
depth reviews, we identified a number of areas which need to be 
improved, including the authority of the chief operating 
officers over the department's component agencies, morale and 
retention at DHS, security of information systems, staff 
shortages in procurement and contract oversights, financial 
management that will lead to a clean audit opinion and further 
integration of the department's operations and programs.
    To address these areas, the Committee on Homeland Security 
reported two authorization bills in the 109th Congress, which 
included provisions to strengthen the department's management 
structure. The testimony we hear today will be helpful as the 
committee drafts its third DHS authorization bill this month.
    I look forward to hearing from Undersecretary Schneider 
about his plans to address the department's management 
challenges and what goals he expects to accomplish during his 
tenure in office.
    And with that, Chairman Carney, I yield back.
    Mr. Carney. Thank you, Mr. Rogers.
    The chair now recognizes the chairman of the full 
committee, the gentleman from Mississippi, Mr. Thompson, for an 
opening statement.
    Mr. Thompson. Thank you very much, Mr. Chairman.
    Welcome, Mr. Undersecretary. Welcome to the hot seat.
    I appreciate you coming today, but I also appreciate your 
outreach before this particular hearing. It tells me that even 
though you have a tough job, you don't mind admitting it. And 
they tell me that is 90 percent of the challenge is to know 
what you face.
    You have some awesome responsibility is to tell people what 
they need to do, to look at it and somehow get them to 
understand that it is in their best interest. And your office 
oversees the department's procurement operations. We heard 
about SBInet, for instance, yesterday. We know about Deepwater. 
We know about a lot of programs that speak to procurement.
    But it is also your responsibility to unify the 
department's information technology, human resources and 
financial systems. MaxHR, I hope you will officially pronounce 
it dead before the hearing is over today, so we can move on to 
something else.
    But I look forward to your testimony, and I appreciate your 
service.
    And I yield back.
    Mr. Carney. Thank you, Mr. Thompson.
    Mr. King is not here.
    Other members of the subcommittee are reminded that, under 
the committee rules, opening statements may be submitted for 
the record.
    I welcome our witness, the undersecretary for management, 
the Honorable Paul Schneider.
    Without objection, the undersecretary's full statement will 
be inserted into the record.
    I now recognize Undersecretary Schneider to summarize his 
statement for 5 minutes.

   STATEMENT OF HON. PAUL A. SCHNEIDER, UNDER SECRETARY FOR 
          MANAGEMENT, DEPARTMENT OF HOMELAND SECURITY

    Mr. Schneider. Thank you, Mr. Chairman, Chairman Thompson, 
Congressman Rogers and members of the subcommittee. It is a 
pleasure to appear before you today for the first time as the 
undersecretary for management.
    I have been the undersecretary for 2 months. For the 
previous 3.5 years, I was a defense and aerospace consultant 
doing work for NASA, Federal Aviation Administration, 
Department of Defense, the United States Coast Guard and 
several others.
    Prior to consulting, I was a career civil servant for 38 
years. I began my career at the Portsmouth Naval Shipyard, 
working as an engineer on designing and constructing nuclear 
submarines.
    My last three government positions, I served as the senior 
acquisition executive at the National Security Agency, I was 
the principal deputy assistance secretary of the Navy for 
research, development and acquisition, and I was the executive 
director and senior civilian of the Naval Sea Systems Command, 
which is the Navy's largest shore command.
    I am here today to discuss the major management and 
programmatic challenges the department faces and the areas that 
I am going to focus on as the undersecretary for management.
    The most significant challenge we have is to continue the 
effort that was started with the creation of the new 
department, merging 22 agencies with approximately 180,000 
people and turning it into the most effective force to protect 
our country. This effort requires effective and efficient use 
of financial and human resources, enabling technology and 
superb management.
    The major elements are our strategy are to improve 
acquisition and procurement throughout the department, 
strengthen the requirements and investment review process, 
acquire and maintain the necessary human capital to do the job, 
seek efficiencies across the enterprise in various operations 
and resources and making the key management systems, such as 
financial and information technology, world-class.
    What we are currently doing is reviewing our major programs 
and investments to ensure that the requirements are clear, the 
cost estimates are valid, technology risk is properly assessed, 
schedules are realistic, contract vehicles are proper and that 
our programs are well-managed with effective oversight. We are 
ensuring that the program offices that manage the major efforts 
are properly structured and staffed with the right people and 
the right skill sets.
    To date, the department's focus has been on procurement, 
but procurement is only one element that is required and one 
skill set for proper acquisition management. Acquisition 
includes understanding operational and lifecycle requirements, 
concepts of operations, how the ultimate product or system 
would ultimately be employed, developing sound business 
strategies, exercising prudent financial management, making 
tradeoffs and managing program risk.
    One of the things I have found in my 2 months here is that 
we need to transition from a focus on procurement to a focus in 
the broader context on management. Prior to DHS' establishment 
in 2003, the department's components did not have major 
acquisitions, like the Coast Guard's Deepwater Program, which 
require large numbers of mature and experienced acquisition 
personnel, like those that are in the Department of Defense. It 
was a different business model, with a different type of 
business.
    DHS has a shortage of people that are experienced in 
program management, including its related functions, such as 
acquisition logistics and cost analysis.
    To reduce our reliance on contractors, which I know is a 
big concern of this committee and others in Congress, for 
fiscal year 2007 and 2008, we are focusing on developing from 
within an acquisition workforce through targeted recruiting and 
advanced training programs for those people we currently have.
    DHS did very poorly in the OPM federal human capital 
survey. Managers and line employees alike delivered a message 
that the leadership has heard loud and clear. As initial steps 
toward improving employee satisfaction, we have already 
identified the need for better communications throughout the 
workforce, continued emphasis on performance management 
training at the supervisory and employee level and improved 
recognition of good performance. Those messages came out loud 
and clear from our analysis of the survey.
    There has been considerable publicity about the 
department's efforts to implement MaxHR, which is the personnel 
management system. In consideration of the recent court 
decision on collective bargaining, we are considering our next 
steps in how we implement a truly effective personnel 
management system in the department.
    And so what we are doing is focusing on performance 
management, we are focusing on targeted hiring and efforts to 
retain our workforce through training and development.
    The OPM survey told that one of the most important things 
we need to concentrate on first is building this performance-
based, results-oriented culture, and it is the area that we 
have to focus on. We started with training over 13,000 
supervisors across the department to administer the new program 
and we have implemented an automated system to support it.
    We are going to continue to expand our coverage of the new 
performance management program, because it allows us on the 
most basic level, between supervisor and employee, to 
understand what performance is required of the employee, make 
sure it is properly aligned with the higher level department 
objectives, and that helps us achieve our overall department 
strategy, and people at the working level can relate to their 
contribution to the overall organization's goals.
    This clearly was an identified deficiency in the survey, 
and so what we need to do is take the process we started, 
increase our emphasis on it, expand the performance management 
aspects in other areas, additional training for employees and 
the like. And so this is the centerpiece of our near-term 
efforts.
    We are also going to be deploying a pilot effort on linking 
performance and pay in one area, and that is in the 
intelligence and the analysis component. And this will be for 
the INA people that are not part of a collective bargaining 
unit. We chose this component because, first, they were eager 
to do it and because we are in an intense competition with the 
private sector and other government agencies for this same 
talent.
    The talent that we are looking for in the intelligence and 
analysis area is the same talent the CIA, the NSA, the DIA, the 
DNI--and I forgot all the acronyms--that they are actively 
trying to compete for. And so what we believe, and in my 
personal experience--I have had considerable experience in the 
Navy with performance pay link systems--the better performers, 
frankly, are much better compensated, and the poor performers 
are less compensated. And so people, once they are in that type 
of system, they recognize the potential.
    So we are going to try this pilot, it is going to give us 
some good examples for the future before we march forward.
    [The statement of Mr. Schneider follows:]

         Prepared Statement of the Honorable Paul A. Schneider

    Thank you Mr. Chairman, Congressman Rogers and members of the 
Subcommittee. It's a pleasure to appear before you today for the first 
time as the Under Secretary for Management.
    I have been the Under Secretary for Management for two months. For 
the previous three and one half years I was a defense and aerospace 
consultant doing work for NASA, FAA, DOD, Coast Guard and others. Prior 
to this I was a career civil servant for 38 years. I began my career at 
the Portsmouth Naval Shipyard as a project engineer in 1965 working on 
nuclear submarines. My last three government positions were Senior 
Acquisition Executive at the National Security Agency (NSA), Principal 
Deputy Assistant Secretary of the Navy (Research, Development and 
Acquisition) and Executive Director and Senior Civilian of the Naval 
Sea Systems Command, the Navy's largest shore establishment.
    I am here today to discuss the major management and programmatic 
challenges the Department faces and areas I will focus on as the Under 
Secretary for Management.
    The Government Accountability Office (GAO) has continued to 
designate transforming DHS as high risk. Their report and other 
Inspector General reports address, in large part, the status of the 
integration of DHS' varied management processes, systems and people in 
areas such as information technology, financial management, 
procurement, and human capital, as well as administrative services. The 
GAO report said DHS has made some progress in management integration, 
but still needed a comprehensive strategy. GAO noted that in such a 
strategy, DHS would integrate planning across management functions to 
identify critical interdependencies, interim milestones and possible 
efficiencies. As the Under Secretary for Management, I support the 
strategy proposed by the GAO. The GAO indicates some of the plans and 
directives already issued by DHS could be used in building the needed 
integration strategy. I am reviewing the DHS progress against each of 
the elements of the integration strategy to confirm that the effort is 
headed on the right track. My role is to direct this effort and to be 
the forcing function across the Department.
    The most significant challenge we have is to continue the effort 
that was started with the creation of the new Department: merging 22 
agencies with approximately 180,000 people and turning it into the most 
effective force to protect our country. This effort requires effective 
and efficient use of financial and human resources, enabling 
technology, strong processes and superb management. These are the 
challenges that are the focus of my efforts.
    The major elements of our strategy are:
         Improving acquisition and procurement throughout the 
        Department.
         Strengthening the requirements and investment review 
        processes.
         Acquiring and maintaining human capital.
         Seeking efficiencies across the enterprise in 
        operations and the use of resources.
         Making the key management systems, such as financial 
        and information technology, world class.
    Our approach has a common thread through all of these areas. That 
is to ensure that there is a comprehensive and integrated strategy with 
specific and measurable goals, and that these goals support the 
activities and priorities of the Department. On a practical level, we 
will ensure the success of this strategy by having a team with the 
right knowledge, skills and abilities to support these programs, the 
overall transformation and integration efforts. Our progress will be 
measured against metrics and milestones.

Acquisition and Procurement
    The Department of Homeland Security is just beginning or is in the 
midst of many crucial acquisitions that are vital to the success of 
DHS. That is why Chief Procurement Officer Elaine Duke and I are 
working to strengthen acquisition and procurement by institutionalizing 
solid processes. To this end we are:
         Strengthening the requirements and investment review 
        processes by improving the Joint Requirements Council (JRC) and 
        Investment Review Board (IRB) process.
         Reviewing the major programs and investments to ensure 
        that the requirements are clear, cost estimates are valid, the 
        technology risk is properly assessed, schedules are realistic, 
        the contract vehicles are proper, and the efforts are well 
        managed.
         Building the capability to manage complex efforts by 
        ensuring that program offices are properly structured and 
        staffed with the right people, and the right skills, to ensure 
        efficient and effective program management and oversight; and 
        aggressively hiring where we have known shortages.
    To date, the Department's focus has been on procurement. 
Procurement, however, is only one element of acquisition management. 
Acquisition also includes understanding operational and life-cycle 
requirements, such as formulating concepts of operations, developing 
sound business strategies, exercising prudent financial management, 
assessing trade-offs, and managing program risks. Best practice 
acquisition management is executed by teams of professionals who 
understand and are able to manage the entire life-cycle of a major 
program effort. DHS has a shortage of people that are experienced in 
program management, including its related functional areas (e.g. 
acquisition logistics, cost analysis). I will focus on this area as one 
of my major priorities by identifying needed skills and processes and 
considering expedited delivery of training in key disciplines for those 
individuals involved in the management of the Department's major 
programs.
    We have established a department-wide real property asset 
management plan with performance metrics to govern investment decisions 
regarding our buildings, structures and land. We are expanding this 
approach to all tangible assets through the investment review process 
with an Asset Management and Services Board with representation by the 
component chief administrative officers.

Contracts
    DHS' $12 billion procurement budget provides for the development, 
fielding and support of significant homeland security capabilities. For 
example, US Coast Guard contracts are providing aircraft and ships from 
the Integrated Deepwater System (IDS) and search and rescue capability 
from the Rescue 21 program. Transportation Security Administration 
(TSA) contracts are providing additional capabilities via the 
Electronic Baggage Screening Program (EBSP) and Transportation Worker 
Identification Credentialing (TWIC) program. Consistent with the SBI 
Strategy, U.S. Customs and Border Protection (CBP) is developing and 
fielding the capabilities at and between our nation's ports of entry to 
gain effective control of our borders.
    Our model for using contractors has been to address immediate 
staffing shortfalls. Because the Department has launched a number of 
new large scale initiatives, our acquisition workforce requires skill 
sets and experience that are very different from an ordinary 
acquisition program. Prior to DHS' establishment in 2003, the 
Department's components did not have major acquisitions like the USCG's 
Deepwater program, which require large mature and experienced 
acquisition support services such as those that exist in the Department 
of Defense for major weapons systems and ship-building. To reduce our 
reliance on contractors, for fiscal year 2007 and 2008 we are focusing 
on developing a mature acquisition workforce through targeted 
recruiting and advanced training programs. Our goal is to build our own 
pipeline of people from within the Department and we've begun to do 
this.
    Also, it is worth noting that DHS has exceeded the Administration's 
goal for small business prime contracts as well as our own goal of 30 
percent. I am happy to report that in fiscal year 2006, 34.6% of the 
procurement dollars went to small business prime contractors. Of that 
34.6%, 12.1% went to small, minority owned businesses.
    Office of Personnel Management (OPM) Federal Human Capital Survey 
(FHCS)
    DHS did very poorly on the OPM Federal Human Capital survey. 
Through the survey results, managers and line employees alike delivered 
a clear message that the leadership has heard loud and clear. 
Leadership teams across DHS are committed to identifying the underlying 
reasons for DHS employee dissatisfaction and are seeking ways to 
address them directly.
    As initial steps toward improving employee satisfaction both at the 
headquarters and within the operating components, we have already 
identified the need for better communication throughout the workforce, 
continued emphasis of performance management training at the individual 
supervisor and employee level and implemented improved recognition of 
good performance. Although the general results of the survey were 
disappointing we are encouraged by the fact that DHS employees have 
passion for our mission. 89% percent of employees report that they 
believe the work they do is important, and 80% percent like the work 
that they do. This is a strong foundation to build upon for 
improvement.
    We will continue to evaluate the detailed results of the survey, 
analyze the practices of Departments that are recognized for their high 
performance, and use this information to develop additional steps that 
will lead to DHS' employee satisfaction. This summer, we will conduct 
another survey of our workforce to ensure that our efforts are on track 
with addressing key employee concerns.
    Additionally, the leadership team in each operating component and 
headquarters unit will discuss details of the survey with our workforce 
in order to gather employee suggestions and recommendations that will 
inform the way forward.

Human Capital
    We are aggressively moving towards building a world-class 
organization by continuing to hire and retain a talented and diverse 
workforce. There has been considerable publicity about the Department's 
initial efforts to implement the MaxHR personnel management system, 
mostly resulting from recent court decisions regarding the labor 
relations portion of the system. In consideration of the recent court 
decision on collective bargaining, we are considering next steps in 
this area.
    In the meantime, our Chief Human Capital Officer Marta Brito Perez 
and I are broadening our efforts to encompass a wider range of human 
resource effectiveness with an initial focus on performance management. 
A performance-based management system compensates and rewards employees 
based on merit, that is, their performance and contribution toward the 
achievement of the Department's mission. Moreover, a performance-based 
management system requires work on everyone's part, as staff members at 
all levels of the Department to collaborate and define requirements, 
establish targets towards desired results, and agree on management 
methods for measuring and evaluating success. Based on the results of 
the OPM survey this is the area we need to focus on first.
    Building a performance based, results oriented culture at DHS is 
very important. It will foster an environment of open communication and 
feedback between the supervisor and employee.
    To date, we have implemented the new performance management program 
to over 14,000 employees, trained over 13,000 supervisors to ensure 
they develop the skills needed to administer the new program, and 
implemented a new automated system to facilitate the new performance 
management process. We will continue to expand coverage of the new 
performance management program as it will allow us to work seamlessly 
across components with the goal of aligning the work we do with the 
overall strategy, vision and values of the Department.
    In addition to establishing a performance-based management program, 
we will soon be deploying a ``performance-based'' pay pilot in the 
Intelligence & Analysis component for non-bargaining unit employees. We 
chose this component because we are competing with the private sector 
and other government agencies for the same talent and it will give us 
experience and employee feedback before we proceed with a wider 
implementation.
    Other efforts underway are captured in a recently developed two 
year Human Capital Operational Plan. Key goals in the human capital 
area include:
         Developing career paths to broaden career 
        opportunities for employees.
         Implementing an automated recruiting system to improve 
        our hiring efficiency.
         Providing learning and development programs for DHS 
        employees at all levels.
         Promoting a leadership environment that encourages and 
        supports cross-developmental opportunities.
    In addition, we will be improving our hiring processes by educating 
our hiring managers and human resource officials on the flexibilities 
that are currently available as well as implementing an enterprise E-
recruitment system. We have established a Department-wide branding 
initiative and will implement proactive recruitment strategies to fill 
979 mission support vacancies that cross component lines in areas such 
as information technology, acquisition, and human resources.
    We are well on our way to achieving our hiring targets in our 
frontline mission critical occupations as well. In ICE, we have already 
filled over 50% of the 1,477 authorized positions for this fiscal year. 
As the President committed to last year, we are looking to have 17,819 
Border Patrol Agents by the end of FY08 and 18,319 by the end of 2008.
    Our recruitment strategies will be designed to ensure that DHS 
reflects our Nation's diversity. The percent of Hispanic females and 
males in the DHS workforce is 4.59 and 12.11 respectively Hispanic 
males are employed at twice their rate in the National Civilian Labor 
Force. The percent of African-American females is 7.63, and for males 
is 6.86, which also exceeds CLF percentages. However, we must do better 
in ensuring our leadership ranks reflect the Nation's diversity. The 
Secretary, Deputy Secretary, and I are committed to ensuring that the 
talent pool for Senior Executive Service positions, in particular, is 
representative of our Nation as a whole.

Financial Management
    The Department has many substantial challenges to overcome in its 
effort to improve its financial management processes. Chief Financial 
Office David Norquist and I are working to make measurable, 
demonstrable progress in the following areas:
         To improve systems and processes eventually leading to 
        sustainable clean audit opinions.
         To provide assurance about our internal controls over 
        financial reporting via a sound internal controls program.
         To provide greater visibility into DHS' financial 
        activity through timely accurate and useful financial related 
        data.
         To provide efficient financial management services.
    Success in these areas rests upon a framework of people, policies, 
processes, systems and assurance. We have efforts underway in each of 
these areas which include: aggressive hiring and development programs; 
the ``Internal Controls over Financial Reporting (ICOFR) Playbook'' -a 
corrective action plan that addresses identified audit weaknesses; the 
development of a comprehensive set of financial management policies 
which represent the best practices of the Federal Government; and a 
plan to continue the migration and reduction in the number of our 
financial management systems.
    Of particular importance are internal controls. Sound internal 
controls are essential to effectively meeting the Department's mission. 
DHS must have a process in place by which it can test whether our 
internal controls are well designed and operating effectively on a 
continuous basis. This means that management must move away from 
reliance on what outside auditors determine is wrong, and be able to 
independently prevent and address issues before they become problems.
    Additionally, we are working to ensure that the Department's grant 
programs have the necessary internal controls in place, are adhered to, 
and that funds to State and Local first responders are monitored to 
achieve success with measurable outcomes.

Information Technology
    The Department has established and institutionalized Department-
wide business processes and systems for managing information. The DHS 
Chief Information Officer (CIO) Scott Charbo, heads the CIO Council, 
whose membership includes the CIOs from all of the DHS components. The 
council works to standardize business practices where it makes sense 
across the Department in order to improve information sharing. These 
efforts will improve our IT operations and reduce costs by eliminating 
duplicative IT systems. At this time, more than 60% of information 
management investments are managed through earned value principles.
    Moreover, the DHS CIO has established program management offices 
(PMOs) to oversee selected major investments. In addition, DHS has 
awarded the EAGLE and FirstSource contracting agreements, the largest 
contracting vehicles in the Federal Government for the procurement of 
IT and program management services, which should result in more 
streamlined and cost-effective procurements.
     The Department's Enterprise Architecture Board (EAB) 
reviews investments at various stages in the IRP and CPIC cycles.
     The EAB has published the DHS Enterprise Architecture 
Version 2.0 to be consistent with best business practices. The Homeland 
Security Enterprise Architecture 2006 was rated ``green'' by OMB and 
rated 5th of 27 in the Federal Government for maturity by GAO. The 
enterprise architecture informs the creation of DHS strategic plans and 
all investment reviews.
     Consolidation of major networks and systems continues, 
reducing seven wide-area networks and creating one common e-mail 
operation.
     The first 24,000 square feet of the primary data center 
has been opened. The next 40,000 square feet is under construction and 
due to open in July. We have migrated systems and more are scheduled to 
move. The RFP for the second DHS data center has been released.
    The Chief Information Officer is working to unify and improve DHS' 
IT security that is essential to accomplishing our mission. The DHS CIO 
and Chief Financial Officer (CFO) are working through the Internal 
Controls Assessment Project to bring information security policy and 
actions to the Federal Information Security Management Act (FISMA) 
standards. We are executing a plan to fix identified FISMA 
deficiencies.
         When we held our first IT security conference (Fall 
        2005), certification & accreditation (C&A) completion was 
        approximately 22%. We have since increased C&A completion to 
        95% (Fall 2006), which reflects a 73% increase.
         A baseline list of systems has been integrated into 
        our budget and procurement process.
         Security controls testing increased from 54% to 87% of 
        DHS systems.
         Annual DHS-wide IT security awareness stands at 88% 
        with training for certain specialized job functions at 97%.
         Key policies and procedures have been revised to 
        assure protection of personal identifiable information.

Consolidated Headquarters
    DHS' mission demands an integrated approach, yet the Department's 
legacy facilities are dispersed in more than sixty locations with 7.1 
million Gross Square Feet (GSQF) of office space throughout the 
National Capital Region (NCR). This dispersal adversely impacts 
critical communication, coordination, and cooperation across the 
Department. Consolidating executive leadership in a secure setting of 
no less than 4.5 million GSQF of office space for policy, management, 
operational coordination, and command and control capabilities at the 
St. Elizabeths campus is vital to the long-term success of the 
Department. It will ensure a unity of effort and command for the 
Secretary as well as build a culture and a spirit which are essential 
to having a happy and productive workforce.
    Without federal construction at St. Elizabeths, DHS will continue 
to be housed in more than 50 locations in the National Capital Region 
(NCR). If the project is not funded, the cost to continue housing DHS 
in leased space is approximately $5.1 billion based on a net present 
value (NPV) analysis. The St. Elizabeths development NPV is $4.1 
billion ($3 billion program investment), a $1 billion dollar NPV 
difference providing an equivalent annual cost advantage of 
$63,953,000.
    Moreover, Congress' approval of this project would reverse the 
current situation where DHS is currently located in 70 percent 
commercially leased space and 30 percent government owned space.
    Consolidating our facilities will increase efficiency and 
communication, as well as help foster a ``one-DHS'' culture to optimize 
prevention and response capabilities across the Department. I request 
that Congress support this effort by authorizing and appropriating the 
funding for DHS' consolidation at St. Elizabeths West Campus.

Authority of the Under Secretary for Management
    Throughout the process that ultimately led to my Senate 
confirmation, the question has been raised as to whether the Under 
Secretary for Management has sufficient authority to do the job. My 
answer is an unqualified, yes. I have sufficient authority to direct 
the type of sustained leadership and overarching management integration 
and transformation strategy that is needed Department-wide. Under 
section 701 of the 2002 Homeland Security Act, and internal 
Departmental directives and delegations, there is a very clear mandate 
of management authority for the USM. I also have the full support of 
the Secretary and Deputy Secretary. The Secretary has advised me that 
if there is any authority that I need that I don't have to do my job, 
he will provide me that authority. In addition to the statute, I 
operate with the Department's leadership fully knowing the job I am 
chartered to do, and that I operate with the full authority of the 
Secretary to get it done.

Conclusion:
    Secretary Chertoff has expressed that one of his key goals for DHS 
is to strengthen DHS core management, policy and operational 
integration. I think DHS has come a long way since its inception in 
management and we will continue to improve by institutionalizing 
management processes and procedures over the next few years. I know 
from my 2 months on the job that we have major challenges ahead but I 
look forward to them with energy and enthusiasm. Thank you for your 
leadership and your continued support of the Department of Homeland 
Security and its management programs. I look forward to working 
together in shaping the future and success of DHS. Thank you for this 
opportunity to be here today and I am happy to answer any questions 
that you may have.

    Mr. Carney. Thank you for the testimony that you have given 
so far, and of course, we have your written testimony. We 
certainly appreciate that.
    I will remind each member that he or she will have 5 
minutes to question the panel, to question Mr. Schneider.
    I am going to go out of order. I am going to allow Mr. 
Rogers to go. He has an urgent appointment he has to make. So 
he will be able to ask the first question for 5 minutes.
    Mr. Rogers. And I thank the chairman.
    Mr. Schneider, as you know, and I have talked with you 
privately, the morale at DHS has been an issue that this 
committee has been attentive to during the 109th Congress and 
concerned about and have held hearings on it. And you also know 
that OPM recently conducted a survey of all federal employees, 
and DHS obviously was included in that.
    On January 30 of 2007, Deputy Secretary Jackson issued a 
memo to all DHS employees regarding that OPM survey. In that 
memo, Mr. Jackson stated that, ``Strengthening core management 
is one of the secretary's highest priorities and the key 
elements of an effective communications and proper recognition 
of our workforce.''
    Mr. Jackson further indicated in that memo that you, he and 
Secretary Chertoff would be evaluating that OPM survey. Have 
you had a chance in your brief tenure to review that OPM 
survey? And if so, what goals have you been able to yield from 
it, and what are your expectations?
    Mr. Schneider. Yes, sir. I have spent considerable time 
looking at all the statistics, not just at the macro department 
level but the individual components, the operating components 
and the headquarters, and what we see is in certain areas a 
common thread.
    We know that certain organizations have some very serious 
issues, and that is based on the number of respondents relative 
to the overall population. And so we also know that we have to 
do a better job on this performance management.
    When you look at the answers to all the questions, people 
feel, in large part, that they are not property acknowledged 
for the work that they do. This is linked to performance 
management. They, in many cases, feel that the communications--
and this gets down to the individual survey questions--
communications between them and their supervisor are poor. In 
some cases, they don't believe that their development 
requirements are being properly recognized by their management 
so that they can get the skill set and development they need.
    So what we have been doing, and I have been working--I 
chair Management Council, my counterparts of the operating 
component. I have met with them. The deputy secretary and 
myself have met with the seven operational component heads, we 
have gone through the results of the survey. We have a 
framework for a package that focuses on communication, change 
processes for even how we do the future-year or out-year 
planning where everybody is part of the team and everybody can 
kind of understand what our objectives are.
    We have got an effort under way with focus groups to go 
down--I mentioned in my opening statement we have trained 
13,000 supervisors. We are going to go target several of those 
across the enterprise and find out what went wrong, okay? They 
were trained, they should have worked with their employees, we 
should have performance plans in place. We are going to go in 
there and we are going to audit these things.
    Mr. Rogers. What timeline do you expect to do this on?
    Mr. Schneider. We are in the process of putting together 
the focus teams right now. I can't give you the actual 
timeline. It is something that is currently under development.
    Mr. Rogers. Conceptually, when would you like to see this 
done, completed?
    Mr. Schneider. I would like to see some of these focus 
groups under way in the next 60 days. I think we have got a 
broad outline of an improved communications packages, of how we 
get the information out to the employees. As a start, the 
secretary this afternoon, literally as I am speaking, is 
conducting an all-hands meeting, and we have arranged for that 
message to get out.
    So I can tell you that the recognition that we have to do a 
better job of communications top down, all the way throughout 
the 180,000 people is well-understood, and we have got efforts 
under way.
    Mr. Rogers. And along that line, one of my pet peeves in 
the last Congress is the fact that your department uses the 
phrase, ``human capital,'' instead of calling it the Office of 
Personnel or something that normal people would use. And on 
page 2 of the report, ``The Culture Task Force, which reviewed 
this, recommends referring to employees by dropping the buzz 
word, 'human capital,' and replacing it with 'employees' or 
'members.' ''
    Do you agree with that recommendation?
    Mr. Schneider. Yes, sir, I do. I don't like the phrase, 
``human capital,'' and when I read that report from that 
committee, I raised the question, ``Why do we use that?'' I 
have not traced it down, but I am in the process. Apparently, 
there is some--what has been told to me, there is some law that 
says that is the proper term. So when I trace that down--
    Mr. Rogers. You let us know. We will change the law.
    Mr. Schneider. Yes, sir. With all due respect, I hate the--
    Mr. Rogers. Good. You and I have something in common.
    Mr. Schneider. Well, it doesn't reflect truly the value of 
the individual.
    Mr. Rogers. Great. Thank you.
    My time has expired.
    Thank you very much, Mr. Chairman.
    Mr. Carney. Thank you, Mr. Rogers.
    I will now recognize myself for 5 minutes.
    Mr. Schneider, integrating 22 legacy agencies into one 
functioning department is a tremendous challenge; we all 
appreciate that. How do you plan to use your directorate to 
facilitate this goal, and what tangible evidence of progress 
can we look forward to in the coming year? In other words, what 
are your benchmarks?
    Mr. Schneider. There is a whole series of them. Let's start 
with the one that gets the most visibility, which is the--and I 
believe it was in your opening comments--internal controls. And 
so let's just take that.
    We have serious weaknesses in internal controls. I have met 
with the inspector general. We have a plan, and I refer to it 
in my statement, called, ``A Way Ahead,'' which is we call it 
the internal controls over financial reporting, ICOFR. And what 
it is, it is the road map at the department and operating 
component levels that addresses every one of the internal 
weaknesses that has been identified by the I.G. and their 
accounting firm KPMG.
    I have met with the I.G. We are starting a series of 
meetings that I am personally running between the chief 
information officer, the chief financial officer at 
headquarters and then the components that go address each of 
these identified deficiencies.
    We have a plan for each component and the headquarters that 
is focused on a timeline for partial remediation, full 
remediation and then assurance. That is the benchmark that I 
look for in terms of internal controls.
    The deputy secretary and I have met with the heads of each 
of the operating components. We have gone through the 
framework. They understand they are signed up to do it. And I 
believe that with periodic monitoring and implementation--this 
is hard work, but it is not something that is beyond the realm 
of doing. I mean, it is just hard work, but people can do it. 
And that is why I believe in our plan. That is our measurement 
or benchmark.
    In the case of the financial management systems 
integration, there is reference to the 22 different agencies, a 
myriad of financial management systems. We have an outline of a 
similar architecture, possible solutions without getting into 
whether it is SAP or Oracle-based, et cetera. We are working 
out at a very definitive plan to start migrating each of the 
financial management systems off their existing platforms to 
one of those two that meets our architecture.
    So I think finance is a big part of it.
    In terms of the human resources, one of the problems we 
have at MaxHR was that it focused on six elements. It didn't 
address the broader context of human resource type things, like 
hiring and leadership and development and things like that.
    So one of our benchmarks is hiring, how well do we do as a 
corporation. We have efforts under way to try and substantially 
meet our hiring goals as well as how do we improve the hiring 
process, both at headquarters and within each of the 
operational components.
    I have already engaged in several discussions where people 
are taking a look and doing process reengineering at the 
operational component level to how they can streamline their 
end of it. We, at the corporate level, have to figure out how 
do we basically merge the best practices and do much more 
efficient hiring?
    The consolidation of I.T. infrastructure, I am frequently 
asked, do I have all the authority I can to do the job? And 
there are others that have made some proposals that perhaps 
enhance that. Well, in my discussion with the secretary about 3 
weeks ago, we were talking about, ``How are we going to 
integrate this I.T. infrastructure? How are we going to, 
basically, cut costs, move people to the right types of 
platforms, basically, execute our enterprise architecture?''
    We have an enterprise architecture. The problem is in 
enforcing it. And so he asked me, ``Do you have all the 
authority that you need and that the CIO needs to make this 
happen?'' And I said, ``No, I don't.'' So he said, ``Fine. You 
tell me what authority you need for you and the CIO to make 
sure you can execute this thing and I will sign it.'' And 8 
days later, he did that.
    So we are in the process right now of structuring, how do 
we migrate this massive I.T. infrastructure to what we believe 
is the correct end state based on our enterprise architecture.
    So I think I have captured, between financial I.T. and 
human resources, some of the major elements.
    My plan is for every one of these areas, have a clear, 
definitive approach, just like we have in the internal controls 
playbook, that the I.G. and the GAO can monitor us on. And I am 
very hopeful that we will, if we do that, start making progress 
and that those two oversight agencies will recognize the 
progress that we make.
    Mr. Carney. We do look forward to those benchmarks and 
watching the progress that DHS makes. It is very important, as 
you know, to certainly the safety of this nation.
    I now recognize Mr. Thompson for 5 minutes.
    Mr. Thompson. Mr. Undersecretary, can you say to the 
committee how you propose to change how the employees view the 
agency they work for? Right now, as you know, it ranks dead 
last in the eyes of the people who work for it, and that is a 
challenge. So tell us how you see that changing?
    Mr. Schneider. Well, we are starting with a good foundation 
where a very high percentage, high 80s, think the work they do 
is important and they think the mission of the organization is 
important, and they understand how their work relates to the 
mission. So we are starting with a very good benchmark.
    I believe it gets down to how people are treated. As 
somebody that came up through the ranks, I started as a GS-5. I 
was very fortunate that I had good supervisors who clearly, in 
my career, explained what was expected of me, would work with 
me, and if I did what I was required to do as part of my 
performance, saw that I got the recognition. I was properly 
recognized for it, and I could rise through the ranks.
    I think that is where we have to focus on, and I spent a 
lot of time going out talking to people, I personally run town 
hall meetings. I believe that part of our communication 
strategy, top down, at all leadership levels, is to get the 
message out to the people, focus on these employee-supervisor 
relationships at the lowest level, the mid level and the high 
level and make it work.
    Mr. Thompson. Let me tell you what some of us hear. If I am 
a GS-12 and I am a federal employee, next to me is a contract 
employee, that contract employee makes one and a half to two 
times more money than I do and we are doing the same job. You 
will never get morale up that way.
    Mr. Schneider. I would like to address that. I agree with 
you if the two people are doing the same job. I personally have 
a problem that that situation would exist. I believe there are 
jobs that are inherently governmental that should be done by 
government employees, and there are those that could be 
properly done by contractors.
    And so from my standpoint, we shouldn't be in that 
situation, Congressman, where we have two employees doing the 
same job. Because I would agree that that would be a 
demoralizing factor, if you will, in employee?
    Mr. Thompson. That is the concern. Let me give you another 
one.
    We put procurements on the street. We don't have enough 
employees to manage the procurements, and, therefore, we either 
get behind on the procurements or, as you know, in times past, 
we have had to cancel procurements and projects, ISIS and some 
others, but we are in the middle of one now called, SBInet.
    We found out in a hearing yesterday that our next 
management task we don't have the employees in place to move 
forward. But yet and still we are pushing out a multibillion 
dollar project, and we don't have staff in house to staff it. 
And we are told by the I.G. and GAO that the staff we need are 
very complicated tasks that you have to have special people. 
You can't use interns, you can't use entry-level people.
    So I think the challenge you are going to have to do is to 
how first get a hand on the procurement, and so we can't go out 
with this procurement unless we can adequately staff it. And 
that is a real problem.
    Mr. Schneider. Yes, sir. And I agree with you, and that is 
why this is one of those cases where the devil is in the 
details.
    For example, on SBInet, it takes a mix, if you will, of 
contracting people to execute contracts. It takes a mix of the 
right system engineers to know whether or not the architecture 
that is ultimately being developed right now for Project 28, 
the first 28 miles, is in fact a good architecture that is 
modular and can be scalable to the entire southwest border. It 
takes test engineers that frankly can work with the Army, who 
is going to be the independent test agent this May and June, to 
have the expertise in testing to look at and evaluate whether 
or not those test and evaluation results are proper.
    So some of those areas we are short. We are not short in 
every one, and I think it is a question of, do we have the 
right talent looking at the specific task at the right time so 
you can move ahead? And that takes going into the level of 
detail almost on a frequent basis to make sure as the program 
ramps up we have all the specialties covered.
    Mr. Thompson. Thank you.
    Mr. Carney. Thank you, Mr. Thompson.
    The chair would also like to recognize the presence of the 
gentlewoman from the District of Columbia at today's 
proceedings. Representative Holmes Norton has a particular 
interest in the topic at hand today and approached the 
committee about participating.
    I ask for unanimous consent to allow Representative Norton 
to sit and question the witnesses at today's hearing.
    Without objection, it is so ordered.
    I now recognize Ms. Clarke, but before I do that, a series 
of five votes has been called. The committee will recess, 
subject to the recall of the chair, to allow members the 
opportunity to vote. When we return, we will continue with the 
questions, beginning with Ms. Clarke.
    [Recess.]
    Mr. Carney. The subcommittee will return to order.
    I recognize Ms. Clarke from New York for 5 minutes.
    Ms. Clarke. Thank you very much, Mr. Chairman.
    Undersecretary Schneider, I thank you for coming before 
this committee and for your indulgence with the procedures 
here. I am sure you are probably more accustomed to it than--
well, actually, you are pretty new here too, so we are probably 
all experiencing this simultaneously.
    Past leadership has led to many serious concerns and 
problems within the directorate of management, and now they 
have sort of left all of this for you to clean up. I just 
wanted to express my concern, as many of my colleagues have, 
with respect to the personnel problems within DHS and 
highlighted specifically by the OPM survey.
    You or the agency is 36 out of 36 in job satisfaction, 35 
out of 36 in leadership and knowledge management, 36 of 36 on 
results-oriented performance culture, 33 out of 36 on talent 
management. And your employees are your most valuable asset, 
and I think before we left you kind of reaffirmed that.
    With statistics like these, DHS cannot possibly expect to 
recruit and retain the very best possible people when there is 
a sharp competition coming from the private sector, as, again, 
you have stated.
    I see this survey and your hiring as a possible turning 
point, and I hope you will take the reigns and provide the 
fresh insights that are obviously needed to right this ship. 
Since the only direction we have to go is up, the opportunity 
could not be a better one.
    My question has to do with your testimony in which you 
noted that the department failed, HR Max personnel system has 
drawn much publicity lately because of court decisions opposing 
the department's proposed treatment of labor relations. You 
then state, ``In consideration of the court decision on 
collective bargaining, we are considering next steps in this 
area.''
    Today, you have discussed at length your general ideas for 
reforming the personnel and human capital system, but I have 
not heard you address the future of collective bargaining 
within the department.
    Please tell me, do you intend to allow your currently 
eligible employees to retain union membership and collective 
bargaining rights, and do you feel that the department attempts 
to end collective bargaining through HR Max had an impact on 
the OMB survey?
    Mr. Schneider. Congresswoman, I do think--and that is a 
personal opinion--that the uncertainty with MaxHR did have an 
impact on the survey, and that is one of the reasons why what 
we are trying to do is to explain to people what are the 
elements of our human resource management system.
    This is the problem, as I see it: MaxHR was comprised of 
six elements. It was performance management, classification, 
pay and pay administration, labor management relations, adverse 
actions and appeals. There were six elements.
    The problem, I think, was that with the court case it 
focused on one of those six, the labor management relations. 
And because of that, I don't think we did a good job of 
explaining to the workforce, what exactly were the other five 
elements of the personnel system.
    And so there was a great deal of uncertainty, which what 
was this MaxHR across the workforce. Shortly after I was sworn 
in, I conducted a series of town hall meetings with all of my 
employees. Filled up the auditorium at GSA and the chapel out 
at Nebraska Avenue. I was asked a lot of questions about it.
    And so what appears would happen was the department tried 
to do too much, too soon, and when people started to think 
about the fact that we are going to start linking pay and 
performance, et cetera, nobody really had taken the time to 
explain to them how that was going to be done, coupled with the 
visibility in the press regarding labor relations issue.
    I think people didn't know what was going on, and when 
people start feeling that their pay is going to be tinkered 
with, not understanding exactly how it is going to work, I 
think that creates an area of concern.
    So the first part of your question is, I do think it had an 
impact, which is why when we are moving--when I say we are 
moving to a human resource management system, it encompasses 
the major elements of MaxHR, but it also focuses on hiring, 
leadership and employee services, which is why that wasn't 
covered--those other elements were not covered by MaxHR.
    So what we have done is we are focusing on performance 
management, we are deferring the labor relations issue till we 
have discussions with the proper union representatives, and we 
are going to do a pilot on pay-for-performance in the INA 
sector. And then get the basics down right and then move toward 
the other elements.
    And I think that once we explain that, and that was one of 
the things that I believe the secretary did in his all-hands 
meeting in transmission this afternoon. Once we do that and we 
start getting the word out, explain what we are really doing, I 
think it will go a lot toward alleviating a lot of the people's 
concerns.
    Mr. Carney. Thank you.
    I now recognize the gentlewoman from the District of 
Columbia.
    Ms. Norton. Chairman, I thank you for your courtesy and the 
courtesy of the ranking member and allowing me to sit it on 
this hearing. I am a member of the full committee but not a 
member of this subcommittee, and I appreciate what I have heard 
of what you are doing in this particular hearing, in 
particular.
    By the way, I didn't hear the gentlelady's original 
question about pay-for-performance. This came up in government 
reform, and I am afraid what the government has not come to 
grips with, as why we have a civil service system in the first 
place when you have thousands and thousands of employees. And 
you are in a system that is a public system where the 14th 
Amendment due process applies.
    Maybe you all are smarter than everybody else, but no one 
has been able to figure out how to do a system with due 
process, which assumes everybody is treated the same way, and 
do the kind of individualized pay-for-performance you are 
describing without getting, first, a gazillion grievances and, 
second, simply complying with due process.
    When Mr. Schneider talked about a consultation with the 
affected unions, I was pleased to hear that since the statute 
setting up the Department of Homeland Security all but wiped 
out collective bargaining, which is part of the problem. I 
don't know how you run an agency so demoralized by wiping out 
the rights of workers but then proceeding to do something that 
has never been done and, I am going to say as a lawyer, think 
can never be done, at least in a public system and that is to 
say, ``We are just like General Motors.'' I shouldn't say 
General Motors because that is a unionized system they are 
following, which isn't quite that way either.
    But we are just like any old corporation. We are going to 
decide on an individual basis who gets paid what in a federal 
system, but the reason that hasn't proceeded, I believe, is 
because it is all but impossible. There may be better ways to 
do it than the way we are doing it, but what has come forward 
in pay-for-performance invites court suits and invites 
overturning.
    I don't have questions.
    I just wanted to thank you, Mr. Chairman, for making the 
St. Elizabeth's campus part of this hearing and making it part 
of the hearing on management.
    Mr. Chairman, the president of the United States, when he 
had a Republican Congress and a Republican Senate last year, 
put in money for the homeland security headquarters and they 
did so for a reason I think we can all understand. And, yet, 
that Congress did not pass this bill. It is amazing since I 
think this president considers homeland security his signature 
issue.
    The reason for the consolidation is that you simply can't 
manage this agency without it. I do not believe we have an 
agency yet. They are located in 60 different locations. In 
other words, they are as we found them. What good did it do to 
set up a Department of Homeland Security that is still spread 
in the very same places that it was before when we said the 
whole reason for setting up, in light of 9/11, was to 
consolidate the agencies so that they could have cross-agency 
coordination and action and that it was dangerous not to have 
them so that they could have the unity of action that would 
come with putting them in the same agency.
    The president has requested that they be placed into the 
only place left in the District of Columbia large enough to 
accommodate what amounts to several agencies, a consolidated 
Homeland Security agency.
    We have been over there, introduced it to the community 
when we thought it was coming the last session. Another reason, 
of course, that this was chosen is that the old St. Elizabeth's 
campus is government-owned. We have very little land that is 
government owned, but still--so that means we don't have to buy 
the land as well as the rest of it.
    As I say, I think that the chair has legitimately put your 
dispersed situation in a management structure. I believe that 
you could have done a lot more at DHS in 4 years to establish 
the semblance of any agency. I will grant you, however, that as 
long as you are left as you were, it is asking a great deal to 
say what the statute envisioned. Make an agency, make it whole, 
make it cohesive.
    I can only ask, Mr. Schneider, part of what I think 
happened last time that as much as the agency was committed, to 
this, they didn't try hard enough. I was in the minority.
    Ms. Norton. And it seemed to me that the burden on the 
president, his agents and his congressman. Instead, the money 
was used up. To show you the kind of respect they had for the 
agency and the need to have a coherent agency, the Senate, just 
found and used it for four courthouses. The president has put 
money for those courthouses in his budget.
    Mr. Schneider, I have come to the hearing only to say to 
you that I am chair of the subcommittee with jurisdiction over 
GSA, which is charged with building this agency. I believe 
Secretary Chertoff, I believe, your deputy, when they say this 
means everything to them, given your position in the agency, I 
hope that you will use your good office as well to make sure 
that this happens this time.
    I think this is the last clear chance, and the president 
has put the money again in this budget. I think he has done all 
he can. It is going to be up to the agency to press very hard 
for it. It is your agency, it is your dispersal, and it is 
yours to do something about.
    Mr. Schneider. If I may, Congresswoman, I really appreciate 
those comments and your support. I have personally walked the 
St. E's campus looking at these buildings and have gone both 
through the DHS $120 million portion of the budget and the GSA, 
I think it is, $345 million of the budget.
    I personally track the progress that GSA is making in 
dealing with the National Capital Planning Commission as well 
as satisfying all of those that have interest relative to the 
National Historic Preservation Act and the specific executive 
orders.
    My personal take on this is, we have got a lot of issues to 
work to make this happen, and we may have a lot of budget year, 
as you indicated, with those seven, but we can still make the 
majority of that schedule if we can work through these historic 
preservation issues, environmental impact statement issues.
    And so I appreciate your support of this. This move is 
absolutely critical to the department.
    I have walked just about every building on Nebraska Avenue 
complex. In many cases, those facilities are not adequate to 
house this department.
    Ms. Norton. If I may say, I wish you would take off the 
table the environmental impact issue. That is not yours to work 
on. There will be a full-blown environmental impact statement. 
And in terms of the historic issues, you may not know this, Mr. 
Schneider, but the federal government has an extraordinary 
record, the best in the country, of building in places that 
have historic buildings and preserving them.
    So I want to take that right off your mind so that you can 
focus on the one thing that seems to me that is your 
responsibility and that is making sure that the Congress 
understands this time that you, the agency, must have this 
construction and need to have it this time. Those other issues 
are not your issues, sir.
    Mr. Carney. I thank Ms. Norton for her comments, her 
insight and her willingness to push this stuff through. It is 
very important.
    And, Mr. Schneider, again for your comments.
    We are going to start round two of the questions now. I 
think both Ms. Clarke and I have another round and we will get 
to them right now.
    Mr. Schneider, last month, Deputy Secretary Jackson told us 
that, ``MaxHR is dead.'' He also told us that he asked Secret 
Service detail but they thought of MaxHR after they did their 
training, and they told him that they hated it. MaxHR is dead 
is a pretty unambiguous statement.
    So I was a little surprised to hear your office describing 
the new human capital operational plan as ``encompassing all 
MaxHR initiatives and more.''
    Mr. Schneider. Let me?
    Mr. Carney. Let me finish the question, and then we will 
get to it.
    I am pretty sure that those Secret Service agents hated 
more than just the name, MaxHR. I am concerned that your just 
stripping the title and repackaging the old Max HR in a shiny 
new wrapper.
    What parts of MaxHR are actually dead? What has changed?
    Mr. Schneider. The one we are not pursuing is that one 
element of the labor relations, which is the item that was the 
basis for the court hearing--those elements focuses--we have a 
template that focuses on those other five elements and the 
additional ones that I talked about, which were leadership and 
development, quality employee services, servicing centers, if 
you will, as well as our hiring effort, okay?
    So those are the elements of our human resources plan. 
These are all documented in what will ultimately be issued as a 
human capital operating plan. And so that is what is our 
centerpiece for human resources.
    Our game plan is to focus on an incremental basis on 
selected portions of this, heavy emphasis on performance 
management, a pilot on pay-for-performance with the 
intelligence and analysis group, leadership development. We 
have already instituted a fellows program, we have instituted 
an SCS counterdevelopment program. We have several other 
leadership and development programs that are under way. We have 
extensive hiring efforts under way. Those efforts that could be 
done across the department as a total enterprise, those that 
are operating unit-specific.
    So that is our plan, if you will.
    And we don't call it MaxHR, we don't--and the reason is, 
MaxHR equals a court case, equals a failed system, equals 
something that people didn't understand. And so we are going 
out now and explaining to people what exactly is our human 
capital operating plan. And we have a large effort in front of 
us because the experience that you got with the Secret Service 
is typical across the enterprise. And that is because we didn't 
do a good job of explaining our plan.
    And so when the secretary says, ``MaxHR is dead,'' it is 
dead as it was envisioned and explained or poorly explained to 
people.
    Mr. Carney. I think I understand that.
    [Laughter.]
    Thank you very much.
    Ms. Clarke?
    Ms. Clarke. Thank you very much, Mr. Chair. I guess let 
me--MaxHR is dead? Okay.
    I wanted to just in light of the whole element piece that 
you went over with us, you said the piece that you are not 
pursuing is labor relations. And I wanted to ask, do you feel 
that the department's attempt to end collective bargaining 
through MaxHR had an impact on the OPM survey?
    Mr. Schneider. I think, as somebody on the outside who was 
trying, when I was first nominated by the president for this 
job, as somebody that was trying to understand what this MaxHR 
was, it was very confusing to an outsider, and I read all the 
available public information, and I was confused about exactly 
what the basis for the court case was, exactly how and pay and 
performance were linked together.
    And I could clearly understand why, if I was an employee in 
the department, why I would be very suspicious about what 
exactly was envisioned and how it would affect my performance, 
how it would affect my compensation, how it would affect my 
employee rights.
    And so I believe that that really did have an impact on the 
survey, because, frankly, the department did not do a good job 
of explaining what was MaxHR.
    Ms. Clarke. So you think the employees sort of saw it as a 
threat or the end of collective bargaining as they knew it, 
because the elements that you just described is something that 
most employees associate with their affiliation and their 
membership with the labor organization, in effect, collective 
bargaining.
    Mr. Schneider. I think it had impact on two accounts. One, 
those employees that were covered by collective bargaining 
clearly perceived that as a threat and a loss of rights, 
without arguing whether that is a valid position to have or 
not. Those that were not under the collective bargaining, I 
think the general uncertainty of what MaxHR was and how it 
would directly impact them I think gave cause for concern as to 
what the impact of what MaxHR would be on them individually.
    So I think you had a double hit, frankly, those that were 
covered by collective bargaining and those that were not. And I 
think it would have an impact. And I can understand, again, as 
somebody who tried to understand based on the available 
literature, the documentation, what exactly was MaxHR. I can 
reasonably understand why somebody would be suspicious and 
concerned that their pay was going to be tinkered with and they 
would have no rights.
    And so that might considered jumping to conclusion, but I 
see the paper trail could have easily led somebody to that 
conclusion.
    Ms. Clarke. And just, finally, as you institute a more 
performance-based system, pay-for-performance, and managers 
will have an increased amount of control over their employees, 
what type of system do you envision will be in place to resolve 
inevitable disputes between employees and management, and would 
this system incorporate cooperation with unions?
    Mr. Schneider. Well, first of all, I think for those that 
are subject to collective bargaining, we have to follow the 
practice in terms of how we institute any system, okay? So that 
would get addressed in the collective bargaining process. For 
those that do not come under collective bargaining, we would 
have what I would consider the menu of appeals and grievances.
    And so in other departments, like the Department of 
Defense, where pilot pay-for-performance and performance 
management systems were implemented, there is a menu of 
grievances and appeals for the employees. So we would have 
those menus of appeals and grievance processes so that they 
would be entitled to protection of their rights. And that is a 
very important part of that.
    So it would be handled differently for those that were 
covered and those that were not under collective bargaining.
    Mr. Carney. Does the gentlewoman have any further 
questions?
    Ms. Clarke. No.
    Mr. Carney. I have none either.
    I want to thank you, Mr. Undersecretary, for the testimony 
and all the members who asked their questions.
    The members may have additional questions, and if you could 
expeditiously respond to them in writing, we would appreciate 
it.
    Hearing no further no business, the subcommittee stands 
adjourned.
    [Whereupon, at 4:26 p.m., the subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              


                  Additiional Questions and Responses

Questions From the Honorable Bennie G. Thompson, for Honorable Paul A. 
                          Schneider Responses

    In its report on the acquisition of the National Security Cutter, 
the Inspector General stated that he ``encountered resistance from the 
Coast Guard'' and that ``responses to document requests were either 
delayed or incomplete,'' ultimately leading the IG to suspend fieldwork 
completely for five weeks.

    Question 1.: Please explain your understanding of the IG's 
statutory right of access to Departmental records and other material.
    Response: The Inspector General's right of access is very broad. 
According to the Inspector General Act, the Inspector General of the 
Department of Homeland Security (DHS) is authorized ``to have access to 
all records, reports, audits, reviews, documents, papers, 
recommendations, or other material available to the applicable 
establishment which relate to programs and operations with respect to 
which that Inspector General has responsibilities under this Act.'' 
Consistent with this statutory grant of authority, DHS Management 
Directive 0810.1 requires Component agencies to provide prompt access 
for the Office of the Inspector General to any files, records, reports, 
or other information that may be requested, and directs DHS employees 
to cooperate fully by disclosing complete and accurate information 
pertaining to matters under investigation or review.

    Question 2.: Do you believe it is appropriate for employees to 
provide materials directly to the IG, or must materials first be 
provided to a central unit or audit liaison?
    Response: As noted previously, DHS requires departmental employees 
to cooperate fully with the Inspector General by disclosing complete 
and accurate information pertaining to matters under investigation or 
review, in accordance with the DHS Management Directive 0810.1.
    In addition, the Departmental GAO/OIG Liaison Office routinely 
works with the Office of Inspector General to facilitate the flow of 
information in the context of the Management Directive. Indeed, the DHS 
Inspector General testified before this Committee on February 7, 2007, 
regarding DHS cooperation and indicated that he was not concerned about 
denial of any information. Moreover, the IG regularly meets with senior 
DHS officials to discuss and resolve such matters.
    Nevertheless, we are constantly striving to improve the 
Department's internal processes in the context of prudent management 
practices. In this way, we can move forward to fulfill lawful requests 
thoroughly and comprehensively.

    Question 3.: Do you believe the IG has a right to all Department 
records or can draft, privileged, privacy protected, or classified 
materials be withheld from the IG?
    Response: As previously stated, the Inspector General Act grants 
the IG broad authority to obtain relevant records, reports, audits, 
reviews, documents, papers, or recommendations within the Department. 
Moreover, the Department maintains a strong Management Directive which 
requires that its Components provide the IG with prompt access to any 
files, records, reports, or other information requested. The documents 
provided to the OIG often include classified or otherwise sensitive 
information, and in these instances, DHS employees are to advise the 
OIG about such markings in order to ensure proper handling of the 
documents. As a result, the Department has provided the Office of 
Inspector General with many thousands of pages of documents--frequently 
containing classified and otherwise sensitive information--and has 
assisted the OIG in issuing hundreds of reports. Further, there may be 
documents that implicate certain legal principles that require careful 
consideration.

    Question 4: Please explain your understanding of the conditions 
under which employees may meet with the IG. In particular, must 
employees report all contact with the IG to their supervisors, or are 
they free to meet confidentially with the IG at any time? Are employees 
free to provide information directly to the IG, orally and in writing, 
without notifying management?
    Response: DHS employees are not required to report their contact 
with the Office of Inspector General. Typically, the OIG will meet with 
employees without supervisors being present. Indeed, DHS Management 
Directive 0810.1 recognizes that the OIG is authorized to ``[p]rotect 
the identity of any complainant or anyone who provides information to 
the OIG.'' This procedure is consistent with Section 7 of the Inspector 
General Act and the provisions of the Whistleblower Protection Act.
    In addition, DHS Management Directive 0810.1 specifies that 
Component agencies will ``assist in arranging private interviews by 
[OIG] with staff members and other appropriate persons.'' This approach 
operates in accordance with prudent management practices, and is, in no 
way, intended to inhibit the free flow of information to the Office of 
Inspector General. Instead, it reflects the need for supervisors to be 
aware of employees' whereabouts and activities within their office or 
Component.

    Question 5: Do you think it is appropriate for the Department or 
one of its Components to require a representative of management or an 
audit liaison to sit in on all interviews with the IG?
    Response: DHS does not require the presence of a management 
representative or audit liaison at all interviews of employees or 
contractors. We are not equipped or staffed to handle such a workload. 
As the Secretary recently testified before the House Appropriations 
Subcommittee on Homeland Security, DHS believes cooperation with the 
OIG is imperative. Nevertheless, when an employee requests a Department 
representative to accompany him/her to a meeting with the Office of 
Inspector General, we will consider such a request and honor it when 
appropriate. In evaluating such situations, we carefully consider the 
employees' rights under the Whistleblower Protection Act and other 
related statutes.

    Question 6.: Please explain your understanding of the Government 
Accountability Office's (GAO) statutory right of access to Departmental 
records and other material.
    Response: The Government Accountability Office (GAO) has a broad 
right of access to a wide range of materials and information within the 
Department. In particular, section 716(a) of Title 31 of the U.S. Code 
provides the Comptroller General with access to various information 
about the Department's ``duties, powers, activities, organization, and 
financial transactions,'' so long as it falls within the proper scope 
of GAO's authority and competency. Consistent with this statutory 
framework, DHS Management Directive 0820 ``requires all employees of 
DHS to cooperate with all employees of GAO to the fullest extent 
consistent with the obligations of the Department and its 
Organizational Elements.''

    Question 7: Do you believe it is appropriate for employees to 
provide materials directly to the GAO, or must materials first be 
provided to a central unit or audit liaison?
    Response: As discussed previously, DHS Management Directive 0820 
requires DHS employees to cooperate with the Government Accountability 
Office (GAO) consistent with the Department's obligations. In addition, 
DHS employees are provided guidance as to when it is appropriate to 
consult with senior officials in order to ensure prompt, accurate and 
complete responses to GAO requests. Moreover, the Departmental GAO/OIG 
Liaison Office routinely works with the GAO to facilitate the flow of 
information and keep track of the materials provided in accordance with 
prudent accountability and good management practices. In this way, the 
Liaison Office helps to ensure proper marking of documents and 
compliance consistent with applicable statutory provisions (including 
31 U.S.C. Section 716).
    As the Secretary testified on February 8, 2007, DHS is putting 
mechanisms in place to create incentives for DHS employees to make 
information flow a top priority and linking employee performance 
reviews to their responsiveness. We are always striving to improve the 
Department's processes in the context of consistency, coordination, and 
prudent management practices. In this way, we can move forward to 
fulfill lawful requests thoroughly and comprehensively.

    Question 8: Do you believe that there are any limitations to the 
types or classes of documents that the GAO can request? If so, please 
describe the limitations.
    Response: DHS works cooperatively with the Government 
Accountability Office (GAO) in responding to its requests. Indeed, DHS 
has provided GAO many, many thousands of documents in response to 
numerous GAO requests and hundreds of GAO audits and investigations.
    DHS employees are provided guidance for reviewing document 
productions before disclosing the information to the GAO. For instance, 
DHS--due to nature of the work it performs--handles very sensitive 
information, the inappropriate disclosure of which can lead to severe 
consequences. While fully cooperating with the GAO, the Department must 
strictly adhere to applicable laws and regulations related to the 
disclosure of such information. The Department's ability to obtain the 
information critical to our mission--particularly from the private 
sector and other stakeholders--is based upon our extreme vigilance to 
ensure that the release of materials will not be made in an 
inappropriate manner. Further, we must ensure that such disclosure will 
not negatively impact the open atmosphere in which the information is 
shared in the first place. Failure to demonstrate such diligence may 
``chill'' or inhibit the willingness of various stakeholders to provide 
useful information to the Department. Therefore, it is important to 
have an organizational mechanism and structure in place to consider 
documents prior to disclosure. DHS will nevertheless continue to work 
with and cooperate with the GAO to improve the proper flow of 
information and materials consistent with 31 U.S.C. Section 716.

            Questions From the Honorable Christopher Carney

    Question 9.: Integrating 22 legacy agencies into one functioning 
Department is a tremendous challenge. How do you plan to use the 
Directorate to facilitate this goal, and what tangible evidence--what 
benchmarks--of progress can you describe for the coming year?
    Response: An effort of this magnitude requires effective and 
efficient use of financial and human resources, enabling technology, 
strong processes and superb management. These are the challenges that 
are the focus of my efforts.
    The major elements of our strategy are:
         Improving acquisition and procurement throughout the 
        Department.
         Strengthening the requirements and investment review 
        processes.
         Acquiring and maintaining human capital.
         Seeking efficiencies across the enterprise in 
        operations and the use of resources.
         Making the key management systems, such as financial 
        and information technology, world class.
    Our approach has a common thread through all of these areas: Ensure 
that there is a comprehensive and integrated strategy with specific and 
measurable goals that support the activities and priorities of the 
Department. On a practical level, we will ensure that this strategy 
succeeds by having a team with the right knowledge, skills and 
abilities to support the programs, the overall transformation and the 
integration efforts.

    Question 10.: The Department has requested over $120 million to 
consolidate its headquarters in Washington, D.C. However, we have yet 
to see a complete budget estimate for this 10 year project. The $120 
million for FY '08 is the short run cost. Looking at the long term 
costs of this project, what guarantees can you give us that this 
project will stay within budget and not become another ``Big Dig'' or 
Capitol Visitor Center?
    Response: Both the General Services Administration (GSA) and the 
Department of Homeland Security (DHS) are committed to executing this 
project in a fiscally responsible manner and will institute controls/
systems throughout the design and construction phases to effectively 
manage the scope, schedule and budget.
    The DHS NCR Housing Master Plan submitted to the Congress on 
October 24, 2006 as directed in the FY 2007 Homeland Security 
Appropriations Act (P.L. 109-295) establishes the DHS requirement in 
terms of the minimum density of development necessary for the 
Department to effectively function as a Unified Headquarters. This 
requirement is for up to 4.5 million gross square feet of office space 
plus parking. GSA is preparing a Master Plan and Environmental Impact 
Statement (EIS) for St. Elizabeths West Campus which has 3 alternatives 
that meet the DHS requirement. The Master Plan will set the framework 
for development, including density, locations for development, design 
guidelines, adaptive reuse of historic structures and demolition. This 
effort is being coordinated with the Regional Planning and Review 
Agencies, including the National Capital Planning Commission, the U.S. 
Commission on Fine Arts, the District of Columbia Office of Planning 
and other stakeholders such as the Advisory Council on Historic 
Preservation. Since the site is a National Historic Landmark, 
consultations in accordance with Section 106 of the National Historic 
Preservation Act (NHPA) are also being conducted.
    The final Master Plan with design guidelines and the programmatic 
agreement from the Section 106 consultations will help form the basis 
of the scope control as all development will have to conform to the 
limits and requirements of these documents.
    To prevent the project from undisciplined cost growth and schedule 
extensions confronting the ``Big Dig'' and Capital Visitors Center, the 
General Services Administration (GSA) intends to reduce risks and 
uncertainties and will focus on the design and construction process to 
deliver a high quality product within the schedule and budget. Our plan 
is to concentrate key leadership, management, policy, and operations 
coordination functions to enhance DHS's mission execution. Design 
Guidelines will be established that will standardize office sizes, 
furniture, furnishings, equipment, and will maximize shared use 
amenities. Generic office plans will allow maximum flexibility for the 
occupancy so changes to the program will limit impact to the design and 
construction contracts. GSA plans to employ a ``Construction Manager as 
Constructor'' (CMc) delivery model for the St. Elizabeths development 
that will facilitate fast tracking of design and construction for 
expedited delivery. The CMc model will improve design and construction 
coordination because the CMc is brought onto the project team early in 
the design to provide pre-construction phase services such as 
constructability reviews, coordination of long lead items, construction 
cost estimating and construction market analysis to reduce the 
likelihood of cost overruns when the design is complete. This delivery 
model fosters a better team environment and cooperation between all 
parties reducing the potential for contract damages and claims.
    The GSA/DHS team will also implement an oversight process for the 
St. Elizabeths development that applies technical and administrative 
direction and surveillance over the lifecycle of the design and 
construction of the project. We will control changes, record and report 
information needed to manage the delivery process, track the status of 
proposed changes and implementation status of approved changes. We will 
also audit change orders to verify conformance to specifications, 
drawings, and other contractual requirements.
    The Congress will play a critical role in the long term cost 
control of the project by providing the necessary funding to maintain 
the project schedule for both GSA and DHS. We are concerned that the FY 
2007 Continuing Resolution did not fund GSA's request to begin 
construction of the USCG Headquarters, which will have both cost and 
schedule impacts. Your support of the combined budget requests from DHS 
and GSA for the consolidated DHS Headquarters will help reduce 
uncertainties and risk by allowing the St. Elizabeths development to 
proceed and will limit the impacts of partial funding to the design and 
construction process.

    Question 11.: The Homeland Security Advisory Council's Culture Task 
Force recommended eliminating the buzzword ``Human Capital'' to 
describe employees at the Department. We have heard that Department 
employees find this term demeaning and that it makes them feel 
expendable. It may seem like a small thing, but sometimes small things 
say a lot. You told us during your testimony that you do not like it.
    What do you intend to do implement this recommendation?
    Response: Section 704 of the Homeland Security Act created the 
position of the Chief Human Capital Officer. Further, as a consequence 
to the Chief Human Capital Officers Act of 2002, most other agencies 
re-named their human resources offices Human Capital Offices. This was 
done for consistency with both the language in the Act, and the 
language in related guidance issued by the Office of Personnel 
Management (OPM). In fact, the establishment of Human Capital Officers 
at Federal Agencies is included in the Act that created the Department 
of Homeland Security (DHS).
    Although legislation created the office for human capital, we are 
aware of the fact that we may refer to our greatest asset using some 
other ``buzzword'' or phrase. As is the case with most employers, DHS 
most often refers to its greatest asset as employees.
    As I stated in my testimony, I am not particularly fond of the term 
human capital when referring to employees and I am exploring other 
possible terms that might be used. My research of this topic, though, 
has caused me to discover that there may have been very well conceived 
intentions behind the use of the term ``human capital'';
        The term ``human capital'', it seems, was coined in order to 
        provide for stronger argument when articulating a need to 
        ``invest'' in the workforce, i.e., training, development, 
        education expenses, etc., just as we invest in physical 
        capital, i.e., buildings, office machines, office furniture, 
        etc.
    The term has also been defined by some as ``a loose catch-all term 
for the practical knowledge, acquired skills and learned abilities of 
an individual that make him or her potentially productive and thus 
equip him or her to earn income in exchange for labor'', and utilizes 
the word ``capital'' metaphorically to describe the ``quality of 
labor''.
    I expect that the use of the term ``human capital'' will remain 
throughout the federal government for some time, and may very well 
continue to be used by DHS when referring to investments by the 
Department in various plans and reports to the Congress. However, as I 
said previously, I will continue to examine other possibilities and 
will consider all the recommendations offered by the Homeland Security 
Advisory Council's Culture Task Force.

    Question 12.: As you know the Department's procurement offices are 
understaffed. Your plan to develop home-grown experts through an 
internship is a good long-term idea, but really won't do much in the 
short term. Other short-staffed areas of the Department have had 
success in hiring federal annuitants.
    Would you support this for the procurement area, and if so do you 
have an estimate of how many would be needed?
    Response: Yes. The Office of the Chief Procurement Officer is 
working with the Office of the Chief Human Capital Officer on several 
key efforts to address the issue of staffing shortages. In fact, one of 
the first initiatives taken was to seek the authority to maximize the 
use of hiring flexibilities such as Direct Hire Authority and Re-
Employed Annuitants for procurement personnel. In working closely with 
CHCO, the CPO is utilizing centralized recruiting efforts, 
incorporating the use of the direct hire authority to rapidly bring 
identified talent on board. By actively recruiting at Veteran specific 
job fairs, placing job announcements in military publications, 
capitalizing on acquisition professionals whose commands were affected 
by the Base Realignment and Closure initiative, and teaming with The 
Department of Veterans Affairs, we will alleviate our immediate 
staffing needs while acquiring the expertise of experienced 
professionals.
    There is a pressing need to begin filling CPO positions as soon as 
possible. However, at this time we do not have an estimate of the 
number that would be needed to adequately resolve our staffing problem.

             Questions From the Honorable Michael D. Rogers

    Question 13.: The Department of Homeland Security was established 
just over four years ago. Yet, it already has undergone major 
reorganizations. The first major reorganization occurred as a result of 
Secretary Chertoff's Second Stage Review in 2005. The second major 
reorganization is currently underway as mandated by Congress to reform 
and strengthen the Federal Emergency Management Agency (FEMA).

    In your view, what impact do such reorganizations have on the 
operations of DHS and the morale of its employees?
    Response: In my view, the business need for reorganization is 
essential. It is important to carefully review the mission and how the 
organizational structure supports the mission. During our 
reorganizations, we have done everything within our power to try to 
ensure that the transition for employees is seamless--from a human 
resource perspective that employees pay and benefits are not 
interrupted, that the supervisory chain is clear and that performance 
plans are adjusted; from a security perspective that all of the 
security clearances, badges and key cards are obtained before 
transferring from one component to another; from an IT perspective that 
proper adjustments are made to telephone numbers, computers, etc.; and 
from a facilities perspective that furniture, key cards and offices are 
relocated in such a way as to keep the disruption for employees to a 
minimum. However, I don't want to diminish the fact that change can be 
unsettling.

    What are some of the lessons learned from the need for such 
reorganizations of a new Cabinet department?
    Response: Since the Department is newly formed, reorganizations can 
be deliberate. Even so, we should attempt to minimize the urge to 
reorganize. The bottom line is that reorganizations interfere with a 
certain security that employees draw from their work environment and 
have an adverse effect on those impacted by the change, no matter how 
small. During reorganizations employees spend valuable time concerned 
about the impact of the reorganization on their job, job security, 
physical moves, etc., instead of the job which we are paying them to 
perform.
    With that in mind, any reorganization within the Department must be 
well thought out and planned with a long-term strategic view, instead 
of a knee-jerk reaction to address an immediate failure or deficiency 
within the Department, which will invariably end up being a short term 
solution necessitating yet another reorganization. The employees of the 
U.S. Fire Administration are a good example of this. They were pulled 
out of FEMA nine months ago, moved to the Under Secretary for 
Preparedness, and are now being moved back to FEMA. We must end this 
practice of repeatedly moving employees back and forth between 
organizations. I think this can be done through better strategic 
planning.

    Do you believe the Department is adequately organized, or do you 
anticipate or recommend another reorganization in the near future?
    Response: I don't see the need for further reorganization in the 
near future.

    Question 14: Section 841 of the Homeland Security Act of 2002 
authorized the Secretary of Homeland Security to establish a human 
resources management system for DHS. Congress intended that the system 
include the flexibilities necessary for the Department to be able to 
take necessary actions and respond appropriately to protect our Nation 
from terrorist attacks.
    The Department's original proposal has been delayed by protracted 
litigation. It is critical that the Secretary have the tools he needs 
to manage the Department to fulfill its overarching mission of 
protecting our homeland.

    What needs to be done to ensure the Secretary has the necessary 
flexibilities to manage the Department's work force?
    Response: We believe that we have the critical flexibilities we 
need to manage our workforce through existing government-wide 
flexibilities, as well as those provided through the Homeland Security 
Act of 2002 and the 2005 Department of Homeland Security Human 
Resources Management System (Part 9701) regulations implementing the 
MAXHR program.
    However, as part of our strategy moving forward under the 2007--
2008 DHS Human Capital Operational Plan, the Office of the Chief Human 
Capital Officer will also be working with the components to identify 
areas where additional regulatory and/or statutory changes would help. 
For example, one area that we will be looking at very closely is hiring 
flexibilities. We will work with our components to review current 
flexibilities in order to determine if there are other changes we may 
need in order to more readily hire qualified individuals into our 
mission critical occupations to meet mission requirements.&
    Once these determinations are made, we will reach out to Congress 
to request those additional flexibilities and report on our efforts. We 
will also be reviewing our internal policies and regulations, in 
partnership with the DHS EEO/Civil Rights Offices, to find additional 
efficiencies, where possible.

    The Committee has been advised that the Department will no longer 
use the term ``MaxHR'' to describe its new personnel system. Could you 
please comment on how DHS plans to proceed with implementing a flexible 
personnel system?
    Response: The flexibilities provided to the Department (which were 
branded using the name MAXHR) provided an excellent start, but they did 
not go far enough in addressing the broad range of needs for a 21st 
century human capital program across the Department. For this reason, 
we will no longer be using the brand MAXHR as we move to address 
broader initiatives that are essential for us to be successful in the 
future.
    As you know, DHS received flexibilities in the following six areas:
         Classification
         Pay and Pay Administration
         Performance Management
         Labor-Management Relations
         Adverse Actions, and
         Appeals
    Over the past few years, we have made significant progress in 
laying the foundation for a robust human capital program using the 
flexibilities provided. The cornerstone of our efforts has been the 
development and implementation of our DHS Performance Management 
Program. Implementing this program under MAXHR has helped many of our 
component organizations achieve new levels of accountability and 
transparency by improving manager-employee interaction and recognizing 
top performing employees.
    At the same time, it became evident that the human capital needs of 
the Department extended beyond the six areas provided for in the 
regulations. To address all the critical areas, we have developed a 
Human Capital Operational Plan to serve as a roadmap to integrate key 
human capital practices. This plan will allow DHS to adjust to changing 
directions and priorities while identifying five operational goals. 
These goals are designed to improve DHS' capacity to build and sustain 
a high-performing workforce with the knowledge, tools and resources to 
achieve the Department's vital mission. They are:
         Hiring and retaining a talented and diverse workforce
         Creating a DHS-wide culture of performance
         Creating high-quality learning and development 
        programs for DHS employees
         Implementing a DHS-wide integrated leadership service
         Being a model of human capital service excellence
    Under the five goals, we will continue the valuable work begun 
under the MAXHR program, but will also broaden our focus to other key 
areas, including development of career paths to expand career 
opportunities and investment in learning and development programs to 
give employees the knowledge and tools they need to be successful. We 
will also modernize hiring and retention programs to make sure we can 
attract and retain the best talent. With respect to the programs 
initiated under MAXHR, we will:
         Expand the implementation of the DHS Performance 
        Management Program to allow us to work more effectively across 
        components and align the work we do with the strategy, vision, 
        and values of the Department.
         Delay the implementation of a pay banding program 
        until the DHS Performance Management Program has been fully 
        implemented and evaluated.
         Conduct a pay-for-performance pilot program in a small 
        component or organization to validate, measure, and refine the 
        pay band models and processes.
         Work with the Office of Personnel Management and 
        collaborate with employee representatives to decide on next 
        steps consistent with recent court rulings.
    By proceeding in this deliberate manner, we will ensure that 
performance management is well-established in the Department, and that 
we have adequate time to properly train the workforce. These actions 
will also support our efforts in addressing the issues raised by the 
Federal Human Capital Survey.
    As we look to a future of increasing challenges, our need for 
innovative, state-of-the art human capital programs is clear. The 
framework for these new programs is described in the DHS Human Capital 
Operational Plan, which will guide our efforts to sustain our high-
performing workforce of today--and build our workforce of tomorrow.

    Question 15.: The Department of Homeland Security (DHS) and the 
General Services Administration (GSA) have developed a plan to relocate 
and consolidate a number of DHS facilities in the National Capital 
Region to one main, secure facility on the site of St. Elizabeth's 
Hospital in Anacostia, District of Columbia.
    The President's Budget for Fiscal Year 2008 requests $120 million 
for DHS and $345 million for GSA for this relocation.

    What is the proposed total cost and timeline for this relocation?
    Response: The overall cost of the St. Elizabeths West Campus 
development is a function of the final Master Plan layout and density 
selected in conjunction and in consultation with the review agencies. 
While a programming level estimate has been developed, it continues to 
be refined and revised as more of the details of the various ongoing 
studies are completed. Currently, the preliminary estimate of total 
project cost, inclusive of GSA infrastructure/building costs, DHS 
tenant specific costs for the construction and renovation, IT, 
furniture, fixtures and equipment, and move costs may approach as much 
as $3 billion. Most of the DHS specific costs will be incurred 
irrespective of the St. Elizabeths West Campus development due to the 
need to replace expiring leases over the coming years.
    According to ``The Automated Prospectus System'' (TAPS) analysis 
conducted by GSA, consolidating up to 4.5 million gross square feet 
(GSF) of the DHS office space requirement at St. Elizabeths West Campus 
will result in an approximate $1 billion Net Present Value (NPV) 
savings over a thirty year period as compared to individually replacing 
commercial leases without any consolidation.
    DHS is currently housed in more than 50 locations and over 80 
buildings dispersed throughout the National Capitol Region (NCR). Over 
the course of the next 10 years approximately 4.7 million GSF of DHS 
leased office space will have to be replaced. Without consolidation of 
up to 4.5 million GSF of office space plus parking at St. Elizabeths, 
DHS would be compelled to occupy predominately leased space at an 
overall greater cost. We would also forego multiple vital efficiencies 
gained through shared services, while incurring higher real estate and 
security costs.
    The original 3-phase schedule for development of the St. Elizabeths 
West Campus as proposed by the General Services Administration (GSA) 
and included the DHS National Capital Region Housing Master Plan 
submitted to the Congress as directed in P.L. 109-295 (FY 2007 Homeland 
Security Appropriations Act) is listed below. The schedule proposed 
construction funding beginning in FY 2007 for the first phase of the 
development (USCG Headquarters Relocation) and completion/occupancy of 
the third and final phase in FY 2015.

------------------------------------------------------------------------
                                         Proposed
  Phase           Component            Construction         Proposed
                                          Start            Occupancy
------------------------------------------------------------------------
       1  USCG Headquarters                    FY2007             FY2011
------------------------------------------------------------------------
       2  DHS HQ/FEMA HQ                       FY2009             FY2013
          National Operations
           Center
          (NOC)
------------------------------------------------------------------------
       3  Remaining Operating                  FY2011             FY2015
          Components
------------------------------------------------------------------------

    Due to the lack of funding for the St. Elizabeths project in the 
recently passed Continuing Resolution, we are concerned that the 
overall schedule may be delayed with corresponding adverse impacts on 
DHS operations and integration. We are currently working with GSA to 
update the schedule and I look forward to working with the Congress on 
options to recover from any schedule slippage as a result of the FY07 
C.R. in future year budget submissions.

    How will the initial $120 million for DHS be used? To the extent 
you may know, how will the $345 million for GSA be used?
    Response: The DHS FY08 Budget Request of $120M is for the 
following:
         USCG Headquarters Building Tenant Improvement 
        construction liability for FY 2008 including the main 
        headquarters facility and shared spaces
         Tenant specific design costs for Phase 2 of the 
        development will include DHS Headquarters (including components 
        with only liaison presence on campus), FEMA HQ, the National 
        Operations Center (NOC )
         Tenant specific pre-design costs for Phase 3 of the 
        development will include the remaining operating components
         Project team staffing to manage the initiative
    The GSA's FY08 Budget Request of $345M is for the following:
         Phase 1 construction of USCG Headquarters
         Management and Inspection costs
         Phase 2 design of DHS Headquarters, FEMA Headquarters, 
        the National Operations Center (NOC) and other shared use 
        facilities
         West Campus Infrastructure
         Site Acquisition for new access into the campus

    What DHS components will be relocated to the new site? What 
components in the National Capital Region would not be relocated?
    Response: The table below is excerpted from the DHS NCR Housing 
Master plan submitted to the Congress on October 24, 2006 as directed 
in P.L. 109-295 (FY 2007 Homeland Security Appropriations Act). All DHS 
and Component Headquarters will have some level of presence on the 
campus. The campus occupancy will be focused on senior leadership, 
policy, mission execution/operations coordination and program 
management functions. Mission support functions that cannot be 
accommodated on the campus will be consolidated where possible off-
campus to support functional integration.
St. Elizabeths West Campus Proposed Occupancy Plan

------------------------------------------------------------------------
                            Estimated Level of
                             Presence[1] S =         Relocation Phase
       Component         Significant L = Liaison    According to GSA's
                                 F = Full            planned schedule
------------------------------------------------------------------------
Executive Office of the  F                        2
 Secretary
------------------------------------------------------------------------
Office of the General    F                        2
 Counsel
------------------------------------------------------------------------
Assistant Secretary for  F                        2
 Policy
------------------------------------------------------------------------
Under Secretary for      S                        2
 Preparedness
------------------------------------------------------------------------
Director of Operations   F                        2
 Coordination
------------------------------------------------------------------------
Office of Intelligence   S                        2
 and Analysis
------------------------------------------------------------------------
Assistant Secretary for  F                        2
 Legislative and
  Intergovernmental
 Affairs
------------------------------------------------------------------------
Office of Public         F                        2
 Affairs
------------------------------------------------------------------------
Under Secretary for      S                        2
 Management
------------------------------------------------------------------------
Director of              F                        2
 Counternarcotics
 Enforcement
------------------------------------------------------------------------
Screening Coordination   F                        2
 Office
------------------------------------------------------------------------
Chief Privacy Officer    F                        2
------------------------------------------------------------------------
Citizenship &            F                        2
 Immigration Services
  Ombudsman
------------------------------------------------------------------------
Officer for Civil        F                        2
 Rights and Civil
 Liberties
------------------------------------------------------------------------
FLETC Washington Office  F                        2
------------------------------------------------------------------------
U.S. Coast Guard         F                        1
------------------------------------------------------------------------
Federal Emergency        F                        2
 Management Agency
------------------------------------------------------------------------
Customs & Border         S                        3
 Protection
------------------------------------------------------------------------
Immigration & Customs    S                        3
 Enforcement
------------------------------------------------------------------------
Transportation Security  S                        3
 Administration
------------------------------------------------------------------------
U.S. Secret Service      L                        2
------------------------------------------------------------------------
Science & Technology     L                        2
------------------------------------------------------------------------
Domestic Nuclear         L                        2
 Detection Office
------------------------------------------------------------------------
US-VISIT                 L                        2
------------------------------------------------------------------------
Citizenship &            L                        2
 Immigration Services
------------------------------------------------------------------------
Office of the Inspector  L                        2
 General
------------------------------------------------------------------------
[1] S = Significant Presence means Component Heads and their senior
  leadership for operations, planning, policy, management and some
  limited support functions. Remaining support staff will be
  consolidated with other Components back-office functions ``off-
  campus'' where possible to minimize locations and take advantage of
  functional integration opportunities.
L = Liaison Presence means a limited coordinating staff only with the
  bulk of the Component space located off-campus.
F = Full Presence means the entire office or component.

    Question: What other sites were considered, and what was the 
rationale for selecting the St. Elizabeth's campus?
    Response: The following table was excerpted from the DHS NCR 
Housing Master Plan submitted to the Congress on 24 October 2006 as 
directed by P.L. 109-295 (Homeland Security FY2007 Appropriations Act) 
and lists the locations that GSA considered to house DHS and why each 
was eliminated from further study. Only Federal sites were examined by 
GSA to avoid incurring unnecessary acquisition costs. Privately owned 
properties were excluded from the analysis given that GSA already 
controls a federally owned site capable of accommodating DHS's need. 
GSA has determined the only site under Federal Government control that 
has the size, potential capacity, security features, and availability 
to meet DHS minimum urgent consolidation needs is St. Elizabeths West 
Campus, Washington, D.C.

                      Alternative Location Analysis
------------------------------------------------------------------------
               Site                          Reason Eliminated
------------------------------------------------------------------------
Germantown Campus,                 Insufficient space--only 1.3 million
Germantown, Maryland                SF of space available.
------------------------------------------------------------------------
Suitland Federal Center,           Insufficient space--only 800,000 SF
Suitland, Maryland                  of space available.
------------------------------------------------------------------------
Federal Research Center at White   Insufficient space--only 1.7 million
 Oak,                               SF of space available.
Silver Spring, Maryland
------------------------------------------------------------------------
Franconia Storage Depot,           Insufficient space--only 55,000 SF of
Franconia, Virginia                 space is available.
------------------------------------------------------------------------
US Geological Survey Campus,       Insufficient space--only 450,000 SF
Reston, Virginia                    of space is available.
------------------------------------------------------------------------
Cotton Annex & 12th and C          Insufficient space--only 56,636 SF of
 Streets,                           space available.
Washington, D.C.
------------------------------------------------------------------------
Southeast Federal Center,          Insufficient space--only 1.8 million
Washington, D.C.                    SF of space available.
------------------------------------------------------------------------
Reservation 13, Washington, D.C.   The site is under control of the
                                    District of Columbia.
------------------------------------------------------------------------
Armed Forces Retirement Home,      The site is projected to be
Washington, D.C.                    redeveloped via ground lease to
                                    compatible users to replenish the
                                    Armed Forces Retirement Home Trust
                                    Fund. GSA cannot pay for both
                                    construction costs and ground lease
                                    payments, since another Federal site
                                    (St. Elizabeths West Campus) is
                                    available. Also, GSA would not pay
                                    for full reimbursement of the site
                                    (in a transfer context), given that
                                    there is already a Federal site
                                    available for development. The
                                    property would also not likely be
                                    available in a timely manner.
------------------------------------------------------------------------
Robert F. Kennedy Stadium Site,    The site is under control of the
Washington, D.C.                    District of Columbia.
------------------------------------------------------------------------
Nebraska Avenue Complex,           Insufficient space--if site was
Washington, D.C.                    developed to full capacity, only 1.2
                                    million SF of space is available.
------------------------------------------------------------------------
Walter Reed Army Medical Center,   The property would not be available
Washington, D.C.                    until 2012, which is outside the
                                    timeframe required by DHS.
------------------------------------------------------------------------
Beltsville Agricultural Research   The U.S. Department of Agriculture
 Center,                            currently determines types of
Beltsville, Maryland                development on this site and has
                                    indicated the site is not available.
------------------------------------------------------------------------

    In addition, language in PL 109-241, Coast Guard and Maritime 
Transportation Act of 2006, dated 11 July 2006, requires GSA to 
specifically evaluate the following properties for the USCG 
Headquarters:
        1. The current Department of Transportation Headquarters 
        located in the Nassif Building above the LEnfant Metro station 
        in Southwest Washington, D.C.
        2. The Waterfront Mall Complex in Southwest Washington, D.C.
    Although GSA will formally provide evaluation of these properties 
to the relevant Congressional Committees, as required by PL 109-241, 
since the USCG Headquarters is part of the up to 4.5 million GSF 
minimum departmental consolidation requirement, neither of these 
facilities has the required size or security setbacks to meet the needs 
of the consolidated campus that DHS seeks.

    Since DHS Headquarters is expected to relocate, will DHS continue 
to use the Nebraska Avenue Complex (NAC)? If so, how?
    Response: DHS and Component Headquarters currently require about 7 
million Gross Square Feet (GSF) of office space. GSA has determined 
there are no sites already federally owned that are available and can 
accommodate the entirety of DHS real estate needs in a single location 
in the NCR. Moreover, the St. Elizabeths West Campus is the only site 
that has the potential to accommodate up to 4.5 million GSF of new and 
adaptively reused office space plus parking as well as meet our 
security requirements. Consequently, the Department carefully analyzed 
the critical functions that must be collocated on the secure campus and 
the remaining requirements that may be consolidated elsewhere. As we 
finalize the specific levels of presence for the components listed 
above, we will look closely at all of the properties and capacities 
that remain. Our goal is to reduce the number of locations housing DHS 
entities to as few as possible.
    The NAC was selected as the initial headquarters when the 
Department was stood up in 2003. As DHS organizations and mission 
requirements have matured and expanded over the past three years, it is 
obvious that the physical limitations of the property make the NAC 
wholly unsuitable as the permanent headquarters for the Department. 
Lessons learned from Hurricane Katrina and the Second Stage Review 
underscore this conclusion. We appreciate that Congress appropriated 
funds to support the NAC, and these funds are vital to sustain the 
current operating capability of the Department. Although the physical 
limitations of the NAC render it unsuitable as the permanent DHS 
headquarters, over the longer term it is certainly likely that the NAC 
can well serve as a site for consolidation of certain DHS mission 
support functions that can utilize the much needed recent facility 
improvements.

    A number of buildings on the site date back to the 1800s. How will 
they be utilized, and what is the cost-benefit analysis that will 
determine whether to renovate the historic buildings versus building 
new office space?
    Response: GSA is responsible for the costs of renovating historic 
buildings to meet current codes and standard office requirements. DHS 
costs are for tenant specific requirements above the tenant improvement 
allowance provided by GSA. There are two overarching considerations 
that influence GSA's approach to renovating historic properties. They 
are the National Historic Preservation Act and applicable Executive 
Orders. The other factor is requirements imposed by the National 
Capital Planning Commission. As the central planning agency for the 
Federal Government in the National Capital Region, NCPC is charged with 
planning for the appropriate and orderly development of the national 
capital and the conservation of important natural and historic 
features. Within that context, GSA is engaged in working with DHS to 
protect the most significant historic resources as part of an 
integrated campus for DHS.
    Executive Order 13006: Locating Federal Facilities on Historic 
Properties in our Nation's Central Cities requires Federal agencies, 
when operationally appropriate and economically productive, to give 
first consideration to historic properties within historic districts. 
St. Elizabeths is a National Historic Landmark. As GSA is committed to 
complying with Executive Order 13006 and Sections 106 and 110 of the 
National Historic Preservation Act, consideration of the site's 
historic significance is a major focus of GSA's planning efforts. GSA 
is guided by the principal goals of its Historic Buildings program in 
carrying out this project. Those goals are to realize the objectives of 
the National Historic Preservation Act by developing: a) strategies 
that enable the reuse of GSA's historic buildings; and other 
contributing elements, such as the cultural landscape b) creative 
design solutions to resolve conflicts between preservation, codes, and 
functional requirements of modern office use. In keeping with these 
preservation and planning goals, GSA is seeking to satisfy DHS's 
programmatic requirements in a manner ensuring that ``to the maximum 
extent possible, [GSA has] undertake[n] such planning and actions as 
may be necessary to minimize harm to [the] National Historic 
Landmark.'' The Master Plan includes both development objectives and 
planning principles that recognize the importance of preserving and 
protecting the important tangible, as well as intangible, historic 
characteristics of the campus while ensuring operational effectiveness 
for the Federal user. The National Capital Planning Commission uses an 
approved Master Plan as the basis of approving follow on building 
designs. The master plan for the St. Elizabeths West Campus development 
and the subsequent building designs are subject to review (advisory 
only) by the U.S. Commission of Fine Arts.
    With regard to the cost-benefit analysis that will determine 
whether to renovate the historic buildings versus building new office 
space, this is also a GSA responsibility and they intend to approach 
this task on a campus wide basis that seeks to preserve the historic 
resource while introducing new construction. The final cost of 
developing the campus continues to be refined as more information is 
learned about the site and individual buildings. GSA advises the costs 
of renovating historic structures will be dependent upon the results of 
consultation process as required by the National Historic Preservation 
Act.
    The alternative to housing DHS in a campus environment (which 
includes new and adaptive re-use space at the St. Elizabeths West 
Campus) would require GSA to house DHS in leased locations that would 
be more costly to the tax payer. here are no other Federal sites that 
have the potential to meet the DHS minimum housing requirement. 
According to ``The Automated Prospectus System'' (TAPS) analysis 
conducted by GSA, consolidating up to 4.5 million gross square feet 
(GSF) of the DHS office space requirement at St. Elizabeths West Campus 
will result in approximate $1 billion Net Present Value (NPV) savings 
over a thirty year period as compared to individually replacing 
commercial leases without any consolidation.
    GSA is currently consulting under Sections 106 and 110 of the 
National Historic Preservation Act of 1966 with the District of 
Columbia State Historic Preservation Office, Advisory Council on 
Historic Preservation, National Capital Planning Commission, U.S. 
Commission of Fine Arts as well as other local planning and other 
planning agencies including National Capital Planning Commission and 
preservation organizations. The consultation will help identify 
appropriate mitigation measures necessary to minimize harm to the 
National Historic Landmark. Mitigation consultations are expected to 
begin when a preferred alternative is made available to the public in 
July 2007 and are expected to be completed in March 2008.

    Question 16: The Government Accountability Office (GAO) has 
recommended that the Department of Homeland Security and the Department 
of Defense each should establish a new Deputy Secretary position 
specifically to focus on management and transformation. GAO also 
advocated that this position should be filled by longer-term executives 
to provide for greater continuity within the departments.

    What is your opinion on this GAO recommendation to create a new 
Deputy Secretary position?
    Response: I have been given, as the Under Secretary for Management, 
the Secretary's authority to manage the entire department. I've been 
told by the Secretary that I should prepare management directives that 
will strengthen any areas of authority that I feel I do not have.
    I don't agree with elevating it to deputy. First of all, I think 
title inflation doesn't necessarily add any value. At some point the 
Under Secretary has to get the work done, and making me a deputy 
secretary doesn't make it any easier. It has a negative effect.
    There should be only one deputy in a department. That person, who 
happens to be very able--Michael Jackson--is the one person who knows 
everything that the Secretary does, including the most highly 
classified things. Anything that muddles his authority in the 
Secretary's absence is counterproductive.

    Wouldn't the same goals be accomplished by simply augmenting the 
authorities of your position within DHS?
    Response: Yes.

    Wouldn't a new Deputy Secretary just be another layer of 
bureaucracy which would overlap the role of the existing Deputy 
Secretary at DHS and create confusion within the organization?
    Response: Yes, it could.

    Wouldn't a longer-term executive serving in this new position 
create inherent conflict with changes in leadership of the Department?
    Response: Yes, it could.

    Question 17: During the last Congress, this Committee held a number 
of hearings and passed legislation to strengthen the ability of the 
chief operating officers to oversee their counterparts in the 
Department's legacy agencies.
    In your first few months in office, have you identified any 
specific problems in the areas of financial management, procurement, 
and personnel that could be related to the lack of direct line 
authority for the chief operating officers at the Headquarters level? 
What recommendations do you have to improve management in these areas?
    Response: Yes, I determined that the DHS Chief Information Offer 
(CIO) did not have sufficient authority to execute the Information 
Technology (IT) transfer required across the Department. The Secretary 
agreed with my assessment and shortly thereafter, he issued the 
appropriate Departmental management directive giving the CIO the 
authority he needed to successfully execute his responsibilities.
    When it was determined that the CIO did not have sufficient 
authority, specific steps were taken to give him the authority he 
needed.

    Question 18.: Comptroller General David Walker testified on January 
31st that DHS ``continues to face challenges in creating an effective, 
integrated acquisition organization.''

    What is your assessment of the existing acquisition organization at 
DHS?
    Response: The Department of Homeland Security is just beginning or 
is in the midst of many crucial acquisitions that are vital to the 
success of DHS. That is why we are working to strengthen acquisition 
and procurement by institutionalizing solid processes. To this end we 
are:
         Building the capability to manage complex efforts by 
        ensuring that program offices are properly structured and 
        staffed with the right people, and the right skills, to ensure 
        efficient and effective program management and oversight; and 
        aggressively hiring where we have known shortages.
         Strengthening the requirements and investment review 
        processes by improving the Joint Requirements Council (JRC) and 
        Investment Review Board (IRB) process.
         Reviewing the major programs and investments to ensure 
        that the requirements are clear, cost estimates are valid, the 
        technology risk is properly assessed, schedules are realistic, 
        the contract vehicles are proper, and the efforts are well 
        managed.

    What changes in the organization do you plan to implement?
    Response: To date, the Department's focus has been on procurement. 
Procurement, however, is only one element of acquisition management. 
Acquisition also includes understanding operational and life-cycle 
requirements, such as formulating concepts of operations, developing 
sound business strategies, exercising prudent financial management, 
assessing trade-offs, and managing program risks. Best practice 
acquisition management is executed by teams of professionals who 
understand and are able to manage the entire life-cycle of a major 
program effort. DHS has a shortage of people that are experienced in 
program management, including its related functional areas (e.g. 
acquisition logistics, cost analysis). I will focus on this area as one 
of my major priorities by identifying needed skills and processes and 
considering expedited delivery of training in key disciplines for those 
individuals involved in the management of the Department's major 
programs.
    We have established a department-wide real property asset 
management plan with performance metrics to govern investment decisions 
regarding our buildings, structures and land. We are expanding this 
approach to all tangible assets through the investment review process 
with an Asset Management and Services Board with representation by the 
component chief administrative officers.

    Question 19.: Many of the legacy components of DHS have their own 
procurement offices.

    What is the Department doing at the Headquarters level to ensure 
the accountability of these different processes?
    Response: To ensure accountability of acquisition and procurement 
processes at the DHS Components, the Chief Procurement Officer has 
established the following top priorities:
         First, to build the DHS acquisition workforce to 
        enhance the Department's acquisition program.
         Second, to establish an acquisition system whereby 
        each requirement has a well defined mission and a management 
        team that includes professionals with the requisite skills to 
        achieve mission results.
         Third, to ensure more effective buying across the 
        eight contracting offices through the use of strategic sourcing 
        and supplier management.
         Fourth, to strengthen contract administration to 
        ensure that products and services purchased meet contract 
        requirements and mission need.
    These four goals were flowed down to each of the eight Heads of the 
Contracting Activities through the component heads to ensure alignment 
and focus on these high priority items. Progress in these four areas 
will significantly strengthen the Department's ability to perform its 
mission and to execute acquisition programs successfully. Additionally, 
the CPO is implementing a 4 step oversight process intended to ensure 
Components are using effective procurement processes. These steps 
include acquisition planning, Component self-assessments, Component 
operational assessments and procurement management reviews of the 
Components. Considerable progress has been made in implementing this 
oversight plan, with the initial implementation of the first three 
steps largely done, and the implementation of the last step commenced.

    What organizational changes, if any, would you recommend to ensure 
acquisition by the legacy components of DHS is integrated to maximize 
economies of scale?
    Response: I would not recommend any organizational changes at this 
time. It is not clear that the current organizational structure is the 
reason for any problems that have been identified. The single largest 
reason for identified problems has been the shortage of acquisition 
personnel and skills to accomplish the mission. Organizational change 
will not necessarily resolve people shortages. I've have taken a number 
of steps to address the people and skills shortage including a 
Department-wide acquisition recruitment initiative. I've asked the CPO 
to lead this effort with support from the Chief Human Capital Officer.

    What additional tools would you recommend be given to the DHS Chief 
Procurement Officer to strengthen oversight of acquisitions by the 
Department's component agencies?
    Response: I intend to review programs on a regular basis and the 
process that is used to manage programs within the Department. I will 
make adjustments as appropriate to ensure that DHS programs are 
effectively managed.

    Question 20.: The DHS Inspector General testified on January 31st 
that many of the procurement offices within the Department are 
understaffed.

    What are your plans to address this issue?
    Response: The Office of the Chief Procurement Officer is working on 
several key efforts to address the issue of staffing shortages. The 
first initiative taken was to seek the authority to maximize the use of 
hiring flexibilities such as, Direct Hire Authority and Re-Employed 
Annuitants for procurement personnel. In working closely with the 
Office of the Chief Human Capital Officer, the CPO is utilizing 
centralized recruiting efforts incorporating the use of the direct hire 
authority to rapidly bring identified talent on board. The centralized 
recruiting efforts include: department-wide vacancy announcements, 
print advertisements in major media publications as well as attendance 
at key acquisition recruiting events such as: the Federal Acquisition 
Conference/Expo and the National Contract Management Association 2007 
World Congress. Future recruiting initiatives will focus on the 
employment of Veterans, such as Veteran specific job fairs, job 
announcements in military publications, capitalizing on acquisition 
professionals whose commands were affected by the Base Realignment and 
Closure initiative, and teaming with The Department of Veterans affairs 
utilizing existing programs such as ``The Wounded Warrior'' whenever 
possible. A longer term approach, and capstone to the plan is the 
centrally managed Intern Program. In order to satisfy the long term 
need for qualified personnel, the Office of the Chief Procurement 
Officer sought centralized funding in order to attract, hire, and train 
exceptional new talent in order to ``grow'' a workforce.

    How long will it take to ensure DHS has the requisite number of 
properly trained procurement officers?
    Response: The Office of the Chief Procurement Officer will utilize 
all resources available to attract and retain qualified talent and 
provide training and development opportunities to the procurement 
workforce across the Department. Currently, the CPO's office is 
contracting a study to assist in determining a methodology for 
forecasting future workforce needs. The training and development of 
procurement personnel is an on-going endeavor and the lifecycle is 
dependant on where in their experience level in their careers an 
individual enters the Department. For instance, in order to fulfill the 
Federal certification requirement a new entrant with no experience will 
be required to obtain a minimum of four years experience and complete 
over four hundred hours of procurement training during that time 
period.

    Question 21.: In the 109th Congress, this Subcommittee held a 
number of hearings on DHS contracts that were riddled with waste and 
mismanagement.
    The Inspector General testified before this Subcommittee that DHS 
lacks the necessary number of procurement officers and a number of the 
procurement staff on board are not properly trained.

    What are your plans to ensure DHS has the necessary number of 
trained procurement officers?
    Response: The Office of the Chief Procurement Officer is utilizing 
the methodologies as outlined in question number 35 in order to 
increase the numbers of procurement personnel. To ensure they are 
properly trained they are embarking on a number of key initiatives. The 
first was to seek centralized, specific funding for acquisition 
training. Those funds will be used to supplement certification training 
provided by the Federal Acquisition Institute with specialized targeted 
training identified such as: Safety Act, Performance Based Acquisition, 
and Buy American Processes and Compliance. The department has also 
launched an almost monthly series entitled, ``Excellence in 
Contracting'' which are seminars targeted on hot and emerging topics in 
procurement. The Acquisition Workforce division is also working closely 
with the Oversight Division to identify deficiencies as procurement 
reviews are conducted and plan to develop and/or buy specific training 
to close those skill gaps as necessary.

    Based on your experience at the Department of Defense, what are 
some of the major differences in contracting and procurement that you 
have seen within DHS?
    Response: DoD has well established protocols and procedures. The 
processes that DHS does have in place, because of the Department's 
infancy, have not had a chance to mature. The acquisition and 
procurement career field is also better staffed at all levels, 
providing a more solid resource base to lay out complex efforts.

    What are some of the lessons learned from your experience at DoD 
that you plan to implement at DHS?
    Response: I plan to adapt best practices in all areas.

    Question 22: On January 31st, the DHS Inspector General testified 
that 36 Federal grant programs may duplicate grant programs 
administered by the Department.
    Will you work with the Inspector General's Office to identify these 
programs?
    Response: The DHS Office of Inspector General's (IG) testimony, 
before the Subcommittee on Homeland Security on February 6, 2007 and 
Committee on Homeland Security on February 7, 20027, stated that they 
``identified 36 federal assistance programs that have the potential for 
duplicating DHS grant programs''. The grants process and the 
requirements associated with each assistance program can be complex, 
and generally are stipulated by the Congress with administrative 
requirements provided by OMB Circulars. The DHS Chief Procurement 
Office has responsible for oversight of assistance programs within DHS 
and has assigned the Office of Grant Policy and Oversight to contact 
the OIG's to request the list of federal assistance programs they 
identified in order to determine if there is a duplication of effort, 
or whether the grant programs address different sets of requirements 
and recipients. It is not unusual for assistance programs awarded under 
grants sponsored by different agencies to address similar missions, but 
generally the agencies are aware of the potential duplication and 
coordinate the efforts to avoid such duplication.

    What can be done to eliminate this bureaucratic overlap?
    Response: The DHS CPO/GPO will continue to work with the DHS 
program offices, the Office of General Counsel and the Office of 
Inspector Generals to identify Federal assistance programs that appear 
to be overlapping with DHS assistance programs, and notify the DHS 
program offices of potential duplication possibilities and request that 
they contact the program respective agency to coordinate program 
mission and/or awards.

    Question 23.: This Committee has consistently been concerned with 
reports that first responder grants were used for unrelated or 
ineligible uses.

    What can the Department do to better manage grants once the awards 
have been made to ensure that funding is being spent appropriately?
    Response: Although the Department of Homeland Security (DHS) gives 
the State Administrative Agency (SAA) maximum flexibility to determine 
State and local funding priorities, the Office of Grants and Training 
(G&T) provides several levels of oversight for Federal grant funds.
         The SAA provides sub-grants to local jurisdictions for 
        their use, and monitors the sub-grantees to ensure compliance 
        with G&T program guidance.
         G&T's Preparedness Officers (POs) are in almost daily 
        contact with State grantees to serve as a resource for 
        questions.
         G&T requires each State and identified urban area to 
        develop a homeland security strategy, based on a comprehensive 
        assessment of threats, vulnerabilities, and assets. Last year's 
        strategies were further enhanced by the requirement that States 
        align their existing State/urban area strategies with the 
        national priorities as listed in the National Preparedness 
        guidance. States must expend grant funds in accordance with 
        identified goals and objectives listed in their strategies.
         POs continually monitor grant implementation, 
        including appropriate and timely obligation and expenditure of 
        grant funds. This office-based monitoring is conducted through 
        quarterly financial status reports, bi-annual progress reports, 
        correspondence, and routine communication with grantees.
         G&T has an established programmatic monitoring 
        protocol requiring that at least one onsite monitoring visit be 
        conducted each year with the SAA. During this visit, POs may 
        conduct interviews with State program implementation staff, 
        review records, review State procedures and guidelines, visit 
        sub-grantees, and verify equipment purchases. Monitoring 
        protocols also require the review of progress made toward the 
        goals and objectives noted in the State strategies, as well as 
        compliance with national initiatives such as National Incident 
        Management System and Homeland Security Presidential Directive-
        8 implementation.
    In addition to the programmatic administrative oversight described 
above, G&T financial monitoring is now being conducted to ensure the 
appropriate use of homeland security funds consistent with Government 
Accountability Office (GAO) recommendations on assessing and addressing 
risk. Risk can be measured in association with dollar volumes, 
incidence significance (meaning that there are trends or other 
indicators that show a need for more in depth analysis), or with a 
combination of discretionary and random risk elements (measuring a 
population of awards, for instance). Monitoring is done using both 
onsite and desk reviews of grantees.
    G&T financial monitoring also includes an assessment of the flow of 
funds through the States to the localities to identify impediments and 
to test the appropriate use and distribution of funds. These reviews, 
which are conducted as part of an annual onsite monitoring plan by both 
programmatic and financial personnel from G&T, include the assessment 
of financial performance as part of a tandem visit.
    G&T also incorporates financial management training and assistance 
to grantees to enhance internal control measures and the proper 
oversight of subgrantees (localities). G&T uses internal reports, 
grantee financial and programmatic progress reports, and a new 
financial monitoring protocol and profile that assists in performance 
assessment and control measures.
    Although there have been periodic media inquiries regarding alleged 
misuses of our funds by State or local entities, DHS has been able to 
refute the vast majority of these claims. In many cases, outside 
entities do not clearly understand how DHS programs work, and, as such, 
the Department is committed to education and outreach to help clarify 
any questions.
    It is also worth noting that after numerous audits by various 
governmental agencies, including GAO, there has not been any evidence 
of widespread abuse of homeland security grant funds. Given the fact 
that the Department has granted more than $15 billion dollars since 9/
11, this is a testament to the commitment to preparedness at the 
Federal, State and local levels.

    Questions 24.: The Inspector General testified on January 31st that 
FEMA has made progress in addressing problems in its contracting, such 
as increasing the number of pre-negotiated contracts. In addition, the 
Department has created a Disaster Response and Recovery Internal 
Control Oversight Board.
    Do you believe these steps will help to reduce waste, fraud, and 
abuse in future disasters?
    Response: FEMA has developed a National Contingency Plan which 
assists the Agency in preparing for upcoming disasters. As part of this 
plan, an acquisition tracker was developed which identifies 
procurements that support future hurricane seasons. The tracker helps 
to support the contingency plan to compete contracts for requirements 
which may be needed in the future. By aiding FEMA in competing 
contracts prior to the advent of a hurricane, the acquisition tracker 
will help preclude the need to procure disaster relief and recovery 
with unusual and compelling urgency.

    What else can FEMA to combat waste, fraud, and abuse in its 
contracting?
    Response: Supporting acquisitions prior to disasters will help 
combat waste, fraud and abuse by enabling procurement officials to 
include proper oversight and monitoring controls in the contract to 
counter abuse as well as ensure FEMA resources are available to 
properly administer and supervise the contracts. Overall, the use of 
contingency contracts will help FEMA to more effectively control its 
procurement and contract management processes.
    In addition to the competitive award of contingency contracts, 
strong contract administration will protect against fraud, waste, and 
abuse. FEMA has established contracting offices in each of the Gulf 
states, staffed with qualified contracting personnel. Additionally, 
FEMA has added contracting officer's technical representatives (COTRs) 
in the region to ensure appropriate acceptance of good and services. 
Also, it has published a FEMA contracting field guide establishing the 
contract administration procedures for the major contracts.&

    What is your role in the current reorganization of FEMA?
    Response: My role is to facilitate the reorganization.

    Question 25.: On January 31st, the DHS Inspector General testified 
that the Department's internal control weaknesses, specifically those 
at the Coast Guard, Immigration and Customs Enforcement, and the 
Transportation Security Administration, weaken financial management 
within DHS.

    What is the Department doing to resolve the internal control 
weaknesses?
    Response: To resolve the internal control weaknesses, the 
Department issued its first ever Department-wide corrective action plan 
in a document entitled the Internal Controls Over Financial Reporting 
(ICOFR) Playbook. The ICOFR Playbook outlines the additional steps the 
Department will take to resolve material weaknesses and build 
management assurances.

    What additional steps should the Department take in this area?
    Response: Substantial progress was achieved in our FY 2006 
financial statement audit. Two components, U.S. Customs and Border 
Protection (CBP) and the Federal Law Enforcement Training Center 
(FLETC) received favorable audit outcomes. CBP obtained an unqualified 
opinion on all financial statements and FLETC achieved an unqualified 
opinion on its first ever balance sheet audit. Significant progress has 
also been achieved in reducing conditions that comprise the 
Department's material weakness structure. For example, most 
significantly the U.S. Immigration and Customs Enforcement (ICE) 
eliminated five of its seven component-level material weakness 
conditions.

    Question 26.: In 2004, Congress passed the Department of Homeland 
Security Financial Accountability Act which strengthened the role of 
the Chief Financial Officer and required audits of the Department's 
internal controls.

    What is the status of the Department's compliance with this Act?
    Response: The Department has made steady and continuous progress in 
implementing the Department of Homeland Security Act. In FY 2005, 
Secretary Chertoff issued an assurance statement on internal control 
over financial reporting. In FY 2006, the Department's Inspector 
General issued an audit opinion on the Department's internal controls 
over financial reporting. In addition, the Department's Chief Financial 
Officer was confirmed by Congress. Finally, Secretary Chertoff approved 
the Department's first ever Department-wide corrective action plan to 
address material weaknesses reported in the Secretary's assurance 
statement and the Inspector General's audit opinion.

    When do you believe the Department will receive its first clean 
audit opinion?
    Response: A favorable audit opinion is dependent upon successful 
execution of corrective action plans. Currently corrective actions are 
scheduled to be completed by 2010.

    Question 27.: The DHS Inspector General testified on January 31, 
2007, that his information security audits identified a number of 
information technology (IT) risks and vulnerabilities within the US-
VISIT program.

    What are these vulnerabilities?
    Response: OIG-06-39 Enhanced Security Controls Needed for US-VISITs 
System Using RFID Technology Audit Closed--As of November 7, 2006, in a 
memo from Assistant Inspector General Frank Deffer, all recommendations 
associated with this audit were closed.
    OIG Report 06-16 US-VISIT System Security Management Needs 
Strengthening
    Recommendation 1: Ensure that CBP's Information Systems Security 
Manager follows up with the local system administrators at the ports-
of-entry (POE) to ensure that the security vulnerabilities identified 
for US-VISIT systems are remediated.
    Original DHS Response: Both the US-VISIT Program Office and CBP 
management concurred with this recommendation. Based on the 
vulnerability scanning results, the US-VISIT Program Office will 
independently determine whether US-VISIT information or assets are at 
risk. CBP Technology Operations will organize a team of local 
administrators to generate a plan for the recommendation of identified 
POE vulnerabilities and for addressing subsequently identifies 
vulnerabilities by March 31, 2006.
    DHS 5/23/06 Update: On March 30, 2006 CBP generated a plan for the 
recommendation of identified POE vulnerabilities and for addressing 
subsequently identified vulnerabilities. By August 31, 2006, CBP plans 
to remediate currently vulnerable US-VISIT systems. By May 31, 2006, 
CBP plans to implement a vulnerability management process for US-VISIT 
systems.
    OIG 10/3/06 Evaluation: The attached ``Plan for Correcting Security 
Vulnerabilities in US-VISIT Systems'' meets the intent of our audit 
recommendation. US-VISIT systems will be tested to ensure existing 
vulnerabilities have been remediated when we schedule a subsequent 
follow-up audit of the US-VISIT security program.
    Status: CLOSED
    Recommendation 2: Establish MOUs and Interconnection Security 
Agreements (ISA) between CBP, ICE and the US-VISIT Program Office for 
the interconnections to the US-VISIT backbone. US-VISIT, in conjunction 
with CBP and ICE, has completed all required actions resulting from 
this finding.
    Recommendation 3: Revise the MOU with the Department of State to 
ensure that it defines the responsibilities for establishing, 
operating, and securing the interconnection between US-VISIT and the 
Department of State systems. Additionally, the US-VISIT CIO should 
formally approve the MOU and ISA with the Department of State. US-VISIT 
is continuing to work with Department of State to update the Memorandum 
of Understanding to reference the appropriate Interconnection Security 
Agreement.
    Recommendation 4: Establish MOUs with key US-VISIT participants to 
ensure that security requirements are documented and agreed to before 
non-DHS systems are connected to US-VISIT's backbone. US-VISIT 
partially concurred with this recommendation. All external connections 
to the US-VISIT backbone are documented in appropriate ISAs. The OIG 
accepted US-VISIT's response that all current external connections to 
the US-VISIT backbone systems are documented in appropriate ISAs. US-
VISIT will continue to follow existing policies and procedures to 
ensure that MOUs are established and reference ISAs (where appropriate) 
to ensure that security requirements are agreed upon with external 
agencies prior to connecting non-DHS systems to the US-VISIT backbone.
    Recommendation 5: Ensure that ISAs for the systems comprising US-
VISIT's backbone and external organizations are current and formally 
approved by the US-VISIT CIO. Remaining action items reside within CBP 
for mitigation.
    Recommendations 6: Establish a formal structure for the oversight 
and management of the security for the US-VISIT Program. US-VISIT 
deferred to the DHS CIO for response. The OIG has requested that the 
DHS CIO formally respond with the actions that have been or will be 
taken to address this recommendation.
    Recommendation 7: Provide US-VISIT's CIO with sufficient authority 
to oversee all elements, including the system security, of the future 
architecture of the US-VISIT Program. US-VISIT deferred to the DHS CIO 
for response. The OIG has requested that the DHS CIO formally respond 
with the actions that have been or will be taken to address this 
recommendation.

    Will the program's reorganization into the new National Protection 
and Programs Directorate have an impact on their information technology 
problems--either negatively or positively?
    Response: The reorganization of the US VISIT program into the new 
National Protection and Programs Directorate will have a positive 
impact on US VISIT information technology problems. The new National 
Protection and Programs Directorate CIO and his staff are from the 
Preparedness Directorate Information and Technology Division. This 
office is recognized throughout the Department of Homeland Security and 
the government as one of the top performing Information and Technology 
(IT) organizations. Their strengths are in Project and Program 
Management, Enterprise Architecture, and IT Security as demonstrated by 
awards from the IT industry.

    What progress has the Department made in its efforts to establish 
resiliency and continuity of operations for its information technology 
systems in the event of a disaster?
    Response: DHS is establishing a redundant IT architecture to ensure 
continuity of operations is maintained in the event of a disaster. We 
are transitioning IT applications from over 17 data centers to 2 
active-active data centers with coop capabilities established as a 
design feature in these new data centers. Additionally, the department 
is establishing a common email system and reducing its five WAN to one 
WAN (with two active-active Network Operations Centers and Security 
Operations Centers and supported by two separate carriers) to ensure 
resiliency.

    What are the major IT challenges at the component level of the 
Department?
    Response:
    a. Some component CIOs do not have sufficient visibility into all 
the IT being developed or proposed to be developed within their 
agencies. They are unable to ensure elimination of duplication where 
not desired and consistency with the target architecture of DHS.
        b. Components have a lack of understanding and implementation 
        of Earned Value Management and portfolio management principles.
        c. Component Information Security challenges stem from the 
        rapid adoption of new information technology by DHS to more 
        effectively accomplish its mission. ew IT drives the need for 
        new security policies and architecture to enable its use at an 
        acceptable level of risk. Further, NIST and OMB continue to 
        evolve security requirements and standards to address emerging 
        threats to information systems. These new and emerging security 
        requirements drive the need for continuous updates of DHS 
        information security polices, implementation oversight and 
        metrics reporting.
    As new requirements and standards are issued, there will be 
specific audit findings by the DHS Inspector General (IG) and the 
Government Accountability Office (GAO) for improvement with 
implementing processes and verification procedures to meet these new 
requirements. New weaknesses that are identified as a result of 
additional requirements will increase remediation efforts across DHS 
and impact the amount of management and oversight required by the DHS 
Information Security Program.
        d. Components are implementing the One Infrastructure vision 
        and migrating to the consolidated infrastructure environment. 
        The consolidated infrastructure which is being developed and 
        deployed by the Department's Infrastructure Transformation 
        Program (ITP), provides capability for addressing continuity of 
        operations requirements and establishes a resilient technical 
        infrastructure that is managed at the enterprise level. (1) 
        Migration efforts to the enterprise email and network solutions 
        are underway. Migration to the consolidated data center 
        environment has initiated, and in that regard, a migration 
        strategy is being developed to support Components in their 
        understanding of the planning, scheduling, funding, and the 
        technical resources required achieve a data center migration, 
        as well as engineering support to facilitate any necessary 
        modification of applications to run in the enterprise data 
        center environment.
        e. Components are challenged with working through legacy 
        barriers and component-specific data repositories to obtain 
        visibility across the Department. (2) Headquarters has 
        established the Global Address List for email which provides a 
        centralized data repository as well as the management processes 
        neeeded to ensure accurate, timely information at the Component 
        level. Additionally HQ has chartered the Single Sign-On project 
        which will develop and deploy the technical solutions needed to 
        provide secure, consistent, authentication to Component and 
        Department resources.

    How is Headquarters working with the components to assist them in 
addressing their IT challenges?
    Response:
        a. Through its investment and procurement review process DHS is 
        instilling the concept of IT as a utility service that is 
        obtained from the component agency CIOs. Individual programs 
        and projects should not own their technology but receive that 
        service from the CIO.
        b. By establishing a contract vehicle whereby component Program 
        Management Offices can conduct Earned Value Management 
        assessments and surveillance of their major investments in a 
        developmental phase, and by working with component IT and 
        functional staff to establish operational portfolio management 
        organizations.
        c. By developing guidance and training material for component 
        Program Management Office staffs to enhance the awareness of 
        Earned Value Management and portfolio management principles, 
        and IT investment and budgeting reporting procedures.
        d. By providing detailed guidance through distribution of the 
        DHS Information Security Handbook, the DHS Certification & 
        Accreditation Methodology, the Information Security SM Guide, 
        and the Plan of Action & Milestone Guide.
        e. Making available specialized training and training material: 
        POA&M Training, FISMA Reporting Training, C&A Training, NIST SP 
        800-53 Training, Annual DHS Security Workshop & Conference, 
        Annual Security Awareness Training Materials, and Component 
        Specific Training as requested.
        f. Performing Component Information Security Assistance Visits: 
        Information Security Teams are made available to all components 
        for assisting in FISMA reporting, C&A, POA&M Reporting, and 
        Remediation Activities.

    Question 28.: Recognizing that the Department was under tremendous 
time pressure to roll out an information sharing network at the 
earliest possible time, is it fair to say that the Homeland Security 
Information Network (HISN) has provided a benefit to states and 
localities?
    The Inspector General's Major Management Challenges report states 
that ``potential users do not regularly use HISN'' because of a lack of 
training by the Department at the time of the program's establishment. 
Anecdotally, the Committee has heard that the Department is using HISN 
to issue a number of homeland security alerts and the network is being 
used by states and localities.

    What type of training or other guidance would you suggest the 
Department institute for HISN users?
    Response:
    Many states have adopted HSIN as the centerpiece for information 
sharing throughout the state. They are using it for situational 
awareness, emergency management and law enforcement coordination, and 
collaboration with the private sector.
    In the past the HSIN program office retained ownership of many 
aspects of the system that inherently belong to the end users. These 
aspects included content control, personnel access, and individual site 
administration. This control has contributed to low user rates. The new 
program office is relinquishing ownership of these aspects through a 
controlled release. Training, policies, and procedures are being 
established to ensure proper use and understanding of the technology. 
This effort is promoting a renewed interest in participation across the 
communities of interest.
    Efforts are underway to provide technical bridges between HSIN and 
other collaboration tools in use within the states. This initiative 
will enable states to be part of the HSIN community of users while they 
to continue to use the solutions they have invested in and built long-
standing processes around.
    Although training has been cited as one of the prime reasons for 
limited use of HSIN, it is more accurate to cite the lack of mission-
focused operational training. The program has lacked the involvement of 
the operational components of the Department. HSIN was deployed as the 
primary tool for sharing terrorism and all hazards information but the 
program office failed to engage the Department components to ensure 
that content would be delivered. In an effort to rectify this 
deficiency Operations Coordination is:
         Standing up the HSIN Advisory Council. This council 
        will work to create policies that will help overcome major 
        obstacles preventing information flow,
         Hiring a full-time resource to help establish 
        governance and procedures for sharing content across HSIN, and
         Standing up a department-wide group--HSIN Mission 
        Coordination Committee--that will focus on ensuring the system 
        is developed to enable the specific information sharing 
        missions of each of the components.
    A few components are using HSIN extensively in the execution of 
their mission. FEMA has integrated the tool in all emergency management 
coordination and has conducted extensive training across the nation. 
The USCG has begun to use the tool as its primary coordination tool for 
exercises and missions that require large-scale, real-time 
collaboration. CBP has constructed collaboration space for each of its 
sectors to enable seamless information flow and situational awareness.
    Although these examples demonstrate the viability of the system, 
efforts to connect the mission owners and the information they produce 
remains a work in progress. Initiatives underway to connect mission 
owners include:
         Single-Sign-On and Identity Management--this will 
        enable seamless interaction and trusted sharing across 
        communities
         Security layering--this will enable appropriately 
        restricted information flow and relieve reluctance to share 
        data
         Additional collaboration tools--to include geospatial 
        data exchange and event visualization
         Information feeds from other agencies' collaboration 
        tools--to include Intelink-U, RISS, and LEO

    Question 29.: The Integrated Deepwater System Program (Deepwater) 
is a $24 billion, 25-year acquisition program designed to replace and 
modernize the Coast Guard's aging and deteriorating fleet of ships and 
aircraft. The Committee is informed that approximately $5 billion has 
beenobligated to date.
    The DHS Inspector General has released audits reflecting a number 
of significant challenges with the Deepwater program.

    How are you working with the Coast Guard to improve the contract 
oversight in the Deepwater program?
    Response: The Chief Procurement Officer (CPO) has been actively 
engaged in the oversight of the Deepwater program since the inception 
of the Department. Separate from the general oversight of the USCG 
Acquisition Operations, Deepwater has been the specific subject of 
numerous reviews by the CPO and CPO Staff. CPO and the Acquisition 
Oversight Staff have been part of every major review of the program 
beginning with the review of the updated ORD to account for changes in 
requirements brought on by the attacks of 9/11/01. We have reviewed 
each change to the Program and each quarterly report to Congress as 
well. The CPO Acquisition Oversight staff participated with the 
Deepwater staff in several GAO and DHS OIG reviews conducted over the 
past 3 years. The DHS CPO was instrumental in advising USCG to seek 
outside assessment on the critical portions of the Deepwater 
acquisition. The DHS CPO Acquisition Oversight Team was one of the 
first offices outside USCG to review and comment on the application of 
Earned Value Management data on the program and sought refinement of 
several cost estimates as a result of that review. Reviews of the 
Deepwater program have been conducted by several levels of DHS 
Management and the CPO and CPO Acquisition Oversight staff have been 
intimately involved in each. The DHS CPO Acquisition Oversight Team 
closely reviewed, for example, the entire process for assessing and 
awarding the first Award Term for the Deepwater contract.

    What steps should DHS take in the short-run--and long-run--to 
ensure this major program is managed most efficiently and cost-
effectively?
    Response: First and foremost, the DHS CPO is supporting the USCG in 
its implementation of the USCG Blue Print for Acquisition Reform. This 
initiative, begun by the Commandant shortly after assuming command, 
will fundamentally change the way that the USCG does business and will 
focus assets in the areas of requirements generation, program 
management, contracting and logistics where needed and when needed. DHS 
CPO supports the request to Congress by USCG to have personnel costs 
shifted from Deepwater specific appropriations to the general 
Operations Expense appropriation so as to give the USCG the flexibility 
to place human resources in the most efficient manner possible and no 
longer be constrained by rigid personnel limitations in program 
specific appropriations. The DHS CPO and the CPO's Acquisition 
Oversight Team will continue to engage the USCG at every level in the 
routine oversight activities involved in the review of Acquisition 
documents such as Acquisition Program Baselines, Acquisition Plans, 
selected contract documents. The Acquisition Oversight Team is part of 
the departmental executive review of each major action and attends 
every meeting involving Deepwater with DHS external organizations. As 
circumstances arise, the DHS CPO has the ability and commitment to 
assign special reviews to the Acquisition Oversight Team and has done 
so recently with respect to the coordination of the updated set of 
Acquisition Documentation including an updated Program Baseline and 
Acquisition Plan. The Team has recently reviewed the Acquisition Plan 
for the Fast Response Cutter (FRC) B-Class and has submitted numerous 
comments on the draft plan. his plan provides evidence of the changes 
that have taken place in the Deepwater program in the past several 
months as it marks the departure from the Systems Integrator as the 
sole acquiring agency for major Deepwater Assets.

    Question 30.: In the 109th Congress, the Management, Integration, 
and Oversight Subcommittee, which I chaired, held three hearings as 
part of its in-depth examination of the current camera system on our 
borders known as the Integrated Surveillance Intelligence System, or 
ISIS. The Subcommittee found rampant waste and mismanagement in the 
Department's oversight of the ISIS program.
    Last September, DHS announced the award of the new Secure Border 
Initiative contract, known as SBInet. This multi-year, multi-billion 
dollar program is intended to cover both the Northern and Southern 
borders.
    On November 15, 2006, we held a hearing on the SBInet contract, and 
the Inspector General testified and released a Management Advisory 
raising specific concerns.
    One of the issues raised in the Management Advisory was that the 
Department lacked the necessary number of acquisition and procurement 
staff to manage a new major acquisition program like SBInet.

    Do you believe the Department currently has the necessary number of 
trained personnel to effectively manage the SBInet contract? Other 
major contracts?
    Response: No. The Department has grown significantly over the last 
couple of years in terms of personnel and acquisitions. It has been a 
challenge to grow the acquisition and procurement workforce 
commensurate with Department growth. Ensuring that DHS has the right 
number of acquisition professionals with the right skills is one of the 
top priorities. DHS is conducting an assessment on the utilization of 
acquisition professionals in the Department to ensure that people with 
optimal skills currently work in DHS. To complement this, the 
Undersecretary for Management has initiated a Department-wide 
acquisition recruitment effort. The CPO has been asked to lead this 
effort with support from the Chief Human Capital Officer. As DHS 
continues to recruit, it will consider using non-DHS resources to help 
address our staffing shortages--this includes use of non-DHS government 
personnel for acquisition and procurement support (such as the Defense 
Contract Management Agency and the Defense Contract Audit Agency) as 
well as some contractor support.

    How do you plan to monitor the Department's progress to limit the 
potential for waste and abuse in SBInet and other major contracts?
    Response: With regard to monitoring the Department's progress on 
achieving effective acquisition and procurement, the CPO is responsible 
for implementing the four-step Acquisition Oversight program. These 
steps include acquisition planning, Component self-assessments, 
Component operational assessments and procurement management reviews of 
the Components. Considerable progress has been made in implementing 
this oversight plan, with the initial implementation of the first three 
steps largely done, and the implementation of the last step commenced. 
Programs of significant importance and size, like SBInet, will receive 
additional reviews as appropriate.

             Questions From the Honorable Michael T. McCaul

    Question 31.: Under the National Technology Transfer and 
Advancement Act, Federal agencies are required to use voluntary 
consensus standards that are developed by private sector standards 
bodies. This policy correctly directs federal agencies to rely on the 
expertise of our nation's private sector standards development system 
as a means to prevent duplication of efforts and to save taxpayer 
dollars. Importantly, the Act also requires federal agencies to 
participate in the activities of voluntary, private sector, consensus 
standards bodies.
    I am very concerned that DHS and its agency components have not 
regularly participated in the standards development activities of 
private sector standards bodies developing standards in critical areas 
that go to the heart of your agency's functions and mission: intrusion 
detection, access control, video surveillance, and other efforts 
related to the interoperability of disparate electronic security system 
components. I believe the active participation of DHS in these private 
sector standards areas would be a wise use of agency and taxpayer 
resources.

    Could you please explain the current level of DHS participation, or 
lack thereof, in these standards areas?
    Also, what plans have been developed or are being developed to 
promote DHS participation?
    Are there any regulatory or statutory issues that need to be 
addressed to promote participation?
    Response: The Department takes an active role in private sector 
standards organizations' standards development activities and has 
specific ongoing efforts in these areas.
    The Department has adopted a policy that all standards activities 
will be conducted in accordance with the relevant provisions of the 
National Transfer and Advancement Act (PL 104 113) and the Office of 
Budget and Management (OMB) Circular A-119. In 2006, DHS reported 35 
agency representatives involved in 100 activities.
    The Science & Technology Directorate's Office of Standards 
coordinates and encourages participation in standards development 
across the Department and with private sector standards organizations. 
This includes partnering with the American National Standards 
Institute's Homeland Security Standards Panel (ANSI-HSSP), which 
promotes a positive, cooperative partnership between the public and 
private sectors in order to meet the nation's needs for homeland 
security standards. The ANSI-HSSP has membership from over 40 private 
sector standards development organizations including the National 
Electronics Manufacturers Association (NEMA), the Security Industry 
Association (SIA) and the American Society for Industrial Security 
(ASIS International). The ANSI-HSSP provides a forum that engages DHS, 
the private sector, and private sector standards development 
organizations on homeland security standardization issues.
    In the area of access control, the S&T Directorate is engaging the 
standards community to help facilitate the transfer of an access 
control technology known as the Policy Machine to commercial entities. 
This effort, which includes publishing papers and performing 
demonstrations, mirrors the process used to develop the Role-based 
Access Control Standard adopted by ANSI and the International Committee 
for Information Technology Standards (INCITS), ANSI INCITS 359-2004, 
which is in wide use today. Additional plans include developing a suite 
of related standards and promoting these standards as a member of an 
ANSI INCITS working group for the development of a national access 
control standard.
    In the area of interoperability of disparate electronic security 
system components, the S&T Directorate is providing input to standards 
development organizations such as the Institute of Electrical and 
Electronics Engineers (IEEE) and the Open Geospatial Consortium (OGC) 
on standards (such as the IEEE 1451 standard) for sensor interfaces for 
sensor and security networks and on the use of sensor networks for 
building applications. Current work aims to find standard ways by which 
data from various sensor networks can be used across platforms, and 
will aim to develop metrics and test methods by which sensor networks 
can be tested for compliance with DHS standards and requirements. The 
S&T Directorate is also working across DHS and standards development 
organizations on the harmonization of sensor and alert-related 
standards.

    Also what plans have been developed or are being developed to 
promote DHS participation?
    Response: In 2006, the S&T Directorate established a DHS Standards 
Council to improve coordination and participation in the development 
and implementation of voluntary consensus standards. The DHS Standards 
Council is working with the S&T Directorate's Office of Standards to 
create guidance on Departmental participation in the development and 
use of non-Government Standards. This guidance is expected to be issued 
by year's end. At the next Council meeting in April, the S&T 
Directorate plans to request that the council develop a strategy to 
improve DHS overall participation in standards bodies that affect the 
interoperability of electronic security systems components.

    Are there any regulatory or statutory issues that need to be 
addressed to promote participation?
    Response: Through the DHS Standards Council, the S&T Directorate 
Office of Standards will work with General Counsel, to explore if there 
are any regulatory or statutory issues that need to be addressed to 
promote participation.

                                 
