    [Senate Hearing 110-588]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 110-588

                     DEPARTMENT OF HOMELAND SECURITY STATUS
                        REPORT: ASSESSING CHALLENGES AND
                               MEASURING PROGRESS

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   ----------

                               SEPTEMBER 6, 2007

                                   ----------

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

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

                 DEPARTMENT OF HOMELAND SECURITY STATUS REPORT:

                  ASSESSING CHALLENGES AND MEASURING PROGRESS

                                                            S. Hrg. 110-588

                     DEPARTMENT OF HOMELAND SECURITY STATUS
                        REPORT: ASSESSING CHALLENGES AND
                               MEASURING PROGRESS

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 6, 2007

                                   __________

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

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

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            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   JOSEPH I. LIEBERMAN, Connecticut, Chairman
    CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
    DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
    THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
    MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
    MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
    BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
    CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
    JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                      Michael L. Alexander, Staff Director
                        Beth M. Grossman, Senior Counsel
                           Holly A. Idelson, Counsel
         Brandon L. Milhorn, Minority Staff Director and Chief Counsel
       Robert L. Strayer, Minority Director for Homeland Security Affairs
                      Leah Q. Nash, Minority GAO Detailee
                      Trina Driessnack Tyrer, Chief Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Lieberman............................................     1
        Senator Collins..............................................     3
        Senator Voinovich............................................    16
        Senator Carper...............................................    18
        Senator McCaskill............................................    21
        Senator Landrieu.............................................    32
    Prepared statement:
        Senator Akaka................................................    37

                                   WITNESSES
                          Thursday, September 6, 2007

    Hon. David M. Walker, Comptroller General of the United States,
      U.S. Government Accountability Office..........................     5
    Hon. Paul A. Schneider, Under Secretary for Management, U.S.
      Department of Homeland Security................................     9

                         Alphabetical List of Witnesses

    Schneider, Hon. Paul A.:
        Testimony....................................................     9
        Prepared statement...........................................    68
    Walker, Hon. David M.:
        Testimony....................................................     5
        Prepared statement...........................................    38

                                    APPENDIX

    Charts submitted for the Record by Mr. Walker....................    79
    GAO Report titled ``Department of Homeland Security: Progress
      Report on Implementation of Mission and Management Functions,''
      August 2007....................................................    81
    Slides submitted for the Record by Mr. Schneider.................   408
    Letter from Secretary Michael Chertoff to the Hon. Peter King,
      dated September 4, 2007, submitted for the Record by Mr.
      Schneider......................................................   412
    Responses to Post-Hearing Questions for the Record from:
        Mr. Walker...................................................   428
        Mr. Schneider................................................   430

                        DEPARTMENT OF HOMELAND SECURITY
                      STATUS REPORT: ASSESSING CHALLENGES
                             AND MEASURING PROGRESS

                                  ----------

                          THURSDAY, SEPTEMBER 6, 2007

                                         U.S. Senate,
                               Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.

        The Committee met, pursuant to notice, at 1:34 p.m., in
    Room SD-342, Dirksen Senate Office Building, Hon. Joseph I.
    Lieberman, Chairman of the Committee, presiding.
        Present: Senators Lieberman, Akaka, Carper, Landrieu,
    McCaskill, Collins, and Voinovich.

                OPENING STATEMENT OF CHAIRMAN LIEBERMAN

        Chairman Lieberman. Good afternoon. The hearing will come
    to order. Welcome to everyone. I particularly want to welcome
    Comptroller General Walker and Under Secretary Schneider to
    this important hearing on the Department of Homeland Security.
    In this Committee, we hold many hearings regarding specific
    programs or policies of this critically important Department,
    but at this one we are going to step back and take the long
    view of the big picture and ask: Do we have the kind of
    Department of Homeland Security we sought to create nearly 5
    years ago after September 11, 2001, with the passage of the
    Homeland Security Act?
        GAO, in its very comprehensive report, provides an answer
    to that question. I think it is fair to say that the Department
    of Homeland Security through Mr. Schneider will dissent in
    part, as they say in the courts. For us, it is helpful to
    remember what brought us here. We did not create the Department
    of Homeland Security as an academic exercise in governmental
    reorganization.
        Almost 6 years ago to the day, the September 11, 2001,
    attacks against the United States by Islamist extremists showed
    just how vulnerable our Nation was to attack by terrorists, how
    disorganized we were, and how the terrorists took advantage of
    that disorganization. The September 11, 2001, plot may have
    been formed in the caves of Afghanistan, but it was practiced
    and carried out right here in America--right in front of our
    eyes.
        As we learned more in the days and weeks that followed the
    attacks, it became clear how ill-prepared our divided
    governmental structure was to deal with this stunning new
    challenge. We simply did not have a single official or a single
    department focused on coordinating the various governmental
    agencies that had the responsibility, in one way or another, to
    defend our citizens from threats to their security here at
    home. As a result, we had failed to adequately recognize or
    prepare for the terrorist threat against our American homeland.
    We lacked a system to connect the dots that could have
    forewarned us of the September 11, 2001, attacks. We had no
    clear place to turn for guidance when the attack occurred or in
    its immediate aftermath. And we had no strong hand to guide us
    in preventing and preparing for future attacks. In short, the
    Department of Homeland Security was born of necessity, not of
    chance or desire.
        We knew it would be an arduous and awkward undertaking to
    forge this new Department. To do so required uniting more than
    22 component agencies into a new whole, while simultaneously
    creating major new capabilities to address issues such as
    homeland security information sharing, State and local
    preparedness and coordination, critical infrastructure
    protection, transportation system protection, and R&D for
    homeland security capabilities. Leading such an effort is the
    kind of job that would be daunting to the most seasoned CEO or
    the toughest veteran military commander.
        In the face of this massive challenge, I would say that
    there has been tremendous work done by many people to
    successfully launch the Department of Homeland Security. I want
    to particularly thank former Secretary Tom Ridge, current
    Secretary Chertoff, and all of the DHS employees for everything
    they have done to bring this Department into being. We know
    that many people have worked tirelessly to identify the threats
    we face, to design measures to prevent or protect against them,
    and to put those programs into action.
        Somebody asked me earlier in the day would I say that in
    response to this GAO report America was not safe, and I said,
    and as we have all said before and the 9/11 Commission said,
    America is a lot safer than it was on September 11, 2001; but
    as this report makes clear, we have got a lot to do before we
    can say we are as safe as we need to be.
        This Committee's commitment to homeland security
    necessarily includes a responsibility for honest examination of
    what is working, what is not, and what has still not come into
    being but should. So I commend Comptroller Walker and his team
    at GAO for the tremendous effort they have made--not only in
    this comprehensive, really unprecedented report but in the
    dozens of ongoing studies that underlie it--to help the
    Department of Homeland Security be all that it can and must be.
        Which brings me to the report itself. The report the
    Comptroller General is presenting today confirms what many of
    us have believed, and it does so in specifics: First, that the
    Department has made important progress establishing programs
    and procedures that make us safer today; and, second, that
    there remain serious deficiencies within the Department that
    require much more attention and resources than they have
    received to date.
        GAO tells us that DHS has made important strides in
    aviation and maritime security, both absolutely critical
    homeland security responsibilities. The report also documents
    how the Department is beginning to lay critical groundwork to
    strengthen border security, infrastructure protection, and non-
    aviation modes of transportation security.
        But there are clearly serious problem areas remaining as
    well which the report documents. Almost 2 years after Hurricane
    Katrina, GAO nonetheless still finds weaknesses in the area of
    emergency preparedness and response. GAO has also documented
    the difficulties DHS has had in forging a unified department
    from its many component pieces. This is difficult, unglamorous
    work, but it goes to the very core of why we created this new
    Department. If the component agencies of DHS operate as
    disconnected entities who happen to be under the same umbrella,
    we will have gained much less than we need to gain in exchange
    for the effort that creating this Department has entailed. And
    that is something we have got to get right.
        I know that the Department of Homeland Security takes issue
    with some aspects of GAO's methodology and some of its
    conclusions. That is not surprising given the scope and content
    of the report. I cannot imagine that there is any perfect way
    to measure a still evolving Department. But I hope today we can
    focus our discussion on the shared bottom line, which is: Where
    do we need to concentrate our energy and our resources and our
    leadership to ensure that we have the strongest Homeland
    Security Department possible? Because we know as recently as
    yesterday's news from Germany that the terrorist threat is as
    real as it was on September 11, 2001.
        Whatever the differences of opinion over methodology, there
    can be no difference of opinion about our shared responsibility
    to make this Department the best it can possibly be.
        I look forward to hearing from our witnesses and, most
    important, to working with them to strengthen this new
    Department. Thank you. Senator Collins.

                  OPENING STATEMENT OF SENATOR COLLINS

        Senator Collins. Thank you, Mr. Chairman.
        After the terrorist attacks on September 11, 2001, the U.S.
    Government launched the largest reorganization in its history
    to strengthen coordination among the 22 agencies with
    responsibilities for protecting our Nation. We established the
    Department of Homeland Security.
        More than 4 years have now passed since DHS opened for
    business on March 1, 2003. As Senator Lieberman noted this
    afternoon, our Nation is safer than prior to September 11,
    2001. But, nevertheless, the threats continue to evolve and
    intensify. Violent extremists, both foreign and homegrown,
    remain determined to attack Americans. Natural disasters
    continue to challenge our communities' ability to prepare,
    respond, and rebuild. Meanwhile, global commerce, travel, and
    new drug-resistant microbes raise the risk of pandemic disease.
        DHS officials and staff have worked hard to enhance our
    security. I think it is important that we take note of that. We
    have been spared a new terrorist attack on U.S. soil since
    2001, and the people of DHS deserve a measure of credit for
    that. We all know, however, that the Department has also
    encountered difficulties and setbacks in performing its vital
    mission.
        Today, we will attempt to assess the Department's
    performance fairly and accurately, noting its successes, its
    failures, and its incompletes. When Senator Lieberman and I
    first asked the GAO last year to perform a status check on
    DHS's first 4 years, we knew that we were asking for a major
    assessment. And the 320 pages in this new GAO report are
    certainly proof of that.
        I also expected that DHS would receive a mixed report card,
    and it has. Reviewing the grades fairly, however, does require
    a word of context. As the GAO notes, ``Successful
    transformations of large organizations, even those faced with
    less strenuous reorganizations than DHS, can take 5 to 7 years
    to achieve.''
        Applying the GAO's measure of ``performance expectations''
    to 14 key DHS mission areas yielded indications of ``moderate''
    or ``substantial'' progress in six areas, including key
    concerns like aviation security and maritime security. Four
    other areas were judged to show ``modest'' progress.
        That DHS should be a work in progress after only 4 years
    should surprise no one. But it is, nevertheless, disturbing to
    see ``limited'' progress in four areas as critical as human
    capital management, information technology management, science
    and technology, and, most of all, emergency preparedness and
    response.
        The limited progress grade in emergency preparedness and
    response particularly concerns me. The GAO does document some
    progress, such as grant programs to improve interoperable
    communications for first responders, a very high priority for
    the Chairman and for me. And I would also think that it is
    important to note that there are some positive developments
    resulting from last year's FEMA reform legislation that are not
    reflected in GAO's analysis. For example, FEMA now has regional
    centers with defense coordinating officers and multi-agency
    strike teams, multiplying its readiness to deliver rapid and
    effective assistance. FEMA also has improved its capability to
    preposition vital supplies and to track their deployment. I
    have seen these improvements firsthand in the regional exercise
    in New England, and they are encouraging, and they are not
    fully reflected in this report.
        But, nevertheless, I am very concerned that GAO found only
    limited progress in establishing an all-hazards national
    response plan, developing national all-hazards preparedness
    goals, and coordinating the implementation of a national
    incident management system. These are troubling
    ``incompletes.'' No amount of investment in technology and in
    aid to first responders can compensate for the lack of well-
    developed and well-understood goals and procedures for
    coordinated response. We simply must have better results in
    this area.
        Now, I am proud that the highest score GAO awarded was in
    an area that this Committee has worked very hard on, and that
    is maritime security. We held a number of hearings. We authored
    landmark port security legislation that was signed into law
    last year. And in this area, the GAO has found that DHS has
    achieved more than 75 percent of performance expectations.
        Another topic that has occupied a great deal of the time of
    this Committee is acquisition management. This Committee has
    uncovered appalling instances of waste and fraud in the
    response to Hurricanes Katrina and Rita and in contracting in
    Iraq and in Afghanistan. In light of those investigations, it
    is troubling that GAO found that DHS still lacks clear
    Department-wide acquisition policies and suffers from
    acquisition staff shortages. This is an area where the
    Department must redouble its efforts because faulty acquisition
    not only wastes scarce taxpayers' dollars, but it also can
    literally cost lives if vital supplies are lacking or they
    cannot be moved swiftly to aid victims of natural disasters or
    terrorist attacks.
        Nearly 6 years after September 11, 2001, 4 years after its
    creation, and 2 years after Hurricane Katrina, the Department
    must pick up the pace of its progress. GAO's report should
    serve as a useful road map in this effort. With so much at
    stake and with so many areas where progress is still required,
    America cannot settle for a mixed report card.
        I welcome our witnesses today, and I look forward to a
    productive discussion. Thank you.
        Chairman Lieberman. Thanks very much, Senator Collins.
        I know the Comptroller General has to depart here around
    3:20 p.m., so I want to go right to the opening statements and
    make sure we get plenty of time for Committee Members to ask
    questions.
        As Senator Collins said, this is a report that was done by
    the GAO at the request of Senator Collins and myself pursuant
    to our oversight responsibilities. And, again, I know there are
    disagreements between GAO and DHS about methodology, but this
    is a serious piece of work that makes some tough judgments. And
    because of all that is on the line, those are exactly the kind
    of judgments we have to make about homeland security.
        So, General Walker, I thank you again for your service to
    our country and to the Congress, and this Committee in this
    case, and we welcome your testimony now.

     TESTIMONY OF HON. DAVID M. WALKER,\1\ COMPTROLLER GENERAL OF
        THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

        Mr. Walker. Thank you, Chairman Lieberman, Senator Collins,
    and other Senators. It is a pleasure to be back before this
    Committee again, this time to discuss the Department of
    Homeland Security's efforts to implement its major mission and
    management reforms. As has been noted, this GAO work was done
    at your request. It was a major undertaking. I feel like this
    is ratings week, between Iraq and the Department of Homeland
    Security. Let me just note that both are very complex and
    controversial endeavors, both are very important endeavors, and
    both of them are situations where, quite frankly, we were
    mandated or requested to do them. Third, these represent
    situations where reasonable people can and will differ. There
    is no doubt about that because the stakes are so high.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Walker appears in the Appendix on
    page 38.
    ---------------------------------------------------------------------------
        With that, I think it is important to know that, prior to
    the creation of DHS, most of the agencies that comprise DHS
    were not focused on homeland security or counterterrorism
    activities. And so, therefore, a lot of them had their own
    challenges before this agency was created, and they brought a
    lot of those challenges with them; and added to that was
    merging 22 different agencies with different systems, different
    histories, different missions, different cultures, even
    different uniforms and other things of that nature that we have
    seen over time. And that made a complex undertaking even more
    complex.
        I think we have to keep in mind that even in the private
    sector, when you do a major merger and where you are trying to
    effectuate fundamental transformation that can be sustained,
    including an integration, that it takes 5 to 7 years at least,
    and in government, it typically takes longer for a variety of
    reasons.
        I think we also have to keep in mind that the Department of
    Defense was created 60 years ago and that while they are No. 1
    in fighting and winning armed conflicts, they are a D on
    business practices. And I am confident DHS can do better faster
    than the Department of Defense has done, but we need to make
    progress on both.
        I think it is also important to state at the outset we
    clearly are safer than we were on September 11, 2001, and there
    is no such thing as zero risk. We can and should do better. But
    we will never have zero risk. That does not exist in today's
    world, and we have to recognize that reality. Furthermore, this
    Department is not just about trying to prevent another event
    like September 11, 2001. It is about a lot of other things too,
    including natural disasters and border security and a variety
    of other issues.
        When they began back in 2003, we put DHS on our high-risk
    list not as an agency but because of the implementation,
    integration, and transformation effort. And I have talked about
    why we felt that was important to do so. This report is a major
    undertaking. Our people spent a lot of time on it. I want to
    thank all of our very capable staff who worked on it. In the
    report, we assess DHS's progress across 14 different mission
    and management areas. For each area, we identified performance
    expectations based on responsibilities either set out in
    legislation, homeland security presidential directives and
    executive orders, or DHS planning documents. In a few
    circumstances, there were other sources, but those were the
    primary sources.
        Our analysts and subject matter experts reviewed the work
    of the Department of Homeland Security's Inspector General and
    information that DHS provided us, which was extensive, in
    trying to determine whether or not DHS achieved each of those
    performance expectations. We used the performance expectation
    assessments to determine DHS's overall progress in each mission
    and management area, and in commenting on our draft, Mr.
    Chairman, as you noted, DHS raised some concerns about our
    methodology, including the criteria that we use for assessing
    the extent to which DHS has achieved each performance
    expectation and our consistent application of the criteria.
        Let me note that while we changed the terminology, we did
    not change the substance. The methodology was not changed. The
    terminology was changed. So it was a form-over-substance
    change. The substance was the same.
        And as you noted yourself, Mr. Chairman, there are a lot of
    different ways you could go about doing this, and there is no
    way that is perfect. But one of the things that we did do is I
    am confident that we had a clearly defined, consistently
    applied, and transparent methodology that we employed and that
    we are comfortable with. And I am confident that we used our
    best independent professional judgment to reach the conclusions
    we reached.
        We believe that our methodology provides a sound basis for
    our progress report. Overall, we appreciate DHS's concerns and
    recognize that in any such broad-based evaluation there is
    going to be some level of disagreement that is inevitable. But
    as I said, we have tried to be consistent, fair, and
    transparent with regard to our judgments, and all of their
    comments are in our report, and what we did with their comments
    is reflected in our report as well.
        DHS has made varying levels of progress in implementing its
    mission and management areas since March 2003. If we can put up
    the first chart,\1\ you can see the summary table, which is--
    fortunately, we have a highlights page. Senator Collins, as you
    know, probably one of the best things we ever did was to take
    these thick reports and have a one-page, maximum two-page
    highlights page. And so we have that here, and, in fact, this
    is part of the highlights page. And for the 14 mission and
    management areas, you can see that there were 171 performance
    expectations. As you can tell, it is a major undertaking. We
    are having a tough time just with the table here.
    ---------------------------------------------------------------------------
        \1\ The charts submitted by Mr. Walker appears in the Appendix on
    page 80.
    ---------------------------------------------------------------------------
        Chairman Lieberman. That is the largest chart we have ever
    had presented to our Committee.
        [Laughter.]
        Mr. Walker. We are happy to provide it for your archives,
    if you would like, if you have storage room for it. But as you
    can see, it is a massive undertaking. There are 14 different
    mission and management areas. There were 171 different
    performance expectations of which we judged that 78 were
    generally achieved, 83 generally not achieved, and 10 that we
    did not assess. We assessed based upon clearly defined
    criteria, which are on the highlights page, how many of the
    different performance expectations you needed to meet in order
    to achieve a limited, modest, moderate, or substantial rating.
        As I think I may have noted, generally they made more
    progress in mission areas than management areas. That is
    understandable. Mission is job one. And to the extent that it
    is trying to deal with counterterrorism or deal with border
    security or deal with emergency preparedness and response, or
    whatever it might be, mission is job one. And many times we
    found, especially with the Department of Defense, prima-facie
    evidence that the business areas, the management areas
    sometimes lagged. It is important that we do better than we did
    with the Department of Defense, and I am confident that DHS
    will over time do that.
        Sometimes DHS has made progress in developing plans and
    programs, but they faced difficulty in implementing them. After
    all, 90 percent of success or failure is implementation, and it
    is no different in government than it is anywhere else. And
    some things are tough, no doubt about it.
        DHS disagreed with our assessments on 42 of 171 performance
    expectations, and we provided detailed responses with regard to
    those items in our report.
        Given the leading role that DHS plays in securing the
    homeland, it is critical that the Department's missions,
    programs, and management systems and functions are operating as
    efficiently and effectively as possible. It has been more than
    4 years since the Department has been established. They have
    taken important actions. People are working very hard. They
    have made progress, more in the mission area than the
    management area, and the mission areas vary as well as the
    management areas. They have done their best to try to do as
    much as they can in this period of time. As I said, even for
    private sector entities, it is a 5- to 7-year effort, minimum,
    and in government, it is going to take longer to fully
    integrate and transform.
        But what is important is that they are focusing on the most
    important things and that they are allocating their limited
    human, financial, technological, and other resources to get the
    most important things done. And it is also important that
    Congress stay engaged to try to be able to provide reasonable
    oversight and to be able to deal with any appropriations and
    authorization needs that they might need. And I might note, as
    Senator Collins said, it paid off when you did in the maritime
    security area. There is no question about it. And working
    together, you can and have made a difference.
        We have all seen the effects of Hurricanes Katrina and
    Rita. We have all seen the concerns there. There have been a
    number of actions taken, I think most of which are probably
    reflected in our report, but evidently, Senator Collins, at
    least something was not, and we will be happy to take a look at
    what you mentioned. I appreciate that, and we will take a look
    at that.
        [The information submitted for the Record follows:]

               INFORMATION PROVIDED FOR THE RECORD BY MR. WALKER

        To what extent does the report capture progress made by
    FEMA with regard to its regional offices with Defense
    coordinating officers and multiagency strike teams and efforts
    to pre-position emergency supplies and equipment?

        Answer: Our report does not specifically address FEMA's
    efforts to improve the role of its regional offices in
    emergency response. With regard to the pre-positioning of
    supplies and equipment, our report provides information on
    DHS's Pre-Positioned Disaster Supply and Pre-Positioned
    Equipment Program. We concluded that DHS has generally not
    achieved the performance expectation under which the pre-
    positioning of supplies was included--develop the capacity to
    provide needed emergency assistance and services in a timely
    manner--as, among other things, DHS's optimization planning
    efforts for its logistics capabilities are still in the
    preliminary stages. DHS also did not provide us with
    documentation on how it determined requirements for the pre-
    positioning of disaster supplies and equipment to assess
    whether FEMA has achieved its intended capacity.

        In summary, the Department of Homeland Security has
    thousands of very capable people working for it, trying to do
    the right thing for our country. Many people are working very
    hard. In some cases, we have had multiple people in different
    jobs. We have already had--I believe this is right, although I
    did not ask this to be verified before I testified--two
    Secretaries, three Deputy Secretaries, and two Under
    Secretaries for Management in the roughly 4-year history of
    DHS. All capable people, but the lack of continuity is an issue
    in government, especially when you are dealing with major
    management reforms and transformation efforts. And that is
    something we may get into in the question and answer period.
        We are clearly safer. We will never be 100 percent safe,
    but we are clearly safer. And I am confident that working
    together in a constructive fashion, we can continue to keep you
    apprised of how they are doing, and we can do a lot better than
    the Department of Defense did with regard to achieving
    implementation of integration. Thank you.
        Chairman Lieberman. Thanks, Mr. Walker. That is an
    optimistic note to end on. We are at the beginning of the
    history of this Department, so we have a chance to really make
    it work well together before it gets, frankly, encrusted in
    ways that older departments sometimes do.
        Mr. Schneider, welcome. You are the designated
    representative, perhaps the designated defender, maybe the
    designated hitter. In any case, we welcome you.

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

        Mr. Schneider. Thank you, Mr. Chairman, Senator Collins,
    and Members of the Committee. It is a pleasure to appear before
    you today. I have been the Under Secretary for about 8 months.
    I am here today to discuss the recent GAO report titled
    ``Department of Homeland Security, Progress Report on
    Implementation of Mission and Management Functions.'' \2\
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Schneider appears in the Appendix
    on page 68.
        \2\ The GAO report titled ``Department of Homeland Security,
    Progress Report on Implementation of Mission and Management Functions''
    appears in the Appendix on page 81.
    ---------------------------------------------------------------------------
        Without question, the most significant challenge we face is
    to continue to transform the Department into a unified force
    that protects the country. GAO has referred to this project as
    an ``enormous management challenge'' and to the size,
    complexity, and importance of our efforts as ``daunting.'' By
    meeting this challenge, DHS will be better positioned to
    protect the country against threats, both foreign and domestic.
        Although the Department has faced numerous challenges
    during the first 4 years of this critical undertaking, we have
    made great progress. The GAO report largely recognizes this
    progress across 14 mission and management areas. In fact, GAO
    concluded that the Department has generally achieved 78
    performance expectations. This is particularly noteworthy given
    GAO's recognition that in many cases there was no anticipation
    that the Department would achieve the performance expectations
    by the end of the fourth year. Although the Department takes
    issue with the methodology and rating system employed by the
    GAO, there can be no dispute that GAO's positive assessments of
    the ``Generally Achieved'' reflect the Department's significant
    progress in four major mission areas, including securing modes
    of transportation; securing the border and administering the
    immigration system; defending against, preparing for, and
    responding to threats and disasters; and implementing
    management functions.
        Since my written testimony lists many of the Department's
    achievements recognized by the GAO, I will not go into the
    details here.
        I think it is worth noting, as the Comptroller General has
    pointed out, that many of the areas where GAO rightly
    recognized the Department's progress were in those critical
    areas where we chose to focus our resources to secure the
    homeland.
        I would also like to state that we are very appreciative of
    the frank and open communication with the GAO that has been
    established during recent months, and especially during the
    final stages of GAO's work on this report. I am especially
    appreciative of the efforts of the Comptroller General, the
    Managing Director of Homeland Security and Justice, Mr. Rabkin,
    and their team for their professionalism, courtesy, and
    cooperation. We look forward to building on and continuing this
    cooperative approach.
         While we were pleased that the GAO recognized our
    progress, the Department continues to believe that they used a
    flawed methodology in preparing the report, which resulted in
    many of the assessments not fully reflecting the Department's
    progress.
        We are particularly concerned that the GAO report is based
    on vague, shifting criteria and standards that result in an ``A
    or Fail'' grading system. It does not properly credit us for
    on-track implementation of long-term, multi-year goals, or
    constantly evolving programs. It is subjective and does not
    normalize the audit standard amongst analysts to ensure
    consistent assessments across the 171 performance expectations.
    It does not consistently account for issues outside of DHS's
    control. And it weighs all performance expectations equally.
        After Secretary Chertoff personally reviewed the initial
    Statement of Facts, he wrote to the Comptroller General
    expressing his concerns and offering to work with GAO to ensure
    the final GAO statement fully reflected the Department's
    achievements over the past 4 years. The Department met with and
    provided GAO with thousands of pages of documents explaining
    how the key programs were on track and performance expectations
    were being met.
        In late May 2007, GAO officials submitted a Revised
    Statement of Facts, and, frankly, without any advance notice
    with the Department, indicated that the Department's progress
    would now be rated as ``Generally Achieved'' or ``Generally Not
    Achieved'' rather than ``Generally Addressed'' or ``Generally
    Not Addressed.''
        Although GAO's recent reply to our comments suggests that
    this was merely a change in language rather than substance, the
    practical differences between these standards are significant,
    reflecting, at a minimum, a difference in how the performance
    expectations would be perceived. ``Addressed'' suggests that a
    program is on track; whereas ``achieved'' indicates final
    completion. Our view is that GAO went from a Pass/Fail to an A/
    Fail grading system without explaining why. This, frankly, is
    like moving the goal post in the middle of the game.
        Based on this new standard, GAO downgraded its assessments
    of the Department in 28 performance expectations to ``Generally
    Not Achieved.'' These changes were particularly surprising in
    light of the documentation and materials that we provided.
        We are also concerned with this binary ``Achieved/Not
    Achieved'' standard. We believe it is ill-equipped to evaluate
    the Department's progress accurately in a multi-year endeavor,
    and many of our efforts are multi-year endeavors.
        Here are some examples. Although GAO has indicated that the
    Department's Secure Border Initiative (SBI) is ``on a
    trajectory'' toward achievement, the Department received a
    score of ``Generally Not Achieved'' in this performance
    expectation because it had not yet fully completed the goals of
    the entire SBI program, a multi-year program. There is no
    obvious way, based on this criteria, to accurately portray the
    actual status, and that is perhaps the major flaw in the
    methodology.
        GAO continues to assess the Department's efforts to detect
    and identify illegal border crossings as ``Generally Not
    Achieved.'' This assessment understates the importance of our
    successful efforts to deploy National Guard agents to the
    border, our efforts to increase the Border Patrol staffing by
    30 percent since 2001, and our effort to begin and implement
    the comprehensive SBI Program.
        The Department delivered a 5-year Research and Development
    Strategic Plan to Congress on June 26, 2007, that incorporates
    information on milestones for fiscal year 2007 through 2011.
    The milestones, deliverables, and goals are included for every
    project within the science and technology effort of the
    Department. It reflects the highest-level objectives for
    internal departmental activities and provides overarching
    guidance for addressing the science and technology needs within
    each homeland security mission area. The plan also addresses
    the importance of developing a strong homeland security science
    and technology national workforce by developing professional
    science and technology employees. In spite of these
    achievements, this performance expectation is rated as ``Not
    Achieved.''
        Regarding airport perimeter security, not only has DHS
    established standards and procedures for effective airport
    perimeter security, we have gone beyond meeting the performance
    expectation and are implementing those standards by executing
    the Aviation Inspection Plan, which addresses the Aviation and
    Transportation Security Act. This also is rated as ``Not
    Achieved.''
        The Department issued the National Response Plan, which is
    in place and functioning. It establishes, coordinates, and
    implements a single all-hazards national response, as we saw
    with the successful handling of Hurricane Dean. But because it
    is under revision, as most living plans are at some point in
    time, GAO rates this as ``Not Achieved.'' The enclosure of my
    letter to the GAO dated July 20, 2007, which is included in the
    report that we are discussing today, contains a more detailed
    discussion of these and the other particularly problematic
    assessments.\1\
    ---------------------------------------------------------------------------
        \1\ The letter from Mr. Schneider to Mr. Walker appears in the
    Appendix on page 328.
    ---------------------------------------------------------------------------
        The Department has done a great deal to ensure the safety
    and the security of our country. We are proud of what DHS has
    been able to accomplish in a short time, notwithstanding the
    many challenges faced by the Department. Moving forward, we
    will build upon the Department's recent program developments
    and successes while dedicating ourselves to continuous
    improvement.
        I look forward to maintaining the cooperative approach with
    the GAO that was followed in preparing this report. I would
    also like to thank the Congress and this Committee for your
    leadership and for your continued support of the Department of
    Homeland Security. And I would be happy to answer any questions
    that you may have.
        Chairman Lieberman. Thanks, Mr. Schneider.
        We will go to the questions now. We will do a 6-minute
    round so that everybody can get an opportunity, and hopefully
    we can even do a second one. I do want to indicate both to the
    Members and the public, I think the Members know that we are
    going to follow this hearing on Monday with a hearing on the
    eve of September 11 when we will hear testimony from Secretary
    Chertoff, FBI Director Mueller, DNI McConnell, and Admiral
    Redd, the head of the National Counterterrorism Center, an
    overall hearing asking each of these critical leaders how are
    we doing in the war against terrorism and particularly in
    protecting the homeland from terrorists. So I look forward to
    that.
        Let me proceed with the questions. Mr. Walker, as I said
    earlier, you have presented a very useful, wide-ranging report
    that examines many of the Department of Homeland Security's
    diverse missions and integrates material from a host of
    previous analyses that GAO has done. I want to ask you at the
    outset to step back for a moment, and if you had to provide a
    single overall assessment of how the Department is doing,
    whether it is on track to meet our expectations and its
    statutory goals, what would your assessment be? And if you can,
    what grade would you give it at this point?
        Mr. Walker. I would hesitate to give them a grade, Mr.
    Chairman, because I do not think that is really fair because
    there is variance from that grade. I would say clearly they
    have made more progress on the mission area than the management
    area.
        Chairman Lieberman. Right.
        Mr. Walker. And that is understandable.
        Chairman Lieberman. Define that a little more.
        Mr. Walker. By ``mission,'' what I mean is, what they are
    trying to achieve--enhance aviation security, enhance maritime
    security, and enhance border security.
        Chairman Lieberman. As opposed to management----
        Mr. Walker. As opposed to financial management, human
    capital management, etc.
        Chairman Lieberman [continuing]. Of the overall Department.
        Mr. Walker. Yes, like information technology management,
    real property management, and acquisition management.
        Chairman Lieberman. Because achieving those missions also
    involves management of those separate tasks.
        Mr. Walker. Correct.
        Chairman Lieberman. But you are saying overall the
    Department is----
        Mr. Walker. I will give you an example, Mr. Chairman. Let
    me give you an example for another agency to help put it on.
    The Defense Department does a great job on achieving mission,
    but it does not necessarily do it in an economical, efficient
    manner. And so many times you can get things done, but the way
    you go about doing it may not be economical and efficient, and
    it may or may not be sustainable.
        So I think they have understandably prioritized their
    efforts to try to make as much of a difference as they can on
    mission as quick as they can, but they haven't made as much
    progress in the area of putting together the necessary
    management infrastructure--systems, controls, people,
    integration--that can be sustainable over time that will help
    on economy and efficiency on the general management front.
        Chairman Lieberman. OK. Mr. Schneider, do you want to take
    the opportunity to grade the Department or give a brief verbal
    assessment, perhaps responding to what the Comptroller General
    has said?
        Mr. Schneider. Well, first off, like the Comptroller
    General, I am not about to put a grade on the table. I do agree
    with what he said because it reflects what we have done. We
    really have focused on the mission areas, and I think his chart
    shows it.
        So if you take a look at some of the areas, aviation
    security, if you take a look at the maritime security, these
    are the mission areas. These are the ones where we have focused
    our effort, and the report, while we may disagree with the
    rating, as we clearly do in 40-some-odd instances, the fact of
    the matter is the report's own words frankly cite the many
    progresses that we have achieved in these particular areas.
        So I do not want our disagreement with the rating to in any
    way infer or give the impression that the report does not
    address many of the achievements. We frankly have disagreement
    on the rating, and I think that is probably true of any time
    somebody is given a grade or a rating. You end up having
    differing views about it. So we clearly have focused on exactly
    what the Comptroller General has said we have.
        Mr. Walker. If I can?
        Chairman Lieberman. Go ahead.
        Mr. Walker. As Under Secretary Schneider mentioned before,
    they had strong differences of opinion in some cases with
    regard to how we rated them on certain of these performance
    expectations. But we had a two-step process. We rated on the
    performance expectations, and then after we did that, we
    aggregated to determine what the overall progress should be in
    each major area. What I just asked my staff is, while we have
    not done the detailed analysis, would the overall progress have
    been dramatically different if we had changed a number of the
    ratings we are talking about? It would have been different, but
    it would not have been dramatically different. So I think that
    is what is important.
        Chairman Lieberman. OK. If you are so critical--and I know
    in part you are positive, but you make some tough criticisms of
    the Department--how do you explain why we have not had another
    terrorist attack since September 11, 2001?
        Mr. Walker. Mr. Chairman, I have always been very
    uncomfortable with anybody who wants to assert that because we
    have not had another terrorist attack, it automatically means
    that we have done a great job and we have done everything we
    should do. We should keep in mind that based on that standard
    on September 10, 2001, we were doing a great job. I do not
    think we can take comfort in the fact necessarily that we have
    not had another attack. Thank God we have not had another
    attack, and I think there are a lot of reasons that we have
    not, and in many cases because of efforts by the Department of
    Homeland Security, intelligence agencies, and things going on
    overseas. But I do not think we should use that as a standard
    for whether we are successful or not.
        Chairman Lieberman. I agree. That was well answered. The
    challenge, as you have talked about, of integrating 22
    component agencies, over 200,000 employees into a Department is
    not easy. You said that in the private sector it often takes 5
    to 7 years to achieve. And we are short on where we should be
    in this regard. What do you believe are the most important
    things the Department of Homeland Security can do to create an
    integrated and fully functioning Department?
        Mr. Walker. Well, obviously, one has to have a strategic
    plan. One has to align the organization to support that plan.
    One has to be able to have appropriate goals, objectives,
    metrics, and measures that will help focus the energies and
    efforts of all the related parties, including tying their
    performance evaluation systems and their compensation systems
    to getting those things done. And one of the things that I know
    all of us have talked about, especially Senator Voinovich and
    I, is I think one of the things we need to think about in
    government on the management side is do we need chief
    management officials in some of these larger, more complex
    entities like DOD and DHS that not only have capable and
    credible people, but provide for continuity within and between
    Administrations to deal with issues that are inherently non-
    partisan and non-political.
        Chairman Lieberman. Thank you. My time is up. Senator
    Collins.
        Senator Collins. Thank you, Mr. Chairman.
        Mr. Schneider, I want to focus on the four areas where the
    GAO really gave the Department unsatisfactory ratings, in other
    words, found only limited progress, the lowest rating. They are
    emergency preparedness and response, science and technology,
    human capital management, and information technology management
    on the chart.
        Now, I have indicated in my opening statement that I think
    GAO actually graded the Department too low on the emergency
    preparedness and response area, that one deserves at least a
    somewhat higher rating. So let's go to the other three. Tell me
    whether or not you agree specifically with the ratings of only
    limited progress for those three areas--science and technology,
    human capital management, and information technology.
        Mr. Schneider. In science and technology, we strongly
    disagree, and the basis for that is the strategic plan that I
    referred to in my opening oral statement. And the reason for
    that is I have looked at that strategic plan. One of the things
    that the Department was criticized for significantly about 2
    years ago was the lack of a good science and technology
    strategic plan.
        I would say that we did not have a good plan, we did not
    have a good structure, and we did not have a good process for
    making science and technology investments. It was one of the
    Secretary's priorities, which is why he went outside, hired a
    new Under Secretary, brought in a lot of people, and changed
    the processes around.
        I worked very closely with the Under Secretary for Science
    and Technology, actually a retired admiral from the Navy who
    used to work with me, and you might say he actually worked for
    me. And so what we have done is we actually have instituted
    some of the very basic processes that were used in DOD and the
    Navy for science and technology investments, which is why we
    spent a lot of time making sure that the science and technology
    plan that we sent to the Hill was, in fact, what we considered
    to be an outstanding plan.
        If you take a look at the number of the performance
    expectations that drive from that science and technology plan,
    there are several. So I would say that we strongly disagree
    with that one.
        Senator Collins. And if I could just interrupt, that is
    Admiral Cohen who was brought in.
        Mr. Schneider. Yes.
        Senator Collins. And I, too, think he has made a real
    difference in that area. I think it was very weak until he was
    brought in. But I think he is making a real difference.
        Mr. Schneider. Most plans are living plans if they are good
    plans. This is a living plan. We changed the number of mission
    areas that we invest in. We increased it based on the changing
    threat. There are handshake agreements between the operational
    customers and those that are managing the science and
    technology so that if the science and technology is executed,
    it reaches a certain point in time. There is an agreement by
    the operator that they will, in fact, use it, and that
    basically is a handshake budget agreement, which means they
    will fund it.
        And so he has instituted and the Department has instituted
    what I consider to be some very rigorous and disciplined
    processes to ensure that we get a pretty good return on the
    investment for science and technology, and our plan reflects
    that.
        Senator Collins. Let us go on to the other two.
        Mr. Schneider. In the area of human capital, we do not take
    exception to that. That is one of the weak areas that we have.
    I do not remember if we contested any of those off the top of
    my head. But the fact of the matter is in the management areas
    generally, and I used this term with the Comptroller General
    when I met with him a couple of weeks ago, I almost think we
    have reached an equilibrium of understanding, and the reason is
    we know what they look for in the management areas, be it
    acquisition, financial systems, internal controls, and the
    like. And the fact is we either produce it, the objective
    quality evidence, or we do not. So we have very few--probably I
    would say for the most part--disagreements in the management
    area. So we would not contest that.
        In the information technology area, that one we had a
    couple of issues--I think three associated with the enterprise
    architecture. In my 40-page letter which addressed some of
    these, we talk about the fact that we have an enterprise
    architecture. It is an approved enterprise architecture. It is
    being executed. We get high marks from OMB on the architecture,
    and I think that relates to, I think, several of those
    performance expectations in the information technology area. So
    we have some disagreement on that.
        I want to go back to the preparedness issue which you
    covered. That is our biggest exception. Roughly 25 percent of
    the total pages in my letter to the Comptroller General takes
    issue across the board with the preparation of performance
    expectations. And it is all-encompassing. It talks about the
    various levels of response teams, and this is where the issue
    is, the grade, not so much the words. In their assessment, they
    talk about the various tiers of response teams that we have for
    local, regional, national disaster type levels. And it talks
    about the progress we have made, but yet it gives us a low
    score.
        There are three performance expectations that talk about
    interoperable communications. We strongly disagree with the
    rating on those three, and I think the GAO's own words that
    describe our progress relative to implementing SAFECOM,
    implementing interoperability standards at the local and State
    level, we think that their words support our rating.
        The other issue is the National Response Plan that I talked
    about in my statement. We really have a problem with that one,
    and the reason being is we have a plan, it is being executed.
    One of the criticisms in the report was the fact that we
    haven't been able to test it out in a large-scale disaster.
    Well, it is very hard to simulate a large-scale disaster, and
    thank God we have not had one. One of the other ones we
    disagree with is emergency assistance.
        So we strongly disagree with that particular area more than
    any other area in the report, and I think I have covered all
    four.
        Senator Collins. Thank you.
        Chairman Lieberman. Thanks, Senator Collins. We will call
    on Members of the Committee in order of arrival at the
    hearing--Senators Voinovich, Carper, Akaka, and McCaskill.
    Senator Voinovich.

                 OPENING STATEMENT OF SENATOR VOINOVICH

        Senator Voinovich. Thank you, Mr. Chairman. First of all, I
    commend you for holding this hearing as I believe it is
    critical that we continue to closely monitor the progress and
    remaining challenges for the Department, which this Committee
    created by legislation in 2002. I thank the witnesses for being
    here and for their candor. But I must say that I find it
    regrettable that GAO and the Department were unable to agree
    upon the basic methodology for this progress assessment. What
    bothers me is that a year from now, if we don't reach
    agreement, we will be quibbling about metrics that are being
    used instead of solving the underlying problems.
        We have been able to achieve progress in addressing other
    areas on the GAO high-risk list, and Senator Akaka and I are
    very conscientious about continuing this work.
        I am pleased that Comptroller General Walker has outlined
    five overarching goals for the Department in his testimony,
    which I have repeatedly highlighted as critical to the
    Department's success, including agency transformation,
    strategic planning and results management, risk-based
    decisionmaking and resource management, information sharing and
    coordination with Federal, State, local, private sector, and
    international stakeholders.
        I am concerned that of all of the agencies that were on the
    high-risk list, DHS was the last to come up with a strategic
    plan. The GAO has criticized the plan for a lack of detail,
    clarity, and clear goals. On the high-risk list, the Department
    still has not come up with a corrective action plan to get off
    the high-risk list. And so I am asking the two of you, and I
    would ask the Chairman and the Ranking Member of this Committee
    to invite you back here in the next several months and see if
    you cannot get together and come up with some kind of
    understanding about the metrics that will be used to determine
    whether or not progress is being made in these respective
    areas.
        Second of all, I would certainly like to have a consensus
    from you on the top four or five challenges for which solutions
    are really going to make the most difference for the
    Department. What I am worried about is that we are going to
    have what we have had with the Department of Defense, and
    General Walker has made it very clear. The Defense Department
    has had eight areas on the high-risk list since 1990, six more
    that are on the general list, and they still have not gotten
    the job done.
        From my perspective, as Ranking Member on the Oversight of
    Government Management, the Federal Workforce, and the District
    of Columbia Subcommittee, we want to be able to determine
    whether or not progress is really being made.
        So I would urge the Chairman and Ranking Member that we get
    our witnesses to agree on common goals to prevent this
    situation in the future.
        Chairman Lieberman. It is a very good idea. I accept it,
    and I echo it and make that appeal to both of you. That is the
    sort of idea that a former mayor and a former governor makes,
    which Senator Voinovich is.
        Mr. Walker. I think it is a great idea. We will do that,
    Senator Voinovich. Let me just clarify that reasonable people
    can and will differ about what is the best way to do something
    like this, and I can think of other ways that we could approach
    it. Quite candidly, we laid out pretty early on what we were
    proposing to do, and it is my understanding that we did not
    really have strong objection from DHS until we were pretty far
    down the pike. And with the massive undertaking that this
    represents, you could not change the course of this battleship
    that far into the effort.
        Now, I think the bottom line is that what I am hearing from
    Under Secretary Schneider is the words they do not have a big
    problem with. The overall bottom-line assessment, with the
    possible exception of emergency preparedness and response,
    there is not a big problem there. There are concerns about how
    we got to that point. We are willing to work together to see
    what we can do, but let us not overstate the problem. I do not
    think there is as big a difference as what 47 items out of 171
    would imply.
        I think the approach that we took is such that it takes
    moving a lot of those items before you are going to change the
    right-hand column. And my personal view is we ought to really
    look at things two ways: Where do you stand? And what progress
    are you making? And you really need to know both in order to
    have a true sense. And we will endeavor to try to do that on a
    prospective basis.
        Senator Voinovich. General Walker, I would like for you to
    comment on why you believe a term for an Under Secretary of
    Management is important for this Department to complete the
    transformation that we think it needs so that it will get the
    job done for the American people.
        Mr. Walker. I do not think that government places enough
    attention on management in general, and in particular, I think
    government has an incredibly complex job to do with regard to
    major mergers and transformation efforts that is of higher
    complexity than the private sector. In the government, you have
    more bosses, you have less flexibility, and you have much more
    transparency. All the more reason why you must not just have
    people who are competent and credible; you must have
    continuity. It is critically important to have adequate
    continuity in order to be able to make transformational change
    happen. And I think in the area of the Department of Defense
    and the Department of Homeland Security, and maybe one or two
    others, you need a level two official with the right kind of
    background, with a term appointment, to provide continuity
    within and between Administrations to try to be able to deal
    with these transformation challenges.
        They can be a political appointee. If they are not doing
    the job, you can have a performance contract so that you can
    get rid of them. But I think we underestimate the degree of
    complexity in government, and we underestimate the degree of
    importance of having this type of person stay there over time.
        Chairman Lieberman. Thanks, Senator Voinovich.
        Let me ask you, on behalf of the Committee, to report back
    to us before Thanksgiving. That gives you a period of months to
    work on that.
        Mr. Walker. On how we would go about it prospectively, is
    that what you are saying?
        Chairman Lieberman. Yes, about working out the disagreement
    about methodology so we can all--we have a common goal here--
    operate together.
        Mr. Walker. Methodology prospectively.
        Chairman Lieberman. Good. Senator Carper, welcome.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. Thanks very much.
        Gentlemen, Mr. Walker, Secretary Schneider, thanks so much
    for being here and for the work that your folks have done at
    GAO, Mr. Walker.
        Let me start off, if I could, with a question. I do not
    know. I have been in and out so this question may have been
    asked. But you said several times--and I have read it in the
    testimony--that big transformations like this in private
    corporations take between 5 and 7 years to fully integrate.
    Federal agencies like the Department of Homeland Security take
    a whole lot longer not uncommonly. I think I know the answer to
    this, but why the difference? Why the much shorter time frame
    with the private sector than, in this case, the public sector?
        Mr. Walker. The private sector has market forces. If the
    private sector does not get things done within a reasonable
    period of time, it gets punished with regard to its stock
    price. It gets punished with regard to its ability to raise
    capital at reasonable rates. And potentially it gets punished
    with its existence if it does not get things done.
        The government does not face the same thing, at least in
    the foreseeable future. We do not have a stock price.
    Fortunately, we are deemed to have a safe credit rating. If we
    get our fiscal act in order, maybe we can avoid what Standard &
    Poor's said, which is we are headed for junk bond status within
    15 to 20 years if we do not get our fiscal house in order.
        But I think the private sector also understands the
    importance of these basic management areas, frankly, a lot more
    than the government does. The private sector is a lot more
    outcome-based and results-oriented than the government is. You
    either get the job done, or you get going. And, last, as I said
    before, frankly it is a lot tougher in government than it is in
    the private sector to get things done. You have a lot more
    bosses, you have a lot more restrictions on you, and you have a
    lot more transparency. That combined with less continuity--we
    can at least deal with the continuity.
        Senator Carper. Alright. Good. Thanks very much.
        I think it was former President Richard Nixon who once said
    that the only people who do not make mistakes are the people
    who do not do anything. And I have oftentimes said to my own
    teenage son, ``Don't be afraid of making mistakes. The sin is
    in making the same mistake over and over and over again and not
    learning from your mistakes.''
        I want to go back to one of the issues that was raised
    earlier, I think maybe by Senator Collins, and I think you
    mentioned--and it is mentioned at some length in your progress
    report--that one of the areas of significant progress was
    maritime security. Let me ask both of you to just take a minute
    or two on this and talk to us about how and why you think the
    Department was able to be especially successful in this
    particular area. And is there a lesson for the Department or
    for us that we can learn from the success as we try to apply it
    or the Department tries to apply it to other areas that are
    being examined?
        Mr. Walker. I think there are a lot of reasons, and I would
    be interested in hearing Under Secretary Schneider's comments
    on this. First, it is a mission area, and the Department
    provided more focus on mission areas than it did to management
    areas, for understandable reasons.
        Second, the Coast Guard is part of this, and the Coast
    Guard is probably the best managed service, and the Coast Guard
    is also an agency that has a long tradition of having multiple
    missions and having great partnerships between different levels
    of government and others in trying to achieve those missions.
        Furthermore, as has been mentioned, in addition to DHS and
    its component parts doing a better job with regard to its area,
    Congress was focused on maritime security with regard to
    oversight, and Congress also engaged in some authorization
    legislation, and I believe Congress also provided more funding
    here.
        So I think there are a number of factors that came together
    to cause this significant progress to be made.
        Mr. Schneider. I agree totally. I think it was the high
    priority assigned to the Department by the Congress. I think it
    is the fact that we have the Coast Guard, which is a well-
    established, well-trained, agile organization. They probably
    were in a better position to respond to changing missions than
    just about anybody. We see that today as recently as within the
    past couple of months, the deployment of these deployable
    operation groups (DOGs), which basically address multi-mission
    areas within the service. And so they are trained, they are
    operational, and they are readily adaptable. And I think that
    was the major driver, as well as the additional resources.
        Senator Carper. Alright. Thank you. So maybe if we renamed
    the Department the Department of the Coast Guard and aligned
    all the different missions--no, I am just kidding.
        Chairman Lieberman. I want to note for the record that
    Secretary Schneider had the expression on his face that I often
    have after you tell one of your jokes.
        [Laughter.]
        Mr. Walker. Although Secretary Schneider might like being
    called ``Admiral Schneider.''
        Mr. Schneider. I think Admiral Allen would have something
    to say about that.
        Senator Carper. That is alright. I am sure we have all been
    called a lot worse.
        Mr. Walker, my Financial Management Subcommittee, which I
    Chair and on which Senator McCaskill and others serve, held a
    hearing not long ago to examine the Department of Homeland
    Security and the challenges that they face in the particular
    area of financial integration, and I want to just take a minute
    to talk about the progress that has been made in integrating
    the Department as a whole.
        What problems has the Department leadership faced in its
    effort to bring the component agencies under the same
    management structure, the same chain of command, if you will,
    and the same culture?
        Mr. Walker. Well, as you know, Senator, the 22 agencies
    merged. They all had their different information systems. They
    had some of their own challenges with regard to financial
    management. And so you have got the issue of multiple legacy
    information systems that are not integrated, thank God not as
    many as the Department of Defense. And you also have a number
    of internal control challenges that exist in that environment.
    Those are the two primary areas, I would say, and Under
    Secretary Schneider may have some additional comments.
        Senator Carper. Admiral Schneider. I mean, Secretary
    Schneider.
        Mr. Schneider. I have a feeling that when I go back, the
    next time you have a hearing there will be a different witness.
        [Laughter.]
        The financial area is a big deal for us. At a hearing that
    Senator Akaka chaired with the Comptroller General and myself
    where we talked about some of the management challenges, one of
    the things that I talked about was that, prior to my
    confirmation, one of the great resources that I used was all
    the GAO reports that had been issued in the management areas.
    And so it pointed out a couple of things: First, that our
    internal controls were very weak across the Department; and the
    second thing was we had the myriad of financial management
    systems.
        So this is a special interest item for myself, the Chief
    Financial Officer, and the Secretary. So we have laid out a
    road map that works on the two areas.
        In terms of areas of internal controls, we issued what we
    call the ICOFR Playbook, which is the Internal Controls Over
    Financial Reporting Playbook, which goes into excruciating
    detail in each of the operational entities of the Department,
    looking at where potential material weaknesses are. And I am
    not an accountant. I am an engineer by profession. But as to
    the business of fund balances with Treasury, budgetary account,
    operating materials and supplies, etc., we have worked with
    each of our operating components and layed out a get-well plan
    that addresses each one of these areas. And we worked that with
    the GAO, we worked that with the Inspector General.
        I report with the CFO on a monthly basis to the Secretary,
    and we go over component by component where they are on each of
    these things. And I can tell you that if a component is not
    making progress, they have got to come around.
        So we, I believe, are holding the components of the
    Department responsible and accountable for getting well in
    terms of internal controls. The financial management system----
        Senator Carper. I am going to have to ask you to go ahead
    and wrap it up because my time is up.
        Mr. Schneider. The financial management system approach
    initially with e-merge was a failure. Instead, what we decided
    to do is migrate down to a couple of stable financial
    management platforms. So we have seven, and we are in the
    process over the next several years of migrating it down to
    two. And that is probably the No. 1 priority of my Chief
    Financial Officer.
        Senator Carper. Alright. Good. Thank you both.
        Chairman Lieberman. Thanks, Senator Carper. In the interest
    of the comprehensiveness of the record for the hearing, I do
    want to note that you are a Senator with a very good sense of
    humor, and often we all do genuinely laugh at your jokes.
        [Laughter.]
        Senator Carper. People have been laughing at me for a long
    time.
        Chairman Lieberman. Senator, thank you. Senator McCaskill.

                 OPENING STATEMENT OF SENATOR MCCASKILL

        Senator McCaskill. If we are going to say we laugh at his
    jokes, I think we need to find out do we laugh at it
    substantially, partially, or how far along----
        Chairman Lieberman. Well, we may ask for a GAO report on
    that.
        Senator McCaskill. I am ready for that audit.
        I want to first compliment this report. I have read every
    page of it. It is an overwhelming body of work for an auditor.
    And I compliment the substance of what is contained in it. I
    want to repeat what you said, Mr. Walker, because what you said
    is that the disagreements are not about the words. The
    disagreements are about how we are characterizing those words
    as to level of accomplishment. And if you read the words, we
    have a lot of work to do, and I think everyone agrees with
    that.
        I think it is also important to remember that if we get
    sidetracked by how we are characterizing the words, we are
    going to lose sight of some of the important messages in the
    words. And so I, for one, am going to try not to use your chart
    as much as I am some of the words that are in the report
    because I think they are important.
        I also want to make a comment before I ask you some
    questions, Mr. Walker, about the lack of a terrorist attack. I
    think it is really important. People need to remember the seat
    that you sit in. What you say in this report is here for
    history, and now there are people in this building that want to
    say we have not been attacked because we are doing a good job.
    If we were attacked tomorrow, there would be people in this
    building that would say it happened because we were doing a
    terrible job. And truth be known, neither are correct, and that
    is really what this report stands for. It is much more
    complicated than saying we are safe because they are doing a
    great job or we are in big trouble because they are doing a
    terrible job. And I think that--please convey from me to the
    individual auditors that worked on this report--quantifying
    this objectively is a huge challenge and had you done things
    differently, in fact, in terms of trying to pass judgment about
    prioritizing--which is one of the criticisms the Department has
    made--you would have been criticized for imposing your judgment
    for the judgment of Congress.
        The priorities are in the eye of the beholder as to what is
    important. I bet if we got all the Senators here and we looked
    at all of this report and they looked at it in detail, we might
    get 100 different opinions as to what was the most important
    part of this report. So I wanted to make that comment, too.
        You referenced the Inspector General at Homeland Security
    many times in this body of work, and I want to recognize the
    Inspector General at Homeland Security because, clearly, you
    believe they have done good work because you referenced a lot
    of their work. I am trying to make a habit of asking every
    Department that appears to put a link directly to the Inspector
    General on their home page. To find the Inspector General on
    DHS's home page, you have to either go down through all the
    agencies or you have to know to put in the search ``Inspector
    General.'' And so I would certainly ask, Mr. Schneider, that
    you all consider putting a direct link to the IG on the home
    page of your website.
        Mr. Schneider. Sure.
        Senator McCaskill. I also want to briefly ask questions
    about access issues. I notice you did not include access issues
    in your summary, Mr. Walker, but in the report, on page 206,
    you talked about delays and issues relating to access. Could
    you address that briefly for us?
        Mr. Walker. Two things. First, we made a conscious decision
    not to prioritize, in part because of what you said. Second, we
    have had continued challenges over a period of time to
    differing degrees with the Department of Homeland Security in
    getting timely access to information. Now, in fairness to them,
    they receive a lot of requests. They have a lot of things to
    do. At the same point in time, the process that they have used
    historically--and hopefully it is changing--has involved the
    lawyers to a greater extent than I believe it should. Under
    Secretary Schneider and I have met on this. I also had, I
    believe, one conversation with the Secretary on this at one
    point in time as well. They both pledged to do better. They are
    doing better, however they are still not doing well enough, but
    they are doing better. And, interestingly, when we got to the
    point where they saw our preliminary assessment here, we had
    well over 1,000 pages of information that came our way pretty
    quickly. Sometimes that happens when the assessments are not
    necessarily coming out the way that people want and, therefore,
    they want to make sure we are fully considering everything that
    is out there. But it really should not have to be that way. I
    mean, we really need to figure out a more streamlined way for
    us to get information, and the only thing I would say to the
    Department to close this out is, look, we are doing work for
    the whole Congress, and to the extent that they can cooperate
    with us, frankly, it is going to save them time because we can
    try to consolidate the requests of many committees, and we
    share our work broadly. And so while our work may cost them
    some time, it may actually save them time over time.
        Senator McCaskill. Well, I am glad to hear that the problem
    is improving, that we are getting better on access issues.
        Let me hone in on a part of the report that I think should
    be a priority, and that is working enforcement in the area of
    illegal immigration. I was interested to see that one of the
    things you talked about in June 2006 was the decline in numbers
    of enforcement personnel, the decline in number of enforcement
    actions.
        The thing that I am, frankly, mildly critical of the audit
    about--and I think it may have to do with the performance
    expectation as to how it has been written--is shouldn't we be
    separating out criminal investigations and sanctions against
    the workers and the employers? To me, these are two different
    issues. One is the magnet that is drawing the illegal immigrant
    over the border. The other is the immigrant who is coming
    across the border trying to feed his family. And I have not
    been able to determine from this audit report or, frankly, from
    much that has come out of ICE as to any kind of delineation as
    to--I keep reading about the sweeps they are doing. I never
    read about a criminal conviction or a jail sentence for an
    employer. You talk about, in this audit, egregious violations
    by employers. Have they defined what ``egregious'' is? What
    does it take, for gosh sakes, to be egregious as an employer in
    terms of hiring illegal immigrants?
        Mr. Walker. Well, let me say several things, and I will
    provide some more details for the record.
        [The information provided for the Record follows:]

               INFORMATION PROVIDED FOR THE RECORD BY MR. WALKER

        To what extent does performance expectation No. 8 under
    Immigration Enforcement (Implement a prioritized worksite
    enforcement strategy to ensure that only authorized workers are
    employed) differentiate between efforts to investigate and
    arrest employers of unauthorized workers and efforts to
    investigate and arrest unauthorized workers? What does DHS mean
    by ``egregious employers violations?''

        Answer: We did not identify separate performance
    expectations for worksite enforcement actions aimed at
    employers of unauthorized workers and at the unauthorized
    workers themselves. Within DHS, U.S. Immigration and Customs
    Enforcement (ICE) is responsible for implementing worksite
    enforcement efforts and has conducted worksite enforcement
    actions against employers and workers, which are described in
    our report. According to ICE, ``egregious employers
    violations'' include those violations that involve multiple or
    widespread abuse such as money-laundering, harboring aliens,
    smuggling aliens, document fraud, or some form of worker
    exploitation.

        I think while there has been a recent increase in the
    enforcement of hiring of illegal workers, that is a real
    serious problem. I think we have to recognize the reality that
    a vast majority of illegal immigration is for economic reasons.
    In Mexico, for example, the average daily wage for an unskilled
    worker is less than $5 a day. They are going to come here, and
    they are going to come here as long as they can get jobs here.
    And so unless we end up enforcing the laws against hiring
    illegal workers aggressively, then we are not going to stem the
    tide. We are just not going to do it. We have to recognize that
    reality. They have allocated some additional resources, but I
    think it is still an issue. And I do think there is a
    difference, clearly a difference, between the employer and the
    individual.
        Senator McCaskill. I am out of time, but I will probably
    stick around. You know me.
        [Laughter.]
        Chairman Lieberman. That is good news.
        Senator McCaskill. Maybe. I will not tell any bad jokes, I
    promise.
        Chairman Lieberman. OK. We have time for a second 6-minute
    round.
        Let me just pick up on the last area that Senator McCaskill
    was talking about. In this case, I want to go to border
    security. The GAO found that the Department had not yet
    implemented a program to detect and identify illegal border
    crossings between ports of entry. Specifically, GAO found that
    the Secure Border Initiative and the SBInet were only in the
    early stages of implementation, and the other border security
    programs that predate the SBI had faced real difficulties in
    implementation.
        The report also notes that of the 6,000 miles of U.S. land
    border, only 392 miles, or 6.5 percent, were under effective
    control as of March 2007, including only 12 miles on the
    Northern border. Obviously we have a very large border.
        Furthermore, it has recently been reported that the launch
    date for the first phase of SBInet's virtual fence of cameras,
    radar, and sensors, which has been much discussed and supported
    here in Congress--and I might say in various campaigns going
    on--is 2 months overdue as a result of technology failures,
    which would seem to confirm GAO's assertion that the Department
    of Homeland Security is not meeting its goals.
        So I want to ask both of you to respond. Mr. Walker, first,
    can you elaborate on GAO's conclusions about the Department's
    work in securing the country's land borders? And if you can,
    address the recent delays in implementing the first 28 miles of
    the so-called virtual fence.
        Mr. Walker. Well, first, this is a massive undertaking. I
    mean, we have thousands of miles of land border, and I would
    argue that the nature of the challenge is fundamentally
    different on the Southern border than the Northern border.
    Fundamentally different. And, from a practical standpoint, I
    think, as you said, SBInet is in the early stages. We only have
    it operational in a fairly small percentage of territory. They
    have missed some of their early milestones.
        Let me tell you what the good news is. The good news is
    that unlike Deepwater, where it was a system of systems
    approach, where we had a number of challenges, there are some
    existing technologies and capabilities that exist out there
    already that we need to be able to draw upon to the maximum
    extent possible, and I will give you an example. My son used to
    be a Marine Corps officer, and at one point in time, right
    before he was in Iraq, he was on the border of Mexico--in Yuma,
    Arizona. There is a big training and testing facility for the
    Marine Corps there, and they use extensive technology to keep
    people off of the range. That type of technology exists. That
    type of technology presumably is something that is being looked
    at as one of the possibilities to use elsewhere.
        Chairman Lieberman. Mr. Schneider, I know that DHS has
    challenged GAO's conclusions in this area, so let me ask you to
    tell us why you disagree, and also if you could address the
    delays in SBInet's 28-mile virtual fence.
        Mr. Schneider. Sure. The initial deployment of SBInet is
    what we call Project 28, which is roughly 28 miles of border,
    roughly southwest of Tucson. Exactly as the Comptroller General
    said, this is totally different than Deepwater. The basis for
    the program is to take available technologies and do a
    comprehensive system engineering effort to deploy a system. In
    other words, take the risk out of a lot of the developments. So
    this has ground-based radars. It has cameras. It has unattended
    ground sensors linked through a command and control
    architecture that basically the CBP can execute command and
    control. This contract was awarded approximately 10 months ago.
        That said, this system is up and it is running, and as part
    of the initial deployment of the system, we have found problems
    that need to be solved. Many of them have to do with slowing of
    the camera after you identify through the ground-based radar a
    target. You need to use the camera to basically do a
    classification of the target.
        And so what is happening is the synchronization of all the
    sensors that ultimately feed the command and control have to be
    worked out. This is no different than in the world that I come
    from in Defense what we would call ``grooming the system.''
        So the system is up and running. As part of this initial
    deployment, we have CBP people that are on the ground that are
    learning how to use the system, learning how to develop their
    concepts of operations that will be a much more effective
    business process. As we fix these problems, that will
    ultimately lead to what I would call ``established doctrine''
    by which they will basically defend the border. That will
    ultimately get incorporated into training programs, and we will
    adjust our business accordingly.
        The other thing about this architecture is that it is
    modular and scalable, so what we will do is literally move
    across the border once we are satisfied and we accept this
    system. I think we have learned a lot of lessons in the
    Department from a lot of the poor examples where we have had
    acquisition deficiencies to the tune of where we basically--we
    have minimized the government's expenditure in this. This is a
    $20 million fixed-price effort. The government will not spend
    more than $20 million. It will not accept the system until it
    is working.
        Chairman Lieberman. So as I understand it, it is not
    actually operational now.
        Mr. Schneider. It is operating.
        Chairman Lieberman. But it is not operating to the
    satisfaction of the Department.
        Mr. Schneider. That is correct. We have refused to accept
    deliverance of the system, and our liability on this is capped.
    We have had some very serious conversations with the leadership
    of the company. We told them that this system will not be
    accepted until it performs satisfactorily. The leadership of
    the company, Boeing, understands that fully. They have a full-
    court effort underway with expertise that has been brought in
    from their entire corporation to get this system up and
    running.
        Chairman Lieberman. Let me just ask you to clarify. How can
    a system be operational that the Department has not yet
    accepted?
        Mr. Schneider. People are using it.
        Chairman Lieberman. It is actually being used to----
        Mr. Schneider. It is being used.
        Chairman Lieberman [continuing]. Secure the border.
        Mr. Schneider. It is being used, but the fact is we have
    deficiencies in the system.
        Chairman Lieberman. But it is not up to the standard----
        Mr. Schneider. It is not up to the standards where we would
    accept formal government acceptance of the system and then give
    them a go-ahead to go further.
        Chairman Lieberman. Is there a time limit on how long you
    are going to work with Boeing?
        Mr. Schneider. Yes. Well, we are in the middle of reviews
    with them right now, and I want to get back to you on a date,
    but we are talking--I believe it was somewhere between 4 to 9
    weeks to where they thought the majority of these problems
    could be----
        Chairman Lieberman. From now?
        Mr. Schneider. It was last week, I think, approximately.
        Chairman Lieberman. Thank you. My time is up. Senator
    Collins.
        Senator Collins. Thank you, Mr. Chairman.
        Mr. Walker, when you looked at the four areas where DHS has
    fallen most short, did you see a common pattern in these areas
    as far as the cause of the difficulties? What I am interested
    in, in particular, is: Did you identify that the problems were
    caused by resource shortages, not enough funding, leadership
    deficiencies, statutory barriers, institutional or cultural
    problems from legacy agencies? Were there common themes that
    prevented progress from being made in those four particular
    areas?
        Mr. Walker. Well, first, I think to the extent that
    leadership at the Department makes something a priority,
    clearly you have a higher likelihood that you are going to see
    progress there. And we saw that.
        To the extent that there are adequate resources or more
    resources allocated, there is some difference. But I think it
    is not just a matter of how much in resources. It is a matter
    of the flexibility that one has with those resources. To what
    extent are they tied? To what extent are they earmarked? To
    what extent does the Department have the ability to allocate
    those resources based upon value and risk? And so I think that
    is an issue where one might have adequate resources, but you
    may not have enough flexibility to allocate those resources
    based upon value and risk and, therefore, you are not going to
    get as much of a result.
        As I said before, to the extent that Congress has paid
    attention in a constructive way to try to be helpful and
    acknowledge progress, not just point out what is wrong, and to
    figure out whether or not there is enabling legislation that
    might be necessary, such as maritime security and other things,
    that has been a positive indicator as well.
        Senator Collins. Mr. Schneider, there is one area within
    the port security area that the GAO was very critical of, and I
    agree with the criticism, and that is that the GAO graded the
    Department as not achieving implementation of a national
    facility access control system for port-secured areas--in other
    words, the TWIC card. We have been talking about the
    Transportation Workers Identification Credential for years. And
    we are never going to achieve the highest level of security at
    our ports until we come up with a good system of restricting
    access to our ports.
        This has been a source of great frustration to me. I have
    brought it up to the Department time and time again. And I was
    not surprised to see GAO highlight this as an area of
    deficiency.
        Can you explain to us why this many years later, after the
    TWIC program was first envisioned, the Department continues to
    miss deadline after deadline and delay the full implementation?
        Mr. Schneider. Senator, I cannot tell you what happened
    before January 2007 and what led to all those problems. I can
    tell you what has happened since January 2007, and the reason
    being I have been personally involved in this ever since I came
    on board. This is one of those areas where I prioritize my
    time, what I consider to be, in terms of the acquisition
    procurement area, the five major areas that I want to spend
    time on. This is one of them.
        We had some deficiencies in the execution of the initial
    contract with TWIC. It was a failure. And so what we did is we
    went out and we resolicited the effort. The contractor that is
    currently performing that effort is Lockheed Martin, and what
    we did starting in, I believe it was, late January is set up,
    if you will, a schedule that I personally oversee every 2
    weeks, with a meeting with the program team, and we track
    everything. And so what I believe is that we are essentially on
    track, based as of my meeting a week ago Friday, to be able to
    start enrollment and issuing cards early this fall. And what we
    have had to work out is software glitches. We have had to work
    out just the sheer production of the card. There is an awful
    lot of information on that card. I will not bore you with the
    details of bar coding and 1D-type bar codes and how you have to
    upgrade printers and how you have to get the software to
    actually trigger the printer. We have had issues relative to
    being able to have--somebody punch in--an applicant fill out
    the form on the computer, go through what they call a screening
    gateway to basically get all the checks back, if you will, so
    you can get a go on issuing the card.
        We believe the end-to-end test is actually completing
    literally as we speak. We are going to review the results of
    that at the meeting I am chairing tomorrow. And we also are
    going to be discussing the detailed rollout plans for--I am
    talking about the number of sites that will be used for
    applicants to come on board. We also have drafted the draft
    rule that would implement that. We worked with the Coast Guard
    and the rulemaking people.
        So I can tell you that since January, this has been
    micromanaged between myself and the Deputy Secretary and the
    head of the Transportation Security Administration. So we are
    going to wait, frankly, until after this rather comprehensive
    review tomorrow afternoon. And if we think the situation is a
    go, then we will publish the dates for initial enrollment at
    the first two sites.
        So I can tell you, after doing the postmortem back in
    January when I came on board, that there were a lot of false
    starts. There was a lot of poor work done on the initial
    contract. I think they have marshaled the forces with the team
    that is, frankly, executing the plan, by and large, that we put
    together in January, and we may be off by a week or so.
        So I hope to be able to tell the Secretary next week that
    we are on track. I had briefed him about a week ago on where
    this was with the team, so I am hopeful that we have turned
    this thing around.
        Senator Collins. I certainly hope so, too, and I hope you
    will keep us informed. Thank you.
        Chairman Lieberman. Thank you, Senator Collins. Senator
    Voinovich.
        Senator Voinovich. I would like to get back to one of the
    recommendations from the 9/11 Commission that I would like to
    have you both comment on, if possible, and that is
    congressional oversight. It is my understanding that we have 88
    committees in the Congress that oversee the Department of
    Homeland Security. And I think, Mr. Schneider, you may have the
    number of hearings that you have come up here for, and the
    question I would like to ask is: What impact do these constant
    hearings have in terms of your getting the job done in your
    agency? Do you think it would be wise for us to reconsider the
    way we are handling the oversight so that we could relieve some
    of the pressure that you have in constantly having to come up
    here to Congress? And, Mr. Walker, I would like your comment on
    the same thing.
        Mr. Schneider. Yes, sir. First off, I think my boss has
    done a pretty good job of putting this matter in a letter that
    he sent to Congressman King on September 4, and we will get you
    a copy of that letter, if we have not already provided one.\1\
    But it goes into excruciating details on the number of
    hearings, last year's statistics, where we are this year,
    number of reports, and the issues.
    ---------------------------------------------------------------------------
        \1\ The letter to Mr. King from Mr. Chertoff appears in the
    Appendix on page 412.
    ---------------------------------------------------------------------------
        I have been in this job 8 months. I don't remember if this
    is my 11th hearing or not, but it is pretty close. I have been
    asked to testify in front of the House a week and a half from
    now, and I just found out that there is another House committee
    that wants me to testify that morning. I have also received
    notice that there is another committee in the House that wants
    me to testify, potentially at the end of this month.
        So the fact of the matter is I have been in this job 8\1/2\
    months, and I conceivably will have had roughly two hearings a
    month. I think the Secretary does a great job--obviously, he is
    my boss--in talking about the fact that he enthusiastically
    supports the 9/11 Commission hearing. It talks about two
    principal focus committees--one in the Senate and one in the
    House. Frankly, as one individual who appreciates congressional
    oversight, I think some of the recommendations that were made
    by the Committee as well as what he has in his letter would
    kind of help us all.
        Some of the committees that I have to testify in front of,
    frankly, are on the periphery of what we do. It is not the main
    battery. This Committee and your equivalent in the House are
    the principal committees that exercise oversight over the
    Department. And, frankly, in some areas I find myself spending
    what might end up being a disproportionate amount of time--not
    that I want to ever criticize congressional oversight--in some
    of these peripheral committees.
        Senator Voinovich. Mr. Walker.
        Mr. Walker. Well, first, the Department of Homeland
    Security is a large, important, complex agency that gets a lot
    of money. It is in the early stages of its existence. One would
    expect that it would receive more than an average amount of
    oversight given all those factors and given the importance of
    its missions.
        That being said, the Congress is a lag indicator on
    organizing itself, just as the Federal Government is a lag
    indicator on organizing itself. I think there are too many
    players, but that obviously raises sensitive issues with regard
    to the client. But, I think while they should receive more
    oversight given all the factors that I said, I think there are,
    arguably, too many players that can conduct that oversight at
    the present point in time.
        Senator Voinovich. Thank you.
        One of the things that, again, people are not aware of is
    that the budget of the Department of Homeland Security since
    its creation has gone up 150 percent. In the area of border
    security and immigration enforcement, there has been a 160-
    percent increase, from $4.6 billion in fiscal year 2001 to
    $12.1 billion in 2007, including the $14.9 billion recommended
    by Senate Appropriations Committee.
        Mr. Schneider, with all of this money and the announcement
    of yet another delay in SBInet, are we allocating the money
    that the Department gets responsibly? Where should our
    resources be placed so that we get the greatest return in terms
    of our homeland security?
        Mr. Schneider. Well, let me try to address this a piece at
    a time.
        I believe that our future-year homeland security plan for
    2008 through fiscal year 2013 for the first time tries to
    capture where the money goes from a mission area--what I call a
    warfare mission area type of a blueprint. In looking at the
    previous years' submittals, they were, frankly, very hard to
    understand from--again, I come from Defense--a warfighting
    perspective; we are putting it into anti-submarine warfare, air
    warfare, etc.
        What we did this year with the recent submittal of the
    future-year plan was to try to follow the DOD model to show
    where the resources go and to even show it at a much greater
    level of granularity in terms of whether we are putting it into
    technology or whether we are putting it into manpower, agents.
        So what I would offer to do is to come sit down with you
    and brief you and whoever else on the details. We think that
    this is the first year, frankly, that we have done a pretty
    good job of trying to trace the money flow so you can see that
    we are investing in securing the borders, we are investing and
    doing analysis of infrastructure, we are investing in
    interoperable communications--because that is how we build the
    budget.
        Relative to the $3 million, I can tell you because I was a
    major player in the discussions of working with all the
    components and the Secretary in terms of what would be our
    priorities and what would be the bang for the buck. Do you put
    it into agents? If you put it into agents, what does that mean
    in terms of throughput through FLETC? If you cannot get the
    throughput through--in other words, I call it like the NTAN
    model. And so where is the best return on----
        Senator Voinovich. The reason I ask these questions is that
    I want to make sure we are not being short-sighted and our
    money is being spent to guard against not only current, but
    future threats to our homeland. I have held three round tables
    in Ohio on interoperability, and the biggest complaint that I
    have heard from the locals is, ``We don't have the money to pay
    for the interoperability. We don't have the money to do it.''
        Now, how important is that? I mean, from a response point
    of view, it is a big deal. Congress has held hearing after
    hearing on interoperability. Should we be maybe putting more
    resources into that area versus maybe some other area?
        Mr. Walker. Mr. Chairman, I know it is almost over, but
    with your indulgence, could I have 1 minute to talk on this?
        Chairman Lieberman. Sure. I have actually been worried
    about getting you out of here on time, but if you could stay a
    little longer.
        Mr. Walker. You are my primary client in the Senate,
    meaning this Committee, so I will be out in about 5 minutes, if
    that is OK, Mr. Chairman.
        First, Senator Voinovich, you are putting your finger on a
    much bigger issue. I know you are talking about a micro sense.
    Candidly, the Federal Government does not allocate money on a
    merit basis. Candidly, most of the Federal Government's budget
    is based upon a baseline and incremental approach. And in the
    absence of key national indicators, outcome-based indicators--
    economic, safety, security, social, environmental--outcome-
    based indicators, which some countries have and we do not, then
    in all too many frequent cases what happens is the only way you
    can show that you care is to spend more money or give more tax
    preferences, when in reality what we ought to be doing is we
    ought to be defining what kind of outcomes are we looking for.
    Let's link those outcomes with strategic planning for all the
    different departments and agencies. Let's then determine how
    much money do we need for what and what outcome are we
    expecting to get and let's make sure we are getting it. And if
    we are not, we get rid of it or we do something different.
        I would like to be able to work with this Committee on the
    need for key national indicators. GAO has been working with the
    National Academy of Sciences and the OECD to try to make this
    happen, and I think it is a strategically important thing that
    goes well beyond homeland security that could make a huge
    difference for the country.
        Chairman Lieberman. Absolutely. We would love to work with
    you on it.
        Senator McCaskill. And then if you have a few extra
    moments, I want to give Senator Landrieu a last round of
    questions. Senator McCaskill.
        Senator McCaskill. Thank you. Great segue because the audit
    says there are no outcome goals or measures for workplace
    enforcement. Do you disagree with that, Mr. Schneider?
        Mr. Schneider. We have metrics that we use, and I would be
    glad to provide it in terms of the number of aliens removed,
    criminal arrests, criminal fines and forfeitures----
        Senator McCaskill. No. I am talking about workplace
    enforcement. I am not talking about how many aliens were
    arrested.
        Mr. Schneider. Well, I am talking about the worksite
    enforcement. We track criminal arrests, administrative arrests,
    and criminal fines and forfeitures, and those are worksite
    enforcement issues, kind of like a follow-on to that
    discussion. I am not sure, frankly, what else we track. I
    happen to know that we track this at a pretty high level. I do
    not know if we have any other details.
        Senator McCaskill. ICE reported in the audit that
    additional time is needed to afford its programs the
    opportunity to mature into an outcome-based system. In other
    words, they are doing data collection now, but there is no
    outcome goals and measures that are there. And we can avoid the
    argument over the blue chart if all of the departments in
    Homeland Security had outcome-based goals and measures. Then
    the auditor's job becomes relatively straightforward and
    simple. We know what your outcome goals and measures are, and
    we look to see if you are achieving them. If they are, success.
    If they are not, why not? And what is the underlying reasons
    why they are not being achieved?
        And it specifically says in here that basically the
    Department is admitting that they have not done outcome goals
    and measures for workplace enforcement.
        Mr. Schneider. Yes, Senator, and I think also that has been
    one of the Comptroller General's major complaints across the
    entire Department.
        Senator McCaskill. Right.
        Mr. Schneider. And that is where Senator Voinovich has been
    very aggressive in trying to help us, if you will, establish
    our strategic plan so we have these types of metrics that can
    be used. And we have a long way to go.
        Senator McCaskill. In the criminal arrests in the data that
    you provided to GAO, you said there had been 716 criminal
    arrests in fiscal year 2006. Was there any indication in those
    arrests how many of those arrests were for--and maybe you can
    provide this to the Committee. I certainly would be interested
    in knowing. How many of those arrests are for employers and how
    many of those criminal arrests are for illegal immigrants
    working in this country?
        Mr. Schneider. I will provide that. I know the number of
    administrative arrests, which are nearly 4,000. I will see if I
    can break that down into some details, categories, as well as
    the over $30 million in fines and forfeitures. I will see if we
    can provide some granularity on that.
        Senator McCaskill. And then in regard to the ICE Mutual
    Agreement Between Government and Employers, from reading the
    audit you have nine members. I am glad there are nine, but nine
    in the whole country, I do not think that is something that we
    should be crowing about at this point. Is there a number, is
    there an outcome goal or measure in that area as to how many
    employers you are targeting to participate in the ICE Mutual
    Agreement Between Government and Employers?
        Mr. Schneider. I will have to get back to you on that.
        Senator McCaskill. OK. And while you are doing that, one of
    the things that was most troubling to me is that we have nine,
    but the problem we have is that there is a weakness in one of
    the key requirements. For the program to work, you have to have
    an employment eligibility verification program, and so if we
    get too far down the road in this mutual agreement and these
    employers are busy patting themselves on the back that they are
    participating, I do not think you are going to get the finding
    from GAO that you want until you tackle the ability to identify
    document fraud. And whatever outcome goals or measures that
    have been set in that area I would certainly like a follow-up
    in that regard also.
        Mr. Schneider. Sure.
        Senator McCaskill. I do not want to take too much time on
    the other area because I know who is going to question next,
    and Senator Landrieu has done an incredible job fighting for
    the people of her State with regard to the mistakes and
    problems that occurred with Hurricane Katrina. I would say just
    very briefly in the minute and a half I have left that the
    specifics that are in the Summary of Findings, particularly
    about ensuring the capacity and readiness for disaster response
    teams, and then, second, the specifics that are in the Summary
    of Findings about developing the capacity to provide needed
    emergency assistance and services in a timely manner. The
    actual words that are in those two sections should really be a
    cause for concern. Essentially, those two sections of this
    audit say that there is not the documentation available to
    reassure the American public that it would not happen again.
    And I bring your attention to those two sections. I am not
    going to dwell on them because I know that my colleague is
    going to be the one that will go into this in some detail, and
    I know of her great concerns in that area. Those were two
    places that I stopped for my highlighter. As we talk about the
    priorities and the metrics, clearly the demonstrated ability to
    respond in a timely manner, in a way that is appropriate to the
    level of the emergency is probably, I think, one of the most
    important things that we expect out of FEMA.
        Thank you very much, Mr. Chairman.
        Chairman Lieberman. Thank you very much, Senator McCaskill.
        Senator Landrieu.

                 OPENING STATEMENT OF SENATOR LANDRIEU

        Senator Landrieu. Thank you, Mr. Chairman. And let me thank
    my colleague for her comments and also her interest. She has
    been down to Louisiana, focused on this with Members of this
    Committee, and I appreciate it.
        And I thank you, Mr. Walker. I know that you have to leave,
    and I thank you for waiting just a few minutes.
        This report, Mr. Chairman, is alarming. It is
    disappointing. It is not, though, surprising to me. I have
    observed very carefully the last 2 years the workings of this
    Department, particularly relative to the disaster response and
    recovery underway in the Gulf Coast. And I have said time and
    time again that it has been apparent that there does not seem
    to be any real serious mobilization. Although this Committee
    has acted and pushed for reforms and Congress in different ways
    has pushed reforms and there have been some minimum
    initiatives, I can say that I am not surprised with the
    findings that only 5 of the 24 benchmarks when it comes to
    response for disasters were met and that 18 have gone basically
    unanswered. But it is time again then for us to re-engage.
        I do have a few questions, Mr. Walker, on this to try to
    move us forward. When you said that the Department had made
    minor advances, basically, for community recovery, in your
    review did the Department note any achievements in the area of
    restoring public facilities? What is your assessment of the
    Department's overall capacity to promote disaster recovery? I
    know it is only one mission of this Department, but for us, for
    a city that went 80 percent underwater, a metropolitan area of
    1.5 million people still struggling to come back, the part of
    the recovery portion is very important to us. Did you observe
    any strong initiatives, mobilization to improve the recovery
    aspects of catastrophic disaster response?
        Mr. Walker. My understanding, Senator Landrieu--and I will
    provide more for the record--is that we saw activity in
    emergency preparedness and response, more there than in
    recovery, and there was a lack of documentation in a number of
    areas. Recovery is important, especially with the type of
    disaster that was experienced by the Gulf Coast. Our sense is,
    from what I have seen so far--and I will provide some more for
    the record--that more emphasis has been given on the
    preparedness and response than the recovery so far, as far as a
    future event.
        [The information submitted for the Record follows:]

               INFORMATION PROVIDED FOR THE RECORD BY MR. WALKER

        When you said that the Department had made minor advances,
    basically, for community recovery, in your review did the
    Department note any achievements in the area of restoring
    public facilities? What is your assessment of the Department's
    overall capacity to promote disaster recovery?
        Answer: DHS did not provide us with documentation on its
    achievements to restore public facilities. We also have not
    completed work at this time that permits us to reach
    conclusions about the overall capacity of FEMA and DHS to
    promote disaster recovery. We have ongoing work looking at the
    recovery from Hurricane Katrina that will provide insight into
    the recovery efforts in the Gulf Coast and lessons these
    efforts may offer regarding recovery capacity.

        Senator Landrieu. And, Mr. Schneider, how would you respond
    to missing 18 of the 24 benchmarks? I know that you have taken
    general issue with the report. But how would you respond to us
    about major initiatives underway by the Department of Homeland
    Security to help a major metropolitan area recover from a
    catastrophic disaster?
        Mr. Schneider. Well, I have some familiarity in the case of
    the Gulf Coast relative to maybe what I would call, again, the
    recovery phase versus what happened immediately after Hurricane
    Katrina. Right after Hurricane Katrina, we had no assets on the
    ground in the Gulf Coast. We had no contracting capability. We
    had no familiarity with local businesses. We were not prepared
    to go execute and help the community.
        What has happened since then is we have about 60 people,
    trained contracting officers, throughout the Gulf Coast. We
    work, if you will, very closely with the local industries to
    understand all their capabilities. We have significant outreach
    programs. We have in-place contracts that have already been
    awarded in terms of technical assistance. We are trying to spur
    growth in the Gulf Coast in the local areas. We basically
    restrict the solicitations of these efforts to local small
    business, expand it to small business, etc. And so the idea
    being is we think from an emergency standpoint that we are
    fairly well networked to be able to respond immediately from
    both providing products and services as well as the
    administrative contracting and financial operations.
        Senator Landrieu. Well, let me say that your Department has
    yet to go on record on getting community development block
    grants distributed based on actual damage assessments. To date,
    you are not on the record on that. That is a fundamental
    question. As Federal aid came through only three major sources,
    that is one. If we are not distributing it based on damage, I
    do not know how we are helping places recover.
        But my time is short. When you did, Mr. Walker, the
    review--and I very much appreciate the Ranking Member's
    question about the barriers because we would like to help you
    break through barriers. We are about fixing this, not blaming
    but fixing. With the Stafford Act, did you come upon it as
    maybe a potential barrier or do you perceive it as a barrier in
    terms of response to catastrophic disasters? Because that seems
    to be the kind of evidence that we are gathering through a
    variety of different places.
        Mr. Walker. Senator, as you know, you and I have had some
    conversations on this, and we have done some work in the past,
    and we are doing additional work. There are certain challenges
    with the Stafford Act. There is no question about that,
    especially when you are dealing with a catastrophic event, an
    event of very large, broad-based, and significant magnitude.
        Senator Landrieu. Could you elaborate on one or two
    challenges that might come to your mind? I mean, is it the
    reimbursement process of the Stafford Act? And I thank the
    Chairman for just giving me an additional 30 seconds.
        Chairman Lieberman. Go right ahead.
        Mr. Walker. It is not just a matter of that, and I will be
    happy to provide more for the record, Senator. But, part of the
    issue is how quickly can you provide assistance, how can you
    streamline the provision of that assistance, and then also the
    issue that you talked about as well, when you are dealing with
    a catastrophic event of the size that we had in New Orleans and
    the Gulf Coast.
        [The information submitted for the Record follows:]

               INFORMATION PROVIDED FOR THE RECORD BY MR. WALKER

        Did you come upon the Stafford Act as maybe a potential
    barrier, or do you perceive it as a barrier in terms of
    response to catastrophic disaster? Because that seems to be the
    kind of evidence that we're gathering through a variety of
    different places.
        Answer. In our prior work on catastrophic disaster
    preparedness, we raised a matter for Congressional
    consideration related to the Stafford Act. We stated that the
    Stafford Act did not explicitly authorize Federal agencies to
    prepare for a catastrophic disaster when there is warning
    before the disaster strikes, as would be the case with
    hurricanes. We suggested that Congress consider giving Federal
    agencies explicit authority to take actions to prepare for
    catastrophic disasters when there is warning.

        Senator Landrieu. OK. And let me just say in conclusion,
    Mr. Chairman, I do believe the American people are grateful for
    the work of this Department and the Administration from
    preventing attacks. And I do not say this at all lightly. It is
    just a huge responsibility of this Department to prevent
    terrorist attacks. But I will say again for the record it is
    also a great responsibility of this Nation to help a community
    recover from a catastrophic disaster, whether that disaster is
    caused by an attack or by the failing of critical
    infrastructure--in this case, levees that should have held but
    did not. And this report indicates, Mr. Chairman, that we have
    an awful lot of work to do. So I thank you.
        Chairman Lieberman. Thank you, Senator Landrieu. That is a
    good note on which to end.
        Mr. Walker, you and your folks at GAO have once again done
    a great public service here. I think to the credit of DHS, you
    have told us some areas, critical areas, that we were hit in on
    September 11, 2001, where they have done very well for us--
    aviation security, now maritime security, surface
    transportation security, and I suppose we should take also
    comfort generally from your evaluation that the Department is
    handling the mission part of its work very well. The management
    part continues to be lacking, and we have to work together,
    hopefully with a metrics system that we can come to an
    agreement on in the next couple of months to make this as good
    as we can. The threat is out there, the danger is there, and we
    have to work together to protect the American people at home
    from that danger. And the work you have done with this report
    is a tremendous assist to this Committee in fulfilling its
    oversight responsibility for this Department, which the
    Committee played a leading role in creating.
        Senator Collins, would you like to say anything in
    conclusion?
        Senator Collins. I am just going to submit my remaining
    questions for the record, Mr. Chairman, and I thank you for
    holding this hearing.
        Chairman Lieberman. Thank you very much. Thanks to both of
    you.
        The record for the hearing will remain open for 15 days.
    With that, the hearing is adjourned.
        [Whereupon, at 3:34 p.m., the Committee was adjourned.]

                                A P P E N D I X

                                  ----------

                      PREPARED STATEMENT OF SENATOR AKAKA

        Thank you, Mr. Chairman. I join you in welcoming our distinguished
    panel members.
        DHS continues to face a monumental management challenge: Bringing
    together 22 separate agencies with nearly 180,000 employees into a
    cohesive Department, while protecting the Nation against natural and
    man-made disasters. While the substantive programs that DHS implements
    are critical to the protection of our country, the effective management
    of DHS as a cohesive entity is central to how effective it is in
    implementing those activities.
        This May, my Subcommittee on Oversight of Government Management,
    the Federal Workforce, and the District of Columbia held a hearing in
    which we examined the Department's challenges and needed improvements.
    Several overarching themes were highlighted at that hearing. Mr.
    Walker's testimony and the GAO report issued today underscore that a
    number of those same issues continue to challenge DHS.

        First, the Department must do more to address its human capital
    needs. With nearly half the workforce eligible for retirement in the
    next 5 years, the Department needs to focus on the recruitment and
    retention of skilled and talented employees, while addressing the
    unacceptably low morale within the workforce as demonstrated by the OPM
    Human Capital Survey.
        Second, the Department still has not developed a comprehensive
    management integration strategy. Although the Department has made
    progress in many areas, some key functions, such as acquisitions and
    financial management, are not fully integrated.
        I also remain concerned that the Under Secretary for Management
    does not have sufficient statutory authority to oversee the
    Department's integration while also focusing on ongoing management
    challenges. The Under Secretary was given more authority to serve as
    the Chief Management Officer and the principal advisor for management
    at DHS with the approval of the Improving America's Security Act (P.L.
    110-53). However, the measure did not elevate the position to a Deputy
    Secretary level as I believe is necessary for the CMO to be most
    effective. That is why I joined with Senator Voinovich in supporting
    the Effective Homeland Security Management Act, S. 547, to elevate the
    Under Secretary for Management to Deputy Secretary for Management. With
    your support, Mr. Chairman, the Committee approved this bill, and I
    look forward to working with the Senate leadership to pass this bill
    and improve the state of management at the Department.
        Again, Mr. Chairman, I thank you for holding this hearing today,
    and I look forward to learning more about these important issues.

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