[Senate Hearing 111-532]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-532

ONE DHS, ONE MISSION: EFFORTS TO IMPROVE MANAGEMENT INTEGRATION AT THE 
                    DEPARTMENT OF HOMELAND SECURITY

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

                                HEARING

                               before the

                  OVERSIGHT OF GOVERNMENT MANAGEMENT,
                     THE FEDERAL WORKFORCE, AND THE
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 15, 2009

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

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






                  U.S. GOVERNMENT PRINTING OFFICE
56-153 PDF                WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001








        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           JOHN McCAIN, Arizona
MARK L. PRYOR, Arkansas              GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana                  ROBERT F. BENNETT, Utah
ROLAND W. BURRIS, Illinois
PAUL G. KIRK, JR., Massachusetts

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


  OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE 
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                   DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan                 GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois           ROBERT F. BENNETT, Utah
PAUL G. KIRK, JR., Massachusetts

                     Lisa M. Powell, Staff Director
             Joel C. Spangenberg, Professional Staff Member
             Jessica K. Nagasako, Professional Staff Member
             Jennifer A. Hemingway, Minority Staff Director
          Thomas A. Bishop, Minority Professional Staff Member
                   Benjamin B. Rhodeside, Chief Clerk










                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Akaka................................................     1
    Senator Voinovich............................................     2
    Senator McCaskill............................................    15

                               WITNESSES
                       Tuesday, December 15, 2009

Hon. Elaine C. Duke, Under Secretary for Management, U.S. 
  Department of Homeland Security................................     4
Anne L. Richards, Assistant Inspector General for Audits, U.S. 
  Department of Homeland Security................................     6
Bernice Steinhardt, Director for Strategic Issues, U.S. 
  Government Accountability Office...............................     8

                     Alphabetical List of Witnesses

Duke, Hon. Elaine C.:
    Testimony....................................................     4
    Prepared statement...........................................    23
Richards, Anne L.:
    Testimony....................................................     6
    Prepared statement...........................................    31
Steinhardt, Bernice:
    Testimony....................................................     8
    Prepared statement...........................................    55

                                APPENDIX

Background.......................................................    70
Responses to questions submitted for the Record:
    Ms. Duke.....................................................    77
    Ms. Richards.................................................    87
    Ms. Steinhardt...............................................    93

 
                    ONE DHS, ONE MISSION: EFFORTS TO
                     IMPROVE MANAGEMENT INTEGRATION
                     AT THE DEPARTMENT OF HOMELAND
                                SECURITY

                              ----------                              


                       TUESDAY, DECEMBER 15, 2009

                                 U.S. Senate,      
              Subcommittee on Oversight of Government      
                     Management, the Federal Workforce,    
                            and the District of Columbia,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Daniel K. 
Akaka, Chairman of the Subcommittee, presiding.
    Present: Senators Akaka, McCaskill, and Voinovich.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. I call this hearing of the Subcommittee on 
Oversight of Government Management, the Federal Workforce, and 
the District of Columbia to order.
    Aloha and good morning to our witnesses and attendees. 
Today's hearing is focused on the ongoing need to improve 
management integration in the Department of Homeland Security 
(DHS) and the Government Accountability Office (GAO) report on 
that issue released today.
    The Federal Government embarked on one of the most sweeping 
reorganizations in its history by establishing the Department 
of Homeland Security. While I believe that DHS has improved the 
coordination of security efforts between the 22 agencies and 
offices that now form the Department, it has not yet developed 
as an integrated and well-managed Department. This hinders its 
ability to achieve its mission.
    The GAO placed the transformation of DHS on its High-Risk 
List in 2003 when it was created. It was clear early on that 
such a large reorganization of government warranted close 
oversight. Unfortunately, the Management Directorate and 
component management chiefs remain unable to effectively 
support the Department's day-to-day operations. The Inspector 
General's most recent yearly assessment shows continuing 
problems in the functional management areas of acquisitions, 
information technology, grants, and financial management.
    As highlighted by the GAO report released here today, one 
cause of these management problems is the lagging integration 
of departmental management. GAO has noted that the successful 
transformation of an organization, even one less complex than 
DHS, could take from 5 to 7 years. We are quickly approaching 
that 7-year mark, which will be this March.
    To be successful, the Department will need to set clear 
department-wide goals and create performance measures to 
analyze its progress. DHS, like other agencies, needs a 
comprehensive strategic plan for management integration. It is 
also important that DHS require clear accountability from its 
leaders.
    In 2007, the Department implemented dual accountability, 
which means that component management chiefs are required to 
report both to headquarters and component leadership. At a 
previous hearing, this Subcommittee examined dual 
accountability in the area of acquisition management. I am 
still concerned that this model does not create clear 
accountability for management and integration. I do, however, 
want to commend the leadership of the Under Secretary for 
Management (USM), Elaine Duke, who joins us today, for her work 
in making management a priority at the Department and for 
staying on until a successor is confirmed.
    As GAO found, the USM and her chiefs have taken steps to 
ensure better coordination, for example, making coordination a 
component of performance reviews. I believe that the USM, who 
is the Department's chief management officer, is critical in 
implementing management integration across the Department. That 
is why I am working with Senator Voinovich on the Effective 
Homeland Security Management Act, which would elevate this 
position to the level of Deputy Secretary with a fixed term. 
This will help ensure that DHS places sustained eye-level 
attention on effective management.
    Able and integrated management will have an enormous and 
overarching impact on the future success of the Department. 
Additional progress in these areas will increase the 
effectiveness and confidence in DHS's ability to achieve its 
mission.
    Again, I want to thank all of our witnesses for appearing 
today and I look forward to your testimony.
    Now, I would like to recognize Senator Voinovich for his 
statement. Senator Voinovich?

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Thank you, Senator Akaka, for holding 
this hearing. I really want to publicly express my appreciation 
to you for the work that we are doing together to try and get 
DHS off the High-Risk List, understanding that it was a major 
reorganization that probably shouldn't have been undertaken in 
the first place, but it happened.
    In addition, I would like to publicly state that I have a 
hold on Rafael Borras, who is supposed to take Ms. Duke's job, 
and the reason I do, Senator Akaka, and I expressed it to the 
Secretary and also to the Administration, is that I do not 
believe that he is qualified to take this very important 
position that is now being held by Ms. Duke. What is your 
title, you are Acting----
    Ms. Duke. No, I am still the Under Secretary.
    Senator Voinovich. She is doing it, and as far as I am 
concerned, she can keep doing it. [Laughter.]
    I regularly remind my colleagues that when we established 
the Department, we initiated the Federal Government's largest 
restructuring since the Department of Defense (DOD), and we are 
all familiar with it--22 agencies, 170,000 people. We knew that 
it would take time, and as you mentioned, Senator Akaka, 5 to 7 
years. And I feel the same way, we are in the 6th year and next 
year is the end of it. I am not going to be around after that. 
I would like to be able to, when I tip my hat, know that you 
are off the High-Risk List.
    Ms. Steinhardt, I thought that meeting that we had in my 
office was great, GAO and the Department and talking about what 
you have been doing to try and work together in terms of 
meeting the metrics so that when we have a hearing later on, 
GAO and the Department will at least agree on the metrics. They 
may not agree on the report, but they will at least agree on 
how they are going to be judged in terms of whether they are 
getting the job done.
    In addition to the challenges GAO and the Inspector General 
will tell us about today, the DHS Chief Financial Officer and 
Homeland Security Advisory Council's Cultural Task Force have 
both articulated concerns about management.
    While all these entities acknowledge the progress, let us 
make sure we understand, there has been substantial progress. I 
don't want anybody to think there hasn't been, we still need to 
get the job done. Today, we have an agency with a $50 billion 
budget--the third-largest now in the Federal Government, 
220,000 employees--so it is really important that the 
Department put the utmost priority on addressing GAO's 
recommendations.
    I want to thank all of you for being here today. I think 
that in order, as I mentioned, for us to achieve what we would 
like to achieve, it has got to be the highest priority.
    Ms. Duke, I want to say you have done a really good job. We 
really appreciate it.
    Senator Akaka, sometimes when I give my statement, it is 
just redundant, so I am leaving out a whole lot of it because 
you have already handled it. But we are just glad to have you 
here, and by working together, I think that we can really get 
some of these things out of the way, and maybe by the end of 
the next year, I probably won't be around for the GAO report, 
but make substantial progress on it.
    Thank you for being here.
    Senator Akaka. Thank you very much, Senator.
    It is my pleasure again to welcome back to this panel, the 
Hon. Elaine Duke, who we thank for continuing her service as 
Under Secretary for Management at the Department of Homeland 
Security; Anne Richards, Assistant Inspector General for Audits 
at the Department of Homeland Security; and Bernice Steinhardt, 
Director of Strategic Issues at the Government Accountability 
Office.
    It is the custom, as you know, of this Subcommittee to 
swear in all witnesses. Will you please stand and raise your 
right hand.
    Do you solemnly swear that the testimony you are about to 
give the Subcommittee is the truth, the whole truth, and 
nothing but the truth, so help you, God?
    Ms. Duke. I do.
    Ms. Richards. I do.
    Ms. Steinhardt. I do.
    Senator Akaka. Thank you. Let the record show that 
affirmative answers were given by our panelists.
    Although statements are limited to 5 minutes, I want all of 
our witnesses to know that their entire statement will be 
included in the record.
    Under Secretary Duke, again, welcome back and please 
proceed with your statement.

   TESTIMONY OF HON. ELAINE C. DUKE,\1\ UNDER SECRETARY FOR 
        MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY

    Ms. Duke. Good morning, Chairman Akaka, and Ranking Member 
Voinovich. First of all, I would like to say that the 
redundancy of your opening statement is encouraging. The way 
this Subcommittee has attacked management and integration at 
DHS in a unified approach has really helped us push forward on 
our objectives and I really do appreciate the unified approach 
this Committee has taken to the Department.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Duke appears in the Appendix on 
page 23.
---------------------------------------------------------------------------
    We have made significant improvements and accomplished a 
lot of initiatives in the first 6 years of the Department. What 
the Inspector General and especially the GAO in the High-Risk 
List is looking for now is an integrated sustained approach, a 
unified approach to looking at our integration.
    I just wanted to take a moment to talk about some of the 
accomplishments we have made in every area of management. We 
recently implemented the efficiency review under Secretary 
Napolitano to look at reducing our overhead and our spending. 
This is going to be especially important as we get into tighter 
and tighter budget years for the Federal Government and the 
Department as a whole.
    We are completing our first Quadrennial Homeland Security 
Review, QHSR, and that will be delivered to Congress on time, 
by the end of this calendar year.
    We have made significant improvements in our acquisition 
workforce, both in terms of numbers--we have been able to 
double the number of contracting officers. That is a net gain, 
even with the attrition. And we have really attacked the root 
cause of some of our acquisition problems by expanding from 
procurement to acquisition and building our program management 
and our test and evaluation systems engineers and cost 
estimating workforces.
    We have completed acquisition reviews of over 90 percent of 
our programs, and on all of our 79 major information technology 
acquisition programs. And we have developed and implemented an 
online reporting system called Next Generation Reporting System 
that provides valuable information to our senior leadership on 
cost schedule and performance for all our major acquisition 
programs, and that was done in May of this year.
    We have our intern program, our acquisition career program, 
in which we are up to 100 now, and received funding to double 
that workforce this year.
    We have finished our Human Capital Strategic Plan. Some of 
the key elements of interest to this Subcommittee, improving 
our diversity numbers throughout the Department, but especially 
at senior leadership levels, and better balancing our 
workforce, our ratio between Federal employees and contractors. 
And we are actually meeting with your staff on Thursday to give 
you an update on that effort to better balance our workforce.
    We have a lot of initiatives going on in financial report 
and are continuingly decreasing our number of material 
weaknesses, down from 30 in 2005 to 12 this year, and we have 
to do more work in that area.
    We have done a lot of initiatives in information technology 
(IT), specifically with data center consolidation and cyber 
operations, really working on improving how we handle attacks 
to our IT systems. We have our enterprise architecture in place 
that guides our IT investments that is consistent with the 
Federal architecture. And we have over 96 percent of our IT 
systems certified properly under the Federal Information 
Security Management Act (FISMA) standards.
    We are on schedule and below budget for our DHS 
headquarters consolidation at St. Elizabeths, thanks in part to 
some Recovery Act funding and the cooperation of General 
Services Administration (GSA).
    And we are in the process, as I reported to you, Senator 
Voinovich, in my recent response to your letter, for upgrading 
and improving our DHS integrated strategy for high risk, 
addressing GAO's criticisms of it, including making sure we 
have more detailed and measurable actions with milestones and 
sustained leadership attention towards accomplishing what we 
put in our plan.
    The GAO and Inspector General (IG) are correct in their 
assessment. We have made moderate progress and there is still a 
lot more to do. I think it is important to remember that DHS 
didn't start with a clean slate or a whole cloth, if you will. 
It started in many management areas with really the tattered 
remains of legacy functions. In most simplistic terms, we have 
really spent some time digging ourselves out of a hole in the 
management area. So I think even making moderate progress in 
terms of outcomes is something that, while I am not content 
that we are finished, we are proud of how far we have come.
    It is also important to note that we do this while still 
delivering services. The chiefs are service providers to over 
3,500 headquarters personnel, a function that was never 
envisioned in the start-up of DHS. So in addition to having the 
traditional roles of policy and oversight, the concerns of this 
Subcommittee, we also have the extreme burden of providing 
service to a huge constituency.
    I appreciate the way the colleagues at GAO and the IG have 
approached this with us. I also thank you, Mr. Chairman and 
Ranking Voinovich, for your continued support and I look 
forward to answering your questions this morning.
    Senator Akaka. Thank you very much, Ms. Duke.
    And now, Ms. Richards, will you please proceed with your 
statement.

 TESTIMONY OF ANNE L. RICHARDS,\1\ ASSISTANT INSPECTOR GENERAL 
        FOR AUDITS, U.S. DEPARTMENT OF HOMELAND SECURITY

    Ms. Richards. Good morning, Mr. Chairman and Members of the 
Subcommittee. I am Anne Richards, Assistant Inspector General 
for Audits at the Department of Homeland Security. I appreciate 
this opportunity to discuss the management challenges facing 
the Department.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Richards appears in the Appendix 
on page 31.
---------------------------------------------------------------------------
    Since its creation in 2003, DHS has been working towards 
accomplishing the largest reorganization of the Federal 
Government in more than half a century. While DHS has made 
progress, it still has much to do to establish a cohesive, 
efficient, and effective organization.
    Our latest major management challenges report identified a 
broad range of issues. Today, I will highlight four key areas 
where significant challenges still exist: Acquisition 
management, information technology management, grants 
management, and financial management. These areas are the 
backbone of the Department and provide the structure and 
information to support the accomplishment of DHS's missions.
    Since these challenge areas have tended to remain the same 
from year to year, we developed a scorecard approach to measure 
the Department's progress in these areas. We based our 
scorecard ratings on a four-tiered scale: Limited, modest, 
moderate, or substantial progress. Our most recent assessment 
shows that the Department has made moderate progress in 
acquisition management and information technology management 
and modest progress in the grants management and financial 
management areas.
    We rated the overall score of the acquisition management 
area as achieving moderate progress this year because of the 
Department's improvements in recruiting and retaining an 
acquisition workforce and progress in developing and 
strengthening acquisition management policies and procedures. 
Two subcomponents of this area, organizational alignment and 
leadership, and knowledge management and information systems, 
have shown only modest progress to date.
    Regarding organizational alignment and leadership, DHS has 
not yet effectively implemented or adhered to its investment 
review processes. Federal Emergency Management Agency (FEMA) 
program offices have not adequately integrated the acquisition 
function into their decision making activities. In the area of 
knowledge management and information systems, DHS has not fully 
deployed a department-wide contract management system that is 
interfaced with the financial system.
    The next challenge area I would like to discuss is 
information technology management. Based on our analysis of six 
IT management capability areas, DHS has made moderate progress 
in IT management overall, with IT strategic planning, 
enterprise architecture, capital planning and investment 
control, and IT security receiving scores of moderate progress. 
However, two areas received scores of modest progress, IT 
budget oversight and IT portfolio management. We scored IT 
budget oversight as modest because of the difficulty still in 
gaining a department-wide view of IT spending due to component 
Chief Information Officers (CIOs) not having sufficient budget 
control and oversight within their components.
    In the category of grants management, DHS has made modest 
progress. For example, in the disaster grants area, we issued 
over 40 reports this year on sub-grantees with more than $80 
million in questioned costs. FEMA needs to make certain that 
States as grantees understand the rules and regulations that 
govern disaster grants and take steps to ensure that sub-
grantees adhere to these rules and regulations.
    The last challenge I would like to discuss is financial 
management. As in previous years, we were unable to render an 
opinion on the Department's financial statements. Material 
weaknesses were also so pervasive that we could not verify the 
sufficiency of internal controls over financial reporting. Some 
of the specific problems include: The Department lacks a 
sufficient number of accounting and financial management 
personnel with core technical competencies; DHS's accounting 
and financial reporting policies, procedures, processes, and 
internal controls have not received investments in proportion 
to the Department's rapid growth in other programs and 
operations; field and operational personnel do not always share 
responsibilities for, or are not held accountable for, matters 
that affect financial management; and the Department's 
financial information technology system infrastructure is aging 
and has limited functionality.
    Having identified some of the specific problems in 
financial management, I also want to take the time to 
acknowledge the progress being achieved by the Department. For 
example, DHS issued its Financial Management Policy Manual to 
help ensure efficient and transparent operations. At the 
component levels, both the Coast Guard and FEMA are continuing 
to make control environment progress and to implement 
corrective actions.
    In summary, it must be acknowledged that some aspects of 
these challenges were inherited by the Department from its 
legacy agencies, and it should also be acknowledged that 
creating a unified organizational culture from many separate 
and proud legacy agencies is simply a daunting task. The 
Department's senior officials are well aware of these 
challenges and have reiterated their commitment to resolve 
them. The Office of Inspector General is also committed to 
helping the Department improve their core business processes 
and procedures in order to improve the Department's ability to 
carry out its missions.
    Mr. Chairman, this concludes my statement. I will be 
pleased to answer any questions you or the Members of the 
Subcommittee may have.
    Senator Akaka. Thank you very much, Ms. Richards.
    And now we will receive the statement of Ms. Steinhardt.

  TESTIMONY OF BERNICE STEINHARDT,\1\ DIRECTOR FOR STRATEGIC 
         ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Steinhardt. Thank you very much, Senator Akaka and 
Senator Voinovich. Of course, we appreciate the opportunity 
once again to be here to share the results of our latest report 
with you.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Steinhardt appears in the 
Appendix on page 55.
---------------------------------------------------------------------------
    You have talked about the enormity of the undertaking in 
the creation of the Department of Homeland Security. I was 
recalling some remarks made by Janet Hale, the first Under 
Secretary for Management at DHS, who pointed out that the 
creation of the Department was at one time a large-scale 
divestiture, acquisition, merger, and start-up all at once. It 
has, in fact, been quite an amazing change.
    And, of course, at the heart of this transformation effort 
is the creation of a well-integrated management infrastructure, 
essentially the underpinning that allows the Department to 
fulfill its various missions. In 2005, we reported that the 
Department lacked a strategy for management integration, and at 
your request, we recently followed up to see what has occurred 
since that earlier report.
    Generally speaking, we found that the Department has moved 
ahead in integrating its management functions. The Management 
Directorate of the Office of the Under Secretary for 
Management, has developed common policies and systems within 
individual management functions like human capital and IT that 
have helped to vertically integrate its component agencies. And 
one example of this which Ms. Richards just pointed out is the 
Financial Management Policy Manual which serves as the single 
authoritative guide on financial management for DHS. The 
Department has also set up a system of Management Councils for 
each of the functional areas headed by the Department chief in 
that area, and these councils provide forums for coordinating 
between component management offices.
    But while there has been progress in vertical integration 
within each management function, there has been much less done 
with horizontal integration, bringing together multiple 
management functions across the Department. So here, for 
example, one might expect to see the integration of human 
capital activities with financial management in areas related 
to payroll. The Transformation and Systems Consolidation (TASC) 
initiative, is a step in this direction. It is an effort to 
consolidate the Department's financial management, acquisition, 
and asset management systems. But there aren't very many like 
this.
    The Under Secretary chairs a Management Council made up of 
the DHS management chiefs and a representative from each of the 
component agencies, and this council has the potential to help 
bring a greater horizontal perspective to the Department's 
management, but it hasn't really played this role.
    When we first reported on this subject back in 2005, we 
pointed out that the Department would benefit from a 
comprehensive strategy for management integration. Subsequent 
to our report, as I am sure you are aware, the 9/11 Commission 
Act also required DHS to develop such a strategy. But that 
hasn't happened yet, and given the effort needed to make 
further progress on management integration, we believe it would 
still be valuable for the Department to develop such a 
strategy.
    The Department indicated a number of different planning 
documents that they believe collectively make up the strategy, 
but our review found that a number of critical elements of an 
integration strategy, which we outlined in 2005, are still 
missing. None of the planning documents conveys a sense of the 
critical links, both within and across management functions, as 
well as the priorities, trade-offs, and efficiencies to be 
achieved. And there are no goals and time lines for monitoring 
the progress of the initiatives to ensure that critical links 
occur when they are needed.
    As the Department develops its strategy and clearly 
articulates what it hopes to achieve in management integration, 
it will also need to develop performance measures that will 
help it track its progress against the strategy.
    Finally, I want to turn to the issue of accountability for 
management integration in the Department. I know one of your 
concerns over the years has been with the dual accountability 
structure in which, among other things, the management chiefs 
within the component agencies are accountable both to the heads 
of their agencies as well as to the Department management 
chiefs. So, for example, the Chief Financial Officer (CFO) at 
FEMA reports directly to the Administrator of FEMA but has a 
so-called dotted line reporting relationship to the 
Department's CFO.
    In operational terms, the Department chiefs are supposed to 
provide input into the performance plans and the performance 
evaluations of the agency chiefs, but this has not happened 
consistently across the management functional areas. Some of 
the Department chiefs have been providing written expectations 
for the component chiefs. Some haven't. Some have been 
providing input into end-of-year performance appraisals and 
others have not. The Under Secretary assured us that changing 
this situation would be one of her priorities, and this will 
become particularly important once the Department has a 
management integration strategy that will involve decisions and 
trade-offs that the components will have to support and carry 
out.
    So with that, Mr. Chairman, I will conclude my remarks and 
look forward to your questions. Thank you.
    Senator Akaka. Thank you very much, Ms. Steinhardt.
    Ms. Duke, as GAO reports, the Department has yet to issue a 
comprehensive strategy for management integration, as mentioned 
here. In response to the GAO report, you stated that you are 
leading the process for developing this strategy. Which DHS 
officials are supporting you in this effort and when will this 
plan be finalized?
    Ms. Duke. The DHS principal that is principally supporting 
right now is the Deputy Secretary, Jane Holl Lute. We just had 
a meeting with GAO at the Office of Management and Budget 
(OMB), and Jeff Zients, the management side, and Xavier de 
Souza Briggs, our lead budget person, were both there. And so 
the Deputy Secretary committed that we are going back in mid-
February with GAO for an update on our integrated strategy.
    I think there are two pieces. One is the overall strategy, 
which, as you know, has the DHS issues, one of which is 
management integration, and then it also has the other high-
risk items like flood map insurance, human capital strategy, 
and real property. So our plan for having the integrated 
strategy on the entire High-Risk List, we will have the outline 
by the meeting with Office of Management and Budget in mid-
February.
    In terms of the management integration strategy, we have 
identified six items in management that are going to drive the 
horizontal integration that Ms. Steinhardt just talked about, 
and that piece of the plan, I have committed to Senator 
Voinovich and this Subcommittee to have by the end of this 
month in terms of identifying the six areas and the plan 
supporting it. That will be an iterative process. We are going 
to continue to have to develop good metrics, but we will have 
those identified by the end of this calendar year.
    Senator Akaka. Ms. Steinhardt and Ms. Duke, as you know, 
GAO estimated that comprehensive reorganization takes between 5 
to 7 years to implement. It has been nearly 7 years now since 
DHS was created and it is only now undertaking a comprehensive 
management integration plan, as you were pointing out. Given 
the amount of progress DHS has made to date, how long do you 
each expect it will take to complete the transformation? Ms. 
Steinhardt.
    Ms. Steinhardt. Well, it depends on the Department's plans, 
I think, to address some of the challenges that we have pointed 
out that have put them on the High-Risk List. Obviously, 
management integration, being able to successfully integrate 
both vertically and horizontally, is a key element of that and 
we look forward to seeing Ms. Duke's plan and how far that 
takes us.
    And then, of course, the other dimensions of the 
Department's transformation challenges and how they plan to 
respond to that, we will see in February when they have their 
plan, and we have committed to working with them and supporting 
them in addressing some of those challenges.
    But I would just say that estimate of 5 to 7 years is based 
on organizations that have historically gone through a major 
transformation. I don't know that any of them have been quite 
on the scale of DHS, though. And so they have taken a number--
they have had a number of missteps, but they have had just an 
enormous challenge. So far, we are encouraged by the progress 
they have made, but there is still quite a lot ahead.
    Senator Akaka. Further comments, Ms. Duke?
    Ms. Duke. I would just say, in addition to Ms. Steinhardt's 
comments, what GAO is looking for us is not only to have the 
plan, but to come off the High-Risk List to show sustained 
progress against the plan. So if we have an acceptable plan 
within the next couple of months, they are going to be looking 
at our progress over a period of time before they would be 
considering taking us off the High-Risk List.
    The other thing I would like to say is a lot of our 
progress is going to be contingent on the budget in the coming 
years. It is going to be challenging as we go to a flat, in 
real terms, declining budget of how much we are going to be 
willing to fund some of these efforts. A lot of them take money 
up front for savings and efficiencies in the future, and 
whether these efforts are funded in the management budget, 
whether they are funded in the component budgets and we have to 
find a way to tax and gather that money, or whether they are 
not funded and DHS is told to find the money is really going to 
directly affect the speed of implementation.
    Senator Akaka. Ms. Duke, I have some concerns about 
accountability with dotted line or dual reporting authority. In 
what management functions is DHS using dual reporting 
authority? And what steps have been taken to hold component 
management chiefs accountable for following departmental 
standards?
    Ms. Duke. All the chiefs use dotted line functional 
authority, so all six of them. Additionally, we are appointing 
component acquisition executives in each of the components to 
have an accountability there. About half the components have 
someone there.
    The main areas we have are inputting to performance 
appraisals, which, as Ms. Steinhardt said last year, 
principally due to transition and all the turnover, we only did 
in a couple of the chiefs' lines but are doing it this year. 
And it is really just the Secretary and the Deputy Secretary 
along with my commitment.
    One of the challenges is we don't have one-for-one 
correspondence. For instance, there is not an equivalent Under 
Secretary for Management in each of the components. So it isn't 
holding individual components. It really rises to the level the 
component had. I have seen with Secretary Napolitano and Deputy 
Secretary Lute a real commitment to good management built in, 
and I have a lot of confidence we are going to continue 
forward.
    The other things that have helped the functional 
integration model are strengthening of the chiefs' delegations 
and their authorities through the functional integration 
management directives. For instance, now the Chief Information 
Officer reviews all purchases over $2.5 million to make sure 
they are consistent.
    But I do think one of our next steps, as Ms. Steinhardt 
said, was getting better visibility. For instance, even though 
the CIO has authority over the CIOs in the components, those 
CIOs really don't have all the IT dollars in there. So it is 
getting those direct-line within our current model, I think, is 
our next steps in integration.
    Senator Akaka. Ms. Steinhardt, I would like to hear from 
you on this issue, as well. GAO's report released today 
discusses dual accountability and dotted line authority. 
However, the report does not address whether this framework is 
effective. In your view, is this approach sufficient to ensure 
accountability or would you recommend changes to this 
structure?
    Ms. Steinhardt. Well, I think the key is having the right 
people at the table when decisions are made. That is a big 
piece of it. As Ms. Duke just mentioned, this isn't the case 
necessarily across all of the management functions. I think, 
certainly from the work that we did, it is clear that in some 
cases, the management chiefs are using their authority to 
provide input into performance plans and to set performance 
expectations and to provide input on actual performance. But 
this is not consistent. So as a start, it would be helpful to 
make sure that, even as envisioned, that it is implemented 
consistently across the Department.
    Senator Akaka. Ms. Duke, in that light, let me ask, are the 
positions in DHS filled, or are there open positions so as a 
result you don't have the people to deal with whatever the 
issue is?
    Ms. Duke. Out of the six business line chiefs, four are 
filled. Two of those are career and two are political 
appointees. One is an acting. That is the Chief Procurement 
Officer. Rick Gunderson is acting. And the final one is the 
Chief Financial Officer, which, as you know, is Senate 
confirmed, and we do not have a nominee for the CFO position at 
this time. So one is vacant with Peggy Sherry acting. One is 
acting, and four are filled.
    Ms. Steinhardt. Senator Akaka, if I may just return to an 
issue that Ms. Duke brought up about having a counterpart to 
the Under Secretary for Management at the component levels. You 
might think of this as having a chief management officer in 
each of the component agencies, somebody at that higher level 
who can oversee all of the management functions. Two of the 
components now have such positions, but it might be worthwhile, 
and certainly work we have done for you, Senator Akaka and 
Senator Voinovich, in the past on the Chief Management Officer 
(CMO) concept more broadly, I think, suggests that this might 
be useful and helpful within the Department as a whole at the 
component level.
    Senator Akaka. Thank you. Let me call on Senator Voinovich 
for his questions.
    Senator Voinovich. Thank you. You indicated that you were 
concerned about having the budget to do the things that you 
need to do. Did you know I am Ranking Member on the Homeland 
Security Appropriations Subcommittee and am very interested in 
making sure that you have the money that you need to get the 
job done?
    One of the things that has been a little disturbing to me 
is that you have various responsibilities. I wonder sometimes, 
does anybody sit down and look at the big picture of how much 
we are spending on this and how much we are spending on that, 
and think about the fact that if we didn't spend money on some 
items, what we could really do with those dollars to help in 
terms of management functions that you would like to put in 
place. This should result in DHS working harder and smarter, 
doing more with less and becoming more efficient.
    I imagine that you are already putting your budget together 
or have for the next time around. I would be very interested in 
helping with that so that you have the dollars that you need to 
get the job done.
    Second, Ms. Steinhardt, do you folks ever as part of your 
evaluation look at the vacancies and at the dollars that it 
would take in order to get the job done? In other words, when 
you are reviewing an agency, is one of the questions you ask 
whether they have the right people there to get the job done? 
And then what is the budget that they need? Do you ever do that 
kind of work in terms of your oversight and review?
    Ms. Steinhardt. I would imagine that--I am just at a loss 
now for a specific example, but yes, we would take that kind of 
overview into account in looking at the management of an 
agency.
    But in this case, I would say that is why--I think this 
kind of underscores the need for management integration and 
thinking about a strategy for how to integrate across the 
Department, because when you are putting together a budget, 
say, for major acquisitions, has the human capital component of 
that--I think probably here, this might be an example where 
that has occurred more laterally--but thinking about at the 
right time whether you have the people in place who are going 
to support these major acquisitions, whether you have the right 
workforce----
    Senator Voinovich. Well, the point is that you have got to 
have the budget to do that. Now, Ms. Duke talked about 
acquisitions and bringing on a lot more people in acquisitions 
than DHS had before. That is an area, by the way, where we need 
more people throughout the Federal Government. Congratulations 
for what you are doing, Ms. Duke. But the issue now is, does 
DHS have the money to do it?
    If I came to GAO, and we sat down and looked at the budget 
of the Department, particularly that portion of it that we are 
talking about today, would you be able to recommend to me some 
of your observations as to where something could maybe be done 
a little differently and might help them out?
    Ms. Steinhardt. We would certainly take a look at it, 
absolutely.
    Senator Voinovich. Because what happens is--I know about 
this because I was a governor--they come in and you tell them, 
this is what you have got to give me. So they go ahead and do 
the best they can, and then the question is, do you give them--
I always say, if you don't give them the money and the budget 
and the tools to get the job done, then you are basically 
telling them that you don't think very much of the job that you 
are asking them to do.
    Ms. Steinhardt. But what are the priorities, also. That is 
another thing that we would want to look at, how the Department 
has identified its priorities. If they are asking for money 
here and their budget allows them only this, then what is going 
to go? And it is looking at the big picture, not just in the 
components.
    Senator Voinovich. Well, part of the problem is that 
Congress comes in and sets your priorities and juggles the 
money around.
    Ms. Steinhardt. Complicated.
    Senator Voinovich. I am really going to dig into it 
because, as I say, I have got one more shot.
    Ms. Steinhardt. Well, we would absolutely want to support 
you there, Senator Voinovich.
    Senator Voinovich. Yes. In terms of this management 
integration, Ms. Duke, I wrote to you and you sent me back a 
letter and said that you were going to have a plan to get it 
done before the end of the year. I am a little confused about 
the six things that you are going to need to drive it down, and 
then you also mentioned, I think, that you are going to have 
metrics to measure performance. Tell me more about that. What 
is it that you are going to be able to give us in the next 
several months that is going to get us down the road on this 
integration?
    Ms. Duke. Well, we are on the High-Risk List for several 
reasons, including management integration. So some of the other 
reasons we are on the High-Risk List are flood map 
modernization program, information sharing, many other very 
big, kind of DHS-wide reasons, if you will. So what we are 
working with OMB on is addressing each one of the reasons we 
are on the High-Risk List. And I have overall coordination of 
that with the Deputy Secretary, for making sure that we are 
addressing all the reasons we are on the High-Risk List, the 
four DHS ones plus the two Federal-wide ones.
    On the management integration one, that one squarely falls 
on my lap completely and that is where we have a strategy, but 
when GAO reviewed it, there were some concerns with the 
strategy, that it wasn't specific enough. It didn't have 
milestones so that they could measure our progress against. And 
it didn't have outcome goals. And it didn't have a sustained 
regular look at the progress. It was kind of putting out fires. 
And it also didn't have the horizontal integration that Ms. 
Steinhardt talked about.
    So what we have done is we have said, OK, we can't do 
everything at once. We are picking out six key areas that are 
horizontally integrated that will be significant in moving the 
Department forward. For instance, one of them is St. 
Elizabeths. Having a DHS headquarters is important. So that is 
going to be one where we will have an actual measurable action 
plan with dates and outcomes. And so we are going to propose 
that these six things are near-term efforts that can be 
measured, that we are committed to, that will substantially 
drive the horizontal and the vertical integration that we need 
to do as a Department at this point in time.
    Senator Voinovich. OK. I will get back to that. Senator 
Akaka has two more questions and he has somewhere to go, so why 
don't you ask your two and then I will finish up with mine.
    Senator Akaka. Thank you so much, Senator Voinovich.
    In the most recent Partnership for Public Service Employee 
Satisfaction and Commitment Survey, DHS ranked 28th out of 30, 
which is a slight improvement from the last survey. Why do you 
think morale continues to be so low?
    Ms. Duke. When you look at the data from the employee 
survey, it was very eclectic, if you will. There was wide 
variances in the different components over what was causing 
dissatisfaction of the employees. But there were a couple that 
were systemic and that was having to do with performance and 
specifically rewarding the good performers and dealing with the 
performers that aren't meeting objectives. And so that is what 
we are principally looking at through our new Chief Human 
Capital Officer (CHCO), Jeff Neal, is how do we make sure our 
supervisors have the skills and actually have the 
responsibility for dealing with that. But that is the one area 
throughout the Department that was low for our employees.
    Senator Akaka. Finally, Ms. Duke, this may be your final 
time appearing before this Subcommittee. Again, I want to thank 
you for agreeing to stay on at DHS through the transition. 
Since your arrival at DHS, what are your biggest 
accomplishments and what key challenges remain for you?
    Ms. Duke. I think the biggest accomplishments are in 
building the acquisition program, building up the workforce, 
building up the accountability of the major acquisition 
programs, the over 100 in DHS, because that isn't just a CPO, 
Chief Procurement Officer, issue. That is an IT issue, it is a 
finance issue. And that is probably the biggest area.
    I think in terms of challenges, that information 
technology, and the systems issue. If you read best practices 
when you have a merger, you first consolidate and then you 
delegate. DHS was handed a position where we were kind of 
delegated and are seeking to consolidate, taking eight grand 
systems and making one, and we have got to get that IT systems 
issue right to really mature, and that is going to be hard 
because it is change and it is dollars initially to save money. 
That is one of the areas we have to spend money to save money.
    The other area, I think, is our budget. We are working on a 
huge effort to get standardization and visibility in our 
budget. After 6 years, it is very difficult to look at our 
budget across components and have the clarity of data and the 
parity to make the tradeoffs on what is important. And so we 
are really focusing on getting our budget right so that 
leadership can make the tradeoff decisions and mission.
    Senator Akaka. Thank you very much, Ms. Duke.
    Senator Voinovich, as you mentioned, I will be leaving, so 
I will be turning the gavel over to you.
    Senator Voinovich [presiding]. Back to the question. So I 
would like to know in writing just what exactly it is that you 
are going to be doing, and is it possible that you could get a 
hold of Ms. Steinhardt and talk to her a little bit about it? 
Because I am really interested in trying to make sure that 
there is a meeting of the minds about what it is that needs to 
be done. I promise you that if we get that and the need is 
dollars and cents, I would like to work with you and the 
Secretary to see if we can't make sure that you have the 
resources that you need to get the job done.
    Ms. Duke. OK. And I will give it to you in writing. But the 
deliverables will be the six major initiatives with action 
plans, with milestones for each of the major initiatives. The 
other deliverable will be the letters to each of the components 
consistent across the chiefs to set forth the performance 
standards in management for the fiscal year. Those are the two 
major deliverables.
    Senator Voinovich. OK. And what I would like to know is 
what are the resources necessary for you to produce those 
deliverables.
    Ms. Steinhardt. And we would be very happy, of course, to 
work with Ms. Duke and her staff on that.
    Senator Voinovich. Great. Senator McCaskill.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Thank you. I did get a spreadsheet and I 
have been trying to figure out how many contractors there are 
in DHS. It was always one of those, ``you have got to be 
kidding me,'' moments. Previously, no one knew and there wasn't 
a number available, which is always a bad sign. That means you 
are hiring so many contractors at once that nobody is bothering 
to keep track of how many contractors there were.
    I am pleased that we got a spreadsheet from you recently 
where clearly there has been an attempt to try to do the best 
job possible counting the number of contractors. The 
spreadsheet that we got from your office, Ms. Duke, indicates 
that there are 10,520 contractors in the Washington, DC area 
working for the Department of Homeland Security. Of that 961 
work for you. Do you believe these are accurate figures? Can we 
rely on these figures?
    Ms. Duke. The figures are based on algorithms, taking the 
cost of the contract and using some very valid formulas. So 
they are as accurate as we can get under the current 
conditions.
    Senator McCaskill. OK. So this was a statistical analysis 
as opposed to asking the contractors to tell you how many 
people they have working for them?
    Ms. Duke. Yes.
    Senator McCaskill. Why can't we do the latter?
    Ms. Duke. There actually is a long history, and that is 
something we are working with Office of Federal Procurement 
Policy (OFPP) on right now. There was an attempt about 6 years 
ago to start counting contractors and asking contractors and 
actually it was put out in the Federal Register as a public 
notice. The comment from industry was so strong that the 
Federal notice was withdrawn and the Federal Government did not 
go forward with that policy.
    Under this Administration, we are looking at that again 
across the Federal Government in terms of how should we be 
counting contractors, how should we be accountable, and what 
these levels of professional services are, and also relooking 
at the definition of inherently governmental and what 
contractors should be doing and what contractors should be 
doing.
    Senator McCaskill. Well, I know that the Secretary's 
efficiency review, you are looking at inherent governmental 
functions, but let me go back and make sure I understand. There 
was an attempt 6 years ago to ask the people that we have hired 
in the Federal Government to tell us how many people they have 
working for them and they said it is too hard for us to do 
that, so we said, never mind?
    Ms. Duke. The promise was that we are asking for a service. 
We are asking them to provide a service, and that it was their 
privileged information in terms of how many people they have 
working on it. So we should ensure we are paying a fair and 
reasonable price for the service we are asking for and how many 
people they use in managing their workforce was really a matter 
that wasn't--that didn't count----
    Senator McCaskill. Concern you?
    Ms. Duke. The attitude of the industry was, it is none of 
your business. The attitude was, you are not buying people, you 
are buying a service, and so buying the number of people is 
irrelevant to the----
    Senator McCaskill. But isn't it true that we are, in fact, 
buying people? Isn't that why we had turned to contractors, 
because we couldn't hire enough people quickly enough because 
of the inherent problems at the Office of PersonnelManagement 
(OPM), that we turned to contractors to hire people? We didn't 
hire--I mean, these are people sitting side by side--would we 
ever dream of having--aren't most of these contractors sitting 
in your offices working alongside Federal employees?
    Ms. Duke. Yes. Quite a few of them are.
    Senator McCaskill. What percentage, would you say?
    Ms. Duke. We just did--I can submit that for the record, 
but we actually did do a data call on that, of how many 
contractors we have, what I will call the attributes of Federal 
service. They sit in government space. They have been there for 
a long period of time using government computers, those type of 
things, and I can submit that to you, Senator McCaskill.
    Senator McCaskill. Well, the more I can understand how--I 
mean, having done government auditing for a long time and 
having done government budgeting for a long time, in order to 
compare efficiency and effectiveness, you look at the number of 
full-time employees that are providing various services and 
then you can compare them and determine whether or not you are 
getting the efficiencies you should get. I am trying to get my 
arms around this concept that we give a contractor a set amount 
of money, and then if they want to hire two people to do what 
it is taking us to have five people do, it is OK, or if they 
are hiring 10 people--I mean, I think that is something we need 
to know if we are contracting for essentially--and I don't 
think anybody would argue, would they, that we hired a lot of 
people at the Department of Homeland Security that were doing 
inherently governmental functions. Is that an unfair statement?
    Ms. Duke. I think that, at a minimum, they were doing core 
services, items that, really, Federal employees should have the 
inherent knowledge to do our core functions, and we have 
identified about 3,500 positions in our first go-around that we 
are in the process of making Federal because they fit that 
category.
    Senator McCaskill. Yes. It just worries me that as we--and 
I am not--and people may have misinterpreted my interest in 
this area as being against contractors or privatization. I am 
not. But what I am against is doing it in a way that we can 
never, ever, ever know whether we are getting a bang for our 
buck, and that is the way we have been contracting, 
particularly in DHS. I don't think we were ever in a position 
to know if we were getting value as it relates to a government 
employee versus a contract employee.
    So I am glad that we have at least an attempt to begin 
counting noses and I would be disappointed if this 
Administration didn't go further down this path of 
effectiveness. I have a lot of confidence in the Secretary. She 
gets this, and you guys have probably noticed that she is 
pretty strong about making things happen and changing things 
when she sees that they are not being done right.
    Let me talk a minute about TASC. After the failure of 
Emerge, we are now, according to the DHS IG, a project that is 
close to $1 billion. If we have another meltdown like we had 
with Emerge, who should be sitting at that table to answer 
questions about it?
    Ms. Duke. Well, I think that starting from the top, TASC is 
part of the future of DHS. So I think it is me, I think it is 
the Deputy Secretary, I think it is the Secretary. The CFO 
currently runs the Program Office and our CIO is heavily 
involved. I mean, we all understand the importance of TASC and 
the success in doing it right.
    Senator McCaskill. Would you consider the CFO the 
functional top of that organizational chart as it relates to 
TASC? Who is the functional----
    Ms. Duke. Yes.
    Senator McCaskill [continuing]. Responsible person, the 
CFO?
    Ms. Duke. The CFO, yes.
    Senator McCaskill. Let me ask, Ms. Richards, in your 
testimony, you said that your professional service contracts 
over $1 million are going to go through a review before award 
or renewal, which is terrific. How many of those contract 
awards under this review have been found, in the review that 
you mention, that they include inherent governmental functions 
and what has happened as a result of those reviews?
    Ms. Richards. Ma'am, I am going to have to get back to you 
for the record with the exact numbers on the contracts that 
have gone through that review. I will say that we do have 
reports that came out this year that did find some contractors 
doing inherently governmental functions, in our opinion, in the 
SBINet area. We also are currently looking at contractors that 
are providing core support to the Transportation Security 
Administion (TSA) in their logistics area, and that report 
should be out shortly. But I will have to get back to you with 
the exact figures.
    Senator McCaskill. Yes. I see it with TSA--it is really 
interesting to me that--I go through a lot of airports, and I 
especially spend a lot of time in the Kansas City and St. Louis 
airports. In Kansas City, all the screeners are contract. Of 
course, they are TSA in St. Louis. I can't figure out the rhyme 
or reason on that. I mean, why would you have contractors in 
some locations--I don't know how many there are. Kansas City 
are the only ones I have noticed.
    And the reason I notice it is because they do things much 
differently. I have a bad knee, so I get wanded every time I go 
through, so I know the drill. I could actually--if you needed 
me, I could step in and be a TSA screener. And so I know about 
where the shoes go on the belt or they don't or if they go in a 
bin. I know all that stuff. They are very different in Kansas 
City--not that they aren't doing a good job, it is just 
different, so I notice it. Is there some reason why we are 
doing contractors in some places and government employees in 
others?
    Ms. Duke. Senator McCaskill, under the original Act that 
stood up TSA, ATSA, it was required to have, I believe it was 
four or five airports that stayed contractor, and they were 
directed to convert all the others to Federal by the end of 
2002, and the reason for that in the statute was to allow 
comparison to see, was the federalization really more 
effective, and TSA was directed within a period of time to do a 
comparison of the four that remained Federal--excuse me, 
remained contractor.
    Later, the statute was modified and airports are now 
allowed to opt out. And so if an airport believes it can 
perform more effectively with contractors, they can submit an 
application to TSA to go back to contractor. I believe there 
has only been a couple airports that have actually asked to 
convert. So that is why you see so very few. A couple of the 
other ones that stayed contractor was a small airport in 
Wyoming. There was one in each category of airport.
    Senator McCaskill. I am curious. Before we changed that 
statute, did we look at the value--I mean, if the reason was 
because we wanted to compare, right, did we compare?
    Ms. Duke. There was a comparison done----
    Senator McCaskill. And the result was?
    Ms. Duke. I honestly don't know the exact results, but that 
study does exist and it looked at both levels of security and 
cost.
    Senator McCaskill. OK. I will follow up on that and get 
that, because that is interesting to me. It is just typical 
that we do a study to see which is better, and then without 
really clearly knowing what the study said, we decide everybody 
can opt out if they want. I mean, it is interesting that no one 
has. And I don't want the word to get out that I am trying to 
move people out of their jobs screening in Kansas City. I am 
really going to slow down on my wanding if that gets out in the 
Kansas City airport, I am sure. [Laughter.]
    Ms. Richards. And ma'am, if I could add, when we do our 
penetration testing and other testing on the effectiveness of 
TSA, we design our tests to specifically test for the 
differences between the contracted screeners and the TSA 
screeners, and our results have not shown an appreciable 
difference between the two.
    Senator McCaskill. I think they are both doing a fine job. 
I just think there is just a little--there is some quirkiness 
and differences in the way they do it. You can tell that there 
is a certain culture, maybe, which is fine. It is the 
difference between an apple and an orange. They are different. 
They are both good.
    Senator Voinovich. Senator, could you----
    Senator McCaskill. Yes.
    Senator Voinovich [continuing]. Give me a shot, and then I 
will get back----
    Senator McCaskill. I thought you were done.
    Senator Voinovich. No, I am not.
    Senator McCaskill. I thought you were handing out the 
gavel.
    Senator Voinovich. No. [Laughter.]
    First of all, I understand what you go through, because I 
have a pacemaker.
    Senator McCaskill. They do the same thing.
    Senator Voinovich. Yes, I see the whole deal. I continually 
try to find out whether the Professional Aviation Security 
Specialists (PASS) program is working like we hoped it would 
work.
    First of all, I am pleased that you are getting back to 
looking at the inherently core governmental functions. I assume 
that you are looking at first of all, can we find these folks 
and bring them in, and then whether or not you have got the 
budget issue--is it an even-steven or maybe can you save money 
bringing them in rather than continuing to have them farmed 
out.
    I think you need to continue to do that, because the 
previous Administration really was into farming stuff out. The 
interesting thing is that when they had these, what is it, 76, 
it is a procedure----
    Ms. Duke. A-76.
    Senator Voinovich [continuing]. A-76--and Senator, you 
would be interested in this--when they have an A-76, they get 
the people who work for the government to compete with the 
private sector to see whether or not you should stay with your 
people----
    Senator McCaskill. Right.
    Senator Voinovich [continuing]. And about 80 percent or 85 
percent of the time, the people that are working for the 
Federal Government win those. But the thing that bothers me is 
why do you have to have the A-76 procedure before you give 
employees that work for the Federal Government the opportunity 
to come back and let you know how they can become more 
efficient?
    In other words, one of the things I wanted to do when I 
came to Washington was based on my work as governor. I 
instituted Total Quality Management for 56,000 workers in the 
State of Ohio. It was one of the best things I ever did, as I 
look back on it. It just seems that we don't have enough of 
that going on today in the Federal Government.
    In your particular case, since you merged all these people, 
different cultures and all the rest of it, I suspect that you 
couldn't do that in the beginning, but I would suggest that you 
look at that situation to see if we couldn't be getting more 
out of the people that we now have by empowering them to come 
back and say, what, Elaine? We could do this a whole lot better 
if you would just let us do it.
    The other thing, the issue of the competency of the people 
that you hire, and again, following up on Senator McCaskill, do 
you have people there that make sure that you are not being 
ripped off and that they are doing the job that they should be 
doing? And it is the same thing, and the question is that you 
award $4 billion in grants each year and the IG finds that FEMA 
does not consistently and comprehensively execute its oversight 
to make sure that what is happening in terms of those grants. 
What can you do to improve that program in terms of monitoring 
the grants that are going out there and that we are getting 
what we are supposed to be getting from them.
    Ms. Duke. Several things. One is we are--on the idea of 
employee involvement, TSA had started an idea factory. That is 
opening up DHS-wide in January. We are working with the labor 
units, with DHS on some fine-tuning, but that is going to allow 
that employee engagement DHS-wide, and that is a big effort for 
us. And hopefully we will get those improvements from the 
grassroots efforts.
    In terms of service employees, one thing that would 
probably be of interest to you, Senator, and this Subcommittee, 
is the OFPP is working on revisions to the circular, but more 
specifically the definition of inherently governmental, and if 
you look at the current definition, it says, for instance, 
signing the budget or approving the budget is inherently 
governmental, but supporting the budget is commercial. So it 
argues, or could be interpreted, you need one budget person and 
all the rest could be contractors, or at some point does the 
ratio skew to that budget person, is really tantamount to an 
autopen. And so that is where I think the Administration, in 
introducing the concept of core functions, is how many real 
Federal budget people do you need so they are really making the 
decisions, not just approving contractors' work, if you will, 
and really have that core knowledge.
    So that is being done at the Federal level. The OFPP 
Administrator, Dan Gordon, just got confirmed. He is actually 
from GAO and really understands the importance of this.
    On grants, you are absolutely right. That is probably one 
of our biggest workforce shortages in DHS. So what happens in 
the workforce shortage on the business side is we focus all our 
efforts on getting the grants awarded, and then the grants 
administration, making sure the State and local governments and 
other recipients execute the grants properly. We received 
funding last year for the first time to have a DHS Grants 
Oversight Office in the Office of the CFO, and FEMA, who is our 
principal granting agency within the Department, is working on 
building up their staffing on the business side. But I agree 
with you on all your points.
    Senator Voinovich. Thank you. Senator McCaskill.
    Senator McCaskill. The only other question I had that I 
didn't get a chance to ask, when I ran so far over my time 
before I got carried away, was about award fees. We had a 
Subcommittee on Federal Financial Management, we had a meeting 
on wasteful contractor bonuses and your Acquisition Management 
Scorecard showed that there hadn't been a lot of change and not 
a lot of consistency. Would anyone want to give me good news 
about contractor bonuses that are wasteful and not deserved?
    Ms. Duke. Yes, Senator. We have issued new policy on award 
fee. The problem with award fee is they are qualitative. They 
reward kind of just general satisfaction, and so under the 
Chief Procurement Officer, we issued guidance that is 
consistent with the Federal guidance that will severely limit 
the use. Additionally, we are giving training and incentives so 
that if we are going to pay fees for performances tied to a 
specific quantitative objective, which is the difference 
between incentive and award fee. So, yes, we do have the new 
policy and are enforcing it in DHS.
    Senator McCaskill. That is great. That is all I had.
    Senator Voinovich. I will just ask one more question, and 
that is on performance management and setting objectives. I 
understand that is not being done in all cases. Are you going 
to be able to get that done this year, the coming year?
    Ms. Duke. We are working on our performance management 
system and improving it. I believe all employees are under a 
performance plan. But in terms of having a centralized approach 
to performance management in DHS, that is what we are working 
on in the coming year.
    Senator Voinovich. Because I understand that for fiscal 
year 2009, only two of your six management chiefs complied with 
this directive. Why didn't all of your chiefs provide these 
written objectives?
    Ms. Duke. It was a matter of transition and turnover and 
the chiefs. It was just our mistake. There was no excuse.
    Senator Voinovich. And then it is the same thing about them 
giving you the feedback regarding their accomplishments. You 
know what it is. Sit down and say, here is what we want to do. 
Periodically meet with them and come back and----
    Ms. Duke. Right.
    Senator Voinovich [continuing]. So they know whether they 
are doing good or bad.
    Ms. Duke. And we did it within management. What we failed 
to do was do it to the components. So we failed to issue the 
objectives, say, to the CIOs in the components, and that is 
what we refocused on. And I agree with you, Senator, that is 
important.
    Senator Voinovich. Thank you. This has been a great 
hearing. I am pleased with it. This is a nice team, and if you 
are all working together, we are going to continue to make some 
real progress.
    Ms. Duke, again, thank you so much for the good work that 
you are doing. I hope this isn't the last time that you come 
before us. Thank you.
    The Subcommittee hearing is adjourned.
    [Whereupon, at 11:13 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                 
