    [Senate Hearing 112-545]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 112-545

     THE HOMELAND SECURITY DEPARTMENT'S BUDGET SUBMISSION FOR FISCAL YEAR
                                      2013

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 21, 2012

                                   __________

            Available via the World Wide Web: http://www.fdsys.gov/

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

                      U.S. GOVERNMENT PRINTING OFFICE
    73-678                    WASHINGTON : 2012
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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              TOM COBURN, Oklahoma
    THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
    MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
    MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
    CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
    JON TESTER, Montana                  RAND PAUL, Kentucky
    MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                      Michael L. Alexander, Staff Director
      Christian J. Beckner, Associate Staff Director for Homeland Security
                           Prevention and Protection
                   Nicholas A. Rossi, Minority Staff Director
       Brendan P. Shields, Minority Director for Homeland Security Policy
                      Trina Driessnack Tyrer, Chief Clerk
                        Laura W. Kilbride, Hearing Clerk
                     Patricia R. Hogan, Publications Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Lieberman............................................     1
        Senator Collins..............................................     3
        Senator Brown................................................    11
        Senator Coburn...............................................    14
        Senator Johnson..............................................    16
        Senator Pryor................................................    18
        Senator McCain...............................................    20
        Senator Akaka................................................    22
        Senator Moran................................................    25
        Senator Carper...............................................    30
    Prepared statements:
        Senator Lieberman............................................    35
        Senator Collins..............................................    37
        Senator Carper...............................................    39

                                    WITNESS
                           Wednesday, March 21, 2012

    Hon. Janet A. Napolitano, Secretary, U.S. Department of Homeland
      Security:
        Testimony....................................................     5
        Prepared statement...........................................    44
        Response to post-hearing questions for the Record with
          attachments................................................    62

                                    APPENDIX

    Letter from the National Association of Counties et al., dated
      March 20, 2012.................................................    41

     THE HOMELAND SECURITY DEPARTMENT'S BUDGET SUBMISSION FOR FISCAL YEAR
                                      2013

                                  ----------

                           WEDNESDAY, MARCH 21, 2012

                                         U.S. Senate,
                               Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:38 p.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Joseph I.
    Lieberman, Chairman of the Committee, presiding.
        Present: Senators Lieberman, Akaka, Carper, Pryor, Collins,
    Coburn, Brown, McCain, Johnson, and Moran.

                OPENING STATEMENT OF CHAIRMAN LIEBERMAN

        Chairman Lieberman. The hearing will come to order. Good
    afternoon and thanks, Madam Secretary, for being here, and
    thanks to everyone else who is here. In the face of record
    deficits and a national debt now heading toward $16 trillion,
    it is obviously imperative that the Federal Government get its
    spending under control.
        Budgets have to carefully balance our Nation's needs with
    what we can afford. Even something as important as securing our
    homeland from terrorists and cyber criminals, or being prepared
    for natural disasters like the devastating tornadoes that
    recently swept through the South and Midwest, requires a cold-
    eyed look at our national ledger.
        With this combination of realities in mind, I want to
    commend President Obama and Secretary Napolitano for presenting
    us with what I believe is a responsible budget request in these
    times. It holds spending at essentially last year's budget
    level. Adjusted for inflation, this budget for fiscal year 2013
    is lower than it was for the Department of Homeland Security
    (DHS) in fiscal year 2009.
        But the budget also increases investments in some key areas
    where I believe we need to strengthen our ability to meet
    emerging threats. In other words, it makes some priority
    judgments, tough judgments. It pays for these increases by
    finding efficiencies and administrative savings throughout the
    Department.
        Most notable to me is the significant increase of $325.8
    million in cybersecurity funding, for a total request of $770
    million for cybersecurity.
        I could not agree more with this strong commitment to
    improving our cyber defenses and, of course, as is evidenced in
    the bill that this Committee has reported out, for placing much
    of that responsibility within the Department of Homeland
    Security as our lead civilian agency.
        The Department simply cannot carry out the responsibilities
    we need it to in defense of the homeland without the kind of
    funding that this budget requests.
        I am also pleased to see that the budget restores $212
    million to the Science and Technology Directorate, for a total
    request of about $830 million. This is one of those parts of a
    department that probably does not have a vast constituency
    supporting it. And yet the work done by the Directorate is
    vital to our capacity to develop countermeasures and detection
    techniques against, for instance, conventional explosives and
    nuclear material or to improve our defenses to cyber attack and
    bioterrorism attack.
        So this additional money, in my opinion, that goes to the
    Science and Technology Directorate is money that is spent
    wisely because it really is an investment in a safer future.
    And as has been the case with the money that has been invested
    in similar parts of the Department of Defense, it can--and I am
    confident will--spin off new technologies, products, and
    services in the private sector, which will help our economy and
    create jobs.
        On the other hand, I am concerned that the budget includes
    a number of attempts to circumvent congressional authorizing
    committees by making legislative and organizational changes to
    the Department through the appropriations process.
        For example, the Administration's budget proposal would
    fundamentally change the nature of core homeland security
    grants that this Committee created by eliminating programs such
    as the State Homeland Security Grant Program, the Urban Areas
    Security Initiative (UASI), and port and transit security
    grants, and replacing them with a new program that adds natural
    disasters as a primary focus.
        We created these programs specifically to help State and
    local governments prepare for terrorist attacks, even though
    when properly implemented they also help localities prepare for
    and respond to natural disasters.
        I have questions about whether the new grant program as
    proposed would be duplicative of the existing all-hazards
    programs, such as the Emergency Management Performance Grant
    Program.
        But I must say that I am really perplexed that the
    Administration is proposing to make such changes to statutory
    programs without submitting legislation to the committees, such
    as ours, with jurisdiction over these programs.
        This Committee also needs to take a closer look at the
    Administration's plans to reorganize some components and
    programs, including the proposal to take U.S. Visitor and
    Immigrant Status Indicator Technology (US-VISIT) out of the
    National Protection and Programs Directorate (NPPD) and
    transfer its screening duties to Customs and Border Protection
    (CBP) and its visa overstay duties to Immigration and Customs
    Enforcement (ICE). I will have questions about this and some of
    the other parts of the proposal that trouble me.
        But, in summary--I go back to what I said earlier--I
    believe that Secretary Napolitano and the Administration have
    put forth a responsible budget request, and I look forward to
    your testimony and the questions that follow. Senator Collins.

                  OPENING STATEMENT OF SENATOR COLLINS

        Senator Collins. Thank you, Mr. Chairman.
        This afternoon, the Committee will review the $39.5 billion
    budget proposal for the Department of Homeland Security.
        I, like the Chairman, am pleased that the budget recognizes
    the seriousness of the cyber threat by including a 74-percent
    increase in the Department's cybersecurity budget. This level
    would help to reduce vulnerabilities in the Federal cyber
    domain by hastening deployment of intrusion-prevention tools on
    government computer systems. The funds would also strengthen
    the Department's information-sharing capabilities and increase
    support to the United States Computer Emergency Readiness Team
    (US-CERT), which responds to more than 100,000 cyber incidents
    and helps the government and the private sector mitigate cyber
    risks.
        Of course, in this time of severe financial constraints, we
    must also continue to find savings within the Department's
    budget.
        Our Committee outlined many cost savings and efficiencies
    in its reauthorization bill reported last fall. For example,
    our bill would mandate a 5-percent cut over 2 years from the
    budget for field components, to be achieved through field
    office consolidation, administrative and logistical cost
    savings, and operational efficiencies. Our plan also eliminates
    two offices and five programs, consolidates three offices
    dealing with travel security, and allows DHS labs to collect
    fees from outside users.
        For the most part, the Administration's budget proposal
    ignores our specific cost savings and efficiencies, which is
    perplexing to me.
        The President does propose to eliminate or combine several
    homeland security grant programs. While some consolidation may
    be desirable, the Department must ensure that it does not
    jeopardize the progress that has been made in achieving such
    goals as interoperability of communications equipment used by
    first responders.
        It is also unclear how the baseline State allocations for
    the newly proposed National Preparedness Grant Program would
    work. I share the Chairman's concern that this proposal appears
    to negate the current State minimum grant formula that this
    Committee wrote in the 2007 Homeland Security law to ensure
    that all States achieve the capability to prevent, respond to,
    and recover from a terrorist attack or other catastrophic
    event.
        We must remember that two of the September 11, 2001,
    hijackers, including the ringleader, started their trail of
    death and destruction from Portland, Maine. Others trained and
    plotted far outside the major urban areas that were their
    target. More recently, the arrest of two al-Qaeda in Iraq
    affiliates in Bowling Green, Kentucky, has served to remind us
    that homeland security challenges are not confined to large
    cities.
        For the State of Maine, with its long, rural border with
    Canada, it is particularly important that DHS continue to
    employ the right mix of resources, ensuring an effective use of
    personnel, technology, and international, State, and local
    agency partnerships to keep the border open to our friends but
    closed to those who would do us harm.
        And, of course, any State can experience catastrophic
    weather or another natural disaster that tests its capacity to
    save lives.
        The budget request does include $10 million for
    technologies to help secure the Northern border. Operation
    Stonegarden funding, however, remains critical to this goal by
    putting boots on the ground in the form of local law
    enforcement serving as force multipliers in partnership with
    Customs and Border Protection. I am concerned that the
    President's budget would simply collapse this successful
    program and other key programs such as the Port Security Grants
    into a single new program.
        I would mention that I recently met with Border Patrol
    agents from the State of Maine as well as sheriffs who told me
    of case after case where Operation Stonegarden had helped both
    the State and local agencies plus their Federal counterparts to
    do a better job.
        During last year's budget hearing, I expressed my concern
    about whether the budget provided the Coast Guard with the
    necessary assets for its very important maritime security role,
    which has grown enormously since September 11, 2001, as well as
    to respond effectively to emergencies such as Hurricane
    Katrina, where the Coast Guard was the one shining star among
    Federal agencies, and the Gulf oil spill. The plan last year
    was to replace 12 High Endurance Cutters (HECs), whose average
    age is 44 years old, with eight National Security Cutters
    (NSCs).
        I am appalled that the Administration's new request for the
    Coast Guard is even worse. It proposes only six National
    Security Cutters and delays the acquisition of the first
    Offshore Patrol Cutter by another year.
        The need for recapitalizing the Coast Guard's fleet is more
    and more evident. The Coast Guard has reported that it lost 528
    operational cutter days last year due to engineering failures
    in the service's aging High Endurance Cutters. That is the
    equivalent of losing three of these cutters from the Coast
    Guard fleet. In comparison, the Coast Guard lost 228 HEC
    operational days in fiscal year 2007. That trend is
    unacceptable and highlights the importance of investing in the
    Coast Guard modernization effort.
        Last month's tragic crash of a Coast Guard helicopter on a
    training mission is a reminder of the significant personal risk
    that the brave men and women of the Department face every day.
        At a time when budgets are tight, difficult decisions must
    be made, but we must ensure that the priorities set by the
    Administration and by Congress do not result in a Department
    that is unable to respond to catastrophic incidents, whether
    created by man or nature. Thank you, Mr. Chairman.
        Chairman Lieberman. Thanks, Senator Collins.
        Secretary Napolitano, thanks very much for your leadership
    of this Department and for being here today. Please proceed.

       TESTIMONY OF HON. JANET A. NAPOLITANO,\1\ SECRETARY, U.S.
                    DEPARTMENT OF HOMELAND SECURITY

        Secretary Napolitano. Thank you, Mr. Chairman, Senator
    Collins, and Members of the Committee, for the opportunity to
    discuss President Obama's fiscal year 2013 budget for the
    Department of Homeland Security.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Secretary Napolitano appears in the
    Appendix on page 44.
    ---------------------------------------------------------------------------
        Ten years after the September 11th attacks, America is
    stronger and more secure today thanks to the strong support of
    the President and the Congress, the work of the men and women
    of the Department of Homeland Security, and local, State, and
    Federal partners across the homeland security enterprise.
        And while we have made significant progress, threats from
    terrorism--including, but not limited to al-Qaeda and al-Qaeda
    related groups--persist and continue to evolve, and the demands
    on DHS continue to grow. Today's threats are not limited to any
    one individual, group, or ideology and are neither defined nor
    contained by international borders. Terrorist tactics can be as
    simple as a homemade bomb or as sophisticated as a biological
    threat or a coordinated cyber attack. We have had success in
    thwarting numerous terrorist plots, including the attempted
    bombings of the New York City subway and Times Square, foiled
    attacks against air cargo, and other attempts across the
    country. Nonetheless, continued threats from abroad and at home
    demonstrate how we must constantly remain vigilant and
    prepared.
        The President's fiscal year 2013 budget for DHS allows us
    to continue to meet these evolving threats and challenges by
    preserving core front-line operational priorities through the
    redirection of over $850 million in base resources from
    administrative and mission support areas. This continues our
    unprecedented commitment to fiscal discipline, which has led to
    over $3 billion in cost avoidances and reductions over the past
    3 years through our efficiency review and other initiatives.
        Given the fiscal challenges to the Department's State and
    local partners, DHS is also approaching these partnerships in
    new and innovative ways. For 9 years, DHS has been supporting
    State and local efforts across the homeland security enterprise
    to build capabilities, awarding more than $35 billion in
    funding. As we look ahead, in order to address evolving threats
    and make the most of limited resources, the Administration has
    proposed a new vision for homeland security grants through the
    National Preparedness Grant Program to create a robust national
    preparedness capacity based on cross-jurisdictional and readily
    deployable State and local assets. Using a competitive risk-
    based model, this grants program will use a comprehensive
    process to assess gaps, identify and prioritize deployable
    capabilities, put funding to work quickly, and require grantees
    to regularly report their progress.
        My written testimony includes a comprehensive list of the
    operational priorities in our budget. Today I would like to
    highlight a few of them.
        First, preventing terrorism and enhancing security. This
    was the founding mission of DHS. It remains our top priority
    today. The fiscal year 2013 budget safeguards the Nation's
    transportation systems through a layered detection system
    focused on risk-based screening, enhanced targeting, and
    information sharing to interdict threats and dangerous people
    at the earliest point possible.
        The budget supports the Administration's Global Supply
    Chain Security Strategy across air, land, and sea modes of
    transportation by strengthening efforts to pre-screen and
    evaluate high-risk containers before they are shipped to the
    United States. We also continue our strong support for State
    and local partners through training, fusion centers, and
    intelligence analysis and information sharing on a wide range
    of critical homeland security issues.
        To secure and manage our borders, the budget continues the
    Administration's unprecedented focus on border security,
    travel, and trade by supporting our Border Patrol agents and
    CBP officers on the front lines, as well as the continued
    deployment of proven, effective surveillance technology along
    the highest-trafficked areas of the Southwest border and
    continued security improvements along the Northern border.
        To secure our Nation's maritime borders, the budget invests
    in recapitalization of Coast Guard assets, including the sixth
    National Security Cutter, Fast Response Cutters, as well as the
    renovation and restoration of shore facilities.
        With respect to the enforcement of the U.S. immigration
    laws, we will complete nationwide implementation of Secure
    Communities in 2013. Through this initiative and our continued
    collaboration with the Department of Justice, we expect to
    continue to increase the number of criminal aliens and other
    priority individuals who are identified and removed. The budget
    provides the resources needed to address this changing
    population while continuing to support Alternatives to
    Detention, detention reform, and immigrant integration efforts.
        The budget also focuses on monitoring and compliance,
    promoting adherence to worksite-related laws through criminal
    prosecutions of egregious employers and expansion of E-Verify.
        To safeguard and secure cyberspace, the budget makes
    significant investments to strengthen cybersecurity, including
    funds to expedite the deployment of EINSTEIN 3 to prevent and
    detect intrusions on government computer systems, increase
    Federal network security across the Federal Government, and
    develop a robust cybersecurity workforce to protect against and
    respond to national cybersecurity threats.
        Finally, with respect to disasters, in 2011 the Department
    responded to a record number of disasters. The President's
    budget focuses on a whole-of-community approach to emergency
    management. It includes resources for the Disaster Relief Fund,
    which provides a significant portion of the Federal response to
    victims in presidentially declared disasters or emergencies,
    and is funded largely through authority provided under the
    Budget Control Act (BCA).
        The budget also continues to provide essential support to
    national and economic security by supporting the Coast Guard's
    operations in the polar regions and by continuing to support
    ICE and CBP's efforts to protect U.S. intellectual property
    rights and collection of customs revenue.
        In closing, the fiscal year 2013 budget proposal reflects
    this Administration's strong commitment to protecting the
    homeland and the American people through the effective and
    efficient use of DHS resources. And while we have taken many
    steps to sustain front-line operations in the face of declining
    budgets, additional cuts of the magnitude outlined in BCA
    sequestration would directly impact our front-line operations.
    They would entail rolling back significant progress in securing
    our Nation's borders, increasing wait times at our Nation's
    land ports of entry and our airports, impacting aviation and
    maritime safety and security, hampering disaster response time,
    and eliminating the cybersecurity infrastructure that has been
    developed in recent years. An 8-percent cut, as prescribed by
    sequestration, translates to over $3 billion in reduction to
    DHS operations. This cut would equate to all of CBP's trade and
    customs operations at our land ports of entry or ICE's
    enforcement and removal operations in their entirety or nearly
    half of our Nation's critical disaster relief funding.
        Mr. Chairman, Senator Collins, Members of the Committee,
    thank you for the opportunity to testify, and thank you for
    your continued support of the work of the Department. I am
    happy to answer your questions and to address some of the
    issues you have raised.
        Chairman Lieberman. Thanks very much, Secretary Napolitano.
        We will do 7-minute rounds of questions for each Senator
    here.
        I focused in my opening statement on the increase in
    budgetary request for cybersecurity, and you touched on that
    some in your statement, and I am supportive of it. I wonder if
    you could give a little more detail about what the additional
    funding will enable the Department to do to protect our cyber
    systems because, as you and I agree, this is the most
    significant vulnerability we have in terms of homeland security
    today.
        Secretary Napolitano. Yes, Mr. Chairman, and I would say it
    is the cloud on the horizon, but it is really the cloud that is
    here.
        Chairman Lieberman. I agree.
        Secretary Napolitano. We are seeing an increasing number of
    cyber attacks of various forms, both in the private sector and
    on our government systems. The increase in the budget allows us
    to do several things. It will allow us to speed up the
    deployment of EINSTEIN 3. It will allow us to create a Federal
    cybersecurity pool for all of the Federal Government. It will
    allow us to increase the size of US-CERT, which is our key
    response asset, by about 31 percent. In short, it will give us
    the tools we need to meet the responsibilities we already have
    in the cybersecurity arena.
        Chairman Lieberman. Good. Let me ask you to go a little
    deeper on US-CERT. Just take a minute because this is a program
    that I am very supportive of. Describe what US-CERT does and
    what the additional funding will enable it to do that it cannot
    do now.
        Secretary Napolitano. In the last full year for which we
    have numbers, as Senator Collins mentioned, the US-CERT team,
    which is basically an incident response team, responded to
    106,000-plus cyber incidents. We did a number of field
    assessments. We did a number of control system interventions
    and assessments across the country. So it is a wide variety, a
    wide menu of protective, preventive, and mitigative activities,
    and it is really kind of a key part of how we intersect with
    not only the rest of the Federal Government, but the private
    sector, writ large, in terms of the cybersecurity network.
        Chairman Lieberman. So if somebody has reason to believe
    that there has been a cyber attack, they find their way to US-
    CERT.
        Secretary Napolitano. Actually, there is a center in
    Northern Virginia called the National Cybersecurity and
    Communications Integration Center (NCCIC), to which we invite
    you or your staffs, and it is staffed not only by folks from
    US-CERT but by other cyber professionals, private sector
    representatives, and State and local representatives. Those
    calls come in there, and then depending on what they are, they
    get deployed out.
        Chairman Lieberman. Let us talk about the shift from
    terrorism to all hazards in the homeland security grants and
    what the rationale for it is. It raises concerns in me and
    others that there is a statement being made that terrorism is
    less of a priority now than it was when the Department was
    created, although, obviously, as you said earlier, this is the
    reason why the Department was created.
        Secretary Napolitano. Yes, and let me explain, if I might,
    Mr. Chairman. State and local grants have been cut by the
    Congress in major ways over the last several years. In fact, in
    the 2013 request, we actually ask for restoration of $500
    million of the $1.5 billion they were cut last year because
    they were cut too deeply. But it seems to me that those cuts
    are kind of the way of the world, and so the question for us
    is: How do we make sure the grant dollars that we receive go to
    their highest and best use?
        We have the grant programs that were established under the
    original construct, as you mentioned. But we have put $35
    billion out there now. We have by that been able to raise the
    overall national capacity both for response and recovery. The
    kinds of response you saw in a multiple of States just 2 weeks
    ago to tornadoes--they had training, they had personnel, and
    they had equipment. They did not need to call on the Federal
    Government first. That is all a product of the grants that, in
    part because of the work of this Committee, they have received
    over the last 9 years or so.
        But now we have to say, all right, in this fiscal
    environment, what makes sense for grants phase II? And what we
    have recommended is consolidating grants so that beyond a State
    minimum--not many, but one State minimum, which would be
    derived from a population-driven formula--we evaluate all grant
    requests according to risk, according to gaps, both locally and
    regionally, and in terms of overall capability so that we can
    sustain an overall security safety net across the country.
        We thought that consolidating grants, streamlining the
    process, and putting out guidance that requires the grantees to
    get the money out into the field more quickly would make the
    grant program more viable in a fiscally restricted environment.
        That being said, we know that this requires changes in
    authorizing language, and we are respectful of that. We in our
    congressional budget justification documents provided an
    initial stab at what that would look like, but we would hope
    that working over the next months, we would work with you and
    others on the actual authorizing language and how the program
    would actually go into statute.
        Chairman Lieberman. I appreciate that. That was my next
    question, and I look forward to working with you because we do
    think it is not right to do it without authorization changes.
        Let me ask you one additional question, and it goes to the
    whole challenge of countering violent homegrown Islamist
    extremism. As you know, the White House promulgated last
    December the Strategic Implementation Plan for countering
    violent extremism with a number of important responsibilities
    given to DHS, including areas such as community engagement,
    strengthening partnerships with local law enforcement, etc.
        However, I do not see those responsibilities on the face of
    the budget reflected in the details of the budget request for
    fiscal year 2013. So I wanted to ask you if you could describe
    the amount of money contained in the budget request that will
    assist in the implementation of the Strategic Implementation
    Plan, which I support.
        Secretary Napolitano. I think, Mr. Chairman, we do not
    break out in a separate budget line what goes for what we call
    countering violent extremism (CVE). But you will find it in
    several places:
        Support for fusion centers across the country. We have 72.
    Almost all of them are now on the classified network.
        You will find it in the Suspicious Activity Reporting
    Initiative. You will find it in the funding for the See
    Something, Say Something Initiative. And you will find it in
    training. The Federal Law Enforcement Training Center (FLETC)
    now has developed a curriculum for State and local law
    enforcement, and we field-tested it in San Diego a couple of
    weeks ago. We are getting ready to deploy it over the summer.
        We are also developing a law enforcement curriculum on CVE
    to be used in law enforcement training academies. That is also
    just about ready to go. And we have a one-week course for
    Federal law enforcement also that will be done at FLETC.
        So there are areas in the budget that have a particular
    emphasis on CVE, but it is just not broken out by name.
        Chairman Lieberman. That, as you know, has been an interest
    of the Committee. I think--and I know you agree--that the
    threat of homegrown extremism continues. In some sense, the
    tragic events in France over the last couple of weeks may
    reflect there a kind of homegrown Islamist extremism as well.
    So I would like to continue to provide oversight and have
    dialogue with you about how the Department is doing in
    implementing the plan.
        My time is up. Senator Collins.
        Senator Collins. Thank you, Mr. Chairman. First, let me
    echo your praise of DHS efforts under the leadership of
    Secretary Napolitano in the area of cybersecurity. I think a
    lot of our colleagues are unaware of just how developed those
    efforts are, and maybe we should organize a field trip for the
    Committee to go to the 24/7 National Cybersecurity and
    Communications Integration Center in Virginia that responds to
    incidents. I think we could learn a lot from that trip.
        Now, that is the good news. That is the first part of the
    questioning. Mr. Chairman, I would ask unanimous consent that a
    letter from 12 different State, local, county, and first
    responder groups be put into the record. It is a March 20
    letter to both of us expressing concerns about the Department's
    proposal to consolidate homeland security grant programs.\1\
    ---------------------------------------------------------------------------
        \1\ The letter submitted by Senator Collins appears in the Appendix
    on page 41.
    ---------------------------------------------------------------------------
        Chairman Lieberman. Without objection. And that same
    request I can see is being made by hand motions from Senator
    Brown. So ordered.
        Senator Collins. Thank you.
        Secretary Napolitano. I have the same letter.
        Senator Collins. That is why I felt confident I could
    question you about it.
        Secretary Napolitano, as a former governor, you are well
    aware of the fact that Federal law enforcement officials and
    DHS agents cannot be everywhere. They truly have to depend on a
    partnership with State, county, local, and tribal law
    enforcement officials, as well as an alert public, which is at
    times our best defense. And that is why I am very concerned to
    receive this letter from such a wide range of groups that says
    that the Department did not consult with them in coming up with
    what are indeed substantial changes in the homeland security
    grant programs. If these are your partners and if we are all in
    this together, why was there no consultation with these
    organizations on the changes?
        Secretary Napolitano. Well, there was consultation, but if
    I might explain, the grant proposal that we make in the 2013
    budget request is really an outgrowth of a series of
    engagements we had with our partners in response to what was
    called Presidential Policy Directive 8 (PPD-8). And in the
    process, we consulted with 100 partners, including the
    associations on the letter, about how they would look at the
    grant program, seeing, reasonably foreseeable, that monies
    would only continue to go down, what they would suggest, and
    what they would recommend. We incorporated many of those
    suggestions in the proposal for the National Preparedness Grant
    Program.
        However, it is just like the authorizing language. We
    realized--this is a process. Somebody had to start it in terms
    of getting it to closure. So we have put forward a proposal,
    but we are meeting with those groups now. In fact, I had a
    conference call with the leadership of the Conference of Mayors
    just 2 days ago going through it. So we will be engaging with
    them over the course of the next months with respect to the
    specifics. But the basic ideas and a lot of the themes that go
    into the National Preparedness Grant Program were part of
    really the findings we had in doing the consultations on PPD-8.
        Senator Collins. Well, as you know, this letter would take
    issue with that and says, ``We must ask why such major changes
    are being proposed without advance consultation with local
    governments and the full range of first responders charged with
    preventing, protecting against, and responding when incidents,
    man-made or natural, occur and why they are being proposed
    without consulting with--in fact, in a way that would bypass--
    the authorizing committees.'' A concern that we have already
    expressed.
        I would encourage you to work with them. They are the
    partners, and we need them, and that is another reason that I
    am so concerned about the fate of Operation Stonegarden, which
    has been such a force multiplier.
        I want to turn, since my time is rapidly expiring, to a
    couple of other questions. One has to do with improper payments
    by the Federal Emergency Management Agency (FEMA). We have
    talked a great deal about this in the past and the fact that
    FEMA has lacked the kinds of basic safeguards in order to
    prevent improper payments. But the most recent report, which is
    from December of last year, indicates that FEMA has been aware
    of issues regarding lack of enforcement on several insurance
    requirements within FEMA's Public Assistance Program for more
    than 10 years. That is just extraordinary, and these
    requirements are designed to prevent public money from being
    used to pay for an insured property, either at the time or in
    the future after an insurance requirement is put on the
    property.
        What are you doing, given that this is such a longstanding
    problem, to ensure that FEMA is addressing improper payments in
    general? This was an Office of Inspector General December 2011
    report, but also this latest one about the lack of enforcement
    of several insurance requirements for the Public Assistance
    Program.
        Secretary Napolitano. Well, FEMA has done a number of
    things. When we came in, I think the so-called error rate on
    FEMA payments was running between 7 and 8 percent. A large part
    of that, in fact, the overwhelming bulk of it, was with respect
    to payments for Hurricanes Katrina and Rita. And as you know,
    there has been legislation now about recoupment and limiting
    recoupment of those. But FEMA has put into place a number of
    protections. Now the error rate is running less than 1 percent,
    and we are trying to drive it down even further. So it is
    supervision, it is training, and it is really being cognizant
    of those requirements.
        Senator Collins. Well, I would note that this is a very
    recent report. It is December of last year, which indicates
    that there is still a problem in the insurance requirements
    area that is costing taxpayers a considerable amount of money
    where we are ending up paying twice. So I know that we are
    doing better on the private payments, but this is the Public
    Assistance Program that the Inspector General has put a
    spotlight on. So I would ask for a more detailed response to
    that for the record.
        Secretary Napolitano. Sure, absolutely.
        Senator Collins. Thank you.
        Chairman Lieberman. Thanks, Senator Collins.
        For the information of colleagues, in order of arrival,
    Senators Brown, Coburn, Johnson, Pryor, and McCain. Senator
    Brown.

                   OPENING STATEMENT OF SENATOR BROWN

        Senator Brown. Thank you, Mr. Chairman. Madam Secretary,
    thank you for coming. It is always a pleasure to see you back
    in Boston.
        This question is an extension of what Senator Collins was
    saying. The Urban Areas Security Initiative program has worked
    very well in Boston and the surrounding areas to improve
    emergency response and other homeland security efforts. It has
    broken down barriers among agencies in Massachusetts and in
    Boston in particular, and it made more efficient use of those
    very valuable Federal dollars. And it has kept, as I said,
    Boston safe while preventing a duplication and waste of Federal
    money.
        In your recent budget, you eliminate the UASI program, and
    it makes a major city like Boston go through a lot of
    bureaucratic red tape and another layer of bureaucracy at the
    State level in order to get its security needs funded, and I am
    hearing from Mayor Thomas Menino of Boston and other mayors
    that they are deeply concerned about this fact.
        Are you willing to meet with any of those stakeholders
    about their concerns?
        Secretary Napolitano. I am willing to and do, but if I
    might, Senator, I think our goal is to eliminate some of the
    red tape and streamline multiple grant programs into one
    National Preparedness Grant Program.
        I think one of the questions that Mayor Menino might be
    raising is the fact that cities typically do not get the check.
    It goes through the States and then the States give the check
    to the cities, and there sometimes is friction in that process.
        Senator Brown. Well, there is not only friction; the States
    keep a little of the juice on top, 20 percent sometimes, and it
    is obviously very frustrating to the States that have X amount
    and certain needs and then the State is going to get the check,
    keep a piece, and then give it out to the cities, and that is a
    deep concern of theirs.
        Secretary Napolitano. The statute sets out who gets the
    money.
        Senator Brown. I will follow up on that.
        I am also hearing that, for example, with that grant
    program, it unfairly favors the purchase of equipment over
    spending on planning. In other words, DHS makes it easier for
    local governments to get a vehicle funded than to get an
    evacuation plan for millions of residents funded. Will there be
    provisions of flexibility that will allow communities more time
    to get their planning right rather than rushing them to spend
    their funding on something that they may or may not need?
        Secretary Napolitano. Well, let me take it in two bites. We
    have added a lot of flexibility in the grant process over the
    last 2 years in response to comments that we have received from
    some local and State officials, like, for example, money to
    maintain, as opposed to having to buy, new equipment, money for
    training, and money for personnel, which previously had not
    been allowed within the ambit of the grants. We have expanded
    the flexibility to permit that.
        With respect to planning, I would have to know the
    specifics about feeling rushed to do planning, but important
    evacuation planning, exercising, and training are all part of
    that security safety net that we want to have.
        Senator Brown. If there are some specific issues, maybe I
    could get that information, and we can draw that connection.
    That would be great.
        I want to commend you and the President on the leadership
    you have shown on the Secure Communities program. It is a
    common-sense program, and I think it would enjoy unqualified
    support here in a less politicized environment. And all you are
    doing is sharing information among law enforcement agencies to
    remove dangerous criminal aliens from this country. I know when
    you last testified, I commended you on it, and I want to
    continue to do that. And for those who are listening, let us be
    clear how it works. It is not about randomly tracking down
    immigration violators. It is about giving local law enforcement
    officials factual and accurate information about someone they
    have arrested for a crime. They might have just arrested a
    violent criminal who is in the country illegally or has an
    outstanding warrant, and sometimes the system you set up
    detects fugitives in our country who are evading justice back
    in their home country and then lets your agency know that they
    have these bad guys in custody, and you make the call on
    whether to pick them up. And it makes a lot of sense.
        I know nationwide, 79 percent of the jurisdictions are
    actually activated, when in Massachusetts, one of 15
    jurisdictions has been activated. And there is, for whatever
    reason, a reluctance to fully implement this program, and I can
    think of many cases, especially most recently, that people's
    lives potentially could have been saved in Massachusetts if
    this program had been implemented.
        Could you please update us on that effort to bring the
    program to all jurisdictions? And do you have a sense of when
    Secure Communities will be fully implemented in Massachusetts?
        Secretary Napolitano. Well, we intend to be fully
    implemented by the end of fiscal year 2013. The President's
    budget request provides the funding for that, and we have, I
    want to say, 320-some-odd counties left, basically. So the big
    bulk of them have already been done.
        In Massachusetts, I know we have it turned on in Suffolk
    County. With respect to the other counties, we have ICE agents
    under what is called the Criminal Alien Program who are
    actually in the jails helping provide the same information, but
    in the end, we really need Secure Communities. That is the
    system that links the fingerprint check that you do for
    criminal history with the immigration check.
        Senator Brown. I agree with you, and there are many
    sheriffs in Massachusetts who also agree with you and the
    President. Some critics would say that implementation would
    mean communities are less secure, i.e., they would deter other
    illegal immigrants from reporting crimes. But there are
    safeguards that are in place for that type of thing. Is that
    right?
        Secretary Napolitano. There are, including U and V visas
    that are given to those. Many communities have had Secure
    Communities in place now for a couple of years, and their
    police departments have good community outreach into
    communities that might feel particularly threatened, if I could
    use that word.
        Senator Brown. Vulnerable.
        Secretary Napolitano. Yes.
        Senator Brown. Now, have you been in contact with Governor
    Deval Patrick's office in Massachusetts on Secure Communities
    and why it has not been implemented?
        Secretary Napolitano. I have been in touch with a number of
    officials about Secure Communities over the years. I cannot
    think of anything recent with Governor Patrick.
        Senator Brown. But there has been communication in the past
    about this issue?
        Secretary Napolitano. Let me not answer that. We will check
    and see.
        Senator Brown. If you could. I would like to know what the
    status is and if you can provide any of that correspondence to
    us because I am trying to find out what the reasoning is.
    Because as I have said, people are dying, and this is another
    tool in the toolbox for law enforcement. I agree with you, I
    agree with the President, and I want to see it implemented, as
    many citizens do in Massachusetts. So I want to thank you for
    that effort, and I look forward to working through the
    budgetary process with you. Thank you.
        Chairman Lieberman. Thanks, Senator Brown. Next is Senator
    Coburn.

                  OPENING STATEMENT OF SENATOR COBURN

        Senator Coburn. Thank you, Mr. Chairman, and thank you,
    Secretary, for being here. Also, thank you for your service. It
    is a very tough job.
        You will find that I am going to be your favorite person on
    your consolidation of grants. I think you have it just right.
    And what you are hearing already is blowback of a parochial
    nature because when we did the grant program, we did not do it
    based on risk. We did it some based on risk, and we improved
    that with the last authorization. But basically we threw it out
    there, and so what we have is a little bit of a creaking door,
    and screeching, because the fast money that really is a State
    responsibility is not going to be paid by the Federal
    Government, and true terrorism prevention based on risk is
    liable to be the outcome of what you are recommending. So I
    heartily endorse your recommendations on consolidating it.
        I want to talk just a minute about fusion centers because I
    have a lot of doubts about them, and we are doing a lot of
    looking at that now. You say we now have 72?
        Secretary Napolitano. Yes.
        Senator Coburn. Do you think they are fulfilling their
    mission on terrorism prevention?
        Secretary Napolitano. Their mission is terrorism
    prevention, but it is also much broader than that. And as
    governor, I started one of the first fusion centers in the
    country. It is an ideal place to collocate, to share
    information. We use them in a variety of ways. They are also
    the portal of entry we now use to get classified information
    out to the country quickly because the vast majority are now
    linked up and have people who have the right clearances to get
    that information. That was a common complaint a few years ago.
        So are there things that can always be done to improve? You
    know, it was a relatively new concept when we started it, but I
    think they are going in the right direction. And, yes, I think
    they are an essential part ultimately of the framework we need.
        Senator Coburn. Do you think they are cost-effective?
        Secretary Napolitano. Yes.
        Senator Coburn. Let me talk with you a minute, and all I
    would like for you to do is just respond. We have talked with
    your legislative representatives here on the Hill about the
    request to spend down this $8.3 billion in unspent grant money.
        Secretary Napolitano. Yes.
        Senator Coburn. We could not get an answer, so I would hope
    that you would make sure we get an answer on it.
        Secretary Napolitano. I can tell you what the guidance that
    went out in February is with respect to the $8.3 billion----
        Senator Coburn. Well, I have read that. I have read your
    stuff, but I cannot get an explanation. Here is basically the
    explanation--those grants are for terrorism prevention,
    correct?
        I mean, that is what the statute says. That is what they
    are for.
        Secretary Napolitano. They are for a number of things, but
    yes.
        Senator Coburn. But if you look at that specific UASI
    grant, that is what they are for.
        Secretary Napolitano. But the $8.3 billion is not just
    UASI, but go ahead.
        Senator Coburn. Well, that is some of the stuff that we are
    asking that we have not been able to get through your
    legislative office.
        Secretary Napolitano. All right.
        Senator Coburn. The idea to tell them to spend it out
    faster, can you talk to me about that? Because the fact is, if
    it is for equipment and they are not spending it, either the
    equipment is not available or they do not see it as a priority
    for equipment, and now we have loosened the grant up to say we
    are going to actually with this grant money be paying for
    things that are truly State and city obligations, not Federal
    obligations. Talk to me about the philosophy behind that.
        Secretary Napolitano. Sure. The guidance is, with the
    unspent grant monies that go back to 2007, those need to be
    spent by this June. For 2008 and 2009, those need to be spent
    by the end of the fiscal year, and so forth.
        One of the reasons for the backlog, quite frankly, is some
    of those original grants were for things like hardening port
    security, and by the time you go through the environmental and
    historic reviews that are required for those and do the
    procurement processes and all the rest, the money just has not
    gone out.
        We have streamlined that process and that review process so
    that we turn those around much more quickly. We are trying by
    this mechanism to encourage States and locals to cut through
    their own red tape to the extent they can and get money where
    it is needed. These are for safety, security, and terrorism
    prevention. They are not just for equipment. They cover a whole
    range of things. And we think if Congress is going to
    appropriate the money, we need to do what we can to get the
    money into the field.
        Senator Coburn. Well, if, in fact, they cannot get the
    money into the field, what is wrong with them returning it to
    the Treasury and letting us spend it somewhere where it might
    be more effective?
        Secretary Napolitano. There is nothing wrong with that.
        Senator Coburn. But has that been part of the directive
    that you sent out--if you really cannot spend this money at
    this time, please send it back?
        Secretary Napolitano. I think that is part of the guidance,
    that the money will not go out.
        Senator Coburn. One question about US-CERT, and then I
    would like to submit some questions for the record to you and
    have them returned on a timely basis, if I may, and not go
    through them here today.\1\
    ---------------------------------------------------------------------------
        \1\ Responses to Senator Coburn's questions for the Record appear
    in the Appendix on page 78.
    ---------------------------------------------------------------------------
        Is it true that you all have reported that the US-CERT's
    own network is vulnerable to cyber attack?
        Secretary Napolitano. I think every network is vulnerable,
    yes.
        Senator Coburn. I do not think that is classified at all. I
    think that is a public statement that we have made. What are we
    doing to make sure it is not?
        Secretary Napolitano. That would be classified, and I would
    be happy to provide a briefing for you.
        Senator Coburn. Then I guess the answer is we are working
    to make sure that US-CERT is not vulnerable, correct?
        Secretary Napolitano. Correct.
        Senator Coburn. All right. Thank you, Mr. Chairman.
        Chairman Lieberman. Thank you, Senator Coburn. Senator
    Johnson.

                  OPENING STATEMENT OF SENATOR JOHNSON

        Senator Johnson. Thank you, Mr. Chairman. Madam Secretary,
    welcome back. Nice to see you.
        In earlier testimony, Defense Secretary Leon Panetta said
    that he certainly felt that because we are running huge
    deficits and huge debts, that is definitely a national security
    issue. Admiral Mike Mullen, former Chairman of the Joint
    Chiefs, said that the most significant threat to our national
    security is our debt. Secretary Hillary Clinton said our rising
    debt levels pose a national security threat.
        I guess I am just asking you as Secretary of the Department
    of Homeland Security, do you also agree that our debt and
    deficit is a security threat?
        Secretary Napolitano. Yes, they can be.
        Senator Johnson. How significant a threat?
        Secretary Napolitano. Well, to the extent they implicate
    the fundamentals of your economy, I think that is part of a
    cluster of security issues that we have to confront.
        Senator Johnson. Do you believe that the deficits that we
    have been running, the $1.4 to $1.3 trillion a year, and
    probably now again this year maybe $1.3 trillion, do you
    believe that is sustainable?
        Secretary Napolitano. You know, Senator, I am here as the
    Secretary of Homeland Security. You all have to make the
    spending decisions, but I will say this: When we prepared our
    budget for this year, we did that in the context of knowing
    that there needed to be fiscal austerity measures taken. That
    is why we came in at less than the fiscal year 2012
    appropriated amount. It is the first year ever that the
    President has requested a lower amount for Homeland Security.
    It is because we all are dealing with that issue and trying to
    solve it as much as we can.
        Senator Johnson. Again, having recognized that the debt and
    deficit is a security issue, as Secretary of the Department of
    Homeland Security, do you believe that is part of your
    responsibility?
        Secretary Napolitano. In the sense that the security of the
    country is part and parcel of the daily responsibility I have,
    I would have to agree.
        Senator Johnson. Have you ever spoken to President Obama
    about the security threat that the debt and deficit issue poses
    within that context?
        Secretary Napolitano. No.
        Senator Johnson. As a former governor, I believe you
    probably submitted--I have written down here--six budgets?
        Secretary Napolitano. Well, more than that when you add
    midyear, etc. Lots.
        Senator Johnson. Did you always submit those on time?
        Secretary Napolitano. Yes.
        Senator Johnson. Were those balanced?
        Secretary Napolitano. Yes.
        Senator Johnson. Are you surprised or, let us say,
    disappointed that now after four bites of the apple President
    Obama has not submitted any plan for ever balancing the budget?
        Secretary Napolitano. If I might, Senator, I think a
    Federal budget is very different than a State budget. I mean,
    the Federal Government assumes obligations and
    responsibilities, for example, for the national defense and the
    national security that States do not have. It is a different
    animal.
        Senator Johnson. But, again, I think we just established
    that the level of debt and deficit is a security threat.
        Secretary Napolitano. Well, it is among many, and I think
    we are all working to be fiscally responsible with how we
    conduct our affairs. But I think it is a little bit like
    comparing an apple and an orange to say a State budget is just
    like a Federal budget. They are not similar.
        Senator Johnson. I did not say that.
        Let me turn to the cybersecurity bill that you testified
    about in January. I asked you whether or not the Department had
    developed any sort of estimate on the cost of the regulations
    that were being proposed in that piece of legislation. At the
    time, you did not have any kind of estimate. Have you developed
    an estimate since that point in time?
        Secretary Napolitano. No, but I think, if I might, Senator,
    the bill is really a very robust public-private partnership
    approach to how we raise the base level of cybersecurity for
    the core critical infrastructure of the country--core critical
    infrastructure that right now is being subject to attack. And
    so there is no regulation per se to evaluate I think in the
    sense that you mean.
        Is this something that we need to do as a country?
    Absolutely. You just asked me whether I thought the deficit was
    a threat. I am here testifying that I think the cybersecurity
    threat in my wheelhouse is the one right in front of us.
        Senator Johnson. That is the one that keeps you awake at
    night. Me, too. I think it is extremely important.
        One of the questions I asked is whether there were
    companies that were supporting that particular piece of
    legislation, and you said that there were, and you were going
    to supply us a list. We have not received that list. Are there
    companies?
        Secretary Napolitano. We will get you a list of some
    supporters, yes, sir.
        Senator Johnson. What about companies or people who would
    be falling under those regulations that are posed? Have people
    come out of that that you are aware of?
        Secretary Napolitano. Well, I think the first thing is the
    decision about what constitutes core critical infrastructure of
    the country, and what the Lieberman-Collins bill would do would
    be to set up the process by which those are determined at the
    outset. But it makes common sense when you think about it,
    those where if they are shut down or attacked, you would have
    loss of life, massive economic damage, displacement of persons.
    So within that realm, then you would want to work with those
    participants, as we do across critical infrastructure across
    the country now, in terms of what are the base standards that
    should be met? Leaving to the actors to decide how to meet
    them, but what should you be able to do if you want to be in
    the core critical infrastructure business?
        Senator Johnson. But, again, I am concerned that we
    actually pass a cybersecurity bill that starts allowing
    companies to share information. Are there companies that have
    come out against this? And why would they be against it? Again,
    I am just trying to address their concerns. I want to make sure
    that we can actually develop a piece of legislation that we can
    pass so we can start moving that football forward.
        Secretary Napolitano. Thank you, and we look forward to
    working with all of you on this. I have not seen all of the
    traffic, but the opposition that I have seen is a regulation
    kind of opposition, but not to the information-sharing parts.
        Senator Johnson. One of my concerns is that during that
    hearing, one of the witnesses--Stewart Baker--testified that
    the industry is concerned about waiting up to 7 years for the
    Department to actually write the regulations. Let us face it,
    the development of technology moves incredibly rapidly. Do you
    really believe that the government can keep up with that pace
    of technological advancement?
        Secretary Napolitano. Yes. But we are not waiting 7 years;
    the problem will not wait 7 years.
        Senator Johnson. Thank you, Madam Secretary and Mr.
    Chairman.
        Chairman Lieberman. Thanks, Senator Johnson.
        I am going to resist the inclination to get into a dialogue
    on the cybersecurity bill because there will be plenty of time
    for that, and I look forward to working with you on it.
        Senator Pryor.

                   OPENING STATEMENT OF SENATOR PRYOR

        Senator Pryor. Thank you, Mr. Chairman. And, Madam
    Secretary, it is always good to see you.
        I have a question about the Anti-Border Corruption Act of
    2010 that we passed a few years ago. As I understand it,
    Customs and Border Protection has made significant progress
    under the new law. However, there is still some work to be
    done.
        It is my understanding that CBP will be caught up with the
    backlog of background investigations by the end of this
    calendar year and that the polygraph requirement is going to
    take a little bit longer. Do you have an update on that? Do you
    know the status of that?
        Secretary Napolitano. Right. I think actually the
    background investigation part, I hope, will be a little bit
    sooner than that, Senator. With respect to polygraph, one of
    the practical problems is the lack of enough polygraphers, so
    we are hiring and getting them on staff and contracting and
    doing everything we can to get those polygraphs out there. So,
    as soon as possible, I will try to get you a more definitive
    answer.
        Senator Pryor. It would be great if we could get a sense of
    a timetable on that, and I do understand the constrictions you
    have with the polygraphers. I understand that.
        Do you think that Customs and Border Protection has
    adequate resources to implement the new law?
        Secretary Napolitano. Yes.
        Senator Pryor. It is just really a matter of finding the
    expertise for the polygraphers. Is that right?
        Secretary Napolitano. That is it. And then the other thing,
    and we are working on this very hard, is that the vast majority
    of the men and women who do that work are honest, they are in
    it for the right reasons. But when you have a big swell in new
    hiring, as we have had, particularly in the Border Patrol,
    there are issues that can go along with that. So it is not just
    background checks but recurrent checking, using the polygraph,
    all of those things to make sure that we maintain that honest
    workforce.
        Senator Pryor. Right. This may be a little bit of a follow-
    up to Senator Coburn's questions a few moments ago. I have a
    question about grants, specifically about the proposal to
    consolidate and streamline 16 existing grant programs into one
    bigger program. And part of that, as I understand it, is the
    Pre-Disaster Mitigation (PDM) Grant Program, which apparently
    Homeland Security thinks is duplicative of other grant
    programs. But the Hazard Mitigation Grant Program (HMGP) is
    only accessible through a major disaster declaration, meaning
    that if States or localities want to apply, they have to have
    had either a recent or a frequent disaster in their area;
    otherwise, they cannot get mitigation funds.
        And so to me, it seems that on those two you may have
    different requirements that would maybe be consolidated into
    one thing. Are you confident that Homeland Security will still
    be providing assistance for people who want to mitigate
    disasters and prevent the damage on the front end?
        Secretary Napolitano. Yes, I think this is one of the
    things we will work through, but the Pre-Disaster Mitigation
    Grant Program has been relatively unused. That is one of the
    reasons we are recommending that it be streamlined or folded
    in, and part of it is because of just the nature of the beast
    and the other statutory requirements that go with those monies.
    And as I mentioned, the President has asked for an additional
    $500 million for grants that would enable us to keep working on
    hazard mitigation.
        Senator Pryor. On the importance of pre-disaster
    mitigation, one example would be in 2011, of course, we had
    terrible flooding in the mid-section of the country, up and
    down the Mississippi River, the Ohio River, and those areas.
    This is a great example of how sometimes you spend millions but
    save billions. The Army Corps of Engineers system worked up and
    down the Mississippi River, but there were lots of local levees
    in States, counties, and cities that were also doing pre-flood
    mitigation during that time, and, again, largely it worked.
        I saw a number the other day--it was way in the billions--
    of the amount of money that we saved because of that
    investment. So I would just encourage you and your team to be
    very confident that the money will be available because these
    cities and counties and levee districts are putting it to good
    use.
        Thank you, Mr. Chairman.
        Chairman Lieberman. Thank you, Senator Pryor. Senator
    McCain.

                  OPENING STATEMENT OF SENATOR MCCAIN

        Senator McCain. Thank you, Mr. Chairman. It is nice to see
    you again, Madam Secretary.
        As you will recall, last year the Border Patrol initiated a
    very successful operation called Operation Samurai, and it led
    to the apprehension of 31 cartel scouts operating on
    mountaintops in Arizona, in addition to 84 smugglers, over 800
    illegal aliens, and thousands of pounds of marijuana and other
    illegal drugs. It was a very professional and impressive
    operation. The operation, as you know, was enabled through the
    use of air support that allowed the Border Patrol agents to get
    in position before the scouts had an opportunity to flee.
        So I have concerns about the proposed reduction of flight
    hours from 106,000 mission hours in fiscal year 2010 to 65,000
    mission hours in 2013. Can you give me an explanation about
    this reduction in flight hours?
        Secretary Napolitano. Yes, two things, Senator. One is that
    we are putting into the air equipment that has more sensors and
    other types of equipment on it, on the platforms. So the hours
    that we are getting are yielding a lot more than some of the
    older planes that we were putting up in the air in 2009 and
    2010.
        Second, as you know, we will be and are receiving air
    equipment from the Department of Defense to put in the air over
    the Southwest border. We think of it as boots in the air and
    boots on the ground, and it is the combination that really
    works best.
        Senator McCain. Well, I will be glad to exchange
    information with you, but that kind of reduction, even though
    we have enhanced capabilities, in my view, does not keep
    aircraft in the air 24/7 or drones in the air. And it certainly
    does not provide for the 24/7 coverage that I think we need. So
    maybe for the record you can provide me with additional
    information.
        In December, Senator Collins and I wrote to you asking for
    justification over media reports that the DHS spent over
    $770,000 on automated cameras to document the movement of
    jaguars crossing into Arizona from Mexico. We received a
    response indicating the jaguar project was just one of about
    $50 million in projects to ``mitigate the environmental impact
    of the border fence,'' and the funding would come from the
    Border Patrol's fencing and infrastructure budget. And among
    those projects were $925,000 to find and study the bat caves of
    the Mexican long-nosed bat, $500,000 to help breed Aplomado
    falcons, and $230,000 to put radio collars on bighorn sheep.
        I am pretty familiar with the border and fencing, Madam
    Secretary, but I do not know how studying the bat caves of the
    Mexican long-nosed bat has anything to do with the border
    fence. Perhaps you can educate me.
        Secretary Napolitano. Not today, but I will be happy to
    respond to you. I will have to look into it myself.
        Senator McCain. Well, here we are with stringent economic
    measures needed to be taken, and we are spending $230,000 to
    put radio collars on bighorn sheep, and maybe we need to put
    radio collars on bighorn sheep, but to call that a mitigation
    of the environmental impact of the border fence obviously is a
    great stretch of the imagination. I missed $2.1 million to
    plant agave cacti. The list, unfortunately, is rather long.
        You know, Madam Secretary, we have been having these
    hearings now since the Department of Homeland Security was
    created as a result of the 9/11 Commission, and most every
    weekend I go to an airport and get on a plane and go somewhere.
    And for the life of me, I cannot think of a single improvement
    in the technology and the screening of passengers that we have
    seen. The men and women who serve under you are very
    outstanding and dedicated people, but 11 years later, we still
    are subjecting passengers to the really invasive patting-down
    procedure.
        We now have a new device, I see, that you have to go into
    and raise your arms, and it lengthens the time of going through
    security rather than shortens it. And I have heard over the
    years, well, we are working on this technology, we are working
    on that technology, we have a Trusted Traveler Program, we will
    do optical--I have heard everything. And nothing has changed.
    The American people are very patient. The American people
    understand the need for airport security. But I can tell you,
    they do not understand why we cannot develop technology that
    eases their passage through security at an airport.
        Now, maybe you can not only help me out but help people who
    have to fly all over the country through commercial airports by
    telling me a little bit about what we can expect.
        Secretary Napolitano. Well, Senator, I am sorry that you
    feel that way because there have been a number of improvements,
    and one thing I can say is the traveling public is safe in the
    face of continuing threats in the aviation environment, which
    involve all kinds of populations. So we start from that
    premise. There is nothing we are doing that is not threat
    related.
        With respect to the technology, I would like nothing better
    than to sit at this table and announce that we do not have to
    take off our shoes and we do not have to divest ourselves of
    our briefcases and our backpacks, etc. The technology just is
    not there, Senator. We have made moves with specific
    populations--children, those over 75--who we view as low risk,
    but we still have to do a certain amount of random checking,
    even in those populations.
        We have met and worked with, among other things, the
    International Air Travel Association (IATA), which is the big
    global unit, on something called the Checkpoint of the Future,
    kind of a one-stop shop. You go in, check, etc. But that, I
    have to say, from a technology standpoint is years away.
        This is a complicated area. We are moving 1.5 million
    people per day through the Nation's airports. It is the largest
    airport system in the world. But, yes, if we can find that
    magic technology, we will use it.
        Senator McCain. Well, it puzzles the American people and
    this Member of the Senate that the most innovative, most
    technologically advanced Nation in the world has not made
    basically a single change. And, by the way, if you think that
    it is more rapid than it was when it was first installed, you
    are not going to the same airports I am. So the fact is, it has
    not been sped up. In fact, it has been delayed some.
        Maybe a trip out to Silicon Valley to meet with some of the
    people out there who are very good at the development of new
    technology might be something that you might think of. But,
    again, I understand your response. I understand exactly what
    you are saying. It is very plain English. But the fact is that
    we have not seen anything that has been a technological advance
    that I know of that would indicate that we could travel more
    expeditiously without the embarrassment of some of the
    procedures that are necessary in your view as we go through
    airports in this country.
        Secretary Napolitano. Yes. Senator, I think what would be
    useful for you is to meet not with us but with the people who
    are involved in the technology side of the industry because I
    think they will show you what is being looked at, what has been
    evaluated. Silicon Valley, Cambridge, Massachusetts, you name
    the high-tech centers of the United States, we have been there
    looking. No place in the world has it quite yet. But we will
    get it ultimately.
        Senator McCain. Thank you. Thank you very much, Mr.
    Chairman.
        Chairman Lieberman. Thank you, Senator McCain. Senator
    Akaka, welcome.

                   OPENING STATEMENT OF SENATOR AKAKA

        Senator Akaka. Thank you very much, Mr. Chairman, for
    holding this hearing. I commend you and Senator Collins for
    your leadership in these areas, and I do personally appreciate
    it. And, of course, I want to say aloha and welcome to
    Secretary Napolitano for being here with us today.
        I would like to express my admiration and sincere gratitude
    to the dedicated men and women of DHS who tirelessly are
    working to ensure our safety and security. And sometimes it is
    tough to do that, but they are doing it. These employees often
    turn down higher pay in the private sector to serve their
    country, and I am saddened by the proposals targeting Federal
    workers that will make it even harder for the Department to
    attract and retain the best and the brightest in our country.
    We must ensure that they have the resources and tools needed to
    do their jobs. I want to commend you for your leadership in
    these areas over these years now.
        Secretary Napolitano, as an island State, Hawaii relies
    heavily on the Coast Guard to protect our people, environment,
    and economic interests. The 14th Coast Guard District in
    Honolulu is the largest geographic command in the Coast Guard,
    covering over 12 million square miles of ocean. Despite the
    14th District's vital role in protecting national interests in
    the Pacific, it is relying on an antiquated fleet.
        How will the proposed cuts in the Coast Guard's budget
    affect its mission in the Pacific?
        Secretary Napolitano. Senator, I think the mission in the
    Pacific is very significant to us. It is significant to the
    Coast Guard. Our presence in Hawaii and its surrounding area is
    critical to the security of the United States, as you
    mentioned.
        When you look at the Coast Guard budget that has been
    submitted by the President, it maintains the long-range
    aircraft that are necessary for Hawaii. We are in the midst of
    the process of building the National Security Cutters: four and
    five are on schedule and on budget; six is contained within the
    President's budget. We are building out or replacing the Fast
    Response Cutters (FRCs).
        There is a minor personnel reduction in the President's
    budget for the Coast Guard, but that is primarily in the Office
    of Intelligence here, Senator, that has been increased 200
    percent in the last few years--we thought it could go down a
    little bit--and also some back-office administrative and other
    personnel here. So that should not be felt at the front line at
    all. So we are very conscious of the special role the Coast
    Guard has in Hawaii.
        Senator Akaka. Yes, and I am sure you know what I am
    referring to when I say antiquated fleet.
        Secretary Napolitano. Yes.
        Senator Akaka. Some of the ships that they have are really
    antiquated out there.
        Secretary Napolitano. I concur.
        Senator Akaka. I am just worried about what the budget
    would do to it.
        Secretary Napolitano, last November, Transportation
    Security Administration (TSA) whistleblowers at Honolulu
    airport alleged that two behavior detection officers (BDOs)
    regularly engaged in racial profiling by targeting Hispanic
    travelers for additional screening. Similar problems of racial
    profiling reportedly occurred at Newark airport as well. There
    are more than 3,000 BDOs nationwide, and the Administration's
    budget requests funding for additional officers. Concerns about
    racial profiling could undermine this entire program, and I
    urge you to fully investigate and address these allegations,
    and I am sure you have.
        How is DHS investigating and addressing alleged abuses? And
    when will DHS release the findings of their investigations?
        Secretary Napolitano. Well, I will have to get back to you
    on those particular investigations in terms of the timing. With
    respect to the behavior detection officer program, however,
    that is based in large part on a program that is done in
    Israel. They perfected some of the original methodology.
        We have over the last year done a study of it in terms of
    evaluating its ability to identify a traveler who deserves
    extra scrutiny versus simply doing random checks. And those
    BDOs were found to be statistically better at doing that than
    just simply doing random checks. So I think in terms of a tool
    to use properly and appropriately in that security environment
    at the airport, it is a good tool for us to use.
        Senator Akaka. Thank you. Madam Secretary, as you may know,
    the debris as a result of the 2011 tsunami in Japan is
    circulating the Pacific and may reach Hawaii within the year.
    The National Oceanic and Atmospheric Administration (NOAA)
    manages Federal debris removal efforts and partners with
    Federal agencies to coordinate their efforts.
        How is the Coast Guard working with NOAA to determine the
    best approach to address the tsunami debris? And does the
    budget take these efforts into account?
        Secretary Napolitano. Yes, Senator. As you noted, NOAA has
    the lead responsibility on the tsunami debris, but our Coast
    Guard region is working with them with respect to the tsunami
    that you are talking about and will coordinate in any way they
    think appropriate. But we are relying on NOAA as the lead.
        Senator Akaka. Thank you. Secretary Napolitano, in 2007,
    DHS committed to empowering CBP's agricultural mission with an
    enhanced leadership structure and authorities to safeguard
    American agriculture, the economy, and public health. Years
    later, our borders remain still vulnerable to dangerous pests
    and disease, and I am deeply concerned that agricultural
    inspections are a low priority for DHS. And as you know, in all
    these years in Hawaii, we have had these agricultural
    inspections going on. I have been informed that CBP uses most
    of the agricultural inspection fees to fund its offices instead
    of its agricultural specialists.
        What steps is DHS taking to fulfill its commitment to
    prevent the entry of harmful pests and bioterrorism agents and
    make sure agricultural user fees are spent as Congress
    intended?
        Secretary Napolitano. Well, I think, Senator, if they are
    not being spent as Congress intended, I want to know about it
    because that agricultural inspection program, as you say, is an
    important one, and we do it a number of ways.
        Actually, the safety of the Nation from bioterrorism or
    just an invasive species getting in, it is a lot of different
    levels, but that agricultural inspector at the gate of entry,
    so to speak, that is kind of the last line of defense. And so
    it is training, it is supervision, it is identifying and having
    people right there with the right kind of equipment so you do
    not have to travel a long time to test things out. So that is
    what we are using the fees for.
        Senator Akaka. Thank you. Mr. Chairman, may I ask my last
    question?
        Senator Moran. It is fine with me, Mr. Chairman.
        Chairman Lieberman. Go ahead.
        Senator Akaka. Thank you very much.
        Madam Secretary, I am pleased that the Department proposes
    to maintain total funding for emergency management performance
    grants. However, I understand that several changes have been
    made to homeland security preparedness grants to better support
    the national preparedness goal.
        Will you please explain how these proposed changes may
    better address special emergency preparedness needs of States
    like Hawaii?
        Secretary Napolitano. I think what we are working on and
    will work with the Committee on is to take the existing
    multiplicity of grants now, consolidate them, have one base
    level of funding population driven; but beyond that, look at
    risk, gaps, and capabilities within States and really try to
    direct those dollars to where they will best be used now given
    that we have already spent $35 billion across the country. So
    this is an Administration proposal that we will work with the
    Congress on and with other groups on.
        Senator Akaka. Thank you very much. Thank you very much,
    Mr. Chairman.
        Chairman Lieberman. Senator Moran.

                   OPENING STATEMENT OF SENATOR MORAN

        Senator Moran. Mr. Chairman, thank you.
        Madam Secretary, last Friday, Under Secretary Tara O'Toole
    spoke to the National Research Council (NRC) about the NRC
    Committee that will be formed at your request to reassess the
    National Bio and Agro-Defense Facility (NBAF) mission. She said
    that panel will not revisit the site selection or consider
    alternative locations for the NBAF. Previously, you likewise
    have told me, Senator Pat Roberts, and others that the
    reassessment will consider only NBAF's scope. So in that
    regard, Under Secretary O'Toole, as far as I can tell to that
    point, did not say anything contrary to the conversations that
    we have had.
        However, Under Secretary O'Toole said that the reassessment
    committee will also consider the question of, ``Could the
    country manage Plum Island Animal Disease Center, which would
    not be pushed to a Bio-Safety Level 4 (BSL-4) level?'' And I am
    concerned that DHS even is asking that question.
        Plum Island has served a useful purpose. It is over 50
    years old. It is well beyond its end-of-life span. It is too
    small to enable necessary research. It does not have a BSL-4
    capability to do research on diseases like Nipah virus or
    Hendra virus. DHS's own studies point to Plum Island's severe
    limitations. From 2006 to 2009, DHS conducted an exhaustive
    site selection process for NBAF, and it considered Plum Island
    as a potential finalist site. And according to DHS's 2009
    Record of Decision for NBAF, Plum Island ``has much higher''
    construction and operation costs associated with building on an
    island. As I understand it, the indications were that island
    costs are 15 to 24 percent above mainland costs. It lacks
    ``proximity and accessibility to medical and veterinary schools
    as well as BSL-3 and 4 labs with related mission areas.'' My
    understanding is that this proximity is necessary and useful
    for attracting the best scientists and working with the animal
    health industry to get vaccines to market. And Plum Island's
    remoteness is a serious drawback in limiting research and our
    country's ability to protect itself.
        Your report indicated that in New York and Connecticut,
    there is ``strong political opposition at Federal, State, and
    local levels to expanding'' and including BSL-4 research
    capabilities; and, finally, ``a foot-and-mouth disease (FMD)
    virus outbreak on an island would be considered no different
    from a FMD outbreak on mainland with respect to impact.''
        Why would we now once again consider spending money on
    propping up an outdated, costly, and inadequate facility
    instead of building a state-of-the-art lab that our country
    needs?
        Secretary Napolitano. Well, I do not know exactly what
    Under Secretary O'Toole said, but if I might, as you and I have
    discussed, we are not reconsidering locale. We are not
    reconsidering the need for an NBAF. In my view, it is an
    essential part of the Nation's security structure moving
    forward.
        We have had a problem persuading the Congress to
    appropriate money in a steady enough stream so that we could
    really get the project moving, and that has left us in a
    position where we have the Plum Island, which in the end will
    not be able to be the kind of Level 4 facility that we envision
    for NBAF. But we are going to have to use it now for a while
    until NBAF is completed.
        We hope through this budget process and the other
    assessments that are being done that we can make material
    progress on that score. But I suspect what the Under Secretary
    was saying is, look, at some point we still have to have a
    biolevel lab, even though we know that lab in the end is not
    the final answer.
        Senator Moran. I think you have answered my question. Thank
    you, Madam Secretary.
        Chairman Lieberman. Thanks, Senator Moran.
        Just a couple more questions, and we will let you go back
    to your work. Last month, Director of National Intelligence
    (DNI) James Clapper testified before Congress that ``some
    Iranian officials, probably including Supreme Leader Ali
    Khamenei, have changed their calculus and are now more willing
    to conduct an attack in the United States in response to real
    or perceived U.S. actions that threaten the regime.''
        Obviously, the catalyzing event was the plot that was
    broken up, with particular help by a Drug Enforcement
    Administration (DEA) agent, to retain some members of a Mexican
    drug cartel to come in and assassinate the Saudi Ambassador
    here in Washington.
        So I wanted to ask you whether the Department is taking any
    actions in response to what the DNI says is this change in the
    attitude of Iran toward committing acts of terrorism here in
    the homeland, including with respect to departmental activities
    such as border screening and infrastructure protection or
    information sharing with State and local law enforcement.
        Secretary Napolitano. Without commenting on the specifics
    in an open setting, Senator, we are constantly monitoring
    threat information, scenarios that become more realistic than
    previously, and providing analysis and products at various
    classification levels out into the State and local environment.
    So I think I would leave that answer just at that level for
    right now.
        Chairman Lieberman. That is good enough. And, finally, let
    me ask you about the US-VISIT program. I agree with you and, by
    action I will describe in a minute, I think that most Members
    of the Committee agree that the US-VISIT's placement within the
    National Protection and Programs Directorate at DHS is
    problematic. One reason is that NPPD is not primarily an
    operating component. So the DHS Authorization Act that we
    passed last fall addressed this issue by creating a new entity
    within the Department to better coordinate DHS efforts to stop
    terrorists from traveling and placing US-VISIT there.
        The proposal that the budget makes, as I mentioned in my
    opening statement briefly, is to place US-VISIT within Customs
    and Border Protection and Immigration and Customs Enforcement,
    and I wanted to ask you about that. My concern is that moving
    the program, splitting it essentially into two sections, will
    make it more difficult to coordinate screening activities
    within the Department, across the interagency, and with our
    foreign partners.
        So we agree there is a problem here. We ended up with a
    different recommendation to deal with it. Why do you think the
    one in the budget is a good one?
        Secretary Napolitano. Well, what we are doing, Senator, is
    we are consolidating all the vetting and screening programs and
    databases in CBP. They have the largest nucleus of that data
    now. They now have the technologic capability for databases to
    talk with each other, etc. And so what we are proposing is,
    take all of the vetting and screening part of US-VISIT and
    merge that into the existing resources we have at CBP, and then
    going and picking up the overstays would go into ICE. That is
    their typical function, which is to do enforcement. So that is
    the theory behind the recommendation.
        Chairman Lieberman. I would like to continue this
    discussion. Again, incidentally, going back to our discussion
    about the grants and noting the absence of Senator Coburn so
    there is no chance he will pick up any support at this moment.
    [Laughter.]
        Although I do not know what his position is on this one, I
    would like to work with you on it to see whether we can have an
    agreement where we as the authorizers will agree on how to deal
    with this problem that we both agree exists.
        Secretary Napolitano. OK.
        Chairman Lieberman. Thank you. Senator Collins.
        Senator Collins. Thank you, Mr. Chairman.
        Madam Secretary, I wish that Senator Johnson and more of
    our colleagues did not have to leave before I asked you this
    question. He brought up the issue of having a very limited
    cybersecurity bill that would just focus on information sharing
    about cyber threats. As you are well aware, that is part of the
    bill that Senator Lieberman and I have introduced. We drew on
    some work done by Senator Carper and others, Senator Dianne
    Feinstein as well. But the fact is that while information
    sharing about cyber threats is needed and those liability
    protections are essential, it does not remove the necessity of
    focusing on critical infrastructure, does it?
        Secretary Napolitano. No, they are not mutually exclusive.
    We need to have core critical infrastructure at a certain base
    level. Because they are a core critical infrastructure, we all
    rely on them. Families rely on them, small business relies on
    them, everybody relies on them. We need the information
    sharing, and it needs to be real time. We need some of the
    other elements. We need Federal Information Security Management
    Act (FISMA) reform. We need some help with some of the
    personnel rules so that we can hire more people more quickly.
        So there are a lot of things that need to be done in the
    cyber arena and that need to be done now.
        Senator Collins. And if, in fact, we just passed a very
    limited bill that dealt only with information sharing and did
    not give the Department the authority to designate what is core
    critical infrastructure and, working in partnership with the
    industry, develop risk-based standards and then leave it up to
    industry how to achieve those standards, we would be falling
    short in addressing what is a very serious threat, would we
    not?
        Secretary Napolitano. Senator, I think we would be back
    here in a year or 18 months, and we will have suffered a major
    infiltration or attack, and we will find that some part of our
    critical infrastructure was a gap and they were not doing it on
    their own, so to speak, and then the gap might be filled at
    that point.
        But it seems to me that what we know now is already enough
    to go ahead, and we should be moving forward.
        Senator Collins. Well, I could not agree with you more. I
    think this is the threat where there is the biggest gap between
    the seriousness of the threat and how little we have done
    legislatively to ensure that the Administration has the tools
    that it needs to address what is an escalating threat. And it
    is important once again to reinforce what we are talking about
    when we are talking about core critical infrastructure. We are
    talking about infrastructure against which an attack would
    cause mass casualties, severe harm to our economy, a serious
    degradation of our national security. We are not talking about
    covering every business, every system in our country. We are
    talking about the electric grid, key water supplies, and I
    think that is something that needs to be better understood. So
    I appreciate the chance to engage you on that colloquy.
        I want to ask you two more questions, and the rest I will
    submit for the record.\1\ First, you have used the term and the
    budget uses the term ``population-driven formula'' several
    times in talking about the grant. My staff has had great
    difficulty in getting from the Department exactly what you mean
    by that phrase. It could be meant in one of two ways. It could
    mean that you are talking about the formula that this Committee
    wrote that ensures that every State receives a certain minimum
    in order to build and now maintain the capabilities that have
    been built up over the past 10 years. Or it could mean that you
    are talking about a formula that is driven by the size of
    populations and, thus, the money is shifted away from that
    statutory minimum and instead given to the large cities and big
    States.
    ---------------------------------------------------------------------------
        \1\ Senator Collins' questions for the Record appear in the
    Appendix on page 117.
    ---------------------------------------------------------------------------
        So what do you mean when you use the term population-driven
    formula?
        Secretary Napolitano. A little bit of both in a way. What
    we want to have is one State formula. There are many different
    formulas now for basic State grants, depending on which grant
    program is at issue, so that there would be one consistent
    State formula of which population would be a key variable that
    would give you that base level. But beyond that, we would be
    looking at risk and gap and capability.
        So, for example, take a State like Maine. One of the things
    you would say is, well, the population is a smaller population
    base, it is a more rural State, but it has a lot of border and
    a lot of coast, and it has some critical infrastructure on
    those things. And that would go into the vast majority of the
    grant dollars, which would be how you look at the risk, how you
    look at consequence, gaps, and capabilities.
        Senator Collins. But are you proposing to still have a
    State minimum of some sort to ensure that every State can
    maintain certain capabilities?
        Secretary Napolitano. Yes, but it would be one uniform
    formula.
        Senator Collins. And, finally, I want to return to the
    Coast Guard. I am just very distressed by the cuts in the
    budget that affect the Coast Guard. A thousand uniformed
    personnel to me is not a small cut. This is not a big service.
    And it was just last year when I was unhappy about the
    reduction to eight National Security Cutters that you testified
    that we fully intend to build them, and we fully intend to
    build them on schedule. In January of this year, just 2 months
    ago, DHS provided the Deepwater Implementation Plan Annual
    Report that validated the Coast Guard's methodology for
    determining the appropriate mix for the Deepwater fleet,
    including verifying the methodology that produced the eight
    National Security Cutters.
        So I do not understand the Administration's budget cuts
    that would eliminate the seventh and eighth National Security
    Cutters from the Coast Guard's 5-year plan as well as that
    1,000 uniform personnel cut.
        Secretary Napolitano. Let me address each of those, and I
    would think one intervening factor is the passage of the Budget
    Control Act, which we are all trying to fit within. As I
    mentioned to Senator Akaka, the Coast Guard is roughly a 50,000
    member service. The 1,000 personnel cut is made up of some
    exchange between decommissioning higher personnel vessels and
    replacing them with vessels that do not need quite as many
    personnel. That is a small part. A second part is some non-
    replaced attrition in clerical and backroom personnel here. A
    third part is, for example, we do not need as many recruitment
    officers in the Coast Guard as we had because we fulfill our
    recruitment at the end of the second quarter, so we do not have
    to fill all of those with full-time equivalent. And the fourth
    is the intelligence officers that I mentioned earlier where we
    have had a very dramatic increase over the last several years.
    We can cut back on that with no impact on front-line
    operations. That is the 1,000.
        With respect to the NSC, the budget fully funds six. There
    is language--and I think it is in a footnote in the budget
    documents--to the effect that the decisions on seven and eight
    will be done in relation to what the Navy is doing with its
    laydown because it is adjusting its forces in response to the
    Budget Control Act as well. And so we are beginning a process,
    working with the Chief of Naval Operations, before we make
    final decisions on seven and eight, which would hit dollar-wise
    not until 2014 anyway. So that is the thinking there.
        Senator Collins. Well, given the cutbacks in naval ship
    building, that is not of great comfort to me. The missions are
    different. I like seeing coordination. Do not get me wrong. But
    I think the cuts in the Coast Guard are something that we are
    going to need to take a very close look at.
        If you look at the expanded role of the Coast Guard, I
    mean, it has just changed enormously during the past decade.
    And while I think they are unparalleled in their ability to do
    more with very little, there is a limit. I have been on those
    cutters and actually seen where you could see through the side
    of some of the cutters because of the poor condition that they
    are in, and the number of cutters that are simply out of
    commission for so many days each year because of engineering
    and other failures. It just calls for recapitalization and not
    delaying with the Offshore Patrol Cutters either.
        Secretary Napolitano. If I might, Senator, one thing--it
    relates to recapitalization of the Coast Guard, it relates to
    the NBAF that Senator Moran referenced. At some point in this
    process, we need to work through how the Department is funded
    to pay for big capital expenditures without having to pay for
    those expenditures out of operations. We are constantly caught
    between those two things.
        So, for example, we need another icebreaker. Now, the
    budget has in it some planning money for another icebreaker.
    There is going to be more activities in the Arctic. Drilling is
    going to start off of Alaska. We know we need a Coast Guard
    presence up there. But that is a $1 billion vessel. Plus, there
    are the NSCs you mentioned, or other recapitalization with
    other kinds of vessels, or the NBAF.
        So these are big-ticket items, but what happens,
    unfortunately, I think, is in the budget process, somehow the
    big items and the operations get merged together. And so we
    will work with you on what the right balance is, but that
    really is a tension that we have to discuss.
        Senator Collins. Thank you. Thank you for your time.
        Chairman Lieberman. Thanks, Senator Collins.
        Of course, I agree with Senator Collins regarding the Coast
    Guard, and I have the same feeling toward this as I have
    expressed several times in the Armed Services Committee, which
    is a lot of these cuts are forced on you by the Budget Control
    Act, which we adopted. But in this authorization process, we
    have an obligation to look back and see if what you have done
    makes sense and whether we want to relook at the BCA and find
    other ways to fund some of these things that really need to be
    funded in the national interest, either by finding savings
    elsewhere or, perish the thought, by raising taxes. Thank you.
        Just when you thought it was safe, Secretary Napolitano, to
    go back to your office, Senator Carper appears. Senator Carper.
        Senator Carper. I would introduce me differently. I would
    say ``an unexpected pleasure.'' [Laughter.]
        Chairman Lieberman. It is that, too, of course.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. It was very good talking with you last
    week. Thanks for that opportunity. And for my colleagues, let
    me just say that the Department of Homeland Security has
    announced that they are going to be audit ready--not in a
    couple years, not in the next decade, but they are going to be
    audit ready this year, paving the way for the Department of
    Homeland Security to actually pass a financial audit--not just
    talk about it, not just think about it, but actually be able to
    do it. And I think this is a wonderful achievement and just a
    great example of one of the best ways that our Federal agencies
    can act to curb not just fraud but wasteful and ineffective
    spending. We are glad you set a great example for a bigger
    agency whose Secretary is trying to drag his agency--the
    Department of Defense--kicking and screaming to being auditable
    as well and trying to push them to beat their deadline of 2017.
    So thanks for being a good role model for them.
        Secretary Napolitano. I will share that with Secretary Leon
    Panetta.
        Senator Carper. He is on it. You know, when you take
    somebody who used to be a Budget Committee Chairman in the
    House, Office of Management and Budget Director, White House
    Chief of Staff, all of the above--you put all that together and
    put that person in charge of the Department of Defense, they
    care about this sort of thing. And the reason why it is
    important, as you know, is if we do not have good financial
    controls, if we do not have the ability to actually track
    money, I mean, we are doomed. It is hard to manage what we
    cannot measure, so it is important.
        I just want to commend you and the folks who work for you
    who have taken your Department to this point in time. And I was
    just hoping you might take a minute and just give us here on
    the Committee some idea how you plan to move forward to obtain
    a clean or unqualified audit for your Department.
        Secretary Napolitano. Well, first of all, the Under
    Secretary for Management, Rafael Borras, and his staff, the
    Chief Financial Officer and others, deserve the credit. I do
    not. But they have moved forward on a number of management
    fronts, really working particularly with one or two of our
    components that we are having particular difficulty in getting
    audit ready because of the complexity of the mission and the
    state of the books, etc. So it is training, management,
    supervision, and it is just constant monitoring the process and
    encouraging us. So we were recipients of a qualified audit this
    year, which is a huge step forward. We will be ready.
        Senator Carper. All right. Thanks.
        The second area I would like to just discuss briefly. This
    Committee has continued to challenge this Administration and
    the previous Administration to try to work smarter with Federal
    dollars and to find programs where we can get better results
    for less money or at least better results for the same amount
    of money. And I believe that your Department budget takes
    really a giant step in this direction, cutting, I am told, more
    than $850 million in administrative costs and duplicative
    programs for fiscal year 2013. And, again, I want to commend
    you and the team you lead for looking in every nook and cranny
    of your Department for ways to save money and doing your part
    to move our country from what I call a culture of spendthrift
    more to a culture of thrift.
        Can you take a moment and talk with us about some of the
    cuts that the Department has made and what type of impact they
    may have on your Department's ability to carry out its security
    mission?
        Secretary Napolitano. Well, I think, Senator, our goal is
    to cut but not deleteriously impact security mission, and so we
    are looking for ways where we can get rid of redundancies,
    inefficient processes, everything from unnecessary
    expenditures, things that are nice but not necessary, to
    acquisition reform, procurement reform. The whole contracting
    process required a real thorough look at by us-- fleet
    management, purchasing, purchase management, all the rest.
    Every component has come up with savings or places where they
    can take money back. ICE is a key example. A large part of
    their budget is not really a reduction. It is savings and costs
    they have been able to identify they can avoid next year and
    not impact mission.
        Senator Carper. In talking with Cabinet Secretaries and
    folks who run some of our other Federal agencies, one of the
    themes that I have heard from them is trying to change, if you
    will, the way people think about Federal programs and to really
    make it part of a cultural change to say how do we get a better
    result for less money about almost everything that we do, or
    how do we get a better result for the same amount of money. And
    given the magnitude of the cuts that you all are looking at, it
    sounds like that is the mind-set you are bringing, so bring it
    on.
        The third question I would have deals with cybersecurity
    within the realm of State and local training. We talked a
    little bit about this before, as you may recall. But a couple
    of weeks ago when you were here, we talked a fair amount about
    Federal cybersecurity efforts, and I know you have talked with
    some of my colleagues about it here today. But while I strongly
    believe we ought to improve our Federal cybersecurity efforts,
    I think it is equally important that we also take some
    important steps at the State and local level. And as you may
    know, my home State of Delaware has devoted a significant
    amount of time and resources and energy to enhancing public
    awareness of cyber attacks and has even participated in several
    Department of Homeland Security Cyber Storm exercises to
    prepare our local officials for cyber incidents.
        Could you just discuss with us briefly some of your hands-
    on cybersecurity training programs and how the Department's
    budget request will maintain these important programs that have
    helped my own State become what we think is a bit of a leader
    nationally in cybersecurity?
        Secretary Napolitano. Absolutely, Senator. It begins with
    the fusion centers, which, as I mentioned to Senator Coburn,
    are a real focus for us in terms of how we get training out to
    the country on basic security needs and analysis. It is
    training programs at FLETC and other places. It is the
    exercises. Delaware participated in Cyber Storm. The National
    Level Exercise this year will be another cyber exercise, so we
    are going to have a continued drumbeat of exercises that will
    include our State and local partners.
        Senator Carper. Thanks again for your leadership, for being
    here today, and for the spirit that you bring to your job.
    Thank you.
        Secretary Napolitano. Thank you.
        Chairman Lieberman. Thanks very much, Senator Carper.
        Secretary Napolitano, thank you for your testimony. I was
    thinking as I was listening to you, leaving aside the fact that
    I have known you for a long time, and admire you and even
    consider you my friend, if I was just coming in from nowhere, I
    would say to myself, ``That Secretary is very informed.''
    [Laughter.]
        Secretary Napolitano. Thank you.
        Chairman Lieberman. You really are on top of what is
    happening in the Department, and we agree most of the time, we
    disagree some of the time, but you were very responsive today,
    and I appreciate that.
        Secretary Napolitano. Thank you.
        Senator Collins. As do I.
        In all seriousness, it is such an important Department, and
    I do appreciate your leadership, particularly in the area of
    cybersecurity, and I have great confidence that you are going
    to fix the budget when it comes to the Coast Guard and that we
    will continue to work very closely together.
        I also want to thank all the men and women who work for the
    Department. So many of them are the unsung heroes who every day
    are so committed to the mission of protecting our country. I
    know, unfortunately, it has become in vogue nowadays to beat up
    on Federal employees, and I think that is really unfortunate
    because so many of them work so hard with the best of
    motivations and intentions. So I would ask that you pass on our
    thanks to them as well. Thank you.
        Secretary Napolitano. I will do that. Thank you very much.
        Chairman Lieberman. As do I.
        Secretary Napolitano. Thank you all.
        Chairman Lieberman. The record of the hearing will stay
    open for 15 days for any additional questions or statements.
    Again, I thank you. The hearing is adjourned.
        [Whereupon, at 4:34 p.m., the Committee was adjourned.]
                                A P P E N D I X

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