[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                CUTTING DHS DUPLICATION AND WASTEFUL 
                 SPENDING: IMPLEMENTING PRIVATE-SECTOR 
                 BEST PRACTICES AND WATCHDOG REC-
                 OMMENDATIONS
=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                       AND MANAGEMENT EFFICIENCY

                                 OF THE

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION
                               __________

                             APRIL 26, 2013

                               __________

                           Serial No. 113-14

                               __________

       Printed for the use of the Committee on Homeland Security
                                     

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                     COMMITTEE ON HOMELAND SECURITY

                   Michael T. McCaul, Texas, Chairman
Lamar Smith, Texas                   Bennie G. Thompson, Mississippi
Peter T. King, New York              Loretta Sanchez, California
Mike Rogers, Alabama                 Sheila Jackson Lee, Texas
Paul C. Broun, Georgia               Yvette D. Clarke, New York
Candice S. Miller, Michigan, Vice    Brian Higgins, New York
    Chair                            Cedric L. Richmond, Louisiana
Patrick Meehan, Pennsylvania         William R. Keating, Massachusetts
Jeff Duncan, South Carolina          Ron Barber, Arizona
Tom Marino, Pennsylvania             Dondald M. Payne, Jr., New Jersey
Jason Chaffetz, Utah                 Beto O'Rourke, Texas
Steven M. Palazzo, Mississippi       Tulsi Gabbard, Hawaii
Lou Barletta, Pennsylvania           Filemon Vela, Texas
Chris Stewart, Utah                  Steven A. Horsford, Nevada
Richard Hudson, North Carolina       Eric Swalwell, California
Steve Daines, Montana
Susan W. Brooks, Indiana
Scott Perry, Pennsylvania
Vacancy
                       Greg Hill, Chief of Staff
          Michael Geffroy, Deputy Chief of Staff/Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                I. Lanier Avant, Minority Staff Director
                                 ------                                

          SUBCOMMITTEE ON OVERSIGHT AND MANAGEMENT EFFICIENCY

                 Jeff Duncan, South Carolina, Chairman
Paul C. Broun, Georgia               Ron Barber, Arizona
Richard Hudson, North Carolina       Donald M. Payne, Jr., New Jersey
Steve Daines, Montana                Beto O'Rourke, Texas
Vacancy                              Bennie G. Thompson, Mississippi 
Michael T. McCaul, Texas (Ex             (Ex Officio)
    Officio)
               Ryan Consaul, Subcommittee Staff Director
                   Deborah Jordan, Subcommittee Clerk
           Tamla Scott, Minority Subcommittee Staff Director
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               Statements

The Honorable Jeff Duncan, a Representative in Congress From the 
  State of South Carolina, and Chairman, Subcommittee on 
  Oversight and Management Efficiency............................     1
The Honorable Ron Barber, a Representative in Congress From the 
  State of Arizona, and Ranking Member, Subcommittee on Oversight 
  and Management Efficiency......................................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security:
  Oral Statement.................................................     5
  Prepared Statement.............................................     6

                               Witnesses

Ms. Cathleen A. Berrick, Managing Director, Homeland Security and 
  Justice Issues, Government Accountability Office:
  Oral Statement.................................................     9
  Prepared Statement.............................................    11
Ms. Anne L. Richards, Assistant Inspector General for Audits, 
  Office of Inspector General, U.S. Department of Homeland 
  Security:
  Oral Statement.................................................    28
  Prepared Statement.............................................    30
Mr. Paul G. Stern, Ph.D., Member, Board of Directors, Business 
  Executives for National Security:
  Oral Statement.................................................    35
  Prepared Statement.............................................    37
Mr. Craig Killough, Vice President, Organization Markets, Project 
  Management Institute:
  Oral Statement.................................................    40
  Prepared Statement.............................................    41
Mr. Henry H. Willis, Ph.D., Director, Rand Homeland Security and 
  Defense Center:
  Oral Statement.................................................    46
  Prepared Statement.............................................    48

                                Appendix

Questions From Chairman Jeff Duncan for Cathleen A. Berrick......    71
Questions From Chairman Jeff Duncan for Anne L. Richards.........    73
Questions From Chairman Jeff Duncan for Paul G. Stern............    75
Questions From Chairman Jeff Duncan for Craig Killough...........    75


  CUTTING DHS DUPLICATION AND WASTEFUL SPENDING: IMPLEMENTING PRIVATE-
           SECTOR BEST PRACTICES AND WATCHDOG RECOMMENDATIONS

                              ----------                              


                         Friday, April 26, 2013

             U.S. House of Representatives,
          Subcommittee on Oversight and Management 
                                        Efficiency,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:05 a.m., in 
Room 311, Cannon House Office Building, Hon. Jeff Duncan 
[Chairman of the subcommittee] presiding.
    Present: Representatives Duncan, Daines, Barber, Payne, and 
Thompson.
    Mr. Duncan. Committee on Homeland Security, Subcommittee on 
Oversight Management Efficiency will come to order.
    The purpose of this hearing is to examine the areas of 
duplication at the Department of Homeland Security, identify 
opportunities for cost savings, and highlight ways the 
Department can improve its efficiency. Now I recognize myself 
for an opening statement.
    We meet today to examine an issue of great importance to 
the American people; duplication and wasteful spending. While 
our Nation is facing $16 trillion of debt, American families 
are continuing to see larger portions of their hard-earned 
paychecks taken out in Federal taxes.
    I believe that the Federal Government must do more to 
eliminate duplicative and wasteful programs, so I recently 
introduced legislation establishing the Committee on the 
Elimination of Nonessential Federal Programs. Its sole 
responsibility is to root out wasteful spending.
    As the third-largest Federal agency with a $60 billion 
budget, the Department of Homeland Security has an important 
responsibility to the American people for how it uses their 
hard-earned money.
    Yet, when my constituents see unnecessary duplication of 
mission or programs that expend valuable resources, a 
reluctance to learn from best practices within the Federal 
Government or private sector, or an unwillingness to make 
changes identified in audits as ways to improve, it can be very 
frustrating.
    Congressional watchdogs have issued thousands of reports 
with ways to improve the efficiency of DHS and save taxpayer 
dollars. Earlier this month, the GAO issued a key report 
related to duplication and cost-savings opportunities across 
the Federal Government, which found 162 areas within the 
Federal Government with fragmented, overlapping, or duplicative 
spending.
    Within DHS, this report identified six separate DHS 
components involved in research and development activities. It 
also found 35 instances among 29 out of 50 R&D contracts where 
overlap in activities occurred. The price tag for these 
duplicative contracts was $66 million.
    Even more concerning, GAO found that DHS does not have the 
policies or mechanisms necessary to coordinate or track R&D 
activities across the Department. DHS was created after 9/11 to 
help prevent the stovepiping of information.
    If DHS does not have a system in place for basic R&D, how 
does that lack of communication affect components, operational 
abilities, and DHS' ability to meet its mission successfully to 
defend the homeland?
    In 2012, GAO identified five more duplicative programs in 
DHS and four opportunities to save costs. In 2011, GAO 
identified four homeland security issues where DHS could 
eliminate duplication and five areas for potential cost 
savings. Yet, out of all these ways to improve efficiency, DHS 
has only fully addressed recommendations in two of these areas.
    Likewise, the Inspector General has open and unimplemented 
recommendations identifying over $600 million in questionable 
costs and about $50 million in funds that could be put to 
better use.
    As of last month, the IG had issued 210 recommendations 
that if implemented could result in cost savings of $1.2 
billion. The IG has also identified 10 high-priority 
recommendations, which would reduce waste and inefficiency at 
DHS.
    To date, DHS has closed three of these high-priority 
recommendations. However, only one of these recommendations has 
been implemented. DHS must take action to implement these 
recommendations in a timely manner to improve the efficiency 
and effectiveness of the Department.
    Further, while I understand that DHS components have 
different missions, I believe there may be some overlap in the 
type of assets and resources used by these components. U.S. 
Customs and Border Protection, CBP, currently has two distinct 
operational boating law enforcement units; those under CBP's 
Office of Air and Marine, OAM, and Border Patrol agents with 
maritime qualifications.
    Also, CBP and the Coast Guard each have their own air and 
marine assets. Now Coast Guard is part of the overall 
Department of Homeland Security. So out of more than 1,000 
Coast Guard small boats and 250 CBP boats, only one common 
asset is shared between them; the 33-foot safe boat. CBP and 
the Coast Guard should consider consolidating these similar 
resources to use taxpayer dollars more wisely.
    DHS has pointed to its Efficiency Review, Bottom-Up Review, 
and success in public-private partnerships for showing progress 
in these areas. However, I believe DHS can do more starting 
with learning from the best practices of the private industry.
    While not every private-sector principle is transferrable 
to the Federal Government and although incentives may be 
different, there are many core principles that both companies 
and the Federal Government require for success.
    As a small businessman in South Carolina, I found the same 
principles of strategic vision combined with strong and capable 
leadership and smart budgeting to be critical. You don't spend 
more than you take in or you go bankrupt. Yet the Federal 
Government has been slow to learn.
    In systems management, process management, and 
organizational culture, the Federal Government, and DHS in 
particular, have a lot to learn. I believe that DHS components 
should better reach out to the private-sector companies with 
similar processes.
    For example, TSA's challenges with long lines and safe and 
satisfied customers are not unique to the TSA. Six Flags, 
Disney World also face similar challenges. DHS should be 
thinking about what ways its components can better leverage 
best practices from the private sector in order to minimize 
duplication and wasteful spending and instead improve outcomes.
    In conclusion, the issues highlighted by GAO and the 
Inspector General require action from DHS; not words, but 
action. The private sector possesses many tools that can help 
DHS implement these recommendations, and I believe that DHS 
should carefully consider how it can improve in order to 
steward American tax dollars more efficiently and effectively.
    I look forward to hearing more from our witnesses today. I 
appreciate them coming and testifying before us. The Chairman 
will now recognize the Ranking Minority Member of the 
subcommittee, the gentleman from Arizona, Mr. Barber, for any 
statement he may have.
    Mr. Barber. Well, thank you, Mr. Chairman and thank you for 
convening this important hearing. Thank you to the witnesses 
for being with us today. I look forward to your testimony and 
the opportunity to raise questions with you.
    I am really pleased to see that for the third year now the 
GAO, as required by law, has taken a very hard look at Federal 
Government programs and provided us with a road map for 
improving efficiency, eliminating waste and duplication in 
saving taxpayer dollars.
    This year's report, as you know, identifies 31 areas that 
require greater efforts at efficiency as well as suggestions 
for providing more effective Government services. Three of 
these 31 areas relate to the Department of Homeland Security.
    The report also identifies Government duplication, overlap, 
and fragmentation to help Congress discover more cost savings 
and revenue enhancement opportunities.
    The need to reduce spending and examine Federal programs to 
determine where reductions can be made is critical to our 
efforts to keep the country and move it further along the road 
to economic recovery. We must get our budget financial house in 
order and this is one important area where we can do that.
    Last week, along with 18, 19 other Members of Congress, I 
introduced bipartisan legislation to require Congress to 
address waste and duplication in Federal programs across the 
board.
    This legislation would require Congressional committees to 
hold hearings to scrutinize duplicative programs and take 
actions on these findings before it makes its appropriations 
recommendations.
    That is what we are here to do today. To talk about these 
important findings from the GAO report and how we can act on a 
bipartisan basis to find common-sense cost savings at DHS.
    This is not a conversation that we can enter into lightly. 
We must ensure that the steps we take to cut costs do not 
compromise the homeland security.
    The threats our Nation faces, both man-made and natural, 
are unfortunate and all-too-present reality. As we know, on 
April 15, 2013, the terrorist attack on the Boston Marathon 
reminds us that terrorism remains a very real threat to our 
Nation and to the security of the homeland, and homeland 
security professionals must be fully equipped to counter this 
threat and preserve our security.
    Two days after the Boston attack, a fertilizer plant 
explosion in West, Texas claimed the lives of 15 individuals--
the memorial services were held yesterday--and countless others 
were injured.
    The Federal Emergency Management Agency, FEMA, and the 
National Protection and Programs Directorate of the Office of 
Infrastructure Protection are just two of the Department's 
components that have been involved in analyzing and responding 
to that tragic event.
    These combined tragedies show us that while duplicative 
efforts must be identified and eliminated, we must also 
continue to ensure that our homeland security officials have 
the resources they need to keep our Nation safe.
    Moreover, border security remains a critical National 
issue. While we have made some progress in our efforts to 
secure the border on the southern part of our country, there is 
so much yet left to be done to ensure that my constituents in 
particular who work and live along the Southwest Border are 
safe in their homes and on their land.
    Yes, we have made improvements, but we still have 50 
percent of drugs being seized in my district alone. We cannot 
allow this to continue, and we cannot afford to lose ground in 
our border secure mission where some progress has been made.
    That is why we must ensure that the Border Patrol operates 
at full capacity and that our agents are given the resources 
they must have to do their jobs effectively.
    Last month, as a result of sequestration, the Department 
was required to slash every new program--every program, 
project, and activity by 5 percent. These, in my view, were 
irresponsible cuts that we simply cannot afford. We must cut 
the budget, we must reduce the deficit, but there are more 
prudent ways to do it than the sequestration.
    The sequester's impact on our Border Patrol agents along 
the Southwestern Border is very real. It is also real for the 
customs inspectors who are helping move legitimate trade into 
our country and expedite legal passage.
    The overtime cuts and work furloughs that have had a 
cumulative impact that is slashing our Border Patrol agents' 
pay by as much as 40 percent if fully implemented. That means 
losing the work-hour equivalent of 5,000 agents Nation-wide.
    Cutting pay means agents would spend less time monitoring 
our borders, leaving us vulnerable both to terrorism and to 
cartel activity and this is absolutely unacceptable.
    That is why spending across the Department must be properly 
scrutinized to avoid harmful cuts to Border Patrol agents and 
the Customs inspectors and we must of course ensure that the 
allocation of funds is done effectively.
    The Department unfortunately has not yet put metrics into 
place to measure and evaluate efforts to secure the Southwest 
Border. How can we know what to cut and what programs deserve 
increased funding if we don't know what is working? When the 
safety of Americans, and my constituents in particular, is on 
the line, I refuse to simply guess at what resources make 
sense.
    I think we can all agree that we have a lot of work to do, 
and I look forward to the hearing from the witnesses on how the 
Department can improve its effectiveness and efficiency, can 
eliminate duplication, and put its resources to the best use 
possible.
    Thank you, Mr. Chairman, I yield back.
    Mr. Duncan. Thank you, Mr. Barber.
    The Chairman will now recognize the Ranking Member of the 
full committee, the gentleman from Mississippi, Mr. Thompson, 
for a statement.
    Mr. Thompson. Thank you, Chairman Duncan, for holding this 
hearing.
    I welcome our witnesses also.
    Given the current fiscal climate, every level of 
government, Federal, State, and local, has joined the effort to 
eliminate wasteful spending, weed out unnecessary duplication, 
and cut costs where possible.
    Eliminating duplicative programs is a common-sense approach 
to saving scarce Federal funds. This approach however should be 
implemented with an eye toward ensuring that reducing programs 
and activities does not diminish homeland security 
capabilities.
    Given the broad range of the Department of Homeland 
Security's mission including aviation, rail, border security, 
emergency preparedness, cybersecurity, critical infrastructure 
protection, and counterterrorism, there may be in fact a need 
for built-in redundancy through such a far-reaching industry.
    As a result, any effort to reduce duplication and 
downsizing the programs must not result in leaving the United 
States vulnerable. Yet, there is clearly a need to tighten the 
belt.
    In many instances, the Department has done just that. Since 
2009, through its efficiency review and component initiatives, 
the Department has identified more than $4 billion in cost 
avoidances and its fiscal year 2014 efficiency initiatives are 
expected to result in an additional $1.3 billion in savings.
    To aid to the effort to reduce spending, the Government 
Accountability Office has conducted its annual examination of 
duplication, overlap, and fragmentation across Federal 
Government programs and has released its third report in this 
series including recommendations for improvement.
    In this report, GAO identifies 31 areas where agencies may 
be able to achieve greater efficiency or effectiveness. Within 
those 31 areas, GAO also identified 81 actions that the 
Executive branch or Congress should take to reduce 
fragmentation, overlap, or duplication as well as other cost 
savings or revenue enhancement opportunities.
    Due to its size, mission, and inherent overlapping 
authority, the Department of Homeland Security is named in more 
areas of overlap than any other agency. The report contained 
two areas where fragmentation, overlap, and duplication exists 
at the Department; No. 1, research and development, and No. 2, 
field-based information sharing.
    GAO also identified checked baggage screening as an area 
that presented an opportunity for cost savings and revenue 
enhancement. Hopefully the Department would heed GAO's 
recommendations.
    I look forward to hearing from GAO on the Department's 
response. I must note however that while GAO makes 
recommendations in its report for agency action, it also makes 
recommendations for Congress.
    Unfortunately, following the last two GAO reports on 
reducing duplication, the Executive branch addressed far more 
of its recommendations than the steps taken by Congress to fix 
situations that could only be addressed through legislative 
action.
    I look forward, Mr. Chairman, to working with you and 
drafting some bipartisan legislation that perhaps could fix 
some of those obvious overlaps and duplication.
    Also, I would be remiss if I did not address at least one 
effort to reduce the Departmental duplication that is once 
again before Congress seeking approval. This is the 
Department's proposal to consolidate its 16 individually 
authorized preparedness grant programs into a single pool of 
money.
    This ill-conceived proposal causes me grave concern. It was 
voted down last Congress and I urge my colleagues to do the 
same this year. Stakeholders, first responders, and State and 
local representatives have all spoken against this proposal and 
stated that such a consolidation would result in hamstrung 
first responders facing unprecedented natural and man-made 
disasters.
    As the world watched, first responders who were on the 
scene at the Boston Marathon made the difference between lives 
being saved and a higher death toll.
    Moreover, in the subsequent search and capture of the 
surviving perpetrator, local law enforcement, equipped with 
infrared technology and other homeland security apparatus that 
are often purchased with Homeland Security grant funds, brought 
a swift end to what could have been a protracted nightmare for 
Boston area residents.
    So I look forward to today's testimony, and I thank the 
witnesses are for appearing today.
    I yield back my time, Mr. Chairman.
    [The statement of Ranking Member Thompson follows:]
             Statement of Ranking Member Bennie G. Thompson
                             April 26, 2013
    Given the current fiscal climate, every level of Government--
Federal, State, and local--has joined the effort to eliminate wasteful 
spending, weed out unnecessary duplication, and cut costs where 
possible.
    Eliminating duplicative programs is a common-sense approach to 
saving scarce Federal funds.
    This approach, however, should be implemented with an eye toward 
ensuring that reducing programs and activities does not diminish 
homeland security capabilities.
    Given the broad range of the Department of Homeland Security's 
mission--including aviation, rail, border security, emergency 
preparedness, cybersecurity, critical infrastructure protection, and 
counterterrorism--there may in fact be a need for built-in redundancy 
throughout such a far-reaching agency.
    As a result, any effort to reduce duplication and downsize programs 
must not result in leaving the United States vulnerable.
    Yet, there is clearly a need to tighten the belt.
    In many instances, the Department has done just that.
    Since 2009, through its Efficiency Review and component 
initiatives, the Department has identified more than $4 billion in cost 
avoidances and its fiscal year 2014 efficiency initiatives are expected 
to result in an additional $1.3 billion in savings.
    To aid in the effort to reduce spending, the Government 
Accountability Office (GAO) has conducted its annual examination of 
duplication, overlap, and fragmentation across Federal Government 
programs and has released its third report in this series, including 
recommendations for improvement.
    In its report, GAO identifies 31 areas where agencies may be able 
to achieve greater efficiency or effectiveness.
    Within those 31 areas, GAO also identified 81 actions that the 
Executive branch or Congress could take to reduce fragmentation, 
overlap, or duplication, as well as other cost savings or revenue 
enhancement opportunities.
    Due to its size, mission, and inherent overlapping authority, the 
Department of Homeland Security is named in more areas of overlap than 
any other agency.
    The report contained two areas where fragmentation, overlap, and 
duplication exists at the Department: (1) Research and Development; and 
(2) Field-Based Information Sharing.
    GAO also identified Checked Baggage Screening as an area that 
presented an opportunity for cost savings and revenue enhancement.
    Hopefully, the Department will heed GAO's recommendations. I look 
forward to hearing from GAO on the Department's response.
    I must note, however, that while GAO makes recommendations in its 
report for agency action, it also makes recommendations for Congress.
    Unfortunately, following the last two GAO reports on reducing 
duplication, the Executive branch addressed far more of its 
recommendations than the steps taken by Congress to fix situations that 
could only be addressed through legislative action.
    In fact, in a follow-up status report on the 176 recommended 
actions made in the first two reports, GAO determined that nearly 80 
percent of the issues identified that required Executive branch action 
had been addressed.
    On the other hand, Congress had addressed less than 40 percent of 
the GAO recommendations that required Congressional action.
    I would urge the Majority to live up to its stated goal to reduce 
spending by not merely providing lip service but working in a 
bipartisan manner to bring common-sense, cost-savings bills on actions 
recommended by GAO to the House floor.
    I would be remiss if I did not address at least one effort to 
reduce Departmental duplication that is once again before Congress 
seeking approval.
    That is the Department's proposal to consolidate its 16 
individually-authorized preparedness grant programs into a single pool 
of money.
    This ill-conceived proposal causes me grave concern.
    It was voted down last Congress and I urge my colleagues to do the 
same this year.
    Stakeholders, first responders, and State and local representatives 
have all spoken against this proposal and stated that such a 
consolidation could result in hamstrung first responders facing 
unprecedented natural and man-made disasters.
    As the world watched, first responders who were on the scene at the 
Boston Marathon made the difference between lives being saved and a 
higher death toll.
    Moreover, in the subsequent search and capture of the surviving 
perpetrator, local law enforcement, equipped with infra-red technology 
and other homeland security apparatus--that are often purchased with 
homeland security grand funds--brought a swift end to what could have 
been a protracted nightmare for Boston-area residents.

    Mr. Duncan. Thank the Ranking Member for participating 
today and other Members of the subcommittee are reminded that 
opening statements may be submitted for the record.
    We are pleased to have a very distinguished panel of 
witnesses before us today on this topic, and I will begin by 
introducing the witnesses and then I will recognize each one 
for their testimony.
    Our first witness today is Ms. Cathleen Berrick and she is 
the managing director of homeland security and justice issues 
at the Government Accountability Office or GAO.
    In this position, she oversees GAO's reviews of the 
Department of Homeland Security and Department of Justice 
Programs and Operations. Prior to being named managing director 
by Comptroller General Gene Dodaro, she oversaw GAO's reviews 
of aviation and surface transportation's security matters as 
well as Department of Homeland Security management issues. 
Prior to joining GAO, Ms. Berrick held numerous positions at 
the Department of Defense and the U.S. Postal Service.
    Our second witness is Ms. Ann Richards who is the assistant 
inspector general for the Office of Audits within the 
Department of Homeland Security's Office of Inspector General, 
OIG.
    Prior to joining OIG in 2007, Ms. Richards served in the 
Department of the Interior including as the assistant inspector 
general for audits. Ms. Richards also held a number of 
positions with the U.S. Army Audit Agency and Mrs. Richards is 
a CPA in the Commonwealth of Virginia.
    Dr. Paul Stern is the chairman of Claris Capital, LLC, and 
is a member of the Board of Directors of Business Executives 
for National Security. Business Executives for National 
Security is nonpartisan and nonprofit group that supports U.S. 
Government by applying best business practices solutions to 
National security problems.
    Dr. Stern has over 26 years of experience in active 
operating experience and 7 years of private-equity experience. 
Dr. Stern also serves on the board of directors of Whirlpool 
Corporation, Dow Chemical Company, and four of Thayer III's 
portfolio companies.
    Mr. Craig Killough is the vice president of Organization 
Markets at the Project Management Institute, PMI. He is 
responsible for PMI's government and corporate relations and 
regional development.
    Previously he served as director of practitioner products 
responsible for the development and delivery of PMI 
professional and career development programs, products, and 
services.
    Prior to joining PMI, Mr. Killough was a consultant in 
Simulation and Training Technologies. Mr. Killough was the 
executive vice president for global operations with General 
Physics Corporation and vice president for Systems Engineering 
and Licensing with Sigma Energy Services.
    Dr. Henry Willis is the director of the RAND Homeland 
Security and Defense Center and a professor at the Pardee RAND 
graduate school. Dr. Willis has applied risk analysis tools to 
resource allocation and risk-management decisions into areas of 
public health and emergency preparedness, homeland and National 
security policy, energy and environmental policy, and 
transportation planning.
    Dr. Willis' recent research has involved assessing the cost 
and benefits of terrorism security measures like the Western 
Hemisphere Travel Initiative and evaluating the impact of 
public health emergency preparedness grant programs like the 
Cities Readiness Initiative.
    I want to thank all of the panelists for being here today 
and I look forward to your testimony.
    The Chairman will now recognize Ms. Berrick to testify.

 STATEMENT OF CATHLEEN A. BERRICK, MANAGING DIRECTOR, HOMELAND 
 SECURITY AND JUSTICE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Berrick. Good morning, Chairman Duncan, Ranking Member 
Barber, and Ranking Member Thompson and Members of the 
subcommittee.
    I am pleased to be here today to discuss GAO's work 
assessing fragmentation, overlap, and duplication across the 
Department of Homeland Security as well as DHS's efforts to 
strengthen their management functions.
    When DHS was first created back in 2003, GAO recognized 
that it was a significant undertaking creating and integrating 
a department as large and complex as DHS that would take years 
to achieve.
    Since that time, we have issued over 1,300 reports 
assessing different aspects of DHS's programs and operations 
and made over 1,800 recommendations to address issues we 
identified in that work of which 60 percent DHS has 
implemented.
    My testimony today is based on two reports GAO issued 
earlier this year. One mentioned this morning, was our third 
annual report assessing overlap, duplication, and fragmentation 
across the Federal Government. The second report I will discuss 
is GAO's biannual high-risk update in which strengthening DHS 
management functions was designated a high-risk area.
    Since 2011, we have identified 24 areas of fragmentation, 
overlap, and duplication across the Department as well as 
opportunities to achieve cost savings and enhance revenue. 
Taken together, this could result in billions of dollars of 
savings if implemented by the Department.
    For example, increasing the aviation security passenger fee 
collections could increase revenue by $2 billion to $10 billion 
over 5 years over current collections.
    In addition, adjusting the indicator on which FEMA 
principally relies related to major disaster declarations could 
result in significant savings. This indicator was developed in 
1986. It hasn't been adjusted for inflation every year. It also 
hasn't been adjusted to reflect changes and increases in 
personal income on which the indicator is based.
    In the past 12 years there has been about $80 billion that 
has been paid out in Federal disaster declarations. Had that 
indicator been adjusted for inflation, about 25 percent of 
those declarations likely wouldn't have been approved. Had it 
been adjusted for increases in per capita personal income 
another 44 percent may not have been approved.
    Another example, installing in-line baggage screening 
systems could result in net savings of up to $470 million over 
5 years due to decreased personnel costs as installing these 
systems requires less TSOs to operate equipment.
    Further, improving collaboration among field-based 
information-sharing entities, and there are about 268 of these 
entities across the United States, could help reduce overlap, 
duplication, and fragmentation. We looked at eight urban areas 
that have 37 of these entities and we found that 34 of the 37 
overlapped with the functions of another entity.
    In addition to identifying new areas we also assess the 
Department's progress in implementing the recommendations we 
made in the last two annual duplication reports, and some five 
of those recommendations have been addressed, 24 are in 
progress, and 13 have not been addressed. Some of those 
recommendations, as was mentioned, were made to the Department, 
some to the Congress.
    One area not addressed relates to FEMA grants. We reported 
that DHS needs to collect better project-level information so 
that they have visibility over where their grants are being 
awarded.
    We identified numerous opportunities for potential 
duplication and a number of a grant programs. We looked at four 
of the largest grant programs at DHS, which accounted for about 
$20 billion in grants awarded from 2002 to 2011 and identified 
overlap and fragmentation among those programs.
    Regarding GAO's designation of strengthening DHS management 
functions as high-risk, we first designated this area as high-
risk back in 2003 because of the enormity of the effort of 
creating the Department of Homeland Security.
    Since that time, DHS has made significant progress in 
integrating its component agencies to make a functioning 
department, but the one area that we think significant work 
remains is the management of the Department.
    I will give you some examples--by management I am referring 
to acquisition management, IT management, financial management, 
human capital management. Related to IT, DHS developed an IT 
governance structure to provide oversight over its IT 
investment portfolio, which was very positive and consistent 
with best practices; however, that structure only covers about 
20 percent of DHS's IT investments so they need to do more work 
to have oversight over those.
    In addition, we reported that DHS leadership continues to 
invest in major acquisition programs that lack key foundational 
documents that are really essential to managing acquisitions.
    Just to give you an example, we have looked at 71 major 
acquisition programs and we found that 42 of those programs 
exceeded cost and schedule estimates. Sixteen of those 42 
exceeded cost estimates by about $32 billion over a 3-year 
period.
    While DHS has made important progress in these areas more 
work remains related to this high-risk area, and specifically 
we identified 31 actions and outcomes of which DHS agreed with, 
that we believe are important to addressing these management 
issues. Of the 31, 7 have been fully or mostly addressed, 16 
are in progress, and 7 have just been initiated.
    We have on-going work assessing all of these issues and 
would be happy to report on DHS's progress moving forward.
    Mr. Chairman, this concludes my statement. I would be happy 
to respond to questions.
    [The prepared statement of Ms. Berrick follows:]
               Prepared Statement of Cathleen A. Berrick
                             April 26, 2013
                             gao highlights
    Highlights of GAO-13-547T, a testimony before the Subcommittee on 
Oversight and Management Efficiency, Committee on Homeland Security, 
House of Representatives.
Why GAO Did This Study
    Since beginning operations in 2003, DHS has become the third-
largest Federal department, with more than 224,000 employees and an 
annual budget of about $60 billion. Over the past 10 years, DHS has 
implemented key homeland security operations and achieved important 
goals to create and strengthen a foundation to reach its potential. 
Since 2003, GAO has issued more than 1,300 reports and Congressional 
testimonies designed to strengthen DHS's program management, 
performance measurement efforts, and management processes, among other 
things. GAO has reported that overlap and fragmentation among 
Government programs, including those of DHS, can cause potential 
duplication, and reducing it could save billions of tax dollars 
annually and help agencies provide more efficient and effective 
services. Moreover, in 2003, GAO designated implementing and 
transforming DHS as high-risk because it had to transform 22 agencies 
into one department, and failure to address associated risks could have 
serious consequences. This statement addresses: (1) Opportunities for 
DHS to reduce fragmentation, overlap, and duplication in its programs; 
save tax dollars; and enhance revenue, and (2) opportunities for DHS to 
strengthen its management functions.
What GAO Recommends
    While this testimony contains no new recommendations, GAO 
previously made about 1,800 recommendations to DHS designed to 
strengthen its programs and operations. The Department has implemented 
more than 60 percent of them and has actions under way to address 
others.
  department of homeland security.--opportunities exist to strengthen 
    efficiency and effectiveness, achieve cost savings, and improve 
                          management functions
What GAO Found
    Since 2011, GAO has identified 11 areas across the Department of 
Homeland Security (DHS) where fragmentation, overlap, or potential 
duplication exists and 13 areas of opportunity for cost savings or 
enhanced revenue collections. In these reports, GAO has suggested 53 
total actions to the Department and Congress to help strengthen the 
efficiency and effectiveness of DHS operations. In GAO's 2013 annual 
report on Federal programs, agencies, offices, and initiatives that 
have duplicative goals or activities, GAO identified 6 new areas where 
DHS could take actions to address fragmentation, overlap, or potential 
duplication or achieve significant cost savings. For example, GAO found 
that DHS does not have a Department-wide policy defining research and 
development (R&D) or guidance directing components how to report R&D 
activities. Thus, DHS does not know its total annual investment in R&D, 
which limits its ability to oversee components' R&D efforts. In 
particular, GAO identified at least 6 components with R&D activities 
and an additional $255 million in R&D obligations in fiscal year 2011 
by DHS components that was not centrally tracked. GAO suggested that 
DHS develop and implement policies and guidance for defining and 
overseeing R&D at the Department. In addition, GAO reported that by 
reviewing the appropriateness of the Federal cost share the 
Transportation Security Administration (TSA) applies to agreements 
financing airport facility modification projects related to the 
installation of checked baggage screening systems, TSA could, if a 
reduced cost share was deemed appropriate, achieve cost efficiencies of 
up to $300 million by 2030 and be positioned to install a greater 
number of optimal baggage screening systems. GAO has also updated its 
assessments of the progress that DHS and Congress have made in 
addressing the suggested actions from the 2011 and 2012 annual reports. 
As of March 2013, of the 42 actions from these reports, 5 have been 
addressed (12 percent), 24 have been partially addressed (57 percent), 
and the remaining 13 have not been addressed (31 percent). Although DHS 
and Congress have made some progress in addressing the issues that GAO 
has previously identified, additional steps are needed to address the 
remaining areas to achieve associated benefits.
    While challenges remain across its missions, DHS has made 
considerable progress since 2003 in transforming its original component 
agencies into a single department. As a result, in its 2013 biennial 
high-risk update, GAO narrowed the scope of the area and changed its 
focus and name from Implementing and Transforming the Department of 
Homeland Security to Strengthening the Department of Homeland Security 
Management Functions. To more fully address this area, DHS needs to 
further strengthen its acquisition, information technology, and 
financial and human capital management functions. Of the 31 actions and 
outcomes GAO identified as important to addressing this area, DHS has 
fully or mostly addressed 8, partially addressed 16, and initiated 7. 
Moving forward, DHS needs to, for example, validate required 
acquisition documents in a timely manner, and demonstrate measurable 
progress in meeting cost, schedule, and performance metrics for its 
major acquisition programs. In addition, DHS has begun to implement a 
governance structure to improve information technology management 
consistent with best practices, but the structure covers less than 20 
percent of DHS's major information technology investments.
    Chairman Duncan, Ranking Member Barber, and Members of the 
subcommittee: I am pleased to be here today to discuss our work on 
opportunities for the Department of Homeland Security (DHS) to 
eliminate fragmentation, overlap, and duplication in its programs; 
enhance revenue; and improve management functions at the Department.\1\ 
Since beginning operations in 2003, DHS has become the third-largest 
Federal department, with more than 224,000 employees and an annual 
budget of about $60 billion. Over the past 10 years, DHS has 
implemented key homeland security operations and achieved important 
goals to create and strengthen a foundation to reach its potential. 
Since 2003, we have made approximately 1,800 recommendations to DHS 
across more than 1,300 reports and Congressional testimonies designed 
to strengthen program management, performance-measurement efforts, and 
management processes, and enhance coordination and information sharing, 
among other things. DHS has implemented more than 60 percent of these 
recommendations and has actions under way to address others. However, 
the Department has more to do to ensure that it conducts its missions 
efficiently and effectively while simultaneously preparing to address 
future challenges that face the Department and the Nation.
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    \1\ Fragmentation refers to those circumstances in which more than 
one Federal agency (or more than one organization within an agency) is 
involved in the same broad area of National need and opportunities 
exist to improve service delivery. Overlap occurs when multiple 
agencies or programs have similar goals, engage in similar activities 
or strategies to achieve them, or target similar beneficiaries. 
Duplication occurs when two or more agencies or programs are engaged in 
the same activities or provide the same services to the same 
beneficiaries.
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    On April 9, 2013, we issued our third report in response to the 
statutory requirement that we identify and report annually on Federal 
programs, agencies, offices, and initiatives that have duplicative 
goals or activities.\2\ Since 2011, we have identified 162 areas across 
the Federal Government where Congress or Executive branch agencies, 
including DHS, could take action to reduce fragmentation, overlap, and 
duplication or achieve cost savings to address the rapidly building 
fiscal pressures facing our Nation.\3\ We reported that fragmentation 
among Government programs or activities can be a harbinger of potential 
overlap or duplication. Reducing or eliminating fragmentation, overlap, 
or duplication could potentially save billions of tax dollars annually 
and help agencies provide more efficient and effective services.
---------------------------------------------------------------------------
    \2\ Pub. L. No. 111-139,  21, 124 Stat. 8, 29-30 (2010), 31 U.S.C. 
 712 note.
    \3\ GAO, Opportunities to Reduce Potential Duplication in 
Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-
318SP (Washington, DC: Mar. 1, 2011); 2012 Annual Report: Opportunities 
to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and 
Enhance Revenue, GAO-12-342SP (Washington, DC: Feb. 28, 2012); and 2013 
Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and 
Duplication and Achieve Other Financial Benefits, GAO-13-279SP 
(Washington, DC: Apr. 9, 2013).
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    Moreover, in February 2013, we reported on DHS's efforts to address 
the high-risk area of Strengthening the Department of Homeland Security 
Management Functions.\4\ We first designated this area as high-risk in 
2003 because DHS had to consolidate 22 agencies--several with major 
management challenges--into one Department. Further, failure to 
effectively address DHS's management and mission risks could have 
serious consequences for U.S. National and economic security.
---------------------------------------------------------------------------
    \4\ GAO, High-Risk Series: An Update, GAO-13-283 (Washington, DC: 
February 2013).
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    My statement today is based on these reports and addresses: (1) 
Opportunities for DHS to reduce fragmentation, overlap, and duplication 
in its programs; save tax dollars; and enhance revenue, and (2) 
opportunities for DHS to strengthen its management functions. For these 
past reports, among other things, we analyzed DHS documents, reviewed 
and updated our past reports issued since DHS began its operations in 
March 2003, and, interviewed DHS officials. More detailed information 
on the scope and methodology of our previous work can be found within 
each specific report. We conducted this work in accordance with 
generally accepted Government auditing standards.
 dhs can strengthen the efficiency and effectiveness of its operations 
   and achieve cost savings by reducing fragmented, overlapping, or 
                   potentially duplicative activities
Areas of Fragmentation, Overlap, and Potential Duplication at DHS
    Since 2011, we have identified 11 areas across DHS where 
fragmentation, overlap, or potential duplication exists, and suggested 
24 actions to the Department and Congress to help strengthen the 
efficiency and effectiveness of DHS operations.\5\ In some cases, there 
is sufficient information available to show that if actions are taken 
to address individual issues, significant financial benefits may be 
realized. In other cases, precise estimates of the extent of potential 
unnecessary duplication, and the cost savings that can be achieved by 
eliminating any such duplication, are difficult to specify in advance 
of Congressional and Executive branch decision making. However, given 
the range of areas we identified at DHS and the magnitude of many of 
the programs, the cost savings associated with addressing these issues 
could be significant.
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    \5\ In many cases, the existence of fragmentation, overlap, or 
duplication can be difficult to determine precisely because of a lack 
of data on programs and activities. Where information was not available 
that would have provided conclusive evidence of fragmentation, overlap, 
or duplication, we often refer to potential unnecessary duplication.
---------------------------------------------------------------------------
    In April 2013, we identified 2 new areas where DHS could take 
actions to address fragmentation, overlap, or potential duplication.\6\ 
First, we found that DHS does not have a Department-wide policy 
defining research and development (R&D) or guidance directing how 
components are to report R&D activities. As a result, the Department 
does not know its total annual investment in R&D, a fact that limits 
DHS's ability to oversee components' R&D efforts and align them with 
agency-wide R&D goals and priorities. DHS's Science and Technology 
Directorate, Domestic Nuclear Detection Office, and the U.S. Coast 
Guard--the only DHS components that report R&D-related budget authority 
to the Office of Management and Budget (OMB) as part of the budget 
process--reported $568 million in fiscal year 2011 R&D budget 
authority. However, we identified at least 6 components with R&D 
activities and an additional $255 million in R&D obligations in fiscal 
year 2011 by other DHS components that were not reported to OMB in the 
budget process. To address this issue, we suggested that DHS develop 
and implement policies and guidance for defining and overseeing R&D at 
the Department. Second, we reported that the fragmentation of field-
based information sharing can be disadvantageous if activities are 
uncoordinated, as well as if opportunities to leverage resources across 
entities are not fully exploited. We suggested that DHS and other 
relevant agencies develop a mechanism that will allow them to hold 
field-based information-sharing entities accountable for coordinating 
with each other and monitor and evaluate the coordination results 
achieved, as well as identify characteristics of entities and assess 
specific geographic areas in which practices that could enhance 
coordination and reduce unnecessary overlap could be adopted. DHS 
generally agreed with our suggestions and is reported taking steps to 
address them. Moving forward, we will monitor DHS's progress to address 
these actions.
---------------------------------------------------------------------------
    \6\ GAO-13-279SP.
---------------------------------------------------------------------------
    Concurrent with the release of our 2013 annual report, we updated 
our assessments of the progress that DHS has made in addressing the 
actions we suggested in our 2011 and 2012 annual reports.\7\ Table 1 
outlines the 2011-2012 DHS-related areas in which we identified 
fragmentation, overlap, or potential duplication, and highlights DHS's 
and Congress's progress in addressing them.
---------------------------------------------------------------------------
    \7\ An area may comprise a single or multiple suggested actions. We 
evaluated the progress of those areas identified in our March 2011 and 
February 2012 reports by determining an ``overall assessment'' rating 
for each area based on the individual rating of each action with the 
area. For Congressional actions, we applied the following criteria: 
``Addressed'' means relevant legislation has been enacted; ``partially 
addressed'' means a relevant bill has passed a committee, the House of 
Representatives, or the Senate, or relevant legislation only addressed 
part of the action needed; and ``not addressed'' means a bill may have 
been introduced but did not pass out of a committee, or no relevant 
legislation has been introduced. For Executive branch actions, 
``addressed'' means implementation of the action needed has been 
completed; ``partially addressed'' means a response to the action 
needed is in development, but not yet completed; and ``not addressed'' 
means that minimal or no progress has been made toward implementing the 
action needed. 
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    In our March 2011 and February 2012 reports, in particular, we 
suggested that DHS or Congress take 21 actions to address the areas of 
overlap or potential duplication that we found. Of these 21 actions, 2 
(approximately 10 percent) have been addressed, 13 (approximately 62 
percent) have been partially addressed, and the remaining 6 
(approximately 29 percent) have not been addressed.\8\ For example, to 
address the potential for overlap among three information-sharing 
mechanisms that DHS funds and uses to communicate security-related 
information with public transit agencies, in March 2011, we suggested 
that DHS could identify and implement ways to more efficiently share 
security-related information by assessing the various mechanisms 
available to public transit agencies.\9\ We assessed this action as 
partially addressed because TSA has taken steps to streamline 
information sharing with public transit agencies, but the agency 
continues to maintain various mechanisms to share such information. In 
March 2011, we also found that TSA's security assessments for hazardous 
material trucking companies overlapped with efforts conducted by the 
Department of Transportation's (DOT) Federal Motor Carrier Safety 
Administration (FMCSA), and as a result, Government resources were not 
being used effectively. After we discussed this overlap with TSA in 
January 2011, agency officials stated that, moving forward, they intend 
to only conduct reviews on trucking companies that are not covered by 
FMCSA's program, an action that, if implemented as intended, we 
projected could save more than $1 million over the next 5 years. We 
also suggested that TSA and FMCSA could share each other's schedules 
for conducting future security reviews, and avoid scheduling reviews on 
hazardous material trucking companies that have recently received, or 
are scheduled to receive, a review from the other agency. We assessed 
this action as addressed because in August 2011, TSA reported that it 
had discontinued conducting security reviews on trucking companies that 
are covered by the FMCSA program. Discontinuing such reviews should 
eliminate the short-term overlap between TSA's and FMCSA's reviews of 
hazardous material trucking companies.
---------------------------------------------------------------------------
    \8\ Percentages do not add to 100 percent because of rounding.
    \9\ DHS could not provide us with a reliable estimate of the 
potential cost savings resulting from consolidating these three 
mechanisms.
---------------------------------------------------------------------------
    Although the Executive branch and Congress have made some progress 
in addressing the issues that we have previously identified, additional 
steps are needed to address the remaining areas and achieve associated 
benefits. For example, to eliminate potential duplicating efforts of 
interagency forums in securing the Northern Border, in March 2011, we 
reported that DHS should provide guidance to and oversight of 
interagency forums to prevent duplication of efforts and help 
effectively utilize personnel resources to strengthen coordination 
efforts along the Northern Border.\10\ Further, the four DHS grant 
programs that we reported on in February 2012--the State Homeland 
Security Program, the Urban Areas Security Initiative, the Port 
Security Grant Program, and the Transit Security Grant Program--have 
multiple areas of overlap and can be sources of potential unnecessary 
duplication. These grant programs, which FEMA used to allocate about 
$20.3 billion to grant recipients from fiscal years 2002 through 2011, 
have similar goals and fund similar activities, such as equipment and 
training, in overlapping jurisdictions. To address these areas of 
overlap, we reported that Congress may want to consider requiring DHS 
to report on the results of its efforts to identify and prevent 
unnecessary duplication within and across these grant programs, and 
consider these results when making future funding decisions for these 
programs. Such reporting could help ensure that both Congress and FEMA 
steer scarce resources to homeland security needs in the most 
efficient, cost-effective way possible.\11\ See appendix I, table 4, 
for a summary of the fragmentation, overlap, and duplication areas and 
actions we identified in our 2011-2013 annual reports that are relevant 
to DHS.
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    \10\ As of March 2013, DHS had not taken steps to determine the 
benefits of participating in the interagency forums or identified the 
costs incurred by all partners participating in each forum.
    \11\ The President's fiscal year 2014 budget request proposes 
consolidating State and local preparedness grant programs (excluding 
Emergency Management Performance Grants and fire grants) into the 
National Preparedness Grant Program. If approved, and depending on its 
final form and execution, the consolidated National Preparedness Grant 
Program could help reduce redundancies and mitigate the potential for 
unnecessary duplication.
---------------------------------------------------------------------------
Opportunities for Cost-Saving and Revenue Enhancements at DHS
    Our 2011-2013 annual reports also identified 13 areas where DHS or 
Congress should consider taking 29 actions to reduce the cost of 
operations or enhance revenue collection for the Department of the 
Treasury.\12\ Most recently, in April 2013, we identified 4 cost-
savings and revenue enhancement areas related to DHS. Table 2 provides 
a summary of the 2011-2012 DHS-related areas in which we identified 
opportunities for cost savings or revenue enhancement, as well the 
status of efforts to address these areas.
---------------------------------------------------------------------------
    \12\ In some cases, there is sufficient information to estimate 
potential savings or other benefits if actions are taken to address 
individual issues. In other cases, estimates of cost savings or other 
benefits would depend upon what Congressional and Executive branch 
decisions were made, including how certain our recommendations are 
implemented. See appendix I, table 5, for a summary of cost savings and 
revenue enhancement areas and actions we identified in our 2011-2013 
annual reports that are relevant to DHS.

 TABLE 2.--COST SAVINGS AND REVENUE ENHANCEMENT OPPORTUNITIES IDENTIFIED
                        IN OUR 2013 ANNUAL REPORT
------------------------------------------------------------------------
          Annual  Report                    Areas Identified \1\
------------------------------------------------------------------------
2013..............................  Agricultural Quarantine Inspection
                                     Fees (Area 18).--The United States
                                     Department of Agriculture's Animal
                                     and Plant Health Inspection Service
                                     could have achieved as much as $325
                                     million in savings (based on fiscal
                                     year 2011 data, as reported in
                                     GAO's March 2013 report) by more
                                     fully aligning fees with program
                                     costs; although the savings would
                                     be recurring, the amount would
                                     depend on the cost-collections gap
                                     in a given fiscal year and would
                                     result in a reduced reliance on
                                     U.S. Customs and Border
                                     Protection's annual Salaries and
                                     Expenses appropriations used for
                                     agricultural inspection services.
2013..............................  Checked Baggage Screening (Area
                                     28).--By reviewing the
                                     appropriateness of the Federal cost
                                     share the Transportation Security
                                     Administration applies to
                                     agreements financing airport
                                     facility modification projects
                                     related to the installation of
                                     checked baggage screening systems,
                                     the Transportation Security
                                     Administration could, if a reduced
                                     cost share was deemed appropriate,
                                     achieve cost efficiencies of up to
                                     $300 million by 2030 and be
                                     positioned to install a greater
                                     number of optimal baggage screening
                                     systems than it currently
                                     anticipates.
2013..............................  Cloud Computing (Area 29).--Better
                                     planning of cloud-based computing
                                     solutions provides opportunity for
                                     potential savings of millions of
                                     dollars.
2013..............................  Information Technology Operations
                                     and Maintenance (Area 30).--
                                     Strengthening oversight of key
                                     Federal agencies' major information
                                     technology investments in
                                     operations and maintenance provides
                                     opportunity for savings on billions
                                     in information technology
                                     investments.
------------------------------------------------------------------------
Source: GAO.
\1\ The area numbers indicate the number assigned to the area when it
  was originally reported.

    In addition, in April 2013 we also reported on the steps that DHS 
and Congress have taken to address the cost savings and revenue 
enhancement areas identified in our 2011 and 2012 annual reports. Table 
3 provides a summary of the 2011-2012 DHS-related areas in which we 
identified opportunities for cost savings or revenue enhancement, as 
well the status of efforts to address these areas. 


    Of the 21 related actions we suggested that DHS or Congress take in 
our March 2011 and February 2012 reports to either reduce the cost of 
Government operations or enhance revenue collection, as of March 2013, 
3 (about 14 percent) have been addressed, 11 (about 52 percent) have 
been partially addressed, and 7 (about 33 percent) have not been 
addressed.\13\ For example, in February 2012, we reported that to 
increase the likelihood of successful implementation of the Arizona 
Border Surveillance Technology Plan, minimize performance risks, and 
help justify program funding, the Commissioner of CBP should update the 
agency's cost estimate for the plan using best practices. This year, we 
assessed this action as partially addressed because CBP initiated 
action to update its cost estimate, using best practices, for the plan 
by providing revised cost estimates in February and March 2012 for the 
plan's two largest projects. However, CBP has not independently 
verified its life-cycle cost estimates for these projects with 
independent cost estimates and reconciled any differences with each 
system's respective life-cycle cost estimate, consistent with best 
practices. Such action would help CBP better ensure the reliability of 
each system's cost estimate. Further, in March 2011, we stated that 
Congress may wish to consider limiting program funding pending receipt 
of an independent assessment of TSA's Screening of Passengers by 
Observation Techniques (SPOT) program. This year, we assessed this 
action as addressed because Congress froze the program funds at the 
fiscal year 2010 level and funded less than half of TSA's fiscal year 
2012 request for full-time behavior detection officers.
---------------------------------------------------------------------------
    \13\ Percentages do not add to 100 percent because of rounding. In 
assessing progress on the areas we identified in our 2011 annual report 
for this year's report, we combined two areas related to the Department 
of Homeland Security's management of acquisitions (Areas 75 and 76) 
into one area.
---------------------------------------------------------------------------
    Although DHS and Congress have made some progress in addressing the 
issues that we have previously identified that may produce cost savings 
or revenue enhancements, additional steps are needed. For example, in 
February 2012, we reported that FEMA should develop and implement a 
methodology that provides a more comprehensive assessment of a 
jurisdiction's capability to respond to and recover from a disaster 
without Federal assistance. As of March 2013, FEMA had not addressed 
this action. In addition, in the 2012 report, we suggested that 
Congress, working with the administrator of TSA, may wish to consider 
increasing the passenger aviation security fee according to one of many 
options, including but not limited to the President's Deficit Reduction 
Plan option ($7.50 per one-way trip by 2017) or the Congressional 
Budget Office, President's Debt Commission, and House Budget Committee 
options ($5 per one-way trip). These options could increase fee 
collections over existing levels from about $2 billion to $10 billion 
over 5 years. However, as of March 2013, Congress had not passed 
legislation to increase the passenger security fee.\14\ For additional 
information on our assessment of DHS's and Congress's efforts to 
address our previously reported actions, see GAO's Action Tracker.\15\
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    \14\ In the President's fiscal year 2014 budget request, TSA 
proposes to replace the current ``per-enplanement'' fee structure with 
a ``per one-way trip'' fee structure so that passengers pay the fee 
only one time when traveling to their destination. It also removes the 
current statutory fee limit and replaces it with a statutory fee 
minimum of $5.00 in 2014, with annual incremental increases of 50 cents 
from 2015 to 2019, resulting in a fee of $7.50 per one-way trip in 2019 
and thereafter. According to TSA, the proposed fee would increase 
collections by an estimated $25.9 billion over 10 years. Of this 
amount, $7.9 billion will be applied to increase offsets to the 
discretionary costs of aviation security and the remaining $18 billion 
will be treated a mandatory savings and deposited in the general fund 
for deficit reduction. This proposal presents an option that, 
consistent with our suggested action, Congress may consider in 
determining whether to take legislative action to change the fee.
    \15\ GAO's Action Tracker is a publicly accessible website of the 
162 areas and approximately 380 suggested actions presented in our 
2011, 2012, and 2013 reports. GAO's Action Tracker includes progress 
updates and assessments of Legislative and Executive branch actions 
needed. We will add areas and suggested actions identified in future 
reports to GAO's Action Tracker and periodically update the status of 
all identified areas and activities.
---------------------------------------------------------------------------
            dhs needs to strengthen its management functions
    Following its establishment in 2003, DHS focused its efforts 
primarily on implementing its various missions to meet pressing 
homeland security needs and threats, and less on creating and 
integrating a fully and effectively functioning Department. As the 
Department matured, it has put into place management policies and 
processes and made a range of other enhancements to its management 
functions, which include acquisition, information technology, 
financial, and human capital management. However, DHS has not always 
effectively executed or integrated these functions.
    The Department has made considerable progress in transforming its 
original component agencies into a single Cabinet-level Department and 
positioning itself to achieve its full potential; however, challenges 
remain for DHS to address across its range of missions. DHS has also 
made important strides in strengthening the Department's management 
functions and in integrating those functions across the Department. As 
a result, in February 2013, we narrowed the scope of the high-risk area 
and changed the focus and name from Implementing and Transforming the 
Department of Homeland Security to Strengthening the Department of 
Homeland Security Management Functions.\16\ Of the 31 actions and 
outcomes GAO identified as important to addressing this area, DHS has 
fully or mostly addressed 8, partially addressed 16, and initiated 7. 
Moving forward, continued progress is needed in order to mitigate the 
risks that management weaknesses pose to mission accomplishment and the 
efficient and effective use of the Department's resources. For example:
---------------------------------------------------------------------------
    \16\ GAO-13-283.
---------------------------------------------------------------------------
   Acquisition management.--Although DHS has made progress in 
        strengthening its acquisition function, most of DHS's major 
        acquisition programs continue to cost more than expected, take 
        longer to deploy than planned, or deliver less capability than 
        promised. We identified 42 programs that experienced cost 
        growth, schedule slips, or both, with 16 of the programs' costs 
        increasing from a total of $19.7 billion in 2008 to $52.2 
        billion in 2011--an aggregate increase of 166 percent. We 
        reported in September 2012 that DHS leadership has authorized 
        and continued to invest in major acquisition programs even 
        though the vast majority of those programs lack foundational 
        documents demonstrating the knowledge needed to help manage 
        risks and measure performance.\17\ We recommended that DHS 
        modify acquisition policy to better reflect key program and 
        portfolio management practices and ensure acquisition programs 
        fully comply with DHS acquisition policy. DHS concurred with 
        our recommendations and reported taking actions to address some 
        of them. Moving forward, DHS needs to, for example, validate 
        required acquisition documents in a timely manner, and 
        demonstrate measurable progress in meeting cost, schedule, and 
        performance metrics for its major acquisition programs.
---------------------------------------------------------------------------
    \17\ GAO, Homeland Security: DHS Requires More Disciplined 
Investment Management to Help Meet Mission Needs, GAO-12-833, 
(Washington, DC: Sept. 18, 2012).
---------------------------------------------------------------------------
   Information technology management.--DHS has defined and 
        begun to implement a vision for a tiered governance structure 
        intended to improve information technology (IT) program and 
        portfolio management, which is generally consistent with best 
        practices. However, the governance structure covers less than 
        20 percent (about 16 of 80) of DHS's major IT investments and 3 
        of its 13 portfolios, and the Department has not yet finalized 
        the policies and procedures associated with this structure. In 
        July 2012, we recommended that DHS finalize the policies and 
        procedures and continue to implement the structure. DHS agreed 
        with these recommendations and estimated it would address them 
        by September 2013.\18\
---------------------------------------------------------------------------
    \18\ GAO, Information Technology: DHS Needs to Further Define and 
Implement Its New Governance Process, GAO-12-818 (Washington, DC: July 
25, 2012).
---------------------------------------------------------------------------
   Financial management.--DHS has, among other things, received 
        a qualified audit opinion on its fiscal year 2012 financial 
        statements for the first time since the Department's creation. 
        DHS is working to resolve the audit qualification to obtain an 
        unqualified opinion for fiscal year 2013. However, DHS 
        components are currently in the early planning stages of their 
        financial systems modernization efforts, and until these 
        efforts are complete, their current systems will continue to 
        inadequately support effective financial management, in part 
        because of their lack of substantial compliance with key 
        Federal financial management requirements. Without sound 
        controls and systems, DHS faces challenges in obtaining and 
        sustaining audit opinions on its financial statement and 
        internal controls over financial reporting, as well as ensuring 
        its financial management systems generate reliable, useful, and 
        timely information for day-to-day decision making.
   Human capital management.--In December 2012, we identified 
        several factors that have hampered DHS's strategic workforce 
        planning efforts and recommended, among other things, that DHS 
        identify and document additional performance measures to assess 
        workforce planning efforts.\19\ DHS agreed with these 
        recommendations and stated that it plans to take actions to 
        address them. In addition, DHS has made efforts to improve 
        employee morale, such as taking actions to determine the root 
        causes of morale problems. Despite these efforts, however, 
        Federal surveys have consistently found that DHS employees are 
        less satisfied with their jobs than the Government-wide 
        average. In September 2012, we recommended, among other things, 
        that DHS improve its root cause analysis efforts of morale 
        issues. DHS agreed with these recommendations and noted actions 
        it plans to take to address them.\20\
---------------------------------------------------------------------------
    \19\ GAO, DHS Strategic Workforce Planning: Oversight of 
Department-wide Efforts Should Be Strengthened, GAO-13-65 (Washington, 
DC: Dec. 3, 2012).
    \20\ GAO, Department of Homeland Security: Taking Further Action to 
Better Determine Causes of Morale Problems Would Assist in Targeting 
Action Plans, GAO-12-940 (Washington, DC: Sept. 28, 2012).
---------------------------------------------------------------------------
    In conclusion, given DHS's significant leadership responsibilities 
in securing the homeland, it is critical that the Department's programs 
and activities are operating as efficiently and effectively as 
possible; that they are sustainable; and that they continue to mature, 
evolve, and adapt to address pressing security needs. Since it began 
operations in 2003, DHS has implemented key homeland security 
operations and achieved important goals and milestones in many areas. 
These accomplishments are especially noteworthy given that the 
Department has had to work to transform itself into a fully functioning 
Cabinet department while implementing its missions. However, our work 
has shown that DHS can take actions to reduce fragmentation, overlap, 
and unnecessary duplication to improve the efficiency of its operations 
and achieve cost savings in several areas. Further, DHS has taken steps 
to strengthen its management functions and integrate them across the 
Department; however, continued progress is needed to mitigate the risks 
that management weaknesses pose to mission accomplishment and the 
efficient and effective use of the Department's resources. DHS has 
indeed made significant strides in protecting the homeland, but has yet 
to reach its full potential.
    Chairman Duncan, Ranking Member Barber, and Members of the 
subcommittee, this concludes my prepared statement. I would be pleased 
to respond to any questions that Members of the subcommittee may have.
 appendix i.--areas and actions identified in 2011-2013 annual reports 
             related to the department of homeland security
    This enclosure presents a summary of the areas and actions we 
identified in our 2011-2013 annual reports that are relevant to the 
Department of Homeland Security (DHS).\21\ It also includes our 
assessment of the overall progress made in each of the areas and the 
progress made on each action that we identified in our 2011 and 2012 
annual reports in which Congress and DHS could take actions to reduce 
or eliminate fragmentation, overlap, and potential duplication or 
achieve other potential financial benefits. As of April 26, 2013, we 
have not assessed DHS's progress in addressing the relevant 2013 areas. 
Table 4 presents our assessment of the overall progress made in 
implementing the actions needed in the areas related to fragmentation, 
overlap, or duplication. Table 5 presents our assessment of the overall 
progress made in implementing the actions needed in the areas related 
to cost savings or revenue enhancement.
---------------------------------------------------------------------------
    \21\ GAO, Opportunities to Reduce Potential Duplication in 
Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-
318SP (Washington, DC: Mar. 1, 2011); 2012 Annual Report: Opportunities 
to Reduce Duplication, Overlap, and Fragmentation, Achieve Savings, and 
Enhance Revenue, GAO-12-342SP (Washington, DC: Feb. 28, 2012); and 2013 
Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and 
Duplication and Achieve Other Financial Benefits, GAO-13-279SP 
(Washington, DC: Apr. 9, 2013). 
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Mr. Duncan. Thank you, Ms. Berrick.
    The Chairman will now recognize Ms. Richards for her 
testimony.

STATEMENT OF ANNE L. RICHARDS, ASSISTANT INSPECTOR GENERAL FOR 
    AUDITS, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF 
                       HOMELAND SECURITY

    Ms. Richards. Good morning Chairman Duncan, Ranking Member 
Barber, Ranking Member Thompson, and Members of the 
subcommittee. Thank you for inviting me to testify today.
    In the 10 years since its establishment, the Department of 
Homeland Security has made progress in addressing the 
challenges it faces to accomplish its mission and in laying the 
groundwork to effectively manage its resources; however, to 
successfully fulfill its vital mission to protect and secure 
our Nation, DHS must continue to overcome challenges that 
hinder its efforts.
    Our recommendations are designed to assist the Department 
and its components in addressing and overcoming their most 
persistent challenges. In the past 10 years we had issued about 
8,000 recommendations of which about 15 percent remain open. 
Those open recommendations identified a total monetary effect 
of about $650 million.
    We believe that by implementing our recommendations, DHS 
will continue to improve the effectiveness inefficiencies of 
its operations. My testimony today will address some of the 
highest priorities, short- and long-term open, that is to say 
on implemented, recommendations that we have made to DHS. These 
recommendations address the Department's critical mission areas 
of the border security and disaster preparedness and response 
as well as accountability issues related to financial and IT 
management.
    In an effort to be mindful of your time, I would like to 
focus on just a few of the recommendations included in my full 
statement. These recommendations addressed interoperable 
communications, financial management, and FEMA's process for 
tracking public assistance insurance requirements.
    We reported in November 2012, that although DHS established 
an internal goal of developing interoperable radio 
communications and identified common channels to do so, it had 
not achieved that goal. Only one out of 479 radio users we 
reviewed could access and communicate using the specified 
common channel.
    Only 20 percent of radios that we tested contained all the 
correct program settings for this common channel. We 
recommended that DHS establish a robust governance structure to 
ensure that the components achieve interoperability as well as 
develop and disseminate policies and procedures to standardize 
Department-wide radio activities.
    Also in fiscal year 2012, DHS produced auditable financial 
statements and obtained a qualified opinion on those 
statements, but challenges remain in financial management 
including the need to improve and integrate the Department's 
financial management systems.
    We also recommended that DHS continue its financial systems 
modernization initiative and improve the Department's financial 
management systems. This is an example of a recommendation that 
will take significant time and effort to implement.
    The Department has worked to improve its financial systems 
for several years and is currently pursuing a strategy to 
improve the financial systems at individual components such as 
the Coast Guard and FEMA.
    Our December 2011 report of FEMA's process for tracking 
public assistance insurance requirements included 
recommendations to help resolve long-standing insurance-related 
issues.
    The Stafford Act encourages State or local governments to 
protect themselves by obtaining insurance to supplement or 
replace Federal Government assistance.
    To receive public assistant grant funding and be eligible 
for funding in future disasters, the act requires applicants to 
obtain and maintain insurance on damaged insurable facilities; 
however FEMA's public assistance program includes disincentives 
for applicants to carry this insurance.
    For example, the program pays for building repair following 
a first disaster, which reduces the incentive for building 
owners to purchase insurance if they had not previously 
received a disaster assistance.
    In addition, FEMA reimburses deductible amounts in 
insurance policies regardless of the amount of the deductible, 
which encourages high deductibles.
    In our December 2011 report we recommended that FEMA 
complete the rulemaking process begun in 2000 and issue a final 
rule that resolves the long-standing issues with public 
assistance insurance regulations including those related to 
deductibles and self-insurance.
    The Office of Inspector General continue to analyze the 
Department's programs and practices to identify those that they 
need improvement, determine how DHS and its components can 
address deficiencies and weaknesses, and recommend appropriate 
solutions to strengthen the Department.
    Mr. Chairman, this concludes my prepared statement. I 
welcome the opportunity to address any questions you might have 
on our efforts to improve the effectiveness of DHS. Thank you.
    [The prepared statement of Ms. Richards follows:]
                 Prepared Statement of Anne L. Richards
                             April 26, 2013
    Chairman Duncan, Ranking Member Barber, and Members of the 
subcommittee, thank you for inviting me here today to discuss cutting 
duplication and wasteful spending, and implementing private-sector best 
practices and watchdog recommendations at the Department of Homeland 
Security (DHS).
    My testimony today will address some of our high-priority short- 
and long-term open recommendations we have made to DHS, which were 
included in reports issued between December 2011 and December 2012.
    In the 10 years since its establishment, DHS has matured and made 
progress in addressing challenges to accomplishing its mission, and it 
has laid the groundwork to manage its resources effectively. However, 
to fulfill its vital mission of protecting and securing our Nation 
successfully, the Department must continue to overcome challenges that 
hinder its efforts. The high-priority open recommendations from the 
reports discussed below illustrate our efforts to assist DHS and its 
components in addressing and overcoming the most persistent challenges 
they face. We believe that by implementing these recommendations, DHS 
will continue to improve the effectiveness and efficiency of its 
operations and reduce the potential for waste and duplication of 
effort.
                               background
    Since DHS-OIG's inception we have made over 8,000 recommendations 
to the Department and its components identifying over $2.6 billion in 
questioned costs, unsupported costs, or funds that could be put to 
better use. Approximately 15% of these recommendations remain open, 
representing about $650 million.
    Our December 2012 report, Major Management Challenges Facing the 
Department of Homeland Security--Revised, summarized and assessed the 
Department's progress in addressing its most serious management 
challenges. We grouped these challenges into the mission areas of 
intelligence, transportation security, border security, infrastructure 
protection, and disaster preparedness and response; and accountability 
issues of acquisition management, financial management, IT management, 
grants management, employee accountability and integrity, and 
cybersecurity.
                            border security
    Our report, CBP's Use of Unmanned Aircraft Systems in the Nation's 
Border Security (OIG-12-85), issued in May 2012, covered our audit of 
U.S. Customs and Border Protection's (CBP) efforts to establish a 
program for its unmanned aircraft systems (UAS). In this report, we 
made a recommendation to improve CBP's UAS program planning, which is 
still open and considered a high-priority short-term recommendation. In 
November 2012, we issued a report, DHS' Oversight of Interoperable 
Communications (OIG-13-06), which includes a high-priority, short-term 
open recommendation that DHS establish policies and procedures to 
standardize radio communications.
CBP's Program for Unmanned Aircraft Systems
    CBP's Office of Air and Marine (OAM) is responsible for protecting 
the American people and the Nation's critical infrastructure through 
the coordinated use of integrated air and marine forces. Air and marine 
forces are used to detect, interdict, and prevent acts of terrorism and 
the unlawful movement of people, illegal drugs, and other contraband 
toward or across U.S. borders. UASs provide command, control, 
communication, intelligence, surveillance, and reconnaissance 
capability to complement crewed aircraft and watercraft, and ground 
interdiction agents.
    After the pilot of the UAS program, Congress appropriated more than 
$240 million to establish the program within CBP. During our 2012 
audit, CBP stated it had expended $152.3 million to purchase nine 
unmanned aircraft and related equipment and, at that time, had seven 
operational aircraft. After our audit, in late 2011, CBP received two 
additional aircraft and was awaiting delivery of a tenth aircraft 
purchased with fiscal year 2011 funds. Each aircraft system cost 
approximately $18 million.
    We reported that CBP had not adequately planned resources needed to 
support its current unmanned aircraft inventory. Although CBP developed 
plans to use the unmanned aircraft's capabilities to fulfill OAM's 
mission, its Concept of Operations planning document did not 
sufficiently address processes: (1) To ensure that required operational 
equipment, such as ground control stations and ground support 
equipment, was provided for each launch and recovery site; (2) for 
stakeholders to submit unmanned aircraft mission requests; (3) to 
determine how mission requests would be prioritized; and (4) to obtain 
reimbursements for missions flown on stakeholders' behalf. With this 
approach, CBP risked having invested substantial resources in a program 
that underutilized assets and limited its ability to achieve OAM 
mission goals.
    Because UAS is critical to protecting the American people and our 
infrastructure, CBP needed to improve its planning to address the UAS 
program's level of operation, funding, and resource requirements, along 
with stakeholder needs. Thus, we recommended that CBP analyze 
requirements and develop plans to achieve the UAS mission availability 
objective and acquire funding to provide necessary operations, 
maintenance, and equipment.
DHS' Oversight of Interoperable Communications
    DHS includes a network of organizations that work together to 
prevent and respond to terrorist attacks, other threats, and natural 
disasters. Such collaboration requires that DHS components establish 
effective communication among external and internal partners during 
operations. DHS established an internal goal of developing 
interoperable radio communications and identified common channels. To 
meet communications requirements, DHS components invested about $430 
million in equipment, infrastructure, and maintenance. Although DHS 
created policies, guidance, and templates to aid in achieving 
interoperability and provided more than $18 million in assistance to 
State and local agencies, full interoperability remains a distant goal, 
according to a 2012 Government Accountability Office report.\1\
---------------------------------------------------------------------------
    \1\ Emergency Communications--Various Challenges Likely to Slow 
Implementation of a Public Safety Broadband Network (GAO-12-343, 
February 2012).
---------------------------------------------------------------------------
    In our November 2012 report we noted that, although DHS had 
established a goal for interoperability and common radio channels, only 
1 of 479 radio users we reviewed could access and communicate using the 
specified channel. Furthermore, only 78 of 382 or 20 percent of radios 
that we tested contained all the correct program settings, including 
the name, for the common DHS channel. Additionally, DHS did not 
establish an effective governing structure with authority and 
responsibility to oversee achievement of Department-wide 
interoperability. Without an authoritative governing structure to 
oversee emergency communications, DHS had limited interoperability 
policies and procedures, and the components did not inform radio users 
of DHS-developed guidance.
    Because of this limited progress in interoperability, personnel 
could not rely on interoperable communications during daily operations, 
planned events, and emergencies. We recommended that DHS create a 
structure with the necessary authority to ensure that the components 
achieve interoperability and to develop and disseminate policies and 
procedures to standardize Department-wide radio activities, including 
program settings, such as naming conventions, to ensure 
interoperability.
                   disaster preparedness and response
    Our December 2011 report, FEMA's Process for Tracking Public 
Assistance Insurance Requirements (OIG-12-18), includes a high-
priority, long-term recommendation to help resolve long-standing 
insurance-related issues. In January 2012, we issued a report related 
to Federal Emergency Management Agency's (FEMA) response to Hurricane 
Katrina, Efforts to Expedite Disaster Recovery in Louisiana (OIG-12-
30), in which we made a short-term and a long-term recommendation, both 
related to closing out Public Assistance (PA) projects and both of 
which we consider high-priority and both are open.
FEMA's Process for Tracking Public Assistance Insurance Requirements
    FEMA's PA grants totaled more than $10 billion for all disasters 
declared between 2007 and 2010. Of that amount, the component provided 
$1.3 billion for buildings, contents, and equipment owned by State, 
Tribal, and local governments, as well as by private non-profit 
organizations. Since fiscal year 2009, we have issued 19 financial 
assistance grant reports that included findings pertaining to PA 
insurance requirements, which involved duplicate benefits, incomplete 
insurance reviews, and applicants who either did not obtain adequate 
insurance or did not file an insurance claim.
    The Robert T. Stafford Disaster Relief and Emergency Assistance Act 
(Stafford Act) encourages State and local governments to protect 
themselves by obtaining insurance to supplement or replace Federal 
Government assistance. To receive PA grant funding and be eligible for 
funding in future disasters, the Stafford Act also requires applicants 
to obtain and maintain insurance on damaged insurable facilities. 
However, FEMA's PA program includes disincentives for applicants to 
carry insurance. For example, the program pays for building repair 
following a first disaster, which reduces the incentive for building 
owners to purchase insurance if they have not previously received 
disaster assistance. In addition, FEMA reimburses deductible amounts in 
insurance policies, regardless of the amount of the deductible, which 
encourages high deductibles.
    FEMA has been aware of these and other equity issues and 
disincentives for more than a decade. In February 2000, FEMA published 
an advance notice of proposed rulemaking in the Federal Register that 
addressed insurance requirements, procedures, and eligibility criteria 
with respect to buildings under the PA program. However, FEMA has not 
issued a final rule and stated that these issues have not been acted on 
because regulatory review and rulemaking for other programs have taken 
precedence. Consequently, the disincentives and equity issues continue, 
and PA program regulations do not provide adequate guidance to those 
who receive, grant, or oversee PA grants.
    In our December 2011 report, we recommended that FEMA complete the 
rulemaking process begun in 2000 and issue a final rule that resolves 
the long-standing issues with PA insurance regulations, including those 
related to deductibles, self-insurance, and State insurance 
commissioners' determinations of reasonably available insurance. In 
February 2013, FEMA rescinded the policy of reducing eligible costs by 
an insurance deductible by deducting all insurance proceeds received or 
anticipated from the total eligible cost of the project. This change in 
policy provides further incentive for applicants to not carry insurance 
or, if they do, to choose the highest deductible possible.
FEMA's Efforts to Expedite Disaster Recovery in Louisiana
    Under the authority of the Stafford Act, FEMA provides Federal 
disaster grant assistance to State, Tribal, and local governments and 
certain private nonprofit organizations through the PA program. FEMA 
has an obligation to ensure timely and appropriate use of Federal 
disaster funds. In January 2012, we reported that only 6.3 percent of 
the PA projects for Louisiana had been closed out in the 6 years since 
Hurricane Katrina made landfall. Many of these projects are years past 
the close-out deadlines.
    Although FEMA has worked with Louisiana to expedite the recovery 
effort, several factors have contributed to the slowness in closing out 
PA projects. Specifically, the Federal Government provided 100 percent 
funding of PA projects. The State of Louisiana does not pay for 
projects and has no incentive to seek cost-effective replacement or 
repair solutions, close completed projects, or reduce the disaster 
workforce as work is completed. Other factors, such as the project 
procurement process, inconsistent decisions for applicant eligibility, 
and determining whether to replace or repair, as well as limited State 
staff resources, also contributed to delays in closing PA projects.
    Because open PA projects could involve substantial amounts of 
obligated Federal funds that could be put to better use, we recommended 
in the short term, that FEMA develop and implement specific policies, 
procedures, and time lines to ensure timely closeout of 100 percent 
Federally-funded projects. For the long term, we recommended that FEMA 
evaluate the status of all PA projects in Louisiana associated with 
Hurricane Katrina and develop, in conjunction with the State, a process 
to close completed projects and to expedite the completion of open 
projects.
    FEMA took several actions to respond to our recommendations. 
Specifically, the component completed the draft of an updated standard 
operating procedure for PA program management and grant closeout. In 
addition, FEMA began implementing a training course, which was 
scheduled for a pilot release in fiscal year 2013, to address the PA 
program process and the roles and responsibilities for closeout 
activities. FEMA also developed a procedure to track the progress of 
recovery and the movement toward programmatic closeout of Hurricanes 
Katrina, Rita, Gustav, and Ike projects.
    FEMA also worked with the State of Louisiana, which developed a 
closeout process to ensure that each applicant and project met the 
eligibility requirements and document standards mandated by Federal and 
State regulations. In addition, FEMA developed and communicated clear 
goals for subgrantees to certify that projects were completed, which 
provide an incentive for meeting these goals. FEMA conducted a complete 
review of the project closeout process used by the State. The average 
number of projects closed monthly increased by 300 percent for 
Hurricanes Katrina and Rita in the first quarter of fiscal year 2013. 
We will review these efforts to determine whether they have 
successfully resolved the recommendations.
                          financial management
    DHS is responsible for an annual budget of more than $59 billion, 
employs more than 225,000 men and women and operates in more than 75 
countries. Sound financial practices and related management operations 
are critical to achieving the Department's mission and to providing 
reliable, timely financial information to support management decision 
making throughout DHS. Although DHS produced auditable financial 
statements in fiscal year 2012 and obtained a qualified opinion on 
those statements, challenges remain for the Department's financial 
management. One high-priority, long-term challenge is the improvement 
of the Department's financial management systems.
Independent Auditors' Report on DHS' Fiscal Year 2012 Financial 
        Statements and Internal Control Over Financial Reporting
    An independent public accounting firm, KPMG LLP, performed the 
integrated audit of the DHS financial statements for fiscal year 2012 
and an examination of internal control over financial reporting and 
compliance.\2\ KPMG considered the effects of financial system 
functionality in its tests and determined that many key DHS financial 
systems are not compliant with the Federal Financial Management 
Improvement Act of 1996 (FFMIA) and Office of Management and Budget 
Circular Number A-127, Financial Management Systems, as revised. DHS 
financial system functionality limitations add substantially to the 
Department's challenges of addressing systemic internal control 
weaknesses, as well as limit its ability to leverage IT systems to 
process and report financial data effectively and efficiently.
---------------------------------------------------------------------------
    \2\ DHS-OIG, Independent Auditors' Reports on DHS' FY08, 09, 10, 
11, and 12 Financial Statements and Internal Control Over Financial 
Reporting (OIG-09-09, November 2008; OIG-10-11, November 2009; OIG-11-
09, November 2010; OIG-12-07, November 2011; OIG-13-20, November 2012).
---------------------------------------------------------------------------
    Specifically, KPMG identified the following persistent, pervasive 
financial system functionality issues:
   An inability to process, store, and report financial and 
        performance data to facilitate decision making, safeguarding 
        and management of assets, and preparation of financial 
        statements that comply with generally accepted accounting 
        principles.
   Technical configuration limitations, such as outdated 
        systems that software vendors can no longer fully support, that 
        impair DHS' ability to comply with policy in areas such as IT 
        security controls, audit logging, user profile changes, and 
        restricting departing employees' and contractors' access.
   System capability limitations that prevent or restrict the 
        use of applications controls to replace less reliable, more 
        costly manual controls. In some cases, additional manual 
        controls must compensate for IT security or control weaknesses.
    Additionally, KPMG determined that the United States Coast Guard 
(USCG):
   Is routinely unable to query its various general ledgers to 
        obtain a population of financial transactions and consequently, 
        must create many manual custom queries that delay financial 
        processing and reporting processes.
   Has a key financial system that is limited in processing 
        overhead cost data and depreciation expenses to support the 
        property, plant, and equipment financial statement line item.
   Uses production versions of financial statements that are 
        outdated and do not provide the necessary core functional 
        capabilities (e.g., general ledger capabilities).
   Has a budgetary module of the core financial system that is 
        not activated. As a result, key attributes (e.g., budget fiscal 
        year) are missing and potential automated budgetary entries 
        (e.g., upward adjustments) are not used. This has created the 
        need for various manual workarounds and nonstandard 
        adjustments.
   Has a financial systems functionality limitation that is 
        preventing the component from establishing automated processes 
        and application controls to improve accuracy and reliability, 
        and to facilitate efficient processing of certain financial 
        data, such as receipt of goods and services upon delivery and 
        ensuring proper segregation of duties and access rights.
    KPMG concluded in its report that these findings limit DHS' ability 
to process, store, and report financial data in a manner that ensures 
accuracy, confidentiality, integrity, and availability. KPMG emphasized 
that some of these weaknesses may result in material errors in 
financial data that go undetected through the normal course of 
business. Additionally, because of financial system functionality 
weaknesses, there is added pressure on mitigating controls to operate 
effectively. Mitigating controls are often more manual, which increases 
the risk of human error that could materially affect the financial 
statements. We recommended that the DHS Office of the Chief Information 
Officer, in conjunction with the Office of the Chief Financial Officer, 
continue the Financial Systems Modernization initiative and make 
necessary improvements to the Department's financial management 
systems.
                             it management
    As technology constantly evolves, the protection of the 
Department's IT infrastructure becomes increasingly important. The 
Department's chief information officer has taken steps to mature IT 
management functions, improve IT governance, and integrate IT 
infrastructure.
                             cybersecurity
    The firewall of cybersecurity--the technologies, processes, and 
practices that protect our systems from attack, damage, or unauthorized 
access--is always on alert for threats to networks, computers, 
programs, and data. In 2012, we recommended actions to address 
weaknesses in DHS' international cybersecurity program.
DHS' International Cybersecurity Program
    Our Nation's economy and security are highly dependent on the 
global cyber infrastructure. The borderless nature of threats to, and 
emanating from, cyberspace requires robust engagement and strong 
partnerships with countries around the world. International engagement 
is a key element of the DHS cyber mission to safeguard and secure 
cyberspace. DHS' National Protection and Programs Directorate (NPPD) 
promotes cybersecurity awareness and fosters collaboration with other 
countries and organizations to global cyber space threats.
    In our report DHS Can Strengthen Its International Cybersecurity 
Programs (OIG-12-112), which we issued in August 2012, we reported that 
NPPD had undertaken actions to promote collaboration with the 
international community and develop partnerships with other nations to 
protect cyberspace better. However, NPPD had not defined its roles for 
carrying out the mission of its international affairs program, nor had 
it developed a strategic implementation plan to provide a clear plan of 
action for achieving its cybersecurity goals with international 
partners, international industry, or the private sector. In addition, 
NPPD had not streamlined its international affairs functions and 
processes to support its international cybersecurity goals, objectives, 
and priorities efficiently, nor had had it effectively consolidated 
resources. Lastly, NPPD needed to strengthen its communications and 
information-sharing activities with international partners to promote 
international incident response, exchange of cyber data with other 
nations, and to share best practices. We recommended that DHS develop 
and implement policies and procedures for establishing and maintaining 
open dialogues with foreign partners regarding cyber threats and 
vulnerabilities.
         steps taken to implement high-priority recommendations
    DHS and its components are taking steps to implement these high-
priority recommendations to improve and strengthen program management 
with which it agreed. In most instances, however, particularly for 
long-term recommendations, it takes time to develop plans, revise and 
update guidance, and implement and disseminate new policies and 
procedures. This can be particularly time-consuming when, as is usually 
the case, such plans, policies, and procedures require coordination and 
concurrence among multiple entities, including some outside of DHS and 
its components. Competing and changing priorities and funding 
uncertainties also affect the Department's ability to implement 
multiple recommendations quickly. In addition, some recommended 
improvements require funding and staffing resources that are not 
readily available.
    Although DHS has made a number of attempts over the years to 
improve and integrate its financial systems, for various reasons, it 
has not yet successfully completed this complicated task. For example, 
because of a vendor protest, a contract for an enterprise-wide 
initiative had to be cancelled. In addition, in June 2010, the Office 
of Management and Budget (OMB) required all agencies to halt the 
issuance of new task orders or new procurements for all financial 
system projects pending its review and approval. In an effort to comply 
with the OMB requirement, DHS began upgrading existing financial 
systems at some components. Projects aimed at improving financial and 
IT systems are scheduled to be implemented at the USCG and FEMA in 
fiscal year 2013.
                            questioned costs
    From April 1, 2012 through September 30, 2012, our audits resulted 
in questioned costs of more than $235 million. During this same period, 
DHS recovered approximately $115 million as a result of disallowed 
costs identified in current and previous audit reports and from our 
investigative efforts. We issued 12 reports identifying approximately 
$101 million in funds that could be put to better use.
                               conclusion
    We encourage Congress and this subcommittee to continue its 
oversight of DHS and its components to ensure effective and efficient 
program management and sound financial practices. For our part, we will 
continue to analyze the Department's programs and practices to identify 
those that need improvement, determine how DHS and its components can 
address deficiencies and weaknesses, and recommend appropriate 
solutions to strengthen the Department. We understand that our 
recommended corrective actions will strengthen DHS only if they are 
implemented. Therefore, we will also continue our efforts to follow up 
with the Department to make certain that it carries out its mission as 
effectively and efficiently as possible.

    Mr. Duncan. Thank you, Ms. Richards.
    The Chairman will now recognize Dr. Stern for his 
testimony.

STATEMENT OF PAUL G. STERN, PH.D., MEMBER, BOARD OF DIRECTORS, 
           BUSINESS EXECUTIVES FOR NATIONAL SECURITY

    Mr. Stern. Chairman Duncan, Ranking Member Barber, Members 
of the committee, my name is Paul G. Stern, and I am honored to 
be here as a private citizen and a member of the Business 
Executives for National Security.
    BENS is a nonpartisan organization of business executives 
like myself concerned about National security. The views I 
express here today are my own although they reflect in great 
part BENS' perspectives on better management to our National 
security organizations.
    My personal experience has been mostly in mergers and 
acquisitions and turnaround of businesses in the private 
sector. I will make my comments brief and ask that with 
permission, with the committee's permission, my written 
testimony be entered into the record.
    The focus of the hearing is how to find cost savings by 
eliminating duplication in the Department of Homeland Security. 
Merging and combining functions to improve efficiency and 
effectiveness is basic to good management, but Government has 
often--skips the crucial next step; that is rationalizing or 
reducing the organization once the functions have been marched.
    To get the cost savings you have to review very objectively 
and aggressively the quality of management, make changes of 
leadership when necessary, stress and emphasize the financial 
organization as well as IT systems so that they enable 
management to track the progress of cost reductions, accurately 
identify the cost of inventory because it tends to tie up 
significant sums of cash, and to use the human resource 
function to help the transition of individuals both in and out 
of the organization.
    In addition to ridding the Department of redundancy, there 
are other management areas that in the private sector have 
proven to contribute as much if not more to the success of the 
organization and the bottom line.
    I have outlined 11 of them in my written testimony. For 
example, they range from eliminating excess real property, 
streamlining the levels of management, of management review and 
approval that tends to slow down progress, and by that I mean 
the flattening of the organization charts as well as evaluating 
compensation incentives and benefits for those people involved.
    What I do not believe in is making arbitrary percentage 
cuts across organizations in order--as a means of cost 
reduction. It is not thoughtful nor is it good management.
    What does work is setting objectives and measuring 
performance, providing incentives and bonuses that are tied to 
specific measurable performance objectives and then rewarding 
management for achieving these performance objectives and these 
are sure ways to ensure to get good results.
    These things are hard to do, and I appreciate the challenge 
that the Department faces in looking across 22 separate units. 
Response--in 2002 when Congress voted to create the Department 
of Homeland Security, it did so to streamline and integrate the 
elements of Government needed to protect our homeland.
    Unfortunately it didn't apply the same discipline to itself 
and today, 10 years later, we still have considerable 
duplication and overlap in the jurisdiction and oversight level 
levied on the Department by the various committees of Congress.
    How can DHS manage efficiently and effectively with so many 
oversight restrictions? Congress could do better by applying 
the same management techniques that I have suggested for the 
Department.
    Give DHS specific short- and long-term performance 
objectives for improving effectiveness and cutting costs. Make 
sure that the right management team is in place. Focus your 
oversight function solely on measuring those performance 
objectives, and reward performance, but let management and do 
its job.
    Many of the business processes and organizational 
structures which back up our Nation's security have the analogs 
in the private sector. As in the private sector, people in the 
heart of any attempt to change whether a successful change is 
taking place can be answered--addressed by a simple set of 
questions and they are: Why are you here? Why are you coming to 
work? What makes you think that you are making a difference? If 
you are gone, what effect would that have on the remaining 
organization?
    I am confident that with the help of this committee, the 
Department can make organizational changes in its overhead and 
infrastructure functions that can put it in the company of the 
best-managed organizations, both public and private, in the 
Nation.
    I thank you for inviting me to testify, and I am prepared 
to answer questions that you might have. Thank you.
    [The prepared statement of Mr. Stern follows:]
                  Prepared Statement of Paul G. Stern
                             April 26, 2013
    Chairman Duncan, Ranking Member Barber, Members of the committee, 
my name is Paul G. Stern. I am honored to be here as a private citizen 
and a member of Business Executives for National Security. I plan to 
address, from the business perspective, several areas of your concern. 
I will speak from my own knowledge and operational experience. I have 
spent my career in strategic planning, corporate mergers and 
acquisitions--and, most recently, in private equity financing for 
corporate restructuring and improved shareholder performance.
    I am a member of the Board of Directors of Business Executives for 
National Security, a non-partisan organization of business executives 
concerned about National security. Although reflective of BENS' 
perspectives on what the private sector can contribute to better 
managing our National security organizations, the views I express are 
my own.\1\
---------------------------------------------------------------------------
    \1\ Dr. Stern has held numerous senior management positions with 
IBM. He was chairman and chief executive officer of Braun AG in 
Germany, corporate vice president at Rockwell International Corporation 
and president of their Commercial Electronics Operations. Dr. Stern 
joined Burroughs Corporation (later Unisys) as an executive vice 
president and rose to become the president and chief operating officer. 
From 1988 to 1992, he served as the chairman and chief executive 
officer of Northern Telecom, now known as Nortel Networks. In private 
equity, he joined Forstmann Little & Co. in 1993, and, later, co-
founded Thayer Capital Partners, LLC, prior to starting Arlington 
Capital.
---------------------------------------------------------------------------
    A key focus of this hearing is, I believe, the opportunity for cost 
savings by eliminating duplication, particularly in research and 
development expenditures. I will comment on that issue. But, I will 
also suggest other management areas that, in the private sector, have 
proven to contribute as much, if not more, to improving the bottom 
line--or, more appropriately for the public sector, to improving 
organizational efficiency and effectiveness.
            1. eliminating duplication and wasteful spending
    I think it important to understand the mechanics of eliminating 
duplication or redundancy. The objective is to merge and combine 
overlapping functions, which is readily accomplished by redrawing 
organization charts and ``x-ing'' out redundant units. However, the 
next step is crucial. That is, rationalizing the organization to reduce 
its size and cost. This is hard, because it ultimately means moving 
people out of the organization and changing policies and procedures to 
match the new scope and mission. The Government does not do this well.
    Here are some considerations from my private-sector experience that 
you might appreciate.
    The goal of eliminating duplication and overlap is to improve 
effectiveness. If this objective can be achieved, cost savings will 
surely follow. However, effectiveness is measured only over the long 
term, so one needs an interim tool or tools to gauge progress. I 
suggest two: Managerial performance and attention to financial 
expenses.
    You need to get managers to perform and you need to know the cost 
of operations. Here's how:
   Review management aggressively: Qualifications, capability, 
        willingness to execute the plan. Make changes to leadership, if 
        necessary.
     However, find ways to positively reinforce change through 
            incentives and bonuses tied to performance objectives.
   Be cautious in trimming the financial function. You need the 
        data they provide to know and control expenses.
   Manage IT platforms with an eye to collecting accurate 
        financial data.
     Track expenses across all operating accounts.
     Audit cost of inventory to determine where resources are 
            tying up organizational funds.
   Look at the HR function. It tends to be overstaffed without 
        adding a great deal of value, except where needed to help 
        transition individuals out of the organization.
   Finally, review layers of management with an eye toward 
        flattening the organization. This allows you to place 
        responsibility much closer to the act of decision making.
     Because they slow down the decision process, buy things, 
            and create staff, trimming the number of department heads 
            saves more than just a salary.
    In sum, identifying redundancy, having accurate expense and 
performance data, and moving rapidly carries risk. But leaders must be 
prepared to take risk. Incenting the change makers, taking intermittent 
satisfaction surveys, and having the cliched ``skin in the game'' has 
the ability to change hearts and minds quickly--especially when they 
see the success that changes are making.
        2. strategic business process reorganization and change
    Let me turn to another set of management tactics and techniques 
that, as I mentioned, are prevalent in private-sector turn-arounds and 
restructurings. Applied aggressively and purposely, they can be equal 
or more productive than the elimination of redundancy that we just 
discussed.
    But first I must add a caveat: It is that while instituting change 
rapidly is better than moving slowly, enacting too much change too 
rapidly can be damaging to morale and counterproductive to 
effectiveness. Instead, choose a few transformative actions; follow 
through to completion, then choose the next set and repeat.
    The Department of Homeland Security under your purview is, by any 
measure, a conglomerate of diverse missions, capabilities, and 
functions. Even after 10 years under the same management umbrella, the 
Department is riven with conflicting cultures and customs. However, 
putting its face-to-the-public operating divisions aside, there is a 
common management infrastructure that is not at all unlike service-
oriented private-sector businesses. Here is where I believe lessons 
from the private sector can be brought to bear on Government management 
challenges.
    The first two have already been discussed:
    (1) Eliminate duplication/redundancy while maintaining safety back-
        up;
    (2) Consolidate and appropriately rationalize functionally-related 
        activities.
    Here are a few more to consider:
    (3) Eliminate excess real property. The Department of Defense has 
        fought this battle with Congress since the late 1980's, but has 
        developed the Base Closure and Realignment (BRAC) process to 
        bring practical resolution to this politically unpalatable 
        necessity. Has DHS considered doing the same? Furthermore, has 
        it done the analysis to determine in a corporate-wide--not 
        independent operating division sense--what excess exists that 
        could intra-departmentally be put to more productive use?
    (4) Reduce duplicative procurement of commercial services, 
        especially professional services. An inventory of commercially-
        provided services by category can yield large opportunities for 
        eliminating waste. In fact, the act of inventorying can itself 
        put managers on warning for possible duplicative and unneeded 
        expenditures.
    (5) Streamline levels of management review. Touched on earlier, 
        this action has system-wide flow-down effects, particularly 
        with regard to man-hours consumed. Fewer levels of approval 
        mean fewer meetings, which occasion fewer pre-meetings, less 
        audio-visual demands, fewer PowerPoints, and less travel. That 
        is in addition to staff reductions and need for office space.
    (6) Reduce inventory to demand levels plus a safety buffer. Owning 
        your own inventory outside of a safety stock is an obsolete and 
        costly proposition in a globally-dispersed and digitally-
        connected commercial marketplace. Does DHS know how much of its 
        common inventory is commercially available either through 
        strategic sourcing or from the GSA schedule?
    (7) Rightsource maintenance, repair, and overhaul. Most commercial 
        service providers outsource the MRO function to take advantage 
        of the MRO's economies of scale and obviate the need to replace 
        and upgrade repair facilities and equipment.
    (8) Intensely manage real property maintenance/establish a capital 
        budget. Capital budgeting, which requires a long-term 
        commitment of resources to effect the replacement of aging or 
        worn-out equipment or infrastructure has never caught on with 
        the annual budgeting cycle of the Federal Government. Congress 
        is loath to give up its short-run appropriations hold on the 
        purse strings. However, there is nothing illegal about 
        approaching projects and planning from a capital budgeting 
        perspective and many States and local jurisdictions have 
        embraced the concept. The technique has the advantage of 
        isolating the year-to-year variability of operational resource 
        demands from the known replacement rates of long-term 
        infrastructure and equipment life cycles.
    (9) Evaluate compensation, pay, and benefits. Pay-for-performance, 
        pay banding, and other innovative alternatives to the civil 
        service general schedule had their moment of ascendance in the 
        1990s, but were struck down by economic and other forces. 
        However, in an era of declining Federal resources, the ``war 
        for talent'' with the competitive private sector--where these 
        plans have become the norm--argues for a relook at the Federal 
        workforce's compensation systems. DHS should press to reinstate 
        its pilot program, but this time with greater transparency and 
        workforce input.
    (10) Rightsource logistics, transportation, and sustainment. Next 
        to the digital revolution, no other sector of the private 
        economy has made the leaps in efficiency and effectiveness than 
        the transportation logistics sector. Few major equipment and 
        materiel manufacturers and many service-sector providers use 
        third-party logistics (TPL) and many operate their fleets and 
        equipment on a service rental agreement.
    (11) Rationalize and consolidate IT platforms and services. It is 
        important to have the right data, but owning the means to that 
        data has become less and less sensible. To keep abreast of 
        rapid changes in the IT sector, it is better to specify a level 
        of service and to let the marketplace provides solutions. 
        Security is a consideration, but today's security is more 
        likely to be found in the cutting-edge technology of the 
        independent IT providers than in legacy Government systems.
     3. reorganization and change is a process to undertake, not a 
                        prescription to swallow
    I have given you a list of management stratagems that, at one time 
or another, have worked in the private sector. I will admit that they 
are difficult to consider from a Government standpoint given the nature 
of our political system and the criteria on which we place success, 
that is, failure is not an option. However, many of the business 
processes and organizational structures which backstop our Nation's 
security have their analogs in the private sector. It would be unwise, 
if not inopportune, not to emulate them where they apply. That has been 
BENS' mantra since its founding over 30 years ago.
    As in any business, people are at the heart of any attempt at 
change. The leadership and the rank-and-file both have to be committed 
to improvement in the way Government business is done. Leadership, by 
definition has to set the tone and lead by commitment or no change is 
possible. They must assign clear responsibilities; then measure 
performance. Set discretionary spending targets; then enforce spending 
discipline. Define the goals; then make the changes transparent and 
equitable.
    Those affected by such change have responsibilities too. First they 
must define and embrace what success means for them and for the 
organization. They will see--sooner than management--what measures of 
effectiveness are working and which are not. They had better speak up 
or they jeopardize the likelihood of success.
    Today, the popular test of inclusion or participation, I guess, are 
the phrases ``all in'' or ``lean in''. Here's my test of whether 
successful change is happening in an organization.
    It's a set of questions that, when answered in an affirmative and 
confident manner, can predict the outcome. Why are you here? Why are 
you coming to work? What makes you think you are making a difference? 
If you are gone, what would happen to the organization?
                             4. conclusion
    I recognize that my comments have not been as specific about how 
DHS can reduce its overlap in R&D and other areas as you may have 
expected and may receive from other witnesses. However, I believe the 
plate is bigger and the opportunities far broader to set the Department 
on the path to greater effectiveness and efficiency. Certainly 10 
years' worth of data should be sufficient to give a basic sense of 
where the frictions and the inadequacies lie. I am confident that with 
the help of this committee the Department can, in the face a certain 
resource restraints in the coming years, commit to structural and 
organizational changes in its overhead and infrastructure functions 
that can put it in the company of the best managed organizations--
public or private--in the Nation.
    Thank you for having me. I am prepared to answer any questions you 
might have.

    Mr. Duncan. Dr. Stern, thank you for your testimony.
    The Chairman will now recognize Mr. Killough for his 
opening statement.

   STATEMENT OF CRAIG KILLOUGH, VICE PRESIDENT, ORGANIZATION 
             MARKETS, PROJECT MANAGEMENT INSTITUTE

    Mr. Killough. Thank you, Mr. Chairman.
    Good morning Chairman Duncan, Ranking Members Barber and 
Thompson, and Members of the subcommittee.
    The Project Management Institute is the world's largest 
project management association with members and credential 
holders numbering in excess of 700,000.
    The Project Management Institute maintains internationally 
recognized standards and professional credentials in project 
program and portfolio management that are recognized by the 
American National Standards Institute and the International 
Standards Organization.
    If I were to leave you today with three thoughts in the 
time that I have, they would be; First, organizations and 
Government bodies that use consistently applied program 
management standards and qualified program managers are more 
successful than organizations that don't.
    Second, organizations that perform poorly in executing 
their programs expose themselves to significantly higher risk 
unnecessarily.
    Third, the entire Government would benefit from broad 
adoption of program management standards and the creation of a 
job classification and defined career path for program----
    [Off mike.]
    Mr. Killough. PMI's Pulse of the Profession Research 
identifies a key difference between high-performing 
organizations and organizations with low program management 
performance.
    That difference is that low-performing organizations risk 
14 times more money than the high performers. High-performing 
organizations demonstrate some key common characteristics.
    First characteristic is standardization. They utilize 
standard program management processes, practices, and 
procedures across the enterprise. Talent management; they 
recognize the critical value in acquiring, developing, and 
retaining talent. They have a defining career path for program 
managers and processes to develop program management 
competency.
    The strategic alignment. They align their program portfolio 
and prioritize that portfolio around the organization's mission 
and ensure the management commitment to the aligned strategy.
    So why would these characteristics be important to the 
Department of Homeland Security? A recent GAO study from 
September 2012 found that DHS leadership has authorized and 
continued to invest in major programs even though the vast 
majority of those programs lack the fundamental processes and 
procedures necessary to manage risk and measure performance.
    In another example a GAO report completed at the request of 
Ranking Member Barber on the Customs and Border Patrol stated 
that Border Patrol has developed key elements of its 2012 to 
2016 strategic plan, but has not identified milestones and time 
frames for developing and implementing performance goals and 
measures in accordance with standard practices and program 
management.
    The Department of Homeland Security's Program 
Accountability and Risk Management Office has taken a number of 
key steps to improve program management. We support these 
efforts and would encourage continued engagement with the 
program management community.
    PARM's efforts should be bolstered by legislation. This 
committee approved House Resolution 3116 in 2012, which 
contained several important provisions to improve the program 
management workforce across the Department of Homeland 
Security. We would encourage the subcommittee restart that 
effort.
    In conclusion, I would like to recommend the following. 
Create job classification for project and program managers. A 
key factor in program failure is the lack of trained and 
experienced program managers.
    The phenomenon of the accidental program manager is far too 
common across Government agencies. PMI strongly encourages the 
Government-wide capability to hire program managers similar to 
what exists in OPM's 2210 job series that in--information 
technology.
    Make the information technology program management career 
path Government-wide. The role of a program manager should not 
just come about by accident. According to our research, U.S. 
Government organizations frequently identify the causes of 
program failure as inexperienced or unqualified program 
managers. The inexperienced program manager is identified as a 
cause for failure in Government programs twice as often as the 
private sector.
    Finally, utilize program management standards in developing 
standard practices and processes. High-performing organizations 
recognize that standardization is the key to element and 
driving performance.
    The Department of Homeland Security has begun to take steps 
to implement better policies and they hope--we hope they will 
decide to align with the established standards. We would 
encourage the Department to adopt the practices identified by 
GAO report 12-833 and make them a high priority.
    Thank you, Chairman Duncan, Ranking Member Barber, Ranking 
Member Thompson, for allowing me to represent the Project 
Management Institute.
    [The prepared statement of Mr. Killough follows:]
                  Prepared Statement of Craig Killough
                             April 26, 2013
    Chairman Duncan, Ranking Member Barber, and Members of the 
subcommittee, my name is Craig Killough; and I am the vice president of 
organizations and markets for the Project Management Institute (PMI). I 
appreciate the opportunity to participate in this important hearing and 
speak to the benefits organizations can derive from implementing best 
practices in project and program management.
    The Project Management Institute (PMI) is the world's largest 
project management membership association, with more than 700,000 
members and credential holders in 187 countries. Our headquarters are 
in Newtown Square, Pennsylvania where we were founded in 1969 as a not-
for-profit organization. PMI seeks to advance the profession of project 
and program management through globally recognized standards and 
certifications, collaborative communities, an extensive research 
program, and professional development opportunities. The project 
management profession, broadly defined, encompasses project management, 
program management, and portfolio management. In the U.S. Government, 
the project management practitioner is typically considered a program 
manager and so I will use the term program management throughout the 
statement. I'd also like to recognize PMI's 259 local chapters; we have 
a chapter in every State in the country, which play an essential role 
in organizing our members locally.
    In this testimony I will outline what PMI has learned about best 
practices and how organizations that value and implement best practices 
in project and program management are yielding significant value and 
gaining a competitive advantage. I will also make recommendations to 
improve program management and increase the use of best practices 
within the Department of Homeland Security.
    PMI-developed standards are the most widely-recognized standards in 
the profession, used by hundreds of leading organizations around the 
world. PMI's Project Management Professional (PMP) credential is the 
most important industry-recognized certification for project managers. 
The PMP demonstrates that you have the experience, education, and 
competency to lead and direct projects. PMI's research program has 
identified how program management delivers a competitive advantage, 
producing increased efficiencies, organizational mission alignment, 
stakeholder satisfaction, and improved decision making. The most 
successful organizations embrace project and program management is a 
strategic competency that enables organizations to deliver expected 
benefits and value through effective planning, organization, and risk 
mitigation.
                    the value of project management
    Effectively implementing program management best practices results 
in transparency and accountability. The most successful organizations 
have learned that creating a culture focused on program management is 
vital to achieving business success. An example of some of the 
organizations who are leaders in program management, and active members 
of the PMI Global Executive Council, include Accenture, BAE Systems, 
Boeing, Booz Allen Hamilton, Deloitte US, Hewlett-Packard, IBM Global 
Business Services, ICF International, Mayo Clinic, Microsoft, NASA, 
PriceWaterhouseCoopers, and Verizon Wireless. These organizations have 
embraced program management, use it to meet their strategic objectives 
and drive business success. Government programs have the opportunity to 
take advantage from what these companies have already learned--using 
global standards in program management is indispensable for business 
results.
    Congress typically focuses on acquisitions and IT when talking 
about the topic of program and project management. Certainly these are 
significant areas for program management, but the need for program 
management skills goes much further. Program managers play an integral 
role in all agencies at all levels. Program managers are asked to 
manage considerable efforts--often times without proper training, 
skills, experience, or authority. They are responsible for working with 
contractors, liaising between our Border Patrol agents, Customs 
officers, Coast Guard and executives--defining the requirements needed 
to fulfill a mission and their feedback and capability to measure and 
report information is critical to agency leadership understanding the 
progress of programs. The GAO has cited improving program management in 
its High-Risk. There is a clear need for improving the utilization of 
best practices in program management given the constraint on resources 
and the need to deliver results--on time and on budget.
    When organizations continue getting better at executing their 
projects and programs, they drive success. PMI's annual research 
survey, Pulse of the ProfessionTM, shows that fewer than 
two-thirds of projects meet their goals and business intent and about 
17 percent fail outright.
    According to the study, there is a strong link showing that 
effective program management reduces risk. Our Pulse of the Profession 
research shows that organizations who have invested in program 
management are seeing results. High-performing organizations are 
defined as having 90 percent of their projects meet original goals and 
business intent. Low-performing organizations see only 34 percent of 
projects meet original goals and business intent. In financial terms, 
on a billion-dollar project, low-performing organizations risk $280 
million of a US$1 billion budget. High performers risk only US$20 
million. This makes being a low performer 14 times more likely to 
experience inefficiency and waste over the course of the program.
    What is the value of being a high performer? PMI's 2013 Pulse of 
the ProfessionTM research also looked specifically at 
Government programs. Our research showed Government programs risk 
approximately 10% more of their budget than the private sector. Our 
research indicates that to become high-performing, organizations and 
Government agencies must focus on three key factors for better results:
   Standardization.--Standardization leads to the efficient use 
        of resources. High-performing organizations are almost three 
        times more likely than low-performing organizations to use 
        standardized practices throughout the organization, and have 
        better program outcomes as a result.
   Talent management.--High-performing organizations are 
        significantly more likely than low performers to have a defined 
        career path for program managers, have a process to develop 
        program management competency and provide training on the use 
        of program management tools and techniques.
   Strategic alignment.--Aligning the portfolio around the 
        organization's mission and ensuring it is appropriately defined 
        and resourced is a significant indicator of success. This 
        aligns capabilities--ensuring that mature and experienced 
        program managers are leading critical missions and given 
        adequate flexibility. The results in significantly better 
        outcomes, improved performance, and less waste.
                      the importance of standards
    As demonstrated by PMI's Pulse data standards are crucial to the 
program management profession because they ensure that a basic program 
management framework, lexicon, and process are applied consistently. 
The value of this framework and lexicon applies equally to the private 
and public sector. In the private sector, it means an organization can 
work together around the world--understand a similar process and 
transfer knowledge between and among teams, develop best practices, and 
measure performance. In the public sector--this means effectively 
communicating with stakeholders, transferring knowledge, developing 
best practices, and measuring performance.
    PMI's 13 standards for project, program, and portfolio management 
are the most widely recognized standards in the profession--and 
increasingly the model for program management in business and 
Government. They are developed and updated by thousands of PMI 
volunteers experts with experience in every type of project, and 
provide a common language for program management around the world. PMI 
standards, such as the PMBOK Guide, with more than 4 million copies in 
circulation, have been successfully around the world.
    For the Department of Homeland Security, an organization with 22 
entities, the use of standards is critical to ensure that decision 
makers and stakeholders are receiving information that allows for an 
effective portfolio and program level review. In addition, standards 
allow for best practices to be shared more easily across agency 
components. As an example, effective risk management has been an area 
of increased complexity and is critical to DHS's mission. PMI has 
developed a practice standard for risk management, which, if utilized, 
consistently and across the agency, DHS executives will be able to 
accurately see how each component or entity is planning for risk with a 
common baseline, where shortfalls may occur, where risk management 
needs improvement.
    Why are these standards relevant to DHS and why should they be 
adopted? Just one example: A GAO study from September 2012 found, ``DHS 
leadership has authorized and continued to invest in major acquisitions 
programs even though the vast majority of those programs lack 
foundational documents demonstrating the knowledge needed to help 
manage risks and measure performance.''\1\ Utilizing a standard for 
risk management will help every entity within the Department meet these 
requirements and improve consistency. Standards when used consistently 
across an organization dramatically improve transparency, decision 
making, and performance.
---------------------------------------------------------------------------
    \1\ United States Government Accountability Office, ``Homeland 
Security: DHS Requires More Disciplined Investment Management to Help 
Meet Mission Needs'' GAO-12-833, p. 45 September 2012.
---------------------------------------------------------------------------
    In another example, a GAO report requested by Ranking Member Barber 
on the Customs and Border Patrol, the GAO stated, ``Border Patrol is 
developing key elements of its 2012-2016 Strategic Plan needed to 
define border security and the resources necessary to achieve it, but 
has not identified milestones and time frames for developing and 
implementing performance goals and measures in accordance with standard 
practices in program management.''\2\ The need for established 
standards is clear.
---------------------------------------------------------------------------
    \2\ United States Government Accountability Office, ``Border 
Patrol: Key Elements of New Strategic Plan Not Yet in Place to Inform 
Border Security Status and Resource Needs'' GAO-13-25, highlights.
---------------------------------------------------------------------------
    In 2010, PMI conducted an analysis of successful Government 
programs: ``Program Management 2010: A study of program management in 
the U.S. Federal Government''. Program managers from a wide variety of 
Government sectors shared their insights on ``success factors'' and 
best practices for this study. We discovered how Government program 
leaders are able to achieve results. The most successful Government 
programs studied start with a firm grounding in the fundamentals: 
Experienced and well-trained program management practitioners (people), 
standardized program management practices (processes), and the tools to 
support both. They then learn to be better communicators, more agile, 
more collaborative, and more engaging. The most successful programs 
demonstrated that standard project and program management process and 
practice, along with effective management of risk were key elements of 
success. It is the combination of all these elements that has led to 
creating an organizational culture of program management, and has 
driven their successful programs.
     pmi's recommendations for the department of homeland security
    PMI advocates for the profession of project management and improved 
program management within organizations and has found there are several 
areas where Government agencies could broadly improve their 
organizational maturity, become high-performing, and spend funds more 
efficiently. Implementation of PMI's recommendations to Congress would 
make great progress toward establishing the framework needed to manage 
projects effectively. It is vital that Congress direct agencies to 
embrace project management standards that can be utilized by any agency 
on any program across the Federal Government. Because PMI's broad-based 
standards are applicable for managing projects across industries and 
geographies, they are especially appropriate for use by the Federal 
Government.
    The Department of Homeland Security's Program Accountability and 
Risk Management (PARM) Office has already taken a number of key steps 
to improve program management. We support its efforts to date and would 
encourage them to continue engaging with stakeholders and the program 
management community. PARM's efforts could be bolstered by legislation, 
however. This committee approved a bill (H.R. 3116) in 2012, the 
Department of Homeland Security Authorization Act, which contained 
several important provisions to improve the program management 
workforce across the Department of Homeland Security. We would 
encourage the subcommittee and full committee to restart that effort 
and incorporate the findings of our latest Pulse of the Profession.
    In addition, we have several other recommendations for your 
consideration.
(1) Create a job classification for project and program managers.
    A key factor of failure is the lack of an identified, trained, and 
supported program manager. The phenomenon of the ``accidental'' program 
manager is far too common across Government agencies. PMI would 
strongly encourage a Government-wide capability to hire program 
managers similar to what exists in OPM's 2210 Job Series for IT. 
Identifying this individual is also critical. Each program should have 
a dedicated program manager who is responsible for implementing proven 
success factors and ensuring results. GAO has also identified this as a 
critical need, given there are staffing shortfalls, this step would 
help the Department identify and address its talent needs. This 
requirement will also increase transparency and provides additional 
accountability and should be the focus of every Government program with 
acknowledgement from agency executives.
(2) Scale IT program management career path Government-wide.
    The role of a program manager should not just come about by 
accident. Recognizing the positive effect that can be obtained by 
having a strong program manager and building the necessary skill sets 
is critical. This is something successful organizations have 
recognized. According to PMI's research, U.S. Government organizations 
themselves identify the causes of program failure to include: Changing 
priorities, poor risk management, inadequate communications, and an 
inexperienced program manager. In fact, Government agencies identified 
an inexperienced program manager as a cause for failure almost twice as 
often as organizations in the private sector.
    It is essential to retain and support talented program managers by 
providing defined career ladders and options. Recruiting and retaining 
highly-performing personnel is a particular challenge in the Federal 
Government. Scaling previously successful reform plans across agencies 
is logical and makes good sense. The model utilized by Rep. Issa and 
Rep. Connolly in the Federal Information Technology Acquisition Reform 
Act; H.R. 1232, could provide an example. This initiative will reduce 
duplication significantly and will improve efficiency and program 
success rates, thereby improving the expenditure of taxpayer funds and 
improving morale at agencies.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

(3) Utilize program management standards in developing standard 
        practices and processes.
    Organizations that value program management understand that the 
contributions of professional program managers using standardized 
practices increase project success rates, create efficiencies, and 
improve alignment with organizational strategies. Standardization leads 
to an efficient use of resources, which allows more time and resources 
to focus on leading, innovating, and delivering products and services--
and ultimately leads to a competitive advantage. High-performing 
organizations are almost three times more likely than low-performing 
organizations (36 percent vs. 13 percent) to use standardized practices 
throughout the organization, and have better project outcomes as a 
result. Organizations that recognize the importance of project 
management are driven by expected and tangible results: On time, on 
budget, within scope, and in accordance with project requirements.
    PMI standards are the guidelines against which individuals and 
organizations can assess their existing project management capabilities 
and provide the benchmark for them to build and mature their existing 
proficiency. They provide the foundation for developing and 
implementing the superior practice of program management.
    A number of GAO's recommendations refer to the need for program 
management standards and their application. The Department has begun to 
take steps to implement better policies and we hope they will continue 
to align with established standards, which have demonstrated success in 
the private sector. Further we would encourage the Department to keep 
the practices identified by GAO in report GAO-12-833, as key practices, 
for program and portfolio management a high priority. Further we would 
encourage the Congress to ensure these recommendations are being 
followed.
(4) Support integrated program teams.
    Program managers should be working with their counterparts across 
the acquisitions workforce and with their counterparts in the private 
sector. A program stands a greater likelihood of being successful if 
everyone understands the importance of the mission, the business 
strategy, and help ensuring the programs are delivering the intended 
results. Integrated teams will prevent silos and facilitate maturing 
program managers. This should also include program managers remaining 
with their programs until a major milestone is reached.
                               conclusion
    PMI will continue to work with the Congress and the administration 
to improve efficiency in the Federal Government. We would encourage all 
of the Members of this committee to join the Government Efficiency 
Caucus, to engage in regular dialog and keep up-to-date on the latest 
in effective best practices in program management. We believe 
increasing Government efficiency through improving the use of project 
and program management standards will save taxpayer funds and improve 
delivery of services.
    The American people expect results from their Government 
particularly in these fiscally challenging times. Having the right 
tools and processes alone will not ensure success. But by bringing 
together tangible best practices with the more intangible ``culture of 
program management'' is what has set successful organizations apart 
from the rest. We believe effective use of program management will make 
those results possible across the U.S. Government.
    Again, thank you Chairman Duncan, Ranking Member Barber for the 
opportunity to testify at this important hearing. I will be pleased to 
answer any questions you or Members of the subcommittee may have.

    Mr. Duncan. Thank you, Mr. Killough.
    The Chairman will now recognize Dr. Willis for his 
testimony.

 STATEMENT OF HENRY H. WILLIS, PH.D., DIRECTOR, RAND HOMELAND 
                  SECURITY AND DEFENSE CENTER

    Mr. Willis. Thank you and good morning, Chairman Duncan, 
Ranking Member Barber, Ranking Member Thompson, and other 
distinguished Members of the subcommittee.
    The recent GAO report on fragmentation, overlap, and 
duplication is the latest critique of DHS effectiveness. The 
report cites inefficiencies across a range of DHS activities. 
The waste in programs like these is a symptom of a larger issue 
at DHS.
    DHS programs too frequently lack strategic guidance and are 
not adequately evaluated. Strengthening the Department 
strategic planning and program management is essential if DHS 
is to implement the Nation's desired capabilities across its 
full set of missions.
    DHS currently has efforts underway that are consistent with 
the goal of integrating Department-wide strategic planning into 
decisions about priorities and budgets. These initiatives point 
the Department in the right direction, but success is not 
assured unless Congress and DHS work together to address three 
related issues.
    First, implementing greater transparency for strategic 
planning, program implementation, and evaluation efforts. 
Second, developing a stable well-resourced cadre of a personnel 
within DHS to conduct analysis and support decisions. Third, 
streamlining Congressional oversight of the Department's 
activities.
    First, let me turn to transparency. Arguably, the most 
important way DHS can improve strategic planning is by 
increasing the transparency of the supporting analysis done by 
and for the Department. When analysis is made available for all 
to view, its quality improves, because data, assumptions, and 
logics are examined and policy debates can then become about 
the facts.
    When data and analysis is subject to review and open to 
deliberations another result is innovative new ways to solve 
problems. Despite its promise, in practice transparency is 
stunted by two myths.
    Myth No. 1: The first myth is that transparency of DHS 
analysis will compromise the security or privacy. Certainly 
concerns about security and privacy warrant careful attention; 
however, other organizations have developed procedures that 
allow for review of analysis regarding highly-classified issues 
or have found that significant analysis of National security 
topics can be conducted outside of the restrictions of 
classification.
    In fact, shielding analysis from review comes at great 
cost. Greater access to methods, data, and analysis help bring 
the combined resources of our Nation's universities to bear on 
homeland security challenges and raise the chances of stronger 
program design and less duplication of effort.
    Myth No. 2: The second myth that stunts the practice of 
transparency is the Government can't explore new ideas under a 
microscope. The origin of this myth rests in the belief that 
Government officials will be wary about exploring new policy 
ideas unless they are provided a shelter from the perceived 
penalties of public review and critique of proposed new ideas 
in their underpinning analysis.
    In practice, there is some truth to these concerns, but 
critique in advance that leads to strengthened planning is 
nearly always preferable to the costs of a failure later. 
Decisions shaped by stronger strategic analysis are better-
positioned to weather critique and ultimately to succeed.
    Thus DHS will be better served by increasing transparency. 
The expectation should be that the analysis will be shared as a 
rule rather than as an exception. If this view is adopted, DHS 
could consistently take three steps to improve transparency of 
strategic planning.
    First, subject analysis and analytic methods to independent 
peer review. Second, develop procedures for making data sets 
available for analysis across DHS and within academia.
    Third, implement processes to share data and analysis as 
part of deliberations about strategies, policies, and 
regulations with partners across Federal and local governments, 
the private sector, and the public.
    Now let me turn to analytic capabilities to support 
strategic planning. To succeed in conducting strategic planning 
and implementing the results, DHS must have analytic 
capabilities within the Department. This capability must exist 
in support of the Secretary so that it is independent of the 
vested interests of any component agencies.
    Sustaining this internal analytic capability requires more 
than Congress ensuring stable and adequate funding. It also 
requires that DHS create and foster career paths across the 
Department that allow these people opportunity for growth.
    Finally, regarding my third point about Congressional 
oversight. The purpose of strategic planning is to ensure that 
DHS uses resources provided by Congress in a way that reflects 
National priorities.
    The current Congressional oversight structure creates 
challenges to efficient management, but consistent and early 
use of transparent strategic planning formed by analysis will 
make it easier for Congress and DHS to together implement 
effective homeland security policies.
    In summary, DHS's first decade was clearly one marked with 
challenges, mistakes, and learning. If DHS is to continue 
maturing, both the Department and Congress should work together 
to institute a new approach to greater use of integrated 
strategic planning that incorporates greater reliance on 
transparent analysis, strengthening the Department's internal 
analytic capabilities, and to the extent possible simplify 
Congressional oversight of DHS.
    Thank you very much. I am happy to answer any questions 
that you might have.
    [The prepared statement of Mr. Willis follows:]
               Prepared Statement of Henry H. Willis \1\
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    \1\ The opinions and conclusions expressed in this testimony are 
the author's alone and should not be interpreted as representing those 
of RAND or any of the sponsors of its research. This product is part of 
the RAND Corporation testimony series. RAND testimonies record 
testimony presented by RAND associates to Federal, State, or local 
legislative committees; Government-appointed commissions and panels; 
and private review and oversight bodies. The RAND Corporation is a 
nonprofit research organization providing objective analysis and 
effective solutions that address the challenges facing the public and 
private sectors around the world. RAND's publications do not 
necessarily reflect the opinions of its research clients and sponsors.
---------------------------------------------------------------------------
                             April 26, 2013
       strengthening strategic planning and management at dhs \2\
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    \2\ This testimony is available for free download at http://
www.rand.org/pubs/testimonies/CT386.html.
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    Congress has given the Department of Homeland Security (DHS) a 
complex set of five missions to meet the evolving challenges faced by 
our country:\3\
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    \3\ These missions were most clearly outlined in two DHS documents: 
The Quadrennial Homeland Security Review (released in 2010) and the 
Department of Homeland Security Strategic Plan Fiscal Years 2012-2016 
(released in 2012).
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   Prevent terrorism and enhance security;
   Secure and manage borders;
   Enforce and administer immigration laws;
   Safeguard and secure cyberspace;
   Ensure resilience to disasters.
    The recent Government Accountability Organization (GAO) report on 
Government fragmentation, overlap, and duplication is the latest 
critique to question the Department's effectiveness and efficiency in 
implementing these missions.\4\ The report cites inefficiencies and 
waste across a range of DHS activities, such as airline passenger and 
baggage screening, border security, and preparedness grant programs.
---------------------------------------------------------------------------
    \4\ GAO (2013). 2013 Annual Report: Actions Needed to Reduce 
Fragmentation, Overlap, and Duplication and Achieve Other Financial 
Benefits, U.S. Government Accountability Office, Washington, DC.
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    Though troubling in a period where budgets are lean, the waste in 
programs like these is a symptom of a larger problem at DHS. DHS 
programs too frequently lack strategic guidance, do not result from 
implementation that reflects choices and priorities to achieve desired 
outcomes, and suffer inadequate evaluation.\5\
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    \5\ As an example, consider observations about DHS acquisition 
management provided by Jeffrey Drezner and Andrew Morral in Reducing 
the Cost and Risk of Major Acquisitions at the Department of Homeland 
Security (2013), PE-105, RAND Corporation, Santa Monica, CA.
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    Strengthening the Department's strategic planning and program 
management is essential if DHS is to implement effective, integrated 
solutions that enable the Nation's desired capabilities across the five 
DHS missions. DHS programs should be supported with early and thorough 
strategic planning that outlines desired outcomes. Resources should be 
directed toward activities that most effectively and efficiently 
achieve these desired outcomes. Programs should be subjected to 
evaluation to ensure progress is made toward those outcomes or to guide 
adjustments to the program.
    While the Department has established goals to put processes in 
place to implement the required strategic planning and management 
capabilities, success depends on Congress and DHS working together to:
   implement greater transparency for strategic planning, 
        program implementation, and evaluation efforts conducted by and 
        for the Department;
   develop a stable, well-resourced cadre of personnel within 
        DHS to conduct analysis and support decision making;
   streamline Congressional oversight of the Department's 
        activities.
    A brief review of the DHS's progress in its first 10 years and 
challenges ahead provide insight into why these steps are critical and 
what is involved in completing them.
            confronting future homeland security challenges
    On March 1, 2003, 22 independent agencies joined together to form 
the Department of Homeland Security as the newest Cabinet-level 
agency.\6\ Now, 10 years later and in the wake of last week's tragedies 
in Boston, it is prudent to assess the status of Department and 
consider what the most pressing steps should be to continue the 
Department's progress.
---------------------------------------------------------------------------
    \6\ Secretary Janet Napolitano (2013, February 26). The Evolution 
and Future of Homeland Security, Third Annual Address on the State of 
Homeland Security, Washington, DC.
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    Arguably the Department's most notable organizational 
accomplishment has been developing the ability to respond as a unified, 
coordinated organization, as exemplified in the response to Hurricane 
Sandy. In October and November of 2012, DHS:\7\
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    \7\ For more details, refer to Hurricane Sandy: Timeline, available 
on-line at http://www.fema.gov/hurricane-sandy-timeline as of April 21, 
2013.
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   coordinated emergency plans with partners at all levels of 
        government;
   deployed close to 10,000 personnel from across FEMA, the 
        Transportation Security Administration, United States 
        Citizenship and Immigration Services, Coast Guard, Secret 
        Service, Customs and Border Protection, Immigration and Customs 
        Enforcement, and DHS Headquarters;
   kept private-sector partners connected and informed through 
        the National Business Emergency Operations Center daily calls;
   distributed more than $700 million to the more than 400,000 
        disaster survivors from Connecticut, New York, and New Jersey 
        who applied for individual assistance support.
    The Department's integrated response capabilities provide a 
foundation for keeping the Nation safe and secure, but the strategic 
environment within which the Department is operating remains filled 
with complex challenges. For example,
   Hurricane Sandy reminded us that old assumptions about where 
        and how frequently natural disasters occur may no longer be 
        valid, and indeed place critical infrastructure at risk.
   As Congress debates immigration reform, the Department may 
        find itself overhauling border security operations, workplace 
        enforcement, and administration of visa policies.
   The more we learn about cyber threats to financial networks, 
        control system software, and intellectual property, the more it 
        becomes evident that we need new strategy, doctrine, and 
        standards for securing cyberspace.
   Revelations about the motivations behind the terrorist 
        attacks in Boston underscore the importance of countering the 
        variety of threats from home-grown radicalization, 
        transnational crime, and terrorism networks.
   While the global community reacts to nuclear ambitions of 
        Iran and North Korea, at home we must consider how to protect 
        the country from nuclear terrorism in a period of possible 
        expanded proliferation.
    When the challenges are great and resources limited, good strategic 
planning is critically important. Three factors make assessing the 
risks from these many sources difficult and strategic planning all the 
more essential to DHS's ability to fulfill its multiple missions.
    1. The threats themselves are poorly understood.--Consider for 
        example, how much will the sea level rise? How might nuclear 
        terrorism occur? Or, what are the threats to the United States 
        in the cyber domain and what are their associated risks? The 
        variety and ambiguity of threats to consider requires careful 
        scoping of scenarios and data-driven analysis to define and 
        assess the range of conditions the Department must be prepared 
        to address.\8\
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    \8\ For further discussion refer to Treverton, Gregory F. (2009). 
Addressing ``Complexities'' in Homeland Security. Center for Asymmetric 
Threat Studies, The Swedish National Defence College, Elanders, 
Vallingby.
---------------------------------------------------------------------------
    2. The consequences of these threats and means to mitigate or 
        prevent them affect the Nation in many ways.--For example, 
        Hurricanes Katrina and Rita killed people and destroyed 
        property. Levees can reduce both of these risks. But, levees 
        also exacerbate poor sediment management and thus can harm 
        unprotected farmland and fisheries in nearby areas.\9\ 
        Furthermore, failure to build community resilience can deepen 
        and prolong the economic disruptions that follow disasters.\10\ 
        Solutions must balance efforts to address each of these 
        outcomes.
---------------------------------------------------------------------------
    \9\ A description of how these issues were managed in Louisiana is 
available in the Lousiana's 2012 Coastal Master Plan, produced by the 
Lousiana Coastal Protection and Restoration Authority, Baton Rouge, LA.
    \10\ For more discussion see Chandra A., J. Acosta, S. Stern, L. 
Uscher-Pines, M.V. Williams, D. Yeung, J. Garnett, L.S. Meredith 
(2011). Building Community Resilience to Disasters: A Way Forward to 
Enhance National Security, TR-915-DHHS, RAND Corporation, Santa Monica, 
CA.
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    3. Solutions require multiple capabilities and thus integrated 
        planning among multiple DHS component agencies.--The desired 
        capabilities to protect the Nation against a diversity of 
        threats do not reside in any single organization within DHS. 
        Thus, choices must be made about how to allocate resources 
        across DHS to most effectively solve problems of National 
        concern.
    Overcoming these challenges to implement solutions to complex 
threats requires setting priorities about which threats are most 
concerning, which outcomes are most important, and how resources can be 
best used to implement the desired balance across both threats and 
outcomes. For example, preventing illegal migration requires choices 
among expenditures on fences and barriers; air, sea, and land 
surveillance; security at ports of entry; workplace enforcement; and 
administering immigration and visa policies. These choices will 
certainly lead to shifting of resources among component agencies. In 
doing so, DHS will simultaneously have to ensure that these resource 
choices do not unduly harm other enduring missions, such as helping 
communities recover from floods or other disasters, collecting duties 
on imports, or protecting the President of the United States.\11\
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    \11\ For a discussion of identifying objectives and performance 
measures refer to Willis H.H., J.B. Predd, P.K. Davis, W. Brown (2010). 
Measuring the Effectiveness of Border Security Between Ports-of-Entry, 
TR837-DHS, RAND Corporation, Santa Monica, CA.
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    Too frequently, important decisions at DHS are not made with the 
benefit of rigorous analysis. For example, a GAO review of 71 DHS major 
acquisition programs documented that 88 percent proceeded past 
acquisition review of the DHS Investment Review Board without the 
documented planning analyses required by DHS Policy.\12\
---------------------------------------------------------------------------
    \12\ See Homeland Security: DHS Requires More Disciplined 
Investment Management to Help Meet Mission Needs (2012, September 18). 
GAO-12-833, Washington, DC.
---------------------------------------------------------------------------
    In summary, meeting complex security challenges in the future 
requires more than just unified action from DHS. For the Department to 
continue its growth it must complement the proven ability to respond as 
a unified organization with the ability to develop integrated plans 
that set priorities, direct resources to programs and activities to 
achieve outcomes consistent with these priorities, and conduct 
evaluations to ensure these outcomes are realized.
       keys to implementing integrated strategic planning at dhs
    DHS currently has efforts underway that are consistent with the 
goal of developing capabilities to integrate Department-wide strategic 
planning into decision making about priorities and budgets. Among these 
are both the implementation of the Integrated Investment Life Cycle 
Model (known as the IILCM) to improve management of acquisition across 
the Department as well as the on-going analysis to support the 
Department's second Quadrennial Homeland Security Review, due to 
Congress on December 31, 2013. While these initiatives point the 
Department in the right direction, success is not assured unless DHS 
addresses three related issues:
   Increasing transparency surrounding strategic planning and 
        analysis;
   Strengthening internal analytic capabilities to support 
        strategic planning;
   Simplifying Congressional oversight.
  increasing transparency surrounding strategic planning and analysis
    Arguably the most important way DHS could improve strategic 
planning is by increasing the transparency that surrounds the 
supporting analysis done by and for the Department. Naturally, efforts 
to increase transparency must pay close attention to protecting 
information that is security-sensitive, could reveal information that 
could favor some firms over others in the Government acquisition 
process, or could risk revealing personally identifiable information. 
As will be described subsequently, there is a great deal in the way of 
analysis that can be done within these constraints.
    However, adopting a position of greater transparency involves 
adopting the expectation that analysis will be shared as a rule rather 
than as an exception. If this goal is adopted, there are several simple 
actions DHS could take consistently to improve the transparency of its 
strategic planning, including:
   subjecting analysis and analytic methods to independent peer 
        review;
   developing procedures for making data sets available for 
        analysis across DHS and within academia;
   implementing processes to use analysis within deliberations 
        about strategies, policies, and regulations with partners 
        across Federal and local government (such meetings already 
        occur regularly) and also to stakeholders among the private 
        sector and public (which can be done more regularly).
    Since greater transparency is key to strengthening strategic 
planning and analysis, I'll return to this topic later in my testimony 
to explain its benefits, as well as the myths that prevent more 
widespread adoption.
   strengthening internal analytic capabilities to support strategic 
                                planning
    To succeed in conducting strategic planning and implementing the 
results, DHS must have analytic capabilities within the Department. To 
provide an integrated view for the Department, analytic capability must 
exist in support of the Secretary. To support leadership 
decisionmaking, the capability must have stable resources so that 
analysis can draw on knowledge of missions, datasets, and the analytic 
agenda that has developed over the recent past.
    Currently, strategic planning and analysis is being conducted 
across many parts of DHS, with a substantial portion of activity 
residing within the component agencies. Analytic capability within the 
components is necessary and appropriate, but is not a substitute for 
support to the Secretary. Integrated planning at the Department level 
requires analysis that is independent of the interests of any one 
component.
    Analytic capability in support of the Secretary has historically 
resided in several places but has never been stable. For example, 
within the DHS Office of Policy, the Office of Strategy, Planning, 
Analysis, and Risk has responsibilities for both developing strategic 
planning processes and conducting analysis decision making by DHS 
leadership. Yet, another place where analytic capability has existed 
within DHS is the Division of Program Analysis and Evaluation with the 
Office of the Chief Financial Officer. Similar complementary 
capabilities have existed or could be developed within the Management 
Directorate or Science and Technology Directorate. In all cases, these 
analytic cells have experienced periods of high turnover or possible 
reductions in funding when DHS is faced with pressure to direct more 
effort to operations.
    As a result, it is clear that sustained internal analytic 
capability requires more than Congress ensuring stable and adequate 
funding. It also requires that DHS create and foster analytic career 
paths across DHS that allow individuals opportunity for growth. Two 
strategies could support development of such careers. First, increased 
transparency of analysis could increase interest among analysts in 
working on DHS strategic planning. Second, deliberate personnel 
development strategies could include cross-Department assignments. It 
would be these assignments that could allow analysts to gain first-hand 
experiences with missions across the various component agencies that 
later helps them answer questions posed by DHS leadership and Congress.
                  simplifying congressional oversight
    The purpose of strategic planning is to ensure that DHS uses 
resources provided by Congress in a way that reflects National 
priorities. The current oversight structure that DHS must operate 
within denies the Department a clear voice from Congress about what 
those priorities should be.
    The abundant Congressional oversight of the Department has been 
widely cited yet remains an obstacle to efficient management. As you 
know, DHS answers to 108 Congressional committees and subcommittees, 
about four times as many as the Departments of State and Justice 
combined.\13\ In contrast, the Department of Defense reports to about 
one-third the number of committees for a budget that is approximately 
ten times larger than DHS's.\14\ This oversight leads to thousands of 
requests for briefings and hundreds of requests for testimony each 
year, as well as multiple perspectives on what issues before DHS are 
the most pressing.\15\
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    \13\ Alicia Caldwell (2011, May 17). DHS Most Overseen Department, 
Associated Press.
    \14\ Jessica Zuckerman (2012, September 10). Politics Over 
Security: Homeland Security Congressional Oversight In Dire Need of 
Reform, Heritage Foundation.
    \15\ Bipartisan Policy Center (2011). Tenth Anniversary Report 
Card: The Status of the 9/11 Commission Recommendations, Washington, 
DC.
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    The prospect of asking some committees to cede oversight of DHS to 
other committees raises difficult political questions. However, these 
discussions are more than justified at this 10-year point in the 
Department's existence, and could yield potential benefits. 
Consolidating jurisdiction over the Department into fewer committees 
would make it easier for the Department to work with Congress to 
develop priorities and respond quickly and efficiently to oversight 
requests.
      how greater transparency will improve dhs strategic planning
    GAO and the National Academies are two among many organizations 
that have identified possible areas where DHS suffers fragmentation or 
inefficiency. Often, the critiques stem from incomplete or missing 
analysis. In turn, these critiques lead to additional oversight and 
requests, and requests for information from Congress. When responses to 
these requests do not meet the satisfaction of Congress, the result is 
erosion of confidence in the management of DHS programs. This, in turn, 
prompts additional reviews and the cycle of criticism, requests, and 
unmet expectations continues. Increased transparency can help DHS break 
this cycle.
    When analysis is made available, the analysis promotes more 
complete deliberations about what the facts are and the subsequent use 
of those facts in decision making. When analysis is subjected to 
review, its quality improves because data, assumptions, and logic are 
evaluated under a wider set of considerations. When data and analysis 
are open to deliberations, the result can be new ideas and innovative 
approaches to solving problems--a natural result when more people are 
aware of problems and have access to facts and figures concerning those 
problems.
    Despite the promise of transparency, in practice implementation is 
stunted by two myths.
myth no. 1: ``transparency of dhs analysis will compromise security or 
                               privacy''
    Certainly concerns about security and privacy warrant careful 
attention. However, other organizations within the National security 
and intelligence community have developed procedures and policies that 
allow for transparency of highly-classified material. The Military 
Operations Research Society was established to provide defense analysts 
an opportunity to share and discuss classified work. The National 
Academy of Sciences, the JASON advisory group, the Defense Science 
Board, and RAND Corporation have found that significant analysis of 
National security topics can be conducted outside of restrictions of 
classification. And, when security concerns dictate greater 
limitations, organizations like these have successfully implemented 
peer-review processes for classified studies.
    Furthermore, even when specific estimates are classified, often the 
methodology, assumptions, and other general features of the problem can 
be discussed and debated in unclassified settings. In some cases, data 
can be made available in ways the limit the risk of disclosure of 
sensitive or personally identifiable information, so that others across 
and outside of the Department have the opportunity to study the 
problems that DHS is trying to solve. In this realm, it is critical 
that research adheres strictly to policies and procedures to protect 
sensitive information and the rights of human subjects in a research 
setting. However, approaches used in topics related to the study of 
education, social security, and health care all provide potential 
analogies.
    These steps could bring the combined resources of our Nation's 
universities to bear on homeland security planning challenges. Beyond 
adding some of the best minds in the Nation to the cadre of analysts 
working on these issues within DHS, increased dissemination of planning 
analyses is likely to foster a new generation of students with the 
knowledge and skills needed to enter the DHS workforce and offer 
important new innovations to its strategic plans and other analytic 
products.
   myth no. 2: ``government can't test new ideas under a microscope''
    The origin of this myth rests in the belief that the combination of 
public interest, vested interests, and costs of complying with requests 
for oversight together lead policy makers to be conservative about 
exploring new policy ideas and proposals (and thus not innovate) unless 
they are provided a shelter from the perceived penalties of this type 
of review. Agencies claim that increased transparency would remove this 
shelter, and this inhibits innovation.
    In practice, there is some truth to these concerns. However, 
consider the alternative: Purported innovation without the benefit of 
fresh ideas and constructive criticism of new proposals. Transparency 
can engender both fresh ideas and constructive criticism, and new ideas 
that are born from such a process are arguably better-positioned to 
weather critiques. Thus, DHS would be better served by increased 
transparency.
                                summary
    Clearly, DHS's first decade was one marked with challenges, 
mistakes, and growth. The challenges to the Nation that the Department 
is responsible for addressing in the near future are strikingly 
complex. Moreover, as the recent GAO report on fragmentation and 
duplication indicates, the Department has plenty of room to continue 
maturing as an organization. If DHS is to step up to these challenges, 
both the Department and Congress should work together to institute a 
new approach to greater use of integrated strategic planning that 
incorporates strengthening the Department's internal analytic 
capabilities, greater transparency surrounding analysis and the data 
supporting it, and (to the extent possible) simplified Congressional 
oversight of DHS.

    Mr. Duncan. I want to thank the witnesses for your opening 
testimony.
    I now recognize myself for 5 minutes for questions.
    I want to start off by saying we have heard words like 
flowcharts, redundancy, strategic planning, and coming from the 
private sector, that is what business does.
    They set an organizational model, they strategically plan 
for the future based on incomes, expenses, and anticipated 
revenue and future expenses. Strategic planning is important 
but also the flexibility with the strategic planning when you 
see something that doesn't work, incomes fall short, expenses, 
to make adjustments on the fly so to speak as business operates 
and so I appreciate that the private sector input here and 
vision and I guess your opinions.
    I want to start off with the Government side of it to Ms. 
Berrick because of the presence of multiple information sharing 
entities can have both favorable and unfavorable consequences 
for how effectively Federal agencies respond to homeland 
security threats.
    With what happened last week in Boston, the terrible 
tragedy there, let me say law enforcement responded beautifully 
and we were able to find the bombers and I appreciate that, but 
I think there are lessons to be learned especially as we look 
back 10 years for homeland security being stood up and we start 
to understand that the reason DHS was created; why all of these 
agencies, 22 of which were brought up under one umbrella, and 
certain centers like National Counterterrorism Center set up as 
the hub in the wheel.
    We start understanding and realizing that maybe the 
information sharing isn't going like it should or maybe we are 
starting to see some stovepipe dynamics that were revealed back 
in 2001 reemerge.
    So I guess my question for you is: What effects, either 
positive or negative, does overlap of information collection 
and analysis among these five entities listed in the GAO's 
report have on DHS's ability to execute its missions 
specifically on information sharing in light of what happened 
last week, Ms. Berrick?
    Ms. Berrick. Thank you. Thank you, Mr. Chairman.
    As you mentioned, there can be significant benefits of 
having that overlap, as intelligence is never perfect. So 
having--getting that information from more sources than one can 
be very beneficial.
    Our point has always been that, when doing that, 
coordination and sharing of best practices is really critical. 
So for example I mentioned we looked at eight urban areas. We 
found 37 of these information-sharing entities and there was 
overlap among 34 of those.
    While these entities had generally good working 
relationships, there was no real emphasis on coordination of 
activities so that they weren't overlapping one another. And as 
a result, some of the customers for these entities would 
complain about getting multiple analytical products that 
covered the same points.
    They thought it, in some cases, was wasting their time 
because they were getting the same information from many 
sources. So first of all, it is important to coordinate.
    Second, in these situations it is really important to share 
best practices. Some of these entities worked out very good 
arrangements where they co-located--some of the entities were 
co-located--that really cut down on unnecessary duplication.
    In other cases, governance boards were established where 
different entities were members of that, and that helped. So 
while some overlap, as you mentioned, can be very good, it 
really makes coordination in the sharing of best practices 
critical.
    I also wanted to mention GAO has designated as early as 
2005, and it is still on our high-risk list, the sharing of law 
enforcement and intelligence information as a high-risk area 
Government-wide.
    Where we have seen the most progress is in the 
establishment of a governance structure to oversee information-
sharing initiatives. We have seen less progress at the 
Department level and actually coordinating and leveraging each 
other's initiatives and also in coming up with good technology 
solutions to facilitate the sharing of information.
    Mr. Duncan. Let me just follow up on that; and while I did 
not plan on it, but you hit on something. You think the 
different IT systems that we are operating on hamper that 
effort of information sharing and do we see some territorial 
disputes or maybe ownership issues of owning the data and not 
really wanting the other agencies to be able to have access?
    I am talking about security data. I am not talking about 
just processes and systems, but I guess if a law enforcement 
agency has a suspect, they have compiled a file on that 
suspect, I would say that it would benefit law enforcement 
across the spectrum to all have that information versus what I 
think we are seeing is some sort of proprietary ownership of 
that information and not wanting to share that. I am afraid 
that that is what we are going to discover as we look back on 
last week. Is there any validity to that?
    Ms. Berrick. Generally speaking, we have identified the 
commonality or lack of for IT systems to be a challenge, and we 
in fact, made a recommendation to the program manager for the 
information-sharing environment to establish an enterprise 
architecture through which the Department--there are five key 
departments that have key information-sharing 
responsibilities--can be a part of so that they can develop 
common IT solutions.
    Of those five departments, only two have developed 
implementing plans to move forward within that architecture. 
The other three are still working on it. So it is recognized 
that it is a problem. There are efforts underway to address it 
but the Government isn't there yet.
    Mr. Duncan. I think the subcommittee will probably revisit 
this IT issue in light of what happened last week.
    I just want to ask one final question before I turn it 
over, but Ms. Richards, we had talked about CBP as a shift 
change happens, CBP officers down maybe in Arizona or along the 
border, having to trade radios out between the car windows 
between shift changes.
    I think Inspector General Edwards recently confirmed in a 
letter--that Department-wide radio interoperability is one of 
his officers' highest-priority, short-term recommendations and 
having seen what South Carolina did after 9/11 and in the post-
Hurricane Hugo days but then after 9/11 more than anything, is 
that our law enforcement; local, Sheriff's Department, Chief of 
the Police, and EMS services along with the National Guard, 
Highway Patrol at the State level--they all couldn't 
communicate.
    So grants were issued and money was spent to upgrade to a 
500 megahertz system so everybody at certain times could be on 
the same frequency to listen what is going on, communicate 
effectively.
    I would like for you just to address that interoperability 
aspect, but also address the fact that we have got $60 billion 
budget and agents are having to hand radios out through the car 
window for the next shift so that they will have the radio 
system that is operable. That alarms me. So if you could 
address that for me.
    Ms. Richards. Thank you, Mr. Chairman.
    There are two issues that you are talking about. One is an 
interoperability where the radios that they have should be 
programmed so that they can access this common channel and the 
radio operator should be aware of the common channel and how to 
get to it.
    What our audit found was that most of the radios were not 
properly programmed although they could have been and that most 
of the radio users were simply unaware of the common channel.
    We recommended that the Department put out policies and 
procedures to make sure that everyone was aware and could get 
to this common channel as a workable solution and most 
importantly that the Department put in a strong governance 
structure to ensure that all of the components were in line 
with this common goal of achieving interoperability.
    The Department is working on putting out its policies and 
procedures. The Department did not agree with our 
recommendation for a governance structure. They have a 
governance structure in place that is based on memorandums of 
agreement among the various components and they believe that 
that is sufficient.
    As to the question of handing radios off at the end of a 
shift, as part of a follow-on to our interoperable 
communications audit we started an audit looking at the 
inventory of the communications assets.
    We have finished our fieldwork and we are about to deliver 
our draft report to the Department and hope to have the report 
to you within the next quarter. I think that would answer some 
of your questions on that issue. Because we haven't finished 
the work, I can't address it today.
    Mr. Duncan. Thank you so much.
    I would ask that y'all would also with interoperability and 
I am sure we will review Boston events and interoperability in 
communication with regard to that as well.
    Ms. Richards. Yes, sir.
    Mr. Duncan. Okay. Thank you so much.
    I will yield to the Ranking Member of the committee, Mr. 
Barber, for his questions.
    Mr. Barber. Well, thank you, Mr. Chairman. I hadn't planned 
on asking this question but in light of what you just said, I 
really feel I must and that has to do with the interoperability 
problem.
    Let me give you a very specific example and I don't think 
much has changed. When the Ranger Rob Krentz was killed 3 years 
ago, we believe by a cartel member, one of the biggest problems 
was interoperability.
    When I drove down there with Congresswoman Giffords to meet 
with the ranchers shortly after his death we learned very 
quickly that we were trying to reach the Secretary and we kept 
losing signal throughout the area.
    In this rugged area of the Southwest Border, this is a huge 
problem. In talking to agents on the ground it is still a 
problem 3 years later. It not only is to the advantage of the 
civilians but certainly to our Border Patrol agents that we fix 
this problem.
    So I look forward to report and unlike your previous report 
on this matter, I hope the Department will seriously consider 
implementing your recommendations. This is a huge issue.
    Let me turn to a general theme. As I have listened to the 
witnesses, there are certain ideas that continue to come up, 
and I want to ask about how we get them done. Having skilled 
personnel doing the right job with the right skill set in the 
right evaluation processes.
    You know, sometimes we promote people who are really good 
at what they do on the field but then they are supervisory, 
they don't know how to do it. You talked about transparency and 
planning. You talked about data-driven planning and evaluation 
processes.
    All of these things are pretty much across the board a 
consensus I think amongst the witnesses this morning. I am 
interested in your ideas about not just what to do but how we 
do it in a department of this size. I don't think it is 
impossible.
    I think any human problem can be fixed by human beings. I 
think the private-sector experiences that we have heard about 
this morning are being done every single day. So I appreciate 
from any and all the witnesses your recommendations on how and 
where in the Department we place responsibility for getting 
this done in an expeditious manner.
    Ms. Berrick. If I can start, I would say there are a few 
things that will really be critical for DHS to address these 
issues and I think they are on their way to doing it. The key 
will be execution.
    The first is having a roadmap, you know, identifying what 
their problems are, what are the root causes of some of these 
fundamental management problems, and how are they going to 
address those gaps.
    I think second, they need to identify the resources that 
are going to be needed to address those gaps and if they 
perceive funding shortfalls start prioritizing on which 
initiatives are more important than others and which are more 
time-sensitive.
    They also need a system of metrics and an oversight 
structure to make sure that they follow through on those plans, 
and then the final piece is show demonstrated progress in 
addressing the issues.
    These also very much mirror GAO's criteria for removal from 
the high-risk list. We are not looking for perfection. We are 
looking for a sustainable, repeatable plan that can--you know, 
through which the Department can show demonstrated progress.
    Related to DHS, they have developed, I think, a good 
strategy to address these high-risk areas. I have seen them 
make the most progress in the past 3 years than I have seen 
since their creation, and they have made improvements to that 
strategy.
    They have put pretty good metrics in place. For the most 
part, they have identified resource needs and prioritized. The 
key now is really executing on those plans. They have some very 
promising initiatives related to acquisition, IT financial 
management, but for the large part they are in the early 
stages.
    DHS also has a very good policies and procedures. Their 
acquisition directive is very strong. It is consistent with 
best practices. The issue has been that they haven't executed 
on that directive. So I think the bottom line, they have good 
strategy strategies and plans in place for addressing these 
management issues. The key is execution and continued 
oversight.
    Mr. Willis. Could I add on to that as well?
    Mr. Barber. Please, doctor, yes.
    Mr. Willis. Thank you, Ranking Member Barber.
    You know, I would add a couple things. I have put in my 
written testimony some things the Department can do. I would 
like to highlight a few things Congress can do to help them.
    One is demand to see analysis for major decisions and 
systems. An example is a good one Congress did in the past when 
the Congress was considering acquiring advanced portal 
detectors.
    Congress and legislation said we need, the Secretary needs, 
to see a cost-benefit analysis and sign off on it before. That 
led it to National Academy's panel that I was a part of that 
reviewed the cost-benefit analysis and said this is a cost 
analysis not a cost-benefit analysis. Subsequently, decisions 
were made of how to change that system.
    The second thing is that Congress can make sure that the 
analytic capabilities at the Department level have adequate and 
stable funding. I highlight adequate, not necessarily large. 
These--it doesn't take--it is an ounce of prevention for a 
pound of cure here.
    Just to test this premise, we at RAND looked at our own 
studies for Department of Defense and we were able to find tens 
of billions of dollars easily of savings and avoided spending 
off a small fraction spent on those types of studies.
    Mr. Barber. Mr. Killough.
    Mr. Killough. One example to add. In 2008 the Department of 
Veterans Affairs created the Acquisition Academy and the 
primary objective at the Acquisition Academy was to support 
Departmental acquisition reform and program execution through 
the creation of curriculum and improved competency capabilities 
and the people in the acquisition and program management areas.
    That Acquisition Academy has functioned in training over 
10,000, I am not sure what the number is--it is 10- to 15,000 
people in improved acquisition processes and in becoming 
experts in program execution since that time.
    In September 2012, the Veterans Affairs Office of the 
Inspector General released a report documenting savings in one 
specific area and that would be in veterans' medical programs 
in the administration, acquisition, and management of programs; 
and an annualized savings of $390 million.
    The benefit of that is that they made a decision that the 
people that were conducting and acquiring assistance needed to 
be more highly confident in the knowledge and capability of 
defining the specific thing they need to acquire, also in 
eliminating redundancy and acquisitions across various 
different areas within the Department, and once they acquire 
the systems or acquire this capability to improve their 
capability to execute the programs.
    Mr. Barber. You know, I would love to hear from other 
witnesses but my time is well over the allotted time, but I 
want to just say, and maybe in the second round I will come 
back to this, that the GAO reported earlier in your statement 
1,800 recommendations I believe over the last 10 years.
    I have looked at many of those GAO studies, some of which I 
was involved in directly, and they are all pinpointing this 
problem, that problem, this issue, that issue, and what I see 
overall is a systemic problem not necessarily individual series 
of problems.
    My question really is trying to get at, how do we solve the 
systemic problem? You know, we hear about banks and other 
institutions being too big to fail and I just wonder if DHS may 
be too big to succeed in the sense of trying to get the job 
done.
    That is an editorial comment, not necessarily a fact, but I 
do think we have to make this Department work more effectively, 
and I am looking for a way to solving the overall problems, not 
just the specifics.
    Thank you, Mr. Chairman.
    Mr. Duncan. Thank you, Ranking Member.
    The Chairman will now recognize the Ranking Member of the 
full committee, Mr. Thompson, for a question.
    Mr. Thompson. Thank you very much, Mr. Chairman.
    I think one of the comments we hear quite often is a 
statement when you are talking about trying to fix things or 
improve them people will say, ``Well we have always done it 
this way.''
    That kind of, I think, is part of the reason we are here is 
we have had people who looked at the agency who said, ``Here 
are some better ways to do it.'' We have had business people 
who have done acquisitions and other things who have said, you 
know, ``Here are just some things that you, from a due 
diligence standpoint, you do if you are spending your own 
money, you want to get the best value.''
    We have some people who also have on a research side said, 
``Here are some things that some other people have done and 
done them successfully.'' Well, Ms. Berrick, if I would say to 
you that there are five or six procurement systems within the 
DHS, would you see the value of streamlining procurement so 
that we would not have separate systems operating?
    Ms. Berrick. I think related to procurement and 
acquisition, the key that we have seen at DHS is the need to 
have better oversight at the Department level of what the 
components are doing and for the under secretary of management 
to have authority over the component acquisition executives 
because there is a process at the DHS level, there is a process 
at the component level, and sometimes those two processes don't 
flow together as they should.
    So there is a lack of oversight. DHS is taking some action 
to improve that and have in fact strengthened the authority of 
the under secretary, but more work still needs to be done.
    Mr. Thompson. All right. Now, does the work need to come 
from the Secretary of DHS or does it require Congressional 
direction?
    Ms. Berrick. I don't think it requires Congressional 
direction to organize internally and provide oversight that is 
needed.
    Mr. Thompson. Right. Well, one of the things, we put 22 
agencies together and we inherited the culture of some of the 
legacy agencies who were a little more mature versus the new 
kids on the block, and so we see the legacy agencies kind of 
being the thousand-pound gorilla sometimes.
    Another thing Dr. Willis, that in an effort to consolidate, 
the perception is that if we have these programs and we 
consolidate them, that will save money.
    The Department has proposed to consolidate its 16 grant 
programs into one. We had a budget hearing. We have had the 
Secretary here. We were saying, ``Okay, how are we going to get 
the efficiencies out of consolidation?'' The response comes 
back most often, ``Well, we will just have one program and we 
will do these missions.''
    Well, but we don't have the analytics and other things that 
go with it to say that we will be able to maintain the 
effectiveness of the programs by consolidation. What is your 
opinion of the consolidation?
    Mr. Willis. I think this goes back to my main point about 
the need for early and sound strategic analysis. We know that 
these programs are important from communities because we are 
praying it succeeds; it is important, if it fails like it did 
in Katrina, it can be devastating.
    We know that these programs have put in place capacities 
that people have bought things, people have done--but there are 
things that we don't know because we don't have planning and 
analysis. We don't know whether this capacities are actually 
making us prepared and we don't know what the next strategic 
step should be taken to improve it.
    Similarly, we should probably consider whether this 
organization of going from 16 to 1 is in fact something that 
will align--allow us to do better leadership or whether there 
are other factors--actions that should be taken.
    Mr. Thompson. Mr. Killough, if I told you that 10-plus 
years later we still have almost as many contractors working in 
DHS as we have FTEs, what would you think of that?
    Mr. Killough. Well, clearly there are needs to have subject 
matter experts and contractors hired to--in specific instances, 
but the cases where contractors or non-affiliated employees are 
contracted to augment staff on a long-term basis generally 
finds that the home or parent organization hasn't been able to 
generate the capacity or the capability to be competent and 
have competencies in that specific area of expertise.
    Mr. Thompson. Well--well one of the things that we have 
asked the Department to do is we have been told that there are 
people in the same department doing the same job but that 
private contractors are being one-and-a-half to two times what 
the Government employee is being paid to do the same job.
    Now I think we can save money; either make a determination 
that we need to over time scale back and bring people in-house 
and build a capacity or we doing something wrong.
    But over 10 years later we still have private contractors 
doing, not the technical that you talked about, but basically 
the jobs that full-time employees normally do, procurement, HR, 
other kinds of things. So would you say to us that it would be 
a good idea to look at those private contracts and see if we 
getting our money's worth or could we do to better way?
    Mr. Killough. Well, first of all, a lot of the times there 
is an authorized head-count issue. So sometimes it is the 
chicken or the egg. So if you are going to authorize in the 
Department head count for Federal employees, that is one thing, 
but if you are not going to authorize increased head-count in 
order to change the contractor to an employee, then you are 
just going to have a problem with execution.
    Mr. Thompson. Well I appreciate it but, you know, I think 
if a Department head would come and say, ``I could save the 
taxpayers 10 percent of this budget by going from this process 
to the other,'' do you think somebody would make the argument 
on head-count or is it a cost efficiency?
    I guess, Dr. Stern, you the businessman. If somebody walked 
in to you and said, ``Dr. Stern, we could save this company 10 
percent by doing it this way. It wouldn't lose any 
efficiency,'' just your--I know there would be some checking 
that you would do, but how would you respond to that?
    Mr. Stern. I would definitely proceed to do it, execute it. 
I get the sense from the broader conversation that what we have 
is kind of a--on the one side a penalty-free system that leads 
to inaction. On the flipside, the total lack of desire to take 
a risk, take a step forward, because there is no reward for 
doing so.
    In aggregate we don't see the cliff, okay. As a Nation, now 
we do but there are pieces that we do, but we don't really see 
the urgency that we find in business where you are seeing a 
business that is really heading for bankruptcy, and you better 
take action and frequently take risky action, you execute, and 
then you make it come out right.
    Don't see that happening here. Not sure how you induce that 
in the Government. It is certainly a need, and I think the 
opportunities are anonymous for consolidation, combining 
function, reducing the level of structure in an organization, 
having fewer levels of management between the person who is 
executing and that the one sitting at the top.
    Anytime you have 13 signatures required to approve a 
capital acquisition, you know darn well that in between those 
13 signatures most of them never read it. They just sign off on 
the assumption that somebody else read it.
    Just eliminate those and streamline it and get on with it. 
We have done it many times and I have been involved in having 
saved many companies many businesses by just--and obviously 
pick the right people to execute.
    One thing you touched on which I think is important you 
want to have good financial and IT systems in place that allow 
you as a manager to track the progress against the objectives 
set. So that area is crucial.
    Mr. Thompson. Thank you very much. I yield back. Thank you 
for----
    Mr. Duncan. Gentleman's time is expired.
    I think he said on an age-old debate about the private 
sector and risk-taking and risk-benefit analysis and reward and 
bureaucracy or large--whether it is Government or large 
industry--where people get in a comfort zone and don't want to 
take that risk.
    We see that. That and the longer they stay in that job, the 
less risk-taking they do. So I appreciate your perspective on 
that and we will probably talk about that in Round No. 2, but 
the Chairman now recognizes Mr. Payne for a question.
    Mr. Payne. Thank you, Mr. Chairman.
    You know, I as a Ranking Member on Emergency Preparedness 
and Communications have continually had this whole issue around 
interoperability come up and this question is for Ms. Richards, 
but anyone else who might want to add their thoughts, please 
feel free to respond.
    Now I represent New Jersey's 10th district in northern New 
Jersey and my district felt the devastating effects of 
Hurricane Sandy. It is clear from my conversations with first 
responders who I am interacting with all the time during and 
after Sandy, interoperability is an essential--it is essential 
to responding to disasters.
    But you stated that there are roadblocks to achieving 
interoperability including DHS's failure to establish clear 
guidelines or effective governing structure with authority and 
responsibility to oversee achievement of Department-wide 
interoperability.
    Could you expand on what more Congress can do in helping 
DHS achieve interoperability? Does it take legislation that 
clearly sets the guidelines and the--and a time line to comply 
with actions like standardizing radioactivity?
    Ms. Richards. Thank you for the question. It is a crucial 
question and very important to all of us.
    The Department should have the capability with the 
authorities that they have now to establish that governance 
structure. The Department believes that collaboration on this 
issue through memorandums of agreement and understanding from 
the components will get them there.
    My audit work indicates that that collaboration is not at 
the point where it is going to get them there quickly. We 
continue to discuss with the Department our recommendation and 
the need for that authoritative governance structure to make 
decisions and disseminate the one decision throughout all of 
the components.
    Mr. Payne. What is their response to that?
    Ms. Richards. Their response continues to be that their 
joint working group is up to the task.
    Mr. Payne. Yet, and still, we have not achieved it and, you 
know--I am by no stretch of the imagination a rocket scientist 
but to get everybody on the same channel, you know, doesn't 
seem like it could be that difficult. I know we have wide-
ranging number of entities involved but----
    Ms. Richards. I would say in an effort to explain some of 
the Department's other issues they are upgrading their 
communication systems; the infrastructure that supports it. 
There are technical upgrades that they are putting in place 
that will or should improve the situation.
    But in my view, the basic getting out to your radio 
operators the information about the common channel and how to 
reach it and to the technicians that are programming the radios 
the information that that channel needs to be programmed in is 
extremely important and it should be fairly straightforward.
    Mr. Payne. You know, we have a little technology that was 
developed a decade ago called email and, you know, that 
potentially could be helpful in everyone--I know I get a lot of 
them every day on a myriad of issues.
    So that might be something they look at. Does it--do you 
think it, you know, would take legislation to set up a 
subdepartment? I mean, here we go, building out again--a 
subdepartment to have the governing authority to oversee this 
achievement toward interoperability because it is--I mean, it 
is the key.
    Ms. Richards. Certainly that would push the Department into 
doing something. This to me is a critical issue for the 
Department. Secretary Napolitano has very rightly stated that 
one of her most important goals is to create One DHS.
    As you are all aware it has been 10 years, which is a long 
time, but not a long time in the history of organizations. Some 
of the organizations that were put together date back to 
colonial times, such as the Coast Guard and the Customs Office.
    They are very proud organizations; overcoming those 
cultures to bring them together to work as one common 
organization is difficult. The Department administration is 
pursuing the issue. They have not been as successful as I would 
like to see.
    Mr. Payne. Thank you.
    Mr. Duncan. Thank you.
    Committee, we do have time for a second round of 
questioning which I would like to personally get into and we 
will work through the process if you guys want to, but so I 
recognize myself for 5 minutes for additional questioning.
    Yesterday, we had the NFL draft, and I will guarantee that 
those NFL teams didn't sign more defensive tackles than they 
needed. They didn't decide, you know, what we like this guy is 
a good athlete, we have got two free safeties, but let's go 
ahead and sign a third one, and I know we have got to pay too 
much for him, but let's go ahead and get a third one just 
because he is a likable guy or just because we might think we 
might need him down the road.
    They did strategic planning, look at the assets they have, 
look at the assets they may need in the future for a long-term 
vision for where they want the team to go, the growth that they 
are going to need, the age of the assets they currently have. 
That is how business operates.
    So I think Government needs to operate that way, as well, 
and I think you if you went on the street and asked average Joe 
American these questions about, ``Well we are $16.8 trillion in 
debt as a Nation, we have got an agency that really was--has 
been in existence for about 10 years and we are looking back at 
it, we understand it has got a $60 billion budget to it, 
225,000 employees, but we have identified where this person or 
this system is doing the exact same thing as this system over 
here, but what should we do?''
    They are going to say, eliminate one of them. Let's just 
let one of them do the job. Let's let one group do that job. 
That is what private sector would do. So I think this is very 
timely and I think this ought to transcend just that DHS. This 
ought to apply to every Government agency.
    We ought to do the same analysis here in Congress where we 
have duplication and wasteful spending that can be cut. This is 
low-hanging fruit for the American taxpayer, this is low-
hanging fruit for Congress, and it should be low-hanging fruit 
for the agencies as they apply stewardship methods to their own 
agencies.
    They shouldn't need an oversight hearing from a 
Congressional committee to recognize duplication, recognize 
waste, and start making the right decisions for the taxpayer.
    So having said all that rant, Mr. Killough, I want to ask 
you this; you know, some of the challenges for acquisition 
programs include lacking experience acquisition and contractor 
personnel.
    You touched on that just a little bit so how would 
Government go about hiring and educating and getting the right 
skills to the right people in the acquisition process because I 
foresee that as part of the big problem here. How do we 
identify those people? How do we get them the right skills, I 
guess is the question?
    Mr. Killough. Well, part of my recommendations was the 
first step is defining through adequate job descriptions or 
what they call in the Government, job classifications of 
these--the critical skills and knowledge that a person needs to 
have in order to perform the acquisition functions.
    So you create job classifications in those areas that you 
feel that you need improved capacity or improved competency in 
order to become more efficient.
    Mr. Duncan. So what you are telling me, based on your 
analysis, that there is not an identified tasked acquisition 
person within the agency to buy a communication system and 
there is not a tasked person with that responsibility to buy IT 
systems. I know there is there but----
    Mr. Killough. Well I am not completely versed in all of the 
OPM job classifications. I am particularly commenting on the 
areas of the program management aspects of it. I know there 
isn't that across-the-board in the Government in program and 
project management. It only exists today in the IT space.
    So there are program and project management activities 
being done in every department in every level in this 
Government and we only have one area where it is specifically 
addressed the skills and knowledge required to do those jobs 
and that is in the IT space.
    Mr. Duncan. I think that is important. Thanks for touching 
on that.
    I want to just shift gears to Dr. Stern for a minute 
because on page 4 of your written testimony--and it is part of 
the record by the way--any written testimony you provide is 
part of the record, but you say that, ``Even after 10 years 
under the same management umbrella, the Department is riven 
with conflicting cultures and customs.''
    So we had a lot of independent stand-alone agencies or 
subagencies who are now brought under the DHS umbrella. We have 
heard this from others, but now you even bring the topic up is 
that we have conflicting cultures and customs.
    So how does an agency as big and broad as DHS is, with 
stand-alone independent agencies that are now a part of 
something bigger--private companies have this problem as well 
as they do acquisitions and those acquired companies are now a 
part of something broader, how do they buy into that culture?
    How do they start writing for that brand and how can DHS 
apply that writing for the brand mindset to what they are 
doing? I use the example that you have got the Coast Guard, you 
have got Secret Service, which was part of Treasury, you have 
got CBP and ICE, which is part of something broader--stand-
alone but broader independently--now they are all part of this 
DHS umbrella. So how do we start working on that culture 
because I think that is vital to the on-going mission?
    Dr. Stern.
    Mr. Stern. In business, you encounter the same problem 
every time you acquire a couple of companies and merge them or 
frequently more than a couple of companies and you really--you 
state your mission and objectives in a broader sense to all 
involved and you force the issue.
    You actually force it, and those who that don't want to 
subscribe to it get invited to go do other things. It is 
interesting how rapidly people do adjust to the common thrust 
of the new entity because they have a lot at stake. Okay?
    Government has less flexibility or less desire to do what I 
am talking about as far as removing people from one 
organization that turn out to be disruptive to the new mission 
and new thrust, but it is a must-do. I don't think it is an 
option. Okay?
    In business, the end result would be disastrous if people 
didn't subscribe to the same objectives and the same 
philosophy. But I have seen it again and again and--there are 
people that will never change; don't fit. It is not to say they 
are not capable as far as professionals but they are better off 
going somewhere else.
    Mr. Duncan. It is almost like a tenure aspect and you can't 
remove them and they do affect the morale because, ``Well this 
isn't how we did it in the old organization,'' and I have seen 
that in private sector, ``Well, we did it this way before.'' 
``Well, that entity has gone away. Now you are a part of 
something broader and this is how we are going to do it and buy 
into it and go home.'' Sort of. That mindset.
    I will applaud the Secretary and the Department for coming 
up with the One DHS mindset. I thought that was the right thing 
but they have got to continue pushing that down and they have 
got to do a lot of the things that you have said is that we 
have got to have the ability to remove those disruptive 
elements and those that aren't part of the team.
    We have got to be able to make those trades, to go back to 
the NFL analogy. We have got to be able to recruit good team 
players with the right assets and we have also got to be able 
to let some guys go, cut them, send them back to minor-league, 
whatever. So with that, I will yield to the Ranking Member for 
a question.
    Mr. Barber. Thank you, Mr. Chairman. You know, in another 
life many years ago I was involved with a publishing company 
and my job was to ensure that acquisitions and mergers were 
properly managed.
    I was the coordinator of all of the different departments 
that had to get on board and one of the things that I found 
that was most effective, apart from the fact that the CEO said 
``we will do this,'' was a singular deadline by which each 
component had to get its job done in order to meet the common 
goal. Sometimes I am not sure if that is existing in the 
Department.
    Well, I just like to ask the witnesses, particularly Dr. 
Stern and perhaps Ms. Richards and Mr. Killough--if you could 
imagine the circumstance; tomorrow you were appointed Secretary 
of Department of Homeland Security--a more enviable job you 
could not find in Federal Government.
    [Laughter.]
    Mr. Barber. You had the lack of smarts to take this job 
because you thought you could do something better. What would 
you do?
    Dr. Stern, let me ask you that. You know, going back to the 
earlier question we have so many--we have pinpointed so many 
individual problems with this system or that system, and as I 
said earlier I think it is a systemic problem of how you manage 
the Department, the second-largest Department in the Federal 
Government, 250,000 employees, billions of dollars in 
taxpayers' money.
    I want to be a part of a solution here as a Member of 
Congress and I would like to know what you think, if you were 
the Secretary, what would be the first steps you take given the 
constraints that, you know Government has that are different 
from private sector, what would you do to get the job done on a 
systemic level?
    Mr. Stern. The first step would be to--in conjunction with 
the leaders of the different departments--operating units--is 
come up with a mission statement that is very clear and very 
understandable.
    I was involved many years ago in a hostile acquisition that 
with mixed feelings we executed on. We ended up with 120,000 
employees; so half of homeland security. It was significant 
with very different philosophies.
    But we did it. We laid out a very clear mission statement 
and subset to that with very measurable quantitative 
objectives, with dates, schedules, and quantification where 
appropriate, and we put in place a risk reward system for the 
key leaders for the individuals to execute on it and the risk 
was departure from the company. The rewards were incentives and 
we were generous with incentives.
    We cut the organization way back because that was part of 
the objectives underlying it all and on balance it worked, but 
there has to be clarity of mission and clarity of the 
objectives and they should generally be very measurable and 
then management follow-up, and the willingness to execute and 
you do take some risks in doing so. Now whether I could do it 
as a Secretary here, I don't know.
    Mr. Barber. Smartest answer might be, ``Thanks, but no 
thanks'' to that job, right? But I think it is serious--I mean 
obviously this is a Department that we pulled together at a 
time of great crisis in our country and I think there has been 
a lot of progress made.
    I don't want to in any way suggest that I think we have not 
come a long way in those 10 years, and as Ms. Richards pointed 
out, in the life of an organization of this size, 10 years, is 
not a long time. Although there is a level of impatience that I 
have and that my constituents have and I think the country has 
with, why we can't get better faster?
    So Ms. Richards, I want to offer the enviable job of being 
appointed Secretary. As he you look inside the Department in an 
objective way, what would you do?
    Ms. Richards. Well, first of all, I would like to remind 
everyone that I am an auditor at heart and we are detailed 
people. So we would probably be a bad choice for the job.
    [Laughter.]
    Ms. Richards. In addition to all of the things that Dr. 
Stern said, which--many of which the Department has worked very 
hard to do, they have also gone through an exercise called the 
Bottom-Up Review. One of the things that I see from my 
perspective is that there is a lack of clarity of data.
    It sounds very simple. It is enormously time-consuming to 
get it right. We did an audit recently on detection equipment 
and we looked to see for commonalities among the different 
components that use detection equipment such as walk-through 
metal detectors.
    They had it on their inventories but they had all defined 
it differently so there was no way to pull from a centralized 
viewpoint the information that would tell them how many metal 
detectors they had or where they were. So if they needed to 
shift them or share them they didn't have that information 
readily available.
    One of the things that, not as Secretary because it is too 
in-the-weeds for that job, but one of the things the Department 
needs to do is to start setting those data dictionaries and 
commonalities and defining the resources that they have both 
physical resources and their employees, the skill sets that 
they have, so that they can share--do information sharing--
share radios that one component might have that another 
component may need. I think that that is critical to the 
success of the Department into achieving that One DHS and 
getting to the efficiencies that they need.
    Mr. Barber. Would any other witness care to be Secretary 
for a day or a year or whatever and give us what you would do? 
Ms. Berrick.
    Mr. Stern. Should I give you----
    Mr. Barber. Can I go to Ms. Berrick first, please?
    Ms. Berrick. Sure. You had made a comment earlier that I 
think relates to this question. You said you spend time reading 
a lot of these reports with lots of recommendations, and really 
what does all of this mean?
    GAO actually went through an exercise where we looked 
through those 1,800 recommendations, 1,300 reports on the 10-
year anniversary of 9/11 and we issued a report basically 
identifying our take on DHS's progress and what do they need to 
do moving forward. Looking across all those recommendations, we 
saw three themes that were common that negatively affected 
DHS's progress.
    So if I were a Secretary for the day would address these 
three themes. The first is the management of the Department. 
When you talk about acquisition and IT and financial management 
and in the abstract way it is hard to see the direct link that 
has on DHS's abilities to meet its missions.
    So for example in acquisition management there have been a 
number of programs that DHS has had to cancel or significantly 
scale back and this is to secure the border and this is to 
secure air travel because they weren't managed properly. In 
fact, we identified $1.75 billion and that related to eight 
such of those programs that were scaled back.
    Financial management, they need information, you know, 
senior leadership needs the information to manage their 
operations. DHS senior leadership doesn't have that visibility 
today. They are working towards that but they are not there 
yet. So management of the Department I would focus very 
strongly on strengthening all of those core management 
functions.
    The second theme we saw is, and it is been discussed today, 
performance, measurement, strategic planning, cost-benefit 
analysis, before DHS pursues a solution, to what extent are 
they looking at the alternatives and weighing the costs and 
benefits and also risk management plays a role in there.
    We found that DHS has done a lot to assess risk. They are 
doing less to incorporate that information into planning, 
programming, and budgeting decisions.
    The third cost-cutting area that I would pay attention to 
is information sharing and partnerships and coordination. DHS--
you know, it is a homeland security enterprise. DHS has to work 
with State, local, the private sector, international partners. 
They have made a lot of progress in this area, but they can do 
more to strengthen those relationships as well as improve 
information sharing within and outside the Department.
    Now overall I think DHS is about where you would expect 
them to be, you know, 10 years into their existence, but I, 
because that is early and this can take years to achieve, but I 
do think these three cross-cutting themes are really--we are at 
a point where they are really negatively affecting their 
ability to be effective, and I think they need to be addressed 
moving forward.
    Mr. Barber. Is there time for one more, Mr. Chairman?
    Mr. Stern. Could I give you----
    Mr. Duncan. I am going to give some leeway----
    Mr. Stern. I am sorry.
    Mr. Barber. Dr. Willis, first please.
    Mr. Willis. Okay. I just very quickly to add on to some of 
the--I would of course like Dr. Stern said, clarify the 
strategy, identify the people to implement that and empower 
them, but I would also be doing one thing alongside to draw on 
the corporate analogy.
    I would communicate that strategy to my board fairly early 
on before I get too far into it, and I would point out in this 
context Congress--there is an analogy between the board and the 
corporate board between Congress, but there is not one board 
for DHS. So I would like to draw that analogy.
    Mr. Stern. I was going to give you a quick example on how 
attitudes change and it can be done--it was budget time of a 
large company and we were getting the budgets from the 
different parts of the company to put it together.
    There was one division that came in and like all others we 
need more of this or we need more head-count here or we need to 
expand there and there and we are trying to trim back the 
budgets but they were adamant about it.
    Conclusion in the later phase, we decided to sell that 
division because it didn't fit our mainstream business. Turns 
out that the management of the business succeeded in raising 
the capital and buying that division themselves. We sold it to 
them.
    You should have seen the rapid change of attitude to 
spending that took place within that division. Suddenly it was 
theirs. It was their money. It was their success. Not the 
overall. It was amazing, and you see that again and again and 
again.
    Mr. Barber. We should be spending the taxpayers' money as 
we would our own, and that is where I will close.
    Thank you, Mr. Chairman.
    Mr. Duncan. You are quite welcome.
    The Chairman will recognize Mr. Payne for the final 
question of the day.
    Mr. Payne. Thank you, Mr. Chairman.
    Ms. Berrick, kind of open the door for me in terms of 
stating that DHS has improved in information sharing. Where--in 
what areas has that been and where are they still lacking and 
where else do they need to improve on State and Federal 
international level?
    Ms. Berrick. Really, in the information sharing they have 
made a lot of progress in these past few years identifying what 
their information-sharing initiatives are, defining those, and 
also clarifying how those tie into the broader information-
sharing environment.
    They have a pretty good set of metrics to measure their 
progress in implementing those initiatives. But largely due to 
funding shortfalls, they are having some difficulty moving 
forward with some of those.
    So I think they had good strategies and plans in place. It 
is going to be executing, moving forward, and also prioritized 
among the different information-sharing initiatives that they 
have, and part of that is partnering with the other departments 
that have key information-sharing responsibilities.
    With respect to coordinating with State, local, private-
sector, and international partners, this has been a theme that 
we have identified in a lot of our work where DHS could do more 
to strengthen those relationships, leverage information at 
those parties, have and in some cases work to not duplicate 
what each other is doing.
    I think DHS has made tremendous progress since it was 
created in that area, but I think they had continued work to do 
to strengthen those relationships.
    Mr. Payne. Okay. I just had another question on another 
topic for Mr. Killough.
    You know for years what I am hearing at DHS, you know, 
there is a low morale, and it has been notoriously low. In your 
research have you determined what the key reasons why low 
morale exists in the workplace and how does that morale impact 
program management, and how does this affect productivity and 
results?
    Mr. Killough. Sources of low morale are many and varied, 
but a lot of common things are the fact that there are 
oftentimes people in an organization don't understand the 
objectives or don't understand where they stand relative to 
their performance.
    One thing is that the organization has got to understand, 
what does success look like? Management has got to help them 
define what success looks like so--and to also answer some of 
what Mr. Barber was talking about is that you have got to put 
leadership in place.
    You get to create clarity to define achievable objectives. 
You have got to define a way of reporting against those 
objectives that is transparent. Everybody knows how everybody 
else is doing and you need to celebrate success but you need to 
define what success looks like.
    So morale is--it can be low when people are--lack the 
appropriate motivational environment because they are not 
really sure how well they are doing, whether they are being 
successful or being--achieving what they are supposed to, and 
therefore they don't--there is no self-satisfaction established 
out of that.
    So they have got to understand where am I going to be? What 
does it look like when we are a successful organization or when 
I am a successful person?
    Mr. Payne. Well, I appreciate that and moving forward that 
is something that I am going to be interested in pursuing in 
terms of the morale of the people in the Department to get--to 
maximize their potential and do the things we need to do to 
continue to make sure that the Nation is safe and secure.
    So with that, I yield back.
    Mr. Duncan. Okay. I think you are right there, Mr. Payne.
    I want to thank the witnesses for their valuable testimony 
today. I learned a lot, and I appreciate you coming and being a 
part of this.
    I want to thank the Members for the questions. I think you 
see the bipartisan nature of investigating duplication and 
wasteful spending and trying to maximize taxpayer dollars and 
keeping our Nation safe as Mr. Payne said at the end there.
    So the Members of the committee may have some additional 
questions for the witnesses and we will ask that you will 
respond to those questions in writing.
    With nothing further and without objection, the 
subcommittee will stand adjourned.
    [Whereupon, at 10:53 a.m., the subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              

      Questions From Chairman Jeff Duncan for Cathleen A. Berrick
    Question 1. GAO reported greater overlap in the analytical 
activities of fusion centers and FIGs than in any of the other 
entities; for investigative activities, fusion centers, and Regional 
Information Sharing Systems had the most instances of overlap. What 
steps is DHS taking in conjunction with DOJ to address this duplication 
in effort?
    Answer. The Department of Homeland Security (DHS) concurred with 
the two GAO recommendations intended to help reduce unnecessary overlap 
and leverage resources among field-based information-sharing entities 
and, in conjunction with the Department of Justice (DOJ), is taking 
steps that begin to address one of the recommendations.\1\ 
Specifically, DHS, in a letter to GAO on how it will respond to the 
recommendations, stated that it plans to use its annual assessment of 
fusion center capabilities to gather data on steps the centers are 
taking to better coordinate analytical activities with all four of the 
other field-based information sharing entities in our review--Field 
Intelligence Groups (FIG), Regional Information Sharing System (RISS) 
centers, Joint Terrorism Task Forces (JTTF), and High-lntensity Drug 
Trafficking Area (HIDTA) intelligence centers. DHS reported that it is 
currently using the assessment to track the extent to which fusion 
centers have representatives from the other four entities on their 
executive boards, are co-located with other entities, and issue 
products jointly developed with other entities. These data should 
provide DHS with a current baseline of the extent to which fusion 
centers have such collaborative mechanisms in place. DHS also stated 
that it is planning to: (1) Add questions to its annual assessment to 
determine the degree to which these entities collaborate on their 
analytical activities, (2) use the results to monitor and evaluate 
coordination among field-based entities, and (3) report these data in 
the National Network of Fusion Centers Final Report, which is expected 
to be issued during 2013.
---------------------------------------------------------------------------
    \1\ See GAO, Information Sharing: Agencies Could Better Coordinate 
to Reduce Overlap in Field-Based Activities, GAO-13-471 (Washington, 
DC, Apr. 4, 2013).
---------------------------------------------------------------------------
    In addition, DHS reported that it, along with the Federal Bureau of 
Investigation (FBI), co-chairs the Fusion Center Subcommittee of the 
Interagency Policy Committee for information sharing, within the 
Executive Office of the President. DHS stated that under the auspices 
of the subcommittee, DHS, the FBI, and the Office of National Drug 
Control Policy (ONDCP) can collaborate to identify and assess 
characteristics of coordination among entities. The co-chair of the 
Interagency Policy Committee for information sharing stated that 
agencies are making progress in assessing ways in which fusion centers 
and HIDTA intelligence centers can further collaborate, and are 
starting to discuss RISS center collaboration, but have not addressed 
opportunities to better collaborate with the FBI's FIGs and JTTFs. GAO 
recommended that the Secretary of Homeland Security, Attorney General, 
and director of ONDCP have their respective organizations work together 
to assess areas where they can: (1) Take advantage of co-locating 
entities, (2) have more participation across entities on their 
respective executive boards, or (3) implement other ways to 
collaborate. Agencies using the results of the annual fusion center 
assessments and the subcommittee structure, among other tools, to 
determine where else they can implement collaboration mechanisms 
Nation-wide would be responsive to our recommendation.
    DHS, DOJ, and ONDCP have not yet begun to address an additional 
recommendation--that they develop a mechanism to hold the heads of 
their respective field entities accountable for such collaboration and 
demonstrating the results achieved through it. The three agencies 
indicated that they already hold their field entities accountable for 
sharing information and track this through metrics. However, our 
recommendation goes beyond having agencies simply agree to share 
information. Rather, the recommendation addresses the need for entities 
to coordinate on their analytical and investigative activities and 
resources, and be held accountable for doing so.
    Given that the agencies have not yet addressed our recommendations, 
GAO will continue to track their progress through our recommendation 
follow-up process. In addition, the co-chair of the Interagency Policy 
Committee for information sharing is planning to inventory how some of 
these field-based entities are already collaborating and publicly 
account for the results in an annual report to the Congress, which we 
also recommended as a way to help hold agencies accountable.
    Question 2. Is DHS on track to develop a uniform oversight function 
and definition of R&D across its components by the May 2013 deadline as 
reported to GAO? What form will this new function take (e.g. management 
directive, policy guidance) and how will it consistently prevent 
duplicative research activities?
    Answer. As you know, in our September 2012 report, we made several 
recommendations to the Secretary of Homeland Security to help DHS 
better oversee and coordinate research and development (R&D) 
investments and activities across the Department.\2\ Taking action to 
implement these recommendations would better position the Department to 
know what R&D activities it was undertaking and the costs of those 
activities, as well as to address overlap, fragmentation, and the risk 
of unnecessary duplication. Specifically, we recommended that DHS 
develop Department-level policies and guidance for defining, reporting, 
and coordinating R&D activities across the Department; and that DHS 
establish a mechanism to track R&D projects. We also noted that such 
policies and guidance could be included as an update to the 
Department's existing acquisition directive.
---------------------------------------------------------------------------
    \2\ GAO, Department of Homeland Security: Oversight and 
Coordination of Research and Development Should Be Strengthened, GAO-
12-837 (Washington, DC: Sept. 12, 2012).
---------------------------------------------------------------------------
    DHS agreed with our recommendations and planned to evaluate the 
most effective approaches to better manage R&D across the Department. 
For example, DHS said it was considering a management directive, 
multicomponent steering committee, or new policy guidance to help 
better oversee and coordinate R&D. According to DHS officials, a 
decision on which one of these approaches to take was to be made by May 
1, 2013. In following up with DHS in June 2013, the Department had not 
yet determined which approach it would implement to address our 
findings and recommendations, but planned to make a decision soon. We 
believe that the options DHS is considering, if implemented 
effectively, could address the issues we identified in our report and 
meet the intent of our recommendations. Specifically, developing policy 
guidance to define and coordinate R&D activities across the entire 
Department could help ensure that DHS components that conduct R&D 
report their efforts and investments consistently and are aware of each 
other's research activities, which would help to avoid unnecessary 
duplication.
    Question 3. GAO reported that S&T knew that Secret Service and ICE 
were conducting R&D in the area of mobile radios but CBP moved forward 
with its own efforts anyway. Why didn't the components coordinate? Was 
this a failure of the process? Who is to blame?
    Answer. This example--cited from our September 2012 report--was 
used to demonstrate a case of effective coordination between the 
Science and Technology (S&T) Directorate and DHS components.\3\ 
Specifically, S&T officials stated that when Customs and Border 
Protection (CBP) requested mobile radios to improve communication among 
its field staff, S&T knew that the Secret Service and U.S. Immigration 
and Customs Enforcement (ICE) were already working in that area because 
of its existing R&D relationships with these components. To address 
this technology need and better coordinate these R&D efforts, S&T 
provided a senior official to lead and coordinate the Tactical 
Communication Team to address the tactical communication needs of these 
operational components, and to coordinate, as appropriate, R&D for 
needed mobile radios. S&T officials stated that in the absence of a DHS 
policy or process to prevent overlap or the risk of unnecessary 
duplication, such relationships with components helped to mitigate that 
risk.
---------------------------------------------------------------------------
    \3\ GAO-12-837.
---------------------------------------------------------------------------
    While relationships can help to prevent unnecessary duplication, we 
found that DHS did not know the total amount its components invested in 
R&D and had no policies or guidance for defining R&D and overseeing R&D 
resources across the Department, which is needed to help effectively 
manage these investments. We also found that DHS had not developed a 
policy defining who is responsible for coordinating R&D and what 
processes should be used to coordinate it, and had no mechanisms in 
place to track all R&D activities to help prevent overlap, 
fragmentation, or unnecessary duplication. As such, we recommended that 
DHS develop Department-level policies and guidance for defining, 
reporting, and coordinating R&D activities and establish a mechanism to 
track R&D projects. DHS agreed with our recommendations and is taking 
action to address them, as discussed in our response above. Taking 
action to implement these recommendations would better position the 
Department to know what R&D activities it was undertaking and the costs 
of those activities, as well as to address overlap, fragmentation, and 
the risk of unnecessary duplication.
    Question 4. According to GAO's High-Risk report, DHS needs to 
strengthen its management functions. Of the major DHS management areas 
GAO reviewed, acquisition management had made the least progress. GAO 
has previously reported billions of dollars in cost overruns in DHS 
major acquisitions despite its acquisition policy that reflects aspects 
of best practices. What legislative action could this subcommittee/
committee take to ensure the Department improves its acquisition 
outcomes?
    Answer. DHS acquisition policy consists of Acquisition Management 
Directive 102-01, an associated guidebook, and 12 appendixes, and it 
reflects many key program management practices that, when properly 
implemented, would help DHS deliver systems on-time within established 
budgets, and that meet performance expectations. For example, the 
directive requires programs to develop documents demonstrating critical 
knowledge that would help leaders make better-informed investment 
decisions when managing individual programs. DHS has also taken 
additional steps to enhance its acquisition management. For instance, 
as of June 2013, DHS had launched seven Centers of Excellence to 
enhance component acquisition capabilities and improve insight into 
program management challenges before they become major problems, and 
has also taken some steps to improve investment management. Each DHS 
component further established a Component Acquisition Executive to 
provide oversight and support to programs within the component's 
portfolio, and DHS began to operate a business intelligence system to 
improve the flow of information from component program offices to the 
Management Directorate to support its governance efforts.
    However, we have found that DHS leadership has continued to allow 
programs it has reviewed to proceed with acquisition activities without 
meeting program-management requirements, and has not always followed 
its own guidance for managing and overseeing major acquisition 
programs. Officials explained that DHS's culture has emphasized the 
need to rapidly execute missions more than adhere to sound acquisition-
management practices. Our work has found that most of the Department's 
major programs are at risk of cost growth and schedule slips as a 
result. In particular, we found that these programs do not have 
reliable cost estimates, realistic schedules, and agreed-upon baseline 
objectives, which DHS acknowledges are needed to accurately track 
program performance, limiting DHS leadership's ability to effectively 
manage those programs and provide information to the Congress.
    DHS recognizes the need to implement its acquisition policy more 
consistently, but significant work remains. To help support continued 
progress in this area, the subcommittee/committee could require that 
DHS's annual budget justification include: (1) A list of major 
acquisition programs that do not have baselines approved in accordance 
with DHS acquisition policy, (2) statements for each of the programs 
explaining why their baselines have not been approved, and (3) the 
amount of funding DHS is requesting for each program lacking an 
approved baseline. The program baseline is the agreement between 
program-, component-, and Department-level officials establishing how 
systems will perform, when they will be delivered, and what they will 
cost. The program baseline also includes performance parameters 
expressed in measurable, quantitative terms, which must be met in order 
to accomplish an investment's goals. This information would enhance DHS 
leadership's ability to effectively manage its acquisition programs and 
inform Congressional decision makers' deliberations as they consider 
funding options for such programs.
        Questions From Chairman Jeff Duncan for Anne L. Richards
    Question 1. The Visa Waiver Program was established in 1986 to 
promote international tourism without jeopardizing U.S. security. The 
Immigration and Nationality Act, as amended, requires the Secretary of 
Homeland Security, in consultation with the Secretary of State, to 
assess the law enforcement and security risks of Visa Waiver Program 
countries, and terminate a country from the Visa Waiver Program if 
necessary. In November 2012, the IG recommended that the Visa Waiver 
Program Office develop processes for communicating with embassy and 
foreign representatives the standards for Visa Waiver Program countries 
to achieve compliance, and for meeting mandated time frames for 
reporting on a country's compliance with program requirements. Has DHS 
taken action to improve the Visa Waiver Program? What do you believe 
still needs improvement?
    Answer. The Visa Waiver Program Office (VWPO) concurred with our 
recommendation and provided revised guidance for Embassy and State 
Department desk officers for engaging with countries interested in the 
VWP. This guidance was developed by the U.S. Department of State's 
Bureau of Consular Affairs (CA) and cleared by the VWPO to help ensure 
that Embassies and State desk officers do not discuss the VWP without 
DHS and CA guidance and thus unduly raising VWP expectations of a 
country. In addition, the VWPO developed diplomatic notes notifying a 
VWP government of a review's conclusion and the resulting 
determination.
    Due to the sequester, the Office of International Affairs has 
implemented a hiring freeze, delaying the recruitment for the existing 
vacancy in the VWPO. The OIG recommended an assessment of the overall 
staffing model and is concerned that the current staffing level 
(including the vacancy) is inadequate to handle the review and 
oversight of the increasing number of VWP countries.
    Finally, on March 31, 2013, the VWPO implemented a new reporting 
system to Congress, forwarding a batch of Congressional Summary Reports 
on a quarterly basis. With this new system, the VWP hopes to avoid the 
delays in producing mandated Summary Reports to the Committees.
    Question 2. In February, I along with Mr. McCaul and Mr. Meehan 
sent a letter to DHS on improving its financial management. We 
emphasized the importance of improving the Department's financial 
systems, leveraging best practices from other organizations, and 
achieving a clean audit opinion. Even if the Department achieves a 
clean audit opinion, much of their efforts still rely on manual data 
calls to components for financial data. How sustainable is this 
approach to maintaining a clean opinion? Does the Department have a 
firm grasp of its finances?
    Answer. DHS management recognizes the need to upgrade its financial 
systems, most of which were inherited when the Department began 
operations in 2003. These legacy information technology (IT) issues 
have existed for more than a decade, causing the Department to rely on 
complex manual workarounds and compensating processes to support its IT 
environment and financial reporting. The financial IT issues have 
become even more problematic with the passage of time, as more IT 
systems are no longer FFMIA compliant, nor are they supported by the 
original vendor. As a result, DHS is unable to attest to a strong 
control environment, and must expend disproportionate human and 
financial resources for even basic financial statement preparation. The 
Department is currently unable to obtain an opinion on its internal 
controls over financial reporting, as required by the DHS Financial 
Accountability Act.
    While DHS financial IT systems have serious internal control 
deficiencies, and are expensive to maintain, the Department has 
implemented compensating manual processes and workarounds to produce 
its financial statements. Provided that the Department maintains the 
effectiveness of the manual workarounds from year to year, and the 
financial IT systems do not further deteriorate, then the Department 
should be able to maintain a clean opinion once it has been achieved. 
Thus, if the Department achieves a clean opinion in fiscal year 2013, 
its current processes and resources should allow it to maintain this 
opinion in the future.
    Each year, the Department has improved its financial management by 
addressing auditors' concerns and correcting identified significant 
deficiencies. This improved financial management includes achieving a 
qualified opinion in fiscal year 2012 on all financial statements after 
years of disclaimers; fewer violations of the Antideficiency Act; 
earlier identification of needed reprogramming of funds; reducing the 
number of material weaknesses and significant deficiencies, as well as 
mitigating the conditions that contribute to significant deficiencies; 
and improving and stabilizing the capabilities of financial management 
staff. Although it cannot guarantee future performance, the 
Department's commitment and tone at all levels, including that of the 
Secretary, have also improved measurably over the past 5 years.
    We should note, however, that a Federal financial statements audit 
is designed to provide reasonable, but not absolute assurance that the 
financial statements are fairly stated. They are designed based on the 
process used to audit publicly-traded companies, where the emphasis is 
on ensuring reasonably accurate reporting of revenue. A financial 
statement audit is not designed to identify waste or inefficiencies; 
and the auditors' opinion does not cover any other operational or 
performance aspects of the agency, systems, or the supporting documents 
that are not part of the underlying financial statements.
    Question 3. You reported that challenges exist for TSA to deter and 
prevent exfiltration of sensitive information outside its network. What 
steps has TSA taken to address these challenges?
    Answer. Both recommendations No. 3 and No. 4 in our report 
entitled, Transportation Security Administration Has Taken Steps To 
Address the Insider Threat But Challenges Remain, were closed due to 
continued non-compliance from the component. There appeared to be an 
unwillingness of the part of the Department to meet, at a minimum, the 
basic intent of each. We became concerned that either or both could 
remain open and unresolved for a significant amount of time.
    TSA supplied no further plan of action to address either of these 
vulnerabilities.
    We advised TSA of the risks it would accept for non-compliance. Our 
decision to close the recommendations was based on TSA's apparent 
acceptance of the risk it was taking by its non-compliance. This could 
have been pursued further through the resolution process, but we opted 
not to.
         Questions From Chairman Jeff Duncan for Paul G. Stern
    Question 1. Within DHS, there seem to be endless levels of 
management review regarding certain programs and less so in others. How 
does the private sector strike the appropriate balance between review 
and action? Will Government ever be able to streamline its cumbersome 
review process for programs?
    Answer. Response was not received at the time of publication.
    Question 2. Eliminating excess real property is another important 
business practice. DHS has over 50 office locations within the DC 
region alone. Realizing the need to reduce its real estate footprint, 
DHS embarked in 2005 on an effort to build a consolidated headquarters. 
However, the schedule for this project has slipped by about 6 years and 
will cost over $4 billion to complete. How would the private sector 
have tackled such a consolidation effort? What lessons learned could be 
applied to DHS to ensure their effort to consolidate real estate is 
done in the most cost-efficient manner?
    Answer. Response was not received at the time of publication.
    Question 3. As the third-largest Federal department, DHS owns a lot 
of vehicles, uses a lot of gas and electricity, ships a ton of 
documents--overall, has a huge logistical footprint. Are there lessons 
to learn from the private sector in the area of logistics that DHS 
should consider in attempting to eliminate wasteful spending?
    Answer. Response was not received at the time of publication.
         Questions From Chairman Jeff Duncan for Craig Killough
    Question 1. Adjusting compensation, pay, and benefits for Federal 
employees is not a popular topic of conversation of bureaucrats inside 
the beltway. However, the private sector constantly evaluates the way 
it compensates employees and takes steps to eliminate overhead and 
management staff when it makes sense. What lessons could be learned 
from business practices to better structure compensation, pay, and 
benefits for Federal employees? What could also be applied to law 
enforcement/security professionals as DHS is the largest Federal law 
enforcement agency?
    Answer. Chairman Duncan, thank you for the question. The treatment 
of pay and compensation is a sensitive topic, but there are lessons to 
be learned from the private sector. PMI's Pulse of the 
ProfessionTM report and other research, including our talent 
report, shows significant differences in organizational performance 
that is directly dependent on how their project and program managers 
are recognized.
    Throughout our Pulse of the Profession report, which was submitted 
to the subcommittee with my testimony, you will read how high-
performing organizations are doing everything they can to minimize risk 
by improving their project and program outcomes. Organizations that 
combine excellence in tactical project implementation with alignment to 
strategy complete projects successfully 90% of the time, while poorer 
performers are successful only 34% of the time. And that gap (which 
nets out to somewhere in the neighborhood of $260 million dollars saved 
on a billion-dollar project) delivers significant value for the 
organizations that do it well.
    One of the key lessons from this is that high-performing 
organizations provide consistent and continuous development for project 
managers to enhance organizational success and are significantly more 
likely than low performers to have a defined career path for project 
managers. An established career path will allow for an appropriate 
definition of a compensation structure. Many private-sector 
organizations align their career path with appropriate compensation 
structures supported by annual salary research addressing the specific 
career path. Furthermore, this process ties performance and achievement 
to responsibilities. Each step along the career path should be clearly 
outlined with performance metrics and designations for training, 
certifications, or other recognitions of skill and merit. A career path 
is an important tool for meeting the human capital challenges of the 
Federal workforce, particularly evaluating talent, retaining high 
performers, and incentivizing career growth through skill development 
and knowledge. The Pulse of the Profession report highlighted the 
importance of a career path in improving the capabilities of project 
professionals to enable excellence, as 68% of high-performing 
organizations have a career path as opposed to only 26% of low-
performing organizations. Having a policy to develop competency and 
ensuring the use of project management standards is also a significant 
element of high-performing organizations. These reforms to the 
structure of the workforce will better align the Government to the 
private sector.
    Finally, for any organization, including law enforcement 
organizations, having clear standards that are compatible with the 
private sector or common among organizations is critically important 
for sharing knowledge, transparency, and oversight. Standards, 
especially risk management standards, should be uniform and aligned 
with the Department's components so that its executives and Congress 
can evaluate risks faced by each law enforcement division of the 
Department and allocate resources according to a common understanding 
of the risks. The process is very similar to companies using metrics 
like earnings per share as a measure to provide investors.
    Question 2. In tightening budget times, what are some cost-
effective ways to train program managers? What practices would you 
recommend DHS adopt to continue to improve its training program?
    Answer. Chairman Duncan, thank you for this important question. 
Finding resources and developing efficient training is a challenge for 
all organizations. PMI's Pulse of the Profession shows that often 
Government organizations have program management offices (like the 
Program Assessment and Risk Management Office at DHS), yet the practice 
of developing program management talent may not be viewed as a 
strategic investment. Our research shows that less than 40% of 
Government organizations have a formal process for developing program 
manager competency. Training to standards, the use of mentoring, and 
having a job classification and career path are critical. Our research 
also shows standardization of practices and tools, especially in 
program and project management, and the use of certifications leads to 
a more efficient allocation of resources and a greater ability to lead 
and innovate. The Department should leverage the resources of other 
agencies in the U.S. Government; we would recommend organizations like 
the Defense Acquisition University, NASA's Academy of Program/Project 
Engineering Leadership (APPEL) and the VA's Acquisition Academy. Easing 
access for DHS personnel to these resources and aligning the program 
management criteria with standard practices could be highly cost-
effective for the taxpayer--reducing duplication and waste, while 
improving access to training for the Department.
    Question 3. When measuring performance in the private sector, what 
are some good performance metrics by which to gauge success? What types 
of performance goals are transferrable from the private sector to DHS?
    Answer. Chairman Duncan, for members of the program and project 
management community, almost any program or project management metric 
is transferable from the private sector to DHS. These metrics include 
scope, budget, resource utilization, and risk. There have been a number 
of steps taken already by the Department, such as the creation of the 
Program Assessment and Risk Management Office (PARM), to better align 
these metrics and requirements across the Department. While these are 
important steps, however, there is one area that should be emphasized 
and will provide a significant amount of support to measure and gauge 
success--that is the use of portfolio management. Portfolio management 
lets executives look holistically across the group of projects to get 
the pulse of the portfolio's return on investment (ROI) and strategic 
alignment. PMI and a separate PriceWaterhouseCoopers survey \1\ found 
that use of portfolio management leads to increases in key performance 
indicators including quality, scope, budget (cost), schedule (on time) 
and business benefits. Additionally, PMI's Pulse of the Profession 
report showed that organizations with mature portfolio management 
practices report an average of 76% of their project meet business goals 
as opposed to an average of 56% of organizations that don't use 
portfolio management as often or as well.
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    \1\ Insights and Trends: Current Portfolio, Program, and Project 
Management Practices, PwC, 2012. Results based on a survey of 1,524 
respondents from 38 countries and within 34 industries.
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    Implementing a strong portfolio management policy will provide 
metrics and transparency to better gauge the Department's success. A 
model for the Department of Homeland Security could be the 
PortfolioStat currently being utilized by the Office of Management and 
Budget and several departments, including the Department of Health and 
Human Services and the Department of Commerce in IT. The Senate 
Homeland Security and Government Affairs Committee held a hearing on 
this subject in June 2013.

                                 
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