[Senate Hearing 113-777]
[From the U.S. Government Publishing Office]
S. Hrg. 113-777
THE INTELLIGENCE COMMUNITY: KEEPING WATCH OVER ITS CONTRACTOR WORKFORCE
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HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JUNE 18, 2014
__________
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Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Gabrielle A. Batkin. Staff Director
John P. Kilvington, Deputy Staff Director
Mary Beth Schultz, Chief Counsel
Troy H. Cribb, Chief Counsel for Governmental Affairs
Katherine C. Sybenga, Senior Counsel
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Andrew C. Dockham, Minority Counsel
Kathryn M. Edelman, Minority Senior Investigator
Laura W. Kilbride, Chief Clerk
Lauren M. Corcoran, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Carper............................................... 1
Senator Coburn............................................... 3
Senator Tester............................................... 13
Senator McCaskill............................................ 16
Senator Ayotte............................................... 19
Prepared statements:
Senator Carper............................................... 27
Senator Coburn............................................... 29
WITNESSES
Wednesday, June 18, 2014
Hon. Stephanie O'Sullivan, Principal Deputy Director, Office of
the Director of National Intelligence.......................... 4
Timothy J. DiNapoli, Director, Acquisition and Sourcing
Management, U.S. Government Accountability Office.............. 6
Alphabetical List of Witnesses
DiNapoli, Timothy J.:
Testimony.................................................... 6
Prepared statement........................................... 37
O'Sullivan, Hon. Stephanie:
Testimony.................................................... 4
Prepared statement........................................... 30
APPENDIX
Responses to post-hearing questions for the Record:
Ms. O'Sullivan............................................... 53
THE INTELLIGENCE COMMUNITY: KEEPING WATCH OVER ITS CONTRACTOR WORKFORCE
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WEDNESDAY, JUNE 18, 2014
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:02 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Committee, presiding.
Present: Senators Carper, McCaskill, Tester, Coburn, and
Ayotte.
OPENING STATEMENT OF CHAIRMAN CARPER
Chairman Carper. The hearing will come to order.
Dr. Coburn and I today are going to be examining, along
with our colleagues, some of the challenges that agencies have
in managing the large contractor workforce we rely on to do
some of the most sensitive and important work that our Federal
Government does. It is essential that the leadership of any
organization should have good visibility over its workforce.
They need to know who makes it up, what skills they have, what
skills they lack, and what they do day in and day out. Nowhere
is this more important than with the Federal agencies in charge
of protecting our Nation and our Nation's sensitive
information.
The men and women who work at our Nation's intelligence
agencies are entrusted with obtaining, analyzing, and
protecting our most sensitive information. The people we
entrust with leadership roles at these agencies need to be able
to show the American people, and Congress, that they know who
is working for them, and why.
Contractors in the Intelligence Community (IC) perform key
functions at the heart of intelligence collection, management,
and analysis. They work side by side with Federal employees and
are given access to our most sensitive information. This
extensive reliance on contractors raises a number of risks:
First and foremost, an agency that turns over too much
responsibility to contractors runs the risk of hollowing itself
out and creating a weaker organization. The agency could also
lose control over activities and decisions that should lie with
the government, not with contractors.
Second, the use of contractors for mission-critical work
creates an additional layer of management between the
contractor employees and the government. Adding layers makes it
more difficult to conduct oversight and to assign
accountability.
And, third, when agencies turn to contractors as a
``default'' option without careful analysis, they run the risk
of paying more to get work done than they would have paid if
they had just relied on Federal employees.
While the precise number of employees at each intelligence
agency is classified, it is no secret that following September
11, 2001, the Intelligence Community ramped up its workforce,
including its use of contractors. In response to concerns that
the Intelligence Community had become too reliant on
contractors, the Office of the Director of National
Intelligence (ODNI) began in 2006 to conduct an annual
inventory of contractors performing core functions at the heart
of intelligence operations. The goal of this inventory is to
provide a snapshot of the size of the intelligence contractor
workforce, its costs, the functions it performs, and the
reasons cited by agencies for using the contractors.
The hearing will focus on the Government Accountability
Office (GAO) report requested by our former colleague Danny
Akaka, with support from Senators Coburn, Collins, McCaskill,
Johnson, and myself. We asked GAO to look closely at the annual
inventory of core contractors and find out how well it is
really working in helping agencies better know and manage their
workforce.
GAO's findings reveal that the numbers in the inventory
simply are not reliable and that the intelligence agencies do
not have the kind of information they need in order to be able
to assess the cost-benefit of using contractors, to conduct
strategic workforce planning, and to determine the role that
contractors should play in their organizations. In other words,
we do not have the full picture of who is working for the
Intelligence Community as contractors, or why.
While the GAO's report shows a number of problems, I like
to say that in adversity lies opportunity. If the Intelligence
Community can get past its initial learning curve in conducting
these inventories, it will have what is potentially a very
useful tool that can be used to help make better decisions
about its entire workforce. These inventories could help the
Office of the Director of National Intelligence and the
individual intelligence agencies identify where their critical
skill gaps are. The inventories could also help identify where
the government is paying too much for contractors or where
agencies could save money through strategic sourcing.
We look forward to hearing from the witnesses today about
the progress that ODNI and the intelligence agencies have made
in responding to GAO's findings and recommendations. And I note
that the Intelligence Community has been ahead of the rest of
the government in creating an inventory of contractors whose
work raises special risks. So there are a lot of good lessons
that we are going to learn today that maybe the rest of our
government can use.
So we welcome each of our witnesses. We look forward to
what you have to say and to have an opportunity to a good
conversation with you.
And, with that, let me turn to Dr. Coburn for any comments
he wants to add. Thank you.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Mr. Chairman, thank you for holding the
hearing. I will put my statement into the record\1\ and use
parts of it in our questioning.
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\1\ The prepared statement of Senator Coburn appears in the
Appendix on page 29.
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Thank you.
Chairman Carper. You bet.
Senator Tester, nice to see you. I think you have done a
little work on this issue, as I understand it. Is that right?
Senator Tester. Yes, we have.
Chairman Carper. Do you want to say anything just briefly?
Senator Tester. I will just put it in the record. Thanks.
Chairman Carper. Senator McCaskill, how is your husband
doing? That is good. Anything you want to say before we jump
into this?
Senator McCaskill. No.
Chairman Carper. OK. Brief witness introductions.
We are pleased to welcome before the Committee Stephanie
O'Sullivan, who is the Principal Deputy Director of National
Intelligence at the Office of the Director of National
Intelligence. In that capacity, she serves in a role similar to
that of a chief operating officer (COO), I am told. Is that
right?
Ms. O'Sullivan. That is right.
Chairman Carper. All right. She focuses on the operations
of the Office of the Director of National Intelligence and also
manages coordination and information sharing across the
Intelligence Community. Ms. O'Sullivan has served in this role
since early 2011, and before this assignment, Stephanie served
from 2009 to 2011 as the Associate Deputy Director of the
Central Intelligence Agency (CIA) with an emphasis on day-to-
day operations of the organization. She also has previously led
the CIA's Directorate of Science and Technology.
Stephanie, we thank you for joining us today.
Also we want to welcome our second witness, Timothy
DiNapoli.
Timothy DiNapoli, who is the Director of the Acquisition
and Sourcing Management team at the Government Accountability
Office, and Tim led GAO's review that is the discussion of our
hearing today. He joined GAO in 1986 and has led many reviews
relating to Federal acquisitions by both the Department of
Defense (DOD) and the civilian agencies. In 2009, he served as
the head of GAO's office in Baghdad and coordinated GAO's
oversight of the stabilization and reconstruction efforts in
Iraq. We thank you for that. Tim is also no stranger to this
Committee because he was detailed to then-Chairman Lieberman in
2007. Tim worked closely with both the majority and minority
staff as this Committee moved forward on legislation to
strengthen competition rules and help revitalize the
acquisition workforce. He tells me before the hearing started
that he once worked for Troy Cribb, who is sitting right behind
me over my left shoulder, and said she was a great boss. And I
would just say, Tim, she still is. So thank you for your work
on this particular report and for all your work on acquisitions
over the years.
And, with that, we will just allow each of you to give us
your statement, and then we will start with some questions.
Stephanie, please proceed.
TESTIMONY OF THE HONORABLE STEPHANIE O'SULLIVAN,\1\ PRINCIPAL
DEPUTY DIRECTOR, OFFICE OF THE DIRECTOR OF NATIONAL
INTELLIGENCE
Ms. O'Sullivan. Chairman Carper, Ranking Member Coburn, and
distinguished Members of the Committee, thank you for your
invitation to discuss core contractors in the Intelligence
Community, and thank you also for your patience with our just-
in-time arrival. I am afraid we may have pinched a few too many
pennies in our vehicle maintenance. We had a few transmission
challenges as we left this morning.
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\1\ The prepared statement of Ms. O'Sullivan appears in the
Appendix on page 30.
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I personally believe that strategic management of the IC's
workforce is one of the most important things that IC leaders
do, and so I appreciate this Committee's dedication to
examining these important issues.
I would like to define up front whom we are discussing. I
see core contractor personnel augment government, civilians, or
military employees by providing direct technical, managerial,
and administrative support to IC elements. They typically work
alongside government employees and in our spaces doing staff-
like work. So they are not the people that we contract with to
build technical collection systems like satellites, and they
are not the people who do common commercial jobs like food
services or janitorial support.
Core contractor personnel hold clearances in accordance
with the same laws, procedures, policies, and regulations as
government employees for access to classified information. Core
contractors do not perform inherently governmental work,
meaning they do not make decisions on priorities, strategic
direction, or commitment of resources. Only government
employees make those decisions.
Core contractors are factored into our strategic workforce
planning across the Intelligence Community. However, government
staff are the long-term foundation of the IC's workforce.
Hiring a government employee is a long-term commitment. We
are responsible for the training and development of a
government employee over what could be a 30-year career span.
We then manage our contractor workforce to fill in with the
skills, whether surge or capacity or capability gaps that we
have in our government workforce. As a result, there is not a
right number of core contractors for the Intelligence
Community. The numbers and skill sets have to be fluid to
support and manage our government workforce's gaps as they
emerge and as we close them and respond to dynamic mission
needs.
You asked us here to talk about the trends in core
contractor use. During the 1990s, like the rest of the Federal
Government, the IC downsized and outsourced a lot of unique and
specialized skills. After September 11, 2001, we found that we
lacked the needed people with some core and unique skills, like
terrorism analysis, critical language skills, and cyber.
So with much appreciated support from Congress, we began to
hire and rebuild our government staff. And while our government
workforce over time has redeveloped those critical skills, we
had to surge to fill the gaps with contractors.
We also used contractors for new missions that we knew were
limited in duration rather than hire permanent staff for
temporary work. War zone surges and Overseas Contingency
Operations (OCO) funding are examples of those uses.
Contractors continue to be an integral part of our
community, but as we expected, our needs have changed as we
have gone on in the years since September 11, 2001. So over the
past few years, Intelligence Community agency directors across
the IC have moved to rebalance our workforce with fewer core
contractors.
In 2007, in support of this, we conducted our first
inventory to track core contractor personnel. As GAO's report
has highlighted, this was not as easy as it sounded at first.
The 17 elements of the Intelligence Community are spread across
six departments plus two independent agencies. All of them have
different systems and different resources subject to differing
authorities, policies, and oversight, supporting an extended
and extraordinary mission range with activities that can shift
at the pace of the headlines.
There are also differences as mundane as how each element
captures data and calculates their inventory. Some elements
have automated systems; others compile their data manually. The
inventory includes data from thousands of contracts, and for
each contract, someone has to make the decision about how to
categorize the work involved, so there are individual judgment
calls involved as well.
Every year, we have looked at ways to improve this process.
We, too, believe that this can be an extraordinarily useful
tool, and it already has been for us. And this year, as
recommended by GAO, we asked each element to fully explain
their methodology used for identifying who counts as a full-
time equivalent to a government staff. This should give us even
better insight.
But this inventory was not designed to be 100 percent
precise. I want to be clear. The survey was never intended to
be an auditable record. It was a tool to give us a sense of the
contractor workforce and to help us in our strategic workforce
management.
Although it is possible to put a lot of effort into making
it more precise, it is not necessarily going to make it more
useful for the uses that we are putting it to. And we are
careful about how precisely we manage the Intelligence
Community at the community level. Director of National
Intelligence (DNI) Clapper believes that the ODNI must
coordinate and integrate across the community, while the
agencies execute the mission. We attempt not to directly
control the field elements from headquarters.
For core contractor inventory, we can focus on efforts that
standardize how the agencies measure, but we cannot and do not
want to manage each agency's workforce at the project level or
the point of execution.
In line with that, the Intelligence Community Directive
(ICD) 612 guides our use of core contractors. It refines and
standardizes our definition of core contractor personnel. It
reaffirms that core contractors cannot perform inherently
governmental activities. It describes the circumstances in
which core contractors may be employed to support IC missions
and functions. And it requires elements to estimate the current
and projected number of core contractors and how we are using
them. These are guiding principles.
Over the past several years, as I said, agency directors
across the community have moved to rebalance the workforce with
fewer core contractors, and our core contractor inventory has
informed those decisions. And it has confirmed since then that
we are making good decisions with this rebalance. We
acknowledge that our inventory is not a precision instrument.
Its role has been to support strategic level direction and
discussion, and it has been very useful to us in this role.
That said, getting strategic management of the IC's
workforce is profoundly important, and we will do anything we
can to improve the tools that we use to achieve that. I hope
this explanation starts the discussion and makes our work and
how we view the core contractor inventory a bit more clear. I
welcome your questions, though I may ask to defer some
questions involving classified details to written responses or
a follow-on session.
So thank you for your attention to the IC workforce.
Chairman Carper. Good. And thanks for joining us. Thank you
for your testimony, and we look forward to having some
questions.
Mr. DiNapoli, please proceed.
TESTIMONY OF TIMOTHY J. DINAPOLI,\1\ DIRECTOR, ACQUISITION AND
SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. DiNapoli. Chairman Carper, Dr. Coburn, and Members of
the Committee, good morning. Thank you for inviting me to
discuss the Intelligence Community's use of contractors. As you
know, contractors can provide the flexibility to meet immediate
needs as well as access to unique expertise. But their use also
introduces risks that must be managed. This is particularly the
case for core contractors who provide direct support to the
Intelligence Community and often sit side by side government
personnel and essentially do the same type of work.
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\1\ The prepared statement of Mr. DiNapolia appears in the Appendix
on page 37.
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Last September, we issued a classified report that looked
at three issues: one, the use of core contractors; two, the
functions they perform and the reasons why they were used; and,
three, the policies in place to mitigate risk.
Our work focused on the eight elements that make up the
civilian side of the Intelligence Community, which includes the
Office of the Director of National Intelligence, the Central
Intelligence Agency, and elements within the Departments of
Energy (DOE), Department of Homeland Security (DHS), Department
of Justice (DOJ), State, and Treasury. In January, we issued an
unclassified version of that report which is the basis for my
statement today.
Let me begin by noting, as the Principal Deputy has, that
the Intelligence Community has focused considerable attention
on its use of core contractors. Since fiscal year (FY) 2007,
under the direction of the Chief Human Capital Officer (CHCO) ,
the Intelligence Community has conducted an annual inventory of
these core contractors. The data is used to provide Congress,
the Office of Management and Budget (OMB), and others insights
on budget requirements and historical trend information. For
example, based on the inventory's data, the Intelligence
Community reported that its use of core contractors had
declined by about a third between fiscal years 2009 and 2011.
However, after reviewing 287 contract records from 2010 and
2011, and reviewing, analyzing inventory guidance, we would be
cautious about drawing such conclusions. We found a number of
limitations, including changes to the definition of ``core
contractors,'' inconsistent methodologies for estimating the
number of core contractors, errors in reporting contract costs,
and poor documentation, that, when you put them all together,
undermined the utility, comparability, accuracy, and
consistency of the inventory's information.
Let me give you two examples--the first concerning
estimating contractor personnel.
One element which used actual labor hours estimated there
were about 16 contractor personnel working on a particular
contract. Another element which uses estimated labor hours
would have estimated that there were 27 contractor personnel on
that very same contract. Two different methodologies, and two
very different outcomes.
The second example involves reported contract costs. We
found that the elements either over or under reported contract
costs by more than 10 percent in about a fifth of the records
that we reviewed. Now, these were due to simple data entry
errors or differences in how the elements record contract costs
in the inventory. Nevertheless, we found that the inventory was
unreliable for reporting contract obligations.
Let me turn now to the work that core contractors do. We
found that the inventory at a broad level did, in fact, reflect
the primary functions that the contractors performed, which
included human capital, information technology (IT),
intelligence analysis, and program management support. It fell
a little short in terms of capturing all the functions that a
contractor may be asked to perform, especially when contracts
contain a broad array of tasks.
Further, the elements often lacked documentation to support
their cited reasons for using contractors. For example, in
about 80 cases in which the elements cited the need to obtain
unique expertise, we did not find documentation in the contract
files that would support that conclusion.
Knowing the reason why one uses a contractor is important,
as hiring a contractor for their unique expertise has different
implications for strategic workforce planning than if we hire
them for surge support or for longer-term gaps in Federal
resources.
Last, I will just briefly summarize our work with regard to
the policies in place to mitigate risk. In September 2011, the
Office of Federal Procurement Policy (OFPP) issued new
guidance, in part to provide the appropriate scrutiny when
contractors provide services that are closely associated with
inherently governmental functions. Services related to
preparing analyses or strategy options or providing acquisition
support fall into this category.
While the guidance required agencies to develop internal
procedures to implement this policy, we found that, of the
agencies in our review, only the Departments of Homeland
Security and State had fully done so.
Further, our prior work and guidance issued by the Office
of Management and Budget in July 2009 indicate that agencies
should develop strategic workforce plans that identify whether
they are doing the right work with the right people, government
or contractor, to accomplish their missions. Overall, we found
that of the eight elements' workforce plans generally did not
fully reflect these requirements.
As I noted before, one limitation of the inventory is that
it does not capture all the functions that a contractor may
perform under a contract. For example, of the 287 records that
we reviewed, more than 125 contained more than one function,
and it was not fully reflected in the inventory. Without
complete and accurate information, the elements may be missing
an opportunity to leverage the inventory as a tool for
determining the right mix of government and contractor
personnel.
Given these findings, we made several recommendations to
the Chief Human Capital Officer to improve both the inventory
and the Intelligence Community's workforce planning efforts.
The Chief Human Capital Officer also generally agreed and
discussed steps they were taking to address them.
We also made recommendations to the departments to set
timeframes for implementing the Office of Federal Procurement
Policy's guidance. The Departments of Justice and Treasury have
recently concurred with that recommendation, and we are
following up with them and other agencies to identify the steps
that they are planning to take in response.
In conclusion, the challenges I highlighted today are not
unique to the Intelligence Community, and we find many of the
same issues with our work at the Department of Defense and the
civilian agencies as a whole. The Intelligence Community, like
all Federal agencies, though, needs to have the policies,
tools, and data in place to make informed decisions about the
use of contractors. Incorporating needed changes into guidance
and improving the reliability of the inventory should better
position the Intelligence Community to make more informed
decisions in the future.
Mr. Chairman, this concludes my statement. I will be happy
to answer any questions that you may have.
Chairman Carper. OK. Thank you. Thank you both for those
testimonies.
I rode home on the train last night. I was tired riding
home, and I read your testimony. And to be really honest, it
was everything I could do to stay awake. And this is not dull
stuff. This is really interesting stuff. Just set aside the--I
do not know--the way you talk about this. And why is this real?
Why is this important? Why should we care? Why should you care
at GAO? Why should our President care? Why should our
intelligence agencies care? Why is this important? Why should
the American people care? Make it real.
Ms. O'Sullivan. From our viewpoint, as I said, I think that
one of the most important things that any leader can do is
manage the workforce that is going to inherit the mission and
carry things forward. It is 30-year decisions that we are
making when we are talking about our workforce. They have
consequence, they have weight. The effects last.
So one of the things that was most important about what the
Intelligence Community did here--in the days after September
11, 2001, we were determined not to repeat the mistakes that we
had gone through after we hollowed out the workforce in the
1990s. We knew we had to surge. We knew that the quickest way
to do that was to use the flexibility that contractors give
you. So we brought back people who had experiences. We brought
on contractors that could fill those gaps. But from the very
beginning, we had our eye on getting the mission done, but
keeping track of the changes that had to be made down the road
that we knew we would have to rebalance. And that is why we
started using the core contractor inventory and that approach
because it was going to start putting the focus back on
shifting back to the government workforce that we had been
allowed to hire, that we had started to train, and who was now
moving to the front lines to take over a lot of these
opportunities.
So if we had not done that, we would have ended up with
excess capacity, we would have ended up with people that we did
not need in the core contractor workforce, and we would have
ended up with the inability to do parts of our mission because
we could not have shifted costs off of that.
So this affects not only our ability to do our mission
today but in the future, and that is why it is absolutely
critical that we manage and pay attention to these functions.
Chairman Carper. All right. Mr. DiNapoli, same question.
Make it real for us.
Mr. DiNapoli. I largely agree with what the Principal
Deputy said. We were ill positioned after September 11, 2001,
to address the new missions that came across because we cut the
workforce in the 1990s without thinking strategically about why
we were cutting and who we were cutting and what skills and
capabilities we----
Chairman Carper. We cut the size of government. I think we
ended up in 2000 with fewer Federal employees than we had had
in a long time. I think that was a goal.
Mr. DiNapoli. That was a goal, absolutely. And we did
achieve that. But we did that without thinking about what
personnel do we have in-house. What is the capacity we have to
move forward to address emerging issues that we were not aware
of? And so when we turned--and I think appropriately so--to the
private sector to provide us assistance to meet those new
missions, whether they be in the Department of Defense, the
Department of Homeland Security, the Intelligence Community, we
hired many folks to do that.
Back in 2007, this Committee held a hearing that DHS
testified at, and at that point in time, we had just issued one
of our very first reports about DHS's reliance on contractors.
And I do not think that DHS at that time agreed that it had an
issue. But I think this Committee's efforts and the work that
we did both then and subsequently found that DHS has agreed
that they need to rebalance their workforce because they were
out of sync.
And so since that point in time, with the introduction of
DHS's balanced workforce study, the tools that they have in
place, DHS continues to identify new areas and new
opportunities to say we have gone too far; we are using
contractors in areas that we think we want to bring back in-
house or that we want to rebalance and make sure we have the
right oversight.
So I think that is why it is important, because there is
work that is important that the government does, and we need to
make sure that that work is done either by government employees
or by contractors that are appropriately supervised and
overseen.
Chairman Carper. Go back to the genesis of this. My
recollection is this is something that Senator Akaka was very
much interested in and focused on when he was with us. I think
he had a hearing maybe in 2011 or 2012 on this subject, and he
requested this report. And before he left, I think, in 2012, it
was completed, what, a year or so later?
Mr. DiNapoli. Slightly longer than a year or so later, yes.
Chairman Carper. OK. When he made the request for the
report, which several of us subsequently joined in as co-
requesters, what was he asking for? What was he asking for you
to help us understand?
Mr. DiNapoli. He really wanted to know whether or not the
kind of the issues that we had identified, much under the
leadership and direction of the Senator and his Subcommittee on
Oversight of Government Management, about looking at the
Federal workforce issues, whether or not those same issues were
prevalent in the Intelligence Community. So he wanted to know
what was the Intelligence Community's reliance on contractors,
what was their cost, and what were we doing to identify what
functions they were performing and whether or not there were
sufficient oversight mechanisms in place to make sure that
those risks were mitigated.
Chairman Carper. Just summarize for us in plain language,
what did you find out?
Mr. DiNapoli. In plain language, I would think that the
inventory had a number of deficiencies. When you talk about
some of the challenges that we identified, some are small, some
are big. But at that point in time, they were talking about the
inventory that was submitted back in 2011 or the 2011
inventory. There were just a number of challenges with it. And
I think because of those challenges and----
Chairman Carper. Well, people do not understand what we are
talking about here in the inventory. Just make it real, please.
Mr. DiNapoli. So the inventory, when you look at it, we can
consider it to be a very large spreadsheet. It contains
information on contractors, the number, their cost, other
activities that they engage in. So it really does become just a
tracking sheet, a mechanism to do that.
Chairman Carper. And each agency, CIA and others, were
doing their own inventory. Is that correct?
Mr. DiNapoli. They do.
Chairman Carper. OK. And do they do it annually?
Biannually? How often?
Mr. DiNapoli. Under the ICD 612----
Chairman Carper. Under what?
Mr. DiNapoli. The Intelligence Community Directive 612,
which was issued back in 2009, they are required annually to
submit an inventory.
Chairman Carper. And they have been doing that since when?
Mr. DiNapoli. Since fiscal year 2007. I think 2006 was a
pilot program, and so this is probably the seventh or eighth
inventory that they have submitted most recently. We looked at
it probably in the sixth or seventh iteration.
Chairman Carper. OK. Again, going back to my question, what
did you find out?
Mr. DiNapoli. The inventory was not good. It has
significant limitations as a tool for decisionmakers. At least
in our view, that when you talked about the numbers and costs
associated with contractors that was provided in statutorily
required reports, such as the Personnel Level Assessments and
the briefings that they provide to you and Congress and to
other committees, the information just was not accurate, and so
we need to be cautious about using that information as the
basis for providing Congress information so you all can provide
oversight.
Chairman Carper. Good. Well, my time is about up, and I am
going to yield to Dr. Coburn. Let me just say, when I come back
one of the things I want to do is ask about the recommendations
you have made and Ms. O'Sullivan's response to those
recommendations.
Dr. Coburn, when I rode home on the train last night and I
read all this material--I know you read this stuff, too--I said
earlier I was about ready to go to sleep. I am wide awake right
now, so thank you. Dr. Coburn.
Senator Coburn. Well, thank you all for being here. I do
not know where to go with this. Deputy Director O'Sullivan,
basically your testimony tells me you want to use this data,
but it is difficult to get it exactly right, and because of
that difficulty, you are going to use limited data. And GAO is
testifying that the data has some big holes in it, and you are
testifying that you have dropped core contracting down a
significant amount. If you have data that has big holes in it,
how do you know you did it right?
Ms. O'Sullivan. The first thing is that the utility of the
contractor inventory is not only in the end results but in the
process. So by forcing every manager across the IC to address
how are you using core contractors to sit down and then justify
their numbers as they work through to be able to talk about
year to year what are those changes and justify any changes and
to ask themselves how am I using these contractor functions is
incredibly valuable.
I can tell you that what happened across the IC is that you
had people reexamining: Do I really need to have this function
covered by contractors?
We then, by setting goals year to year, year-to-year
reduction goals--because we had to manage this responsibly and
get the mission done at the same time. What we were doing was
driving each component to look at can I cut this by 5 percent,
and then we would calibrate again. And, again, it was relative
to the previous year. And then we would see, OK, the mission
moved forward. Looking at the metrics, it looks like we have
still got some room, let us move down another 5 percent.
And by doing that, we managed the transition from a surge
in contractors to a buildup in government staff much more
effectively than we did in the previous decade.
Senator Coburn. So how do you explain that in 81 out of 102
records in their sample they did not find unique expertise,
find the evidence in the statements of work or other contract
documents that the functions performed by the contractors
required expertise not otherwise available from U.S. Government
employees? That is 80 percent.
Ms. O'Sullivan. We did not require them to maintain the
data in support of this that----
Senator Coburn. Well, why not?
Ms. O'Sullivan. Because we were using it as a management
process tool to force the discussion and engagement.
Senator Coburn. But here is the real question: 81 percent
in the sample--that does not mean all of it. That does not mean
you can apply it across the board. But of the sample they
looked at, you do not have a written justification or a reason
for using the outside core contractor for those--at least you
cannot document it. That does not mean it is not there.
I am a big believer in continuous process improvement and
lean manufacturing, and data is important. And your statement
was that it is so difficult to get the data because of all the
other agencies. I am reminded of what Edward R. Murrow said:
``Difficulty is never recognized in history as an excuse.'' And
the fact is you cannot make great management decisions unless
you have accurate data. And we have the testimony of GAO that
says you do not have accurate data.
I sit on the Intelligence Committee. I love you guys. All
right? I love what you do. I love how you sacrifice. I love the
things that you are doing to help protect this country. But to
me I think this is a pretty damning report for the quality of
management and the quality of the--I think the decisions can be
suspect based on what the GAO is showing us. So please defend
that for me.
Ms. O'Sullivan. I believe our reality is that, as our goal
was set out, we have reduced our core contractor numbers. Our
overall contract costs are down. That is an auditable number.
And when we look at the overall budget, when we look at the
numbers of people we have in our buildings, all of our
indicators track with this. But this was the leading tool that
forced people to get involved in the discussion.
Senator Coburn. OK. I guess the other question is: Do you
in your management position expect to take these
recommendations from the GAO to get better and actually
accurate data so that your decisions will be made in a more
fruitful way? I do not deny that you have reduced core
contractors. But we went like this on core contractors in the
IC. So the success of reducing a third of them when they are
talking about 80 percent not having the background in terms of
demonstrating a true need versus core-competent Federal
employees who are going to be with us and bring with that the
experience and the judgment and the long-term view of here is
what has happened in the past, here is where we are today, and
the thinking that goes with that. Where are you going forward
based on this report?
Ms. O'Sullivan. We absolutely agree in trying to continue
to improve the tool that we have, and the GAO recommendations
have been incorporated in our inventory this year.
Senator Coburn. So you are going to ask for better metrics,
because your budget request is based on those, right? And if
the metrics are not any good, your budget request is not any
good.
Ms. O'Sullivan. We have worked every year to improve the
quality of the data and to continue the conversation, and we
absolutely agree with your statement that the transition to the
foundation of our workforce is the government workforce. And I
believe that the right thing that the community leaders did was
knowing from the very beginning that we were doing the surge
and trying to keep the mission going. They never lost sight of
the need to manage the transition. And they started that before
we started having budget-driven cuts that would force that.
So we were 2 or 3 years in advance starting to prepare and
manage the transition down, and I think that that is what
allowed us to do this without breaks in mission.
Senator Coburn. OK. You would agree with the statement on
true government function.
Ms. O'Sullivan. Absolutely.
Senator Coburn. We get better return on our dollars using
Federal employees than we do when we are using contractors.
Ms. O'Sullivan. Absolutely.
Senator Coburn. All right.
Ms. O'Sullivan. And every one of my reports and every
agency, the thing they ask for, 90 percent of the requests I
get are for government staff.
Senator Coburn. OK.
Ms. O'Sullivan. Not more dollars for contractors.
Senator Coburn. All right. Thank you.
Thank you, Mr. Chairman.
Chairman Carper. You are welcome.
Senator Tester, you are up next, and then Senator
McCaskill, then Senator Ayotte. Please proceed.
OPENING STATEMENT OF SENATOR TESTER
Senator Tester. Thanks, Mr. Chairman.
Ms. O'Sullivan, I understand the IC leadership closely
monitors the results of the annual IC Employee Climate Survey
to track the satisfaction and inform retention. In April, I was
able to chair a hearing that examined the Federal employee
morale, productivity, and agency recruitment and retention
efforts. Now, while I understand the IC was highly rated by the
Partnership for Public Service, the IC has experienced some
difficulties in recruiting and retention. As with all agencies,
the IC has faced more than a few challenges hiring and
retaining staff.
So could you walk us through some of the hiring and
retention challenges that you have faced over the last several
years, that the IC has faced?
Ms. O'Sullivan. The primary challenges that we face in our
attrition is critical staff that--key skills that in industry
are highly sought. Believe it or not, one of the most difficult
skills to keep is contracting officers and contract lawyers.
They are frequently recruited about as fast, it feels like
sometimes, as we can train them and bring them on board.
Another area is competition with the IT industry, key cyber
skills, things like that. We also see the most attrition in the
early years, right after you bring someone in, typically you
think about the first 5 years you are really training them,
getting them settled into the mission, fully understanding the
environment. They get more productive after that timeframe.
That is the attrition that we watch most closely, is losing
those people in those first 5 years.
But, overall, the IC's attrition has bounced around between
4 and 5 percent, so it is relatively low.
Senator Tester. How does that compare--that is relatively
low?
Ms. O'Sullivan. Yes.
Senator Tester. OK. What is the solution for the
competition with IT, for example?
Ms. O'Sullivan. The solution, as it has been throughout our
history, is mission. People join this workforce because they
want to do public service, particularly the young officers, and
in many cases almost 60 percent of our workforce or more--I
have not checked it recently--is new since September 11, 2001.
They came on board with a service motto, and they are tied to
getting the mission accomplished.
So what we try to do is always keep that in front of them
and keep them tied to the idea that the work that they are
doing every day makes a difference.
Senator Tester. OK. According to this GAO report, the eight
civilian IC elements have not fully developed policies to
address risks associated with contractors supporting inherently
governmental functions, in certain cases, in terms of
contractors to perform certain intelligence analysis work in
very close alignment with Federal employees side by side. In
this regard, according to Mr. DiNapoli's testimony, the eight
civilian Intelligence Community elements have generally not
developed strategic workforce plans that address contractor
use. Mitigating risk in this case is absolutely central to our
national security. I think you agree with that.
If the Intelligence Community elements are allowing
contractors to set policy or control its mission or operation,
that is a problem. So why don't the IC elements have fully
developed policies across agencies to address contractor risk?
It appears to be a revolving door.
Ms. O'Sullivan. I can add a new data point. The ODNI, the
office for which I am responsible, has issued a policy
reaffirming the OFPP letter. So it is capturing the need to
track critical and closely associated with inherently
governmental function and contractor activities. And as was
reported by the GAO report, they have since gotten indications
from the other departments, a couple of other departments, that
they are moving forward as well.
In addition, the contract procurement authorities across
the IC are actively and vigorously engaged in a debate over how
to incorporate the new Office of Personnel Management (OPM)
definitions in critical functions and closely associated
functions in our core contractor inventory. We are trying to
figure out how the taxonomy works so that we do not have to
rebuild and reargue the agreement on definitional baselines
that we have gotten to.
They are also very engaged in trying to figure out how can
we estimate and track these on our contracts, so they are
looking at how to implement that in the contract proposals that
we are doing in the future.
Senator Tester. So is it fair to say that each IC element
is going down their own track?
Ms. O'Sullivan. They all have to implement it themselves,
but we are engaged in leading the discussion and trying to
reach to a common baseline of how we will all implement the
common guidance that we have----
Senator Tester. So how many of the eight elements are
following your path right now and have issued----
Ms. O'Sullivan. There are three that have issued policies
per the discussion and at least two more that have agreed and
are in process.
Senator Tester. Three that have issued policies, three that
are in process, and two that have not done much.
Ms. O'Sullivan. Two that are still working on it. They are
pretty small elements.
Senator Tester. OK. Who holds them accountable?
Ms. O'Sullivan. Well, we do. We have required that they
address in our inventory their response to this--to what they
are doing to implement it. So they must report what they are
doing to implement this.
Senator Tester. OK. According to the GAO report, it was
discovered that the Intelligence Community has not been using
the same criteria to evaluate who falls into the core
contractor category across all of the eight component agencies.
You all are appropriated a certain number of dollars each year,
and that is how you do your budgeting for hiring and for
contracting. Someone had to be keeping track of those numbers
prior to 2009. Can you outline what measures the ODNI, CIA, and
the IC elements have been taking to ensure that all agencies
are on the same page in their classification of core
contractors?
Ms. O'Sullivan. Classification according to function. The
Intelligence Community Directive, that we issued in 2009 set a
definition out for what a core contractor function was. The
difficulty we had was not in everybody having a different
definition, but in everybody reading those words and
interpreting it slightly differently. And it was complicated by
the fact that we have this enormous diversity of mission across
the 17 IC elements. So what I mean as a language specialist is
different than what the open source people mean or what the
case officers or State Department folks mean.
So we had a lot of clarifications that we worked with as we
did the inventory year on year where someone would say, ``Well,
I interpreted IT support this way,'' and somebody else would
say, ``Well, I interpreted it this way.'' And then we would
issue guidance to clarify the definition. But the definition
stayed fairly standard.
We are doing a new release of that directive right now to
catch all of these accumulated clarifications and try once more
to get everybody to interpret the language the same way. But I
would say that within each agency, a lot of the inconsistencies
we see are across the elements. Within each agency, there was
more of a consistent approach individually. It was just adding
them up across the IC and you would see different ways of
counting and interpreting the data.
Senator Tester. OK. Thank you very much. Thank you both.
Chairman Carper. Thank you, Senator Tester. Senator
McCaskill.
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. Thank you.
I think you know, Ms. O'Sullivan, that there is a little
bit of a crisis of confidence within Congress about the
Intelligence Community, writ large, and the conflict that has
been laid bare by a very brave and appropriate speech given by
Dianne Feinstein on the floor of the Senate about the serious
policy disagreements with the CIA which was being subjected to
Congressional oversight. I think this has made it incumbent on
the Intelligence Community to be as transparent as possible
with Congress while protecting the classification of
information that is important for our national security.
In that regard, I am curious as to why the number of
contractors and the cost of contracts has been classified.
Ms. O'Sullivan. In many cases our relationship with
specific contractors is classified or sensitive at their
request, so we----
Senator McCaskill. I am not saying that you name them. I am
talking about how many there are and how much it costs.
Ms. O'Sullivan. I would be glad to take that on and look at
giving you an update of----
Senator McCaskill. I think it is classified because you get
away with saying things are classified in the Intelligence
Community. I mean, here is the interesting thing: I do not
think it helps the enemy to know the ratio of Federal employees
to contractors. I do not think that is a problem for our
Intelligence Community in terms of jeopardizing our national
security. And what is really interesting is we are paying Booz
Allen Hamilton for administrative support services, but we
cannot even talk about how much we are paying them or how many
there are, even though they have it on their website.
They talk about doing work for the Intelligence Community
on their website.
So I just think there is a time where there needs to be a
little bit of a gut check in the Intelligence Community because
I think that--when you have somebody like Senator Feinstein who
is--she is a work horse, not a show horse. She is someone who
understands the sensitive nature of the responsibilities she
has as Chairman of the Intelligence Committee. When she rips
into our Intelligence Community in a public way, you have a
problem. And I think everything you can do to show that you
accept oversight of Congress is really important, including not
classifying stuff that, frankly, should not be classified,
especially when the people whose identities you are supposedly
wanting to protect are advertising it on their websites.
So I would appreciate some kind of specific answer as to
why the ratio of contractors to Federal employees and the costs
of those contractors would be considered classified
information.
Ms. O'Sullivan. We will, of course, give you a more
detailed answer. The usual calculus is that if you have a total
number and a number of people declare their part, you start
subtracting, and you get what is left, and that is the people
in relationships that need to be protected and want to be
protected. But you deserve an answer, and we will get you a
detailed one, because we are committed to engagement. I
personally spent a great deal of my time reading intelligence
from around the world, and I know just what a society that does
not have oversight looks like. It is incredibly valuable. It is
the thing that allows us to do that which we must do in secret
in an open society. There is no other way to make it work.
So we are committed to that. Director Clapper has been
leaning forward and pushing transparency initiatives. We have
released thousands of pages of documents which, as you know, is
countercultural. And it has required an intense reexamination,
and we are continuing to push that across the Intelligence
Community.
Senator McCaskill. I think that is terrific, and I want to
be very encouraging in that regard, because I do think if there
is a sense that we cannot conduct oversight, then we begin to
have the unraveling of the very foundation of the Intelligence
Community that is necessary for the protection of our country.
Ms. O'Sullivan. We cannot function without adequate and
trusted oversight.
Senator McCaskill. Does ODNI have access to the analysis
that has been done at the element level on cost-benefit for
country employees versus Federal employees?
Ms. O'Sullivan. I believe we do have access to that data,
yes.
Senator McCaskill. And do you feel confident that those
kinds of cost-benefits analyses have actually occurred?
Ms. O'Sullivan. I do, especially given the preference that
almost every manager I know has for government employees as
their base. The drivers that we have had with the number of
budget reductions that have been going on through the past 3
years--we are now going into our fourth-year cycle of down
budget calculations. Everyone looks first to see if we can
squeeze efficiencies here before we touch the key delivering on
mission, take risks that would, frankly, cause us to lose sleep
at night, or that would cause us to cut into that core
foundational workforce.
Senator McCaskill. Senators Tester, Mikulski, Coats,
Collins, and I have introduced legislation to make the National
Security Agency (NSA) Inspector General (IG) a Presidentially
appointed, Senate-confirmed position. As you know, the current
NSA IG is appointed by and reports to the NSA Director.
Do you agree that a Presidentially appointed, Senate-
confirmed IG at NSA might be seen as more independent and more
receptive to complaints of alleged abuse at the agencies?
Ms. O'Sullivan. I believe that that is the way that most
folks in Congress see it, and I have spent my career working
under Presidentially appointed IGs, and with, and they have
been incredibly valuable contributors to our joint enterprise
because they allow me to look at and see things that I might
have missed otherwise.
Senator McCaskill. Do you have an opinion? And if you do
not, if you could take this for the record, I would like some
kind of weighing in by the administration about expanding our
whistleblower protections to contractors within the
Intelligence Community.
Ms. O'Sullivan. We will take that for the record.\1\
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\1\ Information submitted by Ms. O'Sullivan for the record appears
in the Appendix on page 58.
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Senator McCaskill. It is a little tricky. I get that, but,
I have worked a lot in this space with DOD. When you have
employees--and we have this at DOD, we have it at DHS, and we
have it in the Intelligence Community--when you have a row of
carrels and you have contractor, Federal employee, contractor,
contractor, Federal employee, Federal employee, contractor, and
they are all doing the same work, there is no reason why the
ones that are contractors should not have the identical
whistleblower protection as their colleagues that they are
working shoulder-to-shoulder with. And I think it is very
important to have whistleblower protections for everyone who is
working on behalf of the Federal Government, and I would like
some kind of weigh-in from the administration about their
support for that concept.
Ms. O'Sullivan. I would note that they all have very active
redress to those very independent IGs. Many of the employees
that the IGs deal with are contractor complaints.
Senator McCaskill. Well, the problem is that if you have a
complaint and you are going to go to an IG that is hired by,
and in a sense works for, the head of the agency, I do not
think that gives a whistleblower much confidence, especially if
they are working for a contractor and they do not have the
specific protections that Federal employees have.
Ms. O'Sullivan. Perhaps my experience reflects the fact
that I have worked under Presidentially appointed IGs.
Senator McCaskill. Probably.
Thank you, Mr. Chairman.
Chairman Carper. Thank you.
Senator Ayotte, before you are recognized, Dr. Coburn
wanted to say something.
Senator Coburn. Yes, I just want to say something. there is
no committee in Congress that does more oversight than the
Intelligence Committee. Twice a week, 2 hours each time, at a
minimum, the IC is oversighted. We will have a lot of questions
in a closed hearing that you can get answers to.
The other thing that I would point out, the reason there
was no rebuttal to what Senator Feinstein said is that under
the rules of the Committee we cannot. So you might think about
that, why there was no rebuttal, and look at the rules of the
Committee, and you might find a problem.
Senator McCaskill. Well, I am confused. So somebody can
give a speech and disagree with her on the floor of the Senate?
Senator Coburn. It is about disclosing information that is
Committee sensitive or classified.
Senator McCaskill. So do you believe, Senator Coburn, that
she disclosed information that she should not have disclosed?
Senator Coburn. I did not say that. I just said we cannot
rebut that without violating the rules of the Committee.
Chairman Carper. All right. Senator Ayotte.
OPENING STATEMENT OF SENATOR AYOTTE
Senator Ayotte. Thank you. I wanted to ask about a concern
I know this Committee has dealt with on a number of occasions,
which is the insider threat issue to national security,
workforce safety issues, and obviously this is a threat that we
could face not only from contractors but from Federal employees
themselves. However, it has turned out that some of our most
recent and damaging breaches to national security and workforce
safety have come at the hands of contractors, whether it is
Edward Snowden or Aaron Alexis, both who we were working in a
contractor capacity, I know not within the civilian
intelligence agencies, but I think obviously with the sensitive
nature of the information that you are dealing with, those
threats are just as important and great given the importance of
our Intelligence Community of protecting our country.
So when we are speaking about IC accountability for hiring
contractors and knowing what function they are performing and
whether, obviously, they are performing inherently governmental
functions, that is an important question. But I also think it
also deals with a larger IC accountability issue, and including
knowing who we are hiring, mitigating risk, and assuring
continuous evaluation and accountability.
So I would like to hear your thoughts on how we are
addressing this issue, how we are mitigating the risks of
contractors as insider threats, and what you believe is being
done in that regard to ensure the American people that we will
not see similar instances as we have seen outside your
agencies.
Ms. O'Sullivan. First, regrettably, there is no corner on
the market for people who would cause threats. Historically,
Government employees have been an equal risk there. But in
managing the contractor workforce, as I said earlier, they go
through the same security vetting process as our Government
staff. In addition, the contractor must--before they have any
access, they must have this validated need, and they must have
a validated clearance. In addition, they are subject to the
same regulations and monitoring once they are in our systems as
Government staff.
So what we have been doing, as you pointed out, is
enhancing the security process for all, and that includes the
continuous evaluation process, which we are driving to bring on
board working with OPM.
Senator Ayotte. So what are you doing now in terms of
continuous evaluation? And what do you anticipate doing as an
improvement to that process?
Ms. O'Sullivan. We are building off of a pilot project that
I think you have probably heard about that the army did, which
pointed to the benefits of continuous evaluation. We are
looking for an initial operational capability (IOC) at the end
of this year, and 5 percent of our Top Secret/Sensitive
Compartmented Information (TS/SCI) employees cleared covered by
continuous evaluation looks going into 2016.
Senator Ayotte. And right now what is the period that
someone has to--can you remind me of that--how often are you
evaluating your employees right now?
Ms. O'Sullivan. For TS/SCI, predominantly we are looking at
a 5-year periodic reinvestigation. But we did have some
challenges with people facing budget cuts and sequestration,
looking at moving funds from that and focusing on initial
investigations. The DNI sent out a letter in October telling
people to do a risk-based approach to the reinvestigation so
that we make sure that those at highest risk or who have the
most sensitive access are investigated more frequently.
Senator Ayotte. Are you doing any random audits?
Ms. O'Sullivan. We are doing random audits of our employees
on our IT systems.
Senator Ayotte. On the IT systems?
Ms. O'Sullivan. Yes.
Senator Ayotte. So Senator Collins, Senator Heitkamp, and I
have been really having a piece of legislation that deals with
more random audits of the background review, and it seems to
me--I appreciate that you are doing it of the IT system, but
obviously the risks outside of IT are just as important in
terms of the sensitive nature in which some of the issues that
you are dealing with in the Intelligence Community. So that is
one of the things I hope we will get to because, frankly, if
you do not know when you might be evaluated, I think that is a
better system than knowing that, every certain period you are
going to be evaluated.
So I just appreciate what you are doing on that, and
obviously this is an issue we face across government, so thank
you. That is all I had for questions.
Ms. O'Sullivan. Thank you.
Chairman Carper. Thanks so much for joining us today.
I want to go back to--I told you that when I finished my
questioning, I was going to go back and ask you some questions
about recommendations and how those recommendations were
received and acted upon.
Let me just ask you, let me go back in time to 2012.
Senator Akaka was about to leave us. He makes this request for
a GAO study, and you all go to work on it. It takes over a
year. You come out with your report this year. And just talk a
little bit about the back-and-forth between, I do not know, the
two of you, if there is some--I presume there is--but in terms
of the development of the recommendations, how does that take
place between GAO and in this case ODNI?
Mr. DiNapoli. Well, thank you, Senator, for the question. I
think when you look historically back at the start of this
engagement, that was just after the Intelligence Community
Directive 114 was established, which provided a framework for
GAO to move forward with the Intelligence Community in terms of
audits. And with that new Intelligence Community Directive, I
think that did establish a good framework for us to move
forward. It gave us an approach for a presumption of
cooperation. It prevented the categorical denial of
information, and access to much of the information on a more
formal basis.
This job, as you said, started some time ago, and it
continued for about probably a year's worth of dedicated audit
work and then some additional work as to followup. I think the
information and the cooperation that we got from the
Intelligence Community improved over time. I think that initial
period, there were some efforts to try to understand how to
implement the directive. And I think as we came back and walked
through each of the agencies with our findings about what we
found in looking at the inventory, gave them the opportunity to
see what we had done, and then we were discussing with them
what we thought some of the implications were. So I think at
least at the element level we had a good dialogue toward the
end about the work that we had done, how we had completed it,
and what some of those implications are. And I think our
recommendations derive directly from those discussions.
I think when we sent the report over for formal comments,
we had a very good exit conference, which is the standard
process that we use at the Office of the Director of National
Intelligence----
Chairman Carper. Who participates in that kind of exit
conference?
Mr. DiNapoli. I think in that particular case it would have
been the office most directly cognizant for the work, the Chief
Human Capital Officer, with support from the acquisition
individuals, were there at the exit conference along with
agency representatives. It depends upon who actually shows up.
So when we present that information, we talk about here is
the potential recommendations, we are looking for the agencies
to help us out, because we do want the recommendations to be
actionable, we want them to be productive, and we want them to
do something that, once they are implemented, they are just not
implemented because they think they just will be done with GAO;
it is that we have some type of positive action that allows the
agencies to move forward. Because it is not about us, it is
about the agencies having the ability to improve whatever they
are doing.
One of the questions I think you mentioned before is, well,
what do you think about how responsive the Office of the
Director of National Intelligence and the agencies have been?
We thought the responses to the draft report and the
recommendations were solid. I actually thought that the
Director provided cogent responses saying here are some
specific steps we are going to take with regard to improving
information on the methodology; we are going to ask for that
information so we will have a better handle on it.
They had general agreement, at least in principle, with how
to improve workforce planning, but they pointed out that it is
not a simple task. There are some things that they need to
think about how to implement it in a way that makes sense for
us and is not overly burdensome, not too cost prohibitive.
We agree with that in general, that you do need to make
those actions usable, cost-effective, and meaningful. So we are
going to continue to work with the agencies to figure out what
they are doing and make sure that the actions that they take
are responsive, and we will listen to their concerns about if
we do it this way, this might be too much.
Chairman Carper. OK. Ms. O'Sullivan, just chime in here.
How does the process work for you? It seems to me if I were at
GAO and I were doing this, I would want to have you fully
involved. I would not want it to be necessarily adversarial,
but to see if we can collaborate, and at the end of the day
when we come up with recommendations, hopefully they are better
informed recommendations and you would be more likely to comply
with them. But just from your perspective, how does this work?
Ms. O'Sullivan. It starts with engagement at the front end
to understand what is the scope of the work that is going to be
done, and I actually like to work before that by suggesting
here are some areas where I could use some outside eyes. These
are lessons, again, I have learned from the relationships with
IGs through the years that the only way to really approach
this--and this is what I tell my management organization--is by
looking at this as an opportunity to see that which you are
missing. It is that old adage of when you are in college and
you typed a term paper, you could read that paper 50 times and
read right over the typo every time. You just simply cannot see
that which is the norm to you. You need outside eyes to help
you find problems, and that is about the basic credo of IGs and
GAO, is to make the function of government more efficient and
effective.
So it should be looked at as an opportunity to improve, and
the engagement at the front end is to try and figure out how to
understand in our working environment--for instance, one of the
things that we are engaged on now is suggesting maybe you could
take a look at our facilities footprint across the Washington
area to see that we are really getting the gains in shared
space that we think we are. This is the kind of ongoing debate,
and I do this with our IGs all the time. I ask them, I have a
new component director here, why don't you establish a baseline
before the new guy comes in? And that is the way to engage in a
fruitful relationship.
Chairman Carper. OK. I am going to come back and ask you to
walk us through some of the recommendations, and then I am
going to ask--not yet, but after Dr. Coburn goes, and then, Ms.
O'Sullivan, I will be interested in your reaction to those
recommendations and how we are doing.
Then one last question before I finish up I will be asking
you is what do we need to do next on this end, on this side of
the dais, in order to kind of make sure this is all going to
work out. Dr. Coburn.
Senator Coburn. I am going to defer my questions. I have
some other questions, but I am going to defer them for a closed
hearing because there are some questions I want to ask in a
closed hearing.
Chairman Carper. Well, let us just do it. Let us jump into
the recommendations, just some of the key recommendations you
have made, and let us get some reaction how we are doing.
Mr. DiNapoli. So we did make a number of recommendations.
The first two are directed at the Office of the Director of
National Intelligence and the Chief Human Capital Officer. Both
have to do with improving the basic workings of the inventory.
The first one, we said we had to develop more internal
controls, so how do we improve----
Chairman Carper. Had to develop what?
Mr. DiNapoli. Internal controls. How do we get the data
just to be better? And the second part was how do you improve
some of the estimating methodologies to get more consistencies
with regard to what is reported. In that regard, the Chief
Human Capital Officer concurred and said we are going to do
that, and we are going to take some specific steps. So in this
year's inventory, which I believe would be the fiscal year 2015
Intelligence Community inventory, they are going to have a
particular tab, a specific tab that says how did you estimate,
what was your methodology, what kind of limitations or
challenges did you find. That information I think is also
supposed to be reflected in the briefings up to the Hill,
whether it be the annual briefings they provide to the
committees or in the personnel level assessments, so there
should be more clarity about what the information is and what
it can be used for and what it should not be used for. Those
two things I think would be very positive steps by the
Intelligence Community.
We also made a number of recommendations to the heads of
the agencies that did not fully implement the Office of Federal
Procurement Policy's guidance.
Chairman Carper. I am sorry. Say that again? Start that
sentence over again.
Mr. DiNapoli. Sure. During the course of the review, we
looked at the policies in place to mitigate the risks
associated with using contractors, and specifically did the
agencies implement procedures to implement the Office of
Federal Procurement Policy's September 2011 guidance. In our
review, only the Departments of Homeland Security and State had
done so.
Chairman Carper. OK.
Mr. DiNapoli. So we had five other agencies that had not.
We said, you need to get those policies in place, which is a
recommendation that we had previously made to the Office of
Federal Procurement Policy back in 2011.
Chairman Carper. And what has happened subsequent to that
recommendation?
Mr. DiNapoli. A couple things. Since that point in time,
Justice concurred with that recommendation. We are going to
work with them to see what actions they are taking. I think
Treasury also concurred, and the interesting part about
Treasury is that they needed to do a pilot program because they
said this is a pretty fundamental change in how we are thinking
about using contractors. And as part of the briefing they
provided to us, they said we are going to implement changes
probably in September. But they did find that when they were
looking at their workforce balance, they did find a number of
individuals that were paid considerably more than what they
thought was cost-effective. And so as part of that rebalancing
scheme, you might actually have some ability to have cost
savings. So I think there is a positive use of the inventory.
A couple other agencies, we are still in dialogue with them
as far as what actions they are taking. The Central
Intelligence Agency is one of the outstanding ones that we
still need to followup and close the loop on.
Chairman Carper. Ms. O'Sullivan, jump in, please.
Ms. O'Sullivan. I think he has accurately captured the fact
that we responded to the first recommendations by including
concrete direction in our inventory this year where we asked
elements to identify the methodology used and steps taken to
address increasing accuracy of the data.
In addition, as I mentioned earlier, in ODNI, the element I
oversee, we have moved forward and initiated policy as
requested addressing the OFPP letter. So those are concrete
steps taken, and I would also like to point out the benefit he
just highlighted in the discussion with Treasury is what I
meant by the process of going through this examination forces
out things that you should be looking at. When Treasury looked
at their core contractors, because of this inventory, because
of GAO's involvement, they started asking themselves some
questions about is the rate of pay for a contractor the right
thing. It is not a direct intent of the inventory. It is the
byproduct that you get by examining these things closely.
Senator Coburn. Did you do anything in terms of increasing
the justification on outside contracting?
Ms. O'Sullivan. Our contract officers work that constantly
in the contract stuff, and they take that on board to look at
their own audited numbers and see if there is something that we
can issue as far as direction in our----
Senator Coburn. So new outside contracting has to have the
justification there?
Ms. O'Sullivan. There are requirements in the basic
contracting structure.
Senator Coburn. But there always have been.
Ms. O'Sullivan. Yes, so this is----
Senator Coburn. You were not following them.
Ms. O'Sullivan. This is a check to go and look at and see
was this an anomaly or is this something we need to look at
across the board.
Senator Coburn. OK.
Chairman Carper. Great. Well, I think we are going to wrap
up here and go to a secure setting for a few more questions.
Before we do, talk to Dr. Coburn and me about what we can do
from our end to be helpful in making sure that this is not
gathering dust, but just to make sure there is actually good
followup and continue to be good followup. What can we do to be
helpful?
Mr. DiNapoli. Well, I actually think there are two things
that you could do. I think the Committee historically has done
a lot of work in this area, and they have held hearings. I
refer back to the hearing that the Committee held back in 2007
which I think prompted DHS to do more with its contractors.
That type of oversight I think is essential and promotes that
type of reassessment internally by the agencies. So continuing
to hold the oversight hearings that the Committee is holding I
think would be one of the key things to do.
I think the second thing that the Committee could help spur
is a dialogue within the Federal community now that we have had
a number of years' use, looking at the DOD inventory of
contractor service, the civilian inventories, and then the IC
inventory, there are undoubtedly best practices and lessons
learned in how we can use the inventory better. And I think
that requires not just an individual agency or element. I think
it needs more of a concerted Federal-wide dialogue, potentially
led by the Office of Federal Procurement Policy, but definitely
in conjunction with the units that come together, like the
Chief Financial Officers (CFOs), you need the Chief Acquisition
Officers (CAOs). You need the folks that are going to have
their community represented so they need to be part of that
dialogue to say how can we make this work for us within the
environment that we work in.
So I think there is a great opportunity to set the stage
now because, as we get data on contractor performance, as we
get data on the number of contractors, if we lay the foundation
now, 2 to 3 years from now we will be in a position to actually
make some more very informed governmentwide processes that will
make it more applicable and more useful across the government.
Chairman Carper. OK. Ms. O'Sullivan, just wrap it up very
briefly. Same question.
Ms. O'Sullivan. Very briefly, anytime you have a concern,
the sooner you come to us or send us a request, have your staff
reach out, the better it is for all of us. I do not want you to
feel a lack of confidence because you have not gotten an answer
you were looking for.
Chairman Carper. All right. Thank you.
With that, we are going to call it a day here, at least in
our open hearing. The hearing record will remain open for 15
days, until July 3 at 5 p.m.--for the submission of statements
and questions for the record.
The hearing will be in recess subject to the call of the
Chair, and we are going to reconvene shortly in a classified
setting. Thank you again for joining us for this portion of the
hearing. We will look forward to meeting again with you very
shortly.\1\
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\1\ The transcript of the classified session of the hearing is on
file at the Office of Senate Security, document number OSS-2014-0961.
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Thanks, everyone.
[Whereupon, at 11:16 a.m., the Committee proceeded in
Closed Session.]
A P P E N D I X
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