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35–446 PDF 2007

CONTINUING SECURITY CONCERNS AT LOS

ALAMOS NATIONAL LABORATORY

HEARINGS

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND

INVESTIGATIONS

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JANUARY 30, APRIL 20, 2007

Serial No. 110–1

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov

COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DEGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Minority Member

RALPH M. HALL, Texas

J. DENNIS HASTERT, Illinois

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, General Counsel

SHARON E. DAVIS, Chief Clerk

BUD ALBRIGHT, Minority Staff Director

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

BART STUPAK, Michigan, Chairman

DIANA DEGETTE, Colorado

CHARLIE MELANCON, Louisiana

HENRY A. WAXMAN, California

GENE GREEN, Texas

MIKE DOYLE, Pennsylvania

JAN SCHAKOWSKY, Illinois

JAY INSLEE, Washington

ED WHITFIELD, Kentucky

Ranking Minority Member

GREG WALDEN, Oregon

MIKE FERGUSON, New Jersey

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

(II)

(III)

C O N T E N T S

JANUARY 30, 2007

Page

Barton, Hon. Joe, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 7

Burgess, Hon. Michael C., a Representative in Congress from the State of

Texas, opening statement .................................................................................... 11

DeGette, Hon. Diana, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 8

Dingell, Hon. John D., a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 5

Green, Hon. Gene, a Representative in Congress from the State of Texas,

prepared statement .............................................................................................. 13

Murphy, Hon. Tim, a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 13

Stupak, Hon. Bart, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 1

Walden, Hon. Greg, a Representative in Congress from the State of Oregon,

opening statement ................................................................................................ 10

Whitfield, Hon. Ed, a Representative in Congress from the Commonwealth

of Kentucky, opening statement ......................................................................... 4

WITNESSES

Anastasio, Michael R., Director, Los Alamos National Laboratory ..................... 56

Prepared statement .......................................................................................... 73

Answers to submittted questions .................................................................... 96

Brian, Danielle, executive director, Project on Government Oversight .............. 19

Prepared statement .......................................................................................... 98

D’Agostino, Hon. Thomas P., Acting Administrator, National Nuclear Security

Administration ..................................................................................................... 51

Prepared statement .......................................................................................... 111

Friedman, Gregory H., Inspector General, U.S. Department of Energy ............. 15

Prepared statement .......................................................................................... 119

Podonsky, Glenn S., Chief Health, Safety and Security Officer, Office of

Health, Safety and Security, U.S. Department of Energy ................................ 17

Prepared statement .......................................................................................... 132

Pyke, Thomas N. Jr., Chief Information Officer, U.S. Department of Energy ... 55

Prepared statement .......................................................................................... 143

Sell, Hon. Clay, Deputy Secretary, U.S. Department of Energy ......................... 40

Prepared statement .......................................................................................... 145

Wilbanks, Linda, Chief Information Officer, National Nuclear Security Administration .......................................................................................................... 53

Prepared statement .......................................................................................... 148

APRIL 20, 2007

Blackburn, Hon. Marsha, a Representative in Congress from the State of

Tennessee, opening statement ............................................................................ 164

Burgess, Hon. Michael C., a Representative in Congress from the State of

Texas, opening statement .................................................................................... 171

DeGette, Hon. Diana, a Representative in Congress from the State of Colorado, prepared statement .................................................................................... 166

Dingell, Hon. John D., a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 161

Page

IV

Doyle, Hon. Mike, a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 170

Green, Hon. Gene, a Representative in Congress from the State of Texas,

prepared statement .............................................................................................. 163

Stupak, Hon. Bart, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 157

Walden, Hon. Greg, a Representative in Congress from the State of Oregon,

opening statement ................................................................................................ 162

Whitfield, Hon. Ed, a Representative in Congress from the Commonwealth

of Kentucky, opening statement ......................................................................... 160

WITNESSES

Anastasio, Michael R., director, Los Alamos National Laboratory, Los Alamos,

NM ......................................................................................................................... 184

Prepared statement .......................................................................................... 201

Bodman, Hon. Samuel, Secretary, U.S. Department of Energy .......................... 172

Prepared statement .......................................................................................... 198

Friedman, Hon. Gregory H., Inspector General, U.S. Department of Energy .... 182

Prepared statement .......................................................................................... 202

(1)

CONTINUING SECURITY CONCERNS AT LOS

ALAMOS NATIONAL LABORATORY

TUESDAY, JANUARY 30, 2007

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,

Washington, DC.

The subcommittee met, pursuant to call, at 10:00 a.m., in room

2123, Rayburn House Office Building, Hon. Bart Stupak (chairman

of the subcommittee) presiding.

Present: Representatives Stupak, Degette, Melancon, Green, Dingell [ex officio], Whitfield, Walden, Burgess, Murphy, and Barton

[ex officio].

Also present: Representatives Udall of New Mexico and Wilson

of New Mexico.

Staff present: John F. Sopko, Christopher Knauer, Voncille T.

Hines, Rachel Bleshman, Peter Goodloe, Christopher Treanor, Jodi

Seth, Alec Gerlach, Alan Slobodin, Dwight Cates, and Matthew

Johnson.

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. STUPAK. This meeting will come to order on the Energy and

Commerce Committee, Subcommittee on Oversight and Investigations. This hearing, which will be the first of the 110th Congress,

is entitled, Continuing Security Concerns at Los Alamos National

Laboratory.

We will begin with the Members’ opening statements.

Los Alamos National Laboratory is a place of great history. It is

home to many of our Nation’s most secret of weapons development,

and yet it is also home to some embarrassing lax security protocols.

During my 12 years on the Oversight and Investigations Subcommittee, I have sat through far too many hearings detailing

problem after problem at Los Alamos.

Now as I take over as chairman of this distinguished subcommittee, I find myself presiding over yet another hearing about inadequate security at the lab. The latest security debacle begins in October 2006 when Los Alamos County Police responded to a call at

a private residence and discovered several hundred pages of classified and unclassified materials as well as electronic files that were

stolen from the Los Alamos National Laboratory.

Documents were taken from the lab by a subcontract employee.

The employee simply walked out of the lab with stolen documents

2

in her purse or on a thumb drive which she easily inserted into

open ports on classified computers.

Over the last 8 years, this subcommittee has held 11 hearings

into various security lapses at Los Alamos. I have this chart which

I will enter into the official record illustrating 11 hearings that this

committee has held. These hearings have ranged from the Wen Ho

Lee case in 1999 to the removal of Classified Removable Electronic

Media, CREM, in 2005 in the cyber security hearings we held in

June 2006.

Throughout these hearings, Members have heard time and again

how the Department of Energy and the lab managers were going

to improve security. We have heard excuse after excuse and plan

after plan of how the lab would improve security. The DOE went

so far as to competitively bid out the lab’s operation in the hope

that a new management team would bring about change, security

and accountability.

But DOE awarded the contract to a consortium that includes the

previous contractor, the University of California. With this brilliant

decision, did anyone really expect the laissez faire culture of Los

Alamos to change?

As a result of our investigation, I have a number of questions

that need to be answered today. How and why did the October security breach occur? What is the potential and overall actual harm

to national security as a result of the breach? Why do security

breaches continue to plague Los Alamos? What plans do Los Alamos, DOE and the National Nuclear Security Administration have

for preventing breaches at Los Alamos? Who is accountable for the

most recent security breach at Los Alamos? What tools are available to the Federal Government to hold Los Alamos accountable for

the latest security breach?

For example, new accountability rules allow DOE to penalize

contractors and their subcontractors for violations of DOE rules,

regulations and orders regarding the safeguarding of restricted

data and other classified information. Based upon our staff’s investigation, my real concern here is whether DOE is using these tools,

or is it just giving contractors a slap on the wrist for egregious security violations? Are the tools available for the Federal Government to adequately deter security breaches? This incident does

raise serious questions about the manner and policies of the Department of Energy in granting the security clearances to employees. This question, as well as many others, will of course have to

be answered in closed session due to their sensitivity.

During the last hearing in 2006, I became so fed up that I asked

the question, ‘‘What do we do at Los Alamos that could not be done

at our other National Laboratories?’’ I was serious when I asked

that question back then, and I must tell you I have been asking

myself the same question again in recent months.

I am a former police officer, and in Michigan, we like to use auto

analogies. For far too long we have essentially been issuing parking

tickets to Los Alamos. In July 2004, we essentially put a boot on

the lab when it was shut down for 7 months to clean up its act.

This cost the American taxpayers more than $350 million and was

supposed to result in a more secure facility. Unfortunately, there

has been yet another breach not long after Los Alamos reopened.

3

Los Alamos did not change after repeated tickets. It did not change

after putting a boot on. And now, I am convinced that we may need

just to tow the car.

Something drastic must be done at Los Alamos in order to

change the systemic security problems. The American people demand and deserve the highest level of protection of our national secrets. If the Department and the lab won’t change, provide security

at our labs, Congress must explore ways to protect our security.

Therefore I will, in cooperation with my friends on the minority

side, be asking the Government Accountability Office to perform a

comprehensive audit of all services performed at Los Alamos.

I will ask them to evaluate whether the footprint and mission at

the lab is too large.

I will also ask them to evaluate the possibility of consolidating

and moving many of the classified operations at Los Alamos to another lab, such as Sandia where there is a willingness among the

employees and management to heed our advice. I will not tolerate

continued security lapses and thumbing of their nose at Congress.

Finally, it is my understanding that Secretary Bodman has

asked for additional reviews of Los Alamos’s security and that the

reports of the review are due at the end of February. It is our expectation that the Department will take these reviews seriously,

provide concrete answers and submit detailed plans to remedy the

security lapses.

I fully expect Secretary Bodman will appear before this subcommittee to articulate what has and will be done to improve security at Los Alamos.

In conclusion, I am pleased that the first hearing of the O&I

Committee is truly a bipartisan effort by myself, the ranking member and our staffs. This is what I hope will be the first of many

bipartisan efforts to make our country safer and our government

more effective.

Thoughtful and tough oversight is neither Republican nor Democratic. It is just good government. I salute the former chairman and

his staff for all their work in this inquiry. I look forward to continuing to work with him.

The Constitution entrusted Congress with a solemn duty to oversee the activities of the executive branch. Oversight is the only way

Congress can assure that our laws are adequately and properly administered.

Without effective oversight, how can Members of Congress truly

determine with confidence what additional laws are needed? As

chairman of the subcommittee, I plan to be persistent in our oversight responsibilities, fully realizing that Congress’s power to probe

is a necessary tool of our democracy that is best wielded in a nonpartisan manner.

Again, I want to thank our former chairman, the gentleman from

Kentucky. I look forward to working with all the members of the

committee and the Subcommittee on Oversight and Investigations.

With that, I would yield to Mr. Whitfield.

4

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

Mr. WHITFIELD. Mr Chairman, thank you so much for holding

this important hearing, and I certainly want to congratulate you on

your new with your new responsibilities as chairman of this subcommittee.

As you said, we have held several hearings to review ongoing security problems at Los Alamos over the last 3 or 4 years.

And as long as it is important that we continue to do, so I am

delighted that we are continuing to hold these hearings.

Prior investigations led by this subcommittee have uncovered the

details of the 1999 Wen Ho Lee case, the 2000 NEST team hard

drive incident, and several incidents in 2003 and 2004 relating to

the improper handling and destruction of classified removable electronic media, and then, in 2004, operations at Los Alamos were

shut down for a 6-month period in an attempt to deal with many

of these problems.

At each subcommittee hearing, Los Alamos officials have promised to solve ongoing security problems.

But they have failed to follow through.

I was pleased when the Department recently decided to compete

the Los Alamos contract for the first time in over 60 years.

In June 2006, a new consortium named, Los Alamos National Security began operations at its site. In its contract, LANS has made

several commitments to solve the security problems at Los Alamos.

Unfortunately for LANS, only 4 months passed before the most recent security incident occurred. In October 2006, it was discovered

that 1,588 pages of classified documents from a classified vault had

been removed in paper form and also downloaded on to a portable

thumb drive. The documents and the thumb drive showed up in the

trailer home of a former LANL employee.

Now, 1,588 pages—I just want to show you, this is 1,588 pages.

So it is really quite shocking that this is still going on in this magnitude.

However unfortunate the time, LANS must be held accountable

for compromising these documents, and it should pay a price. This

incident demonstrates that the Department and LANS have failed

to implement an effective security policy at Los Alamos.

DOE must assert its contract and regulatory authorities to compel greater security performance.

This most recent security incident demonstrates the same poor

security management, lack of formality of operations, and insufficient oversight that has plagued the lab for decades. I do not think

the security problems at Los Alamos can be solved with small

changes on the margin.

Dramatic, new ideas from the Department, from LANS and from

Congress, are needed.

I have co-signed legislation drafted by Mr. Barton to strip NNSA

of its autonomy with respect to safeguards and security, worker

health and safety and cyber security oversight, and understand

that Chairman Dingell and Chairman Stupak have also cosponsored this important legislation. I would also note that we signed

a co-letter last night along with Mr. Barton and Representative

5

Hastert that asked the Department to take immediate steps to

solve the security problems at Los Alamos.

The letter has several recommendations and urges DOE to take

action to reduce the volume of classified material across the laboratory. At Los Alamos, operations are spread out over a 43-square

mile area. The lab has approximately 15,000 employees, 3,000 classified computers and 1,774 classified security areas. To give you

some perspective, there are more classified security areas at Los

Alamos than there are total rooms in the Rayburn, Cannon and

Longworth House Office Buildings combined.

And at this time, I would ask unanimous consent to introduce

into the record the letter that we just referred to, that we had sent.

Do they have a copy of it?

Mr. STUPAK. Without objection, it will be part of the record.

Mr. WHITFIELD. LANL’s volume of classified holdings is unnecessarily large, conducted in too many security areas and involves too

many people. These factors, including the geographical dispersions

of activities, make LANL susceptible to security failures. I hope

this subcommittee can help identify the right solutions to fix this

problem once and for all. Thank you.

Mr. STUPAK. I thank the gentleman from Kentucky.

Next, the gentleman from Michigan, chairman of the full Energy

and Commerce Committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

The CHAIRMAN. Mr. Chairman, first, thank you for recognizing

me, and second, congratulations to you on your becoming chairman

of this subcommittee. You will do an outstanding job. You have

been a superb member of the committee and superb ranking member, and I am delighted to see you sitting where you are.

I want to also say, express my good wishes to the gentleman, Mr.

Whitfield, who was so gracious and kind in his conduct in this subcommittee. We look forward to working with him, as I know we all

do.

I feel a little bit like this is the movie ‘‘Groundhog Day’’. All of

us will remember that we seem to be waking up each morning to

repeat the same events over and over with regard to security at the

National Laboratories.

As I recall, when the House turned in 1994, this subcommittee

was preparing a set of hearings to go into the conduct of matters

at DOE and how things were being done at that time with regard

to the laboratories.

There were all matters of difficulties, and I won’t belabor the

matter or delay the process by talking about it.

But the events there with regard to security, security breaches

at Los Alamos and the other laboratories, were very serious.

And so I am reminded of what Yogi Berra used to say, this is

like deja vu all over again. I am somewhat distressed that this subcommittee must convene to hear about security breaches at the National Energy Labs, Los Alamos in particular. We could drag out

stacks of letters sent to the Department Secretaries and the Presidents over the past two decades on the issue we are reviewing

6

today. We could also display a small tower of hearing records,

many of which I chaired, relating to security breakdowns at DOE

and at the Los Alamos National Laboratory in specific.

This would be good drama in a movie. These, however, are security breaches and are deadly serious. They threaten our security to

guard our Nation’s military secrets, our nuclear secrets and other

matters of importance. For some reason or another, DOE has proven itself incapable of managing this critical security and preventing

recurring problems that we will discuss today.

There is a new twist to this story, and I find it a worrisome development. Apparently, this latest security breach raises serious

questions about DOE’s process and procedures in granting security

clearances and the adjudication of adverse information dealing

with the suitability of employees and contractors.

This appears to be, in part at least, a new issue. And it should

be the subject—as it is going to be—of an executive session which

is going to take place later today. We may very well need to expand

the investigation of this subcommittee into DOE’s personnel security system.

Mr. Chairman, it is our joint concern that we will hear the same

promises that we have heard in the past about how DOE will remedy the situation, how this lab is now going to take security matters seriously and how the lab will be reorganized, how some officers and officials and managers may be removed.

I must confess that I have been hearing these promises for a long

time, and I am beginning to find them somewhat tedious. The time

has come to focus on the adequacy of the tools DOE possesses to

effectively penalize the contractors and the lab for serious security

failures, and whether DOE ever intends to use them or knows how

to do so. There may be nothing in the Secretary’s toolbox effective

enough to turn this lab around. We will need to determine that in

today’s hearing and to find whether penalties are sufficient to effectively improve security at Los Alamos.

I understand that Secretary Bodman, for whom I have considerable affection, is considering yet another security review regarding

Los Alamos specifically and the Department in general. I look forward to his appearance before this subcommittee in February to

learn what he intends to do to fix this mess. I support requesting

the Government Accountability Office to conduct a comprehensive

audit of Los Alamos operations in order to determine what functions need to be retained, there versus being moved to another government or private facility.

It increasingly appears that the overall footprint of the lab may

be too big in both physical scale and in the scope of its mission to

be properly managed.

At this point, all options should be open, on the table for consideration as to how we correct this intolerable situation.

Again, Mr. Chairman, congratulations. Thank you for holding

this hearing, and I look forward to hearing what will be said by

our witnesses. But I hope you will forgive me, as I note in the case

of Groundhog Day, we have seen all of this before.

Thank you Mr. Chairman.

Mr. STUPAK. I thank the gentleman.

7

Next turn to the distinguished former chairman of the full committee, Mr. Barton of Texas.

OPENING STATEMENT OF HON. JOE BARTON, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BARTON. Thank you, Mr. Chairman. I, too, want to congratulate you on the assumption of your new duties as the subcommittee

chairman of Oversight and Investigations. I consider this subcommittee to be the heart of the full Energy and Commerce Committee.

You are following in some big footsteps; in the prior Congress,

Mr. Whitfield, but if you want to go back to when your party was

last in the majority, the full committee chairman, Mr. Dingell, was

also the subcommittee chairman, and this is where he gained his

reputation for making sure that the ship of state was sailed

straight.

So, we are going to have a good relationship.

I want to echo what Mr. Dingell just said, if there is nothing else

to do on the Oversight and Investigation Subcommittee it seems

you can also hold a hearing of security lapses at Los Alamos.

I believe this is the 10th hearing in the last 4 years. I could be

wrong about that. But I wouldn’t be off by much; 2004 the entire

laboratory complex was shut down for 7 months; 2005, 1,500

records—including Social Security numbers—some people hacked

into the system, stole those numbers and the Administrator didn’t

even bother to tell the Secretary of Energy about it.

This last October, approximately 1,600 documents were stolen

and carried out of the complex and, if my memory is correct, were

found in a mobile home when the local police responded to a domestic disturbance.

Enough is enough.

This is not a fast food restaurant on the corner somewhere. This

is the crown jewel of our weapons complex.

I don’t have words to explain how frustrated I am, and I think

my frustration is shared by every member of the committee.

I am happy to report that last evening we introduced a bipartisan bill, Mr. Stupak and Mr. Dingell, original cosponsors, along

with myself, Mr. Whitfield and Mr. Hastert, that strips the NNSA

of its authority to manage some of these problems and gives it back

to the Secretary of Energy to delegate as he sees fit. It is H.R. 703.

And I hope that bill is given a hearing very quickly at subcommittee, or perhaps even at full committee and is moved to the

floor. We need to do something about this problem.

If there were a way to start over, I would say, shut down Los

Alamos, fire everybody out there and build a new weapons laboratory somewhere else. That is not cost-effective. And obviously, there

are many, many good people at the laboratory. But there is an absolute inability or unwillingness to address the most routine security issues at this laboratory.

I have sent a letter to the Secretary of Energy, Mr. Bodman,

today making him aware of this new legislation. But I have also

asked him to immediately consider doing the following things by

his authority as the senior executive officer of the Department of

Energy. I have asked that he consider directing the Office of

8

Health Safety and Security to conduct an immediate inspection at

Los Alamos and to repeat it next 2 years to report any problems

and report any progress in security and worker safety.

I have asked the Secretary to consider directing Los Alamos to

dramatically reduce and consolidate the number of classified activities, the number of classified computers, the number of classified

vaults. They have got classified material strewn all around the

complex. I have visited Los Alamos, seen for myself some of these

sites where they store classified material. I am not an expert on

security, but I consider the current number of sites to be many,

many more than is absolutely necessary. And one simple solution

to the problem would be just to reduce the number of places they

keep this material.

I also think that the current contractor at Los Alamos apparently

doesn’t give a damn about this. And I hate to use that kind of language, but that is the way I feel.

If it is contractually legal, I think part of their fee should be

withheld, perhaps even forfeited. If the contract allows for civil

penalties I would hope the Secretary would consider assessing

those penalties. If you can’t get somebody’s attention any other

way, sometimes you can get their attention by withholding financial assets.

So it is obvious that we are not going to solve this problem with

one hearing, Mr. Chairman. But I do want to commend you for

being willing in your first hearing of all the things you could do,

to tackle this issue. It is a very serious issue. And I will pledge to

you that the minority is doing to continue to work on this problem.

And now that you are the chairman and Mr. Dingell is a full committee chairman, you will have our full cooperation in trying to get

on the bottom of it and rectify the situation if it is possible. And

if it is not, if after a year or year and a half, if it doesn’t look like

any progress is being made, I do reserve the right to request that

we consider shutting down this laboratory.

If that is the only way to do it, and we have to start over, then

so be it.

But we ought to be able to get security right at Los Alamos.

With that, I yield back.

Mr. STUPAK. I thank the gentleman, and we do anticipate at

least one more hearing on this subject with Secretary Bodman

probably in March. And with that, I would yield to the distinguished vice chair of the full committee, Ms. DeGette of Colorado.

OPENING STATMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO

Ms. DEGETTE. Thank you very much, Mr. Chairman. It is good

to see you in that chair after all these years working with you on

this subcommittee, which I consider to be the best subcommittee in

the House.

And I also want to add my congratulations to the new vice chairman of the subcommittee, Mr. Melancon. He is going to have a

great time.

One thing that is so great about this subcommittee is, when we

get mad, we get really mad in a bipartisan way. And I want to echo

9

what former chairman Barton said, because I have been on this

subcommittee during my 10 years in Congress, and you are exactly

right, we have had about six to 10 hearings in the last few years

alone on this subject. And we have been told repeatedly in every

single hearing that this problem would be fixed.

In 2004, then-Chairman Barton and I visited Los Alamos, and

this was akin to a state visit for Los Alamos I guess. We went in;

there was tremendous local interest. There was tremendous, tremendous effort to brief us and show us what was going on. The

deputy secretary was there. The new director was there. Everybody

was there. We toured the facility. We had some very tough conversations. We were told that this situation was going to be fixed

and that this situation was going to be fixed immediately.

And subsequently, that director who was with us was drummed

out, and nothing happened, as we have new seen. Mr. Dingell

talked about Groundhog Day, and this week, in fact, is Groundhog

Day, so it is appropriate that we are having these hearings this

week, but it is not funny about these security breaches. The lab is

home to some of the most confidential and important data in the

Nation, weapons development, security of our nuclear stockpile, the

development of technology to protect us from terrorist attacks. And

it is not the first time either that we seem to be dependent on

dumb luck to discover a breach of security.

If it hadn’t been for the vigilance of police officers in investigating unrelated drug charges, this classified data would still be sitting at the home of a former subcontractor for a yet to be discovered purpose. And so, really, the issue is so much broader than just

this single incident.

And as we will hear today, the Department of Energy’s Inspector

General recently found that physical and cyber security at the lab

have been consistently compromised. We keep saying to ourselves,

why does this happen time after time, year after year? And we

haul everybody in, and we rant and rave, and then it happens

again.

I think there are two problems. There is the oft discussed culture

at Los Alamos where people really think themselves beyond the requirements of true security measures. But there is another problem, and former chairman Barton alluded to this. It is such a large

site and with so many different areas that contain this data, that

it is very difficult to secure it.

And in addition, when I visited, I found, 3 years ago, some of the

security measures being implemented would be just routine security measures at a private facility, and so you have got to wonder,

do these Government facilities think that they have to comply with

lower standards than in private industry? So, really, I think the

questions that former Chairman Barton and Chairman Stupak and

Chairman Dingell are asking are the right questions.

And I cannot stress enough to the witnesses today and to those

who care about this facility, we are really serious and we are really

serious this time, I think the legislation that was introduced is

drastic, but that is the direction we are going to have to go unless

we can get some clear answers of how we are going to fix this problem.

With that, Mr. Chairman, I yield back.

10

Mr. STUPAK. Before the gentle lady leaves, if we can do housekeeping. I notice there is a majority of the committee present, and

we are going to have to take a vote to move into classified or executive session later. We won’t do it—so before we continue, all those

in favor of moving to an executive session later, please just raise

your hand or indicate aye.

Any opposition? Hearing none, at the appropriate time, we will

move into executive session later in this hearing. With that, we will

continue with the opening statements, next turning to Mr. Walden.

OPENNG STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Mr. WALDEN. Thank you, very much, Mr. Chairman, and I think

people who have come before me have laid it out pretty clearly and

forcefully. There are just few things as important to our Nation’s

security as maintaining the security of our classified data in our

National Labs. I think my colleagues have made that clear. You

have heard it from me before in these hearings we have had in the

past. The chairman said, these are the crown jewels of our weapons

systems. And I guess what strikes me is, we have got employees

who still are walking out the front door with the diamonds out of

the crown jewel set. And that is a problem. That is a very serious

problem and one that this subcommittee has railed on before in

public and in private sessions, perhaps even more so than what

people are hearing in the public session. There are some fundamental questions that we will have for all of you today that will come

in both sessions, including access to these computers once again,

how is that controlled, how does somebody walk out with a thumb

drive? I understand you are now using a product like this, J-B

Weld, the world’s finest cold weld, to actually seal up the USB and

FireWire ports so that somebody can’t use one of these thumb devices.

It is great. It works for engine blocks, and it works for faucets,

and I guess it works to plug leaks in our national security system,

too, but why do we even order computers that have those ports in

them? It would seem to me that Government could work out a contract to get a computer that doesn’t have them. I am glad you now

sealed up 7,200 of these ports or whatever the actual count is. Perhaps we will learn later today. But it strikes me as a bit strange

that we are relying on J-B Welds to protect leaks of our national

security.

With that, Mr. Chairman, I will yield back.

Mr. STUPAK. I thank the gentleman. Next, I turn to the vice

chair of the subcommittee, Mr. Melancon.

Mr. MELANCON. Thank you, Mr. Chairman. I don’t have any

written statements. I would like to move as quickly as we can into

testimony.

Being new on the committee and just picking up the gist of what

has been said about Los Alamos, and in looking at the concerns

that we have about nuclear proliferation around the world, and we

are not even protecting our own, it seems so. With that, I’d just like

to thank you for allowing me to be part of the committee and the

ranking member and the members of the committee. Thank you.

Mr. STUPAK. Thank the gentleman.

11

Next, I turn to Mr. Burgess, Dr. Burgess.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BURGESS. Thank you, Chairman Stupak and Ranking Member Whitfield for continuing this committee’s important oversight

over Los Alamos. Chairman Stupak, I appreciate the bipartisan nature of this hearing, and I hope it is a sign of how you will handle

hearings in the months to come. You and your staff are to be commended for your preparation and your willingness to share relevant information with members across the aisle.

Mr. Chairman, it is my sincere hope that we have your commitment to continue this collegial and bipartisan disposition throughout all the hearings of this congress. And I would also like to take

a minute and thank Ranking Member Whitfield for his investigation of Los Alamos throughout the years. Clearly, today’s hearing

builds upon the hard work and the determination that you and

your staff have displayed on this crucial matter of national security. I thank you for your leadership on this important issue.

Today we have three panels before us that will hopefully be able

to explain to us not only what exactly happened in October but also

what has been done to prevent another recurrence. I welcome you

all here today and hope we can get to the bottom of this continuing

problem at Los Alamos once and for all. I would especially like to

welcome my fellow Texan, Deputy Secretary Clay Sell. Thank you

for being here with us today and sharing your valuable insight into

the Department of Energy.

In the post–9/11 world in which we live today, our national security has become the most important issue facing our Nation. We

must do everything within our power to ensure that we do not become the victims of terrorism again. As terrorists become more and

more sophisticated, we must continue to implement and maintain

comprehensive measures to secure our safety. While we often think

of terrorists of being from foreign lands, it is easily plausible that

people living on American soil can compromise our country’s national security interests. The fact that someone can walk out of an

institution that developed the atomic bomb with a disk full of classified information is deeply disturbing. This is absolutely indefensible.

Los Alamos has some of the smartest minds, people of almost immeasurable brilliance, working on the facility, and the reoccurrence

of so many security breaches is simply inexcusable. I was taught

that people should be held accountable for their actions. While

there are many organizational changes that can be made to better

ensure the security of our country’s classified information, one of

the easiest and most effective remedies is to make the contractor

in charge of security pay a step penalty. As a steward of the taxpayer dollar, I fully support this idea. If the contractor is penalized,

millions upon millions of dollars maybe, then they will finally realize how serious the problem is and that it must be stopped.

While there is clearly an institutional problem at Los Alamos, we

must also remember that there are thousands, 15,000, hardworking

employees at the lab who make a remarkable contribution to

science in this country on a daily basis. I had the pleasure—the

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honor of visiting the lab in July 2005, and I met many of those

hardworking and dedicated men and women. I was impressed by

their dedication. I was impressed by the overall intellect of the individuals involved.

In preparation for this hearing, I came across a posting on a well

known blog of Los Alamos employees. The posting was addressed

to members of this committee and ended with this thought: ‘‘Don’t

give up on us just yet. Please be careful with your words. Direct

them at those who are truly at fault and avoid belittling comments

directed against the whole workforce and against the vital work

that we can do to help this country. And one more thing, yes, you

do need Los Alamos—a well functioning Los Alamos’’.

I completely agree with this employee. The country needs a well

functioning Los Alamos. And that is why we are here today, to protect what is a national treasure.

And I would oppose any diminution of that mission or relocation

of the resources, but oversight is our obligation.

Mr. Chairman, I have several questions that I hope we will get

answered, and one of those questions deals with the RFP process

that the lab went through just a little over a year ago. Was it a

fair process? Was the University and the contractor that was not

selected, were they given a fair shake? Were they given a fair

chance to compete for that contract?

It seems as if the embedded culture at Los Alamos is incapable

of change. Perhaps that is reason enough that we should reopen

the RFP process.

Mr. Chairman, I again thank you for the bipartisan hearing in

which we can further address this troubling issue and what needs

to be accomplished with this dismal and depressing cycle of security breaches at Los Alamos.

And I feel it is important that we continue to work on this problem so that we do not risk the welfare of our Nation and succeeding generations who will either benefit from our decisions or inherit

the failings of our security lapses. With that, I will yield back.

Mr. STUPAK. I thank the gentleman.

The gentleman from Texas, Mr. Green.

Mr. GREEN. Thank you, Mr. Chairman, and I am glad to be back

on the subcommittee although following our chairman, when it is

his deja vu, I have been off this subcommittee for I think three

terms, and it seems like we ended and that last term with Los Alamos obviously back then much more serious allegations than we

have today.

But, Mr. Chairman, I have a statement I would like to place into

the record and express the same frustration I think everyone has

heard on a bipartisan basis, but I would like for us to get moving

and see what we can do. But also I am thankful that we have local

law enforcement who were sharp enough to pick that up, but hopefully we can stop it before it actually leaves the lab. With that I

will submit my statement for the record and yield back.

[The prepared statement of Mr. Green follows:]

13

PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS

Mr. Chairman, I am privileged to be back on the Oversight Subcommittee, but

it looks like not a whole lot has changed, we are still looking into security problems

at Los Alamos.

Everyone up here and all our witnesses are upset, but I do not think anyone has

made the point that since our intelligence overseas has not been as good as it could

be, we cannot afford nuclear security mistakes here at home.

The risk of international nuclear proliferation is bad enough with Iran and North

Korea without having to worry about risks in our own backyard.

Some members of this committee criticized the previous administration for security lapses that occurred in the years after the cold war and rightfully so.

But now, more than 5 years after 9/11, this administration has still not resolved

many of the same issues. It looks like 9/11 led to increased security everywhere but

Los Alamos.

The National Nuclear Security Administration imposed millions in financial penalties against the University of California for problems at Los Alamos in past years,

and the new contractor could be liable for even larger penalties.

I notice that we have some new faces in charge, and some former officials are pursuing other opportunities. I certainly hope the changes are noticed on the ground

as well.

However, I have to say I am somewhat bothered by much of the testimony here

today.

The testimony contains lots of findings from internal investigations and a great

deal of new and updated directives and procedures.

We’ve heard this same song about security breaches before-with similar findings

of root causes and similar new procedures. In fact, DOE and Los Alamos just keep

re-releasing the same album.

Instead of more studies and procedures, I think the problem may be a lack of actual leadership and people who will implement the procedures in a coherent way.

So I hope our new faces here are not just interested in more studies, more investigations, and more new set of rules.

Instead I hope they and their managers get out there and work with the subcontractors, security personnel, scientists, and employees and change the situation

on the ground.

Hopefully Congress does not have to remind the administration that several countries opposed to the United States are currently seeking nuclear weapons.

We need to keep our technologies out of these nations’ hand and we need to be

dead serious about it.

Thank you Mr. Chairman and I yield back.

Mr. STUPAK. Without objection, and welcome the gentleman back

to this subcommittee.

Mr. Murphy from Pennsylvania, any opening statement?

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

Mr. MURPHY. Thank you, Mr. Chairman, and it is a pleasure to

be joining you on this committee. Mr. Chairman we are about to

hear about these appalling violations and blatant disregard to national security safeguards at Los Alamos National Laboratory, and

they warrant intense scrutiny of this facility. The unauthorized removal of any classified materials is, of course, a grave matter. But

the frequency at which classified materials seem to be removed at

Los Alamos National Laboratory indicates a careless attitude towards our national security and deserves the intense scrutiny of

this committee.

One such display of this disregard for national security occurred

in 2005, as referenced by the members here, when the former administrator of the National Nuclear Security Administration Linton

Brooks—for 9 months, Administrator Brooks refused to report comVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
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puter hackers’ theft of 1,500 Social Security numbers and personal

information of employees of the NNSA. Another instance, in October 2006, we know police found a flash drive and hundreds of pages

of classified documents at the home of a former subcontractor, the

content of which is so classified it can’t be released to the public,

but nonetheless it raises our concerns deeply.

For the sake of our national security, we must determine how

they were removed and take immediate steps to prevent this from

occurring in the future. We need to prevent breaches through better security systems on computers and hardware, to thoroughly

screen everyone, especially contractors at Los Alamos, to fully inspect those materials that come in and out of the facility, and to

prosecute to the fullest extent of the law and give stern penalties

for those who breach that security.

As our society is growing more dependent on technology, we have

seen a disturbing trend in the theft or loss of personal information

from Government agencies, such as the VA and large corporations,

that at times are used for malicious intent.

What has been the consequence of the theft of this material and

who is responsible for their loss or misuse? We need answers to

these questions, and we need ideas on how to prevent this in the

future.

Misuse of personal information must have consequences. For example, in the 109th Congress, I introduced the SERVE Act which

would physically secure all sensitive personal information and all

equipment containing such information processed and maintained

by the Department of Veterans’ Affairs. But I also would have also

required the VA and its contractors to encrypt sensitive personal

information. The SERVE Act also imposed criminal penalties for

unauthorized disclosure of sensitive personal information.

But we are here not to address just one or two of these problems

but to find a way to address a chronic failure to follow national security procedures in guarding classified materials. I look forward to

this hearing, and I yield back.

Mr. STUPAK. I thank the gentleman. We should note that Mr.

Udall is here. He is not a member of the committee, but Los Alamos is in his district. He is very concerned about it and has always

been a strong advocate for Los Alamos. You can see the concerns

of members, Tom, but welcome, and I look forward.

Mr. UDALL. Thank you and a pleasure to join you today, Mr.

Chairman. Thank you.

Mr. STUPAK. We are in recess until noon so we should be able

to get hopefully most of this hearing in. It is the policy of the subcommittee to take all testimony under oath.

Please be advised that witnesses have the rights under the Rules

of the House of Representatives to be advised by counsel during

their testimony.

Do you desire to be advised by counsel at this time? If so, please

introduce your counsel. Seeing no reaction, I advise, we do swear

in witnesses. Would you please rise and raise your right hand?

[Witnesses sworn.]

Mr. STUPAK. Let the of record state an affirmative response of

the witnesses. Witnesses are now under oath. You have 5 minutes

for an opening statement. Witnesses may, at the discretion of the

15

committee, submit brief and pertinent sworn statements for inclusion in the hearing record.

Let me now start with Mr. Friedman please.

TESTIMONY OF GREGORY H. FRIEDMAN, INSPECTOR

GENERAL, U.S. DEPARTMENT OF ENERGY

Mr. FRIEDMAN. Mr. Chairman and members of the subcommittee,

I am pleased to be here at your request to testify on the Office of

Inspector General’s review of the recent compromise of classified

data at the Department of Energy Los Alamos National Laboratory. Los Alamos, as has been stated earlier today, has been at the

forefront of our Nation’s security related research and development

enterprise for over 60 years. There have been a number of highly

publicized incidences that have cast doubt on the laboratory’s ability to protect national security.

The Office of Inspector General has performed numerous audits,

inspections and investigations of physical, and cyber security related issues at the laboratory.

Our reviews have covered diverse areas such as the implementation of design bases threat, safe guards over classified material and

property and security of information systems. I have been asked to

testify before this subcommittee and other congressional panels on

several occasions regarding management of security interest issues

at Los Alamos.

No doubt the subcommittee is fully aware of the circumstances

surrounding the recent seizure of classified information from a residence by the Los Alamos county police department. Shortly after

the material was seized, Secretary Bodman requested that the Office of Inspector General begin a review of the compromise of classified data.

The Secretary also asked that we evaluate certain aspects of the

Department’s security clearance process, the results of which can

be discussed in closed session.

Our special inquiry disclosed that, despite the expenditure of

tens of millions of dollars by the National Nuclear Security Administration to upgrade various components of the laboratory security

apparatus, the security environment was inadequate.

Specifically, our special inquiry revealed that, first, certain computer ports which could have been used inappropriately to migrate

information from classified systems to unclassified devices and

computers had not been disabled.

Second, classified computer racks were not locked.

Third, certain individuals were inappropriately granted access to

classified computers and equipment to which they were not entitled.

Fourth, computers and peripherals that could have been used to

compromise network security were introduced into a classified computing environment without approval, and finally critical security

functions had not been adequately separated, essentially permitting systems administrators to supervise themselves when it came

to security and to override controls.

In many instances, laboratory management and staff had not developed policies necessary to protect classified information, had not

enforced existing safeguards or had not provided the emphasis necVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
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essary to ensure protective measures were adequate. Some of the

security policies were conflicting or applied inconsistently. Also,

both laboratory and Federal officials were not as aggressive as they

should have been in conducting security reviews and inspections.

Our findings raised concerns about the laboratory’s ability to protect both classified and sensitive information.

The picture before you right now depicts the rack of classified

computers at Los Alamos from which the diverted classified information originated. As you can see, the rack that held the computers was unlocked, a condition that permitted access and exploitation of the open ports. And I know you all are familiar—this is

a thumb drive similar to the one which in fact was used to divert

the material from the laboratory. This is a 1 gigabyte thumb drive,

and this can contain the equivalent of two file cabinets full of information to show you how powerful this little item is.

Any diversion of classified material creates a potentially serious

national security situation. The full extent of the damage related

to the removal of classified information in this case may never be

fully known. A criminal investigation of this matter by the FBI

continues.

We made a number of recommendations to correct identified deficiencies.

For example, we recommended the Department take immediate

action to disable unneeded computer ports, secure classified computer racks, segregate critical security functions and limit classified computer access and privileges to those who specifically require it.

In response to our report, Secretary of Bodman established two

high-level task forces to address our findings, and Deputy Secretary Sell directed an immediate review of policies and practices

related to computer ports in each of the Department’s facilities.

The subcommittee requested that we identify other actions that

could improve security at the laboratory. In short, we concluded

that the Department should first establish an up-to-date, unified,

coherent, risk-based security policy that flows throughout all elements of the Department. It is essential this policy be applied consistently and that all aspects of security, physical, cyber and personnel be integrated to ensure a seamless system.

Second, the Department should aggressively hold individuals and

institutions at both the Federal and contractor levels accountable

for failure to follow established security policies. Penalties should

include meaningful reductions in contractor fees, personnel reassignments and terminations, civil penalties, program redirection

and ultimately—should it be needed—contract termination.

One final note, one of the most disturbing aspects of this event

is the fact that it was not discovered by the laboratory but by local

police during an offsite investigation unrelated to laboratory activities. Without this inadvertent discovery, the diversion of classified

material may never have been disclosed. And in that light, the Department and Los Alamos need to strengthen efforts to proactively

detect and prevent security breakdowns. This might include, for instance, first improving the level of monitoring of classified computer use through the application of specialized software which is

currently available; two, enhancing computer activity logging; and

17

three, initiating a program of unannounced security checks beyond

routine inspections.

Admittedly there is a cost involved with such undertakings, but

it is a cost that may be necessary given the pattern of security

issues that we have seen at the laboratory.

Mr. Chairman, this concludes my statement. I would be pleased

to answer any questions that you may have.

[The prepared statement of Mr. Friedman follows appears at the

conclusion of the hearing.]

Mr. STUPAK. Thank you, Mr. Friedman, and I should have properly introduced you as the Inspector General for the Department

of Energy. I appreciate your work.

Mr. Podonsky is the chief health safety and security officer at the

U.S. Department of Energy.

Mr. Podonsky, your opening statement please.

TESTIMONY OF GLENN PODONSKY, CHIEF HEALTH, SAFETY,

AND SECURITY OFFICER, OFFICE OF HEALTH, SAFETY, AND

SECURITY, U.S. DEPARTMENT OF ENERGY

Mr. PODONSKY. Thank you, Mr. Chairman, and Mr. Whitfield,

and members of the subcommittee, I appreciate the opportunity to

testify today regarding the improper removal of classified information from the Los Alamos National Laboratory.

At the time of this incident, when it was discovered, our Office

of Independent Oversight was conducting scheduled inspections at

the laboratory’s security, cyber security and emergency management programs.

As we heard from my colleague, Mr. Friedman, his office conducted the inquiry into the circumstances surrounding the incident.

Therefore, I will focus my remarks on our inspection of the laboratory in terms appropriate for this unclassified hearing. Our

independent oversight inspection just completed resulted in the

lowest set of performance ratings for security and emergency management topics that we have seen at Los Alamos since 1999.

That, combined with the history of security problems at Los Alamos, is of great concern to everyone.

However, these ratings should not leave this committee to conclude that the laboratory is not protecting their most important national security asset. This inspection concluded that special nuclear

material, an area with historically significant weakness, is adequately protected.

Additionally, the ratings in part reflect the fact that our independent oversight inspection process has become more technically

enhanced and increasingly focused on performance-protection-based

activities, especially in the area of cyber security and protection of

classified matter.

We note some improvements. However, we continue to conclude

that extensive work remains to ensure that Los Alamos fully meets

Department’s expectations. While special nuclear materials were

adequately protected and overall performance of the protective

force was considered effective, we identified a number of significant

problems with the protection of classified documents and materials

and with the configuration of vault-type rooms. It was evident that

the site is overly dependent on the use of nonstandard storage conVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
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figurations for the protection of many of its classified weapons

parts. Compensatory measures, established to support approval of

the nonstandard storage configurations, were found to be inconsistent and not performing according to plans.

The overall impact of the deficiencies related to the protection of

classified matter is substantial.

Also, while some cyber security enhancements have been made,

the laboratory’s cyber security policies are not comprehensive and

not up-to-date with DOE and NNSA requirements, and they do not

sufficiently address threats posed by emerging technologies.

Additionally, risk management processes are insufficient, resulting in risk acceptance decisions being made by lower staff members, which is inappropriate.

In many cases, the protection of classified systems is overly dependent on administrator controls to mitigate potential insider activity rather than more robust controls and barriers. As a result,

Los Alamos National Laboratory systems continue to operate at increased risk from malicious insiders intent on subverting established departmental requirements.

Another area of concern is the certification and accreditation of

both classified and unclassified information systems. The Los Alamos certification and accreditation process has not kept up with

current methodologies, and existing processes do not ensure a consistent approach for applying testing necessary security controls.

For example over 25,000 existing unclassified work stations in

service at Los Alamos were not certified and accredited. Self assessment processes are weak, and very few systems actually are

being tested as part of these assessments.

Moreover, deficiencies identified during self-assessments are not

always reported to the Los Alamos site office or NNSA, and development of corrective action plans to address them seems to be optional. Consequently, there is little in-depth understanding of program weaknesses. Considering the progress made to date balanced

against the cyber security issues that remain, we conclude that

strong and aggressive management action is required.

There does need to be sound new laboratory plans for conducting

self-assessments and implementing a contractor performance assurance program as part of the contract transition. However, the

plans are not yet fully implemented.

In addition, the laboratory does not have an effective process for

identifying actions for identified deficiencies. Similarly, the NNSA

site office security survey program is inadequate. In a few cases,

the laboratory has decided not to comply with departmental requirements, and the laboratory and NNSA did not utilize the Department’s mandated deviation process to fully assess and accept

risks associated with these decisions.

The recent inspection results illustrate some improvement. However, the most important national security asset at Los Alamos

must be recognized to be protected, and that is the special nuclear

material.

Nevertheless, significant and disturbing protection and emergency management program deficiencies continue to exist at Los

Alamos that require prompt attention, forceful and sustained management actions, and corrective actions to be followed.

19

We have heard all too often from a long line of DOE managers

how serious LANL issues are and changes are needed. However,

Mr. Chairman, it is my professional opinion that no one now or

previously in the Department has had the commitment, the dedication, and absolute resolve to change the way this department is

managed and the way this laboratory is managed than Secretary

Bodman and Deputy Secretary Sell. It is imperative that the NNSA

and the Los Alamos site office in particular follow the leadership

of the Secretary and the Deputy Secretary and must immediately

enhance NNSA capabilities to effectively oversee the contractor

performance now and in the future.

Mr. Chairman, one other note, in the course of this hearing,

there may be privacy issues that arise, and I would like just to recognize that Eric Fygi from General Counsel is here and representing the Department.

[The prepared statement of Mr. Podonsky appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you.

Before we move to our next witness, we should note that Congresswoman Heather Wilson from New Mexico is a member of the

full committee, but not on the subcommittee, but we welcome her

participation here today. Thank you.

With that, we will next hear from Ms. Danielle Brian, executive

director of Project on Government Oversight.

Ms. Brian.

TESTIMONY OF DANIELLE BRIAN, EXECUTIVE DIRECTOR,

PROJECT ON GOVERNMENT OVERSIGHT

Ms. BRIAN. Thank you for inviting me to testify today.

I am Danielle Brian, executive director of the Project on Government Oversight. We have been investigating and exposing security

failures in the nuclear weapons complex since 2001.

Despite the creation of NNSA, security failures have continued

to plague the complex, especially at Los Alamos. Now NNSA Administrator Linton Brooks has been asked to resign, and our Nation’s secrets have been mishandled by Los Alamos again. Not only

have NNSA and U.C. failed to correct security issues, but now

there will be even less oversight of Los Alamos as a new pilot program has been implemented at Los Alamos in which oversight has

been handed over to the contractor themselves. Perhaps this new

legislation that Congressman Barton has introduced could help

turn the tide on this disregard for Federal oversight.

Since 2001, there have been at least seven instances in which

classified information was mishandled at Los Alamos, and I suspect

there were many others that have simply flown below the radar.

Classified computer disks have gone missing. Computers that may

have contained classified information have somehow disappeared

from lab property, either having been stolen or lost. Classified information has been transmitted through unsecured e-mail, and the

list goes on.

The cybersecurity episode has occurred on average nearly once a

year since POGO began its investigations, and all of these instances occurred after the infamous episode of the two missing

hard drives which were later discovered behind the Xerox machine.

20

Now, in the recent incident, a subcontractor employee freely took

over 200 pages of hard-copy, classified documents and over 400

classified documents on flash drives to her home, which she shared

with a drug dealer. This could only have happened if there were

a complete collapse of multiple supervisory and security systems.

It was only by happenstance that she was caught, not because an

effective security system was in place. We would never have known

about the security breach if it hadn’t been for a domestic disturbance.

Furthermore, we have no way of knowing how many other instances like this there are out there that we don’t know about. It

is important to remember that NNSA attempted to keep this incident secret from Congress and the public until POGO learned

about it 8 days after the local police raid.

After the most recent security incident, a cybersecurity audit was

launched, and according to a lab e-mail from just a few days ago

that I asked to be submitted for the record, quote, ‘‘As a result of

the preliminary findings of the cybersecurity audit’’—this is just a

week and a half ago—‘‘LANL has agreed to suspend all nonessential classified, computing activities for at least the next 48

hours by the close of business today.’’

And this is not the first time security failures have significantly

impacted operations at the lab. In 2000, then-Secretary Bill Richardson announced a new system so that there would no longer be

classified, removable electronic media to be lost or stolen. The labs

essentially ignored the order. In May 2004, then-Secretary Abraham announced that the complex was going to have a new system

doing essentially the same thing. Again, the labs essentially ignored the order. I suspect Secretary Bodman will soon be announcing a new initiative to solve cybersecurity problems, and I am sure

he is genuine in his beliefs that his directives will fix the problems,

but those of us who have been around for a while have reason to

be skeptical.

In addition to cybersecurity failures, Los Alamos continues to

suffer from a litany of other problems, and while Los Alamos is a

big problem, it is by no means the only problem in the nuclear

weapons complex as other sites are also currently facing their

share of serious problems.

Despite these other sites that urgently need attention, Los Alamos does stick out as the bad child. Why? There is a joke around

the complex that goes something like this: The Secretary of Energy

tells the three national labs to jump. Sandia asks, how high? Livermore makes an excuse for why it is too busy to jump, and Los Alamos asks who the Secretary of Energy is.

Los Alamos sticks out as the bad child because of its consistent

and utter disregard for Federal oversight. At this rate, as was mentioned before, we can all schedule next year’s hearing right now

given the likelihood we will still be discussing problems at Los Alamos unless the entire incentive system is reversed.

I have enumerated in my written testimony a number of specific

recommendations, but in the interest of time, to highlight them,

first is that NNSA, or perhaps simply the Department of Energy,

needs to make it a priority to fund oversight and promote Federal

employees who are thorough in their oversight work. In its current

21

state, the Los Alamos site office is nonfunctional. There are over

20 vacant Federal positions in that office.

Officials should also be held accountable if they do not implement the recommendations made by the two gentlemen who are

sitting at the witness table, the Department of Energy’s Inspector

General and the Office of Health, Safety, and Security. As we have

mentioned before, there are numerous reports that have been

issued on these issues, but no one gets in trouble when they don’t

do anything about what these people have recommended.

The Performance Incentive Fee in the Los Alamos contract

should be recalculated and equally weighted to reflect the equal importance of accomplishing the mission with ensuring security and

doing so safely. Of the $51 million that is currently on the table

for fiscal year 2007 in the performance fee for the Los Alamos

budget, only 6 percent, or $3 million of that amount, is tied to security. Fortunately, that small percent is not set in stone and should

certainly be revisited and dramatically increased. At the very least,

DOE should cut the Performance Incentive Fee for the most security—for the most recent security debacle at Los Alamos.

DOE should also be disallowing costs—this is a cost-reimbursable contract, so they should be disallowing costs with Los Alamos’

as failure to perform adequately.

POGO also recommends that the ‘‘at will’’ employment provision

at Los Alamos be changed for their employees because currently,

if an employee is the bearer of bad news to management, the employee can be fired at will, creating exactly the wrong incentives.

This is an important issue for the committee to be conscious of as

it is of particular concern for Livermore employees who are not currently operating under this condition, but, as you see, appears to

be poised to retain the contract at Livermore. There is, in fact, concern that this will now affect or be affected for the Livermore employees as well.

I am thrilled that the committee has already undertaken our

next recommendation to audit the missions currently being conducted at Los Alamos. I think that’s a very important effort the

committee is undertaking.

In closing, DOE will soon be submitting a request of $150 billion

to fund a wildly ambitious project to revamp the nuclear weapons

complex known as Complex 2030. Before any funding for further

expansion is approved, I respectfully suggest that Congress must

have confidence in the mission and in the ability of the complex to

carry out that mission safely and securely.

Thank you.

[The prepared statement of Ms. Brian appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you.

We will begin questioning.

Mr. Friedman, your investigation of the recent incident at Los

Alamos revealed the lab security framework was seriously flawed.

For example, is it true that a number of key areas, including security policy, was nonexistent, applied inconsistently or not followed?

Mr. FRIEDMAN. That is correct, Mr. Chairman.

22

Mr. STUPAK. In 2004, the lab was shut down when we did this

massive review. Wasn’t that one of the recommendations in 2004?

Mr. FRIEDMAN. It was, and actually you could trace it back to

1999, in essence.

Mr. STUPAK. Then what is it? Why are we having such problems

with Los Alamos? As Ms. Brian says, Secretary Richardson gave an

order, Secretary Abraham, now Secretary Bodman, and we have

been reassured by Mr. Podonsky that things are going to change.

For instance, in 1999—that’s, what, 8 years now—there have been

11, 12 hearings. Any answers?

Mr. FRIEDMAN. Well, I use—I thought the ultimate question

would come a little bit later. I didn’t expect it on the third question, Mr. Chairman.

Mr. STUPAK. I’ve only got 8 more years to mess around, but we

don’t with this lab.

Mr. FRIEDMAN. Of course, it is an issue that we have thought

about a great deal. We devote a lot of resources to Los Alamos, and

you and I have had this discussion before, obviously.

I think one of the problems that we’ve found consistently is the

question of sustainability, Mr. Chairman, if I can put it that way,

use that term. There are a lot of good intentions. People start off

with the right set of principles. They have new policies, new procedures that they begin to implement, and the implementation begins, but there is not the stay with it, the closing the deal, the sustainability that is necessary to go from a good idea to implementation, to execution, and to consistency, and I tend to think that’s one

of the fundamental problems that we have seen at Los Alamos over

time. I said there are good starting principles, but no followthrough, a lack of follow-through.

Mr. STUPAK. There is a lack of follow-through because of turnover in personnel, or we lose interest in the principles that we are

supposed to put forth?

Mr. FRIEDMAN. I think it’s the latter rather than the former. Certainly there is a turnover in personnel, but I don’t think—my sense

is that is not the heart of the problem.

Mr. STUPAK. Well, in your recently released report on Los Alamos, in doing your work your team uncovered a number of much

broader concerns than merely the concerns related to the October

incident. Let me read from your report, and I am quoting now.

It says, ‘‘Our review revealed a serious breakdown in core laboratory security controls,’’ and your report reached the conclusion, and

it states, ‘‘In short, your findings raise serious concerns about the

laboratory’s ability to protect both classified and sensitive information systems.’’

I presume you still stand by that report and that conclusion?

Mr. FRIEDMAN. Yes. Yes, we do.

Mr. STUPAK. There has been a lot of talk this morning about

maybe we should just change the focus of this lab, or some of the

missions must be shifted to other labs like Sandia. It is a very,

very large complex.

Your thoughts on that suggestion.

Mr. FRIEDMAN. Well, I am not here, Mr. Chairman, as a shill for

the laboratory, but as a number of members of the sub committee

have identified this morning, it is an extraordinary institution.

23

Sixty-three percent of the people there or thereabouts have postgraduate degrees. They’re eminent scientists. Last year lab personnel won, I believe, five R&D 100 awards. There are 28 E.O. Lawrence Award winners there.

It is an extraordinary institution, and I caution, if I might, that

before we do anything truly radical—and I understand the motivation and where it’s coming from—that we make sure we balance so

that we don’t throw out the baby with the bath water, if I can put

it that way. So I hope that we give the new contractor—I mean,

after all, this took place 2 months ago. When we last spoke, Mr.

Stupak, we agreed that the new contractor was coming on board,

and they deserved an opportunity to turn the situation around.

This series of events occurred within 2 months or 3 months after

they took over. They identified a number of preconditions—preexisting conditions that concerned them before they assumed responsibility, and cybersecurity was one of those preconditions.

I am hopeful that we can give them a chance, with increased

Federal intervention and oversight, to do what they were hired to

do, which was to enhance dramatically the management of the laboratory, including better security and better cybersecurity specifically.

So I understand, at some point down the road, a more dramatic,

a more radical departure may be warranted conceivably, but at this

point I hope we give them the benefit of the doubt, at least for a

period of time, recognizing that the problem that we face here is

a very, very serious national security problem.

Mr. STUPAK. Sure, but if it wasn’t for the Los Alamos County Police Department, we would not even know about this incident. How

many other breaches are out there that we do not know about because there has been no mechanism in place to detect it, or even

if it was detected, from your testimony, no one at the lab seems to

want to follow up on it?

Mr. FRIEDMAN. I said in my testimony that one of the most

frightening parts of this whole incident is that, had it not been for

an inadvertent set of circumstances totally unrelated to this issue,

we might not have known about it today. We might never have

known about it, and that is a frightening thought. And we have

identified a couple of suggestions of a more intense activity logging

at the laboratory and monitorship with new software that can be

costly, but may be necessary to make sure that other breaches,

other similar breaches, are not occurring. Prevention is the key, in

my view.

Mr. STUPAK. OK. My time is up. Hopefully we will go around for

a second round.

Next let me turn to the ranking member, Mr. Whitfield from

Kentucky.

Mr. WHITFIELD. Thank you very much, Mr. Chairman, and I

thank the witnesses for their testimony this morning.

All three of you have extensive experience in this area, and the

consensus appears to be that Los Alamos is sort of, for lack of a

better term, the problem child. All of these weapons labs have had

some problems, but the Los Alamos problems seem to be more serious and certainly more frequent. And I know that the University

of California does manage the Lawrence Livermore—has the conVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
24

tract for that, and for 60-some years had the contract at Los Alamos and now is a 50-percent participant in the new consortium.

That’s correct, isn’t it?

Mr. FRIEDMAN. That is roughly correct, yes.

Mr. WHITFIELD. OK. Now, just from your personal experience,

how would you explain if you were talking to a Rotary Club in

Hopkinsville, KY, what your theory is as to why Los Alamos has

so many breaches when you have had, for many years, the same

management contract responsibility at both Los Alamos and Livermore?

I would like to ask each one of you to just give me your impressions as to why that is the case.

Mr. FRIEDMAN. Well, I don’t, Mr. Whitfield, have a good answer

for that question. I mean, it is an extremely important question,

and despite spending years at looking at all of the laboratories, I

don’t have a good answer. I wish I did. I think it would get to the

heart of the cure.

But what I would say is that Los Alamos is slightly different. I

think Livermore—and I might be wrong about this—is essentially

located on 1 square mile of territory. Sandia is larger, but I think

none of them have the diversity, the geographic diversity, if nothing else, and that may be a contributing factor to the problem. I

mean, as we have pointed out in the testimony, and as has been

discussed earlier, we found, I believe, 2,700 classified computing

environments. We have long taken the position that closing, reducing the footprint is the way to go, and it may well be that the number of classified computing environments, the number of classified

materials that are there in sheer numbers, may be part of the

problem.

Mr. WHITFIELD. What about you, Mr. Podonsky? What would be

your thought.

Mr. PODONSKY. Well, sir, to put it in context, we’ve been inspecting independently the operations of this lab as well as the entire

complex now since 1984, and our observations and continuing

issues that have developed is the lack of accountability, which is

why I say in my opening testimony and why the committee here

all talks about the preceding managers that have come up and

make the statements about, now we did it, now we are serious,

which is why I made a very poignant statement that I do believe

that Secretary Bodman and Deputy Secretary Sell not only are as

committed as previously, but they are taking action. I have been

through a number of previous Secretaries through all of these

incidences and come up with great plans, but they don’t get converted into action.

Mr. WHITFIELD. OK.

Mr. PODONSKY. So, specifically to your question, sir, I would say

that it’s accountability and holding people responsible for the jobs

that they have out there, and we have not seen that consistently

at Los Alamos through the years and at some other places, but predominantly at Los Alamos.

Mr. WHITFIELD. Can I assume that you and Mr. Sell and Mr.

Bodman are supporting the Barton-Dingell-Stupak-Whitfield legislation to remove NNSA from the equation.

25

Mr. PODONSKY. I can’t speak for the Secretary or for the Deputy

Secretary. I can only speak for myself, and I have not seen that

correspondence.

Mr. WHITFIELD. OK.

Ms. Brian, what about the question?

Ms. BRIAN. I have been struggling with this question for a while

myself. I think it is a combination, as I mentioned in the joke that

goes around, that there is a different attitude at Los Alamos, and

I think because of that different attitude, they are more difficult at

the Federal level to manage. And I think the bottom line is when

you get the push-back from Los Alamos, and the Federal structure

is not there, really, with the willingness to stick with them and demand change, I think that is where there is really the breakdown

that I think we can be enforcing on.

Mr. WHITFIELD. OK.

Mr. Podonsky, let me ask a question. In 2004, Los Alamos was

closed down for 6 months because of security breaches. What was

the dollar amount of the penalty that the University of California

system had to pay at that time for that breach?

Mr. PODONSKY. I am not aware of what the penalty was, sir.

Mr. WHITFIELD. Who would know that.

Mr. PODONSKY. I believe the next panel—or the third panel

would.

Mr. WHITFIELD. OK.

Mr. BARTON. Would the gentleman yield on that?

Mr. WHITFIELD. Yes, sir.

Mr. BARTON. Was there any penalty?

Mr. PODONSKY. Mr. Barton, I’m not aware of any penalty that

was associated with this shutdown.

Mr. BARTON. So there was zero penalty then?

Mr. STUPAK. If the gentleman would yield, it cost the taxpayers

$350 million. Who paid for that other than the taxpayers? Are we

back with the same problems?

Mr. WHITFIELD. My time has expired.

Mr. STUPAK. I thank the gentleman.

Mr. Dingell, questions? We are doing 5 minutes now, and we’ll

go another round.

The CHAIRMAN. Mr. Chairman, thank you for the courtesy.

I find this again, as I indicated, sort of a Groundhog Day or perhaps deja vu all over again.

Mr. Podonsky and Mr. Friedman, I would like to summarize

some of the key findings of your recent work at Los Alamos.

Mr. Friedman, isn’t it correct that your team went out to investigate the event, and that you, in fact, spent a relatively short period of time on the ground, yet in that short period you found a lot

of serious problems at the site? Is that correct?

Mr. FRIEDMAN. That’s correct, Mr. Chairman.

The CHAIRMAN. Mr. Friedman, in fact, didn’t your investigation

of the recent incident reveal that in a number of key areas that security plans and policies were either applied inconsistently or not

followed in some cases or, in others, nonexistent?

Mr. FRIEDMAN. That is correct.

The CHAIRMAN. Mr. Friedman, isn’t it true that your audit revealed that the critical cybersecurity internal controls and safeVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
26

guards were not functioning as intended at various places across

the LANL?

Mr. FRIEDMAN. Yes, sir.

The CHAIRMAN. Now, Mr. Friedman, isn’t it also correct that

monitoring by both the laboratory and Federal officials was also

found to be inadequate or, in other cases, nonexistent?

Mr. FRIEDMAN. It was.

The CHAIRMAN. Isn’t it correct also, Mr. Friedman, that even

though the network engineering officials and others within the

lab’s Chief of Information Office expressed concerns about open

ports and problems with managing tamper-indicating devices, and

these concerns were largely ignored by LANL officials?

Mr. FRIEDMAN. Yes. And can I elaborate on my answer on that

one, Mr. Chairman?

The CHAIRMAN. Now, Mr. Podonsky, I believe your testimony also

says that Los Alamos received the lowest set of performance ratings for security and emergency management since 1999; is that

correct?

Mr. PODONSKY. Yes, sir.

The CHAIRMAN. Now, Mr. Friedman and Mr. Podonsky, both of

you know that I’ve been working at this security problem for more

than a little while.

Mr. Podonsky, you indicated Los Alamos received some of the

lowest scores since 1999 on security issues.

Mr. Friedman, your report found that there was a core breakdown of Los Alamos’ ability to protect classified information.

That’s correct, is it not, gentlemen?

Mr. FRIEDMAN. Yes.

Mr. PODONSKY. Yes, sir.

The CHAIRMAN. Would you like to tell us what is going on here?

And we are going to ask the Secretary why we need to keep on

having these hearings.

What comments do you have, gentlemen?

Mr. FRIEDMAN. Well, I think your series of questions, Mr. Chairman, from my perspective, basically outline—as you say, we have

been on the ground for a relatively short period of time, although

we have a resident staff at Los Alamos who spend a lot of time

there, but to say that the system we found in place was inadequate

to protect the material is an accurate reflection of what we found.

The CHAIRMAN. Mr. Podonsky, are you going to comment?

Mr. PODONSKY. Yes, sir. I do not disagree with your statements.

The only thing I would like to again point out to the committee is

that, when our inspection team was at the site, we again did determine that the nuclear material was protected, and that’s not insignificant. That is something, Mr. Chairman, as you’ll recall back in

the 1980’s we paid a lot of attention to. That doesn’t make it a good

story, because the classified matter is something of grave concern

to all of us, and as my colleague Mr. Friedman has talked about,

we do believe that Los Alamos has a mission to perform for the

country, but the security performance that they’ve demonstrated

inspection after inspection continues to leave us concerned and baffled.

The CHAIRMAN. Now, I would like to direct this to the panel, but

with particular emphasis to Danielle Brian.

27

A statement here says this,

Now, in the most recent incident, a subcontractor employee freely took over 200

pages of hard-copy, classified documents and over 400 classified documents on flash

drives to her home, which she shared with a drug dealer. This could only have happened if there was a complete collapse of multiple supervisory and security systems.

It is only by happenstance that she was caught, not because of an effective security

system in place. We never know—we would never have known about this security

breach if it hadn’t been for a domestic disturbance.

Then she goes on to say this,

Furthermore, we have no way of knowing how many other incidences like this are

out there or have flown below the radar. It is important to remember that NNSA

attempted to keep this incident secret from Congress and the public until POGO

learned about it about—learned about it 8 days after a local police raid.

Then here, as a side note,

If media reports and statements by investigators are accurate, this most recent

case points to extraordinary failures in the personnel security clearance process in

addition to cybersecurity failures at the lab.

Now, my concern here is we seem to have a situation where the

process has broken down, whether there just is a lack of will or

there isn’t a competence on the part of the agency to do what needs

to be done. Would you each like to tell us what your feelings are

on this matter?

Could I just ask for 1 minute more, Mr. Chairman, please?

Mr. STUPAK. Without objection.

The CHAIRMAN. What do you have to say, ladies and gentlemen?

Ms. BRIAN. Well, that is what I had to say.

I think the problem here is a combination of extraordinary breakdowns. Maybe the systems aren’t even there, and it’s not a case of

broken systems, but I am also equally concerned that at the time

this was becoming known at Los Alamos, there was a real effort

to make sure that people in the Congress didn’t know about it.

They were hoping they would make this go away.

The CHAIRMAN. Thank you.

Mr. Podonsky and Mr. Friedman.

Mr. PODONSKY. We did not investigate the actual circumstances.

As I said in my testimony, Mr. Friedman did the investigation. We

were there doing a comprehensive safeguard security inspection

which gave us an overall, comprehensive review of the various topics, but we did see clearly the laboratory suffering from a lack of

policies, procedures, adequate management, adequate oversight—

both contractor and Federal—and all of that would contribute, we

believe, to the incident that the Inspector General investigated.

The CHAIRMAN. Thank you.

Mr. Friedman.

Mr. FRIEDMAN. Mr. Chairman, you made a point in your earlier

questioning that I wanted to comment on which I think would respond to this question as well.

You pointed out, which was a good read of our report if I may

say so, that we found that, I think it was in the March 2006 time

frame, there was e-mail communication, within the laboratory

about the concern about open ports. So, in other words, the institution itself identified that as a problem, and there was a fair

amount of traffic, e-mail traffic, on that issue.

28

And it gets to the point that I was trying to make earlier about

closing the deal, sustainability and the ultimate fix, and that is

that, tragically, even though it was discussed extensively—and I

think it was in March 2006, and I don’t have that instant recall.

I think that’s the right date—no one took it to the next step, which

is to make sure that the proper fix was implemented to address the

concern. Now, it was not of universal concern. There were people

at the laboratory who didn’t think the open ports were a serious

problem, but there were enough people who did, and it would seem

to me—and I think this is, perhaps, revealing as to the essence of

the problem—that they didn’t address the problem then and resolve it.

The CHAIRMAN. Your comments earlier in response to a question

were that we ought to give the laboratory the benefit of the doubt.

I wonder if, after this commentary, you are in agreement that we

ought to give them the benefit of the doubt.

Mr. FRIEDMAN. Well, I think I’m the one who said it, Mr. Chairman, so I will stand by the statement.

First of all, I think the laboratory is an extraordinary institution,

and second, I think that in fairness—and believe me, I am not

here—I probably write more critical reports about Los Alamos than

anyone, but in fairness, I think the new contractor is really brand

new, was brand new when this occurred, and they deserve an opportunity to try to fix the problem, and if they can’t fix the problem, I’d be the first one to sit before you and tell you that a much

more radical solution needs to be tried.

The CHAIRMAN. Thank you, Mr. Chairman.

Mr. STUPAK. Next, Mr. Barton from Texas.

Mr. BARTON. Thank you. Some of the statements just kind of

strain credulity.

Mr. Friedman, who was the old contractor?

Mr. FRIEDMAN. The University of California.

Mr. BARTON. Who is the new contractor?

Mr. FRIEDMAN. I think it’s a consortium. I believe it’s a limited——

Mr. BARTON. Come on. Who is the new contractor? It is the University of California. They’ve got a consortium, and there may be

some different players, but the University of California has had

this contract for 60 years. They were the old contractor; they are

the new contractor; is that not correct?

Mr. FRIEDMAN. Well, I——

Mr. BARTON. Yes or no?

Mr. FRIEDMAN. No, actually.

Mr. BARTON. It’s not?

Mr. FRIEDMAN. No.

Mr. BARTON. They are not part of it?

Mr. FRIEDMAN. They are the primary science player, there is no

question about that, but the whole concept, as I understand it——

Mr. BARTON. They have 50 percent of the contract.

Mr. FRIEDMAN. That’s true, but it——

Mr. BARTON. The person who has been moved to the new—who

is the new lab director is a University of California employee.

Mr. FRIEDMAN. That is correct.

29

Mr. BARTON. The Bechtel individual, who is the top person, has

already left; is that correct?

Mr. FRIEDMAN. That is correct, yes.

Mr. BARTON. Now at least be honest with the committee.

Mr. FRIEDMAN. Well, I have tried to be honest, Mr. Chairman.

Mr. BARTON. This semantics about old and new is an affront at

least to me. My gosh. Is it not true that under the new contract

the performance part of it is at risk if there is a security lapse?

Mr. FRIEDMAN. Well, let me give you the read of the contract as

I understand it, Mr. Barton, and there are people at least on the

third panel who are the negotiators of the contract who can give

you more detail.

In its full bloom, my understanding is there’s about a $70 million-a-year potential award fee, 30 percent of which, as I understand it, is——

Mr. BARTON. It is $73,280,000 to be exact.

Mr. FRIEDMAN. As I understand it, 30 percent of it is fixed, and

70 percent is at risk. That’s the way I understand the formulation

of the contract. I believe there also is a provision—and I’m not an

expert on the contract. There are people here who are. I believe

there are provisions that, in extraordinary circumstances, at least

the entire at-risk portion can be withheld from the contract.

Mr. BARTON. Is it not true that, in your testimony, you suggested

that there’d be a serious withholding of the incentive part of the

contract?

Mr. FRIEDMAN. Yes, sir, I did.

Mr. BARTON. Do you want to put a number on that? How serious

is ‘‘serious’’? The safeguard and security execution part of the mission success is $3 million.

Mr. FRIEDMAN. Yes.

Mr. BARTON. Is that serious, or do you think ‘‘serious’’ would be

$10 million?

Mr. FRIEDMAN. No, I think it may be $3.8 million, Mr. Chairman,

but I don’t think that’s serious money.

Mr. BARTON. Mr. Stupak is the chairman. I am the ranking

member.

Mr. FRIEDMAN. Mr. Ranking Member then. I apologize.

Mr. BARTON. I’m just at a loss here.

I’m going to ask Mr. Podonsky something.

The gentle lady next to you indicated that the contractor at the

site office has 20 vacancies. Is that your understanding?

Mr. PODONSKY. I do not know the exact number, but, yes, I do

know that they are short.

Mr. BARTON. What is the number—what would be the full complement? Is it like 40 people at the site office, 100 people?

Mr. PODONSKY. Mr. Barton, I do not have that number. That

would be—the NNSA would have that number, but I would just tell

you that I do know that they’re short on qualified Federal staff.

Mr. BARTON. OK.

Ms. Brian, do you know how many people would be the full complement if they were fully manned at the site office?

Ms. BRIAN. I don’t know. I do know that of the 20 vacancies, a

large percentage of them are in the security and safety area for the

site office.

30

Mr. BARTON. Does that, to you, indicate that the Department is

serious and the new contractor is serious about this?

Ms. BRIAN. Well, that’s actually the Federal Government.

Mr. BARTON. I understand that.

Ms. BRIAN. So my worry is that DOE isn’t serious or NNSA.

Mr. BARTON. OK. Could we get that information, what the total

staffing is and what these vacancies are?

Mr. Podonsky, do you think that we ought to fill those slots?

Mr. PODONSKY. Yes, sir. I think that they need to be filled with

the right qualified people because this laboratory needs appropriate

Federal oversight from the NNSA.

Mr. BARTON. My time has expired, Mr. Stupak.

Mr. STUPAK. I thank the gentleman.

Ms. DeGette.

Ms. DEGETTE. Thank you very much, Mr. Chairman.

Mr. Friedman, I wanted to ask you some questions about what

you had said in response to several of the other Members’ questions.

The first thing is you said that we really need to give this new

contractor a chance, and that we need to—if we need to do something dramatic, we should do it down the road. So I’m kind of wondering how long is that road, because I’ve been sitting here in this

subcommittee since 1999 hearing these assurances. I understand

what you’re saying about the quality of people that we have there

and the high-level work that’s going on, but how much longer do

you think we need to be patient? How much longer do we need to

give these folks to fix these problems?

Mr. FRIEDMAN. Well, my view is, from the start date, it should

be probably 1 year.

Ms. DEGETTE. One year from June? So until this June?

Mr. FRIEDMAN. This June, yes.

Ms. DEGETTE. And do you think that—and my second question

is how will we know if the new contractors have fixed the problem?

Will we know that if the local law enforcement authorities bust

some people or if the local newspapers have an expose? How are

we going to know if the problem’s been fixed?

Mr. FRIEDMAN. Well, with 12,000 people there, you may never

know for sure. I understand that, but I think in the next 6 months’

time what will be devoted by the Department is an intensive examination of all aspects of the function of the lab to make sure that

the problems have been addressed.

Ms. DEGETTE. Well, do you think we haven’t had that intensive

examination in the many past times that we’ve worked on this?

Mr. FRIEDMAN. I do not think we’ve had that intensive examination.

Ms. DEGETTE. That’s just appalling to me because they closed

down the lab after we visited in 2004, and you don’t think they did

that intensive examination?

Mr. FRIEDMAN. Well, I think they did an intensive examination,

but the point I’ve been trying to make is that, once they did the

intensive examination, did they sustain an aggressive program to

address the problems that were identified, and that’s the concern

that I’m expressing today.

31

Ms. DEGETTE. Do you have some specific recommendations as to

what the Department can do to do this intensive examination within the next 6 months?

Mr. FRIEDMAN. Yes.

Ms. DEGETTE. Would you mind supplementing your responses by

delineating those specific things that the Department can do?

Mr. FRIEDMAN. Certainly.

Ms. DEGETTE. Thank you.

Ms. Brian, what is your view about all of this that we should

give some time for the Department to clean this up, and then it’ll

be fixed?

Ms. BRIAN. I respectfully disagree with Mr. Friedman.

I think that the first thing is that the DOE needs to get its house

in order and NNSA, and then I think the contractor will ultimately

follow in line. I just think that the Government hasn’t been doing

its end of the job.

Ms. DEGETTE. And what do you think the Government can do?

Ms. BRIAN. I think we need to have sincere—well, one of the

things that I think is really important is that a lot of these issues,

as I discussed in my written testimony, are infuriatingly familiar.

Ms. DEGETTE. Right.

Ms. BRIAN. We’ve known about these problems before. We’ve had

IG and various iterations of Mr. Podonsky’s office make recommendations, and nothing has—no one has required the people at

NNSA to actually implement these recommendations. We’ve had

Secretaries—in fact, the issues that—I think it was Mr. Walden

who was raising them with the glue sticks. Those were the kinds

of things that were supposed to have been dealt with back with

Secretary Richardson——

Ms. DEGETTE. Right.

Ms. BRIAN [continuing]. And they’ve been buying new computers

for the last 10 years with the USB ports because, as I learned, the

people who were in charge of buying the computers at Los Alamos

weren’t really talking to the cybersecurity people to realize that

they didn’t want to have computers with USB ports.

Ms. DEGETTE. Mr. Podonsky, do you have a view on that? Do you

think this problem can be fixed in 6 months without any substantial changes?

Mr. PODONSKY. No. We do believe that there needs to be substantial changes, and we do believe that this Secretary and the Deputy

Secretary are moving towards that direction. They’re not just promissory notes of the past. We’ve seen actions taken that we have

never seen in 25 years of this Department where people were actually held accountable.

You do need to have performance measures that the contractor’s

held accountable against. We also have an enforcement function

within the office that we also need to employ.

So there are a lot of—a lot of tools for the Department to exercise

now and get on with fixing the laboratory together with fixing the

NNSA and the policy of the Department.

Ms. DEGETTE. Do you think, Mr. Friedman, that the physical

size of Los Alamos is a problem?

Mr. FRIEDMAN. Yes, I think it’s a challenge.

32

Ms. DEGETTE. And what can we do to deal with that challenge,

do you think?

Mr. FRIEDMAN. Well, first of all, we can make a concerted effort

to consolidate functions, reduce the number of vaults, reduce the

number of classified computing environments. I don’t know how

practical that is. I think it’s something that we need to look at very

carefully.

Ms. DEGETTE. Thank you.

Mr. FRIEDMAN. Second, I think we need to enclose the footprint

so that the security perimeter is reduced so physical security will

be—will be somewhat easier.

Ms. DEGETTE. Mr. Chairman, I think a good time for a followup hearing—I mean, we should have some interim ones, but we

also need to have one in June to mark the 1-year anniversary and

see how they fixed all these problems.

Mr. STUPAK. Mr. Burgess, questions?

Mr. BURGESS. Thank you, Mr. Chairman.

Mr. Podonsky, we have been through—I have been through at

least 2 years of these travails, and it seems like every security incident that has been reviewed has been by an employee who has received a security clearance; is that correct?

Mr. PODONSKY. My recollection is that predominantly cleared individuals have been violating DOE’s requirements.

Mr. BURGESS. Was that the case in this most recent event in October?

Mr. PODONSKY. I believe so.

Mr. BURGESS. OK. And the individual who claimed assault at the

bar a couple of years ago, was that also an individual who had

been cleared?

Mr. PODONSKY. I believe that is the case.

Mr. BURGESS. Is there a problem with how we’re granting clearances to—how NNSA is granting security clearances?

Mr. PODONSKY. The personnel security process is one of—the

task force that the Secretary initiated at the beginning of this

event after Mr. Friedman’s report was to look at personnel security, specifically at the case in question as well as DOE-wide. Concurrently there was a review that had begun by Deputy Secretary

Sell in May of last year where we were looking at personnel security processes.

So the short answer is, yes, we do believe that personnel security

processes within the Department and, in fact, the entire executive

branch which are being looked at by the OMB right now are something that we need to get on with, and that’s what we’re doing, and

we’re going to be making recommendations to the Secretary and

the Deputy Secretary at the end of February of what to do with the

personnel security program within the Department of Energy.

Mr. BURGESS. Will that include any type of program that looks

at cleared individuals in an ongoing fashion?

When I was there in July 2005, it was right after the credit card

abuses came to light, and it appeared, as I recall, that those were

cleared individuals who had then subsequently developed either domestic problems or substance abuse problems that led them to misuse the credit cards, and you can just imagine that other things

may have happened also as a result.

33

So will there be an ongoing evaluation?

Mr. PODONSKY. The recommendations that, I believe, are coming

out of the task force will be covering both from the beginning of

hiring all the way through current employees so that we have an

ongoing review of people holding clearances.

Mr. BURGESS. Inspector Friedman, do you think, in retrospect—

I reference the RFP process that the lab just went through. Chairman Barton also referenced the contractor. Do you think that was

an open and fair process?

Mr. FRIEDMAN. Frankly, Dr. Burgess, I have no information that

it was not. Unfortunately, there were two proposals, as I understand it, in the final field, but I have no reason to believe it was

not open and fair. I have no information to that effect.

Mr. BURGESS. Would that be in the purview of the Inspector General’s Office to know that, or is that outside your capabilities?

Mr. FRIEDMAN. No, it’s not outside our capabilities, and, by the

way, if there had been concerns by proposers that were not considered, it would not be unusual for us to get complaints about that,

and to the best of my recollection, and I could be wrong about this,

I don’t think we received any complaints along those lines.

Mr. BURGESS. And yet some of just the traffic from the bloggers

on line—and I realize that that carries its own inherent dangers,

but there is some question as to whether or not the current contractor was, in fact, the best one and is the best one going forward.

Again, I don’t know whether it’s the purview of this committee

to investigate that process, but, Mr. Chairman, I for one certainly

wonder if we oughtn’t to look at that.

Ranking Member Barton asked about the fines. The amount of

money levied so far against the current contractor, do we have a

dollar figure on that?

Mr. FRIEDMAN. Are you referring that question to me?

Mr. BURGESS. Yes, sir.

Mr. FRIEDMAN. I do not have a number on that, no.

Mr. BURGESS. Is there a way to—for anyone, is there a way to

get that dollar figure on the fines levied against the contractor?

Mr. FRIEDMAN. Well, respectfully, the third panel, I think, includes people who would have that information.

Mr. BURGESS. Does the contractor recognize the amount of dollars that they are putting at risk?

Mr. FRIEDMAN. I suspect they know the contract intimately.

Mr. BURGESS. OK.

Mr. Friedman, just to finish up, your statement said the criminal

investigation into the matter last fall is ongoing and may yet reveal

additional security problems.

In an open session can you expand on that statement?

Mr. FRIEDMAN. Well, simply, the FBI has been conducting a

criminal investigation from the get-go, and the purpose of that

statement in my testimony—and I think it’s in our report as well

if I’m not mistaken—is that until their investigation is complete,

we don’t know what will turn up. There may be more.

Mr. BURGESS. What would be a reasonable time frame for this

committee to expect that that investigation will take?

Mr. FRIEDMAN. That’s within the purview of the FBI, sir, and I

have no idea.

34

Mr. BURGESS. Mr. Chairman, will we be privy to that report

when the Department of Justice completes that?

Mr. STUPAK. That’s a good question. We’ll double check on it. I

don’t see why not, but let’s double check first.

Mr. BURGESS. All right. My time has expired.

Mr. STUPAK. The gentleman from Louisiana Mr. Melancon.

Mr. MELANCON. Thank you, Mr. Chairman.

I guess, Mr. Friedman, one of the first things when you look at—

and I understand there’s a problem with the drug use, apparently,

with this one particular breach, but apparently there’s some additional problems out there within.

Does the staff or the security people require or do the random

drug sampling, the urine test, at all on the employees, or is it

‘‘you’re hired’’?

Mr. FRIEDMAN. I’m in open session. Part of your question I think

I can address, but part of it I would prefer not to address.

My understanding is—and, again, there are people who are on

the third panel who can address the issue of the current policy. My

understanding is that they have implemented a random drug test

for all Los Alamos employees, but I may be wrong about that, and

you’ll need to ask the third panel, sir.

Mr. MELANCON. And have you just done that just recently?

Mr. FRIEDMAN. Fairly recently, yes.

Mr. MELANCON. With the time that’s transpired with the issue

of security breaches and you’ve replaced the chain of command, the

latest chain of command replacement took place when, how long

ago?

Mr. FRIEDMAN. June 1.

Mr. MELANCON. June 1 of last year?

Mr. FRIEDMAN. Correct.

Mr. MELANCON. And that was subsequent of the close-down for

7 months in 2004?

Mr. FRIEDMAN. Well, the contract changed hands on or about

June 1, 2006, and, yes, it was subsequent to the 2004 shutdown.

Mr. MELANCON. OK. So somewhere between 2004 and last year,

which was 2006, how was the lab run? Who was in charge?

Mr. FRIEDMAN. The University of California was the prime contractor.

Mr. MELANCON. And the on-site security?

Mr. FRIEDMAN. They ultimately were responsible for the on-site

security.

Mr. MELANCON. Who did they subcontract out for the security?

I don’t think the University of California is a security company.

Mr. FRIEDMAN. Well, they are at some locations, interestingly

enough, and I forget the name of the contractor, to be honest with

you; the subcontractor, I should say.

Mr. MELANCON. The diversity of the science—and this is, of

course, somewhat new to me—that’s out there or the regimens that

you have out there of the different scientists, is there some way—

and I think maybe you spoke to it earlier. Is there some way to isolate these and provide better security on each sector rather than

just have these—and I haven’t been to the facility—12,000 people

just coming and going wherever they want to go?

35

Mr. FRIEDMAN. Well, there are a number of secure areas at the

facility, and it’s worthwhile going to see it. It’s quite impressive. So

I wouldn’t say there are 12,000 people running back and forth at

will. It’s much more systematic and controlled than that. I’m not

sure if there’s a practical way of doing it by discipline, but I haven’t

thought that through, I can’t give you a good answer.

Mr. MELANCON. Yes, I’d like to go and see it. The only view I’ve

had of it was from across the valley at a friend’s house at night

with the lights, so getting in there and looking at it, I guess, closehand would do me a whole lot of good.

I listened to the frustration of Ranking Member Barton and

Chairman Stupak and others who have been here and gone

through this for a period of time, and I guess to—we’re to June.

Why did it take so long from the 7-month shutdown—and that’s

another year, year and a half—before we got the new contract in,

and now we’re waiting a year to see if we’re going to get—what’s

the problems with moving this thing quicker? I mean, I know the

numbers are big, but——

Mr. FRIEDMAN. Well, yes. I’m not sure I can give you the precise

timeline, but in the general sense, the recompetition of this contract was a very turbulent issue. It was a very costly issue. It was

a very labor-intensive issue, and it was a time—a time issue as

well. It takes a long time to prepare the RFP, to address, hopefully,

the issues that have been resident at Los Alamos for 64 years, and

to go to the street, give people time to propose, to evaluate the proposals, and to move forward.

So I don’t know if that answers your question, but it is a very

time-consuming task.

Mr. MELANCON. I’m from south Louisiana. I’ve seen inside baseball, and they’re getting plagued down in recovery efforts, so I

think I can understand some of it.

Thank you. I have no more questions.

Mr. STUPAK. Mr. Murphy.

Mr. MURPHY. Thank you, Mr. Chairman.

Mr. Friedman, do we have information yet on what was the motive for this theft?

Mr. FRIEDMAN. Mr. Murphy, It would be inappropriate—first of

all, I don’t know the answer to the question. It perhaps resides

with the FBI, but at this point I don’t know.

Mr. MURPHY. Do we know yet—and I guess I would open this to

all of you—what, if anything, was—I know there was also talk

about printers being bought and things like that—about to what

extent things were copied, distributed and sold or who these documents also went to?

Mr. FRIEDMAN. If you’re directing that to me, I’ll give you the

same answer. The FBI really, ultimately, will have to address that.

Mr. MURPHY. The same with Mr. Podonsky and Ms. Brian. Does

anybody know yet?

Mr. PODONSKY. I would say the same thing as Mr. Friedman. We

don’t have the answers to that.

Ms. BRIAN. I can speak to the press reports from her attorney,

which were that she was taking the work home to get extra work

done, that she was behind.

36

Mr. MURPHY. OK. Has anybody determined if there has been—

if any of these contents have appeared anywhere else besides just

there?

I guess what I’m getting to here is, with regard to this information, that even though we’re waiting for further details from the

FBI, have we learned anything from this yet that can be used to

take other steps other than just blocking some of the ways you can

put in a thumb drive or something; but have we learned how it affects security, of how it will affect hardware and software inspections, how people come on and off the site, their security clearances? Have we learned things from this, unique to this, that has

affected what we’re doing overall and what’s been implemented, or

are we still going to wait for the FBI reports on this?

Mr. PODONSKY. I would start, first of all, Congressman, with a

task force that we are heading up on the personnel security piece.

We believe there is going to be a lot of serious lessons learned that

are going to come out of the specifics to the case as well as the

broader issue on personnel security that one of the members of the

committee asked earlier.

We believe that, in terms of cybersecurity as well, there are also

lessons learned that we know that the CIOs for both NNSA as well

as the Department are looking at, and we also know that the third

panel will—has, in fact, done a damage assessment that they could

probably talk about in executive session.

Mr. MURPHY. And I will look forward to that part.

I was just wondering here, while we’re still in a public hearing,

what we can assure the American public with regard to some lessons learned, because it concerns me that this subcommittee has

looked at these issues for a long time. Your inspections give us

pretty solid, yet frightening information on the levels of breach of

security, and we’re still awaiting another review before we determine what else we need to do when so much has been out there

for a while, and so it’s just something I just have to continue to

raise the question of. What more do we need to know before we

really put the heel down on this?

Ms. BRIAN. Congressman, if I could answer one question, I’m

hoping by the end of this hearing that one thing that could change

is NNSA’s pilot program at Los Alamos, which is essentially selfpolicing for safety and cybersecurity. I’m generally not a big fan of

self-policing as a rule, and I think that a facility like Los Alamos

hasn’t earned the trust of the Congress or the public to be essentially left up to themselves to report when they have problems, and

I think that’s something that should be changed immediately.

Mr. MURPHY. Anybody else on that issue?

Mr. Friedman, do you have something on that?

Mr. FRIEDMAN. I did want to point out to you, Mr. Murphy, that

our report—and I think we have 14 recommendations for corrective

actions. They’re not all-encompassing, all-inclusive, but we think

it’s a good start. The Secretary, as I indicated in my testimony, has

a task force looking at those, and we’ll be interested to see what

their report says in February in terms of how to convert those

ideas into reality at the laboratory, both at the Federal level and

the contractor level.

Mr. MURPHY. Mr. Podonsky.

37

Mr. PODONSKY. As the independent overseer for the Secretary

and the Deputy Secretary, I would just tell you that I have a prejudicial answer, and that is we don’t think that self-assessment, by

itself, is good, and the contractor should have Federal oversight.

That’s why we have contractors and the Feds managing them or

should be managing them. So, while the NNSA has this pilot proposed, we don’t think it’s ready for prime time as exemplified by

their performance to date.

Mr. MURPHY. And I would add to that. We’re waiting for further

investigations. We’re reviewing these 14 recommendations. It

seems to me a lot of time is ticking by, and I’m just frightened, and

I shudder to think what is out there and what else could be happening while all these breaches have occurred and continue to

occur. So we will hopefully speed up this whole process.

Thank you, Mr. Chairman.

Mr. STUPAK. I thank the gentleman.

Mr. Green from Texas, questions?

Mr. GREEN. Thank you, Mr. Chairman.

Mr. Podonsky, you state in your testimony that 25,000 unclassified workstations and servers were not certified or accredited.

What does that actually mean? Are they unprotected workstations?

Mr. PODONSKY. No, sir. I should—I should clarify that the certification and accreditation process makes sure that security features

are in place and operating as designed. When you didn’t—when

they didn’t do the accreditation of the 25,000 unclassified

workstations, they did do a network accreditation. Our cyber experts tell me that that’s not sufficient, because you don’t know if

you have individual vulnerabilities on those 25,000 computer

workstations. So that’s something that—what we believe should be

done and should be included in their certification and accreditation

process.

Mr. GREEN. It seems like—and, again, you’ve heard it from every

Member up here for the last at least 8 years, I guess—we’ve identified problems time and time again and identified solutions, but for

some reason there’s no follow-through on closing the deal. I know

it’s a great task to do—to just deal with those 25,000 workstations

and servers, but why wasn’t that done before this particular person

walked out with the disk? It seemed like that would have come up

in the last 8 years before, at least before this committee, and is

there a problem, and nobody knows how to implement the solutions

to it?

Mr. PODONSKY. Well, sir, we’ve identified that the lab has inadequate cyber plans, policies and procedures; incomplete risk management processes; weak self-assessment. So there’s a whole litany

of things that the laboratory could do to fix this.

Mr. GREEN. OK. I imagine this is not news to anyone sitting on

this panel for the last 8 years. As I said, I just came back after 6

years off of it.

Why can’t it be fixed? Why can’t we have this? Since it’s a new

contract, I assume when it went out for bids, this new contractor

was security-conscious, and is it just not an issue that makes it to

the floor of the actual Los Alamos?

Mr. PODONSKY. Sir, if you’re addressing that to me, I would answer it can be fixed, and I believe, under the current leadership of

38

the Department, it will be fixed. As I said for my third time now,

having listened to all the plans before, to answer your question

specifically, it is that the contractors in years past have not been

held accountable to do what the Department has expected them to

do.

Mr. GREEN. Mr. Friedman, do you have a comment on that?

Mr. FRIEDMAN. Well, a number of failures that we identified in

our report, Mr. Green, are low-hanging fruit: plug the holes where

they should be, the ports where they should be plugged, essentially

segregate duties where they need to be segregated, ensure that

there’s adequate monitoring. I mean, these are not high-tech, costly, time-consuming, difficult things to do, and they should be

done—they should have been done instantaneously, and if the lab

has not taken steps to do those at this point, I would be very discouraged and very disappointed.

Mr. GREEN. Well, Mr. Chairman, it seems like I’m refreshing my

memory on this. I remember, over the years, we’ve had—this is

really a college campus. The security is mostly research, what

they’re doing, and they’re more interested in that. And it seems

like, since the last time I was on the committee, we haven’t seen

any changes even though it went out for bid, and I hope the next

panel, even in closed session, will show us what can be done from—

to make sure that this oversight investigation committee doesn’t

continue to be dealing with what’s happening at Los Alamos for almost a decade now, so—and I yield back my time.

Mr. STUPAK. I thank the gentleman.

The Members have just a couple of quick follow-ups. We’re going

to switch to 2 minutes and just a quick follow-up with this panel,

and then we’re going to ask Mr. Friedman and Mr. Podonsky to

stay because we will go to executive session a little bit later, but

we’d like to get the other panels done before we move to executive

session.

So, with that, for 2 minutes, I’ll just recognize myself for 2 minutes.

In questions Mr. Green put forth and throughout the testimony

today, we’ve heard that the system breaks down; there’s broken

systems; it’s inadequate.

In July 2004, the lab was shut down. They were doing this extensive review. Everything was supposed to be fixed up for that. It

cost the taxpayers $350 million.

So what happened? The $350 million and the 6-month shutdown

didn’t accomplish anything? The systems weren’t updated? The

holes weren’t plugged? What happened? What did we get for $350

million besides a shut-down lab for 6 months?

Mr. FRIEDMAN. Are you directing that to me?

Mr. STUPAK. Sure, Mr. Friedman.

Mr. FRIEDMAN. Look, Mr. Chairman, if I gave anybody the impression by my earlier testimony that I think that the situation you

find now is OK and it will get better automatically, I left the wrong

impression, and I apologize for that.

I am extremely discouraged and disappointed that after the litany of reports and the series of unsettling events that have taken

place, that the simple fixes that are obviously readily available

39

have not been in place, regardless of whether there is a new contractor or not.

So if you are asking what we got for our own money, it seems

to me if this is the result, we did not get a lot for our money.

Mr. STUPAK. As I stated earlier, Mr. Friedman, in your report

you said. Reviewing serious breakdown in the core laboratory security controls. Core. Their very basic, fundamental security is broken down. If we couldn’t fix it after shutting it down for 6 months

and $350 million, how do we fix it now other than we have a new

person coming on board?

Mr. FRIEDMAN. Well, I think I tried to lay it out. As I said, we

have 14 recommendations in our report, and I try to lay out some

bigger-picture items that we talked about. One is the question of

real accountability, significant material impact on award fees, reassignments, terminations; perhaps a change of the mix of the mission of the lab is a possibility. So I think there needs to be some

really fundamental changes to shake up the system to ensure that

there is a sincere dedication to fixing these problems. We haven’t

seen it yet.

Mr. STUPAK. My time has expired. Let me ask one question if I

may.

Los Alamos has a great record. They have great people there, top

scientists, some of our best, most sensitive work there, no doubt

about that. But I asked a question last hearing and never really

got an answer. Maybe you can answer it now after some time reflecting upon it.

What do we do at Los Alamos that cannot be duplicated or done

at the other labs? Is there anything so unique that can only be

done at Los Alamos and not at the other labs?

Mr. FRIEDMAN. Well, let me try to answer it this way. You did

ask that question in a hearing that I participated.

Mr. STUPAK. And no one has come can up with a unique mission.

Mr. FRIEDMAN. It seems to me once you get past the facilities,

the physical plant, and there are unique aspects of the physical

plant that would cost hundreds of millions, if perhaps billions, to

replicate, once you get past the core of the extraordinary intellectual invigoration that exists there, the people with the unique talents, it seems to that—the fundamental issues that go on there

could be done someplace else. I think the answer to your question

is yes.

Mr. STUPAK. Mr. Whitfield.

Mr. WHITFIELD. Thank you, Mr. Stupak.

Mr. Podonsky, under the terms of the new contract with LANS

at Los Alamos, and when it comes time to assess penalties or fees

which we had discussed a number of times today, does the National

Nuclear Security Administration have the primary responsibility of

enforcing the contract?

Mr. PODONSKY. For enforcing the contract, yes, sir.

Mr. WHITFIELD. And could you just briefly explain the process

that would be entailed in assessing a penalty under the contract?

Mr. PODONSKY. Not under the contract. I would have to request

that you defer that to the third panel.

Mr. WHITFIELD. So you are not involved in that at all?

Mr. PODONSKY. Not in that type of enforcement.

40

Mr. WHITFIELD. Thank you.

Mr. STUPAK. Mr. Melancon, any questions to follow?

Seeing no other Members present, we will dismiss this panel.

Mr. Friedman and Mr. Podonsky, we would ask you to stay.

Ms. Brian, thank you.

Mr. STUPAK. Our next panel, if we may, would consist of the

Honorable Clay Sell, Deputy Secretary of the Department of Energy.

Mr. Sell, again, I have to ask you to since we take all testimony

under oath, and did you bring a legal counsel with you?

Mr. SELL. I would just note, Mr. Chairman, the presence of our

Deputy General Counsel from the Department of Energy.

Mr. STUPAK. Very good.

OK, sir, I would ask you to please raise your right hand.

[Witness sworn.]

Mr. STUPAK. The record should reflect the witness has affirmatively stated that his testimony would be under oath.

Mr. Deputy Secretary, please, if you want to give an opening

statement.

TESTIMONY OF HON. CLAY SELL, DEPUTY SECRETARY, U.S.

DEPARTMENT OF ENERGY

Mr. SELL. Chairman Stupak, Congressman Whitfield, members

of the subcommittee, I welcome this opportunity to appear before

you today to discuss security within the Department of Energy and

the recent security incident at Los Alamos National Lab.

The national security responsibilities entrusted to Los Alamos

are our Nation’s most important. The successes that have sprung

forth from this great lab in years past and today are properly a

source of great pride and great power in our country. The capabilities of the men and women of Los Alamos continue today to make

this lab the only place to go for many national security requirements. And, of course, the secrets entrusted to this lab are among

the Nation’s most sensitive.

These are among the reasons that the facts of the most recent

security incident at Los Alamos are so troubling and the source of

such tremendous frustration and concern to the Secretary, to me

and to many others throughout the DOE enterprise.

And now, despite years of focused attention and the expenditure

of millions of dollars, we are confronted again with the security

failure, the facts of which suggest we still have a much larger and

a much deeper problem.

As has been alluded to, many well-intentioned leaders have

worked to improve security at Los Alamos over the last few years,

and in many key areas the Department has made substantial

progress. But Secretary Bodman and I are less interested in effort,

process and good intentions and more interested in results. The results on matters of security at Los Alamos National Laboratory remain unacceptable.

You have already heard from earlier witnesses; in fact, you each

have made statements about what have led to the problems and

what happened in this recent matter.

Later today you will hear from the Acting Administrator of the

NNSA, our Department’s Chief Information Officer and the DirecVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
41

tor of Los Alamos National Laboratory in more detail. Therefore,

I intend to focus the balance of my remarks on what the Secretary

and I are doing to fix the problems and move forward.

First, in the immediate aftermath of learning about the security

breach at Los Alamos, we acted immediately to assess the situation

and understand the facts. The NNSA Administrator dispatched the

Chief of Defense Nuclear Security and the Cybersecurity Team to

the site to begin an immediate review of the incident. On October

26, the Secretary ordered the Inspector General to investigate. And

on October 30, I personally traveled to the lab to meet directly with

those on the ground and to gain firsthand knowledge of the incident and remedial actions to address the problems.

Second, we took quick action to address realized vulnerabilities.

On November 8, I issued a memorandum to improve cybersecurity

protection for classified computer systems throughout the DOE

complex. That memo included immediate direction to every lab and

every facility operating a classified system to conduct an examination of the adequacy of its practices and procedures to ensure that

classified information is protected using multiple layers of

cybersecurity protection including protection against potential insider threats. Also, the memo required an accounting by each lab

and facility throughout our complex for full implementation by January 15 of this year. Today I am informed that the entire complex

is in compliance. The line managers will be responsible for ensuring continued adherence to this policy.

Third, in response to findings contained within the Inspector

General’s report issued on November 27, the Secretary directed two

specific actions: first the creation of a senior-level ad hoc committee

to review all of the recommendations in the IG’s report except

those concerning the Department’s security clearance process; second, the establishment of a task force to review the personnel security programs throughout the entire DOE complex.

Both reviews will conclude and provide recommendations to the

Secretary no later than February 28 of this year. Once we have reviewed the results of the laboratory’s actions, corporate and Federal validation activities, the Secretary’s two task force recommendations and other actions that have been directed, we will

follow up—we will follow up and develop additional improvements

and additional reviews as necessary.

We will be pleased to discuss with the subcommittee the additional actions the Secretary decides to take once he has received

and reviewed the task force recommendations.

Fourth, during numerous occasions, meetings and conversations

with the NNSA, with the NNSA Administrator and his team, with

the Los Alamos Director, and with members of the Executive

Board, the new contractor at Los Alamos, the Secretary and I have

expressed our depth of concern, our sense of urgency and clear expectations for accountability from the top of the Department to the

bottom of the laboratory, and that these continuing security problems must be addressed, rectified, and prevented in the future.

Fifth, even before the recent incident at Los Alamos, the Department had substantially increased focus and attention to matters of

cybersecurity including hiring of a new Chief Information Officer in

November 2005 to reinvigorate and strengthen our efforts. Among

42

other things, he accelerated our efforts to update our cybersecurity

order and National Security Systems Control Manual, and has

taken numerous actions to improve our Department’s cybersecurity

posture. We also brought in a new Chief of Counterintelligence and

reorganized the office to improve its performance.

Sixth, the Department also previously recognized—and I would

add with strong urging from the Congress—that the leadership of

the laboratory could be strengthened by competing the M&O contract. And last June a new corporate leadership team took over

management of the laboratory for the first time in its 64-year history.

Seventh and finally, because it is our view that we are—that we,

the Department, the Secretary and I, are accountable to the President, the Congress, and the American people not just for efforts,

but for results, the Secretary and I made the extremely difficult decision to replace the Administrator of the NNSA and bring in new

leadership.

Now, only time will tell if we are to be successful, if we are to

distinguish ourselves from our predecessors. But the Secretary and

I are committed to making the tough decisions required to lead our

Department to a level of security performance befitting the great

missions the country has asked us to carry out. We have made

progress in improving the security across the Department and at

Los Alamos, but as the latest incident indicates, we have much

more work to do. We remain committed to the task.

I am happy to answer your questions at this time.

[The prepared statement of Mr. Sell appears at the conclusion of

the hearing.]

Mr. STUPAK. Thank you, Mr. Secretary.

You indicated that only time will tell whether or not we are

going to be successful, and I say this politely, but one of the problems, I think there is a turnover we see at the lab and administration and things like that. Secretary Bodman, with an upcoming

Presidential election, will only be there 2 years. Those problems

that we see, the problems, the constant problems we see, won’t be

resolved in 2 years, will they?

Mr. SELL. The efforts to resolve these problems, in my judgment,

take continuous effort over the course of the next 2 years and in

the years thereafter. Threats evolve, technologies evolve, and require constant vigilance.

Mr. STUPAK. Wouldn’t it be easy for folks in Los Alamos to say,

well, there is that directive; we have seen that directive for 2 years.

A new set of people come in, and we can sit back?

Mr. SELL. Mr. Chairman, that is certainly a limitation of the

manner in which the executive branch of our Government operates.

I will be gone in 2 years as will the senior leadership of this Department, as will the President, so we are taking great effort to institutionalize the changes that we are making, and I will give you

an example.

After a previous incident in 1999, then-Secretary Richardson

issued a substantial press release announcing a number of changes

to correct the then-perceived security problems at the lab. Those

announcements that were made were never put into the directives

43

which actually govern the relationship between the Department

and its contractors.

Mr. STUPAK. We have just seen a $350 million review, and things

that were supposed to be done were never implemented at Los Alamos.

Mr. SELL. What we are doing, with the changes that we have

made, is putting them into the directives which actually govern the

contractual relationship so——

Mr. STUPAK. Let’s talk about the directives though. You personally travel to Los Alamos. You did a memo on November 8 directing each laboratory and DOE facility operating a classified computer—didn’t do anything about unclassified—but classified computer system to conduct an immediate and thorough examination

to ensure that classified information is protected using multiple

layers of cybersecurity. But isn’t it also true that in this memo you

set forth minimum standards that must be met by January 15,

2007; is that correct?

Mr. SELL. That is correct.

Mr. STUPAK. Were these minimum standards accomplished by

January 15?

Mr. SELL. Not in all cases.

Mr. STUPAK. Not in all cases.

Your memo also says steps are to be taken—I am looking at your

memo. I am sure you have one there in front of you. Steps to be

taken are to include at a minimum those in the attached guidance

prepared by DOE Chief Information Officer. There it is. So these

were the minimum things.

Did anyone at Los Alamos come back to you and say, Mr. Secretary, you asked for the minimum. We went over and above; we

went beyond the minimum. Did they do anything beyond the minimum? Any recommendations going beyond the minimum?

Mr. SELL. Yes, Mr. Chairman. The lab is doing a number of

things beyond what was addressed in the memo. The memo that

I put out was based on the immediate recognition that we had a

real problem——

Mr. STUPAK. Sure.

Mr. SELL. Specifically with ports; I wanted to take the lesson

that we had learned under very unfortunate circumstances at Los

Alamos——

Mr. STUPAK. But you said part of it was complied by or complied

with your request by January 15; other parts were not, correct?

Mr. SELL. To clarify completely, Los Alamos was the last of our

labs and facilities to come into compliance, and that occurred on

January 22. But that is a report that I have.

Mr. STUPAK. Well, let me ask you this question then. Your Chief

Information Officer of NNSA in staff interviews said that she sent

the team out on January 8 to see whether Los Alamos was complying with your directive. They found widespread noncompliance with

your directive; isn’t that correct?

Mr. SELL. I know as of January 8 the lab was not in compliance.

Mr. STUPAK. OK. Isn’t it also true that even in the face of all the

publicity of the most recent security lapse, that NNSA had to pull

the entire team back from the lab because they either could not understand your directives or simply were incapable of responding to

44

your directives of securing the very areas and items that were

under question as a result of the October 6 event? Why did NNSA

have to pull back its teams?

Mr. SELL. Mr. Chairman, we are trying to deal in a very serious

way; I gave out in this case very clear guidance as to what was to

be accomplished. I could have just given clear guidance and gone

on and done something else, but we followed up on that clear guidance by sending a team out.

Mr. STUPAK. And have you pulled back?

Mr. SELL. We sent the team out even before the deadline for

compliance, and we found out when the team was out there that

we weren’t making progress——

Mr. STUPAK. We were not making progress?

Mr. SELL. We were not making progress at a sufficient pace to

accomplish what needed to be accomplished by January 15. That

came to our attention. We gave further direction. I clarified. I

talked to the lab Director. They understood what their requirements were. We sent a team back out shortly after January 15 and

concluded approximately January 22 that they had complied with

the directive.

I think it is indicative that unfortunately ensuring compliance

and making progress requires continued effort. It requires vigilance. It requires follow-up. It will require that long after I am

gone. I only have control of the 2 years that I remain in my position, and that is the way I intend to deal. And I hope we can also

institutionalize the progress that we are making, and there are a

number of means within our disposal to help do that, through the

contract, through the outstanding career staff that we have in our

Department, through a number of the individuals and leaders of

the laboratory that will remain into the next administration.

But it is difficult. There are reasons sufficient progress has not

been made in previous years, and the only thing I can commit to

you is that I am trying to deal in a way which is distinct and different and distinguishable from the ways that folks have dealt in

the past.

I believe the Secretary and I have taken more aggressive action,

and because I believe we are acting differently, at least I have

some reasonable expectation that this time we will get different results, but only time will tell.

Mr. STUPAK. All right. My time has expired.

Mr. Whitfield for 5 minutes.

Mr. WHITFIELD. Thank you, Mr. Chairman.

And, Secretary Sell, we enjoyed your testimony today and appreciate your being here. It seems to me the years that I have been

on this subcommittee and this issue of security breaches has been

a subject that ultimately the effectiveness of really dealing with

this is through the M&O contract. And you were involved in preparing or negotiating this most recent M&O contract with the consortium that is now operating LANS; is that correct or not correct?

Mr. SELL. I am happy to have the opportunity to tell you my

exact level of involvement.

When I came to the Department in March 2005, the procurement

work was already well under way. But certainly I knew it to be and

45

believed it to be the most important procurement—and I said

this—in the history of the Department to date.

I am not the selecting official.

Mr. WHITFIELD. Who is the selecting official?

Mr. SELL. The selecting official at the time, I believe, and I will

ask was Tom D’Agostino, who is not yet confirmed as the Deputy

Administrator for Defense Programs. He has been a career member

of our NNSA team for a number of years.

Mr. WHITFIELD. So was he within the NNSA at that time?

Mr. SELL. Yes, sir.

Mr. WHITFIELD. So the NNSA has the responsibility for selecting?

Mr. SELL. The NNSA had the responsibility; Mr. D’Agostino, I

believe, was the selecting officer. But the Secretary and I did spend

time—once the decision had been made, after the decision had been

made, we met by video teleconference with the Source Selection

Advisory Board. We met at length with Mr. D’Agostino, and it is

my view that the decision that the Department made was absolutely the correct one.

Mr. WHITFIELD. Now what is the length of the contract?

Mr. SELL. The length of the contract, I believe, Mr. Whitfield, is

a 7-year initial period but could be extended to 20 years. And I

may be off 1 or 2 years.

Mr. WHITFIELD. What is the approximate total value per year to

the consortium for being awarded the contract?

Mr. SELL. The total value, in rough order, about $2 billion, or $11⁄2 to $2 billion a year flow through the contractor.

Mr. WHITFIELD. One and a half to $2 billion?

Mr. SELL. The fee available to the contractor is on rough order

$70 million a year. So that is the potential net to the contractor.

Mr. WHITFIELD. So would I be accurate or inaccurate to describe

the $70 million as incentive pay that they can receive in addition

to the base amount?

Mr. SELL. The $70 million, Mr. Whitfield, includes both the base

amount and the incentive portion. I think that is the total fee,

roughly, that is available to be paid to the contractor.

Mr. WHITFIELD. OK. Now, you would think that since the real

problem is safety and security, that is one of the major problems,

that the incentives apportioned to do that would be greater than

$3 million out of a total of $73-some million incentives. What would

be the explanation for not making that a greater amount?

Mr. SELL. Mr. Whitfield, I don’t think I can say anything that

you would find to be a great explanation. Although the next

panel—and I don’t mean to just kick this to Mr. D’Agostino, I do

think he is more informed on that. But I will also state my belief

that we have a greater authority to restrict and pull back award

fee for failures beyond just the $3 to $6 million for the security.

Mr. WHITFIELD. Are you aware, yourself, of the amount of penalty assessed in the 2004 6-month shutdown or not?

Mr. SELL. I am aware that it was generally in the neighborhood of around $3 million for the failures in 2004.

Mr. WHITFIELD. So that was a penalty that University of California paid?

Mr. SELL. That was a fee reduction in the amount that they——

46

Mr. WHITFIELD. A fee reduction. OK.

Now, it is my understanding that in the most recent contract

that the consortium agreed that the 21 key personnel committed—

that they committed to stay for a minimum of 2 years, and after

6 months the Deputy Director has already left; is that true?

Mr. SELL. Yes, sir.

Mr. WHITFIELD. Has anyone else left of those 21 key people?

Mr. SELL. To my knowledge none of the other 21 key individuals

have left.

Mr. WHITFIELD. But you all do have authority to assess a fee for

the breach of that aspect of the contract, I would assume?

Mr. SELL. I believe we do. And the only reason I hesitate is these

are actual decisions that must be made by the contracting officer

of whom I am not. I am trying to state as clearly as possible my

expectation and belief.

Mr. WHITFIELD. My time has expired.

Mr. STUPAK. The gentleman from Louisiana Mr. Melancon.

Mr. MELANCON. Thank you, Mr. Chairman.

Mr. Sell, I was just wondering if Los Alamos or your children are

causing this premature gray hair.

Mr. SELL. Both.

Mr. MELANCON. Some of the thoughts that have run through my

mind, is the DOE team, is it on site, or was it just sent and came

back and made a report? And how long were they on site when

they were there?

Mr. SELL. We have a Federal site presence of around 120 individuals that live there, work there, and deal every day as the Federal

representative at Los Alamos. But there have been tens and tens

of individuals from headquarters, from other locations around the

complex, outside experts that have come for the various reviews

and evaluations and recommendations since this most recent incident in October.

Mr. MELANCON. Is it feasible or possible—we are looking at a

June deadline, I think Mr. Friedman had said, to try to ascertain

where we were in compliance—that—do you think it would make

any difference if we put the team back down there several days a

week between now and that time to monitor it, to make it progress

faster, to maybe sometimes even point out their deficiencies, which

apparently they are not seeing readily?

Mr. SELL. Well, I think it may well help, but I want to emphasize

that we have a team there that worked for me. I mean, they

worked for the Secretary and I and the Administrator and on down

the chain. And their responsibility is to ensure that the contractor

is performing pursuant to the terms of their contract.

And in addition to that, we have other oversight groups from

headquarters. And we have other oversight groups from the contractor that they have hired, and they will continue to go—I mean,

it is going to take continuous vigilance and monitoring, and perhaps other groups consistent with your suggestion would be helpful

as well in ensuring that we make an institutionalized progress at

the lab.

Mr. MELANCON. The people that are on the DOE team or the people that are responsible from DOE to monitor security, are they the

47

same people that are there when the first breaches occurred and

subsequent breaches?

Mr. SELL. Some of them. But we have made a change at the top

of the NNSA. The new Acting Administrator then subsequently

made a change in the person that is heading the site office at Los

Alamos. And so we are trying to find the right kind of leadership

that can ensure much higher levels of performance at the lab.

Mr. MELANCON. I have a general in Louisiana I can suggest, because it sounds like it is going to take more than just a manager

out there.

And I guess that is the concern that I have is it appears to me—

and this is new to me—that we have rolled a head or two, but the

problem is the tail is wagging this dog. And I just—do you have

any comments? I mean, how deep is our problem, or is our problem—is the problem at the upper levels or security at the lower

levels?

Mr. SELL. Well, it has been suggested, Mr. Melancon, that we

should shoot the dog, and I have to reject that suggestion in the

strongest possible terms. We do have 12,000 individuals at Los Alamos that were there under the University of California. They are

there under LANS and will continue to be there. They are the core

capability of that laboratory. And I do believe that we have deepseated issues that are going to take time. And I would suggest,

with all due respect to our Inspector General, it will take longer

than a year. It is going to take time to change.

But we do have an outstanding new leadership team in place,

and I believe the LANS team is the right team to lead the lab. I

believe Mike Anastasio is the right Director to lead the lab.

I believe we have a new Federal lead there on an acting basis,

Dan Glenn. We have an Acting Administrator, in Tom D’Agostino.

We are putting in place new policies that will actually be incorporated in the terms of the contract by which we can hold the contractor accountable, and we intend to use the authorities in that

contract to the greatest extent possible to ensure compliance and

institutionalization of progress.

That is our approach going forward, and if the tail continues to

wag the dog, then the committee may properly question whether I

am the right one to continue to provide leadership. But I have laid

out our path as to how we are proceeding, and I am confident that

we can make real progress.

Mr. MELANCON. Mr. Chairman, if I could be allowed one more.

Mr. Sell, I guess the last question that I have is when do you

think we are going to get this dog into the kennel?

Mr. SELL. We have made in the last few months substantial

progress. Just for example, we had—there were thousands of open

ports on classified computers when this—the day this thing came

to light.

I have some level of confidence, not supreme confidence, but

some level of confidence that that situation has been rectified; it

will stay rectified at Los Alamos. We are changing our processes,

but it will take—so we will continue to make progress. But the nature of security, particularly at a place as dynamic as Los Alamos,

is constantly evolving, and I don’t think there is ever a point where

we will reach where we say—where we can say we are done and

48

we need not worry about security anymore. We will have to be constantly tending the kennel door to make sure we have got the dog

contained.

Mr. MELANCON. Thank you.

Mr. STUPAK. Mr. Secretary, let me assure you no one wants to

shoot the dog. We want to put that dog on a diet and put him in

a new kennel.

Mr. MELANCON. He needs to be trained.

Mr. STUPAK. Mr. Burgess, questions?

Mr. BURGESS. Thank you, Mr. Chairman.

Mr. Secretary, good to see you again. You mentioned in your testimony, or I think in response to a question, that you were not the

selector in the process of going through the RFP last year. I have

asked this question of other witnesses, but in your opinion the

process was fair and open and above board?

Mr. SELL. Yes.

Mr. BURGESS. Let me ask you this: At Los Alamos what measures are being taken to ensure the laptops and removable media

are being encrypted or sequestered so that sensitive data is not

leaving your site unprotected?

Mr. SELL. Just so I understand, this is a different set of

vulnerabilities as to the encryption of data that is then—you mean

when it is communicated across open lines, or when it is in

laptops?

Mr. BURGESS. Yes. Is it encrypted in laptops to reduce susceptibility to theft?

Mr. SELL. The encryption of classified material on laptops when

they are at a secure facility is a matter that is covered under our

policies, and those policies are those directives that—the manual

which governs that is being updated and will be finalized in the

course of the next few weeks. That governs the exact terms under

which laptops have to be encrypted. But I am sorry, Dr. Burgess,

I can’t give a more exact recitation as to exactly how that is carried

out.

Mr. BURGESS. And will that be something that is universal across

the Department of Energy, or will that be specific for Los Alamos?

Mr. SELL. It will be universal across the Department.

Mr. BURGESS. We heard previous testimony from the other panel

that the concept of at will employment be curtailed, but that really

is not something that is within the purview of the Department of

Energy, is it? That is up to the individual contractor involved?

Mr. SELL. That is something I believe that we largely leave to

the contractor as to the negotiation of employment terms with their

employees.

Mr. BURGESS. When the contract was awarded to LANS a year

ago, it was done so in a belief that it could substantially improve

security at Los Alamos. Do we still believe that?

Mr. SELL. I do.

Mr. BURGESS. And we believe we have in place the metrics by

which we are going to be able to show not just this committee, but

America at large that is indeed the case?

Mr. SELL. We have some metrics, and we are developing additional metrics, and we will develop even further ways of measuring

progress once we have the full recommendations from our two

49

groups that are reviewing the IG’s report and once we put in place

all of the policies going forward. But certainly our ability to measure progress and understand when there are failures or when there

are potential failures before they actually happen or before they get

outside the gates of the laboratory is a very important management

tool that we must have, and I will ensure that we will have it.

Mr. BURGESS. So in your opinion that is what real progress will

look like? Hopefully to us it will look like the absence of breaches,

and we won’t be back here every 6 months covering one of these

incidents.

Mr. SELL. It is—a much higher level of performance must be required. But I would like to just take a moment. I think some context about what our lab does. They generate many secrets. That is

the nature of their business. That is the tools of their trade. And

we talk about 139 vault-type rooms and 3,000 classified computers.

That is the nature of the work that we do. And in order to print

something or to move it around the lab or to store it, it requires

lots of computer capability. It requires ports. It is a very complex

manner dealing with our business. Vault-type rooms——

Mr. BURGESS. Can you then reduce the number of computers

without compromising your business?

Mr. SELL. I don’t know that we can. That is certainly something

we are looking at, and I think it is a sound suggestion. It is a suggestion that has been made internally. But I have not received a

recommendation that we, in fact, can do that. If we can, we will.

But our business at Los Alamos is national security matters. Almost all of it is classified.

And so I just want to try to put this into context that it may not

be as simple as taking 139 vault-type rooms and going to 100. That

may mean that a third of the work that we would like to do can’t

get done.

Mr. BURGESS. Thank you, Mr. Chairman. I will yield back.

Mr. STUPAK. Mr. Sell, if I may, let me just ask you quickly, hopefully we are going to have the Secretary here in March to answer

some questions, but he put out a memo on November 28 after this

incident came to light, and he states that the recent incident at Los

Alamos and the findings of the Inspector General report indicate

there may be significant deficiencies involving the application of

personnel security policies and standards within the Department.

What were those significant deficiencies?

Mr. SELL. Mr. Chairman, I don’t know that I can get into the details of the deficiencies without treading into areas which are governed by the Privacy Act in the instant case.

Mr. STUPAK. Will you stay for the executive session then? We can

ask you the questions then?

Mr. SELL. I will accommodate the committee and you, Mr. Chairman, however you would like.

Mr. STUPAK. OK, because I had a couple of follow-up questions

on that. So allow me to do that in closed session. Thank you.

Anyone else have questions? Mr. Whitfield.

Mr. WHITFIELD. Just one additional quick question. Mr. Burgess

was asking questions about the number of computers. This is a

similar question relating to the separate security area, over 1,700

of them, and I was just wondering have you yourself formed any

50

opinions about to believe that such a large number of geographically dispersed and classified areas increases the vulnerability of

operations? And do you think the areas should be reduced? And

your views on that.

Mr. SELL. Mr. Whitfield, I believe that there may be benefits

from those, and certainly instinctively I would think that we could

perhaps do that. I know that there are views inside our Department that we can do that. We are looking at it. And I know in your

letter of last night you suggested also that we look at it, and we

will do that. We are looking for suggestions and good ideas from

any corners from which they come.

I have not made a conclusion that is going to be possible. But it

may well be.

Mr. WHITFIELD. Thank you.

Mr. STUPAK. Thank you, Mr. Secretary. And, yes, sir. You want

to clarify something?

Mr. SELL. Well, Mr. Chairman, I wanted to take an opportunity

to answer a question which you posed to other witnesses but you

did not pose to me: What is unique about Los Alamos?

Mr. STUPAK. The unique mission that they do there. What is the

unique mission that cannot be duplicated at any of our national

labs?

Mr. SELL. Los Alamos National Laboratory and the men and

women of that lab invented and designed and are responsible for

certifying to this day two-thirds of our strategic nuclear weapons

stockpile. They are the only place in the country today where we

can build a plutonium pit, which is the trigger, in layman’s terms,

for a nuclear weapon. They have many, many other unique capabilities beyond that.

But it is my view that we have to have Los Alamos, and we have

to be successful, but more importantly that we can be successful.

We are not destined to failure. We can be successful, but it is—we

must have it.

Mr. STUPAK. No doubt men and women at Los Alamos are

unique. Whether they work in Sandia, Los Alamos, or Lawrence

Livermore, they are all unique and all talented people, and we

have no problem with that. But we are not going to continue to

have lapse after lapse. They owe it to the American people, not this

committee, but the American people, to guard.

You tell about the most sensitive things that are going on not

only for nuclear or antiterrorism or anywhere else. We cannot have

it going on at the same time going out the back door. That is what

we want to impress upon not only you, but the Secretary and everybody else.

Look at the list here, how many hearings we have had here? 350 million taxpayer dollars spent; the fine was $3 million, less than

1 percent? No wonder there is no accountability. They will just ignore it and continue.

We just want things done and done properly. American people

deserve it. It is the American people who pay for those weapons,

American people that have developed this. And we appreciate everyone who works at those labs, but it is not going to continue like

it has been.

With that, if you have any further comment?

51

Mr. SELL. Mr. Chairman, I agree with your final statement completely, and you have my full commitment for as long as I am in

my position.

Mr. STUPAK. We appreciate that, and we look forward to talking

to you a little bit more in executive session. Thank you.

Mr. STUPAK. We have our third panel. Our final panel consists

of five people: Mr. Thomas D’Agostino, Acting Administrator, National Nuclear Security Administration; Ms. Linda Wilbanks, Chief

Information Officer, National Nuclear Security Administration; Michael R. Anastasio, Director, Los Alamos National Laboratory; Mr.

William Desmond, Associate Administrator and Chief for Defense

Nuclear Security; and Mr. Thomas Pyke, Jr., Chief Information Officer, Department of Energy.

It is the policy of this subcommittee to take all testimony under

oath.

Please be advised the witnesses have a right under the rules of

the House to be advised by counsel during testimony. Do any of the

witnesses desire to be advised by counsel at this time? If so, would

you please introduce your counsel?

Hearing nothing in the affirmative, I take it you do not have

counsel with you.

Please rise and raise your right hand to take the oath.

[Witnesses sworn.]

Mr. STUPAK. Let the record reflect all witnesses answered in the

affirmative.

Mr. D’Agostino, sir, is going to start, please.

TESTIMONY OF THOMAS P. D’AGOSTINO, ACTING ADMINISTRATOR, NATIONAL NUCLEAR SECURITY ADMINISTRATION

Mr. D’AGOSTINO. Thank you, Mr. Chairman. My name is Thomas

D’Agostino, and I am the Acting Administrator of the National Nuclear Security Administration within the U.S. Department of Energy, a position I have held since January 20, 2007. I am also the

Deputy Administrator for Defense Programs.

I want to personally assure you that with respect to the current

issue of security at Los Alamos National Laboratory, that we are

committed to providing the most effective security possible for nuclear weapons, nuclear material and classified information both at

the laboratory and at each of our NNSA facilities.

The primary reason I am acting as Administrator is because of

the Secretary of Energy’s dissatisfaction with the continuing series

of security incidents. When the Secretary does not see results he

expects, he takes action. The most recent of these was his request

for the resignation of the former NNSA Administrator, Linton

Brooks.

Mr. Chairman, the Secretary and the Deputy Secretary expect

me to be active in running the NNSA and to be accountable for our

performance and make decisions when they need to be made. That

is exactly what I am doing.

I have made it clear to Los Alamos National Security, or LANS,

the contractor who manages the laboratory, that we are expecting

them to take appropriate action against any LANS employees determined to be accountable for most recent security incident. LANS

52

has reported that formal disciplinary action will be taken against

24 employees.

I have decided to spend my first 2 days on the job as Acting Administrator in New Mexico both visiting the laboratory itself and

the Federal site office responsible for overseeing the laboratory to

get firsthand, upfront and personal information that I can use. I

did that last Monday and Tuesday.

I stressed to them my expectations concerning oversight of the

laboratory activities and the importance of accountability and

meeting our commitments.

I’ve directed that Dan Glenn, one of the Department’s most experienced site office managers from the Pantex site in Texas, to serve

as the acting Federal site office manager until a permanent replacement is found. Mr. Glenn has extensive nuclear safety and security experience at our most sensitive site. In fact, Pantex is the

only NNSA facility where we have complete nuclear weapons on

site. Dan has my complete confidence.

Dan spent last Thursday and Friday at Los Alamos assessing

current activities and operations at the Los Alamos site office, and

he is assembling a team to aggressively oversee laboratory security

and safety programs and to recommend not only immediate, but

near-term fixes, fixes that we can implement and take action on

right away. Dan will take over Los Alamos site office on February

5.

With respect to our specific interactions with LANS, management and operating contractor on the latest security incident, all

contractual options for both penalties and motivation are under

consideration and on the table. I want to assure you that this is

not an academic exercise. With a nominal fee at stake, the maximum available annual fee with security and safety as key factors

is over $70 million. The majority of LANS’s fee is at risk, as is

their ability to earn additional award terms—or years—added on

to the contract. The combination of award fee and award term are

very powerful incentives on performance, and I intend to fully utilize these tools that are available to me in managing this contractor.

The Department is also conducting a review of the incident to determine whether notice of violation will be issued, as was discussed

earlier.

Finally, the contract has a clause called Conditional Payment of

Fee, Profits, and Incentives. This clause allows for the complete

elimination of fee in the event of serious safety or security events

that result in a loss of life and irrecoverable harm to the security

of the United States.

On January 3, 2007, we took further direct action and unilaterally notified the LANS Board of Governors Executive Committee

that I was calling a session in Washington the following week. On

January 10, I met with the executive committee and told them of

my specific concerns on how they have handled the current security

incident at Los Alamos and my expectations for performance. The

Secretary and the Deputy Secretary joined me to emphasize the seriousness of the situation.

The executive committee will provide me with their plans on how

they will address the current situation and improve the culture at

53

the laboratory. In the coming months I will be routinely meeting

with members of the executive committee to hear how they are progressing with their plans. Additionally, I have asked the chairman

of the committee, Mr. Gerald Parsky, to call the Secretary on a regular basis, probably monthly, maybe more like on a 5-week basis,

to update him personally on the actions that the board is taking

to reach back to the corporate parents and to support improvements at the laboratory.

In closing, Mr. Chairman, I commit to you that if the current laboratory management team is unable or unwilling to change the security culture at Los Alamos, I will use every tool available to me

consistent with the terms of the contract to effect the kind of positive changes I expect and we deem necessary for our taxpayers.

Thank you, and I would be pleased to take any questions the

committee may have.

[The prepared statement of Mr. D’Agostino appears at the conclusion of the hearing.]

Mr. STUPAK. Mr. Desmond, your opening statement.

Mr. DESMOND. Mr. Chairman, I do not have an opening statement.

Mr. STUPAK. Ms. Wilbanks, opening statement.

TESTIMONY OF LINDA WILBANKS, CHIEF INFORMATION

OFFIER, NATIONAL NUCLEAR SECURITY ADMINISTRATION

Ms. WILBANKS. Chairman Stupak, Ranking Member Whitfield

and members of the committee, good afternoon. I am Dr. Linda

Wilbanks, the National Nuclear Security Administration Chief Information Officer.

Thank you for the opportunity to discuss the cybersecurity incident at Los Alamos National Laboratory and the actions NNSA has

taken to prevent similar incidents. As CIO, I am responsible to the

Administrator for cybersecurity, specifically policies and procedures

to ensure the security of the information and technology as it relates to the NNSA mission and to enhance our ability to protect the

classified, sensitive and unclassified information systems.

I came to NNSA after almost 3 years at Goddard Space Flight

Center as a CIO. I have over 30 years experience in information

technology, a bachelor’s degree in mathematics, a master’s degree

in engineering and a doctorate in computer science.

When the recent incident was reported, at my direction the

NNSA Cybersecurity Program Manager and the Director of the

Diskless Workstation Task Force immediately flew to Los Alamos

with two members of the DOE cybersecurity team. Their objective

was to learn as much as possible about the incident from the

cybersecurity perspective and determine if any of the contributing

factors could put LANL at further risk or they could take place at

other NNSA sites.

I also traveled to Los Alamos and met with the cybersecurity personnel responsible for the Los Alamos computer systems to further

understand the issues. We quickly identified two issues: the accessible USB ports and the cybersecurity plan that did not address the

specific risks of the system and was incomplete, which contributed

to the system’s vulnerabilities.

54

The Los Alamos incident occurred when a trusted insider maliciously decided to use a personal device to electronically remove

classified material. The cybersecurity plan allowed for the cages to

be unlocked with exposed USB ports because the servers were in

a secure room with limited access by people with clearances to access the classified material.

As a result of this incident, we have taken a number of actions

to strengthen the cybersecurity at Los Alamos and all NNSA sites

addressing the cybersecurity root causes that allowed this incident

to occur.

As a result of the incident, I immediately required that all NNSA

sites identify the open ports on classified systems and determine if

they needed to be open or could be permanently disabled.

We purchased an enterprise license for software to monitor open

port activity. All sites, including Los Alamos, are now in compliance with any ports that can be used to transmit data being sealed

or monitored.

The Designated Approving Authority, the DAA, is responsible for

approving an IT system for operations by signing the cybersecurity

plan that states how the system will be in compliance with DOE

and NNSA policy. I have temporarily reassigned the DAA from the

Sandia site office to Los Alamos to strengthen the cybersecurity

there. I have directed the DAAs at all NNSA sites to review the

cybersecurity plans, and I hold them accountable to ensure that

those plans now address the specific risk of each system and to

identify and rewrite the plans with omissions such as those that

allowed the incident at Los Alamos.

I have increased the funding to Los Alamos to hire three

cybersecurity experts to support the Federal activity there. I have

assembled a team of eight cybersecurity experts from headquarters

and NNSA and had them inspect all the vaults at Los Alamos to

determine if they were in compliance with the Department’s directive to close ports. The team initially found areas of noncompliance;

however, when reconvened on the site this past week, they inspected all vaults and are now in compliance.

I further directed the team to inspect the cybersecurity implementation at all NNSA sites. Those inspections will start in February and conclude in April when the team revisits Los Alamos.

My office has worked with the DOE CIO, Mr. Tom Pyke, to identify areas where policies and procedures are needed to strengthen

cybersecurity and to aggressively implement them as quickly as

possible. NNSA is responsible for over 70 percent of the classified

networks within the Department. We take this responsibility very

seriously, and maintaining the security of the classified networks

is our highest priority.

Because of the dynamic nature of cybersecurity, no one can guarantee there will never be another cybersecurity incident at any

NNSA site. It is not possible to have perfect and complete security.

We live in a world where hacking into Federal systems is a hobby

of many students and many highly paid professionals. We are

using every tool available and have put in place strong

cybersecurity policies to ensure this type of event does not happen

again.

55

NNSA is working very diligently to maintain a secure environment for our information and that of the Department. We work

closely with our sites to identify the risks, and we are moving

ahead in many areas, and we are making progress.

I am happy to answer your questions, sir.

[The prepared statement of Ms. Wilbanks appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you.

Mr. Pyke.

TESTIMONY OF THOMAS N. PYKE, JR., CHIEF INFORMATION

OFFICER, U.S. DEPARTMENT OF ENERGY

Mr. PYKE. Good afternoon, Mr. Chairman. My name is Tom

Pyke. I am the Chief Information Officer at the Department of Energy. I came to the Department in November 2005 and have given

a high priority to revitalizing the management of cybersecurity

within the Department.

Over the last year, DOE has undertaken a major effort to improve our cybersecurity. We developed a plan to update departmental cybersecurity directives and to issue guidance in specific

high-priority areas. In December 2006, the Deputy Secretary

signed a new DOE cybersecurity departmental order which established a new governance structure for cybersecurity program manager. The order directs the use of a risk-based management approach and makes clear assignment of responsibility to the Under

Secretaries and other senior officials to oversee cybersecurity management within their organizations, including the field organizations under their jurisdiction.

The Under Secretaries have accepted this enhanced role and are

working hard to strengthen the management of cybersecurity. This

order is a key part of the institutionalization of forceful new direction to the Department. As referred to earlier by Deputy Secretary

Clay Sell.

The new order provides for timely issuance of urgently needed

cybersecurity guidance. To date, I have issued 20 cybersecurity

guidance documents, and the Office of the Chief Information Officer continues to develop guidance in accordance with the plan developed last year. I have already issued guidance on certification

and accreditation of systems and on system configuration management, both directly relevant to the recent Los Alamos incident. We

have also issued special guidance on the protection of personally

identifiable information and on the disposal of disk drives.

Finally, directly to the concerns being addressed at this hearing,

we have recently completed a planned DOE National Security Systems Controls Manual. It is now in final review in the Department.

We have been able to incorporate actions in the manual based on

a number of the lessons learned from this incident.

I would be pleased to respond to any questions you may have.

[The prepared statement of Mr. Pyke appears at the conclusion

of the hearing.]

Mr. STUPAK. Mr. Anastasio.

56

TESTIMONY OF MICHAEL ANASTASIO, DIRECTOR, LOS

ALAMOS NATIONAL LABORATORY

Mr. ANASTASIO. Chairman Stupak, Ranking Member Whitfield

and other members of the subcommittee, I thank you for the opportunity to speak with you today.

I’m Michael Anastasio, and since June 1, 2006, I have been the

Director of the Los Alamos National Laboratory. I am also President of the laboratory’s new management company, the Los Alamos

National Security, LLC, often referred to as LANS. Previously, I

served our country for over 25 years at the Lawrence Livermore

National Laboratory, first as a scientist and ultimately as the director of that institution.

The security breach at Los Alamos National Laboratory is deeply

troubling. I want to make it absolutely clear to all of you that my

board and I personally find this incident totally unacceptable. It is

precisely because of such incidents that the DOE made its decision

to recompete the contract at the laboratory.

I want to talk with you today in my opening comments about

four main points: First, that we take this incident very seriously,

that we took immediate action upon learning about the issues, that

we bring a different approach to running this laboratory, and that

this incident accelerates our plans to develop a robust security system that handles today’s issues and anticipates the future.

Although this incident occurred only weeks after we took control

of the laboratory, I am responsible for this incident. But even more

importantly, we are responsible for the solution to fix the laboratory with regard to security and other matters. I have detailed in

my written testimony a number of corrective actions that we’ve

taken, and I would just like to cover six of those right now.

We have tightened controls on the ports on all the classified computers. Through our parent organizations, we have tapped into

independent security expertise from across the country. We have

established a new cybersecurity organization that reports directly

to me. Our guard force has significantly increased the number of

searches of laboratory personnel as they leave the site. We terminated the relationship with the scanning subcontractor, and I have

disciplined 24 employees of the laboratory as a result of this incident. We are prescreening for illegal drugs of all new hires and will

be randomly testing the existing workforce.

These steps have already proven effective as we heard DOE and

NNSA have certified last week that all the vault-type rooms that

we have at the laboratory with classified computing are now compliant. But these initial actions aren’t sufficient. We must move beyond the quick-fix, Band-Aid approach that’s been used in the past,

and that means we must now have—address security in a comprehensive and integrated manner that anticipates risks associated

with the inexorable advancement of technology.

There will not be a silver-bullet solution because there are none,

but we have developed a forward-looking approach addressing all

of the elements of enhancements to the security that needs to be

done and do them simultaneously. We will quickly put in place

demonstration projects that create a test bed to try out all these

new security approaches that we have in mind. We will consolidate

10 to 20 of our existing vault-type rooms into one overall facility.

57

In there, we will implement clear policies with advanced technologies and proven behavioral methods. In this way, we will have

a plan that we have demonstrated will work and that we can then

implement across the entire laboratory.

So, Mr. Chairman, in conclusion, the steps that I and the board

are taking are a fundamental break from the past. The LANS partnership brings together expertise and successful performance from

across the Federal and the commercial sectors.

As president of LANS, I report to a very demanding board, a

board that provides a level of oversight, engagement and rigor that

this laboratory has not seen before. I have a brand new management team that I, personally, selected from across our parent companies. The partnership of these four companies gives me a deep

bench of capabilities and personnel that I’m already tapping into.

I’m already seeing evidence of positive change at the laboratory,

and in time these steps will lead to dramatic improvement in the

overall performance of the laboratory. We have taken immediate

action. We have an ambitious and comprehensive plan. We have

extraordinary capabilities to draw upon, and we are working aggressively to execute our plan. All of my leadership team and I,

personally, are deeply committed to the Los Alamos National Laboratory’s success and its essential role in protecting our country’s

national security.

Thank you, Mr. Chairman, and I look forward to answering all

of your questions.

[The prepared statement of Mr. Anastasio appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you. And thank you all for your testimony.

Mr. Anastasio, you said you are responsible for what happened

at Los Alamos. Then what’s been the consequences of accepting

that responsibility? Has anything happened to you?

Mr. ANASTASIO. Has anything happened to me?

Mr. STUPAK. Yes.

Mr. ANASTASIO. I’ve been working a lot longer hours, sir. Do you

mean if I’ve been disciplined in any way?

Mr. STUPAK. Yes.

Mr. ANASTASIO. I’ve been certainly in contact with my board from

the very beginning of this incident, and they’ve made their expectations very clear to me. The board also talked with NNSA and the

Secretary, and based on that conversation, they’ve passed along

those expectations, and I’ve heard the same from the Department

as well, personally. It’s been very clear to me what everyone expects of us at the laboratory, and——

Mr. STUPAK. Well, what are the lessons you have learned since

then, and what is being done to ensure this incident doesn’t happen

again?

Mr. ANASTASIO. Well, as I tried to detail for you a little bit in

my oral testimony and more so in the written, it’s that we’ve taken

a number of aggressive actions.

Mr. STUPAK. Such as?

Mr. ANASTASIO. As soon as I learned about this incident, within

hours we had already started to control the ports on classified computers. We started taking that action immediately.

58

Mr. STUPAK. We’ve heard that since 2000. We’ve had eight hearings on cybersecurity since we first brought it up in 2000, so excuse

me, but I don’t—what’s going to be different? We’ve heard all this

before. This is my eighth hearing now on this.

Mr. ANASTASIO. We have actually succeeded in doing that, and

the recent audit confirms that, in fact, we have complied with all

the direction we’ve been given.

Mr. STUPAK. The audit from the Inspector General, Mr. Friedman, said the core security at Los Alamos is in shambles, the core

security. I’ll read it for you exactly if you want it, because I asked

him about it, and it was the very basis of Los Alamos; the very core

of their security was not good.

Mr. ANASTASIO. Mr. Chairman, I find this incident and the issues

around it totally unacceptable. My board finds that totally unacceptable. They’re going to hold me accountable to fix this.

Mr. STUPAK. And we find it totally unacceptable.

What are we going to do to fix it?

Mr. ANASTASIO. I understand that, and we are in the process of

doing that. And so we’ve taken a series of immediate actions which,

I think, address the immediate concerns and risks at the laboratory; and, at the same time, we have a long-term plan that will get

us to a point where we can be out in front of these issues—not always playing catch-up that we’ve done in the past—and that will

allow me and the American people and you, the Congress, to have

confidence in this laboratory again.

The Department recompeted this contract, we understand, very

well. They recompeted this contract because of these issues, and I

understand that the reason I’ve been brought in and my team and

this new contractor is that we need to fix these and the other

issues that are going on at the laboratory. And that’s what I’m here

to commit to you to do.

Mr. STUPAK. The Inspector General’s report I will quote now,

Our review revealed a serious breakdown in core laboratory security controls. In

short, these findings raise serious concerns about the laboratory’s ability to protect

both classified and sensitive information systems.

So that’s the challenge you have.

Ms. Wilbanks, at Los Alamos, sensitive, unclassified computer

systems, are they adequately protected from today’s threat? You

mentioned hackers always trying to get in.

Ms. WILBANKS. The unclassified, sir?

Mr. STUPAK. The unclassified. ‘‘Sensitive, unclassified,’’ they’re

called.

Ms. WILBANKS. While we do not put as much attention on those

systems as we do the classified systems, sir, I do believe they are

adequately protected. The 25,000 systems that were referred to by

Mr. Podonsky, they are C&A’d under the NIST provisions.

Mr. STUPAK. Sure. Would you bet your job on that all 25,000 are

secure?

Ms. WILBANKS. I can’t guarantee what a hacker will do and what

the new technology will be, sir.

Mr. STUPAK. OK.

Ms. WILBANKS. I am doing everything in my power, sir, to make

that guarantee to Mr. D’Agostino.

59

Mr. STUPAK. OK. In your testimony, you state ‘‘We have since secured all USB ports at all NNSA sites and are reviewing all

cybersecurity plans to ensure they address the specific risks for

that system. This type of incident, the undetected transfer of classified information to a portable device, could no longer occur at any

NNSA site.’’

So let me ask you: Why wasn’t all of this fixed prior to this incident?

Ms. WILBANKS. Actually, at some of our sites, sir, it was fixed.

Mr. STUPAK. Right. But not at all of them, obviously.

Ms. WILBANKS. That is correct, sir. At a meeting of all of the

DAAs from the sites in November, the ‘‘open ports fine’’ issue was

brought up.

Mr. STUPAK. Sure, that’s November, but wasn’t that really one

of the primary reasons the lab was shut down in July 2004?

Ms. WILBANKS. I was not here then, sir. I’m sorry.

Mr. STUPAK. Did you ever review the report in 2004 and see

what was required for cybersecurity at the lab’s computers?

Ms. WILBANKS. Yes, I did, sir, and there was very minimal in

there for cybersecurity.

Mr. STUPAK. OK. Hopefully, I’ll have some time for some followup because I would follow that up, but my time is up.

Mr. Whitfield.

Mr. WHITFIELD. Thank you, Mr. Chairman, and I thank the witnesses for their testimony today.

Mr. Anastasio, you were the Director of Lawrence Livermore, I

think you said in your testimony.

Mr. ANASTASIO. That’s correct, sir.

Mr. WHITFIELD. For how many years?

Mr. ANASTASIO. Almost 4 years.

Mr. WHITFIELD. And you’ve been here now for about 7 months at

Los Alamos?

Mr. ANASTASIO. Since June 1, that’s correct.

Mr. WHITFIELD. Well, you might have some unique perspectives

on this that we’ve been asking a lot of people, and I read this comment that said LANS’ volume of classified holdings is unnecessarily

large, conducted in too many security areas, involving too many

people, and is spread out over too large of an area.

Would you agree that that assessment may give a synopsis of the

primary differences in Los Alamos and Lawrence Livermore and

would explain why security is such a challenge at Los Alamos?

Mr. ANASTASIO. Well, I would agree those factors add a challenge

to Los Alamos, but I believe the—one of the fundamental issues at

the laboratory right now is that there is unclear, complicated policies which are inconsistently applied across the laboratory. And of

course one of the reasons for inconsistency is the fact that there are

so many different locations. But in the past, the laboratory has—

each organization has implemented their own version of the overall

policies, which led to inconsistency; and I would also argue that the

policies are overcomplicated and sometimes inconsistent, so we

have not been enabling our employees to be a success. What they

see is confusing. They don’t know what is allowed and what’s not

allowed. So that’s one of the things that was in the core approach

that we’ve taken to fix the laboratory. But at the same time, we

60

are also looking to consolidate the number of vaults, to bring those

down. The laboratory, before we arrived, has done a lot to reduce

the total number of accountable, removable, electronic media, a

number of documents, so I think these are all approaches to an

overall plan that we’re putting together.

Mr. WHITFIELD. So, the confusion in policy, is that partly the responsibility of the Government and the holder of the M&O contract?

Mr. ANASTASIO. Well, certainly, we are driven by the policies that

come from the Department through our contract, but I believe my

responsibility goes beyond that.

My job is to make sure the laboratory is secure. I have to be compliant with the policies, but if that is not sufficient, I have to take

further action. I believe that——

Mr. WHITFIELD. But you found a lot of things wrong with the policy and the confusion in the policy when you arrived there. I mean

there obviously was room for improvement.

Mr. ANASTASIO. Yes, there’s certainly room for improvement, and

we’re off dealing with that and trying to——

Mr. WHITFIELD. Now, why would we expect that there would

really be a great improvement when the University of California

had responsibility for 64 years prior to the new M&O contract, and

now they are a 50-percent stakeholder in the new contract?

Mr. ANASTASIO. Well, I think there’s a number of reasons why

you should have confidence.

This is a new team. First, we have a board of directors that we’ve

never had before who are very demanding.

Mr. WHITFIELD. And who is on the board of directors?

Mr. ANASTASIO. There are 11 members of the board of directors—

six from the parent companies and five from the outside—outside

world.

Mr. WHITFIELD. And the parent companies would be the University of California, Bechtel, and who else?

Mr. ANASTASIO. BWX Technologies and Washington Group International.

Mr. WHITFIELD. Now, what is the Washington Group International? Who is that?

Mr. ANASTASIO. I’m sorry. I’m not sure what you mean by that.

Mr. WHITFIELD. I’m not familiar with that.

Mr. ANASTASIO. The president of that is Presray.

Mr. WHITFIELD. What is the experience of that company? Where

does that come from?

Mr. ANASTASIO. Oh, they are involved, for instance, with the Savannah River site. They are a major part of that contract. They are

at the WIPP site. Those are a couple of places. They have a lot of

expertise in nuclear—nuclear facility management.

Mr. WHITFIELD. But the board is composed of six members from

those four entities?

Mr. ANASTASIO. That’s correct, sir.

Mr. WHITFIELD. And then five members outside of those?

Mr. ANASTASIO. That’s correct.

Mr. WHITFIELD. Who selected the board members, the five that

are outside?

61

Mr. ANASTASIO. The six members on the inside from the companies, yes.

Mr. WHITFIELD. OK, and those five, what companies do they represent?

Mr. ANASTASIO. We have one for oversight from

PricewaterhouseCoopers for financial oversight. We have someone

from Stanford. We have a former admiral, et cetera.

Mr. WHITFIELD. And the board meets how often?

Mr. ANASTASIO. The board normally meets quarterly but whenever they need to. So we’ve had quite a number of meetings, both

formal meetings—but I’m in constant conversation on the telephone with the key members of the board whenever that’s necessary.

Mr. WHITFIELD. Now my time has expired. I just have one quick

question.

As a result of the most recent breach, the 1,500 and some documents that were a problem, as the director of Los Alamos, representing the president of the new consortium, would you expect

that the Government would penalize your company financially for

that breach?

Mr. ANASTASIO. Oh, I certainly understand that part of our fee

or, ultimately, all of our fee could be at risk for this or any other

incidents that go on at the laboratory. We understand that very

well.

Mr. WHITFIELD. OK. Thank you.

Mr. STUPAK. The gentlewoman from Colorado.

Ms. DEGETTE. Thank you very much, Mr. Chairman.

Mr. Anastasio, I wanted to follow up on some of the ranking

member’s questions because you successfully ran Lawrence Livermore for a good number of years, and I’m wondering if you could

just tell me very briefly what is it that’s so different at this facility.

You said a minute ago there’s unclear competing policies that are

applied inconsistently. Are there other things?

Mr. ANASTASIO. Certainly things that the ranking member identified are issues as well, the fact that it’s physically spread out——

Ms. DEGETTE. The physical layout.

Mr. ANASTASIO. Also, there’s a history at the site of each organization having a lot of autonomy to implement the specifics in their

own work area. All of these things lead to some of these challenges

that we face.

Ms. DEGETTE. How’s the morale out there?

Mr. ANASTASIO. Well, the morale of the employees—they are

really—I think it’s improving. They’ve been through a lot of controversy over the last years. They understand, because of the contract competition, that change is happening and it needs to happen,

and I think they’re very, very committed to their mission.

Ms. DEGETTE. Do you think that they’re committed to complying

with security procedures?

Mr. ANASTASIO. I think the employees are very committed to do

their job very well, including their security responsibilities.

Ms. DEGETTE. And is that a change in attitude? Well, you’ve only

been there since June.

Mr. ANASTASIO. Yes. I can’t say how much there’s been a change

in attitude.

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Ms. DEGETTE. I’ll be frank. When we were out there a couple

years ago, when Mr. Barton and I were there, we got the sense

that part of the problem was that many of these high-level employees felt like these were—these security procedures were ridiculous,

and they didn’t really want to comply. Have you found some of that

attitude?

Mr. ANASTASIO. The attitude I found is, first, a very loyal commitment to their country and their mission but also a confusion

about what standard they’re being held to. And so they want to

comply, but they’re not clear what they’re supposed to——

Ms. DEGETTE. And this is what you were talking about, the unclear, competing policies applied inconsistently?

Mr. ANASTASIO. Yes. And I think one of the things we’re trying

to do is, as we define the overall goal and policy we want them to

achieve, we’re trying—we’re involving some of the employees in developing the implementation plan. That way, they’re there from the

beginning. Now, they don’t get the final choice of what that plan

is, but they’re part of that discussion so they understand why the

policy is in place and how it’s implemented.

Ms. DEGETTE. Right. Let me ask you this. Mr. Friedman said

that he felt like we should give the agency until June, which would

be your 1-year anniversary, to fix this.

Can you fix all of these problems by June, and are you willing

to commit to that today?

Mr. ANASTASIO. I would agree with the deputy director that we

are off fixing them right now. We have been fixing these problems

ever since the incident occurred, that we are making progress every

day.

Ms. DEGETTE. OK. My question is can you do it by June, ‘‘yes’’

or ‘‘no.’’

Mr. ANASTASIO. I think this is a continuous challenge that we

have to be on top of every day from now until——

Ms. DEGETTE. Can you make substantial progress by June?

Mr. ANASTASIO. Absolutely, we can make substantial progress by

June.

Ms. DEGETTE. OK. Thanks. I just have a quick question for you,

Mr. D’Agostino.

In the binders of this Fiscal Year 2000 Performance Evaluation

Plan—I’m sure you’re familiar with that plan——

Mr. D’AGOSTINO. Yes, ma’am.

Ms. DEGETTE. In part of that plan on page 5 is performancebased incentives. We’re a little confused up here. Mr. D’Agostino

testified about everybody now understands that there are incentives under this new contract.

We’re a little concerned about, if we wanted to take some kind

of punitive action if these problems aren’t fixed, how much we

could penalize the management by. Is it the entire $73,280,000 or

some other number of that?

Maybe you can quickly explain that to me.

Mr. D’AGOSTINO. Yes, ma’am. Thank you for the opportunity to

do that. A couple of points.

The one is there’s the clause I mentioned during my oral testi- mony, conditional payment of fee. It puts that whole $73 million at

risk.

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Ms. DEGETTE. OK. So, if we wanted to, we could penalize them

that whole amount?

Mr. D’AGOSTINO. Yes, ma’am, but there are conditions associated

with the contract, associated with the level of severity and——

Ms. DEGETTE. Whose department is that?

Mr. D’AGOSTINO. I would go through the contracting officer, is

my——

Ms. DEGETTE. Who determines the level of severity?

Mr. D’AGOSTINO. There would be an analysis done. The damage

assessment, for example, in this particular incident will be looked

at. If there are further safety and security problems that happen,

those would get added up into the problem, if you will, when we

look at fee determination at the end of the fiscal year.

So what we will do at the end of the fiscal year, which is September 30 of this year, take a look at the laboratory’s performance not

only on this particular security incident but on whether there have

been any safety issues associated with the laboratory, and look at

whether that conditional payment of fee clause actually applies

here.

In addition, your question, ma’am, was referring to this particular page which which broke down the $70-plus million. There is the

fixed fee: 30 percent of about $22 million; and the incentive fee.

Within the incentive fee that you call out ‘‘performance-based incentives’’. There are very specific measures and deliverables under

each one of those performance-based incentives 1 through 13. PBI

No. 5 applies to safeguards and security, which was pointed out

earlier that, if it’s only $3 million of the whole 70, why is that—

why should we feel——

Ms. DEGETTE. Right. So do you think we can only penalize them

$3 million or $73 million?

Mr. D’AGOSTINO. No, ma’am. All of the $73 million is at stake.

I wanted to get to a point. I did spend the first few days of this

job at Los Alamos last week. I got a chance to see firsthand the

conditions that we’ve talked about earlier in the hearing.

Based on that, I directed the manager at the site office, working

with Mr. Desmond, to reevaluate, and we are unilaterally reevaluating this fee allocation within this particular plan. So we have two

approaches, and we will—as I mentioned in my testimony, I’m

going to make full use of the contract because that is the main tool.

It is the tool that we should use and will use in order to make sure

that the message gets across to the contractor.

Ms. DEGETTE. OK.

Mr. D’AGOSTINO. I apologize for taking so long. We are going to

conduct a reevaluation of this allocation, and we will be working

with LANS on that reallocation, but if we don’t come to agreement,

the Federal Government has the ability to unilaterally impose a

change on this allocation.

Ms. DEGETTE. Thank you.

Mr. STUPAK. Mr. Burgess.

Mr. BURGESS. Thank you, Mr. Chairman.

Mr. D’Agostino, just so I’m clear on this, I think Deputy Secretary Sell testified that you were the selector in the RFP process

a little over a year ago; is that correct?

Mr. D’AGOSTINO. Yes sir, that is correct.

64

Mr. BURGESS. You mentioned in your testimony about recompeting the contract. I’m assuming there you were talking about the recompeting of the contract that happened a year ago, not a recompete that’s at some point in the future.

Mr. D’AGOSTINO. I’m actually referring to a recompete if it should

come to this point. If it should come to the point where myself as

the Acting Administrator of the NNSA feels that we have a material breach of the contract or we have a situation where it’s in the

best interest of the Government, I, as the Administrator, through

my contracting officer, have an ability to recompete.

That is not the case right now. I want to make that clear because

I do believe we don’t have—we don’t have all of the analysis together as a result of the current criminal investigation that’s underway.

Mr. BURGESS. But you do have the ability, then, to recompete the

contract.

Mr. D’AGOSTINO. The contract allows me to terminate for cause

of the existing contract.

Mr. BURGESS. Without waiting the 7 years to do so?

Mr. D’AGOSTINO. That’s right. Yes, sir.

Mr. BURGESS. Well, let me just ask you a question then.

We’ve heard all kinds of testimony about the fines levied, whether it’s $3 million or $73 million; and $73 million would be a significant fine to levy against the contractor.

Would they be able to continue in their mission if they were hit

with that level of fine? Would that damage their ability to provide

the services, the security that we’re going to demand of them?

Mr. D’AGOSTINO. I believe that if I were to decide today that I

wanted to levy, and I had all of the data with me today that it

would be a bad management decision to make that move right now

before the fiscal year is over. I have complete faith and confidence

in Dr. Anastasio. I understand the plans he’s putting in place. He

does take this seriously. He has taken specific steps. There are obligations on the part of the Federal Government as well, and I’m

making changes on that particular side. But I do believe that it

would be irresponsible and a bad management move from my years

of managing organizations, before the fiscal year is actually over,

to make that decision.

So, to answer your question, I wouldn’t do it at this point, but

what’s clear is the fee is an amount of resources that are set aside.

Mr. BURGESS. Well, let me just interrupt you then.

As far as just the management aspects of it, we had a team that

was on site for over 60 years. I’m relatively new, but it sounds like,

on this committee, we’ve been dealing with the same sort of problem over and over again. I don’t know whether they’re interrelated

or not. I’ve got to assume that a laser injury of the eye is not related to the removal of a thumb drive, is not related to the guy getting beat up at the bar, but still there are all these things that

keep coming up.

How good a management decision is it to continue on with the

same group that has brought you these troubles in the past, and

should we not have been able to anticipate a subsequent breach because of the behavior that at least has been exhibited since 1999?

65

Mr. D’AGOSTINO. Sir, I’d like to address that in two ways. One

is to make sure that it’s clear that the same organization is not

running this laboratory. It’s clear that the proposal that I reviewed——

Mr. BURGESS. Has the culture actually changed then since the

awarding of the contract?

Mr. D’AGOSTINO. I would say I don’t know the answer to that

question, but here’s what I will——

Mr. BURGESS. I hope you find out quickly.

Mr. D’AGOSTINO. That’s exactly right.

The LANS executive committee knows. The Executive Board of

Governors, the executive committee on the board, truly understands, because I put this in writing, that I don’t believe this is just

a matter of, well, let’s straighten out our policies and procedures,

do a couple of checks and follow up, and everything will be all

right.

My job as a manager is to set expectations, to man performance

and then follow up and use the tools that I have. This structure

actually allows me the opportunity to do that. Never before has the

Department had this much money on a contract.

Mr. BURGESS. And I hope you have the courage to enforce that.

Ms. Wilbanks, let me just ask you briefly. You used the word

‘‘malicious’’ in your testimony. Did I understand that accurately?

Ms. WILBANKS. Yes, sir.

Mr. BURGESS. So this person willfully downloaded material, took

it back to her living quarters. What would be the—if I’m going to

do something maliciously, presumably I have a reason for doing it.

Have you explored that? Do we know what that answer is or is

that still locked up in the FBI report?

Ms. WILBANKS. I believe it’s part of the FBI investigation, sir.

Mr. BURGESS. And at some point, again, Mr. Chairman, that information is going to be shared with us?

Mr. ANASTASIO. Mr. Chairman, Congressman, if I could try to answer that briefly, in all the conversations that I’ve had with the

FBI, they’ve given me no evidence that anything’s happened beyond taking that material to her home.

Mr. BURGESS. But there must have been some financial incentive

or wanting to damage someone. I mean you don’t just do something

like that on a whim, or at least I can’t believe that you would.

Mr. ANASTASIO. Certainly, the FBI is the one that can answer

that in better detail, but what they’ve expressed to me in my variety of discussions with them is they have no indication that she did

anything beyond what was reported in the press.

Mr. BURGESS. But, again, the motive—I mean the laser injury to

the eye, OK, that was an accident; getting beat up in a bar, that’s

bad judgment; but taking material from the server back to your living quarters—I mean there’s got to be a reason why someone would

engage in that type of activity. It was either for sale or to damage

someone else. But again, we don’t know the answer to that at this

point.

Mr. ANASTASIO. But what we are working hard to do is make

sure that never happens again.

Mr. BURGESS. And I would very much like an answer as to why

it happened in the first place.

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Do we get another round?

Mr. STUPAK. We’ll just do one more question or so.

To get back to the FBI, we talked a little bit off the record there.

We’ll try to have them come in and give us a briefing, a members’

briefing, on the status there to answer some of your questions.

Mr. Melancon.

Mr. MELANCON. Thank you, Mr. Chairman.

Mr. Anastasio, you talked earlier about disciplining about 20-

some-odd people. What were the violations that you disciplined

them for?

Mr. ANASTASIO. We did a very extensive review with a detailed

look at all the incidents going back to over a year and a half ago

when this project was first set up. The conditions of security that

were built into the planning that they did, all the way through the

activities, up until—up until the recent times, and in that, there

were a variety of people that were disciplined, either removed from

their job or other forms of discipline for all of the different sorts

of things that went on, which were bad judgment on the part of

employees, bad policies and procedures that were in place and

things of that nature.

Mr. MELANCON. Can you give me an illustration of what, maybe,

the worst one was or one of the worst ones?

Mr. ANASTASIO. I think the worst problem was the way the security was set up for this particular project. The people who set it up

actually were trying hard to be very conscious of security, but they

didn’t—they didn’t make a plan that addressed all of the potential

risks, and the people that were responsible for that security plan

in that vault-type room, I think, were the ones that got the most

severe penalty. And then the second-most, I would say, was the—

was the cybersecurity team that was responsible for the overall

policies of the institution.

Mr. MELANCON. Of the 20-some-odd, how many did you fire?

Mr. ANASTASIO. Three were removed from their assignments.

Many of the people who were responsible for this activity were no

longer in the same assignment when we came on board, so they

had been moved out of their job for a variety of reasons before we

even got there, even though they were responsible a year and a

half ago for—for overall security things.

Mr. MELANCON. Have you been—I don’t know if you’ve been

there shortly, but has the process been to try and ferret out all of

these people from as far back—of course, I don’t know how far back

you go.

Mr. ANASTASIO. Yes, we went back to the very beginning when

the project was set up. We identified all the people who were responsible. The organization itself that was responsible at the time

doesn’t any longer exist. We’ve reorganized, et cetera, but we went

and identified all of the individuals who have been involved over

this entire period of time and, again, went through a very detailed

effort to examine all the issues and who was responsible for them,

and that led to the 24 different disciplinary actions.

Mr. MELANCON. You ran Lawrence Livermore; is that correct?

Mr. ANASTASIO. Yes, sir.

Mr. MELANCON. How many employees are there at Lawrence

Livermore?

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Mr. ANASTASIO. Oh, I guess I don’t remember offhand. I’d say

about 8,000 to 9,000.

Mr. MELANCON. So about two-thirds to three-quarters of what

you have at——

Mr. ANASTASIO. That’s approximately right.

Mr. MELANCON. Yes, and there’s not any security problems that

you experienced there, cyber or otherwise?

Mr. ANASTASIO. There were some security problems at Lawrence

Livermore while I was there. One incident that got quite a lot of

attention was some security keys that got lost. And the approach

I’m taking to the incidence here is the same I took there, which is

to act very quickly and decisively, to find out those who were responsible and make sure that they’re properly held accountable,

and to go build a system that addresses the issues. And I would

say—I’d defer to others, but I’ve been told that Lawrence Livermore now has the model security program for keys in the complex,

and in fact, the lab goes around and briefs the other sites on the

lessons learned and how to do a better job. So I think we responded

very decisively there, and that’s been my intent to do here at Los

Alamos.

Mr. MELANCON. Yes. I guess the thing that I’m having problems

getting my arms around is that this country—of course, I guess,

when you look at Homeland Security, maybe we really do have a

problem, but it’s not at your level. But when you look at the security that is provided in this country and other places by our Government, why is there not some type of guideline, some type of program that we can model after? I mean this is—are we making it

up as we go when we brought these new contractors in?

Mr. ANASTASIO. Well, certainly, there’s an element that’s very

clear on how to do this that has the behavioral issues involved,

that has issues of policies and procedures, infrastructure that we’ve

talked about, how big is your infrastructure, et cetera. But there’s

another piece which I think is a very large challenge for the country and us at the laboratory, which is the advance of technology.

The last time the laboratory reviewed its policies—and we could

argue they should have done it much sooner—these little memory

stick, thumb drives were not in common usage, and yet now that

they are, it’s quite obvious what a risk they are for security. And

so what’s going to be the challenge we have 2 years from now is

we really need to develop a system in place that’s robust against

the future advancement of technology so we don’t have to fix it

after the fact like we’re doing now. And that’s the plan we’re off

doing.

Now, I would argue that, as one of the previous witnesses has

testified, there are a lot of nefarious people out there who are very

sophisticated who are always looking to get access, and that also

concerns me very much. And finding a way to defend ourselves

from those kinds of attacks as well as the kind we’re talking about

here is a deep concern to me.

Mr. MELANCON. Thank you, sir.

My time has expired.

Mr. STUPAK. We’ll move quickly and see if any members have

further follow-up. There’s been some expression of wanting to follow up. If I may, just two questions.

68

Mr. Anastasio, you indicated the thumb drives—when that

cybersecurity was done, thumb drives weren’t in use, but if you’ll

look after January 2005, after they shut down the lab for a while,

five out of 14 points dealt with cybersecurity, dealt with the fact

that these things are accessible. So I would suggest that maybe a

good place to start for security is go back and look—after we shut

down the lab that cost $350 million, that we look at the recommendations that were made and implement those procedures.

Mr. ANASTASIO. I can’t speak to exactly what happened during—

during that shutdown and why they did it.

I can say that we have looked at and have, in fact, developed

plans for all the issues that came up associated with that shutdown, and the corrective actions in place. We have a very effective

system in place now to keep track of those about who’s responsible

to——

Mr. STUPAK. Sure, but in Mr. Melancon’s answer, you said the

last time you had a security review like that, thumb drives weren’t

being used. They were certainly in use in 2005 and long before

that.

Mr. ANASTASIO. Yes, sir, and I guess what I was—maybe to be

clearer, the policies that the laboratory has for cybersecurity were

not changed to be cognizant of the new technology that was available, and that was a mistake on the laboratory’s part, and we’re

all fixing that.

Mr. STUPAK. Ms. Wilbanks, I was asking you some questions

about the cybersecurity and the computer systems, and I’ll ask you

the same thing. Had you reviewed the 2004—or after the 2004 report—recommendations made, and you indicated that there wasn’t

much in there about cybersecurity, but yet five of the 14 recommendations deal with cybersecurity. In fact, as you are the Chief

Information Officer, it even states—and I’m looking at the January

2005 memo. It says that the Office of Chief Information Officer is

leading the effort to implement a cybersecurity enhancement plan

to protect the confidentiality, integrity and availability of all DOE

information systems.

So you certainly, as the Chief Information Officer, have a huge

role to play in shoring up all the classified and unclassified systems, including cyber; is that correct?

Ms. WILBANKS. Yes, sir.

Mr. STUPAK. OK, and with that, Mr. Whitfield.

Mr. WHITFIELD. Thank you, Mr. Chairman.

Just a couple more questions.

Mr. Anastasio, what is—do you have a policy on whistleblowers?

Mr. ANASTASIO. Yes, sir, we do.

Mr. WHITFIELD. OK, and I’m assuming you encourage——

Mr. ANASTASIO. Absolutely. And we have a number of mechanisms in place to allow anybody at the laboratory who has a concern that they feel they can’t discuss with their line management,

they had, as a confidentiality process, a separate group of people

to—to—we also have an ombudsman program. We have a variety

of mechanisms that employees have available to them.

Mr. WHITFIELD. OK, and then as a result of the deputy lab director announcing his retirement, which basically was in violation of

the contract, the contract administrator or contracting officer,

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Edwin Wilmot, wrote a letter to you on December 6, requesting a

briefing on what steps you all intended to take to ensure the retention of all key personnel.

Now, have you all had that briefing yet or——

Mr. ANASTASIO. I have not formally responded to his letter, but

he and I, in fact, just last week talked about this very subject on

the phone, and I gave him an update, and he requested me to send

him some more information which I promised to do right after this

hearing.

Mr. WHITFIELD. OK. And then just one other comment. Ms.

DeGette’s questions made me think of this a little bit.

The base contract, Mr. D’Agostino, is $1.5 billion to $2 billion; is

that correct, roughly?

Mr. D’AGOSTINO. It’s roughly $2 billion, sir.

Mr. WHITFIELD. And that’s basically for managing the site?

Mr. D’AGOSTINO. That’s right. It’s for managing the site. There’s

a fee element associated with that. That’s right.

Mr. WHITFIELD. And then, on top of that, we have a $73 million

pool that can be given for extraordinary performance or incentives

or whatever; is that correct?

Mr. D’AGOSTINO. As a subset, sir, not on top. It’s roughly $2 billion. It depends on how much work we allocate to Los Alamos National Laboratory and the amount of work they have. The laboratory gets its resources from a number of different areas within the

Department and across the Federal Government. About 60 percent

of it, maybe closer to 70 percent of it, actually comes from the

NNSA. Probably about 15 percent of it comes from other elements

of the Department of Energy, and about 15 percent comes from

what we call ‘‘work for others,’’ which is work for other Federal

agencies, the Department of Defense and other intelligence agencies.

Mr. WHITFIELD. But the $1.5 billion to $2 billion, that actually

is paid to the M&O contract holder?

Mr. D’AGOSTINO. Right. That’s the sum total of that text that I

just described to you earlier, and the fee element is essentially an

indirect charge that we allow the laboratory and part of its management to make it an allowable cost, and it’s set aside in a specific

account within the indirect pool, so it’s not in addition to on top

of, sir.

Mr. WHITFIELD. OK.

Mr. ANASTASIO. Excuse me, Congressman, but that $2 billion is

to execute work. That’s well——

Mr. WHITFIELD. OK.

Mr. ANASTASIO. That’s well defined by Congress and by the Department that here’s a set of work activities for us to go and do.

Mr. WHITFIELD. OK. Thank you.

Mr. STUPAK. Ms. DeGette, any follow-up?

Ms. DEGETTE. Ms. Wilbanks, when I was at the facility in 2004,

we were told that all of these ports were going to be secured then.

And then in your testimony today, you said that since this incident,

you’ve secured all USB ports at all NNSA sites and are reviewing

all cybersecurity plans to ensure that they address the specific

risks for the system. This type of incident, the undetected transfer

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of classified information to a portable device, could no longer occur

at any NNSA site.

I guess my great frustration here and, I think, the frustration of

the rest of the committee is that we keep trying to close the barn

door after the horse escapes. Mr. Anastasio says, well, now we’re

drug testing the employees before they get through the security

system. Now you’re in here saying that the ports have been secured.

Why didn’t that happen before this incident? If we knew the

problem existed several years ago, why didn’t it happen?

Ms. WILBANKS. I did not come to the Department of Energy until

the end of October 2004, so I can’t speak to the comment that was

made before I was there.

I can tell you that the ports have been in the process of being

closed, and the sites have been working on it. I don’t have any

other——

Ms. DEGETTE. It took 21⁄2 years to do that?

Ms. WILBANKS. I don’t know, ma’am.

Ms. DEGETTE. OK. When did you say you came?

Ms. WILBANKS. October 31st, 2004.

Ms. DEGETTE. OK. So that was right after we were there, and

so when you came, and then in October of this year, that was 2

years, and the ports still weren’t closed in that time, right?

Ms. WILBANKS. Yes, ma’am. There was no policy or procedure in

place to require the port closure. It was not identified as a high

risk is my assumption.

Ms. DEGETTE. OK. So, if we were told—you would have no

knowledge—so no one told you that that was a high priority?

Ms. WILBANKS. No, ma’am. I was not aware of it.

Ms. DEGETTE. OK. See, that’s why we’re so frustrated is because,

when we were there earlier that year, we were told that that was

a high priority.

I guess this is what you’re talking about, Mr. Anastasio, about

the unclear competing policies.

Thanks. This is what they secure it with, this JB Weld.

Ms. WILBANKS. Yes, ma’am.

Ms. DEGETTE. So how would that take 2 years? Because it wasn’t

a high priority, I guess.

Ms. WILBANKS. That would be my answer, ma’am.

Ms. DEGETTE. I’ll yield to you, Mr. Stupak, for the JB Weld question.

Mr. STUPAK. Thanks for yielding.

I mean, wouldn’t you anticipate—if you’re security experts,

wouldn’t you anticipate that someone’s going to take a thumb drive

and put it in these computers?

Ms. WILBANKS. No, sir. She was in a classified environment that

only cleared——

Mr. STUPAK. No. No. No. I’m not saying this lady.

You’ve got 25,000 computers out there that you say contain sensitive information. If anyone can just take a thumb drive—and I

think Mr. Friedman held it up earlier and said you could take two

file cabinets full of information off of it—wouldn’t you so-called ‘‘security experts’’ think of that? I mean someone thought of it in 04

and told us when we were out there. That’s the part that’s baffling.

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I yield back.

Ms. DEGETTE. I just think, Mr. Anastasio, that you really have

a job ahead of you, and I hope that you and your team can do that

job because I don’t think there’s very long for that to happen before

we do take really drastic changes. We’ve been sitting here for 8

years doing this, and this is a perfect—drug testing is another example. I’m assuming at Lawrence Livermore and at other labs that

drug testing for high-level security clearances is pro forma,

wouldn’t it be?

Mr. ANASTASIO. There was not a policy for drug testing at Lawrence Livermore when I was there. We have a requirement for certain specific activities, the handling of nuclear material, for example, that the Department requires us to have a drug testing program for, and of course those are in place all across all the sites.

What I’ve done at Los Alamos is to say that, actually, I’m going

to have drug testing for all employees whether they have a toplevel security clearance or not.

Ms. DEGETTE. And just——

Mr. ANASTASIO. For anybody who comes to work at my site, I

won’t stand for people using illegal drugs.

Ms. DEGETTE. Well, that’s good. But even under the previous

standards, this gal who was cleared probably shouldn’t have had

that level of security clearance, wouldn’t you agree?

Mr. ANASTASIO. I can’t speak to that. I don’t know. I don’t know

all the background that she had and that led to her—the decision

about the clearance.

Ms. DEGETTE. Thank you.

Thank you. I yield back.

Mr. STUPAK. Mr. Burgess.

Mr. BURGESS. Thank you. And Mr. Anastasio, it just seems incredible that we will drug test our athletes. In fact, we’ve had hearings in this very room about that. We’ll drug test our athletes, and

we’re not drug testing at Lawrence Livermore. I don’t see that as

good information.

Mr. Pyke, let me ask you a question.

The designation of an ‘‘official use only’’ document, what would

be the reason to designate something as ‘‘official use only’’? Would

that mean that we shouldn’t be distributing it, say, around in this

room for everyone to look at?

Mr. PYKE. My understanding is that the ‘‘official use only’’ designation is given when someone has reason to believe there’s sensitive information in there that should not be disseminated broadly.

Mr. BURGESS. Then, of course, you’re aware that one of our staff

members this morning downloaded a document from your Web site

that’s marked ‘‘official use only’’.

Mr. PYKE. His report to me, late morning, is very disturbing to

me, and in fact, I would appreciate it very much—he reported

something similar last year, and I’m told that our staff went out

and assured that the offending material had been taken down immediately, that very day, off of the Web. I gave directions right

after I heard from him this morning that if, in fact, that information is still on the Web, that it be taken down immediately.

72

We have a clear directive to the Department that not only is

OUO and other sensitive, unclassified information not to be placed

on the Web, to say nothing of classified information not to be

placed on the Web, but there is to be a process in place to ensure

regular monitoring of Web sites to ensure that such information

has not crept onto the Web by mistake or otherwise.

Mr. BURGESS. Or otherwise. With all of the talk that we’ve had

this morning, you do have to worry about the ‘‘otherwise’’. Fortunately for you, I’m not smart enough to understand what I’m holding in front of me. I don’t know that I can say the same about the

staff member who downloaded it, and if it’s not off the Web site,

I do encourage that you do that.

Just as a final thought on everything we’ve been talking about

this morning, I hope we don’t focus on so much the individual

worker at Los Alamos, the person who may have given in to a moment of human frailty, but we really have to put those procedures

and the culture in place that just does not allow this to happen in

the future. And heaven help us all if we’re back here doing this

same thing in 6 months’ time.

I yield back, Mr. Chairman.

Mr. STUPAK. OK. Our witnesses, nothing else?

OK. Well, thank you and you’re excused.

We will go into executive session in 2218, Room 2218, in 15 minutes, 2:05, Mr. Friedman, Mr. Podonsky and Deputy Secretary Sell,

if you would, please.

This record will remain open for 30 days. If members have questions they’d like to submit to any of the witnesses, that record will

remain open for 30 days for those questions.

[Whereupon, at 1:51 p.m., the subcommittee proceeded in executive session in room 2218.]

[Material submitted for inclusion in the record follows:]

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ANSWERS TO SUBMITTED QUESTIONS

Please identify exactly how many classified computers there are at Los

Alamos National Laboratory (LANL). Please also describe in how many different locations these computers reside, and how many computers have

open Universal Serial Bus (USB) or firewire ports. Please describe why

each computer is essential and whether there are opportunities to reduce

and consolidate the number of classified computers.

The Los Alamos National Laboratory occupies 43 separate technical areas spread

across an approximate 40-square-mile site. When Director Anastasio testified in

January, we reported an inventory of 3,310 classified systems, 2,990 (89 percent) of

which were networked and 320 (11percent) were non-networked. Of the networked

systems, 430 were servers and 2,560 were user systems. The non-networked systems

consisted of 240 desktop systems and 80 laptop systems. Non-networked systems

are generally utilized in areas where classified network connections are not available or to address information protection requirements. Laptop systems are needed

for experiments conducted in remote regions of the LANL site and to which data

acquisition equipment must often be transported, and also are an essential component for nuclear emergency response activities. When not in use, the non-networked

laptop systems are protected as accountable CREM by storing them in a classified

media library.

As of the time of this response, LANL has 2,912 classified systems, of which 2,653

(91 percent) are networked computers and 259 (9 percent) are non-networked. Of

the networked systems, 450 are servers, and 2,203 are user systems. The nonnetworked systems include 54 laptops, 198 desktops, and seven custom experimental devices. The reduction is due both to conscious decisions made to reduce the

total number of systems (for instance 94 non-networked systems were decommissioned in the first quarter of this year) and changes in our programmatic activities

and their associated needs for classified computing.

Only seven of Los Alamos’s 43 technical areas house classified networked computers. Sixty percent of our networked classified computers are located in a single technical area. Twenty-seven percent are located in two other technical areas and the

remaining systems are found at four other technical areas. Non-networked systems

are found at 14 technical areas; 50 percent at a single technical area, seven percent

at another technical area, and the remaining systems are scattered between the

other 12 technical areas. Nine of the 14 technical areas do not house any networked

computers. Twelve classified media libraries currently store the non-networked classified laptops when they are not in use.

All classified computing is performed in security areas.

As with the above reductions made in the number of classified systems, LANL has

also made major changes in the control of USB and firewire ports since the time

of the incident last Fall. Currently, there are no ′′open′′ USB or firewire ports on

classified systems (with the exception of systems used by the nuclear emergency response teams, which constitute a very small percentage of Los Alamos’ total classified computing resources). All USB and firewire ports have been protected by one

or more methods that have been approved by the NNSA Los Alamos Site Office.

The number of computers at LANL varies with changes in our programmatic efforts. Expenditures for classified computers, as with other equipment, are appropriately justified based on programmatic need. Specific discussion about why each

program requires the specific computers supporting it would render this response

classified. In general, the classified computers at LANL support the following areas:

• Nuclear weapons design

• Stockpile stewardship

• Pit production

• Homeland security and threat reduction

• Nuclear emergency response

• Intelligence community support

LANL is taking a number of actions to further reduce risks. For instance, LANL

is emphasizing standardizing the types of systems used, networking as many of

those as possible to permit consistent system administration, reducing accountable

CREM, monitoring computer activity, and consolidating locations where such services as classified printing, media generation, and matter storage are available to improve the control of system output mechanisms. As an example, the Super VTR prototype is expected to eliminate at least six other vault-type rooms and five classified

media libraries.

Please identify exactly how many classified security areas there are at

LANL. Please describe why each classified security area is essential and

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whether there are opportunities to reduce and consolidate the number of

classified security areas.

Currently there are 1,372 distinct and separate buildings where classified activities occur and where the appropriate levels of security are provided. These 1,372

buildings are located within 108 ‘‘Security Areas,’’ each enclosed by security fences

and access gates. Each building/area where a classified activity occurs has a unique

significance relative to national security that is mission-specific to those locations.

The majority of these buildings contain classified repositories that reduce the necessity and frequency (and resultant risk) of transporting classified documents/materials between locations.

We are continuing our comprehensive review of locations and holdings to ensure

this number is reduced to the absolute minimum consistent with operational requirements.

Please identify exactly how many classified vaults there are at LANL.

Please describe why each classified vault is essential and whether there

are opportunities to reduce and consolidate the number of classified

vaults.

There are currently 129 Vaults and Vault Type Rooms at LANL. Of that, 11 of

those facilities are true vaults. Each Vault or Vault Type Room has a unique significance relative to national security that is mission-specific to the location. Since October 1, 2006 LANL has embarked on a continuing process to consolidate and reduce

the number of these types of facilities. Since then, LANL has successfully reduced

the number of Vaults and Vault Type Rooms from 142 to 129 using the following

criteria:

• Wherever possible and when programmatic compartmentalization responsibilities allow, remove classified material and consolidate into existing Vaults and Vault

Type Rooms.

• In cases where aging infrastructure make compliance with physical security

standards and maintenance of intrusion detection systems cost prohibitive, classified

assets are to be consolidated into newer, compliant Vaults and Vault Type Rooms.

• Those existing Vaults and Vault Type Rooms that only house classified computing infrastructure like server racks and networking systems hardware are to be

given a priority for review for consolidation and reduction.

• LANS is piloting a Super Vault Type Room project where similar classified processing activities are to be consolidated into a single facility. The first Super VTR

will combine at least six Vault Type Rooms into one. As funding becomes available

for additional Super VTRs, additional consolidation will be possible.

These efforts are ongoing and should lead to future further reductions in the number of Vaults and Vault Type Rooms at LANL. To put our efforts in context with

the DOE complex, Lawrence Livermore National Laboratory, Sandia National Laboratory and the Pantex Plant currently manage over 200 Vaults and Vault Type

Rooms each.

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(157)

CONTINUING SECURITY CONCERNS AT LOS

ALAMOS NATIONAL LABORATORY

FRIDAY, APRIL 20, 2007

HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, Washington, DC.

The subcommittee met, pursuant to call, at 9:30 a.m., in room

2123 of the Rayburn House Office Building, Hon. Bart Stupak

(chairman of the subcommittee) presiding.

Members present: Representatives DeGette, Green, Doyle, Inslee,

Dingell [ex officio], Udall, Whitfield, Walden, Murphy, Burgess,

Barton [ex officio], and Wilson.

Staff present: Chris Knauer, Richard Miller, Scott Schloegel, Rachel Bleshman, Lauren Bloomberg, Jodi Seth, Bud Albright, Alan

Slobodin, Dwight Cates, and Matt Johnson.

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. STUPAK. This meeting will come to order. Today we have a

hearing on DOE’s response to ongoing mismanagement at the Los

Alamos National Labs. Each member will be recognized for 5 minutes for their opening statement, and I will begin.

Los Alamos National Laboratories is home to many of our Nation’s most secretive weapons program, yet it is also home to some

of the worst security breaches in our Nation’s history. This is our

13th hearing on security problems at Los Alamos in just the past

8 years.

For 63 years, the University of California operated Los Alamos;

but after numerous high-profile security lapses, the Department of

Energy was urged to competitively bid the contract for operation of

LANL. In June of last year, University of California was again

awarded the contract under a limited liability consortium known as

Los Alamos National Security, or LANS. This committee anxiously

awaits proof that this new contractor will result in significant

changes in Los Alamos and not just put new drapes over a broken

window.

At our January 30 hearing, we investigated the October 2006

case of classified documents that were removed from Los Alamos

by a contractor. We learned at that hearing that the security lapse

would probably have not been discovered if it had not been for a

domestic disturbance at the contract employee’s home. The resulting investigation led to the discovery of drug paraphernalia and the

discovery of classified paper and electronic files at the residence.

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The female contract employee was not adequately watched by her

escort. The employee also had access to open ports on classified

computers which enabled her to download and remove classified

documents.

We heard the Department of Energy’s Inspector General testify

in January that they do not know how much other classified information may have been removed using this gaping hole in security.

We don’t know where this classified material has ended up. We

hope to learn the answers to these questions from the FBI’s investigation, but they will not brief members until their investigation

is complete.

Many of the members of this committee were shocked that the

National Nuclear Security Administration, NNSA, approved a security clearance for this employee, even though she admitted using

illegal drugs within 30 days of her security clearance being approved. We were equally shocked at the fact that there was no follow-up evaluation or testing of this individual after she was granted her security clearance. Apparently, her promise not to use drugs

in the future was good enough for NNSA.

This security breakdown took place against a backdrop of previously degraded security performance. In 2006, the Department of

Energy, Office of Health, Safety, and Security, documented substantial substandard-to-failing performance in 14 of 17 key security

areas at Los Alamos. You can see the 2006 report right over there.

The poor grades were in categories such as classified matter, protections and control, cyber security, and emergency management.

Performance in 2006 had sharply deteriorated since the previous

review in 2002 which had cited serious problems. I will be placing

into the records summaries of these oversight reports. You can see

them up on the screen now.

[Slide shown.]

In today’s hearing, I hope to focus on a number of issues including what is the Department of Energy’s system to issue classified

security clearances? What led DOE to grant security clearance to

an individual who admitted using illegal drugs within 30 days of

her clearance being issued? What lessons are learned from this security lapse? What steps have been taken to correct the security

deficiencies in the Department of Energy and at Los Alamos so

that we do not have to hold our 14th hearing later this year?

At the January 30 hearing, DOE testified that the Secretary convened two task forces, one to examine cyber security and a second

task force to look at personnel security issues raised by the latest

security breach. Today we will hear the results of these task force

reports. A key finding by the personnel security task force was that

at least two additional employees admitted to illegal drug use in

the 30 days prior to security clearance approval. Eighteen other

employees had similar information in this 12-month period between 2001 and 2002 thereby causing DOE to re-examine their security clearances.

We look forward to hearing what Secretary Bodman plans to do

about this and other security problems his task force has uncovered. We also look forward to hearing how he plans to hold the contractors accountable.

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The Department of Energy has various tools, including enforcement action and reducing award fees to hold its contractors accountable. Nonetheless, this committee was disturbed to learn just

this week that the Department of Energy apparently forgot to put

legal requirements in its contract with the lab operator, the Los Alamos National Security. These legal requirements would have obligated the contractor to comply with DOE’s stringent safeguards

and security order known as DOE Order 470. This omission was

discovered after the October 2006 incident which leaves open the

question of whether the Department of Energy contracting officer

may have handed Los Alamos National Security, the partner here,

a get-out-of-jail-free card if and when DOE attempts to bring in enforcement action for multiple security violations associated with

the October 6th incident.

The committee wants to know when the Department of Energy

learned of this contract omission. Was it before last hearing where

DOE officials swore they had all the necessary tools to enforce this

new security standard? If so, why weren’t we informed of this problem? When was the committee going to be told about this issue and

what plans has the Department made to fix it?

After our January hearing, I, along with my Republican colleagues, asked the Government Accountability Office to evaluate

whether the security footprint at Los Alamos is simply too large to

manage the classified information effectively. We also asked GAO

to evaluate the possibility of consolidating and moving classified

operations at Los Alamos to another lab such as Sandia where security is managed more effectively. GAO is moving forward on this

evaluation despite requests by some legislators to do an analysis.

In addition, the committee is reviewing H.R. 703, legislation introduced on a bipartisan basis with my colleagues, Mr. Barton and

Mr. Whitfield, to move responsibility for safety and security out of

NNSA and place it under the direct control of Secretary of Energy.

We would welcome hearing the Secretary’s view on this legislation.

Secretary Bodman and his predecessors have come before this committee with commitments to improve the security culture at Los Alamos. Despite the creation of security czars and task forces, the

end result has been a litany of security breaches and mismanagement. To say the least, the committee is skeptical.

Today, Mr. Secretary, we want to know, what is different? Why

are your proposals more likely to succeed when your predecessor’s

proposals have not? What assurances can DOE give us that these

new reforms will work? What resources, and from whom, will DOE

look to pay for these new security measures at Los Alamos? I can

assure you, Secretary Bodman and the American public, that the

committee will continue its oversight at Los Alamos. I can also assure you that this oversight will continue just as it has in the past

in a truly bipartisan basis. When it comes to Los Alamos and security at nuclear labs, this committee is united in its oversight.

I appreciate the assistance and cooperation of my Republican colleagues led by my friend, Mr. Whitfield, and his able staff.

And with that, I would yield to the ranking member, my friend

from Kentucky, Mr. Whitfield, for his opening statement, please.

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OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

Mr. WHITFIELD. Thank you, Chairman Stupak, and for today’s

hearing to review ongoing security mismanagement at Los Alamos.

Over the past decade, this subcommittee has established a rigorous tradition of strong, bipartisan oversight on DOE security matters, and I am pleased that this committee has continued this tradition with its close attention to ongoing mismanagement at Los

Alamos.

The most recent security incident, which occurred last October,

resulted in the loss of over 1,500 classified documents. As I pointed

out at the January hearing, this incident demonstrates poor security management, lack of formality of operations, and insufficient

oversight that has plagued the lab for decades. Dramatic new ideas

from the Department, from LANS, and from Congress are needed.

At Los Alamos, the security environment is certainly challenging.

Operations are spread out over a 43-square-mile area. The lab has

approximately 15,000 employees. There are more than 2,000 classified computers and 1,774 separate security areas. To give perspective, there are more classified security areas at Los Alamos than

there are total rooms in the Rayburn, Cannon, and Longworth

House Office Buildings combined. Los Alamos has an unnecessarily

large volume of classified information and conducts classified activities in too many areas involving too many people. These factors,

including the geographical dispersions of activities, continue to

make LANL susceptible to security failures.

At the last hearing, I stated that LANS must be held accountable

for the loss of classified documents last October and that it should

pay a price. The Department of Energy must assert its contract

and regulatory authorities to compel greater security performance.

The Department has three primary tools to help compel performance, the enforcement of new information security relations with

strong, civil penalties; the withholding of incentive pay associated

with security performance; and three, the use of the conditional

payment of fee clause in the contract that allows the Department

to withhold up to 100 percent of the award fee.

The Department has not yet finalized how they will use these enforcement tools, but I know members of the committee and in the

Congress will be quite interested in what the final decision will be.

Six months have elapsed since the October 2006 security incident. That is a reasonable amount of time to allow NNSA and

LANS to formulate a plan to help improve security at the site.

Later today, we will hear from Lab Director Michael Anastasio on

the remedial actions he has taken to correct security failures. I

think Director Anastasio’s efforts to date appear to be more responsive than what we’ve seen in the past. I am encouraged by his initial steps to reduce the number of classified vaults at Los Alamos,

and I think LANS has already implemented a few valuable cyber

security improvements at the site. However, it is too soon to say

whether these actions are simply short-term fixes or a commitment

to long-term security improvements. I am delighted Secretary

Bodman has joined us today, and we certainly look forward to his

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views on this very important issue. And thank you, Mr. Chairman.

I yield back my 1 minute.

Mr. STUPAK. Thank you, Mr. Whitfield. Next, turn to the Chairman of the full committee, Mr. Dingell, for an opening statement,

please.

The CHAIRMAN. Mr. Chairman, I thank you, and I commend you

for holding this hearing. Mr. Secretary, welcome.

Secretary BODMAN. Thank you.

The CHAIRMAN. I hope your visit here is pleasant here today.

Secretary BODMAN. So do I.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

The CHAIRMAN. Mr. Secretary and my colleagues, today’s topic is

sort of as what is observed as deja vu all over again. The security

at the Energy Department labs, in particular the one we are discussing today, Los Alamos National Laboratory, is an issue with

which this committee has been involved for more than two decades.

Our colleagues on this committee and I could produce stacks of letters and piles of hearing documents relative to the question of security breakdowns at the Department of Energy and at this unfortunate laboratory in particular. Likewise, we could display a small

mountain of proposals and promises made by lab directors, blueribbon panels, task forces, Secretaries of Energy, and yes, even a

few Presidents to fix the security problems at the labs.

You, Mr. Secretary, are no different than your predecessors, and

you inherited a fine mess out there. You have proposed a number

of changes and recommendations to fix the problems, and we commend you for that; and you’ve convened blue-ribbon task forces to

make these recommendations. For that we are appreciative. I am

sure that we will hear about how everyone takes this matter of security seriously. I am sure that in fact everyone is sincere about

improving security; and I am certain that you, Mr. Secretary, will

propose changes that will make sense.

But before we claim victory in our battle to improve Los Alamos,

we need to look closely at what is being proposed and whether in

fact it differs from what has happened before or what has come before. As President Reagan used to say, trust but verify. As my old

daddy used to tell me, trust everybody but cut the cards. I would

urge my colleagues to do that today. In this regard, I recommend

you pay particular attention to the tools that you, Mr. Secretary of

DOE, actually have to enforce the new security proposals.

I understand that the Department’s ability to assess an effective

fine has come into question in the light of information provided to

the committee this week. The DOE officials who reviewed and

signed the contract on behalf of the U.S. Government were the new

contractors, Los Alamos National Security, apparently omitted the

applicable safeguards and security orders for 13 months. This is

hardly an auspicious way to start new reforms. Although legal implications of this omission are still unclear, it appears there is a serious question as to whether DOE is unable to cite the contractor

for each and every violation of its security requirements. Apparently, applicable security requirements under DOE Order 470 were

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not inserted into the contract until after the violations were discovered. In fact, these requirements were not included in the contract

until after January 25, 2007, a mere 5 days before our last hearing

on Los Alamos. I am curious to know why this information was

withheld from the committee until now. This is certainly not trusting and verifying.

I hope the Secretary abides by this maxim, too. Mr. Secretary,

do not trust everything that you are told. I would observe that we

have been working on Los Alamos for a long time, and our problems with security there have been substantial and have run all

the way from penetrations by foreign countries into the security

there to loss of valuable Government property to problems with regard to stings that were supposed to be held to address problems

of narcotics sales inside the facility and, very frankly, also two

other things including a curious event involving fornication in the

guard towers out there.

Mr. Secretary, I note with both respect and affection that you are

not only requiring briefings from your staff regarding security and

safety issues when you were there but that you also poked around

the basements and nooks and crannies to assure that the situation

with regard to security was going properly. Certainly, Mr. Secretary, we need that kind of approach today. I think we have to

look beyond fines and penalties to fix the problems at Los Alamos.

For that reason, along with my good friend, the chairman of the

subcommittee, our good friends and colleagues in the minority, we

have requested that the Government Accountability Office, GAO,

conduct a comprehensive audit of Los Alamos to determine what

functions are essential at that laboratory. Their report will inform

us of the options available.

Mr. Secretary, I hope that you will assist the committee and the

GAO in this important study and in our efforts to improve security

at Los Alamos and throughout your Department. I thank you for

your presence here. I express to you my affection and respect and

also the hope that you will have success in straightening up something which has defied your predecessors in office in this matter.

I want to thank all of our witnesses for appearing before us

today; and you, Mr. Chairman Stupak, I want to express my particular respect and gratitude to you for what you are doing. Thank

you, Mr. Chairman.

Mr. STUPAK. Thank you, Mr. Dingell. Next we go to Mr. Walden

from Oregon for opening statement, please.

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Mr. WALDEN. Thank you very much, Mr. Chairman. And I, too,

appreciate the continuing efforts in a bipartisan manner of this

subcommittee to try to figure out how to provide full security at

these labs. And Secretary, I want to welcome you as my colleagues

have done and appreciate the work you’re doing on this.

I noted in your testimony that you indicate that you feel like that

significant progress has been made in security at Los Alamos and

yet then you go on to say you’re still not satisfied. I would be curious to know with only 20 months left in office, provided you’re

there to the end, how are we going to get this thing resolved and

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do you think it is possible? We have had, as you know, multiple

hearings over multiple years in both classified settings and nonclassified settings and continue to chase this. And if anybody can

get this fixed, I have confidence that you certainly have the commitment and the ability to get it done. So I will look forward to

hearing that. Before I have held up the J. B. Weld which is the

world’s finest cold glue I guess for households and hobbies. It is

great for farm machinery and equipment. It is also $4.99 at WalMart and was used I believe to plug something in the order of

7,200 USB ports at Los Alamos but only after there had been about

a year of security breach. It seems to me that for $4.99 you can

fix this problem. Maybe it wouldn’t cost that much more to fix the

whole thing. But it has been very disturbing that data can come

and go in and out of the lab, and the most recent examples are

very frustrating for us and I am sure for you, Mr. Secretary.

So we welcome you here today. We look forward to hearing your

comments, and unfortunately they tell us we are going to have a

long series of votes beginning in about 9 minutes. So I am going

to quit and return the balance of my time and look forward to your

comments. Thank you, sir.

Secretary BODMAN. Thank you, sir.

Mr. STUPAK. Thank you. Mr. Green from Texas, opening statement?

Mr. GREEN. Mr. Chairman, I’ll just welcome the Secretary and

submit an opening statement for the record.

PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS

Mr. Chairman thank you for calling this hearing.

I would also like to thank our witnesses, including Secretary Bodman and Los Alamos Director Anastasio for returning here a couple months after our last hearing

to provide us with a status report on ongoing security measures at Los Alamos National Lab.

Given the situation at the national laboratory system, congressional oversight is

a necessity.

Security can be high tech, involving counter-measures for computer hackers and

electronic warfare, or it can be very low-tech, such as old-fashioned human intelligence.

The national laboratories, particularly Los Alamos, have had problems with both

issues, as we see in the reports on Personnel Security and Cyber Security that the

Inspector General has produced.

On the personnel front, this committee is going to be very interested in the ongoing review of security clearances and background checks for all employees in the

DOE national security complex.

We are pleased to see a full review over issues like drug history and the implementation of new drug testing measures.

In addition, we need to ensure the security clearance review is not only looking

at narcotics, since there can be many other security risks as well.

If people working on sensitive national security projects have any kind of major

criminal activity or other issues that could make them a security risk, then DOE

needs to know about that.

Often the lab has taken a reactive security approach, going from one crisis to another trying to prevent the same thing from happening again.

We need a proactive approach that thinks ahead to what other kinds of security

breaches COULD happen, but haven’t happened yet.

On the cyber security front, our committee is looking for a full update on issues

like sealing open USB ports in lab computers, disabling dual use computer ports,

and securing racks of computers with sensitive national security information.

Personnel security and cyber security are related, because sometimes it is just as

important to know who is on the computer system as it is to know who is actually

handling bomb-grade radioactive materials.

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Mr. Chairman, with that I would like to yield back so that we may get to the

question time for the witnesses. Thank you.

Mr. STUPAK. Mrs. Blackburn from Tennessee.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

Mrs. BLACKBURN. Thank you, Mr. Chairman. I do want to thank

you for holding the hearing and thank you and our ranking member, Mr. Whitfield, for the work on the issue; and I want to thank

our participants for being here on what looks like is going to be an

interrupted day. And before we begin the hearing, I do want to give

a little bit of an overview of how I see things and how I think a

lot of people that are looking at this with us see things.

It seems that, and we all know and it is frustrating, there is a

systemic problem with management at Los Alamos, and for several

years the culture of—has seemed to persist. It has gone on without

seeming to have a lot done about it, and I see no significant efforts

by NNSA or the DOE to change the culture; and I come to this decision by reading the reports that you have given us. I am partially

relieved to see that the previous organization which appeared to be

incompetent in so many different areas, that they have been replaced; and I have several concerns about the new operator and we

will address those in questions. And from time to time, I think we

see new policies that are brought forward; and Mr. Secretary, we

hold great hope for you that new policies this time are actually

going to do something to correct the problem, that there will be

timelines, that there will be guidelines and some accountability

measures that are there. I think all too often we see that people

admit there is a problem, they find the problem; but unfortunately,

they do not seem to have the desire to correct the problems, and

that is the situation in which we find ourselves right now. Not correcting the problems it appears to me to each employee would be

a disservice to their personal record, it would be a disservice to the

administration, it is definitely a disservice to the American people.

It is something that I hope we hear from the director and also from

you, Mr. Secretary, that it is no longer going to be tolerated and

that you can give us some measureables and some quantitative

data that will prove to us that changes are indeed taking place.

We are hopeful for your progress, and I yield the balance of my

time.

Mr. STUPAK. I thank the gentlewoman. We will next move to the

gentlewoman from Colorado, Ms. DeGette.

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO

Ms. DEGETTE. Thank you very much, Mr. Chairman. We were

trying to count the number of these Los Alamos hearings that——

Mr. STUPAK. Thirteen.

Ms. DEGETTE. Thirteen? And those are all the ones we have been

sitting in together plus the visit down there. Secretary Bodman, I

am delighted to see you today; and I am really glad you came because I think that resolving these problems is going to have to

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come from your level, and I know you have got that commitment.

So I am pleased.

I am going to submit my whole statement for the record because

frankly I am really tired of saying the same thing over and over

again and emoting about what a disaster it is down there, and this

latest incident with the employee who apparently had problems

with her security credentials and then she takes critical documents

on a flash drive and then she gets busted for drugs, it just boggles

the mind. And it goes on and on.

But there are some really important legal questions that we have

heard about in recent days that add yet a new dimension that I

haven’t even whined about once because they just came to light

and that is about the contracting procedures at the Department of

Energy. The committee has learned that the management contract

signed by the Department and with great fanfare I may add lacked

key components that allow penalties to be assessed when DOE security procedures are not followed; and because those orders were

inadvertently omitted from the contract, so have the security

breaches we have seen could go unpunished which frankly just underscores the cavalier attitude really that a lot of people take toward security at what should be frankly our most secure facility.

So here is the big picture. The American people need to know

that management at Los Alamos, which comes from a lucrative,

multi-million dollar contract, is top notch. That hasn’t been the

case, far from it. And all of our constituents need to have the confidence that if managerial negligence is found, if security breaches

do occur, and if specific DOE procedures are not followed, then

there will be severe consequences. That hasn’t been the case, either. Enforcement so far has amounted to a slap on the wrist, and

I think we all agree that is not acceptable. So there will be several

questions I will be exploring today, what went wrong with the contracting procedures at DOE, how could these omissions have occurred, has this compromised the Department’s ability to enforce

its rules and assess penalties, and what is being done to ensure

that this does not happen again?

Thank you, Mr. Chairman. I look forward to this hearing, and I

am sure there will be many more. I yield back.

[The prepared statement of Ms. DeGette follows:]

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169

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Mr. STUPAK. I hope not but I am afraid there will be. Mr. Murphy, opening statement, please.

Mr. MURPHY. Thank you, Mr. Chairman. I will waive in interest

of time, but I would like to welcome the Secretary for being here.

Thank you.

Mr. STUPAK. Thank you. Mr. Doyle from Pennsylvania, opening

statement, please?

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. DOYLE. Thank you, Mr. Chairman. I want to commend you

for your continued vigilance on this important matter.

The protection of classified documents and information at our national labs, especially at Los Alamos National Lab, is critical to ensuring that we are able to protect the American public against

those who may intend to do us harm. The frequent security

breaches at this and other labs are completely unacceptable. I am

looking forward to hearing the testimony of Secretary Bodman and

his colleagues as we work together to ensure our nation’s classified

nuclear information remains protected.

It is no secret that there are and have been over a number of

years serious security questions at the Los Alamos National Lab.

Thankfully, most of these breaches have been of an accidental nature due to inadequate security breaches being in place. In essence,

the breaches have served as a wake-up call to all of us. I shudder

to think what may have occurred had the breaches been the result

of a well-thought-out and intentional plan to secure classified information for sale on the black market. We have been lucky so far.

But if security there is not made ironclad, our luck will surely run

out.

I am looking forward to hearing about the improvements that

have been made since October 2006 investigation, as well as what

improvements have been made since our last hearing on this matter in January. I am so very interested in being able to judge the

level of commitment to security improvements, not only on the

ground at the site but all the way to the Secretary’s office. I believe

it is critical that the Secretary maintains his vigilance, not only on

this particular incident but on the entire security systems under

his prevue.

One thing is clear, when it comes to the long history of violations

at Los Alamos, an intensive, short-term focus which trails off once

the media focuses on another subject, will only lead to future concerns at the lab. We on this committee, those in the administration,

and those on the ground at the labs must continue to shine a light

on security while working together to ensure that procedures are

updated so that the facilities are not only more secure today but

will become even more secure with the passage of time.

Former Secretaries of Energy have come before Congress with

promises of new security; but for one reason or another, they have

fallen short and violations have continued. Now this matter falls to

you, Secretary Bodman. We on this committee hope to work closely

with you so that you will succeed where your predecessors have

failed. Security, especially nuclear security, is not a Democratic or

Republican issue, it is an American issue in which all branches of

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Government and both political parties must work hand in hand to

ensure that the American people have the protections in place they

deserve. We must renew this focus today and continue to fully and

completely protect our facilities and the critical information they

possess at both the physical and cyber levels. Anything less opens

our nation to dangers that none of us even want to believe could

happen.

So again, Mr. Chairman, I commend you for your continued vigilance. I will look forward to hearing the testimony of our distinguished panelists, and I yield back the balance of my time.

Mr. STUPAK. Mr. Burgess.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BURGESS. Thank you, Mr. Chairman. I guess I am glad we

are here today. Like everyone else, I am frustrated that we never

seem to make any forward motion on this. It is a bipartisan issue.

We all share the same concern and anxiety regarding security at

the lab. I appreciate the aggressive nature the committee has

taken on the crucial issue of national security.

We have three witnesses today that can provide insight into the

problems and hopefully solutions to the Los Alamos problems. Secretary Bodman, Inspector Friedman, Director Anastasio, gentlemen, I welcome you all here today and I look forward to entering

into a constructive discussion with each of you. I understand that

there have been improvements made, but there are still many,

many challenges ahead of both you and us.

Today we are going to be reviewing the findings of both the personnel security task force and the cyber security task force. I am

encouraged by reading about the task forces, but unfortunately, we

have been told in the past that actions and repercussions will occur

but they never do. That is why we have held hearing after hearing,

year after year, on Los Alamos. To quote the Inspector General in

his written statement, ‘‘Many of the actions are in process and the

key to the successful resolution of the matter is detailed in our November report, its implementation and execution.’’ Implementation

and execution. You all have good ideas that will significantly affect

the security of Los Alamos, but it is not enough for us to come here

and hold these hearings and talk and talk and talk about it. One

of these days someone is going to have to walk the walk. I am still

not completely comfortable with using basically the same contractor for operating Los Alamos. I do believe that Director Anastasio

was capable and qualified to help turn things around but also mentioned during the last hearing, you have some of the most intelligent minds in the world at work at Los Alamos. While there is

clearly an institutional problem, we must also remember that there

are thousands of hard-working employees at the lab who make a

remarkable contribution to science and the country on a daily

basis.

Also at the last hearing, we discussed the issue of accountability.

It is appropriate to readdress that issue today. While there are

many organizational changes that can be made to better ensure the

security of our country’s classified information, one of the easiest

and most effective remedies is to make the contractor in charge of

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security pay a steep and deep penalty. As a steward of the taxpayer dollar, I fully support this idea. If the contractor is penalized

substantial sums, and in Washington substantial sums are substantial sums of dollars, maybe then they will finally recognize how

serious of a problem this is and must be stopped at all costs.

One of the other things we learned at our hearing earlier this

year was the fact that although the contract for the lab had been

rebid and re-awarded, that that process could be opened again if

there were substantial problems encountered. I would submit to

you that it appears that there are substantial problems, but I

would like an update on whether or not the Department of Energy

is going to hold the contractor accountable for his actions or lack

thereof, if there is going to be a reopening of the contract that was

awarded the past year.

I have also another issue within the Department of Energy that

I think is appropriate to briefly mention and discuss. I understand

that there is a strike occurring at a nuclear security weapons plant

in my home State of Texas, the Pantex facility, and I would appreciate it if Secretary Bodman would give us a brief update on that

issue and the impact of security at the plant.

Again, Mr. Chairman, thank you for holding this bipartisan hearing in which we can further address the security at Los Alamos.

We are all committed to continuing these hearings until this cycle

of security breaches at Los Alamos is over once and for all.

I yield back.

Mr. STUPAK. That concludes the opening statements. For the

record, Mrs. Wilson is here from New Mexico and so is Mr. Udall,

not members of the subcommittee but we welcome you, and I know

you have been at every hearing we have had on this, Tom; and you

certainly can be here when we go to the questions, and we will certainly give you an opportunity to ask questions if you like.

So that concludes the opening statements by members of the subcommittee. I will now call our first witness to come forward. Our

first panel we have The Honorable Sam Bodman, Secretary of the

U.S. Department of Energy. Secretary Bodman, it is the policy of

the subcommittee to take all testimony under oath. Please be advised that witnesses have the right under the rules of the House

to be advised by counsel during the testimony. Do you wish to be

represented by counsel?

Secretary BODMAN. No, sir.

Mr. STUPAK. OK.

[Witness sworn.]

Mr. STUPAK. Mr. Secretary, you are under oath. You may begin

your opening statement, please.

STATEMENT OF HON. SAMUEL W. BODMAN, SECRETARY,

DEPARTMENT OF ENERGY, WASHINGTON, DC

Secretary BODMAN. Mr. Chairman, Ranking Member Whitfield,

members of the subcommittee, I am very pleased to be here to discuss what I consider to be one of the most pressing management

issues confronting my Department.

Since coming to the Department, one of my top goals has been

to institute a safer, more secure work environment across the DOE

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rity as well as cyber security. I want to be absolutely clear with all

of you, the protection of sensitive information is essential to our

ability to meet the mission of this Department. Without it, we can’t

do it.

What I would like to do today is to briefly outline the steps that

we have taken since the Deputy Secretary testified before you in

January. In summary, I would make two points. First, we have

made significant progress in my judgment, and I am confident that

we are on the right track. That being said, we are not satisfied

with where we find ourselves today. We are sitting on top of this

issue, we continue to look for ways to identify and correct any potential weaknesses. If I may, I would like to now describe some of

the improvements and also note that more details appear in my

written testimony which will be submitted for the record, if that is

acceptable to the Chairman.

First, we have made some senior management and oversight

changes in response to the security breaches at Los Alamos. In

January, I made what for me has been a very difficult decision and

that is to replace the Under Secretary for Nuclear Security. Tom

D’Agostino is the Acting Under Secretary and NNSA Administrator. In addition, NNSA has reassigned the Los Alamos site office

manager and has put one of its strongest managers, Daniel Glenn,

in place as the Acting Manager.

Further, Tom D’Agostino has requested that DOE’s Office of

Health, Safety, and Security conduct annual inspections at Los Alamos for the next 3 years. This month, both NNSA’s Office of Defense Nuclear Security and CIO will inspect LANL for cyber and

physical security problems. In fact, the CIO has already been there

and conducted her inspection. The site office will conduct annual

and regular observations of the laboratory’s security program.

I would just add that I continue to be in close contact with the

senior leadership of the laboratory. In fact, I met with all of the

national laboratory directors just last week in Chicago. At a department level, I have formed two teams of senior officials, including

Under Secretaries, the Chief of Security, and our Chief Information

Officer and asked them to make specific recommendations based on

the report of the Department’s Inspector General who conducted

his report at my request. I have directed that these recommendations be implemented department-wide, including enhanced mandatory training for those involved in granting of security clearances; a strengthened departmental policy on drug testing that

hold security clearances, everyone; better quality assurance oversight for granting security clearances; and a revised organizational

structure for our personnel security program that will ensure accountability.

We are also taking actions based on the recommendations from

our cyber security team. Those include mandatory separation of duties for critical positions, improved training for all individuals with

cyber security responsibilities, and improved line management

oversight. We are carrying out the Department’s new authorities

related to assessing civil penalties for classified information security violations. At the same time, the laboratory’s current management contractor, LANS, is also taking corrective action of their

own. Among other issues, LANS recognizes that the lab’s volume

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of classified holdings is unnecessarily large, it is conducting in too

many security areas, involves too many people, and is too spread

out. As a result and with the approval of NNSA, they are aggressively reducing the number of locations where they hold and process classified matter.

In closing, Mr. Chairman, let me say this. The men and women

who work at our national laboratories are among the world’s most

talented scientists and engineers. Since their founding, these laboratories have demonstrated again and again the tremendous

power and terrific promise of science to help our nation solve our

greatest challenges. But such a system cannot tolerate the kind of

lapses in security that we have seen, be they in the physical or

cyber realm. Protecting critical information and maintaining a vibrant collaborative science culture are not in my judgment mutually exclusive. Quite the opposite is true. In this case, you absolutely cannot achieve one without the other; and you continue to

have my word that I will do everything in my power to support

both objectives. The American people deserve no less.

I would like to say, sir, that in my view, the objectives of this

committee and all of the statements that I have heard made by the

members of the committee are very consistent with my own feelings. We have a real problem here, and I think we have the opportunity of working together to try to deal with it. Thank you very

much.

[The prepared statement Secretary Bodman appears at the conclusion of the hearing.]

Mr. WHITFIELD. Mr. Chairman, may I ask a procedural question

before we begin our questioning? I know that we do have some information, Official Use Only information, particularly relating to

the rating summary for the Los Alamos plant and various areas,

and in the past, whenever we’ve discussed Official Use Only information, we have either gone into executive session or a closed session or we have worked with the Department to agree on redacted

material before we release anything to the public. I mean, that is

one of the documents there. I know it has been partially redacted,

but I would ask the chairman what his intent is on this issue relating to Official Use Only.

Mr. STUPAK. Well, I thank the gentleman for posing the question.

As you can see on the ratings summary, and we had it up during

my opening statement, that was the most recent Los Alamos site

office and lab rating summary. The broad categories are there, but

the detailed areas of security have been redacted at the request of

the minority and the majority; and the documents with more detailed information in there will not be released and have no intentions of being released, even the ones I think we have in Secretary

Bodman’s book up there is all redacted. For the audience, the yellow part there is probably about a C-minus if we are grading this.

Green is maybe a B. That’s good. R is really bad. I guess that is

what R stands for, really bad. In 1999, the report was better than

this and we seem to be on a downhill slope. So I am sure there will

be questions about it, but there are no details in there. What does

emergency management, that is the broad category or cyber security, but we do not have any details in there nor do we intend to

release any of those details. As you have said, they are for official

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use, even though this committee or any member would have a right

to release it I believe in a hearing in the context of their official

duties, but we are going to leave it like it is.

Mr. WHITFIELD. Well, I appreciate——

Mr. STUPAK. Not to hold you up.

Mr. WHITFIELD. Yes, I appreciate that, Mr. Chairman. And I

think all of us would stipulate that the grades that the Department

has received on this are not particularly good, but I really appreciate your conveying that information. And I am assuming that is

the only Official Use document that we have. So thank you very

much.

Mr. STUPAK. If it would have had the details in, it would have

been Official Use. Since it has been redacted, it is my understanding it is no longer Official Use. That document can be released. The

ones that say Official Use with the details, there is no intention

that I know of of anyone on this committee or myself or staffs of

releasing that. Thank you.

In order to proceed in a more orderly and efficient manner, I

would like to propose and set up 5 minutes for each member for

questions, that each member will have 10 minutes to use for questioning during this hearing. Any objection? I see ranking member

of the full committee, Mr. Barton, has just arrived. Before we go

into questions, would you care to make an opening statement, sir?

Mr. BARTON. Thank you, Mr. Chairman, but I am a little bit late

so to expedite the hearing, I know we have got some votes, so I will

put my statement in the record.

Mr. STUPAK. Yes, we have nine votes coming up here. I don’t

know if you want to do an opening before we do the votes and I

don’t know if we want to get halfway through the questions and

have to stop.

Mr. BARTON. No.

Mr. STUPAK. OK. Then we will proceed to questions. I will start

off.

Mr. Secretary, the Cyber Security Task Force calls for an independent oversight review of cyber security at Los Alamos this year.

Your testimony calls for annual reviews. Is Los Alamos in compliance with all DOE directives regarding security as we sit here

today?

Secretary BODMAN. No.

Mr. STUPAK. In what areas are they still deficient?

Secretary BODMAN. Well, we have a number of recommendations

that have been put in place in the cyber security area, most notably a systems manual that was delivered and made available to the

contractors and with the stipulation that these be entered into the

agreements with each contract.

Mr. STUPAK. So it is not entered into the contract?

Secretary BODMAN. They are in the process of being entered into

it. I think it was on the date of March 8 that the security manual

was issued. They have 90 days in which to accomplish that, and

we expect them to accomplish that by June 8. Now that will then

put it in being a part of the contract.

Mr. STUPAK. Correct.

Secretary BODMAN. There will then be a period of time. I can

read through the various issues if you would like.

176

Mr. STUPAK. When do you think the implementation will be?

Secretary BODMAN. It is going to be a couple of years, sir, before

all of this is done because this calls for training, it calls for a

change in the way we manage the entire cyber security responsibilities of the Department.

Mr. STUPAK. If it is going to be a couple of years, I think we will

be having a 14th, 15th, and 16th hearing then. In summary, you

were summing up and you said LANS, the new contractor who is

in charge of this lab——

Secretary BODMAN. Yes.

Mr. STUPAK. You see them, might as well call them, 60 percent

of LANS is University of California——

Secretary BODMAN. No, sir, it is not, sir.

Mr. STUPAK. OK.

Secretary BODMAN. Sir, it is not. The 60 percent is not California.

Mr. STUPAK. OK. LANS is now in charge.

Secretary BODMAN. That is correct.

Mr. STUPAK. Sixty-three years of U.C., now we got LANS.

Secretary BODMAN. That is correct.

Mr. STUPAK. OK. LANS, if I heard you correctly at the end,

LANS agrees that Los Alamos is too large, too many people, and

too spread out is what you said at the end, correct?

Secretary BODMAN. They believe that the use of classified information, that there are too many centers, we have too many classified retrievable electronic media that are being used, and there is

a specific program that I am sure Director Anastasio will review

with you for reducing those.

Mr. STUPAK. OK. As you know, we have asked the GAO to take

a look at this.

Secretary BODMAN. Yes, sir.

Mr. STUPAK. Not just in the cyber security but the whole footprint out there because many of us feel the repeated security

breaches at Los Alamos, because it is too large, too many people,

too spread out, and when it takes years to implement policy, we do

not feel real confident that the implementation and the policy will

be completed in a timely manner and we will be back here again

with more breaches. So if it going to take years to implement security agreements, that really bothers us.

Secretary BODMAN. Well, some of it, sir, depends on budgets. In

other words, these will be costly, they will require the approval of

this Congress in order to get sufficient funds to do what needs to

be done.

Mr. STUPAK. So the taxpayers are going to pay for all these new

security measures?

Secretary BODMAN. It will be perhaps shifted around from one

part of the organization to another, so I am not saying there will

be a total increase in the budget but I am saying there will be a

funding for this that is required.

Mr. STUPAK. Well, I don’t want to throw good money after bad,

but we are a little concerned here when we learned this past week

that the enforcement mechanism for LANS wasn’t even in the contract. Now, 13 months later I guess it is inserted. So when I said

177

get-out-of-jail-free card, that is from the game Monopoly and this

is real money, not paper money.

Secretary BODMAN. I understand that.

Mr. STUPAK. You have a monopoly when one entity you see has

managed this lab for 63 years and still is part of LANS. And so

we can’t be giving out get-out-of-jail-free, using taxpayer money,

and a management monopoly and we are back here all the time

doing the same thing.

Let me ask you this question. The Inspector General’s testimony

said the Federal and contract managers need to manage the lab

more aggressively and the Department and the lab must develop

a regiment of compliance testing. However, it appears you are

going in the opposite direction by using a pilot program at Los Alamos which is based on reduced Federal oversight and increased

contractor self-assessment. Given the core weaknesses in security,

safety, and the history of mismanagement, do you believe that reduced Federal oversight is appropriate model at this time especially when it is going to take near 3 or 4 years?

Secretary BODMAN. Of course not.

Mr. STUPAK. Then why would you propose a test pilot program

at Los Alamos?

Secretary BODMAN. I don’t understand what that is. I never

heard of it.

Mr. STUPAK. You have no idea? OK. All right. Secretary, is it

true that during the investigation of the security incident the Department learned the subcontractor employee had taken an unsecure cell phone into the vault at Los Alamos?

Secretary BODMAN. Yes, I heard that yesterday in preparation for

this hearing that there was some allegation of that, but I do not

know anything about that.

Mr. STUPAK. We heard that some time ago. From the January

hearing to now, we heard about this. We heard about the enforcement part of the contract not being there, now we hear about a cell

phone. What are we going to hear about next? I thought we had

this thing.

Secretary BODMAN. Mr. Chairman, I will repeat for you, sir.

Mr. STUPAK. Sure.

Secretary BODMAN. I do have a record of truthfulness and integrity in handling management matters. I do have a record of some

competence in handling management matters. Now, some of your

statements, sir, in my judgment are not correct. They have the

wrong premise.

And I have attempted to correct those as we have gone along.

Mr. STUPAK. What is not correct?

Secretary BODMAN. So I will tell you, sir, that we are committed,

I am personally committed, to trying to improve the security situation at Los Alamos. I frankly find myself in a position of some embarrassment. Why? Because I did not personally ask the right

questions in the early days of my tenure in this job, and the questions might have been something along the line have all past Declarations of Secretaries been included in the policy that has been

included in the contracts between this Department or between the

NNSA and the contractor? The answer is no, they have not been.

And so there are many things. Why haven’t we had a compulsory

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drug testing program for all members who are cleared? We have

not had. We will now to the extent that we are able to do it. And

so I am just saying that there are number of things that have been

done, and I am here to tell you that I am committed to trying to

get it done but I also repeat I am somewhat embarrassed I didn’t

ask all the right questions in the beginning.

Mr. STUPAK. Let me ask you, the January 30 hearing, did the

Department of Energy know that they didn’t put the enforcement

mechanisms, the DOE Order 470, in the LANS contract in January?

Secretary BODMAN. I don’t know, sir.

Mr. STUPAK. All right.

Secretary BODMAN. I learned about it about that time.

Mr. STUPAK. About that time?

Secretary BODMAN. Yes, sir.

Mr. STUPAK. And no one told us about it until last week?

Secretary BODMAN. That was about the time we learned about it.

I may have been a week or two earlier, but I just don’t know.

Mr. STUPAK. Well, last week is a lot different from January 30.

That is quite a bit of timeframe. What about the cell phone incident in the vault? You just learned about that, too?

Secretary BODMAN. I just learned that the allegation of the cell

phone in the vault. I don’t know of the truth. This is an investigation, sir, that is still ongoing; and I would remind you on that, and

so I am unable to comment on anything specific that I have heard.

But I just tell you with respect to any questions about the cell

phone, I have not heard about it before.

Mr. STUPAK. Well, when is your investigation anticipated then to

be done?

Secretary BODMAN. It is not my investigation, sir. This is something being handled by the FBI.

Mr. STUPAK. OK.

Secretary BODMAN. So I can’t answer for them.

Mr. STUPAK. So after the FBI is done and after they brief this

committee, are you going to come back up to this committee then

and tell us the facts of the investigation as you know it?

Secretary BODMAN. We will report to you the facts.

Mr. STUPAK. Well, we would just as soon get them on the record

so we don’t have to have more hearings, but this information keep

dribbling out is not good.

Mr. Secretary, let me ask you this. Was it a violation of DOE policy, I am talking about DOE policy now, to approve a security

clearance for an employee who admits to using illegal drugs in the

30-day period prior to the approval of their security clearance?

Secretary BODMAN. I don’t know if it was a violation of DOE policy, but it didn’t make any sense to do that, sir.

Mr. STUPAK. OK. And in review, we have seen at least two other

employees and 18 others who have what you call derogatory information in it who have received security clearance that probably

based on derogatory information should not have received it or had

used drugs within 30 days of receiving that clearance?

Secretary BODMAN. I don’t know what those were. I can tell you

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rity system for the Department involves a review of all of the clearances that were provided——

Mr. WALDEN. Mr. Chairman, can I ask a point of parliamentary

inquiry? I thought you moved that we would reduce the amount of

time for questions to 5 minutes?

Mr. STUPAK. Ten minutes we said.

Mr. WALDEN. Ten minutes? OK.

Mr. STUPAK. Go ahead, Mr. Secretary. I think where you are

going is the question I was trying to ask. The Department is going

to implement the task force’s recommendation to review all 4,360

security clearances——

Secretary BODMAN. There are some 4,000 that we are in the

process of doing, and I expect to have that done during the balance

of this season. I would guess during the summertime.

Mr. STUPAK. Thank you, Mr. Secretary. Mr. Whitfield for questioning? We have 6 minutes left.

Mr. WHITFIELD. I am going to take 5 minutes and then come

back when—Mr. Secretary, before you came to the Department of

Energy, and I know you have other Government experience, but

you certainly had a reputation in the private sector as being a

strong executive. And when you look at this situation, you hear a

lot of comparison about Lawrence Livermore and Los Alamos; and

we know that the University of California has been involved in the

management of both of them for many, many years, for about 63

years or so, and yet there doesn’t seem to be the problems at Lawrence Livermore as there is at Los Alamos.

From your position as Secretary of Energy and experiences running business, as a strong executive, why do you feel that there has

been so much problems at one of these labs but not the other?

Secretary BODMAN. That is sort of a speculation on my part. I

guess I would cite for you, sir, there are significant differences between the two institutions as to where they are located, geographic

location, and getting the right management. In San Francisco is a

very different matter than getting the right people to move to Los

Alamos and to take on that assignment. So that would be one comment.

Comment two, I think it goes back to the very history of the laboratory. There have been issues of security, if you read back the

history of this, for 60 years and there has been a very challenging

environment there because of the preeminence of science and less

interest apparently at times in security responsibilities. The one

you should really ask that question of is Mr. Anastasio who will

testify next. And if I had to answer that question, he is the person

I would ask.

Mr. WHITFIELD. OK.

Secretary BODMAN. He has been at both places.

Mr. WHITFIELD. Who at the Department was responsible for

overseeing the contract letting that LANS recently won and the security requirements were omitted from that contract? Who in the

Department was really responsible for negotiating that contract?

Secretary BODMAN. Ultimately, I am responsible, Mr. Whitfield

for the contract. You then go down through Linton Brooks who was

the Administrator and oversaw the activity that had that responsibility, Tom D’Agostino who oversaw it. A lot of things went on if

180

I may say at that point in time. I also would add, this is the world

according to Sam and not anything else, I think that there will be

ample opportunity whether or not there is the specific inclusion of

specific arrangements in there for whatever penalties are deemed

desirable by the enforcement actions to be implemented.

Mr. WHITFIELD. Some people feel like the University of California

has been involved in the management of this plant for 63 years;

and there was a strong argument that maybe we need to just

change it completely, and I know they are still a part of LANS.

Secretary BODMAN. Right.

Mr. WHITFIELD. Was there any discussion of that at the Department about maybe just a complete culture change by changing the

major——

Secretary BODMAN. Yes, there certainly was a discussion, and I

think that first of all it is important to recognize that there are

very specific Federal procurement rules that apply that involve a

Source Selection Officer and a Source Evaluation Committee that

provides information for the Source Selection Officer, and these are

all career employees. And so it is something that is done in order

to prevent political interference with the ultimate decision.

So I know there was a discussion of this general matter, but I

would think that it is important to recognize that the team was

recognized for the combined scientific excellence in the University

of California and the management expertise of both Bechtel as well

as BWXT and the Washington Group.

Mr. WHITFIELD. Right.

Secretary BODMAN. Now, this group I will tell you, I have personally dealt with this board on a one-on-one basis meeting with both

the chairman and the vice-chairman of the Board since this event

occurred, I think it is fair to say this event caught them by surprise

just as to how serious this matter was and is. They immediately

dispatched their own people—I am sure Dr. Anastasio will review

that with you—in order to review the situation. They found a very

glaring failure in cyber security programs, they said about their

own programs, over and beyond anything we are doing in order to

try and deal with this.

Mr. WHITFIELD. Well, Mr. Secretary thank you. We have about

a minute left so I guess we need to get over and vote.

Mr. STUPAK. OK. So we have seven votes, so let us adjourn. We

should be back 11:15 or so. We will adjourn the hearing until then.

How is that with you, Mr. Secretary?

Secretary BODMAN. Whatever you say, sir. I will be happy to——

Mr. STUPAK. Well, you got to remember——

Secretary BODMAN. I got a limit as to how long I can stay the

rest of the day.

Mr. STUPAK. Yes, and unfortunately they give us seven votes

right now.

Secretary BODMAN. I understand that and I honor that. I want

you to honor what time pressures I have, sir.

Mr. STUPAK. I understand.

Secretary BODMAN. Thank you.

Mr. STUPAK. Thank you. The subcommittee stands recessed until

11:15.

[Recess.]

181

Mr. STUPAK. A lot longer than we all thought. We thought we

had seven votes and it ended up being nine plus motions to recommit.

Unfortunately, the Secretary, as he indicated, had a noon appointment that he had to make and so we dismissed him. We may

call him back at some time in the future. But had he been here I

would have asked him again about DOE’s pilot oversight model at

Los Alamos that he seemed to know nothing about. I would for the

record like to read the general question I asked the Secretary about

this pilot. My question was, Mr. Secretary, the Inspector General’s

testimony said the Federal and contract managers need to manage

the lab more aggressively in the Department and the lab must develop a regiment of compliance testing. However, DOE is going in

the opposite direction by using a pilot program at Los Alamos

which is based on reduced Federal oversight and increased contractor self-assessment. Given the core weaknesses in security, safety,

and the history of mismanagement, do you believe that reduced

Federal oversight is the appropriate model at this time? If so, why?

The Secretary claimed he did not know anything about this pilot.

In fact, our staff has provided an official Department of Energy

memorandum establishing this pilot specifically for Los Alamos.

It is also my understanding that this pilot is well-known by other

key officials including the Inspector General who is rather critical

of it. I intend to ask the Inspector General, our next panel here,

(a), if they know about the pilot and, (b), what concerns does he

have about it. But now perhaps more importantly, I intend to ask

the IGY when this memo was signed by the former NNSA Chief,

Ambassador Linton Brooks, the Secretary would apparently know

nothing of it. I find that troubling unto itself, and we will ask the

Secretary in writing the same questions.

We have had problems as you all know in the past with the head

of the National Nuclear Security Administration not conveying key

management information related to the Secretary. I wonder if this

is yet another example.

So we can move to our second panel so we can get these questions out. I will now call our second panel of witnesses, the Honorable Gregory Friedman, Inspector General for the Department of

Energy, and Mr. Michael Anastasio, Director of the Los Alamos

Nuclear Laboratory.

It is the policy of this subcommittee, gentlemen, to take all testimony under oath. Please be advised witnesses have the right under

the rules of the House to be advised by counsel during their testimony. Do any of you wish to be represented by counsel? Mr. Friedman?

Mr. FRIEDMAN. No.

Mr. ANASTASIO. No.

[Witnesses sworn.]

Mr. STUPAK. Thank you. The record should reflect the witnesses

have replied in the affirmative. You are now under oath. Mr. Friedman, we will start with you. Five-minute opening statement, sir.

182

STATEMENT OF HON. GREGORY H. FRIEDMAN, INSPECTOR

GENERAL, U.S. DEPARTMENT OF ENERGY, WASHINGTON, DC

Mr. FRIEDMAN. Mr. Chairman and members of the subcommittee,

I am pleased to be here at your request to testify in the concerns

expressed in your April 5 letter regarding operations at the Los Alamos National Laboratory.

In January 2007 I testified before this subcommittee on the special inquiry conducted by my office regarding the diversion of classified data from Los Alamos. Specifically at the request of the Secretary of Energy, we examined the efforts of the Department and

its contractors to protect classified information and the steps that

were taken to assure that only authorized individuals had access

to such information. Our report on this matter was issued on November 27, 2007. The Office of Inspector General found the security

environment at Los Alamos is inadequate despite the expenditure

of millions of dollars by the National Nuclear Administration to upgrade various components of the laboratory’s security apparatus. In

particular to the cyber security control structure we found that certain computer ports had not been disabled, classified computer

racks were not locked, and some individuals were inappropriately

granted access to classified computers and equipment to which they

were not entitled.

In many cases, laboratory management staff had not developed

policies necessary to protect classified information, enforce existing

safeguards, or provided the attention or emphasis necessary to ensure protective measures were adequate.

Some of the security policies were conflicting or applied inconsistently. We also found the laboratory and Federal officials were not

as aggressive as they should have been in conducting security reviews and physical inspections. In short, our findings raise serious

concerns about the laboratory’s ability to protect both classified and

sensitive information systems.

The OIG also reviewed certain aspects of the security clearance

process in place for laboratory employees. We identified particular

weaknesses associated with this program which were discussed in

a closed-session of this subcommittee in January 2007.

After this incident was discovered, Department and laboratory

management officials launched several efforts to identify and correct and control deficiencies that certainly contributed to an environment which classified information could be removed without authorization. In particular, the Deputy Secretary directed an immediate review of policies and practices related to computer ports at

each of the Departments’ facilities. Further, the Secretary established two high-level task forces to address our findings. The reports of the Secretary’s task forces and a list of the proposed directive actions were provided to my office last week. Many of the corrective actions outlined by the two task forces are in progress. Implementation, deployment, and execution are key. If properly carried out, the corrective actions should improve classified operations

at Los Alamos and could help prevent similar incidents at departmental facilities throughout the complex.

As I have testified on several occasions, the Department must do

a better job addressing the recurring challenges it faces, and I have

four or five specific suggestions. Number 1, with regard to the curVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00186 Fmt 6601 Sfmt 6601 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
183

rent matter, the Department must ensure that all actions and recommendations outlined in the Task Force Reports are formalized

into policy and adopted as practice throughout the Department. As

part of that effort, these policies should be incorporated into all facility contracts.

Two, to achieve the recommended reforms, the Department must

establish firm schedules with specific implementation timelines

and performance metrics. No. 3 both Federal and contractor officials need to manage more aggressively. As part of that process,

the Department needs to ensure that its Federal contract management function is adequately staffed with the appropriate skill mix.

In addition, Department and laboratory officials must develop a

more comprehensive regimen of compliance testing and follow up

to ensure that security policies and procedures are rigorously followed. Individuals and institutions, both Federal and contracted,

must be held accountable for failure to follow established security

measures. As it has begun to do so in response to the most recent

Los Alamos incident, the Department should emphasize that the

failure to properly protect classified information and materials will

have meaningful consequences.

Finally, consistent with our 2006 recommendation, we continue

to believe the Department should perform a risk-based evaluation

of cyber security funding at Los Alamos. The objective of this evaluation would be to ensure that the resources are available for complete implementation of the revised cyber security policies and procedures.

For the past 5 years we have identified both cyber and physical

security as pressing management challenges. For these reasons and

because of the recent incidents, the Office of Inspector General continues to be concerned about the security across the Department of

Energy complex. We have ongoing activities to examine information

technology and system security, implementation to revise security

measures, disposal of sensitive property, and issues related to protective force training.

In addition to our ongoing work, the full committee in January

2007 requested that the GAO examine the security of the Department’s unclassified and classified information networks and its

cyber security programs. My office coordinates closely with GAO on

reviews of the Department, and we are hopeful that he assessment

requested by the committee will provide recommendations leading

to a strengthened agency-wide security posture. My office continues

to conduct audit inspection investigative work that complements

the reviews requested by the committee.

Mr. Chairman, this concludes my statement. I would be pleased

to answer any questions you may have.

[The prepared statement of Mr. Friedman appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you, sir. Next we will hear from Mr.

Anastasio for 5 minutes.

184

STATEMENT OF MICHAEL R. ANASTASIO, DIRECTOR, LOS

ALAMOS NATIONAL LABORATORY

Mr. ANASTASIO. Good afternoon, Chairman Stupak, Ranking

Member Whitfield, and other members of the committee. Thank

you for the opportunity to update you on our progress.

As you know, I am Michael Anastasio, Director of the Los Alamos National Laboratory since June 2006 and president of the Los

Alamos National Security, LLC.

I am pleased to report that we have continued to make significant progress on many fronts since I last addressed this subcommittee 11 weeks ago. Today, in keeping with the subject of this

hearing, I will focus on security; and I want to reiterate what I said

at the last hearing, that I personally take the issue of security at

Los Alamos very, very seriously.

First, we have significantly reduced risks in both cyber and physical security, and this includes reducing and consolidating classified

holdings, per the subcommittee’s stated concerns. Second, we have

taken actions to make policy clear and consistent and to change

employee behaviors. And third, we are putting in place comprehensive corrective actions with a major focus on long-term sustainability.

Here are some examples of the specific actions my management

team, my Board of Governors, and I myself personally are taking

to reduce risk. Starting with cyber security, we now have positive

control over all our classified computer ports using a combination

of software, physical locks, and tamper-indicating devices. All of

our classified systems have been inspected and found to be compliant, and we have reduced the number of stand-alone classified systems by 28 percent.

As for physical security improvements, we have made our vault

escort requirements clearer and tougher, for example, requiring the

search of all belongings carried by those escorted both in and out

of the vaults. By December, we will have reduced our accountable

classified removable electronic media, known as ACREM, by 50

percent. We have destroyed almost 1,500 classified parts and 500

boxes of classified documents that we inherited. We have eliminated 14 vault-type rooms, a reduction of 10 percent, with more to

come.

In the area of policy and behaviors, we have uniformly trained

our Information Systems Security Officers, our ISSOs, and are hiring senior ISSOs in all key organizations to provide consistency

across the laboratory.

We are clarifying and simplifying security policy. In addition to

mandatory training, we will promote the right behaviors through

active employee participation. For example, we have directly involved employees and worker-led security teams at multiple levels

in our line organizations.

On March 5, we launched and enhanced substance abuse program where every newly hired employee is tested for illegal drugs

and every badge holder is now subject to random testing, regardless of his or her clearance level.

For long-term effectiveness and sustainability, we have begun

constructing a super vault-type room, the first of its kind. This will

allow us to consolidate and uniformly control classified information

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managed by security professionals. At the same time, it will give

authorized users efficient access to this information. I expect to

complete construction of the first functional prototype this June.

This project will initially allow us to close six additional vault-type

rooms and reduce our ACREM libraries by one-third. By constructing additional super vault-type rooms, we will reduce the number

of classified vaults to an absolute minimum consistent with our

operational and mission requirements.

We have also been careful to embed validation and verification

regimes into our corrective action plans in order to sustain all of

these efforts and to prevent any backsliding. Moreover, everything

we are doing is being closely scrutinized, not only by Congress but

by my own Board of Governors, by the DOE, NNSA, and other

oversight bodies. I welcome that continuing scrutiny. It validates

that we are heading in the right direction and keeps our eye on the

ball.

So in conclusion, Mr. Chairman, as I have testified previously on

this issue, there are no silver bullets where security is concerned,

but with these security enhancements and Board of Governors’ support and oversight, we are aggressively moving Los Alamos in the

right direction as we are in many other fronts vital to our success

as a national security science laboratory.

Thank you again for the opportunity to testify, and I am happy

to take your questions.

[The prepared statement of Mr. Anastasio appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you both for being here, and we will start

with questioning that will go for 10 minutes. I am glad to see Mr.

Udall is still here. It is Friday, the votes are over for the week, everyone has taken off, but Mr. Udall has great interest in this. He

remains with us. Thank you again, Tom.

Before we begin, Mr. Friedman, I indicated I was going to ask

you the same question I put to the Secretary about your testimony

that the Federal and contractor managers need to be more aggressive. In fact, you said that in your opening statement and the Department must develop a regimen in compliance. However, we

seem to have this pilot program at Los Alamos which really would

reduce Federal oversight increase, contractor self-assessment. Do

you believe that reduced Federal oversight is the appropriate model

at this time? If so or if no, why not?

Mr. FRIEDMAN. I do not, Mr. Stupak. We have been following this

proposal for several years.

Mr. STUPAK. So you are familiar with this pilot project?

Mr. FRIEDMAN. Yes.

Mr. STUPAK. And it has been around for a number of years?

Mr. FRIEDMAN. Yes.

Mr. STUPAK. It is it site-specific to Los Alamos?

Mr. FRIEDMAN. Well, I am not the expert as to how they are ruling it out, but it seemed to me it may have initiated at Sandia and

it has some relationship to the Kansas City plant; but certainly it

is contemplated for Los Alamos as well.

Mr. STUPAK. Right, the document I held up, the memo, was from

Linton F. Brooks, the Administrator, and former ambassador. It’s

the pilot of the new National Nuclear Security Administration,

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oversight model for Los Alamos. This is the document you are

speaking of?

Mr. FRIEDMAN. I assume it is.

Mr. STUPAK. While we are here, I will wait until Ed gets back,

but I would like to move for admission in the record. It actually

says in December 2002 we announced a new approach to oversight

with the National Nuclear Security Administration. So this is the

pilot program we have been speaking about?

Mr. FRIEDMAN. Yes, this memo is not dated and I am not sure

when I did see it.

Mr. STUPAK. It is signed by Ambassador Brooks?

Mr. FRIEDMAN. It does appear to be, yes.

Mr. STUPAK. Why would a Secretary not know about a memo

dealing with Los Alamos as to a pilot of the new National Nuclear

Security Administration oversight model for Los Alamos?

Mr. FRIEDMAN. I certainly cannot testify on behalf of the Secretary on that. I really don’t know.

Mr. STUPAK. Should the Secretary be made aware of it?

Mr. FRIEDMAN. The span of activities in the Department of Energy is enormous, and perhaps he was aware of it under some

other name. I just can’t speak for him.

Mr. STUPAK. OK. I also asked the Secretary about the cell phone

in a vault. Do you have any knowledge of that in your overview

about this employee had a cell phone in a vault?

Mr. FRIEDMAN. Mr. Stupak, as I recall your background, I think

you have a law enforcement background.

Mr. STUPAK. Yes.

Mr. FRIEDMAN. And I am ill at ease answering your question.

There is an ongoing FBI investigation with deep involvement of the

Justice Department and the question of the individual’s background, and what is in her investigative file is certainly part of

that investigation. And I would not want to say anything inadvertently in response to your question that would compromise that. I

am familiar with at least one incident, and there was an allegation

of a second incident.

Mr. STUPAK. Of a cell phone in a vault?

Mr. FRIEDMAN. Right.

Mr. STUPAK. It is an unsecured cell phone in a secured vault?

Mr. FRIEDMAN. Essentially that is correct.

Mr. STUPAK. OK. And is this a——

Mr. FRIEDMAN. I should say I think it is a personal cell phone.

Mr. STUPAK. Right. Personal or departmental but it was an unsecured cell phone. And is this a breach or violation of security at Los

Alamos?

Mr. FRIEDMAN. My understanding it most certainly is or was.

Mr. STUPAK. OK. And again, if the Secretary is briefed about an

investigation, if there are these allegations, he certainly should be

made aware of it. You see, my problem is the last time we testified

here in January we had the breach about the employee’s personal

information being put out on the web inadvertently, and the Secretary didn’t seem to know about that or DOE Order 470, we don’t

seem to know anything about that, we don’t seem to know anything

about the cell phone. It seems like not only is there structural

187

problems within Los Alamos and DOE but it seems like there is

a communication problem, too.

Mr. FRIEDMAN. Well, I think that the people most directly responsible for operations of the laboratory and the Federal site were

aware of the incidents as best I could determine, and certainly we

were aware of them. So the fact that the Secretary was not aware

of them given the, again, the scope of his activities, I am not sure

it is all that surprising.

Mr. STUPAK. The fact that you’re aware of it, someone in DOE

should be made aware of it.

Mr. FRIEDMAN. Yes, absolutely.

Mr. STUPAK. What’s the problem with this pilot program here?

What are your concerns specifically? Does it lead to less Federal

oversight and more self-assessment by the contractor?

Mr. FRIEDMAN. I am not the best person to testify on the program itself, but the essence of it is as you characterized it, reliance

on self-assessment with a third-party review of the assessments,

similar to commercial standards. I mean, that’s basically what

we’re talking about.

We have for many years been concerned, we have expressed this

in a number of forums, about the effectiveness of the Department’s

administration of its contracts. And it is our view that sort of stepping back, while it may be satisfying for the contractors because it

means less reports, less intrusive reviews, less evaluations, is not

the approach that we should take.

Mr. STUPAK. It is not the aggressive approach that you’ve been

suggesting?

Mr. FRIEDMAN. No, it is not.

Mr. STUPAK. OK. The 550 security police officers went on strike

at Pantex. I think Mr. Burgess mentioned it on the first span on

his opening there, and there is a force of about 211 to replace them.

Given your reduction in force size, and I understand some people

have to work up to 84-hour workweeks, can you give an opinion

whether the Nation’s most valuable nuclear assets are being protected at a level that is sufficient to meet Department requirements?

Mr. FRIEDMAN. I don’t know how many people and I accept your

numbers, Mr. Chairman, and I don’t quarrel with them. We issued

a report I think last year at the Oak Ridge complex in which we

were concerned about the amount of overtime, that it was excessive

and it would lead to a degradation of the ability of the guard force.

And I take it that the guards that have been sent to Pantex have

been sent from other locations throughout the Department complex. So certainly to the extent that we have been concerned historically about overtime and the impact of the overtime on the ability of the guards to do their job, there is that concern.

Mr. STUPAK. Well, besides the drawing of personnel from other

areas of the other sites to beef up Pantex while we have this security police that went on strike there, what would be the longerterm consequences to the Pantex site operations if this dispute goes

on for a protracted period of time? I guess my concern is Pantex,

where we assemble everything and disassemble, seems like it is

one of the more sensitive sites. So if this goes on for a protracted

188

period of time, that is going to lessen our security I would think

overall.

Mr. FRIEDMAN. Let me divert for just 1 second. I should tell you

that in the interest of full disclosure that there are five or six

points that have been expressed to us by the guards themselves

and other individuals, and we are pursuing those aggressively.

Now, we have an open inspections on those fundamental issues.

And they do deal with core safety and security. I am not in the position to evaluate what the short-term, mid-term, or long-term impact of a strike would be. I think it is pretty clear that this is one

of the most sensitive sites that the U.S. Government has in the

continental United States, and it is a situation which needs to be

resolved as soon as possible or there will be potential consequences.

Mr. STUPAK. Thank you. Mr. Anastasio, I was a little concerned

when the Secretary testified, and I think you were in the room

then, about the memo here to do the implementation of your cyber

security I believe it was, that the booklet was given to your organization right around March 8, you have 90 days to comment on it,

you send it back to the Department, and then he said it would be

years to implement it. Why would it take years to implement the

policy?

You get 90 days, why would it take years to implement it.

Mr. ANASTASIO. Well, it is a complicated set of requirements that

takes——

Mr. STUPAK. It is complicated to digest and 90 days to——

Mr. ANASTASIO. Excuse me? I am sorry, I didn’t hear it.

Mr. STUPAK. You have 90 days to digest it.

Mr. ANASTASIO. Ninety days to comment and then we will have

to put in place a plan that will do the implementation over a specific period of time; and then of course, we will have lots of oversight and the effectiveness of carrying out that plan, both to put

it in place and to make sure that we have an effective plan in place

as we do that.

Mr. STUPAK. I mentioned and the Secretary objected to this, your

new organization managing Los Alamos, is made up of UC people.

What percentage? I said 60, he said it was not 60. What is it, do

you know?

Mr. ANASTASIO. The management is an equal partnership of the

two major partners of the UC and the Bechtel National.

Mr. STUPAK. So if it is equal, is it 50 percent then?

Mr. ANASTASIO. Yes, so as an example, the executive committee

of the board has six members, three from the university and three

from the industrial partners, so in that sense it is——

Mr. STUPAK. OK. What about the board makeup then?

Mr. ANASTASIO. There is the executive committee as I said and

then there are an additional five members from outside any of the

partner companies. Overall 11, but let us say the business decisions of the LLC are made by the Executive Committee. That is

three and three.

Mr. STUPAK. OK. And that is 50 percent then basically?

Mr. ANASTASIO. Yes, sir.

Mr. STUPAK. OK. I guess my time has expired. Mr. Walden for

questions?

189

Mr. WALDEN. Thank you, Mr. Chairman. I appreciate that. Director Anastasio, in your testimony you pointed to progress at the site

by stating, and I quote, ‘‘we have destroyed 500 boxes of classified

documents we inherited at Los Alamos.’’ Sounds like a lot of documents. However, I am told when the committee staff asked about

how many classified documents there are at Los Alamos, to try and

put this in perspective, the lab’s response was there is no requirement to maintain strict accountability of each classified document.

We cannot tell you how many classified documents we have which

leaves some of us wondering, do you know how many classified documents you have and there is no system in place to monitor those?

Mr. ANASTASIO. There is a set of specific kinds of classified documents that we are required to keep in an accountability system

where we have a strict numbering system on every individual document, and we track those. But the general large collection of documents that we have, there is not a requirement to keep it in strict

accountability system.

We do protect those documents in a very rigorous way.

Mr. WALDEN. I understand the need to do that. I guess I am just

trying to put your comment in perspective because I don’t know

how big the boxes are.

Mr. ANASTASIO. Oh, I am sorry. So we have probably I would estimate, I don’t have an exact count, but I would estimate that we

have several million classified documents.

Mr. WALDEN. And so I guess the question is I have heard estimates of up to 30 million classified documents?

Mr. ANASTASIO. That sounds high to me, but again, I don’t have

an exact number.

Mr. WALDEN. When you say you have destroyed 500 boxes of

classified documents, is that 1,000 documents or is that 10,000 documents?

Mr. ANASTASIO. There are, kind of——

Mr. WALDEN. Just sort of file folder box documents?

Mr. ANASTASIO. Yes, file folder boxes, yes, sir.

Mr. WALDEN. So it wouldn’t be that many then?

Mr. ANASTASIO. Not in relation to the total number. All I

was——

Mr. WALDEN. That is what I am trying to do is get it in perspective.

Mr. WALDEN. Yes, sir.

Mr. ANASTASIO. All I was trying to express is that we are actively

in just the last 11 weeks off working down the large volume of both

documents, parts, removable media, vault-type rooms and so forth.

We have a concerted effort we have moved out on, and there is

really concrete progress that we have made just the last 11 weeks.

Mr. WALDEN. And I appreciate that. I think that is a good thing.

How many boxes would normally be destroyed in a given year? I

assume this is like my business where you are always shredding

things from the prior year, and you are kind of keeping the shelving available as you move forward another year.

Mr. ANASTASIO. Unfortunately, my impression at Los Alamos is

they have not destroyed many things very often.

Mr. WALDEN. Classified as pack rats then?

190

Mr. ANASTASIO. So they keep labeling things and store them and

to keep good records. Now we have good computer systems that we

can scan and upload documents into a computer system that we

can actually use the information more effectively that way because

you can search it just like you would information on the Internet

but in a classified network, in a classified computer, protected.

Then that obviates the need for the document and we can start getting rid of documents. So there is a very active program and a very

active desire on our employees, in fact, to move that way because

it is easier to manage.

Mr. WALDEN. Sure. We obviously, and I have, made reference to

the J.B. Weld project of security enhancement at the labs, and I

have had our prop here to point out a simple solution. I suppose

the more simple solution would have been to order computers that

don’t have USB ports to begin with, rather than glue these shut.

As you replace computers, which I assume the lab is doing, are

they ordering computers with USB ports in them or are they ordering them without USB ports in them?

Mr. ANASTASIO. Most computers have a USB port as an example

to plug the keyboard in. That is through USB port, and of course,

you need a keyboard on the computer. In some cases some computer you actually want to get information off the computers and

you need a mechanism to do that. But what we have done is we

have put controls in place that, for instance, even if you have a

keyboard with a USB port plugged in, you can put software in

place as an example that makes sure that that port only recognizes

the keyboard.

Mr. WALDEN. Right.

Mr. ANASTASIO. If you try to put a fun drive or the equivalent

into it, the computer doesn’t recognize what it is, it is incapable of

reading that. When we move to this super vault-type rooms that

I alluded to in my testimony, what we are looking at right now as

part of this prototype is to have what I like to call an idiot savant

computer, a computer that is very, very capable at displaying data

but is very stupid at doing anything else. And so it doesn’t have

the operating system capability to recognize ports to do anything.

So there is a keyboard, there is a mouse, and it can display 3-D

very rapidly, high-resolution data, but it can’s process the data.

That is done on the server that is locked up in this vault, protected

by people who are security professionals with a different approach

to security when done in the past.

So that is the direction we are trying to move to really move

away from being even concerned about whether you have a port or

not, you are just going to disable it so that it can’t function at all.

Mr. WALDEN. And clearly it is not really our job to micromanage

the security of your labs, but it is our job to make sure somebody

is doing that. And so I know we have all gotten to know each other

all too well in the last few months and years. We couldn’t spend

this time on every agency, but I can’t think of one that is more important to American security in many respects than the one that

you are in charge of. And so I just still struggle at how these opportunities to lose data occur as we saw I think it was last fall with

the woman who took the data home and was working out of her

home and then got caught. And I guess I just still struggle, wonVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00194 Fmt 6601 Sfmt 6601 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
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dering how is it so hard to fix? I mean, you were at Lawrence

Livermore before, right?

Mr. ANASTASIO. That is correct.

Mr. WALDEN. And you didn’t see these kinds of breaches of security at Lawrence Livermore, did we? Did you?

Mr. ANASTASIO. Not of this nature, no.

Mr. WALDEN. So what is different here? I mean, you have been

there a while now. What is going on? I mean, you got good people,

I’m sure, at both labs, top-notch brains, scientists, but the security

function just seems to be a problem.

Mr. ANASTASIO. Well, I think there is a variety of issues. I think

having the right leadership team and the people who are focused

on this, to bring a system-level approach to it, to have consistency

and simplicity so the employees can understand, actually making

systems so that employees can succeed, people are human. They

are fallible. People make mistakes. So we need to put in place a

system so that if there is a mistake that we contain any potential

impact of the mistake. This is standard but kind of safety approached in human performance from the nuclear power industry,

as an example. These are systems that so if you start to drift off,

there is something to remind you, hey, you are starting to make

a mistake, you need to stop. And that happens before there is any

significant consequence.

So these are the kinds of systems we are trying to put in place

to really make sure the employees can be a success, they are very

committed to our national security, they are very conscious and

conscientious about security in this sense. And so my job is to

make sure that I give them all the tools they can have to be a success and at the same time hold them accountable for my expectations of them. And if they really intentionally violate the rules,

then there are severe consequences for that.

Do you find many who intentionally violate the rules?

Mr. ANASTASIO. No, sir. Since June if I remember correctly, I

think we terminated one employee for violating security rules. That

is my memory, on the order of one or two.

So it does happen. We will take the action to terminate someone,

but it is not very frequent at all.

Mr. WALDEN. Mr. Friedman, are you comfortable with what I am

hearing here today from your independent perspective that things

are going to turn around soon?

Mr. FRIEDMAN. Mr. Walden, I guess that is the question that I

hope I wasn’t asked.

Mr. WALDEN. Now I am doing my job.

Mr. FRIEDMAN. Einstein, I think, said that insanity is doing the

same thing over and over and expecting a different result.

Mr. WALDEN. Expect a different result.

Mr. FRIEDMAN. As I testified in January, I am really hopeful that

the new management team at Los Alamos and the Department’s

aggressiveness will result in a meaningful change in the way they

view security and safety and the other operational issues that have

been a problem there for so many years. Can I give you a level of

guarantee? No. I hope it is the case, and it would serve everyone

if that is the case.

192

Mr. WALDEN. So we need to plan on another hearing in a couple

of months at which time you should be able to give us that certainty, correct?

Mr. FRIEDMAN. Only if you serve lunch for the next hearing.

Mr. WALDEN. Yes, well, hopefully it won’t be a barbecue. With

that, I yield back my time, Mr. Chairman.

Mr. STUPAK. I thank the gentleman from Oregon. The gentleman

from Washington, Mr. Inslee for questions?

Mr. INSLEE. Thank you. Mr. Friedman, I have missed some of

this but I wanted to ask you, what could you tell us specifically

needs to be done that is not currently being done at the lab so that

you can control classified and unclassified, sensitive information?

Mr. FRIEDMAN. Well, I think as the Secretary testified this morning that many of the corrective actions are a work in progress, and

that has been historically one of the problems it seems to me that

we get off to a good start, we have good ideas, we try to implement

good fixes, but they lose steam, the momentum is lost. So one of

the important things that has to be done is that all of the good

things that have been proposed, discussed here today, and have

been reduced to writing in various forms are, in fact, implemented

and they flow down to the entire organization. Again, one of the

historic problems we found is that the upper levels frequently got

it but it didn’t always make it down to the 10,000 or so other people who work at Los Alamos. So that is one.

Second, I think we need to ensure that we overcome the resistance to change. Change is difficult for all of us but we the question

was posed previously about the difference between Los Alamos and

Livermore as an example. We have found historically that there

has been strong resistance to change at Los Alamos. As much as

I admire the laboratory and the work that they do and the people

that are there, there is that resistance. And that has to be overcome. We have to make sure that the attempt to reduce the footprint that Dr. Anastasio described today, that is, reduce the number of vaults, consolidate, actually takes place. We have been advocating that frankly for a long, long time, and our recommendations

simply have never been accepted. So there are some common-sense

sorts of things that I think need to be done and can be done, and

certainly the secretary has committed to it, as has Dr. Anastasio.

And with the right set of oversight principles, I think we can hopefully make progress.

Mr. INSLEE. I want to ask Dr. Anastasio, I have been told that

the DOE failed to incorporate the current safeguards and security

requirements contained in Order 470 in its contract with LANS

when the contract was signed in December 2005. Is that accurate?

Mr. ANASTASIO. My understanding is that the orders that were

included did not include the appropriate language that civil penalties could result per the new 10 C.F.R. 824 order. So I believe,

and I am not the expert on this, but I believe they were in the contract but it wasn’t done in the right way to make them subject to

this new order. But my understand is that has now been fixed.

Mr. INSLEE. Well, has that been fixed? Are those new orders contractually binding on the contractor now?

Mr. ANASTASIO. My understanding is that is the case right now,

yes, sir.

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Mr. INSLEE. OK. Thank you.

Mr. STUPAK. Mr. Whitfield for questions?

Mr. WHITFIELD. Thank you. Mr. Friedman, they didn’t give you

lunch today, is that my understanding?

Mr. FRIEDMAN. It doesn’t show but no I didn’t.

Mr. WHITFIELD. When we talk about Los Alamos, we are always

talking about two basic issues, one, the footprint is way too bug,

and then second, the culture, what I refer to as culture. And people

keep talking about this resistance to change, and Mr. Anastasio,

you have been at Lawrence Livermore and now you are at Los Alamos. How do you characterize this resistance to change? Is that

something that is real or is this just something we just talk about?

Mr. ANASTASIO. I think it is real. I think there is a resistance to

change, and I think all organizations have resistance to change, all

individuals do. The employees at Los Alamos have been through

very tumultuous times over the last many years, and there has

been a lot of things happened to them. I think there is a lot of anxiety in the workforce, and that is one of my goals, of course, to stabilize the morale and get us focused on the future. And part of that

is change, and I think the laboratory has not been through as

much change at Los Alamos as I experienced at Livermore, having

to face during my career there. But the goal I set out with the laboratory, I said let us think about it as improvement. It is not

change to make your life worse, let us go decide what laboratory

we want to be that is going to achieve all these goals that are hard

to deny, and let us go create that laboratory, the laboratory we

want to have, the kind that will serve us in the 21st century. And

I find that employees are responding very much to that. But we

have to take them through change. Change is a process, we all

know, and we are in the middle of that process. We are not done

yet. But I feel the laboratory has been very responsive. People want

that kind of leadership, they want to move forward, they don’t like

the fact that they get talked about in hearings like this, and they

are very receptive to doing the things they need to do to go forward

for the future.

Mr. WHITFIELD. What are the total number of employees, including independent contractors?

Mr. ANASTASIO. I don’t have an exact number off the top of my

head, but around 13,000.

Mr. WHITFIELD. Right. But the morale has been low just because

of this constant barrage of bad publicity and security leaks?

Mr. ANASTASIO. The constant barrage, the change of contractors,

the change of directors. Los Alamos is used to having a director for

10 years, 20 years at a time; and over the last 5 years, maybe we

have had three or four different directors. I mean, there is just this

kind of change that has gone on that they are not used to, and so

we have to move the employees through that.

Mr. WHITFIELD. Of course, you are the one responsible for doing

this. How do you feel yourself about the progress that you’re making right now?

Mr. ANASTASIO. I think we have made some really good progress

as I tried to outline in my testimony, some examples of very concrete things that we have accomplished. I would be anxious to be

able to do it even faster than we are doing. That would be my deVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00197 Fmt 6601 Sfmt 6601 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
194

sire, so I am pushing the system. But on the other hand, it is very

important that we don’t do this the way some things have been

done in the past as well where you do Band-Aids because I think

Mr. Friedman’s comment, can we sustain this? If it is just one

Band-Aid here and the next thing comes, there is another BandAid there. You are just moving from issue to issue. We need to put

in place a system that is sustainable, that puts us not to catch up

with the threat that we have but gets in front of it so that we can

respond to the future threats. Cyber security is so difficult because

computer technology advances so rapidly, and as that advances,

that generates different kinds of threats. So we have to put into

place a system that is really sustainable for the long term that

puts us out in front, as well as putting in place the risk reductions

immediately to handle the problems that we have today in trying

to catch up to that. We are also trying to build a system that will

serve us well into the future.

Mr. WHITFIELD. Well, we wish you the very best in this, and I

think everyone in the country is really tired of the issue and hope

to get it resolved; and I wish you the very best and look forward

to continue working with you. I yield back the balance of my time.

Mr. ANASTASIO. Thank you, and we know that we have a special

responsibility for the country; and we are taking that very seriously.

Mr. STUPAK. Mr. Anastasio, I have got a few questions if I may.

Mr. Friedman, could you give him that memo that you were looking at earlier? The second paragraph of this memo from Linton

Brooks, subject, Pilot of the New National Nuclear Security Administration Oversight Model at Los Alamos. The second line says, the

arrival of a new management team at Los Alamos is an opportunity to take that action. Therefore, you are directed to move immediately into a 2-year pilot of our new oversight model once you

have concurred in the Los Alamos National Security, LLC (LANS)

Contractor Assurance System. Now that is your group, right?

Mr. ANASTASIO. Yes, sir.

Mr. STUPAK. So this pilot would apply to your group coming in

to Los Alamos?

Mr. ANASTASIO. Yes, sir.

Mr. STUPAK. OK. So you would be familiar with this memo?

Mr. ANASTASIO. I am familiar with this, and I would like to just

clarify one thing about this pilot and I do know about it, of course,

and we are off doing our part. This of course is a memo to the site

manager to the Federal workforce, not to us. But one thing to be

clear on, it was very clear to me and still is that this is something

that does not apply to security, it is something that does not apply

to nuclear safety and biohazard facilities. This is something that

applies——

Mr. STUPAK. It deals with the overall management of this site.

Mr. ANASTASIO. It deals with overall management.

Mr. STUPAK. And look what it says.

Mr. ANASTASIO. The oversight model of security and of nuclear

operations has not changed because of this pilot. This pilot is about

other things like——

Mr. STUPAK. Mismanagement of this site. It is totally related,

whether you are dealing with classified, unclassified, employees

195

using drugs, not using drugs, cell phones, not using cell phones. It

is the whole thing. And it says right here, the arrival of a new

management team. You alluded to it, Mr. Friedman alluded to it.

You come into a new management team, you are all fired up here

to do something but then 6 months we lose the enthusiasm, nothing filters down. So instead of having more Federal oversight we

are having less Federal oversight with self-assessment by the new

management team, the new management team which has financial

incentives to do well in their assessment. It seems like the fox is

guarding the hen house in a way.

Mr. ANASTASIO. Just to clarify again, sir, that there is two issues.

There is the management system I use inside the laboratory and

how we manage the laboratory and what tools we use to do

that——

Mr. STUPAK. Right, and we are trying to get at how are you going

to be different from the other teams.

Mr. ANASTASIO. That is our Contractor Assurance System that is

outlined here. This is the management tool I use for all activities.

Mr. STUPAK. OK.

Mr. ANASTASIO. That management system is transparent to the

Federal Government so that they can see my dashboard, how I am

doing against metrics. There is a second issue which is how does

the Government provide oversight. In this pilot, the Government

will maintain the same level of oversight, if not enhance it as what

is going on now in things like security and like nuclear safety. The

pilot is to try to change the oversight model for things that aren’t

that. So there is a management system which is our Contractor Assurance System which is my system——

Mr. STUPAK. And the pilot provides less oversight from a Federal

point of view, from a DOE point of view?

Mr. ANASTASIO. But not for security.

Mr. STUPAK. OK. Then let us look at our dashboard, the figure

we have looked at today, these charts we have had up once or twice

from opening that.

Mr. ANASTASIO. Yes, sir.

Mr. STUPAK. In 2006, DOE’s Office of Health, Safety, and Security found failing or substandard security performance in 14 of the

17 key areas—that is the chart over there—including classified material protection and control, cyber security, and emergency management. The trend was negative compared to 2002. Mr. Podonsky,

the head of that office, testified on January 30, our last hearing,

that ‘‘Los Alamos received the lowest set of performance ratings for

security and emergency management since 1999.’’ As you are looking at your dashboard, what explains it? Why are we going downward in our performance, security, cyber security?

Mr. ANASTASIO. Just to recall that audit was done last fall, between October and December of last year. Of course, I am very

aware of it and was very concerned by it. We have taken a number

of specific actions to address those issues. I have outlined a few of

the concrete results of that. The other thing I would say is that

many audits and reviews have been done since Mr. Podonsky’s review that you are referring to, and just over the last few weeks,

Mr. Pike, the DOE CIO, was here——

Mr. STUPAK. Right.

196

Mr. ANASTASIO. Not here, was at the laboratory as well as the

NNSA CIO; and in talking to those folks after the review, they believe that in fact we have made very significant progress, that we

have improved relative to——

Mr. STUPAK. So what changed the colors on that chart? What

changed the red to something other than red, the yellow to at least

green, and maybe we can get a blue one on there some day. How

do we do it?

Mr. ANASTASIO. Well, I think those are the steps that we have

been taking that I have outlined for you today and that I believe

that I have tried to demonstrate that we are very serious about

this, that we are taking very specific actions, that they are very

concrete. Some have resulted in very demonstrable improvement,

that we are continuing to focus on making those improvements,

and at that same time getting it in a way that is sustainable, that

we don’t have to be back here——

Mr. STUPAK. Look at your dashboard, look at your speedometer.

You got another one of these reviews coming up I believe this fall.

Mr. ANASTASIO. Yes, sir.

Mr. STUPAK. How fast are we going to be going? What colors are

we going to see on there?

Mr. ANASTASIO. Well, I want as many greens up there as I can

get. That is my goal.

Mr. STUPAK. OK. On March 28 an employee discovered that 550

employee names and Social Security numbers were posted on the

Web site of a former subcontractor and worked for the former company, Lujan Software Service, to remove this information. Do you

have any idea how long that information about these employees

were on the Web site?

Mr. ANASTASIO. We are still investigating that issue right now,

Mr. Chairman, so I don’t know for sure how long it has been there.

We believe the data is from the 1998 period is how long it has actually been up on the Web site, we have been working with Mr.

Lujan and his company to try to do some forensics on the Web site

to see if we can understand——

Mr. STUPAK. Right. It didn’t have a counter, so we don’t’ know

how many hits it has had.

Mr. ANASTASIO. We are working that. We don’t have an answer

to that.

Mr. STUPAK. It is from 1998 personnel records and was just discovered in 2007, so it has been there maybe 9 years?

Mr. ANASTASIO. It is potentially that. On the other hand, the information was a name and a Social Security number.

Mr. STUPAK. Right.

Mr. ANASTASIO. That information was buried in several layers

down inside that Web site of a relatively small company. So we are

hopeful that there has been little opportunity to compromise it. The

second thing that we have done, of course, my first concern in this

whole incident was for the employees themselves and we have

taken a number of actions to support the employees. And I could

go through those, but my point was going to be that in fact we have

informed all the employees who were affected. We have heard back

from none of them that say that they had a concern that they think

that their information might have been compromised.

197

Mr. STUPAK. From this side I tell you, it would be a violation of

the contract or subcontract to have this information out there.

Mr. ANASTASIO. Certainly part of his subcontract was to protect

the personal information.

Mr. STUPAK. Then what action or accountability has been taken

for Lujan Software Services?

Mr. ANASTASIO. Well, certainly we have made sure that we took

down that information off that Web site. The lawyers and working

with the IG, we are doing the investigation to understand what

the——

Mr. STUPAK. So no enforcement action then?

Mr. ANASTASIO. Have yet but we are still in the middle of the investigation.

Mr. STUPAK. OK. The Inspector General testimony calls for a

risk-based evaluation of cyber security funding at Los Alamos to

make sure that the resources are available for revised cyber security policies. Has your organization undertaken this evaluation?

When will it be complete? And do you have an estimate of that potential cost?

Mr. ANASTASIO. Yes, every year of course we given input to the

Department on our funding requirements to meet the goals that

they set out for us. So we do that every year. In addition, we have

been in discussion with the Department about extending this idea

of super vault-type rooms and made some estimates of what that

might cost to—if this works like we hope, which we will learn as

we run this pilot. We have been discussing with them as well what

it would take to propagate that through the site in the way we

would like over several years.

Mr. STUPAK. Do you have any numbers or anything for us?

Mr. ANASTASIO. I think it is premature to tell you what the number is. I think we have made some very simple estimate. Let me

just say many tens of millions of dollars.

Mr. STUPAK. OK.

Mr. ANASTASIO. I hope that is useful.

Mr. STUPAK. Well, I said earlier, it is not get out of jail free, it

is not Monopoly, it is not paper money, it is taxpayers’ money and

the monopoly—let me ask you a little bit about that. You are at

Sandia. Did you have the contract at Sandia, too? Did you manage

that lab?

Mr. ANASTASIO. No, it does not.

Mr. STUPAK. Is this the only lab where for 63 years, basically the

life of this lab, one entity has had responsibility there?

Mr. ANASTASIO. It is certainly the only one in 63 years because

Los Alamos was the first lab, of course, of that nature. The Lawrence Berkley Lab also has been under the UC contract. It is not

a national security site but it is a DOE laboratory. But then the

PNL Lab up in Washington has been under the same contractor,

and I think that is coming up for competition and I don’t remember

exactly when but in the near term. So there are other sites that

have had one contractor for many decades but——

Mr. STUPAK. Well, if you have open contractor, we have Secretaries come and go and members come and go and there is really no

incentive to make that change, to bring forth any kind of change

it seems like if you are always getting the same contract and no

198

matter how many hearings we have and things like this. And your

board is still 50 percent UC.

Mr. ANASTASIO. But as you said to me or the committee or subcommittee said to me earlier in a question, why didn’t we see these

problems at Livermore, and I spent most of my career at Livermore

which was under UC contract, too. So I don’t think these problems

are fundamentally an issue of the contractor per se, I think it is

about the local situation more than it is the fundamental issue of

the contractor. That is my personal view. But I would also say that

I am very personally motivated to make Los Alamos a success. This

is certainly something that I believe is very important for the country, and I can certainly speak for all the employees there, that they

are very concerned about their role in these turbulent times the

country faces to fulfill their role, to help the country’s security.

Mr. STUPAK. No one questions your commitment to the process,

but as we have heard over and over again from many, many people

sitting in those chairs, they are all enthused, they are all excited,

it goes for a while, it fizzes out, and it never seems to get down

to the other 13,000 employees. We have the guards striking at

places, performance reviews seem to go from bad to worse, and believe me, we don’t like being here anymore than you do and having

to got through these hearings.

Any further questions for anyone? I ask that the memo be made

a part of the record, that our discovery book that we all agreed

upon earlier be made part of the record except for the Official Use

ones we will not make a part of the official record. We won’t put

the OU documents in.

With that we will keep the record open for 30 days and for follow-up questions for Secretary Bodman. I am sorry he had to leave.

I am sure we will catch him back at another time, hopefully not

in the real near future. And with that, we will let you go, Mr.

Friedman. Get lunch and thank you for your time and effort. The

hearing is adjourned.

[Whereupon, at 1:10 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]

TESTIMONY OF HON. SAMUEL BODMAN

Chairman Stupak, Congressman Whitfield, and Members of the Subcommittee,

I’m pleased to appear before you to discuss what I consider to be one of the most

pressing management issues confronting the Department of Energy (DOE). Since

coming to the Department, one of my top goals has been to institute a safer, more

secure work environment across the DOE complex. And I have meant this to include

physical safety and security as well as cyber security. I want to be absolutely clear

here: the protection of sensitive information is essential to our ability to meet our

mission as a Department.

This testimony is intended to describe the steps that we have taken to improve

security within the Department of Energy following last year’s incident at Los Alamos National Laboratory (LANL). In particular, I will discuss improvements that

have occurred since Deputy Secretary Sell last testified before you in January of

this year. I would preface this discussion with two over-arching points: first, we

have made significant progress over the past few months, and I am confident that

we are on the right track. But, we are not satisfied. We are staying on top of this

issue, and we continue to look for ways to identify and correct any potential weaknesses.

And I hasten to add that the entire senior leadership team at DOE—including

myself, Deputy Secretary Sell, and National Nuclear Security Administration

(NNSA) Acting Administrator Tom D’Agostino—remain strongly committed to imVerDate 11-SEP-98 11:04 Jun 05, 2007 Jkt 000000 PO 00000 Frm 00202 Fmt 6601 Sfmt 6601 Q:\DOCS\110-1 SCOM1 PsN: SCOM1
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proving security at the entire DOE complex and to keeping this Committee closely

informed of our progress.

SENIOR MANAGEMENT CHANGES AND DOE OVERSIGHT ACTIONS

First, let me describe the senior management and oversight changes that we have

made at the Department level. In January, I made the difficult decision to replace

the Under Secretary for Nuclear Security, and Thomas D’Agostino was named as

the Acting Under Secretary and NNSA Administrator. In addition, NNSA has reassigned the Los Alamos Site Office (LASO) Manager and has put one of its strongest

managers, Daniel Glenn—formerly of the Pantex Site Office, in place as Acting

Manager. We are making changes to the Los Alamos National Security, LLC

(LANS) contract to mandate further improvements, and we have increased the

planned fiscal year 2008 investment in cyber security significantly.

In addition, following the event at LANL this past October, I formed two teams

consisting of the Department’s three Under Secretaries, the Chief of Health, Safety,

and Security, and the Chief Information Officer: a Personnel Security Task Force

and a Cyber Security Review Team. I asked them to make specific recommendations

based on the Department’s Inspector General report on the LANL incident.

The Personnel Security Task Force submitted its report on February 28, 2007. It

recommended improvement in several areas. I have accepted their recommendations

and have directed implementation to begin immediately of the following:

• Enhanced mandatory training for those involved in the granting of security

clearances,

• Strengthened Departmental policy on drug testing for those that hold security

clearances,

• Enhanced quality assurance oversight to increase confidence in the suitability

of those granted a security clearance; and

• Revised the personnel security organizational structure to increase the authority

and ensure greater accountability for the Personnel Security Program.

I have also directed that all of the recommendations made by the Cyber Security

Review Team that have not already been implemented, be implemented immediately. To that end, issuance of a revised cyber security policy [DOE Order 205.1A]

was completed on December 4, 2006. And, the new National Security Manual was

issued on March 8, 2007. The Cyber Security Task Force also recommended the following, which we are in the process of implementing:

• Mandatory separation of duties for key positions, such as Information System

Security Officers and System Administrators,

• Improved training for all individuals with cyber security responsibilities; and

• Improved line management oversight of cyber security.

We are also taking steps to further strengthen the oversight by NNSA of LASO.

The NNSA Acting Administrator has directed the NNSA Chief Information Officer

to work very closely with Site Office management to ensure cyber security requirements are implemented by LANL. To ensure that these requirements are fully implemented, the Designated Approval Authority position for cyber security has been

strengthened within the LASO management structure. This position will report directly to the Site Office Manager and is in the process of being filled. Working in

concert with the Site Office and NNSA management additional cyber security personnel will be hired to bolster the cyber security staff and program within the Site

Office.

Further, Acting Administrator D’Agostino has requested that DOE’s Office of

Health, Safety and Security conduct annual inspections at Los Alamos for the next

three years. This month, both NNSA’s Office of Defense Nuclear Security and CIO

will inspect LANL for the cyber and physical security programs. The Site Office will

conduct annual surveys—and regular observations—of the Lab’s security programs.

We are also exercising the Department’s new authorities under 10 CFR 824, Procedural Rules for the Assessment of Civil Penalties for Classified Information Security Violations. The DOE Office of Enforcement has completed its review of the

LANL incident and last week the Department held an enforcement conference with

the Lab’s current management and operating contractor, LANS, and with the

former contractor, the University of California. Similar to the process we use for

Price-Anderson enforcement, both contractors now have the opportunity to respond

before we make a decision regarding a Preliminary Notice of Violation.

Finally, I would just add that I continue to be in close contact with the senior

leadership of the Laboratory and the LANS Board.

200

CORRECTIVE ACTIONS BY LANL MANAGEMENT & OPERATING CONTRACTOR LANS,

LLC

Even while these Departmental reviews and changes have been underway, LANS

has moved ahead with corrective actions. Following the incident, LANS immediately

strengthened its escorting procedures, initiated mandatory entry and exit inspections of vault-type room visitors, and increased the number of exit inspections at

other security boundaries ten-fold.

One of the issues identified as a contributing cause to this incident was the span

of classified activities. LANS continues on schedule to move to a diskless environment, reducing the number of pieces of classified removable electronic media

(CREM) and the number of classified paper documents. LANL recognizes their volume of classified holdings is unnecessarily large, conducted in too many security

areas, involves too many people, and is spread out over too large of an area. As a

result, LANS is aggressively reducing the number of locations where they hold and

process classified matter. LANS will more closely scrutinize the continued need for

existing security operations or the establishment of a new security area. This will

enable them to better focus professional security resources to provide stronger management and oversight of classified operations.

To achieve this reduction, LANS has proposed, and NNSA has approved, a new

consolidated vault-type room (VTR) concept to create classified matter storage and

processing centers thatwill reduce the number of security areas and enhance the accountability and control of classified matter. The first ′′Super′′ VTR is planned to

open on June 1, 2007.

The Weapons Engineering Division at LANL plans to close three VTRs immediately, three more by the end of April, and another five by the end of fiscal year

2007, a reduction of 50 percent. This division also plans to further reduce its CREM

holdings by 90 percent, from 364 to a dozen or so pieces in the near term. Another

division within LANL, the Weapons Physics Division, currently has six VTRs; it will

close three by the end of fiscal year 2007. The classified materials in these VTRs

will be archived, destroyed, or re-located as appropriate. These reductions are just

examples of progress that will reduce security risk without reducing the productivity

of our scientists and engineers.

While this incident occurred during the early stage of LANS’ contract, I hold it

accountable for the incident, and for rectifying the situation, just as I would at any

DOE site managed by any contractor.

The LANS Board of Governors has also taken an active role in reviewing and validating the adequacy of LANL’s corrective actions. The Board is closely monitoring

the Laboratory’s integrated corrective action plan which was developed to address

the root causes of the incident identified during the incident inquiry. LANS has reassigned cyber security responsibilities to the Chief Security Officer who reports directly to the Laboratory Director. The Board has also made a significant effort to

employ the collective power of the LANS member companies through the use of Assess, Improve, and Modernize, or AIM Teams from the member companies to conduct oversight assessments and make recommendations for improvement. The

Board has taken aleadership role in numerous other ways as well, but most importantly, it has opened a clear line of communication with me and the Acting NNSA

Administrator. I talk to the Chairman of the LANS Board of Governors, Gerald

Parsky on a regular basis. In fact, we met with the Chairman and Vice Chairman

of the Board of Governors in person two weeks ago.

CONCLUDING OBSERVATIONS

While we have made significant improvements and changes in personnel and

cyber security programs, I believe that in order to guard against future incidents,

we must continually improve the security culture across the DOE complex. And we

will.

In closing, let me just say this: the men and women who work at LANL and all

our National Laboratories are among the world’s most talented scientists and engineers. Since their founding, these Laboratories have demonstrated again and again

the tremendous power—and promise—of science to help our nation solve its greatest

challenges. But such a system cannot tolerate any lapses in security—be they in the

physical or cyber realm. Protecting critical information and maintaining a vibrant,

collaborative scientific culture are not mutually exclusive goals. Quite the opposite

is true. In this case, you absolutely cannot achieve one without the other. And, you

continue to have my word that I will do everything in my power to support both

objectives. The American people deserve no less.

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This concludes my statement. I will be pleased to respond to your questions.

Thank you.

TESTIMONY OF MICHAEL R. ANASTASIO

Good morning Chairman Stupak, Ranking Member Whitfield, and Members of the

Subcommittee. Thank you for the opportunity to update you on our progress.

I am Michael Anastasio, director of Los Alamos National Laboratory since June

2006, and president of Los Alamos National Security, LLC.

I am pleased to report that we have continued to make significant progress on

many fronts since I last addressed this Subcommittee 11 weeks ago. Today, in keeping with the subject of this hearing, I will focus on security. As I expressed at the

last hearing, I personally take the issue of security at Los Alamos very seriously.

We are entrusted with some of the Nation’s most important secrets and I view their

safeguarding as one of my most significant responsibilities.

First, we have significantly cut our risks in both cyber and physical security. This

includes reducing and consolidating our classified holdings, per the subcommittee’s

stated concern. Second, we are taking additional actions to make policy clear and

consistent—and to change employee behavior. Third, we are putting in place comprehensive corrective actions with a major focus on long-term sustainability.

My management team, my Board of Governors, and I are taking a number of specific actions to reduce risk.

Cyber security. We now have positive control over both our classified computer

ports, using a combination of software, physical locks, and tamper-indicating devices. All of our classified systems have been inspected and found to be compliant.

We have reduced the number of stand-alone classified systems by 28 percent.

Physical security. We have made our vault escort requirements clearer and

much tougher, requiring the search of all belongings carried by those escorted in

and out of vaults. By December, we will have reduced our accountable classified removable electronic media (known as ACREM) by 50 percent. We have destroyed almost 1,500 classified parts and 500 boxes of classified documents that we inherited.

We have eliminated 14 vault-type rooms, a reduction of 10 percent—with more to

come.

Policy and behaviors. In the area of policy and behaviors, we have uniformly

trained our Information Systems Security Officers (ISSOs) and are hiring senior

ISSOs in all key organizations to provide consistency throughout the Laboratory.

We are making our cyber security policy clearer and simpler. In addition to mandatory training, we will promote the right behavior through active employee participation. For example, we will directly involve employees through worker-led security

teams at multiple levels.

On March 5, we launched an enhanced substance abuse program. Every newly

hired employee is tested for illegal drugs, and every badgeholder is now subject to

random testing, regardless of his or her clearance level.

New type of vault-type room. For long-term effectiveness and sustainability,

we have begun constructing a super vault-type room, the first of its kind. This will

allow us to consolidate and control classified information uniformly. At the same

time, it will give authorized users efficient access.

I expect to complete construction of the first functional prototype by June. This

project will initially allow us to close at least six more vault-type rooms and reduce

our ACREM libraries by nearly one-third.

By constructing additional super vault-type rooms, we will reduce the number of

classified vaults to an absolute minimum, consistent with our operational requirements.

Validation, verification & oversight. We have been careful to embed validation and verification into our corrective action plans to sustain all these efforts and

to prevent backsliding. Moreover, everything we’re doing is being closely scrutinized

only by Congress but by my own Board of Governors and by DOE, NNSA, and other

oversight bodies. I welcome that continuing scrutiny. It validates that we’re heading

in the right direction—and keeps our eye on the ball.

As I testified previously on this issue, there are no ‘‘silver bullets’’ where security

is concerned. But, with these security enhancements, and Board of Governors support and oversight, we are aggressively moving Los Alamos in the right direction,

as we are on many other fronts vital to the Lab’s mission.

Thank you again for the opportunity to testify. I would be pleased to answer any

questions you may have.

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STATEMENT OF GREGORY H. FRIEDMAN

Mr. Chairman and members of the Subcommittee, I am pleased to be here at your

request to testify on the concerns expressed in your April 5 letter regarding operations at the Los Alamos National Laboratory.

BACKGROUND

In January of this year, I testified before this subcommittee on the special inquiry

conducted by my office regarding the diversion of classified data from the Los Alamos National Laboratory. Specifically, at the request of the Secretary of Energy, we

examined the efforts of the Department and its contractors to protect classified information and the steps that were taken to ensure that only authorized individuals

had access to such information. Our report on this matter was issued on November

27, 2006.

OFFICE OF INSPECTOR GENERAL REVIEW

The Office of Inspector General (OIG) found that the security environment at Los

Alamos was inadequate, despite the expenditure of millions of dollars by the National Nuclear Security Administration to upgrade various components of the Laboratory’s security apparatus.

In particular, related to the cyber security control structure, we found that:

• Certain computer ports, which could have been used to inappropriately migrate

information from classified systems to unclassified devices and computers, had not

been disabled; • Classified computer racks were not locked;

• Certain individuals were inappropriately granted access to classified computers

and equipment to which they were not entitled; • Computers and peripherals that could have been used to compromise network

security were introduced into a classified computing environment without approval;

and, • Critical security functions had not been adequately separated, essentially permitting system administrators to supervise themselves and override controls.

In many cases, Laboratory management and staff had not: developed policies necessary to protect classified information, enforced existing safeguards, or provided

the attention or emphasis necessary to ensure protective measures were adequate.

Some of the security policies were conflicting or applied inconsistently. We also

found that Laboratory and Federal officials were not as aggressive as they should

have been in conducting security reviews and physical inspections. In short, our

findings raised serious concerns about the Laboratory’s ability to protect both classified and sensitive information systems.

The OIG also reviewed certain aspects of the security clearance process in place

for Laboratory employees. We identified particular weaknesses associated with this

program which were discussed in a closed session of this subcommittee in January

of this year.

DEPARTMENTAL RESPONSE

After this incident was discovered, Department and Laboratory management officials launched several efforts to identify and correct control deficiencies that contributed to an environment in which classified information could be removed without

authorization. In particular, the Deputy Secretary directed an immediate review of

policies and practices related to computer ports at each of the Department’s facilities. Further, the Secretary established two high-level Task Forces to address our

findings. The reports of the Secretary’s Task Forces and a list of the proposed corrective actions were provided to my office last week.

The report from the Department’s Committee to Review the Cyber Security-related Recommendations indicated concurrence with the OIG’s report and specified that

the Department had initiated corrective actions that involved revising policy, securing unneeded ports, limiting access and privileges, and maintaining separation of

duties. The report also indicated that controls over security planning and accreditation and physical inspections were to be strengthened and that corrective actions

would be tracked to resolution.

The Personnel Security Program Review Task Force analyzed the OIG report and

agreed that there were personnel security program weaknesses. The Task Force addressed the security clearance issues raised in our November 2006 report. Specifically, it identified and developed recommendations for improving Department-wide

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tional details are contained in the Task Force’s report, which has been marked by

the Department as ′′Official Use Only.′′

Many of the corrective actions outlined by the two Task Forces are in progress.

However, implementation and execution are key. If properly carried out, the corrective actions should improve classified operations at Los Alamos and could help prevent similar incidents at Departmental facilities around the complex.

ISSUES REQUIRING CONTINUING ATTENTION

As I have testified on several occasions, the Department must do a better job addressing the recurring challenges it faces. Specifically:

1. With regard to the current matter, the Department must ensure that all actions and recommendations outlined in the Task Force Reports are formalized into

policy and adopted as practice throughout the Department. As part of that effort,

these policies should be incorporated into all facility contracts.

2. To achieve the recommended reforms, the Department must establish firm

schedules with specific implementation timelines and performance metrics.

3. Both Federal and contractor officials need to manage more aggressively. As

part of that process, the Department needs to ensure that its Federal contract management function is adequately staffed and that the skill mix is appropriate. In addition, Department and Laboratory officials must develop a more comprehensive

regimen of compliance testing and follow-up to ensure that security policies and procedures are rigorously followed.

4. Individuals and institutions, both Federal and contractor, must be held accountable for failure to follow established security measures. As it has begun to do

in its response to the recent Los Alamos incident, the Department should emphasize

that the failure to properly protect classified information and materials will have

meaningful consequences.

Finally, consistent with our November 2006 recommendation, we continue to believe that the Department should perform a risk-based evaluation of cyber security

funding at Los Alamos. The objective of this evaluation would be to ensure that the

resources are available for complete implementation of the revised cyber security

policies and procedures.

ONGOING INSPECTOR GENERAL EFFORTS

For the past 5 years, we have identified both cyber and physical security as pressing management challenges. For these reasons, and because of the recent incidents,

the Office of Inspector General continues to be concerned about security across the

complex. We have ongoing activities to examine information technology and systems

security; implementation of revised security measures; disposal of sensitive property; and, issues related to protective force training.

In addition to our on-going work, the full Committee, in January 2007, requested

that the Government Accountability Office (GAO) examine the security of the Department’s unclassified and classified information networks and its cyber security

programs. My office coordinates closely with GAO on reviews of the Department,

and we believe that the assessment requested by the Committee will lead to a

strengthened agency-wide security posture. My office will continue to conduct audit,

inspection, and investigative work that will complement the review requested by the

Committee.

Mr. Chairman, this concludes my statement and I would be pleased to answer any

questions you may have.

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