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[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]

 
MISMANAGEMENT OF THE BORDER SURVEILLANCE SYSTEM AND LESSONS FOR THE NEW
                      AMERICA'S SHIELD INITIATIVE
                          PART I, II, AND III

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

                                HEARING

                               before the

         SUBCOMMITTEE ON MANAGEMENT, INTEGRATION, AND OVERSIGHT

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                        FIRST and SECOND SESSION

                               __________

                   JUNE 16, 2005, DECEMBER 16, 2005,

                         and FEBRUARY 16, 2006

                               __________

                           Serial No. 109-21

                               __________

       5Printed for the use of the Committee on Homeland Security
                                     
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

                                     

  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html

                               __________

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                     COMMITTEE ON HOMELAND SECURITY

                 Christopher Cox, California, Chairman

Don Young, Alaska                    Bennie G. Thompson, Mississippi
Lamar S. Smith, Texas                Loretta Sanchez, California
Curt Weldon, Pennsylvania, Vice      Edward J. Markey, Massachusetts
Chairman                             Norman D. Dicks, Washington
Christopher Shays, Connecticut       Jane Harman, California
Peter T. King, New York              Peter A. Defazio, Oregon
John Linder, Georgia                 Nita M. Lowey, New York
Mark E. Souder, Indiana              Eleanor Holmes Norton, District of 
Tom Davis, Virginia                  Columbia
Daniel E. Lungren, California        Zoe Lofgren, California
Jim Gibbons, Nevada                  Sheila Jackson-Lee, Texas
Rob Simmons, Connecticut             Bill Pascrell, Jr., New Jersey
Mike Rogers, Alabama                 Donna M. Christensen, U.S. Virgin 
Stevan Pearce, New Mexico            Islands
Katherine Harris, Florida            Bob Etheridge, North Carolina
Bobby Jindal, Louisiana              James R. Langevin, Rhode Island
Dave G. Reichert, Washington         Kendrick B. Meek, Florida
Michael McCaul, Texas
Charlie Dent, Pennsylvania

                                 ______

         SUBCOMMITTEE ON MANAGEMENT, INTEGRATION AND OVERSIGHT

                     Mike Rogers, Alabama, Chairman

Christopher Shays, Connecticut       Kendrick B. Meek, Florida
John Linder, Georgia                 Edward J. Markey, Massachusetts
Tom Davis, Virginia                  Zoe Lofgren, California
Katherine Harris, Florida            Sheila Jackson-Lee, Texas
Dave G. Reichert, Washington         Bill Pascrell, Jr., New Jersey
Michael McCaul, Texas                Donna M. Christensen, U.S. Virgin 
Charlie Dent, Pennsylvania           Islands
Christopher Cox, California (Ex      Bennie G. Thompson, Mississippi 
Officio)                             (Ex Officio)

                                  (II)

                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Mike Rogers, a Representative in Congress From the 
  State of Alabama, and Chairman, Subcommittee on Management, 
  Integration, and Oversight:....................................
  Oral Statement.................................................     1
  Prepared Statement.............................................    52
The Honorable Kendrick B. Meek, a Representative in Congress From 
  the State of Florida, and Ranking Member, Subcommittee on 
  Management, Integration, and Oversight.........................     2
The Honorable Christopher Cox, a Representative in Congress From 
  the State of California, and Chairman, Committee on Homeland 
  Security.......................................................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security..............................................     5
The Honorable Sheila Jackson-Lee, a Representative in Congress 
  From the State of Texas:
  Oral Statement.................................................    34
  Prepared Statement June, 16, 2005..............................     6
The Honorable John Linder, a Representative in Congress From the 
  State of Georgia...............................................    29
The Honorable Michael McCaul, a Representative in Congress From 
  the State of Texas.............................................    37
The Honorable Dave G. Riechert, a Representative in Congress From 
  the State of Washington........................................    32
The Honorable Christopher Shays, a Representative in Congress 
  From the State Connecticut.....................................    48

                               WITNESSES
                        Thursday, June 16, 2005

Mr. Joel S. Gallay, Deputy Inspector General, U.S. General 
  Services Administration:
  Oral Statement.................................................     7
  Prepared Statement.............................................     9
Mr. Greg Pellegrino, Global Managing Director--Public Sector, 
  Deloitte Touche Tohmatsu:
  Oral Statement.................................................    19
  Prepared Statement.............................................    21
Mr. Joseph A. Saponaro, President, L-3 Communications, Government 
  Services, Inc.:
  Oral Statement.................................................    14
  Prepared Statement.............................................    16
Accompanied by: Mr. Thomas Miller, General Counsel...............    28

                       Friday, December 16, 2005

The Honorable Richard L. Skinner, Inspector General, Department 
  of Homeland Security:
  Oral Statement.................................................    54
  Prepared Statement.............................................    56
Accompanied by: Mr. Carl Mann, Chief Inspector, Office of 
  Inspections and Special Reviews, Office of Inspector General, 
  Department of Homeland Security: Oral Statement................    64

                      Thursday, February 16, 2006

Mr. Gregory L. Giddens, Dirctor, Secure Border Initiave Program, 
  Department of Homeland Security:
  Oral Statement.................................................    79
  Prepared Statement.............................................    80
Mr. James C. Handley, Regional Administrator, Great Region 5, 
  General Services Administration:
  Oral Statement.................................................    84
  Prepared Statement.............................................    85

                             For the Record
                       Friday, December 16, 2005

Questions Submitted by the Honorable Mike Rogers.................   107

                      MISMANAGEMENT OF THE BORDER
                    SURVEILLANCE SYSTEM AND LESSONS
                FOR THE NEW AMERICA'S SHIELD INITIATIVE
                                 PART I

                              ----------                              

                        Thursday, June 16, 2005

                  House of Representatives,
                    Committee on Homeland Security,
                                Subcommittee on Management,
                                 Integration and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:06 a.m., in 
Room 2212, Rayburn House Office Building, Hon. Mike Rogers 
[chairman of the subcommittee] presiding.
    Present: Representatives Rogers, Cox, Shays, Linder, 
Reichert, McCaul, Dent, Thompson, Meek, Jackson-Lee, and 
Christensen.
    Mr. Rogers. [Presiding.] This meeting of the Homeland 
Security Subcommittee on Management, Integration, and Oversight 
will come to order.
    I would first like to welcome our guests and thank you for 
taking the time out of your busy schedules to be with us today.
    We are holding this hearing today to discuss the issue of 
border patrol surveillance technology.
    In 1998, the former Immigration and Naturalization Service 
launched the Integrated Surveillance Intelligence System, known 
as ISIS. This system was originally designed to detect illegal 
aliens and drug traffickers crossing our borders.
    A major component of the system is the Remote Video 
Surveillance program. This network integrates multiple color, 
thermal and infrared cameras, which are mounted on 50-to 80-
foot poles along the borders, into a single remote-controlled 
system.
    Later this year, the Department of Homeland Security plans 
to roll out a new initiative to expand and upgrade this system. 
Known as the America's Shield Initiative, this program will 
expand and replace ISIS to help prevent terrorists from 
slipping over our borders between the ports of entry. It is 
expected to cost $2.5 billion.
    In December 2004, the Inspector General of the General 
Services Administration issued an audit. This report found 
numerous problems with the Border Patrol's contract for the 
Remote Video Surveillance program.
    For example, the initial $2 million award was made to the 
International Microwave Corporation, known as IMC, without 
documented evidence of a competition. Interestingly, however, 
one year later IMC received a $200 million extension for many 
of the tasks that had fallen outside the scope of the original 
contract.
    GSA also found problems with the equipment. At the Border 
Patrol location in Blaine, Washington, for example, auditors 
found cameras and other pieces of equipment that did not work. 
Some needed frequent repair.
    At three other locations, including Detroit, auditors found 
surveillance sites where no equipment had even been delivered 
and no work was underway. At other sites in New York, Arizona 
and Texas, some equipment had been installed, but was not 
operational.
    GSA also noted these deficiencies: 60-foot poles that were 
paid for but never installed; sensitive equipment that failed 
to meet electrical codes; an operations center where 
contractors and government employees did little or no work for 
over a year; and, not surprisingly, numerous cost-overruns.
    In September 2004, GSA abruptly halted extending the 
contract, leaving approximately 70 border sites without 
monitoring equipment. It also forced the contractor to ship 
truckloads of equipment back to the Border Patrol. Today, that 
equipment is gathering dust in a warehouse.
    What we have here, plain and simple, is a case of gross 
mismanagement of a multimillion dollar contract. This agreement 
has violated federal contracting rules. And it has wasted 
taxpayers' dollars. Worst of all, it has seriously weakened our 
border security.
    Today we will hear from the GSA's Deputy Inspector General 
about the findings of this audit. We will also hear from the 
President of L-3 Communications, the company that acquired IMC.
    We will also hear from a leading private sector expert on 
the best practices in government contract management.
    And in a future and not too distant hearing, we will hear 
from representatives of the Department of Homeland Security. 
And we will be interested in obtaining information and 
documents on this contract from the department.
    We will also look forward to a response to a letter that 
Congressman Meek and I sent to Secretary Chertoff on May 27, 
which is still pending a response.
    Again, I would like to thank our witnesses for being here 
today, and I look forward to hearing your testimony. I now 
yield to my colleague, the Ranking Member, Mr. Meek from 
Florida, for any comments that he may have.
    Mr. Meek. Thank you, Mr. Chairman. And once again, it is 
good to be here with you, having this subcommittee meeting. And 
I am glad to be joined by the full committee chairman and the 
ranking member.
    I would also like to say that I am glad that we are 
discussing the issues that have been raised by the inspector 
general of the General Services Administration about the 
Integrated Surveillance Intelligence System, known as ISIS.
    The network of cameras and sensors that are along our 
borders that we are trying to protect the American people, we 
know that there are a number of failures. Even though it only 
covers 4 percent of America's border, it is not strong enough 
to be able to protect us all.
    And even though I am glad to hear that DHS has decided to 
move forward with using technology to protect our borders, it 
has failed to explain how and why America's Shield Initiative 
is more effective or efficient than the Integrated Surveillance 
Intelligence System. I understand that the ISIS system will be 
supplemented by an ASI system, which has integrated new 
technologies. And I want to make sure that we look at the 
mistakes that have led to the failure of ISIS.
    This will let us understand how the ASI system will work 
better. But before I take the opportunity to not only welcome 
the witnesses we do have, I have to point out the fact that we 
do not have witnesses from the department.
    In my opinion, Mr. Chairman, this is very disappointing. I 
know that you tried to get them here. And it would have been 
very helpful to have those members here.
    Hopefully, they could have answered some of the questions 
on our May 27th letter. But I have to point out for the record 
some of those questions that we put out before them: what 
evaluation has been done of the program, number one; number 
two, what steps it took to address the management and program 
contract issues that obviously are glaring; the specific 
difference between the Integrated Surveillance System and 
America's Shield Initiative; and also, how the implementation 
of America's Shield Initiative is safeguarded to avoid the 
problems that were pointed out by the General Services auditor.
    However, it is my understanding that as of yesterday, DHS 
has failed to provide the subcommittee with this information. 
And also, I checked this morning and we still have not received 
it.
    The second issue I would also like to raise is the fact 
that for us to be able to move forth and be able to make sure 
that the American people are getting what they deserve as it 
relates to having protected borders using this new technology, 
until we hear from the Department of Homeland Security in a 
meaningful way, we are still--in my opinion--very vulnerable 
and also wasting the taxpayers' money.
    Mr. Chairman, I look forward to hearing from our witnesses 
that we do have here. And I want to thank those that are here 
from the public and private sector because our goal here in 
this subcommittee is to make sure that not only do we protect 
our borders, but we make sure that we spend the taxpayers' 
dollars responsibly.
    So I look forward to the testimony. I look forward to 
hopefully learning more about protecting our borders, but also 
pointing out the inequities that are ongoing today.
    Mr. Chairman, thank you once again for having this hearing. 
And I look forward to hearing good testimony.
    Mr. Rogers. I thank the gentleman.
    The Chair now recognizes the Chairman of the full 
committee, Mr. Cox of California.
    Mr. Cox. Thank you, Mr. Chairman. This is a very important 
hearing for the reasons that you both laid out. I want to thank 
you for having it.
    We are not interested merely in exhuming the failures of 
the past, but more importantly, in inferring organizational 
lessons of both the contracting and procurement for the 
Department of Homeland Security going forward with respect to 
the America's Shield Initiative.
    And there is a purpose to all this. In just six weeks, to 
remind my colleagues, on July 27, 2005, Ahmed Ressam, whom we 
refer to as the Millennium Bomber, is going to be sentenced for 
his attempt to smuggle explosives across the northern United 
States border into Port Angeles, Washington.
    His plan, of course, was to blow up LAX, the Los Angeles 
International Airport. And that plan was thwarted six years ago 
by an alert customs agent.
    Today, we have the opportunity to examine key findings in 
the General Services Administration's audit, through the IG, of 
the Remote Video Surveillance program and its parent program, 
the Integrated Surveillance Intelligence System. What the audit 
reflects, as the Chairman has noted, is that these key 
initiatives of the former INS and the Border Patrol to protect 
our borders were not effectively managed.
    The result was a waste of taxpayer dollars and, more 
importantly, more seriously, continuing holes in our border 
security system.
    We will explore today questions regarding four things about 
this failure: first, the initial award of the first RVS 
contract six years ago; second, the contract mechanisms that 
were used; third, the type and quality of equipment that was 
installed; and fourth, the management of the contract, both by 
the Border Patrol and GSA.
    This hearing is timely because the Department of Homeland 
Security will soon announce its plans regarding the America's 
Shield Initiative, which, of course, is going to supplement and 
replace both the ISIS and the RVS programs.
    The department estimates that America's Shield will cost 
$2.5 billion over the next five years; that is, perhaps a 
justifiable amount, given that it is going to focus on an 
aggressive effort to monitor over 6,000 miles of our borders 
with surveillance technology. But it is, nonetheless, a 
significant sum of money. And it is absolutely vital that this 
time we get it right.
    America's Shield, as planned, will integrate the use of 
ground sensors, unmanned aerial vehicles, regional command 
centers and border agents on the ground. As we prepare to spend 
$2.5 billion on this initiative, it is important to examine the 
lessons of past failures and, more importantly, to infer what 
best practices can be applied in the future for managing ASI.
    Currently, the Department of Homeland Security is the 
second largest spending agency in the Federal Government after 
the Department of Defense. Simply to manage the DHS 
acquisitions requires approximately 700 Department of Homeland 
Security employees. They are responsible for $13 billion of 
contracts.
    The Bureau of Customs and Border Protection, which is the 
leading agency for the America's Shield Initiative, has 80 
acquisition staff handling $2.6 billion in planned obligations 
for the current fiscal year. When the department was 
established, it had legacy components. And those legacy 
components have contributed no fewer than seven separate 
procurement offices.
    The Homeland Security Act of 2002 created 35 new offices 
within DHS that have no independent procurement support. So, 
the Chief Procurement Officer established an eighth office, the 
Office of Procurement Operations, to support over $2 billion in 
transactions by those 35 offices.
    Under the current organizational structure at DHS, the 
Chief Procurement Officer has direct line authority over only 
the eighth office that he established. He has only indirect 
line authority over the seven legacy procurement offices.
    So Mr. Chairman, I look forward to exploring in this 
hearing, and afterwards with the Department of Homeland 
Security, what organizational changes the Congress can help the 
department to make in order to strengthen the procurement 
process and improve overall contract management at DHS. There 
is no more important substantiation of this requirement than 
with the America's Shield Initiative that is the focus of this 
hearing.
    Thank you, Mr. Chairman.
    Mr. Rogers. Thank you.
    The Chair now recognizes the Ranking Member of the full 
committee, the gentleman from Mississippi, Mr. Thompson.
    Mr. Thompson. Thank you very much, Mr. Chairman and ranking 
member.
    And I would like to welcome the witnesses to the panel this 
morning.
    Border security is vital to America's security. Ensuring 
the safety of our borders must be one of this committee's main 
priorities.
    Border Patrol agents, support personnel and equipment and 
technology each play a role in ensuring the safety of our 
borders. The successful and comprehensive use of technology can 
serve as a force multiplier along our vast borders and provide 
the clock surveillance and monitoring.
    ISIS was envisioned as a means to integrate technology in 
our nation's border protection strategy. However, the December 
2004 audit by the inspector general of GSA revealed major and 
significant problems within the ISIS program.
    Over a 10-year period, the American taxpayers have paid 
$239 million for ISIS; yet, based on this GSA report, only 4 
percent of the border has been covered. In our oversight role, 
we need to understand not only what has happened, but how it 
happened and how mistakes can be avoided in the future.
    It is not enough to change the name of ISIS to America's 
Shield. We must change the practices that led to the problem.
    For fiscal year 2006, the administration requested $51 
million for the America's Shield Initiative. And this Congress 
appropriated the amount requested.
    We must ensure that the past and future investment of the 
American taxpayer is properly spent. We cannot fulfill our 
constitutionally mandated function if the administration 
refuses to cooperate.
    We do not have witnesses who can tell us why the INS 
decided to allow GSA to manage this contract. We do not have 
witnesses who can tell us why the GSA failed to exercise 
oversight of the contract. We do not have the witnesses from 
DHS who can tell us the steps that have been taken to assure 
that these mistakes will not be repeated.
    I am happy to hear the chairman's comments, in his opening 
statement, that we will continue to pursue the individuals to 
get them before this committee to answer some of these 
questions.
    But also, Mr. Chairman, at this point, we do not have 
witnesses who can paint a complete picture and provide a 
forward-looking strategy for us. The DHS IG will release a 
report in 30 days on the failure of ISIS.
    At that time, this committee should convene a hearing with 
representatives from DHS, IG and GSA procurement office and of 
the Department of Homeland Security to look at the failure of 
ISIS. We cannot fulfill our oversight mission unless all 
relevant parties are called before this committee.
    And I look forward to that taking place, Mr. Chairman.
    I support the men and women in our Border Patrol. They need 
the kind of help that technology can bring. And we must do our 
part to assure that they have an efficient and effective 
system.
    We can do better than the mistakes of ISIS. We can make 
America safer and make America's Shield the program that it is 
intended to be, only if we build on the errors of the past.
    And I look forward to the testimony, Mr. Chairman.
    Mr. Rogers. Thank you. And I do assure you, we are going to 
have a subsequent hearing for those parties. And DHS has 
assured us that they will make it a point to be at that 
hearing.
    I want to remind other members that they can provide 
opening statements for the record.

Prepared Statement of the Honorable Sheila Jackson-Lee a Repesentative 
                  in Congress From the States of Texas

                             Jund 16, 2005

    Chairman Rogers and Ranking Member Meeks, I appreciate your efforts 
in holding today's hearing concerning the new border surveillance 
system. As a Representative of the 18th Congressional District of Texas 
and Ranking Member on the Judiciary Subcommittee on Immigration, Border 
Security, and Claims, the success of the new America's Shield 
Initiative (ASI) is a major issue for me as well as my constituency.
    On the Immigration Subcommittee as well as with this body, I have 
worked extensively to underscore the need for more technology and 
manpower at the borders in order to obviate the need for volunteer 
militias such as the Minuteman Project. I am concerned about the 
potential for violence along the border, given that many of the 
participants carry firearms.\1\
---------------------------------------------------------------------------
    \1\ Associated Press; ``Armed Civilians to Patrol Mexican Border'' 
(3/20/05). See also, Ayres, Chris; ``Tombstone vigilantes ride shotgun 
to keep the strangers out;'' The London Times; pg. 42 (4/1/05).
---------------------------------------------------------------------------
    In addition to an analysis of the performance of AS I, I would like 
to know what actions the Department is taking to monitor the activities 
of the Minutemen and other private individuals involved in monitoring 
border movements of undocumented persons. I would also like to know 
what, if any, efforts are underway to guard against violence along our 
border by the armed Minutemen or other private individuals involved In 
monitoring border movements of undocumented persons.
    In addition to enhancing technology, we must ensure that we have a 
trained and an adequate number of employees available to patrol in 
order to thwart the propagation of armed private individuals along 
these borders who pose a threat to undermine the Department's role in 
protecting our borders and, if violence results could create 
significant new homeland security threats that could overshadow the 
real issue of porous borders.
    I hope that the integration problems that riddled the Integrated 
Surveillance Intelligence System (ISIS) do not carry over to ASI. This 
body as well as the Full Committee must exercise sufficient oversight 
as we move forward with implementation of this new technology. Thank 
you.

    Mr. Rogers. And we are delighted to have such a great panel 
of folks to testify with us today.
    I would like to start off by recognizing Mr. Joel Gallay, 
Deputy Inspector General of the U.S. General Services 
Administration, for his comments.

                    STATEMENT OF JOEL GALLAY

    Mr. Gallay. Thank you, Mr. Chairman, Mr. Meek, members of 
the subcommittee. I am pleased to have the opportunity to 
appear today to discuss our recent audits of GSA's contracting 
efforts in support of the Border Patrol's Remote Video 
Surveillance Program.
    Over the past several years, we have performed a number of 
audits of contracting practices of GSA's Federal Technology 
Service Client Support Centers across the nation. In a series 
of reports, beginning in early 2003, we identified widespread 
problems in FTS contracting.
    Our initial reports prompted a request from the GSA 
Administrator for us to conduct a nationwide review. In our 
2004 audit, part of that review, we sampled over 300 task 
orders awarded by FTS, including 13 relating to the RVS 
project. The total value of those 13 orders was $43.4 million.
    Our review found that there were a number of significant 
deficiencies in the RVS procurement, along with a lack of 
adequate progress in actually implementing the RVS improvements 
and chronic inattention on the part of both GSA and the Border 
Patrol to the proper administration of the contract.
    Despite the critical nature of the program and despite 
having paid the contractor nearly $20 million, as of last 
summer, at the end of our field work, none of the sites covered 
in our sample had fully operational RVS systems in place. At 
some locations, no equipment had been installed; and at others, 
problems with the equipment rendered the system incomplete and 
unreliable.
    Procurement deficiencies occurred in a number of areas. A 
major problem was the lack of competition in awarding the RVS 
contracts.
    In brief, in 1999, FTS made individual task orders on the 
order of $1 to $2 million to a contractor for the purchase and 
installation of RVS cameras and monitoring equipment. The 
following year, as the chairman pointed out, FTS awarded to 
that same contractor and a team of vendors, effectively on a 
sole-source basis, a blanket purchase agreement valued at more 
than $250 million for a nationwide RVS project.
    This new contract represented an enormous increase in scope 
and value over the initial award. It should have been formally 
competed to allow all interested, qualified vendors an 
opportunity to respond.
    Another problem highlighted by our audit work was the use 
of contracting vehicles that were inappropriate for 
construction services. A considerable portion of the RVS 
project required construction work to install foundations, 
erect poles and towers up to 300 feet in height, and hook up to 
utilities.
    Skilled craftsmen were employed to build and install the 
components of the system. Engineering firms were needed to 
design the installation and define the specific requirements 
for each location.
    The contractor's multiple award schedule contract and those 
of its team members did not include the services necessary to 
perform such work. The scheduled contract it held was primarily 
a commodities contract for furnishing radios and microwave 
transmission equipment, not construction work.
    This appears to have been an attempt to improperly shoehorn 
a broad and complex project into a more narrowly defined and 
conveniently available existing contract. Government personnel 
procuring construction services require specialized training. 
FTS personnel lacked that training and expertise.
    In the case of the RVS program, FTS undertook projects it 
had neither the authority nor skills to properly procure and 
manage. Our review also found widespread inadequate contract 
administration and project management on the part of both FTS 
and the Border Patrol.
    FTS' lack of oversight of its task orders resulted in 
payments being made for shoddy work, for work that was 
incomplete, for goods never delivered to the government and for 
unsupported increases in billing rates. We found significant 
problems with equipment delivery and installation.
    For example, we found locations where no equipment had been 
delivered and no work was underway for as long as 2 years after 
issuance of the task orders. In other locations, equipment had 
been delivered but not installed or had been installed but was 
not operational, with cameras and other equipment not 
functioning or having continuing reliability problems.
    We found parts laying on the desert floor and in storage 
adjacent to Border Patrol property. We also found that the 
contractor ordered and billed the government for equipment that 
sat in warehouses, sometimes for years.
    Our review also found that in many instances, the 
contractor did not provide the thermal imaging camera equipment 
that its own pricing worksheets had identified as components of 
the contract line items of the BPA. Instead, the contractor 
provided less expensive cameras having less capability.
    According to the contract files, there was no corresponding 
reduction in price to the government, nor was approval for the 
changes obtained from the FTS contracting officer. This created 
a potential for overpayments totaling $6.5 million, when 
medium-range cameras were provided instead of the more 
expensive long-range ones.
    Our review found that FTS did not have adequate internal 
controls to ensure that the procurements were properly managed. 
In many instances, FTS approved payments for services without 
ever visiting the sites or adequately verifying whether the 
services invoiced were actually rendered.
    In some cases, FTS paid for products that were not 
installed or even delivered. Both FTS contracting personnel and 
Border Patrol management bear accountability for the failings 
we identified. Clearly, neither agency adequately fulfilled its 
responsibilities.
    Before closing, I think it is important to let the 
committee know that GSA and FTS have made a number of 
improvements since our initial audits. In July 2004, the 
Administrator, in conjunction with DOD, launched the Get It 
Right Initiative to help ensure proper contracting practices.
    The initiative has led to the implementation of better 
controls across FTS. And we believe the agency is making 
genuine progress in addressing the serious contracting 
deficiencies we found in our reviews.
    Finally, I would note that there are perhaps some lessons 
that can be learned here. The RVS effort was in many respects a 
major project gone awry.
    Underlying the problems we found was the failure to follow 
basics: to adhere to proper procurement rules and practices; to 
ensure there was adequate planning, selection of an appropriate 
contracting vehicle and open competition; to ensure ongoing 
communication between GSA and the client agency and between 
headquarters and on-site users; and to ensure there was 
attentive contract administration and effective of the 
contractor's performance.
    All of these are simply basic elements of good government 
contracting. Our review of FTS contracting and the experience 
with the Border Patrol's RVS program demonstrates just how 
important such basics are to protecting the public interest and 
to the proper stewardship of taxpayer funds.
    Mr. Chairman, that concludes my statement. I would be happy 
to answer any questions you or the subcommittee may have.
    [The statement of Mr. Gallay follows:]

                  Prepared Statement of Joel S. Gallay

    Mr. Chairman, Mr. Meek and Members of the Subcommittee:
    Thank you for this opportunity to discuss our office's recent audit 
of task orders issued by GSA's Federal Technology Service (FTS) Client 
Support Centers (CSCs). Our reviews included the procurement of 
services and equipment for the Border Patrol's Remote Video 
Surveillance (RVS) program, part of the Department of Homeland 
Security's overall Integrated Surveillance and Intelligence System.

Audits of GSA Contracting Practices
    Over the past several years, we have performed a number of audits 
of FTS contracting practices at its Client Support Centers across the 
nation. The FTS Centers assist Federal agencies in identifying 
technology solutions and acquiring, deploying, managing and using them. 
FTS revenue from client agencies for these services has significantly 
increased over the last several years and reached $5.4 billion in FY 
2004.
    In a series of audit reports beginning in early 2003, we identified 
numerous improper task order and contract awards, including improper 
sole-source awards, work outside the contract scope, lack of support 
for fair and reasonable pricing, improper task order modifications, 
frequent inappropriate use of time-and-materials task orders, misuse of 
small business contracts, and failure to enforce contract provisions. 
Overall, we found that FTS failed to adequately ensure that contracting 
laws and regulations were followed.

Review of Homeland Security Task Orders
    Our 2004 audit \1\ was part of a nationwide review requested by the 
GSA Administrator in response to our earlier findings. In this review 
we sampled over 300 task orders awarded by FTS, including 13 that 
related to the RVS project.\2\ The task orders included: (1) 
installation of surveillance cameras to be mounted on poles and other 
structures; (2) construction of towers for microwave transmission 
equipment; (3) installation of monitoring equipment in Border Patrol 
facilities located along the U.S.-Canada and U.S.-Mexico borders; and 
(4) provision of a maintenance and repair facility. The total value of 
the 13 orders included in the audit sample was $43.4 million.
---------------------------------------------------------------------------
    \1\ ``Compendium of Audits of the Federal Technology Service 
Regional Client Support Centers,'' dated December 14, 2004.
    \2\ As our work was a review of GSA's procurement practices, we did 
not review the overall efficiency, effectiveness, or management of the 
RVS program.
---------------------------------------------------------------------------
    Our review concluded that there were a number of significant 
deficiencies in the RVS procurement, as well as a lack of adequate 
progress in actually implementing the RVS security improvements, and 
chronic inattention on the part of both GSA and the Border Patrol to 
the administration of the contract and management of the project. 
Despite the critical nature of these security improvements and nearly 
$20 million already paid to the contractor for the eight RVS 
installations in our sample, as of the end of our field work in Summer 
2004, none of the eight sites had fully operational RVS systems. At 
some of these locations, no equipment had been installed, and at 
others, problems with the equipment installed to date have rendered the 
system incomplete and unreliable. Contracting deficiencies occurred in 
five broad areas: lack of competition for contract award; use of an 
inappropriate contract vehicle; inadequate contract administration and 
project management; contractor's providing less expensive equipment; 
and ineffective management controls.

Lack of Competition in RVS Contract Award
    From meetings with CSC officials, we determined that the contract 
for the RVS project was not conducted with full and open competition as 
required by federal acquisition regulations. According to FTS records, 
in the fall of 1998, the Immigration and Naturalization Service (INS), 
at that time the Border Patrol's parent agency, issued a Request for 
Proposal for the RVS project. In response, several vendors made oral 
presentations at INS headquarters in Washington, D.C.
    In November 1999, FTS awarded an initial task order to 
International Microwave Corporation (IMC) for $2 million, for the 
purchase and installation of cameras and monitoring equipment at one 
RVS location. Despite our repeated requests, no documentation was 
provided evidencing the criteria used to evaluate the vendors' 
proposals or the analysis that led to the award to IMC.
    One year later, in December 2000, FTS awarded a Blanket Purchase 
Agreement (BPA) \3\ to IMC and a team of vendors for RVS cameras and 
monitoring equipment to be installed at dozens of locations across the 
nation. Although the work under this BPA far exceeded, in dollar amount 
and extent of work, the initial task order, it was nonetheless awarded 
to IMC without further competition, contrary to federal acquisition 
regulations. The BPA increased the contract value to more than $257 
million. This new contract represented an orders of magnitude increase 
over the initial award, and should have been formally competed to allow 
interested, qualified vendors the opportunity to provide contract 
proposals.
---------------------------------------------------------------------------
    \3\  A BPA (blanket purchase agreement) is a vehicle which provides 
a simplified method of filling agencies' anticipated repetitive needs 
for supplies or services. BPAs are typically established under existing 
multiple award schedule (MAS) contracts, but can also be freestanding 
arrangements. This BPA was a teaming arrangement involving six FSS MAS 
contractors whose products and services would be used to provide the 
RVS? components.
---------------------------------------------------------------------------
    In proposing the BPA, the vendor asserted that substantial savings 
to the Government would result from additional discounts off the FSS 
Schedule pricelists for the monitoring equipment. However, no such 
savings occurred. For example, one item we found on schedule, a Hitachi 
camera, was priced under the BPA at more than double the FSS Schedule 
price. The BPA called for hundreds of these cameras at a unit cost 
about $2700 higher than the FSS schedule price. Moreover, the vast 
majority of the items to be supplied were not on IMC's or any of the 
teaming vendors? FSS Schedule pricelists. Other equipment was 
subsequently purchased from a company partially owned by the prime 
contractor.

Inappropriate Contract for Construction Services
    A considerable portion of the RVS project required construction 
work, including the use of backhoes, cranes, bulldozers and boring 
equipment to install foundations, erect poles and towers up to 300 feet 
in height, and connect to utilities. Skilled craftsmen such as 
electricians, carpenters, steeplejacks, and heavy equipment operators 
were employed to build and install the components of the system. 
Engineering firms were needed to design the installation and define the 
specific requirements for each location. IMC's FSS schedule contract, 
and those of its team members, did not include the services necessary 
to perform such work.
    The FSS Schedule contract with IMC was a commodities contract for 
furnishing radios and microwave transmission equipment, not 
construction work. It contained none of the requisite references to 
construction laws and regulations that protect employee wages, 
workplace safety, the environment, the integrity of the procurement 
process, or ensure timely delivery and quality of workmanship. Congress 
has determined, with the passage of numerous such laws, that there are 
inherent risks to the Government and special requirements associated 
with construction work. For example, the Davis-Bacon Act requires 
prevailing wage determinations; these requirements were not 
incorporated into the task orders, resulting in a potential unfunded 
liability to the Government. Furthermore, Government personnel 
procuring construction services require specialized training and 
experience. FTS personnel lack that training and expertise. In the case 
of the RVS program, FTS undertook projects it had neither the authority 
nor skills to properly procure and manage.

Inadequate Contract Administration and Project Management
    Due to inadequate contract administration and project management on 
the part of FTS and the Border Patrol, as of the end of our field work 
in Summer 2004, none of the eight locations we reviewed had fully 
installed and operational RVS systems, despite almost $20 million in 
payments to IMC. FTS's lack of oversight of its task orders resulted in 
several questionable practices involving customers and contractors, 
including payment made for shoddy work, work that was incomplete or 
never delivered to the Government, and unexplained increases in billing 
rates. Neither the BPA nor the individual task orders included detailed 
specifications, thus often leaving interpretation of the Border 
Patrol's needs up to the contractor.
    Our site visit to one location in Washington State revealed serious 
problems with the quality of the installation of equipment. Cameras and 
other pieces of equipment were not functioning and had numerous 
reliability problems resulting in significant down-time and the need 
for frequent repairs. Border Patrol officials performed a technical 
inspection of the work and identified numerous problems. Remediation 
efforts were underway by the contractor at the time we made our visit.
    At three other locations (Tucson Station, Arizona, Carrizo Springs, 
Texas, and Detroit, Michigan), although task orders had been issued one 
to two years earlier, no equipment had been delivered and no work was 
underway at the time we contacted Border Patrol officials. At three 
additional locations (Buffalo, New York, Nogales, Arizona, and Laredo, 
Texas), some equipment had been installed but the components were not 
operational. In Buffalo, only four of 59 cameras had been installed. At 
Nogales and Laredo, some work had been done, but system components were 
still not operational as other equipment, such as microwave towers, had 
yet to be installed. On our visit to Naco, Arizona, some equipment had 
been delivered, but there was no evidence of installation. We found 
parts in storage and laying on the desert floor adjacent to Border 
Patrol property. According to Border Patrol officials, no contractor 
personnel had been on-site since the equipment was delivered to Naco 
about a year prior to our visit.
    Border Patrol officials at the Arizona locations raised concerns 
about workmanship and adherence to national electrical codes and, in 
particular, protection against lightning strikes. The Border Patrol's 
local electronic technicians had been left largely in the dark as to 
the equipment to be furnished or the design of the system to be 
provided; no one provided them with design drawings or specifications 
for the equipment.
    The table below summarizes the status of RVS improvements at each 
of the eight sites we reviewed:

----------------------------------------------------------------------------------------------------------------
                                                                                                  Amount Paid to
        State Location              Value        Date                     Status                        the
                                                Issued                                              Contractor
----------------------------------------------------------------------------------------------------------------
          Carrizo Springs, TX     $4,742,500   12/09/02  Not Installed                                $2,190,169
----------------------------------------------------------------------------------------------------------------
             Nogales, Arizona      3,048,500   11/15/01  Partially Installed                           1,758,980
----------------------------------------------------------------------------------------------------------------
                             Laredo4,156,175   10/25/02  Partially Installed                           4,114,933
----------------------------------------------------------------------------------------------------------------
                                                         Not Installed; some                           2,850,649
                Naco, Arizona      3,536,550   06/29/01  equipment delivered
----------------------------------------------------------------------------------------------------------------
      Tucson Station, Arizona      2,345,000   05/21/02  Not Installed                                   623,974
----------------------------------------------------------------------------------------------------------------
            Detroit, Michigan      3,343,500   05/13/03  Not Installed                                   362,880
----------------------------------------------------------------------------------------------------------------
            Buffalo, New York      5,287,500   01/31/03  Partially Installed                           1,347,713
----------------------------------------------------------------------------------------------------------------
           Blaine, Washington      6,695,182   11/24/99  Operational Problems                          6,624,367
----------------------------------------------------------------------------------------------------------------
                      Totals:    $33,154,907                                                         $19,873,665
----------------------------------------------------------------------------------------------------------------

    Delays were often attributable to the acquisition of the land where 
the camera monopoles or transmission towers were to be installed. The 
task orders required the contractor, at a cost to the Government of 
about $280,000, to provide assistance to the Government in acquiring 
the sites, but did not define what specific work was required. Border 
Patrol officials told us that little assistance in acquiring the 
property had been provided by the contractor. Instead, Border Patrol 
officers themselves were charged with identifying property owners and 
negotiating leases or access rights.
    It made little sense for FTS to issue task orders for procurement 
and installation of the RVS system before sites had been acquired. Yet 
that is what occurred. The contractor ordered equipment and billed the 
Government for equipment that languished in warehouses.
    Delays in installation and operation of the RVS components were 
also exacerbated by FTS officials extending, without adequate 
justification, the period of contract performance for the task orders. 
Of the 13 task orders sampled, there were 18 contract modifications to 
extend the period of performance, none of which included proper 
justification for the extension.
    Further, due to lack of contract oversight, some Management, 
Administration, and Engineering task orders inappropriately specified 
higher billing rates than required. In one order for $3.1 million for 
labor costs and program management support, FTS incorporated higher 
labor rates from another IMC contract into the task order with a sole 
source justification, costing the Government an additional $600,000. A 
task order for $1.8 million of additional funding for program 
management support similarly incorporated the higher labor billing 
rate, resulting in an estimated additional cost to the Government of 
$219,000. These task orders were performed on a time-and-materials 
basis, yet the invoices submitted to the FTS, and which FTS paid, did 
not include the required support for hours worked and hourly billing 
rates.

Providing Less Expensive Equipment Without Contracting Officer Approval
    In numerous instances, the contractor did not provide the thermal 
imaging camera equipment that its pricing worksheets identified as a 
component of the contract line items provided for in the BPA. Instead, 
the contractor provided less expensive cameras having less capability. 
According to the contract files, there was no corresponding reduction 
price to the Government, and approval for the changes was not obtained 
from the FTS contracting officer.\4\ This created a potential for 
overpayments of at least $6.5 million for thermal imaging cameras when 
medium-range cameras were provided instead of the more expensive long-
range ones.
---------------------------------------------------------------------------
    \4\ There is some evidence that the contractor may have informed 
headquarters Border Patrol personnel of the planned substitution of 
cameras. However, GSA contracting officials were not so informed.
---------------------------------------------------------------------------
    Bills of material reviewed during our audit, used by the contractor 
to price the Border Patrol project, provided for FLIR brand thermal 
imaging cameras with doubler lenses at a cost of $48,500. The doubler 
lens, valued at $10,000, expanded the camera's range of vision. The 
Border Patrol purchased several hundred of these cameras, but few 
actually included the doubler lens. As of the end of our field work, 
the Border Patrol's master inventory data showed 396 FLIR brand thermal 
imaging cameras, but only 78 were delivered with the doubler lens, 
resulting in a potential overcharge to the Government of approximately 
$3,180,000 (318 x $10,000).
    The contractor provided two types of other cameras that also did 
not come with doubler lenses, and were uncooled, medium-range cameras, 
as opposed to the cooled, long-range cameras that were built into the 
contract price. The master inventory data showed 328 ISAP brand 
cameras. This camera was priced on the FSS multiple award schedule at 
$38,500, resulting in a potential overcharge to the Government of at 
least $3.28 million ($48,500 -- $38,500 = $10,000; 328 x $10,000 = 
$3,280,000). The Border Patrol inventory also showed 70 BAE brand 
cameras, another less expensive thermal imaging camera, priced at 
$23,080, resulting in a potential overcharge of $1,779,400 ($48,500 -- 
$23,080 = $25,420; 70 x $25,420 = $1,779,400).
    Contractor officials \5\ told us that thermal imaging cameras with 
doubler lenses were not required for every installation, and that the 
contract gave the Border Patrol the flexibility to decide which type of 
camera it needed. However, we learned from the contractor that each BPA 
contract line item that included a thermal camera installation was 
priced to include the more expensive camera with doubler lens. No 
adjustment to the BPA price to reflect the less expensive equipment was 
offered by the contractor or requested by FTS.
---------------------------------------------------------------------------
    \5\ L-3 Communications acquired IMC in February 2003, and became 
the contractor of record on the project.

Ineffective Management Controls.
    Overall, for the RVS task orders we reviewed, we determined that 
FTS did not have adequate internal controls to ensure that the 
procurements were made and executed in accordance with applicable 
regulations. Contracting officers often did not get involved in the 
development of requirements or decisions on procurement methodology 
until the Border Patrol had already made those crucial decisions. 
Consequently, orders were signed that often were flawed from the 
beginning.
    FTS contracting officials did not adhere to federal acquisition 
regulations governing purchases under the multiple award schedule and 
as a result failed to obtain adequate competition and ensure fair and 
reasonable pricing for the Government. Time-and-materials task orders 
were issued to contractors with no review of labor hours to ascertain 
the level of effort necessary to accomplish the work, and there was no 
evaluation of the proposed mix of labor skills to determine if the 
contractor's proposal met the needs of the Government.
    In many instances, FTS approved payment for services and 
installations never inspected. FTS failed to visit the sites or 
adequately verify whether or not services invoiced were actually 
rendered, and whether work had actually been completed. In some cases, 
FTS paid for products that were not installed, or were still sitting in 
the contractors? or manufacturers? warehouses.
    In summary, from our review of the task orders for the RVS 
installations, it is clear that neither FTS nor the Border Patrol 
adequately fulfilled its responsibilities in administering the contract 
and managing the project. Proper adherence to government contracting 
competition requirements was lacking. Task orders awarded to 
contractors failed to adequately define the actual work to be 
performed. Improper contracting vehicles were used to accomplish client 
agency objectives. Border Patrol officials failed to bring contractor 
deficiencies to FTS? attention, and FTS itself performed no 
inspections. Nevertheless, the contractor continued to receive payment 
for incomplete work. RVS systems remained to be fully installed long 
after the specified contract performance period, and installed 
equipment did not operate properly.

Lessons Learned
    The RVS program reflected many of the problems that can arise when 
attempting to execute major projects without the benefit of sound 
acquisition planning and effective project management and oversight. 
There are a few fundamentals of good contracting that, if properly 
adhered to, would have greatly increased the chances for overall 
project success.
    First, the client agency is in the most knowledgeable position to 
develop the requirements for its own programs. It knows best what the 
agency's program objectives should be. It also should recognize what 
its in-house capabilities are and be able to determine if outside 
assistance is required to better define its contract requirements. 
GSA's role should be to ensure that the client's requirements are 
described in sufficient detail to allow potential vendors to prepare 
proposals and to foster competition in response to the Government's 
stated needs.
    Second, sufficient time must be set aside to allow for proper 
acquisition planning. GSA and the client agency need to collaborate at 
the earliest possible time to identify the most appropriate and 
efficient procurement vehicle and to ensure there is proper 
competition. The procurement vehicle selected should provide the full 
scope of services and commodities that have been identified as 
necessary to accomplish the project. Attempting to ``shoehorn'' a broad 
and complex project into a narrowly defined contract vehicle is a 
recipe for problems further down the road; it may also unfairly 
preclude awards to vendors who may be better qualified to accomplish 
the work. Proper competition of a project among several vendors or 
teams of vendors will generally produce a wider range of potential 
solutions, and often generates questions from the vendors about the 
project that may identify problems not addressed in the original plan. 
It affords the greatest assurance of obtaining the best value for the 
government.
    Third, the evaluation of proposals received from contractors is the 
responsibility of GSA as the contracting agency. Experts in the client 
agency's program, however, should participate as members of evaluation 
panels or technical advisors. Evaluations of proposals should be 
performed in accordance with the factors established by the Government 
during the acquisition planning process and conducted with integrity 
and independence and in accordance with established regulations and 
practices.
    Finally, the contracting officer should establish a formal plan 
identifying the roles and responsibilities of GSA and the client agency 
in ensuring that the contract terms and conditions relating to quality, 
quantity and timeliness are met. The Government representatives charged 
with these responsibilities must collectively possess the knowledge, 
training and experience to handle the job. The responsibilities and 
authorities of the team members should be defined in writing by the 
contracting officer and/or the project manager. Just as musicians need 
a conductor to make them into an orchestra, a project needs a single 
overall director to make sure that all the parts come together in a 
planned sequence. Communication among team members at all levels and 
effective oversight by the agencies involved is crucial to ensuring 
that the often unforeseen complications and disruptions that can affect 
any large project can be addressed before they become serious problems.
    We firmly believe that had the RVS program followed these basic 
precepts of proper government contracting, the mission of the client 
agency and the interests of the taxpayer would have been far better 
served.
    Before closing, I think it is important to let the Committee know 
that GSA and FTS have made a number of improvements since our initial 
audits. In July 2004, the Administrator, in conjunction with DoD, 
launched the ?Get it Right? program to help ensure proper contracting 
practices. The initiative has led to the implementation of better 
controls across FTS nationwide, as well as individual Client Support 
Center management improvement plans. It has resulted in greatly 
increased attention to ensuring adequate competition, determining best 
value, and utilizing and properly administering the appropriate 
contract vehicles. These efforts have been fully supported by GSA's 
management team. We believe the agency is making genuine progress in 
addressing the serious contracting deficiencies found in our reviews.
    In conclusion, the RVS effort was in many respects a major project 
gone awry. A principal reason was the failure to follow basics: to 
adhere to proper procurement rules and practices; to ensure there was 
adequate planning, selection of an appropriate contracting approach, 
and open competition; to ensure on-going communication between GSA and 
the client agency, and between headquarters and on-site users; and to 
ensure there was attentive contract administration and effective 
oversight of contractor performance. All of these are simply basic 
elements of good procurement practices. Our review of FTS contracting, 
and the experience with the Border Patrol's RVS program, demonstrates 
just how important such basics are to protecting the public interest 
and to the proper stewardship of taxpayer funds.
    Mr. Chairman, that concludes my formal statement. I would be happy 
to answer any questions you or members of the Subcommittee may have.

    Mr. Rogers. After that statement, I trust we are going to 
have a lot of questions.
    [Laughter.]
    But I would like to go to our next panelist now.
    And thank you, Mr. Gallay.
    The Chair now recognizes Mr. Joseph Saponaro, President of 
L-3 Communications Government Services, to offer a statement.
    I understand that you have with you today Mr. Thomas 
Miller.
    Mr. Saponaro. Yes, sir.
    Mr. Rogers. Thank you. The floor is yours.

                  STATEMENT OF JOSEPH SAPONARO

    Mr. Saponaro. Thank you, Mr. Chairman.
    Good morning. I am Joe Saponaro, president of L-3 
Communications Government Services, Inc., known as GSI, joined 
by Tom Miller, general counsel of L-3 Communications Services 
Group, which GSI is a division.
    First, thank you for inviting L-3 to participate in this 
hearing. We welcome the opportunity to share our relevant 
corporate experience and to support the America's Shield 
Initiative.
    To assist you, we would like to discuss our experiences 
from the Remote Video Surveillance Contract, which was a 
forerunner to ASI. The RVS contract was let by INS in 1999 
through GSA. It was a small contract, $5 million initially, 
awarded to a small business, International Microwave 
Corporation.
    But in response to expanding requirements, the contract 
funding ultimately exceeded $150 million, taxing seriously the 
management capacity of both IMC and the administering 
government office. Nevertheless, under RVS, 246 sites with 
daytime and nighttime vision cameras were installed. Where 
properly maintained, this system is operational today.
    L-3 purchased IMC in November 2002, at which time the RVS 
contract was, from the customer's assessment, being performed 
in a satisfactory manner. By the middle of 2003, however, the 
effects of the rapidly growing RVS program had become apparent.
    To better support the program, on January 1, 2004, L-3 
merged IMC into L-3's Government Services, Inc., a company with 
greater management depth. IMC's original management was not 
retained.
    In the spring of 2004, the GSA inspector general audited 
the RVS contract as part of an agency-wide review of 
contracting practices under GSA's information technology 
schedule. The audit report, which was published in December 
2004, was harshly critical of GSA contracting practices, 
including the issuance of contracts under the GSA IT Schedule 
70 contracts.
    I know this committee is also aware of the allegations of 
IMC wrongdoing under the RVS contract that emerged from the 
audit. We have provided the committee staff a copy of our 
detailed responses refuting these allegations, which were also 
sent to GSA and the IG in January.
    Our responses to these allegations show with specific 
detail and backup data that the claims are wrong. Regrettably, 
the GSA IG never allowed us to comment on the findings prior to 
issuing the report. The damage by this report has been done. 
And L-3 has worked hard to correct the record.
    L-3 is still submitting information to the government. We 
are here today because we take our partnership with the 
government seriously and have a deep sense of responsibility 
for the continued performance of the RVS program.
    Indicative of our commitment, L-3 continued to support the 
RVS program without interruption, even though GSA ceased paying 
its invoices in March 2004, presumably because of the ongoing 
IG audit. Up until September 24, 2004, GSA assured L-3 and the 
Border Patrol that the RVS contract would be extended, probably 
until the end of 2004, so that critical installations could be 
completed.
    On September 24, 2004, GSA notified L-3 that there would be 
no extension of labor funding and that L-3 was to stand down 
and cease work effective September 30. Both L-3 and the Border 
Patrol sought relief from this but were unsuccessful.
    To this day, we are working through an exhaustive invoice 
review with the Border Patrol and GSA to collect the millions 
of dollars still owed to L-3 in this contract.
    So what can we learn from the RVS experience to help ensure 
the success of ASI? First, selection of the proper contract 
vehicle will allow for installation, construction and other 
activities required to deploy sensors on the border.
    ASI will involve substantial construction. And it will 
require a massive system integration effort.
    Thus, it will require sophisticated program and contract 
management working as a team, preferably within a single 
customer agency. RVS program and contract management were split 
between two agencies, an impossible situation for any complex 
program.
    Next, it will be necessary to acquire land rights and 
environmental clearances along the border, a very large and 
complex task. Indeed, the acquisition of land rights and 
environmental clearances by the government was a central reason 
for RVS delays.
    Congress and CBP should seek streamlined approaches to 
acquiring land rights for ASI and should coordinate work 
activities consistent with the availability of land and access 
to work sites.
    With the 20 CBP sectors managed from a central office, ASI 
will require a command and control system that facilitates 
sector integration. Our experience indicates that the best way 
to achieve this end is to include the user community--the 
Border Patrol agents in the field--in the requirements and 
design process.
    The Customs and Border Protection Service has a challenging 
task in securing our country's borders. Technology, properly 
planned and deployed along the borders, is a force multiplier 
that will only enhance the performance of the dedicated people 
of CBP.
    L-3 not only wants to participate in this success; we feel 
a duty to complete the task begun under RVS. L-3 provides high-
technology products and service worth billions annually to the 
government. We recognize both the letter and spirit of our 
obligations and we demand the highest ethical standards.
    L-3 is successful because we live these standards in 
everything we do.
    Thank you for your time and attention. My colleague and I 
will be pleased to answer any questions.
    [The statement of Mr. Saponaro follows:]

                  Prepared Statement of Josph Saponaro

    Good morning, Mr. Chairman. I am Joe Saponaro, President of L-3 
Communications, Government Services, Inc., known as GSI. I am joined by 
Tom Miller, General Counsel of L-3 Communications Government Services 
Group, of which GSI is a division.
    First, thank you for inviting L-3 to participate in this hearing. 
L-3 is keenly aware of the paramount importance of the America Shield 
Initiative in protecting our borders and securing our safety--elements 
that are crucial to victory in the Global War on Terror. We are honored 
to have this opportunity to share our relevant corporate experience and 
offer ideas to help make ASI a successful program.
    A program the magnitude of ASI will only be successful if the 
Congress is active in providing leadership, resources and guidance for 
the program. With clear Congressional participation, the executive 
branch--through the professionals at the US Customs and Border 
Protection Service--can confidently define the objectives, develop the 
plans and implement a comprehensive ASI program that will produce 
unprecedented levels of security for the American people.
    It is in that context that we would like to share our experiences 
and lessons learned from the Remote Video Surveillance contract, which 
was, in some measure, a predecessor to ASI. The RVS contract was let by 
the Immigration and Naturalization Service in 1999 through the General 
Services Administration. It was a small contract--$5 million 
initially--awarded to a small business, International Microwave 
Corporation (IMC), later acquired by L-3 Communications. It is 
important to keep in mind that the objective of RVS was to deploy video 
technology along key points of the US borders. When the contract was 
first let it was never envisioned that it would become a comprehensive 
shield to protect our country.
    In the post-9/11 world, the RVS objective changed. No longer was 
the paramount concern one of illegal immigration; suddenly and 
irrevocably, the issue became one of preventing terrorists from 
reaching American soil. Consequently, the RVS contract became a high 
priority program, with funding that exceeded $150 million by its 
expiration on September 30, 2004--orders of magnitude larger and more 
complex than envisioned in the original contract. It is fair to say 
that the contract outgrew the company performing it and the Government 
offices administering it, neither of which had the processes in place 
at that time to efficiently work a contract of this magnitude. And yet, 
had RVS been fully deployed, it would have only covered 4% of the 
borders. Even with its staggering growth, RVS was never a project of 
ASI's scope and size.
    In November 2002, L-3 purchased IMC. In the RVS contract, IMC had 
an important mission that was consistent with L-3's strategic goals in 
supporting the defense of our country. Moreover, at that time, 
performance of the RVS contract was, from the customer's assessment, 
satisfactory. There was no indication of any weaknesses in the IMC 
management concept or in the program's execution.
    By the middle of 2003, however, the effects of the unplanned growth 
of the RVS program were becoming apparent; IMC did not have adequate 
program and contract management experience to keep up with the mounting 
complexity of the project. Recognizing this management challenge, L-3 
moved aggressively to reengineer our management concept. We merged IMC 
into Government Services, Inc. on January 1, 2004 and replaced IMC's 
original management team.
    During spring of 2004, the RVS contract was audited by the GSA 
Office of the Inspector General as a part of the agency-wide review of 
contracting practices under GSA's Information Technology Schedule 
contracts. The audit report, which was harshly critical of GSA 
contracting practices, was issued in December 2004. The fundamental 
finding of the audit was that GSA had awarded contracts under GSA IT 
Schedule 70 contract vehicles for materials and services that could not 
be appropriately purchased under those contracts. RVS was identified as 
one such contract for GSA Region 5.
    The RVS contract expired on September 30, 2004 even though not all 
funded sites had been installed. We believe that the results of the 
audit led directly to GSA's decision not to extend the RVS project, 
even though L-3 and the Border Patrol had been repeatedly assured by 
the GSA contracting officer that it would be extended.
    While L-3 is mindful of the shortcomings of the greatly expanded 
RVS contract, we believe the successes of the program must also be 
recognized. By the expiration of the RVS contract on September 30, 
2004, a total of 246 sites with daytime and night vision cameras had 
been installed. Where properly maintained, the system is operational 
today. However, as with any high technology system exposed to the 
environment, RVS cannot be expected to operate continuously without 
regular maintenance. It will, in time, cease to function. Without a 
contract, L-3 can only informally advise the Border Patrol on how to 
handle these failures and L-3 has been forthcoming with such advice 
whenever asked. It is also important to note that L-3 has honored and 
will continue to honor all of its warranty obligations under the 
contract.
    I know that this Committee is aware of the allegations of IMC 
wrongdoing under the RVS contract that emerged from the audit, such as: 
camera substitutions; no operation and maintenance services performed 
by IMC; the Government not receiving delivery of certain RVS systems; 
and problems at the Blaine, Washington site. While there are important 
lessons to be learned from the contract, the audit allegations were 
unfounded. We have provided the Committee a copy of our detailed 
responses refuting these allegations, which were sent to both GSA and 
the IG in January. Our responses to these allegations show with 
specific detail and back-up data that the IG claims were wrong. L-3 
does not know whether the contract was legally awarded under the IT 
schedule. We understand that GSA disputes this finding.
    L-3 does know, without doubt, that IMC did not improperly 
substitute cameras and over-bill the contract as alleged in the report. 
Documentation of this has been provided to the Committee. All cameras 
delivered during the RVS program were (1) authorized under the 
contract, (2) billed in accordance with the contract and, most 
importantly, (3) selected by the customer.
    We also know that we provided the services billed for at the 
Operations and Maintenance Center in Albuquerque, New Mexico, contrary 
to the report's allegation that no work had been performed there for 
the last year of the contract. Documentation of this has been provided 
to the Committee. There are exhaustive records of work performed at the 
O & M Center which fully refute the IG's allegation. Further, the 
allegation in the IG report was apparently based on an anecdotal 
comment made by an unidentified individual in the course of an entirely 
different audit and, to our knowledge, the GSA IG never tested the 
veracity of that statement.
    We know that the Government received full value under the contract 
for all sites, whether they were complete at the time of contract 
expiration or not. Documentation of this has been provided to the 
Committee. The IG inspected certain sites while conducting their audit 
in spring of 2004. The IG then reached the conclusion that these eight 
sites were incomplete and that the Government had been charged 
approximately $20 million. The IG report overlooked, first, that 
performance continued at these sites from spring 2004 until contract 
expiration on September 30, 2004. Consequently, of the eight sites 
mentioned, installation of four sites was effectively complete by 
contract expiration. The remaining four sites could not be completed in 
time because of the Government' difficulties in conducting 
environmental assessments and acquiring land rights. Finally, even at 
the incomplete sites, L-3 can only be paid for the costs incurred when 
the contract expired. Thus, the Government has not paid for work or 
materials it has not received.
    We know that problems at the Blaine, Washington site set forth in 
the IG report were all corrected at L-3's expense and that the site was 
fully functional when the contract expired. Documentation of this has 
been provided to the Committee. L-3 acknowledges that there were 
problems with the Blaine installation. By contract expiration, the 
Blaine site had been fully remediated to the Government's satisfaction.
    Beyond the clearly erroneous allegations contained in the report, 
L-3 notes that the GSA IG never allowed L-3 to comment on its findings 
prior to publishing its report, which is the normal procedure in the 
audit process. The simple act of discussing these charges with L-3 
prior to issuing the report could have prevented the spread of 
inaccurate and damaging information. The damage done by this report to 
L-3' reputation has been significant, and L-3 is working hard to 
correct the record. The Committee has our detailed responses that were 
submitted to GSA and the IG last January. L-3 is here today because we 
take our partnership with the Government seriously and have a deep 
sense of responsibility for the continued performance of the RVS 
program.
    Indicative of our commitment, L-3 continued to support the RVS 
program without interruption even though GSA ceased paying L-3's 
invoices in March 2004, presumably because of the ongoing IG audit. Up 
until September 24, 2004, GSA assured L-3 and the Border Patrol that 
the RVS contract would be extended, probably until the end of 2004, so 
that critical installations could be completed. On September 24, GSA 
notified L-3 that there would be no extension of labor funding and that 
L-3 was to stand down and cease work effective September 30. Both L-3 
and the Border Patrol sought relief from this but were unsuccessful. To 
this day, we are working through an exhaustive invoice review process 
with the Border Patrol and GSA to collect the millions of dollars still 
owed on this contract.
    What are the critical considerations for ASI and what can we learn 
from the RVS experience to help ensure the success of ASI?
    First, selection of the proper contract vehicles and program 
management structure will ensure that the needed skill sets and 
management experience are devoted to ASI and that the Government can be 
assured of optimal results. The proper contract vehicle will allow for 
the installation, construction and other activities required to deploy 
sensors on our borders.
    ASI has at least two complicating elements: it will involve 
substantial construction and it will be a massive system integration 
effort. Accordingly, it will require sophisticated program and contract 
management, working as a team--preferably within a single customer 
agency. A serious RVS problem was that one agency was handling the 
program management while another had the contracting authority. This 
created an untenable situation once the contract became more 
complicated than simply buying products off of a schedule.
    Second, a major project to deploy technology along the US borders 
depends, in the first instance, on the acquisition of land rights and 
environmental clearances--neither a quick nor simple process. Under 
RVS, the acquisition of land rights, which included environmental 
assessments, was the central reason for delayed installations. Congress 
and CBP should streamline the process of acquiring land rights and 
environmental clearances for ASI and coordinate work activities 
consistent with the availability of the land and access to the work 
sites. At a minimum, installation projects should be in two phases--
phase one for land rights and phase two for installation--with the 
installation schedule contingent on the completion of phase one.
    Third, we must address the issue of command and control. Currently, 
our borders are protected by 20 different sectors of the Border Patrol. 
Under RVS, the sectors were the dominant Border Patrol entities, rather 
than being coordinated by the home office. IMC often found itself 
trying to coordinate with two customer agencies and a contracting 
agency. To avoid this, we recommend that CBP install program and 
contract authority in the central office and have the sector offices 
coordinate through a single point of contact. This is all the more 
important given that ASI should include a command and control function 
and sector integration with a sophisticated and state-of-the-art 
command and control system.
    A primary goal of ASI should be to provide to Border Patrol agents 
improved information on inappropriate penetrations of the U. S. 
borders. The CBP sectors and sites should be key elements in 
establishing site specific requirements for ASI. Accordingly, the CBP 
program management office needs to provide a forum for these sector and 
site requirements.
    Finally, it is worth noting that RVS and, to an even greater 
extent, ASI are high technology projects. The temptation is to press 
for state of the art equipment. The problem is that the state of the 
art in technology is often not fully proven and can lead to 
disappointing results. We recommend a Congressionally-mandated 
technology test and evaluation process to establish that the products 
to be deployed will meet the life cycle requirements of the program.
    The Customs and Border Protection Service has a challenging task in 
securing our country's borders, and L-3 is confident that CBP will 
gather and use the resources needed to achieve this task. Technology, 
properly planned and deployed along the borders, is a force multiplier 
that will enhance the performance of the dedicated people at CBP. L-3 
not only wants to participate in this success, we feel a duty to 
complete the task begun under RVS.
    L-3 provides high technology products and services worth billions 
annually to the Government. We recognize not only the letter of our 
obligations but the spirit as well, and we demand uncompromising 
standards of ethics. L-3 is successful because we honor these values.
    Thank you for your time and attention. My colleague and I will be 
pleased to answer any questions you may have.

    Mr. Rogers. And we thank you, Mr. Saponaro.
    The Chair now recognizes Mr. Greg Pellegrino, Global 
Managing Director, Public Sector for Deloitte Touche Tohmatsu.

                  STATEMENT OF GREG PELLEGRINO

    Mr. Pellegrino. Good morning, Mr. Chairman, Congressman 
Meek and subcommittee members. I am Greg Pellegrino, the global 
managing director for the public sector industry within 
Deloitte Touche, one of the world's largest professional 
services firms.
    I am directly responsible for our work with the Department 
of Homeland Security. And I am currently the chairman of the 
board of directors for the industry's Homeland Security and 
Defense Business Council. It is important to underscore the 
urgency of efforts like the America's Shield Initiative.
    In the post-9/11 world, government simply has no choice but 
to be as nimble as those who seek to cause harm and to be 
responsive to sudden events that disrupt our communities and 
the nation's economy. The challenges of this new environment 
are daunting. And we are dependent on the rapid adoption of new 
technologies to accomplish a new mission without bringing the 
economy to a crawl by creating the very same disruptions that 
we are seeking to avoid.
    However, consider that a 2002 study by Gartner, one of the 
leading analyst firms, found that major corporate investments 
in technology are not used as intended and that 80 percent of 
the time, they are abandoned within 6 months. That statistic is 
simply unacceptable when it comes to our nation's security.
    So government's historic approach to project management is 
being put to a test in this new environment. Its hierarchal 
approach is running up against the pace, complexity and 
diversity in today's fast-paced economy.
    The unique constraints of government contracting make it 
difficult for departments to achieve their goals at a level of 
cost and efficiency comparable to commercial entities. Whenever 
these constraints conspire to bring a new idea or an innovative 
program like RVS to its knees, we--both industry and 
government--often ask ourselves how we got here.
    How do programs with bright minds and huge resources lead 
to results where no one is satisfied?
    To illustrate the challenge of large programs, I would like 
to describe a management parable called often the Abilene 
Paradox. It is a story about a group of Texans trying to keep 
cool during a scorching West Texas summer.
    One of them suggests heading off to Abilene in an un-air 
conditioned Buick 53 miles down the road for an ice cream; 4 
hours and 106 miles later, on one of the hottest days of the 
year, they got to talking. And it turns out that no one really 
wanted to go to Abilene.
    But each of them thought the others did. And these large 
programs begin to look a lot like rides to Abilene, where the 
lesson is that managers in both the government and industry 
need to seek out ways to break the cycle, to challenge the 
assumptions that were behind programs when they began, to 
monitor feedback and to measure results more effectively.
    Too often, these wayward programs lose the focus of their 
original objective, while leadership in both the government and 
industry navigate the hurdles of keeping the program itself 
alive. It is as if the incentives reward success in overcoming 
the barriers, instead of achieving the mission itself.
    So how does government break the cycle and better ensure 
that we get results from these major cutting-edge technology 
investments like ASI? I suggest three principles.
    One, while the tendency is to regulate and seek to get 
greater control, we actually need to build a close, 
collaborative environment where industry and government 
managers work more closely together to ensure success of these 
new programs. New restrictions on contracting will not make our 
borders safer; more innovation will.
    Two, develop a corps of modern managers, skilled in the 
complex tasks of building links beyond the public sector with 
whoever can serve the interests of the taxpayers.
    And three, foster a culture of challenging old assumptions 
and past decisions. Every major program like this faces a point 
in its path that they either follow the plan or achieve the 
mission. The mission needs to be above the plan. And 
adjustments need to be made when necessary in order to ensure 
that the mission is achieved.
    In my written testimony, I have discussed a few specific 
ways to pursue these three principles. And I will just share a 
few of them in closing.
    For one thing, it is important to look beyond the Beltway 
to assemble the expertise that best fits the issues at hand. 
The federal government is entitled to the best talent and the 
best equipment that professional services and manufacturers 
industries can provide, regardless of industry and regardless 
of geography.
    As well, these innovative programs face unique challenges. 
And they need a strong executive leader in government to take 
responsibility for ensuring they achieve success.
    Keep it on course, keep the team inspired and back them up 
under fire and when things need to change. And flexibility 
should be regarded as a crucial element of the program.
    Plans need to be adjusted for changing circumstances and 
public attitudes. And it is important to plan for these 
contingencies because it is rarely that the expected changes 
are the ones that cause problems.
    And government, finally, should ensure greater 
accountability from its suppliers by aligning incentives, 
sharing risks and measuring performance more closely.
    Overall, the public and the private sectors need to work 
from the same game plan, one that yields lower costs and 
delivers intended results more predictably, that will help us 
get to where we need to go, where taxpayers want our country to 
go and to ensure we get there together and that we are glad we 
went along for the ride.
    Thank you. I look forward to your questions.
    [The statement of Mr. Pellegrino follows:]

                 Prepared Statement of Greg Pellegrino

    Chairman Rogers, Congressman Meek, and Members of the Subcommittee, 
I am Greg Pellegrino, the Global Managing Director of the Public Sector 
practice supporting the member firms of Deloitte Touche Tohmatsu. I am 
also a principal within Deloitte Consulting LLP. In that capacity, I am 
directly responsible for our work across the Department of Homeland 
Security. And I serve as Chairman of the Board of Directors for the 
Homeland Security and Defense Business Council in Washington, D.C., a 
non-profit association of the leading companies focused on the homeland 
security market.
    Deloitte Touche Tohmatsu is one of the world's largest professional 
services firms, with more than 120,000 employees in nearly 150 
countries. In the United States, we have more than 2,500 partners and 
29,000 employees working from 90 U.S. cities, providing audit, tax, 
financial advisory and consulting services.
    Serving the United States government is one of Deloitte's most 
significant strategic initiatives. We are proud to be working alongside 
leaders from civilian and defense agencies supporting their strategic 
initiatives through our expertise in human capital, financial 
management, technology integration, auditability, and program 
management.
    I've had the unique opportunity over the last 20 years to work with 
leading public and private sector organizations helping them navigate 
their way through management and technology challenges. These efforts 
have included the adoption of emerging technologies for programs as 
diverse as ship maintenance with the U.S. Navy, putting computers into 
school classrooms throughout Florida, and helping to speed up the 
matching process for vital organs throughout the U.S. I also helped to 
create a national model for highway safety information and led our 
efforts to support Governor John Engler's revolutionary e-Michigan 
program to reform the way government services are delivered using the 
Internet. Those experiences led to my direct involvement in helping to 
define the strategies and tools to support information sharing for the 
newly formed Transportation Security Administration (TSA) following 9/
11 and I have led Deloitte's teams supporting the Department of 
Homeland Security since its creation.
    I think I can be most helpful to the Committee today by focusing on 
what I have gleaned from my own experiences with large-scale programs, 
much of which has been in leading truly transformational initiatives, 
driven by cutting edge technologies. I will discuss what I believe are 
best practices that will help to ensure the success of America's Shield 
Initiative (ASI) in protecting our borders.

New World, New Approach
    It is important to underscore the urgency of efforts like ASI. We 
are in an era in which more and more of what government is involved in 
is clearly transformational in nature. In the post-9/11 world, 
government simply has no choice but to be as nimble as those who seek 
to cause harm and to be responsive to sudden events that disrupt our 
communities and the national economy.
    The challenges of the new environment are daunting. Whether it is 
securing over 100,000 miles of land surrounding our borders, ensuring 
every container entering our ports is safe, or searching every piece of 
luggage boarding an aircraft, we are dependent on the rapid adoption of 
new technologies to accomplish a new mission without bringing the 
economy to a crawl by creating the very same disruptions that we are 
seeking to avoid.
    However consider that a 2002 study by Gartner, one of the leading 
analyst firms, found that major corporate investments in technology are 
not used as intended--and 80 percent of the time, they are abandoned 
within six months. That statistic is simply unacceptable when in comes 
to our nation's security. So the key question is: How does government 
better ensure that it gets results from investments in major programs 
that are dependent on new technologies and breakneck speed?
    In rising to this challenge, government's historic approach to 
project management is being put to the test. Its hierarchical approach 
is running head up against the pace, complexity, and diversity in 
today's fast-paced economy. Long reporting chains, narrow work 
restrictions, and compartmentalized operating units are no longer 
acceptable if we are to make advances in how government operates.
    This is by no means a challenge specific to government alone. 
Neither the public--nor private sectors are immune to change. Many 
organizations are revamping the old organization chart of closed boxes 
sealed off into distinct columns. In its place, they are shaping a 
dynamic web in which participants connect and cooperate on an ongoing, 
networked basis.
    The Department of Homeland Security continues to demonstrate its 
commitment to keep up with these forces for change. For example, 
organizations like Customs and Border Protection have created a 
dedicated program management office for ASI and are strengthening 
project management expertise through the same certification programs 
that industry depends on through the Project Management Institute. In 
fact, the department's own deputy secretary, Michael Jackson, has a 
proven track record of collaborating with the private sector to tackle 
tough management challenges. He led the effort to engage some of the 
brightest minds from industry to help the Department of Transportation 
respond to 9-11 and legislation that created the new TSA. The 
leadership and creativity to reach beyond the beltway to engage highly 
talented, senior executives from some of the world's leading private-
sector organizations in helping the government achieve something that 
had never been conceived is an essential skill for this new 
environment.

Government's Unique Challenges
    The notion that the government can solve its toughest management 
challenges by simply acting more like a corporation is unsound. Many 
transformational initiatives that have been introduced smoothly and 
economically in the private sector often fall prey to what might be 
called a ``government gap:'' the unique constraints that make it 
difficult for government institutions to achieve their goals at a level 
of cost and efficiency comparable to commercial entities.
    All too often, government's unique nature undermines its ability to 
work with a service provider across a project's scope and life.
    It enforces an arm's-length relationship when close collaboration 
is needed.
    It drags out procurement time frames, often making technologies 
obsolete between the time an RFP is issued and a purchasing decision is 
made.
    And detailed procedural requirements, prolonged budget processes, 
multiple decision-making layers, and detailed design directives stall 
it to the pace of a tortoise when today's world is demanding the speed 
of a rabbit.

Abilene Paradox
    Whenever these forces conspire to bring a new idea or an innovative 
program to its knees, we--both industry and government--often ask 
ourselves how we got here. After all, I'm confident that 100% of these 
ambitious programs start out with the best intentions among all of the 
parties to achieve the desired results.
    What are the underlying causes that often lead to program failure? 
To address that question, I'd like to describe a management example, 
called ``The Abilene Paradox,'' which is often referenced by Deloitte's 
Human Capital practice as well as in leading business schools. It 
illustrates the issues that emerge with organizational decision-making. 
This story is about a group of Texans sitting in their backyard, trying 
to keep as cool as possible during a scorching West Texas summer. One 
of them suggests heading off to Abilene--taking an un-air-conditioned 
1958 Buick fifty-three miles down the road for a nice dinner at the 
cafeteria. Four hours and 106 miles later, on one of the hottest days 
of the year, they ended up spending most of their time looking for 
shady places to get a break.
    On the way back, people in the car got to talking. It turned out 
that no one really wanted to go to Abilene in the middle of a heat 
wave. But each one of them thought the others did.
    So they all went along for the ride.
    Too often wayward programs lose the focus of their original 
objectives while leadership in both the government and contractor teams 
navigate the hurdles of keeping the program alive. It is as if the 
incentives reward success in overcoming the barriers rather then the 
mission itself. We need to find better ways to harness the dedication 
of the government workforce with the speed and innovation of industry 
that it is depending on for this new mission.
Crucial elements of success: Clarity and Flexibility
    So how can we avoid losing our way, and begin to consistently drive 
change and results? In my experience, when we have been able to drive 
transformational projects to the goals set out for them and within the 
cost allocated, we have been doing two things:
    Solving the right business problem, and being held accountable for 
the right results.
    And, providing the teams involved with the flexibility to change 
course when they felt they had identified a better approach, or when 
they found they were going down the wrong path.
    Government can achieve a shared focus by clearly defining 
deadlines, objectives, and capabilities targeted to results. One of the 
classic examples was how NASA responded to the challenge of putting a 
man on the moon by rapidly growing industry's role through the Apollo 
mission. And another is the rapid response to 9-11 through the creation 
of organizations like TSA through close collaboration with industry and 
a focus on meeting deadlines.
    Such accomplishments are obviously not unique. They can be 
identified in various corners of government. The question is, how to 
create a government-wide environment that will nurture and sustain this 
type of focused, flexible--and successful--approach?

Three Guiding Principles:
Partnership, Skills, A Culture of Change
    In addressing that, I would like to put forward several ideas, 
under the rubric of three guiding principles:
    1. Government needs to seek out new approaches to collaborate with 
the private sector, with greater predictability and cost-effectiveness. 
When working with the private sector, it is best to introduce a 
partnership approach early on--and build on it. New restrictions on 
government contracting won't make our borders safer. Greater innovation 
will.
    2. Government must continue to build the internal skills necessary 
to match the capabilities sought from the private sector--including the 
capacity to manage complex relationships. It is important to invest in 
developing program, project and procurement management capabilities 
within the civil service.
    3. Government must foster a culture of challenging old assumptions 
and past decisions. The ability to adapt to new circumstances depends 
on the willingness to recognize when traditional approaches are flawed 
or obsolete. In our effort to redesign the systems for matching organs 
with recipients there was a point we abandoned the original solution--
more than halfway through--and still met the project's requirements on 
time and within budget. It was the type of decision that demanded close 
collaboration and trust between the customer and the contractor. And I 
would point out that it was only because of the clarity of the goals 
that such a bold decision was feasible. Every major program worth doing 
faces such a critical moment when we all must make a choice--to follow 
the plan, or achieve the mission. We need to be able to put the mission 
above the plan.
    I'd like to discuss some specific ways we can pursue these three 
principles.

Transparency: Open the System Up--Don't Tie It Down
    When problems occur, government's understandable tendency is to 
focus on how to regulate them away. But regulation won't fix the 
problems--transparency will. Transparency stimulates innovation; 
regulations often stifle it. The culture of challenging assumptions of 
the past depends on flexibility and decentralization--not a rigid 
adherence to checking off boxes.

Notch Some Early Wins
    In government as everywhere, success breeds success. It is 
necessary to foster clear, visible successes to support continuing 
implementation, and more importantly, to provide a continuing focus on 
larger objectives. We believe in pursuing what we call ``100 day 
wins''--targeting short-term results that are achievable, regular, 
frequent, and build to the ultimate goal--while maintaining a keen 
focus on how such results ultimately fit into the overall vision. 
Similarly, expectations must be managed throughout the process, so that 
the roadblocks one is bound to encounter do not become insurmountable, 
simply due a loss of confidence among stakeholders.

Look Beyond the Beltway
    Experience and expertise is not restricted to any enclave. It is 
crucial to go ``beyond the Beltway'' as necessary to assemble the 
expertise that best fits the issues at hand. Rather than be restricted 
to an inner circle here in Washington, D.C., as one of the largest 
buyers of professional services in the world, the federal government is 
entitled to access the best professional talent that the professional 
services firms can provide.

Recruit a Champion
    Big, innovative projects face big, unique challenges. That's why 
they need a champion--a government sponsor with commitment to keep it 
on course, motivational abilities to keep the team inspired, and 
political savvy to back it up when it's under fire.

Be Flexible--and Plan for Contingencies
    Political environments are not known for being static. The public's 
priorities change, and plans need to be adjusted for changing 
circumstances. Given the importance of maintaining public support, 
flexibility is a crucial element of any program. Similarly, it's 
important to plan for appropriate contingencies. It's rarely the 
expected developments that cause problems.

Link Design and Implementation
    For understandable reasons, government tends to insist on an arms-
length relationship between public and private-sector entities in 
program and project management. Unfortunately, that leads to splitting 
off two elements in a program that should be intrinsically linked--
design and implementation.
    Linking design and implementation by ensuring continuity--and 
accountability--of a team through the entire life of the effort is 
critical. For example, the City of London installed more than 600 
cameras at 174 locations to charge travelers who drove into the city--a 
revolutionary program that was a achieved in just over two years. It 
was led by a strong program management office that took the ``client's-
side'' in eliminating barriers, aligning policies, and managing over 
130 stakeholder organizations to achieve results. The success of that 
groundbreaking program, by the way, also owed much to the previous two 
points, effective sponsorship and flexibility.

Emphasize the Result--Not The Process
    Perhaps as a consequence of its unique mandate and nature, the 
focus within government too often tends to be on the process rather 
than the result. Missing the forest for the trees is an occupational 
hazard in both public and private sectors, but the impact in government 
agencies can be especially debilitating. As I said a few minutes ago, 
we've all been involved in journeys where we get to a point where we 
can either follow the plan, or achieve the mission. The plan is a 
means--the mission is the end.

Establish Clear Accountability
    When responsibility for a project is parceled out in unconnected 
pieces, it is difficult to pin down who to blame if results far short. 
However, you really do need a single throat to choke when things go 
wrong. Large-scale programs may be complex, but the lines of 
responsibility must be clear. But it is important to keep in mind the 
need to go beyond traditional accountability. Rather than rely on 
process standardization, it is vital to introduce the principles that 
characterize the 21st century organization, including its dependence on 
partners to achieve its results.

Build a Public-Private Partnership
    In the words of the director for administration and services at the 
Department of Defense's acquisition training institute: ``Acquisition 
is no longer about managing supplies. It's about managing suppliers.'' 
Government can shape a new kind of supplier partnership to ensure 
greater accountability, by aligning incentives, sharing risks, and 
measuring performance.
    The Homeland Security and Defense Business Council has offered DHS 
to help with the challenge of increasing the number of certified 
project managers by offering to help fund a new certification program 
through the Project Management Institute. This will create a new 
generation of public sector managers that are both disciplined and 
agile enough to work closely with industry to achieve a new level of 
performance through programs such as ASI.

Conclusion
    Government and its partners share the same goal. We want to see 
projects completed on-time and on-target. We want to see programs that 
meet their objectives. But sometimes there are roadblocks.

    How do we overcome them?

    By focusing on building partnership, skills and a culture of 
change.

    The public and private sectors need to be able to work from the 
same game plan--one that yields lower costs and intended results.
    Government needs to make it a priority to develop the corps of 
modern managers skilled in the complex--and essential--task of building 
links and reaching out beyond the public sector to whomever can serve 
the interests of the taxpayer.
    And public and private sector managers need to be able to speak out 
early if we think we're getting off track--or if there's a better 
track, a newer technology or a better solution. So we get to where we 
need to go--where taxpayers of this country want us to go--and in order 
to ensure that we get there together.

    Thank you. I look forward to your questions.

    Mr. Rogers. I thank all of you for your statements. And I 
will lead off with the questions.
    First, I just want everybody to know, I am just struck by 
how much money has been abused in this particular instance. And 
it is not just what you would typically expect in federal 
spending abuses.
    This is adversely affecting the security of our nation. And 
that makes it particularly offensive to me.
    But I want to start my questions with Mr. Gallay.
    You used the word that your review revealed ``chronic 
inattention.'' And I am still trying to get my hands around how 
this $2 million contract was issued. Was it bid? Do you have 
any documents about how Border Patrol decided IMC would get the 
contract?
    And then somehow, they got $44 million worth of add-ons in 
the first year. And then your statement was, ``After $44 
million, none of the sites had a functional RVS system.'' And 
then they were given a $250 million extension.
    How did that happen?
    Mr. Gallay. I wish there was a simple answer.
    Mr. Rogers. Did your audit reveal anything?
    Mr. Gallay. Going back to the initial procurement, there 
was an individual task order during 1999, there was one or two 
on the order of $1 or $2 million. We had sought the records 
of--the details of--that initial competition. We never did 
actually get those. We do not doubt that there was some degree 
of competition or we know that proposals were submitted and 
that there was a review by the Border Patrol of those 
proposals.
    But it was not a full and open competition at the point at 
which this individual task order was expanded to a blanket 
purchase agreement; that is the point at which the requirements 
really dramatically changed.
    Mr. Rogers. Was there a paper trail as to how that 
occurred, how they arrived at one provider?
    Mr. Gallay. There is a paper trail with respect to the 
blanket purchase agreement, but the real issue was that there 
should have been full and open competition at that point and 
there was not. The underlying notion was to say: since IMC had 
a schedule contact, that would be a device under which 
competition would not ordinarily be required.
    Once you put in place the blanket purchase agreement, all 
future orders under that BPA do not require further 
competition. And that was really the problem. It is at that 
point at which the requirement really ballooned into a 
nationwide program that had a value of over $250 million, that 
was not in keeping with the scope of the original order, and 
that is where there should have been competition. The original 
proposals really related to just that $1 million or $2 million 
task order.
    Mr. Rogers. But in your audit, you did not find any 
restraint or barriers outside which they could not have gone? I 
mean, they went from $2 million to $250 million. Could they 
have been $1 billion?
    Mr. Gallay. Well, the limitation would have been that with 
respect to the BPA. To the extent that it could have been 
extended or renewed, you are correct.
    Mr. Rogers. You also mentioned that they were shoehorning 
monies that apparently were meant for purchase of commodities 
like cameras and such into construction. Is that lawful?
    Mr. Gallay. It is certainly not good procurement practice. 
This again goes back to the nature of the contract that IMC 
had, which was for equipment, some IT services and repairs.
    The underlying notion of using the BPA was to say, okay, 
well we can stay with this one vendor and use them for the full 
range of services that are needed. That was really the essence 
of our finding, that this was not proper procurement.
    At the point at which you knew your requirements really 
extended to this full range of other services, it was not 
appropriate. It was not lawful under the federal acquisition 
regulations to stay with that single vehicle for this purpose, 
when in fact you were really talking about a whole wide range 
of purposes.
    Mr. Rogers. But in that response, you did say it was not 
lawful.
    Mr. Gallay. That is correct.
    Mr. Rogers. In your opinion?
    Mr. Gallay. In terms of violation of federal acquisition 
regulations.
    Mr. Rogers. Great.
    Who was supervising this? Or was anybody? I notice you made 
reference to your office and you also made reference to the 
FTS.
    Mr. Gallay. The FTS, Federal Technology Service, which is 
part of GSA.
    Mr. Rogers. Right.
    Mr. Gallay. Well, yes. The BPA did go through a process. It 
was handled out of the Chicago region and then was presented 
for approval up through the chains back at FTS headquarters.
    So it is not like this was done, you know, in some sort of 
midnight, behind-the-scenes scenario.
    Mr. Rogers. So the people supervising this project seemed 
okay.
    Mr. Gallay. The RVS project, the Border Patrol efforts, did 
not occur in isolation. The real essence of our findings, in 
terms of our overall review, was that these kinds of problems 
were occurring with respect to FTS contracting activities 
across the board.
    Something like 85 percent of their activities involve DOD. 
The reasons were many. Chiefly, probably the culture in which 
there was a great emphasis placed on growing the business. GSA 
and FTS are dependent on the fees they earn from contracting 
agencies or from client agencies.
    And also, a desire to work with the client, do whatever the 
client wished. Doing whatever the client wished became more 
important than complying with federal acquisition regulations 
and good procurement practices.
    Mr. Rogers. And the law.
    Mr. Gallay. Well, that is correct.
    Mr. Rogers. My time is up. I now yield to my friend and 
colleague from Florida, Mr. Meek, for any questions he may 
have.
    Mr. Meek. Thank you, Mr. Chairman. And once again, I would 
just like to say I am glad that we are having this hearing.
    Mr. Gallay, I want to ask you just one more question as it 
relates to your findings. How long have you been in the 
business of being an inspector general?
    Mr. Gallay. A good long while. I have been with the IG's 
office since 1979 and have also been a federal prosecutor.
    Mr. Meek. So you have seen a lot. Where does this case, 
this report that you all have generated as it relates to the 
practices that took place in this area, where does it rank as 
it relates to decisions that should have been made that were 
not made and also to waste of taxpayers' dollars?
    Mr. Gallay. It is certainly up there among the headline 
problems we have seen. Again, because it goes to something that 
is a critical program; that is the reason you are having this 
hearing.
    Mr. Meek. Critical program, I am pretty sure. Also, I 
guess, would you believe, of a waste of the taxpayers' dollars 
in many cases, as it relates to accountability?
    Mr. Gallay. I am sorry?
    Mr. Meek. As it relates to accountability from the 
department? And also, I guess, some responsibility by those 
individuals, those contractors, that are receiving money, I 
would assume. I am not putting words in your mouth, but I am 
just asking the question: a waste of the taxpayers' dollars.
    Mr. Gallay. That is correct.
    Mr. Meek. Okay.
    Mr. Saponaro?
    Mr. Saponaro. Saponaro.
    Mr. Meek. Saponaro. I am sorry, sir. I am very sorry.
    Your company acquired the original awardee of the contract. 
Am I correct?
    Mr. Saponaro. Yes.
    Mr. Meek. You all deal in a number of federal contracts. Is 
that an accurate statement?
    Mr. Saponaro. Yes.
    Mr. Meek. Under House rules, there is a disclosure form. 
You all have quite a few federal contracts. There is the Air 
Force, the Department of Defense, with General Administration. 
How many different contracts do you all have ongoing with the 
federal government?
    Mr. Saponaro. I think L-3 as a company and current revenue 
is about $8 billion in annual size. So I think we have 
thousands of contracts with both the DOD agencies, other 
international agencies, as well as Homeland Security.
    Mr. Meek. I am looking here and there is like a page-and-a-
half of federal contracts that you all have. And especially 
when it comes down to this $200-plus million that we are 
dealing with here, I mean, that is a pretty big one.
    Is that the largest one?
    Mr. Saponaro. No, it is not.
    Mr. Meek. Okay.
    I noticed that you said something in your testimony that 
you all had some issues with some of the inspector general's 
findings. You wanted to be able to respond to some of it but 
did not have the opportunity to do so.
    Where do you lie blame here as it relates to this? And were 
there some mismanagement within your company? Or was there 
mismanagement in the Department of Homeland Security? Were you 
all misled?
    Probably you can answer some of the blatant questions that 
are here, of how the contract continued from what the inspector 
general said, cameras that were bought at a cheaper rate than 
what the government was actually billed. I mean, how do we 
explain some of those things?
    I was looking in your testimony and I did not quite see it. 
But I do appreciate the fact that you are here.
    Mr. Saponaro. Yes. And I appreciate the opportunity to 
address some of those issues, particularly ones raised in the 
IG report.
    As far as the camera substitution issue, we delivered 
essentially what the Border Patrol requested. Early on, in the 
1999 period, prior to 2000, it was in fact a time and materials 
contract. And Border Patrol sectors would, in fact, select 
cameras that they felt were best for that sector.
    The GSA would approve it. And we would in fact purchase it 
and deliver it, as requested by the Border Patrol, and in fact 
bill them in accordance with what the costs were for that 
camera.
    Subsequent to the BPA, which was more of a fixed price 
arrangement on the contract, they had a selection of at least 
two different cameras with two different types of options on 
each camera. And again, I think we delivered pretty much what 
the Border Patrol requested.
    There was a site plan created. They could change within 
this framework of what was on the BPA, as he suggested, and 
either pick a flare type or an ISAP camera. They could add a 2X 
extender to get improved visibility or not.
    And whatever they chose, we actually got that approved by 
the GSA and then delivered that particular camera and, in fact, 
billed them in accordance with what the costs of those cameras 
were. So the interpretation, as we understand it, made that 
there was a single type of camera at a single price for all 
these installations made within the IG report is absolutely not 
correct with respect to the way the contract was executed.
    Mr. Meek. Okay.
    Mr. Miller. Mr. Meek, would you mind if I amplified a 
little bit on what Mr. Saponaro said?
    Mr. Meek. I guarantee you, if I get an opportunity to ask 
another question, I will ask the question to you directly. I am 
on the negative side of my time and there are some other 
members here.
    Mr. Saponaro. There were a couple of other things. I think 
the other point--and I think it is a significant one--raised in 
the report that there was something like $20 million spent for 
sites over the U.S. that were not delivered and the government 
was billed. The fact is that, at the time the IG made its 
visit, as he indicated somewhere in the summer, there were 
eight particular task orders on the contract that involved 
several sites around the country.
    Mr. Meek. Well, let me, before you get into that, there are 
several other members who need to ask questions. I am pretty 
sure that you are going probably be the flavor of the day, so 
you will have an opportunity to answer those questions.
    [Laughter.]
    Mr. Saponaro. Okay.
    Mr. Meek. Mr. Gallay, I have a couple more questions for 
you if I get another round to ask additional questions.
    Mr. Chairman, thank you.
    Mr. Rogers. Thank you.
    The chair now recognizes the gentleman from Georgia, Mr. 
Linder.
    Mr. Linder. Mr. Gallay, did anyone lose their job over 
this?
    Mr. Gallay. There are actually some proposed removal 
actions underway now.
    Mr. Linder. There was something that was criminal.
    Mr. Gallay. I am sorry?
    Mr. Linder. Is anything being pursued as criminal?
    Mr. Gallay. We have an open investigation at the present 
time.
    Mr. Linder. Who is ``we''?
    Mr. Gallay. Our office, the Office of Inspector General at 
GSA.
    Mr. Linder. Do you expect that to occur?
    Mr. Gallay. It would really be inappropriate for me to say 
anything other than that we have an open investigation.
    Mr. Linder. You said these were just essentially 
commodities.
    Mr. Gallay. No, the nature of the work was certainly well 
beyond commodities. It was construction, installation of 
equipment and associated services.
    Mr. Linder. That was not completed. That was not completed, 
construction and installation?
    Mr. Gallay. Well, no. At many sites, construction was done. 
But at the eight sites we visited, the reference that was just 
made, in the summer of 2004, at none of those sites was the 
installation complete. And that was after having spent $20 
million identified as to each of those sites. That was the 
total spent with respect to those sites.
    Mr. Linder. Mr. Saponaro, you said, ``We delivered what was 
ordered.''
    Mr. Saponaro. As far as the cameras, yes, sir.
    Mr. Linder. But you did not install them.
    Mr. Saponaro. I am sorry?
    Mr. Linder. You did not install them?
    Mr. Saponaro. No, I was just about to comment on these 
eight specific sites that were being mentioned here. It was 
visited in the summertime. And the contract actually was ended 
on the 30th of September, 2004. And at that time, four of those 
eight were completely installed and completely operational, as 
they are today.
    The other four sites that were not completed were strictly 
not completed because of the requirements for the government, 
meaning the Border Patrol had to provide environmental 
clearances and land accesses before we could complete the 
installation at these other four sites. And in fact, those 
sites were not completed.
    But in anticipation of that happening, because we ordered 
cameras and ordered a number of other things to go in those 
four sites, assuming they would be approved, and the government 
was only billed for the equipment and cost that we bore to get 
that partially completed site. So we completed four. The four 
that were uncompleted, we only billed the government for what 
our costs were on those programs.
    Mr. Linder. When you purchased IMC, was it a stock sale or 
an asset sale?
    Mr. Saponaro. I believe it was a stock sale, although I am 
not sure actually.
    Mr. Linder. So you all also purchased their liability?
    Mr. Saponaro. Yes, sir.
    Mr. Linder. Is there any investigation going on in your 
company about escalating a $2 million contract to $250 million 
without any bid?
    Mr. Saponaro. I think we had several things, when we got 
involved and it started to appreciate.
    Mr. Linder. My question was is your company investigating 
how a $2 million single contract escalated to $250 million?
    Mr. Saponaro. No, not to my knowledge.
    Mr. Linder. Do you think you ought to do that?
    Mr. Saponaro. I think it may be good to look into that. We 
have not been focused on that. We have been focused on some of 
these other issues.
    Mr. Linder. So you are an $8 billion company? Is that L-3 
Communications? Or is that L-3 Government Services?
    Mr. Saponaro. L-3 Communications is $8 billion; Government 
Services Company is $400 million.
    Mr. Linder. And about more than half of that was the 
contract for the border.
    Mr. Saponaro. No, those are annual revenue numbers. I would 
say, just to correct the record on the numbers, there may have 
been a contract awarded at $250 million. I am actually not sure 
of that.
    I am sure that $150 million were task-funded on this 
contract. And I am also sure that we only invoiced something 
like about $100 million or $110.
    So there is some $40 million to $50 million, as far as I 
know, still sitting in GSA. And there may be in fact more 
appropriations.
    Mr. Linder. Mr. Gallay, are you sure that it was a $250 
million operation.
    Mr. Gallay. Absolutely. Well, the value of the BPA was $257 
million. Absolutely.
    Mr. Linder. Is there $50 million laying around at GSA? Mr. 
Saponaro said that there might be $50 million; he did not know 
where it is.
    Mr. Gallay. I do not know the answer to that. The total 
obligations, there were orders placed against the BPA. There 
were also orders outside the BPA. And I believe the total 
obligations that have gone through FTS are on the order of $200 
million.
    Mr. Linder. Thank you.
    Mr. Rogers. The gentleman yields back.
    The Chair now recognizes the Ranking Member of the full 
committee, Mr. Thompson, from Mississippi.
    Mr. Thompson. Thank you very much.
    Mr. Gallay, can you, without any hesitation or reservation, 
say to this committee that proper procurement procedures were 
not followed?
    Mr. Gallay. Absolutely. That is correct. They were not 
followed.
    Mr. Thompson. Can you say to us that those procedures 
presently exist within procurement practices within the federal 
government?
    Mr. Gallay. That standards exist?
    Mr. Thompson. The standards.
    Mr. Gallay. Absolutely.
    Mr. Thompson. Did you look at whether or not the 
individuals that Mr. Linder referred to had the proper training 
to administer those standards that existed?
    Mr. Gallay. Did we look at that? I am sorry.
    Mr. Thompson. Did you look at the people who have been 
disciplined to see whether or not the standards that you were 
talking about, that they had received the training or anything?
    Mr. Gallay. That was not within the scope of our review. 
However, I did reference the Get It Right program. One 
important element of that, in addition to making it very clear 
as a matter of first principle that procurement regulations 
should be complied with, one element though was also to 
emphasize training, to look to the procurement workforce and 
ensure that greater attention is paid to proper training.
    Mr. Thompson. Now the sole source contract that raises most 
of the committee's concern here today, is it your opinion that 
that contract should not have been sole source?
    Mr. Gallay. Absolutely.
    Mr. Thompson. That there are other people in the 
marketplace who, if they were given an opportunity to 
competitively bid on that contract, they would have?
    Mr. Gallay. Yes, sir. The fundamental principle of 
government contracting is that there should be open 
competition. And that can occur in a variety of ways.
    The device of the BPA in this case, in a situation where 
the nature of the procurement was so substantially transformed 
and so far exceeded the nature of the existing schedule 
contract that IMC held, absolutely required under proper 
procedures that there should have been open competition.
    Mr. Thompson. Mr. Saponaro, you indicated that L-3 was not 
allowed to comment on the report. And I want to make sure that 
we get the language correct. We have some comments to an audit 
by GSA that your company has made and a second response to 
that.
    Mr. Saponaro. The question, I think, my comments really 
were that more typically our experience that IG was in our 
offices, did do their audit. They audited five of GSA. And more 
typically, with such serious findings, there would be some 
opportunity for GSA to get that report or share that report 
before it is published so that we can at least comment on 
whether we think the validity of the data is correct. And we 
never got that opportunity to do that.
    Mr. Thompson. Did you request it?
    Mr. Saponaro. We did not know the report was being 
generated. No, sir. We did not.
    But typically, we would see that, with such accusations 
being made in the report. The first time we saw a copy, a piece 
of the report, was 2 weeks before it was released to the press 
in the end of December 2004.
    Mr. Thompson. Thank you.
    Mr. Gallay, you heard what was just said. Do you agree with 
that?
    Mr. Gallay. It would not be typical for us to provide a 
copy of the report to a contractor. This was an internal audit 
report. In the process of preparing it, we did provide copies 
to the management officials at FTS to get their input back. And 
they were taken into account in the issuance of our final 
report.
    And we stand by our findings. It would not have been 
typical for an outside contractor to get a copy of this report 
prior to its being finalized.
    And I would note, we are also aware of the response that 
they have provided. And we will not go into details at this 
time, but we also stand by our findings with respect to that. 
If the committee wishes to explore some of the issues on the 
cameras, we could address those as well.
    Mr. Thompson. There is another concern I have about the 
contract. It appears that some aspects of this contract went 
beyond the scope of installation and maintenance and that, to 
some degree, the equipment was stored somewhere and we, in 
turn, were paying to have it stored, the same people that 
installed it.
    In other words, there were a number of entities receiving 
payment. But from what we saw, they were one and the same. Is 
that your recollection of some of the storage facilities?
    Mr. Gallay. I do not know specifically the reference to the 
storage facilities. Certainly, there were materials that were 
delivered to sites and were--that would be the situation in 
Naco, Arizona. It was just lying out on the desert and also in 
storage adjacent to the property.
    There may have been payments made in connection with that 
storage. I do not recall specifically about that. I could get 
you that information.
    Mr. Thompson. That is the one I have recollection myself. 
And at some point, I am sure, maybe the second round of 
questions, we could get to it.
    Mr. Gallay. Yes, sir.
    Mr. Rogers. The gentleman yields back.
    The Chair now recognizes the gentleman from Washington, Mr. 
Reichert, for any questions he may have.
    Mr. Reichert. Thank you, Mr. Chairman.
    My question will go to all the members that wish to answer. 
The memo that we got, we received prior to this hearing, states 
that only 2 to 4 percent of the border and $200 million paid 
for work that was poor, incomplete or never delivered.
    And what I was pleased to hear is that there is an 
investigation being conducted. Whether criminal or some 
internal misconduct, there certainly needs to be an 
investigation conducted on behalf of the American people to 
find out really what happened.
    More importantly, we need to look toward the future because 
the whole issue here is protecting our country and our nation's 
borders. And looking through your testimony for this hearing, I 
am appalled to hear about the gross mismanagement of federal 
taxpayer dollars.
    In a post-September 11th world, it is unacceptable for the 
Department of Homeland Security to waste this kind of money--
hundreds of millions of dollars.
    My district in Washington State is right next to the 
Canadian border. And part of the report certainly refers to 
Blaine, Washington.
    And we have learned from Al-Qa`ida and other terrorist 
groups that they continually look for ways to exploit the 
Canadian border and our vulnerabilities there. As many of you 
know, the so-called Millennium Bomber, Ahmed Ressam, was 
apprehended there in 1999.
    The bottom line for me is this: we talked a little bit 
about it and I heard some comments about things that we need to 
do in the future--close government and business partnerships 
and modern managers. And new technology and we have to focus on 
achieving the mission and look for the best talent and be 
flexible in how we approach these projects.
    These are all things that we have known. These are common-
sense things that all of us should know when approaching any 
kind of project in our daily work. These are things that we all 
do.
    I want to know how this sort of thing can be specifically 
prevented from happening in the future.
    Mr. Gallay. Well, I think the essentials, as I mentioned 
earlier, are nothing new under the sun. It is adherence to some 
just basic elements of good contracting practices: acquisition 
planning beforehand, early identification what the requirements 
are; stick to the principles that are well established, of 
having competition when it is called for; and attentive and 
effective contract administration.
    There does have to be a partnership between the government 
and the contracting community. And going forward, we are 
increasingly relying on contractors to do the government's 
business.
    The government has responsibilities and contactors have 
responsibilities. And if people are not diligent about paying 
attention to those responsibilities, we are going to be back 
here at another hearing.
    Mr. Reichert. I guess I am really puzzled. I was the 
sheriff of Seattle just up until January 3 of this year. I had 
1,100 employees. And there is a ranking structure. There is 
accountability. There is responsibility, a supervisory 
responsibility.
    Where did that all fall apart? What happened to the 
accountability piece and people being held responsible and the 
line of supervision?
    Mr. Pellegrino. In this new environment where speed and the 
dependency on suppliers that are outside of the government in 
order to achieve these more complex missions, you have to 
recognize that the traditional hierarchal approaches sometimes 
just simply do not work in this new world where you have to be 
able to manage as well horizontally, not just up and down.
    And in that environment, looking at not only the issues 
related to contract compliance, which both industry and 
government, everyone would agree at the beginning of these 
programs that compliance is not optional, that it is mandatory 
and it is essential to being effective in serving the federal 
government.
    However, as good people intend to go down the path together 
and try to get something accomplished, if they in this 
particular program had achieved what they originally set out 
to, it would be an example that we would all call creative, an 
accomplishment. And we would not be having a hearing focused on 
some of the issues because when good things get done, we tend 
to say that we were creative; we did a good job; we did it 
quickly; we saved money.
    But in an environment where the mission is moving faster 
than the pace of the government to keep up from a contracting 
perspective, we are depending on new approaches moving forward. 
If you look at NASA, for example, NASA contracts 80 percent of 
its budget. It is a recognition that, in a high-tech world, the 
dependency on suppliers and a partnership with industry and 
changing the management approaches to manage the network of 
organizations that are necessary to support a mission is a new 
skill.
    We have to be able to teach that new skill. We have to have 
contracting be able to be responsive to rapidly changing 
priorities, moving ahead. And that is going to require us to 
continue to invest in the development of these new modern 
managers.
    Now DHS is taking this issue seriously. And the new 
secretary and the deputy secretary are focused on strengthening 
the program management capabilities--not just the project 
management, the program management capabilities--by certifying 
more and more program managers through the Program Management 
Institute.
    So there are measures that are being taken. They are 
essential to build that new workforce. It does not exist today, 
although I do agree it is common sense when you look back at a 
program that has failed to achieve its objective.
    Mr. Rogers. The gentleman yields back.
    The Chair now recognizes the gentlelady from Texas, Ms. 
Jackson-Lee.
    Ms. Jackson-Lee. I thank the chair and the ranking member 
and the ranking member of the full committee for this hearing. 
And I was not a sheriff, but I was a lawyer and a former 
associate judge in local government. And I am equally 
concerned, as my friend is.
    So I think this is truly a bipartisan crisis because it 
deals with the utilization of public dollars, but more 
importantly, in one of the most trusted or areas that needs the 
greatest trust of the American people, and that is their 
security.
    So I hope that we will not have another hearing and we have 
an empty chair, which I assume is next to the last speaker 
here, sort of a very glaring empty space of the Department of 
Homeland Security.
    And I hope that we will have the Homeland Security 
representative face this committee, Mr. Chairman, Ranking 
Member, as you so eloquently stated, so that we can restore the 
trust, but also be a part of helping to secure the American 
people. It is a great disappointment to me.
    I am one of the border states. And when we do not get it 
right, not that we face any more danger than anyone else, but 
that we are constantly at risk because we are certainly a 
border that faces or has a greater opportunity for individuals 
to pass over that line into the United States illegally.
    I am interested in where the problem lies. We know that 
Border Patrol agents and law enforcement officers are trained 
in the basic skills of law enforcement. And we know now law 
enforcement has encompassed new technology.
    DNA, for example, for those who are on the prosecution side 
and ultimately the trying of cases, DNA has become a new 
technological tool. And we know that there are a lot of 
equipment that we have been arguing about here in Washington, 
banging the gavel and the table, saying, ``Let's get the 
technology out there. Let's get scanners out there. Let's put 
these things in the hands of the persons who are engaged in law 
enforcement.''
    So I am trying to track down, Mr. Gallay and Mr. Saponaro--
is it Saponaro? Is that correct?
    Mr. Saponaro. Yes, it is. Thank you.
    Ms. Jackson-Lee. Trying to track down where the problems 
lie. If I could get Mr. Gallay to tell me whether or not we 
need, when you talk about the Border Patrol and their failure 
to have any attention to this RSV security improvement, chronic 
inattention, I note in your testimony, which leads of course to 
chronic mismanagement and chronic failure of the use of federal 
funds.
    Tell me the crux of the problem. Is it law enforcement 
people who are more skilled at their tasks of being at the 
border or arrests? Is it that there is no institutional 
structure, there is no procurement process, there is no 
paperwork that came down from the Department of Homeland 
Security when it merged?
    Border Patrol has no internal mechanism? What is the 
problem that would allow the wrong equipment or the wrong 
processes to be utilized and thereby diminish our security?
    Mr. Gallay. I think there were enough problems to go 
around. Everyone that participated in this program bears a 
share of the responsibility for the fact that it did not work 
as it should have.
    Certainly GSA and the contracting arm did not do what it 
should have in terms of supporting the Border Patrol and 
providing the right kind of contract vehicle--competition--and 
failed to provide the right kind of contract administration 
support. The Border Patrol itself did not pay sufficient 
attention to what was being provided to it by the contractor. 
And there were significant failings on the part of the 
contractors on performance.
    So everybody had a seat at this table.
    Ms. Jackson-Lee. So this committee has a responsibility. 
Let me just go quickly to Mr. Saponaro. Can you provide this 
committee with a complete list of the prices for the components 
of the RVS sites and the costs of these component parts to IMC?
    And let me add this one. Can you provide this committee 
with substantial records explaining why IMC was awarded such a 
large government contract over another equally or more 
qualified company?
    Mr. Saponaro. With respect to the first thing you asked, 
yes we can. And I think, to some extent, some of the data we 
have supplied already does do that. But I think we can supply a 
complete auditing of our price list and what we charged for 
each of the sites that exist.
    Ms. Jackson-Lee. I would appreciate a freestanding answer 
on that.
    Mr. Saponaro. Okay. On the second point, I am not sure we 
can provide that. I think it was pointed out here earlier that 
we should obviously take a look and do our own investigation of 
how this happened, to be awarded a larger contract from the 
initial.
    We have not done that, to my knowledge. I would point out, 
however, that the selection of the contract is not really done 
by the contractor, meaning IMC or L-3 or any other contractor. 
It is done by the government.
    They pick the contract appropriate to perform the work. And 
in this case, it is absolutely clear that the contract selected 
was not adequate to really perform this work.
    Many of the non-IT-related construction activities pointed 
to by the IG audit report could not be done under the IT 
Schedule 70 contract. And as a result, I mean, that was the 
biggest failing in the selection of the contract because this 
work--to install sensors, et cetera, along the border--does in 
fact require that kind of work to be done.
    I think, as far as some of the other things that were 
mentioned here, we are aware of the Blaine, Washington thing. 
We did find out there was problems there in the summertime. L-3 
actually stepped up on its own and completely fixed that system 
so it is operational today.
    And in fact, I would make a recommendation that either the 
committee or its staff or some members of the committee 
actually go out to look at some of these sites and see how they 
really work. They have been very effective in a lot of the 
places in Texas that I think the agents used them successfully 
in performing their work.
    There is no doubt that I think that whatever ASI does going 
forward in the application of technology will require, I think 
some training and involvement with the agents in the field to 
make sure they can utilize effectively this technology they 
get, whatever it is, because I think they are the key.
    The key point here is to provide them information in a 
rapid and timely fashion so they can better do their job. And 
they ought to be part of the process of requirements, as I said 
in my testimony earlier.
    Ms. Jackson-Lee. Mr. Chairman, I appreciate his kind offer. 
My understanding is there has been information associated with 
the audit, but not a complete itemized list. If we can take Mr. 
Saponaro up on his offer to provide us with a complete itemized 
listing of the prices and the additional records that he may 
have, that would be helpful to the committee.
    Mr. Saponaro. We definitely will.
    Ms. Jackson-Lee. Thank you very much.
    Mr. Rogers. The gentlelady yields back.
    Ms. Jackson-Lee. I yield back.
    Mr. Rogers. And I would offer, let you know that I talked 
with the Ranking Member. We have every intention of going out 
and inspecting, as a committee, these sites where they are 
working and where they are not working.
    But we will have to schedule that a little bit later.
    Right now, the Chair recognizes the gentleman from Texas, 
Mr. McCaul, for any questions he may have.
    Mr. McCaul. Thanks, Mr. Chairman. I think the issue for 
this hearing is accountability or lack thereof. But what is 
most disturbing to me is not the $2 million--which it was and 
we do not know what we got for the $2 million--not that the 
taxpayers, in my view, got ripped off, but that it impacts our 
national security.
    This has a direct impact on our national security. I am 
interested in this investigation.
    Mr. Gallay, you mentioned improper procurement procedures 
involved with the contract, used the word ``unlawful,'' I 
believe, at one point in your testimony. I am a former federal 
prosecutor like you. I worked on counterterrorism 
investigations. I also worked in the Public Integrity Section 
in Washington.
    And I understand you cannot comment on the nature of the 
investigation. But tell me, who is conducting the 
investigation?
    Mr. Gallay. We have an investigation underway ourselves, 
the Office of Inspector General of GSA. In the course of that 
investigation, we are also coordinating with other cognizant 
law enforcement agencies.
    That would include the Inspector General's Office at DHS 
and the FBI.
    Mr. McCaul. So the FBI is investigating this matter 
currently?
    Mr. Gallay. It would be more accurate just to say that we 
are conducting an investigation and we have coordinated with 
them.
    Mr. McCaul. Okay. Is anyone from the United States 
Attorney's Office or with Public Integrity looking into this?
    Mr. Gallay. I really would not want to get into any further 
details about the nature of the investigation other than just 
to say it is ongoing.
    Mr. McCaul. Do you know how many individuals are under 
investigation?
    Mr. Gallay. It would not be appropriate for me to get into 
any specifics with respect to that. I would be happy to do it 
in executive session.
    Mr. McCaul. I think perhaps we should do that.
    The second half of my question relates to, we spent $200 
million. I do not know what we got for that. And now we are 
proposing $2 billion to expand.
    And that obviously gives us some pause, given the lack of 
performance of this contract; 2 to 4 percent of the border was 
covered with the $200 million. I think 6,000 miles will be 
covered under the $2 billion contract.
    Can any of you tell us, first of all, what did we get for 
the $200 million contract? And how are we going to do better 
with the $2 billion? And what is that going to provide?
    Mr. Saponaro. If I could? First of all, just to correct the 
record, from our record on the Remote Video Surveillance 
System, we have installed 246 sites at various locations, which 
we could provide you a complete list. That 246 sites cost the 
government $100 million, not $200 million. I just want to pound 
away on that because our records, that is what we have actually 
invoiced GSA that much money, not $200 million. So that is the 
record.
    I think of the 246 sites, all of them are at least 
operational or being maintained to be operational, as I stated 
earlier. There were several that were not completed at the end 
of the contract, which was not continued, primarily due to the 
problems associated with getting environmental assessments 
completed or land leases or things that had to be done so that 
work could be installed on the border. And in fact, if those 
things were completed, that equipment could in fact be 
installed on a going-forward basis.
    Again, all of this investment made on RVS in its current 
capacity can, in fact, be integrated in the future ASI program. 
So it is not an investment that went down the drain. In some 
respects, it can be integrated.
    And in fact, any kind of ASI program should have a pretty 
sophisticated integration of technology and a refresh of that 
technology in the future over the lifecycle of that for such a 
large program. So you spent $100 million and you got 246 sites 
installed on the border, many of it being used successfully by 
Border Patrol agents today.
    Mr. McCaul. Is this mostly cameras on poles and 
surveillance?
    Mr. Saponaro. Yes. The RVS program was, as opposed to the 
ASI broader program, was principally to mount poles in the 
ground and then some series of either 10 or more cameras on 
those poles focused on some section of the border. And they 
would cover different geographic ranges. And that way, that 
information would then be communicated back to a control center 
where they could view the information coming from the video 
cameras into the control station.
    That is all the RVS program was. There are other sensors 
and things that the Border Patrol has experimented with--remote 
vehicles and other types of sensors. But they were not part of 
the RVS program but, in fact, will be part--I think--of an ASI 
program that perhaps should use a multiplicity of different 
technologies because each of these sections of the geography of 
the U.S. border are different, requiring different kinds of 
systems to really handle the surveillance of those kind of 
borders.
    Mr. McCaul. And lastly, Mr. Chairman, if I could just--I 
noticed that 6,000 of the border.
    Mr. Saponaro. Yes.
    Mr. McCaul. I, too, am from Texas. It is a border state. 
How much of that 6,000, what percentage of the southwest 
border, where we have the major influx of illegal immigration, 
which poses a threat to our national security, how much of that 
will be on the southwest border?
    Mr. Saponaro. I do not know the exact answer to that 
question off the top of my head. But I certainly would be 
prepared to get exactly how many miles of coverage we have in 
both Texas and Arizona. We have perhaps the majority of these 
installations are on the southern border.
    And I could get that number. And we could supply it with 
this information requested into the record from our version.
    Certainly, I am sure the Border Patrol or Customs and 
Border Patrol has perhaps the answer at the tip of their 
fingers. I just do not have it.
    Mr. McCaul. Thank you, Mr. Chairman.
    Mr. Rogers. The gentleman yields back. The Chair now would 
like to begin a second round of questions.
    Mr. Saponaro, you just made a clarification and said that 
your company had billed $100 million.
    Mr. Saponaro. That is correct.
    Mr. Rogers. For 246 camera sites--246, 247? I heard both 
numbers. I do not know which.
    Mr. Saponaro. Yes, that is correct.
    Mr. Rogers. And describe for me actually what that site is. 
What would be at the typical site?
    Mr. Saponaro. A typical site would be an area of the border 
where we mount a pole--a 60-foot pole, as you indicated, in the 
ground and then mount on the pole upwards of--anywhere from 
seven to 10 cameras, depending on the geography of that section 
of the border.
    Mr. Rogers. So each side will have how many poles?
    Mr. Saponaro. Well, it depends on the geography of the 
site.
    Mr. Rogers. Okay.
    Mr. Saponaro. What we were just talking about is there are 
four cameras on any individual pole.
    Mr. Rogers. Okay.
    Mr. Saponaro. Okay? And then that information is then 
transmitted back to a control tower and that either could be 
directly, depending on distance to the control tower, or 
through a relay communication device.
    Mr. Rogers. Are they wired together? Or is it through 
satellite signals that they communicate?
    Mr. Saponaro. They are radio transmitted back really to the 
control.
    Mr. Rogers. Okay. The cameras themselves, how much do they 
cost--does each cameras cost? You said you have the kind that 
were requested, not the better kind.
    Mr. Saponaro. There was a range of cameras at the end of 
the contract. There was, I believe, FLIR cameras were one 
camera; the ISAP camera was another type of camera. A FLIR 
camera had a lens extender feature that could be added to get 
better vision.
    Mr. Rogers. So how much would the most expensive camera 
that you had to put on there cost?
    Mr. Saponaro. I would say $35,000 to $50,000.
    Mr. Miller. It was actually $48,500 for the FLIR with the 
extender.
    Mr. Rogers. Okay. Well, math is not my strong suit. But 
$100 million at 246 or 247 sites is over $300,000 per site. I 
cannot imagine why it would cost over $300,000 to put a 60-foot 
pole in the ground and a $35,000 camera on top of it. What am I 
missing?
    Mr. Saponaro. I think that is about the right number, 
$300,000 per site, is about the right number of the total cost 
to do that.
    Mr. Miller. Mr. Chairman, if I could help clarify?
    Mr. Rogers. Please do.
    Mr. Miller. There are four cameras on each pole, two 
nighttime infrared cameras, two of the daytime cameras. The 
nighttime cameras that the inspector general discussed are the 
ones that are approximately $48,500.
    So you have two on each pole; then the lower priced, 
daytime camera. Then you have microwave transmission equipment 
as well as the cost of installation and other accessories to go 
along with it, a very large pole as well that has to be planted 
in the ground.
    Mr. Rogers. Now you just described to me about $150,000 
worth of equipment and poles. How do you get the other $150,000 
into that mix?
    Mr. Miller. I think when you look at the entirety of what 
goes into that pole, including installation, et cetera, that 
there is a basis for the price.
    Mr. Rogers. Okay. I would like to have an itemization of 
that.
    Mr. Gallay, did your audit find that to be an accurate 
statement? That this roughly $300,000 per site was supported by 
the actual equipment necessitated on that site?
    Mr. Gallay. Well, certainly the price of the contract line 
item number was on the order of $300,000. I think the real 
issue is: what should it have been? And it goes back to the 
question that was asked before. There have been many 
installations that are up and running around the country.
    The question is: did we get our money's worth? And the 
point about competition is that that would have been the way to 
determine what was the appropriate price.
    This procurement vehicle does not provide any great 
assurance as to whether or not that was the appropriate price.
    Mr. Rogers. Right. We are finding that a lot in this 
committee, not just on this item. We are being told it costs 
$190,000 to put a Border Patrol officer through a five-month 
training program, but yet you can send your child to Harvard 
University for a four-year degree for $20,000 less than that. 
And somehow, that makes sense to the people that sat at that 
table that you are sitting at today.
    The last thing I wanted to ask you about was--there was a 
reference you made earlier to fees being obtained by TRS and 
somebody else as being a possible cause for some of this--the 
lax oversight. What did you mean?
    Mr. Gallay. By FTS? By the Federal Technology Service?
    Mr. Rogers. Yes. And there is somebody else that you said 
generated fees.
    Mr. Gallay. Well, I think what I was saying, what you are 
referring to, was that one of the underlying causes, we 
believe, in our review of all of the FTS contracting practices 
in terms of what happened in the environment there, was the 
fact that they were motivated to get more business and part of 
that was keeping the client happy.
    And that became more of a dominant concern, in some cases, 
than proper adherence to proper federal procurement practices.
    GSA is no longer an appropriated fund agency. And for the 
most part, it operates based on fees generated from its 
contract activities in support of other client agencies in the 
federal government.
    On the FTS side, Federal Technology Service side, the fees 
they would get for performing these contracts, acquisition and 
support services would range from about 1 to 4 percent. FSS, 
the Federal Supply Service, which operates the schedule 
contracts, which IMC had held, which was the basis for the BPA, 
had gotten to be about 1 percent. That is down to .75 percent 
now on its contracts.
    Mr. Rogers. So these are agencies that would be reviewing 
the process?
    Mr. Gallay. Well, FTS was the component of GSA that 
operated, that handled this procurement.
    Mr. Rogers. And they had an economic incentive for it to be 
a larger project.
    Mr. Gallay. Well, one could look at it that way. That was 
not a specific element of our finding in the report.
    Our point was more directed toward the environment that was 
created in terms of let's emphasize growing the business, you 
know, let's keep the client happy. That became the dominant 
motivator. And the net result that we found was a whole range 
of problems in terms of failure to follow proper contracting 
procedures.
    Mr. Rogers. My time is up. I appreciate your responses.
    Mr. Gallay. Thank you, Mr. Chairman.
    Mr. Rogers. The gentleman from Florida, Mr. Meek.
    Mr. Meek. Thank you, Mr. Chairman.
    Mr. Saponaro, I want to give you the opportunity--you 
wanted, you and Mr. Miller, wanted to explain a little bit more 
about what you were doing as it relates to cameras. But before 
that, I just want to ask you a question.
    Are there any other inspector general's reports or anything 
that we need to be aware of that your company happens to have 
the contract on?
    Mr. Saponaro. Not to my knowledge. We do not have any other 
such--
    Mr. Meek. Not at this time. And I would say that the GSA 
does not have--this is the only issue, this particular 
contract, that you are actually looking into the practices of 
the company?
    Mr. Gallay. Of L-3?
    Mr. Meek. Yes.
    Mr. Gallay. To my knowledge. I would have to check and let 
the committee know if there are others.
    Mr. Meek. Okay. I ask that question because I am encouraged 
by the fact that you are here, sir, because you want to set the 
record straight, if the record needs to be set straight. I am 
concerned by the fact of all the media coverage on this and all 
of the attention on the GSA report and all, that there has not 
been an internal investigation launched yet to find out who did 
what wrong, if something did go wrong, in your opinion.
    I am also concerned that I have already mentioned that the 
Department of Homeland Security is not here. And believe me, 
when they come, I am pretty sure that there will be more 
fireworks in this committee about what took place.
    But I do this congressional thing every day. And if there 
is something that is happening the next day that did not happen 
the days that I have been here, then I am going to raise the 
question.
    So basically, your testimony today is the fact that you did 
not find anything out of the ordinary with this contract until 
you saw the report. It was the first knowledge, I guess, to 
your level or Mr. Miller, that there was an issue.
    Mr. Saponaro. I think it is accurate to say that, as I 
mentioned in the opening remarks, IMC had this contract. We 
acquired it in the year 2002, the end of 2002. It ran in a 
separate sort of company within L-3.
    And by the time we looked at it in mid-2003 and began to 
look at the contract and performance and the magnitude of this 
thing, we felt that it would be more appropriate to integrate 
it into a larger company, GSI, and then to change the 
management and put some of our own management practices in, 
which were used to handling larger programs. So we actually did 
that.
    As we got some indications during the execution of the 
contract in 2004 from the GSA people we were dealing with, the 
question asked me earlier was did we do our own investigation 
of the award going from $2 million to $250 million. We did not 
do that, but we did look deeply into the way we were performing 
the program during 2004 and took every step we really did do to 
improve the performance of the contract to L-3 standards.
    As I mentioned in my opening remarks, L-3 has a very, very 
strong code of ethics in terms of not only performing contracts 
to the letter of the law, but performing the spirit of the 
contract. So we were on the move, trying to improve our 
performance.
    At the same time, of course, the IG was completing its 
audit of the--
    Mr. Meek. Mr. Saponaro, let me ask you this question 
quickly. Is there someone still living within the old 
management team within L-3 now?
    Mr. Saponaro. No, sir.
    Mr. Meek. No one? The president, vice president, no one?
    Mr. Saponaro. No one.
    Mr. Meek. Okay. So you still have stockholders that were 
involved in that company?
    Mr. Saponaro. I am sorry, could you repeat that?
    Mr. Meek. Was the company publicly traded?
    Mr. Saponaro. No, it was not.
    Mr. Meek. Okay.
    Mr. Saponaro. And one other correction I would make to 
that. We have an employee that works for us now that was an 
employee of IMC. And she continues to manage and very 
successfully manage a lot of other programs for us.
    Mr. Meek. Okay.
    Mr. Saponaro. She is currently an employee.
    Mr. Meek. Okay, let me ask you a quick question. This is to 
be continued. We are not trying to come in for a landing right 
now. You have an ongoing investigation. There may be others 
that we do not know of at this time that may have an ongoing 
investigation into the practices of not only the department.
    But I also think that there is some responsibility on the 
side of the contactors. I mean, it is encouraging that you are 
here. I do not think it is a bad thing. I think it is a great 
thing.
    But I think that it is important. I think it has been said 
here 10 times over today that we are very concerned about this.
    And for the first time in the history of the Congress that 
we have a Homeland Security standing committee, the mission of 
this subcommittee is to make sure that the American taxpayers 
get what they deserve--protection and also the accountability.
    As it relates to the investigation that you all are 
conducting within GSA, when do you think that will be coming in 
for a landing? Or you do not know?
    Mr. Gallay. I really could not say. It would be 
inappropriate to talk in any detail about the investigation.
    Mr. Meek. Would you be willing to come back before the 
committee when the department comes back or comes before this 
committee?
    Mr. Gallay. Certainly.
    Mr. Meek. Okay. I think it would be helpful because I 
believe it will be only fair to have your office represented at 
the same time the Department of Homeland Security is before us. 
They have quite a bit of explaining to do as it relates to what 
is happening.
    I want to ask you the same question. The individuals that 
were over the contract, you said earlier, well there is a 
process right now of evaluating their job status within the 
department. But they are still--do you have knowledge, are they 
still working for the Department of Homeland Security in the 
capacity of awarding contracts on a sole-source basis?
    Mr. Gallay. I cannot speak to what is going on at Homeland 
Security. At GSA, that is what you are asking me about?
    Mr. Meek. Yeah, GSA. I am sorry.
    Mr. Gallay. There are some people that were involved who 
are no longer at the agency. There are some people who are 
still there. And as I said, there are actions that are being 
proposed. And they have to work their way through the process.
    Mr. Meek. Okay.
    Well, Mr. Chairman, I once again just would first of all 
like to thank you and also the chairman and ranking member for 
continuing to pay attention to this issue. We are not only in 
this area finding questionable practices, but in others.
    So we have to continue to go through this process. And I am 
pretty sure the Department of Defense, especially with the Iraq 
war going on, they are going to have to go through this process 
too.
    This is hopefully to prevent this from happening again. Not 
only is it bad for the federal government, but it is also bad 
for the contractors that are involved.
    But I guess the truth will float to the top eventually. And 
I would suggest that your company plays a very close role in 
this. If it is something that you all have not done, you better 
say it quickly because I am pretty sure that someone is going 
to have to answer for something that happened here.
    And I do not know how far it is going to go. But I hope 
that some of the things that have been brought to light can be 
explained because I know the American people will feel better, 
because some of this stuff is truly hard to believe.
    Thank you.
    Mr. Rogers. Thank you.
    I prefaced my questions a little while ago about the pole 
site costs by telling you math was not my strong suit. And I 
have to apologize. My math was wrong. It was not $300,000 per 
site; it was $406,000 per site.
    Can you speak to that?
    Mr. Saponaro. Yes, sir. I will try to speak to that. I 
mean, you had some idea of what the equipment costs were, 
including additionally to the cameras were some radio 
communications equipment. But the evolution of the sites also 
involved site planning; that is, there had to be some labor 
involved to do the planning for the site, just to get that to 
the Border Patrol for their approval.
    Some labor involved to supply information to the Army Corps 
of Engineers that handle the environmental assessments and all 
that part of it. There was a number of things involved.
    And it is not only installing these sites, getting power to 
the sites and, I would say, several labor-related activities 
that supported the equipment that you roughly added up. And I 
think we can and will provide you sort of a breakdown of the 
site in terms of the components and the costs that go with it.
    Mr. Rogers. I look forward to that.
    Mr. Saponaro. And we are prepared to stand behind it.
    Mr. Rogers. I look forward to that. And before I move to 
the next questioner, I did want to revisit one statement you 
made and that was you said you have installed these 246 
cameras.
    You said, ``Many are being used today by Border Patrol 
officers.''
    Mr. Saponaro. Yes.
    Mr. Rogers. Not all of them?
    Mr. Saponaro. I think all of them are being used.
    Mr. Rogers. When you said many, it made me think that maybe 
some of them were not working.
    Mr. Miller. I think the qualifier there is because since 
September 30, 2004, to our knowledge, there has been no 
maintenance of the system as it was installed on that date. 
These are high-technology cameras. And in particular, a great 
number of them are cooled cameras.
    And there will be failures if they are not maintained. We 
cannot speak to the current status.
    Mr. Rogers. Thank you very much.
    I now yield to the gentleman from Washington, Mr. Reichert, 
for his second round of questions.
    Mr. Reichert. Thank you, Mr. Chairman.
    First of all, this will be my last time to talk to you, so 
I want to thank you for being here. I know it is tough to sit 
in this meeting room and answer these hard questions. But we 
have that responsibility to the American people and appreciate 
you being here and giving us your honest answers.
    I want to get back to just the responsibility issue that I 
share with my colleague from Florida, that someone will be held 
responsible and accountable here. And I know we cannot talk 
about details of the investigation. People in this room 
recognize that investigation will uncover some misconduct, if 
not criminal activity.
    You can talk about vertical or horizontal responsibility, 
poor management. You can talk about silos. You can talk about 
all those things that might have prevented certain things from 
happening, how to manage a project within an old and tired 
system and trying to transfer it to a new and more modern 
system of management.
    But the fact is that checks and balances here, whatever 
system we are talking about, failed. One of the questions that 
I had, now as we look to the future, we want to get things 
done. And we want to make sure that we get our money's worth.
    One of the things that has to happen is the Homeland 
Security Department has to have authority to enter into 
agreements and partnerships with private companies and 
businesses, partnerships and partnerships with them. Do they 
have that authority now?
    Mr. Pellegrino. Just from firsthand experience, both our 
own organization as well as working with many of the leading 
suppliers, as the chairman of their association, supporting the 
department, they do have that authority. They are somewhat 
under-resourced, as the full committee chairman described 
earlier.
    I think his numbers, in fact, were pretty accurate and on-
target as of yesterday, in an update that our industry received 
from the chief procurement officer in terms of where they were 
with resources. Private industry spends 2.5 to 3 percent of 
their acquisition costs on resources to manage those 
procurements.
    So 2 to 3 percent of the total cost of what they buy is 
spent on managing the acquisition. Today, if Homeland Security 
added literally twice as many contracting and procurement 
officers within their organization to run these acquisitions, 
they would only still be at half of the standard industry 
benchmark.
    Double the current workforce and they would still be at 
half, which would mean that, to achieve the same level of 
performance as the private sector, they would have to work 
twice as hard. That is a very challenging environment.
    And what that will drive, as we enter into a period where 
more and more government workers are also facing retirement 
over the next decade, is a greater dependence on private sector 
and systems integrators in order to achieve some of these very 
complex programs. So we need to develop that workforce, add 
those resources.
    I know the department is committed to doing that. And they 
have already begun to make some progress.
    And likewise, industry is stepping up to the plate as well. 
In fact, we have offered, as an industry group, to help 
facilitate the development of more skills in this new program 
management area by sponsoring some of the training, as well as 
some of the skills development, working side by side, to ensure 
that industry and government have comparable skills together to 
ensure that these types of things do not happen.
    Mr. Reichert. So now that you have described some of the 
difficulties that the Department of Homeland Security is 
facing, is it realistic to assume that we can complete 
America's Shield--6,000 miles--in 4 years?
    Mr. Pellegrino. A program like that faces many challenges, 
as we have heard here. You have a full range of different types 
of skills that have to be brought together in order to address 
the full life cycle.
    We have heard about site development and construction costs 
and putting up holes and wiring cameras. These are all 
different types of skills necessary.
    And so a program like this has to address that entire life 
cycle of capabilities. I am reminded that the city of London a 
few years ago installed over 600 cameras in 174 locations in 
just 2 years. And they charge every driver of a vehicle into 
the center city every day for that privilege.
    And such a system being built in such a short period of 
time had a couple of critical elements: one, the mayor itself 
put his office on the line relative to the accomplishment of 
that very complex program. And he ran a very large program 
office that represented the client side, what we would say.
    In other words, the program office represented the 
government in ensuring that all of the steps that were 
necessary were performed and competed and that the money was 
only paid when the job was done. That program was successful 
and it went live and it has operated very efficiently ever 
since it went in place 2 years ago.
    So 2 years, a program that is equally ambitious and 
complex, just in the sense of putting something into a city 
that is that old, with new technology. And we should learn from 
programs like that, in terms of how they accomplished it.
    Mr. Reichert. So was that a yes?
    Mr. Pellegrino. Yeah.
    [Laughter.]
    Mr. Reichert. Thank you, Mr. Chairman.
    Mr. Rogers. The Chair now recognizes the gentleman from 
Texas, Mr. McCaul, for any more questions he may have.
    Mr. McCaul. Thank you, Mr. Chairman.
    I want to clarify some of the testimony. It is great to 
have all this technology on the border. I am generally 
supportive if we do it right.
    But do we have the personnel to maintain it? Because if we 
do not, it is not of any benefit. I know that may be a little 
bit out of your field, but if you could address that issue, I 
think.
    Mr. Miller, I know you are counsel, but you seemed to touch 
on that issue. It is an issue that we as a Congress, we fund 
Border Patrol and DHS. And so it is an issue I would like to 
hear your response.
    Mr. Saponaro. Border Patrol has established a center for 
operations and maintenance for the existing towers that are 
there in Albuquerque, in Texas. And we had 19 people, in 
addition to the Border Patrol people, helping to maintain that 
equipment.
    In fact, that was one of the areas where the IG report, in 
our testimony, that we have clear records of what these people 
were doing exactly in terms of maintenance. I think in the 
acquisition of ASI, the logistical support for the more 
complicated systems perhaps should be in the hands of the prime 
integrator for some period of time, during the warranty period 
in the first couple of years of the system, they have the most 
to gain to make sure that equipment is in fact operating and 
working successfully, assuming there are some metrics or fixed 
price arrangement.
    But I think currently, we do not know actually the status 
of the maintenance activities that have been done on the RVS 
equipment since September 30 since we have been off the 
contract.
    Mr. McCaul. Do you have an estimate of how many, sort of 
the personnel numbers, what it would require to maintain the 
Shield Initiative?
    Mr. Saponaro. I do not really know that number. I think it 
definitely could be estimated. And we have not been privy to, 
in industry, really what the vision and objectives and 
requirements really are for ASI.
    It most likely will involve a multiplicity of technologies 
that can be deployed in different parts of the border, a 
program that I think might evolve over a longer period than the 
4 years you mentioned, although it is hard to make a judgment 
on that without seeing what the priorities of the program are.
    And as was indicted here earlier, once most prime 
contractors in the industry today, you know, really get up 
every morning trying to figure out how better to work with 
their customers to provide quality services and solution. And 
we are not getting up every morning to figure out how to cause 
some events that may cause another program to happen.
    So I think the vision, priorities; then I think you could 
make a comment of whether this system can be done in 4 years. 
That seems like a pretty aggressive schedule.
    Mr. McCaul. Mr. Gallay, a question regarding your 
investigation. Did you request documents from Border Patrol as 
to how this contract was awarded?
    Mr. Gallay. In the context of our audit, yes we did.
    Mr. McCaul. Right.
    And was there any compliance with that request?
    Mr. Gallay. Our requests were made through the FTS 
contracting officials, which handled the procurement. And I 
regret to say we were not provided with those documents. We 
never got a really satisfactory explanation as to why, as to 
whether or not they were destroyed or could not be located or 
what.
    We made that request multiple times. We never were provided 
with the documentation. And that is reflected in the formal 
statement.
    Mr. McCaul. So you made several requests to Border Patrol.
    Mr. Gallay. To FTS, which made the request to the Border 
Patrol. And during the pendency of our request, we kept being 
told that yes, there is a box of materials relating to the 
initial RFP and the proposals and the awards. And those would 
be provided; those would be provided.
    Suddenly, we were then told they were not available.
    Mr. McCaul. And so no documents were produced?
    Mr. Gallay. Not to us.
    Mr. McCaul. Is it typical when you have a contract awarded 
to maintain those records as to how the contract was awarded?
    Mr. Gallay. Yes, sir.
    Mr. McCaul. But in this case, they did not have any 
documents?
    Mr. Gallay. None were provided to us. That is not typical. 
And that is most disturbing.
    Mr. McCaul. And did they indicate they just did not have 
any documents? Or they just did not want to comply?
    Mr. Gallay. We did not get a satisfactory explanation as to 
why the documents were not provided to us.
    Mr. McCaul. I am very disturbed by that.
    I think that is something, Mr. Chairman, that we should 
pursue on this committee.
    Lastly, Mr. Saponaro, I know you sort of acquired a bit of 
a liability when you bought or acquired IMC. And this may apply 
to Mr. Gallay as well.
    It is my understanding that IMC bought ISAP and that there 
were certain cameras that were specified to be used for the 
surveillance, but that at some point, the decision was made to 
substitute the more expensive cameras with the cheaper version. 
And I believe that was in your report.
    Is that accurate? Or could you comment on that?
    Mr. Gallay. That is correct. Now this is a point on which 
there is some difference between L-3 and our view of events. I 
will say that, in terms of the point we made, the pricing of 
the proposal, which was done by IMC early on, was based for 
each contract line item on a certain array of cameras. And that 
pricing was based on the FLIR cameras at $48,500. There may 
have been other variations.
    And again, this goes back to the discussion about the 
government needing to work hand-in-hand with contractors. L-3's 
point was, well, they were free to make some changes in the 
selection of the individual cameras. Our point is, if that was 
done, that certainly should have been, in fairness, reflected 
in the price.
    Mr. McCaul. And did the contractor ever notify GSA of this 
change?
    Mr. Gallay. We received some indication that the contractor 
did have conversations with the Border Patrol about some of the 
changes and that Border Patrol headquarters may have approved 
them, although one of the issues we found on our field visits 
was the people in the field clearly wanted the higher-end 
cameras and were not satisfied with some of the substitutions 
that were made.
    Mr. McCaul. So the agents in the field wanted the higher-
value camera. The decision was made at a higher level to go 
with the cheaper?
    Mr. Gallay. That is essentially correct. And just to follow 
up on your other point, there was not notification to the FTS 
contracting officer about those changes.
    Mr. McCaul. Okay. I see my time has expired. Thank you.
    Mr. Rogers. Thank the gentleman.
    The Chair now recognizes the gentleman from Connecticut, 
Mr. Shays, for any questions he may have.
    Mr. Shays. Thank you very much.
    The chairman of the full committee was here earlier and 
outlined this. We would love some answers as to the issue of 
seven procurement offices, the creation of a chief procurement 
office, the legacy of these 22 departments becoming one.
    Under this issue, do you believe the current organizational 
structure is adequate to support successful contracting actions 
for the $2.5 billion America's Shield Initiative?
    And that would go to you, Mr. Pellegrino.
    Mr. Pellegrino. I believe that the department is taking 
measures to ensure that CBP is adequately resourced and the 
chief procurement officer recognizes this as a significant 
challenge and has already begun to add a significant number of 
acquisition resources in order to address the current 
constraints.
    Mr. Shays. You have about 700 totally and you are going to 
go to 400 more or so?
    Mr. Pellegrino. I am not sure, 400 more? Today, I think it 
would be larger than that is the current plans. I believe that 
400 more would just reflect the need that they have in both CBP 
and TSA.
    Mr. Shays. Are you looking to consolidate these?
    Mr. Pellegrino. This is not our role as Deloitte Touche. 
But I believe that they are addressing these issues in terms of 
how to better integrate the different procurement organizations 
within the department.
    And we believe that their plans are well considered and 
appropriate.
    Mr. Shays. Do you believe that the chief procurement 
officer should have direct line authority over the others?
    Mr. Pellegrino. I believe that to have a chief procurement 
officer, it should have that type of authority.
    Mr. Shays. Any opinions expressed by the other panelists on 
this issue?
    Let me just ask, in one other area, in light of the 
management failures--and I would ask GSA on this--in light of 
the management failures outlined in your report, your audit, 
considering how significantly larger and more complex the ASI 
contract is projected compared to ISIS, which of these 
contracting options are you recommending GSA pursue for ASI?
    Mr. Gallay. Which of the options? I am sorry.
    Mr. Shays. Yeah.
    Mr. Gallay. I am not sure I understood what the array of 
options was.
    Mr. Shays. Well, you have one option is the full and open 
competition; you have option two, assisted contracting; and 
option three, partial-assisted contracting.
    Mr. Gallay. I do not have a specific recommendation. But 
certainly, the notion of open competition has to be an integral 
part of anything going forward here. And I would have serious 
reservations about anything that took away from that.
    But essential to a project of this scope is proper planning 
and development of an acquisition concept that takes into 
account the difficulties that are to be encountered and 
provides everybody that is in the position to submit a proposal 
that opportunity.
    Mr. Shays. Any other opinion by other panelists?
    Mr. Pellegrino. I believe, from an industry perspective, 
full and open competition and a primary systems integrator to 
manage the program and the delivery is the right model.
    Mr. Shays. Okay. It is pretty striking to me that this 
department, $13 billion purchasing is an extraordinary amount 
of money. And it is a little unsettling that we still have not 
kind of sorted this out to the extent that we need to.
    Are we finishing up here, sir?
    Mr. Rogers. Yes.
    Mr. Shays. Is there any question that you wish that the 
members had asked, that you were prepared for, that you need to 
put on the record? It can be on any issue.
    Anything you stayed up all night preparing for?
    [Laughter.]
    Seriously, is there any issue that any of you would like to 
put on the record? So I will assume no.
    Thank you.
    Mr. Rogers. Thank the gentleman; he yields back.
    I want to thank the witnesses for your very valuable 
testimony and your presence. And I want to thank the members 
for their questions.
    Panelists, I would like you to be advised that the record 
will be held open for the next 10 days. So if members do have 
some questions, I would appreciate you responding to those.
    And with that, this hearing is adjourned.
    [Whereupon, at 12:04 p.m., the subcommittee was adjourned.]

                      MISMANAGEMENT OF THE BORDER
                    SURVEILLANCE SYSTEM AND LESSONS
                  FOR THE NEW SECURE BORDER INITIATIVE
                                PART II

                              ----------                              

                       Friday, December 16, 2005

                  House of Representatives,
                    Committee on Homeland Security,
                                Subcommittee on Management,
                                Integration, and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:45 a.m., in 
Room 311, Cannon House Office Building, Hon. Mike Rogers 
[chairman of the subcommittee] presiding.
    Present: Representatives Rogers, Linder, McCaul, Meek, 
Pascrell, and Thompson.
    Mr. Rogers. I would like to call this meeting of the 
Subcommittee on Management, Integration, and Oversight of the 
Committee on Homeland Security to order. I thank the witness 
for being here.
    We are holding this second hearing today to examine what 
went wrong with the border surveillance camera program, and how 
to avoid repeating the mistakes of the past in the new Secure 
Border Initiative.
    I would first like to welcome our witness, the Inspector 
General from the Department of Homeland Security, in his first 
appearance before the subcommittee since his confirmation. On 
June 16, 2005, we held our first hearing on mismanagement of 
the Integrated Surveillance Intelligence System, referred to as 
ISIS. This program, managed by the Border Patrol, is a network 
of remote surveillance technology that includes ground sensors 
and cameras mounted on poles along the Nation's borders.
    That hearing focused on a report from the General Services 
Administration Inspector General on disturbing financial and 
management problems in the ISIS program. These included: The 
ballooning of the initial contract award from $2 million to 
$200 million in just one year without competition; secondly, 
payments for tasks outside the scope of the original contract; 
payments for cameras and other equipment that did not work or 
were never installed; and then finally, numerous cost overruns 
in violations of contracting rules.
    Today we will hear from the Inspector General for the 
Department of Homeland Security on his review of border 
surveillance technology. The Inspector General's report, which 
is being released to the public today, identified a lack of 
effective oversight by the Border Patrol of the ISIS contract.
    Today's oversight hearing is particularly important as the 
Department moves forward with its comprehensive new plan to 
secure our borders and reduce illegal immigration. This 
program, known as the Secure Border Initiative, is a multi-
year, multi-billion dollar program that will use the 
combination of personnel, infrastructure, and technology. SBI 
is a far more ambitious and more expensive undertaking than was 
ISIS. Given the size and scope of SBI, it is critical that the 
Department not repeat the mistakes we have seen with ISIS.
    I thank the Inspector General for being here today. I look 
forward to your testimony.
    Now I would like to recognize the ranking member of the 
committee, my friend from Florida, Mr. Meek, for any statement 
he may have.
    [The statement of Mr. Rogers follows:]

        Prepared Opening Statement of the Honorable Mike Rogers

                           December 16, 2005

    We are holding this second hearing today to examine what went wrong 
with the border surveillance camera program, and how to avoid repeating 
the mistakes of the past in the new Secure Border Initiative.
    I would first like to welcome our sole witness--the Inspector 
General for the Department of Homeland Security--in his first 
appearance before this Subcommittee since his confirmation.
    On June 16, 2005, we held our fIrst hearing on mismanagement of the 
Integrated Surveillance Intelligence System, referred to as ISIS 
(pronounced: Eye-sis).
    This program, managed by the Border Patrol, is a network of remote 
surveillance technology that includes ground sensors and cameras 
mounted on poles along the Nation's borders.
    That hearing focused on a report from the General Services 
Administration Inspector General on disturbing financial and management 
problems in the ISIS program.
    These included--
         the ballooning of the initial contract award from $2 
        million, to $200 million, in one year without competition;
         payments for tasks outside the scope of the original 
        contract;
         payments for cameras and other equipment that did not 
        work, or were never installed; and
         numerous cost overruns and violations of contracting 
        rules.
    Today we will hear from the Inspector General for the Department of 
Homeland Security on his review of border surveillance technology.
    The Inspector General's report--which is being released to the 
public today--identified a lack of effective oversight by the Border 
Patrol of the ISIS contract.
    Today's oversight hearing is particularly important. . .as the 
Department moves forward with its comprehensive new plan to secure our 
borders, and reduce illegal immigration.
    This program--known as the Secure Border Initiative--is a multi-
year, multi-billion dollar program that will use a combination of 
personnel, infrastructure, and technology.
    S-B-I is a far more ambitious--and expensive--undertaking than 
ISIS. Given the size and scope of S-B-I, it is critical that the 
Department not repeat the mistakes we have seen in ISIS.
    We thank the Inspector General for being here today, and look 
forward to your testimony.

    Mr. Meek. Thank you, Mr. Chairman. Once again, I am glad to 
be here at this second hearing on the Integrated Surveillance 
Intelligence System, better known as ISIS. I want to also thank 
the Inspector General for Homeland Security, Mr. Skinner, for 
being here, and also the Chief Inspector of the Office of 
Inspections and Special Reviews, Inspector Mann. Thank you, 
sir, for being here before us today.
    First, I want to say in our first hearing, we heard from 
Mr. Joel Gallay, the Acting Inspector General at the General 
Services Administration. After describing the many problems 
with the ISIS contract, Mr. Gallay summarized the problems with 
this contract by stating that this contract failed to follow 
proper procurement rules, ensure adequate procurement planning, 
selection, and an appropriate contract vehicle, required open 
competition, and also provided oversight of the contracts 
before him. These are some of the places where we fell short.
    In a nutshell, the contract had problems because it didn't 
follow the accepted rules in Federal contracting procurement 
guidelines. At this point, the Department has spent over $400 
million on border security technology, but has failed to cover 
more than 10 percent of the borders. This leads me to believe 
that the problems outlined in June by Mr. Gallay are still 
problems that face the Department of Homeland Security in 
implementing this program today under whichever name they may 
give it at this point.
    For me, the question is how can we get beyond this point 
and bring about solutions. I believe that the answer is clear. 
There must be effective leadership and a clear vision and 
accountability, especially on how the taxpayer dollars are 
being spent.
    Mr. Chairman, I understand that we are planning to have a 
third hearing on ISIS in February, and the Department of 
Homeland Security is planning to testify at that hearing. I 
hope that they come before us and provide us with solutions to 
many of the problems we heard about in June and the problems 
that I expect that we will hear about today with this report.
    I just want to thank our witnesses once again for the work 
that they are doing. It is a very young department, but we need 
the oversight and we need your professional staff to stay 
motivated so that the taxpayers' dollars are being spent in the 
way they should be spent and, at the same time, protecting our 
borders and our country. Thank you.
    Mr. Rogers. I thank the gentleman. The Chair now recognizes 
the ranking member of the full committee, our friend and 
colleague from Mississippi, Mr. Thompson, for any statement he 
may have.
    Mr. Thompson. Thank you very much, Mr. Chairman. Welcome to 
our witnesses. I am happy that you have come before us today.
    I, too, attended the hearing in June and, like most of my 
colleagues, was very alarmed at what we were told. I am looking 
forward to your presentation this morning. This is our third 
new name for the same program, and we have to do better than 
just rename a program; we have to absolutely make sure that we 
do what is required. We have spent some $428, $429 million on 
this program, and as my colleague, Mr. Meek, just indicated, 
and we are only about 10 percent home. We have only demoted 
four employees in the process. So we have a long way to go. We 
all agree that we can't stand people shoulder-to-shoulder on 
the border to protect it. Technology absolutely has to be the 
way to go. But somehow, with the ability of this government, 
either procurement is not right or something, and we just have 
to do what is right to protect our borders.
    So I look forward to the testimony. I want to personally 
thank Mr. Skinner and his operation for the help that they have 
provided the people of the gulf coast during Katrina. You have 
done a good job. I would say that an IG's job is not really a 
thankless job but, nonetheless, you don't make a lot of 
friends. But I assure you the taxpayers of this country 
appreciate you for the job that you do.
    Mr. Chairman, I yield back the rest of my time and look 
forward to the testimony.
    Mr. Rogers. I thank the gentleman. I would also remind the 
members if they would like to provide opening statements for 
the record, they will be able to do so.

   STATEMENT OF THE HONORABLE RICHARD L. SKINNER, INSPECTOR 
            GENERAL, DEPARTMENT OF HOMELAND SECURITY

    Mr. Rogers. The Chair now recognizes the Honorable Richard 
L. Skinner, Inspector General of the Department of Homeland 
Security, to testify. He is accompanied by Mr. Carl Mann, Chief 
Inspector for the Inspector General's Office of Inspections and 
Special Reviews. Mr. Skinner, you may proceed.
    Mr. Skinner. Thank you, Mr. Chairman and members of the 
committee. It is a pleasure to be here to talk about our report 
on remote surveillance technology. As you know, CBP, Customs 
and Border Protection, uses a mix of agents, intelligence, 
technology, and equipment to secure our Nation's border. The 
technology includes cameras and sensors to detect and identify 
illegal border intrusions recently augmented by aerial, or 
unmanned aerial vehicles, UAVs, along the southwest border. CBP 
manages remote surveillance technology under the auspices of 
the Integrated Surveillance Intelligence System as we all know 
as ISIS. Since fiscal year 1997, when it started under the 
Department of Justice, ISIS has received more than $429 million 
in funding. Our report discusses a number of problems 
associated with the ISIS program, and it will be posted on our 
Web site later today. These issues are also summarized in my 
prepared statement.
    In my oral remarks today, however, I would like to focus on 
the contract management problems that we encountered during our 
review. Before I begin, I wish to point out that we did not set 
out to audit CBP's contract with International Microwave 
Corporation but, because of the impact that contract management 
problems had on the effective implementation of ISIS, we felt 
compelled to comment on it in our report.
    The first observation that anyone who looks at this program 
would make is that contract accountability was most certainly 
confused. At the Department of Justice where ISIS began, it 
actually began with the IT Office within the INS. Then it was 
transferred to the Border Patrol office. From there, INS dealt 
through GSA, using a Federal supply schedule contract and a 
blanket purchase agreement to eventually reach the contractor. 
The contractor, as integrator or coordinator, teamed with five 
other companies to procure and install the equipment that CBP 
had requested. This shifting of responsibility, the use of GSA 
as an intermediary, and the use of different procurement 
vehicles are not in themselves that extraordinary as 
procurement practices. But, taken together, this over-taxed 
everyone's capacity to manage this contract and this program 
effectively. As a result, most contractor invoices were paid 
without CBP certification or, more recently, CBP certified the 
invoices, but after they had been paid. For example, in 2005, 
we were certifying invoices for goods and services that were 
delivered in 2002.
    In our sample of about 65 invoices, we could only identify 
7 invoices that were actually recommended for payment by CBP. 
No invoices in our sample, however, were rejected, although we 
understand that there were some invoices that were rejected by 
CBP. This resulted in payments to the contractor for goods and 
services that were never received.
    At one point, CBP attempted to bring the contractor into 
compliance. On September 9, 2003, the ISIS program manager 
wrote a detailed letter to the contractor outlining a litany of 
concerns regarding the contractor's performance. The letter 
cited inefficient financial tracking and cost control, 
inefficient inventory control, failure to meet required 
deadlines and deliverable due dates, and a failure to notify 
the government of impediments to installations of cameras. The 
letter made several recommendations for remediation. However, 
one month later, GSA instructed the contractor to disregard 
CBP's letter on the grounds that CBP should not have had such 
communication with a contractor. While technically, GSA was 
correct in doing this, the contracting officer made no attempt 
to address the problems reported by the ISIS program manager. 
Instead, in the same letter, GSA advised that it had determined 
that no invoices could be submitted for non-IT related work, 
although such work had been performed, invoiced, and paid since 
the inception of the contract years earlier; 1998, in fact.
    In essence, the letter from GSA was a stop work order. GSA 
did not coordinate this action with CBP, nor did it offer an 
alternative means or solution to get the work done. 
Consequently, little work on the ISIS contract has occurred 
over the past 2 years.
    Another acquisition management issue that we think could be 
improved relates to site acquisition. To meet the ambitious 
goals of ISIS and presumably of the Secure Border Initiative, 
SBI, a significant number of additional surveillance structures 
and supporting infrastructure will likely be required. Based on 
a review of CBP records, however, camera installations took, on 
average, 20 months to install or to complete. The most time-
consuming aspect involved site selection, securing land access, 
and performing environmental assessments. Much of this 
preconstruction activity under the contract was performed 
sequentially when some steps, in our opinion at least, could 
have been performed concurrently. We made seven recommendations 
to CBP. It concurred with all of them. However, it appears that 
ISIS is now being subsumed into the much broader Secure Border 
Initiative, SBI. As a result, the program has been put on hold.
    CBP indicated that the next step would involve the 
selection of an integration contractor, which is projected to 
occur in September 2006. Given the uncertainty of when or if 
ISIS implementation, at least as currently envisioned by CBP 
might resume, we asked CBP to provide our office with a 
detailed corrective action plan addressing each of our 
recommendations prior to then. Furthermore, we plan to monitor 
very closely the Department's strategy for rolling out its SBI, 
Secure Border Initiative, and the costs associated with its 
implementation.
    Mr. Chairman, this concludes my statement. I am pleased to 
answer any questions you or the committee may have.
    [The statement of Mr. Skinner follows:]

                Prepared Statement of Richard L. Skinner

                       Friday, December 16, 2005

    Good morning Mr. Chairman and Members of the Subcommittee. Thank 
you for the opportunity to discuss the Office of Inspector General's 
(OIG) review of the effectiveness of border surveillance, remote 
assessment, and monitoring technology in assisting the Department of 
Homeland Security's (DHS) Bureau of Customs and Border Protection (CBP) 
to detect illegal entry into the United States.\1\
---------------------------------------------------------------------------
    \1\ DHS OIG, A Review of Remote Surveillance Technology along U.S. 
Land Borders (OIG-06-15)

Introduction
    The Office of Border Patrol (OBP), within CBP, is the primary 
federal law enforcement organization responsible for detecting and 
preventing illegal aliens, terrorists, and contraband from entering the 
United States between official ports of entry. To accomplish its 
mission, OBP uses a mix of agents, information, technology, and 
equipment.
    The technology OBP uses includes cameras and sensors to detect and 
identify illegal border intrusions. OBP manages remote surveillance 
technology under the auspices of the Integrated Surveillance 
Intelligence System (ISIS) program and the America's Shield Initiative 
(ASI). Since Fiscal Year 1997, ISIS and ASI have received more than 
$429 million in funding. ISIS equipment includes sensors, the Remote 
Video Surveillance (RVS) system, and the Intelligent Computer Assisted 
Detection (ICAD) system. The key elements are as follows:

ISIS Equipment
    Sensors, primarily seismic and magnetic, buried in the ground, 
provide primary remote detection capability. When a sensor detects 
activity, alerts are sent via radio transmission to an OBP sector or 
station communications center. According to OBP, there are more than 
11,000 sensors along the northern and southwest borders. Sensors are 
part of the first level of a layered border security strategy. Sensor 
technology is the most widely used as well as the easiest and least 
expensive to install and maintain.
    The RVS system provides the primary remote identification 
capability. It includes both color (day) and thermal-infrared (night) 
cameras, which are mounted on sixty or eighty-foot poles or other 
structures. The RVS system utilizes related infrastructure such as 
repeater towers, control room monitors, and toggling keyboards to zoom, 
pan, and tilt the cameras. As of August 2005, 255 RVS camera sites and 
27 non-camera sites (repeater towers, for example) are operational. 
There are 168 RVS camera sites and 38 non-camera sites that are 
incomplete.
    The ICAD system provides OBP with a resource tracking and response 
coordination capability. ICAD is integrated with the sensors so that 
when a sensor is triggered, an alert is registered in ICAD. The alert 
creates an event record, or ticket, that is used to record data 
pertaining to the alert and eventually the result of an OBP agent's 
investigation. ICAD aids Law Enforcement Communication Assistants 
(LECAs) in tracking OBP agent activities and provides OBP with a means 
to generate activity reports.

Law Enforcement Communications Assistants (LECA)
    LECAs are primarily responsible for providing radio and dispatch 
support to OBP agents in the field. They are the coordination point 
between ISIS and the OBP agent. The LECAs monitor both RVS camera and 
ICAD terminals. Once they observe suspicious activity or receive a 
sensor alert notification through ICAD, they relay the appropriate 
information to OBP agents who will investigate and report on the 
incident. When the results of the OBP agent's investigation are 
received, the LECA closes the ICAD ticket.

Results of Review
    Several limitations of border surveillance, remote assessment and 
monitoring technology as well as significant delays and cost overruns 
in the procurement of the RVS system have impeded the success of ISIS.

ISIS Has Not Been Integrated
    Since its introduction, ISIS has had varying expectations.\2\ 
However, it is clear that sensors and RVS cameras were intended to work 
together, leveraging the detection capabilities of sensors with the 
visual identification capabilities of RVS cameras.
---------------------------------------------------------------------------
    \2\ ISIS was initiated while the Border Patrol was part of the 
Department of Justice's Immigration and Naturalization Service (INS). 
Within INS, the Office of Information Resources Management (OIRM) was 
the principal manager of the ISIS program. In April 2001, a memorandum 
of understanding was established between OIRM and Border Patrol that 
transferred the RVS system and sensor program to Border Patrol but left 
the ICAD component of ISIS with OIRM. In March 2003, when Border Patrol 
became a component of DHS, all ISIS elements transferred to the Border 
Patrol. All references to OBP refer to both current and legacy INS 
activities related to the ISIS program.
---------------------------------------------------------------------------
    To date, ISIS components have not been integrated to the level 
predicted at the onset of the program. RVS cameras and sensors are not 
linked whereby a sensor alert automatically activates a corresponding 
RVS camera to pan and tilt in the direction of the triggered sensor. 
However, even if ISIS was fully integrated, due to a limited number of 
operational RVS sites (255 nationwide), integration opportunities would 
be limited to the areas near these sites.\3\
---------------------------------------------------------------------------
    \3\ According to OBP officials, the RVS system currently deployed 
provides approximately five percent border coverage given an average 
tower height of 70 feet and viewing range of 1.5 miles.
---------------------------------------------------------------------------
    The lack of automated integration undercuts the effectiveness and 
potential of ISIS. Since no automated integration exists between RVS 
cameras and sensors, the integration of information from these two 
sources becomes the responsibility of the LECAs. The LECA is required 
to select the appropriate RVS camera, manually maneuver the camera in 
the direction of the sensor, and then attempt to identify the cause of 
the sensor alert.

OBP Could Not Demonstrate Force_Multiplication Advantages of Technology
    Senior CBP and OBP officials have repeatedly stated in 
congressional testimony and program documents that ISIS is a force-
multiplier. OBP officials asserted that ISIS has been successful in 
serving as a force-multiplier in that it frees the use of the limited 
number of OBP agents who would otherwise be needed to monitor the 
border. However, OBP has not developed performance measures to evaluate 
the effectiveness of ISIS or its role as a force multiplier.
    OBP officials pointed out that to measure accurately the force-
multiplication benefits of ISIS technology requires an accounting of 
the number of attempted illegal entries and the number of attempts that 
were successful. Since this information is not easily obtainable, OBP 
must consider other indicators to measure force-multiplication and 
response effectiveness.

ICAD Data is Incomplete and Unreliable for Measuring Force-
Multiplication
    OBP officials acknowledged that ICAD data could be used to analyze 
force-multiplication and response effectiveness. However, because of 
the numerous variables involved in cataloging information in ICAD, and 
because some OBP sectors are recording certain events in ICAD while 
other sectors are not, they also acknowledge that ICAD data would be of 
limited value and that conclusions drawn from this data would vary.
    Several factors limit the accuracy of ICAD data, thus its 
usefulness for measuring force-multiplication benefits and response 
effectiveness is limited. For example, LECAs may not always have time 
to advise an OBP agent of sensor alerts or camera observations. 
Similarly, OBP agents may not be available to respond. If there is a 
delay between the sensor alert or camera observation and when an OBP 
agent investigates the possible intrusion, the ticket may simply be 
cleared as ``Unidentified,'' ``Not Available,'' or ``Unknown.''

Few Apprehensions Attributed to Sensor Alerts
    Using sample ICAD data, we determined that more than 90 percent of 
the responses to sensor alerts resulted in ``false alarms''--something 
other than illegal alien activity, such as local traffic, outbound 
traffic, a train, or animals. On the southwest border, only two percent 
of sensor alerts resulted in apprehensions; on the northern border, 
less than one percent of sensor alerts resulted in apprehensions.
    Therefore, despite claims that ISIS prevents OBP agents from having 
to respond to false alarms, our analysis indicates that OBP agents are 
spending many hours investigating legitimate activities because sensors 
cannot differentiate between illegal activity and legitimate events, 
and because there are too few operational RVS camera sites available 
for OBP personnel to evaluate the cause of an intrusion alert remotely.

ISIS Procurement
    Over the life of ISIS different contracts, regulations, and 
agreements have affected the installation of the RVS sites, including, 
Federal Acquisition Regulations and General Services Administration 
(GSA) federal supply schedule contracts with various vendors, 
particularly the federal supply schedule contracts with International 
Microwave Corporation (IMC) and a Blanket Purchase Agreement (BPA).
    In September 1998, the INS entered into an interagency agreement 
with GSA through a Memorandum of Understanding (MOU). According to the 
MOU, GSA would provide information processing services through task 
orders to private sector contractors, while GSA would provide the 
contracting officer and the contracting officer's technical 
representative.
    In March 1999, IMC was awarded a contract to engineer, install, 
manage, and provide remote surveillance equipment and support to 
multiple sites throughout the United States. Following the initial 
award to IMC, INS requested that GSA issue a BPA to IMC, citing cost 
savings as the greatest benefit of a BPA. Specifically, INS highlighted 
a unique teaming alliance that IMC had with five technology companies, 
which would result in favorable equipment discounts up to 16 percent 
below the GSA federal schedule price list. Additionally, INS stated 
that IMC had emerged as the principal systems integrator and that 
approval of the BPA would help standardize the RVS equipment by 
eliminating the continual requests from the field for customization.
    In November 2000, GSA issued a BPA to IMC for an estimated $200 
million in purchases to support all RVS requirements through September 
30, 2004. Only ISIS technology and OBP agent support equipment and 
services could be ordered under this BPA.

OBP's Oversight of RVS Equipment Contract Activities was Ineffective
    Our primary objective was to review OBP's use of remote 
surveillance technology, including RVS equipment, rather than audit its 
procurement practices. Nonetheless, while conducting our review, we 
encountered certain contract management issues that adversely affected 
the timely installation of RVS equipment.
    To test the adequacy of contracting oversight, we reviewed 
procurement documents for a sample of seven RVS installation Technical 
Directives (TDs), six issued under the BPA and one issued prior to the 
BPA. Weak project management and contract oversight, exacerbated by 
frequent turnover of ISIS program managers, resulted in RVS camera 
sites being incomplete, leaving large portions of the border without 
camera coverage.
    In addition, completed work was not finished in a timely manner. 
More than $37 million in DHS funds remain unspent in GSA accounts.

OBP Certified Few Contractor Invoices Prior to Payment
    According to OBP and GSA records, most contractor invoices were 
paid without OBP certification. Procedurally, OBP should have certified 
correct and properly supported invoices, thereby accepting services, 
and returned the certifications to the contractor, who would forward 
the invoices and certifications to GSA for payment.
    Currently, OBP is certifying invoices after the invoices have been 
paid. OBP hired Performance Management Consulting (PMC) to assist in 
verifying contractor invoices and closing TDs. As evidence that OBP 
certified invoices, OBP provided copies of email messages primarily 
written by PMC employees recommending payment of invoices submitted by 
the RVS contractor. PMC did recommend rejection of a few invoices. Most 
invoices were neither accepted nor rejected by OBP. In the six TDs in 
our sample, only seven invoices were recommended for payment in the 
certification emails, although according to GSA records, 65 invoices 
submitted by the contractor for these six TDs were paid in full. No 
invoices were rejected. However, the certification emails did include 
rejections of a few invoices for TDs that were not in our sample.
    According to GSA, the GSA contracting officer's technical 
representative was to ensure that OBP received and approved contractor 
invoices. GSA agreed that, in practice, there was confusion about the 
responsibilities of OBP and GSA and, as the project grew and became 
more complex, the potential for error and pressure to keep on schedule 
increased. Nonetheless, OBP was obligated to certify invoices; but 
there is minimal evidence that it fulfilled that obligation. This 
resulted in payment to the contractor for unverified goods and 
services.

OBP Made Some Efforts to Bring the Contractor into Compliance with the 
BPA
    OBP attempted to bring the contractor into compliance with the BPA. 
On September 9, 2003, the ISIS program manager wrote a detailed letter 
to the contractor outlining a litany of concerns regarding the 
contractor's performance. The letter cited inefficient financial 
tracking and cost control, inefficient inventory control, a failure to 
meet required deadlines and deliverable due dates, and a failure to 
notify the government of impediments to installations. The letter made 
several recommendations for remediation.
    However, GSA complicated OBP's efforts. In October 2003, GSA 
concluded that BPA invoices could not be submitted for construction-
related expenses. According to the MOU, funds for RVS installations 
were directed to the GSA ``Information Technology (IT) Fund.'' On 
October 9, 2003, the GSA contracting officer wrote a letter to IMC 
instructing the company not to submit any invoices for non-IT related 
work. This letter instructed the contractor to disregard OBP's letter 
of September 9, 2003, too. According to GSA's letter, the GSA 
contracting officer is the only authority who can provide contractual 
direction and OBP's letter was not legally binding. Despite this 
correspondence, GSA continued to pay invoices that the contractor 
submitted after this letter was sent. In essence, the letter from the 
GSA contracting officer was a stop work order. It does not appear that 
GSA coordinated this action with OBP.

Challenges Exist in Expanding Surveillance Coverage
    Based on a review of RVS camera installation schedules and OBP 
records, these installations took, on average, 20 months to complete. 
The most time consuming aspect of installing RVS sites and associated 
infrastructure involved site selection, securing land access, and 
performing environmental assessments. In some instances, these 
administrative activities took more than 12 months to accomplish. This 
requirement will continue to exist in completing future RVS camera 
sites, repeater tower sites, and supporting power infrastructure.
    Much of this pre-construction activity was performed sequentially 
when some steps could have been performed concurrently. For example, 
U.S. Army Corps of Engineers personnel could have performed informal 
consultation with state, tribal, and federal regulatory agencies and 
provided a preliminary assessment as to whether a potential 
environmental consideration might exist as part of the site selection 
process, while other contract activities--such as preparing, reviewing, 
and approving the contractor's technical and cost proposals, validating 
selected sites, and preparing property access agreements--were in 
progress.
    To meet the ambitious goals of ASI, a significant number of 
additional surveillance structures and supporting infrastructure will 
likely be required. Once land access is obtained, environmental 
assessments will need to be performed for all sites considered for RVS 
camera, repeater tower, and supporting power infrastructure 
installations. Legislation such as the National Environmental Policy 
Act requires that federal agencies analyze the proposed federal actions 
that could significantly affect the environmental quality, including a 
detailed analysis of alternatives to the proposed action. Depending on 
the level of environmental evaluation and coordination required, some 
of these activities could take months to complete.
    If OBP successfully obtains land access and favorable subsequent 
environmental assessments, resistance to the installation of ISIS 
equipment from special interest groups, privacy advocacy groups, 
private landowners, tribal governments, and other concerned citizens 
may further complicate or delay the installation of camera sites or 
force OBP to pursue alternate locations.
    Some sectors have been successful in getting permission from other 
governmental, as well as non-governmental sources, to either access 
video feeds from non-OBP cameras or to install RVS cameras on non-OBP 
infrastructure. This strategy cannot be used in all locations where 
cameras are needed, but if access to property that meets strategic or 
tactical objectives can be secured, this approach would accelerate the 
process of establishing surveillance coverage.
    Another limitation to current surveillance coverage is that once 
installed, RVS camera sites cannot be easily moved to respond to 
changes in the traffic patterns of illegal aliens. During our field 
visits, OBP demonstrated mobile surveillance technology or ``scope 
trucks,'' which are available in some sectors. Mobile surveillance 
technology will eliminate the need to lease property or perform costly 
and time-consuming environmental assessments. Also, this technology 
could allow OBP to move remote surveillance platforms to different 
locations in response to changing traffic patterns of illegal aliens.

Unmanned Aerial Vehicles for Border Security
    OBP's use of Unmanned Aerial Vehicles (UAVs) along a portion of the 
southwest border is one positive step toward using mobile technology. 
Nevertheless, challenges remain in expanding the use of UAVs, as well. 
While the UAVs that were tested are able to stay airborne for up to 20 
hours, which surpasses any current capability of aircraft in OBP's 
fleet, there are significant limitations to the UAV system. Weather 
conditions can impact the operational capabilities of UAVs. Dense cloud 
cover limits the visual acuity of some sensor and camera packages. 
Also, icing conditions and thunderstorms cause difficulty for UAV 
flights.
    UAVs remain very costly to operate and require a significant amount 
of logistical support as well as specialized operator and maintenance 
training. Operating one UAV requires a crew of up to 20 support 
personnel. OBP officials mentioned that the cost to operate a UAV is 
more than double the cost of manned aircraft, and that the use of UAVs 
has resulted in fewer seizures. However, the fact remains that UAVs can 
stay on station for an extended period of time, which is a distinct 
advantage over manned air support. According to OBP, the Hermes UAV 
costs $1,351 per flight hour and the Hunter costs $923. Those figures 
included acquisition costs, operations and maintenance costs, and the 
salaries and benefits of the pilots, payload operators, and mechanics. 
Flight hour costs were based on leasing the tested UAVs as opposed to a 
purchase, which OBP says would be less expensive.

Recommendations
    We recommended that CBP (1) maximize integration opportunities and 
ensure that future remote surveillance technology investments and 
upgrades can be integrated; (2) standardize the process for collecting, 
cataloging, processing, and reporting intrusion and response data; (3) 
develop and apply performance measures to evaluate whether current and 
future technology solutions are providing force-multiplication benefits 
and increasing response effectiveness; (4) continue to work with GSA to 
resolve contract related claims, financially reconcile funding provided 
to GSA, and obtain the return of the unused funds to DHS; (5) develop 
strategies to streamline the site selection, site validation, and 
environmental assessment process to minimize delays of installing 
surveillance technology infrastructure; (6) expand the shared use of 
existing private and governmental structures to install remote 
surveillance technology infrastructure where possible; and (7) continue 
to identify and deploy the use of non-permanent or mobile surveillance 
platforms.
    In its response, CBP concurred with all seven of our 
recommendations. However, we regarded five of their responses 
insufficient to resolve our recommendations. We have requested that CBP 
provide additional information in those instances.
    Additionally, six of CBP's responses to our recommendations mention 
ASI. ASI is being subsumed into the much broader Secure Border 
Initiative (SBI). As a result, ASI has been put on hold according to 
OBP. In its response, CBP indicates that a key milestone toward ASI 
implementation will be the selection of a development and integration 
contractor, which is projected to occur in September 2006. Given the 
uncertainty of when, or if, ASI implementation as currently envisioned 
by CBP, we asked CBP to provide specific actions or activities that it 
will take prior to the proposed ASI implementation date to resolve our 
recommendations.
    Mr. Chairman, this concludes my prepared statement. I will be 
pleased to answer any questions you or the members may have.

    Mr. Rogers. Thank you very much, Mr. Skinner. In reviewing 
your statement last night, I was most struck by the conclusion 
following the recommendations you made. After you outlined your 
recommendations, you stated, ``In its response, CBP concurred 
with all seven of our recommendations. However, we regarded 
five of their responses insufficient to resolve our 
recommendation.''
    Tell me--they are saying we know we did wrong, but we are 
not going to do anything about it? What does that mean?
    Mr. Skinner. In essence what they are saying is yes, we 
agree with your findings, we agree with your conclusions, and 
yes, we agree with your recommendations that corrective action 
has to take place. What they did not provide us is exactly what 
they intend to do to make those corrections. So now--
    Mr. Rogers. It would be nice to know, wouldn't it?
    Mr. Skinner. As I say in my oral statement, now we are 
going back and asking, we need to know exactly what you are 
going to do in order to correct these issues.
    Mr. Rogers. Okay. I would also like to direct your 
attention to the section a couple of pages before that titled, 
OBP certified fewer contractor invoices prior to payment.
    This is the only part of your report I had a hard time 
really understanding what you were saying because of all the 
acronyms. Can you kind of walk me through, in plain English, 
what you were saying in that section?
    Mr. Skinner. First, let me apologize for all the acronyms, 
and we are going to work on that.
    Mr. Rogers. Thank you.
    Mr. Skinner. In essence, what we are saying is that the way 
the arrangement was supposed to work is that we entered into an 
agreement and an MOU with GSA. GSA was going to serve as our 
contracting officer. GSA appointed a contracting officer 
technical rep to handle the technical or admin parts of the 
contract, whereas OBP, under the agreement, was to manage the 
contract in this sense: they were to provide the taskings to 
the contractor, they were to review the delivery of the goods 
and services, and they were to review the invoices for those 
goods and services. They were to determine whether the invoices 
or the bills that arrived were, in fact, supportable, and that 
the goods and services had been, in fact, delivered and were 
acceptable.
    The CBP would then certify: we received the goods and 
services, we gave that certification back to the contractor, 
who then would turn it over to the COTR, who would process it 
and authorize the check.
    Mr. Rogers. You lost me again. The COTR, what is the COTR?
    Mr. Skinner. I am sorry, the Contracting Officer's 
Technical Rep. It is someone who is appointed by the contractor 
or to handle the technical parts of the contract.
    Mr. Rogers. Is that what you refer to here as a PMC, 
Performance Management Consultant?
    Mr. Skinner. No. This is a very good point.
    CBP does not have sufficient contracting officers, they do 
not have sufficient contracting reps who can serve on behalf of 
contracting officers, nor do they have sufficient certified 
program managers to manage large procurements. Therefore, they 
hired a private firm to do this on their behalf. This firm 
then, acting on behalf of the Department, would review the 
goods and services received and the related bills and certify 
that they were, in fact, sufficient and supportable.
    What we found in our sample, we reviewed about 65 invoices, 
and of those 65 invoices, we determined that only six of the 
invoices that were submitted for payment were, in fact, 
reviewed and certified or approved by CBP or its agent, the 
contractor, before it was paid by the contracting officer. In 
other words--
    Mr. Rogers. I understand that. What was the response to 
that? I mean, have you asked anybody how did that happen?
    Mr. Skinner. Yes, we did.
    Mr. Rogers. And what did they say?
    Mr. Skinner. It was simply--what we found through this 
whole process, which began way back in 1998, that the program 
was shuffling from one office to a second office. And then to 
compound matters even worse, there was a reorganization under 
DHS. Then, to even compound matters even further, within the 
program, there was staff turnover. So what we had here was 
people were being brought in, they were ill-equipped, ill-
trained to actually provide procurement oversight, and they 
were unable to fulfill their responsibilities.
    The CBP at that time could have been more decisive; they 
could have been more assertive. They did not--they were 
distracted by other issues and, as a result, these contracts, 
the activities under the contract were proceeding without 
anyone monitoring what was going on. The contracting officer 
just simply assumed that the Department was monitoring these 
things, and they were not.
    Mr. Rogers. Okay. I thank you. I have a lot more questions, 
but I will wait until the next round.
    I would like to ask, though, that when you finally receive 
the response back from CBP to your recommendations and what 
they intend to do about them, if you would forward a copy to 
this committee. We would appreciate it.
    Mr. Skinner. We most certainly will.
    Mr. Rogers. The Chair recognizes the gentleman from 
Florida, Mr. Meek, for any questions he may have.
    Mr. Meek. Thank you, Mr. Chairman. Once again, thank you to 
our witnesses.
    You are familiar now, Mr. Inspector General, of what your 
office is doing now with Katrina-related, I guess, Rita-related 
contracts, of being on the ground, being in their face, and 
being there with those contracting officers. Can you talk a 
little bit about what you are doing now and how can it apply to 
contracts such as this one and how can we head off I guess 
reporting the news after the taxpayers' money has been spent 
inappropriately?
    Mr. Skinner. Yes, it can. This is not news. We were not 
surprised with anything that we are finding with Katrina right 
now. The Department is ill-equipped, from a procurement 
perspective, to provide oversight of the large number of 
contracts for which it is responsible.
    In April of last year, of 2005, the Secretary arrived and 
we did discuss these issues. He asked what are some of the 
major issues that need to be addressed immediately, and we 
advised him, your procurement operations. As a result of that, 
he asked us to do an integrity review. In early May, we issued 
a report in which we identified weaknesses throughout the 
Department, not just with regards to FEMA or Katrina, or not 
just within CBP, but throughout the Department. We were 
woefully understaffed and ill-equipped to manage our contracts.
    Let me give you an example. CBP, which has responsibility 
for ISIS, has 23 program managers responsible for over $1 
billion in procurements. But of those 23 program managers, only 
three are certified to provide that oversight; that is, with 
the experience and training in procurement to provide program 
oversight for procurement.
    Mr. Meek. Excuse me, sir. Are you referring to the report 
at the time that it was printed, or that is the situation as it 
stands now?
    Mr. Skinner. That was in May of 2005. It is very unlikely 
that it has increased a lot, because the training and the 
experience to obtain certification to handle procurements the 
size of ISIS, for example, a $200 million, $400 million 
project, it can take months and years. There may be some modest 
improvement, but I would be very surprised if it was 
substantial.
    Also, with regard to contracting, on a national scale, it 
is recommended that a procurement official should have about 
approximately a $5 million inventory of procurements for which 
you would be responsible on the average, per procurement 
officer. In the case of CBP, for example, I think each 
procurement officer has responsibility for over $13 million per 
individual, which is almost twice what is recommended on a 
national scale. So they are woefully understaffed.
    Mr. Meek. Is the national scale based on Federal contracts, 
or are you just saying local government, State government?
    Mr. Skinner. This is recommended by associations of 
acquisition, institutes, NGOs, nongovernment offices. On a 
national scale in the government, it is probably between $6 
million and $8 million. So we are still anywhere from 2 to 1-1/
2 to 2 times what we should be handling.
    Mr. Meek. I would love to get a copy of that integrity 
report that you put forth. I don't know if I am stating--was it 
the integrity in-house report?
    Mr. Skinner. No. I believe we published this on the Web 
back in the May, June time frame. I am happy to send up another 
copy.
    Mr. Meek. If it is on the Web, we will get it.
    I know that it is very difficult, especially for the job 
that you have to report; it is almost like in Katrina, the 
report was that the storm was coming and we weren't ready on 
all levels. And you are reporting now here before this 
committee that it still exists or possibly exists at the 
Department now. So as we speak, there is Federal contracts that 
are not receiving the kind of oversight from the procurement 
office or attention from a qualified procurement officer to be 
able to make sure the taxpayers' dollars are well spent.
    I am hoping, Mr. Chairman, and I know, Inspector General, I 
hope I will get another opportunity to come around again, but I 
hope, Mr. Chairman, that when the Department comes, they have 
some real answers. Because usually what we get is the Potomac 
two-step about oh, that is covered, I don't know, that was an 
old report, that was under another department. I want to thank 
you for having this meeting again.
    Mr. Rogers. Thank you. I now recognize the gentleman from 
Texas, Mr. McCaul, for any statements or questions he may have.
    Mr. McCaul. Thank you, Mr. Chairman. I thank the witnesses 
for being here. Mr. Skinner, I think you are doing a good job 
since you have come into your role, and I want to also commend 
Chairman Rogers for introducing the Secure Border Initiative 
Accountability Act, which I was proud to be an original 
cosponsor of, addressing this situation.
    I have a series of questions, and I may not be able to get 
them all in in 5 minutes, but I want to go back to your 
investigation of how this all came about. This was--was this a 
sole source contract, or was it competitively bid?
    Mr. Skinner. Originally it was competitively bid, is that 
right, Carl, in 1997. That is when we started with $2 million.
    The way this thing worked, it worked from the ground up. In 
other words, the Department did not have a strategic plan 
saying we want to have integrated surveillance, video and 
sensor surveillance on a national scale to cover the State of 
Texas, New Mexico, and parts of the northwest. It actually 
filtered up. In other words, it was a data call saying, if we 
have funding, where would you like to put cameras or sensors? 
So each sector would submit their request and, based on those 
requests, the Department would approve a sector: one sector 
would get cameras this year, and another sector would get 
cameras next year. It was done on an incremental basis.
    After they went through its first round, they realized that 
this is actually a worthwhile endeavor and they wanted to 
expand it. I think just recently they referred to it as 
America's Shield Initiative, and they started expanding this 
initiative. The growth of the program then went from $2 million 
to $200 million to $429 million, where it is today, before it 
was suspended.
    Mr. McCaul. So the answer is it was competitively bid?
    Mr. Skinner. Well, the very first contract. So they had the 
contractor in place. They realized they liked it. They went 
back to GSA and said we would like to expand. In our opinion, 
they pulled the contractor off the general schedule, they did 
it under a blanket purchase agreement, but it grew to such an 
extent that they probably should have went out and rebid.
    Mr. McCaul. So the original contract was competitively bid 
and then, after that, it was essentially amended with the same 
contractor.
    Mr. Skinner. Yes.
    Mr. McCaul. When you have a competitive bid, are you 
required to maintain documents relating to that competitive 
bid?
    Mr. Skinner. Most certainly.
    Mr. McCaul. Is that by regulation?
    Mr. Skinner. Yes, and also by procurement law as well.
    Mr. McCaul. So by law, it is required. Were those documents 
requested by you in this case?
    Mr. Skinner. The blanket purchase order? Yes.
    Mr. Mann. Yes.
    Mr. McCaul. Were those documents provided to you?
    Mr. Skinner. Yes.
    Mr. Mann. Yes.
    Mr. McCaul. I recall at the last hearing, you had 
difficulty getting from Border Patrol documents related to the 
competitive bid; is that accurate?
    Mr. Skinner. That may have been GSA had difficulty getting 
those documents.
    Mr. McCaul. But you were able to get those?
    Mr. Skinner. Yes, the original procurement, the blanket 
purchase agreements and the MOUs with GSA.
    Mr. McCaul. Okay. I want to get to what was done in terms 
of reprimands or penalties to employees in the Federal 
Government. Can you tell me briefly who was reprimanded?
    Mr. Skinner. To our knowledge, no one.
    Mr. McCaul. Did any demotions take place as a result of 
this?
    Mr. Skinner. Not to our knowledge, but we didn't ask those 
questions with regards to the Department of Homeland Security.
    Mr. Mann. Pardon me. We do understand that some employees 
in the contracting office that was managing this contract out 
of the Chicago area were, in fact, reassigned. We did not get 
all of the details as to what led up to the reassignment. We 
suspect that the improper management of this contract may have 
contributed to that. However, we cannot say categorically that 
the lack of contract control on this particular contract was 
the sole source that caused the reassignments.
    Mr. McCaul. So the only action taking place in response to 
all this from an internal policy standpoint, and we are 
speculating, it sounds like, was the reassignment of four 
employees?
    Mr. Skinner. That is correct.
    Mr. Mann. Yes, sir.
    Mr. McCaul. How much was the total contract award at the 
end of the day before it was stopped?
    Mr. Skinner. With the installation, installation of 
cameras, I believe it was around $200 million; is that correct?
    Mr. Mann. Yes, sir.
    Mr. McCaul. And as I understand it, only $9,000--we are 
only seeking, or you are, I guess the Department of Homeland 
Security is only seeking $9,000 back. How much money was 
wasted?
    Mr. Skinner. The GSA is looking at that, and I believe they 
are very close to finishing their work. Since the contract was 
awarded by GSA, they have that oversight responsibility. We 
were looking at this from more of a program management 
perspective.
    Mr. McCaul. I understand. And perhaps this is out of your 
realm, but so the only disciplinary action was the possible 
reassignment of four employees, and the only remedy against the 
contractor to date has been asking for seeking $9,000 when we 
are talking about a $200 million contract?
    Mr. Skinner. I can't say that it is only $9,000. GSA would 
have more details on that.
    Mr. McCaul. I understand. I see my time has expired. I will 
talk again. Thanks.
    Mr. Rogers. I thank the gentleman. I would like to make 
sure we are clear on this initial bid. I am looking at the 
language from the GSA Inspector General's audit, which said 
they found no documentation as to how the initial task order 
was complete and no documentation regarding the basis for award 
to IMC. And you found something inconsistent with that?
    Mr. Skinner. No. I think GSA was alluding to the decision 
made by the Department to award a blanket purchase.
    Mr. Rogers. No, sir. This is before that. They subsequently 
make reference to the fact they couldn't find any documentation 
as to why it ballooned to a $200 million blanket purchase 
order. I am talking about the initial contract for surveillance 
contracts being given to a radio company with no competitive 
bidding.
    Mr. Skinner. The $2 million.
    Mr. Rogers. The initial $2 million.
    Mr. Skinner. It is our understanding that it was 
competitively let, and we have documentation to support that.
    Mr. Rogers. I would like to see that, because that is 
completely inconsistent with what GSA's audit found, and it was 
pretty detailed.
    Mr. Skinner. We will be happy to provide that.
    Mr. Rogers. I appreciate that. What we did learn from that 
audit was that there was no competitive bidding, that they had 
invited some people to come in and make an oral presentation, 
and then at the end of those oral presentations, they issued a 
sole contract, but there was no objective criteria laid out 
that was competitively bid. So I would love to know how you see 
that differently. I am sorry to get off track, but I thought we 
needed to clear that up before we went forward with any more 
questions.
    The Chair now recognizes the ranking member of the full 
committee, Mr. Thompson, for any questions he may have.
    Mr. Thompson. Thank you very much. The only thing I can say 
is if I take the June hearing and fast forward it to this one, 
I am even more troubled by what you presented, Mr. Skinner.
    I guess I have some just basic questions. Did we have any 
nonperformance or cancellation clauses in this contract?
    Mr. Skinner. Carl, are you familiar with that?
    Mr. Mann. I am not familiar with that.
    Mr. Skinner. I am not sure if we did or not. We can get 
back to you on that. Again, keep in mind that the thrust or the 
objective of this review was not a contract evaluation, but 
rather a review to see how well ISIS was working. But we could 
not overlook the impact that contract management had on the 
effectiveness of ISIS's ability to work. So we were compelled 
to comment on that. We did not actually study the contract 
itself or the contractual arrangements. We relied on GSA to do 
that for us.
    Mr. Thompson. Well, Mr. Chairman, somewhere between Mr. 
Skinner and GSA, we ought to ask for that review to happen so 
that we at least can have, I think, the basis for as much 
information as we can.
    Moving forward, I am troubled now by the fact that some of 
this technology that we CBP has, the unmanned units, in your 
report you said that it is costing us more to staff the 
unmanned unit than it would a manned unit in terms of cost; is 
that correct?
    Mr. Skinner. That is correct.
    Mr. Thompson. And that the question as to whether or not 
you are getting any more with the unmanned unit versus the 
manned unit.
    Mr. Skinner. That is something that requires further study. 
The one thing that I think we need to recognize is the unmanned 
vehicles can stay in the air for long, prolonged periods of 
time, whereas the manned vehicles cannot.
    Mr. Thompson. The other question, moving forward is, did we 
cancel the contract, and I know we are getting into the 
contract, with the private contractor whose job was to oversee 
invoices? Was that contract still in force during your review?
    Mr. Skinner. It was during our review. There hasn't been a 
whole lot of work since October 2003, but I am not sure exactly 
when the contract was put in place, and I am not real sure when 
it was stopped.
    Mr. Thompson. Well, I guess what I need is what company was 
doing that?
    Mr. Skinner. Performance Management Consulting, PMC, as we 
have referred to, in our acronyms.
    Mr. Thompson. I think the committee would benefit from some 
review of the contract, some analysis of the work done. We have 
heard your testimony so far, but from your testimony, more 
questions are raised as to whether or not the taxpayers got the 
best for the payment in the contract, and I just think that if 
we can, Mr. Chairman, get provided that information on the 
contract, because I think it causes real concern.
    Is it customary to contract out the approval of invoices?
    Mr. Skinner. I don't believe that is a preferred method of 
providing oversight. Quite frankly, I would have to commend CBP 
for doing it, because they did not have the ability to do it, 
so they did have the sense enough to go find an expert to do it 
for them.
    Mr. Thompson. But what is your analysis of the job the 
expert did?
    Mr. Skinner. Well, it is hard for me to make a judgment as 
to whether they did a great job, because when you look at the 
invoices and you see only six have been certified out of 65, it 
does not appear that they were doing a good job.
    Mr. Thompson. I understand maybe the Potomac definition of 
expert is a little different from where I am from, but I think 
we could have gotten a better job from that, but I see my time 
as expired. I yield back, Mr. Chairman.
    Mr. Rogers. I thank the gentleman. I concur.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Pascrell, for any questions he may have.
    Mr. Pascrell. Thank you, Mr. Chairman, good morning. We get 
more and more astonished by what we hear. Inspector General 
Skinner, thank you for your service and thank you for your 
previous service in FEMA. It was a freestanding agency and it 
worked, so you brought some expertise here, and we should 
listen to you.
    Mr. Skinner. Thank you.
    Mr. Pascrell. There is nothing more offensive to me in 
looking back before 9/11 and since 9/11, Mr. Chairman, than 
those people who have taken advantage of securing our 
neighborhoods and our families and our borders, in securing 
also the security of the country by what has happened overseas. 
To me, this is vial. This is unacceptable. I have heard very 
little transparency or credibility, accountability in any of 
these committee meetings, to be very honest with you. One has 
to conclude, one has to conclude that we sit up here and say we 
want to protect the taxpayer, we want to look at the system 
that was created, 90 percent of which, 90 percent of which in 
the ISIS, correct me if I'm wrong, were all false starts; 
either rabbits running across the borders and were picked up, 
and some traffic or some truck from Mexico where the back was 
falling out, and they were picked up by someone coming across 
the border. One has to conclude that it doesn't work, it is 
broken.
    But I would like to ask you this question. If border 
security requires technological integration at the border, and 
interoperability, yet we seem to be approaching this on a 
piecemeal basis; this is my perception. It seems that this kind 
of piecemeal approach will either cost more money, lead to poor 
results, or compromise our security. I don't sense any urgency, 
as Lee Hamilton and Tom Kean said in the 9/11 Report, and the 
9/11 Report of recent time. Do you share my concerns about 
these likely outcomes and, if so, how should we remedy the 
situation?
    Mr. Skinner. Yes, we do. And one of the things that we have 
recommended to the Department is that the CBP, before they 
proceed, that they begin working very closely, hand in hand, 
with our science and technology directorate, where they can 
find the technology that is needed so that they can make wise 
investments. At the same time, we have made recommendations 
that before they proceed with any future large procurements, 
that they be vetted through an investment review board.
    That is in a separate report dealing with our procurement 
oversight; it does not deal with ISIS per se, but this would 
apply here. As we proceed, we need to first ensure that the 
technology that we are going to put out there works. Two, we 
want to clearly define what our objectives are. What is our 
vision? What do we want to accomplish? Let's don't do it from 
the ground up, let's do it in a strategic manner. And 
hopefully, under the SBI, and it is too early for us to comment 
on that, but it is our understanding that is the approach they 
are going to be trying to take.
    Mr. Pascrell. Last night, Mr. Skinner, we voted on an 
amendment, and don't ask me what we are amending, because I 
thought we left homeland security talking about border 
security, and we wound up in an immigration bill. So God knows 
what can happen today. Hold on to your hats. We haven't seen 
the conclusion yet.
    But last night we voted on an amendment that would, among 
other things, essentially create a 2,000-mile fence along the 
Canadian border. Just envision this, a 2,000-mile fence, a long 
fence, a pretty long fence. If this were to actually occur, how 
would it impact, in your mind, on the American Shield 
Initiative?
    Mr. Skinner. Sir, I am not qualified to answer that without 
having more information. One, I am not familiar with the 
amendment; and two, when you say American Shield, which is now 
going to become the Secure Border Initiative, as of right now 
has not been clearly defined, and it is something that the 
Secretary and his executive team is currently working on.
    Mr. Pascrell. I mean the fence is not going to have any 
appreciable impact upon this high-tech system that we want to 
employ. If we don't have the fence, we still have to do this. 
If we still have the fence, are we still going to do this, to 
your knowledge?
    Mr. Skinner. Are we trying to keep us in, or are we trying 
to keep someone out?
    Mr. Pascrell. I think they are trying to keep us in.
    Mr. Skinner. I don't know what the technology associated 
with the fence would be. I mean, can it be breached?
    Mr. Pascrell. I just had the picture, Mr. Chairman, of 
Marat Assad. We are trying to keep those folks out and we wind 
up locking ourselves in. Just think about that for a little 
while, you know, before we go home this weekend.
    Do I have time for one more question?
    Mr. Rogers. Yes.
    Mr. Pascrell. Thanks. The Department has estimated that it 
is going to take about $2.5 billion to fully implement the 
technological portions of the Shield program. Based on your 
audit findings, do you believe that this estimate is accurate?
    Mr. Skinner. We don't know, and that is something that we 
are looking at, and we are going to be monitoring it very, very 
closely. We just had our initial oversight briefing yesterday 
with regards to SBI, and we are going to be monitoring this 
thing as it is rolled out, and we are going to maintain a very, 
very close eye on any of the funds that they are proposing or 
asking for or spending.
    Mr. Pascrell. The final half of the question. Do you sense 
any urgency in getting this done?
    Mr. Skinner. Yes, I do. Within the Department, yes, I do. 
It is something--they are moving at a rapid pace; very, very 
fast, faster than I have seen any department move, and a good 
illustration of that would be the 2SR. To do a study and 
reorganize in a 4-month period is something I have seen other 
departments take years to do.
    So there is a sense of urgency within the Department that 
we need to redefine the direction that we are going and build 
on our past successes, as few as they are.
    Mr. Pascrell. Thank you. Thank you, Mr. Chairman.
    Mr. Rogers. The Chair would like to yield to Mr. McCaul. I 
understand he has an inquiry.
    Mr. McCaul. Just a clarification. The amendment last night 
was not a 2,000-mile fence, but rather, fences at strategic 
points, and then technology in-between those points. So I just 
wanted to clarify that for the record.
    Mr. Pascrell. Excuse me. Mr. Chairman, I am talking about 
simply the northern part of the country. Part of the amendment 
dealt with also the border between the United States and 
Mexico. That was part of it as well.
    Mr. McCaul. Well, the southern border, as I understood it, 
if the gentleman will yield, was strategic; it costs to do 
that. But it is not germane in this hearing.
    Mr. Rogers. I have some questions. We are going to be 
called for votes pretty soon, so I would like to try to get 
through another round, if we could. And I know I am going to 
have some additional questions I want to submit to you in 
writing as well. I am curious to know how many sites were 
supposed to be installed in total from the inception in 1997 
until 2003 when the plug was pulled, and how many have, in 
fact, been installed? I noticed in one report I read last night 
that there were 65 sites yet to be completed. So how many sites 
in total were supposed to be erected?
    Mr. Skinner. I believe the total was supposed to be about 
488. That included camera sites and repeater sites. What was 
actually completed was 255 camera sites, 27 repeater sites, for 
a total of 282 sites.
    Mr. Rogers. So about half?
    Mr. Skinner. About 60 percent. What was not completed was 
168 camera sites, 38 repeater sites, and 206 total sites were 
left incomplete.
    Mr. Rogers. So we were paying, based on what you are 
telling me, about $800,000 a site.
    Mr. Skinner. That is correct. Approximately, yes.
    Mr. Rogers. For a pole with two to four cameras on each 
one.
    Mr. Skinner. Yes, but that also included the wiring and 
tape, swivels and other things that would make the camera work.
    Mr. Rogers. I know that doesn't shock some people in 
Washington, but that is just an astounding number to me--and 
most people in America, I would think. What, if anything, has 
the Department done since the suspension of the ISIS contract 
to maintain these existing cameras and sensors?
    Mr. Skinner. Right now, unfortunately, they have been 
maintained in two ways: (1) on-site by CBP agents. For example, 
if they have to switch batteries or something that is a simple 
to do; or if it is something that that requires major repair, 
CBP has a site--I believe it is in Albuquerque, New Mexico--
where they will extract the camera and send it to Albuquerque 
for repair.
    Mr. Rogers. And you talked about these 200 and roughly 80 
sites that have been completed. What percentage of our border 
does that cover? I read 2 to 4 percent somewhere. Is that 
accurate?
    Mr. Skinner. That is accurate. I was going to say about 5 
percent. I think those were the figures that they were giving 
us.
    And this gets back to the other issue that we are having 
with this whole program, that is, we have 5 percent covered, 
but how much should have been covered? How much do we want 
covered? What is our vision? What is our objective here?
    Mr. Rogers. I noticed in your evaluation you also were very 
critical as to the integration capabilities of these camera 
systems. Now when I went to the border this summer I was very 
impressed with what the cameras could do. But you seem critical 
of their ability to integrate the sensor information into a 
central database where a border patrol agent would be 
monitoring these cameras. Is that still your opinion?
    Mr. Skinner. Well, some are better than others. For one 
thing, the cameras have to be manned at a central control point 
in order to react to a sensor. The camera does not 
automatically react to a sensor. And if you go to some of these 
control sites, you may have one person trying to monitor a 
stream of 200 cameras, or 200 sensors. And that can create 
problems--the technology can do a little bit better job than 
that.
    Mr. Rogers. Well, that was one of your seven areas of 
recommendation. Was that one of the five that they didn't 
adequately respond to?
    Mr. Skinner. Technology, yes.
    Mr. Rogers. The integration.
    Mr. Skinner. Yes.
    Mr. Rogers. And the last area I want to visit before my 
time is up is disciplinary actions. I look back at how IMC got 
the initial contract and then how it ballooned into a blanket 
purchase order. Then, as Mr. Thompson was referencing, they 
contracted whomever to oversee it because they didn't have time 
to oversee it themselves. What disciplinary action has been 
taken? Have there been any civil actions?
    You know, I assume this contractor was paid for what he was 
supposed to have been doing. Has there been a civil action to 
get money back? What disciplinary actions have taken place? And 
are they adequate in your opinion?
    Mr. Skinner. The contractor in the arrangement between the 
Federal Government and the contractor is currently under 
investigation by the GSA OIG, and I believe they will have 
their report ready in time for the February hearing. That is my 
understanding.
    Mr. Rogers. And that includes the disciplinary actions in 
that report.
    Mr. Skinner. If there are any, I would assume they would be 
in that report. If you are talking about disciplinary action as 
a result of mismanagement within CBP, it will not be addressed 
in that report unless there was some criminal culpability.
    Mr. Thompson. Will the gentleman yield?
    Mr. Rogers. I will be happy to yield.
    Mr. Thompson. I guess my concern is, if we pay people to 
look at invoices and make recommendations for payment and your 
test of the system revealed that a majority of instances 
indicated that that was not done, I think there is some cause 
for concern, Mr. Chairman, on our part that, in fact, we paid 
for a product that was never delivered. And I think that goes 
to part of your concern.
    Mr. Skinner. May I comment on that?
    Mr. Thompson. Certainly.
    Mr. Skinner. We will go back to work papers and get some 
validation as to whether invoices were made available to the 
contractor and were not reviewed.
    What we were finding was that the contractor was submitting 
invoices directly to the GSA contracting officer and the 
contracting officer was paying the bill without advising the 
CBP or their agent who was charged with reviewing those bills. 
So the six that we identified as being paid were probably bills 
that CBP became aware of. The others, it is our understanding, 
they may not have even been aware of until after the fact. That 
is why we found examples where CBP was reviewing, or the 
contractor on their behalf, was reviewing bills this past 
summer that were submitted to GSA in 2002. That is where I 
think you may find the gap.
    Mr. Thompson. Well, can you tell us, under the contract for 
the private vendor and CBP, did it say that the invoices had to 
be submitted to the private contractor or to the CBP or to GSA?
    Mr. Skinner. They are to be submitted to CBP for 
certification prior to submission to the contracting officer. 
That was not occurring.
    Mr. Thompson. So they would go to CBP and stay.
    Mr. Skinner. They were not going to CBP. They were going 
directly to the contracting officer.
    Mr. Thompson. Okay. So I guess maybe we need a matrix on 
procurement. But I guess my concern, more than anything else, 
is if a system was defined as to how payment was to be 
performed, is it your testimony that the payment system was not 
followed?
    Mr. Skinner. That is correct. It was a very awkward 
process, very awkward.
    Mr. Rogers. I think that this whole ISIS program is the 
poster child for gross mismanagement, and I think that your 
audit has revealed that, as well as GSA's.
    I also want to make it clear, for anybody from DHS that is 
here, we are going to have a hearing in February. I think 
everybody on this panel, as well as a lot of Americans who are 
paying the taxes, are looking for some heads to roll. When you 
spend $429 million and you only get 60 percent of what you were 
supposed to get, we don't need to see people just being slapped 
on the hand for this. This is just inexplicably unforgivable.
    Any questions by the ranking member from Florida, Mr. Meek?
    Mr. Meek. Thank you, Mr. Chairman.
    Inspector General, I know that the day you were releasing 
your report I know possibly the Department had a copy of the 
report, your report following up on this ISIS program, and I 
know GSA has done one. Has any of this been passed on or asked 
for by the Justice Department or any other agency that may 
pursue a criminal route?
    Mr. Skinner. GSA OIG, I am sure, is working with Department 
of Justice with regard to their investigation of the contractor 
and their billing relationship with GSA or the Federal 
Government. Our office has not been involved in the actual 
contractor-Federal Government relationship. We rely on GSA to 
do that on our behalf.
    Mr. Meek. Reading some of this--mean, we are talking about 
demotions and heads rolling and all, but I mean, just looking 
at the report and hearing what we have heard from GSA, I mean, 
it is just very difficult not to even mention the issue of 
criminal activity here. I can tell you that I am very disturbed 
because the taxpayers not only got robbed in the spirit of 
protecting our borders, but they got robbed as relates to 
just--individuals thought that it was okay to just mail checks 
to a contractor that wasn't doing the work.
    The reason why I raised my concerns earlier, in the first 
round of questions, about that activity, I could say very well 
it could be going on now, not maybe intentionally. Maybe it is 
not intentional. But I don't see the kind of forward lean from 
the Department right now. I just don't see it. I don't feel--
and I believe that there is only so far that we can ride the 
horse, seeing we are a new department and we are trying to 
catch up.
    Meanwhile, we are here thinking we are appropriating and 
authorizing money and we are protecting not only our 
constituents but Americans in general, and it is just not 
happening.
    I am very disturbed and I think, Mr. Chairman, that 
especially the folks that sit on this side and the folks that 
sit on that side, we are united in this effort. But I think 
that the Department, we should probably put forth some 
questions, some real boilerplate questions that we want answers 
to, and they should be answers beyond a one- or two-line issue.
    I know, Inspector General, that just looking at what is 
written in this report, I know the Department has some issues 
with it. And I just want to thank your staff once again and all 
the folks that are sitting behind you all for the work that you 
all are doing because this is--I don't think that we have heard 
the end of it. And, unfortunately, I hope that we are not--you 
are not before us again talking about something, as I speak 
now, that is happening.
    I am very, very concerned. I know you are aware of the 
amendment that I put forth earlier in this Congress to give 
your office more--almost just as many inspector generals or 
assistant inspector generals as the Department of Defense. 
Because the way I look at it, the integrity of the Department, 
the integrity of defending America is at stake.
    And we don't want to lose the American people on this. We 
just don't want to lose them. Because we could very easily lose 
them, especially if doing a good job of protecting our borders, 
preventing terrorist attacks--and we are asking Americans to do 
some things that they haven't done before as relates to 
personal information and all of those things. So when they see 
instances such as this one, and others that are out there being 
reported daily, it is very discouraging.
    So I look forward not only to the Department--but I thank 
you. As we continue to understand the report more and Americans 
understand it more, I think we will hopefully be on the path to 
try to avoid some of these issues. But I want to thank you.
    I know my office will be calling you on that whole 
procurement-officer-ratio issue based on the money that is 
being spent. Because if we do know that that is a problem, we 
need to try to deal with it and monitor, Mr. Chairman, some of 
the legislation that is going through the committee. We think 
that we are doing good, and we know that we have to have the 
FTEs in that area trained to be a part of making sure that the 
taxpayer dollars are not spent in an inappropriate way because 
an individual is not qualified or we don't have enough.
    Thank you, Mr. Chairman.
    Mr. Rogers. I thank the gentleman.
    The Chair now recognizes the gentleman from Texas, Mr. 
McCaul, for any final questions he may have.
    Mr. McCaul. Thank you, Mr. Chairman.
    I would like to echo my colleague's comments. There is 
nothing more disturbing than wasting taxpayers' money at the 
expense of protecting the American people. And I agree with the 
chairman. This is a really a poster child for mismanagement 
within the Department of Homeland Security, and it is something 
we will be following up on.
    I had some very specific questions, and I do think it would 
be good to get the Inspector General for Homeland Security's 
sense for what happened here with the contracting issues, 
because there were some problems from the inception with this 
contract. I don't know if you have looked into that from the 
CBP standpoint or not, but that may be something we will want 
to talk about. Can you answer that?
    Mr. Skinner. We have looked at it more from a global 
perspective in our initial review. But as a result of that, in 
April, I created a new division within the OIG, the Office of 
Procurement, that is focused entirely on providing oversight of 
the Department's procurement activities.
    With regard to this issue, yes, the Department came ill-
equipped when it was formed in 2003, in March. They have done 
little up through 2005 to address those issues. Since 2005, 
there has been an active recruiting campaign. There has been an 
active training campaign. There has been an active government 
ethics campaign for all procurement officers with the 
Department. This is all within the last 3, 4, 5, 6 months. We 
have not seen the impact of any of this yet.
    I know, for example, as a result of Katrina, FEMA is in the 
process of hiring 120 additional procurement officers, and that 
is on a fast track. I meet on a weekly basis and I will meet 
again today, every Friday, with the Katrina procurement 
integrity board of the Department, and their primary focus 
right now is hiring for Katrina operations.
    Mr. McCaul. And I would like to commend you for injecting 
yourself, the IG's office, at the procurement stage with those 
officers. It is a great idea. I know with Katrina you are doing 
that.
    Because we have to vote soon, let me get to the point. I do 
understand--is it your understanding that there is a current 
criminal investigation by the Department of Justice?
    Mr. Skinner. No, it is my understanding that there is an 
investigation by the GSA OIG.
    Mr. McCaul. Okay.
    Mr. Skinner. And, of course, any OIG investigation will be 
coordinated with the Department of Justice.
    Mr. McCaul. Well, the GSA Inspector General indicated that 
there was.
    One last question. Your report indicated that on September 
9 of 2003 that the ISIS program manager wrote a letter to the 
contractor, IMC, expressing concerns over what was happening 
here and the failures. And your report also characterized this 
letter as a stop work letter, or stop work order. However, GSA 
instructed IMC to disregard the letter, since GSA was the only 
contracting authority that could do that, and that the Border 
Patrol letter was not legally binding. And, despite this 
correspondence, in your report it appears GSA continued to pay 
invoices that the contractor submitted after this letter was 
sent out. What happened here? And how much did the taxpayers 
lose as a result of that?
    Mr. Skinner. Let me explain. That is not the exact sequence 
of events.
    In September, 2003, the ISIS project manager--and, again, 
keep in mind this contract was just transferred from the 
Department of Justice only 6 months prior--reviewed the 
activities under the contract and found several problems, which 
we identify in our report. He took--the project manager took it 
upon himself to write directly to the contractor saying we have 
a problem here and I want to get it fixed. He did not stop the 
contract--it was not a stop order letter.
    GSA, in turn, wrote saying CBP is not authorized, nor do 
they have the authority to ask for such a remediation plan, nor 
should they be dealing directly with the contractor. That is 
what the contracting officer is supposed to do.
    In and about the same time, or in the same letter, the 
contracting officer said, by the way, you are charging 
construction costs against this program, whereas the agreement 
only allows you to charge IT costs. And since the only way you 
can complete this project is through construction, that is, the 
construction of the poles and things of that nature, that, in 
essence, was a stop order. It wasn't a stop order because of 
lack of performance. It was a stop order because CPB was not 
authorized to spend funds out of an IT account for 
construction.
    That is essentially when ISIS came to a stop. Bills, of 
course, were being paid after that to settle up accounts. Also, 
there was some IT work done to install cameras on poles that 
had already been installed. All installation came to a stop.
    Mr. McCaul. I see my time has expired.
    Mr. Rogers. It is. And I want to thank the members for 
their questions. I want to thank you, Mr. Skinner, and you, Mr. 
Mann, for your time. It has been a very beneficial hearing for 
us.
    I would remind you that for the next 10 days we will keep 
the record open. Members may want to submit questions for the 
record, and I would ask you to respond to those in writing.
    And, without objection, we are in adjournment.
    [Whereupon, at 11:56 a.m., the subcommittee was adjourned.]

                      MISMANAGEMENT OF THE BORDER
                    SURVEILLANCE SYSTEM AND LESSONS
                 LEARNED FOR THE NEW BORDER INITIATIVE
                                PART III

                              ----------                              

                      Thursday, February 16, 2006

                  House of Representatives,
                    Committee on Homeland Security,
                                Subcommittee on Management,
                                Integration, and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 1:45 p.m., in 
Room 311, Cannon House Office Building, Hon. Mike Rogers 
[chairman of the subcommittee] presiding.
    Present: Representatives Rogers, Meek, and Jackson-Lee.
    Mr. Rogers. [Presiding.] This hearing of the Management, 
Integration, and Oversight Subcommittee of the Homeland 
Security Committee will come to order.
    Today we are holding our third hearing on the mismanagement 
of the Integrated Surveillance and Intelligence System, 
referred to as ISIS. This program includes the cameras and 
sensors that monitor our nation's borders.
    Let me begin by welcoming our two distinguished witnesses 
and thank them for being here today.
    I would like to note for the record that this is the first 
appearance before Congress by the director of the department's 
new Secure Border Initiative office.
    In our first hearing on ISIS, the deputy inspector general 
of the General Services Administration testified that ISIS was 
``a major project gone awry'' and ``a waste of taxpayers' 
dollars.''
    At our second hearing in December, the department's 
inspector general stated that weak project management and 
contract oversight left large portions of the border without 
camera coverage.
    His audit also found that payments were made for goods and 
services never received; that installment of cameras took an 
average of 20 months to complete; that only 50 percent of the 
camera sites were completed for a cost of approximately 
$800,000 per completed site; and, finally, that millions of 
dollars intended for border surveillance remained unspent in 
GSA accounts.
    Just last week, the head of the U.S. Border Patrol agency, 
Chief David Aguilar, testified before Congressman McCaul's 
subcommittee. At that hearing, Chief Aguilar stated that ISIS 
had ``major problems.''
    In my view, the ISIS program is nothing less than the 
poster child of government waste and mismanagement.
    In today's hearing, we will examine three areas with 
officials from agencies responsible for the ISIS program: 
first, what went wrong with the ISIS program and what steps 
have been taken to fix those problems; second, and the area 
that I think is most important, what disciplinary actions have 
been taken against those federal employees who mismanaged the 
ISIS program; and then, thirdly, what assurances do we have 
that the mistakes made in the ISIS program will not be repeated 
in the implementation of the Secure Border Initiative.
    As Ranking Member Meek and I have indicated in two letters 
to the deputy secretary, Michael Jackson, we expect those 
employees responsible for the ISIS problems to receive severe 
disciplinary action and not just a slap on the wrist. We expect 
nothing less for those who waste taxpayer dollars and 
jeopardized our border security.
    And with that, I will yield to the ranking member, Mr. 
Meek, for any comments that he may have.
    Mr. Meek. Thank you, Mr. Chairman.
    I want to thank our witnesses for being here.
    And I am glad that we are having a third hearing on this 
issue. Hopefully, the third time will be a charm. And the 
chairman has called this hearing to give the department an 
opportunity to respond, not only to the auditor general's 
report, but many other reports that are out there.
    I am pretty sure all of you are aware, and the chairman 
just mentioned, we sent correspondence to the department hoping 
that the two of you will be able to answer the questions in 
detail of, not only the department's response or message, but 
to also answer our questions as it relates to disciplinary 
action that has been taken or hopefully forthcoming to be taken 
against those individuals that are responsible, not only for 
the immediate oversight of the ISIS program, but also those 
individuals that have oversight over them.
    I think it is important also for the American people to 
really understand what happened in this case, because right now 
the department has launched a new initiative similar to ISIS to 
be able to protect our borders.
    We have to know this as an oversight committee to be able 
to make sure that the taxpayers' dollars are being spent in the 
way they are supposed to be spent.
    At the same time, those individuals that have the 
responsibility, after we appropriate, after we legislate, of 
carrying out the programs that will protect Americans and 
protect our borders, they should also be held responsible.
    Mr. Chairman, I just wanted to say that I know that Mr. 
Giddens has a long history in the procurement field. And I also 
know that the issues that we are going to be talking about here 
today I am pretty sure that you have a pretty good idea of what 
we are going to ask.
    Hopefully, we will hear something new from the department 
that we have not heard thus far, as it relates to the 
explanation of how we got to this point.
    As you know, we started in the summer of 2005, so we are 
well into a year of having these hearings and, hopefully, there 
will be some new information revealed here today.
    This is not a witch hunt; this is just our job as an 
oversight committee of being able to get to the bottom or close 
to the bottom of what has happened so that we do not have to 
repeat ourselves.
    So, Mr. Chairman, I am glad that, once again, that we are 
here. I want to thank our witnesses for coming.
    I want to say, again, we sent correspondence saying that 
hopefully either you can answer--both of you can answer our 
questions or the people sitting behind you can answer our 
questions so that we can hopefully share it with our colleagues 
in the full committee.
    Thank you, Mr. Chairman.
    Mr. Rogers. I thank the gentleman.
    The chair now calls our first witness, Mr. Gregory L. 
Giddens, director of the Secure Border Initiative program at 
the U.S. Department of Homeland Security, for any statement he 
may have.

     STATEMENT OF GREGORY GIDDENS, DIRECTOR, SECURE BORDER 
      INITIATIVE PROGRAM, DEPARTMENT OF HOMELAND SECURITY

    Mr. Giddens. Good afternoon, Mr. Chairman and Ranking 
Member Meek. Thank you for the opportunity to come before you 
today to talk about the legacy border surveillance program, 
ISIS, and the Remote Video Surveillance System that was a part 
of that.
    Mr. Chairman, in your opening comments, you mentioned the 
mismanagement of the program. I am not going to sit here today 
and dispute that. Mistakes were made on this program. And, sir, 
they were made from the very beginning.
    At that time INS partnered with GSA to go down this path, 
we really structured a program that would be more fitting for a 
commodity buy versus a buy that was for a part of a critical 
mission set. And, I think, was the beginning of the undoing of 
the program.
    And that is one of the clear lessons that we have learned 
from this, as we are structuring SBI and as we go forward 
looking at major acquisitions, and treating those as major 
acquisitions of mission-critical programs, and the requisite 
planned program controls, risk management, test and evaluation 
plans, program management plans--processes and procedures, 
roles and responsibilities, we have learned a lot of lessons 
from that.
    Collocating program management and contracting staff and 
engineering staff, there is a lot of lessons learned. And I 
will certainly be glad to elaborate more on that as we go 
forward.
    We certainly appreciate the committee's support of the 
Department of Homeland Security and our efforts to secure the 
border to make it safe and secure.
    And, Mr. Chairman and Ranking Member, I would welcome your 
continued oversight as we go forward.
    Clearly, SBI in itself is a complicated program. It is 
critical, but it is complicated. And I will not sit before you 
and pretend it is not. And I would welcome your continued 
engagement.
    And I also just want to make a point. I appreciate the work 
that the staff has done with us, even before this hearing, in 
general on SBI and their willingness to meet with us and 
discuss issues that DHS has and try to build a collaborative 
partnership.
    [The statement of Mr. Giddens follows:]

                 Prepared Statement of Gregory Giddens

    Chairman Rogers, Ranking Member Meek, and members of the Committee: 
Thank you for the opportunity to address you today, and for your 
ongoing support of the Department of Homeland Security's (DHS) efforts 
to keep America's borders safe and secure. I am Gregory Giddens, 
Director of the DHS Secure Border Initiative (SBI) Program Executive 
Office. I am pleased to be here today to discuss the legacy border 
surveillance technology program known as the Integrated Surveillance 
Intelligence System (ISIS), and to identify how DHS has incorporated 
the lessons learned in our acquisition and management processes as we 
move forward to gain control of our nation's borders.
    DHS shares Congressional concern over the problems identified in 
the December 9, 2004, audit report by the Inspector General (IG), 
General Services Administration (GSA), regarding the administration and 
oversight of the procurement of the Remote Video Surveillance System 
(RVSS), one component of the Integrated Surveillance Intelligence 
System (ISIS). These concerns were a major factor in the decision to 
terminate the ISIS program and related contracts at the end of FY2004.
    In 2004, the successor border surveillance technology project 
referred to as the America's Shield Initiative (ASI) was initiated and 
designed to ensure the shortcomings or problematic issues of ISIS were 
not repeated. The requirements of this program are now being subsumed 
into a more comprehensive program called the Secure Border Initiative 
(SBI), which will be discussed in greater detail later. SBI 
incorporates similar sound acquisition and procurement strategies

The ISIS Project
    ISIS had its origins in a program begun in 1998 to improve Border 
Patrol surveillance capabilities by acquiring new sensors, cameras, and 
Intelligent Computer-Aided Detection (ICAD) capabilities. Border Patrol 
was then a part of the former Immigration and Naturalization Service 
(INS). The Office of Information Resources Management (OIRM) at the INS 
originally was the Program Manager for this effort. Through a 1998 
Memorandum of Understanding between INS and the General Services 
Administration (GSA), the initial ISIS contract vehicles, including the 
Remote Video Surveillance System (RVSS) program, were GSA Federal 
Supply Schedule contracts.
    The RVSS project installed camera systems mounted on poles, towers, 
and other structures at a limited number of locations on the northern 
and southern borders. The cameras transmitted video images back to a 
control room where Law Enforcement Communications Assistants viewed the 
images and dispatched Border Patrol agents as necessary. At first the 
RVSS Project was supported through a series of individual orders with 
various contractors. In 1999, GSA selected a single vendor, the 
International Microwave Corporation (IMC) (later purchased by L-3 
Communications), to provide RVSS capabilities as requested by OIRM in 
response to Border Patrol requirements. The award was converted to a 
Blanket Purchasing Agreement (BPA) between GSA and IMC in November 2000 
under GSA Federal Technology Schedule 70, with a period of performance 
from November 8, 2000, until September 30, 2004. Under the BPA, OIRM 
provided program management oversight of the ISIS, and GSA served as 
the Contracting Officer (CO) and the Contracting Officer's Technical 
Representative (COTR).
    In April 2001, program management responsibilities for the ISIS BPA 
were transferred to the Office of Border Patrol (OBP) through a 
Memorandum of Understanding signed by OIRM and OBP. GSA continued to 
exercise CO and COTR authority. With the creation of the DHS in March 
2003, OBP became a part of U.S. Customs and Border Protection (CBP) and 
OIRM became part of Immigration and Customs Enforcement (ICE). Because 
of the continuously unresolved prior and ongoing problems with the IMC 
contract, CBP allowed the contract to lapse in September 2004, rather 
than renew it.
    The CBP Office of Finance is continuing to work with GSA to 
recertify all remaining ISIS funding, which can only be utilized for 
the original intent of providing border surveillance technology.

IG Reports
    Numerous problems with the RVSS project resulted in the GSA 
Administrator requesting the IG to conduct an audit. This audit covered 
all the GSA Federal Technology Service's (FTS) Regional Client Support 
Centers and was performed by the GSA IG office in Fiscal Years (FY) 
2003 and 2004. Although the majority of the audit findings related to 
GSA's procurement practices and alleged mismanagement by the 
integration contractor with regard to the purchase and installation of 
the RVSS, some of the findings and recommendations also focused on the 
OBP role in program management.
    The GSA IG report identified three major areas with regard to the 
ISIS/RVSS acquisition that related to CBP/OBP:
         Inadequate contract management and oversight.
         Lack of acquisition planning.
         Inadequate provision for competition.
    The DHS Inspector General issued a report (OIG-06-15) in December 
2005 entitled ``A Review of Remote Surveillance Technology Along the 
U.S. Land Borders'' which also catalogues CBP's corrective actions 
regarding the problems with the ISIS project. [Maintained in committee 
file.]

Corrective Actions Addressed Through ASI
    In 2004, CBP initiated ASI. ASI was designed to provide technology 
to improve our nation's ability to detect, classify, and respond to 
illegal attempts to enter the United States between the ports of entry.
    CBP took a rigorous approach to managing and overseeing ASI 
planning for major acquisitions and investments, with a specific focus 
on correcting the problems that had existed with the previous ISIS 
effort. An ASI Program Management Office (PMO) was developed and 
staffed by the CBP OBP, the Office of Information and Technology, the 
Office of Procurement, and contractor personnel. PMO personnel were 
well qualified in program management, systems acquisition, logistics, 
contract management and oversight, and engineering, and brought a 
significant level of experience to the program. The PMO ensured its 
procurement processes and structure adhered strictly to Federal and DHS 
procurement guidelines.
    To govern the operation of the PMO and comply with DHS investment 
management policy, the PMO created and implemented the following formal 
plans and processes for the acquisition of the ASI. This detailed level 
of planning meets the highest standards of federal enterprise 
architecture for acquisition projects and ensured all activities 
associated with the project were firmly under the supervision of senior 
management:

         Cost-benefit analysis
         Program Management Plan
         Acquisition Performance Baseline
         Acquisition Plan
         Source Selection Plan (draft)
         Risk Management Plan
         Test and Evaluation Master Plan
         Configuration Management Plan
         Integrated Logistics Support Plan
         Program Level Work Breakdown Schedule and Integrated 
        Schedule
    In accordance with FAR, Parts 7 and 39, the ASI Program Manager 
developed a comprehensive acquisition strategy that emphasizes the use 
of non-developmental, open systems technology to both ensure 
competition and to shorten the amount of time required to field the 
first incremental capabilities to the field. ASI planned to validate 
technologies and approaches through prototyping before approval was 
given to enter the production phase.

    The ASI plan envisaged that:
    The ASI program manager, contracting officer, contracting officer 
technical representatives (COTR) and support staff would be responsible 
for day-to-day administrative matters as well as cost, schedule and 
performance tracking. Contract performance would be managed through the 
application of Earned Value Management, the Contractor's CMMI Level 3 
methodology, program management reviews, and design and milestone 
reviews.
         A procuring contracting officer would be on-site 
        during the period of performance for the prototype development 
        and acceptance testing.
         The contractor would be required to provide a quality 
        management plan within 60 days of contract award.
         The contract and, as appropriate, any associated task 
        orders will have a Government point of contact who will 
        periodically audit the contractor's implementation of its 
        quality management plan.
         A deliverables review system would be established by 
        CBP to ensure timely delivery and Government inspection and 
        acceptance of deliverables required in the contract.
         Each line item would be accepted after successful 
        completion of acceptance testing.
         Invoices would be reviewed by the COTR to ensure that 
        the contractor has met all the acceptance criteria before the 
        approval and payment of each invoice.
         CBP and the development and integration contractor 
        would identify, assess, track, and mitigate all risks that can 
        potentially impact contract cost, schedule, and performance.

The Secure Border Initiative_The Way Forward
    On November 2, 2005, Secretary Chertoff announced a comprehensive 
multi-year plan to secure America's borders and reduce illegal 
immigration. The, the Secure Border Initiative (or SBI) focuses broadly 
on three major t themes, controlling the border, immigration 
enforcement within the United States, and the Temporary Worker Program.
    The Secretary's vision for SBI includes:
         More agents and officers to patrol our borders, secure 
        our ports of entry and enforce immigration laws;
         Expanded detention and removal capabilities to 
        eliminate ``catch and release'';
         A comprehensive and systematic upgrade of the 
        technology used in controlling the border, including use of 
        manned and unmanned aerial assets (UAV's);
         Increased investment in infrastructure improvements--
        providing additional physical security and to sharply reduce 
        illegal border crossings;
         Improve interior enforcement of our immigration laws.
         Working in close coordination with international 
        partners to ensure illegal entrants are quickly returned to 
        their countries of origin.
    DHS has instituted specific leadership and management structures 
through SBI which will ensure program management deficiencies of legacy 
efforts such as ISIS are not repeated. Specifically, DHS has created an 
SBI Program Executive Office within the Office of the Assistant 
Secretary for Policy, Planning and International Affairs. I am the 
Director of that office. Weekly meetings are chaired by the Secretary 
and attended by a broad scope of DHS senior leaders to ensure we are 
realizing near term improvements in our immigration enforcement with 
existing resources, while continuing to focus on building a multiyear 
strategy that will address the gaps in our current approach. We also 
place a priority in working with our international partners, 
particularly in the area of detention and removals. We are appreciative 
of those nations that work with us most closely in this area; I would 
like to specifically note the excellent cooperation that we have 
experienced with El Salvador and Honduras.
    Furthermore, CBP has created an SBI program management office (PMO) 
in the Office of Policy of Planning with direct reporting 
responsibility to the Commissioner. The organizational structure 
provides the SBI PMO with the advantage of drawing on the full range of 
relevant expertise and capabilities within CBP to ensure fully 
successful management of the effort. Leaders from the operational side 
of the agency provide overall project management, while the acquisition 
process for SBI technology and infrastructure are supervised by highly 
trained and certified program managers with extensive experience in the 
Federal Acquisition Regulations (FAR). The PMO also leverages expertise 
from the ASI PMO. Similarly, program management offices are also being 
developed for the Immigration and Customs Enforcement and Citizenship 
and Immigration Services.

SBInet
    A critical component of the SBI strategy to control the border is 
the Department's plan to launch a comprehensive program to transform 
its border control technology and infrastructure. This program, named 
SBInet, will integrate multiple state of the art systems and 
traditional security infrastructure into a single comprehensive border 
security suite for the department. CBP will serve as the executive 
agent for the SBInet program--leading, managing, and working with an 
industry integrator to implement this aggressive new DHS program.
    Last month, DHS held an ``Industry Day'' to reach out to America's 
private industry as a first step in building a strategic partnership in 
support of the Secure Border Initiative (SBI). More than 400 
representatives from the private sector attended the SBInet Industry 
Day, which challenged industry to develop an integrated solution using 
a combination of new technology, tactical infrastructure, personnel, 
facilities, sensor and response platforms, communications, as well as 
existing government resources and infrastructure.
    The DHS goal is to award an integrator contract by the end of this 
fiscal year through a constructive down select competition in full 
compliance with the FAR. DHS has contracted with an independent 
contractor to provide professional assistance with drafting the Request 
for Proposal and the process of reviewing proposals submitted in 
response.
    We expect the private sector systems integrator to help CBP and DHS 
provide a solution that provides deterrence, detection, and 
apprehension by a solution that:
         Fully integrates and balances the tradeoffs of 
        personnel, technology and infrastructure requirements
         Addresses the need to coordinate operations and share 
        information among all relevant DHS agencies and other federal, 
        state, local and tribal law enforcement, defense, legal and 
        intelligence agencies.
         Evaluates the illegal entry threat against the current 
        level of resources, prioritizes the shortfalls based on areas 
        of greatest operational need, and provides a comprehensive 
        road-map for achieving full operational control of the border 
        in the shortest possible time.
         Includes a detailed and comprehensive set of 
        performance measures to ensure we have a robust ability to view 
        and understand the impact of adding resources to ensure the 
        expected improvements in operational capabilities actually are 
        occurring.

Rigorous Program Management and Leadership
    DHS is well positioned to meet the challenges of awarding and 
overseeing SBInet, and ensuring mistakes of the past are not repeated. 
The following actions have been instituted to establish rigorous 
program management and leadership necessary for success of large scale 
projects such as SBInet: Specifically:
         For major programs, oversight is provided by the DHS 
        Program Executive and Central Procurement Offices, as well as 
        by Senior Management in DHS organizations.
         The CBP SBI Program Management Office will include an 
        independent, objective assessment of acquisition planning and 
        implementation activities.
         The contractor will be required to provide a quality 
        management plan within 60 days of contract award.
         CBP and the integration contractor will identify, 
        assess, track and mitigate all risks that can potentially 
        impact contractor costs, schedule, and performance
         The program manager, contracting officer, contracting 
        officer technical review (COTR) will be held to the highest 
        standards of accountability for program performance
         Contract performance will be managed through the 
        application of Earned Value Management, program management 
        reviews, and design and milestone reviews.
         A Contracting Officer will be assigned to CBP 
        Acquisition Project Management Offices for the duration of the 
        program to provide effective oversight for acquisition 
        planning, solicitation, and contract administration activities.
         The contract and associated task orders will have a 
        Government point of contact who will periodically audit the 
        contractor's implementation of its quality management plan.
         CBP will establish a deliverables review system to 
        ensure timely delivery and Government inspection and acceptance 
        of deliverables required in the contract.
         Line items will be accepted only after successful 
        completion of acceptance testing.

Conclusion
    Gaining control of the border is a major challenge, which requires 
a comprehensive strategy that fully integrates personnel, technology 
and infrastructure most effectively, and through the Secure Border 
Initiative the Federal Government has defined this goal as a major 
priority.
    Under this program, effective measures will be in place to provide 
high standard program management, direct supervision of all program 
activities by senior leadership, detailed performance metrics to 
measure operational capabilities.
    Several IG, GAO and Congressional reviews of the problems 
associated with the ISIS program have highlighted the serious 
shortcomings in the management of the acquisition and procurement 
process, and DHS has taken steps to ensure similar problems do not 
occur in any current or future program.

Closing
    Thank you again for the opportunity, Mr. Chairman to speak to you 
today. I will be happy to answer any questions from you or the other 
Members of the Subcommittee.

    Mr. Rogers. I thank the gentleman.
    The chair now recognizes our next witness, Mr. James C. 
Handley, regional administrator for the Great Lakes Region 5 of 
the U.S. General Services Administration, for any statement you 
may have.
    Mr. Handley?

                   STATEMENT OF JAMES HANDLEY

    Mr. Handley. Thank you, Chairman Rogers, Minority Member 
Meek.
    We, too, have not shied away from admitting that mistakes 
were made in this program, as our I.G. most adequately 
testified before you some time ago, identifying certain 
shortcomings in the administration of this contract.
    I will say that we have enjoyed now in these last few 
months a very good relationship with the Department of Homeland 
Security and the contractor in this case to try and arrive at 
some final numbers to present to everyone and close this matter 
out.
    As you know, probably from previous testimony, that this 
all started in 1998. A close-out for all orders occurred in 
2004. And since that time, we have been working to close out 
the program and to come up with some final numbers of 
accountability.
    As you also noted, and the I.G. testified about, the 
December 14, 2004, audits. In those audits, there were several 
concerns raised.
    Just to enumerate a few of those, a lack of competition in 
the awarding of the RVS contract, the inappropriate contract 
for construction services, inadequate contract administration, 
providing equipment without contract or approval, and 
ineffective management controls.
    We agree with that, Mr. Chairman. And we are doing as much 
as we can today in trying to put those things behind us and to 
put in place--I think we do have in place now controls for 
addressing those kinds of matters in the future.
    Once again, I would enumerate just a few. For instance, 
putting management controls in place to ensure adequate review 
and documentation, replacing key managers.
    As you pointed out earlier, there were some shortcomings, 
and some key managers have been replaced. We do conduct regular 
meetings, as I mentioned a moment ago, with the contractor and 
DHS.
    We also do consultation with our inspector general and with 
the general counsel in our office, who has been instrumental in 
guiding us through this process.
    And we now have a process for requiring that funds are 
appropriately appropriated, if you will, and that the 
contracting vehicles are the correct contracting vehicles.
    We also have a contract review board, which is pre-
solicitation and do post-award reviews.
    In addition to these actions, as you pointed out earlier, 
there were several disciplinary actions that were given out. 
And we send a paper to the committee on this prior to coming.
    My written testimony goes into detail about how we 
conducted our deliberations, and I will be happy to answer 
questions you have about that.
    One thing we would point out, we have had--you may have 
heard of it; you may not have heard of it. But at GSA we have 
what we call the Get it Right program. We are trying to make 
sure that we are doing things right in the acquisition field.
    We recognize that this is an means to an end, that what we 
are really striving for is excellency in acquisition.
    I will conclude my testimony at this time and be happy to 
answer any questions you might have about this program and 
about those disciplinary actions, which you referred to 
earlier.
    Thank you, Mr. Chairman.
    [The statement of Mr. Handley follows:]

                 Prepared Statement of James C. Handley

    Good afternoon, Chairman Rogers and Members of the Subcommittee. 
Thank you for the opportunity to appear before you to discuss the 
General Services Administration's (GSA) role in the U.S. Border Patrol 
Integrated Surveillance and Intelligence System (ISIS). I am Jim 
Handley, Regional Administrator for GSA's Great Lakes Region (Region 
5), and I am pleased to be here today to discuss the December 2004 GSA 
audit of the Federal Technology Service (FTS), particularly the 
contract awarded for the U.S. Border Patrol's Remote Video Surveillance 
(RVS) program and what we are doing to correct these errors.

BACKGROUND
    In late 1998, the former Immigration and Naturalization Service 
Border Patrol approached our regional FTS for acquisition support, 
including network cabling, IT services, commodities, network 
maintenance and upgrades for the RVS program. Initially, individual 
orders were issued; however, due to anticipated requirements, it was 
determined that a Blanket Purchase Agreement (BPA) would better 
streamline the process and provide for quantity discounts. The BPA, 
with an estimated value of $200 million, was awarded to International 
Microwave Corporation (IMC) on November 14, 2000. The BPA was 
established under the terms of IMC's position on the Federal Supply 
Schedule (FSS) Contract FSS70. IMC was subsequently acquired by L3 
Communications Incorporated in 2003.
    The BPA expired for new orders on May 5, 2004, although some work 
was ongoing through September 30, 2004. The BPA, however, did not 
account for all equipment and services provided in support of the 
Border Patrol's surveillance needs and there were ancillary equipment 
requirements and support not covered under the BPA which were procured 
under separate task orders.

GSA AUDIT
    The December 14, 2004, Office of Inspector General (OIG) audit was 
part of a nationwide review requested by the GSA Administrator to 
answer the following question: Were procurements awarded and 
administered in accordance with the Federal Acquisition Regulations and 
the terms of the contracts utilized? As we found out, the answer to 
this question was no.
    A copy of that final audit was provided to the Committee when it 
was released and GSA's Deputy Inspector General appeared before the 
Subcommittee on June 16, 2005, to discuss the audit in greater detail.
    In its final report, the OIG raised several concerns, such as:
         the lack of competition in the awarding of the RVS 
        contract
         the inappropriate contract for construction services
         inadequate contract administration and project 
        management
         providing equipment without contractor approval
         ineffective management controls
    I assure you that these concerns are currently being addressed on a 
detailed level within the Region.

PROJECT REFORMS
    Mr. Chairman and Members of the Subcommittee, I agree with these 
findings of the OIG. There were definitely certain instances of 
inappropriate contracting practices. These practices were not specific 
to Region 5 but part of a larger problem that permeated FTS nationwide. 
This is not meant to excuse our actions in any way, but it is meant to 
reinforce the OIG's finding of environmental problems throughout the 
organization.
    Since the receipt of the OIG audit and as a direct result of it, 
Region 5 has made tremendous strides in correcting the issues raised. 
Some of these actions were taken immediately while some have taken more 
time. This is a situation that will require a dedicated effort on our 
behalf to make sure this does not occur again. And I assure you, we are 
focusing our resources to resolve these issues.
    Some of the actions we have taken on the regional and programmatic 
levels include:
         Putting management controls in place to ensure 
        adequate review and documentation is provided;
         Replacing key managers with individuals who were 
        experienced in their field and focused on customer service, 
        quality of tasks, and adherence to procurement regulations;
         Conducting regular meetings with the Contractor and 
        U.S. Customs and Border Protection to address any discrepancies 
        in contracting procedures and contractor performance;
         Requiring a Memorandum of Understanding or Memorandum 
        of Agreement with each task order to confirm GSA and customer 
        roles and responsibilities;
         Consulting with the Office of General Counsel in our 
        acquisition planning and execution;
         Limiting contracting authority to allow for more 
        management control;
         Establishing a database to monitor every phase of the 
        acquisition;
         Reviewing funds received, obligated, and invoiced 
        between the two GSA financial centers;
         Validating all GSA financial data at the task order 
        level to ensure funds and payment records match;
         Encouraging Contracting Officers to become more 
        involved in task planning and encouraging customers to invite 
        their contracting and financial management offices into 
        discussions;
         Requiring that project funds be accepted only at the 
        Director level or higher to ensure incoming work will be 
        carried out effectively and efficiently;
         Instituting a regional remediation plan to review 
        existing task orders and address any deficiencies or areas of 
        concern;
         Establishing a Contract Review Board for pre-
        solicitation and post-award reviews;
         Reviewing all contract actions to ensure compliance 
        with applicable regulations and policies;
         Revising performance measures to emphasize quality and 
        eliminate the emphasis on volume and revenue; and
         Requiring a continued review of operating procedures 
        to ensure pre- and post-award and contract administration is 
        effectively carried out.

DISCIPLINARY ACTIONS
    Mr. Chairman and Members of the Subcommittee, in addition to our 
actions mentioned above, disciplinary action was needed. Prior to this 
hearing, we provided the Subcommittee with a description of the 
disciplinary actions we have taken against certain GSA personnel as a 
result of the audit. In that letter, as well as in communication with 
the Subcommittee staff, we name the individuals involved, their 
positions and the nature and outcome of the disciplinary action taken 
against each. However, for the purposes of this open hearing, and 
because of Privacy Act considerations, I will limit my testimony today 
to briefly describing the general disciplinary process at GSA and 
addressing the questions we received from the Subcommittee.

    1. How these cases happened at GSA?
    As I have discussed previously, as a result of an OIG audit report 
on the FTS Client Support Center in GSA's Great Lakes Region, several 
improper task orders and contract awards were identified. Through 
further investigation, GSA found that some of the GSA employees 
involved in these procurements were engaged in misconduct and were 
issued disciplinary notices for their actions. These cases were the 
result of those proposed disciplinary actions. Several other personnel 
actions resulted in non-adverse actions, including official reprimands.

    2. Who decides the cases at GSA?
    The GSA Delegations of Authority permits the Heads of Services and 
Staff Offices and Regional Administrators to designate officials in 
their individual organization or region who are authorized to take 
disciplinary actions. Designated officials are usually in the line of 
authority over the disciplined employee. The type of disciplinary 
action taken determines who decides the matter. For example, warning 
and reprimand notices are usually issued by the first line supervisor. 
Suspension and removal actions require a proposal notice before a 
decision is rendered. Therefore, there is a proposing official and 
deciding official.

     3. What is the procedure and how are they decided?
    The Heads of GSA's Services and Staff Offices and Regional 
Administrators are responsible for the maintenance of discipline and 
adherence to the standards of conduct by employees under their 
jurisdiction. Immediate supervisors have the primary responsibility for 
discipline and initiating appropriate corrective action when it becomes 
necessary. When a supervisor suspects misconduct has occurred that 
supervisor conducts an inquiry to secure the facts needed to determine 
what disciplinary action, if any, is warranted.
    As I mentioned previously, disciplinary action can take the form of 
a warning notice, an official reprimand or more serious penalties such 
as a suspension, a demotion to a lower grade or removal from Federal 
service. When an adverse action, such as a suspension, demotion or 
removal, is proposed the agency must comply with Title 5, Part 752 of 
the Code of Federal Regulations, which entitles an employee against 
whom such action is taken certain rights. These rights include the 
following: (1) an advance written notice stating the specific reasons 
for the proposed action; (2) a reasonable amount of time to reply 
orally and/or in writing to the charge(s) against him/her and to 
furnish affidavits and other documentary evidence in support of the 
reply; (3) to be represented by an attorney or other representative; 
and (4) a written decision and the specific reasons for that decision 
at the earliest practicable date. If the employee fails to make either 
a written and/or oral reply, the deciding official will make a decision 
based on the record as a whole. The decision is based on certain 
factors, prescribed by the Merit Systems Protection Board (MSPB), such 
as the employee's past disciplinary record, if any, his/her past work 
performance, length of service, the notoriety of the offense and the 
consistency of the penalty with those imposed upon other employees for 
the same or similar offenses.
    Before applying these factors, the deciding official will make the 
determination as to which charges can be sustained based on the 
evidence of the record as a whole. The deciding official should make 
this decision independently, free of advice from the proposing 
official.
    After making a determination on which charges to sustain, the 
deciding official must do a full analysis of the case to determine its 
outcome and then apply the relevant mitigating factors to the case at 
issue. In order to take an adverse action, the deciding official must 
make the determination that the misconduct at issue is severe and the 
penalty promotes the efficiency of the agency. Also, the penalty should 
be in accordance with the agency's penalty guide.
    If an employee receives a suspension for longer than 14 work days, 
a demotion to a lower grade or removal from Federal service, he/she can 
appeal this decision to the MSPB within 30 calendar days of the 
effective date of the action. If the appeal proceeds to hearing, an 
Administrative Judge will decide whether the charges against the 
employee are sustained and, if so, whether the penalty imposed is 
reasonable.
    The MSPB will not disturb the agency's choice of penalty unless the 
severity of it appears totally unwarranted in light of the relevant 
factors. If the deciding official fails to consider relevant mitigating 
factors, MSPB may mitigate the penalty to bring it within parameters of 
reasonableness, which is determined based on MSPB case law.

    4. What were the final decisions?
    Four GSA employees from the Great Lakes Region received the 
proposed adverse actions. All four actions were decided by the agency 
and all involved disciplinary actions against the individuals. Three of 
those cases have been appealed and settled. The fourth has an appeal 
pending with the MSPB. The three settled cases resulted in one person 
being demoted from a GS-15 to a GS-13; one person being demoted from a 
GS-15 to a GS-14; and one person agreed to retire from Federal service 
in lieu of being demoted from a GS-14 to a GS-13.
    The pending appeal also involves a full grade demotion.

    MOVING FROM ``GET IT RIGHT'' TO EXCELLENCE IN ACQUISITION
    Mr. Chairman and Members of the Subcommittee, excellence in 
acquisition is the top priority for GSA. Conducting acquisitions the 
right way is critical to everyone. In July 2004, the Administrator, in 
conjunction with the Department of Defense, launched the ``Get it 
Right'' program to help promote proper contracting practices. The 
initiative has led to the implementation of better controls across FTS 
nationwide, as well as individual Client Support Center management 
improvement plans. ``Get it Right'' has resulted in greatly increased 
attention to ensuring adequate competition, determining best value and 
utilizing and properly administering the appropriate contract vehicles. 
These efforts have been fully supported by GSA's management team and we 
believe the agency is making genuine progress in addressing the serious 
contracting deficiencies found in our reviews. As I discussed earlier, 
the management team in GSA's Great Lakes Region fully embraced the 
``Get it Right'' initiative, and we have begun implementing a wide-
range of program reforms in our procurements .
    The ``Get it Right'' Plan is the foundation for Acquisition 
Excellence and is based on five objectives:
        1. Secure the best value for Federal agencies and American 
        taxpayers through an efficient and effective acquisition 
        process, while ensuring full and open competition and 
        instilling integrity and transparency in the use of GSA 
        contracting vehicles.
        2. Make acquisition policies, regulations and procedures clear 
        and explicit.
        3. Improve education/training of the Federal acquisition 
        workforce on the proper use of GSA contracting vehicles and 
        services.
        4. Ensure compliance with Federal acquisition policies, 
        regulations and procedures. Non-compliance is unacceptable!
        5. Communicate with the acquisition community, including 
        agencies, industry partners, the Office of Management and 
        Budget, Congress and other stakeholders regarding the use of 
        GSA contracting vehicles and services.
    While the Get It Right Plan demonstrates our strong commitment to 
ensuring the proper use of GSA contracting vehicles and services in 
order to be in full compliance with Federal Acquisition Regulations and 
best practices, we view the ``Get it Right'' program as the means to an 
end. We are committed to excellence in acquisition at GSA and we know 
that that goal must begin with GSA's strong commitment to ensuring the 
proper use of GSA contracting vehicles and services in order to be in 
full compliance with Federal laws and regulations and best practices.
    In addition to the regional and programmatic reforms put in place 
as a result of the audit, GSA has implemented better controls within 
FTS nationwide, and GSA has been making genuine progress in addressing 
the serious FTS contracting deficiencies found in our reviews.
    Our Office of the Chief Acquisition Officer (CAO) has updated 
policy guidance on doing business with other agencies. We are 
increasing the use of competition in the procurement process and 
raising our own goals for competitive contracting, including small 
businesses in acquisition strategies and the use of small businesses to 
achieve socio-economic goals. We are also clarifying how to account for 
other direct costs when ordering from a GSA schedule. In 2006, the CAO 
is launching a multi-year campaign to rewrite the General Services 
Acquisition Manual (GSAM) and will be updating our acquisition 
regulations to ensure we have clear and explicit rules on which our GSA 
customers and associates can rely. On the national level, we are also 
working on an interagency contracting workgroup that OMB's Office of 
Federal Procurement Policy has put in place that will once again move 
us toward a common understanding of our responsibilities, both 
internally and government wide. Also, GSA has begun a thorough 
assessment of our acquisition workforce to determine whether they have 
the skills to "Get it Right" and to achieve excellence in acquisition. 
Finally, to ensure that we are doing things right, we are working 
closely with our Inspector General's office in reviewing our 
procurements, and our CAO's office has been traveling to each of the 
regional offices, conducting Program Management Reviews (PMR) of 
contracting actions. These PMRs are not audits, but are independent 
peer reviews, performed on an annual basis by GSA acquisition 
professionals; and are designed to ensure that acquisitions functions 
are in compliance with all applicable regulations, policies and 
procedures, to provide acquisitions solutions, and to identify and 
share best practices.

CLOSING
    Mr. Chairman and Members of the Subcommittee, in its audit, the OIG 
raised several concerns. You have heard from the OIG directly and I 
have outlined them for you today. Everyone at GSA, from our 
Administrator and top executives, to our acquisitions officials, to our 
program managers take these concerns seriously. Our ``Get it Right'' 
initiative demonstrates our commitment on a nationwide level and we are 
addressing them on a detailed level within the Region as well.
    Thank you again for this opportunity to speak with you about this 
very important matter this afternoon. We are committed to serious 
reforms and we are proud of our progress in rectifying the problems 
discovered. I will be happy to answer any questions you may have.

    Mr. Rogers. Thank you. And that is exactly what I would 
like to go to first.
    Mr. Handley. Okay.
    Mr. Rogers. My understanding of the disciplinary actions 
are that there were four individuals that were downgraded or 
taken down in pay grade by one level. Nobody was fired. Is that 
inaccurate? This is $250 million we are talking about.
    Mr. Handley. That is correct, Mr. Chairman. Yes, your 
statement would be accurate. There have been some departures of 
people who were involved in the program.
    Mr. Rogers. Through retirement.
    Mr. Handley. Actually that, but there were also some 
people, frankly, who left. I am speaking now from my region, 
Region 5 only, which is in Chicago.
    There were two or three key individuals who departed before 
the I.G. audit findings were finalized and before the 
disciplinary process began.
    But you were right; there were four what we call adverse 
actions taken. As you pointed out, no one was dismissed, but 
there were mitigating factors which we have to consider in 
these cases--
    Mr. Rogers. Such as?
    Mr. Handley. Such as mostly as past performance, how these 
people have conducted their--st of these people were long-time 
federal government employees. And you have to take into 
consideration their past work performance in issuing any 
disciplinary action.
    Mr. Rogers. Are you limited to that by some rules or 
regulations?
    Mr. Handley. Yes. These restrictions are called--it is 
something called the Douglas factors. And when you are dealing 
with the Merit Systems Protection Board, which on matters of 
personnel in the government are subject to going through their 
process, you are bound by these factors, which are called the 
Douglas factors.
    And once again, they are basically just past performance.
    Mr. Rogers. From what I see, these are all pretty well-paid 
folks, GS-13, GS-14, GS-15, and virtually all of these people 
were reduced one grade. That is a slap on the wrist if I have 
ever seen one, particularly given the massive amount of money 
that we are talking about.
    Mr. Handley. Right. Well, it is a massive amount of money; 
there is no question about that.
    Mr. Rogers. And a lot of questions, too, about the 
propriety of their action. When you look at this unbid contract 
morphing from a $2 million contract to a $200 million contract, 
ultimately $250 million, with no competitive bidding and nobody 
getting in trouble for it, and the cameras were not even put 
up, it makes you think that, at a minimum, some people would be 
terminated for that level of incompetence and possible 
corruption.
    Mr. Handley. Well, frankly, it was proposed that they be 
released from federal service. But once again, the deciding 
official is bound to consider these factors, which I referred 
to before, which are the Douglas factors--
    Mr. Rogers. Who is the deciding official?
    Mr. Handley. The decision official in this case was my 
deputy, deputy regional administrator in Chicago.
    Mr. Rogers. And he was the person who was recommending 
termination or--
    Mr. Handley. No, the recommending authority was the 
assistant--not the assistant regional administrator that was 
there at the time of these actions, but the one who 
subsequently came in.
    Mr. Rogers. Right.
    Mr. Handley. He was the one who was the recommending 
official. And then--
    Mr. Rogers. And he recommended termination?
    Mr. Handley. He recommended termination.
    Mr. Rogers. For one or more?
    Mr. Handley. For, I believe, four individuals.
    Mr. Rogers. And then your deputy said no?
    Mr. Handley. My deputy, well, he had to consider, as I say, 
these factors. And after considering those factors and deciding 
what was supportable going forward, he made the decisions as 
have been presented to you.
    And incidentally, you know, to a federal employee or to any 
employee in any organization, when you get knocked down in 
grade and you get taken out of a job, that is a pretty 
devastating thing.
    Granted, I know what you are saying. Accountability to the 
taxpayer is paramount; I agree with you wholeheartedly. But in 
this case, the affected people think this has been a pretty 
severe punishment.
    Mr. Rogers. Well, the affected people are wrong. The thing 
that we all have to keep in mind what the American people, the 
American taxpayer, is thinking about this.
    We hear about all of these outrageous abuses and waste 
after Katrina, just on the news in the last couple of days 
about these 11,000 mobile homes that we paid $300 million for, 
they are sitting in a field rotting. And nobody is using them 
or sees any use of them in the near future.
    We see this, $250 million for cameras that most, half of 
which, did not go up, and the ones that did go up are not 
working. I mean, it erodes the confidence of the citizenry in 
the Congress and the homeland security.
    So, you know, there is a lot more at stake than just, you 
know, the feelings of these people.
    And my question, I guess, though is: Is it your opinion 
that, because of that outcome, because your deputy had his 
hands tied by these regulations, these merit system 
regulations, do you think that is one of the other things that 
should be implemented as a consequence, that we ought to be 
giving more latitude to management to ensure that their 
employees take responsibility for their actions?
    Mr. Handley. I do not see a downside to that at all, sir. I 
think that would be a good thing to do.
    Mr. Rogers. Okay. I see my time is expired.
    I yield to the ranking member for any questions he may 
have.
    Mr. Meek. Thank you, Mr. Chairman.
    Mr. Handley, if I can continue on a line of questioning 
that the chairman was asking, you mentioned I believe the 
factor where you could not fire an individual--what is the name 
of that?
    Mr. Handley. The Douglas factor.
    Mr. Meek. Douglas factor, okay. I am familiar. That was a 
mitigating factor--
    Mr. Handley. Right, they are.
    Mr. Meek. --looking at all of those different disciplinary 
opportunities that you may have based on past performance. I am 
familiar with it, but the name slipped my mind there quickly.
    These individuals could have been suspended, am I correct?
    Mr. Handley. They could have been.
    Mr. Meek. For a period of time?
    Mr. Handley. Yes, that would be one of the recommendations 
that could have come.
    Mr. Meek. Right. Were they?
    Mr. Handley. I do not believe so. Of these four 
individuals, I do not think they were suspensions. They were 
demotions.
    Mr. Meek. And I think this thing is a lot bigger than the 
four individuals. I think they have some bosses and some other 
folks that kind of knew that something was going wrong here.
    When you are talking about $250 million, that is an awful 
lot of money, even on the federal level. And we are talking 
about border security. This is not some study that was done in 
the university and the money was spent in a way that it should 
not have been spent. Some universities wish they could get $250 
million.
    I represent a district, if someone misspends $1 million, 
they will have the federal prosecutor trying to prosecute them 
for misappropriation of these dollars.
    As far as your agency is concerned, as it relates to 
disciplinary action or any further action, are you done with 
your whole inquiry and disciplinary action, not only on behalf 
of the four, but possible others that could be involved in 
this?
    Mr. Handley. This, as we see it, is the end of the issue.
    Mr. Meek. Okay. So you are saying that the individuals that 
were disciplined, that they actually went through being demoted 
a grade, that the department sees it as quite severe?
    Mr. Handley. Yes. One of the four cases, Congressman, is 
still pending appeal. But I would have no reason to believe 
that it will be overturned, but it is pending appeal.
    Mr. Meek. If someone at the department was to take one of 
your vehicles and crash it, what do you do with them? Do you 
demote them, or do you fire them, or what do you do with them?
    Mr. Handley. I think it depends on the circumstance. If 
they were negligent, I am sure we would fire them, that they 
would undergo some kind of a warning or disciplinary action, 
once again depending on the merits of the case.
    It is hard to make just a blanket statement regarding that, 
because there could be any set of circumstances you can 
imagine, I guess.
    Mr. Meek. We are not looking for blood here; we are just 
looking to make sure that bad behavior is not rewarded. And I 
am going to tell you, I have been in a career service setting 
before in my professional career. And I have seen people 
dismissed, and I mean dismissed for far less than wasting $250 
million.
    Mr. Handley. Right.
    Mr. Meek. So, with all due respect, sir, it is kind of hard 
for me to believe that, because of all of the mitigating 
factors that is involved here that these individuals only got 
demoted just one step down.
    And that is the reason why we have this era of one may say 
cronyism. And folks get turned off with government. This is the 
perfect example.
    Now, we have to continue to march on, on this issue, and 
push the department to hopefully come up, not only with better 
answers, but with better action.
    If someone in an office in the same?what are they doing 
now? Are they over at some procurement program? Are they still 
in the business, in the area of where they were?
    Mr. Handley. They are out of any management responsibility 
now.
    Mr. Meek. What are they doing?
    Mr. Handley. Well, one of the people transferred to another 
service within GSA. And she is out of the management chain. The 
one gentleman, as I say, he is still pending appeal. One of the 
four people retired.
    And the other lady has been demoted to a non-supervisory 
role in the same service. She is no longer involved in 
acquisition.
    Mr. Meek. Are they doing any contracting whatsoever?
    Mr. Handley. No.
    Mr. Meek. None of them?
    Mr. Handley. No. No. And we have implemented a whole new 
policy of oversight in that area. We have got much stronger 
reviews.
    Once again, I am not saying that we were not negligent, we 
did not make a lot of mistakes. But we do have the measures in 
place now which I think will address a lot of this.
    And I know any certain amount of money, to me, is a big 
amount of money, even a few million dollars.
    But when we speak of $250 million, when this whole thing is 
said and done and we come up with a final determination of what 
money was squandered or what did happen, the number will be far 
less. I mean, there was some value that did occur within this 
$250 million which we are talking about.
    Once again, Congressman, I am not saying that any amount of 
money in the millions is not substantial; to me, that is a lot 
of money. But it will not end up being a squandering of $250 
million.
    Mr. Meek. Maybe a question for both of you. You are on our 
way to the America's Shield Initiative, and I am pretty sure we 
are all familiar with it. We call it ASI.
    What are the corrective actions to make sure that we do 
not?you are speaking of it very loosely by saying we have 
things in place.
    It just seems like, time after time, in this committee, Mr. 
Chairman, and the department, and I am dealing with the federal 
dollar, that it is a lot of after the fact. And there is a real 
what one may call incompetence tax that the American people are 
paying.
    These are the dollars that just fall down a black hole and 
they have no real public benefit to it. And I do not know if 
anyone is really accumulating the numbers, but it is in the 
billions.
    And so, when folks start talking about saving the 
taxpayers' money, I mean, this is very, very important work. So 
I am just trying to figure out, because I know now, dealing 
with the issues, dealing with Katrina and all the other issues 
that we have out there, we are supposed to have this 
accountability arm with the inspector general being a part of 
the whole contracting experience.
    Can you explain to me a little bit more how we will never 
go down this road again or prevent going down this road again? 
I hate to say never, because I know folks are human. But at the 
same time, I do not understand it.
    If I was to tell you, if you were to walk out this door, 
and there is some water on the floor there, and if you step in 
it you are going to slip, you may step in it the first time, 
and slip, and say, ``Well, you know, Kendrick told me that that 
water was out there.''
    But you go there the second time, you are going to be 
looking to the right. Well, in this case, we walked out of the 
door well over 10 or 15 times, in my little short time here in 
Congress.
    So I am trying to figure out, how can we stop stepping in 
the same puddle? So can you just elaborate a little bit more? 
Because this exercise is more than who did it; this is about 
making sure that we do not continue having Groundhog Day all 
over again, talking about the things that we are talking about 
constantly.
    I would like to talk about forward progress here.
    Mr. Handley. Right.
    Mr. Meek. But we are spending a lot of time talking about 
what just happened yesterday, because we talked about it last 
week and we thought it would be corrected, and we just continue 
to do the same thing.
    Mr. Handley. Right.
    Mr. Meek. So, Mr. Chairman, I know I have gone over my 
time, but, you know, I think we do have enough time to try to 
get a better understanding of how this will not happen again. 
And, of course, let's continue to have the discourse on where 
the department is headed.
    Mr. Handley. My written statement does have an enumeration 
of some of these things. But let me just go over a couple which 
are very key to our oversight today, which we did not have in 
place at the time this occurred.
    We now have project review panels in the services that 
review these things, and discussions with the customer agency 
occur in a much more meaningful fashion to get better 
understanding going forward of exactly what is expected of all 
parties.
    We now review all acquisition plans, and any acquisition 
plan which involves a project of over $100,000 has to be signed 
off on by me, and only after it is reviewed by the true 
professionals in our organization.
    In our region, we have what is called a regional 
acquisition management staff. They review it for all technical 
aspects, and then it goes to our regional council. They sign 
off on it. And not until then do I sign it.
    As pointed out earlier, we have a process now where these 
things, which may originate--much of this originated at a place 
called Wright-Patterson Air Force Base in Dayton, Ohio. Those 
folks no longer have the authority out there to sign off on a 
project of anywhere near this magnitude, and now has to go to 
Washington, D.C., for a review by the proper acquisition folks.
    Let's see. We now have a system whereby the agency, the 
customer agency, verifies the source of the funds, the proper 
year, allocation or appropriation of the funds. And that has to 
be certified before we can go forward.
    They have been enumerated. I will be happy to provide you 
additional information on that, but those are a few of the 
things which we now have in place, which I think will avoid 
this--I do not know that we will ever avoid the black hole you 
spoke of.
    I suppose there will always be waste. Hopefully we can 
minimize it. We think many of these things that we put in place 
will help GSA minimize that exposure.
    Mr. Meek. Towards that initiative, Mr. Chair, as I yield 
back, I just want you to think about it, because I am pretty 
sure we are going to have another round.
    I just want to make sure that--I want to talk to you about 
the staffing and the enforcement of what you just explained.
    Because many times we start initiatives, and if there is 10 
people in compliance--I am just taking a number; I am not 
saying that there is 10--and you put these new responsibilities 
on them, and it is still 10 people, if they could not comply 
with the old rules, how can they do it with the new rules and 
all of the steps that you just talked about?
    When we talk about streamlining government, nine times out 
of 10 compliance does not play a very strong acting role in 
that particular situation.
    So if you can think about that, maybe in the next round of 
questions we can talk about it and go from there. Thank you for 
your--
    Mr. Handley. Thank you, sir.
    Mr. Rogers. I thank the gentleman.
    The gentlelady from Texas is recognized for any questions 
she may have.
    Ms. Jackson-Lee. Mr. Chairman, I want to thank you and the 
ranking member for consistent, valuable hearings that we have 
had over the period of time.
    And I will beg the indulgence of the witnesses. I may stay 
for a second round, but I do want to have a corrected record 
for something that I find enormously important, and that is the 
title of this committee is Management, Integration and 
Oversight.
    And so, as we are looking at lessons for the new border 
initiative, which I believe are extremely important, and I 
understand that there are some benchmarks, Mr. Handley and Mr. 
Giddens, that we may not have met as of yet.
    Just a couple of hours ago, we were in this committee with 
the secretary of Homeland Security, Mr. Chertoff. 
Unfortunately, we have not, although this committee has 
been?and at the full committee, excuse me--has been organized 
for at least one session, and we did so in order to be at the 
cutting edge of protecting America.
    In this instance, we are talking about border security, but 
there are issues such as intelligence gathering, and there are 
issues dealing with natural disasters.
    I was frustrated that, in a time when we need to be moving 
forward in our oversight, that Mr. Chertoff, who has spent few 
hours before our full committee, the last time appearing here 
on July 2005, thought that lunch for more than an hour and 15 
minutes was more important than addressing some of the severe 
management deficiencies that I believe resulted in 1,300 people 
dying in the gulf region.
    Now, we can look prospectively, and I think that is key. As 
I said, I applaud the chairman and the ranking member, because 
this committee has been, I think, at the cutting edge of trying 
to improve the workings of the Department of Homeland Security. 
We have been meticulous in that work.
    But I cannot imagine, despite all of the editorial comments 
about Katrina fatigue, how sad that is, that we in Washington 
would tolerate a cabinet member who infrequently comes to the 
Hill, particularly before this committee.
    And let me say that I intend to mind my manners, because I 
do not usually speak when someone is not present. But Mr. 
Chertoff had an opportunity to stay and to allow members to 
question him rather fully. But again, as the record will 
reflect, and I stand ready to be corrected, he had to go to 
lunch.
    The chairman of the full committee attempted to indicate 
that my facts were wrong about why Mr. Chertoff was leaving or 
that he had an appointment. He had an appointment at 1:30, and 
we were forced to end the hearing at 12:15.
    So if there is an explanation to you gentlemen, who are 
clearly part of the family, and not necessarily in the line of 
fire in this sense, dealing with Katrina, whatever ways that 
you are able to communicate with the secretary, let it be known 
that America is watching and that these positions are 
privileged positions.
    They do not belong to an individual; whether it is elected 
or appointed, you are a servant of the American people.
    And if we are attempting to ask hard questions about why 
1,300 people died, if we are trying to find out why there is an 
e-mail fight when CNN made it very clear that the levees were 
breaking between the 29th and the 30th, why you felt there was 
no reason, as the controller general indicated, to designate a 
designated leader to lead and coordinate the efforts.
    And I think that management, integration and oversight, we 
certainly failed in management of the Homeland Security 
Department. And I believe that this committee failed in its 
jurisdiction or its duty by defining the hearing as a budget 
hearing, as opposed to a hearing to address some of the 
immediacies.
    My comments are that, if this was a terrorist act and the 
levees had been imploded by terrorists, foreign or domestic, we 
would be having hearings, upon hearings, upon hearings, and 
rightly so.
    But because there are people suffering in the Gulf Coast 
who are homeless, who are without businesses or work, because 
their faces represent the faces of America in all their 
diversity, we go on with business as usual in the United States 
of America.
    The secretary of homeland security has to go to lunch, 
while I am facing thousands upon thousands of constituents in 
Houston, Texas, who are literally homeless, suffering traumatic 
experiences day after day, because they have no place to go.
    I do not know what kind of country we are living in; I do 
not know what kind of leadership we have. But I would say that 
this represents, in my mind, one of the biggest failures of a 
department and a nation that we could ever imagine, and as well 
I restate my call for Mr. Chertoff to be fired, reprimanded or 
censured, because I see no passion, no concern whatsoever in 
the presentation that he made here today.
    And, Mr. Chairman and the ranking member, let me--I know 
there will be a second round. Thank you for your indulgence.
    And I would simply say that I hope it may be that you have 
heard enough and that the committee that was so designated 
might have been sufficient, but I would just argue this.
    I would not want to pursue going over what happened--I am 
certainly frustrated--but I do think this committee would be 
well in its jurisdiction to prospectively go forward and find 
out, not 6 months down, Mr. Chairman, or what we are doing, but 
why did not the secretary come here and say, ``In 10 days, we 
will be back before the full committee with a directed plan 
that answers the tragedy of Katrina''?
    We do not when we will hear from him again, and I would 
like this committee to make the request that Mr. Chertoff 
either be before us or others talking about a concrete plan, as 
we face hurricane season of 2006.
    Is anybody home? Are the lights on in America for those who 
are suffering?
    I yield back, Mr. Chairman.
    Mr. Rogers. And I thank the gentlelady.
    I would like to revisit the disciplinary action subject.
    Mr. Handley, specifically--and I ask Mr. Giddens to offer 
the same response, or a similar response, or a response to the 
same kind of question--specifically, what would you suggest be 
done differently that would allow you the latitude to 
appropriately discipline an employee that made a similar 
misjudgment in decisionmaking in the future?
    Mr. Handley. Honestly, Mr. Chairman, I do not know. I am 
not an expert in H.R. And without much more background, I do 
not feel qualified to answer that question.
    I think you do have to consider extenuating factors when 
you are talking about disciplining individuals. I just do not 
feel qualified to answer that, but I will give it some thought 
and provide an answer to you by consulting with others, if you 
would like?
    Mr. Rogers. I would.
    Mr. Giddens, with SBI going forward, if a similar problem 
arose, what would you like to have in place to make sure that 
you were able to appropriately discipline your subordinates?
    Mr. Giddens. Sir, I think the first thing I would like to 
have in place is a process so that those issues could identify, 
while they are still young, and do not continue and continue 
for a month and month.
    And I think that is one of the lessons that we have to 
learn on our side, is to set up a structure to really manage 
our acquisitions and to bring program management and systems 
engineering discipline to manage those and provide a leading 
indicator so that we get insight.
    Mr. Rogers. And do you have those in place now?
    Mr. Giddens. We are building those, sir. And, for example, 
our program management plan, which would detail our roles, 
responsibilities and processes, we will have that in place 
before we make the award of SBI Net this September.
    So we are in the process of building those. And we are 
leveraging other programs. We are also inviting in a third 
party to come in and do an assessment of where we are in our 
planning process, and try to bring ideas from outside the 
department to help us make the best acquisition plan and then 
execute that well going forward.
    Mr. Rogers. What do you anticipate the cost of SBI, the 
border security technology component to be? What do you 
anticipate the cost of that program being, given that it is 
going to be for the entire border, not just 5 percent like 
ISIS?
    Mr. Giddens. Sir, that would be a question I will need to 
take back. We have not yet done an independent government 
estimate. It is a different program than the ASI program, and 
it is not just a technology piece; it is more inclusive.
    Mr. Rogers. Right.
    Mr. Giddens. It will be a large investment and will be 
worthy of this committee's insight.
    Mr. Rogers. But you acknowledge that the technology 
component will be a multibillion-dollar component?
    Mr. Giddens. Yes, sir.
    Mr. Rogers. And we have every reason to be apprehensive 
going into it, based on this more limited program and how it 
went awry.
    Mr. Giddens. Yes, sir.
    Mr. Rogers. Let me ask, one of the things I noticed in 
preparing for this hearing was that the procurement officers in 
ISIS had a responsibility for, as I understand it, around $13 
million worth of contracts, which was double the normal 
recommended government level of contracting. And in the private 
sector, I understand it is $5 million.
    Your background is in procurement. Are you familiar with 
that at all?
    Mr. Giddens. Yes, sir. I am familiar with that, through 
reading the various I.G. reports and audits.
    Mr. Rogers. What level of responsibility would the 
procurement officers in your SBI program be shouldered with? 
Would they maintain those reasonable levels of responsibility 
of $7 to $8 million?
    Mr. Giddens. Well, sir, part of it would be the dollar 
amount and part of it the complexity and the number of the 
transactions.
    If they are managing, from a procurement perspective, the 
acquisition of a single end item that is a large dollar value 
item, even say it is $100 million a single item, they may be 
able to manage that, where if you have four different items 
that are $20 to $25 million with a lot of transactions, then 
they may not be reasonable for that one person to load.
    One of the things that we have done within DHS and in CBP 
is really added procurement staff in preparation for ASI and 
now for ASI Net, to make sure that we have got a better balance 
of that.
    I mentioned early the third-party review. We will also, as 
part of that third-party review, we will have a staffing review 
to give us insight based on some best practices across the 
government on what should be the right level of staffing to 
support this activity.
    Mr. Rogers. Let me ask both of you to answer this. Going 
forward with this SBI program, which all of us would 
acknowledge is critically important to our nation's future 
security, can each of you tell me, with a high degree of 
confidence, that we will not see the same types of mistakes 
made and abuses occur with SBI's technology component that we 
saw with ISIS?
    And I will start with you, Mr. Handley.
    Mr. Handley. Thank you, Mr. Chairman. If we were fortunate 
enough to be their agent in future endeavors, I can assure you 
that we will have things in place that will not put us here in 
front of you again.
    We will do a much job. We think we have got those things in 
place today. As I like the say, the proof is in the pudding. 
But I think, yes, we can assure that we would do a much better 
job.
    Mr. Rogers. You have got those things in place, except for 
the ability to discipline your employees when they go off the--
    Mr. Handley. That is correct. And I think that is a fair 
question, and I will consult with people within GSA. And maybe 
they will have some others that we will talk about, and we will 
get back to you on that.
    Mr. Rogers. Thank you.
    Mr. Giddens, the SBI is your baby. Do you have a high 
degree of confidence that we will not have this same problem, 
going forward with that technology component, as we saw with 
ISIS?
    Mr. Giddens. Yes, sir. I have a high degree of confidence 
that I can assure you we will not have these kind of problems.
    But, sir, I do not want to sit here and assure you that we 
are not going to have some type of problems. This will be a 
complicated undertaking, and we are going to manage it and work 
to have the right processes, procedures in place to be good 
stewards.
    But we do not want to learn this lesson again.
    Mr. Rogers. My time is up, but I would like to ask the same 
thing of you I ask of Mr. Handley, and that is I would request 
that you go back and look at your options for disciplining 
employees who are just as abusive with their power as these 
people were with ISIS.
    And let the ranking member and me know if you do not have 
all of the options available that you think you need to run a 
tight ship.
    Mr. Giddens. Yes, sir.
    Mr. Rogers. Because if you have got some suggestions, there 
are things that we can recommend, as far as changes, we will be 
happy to champion that cause for you.
    Mr. Giddens. Thank you, sir.
    Mr. Rogers. I yield back.
    Now the ranking member is recognized for any questions he 
may have.
    Mr. Meek. Thank you, Mr. Chairman.
    Mr. Handley, you have been in and out of this process over 
a number of years. And you have been in situations where you 
have been in the administrative level and making decisions on 
staffing and FTs, where you were authorized through Congress.
    It runs along the lines of what the chairman was just 
speaking with the director on. Do you feel that you have what 
you need to be accountable with the taxpayers' dollars, as it 
relates to the programs that you outlined in the first round of 
questioning, as it relates to compliance?
    Mr. Handley. I believe we do, sir. I think we can always 
hone the process, and I think you have some of the very people 
in this room today who were involved in that.
    And we get your message loud and clear, and I think we will 
be--we have within GSA a Human Capital Council, which is very 
much involved in looking at those areas which are what we call 
our mission-critical occupations and things like that, where we 
can definitely do a better job.
    Mr. Meek. Well, let me just say this. My question in the 
last round was: Do you still have the same number of 
individuals that are working on compliance within the GSA, 
prior to your new initiative, of all of the benchmarks that one 
has to go through to get a certain dollar procurement order 
through?
    Is it the same group? It is the same five? It is the same 
10? What do you have?
    Mr. Handley. No. It is not the same people doing the review 
at this point in time. As you might expect, these things 
change. All these jobs within the government are works in 
progress, because you have people coming and going and whatnot, 
and you have different directives and things you have to abide 
by.
    But, clearly, we have a different group of people reviewing 
programs in the Great Lakes region. And my guess is that, 
across the country and all regions of the GSA, there are a lot 
of new people looking at these things.
    Mr. Meek. Mr. Giddens, do you feel that, as it relates--I 
know that you are just getting really into your capacity of 
what you are doing now, but do you feel, again--I know that the 
chairman asked you, but I am asking you again, because the 
department is constantly in the news about mismanagement of the 
public dollar.
    And it is not your fault. It is not something that you need 
to brunt on your shoulders, saying that I am here wearing the 
badge of the Department of Homeland Security, but I just want 
to make sure and I want to be crystal clear, because I think--
and I know it is not a light thing to come before Congress, and 
testify, and start speaking in sentences and putting a period 
at the end.
    We know that there will be issues, but it is not every day 
that we have $250 million issues, especially when it comes down 
to protecting the borders of the United States of America.
    Do you have what you need, sir, again to be repetitive, to 
be able to make sure that we are not having another hearing 
like this anytime soon?
    Mr. Giddens. Yes, sir. We have resources in place and are 
growing resources, as well, as we prepare to make the award and 
then execute the contract for SBI Net.
    Mr. Meek. When you say ``growing resources,'' could you 
elaborate?
    Mr. Giddens. Well, we have, based on the 2006 
appropriation--
    Mr. Meek. This is the $51 million?
    Mr. Giddens. No, sir, that was a 2005 appropriation.
    Mr. Meek. Okay.
    Mr. Giddens. But there was staff included in the 2006, and 
CBP has taken that staff, and is building their program office, 
and putting those people in there. And they have already 
started that back in January.
    And we are confident that they are putting together the 
right staff. We are going to do a third-party staffing 
assessment for that, to get an outside set of eyes on that.
    But yes, sir, I am confident we are putting the right 
processes and resources in place.
    Mr. Meek. You know, Mr. Chairman, I mean, hearing the 
witnesses, I mean, it is almost like they are hear and they are 
saying, ``Hey, listen, we are with you all. We are all in this 
thing together. We want to do the right thing. No one set out 
to waste $250 million.''
    I think we need to go a step further. I mean, I would like 
to, Mr. Chairman--and I know that if we can both make the 
time--to kind of figure out who are these individuals that are 
carrying out the duty of watching over the taxpayers' dollars?
    Of course, we are the stewards of appropriating 
constitutionally, but I am talking about the individuals that 
are down there punching in and out every day, taking a 30-
minute lunch break.
    I think we need to interface with those individuals, 
because they will not come and sit at that table. But we need 
to kind of find out how well this program is working.
    I think it is where the money that has been wasted thus 
far, and also the mission to protect our borders. So I look 
forward, hopefully--and I do not know if GSA is going to be a 
part of that experience, but, if they are, I think it is worth 
a field trip to wherever these individuals are who will be 
carrying out the procurement responsibilities for this.
    I really want to know the compliance end of it. You know, 
who is looking at it, outside of the inspector general? Because 
they are, like, after. They are almost like--they come up and 
they write the report after it is done, for us to call you to 
the Hill to come give your side, and the money is already 
spent.
    So, Director, I look forward, as you start moving into your 
procurement stage--you said September of this year, am I 
correct, sir?
    Mr. Giddens. Yes, sir.
    Mr. Meek. So I am assuming somewhere in August that you 
will be almost--you would have almost accomplished what you 
needed to accomplish to get the people in place to be able to 
oversee, not only the letting of the contract, but the 
responsibility for oversight and compliance.
    Mr. Giddens. Yes, sir.
    Mr. Meek. So if you could please commit to keep the 
committee in writing informed on the forward progress of this, 
it will be very helpful to us, so that we can take the 
appropriate field trip and meet with the individuals that are 
maybe four or five tiers under you, have an opportunity to have 
a conversation with them.
    I think it would be well worth all of our time, so that we 
can understand, because I am not going to rely--you may move on 
to another position. But I want to make sure that that 
principle is in there with those individuals and they feel good 
about the process.
    Because they do not set out to do wrong; they set out to do 
right.
    Mr. Chairman, I yield back my time.
    Mr. Rogers. I thank the gentleman.
    The gentlelady from Texas is recognized for another round 
of questions.
    Ms. Jackson-Lee. Thank you very much, Mr. Chairman.
    Let me just, Mr. Handley, acknowledge your work. And I am 
going to pose questions to Mr. Giddens, because I am well aware 
that you had to take the contract over and obviously were 
working in the framework that GSA works as a procurement 
entity, not really one that has the standard informational 
background, but you put the nuts and bolts together. And I 
appreciate that.
    But, Mr. Giddens, let me thank you for your work that you 
did previously in the deepwater effort. And I know this was 
another life that you had, but I always want to take an 
opportunity to thank the Coast Guard for the work that was done 
during Hurricane Katrina.
    So I just want to offer that appreciation and thank you for 
your work.
    We have a serious state of affairs. And you will find that 
I will weave in and out of the ongoing episodes and scenarios 
that are occurring in the Gulf Coast.
    I will cite for you the expenditures of a no-bid contract 
with one of the major engineering firms that generated 10,000 
mobile homes that are now stuck in the mud in Arkansas for $431 
million.
    That brings me to what I understand is an expenditure of 
$439 million for only 4 percent coverage of the border, is what 
I am understanding. And I am certainly going to yield to you to 
try to help me understand where you are at this point.
    The other thing is that, coming from the southern border--
and I recognize the importance of both borders, having been to 
both of them, walked alongside the border on both ends--that we 
still are operating, I believe, with the same technology, the 
same equipment, the same infrastructure.
    And even though we have this new Secure Border Initiative, 
it is my understanding that we have not made any steps forward 
on this equipment or that we are having any personnel who are 
engaged in operating the equipment or functioning in a way that 
should be.
    You came to this position when, Mr. Giddens, the position 
that you hold now?
    Mr. Giddens. I believe it was last October.
    Ms. Jackson-Lee. About last October. And have you met with 
Secretary Chertoff on these issues dealing with the failing 
border?
    Mr. Giddens. Yes, ma'am.
    Ms. Jackson-Lee. And when did you have that meeting?
    Mr. Giddens. I met with him several times, on the Secure 
Border Initiative and where we are moving forward as part of 
that program.
    Ms. Jackson-Lee. Specifically, however, when you have met 
with him several times, this figure leaks out that we have 
spent $439 million and only 4 percent of the border is now 
seemingly covered.
    In the meetings, was this your Secure Border Initiative 
team or was this--what framework of a meeting was this, please?
    Mr. Giddens. The meeting was on the Secure Border 
Initiative and it is generally with the secretary and the 
component heads within DHS. Assistant Secretary Baker and 
myself were there from Secure Border office.
    And really the intent of that is to ensure there is good 
communication, coordination, integration across the department. 
But, ma'am, as you can appreciate, it is an issue that is 
outside of Border Patrol. CPB has a role. ICE has a role. And a 
lot of agency components within the department have a role.
    And the secretary--we meet with him, usually it is once a 
week--to go over current status and issues on the program.
    Ms. Jackson-Lee. Very good. I wish he had given that much 
attention to Hurricane Katrina, as well.
    Did you report to him the status of this particular--I will 
give him status reports as it relates to the Secure Border 
Initiative, the ongoing concerns about the equipment and also 
the limited amount of coverage that we are getting?
    Mr. Giddens. Yes, ma'am. That is one of the reasons that he 
has been so aggressive with us and getting this awarded so that 
we can start upgrading that equipment and provide an integrated 
suite of tools for the men and women--
    Ms. Jackson-Lee. Tell me, what do you mean by aggressive? 
What has he done? And I am very interested, because I would 
like to see some progress being made.
    Mr. Giddens. One of the things that we have done is within 
the department and CBP, we stood up the program office to 
gather requirements, release the RFP, do a source selection, 
and make a competitive award by September.
    Ms. Jackson-Lee. So this was a competitive-bid, as opposed 
to a no-bid contract?
    Mr. Giddens. It will be a competitive bid.
    Ms. Jackson-Lee. It is forthcoming?
    Mr. Giddens. Yes, ma'am.
    Ms. Jackson-Lee. And when do you expect that? I did not 
hear what you said on the time frame.
    Mr. Giddens. This September.
    Ms. Jackson-Lee. This September is going to be when the RFP 
is going to be out or--I am not hearing--
    Mr. Giddens. It will be awarded this September.
    Ms. Jackson-Lee. So is it out on the street now?
    Mr. Giddens. No, ma'am. I anticipate that going out the 
first week of April.
    Ms. Jackson-Lee. Okay. And in your mind, do you think that 
is as fast as it could be done?
    Mr. Giddens. Yes, ma'am. And the challenge is there is a 
great need on the border. And our job is, through the 
acquisition process, provide those tools and equipment.
    I appreciate your comments about the work that the Coast 
Guard does and that they did relative to Katrina. And I am not 
ashamed to say that, you know, one of the things that touched 
me about that is when we saw Coast Guard helicopters rescuing 
people.
    And those were helicopters that our office helped set in 
place to re-engine--
    Ms. Jackson-Lee. Outstanding.
    Mr. Giddens. --so that we could pluck people off of 
rooftops and out of danger, to make those helicopters safe and 
reliable for use.
    So I do not make any bones about that acquisition is 
something for the bureaucracy. It is in the?to provide 
capability and capacity to the men and women in federal service 
on the front lines.
    And I think your reference back to Katrina, the thing I 
thought about was seeing those HH-65 Charlies that we, within 7 
months, had test flights of new engines on those so that they 
could be a safe and reliable asset to go out and do business 
when called upon.
    That is the same kind of focus, the same kind of passion 
that we are going to have within SBI. I made a trip to the 
border; I have seen the equipment that they have had for 20 or 
30 years.
    I have seen the cameras that ISIS--I actually mounted and 
was actually in a control room when those cameras saw people 
jumping over the fence. And they were able, because of those 
cameras, to stop those folks and catch them.
    So there is some benefit out there, as well, from these 
cameras. They are in operation now, and they are providing 
service to the Border Patrol. But that is not enough. We have 
to do more.
    And it is not just the technology; it is providing command-
and-control capabilities to allow sound operational decisions 
to be made by Border Patrol agents that work in a very 
dangerous environment.
    We need to give them all the information they can to have 
situational awareness and then the response capabilities in 
order to carry out their mission.
    Ms. Jackson-Lee. Well, Mr. Giddens, we are very lucky to 
have you.
    And let me just close by saying: Are you comfortable that 
the procurement process that has generated no-bid contracts at 
the very early stages, again, of Katrina, and that have not 
been effective, are you confident that, as you move forward in 
the procurement process going forward there are sufficient 
structures in place that, one, the equipment is going to be or 
the contract is going to generate superior type service, 
similar to what you have recounted in what you did previously 
in the Coast Guard?
    And, by the way, the Coast Guard was literally the saving 
grace of anything that occurred down in that region.
    But are you confident? And are you confident that you will 
have an ongoing relationship, not with deputies, not with 
assistant secretaries, but are you confident that Secretary 
Chertoff is going to actually be in place, knowing what is 
going on, monitoring what is going on, listening to your input, 
such as you can convey that to this committee?
    Mr. Giddens. Yes, ma'am.
    Ms. Jackson-Lee. I look forward to that, and I look forward 
to not you, Mr. Giddens, in front of this committee, but I look 
forward to Mr. Chertoff appearing and being able to be as 
articulate as you have been, and as knowledgeable as you have 
been, and certainly as committed.
    I yield back.
    Mr. Rogers. I thank the gentlelady.
    I would like to pick back up with the line of questioning 
that I was pursuing with Mr. Handley but with Mr. Giddens 
instead.
    Before this hearing, I would ask both--I had directed my 
staff to inform both your offices I wanted you to be prepared 
to talk at length about the disciplinary actions that were 
taken by employees in your department. And I have pursued that 
with Mr. Handley.
    But several of the employees involved in this ISIS abuse 
were Border Patrol officers. In reviewing the statement that 
you submitted to the committee prior to this hearing, I did not 
see any reference to any disciplinary actions by your 
department or Border Patrol for the actions of any of its 
employees.
    Could you update us and let us know what, if any, 
disciplinary actions have been taken against any Border Patrol 
officers who were involved in the ISIS program?
    Mr. Giddens. Yes, sir. There have been no disciplinary 
actions with any of the INS, former INS employees, or the CBP 
employees. The people that were involved in initiating this 
program within INS are no longer with the federal government.
    The people that to a degree inherited this program, and 
started raising some of the issues and concerns, and then took 
actions to try and working with GSA to shut it down and to end 
it, they are not working on SBI. They have been reassigned.
    But again, those were people that inherited it and started 
working through issues, and then said, ``Hey, this is not 
working. We need to get out of this contract.''
    Mr. Rogers. So let me make sure I understand. The employees 
that were affiliated with this project that have some 
culpability in this abuse are no longer with the federal 
government?
    Mr. Giddens. The Federal government, yes, sir.
    Mr. Rogers. And those that came in to clean it up are the 
folks that you have left?
    Mr. Giddens. Yes, sir.
    Mr. Rogers. Okay. That is all I have got.
    I yield to the ranking member for any additional questions 
he may have.
    Mr. Meek. Well, Mr. Chairman, I really do not have any 
further questions. I believe that our two witnesses have tried 
to answer the questions to the best of their ability.
    I just wanted assurances, a, that disciplinary has been 
carried out as far as it can be carried out. The last we want 
are media reports and other reports about individuals that 
mishandled $250 million still being upheld by the department, 
by both departments, as though it is just another day at the 
office, because it is not.
    Also, I heard in testimony from both of our witnesses that 
corrective action and standards have been put in place to make 
sure that this never happens again or come close to never 
happening again, especially not at this magnitude, in dealing 
with the issue of border security.
    Director Giddens, I know that one of the things that you 
spoke on a little earlier was the fact that you are taking the 
appropriate staffing to start letting the contract Ms. Jackson-
Lee was sharing with you.
    And I know that Undersecretary Michael Jackson mentioned 
that it will be--you said it will be out in April?
    Mr. Giddens. The first week of April.
    Mr. Meek. Okay. And was mentioning March. I hope we do not 
start--you believe first week in April. You are pretty 
confident about that, that we could start moving forward in the 
procedure of getting that contract out on the street.
    I hope that you have what you need in place to make sure 
that every t is crossed and every sentence, at the end of it, 
has a period there, or every I is dotted, because we do not 
want this to be Groundhog Day again. It will be embarrassing 
for this committee.
    And I will tell you right now that this committee does not 
want to be embarrassed, especially with the taxpayers' dollars, 
because people stand in judgment of all of us on this committee 
on a given Tuesday every 2 years.
    And I do not want to have to explain to them that we did 
not do everything that we could possibly do to make sure that 
the taxpayers' dollars are not wasted again.
    So I am not putting that on your shoulders; I am just 
putting it out there to the department, both departments. We 
have direct oversight over Department of Homeland Security, and 
so I am speaking to you directly.
    Hopefully that message will get back to as high as the 
secretary of the department and anyone in the White House that 
oversees policy at the department, that we all have a 
responsibility.
    We are elected, you all are selected to lead. By us being 
elected, we have a higher responsibility to the American 
people, because by the fact that they elected us to represent 
them gives us the authority to ask the questions that we asked 
and to carry out the oversight that we must carry out.
    Mr. Chairman, I just want to say in closing I am so glad 
that, since the formation of our subcommittee, that we have 
continued to stick with this issue. And this is not the end; we 
will continue to stick with this issue all the way through.
    I just want to commend you that, on this issue, we have 
really worked in a bipartisan way, Mr. Chairman, equally 
signing letters together, putting forth legislation to make 
sure that we do not approach this particular threshold again.
    And it is a pleasure to continue to work with you on this; 
unfortunately, it has to be under these circumstances.
    Mr. Rogers. Thank you, witnesses.
    I thank the gentleman.
    The chair now recognizes for any final question Ms. 
Jackson-Lee of Texas.
    Ms. Jackson-Lee. Thank you. I want to echo the comments of 
the ranking member in how this committee in general as worked.
    As you well know, we have overlapping hearings. In fact, my 
hearing is going right now with the economic infrastructure, 
but I wanted to be here because I thought the management of a 
department, Mr. Chairman and ranking member, are clearly, I 
think, at the heart and soul of the service to the American 
people.
    I keep hearing the question, and I did not hear the answer, 
of what kind of disciplinary action. And, forgive me, did 
someone answer whether they are in the process thereof of 
addressing the question?
    And I might say this, because it would seem that we would 
take pleasure in being able to sit three or four feet above the 
witness table and make comments about people's livelihood or 
future.
    And, frankly, I would rather be giving out accolades, and 
Congressional Medal of Freedom, and a number of other 
citations, to be able to compliment what is going on.
    But for a product or a project to have been so ignored, 
clearly there needs to be some sort of a reprimand, if you 
will.
    So I just want to yield. Has someone answered the question 
or is it under review? I just did not get the answer.
    Mr. Rogers. In short, it was answered, and it is not what 
you want to hear.
    There were four employees, GSA employees, who are well 
paid, GS-13, --14, and-15s, who were demoted one level in pay. 
The other folks who were with GSA that had some culpability 
retired, and the same thing with the folks with Border Patrol.
    Nobody was demoted. Nobody was fired. The folks who had 
some culpability early on have decided to move on to the 
private sector, either through retirement or of their own 
volition.
    But, yes, we saw a $250 million program had about $100 
million of that wasted. And nobody was fired.
    Ms. Jackson-Lee. And I want to--and, thank you, Mr. 
Chairman. You are right; I did not hear it correctly.
    But we do not take comfort in this line of questioning. And 
for fear of tying various themes together, I think that there 
lie sort of the theme and the chain that found itself 
ultimately with the horrific response, the failure in Hurricane 
Katrina.
    So I want to say this.
    Mr. Handley, you are functioning now, and monitoring, and 
moving forward. and I would like to see us have reports back 
really quite frequently, as we monitor the progress of this 
particular effort.
    I happen to sit on the Subcommittee on Immigration in the 
Judiciary Committee, and I can assure you before the committee, 
some of its jurisdiction moved to homeland security, we had the 
whole mettle, if you will.
    And this whole question of border security is likewise a 
key element to the nation's security. One of the messages that 
Secretary Chertoff said today was protection and prevention. 
Unfortunately, this hearing goes to the crux of failures to 
prevention and protections.
    And so, one, I am sure the reprimands are behind us on 
this. unfortunate saga. Again, let the record state that we are 
going down the same unfortunate path with the failures of 
Hurricane Katrina, because we heard no one suggest any kind of 
reprimand, censure or firing, except for the scapegoating of 
Michael Brown.
    This committee is here for serious business, and that is to 
help a 180,000-plus-person department with very staff, I know, 
working in many, many areas, give the best product that we can 
possibly give for the American people.
    I think this border security initiative and the progress 
that will take place between now and September is crucial. It 
is one of the steps that can be shown to this committee and the 
full committee that DHS knows what it is doing and that it is 
engaged in the protection of the American people.
    And, again, although he is not present, I hope that the 
meetings with you, Mr. Giddens, and the secretary are more than 
frequent.
    And I know that some may find this to be somewhat humorous. 
Just take a ride down to New Orleans, and Biloxi, Mississippi, 
and Houston, Texas, and you will find that in other places 
where Katrina survivors and Rita survivors are, and this is not 
humorous.
    The management of this department is poor. The leadership 
is poorer. And for those of you who are working hard everyday, 
we want to thank you.
    But to the head, I believe that they have been ineffective, 
asleep at the wheel, and we will see whether or not this 
September, if we are all here to talk about it, that border 
security initiative is in place and, God forbid, God forbid 
that there be some horrific tragedy, manmade because we have 
failed, we are derelict in our duties.
    I yield back, Mr. Chairman.
    Mr. Rogers. And I thank the gentlelady.
    I appreciate the time that the witnesses put into your 
statements and for making yourself available for this.
    I do want to make the point that this is our third hearing. 
This committee did not exist when these problems occurred, much 
less this subcommittee. This permanent standing Committee on 
Homeland Security was only established 13 months ago by the 
Congress.
    We will be all over this subject matter in the future. We 
will be having a fourth hearing this fall on SBI and the 
technical component.
    So just know that we take our responsibility in oversight 
and management supervision very seriously, and we will be 
looking forward to working with you in a collaborative fashion 
in the future to ensure these kind of things do not happen 
again.
    And, again, I want to thank the witnesses. I do want to 
remind you that the record will be left open for 10 days.
    As you know, earlier today our voting on the floor ended 
for the week, so most members are headed for the airport, which 
is why you do not see more in attendance today.
    But I am sure that we will have some questions that we will 
submit to the record. I would ask you to respond to those in 
writing and submit them back to us.
    So with that, this meeting is adjourned.
    [Whereupon, at 2:58 p.m., the subcommittee was adjourned.]

                             FOR THE RECORD

       Questions for the Record Submitted by Chairman Mike Rogers

                        Friday, December 16, 2005

    In our first hearing we held on the ISIS program, we heard 
testimony from the Office of Inspector General for the General Services 
Administration. The testimony was highly critical of the contracting 
and management of the border surveillance system. Testimony revealed a 
program that resulted in a ``major project gone awry'' and ``a waste of 
the taxpayer's dollars.''

    Question: 1. Are your findings consistent with this 
characterization of the ISIS program?
    Yes. We characterized the ISIS program as having weak project 
management and contract oversight, which resulted in remote video 
surveillance (RVS) camera sites not being completed, leaving large 
portions of the border without camera coverage. We believe that was due 
in part to the frequent turnover of ISIS program managers.
    The first observation anyone who looks at this program would make 
is that contract accountability was confused. This is the net affect of 
shifting contract responsibilities within the Immigration and 
Naturalization Service between its Office of Information Resources 
Management and the Office of Border Patrol (OBP) when dealing with the 
contractor, the contractor's ``teaming'' arrangement with five other 
companies to obtain the equipment OBP requested, the use of the General 
Services Administration (GSA) as an intermediary, and the use of 
different procurement vehicles.

    Question: 2. What should have been done differently in managing the 
contracts for the Remote Video Surveillance (RVS) equipment?
    This question might better be directed to GSA's OIG, since our 
inspection focused on the programmatic applications rather than the 
acquisition or management of the contract. We were critical of OBP's 
role, however. Although the contracting officer and contracting 
officer's technical representative were GSA employees, it was incumbent 
upon OBP to oversee contractor performance and certify contractor 
invoices.

    Question: 3. What, if anything, has the department done since the 
suspension of the ISIS contract in September 2004 to maintain the 
existing cameras, and install new cameras, along the border?
    It is our understanding that maintenance of ISIS equipment 
continues to be performed by OBP agents, Customs and Border Protection 
(CBP) electronics technicians, and by contract personnel at the 
operation and maintenance facility in Albuquerque, New Mexico. 
Additionally, we understand that OBP plans to enter into other contract 
arrangements to complete the work at some locations where the work was 
started but not completed.

    Question: 4. Your review, as well as the GSA Inspector General's 
review, found improper sole-source awards, work outside the contract 
scope, and lack of effective oversight [sic] contract provisions. In 
your opinion, to what degree has the Department of Homeland Security 
identified the improper procurement practices regarding ISIS and other 
border surveillance programs? To what extent have these problems been 
addressed? What more can the department do?
    We reported a general need for more comprehensive acquisition 
guidance and oversight in our report, ``Department of Homeland 
Security's Procurement and Program Management Operations,'' OIG-05-53, 
September 2005. In this report, we recommended that DHS require 
expanded procurement ethics training for senior program and procurement 
officials; ensure procurement and program management oversight 
processes monitor departmental procurement activities for potential 
standards of conduct violations; create and staff a DHS organization to 
develop program management policies and procedures; provide independent 
technical support to DHS senior management and organizational component 
program managers on an as-required basis; and identify and foster best 
practices.
    The GAO reported in 2005 that the Office of the Chief Procurement 
Officer (OCPO) had only two people to conduct oversight on the eight 
separate procurement offices and almost $9.8 billion in procurement 
activity during FY 2004. GAO recommended that DHS provide OCPO with 
sufficient resources and enforcement authority to enable effective 
department-wide oversight of acquisition policies and procedures. DHS 
issued a management directive on the Acquisition Oversight Program in 
December 2005. Therefore, we also recommended that DHS provide the OCPO 
with sufficient staff and authority to effectively conduct oversight of 
DHS' procurement operations.
    In response to our report, management began action to correct the 
reported problems. Specifically, the OCPO is developing a training 
class on procurement ethics for senior program and procurement 
officials that is emphasizing real examples of procurement fraud in 
addition to teaching applicable regulations. OCPO issued a DHS 
management directive on the Acquisition Oversight Program in December 
2005 and is hiring additional staff to conduct oversight of other 
acquisition offices. Finally, DHS began work to create a Departmental 
Program Management Office in FY 2007.

    On November 2, 2005, Homeland Security Secretary Michael Chertoff 
announced a comprehensive multi-year plan, referred to as the Secure 
Border Initiative (SBI), which is designed to integrate technologies, 
infrastructure, and personnel to gain ``operational control'' over the 
nation's borders in five years. This initiative is expected to cost 
hundreds of millions, if not billions, of dollars over a number of 
years.
    Question: 1. To your knowledge, what are the Department's plans for 
this new initiative? How will the existing ISIS program, including the 
Remote Video Surveillance (RVS) cameras, be integrated into the Secure 
Border Initiative?
    SBI is still a work in progress. We will know more when we get the 
department's action plan for implementing our recommendations, due 90 
days after issuance of the report. It is our understanding that ISIS, 
for which the RVS program is a part, will continue to be a subset of 
the much broader America's Shield Initiative, which is one of many 
components of the SBI. However, the SBI, particularly the technology 
aspects of it, has not been fully articulated.

    Question: 2. Based on your review, what lessons were learned from 
the problems in contract oversight for ISIS and the Remote Video 
Surveillance program that can be applied to this much larger, more 
complex, and much more expensive Secure Border Initiative?
    The lessons learned include: (1) DHS must properly assert itself as 
the customer and contract underwriter, and (2) DHS must have a 
sufficient number of competent, adequately trained, and certified 
contract managers commensurate with the size, complexity, and value of 
SBI.

    Question: 3. What management and financial controls should the 
Department of Homeland Security have in place to ensure the effective 
acquisition of new surveillance equipment and services under the Secure 
Border Initiative?
    DHS and its subcomponents must have a sufficient number of 
competent, adequately trained, and certified contract managers 
commensurate with the size, complexity, and value of its procurement 
activity. In addition, DHS must ensure fair and open competition before 
a contract is awarded to make sure the government gets the best value 
possible.
    The Department of Homeland Security needs management and financial 
controls over all procurements, not just the Secure Border Initiative. 
We have not yet conducted a comprehensive review of the controls over 
acquisition programs, although we reported a general need for more 
comprehensive acquisition guidance and oversight in our report, 
``Department of Homeland Security's Procurement and Program Management 
Operations,'' OIG-05-53, September 2005.

    Question: 4. In light of the problems with ISIS, what should the 
roles of the Chief Financial Officer and the Chief Procurement Officer 
be in overseeing Secure Border Initiative contracts?
    The DHS Under Secretary for Management through the Chief Financial 
Officer and Chief Procurement Officer must ensure fair and open 
competition for DHS procurements and that DHS has a sufficient number 
of competent, adequately trained, and certified contract managers.
    We reported a general need for more comprehensive acquisition 
guidance and oversight in our report, ``Department of Homeland 
Security's Procurement and Program Management Operations,'' OIG-05-53, 
September 2005.

    Question: 5. Do you believe the Department currently has the 
necessary number of staff under the Chief Financial Officer and the 
Chief Procurement Officer to effectively oversee future contracts in 
the Secure Border Initiative?
    We have reported that both the Chief Financial Officer and Chief 
Procurement Officer need more staff and authority to effectively carry 
out their general oversight responsibilities. Both issues were 
discussed in our report on ``Major Management Challenges Facing the 
Department of Homeland Security,'' OIG-06-14, December 2005. We also 
reported on general organizational issues in our report, ``Department 
of Homeland Security's Procurement and Program Management Operations,'' 
OIG-05-53, September 2005. In that report, we recommended that DHS 
provide OCPO with sufficient staff and authority to effectively conduct 
oversight of DHS' procurement operations. DHS management concurred with 
our recommendations and is taking action to increase staffing for 
procurement oversight.

    Question: 6. In your opinion, do you believe the Department's new 
organizational structure under Secretary Chertoff's Second Stage Review 
is fully equipped to implement the comprehensive multi-year Secure 
Border Initiative? If not, what organizational changes would you 
recommend?
    We have reported that both the Chief Financial Officer and Chief 
Procurement Officer need more staff and authority to effectively carry 
out their general oversight responsibilities. Both issues were 
discussed in our report on ``Major Management Challenges Facing the 
Department of Homeland Security,'' OIG-06-14, December 2005. We have 
not, however, fully assessed the organizational structure for the 
Secure Border Initiative, although we reported on general 
organizational issues in our report, ``Department of Homeland 
Security's Procurement and Program Management Operations,'' OIG-05-53, 
September 2005. In that report, we recommended that DHS create and 
staff an organization to develop program management policies and 
procedures; provide independent technical support to DHS senior 
management and organizational component program managers on an as-
required basis; and identify and foster best practices. We further 
recommended that DHS provide OCPO with sufficient staff and authority 
to effectively conduct oversight of DHS' procurement operations. DHS 
management concurred with our recommendations and is taking action to 
increase staffing for procurement oversight.

    Your report, as well as the General Services Administration 
Inspector General's report, identified problems in the use of a 
``blanket purchase agreement'' for the contractor--International 
Microwave Corporation (IMC)--to install poles and cameras along our 
borders.
    Question: 1. Could you describe the problems with a blanket 
purchase agreement?
    Within the context of our review, the primary problems were 
associated with CBP's oversight of the blanket purchase agreement for 
the installation of RVS camera sites and not with the contract vehicle 
itself. A contributing factor to CBP's oversight problems with this 
particular blanket purchase agreement was the issuance of technical 
directives for the design and installation of RVS systems prior to the 
completion of the permit, zoning and lease negotiations (as evidenced 
by the fact that the technical directive required the contractor to 
provide assistance to the Government during these processes). 
Permitting, zoning, and lease negotiations can sometimes be protracted 
legal processes and are subject to delay. Contractors are motivated to 
bill for their services as soon as possible after the incurrence of 
costs in order to recoup their costs and reduce the carrying cost of 
their inventory. Delays in the zoning, permitting and leasing processes 
may have resulted in the contractor incurring additional carrying costs 
attributable to a high level of RVS inventory. The blanket purchase 
agreement appeared to have adequate contractual provisions in place to 
allow CBP to adequately monitor contract services. Therefore, we 
consider the CBP oversight to be the primary problem with this 
particular blanket purchase agreement.

    Question: 2. What type of contracts would you recommend the 
Department utilize for the Secure border Initiative?
    The type of contract is less important than the management and 
oversight of the contract. DHS must choose the type of contract that 
best fits the nature of the procurement.

    Based on your review of Remote Video Surveillance (RVS) camera 
installation schedules and Border Patrol records, these installations 
took, on average 20 months to complete. And, administrative activities 
alone, in some instances, took more than 12 months to accomplish.
    Question: 1. Did your report identify the cause of these 
significant delays?
    Yes. The most time consuming aspect of installing RVS sites and 
associated infrastructure, involved site selection, securing land 
access, and performing environmental assessments.

    Question: 2. Are there ways to streamline the site selection, site 
validations, and environmental assessments to minimize delays? If so, 
what are they?
    Yes. We believe that much of the pre-construction activity could be 
performed concurrently. For example, U.S. Army Corps of Engineers 
personnel could perform informal consultation with state, tribal, and 
federal regulatory agencies and provide a preliminary assessment as to 
whether a potential negative environmental effect might exist as part 
of the site selection process, while other contract activities--such as 
preparing, reviewing, and approving the contractor's technical and cost 
proposals, validating selected sites, and preparing property access 
agreements--are being performed.
    In addition, CBP could expand the shared use of existing private 
and governmental structures to install remote surveillance technology 
infrastructure where possible and continue to identify and deploy the 
use of non-permanent or mobile surveillance. The use of existing 
infrastructure and non-permanent, mobile surveillance platforms, where 
possible, will eliminate the need for time-consuming site access 
activities.

    Question: 3. Given the ambitious goals of the new Secure Border 
Initiative, has the Department dentified ways in which similar 
administrative hurdles can be eliminated?
    Yes. CBP advised that it would make every possible use of existing 
private and government structures to install future remote surveillance 
technology. In addition, CBP stated that it would implement strategies 
to streamline the site selection process through a Risk Management 
Plan.

    Despite a Federal investment of more than $429 million since 1997, 
your audit revealed that ISIS components have not been integrated to 
the level predicted at the program's onset. For example, as your report 
points out, if ground sensors are triggered, cameras do not 
automatically pan in the direction of the activated sensor.
    Question: 1. In your opinion, how and to what extent has the lack 
of integration weakened our border security?
    ISIS's lack of automated integration has made border surveillance 
more staff intensive instead of a force multiplier. Law Enforcement 
Communication Assistants must perform manual integration to confirm the 
cause of a sensor alert using RVS cameras where the two are installed 
in close proximity. Where cameras and sensors are not co-located, the 
cameras must be continually monitored to be effective and OBP agents 
must investigate all sensor alerts because video surveillance is 
unavailable. Without the necessary personnel to perform video analysis 
or investigate sensor alerts, force-multiplication benefits are 
minimized.

    Question: 2. In your opinion, what are the impediments to achieving 
greater integration of the existing Remote Video Surveillance (RVS) 
components?
    Neither the RVS nor the Intelligent Computer Assisted Detection 
(ICAD) system contract required the automated integration of RVS 
cameras with sensors. Nevertheless, OBP did attempt to integrate these 
two systems using both hardware and software design modifications that 
would have automated the integration between sensors and RVS cameras. 
These modifications were ``successfully demonstrated,'' but never 
deployed because solutions did not meet functional requirements. Even 
if the attempts to integrate these two systems were successful, due to 
the limited number of RVS sites installed, this would have only covered 
approximately five percent of the border.

    Question: 3. Based on your review, can you determine whether the 
existing system can be fully integrated? If so, what steps need to be 
taken?
    No. OBP tested hardware and software design modifications that 
would have automated the integration between sensors and RVS cameras. 
However, further refinements in integration capabilities are necessary. 
For example, how an RVS camera would react to multiple sensor alerts 
being triggered at or near the same time remains unresolved.

    Question: 4. What steps would you recommend to the Border Patrol to 
ensure that remote surveillance technologies deployed in the future can 
be fully integrated?
    We did not make a specific recommendation that CBP should institute 
to integrate technology. However, we do endorse OBP's work with Customs 
and Border Protection's Office of Information Technology, and its 
consulting contractor, to identify and refine ASI requirements, and the 
Science and Technology Directorate to identify potential technology 
solutions to address impending ASI requirements.
    CBP officials advised that they plan to establish ASI requirements 
and objectives and then hire a contractor to serve as a prime 
integrator. Once ASI is further refined and the prime integration 
contractor identifies specific technology requirements to meet OBP's 
objectives, we anticipate that this collaborative effort will address 
immediate and future ASI integration requirements if executed properly.

    Your report ``evaluates the effectiveness of border surveillance, 
remote assessment, and monitoring technology in assisting the Bureau of 
Customs and Border Protection (CBP) to detect illegal entry into the 
United States.''

    Question: 1. Could you please elaborate on the report's finding 
that the Border Patrol could not demonstrate ``force-multiplication 
advantages'' in the ISIS program?
    We questioned whether remote surveillance technology is providing 
force-multiplication benefits or increasing response effectiveness 
because according to our analysis of sample sensor alert data, non-ISIS 
sources of illegal alien detection proved to be as effective based on a 
percentage of apprehensions per sensor alert as RVS camera detections. 
Non-ISIS detections are primarily observations by citizens, OBP agents, 
or other agency personnel. Along the northern border, non-ISIS sources 
were more effective than RVS camera detections, and both non-ISIS 
sources and RVS cameras performed better than sensors based on a 
percentage of arrests per sensor alert. Our analysis of sample sensor 
alert data also indicated that more than 90% of the responses to ground 
sensor alerts resulted in ``false alarms,'' meaning that OBP agents 
spent many hours investigating activities that did not involve illegal 
attempts to enter the United States. Nevertheless, OBP officials assert 
that ISIS has been successful in serving as a force-multiplier in that 
it frees the use of the limited number of OBP agents who would 
otherwise be needed to monitor the border.

    Question: 2. How would you advise the Border Patrol to address your 
report's finding that data is incomplete and unreliable for measuring 
effectiveness?
    We recommended that the Commissioner for CBP should standardize the 
process for collecting, cataloging, processing, and reporting ICAD 
intrusion and response data. CBP stated that they recently released 
enhancements to the ICAD system that provides aids and tools to improve 
and standardize the data collection process. CBP indicated that 
response data fields have been defined, which should lead to more 
consistent recording of activity. We believe these enhancements will 
lead to improved data collection and reliability which in-turn will 
allow OBP to analyze force-multiplication benefits and response 
effectiveness better.

    Question: 3. How would you advise the Border Patrol to address your 
report's finding that its oversight of contract activities and its 
oversight of contractor performance were ineffective?
    We would suggest that the Border Patrol hire a sufficient number of 
competent, adequately trained, and certified contract managers 
commensurate with the size, complexity, and value of its procurements 
and ensure that contract awards are based on fair and open competition. 
It might also consider obtaining the services of a contractor with 
expertise in large project management and contract oversight to advise 
it and augment the Border Patrol's own capabilities given the 
complexity and high dollar value of the project.

    Question: 4. Could you please elaborate on the report's finding 
that the Border Patrol certified few contractor invoices prior to 
payment and what effect [sic] this practice had on the ISIS program?
    According to our analysis of OBP and GSA records, most contractor 
invoices were paid without OBP certification despite a requirement of 
the BPA that OBP must certify correct and properly supported invoices. 
Overall, OBP rejected few invoices, and most invoices were not 
addressed (either accepted or rejected). According to GSA, the GSA 
contracting officer's technical representative should have ensured that 
OBP received and approved contractor invoices. GSA agreed that, in 
practice, there was confusion about the responsibilities of OBP and 
GSA. GSA added that as the project grew and became more complex, the 
potential for error and pressure to keep on schedule increased. 
Nonetheless, OBP was obligated to certify invoices, and there is 
minimal evidence that it fulfilled that obligation. This resulted in 
payment to the contractor for unverified goods and services.

    Your report cites that millions of dollars dedicated for installing 
border surveillance cameras remain unspent in accounts at the General 
Services Administration (GSA).
    Question: 1. Based on your review, could you determine where along 
the borders cameras have not been installed because of this 
bureaucratic delay?
    As of August 2005, 168 RVS camera sites and 38 non-camera sites 
were incomplete. According to OBP reports, these sites are within the 
following OBP sectors:

 Buffalo                   El Paso     San Diego
 Del Rio                   Laredo      Tucson
 Detroit                   Marfa       Yuma
 El Centro                 McAllen..

    Question: 2. What recommendations do you have to expedite 
allocation of these funds for deployment of more border security 
cameras? Or, do you believe these funds should be reallocated though 
the new Secure Border Initiative?
    We recommended that the Commissioner for CBP, continue to work with 
GSA and the RVS contractor to settle remaining claims under the BPA, 
financially reconcile funding provided to GSA, and obtain the return of 
the unused funds to the Department. In an interview, a senior OBP 
official told us that OBP has completed verifying invoices with the 
contractor and GSA, and GSA is going to permit the OBP to spend 
remaining funds, approximately $37 million, through GSA, on ``ISIS-like 
equipment.'' According to the OBP, this will occur after GSA pays 
agreed upon outstanding debts to the contractor. OBP officials said 
that OBP would receive an official letter confirming this agreement 
from GSA after GSA's counsel approves it. As of the date of the 
hearing, that letter had not been received.

                                 
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