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S. Hrg. 110–238

MANAGING THE DEPARTMENT OF HOMELAND

SECURITY: A STATUS REPORT ON REFORM

EFFORTS BY THE UNDER SECRETARY FOR

MANAGEMENT

HEARING

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE, AND THE 

DISTRICT OF COLUMBIA SUBCOMMITTEE

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MAY 10, 2007

Available via http://www.access.gpo.gov/congress/senate

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

DANIEL K. AKAKA, Hawaii, Chairman 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

GEORGE V. VOINOVICH, Ohio 

TED STEVENS, Alaska 

TOM COBURN, Oklahoma 

JOHN WARNER, Virginia

RICHARD J. KESSLER, Staff Director 

JENNIFER A. HEMINGWAY, Minority Staff Director 

EMILY MARTHALER, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Akaka .................................................................................................. 1

Senator Voinovich ............................................................................................. 5

WITNESSES 

THURSDAY, MAY 10, 2007

Paul A. Schneider, Under Secretary for Management, U.S. Department of 

Homeland Security ............................................................................................... 3

Hon. David M. Walker, Comptroller General, U.S. Government Accountability 

Office ..................................................................................................................... 6

ALPHABETICAL LIST OF WITNESSES

Schneider, Paul A.: 

Testimony .......................................................................................................... 3

Prepared statement .......................................................................................... 29

Walker, Hon. David M.: 

Testimony .......................................................................................................... 6

Prepared statement .......................................................................................... 41

APPENDIX 

Questions and responses for the Record from: 

Mr. Schneider ................................................................................................... 79

Mr. Walker ........................................................................................................ 123

Background .............................................................................................................. 129

(1)

MANAGING THE DEPARTMENT OF HOMELAND 

SECURITY: A STATUS REPORT ON REFORM 

EFFORTS BY THE UNDER SECRETARY FOR 

MANAGEMENT 

THURSDAY, MAY 10, 2007

U.S. SENATE, SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT

MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 9 a.m., in Room 

342, Dirksen Senate Office Building, Hon. Daniel Akaka, Chairman 

of the Subcommittee, presiding. 

Present: Senators Akaka and Voinovich. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Good morning to all of you. I call this hearing 

of the Subcommittee on Oversight of Government Management, the 

Federal Workforce, and the District of Columbia to order. 

Today’s hearing, ‘‘Managing the Department of Homeland Security: A Status Report on Reform Efforts by the Under Secretary for 

Management,’’ will examine the Department’s management challenges, the status of development of a comprehensive management 

strategy for the Department, and needed improvements. It is the 

first hearing this Subcommittee has held since becoming responsible for the oversight of the Department’s Management Directorate. Today’s hearing will establish the baseline from which we 

will judge progress made in reforming the Department. 

Unfortunately, shortly the Indian Affairs Committee will be 

marking up my legislation, critical to Hawaii, and I will need to 

leave the hearing early, but hope to return. Senator Voinovich has 

asked me to begin and he will be here and he will be chairing the 

hearing during my absence. 

DHS has a monumental challenge, bringing together 22 separate 

agencies with nearly 180,000 employees into a cohesive Department. The DHS Directorate for Management, led by Under Secretary for Management Paul Schneider, is responsible for ensuring 

the effective reorganization and management of the Department. 

He is here today with the Comptroller General at the Government 

Accountability Office, David Walker, to describe the progress the 

2

Department has made in organizing itself and the challenges that 

it still faces. 

Mr. Schneider’s management task is vital to our national security. Despite the difficulty of the task, carrying out the successful 

integration of these agencies into one unified organization as effectively as possible is very crucial. Protecting the Nation against disasters, both natural and man-made, is one of the most important 

functions of the Federal Government today. 

That is one reason that the GAO continues to place the transformation and integration of DHS on its annual high-risk list. 

Other factors making the reorganization high-risk include the preexisting challenges that many of DHS’s component agencies faced 

before their reorganization and the enormous complexity of creating this new Department. 

I want to highlight several key problems which I hope will be addressed in this hearing. First, as you know, this Subcommittee has 

had a keen interest in the Department’s human capital challenges. 

Recruitment, retention, and training are critical elements to developing a unified workforce. The Department faces low employee morale and deep divisions between labor and management. The personnel regulations issued by DHS severely erode employee rights 

and protections and they contribute significantly to these internal 

divisions. The Department must work with and listen to employees 

in order to develop a fair and flexible personnel system that has 

employees’ buy-in. 

Second, we must focus on the Department’s ongoing efforts to 

create integrated and effective systems for key management functions, including acquisition and procurement, financial management, and information technology. 

Third, the Department needs a consolidated headquarters building. The Department headquarters remains scattered in offices 

throughout the National Capital Region. 

And finally, underlying the entire effort to reorganize the Department is the Under Secretary’s authority to get things done. This 

Subcommittee is concerned that the Under Secretary does not have 

sufficient statutory authority to spearhead a massive reorganization while at the same time overseeing the Department’s ongoing 

management. 

That is why I joined with Senator Voinovich in introducing the 

Effective Homeland Security Management Act, which has also been 

cosponsored by Senators Levin, McCaskill, and Carper. The legislation would elevate the current Under Secretary for Management to 

a Deputy Secretary with a term appointment in order to promote 

sustained high-level focus to management and integration efforts at 

DHS. 

I know that some in DHS have some concerns about our proposal, but I believe that to make this Department work, it needs 

a management team that has the authority to manage. It has to 

be more than cheerleaders operating on the sidelines, but a quarterback calling the plays. 

My thanks to our witnesses for being here today and for contributing in the past up to this point as to what we can do to improve 

DHS and the conditions that we face today. 

3

1The prepared statement of Mr. Schneider appears in the Appendix on page 29. 

I am expecting Senator Voinovich to come, but let me at this 

point ask the witnesses for their statements. Before that, as you 

know, we have a custom with this Subcommittee to swear in all 

witnesses, and we will do that. But I want to again welcome you, 

Paul Schneider, Under Secretary for Management, Department of 

Homeland Security, and also David Walker, Comptroller General of 

the U.S. Government Accountability Office. So if you will stand, we 

will take the oath. 

Do you swear that the testimony you are about to give this Subcommittee is the truth, the whole truth, and nothing but the truth, 

so help you, God? 

Mr. SCHNEIDER. I do. 

Mr. WALKER. I do. 

Senator AKAKA. Thank you. Let the record note that the witnesses did respond in the affirmative. 

I want our witnesses to know that while their oral statements 

are limited to 5 minutes, your entire statements will be included 

in the record. 

Mr. Schneider, will you begin and proceed with your statement. 

TESTIMONY OF PAUL A. SCHNEIDER,1 UNDER SECRETARY 

FOR MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. SCHNEIDER. Thank you, Mr. Chairman, Senator Voinovich, 

and Members of the Subcommittee. It is a pleasure to appear before you today for the first time as the Under Secretary for Management. I am here to discuss the major management and programmatic challenges the Department faces. 

The most significant challenge we have is to continue the effort 

that was started with the creation of the new Department and 

turning it into a unified force that protects the country. DHS’s size 

is that of a Fortune 500 company. It is the equivalent of an entrepreneurial start-up that has merged 22 agencies with approximately 180,000 employees. The major elements of our strategy are 

improving acquisition and procurement throughout the Department; strengthening the requirements and investment review process; hiring and maintaining human capital; seeking efficiencies 

across the enterprise in operations and the use of resources; and 

making the key management systems, such as financial and information technology, world class. 

The Department is in the midst of many crucial acquisitions that 

are vital to the success of the Department. We are working to 

strengthen acquisition and procurement by implementing good 

processes, reviewing the major programs and investments to ensure that the requirements are clear, cost estimates are valid, technology risks are properly assessed, schedules are realistic, contract 

vehicles are proper, and the efforts are well managed. 

We are also—part of our strategy is building the capability to 

manage these complex efforts by ensuring that the program offices 

are properly structured and staffed with the right people and skills 

to ensure efficient and effective program management and oversight, aggressively hiring where we have known shortages and 

4

implementing good metrics. We have a shortage of people who are 

experienced in program management, not just contracting. This includes the related disciplines such as acquisition logistics, cost estimating, test and evaluation, and the like. 

In response, we have initiated aggressive staffing solutions to address these personnel shortages. As part of the President’s fiscal 

year 2008 budget, we plan to initiate our Acquisition Intern Program. We will start with 66 new entry-level positions and grow to 

200 by fiscal year 2010. This program is modeled after highly successful DOD programs. 

The Department did very poorly in the OPM Federal Human 

Capital Survey. Leadership teams across the Department are committed to identifying the underlying reasons for DHS employees’ 

dissatisfaction and we are seeking ways to address them quickly. 

As an initial step toward improving employee satisfaction at headquarters and within all of the operating components, we are working to better communicate throughout the workforce, emphasize 

performance management training at the supervisor and employee 

level, and improve the recognition of good performance. 

A performance-based management system compensates and rewards employees based on their performance and contribution to 

the achievement of the Department’s mission. Based on the results 

of the OPM survey, this is the area that is critical and that we 

need to focus on first. It will foster an environment of open communication and feedback between the supervisor and the employee 

and reward more productive and harder-working employees. 

The Department has many substantial challenges to overcome in 

its effort to improve its financial management processes and address GAO’s expectations. Success in these areas rests on a framework of policy, processes, systems, and accountability. We have implemented a corrective action plan that includes the Federal Government’s best practices for financial management. We have also 

developed a strategy to migrate and reduce the number of our financial management systems across the Department and to incrementally start providing greater visibility into financial activity 

through timely, accurate, and useful financial data. 

In my early assessment of the Office of Management, I recognized that our Chief Information Officer did not have the requisite 

authority over each of the DHS IT components and that the documented concerns of the GAO with respect to authority of the business chiefs was valid in the case of the Chief Information Officer. 

The Secretary agreed with my assessment and shortly thereafter 

issued a management directive to provide the CIO with such authority. 

The Department also needs to reduce the total number of locations that house DHS components in the National Capital Region 

to as few as possible in order to lower overall costs. This dispersal 

adversely impacts critical communications, coordination, and cooperation across the Department. Consolidating executive leadership in a secure setting is vital to the long-term success of the Department. 

In conclusion, Secretary Chertoff has expressed that one of his 

key goals for the Department is to strengthen core management 

5

and operational integration. This process is a marathon and not a 

sprint. 

I want to thank you for your leadership and continued support 

of the Department and its management programs and for the opportunity for me to be here today. I would be pleased to respond 

to any questions that you may have. 

Senator AKAKA. Thank you very much, Mr. Schneider. 

Before I call on General Walker for his statement, let me now 

turn to my good friend, Senator Voinovich, for his opening statement. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. Thank you, Senator Akaka. I apologize for 

being late and I am going to ask that my opening statement be inserted in the record so that we can hear from General Walker and 

get on with the questions. Thank you. 

[The prepared statement of Senator Voinovich follows:]

PREPARED STATEMENT OF SENATOR VOINOVICH 

Thank you, Chairman Akaka, for holding this important hearing. 

With the Department of Homeland Security still in its formative years, it is critical that Congress closely monitor its transformation. We have a responsibility to 

ensure the Department is living up to its full potential and is operating as we intended. 

It bears repeating that the Homeland Security Act of 2002 initiated the Federal 

Government’s largest restructuring since the creation of the Department of Defense 

in 1947. While carrying out its critical mission of securing the Nation from terrorism and natural hazards, the leadership of DHS must also contend with the 

major organizational, operational, and cultural issues associated with large mergers. 

It is indeed a challenge to unify more than 200,000 employees from 22 different 

Federal agencies and programs into one cohesive Department. This monumental 

task is further complicated by the urgent demand for new policies, solutions, and 

investments in areas which the Federal Government has not traditionally addressed. Additionally, the response and recovery effort from the unprecedented and 

overwhelming devastation of Hurricane Katrina has required much of the Department’s focus over the past year and one half. 

I am frustrated, but not surprised, that in its fifth year the Department continues 

to experience severe growing pains. Weaknesses persist across the core management 

functions of human capital, financial management, procurement and acquisition, 

and information technology. The Department also continues to experience an array 

of programmatic challenges as it attempts to secure borders and ports of entry, prepare for and respond to disasters, protect critical infrastructure, and improve risk 

analysis and information sharing. 

I thank both of our witnesses for being here today. It is important that we have 

a frank discussion about the challenges facing DHS so that we can establish a baseline and a roadmap with clear performance metrics that will allow us to determine 

whether progress is being made. 

Mr. Schneider, though you do not serve on the frontline, your job is critical to improving our Nation’s homeland security. You are charged with tackling the formidable management challenges at the Department of Homeland Security and institutionalizing long-term reforms that will last well beyond your tenure. In your fourth 

month on the job, I am eager to hear your assessment of the challenges, and your 

near-term and long-term strategic plans for transformation. 

As you work to achieve reform, Comptroller General Walker will be an important 

resource. Since 2003, the GAO has included implementing and transforming the Department of Homeland Security on its high-risk list of programs susceptible to 

waste, fraud, abuse, and mismanagement. In announcing its 2007 high-risk list, 

Comptroller General Walker stated, ‘‘The array of management and programmatic 

challenges continues to limit DHS’s ability to carry out its roles under the National 

Homeland Security Strategy in an effective risk-based way.’’

Mr. Schneider, I strongly encourage you to consider the GAO’s recommendations 

for improvements as you proceed. I look forward to learning which recommendations 

you have already implemented. 

6

1The prepared statement of Mr. Walker appears in the Appendix on page 41. 

Strengthening the management focus at DHS remains one of my top priorities as 

Ranking Member of this Subcommittee. During my long career in public service, including as a Mayor and Governor, I have repeatedly observed that the path to organizational success lies in adopting best practices in management, including strategic 

planning, performance and accountability measures, and effectively leveraging 

human capital. 

I fully appreciate that DHS is constantly busy ‘‘putting out fires.’’ But the connection between good management and operational success should not be lost. Unless 

DHS institutes day-to-day management best practices, the Department will not 

reach its full potential in meeting its homeland security mission. 

It has become clear to me that the existing Under Secretary for Management position does not possess the visibility or authority to affect department-wide changes 

needed for successful transformation of DHS. To address this deficiency, I introduced the Effective Homeland Security Management Act of 2007, along with my 

friends Senators Akaka, Carper, Levin, and McCaskill. 

The legislation would elevate the role and responsibilities of the current Under 

Secretary for Management of the Department to a Deputy Secretary of Homeland 

Security for Management. The incumbent would be appointed to a 5-year term and 

report directly to the Secretary in order to provide essential expertise, including continuity and sustained leadership, necessary for improving the long-term efficiency 

and effectiveness of the Department. Mr. Schneider, we want to promote you. 

This legislation has passed the Senate as part of the Improving America’s Security Act of 2007, and awaits the approval of our friends in the House of Representatives. I am confident they will agree that Department needs a stronger management 

focus to enable programmatic and operational success. 

Mr. Walker, I understand that you recently hosted a forum of government and 

private sector leaders to discuss implementing Chief Management Officer positions. 

I thank you for your continued attention to the need to elevate and institutionalize 

a high level focus on management at Federal agencies. 

While the Department faces considerable hurdles as it matures, I am also mindful 

that progress has been made. There are many capable and dedicated individuals at 

DHS who deserve recognition. With a firm understanding of mission and priorities, 

comprehensive corrective action plans, and a detailed strategy on how to achieve defined goals, I am optimistic that the Department can continue making strides. 

Having served on this Subcommittee since the creation of DHS, I feel a personal 

responsibility to ensure the success of the Department. I will continue to closely 

monitor progress. 

I look forward to the witnesses’ testimony. Thank you, Mr. Chairman.

TESTIMONY OF HON. DAVID M. WALKER,1 COMPTROLLER 

GENERAL, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WALKER. Chairman Akaka, Senator Voinovich, Members of 

the Subcommittee, it is a pleasure to be here. As I said, I am looking forward to my vacation in your lovely State, Senator Akaka, in 

August, and I have been to your lovely State within the last month 

or so, Senator Voinovich. But today, I am here to talk about management and programmatic challenges at the Department of Homeland Security. 

Let me note at the outset that I think that it is more than a little 

bit ironic that arguably the two agencies with the greatest management challenges in the Federal Government are the two that relate 

to the most fundamental aspect of man’s hierarchy of needs, namely self-preservation, and the two that are arguably among the most 

fundamental with regard to the roles and responsibilities of the 

Federal Government under the Constitution of the United States, 

namely the Department of Defense and the Department of Homeland Security. These are major challenges that are well represented 

on GAO’s high-risk list and they are challenging endeavors. 

7

As you know, we put DHS’s implementation and transformation 

effort on our high-risk list in 2003. It remains on our high-risk list 

in 2007 for a number of reasons. Twenty-two separate agencies 

were merged into one, many of which had serious problems on 

their own, most of which their primary mission was not homeland 

security before September 11, 2001, and as the Under Secretary 

has mentioned, it is a major challenge that will take years in order 

to be able to effectively address. 

DHS’s implementation and transformation effort remains on our 

high-risk list for a number of reasons, a few I will mention now 

since my entire statement has been included in the record. While 

DHS has issued guidance and plans to assist management in its 

overall integration on a function-by-function basis, they still lack a 

comprehensive and integrated strategy to make this happen and 

they still lack a plan to get off of GAO’s high-risk list. 

DHS does have a pretty good strategic plan relating to the GPRA 

requirement, the Government Performance and Results Act. It covers five of six of the required elements under GPRA. However, 

when they developed that plan, in our view, they did not have as 

extensive a consultation process with key stakeholders as should 

have been the case, and therefore, hopefully when they update it, 

they will modify that process. 

They have yet to develop outcome-based measures to assess performance, but in fairness, there are many government agencies 

that have not done the same. 

While the Secretary of DHS has expressed a commitment to risk 

management, the Department has yet to really perform a fully 

comprehensive risk management assessment in order to guide its 

allocation of resources in key areas, and I might add that it is 

going to need the Congress’s help here, as well, because sometimes 

the Congress tends to want to give directions as to how the money 

should be spent in some circumstances that do not relate to risk. 

We have limited resources, so it is important to try to be able to 

allocate those as prudently as possible to mitigate as much risk as 

we can. 

DHS has not been able to obtain an opinion on its financial statements, and in fact, a number of its basic financial statements cannot be audited at the present time. 

They face challenges with regard to information management 

and also with regard to acquisitions and, as Chairman Akaka said, 

the human capital strategy. Let us face it. Every organization is 

only as good as its people, whether you are in the government, the 

private sector, or the not-for-profit sector. DHS has 180,000 people, 

very capable, committed professionals, but unfortunately, they are 

either ranked last or next-to-last with regard to the Best Places to 

Work survey. So there are serious morale and other challenges associated with the Department of Homeland Security and that won’t 

be solved overnight. 

DHS has taken some steps to strengthen a number of program 

activities, and frankly, to address a number of our recommendations with regard to management, but there are a number of key 

programmatic challenges, such as the need to strengthen cargo and 

passenger screening, visitor tracking, efforts to combat employment 

of illegal immigrants, and outdated Coast Guard asset capabilities. 

8

It is constantly trying to struggle to balance its homeland security 

needs and other missions, such as disaster preparedness, and also 

we are all concerned with making sure that we can maximize security without undue invasion of personal privacy. There is a need to 

clearly define leadership roles and responsibilities in a number of 

areas and to take more steps to fight fraud, waste, abuse, and mismanagement, especially within the Federal Emergency Management Agency (FEMA). 

In order to be removed from GAO’s high-risk list, DHS is going 

to have to do three things. First, they are going to have to have 

a comprehensive and integrated plan to deal with the areas that 

cause them to be on the high-risk list. 

Second, they are going to have to show significant progress towards effectively implementing that plan. They don’t have to complete it, but they have to show significant progress. 

And third, they have to demonstrate to GAO’s independent and 

professional judgment that their leadership is committed and that 

their structure and staffing is capable of completing the task. 

In summary, DHS is a very important agency. It is relatively 

new. In fairness to them, they are probably the second most challenged agency from a management standpoint. The first most challenged is DOD and it has been in existence 60 years as of this year. 

Management is committed to improving things. I will tell you that 

we have had some serious records access challenges in the past, 

but I am also here to tell you that I had a personal conversation 

with Secretary Chertoff on the phone and I had a face-to-face conversation with Under Secretary Schneider. They have told me they 

are committed to improve things. Things are improving, but obviously only time will tell to whether it will be sustained. And in fairness to them, they have a lot of oversight requests, not just from 

us, but frankly, from a lot of committees and the Inspector General 

and others. Therefore, it is important that we try to coordinate our 

efforts to minimize duplication of effort while making sure the Congress can effectively discharge its constitutional responsibilities. 

Thank you, Senators, and I am happy to answer any questions 

you may have. 

Senator AKAKA. Thank you very much, General Walker. 

As I mentioned earlier, I am going to have to leave. I want to 

apologize to both of you and especially to my good friend, Senator 

Voinovich. I will be turning over the Chair to him in my absence 

here. Because of the critical importance of DHS’s reorganization, I 

will be submitting additional questions for the record. But I will try 

to be back here. So thank you very much and thank you again Senator Voinovich. I really appreciate your chairing this Subcommittee 

hearing. 

Senator VOINOVICH [presiding]. Thank you, Senator Akaka. I am 

very grateful for your calling this hearing of the Subcommittee. 

The two of us have worked conscientiously to perform our oversight 

functions of the new Department of Homeland Security. I think 

that General Walker’s comment about the fact that two agencies 

that are most essential to the national security of our country are 

two of the worst in terms of management, underscores how important our work is to make sure that we fulfill our oversight responsibilities. The two of us are going to work together to see if in the 

9

next couple of years, we can get their programs susceptible to 

waste, fraud, abuse, and mismanagement off GAO’s high-risk list. 

Mr. WALKER. Don’t bet a lot of money on that, Senator Voinovich. 

[Laughter.] 

Senator VOINOVICH. The transformation of DHS is probably the 

biggest management challenge ever undertaken by the Federal 

Government. In all fairness to the agency, you are brand new and 

Hurricane Katrina, which is the worst natural disaster this country 

has encountered, superimposed itself to the extent that I am sure 

many projects were placed on the backburner. I am familiar 

enough with management to know that there is a certain amount 

of energy that one has to put on reorganization if it is going to take 

place, and if something as big as Hurricane Katrina comes along, 

it just interrupts that and takes your focus away from the things 

that you should be concentrating on. So in all fairness, that should 

be, I think, acknowledged. 

I believe part of the problem of getting to the transformation that 

we want in terms of management in the Department is caused by 

the Legislative Branch of government and I would like your opinion 

in regard to the number of oversight committees that this agency 

has to respond to and whether or not you feel that it is incumbent 

on us to reexamine the oversight so that you don’t spend half your 

time running up here to testify before committees like ours and 

others in the Congress. 

Second, I really believe that if this Department is going to 

achieve the transformation necessary for mission accomplishment, 

we need a Chief Management Officer to drive the transformation. 

I feel the same way with respect to the Defense Department. I really believe that one of the reasons why the Defense Department is 

still plagued with management challenges is because of the 

changes in direction and leadership and resulting of loss momentum for transformation. I believe, you need somebody paying attention on a full-time basis to management. 

There are some systemic changes that need to be made if we are 

ever going to accomplish real reform. 

Mr. WALKER. I agree, Senator. As you know, and we have had 

conversations, in my view, the Federal Government is not well positioned in order to be able to effectively address the challenges 

and capitalize on the opportunities of the 21st Century. As you 

know, the Federal Government tends to be a lag indicator and 

there is no question that both the Executive Branch and the Legislative Branch need to reexamine how they are structured in order 

to be able to more economically, efficiently, and effectively discharge their respective responsibilities. 

I do think there is a need to relook at how many committees are 

involved with regard to the oversight of Homeland Security, but 

not just Homeland Security, frankly, with regard to other areas of 

government, as well. 

Second, with regard to the Chief Management Officer concept, I 

believe that it is absolutely essential at the Defense Department. 

It is strongly desirable within the Department of Homeland Security. What is needed, as you properly pointed out, is this is a major 

undertaking, arguably unprecedented in the history of the Federal 

Government, and it is going to take the full time and attention of 

10

a number of parties in order to be able to help maximize the 

chance of success. 

We need somebody who is responsible and accountable on a fulltime basis with regard to the overall business transformation-integration process. They need to be at the right level, to have the 

right qualifications, and to have the right reporting lines. I believe 

they also should have a term appointment because this is not about 

policy, this is about good government. It is about economy, efficiency, effectiveness, ethics, and equity. Those aren’t Republican or 

Democrat. They are not liberal or conservative. It is going to take 

a number of years for us to be able to effectively address these 

transformation challenges and we need some continuity in order to 

be able to do it. 

I will also respectfully suggest that it would be desirable to have 

some type of a performance contract such that the individual who 

has this job is held responsible and accountable and could be recognized and rewarded appropriately if they do a really good job, but 

also could be held appropriately accountable if they don’t. 

Senator VOINOVICH. Mr. Schneider. 

Mr. SCHNEIDER. Senator, in response to the first question, the 

Congressional oversight in the 109th Congress we keep track of 

this—there were 86 committees that exercised Congressional oversight over the Department. In the 110th Congress, there are two 

new subcommittees. Clearly, it is not our prerogative to recommend 

how many committees ought to have jurisdictional oversight, but 

the fact is——

Senator VOINOVICH. Why not? 

Mr. SCHNEIDER. Well, that is really the prerogative of the Congress. I mean, I think the 9/11 Report made some recommendations 

regarding streamlining the oversight. I can tell you that since the 

first of the year, apparently this is the 100th hearing since the first 

of the year where a DHS official has testified. 

Senator VOINOVICH. Well, let me tell you something. I don’t agree 

with you. If I was the President, and the oversight by the legislative body was preventing me from performing the job that they 

have asked me to do, I would ask the Majority Leader and the 

Speaker of the House to my office and I would say to them, you 

guys have asked me to do a job and I can’t get it done because of 

the harassment that I am under and implore them to better organize the way oversight is being conducted. 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. I would like you to provide information on 

the number of hearings you have testified at and what you think 

would make sense in terms of the oversight. We ignored this part 

of the 9/11 Report and I think that if we have good information, 

we can generate support. 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. Chief Management Officer. 

Mr. SCHNEIDER. CMO. First off, relative to the need for a Chief 

Management Officer, I believe one of the few by my responsibilities 

and authority that in practice is a Chief Management Officer. I 

know I have no equivalent at the Department of Defense, given the 

fact that I have broad responsibility for—I mean, there are at least 

three under secretaries in DOD that have the responsibilities that 

11

I have. So I am probably the closest, I would suspect, to a Chief 

Management Officer in the Federal Government within the vision 

or concept as proposed. And I think that is, frankly, one of the reasons why I found this job attractive when I was first asked about 

it, because I thought it was unique and I thought, based on the job 

responsibilities, that I was, in practice, the Chief Management Officer. 

I also have from practice, and I cite in my testimony, the support 

that I receive from the Secretary. His guidance for me is very clear. 

If you don’t think you have authority to do what you need to get 

done, you just give me the piece of paper and I will sign it. He has 

already made good on that in very short order, within days when 

I pointed out the issue of the information technology. So based on 

what I believe is the confidence that the Secretary and the Deputy 

Secretary have in me and their support of basically structuring the 

management of the Department, in this present Administration, I 

believe I have the authority that I need. 

Based on the structure where I am, in fact, responsible for budget, IT, procurement and contracting, administration, security, I believe I meet the intent better than anyone else in terms of a Department within the Federal Government. 

Senator VOINOVICH. Why don’t we put that in legislation and 

give you or someone else a term so you have sufficient authority 

to perform your job. 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. I just can’t understand why your Department is opposed to having a Chief Management Officer. 

Mr. SCHNEIDER. I think, Senator, I believe the Secretary testified 

before one of the committees, and I forget which one, in early February when this came up and I believe——

Senator VOINOVICH. It was our Subcommittee. 

Mr. SCHNEIDER. And what he, I believe, talked about was, and 

what I believe the message was basically at this stage of maturity 

in the Department, having a second deputy would be cumbersome—I don’t know exactly the word he used, cumbersome or 

difficult—relative to a unified chain of command within the Department. And I can understand where he is coming from, and I will 

use the Department of Defense because I came from there. 

Unlike the Department of Defense, where—let us just say the 

operational side of combat and command and the like, there is a 

clear reporting chain and almost a separation of the operational 

forces with the sure infrastructure and support management side, 

and so it lends itself more to, if you will, where by law the Under 

Secretary of Defense for Acquisition Technology and Logistics can, 

in fact—I think it is Title X—direct the service secretaries in a lot 

of those management areas. So he has basically line execution authority over procurement, contracting, test and evaluation, and the 

like. 

The situation at this point in time, I believe, in the Department 

of Homeland Security is significantly different. Our operational 

units, whether it be FEMA, TSA, CBP, etc., they by and large are 

operational commands as well as sure infrastructure support. The 

head of CBP is responsible for roughly 50,000 people. Many of 

12

them patrol the borders. He also has a group that manage major 

acquisitions, like SBI.net. 

And so at this point in time, we do not have, I believe, an operational structure that has matured where, in fact, you could effectively have two people below the Secretary exercising, if you will, 

line of control of authority over the operational components, and I 

believe that is why the Secretary has used terms like cumbersome, 

etc., in the unified command and control. And frankly, it took many 

years since the establishment of the Defense Department to—

roughly 1986 for Goldwater-Nichols and then the Defense Management Review (DMR)—that they were able to give the authority to 

an Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) in this particular case. So I understand where the 

Secretary is coming from——

Senator VOINOVICH. Comptroller General Walker, how do you respond to the fact that the Defense Department today has 14 items 

on the high-risk list, eight of them that have been on since 1990, 

six of them have been government-wide, and the fact of the matter 

is that the place is still, pardon me, screwed up? General Walker, 

you have had a chance to hear Mr. Schneider. I would like your 

comment about this argument from the agency that says that, for 

some reason, they just don’t need a CMO to be in charge of transformation and the conflict that he indicated that would occur if you 

had a deputy secretary to deal with transformation. 

Mr. WALKER. Well, this hearing, as you know, Senator, is dealing 

with DHS, so I will focus on DHS, but I will say for the record, 

again, I think it is absolutely critical and essential that we have 

one at DOD. 

Now, I am a little bit perplexed, quite frankly, with regard to the 

debate about this because at DOD, they don’t have this position. 

At DHS, they do have this position in part. So it is not like you 

are introducing a new position that has never existed before. The 

Under Secretary for Management is a position that, from a conceptual standpoint, was intended to do a lot of the things that the 

CMO is intended to do. But I think the thing we have to keep in 

mind is we need to look beyond individuals and we need to start 

thinking about institutions. 

Secretary Chertoff and Under Secretary Schneider may have a 

great relationship, but we don’t know who the next Secretary or 

Under Secretary is going to be. We don’t know who the next Administration is going to be, who is going to be President of the 

United States, and the question is what type of assurance do we 

have that we are going to have the right type of people in the job 

and that they are going to be there long enough to be able to get 

the job done. 

And so my view is that on the level, at DOD, it has got to be 

level two to get the job done. At DHS, the question is, what level 

do you need to be to get the job done. Now, whether that is level 

two or level three, I think two is preferable. It is essential at DOD. 

It may or may not be at DHS, but you need to be at the right level. 

Second, I think a term appointment is highly desirable. I think 

it is also fully appropriate. Why? Because this is good government. 

This isn’t about policy. This isn’t about politics. This is about economy, efficiency, effectiveness, ethics, and equity. 

13

Now, the objections that I hear about a term appointment are 

that the President ought to have the prerogative and the Secretary 

ought to have the prerogative with every PAS appointment to be 

able to put whoever they want, subject to confirmation by the Senate, and remove them whenever they want. 

For example, there are a number of management type positions 

where I would assert that it is important to have statutory qualification requirements for the persons to make sure you have the 

right kind of person in the job and you could have the following. 

You could have an advance notification requirement by the President to the Congress of the United States, both the Senate and the 

House, say, on his/her intention to nominate a specific person for 

the job. Here are their statutory qualification requirements. I believe they are qualified. It is not a policy job, it is a management 

job. And if the Congress or the Senate has difficulty with that, believe me, you know as well as I do there are ways that you can express your displeasure without having a confirmation hearing. 

Now, my personal opinion is the CMO ought to be PAS, and 

ought to be subject to Senate confirmation, because while it is primarily a professional job and it is primarily an operational management job, they are going to have to interface with the Secretary 

and the Deputy Secretary and there will be policy issues that they 

will be in discussions on from the management and execution perspective and they are the ones that ultimately will be responsible 

and accountable——

Senator VOINOVICH. And we agree with that. 

Mr. WALKER. Right. So Chief Financial Officer (CFO), Chief Information Officer (CIO), Chief Human Capital Officers (CHCOs), 

Chief Procurement Officer (CPO), those kinds of jobs, I think you 

could think about taking an alternative approach where the Congress would still have a role to play but where we are getting the 

right kind of people in the job. 

Bottom line, my view is that the CMO makes eminent sense. I 

think your legislation has strong merit. I don’t really understand 

why there would be opposition to it. It is only going to make this 

job stronger, not weaker, and candidly, with regard to the term appointment issue, if I was the Secretary of DHS or the Secretary of 

DOD and I had a top-quality professional that was in that job to 

deal with these issues who was willing to make that type of a commitment, a 5 to 7-year commitment, that would be a Godsend, an 

absolute Godsend. 

And believe me, if the chemistry is not right, which some people 

will say, because you were picked by a former President or a 

former Secretary, believe me, the level of people we are talking 

about here, they have plenty of other things to do. If the chemistry 

is not right, they will just go someplace else. It is as simple as that. 

Senator VOINOVICH. Yes. Thank you. Let us talk about the strategic plan. When Deputy Secretary Jackson met with me the other 

day, we talked about the Department’s strategic plan. Of all of the 

agencies on the high-risk list, it is my understanding that the only 

one that hasn’t submitted a strategic plan is DHS. I would like to 

hear the explanation for why that plan hasn’t been submitted. 

Mr. SCHNEIDER. Yes, sir. I have also talked to Clay Johnson 

about that and I will tell you this. When I came into office in early 

14

January, Clay Johnson was one of the first people that I talked to 

and he said, go look at the strategic plan. So I went and found the 

strategic plan and what I determined was, simply put, it was garbage, and so I talked to the Deputy Secretary and I said, we cannot 

send that out because the fact is it doesn’t address really the important strategic issues, especially what we have to do to meet the 

requirements that have been identified by the high-risk list. 

And so when I talked to Clay, I told Clay that you are not going 

to see that strategic plan because it is garbage, and so I told him 

what we have to do is we have to take the framework that has 

been established by the GAO, structure a strategic plan around 

that, and that is what we have to work to. 

So one of the things that we have been doing is working with the 

framework that the GAO has identified, and it is a marvelous 

framework. It takes everything that the Department is supposed to 

do, breaks it into four mission categories, the four mission categories are broken down into 14 specific mission areas that address 

not just the management aspect, but the critical mission execution, 

whether it is protecting our borders, response, critical infrastructure, and the like. It further breaks it down into approximately 172 

performance expectations. These are the measures by which the 

Comptroller General goes and takes a look at our performance. And 

so what we are doing now is structuring a strategic plan that is 

properly aligned with the four mission categories and the 14 mission areas and have basically our strategic plan be the framework 

to basically improve our performance in the areas that we are getting measured against. 

So the bottom line is the plan that was in process when I came 

in place, I looked at it and I determined it was unset. We looked 

and one of the things we have been doing is digesting, if you will, 

all the GAO documentation. One of my key staff members behind 

me pointed out that if we were a private company, we would pay 

consultants, like what I used to do for a living, a fortune to basically identify the framework and the areas where we need improvement. And so as she aptly puts it, Ms. Regis sitting behind me 

here, she aptly put it is, you don’t have to pay consultants. The 

government has provided that for you. 

So what we are trying to do is take this framework, which I happen to think is excellent, work our strategic mission around that, 

and that is what we are going to get measured against. This way, 

the GAO can assess our performance against our plan, OMB can 

assess our performance against the plan, and the Congress will 

have measures that, as the Comptroller General says, we have to 

demonstrate a sustained performance over a period of time. So that 

is why that plan hasn’t gotten issued. 

Mr. WALKER. If I can clarify, Senator, I think it is important for 

all of us. There are really two plans that we are talking about. 

First, the Department does have a ‘‘strategic plan’’ as required by 

the Government Performance and Results Act and it exists and it 

meets five of the six criteria for a strategic plan. The big area that 

it is missing is linking resources to results, and there is always 

room for improvement. So they do have a strategic plan. 

What they don’t have is a comprehensive and integrated action 

plan to get off of GAO’s high-risk list. That is what they don’t have 

15

and that is what has to be pulled together. So they do have a strategic plan. It is, in the aggregate, it is pretty good, except for the 

one area. But they don’t have a comprehensive and integrated action plan to get off GAO’s high-risk list and that is what they need, 

and I just told them that we won’t send them a bill for our advice——

[Laughter.] 

Mr. WALKER [continuing]. But we would like for the Congress to 

fund us a little bit more adequately. 

[Laughter.] 

Senator VOINOVICH. Well, as you know, General Walker, one of 

the things that we did with the supply chain management is OMB, 

the Defense Department, and GAO, to put together a corrective action plan. It would seem to me that if you had such a plan in place, 

Mr. Schneider, at least you could establish a baseline and measure 

progress. 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. My suggestion would be that you try to accelerate that effort and work with GAO and OMB to develop a plan 

to address the issues highlighted in the GAO report. 

Mr. SCHNEIDER. Yes, sir. 

Mr. WALKER. And Senator, the other reason this is important is 

because we know there will be a new Administration in January 

2009 and so it is important to be able to have such a plan in place 

so hopefully that will be a basis for maintaining progress in areas 

that inherently are not partisan areas. 

Senator VOINOVICH. Once this plan is in place, we can use it to 

ensure the new Administration continues the progress made to 

date. In a way, that is continuity in itself. If you had a CMO and 

a strategic plan that everybody knew about, it would make it so 

much easier to determine whether, indeed, you are making some 

progress. The real key is to institutionalize these plans so that they 

become part of the fabric of the agency and progress can continue. 

Mr. WALKER. If I can mention really quick, Senator, as you 

know, I headed two Executive Branch agencies in the past in addition to the one that I head now in the Legislative Branch and I will 

say for the record that I had two deputies for the agencies that I 

headed in the Executive Branch and it worked great. I had one 

that was focused primarily on policy and external matters. I had 

another one that was focused primarily on management, operational, and enforcement matters. We worked together as a team 

and it was very effective. 

Senator VOINOVICH. Well, one of the things that I have always 

thought about doing is bringing Total Quality Management to the 

Federal Government. As you know, General Walker, the Federal 

Government faces a human capital challenge with people planning 

to retire. We have enacted flexibilities into the system so that we 

recruit, retain, and reward people that chose to work for the government. Total Quality Management could make a big difference in 

the various departments because I honestly believe that it is the 

only way that you can get people involved in coming back with recommendations on how they can improve their operations. 

When agencies are given the chance to set up Most Efficient Organizations, and given the opportunity to look at themselves to figVerDate 0ct 09 2002 09:07 Jan 17, 2008 Jkt 035533 PO 00000 Frm 00019 Fmt 6633 Sfmt 6601 P:\DOCS\35533.TXT SAFFAIRS PsN: PAT
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ure out how they can be more competitive, it is interesting that 80 

percent of the time, the MEO is selected to carry out the particular 

function. It would be nice if we could get these efficiences before 

we had a competition, as part of a quality management operation 

throughout the Federal Government. 

Mr. SCHNEIDER. I have had a lot of experience with that, Senator, with running the A–76 competitions, and you are right. Unfortunately, in many cases, it takes a forcing function like your survival and your jobs to basically force the leadership when you go 

down to those levels, the fact that we are either going to become 

the Most Efficient Organization or we are going to be out of a job. 

And so my view is that is a responsibility of leadership to drive—

just like if we were in the private sector, to drive those efficiencies 

without having to have the threat, if you will, on a case-by-case 

basis. 

Senator VOINOVICH. But you see, the interesting thing is we did 

this exercise with 56,000 employees in Ohio State Government. As 

Governor, I went to school for a week with my labor union members. We had 3,500 continuous improvement teams when I left, and 

2,500 facilitators. When the people get the training and then they 

are given the empowerment and also some money so they can upgrade their skills, they become energized. 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. They really do. I had people come up to me 

and say, you know what? I have been here for 25 years, and now 

I really feel like I am somebody. I am involved. People are listening 

to me. We had an opportunity each year where we brought in these 

continuous improvements teams to share best practices. There was 

an excitement there. 

Mr. WALKER. Senator, if I can follow up on that, I will have my 

staff send to your office the result of a commission report that I 

was asked to chair by the Congress several years ago dealing with 

competitive sourcing. And while the Executive Branch took a number of steps to try to implement some of those recommendations, 

the Legislative Branch really didn’t do anything. I think the time 

has come to relook at some of those recommendations. 

One of the ironies that I have found was this: Why aren’t we 

looking for Most Efficient Organizations throughout the government. Why aren’t we creating mechanisms to try to make this happen? Why do we have to wait until we decide that this may be a 

target for competitive sourcing before we do a Most Efficient Organization? Why can’t we look to try to create a pool of funds where 

organizations can make a business case, maybe to OMB, to try to 

be able to help engage in this, absent competitive sourcing? 

And the other issue that we have is, quite frankly, we are relying 

upon contractors to a much greater extent than is prudent and appropriate in many circumstances. 

Senator VOINOVICH. And we don’t have enough people in the 

agencies that have the sophistication to ensure comprehensive contract management and oversight. 

Mr. WALKER. Yes, and one of the things that either the full Committee or this Subcommittee needs to do is dedicate a hearing just 

to this topic. It is a huge government-wide challenge and we are 

talking about billions of dollars and tens of thousands of people. 

17

Senator VOINOVICH. Mr. Schneider, serious contract oversight 

lapses and poorly-defined requirements jeopardized the Coast 

Guard’s Deepwater Fleet Modernization Program and resulted in 

boats that did not float. What lessons has the Department learned 

from the Deepwater mistakes? Was the prime contractor held accountable for poor performance? What penalties did you extract out 

of that contract? 

Mr. SCHNEIDER. Let me try and answer all different parts of 

that. First, the Deepwater program was intended conceptually to 

be a comprehensive recapitalization of Coast Guard assets—sea assets, air assets, shore-based architecture, command and control, 

communications, and logistics. It was intended as a comprehensive, 

roughly $17 billion initially and then went to $24 billion for various 

reasons, total asset replacement, almost like a single—a comprehensive solution of multiple assets. So that was the concept. 

Senator VOINOVICH. By the way, who was the person that was 

overall in charge of that? Which person? 

Mr. SCHNEIDER. At the time it was, before the Department existed, it was basically initiated by the Coast Guard under its previous Department of Transportation, I believe. So this started 

years——

Senator VOINOVICH. What person in the Coast Guard was the 

person that had been responsible? 

Mr. SCHNEIDER. Well, ultimately, it was the Commandant. There 

was an admiral in charge of the program, but by and large, I believe the program was sponsored by the Commandant. 

Senator VOINOVICH. Well, I would like you to, in writing, get 

back to me. I would like to know who was in charge. 

Mr. SCHNEIDER. Yes, sir. Absolutely. And so the concept was a 

comprehensive recapitalization of all Coast Guard assets for the future. Because legacy assets were beyond their useful life, etc., it 

was costing a lot of money to maintain them. And the contract was 

awarded to a joint venture between Lockheed Martin and Northrop 

Grumman. 

So the problem, I think, specifically you are talking about, boats 

that work, is one element of the program. One of the initial priorities in the program was to replace the cutter fleet, and so what 

they did was they came up with a package solution, large national 

security cutter, mid-sized offshore patrol cutter, and then the workhorse boat of the Coast Guard, which is a fast-response cutter. 

Because of the fact that the missions were changing and there 

was more demand being put on the boat, they looked for a stopgap measure to fill what they called the gap in patrol boat hours. 

There is a certain number of hours that they perform yearly. So 

they looked at a short-term solution, near-term solution to fixing 

the gap in patrol boat hours and what they concluded was they 

could take the existing 110-foot patrol boats, the Island-class patrol 

boats, and modify them to basically extend them to 123 feet, put 

in the modernized C4I suite, and that would, in fact, accomplish 

the near-term objective. 

And so the problem was that the way that was done, designed, 

etc., they ended up having some structural problems after those 

boats were delivered. So that is where the Commandant, I think 

about four or five months ago, maybe less than that, decided that 

18

operationally they were not suitable and he basically took them out 

of service. 

In response to the liability issue, I know that his Department, 

with help from my people in the procurement organization and the 

Office of Counsel, are trying to answer the very specific question 

about liability. So that work is underway. I believe the Commandant has testified many times regarding the details of the 123-

footers and what they are doing to determine liability. 

Now, with respect to your question, what the Coast Guard did 

starting several months ago, I think it was roughly in the fall, latesummer, fall time frame, is to bring independent people in to take 

a look at the whole Deepwater structure. It ends up being actually 

a coincidence that I, in my previous life, was brought in to head 

a team of people that the Coast Guard had contracted with Defense 

Acquisition University to bring in an independent team of experts 

to go look at the Deepwater program. 

So to get to the bottom line, there was a whole series of recommendations made by that group. As part of that, what the Commandant has done is instituted a complete restructuring of the program. For example, and I think this gets at your point, these guys, 

they didn’t do a good job, so what is the government doing about 

it? They are doing the following. 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. I have to go vote. 

So if you could maybe provide additional information on the 

project I would appreciate it. 

Mr. SCHNEIDER. I will give you a piece of paper——

Senator VOINOVICH. Yes. 

Mr. SCHNEIDER [continuing]. But basically, we have restructured 

the contract, changed the management structure, more Coast 

Guard heavy involvement in terms of running competitions and 

making source selections, and it is much more hands-on. In addition, we have achieved some success in bringing in, I would say, 

high-end acquisition professionals at the high level and at the 

lower level to really beef up the acquisition, execution, and oversight. 

Mr. WALKER. My understanding is the lead contractor was fired, 

as well, but that doesn’t——

Senator VOINOVICH. The last thing, if you can give it to me in 

writing, is that the Department has now embarked on the SBI.net, 

a multi-year, multi-billion-dollar effort to secure the boarders with 

a combination of fences, high-tech monitoring devices, manpower. 

Questions have been raised about the undefined nature of the contract, and what I would like you to do for me is to submit in writing——

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH [continuing]. How you are working to ensure 

that the SBI.net and other future acquisitions do not waste taxpayer dollars on insufficient systems. 

I understand that Senator Akaka will be able to come back afterwards. What is your schedule like? 

Mr. WALKER. You are my client, so I will stay here. I think I 

have something at noon, but I don’t have anything before that. 

Senator VOINOVICH. Mr. Schneider. 

19

Mr. SCHNEIDER. I am at your service. 

Senator VOINOVICH. Well, we are eating up your time. You could 

be back working on your strategic plan. 

[Laughter.] 

Mr. SCHNEIDER. This is very important to me. 

Senator VOINOVICH. We are going to recess and resume the hearing shortly. Thank you for your patience. 

[Recess.] 

Senator AKAKA [presiding]. This hearing will be in order. 

I appreciate your understanding, and I understand also that 

while I was gone, the witnesses addressed our CMO bill and the 

Department’s need to finish a comprehensive management integration strategy. So I won’t be going into those issues, but I will start 

with another issue very important to me and to my friend, Senator 

Voinovich, and that is human capital. Again, I want to thank my 

good friend, Senator Voinovich. We have worked so well together 

and over the years have worked with General Walker, as well, on 

the challenges that we are facing and we are, I would say, trying 

our best to address those challenges. 

Secretary Schneider, we both know the importance of attracting 

and retaining skilled and trained workers, especially those safeguarding the Nation against man-made and natural disasters. 

However, I am concerned about the use of personnel flexibilities by 

DHS. Earlier this year, OPM released the annual report of agencies’ use of student loan repayments. DHS reported that only 17 

employees received student loan repayment. While I have been 

here, I have considered that to be so important to our Federal 

workforce and to try to keep them well-qualified so that they will 

be able to move into these top positions when the time comes. Of 

course, a student loan repayment program can certainly help in 

that direction. 

Secretary Schneider, why is the number of employees at DHS 

participating in this program so low? 

Mr. SCHNEIDER. Senator, I frankly don’t know. This is the first 

time that student loan repayments has ever really been put on my 

radar screen. That number is, frankly, astonishingly low, and as 

much as I hate to admit, it was over 40 years ago that I had student loan payments to make. To me, that is a big deal. So I will 

go back and look at that and I will get back to you. 

Senator AKAKA. Will you please? 

Mr. SCHNEIDER. Yes, sir. 

Senator AKAKA. As I said, it is important to our future human 

capital, and if anything, we need to try to raise the level of those 

kind of programs. 

Can you also provide for the record in this regard the number of 

Federal employees at DHS who receive retention bonuses and the 

amount of money DHS spends on employee training? 

Mr. SCHNEIDER. Yes, sir. 

Senator AKAKA. And again, you can see the direction here of 

our——

Mr. SCHNEIDER. Sure. 

Senator AKAKA [continuing]. Trying to train people for these high 

positions. 

20

General Walker, in your testimony, you state that GAO has not 

yet been able to review DHS’s new human capital operation plan, 

HCOP, to see if this new plan addressed your previous recommended changes. I want to tell you, General Walker, that during my time here, you have made so many great recommendations 

over the years. I can see that it was based on your experiences here 

and these have been great. Unfortunately, many of them, we 

haven’t really been able to do. But it has helped us in trying to improve the situation here. 

When do you expect, General Walker, to review that plan? We 

would very much like to get your assessment as quickly as possible 

after that happens. 

Mr. WALKER. Senator, we fully intend to review their new plan 

and to find out whether or not they have complied with our recommendations. I will provide something for the record as far as the 

timing. Let me note for the record also that, fortunately, about 80 

percent-plus of GAO’s recommendations in recent years have been 

adopted within 4 years. Sometimes it takes longer for people to see 

the light and find the way, but it is a very high percentage. 

And let me, if I can, while you are talking about human capital 

for DHS, Senator, mention one other thing. I know there is some 

controversy right now between the Congress and the Executive 

Branch about whether and to what extent the legislation should be 

moved dealing with the flexibilities that the DHS has in the 

human capital area. 

One thing that I would respectfully suggest that you consider, 

and I also mentioned this to Senator Voinovich, is, as you know, 

we have recommended a number of times, including before this 

Subcommittee, that there are certain safeguards that should be in 

place that should be coupled with any statutory flexibilities in 

order to maximize the chance of success and to minimize the possibility of abuse. Not all of those safeguards were incorporated into 

the DHS legislation and very few, if any, were incorporated into 

the DOD’s National Security Personnel System (NSPS) legislation. 

So that is something that you may want to think about if you have 

concerns about how things are proceeding. That could end up being 

a potential compromise between outright repeal and trying to make 

sure that it is done right and in the interest of all affected parties. 

Senator AKAKA. Yes. And as you know, General, we have frequently spoken about oversight and so these safeguards would certainly be a way to get to that. Oversight has been costly and time 

consuming, so I thank you for that. 

Secretary Schneider, I know you were deeply troubled by DHS’s 

poor ranking in the 2006 Federal Human Capital Survey. I am certain everyone is doing what they can to try to improve morale. 

What effort is being taken to identify best practices within DHS 

component agencies in which morale is high, assuming they exist, 

and to pass those lessons on to the agencies most afflicted by poor 

morale? 

Mr. SCHNEIDER. Senator, first of all, thank you for that question. 

There are, in fact, elements of the Department when you go in and 

look at the data that fared very well, and what we have learned 

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sponsiveness in terms of the people that responded as well as the 

nature of their response was much more positive. 

For example, U.S. VISIT, which is the organization, I think it is 

a couple of hundred people, responsible for implementing the tenfingerprint screening technique, they had a very high percentage of 

those individuals that were surveyed, responded to the survey, and 

they came out very high in terms of their positive responses. In 

terms of a larger organization, I would say the Secret Service, if 

I recall, their response rate was very high and the nature of their 

responses was very high. 

So what we are doing is this. We are in the process as we speak, 

literally, throughout the country, holding focus group sessions from 

across the Department, trying to identify those best practices by 

which people communicate, some of the lessons learned from trying 

to implement performance management, how do we identify these 

best practices and share them, how do we communicate. We are 

talking about starting with the Secretary on down. 

There has been an increase in the number of people who have 

successfully used all-hands meetings. I, in my own organization, for 

example, of roughly 500 people because they are scattered all over 

the district, have run four all-hands meetings shortly after I came 

on board, when the results of the survey were published. Most recently, within the past 2 weeks, I ran four separate sessions. 

And what people are doing is they are taking what are the Department goals, what are we trying to do, what are the specific actions, and then each organization—what does that organization do 

that makes a difference, whether it is the security people that are 

guarding the perimeter, whether it is the contracting people that 

are awarding contracts, and so what we are seeing is communications was identified as a serious shortcoming, performance management, that basic employee-to-supervisor relationship, as well as 

recognition programs. 

So we are instituting across the Department an awards program 

that is modeled after the best practices across the government. We 

don’t have that type of structure that is in place, and so we need 

to start working on that. The other thing we are doing is we are 

doing quality assurance of our performance management effort. So 

we are focused on best practices. 

I have personally talked to the heads of each of the operating 

components to get a gut feel for some of the kinds of things that 

they are doing individually, and then our plan is to figure out what 

ought to be done centrally, corporate-wide, and what are those 

things that can best be done individually. 

Senator AKAKA. Thank you. Mr. Walker, I know you have had a 

lot of experience in these areas and I want to ask you, too, could 

you provide your thoughts——

Mr. WALKER. Sure. 

Senator AKAKA [continuing]. On how the Department should address morale problems. 

Mr. WALKER. Thank you, Senator. There are a number of things, 

but I will mention three now. First, it is not unusual for smaller 

organizations to have somewhat higher response rates and somewhat higher scores, all things being relatively equal, because you 

have more cohesiveness. It is more of a team and family-oriented 

22

structure. They can interact with their leaders easier and typically 

you have better communication the smaller the unit is. But it is 

also not impossible for large organizations and medium-sized organizations to do well here, as well. 

In my view, there are three important elements that I would 

mention now. First, there has got to be total commitment from top 

leadership. If top leadership does not make human capital a top 

priority, it really doesn’t make a difference whatever else you do, 

and it has not only got to be words, it has got to be actions. You 

have to see top leadership visibly, actively engaged in key elements. 

Second, effective communication. The larger the organization, 

then the more critically important communication becomes, and it 

is not just written communications. It is video conferencing. It is 

small group meetings. In some cases, it is all-hands meetings or 

whatever, but a variety of means in order to try to be able to get 

the message out both to large groups, to small groups. And communication, as you know, Mr. Chairman, is a two-way street. It is not 

just imparting information, but very importantly, it is active listening and hearing what people have to say and seriously considering 

what they have to say. 

And third and very importantly, employee participation, empowerment, feedback, and appreciation. There must be a number 

of programs in place in order to try to help emphasize employee 

participation, empowerment, feedback, and appreciation. 

Now, we are far from perfect at GAO. We never will be perfect, 

and frankly, no organization will ever be. But we were ranked No. 

2 by our own employees among the largest Federal agencies as a 

place to work despite some very difficult and somewhat controversial changes that we have made. We are still ranked No. 2. We are 

looking forward to being ranked No. 1 eventually. 

Senator AKAKA. Good luck. 

[Laughter.] 

Secretary Schneider, Mr. Walker in his testimony mentions that 

the Business Transformation Office has been eliminated. This office 

used to help integrate the Department’s functions. I understand 

that the BTO’s work is now being performed by the Office of Policy, 

but the DHS Policy Office has been given increased responsibilities. 

Can the Policy Office really perform this function and its other obligations? I would appreciate Mr. Walker’s additional comments on 

this question, as well. Mr. Secretary. 

Mr. SCHNEIDER. Senator, first, it is my understanding that—and 

this happened before I came on board—that the Business Transformation Office, the BTO, was identified as either a line item in 

the Under Secretary’s budget or included in an existing line item 

in the Under Secretary’s budget that was—and there were roughly 

seven, I think, billets assigned to that office. My understanding is 

that Congress did not fund, or more specifically did not want to 

fund the BTO, so in one of the appropriations bills, they zeroed 

that out. 

And what happened was, I don’t think they even fully staffed up 

to seven, but to make a long story short, when I came on board, 

there were roughly three people left, if you will, and they were 

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23

retary for Management. I am unaware that the responsibilities of 

what was originally envisioned and executed as the BTO, I am unaware of the fact that has been picked up by Policy. I work very 

closely with the Assistant Secretary for Policy and what they do, 

especially the strategic planning group, and I am unaware of the 

fact that they have picked up that responsibility. 

What I do is, as a matter of routine, I don’t have lots of independent staff. I work through the business chiefs. So any transformation effort, I would use the existing chain of command to put 

multi-discipline groups together to go accomplish an objective. So 

I will go back and check this Office of Policy, whether or not some 

functions were reassigned. I am not aware that they were. 

Senator AKAKA. General Walker. 

Mr. WALKER. If I can, Mr. Chairman, first, I am not sure whether or not the Congress lined-out this particular item or not or 

whether or not there was a line item for this particular unit, but 

if there was, that is a matter of major concern. For there to be a 

line item for a unit of seven people is incredible micro-management, in my view. I don’t know if that is true. I am going to go 

back and try to follow up. For the Congress to get involved in that 

level of precision and detail is very troubling if that is true. 

Second, I think there needs to be a business transformation 

team. Call it whatever you want. It should be a small group. Ideally, it would be a combination of people who are core and detailees 

coming from key different units in order to work with the CMO 

and Under Secretary to try to help achieve the overall implementation of the transformation plan. I think it clearly is a best practice, 

it is clearly appropriate, and it needs to be funded. And importantly, it needs to be staffed by the right kind of people. 

Senator AKAKA. Thank you. Secretary Schneider, the Homeland 

Security Appropriations Act for fiscal year 2007 contained a provision I authored to establish a rotational program to allow employees at DHS to gain broad expertise throughout the Department. I 

believe this type of program could help the Department enormously 

in building an effective sense of mission. Can you tell me what is 

the status of that rotation program? 

Mr. SCHNEIDER. Yes, sir. It is actually a two-step process. The 

first thing is we are putting in place as a result of that language 

a formal rotation program whereby we identify specific opportunities, the operating components, make sure the workforce understands that this is a necessary type of experience if people are 

going to rise to above a certain level. I have had a lot of experience 

with that in the Navy. So we are basically in the process of setting 

up the groundwork to implement across the Department that type 

of program. 

As a near-term action, what we have decided to do and have implemented already is we started a DHS Fellows Program. This is 

a program that basically takes some of the best and brightest from 

across the Department and work with them as a future leadership 

team over a period of a couple of years. We give them broad experiences in leadership. We expose them to some of the significant 

issues and problems that the Department has and they work on 

them. 

24

What we have decided to do, because we have this group of 

bright people already assembled, is to tack onto the end of their 

program—I think it is roughly a 6-month mandatory rotational assignment that would start implementing that right now with this 

group of very bright folks. 

So near-term step, implement this as part of our existing DHS 

Fellows Program, and the second is to basically have a much more 

institutionalized formal program across the Department. 

Senator AKAKA. What types of rewards or incentives will be in 

place to encourage mid-level employees to serve in other areas of 

the Department? 

Mr. SCHNEIDER. Well, my experience in the past has been, and 

what we used to do in the Navy is that some of our key field activities which were basically the operating components, we felt that 

the people to rise to the SES level, what we did in some cases was 

make it a mandatory requirement at some of our key field activities that to be selected for an SES position, they needed to have 

headquarters experience for a period of time. And so once the leadership of the organization recognized the value of that type of an 

experience, the best and brightest responded and what we were 

able to do across the board very successfully is to move people to 

very key assignments for roughly 8 months to a year and then 

move them back. That helps strengthen the concept of a unified organization. 

So what we are looking at is how do we make this an incentive 

for people? Do we do things like that? It may not work in every 

application. The other thing is there could be a series of different 

incentives, depending upon the career field. For example, the Chief 

Financial Officer (CFO), has already instituted a program that basically moves CFOs around the Department. I had the opportunity 

to talk to the entry-level class of folks that have been selected for 

this program. 

So I think it depends on the career field. I think it depends on 

the geography. And I think the incentives will range differently, 

and that is what we are looking at as part of our comprehensive 

across-the-Department program. 

Senator AKAKA. Secretary Schneider, last year at your confirmation hearing, I raised the issue of employee mentoring programs. 

I believe that mentoring programs are critical in passing knowledge from one generation of Federal workers to the next and also 

are critical in integrating legacy agencies into the Department. My 

question to you is, what is the Department doing to establish mentoring programs? 

Mr. SCHNEIDER. Senator, the first thing we have done is we have 

initiated, since I have been on board, with the working cooperation 

with OPM, an SES candidate development program. I had the opportunity about a month ago to talk to the first class that recently 

was selected—this has all happened very recently—class of SES 

candidates. And what we are in the process of doing as part of this 

program is to ensure that—and these are for people across the Department all over the continental United States—is to make sure 

that each of these candidates has a hand-picked mentor, and the 

reason being is we are investing a lot in these people. They are our 

25

future leaders and so we want to make sure that at the start, we 

have the right type of mentor for each one of these people. 

I had the opportunity to talk to all of the mentors for this population of candidates and to stress the importance of being a mentor. 

And so I think we have got mentors right now on the most nearterm program, which is the SES candidates. Now what we are trying to do is figure out how we institute, I will call it a mix-andmatch. In other words, throughout the Department, if you want to 

be a mentor, how do you sign up to be a mentor? How do we make 

sure that, in fact, we have the right people as mentors that really 

care about nurturing and guiding the career path? 

And then we need to basically make, once we have, I will call it 

a reservoir of mentors that possess the right skill set, then we need 

to go out and selectively across the Department, whether we do it 

by career fields or organizations, have people raise their hand and 

say they would like to formally have a mentor. So that is why I 

call it kind of a mix-and-match. There are several models in existence across government. Our intention is to basically take some of 

the best practices and utilize them. 

Senator AKAKA. General Walker. 

Mr. WALKER. I might note, Senator, and Under Secretary Schneider might be interested in this, we are in the process of rolling out 

a mentoring program at the GAO on a broad basis. We have had 

them in certain circumstances in the past, but now we are rolling 

it out on a much broader basis. Carol Willett, who is head of our 

Performance and Learning Center, would be somebody you may 

want to get in touch with and would be happy to share our experiences there. 

Senator AKAKA. Thank you very much. I just told Senator 

Voinovich that we have been talking about human capital, so I 

would like to ask Senator Voinovich if you have any further questions or comments to make. Senator Voinovich. 

Senator VOINOVICH. Thank you, Senator Akaka. 

I left off with the SBI.net, the multi-billion-dollar effort to secure 

the borders with a combination of fences, high-tech monitoring devices, and manpower. The Department can’t afford to have any 

more acquisition failures. How are you going to ensure that we 

don’t have the same problem with SBI that we had with the Coast 

Guard’s Deepwater Fleet Modernization Program? 

Mr. SCHNEIDER. Senator, I personally think that SBI.net is a 

good news story in terms of how to do a major acquisition properly. 

First off, this contract was awarded roughly the first part of October. We have a program manager for SBI.net that has 30-plus 

years’ experience managing major defense acquisition programs, 

highly technical Ph.D., supported by a strong technical team and 

contracting team. 

This is what I believe the Defense Department would call evolutionary or spiral acquisition. It is key to an initial deployment of 

a 28-mile sector of the Southwest border in Arizona, and as we 

speak, approximately—and this mix, just like you said, of technology, people, and infrastructure is going up. 

Senator VOINOVICH. Twenty-eight miles? 

Mr. SCHNEIDER. Twenty-eight miles. This is an initial 28-mile, 

$20 million initial deployment. So my way of looking at it is this. 

26

There was a substantial amount of modeling and simulation work 

that was done to characterize, if you will, the performance of the 

sensors, be they radar, electro-optic, IR, seismic, etc., as well as 

demonstrations referred to as the common operating picture that 

will move across the border as well as to centralized command and 

control. This initial deployment is scheduled to be completed in 

June. The Army has been contracted with to run an independent 

operational test and evaluation over the summer. 

And so the idea is that this architecture that is going into this 

28-mile segment is using equipment and sensors that exist. It is a 

modular and scalable architecture. We will get performance data 

and we will have obviously cost data on what it costs to field this 

thing at the end of the summer by which we can make the trades 

in terms of how well does this thing work. It will give us a chance 

to basically develop what is used, con-ops or tactics, training, and 

procedures to see how do we use this technology? How do we 

change our con-ops, etc.? How do we design our logistics paths so 

that once we detect, where do we intercept? How much in terms 

of temporary housing, because it is a mix of not just CBP, but ICE 

people? And so how effective is this thing? 

And then we do the analysis to decide, is this performance good 

enough or do we need to augment it with additional sensors, etc., 

make the trades,—this is why I think this is a good news story—

we will have within 1 year after the award of this contract what 

I consider to be a pretty good handle on how well does this system 

perform, what is the scalability in terms of cost, and I consider that 

to be a significant risk reduction step that, in Deepwater, there 

was none, okay? 

Senator VOINOVICH. So what you are saying is that——

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH [continuing]. You picked out a 28-mile area 

to try to develop a program and then use the information to expand——

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH [continuing]. So the end result will be a foolproof system. 

Mr. SCHNEIDER. Right. I think this is a very smart way to do this 

business. Frankly, I have looked at all the testimony that has come 

out of the Department in the 12 months on this. Frankly, I don’t 

think we have done as good a job as possible in terms of explaining 

what we are trying to do in terms of risk mitigation as well as, 

moving——

Senator VOINOVICH. Well, this is good. I am glad to hear that. 

Hopefully, what you are doing there is going to have some positive 

impact on some of the decisionmaking that we have to make with 

respect to our immigration policy. 

Mr. SCHNEIDER. This is a very well-structured contract. I mean, 

we have already met the contribution the government has to make. 

We are not locked into one of these things where to sever it or significantly change it, like in the case of Deepwater, is a big effort. 

So this is an apples-and-orange comparison. I am personally 

pleased with the way that this thing is structured, and from my 

observation, I meet with the folks running SBI.net every 4 weeks 

just to see how well we are doing and I think this is a model for 

27

how, from a headquarters standpoint, we need to exercise oversight 

over some of these major acquisition efforts. 

Senator VOINOVICH. Thank you. General Walker. 

Mr. WALKER. Senator, there are several important points here. 

One, there are some that will argue that the conceptual framework 

for the Deepwater Project had a lot of intellectual merit, but needless to say, it ended up with a totally unacceptable outcome. There 

are, however, significant differences, I believe, between the Deep 

Water and SBI.net. Many members, however, seem to be treating 

them about the same, and on the surface, I can understand why, 

because it is a system of systems approach and we are relying 

heavily on outside contractors to deliver for us. So from that standpoint, it is very similar. 

However, there are important differences and here are some of 

the elements I think are critical. First, we must nail down requirements. What are we attempting to accomplish? What are our requirements? And we need to fix them and not continue to change 

them. 

Second, we need to do it on an installment basis. Spiral development is the terminology that is used, but we need to do things on 

an installment basis, make sure that it works before we start to 

expand it more broadly. 

Third, we need to rely upon existing technologies to the maximum extent possible. In this regard, my son was an officer in the 

Marine Corps. He fought in Iraq, but before he went to Iraq, he 

was stationed in Yuma, Arizona. Yuma, Arizona, as you know, is 

on the border, and there is a very important testing facility for the 

Marine Corps there and they already use a lot of these technologies 

in order to try to keep people off of this testing range for personal 

safety and other reasons. So one of the big differences here is there 

are some technologies we can look at and we should maximize the 

use of existing technologies. 

In addition, we have to have enough people with the right kind 

of skills and knowledge to manage cost, quality, and performance 

of the contractors. We have absolutely got to have that. 

We need to protect the border, but there is another thing that 

relates to DHS that has to happen. If we don’t start enforcing the 

labor laws with regard to hiring of illegal immigrants, we will 

never solve the problem because the average wage in Mexico for an 

unskilled worker is $4.50 a day. Therefore, the economic draw for 

people and their families is such that you may cut down on the 

amount, but you won’t eliminate it. 

Finally, I think another thing that the Congress needs to think 

about is what does it take to become a citizen of this country? 

Merely because you are born in this country, is that enough, or 

should you have at least one parent who is a citizen of this country? It creates very perverse incentives to get people into the country to have somebody born in this country and then to serve as a 

basis to bring many more people into the country over time. That 

is something I think the Congress needs to think about, as well. 

Senator VOINOVICH. Thank you. 

Senator AKAKA. Thank you, Senator Voinovich. 

This has been a good hearing. I want to apologize again for missing part of this important hearing. I want to thank you both for 

28

the time you spent preparing and presenting this valuable information to this Subcommittee. We appreciate the hard work that both 

of you are doing to ensure the strength and efficiency of the Department of Homeland Security. 

Today’s hearing highlights the progress that DHS has made and 

the challenges that it still faces. I would like to draw attention to 

a couple of particularly important points from the testimony. 

I am pleased that Secretary Schneider has testified that DHS 

leadership is committed to identifying the reasons for low morale 

in the Department and addressing the problems quickly. The Department must work with and listen to employees in addressing 

their concerns just as it must with all human capital challenges. 

We are concerned that the Department is not doing enough to integrate core management functions across the Department, and as 

Mr. Walker testified, the Department still has no comprehensive 

integration strategy. Department-wide integration of functions such 

as human capital development, acquisition and procurement, financial management and information technology is crucial, and you 

have mentioned that. This Subcommittee will continue tracking 

DHS’s progress and we will do everything that we can to ensure 

the Department’s success. 

As the General mentioned, and I think he drew a time line here 

when he said DOD 70 years ago did work on some of this and DHS 

is not quite that old yet. But it is great that we are working together to try to change this and improve the quality of DHS. 

With that, again, I want to say thank you both so much, and my 

good friend Senator Voinovich. The hearing record will be open for 

1 week for additional statements or questions other Members may 

have. 

The hearing is adjourned. 

[Whereupon, at 11:03 a.m., the Subcommittee was adjourned.] 

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