Testimony 

Before the Committee on Government 

Reform, House of Representatives 

United States Government Accountability Office

GAO

For Release on Delivery 

Expected at 10:00 a.m. EDT 

Tuesday, August 3, 2004 9/11 COMMISSION 

REPORT 

Reorganization, 

Transformation, and 

Information Sharing 

Statement of the Honorable David M. Walker 

Comptroller General of the United States 

GAO-04-1033T 

On 8/4/04 this testimony was reissued because: On page 12, in footnote 11, 

"OGC" was changed to "OCG" to correct a transposition error. On page 21, 

in the next to the last sentence in the final paragraph, "might" was changed 

to "must," and "challenges was changed to "responsibilities and 

opportunities." In the same pargraph, in the last sentence, " executive" was 

changed to "effective." These correct transcription errors. 
Page 1 GAO-04-1033T 

Mr. Chairman and Members of the Committee: 

We at GAO applaud the efforts of the 9/11 Commission and the dedicated 

family members of the victims of that tragic day whose combined efforts 

have resulted in a definitive account of the past events, and a number of 

constructive recommendations for the future. The sorrow, loss, anger, and 

resolve so evident immediately following the September 11, 2001, attacks 

have been combined in an effort to help assure that our country will never 

again be caught unprepared. As the Commission notes, we are safer today 

but we are not safe, and much work remains. Although in today’s world we 

can never be 100 percent secure, and we can never do everything 

everywhere, we concur with the Commission’s conclusion that the 

American people should expect their government to do its very best. 

GAO’s mission is to help the Congress improve the performance and 

ensure the accountability of the federal government for the benefit of the 

American people. GAO has been actively involved in improving 

government’s performance in the critically important homeland security 

area both before and after the September 11 attacks. For example, GAO 

issued over 100 reports on homeland security-related issues and 

recommended the creation of a national focal point for homeland security 

before the attacks. We have also been privileged to actively support this 

Congress and the 9/11 Commission through details of key personnel, 

testimony before the Congress and the Commission, and sharing our 

research, products, and experiences. 

Just a few days after the tragic events of September 11, I testified about 

various challenges and strategies to address both our short- and long-term 

homeland security needs and outlined a framework for addressing our 

nation’s efforts. I emphasized that we as a nation must find the best ways 

to sustain our efforts over a significant time period, and leverage our finite 

human, financial, and technological resources in ways that would have the 

greatest impact. At that time, I identified several key questions that our 

government needed to address in order to improve the security of the 

homeland:1

1. What are our vision and national objectives to make our homeland 

more secure? 

 1

U.S. General Accounting Office. Homeland Security: A Framework for Addressing the 

Nation’s Efforts, GAO-01-1158T (Washington, D.C.: Sept. 21, 2001). 
Page 2 GAO-04-1033T 

2. What essential elements should constitute the government’s strategy 

for securing the homeland? 

3. How should the executive branch and the Congress be organized to 

address these issues? 

4. How should we assess the effectiveness of any homeland security 

strategy implementation to address the spectrum of threats? 

During the past few years, we have seen major efforts to address these 

questions, such as the formation of the Department of Homeland Security 

(DHS) and major initiatives such as strengthened passenger and baggage 

screening, increased border patrols, reform of the Federal Bureau of 

Investigation (FBI), and the creation of the Northern Command. However, 

as the 9/11 Commission and our own work indicates, these questions are 

yet to be fully addressed. 

GAO has continued to explore these topics on behalf of this Committee 

and the Congress, issuing over 200 homeland security related products 

since the September 11 attacks, developing over 500 recommendations for 

action, testifying on over 90 occasions before the Congress, and working 

closely with the Congress and federal agencies, including the FBI, the 

Department of Defense (DOD), and DHS, to implement key 

recommendations to improve homeland security mission performance, 

improve government efficiency, and promote enhanced accountability and 

oversight to assure the American people that the federal government is 

doing all that can reasonably be expected. 

In your request, you have asked me to address two issues: the lack of 

effective information sharing and analysis and the need for executive 

branch reorganization in response to the 9/11 Commission 

recommendations. Further, you have asked me to address how to remedy 

problems in information sharing and analysis by transforming the 

intelligence community from a system of “need to know” to one of a “need 

to share.” The 9/11 Commission has recommended several 

transformational changes, such as the establishment of a National 

Counterterrorism Center (NCTC) for joint operational planning and joint 

intelligence and replacing the current Director of Central Intelligence with 

a National Intelligence Director (NID) to oversee national intelligence 

centers across the federal government. The NID would manage the 

national intelligence program and oversee agencies that contribute to it. 
Page 3 GAO-04-1033T 

Yesterday, on August 2, 2004, the President asked Congress to create a 

NID position to be the principal intelligence advisor, appointed by the 

President, with the advice and consent of the Senate and serving at the 

pleasure of the President. Unlike the 9/11 Commission, the President did 

not propose that the NID be within the Executive Office of the President. 

He also announced that he will establish a NCTC whose Director would 

report to the NID, and that this center would build upon the analytic work 

of the existing Terrorist Threat Integration Center. He suggested that a 

separate center may be necessary for issues of weapons of mass 

destruction. Finally, he endorsed the 9/11 Commission’s call for 

reorganization of the Congressional oversight structure. There are, 

however, several substantive differences between the President’s proposal 

and the Commission’s recommendations. 

While praising the work of the 9/11 Commission, and endorsing several of 

its major recommendations in concept, the President differed with the 

Commission on certain issues. These differences reflect that reasoned and 

reasonable individuals may differ, and that several methods may exist to 

effectuate the transformational changes recommended. However, certain 

common principles and factors outlined in my statement today should 

help guide the debate ahead. 

Although the creation of a NID and a NCTC would be major changes for 

the intelligence community, other structural and management changes 

have occurred and are continuing to occur in government that provide 

lessons for the intelligence community transformation. While the 

intelligence community has historically been addressed separately from 

the remainder of the federal government, and while it undoubtedly 

performs some unique missions that present unique issues (e.g., the 

protection of sources and methods) its major transformational challenges 

in large measure are the same as those that face most government 

agencies. 

As a result, GAO’s findings, recommendations, and experience in 

reshaping the federal government to meet Twenty-First Century challenges 

will be directly relevant to the intelligence community and the 

recommendations proposed by the 9/11 Commission. Reorganizing 

government can be an immensely complex activity with both opportunities 

and risks. As a result, those who propose to reorganize government must 

make their rationale clear and build a consensus for change if proposed 

reorganizations are to succeed and be sustained. All key players must be 

involved in the process. 
Page 4 GAO-04-1033T 

The goal of improving information sharing and analysis with a focus upon 

the needs of the consumers of such improved information for specific 

types of threats can provide one of the powerful guiding principles 

necessary for successful transformation. The elevated threat advisory 

(orange alert) issued this past weekend for certain financial institutions in 

particular regions dramatically illustrates the value of improved analysis 

and sharing of information specific enough to guide effective and efficient 

preparedness actions by those most at risk. Earlier threat advisories 

issued by DHS were criticized for lack of specificity, “one size fits all” 

applicability, and lack of “actionable” information. 

In my testimony today, I will cover four major points. First, I describe the 

rationale for improving effective information sharing and analysis, and 

suggest some ways to achieve positive results. Improvements would 

include, for example, developing a comprehensive and coordinated 

national plan to facilitate information sharing and relationships. Second, I 

provide some overview perspectives on reorganizational approaches to 

improve performance and note necessary cautions. For example, the 

Congress has an important role to play in the design and implementation 

of a new structure, and oversight will be key to success. Third, I illustrate 

that strategic human capital management must be the centerpiece of any 

serious change management initiative or any effort to transform the 

cultures of government agencies, including that of the intelligence 

community. Strategic management includes, for example, consideration of 

human capital flexibilities. Finally, I emphasize the importance of resultsoriented strategic planning and implementation for the intelligence arena, 

focusing management attention on outcomes, not outputs, and the need 

for effective accountability and oversight to maintain focus upon 

improving performance. For example, much more attention needs to be 

paid to defining goals and measures, and providing for increased oversight 

of the performance of the intelligence community. I conclude by applying 

these concepts and principles to the challenges of reform in the 

intelligence community. 

This testimony draws upon our wide-ranging, completed, and ongoing 

work, and our institutional knowledge on homeland security, combating 

terrorism, and various government organizational and management issues. 

We conducted our work in accordance with generally accepted 

government auditing standards. 
Page 5 GAO-04-1033T 

Mr. Chairman, there is a continuing and heightened need for better and 

more effective and comprehensive information sharing. We agree the 

intelligence community needs to move from a culture of “need to know” to 

“need to share.” The 9/11 Commission has made observations regarding 

information sharing, and recommended procedures to provide incentives 

for sharing and creating a “trusted information network.” Many 

Commission recommendations address the need to improve information 

and intelligence collection, sharing, and analysis within the intelligence 

community itself. In addition, we must not lose sight of the fact that the 

purpose of improving information analysis and sharing is to provide better 

information throughout the federal government, and ultimately also to 

state and local governments, the private sector, and our citizens, so that 

collectively we are all better prepared. I want to make it clear that such 

information sharing must protect confidential sources and methods, and 

we do not propose any changes that would infringe upon those 

protections. 

In addition, as the Congress considers the Commission’s 

recommendations, I would also recommend that it consider the role that 

state and local agencies and the private sector should play as informed 

partners in homeland security. The Commission’s work, as is the case with 

our own observations, notes the changing perspective of “federal” versus 

“other entities’” roles in homeland security and homeland defense. In 

performing its constitutional role of providing for the common defense, we 

have observed that the federal government must prevent and deter 

terrorist attacks on our homeland as well as detect impending danger 

before attacks occurs. Although it may be impossible to detect, prevent, or 

deter every attack, steps can and must be taken to reduce the risk posed 

by the threats to homeland security. Furthermore, in order to be 

successful in this area, the federal government must partner with a variety 

of organizations, both domestic and international. 

Traditionally, protecting the homeland against threats was generally 

considered a federal responsibility. To meet this responsibility, the federal 

government (within and across federal agencies) gathers intelligence, 

which is often classified as national security information. This information 

is protected and safeguarded to prevent unauthorized access by requiring 

appropriate security clearances and a “need to know.” Normally, the 

federal government did not share national-level intelligence with states 

and cities, since they were not viewed as having a significant role in 

preventing terrorism. Therefore, the federal government did not generally 

grant state and city officials access to classified information. After the 

September 11 attacks, however, the view that states and cities do not have 

Stronger Intelligence 

Sharing Is Needed 
Page 6 GAO-04-1033T 

a significant role in homeland security changed, and the “need to share” 

intelligence information became clear.2

However, reconciling the need to share with actually sharing has been at 

the heart of the 9/11 Commission’s recommendations and our own 

findings and observations on practices to improve information sharing. In 

work begun before the September 11 attacks,3

 we reported on informationsharing practices of organizations that successfully share sensitive or timecritical information. We found that these practices include: 

• establishing trust relationships with a wide variety of federal and 

nonfederal entities that may be in a position to provide potentially 

useful information and advice on vulnerabilities and incidents, 

• developing standards and agreements on how shared information will 

be used and protected, 

• establishing effective and appropriately secure communications 

mechanisms, and 

• taking steps to ensure that sensitive information is not inappropriately 

disseminated. 

As you might recall, we also testified before this committee last year on 

information sharing. GAO has made numerous recommendations related 

to sharing, particularly as they relate to fulfilling DHS’s critical 

infrastructure protection responsibilities.4

 The Homeland Security 

Information Sharing Act, included in the Homeland Security Act of 2002 

(P.L. 107-296), requires the President to prescribe and implement 

procedures for facilitating homeland security information sharing and 

establishes authorities to share different types of information, such as 

grand jury information; electronic, wire, and oral interception information; 

and foreign intelligence information. In July 2003, the President assigned 

 2

U.S. General Accounting Office, Homeland Security: Efforts to Improve Information 

Sharing Need to Be Strengthened, GAO-03-760 (Washington, D.C.: August 2003). 

3

U.S. General Accounting Office, Information Sharing: Practices That Can Benefit 

Critical Infrastructure Protection, GAO-02-24 (Washington, D.C.: Oct. 15, 2001). 

4

U.S. General Accounting Office. Homeland Security: Information Sharing 

Responsibilities, Challenges, and Key Management Issues, GAO-03-1165T (Washington, 

D.C.: Sept. 17, 2003); GAO-03-715T (May 8, 2003). 
Page 7 GAO-04-1033T 

these functions to the Secretary of Homeland Security, but no deadline 

was established for developing such information sharing procedures.. 

To accomplish its missions, DHS must gain access to, receive, and analyze 

law enforcement information, intelligence information, and other threat, 

incident, and vulnerability information from federal and nonfederal 

sources, and it must analyze such information to identify and assess the 

nature and scope of terrorist threats. DHS must also share information 

both internally and externally with agencies and law enforcement on such 

things as goods and passengers inbound to the United States and 

individuals who are known or suspected terrorists and criminals (e.g., 

watch lists). 

As we reported in June 2002,5

 the federal government had made progress 

in developing a framework to support a more unified effort to secure the 

homeland, including information sharing. However, this work found 

additional needs and opportunities to enhance the effectiveness of 

information sharing among federal agencies with homeland security or 

homeland defense responsibilities, and with various state and city law 

enforcement agencies that have a key role in homeland security, as well as 

with the private sector. 

As we reported in August 2003,6

 efforts to improve intelligence and 

information sharing still needed to be strengthened. Intelligence- and 

information- sharing initiatives implemented by states and cities were not 

effectively coordinated with those of federal agencies, nor were they 

coordinated within and between federal entities. Furthermore, neither 

federal, state, nor city governments considered the information-sharing 

process to be effective. For example, information on threats, methods, and 

techniques of terrorists was not routinely shared; information that was 

shared was not perceived as timely, accurate, or relevant; and federal 

officials have not established comprehensive processes or procedures to 

promote effective information sharing. At that time, we recommended that 

the Secretary of Homeland Security work with the heads of other federal 

agencies and state and local authorities to: 

 5

U.S. General Accounting Office, Homeland Security: Key Elements to Unify Efforts Are 

Under Way but Uncertainty Remains, GAO-02-610 (Washington, D.C.: June 7, 2002). 

6

GAO-03-760. 
Page 8 GAO-04-1033T 

• incorporate the existing information-sharing guidance that is contained 

in the various national strategies and information-sharing procedures 

required by the Homeland Security Act, 

• establish a clearinghouse to coordinate the various information-sharing 

initiatives to eliminate possible confusion and duplication of effort, 

• fully integrate states and cities into the national policy-making process 

for information sharing and take steps to provide greater assurance 

that actions at all levels of government are mutually reinforcing, 

• identify and address the perceived barriers to federal information 

sharing, and 

• use a survey method or a related data collection approach to 

determine, over time, the needs of private and public organizations for 

information related to homeland security and to measure progress in 

improving information sharing at all levels of government. 

DHS concurred with the above recommendations. 

DHS and other federal agencies have instituted major counterterrorism 

efforts involving information and intelligence sharing over the past 2 years. 

For example, the Terrorist Threat Integration Center (T-TIC) was designed 

to improve the collection, analysis, and sharing of all counterterrorism 

intelligence gathered in the United States and overseas. The DHS 

Information Analysis and Infrastructure Protection (IAIP) Directorate is 

intended to receive intelligence from a variety of federal sources and act 

as a central fusion point for all intelligence relevant to homeland security 

and related critical infrastructure protection. Furthermore, the FBI has 

created a new Office of Intelligence, established a National Joint 

Terrorism Taskforce, expanded its Joint Terrorist Task Forces (JTTFs), 

and recently made operational an interagency joint Terrorist Screening 

Center. 

Although improvements had been made, we continue to identify needs, 

such as developing a comprehensive and coordinated national plan to 

facilitate information-sharing on critical infrastructure protection (CIP); 

developing productive information sharing relationships among the federal 

government and state and local governments and the private sector; and 

providing appropriate incentives for nonfederal entities to increase 

information sharing with the federal government and enhance other 

critical infrastructure protection efforts. As we recently reported, 
Page 9 GAO-04-1033T 

information sharing and analysis centers (ISACs) have identified a number 

of challenges to effective CIP information sharing between the federal 

government and state and local governments and the private sector, 

including sharing information on physical and cyber threats, 

vulnerabilities, incidents, potential protective measures, and best 

practices. Such challenges include building trusted relationships; 

developing processes to facilitate information sharing; overcoming 

barriers to information sharing; clarifying the roles and responsibilities of 

the various government and private sector entities that are involved in 

protecting critical infrastructure; and funding ISAC operations and 

activities.7

Although DHS has taken a number of actions to implement the 

public/private partnership called for by federal CIP policy, it has not yet 

developed a plan that describes how it will carry out its informationsharing responsibilities and relationships, including consideration of 

appropriate incentives for nonfederal entities to increase information 

sharing with the federal government, increase sector participation, and 

perform other specific tasks to protect the critical infrastructure. Such a 

plan could encourage improved information sharing among the ISACs, 

other CIP entities, and the department by clarifying the roles and 

responsibilities of all the entities involved and clearly articulating actions 

to address the challenges that remain. 

The department also lacks policies and procedures to ensure effective 

coordination and sharing of ISAC-provided information among the 

appropriate components within the department. Developing such policies 

and procedures would help ensure that information is appropriately 

shared among its components and with other government and private 

sector CIP entities. GAO recommended that the Secretary of Homeland 

Security direct officials within DHS to (1) proceed with the development 

of an information-sharing plan that describes the roles and responsibilities 

of DHS, the ISACs, and other entities and (2) establish appropriate 

department policies and procedures for interactions with other CIP 

entities and for coordination and information sharing among DHS 

components. DHS has generally agreed with our findings and 

recommendations. 

 7

U.S. General Accounting Office. Critical Infrastructure Protection: Improving 

Information Sharing with Infrastructure Sectors, GAO-04-780 (Washington, D.C.: July 9, 

2004). 
Page 10 GAO-04-1033T 

DHS has also implemented the Homeland Security Advisory System. 

Utilizing five color-coded threat levels, the system was established in 

March 2002 to disseminate information regarding the risk of terrorist acts 

to federal agencies, states and localities, and the public. Our recent work 

indicates that DHS has not yet officially documented communication 

protocols for providing threat information and guidance to federal 

agencies and states, with the result that some federal agencies and states 

may first learn about changes in the national threat level from media 

sources. Moreover, federal agencies and states responding to our inquiries 

indicated that they generally did not receive specific threat information 

and guidance, and they believed this shortcoming hindered their ability to 

determine whether they were at risk as well as their ability to determine 

and implement appropriate protective measures.8

In addition, there is a need for an improved security clearance process so 

that state, local, and private sector officials have the access to information 

they need, but with appropriate security safeguards in place, while efforts 

to improve information sharing continue. In a recent report,9

 we described 

the FBI’s process for granting access to classified information for state 

and local law enforcement officials. The FBI’s goal is to complete the 

processing for secret security clearances within 45 to 60 days and top 

secret security clearances within 6 to 9 months. While the FBI’s processing 

of top secret security clearances has been generally timely, that was not 

the case for secret clearances. However, the FBI made substantial 

improvements in 2003 to the timeliness of processing secret clearances. 

We also have conducted a body of work that has found that long-standing 

security clearance backlogs and delays in determining clearance eligibility 

affect industry personnel, military members, and federal employees. For 

example, as we reported in May of this year,10 more than 187,000 

reinvestigations, new investigations, or clearance adjudications were not 

completed for industry personnel alone within established time frames. 

 8

U.S. General Accounting Office, Homeland Security: Communication Protocols and Risk 

Communication Principles Can Assist in Refining the Advisory System, GAO-04-682 

(Washington, D.C.: June 25, 2004). 

9

U.S. General Accounting Office. Security Clearances: FBI Has Enhanced Its Process for 

State and Local Law Enforcement Officials, GAO-04-596 (Washington, D.C.: April 30, 

2004). 

10U.S. General Accounting Office, DOD Personnel Clearances: Additional Steps Can Be 

Taken to Reduce Backlogs and Delays in Determining Security Clearance Eligibility for 

Industry Personnel, GAO-04-632 (Washington, D.C: May 26, 2004). 
Page 11 GAO-04-1033T 

Delays in conducting investigations and determining clearance eligibility 

can increase national security risks, prevent industry personnel from 

beginning or continuing work on classified programs and activities, or 

otherwise hinder the sharing of classified threat information with officials 

having homeland security or homeland defense responsibilities. 

The FBI has also taken a number of steps to enhance its information 

sharing with state and local law enforcement officials, such as providing 

guidance and additional staffing. The FBI has further increased the 

number of its JTTFs, increasing them from 35 prior to the September 11 

attacks to 84 as of July 2004 and state and local law enforcement officials’ 

participation on these task forces has been increased. The FBI has at least 

one JTTF in each of its 56 field locations and plans to expand to 100. The 

FBI also circulates declassified intelligence through a weekly bulletin and 

provides threat information to state and local law enforcement officials via 

various database networks. 

These critical needs for better information and information sharing 

identified by federal, state, and local governments and the private sector 

must form the clear rationale and basis for transformation of the 

intelligence community. Reorganization isn’t the objective; rather it is 

improving government performance to meet twenty first century 

information sharing requirements. 9/11 Commission Chairman Thomas H. 

Kean and Vice-Chairman Lee H. Hamilton, in their testimony before the 

Senate Governmental Affairs Committee on July 30, 2004, noted: 

“There is a fascination in Washington with bureaucratic solutions—rearranging the wiring 

diagrams, creating new organizations. We do recommend some important institutional 

changes. We will articulate and defend those proposals. But we believe reorganizing 

governmental institutions is only a part of the agenda before us. Some of the saddest 

aspects of the 9/11 story are the outstanding efforts of so many individual officials 

straining, often without success, against the boundaries of the possible. Good people can 

overcome bad structures. They should not have to. We have the resources and the people. 

We need to combine them more effectively, to achieve unity of effort.” 

GAO agrees with this comment, and we have noted several related 

suggestions below. 
Page 12 GAO-04-1033T 

As the committee is aware, GAO has done extensive work on federal 

organizational structure and how reorganization can improve 

performance. The 9/11 Commission has recommended major changes to 

unify strategic intelligence and operational planning with a National 

Counterterrorism Center and provide the intelligence community with a 

new National Intelligence Director. As the Congress and the 

administration consider the 9/11 Commission’s recommendations, they 

should consider how best to address organizational changes, roles and 

responsibilities, and functions for intelligence-sharing effectiveness. 

In response to the emerging trends and long-term fiscal challenges the 

government faces in the coming years, we have an opportunity to create 

highly effective, performance-based organizations that can strengthen the 

nation’s ability to meet the challenges of the twenty first century and reach 

beyond our current level of achievement. The federal government cannot 

accept the status quo as a given—we need to reexamine the base of 

government policies, programs, structures, and operations. We need to 

minimize the number of layers and silos in government, emphasize 

horizontal versus vertical actions, while moving our policy focus to 

coordination and integration. The result, we believe, will be a government 

that is effective and relevant to a changing society—a government that is 

as free as possible of outmoded commitments and operations that can 

inappropriately encumber the future, reduce our fiscal flexibility, and 

prevent future generations from being able to make choices regarding 

what roles they think government should play. 

Many departments and agencies, including those of the intelligence 

community, were created in a different time and in response to challenges, 

threats, and priorities very different from today’s world. Some have 

achieved their one time missions and yet they are still in business. Many 

have accumulated responsibilities beyond their original purposes. Many 

are still focused on their original mission that may not be relevant or as 

high a priority in today’s world. Others have not been able to demonstrate 

how they are making a difference in real and concrete terms. Still others 

have overlapping or conflicting roles and responsibilities. Redundant, 

unfocused, uncoordinated, outdated, misaligned, and nonintegrated 

programs and activities waste scarce funds, confuse and frustrate program 

customers, and limit overall efficiency and effectiveness.11 These are the 

 11U.S. General Accounting Office, Managing in the New Millennium: Shaping a More 

Efficient and Effective Government for the 21st Century, GAO/T-OCG-00-9 (Washington, 

D.C.: Mar. 29, 2000). 

While Changes May 

be Needed, Caution 

and Care Must be 

Taken 
Page 13 GAO-04-1033T 

charges highlighted by the 9/11 Commission’s findings and 

recommendations. 

The problems the 9/11 Commission has described with our intelligence 

activities indicate a strong need for reexamining the organization and 

execution of those activities. However, any restructuring proposal requires 

careful consideration. Fixing the wrong problems or even worse, fixing the 

right problems poorly, could cause more harm than good. 

Past executive reorganization authority has served as an effective tool for 

achieving fundamental reorganization of federal operations. As I have 

testified before this committee,12 the granting of executive reorganization 

authority to the President can serve to better enable the President to 

propose government designs that would be more efficient and effective in 

meeting existing and emerging challenges involving the intelligence 

community and information sharing with other entities. However, lessons 

learned from prior federal reorganization efforts suggest that reorganizing 

government can be an immensely complex activity that requires consensus 

on both the goals to be achieved and the process for achieving them. Prior 

reorganization authority has reflected a changing balance between 

legislative and executive roles. Periodically, between 1932 and 1984, the 

Congress passed legislation providing the President one form or another 

of expedited reorganization authority.13

Congressional involvement is needed not just in the initial design of the 

reorganization, but in what can turn out to be a lengthy period of 

implementation. The Congress has an important role to play—in both its 

legislative and oversight capacities—in establishing, monitoring, and 

maintaining progress to attain the goals envisioned by government 

transformation and reorganization efforts. However, as the 9/11 

Commission has noted, past oversight efforts in the intelligence area have 

been wholly inadequate. 

To ensure efficient and effective implementation and oversight, the 

Congress will also need to consider realigning its own structure. With 

 12U.S. General Accounting Office, Executive Reorganization Authority: Balancing 

Executive and Congressional Roles in Shaping the Federal Government’s Structure, GAO03-624T (Washington, D.C.: April 3, 2003). 

13Ronald C. Moe, Congressional Research Service, The President’s Reorganization 

Authority: Review and Analysis (Washington, D.C.: Mar. 8, 2001). 
Page 14 GAO-04-1033T 

changes in the executive branch, the Congress should adapt its own 

organization. For example, the Congress has undertaken a reexamination 

of its committee structure, with the implementation of DHS. The DHS 

legislation instructed both houses of Congress to review their committee 

structures in light of the reorganization of homeland security 

responsibilities within the executive branch. Similarly, the 9/11 

Commission recommends realigning congressional oversight to support its 

proposals to reorganize intelligence programs. 

The 9/11 Commission stresses the need for stronger capabilities and 

expertise in intelligence and national security to support homeland 

security. For example, the Commission recommends rebuilding the 

Central Intelligence Agency’s analytical capabilities, enhancing the 

agency’s human intelligence capabilities, and developing a stronger 

language program. 

We believe, Mr. Chairman, that at the center of any serious change 

management initiative are the people involved—people define the 

organization’s culture, drive its performance, and embody its knowledge 

base. They are the source of all knowledge, process improvement, and 

technological enhancement efforts. As such, strategic human capital (or 

people) strategy is the critical element to maximizing government’s 

performance and ensuring accountability of our intelligence community 

and homeland security efforts. 

Experience shows that failure to adequately address—and often even 

consider—a wide variety of people and cultural issues is at the heart of 

unsuccessful organizational transformations. Recognizing the “people” 

element in these initiatives and implementing strategies to help individuals 

maximize their full potential in the new environment is the key to a 

successful transformation of the intelligence community and related 

homeland security organizations. Thus, organizational transformations 

that incorporate strategic human capital management approaches will 

help to sustain agency efforts and improve the efficiency, effectiveness, 

and accountability of the federal government. To help, we have identified a 

Addressing 

Intelligence Human 

Capital Needs 

Requires Strategic 

Management 
Page 15 GAO-04-1033T 

set of practices that have been found to be central to any successful 

transformation effort.14

Committed, sustained, highly qualified, and inspired leadership, and 

persistent attention by all key parties in the successful implementation of 

organizational transformations, will be essential, if lasting changes are to 

be made and the challenges we are discussing today are to be effectively 

addressed. It is clear that in a knowledge-based federal government, 

including the intelligence community, people—human capital—are the 

most valuable asset. How these people are organized, incented, enabled, 

empowered, and managed is key to the reform of the intelligence 

community and other organizations involved with homeland security. 

We have testified that federal human capital strategies are not yet 

appropriately constituted to meet current and emerging challenges or to 

drive the needed transformation across the federal government. The basic 

problem has been the long-standing lack of a consistent approach to 

marshaling, managing, and maintaining the human capital needed to 

maximize government performance and ensure its accountability to the 

people. Thus, federal agencies involved with the intelligence community 

and other homeland security organizations will need the most effective 

human capital systems to address these challenges and succeed in their 

transformation efforts during a period of sustained budget constraints. 

This includes aligning their strategic planning and key institutional 

performance with unit and individual performance management and 

reward systems. 

Fortunately, the Congress has passed legislation providing many of the 

authorities and tools agencies need. In fact, more progress in addressing 

human capital challenges was made in the last 3 years than in the last 20, 

and significant changes in how the federal workforce is managed are 

under way. For example, the Congress passed legislation providing 

governmentwide human capital flexibilities, such as direct hire authority, 

the ability to use category rating in the hiring of applicants instead of the 

“rule of three,” and the creation of chief human capital officer (CHCO) 

positions and the CHCO Council. In addition, individual agencies—such as 

the National Aeronautical and Space Administration (NASA), DoD, and 

 14U. S. General Accounting Office, Results-Oriented Cultures: Implementation Steps to 

Assist Mergers and Organizational Transformations, GAO-03-669 (Washington, D.C.: July 

2, 2003). 
Page 16 GAO-04-1033T 

DHS—received flexibilities intended to help them manage their human 

capital strategically to achieve results. 

While many agencies have received additional human capital flexibilities, 

additional ones may be both needed and appropriate for the intelligence, 

homeland security, national defense, and selected other agencies. While 

the above authorities are helpful, in order to enable agencies to rapidly 

meet their critical human capital needs, the Congress should consider 

legislation granting selected agency heads the authority to hire a limited 

number of positions for a stated period of time (e.g., up to 3 years) on a 

noncompetitive basis. The Congress has passed legislation granting this 

authority to the Comptroller General of the United States and it has helped 

GAO to address a range of critical needs in a timely, effective, and prudent 

manner over many years. 

Recent human capital actions have significant precedent-setting 

implications for the rest of government. They represent progress and 

opportunities, but also present legitimate concerns. We are fast 

approaching the point where “standard governmentwide” human capital 

policies and processes are neither standard nor governmentwide. As the 

Congress considers the need for additional human capital authorities for 

the intelligence community, it should keep in mind that human capital 

reform should avoid further fragmentation within the civil service, ensure 

reasonable consistency within the overall civilian workforce, and help 

maintain a reasonably level playing field among federal agencies in 

competing for talent. Importantly, this is not to delay needed reforms for 

any agency, but to accelerate reform across the federal government and 

incorporate appropriate principles and safeguards. 

As the Congress considers reforms to the intelligence communities’ human 

capital policies and practices, it should require that agencies have in place 

the institutional infrastructure needed to make effective use of any new 

tools and authorities. At a minimum, this institutional infrastructure 

includes a human capital planning process that integrates the agency’s 

human capital policies, strategies, and programs with its program goals 

and mission and desired outcomes; the capabilities to effectively develop 

and implement a new human capital system; and, importantly, a set of 

appropriate principles and safeguards, including reasonable transparency 

and appropriate accountability mechanisms, to ensure the fair, effective, 

credible, nondiscriminatory implementation and application of a new 

system. 
Page 17 GAO-04-1033T 

As Chairman Kean and Vice-Chairman Hamilton caution, organizational 

changes are just a part of the reforms needed. The Commission rightly 

says that effective public policies need concrete objectives, agencies need 

to be able to measure success, and the American people are entitled to see 

some standards for performance so they can judge, with the help of their 

elected representatives, whether the objectives are being met. To 

comprehensively transform government to improve intelligence and 

homeland security efforts, we must also carefully assess and define 

mission needs, current capabilities, resource practicalities, and priorities. 

And we must implement our plans to achieve those mission needs. 

The federal government is well short of where it needs to be in setting 

national homeland security goals, including those for intelligence and 

other mission areas, to focus on results—outcomes—not inputs and 

outputs which were so long a feature of much of the federal government’s 

strategic planning. We are concerned that the tenets of results 

management—shifting management attention from inputs, processes, and 

outputs to what is accomplished with them (outcomes or results)—still 

are elusive in homeland security goal setting and operational planning. We 

advocate a clear and comprehensive focus on homeland security results 

management, including the mission of intelligence and information 

sharing. Results management should have the elements to determine (1) if 

homeland security results are being achieved within planned timeframes, 

(2) if investments and resources are being managed properly, (3) if results 

are being integrated into ongoing decision making and priority setting, and 

(4) what action is needed to guide future investment policies and influence 

behavior to achieve results. These actions go far beyond a limited focus on 

organizational structure. 

As the Gilmore Commission stated, a continuing problem for homeland 

security has been the lack of clear strategic guidance from the federal level 

about the definition and objectives of preparedness and how states and 

localities will be evaluated in meeting those objectives.15 The 9/11 

Commission’s broad recommendations, if adopted, will require a 

thoughtful, detailed, results-oriented management approach in defining 

specific goals, activities, and resource requirements. 

 15The Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving 

Weapons of Mass Destruction, V. Forging America’s New Normalcy, (Arlington, VA.: Dec. 

15, 2003). 

Managing for Results 
Page 18 GAO-04-1033T 

The track record for homeland security results management to date is 

spotty. The National Strategy for Homeland Security, issued by the 

administration in July 2002, was intended to mobilize and organize the 

nation to secure the homeland from terrorist attacks.16 Intelligence and 

warning was one of its critical mission areas. Despite the changes over the 

past two years, the National Strategy has not been updated. In general, 

initiatives identified in the strategy do not provide a baseline set of 

performance goals and measures upon which to assess and improve 

preparedness, stressing activities rather than results. For example, for 

intelligence and warning, the National Strategy identified major initiatives 

that are activities, such as implementing the Homeland Security Advisory 

System, utilizing dual-use analysis to prevent attacks; and employing “red 

team” techniques. 

Establishing clear goals and performance measures is critical to ensuring 

both a successful and a fiscally responsible and sustainable preparedness 

effort. We are currently doing work on the extent to which the National 

Strategy’s goals are being implemented by federal agencies. Senator 

Lieberman has recently introduced legislation requiring executive branch 

efforts to produce a national homeland security strategy. We support the 

concept of a legislatively required strategy that can be sustained across 

administrations and provides a framework for congressional oversight. 

Before the administration’s National Strategy for Homeland Security was 

issued, we had stated that the strategy should include steps designed to (a) 

reduce our vulnerability to threats; (b) use intelligence assets and other 

broad-based information sources to identify threats and share information 

as appropriate; (c) stop incidents before they occur; (d) manage the 

consequences of an incident; and (e) in the case of terrorist attacks, 

respond by all means available, including economic, diplomatic, and 

military actions that, when appropriate, are coordinated with other 

nations.17 Earlier this year we provided a set of desirable characteristics 

for any effective national strategy that could better focus national 

 16The White House, The National Strategy for Homeland Security, (Washington, D.C.: July 

2002). 

17U.S. General Accounting Office, Homeland Security: Challenges and Strategies in 

Addressing Short- and Long-Term National Needs, GAO-02-160T (Washington, D.C.: Nov. 

7, 2001). 
Page 19 GAO-04-1033T 

homeland security decision making and increase the emphasis on 

outcomes.18

Strategic planning is critical to provide mission clarity, establish long-term 

performance strategies and goals, direct resource decisions, and guide 

transformation efforts. In this context, we are reviewing the DHS strategic 

planning efforts. Our work includes a review of the manner by which the 

Department’s planning efforts support the National Strategy for Homeland 

Security and the extent to which its strategic plan reflects the 

requirements of the Government Performance and Results Act of 1993. 

DHS’s planning efforts are evolving. The current published DHS strategic 

plan contains vague strategic goals and objectives for all its mission areas, 

including intelligence, and little specific information to guide 

congressional decision making. For example, the strategic plan includes 

an overall goal to identify and understand threats, assess vulnerabilities, 

determine potential impacts, and disseminate timely information to DHS’s 

homeland security partners and the American public. That goal has very 

general objectives, such as gathering and fusing all terrorism-related 

intelligence and analyzing and coordinating access to information related 

to potential terrorist or other threats. Discussion of annual goals are 

missing, and supporting descriptions of means and strategies are vague, 

making it difficult to determine if they are sufficient to achieve the 

objectives and overall goals. These and related issues will need to be 

addressed as the DHS planning effort moves forward. 

In another effort to set expectations, the President, through Homeland 

Security Presidential Directive 8,19 has tasked the Department of Homeland 

Security with establishing measurable readiness priorities and targets 

appropriately balancing the potential threat and magnitude of terrorist 

attacks, major disasters, and other emergencies with resources required to 

prevent, respond to, and recover from them. The task also is to include 

readiness metrics and elements supporting the national preparedness goal, 

including standards for preparedness assessments and strategies, and a 

system for assessing the nation’s overall preparedness to respond to major 

 18U.S. General Accounting Office, Combating Terrorism: Evaluation of Selected 

Characteristics in National Strategies Related to Terrorism, GAO-04-408T (Washington, 

D.C.: Feb. 3, 2004). 

19The White House, Homeland Security Presidential Directive 8 (National Preparedness), 

(Washington, D.C.: Dec. 17, 2003). 
Page 20 GAO-04-1033T 

events, especially involving acts of terrorism. However, those taskings 

have yet to be completed, but they will have to address the following 

questions: 

• What are the appropriate national preparedness goals and measures? 

What are appropriate subgoals for specific areas such as critical 

infrastructure sectors? 

• Do these goals and subgoals take into account other national goals 

such as economic security or the priority objectives of the private 

sector or other levels of government? 

• Who should be accountable for achieving the national goals and 

subgoals? 

• How would a national results management and measurement system 

be crafted, implemented, and sustained for the national preparedness 

goals? 

• How would such a system affect needs assessment and be integrated 

with funding and budgeting processes across the many organizations 

involved in homeland security? 

However, even if we have a robust and viable national strategy for 

homeland security, DHS strategic plan, and national preparedness goals, 

the issue of implementation remains. Implementation cannot be assured, 

or corrective action taken, if we are not getting the results we want, 

without effective accountability and oversight. The focus for homeland 

security must be on constantly staying ready and prepared for unknown 

threats and paying attention to improving performance. In addition to 

continuing our ongoing work in major homeland security mission areas 

such as border and transportation security and emergency preparedness, 

GAO can help the Congress more effectively oversee the intelligence 

community, and any changes should consider, in our view, an appropriate 

role for the GAO. 

With some exceptions, GAO has broad-based authority to conduct reviews 

relating to various intelligence agencies. However, because of historical 

resistance from the intelligence agencies and the general lack of support 

from the intelligence committees in the Congress, GAO has done limited 

work in this community over the past 25 years. For example, within the 

past 2 years, we have done a considerable amount of work in connection 

with the FBI and its related transformational efforts. In addition, GAO has 
Page 21 GAO-04-1033T 

recently had some interaction with the Defense Intelligence Agency in 

connection with its transformation efforts. Furthermore, GAO has 

conducted extensive work on a wide range of government 

transformational and homeland security issues over the past several years. 

As always, we stand ready to offer GAO’s assistance in support of any of 

the Congress’ oversight needs. 

In conclusion, on the basis of GAO’s work in both the public and the 

private sector over many years, and my own change management 

experience, it is clear to me that many of the challenges that the 

intelligence community faces are similar or identical to the transformation 

challenges applicable to many other federal agencies, including GAO. 

Specifically, while the intelligence agencies are in a different line of 

business than other federal agencies, they face the same challenges when 

it comes to strategic planning and budgeting, organizational alignment, 

human capital strategy, and the management of information technology, 

finances, knowledge, and change. 

For the intelligence community, effectively addressing these basic 

business transformation challenges will require action relating to five key 

dimensions, namely, structure, people, process, technology, and 

partnerships. It will also require a rethinking and cultural transformation 

in connection with intelligence activities both in the executive branch and 

in the Congress. 

With regard to the structure dimension, there are many organizational 

units within the executive branch and in the Congress with responsibilities 

in the intelligence and homeland security areas. Basic organizational and 

management principles dictate that, absent a clear and compelling need 

for competition or checks and balances, there is a need to minimize the 

number of entities and levels in key decision making, oversight, and other 

related activities. In addition, irrespective of how many units and levels 

are involved, someone has to be in charge of all key planning, budgeting, 

and operational activities. One person should be responsible and 

accountable for all key intelligence activities within the executive branch, 

and that person should report directly to the President. This position must 

also have substantive strategic planning, budget, operational integration, 

and accountability responsibilities and opportunities for the intelligence 

community in order to be effective. In addition, this person should be 

appointed by the President and confirmed by the Senate in order to help 

facilitate success and ensure effective oversight. 

The Challenges Faced 

in Intelligence Reform 
Page 22 GAO-04-1033T 

With regard to the oversight structure of the Congress, the 9/11 

Commission noted that there are numerous players involved in 

intelligence activities and yet not enough effective oversight is being done. 

As a result, a restructuring of intelligence and homeland security related 

activities in the Congress is also needed. In this regard, it may make sense 

to separate responsibility for intelligence activities from personal privacy 

and individual liberty issues in order to ensure that needed attention is 

given to both while providing for a check and balance between these 

competing interests. 

With regard to the people dimension, any entity is only as good as its 

people, and as I stated earlier, the intelligence community is no exception. 

In fact, since the intelligence community is in the knowledge business, 

people are of vital importance. The people challenge starts at the top, and 

key leaders must be both effective and respected. In addition, they need to 

stay in their positions long enough to make a real and lasting difference. In 

this regard, while the FBI director has a 10-year term appointment, most 

agency heads serve at the pleasure of their appointing official and may 

serve a few years in their respective positions. This is a problem when the 

agency is in the need of a cultural transformation, such as that required in 

the intelligence community, which typically takes at least 5 to 7 years to 

effectuate. 

In addition to having the right people and the right “tone at the top,” 

agencies need to develop and execute workforce strategies and plans 

helping to ensure that they have the right people with the right skills in the 

required numbers to accomplish their missions. Many of these missions 

have changed in the post-Cold War and post September 11 world. This is 

especially critical in connection with certain skills that are in short supply, 

such as information technology and certain languages, such as Arabic. In 

addition, as the 9/11 Commission and others have noted, it is clear that 

additional steps are necessary to strengthen our human intelligence 

capabilities. 

With regard to the process and technology dimensions, steps need to be 

taken to streamline and expedite the processes used to analyze and 

disseminate the tremendous amount of intelligence and other information 

available to the intelligence community. This will require extensive use of 

technology to sort and distribute information both within agencies and 

between agencies and other key players in various sectors both 

domestically and internationally, as appropriate. The 9/11 Commission and 

others have noted various deficiencies in this area, such as the FBI’s 

information technology development and implementation challenges. At 
Page 23 GAO-04-1033T 

the same time, some successes have occurred during the past 2 years that 

address process and technology concerns. For example, the Terrorist 

Screening Center, created under Homeland Security Presidential Directive 

6 is intended to help in the consolidation of the federal government’s 

approach to terrorism screening.20 This center has taken a number of steps 

to address various organizational, technological, integration, and other 

challenges, and it may serve as a model for other needed intra- and 

interorganizational efforts. 

With regard to partnerships, it has always been difficult to create an 

environment of shared responsibility, shared resources, and shared 

accountability for achieving difficult missions. Effective partnerships 

require a shared vision, shared goals, and shared trust in meeting agreedupon responsibilities. Partnerships also mean that power is shared. Too 

often we have seen both public and private sector organizations where the 

term “partnership” is often voiced, but the reality is more a jockeying for 

dominance or control over the “partner.” The end result is that resources 

are not shared, the shared mission is never complete or adequate, and 

opportunities for true strategic alliance are squandered. In the intelligence 

arena, we know the potential end result is failure for the nation. 

With regard to the cultural dimension, this is both the softest and the 

hardest to deal with. By the softest, I mean it involves the attitudes and 

actions of people and entities. By the hardest, I mean that changing longstanding cultures can be a huge challenge, especially if the efforts involve 

organizational changes in order to streamline, integrate, and improve 

related capabilities and abilities. This includes both execution and 

oversight-related activities. As the 9/11 Commission and others have 

noted, such a restructuring is needed in both the executive branch and the 

Congress. This will involve taking on the vested interests of many 

powerful players, and as a result, it will not be easy, but it may be 

essential, especially if we expect to go from a “need to know” to a “need to 

share’ approach. As I have often said, addressing such issues takes 

patience, persistence, perspective, and pain before you prevail. Such is the 

case with many agency transformational efforts, including those within 

our own GAO. However, given the challenges and dangers that we face in 

the post 9/11 world, we cannot afford to wait much longer. The time for 

action is now. 

 20The White House, Homeland Security Presidential Directive-6 (Integration and Use of 

Screening Information), Washington, D.C.: Sept. 16, 2003. 
Page 24 GAO-04-1033T 

Mr. Chairman, in its final report, the Gilmore Commission stated: 

“There will never be an end point in America’s readiness. Enemies will change tactics, 

citizens’ attitudes about what adjustments in their lives they will be willing to accept will 

evolve and leaders will be confronted with legitimate competing priorities that will demand 

attention....In the end, America’s response to the threat of terrorism will be measured by 

how we manage risk. There will never be a 100% guarantee of security for our people, the 

economy, and our society. We must resist the urge to seek total security—it is not 

achievable and drains our attention from those things that can be accomplished.”21

Managing risk is not simply about putting new organizations in place. It 

requires us to think about what must be protected, define an acceptable 

level of risk, and target limited resources while keeping in mind that the 

related costs must be affordable and sustainable. Perhaps more important, 

managing risk requires us to constantly operate under conditions of 

uncertainty, where foresight, anticipation, responsiveness, and radical 

adaptation are vital capabilities. 

We can and we must enhance and integrate our intelligence efforts as 

suggested by the 9/11 Commission to significantly improve information 

sharing and analysis. Several models to achieve this result exist, and 

despite the unique missions of the intelligence community can readily be 

adapted to guide this transformation. 

We at the GAO stand ready to constructively engage with the intelligence 

community to share our significant government transformation and 

management knowledge and experience in order to help members of the 

community help themselves engage in the needed transformation efforts. 

We also stand ready to help the Congress enhance its oversight activities 

over the intelligence community, which, in our view, are an essential 

element of an effective transformation approach. In this regard, we have 

the people with the skills, experience, knowledge, and clearances to make 

a big difference for Congress and the country. 

Mr. Chairman, this concludes my statement. I would be happy to answer 

any questions that you or members of your committee may have at this 

time. 

 21V. Forging America’s New Normalcy, p. 2. 

Conclusion 
Page 25 GAO-04-1033T 

For information on this testimony, please contact Randall Yim at (202) 

512-6787 or yimr@gao.gov. Contacts 
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