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THE INTELLIGENCE COMMUNITY: KEEPING WATCH 

OVER ITS CONTRACTOR WORKFORCE 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 18, 2014 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

GABRIELLE A. BATKIN. Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

MARY BETH SCHULTZ, Chief Counsel 

TROY H. CRIBB, Chief Counsel for Governmental Affairs 

KATHERINE C. SYBENGA, Senior Counsel 

KEITH B. ASHDOWN, Minority Staff Director 

CHRISTOPHER J. BARKLEY, Minority Deputy Staff Director 

ANDREW C. DOCKHAM, Minority Counsel 

KATHRYN M. EDELMAN, Minority Senior Investigator 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator Coburn ................................................................................................. 3 

Senator Tester .................................................................................................. 13 

Senator McCaskill ............................................................................................ 16 

Senator Ayotte .................................................................................................. 19 

Prepared statements: 

Senator Carper ................................................................................................. 27 

Senator Coburn ................................................................................................. 29 

WITNESSES 

WEDNESDAY, JUNE 18, 2014 

Hon. Stephanie O’Sullivan, Principal Deputy Director, Office of the Director 

of National Intelligence ....................................................................................... 4 

Timothy J. DiNapoli, Director, Acquisition and Sourcing Management, U.S. 

Government Accountability Office ...................................................................... 6 

ALPHABETICAL LIST OF WITNESSES

DiNapoli, Timothy J.: 

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

Prepared statement .......................................................................................... 37 

O’Sullivan, Hon. Stephanie: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 30 

APPENDIX 

Responses to post-hearing questions for the Record: 

Ms. O’Sullivan ................................................................................................... 53 

(1) 

THE INTELLIGENCE COMMUNITY: KEEPING 

WATCH OVER ITS CONTRACTOR WORKFORCE 

WEDNESDAY, JUNE 18, 2014 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:02 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Thomas R. Carper, 

Chairman of the Committee, presiding. 

Present: Senators Carper, McCaskill, Tester, Coburn, and Ayotte. 

OPENING STATEMENT OF CHAIRMAN CARPER 

Chairman CARPER. The hearing will come to order. 

Dr. Coburn and I today are going to be examining, along with 

our colleagues, some of the challenges that agencies have in managing the large contractor workforce we rely on to do some of the 

most sensitive and important work that our Federal Government 

does. It is essential that the leadership of any organization should 

have good visibility over its workforce. They need to know who 

makes it up, what skills they have, what skills they lack, and what 

they do day in and day out. Nowhere is this more important than 

with the Federal agencies in charge of protecting our Nation and 

our Nation’s sensitive information. 

The men and women who work at our Nation’s intelligence agencies are entrusted with obtaining, analyzing, and protecting our 

most sensitive information. The people we entrust with leadership 

roles at these agencies need to be able to show the American people, and Congress, that they know who is working for them, and 

why. 

Contractors in the Intelligence Community (IC) perform key 

functions at the heart of intelligence collection, management, and 

analysis. They work side by side with Federal employees and are 

given access to our most sensitive information. This extensive reliance on contractors raises a number of risks: 

First and foremost, an agency that turns over too much responsibility to contractors runs the risk of hollowing itself out and creating a weaker organization. The agency could also lose control 

over activities and decisions that should lie with the government, 

not with contractors. 

Second, the use of contractors for mission-critical work creates an 

additional layer of management between the contractor employees 

and the government. Adding layers makes it more difficult to conduct oversight and to assign accountability. 
2 

And, third, when agencies turn to contractors as a ‘‘default’’ option without careful analysis, they run the risk of paying more to 

get work done than they would have paid if they had just relied 

on Federal employees. 

While the precise number of employees at each intelligence agency is classified, it is no secret that following September 11, 2001, 

the Intelligence Community ramped up its workforce, including its 

use of contractors. In response to concerns that the Intelligence 

Community had become too reliant on contractors, the Office of the 

Director of National Intelligence (ODNI) began in 2006 to conduct 

an annual inventory of contractors performing core functions at the 

heart of intelligence operations. The goal of this inventory is to provide a snapshot of the size of the intelligence contractor workforce, 

its costs, the functions it performs, and the reasons cited by agencies for using the contractors. 

The hearing will focus on the Government Accountability Office 

(GAO) report requested by our former colleague Danny Akaka, 

with support from Senators Coburn, Collins, McCaskill, Johnson, 

and myself. We asked GAO to look closely at the annual inventory 

of core contractors and find out how well it is really working in 

helping agencies better know and manage their workforce. 

GAO’s findings reveal that the numbers in the inventory simply 

are not reliable and that the intelligence agencies do not have the 

kind of information they need in order to be able to assess the costbenefit of using contractors, to conduct strategic workforce planning, and to determine the role that contractors should play in 

their organizations. In other words, we do not have the full picture 

of who is working for the Intelligence Community as contractors, 

or why. 

While the GAO’s report shows a number of problems, I like to 

say that in adversity lies opportunity. If the Intelligence Community can get past its initial learning curve in conducting these inventories, it will have what is potentially a very useful tool that 

can be used to help make better decisions about its entire workforce. These inventories could help the Office of the Director of National Intelligence and the individual intelligence agencies identify 

where their critical skill gaps are. The inventories could also help 

identify where the government is paying too much for contractors 

or where agencies could save money through strategic sourcing. 

We look forward to hearing from the witnesses today about the 

progress that ODNI and the intelligence agencies have made in responding to GAO’s findings and recommendations. And I note that 

the Intelligence Community has been ahead of the rest of the government in creating an inventory of contractors whose work raises 

special risks. So there are a lot of good lessons that we are going 

to learn today that maybe the rest of our government can use. 

So we welcome each of our witnesses. We look forward to what 

you have to say and to have an opportunity to a good conversation 

with you. 

And, with that, let me turn to Dr. Coburn for any comments he 

wants to add. Thank you. 
3 

1The prepared statement of Senator Coburn appears in the Appendix on page 29. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Mr. Chairman, thank you for holding the hearing. I will put my statement into the record1 and use parts of it 

in our questioning. 

Thank you. 

Chairman CARPER. You bet. 

Senator Tester, nice to see you. I think you have done a little 

work on this issue, as I understand it. Is that right? 

Senator TESTER. Yes, we have. 

Chairman CARPER. Do you want to say anything just briefly? 

Senator TESTER. I will just put it in the record. Thanks. 

Chairman CARPER. Senator McCaskill, how is your husband 

doing? That is good. Anything you want to say before we jump into 

this? 

Senator MCCASKILL. No. 

Chairman CARPER. OK. Brief witness introductions. 

We are pleased to welcome before the Committee Stephanie 

O’Sullivan, who is the Principal Deputy Director of National Intelligence at the Office of the Director of National Intelligence. In that 

capacity, she serves in a role similar to that of a chief operating 

officer (COO), I am told. Is that right? 

Ms. O’SULLIVAN. That is right. 

Chairman CARPER. All right. She focuses on the operations of the 

Office of the Director of National Intelligence and also manages coordination and information sharing across the Intelligence Community. Ms. O’Sullivan has served in this role since early 2011, and 

before this assignment, Stephanie served from 2009 to 2011 as the 

Associate Deputy Director of the Central Intelligence Agency (CIA) 

with an emphasis on day-to-day operations of the organization. She 

also has previously led the CIA’s Directorate of Science and Technology. 

Stephanie, we thank you for joining us today. 

Also we want to welcome our second witness, Timothy DiNapoli. 

Timothy DiNapoli, who is the Director of the Acquisition and 

Sourcing Management team at the Government Accountability Office, and Tim led GAO’s review that is the discussion of our hearing 

today. He joined GAO in 1986 and has led many reviews relating 

to Federal acquisitions by both the Department of Defense (DOD) 

and the civilian agencies. In 2009, he served as the head of GAO’s 

office in Baghdad and coordinated GAO’s oversight of the stabilization and reconstruction efforts in Iraq. We thank you for that. Tim 

is also no stranger to this Committee because he was detailed to 

then-Chairman Lieberman in 2007. Tim worked closely with both 

the majority and minority staff as this Committee moved forward 

on legislation to strengthen competition rules and help revitalize 

the acquisition workforce. He tells me before the hearing started 

that he once worked for Troy Cribb, who is sitting right behind me 

over my left shoulder, and said she was a great boss. And I would 

just say, Tim, she still is. So thank you for your work on this particular report and for all your work on acquisitions over the years. 
4 

1The prepared statement of Ms. O’Sullivan appears in the Appendix on page 30. 

And, with that, we will just allow each of you to give us your 

statement, and then we will start with some questions. Stephanie, 

please proceed. 

TESTIMONY OF THE HONORABLE STEPHANIE O’SULLIVAN,1

PRINCIPAL DEPUTY DIRECTOR, OFFICE OF THE DIRECTOR 

OF NATIONAL INTELLIGENCE 

Ms. O’SULLIVAN. Chairman Carper, Ranking Member Coburn, 

and distinguished Members of the Committee, thank you for your 

invitation to discuss core contractors in the Intelligence Community, and thank you also for your patience with our just-in-time arrival. I am afraid we may have pinched a few too many pennies 

in our vehicle maintenance. We had a few transmission challenges 

as we left this morning. 

I personally believe that strategic management of the IC’s workforce is one of the most important things that IC leaders do, and 

so I appreciate this Committee’s dedication to examining these important issues. 

I would like to define up front whom we are discussing. I see core 

contractor personnel augment government, civilians, or military 

employees by providing direct technical, managerial, and administrative support to IC elements. They typically work alongside government employees and in our spaces doing staff-like work. So they 

are not the people that we contract with to build technical collection systems like satellites, and they are not the people who do 

common commercial jobs like food services or janitorial support. 

Core contractor personnel hold clearances in accordance with the 

same laws, procedures, policies, and regulations as government employees for access to classified information. Core contractors do not 

perform inherently governmental work, meaning they do not make 

decisions on priorities, strategic direction, or commitment of resources. Only government employees make those decisions. 

Core contractors are factored into our strategic workforce planning across the Intelligence Community. However, government 

staff are the long-term foundation of the IC’s workforce. 

Hiring a government employee is a long-term commitment. We 

are responsible for the training and development of a government 

employee over what could be a 30-year career span. We then manage our contractor workforce to fill in with the skills, whether 

surge or capacity or capability gaps that we have in our government workforce. As a result, there is not a right number of core 

contractors for the Intelligence Community. The numbers and skill 

sets have to be fluid to support and manage our government 

workforce’s gaps as they emerge and as we close them and respond 

to dynamic mission needs. 

You asked us here to talk about the trends in core contractor 

use. During the 1990s, like the rest of the Federal Government, the 

IC downsized and outsourced a lot of unique and specialized skills. 

After September 11, 2001, we found that we lacked the needed people with some core and unique skills, like terrorism analysis, critical language skills, and cyber. 
5 

So with much appreciated support from Congress, we began to 

hire and rebuild our government staff. And while our government 

workforce over time has redeveloped those critical skills, we had to 

surge to fill the gaps with contractors. 

We also used contractors for new missions that we knew were 

limited in duration rather than hire permanent staff for temporary 

work. War zone surges and Overseas Contingency Operations 

(OCO) funding are examples of those uses. 

Contractors continue to be an integral part of our community, 

but as we expected, our needs have changed as we have gone on 

in the years since September 11, 2001. So over the past few years, 

Intelligence Community agency directors across the IC have moved 

to rebalance our workforce with fewer core contractors. 

In 2007, in support of this, we conducted our first inventory to 

track core contractor personnel. As GAO’s report has highlighted, 

this was not as easy as it sounded at first. The 17 elements of the 

Intelligence Community are spread across six departments plus 

two independent agencies. All of them have different systems and 

different resources subject to differing authorities, policies, and 

oversight, supporting an extended and extraordinary mission range 

with activities that can shift at the pace of the headlines. 

There are also differences as mundane as how each element captures data and calculates their inventory. Some elements have 

automated systems; others compile their data manually. The inventory includes data from thousands of contracts, and for each contract, someone has to make the decision about how to categorize 

the work involved, so there are individual judgment calls involved 

as well. 

Every year, we have looked at ways to improve this process. We, 

too, believe that this can be an extraordinarily useful tool, and it 

already has been for us. And this year, as recommended by GAO, 

we asked each element to fully explain their methodology used for 

identifying who counts as a full-time equivalent to a government 

staff. This should give us even better insight. 

But this inventory was not designed to be 100 percent precise. 

I want to be clear. The survey was never intended to be an 

auditable record. It was a tool to give us a sense of the contractor 

workforce and to help us in our strategic workforce management. 

Although it is possible to put a lot of effort into making it more 

precise, it is not necessarily going to make it more useful for the 

uses that we are putting it to. And we are careful about how precisely we manage the Intelligence Community at the community 

level. Director of National Intelligence (DNI) Clapper believes that 

the ODNI must coordinate and integrate across the community, 

while the agencies execute the mission. We attempt not to directly 

control the field elements from headquarters. 

For core contractor inventory, we can focus on efforts that standardize how the agencies measure, but we cannot and do not want 

to manage each agency’s workforce at the project level or the point 

of execution. 

In line with that, the Intelligence Community Directive (ICD) 

612 guides our use of core contractors. It refines and standardizes 

our definition of core contractor personnel. It reaffirms that core 

contractors cannot perform inherently governmental activities. It 
6 

1The prepared statement of Mr. DiNapolia appears in the Appendix on page 37. 

describes the circumstances in which core contractors may be employed to support IC missions and functions. And it requires elements to estimate the current and projected number of core contractors and how we are using them. These are guiding principles. 

Over the past several years, as I said, agency directors across the 

community have moved to rebalance the workforce with fewer core 

contractors, and our core contractor inventory has informed those 

decisions. And it has confirmed since then that we are making good 

decisions with this rebalance. We acknowledge that our inventory 

is not a precision instrument. Its role has been to support strategic 

level direction and discussion, and it has been very useful to us in 

this role. 

That said, getting strategic management of the IC’s workforce is 

profoundly important, and we will do anything we can to improve 

the tools that we use to achieve that. I hope this explanation starts 

the discussion and makes our work and how we view the core contractor inventory a bit more clear. I welcome your questions, 

though I may ask to defer some questions involving classified details to written responses or a follow-on session. 

So thank you for your attention to the IC workforce. 

Chairman CARPER. Good. And thanks for joining us. Thank you 

for your testimony, and we look forward to having some questions. 

Mr. DiNapoli, please proceed. 

TESTIMONY OF TIMOTHY J. DINAPOLI,1 DIRECTOR, ACQUISITION AND SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. DINAPOLI. Chairman Carper, Dr. Coburn, and Members of 

the Committee, good morning. Thank you for inviting me to discuss 

the Intelligence Community’s use of contractors. As you know, contractors can provide the flexibility to meet immediate needs as well 

as access to unique expertise. But their use also introduces risks 

that must be managed. This is particularly the case for core contractors who provide direct support to the Intelligence Community 

and often sit side by side government personnel and essentially do 

the same type of work. 

Last September, we issued a classified report that looked at 

three issues: one, the use of core contractors; two, the functions 

they perform and the reasons why they were used; and, three, the 

policies in place to mitigate risk. 

Our work focused on the eight elements that make up the civilian side of the Intelligence Community, which includes the Office 

of the Director of National Intelligence, the Central Intelligence 

Agency, and elements within the Departments of Energy (DOE), 

Department of Homeland Security (DHS), Department of Justice 

(DOJ), State, and Treasury. In January, we issued an unclassified 

version of that report which is the basis for my statement today. 

Let me begin by noting, as the Principal Deputy has, that the Intelligence Community has focused considerable attention on its use 

of core contractors. Since fiscal year (FY) 2007, under the direction 

of the Chief Human Capital Officer (CHCO) , the Intelligence Community has conducted an annual inventory of these core contrac-
7 

tors. The data is used to provide Congress, the Office of Management and Budget (OMB), and others insights on budget requirements and historical trend information. For example, based on the 

inventory’s data, the Intelligence Community reported that its use 

of core contractors had declined by about a third between fiscal 

years 2009 and 2011. 

However, after reviewing 287 contract records from 2010 and 

2011, and reviewing, analyzing inventory guidance, we would be 

cautious about drawing such conclusions. We found a number of 

limitations, including changes to the definition of ‘‘core contractors,’’ inconsistent methodologies for estimating the number of core 

contractors, errors in reporting contract costs, and poor documentation, that, when you put them all together, undermined the utility, 

comparability, accuracy, and consistency of the inventory’s information. 

Let me give you two examples—the first concerning estimating 

contractor personnel. 

One element which used actual labor hours estimated there were 

about 16 contractor personnel working on a particular contract. Another element which uses estimated labor hours would have estimated that there were 27 contractor personnel on that very same 

contract. Two different methodologies, and two very different outcomes. 

The second example involves reported contract costs. We found 

that the elements either over or under reported contract costs by 

more than 10 percent in about a fifth of the records that we reviewed. Now, these were due to simple data entry errors or differences in how the elements record contract costs in the inventory. 

Nevertheless, we found that the inventory was unreliable for reporting contract obligations. 

Let me turn now to the work that core contractors do. We found 

that the inventory at a broad level did, in fact, reflect the primary 

functions that the contractors performed, which included human 

capital, information technology (IT), intelligence analysis, and program management support. It fell a little short in terms of capturing all the functions that a contractor may be asked to perform, 

especially when contracts contain a broad array of tasks. 

Further, the elements often lacked documentation to support 

their cited reasons for using contractors. For example, in about 80 

cases in which the elements cited the need to obtain unique expertise, we did not find documentation in the contract files that would 

support that conclusion. 

Knowing the reason why one uses a contractor is important, as 

hiring a contractor for their unique expertise has different implications for strategic workforce planning than if we hire them for 

surge support or for longer-term gaps in Federal resources. 

Last, I will just briefly summarize our work with regard to the 

policies in place to mitigate risk. In September 2011, the Office of 

Federal Procurement Policy (OFPP) issued new guidance, in part 

to provide the appropriate scrutiny when contractors provide services that are closely associated with inherently governmental functions. Services related to preparing analyses or strategy options or 

providing acquisition support fall into this category. 
8 

While the guidance required agencies to develop internal procedures to implement this policy, we found that, of the agencies in 

our review, only the Departments of Homeland Security and State 

had fully done so. 

Further, our prior work and guidance issued by the Office of 

Management and Budget in July 2009 indicate that agencies 

should develop strategic workforce plans that identify whether they 

are doing the right work with the right people, government or contractor, to accomplish their missions. Overall, we found that of the 

eight elements’ workforce plans generally did not fully reflect these 

requirements. 

As I noted before, one limitation of the inventory is that it does 

not capture all the functions that a contractor may perform under 

a contract. For example, of the 287 records that we reviewed, more 

than 125 contained more than one function, and it was not fully 

reflected in the inventory. Without complete and accurate information, the elements may be missing an opportunity to leverage the 

inventory as a tool for determining the right mix of government 

and contractor personnel. 

Given these findings, we made several recommendations to the 

Chief Human Capital Officer to improve both the inventory and the 

Intelligence Community’s workforce planning efforts. The Chief 

Human Capital Officer also generally agreed and discussed steps 

they were taking to address them. 

We also made recommendations to the departments to set timeframes for implementing the Office of Federal Procurement Policy’s 

guidance. The Departments of Justice and Treasury have recently 

concurred with that recommendation, and we are following up with 

them and other agencies to identify the steps that they are planning to take in response. 

In conclusion, the challenges I highlighted today are not unique 

to the Intelligence Community, and we find many of the same 

issues with our work at the Department of Defense and the civilian 

agencies as a whole. The Intelligence Community, like all Federal 

agencies, though, needs to have the policies, tools, and data in 

place to make informed decisions about the use of contractors. Incorporating needed changes into guidance and improving the reliability of the inventory should better position the Intelligence Community to make more informed decisions in the future. 

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

answer any questions that you may have. 

Chairman CARPER. OK. Thank you. Thank you both for those 

testimonies. 

I rode home on the train last night. I was tired riding home, and 

I read your testimony. And to be really honest, it was everything 

I could do to stay awake. And this is not dull stuff. This is really 

interesting stuff. Just set aside the—I do not know—the way you 

talk about this. And why is this real? Why is this important? Why 

should we care? Why should you care at GAO? Why should our 

President care? Why should our intelligence agencies care? Why is 

this important? Why should the American people care? Make it 

real. 

Ms. O’SULLIVAN. From our viewpoint, as I said, I think that one 

of the most important things that any leader can do is manage the 
9 

workforce that is going to inherit the mission and carry things forward. It is 30-year decisions that we are making when we are talking about our workforce. They have consequence, they have weight. 

The effects last. 

So one of the things that was most important about what the Intelligence Community did here—in the days after September 11, 

2001, we were determined not to repeat the mistakes that we had 

gone through after we hollowed out the workforce in the 1990s. We 

knew we had to surge. We knew that the quickest way to do that 

was to use the flexibility that contractors give you. So we brought 

back people who had experiences. We brought on contractors that 

could fill those gaps. But from the very beginning, we had our eye 

on getting the mission done, but keeping track of the changes that 

had to be made down the road that we knew we would have to rebalance. And that is why we started using the core contractor inventory and that approach because it was going to start putting the 

focus back on shifting back to the government workforce that we 

had been allowed to hire, that we had started to train, and who 

was now moving to the front lines to take over a lot of these opportunities. 

So if we had not done that, we would have ended up with excess 

capacity, we would have ended up with people that we did not need 

in the core contractor workforce, and we would have ended up with 

the inability to do parts of our mission because we could not have 

shifted costs off of that. 

So this affects not only our ability to do our mission today but 

in the future, and that is why it is absolutely critical that we manage and pay attention to these functions. 

Chairman CARPER. All right. Mr. DiNapoli, same question. Make 

it real for us. 

Mr. DINAPOLI. I largely agree with what the Principal Deputy 

said. We were ill positioned after September 11, 2001, to address 

the new missions that came across because we cut the workforce 

in the 1990s without thinking strategically about why we were cutting and who we were cutting and what skills and capabilities 

we—— 

Chairman CARPER. We cut the size of government. I think we 

ended up in 2000 with fewer Federal employees than we had had 

in a long time. I think that was a goal. 

Mr. DINAPOLI. That was a goal, absolutely. And we did achieve 

that. But we did that without thinking about what personnel do we 

have in-house. What is the capacity we have to move forward to address emerging issues that we were not aware of? And so when we 

turned—and I think appropriately so—to the private sector to provide us assistance to meet those new missions, whether they be in 

the Department of Defense, the Department of Homeland Security, 

the Intelligence Community, we hired many folks to do that. 

Back in 2007, this Committee held a hearing that DHS testified 

at, and at that point in time, we had just issued one of our very 

first reports about DHS’s reliance on contractors. And I do not 

think that DHS at that time agreed that it had an issue. But I 

think this Committee’s efforts and the work that we did both then 

and subsequently found that DHS has agreed that they need to rebalance their workforce because they were out of sync. 
10 

And so since that point in time, with the introduction of DHS’s 

balanced workforce study, the tools that they have in place, DHS 

continues to identify new areas and new opportunities to say we 

have gone too far; we are using contractors in areas that we think 

we want to bring back in-house or that we want to rebalance and 

make sure we have the right oversight. 

So I think that is why it is important, because there is work that 

is important that the government does, and we need to make sure 

that that work is done either by government employees or by contractors that are appropriately supervised and overseen. 

Chairman CARPER. Go back to the genesis of this. My recollection 

is this is something that Senator Akaka was very much interested 

in and focused on when he was with us. I think he had a hearing 

maybe in 2011 or 2012 on this subject, and he requested this report. And before he left, I think, in 2012, it was completed, what, 

a year or so later? 

Mr. DINAPOLI. Slightly longer than a year or so later, yes. 

Chairman CARPER. OK. When he made the request for the report, which several of us subsequently joined in as co-requesters, 

what was he asking for? What was he asking for you to help us 

understand? 

Mr. DINAPOLI. He really wanted to know whether or not the kind 

of the issues that we had identified, much under the leadership 

and direction of the Senator and his Subcommittee on Oversight of 

Government Management, about looking at the Federal workforce 

issues, whether or not those same issues were prevalent in the Intelligence Community. So he wanted to know what was the Intelligence Community’s reliance on contractors, what was their cost, 

and what were we doing to identify what functions they were performing and whether or not there were sufficient oversight mechanisms in place to make sure that those risks were mitigated. 

Chairman CARPER. Just summarize for us in plain language, 

what did you find out? 

Mr. DINAPOLI. In plain language, I would think that the inventory had a number of deficiencies. When you talk about some of the 

challenges that we identified, some are small, some are big. But at 

that point in time, they were talking about the inventory that was 

submitted back in 2011 or the 2011 inventory. There were just a 

number of challenges with it. And I think because of those challenges and—— 

Chairman CARPER. Well, people do not understand what we are 

talking about here in the inventory. Just make it real, please. 

Mr. DINAPOLI. So the inventory, when you look at it, we can consider it to be a very large spreadsheet. It contains information on 

contractors, the number, their cost, other activities that they engage in. So it really does become just a tracking sheet, a mechanism to do that. 

Chairman CARPER. And each agency, CIA and others, were doing 

their own inventory. Is that correct? 

Mr. DINAPOLI. They do. 

Chairman CARPER. OK. And do they do it annually? Biannually? 

How often? 

Mr. DINAPOLI. Under the ICD 612—— 

Chairman CARPER. Under what? 
11 

Mr. DINAPOLI. The Intelligence Community Directive 612, which 

was issued back in 2009, they are required annually to submit an 

inventory. 

Chairman CARPER. And they have been doing that since when? 

Mr. DINAPOLI. Since fiscal year 2007. I think 2006 was a pilot 

program, and so this is probably the seventh or eighth inventory 

that they have submitted most recently. We looked at it probably 

in the sixth or seventh iteration. 

Chairman CARPER. OK. Again, going back to my question, what 

did you find out? 

Mr. DINAPOLI. The inventory was not good. It has significant 

limitations as a tool for decisionmakers. At least in our view, that 

when you talked about the numbers and costs associated with contractors that was provided in statutorily required reports, such as 

the Personnel Level Assessments and the briefings that they provide to you and Congress and to other committees, the information 

just was not accurate, and so we need to be cautious about using 

that information as the basis for providing Congress information so 

you all can provide oversight. 

Chairman CARPER. Good. Well, my time is about up, and I am 

going to yield to Dr. Coburn. Let me just say, when I come back 

one of the things I want to do is ask about the recommendations 

you have made and Ms. O’Sullivan’s response to those recommendations. 

Dr. Coburn, when I rode home on the train last night and I read 

all this material—I know you read this stuff, too—I said earlier I 

was about ready to go to sleep. I am wide awake right now, so 

thank you. Dr. Coburn. 

Senator COBURN. Well, thank you all for being here. I do not 

know where to go with this. Deputy Director O’Sullivan, basically 

your testimony tells me you want to use this data, but it is difficult 

to get it exactly right, and because of that difficulty, you are going 

to use limited data. And GAO is testifying that the data has some 

big holes in it, and you are testifying that you have dropped core 

contracting down a significant amount. If you have data that has 

big holes in it, how do you know you did it right? 

Ms. O’SULLIVAN. The first thing is that the utility of the contractor inventory is not only in the end results but in the process. 

So by forcing every manager across the IC to address how are you 

using core contractors to sit down and then justify their numbers 

as they work through to be able to talk about year to year what 

are those changes and justify any changes and to ask themselves 

how am I using these contractor functions is incredibly valuable. 

I can tell you that what happened across the IC is that you had 

people reexamining: Do I really need to have this function covered 

by contractors? 

We then, by setting goals year to year, year-to-year reduction 

goals—because we had to manage this responsibly and get the mission done at the same time. What we were doing was driving each 

component to look at can I cut this by 5 percent, and then we 

would calibrate again. And, again, it was relative to the previous 

year. And then we would see, OK, the mission moved forward. 

Looking at the metrics, it looks like we have still got some room, 

let us move down another 5 percent. 
12 

And by doing that, we managed the transition from a surge in 

contractors to a buildup in government staff much more effectively 

than we did in the previous decade. 

Senator COBURN. So how do you explain that in 81 out of 102 

records in their sample they did not find unique expertise, find the 

evidence in the statements of work or other contract documents 

that the functions performed by the contractors required expertise 

not otherwise available from U.S. Government employees? That is 

80 percent. 

Ms. O’SULLIVAN. We did not require them to maintain the data 

in support of this that—— 

Senator COBURN. Well, why not? 

Ms. O’SULLIVAN. Because we were using it as a management 

process tool to force the discussion and engagement. 

Senator COBURN. But here is the real question: 81 percent in the 

sample—that does not mean all of it. That does not mean you can 

apply it across the board. But of the sample they looked at, you do 

not have a written justification or a reason for using the outside 

core contractor for those—at least you cannot document it. That 

does not mean it is not there. 

I am a big believer in continuous process improvement and lean 

manufacturing, and data is important. And your statement was 

that it is so difficult to get the data because of all the other agencies. I am reminded of what Edward R. Murrow said: ‘‘Difficulty is 

never recognized in history as an excuse.’’ And the fact is you cannot make great management decisions unless you have accurate 

data. And we have the testimony of GAO that says you do not have 

accurate data. 

I sit on the Intelligence Committee. I love you guys. All right? 

I love what you do. I love how you sacrifice. I love the things that 

you are doing to help protect this country. But to me I think this 

is a pretty damning report for the quality of management and the 

quality of the—I think the decisions can be suspect based on what 

the GAO is showing us. So please defend that for me. 

Ms. O’SULLIVAN. I believe our reality is that, as our goal was set 

out, we have reduced our core contractor numbers. Our overall contract costs are down. That is an auditable number. And when we 

look at the overall budget, when we look at the numbers of people 

we have in our buildings, all of our indicators track with this. But 

this was the leading tool that forced people to get involved in the 

discussion. 

Senator COBURN. OK. I guess the other question is: Do you in 

your management position expect to take these recommendations 

from the GAO to get better and actually accurate data so that your 

decisions will be made in a more fruitful way? I do not deny that 

you have reduced core contractors. But we went like this on core 

contractors in the IC. So the success of reducing a third of them 

when they are talking about 80 percent not having the background 

in terms of demonstrating a true need versus core-competent Federal employees who are going to be with us and bring with that the 

experience and the judgment and the long-term view of here is 

what has happened in the past, here is where we are today, and 

the thinking that goes with that. Where are you going forward 

based on this report? 
13 

Ms. O’SULLIVAN. We absolutely agree in trying to continue to improve the tool that we have, and the GAO recommendations have 

been incorporated in our inventory this year. 

Senator COBURN. So you are going to ask for better metrics, because your budget request is based on those, right? And if the 

metrics are not any good, your budget request is not any good. 

Ms. O’SULLIVAN. We have worked every year to improve the 

quality of the data and to continue the conversation, and we absolutely agree with your statement that the transition to the foundation of our workforce is the government workforce. And I believe 

that the right thing that the community leaders did was knowing 

from the very beginning that we were doing the surge and trying 

to keep the mission going. They never lost sight of the need to 

manage the transition. And they started that before we started 

having budget-driven cuts that would force that. 

So we were 2 or 3 years in advance starting to prepare and manage the transition down, and I think that that is what allowed us 

to do this without breaks in mission. 

Senator COBURN. OK. You would agree with the statement on 

true government function. 

Ms. O’SULLIVAN. Absolutely. 

Senator COBURN. We get better return on our dollars using Federal employees than we do when we are using contractors. 

Ms. O’SULLIVAN. Absolutely. 

Senator COBURN. All right. 

Ms. O’SULLIVAN. And every one of my reports and every agency, 

the thing they ask for, 90 percent of the requests I get are for government staff. 

Senator COBURN. OK. 

Ms. O’SULLIVAN. Not more dollars for contractors. 

Senator COBURN. All right. Thank you. 

Thank you, Mr. Chairman. 

Chairman CARPER. You are welcome. 

Senator Tester, you are up next, and then Senator McCaskill, 

then Senator Ayotte. Please proceed. 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thanks, Mr. Chairman. 

Ms. O’Sullivan, I understand the IC leadership closely monitors 

the results of the annual IC Employee Climate Survey to track the 

satisfaction and inform retention. In April, I was able to chair a 

hearing that examined the Federal employee morale, productivity, 

and agency recruitment and retention efforts. Now, while I understand the IC was highly rated by the Partnership for Public Service, the IC has experienced some difficulties in recruiting and retention. As with all agencies, the IC has faced more than a few 

challenges hiring and retaining staff. 

So could you walk us through some of the hiring and retention 

challenges that you have faced over the last several years, that the 

IC has faced? 

Ms. O’SULLIVAN. The primary challenges that we face in our attrition is critical staff that—key skills that in industry are highly 

sought. Believe it or not, one of the most difficult skills to keep is 

contracting officers and contract lawyers. They are frequently re-
14 

cruited about as fast, it feels like sometimes, as we can train them 

and bring them on board. 

Another area is competition with the IT industry, key cyber 

skills, things like that. We also see the most attrition in the early 

years, right after you bring someone in, typically you think about 

the first 5 years you are really training them, getting them settled 

into the mission, fully understanding the environment. They get 

more productive after that timeframe. That is the attrition that we 

watch most closely, is losing those people in those first 5 years. 

But, overall, the IC’s attrition has bounced around between 4 and 

5 percent, so it is relatively low. 

Senator TESTER. How does that compare—that is relatively low? 

Ms. O’SULLIVAN. Yes. 

Senator TESTER. OK. What is the solution for the competition 

with IT, for example? 

Ms. O’SULLIVAN. The solution, as it has been throughout our history, is mission. People join this workforce because they want to do 

public service, particularly the young officers, and in many cases 

almost 60 percent of our workforce or more—I have not checked it 

recently—is new since September 11, 2001. They came on board 

with a service motto, and they are tied to getting the mission accomplished. 

So what we try to do is always keep that in front of them and 

keep them tied to the idea that the work that they are doing every 

day makes a difference. 

Senator TESTER. OK. According to this GAO report, the eight civilian IC elements have not fully developed policies to address risks 

associated with contractors supporting inherently governmental 

functions, in certain cases, in terms of contractors to perform certain intelligence analysis work in very close alignment with Federal employees side by side. In this regard, according to Mr. 

DiNapoli’s testimony, the eight civilian Intelligence Community 

elements have generally not developed strategic workforce plans 

that address contractor use. Mitigating risk in this case is absolutely central to our national security. I think you agree with that. 

If the Intelligence Community elements are allowing contractors 

to set policy or control its mission or operation, that is a problem. 

So why don’t the IC elements have fully developed policies across 

agencies to address contractor risk? It appears to be a revolving 

door. 

Ms. O’SULLIVAN. I can add a new data point. The ODNI, the office for which I am responsible, has issued a policy reaffirming the 

OFPP letter. So it is capturing the need to track critical and closely 

associated with inherently governmental function and contractor 

activities. And as was reported by the GAO report, they have since 

gotten indications from the other departments, a couple of other departments, that they are moving forward as well. 

In addition, the contract procurement authorities across the IC 

are actively and vigorously engaged in a debate over how to incorporate the new Office of Personnel Management (OPM) definitions 

in critical functions and closely associated functions in our core 

contractor inventory. We are trying to figure out how the taxonomy 

works so that we do not have to rebuild and reargue the agreement 

on definitional baselines that we have gotten to. 
15 

They are also very engaged in trying to figure out how can we 

estimate and track these on our contracts, so they are looking at 

how to implement that in the contract proposals that we are doing 

in the future. 

Senator TESTER. So is it fair to say that each IC element is going 

down their own track? 

Ms. O’SULLIVAN. They all have to implement it themselves, but 

we are engaged in leading the discussion and trying to reach to a 

common baseline of how we will all implement the common guidance that we have—— 

Senator TESTER. So how many of the eight elements are following your path right now and have issued—— 

Ms. O’SULLIVAN. There are three that have issued policies per 

the discussion and at least two more that have agreed and are in 

process. 

Senator TESTER. Three that have issued policies, three that are 

in process, and two that have not done much. 

Ms. O’SULLIVAN. Two that are still working on it. They are pretty 

small elements. 

Senator TESTER. OK. Who holds them accountable? 

Ms. O’SULLIVAN. Well, we do. We have required that they address in our inventory their response to this—to what they are 

doing to implement it. So they must report what they are doing to 

implement this. 

Senator TESTER. OK. According to the GAO report, it was discovered that the Intelligence Community has not been using the same 

criteria to evaluate who falls into the core contractor category 

across all of the eight component agencies. You all are appropriated 

a certain number of dollars each year, and that is how you do your 

budgeting for hiring and for contracting. Someone had to be keeping track of those numbers prior to 2009. Can you outline what 

measures the ODNI, CIA, and the IC elements have been taking 

to ensure that all agencies are on the same page in their classification of core contractors? 

Ms. O’SULLIVAN. Classification according to function. The Intelligence Community Directive, that we issued in 2009 set a definition out for what a core contractor function was. The difficulty we 

had was not in everybody having a different definition, but in everybody reading those words and interpreting it slightly differently. 

And it was complicated by the fact that we have this enormous diversity of mission across the 17 IC elements. So what I mean as 

a language specialist is different than what the open source people 

mean or what the case officers or State Department folks mean. 

So we had a lot of clarifications that we worked with as we did 

the inventory year on year where someone would say, ‘‘Well, I interpreted IT support this way,’’ and somebody else would say, 

‘‘Well, I interpreted it this way.’’ And then we would issue guidance 

to clarify the definition. But the definition stayed fairly standard. 

We are doing a new release of that directive right now to catch 

all of these accumulated clarifications and try once more to get everybody to interpret the language the same way. But I would say 

that within each agency, a lot of the inconsistencies we see are 

across the elements. Within each agency, there was more of a consistent approach individually. It was just adding them up across 
16 

the IC and you would see different ways of counting and interpreting the data. 

Senator TESTER. OK. Thank you very much. Thank you both. 

Chairman CARPER. Thank you, Senator Tester. Senator 

McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you. 

I think you know, Ms. O’Sullivan, that there is a little bit of a 

crisis of confidence within Congress about the Intelligence Community, writ large, and the conflict that has been laid bare by a very 

brave and appropriate speech given by Dianne Feinstein on the 

floor of the Senate about the serious policy disagreements with the 

CIA which was being subjected to Congressional oversight. I think 

this has made it incumbent on the Intelligence Community to be 

as transparent as possible with Congress while protecting the classification of information that is important for our national security. 

In that regard, I am curious as to why the number of contractors 

and the cost of contracts has been classified. 

Ms. O’SULLIVAN. In many cases our relationship with specific 

contractors is classified or sensitive at their request, so we—— 

Senator MCCASKILL. I am not saying that you name them. I am 

talking about how many there are and how much it costs. 

Ms. O’SULLIVAN. I would be glad to take that on and look at giving you an update of—— 

Senator MCCASKILL. I think it is classified because you get away 

with saying things are classified in the Intelligence Community. I 

mean, here is the interesting thing: I do not think it helps the 

enemy to know the ratio of Federal employees to contractors. I do 

not think that is a problem for our Intelligence Community in 

terms of jeopardizing our national security. And what is really interesting is we are paying Booz Allen Hamilton for administrative 

support services, but we cannot even talk about how much we are 

paying them or how many there are, even though they have it on 

their website. 

They talk about doing work for the Intelligence Community on 

their website. 

So I just think there is a time where there needs to be a little 

bit of a gut check in the Intelligence Community because I think 

that—when you have somebody like Senator Feinstein who is—she 

is a work horse, not a show horse. She is someone who understands 

the sensitive nature of the responsibilities she has as Chairman of 

the Intelligence Committee. When she rips into our Intelligence 

Community in a public way, you have a problem. And I think everything you can do to show that you accept oversight of Congress 

is really important, including not classifying stuff that, frankly, 

should not be classified, especially when the people whose identities you are supposedly wanting to protect are advertising it on 

their websites. 

So I would appreciate some kind of specific answer as to why the 

ratio of contractors to Federal employees and the costs of those contractors would be considered classified information. 

Ms. O’SULLIVAN. We will, of course, give you a more detailed answer. The usual calculus is that if you have a total number and a 
17 

number of people declare their part, you start subtracting, and you 

get what is left, and that is the people in relationships that need 

to be protected and want to be protected. But you deserve an answer, and we will get you a detailed one, because we are committed 

to engagement. I personally spent a great deal of my time reading 

intelligence from around the world, and I know just what a society 

that does not have oversight looks like. It is incredibly valuable. It 

is the thing that allows us to do that which we must do in secret 

in an open society. There is no other way to make it work. 

So we are committed to that. Director Clapper has been leaning 

forward and pushing transparency initiatives. We have released 

thousands of pages of documents which, as you know, is countercultural. And it has required an intense reexamination, and we are 

continuing to push that across the Intelligence Community. 

Senator MCCASKILL. I think that is terrific, and I want to be very 

encouraging in that regard, because I do think if there is a sense 

that we cannot conduct oversight, then we begin to have the unraveling of the very foundation of the Intelligence Community that is 

necessary for the protection of our country. 

Ms. O’SULLIVAN. We cannot function without adequate and trusted oversight. 

Senator MCCASKILL. Does ODNI have access to the analysis that 

has been done at the element level on cost-benefit for country employees versus Federal employees? 

Ms. O’SULLIVAN. I believe we do have access to that data, yes. 

Senator MCCASKILL. And do you feel confident that those kinds 

of cost-benefits analyses have actually occurred? 

Ms. O’SULLIVAN. I do, especially given the preference that almost 

every manager I know has for government employees as their base. 

The drivers that we have had with the number of budget reductions that have been going on through the past 3 years—we are 

now going into our fourth-year cycle of down budget calculations. 

Everyone looks first to see if we can squeeze efficiencies here before 

we touch the key delivering on mission, take risks that would, 

frankly, cause us to lose sleep at night, or that would cause us to 

cut into that core foundational workforce. 

Senator MCCASKILL. Senators Tester, Mikulski, Coats, Collins, 

and I have introduced legislation to make the National Security 

Agency (NSA) Inspector General (IG) a Presidentially appointed, 

Senate-confirmed position. As you know, the current NSA IG is appointed by and reports to the NSA Director. 

Do you agree that a Presidentially appointed, Senate-confirmed 

IG at NSA might be seen as more independent and more receptive 

to complaints of alleged abuse at the agencies? 

Ms. O’SULLIVAN. I believe that that is the way that most folks 

in Congress see it, and I have spent my career working under 

Presidentially appointed IGs, and with, and they have been incredibly valuable contributors to our joint enterprise because they allow 

me to look at and see things that I might have missed otherwise. 

Senator MCCASKILL. Do you have an opinion? And if you do not, 

if you could take this for the record, I would like some kind of 

weighing in by the administration about expanding our whistleblower protections to contractors within the Intelligence Community. 
18 

1 Information submitted by Ms. O’Sullivan for the record appears in the Appendix on page 58. 

Ms. O’SULLIVAN. We will take that for the record.1

Senator MCCASKILL. It is a little tricky. I get that, but, I have 

worked a lot in this space with DOD. When you have employees— 

and we have this at DOD, we have it at DHS, and we have it in 

the Intelligence Community—when you have a row of carrels and 

you have contractor, Federal employee, contractor, contractor, Federal employee, Federal employee, contractor, and they are all doing 

the same work, there is no reason why the ones that are contractors should not have the identical whistleblower protection as their 

colleagues that they are working shoulder-to-shoulder with. And I 

think it is very important to have whistleblower protections for everyone who is working on behalf of the Federal Government, and 

I would like some kind of weigh-in from the administration about 

their support for that concept. 

Ms. O’SULLIVAN. I would note that they all have very active redress to those very independent IGs. Many of the employees that 

the IGs deal with are contractor complaints. 

Senator MCCASKILL. Well, the problem is that if you have a complaint and you are going to go to an IG that is hired by, and in 

a sense works for, the head of the agency, I do not think that gives 

a whistleblower much confidence, especially if they are working for 

a contractor and they do not have the specific protections that Federal employees have. 

Ms. O’SULLIVAN. Perhaps my experience reflects the fact that I 

have worked under Presidentially appointed IGs. 

Senator MCCASKILL. Probably. 

Thank you, Mr. Chairman. 

Chairman CARPER. Thank you. 

Senator Ayotte, before you are recognized, Dr. Coburn wanted to 

say something. 

Senator COBURN. Yes, I just want to say something. there is no 

committee in Congress that does more oversight than the Intelligence Committee. Twice a week, 2 hours each time, at a minimum, the IC is oversighted. We will have a lot of questions in a 

closed hearing that you can get answers to. 

The other thing that I would point out, the reason there was no 

rebuttal to what Senator Feinstein said is that under the rules of 

the Committee we cannot. So you might think about that, why 

there was no rebuttal, and look at the rules of the Committee, and 

you might find a problem. 

Senator MCCASKILL. Well, I am confused. So somebody can give 

a speech and disagree with her on the floor of the Senate? 

Senator COBURN. It is about disclosing information that is Committee sensitive or classified. 

Senator MCCASKILL. So do you believe, Senator Coburn, that she 

disclosed information that she should not have disclosed? 

Senator COBURN. I did not say that. I just said we cannot rebut 

that without violating the rules of the Committee. 

Chairman CARPER. All right. Senator Ayotte. 
19 

OPENING STATEMENT OF SENATOR AYOTTE 

Senator AYOTTE. Thank you. I wanted to ask about a concern I 

know this Committee has dealt with on a number of occasions, 

which is the insider threat issue to national security, workforce 

safety issues, and obviously this is a threat that we could face not 

only from contractors but from Federal employees themselves. 

However, it has turned out that some of our most recent and damaging breaches to national security and workforce safety have come 

at the hands of contractors, whether it is Edward Snowden or 

Aaron Alexis, both who we were working in a contractor capacity, 

I know not within the civilian intelligence agencies, but I think obviously with the sensitive nature of the information that you are 

dealing with, those threats are just as important and great given 

the importance of our Intelligence Community of protecting our 

country. 

So when we are speaking about IC accountability for hiring contractors and knowing what function they are performing and 

whether, obviously, they are performing inherently governmental 

functions, that is an important question. But I also think it also 

deals with a larger IC accountability issue, and including knowing 

who we are hiring, mitigating risk, and assuring continuous evaluation and accountability. 

So I would like to hear your thoughts on how we are addressing 

this issue, how we are mitigating the risks of contractors as insider 

threats, and what you believe is being done in that regard to ensure the American people that we will not see similar instances as 

we have seen outside your agencies. 

Ms. O’SULLIVAN. First, regrettably, there is no corner on the 

market for people who would cause threats. Historically, Government employees have been an equal risk there. But in managing 

the contractor workforce, as I said earlier, they go through the 

same security vetting process as our Government staff. In addition, 

the contractor must—before they have any access, they must have 

this validated need, and they must have a validated clearance. In 

addition, they are subject to the same regulations and monitoring 

once they are in our systems as Government staff. 

So what we have been doing, as you pointed out, is enhancing 

the security process for all, and that includes the continuous evaluation process, which we are driving to bring on board working 

with OPM. 

Senator AYOTTE. So what are you doing now in terms of continuous evaluation? And what do you anticipate doing as an improvement to that process? 

Ms. O’SULLIVAN. We are building off of a pilot project that I 

think you have probably heard about that the army did, which 

pointed to the benefits of continuous evaluation. We are looking for 

an initial operational capability (IOC) at the end of this year, and 

5 percent of our Top Secret/Sensitive Compartmented Information 

(TS/SCI) employees cleared covered by continuous evaluation looks 

going into 2016. 

Senator AYOTTE. And right now what is the period that someone 

has to—can you remind me of that—how often are you evaluating 

your employees right now? 
20 

Ms. O’SULLIVAN. For TS/SCI, predominantly we are looking at a 

5-year periodic reinvestigation. But we did have some challenges 

with people facing budget cuts and sequestration, looking at moving funds from that and focusing on initial investigations. The DNI 

sent out a letter in October telling people to do a risk-based approach to the reinvestigation so that we make sure that those at 

highest risk or who have the most sensitive access are investigated 

more frequently. 

Senator AYOTTE. Are you doing any random audits? 

Ms. O’SULLIVAN. We are doing random audits of our employees 

on our IT systems. 

Senator AYOTTE. On the IT systems? 

Ms. O’SULLIVAN. Yes. 

Senator AYOTTE. So Senator Collins, Senator Heitkamp, and I 

have been really having a piece of legislation that deals with more 

random audits of the background review, and it seems to me—I appreciate that you are doing it of the IT system, but obviously the 

risks outside of IT are just as important in terms of the sensitive 

nature in which some of the issues that you are dealing with in the 

Intelligence Community. So that is one of the things I hope we will 

get to because, frankly, if you do not know when you might be evaluated, I think that is a better system than knowing that, every certain period you are going to be evaluated. 

So I just appreciate what you are doing on that, and obviously 

this is an issue we face across government, so thank you. That is 

all I had for questions. 

Ms. O’SULLIVAN. Thank you. 

Chairman CARPER. Thanks so much for joining us today. 

I want to go back to—I told you that when I finished my questioning, I was going to go back and ask you some questions about 

recommendations and how those recommendations were received 

and acted upon. 

Let me just ask you, let me go back in time to 2012. Senator 

Akaka was about to leave us. He makes this request for a GAO 

study, and you all go to work on it. It takes over a year. You come 

out with your report this year. And just talk a little bit about the 

back-and-forth between, I do not know, the two of you, if there is 

some—I presume there is—but in terms of the development of the 

recommendations, how does that take place between GAO and in 

this case ODNI? 

Mr. DINAPOLI. Well, thank you, Senator, for the question. I think 

when you look historically back at the start of this engagement, 

that was just after the Intelligence Community Directive 114 was 

established, which provided a framework for GAO to move forward 

with the Intelligence Community in terms of audits. And with that 

new Intelligence Community Directive, I think that did establish a 

good framework for us to move forward. It gave us an approach for 

a presumption of cooperation. It prevented the categorical denial of 

information, and access to much of the information on a more formal basis. 

This job, as you said, started some time ago, and it continued for 

about probably a year’s worth of dedicated audit work and then 

some additional work as to followup. I think the information and 

the cooperation that we got from the Intelligence Community im-
21 

proved over time. I think that initial period, there were some efforts to try to understand how to implement the directive. And I 

think as we came back and walked through each of the agencies 

with our findings about what we found in looking at the inventory, 

gave them the opportunity to see what we had done, and then we 

were discussing with them what we thought some of the implications were. So I think at least at the element level we had a good 

dialogue toward the end about the work that we had done, how we 

had completed it, and what some of those implications are. And I 

think our recommendations derive directly from those discussions. 

I think when we sent the report over for formal comments, we 

had a very good exit conference, which is the standard process that 

we use at the Office of the Director of National Intelligence—— 

Chairman CARPER. Who participates in that kind of exit conference? 

Mr. DINAPOLI. I think in that particular case it would have been 

the office most directly cognizant for the work, the Chief Human 

Capital Officer, with support from the acquisition individuals, were 

there at the exit conference along with agency representatives. It 

depends upon who actually shows up. 

So when we present that information, we talk about here is the 

potential recommendations, we are looking for the agencies to help 

us out, because we do want the recommendations to be actionable, 

we want them to be productive, and we want them to do something 

that, once they are implemented, they are just not implemented because they think they just will be done with GAO; it is that we 

have some type of positive action that allows the agencies to move 

forward. Because it is not about us, it is about the agencies having 

the ability to improve whatever they are doing. 

One of the questions I think you mentioned before is, well, what 

do you think about how responsive the Office of the Director of National Intelligence and the agencies have been? We thought the responses to the draft report and the recommendations were solid. I 

actually thought that the Director provided cogent responses saying here are some specific steps we are going to take with regard 

to improving information on the methodology; we are going to ask 

for that information so we will have a better handle on it. 

They had general agreement, at least in principle, with how to 

improve workforce planning, but they pointed out that it is not a 

simple task. There are some things that they need to think about 

how to implement it in a way that makes sense for us and is not 

overly burdensome, not too cost prohibitive. 

We agree with that in general, that you do need to make those 

actions usable, cost-effective, and meaningful. So we are going to 

continue to work with the agencies to figure out what they are 

doing and make sure that the actions that they take are responsive, and we will listen to their concerns about if we do it this way, 

this might be too much. 

Chairman CARPER. OK. Ms. O’Sullivan, just chime in here. How 

does the process work for you? It seems to me if I were at GAO 

and I were doing this, I would want to have you fully involved. I 

would not want it to be necessarily adversarial, but to see if we can 

collaborate, and at the end of the day when we come up with recommendations, hopefully they are better informed recommenda-
22 

tions and you would be more likely to comply with them. But just 

from your perspective, how does this work? 

Ms. O’SULLIVAN. It starts with engagement at the front end to 

understand what is the scope of the work that is going to be done, 

and I actually like to work before that by suggesting here are some 

areas where I could use some outside eyes. These are lessons, 

again, I have learned from the relationships with IGs through the 

years that the only way to really approach this—and this is what 

I tell my management organization—is by looking at this as an opportunity to see that which you are missing. It is that old adage 

of when you are in college and you typed a term paper, you could 

read that paper 50 times and read right over the typo every time. 

You just simply cannot see that which is the norm to you. You need 

outside eyes to help you find problems, and that is about the basic 

credo of IGs and GAO, is to make the function of government more 

efficient and effective. 

So it should be looked at as an opportunity to improve, and the 

engagement at the front end is to try and figure out how to understand in our working environment—for instance, one of the things 

that we are engaged on now is suggesting maybe you could take 

a look at our facilities footprint across the Washington area to see 

that we are really getting the gains in shared space that we think 

we are. This is the kind of ongoing debate, and I do this with our 

IGs all the time. I ask them, I have a new component director here, 

why don’t you establish a baseline before the new guy comes in? 

And that is the way to engage in a fruitful relationship. 

Chairman CARPER. OK. I am going to come back and ask you to 

walk us through some of the recommendations, and then I am 

going to ask—not yet, but after Dr. Coburn goes, and then, Ms. 

O’Sullivan, I will be interested in your reaction to those recommendations and how we are doing. 

Then one last question before I finish up I will be asking you is 

what do we need to do next on this end, on this side of the dais, 

in order to kind of make sure this is all going to work out. Dr. 

Coburn. 

Senator COBURN. I am going to defer my questions. I have some 

other questions, but I am going to defer them for a closed hearing 

because there are some questions I want to ask in a closed hearing. 

Chairman CARPER. Well, let us just do it. Let us jump into the 

recommendations, just some of the key recommendations you have 

made, and let us get some reaction how we are doing. 

Mr. DINAPOLI. So we did make a number of recommendations. 

The first two are directed at the Office of the Director of National 

Intelligence and the Chief Human Capital Officer. Both have to do 

with improving the basic workings of the inventory. 

The first one, we said we had to develop more internal controls, 

so how do we improve—— 

Chairman CARPER. Had to develop what? 

Mr. DINAPOLI. Internal controls. How do we get the data just to 

be better? And the second part was how do you improve some of 

the estimating methodologies to get more consistencies with regard 

to what is reported. In that regard, the Chief Human Capital Officer concurred and said we are going to do that, and we are going 

to take some specific steps. So in this year’s inventory, which I be-
23 

lieve would be the fiscal year 2015 Intelligence Community inventory, they are going to have a particular tab, a specific tab that 

says how did you estimate, what was your methodology, what kind 

of limitations or challenges did you find. That information I think 

is also supposed to be reflected in the briefings up to the Hill, 

whether it be the annual briefings they provide to the committees 

or in the personnel level assessments, so there should be more clarity about what the information is and what it can be used for and 

what it should not be used for. Those two things I think would be 

very positive steps by the Intelligence Community. 

We also made a number of recommendations to the heads of the 

agencies that did not fully implement the Office of Federal Procurement Policy’s guidance. 

Chairman CARPER. I am sorry. Say that again? Start that sentence over again. 

Mr. DINAPOLI. Sure. During the course of the review, we looked 

at the policies in place to mitigate the risks associated with using 

contractors, and specifically did the agencies implement procedures 

to implement the Office of Federal Procurement Policy’s September 

2011 guidance. In our review, only the Departments of Homeland 

Security and State had done so. 

Chairman CARPER. OK. 

Mr. DINAPOLI. So we had five other agencies that had not. We 

said, you need to get those policies in place, which is a recommendation that we had previously made to the Office of Federal 

Procurement Policy back in 2011. 

Chairman CARPER. And what has happened subsequent to that 

recommendation? 

Mr. DINAPOLI. A couple things. Since that point in time, Justice 

concurred with that recommendation. We are going to work with 

them to see what actions they are taking. I think Treasury also 

concurred, and the interesting part about Treasury is that they 

needed to do a pilot program because they said this is a pretty fundamental change in how we are thinking about using contractors. 

And as part of the briefing they provided to us, they said we are 

going to implement changes probably in September. But they did 

find that when they were looking at their workforce balance, they 

did find a number of individuals that were paid considerably more 

than what they thought was cost-effective. And so as part of that 

rebalancing scheme, you might actually have some ability to have 

cost savings. So I think there is a positive use of the inventory. 

A couple other agencies, we are still in dialogue with them as far 

as what actions they are taking. The Central Intelligence Agency 

is one of the outstanding ones that we still need to followup and 

close the loop on. 

Chairman CARPER. Ms. O’Sullivan, jump in, please. 

Ms. O’SULLIVAN. I think he has accurately captured the fact that 

we responded to the first recommendations by including concrete 

direction in our inventory this year where we asked elements to 

identify the methodology used and steps taken to address increasing accuracy of the data. 

In addition, as I mentioned earlier, in ODNI, the element I oversee, we have moved forward and initiated policy as requested addressing the OFPP letter. So those are concrete steps taken, and 
24 

I would also like to point out the benefit he just highlighted in the 

discussion with Treasury is what I meant by the process of going 

through this examination forces out things that you should be looking at. When Treasury looked at their core contractors, because of 

this inventory, because of GAO’s involvement, they started asking 

themselves some questions about is the rate of pay for a contractor 

the right thing. It is not a direct intent of the inventory. It is the 

byproduct that you get by examining these things closely. 

Senator COBURN. Did you do anything in terms of increasing the 

justification on outside contracting? 

Ms. O’SULLIVAN. Our contract officers work that constantly in 

the contract stuff, and they take that on board to look at their own 

audited numbers and see if there is something that we can issue 

as far as direction in our—— 

Senator COBURN. So new outside contracting has to have the justification there? 

Ms. O’SULLIVAN. There are requirements in the basic contracting 

structure. 

Senator COBURN. But there always have been. 

Ms. O’SULLIVAN. Yes, so this is—— 

Senator COBURN. You were not following them. 

Ms. O’SULLIVAN. This is a check to go and look at and see was 

this an anomaly or is this something we need to look at across the 

board. 

Senator COBURN. OK. 

Chairman CARPER. Great. Well, I think we are going to wrap up 

here and go to a secure setting for a few more questions. Before 

we do, talk to Dr. Coburn and me about what we can do from our 

end to be helpful in making sure that this is not gathering dust, 

but just to make sure there is actually good followup and continue 

to be good followup. What can we do to be helpful? 

Mr. DINAPOLI. Well, I actually think there are two things that 

you could do. I think the Committee historically has done a lot of 

work in this area, and they have held hearings. I refer back to the 

hearing that the Committee held back in 2007 which I think 

prompted DHS to do more with its contractors. That type of oversight I think is essential and promotes that type of reassessment 

internally by the agencies. So continuing to hold the oversight 

hearings that the Committee is holding I think would be one of the 

key things to do. 

I think the second thing that the Committee could help spur is 

a dialogue within the Federal community now that we have had a 

number of years’ use, looking at the DOD inventory of contractor 

service, the civilian inventories, and then the IC inventory, there 

are undoubtedly best practices and lessons learned in how we can 

use the inventory better. And I think that requires not just an individual agency or element. I think it needs more of a concerted Federal-wide dialogue, potentially led by the Office of Federal Procurement Policy, but definitely in conjunction with the units that come 

together, like the Chief Financial Officers (CFOs), you need the 

Chief Acquisition Officers (CAOs). You need the folks that are 

going to have their community represented so they need to be part 

of that dialogue to say how can we make this work for us within 

the environment that we work in. 
25 

1The transcript of the classified session of the hearing is on file at the Office of Senate Security, document number OSS–2014–0961. 

So I think there is a great opportunity to set the stage now because, as we get data on contractor performance, as we get data on 

the number of contractors, if we lay the foundation now, 2 to 3 

years from now we will be in a position to actually make some 

more very informed governmentwide processes that will make it 

more applicable and more useful across the government. 

Chairman CARPER. OK. Ms. O’Sullivan, just wrap it up very 

briefly. Same question. 

Ms. O’SULLIVAN. Very briefly, anytime you have a concern, the 

sooner you come to us or send us a request, have your staff reach 

out, the better it is for all of us. I do not want you to feel a lack 

of confidence because you have not gotten an answer you were 

looking for. 

Chairman CARPER. All right. Thank you. 

With that, we are going to call it a day here, at least in our open 

hearing. The hearing record will remain open for 15 days, until 

July 3 at 5 p.m.—for the submission of statements and questions 

for the record. 

The hearing will be in recess subject to the call of the Chair, and 

we are going to reconvene shortly in a classified setting. Thank you 

again for joining us for this portion of the hearing. We will look forward to meeting again with you very shortly.1

Thanks, everyone. 

[Whereupon, at 11:16 a.m., the Committee proceeded in Closed 

Session.] 

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