U.S. GOVERNMENT PRINTING OFFICE

58–514CC WASHINGTON : 1999

THE RUDMAN REPORT: SCIENCE AT ITS BEST,

SECURITY AT ITS WORST

HEARING

BEFORE THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

JUNE 22, 1999

Serial No. 106–57

Printed for the use of the Committee on Commerce

(

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COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

THOMAS C. SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

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C O N T E N T S

Page

Testimony of:

Richardson, Hon. Bill, Secretary of Energy .................................................... 11

Rudman, Hon. Warren B., Chairman, President’s Foreign Intelligence

Advisory Board .............................................................................................. 15

Material submitted for the record by:

Dingell, Hon. John D., a Representative in Congress from the State

of Michigan, letter dated June 25, 1999, to Hon. Warren B. Rudman,

requesting responses for the record ............................................................. 84

Richardson, Hon. Bill, Secretary of Energy, responses for the record ......... 78

Rudman, Hon. Warren B., Chairman, President’s Foreign Intelligence

Advisory Board, letter dated June 30, 1999, enclosing response for

the record ....................................................................................................... 87

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THE RUDMAN REPORT: SCIENCE AT ITS

BEST, SECURITY AT ITS WORST

TUESDAY, JUNE 22, 1999

HOUSE OF REPRESENTATIVES, COMMITTEE ON COMMERCE, Washington, DC.

The committee met, pursuant to notice, at 1 p.m., in room 2123

Rayburn House Office Building, Hon. Tom Bliley (chairman) presiding.

Members present: Representatives Bliley, Oxley, Barton, Upton,

Stearns, Gillmor, Greenwood, Cox, Burr, Ganske, Rogan, Shimkus,

Bryant, Ehrlich, Dingell, Markey, Rush, Klink, Stupak, Sawyer,

Green, Barrett, and Luther.

Staff present: Tom DiLenge, majority counsel; Mark Paoletta,

majority counsel; Kevin Cook, professional staff member; Anthony

Habib, legislative clerk; and Edith Holleman, minority counsel.

Chairman BLILEY. The committee will come to order: I want to

thank the Secretary and I want to thank Senator Rudman for

being available today. I know they have been testifying this morning over in the Senate. I also know that Senator Rudman has a

schedule to meet and a plane to catch and we need to be respectful

of that.

As a result of that, I intend to make an opening statement and

turn to our colleague, Ron Klink from Pennsylvania, for an opening

statement and ask unanimous consent that all members may insert

opening statements in the record so that we can get the testimony

of the Secretary and the Senator Rudman and have as much time

for questioning as possible.

Without objection that will be the order. The Chair recognizes

himself for an opening statement.

Today, the full committee will hold this hearing on the report

issued last week by the President’s Foreign Intelligence Advisory

Board—a report that speaks directly about the poor state of security at the Department of Energy’s most sensitive nuclear weapons

laboratories. The chairman of the board—the distinguished former

United States Senator from New Hampshire, Warren Rudman—

will testify before us today, along with Energy Secretary Bill Richardson, to discuss those findings and the board’s recommendations

for structural reform at the Department.

Unfortunately for the American people, the Rudman Report confirms that the Department of Energy as currently organized, simply cannot be trusted with the awesome responsibility of protecting

our Nation’s most prized nuclear secrets. As I stated this past April

at a subcommittee hearing on the topic, the Department’s historical

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pattern on security matters is all too clear: scandal or incident, followed by announcements from well-meaning department heads of

‘‘sweeping’’ reforms that are either never implemented by the bureaucracy or soon abandoned once the public spotlight fades or priorities change. Given this troubling pattern, I asked the General

Accounting Office last fall to begin a review of the Department’s

implementation of security recommendations and to update its

work on the status of nuclear security.

The Rudman Report describes this historical pattern in detail.

Secretary Watkins, during the Bush administration, took aggressive steps to improve the Department’s poor record on security—

establishing a high-profile counterintelligence office with FBI involvement, instituting mandatory background checks on foreign

visitors, and creating independent security policy making and inspection units for the first time in the Department’s history. I understand that Secretary Watkins personally took an active interest

in security matters, and that both he and his senior staff received

regular security briefings.

Yet, as the Rudman report found, just 2 years later, a new Energy Secretary came in and killed most of these initiatives. Counterintelligence was slashed and buried in the bureaucracy, background check waivers were granted to the labs’ foreign visitors programs, the frustrated FBI officials packed their bags and left in

disgust, and the Department’s own security apparatus was shunted

aside. No more secretarial or senior management briefings by the

Department’s independent security inspectors—they couldn’t get

time on the schedule. And numerous critical security reports and

warnings from internal and external critics went unheeded.

While the current Secretary is the first since Admiral Watkins

to pay attention to security matters, there are troubling indications

that he may be paying attention to the wrong people within the Department. Ever since the latest security scandal broke several

months ago, Secretary Richardson has been busy reassuring Congress and the American people that whatever had been broken is

now fixed. When our Oversight Subcommittee held a hearing in

April to put these claims of success in historical perspective and to

raise continuing security concerns, the Secretary attacked us for,

‘‘wallowing in old problems,’’ and, ‘‘exhuming the past.’’

When the Cox report on Chinese espionage was released in May,

Secretary Richardson dismissed its unanimous conclusion that security at the labs remained unsatisfactory, claiming that the report’s 6-month-old findings were ‘‘now outdated’’ in light of his reforms. And when the Rudman report took direct issue with the Secretary’s views on the current state of security, he accused the board

of lacking evidence and relying on ‘‘malcontents’’ for information.

The truth, Mr. Secretary, is that your repeated public claims that

our nuclear secrets are now safe and secure are simply not accurate, and all the evidence you should have needed on that point

was right within your own Department. I fear that you are not

being well-served by your advisers, and that you are overlooking

important sources of information. I find it difficult to understand

that for someone who claims that security is his top priority, you

had never met with—indeed you apparently did not even know—

your Department’s chief security inspector until 2 days before he

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was scheduled to testify before our Oversight Subcommittee in

May. And when my staff requested a briefing last week on the Department’s May 1999 security inspection of Lawrence Livermore

National Laboratory—which I understand was not favorable in

many important respects—your office blocked the briefing because

you had not had a chance to be fully briefed on the subject yet.

None of this bodes well for your reform efforts. As with all

things, the devil is in the details of implementation. The Rudman

Report makes clear that Congress cannot solely rely on the Secretary—any Secretary—to make the type of lasting and effective

changes in security that this Nation deserves. That said, I think

the specific recommendations of the President’s Advisory Board

need to be carefully considered to ensure that we don’t trade in old

problems just to find ourselves with new ones.

I am particularly concerned with the board’s apparent willingness to subordinate security policy and, more importantly, security

oversight and inspections to what in essence would be a nuclear

weapons program office. My experience in this area tells me that

that would be a step backwards. I also have concerns about what

would become of the independent environmental, health, and safety

oversight that currently exists with respect to the Department of

Defense and lab programs. But I agree with the board’s view that

the current management structure needs to be vastly simplified to

ensure the most aggressive oversight and the highest standards of

accountability—two things that have been sorely lacking for as long

as the Department has been in existence.

I look forward to today’s debate and future debates, on all of

these issues. I will now recognize the distinguished ranking member of the Subcommittee on Oversight and Investigations, the gentleman from Pennsylvania, Mr. Klink.

Mr. KLINK. Thank you very much, Mr. Chairman. To call this an

important hearing I think would be an incredible understatement.

I thank you for holding it and I thank you for yielding me this time

for an opening statement. As you, Mr. Chairman, know and Mr.

Dingell knows far better than I, this is an area in which this committee has a long and frustrating history of conducting oversight

and recommending changes to environment, health, safety and security at these facilities.

The Rudman report has spelled out in no uncertain terms the refusal of the weapons laboratories, to this very day, to make a full

commitment to the security that equals the quality of their science.

Whether this has resulted in espionage at a level that is inferred

by the Cox report, we do not know. We do know that security needs

to be radically changed. But I remain extremely skeptical of the report’s recommendation to lift the nuclear weapons program and its

contractors out from under the control of any Cabinet-level officers

and plunge it down under another name and expect the culture to

miraculously change. Also this proposal makes no provision for the

safety, health, and environmental management responsibilities at

the labs, nor does it deal with the major security problem: the nuclear materials accountability for those materials now stored in

other sites.

And, Mr. Chairman, I also am skeptical of the congressional proposals that would reward Defense Programs for its decades of arroVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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gance by giving it a semiautonomous status in the Department of

Energy, with even less control by anyone, including the Secretary

of Energy, and no oversight structure of any type. This astounding

provision is in the House defense authorization bill and is expected

to be in the Senate’s intelligence bill. This is something labs have

wanted for at least 2 decades: a structure in which no one except

their captive Federal bureaucracy can tell them what to do.

One thing that we in this committee know better than almost

anyone else is that the culture of arrogance which pervades the

weapons laboratories is not just in the area of security but it is everything that the laboratories do. It is not only because of scientific

accomplishment but also because of political clout. In many ways

the laboratories, often with the help of the field offices, have control of the Office of Defense Programs, the Assistant Secretaries

who have headed it, and occasionally even the Secretary.

The Office of Defense Programs seems to view its job as getting

to labs what they want. And we need to take some responsibility

up here in Congress. The actions of the labs and the Defense Programs are often backed up by congressional members and delegation s in the States in which they are located. For these reasons,

the labs have been able to thumb their noses at Congress and the

DOE headquarters. Security, industrial and radiation safety, and

responsibility for environmental management are viewed as major

hindrances to their primary missions.

Even now we must note that no one has been punished at either

the Defense Programs or the University of California which runs

Los Alamos, the lab on which the Chinese espionage investigation

has focused. As far as we can tell, the only adverse action taken

has been against the director of the Office of Standards and Security for an alleged security infraction unrelated to the espionage investigation, an action that has yet to be appropriately explained.

The Office of Safeguards and Security is a policy office whose reports over the years pointed out numerous security concerns that

angered the labs and Defense Programs. The unclassified version

of those reports were cited six times in the Rudman report.

Let me give you just a brief example in the safety area of how

the labs’ clout works. Just last week, staff was told that the Lawrence Livermore National Laboratory in 1998 killed the Department’s press release concerning a large fine assessed for safety—

for radiation safety violations. Because Congress has exempted the

laboratories from actually paying the fines, the only real club that

DOE has is bad publicity. The press release was dutifully prepared

by a field office, was sent to the Secretary’s office, and then disappeared. We are trying to find out what happened, but the Department is not being particularly forthcoming with staff of this information, and perhaps after this hearing we can get some assistance in finding out what happened to that press release.

Let me give you another example of lab clout. For over a year

Mr. Dingell, Mr. Brown, the ranking member of the Science Committee, and myself and others have been investigating the largest

CRADA or Cooperative Research and Development Agreement ever

signed. It is between the Sandia, Lawrence Livermore, Lawrence

Berkeley labs and Intel Corporation, and it will continue to work

to develop a critical piece of equipment for the next generation of

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computer chips. The labs got $250 million. The only problem was

that they and Intel want to manufacture all the equipment outside

the U.S. Even though the technology was developed here. This

meant that the lab researchers would have jobs but the high-paying skilled manufacturing jobs based on U.S. Technology would be

located another country. That position was developed by the labs

and the Oakland field office and was rubber-stamped by the Defense Programs. The headquarters staff hardly even knew the details of this enormous CRADA or that it violated our technology

transfers law. At one point they intended to negotiate an agreement with a manufacturer in a single afternoon meeting. Only

after great effort were Mr. Dingell and Mr. Brown able to convince

DOE headquarters that American taxpayers had the right to get

some actual benefit from the investment that they had made—or

we think we convinced them.

DOE signed a very general agreement with a foreign manufacturing company that is supposed to guarantee manufacturing in

this country but so far has refused to produce a copy of the agreement. From the little we know, it appears not to be binding and

we would like some help with the Energy Department to find out

about that.

Let me just say in full disclosure, Mr. Chairman, that the Secretary of Energy served with us on this committee, he is a friend

of mine, someone I am sure is well-intentioned, and we will stipulate to that. But the question the Rudman report brings up time

and time again is, what happens if the people within the Department of Energy don’t listen to what the Secretary says, or even

what the President says, or even what the Congress says. And

what happens when Bill Richardson, our dear friend, the Secretary

of Energy, is not the Secretary of Energy anymore? How do we

know there is a continuation of policies which are to the best benefit of our Nation and to the taxpayer?

For all of these reasons, I think that it would be a major error

to give more independence and power, with no meaningful oversight, to the Nation’s nuclear weapons laboratories.

With that Mr. Chairman I yield back my time.

Chairman BLILEY. I thank the gentleman.

[Additional statements submitted for the record follow:]

PREPARED STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF MICHIGAN

Thank you, Mr. Chairman, for holding this very important hearing today. I believe that the issues raised by the Rudman Report and the Department’s long-standing inability to get its act together on security matters warrant the prompt attention

of the entire Committee, and I applaud you for convening us so quickly to address

this problem.

As the new chairman of the Oversight Subcommittee, I have been very troubled

by what I’ve learned over the past few months about both the history of security

problems at the nuclear weapon labs and the current progress—or apparent lack

thereof—that is being made in reforming this recalcitrant bureaucracy. I’m amazed

by the Rudman Report’s findings about continuing bureaucratic obstruction of Presidential and Secretarial reforms at the laboratory level. Secretary Richardson has

boasted that he now runs the labs and they report to him, but the Rudman findings

make me wonder who really is in charge here.

I think it is also self-evident by now that the Department still has a long way

to go before it can claim confidently that sufficient reforms are in place—and, most

importantly, are working effectively—to safeguard our nation’s nuclear secrets. Just

last month, the Cox Committee on Chinese espionage unanimously concluded that,

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even if all of the announced reforms are fully implemented, we cannot realistically

expect that security will improve to a satisfactory level until next year at the earliest. Given the Department’s history and the problems experienced so far in instituting the latest round of reforms, the Cox Report’s conclusion appears well-founded.

The Secretary’s repeated public comments to the contrary are baffling. Either he

is misleading the American public—which I don’t believe he would intentionally

do—or he has less information available to him than the Cox Committee and the

Rudman panel had available to them, which itself is a major problem. Indeed, our

Committee staff has been receiving briefings from various Department employees

over the past several months that indicate continuing problems with security at the

labs and the implementation of the Administration’s announced reforms. Apparently, everyone except the Secretary knew of these continuing problems, forcing him

to repeatedly backtrack in public about this unfolding scandal.

The American people have a right not only to have their nation’s most sensitive

secrets fully protected, but also to get the most complete and accurate information

about the status of that protection. I think, so far, the Secretary and the Department as a whole have failed in both respects. At the Subcommittee level, we plan

to keep the pressure on the Department to live up to both of these reasonable expectations.

Thank you, Mr. Chairman.

PREPARED STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS

Thank you, Mr. Chairman. I am glad you decided to hold this as a full Committee

hearing, as this issue extends beyond just an Oversight and Investigations matter.

Any legislative effort to reorganize the Department of Energy will have to come

through the Commerce Committee, and it is essential that our Members understand

the magnitude of the problem we are facing.

Senator Rudman and his panel deserve a lot of credit for producing a candid and

hard-hitting analysis of the security problem at DOE facilities. When the Rudman

panel describes the Department of Energy as a ‘‘dysfunctional’’ structure characterized by ‘‘organizational disarray, managerial neglect, and a culture of arrogance,’’ it

hit the nail right on the head. During my four years as the previous chairman of

our Oversight and Investigations Subcommittee, and even dating back to my days

as a Presidential Management Intern assigned to DOE, I have seen abundant evidence of the entrenched bureaucracy at DOE. Numerous Secretaries have tried to

make changes at the Department, only to be outwitted, or out-waited, by those resistant to change.

While Senator Rudman’s panel did an outstanding job of characterizing the problem, I am not sure yet whether the proposed solution is the right fix for the problem. I believe it is necessary to relocate the functions of the labs completely out of

DOE.

From a security perspective, a more serious problem arises from the fact that a

number of other DOE facilities not considered by the Rudman panel also engage in

weapons-related work. Examples include the Oak Ridge National Lab, the Pacific

Northwest Lab, and the Savannah River Site. Whatever solution we propose for the

security problems at DOE must address the entire DOE complex, not just the handful of labs and plants that are most strongly identified with weapons work. Here

is where the idea of a single security ‘‘czar’’ for the entire Department might be

more effective at policing the whole organization than the more limited fix recommended in the Rudman report.

There is one other area where I believe the Rudman panel may have missed the

mark. All of my experience with DOE, both within the organization and here in

Congress, tells me that the fundamental problem in the DOE organization is the

dominant role that its contractors play. One cannot change the culture in DOE without addressing the role of these contractors. I believe that action should be taken

where there is evidence of problems with the contractors.

Any meaningful change in the DOE organization must start with the government

personnel, but must follow through with how the DOE contractors execute the direction provided by the government. Certainly the government is responsible for defining the scope of work to be performed, negotiating a fair contract price, and then

exercising sufficient contract oversight to ensure the work is performed. But the

contractor is not off the hook in this equation. Two of the most problematic labs—

Lawrence Livermore and Los Alamos—are run by the University of California. This

contractor shares a large part of the responsibility for this problem. It may be exVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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pecting too much to ask an academic institution, whose philosophy is built around

the free and open exchange of information, to operate effectively in the national security arena. I support terminating the University of California’s contract because

of their gross negligence in managing the Los Alamos lab where Chinese espionage

on our nuclear weapons designs occurred.

And that is where Secretary Richardson comes in. Mr. Secretary, you have a responsibility to set the right security standards for your organization. When those

standards are not met, as clearly they were not in the Los Alamos case, you have

a responsibility to hold the appropriate government officials and contractor personnel accountable. I am not talking about just the Wen Ho Lee incident, but rather

about the mounting evidence that something is seriously wrong in the management

of these labs and in the security operation throughout your organization. You should

be thinking about replacing not just the responsible DOE personnel at the field level

and headquarters, but also the responsible lab directors and contractors.

Lastly, I think the Rudman report has it right regarding the limited ability of any

one Secretary of Energy to change the system at DOE. No matter how well-intentioned Secretary Richardson may be about reforming the Department of Energy and

correcting the security problems, there is no guarantee that subsequent Secretaries

will bring the same priority to the job. And there is no guarantee that the existing

bureaucracy of government personnel and contractor employees will implement your

reforms, when they have resisted so many other reforms in the past. That is why

this Committee must consider seriously the proposal to make a statutory change to

the organization at DOE.

Mr. Secretary, you have promised this Congress and the American public that the

problems that surfaced at Los Alamos are under control and cannot happen again.

The Rudman report says otherwise—that major security problems still persist in

DOE. I hope we can all get past the natural instinct to defend the status quo and

protect existing turf—we have to work together to do what’s best for the country.

This issue is too important to do anything less. Thank you, Mr. Chairman.

PREPARED STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF FLORIDA

Mr. Speaker: After reviewing the Report of the President’s Foreign Intelligence

Advisory Board regarding the poor security at the Department of Energy Nuclear

Weapons Laboratories and proposals for reform, I have come to the conclusion that

I agree with Secretary Richardson’s opposition to the recommendations of the Advisory Board to create a semi-autonomous agency or a separate independent agency

and I agree with Secretary Richardson’s opposition to a wholesale reorganization of

the Department of Energy.

The only way to effectively deal with the repeated and critically damaging security lapses is through the abolishment of the Department of Energy.

I read with horror the Rudman Report and its notation that:

‘‘Never have the members of the Special Investigative Panel witnessed a bureaucratic culture so thoroughly saturated with cynicism and disregard for authority. Never before has this panel found such a cavalier attitude toward one

of the most serious responsibilities in the federal government—control of the design information relating to nuclear weapons... Never before has the panel

found an agency with the bureaucratic insolence to dispute, delay, and resist

implementation of a Presidential directive on security, as DOE’s bureaucracy

tried to do to the Presidential Decision Directive No. 61 (issued) in February

1998.’’

The Presidential Decision Directive (PDD) mandated new counterintelligence

measures at the labs, but the Advisory Board found that implementation of PDD

61 suffered from ‘‘bureaucratic foot-dragging and even recalcitrance’’ by DOE and

lab officials.

The report further notes that, ‘‘DOE and the weapons laboratories have a deeply

rooted culture of low regard for and, at times, hostility to security issues, which has

continually frustrated the efforts of its internal and external critics.’’

I personally do not believe that a reorganization or a shake-up of the Department

of Energy and how it handles nuclear secrets will be sufficient in destroying the pervasive anti-establishment culture that exists in the Department and at the weapons

labs, as detailed by the Rudman Report.

A cancer exists at DOE and the only way to rid the disease that is infecting our

national security is through its removal of the Department’s control of our nation’s

nuclear weapons. I believe the Department of Defense is much more capable of instiVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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tuting the necessary security measures that will bring discipline to weapons management.

The non-military civilian functions of DOE and the weapons labs could easily be

rolled into a semi-autonomous agency within the Department of Commerce, such as

NTIA.

I admire my former colleague and still good friend, Secretary Richardson, for his

diligent work of trying to correct the serious problems at DOE. But, the Rudman

Report clearly details the uncorrectable culture that exists and has existed at DOE.

Secretary Richardson, unfortunately, believes that the security problems that has

led to overt espionage being committed against our nation has been fixed. The Rudman Report found new evidence of continuing problems despite the recent Presidential and Secretarial reforms, including poor control of restricted and classified

data, inadequate monitoring of outgoing e-mails, and unsecure storage of nuclear

weapons parts, to name a few of the ongoing problems.

The Rudman Report concluded that DOE is ‘‘incapable of reforming itself—bureaucratically and culturally—in a lasting way, even under an activist Secretary.’’

I want to compliment and thank Senator Rudman and the Advisory Board for

their comprehensive work.

They accomplished in 90 days what National Security Advisor Sandy Berger could

not and did not even try to accomplish in three years. In fact, Notra Trulock, the

former Chief of Intelligence for DOE and one of Secretary Richardson’s intelligence

advisors, has stated that he informed Mr. Berger in April of 1996 about the dilapidated security conditions at DOE.

But Mr. Berger did less than nothing. He even waited over a year before notifying

the President of the serious security problems. For nearly three years after Berger

was notified and before Secretary Richardson came on board and before the Advisory Board was formed, nothing was done to correct these devastating problems at

DOE.

And now Secretary Richardson says lower-level employees will be fired, even

though the National Security Advisor and other political appointees deserve immediate removal.

The Department of Energy is a bureaucratic wasteland deserving of extermination.

Thank you Mr. Chairman.

PREPARED STATEMENT OF HON. GREG GANSKE, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF IOWA

A safe and secure Department of Energy, with its oversight over the most advanced computer and weapons technology in the world, is necessary for our national

security. However, the General Accounting Office has been reporting security deficiencies at DOE laboratories for two decades.

The Report of the President’s Foreign Intelligence Advisory Board is important because it alleges that the Department has been indifferent to security, institutional

authority, and personal accountability.

GAO told us two months ago that the two main causes of DOE security problems

were ‘‘a long-standing lack of attention and/or priority given to security matters by

DOE managers and its contractors’’ and ‘‘there is a serious lack of accountability

among DOE and its contractors for their actions.’’

The Report before us today goes even further... ‘‘Accountability at DOE has been

spread so thinly and erratically that it is now almost impossible to find’’ and ‘‘Never

before has this panel found such a cavalier attitude toward one of the most serious

responsibilities of the federal government—control of the design information relating

to nuclear weapons.’’

Even more troubling is the reported attitude that DOE employees approach their

security responsibilities with ‘‘cynicism and disregard for authority’’ and that ‘‘DOE

is still unconvinced of Presidential authority.’’

In light of the Rudman Report’s analysis, I think it is valuable to repeat some

of GAO’s findings:

DOE Order 1240.2b requires that background checks be done for all foreign visitors from sensitive countries. In September 1997, GAO reported that at two of our

nuclear laboratories, due to a special exemption to help those facilities cope with the

high volume of foreign visitors, background checks were conducted on only 5 percent

of visitors from sensitive countries. As a result of this failure to follow procedure,

GAO was able to document 13 individual cases in which persons with suspected foreign intelligence connections were allowed access to DOE laboratories without background checks.

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Other reports detail foreign visitors allowed to roam secure areas after hours

without supervision, a lab losing 10,000 classified documents, and a DOE security

clearance database that was so outdated that 4,600 clearances should have been terminated.

The Rudman Report asserts that we may now be physically secure against armed

infiltration. Even if this assessment is accurate, we currently face an even more

dangerous and harder to control threat—electronic espionage. Computer hackers are

very adept at circumventing firewalls and other protective devices. I would expect

that we could construct a secure system.

The Rudman Report recommends changes to the Department’s structure. Something needs to be done to change not only the regulations of the Department, but

also the institutional culture within which DOE employees perform their duties. I

agree with the security changes recommended by the President’s Foreign Intelligence Advisory Board. DOE remains accountable not only to the President, but

also to this Congress and the American people.

I would like to thank both Secretary Richardson and Senator Rudman for appearing here today. I look forward to your testimony and hope that you can help reassure this Committee that DOE is taking the necessary steps to ensure our national

security.

PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF MICHIGAN

Mr. Chairman, thank you for holding this hearing today. No Congressional committee has spent more time and effort on oversight of the Department of Energy’s

security efforts. During my tenure as Chairman of the Subcommittee on Oversight

and Investigations, we conducted dozens of hearings over a decade. We looked at

numerous security lapses, such as the inability to account for nuclear material, the

lack of security at our weapons facilities, theft of property, and problems in the security clearance process, the handling of classified information, and the foreign visitors program. Now the rest of the country knows why we were concerned.

I have reviewed the report by Senator Rudman and the President’s Foreign Intelligence Advisory Board, and I want to commend the Senator for an excellent report.

It documents security lapses over the past several decades in a clear and comprehensive fashion. It is a wakeup call to the country that these problems are extremely serious and in need of correction.

Reports alone will not suffice. Nor will good intentions. I note with interest that

on Sunday, Senator Rudman stated that bureaucrats at the Department of Energy

are still balking at implementing a Presidential order on security. He said, ‘‘The attitude of people within that department, in that bureaucracy, is astounding.’’

To that I say, ‘‘Amen.’’

The question before us is what to do next. In his report, Senator Rudman gave

good marks to recent actions by Secretary Richardson. He stated that more reforms

are necessary. More importantly, he noted that even if the Secretary made all of

the appropriate reforms, we need a statutory restructuring, because a future Secretary could undo the reforms.

Indeed, we have already seen reforms adopted by one Administration, such as an

independent Office of Safeguards and Security Assessments, undone by the next Administration.

Yet Chairman Bliley and I share concerns about current legislative efforts to establish an autonomous or semi-autonomous agency in charge of nuclear weapons for

precisely the reasons described by the Senator. We are concerned that those same

bureaucrats and lab contractors, who are refusing to accept the President’s security

order, would be the ones running this agency, with even less oversight than is currently in place.

None of us wants to use these serious security problems as an excuse to put the

inmates in charge of the asylum.

This concern is not hypothetical. It is real. In every investigation concerning problems at the DOE weapons facilities and labs, the individuals responsible for the operation of defense programs and their contractors consistently and repeatedly denied

the problems, punished the whistleblowers, and covered up the problems to their superiors and Congress.

Unfortunately, two provisions that are currently before Congress—one in the

House-passed Defense Authorization, and the other a pending amendment to the Intelligence Authorization in the Senate—would give these recalcitrant bureaucrats

and contractors total control over these programs. I strongly oppose these proviVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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sions. I was joined in my opposition to the House provision by Chairmen Bliley and

Sensenbrenner, but we were not permitted to offer an amendment to strike it.

I want to turn attention to an even greater problem. Senator Rudman’s Panel’s

report is entitled, ‘‘A Report on Security Problems at the U.S. Department of Energy.’’ As a report on security problems, it is excellent. But in crafting legislative

solutions to security problems, we must not create other problems. I refer specifically to safety, health, and the environment.

Throughout the report, I found no references to the safety and environmental

problems at the DOE facilities, and I understand why: that was not the panel’s

mandate. However, some of the legislative proposals would certainly affect those activities.

I am taken aback by those who say, in effect, that we need to return to the days

of the Atomic Energy Commission.

Do they want to return to the days when the operators of the Hanford facility put

thousands of gallons of highly radioactive waste in steel drums and buried them in

the ground, and then for years tried to hide the environmental damage that is now

costing the country billions of dollars a year to clean up their mess?

Do they want to return to the days when safety was so bad at our weapons facilities that every plant had to be closed down, and we still do not have the capacity

to produce tritium for our weapons?

Do they want to return to the days when radiation experiments were conducted

on human guinea pigs, and then were covered up for decades?

The answer, of course, is ‘‘no.’’ I am pleased that the Rudman panel report appears to recognize the need for independent oversight for security and counterintelligence. I note that the recommendations also expect the independent oversight

board to ‘‘monitor performance and compliance to agency policies.’’ In my view,

health, safety and the environment must also be subject to oversight that is independent of national security officials.

Mr. Chairman, I am sure that we will find that in the end, we are much more

in agreement than disagreement. We all support the need to streamline the organizational structure and enhance accountability of agency officials. We all agree that

independent oversight of sensitive areas, such as security, health, safety, and environment is required. We all agree that current proposals need to be significantly

amended so that we do not repeat the problems of the past. We have in the past

worked in a bipartisan manner to bring about reforms, such as the Cox-Dicks

amendment to the Defense Authorization and the establishment of a Defense Facilities Safety Board. That same effort is required now—not in a hasty and haphazard

manner on the Defense or Intelligence Authorization bills—but in carefully crafted

bipartisan legislation.

PREPARED STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MASSACHUSETTS

Thank you, Mr. Chairman.

The Rudman report justly accuses the Department of Energy’s Defense Programs

of a ‘‘culture of arrogance,’’ of ‘‘organizational disarray,’’ of being a ‘‘dysfunctional bureaucracy.’’ The report then proposes to isolate this dysfunctional culture into a separate government agency that will be even less subject to outside oversight. It does

not address how to change the culture at the nuclear weapons labs or at the contractors who run them.

The report traces many of the problems back more than 25 years. At that time,

the weapons labs were under the Atomic Energy Commission, an independent agency. Because of the problems due to lack of oversight, the Commission was disbanded, with the labs transferred to the Energy Research and Development Administration, which later became part of the Department of Energy. Twelve years later,

when the extent of environmental destruction hidden behind the walls of secrecy became widely known, the environmental cleanup and restoration functions were split

off from the Defense Programs and an environmental czar was appointed. Ten years

after that, when security problems became well-publicized, a security czar was appointed. Throughout this time, the same contractor, the University of California, has

actually managed Los Alamos as well as Lawrence Livermore Labs.

Now we are being urged to reorganize the Department of Energy, to put defense

programs back into a separate agency, to reanimate the corpse of the old Atomic

Energy Commission. I fear this will take us back to the bad old days, when an agency focused on making bombs, hidden from public sight, caused environmental havoc

and public health catastrophes. And once again the contractors who actually run the

weapon labs go virtually unmentioned. Rearranging deck chairs on the Titanic will

11

not plug the hole the security iceberg at Los Alamos has opened up. There is a gaping security hole in our weapons laboratories, but rearranging government offices

will not close it.

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

THE STATE OF TEXAS

Mr. Chairman, I would like to start by thanking you for holding this important

hearing. The findings in this report deserve the close scrutiny that only this committee can provide.

I would also like to thank our witnesses, Senator Rudman, and especially our

former colleague and good friend, Secretary Richardson, for appearing before the

Committee today.

It was clear to me, even before this report came out, that there were serious problems with security at these DOE laboratories. Since the early 1970s, this committee

has held extensive hearings on this subject, closely following the efforts of the DOE

to institute reforms.

Hopefully, this report, and the recommendations that it contains, will open a new

chapter in our oversight of this problem. We need to move forward on solutions that

will ensure the safety and security of both the information and technology that

these labs produce and the personnel who work in these labs.

However, I have my concerns about some of those recommendations. For instance,

if a new, semiautonomous agency is created within DOE, or if we move the responsibility for these labs outside of DOE, what will happen to the many other tasks and

functions that these labs serve that are not weapons-related?

Also, it seems to me that part of the problem is the culture that has grown inside

these labs over the years. If we streamline the chain of command or create a new

agency, what will prevent that culture, that has contributed to the problem, from

becoming established in this new entity?

Furthermore, these weapons labs are currently self-regulating on things like radiation exposure, safety and environmental issues. Since these are the types of issues

that have been problems in the past, will we continue to allow the labs to police

themselves?

Finally, we all know that these labs, for many years, ignored environmental concerns and focused simply on producing weapons. Who will be responsible for the environmental cleanup at these sites, especially if they are removed from DOE jurisdiction?

These are just a few of the questions that I hope we have the opportunity to hear

the answers to today, Mr. Chairman. I look forward to hearing the responses from

both Senator Rudman and Secretary Richardson.

Chairman BLILEY. Mr. Secretary.

STATEMENT OF HON. BILL RICHARDSON, SECRETARY OF

ENERGY

Mr. RICHARDSON. Mr. Chairman, members of the committee,

thank you for the opportunity to discuss how to improve security

and counterintelligence at the Department of Energy. I want to

thank the committee for its flexibility which allowed me to testify

before the Senate this morning. I truly mean that, because I know

how busy members of this committee are.

No mission is more important to me than taking the actions necessary to ensure that America’s nuclear secrets are well guarded.

We have made considerable progress, but I won’t admit perfection,

as some of my colleagues have indicated. I am looking forward to

working with this committee, the Congress, and Senator Rudman

on ways to make things better.

Let me deal with Senator Rudman’s report. This is a very important report. It is hard-hitting, it identifies the root causes of the

long-standing security and counterintelligence problems at the Department of Energy: confusing organizational structure, lack of acVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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countability, unclear roles and responsibilities, a lack of attention

to security.

I want to thank the chairman, Chairman Rudman, and this

panel for recognizing the aggressive steps we have already taken

to address serious and systemic security problems at the Department’s labs and for making additional recommendations that can

help address the critical nature of the problems.

Chairman Rudman identifies a list of attributes that must characterize meaningful reform. I agree virtually with all of them, such

as the needs of leadership, clarity of mission, and streamlined field

operations. The Presidential decision directive and the reforms I

have undertaken are based on some of the same basic principles

about what is needed to address the underlying problems. After

several months of wrestling with the problems at the Department,

I think it is essential that any reform of the departmental organization ensure that certain criteria are met.

First we must ensure that there is a clear chain of command and

accountability for implementing national security policy. I have already undertaken a major reorganization of the headquarters-tofield relationship which clarifies reporting lines and responsibilities

across the complex. In my plan, the chain of command is clear, and

accountability is established for the nuclear weapons program. The

three weapons labs, and all of our nuclear weapons sites and facilities throughout the complex report to the Assistant Secretary for

Defense Programs.

On those charts, Mr. Chairman and members of the committee,

are the reorganizations of the Department of Energy. The left chart

is the way that I have organized the Department. The chart on the

right is the confusing maze that I think has caused us these problems because of lack of attention given to security.

Second, the second principle, we must raise and not lower the

profile on authority of the nuclear weapons program to overcome

the systemic and long-lived security problems identified by both the

Cox and advisory board reports. From my experience, the Department needs more engagement from the Secretary of Energy and his

or her office in the nuclear weapons program. I am concerned that

fencing off the Nation’s nuclear weapons program would blur the

Cabinet Secretary’s role.

Third, we must ensure that security and counterintelligence programs have a senior departmental advocate with no conflicts of interest. The only way to assure this is to have a separation between

the office responsible for the nuclear weapons program and the office responsible for establishing and monitoring security and counterintelligence policies. That is the only way that you can assure

that security decisions aren’t shortchanged and that they are not

competing for the time and attention of senior management as well

as budgetary resources.

And fourth, we must ensure that stockpile stewardship doesn’t

lose its link to cutting-edge science. Our ability to ensure the safety

and reliability of the nuclear deterrent depends upon cutting-edge

science. An autonomous agency would partition the laboratory system and ultimately undermine the science on which our national

security depends.

13

A bureaucratic Berlin Wall between the weapons labs and the

science labs would hamper the joint research that they perform and

weaken the quality of basic science at the weapons labs. The nuclear weapons program depends on unclassified cutting-edge

science, requires active engagement in the other national labs, and

contact with the international community. It needs overall scientific excellence to recruit and retain the best and brightest scientific minds for the weapons program.

Let me just go through some reforms that we have taken. When

I went through all the recommendations that Senator Rudman and

his commission proposed, 43 in number, I found that my security

plan embraces 38 of them. That is almost 90 percent. That is a lot

of common ground in which we can work.

Let me quickly run through some of the reforms that we have already put in place. In counterintelligence, in February 1998, President’s Clinton ordered that the Department of Energy improve its

security dramatically and implement an innovative, comprehensive

counterintelligence and cybersecurity plan. By November of last

year, I approved the far-reaching aggressive new plan, improving

background checks on visitors, document controls, use of poly

graphs, and increases in our counterintelligence budget which has

grown by a factor of 15 since 1996.

In March we took additional steps for counterintelligence upgrades, security training, and threat awareness and focused an additional $8 million on further security, classified and unclassified

computer network. When I was informed of the serious computer

transfer issue at Los Alamos, I ordered a complete stand-down of

the classified computer systems at our three weapons labs—Los Alamos, Livermore, and Sandia—to accelerate computer security

measures already underway. The systems went back on line only

when I was convinced significant progress had been made. As of

today we have implemented 85 percent of the key recommendations

in our counterintelligence action plan.

We deal with security. I know that this has been an issue of

great interest to this committee, particularly Chairman Dingell,

former Chairman Dingell. I came to the Department of Energy

after having served 14 years on this committee, where I came to

understand the magnitude of the security management problems

facing the Department. And key members of this committee have

held a few hearings on this subject. Important hearings.

One of the first steps I undertook was to figure out how to untangle the maze of illogical reporting relationships between the labs,

the field offices, and headquarters, to clarify chain of command and

establish accountability. That reorganization was completed April

21 and you can see it on the left.

Then on May 11 I took the next step needed to bring about accountability and put some teeth into the security operation, with

the farthest-reaching security reorganization in the Department of

Energy’s history. We established the new high-level Office of Security and Emergency Operation; the security czar, gathering all departmental security function s in one place and answering directly

to me.

Last Thursday, retired four-star General Gene Habiger accepted

the position as the Department’s security czar. General Habiger

14

brings to this job his experience as the Commander in Chief of

Strategic Command, where he was in charge of nuclear forces. He

is only 1 of 9 CINCs, and there is probably nobody better to deal

with nuclear weapons than General Habiger, who is here with me,

and who has come out of retirement to take this position.

As the security czar, the general will rebuild the entire Department’s security, cybersecurity, and counterterrorism apparatus, as

well as our emergency response operations. He will be the single

focal point for security policy in ensuring that security is rigorously

implemented across the Department complex. We all know that

any organizational structure is only as its good as its people. We

should all thank him for coming out of retirement to serve his

country once more.

These are some of the measures we have already undertaken. I

believe that these changes embody the attributes that the Rudman

Commission identifies as critical to meaningful reform, and have

already had a dramatic impact on the security of the labs.

But, clearly, more needs to be done. I am looking carefully at the

recommendations in the Cox report and in this report of Senator

Rudman. I have been meeting with Senators and Members of the

House on ways to sort out what additional steps are needed and

which of these changes are measures we should codify to ensure

that the changes are institutionalized and last beyond the tenure

of any one Secretary of Energy or committee chairman.

There is much common ground. I think we can work that common ground to build on what has already been accomplished and

make even more sweeping Department reforms than the advisory

board recommends. But I do have concerns, I do have concerns

about the creation of an autonomous or semi-autonomous entity,

especially if we are trying to solve the security and counterintelligence problems at the Department.

Security and counterintelligence problems cut across all of the

Department’s missions and are not limited to the weapons labs and

productionsites. If anything, I think this has been the greatest contribution of this committee, to point out some of the problems that

are in the entire complex, in the plutonium areas, at Rocky Flats,

in other parts where the guns, bombs, some of the other parts of

the Department have not been up to speed.

Chairman BLILEY. Mr. Secretary, could you——

Mr. RICHARDSON. Mr. Chairman, this is pretty important. I

would appreciate the chance to be heard. We need to improve security at all sites, and fencing off the weapons complex is not the answer. Plutonium located at our environmental management sites

demands the same level of security as plutonium at Los Alamos.

Mr. Chairman, since I am the person that inconvenienced the

committee, I will now wrap up. Let me just say that this Commerce

Committee is one of the most active oversight committees in the

Congress. And the last point I am going to make is that I think

it is very important that there be independent oversight of my Department by an independent oversight agency reporting directly to

me.

This is something that was part of the Dingell Commission reforms that were adopted, but then previous Secretaries took out

this office, put it in Germantown, Maryland, and I have brought

15

this back because I think it is important to have this independent

oversight.

I believe that with the Rudman recommendations, with the Cox

recommendations, we can make a lot of progress. I am trying to fix

a problem. I have been in the job 8 months. We are not perfect but

we have made dramatic reforms. I need the support of this committee to ensure that we have those reforms in place.

Chairman BLILEY. Thank you, Mr. Secretary.

Senator Rudman.

STATEMENT OF HON. WARREN B. RUDMAN, CHAIRMAN,

PRESIDENT’S FOREIGN INTELLIGENCE ADVISORY BOARD

Mr. RUDMAN. Mr. Chairman, Mr. Dingell, first let me inquire of

Mr. Chairman how long is that set for in opening statements, and

I will try to stay within that time.

Chairman BLILEY. Well, since Mr. Secretary took about 10 minutes, you plan on taking that amount, too.

Mr. RUDMAN. All right. Let me try to do that. I will assume that

members have at least read part of the report, if not all of it.

First let me tell you it is an honor to appear here. It has been

a long time since I have been up here again. It is nice to see so

many familiar faces. There is rarely enough time to discuss a report such as this in detail, so I will try to highlight what we did.

Our objective was to write a report that would stick, that would

make a substantial difference, would help the President and the

Congress and the Secretary effectuate reform, and that is essentially what we have produced. Let me point out to this committee

that has had a long record of oversight over this agency, that we

were not asked to look at management generally, we were not

asked to look at other issues. Our charge at the present was quite

narrow and direct: Look at security at these agencies, historically,

present, future; make a recommendation; back it up with facts.

That is what we have done. I cannot comment on other parts of

this Department because we did not study them. And I must tell

you I have never served on a committee in the Congress that had

oversight directly over the Department of Energy, for which I express some degree of luck.

I had our staff sit down and add up the number of reports that

have found problems with security at DOE for the past 20 years.

There are 29 reports from GAO and 61 from inside DOE; more

than a dozen reports from special task forces and various ad hoc

panels. We wanted to cut through the fog of the bureaucratic jargon and somewhat wishy-washy language of some of those reports,

so we have written a fairly direct and blunt report.

I want to advise the committee that I did not do this alone. I had

people familiar to this panel, certainly one of the preeminent nuclear physicists of this country, Sid Drell, who I am sure has appeared over here, who knows these laboratories better than anyone

I have ever spoken to; Ann Caracristi, former number 2 at NSA,

long-time government employee; Stephen Friedman, who, since his

retirement from business, has done a lot of intelligence assignments for several administrations. So this is a group effort. And I

have had a great staff, much of it loaned by agencies, some PFIAB

staff.

16

There is an old saying among farmers from New Hampshire, and

probably Chairman Bliley would say it is Virginia, but we have all

heard it, and the saying is, you know, if it ain’t broke, don’t fix it.

Well, I have a corollary, and my corollary is if it is broken so badly

as this is, don’t even try to fix it, do something to kind of replace

it. And that is about where we come out.

It comes down to this: This is really not about security. That is

what we finally decided. This is about what, frankly, former Chairman Dingell talked about in a series of reports written by him

when he was chairman. This is about accountability. This is about

a chain of command that works. And counterintelligence, security

are merely symptoms of a problem of accountability.

Let me say a word about the root causes. These laboratories are

not only, in our opinion, the crown jewels of the United States scientific establishment, they are the crown jewels of the world’s scientific establishment. Nothing we say in this report should be construed as criticism of the extraordinary contribution these laboratories have made to this Nation’s security. In fact, we chose the

title with some care, Science at Its Best, Security at Its Worst.

And we don’t have any comments about the work they do. We

have a lot of comments about improving their security.

We found evidence and heard testimony that was appalling, and

I use that word deliberately. Now, you hold a lot of hearings here,

and I held a lot of hearings over in my career at the Senate. It is

fascinating what you can do in a closed hearing which you don’t

have the luxury to do that. It is as fascinating to invite people in

who are not on the record, who are not subject to retribution by

their agency, and have them tell you frankly what is going on. And

what we heard was astounding. We can back up every allegation

in this report with solid, uncontrovertible, confirmed fact.

We found six areas, security and counterintelligence and management, and planning, physical security, personnel security, information security, nuclear materials accounting, and foreign visitors.

The striking thing about this is—and this is known to this committee better than to us; I mean, after all, you have been doing this

for years—there have been report and report after report that has

come to the Congress, and I expect people have tried to do things.

I don’t quite understand why this bureaucracy seems to be able to

defend itself against almost anything. I brought a few along for

those of you that are lawyers. We often talk about the weight of

the evidence; well, this is pretty heavy. There are a hundred of

them. I brought six, just to remind you of some of the work that

has been done mainly by DOE at your request and by the Senate

committee’s request, but more by this committee: 1986, DOE management of safeguards and security needs to be improved; 1988,

GAO, major weaknesses in foreign visitor program at nuclear labs;

1993, done by DOE, lack of accountability for implementing security requirements; 1996, Defense Nuclear Facilities Safety Board,

impediments to resolving problems as a result of lack of understanding, experience and personal involvement by upper echelons

of DOE management; 1997, DOE Office of Security Affairs, fragmented and dysfunctional security management in place at DOE;

1999, DOE’s bureaucratic complexity is so great that it can conceal

otherwise obvious and easily detected flaws. The variety of relaVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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tionships that exist between field offices, headquarters and contractors will continue as a root cause for complexity, confusion and lack

of efficient, effective performance. And finally 1999, mandated by

this Congress, the Chiles report, which you are all familiar with,

I am sure, says a thorough revamping to institute streamlined, efficient management would send a strong signal throughout the complex that DOE takes its weapons programs seriously.

Now, also this year in 1999, GAO, I believe at the request of this

committee, ‘‘In the final analysis security problems reflect the lack

of accountability.’’

Now, I go through that not for dramatic effect, but to impress on

this committee that this is not a security issue. This is not a counterintelligence issue. Those are only symptoms. This is totally dysfunctional unless you change it; no matter the caliber of the people

that Bill Richardson brings in, it will happen again.

Let me go through the remaining 8 or 10 pages without repeating myself. I believe that Congress and the President have an opportunity to do what no one has done before, and that is because

of the environment in which this all takes place. I want to say to

you that as a former Member of the Congress, I think you would

all agree with me we are a lot like a fire department. We tend to

respond to the latest fire. Had it not been for the New York Times

breaking this story, had it not been for Chris Cox and Norm Dicks

and the excellent work that they did, I daresay that the President

would probably not have asked PFIAB to do this. I wouldn’t be

here today, and business would go on as usual.

That is a troubling thing to me. It shouldn’t take the press to

galvanize our own institutional responsibilities. And I use the word

‘‘our’’ because I still in my way feel as an alumni of this great legislative institution called the U.S. Congress.

You certainly have enough evidence here. I don’t understand.

Maybe Chairman Dingell, Chairman Bliley will understand why

something didn’t happen before. Maybe people tried. But we found

evidence of this bureaucracy managing to fight off every major reform that was tried until the man on the left, and I have high regard for what he has done, and I want to put that on the record.

Now, let me first talk about the models. We have just come from

3 hours over at the Senate, and we are able to disagree without

being disagreeable. Why we recommend a semiautonomous agency

is no accident. This was nothing that we came up with just suddenly a flash of lightning. We looked at agencies that had very interesting scientific and technical responsibilities contained within

larger departments that had dissimilar functions, and we found

four, and they work. The National Security Agency is part of DOD,

yet the Secretary of defense has total responsibility and authority

to run that agency. Defense Advanced Research Projects Agency,

DARPA, huge, does extraordinary scientific work, part of the Department of Defense, but a separate agency; NOAA, part of the Department of Commerce, responsible to the Secretary; and finally

the NRO, which we can’t talk about much in unclassified session,

but which does extraordinary work, very similar in some ways in

terms of contracting and research, but with a totally different management structure and none of the problems that we have seen

here. That is why we made this recommendation.

18

Let me say one other thing and just put this prepared text totally aside because I want to wind up in time. A question has been

raised by former Chairman Dingell in a letter that was written to

this committee in response to the Kyl-Domenici proposal. That letter was written before our proposal ever was published by a matter

of weeks. One of the things that Dr. Drell pointed out to us—and

if you look at our organizational chart—was a very strong point

made by several people here, and I want to just assure you of what

we are doing. You can’t separate science of the Department of Energy from these labs. They do biological research, they do

mathematic research, they do computer research, many other

things. So we maintain a strong link. That is why although you

will find in our report there are two models we give you, one like

NASA, which take it separately, pull it out of DOE, make it directly accountable to the President, or make it a separate agency,

or, if you will, administration, directly responsible to the Secretary,

but still within DOE.

We opt, I opt, for the second one because of the incredible science

that is done, and you ought not to separate that. But what you

have now is a dysfunctional bureaucracy. And what we have put

together is what we have modeled after those bureaucracies within

this government that work.

Finally, the most incredible thing that we came across was this

IDA, Institute for Defense Analysis, report, which this Congress

authorized, this Congress appropriated money for. This is a superb

report. It mirrors much of what we have said, and yet it appeared

to go in some dust bin. And I would just say to you, Mr. Chairman,

that there is not much disagreement between the Secretary and

myself except he continues to say, I don’t want a semiautonomous

agency. And I said to him privately and publicly I don’t really understand that. The language we recommend in this semiautonomous agency is, notwithstanding any other provision of this

law or act, the Director of the Agency for Nuclear Stewardship,

who also serves as an under Secretary of Energy, shall report directly to and be responsible directly to the Secretary of Energy,

which shall be the Director’s immediate superior. That is not our

language. That is the language from the existing agencies around

this government.

So, Mr. Chairman, I will stop right there.

[The prepared statement of Hon. Warren B. Rudman follows:]

PREPARED STATEMENT OF HON. WARREN RUDMAN, CHAIRMAN, PRESIDENT’S FOREIGN

INTELLIGENCE ADVISORY BOARD

Distinguished members of the House Commerce Committee. Let me first say

thank you for the invitation to appear here today.

I know there is rarely enough time to discuss all the issues that are raised in a

report such as this, so I would like to make just a few introductory comments, give

you a brief synopsis of the PFIAB panel’s report, and then move straight on to the

questions and answers.

Introduction

Let me say first that we had one major objective with this report. There is nothing

more important to America’s long-term national security interests than security of

our nuclear secrets. And that security has been atrocious for a long time. But report

after report has been tossed up on the shelf to gather dust. So our objective was

to write a report that would stick, that would actually make a substantial difference

in the way that security at the labs is handled.

19

I had our staff sit down and add up the number of reports that have found problems with security at DOE for the past 20 years. The numbers are astounding.

29 reports from the General Accounting Office;

61 internal DOE reports; and,

More than a dozen reports from special task forces and ad hoc panels.

Altogether that is more than 100 reports, or an average of 5 critical reports a year

for the past two decades. And here we are, 20 years down the road, still battling

with the same issues. That’s unacceptable.

Even more unacceptable to our panel would be adding this report to that list of

more than 100 reports.

We wanted to cut through the fog of the bureaucratic jargon and wishy-washy

language that has worked to protect the status quo over the years.

So our objective was to take the major security issues one-by-one, and address

them directly and forcefully. We did that. And I want to commend my colleagues—

Ann Caracristi, Stephen Friedman, and Dr. Sidney Drell—for working with me to

do that. This was not an easy report to put together. But they, and the members

of the PFIAB staff and adjunct staff, put in long hours to get it right, to make sure

it was rock-solid on the facts, and to get it done on time. And I think they did an

extraordinary job.

That is also why I think President Clinton also deserves a great deal of credit.

We had some very tough words for the Administration in this report. But he agreed

to release it to the public—something that has never been done in the history of

the PFIAB—and put this issue on the table. And I must say that when we briefed

him, he was very appreciative of the work that we had done, because he recognizes

how important it is.

Restoring Accountability

There’s an old saying among New Hampshire farmers. They say: ‘‘If it ain’t broke,

don’t fix it. I have a corollary: ‘‘If it’s badly broken, don’t fix it—replace it!’’

This report finds that the Department of Energy is badly broken. And it is long

past time for half-measures and patchwork solutions. It is time to fundamentally

restructure the management of the nuclear weapons labs and establish a system

that holds people accountable.

That’s what it comes down to. It’s not just about security. If you’ve ever been to

one of these labs, you know they put up one heck of a fence. And it’s not just about

counterintelligence. It’s about whether we are going to have a system of management that holds each and every person responsible for the security of these labs.

No President or Energy Secretary or Committee Chairman can guarantee that the

laws on the books are going to provide absolute security. But when management of

these labs is on our watch, we can and should demand absolute accountability. So

that’s what our report has proposed: alternatives that we think will help the leadership impress the seriousness of this responsibility on the people within the organization.

Background and Root Causes

Let me say a word about what we found.

We found that these labs are not only the crown jewels of the U.S. scientific establishment. They are the crown jewels of the world scientific establishment.

We visited several of the labs, and I can tell you that their work is truly phenomenal. And I want to be clear that nothing we say in this report is intended as

criticism of the scientific research and development at the labs. Nor do we want to

do anything to undermine their effectiveness. We want to improve their security,

their counterintelligence, and the accountability that allows them to continue to do

their job.

We found that maintaining security and strong counterintelligence at the weapons

labs, even under ideal circumstances, is challenging. Part of the difficulty comes

from the inherent character of the work at the weapons labs:

• an international enterprise;

• requiring collaboration across bureaucratic lines;

• involving public/private cooperation;

• amid a culture of scientific research.

The inherent problems have been made worse over the years because the weapons

labs have been incorporated within a huge bureaucracy that has not made security

a priority. The Department has been distracted by other national imperatives, such

as the cleanup of radioactive waste and DOE’s role in the national drive for clean

and efficient energy, etc.

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Recurring Problems

We found evidence and heard testimony that was appalling in six critical areas:

security management and planning; physical security; personnel security; information security; nuclear materials accounting; and foreign visitors (counterintelligence).

There has been report after report of serious security failings; here are but a few

examples... We found recent cases of:

• Foreign scientists visiting labs without proper background checks and monitoring. • Classified computer systems and networks with innumerable vulnerabilities. • Top-level bureaucrats who could not say exactly to whom they were accountable. • Instances where secure areas were left unsecure for years. • Thousands of employees being granted security clearances without good reason. • In the middle of all this, there were confirmed cases of espionage, the damage

from which we may never know.

And as you can see from the chart that shows how long it took to fix even the

very basic security problems, some of the evidence that we found simply boggles the

mind.

How can it be that it took less than three years to construct the first weapons

labs and build an atomic bomb, but in our time it takes nearly four years for someone to fix the lock on a door protecting nuclear secrets?

Responses and Responsibilities

There is not a person in this room—and I would add there’s probably not a person

in the Department of Energy—who, when confronted with that kind of record would

say that this is tolerable. It is not. It is intolerable. In fact, it is a disgrace to the

nation.

If that is the case, then why have these things been allowed to go on, year after

year? DOE has had so many overlapping and competing lines of authority that people are rarely held accountable for failures. Just to give you an example, I want you

take a look at a chart that I brought.

A couple of years ago, the Defense Department made an honest attempt to track

the chain of responsibility for protection of the nuclear-related operations at the Department of Energy. This is what they came up with.

If anyone in this room can make sense out of this management structure you

ought to be a brain surgeon instead of a Member of Congress.

Let me be clear: there is plenty of blame to go around. No administration can

claim it gave this problem sufficient attention, let alone took the proper steps to

solve it.

Several Secretaries have tried some type of reform at one time or another. And

there were attempts to try to improve management effectiveness and accountability—but within the confines of the DOE bureaucracy. The problem is that the

DOE bureaucrats and lab employees have been able to wait out the reform initiatives and then revert to form.

Because of the overwhelming weight of damning evidence of security failures, and

the profound responsibility that comes with the stewardship of nuclear weapons

technology, it is time to fundamentally restructure the lines of authority so that the

weapons labs and their security are ‘‘Job Number One’’ within a substantially autonomous agency.

Even in the current uproar over the Cox Committee report (and related events),

PFIAB found as late as last week indifference and ‘‘business as usual’’ at some levels

at the labs. For example, there has been incomplete implementation of computer security measures and foot-dragging on implementation of a good polygraph program.

Just yesterday, there were reports of ‘‘strong opposition’’ to the use of polygraphs

at the weapons laboratories.

If the current scandal, plus the best efforts of Bill Richardson are not enough,

only a fundamental and lasting restructuring will be sufficient

Looking Ahead

The Congress and the President have an opportunity to do what none of their

predecessors have done: step up to the plate and make a lasting reform through a

fundamental restructuring of DOE

PFIAB offers two alternatives that will make accountability clear and streamline

reporting channels: A semi-autonomous agency; and, A completely independent

agency.

I would like to note, parenthetically, that we call for the integration of the DOE

Office of Naval Reactors into the new Agency for Nuclear Stewardship. We recommend this because we believe that the ANS should be the repository for all deVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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fense-related activities in the DOE. However, we believe the Office of Naval Reactors must retain its current structure and legal authority under which its director

is a dual-hatted official of both DOD and DOE.

Our panel debated the merits and demerits of these reorganization proposals. But

we came down in full agreement on one principle and from that principle we will

not deviate: the nuclear weapons labs need to be semi-autonomous from the Department of Energy as a whole, and that change needs to be substantial and codified.

It is not enough to change policy from the top, we have to change the culture, priorities, and implementation at the ground level.

That will require very strong leadership plus an organization that allows people

to be held fully and directly accountable for their actions.

Response to Hint about Cooperation

Someone asked me if it was merely a coincidence that the PFIAB panel’s recommendations for a semi-autonomous agency were similar to those proposed by

some in Congress.

Foremost, I will state unequivocally and for the record that there was no collaboration with the Congress on our findings or our recommendations.

Second, I would remind people that we did not endorse a single solution, although

I would have much preferred to do so. We sketched two alternatives and, as a panel,

purposely did not favor one over the other.

Finally, none of the conclusions that we reached or alternatives that we considered are new. After looking at the 100 or so of these critical reports, the fact that

we reached similar conclusions was not a matter of coincidence. It was destiny.

Just look at the record.

In 1976, federal officials studied the operation of the weapons labs and considered

three possible solutions: placing the weapons labs under the Department of Defense,

making them a freestanding agency, or leaving them within the Energy Research

and Development Administration. They opted for the status quo.

In 1979, an internal management audit of DOE found that its top management

was poorly organized, its planning was spotty, and its field structure was not integrated into headquarters staff. When asked who was in charge of the field offices,

the Secretary of Energy at the time said he would have to consult an organizational

chart. One employee said that DOE was ‘‘about as well organized as the Titanic was

in its 11th hour.’’ But again, the status quo prevailed.

In 1981, the incoming Reagan Administration, led by OMB, evaluated whether to

dismantle the Department of Energy and place its nuclear operations with an independent agency. The idea was dead in less than a year.

In 1985, the Reagan Administration appointed a blue-ribbon panel appointed to

study DOE’s security and organization problems. Again, Congress and federal officials weighed whether the weapons labs should be transferred to the Department

of Defense or DOE should be restructured to be given more autonomy to the labs.

The status quo prevailed.

In 1995, the Galvin report said that it was ‘‘hard to reach any other conclusion

than that the current system of governances of these laboratories is broken and

should be replaced with a bold alternative.’’ That report recommended ‘‘an alternative structure...that achieves greater independence.’’ But the status quo prevailed.

In 1997, the Institute for Defense Analysis issued a very detailed report.

This was a report that was proposed by Congress. You authorized it. And you paid

for it. You must have paid a lot of money for it, because it was very thorough. Its

conclusions were very clear and very similar to those of our panel. Nothing happened.

Every time a President or Energy Secretary or Congress has run up against the

DOE bureaucrats, the bureaucrats have won. They are fully aware of that fact. And

if you let them, they will win again in the future.

It reminds me of what a current DOE official told our panel just a few weeks ago.

He said that the attitude of the people deep inside the bureaucracy is ‘‘WE-BE.’’

Their attitude toward the leadership is ‘‘WE BE here when you came, and WE BE

here when you’re gone. So we don’t have to take you seriously.’’

That is arrogance. That is the type of arrogance that enables DOE bureaucrats

to ignore a direct order from the highest authority in the Executive Branch. In other

words, their response to a direct order from the President of the United States was

not ‘‘Yes, sir’’ or even ‘‘Yes.’’ It was ‘‘maybe.’’

I have yet to meet a general who believed he could win a war with soldiers who

will not obey orders and are never punished for failure to do their duty. That is

what we have in DOE. This is not a security or counterintelligence problem. It is

an accountability problem.

22

Secretary Richardson

I think it would be useful at this point to say a word about Secretary Richardson’s

recent initiatives.

I have a high regard for Secretary Richardson and I think that he has been working very hard to carry out his duty—as he perceives it—to address these problems.

I would also like to commend the Secretary for bringing both Ed Curran and General Habiger in to address the problems at the labs. Both have impeccable credentials and a no-nonsense approach to getting things done.

But as good as Ed Curran and General Habiger are, they cannot make up for the

culture of arrogance, the pervasive disregard for security and counterintelligence

issues, and the lack of accountability in the Department.

The problem, as we see it, is that Secretary Richardson will be gone in 18 months,

and it is not clear that these two very capable men, under a new secretary, will be

allowed to remain indefinitely.

Most of the events that precipitated this current uproar occurred before Secretary

Richardson arrived on the scene in 1998. Because he has been at the tip of this

sword, he has been sensitized to these security problems and has worked very hard

at them.

But one thing is certain: the next Secretary will have different priorities and be

pulled in a different direction by other emergencies.

Secretary Watkins, for example, had excellent credentials on security issues. But

when he became Energy Secretary he was immediately besieged by the public outcry over the handling of environmental issues. Congress also diverted its attention

to address these issues—and rightly so.

Unfortunately, the reality is that the American body politic works like a fire department. It responds to the latest fires.

That is why Congress and the President must institutionalize these changes in

the Department of Energy by embedding them in the statutes and implementing

them at every level.

Regardless of whatever issue is occupying the Congress or the Executive Branch,

the people in charge of security and counterintelligence at the nuclear weapons labs

need to have the tools and the structure that allow them to do their jobs.

The fundamental issue of accountability and how well it is instilled in the attitudes and actions of individuals within the labs is going to remain regardless of

which President, which Energy Secretary, or which Congress is in office at any one

time.

Conclusion

So I hope that you, in this Congress, and the President can work together on this.

Nothing about this is politically easy. Jobs are at stake. And it is hard for people

who have so much vested in the existing system to admit that it simply does not

work. But I do hope that the Congress and the President can reach an accord. This

is a matter of tremendous gravity for our national security. And I think everyone

here will agree that it should be above partisan politics.

I also believe that solving these security and counterintelligence problems within

DOE will ultimately help the Department to better address its many other missions.

I want to commend Congressman John Dingell, in particular, for his steadfast efforts over the past two decades to try to remedy so many of the problems at DOE.

Our panel agrees with the Congressman that the pervasive lack of accountability

undermines not just security and counterintelligence, but the work of the Department in many areas.

For example, the Congress, in restructuring DOE, should also look at the contractual relationships and evidence that the contractors have impeded and resisted federally mandated reforms.

Thank you again for inviting me to come up here. And I will be more than happy

to take any questions you have.

Chairman BLILEY. Thank you, Senator.

The Chair will recognize each member for 5 minutes for questions. I would ask that we not ask for extension of time because,

as I said at the outset of this hearing, that Senator Rudman has

a tight schedule, and we want to get everybody a chance to ask

their questions.

Chair recognizes himself for 5 minutes.

Mr. Secretary, according to press accounts, the November 1998

intelligence report provided to you and other top administration ofVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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ficials noted that 37 Chinese intelligence officers had visited or

been assigned to the labs or other Department sites over the last

5 years. GAO testified before our oversight subcommittee in April

that often the Department knew its foreign visitors were spies, but

felt that they could adequately monitor their access to sensitive

materials or had other defensive mechanisms in place.

You say that you are now doing 100 percent background checks

on foreign visitors to the labs, but given the history here, I am not

sure whether that means scientists whose backgrounds suggest ties

to intelligence agencies will actually be barred from the labs or

whether they will be permitted anyway on the theory that they can

be adequately monitored.

What exactly is the Department’s policy on foreign visitors with

suspicious backgrounds, and will you commit to us today that no

known or suspected intelligence officers from sensitive countries

will ever again be permitted to have any contact with their labs or

their employees?

Mr. RICHARDSON. Mr. Chairman, I can commit that to you. I can

assure you that we have the best counterintelligence person in the

government in Ed Curran, who has had 37 years experience in the

espionage cases. We now have at this very moment 100 percent capability to do background checks on scientists from sensitive countries. That is a list includes Russia, China, India, Pakistan, several

others. We think our foreign visitors program—it has been tightly

controlled. We are monitoring it closely. We have individuals from

the lab accompany some of these scientists to classified areas.

We have rejected potential visitors who raised suspicions, a criteria that is important as these scientists have ties to intelligence

agencies. As I said, we have rejected groups and people, and it is

working well. And Mr. Curran can provide further details if you so

choose.

Chairman BLILEY. Thank you, Mr. Secretary.

Mr. Secretary, I have some questions about your proposal for a

new security czar to coordinate the disparate security functions of

the Department. I have seen reported that the czar would have

control over the now cross-cutting 800 million security budget,

which I believe would be essential to effective reform. But I note

that in the Department’s recent press release announcing the hiring of the czar, there is no mention of whether he will, in fact, have

this power which now resides with each Assistant Secretary and

lab director.

What are your plans in this regard? Will the czar have total

budget control and authority to order and pay for security upgrades, or will the labs and the Assistant Secretary still be able to

block reforms?

Mr. RICHARDSON. I created a czar, Mr. Chairman, to precisely ensure that security is given a higher priority than it was before. And

it certainly was not given a higher priority before. General Habiger

for the first time—all the security budgets will be formed separately from the rest of the program budgets. And we are talking

about $800 million.

What we talk about in cross-cutting budgets is General Habiger

will work with all the relevant Assistant Secretaries throughout

the whole complex and make sure that security is given a budget,

24

that it is properly administered, that it is handled, that it is not

siphoned off. In the past what you saw was security budgets siphoned off the programs. If you are a program director, you spend

it on your program and not security.

Chairman BLILEY. Well, who is going to have the final say if he

says, I need this security at Lawrence Livermore, and the lab director says, well, we think that is too much, we don’t think you need

that, and I am the Assistant Secretary?

Mr. RICHARDSON. The security czar will have the ultimate say

because he will have my backing, and he will determine the security budgets.

Chairman BLILEY. All right. Well, thank you very much.

Senator, your report is quite candid, and I commend you for it.

I know that before it was issued, you briefed the President and

other White House officials on your findings and recommendations.

What was the White House reaction, and did anyone over there indicate to you whether the President was prepared to accept your

reform recommendations?

Mr. RUDMAN. Mr. Chairman, it was a strange event. This was

not to be released until last Thursday. I got a call in New Hampshire on Sunday the President wanted to be briefed on it Monday

morning last. So I flew back here, got the staff to get it together,

got it printed overnight, and saw him at 9 in the morning. He had

a call coming from Mr. Yeltsin following that. So we finished our

briefing. He thanked us, told me he appreciate what we have done,

would read it very carefully, and the phone rang. So I have no idea

what he thinks about it.

Chairman BLILEY. Thank you. I see my time has expired.

Now, I would like to recognize the gentleman from Michigan, the

ranking member, Mr. John Dingell.

Mr. DINGELL. Mr. Chairman, I thank you. Mr. Chairman, I ask

unanimous consent my opening statement be inserted in the

record.

Chairman BLILEY. Without objection all opening statements will

be inserted in the record.

Mr. DINGELL. Mr. Chairman, I wish that 5 minutes were enough

to express the high regard that I have for Senator Rudman and to

welcome him back, and also to welcome our old friend, a former

member of this committee, the Secretary.

Senator, the laboratory directors at Los Alamos and Lawrence

Livermore labs are employees of the University of California, not

the Department of Energy. The lab directors have day-do-day responsibility for security and computers, physical security, other

types of security. The government basically employs the University

of California as a contractor to manage employees and lab facilities.

You talked in your report of the culture of the defense laboratories, regarding it as arrogant, fractious, saturated with cynicism

and disregard for authority. You stated that to this day the laboratories are fighting security changes. You—shouldn’t we fire a contractor who behaves this way?

Mr. RUDMAN. This was not within the ambit of our charge, but

I am never one to avoid a direct question, Congressman Dingell, so

I will answer you. I think that the Secretary ought to look real

hard at every contractor that deals with DOE.

25

Now, let me say from a scientific point of view you cannot beat

what they have done so far. I think they are extraordinary.

Mr. DINGELL. But they provided a good bit of it to the Chinese.

Mr. RUDMAN. I did not have that in mind, but of course you are

correct. But I would make the observation that certainly the Secretary is going to have to look at all its contractors, which, if I am

correct, the Secretary’s predecessor fired a contractor at

Brookhaven for misdeeds and replaced that contractor. I think you

have got to be very careful changing contractors. These people do

very good work.

As you know, I am not from California, Mr. Dingell, I am from

New Hampshire, so I have no constituent interest. But it seems to

me that they not only have to do good science, but they have to do

good security.

Let me tell you something that may surprise the Secretary. I was

going to tell him this right after the hearing this morning, but he

left and headed over here, and I just missed him. I read a report

last evening, we have good sources at PFIAB, from an employee at

one of these laboratories who thought that the idea of computer security training today was nothing but—to use a polite word—hogwash, and he would not attend.

Now, let me just say that there better be some discipline in this

process or—it is one thing to lay down rules; it is something else

to get these people to obey these rules, which is one of the reasons

we want to see this thing carved out a bit.

Mr. DINGELL. Well, I would like to do a little carving on my own,

but it would probably take place on the persons of some of the people who have been violating security.

Mr. Secretary, why don’t we fire these contractors if they behave

the way the Senator and his commission say? Why do we keep people on who are security risks and who are arrogant, haughty and

resist change?

Mr. RICHARDSON. Congressman, I have set a new policy with contractors. In most every case since I have been on board, we have

recompeted contracts. We think that this is a good use of taxpayer

money. This is in line with what the Congress wants to do and gets

us a better bang for the buck. I will reassess—I personally get involved in look looking at every contract. I will look at the lab contract. I will say that we have had dramatic improvement in the attitude of the lab employees in terms of observing security procedures.

What Senator Rudman mentioned is that I ordered a stand-down

the last 2 days after reading the Rudman report. A stand-down at

the nuclear weapons labs is—basically I shut them all down for 3

days—2 days, so that we look at all security, cybersecurity, computers and see where we are.

Now, I would wish you would tell me about this employee. I will

say one more thing.

Mr. DINGELL. My time is limited, Mr. Secretary, and I do this

with all respect. We have talked about a semiautonomous or independent or semi-independent agency. Frankly, we have seen this

kind of structure. It is call the Atomic Energy Commission. It

didn’t work. It had no accountability. Every place it dealt with is

now a cesspool of contamination, atomic and otherwise. It dripped

26

abuses, and it was run not by the U.S. Government, but by the contractors.

How is it we can expect a semiautonomous agency to behave any

better than the AEC did in times past?

Mr. RUDMAN. Fair question, Mr. Dingell. Let me simply say that

that is why we think it should not be—even though we gave the

Congress two independent kinds of looks at it, one totally autonomous, like NASA—we looked back at the AEC experience, the folding in of all these agencies, we believe it needs Cabinet-level supervision. That is why we believe it ought to be within the DOE as

an agency or an administration. As a matter of fact, as the Secretary I am sure will tell you, his latest proposal almost mirrors

ours with some exceptions, but does not make it semiautonomous,

creates an Under Secretary. We believe that because this gentleman will not be there more than another 18 months, unless he

is truly a glutton for punishment and wants to serve another 4

years, I assume that General Habiger might be there or might not

be there, I assume Mr. Curran might be there or might not be

there, we are concerned about the future. That is why we want to

carve it out, if you will, semiautonomous.

I don’t think the AEC is a good example. NSA is a much better

example.

Mr. DINGELL. I ask unanimous consent to be permitted to send

written questions to our two witnesses and they be inserted into

the record.

Chairman BLILEY. Without objection, all members, since time is

extremely limited today, will be able to send written questions to

the witnesses.

At this time I would like to recognize the gentleman from Texas,

the chairman of the Energy and Power Subcommittee, Mr. Barton

for 5 minutes.

Mr. BARTON. Thank you, Mr. Chairman. And I am basically

going to give a statement, then if I have a chance ask a question

or two, and be around for the second round. I think this is the most

serious issue that has come before our committee in the time that

I have been on it. I was chairman of the Oversight and Investigation Subcommittee the last two Congresses and has been pointed

out I am now chairman of the Energy and Power Subcommittee.

I am going to read some of the comments that were in the Rudman report; talks about a feckless system of control of classified

documents, underfunded and poorly trained counterintelligence

programs, security methods that were naive at best and dangerously irresponsible at worst. That is a direct quote. It also talks

about the fact that these problems, when they were highlighted,

were blatantly and repeatedly ignored; placed the blame on organizational disarray, managerial neglect and a culture of arrogance

both at DOE headquarters and at the labs themselves. Furthermore, the Rudman report states, and I quote again, the Department of Energy and the weapon laboratories have a deeply rooted

culture of low regard for and at times hostility to security issues,

which have continuously frustrated the efforts of internal and external critics.

Finally the report says, never have the members of the special

investigative panel witnessed a bureaucratic culture so thoroughly

27

saturated with a cynicism and disregard for authority. Never before

has this panel found such a cavalier attitude toward one of the

most serious responsibilities in the Federal Government, control of

the design information relating to nuclear weapons. Never before

has the panel found an agency with the bureaucratic insolence to

dispute, delay, and resist implementation of a Presidential directive on security as the Department’s bureaucracy tried to do to the

Presidential Decision Directive Number 16 issued in February

1998.

It doesn’t say this in the report, but staff has indicated to the

members of the committee that since we have been attempting to

correct some of these problems, that same elitism and arrogance

and cynicism apparently is still in the laboratory.

So here are my recommendations, and they are not members of

the committee, they are not members of the subcommittee, but if

I were the Secretary of Energy, and if I were the new czar that is

sitting out there behind the Secretary, I would immediately take

whatever steps are necessary to terminate the contract with the

University of California, period. I would do that. I think they are

the root of the problem.

I would centralize or ask for legislation to centralize the jurisdiction over the weapons laboratories within the House of Representatives. Currently they are between the Science Committee, the Energy and Commerce Committee and the Armed Services Committee. That is too many bosses. I think we need to take steps to

centralize that.

I think if it is possible under the Federal service rules, every

member of the weapons laboratory that it can be shown has exhibited this arrogance and indifference should be terminated. I think

they should be asked to resign at a minimum. And if they won’t

resign, I think they ought to be terminated.

I think the weapons bureaucracy should be downsized by statute

if necessary, by administrative action if possible.

And I think long term we should pass legislation to take the

weapons laboratories out of the Department of Energy. I don’t

think the Department of Energy ever effectively managed them. I

think it is an impossible task. I think we should take them out, put

them in within the Department of Defense, the National Security

Administration, or some other Federal agency. Some may say that

that somehow violates the decision made after World War II to

keep weapons developments in civilian hands, but I would point

out that the Secretary of Defense is a civilian and is appointed by

the President of the United States.

So, in short, Mr. Chairman, I think this is a very serious issue.

I don’t think it can be swept under the table. I don’t think we can

spin-control it. I think it needs to be addressed immediately, effectively, and comprehensively by the House and the Senate and with

the full cooperation of the Secretary of Energy and Senator Rudman and his panel and General Habiger, if he is the man that is

in charge of this.

So that is really not a question as much as it is a statement. I

guess my question to the Secretary would be do you think we can

terminate the contract at the University of California?

28

Mr. RICHARDSON. Congressman, I will make that decision after

I assess their performance, their improvements. As I said, I have

a policy of recompeting almost every contract, and I will apply the

same standards at the University of California.

Mr. BARTON. My time is expired, but let me simply say when

that came up several years ago, a decision was made by your predecessor not to recompete the contract, and it was given to the University of California again on a noncompetitive basis.

Thank you, Mr. Chairman.

Chairman BLILEY. The time of gentleman has expired. The Chair

now recognizes gentleman from Pennsylvania, Mr. Klink.

Mr. KLINK. Thank you, Mr. Chairman. I am sitting here, and, of

course, I have read, Senator Rudman, your report. I am still left

with some blanks here. I hope you can help me fill them in.

Mr. RUDMAN. I will try.

Mr. KLINK. My problem is I don’t see how exactly we can change

that lab culture that you referred to in the report if the contractor

is the same, the management is the same, the employees are the

same. You cited that stack of reports, and Congress, and GAO and

everybody else has done these reports, the Energy Department,

various agencies within it have done these reports saying there are

problems. Why in the world would this new administration pay any

more attention to someone else when the defense program has ignored all of those reports, the DOE inspector general, General Accounting Office, all of the reports that you have cited? You said

there were a hundred of them. You state that this group of people

is even unconvinced of Presidential authority. So I can’t understand why the same people in a new agency would all of a sudden

become convinced of Presidential authority, in particular when an

administrator would have a 5-year irrevocable term. Why would

they be all of a sudden convinced to do what is right and see the

light of God and bow to the altar?

Mr. RUDMAN. Let me try to answer that if I can. First they would

not necessarily be the same people; and number 2, there would be

a lot less of them.

I think that one of the most extraordinary things that has been

written on this was written yesterday in the Wall Street Journal

by a scholar at Brookings, Paul Light. Mr. Light did a little different analysis than we did and found the following: In 1979, there

were 10 layers of senior bureaucracy with 56 senior executives. In

1998, there were 18 layers with 143 senior executives. It takes 15

to 25 layers to get from the top of the Department to the top of

Los Alamos. So what we say is take a broom and sweep that intermediate bureaucracy out, put accountability in directly from a position where if something goes wrong, you know who to blame. We

are not talking about the moving the deck chairs, Congressman, we

are talking about really changing this organization.

Mr. KLINK. What I am really talking about is at the labs. You

still—how do we know that we are going to have new people or we

are going have the same shrinkage of bureaucracy at the labs

themselves? We understand there are going to be changes at DOE,

but what is going to happen at the labs? Are we not going to have

the same people there who have looked at science only and not

29

looked at environment, have not looked at security, have not looked

at safety issues?

Mr. RUDMAN. Congressman, let me answer that question, which

is a very good one. If there is accountability and strong leadership

without intermediate layers of bureaucracy, and these organizations refuse to do as they are told, then I assume the Secretary

would replace them. This is, after all, U.S. Taxpayer money even

though they are being done by private universities or, in one case,

a private contractor.

What we are saying is that there has been no way for this bureaucracy to work with these labs in an effective way because there

has been no straight-line accountability. Too many people have had

the responsibility to these labs, including an intermediate structure, which boggles the mind. And I submit that your staff ought

to show the staffing of area offices, regional offices, field offices,

laboratory offices. I mean, if anybody wants to avoid responsibility

in this structure, they can.

Now if you are saying that the identical people that are there

won’t change, well, if you are right, then under the structure we

are recommending, I guess they will be replaced.

Mr. KLINK. Mr. Secretary, what do you plan to do to defense programs? What changes do you have in mind for defense programs?

Mr. RICHARDSON. Well, Congressman I have addressed Senator

Rudman’s very accurate claim. I have put lines of responsibility

that are very clear. Under defense programs, you will eliminate

some of the middle layers. You give the Assistant Secretary for Defense Programs direct responsibility. You make that person accountable. You have the field offices that are responsible for defense programs report directly. Headquarters policy comes from

Washington, it comes from me, and that is very clear.

I think one of the things that we need to do is acknowledge that

there have been some reforms, and also to say that the labs don’t

look at health, don’t look at safety, don’t look at security. With all

due respect, I will defend my lab employees. These are patriotic,

these are strong-willed people, they are scientists, but the culture

is changing.

How do you do that? By enforcing accountability, by having zero

tolerance policy for leaks, by telling them who is the boss, defense

programs and me.

I am ready to look at some of the Senator’s very good recommendations, upgrade the defense programs, create an Under

Secretary for Nuclear Stewardship. We are ready to do that, to

strengthen that, to better deal with security, to better deal with

many of the issues that you have asked.

Mr. KLINK. But, Mr. Secretary, do you agree with the comment

of the reporter with Senator Rudman that you have this bloated

bureaucracy and that there are, in fact, too many people doing too

many things, and if that is the case at the top of defense programs,

the top level of the defense level, not the intermediate level, the top

level, are you going to get rid of some people, narrow that down

to fewer bodies, more direct responsibility, or are we still going to

just shuffle the bodies around?

Mr. RICHARDSON. I don’t accept the claim that we have too many

people. This Department has downsized 25 percent in the last 3

30

years, and I need strong people and plenty of good people to deal

with the defense programs. We are talking about nuclear weapons

here. If I need more security people, I am going to ask you for

them. So I am not necessarily—I am changing the boxes around to

eliminate the layers of bureaucracy, that is what I am doing with

defense programs, to have more accountability.

The problem is that Los Alamos and Sandia felt that they were

these independent operators, and they didn’t have to answer to

anybody. That has changed. And I think we have to acknowledge

that that is happening. And I can tell you right now that the security stand-down that we are doing with Los Alamos and Sandia

this very day, where everything has stopped, is working, and we

are getting our act together. And I think to just say that we are

beyond help or dysfunctional is not going to correct the problem.

Chairman BLILEY. The time of the gentleman has expired. The

Chair now recognizes the gentleman from Ohio, Mr. Oxley.

Mr. OXLEY. Thank you, Mr. Chairman.

Welcome, Senator Rudman and our old friend Bill Richardson.

Senator, you mentioned in your report the culture of arrogance.

Is that arrogance on the part of the DOE bureaucrats or on the

part of the contract researchers?

Mr. RUDMAN. About equal.

Mr. OXLEY. And you also described the DOE relationship with

the FBI counterintelligence experts up to the mid-1990’s, quote,

strained at best. Where does that relationship stand now? Is DOE

making effective use of the FBI’s capabilities?

Mr. RUDMAN. I believe Secretary Richardson has made major

progress in the areas of counterintelligence and security, including

relationships with those agencies and asking them for help, reaching out try to reorganize things. We commend the Secretary. Had

I had a chance to give my entire statement, which, because of time,

I realized I couldn’t, you would have found a section in there that

talks about what the Secretary has done.

We don’t have a problem with that. We think he has done a

great deal. But we have serious concerns that this bureaucracy has

nine lives, and when Bill Richardson is off in New Mexico, wherever he goes after his tenure, and Mr. Curran and General Habiger

are doing something else, and the new Secretary of Energy is faced

with a different kind of an issue, like Secretary Watkins was when

we had the problem with nuclear waste, environmental pollution,

I submit to you that there isn’t anything in the record of a hundred

reports that convinces me that anything that the Secretary of Energy does here or that the Congress does that does not radically reform the organization of this, you will fail and fail once more. I will

quote one of the finest corporate executives in America. Mr. Galvin,

Motorola, was asked to do an independent study. What did he say,

what, 4 years ago, 3 years ago? He said, unless you radically restructure this, it won’t work.

Now, I understand bureaucracies. They are extraordinarily good

at perpetuating themselves. And this one may after we are all

done. PFIAB has no constituency, we have no obligation other than

as citizens. We reached this conclusion inescapably after reading 50

other reports. I have high regard for the Secretary and the people

31

that he kept. I have no confidence that that will continue once he

is gone.

Mr. OXLEY. Thank you.

Mr. Secretary, I would like you to respond to that particularly in

relation to how this culture of arrogance or this strained relationship over the years came to exist between the FBI counterintelligence operations and your employees.

Mr. RICHARDSON. Well, Congressman, I know you have experience with law enforcement and the FBI, so I want to be particularly precise. Counterintelligence in the past, in this past administrations, in yours and mine, were not given the priority they deserved at the labs. Counterintelligence types were dismissed, security was not considered important, we are a science lab, et cetera.

That has changed. And I can assure you that my relationship with

Louis Freeh on many of these law enforcement issues, issues relating to the suspect, issues relating to the counterintelligence plan,

is excellent.

I have an FBI agent running the counterintelligence program at

all of our labs at DOE. It is Ed Curran, 37 years experience, has

been involved in the Ames and Nicholson espionage cases. He is

the best in the business. And I believe that our plan is working.

Our counterintelligence budget has quadrupled. It is close to $50

million thanks to the help of the Congress. We have FBI and counterintelligence people at each of the labs. We are not perfect. We

can use some improvements, but we have got a good relationship

right now.

And I want that counterintelligence director to report directly to

me, to have direct access to me. And I have some concerns about

that counterintelligence person reporting through another entity.

But I think this is something that we can work out.

Mr. OXLEY. What other entity?

Mr. RICHARDSON. Well, under a semiautonomous agency, I just

want to make sure that the counterintelligence chief has direct access to me and reports directly to me.

I want to make one final point, Congressman Oxley. We have

said we are ready in the administration to codify many of these

changes sugggested by Senator Rudman and by Congressman Cox

and Dicks’ committee. Many of you all already voted in the armed

services bill for some codification in the counterintelligence area,

provisions that we think are quite good.

Mr. OXLEY. Thank you, Mr. Chairman.

Chairman BLILEY. The time of the gentleman has expired. The

Chair now recognizes the gentleman from Ohio, Mr. Sawyer.

Mr. SAWYER. Thank you, Mr. Chairman.

Thank you both for being here and for your candor today.

Mr. Secretary, the recommendations that have been made by

Senator Rudman’s panel have focused on certainly the highest risk

arena of the work that you do in terms of nuclear weapons. But

let me ask you, are there other arenas that demand security that

are unaddressed by the report as you understand it?

Mr. RICHARDSON. Yes. And this is why I want a security czar

that deals with the entire complex. We have security problems in

our nuclear materials in fissile materials. For instance, Rocky Flats

contains nuclear materials. It wouldn’t be covered under this very

32

good reorganization that the Senator has proposed. And what I am

simply saying is let’s go beyond his security concerns for the nuclear weapon complex. Let’s deal with security at science labs, too.

You have sites in Ohio that deserve better security. And so what

I want to do is have a comprehensive approach to security. This is

why we have General Habiger as the security czar, a czar that

would control and be able to deal with security across the complex.

Mr. SAWYER. Let me offer another thought that underlies, I

think, a great deal of what both of you are saying. The culture of

science, it seems to me, has always been made as rich as it has

been in the United States by its openness, by the culture of peer

review, of sharing ideas, leaving them open to competition and letting them be criticized.

That is clearly in direct conflict and in deep tension with the

kind of work that is done in weapons labs and in the settings

where the science that underlies weapons technology is developed.

It seems to me that part of our problem is to try to retain the richness of that scientific interaction and the capacity to question one

another at the same time we are protecting the security of the

technology. Would either of you care to talk about that and the consequences of the two different structures that you have offered for

that particular tension between science and technology and weapons?

Mr. RUDMAN. Mr. Sawyer, I will be brief. You have just eloquently essentially stated one of the things that we state in our report. In fact, we say in the report, and probably not as well as you

said it, with either proposal it will be important for the weapons

labs to maintain the scientific contact on a nonclassified scientific

research with other DO labs and the wider scientific community.

To do otherwise would work to the detriment of the Nation’s scientific progress and security over the long run. This argument

draws on history. Nations that honor, advance freedom of inquiry

have fared better than those who have sought to arbitrarily suppress and control the community of science, which is what you

have said.

I happen to think that you could do it quite well in either model

that we have advanced. Certainly the current model promotes that,

but unfortunately it allows other things to happen.

Mr. SAWYER. Mr. Secretary, could you talk to that point as well?

Mr. RICHARDSON. I think we have a little bit of a difference, because if you look at these labs, you go to Los Alamos, Sandia,

Livermore, right next to each other you have nuclear weapons work

and life sciences. You have environmental science. And I am concerned, by giving such separation, that you are going to cutoff the

essential science work from the weapons work. It is not a very big

difference that we have, because I think we could accomplish both

by acknowledging that the weapons labs, at least the nuclear weapons labs, their major mission is national security work. And we are

ready to create an Under Secretary that gives them priority, that

gives them strength. What I don’t want to do is blur the lines of

authority that I would have between the two science and national

security components.

Mr. RUDMAN. I would simply say, Congressman Sawyer, if you

look at page 47, in the interest of time I am not going to read it,

33

the very point that you have just addressed with the Secretary is

covered there. We agree with you totally, and we think we have addressed it in this report. The middle of page 47.

Mr. SAWYER. Mr. Chairman, I see my time has expired.

Chairman BLILEY. The Chair now recognizes the gentleman from

Michigan, Mr. Upton.

Mr. UPTON. Thank you, Mr. Chairman.

And welcome to you both, our two witnesses today.

As I have begun to look at the Rudman report, and I have looked

over a number of the GAO reports and talked to folks at DOE, I

know that there is no more important a job than security at these

labs. As I talk to constituents across the country, they want to

make sure that, in fact, these labs are safe. And they are appalled,

as you indicated, Senator Rudman, in your testimony over some of

the details that have been shed in the New York times and other

reports.

And, Secretary Richardson, I notice back in May, on May 25, you

said, I can assure the American people that their nuclear secrets

are now safe at the labs. Yet when I see and read the Rudman report and enormous backlogs of security, background checks that

haven’t been undertaken, the polygraph tests, we look at some of

the labs in terms of, you know, the hogwash item that Senator

Rudman raised, it doesn’t seem like it all comes together. And it

almost goes back to 5 Senator Rudman’s comments at the very beginning when he said that there were folks that wanted to just

delay and delay and fight off every major reform, and in the end

nothing happens, and afraid that a few years from now the same

report will be back. How do you put the two comment s in sync?

Mr. RICHARDSON. Well, first of all, I think if you read Senator

Rudman’s report—and I will let him speak for himself—he does acknowledge that progress has been made in security and counterintelligence measures. He does say he doesn’t think we have gone

far enough. But I think progress is acknowledged.

Second, what I meant in that statement was that we were addressing the security lapses with our best efforts at counterintelligence, our best efforts at security. I can say to you that the Presidential directive of February 1998, his counterintelligence measures are in place. I think that is acknowledged in the report; second, that 85 percent of the top tier recommendations are in place,

we have a polygraph plan in place. You got to do it carefully. You

can’t just polygraph anybody. It has got to be done on substance,

not on life-style. It has got to be prepared properly because they

are controversial. And we are one of the few agencies that is doing

it.

Our foreign visitors program, I believe Mr. Curran will tell you,

100 percent of the background checks are taking place.

Mr. UPTON. So that is happening now; the background checks on

all foreign visitors are happening now?

Mr. RICHARDSON. Yes.

Mr. UPTON. Is that for folks that are staying here more than 30

days or less?

Mr. RICHARDSON. This is any scientist from a sensitive country,

100 percent of the background checks are being done now.

34

They are happening. And I have said—I have been on the record

on this before, but what I want, Congressman, is if there is a problem and somebody says, all right, your statement is not 100 percent correct that the nuclear secrets are not safe and secure, I want

to see the evidence. Show me who is not observing counterintelligence and security policy. Give me some concrete examples, and

I will take action.

I am the one out in the trenches doing this, and I want to hear

directly. I think Senator Rudman has pointed out some areas that

we need to work on. We are doing that. Congressman Cox’s report

did, too. But I need direct evidence so I can correct the problem.

There have been some that say, well, you know, the security is not

happening. I want to see tangible proof of violations of problems so

I can act on them.

Mr. UPTON. Now, you said—Secretary Richardson, you said in

your opening statement that the Rudman report was hard-hitting

and thorough, yet you told Los Angeles Times last week, I want to

see evidence from the malcontents he has been talking to, referring

to Senator Rudman; I want to see evidence of nuclear security

problems.

How does last week fit with this week?

Mr. RICHARDSON. Well, very clearly.

Mr. UPTON. Other than the fact that you are here today.

Mr. RICHARDSON. Well, very clearly. A lot of malcontents went to

Senator Rudman. I want those malcontents to come to me and tell

me where these problems are. You know, I am ready to talk to dissidents and malcontents, and I have done so, but I want the evidence. I want to see where we are weak. That is what I meant.

And I encourage the process of whistle-blowers, from those who

see problems. As part of these reforms, there is an independent

commission that is being proposed by Senator Warner of Virginia.

I am ready to accept it, outside scrutiny, independent oversight,

something this committee has always wanted, independent oversight so we can send somebody to the labs on a moment’s notice

unannounced to see if there are problems. I am ready to undertake

that scrutiny.

Mr. RUDMAN. May I just have one brief response? There was

something said there I cannot leave. I am not sure the Secretary

meant it the way it came out; at least I hope he didn’t. We didn’t

have any volunteers come to see us. We didn’t have a bunch of malcontents, you know, coming in from New Mexico and Oakland and

Ohio and saying, let me tell you about this horrible place that I

work. We carefully selected who we invited to come in to an intense

session before the PFIAB, behind closed doors. And a lot of those

folks, I will tell the Secretary, were fairly high-level folks in your

Department or across the country, former Secretaries, former deputies, current people with high positions. They weren’t malcontents.

They were people who had concerns.

I want to just correct that mischaracterization.

Chairman BLILEY. Thank you.

The Chair now recognizes the gentleman from Wisconsin, Mr.

Barrett.

Mr. BARRETT. Thank you, Mr. Chairman, and welcome to you

both. It is a pleasure to have you here. You will have to excuse me.

35

I just came in late, and, frankly, I am just trying to get up to speed

on this, so some of my questions might be pretty elementary. They

pretty much relate to the whole issue of external regulation, and

I know, Senator Rudman, that you were the one who basically

chaired the report or put the report together.

In preparing this report did your panel make recommendations

as to whether the Department’s nuclear programs should be subject

to external regulation?

Mr. RUDMAN. Would you define ‘‘external regulation’’ for me?

Mr. BARRETT. No, I won’t. I am not saying that to be flippant.

I am just curious so I have a better understanding as to whether

you did look at the whole issue of external regulation.

Mr. RUDMAN. We did not. That was not within our charge at all.

We looked at security issues alone. And the answer is no.

Mr. BARRETT. Okay. Just because it wasn’t part of the charge.

Mr. RUDMAN. It was not at all.

Mr. BARRETT. I may be showing you my ignorance, but I want

to be sure I understand exactly what the panel did.

The Defense Nuclear Facility Safety Board, what do you see as

its role, and what did the panel see as its role?

Mr. RUDMAN. Well, they are an oversight group. There are several others. We seriously question whether they have been working

the way they should work. We believe that one of the reasons none

of these oversight groups works very well is it is too much bureaucracy to layer.

I will disagree with an earlier statement that the Secretary

made. I don’t argue with the fact that you might need more security people, more FBI people, but I will tell you when you look at

the slots, and all of the offices leading up above the laboratories all

the way to the Secretary, I think it is so cumbersome up there, and

that was the point of an interesting piece by a scholar at Brookings

yesterday that was in the Wall Street Journal. I think you have got

to slim the place down.

Mr. BARRETT. I understand that, but, again, so I understand the

role of your panel, did it gauge the performance at all of that

board?

Mr. RUDMAN. We did not particularly look at the performance of

the board. We did not. We looked at the performance of another

board, I think, with another name.

Now, what is the name of that one?

The Security Management Board, which was supposed to solve

some problems, only met, I don’t know, two or three times over a

long period of time, and some of the members felt that they didn’t

accomplish very much, and I guess they were right.

Mr. BARRETT. Okay. And under your proposals would the defense

board continue to exist? What role do you foresee?

Mr. RUDMAN. We have left that open. That is up to the Congress

to decide. We believe that Senator Warner has made a pretty good

proposal on the Senate side. It was made before the report was

written, so we embodied it in this report as an independent oversight board. Now, the Secretary might want other oversight boards,

but I would think one good one over this part of the agency would

suffice.

36

Mr. BARRETT. Would your recommendations about a new oversight agency, is that—again, is that driven by the security concerns?

Mr. RUDMAN. It is driven by a history that there has not been

sufficient oversight. And let’s face it, Secretaries of departments as

big as this one have a lot of other responsibilities. If you have a

good independent oversight board that reports directly to you,

made up of outsiders that you pick carefully, they can be of enormous help. I might point out that is precisely what the PFIAB is

of the President of the United States.

Mr. BARRETT. The reason I ask you about security, there are

other issues with nuclear facilities like health and safety. Who

would oversee those issues?

Mr. RUDMAN. The Secretary is better to answer that question.

We did not address that.

Mr. BARRETT. Okay. Mr. Secretary, again, if the defense board

were not to exist, what would be the—who would be responsible for

the health and safety concerns at the facilities?

Mr. RICHARDSON. Well, under my reorganization, health and

safety are given top priority, and I think they should be. We have

an Office of Safety, an independent oversight board and Office of

Safety that exists today. Safety has to be a top priority. I think

that every entity should be subject to health standards. I don’t

think anybody should be immune just because you are a nuclear

weapons complex. I think that there should be independent oversight across the board.

Now, I am willing because of the importance of nuclear weapons

work, because of the security concerns that have been raised, to

give the nuclear weapons area an Under Secretary, an organization

of some kind, to better streamline. But I am wondering whether we

are excluding from proper oversight an entity that like anybody

else, like me, like you, should conform to certain safety and health

standards.

Mr. BARRETT. Thank you, Mr. Chairman.

Mr. UPTON [presiding]. Thank you.

Mr. Cox.

Mr. COX. Thank you very much.

I would like to pick up on the topic that was under discussion

a moment ago, and that is the malcontents, the people that are

coming in and talking to you, because I know that the Secretary

feels that he needs more evidence that these problems exist or that

otherwise we are—actually I ought to let you tell me what you

think about why you are saying you need more evidence. What do

you mean by that, Mr. Secretary?

Mr. RICHARDSON. Well, what, Congressman Cox, I will do is go

straight to your—the claim in your report that you made, and that

was that there were serious severe security problems remaining.

And I didn’t get the sense in your report that the—which was completed in December—that you had acknowledged the number of

measures that we have made, and that was my reference. Now,

again——

Mr. COX. I mean today. By the way, as you know from having

read the classified as well as the unclassified report, and now

enough of this has been made public that we can state is it here,

37

the source for that is Ed Curran, who testified under oath, and we

quoted from him with quotation marks around what he said in the

transcript.

Mr. RICHARDSON. But very clearly to you in open testimony

amended that to say——

Mr. COX. No. No, it was not testimony, it was on a Sunday news

show months later.

Mr. RICHARDSON. Well, he very clearly stated that at this point

we had achieved 85 percent of our reforms.

Mr. COX. No, what he told us under oath it was going to be sometime in the year 2000 before we could get around to this.

Mr. RICHARDSON. I wish Mr. Curran were here, but he contradicts what you are saying.

Mr. COX. Well, he never did.

Mr. RICHARDSON. Well, I think you should ask him.

Mr. COX. Let me not argue with you here, because I think the

problem we are having is that we have now, the President’s advisory board coming to us, and they did a very fine job, and their

criticism of them was much more harsh than what was in our select committee report. And what they are saying is that they listened to people in a setting that permitted them to let their hair

down. These weren’t malcontents that walked in.

I guess my question is what would happen if we said instead of

PFIAB, the President’s Foreign Intelligence Advisory Board, giving

people that they selected the opportunity to come in and say, you

are not going to be terminated for what you tell us, there is no

transcript made of what you said, we are not going to in any way

interfere in the process of taking your testimony with what it is

you have to say; what if instead we had to wait until somebody in

a much more formal way had to come in and talk to you, the Secretary. Would we ever know anything?

Mr. RICHARDSON. I have not discouraged this process of either of

you or Senator Rudman talking to anybody he wants. In fact, I

have rewarded somebody who I felt was a whistle-blower who made

a difference, who persisted, a man by the name of Mr. Trulock, who

provided a lot of evidence to your committee. So I don’t care who

talks to you. I don’t care what scrutiny you put me under. All I

want is if you have evidence of problems, that you tell me about

those problems; and second, if there is progress being made, if

there are changes being made, if these changes are working, as Mr.

Curran and others are trying to implement, that you acknowledge

it. That is all I am asking. And I fail to see that acknowledgment

of the dramatic steps that we have taken.

Mr. COX. As you know, our report was written in December 1998,

and it was accurate as of that date. So I would ask the chairman

of the Investigative Task Force and the president of the President’s

Foreign Intelligent Advisory Board, who is with us today, who I

wish to commend for your work, what has changed, and do you discount the evidence that you heard in these interviews that you conducted? Is there enough change now that we are in June that we

can say these problems are behind us?

Mr. RUDMAN. No, of course not. And I don’t think the Secretary—

it seems like ships passing in the night. I don’t think the Secretary

is testifying here today that everything is safe and secure. I think

38

the Secretary is probably saying they put a lot of things in place

to try to make that happen. I will tell you unequivocally I don’t believe that no matter what they do, with all the—if you passed a bill

tomorrow, the President signed it, you did exactly what we said,

created an agency within the Department, kept counterintelligence

reporting to the Secretary, did all of that, it will take a couple, 3

years before you can have an assurance that you got a safe situation out there. Counterintelligence, poly graphing, all of this takes

enormous amounts of time.

No, I don’t think that it is safe now. I don’t think the Secretary

does. But let me just disagree with one thing so everybody knows

where I am coming from. There is not a question of whether or not

you can prove that the Cox committee’s findings were all right, or

some were right and some were wrong. You and I have discussed

this, Congressman Cox. We say in our report, we agree with a lot

of it; we don’t agree with all the conclusions. And people can disagree on the same intelligence analysis.

What we do say is that it is the opportunity for espionage that

your committee essentially reported on, that Mr. Trulock reported

on, that was of extraordinary importance to the country, is the opportunity—it is the opportunity for further mischief that we are

concerned about. We think the one way that you get that changed

is by streamlining this agency and making it very, very functional

and reporting directly to the Secretary. That is what we think.

Mr. COX. My time is expired. I wonder if I might just ask for a

brief update on very important issue in your report. In the President’s Foreign Intelligence Advisory Board report, you state that

remote dial-up access to unclassified networks without any monitoring by the lab is possible at least as of the date of your report.

Is that still possible? Do we still have problems with——

Mr. RUDMAN. I have someone here who is an expert in that area

from the Intelligence Community. If you will give me 30 seconds,

I will answer your question.

We cannot give you any more information that is more current

than 13 days ago; 13 days ago that statement stands. Possibly

something has done to change it. That was true 13 days ago.

Mr. COX. With your permission I would ask the Secretary then

to respond.

Mr. RICHARDSON. I think it applies to unclassified systems only.

Mr. COX. Yes. We are talking about the unclassified network,

such as the network to which the millions of lines of nuclear codes

were transferred.

Mr. RICHARDSON. I understand that there is a firewall up, and

the only thing that is accessible is the Web pages and the unclassified provisions. So there is a firewall.

Mr. COX. Has that changed in the last 13 days?

Mr. RICHARDSON. Yes. In the last month.

Mr. COX. I just wonder if you are talking about before or after

the 13 days ago date that Mr. Rudman is talking about.

Mr. RUDMAN. Congressman, let me just say—and we are in an

open session, and you know this is—PFIAB deals with these issues

all the time. This is something I know something about. I don’t

take any confidence whatsoever from the statement I just heard,

that the Secretary may believe it, but I suggest he talk to some exVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00041 Fmt 6633 Sfmt 6602 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
39

perts in cyberpenetration. These firewalls are penetrated all the

time, and that is all I want to say. But it has got to be looked into

very closely. And quite frankly, we have people that we have talked

to that are the world experts on this issue, and I expect you could

talk to them, too. I am sure the Secretary will.

I just don’t think we ought to give people assurances about

things we are not certain of. This did not happen on Bill Richardson’s watch. He is not responsible for what happened, he is trying

to fix it, and I don’t think he ought to try to defend something that

he can’t defend. That is my honest opinion. I will tell you what I

think here.

Mr. RICHARDSON. I am not trying to defend it. You asked me a

question whether firewalls have been set up, and I answered yes.

Are they perfect in the unclassified area? No. The firewalls that

deal with security and classified information, we are going through

a stand-down right now to determine that. My people tell me that

they are. Again, we need time to do this right. And that is exactly

what we are doing.

Mr. COX. Mr. Chairman, I thank you, and I wish again to thank

both of our witnesses, which I should have done at the outset of

my time, for the energy and work that have you been in here, and

notwithstanding what I take to be a little defensiveness on the part

of the Secretary, we do recognize the work that you have done, and

I publicly recognize it and wish to do so here again today.

And insofar as Mr. Curran is concerned, I think it is pretty clear

that what he was telling our committee he was telling us in real

time at the end of 1998, and what he has said subsequently is that

that situation has been changed, and I think it is your point here

today that you are trying to accelerate that process where we were

at the end of 1998, when our committee was investigating this, was

that we were off in the year 2000. And you hope now you can accelerate that. And obviously the purpose of this oversight is to help

accelerate that process, and we take very seriously the expressions

of Senator Rudman that we shouldn’t have to wait for a newspaper

account or media reports or what have you in order to do our job

up here, and the extent of our job here today is to continue to focus

white heat on this. That is what we intend to do. I thank the chairman.

Mr. UPTON. Mr. Burr.

Mr. BURR. Thank you, Mr. Chairman. Mr. Secretary you have

used some words over and over again. One of them is ‘‘polygraph.’’

let me just ask you, the Washington Post yesterday reported that

the first DOE employees to be polygraphed under the new program, and the only ones so far, are 57 of the 60 members of the

counterintelligence staff. Is that an accurate report in the Washington Post?

Mr. RICHARDSON. Yes, because we are the source of that. I think

it is close to 60 now.

Mr. BURR. Let me ask you, do you know Stu Nagurka? Am I correct?

Mr. RICHARDSON. Yeah. He is my press Secretary.

Mr. BURR. Is he here today?

Mr. RICHARDSON. I don’t see him.

40

Mr. BURR. Let me read a statement that he made on May 30 to

the Sacramento Bee. The Energy Department spokesperson said orders have gone out for a large number of Department scientists to

be subjected to periodic lie detector tests. I know they have begun,

Nagurka said.

Is that an inaccurate statement on his part that, in fact, poly

graphs had begun with Department scientists?

Mr. RICHARDSON. His statement is accurate. He said order.

Mr. BURR. No, his statement says, I know they have begun. They

have gone out, I know they have begun.

Mr. RICHARDSON. The orders have begun.

Congressman, let me just tell you about poly graphs, because this

was a very controversial provision that I approved amidst great opposition within the labs, within the bureaucracy, within the government, within civil liberties groups. If we are going to do poly

graphs—and by the way, they began in April, I believe the 27th.

When we have polygraphs, you have got to be careful how you do

them. They have to be based on national security.

Mr. BURR. So all scientists are not going to go through a polygraph.

Mr. RICHARDSON. That is correct.

Mr. BURR. Let me ask you about the contract, if I could. You

stated earlier that you would consider the University of California

contract based upon the facts. And I would like to look at some of

those facts. Does the contract as written currently require the University of California to carry out the security directives that are set

by the Department of Energy?

Mr. RICHARDSON. Yes. All our contracts have—ensure that security and other aspects are adhered to, yes.

Mr. BURR. Did you in 1995 in a letter to Secretary O’Leary ask

her to open up the bidding process so that people could bid against

the University of California for the Los Alamos contract?

Mr. RICHARDSON. Yes, I did.

Mr. BURR. To your knowledge, has the university ever been penalized through a fee deduction based upon their annual evaluation

rating that is done by the Department of Energy?

Mr. RICHARDSON. The policy now is that the subcontractor is penalized, and I believe at the time when I was a member of this

committee, which has been my policy, which is that there should

be open competition for all contracts.

Mr. BURR. In fact, is there not an annual evaluation rating that

is done by the Department of Energy on all their contractors?

Mr. RICHARDSON. No, not on every contract. For some contracts—

the University of California contract—there is at least a yearly

component, yes.

Mr. BURR. In fact, one of those components is an evaluation performance on safeguards and security. And one was done last year

on the University of California where they received a rating of excellent by the Department of Energy. Given what you know today,

did somebody at the Department of Energy make an inaccurate

evaluation?

Mr. RICHARDSON. I don’t know about that test. I do know

that——

41

Mr. BURR. These are the ratings that DOE gives their contractors based upon their performance.

Mr. RICHARDSON. I don’t know if that is accurate. I have never

heard of that excellent rating. When I recently conducted very extensive security reviews in Los Alamos, which is the University of

California, main contractee, did not receive an excellent rating. In

fact, it was marginal. It was marginal. So I don’t think your report

is up to date.

Mr. BURR. I would challenge you to go back and look at the internal evaluation done for the purposes of whether there was a deduction of their fee based upon their lack to reach a good or above rating.

Let me ask you again, given what you know today, would you

consider—not asking you for a definitive answer—would you consider a cancellation in their contract?

Mr. RICHARDSON. I can’t give you that answer. I will make a

judgment at the end of the term, and it is going to be based on

whether they have performed well on security, whether they have

achieved their scientific goal.

Mr. BURR. Do you believe they have fulfilled their security requirements based on——

Mr. RICHARDSON. Congressman, I don’t want you to blame the

University of California for the security problem. You should blame

the Department of Energy personnel. You should blame Los Alamos. It is a collective blame. To set up the University of California

as a straw man I don’t think makes sense. Now, that doesn’t mean

that we shouldn’t look at every contract, as I have, and I have generally recompeted almost every one, despite a lot of political pressure to the contrary. When the University of California contract

comes up—and it is not up for a year, year and a half——

Mr. BURR. It is not up until 2002, and with all due respect to

you, I certainly appreciate the effort that you have made. Part of

my questions are to distinguish—if I could, Mr. Chairman—are to

distinguish whose responsibility it is. We have tended to watch a

process that I think Senator Rudman’s committee has said that

there is a tremendous lack of confidence that exists with the current DOE employees to carry out any internal revamping of the security measures at these facilities. Clearly that is substantiated if

the DOE internal performance rating was an excellent on security

and——

Mr. RICHARDSON. Congressman, that was before I came, and I

don’t know who did that. That is one of the reasons we need to reform the Department, because you get these ratings that are obviously wrong. That is what I want to change.

Mr. BURR. So your statement would be then, it is the Department of Energy’s responsibility, it is not the University of California?

Mr. RICHARDSON. The Department of Energy contracts with the

University of California. It should be a collective responsibility. It

is not just one or the other. The University of California needs to

do better on security. That is painfully evident. I am not taking

that out. I am also saying to you, which maybe you are having difficulty accepting, is that we have made dramatic progress on security and counterintelligence with the labs, with the University of

42

California. The University of California has just undertaken a review of their own. Nobody is disputing that there have been security lapses. We are trying to fix it.

Mr. BURR. I appreciate the chairman’s indulgence and would,

just for the record, make the Secretary aware that the current contract runs out in 2002, but based upon the requirements, if the government were to open the bid process, the Secretary would have to

notify the university by the end of next year. And my question

didn’t deal with the whether we would open the bid process, it

dealt about would the Secretary, based upon his findings, consider

cancellation of the current contract, which is certainly within the

purview of the Secretary. And I yield back.

Chairman BLILEY. The gentleman from Pennsylvania, Mr. Greenwood.

Mr. GREENWOOD. Mr. Chairman, Secretary Richardson, I think

my constituents would be a little bit surprised had they been aware

of the fact that there were so many thousands of visitors going

through these weapon laboratories. I think they would even be a

little more surprised to learn that a lot of them were foreign visitors; might be shocked to learn that those foreign visitors were

from countries like China. They would probably be knocked over if

they knew that some of those Chinese visitors were intelligence officers, and they just wouldn’t believe it at all if we told them that

some of them were known spies. But all that seems to have been

the case.

It is my understanding that the Department’s Inspector General

reviewed the last two Department status reports to the President

of nuclear security, one in 1997 and one in February of this year.

And the IG recommended that the security risk posed by the foreign visitors’ program be upgraded in the reports and flagged for

the President. But DOE, as my staff tells me, didn’t do that, and

at least once under your tenure that was the case.

Can you help us understand why the Department did not concur

with the IG’s recommendations for flagging this issue for the President?

Mr. RICHARDSON. Well, I don’t know where your staff is getting

this information. I do not believe I ever received any report like

that. I can tell you that we have dramatically upgraded the foreign

visitors’ program. This was part of President’s Clinton’s Presidential Decision Directive 61.

Mr. GREENWOOD. I am told—if I may interrupt—the answer to

your rhetorical question was from the Inspector General in the Department of Energy.

Mr. RICHARDSON. Well, you know, this is news to me. I believe

very strongly that we have upgraded the security of this program.

You know, I can say to you that the majority of the Congress has

agreed with me, to keep the foreign visitors’ program. Some of the

measures that are in the armed services bills such as moratoriums,

are a bad idea and other very strong controls over the foreign visitors’ programs are good, and we will go further. But I am not

aware of the inspector general saying anything to me or giving me

a report about flagging the President on anything.

[The following was received for the record:]

43

As indicated by the actual Accountability Report excerpted below, the President

has been fully informed of counterintelligence matters at the Department and had

as a result, on February 11, 1998, issued a national security directive (PDD-61) to

the Depamment to make improvements in this area. As the Report also indicates,

the Department was reporting its progress in implementing these improvements as

an emerging issue, including, as stated in the Report, the preparation and submission of an action plan to the President’s National Security Advisor. This action plan

was submitted to the White House on November 13, 1998. Although the Inspector

General criticized the Department for not further elevating these issues in the Accountability Report, the Department believed that these counterintelligence matters

had already been reported to the President through other communications, as evidenced by the President’s issuance of PDD-61. Consequently, the Department did

not agree with the Inspector General recommendation.

44

45

46

47

48

49

50

51

Mr. GREENWOOD. Okay. The Rudman report also mentioned that

there was an incident where there was an illegal wiretap that was

discovered in the lab, and that the responsible employee confessed,

but was not prosecuted. If this question hasn’t been asked in my

absence, and I apologize if it has, was the tap discovered in a classified area of the lab?

Mr. RICHARDSON. We have no knowledge whatsoever about this

report. And I directed my counterintelligence people to find out

about it, and they gave me this answer, too.

I will say to you that there was a—there was a nonespionagerelated incident that was presented by the FBI to the Special U.S.

Assistant Attorney for Prosecutorial Action, a nonespionage-related

incident. The special assistant declined to prosecute. The DOE then

pursued prosecution under New Mexico State law as the act violated the New Mexico Law Code. The subject of the investigation

pled guilty in court, was sentenced to a fine and probation. And the

Department of Energy took administrative action against the subject that included the suspension of his Q clearance, reassigned

him to an area that required no classified access. Based on the reassignment action, the subject was forced to accept an estimated

$30,000 reduction in annual salary. So this was a nonespionage incident.

Mr. GREENWOOD. I think we are all a little curious up here.

What sort of information was which employee trying to gain

through a wiretap? Is this a romantic issue?

Mr. RICHARDSON. I don’t know.

Mr. GREENWOOD. Senator Rudman, did you want to comment on

either?

Mr. RUDMAN. I would not comment on either one of them. They

are both law enforcement matters. We illustrated them only to

show the incredible things that were happening in these laboratories long before the Secretary became Secretary, and for which no

apparent tough measures were taken.

Now, if I understand it correctly, one of the reasons we cited it

is this individual—and, again, this is before this current administration—was reassigned. I think I am correct about that, he was

reassigned, but his security clearance was taken. I don’t understand how anybody who attempts to wiretap a government facility

isn’t fired on the spot and just shipped out. It would happen in any

private company I know.

But there was such a permissiveness in this place about everything, and we illustrated that. There were other examples, but not

in open session can they be talked about.

I mean, again, why the Secretary and his staff defend those kind

of actions, if they are, is beyond me. They didn’t do them.

Maybe there is something in the water over there. Maybe once

you work in the Department of Energy, you defend it to the death,

even if the people 10 years before were damn fools, as many of

them were. I mean, this was foolishness. This person should have

been fired.

Your constituents, told that somebody wiretapped and suddenly

got their clearance jerked, but went back to work and got their

pension and health care, they wouldn’t believe it. They would get

52

fired from their job from wherever you are from in Pennsylvania

with alacrity.

Mr. RICHARDSON. Congressman, I guess I just have a different

way of facing things. If there is a problem, I try to fix it. I don’t

like to say, well, I wasn’t here.

I gave you an answer, and the answer was the facts as I know

them. I am not trying to defend that. I am not saying it was right.

But, you know, to say, look, this was on the Republican watch, and,

you know, there is a lot of incidents on the Republican watch, on

the Democratic watch, it is a pervasive problem—we are talking

about 20 years of problems—you asked me a question, and I am

answering it. I am not defending anything, but I just have problems with the perception that just because it didn’t happen on my

watch I shouldn’t try to fix it.

Mr. GREENWOOD. Well, perhaps—it is my understanding, Mr.

Secretary, that—I need to yield back now—but that you are not

aware of the details of this particular incident, and I asked you

what information he was obtaining or she was obtaining through

this illegal wiretap. Would you supply this committee with the answer to that question?

Mr. RICHARDSON. Either myself or the FBI would do that for you.

Mr. GREENWOOD. I appreciate it. Thank you very much.

[The following was received for the record:]

On April 28,1997, a male Los Alamos National Laboratory (LANL) employee admitted to rewiring the telephone and recording telephone conversations of a female

LANL employee while at work. He allegedly had an affair with the female employee

and recorded the conversations for personal reasons.

On May 7, 1997, the facts of the case were presented to Assistant United States

Attorney (AUSA) David N. Williams. AUSA Williams declined federal prosecution

of this matter due to the personal nature of the recordings and the fact that the

female employee did not work in a classified area or have access to classified information at the time this incident occurred.

Mr. GREENWOOD. Thank you, Mr. Chairman.

Mr. UPTON. The gentleman from Illinois, Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman.

Senator, first for you, I really appreciated that stack of documents on reports. What do we need to do so this report is not just

another one that gets thrown in the stacks and then 2 years from

now, instead of—what did you have six, six reports, or eight? I

can’t remember how many, but then you have seven or nine that

you just say, and here is a report——

Mr. RUDMAN. There are actually 100.

Mr. SHIMKUS. [continuing] from June 1999 listing these problems

again.

Mr. RUDMAN. What has to be done?

Mr. SHIMKUS. Yes, sir.

Mr. RUDMAN. I would say several things. No. 1, I hope whoever

is elected President’s in the year 2000 selects a Secretary of Energy

that has some national security background and some, hopefully,

technical background. I think it is a very important place.

Obviously, Secretary Richardson certainly has substantial national security background, and a lot of technical background from

serving on this committee.

No. 2, I would hope that the Congress will adopt some sort of a

major reorganization and streamline this agency.

53

No. 3, I hope the oversight, both within the agency and the Congress, is vigorous; and I mean vigorous. That is what I believe.

Mr. SHIMKUS. Thank you, Senator.

In part of your report, some of the DOE complex would not fall

within the new entity that you proposed. Do you think that those

other areas and their security concerns could fall under the proposed security czar as the Secretary has mentioned? Or how do

you—how do we deal with those elements?

Mr. RUDMAN. This morning before the Senate, we had quite a

discussion about that. I don’t have a problem at all with some

modifications of our proposal in terms of staffing of the semiautonomous agency. Certainly the Secretary makes a good case

that security probably belongs up at the top with reporting to him,

setting policy, with some adjunct to that office located in the new

Department or agency. I don’t have a problem with that at all.

Counterintelligence, I think we still disagree. I think he can have

counterintelligence policy at the top level. I don’t disagree with

that. You have to have strong counterintelligence down within the

unit, and I don’t think we really disagree with that. So there is a

lot of agreement here.

The fundamental disagreement we have seems to be that the

Secretary is having a hard time accepting an agency or an administration within a Department, which is fairly common at DOE and

at Commerce and a couple of other places, I am told. But, you

know, you will have to work that out with the Secretary.

I want to point out here that the PFIAB, this is an unusual role

for the PFIAB. We don’t have any great pride of authorship. We

try to do a public service. It is up to Members of Congress, members of the appropriate committees who do this all the time with

your staffs and the people on the Senate side, work with the Secretary and get this done.

But I surely hope that when you get it done, you don’t leave it

so that some future Secretary or some future Director of Security

or some future Director of Counterintelligence cannot realize what

everybody went through in 1998 and 1999 on this issue, which, by

the way, is what normally happens in government. It is the next

crisis that people pay attention to.

Mr. SHIMKUS. Well, I appreciate those comments, and I think

that is reiterated in those other reports that you addressed; a new

administration coming in in 18 months and another new wave.

I am also really struck by the testimony and your report on corporate culture. That is what we are really getting at, for lack of a

better word. The corporate culture at the Department of Energy,

especially on the issue of security, seems to be, based on a report

of—and I want to choose my words carefully—really a failure, and

your report recommends a way to break out of that corporate culture. I guess you said it great in your opening comments, the old

saying we need a new wheel, and I would hope that this committee

in its oversight, and if we can continue working with the Secretary

and as we continue to move forward, keep this close at hand so

that we can help rebuild the wheel for national security’s sake.

With that, I will yield back my time.

Mr. UPTON. Thank you.

Mr. Stearns.

54

Mr. STEARNS. I thank the chairman.

In all deference to you, Senator Rudman, I think any CEO of any

Fortune 500 company could come in and straighten this out in 90

days or 6 months. It would not take 3 years to do this.

Mr. RUDMAN. Congressman, I am sorry, but I cannot hear. It is

probably me and not you.

Mr. STEARNS. Okay. I am just saying, Senator Rudman, I don’t

think it would take 3 years to straighten this out, like you indicated. I think any CEO of any middle management company could

do it in 90 days to 6 months. I think the taxpayers just won’t tolerate a 3-year process on this.

The Secretary of Energy had indicated earlier that he didn’t

think the Department of Energy, or in this case the Department at

Los Alamos, was top-heavy. But yesterday’s Wall Street Journal

talked about the bloated bureaucracy, indicating that in 1979 there

were sort of 4 major departments with 10 layers and 56 senior executives, and then last year they exploded to 18 layers and 143

senior executives.

I mean, obviously I think most of us think there is a lot of topheavy bureaucracy in that area, and I hope the Secretary will look

at it more carefully.

My second concern is, Mr. Secretary, you indicated that you

talked about—you have ordered a 2-day complete stand-down in

the labs to renew instructions for staff about security practices.

Now, obviously, this costs a lot of money to taxpayers.

When we try to understand what this 2-day complete stand-down

is, we understand that basically all it is is employees are told to

read the Rudman report, to attend to some old replayed videos on

security in the afternoon. We are told that virtually no manager attended these sessions and that employee attendance for the afternoon session was roughly 20 percent. I think this whole idea of this

2-day complete stand-down doesn’t seem to be that effective.

And this is a question for Senator Rudman. Back in April, the

Secretary of Energy ordered the computer systems at the three nuclear weapons labs shut down for 2 weeks in April in order to brief

all the employees on it and to drive home the importance of computer security. In response to the release of your report last week,

you ordered complete shutdowns, as I mentioned earlier, for 2 days.

I mean, based upon your report and your inspection, do you think

there is any value to the Secretary’s 2-week, so to speak, lab shutdown, and what do you think of this whole 2-day complete standdown he did just recently?

Mr. RUDMAN. I am not sure I am qualified to answer the question.

Mr. STEARNS. Did you find any impact from this great 2-week

shutdown that he ordered in April? Did you find any segment of

this influencing the Department at all?

Mr. RUDMAN. I am not sure that I can answer that question, because I want to be honest and fair here, and I don’t want to answer

about things that I don’t know.

You are asking for a factual answer. I have a lot of opinions, but

lately I don’t have too many facts. You know, there is an old saying, I am entitled to my own opinions. I am not entitled to my own

facts. So I don’t think I can answer the question.

55

But let me just say this to you: I think the Secretary, and I know

that he will and his staff, now check and see if what you just said

was accurate. If this stand-down was a mock exercise, then there

ought to be hell to pay for it, frankly.

Mr. STEARNS. I would think so.

Mr. RUDMAN. That is all I would say.

Mr. STEARNS. Did you see any attitude change in the employees?

I don’t think you saw any attitude change as a result of this 2

weeks in April, big shutdown to discuss security and talk about security stand-down. I mean, you didn’t see any attitude changes at

all?

Mr. RUDMAN. Well, to answer your question, we met with a number of employees, some of whom are at levels quite high, others

middle, and I would say that they were very concerned about the

perception that they were doing a terrible job at security; that they

had an arrogance and a culture that was unacceptable. I think

there was a lot of concern about that. I think some of that came

out of that stand-down.

Now, I don’t know much else about it because we have not done

a postaudit of what the Secretary has done, so I don’t want to answer that question because it will be unfair.

Mr. STEARNS. But the fact that no managers attended this recent

stand-down session and the employee attendance for the afternoon

session was roughly 20 percent I think says it all.

Now, Senator Rudman——

Mr. RICHARDSON. Congressman, am I asked to respond to totally

unfounded allegations?

Mr. STEARNS. Well, let me just continue.

Mr. RICHARDSON. On a stand-down that isn’t even over and you

have the results, I find that very curious.

Mr. STEARNS. Mr. Chairman, can I have my time? I would like

to continue.

Mr. RICHARDSON. The stand-down is not even over yet, and you

have its conclusions. I find that strikingly interesting.

Mr. STEARNS. I have a question for Senator Rudman.

Mr. UPTON. The gentleman’s time has expired. If we can just get

an answer, we are going to have enough time for another round of

questions.

Mr. STEARNS. Okay. Can I ask this last question, Mr. Chairman,

ask unanimous consent?

Mr. UPTON. He can respond to the question that you asked.

Mr. STEARNS. I mean, this is a question for Senator Rudman.

Mr. UPTON. Go ahead.

Mr. STEARNS. Okay. Mr. Berger, the national security advisor,

was notified in 1996 about severe security problems in the Department of Energy, and the President was notified in 1997. Shouldn’t

the administration bear some responsibility and criticism for security lapses in regard to this Chinese espionage?

I know on the Senate side you indicated that it was Congress’

fault, but I mean shouldn’t the President take some responsibility?

Mr. RUDMAN. Well, what I said, I said that there was enough

fault to go around, including the Congress, including the President,

several Presidents, and several Secretaries. I got a note from someone who didn’t like that, but that is the way I feel.

56

Let me answer your question from my report. If you look at page

37 of our report, you will find that we say the following: Although

the national security advisor was briefed on counterintelligence

concerns by DOE officials in April 1996—that is the bottom of page

37—we are not convinced that the briefing provided a sufficient

basis to require initiation of a broad Presidential directive at that

time. We are convinced, however, that the July 1997 briefing,

which we are persuaded was much more comprehensive, was sufficient to warrant aggressive White House action. We believe that

while the resulting PDD was developed and issued within the customary amount of time, these issues had such national security

gravity that it should have been handled with more dispatch.

That is a very direct statement. Told the President of that last

Monday. That is kind of a good news, bad news story. The good

news is that the Presidential Decision Directive that they issued to

the Department of Energy was far-reaching, well thought out, and

formulated by the FBI, the CIA and the Department. That was the

good news.

The bad news is that for a long time nobody paid any attention

to it.

Mr. UPTON. The gentleman from Maryland, Mr. Ehrlich.

Mr. EHRLICH. Senator, I love your style.

Mr. Secretary, I like your style, too. I know you have a tough position. I think a lot of us who have been in government can have

some sympathy with respect to where you are right now.

Let me ask you, particularly with respect to the issue of polygraphs, my friend from North Carolina had begun a line of questioning, which I am an attorney, but I am not an expert in polygraphs, and I think he was referring to the observation made in

yesterday’s papers that not a single scientist had yet been subjected to polygraphs, University of California scientists.

Let me ask you, or whomever is the appropriate person on your

staff, what the status of the law is with respect to polygraph testing.

Now, you made an earlier statement that the issue of probable

cause comes into play as to the identities of those who are subject

to polygraph, and I understand this is a legal land mine with all

sorts of potential lawsuits and the whole 9 yards. Can you tell us

right now what the present status is with respect to the law, how

it applies to contractual employees, let alone Department employees, and particularly in the context of the observation that someone

has made that it would take the initial round of polygraphs—for

those who are supposed to take it, it would take 4 years? I know

that is a wide-ranging, multifaceted question. Let me throw it open

to you and ask you to respond to all of those questions.

Mr. RICHARDSON. Congressman, on March 17 of this year, I

signed notice DOE 472.2, use of polygraph examination. This is

what it does: It identifies those DOE programs subject to the polygraph and the general provisions for conducting polygraph exams

of DOE Federal employees. Since its issuance, the DOE has

polygraphed many Federal employees who are covered by the notice, as well as some of its contractors who have volunteered to be

polygraphed.

57

We are at the time undertaking a rulemaking process, and I

haven’t waited for the rulemaking process. I have gone forward

with the policy initiative of doing polygraphs.

We are undertaking a rulemaking process which will expand

DOE’s counterintelligence polygraph program to include its contractor employees as well Federal employees.

Now, the polygraphs are based on counterintelligence, on espionage, on national security grounds. They are carefully drawn. They

don’t involve life-style.

This is, as you know, a scientifically questioned procedure. They

can refuse, but they would be removed from sensitive work, and

there would be no need for probable cause.

Mr. EHRLICH. Let me interject, if I may, just for a second. You

had said with respect to contractual employees, at this point in

time the ones who have volunteered have been polygraphed. That

leads me to believe that others have not volunteered.

Is it your opinion that you have the authority with respect to

those contractual employees who have not volunteered that if they

are asked and decide not to take the polygraph, that they can be

removed from any sensitive areas?

Mr. RICHARDSON. Yes, I would have the authority—once I get the

rulemaking, and we are going to get it, I would have the authority

to polygraph the contractors, too.

Mr. EHRLICH. Do you need any statutory changes in the law that

we need to know about to implement what you believe needs to be

done with respect to polygraphs generally?

Mr. RICHARDSON. Congressman, I don’t think so, because I think

this rulemaking is imminent. I think I have the existing authority.

The tough decision was doing polygraphs. Only two other agencies do it: the National Security Agency and the CIA.

Mr. EHRLICH. Thanks. I appreciate it. I yield back.

Mr. UPTON. Thank you.

Mr. Klink.

Mr. KLINK. Thank you, Mr. Chairman, for allowing me to go

first. I am going to try to get to the floor.

First of all, Mr. Secretary, I just want to follow up on one question on Mr. Cox’s line of questioning. Currently can employees still

download classified information——

Mr. RICHARDSON. No.

Mr. KLINK. [continuing] into their own disks? Can they download

classified information currently onto their own disks, and then take

it out of the laboratory?

Mr. RICHARDSON. They cannot take them out of the labs. They

cannot download on classified disks.

Mr. KLINK. I am sorry. I don’t understand. They can what?

Mr. RICHARDSON. They cannot download on classified disks, and

they cannot take the disks home.

Mr. KLINK. How are you to enforce them not taking that disk

home?

Mr. RICHARDSON. We have a two-person rule. We have what is

called a two-person rule, and intrusion devices. The two-person

rule involves two individuals giving approval whenever you transfer classified to unclassified.

58

Mr. KLINK. So how would you be made aware—without giving up

anything secret, give us an idea of how you would be made aware

that they were downloading something that was classified.

Mr. RICHARDSON. I can’t do that.

Mr. KLINK. But there is a way?

Mr. RICHARDSON. There is a way. I think we have to go into classified session.

Mr. KLINK. I understand. But you are assuring me that there is

a way that you would know that something classified was being

downloaded?

Mr. RICHARDSON. Yes.

Mr. KLINK. We don’t have to go any further than that, Mr. Secretary. I appreciate that.

Senator Rudman, I don’t want you to get angry with me with

this question, but it is something that needs to be asked, and I

have been struggling with it myself. Please don’t be insulted. One

of the things that has bothered me about the panel that you put

together to look at these enormous security problems that surfaced

at the weapons labs was that you appointed Dr. Sidney Drell, who

I don’t know, from the University of California, who has the responsibility of those same laboratories.

Now, he may be a wonderful person, may be an honorable person, but the question is are we not putting somebody in charge of

the investigation who is going to be asked to rat out his employer

to the President of the United States? That is a very uncomfortable

position to ask Dr. Drell to be in. Can you explain that thought

process to us?

Mr. RUDMAN. Yes. I thought it was, and that is why I told Sid

Drell, that I thought this service was so important to this country

that I would like him to resign from his position at the University

of California before going on this panel. He did so.

Mr. KLINK. So you didn’t see any problems at all with the——

Mr. RUDMAN. Dr. Drell is a man of such unquestioned integrity,

but even with that we felt that staying on the UC advisory board

would have a terrible appearance, and so we just said, Sid, we need

you on this panel.

I had a limited group to pick from. The PFIAB was only about

14 people. He is a world-renowned expert and could answer questions that no one else could, and he decided, after many years, that

he would resign.

I might also point out to you that we had another extraordinary

person on there named Lou Allen, who you may know, former Chief

of Staff of the United States Air Force, former director of the jet

propulsion lab, he is on the Sandia board, and thus we felt we

could not have him on the panel at all. But we did not have a problem with Dr. Drell, but I did require that resignation, and he did

it.

Mr. KLINK. Thank you. You have cleared that up for us.

Now, did your panel review the ramifications of shifting the control—again, I want to get back to environment, safety and health

operations. If you are shifting that function away from the Office

of Environmental Management to this new autonomous Nuclear

Security Administration, what impact would it have on national

59

laboratories and facilities like Oak Ridge or Savannah River? Is

this something that you looked at?

Mr. RUDMAN. Well, I don’t think we are doing that. I don’t think

we are doing that at all.

If you are looking at the chart on page 50, I believe, or 51, we

have everything in place, and we leave the Secretary full authority

to interface those other parts of his Department, such as environment, health, with the new Agency for Nuclear Stewardship.

We put nonproliferation and arms control, fissile material and

naval reactors in there, and these plants, but those other parts of

the agency, huge, particularly environmental, we don’t touch those.

Mr. KLINK. Then who would be responsible for environment,

safety and health operations at the sites that you have listed?

Mr. RUDMAN. Within the Agency for Nuclear Stewardship, it

would be the Under Secretary, as it should be.

I mean, you can’t have someone—Congressman Klink, let me tell

you something. You know, from being out in the private world that

I am in, you know, I see people who head up a corporation, and

one of their division managers heads up a division with 10,000 people in that division. If anything goes wrong in that division, whether it is production, cost, embezzlement, environment, OSHA, whatever, that person is responsible, and they are gone if something

happens they should have prevented.

That is what is wrong here; there is nobody responsible. I mean,

you know, if you want to put the person from the environmental

part and the health part and all the other parts and say, well, they

are going to have jurisdiction over that part of it, then you are

going to go back to where we started.

Name a strong leader and make that leader responsible. It works

in the private sector. It will work here. It works at NASA. It works

as NOAA. It works at DARPA, and it works at NSA.

Mr. KLINK. So, Senator, what you are saying is you are setting

up a parallel structure, one within DOE and one within this autonomous?

Mr. RUDMAN. The difference is it is just a—this is a division of

DOE, if you will, a part of it; like NSA is a part of the Department

of Defense.

Obviously, the Secretary will have at his level a much bigger environmental organization than they will have, but they will have

to have people who look after environmental issues.

Mr. KLINK. What if there is a disagreement then between what

DOE thinks and what this semiautonomous or this autonomous

group thinks?

Mr. RUDMAN. I have been trying to figure that out now for 72

hours because I like Bill Richardson, and we have talked. We have

had discussions. But he has a block that he has placed someplace

that says, I will do this all with some changes, but don’t call it an

agency, don’t call it an administration; just don’t call it anything.

We believe that to insulate this, not isolate it but to insulate

this, from the rest of the bureaucracy, which we have plenty of evidence has not contributed to the solution but is part of the problem, we want this to be called an agency or administration responsible directly to him.

60

Mr. KLINK. If there is a different interpretation between what

DOE thinks how something should be done or interpreted and this

autonomous agency thinks something differently, who overrides

whom?

Mr. RUDMAN. The Secretary is in charge. The statutory language

I read here this morning. There is no question. Let me give an example. The National Security Agency located out in Maryland, suburban Maryland, an extraordinarily important agency, does very

important things. They have a Director who happens to be a military officer. Anything that the Secretary of Defense is unhappy

with at NSA, it goes through the chain of command; it is fixed.

True also of DARPA, true of NOAA and Commerce. The Secretary,

under our reorganization plan, if people will just read it, not just

look at the chart, says to the Secretary, you are in charge of these

weapons programs ultimately, and this is the fellow or the woman

who is going to run them. It is in this box down here. We call it

an agency, because we are worried about what happens after this

current group leaves. I am very concerned about that.

Why? Because we looked at transitions over the last 20 years,

and you wouldn’t believe what we found.

Mr. KLINK. Thank you for being so forthright.

Mr. Secretary, I thank you also.

Mr. RICHARDSON. Congressman, I hope you will let me use 1

minute or so to respond to an unsubstantiated charge which Congressman Stearns didn’t have the courtesy of letting me respond to.

To say that the stand-down of 2 weeks ago that we ordered because of the security concerns raised by so many in cybersecurity

that you raised, and to say that the 2-day stand-down that we have

done, where we are training employees, where we are looking at all

the cybersecurity changes, where we are testing, putting ourselves

under scrutiny, is an exercise that is not worth doing, and 20 percent of the employees—of the managers have not attended is a totally baseless charge.

It is now in New Mexico 1:30, and I find Congressman Stearns’

results already tabulated before we have finished the exercise rather skillful manipulation.

So these are necessary exercises. I think that to do a stand-down

at a national laboratory, a nuclear lab, is one of the most drastic

actions you can take. You are actually stopping work to make sure

that counterintelligence security are being observed. That is never

happened before.

I did it for 2 weeks. I didn’t tell them when I would stop it until

I was satisfied. I am doing it now for 2 days, after reading further

concerns that some in the Rudman Commission and others in the

Congress had. And I may do this again, but to say this is not a

worthy exercise when you are asking me to test our labs, to go out

and make them uncomfortable, which this does, is something that

I am rather flabbergasted at this claim that this is an exercise that

we shouldn’t do.

Mr. UPTON. The time has expired.

Gentlemen, thank you, again, for coming up. I know that members of the committee are going to have additional questions later

for you. I know that Mr. Klink and I are going to be cooperating

and having probably additional hearings on this topic as well.

61

Mr. MARKEY. Mr. Chairman, I apologize. I was just sitting over

here. I thought you were going to go a second round.

Mr. UPTON. We are now starting a second round. Actually, I

yielded to Mr. Klink to start the second round because he has an

amendment on the floor. I am going to just take a minute or 2. I

am going to go yield to Mr. Dingell. We will come back to Mr.

Shimkus, and then we will take you.

In any case, I have one question that remains unanswered, as I

listened to the many questions that are here now, and that is the

banning of foreign visitors. We had an amendment on the floor a

couple of weeks ago offered by our colleague Jim Ryun from Kansas. As I recall, the amendment failed, but he did ban foreign visitors, with the feeling that the background checks were not in place.

Mr. Secretary—Senator Rudman, as we listened to you, you indicate that even if everything was taken into account, the GAO reports, your study that you so carefully prepared, it would still take

a minimum of 3 years before that was going to be in place.

Mr. RUDMAN. Well, if you look at the number of people there are

to go through the clearance process, if we believe it wasn’t done

properly before, if you look at the amount of polygraphing, and that

is a tough issue, I mean, I am going to predict there will be lawsuits on this issue, I think you may have long delays. You know,

it is a very tough issue with arguments on both side.

If you look at the foreign business program, which I understand

the policy for that is being promulgated, the regulations, I think,

in the next week or so to formalize it, that is what we are told, I

mean, that takes time. This is nothing you can do overnight.

I am pleased to see these efforts undergoing, but I will guarantee

you they won’t all be in place when Secretary Richardson is off

cruising the Caribbean after working on it all these years and

somebody else will be there. And I don’t want to sound like a broken record, but, you know, Congressman Dingell can tell you better

than I can tell you what happened in every transition of DOE going

back to 1978. We have looked at it, and things which were considered so important just dropped through the cracks. They just left.

Why? Because people had other priorities. So I would say that it

is going to take time.

Mr. UPTON. Shouldn’t we have that barn door shut on some of

these foreign visitors from countries like China and other places

until these reforms are actually in place and they are working?

Mr. RUDMAN. I would err on the side of being safe rather than

the side of being sorry, given the choice, if I were running this program.

Mr. UPTON. Thank you.

Mr. Dingell.

Mr. DINGELL. Thank you, Mr. Chairman.

Mr. Secretary, if you have a director of a laboratory who you

think is not doing a good job, or you have an employee at the laboratory that you don’t think is doing a good job in terms of security

or something of that sort, what can you do about them?

Mr. RICHARDSON. I can fire them. I can fire a lab director.

Mr. DINGELL. Can you fire the employee of a contractor?

Mr. RICHARDSON. Yes.

Mr. DINGELL. You can fire an employee of a contractor?

62

Mr. RICHARDSON. Yes. I have to consult with the lab director,

but, in essence, I am going to do that.

Mr. DINGELL. Supposing the lab director doesn’t want them fired,

what then?

Mr. RICHARDSON. Then I fire the lab director.

Mr. DINGELL. I have always been told that Secretaries couldn’t

address this problem. You are telling me that you can?

Mr. RICHARDSON. I can, and I will.

Mr. DINGELL. I am going to watch very closely, Mr. Secretary,

and I know you are not going to disappoint me, because we are

going to be quoting those remarks.

Now, Mr. Secretary, how do you expect to control this through

an independent agency?

Mr. RICHARDSON. Well, Congressman Dingell, I have indicated

my preference, which is to have an Under Secretary for Nuclear

Weapons with a security czar, and a Director of Intelligence on

these separate tracks.

Senator Rudman and I differ a little bit about the semiautonomous agency. I am willing to work with him and others in

the Congress, but I think the reorganization I have done with the

security czar, with this very distinguished general that has nuclear

weapons background and security background and military and

management background, I think we can do that better.

Mr. DINGELL. All right. Now, did all of the employees of the contractors show up to this stand-down that you put on out there?

Mr. RICHARDSON. Well, they are all required to, yes.

Mr. DINGELL. Did they?

Mr. RICHARDSON. Well, it is not over, Mr. Chairman. It is going

to be over today at 5 p.m.

Mr. DINGELL. But, beloved friend, I assume that they were supposed to show up. Did they? Did they all show up?

Mr. RICHARDSON. Well——

Mr. DINGELL. Mr. Secretary, they showed or they didn’t show.

Which is the case?

Mr. RICHARDSON. Well, they showed, but it is not over yet.

Mr. DINGELL. So some of them did not show?

Mr. RICHARDSON. No, no, I didn’t say that.

Mr. DINGELL. Well, did they all show?

Mr. RICHARDSON. I will know at 5 p.m. Today. This is a very serious exercise.

Mr. DINGELL. If they didn’t show, what will you tell this committee?

Mr. RICHARDSON. Well, anybody that did not take it seriously, I

will let you know.

Mr. DINGELL. I am informed that a large number of them did not

appear. Is that a true statement?

Mr. RICHARDSON. Well, I don’t know how those reports have

come in when the exercise isn’t even over.

Mr. DINGELL. Well, if they haven’t showed, they haven’t showed.

They were supposed to, though, were they not?

Mr. RICHARDSON. Well, I don’t have that. That is information

that I don’t have.

63

Mr. DINGELL. But if they are not showing when you have a

stand-down, they are not complying with your orders; isn’t that

right?

Mr. RICHARDSON. That is correct.

Mr. DINGELL. All right. I want a full written report on this matter, and I want to have it inserted into the record because I think

that should be.

[The following was received for the record:]

Recent inquiries indicate that participation in the Security Immersion Program

conducted at the three Nuclear Defense National Laboratories on June 21-22 was

high. The Sandia National Laboratories reports that 93% of their personnel attended and the Los Alamos National Laboratory reports a 90% attendance. Those

which did not attend were on previously scheduled vacations, official travel that

could not be rescheduled, ill or excused for legitimate personal reasons, or in jobs

which must be staffed at all times. The Lawrence Livermore National Laboratory

did not keep centralized attendance records for the two days of training, but there

is no reason to believe their training was not just as well attended.

On June 24, 1999, Dr. Reis, Assistant Secretary for Defense Programs, submitted

an information memorandum to the Secretary summarizing the two-day security

stand-down training. A copy of that memorandum follows.

DEPARTMENT OF ENERGY

WASHINGTON, DC 20585

June 24, 1999

MEMORANDUM FOR THE SECRETARY

THROUGH: Ernest J. Moniz, Under Secretary

FROM: Victor H. Reis, Assistant Secretary for Defense Programs

SUBJECT: INFO MEMO: Security Immersion Program

In response to your June 16 directive, the three Nuclear Defense National Laboratories—Los Alamos, Lawrence Livermore, and Sandia—underwent a two-day Security Immersion Program standdown on June 21-22. During the standdown, all normal operations ceased and employees were required to participate in mandatory intensive reviews of personal responsibility for security, counterintelligence, and

cyber-security.

Following are the missions that were accomplished by the Security Immersion

Program at the laboratories:

Personal responsibilities were reviewed with all employees to enforce and respect effective counterintelligence, security, and cyber-security procedures.

Historical problems related to the laboratories’ culture of resistance to effective security and counterintelligence were reviewed with all employees.

The status of implementation of previous counterintelligence, security, and cyber-security improvements underway by prior directives was reviewed with all employees.

Cyber-security actions being taken at the laboratories, especially those associated

with personal responsibility for personal computer use and e-mail, were explained to all employees.

The Zero Tolerance Security Policy was fully discussed to assure a complete understanding by all employees.

Senior management at all laboratories was actively involved in planning for the

Security Immersion Program at their respective sites and participated fully in the

program. With very few Director-approved exceptions, all employees and contractors, either in person or through video links, attended the full two-day sessions with

their supervisors and managers present and participating. Those employees absent

from work, off-shift, or not able to attend will be required to attend make-up sessions.

In general, contents of the program sessions included:

Laboratory commitments to security

Document control

Export control

Counterintelligence

Cost of espionage

Foreign interactions, visits, assignments, travel

Cyber-security

64

Information management

The Security Immersion Program at all three laboratories was determined to be

a success. All sessions were well attended, with active question and answer periods

that went beyond scheduled times. Interest focused on understanding, guidance, and

additional information rather than rejection. Feedback from employees and managers has been constructive and positive.

If you have any questions or require further information, I would be pleased to

meet with you at your convenience.

Attachments

SUMMARY OF SECURITY STANDDOWN ACTIVITIES

LOS ALAMOS NATIONAL LABORATORY—JUNE 21-22, 1999

Los Alamos National Laboratory completed its two-day security standdown at the

close of business on Tuesday, June 22, 1999. All Laboratory operations, except those

necessary to maintain the safety, security, and compliance posture of the site, were

suspended so that University of California and Department of Energy (LAAO) employees and subcontractors could devote all of their attention to an intensive review

of personal responsibility for security, counterintelligence, and cybersecurity.

The two-day event featured an opening presentation by Director John Browne

with a question and answer session, presentations by guest and internal speakers

on a variety of security topics, and meetings of line organizations led by line managers. The presentations were delivered in two large auditoriums (600- and 900-seat

capacity) and transmitted live on closed-circuit television to a large number of offices and conference rooms around the Los Alamos site. In addition, the presentations were made available through an internal web server.

The principal speakers and topics were as follows:

Opening Remarks, John Browne, Director, Los Alamos National Laboratory

Questions and Answers, William Frazer, Interim Chairman, University of California, President’s Council

Nuclear Weapons, Stephen Younger, Associate Laboratory Director for Nuclear

Weapons

Cybersecurity, Scott Larson, FBI—National Infrastructure Protection Center

Espionage/Information Security, H.T. Hawkins, Director of Nonproliferation and

International Security

Strategic Counterintelligence, Rusty Capps, Center for Counterintelligence and Security Studies (former FBI)

Employee Responsibility/Accountability for Security, John Hopson, Senior Technical

Staff Member

The line organization meetings were held at the ‘‘group’’ (10-100 people) level on

both Monday and Tuesday for a total of 21⁄2 hours. The purpose of these meetings

was to obtain feedback on the presentations, develop individual group plans on addressing the five points in the Secretary of Energy’s Security Immersion Program,

and to engage employees in addressing any other security issues that might need

attention. A telephone ‘‘help’’ line and e-mail address were manned by Laboratory

security resource experts during the two-day standdown to assist organizations in

developing their individual plans. A total of 68 inquiries was received and responded

to by the expert assistance team during the standdown.

At the end of the second day of the standdown, group leaders met with their Division Directors (next line management level) to begin rolling up their group-level

plans into Division-level plans. Director Browne has scheduled a meeting with all

Division Director-level management for June 24 to roll up Division-level plans to ensure that the points in the Secretary’s Security Immersion Program have been addressed.

All of the speaker’s presentations were videotaped. Because some employees and

contractors could not attend all of the sessions, makeup sessions for viewing the videotapes are being scheduled. Attendance was taken during the standdown and will

also be recorded for the makeup sessions. At this time, we estimate that approximately 80% of the more than 10,000 Laboratory employees and subcontractors participated in standdown activities. We are collecting attendance information from

Laboratory organizations to obtain a better estimate of actual participation. Makeup

sessions will be conducted until all employees and contractors have viewed these

sessions.

Questions and feedback from employees both during and subsequent to the presentations and meetings has been constructive and positive.

65

June 22, 1999

Vic—

We thought you would be interested in LLNL’s activities in support of the Secretary’s two-day Security Immersion Program. I WILL IMPROVE ON THIS TOMORROW, BUT I AM SENDING A DRAFT VERSION TONIGHT AS I DON’T

KNOW WHEN YOU MIGHT NEED THIS. I have also faxed you some supplemental

material.

Content: We created and tailored a full day of video presentations for all employees to view, which clarified security concerns, instructed in LLNL security policies

and practices, and educated as to outside perceptions of security problems at the

weapons labs.

We followed that with a half-day designed for employees to read and discuss specific security-related materials relevant to their workplace and activities.

Lastly, we concluded with a half-day of discussion in the workplace between employees and supervisors to apply what they’ve learned to their specific workplace

and activities.

We are now rolling up the output of these discussions to a Laboratory-wide compilation of issues, resolutions and lessons learned.

Process: Two special meetings were held on Thursday and Friday of last week,

with all senior managers to explain and design the program.

With very few Director-approved exceptions, all work was stopped at the Laboratory. All employees were required to participate in the full two-days at their normal

workplace with their supervisors and managers present and participating.

Phone conversations between the Deputy Director for Operations and each senior

manager (26) or principal assistant were held Tuesday morning to assess progress

and ensure successful implementation.

Videos were rebroadcast continuously during the immersion program for make-up

and off-shift viewers. Video tapes will be provided to employees who were unable

to view them during the immersion program

Preliminary results: Preliminary feedback has been positive. Rusty Capps with his

espionage talk captivated viewers and set the stage for stimulating participation in

the remaining day and a half.

Phone calls to our hot-line indicated high employee interest—mostly seeking answers to questions or additional guidance to material or information.

I hope this is of interest and assistance to you. As our rollup is completed, we

will provide additional results and conclusions. This will take a few days. If you

need any additional information or help, please let me know.

BOB

LLNL SECURITY IMMERSION PROGRAM

Monday, June 21, 1999

8:30 am Director Tarter address to all Laboratory employees

Bruce discussed the importance of, and our commitment to security. He explained

the reasons for and the details of the Secretary’s Security Immersion Program. He

provided a hot-line number for employees to call if they had input or questions.

Bruce then introduced the next speaker.

(This was conducted live in the Laboratory auditorium with ∼200 people present.

It was televised live to all Laboratory employees. With a few director-approved exceptions, all work was stopped and all employees watched the broadcast from their

workplaces.)

9:00 am to 12:00 pm The High Cost of Espionage

Presentation by Rusty Capps, former FBI agent, to all Laboratory employees.

(This hour presentation was conducted live in the auditorium to ∼200 employees

and broadcast live to all employees over Lab-wide television. With a few Directorapproved exceptions, all employees viewed the presentation from their workplaces.)

1:00 pm Current LLNL Practices, Foreign Visits and Assignments and Foreign Travel

Presentation by Bill Dunlop, Program Leader for Proliferation Prevention and

Arms Control Program at LLNL to all Laboratory employees.

(This is a 30-minute video recorded specifically for this immersion program. It was

broadcast on Lab-wide television. With a few Director-approved exceptions, all employees viewed the video from their workplaces.)

66

1:30 pm Export Control at LLNL

Presentation by Bill Bollinger, LLNL Classification and Export Control Advisor,

to all laboratory employees.

(This is a 30-minute video recorded specifically for this immersion program. It was

broadcast on Lab-wide television. With a few Director-approved exceptions, all employees viewed the video from their workplaces.)

2:15 pm Cyber Security at LLNL

Presentation by Joe Brandt, Principal Deputy Associate Director for Compensation Directorate and Information Security Program Leader, Office of the Chief Information Officer.

(This was a 45-minute video presentation recorded specifically for this immersion

program and broadcast via Lab-wide television to all employees. With a few Director-approved exceptions, all employees viewed this presentation from their workplaces.)

3:15 pm Laboratory Directors’ Testimony

(This one and one-half hour video is a compilation of the recent testimony on security by the three nuclear weapons Laboratory Directors. This tape was created specifically for this immersion program and televised to all employees via lab-wide television. With a few Director-approved exceptions, all employees viewed the video

from their workplaces.)

4:45 pm Security-related TV Clips

(This one hour video was a compendium of various security-related video clips

from various recent television news programs. It was created specifically for this immersion program and broadcast on Lab-wide television.)

Tuesday, June 22, 1999

8:00 am to 12:00 n—All employees gathered in their work areas and read and discussed selected materials from the following:

1) US. National Security and Military/Commercial Concerns with the Peoples Republic of China

2) Report of President’s Foreign Intelligence Advisory Board (PFIAB)

3) Director of Central Intelligence George J. Tenet’s April 21, 1999, statement on

the implications of China’s acquisition of U.S. nuclear weapons information

4) Report of the Secretary of Energy Advisory Board Working Group on Foreign Visits and Assignments (June 8, 1999)

5) and other related materials, as appropriate

1:00 pm to 5:00 pm—Employees gathered in their workplaces and discussed with

supervisors the application of the information viewed and read, to their group activities and their workplaces. This information will then be rolled up and aggregated

at increasing levels until a full Laboratory roll-up is accomplished by the Deputy

Director for Operations. This will then be used for further Lab-wide communication

and actions concerning security. Employees and supervisors will also immediately

implement local security improvement measures identified in the two-day program.

The classes listed below were optional for those departments who believe these

topics are relevant to work-specific projects being performed by employees in their

organization:

UNCLASSIFIED Presentations for Security Immersion Program

Time Topic Speaker

08:30-09:15 a.m .................................... Document Control .................................. Maggie Lucero

09:30-10:15 a.m .................................... Export Control ........................................ Chad Twitchell

10:30-11:15 a.m .................................... Counterintelligence ................................ John Kirby

12:30-01:15 p.m .................................... Foreign interactions ............................... Melanie Florez

01:30-02:15 p.m .................................... Cyber Security ........................................ Sharon Walsh

02:30-03:15 p.m .................................... Information Management ....................... Joe Morreale

Attendance at these meetings was high both in the Schiff Auditorium and in the

video linked areas. Question and answer periods were active with questions going

beyond the scheduled time. Videotapes are being made available to all Sandia organizations for make-up sessions and for those who were double scheduled and wanted

to review the session that they missed.

67

General Observations

The staff at Sandia took the request to focus on security during these two days

with an intensity that was surprising and pleasing even to those of us who knew

that they would do a good job. Questions concerning zero tolerance and polygraphs

were related to understanding rather than rejection of the concept. A great deal of

this success is due to the planning sessions that Paul Robinson and the Laboratory

Vice presidents conducted on June 17 and 18 and the training materials prepared

by Lynn Jones and staff over the weekend. This material gave each organization

a wide range of materials to cascade the initial Monday meetings down to the staff.

SECURITY IMMERSION MEETINGS AT SANDIA NATIONAL LABORATORIES—JUNE 21-22,

1999

MONDAY, JUNE 21, 1999

08:00-09:30—Half of managers attended an address by Paul Robinson, labs Director and a review of core presentation by Vice President Lynn Jones. Both speakers

emphasized the five points in Secretary Richardson’s request and personalized these

points to the Laboratories.

09:30-11:30—Second half of management staff attended the above presentation.

The above were video taped for use in required make-up for employees and

videolinked to our California site.

Vice Presidents met with their center and department groups for the remainder

of Monday morning. The intent of these meetings was to cascade the messages presented by Paul Robinson and Lynn Jones to each employee. The challenges presented to all Sandians are to emphasize security responsibilities and think of ways

to improve security in our operation. A quick estimate of the number of these cascade meetings is 60 center-level meetings plus 1 per department (approximately 600

total meetings). Many of these were multiple session and are continuing on Monday

afternoon.

Source material was provided to every Sandian via the web site (see attached Security Immersion Program Official Use Only page). Sandians were automatically

linked to this page when they logged onto the internal web page on Monday, June

21, 1999.

TUESDAY, JUNE 22, 1999

On June 22, these cascade meetings continued plus special meetings for those

holding SCI clearances were conducted. These meetings progressed far beyond information gathering into discussions of operation in specific organizations and how to

improve on a detailed level. Direct involvement of the Vice Presidents was clearly

a plus for the staff. This involvement ranged from teaching classes to joining classes

to answer questions.

General training sessions were held in our largest auditorium and were video

broadcast to many smaller meeting rooms. These special sessions were conducted

every hour from 8:30 a.m. to 3:30 p.m. Each session was planned for a 30-minute

presentation with a 15-minute Q&A period following.

Mr. DINGELL. Now, the Cox report stated that the labs were penetrated by spies. Is that true? And he stated—it said today by

spies. Is that true?

Mr. RICHARDSON. Mr. Chairman, there are three cases: in the

1970’s, a neutron bomb case; the Tiger Trap case in 1984/1985 and

from 1984 to 1988, we have alleged espionage. Right now, in the

present case involving the suspect from Los Alamos there is no law

enforcement case for espionage.

Mr. DINGELL. Has anyone been punished for what happened at

Los Alamos?

Mr. RICHARDSON. I will, in 2 weeks, be issuing a report on who

has been punished, and that will be based on an inspector general

report, and individuals at Los Alamos and DOE will be punished

or disciplined.

Mr. DINGELL. Will anybody be punished?

Mr. RICHARDSON. Yes.

68

Mr. DINGELL. They will? And this report will be forwarded, I

know, Mr. Secretary, to the committee?

Mr. RICHARDSON. Yes, it will.

Mr. DINGELL. Very good. So that we may be informed of the actions which will be taken.

Under your proposal, who would have—Senator, under your proposal, who would administer the authority to impose civil penalties

on contractors for violation of health and safety rules which the

Congress granted DOE—when it renewed the Price-Anderson Act

in 1987?

Mr. RUDMAN. Congressman Dingell, it would be the Secretary. I

want to make it very clear again that this is a semi, and I emphasize the word semi, autonomous agency. There are two models in

the report. One is a NASA-type model, which is totally autonomous. This is an agency reporting to the Secretary with his final

control and his ability to do anything he wishes in terms of those

issues.

Those issues particularly reside in the Secretary’s office and in

his other departments. He has full authority to impose whatever he

wishes on this independent, semiautonomous group.

Mr. DINGELL. Will this require renegotiation of the contract with

the contractors?

Mr. RUDMAN. We would not think so.

Mr. DINGELL. Mr. Secretary, do you know this?

Mr. RICHARDSON. There are environmental and safety and health

provisions in the contract. I don’t think you need to renegotiate.

Mr. DINGELL. You don’t think you have to renegotiate them so

you have full control over the behavior of the contractor, including

hiring and firing, things of that kind?

Mr. RICHARDSON. Any——

Mr. DINGELL. Would you request your counsel to give us an opinion on that particular matter?

Mr. RICHARDSON. Yes.

[The following was received for the record:]

The Department’s management and operating (M&O) contract is a contract characterized both by its purpose (i.e., the operation, maintenance, or support of Government-owned or controlled research, development, special production or testing facilities) and the special relationship it creates between the Government and the contractor. See Federal Acquisition Regulation (FAR) 17.601 and 17.604, One of the indicia of an M&O contract is the close relationship with the contractor and its personnel in a number of important areas, including safety, security, cost control and

site conditions. FAR 17.604 (b). Through the uniquely structured M&O contract vehicle, the Department retains a large measure of control over the contractor’s internal management activities, generally beyond that found in other government contracts. Through the M&O contract, the Department also possesses a number of remedies in the event of deficient performance.

Notwithstanding the close relationship and control established under the M&O

contract, however, the M&O contract is not considered to be an employment contract or personal services contract with the contractor and its employees. As a result, the Department does not have full control over all aspects of the behavior of

the contractor, including the hiring and firing of contractor employees, and it would

be necessary to renegotiate the M&O contracts should the Department (or Congress)

determine that the Secretary should possess complete control.

Using the LANL contract for illustrative purposes (Contract No. W-7405-ENG-36,

effective October 1, 1997), the following is a general description of some of the contract’s principal control measures and remedies available to improve performance.

The discussion below also touches upon some of the legal issues, risks and liabilities

which should be considered.

69

Personnel

The University of California is charged under the contract with providing the necessary intellectual leadership and management expertise to manage, operate and

staff the Los Alamos National Laboratory. While the contractor has the overall responsibility for hiring the personnel necessary to perform the contract, the contract

addresses a number of specific personnel-related matters. For example, the selection

of ‘‘Key Personnel’’ (the Laboratory Director and Deputy Laboratory Director(s))

must be approved by the DOE Contracting Officer and cannot be removed or reassigned (except for disciplinary reasons) without prior consultation with the Contracting Officer (clause 5.8). However, subject to the Key Personnel clause, the University retains the authority to terminate senior management from University employment (Appendix A, Section III (f)(4)). Additionally, in Clause 6.4, the Laboratory

Director is to be a competent full-time resident supervisory representative of the

contractor ‘‘satisfactory to the Contracting Officer’’ in charge of all work under the

contract, the contractor is made responsible for maintaining satisfactory standards

of employee competency, conduct, and integrity; for taking disciplinary action with

respect to its employees as may be necessary, and for establishing standards and

procedures, to be approved by the Contracting Officer, as are necessary to effectively

implement DOE’s regulations relating to contractor employee standards of conduct,

acceptance of gratuities, and outside employment.

The contract also contains Appendix A, ‘‘Personnel Costs and Related Expenses,

which is an advance understanding between the University and the Department on

allowable personnel costs and related terms and expenses. This Appendix addresses,

among other things, compensation standards, vacation time, training, travel and so

forth. Appendix A also establishes that the evaluation of the contractor’s performance in science and technology and operation and administration is the basis for determining the contractor’s senior management’s salary increases ‘‘authorization multiplier.’’ (Personnel Appendix A, Section III (f)(8)).

Thus, while in general the Department cannot contractually direct the University’s hiring and firing decisions, DOE has a wide range of controls and review functions in the M&O contract to assure that highly qualified individuals are employed

by the University of California in the performance of the contract and that they perform well in the operation of the Laboratory. As a result, DOE may exert substantial influence over the selection, performance appraisal and retention of contractor

employees, particularly those in senior management positions.

The oversight controls and mechanisms discussed provide the Department with

the ability to direct, evaluate and monitor contract performance, but at the same

time to avoid creating what might be viewed as an ‘‘agency’’ or ‘‘employer-employee’’

relationship which could arise if the Department had full control over the behavior

of the contractor, including all hiring and firing. If DOE had direct control over employees of the University of California, such control might raise legal questions by

giving the appearance that DOE was hiring a personal services contractor rather

than an independent management and operating contractor. For example, the Federal Acquisition Regulation provides that obtaining personal services by contract,

rather than direct hire, circumvents civil service laws unless Congress has specifically authorized acquisition of the services by contract (FAR 37.104). The Federal

Acquisition Regulation describes the characteristics of an employee-employer relationship as including situations where contractor personnel are subject to the relatively continuous supervision and control of a Government officer or employee.

Thus, in view of the fact that the University of California is intended to have contractual responsibility for managing and operating the Los Alamos National Laboratory and is not intended to be essentially a personal services contractor, it would

not be appropriate for DOE to exercise relatively continuous supervision and control

over individual contractor employees.

Other legal issues could also arise in the event full control over laboratory employees was obtained such that an employer-employee relationship is created and

the employees were considered to be agents of the Government. These issues include

whether the Government could be held directly liable for the tortious conduct of the

employees, whether the contractor would enjoy the Government’s sovereign immunity from state taxation, and whether subcontractors could assert claims directly

against the Government.

Security

Through a number of contract clauses, DOE has the authority to require the contractor to fulfill extensive responsibilities in the security area. For example, the contractor is required to establish appropriate controls for nuclear materials pursuant

to DOE directives (Clause 10.1), safeguard classified information and special nuclear

material and protect against sabotage and espionage, and conform to all DOE secuVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00072 Fmt 6633 Sfmt 6621 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
70

rity regulations and requirements (Clause 10.3), ensure that all information and

equipment generated under the contract in a potentially classified subject area is

reviewed by an appropriate classifier in accordance with classification regulations

or directives (Clause 10.4), protect certain unclassified controlled information in accordance with DOE regulations and directives (Clause 10.5), and protect DOE programs, technology, unclassified sensitive information, classified matters, etc. from

foreign intelligence threats (Clause 10.6). Among the powers and authorities DOE

has in the security area is the right to determine whether an authorization of access

to classified information or special nuclear material shall be denied to or revoked

for an individual. Possible grounds for denial or revocation of an access authorization include failure to protect classified matter or disclosure of classified information

to a person unauthorized to receive such information (10 C.F.R. Ch. 111, section

710.8(g)(1999)).

Environment, Safety and Health

The general environment, safety and health clause in the contract provides broad

general requirements for the contractor and rights for DOE to be closely involved

in assuring that the contractor properly performs its responsibilities in the areas of

environmental, safety and health protection (Clause 6.7). For example, the contractor is required to manage and perform work in accordance with a documented

Safety Management System, and the contractor must submit to the Contracting Officer documentation of its system for review and approval. The contractor must also

comply with all applicable laws, regulations, and DOE directives; and if, at any

time, the contractor’s action or failure to act cause substantial harm or an imminent

danger to the environment, or health and safety of employees or the public, the Contracting Officer may issue an order stopping work in whole or in part.

Performance Appraisal

As a performance-based management contract, the contract provides an extensive

system for appraisal and evaluation of the contractor’s performance in two overarching areas: (a) Science and Technology, and (b) Operations and Administrative

performance (Clause 2.6; Appendix F). Detailed performance objectives, criteria and

measures are provided in areas which include, among others, safeguards and security, and environment, safety and health, and financial management. The amount

of the program performance fee awarded to the contractor depends upon the ratings

the contractor is given in the performance areas described (Clause 5.3).

Termination

Under the Termination clause in the contract (Clause 13.2), the Contracting Officer may terminate the contract for certain specified reasons (e.g., certain illegal activities), or ‘‘whenever, for any reason, the Contracting Officer shall determine any

such termination is for the best interest of the Government.’’ The right to terminate

a contract for convenience ‘‘for the best interest of the Government’’ has been given

great deference and generally will not be disturbed, absent a finding of bad faith

or abuse of discretion by the Government. Krygoski Construction Company, Inc. v.

United States, 94 F.3rd 1537 (Fed. Cir. 1996).

Conclusion

It is clear that DOE has broad authority to set standards and impose requirements over many areas of contractor performance in the operation of the Los Alamos National Laboratory. And, although the M&O contract is not an employment

or personal services contract providing DOE with full control over contractor behavior, including the ability to directly fire and hire all individual contractor employees,

DOE does have numerous mechanisms available, such as the right to approve a satisfactory laboratory director, the right to evaluate contractor performance and thus

affect the contractor’s fee, and ultimately the right to terminate the contract, so that

it can effectively assure that the work is being performed in accordance with the

contract’s performance standards.

Mr. DINGELL. I notice my time has expired, but one quick question, Senator. You talked about the NRO. That is an agency that

built a building without ever telling the Congress?

Mr. RUDMAN. As a matter of fact, they built the building and told

the Congress, but everybody ignored it.

Mr. DINGELL. Is that what happened?

Mr. RUDMAN. That is exactly what happened. That is not what

the press said, but that is what happened.

71

But let me say that they have a lovely headquarters out there,

which I was here when we appropriated the money for that. I was

on the Intelligence Committee, and it is rather palatial. I think

some people up here are a bit jealous of it, but the fact is that the

work that they do is extraordinary, and I commend it to this committee to look at.

Mr. DINGELL. And they spent money, I gather, very genteelly.

Mr. RUDMAN. They spend a lot of money, but we tend to appropriate it for them up here.

Mr. DINGELL. Thank you, Mr. Chairman.

Mr. UPTON. The building is like the B-2 bomber, you weren’t supposed to see it.

Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman.

Mr. Secretary, you probably thought you were getting a break

coming to the DOE versus the U.N. It seems like the firing is a

little more intense on this end.

Senator, I am a former Army officer, and I think there is another

agency that holds people accountable for what the unit does or fails

to do, and that is the military. That is why I think we see a proliferation of retired generals coming into the Federal bureaucracy

to help us rein in and keep people accountable, and I, as a veteran

and as a Reservist, I applaud that portion of our Federal Government that still holds a line on some accountability.

I want to kind of follow up on our last line of conversation to try

to understand, Senator, the line you drew between the facilities

and functions that would be transferred to the new semiautonomous, independent organizations and those that would remain in DOE.

Your report recommends transferring three labs, Lawrence Livermore, Los Alamos and DN; four facilities, Kansas City, Pantex, Y12 and the Nevada test site.

These three labs each conduct a significant amount of nonweapons work, so that the basic question is: What do we do with

those parts of those labs that are not doing weapons-type research?

Do we keep them there? Do we move them? Do we move the personnel? What would you do given that problem?

Mr. RUDMAN. Congressman, your question is addressed in some

detail in our written report.

Let me point out to you that the reason that we believe that even

though we gave you two alternatives, that the alternative keeping

it under the Secretary of Energy’s control, even though it is a semiautonomous agency, is for that very reason. You will note on page

50 of our report, we show the Assistant Secretary for Science and

Energy who has a direct line going into the Deputy Director of Defense programs. You would still have the authority going up to the

Deputy Director and all the way up, if you will, to the Under Secretary, but we believe that all of that science should be kept at the

Department of Energy.

It should be done at those laboratories, and the Secretary has

enormous power under their enabling statute to do anything he

wishes to effectuate that. What we don’t want to happen is to have

all of these other folks who have some lines of authority over this

weapons agency. That is where we think the trouble starts.

72

It also starts in the field operations, which we strongly say ought

to be stripped away and then put back in place to the extent that

they are needed.

Mr. SHIMKUS. Am I correct in stating that at Savannah there is

some weapons research done there also; do you know?

Mr. RUDMAN. Yes. That is production of tritium, right; I knew

that, right.

Mr. SHIMKUS. So I guess the same—I guess the same follow-up

question continues with what do we do—Savannah is not really

specifically mentioned in the report, as far as I have reviewed. How

do we respond with Savannah?

Mr. RUDMAN. The Secretary can correct me on this because he

has more knowledge of it, but my understanding is that that is in

the process of a very careful long-term shutdown, if I am not mistaken.

Mr. RICHARDSON. Savannah deals with tritium. Savannah has

many components. We are not shutting Savannah down.

Mr. RUDMAN. Part of it is being shut down, correct?

Mr. RICHARDSON. The tritium extraction facility is going to be

built there.

Now, I guess——

Mr. SHIMKUS. You see, the problem is when we are trying to

merge and have a separate entity, and I kind of tend to agree with

the Senator on the report, the question is these facilities that have

other activities that are civilian-related, how do you break them

apart? I don’t know if we have thought that through.

Mr. RUDMAN. We don’t break them apart. We say there are certain of these facilities which should not be a part of this agency for

nuclear stewardship. We say that the problem now is that you have

got too much in too many places.

Look, I showed this organization to the CEO of I guess it is the

ninth largest U.S. Corporation. He got hysterical looking at it. He

said it is impossible to run anything like this. He says what you

would do is you would break it into smaller units. That was after

we had done our report.

I mean, I agree with some of these comments. You bring in a

ruthless CEO, and let me tell you, it would be yes, sir, and no, sir,

march off to the right. The trouble in the body politic is we don’t

operate that way, although I think the Secretary may find in the

coming 18 months of his term that he may have to get very tough

with people, because my sense is there are a lot of folks out there

who are still resisting in spite of every good effort.

Mr. SHIMKUS. I think the Secretary can take support from the

fact that there are a lot of Members of Congress who would support

activities that the Secretary does in moving aggressively.

I yield back my time.

Mr. UPTON. Thank you.

The gentleman from Massachusetts, Mr. Markey.

Mr. MARKEY. Thank you, Mr. Chairman, very much.

Mr. Secretary, as a long-time veteran of this committee, you remember, I am sure, back in the 1980’s, the battle days when DOE

production was everything, and there was a severe lack of environmental compliance, health compliance, safety compliance, dozens of

hearings held in this committee trying to get the Department of

73

Energy to measure up on issues that were clearly of great importance to American families, American workers and the environment in our country.

At that time, the defense nuclear complex, this thing that coexists with DOE, the same operators who created the massive contamination of these facilities, was in charge of the environment, of

the safety, of the health function.

Now, in 1989, after countless investigations and GAO reports,

the environment, health and safety function was given to the Office

of Environmental Management. Will you oppose any legislative effort, such as the Kyl amendment in the Senate, that effectively

puts the environment, safety and health function back in the defense nuclear complex, whether in the form of a semiautonomous

entity or otherwise?

Mr. RICHARDSON. Yes. Although Senator Kyl has changed his

amendment several times, I can’t keep track of it, but, yes, I think

that environment, health, safety oversight should be in a separate

entity that reports directly to me, and I think the nuclear weapons

component should abide with safety and health provisions and

should not be immune from being scrutinized in these areas.

Mr. MARKEY. Senator Rudman, no one holds you in higher regard than I do, and you have done an excellent job in diagnosing

the problem here. We just want to make sure that we make the

referral to the right doctor for each one of the problems. The

health, the safety, and environmental issues have always been very

troublesome in terms of the handling by the defense establishment.

Would you support the Kyl amendment?

Mr. RUDMAN. Oh, absolutely not. I told him that. In fact, they

have withdrawn it. They have essentially adopted our formulation.

And we were very careful because, you know, we heard a lot of testimony from a lot of people. We looked at all of the reports from

this committee. We had—how many reports from this committee

did we look at? Probably 30, 35 reports over the last 20 years. We

got them all from both minority and majority staff.

We do not believe that any—that the environment, the health

issues should be stripped out from where they are and put down

within this unit. We believe they ought to stay where they ought

to stay, with the Secretary. So we didn’t do that, and I would not

support that kind of a change, because I know what we all went

through back during the 1980’s.

Mr. MARKEY. Now, do you think that it is impossible to construct

an entity such as the Secretary is recommending, that is within the

existing structure of DOE, to solve these problems, that would satisfy the concerns which your report has identified? Do you think he

just can’t accomplish this under any circumstances, or are you just

kind of trying to propose the perfect, but the good could still be accomplished under the Secretary’s formulation?

Mr. RUDMAN. It would certainly be an improvement, but let me

just make an observation, Congressman Markey.

The only essential difference, if you take the boxes of the staff

offices and say to the Secretary, what don’t you think ought to be

there, and say, okay, we will move that around, we won’t have an

IG, we won’t have a general counsel, we will move that back up,

we will have a representative there, you get that all done, the only

74

lasting—the only difference that is left between our proposal and

his proposal is whether or not you refer to this in the statute as

the Agency for Nuclear Stewardship or the Nuclear Stewardship

Administration, directly responsible to the Secretary. That is the

only difference. There is no difference.

I have been trying to figure out now for going on 7 hours—and

I am usually not that slow, but I am pretty slow today.

Mr. MARKEY. You went to an excellent law school, Senator. I just

want to compliment you.

Mr. RUDMAN. That is right.

I can’t figure out for the life of me if everybody is willing to say

to the Secretary, we will put the boxes the way you want them,

this persons is directly responsible to you and all of that, he has

some sort of a block against the word ‘‘agency’’ or ‘‘administration,’’

and maybe you can help get him over that.

Mr. MARKEY. Mr. Secretary, is there a bridgeable gulf? Is there

another word in the thesaurus that we could look to that could

solve the problem?

The Senator says that there really is not a substantive difference

of opinion here; that it is now on the nomenclature that is dividing

you.

Mr. RICHARDSON. I think that we are—hopefully we will merge

these differences.

Congressman, I also want to preserve the rights in the House of

my old committee, your oversight responsibilities, that you are now

conducting. So I want to put that on the table.

No. 2, I think it is important that we do this right because we

are going to codify it, and we don’t want to create a monster that

doesn’t have proper oversight by anybody else, as imperfect as it

may be.

I will repeat again, I don’t think Senator Rudman and I are very

far apart. I worry about some of the drafting that is going on in

the other body that has all the right rhetoric, but if you look at the

boxes that Senator Rudman and I can agree on, that there are

some that want to, for instance, deal with safety and health separately and not make them a part of the charter of this new entity.

I don’t think it is right. I think everybody should be accountable

for safety and health and security, and I think my plan achieves

this. I think we are coming closer as the hours go by.

Mr. MARKEY. Senator Rudman and I are both alumni of Boston

College Law School, but you and I are both alumni of this committee, and I am very sensitive to your concern about our committee’s jurisdiction.

At the bottom of all of this is really a problem of contractors and

how we make them accountable, and if we move the people who

used to be responsible for $800 toilet seats and now put them in

charge of this, and we take the people who used to be in charge

of our secrets at the labs and move them over here to the toilet

seat area, that doesn’t really do anything.

Moving around the boxes isn’t going to solve this. Accountability

of contractors, no matter how we design it at the end of the day,

is really going to determine whether this is a success or not. And

I think that our committee’s record in identifying and highlighting

these issues over the years is unsurpassed in Congress.

75

As a matter of fact, I think you largely have had to rely upon

the reports of this committee, and I think in the same way that

while the Banking Committee might have had their scandals with

the S&L industry, we never had the counterpart in the securities

industry. The same thing can be said here, and I would just hope

that there would be some respectful attention paid to the legitimate concerns raised by the Secretary.

Mr. RUDMAN. I just want to respond, if I may, Mr. Chairman, in

30 seconds.

Mr. UPTON. Go ahead.

Mr. RUDMAN. I think that it is essential that this be done carefully, methodically. I don’t know what the Senate will do. It may

pass something in the next several days. I think this ought to be

looked at very carefully, but I just want you to understand where

I am coming from, Congressman Markey. I said it before you got

here. I am deeply concerned about what happens after Secretary

Richardson is no longer Secretary of Energy, and his top people are

now gone, and somebody comes in with different priorities. That is

why we think the semiautonomous agency or administration, structured with the right people, stands the greatest chance of maintaining accountability.

This is all about accountability. That is what it is really about,

and I think you have said that.

Mr. MARKEY. Thank you, Senator, very much.

Mr. UPTON. The gentleman from Texas, Mr. Barton.

Mr. BARTON. Thank you, Chairman Upton.

I want to first welcome Congressman Markey’s better half, Dr.

Susan Markey, in the hearing room. She was smiling broadly as

you spoke, nodding her head aggressively on occasion. So we are

glad to have her here.

I have just three questions, and I know you have got to catch a

plane, and I know Secretary Richardson has a busy schedule.

My first question is to you, Mr. Secretary. When I gave my opening statement, I said that we ought to terminate the contract with

the University of California immediately, if possible. Do you see

any cultural conflicts in having an academic institution, which

tends to seek openness and dialog, in charge of a weapons complex

where a paramount concern is just the opposite, which is security

and classified information?

Mr. RICHARDSON. Congressman, I don’t see a conflict. I think

whoever your contractor might be, if you have strong stipulations

on security and counterintelligence, as there should be—I think

that the labs have benefited in their science, in their research, from

being associated with world-class institutions like the university. I

am talking about the science side. We have labs associated with

MIT, with Princeton, with the University of Chicago. That is good

for science. That is good for us.

We have some relationships with your universities that are good

for the Department of Energy.

Mr. BARTON. Why hasn’t the University of California then, if it

is good for the weapons complex, why haven’t they aggressively

acted on the recommendations that you have made and other Secretaries before you have made? Why does it take a congressional

oversight hearing and a national scandal to get their attention?

76

I could point out that when Chairman Dingell was chairman of

the full committee, his oversight subcommittee uncovered a number of scandals in the contract that the University of California

was then administering. So how many scandals and how long does

it take, Mr. Secretary?

Mr. RICHARDSON. Well, there shouldn’t be any more. There

shouldn’t be any more.

Mr. BARTON. Well, I think we agree on that.

Mr. RICHARDSON. There should be statutory language to prevent

ingrained problems. We are moving in that direction, but I am not

going to blame the University of California for all the security

lapses at the lab.

Mr. BARTON. Well, they are the contractor.

Mr. RICHARDSON. Well, it is——

Mr. BARTON. You either blame the contractor, or you blame people above them in your chain of command. There has to be accountability.

Mr. RICHARDSON. I am blaming the people above them. I am

blaming the Department of Energy. I am blaming past White

Houses. We could have a collective responsibility. You can’t just

blame the contractor. We change the culture of the lab employees.

Mr. BARTON. Well, I think you can hold them accountable.

Mr. RICHARDSON. I am blaming the Congress, too. You know, we

shouldn’t have—my staff is yelling no.

Mr. BARTON. No, that is okay. I won’t disassociate myself with

that.

Mr. RICHARDSON. We briefed a lot of committees about these

problems, and there were times when my counterintelligence chief

didn’t get the funding that he requested from the Congress.

Mr. BARTON. I have got two more questions. I know that you can

filibuster with the best in the other body when you want to.

Senator Rudman’s report has a part of it in the section entitled

Trouble Ahead, where it talks about that foreign nationals were

able to have remote dial-up access to unclassified networks without

any monitoring by the lab. Is that true, yes or no?

Mr. RICHARDSON. There will be monitoring soon.

Mr. BARTON. No, it is not true. So Senator Rudman’s report is

wrong? Well, we will come back to that.

Mr. RICHARDSON. No, Senator Rudman has got a very good,

strong report.

Mr. BARTON. Okay. It goes on to say that the labs have begun

to monitor outgoing e-mails for classified materials, that you personally ordered that in April, but that one lab took the minimal action necessary. It began monitoring e-mails but did not monitor the

files attached to the e-mails. What is your reaction to that?

Does that indicate to you that they are taking seriously these

concerns?

Mr. RICHARDSON. Well, no, no, no. Every lab has been strong,

some stronger than others. There are some that should have been

stronger. There were some technology problems related to

cybersecurity. This is why I ordered this computer stand-down.

Mr. BARTON. My high school junior daughter knows that if you

are supposed to monitor an e-mail, you also have to monitor the

file attached to it, Mr. Secretary. That doesn’t take a rocket sciVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00079 Fmt 6633 Sfmt 6602 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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entist at a weapons laboratory. I mean, that is kind of honoring the

spirit of your direct request.

Mr. RICHARDSON. We are doing that.

Mr. BARTON. But not doing what is totally required.

Mr. RICHARDSON. What we are doing, we are monitoring e-mail.

There are such explosive changes in technology. This is why in

cybersecurity you need constant testing. That is what is happening

today in the stand-down.

Mr. BARTON. So can I depend upon you today directly to go back

and send out another directive that in addition to monitoring the

e-mails, they also monitor the files attached to the e-mails?

Mr. RICHARDSON. They are working on that.

Mr. BARTON. Do I need to give you a definition of what a file attachment is? I mean, how many levels down do we have to go before you begin to take this seriously?

Mr. RICHARDSON. You know, Congressman, I am—this is what I

mean. I marvel at the sources of information that you have that

I apparently don’t have.

Mr. BARTON. Our source is sitting right next to you.

Mr. RICHARDSON. Well, you have—in the last second, 2 minutes,

you have come up with two claims that I am unaware of.

Mr. BARTON. I am not even the Secretary of Energy. I am just

a lowly midranking Congressman trying to just bask in the reflected glory of your stewardship at the Department of Energy.

I have got one final question for Senator Rudman.

When Secretary Richardson ordered the computer shutdowns at

the three laboratories back in April, the Department stated that

the computers would not be allowed back on until each lab undertook certain security upgrades to prevent the downloading there,

we have that word again, or transfer of classified files and to scan

its unclassified systems and outgoing e-mails for classified data.

Mr. Secretary—I mean, former Senator, what did your panel find

with respect to these initiatives? Were the computers allowed back

on despite the failure to achieve these upgrades? And if so, why so?

Mr. RUDMAN. We started drafting this report in early May. We

had a chance to observe much of what went on. We believe the

stand-down was a good idea. We think something was achieved by

it. We do not have the level of confidence of the Secretary or some

of his people that we are quite where we want to be. As a matter

of fact, in fairness, it is not just DOE. It is the entire government.

Some of the firewalls that people think that have existed at DOE

and other places don’t exist.

The PFIAB does not talk about its work publicly, but let me simply say parenthetically we do a great deal of work and have been

doing it, obviously, in the area of the Intelligence Community and

cybersecurity. So I think we probably know a little bit more about

that than most folks out there.

I have no high level of confidence, but I am not even sure the

Secretary has a high level of confidence. I think they have done

what current technology will give them, but there is a lot more to

be done.

Mr. BARTON. Is there a protocol, now that your report is public,

that prevents your staff that helped in the advisory board to comVerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00080 Fmt 6633 Sfmt 6602 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
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pile this report from talking to the Secretary of Energy’s designee

on some of these issues? Is that allowed or not allowed?

Mr. RUDMAN. It is allowed. The PFIAB is an independent group,

but nonetheless part of the Executive Office of the President, bipartisan. It can work with any agency that has a component of intelligence or counterintelligence. So certainly we don’t have a problem

talking about it.

Mr. BARTON. The Secretary seems perplexed that sources of our

information are not available to he and his staff, so I would encourage you to provide them what you have provided the committee.

Mr. RUDMAN. Well, we are not the original source, but we will

be happy to direct him to the best source in the government for

that information.

Mr. BARTON. Mr. Chairman, in closing, if we take legislative action on this issue, and I hope we do, it will come before my subcommittee, and I pledge to the Secretary and to the Senator that

we will work together to try to come up with something that everyone can support.

I want to tell my good friend, the Secretary, that I want to be

more proactive on this and think outside the box a lot more than

I gather that you do based on your testimony today, but I will work

with you on it.

Thank you, Mr. Chairman.

Mr. UPTON. Thank you, Mr. Barton.

Again, to my two friends, personal and certainly professional, we

appreciate your fine work and your willingness to spend a number

of hours with us this afternoon. We look forward to working with

you in the days ahead. Thanks very much.

[Whereupon, at 4 p.m., the committee was adjourned.]

[Additional material submitted for the record follows:]

RESPONSES FOR THE RECORD OF HON. BILL RICHARDSON, SECRETARY OF ENERGY

QUESTIONS FROM THE HOUSE COMMERCE COMMITTEE

Question 2. Do you believe that giving the labs more independence will change

their culture or improve security? What do you recommend as the most effective

step you can take to change the laboratory culture, from the lab director down

through the ranks, so well described in the Rudman report concerning the significance of security and safety issues?

Answer 2. Improving security at the labs depends on factors including Headquarters and laboratory management commitment; employee training; the recognition by each employee that security is their individual responsibility; and financial

incentives for the laboratories to strive for the highest level of performance in safeguards and security. Each of these important areas is being addressed.

Defense Programs has initiated measures that will institutionalize each of these

factors. Field managers have been directed by Defense Programs Management to

provide immediate, detailed information to headquarters for management assessment of all security incidents as well as their corrective actions. Defense Programs

is currently tracking to closure all deficiencies so that sites will attain a satisfactory

rating by the end of calendar year 1999. A laboratory stand-down was conducted

in April 1999, and a 9-point INFOSEC Action Plan for all classified computer professionals and administrative users was instituted. A security Immersion Program

for all federal and contractor field and headquarters personnel was conducted in

order to provide training in Information Security policies and procedures and to insure that each individual understands that security is his/her responsibility. Finally,

Defense Programs is working to assure a more consistent process for determining

safeguards and security Performance Objectives, Criteria and Measurements

(POCM’s) for the laboratories in FY 2000. The new performance evaluation criteria

will be based on safeguards and security results from oversight reviews. Award fees

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will be determined in conformity with the laboratories’ performance and their accountability for individual protection programs.

The revised POCMs will provide an incentive for the laboratories to achieve a satisfactory rating in their programs. Defense Programs management accountability

and sustained attention to its safeguards and security programs will promote a cultural change and superior performance in these areas.

QUESTIONS FROM CONGRESSMAN DINGELL

Question 3. Who do you think should enforce environmental, health and safety requirements at the DOE weapons facilities? Under a quasi-independent agency as

proposed, how would these requirements be imposed?

Answer 3. I believe the soundest approach to enforcement of environment, health

and safety requirements in the DOE defense complex is one in which line management bears responsibility for safe and compliant operations, with a robust independent oversight and enforcement regime outside the operational chain of command. This ensures that all the Department’s expertise can help assure safe and

compliant operations. It is well to remember that the DOE defense complex must

conduct its operations using potentially extremely hazardous materials in esoteric

processes, and therefore assuring worker and public health and safety is an objective whose importance cannot be overstated.

Under the recently-adopted National Nuclear Security Administration Act the Administrator is expressly charged by statute with responsibility for environment,

safety and health regarding operation of the Department’s defense complex. Other

provisions of the legislation, in particular its unusual limitations on the Secretary’s

direct management and delegation authorities, likely will compel changes in the

independent environment, safety and health enforcement regime within the Department with respect to the defense complex. Specifically, for example, the legislation

would effectively terminate the emergency ‘‘shutdown’’ authority that since 1988 has

been delegated to the Assistant Secretary for Environment, Safety and Health. We

anticipate seeking clarifying legislation bearing on this question, and in any event

will provide the Department’s implementation plan in the report the statute requires the Secretary to submit by January 1, 2000.

Question 4: The Rudman panel is very taken by the operations of the National

Reconnaissance Office (NRO) which is responsible for the awarding and managing

the contracts that provide the nation’s surveillance satellites. The report indicated

that DOE should be modeled after the NRO. Is this an appropriate agency to compare to the Department of Energy. Why or why not?

Answer 4: The NRO’s charter, which is a Department of Defense Directive rather

than a statute, makes clear that the entire NRO is ‘‘under the direction and supervision of the Secretary of Defense,’’ and is headed by a Director who manages the

NRO ‘‘in accordance with policy guidance and decisions of the Secretary of Defense.’’

DoD Dir. 5105.23, §§ 1&2. The Secretary of Defense, in turn, may ‘‘exercise any of

his powers’’ of supervision of the NRO ‘‘through, or with the aid of such persons in,

or organizations of, the Department of Defense as he may designate.’’ 10 U.S.C.

113(d). Thus the Secretary of Defense retains both direct supervisory authority over

the NRO itself and the ability to delegate that authority to any person or entity

within the entire Department of Defense.

These Secretarial management authorities over the NRO were rejected in the legislation establishing the National Nuclear Security Administration. Instead that legislation enacted ‘‘firewalls’’ immunizing NNSA personnel from any outside supervision, including by the Secretary himself, and limited the Secretary’s ability to delegate his sole supervisory authority—over just the head of the NNSA—only to the

Deputy Secretary. These are major deficiencies of the legislation, which conflicted

in this respect with the models of semi-autonomous agencies cited in the Rudman

Report recommendations.

Question 5: Does the NRO have any non-military scientific missions? Is it expected to go out and find unclassified work in the private sector to keep its contractors busy?

Answer 5: While it is possible that the NRO has non-defense scientific missions,

the Department is not aware of any such missions and there is no evidence of any

such missions in the publicly available documents on the NRO.

The Department of Defense Directive which created the NRO describes the NRO’s

‘‘Organization and Responsibility’’ as follows: ‘‘The Director [of the NRO] will be responsible for the consolidation of all Department of Defense satellite air vehicle

overflight projects for intelligence, geodesy and mapping photography [deleted material] into a single program, defined as the [deleted material] National Reconnaissance Program . . .’’ DoD Dir. 5105.23, § 2 (March 27, 1964). The NRO’s mission

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statement as it appears on the NRO’s official website reads as follows: ‘‘The mission

of the National Reconnaissance Office is to enable U.S. global information superiority, during peace through war [sic]. The NRO is responsible for the unique and

innovative technology, large-scale systems engineering, development and acquisition, and operation of space reconnaissance systems and related intelligence activities needed to support global information superiority.’’

The Department similarly has no direct familiarity with the NRO’s policies and

procedures governing its contractors and their work.

The Department will have to defer to the NRO regarding additional information

on both of these matters.

Question 6. The complicated organization chart in the Rudman report does not describe your recent changes, but is there more to be done/ For example, should the

field offices be eliminated or significantly reduced?

Answer: The ‘‘complicated organization chart’’ to which you refer was drawn to

make the point that the lines of authority and accountability within the Department

were unclear. While the chart was somewhat overdrawn, I agree with the point.

That is why I chartered a Management Review of the roles and responsibilities and

lines of authority and accountability at Headquarters and the field. In recent testimony before the Congress on these issues, I presented the attached chart showing

how we had clarified the Department’s program responsibilities.

We are continuing to implement the changes to the Departmental structure that

I proposed in April as a result of my Management Review. These changes will eliminate multiple reporting channels and improve lines of communication, direction and

accountability.

Regarding the field offices, I continue to believe they play an indispensable role.

As you know, our laboratories and production sites are primarily government

owned, contractor operated, facilities. These sites need a Federal presence nearby

for contractor oversight, liaison with Headquarters and the continuing task of representing the Federal government to the surrounding communities, local political institutions, and regulators. We have reduced the Department’s Federal field staff by

an average of 25% since 1996 and we continue to look for more efficient ways to

do our work in the field.

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Question 7. Would you oppose a requirement that all lab management contracts

which have not been rebid in the last five years should be rebid at their next expiration? Why or why not?

Answer 7. Consistent with the Competition in Contracting Act of 1984 (CICA),

DOE policy establishes competition as the norm for its contracts for the management and operation of its major sites and facilities, including its laboratory management contracts. DOE’s competition policy also preserves the benefits of long term

relationships by permitting contract terms for up to 10 years for these contracts. I

support that policy and believe that there are significant benefits to competition.

During this Administration, DOE has competed numerous site and facility contracts

(both laboratory and non-laboratory), e.g., Brookhaven National Laboratory, Idaho

National Engineering and Environmental Laboratory, Bettis Atomic Power Laboratory, National Renewable Energy Laboratory, Hanford Site, Rocky Flats Environmental Technology Site, Savannah River Plant, the Oak Ridge environmental program, and Mound Site. Notwithstanding this impressive track record of competition,

I would oppose a statutory requirement to compete laboratory management contracts which have not been competed in the last five years. Such a requirement

would be contrary to established law and regulatory policy, could adversely affect

the accomplishment of critical Departmental missions, and would ignore circumstances which would rationally support a noncompetitive action.

Consistent with current law and regulations applicable to other Federal agencies,

DOE’s competition policy provides that contracts for the management and operation

of DOE sites and facilities, including laboratories, will be competed, unless a noncompetitive procurement is justified in accordance with criteria contained in CICA.

CICA recognizes the need for contractual latitude in addressing the needs of the

United States Government by providing seven specific exceptions to the requirement

to compete, e.g. only one responsible source; unusual and compelling urgency; industrial mobilization or essential engineering, development, or research capability provided by educational or nonprofit institutions, or Federally Funded Research and

Development Centers (FFRDCs); and national security. Moreover, the Federal Acquisition Regulation (FAR), under Part 35.017, encourages long-term relationships

between the Government and FFRDCs in order to provide the continuity that will

attract high-quality personnel to the FFRDC, permit special long-term research or

development needs to be met, and accomplish tasks that are integral to the mission

and operation of the sponsoring agency. Flexibility under special circumstances is

an important management tool in order for DOE to meet mission needs and retain

excellent R&D laboratory contractors.

The ability to engage in prudent decision-making provided by CICA and the recognition of the value of special long term relationships found in the FAR are critical

to the successful conduct of DOE missions. DOE missions are broad and varied, critical to the national security of the United States, and the national laboratories are

an important cornerstone in the accomplishment of these missions. However, this

does not mean that DOE mechanically applies the exceptions allowed by CICA or

the flexibility of the FAR. DOE’s exercise of the discretion authorized by statute and

regulation is, in fact, more rigorous than what is found in most, if not all, other Federal agencies. Any decision to extend rather than compete a management and operating contract requires an extensive analysis of the basis for non-competition, consensus of DOE’s senior management, Secretarial authorization, and Congressional

notification. Pursuant to the Energy and Water Appropriations Act of 1999, none

of the funds appropriated by that Act may be used to award a management and

operating contract unless such contract is awarded using competitive procedures or

the Secretary of Energy grants a waiver to the requirement. Also under this Act,

the Secretary must notify Congress of any waiver at least 60 days before contract

award. Furthermore, DOE is the only agency that routinely reviews its FFRDC laboratory contracts for competition even though one CICA exception expressly covers

FFRDCs. Over the last five years DOE competed, or is in the process of competing,

six FFRDCs. No other agency has demonstrated such a track record.

QUESTIONS FROM THE HOUSE COMMERCE COMMITTEE

Question 8. The security function at DOE has always included the nuclear materials accountability responsibility. There are large amounts of nuclear materials

stored at sites, such as Rocky Flats, that would not be part of the new agency as

proposed by Senator Rudman and others. Do you believe that this is a workable and

efficient arrangement.,

Answer 8. The Department is committed to assure that nuclear material accountability responsibilities at DOE sites both within and outside the purview of the new

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administration will be coordinated in order to ensure proper accountability for these

materials.

The Department has convened a Task Force to develop a plan for implementation

of the National Nuclear Security Administration. Details of the plan will be included

in the report required by the National Defense Authorization Act for Fiscal Year

2000.

Question 9. Under the Rudman proposal, who would be responsible for security

at the other DOE weapons sites and its other facilities? Who would be responsible

at Savannah River, Hanford, and Oak Ridge? Would there be a parallel structure

for the non-weapons and weapons sites?

Answer 9. The Department has convened a Task Force to develop an implementation plan for the National Nuclear Security Administration. Details of the plan will

be included in the report required by the National Defense Authorization Act for

Fiscal Year 2000.

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