```

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

    TSA REFORM: EXPLORING INNOVATIONS IN TECHNOLOGY PROCUREMENT TO 
                          STIMULATE JOB GROWTH

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

                                HEARING

                               before the

                            SUBCOMMITTEE ON 
                        TRANSPORTATION SECURITY

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

       SEPTEMBER 22, 2011, OCTOBER 13, 2011 and NOVEMBER 3, 2011

                               __________

                           Serial No. 112-46

                               __________

       Printed for the use of the Committee on Homeland Security

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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

                               __________

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                     COMMITTEE ON HOMELAND SECURITY

                   Peter T. King, New York, Chairman
Lamar Smith, Texas                   Bennie G. Thompson, Mississippi
Daniel E. Lungren, California        Loretta Sanchez, California
Mike Rogers, Alabama                 Sheila Jackson Lee, Texas
Michael T. McCaul, Texas             Henry Cuellar, Texas
Gus M. Bilirakis, Florida            Yvette D. Clarke, New York
Paul C. Broun, Georgia               Laura Richardson, California
Candice S. Miller, Michigan          Danny K. Davis, Illinois
Tim Walberg, Michigan                Brian Higgins, New York
Chip Cravaack, Minnesota             Jackie Speier, California
Joe Walsh, Illinois                  Cedric L. Richmond, Louisiana
Patrick Meehan, Pennsylvania         Hansen Clarke, Michigan
Ben Quayle, Arizona                  William R. Keating, Massachusetts
Scott Rigell, Virginia               Kathleen C. Hochul, New York
Billy Long, Missouri                 Janice Hahn, California
Jeff Duncan, South Carolina
Tom Marino, Pennsylvania
Blake Farenthold, Texas
Mo Brooks, Alabama
            Michael J. Russell, Staff Director/Chief Counsel
               Kerry Ann Watkins, Senior Policy Director
                    Michael S. Twinchek, Chief Clerk
                I. Lanier Avant, Minority Staff Director
                                 ------                                

                SUBCOMMITTEE ON TRANSPORTATION SECURITY

                     Mike Rogers, Alabama, Chairman
Daniel E. Lungren, California        Sheila Jackson Lee, Texas
Tim Walberg, Michigan                Danny K. Davis, Illinois
Chip Cravaack, Minnesota             Jackie Speier, California
Joe Walsh, Illinois, Vice Chair      Cedric L. Richmond, Louisiana
Mo Brooks, Alabama                   Bennie G. Thompson, Mississippi 
Peter T. King, New York (Ex              (Ex Officio)
    Officio)
                     Amanda Parikh, Staff Director
                   Natalie Nixon, Deputy Chief Clerk
            Thomas McDaniels, Minority Subcommittee Director

                            C O N T E N T S

                              ----------                              
                                                                   Page

                      THURSDAY, SEPTEMBER 22, 2011

                               Statements

The Honorable Mike Rogers, a Representative in Congress From the 
  State of Alabama, and Chairman, Subcommittee on Transportation 
  Security:
  Oral Statement.................................................     1
  Prepared Statement.............................................     2
The Honorable Sheila Jackson Lee, a Representative in Congress 
  From the State of Texas, and Ranking Member, Subcommittee on 
  Transportation Security:
  Prepared Statement.............................................    31
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security:
  Oral Statement.................................................     3
  Prepared Statement.............................................     4

                               Witnesses

Ms. Elaine C. Duke, President, Elaine Duke & Associates, LLC:
  Oral Statement.................................................     5
  Prepared Statement.............................................     7
Mr. Michael P. Jackson, President, Firebreak Partners, LLC:
  Oral Statement.................................................     9
  Prepared Statement.............................................    10
Mr. Stephen M. Lord, Director, Homeland Security, Government 
  Accountability Office:
  Oral Statement.................................................    15
  Prepared Statement.............................................    17

                       THURSDAY, OCTOBER 13, 2011
                               Statements

The Honorable Mike Rogers, a Representative in Congress From the 
  State of Alabama, and Chairman, Subcommittee on Transportation 
  Security.......................................................    41
The Honorable Sheila Jackson Lee, a Representative in Congress 
  From the State of Texas, and Ranking Member, Subcommittee on 
  Transportation Security........................................    42

                               Witnesses

Mr. Marc A. Pearl, President and CEO, Homeland Security and 
  Defense Business Council:
  Oral Statement.................................................    45
  Prepared Statement.............................................    46
Mr. Scott Boylan, Vice President and General Counsel, Safran 
  Morpho Detection:
  Oral Statement.................................................    51
  Prepared Statement.............................................    53
Mr. Guy Ben-Ari, Deputy Director, Defense-Industrial Initiatives 
  Group Fellow, International Security Program, Center for 
  Strategic and International Studies:
  Oral Statement.................................................    54
  Prepared Statement.............................................    56

                       THURSDAY, NOVEMBER 3, 2011
                               Statement

The Honorable Mike Rogers, a Representative in Congress From the 
  State of Alabama, and Chairman, Subcommittee on Transportation 
  Security.......................................................    71

                               Witnesses

Mr. Nick Nayak, Chief Procurement Officer, U.S. Department of 
  Homeland Security:
  Oral Statement.................................................    74
  Prepared Statement.............................................    75
Mr. Robin E. Kane, Assistant Administrator, Security Technology, 
  Transportation Security Administration:
  Oral Statement.................................................    78
  Joint Prepared Statement.......................................    79
Mr. Paul Benda, Chief LOf Staff, Director, Homeland Security 
  Advanced Research Projects Agency, U.S. Department of Homeland 
  Security, Accompanied by Susan Hallowell, Director, 
  Transportation Security Laboratory:
  Oral Statement.................................................    85
  Joint Prepared Statement.......................................    79
Mr. Charles K. Edwards, Acting Inspector General, U.S. Department 
  of Homeland Security:
  Oral Statement.................................................    87
  Prepared Statement.............................................    88

                                Appendix

Questions Submitted by Chairman Mike Rogers for Nick Nayak.......   117
Question Submitted by Ranking Member Sheila Jackson Lee for Nick 
  Nayak..........................................................   117
Questions Submitted by Chairman Mike Rogers for Robin E. Kane....   118
Questions Submitted by Ranking Member Bennie G. Thompson for 
  Robin E. Kane..................................................   120
Questions Submitted by Ranking Member Sheila Jackson Lee for 
  Robin E. Kane..................................................   120
Questions Submitted by Chairman Mike Rogers for Paul Benda.......   121
Question Submitted by Ranking Member Bennie G. Thompson for Paul 
  Benda..........................................................   121
Question Submitted by Ranking Member Sheila Jackson Lee for Paul 
  Benda..........................................................   122
Question Submitted by Ranking Member Sheila Jackson Lee for 
  Charles K. Edwards.............................................   122

 
    TSA REFORM: EXPLORING INNOVATIONS IN TECHNOLOGY PROCUREMENT TO 
                          STIMULATE JOB GROWTH

                              ----------                              

                      Thursday, September 22, 2011

             U.S. House of Representatives,
           Subcommittee on Transportation Security,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:01 a.m., in 
Room 311, Cannon House Office Building, Hon. Mike Rogers 
[Chairman of the subcommittee] presiding.
    Present: Representatives Rogers, Jackson Lee, Davis, 
Richmond, and Thompson (ex officio).
    Mr. Rogers. The Committee on Homeland Security Subcommittee 
on Transportation Security will come to order. The subcommittee 
is meeting today to examine innovative solutions to technology 
procurement at TSA that could generate cost savings for the 
Federal Government and stimulate job growth in the private 
sector.
    I will recognize myself now for an opening statement. I do 
want to make a point that the Ranking Member, Ms. Jackson Lee, 
called me a little while ago. She is currently giving a speech 
downtown and is going to be a few minutes late. So we will get 
started and she will be here as soon as she can.
    I would like to welcome everybody to our hearing today and 
thank the witnesses for the time they have put into these 
prepared remarks and making themselves available for this 
hearing. I look forward to your comments.
    As part of our oversight of the Transportation Security 
Administration, one of the things we are looking to do is to 
encourage good ideas that will stimulate job growth in the 
private sector. Given the hundreds of millions of dollars that 
the agency spends on technology procurement per year, I believe 
the TSA has ample opportunity to generate any number of 
private-sector jobs. The House-passed fiscal year 2012 
appropriations bill would provide TSA with more than $550 
million for explosive detection system procurement and 
maintenance. I would like to see if we can find creative ways 
to reduce that cost over time while still keeping the traveling 
public safe from acts of terrorism.
    There are lots of good ideas out there, some of which TSA 
is engaged in already, and other proposals that we are hearing 
about from the private sector. I believe there are a variety of 
ways that we can better tap into and leverage the private 
sector to provide technologies and services. There is a great 
innovation in the private sector, both among large and small 
businesses, and we need to do everything we can to foster that 
innovation. This includes streamlining and reforming 
acquisitions mechanisms within TSA and it also means finding 
new opportunities to entice industry, especially through 
greater transparency on the part of TSA, as to what its 
acquisition roadmap looks like.
    The only way to reap the benefits of many businesses out 
there that have the solutions we need is, to the extent 
possible, let them know what TSA wants and when it wants it.
    The TSA Authorization Act of 2011, just adopted by this 
subcommittee, is aimed at improving security by streamlining 
and eliminating burdensome regulations that are a barrier to 
job creation in the transportation industry and encouraging the 
use of technologies developed by the private sector.
    This subcommittee hearing will continue to focus on the 
wise use of taxpayer dollars and job creation by examining 
TSA's technology procurement practices. I would like to see TSA 
fully engage the private sector in an open, transparent way for 
the development and purchase of security technologies. I would 
like to see progress on saving taxpayers' dollars and creating 
private sector jobs. I believe we can achieve this while 
effectively securing the traveling public and the flow of 
commerce. I look forward to hearing the witnesses' ideas for 
finding cost efficiencies and stimulating jobs through improved 
technology procurement at TSA.
    [The statement of Chairman Rogers follows:]
               Prepared Statement of Chairman Mike Rogers
                           September 22, 2011
    I would like to welcome everyone to this important hearing and 
thank our witnesses for being here. We look forward to your testimony 
and greatly appreciate your time.
    As part of our oversight of the Transportation Security 
Administration, one of the things we are looking to do is encourage 
good ideas that will stimulate job growth in the private sector. Given 
the hundreds of millions of dollars that the agency spends on 
technology procurement per year, I believe that TSA presents ample 
opportunity for generating any number of private-sector jobs.
    The House-passed fiscal year 2012 appropriations bill would provide 
TSA with more than $550 million for explosives detection system 
procurement and maintenance. I'd like to see if we can find creative 
ways to reduce that cost over time, while still keeping the traveling 
public secure from acts of terrorism.
    There are lots of good ideas out there, some of which TSA is 
engaged in already, and other proposals that we are hearing about from 
the private sector.
    I believe there are a variety of ways that we can better tap into 
and leverage the private sector to provide technologies and services. 
There is great innovation in the private sector, both among large and 
small businesses, and we need to do everything we can to foster that 
innovation.
    This includes streamlining and reforming acquisitions mechanisms 
within TSA. It also means finding new opportunities to entice industry, 
especially through greater transparency on the part of TSA as to what 
its acquisition roadmap looks like. The only way to reap the benefits 
of the many businesses out there that have the solutions we need is--to 
the extent possible--let them know what TSA wants and when it is going 
to want it.
    The TSA Authorization Act of 2011, just adopted by this 
subcommittee, is aimed at improving security by streamlining and 
eliminating burdensome regulations that are a barrier to job creation 
in the transportation industry, and encouraging the use of technologies 
developed by the private sector.
    This subcommittee hearing will continue to focus on the wise use of 
taxpayer dollars and job creation by examining TSA's technology 
procurement practices. I would like to see TSA fully engage the private 
sector in an open and transparent way for the development and purchase 
of security technologies. I'd like to see progress on saving taxpayer 
dollars and creating private-sector jobs. I believe we can achieve this 
all while effectively securing the traveling public and the flow of 
commerce.
    I look forward to hearing the witness' ideas for finding cost 
efficiencies and stimulating the growth of jobs through improved 
technology procurement at TSA. With that I yield to the Ranking Member, 
Ms. Jackson Lee of Texas, for any opening statement she may have.

    Mr. Rogers. With that, I yield to the Ranking Member of the 
full committee, Mr. Thompson from Mississippi.
    Mr. Thompson. Thank you very much, Mr. Chairman. I welcome 
our panel of witnesses to the subcommittee hearing today.
    Under the Democratic majority, as you know, we held several 
hearings on the role of the Science and Technology Directorate, 
TSA's technology vetting and approval process, and the need for 
DHS to align research with its mission. I am pleased that the 
oversight begun under our watch continues today. As we conduct 
oversight and continue steps toward reform, let us assure that 
S&T has sufficient funding. As you know, S&T is in line to make 
a major cut to its budget in the fiscal year. Programs would 
need to be scaled back and promising projects may be 
eliminated. Mr. Chairman, I hope you can work with us to stop 
these drastic cuts.
    Today's hearing will evaluate the Department's process to 
develop, procure, and deploy innovative technologies. It would 
have been helpful if we had had someone who currently works for 
the Department testify today. But I do look forward to hearing 
from Mr. Jackson and Ms. Duke, former Department employees. 
While they are unlikely to shed light on the current process, I 
hope they can shed light on the process used during their 
tenure.
    Some experts have said the failure to employ an effective 
process led to the puffer machine fiasco. For those who may not 
recall, I want to take a moment to recount the puffer machine 
story. The Department purchased these high-tech checkpoint 
screening machines for about $150,000 each. We were told that 
the machines would spray a short puff of air on a passenger. 
The machine would then analyze the debris that fell from the 
passenger and determine whether the passenger had been near 
explosive material.
    In the lab, the machine seemed to work. The maker promised 
that they would work. So TSA ordered 200 of them. However, in 
the real world, the machines were useless. They did not work. 
There was no way to make them work. After spending nearly $30 
million to buy and maintain the nearly 100 puffer machines 
deployed, TSA finally retired these machines. At one time, 
these machines were touted as a high-tech response to aviation 
security. Now, they are sitting in a warehouse and we have 
wasted $30 million.
    Why did this happen? It happened because the research, 
development, and testing of the technology was disconnected 
from the real-world use of the machines.
    We cannot allow another incident of this kind to occur. 
Every dollar we waste on ineffective technology is a dollar 
that will not be spent to secure this Nation. The puffer 
machine fiasco happened while Mr. Jackson and Ms. Duke were at 
the Department. I look forward to hearing from them about how 
the system that was in place then allowed for the procurement 
of these machines.
    In the last few months, the Obama administration has 
attempted to reform research, development, and procurement 
practices at S&T. I hope that Mr. Jackson and Ms. Duke will 
share with this committee the difficulties they found in their 
attempts at reform.
    I look forward to hearing from our witnesses.
    I yield back.
    [The statement of Ranking Member Thompson follows:]
        Prepared Statement of Ranking Member Bennie G. Thompson
                           September 22, 2011
    Under the Democratic Majority, we held several hearings on:
   the role of the Science and Technology Directorate;
   TSA's technology vetting and approval process;
   the need for DHS to align research with its mission; and
   examining whether research fulfilled mission-critical needs 
        of the components.
    I am pleased that the oversight begun under our watch continues 
today. As we conduct oversight and consider steps toward reform, let us 
also assure that S&T has sufficient funding to do its job.
    As you know, S&T is in line to take a major cut to its budget in 
the upcoming fiscal year. Programs will need to be scaled back and 
promising projects may be eliminated. Mr. Chairman, I hope you can work 
with us to stop these drastic cuts.
    Today's hearing will evaluate the Department's process to develop, 
procure, and deploy innovative technologies. It would have been helpful 
to have someone who currently works for the Department testify today.
    But I do look forward to hearing from Mr. Jackson and Ms. Duke, 
former Department employees. While they are unlikely to shed light on 
the current process, I hope they can shed light on the process used 
during their tenure.
    Some experts have said that the failure to employ an effective 
process led to the ``Puffer'' machine fiasco.
    For those who may not recall, I want to take a moment to recount 
the Puffer machine story. The Department purchased these high-tech 
checkpoint screening machines for about $150,000 each.
    We were told that the machine would spray a short puff of air on a 
passenger. The machine would then analyze the debris that fell from the 
passenger and determine whether the passenger had been near explosive 
materials. In the lab, the machines seemed to work. The maker promised 
that they would work. So TSA ordered over 200 of them.
    However, in the real world, the machines were useless. They did not 
work and there was no way to make them work. After spending nearly $30 
million to buy and maintain the nearly 100 Puffers deployed TSA finally 
retired the machines. At one time, these machines were touted as a 
high-tech response to aviation security. Now they are sitting in a 
warehouse and we have wasted $30 million.
    Why did this happen? It happened because the research, development, 
and testing of the technology was disconnected from the real-world use 
of the machine.
    We cannot allow another incident of this kind to occur. Every 
dollar we waste on ineffective technology is a dollar that will not be 
spent to secure this Nation. The Puffer machine fiasco happened while 
Mr. Jackson and Ms. Duke were at the Department.
    I look forward to hearing from them about how the system that was 
in place then allowed the procurement of these machines. In the last 
few months, the Obama administration has attempted to reform the 
research, development, and procurement practices at S&T. I hope that 
Mr. Jackson and Ms. Duke will share with this committee the 
difficulties they found in their attempts at reform.

    Mr. Rogers. I thank the Ranking Member.
    We are very pleased today to have a distinguished panel of 
witnesses before us on this important topic. Elaine Duke is the 
principal of Elaine Duke and Associates, LLC. She provides 
acquisition and business consulting services to a wide variety 
of clients. She specializes in assisting companies in doing 
business with the Federal Government. Ms. Duke had 28 years 
with the Federal Government--she started at age 3--culminating 
with her Senate confirmation on June 27, 2008, as the 
Department of Homeland Security's Under Secretary for 
Management. As the Under Secretary, she was responsible for the 
management of the Department's $47 billion budget. We don't use 
millions up here, apparently.
    She previously served in several positions within the 
Department, including Deputy Under Secretary for Management and 
Chief Procurement Officer. Ms. Duke assisted in the stand-up of 
DHS while at the Transportation Security Administration, where 
she served as Deputy Assistant Administrator for Acquisition 
beginning in August 2002. Ms. Duke spent a great deal of her 
career with the U.S. Navy, and she has held various acquisition 
positions of progressive responsibility.
    During her service with the Federal Government, Ms. Duke 
received the Presidential Meritorious Rank award, the DHS 
Secretary's Medal, and the Transportation Security 
Administration's Silver Medal for Customer Service, the 
Department of Army Commanders Award for Public Service, and the 
U.S. Coast Guard's Distinguished Public Service.
    Ms. Duke, we are very proud to have you here today. You are 
recognized for your opening statement.

     STATEMENT OF ELAINE C. DUKE, PRESIDENT, ELAINE DUKE & 
                        ASSOCIATES, LLC

    Ms. Duke. Good morning, Chairman Rogers and Members of the 
subcommittee. I am pleased to testify before the committee as 
it explores innovations in technology procurement to stimulate 
job growth.
    Mr. Chairman, I would like to begin by thanking you for 
your leadership over the years as a key member of the Homeland 
Security Committee. Since I was first standing up acquisition 
at TSA, through my time as the Department of Homeland Security 
as Chief Procurement Officer, and then Under Secretary for 
Management, you and this committee have provided me tremendous 
support. I am truly grateful.
    In this time of high unemployment, coupled with the debt 
ceiling crisis, each one of us must ask what can be done 
differently to contribute to economic recovery? The questions 
``What changes to the procurement process might stimulate job 
growth?'' and ``How can TSA improve efficiency and therefore 
save taxpayer dollars?'' are important questions, and I thank 
you for letting me participate in this hearing.
    I believe Federal procurement can play a role in 
stimulating job growth in the United States. There are several 
measures that can be taken to ensure DHS, TSA technology, and 
other acquisition programs maximize job growth as they meet 
mission needs in partnership with industry. The key to making 
this happen is to get the funds that are appropriated to TSA 
for acquisition programs out into awarded contracts to our 
industry partners quickly effectively and efficiency. There are 
several steps that can be taken to do this.
    First, there must be the appropriate number of acquisition 
workforce personnel with the appropriate skill set to manage 
the acquisition programs. Now, more than ever, with flat and 
declining budgets, TSA must ensure that the acquisition 
workforce is properly positioned to manage its programs. That 
will ensure a couple of key features: First, that the 
requirement will be adequately defined so industry can prepare 
proposals and perform effectively. Good requirements lead to 
good competition.
    Second, the request for proposals and resulting contracts 
can be issued quickly and awarded without protest so the work 
can begin promptly and the industry partner can create and 
sustain jobs.
    Third, is the Government's requirement will be met at the 
best price, with the appropriated funds not going to 
unnecessary overhead but to direct work in the related jobs. 
The acquisition program will deliver what the homeland security 
mission really needs.
    There are several key initiatives that will help ensure the 
desired result. One is continuation of the DHS's acquisition 
workforce and its Acquisition Professional Career Program that 
provides a pipeline of acquisition professionals into the 
Federal workforce. Another is continued refinement of the 
functional integration authority over the departmental chiefs 
of the business lines. A third is the balancing of the Federal 
and acquisition workforce within DHS. There must be an 
appropriate balance of the Federal workforce and its industry 
partners. I don't believe there is a magic formula of 
percentage and number. The amount of the workforce and control 
is dependent on the size and criticality of the program.
    An agency, regardless of its contractual relationship, must 
retain ownership and responsibility for being a good steward of 
the taxpayer dollars appropriated to that agency.
    Another important aspect of using procurement to stimulate 
job growth is to ensure there is strong regular communications 
with industry. The Federal Acquisition Regulation provides 
guidelines for market research that allow extensive 
communications with industry throughout the acquisition 
process.
    Taking maximum advantage of the communications not only 
makes for a better acquisition program, it helps industry by 
informing its business decisions. Bid and proposal decisions 
are critical in industry, and the cost to submit proposals for 
Federal procurements can be very high. Communications mutually 
inform so both parties--the U.S. Government and industry--can 
make the best, most precise, most efficient business decisions.
    Third, acquisition strategies, budgets, and requirements 
can work together. The current 25-Point Implementation Plan to 
Reform Federal Information Technology Management, for instance, 
points out that for the technology initiatives, such as cloud 
computing and shared services to work, there must be strong 
acquisition management, and more importantly, there must be an 
alignment between the programs, the acquisition process, and 
the budget cycle.
    Also, DHS, with TSA, must buy effectively and efficiently. 
That includes a robust strategic sourcing program and working 
towards the joint capabilities that are outlined in DHS's 
integrated strategy for high-risk management. Improved 
procurement can benefit and help the United States move towards 
its economic recovery.
    I look forward to discussing this further through your 
questions. Thank you.
    [The prepared statement of Ms. Duke follows:]
                  Prepared Statement of Elaine C. Duke
                           September 22, 2011
    Chairman Rogers, Ranking Member Jackson Lee, and Members of the 
subcommittee, I am pleased to testify before the committee as it 
explores ``Innovations in Technology Procurement to Stimulate Job 
Growth.'' Mr. Chairman, I'd like to begin by thanking you for your 
leadership over the years as a key member of the Homeland Committee. 
Since I was first standing up the acquisition function at TSA, through 
my time as Department of Homeland Security's Chief Procurement Officer 
and then Under Secretary for Management, you provided me tremendous 
support, and I am truly grateful.
    In this time of high unemployment coupled with the debt ceiling 
crisis, each one of us must ask what can be done differently to 
contribute to economic recovery. The questions ``What changes to the 
procurement process might stimulate job growth?'' and ``How can TSA 
improve procurement efficiency, and therefore save taxpayer dollars?'' 
are important questions and I again thank the committee for calling 
this hearing to explore answers to these critical questions.
    I believe Federal procurement can play a role in stimulating job 
growth in the United States. There are several measures that can be 
taken to ensure that DHS, TSA technology, and other acquisition 
programs maximize job growth as they meet mission needs in partnership 
with industry. The key is to get the funds that are appropriated to TSA 
for acquisition out into awarded contracts with industry partners 
quickly, effectively, and efficiently. There are several steps that can 
be taken to do this.
    First, there must be the appropriate number of acquisition 
workforce personnel, with the appropriate skill set, to manage the 
acquisition programs. Now more than ever, facing flat and declining 
budgets, TSA must ensure that its acquisition workforce is properly 
positioned to manage its program. That will ensure several key 
features:
   The requirement will be adequately defined so industry can 
        prepare proposals and perform most effectively. Good 
        requirements lead to good competition.
   The request for proposals and resulting contracts can be 
        issued and awarded quickly and without protest, so work can 
        begin promptly and the industry partner can create and sustain 
        jobs.
   The Government's requirement will be met at the best price, 
        with the appropriated funds not going to unnecessary overhead, 
        but to direct work and the related jobs.
   The acquisition program will deliver what the homeland 
        security mission needs.
    There are several initiatives that will help ensure the desired 
results are achieved.
   The DHS acquisition Workforce and its Acquisition 
        Professional Career Program is providing a pipeline of new 
        acquisition professionals into the Federal workforce. It is 
        designed to provide both formal and on-the-job training and 
        results in a well-qualified Federal acquisition workforce.
   The functional integration authority of the Departmental 
        chiefs over the component functions must continue to be 
        refined.
   A balancing of the Federal and contracting workforce within 
        DHS. There must be an appropriate balance of Federal workforce 
        and industry partners. There is no magic formula of percentage 
        and number. The amount of Federal workforce and control is 
        dependent on the size and criticality of a program. An agency, 
        regardless of its contractual relationship, must retain the 
        ownership and responsibility for being a good of steward of 
        taxpayer dollars appropriated to that agency. Partnering with 
        industry to perform the work is a key aspect of good 
        stewardship, but accountability, at its core remains with the 
        Federal agency. Critical functions should be performed with 
        Federal employees to the extent required by the agency to 
        maintain control of its mission. Once there are adequate 
        Federal employees to control the critical functions (mission 
        and operations), the work can be performed by private sector 
        contractors, creating the properly balanced workforce and 
        private industry job stimulation.
    Second, is there must be strong, regular communications with 
industry. The Federal Acquisition Regulation provides guidelines for 
market research that allow extensive communications with industry. 
Taking maximum advantage of the communications not only makes for a 
better acquisition program, it also helps industry but informing its 
business decisions. Bid and proposal decisions are critical for 
industry, and costs to submit proposals for Federal procurements can be 
very high. Communications mutually inform so both parties--the U.S. 
Government and industry--so they can make the best, most precise, most 
efficient business decisions.
    Third, acquisition strategies, budgets, and requirements must work 
together. The 25-Point Implementation Plan to Reform Federal 
Information Technology Management points out that for the technology 
initiatives, such as cloud computing, shared services, data centers to 
be effective, there must be strong acquisition management, the 
acquisition process must be aligned with the technology cycle, and the 
budget process must be aligned with the technology cycle. Industry will 
only partner with the Federal Government, and create jobs, if the 
business risk is appropriate. The Federal procurement system must, with 
industry engagement, develop acquisition strategies that deliver the 
technology solution with appropriately manageable financial, 
performance, and schedule risk.
    Fourth, DHS, with TSA, must buy efficiently and effectively, thus 
enabling industry to operate efficiently and effectively. There are two 
facets to this point. The first is based around finding commonality in 
requirements within DHS missions and programs, and defining 
requirements and filling those requirements in a joint manner. DHS's 
Integrated Strategy for High Risk Management Implementation and 
Transformation, discusses the formation of Functional Coordination 
Offices and a Capabilities & Requirements Council among the key 
initiatives to increase DHS management integration. This will require a 
rationalization of requirements that will greatly contribute to 
effectiveness and efficiency in procurement. The second facet is that 
agencies must continue to use and grow strategic sourcing programs to 
procure goods and services more effectively. Strategic sourcing 
leverages the buying power of TSA, DHS, and the Federal Government.
    Improved procurement not only provides economic benefit to our 
country in terms of effective use of tax dollars and job creation, it 
also helps ensure screening technologies actually make the traveling 
public safer. TSA must buy the right things at the right time for the 
right price to meet the homeland security threat, currently and as it 
evolves. The initial stand-up of TSA was focused on Federalizing the 
airports. As it matures, TSA must find the right mix of technology, 
people, and systems. A risk-based approach, facilitating freedom of 
movement of goods and people while providing adequate security for 
evolving threats against homeland security is a critical facet of the 
path forward. The approach must provide security for the present, while 
always anticipating and prepared to evolve to adapt to changes in 
threat and security technology.
    Thank you for the opportunity to participate in your discussions 
regarding the ability of sound procurement to contribute to job growth 
and economic stability. I look forward to your questions.

    Mr. Rogers. Thank you. Next, we have Michael Jackson, 
President and founder of Firebreak Partners, LLC, a firm that 
designs, finances, and deploys high-value security technology 
networks to protect airports, seaports, and other critical 
infrastructure. Mr. Jackson has extensive experience in 
executive positions in both the private sector and Federal 
Government. From early 2005 through October, 2007, he was 
Deputy Secretary of the U.S. Department of Homeland Security. 
In this role, he was the Department's chief operating officer, 
with responsibility for managing day-to-day operations in DHS. 
Mr. Jackson served as Deputy Secretary to the U.S. Department 
of Transportation from May, 2001 to August, 2003.
    His tenure there was particularly focused on DOT's response 
to 9/11 terrorist attacks, including creation of the new 
Transportation Security Administration and the management of 
the recovery efforts for the Nation's aviation industry. Mr. 
Jackson also held positions working for Presidents George H.W. 
Bush and Ronald Reagan. In addition, Mr. Jackson has worked at 
a number of private technology corporations. He has been a 
researcher at the American Enterprise Institute, and taught 
political science at the University of Georgia and Georgetown 
University.
    Mr. Jackson, thank you for being here. We look forward to 
your testimony. You are recognized.

STATEMENT OF MICHAEL P. JACKSON, PRESIDENT, FIREBREAK PARTNERS, 
                              LLC

    Mr. Jackson. Good morning, Mr. Chairman. Thank you very 
much for having me here today. Ranking Member Thompson, thank 
you for being with us this morning. I appreciate your presence 
as well and the opportunity to talk about TSA and the topic of 
this hearing.
    Technology, obviously, is a vital component of TSA's 
success and its mission. Congress has generously funded 
billions of dollars in technology for this agency over the 
decade following the attacks of 9/11. Over that period, TSA has 
made substantial progress. Yet today, simple procurement tools 
and technologies could deliver meaningful budget savings and 
improved security. Moreover, with Congressional approval and 
with no additional cost to the taxpayers, TSA could also easily 
increase the number of jobs in America, and do so relatively 
quickly, particularly with simple affirmation of alternative 
financing. My written testimony provides additional material 
about all of these ideas. But I have essentially focused on 
four points. I would like to today summarize those four points 
by way of introduction.
    First, the first recommendation I would have is to 
authorize alternative financing and operating lease agreements 
as proposed to TSA by public commercial airport authorities. 
These transactions would leverage private sector capital to 
acquire and maintain security technology for inline baggage 
systems, checked baggage inspection, passenger checkpoint 
screening, and other associated technology needs.
    TSA faces just a formidable array of needs for the 
technology to do its work to get operating efficiencies and to 
do their screening tasks more effectively.
    I would argue or suggest that Congress should consider 
authorizing TSA--even better, instructing TSA--at least to 
experiment and adopt alternative financing transactions. There 
are multiple ways to structure these types of transactions that 
would bring capital that could attract literally billions of 
dollars into this important need for airports and TSA. My 
testimony explains in more detail, for example, a proposal from 
two airports that would have leveraged approximately $198 
million in private sector investment to support TSA. TSA 
rejected the proposal a few months ago because its staff 
thought it lacked statutory authority to exercise an 
appropriate operating lease arrangement with these airport 
authorities.
    The second recommendation is to privatize DHS's 
transportation security lab certification testing for explosive 
detection equipment, as has been pioneered by the European 
Union. The process that DHS uses for certification testing for 
explosive detection needs rethinking, it needs your focus, it 
needs your attention and examination. The current process is 
unnecessarily expensive, both for taxpayers and for vendors who 
use the system. It is excessively time-consuming and the 
process for obtaining approvals lacks clarity, transparency, 
the resources, and adequate institutional capacity for making 
this happen more quickly. The E.U. governments have 
successfully privatized this function. My written testimony 
explains why that should be considered here in the United 
States.
    The third recommendation I would like to lay on the table 
is for TSA to create a TSA version of an ``X-Prize'' by 
replacing at least some of TSA's traditional R&D equipment 
funding with results-based achievement testing awards. Such 
awards can stimulate breakthrough innovations in checkpoint and 
checked baggage screening, and better leverage private 
investment.
    Pure and simple, we should at least look at some technology 
incentive investments that reward getting the job done rather 
than making promises for a job to be done.
    The final recommendation is insist that any new core 
explosive detection imaging system--CT, AT, AIT, trace 
detection, these types of tools--that are sold to TSA, after 
some reasonable date to be determined must have presented image 
data outputs in an open source format. In addition, requiring 
manufacturers to provide sufficient software transparency to 
allow TSA the option to develop modular common-use apps 
routinely that could help upgrade the software. This is a big 
problem. The GAO has done a good report recently on this topic.
    This type of thing is not hard to do. I thought when I was 
at DHS that it was a good idea. I gave a speech for it. It 
immediately met with a resounding reaction from the vendor 
community. They just hated it. It is understandable. But I 
would just urge you to dig into this topic because it is really 
something that has transformed the medical community and can 
transform TSA operations.
    In conclusion, these four authorizations seem, in a way, 
disarmingly simple or small-bore things perhaps, but together 
they offer specific systemic procurement reform as regards to 
TSA technology acquisition and promise transformational change 
for the agency.
    I thank you and look forward to your questions.
    Mr. Rogers. I thank you.
    [The prepared statement of Mr. Jackson follows:]
                Prepared Statement of Michael P. Jackson
                           September 22, 2011
    Good morning Chairman Rogers, Ranking Member Jackson Lee, and 
distinguished Members of the subcommittee. I appreciate the opportunity 
to appear before you today and to share some thoughts about the 
Transportation Security Administration (TSA) and the important topic of 
this hearing.
    Technology is a vital component of TSA's mission and essential to 
its success. Congress has generously funded billions of dollars in 
technology for this agency over the decade following the attacks of 9/
11. The topic of this hearing suggests two introductory, orienting 
questions:
   Can further innovations at TSA regarding technology 
        acquisition allow the agency to reduce cost while improving 
        security?
   Can TSA's technology investments be structured to maximize 
        job creation in these difficult economic times?
    The answer to both is clearly yes. Tools to deliver budget 
reductions and better security are readily available. Moreover, with 
Congressional approval--and with no additional cost to taxpayers--TSA 
could also easily increase the number of jobs in America, and do so 
relatively quickly.
    As a private citizen, I offer four recommendations for 
Congressional action that can significantly advance the objectives 
being explored by today's hearing:
    1. Authorize ``alternative financing'' operating lease agreements 
        as proposed to TSA by public commercial airport authorities. 
        These transactions would leverage private sector capital to 
        acquire and maintain security technology for in-line baggage 
        systems, checked baggage inspection, passenger checkpoint 
        screening and potentially other needs.
    2. Privatize the DHS's Transportation Security Lab certification 
        testing for explosive detection equipment, as has been 
        pioneered in the European Union.
    3. Create TSA's version of an ``X-Prize'' by replacing at least 
        some of TSA's traditional R&D equipment funding with results-
        based achievement awards. Such awards can stimulate 
        breakthrough innovations in checkpoint and checked bag 
        screening, and better leverage private investment.
    4. Insist that any new core explosive detection imaging systems 
        (CT, AT, AIT, and the like) sold to TSA after a reasonable date 
        certain generate image data outputs in an open-source format. 
        Additionally, require manufacturers to provide sufficient 
        software transparency to allow TSA the option to develop 
        modular, common-use aps for routinely upgrading explosive 
        detection algorithms for its entire network of detection 
        systems.
    What follows offers a few words about each of these 
recommendations. My purpose is not to explore any single one in great 
depth, instead to provide a high-level summary that can guide further 
assessment by the subcommittee, if of interest.
    Alternative Financing Agreements.--TSA faces a formidable array of 
financial demands to fuel its critical technology needs. The single 
most expensive category of investment has been in-line checked baggage 
inspection systems. These investments clearly improve security and 
airport operations, diminishing delays, and passenger inconvenience.
    With each efficient in-line baggage system, TSA also typically 
generates meaningful cost savings for its own operation--for its 
capital budgets, because TSA purchases fewer explosive detection 
systems (e.g., EDS and trace detection) and for operational budgets 
because TSA achieves greater personnel efficiency, increased screening 
throughput, lower maintenance, fewer consumables and reduced energy 
consumption. These TSA savings often total millions of dollars 
annually, even at a mid-sized airport.
    Although TSA has a large backlog of in-line checked baggage system 
projects that have been funded but not completed, there remains a large 
backlog of unfunded in-line system needs that will require more 
billions of dollars and many years to eliminate.\1\ TSA has been 
chasing this backlog since 2002. In fact, some of the expensive 
projects initially funded by TSA must now regrettably be upgraded to 
accommodate today's requirements for higher-speed screening technology.
---------------------------------------------------------------------------
    \1\ Congress and the administration have allocated a great deal of 
cash to this problem, especially during the last 2 years. Yet the 
number of priority airports (TSA's Category X-III targets) that are 
still not fully funded remains large. TSA's fiscal year 2012 
Congressional Budget Justification reports that only 187 of the 286 
largest airports (CAT X-III) will have CBIS systems completed for the 
entire airport at the end of fiscal year 2011 (p. A-23). The fiscal 
year 2011 Budget Justification predicted that TSA would not reach 100 
percent coverage even for the largest airports until 2018 (p. AS-30). 
Some airports lack capacity to fund projects effectively under TSA's 
current business model. Those airports are, in many cases, not yet even 
in the early stages of TSA's project funding queue. Moreover, several 
of the more expensive projects completed early after 9/11 have failed 
by a notable margin to meet the minimum throughput standards that TSA 
set for such systems (400 bags per hour) and would need almost 
wholesale replacement to support even the currently certified medium-
capacity EDS machines, let alone the higher-capacity EDS machines that 
could improve performance and further reduce TSA capital and operating 
expenses at those airports.
---------------------------------------------------------------------------
    Aside from in-line baggage system investments, TSA is also juggling 
numerous other formidable capital needs for technology. These include 
checkpoint equipment modernization, exit lane breach control (for which 
effective technology is available to allow reassignment of guards who 
now stand watch at exit lanes), risk-based screening infrastructure, 
credential validation systems, efficient physical security device 
management (for cameras, video recorders, door locks, etc.), 
multiplexing of threat detection imaging for more efficient and 
effective review remotely (TSA has recently published a Request for 
Information seeking technologies that can make this happen), and more.
    For the next several years, TSA's capital budgets will face a 
particular squeeze in order to recapitalize its first-generation EDS 
machines and related technologies, which are now reaching the end of 
anticipated service life. It is simply not practical to fund all of 
TSA's needs with a business model that continues to ask Congress to 
write such large checks. Yet absent investment, better security, 
greater efficiency, TSA cost reductions and customer service 
improvements will be deferred.
    Alternative financing can and should play a role in meeting TSA 
mission needs. There are multiple business models that work, and there 
will be many airports willing to engage with TSA creatively, if 
allowed. These solutions don't require complex tax code changes or 
exotic and risky financing structures. They would simply leverage the 
way airports for decades have done business.
    But to jump-start this common-sense investment, Congress must 
authorize TSA--even better, instruct TSA--at least to experiment in 
adopting alternative financing transactions. By legislatively cutting 
through one or two project scoring nits that are perceived by TSA staff 
to be impediments, Congress can make it possible for TSA to negotiate 
operating leases for security technology, just as TSA does today with 
regard to leasing office space and obtaining other essential services 
from airports Nation-wide. TSA authorizing legislation would simply 
recognize affirm the unique dependencies that exist between TSA and 
airport authorities, allowing government-to-government alternative 
financing transactions to be funded, especially at today's 
unprecedented favorable rates.
    Sensible alternative financing can literally attract billions of 
dollars of investment from the private sector. Not 2 or 3 years from 
now. Now. This approach can facilitate many airport in-line baggage 
system improvement projects, which can easily be completed at lower 
cost and in less than half the time required to complete an identical 
project funded with TSA's existing procurement model. Putting Americans 
to work and supporting TSA's mission. I'll give a quick overview of one 
approach with which I have been personally involved.
    In September of last year two airport authorities--supported by 
Delta Air Lines, Southwest Airlines, the Vic Thompson Company (arguably 
the leading U.S. engineering firm specializing in aviation security 
project work) and my firm--formally proposed two alternative financing 
lease agreements to TSA. We had others ready to follow. These first two 
transactions together offered an estimated $198 million in private-
sector investment to design, purchase, and maintain in-line baggage 
systems, explosive detection equipment, and checkpoint modernization 
technology.
    As proposed, at each airport, the airport authority would make the 
screening technology and infrastructure needed by TSA available to the 
agency through a multi-year services agreement (the proposed term was 8 
years). Screening systems currently operated by TSA (or regulated in 
any way by TSA) would, of course, meet all TSA performance standards, 
relevant equipment certifications and operational requirements.
    The two transactions were part of a proposed new pilot program of 
security investments, which the offerors called the Next Stage 
Investment (NSI) program.
    NSI does not contemplate any change regarding existing operational 
roles and obligations at the airport. TSA would, for example, still be 
responsible for operating or overseeing private sector operations 
regarding checked bag and checkpoint screening. By pilot testing an 
alternative to TSA's existing buy-own-maintain business model, TSA can 
gain remarkable advantages, while preserving all of its inherently 
Governmental discretion and operational control.
    The NSI program is not an ordinary commercial enterprise; rather, 
it is a government-to-government agreement that leverages private 
sector skills in support of a compelling public interest. NSI can 
substantially improve aviation security--and do so much more quickly, 
at a lower project cost and more comprehensively than can be achieved 
using TSA's existing business model for infrastructure investment. The 
offerors are convinced that their alternative financing pilot program 
provides a compelling value proposition for TSA and the aviation 
industry.
    NSI would generate well-paying jobs and other near-term economic 
activity with its technology purchases, project design, construction 
and private sector program management. Monthly fees to be paid by TSA 
under the services agreement would not begin until after system 
acceptance. In other words, NSI transactions would truly be quick-start 
projects. Because TSA does not have to obligate funds up front to get 
an NSI project off the ground, they offer a very efficient way to 
reduce the backlog of TSA project needs without imposing on Congress 
for large capital budget appropriations. A way to pilot test technology 
innovations of all sorts.
    The offerors can prove that the proposed NSI projects are sound 
financial investments for TSA--reducing overall project costs, 
decreasing the number of TSA employees needed for on-going screening 
operations and reducing overhead costs at TSA headquarters. NSI 
projects can considerably reduce TSA's dauntingly large backlog of 
near-term technology investment needs. They can smooth investment 
spikes and increase flexibility to pay for what will otherwise be large 
capital budget needs for years ahead. Many of the savings achieved drop 
straight to TSA's bottom line, generating annual saving each year 
ahead.
    Such alternative financing tools can help DHS and Congress balance 
the need to reduce Federal budget outlays while meeting DHS mission 
needs. The NSI and other alternative financing approaches proposals 
therefore raise transactional policy issues that are strategically 
significant for the long-term success of TSA and to DHS overall. In 
sum, the NSI program constitutes a potentially transformational 
business model for acquisition and maintenance of aviation security 
technology.
    So what happened with the two proposals? TSA staffers reviewed them 
and decided that the transactions would have to be scored as a capital 
lease rather than an operating lease, thus making the transaction 
unworkable. This was based on a conservative interpretation of OMB 
Circular A-11 (Appendix B), one that I would invite Members to review. 
However, a simple legislative waiver allowing TSA to accept proposals 
for such transactions would, I'm convinced, unlock very considerable 
benefits for TSA.
    2. Privatize the DHS's equipment certification testing.--The 
process within DHS for providing certification testing for explosive 
detection systems needs re-thinking. Today, the Transportation Security 
Laboratory (TSL), a part of the DHS Science and Technology Directorate, 
conducts such certification testing for TSA. A legacy FAA organization, 
TSL is home to many highly talented individuals, men and women who do 
work that is essential to DHS's mission. Certification testing is not a 
task that needs to remain on their plate.
    The current process is unnecessarily expensive, both for the 
taxpayers and for vendors seeking certification of devices. It is 
excessively time-consuming and the process for obtaining approvals 
lacks clarity, transparency, resources, and an adequate institutional 
capacity for working more quickly.
    The gauntlet through which equipment manufacturers must navigate is 
dispersed to several different testing locations. Vendors must often 
guess at the requirements for success. If a firm is trying, for 
example, to get a new EDS machine certified it starts with something 
called certification readiness testing. Later, it ships a prototype 
machine to TSL's Atlantic City, New Jersey facility. There it undergoes 
testing with military and commercial explosives. Much of the actual 
work supporting certification is done by TSL-contracted labor. In 
addition, the firm has to send another prototype to Tyndall Air Force 
Base in Florida for testing with more exotic and unstable threat 
materials. Tyndall then sends their data and images up to New Jersey 
for review. If successful, the applicant has to send a prototype 
machine for integration testing to a facility outside of Washington, 
DC, and later elsewhere for operational testing in an actual airport 
environment.
    If you fail at any stage (certification testing is appropriately 
binary; miss something on the extensive test-list and you fail), you 
pull out, try to fix the problems and ask for a spot in the busy queue 
to start over. In short, the process is unnecessarily bureaucratic--and 
a substantial impediment to innovation. I have spoken over the last 3 
years with numerous successful venture capital investors who fund 
various security start-ups or early stage businesses. Most of them 
won't even go near any investment that has to end up subjected to this 
certification process. That's a market-driven recognition that this 
essential process is too much cloaked in mystery, delay, and excessive 
cost. In short, too often the process unintentionally squelches 
innovation.
    What would an alternative process look like? First, TSL and TSA 
would still be responsible for formulating and promulgating the 
performance standards that any particular class of equipment (AIT, 
checked baggage inspection, checkpoint bag inspection, trace detection, 
etc.) must meet. That is an inherently Governmental task. Performance 
standard-setting should be a collaboration that brings together 
technologists with TSA and DHS intelligence analysts. It is the 
military and intelligence community that is continuously gathering 
relevant field information. Getting enough clarity to outsource testing 
will almost certainly make for more rigorous, adaptable, and 
transparent standards.
    Then, DHS would design and conduct a procurement to select one or 
(ideally) two vendors. The winners would receive multi-year charters to 
establish integrated professional teams qualified to do the testing. 
There should be greater transparency about the performance standards 
for testing. Like an Underwriters Laboratory does in other areas. The 
National Labs, non-profits such as Battelle or MITRE, some university 
labs, and various for-profit corporations have the basic program 
capabilities needed. The certification testing would be provided to 
industry on a fee-for-service basis. If the Government likes, DHS could 
take half of what it currently spends on this task and buy down the 
retail testing cost with a subvention for the testing lab(s). Or take 
part of that cost savings and apply those funds to results-based 
achievement awards (see below).
    With private lab, if a particular machine fails a test, it might 
not be necessary to withdraw altogether and re-schedule. Perhaps the 
same lab might also become a center of expertise that could help both 
fledgling entrepreneurs and established corporations improve the 
products. That's not appropriate or possible if DHS is doing the 
testing. It is a given that such labs would be appropriately trained 
and resourced, and routinely audited by DHS.
    In the end, the testing lab would make a recommendation for a 
certification to TSA, which would still own that final decision.
    This model has been adopted within the European Union (EU) and it 
works well. There are four E.U. labs that provide comparable 
certification testing in Europe--they are located in France, the United 
Kingdom, Germany, and Holland. The latter two are privately-owned 
facilities.
    Why is this important? Because the threats are real, and we owe it 
to TSA to put in place the best possible package of incentives to spur 
aggressive innovation by the private sector. A more efficient 
certification process should be part of such an incentive package.
    3. Results-based achievement awards.--Ten years into TSA's life, it 
is worth the effort for Congress and TSA to engage in a fresh dialogue 
about how best to structure TSA's research grant program for new 
technologies. To date, DHS has devoted considerable dollars to various 
development grants or R&D grants for firms working on what seem to be 
promising avenues of study. These grants kept some struggling firms in 
the hunt. Even still, only some TSA investments proved successful, 
others were duds.
    Alternatively, I'm convinced that a results-oriented award program 
for winning technologies would offer more effective incentives, 
especially when paired with a more transparent and swift certification 
process. TSA needs the functional equivalent of a permanent X-Prize. 
This would offer a ring to chase, notoriety to be won, and cash to be 
awarded if you are the first (or perhaps also the second) to obtain 
certification for a breakthrough technology.
    If we had offered such a grant in 2008 or 2009 for an AT machine 
that accurately identified liquid explosives in a carry-on bag, the 
loathed ``3-1-1 rule'' might today be history.
    These prizes would be meaningful only if they were rewards for 
taking security to a noticeably higher level, not for incremental 
change. A given prize should be large enough to constitute a reward and 
an incentive. TSA should pay more if the private sector delivers 
results faster. Achieving a TSA-endorsed goal might be worth a fixed 
amount if delivered in, say, 2 years. But perhaps twice as much, if 
delivered in one. I can imagine that a non-profit foundation might be 
formed with public contributions to support TSA by matching, for 
example, a given string of awards.
    A prize would perhaps also help to re-align how investors in new 
technology view the homeland security technology market. In essence, 
this is simply a suggestion to look closely at how grant incentives are 
awarded today, and ask if they might, at least in part, be better based 
also on rewards for performance, not just promises.
    I have no clue what Administrator Pistole's lawyers or his 
procurement chief would say about whether TSA has the legal authority 
to do this. But if the specific authorization were to come from 
Congress, this subcommittee would certainly be a good place to get the 
ball rolling.
    4. Open source data, image standards and a TSA app factory.--In an 
earlier life in the public sector, I became convinced that this final 
recommendation was potentially transformational. So I gave a speech 
about it one day at a large industry gathering. It quickly evoked a 
reaction from TSA's technology vendor community: They hated it.
    Members of this subcommittee may get the same reaction. Still, I 
think it is worth insisting on this legislatively, in some way or 
another.
    What is the basic recommendation? To give TSA the mandate to insist 
that any new core explosive detection imaging equipment (CT, AT, AIT, 
and the like) sold to TSA after a reasonable date certain must compile 
its image data outputs in an open-source format (format to be 
determined). Moreover, the manufacturers should be required to provide 
such additional software transparency as required to allow TSA to 
develop and deploy modular, common-use apps that would routinely 
upgrade explosive detection algorithms in its equipment.
    In July of this year the Government Accountability Office published 
an insightful report that is germane to this suggestion.\2\ It explains 
the extraordinary complexity of the job of implementing needed 
configuration management and software upgrades for TSA's inventory of 
EDS equipment and other screening devices, such as electronic trace 
detection. There are at least two big parts to this problem. The first 
is keeping up with what is known about terrorist bomb-making 
innovations. Of course, TSA has the on-going obligation to convert 
intelligence about those threats into equipment performance standards 
and operational protocols. But the second problem is that all of TSA's 
explosive detection equipment runs with proprietary software, which TSA 
has virtually no ability to control once it has bought one of these 
long-life tools.
---------------------------------------------------------------------------
    \2\ United States Government Accountability Office, Aviation 
Security: TSA Has Enhanced Its Explosive Detection Requirements for 
Checked Baggage, but Additional Screening Actions Are Needed 
(Washington, July 2011), GAO-11-740.
---------------------------------------------------------------------------
    So if TSA needs a specific software change, they are at the mercy 
of getting it from a welter of original manufacturers. I'd vouch for 
that community to say there is an enormous reservoir of professionalism 
in the manufacturing community. A commonality of interest. But not 
perfect alignment. TSA is more or less at the mercy of each 
manufacturer of its legacy screening equipment to design and implement 
system modifications as needed. Of course, TSA is expected to pay for 
any such changes. The changes themselves and the costs are usually not 
trivial. The GAO report shed light on some of the problems regarding 
this process, both at TSA and among the vendors.
    These circumstances are not unlike what existed with owners of 
cellular phones prior to introduction of the iPhone, and later its 
competition. By making the core software that ran these gizmos open-
source, Apple empowered individuals with specific interests to write 
their own apps. When a lot of people wrote apps, those innovations 
began to cascade, redefining what was possible and therefore what tools 
users could expect. In recent years, the medical community has made a 
similar, dramatic progress in standardizing software protocols for 
essential diagnostic and business tools.
    TSA finds itself with identical needs with respect to their imaging 
technology providers. Changing the status quo would not be easy, but 
dividends are large. In each case, the software component of a given 
machine is a vendor's secret sauce. So that makes for an untidy stew at 
TSA. On the other hand, if there were greater openness and 
standardization with software across these systems, that would enable 
greater flexibility and creativity. It would allow TSA to retain an 
outrageously talented team to do configuration management and to 
support innovation, matching the pace of threat changes in the real 
world. This would take a bit of time and a lot more detailed planning, 
but again, it would offer a transformational responsiveness and 
strengthen homeland security.
    In close, I'd like again to thank the Members of the subcommittee 
for affording me the time to present these four ideas. Taken together, 
they constitute a cluster of tools that could give TSA remarkable new 
capabilities to spur innovation, acquire and utilize technology, and 
create economic opportunity.

    Mr. Rogers. Next, we have Steve Lord. He is the GAO 
executive responsible for directing GAO's numerous engagements 
on the aviation surface transportation issues and regularly 
discusses these issues before Congress and at industry forums. 
He has recently conducted in-depth reviews of TSA's of 
passenger checked baggage and air cargo screening programs, 
which led to significant improvements at TSA's operations. 
Before his appointment to senior executive service in 2007, he 
led GAO's work on a number of key international security, 
finance, and trade issues. Mr. Lord has received numerous GAO 
awards for meritorious service and outstanding achievement.
    Mr. Lord, we appreciate your presence before this committee 
and on the many occasions you have been here, and look forward 
to your testimony.
    You are recognized.

  STATEMENT OF STEPHEN M. LORD, DIRECTOR, HOMELAND SECURITY, 
                GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Lord. Thank you, Mr. Chairman. I am pleased to be here 
today to discuss TSA's progress and related challenges in not 
only developing but fielding new technology. As you and 
Representative Thompson have indicated, these programs 
represent billions of dollars in life-cycle costs. This is 
obviously a very important issue.
    What I would like to do today is summarize some of the key 
insights gleaned from our recent work in this area related to 
DHS and TSA acquisition. They are in the three following areas: 
Our work has emphasized the importance of, No. 1, developing 
clear program requirements; our work has also demonstrated the 
importance of testing and conducting oversight of the 
acquisition process; and third, our work also has highlighted 
the importance of conducting cost/benefit analysis to guide 
your acquisition and deployment decisions.
    Regarding the first point, requirements, our past work has 
highlighted the importance of setting clear requirements up 
front. Otherwise, you have difficulty further in the process in 
achieving successful outcomes and you run the risk of 
increasing the costs of your programs if it is unclear what you 
are trying to achieve. For example, in June, 2010, we reported 
that over half of the 15 DHS programs we reviewed in detail 
lacked documented approval of key planning, requirement 
setting, and program baseline documents. These are all very 
important planning steps that you need to conduct up-front to 
ensure you have good outcomes.
    Regarding TSA, we also found that TSA faced similar 
challenges in identifying and meeting requirements in some 
programs. For example, in July, a few months ago, we reported 
that TSA revised it is checked baggage explosive detection 
requirements in January of this year, which we view as a good 
thing to better detect new threats. However, while the specific 
numbers are sensitive security information, some of the current 
machines are configured to detect explosives at the 2005 levels 
while the other machines are configured to detect explosives at 
the 1998 levels.
    So we recommended, given the disparities between the 
current requirements and the current capabilities, we recommend 
that TSA develop an action plan to better ensure new and 
deployed equipment meets current requirements. TSA agreed with 
our recommendation and has begun to take appropriate steps.
    In a recent report, we also recommended that TSA establish 
a better process for communicating with the vendor community, 
these are issues that Mr. Jackson and Ms. Duke previously 
raised, such as through industry days and kickoff meetings. 
This has been a reoccurring issue. We identified similar 
communication issues in our 2009 report.
    Regarding testing, our prior work has identified several 
challenges which can lead to problems down the road in 
achieving desired incomes. For example, we recently reported on 
the role played by S&T's test and evaluation and standards 
office. This is an important development. TSA stood this office 
up to ensure proper testing at the component level. We found it 
could do a better job in reviewing and approving the testing 
agents conducting testing across DHS.
    Another testing issue we identified is related to our July 
checked baggage screening report. We found TSA was trying to 
collect explosives test data as the same time as it was 
procuring new baggage screening machines. This is not to say it 
couldn't be done. This major strategy is a higher risk. We 
found that this led to some delays in the acquisition process. 
Thus, we recommended that TSA collect the needed data before 
starting the procurement process for new machines and upgrades.
    In the earlier report, and as previously referenced by 
Representative Thompson, we found that TSA deployed explosive 
trace portals, or puffers, before they demonstrated reliable 
performance in an airport environment. As a result of this 
setback, TSA has agreed and changed their processes to better 
test new technology before deploying it to airports.
    Finally, our prior work has shown that cost/benefit 
analysis can be a useful tool when making acquisition 
decisions. The good news is that in June of this year, in 
response to these and other reports, the Department has 
reported taking steps to strengthen its investment and 
acquisition process. But as we reported earlier, it is too soon 
to tell whether this is going to have the desired effect.
    Mr. Chairman, this concludes my statement. I look forward 
to any questions you may have.
    [The prepared statement of Mr. Lord follows:]
                 Prepared Statement of Stephen M. Lord
                           September 22, 2011
                             gao highlights
    Highlights of GAO-11-957T, a testimony to the Subcommittee on 
Transportation Security, Committee on Homeland Security, House of 
Representatives.
Why GAO Did This Study
    Within the Department of Homeland Security (DHS), the 
Transportation Security Administration (TSA) is responsible for 
developing and acquiring new technologies to address homeland security 
needs. TSA's acquisition programs represent billions of dollars in 
life-cycle costs and support a wide range of aviation security missions 
and investments including technologies used to screen passengers, 
checked baggage, and air cargo, among others. GAO's testimony addresses 
three key challenges identified in past work: (1) Developing technology 
program requirements, (2) overseeing and conducting testing of new 
technologies, and (3) incorporating information on costs and benefits 
in making technology acquisition decisions. This statement also 
addresses recent DHS efforts to strengthen its investment and 
acquisition processes. This statement is based on reports and 
testimonies GAO issued from October 2009 through September 2011 related 
to TSA's efforts to manage, test, and deploy various technology 
programs.
What GAO Recommends
    GAO is not making any new recommendations. In prior work, GAO made 
recommendations to address challenges related to deploying EDS to meet 
requirements, overseeing and conducting testing of new technologies, 
and incorporating information on costs and benefits in making 
technology acquisition decisions. DHS and TSA concurred and described 
actions underway to address the recommendations.
   homeland security: dhs and tsa acquisition and development of new 
                              technologies
What GAO Found
    GAO's past work has found that TSA has faced challenges in 
developing technology program requirements on a systemic and individual 
basis. Program performance cannot be accurately assessed without valid 
baseline requirements established at the program start. In June 2010, 
GAO reported that over half of the 15 DHS programs (including 3 TSA 
programs) GAO reviewed awarded contracts to initiate acquisition 
activities without component or Department approval of documents 
essential to planning acquisitions, setting operational requirements, 
or establishing acquisition program baselines. At the program level, in 
July 2011, GAO reported that in 2010 TSA revised its explosive 
detection systems (EDS) requirements to better address current threats 
and plans to implement these requirements in a phased approach. 
However, GAO reported that some number of the EDSs in TSA's fleet are 
configured to detect explosives at the levels established in the 2005 
requirements and TSA did not have a plan with time frames needed to 
deploy EDSs to meet the current requirements.
    GAO has also reported DHS and TSA challenges in overseeing and 
testing new technologies. For example, in July 2011, GAO reported that 
TSA experienced challenges in collecting data on the physical and 
chemical properties of certain explosives needed by vendors to develop 
EDS detection software and needed by TSA before procuring and deploying 
EDSs to airports. TSA and DHS Science and Technology Directorate have 
experienced these challenges because of problems associated with safely 
handling and consistently formulating some explosives. The challenges 
related to data collection for certain explosives have resulted in 
problems carrying out the EDS procurement as planned. In addition, in 
October 2009, GAO reported that TSA deployed explosives trace portals, 
a technology for detecting traces of explosives on passengers at 
airport checkpoints, in January 2006 even though TSA officials were 
aware that tests conducted during 2004 and 2005 on earlier models of 
the portals suggested the portals did not demonstrate reliable 
performance in an airport environment. In June 2006, TSA halted 
deployment of the explosives trace portals because of performance 
problems and high installation costs.
    GAO's prior work has shown that cost-benefit analyses help 
Congressional and agency decision-makers assess and prioritize resource 
investments and consider potentially more cost-effective alternatives, 
and that without this ability, agencies are at risk of experiencing 
cost overruns, missed deadlines, and performance shortfalls. GAO has 
reported that TSA has not consistently included these analyses in its 
acquisition decisionmaking.
    In June 2011, DHS reported that it is taking steps to strengthen 
its investment and acquisition management processes by implementing a 
decision-making process at critical phases throughout the investment 
life cycle. The actions DHS reports taking to address the management of 
its acquisitions and the development of new technologies are positive 
steps and, if implemented effectively, could help the Department 
address many of these challenges.
    Chairman Rogers, Ranking Member Jackson Lee, and Members of the 
subcommittee: I am pleased to be here today to discuss our past work 
examining the Transportation Security Administration's (TSA) progress 
and challenges in developing and acquiring new technologies to address 
homeland security needs. TSA acquisition programs represent billions of 
dollars in life-cycle costs and support a wide range of aviation 
security missions and investments including technologies used to screen 
passengers, checked baggage, and air cargo, among others. Within the 
Department of Homeland Security (DHS), the Science and Technology 
Directorate (S&T) has responsibility for coordinating and conducting 
basic and applied research, development, demonstration, testing, and 
evaluation activities relevant to DHS components, which also have 
responsibilities for developing, testing, acquiring, and deploying such 
technologies. For example, TSA is responsible for securing the Nation's 
transportation systems and, with S&T, researching, developing, and 
deploying technologies to, for example, screen airline passengers and 
their property.
    In recent years, we have reported that DHS has experienced 
challenges in managing its multibillion-dollar acquisition efforts, 
including implementing technologies that did not meet intended 
requirements and were not appropriately tested and evaluated, and has 
not consistently included completed analyses of costs and benefits 
before technologies were implemented.
    My testimony today focuses on the key findings of our prior work 
related to TSA's efforts to acquire and deploy new technologies to 
address homeland security needs. Our past work has identified three key 
challenges: (1) Developing technology program requirements, (2) 
overseeing and conducting testing of new technologies, and (3) 
incorporating information on costs and benefits in making technology 
acquisition decisions. This statement will also discuss recent DHS and 
TSA efforts to strengthen its investment and acquisition processes.
    This statement is based on reports and testimonies we issued from 
October 2009 through September 2011 related to TSA's efforts to manage, 
test, and deploy various technology programs.\1\ For our past work, we 
reviewed program schedules, planning documents, testing reports, and 
other acquisition documentation. For some of the programs we discuss in 
this testimony, we conducted site visits to a range of facilities, such 
as national laboratories, airports, and other locations to observe 
research, development, and testing efforts. We also conducted 
interviews with DHS component program managers and S&T officials to 
discuss issues related to individual programs. We conducted this work 
in accordance with generally accepted Government auditing standards. 
More detailed information on the scope and methodology from our 
previous work can be found within each specific report.
---------------------------------------------------------------------------
    \1\ See the related products list at the end of this statement.
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                               background
    The Aviation and Transportation Security Act (ATSA) established TSA 
as the Federal agency with primary responsibility for securing the 
Nation's civil aviation system, which includes the screening of all 
passenger and property transported from and within the United States by 
commercial passenger aircraft.\2\ In accordance with ATSA, all 
passengers, their accessible property, and their checked baggage are 
screened pursuant to TSA-established procedures at the 463 airports 
presently regulated for security by TSA. These procedures generally 
provide, among other things, that passengers pass through security 
checkpoints where they and their identification documents, and 
accessible property, are checked by transportation security officers 
(TSO), other TSA employees, or by private-sector screeners under TSA's 
Screening Partnership Program.\3\ Airport operators, however, also have 
direct responsibility for implementing TSA security requirements such 
as those relating to perimeter security and access controls, in 
accordance with their approved security programs and other TSA 
direction.
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    \2\ See Pub. L. No. 107-71, 115 Stat. 597 (2001). For purposes of 
this testimony, ``commercial passenger aircraft'' refers to a U.S.- or 
foreign-based air carrier operating under TSA-approved security 
programs with regularly scheduled passenger operations to or from a 
U.S. airport.
    \3\ Private-sector screeners under contract to and overseen by TSA, 
and not TSOs, perform screening activities at the 16 airports 
participating in TSA's Screening Partnership Program as of July 2011. 
See 49 U.S.C.  44920.
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    TSA relies upon multiple layers of security to deter, detect, and 
disrupt persons posing a potential risk to aviation security. These 
layers include behavior detection officers (BDOs), who examine 
passenger behaviors and appearances to identify passengers who might 
pose a potential security risk at TSA-regulated airports;\4\ travel 
document checkers, who examine tickets, passports, and other forms of 
identification; TSOs responsible for screening passengers and their 
carry-on baggage at passenger checkpoints, using X-ray equipment, 
magnetometers, Advanced Imaging Technology, and other devices; random 
employee screening; and checked-baggage screening systems.\5\
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    \4\ TSA designed the Screening Passengers by Observation Techniques 
program to provide BDOs with a means of identifying persons who may 
pose a potential security risk at TSA-regulated airports by focusing on 
behaviors and appearances that deviate from an established baseline and 
that may be indicative of stress, fear, or deception.
    \5\ Advanced Imaging Technology screens passengers for metallic and 
nonmetallic threats including weapons, explosives, and other objects 
concealed under layers of clothing.
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    DHS's Science and Technology Directorate (S&T) and TSA have taken 
actions to coordinate and collaborate in their efforts to develop and 
deploy technologies for aviation security. For example, they entered 
into a 2006 memorandum of understanding for using S&T's Transportation 
Security Laboratory, and they established the Capstone Integrated 
Product Team for Explosives Prevention in 2006 to help DHS, TSA, and 
the U.S. Secret Service to, among other things, identify priorities for 
explosives prevention.
 dhs and tsa have experienced challenges in developing and meeting key 
           performance requirements for various technologies
    Our past work has found that technology program performance cannot 
be accurately assessed without valid baseline requirements established 
at the program start. Without the development, review, and approval of 
key acquisition documents, such as the mission need statement, agencies 
are at risk of having poorly defined requirements that can negatively 
affect program performance and contribute to increased costs.\6\ For 
example, in June 2010, we reported that over half of the 15 DHS 
programs we reviewed awarded contracts to initiate acquisition 
activities without component or Department approval of documents 
essential to planning acquisitions, setting operational requirements, 
or establishing acquisition program baselines.\7\ For example, TSA's 
Electronic Baggage Screening Program did not have a Department-approved 
program baseline or program requirements, but TSA is acquiring and 
deploying next-generation explosive detection technology to replace 
legacy systems. We made a number of recommendations to help address 
issues related to these procurements as discussed below. DHS has 
generally agreed with these recommendations and, to varying degrees, 
has taken actions to address them.
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    \6\ The mission need statement outlines the specific functional 
capabilities required to accomplish DHS's mission and objectives, along 
with deficiencies and gaps in these capabilities.
    \7\ GAO, Department of Homeland Security: Assessments of Selected 
Complex Acquisitions, GAO-10-588SP (Washington, DC: June 30, 2010). 
Three of 15 were TSA programs.
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    In addition, our past work has found that TSA faces challenges in 
identifying and meeting program requirements in a number of its 
programs. For example:
   In July 2011, we reported that TSA revised its explosive 
        detection system (EDS) requirements to better address current 
        threats and plans to implement these requirements in a phased 
        approach.\8\ However, we reported that some number of the EDSs 
        in TSA's fleet are configured to detect explosives at the 
        levels established in the 2005 requirements. The remaining EDSs 
        are configured to detect explosives at 1998 levels. When TSA 
        established the 2005 requirements, it did not have a plan with 
        the appropriate time frames needed to deploy EDSs to meet the 
        requirements. To help ensure that EDSs are operating most 
        effectively, we recommended that TSA develop a plan to deploy 
        and operate EDSs to meet the most recent requirements to ensure 
        new and currently deployed EDSs are operated at the levels in 
        established requirements.\9\ DHS concurred with our 
        recommendation and has begun taking action to address them; for 
        example, DHS reported that TSA has developed a plan to evaluate 
        its current fleet of EDSs to determine the extent to which they 
        comply with these requirements. However, our recommendation is 
        intended to ensure that TSA operate all EDSs at airports at the 
        most recent requirements. Until TSA develops a plan identifying 
        how it will approach the upgrades for currently deployed EDSs--
        and the plan includes such items as estimated costs and the 
        number of machines that can be upgraded--it will be difficult 
        for TSA to provide reasonable assurance that its upgrade 
        approach is feasible or cost-effective. Further, while TSA's 
        efforts are positive steps, it is too early to assess their 
        effect or whether they address our recommendation.
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    \8\ GAO, Aviation Security: TSA Has Enhanced Its Explosives 
Detection Requirements for Checked Baggage, but Additional Screening 
Actions Are Needed, GAO-11-740 (Washington, DC: July 11, 2011).
    \9\ GAO-11-740. An EDS machine uses computed tomography technology 
to automatically measure the physical characteristics of objects in 
baggage. The system automatically triggers an alarm when objects that 
exhibit the physical characteristics of explosives are detected.
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   In October 2009, we reported that TSA passenger screening 
        checkpoint technologies were delayed because TSA had not 
        consistently communicated clear requirements for testing the 
        technologies.\10\ We recommended that TSA evaluate whether 
        current passenger screening procedures should be revised to 
        require the use of appropriate screening procedures until TSA 
        determined that existing emerging technologies meet their 
        functional requirements in an operational environment. TSA 
        agreed with this recommendation. However, communications issues 
        with the business community persist. In July 2011, we reported 
        that vendors for checked-baggage screening technology expressed 
        concerns about the extent to which TSA communicated with the 
        business community about the current EDS procurement.\11\ TSA 
        agreed with our July 2011 recommendation to establish a process 
        to communicate information regarding TSA's EDS acquisition to 
        EDS vendors in a timely manner and reported taking actions to 
        address it such as soliciting more feedback from vendors 
        through kickoff meetings, industry days, and classified 
        discussions of program requirements.
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    \10\ GAO, Aviation Security: DHS and TSA Have Researched, 
Developed, and Begun Deploying Passenger Checkpoint Screening 
Technologies, but Continue to Face Challenges, GAO-10-128 (Washington, 
DC: Oct. 7, 2009).
    \11\ GAO-11-740.
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 dhs and tsa have encountered challenges in overseeing and testing new 
                              technologies
    Our prior work has also shown that not resolving problems 
discovered during testing can sometimes lead to costly redesign and 
rework at a later date. Addressing such problems before moving to the 
acquisition phase can help agencies better manage costs. Specifically:
   In June 2011 we reported that S&T's Test & Evaluation and 
        Standards Office, responsible for overseeing test and 
        evaluation of DHS's major acquisition programs, reviewed or 
        approved test and evaluation documents and plans for programs 
        undergoing testing, and conducted independent assessments for 
        the programs that completed operational testing.\12\ DHS 
        senior-level officials considered the office's assessments and 
        input in deciding whether programs were ready to proceed to the 
        next acquisition phase. However, the office did not 
        consistently document its review and approval of components' 
        test agents--a Government entity or independent contractor 
        carrying out independent operational testing for a major 
        acquisition. In addition, the office did not document its 
        review of other component acquisition documents, such as those 
        establishing programs' operational requirements. We 
        recommended, among other things, that S&T develop mechanisms to 
        document its review of component acquisition documentation. DHS 
        concurred and reported actions underway to address them.
---------------------------------------------------------------------------
    \12\ GAO, DHS Science and Technology: Additional Steps Needed to 
Ensure Test and Evaluation Requirements Are Met. GAO-11-596. 
(Washington, DC: June 15, 2011).
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   In July 2011, we reported that TSA experienced challenges in 
        collecting explosives data on the physical and chemical 
        properties of certain explosives needed by vendors to develop 
        EDS detection software.\13\ These data are also needed by TSA 
        for testing the machines to determine whether they meet 
        established requirements prior to their procurement and 
        deployment to airports. TSA and S&T have experienced these 
        challenges because of problems associated with safely handling 
        and consistently formulating some explosives. The challenges 
        related to data collection for certain explosives have resulted 
        in problems carrying out the EDS procurement as planned. 
        Specifically, attempting to collect data for certain explosives 
        while simultaneously pursuing the EDS procurement delayed the 
        EDS acquisition schedule. We recommended that TSA develop a 
        plan to ensure that TSA has the explosives data needed for each 
        of the planned phases of the 2010 EDS requirements before 
        starting the procurement process for new EDSs or upgrades 
        included in each applicable phase. DHS stated that TSA modified 
        its strategy for the EDS's competitive procurement in July 2010 
        in response to the challenges in working with the explosives 
        for data collection by removing the data collection from the 
        procurement process. While TSA's plan to separate the data 
        collection from the procurement process is a positive step, we 
        feel, to fully address our recommendation, a plan is needed to 
        establish a process for ensuring that data are available before 
        starting the procurement process for new EDSs or upgrades for 
        each applicable phase.
---------------------------------------------------------------------------
    \13\ GAO-11-740
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   In July 2011, we also reported that TSA revised EDS 
        explosives detection requirements in January 2010 to better 
        address current threats and plans to implement these 
        requirements in a phased approach. TSA had previously revised 
        the EDS requirements in 2005 though it did not begin operating 
        EDS to meet the 2005 requirements until 2009. Further, TSA 
        deployed a number of EDSs that had the software necessary to 
        meet the 2005 requirements, but because the software was not 
        activated, these EDSs were still detecting explosives at levels 
        established before TSA revised the requirements in 2005. TSA 
        officials stated that prior to activating the software in these 
        EDSs, they must conduct testing to compare the false-alarm 
        rates for machines operating at one level of requirements to 
        those operating at another level of requirements. According to 
        TSA officials, the results of this testing would allow them to 
        determine if additional staff are needed at airports to help 
        resolve false alarms once the EDSs are configured to operate at 
        a certain level of requirements. TSA officials told us that 
        they plan to perform this testing as a part of the current EDS 
        acquisition.
   In October 2009, we reported that TSA deployed explosives 
        trace portals, a technology for detecting traces of explosives 
        on passengers at airport checkpoints, in January 2006 even 
        though TSA officials were aware that tests conducted during 
        2004 and 2005 on earlier models of the portals suggested the 
        portals did not demonstrate reliable performance in an airport 
        environment.\14\ TSA also lacked assurance that the portals 
        would meet functional requirements in airports within estimated 
        costs and the machines were more expensive to install and 
        maintain than expected. In June 2006, TSA halted deployment of 
        the explosives trace portals because of performance problems 
        and high installation costs. We recommended that to the extent 
        feasible, TSA ensure that tests are completed before deploying 
        checkpoint screening technologies to airports. DHS concurred 
        with the recommendation and has taken action to address it, 
        such as requiring more-recent technologies to complete both 
        laboratory and operational tests prior to deployment. For 
        example, TSA officials stated that, unlike the explosive trace 
        portal, operational testing for the Advanced Imaging Technology 
        (AIT) was successfully completed late in 2009 before its 
        deployment was fully initiated. We are currently evaluating the 
        testing conducted on AIT as part of an on-going review.
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    \14\ GAO-10-128.
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tsa has not consistently incorporated information on costs and benefits 
                    in making acquisition decisions
    According to the National Infrastructure Protection Plan, security 
strategies should be informed by, among other things, a risk assessment 
that includes threat, vulnerability, and consequence assessments, 
information such as cost-benefit analyses to prioritize investments, 
and performance measures to assess the extent to which a strategy 
reduces or mitigates the risk of terrorist attacks.\15\ Our prior work 
has shown that cost-benefit analyses help Congressional and agency 
decision makers assess and prioritize resource investments and consider 
potentially more cost-effective alternatives, and that without this 
ability, agencies are at risk of experiencing cost overruns, missed 
deadlines, and performance shortfalls. For example, we have reported 
that TSA has not consistently included these analyses in its 
acquisition decision making. Specifically:
---------------------------------------------------------------------------
    \15\ DHS, National Infrastructure Protection Plan (Washington, DC: 
June 2006). In 2009, DHS issued an updated plan that replaced the one 
issued in 2006.
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   In October 2009, we reported that TSA had not yet completed 
        a cost-benefit analysis to prioritize and fund its technology 
        investments for screening passengers at airport 
        checkpoints.\16\ One reason that TSA had difficulty developing 
        a cost-benefit analysis was that it had not yet developed life-
        cycle cost estimates for its various screening technologies. We 
        reported that this information was important because it would 
        help decision makers determine, given the cost of various 
        technologies, which technology provided the greatest mitigation 
        of risk for the resources that were available. We recommended 
        that TSA develop a cost-benefit analysis. TSA agreed with this 
        recommendation and has completed a life-cycle cost estimate, 
        but has not yet completed a cost-benefit analysis.
---------------------------------------------------------------------------
    \16\ GAO-10-128.
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   In March 2010, we reported that TSA had not conducted a 
        cost-benefit analysis to guide the initial AIT deployment 
        strategy.\17\ Such an analysis would help inform TSA's judgment 
        about the optimal deployment strategy for the AITs, as well as 
        provide information to inform the best path forward, 
        considering all elements of the screening system, for 
        addressing the vulnerability identified by the attempted 
        December 25, 2009, terrorist attack. We recommended that TSA 
        conduct a cost-benefit analysis. TSA completed a cost-
        effectiveness analysis in June 2011 and provided it to us in 
        August 2011. We are currently evaluating this analysis as part 
        of our on-going AIT review.
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    \17\ GAO-10-484T.
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   dhs has efforts underway to strengthen acquisition and technology 
                              development
    Since DHS's inception in 2003, we have designated implementing and 
transforming DHS as high-risk because DHS had to transform 22 
agencies--several with major management challenges--into one 
department. This high-risk area includes challenges in strengthening 
DHS's management functions, including acquisitions; the effect of those 
challenges on DHS's mission implementation; and challenges in 
integrating management functions within and across the Department and 
its components. Failure to effectively address DHS's management and 
mission risks could have serious consequences for U.S. National and 
economic security.\18\
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    \18\ GAO, High Risk Series: An Update, GAO-11-278 (Washington, DC: 
February, 2011).
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    In part because of the problems we have highlighted in DHS's 
acquisition process, implementing and transforming DHS has remained on 
our high-risk list. DHS currently has several plans and efforts 
underway to address the high-risk designation as well as the more 
specific challenges related to acquisition, technology development, and 
program implementation that we have previously identified.
    In June 2011, DHS reported to us that it is taking steps to 
strengthen its investment and acquisition management processes across 
the Department by implementing a decision-making process at critical 
phases throughout the investment life cycle.\19\ For example, DHS 
reported that it plans to establish a new model for managing 
Department-wide investments across their life cycles. Under this plan, 
S&T would be involved in each phase of the investment life cycle and 
participate in new councils and boards DHS is planning to create to 
help ensure that test and evaluation methods are appropriately 
considered as part of DHS's overall research and development investment 
strategies. According to DHS, S&T will help ensure that new 
technologies are properly scoped, developed, and tested before being 
implemented. DHS also reports that it is working with components to 
improve the quality and accuracy of cost estimates and has increased 
its staff during fiscal year 2011 to develop independent cost 
estimates, a GAO best practice, to ensure the accuracy and credibility 
of program costs.\20\ DHS reports that four cost estimates for level 1 
programs have been validated to date, but did not explicitly identify 
whether any of the Life Cycle Cost Estimates were for TSA programs.\21\
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    \19\ GAO-10-588SP.
    \20\ GAO, GAO Cost Estimating and Assessment Guide: Best Practices 
for Developing and Managing Capital Program Costs, GAO-09-3SP 
(Washington, DC: Mar. 2, 2009).
    \21\ Level 1 programs are those that have estimated life-cycle 
costs in excess of $1 billion and are reviewed at the Department level.
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    The actions DHS reports taking or has underway to address the 
management of its acquisitions and the development of new technologies 
are positive steps and, if implemented effectively, could help the 
Department address many of these challenges. However, showing 
demonstrable progress in executing these plans is key. In the past, DHS 
has not effectively implemented its acquisition policies, in part 
because it lacked the oversight capacity necessary to manage its 
growing portfolio of major acquisition programs. Since DHS has only 
recently initiated these actions, it is too early to fully assess their 
effect on the challenges that we have identified in our past work. 
Going forward, we believe DHS will need to demonstrate measurable, 
sustainable progress in effectively implementing these actions.
    Chairman Rogers, Ranking Member Jackson Lee, and Members of the 
subcommittee, this concludes my prepared statement. I would be pleased 
to respond to any questions that you or other Members of the 
subcommittee may have.

    Mr. Rogers. I thank you for those comments. I now recognize 
myself for my opening questions.
    Mr. Lord, you are right on the money when you talked about 
the failure to adhere to the 2005 standards that TSA has set. 
When you raised that point in your opening statement, you said 
that TSA acknowledged that was a problem and was working to 
correct it. Why haven't they corrected it already, and did they 
have set a time line? It is crazy to still be using 1998 
standards. How did they get by that long without anybody 
raising this issue?
    Mr. Lord. Well, we were somewhat surprised. When we looked 
at the 2005 standards we found that it took 4 years to start 
implementing them. So our point was we think it is a positive 
development. They are constantly updating and refining the 
standards. But we were concerned about the substantial lag 
between issuing the standards and integrating them in the 
machines. I don't want to oversimplify the complexity of the 
task. These are very complicated of technology. I am not sure 
we ever got a really clear response. Some of it was related to 
TSA's need to do some additional testing to see how the false 
alarm rates were affected. That could conceivably change the 
number of people you needed in the airport to check bags that 
are kicked aside.
    The good news is they wholeheartedly agree it shouldn't 
take that long, and they have instituted some changes to 
improve the process. As they will point out, the 1998 standards 
at the time were considered world-class standards.
    Mr. Rogers. Well, I guess what I am hoping is when you say 
they wholeheartedly agree and are going to address it, have 
they given a time line that they are committed to have 
implemented these recommendations?
    Mr. Lord. I am not sure they have a very specific time 
line, but I am convinced they are taking action to address it. 
I will have to get back to your staff if they have committed to 
a specific time line.
    Mr. Rogers. Do you have a time line to go back to revisit 
the issue and see if they have followed through?
    Mr. Lord. Yes. Under our process, any time we conduct a 
recommendation, we conduct thorough follow-up after our report 
is issued to help close the loop. Obviously, we are just as 
interested as the committee in seeing these important changes 
in the process are made.
    Mr. Rogers. Great.
    Ms. Duke, you talked about needed alignment changes. Can 
you talk more fully about that?
    Ms. Duke. The Department operates in the business lines, 
which include the CF, chief information office, chief financial 
officer, and procurement and human capital, security and 
facilities, under a functional integration model, which means 
that in the operating components, the operating components own 
those business lines. However, the chiefs of the Department 
that report to the Under Secretaries for Management have 
functional authority.
    Over time, the Department has refined those authorities to 
ensure that--to work towards ensuring that the right controls 
are in place--the oversight, the standardization of policy. 
That would be typical in a department, where a department would 
exercise over its operating components. So I think that is 
important in continuing to strengthen and refine those 
functional authorities of the business line chiefs to have the 
Department operate more effectively.
    Mr. Rogers. You recall when I was Chairman of the 
Management and Oversight Subcommittee, you had raised the issue 
of inadequate number of procurement office staff. Do you see 
that having been remedied since your departure?
    Ms. Duke. Yes. The number of procurement staff has gotten 
better. I think what continues to have to work on is the other 
pieces of staffing properly the other types of acquisition 
professionals, like the program managers; test and evaluation 
is another acquisition career field; logistics, cost 
estimating. These are all other types of acquisition 
professionals that DHS continues to try to build a need to get 
the full answer to running these programs more effectively.
    Mr. Rogers. Mr. Jackson, you talked about the high cost of 
certification under the current structure. Why is it so 
expensive and cumbersome right now and how would it be better 
if we worked in a different direction?
    Mr. Jackson. Right now, it is a fragmented process. You 
have literally to take machines that you want certified, 
oftentimes they have to make multiple machines for the 
certification process, but you have to take them to multiple 
locations--to Tindall for HME analysis and other unstable 
explosives. For other more traditional explosives, that is done 
in New Jersey at the TSL lab. Then you have early testing in a 
TSA test environment, and in the field you have pre-
certification work to do as well.
    It is just simply a bureaucratically dispersed and not 
adequately focused program. It is very, very expensive and 
becomes a checklist process. You either pass or fail. If you 
fail, it is oftentimes, if you talk to the people who have been 
doing this, very unclear to them why exactly they failed and 
what is necessary to get back in the game. Oftentimes, there 
are mistakes made by the people submitting the machines. They 
are sort of obvious and can be corrected. But there is work on 
both sides that needs to happen.
    The model that has been used in Germany, for example, has 
been very successful in making a more collaborative process 
while focusing the government on the inherently governmental 
process of defining the performance requirements that they want 
from the output, which really goes to this whole question about 
what are we trying to get these machines to do.
    More and better work can be done there. Greater clarity, 
greater transparency. Then have a group of people that can 
maybe perhaps--have two groups that can compete this process 
and work it more effectively.
    Mr. Rogers. I thank you.
    I recognize the Ranking Member for any questions he may 
have.
    Mr. Thompson. Thank you very much, Mr. Chairman.
    It has often been said hindsight is 20/20. Ms. Duke, Mr. 
Jackson, you have been here, done that. You have now gone into 
another part of your professional career. I want to get from 
you what it is you tried to do to improve this inside the 
Department and why we didn't get it done. Do you understand? So 
that going forward we can revisit it from a committee 
perspective.
    Ms. Duke. Yes, Mr. Thompson. What I tried to do in my 
positions as Chief Procurement Officer and Under Secretary of 
Management was to build the acquisition system. I think that we 
made good starts. I think the reason we didn't finish during my 
tenure was because there was so much to do. We were in the 
right direction. I think the work of Under Secretary Borras is 
taking the Department further in that direction, but just not 
the time to do it.
    For instance, the test and evaluation function that you 
mentioned in your opening statement didn't exist. So during the 
tenure that I had at the Department, we set up the test and 
evaluation function. Now, the current leadership is working to 
try to refine that to make sure it handles not only 
developmental testing, which is the part of testing that 
doesn't meet the specification, but also operational testing, 
which gets to the point of: Does it perform for the intended 
use in the operational environment?
    So I think that we set the building blocks in terms of what 
needed to happen. The carry-through has to happen to make it 
fully functional.
    I think another point is that when you talk about 
effectiveness, it is the balance of cost, schedule, and 
performance. I believe that in the aftermath of 9/11, there was 
such an emphasis on schedule--fast, fast, fast--that in the 
balance of cost, schedule, and performance, there sometimes was 
an imbalance. And schedule, getting things out quickly, ruled. 
I think that there is a necessity for continued homeland 
security excellence to balance being nimble and quick and being 
postured in a nimble way to be able to react to changes in the 
terror threat, but also have the stability where you are 
balancing schedule with cost and performance.
    Mr. Thompson. Mr. Jackson.
    Mr. Jackson. Congressman, I think that Elaine is correct in 
everything that she said, and I would just underscore a couple 
of points. The sense of urgency at the outset of the 
Department's formation was substantial and animated by an acute 
awareness that another attack could be upon us each day. So to 
some degree, it was a rush job to build DHS and then to fill it 
out in a more professional and effective and efficient fashion. 
That is not an excuse for mistakes that we have made in that 
period, but it does explain that the tradeoffs in the sense of 
trying to build a new organization from scratch and to deliver 
a capable set of assets into the field was a very complex set 
of tradeoffs.
    I think what I am trying to suggest this morning is that if 
you try going forward and focus on things that can have 
transformational change at the points of failure or the points 
of opportunity that lay on the field, then that gives you a 
constructive and positive way to look about going ahead. It is 
important to understand the failures of the past, as I think 
your opening remarks absolutely make clear.
    Mr. Thompson. Thank you. As you know, we have voted in the 
House on a budget. A lot of those items that you have 
indicated, we will have to do within S&T. Those funds have been 
cut.
    Now you referenced Under Secretary Borras. He basically has 
offered testimony to us that if he has to lay off 70 percent of 
the management directorate staff, that creates a problem.
    Ms. Duke, you referenced the fact that under your tenure we 
as a Congress plussed-up your ability to hire more people. Do 
you see the reduction in the budget for the Department as 
creating a potential problem/vulnerability for S&T?
    Ms. Duke. I believe that if Congress chooses to fund a 
program, that it must fund the people to manage the program. So 
if the decision is to fund major acquisition programs such as 
Secure Border or any type of program or TSA technology, that it 
must fund the appropriate people to manage that program. It 
goes back to my written statement point of when the money is 
appropriated to an agency or department, it has the fiduciary 
responsibility to manage that money. So I do think that we have 
to continue to fund the Federal employees to manage those 
programs--the acquisition workforce--yes.
    Mr. Thompson. So if we create new programs, new pilots, or 
whatever, and not put the resources to operate them, then we 
put those pilots or demonstrations at risk?
    Ms. Duke. Well, one shouldn't be surprised if they don't do 
as well as one had hoped if we don't fund the people to 
actually manage the programs, yes.
    Mr. Thompson. Thank you.
    I yield back.
    Mr. Rogers. I thank the gentleman.
    Ms. Duke, in looking at the TSA and the industry, how can 
we get them to partner better? What, in simple lay terms, would 
be the thing that you would suggest first and foremost?
    Ms. Duke. I think starting communications early is first 
and foremost. Mr. Lord mentioned changing the standards. TSA 
could and should be communicating with industry early on.
    Mr. Rogers. By ``early on,'' what do you mean? Give me some 
time lines.
    Ms. Duke. Before setting the standards. New standards, new 
specifications should not be a surprise to industry. So as it 
is setting its standards, I recommend that TSA be dialoguing 
with industry and see what is state-of-the-art? What is 
possible? What is the cost/benefit tradeoff between different 
standards that will meet the terrorist threat?
    Mr. Rogers. You were with the Navy. Does the DOD do what 
you are talking about in their procurement process?
    Ms. Duke. I think every Federal agency can do it more 
effectively. There is, I will call it a systemic fear that if 
the Federal Government talks with industry effectively, that it 
increases the chance of protest. So there is kind of a 
prejudice to cut off dialogue really just at the point where it 
would be most beneficial to the program. So I think that what 
DHS, DOD needs to do is manage that risk and make sure that the 
communications are fair, meaning they don't just favor a 
company. So do it maybe in open forums. I believe that doing 
them orally sometimes helps.
    When you get back into the written questions and answers, 
it kind of looks legalistic. So I think there is more 
opportunity for oral forums. I think a lot could be done and 
still not increase the risk of protest.
    Mr. Rogers. But what you are talking about, I take it, is 
more than just having industry days?
    Ms. Duke. Yes. I think industry days are very useful, but 
they are too late. They need to stay, but then there needs to 
be predecessors to industry day.
    Mr. Rogers. Mr. Jackson, you talked in your opening 
statement about an idea for lease processes. How would that 
save the Department money?
    Mr. Jackson. Well, first of all, the proposals that have 
been laid on the table would make these expensive inline 
baggage system investments and other investments in the 
technology happen much faster. So you save the time, cost of 
money, and getting them into the field more quickly. In 
addition, frankly, by cutting through some of the bureaucratic 
layers of TSA oversight in a traditional grant-based approach 
to this, you cut out some of the cost to TSA of the overhead to 
paying consultants to stand around and watch people to make 
sure they are doing it right.
    You still have, I think, an urgent necessity to have high 
standards of performance and very clear objectives about what 
the performance standards are. For example, in what a machine 
must do and what it must not do; up time, down time. All these 
types of indicators are crucial to having clarity and success 
in the mission. But, frankly, there is just a much more 
efficient way to put capital to work there.
    Also, if you are constrained with resources, as we are 
today, in trying to get done a substantial backlog of work, you 
have to figure out how to find the cash to do that. You can 
leverage an awful lot of money and get that work done up-front 
without having to obligate the entirety of a project's cost and 
hold it in escrow at TSA while the work is done.
    So I think with an approach that is very common-sense and 
uses private sector capabilities that are structured through a 
government-to-government contract--the airport authority with 
TSA--that should be something that we figure out how to work. 
It is not that hard. It is a very transformational way, 
however, to intrude a lot more efficiency and effectiveness, 
and especially over the next couple of years where I think the 
recapitalization problem is going to leach out the funds that 
would otherwise be used for some of this backlog of inline 
systems, that it is an especially timely thing to do, and the 
cost of capital is at an all-time low, so it is an effective 
way to do this.
    Mr. Rogers. Is that process being used by any other 
governmental entity that you are aware of?
    Mr. Jackson. Variations of it are. For example, at LAX, 
using a basic grant agreement, Delta had worked with a private 
sector vendor to essentially build and maintain an in-line 
system for the terminal that Delta operates out of. Southwest 
Airlines has done a similar thing at multiple different 
airports.
    So there is experience with this. At Denver, for example, 
after 
9/11, the airport was very impatient, rightfully so, to get a 
big EDS machine deployment working. So they worked with the 
manufacturer to do a financing project for that, for which TSA 
came behind and did reimbursements.
    So there is plenty of experience in the private sector of 
how to do these sort of things. There is no one group or way to 
sign on to make it work. There just needs to be some 
flexibility, in my view, to have a very fundamental thing that 
allows the airport authority to structure and take the risk for 
an investment that supports themselves, the airlines, and TSA, 
and then allow TSA simply to buy that as a service from that 
airport authority. That is a dramatic transformation and 
energizing way to give TSA the tools they need to do it without 
having to come to Congress and beg for so many billions of 
dollars.
    Mr. Rogers. Great. Thank you.
    The Chairman now recognizes Mr. Davis from Illinois for any 
questions he may have.
    Mr. Davis. Thank you very much, Mr. Chairman.
    Mr. Jackson, I notice in your testimony that you suggested 
a prize for technology. One of the complaints that I have heard 
from vendors, both large and small, is what they consider to be 
a lack of direction and planning from TSA. There is no 
indication of multi-year planning or strategy in its 
procurement process. How would offering a prize really help, 
and wouldn't it continue to hold TSA to being reactionary or 
being a reactor as opposed the initiator?
    Mr. Jackson. An excellent question. Let me see if I can try 
to just explain in short compass.
    This is not something that would cover every need or 
objective at TSA, but for some major transformational 
investments that need to happen, where you take not incremental 
change but substantial change, what you are trying to do is go 
from the existing model, which is basically to seed a variety 
of different firms and hope they come out with a successful 
machine or a successful technology. Instead, to reverse that a 
little bit and say: Here is a very important outcome.
    I give one example, which is, I believe, that it is 
possible, I know that it is possible, with the right focus, to 
get an AT machine to be able to detect liquid explosives in a 
bag. TSA has gone through several years of conversations with 
the vendor community about that. I believe if you made a very 
simple objective of achieving that goal and then put some money 
behind it, it would induce people to invest the time and energy 
and focus to get there, whereas right now it is a very 
uncertain outcome for the vendor community; if you invest in 
this thing one day and another thing another day, whether you 
are going to be on point for what TSA really most needs.
    So that is just a way of trying to get the Government to 
focus on the two or three things that are most transformational 
for the Government, and then the private sector to chase it 
with a sense of urgency and dispatch and innovation.
    Mr. Davis. So are you saying that the vendors are more 
reluctant to explore new or different approaches if they don't 
have much indication of what the outcome might be in terms of 
TSA deciding that what they have come up with is something that 
it really wants to use?
    Mr. Jackson. That is true. It relates to the other point I 
had made in the testimony about the complexity and expense and 
time delays associated with the certification process. So if 
you could make that more transparent, more efficient, less 
costly, then you can actually help bring these two ideas 
together to allow TSA to focus their highest priorities in a 
way that is very clear and to give the vendor community a 
system that they can use to get it certified.
    Mr. Davis. Thank you. That leads me to my next question, 
actually. Mr. Lord, what would you say is the most effective 
means for DHS to assess cost and benefits of new technologies?
    Mr. Lord. In terms of cost, first of all, they already 
produce life-cycle cost estimates at the component level. What 
has been lacking in the past, as Ms. Duke alluded to, is the 
need to validate these cost estimates. Have an independent 
office outside of the component validate independently whether 
these estimates are realistic. That is in terms of cost.
    In terms of performance, again, it is an independent 
oversight issue. I think it is always good to have a second set 
of eyes review any estimates or summary of performance that are 
delivered to senior management.
    So, again, it is just an independent oversight function 
that has recently been stood up. We think it is a good thing. 
It has taken years to erect it. So we would obviously have some 
concerns if that was changed significantly.
    Mr. Davis. Thank you very much. My time is about to expire, 
so I will just end there.
    Mr. Rogers. I thank the gentleman.
    Mr. Jackson, in your testimony, you discussed the 
considerable backlog of inline checked baggage system 
replacement projects. Even if Congress writes annual checks to 
TSA to replace these technologies as they age, would we find 
ourselves during this perpetually as the technologies need to 
be replaced? In your opinion, is this a sustainable way of 
doing business? Ms. Duke, I would like your comments on this as 
well.
    Mr. Jackson. I don't think it is sustainable under the 
current procurement model because we need to address several 
problems in this--how to get more capital into the field faster 
and more efficiently. That is a big problem. Alternative 
finance helped address that.
    There is a question that I think has come up with several 
of the Members' questions here this morning about the change 
and the pace of change for managing the software that drives 
detection in these big explosive detection systems both at the 
checkpoint and downstairs with checked baggage. The issue is 
that our opponents in the field are constantly innovating them 
in the way they package and the types the recipes or formulas 
they use for explosives. It is not just a simple inventory of 
death tools that are out there and once you figure out how to 
use those, you have got everything covered. It is a constantly 
iterative cat-and-mouse game between the bad guys and the 
Government to figure out how best to use your devices.
    The Government puts the standard on the table when they buy 
these things in good faith. As Mr. Lord says, the procurements 
we did after 9/11, we took the state-of-the-art that we could 
deliver and that the manufacturers could come to the table 
with. But that state-of-the-art changes over time and it 
produces a series of different software operating platforms 
that have different capabilities different from one 
manufacturer to the next and over time they get progressively 
more complex and more efficient and more effective. But the 
threat changes as well.
    So what you are in is a game of exploring how to do this on 
a continuous basis. That is why the suggestion that I make 
about making the architecture of the software open and 
transparent is so vital because what that would do is give TSA 
the capability to take charge of its destiny in making rapid 
and iterative changes in the software algorithms necessary to 
make these machines work against the current threat level. That 
way you get a better value for the long term for the very 
substantial investment that you have paid for with the 
machines.
    The medical industry has made phenomenal progress in this 
way. If you just think about what an iPhone did with apps, it 
is the same thing, really. When you make an open architecture 
for a device that is widely used and iteratively changes, you 
now empower a whole community of smart people to come in and 
help you work on those type of tools.
    What you can do if you had that and you gave a little prize 
money for success on specific things, these four things all 
link together to say you have to stand back from where we have 
been and really evaluate how to go forward and give TSA the 
tools they need to succeed. Some of these things that I have 
suggested TSA may be less favorable about, and others much more 
favorable. Some in the industry may not like them as much and 
others they may like very much. I am saying that the 
responsibility of an independent analyst and the Congress is to 
step back and say: How can we put together the right tools to 
make it happen?
    Mr. Rogers. Ms. Duke.
    Ms. Duke. Mr. Chairman, when TSA stood up, its focus was on 
Federalizing the airports in a short amount of time. I think 
from the perspective of getting that, it was a huge success. 
Two challenges that it resulted in that is something that we 
have to deal with now are the reliance on technology, virtually 
solely, and second are what I call chokepoints in both 
passenger and baggage screening in the process.
    So I think that as TSA moves forward, looking at the 
layered risk-based approach to screening technology is an 
improvement that could be made. We still have to rely on 
technology. But how do we address the risk-based piece of it, 
and the layer, including like the behavioral technology.
    So I think that TSA, working with CBP, because that is 
something they have done in the past, is a step in the right 
direction. So you have your technology as a base, but then you 
also have the layered approach that deals with these two 
challenges. One is the overreliance on technology and the cost 
of that, and the second are these movement of goods and people 
chokepoints.
    Mr. Rogers. Mr. Lord, your thoughts.
    Mr. Lord. I agree with Ms. Duke, it is very important not 
to lose sight of the impact on commerce. You are obviously 
trying to balance commercial considerations--moving people 
through airports with security needs. I always like to add 
another consideration, and that is privacy. That has recently 
been discussed extensively in Congress and in the press. So 
within that triangle, you are trying to figure out where to put 
your pin--privacy; security; and throughput, or commerce. So I 
think that is a constant struggle.
    In terms of the additional financing flexibility Mr. 
Jackson has alluded to, I think that is a very interesting 
concept. I haven't seen any proposals in writing, but I know 
the TSA administrator, he has already been on record in 
suggesting there could be some additional flexibility needed in 
financing so many improvements being made at airports.
    In terms of open software issue, I believe I would have to 
think about that. There is obviously some National security 
considerations involved here. We don't want our adversaries to 
know exactly what our requirements are, what our machines are 
looking for. Is there a way to make the process more 
transparent in terms of testing? Probably if TSA was here to 
probably mention this new testing facility they are coming up 
with, hopefully that will address some of Mr. Jackson's 
concerns stated today.
    Mr. Rogers. Excellent. The Chairman now recognizes the 
Ranking Member Ms. Jackson Lee from Texas.
    Ms. Jackson Lee. Mr. Chairman, let me thank you for your 
indulgence. I appreciate the opportunity to briefly give my 
opening remarks and how the Chairman must proceed I would like 
to raise a few questions if I might.
    [The statement of Ranking Member Jackson Lee follows:]
        Prepared Statement of Ranking Member Sheila Jackson Lee
                           September 22, 2011
    TSA and the Science and Technology Directorate at DHS are tasked 
with the critical mission of delivering technologies that can improve 
transportation security. I cannot overstate the importance of this 
mission.
    Given the risks to our aviation and mass transit sectors, it is 
imperative that we take a close look at how DHS integrates an effective 
security technology approach into our transportation security programs.
    Last Congress, this subcommittee took the first step in this 
evaluation.
    I held a hearing exploring the Department's effectiveness in 
acquiring and deploying passenger screening technologies and 
procedures.
    Coordination between the Science and Technology Directorate and the 
Transportation Security Administration is essential to ensuring that 
the best technology is deployed in a systematic way.
    We cannot address emerging threats with an ad hoc practice and a 
lack of process.
    To be clear, Mr. Chairman, the Department has come a long way since 
its establishment but more must be done to ensure an effective research 
and development program that leads to purchases in the real world.
    However, because my colleagues on the other side of the aisle have 
proposed to slash S&T's budget below the President's fiscal year 2012 
request, I have little hope that S&T will be able to fulfill its 
mission.
    We ask the Department to improve efficiency, delivery, and 
coordination efforts but we want them to do this with inadequate 
funding.
    Doing more with less is a good campaign slogan, but it does not 
explain how we get the necessary research and development done.
    It doesn't explain how we keep this Nation safe from emerging 
threats.
    Mr. Chairman, I know from my discussions with you, that we share 
the same commitment to securing our Nation's transportation systems.

    Ms. Jackson Lee. Let me thank the witness for their 
presence here today and I acknowledge some other friends and 
individuals we discussed in the past I am delighted with the 
Chairman and our effort to be part of the securing of the 
homeland and recognizing the importance of job opportunities 
through new technology. I think this is a very instructive 
hearing.
    Mr. Chairman, I would encourage that we expand these 
hearings and hear more about the emerging technology.
    In particular, TSA and the science and technology 
directorate at DHS are tasked with the critical mission of 
delivering technologies that can improve transportation 
security. I cannot overstate the importance of this mission, 
given the risks to our aviation and mass transit sectors. It is 
imperative that we take a close look at how DHS integrates an 
effective security technology approach in our transportation 
security programs.
    If I might anecdotally say, had any of us heard of a shoe 
bomb in 1995? But our terrorist community, if I might use that 
with some tongue-in-cheek, are at the cutting edge of 
technology. Had anyone heard on the Christmas day bomber of the 
hiding or the placing of bomb materials in a strategic location 
of which it was found? They are looking for new ways to do us 
harm.
    Last Congress, this subcommittee took the first step in 
this evaluation. I held a hearing exploring the Department's 
effectiveness and acquiring and deploying passenger screening 
technologies and procedures. Coordination between the science 
and technology directorate and the Transportation Security 
Administration is essential to ensure that the best technology 
is deployed in a systemic way.
    We cannot address emerging threats with an ad hoc practice 
and a lack of progress or a lack of process. To be clear, Mr. 
Chairman, the Department has come a long way since its 
establishment, but more must be done to ensure an effective 
research and development program that leads to purchases in the 
real world. However, because of my colleagues on the other side 
of the aisle I am concerned about the slash in the S&T's budget 
below the President's fiscal year 2012 request. I have some 
concern that S&T will be able to fill its mission. Maybe the 
Chairman and I can raise this question in a bipartisan manner. 
I have always said we should not nickel-and-dime our security. 
We ask the Department to improve efficiency, delivery, and 
coordination efforts, and I expect that they will do so. But I 
also think that they cannot function with inadequate funding. 
Doing more with less is a good campaign slogan, but it does not 
explain how we get the necessary research and development done. 
It doesn't explain how to keep the Nation safe from emerging 
threats.
    Secretary Napolitano is reaching across the Nation on the 
slogan and the effort of ``see something, say something.'' We 
are calling upon Americans to rise to their higher angels and 
to be part of securing the homeland. We must do our job and our 
job is to ensure that the resources are there for the right 
work to be done, to be able to approach and face the threats 
that are constantly emerging.
    Mr. Chairman, I know from my discussions with you that we 
share the same commitment to secure our Nation's transportation 
systems, and I look forward to doing so. I might add 
anecdotally that I think the Chairman and I were speaking of 
the new technology and canines, the kinds of canines, how they 
are bred. That is a step that was not in focus or in play, if 
you will, either before 9/11 or shortly thereafter. So I 
believe that our technology is the key to the 21st Century and 
I ask as I proceed with my questions that we continue on that 
pathway.
    Let me proceed with some questions. Ms. Duke, welcome. It 
is good to see you. I know we went down this pathway again, but 
it disturbs me that I would like to pose it again and that is 
around the explosives trace portal known as puffers, costing us 
$36 million. The reason why I use it is because it will be used 
by others. I know that my Ranking Member of the full committee 
also posed this question that it was removed from the airport 
checkpoints in 6 months. I think I remember being puffed and 
seeing how it worked. It was an attractive looking and I do not 
say this with disrespect, but toy. It had those kinds of bells 
and whistles. I can imagine it might have been that kind of an 
attractive sight when someone made the determination.
    So the question comes again: What is the level of expertise 
that reviews new technology? What are the bells and whistles 
that should go off? I would like Mr. Lord to comment, $36 
million used against us at some point in time, it might have 
had some value, but it didn't function in 6 months. Do we have 
the right kind of expertise that are vetting these particular 
new projects?
    Ms. Duke. I think there are two aspects at the beginning 
and end of the process: The first is setting the requirement to 
meet the operational need most effectively. We talked about 
that a little earlier. The second----
    Ms. Jackson Lee. Did we do that in this instance or do we 
have the kind of expertise? I doubt that----
    Ms. Duke. I think the Department and TSA continues to build 
it, but it is still a work in progress. I think at the other 
end of cycle is test and evaluation. I mentioned earlier that 
initially there was probably not enough testing in either area. 
Then we started to improve the developmental testing which 
deals with how can--do these machines meet the specifications. 
Then near the end of my tenure, we started to, more 
systematically, do more operational testing and that is the 
full picture. Operational testing just doesn't meet the 
specification, but does it operate for the intended purpose in 
the intended environment? I think this is an area that is 
building and will really help ensure the puffer scenario 
doesn't happen in the future.
    Ms. Jackson Lee. Just quickly, do you know how many staff 
are involved in those layers, operational, developmental?
    Ms. Duke. At the Department level there are few people in 
S&T, standard and test and evaluation division. There should be 
test and evaluation personnel in each of the major programs but 
I don't know the numbers.
    Ms. Jackson Lee. Can you get back to us with a number, it 
would be helpful to me, if you would. Did you hear me?
    Ms. Duke. Yes.
    Ms. Jackson Lee. If you would say what your appointees----
    Ms. Duke. I will work with the Department, since I am 
retired now, I will work with the Department to get access to 
that information.
    Ms. Jackson Lee. I appreciate that. Mr. Lord, do you want 
to comment on how we found ourselves in that manner? Do you 
have the expertise in house?
    Mr. Lord. I think this whole puffer episode underscores the 
importance of conducting rigorous testing and evaluation. I 
would just like to amplify. I agree with Ms. Duke's assessment. 
I would like to clarify, there are two types of test and 
evaluation. There is qualification test and evaluation, that is 
where you test against the requirements in a controlled 
laboratory setting. I think that was done. But I think where 
the shortfall occurred is operational test and evaluation. That 
is where you test in a real-world setting. What they found with 
the puffers is when there is dirt in the air, high humidity, 
temperature variations, that it did not perform like it did in 
the carefully controlled laboratory settings. So again, the 
lesson learned is you need to test it in real-world conditions. 
That should be part of your testing scenario. They have changed 
their processes now. That is a requirement for the new 
technology. So hopefully, these types of incidents will be 
avoided in the future.
    Ms. Jackson Lee. Do we have the in-house expertise? Do we 
have scientists at the level----
    Mr. Lord. We not only have more procurement experts, 
acquisition experts, independent cost estimators. There are 
more people concerned with testing and evaluation. Again, as I 
stated earlier, you need to have that function outside of the 
component level, you need to have an independent function and 
they stood that up. So it is--I mean, they have been 
strengthening the process over the years. It has taken 
probably--it has taken a long time, but they do have the 
enhanced processes and testing capabilities now, which is a 
good thing.
    Ms. Jackson Lee. Let me quickly ask--thank you very much, 
Mr. Lord. If I can put on the record that I would like to get 
the numbers of the staff and the levels of positions that they 
hold. So Mr. Chairman, I am not sure Mr. Lord will be able to 
help us, Ms. Duke is retired, and I do appreciate that.
    Let me just pose this question: There is not a moment that 
we are home in our districts that the American people whose tax 
dollars we are entrusted to who are in business ask us about 
this complicated process of doing business with the Federal 
Government. I have encouraged the President to talk more about 
buy America from the perspective of the Federal Government that 
every effort is made to buy America. I think if we buy paper 
clips from a small business in the United States, we have just 
built capacity beyond our expectation.
    What steps do you recommend for TSA in order to issue and 
award contracts quickly, at the same time, ensuring competition 
and the proper use of TSA funds in the technology area? What 
can we do? Forgive me if someone has asked that.
    Ms. Duke. I think that one of the key steps is 
communicating with industry early and openly and that goes back 
to before the requirements are set, not just a day once the 
requests for proposals was issued, but work with industry early 
on about what is state-of-the-art, what is the art of the 
possible and what are the cost and schedule tradeoffs for going 
to the cutting edge technology, versus commercially available 
and the stages in between. So I think that is very important. I 
also think it allows industry to bid more effectively if they 
know what to anticipate and plan for.
    I think setting clear requirements is No. 1. I know I have 
worked that into every hearing that I have ever testified in, 
but that is important. Industry has to make a decision whether 
to propose on a contract. Without a good requirement it really 
is kind of--it really is taking on undue business risk.
    A third part, I think, is educating the businesses, 
especially the small businesses and how to do business with the 
Government, programs such as the Small Business Innovative 
Research Program need to continue so that small businesses have 
the opportunity to enter the Federal market in a prime contract 
function, not just as a subcontractor.
    Ms. Jackson Lee. Let's probe that because we have had long 
discussions. I know when you were in the Government you were 
out on the road. We are still hearing from small minority and 
women-owned businesses. How do we get the mind-set to be more 
energetic on really aggressively looking at small businesses 
may make their application or they are fishing around to really 
create the atmosphere they could thrive and secure a contract? 
Is there some pearl of wisdom or some action you took that you 
not just offered to us in testimony right now? Some anecdotal 
story that might give us some understanding how to get small 
businesses involved.
    Ms. Duke. Well, I think really the key is for the small 
businesses decoding the process, there are a lot of acronyms 
and stuff that seem complicated. I think education is the key.
    I think the recent change to allow set-asides for women-
owned business is a step in the right direction for that. I 
encourage women-owned businesses to get certified just like 
there is certification under the 8(a) program, because that 
allows you to compete against your peers, just other small 
women-owned businesses as other small 8(a)s, that is huge, 
because it is more of a level playing field than you competing 
against a large business. Both the Department and Small 
Business Administration has to really continue that education 
process.
    The other point if it is a pearl of wisdom, I would say is 
think small; it is always hard to get that first contract, just 
like it is hard to get that first job when you are out of 
college. So when I am coaching small businesses, I say really 
look for that opportunity where you can garner your reputation 
and get that past performance in Federal Government. I think 
that is important.
    Ms. Jackson Lee. Let me just--Mr. Chairman, I am concluding 
in just a moment. Let me make this point on the record, Mr. 
Chairman, which I hope we can find a way, maybe the committee 
could join in sort of an on-the-Hill summit about this small 
business issue because it impacts all of our constituents. I 
want the Federal Government to put small contracts forward. It 
is difficult to get procurement officer to think of the value 
of the those small contracts, maybe you can have greater 
encouragement, if we could, to be able to do that.
    Mr. Jackson, from your business perspective, a comment on 
doing business with the Federal Government, particularly on the 
technology lines.
    Mr. Jackson. Well, I think that TSA has made huge progress 
in trying to figure out structures and mechanisms to work with 
businesses large and small. So they are in the process of 
growing, they have made substantial changes and progress and 
there is more to do. So there is always more to do. So I think 
that TSA could do more in reaching out to businesses in a 
systemic way.
    I agree with what Elaine has said for the process. I would 
also add it is equally important once a business has gotten an 
award for a service or technology, it is particularly important 
to give sustained feedback and input to the company about how 
they are performing. That is frequently an area that is easy to 
ignore or forget. So if you are producing a piece of technology 
and it gets out into the field and it is not doing certain 
things that the users would like or it is doing them 
particularly well, those are things that need constant 
feedback. It has to start with the beginning of an idea of a 
need and continue all the way through the operational life.
    Ms. Jackson Lee. If I might interrupt you, do you know the 
functional coordination officers and capabilities requirement 
council that DHS is proposing? Does that ring a bell?
    Mr. Jackson. I do not, ma'am.
    Ms. Duke. Ms. Duke knows about it. Why does the Federal 
Government have--Chairman, do you know about the functional 
coordination offices and capabilities and requirement council?
    Mr. Rogers. First time I have heard it.
    Ms. Jackson Lee. Ms. Duke, will you tell us that be worth--
Mr. Jackson, I didn't mean to interrupt you. I just thought you 
may be aware of it.
    Ms. Duke. Mr. Lord may want to comment, but that is part of 
DHS's answer to the GAO integrated high-risk plan. What that 
seeks to do is define commonality in capabilities and mission 
requirements across DHS and eventually buy more effectively. So 
if TSA, CVP Coast Guard have a similar mission requirement, how 
can you rationalize the requirements and then buy them more 
effectively?
    Ms. Jackson Lee. Is it proposed, or is it in place yet?
    Ms. Duke. It is part of the report that went to GAO and 
they are in the process of putting it together. I believe Mr. 
Lord could verify that.
    Mr. Lord. That is correct.
    Ms. Jackson Lee. Thank you. I will finish with this 
question Ms. Duke. Thank you, Mr. Lord, and I do not take issue 
with the language as long as I understand it, but it is pretty 
long title here. I noted that it is to become more efficient 
with the buying process when there is overlap.
    Let me just ask this question, Ms. Duke. In your testimony, 
you emphasize a need for an appropriate acquisition workforce 
in your review or your knowledge of the proposed House budget, 
which I will just say cuts quite a bit. Does the proposed House 
budget impact DHS's effort to ensure accountability and a 
acquisition workforce adequate to stimulate economic growth and 
innovative solutions in Homeland Security technologies?
    Ms. Duke. I have not looked at the current proposed budget, 
but I can say this: One is that the acquisition workforce has 
to stay in proportion to the program dollars. So if the cut in 
the acquisition workforce is more than the program dollars, 
that is going to be to the detriment of the spending of the 
money. It will make it harder for the acquisition workforce to 
get the requirement out there and get under contract to allow 
job growth and industry. I learned in industry, that oftentimes 
they have a percentage so that as they look at program or 
direct dollars, they anticipate a percentage increase and the 
need for people like acquisition workforce, human resources, 
and I think that is important in ensuring that the taxpayers 
dollars are spent.
    Ms. Jackson Lee. Thank you very much for your indulgence, 
Mr. Chairman. To the witnesses, let me thank you very much for 
what I think is a major component to securing the homeland, but 
at the same time, the Department of Homeland Security gives a 
very, very important opportunity for the genius of America, the 
new inventors, the new technology that can both secure us, but 
generate the next level of inventiveness and jobs. With that, 
Mr. Chairman, I thank you for this hearing and I yield back.
    Mr. Rogers. I thank the gentlelady.
    Mr. Lord, in your opinion, is it fair to say that in the 
procurement process TSA over the last 10 years, we have largely 
been reacting to the last terrorist attempt rather than looking 
forward to new technologies and new threats?
    Mr. Lord. That is--hmm. I would have to say in terms of 
their requirement-setting process, they are trying to 
anticipate new threats. That is why in January of this year 
they broadened and deepened, I can't give any specifics, it is 
sensitive information, but they have made an attempt to keep 
abreast of latest developments. You know, it is Government 
bureaucracy, sometimes it probably takes a little longer than 
you would anticipate, but they are making an attempt. In 
terms----
    Mr. Rogers. Do they have formal practice, exercises is what 
I am getting at. When I played football a long, long time ago, 
we would have what we call skull sessions, that was all about 
brainstorming. I am wondering does TSA have formal meetings or 
functions where they just sit around and think in cooperation 
with the private sector, what are our threats? How can we deal 
with them? Are you aware of anything like that, any exercises?
    Mr. Lord. They set up this process with S&T, it is called 
integrated product team IPT capstone process where they try to 
harmonize and discuss what are the threats and requirements, 
what are the detection issues we should be aware of. I know 
they made at least some effort. Also, they do reach out, Ms. 
Duke mentioned the industry days, they conduct classified 
briefings. They have discussions with industry: Is it enough? I 
don't know how you would measure that, but they do have 
mechanisms in place. What we found in our prior work is vendor 
still considered an issue, it is difficult to evaluate, because 
the vendors, you are not sure what the basis of the complaint 
is, but they have been very vocal with us. I think it is 
something TSA needs to continue to work on. Obviously they are 
trying, but could further efforts be made? Absolutely.
    Mr. Rogers. Mr. Jackson, your thoughts?
    Mr. Jackson. I think TSA absolutely does look in the rear-
view mirror, and they must do that, because once you have a 
known threat, you have no excuse not to try to cover that 
threat in an effective way. My experience in the Government 
showed that we spent however a substantial amount of time, a 
really focused effort to try to anticipate changes in this. So 
the TSA administrator begins his or her day with an 
intelligence briefing from the intelligence community that 
sucks up all this sort of information about current plots, 
techniques, tools, devices, modes of attack, and it has home at 
DHS headquarters, intelligence shop, it has an intelligence 
shop home at TSA. This is how you begin your day if you were in 
a job like my old one, I would start 7:00 a.m. with those type 
of briefings.
    Then each of the operating components, most all the 
operating components have real field work, CDP, Coast Guard, 
TSA, Secret Service have that focus. Then there is a systemic 
search for what you can do to make a cost-effective investment 
for a dollar to try to cover the known threats and the unknown 
threats. For example, when Kip Hawley became TSA administrator, 
we had a very sustained and focused conversation around how can 
I spend a certain amount of money and achieve the maximum extra 
benefit for detection. I had some of these conversations with 
you at the time. We thought getting more dogs and behavior 
recognition into the field as fast as we could in a disciplined 
way, were the two most efficient ways to take on a bunch of 
unknown problems, but which fell into that categories that we 
knew we could work through with those tools. So my experience 
is you have to do both, TSA does both. It is a hard job to try 
to crystal ball the means of attack in the future. It can 
always be improved, that process can always be improved, I 
assume, but they work at it.
    Mr. Rogers. Ms. Duke, your thoughts.
    Ms. Duke. One of the recommendations I would have is that 
one difference between Department of Defense and Department of 
Homeland Security is the budgeting and programming process. 
Even though both have an annual budget. Within Homeland 
Security it tends really, even though you submit a 5-year 
budget, it is really nearly 100 percent annual. Where in 
Defense even though most of their appropriations are annual 
also there is really a 5-year plan. They really look at the 5-
year budget. I think that TSA has to look back, as Mr. Jackson 
said, and also, has to look forward.
    But really, looking at the 5-year budget as a plan, subject 
to the annual adjustments that are necessary, but really 
looking at that comprehensively, because the years do feed on 
each other, I think would help TSA look more perspectively and 
plan better. I think it would also help industry because then 
they can anticipate if there is a reasonable assurance that 
they can predict the out years, I think it would help them use 
some of their--as you know every industry partner major has the 
IRAD funds, internal research and development. It would help 
them use that more effectively if they knew what they could 
reasonably anticipate in the budget out years.
    Mr. Rogers. Excellent. Mr. Lord, you had something you 
wanted to say?
    Mr. Lord. Yes, I wanted to add one thing to my prior 
remarks. On the Department-wide basis, the Department has an 
office of risk management and analysis, they go through the 
scenario testing, what, looking at different scenarios, how the 
terrorists could hit us next. It is really interesting, they 
literally model hundreds of scenarios. They try to get at the 
unknown unknowns, as former Secretary of Defense Rumsfeld once 
labeled it, the so-called Black Swan, what should we be worried 
about that we can't even vision. Sort of futuristic, I think 
that office does good work and that is an important part of 
their program.
    Mr. Rogers. I am glad you offered that. The Chairman now 
will recognize Mr. Richmond, if he has any questions.
    Mr. Richmond. I will just ask one and it is to Mr. Lord. I 
know GAO has done extensive work on TSA and looking at their 
workforce. I guess my specific question would be looking at the 
high turnover and attrition there, and its impacts on fewer 
training opportunities, especially based on the fact the 
checkpoints are understaffed and workers are not allowed to 
take time off for training. What type of impact does that have 
on the training on the deployment of checkpoint technology?
    Mr. Lord. Um, all due respect, sir, we never looked at that 
question specifically. What we did look at was turnover at the 
higher level, the SES level. We found that turnover typically 
goes up after a new administrator comes on board and levels 
out. Over time, it had gone down. It wasn't out of line with 
the rest of the Department, so I can't answer that specifically 
as relates to the transportation security officers, but the 
only work we have done was at a much higher level on that.
    Mr. Richmond. Thank you. I yield back.
    Mr. Rogers. I thank the gentlemen. I thank the witnesses. 
This has been very helpful. This hearing is the first in a 
series of three. We wanted to get folks who could to have kind 
of a rearview mirror perspective and get their thought from the 
20/20, ``you are out of the Government looking back in'' 
perspective. Our next panel hearing will be with private sector 
folks who have had struggles in working with the Department, 
what they think we can do to improve the procurement process. 
Then we will have a third and final hearing where we have DHS 
folks come in who are doing it now. They will have the benefit 
of your testimony and comments here today as well as the 
private sector folks, and hopefully well get something 
productive out of it. I do appreciate all of you. I want to 
remind the witnesses that there may be some additional 
questions from Members who couldn't be here. So we will hold it 
open for 10 days, if you could respond to those, I would 
appreciate it. Again this is very helpful. Thank you for being 
here, this hearing is adjourned.
    [Whereupon, at 11:25 a.m., the subcommittee was adjourned.]

    TSA REFORM: EXPLORING INNOVATIONS IN TECHNOLOGY PROCUREMENT TO 
                     STIMULATE JOB GROWTH, PART II

                              ----------                              

                       Thursday, October 13, 2011

             U.S. House of Representatives,
           Subcommittee on Transportation Security,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:15 p.m., in 
Room 311, Cannon House Office Building, Hon. Mike Rogers 
[Chairman of the subcommittee] presiding.
    Present: Representatives Rogers, Jackson Lee, and Richmond.
    Mr. Rogers. The Homeland Security Subcommittee on 
Transportation will come to order. The subcommittee is meeting 
today to continue to examine innovative solutions to technology 
procurement at TSA that could generate cost savings for the 
Federal Government and stimulate job growth within the private 
sector.
    I want to thank our witnesses for being here. I know it is 
a consuming effort, but I appreciate them making the time to 
participate in what I believe is going to be a very timely 
hearing. We look forward to your thoughts on how TSA can 
continue to improve its working relationship with the private 
sector.
    Our job on this subcommittee is to ensure that TSA has the 
resources and capabilities needed to secure commerce and the 
traveling public. Through that oversight, we have a great 
opportunity to examine the ways to solve some of our Nation's 
other challenges, the most pressing of which right now is high 
unemployment. This subcommittee held the first installment of 
this series of hearings just a few weeks ago. In that hearing 
we heard from former DHS officials and the GAO on ways in which 
TSA can do a better job communicating with the private sector 
and ways TSA and DHS might reform their procurement processes.
    Some of the ideas we heard included things like providing 
the private sector with a much better roadmap so they can work 
to meet TSA's needs in a less reactionary sort of way than what 
we are seeing now.
    It is clear that we need to look at ways to streamline and 
reform acquisitions mechanisms within TSA and the Department 
more broadly. Chairman King's authorization bill, of which I am 
an original cosponsor, gets at some of these reforms in matters 
like strategic sourcing and enhanced requirement settings.
    I can't overemphasize the need for well-thought-out 
requirements. Both the Science and Technology Directorate and 
the operational components of TSA must be part of the process. 
The Capabilities and Requirements Council that DHS is standing 
up once again, after having disbanded it, should go a long way 
toward that end.
    We have heard recommendations of a third-party 
certification for alternative financing for strategic sourcing 
and for revising the clearance process. I am pleased to see 
these ideas in the dialogue that these hearings generated 
around the issue. We must examine all options for finding new 
opportunities to engage industry.
    What I would like to hear from all of you are viable 
options for changing how things are done at TSA that will build 
innovative capacity in your world. You know better than anybody 
what you need to promote progress in your challenging but 
critical fields and create job opportunities.
    I want to do all I can to foster that innovation of which I 
know the private sector is incredibly capable, so I look 
forward to hearing your thoughts on finding cost efficiencies 
and creating jobs through improved technology procurement at 
TSA. I encourage you all to return next month when we invite 
the Department to testify on that same issue.
    With that, I yield to my Ranking Member, my good friend 
from Texas, Ms. Jackson Lee, for any opening statement she may 
have.
    Ms. Jackson Lee. I think this series of hearings are both 
important and relevant in light of the fact of our full 
understanding that security is holistic, and it requires a 
seamless interaction between the S&T of the Department of 
Homeland Security and the importance of the private sector.
    I have interest of the private sector's collaboration. I 
don't have interest in the private sector's dominance. But I do 
think it is important that S&T becomes more focused, that it is 
not a hobby shop, that it is intertwined with the framework of 
our present conditions. I always say this. I think the Chairman 
has heard me say this, that terrorism is becoming franchised. 
We use the term ``lone wolf.'' I prefer using ``individual 
actor'' and we don't know who that actor may be.
    So it is not a laughing matter or a matter that draws 
humor, but it requires a sense of balance and a sense of 
understanding that all the principals are important in the 
effort of securing the homeland.
    So as I indicated I know from our discussions that the 
Chairman and myself share the same commitment to securing our 
Nation's transportation system. Understand that today's hearing 
is the second hearing in this series, and I look forward to 
receiving testimony from today's witnesses and hope that the 
third hearing, which will contain Government witnesses, will 
provide insight on the practices of this administration.
    Today we will hear from members of the business community. 
I want to first welcome Mr. Guy Ben-Ari, deputy director of the 
Defense-Industrial Initiatives Group at the Center for 
Strategic and International Studies. It is an important think 
tank, and I thank you for being here today.
    At the September hearing, we heard from former Homeland 
Security officials. They testified about the need for greater 
cooperation between business and Government in developing 
contract requirements for major research projects. The 9/11 
Commission was a very, very thorough review, I believe, in the 
immediacy of the tragedy. But they produced a readable 
document. All of these elements are part of preparedness, part 
of putting on our armor, and it is imperative that we continue 
going to the next generation of technology that gets us more 
than one step ahead of the terrorists but many steps ahead of 
the terrorists.
    While this is an interesting thought, as you know, the 
Federal Acquisition Regulations have strict rules about the 
depth and breadth of permissible discussions between Government 
and industry prior to the announcement of a contracting 
opportunity.
    I think the last hearing also made it clear that this 
administration has given some thought and taken some action on 
how TSA and S&T can improve their collaboration. We can put in 
a framework where the security issues are answered and the 
dialogue can continue.
    We in Congress need to support and encourage efforts to 
assure that Government is more efficient and generally meets 
the needs of its customers and the American taxpayer. 
Unfortunately, the current budgetary atmosphere makes a strong 
and robust research and development agenda unlikely, though I 
would like to push the envelope to say that we should not 
nickel-and-dime the Nation's security.
    TSA and the Science and Technology Director at DHS are 
tasked with the critical mission of developing, evaluating, and 
delivering technologies to improve transportation security. 
Their job is to increase public safety. Given the risk to our 
aviation and mass transit sectors, DHS must be able to 
integrate effective security technology into our transportation 
security programs. However, new solutions, old problems, seldom 
come without cost.
    Mr. Chairman, at this point we must ask: What costs are we 
willing to pay? We should not be afraid to spend dollars if we 
save lives.
    Let me put in an additional note. Some of the greatest 
research comes from start-ups and small businesses. I don't 
want to see the intricate and difficult procurement process 
that is tied to S&T and the Department of Homeland Security 
keep away those genius ideas that may be the next level of 
securing the homeland. I hope the witnesses will comment on the 
need for that kind of view in order to keep with the next 
generation of technology.
    I will just make one point. Every time there was a 
terrorist act post-9/11, from the anthrax to the shoe bomber to 
the underwear bomber, unfortunately these were low-tech, but 
everybody in the United States I would imagine had never heard 
of it. Low-tech, never heard of it. What is next? We have got 
to be ahead of that kind of action. So we should not be afraid 
to spend dollars however because my colleagues on the other 
side of the aisle have from the leadership decided to slash the 
Department's budget below fiscal year 2012. I am not hopeful of 
moving forward.
    So I am hoping to convince a few of my colleagues that 
research and development under the S&T is extremely important. 
I hope this testimony will help the Chairman work with me on 
that idea and that premise, and that we can ensure that we do 
not stop the collaboration between the private sector, the 
effectively secured collaboration between the private sector.
    With that, Mr. Chairman, might I just offer, as I indicated 
to you that I have a duplicate or an overlapping hearing of 
which I am offering amendments to legislation. If the witnesses 
perceive that I am departing, I am hoping to return to this 
very important hearing, and I have asked the Chairman for his 
indulgence, and he has been kind enough to indulge me.
    Thank you very much, Mr. Chairman, I yield back.
    Mr. Rogers. I thank the gentlelady.
    I am tickled to have such a fine panel here. I appreciate 
all of you.
    We have Mark Pearl who has served as the president and CEO 
of Security and Defense Business Council since March 2008. 
Prior to joining the Council, Mr. Pearl was principal and 
chairman of IT Policy Solutions, which he founded to counsel 
private sector organizations in meeting their public policy 
challenges. He concurrently served as executive director of the 
Consumer Electronics Retailers Association. Mr. Pearl had 
previously been a partner in the international law firm of Shaw 
Pittman and led their e-commerce policy practice; served as 
general counsel and senior vice president to the ITAA, now Take 
America, and was chief of staff and legislative counsel to U.S. 
Representative Dan Glickman when the former chairman chaired 
the House Intelligence Committee.
    We also have Scott Boylan, who is vice president and 
general counsel of Morpho Trust USA, where he overseas legal 
and Governmental relations functions. Mr. Boylan joined Morpho 
in April 2005 where he served as vice president of Government 
Relations and general counsel. Prior to joining Morpho 
Detection, Mr. Boylan was senior advisor to the Secretary of 
Homeland Security and part of the team that established DHS. 
Immediately prior to his time at DHS, Mr. Boylan served at the 
Treasury Department and the Department of Justice in 
international law enforcement roles. We are pleased to have Mr. 
Boylan here and appreciate his testimony before the committee 
on numerous occasions.
    We also have Guy Ben-Ari, deputy director and fellow of the 
Defense Industrial Initiatives Group at the Center for 
Strategic and International Studies, where he studies the links 
among innovation industry, military capabilities, and defense 
policy. Prior to joining the CSIS, Mr. Ben-Ari was research 
associate at George Washington University, Center for 
International Science and Technology Policy, where he worked on 
National research and development policies and network-centric 
capabilities.
    From 2000 to 2002 he managed collaborative research and 
development programs for Gilat Satellite Networks Limited, an 
Israeli high-tech company in the field of satellite and 
communications, and from 1995 to 2000 he was technology analyst 
for the Israeli Government. He also consulted for European 
Commission and the World Bank in innovation policy and project 
evaluation.
    We are thrilled to have all of you here and look forward to 
your opening statements before we go into questions.
    Mr. Pearl, we will start with you.

    STATEMENT OF MARC A. PEARL, PRESIDENT AND CEO, HOMELAND 
             SECURITY AND DEFENSE BUSINESS COUNCIL

    Mr. Pearl. Mr. Chairman, thank you for giving the Homeland 
Security and Defense Business Council an opportunity to testify 
before you today to discuss the important issues involving 
technology procurement at the TSA, particularly related to 
innovation and job growth in the private sector. The Council, 
as you well know, serves as the collective voice of the 
Nation's leading homeland security solution providers whose 
major goal is to facilitate transparent, substantive dialogue 
between industry and Government on critical homeland security 
issues.
    Our written testimony focuses on providing the subcommittee 
with industry's perspective on how TSA in particular, and the 
Department of Homeland Security as a whole, can work more 
effectively with the private sector to improve technology 
acquisition and procurement process, as well as stimulate job 
growth.
    While my written testimony goes into obviously much more 
issues and more detail, I would like to use my time to 
highlight a few issues that we raise.
    Everyone understands that the full acquisition life-cycle 
process is very complex and requires effective and efficient 
strategies, processes, and procedures. It requires strong 
organization, capable of determining if what is needed 
technologically is technologically feasible and economically 
reasonable, with strong understanding of any unintended 
consequences. Those are three important questions that have to 
go into the whole life-cycle process.
    The DHS Acquisition Management Directive, 102-01, updated 
in January of last year, provides a foundation of policies and 
procedures to support acquisition management at the agency. The 
issue, however, is whether the programs that result from these 
policies actually operate and function as intended and in a 
manner that is transparent to all parties.
    Government and industry share the same goal: To provide for 
the technology and capabilities needed by TSA for mission 
success through processes that are transparent, accountable, 
coordinated, timely, cost-effective, and policies that 
encourage competition, innovation, and investment in the 
homeland security marketplace.
    No one, particularly in these tough economic times, wants 
to see nor can afford to have their time, money, and resources 
wasted. Reform alone, however, at TSA will not solve the 
current challenges with technology acquisition. A truly 
successful processing system will require that component parts 
of DHS stop operating in silos and become more harmonized. 
While much progress has been made since its creation, DHS 
across all platforms, within all of its components, must work 
to achieve the development of a common operating picture that 
facilitates communication, collaboration, coordination, and 
cooperation in a triangulated fashion between and among 
operations; in this case, at TSA, R&D, and the procurement 
process.
    Here are a few ways in which we belive that shared goal can 
be achieved:
    First, develop a long-term acquisition strategy along with 
adequate and predictable funding. Particularly given the 
current economic environment, companies cannot waste time and 
money on speculative technologies that they believe TSA might 
want to incorporate into security in the transportation arena. 
Industry needs greater insights and predictability into TSA's 
long-range acquisition and procurement plans. The information 
the private sector currently receives comes much too late in 
the process and is not detailed enough to enable it to redirect 
R&D investments to align with TSA's goals.
    Second, develop procedures that encourage and allow an 
early and on-going dialogue with industry. DHS and TSA must 
facilitate early substantive engagement with the private sector 
in an open and transparent manner, long before an RFP or an RFI 
is initiated, that will encourage industry input to help define 
and calibrate technological requirements to match objective and 
achieve mission goals. The more complex the procurement, the 
more critical the need is for an open information exchange.
    Such conversations between and among the interested parties 
sufficiently in advance of any specific procurement would not 
be tied to an upcoming project or program or contract, but 
would enable the Government to gather the information needed to 
help shape the desired outcome and define requirements long 
before a contract is initiated.
    Third, technology testing requirements should be 
standardized. Technology testing and certification requirements 
need to be more transparent, realistic, consistent, and not 
cloaked in mystery. The process should rely on a clearly-
defined series of lab, field, and operational tests under an 
open schedule to encourage technology companies to invest in 
new research, with more assurance that its investment will 
receive vetting and possible acquisition by TSA.
    In conclusion, let me say: A harmonized acquisition process 
within DHS that encourages and utilizes early engagement and 
on-going communication with industry will drive innovation and 
investment towards technologies needed for mission success. 
This process does not pick winners. Rather, it provides a 
foundation for competition at the very high level. The Council 
believes the actions I have outlined here as well as in my 
written testimony will go a long way to ensuring that TSA will 
be able to acquire the most effective and cost-efficient 
technology.
    On behalf of the Council, I appreciate the opportunity to 
provide this collective perspective of industry on these 
important issues before the subcommittee.
    I will answer any questions that you deem fit to ask.
    [The statement of Mr. Pearl follows:]
                  Prepared Statement of Marc A. Pearl
                            October 13, 2011
    Chairman Rogers, Ranking Member Lee, and distinguished Members of 
the subcommittee, I thank you for giving the Homeland Security & 
Defense Business Council an opportunity to appear before you today to 
discuss the important issues involved with technology procurement at 
the Transportation Security Administration (TSA), particularly as they 
relate to innovation and job growth in the private sector.
    I am Marc Pearl, President and CEO of the Council, a non-partisan, 
non-profit organization of the leading homeland security solution 
providers. The purpose of the Council is to facilitate two-way 
substantive dialogue between the private sector and Government on 
critical homeland security issues and to ensure that the private 
sector's perspectives, innovation, expertise, and capabilities are 
integrated into our Nation's security.
    Collectively, our members employ more than 3 million Americans in 
all 50 States and provide expertise in technology development and 
integration, facility and networks design and construction, human 
capital, financial management, and program management. In particular, 
many of our member companies specialize in the technologies and 
services needed and used by TSA.
    The Council's testimony today will focus on providing the 
subcommittee with industry's perspective on how TSA, in particular, and 
the Department of Homeland Security (DHS), as a whole, can work more 
effectively with the private sector to improve the technology 
acquisition and procurement process and stimulate job growth. As 
recognized in the September 2011 Government Accountability Office 
Report on ``DHS and TSA Acquisition and Development of New 
Technologies,'' TSA acquisition programs represent billions of dollars 
in life-cycle costs and support a wide range of aviation security 
missions and investments including technologies used to screen 
passengers, checked baggage, and air cargo. These technologies make up 
a significant part of TSA's annual budget and play a critical role in 
its ability to accomplish its mission.
    The full acquisition life-cycle process is quite complex and 
requires effective and efficient strategies, processes, and procedures, 
and a strong organization capable of determining if what is needed is 
technologically feasible, economically reasonable, and will not result 
in unintended consequences. The life-cycle process begins with 
identifying a capability need; analyzing and selecting the means to 
provide that capability; obtaining the capability through the 
appropriate types of acquisitions; and producing, deploying, and 
supporting the capability through its useful life until disposal. If 
any infrastructure component is deficient, the entire process is at 
risk for failure.
    The DHS Acquisition Management Directive 102-01, updated in January 
2010, provides the overall policy and procedures to support acquisition 
management at the agency. While it offers a strong indication that 
acquisition management processes are in various stages of development, 
it is critical that the programs resulting from these policies actually 
operate and function as intended and in a manner that is transparent to 
all parties.
    Government and industry share the same goal: To achieve the 
capabilities needed by TSA for mission success through processes that 
are transparent, accountable, coordinated, timely, cost-effective, and 
policies that encourage competition, innovation, and investment in the 
homeland security marketplace. No one, particularly in tough economic 
times, wants to see, nor can afford, to have time, money, and resources 
wasted.
    Reform solely at TSA, however, will not solve the current 
challenges with technology acquisition. A truly successful process and 
system will require that component parts of DHS stop operating in 
silos. DHS--across all of its platforms, within all of its components--
must work to achieve the development of a common operating picture that 
facilitates communication, collaboration, coordination, and cooperation 
in a triangulated fashion between and among operations at TSA, the 
research and development (R&D) process, and the procurement process. To 
achieve the shared goal, the Council strongly recommends the 
development of the following:

    (1) A long-term acquisition strategy, multi-year budgets and 
        deployment plans, and adequate and predictable funding;
    (2) Open, transparent, and coordinated processes, practices, and 
        procedures that facilitate early and on-going dialogue with the 
        private sector and well-defined technology performance and 
        testing requirements; and
    (3) A strong organization that can coordinate both the R&D and 
        procurement processes and has a workforce capable of planning 
        and executing that process.

    If the entire acquisition process is harmonized (and perhaps even 
``standardized'') within DHS, and includes earlier and continuous 
engagement and communication with industry throughout the process, we 
can drive innovation and investment towards the technologies needed for 
mission success. This process does not pick winners; rather, it 
provides a foundation for competition at the very highest level. The 
Council believes these actions will go a long way in ensuring that TSA 
(as well as other components within DHS) can acquire the best, most 
effective, and cost-efficient technologies (as well as services and 
products).
1.development of a mid- to long-term strategic acquisition plan, multi-
           year budgets, and adequate and predictable funding
    The private sector serves an important role in developing, testing, 
and providing the technologies that TSA needs to operationalize its 
mission. Industry, however, does not have limitless resources to devote 
to technology development in a void. Particularly in the current 
economic environment, the private sector cannot waste time and money on 
building speculative technologies that they believe TSA ``might'' want 
to incorporate into aviation security. Industry wants to develop and 
deliver the technologies that TSA needs now and long into the future. 
To accomplish this, the homeland security industry must have greater 
insight and predictability into TSA's long-range acquisition and 
procurement plans. It currently only receives high-level, near-term 
technology plans in the form of an annual Congressional budget 
justification. This information comes too late and is not detailed 
enough to enable industry to redirect R&D investments to align with 
TSA's goals. Development and testing typically requires several years 
before a security technology is ready for implementation and 
deployment.
    The Council strongly believes that TSA must strive to develop a 
mid- to long-term strategic acquisition plan and consider the 
possibility of multi-year budget plans. A strategic acquisition plan 
would provide all interested companies with an insightful blueprint for 
Government's future needs, and give them the necessary time to align 
and focus financial and personnel resources towards addressing the 
highest-priority needs. While no doubt difficult to do under the 
current budget approval process, Congress and the Department could work 
together more closely to develop multi-year budget plans, or at least a 
credible forecast of future budget activities at the time of an annual 
budget justification. This would provide all interested parties, 
including and particularly industry, with a level of certainty needed 
to make multi-million dollar technology investments and hiring 
decisions.
    TSA could also improve transparency in the acquisition planning 
process by sharing, through appropriate channels, the relevant 
findings, from the Transportation Sector Security Risk Assessment. 
Sharing long-term technology acquisition and deployment plans, 
including a prioritized, risk-based, multi-year list of required 
capabilities and intended deployment plans would help industry provide 
more timely and cost-effective solutions. New technology development is 
hindered when industry is uncertain as to whether DHS will undertake 
testing, much less purchase newer, higher-performing systems.
    In conjunction with budget forecasts, it is also critical that TSA 
have confidence that it will receive adequate funding to address 
evolving threats. Enhanced budget planning and communication of budget 
requirements will result in taxpayer savings and increase industry's 
ability to understand whether business risk justifies future job 
creation. Any and all assistance that Congress can provide in guiding 
the development of a mid- to long-term strategic acquisition plan, 
multi-year budget plans, or ensuring adequate funding for TSA would go 
a long way in providing the foundation for all interested parties to 
achieve mission success.
    2. development of open, transparent, and coordinated processes, 
 practices, and procedures that facilitate well-defined technology and 
                          testing requirements
A. Engaging the Private Sector Long Before the Procurement Process 
        Begins Will Result in Well-Defined Technology Performance 
        Requirements and Better Results
    The private sector wants to develop and provide the capabilities 
that TSA (and the entire Department) needs to achieve mission success. 
To accomplish this, it is incumbent upon Government to provide industry 
with well-defined technology and testing requirements. If the technical 
performance needs and testing requirements for technologies are not 
clear to industry, it increases the potential for an increased or lost 
cost of development, longer time before deployment, duplication of 
effort, and a resulting product or technology that fails to meet TSA's 
expectations and operational needs. Well-defined requirements also help 
motivate industry and are critical to promoting competition.
    Defining mission needs in a clear and concise fashion is not a job 
that Government can or should do alone. DHS and TSA must develop 
coordinated processes, procedures, policies, and practices that 
facilitate early, substantive engagement with the private sector in an 
open, transparent, and predictable manner long before a Request for 
Proposal (RFP) is initiated. Industry input is essential to help define 
and calibrate technical requirements to match mission objectives and 
achieve mission goals. The more complex the procurement, the more 
critical the need for an open information exchange. Transparency in 
this process is also necessary to ensure that no one feels that a 
particular technology is being highlighted or unfairly selected. If all 
participants understand and adhere to ``rules of engagement,'' that are 
both predictable and consistent, we can optimize the input and exchange 
between Government and industry.
    The members of the Council strongly support DHS engaging the 
private sector by conducting more conversations or discussions 
surrounding general needs and conceptual frameworks that are NOT tied 
to any upcoming or projected program or contract. Whether called 
``Industry Days'' or something else, such interactions between and 
among the interested parties sufficiently in advance of any specific 
procurement will enable Government to gather the information needed to 
help shape the desired outcome, define requirements, identify what is 
economically reasonable and technologically feasible, and allow all 
interested parties to explore any unintended consequences before a 
contract is initiated.
    Contracting professionals in Government often have a limited 
understanding of what industry is (or may not be) capable of providing, 
and limited exposure with the skills, business practices, and 
experiences of potentially valuable companies. By engaging with the 
private sector long before the procurement process begins, DHS 
personnel, for example, can conduct more effective market research and 
gain a greater understanding of existing and emerging technologies, 
including Commercial Off The Shelf (COTS) products, which may offer 
significant opportunities for reduced development time, faster 
insertion of new technology, lower life-cycle costs, and an overall 
substantial cost savings to Government. This type of engagement with 
industry would allow Government to understand the business practices 
supported by the commercial item, learn the appropriate industry 
terminology and concepts associated with the desired service or 
equipment, identify potential contractors that provide the item, and 
determine the correct scope of the requirements that best fit the 
existing vendor base.
    The Council has been in on-going discussions over the past year 
with representatives from the Science and Technology (S&T) and the 
Management Directorates to begin to address some of these needs and 
issues to further the goal of transparency and how best to achieve 
mission success. We have raised the idea, for example, of creating a 
Government-industry advisory council that could coordinate an open 
dialogue on specific topics that could bring about a greater 
understanding between the two sectors, such as having industry days 
earlier in the process. A jointly-led advisory council could conduct 
work sessions to share perspectives on the timing, manner, and 
substance of communications, and the best ways to conduct industry days 
so that both sectors receive mutual benefit. We are currently exploring 
options for how to facilitate such an important and potentially 
effective activity.
    Industry is also encouraged to see the Government issuing more 
Requests for Information (RFIs) on the FedBizOpps website, and hopes 
this trend continues in the future. This is another manner for the 
Government to conduct market research to identify what kind of products 
or service solutions are commercially available. It asks industry to 
offer solutions for agency requirements or objectives; and facilitates 
the collection of information about companies with the appropriate 
capabilities, products, experience, and expertise. Through this 
interactive tool, Government and industry can have a continuous two-way 
dialogue that results in requirements that are greatly improved from 
when the RFI was first issued.
    We must stress that the exchange of information with industry 
cannot stop at the issuance of a RFP, it must continue throughout the 
entire procurement process, particularly when information previously 
provided has changed. DHS should continue to use and further develop 
acquisition websites that provide information for specific identified 
procurements, definitions of terminology and milestones, and regular 
updates to time schedules, future needs, and other previously provided 
information.
B. Standardize Technology Testing Requirements and Speed Up the Process 
        for Certification by Using a Clearly-Defined Series of Lab, 
        Field, and Operational Tests That Can Be Provided by Third 
        Parties
    The process by which DHS tests technology is not standardized. TSA 
uses a series of lab, operational, and field tests to validate some 
equipment but not all equipment. Other components, like Customs and 
Border Protection, rely on a single demonstration test every 5 years to 
evaluate inspection equipment. The lack of consistency and continuity 
creates a great deal of unpredictability and inefficiency, which can 
cause delays in deploying the most up-to-date, qualified technology in 
a cost-effective manner.
    DHS must do more to communicate with industry to ensure that 
technology testing and certification requirements are realistic, 
consistent, and not cloaked in mystery. It must develop a process that 
relies on a clearly-defined series of lab, field, and operational tests 
on a rolling schedule to allow for the testing and validation of new 
technologies. An open schedule will encourage technology companies to 
invest in new research with more assurance that its investment will 
receive vetting and possible acquisition by DHS.
    The current process for testing and certifying new technologies is 
often confusing, cumbersome, and can result in wasted time, money, and 
resources. DHS needs to provide industry with greater transparency into 
the process and should also consider alternative arrangements, such as 
paying a third party to test and certify the technologies based on 
standards established by the Government. This is something that has 
been successfully done in the United Kingdom. The use of National labs, 
non-profits, or for-profit corporations for this process could greatly 
speed up the deployment of technology to TSA.
    3. development of a strong organization that has a coordinated 
 acquisition process and a workforce capable of planning and executing 
                              the process
A. Development of a Coordinated Acquisition Process That Links 
        Operations, R&D Efforts, and the Procurement Process
    DHS needs a stronger, more coordinated acquisition process that 
moves away from the current stove-piped environment and can harmonize 
and link operational considerations with R&D efforts and procurements. 
While much progress has been made since its creation, DHS still has 
more work to do in ensuring collaboration, coordination, and 
communication across the agency.
    The Council believes that it is critical to implement an 
acquisition process that facilitates effective engagement between and 
among DHS' components and with the private sector. There are at least 
11 unique procurement and R&D processes occurring across the agency. 
Large components run their own processes in different ways and many 
times inconsistently. This can result in duplicative efforts.
    Current R&D efforts are spread not only among different component 
organizations within DHS but also across Federal agencies. The S&T 
Directorate is highly dependent on other Federal agencies to achieve 
its mission. There does not appear to be a clear strategy for how to do 
it effectively and in collaboration with the Department of Defense, the 
Department of Energy, NIST, and other scientific organizations. This 
lack of collaboration may result in duplicative efforts and unleveraged 
technologies. To increase the likelihood of success, Congress should 
determine whether the S&T Directorate needs greater authority to 
perhaps direct the Government-wide R&D agenda, rather than having to 
compete against numerous organizations inside and outside of DHS.
    With more communication within and among Federal agencies, DHS has 
the opportunity to effectively link efforts and identify potential 
technologies that it could leverage in support of other missions. The 
development of a standardized and coordinated DHS-wide acquisition 
process and the use of the same communication tools would not only 
enhance efficiency, but would provide needed transparency so that end-
users, acquisition and operations officials, and industry can work 
together. If we can improve coordination of these programs and 
processes throughout the Department, it will contribute to a strong 
organization and we will get better results with procurements at TSA.
B. Ensure a Workforce Capable of Planning and Executing the Acquisition 
        Process by Increasing the Quantity and Quality of Public Sector 
        Contracting Personnel
    We urge Congress to recognize and help address the shortage of 
acquisition and procurement staff across the Department. DHS needs the 
ability to increase the number of procurement officers with expertise 
in technology, engineering, and management to accomplish the complex 
operational aspects of oversight and review. Contracting officers must 
be accessible, interactive, and open to sharing concerns and approaches 
for various aspects of a particular procurement. They must also value 
and understand input and substantive dialogue with the private sector 
both pre- and post-award. Such an exchange is particularly valuable at 
a time when procurements have become more complex. To accomplish these 
goals, Congress should support programs that further the development, 
training, and retention of acquisition professionals. This could be 
accomplished, in part, by ensuring continued funding for the 
acquisition ``intern'' program.
    The Council has also long advocated, for example, that DHS develop 
an exchange program with the private sector to improve the management 
abilities and the technical and professional competencies of its 
employees. A professional exchange program would offer DHS direct 
insight into the philosophy, procedures, and practices of industry. It 
would provide public sector professionals with an opportunity to 
examine industry policies and processes, as well as learn first-hand 
how industry addresses both R&D and contracting and procurement issues. 
This would allow DHS to interpret the needs of the Department in 
industry terms. By studying the best practices of the industry, 
Government professionals are able to bring new knowledge, 
understanding, and empathy back into the Department to improve its 
processes. The process would also benefit industry, which would gain a 
better understanding of the unique perspective and experience of the 
DHS professional. Obtaining such direct insight and experience is 
currently unavailable in DHS. There are a few programs that bring 
private sector experts into Government, but none, as far as we know, 
that encourage or permit public sector employees to be temporarily 
detailed into the private sector to gain the knowledge and/or 
perspective that would help them better understand the multiple factors 
that go into the relationships between R&D, procurements, and 
operations.
                               conclusion
    As I stated in my introduction, we all share the same goal: To 
achieve the most successful outcome for all stakeholders through a 
process that is transparent, accountable, predictable, timely, cost-
effective, and that encourages competition, innovation, and investment 
in the homeland security marketplace. Today's acquisition process and 
specifically the procurement process need to be more flexible, 
inclusive, and dynamic to change. The Council and its members have 
worked closely and successfully to nurture a substantive relationship 
with the Management and S&T Directorates in particular to discuss how 
we can best develop a dialogue that identifies a successful process 
that could lead to even more effective and efficient innovative 
solutions to protect our country. But even amidst the establishment of 
these relationships, the business sector, as a whole continues to 
struggle to comprehend the long-term strategic needs and goals of TSA. 
This has made our long-term investments toward new and innovative 
technologies that might become effective solutions, challenging at 
best.
    We respectfully ask Congress and this vital and interested 
subcommittee to consider the following recommendations, provide 
guidance and continued oversight, and help facilitate the dialogue 
necessary between industry and Government to improve the process and 
outcome for all stakeholders:

    (1) Development of a long-term acquisition strategy, multi-year 
        budget plans, and predictable and adequate funding for TSA;
    (2) Development of open, transparent, and coordinated processes, 
        practices, and procedures that facilitate well-defined 
        technology and testing requirements; and
    (3) Development of a strong organization with a standardized and 
        coordinated acquisition process and a workforce capable of 
        planning and executing the process.

    While TSA in particular and the Department as a whole are still 
evolving, this is not about ``reinventing the wheel,'' but rather 
identifying and encouraging the many best practices and lessons learned 
available from other Federal agencies that have decades of experience 
with acquisitions.
    On behalf of the Homeland Security & Defense Business Council, I 
appreciate the opportunity to provide the collective perspectives of 
industry on the important issues before the subcommittee. The Council 
is willing to provide or facilitate any support, expertise, and input 
you need to ensure that we can all work together to achieve mission 
success.

    Mr. Rogers. Mr. Boylan, you are recognized.

STATEMENT OF SCOTT BOYLAN, VICE PRESIDENT AND GENERAL COUNSEL, 
                    SAFRAN MORPHO DETECTION

    Mr. Boylan. Morpho has three companies that supply to TSA: 
Morpho Trust, which I am an employee of; Morpho Detection, 
which is a leading provider of explosive detection to TSA; and 
Morpho Track, which is a leading provider of automated 
fingerprint systems that the FBI uses and they are used in 
various applications at TSA as well.
    We are also a leader in identity technologies that are used 
in the TWIC program and a number of other programs. So TSA is a 
very important customer of ours.
    Just a footnote. Morpho, a commonality that crossed our 
businesses is algorithms, algorithms that enable us to make 
decisions in the security context. Morpho is a type of 
algorithms mathematics and that is why we have that name. I 
heard that question in your voice, Mr. Chairman.
    I have three points to make.
    One, the first is engagement. I echo Mr. Pearl's comments. 
Pre-engagement with industry, discussing the possibilities and 
the limitations and the fundamentals of what technology can and 
cannot do, is very important for TSA and especially for TSA 
policymakers. When I was at the Department, I have to say we 
were a bit remiss in understanding these capabilities. I think 
not just the technology people, but also the policymakers need 
to know not at a micro level, but at a certain baseline, what 
technology can and cannot do. That enables you to make good 
policy decisions.
    Constructing a way to engage with TSA, industry and TSA, is 
something I think is necessary because in my experience with 
folks at TSA, they want to engage, they want to talk, they do 
talk. But they also have a certain hesitation because it is not 
really clear what bright-line engagement rules are for them. I 
think clarifying that for the employees could go a long way to 
making that interaction more fruitful.
    Second is phased implementation of technology as opposed to 
here is what we want the technology to do, a long laundry list, 
and trying to deploy that. What happens is you have years of 
experimentation before you get a deployment, as opposed to 
deploying the basics and improving from that baseline.
    We have a very clear example of this from the very 
beginning of TSA. We have been providing TSA explosive 
detection equipment that scans bags since the creation of TSA, 
and the initial deployment of that technology met a baseline 
that wouldn't get certified today. Many of those machines that 
were deployed at the beginning, I have to say Reagan Airport is 
one of them, you can see our machines there, they are the early 
version, those machines have the capabilities that are required 
today because they have been updated in place.
    So there is the capability of deploying machines, deploying 
technologies at a baseline, and raising that if you plan for 
it. That system, it was planned for. So I recommend that that 
is something that TSA look into for most of their deployments.
    Finally, a recommendation in the international field and 
international standards. In the European Union, for example, 
E.U. Commission passed a regulation that was to go into effect 
next year that basically required the adoption of the American-
style system of screening baggages by deployment computer 
tomography, CT machines that we use here in the United States 
at level one as the first instance of screening. Industry 
airports in the European Union have pushed back on that because 
of the expense, and it has been pushed out to 2014.
    TSA has largely been uninvolved, not engaged in this 
discussion. That is an area where we could really have a big 
impact on jobs and the economy, because right now the CT 
industry, all of the certified equipment around the world, is 
made here in the United States. That is an opportunity that we 
have for our economy here to grow vis-a-vis TSA.
    Thank you for your time. I am happy to answer any 
questions.
    [The statement of Mr. Boylan follows:]
                   Prepared Statement of Scott Boylan
                            October 13, 2011
    Chairman Rogers, Ranking Member Jackson Lee, and Members of the 
subcommittee: Thank you for holding today's hearing on TSA procurement 
and how TSA's technology procurement can stimulate economic growth. My 
name is Scott Boylan and I am Vice President and General Counsel of 
MorphoTrust USA Inc., a subsidiary of the Safran Group, the largest 
biometrics company in the world. I was most recently the Vice President 
and General Counsel of Morpho Detection, Inc. (``MDI''), the second of 
three Morpho security companies that provide security technologies 
related to detection and/or identification to TSA, the Department of 
Homeland Security (``DHS'') and U.S. Government more broadly.
    MorphTrust has more than 1,000 employees in the United States and 
is headquartered in Massachusetts. We offer a comprehensive set of 
products and solutions for protecting and securing personal identities 
and assets--leveraging the industry's most advanced multi-modal 
biometric platform for finger, face, and iris recognition, document 
authentication, secure driver's licenses and identification cards, and 
passports. MorphoTrust is a global leader in providing Secure Identity 
Management solutions across Government and commercial markets.
    MDI has more than 560 U.S.-based employees with factories in 
California and Massachusetts. We are a leading supplier of explosives 
and narcotics detection technology world-wide. Our technologies support 
Government, military, transportation, first responder, critical 
infrastructure, and other high-risk organizations. We integrate 
computed tomography (CT), Raman Spectroscopy, trace (ITMS technology), 
X-ray and X-ray Diffraction (XRD) technologies into solutions that 
deliver detection results quickly with a high degree of accuracy, while 
ensuring efficient security operations. MDI has been a supplier to TSA 
since its creation.
    MorphoTrak has more than 541 employees in the United States with 
major facilities in New York, California, and Washington State. We 
provide biometric and identity management solutions to a broad array of 
markets in the United States including law enforcement, border control, 
identity cards, civil identification, and facility/IT security. We are 
a leading innovator in large fingerprint. MorphoTrak has provided 
biometric identification solutions in the United States for over 35 
years and provides State-wide biometric identification systems in 28 
States plus the District of Columbia. Our products are used by more 
than 300 city, county, and State government agencies across the United 
States.
          industry government partnership: advisory committees
    A continuous challenge doing business with TSA is the lack of 
visibility into its future acquisition plans. The Chairman has 
recognized that this is a challenge for industry and has encouraged TSA 
in previous hearings to be more open and communicative with private-
sector partners. We believe that a formal mechanism, such as an 
advisory panel consisting of industry and technology stakeholders, 
would be an excellent vehicle for exchanging information for both 
industry and TSA. TSA should set goals for industry and work with 
industry to create high, interoperable standards.
    Having visibility into future TSA procurement plans gives key 
guidance to industry in making employment, manufacturing, and inventory 
decisions. TSA would also benefit by reduced costs associated with its 
technology suppliers being able to more efficiently purchase inputs for 
their products with better planning and more efficient procurement of 
parts. Transparency will also allow for stabilization of manufacturing 
operations and avoid employment disruptions that many in the industry 
have seen.
    The Morpho companies spend millions on research and development of 
security technologies. This effort can be more efficiently targeted 
when TSA's future plans, strategy, and vision are known. For example, a 
Morpho company recently was awarded a TSA contract for traveler 
document authentication. We were willing to dedicate significant 
resources and investments to develop this technology for TSA, without a 
guaranteed return, because when TSA issued requirements we then knew 
what TSA wanted. This is the scenario we need to recreate going 
forward. We believe that this will become the standard practice as TSA 
continues to improve and invest in its procurement system.
                          phased acquisitions
    TSA should use phased acquisitions when moving into new and 
developing technology areas. Initial procurements should focus on basic 
requirements and follow-up procurements should push for increased 
performance and options. An example of this is EDS standards that 
started with a high threshold and have continually gotten more 
difficult to achieve in subsequent procurements. This has allowed for 
the initial broad deployment of baggage screening equipment immediately 
after 
9/11 and contributed to a constant improvement in detection 
capabilities up to today.
        advocating for stronger international aviation security 
                standards=higher u.s. jobs and security
    TSA is in a unique position to influence the security standards 
used around the globe. Our company provides security technology around 
the world, much of which is made in the United States and shipped 
overseas. We see in numerous international procurement solicitations 
that the standard required by airports and governments around the world 
is the TSA technology standard--especially explosive detection 
standards. TSA or E.U. certification is often required before a 
manufacturer can bid on a contract. We have seen this in many countries 
with emerging security standards that do not have the resources to 
conduct their own testing.
    We have also witnessed TSA's reluctance to strongly advocate for 
their superior standards in international markets. A key example is the 
European Union where the Commission has adopted standards for checked 
baggage screening that would require in the future deployment of 
computed tomography machines at the first level of screening. This is 
effectively the system used by TSA in the United States today. The E.U. 
standards currently permit X-ray technology to scan checked bags, but 
TSA and the European Union have both recognized that X-ray technology 
has challenges screening for certain threats that CT technology does 
not. Despite the regulation change and the recognition of a security 
concern, there has been strong resistance to deploying CT technology at 
level one in Europe by European stakeholders who would have to invest 
in the technology. TSA has largely stayed out of this debate. But this 
is where they have the opportunity to both increase the level of 
explosive detection capability in a region that is a key to U.S. 
aviation security and open a potentially huge market to what is 
predominately a U.S. industry. Adoption of CT at level one in the 
European Union would create a market for CT in Europe that would be 
larger than in the United States. All of the currently certified CT 
technology in the world is manufactured in the United States.
    Once this standard becomes a U.S. and E.U. standard it will likely 
become a de facto global standard that increases aviation security 
around the globe--and jobs and economic activity in the United States.
    Thank you.
    I will be happy to answer any of your questions.

    Mr. Rogers. Thank you.
    Mr. Ben-Ari, you are recognized.

 STATEMENT OF GUY BEN-ARI, DEPUTY DIRECTOR, DEFENSE-INDUSTRIAL 
   INITIATIVES GROUP FELLOW, INTERNATIONAL SECURITY PROGRAM, 
         CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

    Mr. Ben-Ari. Thank you, Mr. Chairman. Thank you for the 
opportunity to come before the subcommittee on this important 
issue.
    I would like to provide a few overall DHS trends based on a 
report that was recently published. We use publicly available 
data to look at contract spending at the Federal level for 
various departments and agencies, and the data I will be 
presenting is from a recent report on Department of Homeland 
Security with a little of the more drilled-down into the TSA 
data.
    Overall, the numbers for DHS are pretty steady in terms of 
contract spending. In the period we looked at from 2004 to 
2010, contract spending stood at about $13 billion to $14 
billion a year, every year. This is a good thing for internal 
planning and budgeting purposes. DHS internally knows that it 
has a steady stream of contract dollars that it can then award 
to the private sector. The private sector has a clear signal 
from the DHS customer that there is a steady contracting dollar 
amount that it can plan against.
    About 70 percent of contract spending by DHS is spent on 
service contracts. The rest almost entirely is spent on 
products as we will talk about in a minute, relatively small 
portion spent on R&D contracts, research and development 
contracts. In fact, research and development contract spending 
fell from around $700 million spent in 2004 to about $400 
million spent last fiscal year, fiscal year 2010. Those $400 
million amounted to about 3 percent of total DHS contract 
spending that year.
    Our report also looks at--sorry. One more word on research 
and development before I move on, because I think this is an 
important topic for this subcommittee and this hearing.
    About one-third of DHS contract spending on research and 
development is actually spent on research and development 
management and support contracts. So it is important to make 
that distinction because these are contracts that do not buy 
for the Department of Homeland Security actual research and 
development. They are instead supporting facilities, 
laboratories, test equipment and so forth, and when counting 
overall R&D dollars, it skews the data a little bit if you 
include that, what in DHS is a significant amount is R&D 
spending.
    In terms of how DHS has competed its contracts and how well 
the industrial base has responded to that competition, a large 
majority--about 75 percent of DHS contracts are awarded 
competitively--are competed. About half of them receive more 
than multiple offers from the industry side.
    The way that the Department of Homeland Security has spread 
out those contracts to industry has also been relatively spread 
out in terms of the distribution to small, medium, and large 
companies. In DHS, large companies receive about 40 percent of 
the contract with small- and medium-sized companies receiving 
about 30 percent each. This, compared to other Government 
departments is a very, very diversified spread of the contract 
dollars.
    Specifically for TSA, we ran similar data, and for the most 
part the trends for overall DHS contract spending are reflected 
in TSA's contract spending. That is to say, there is a 
relatively steady amount year over year at about $2 billion 
dollars a year. About three-quarters of that goes on services, 
and about $500 million goes on products. A much smaller share 
in TSA goes to R&D, and that is down significantly, from around 
$380 million in 2004 to almost $6 million in 2010. Even there, 
of those $6 million, about one-third is R&D management and 
support of contracts I referred to earlier.
    In terms of competition and the industrial base, the 
picture is slightly different for TSA than from DHS overall. 
Only about half of the contracts that TSA awards are competed 
and receive multiple offers. The share of those contracts that 
goes to the large companies in the industrial base is much 
larger as well. In 2004 it was 56 percent, with about 21-23 
percent awarded to small- and medium-sized companies 
respectively.
    Just two quick points. I know I am short on time.
    Two quick points in conclusion. The first is that our 
report, as most of our other reports, in this case was not 
intended to answer specific questions or address a specific 
trouble or issue. It was purely data-driven. We felt there was 
a lack of good data on the Department and on its components, 
and our aim here was to put forward that data, and we are happy 
to cut this data any other way as is necessary for the 
betterment of the analysis and the planning that goes on in DHS 
and in Congress.
    The second comment is that specifically on R&D again, the 
importance of making that distinction between R&D overall and 
then the components of research and development, specifically 
that component of management and support research and 
development contracts which do not directly contribute to the 
R&D effort.
    Thank you very much. I look forward to your questions.
    [The statement of Mr. Ben-Ari follows:]
                   Prepared Statement of Guy Ben-Ari
                            October 13, 2011
    Chairman Rogers, Ranking Member Jackson Lee, and Members of the 
subcommittee, I appreciate the opportunity to appear before you this 
afternoon as part of this distinguished panel to offer my views on 
contracting trends in the Department of Homeland Security and the 
Transportation Security Administration. I would note that my statement 
draws on research undertaken at the Center for Strategic and 
International Studies (CSIS) but that the statements and conclusions 
are my own and do not necessarily represent the views of CSIS.
    The Defense Industrial Initiatives Group (DIIG) at CSIS recently 
undertook a study on contracting trends in the Department of Homeland 
Security (DHS) between 2004 and 2010. Although DHS was enacted by law 
in 2002 and created as a separate entity in 2003, our analysis begins 
with the year 2004 as it was the first full fiscal year of DHS 
operations. We used the Federal Procurement Data System (FPDS) as our 
primary source of data. All dollar amounts in the report and in this 
testimony are obligated dollars as reported in FPDS and are in 2010 
constant dollars.
    In this testimony I plan to first provide an overall view of DHS 
contract spending on products, services, and research and development 
(R&D), then present data for the Transportation Security Administration 
(TSA), and conclude with final comments.
                        overall dhs contracting
    DHS has kept its overall contract spending levels steady at around 
$13-$14 billion per year since 2005 (with the exception of Katrina 
response in 2006). Responses to unexpected events such as natural 
disasters and attempted terrorist attacks have largely been funded by 
other outlays, including personnel accounts and grants to State and 
local governments.
    This stability in contract spending enables DHS managers to conduct 
long-term planning and programming with the knowledge that, barring 
unexpected developments, they can accurately predict the funding levels 
in future years. A steady budget over several years also sends a clear 
signal to industry that, overall, there is stability and continuity in 
DHS spending that is contracted to the private sector. However, the 
fact that there has been no growth in contract spending also means that 
there is currently very little cushion in this category as the 
Department moves into a period of budget cuts and greater fiscal 
austerity.
    The majority of DHS contracts--60 percent to 75 percent each year--
are awarded for services. Within services, the majority of contract 
dollars--worth $27 billion for the period 2004 to 2010--were spent on 
professional, administrative, and management services (PAMS). The 
second- and third-largest service categories, by value, were facility-
related services (including construction) and information and 
communication technologies (ICT), at $16 and $14 billion, respectively. 
Total DHS spending on services for the years 2004-2010 increased by 85 
percent, much more than it did for products. Between 2007 and 2010, 
annual spending on services stabilized at around $10 billion.
                          dhs spending on r&d
    DHS spending on R&D contracts dropped, from $675 million in 2004 
(when it was 8 percent of contract spending) to some $400 million in 
2010 (when it was 3 percent of contract spending). In comparison, the 
Department of Defense in 2010 spent 11 percent of its contract dollars 
on R&D (not including classified R&D, which, if included, would 
significantly raise the R&D share). Note that as per the norm in all 
CSIS/DIIG research, R&D management and support contracts, though 
classified as R&D contracts in FPDS, are counted as service contracts 
and not R&D contracts.
    This leads me to an important point on DHS R&D contract spending. 
From 2004 to 2010, a total of $4.4 billion was spent on actual R&D 
contracts and $1.7 billion was spent on R&D ``management and support'' 
contracts, i.e. contracts for the operation and maintenance of research 
laboratories and equipment. In other words, almost 30 percent of DHS 
dollars spent on R&D contracts between 2004 and 2010 was not spent 
actual R&D and should be excluded from R&D data for the purpose of 
assessing R&D funding.
                    competition and contractor base
    In 2010, nearly half of DHS contracts were openly competed and 
received multiple offers, up from 38 percent in 2004. In parallel, 
contracts that were not competed have been on the decline at a rate of 
18 percent per year, on average, to a share of 13 percent of total 
contract dollars.
    DHS has been spreading its contracts to a wider contractor base. In 
2010, the top 20 DHS contractors accounted for 34 percent of total 
contract spending, compared to 43 percent in 2005. DHS contracts with a 
significant number of commercial companies (primarily in the IT domain) 
in addition to the traditional defense and security contractors.
    DHS has been consistently contracting with small and medium-sized 
companies. In the past 3 years, about 40 percent of contract dollars 
have gone to large companies (those with annual revenue of $3 billion 
or more), 30 percent have gone to medium-sized companies, and 30 
percent have gone to small companies. By comparison, the Department of 
Defense in 2010 spent 56 percent of its contract dollars on large 
companies, 30 percent on medium-sized companies, and 18 percent on 
small companies.
                                  tsa
    Contract spending levels at TSA have been relatively steady from 
2004-2010, with about $2 billion spent each year. Of that amount, some 
$500 million are spent each year on product contracts (baggage 
screening technology, advanced imaging technology, etc.), some $1.5 
billion are spent on service contracts (screeners, maintenance of 
products procured, etc.).
    R&D contract spending at TSA dropped dramatically, from $381 
million in 2004 to $3.8 million in 2010. This drop is in part explained 
by a reclassification earlier this year of some $170 million from R&D 
management and support contracts to services contracts. In addition, 
TSA spent $1.8 million in 2010 on R&D management and support services, 
32 percent of its total R&D contract spending.
    Some 55 percent of TSA contracts were competed and received 
multiple offers, a share similar to that of DHS as a whole. The share 
of uncompeted contracts dropped from 38 percent in 2004 to 33 percent 
in 2010 yet remains higher than the DHS-wide share of 18 percent 
uncompeted.
    Regarding the industrial base supporting TSA, 56 percent ($1.1 
billion) of TSA's contract dollars were awarded to large companies, 21 
percent ($410 million) were contracted to small companies, and 23 
percent ($450 million) went to medium-sized companies. Furthermore, the 
top 20 TSA contractors in 2010 accounted for 42 percent of contract 
dollars obligated, compared to 45 percent in 2004. Of the top 20 in 
2004, 14 remained on the list in 2010.
                               conclusion
    Mr. Chairman and Congresswoman Jackson Lee, distinguished Members 
of the subcommittee, I would like to close with two comments.
    First, our research on DHS contract trends was not intended to 
answer a specific question or address a particular problem. Rather, it 
was intended to present the facts as they arise from publicly available 
data. Given that, we found that DHS contract spending was overall 
stable over time, with a majority of contracts openly competed and 
awarded across a broad industrial base that includes companies of 
varying competencies and size. TSA exhibited similar trends in budget 
stability and share of competed contracts, but has been awarding 
contracts to a less diverse industrial base.
    Second, our findings raise several important questions that the 
data are unable to answer. With regard to R&D, the issue of how we can 
measure the outcomes of actual R&D contract spending deserves greater 
attention. A first step would be to separate R&D management and support 
services from actual R&D contracts. More importantly, measuring any 
kind of R&D spending is an input metric that says nothing about R&D 
productivity and innovation, which are the issues we are really 
interested in. For a better understanding of these issues, new analysis 
is needed that assesses TSA's success in delivering new capabilities to 
better undertake its missions.
    With that, I conclude my remarks and look forward to your 
questions.

    Mr. Rogers. Thank you.
    I will start off with the questions.
    I was struck by that number when you said it dropped to $6 
million. To what do you attribute that?
    Mr. Ben-Ari. So there are two factors in play here. The 
first one is that as other sectors in the Department of 
Homeland Security grew, namely service and products, something 
had to give. That something in the past 7 years was research 
and development. The numbers are down for--Department-wide, 
they are particularly starved in TSA's case.
    The second reason is that in recent years, there has been a 
reclassification of the contract dollars awarded away from the 
research and development classification towards professional 
services classification.
    So it is not that less work was undertaken. In some of the 
cases, it was just undertaken under a different type of 
contract classification.
    Mr. Rogers. Mr. Boylan, you made reference to the concern 
that some folks in DHS have with talking with the private 
sector. To your knowledge, there are no policies that guide 
them as to the extent to which they can interact with the 
private sector without getting in trouble?
    Mr. Boylan. It depends on the context. Within the 
contracting context, absolutely. Under the FAR, there are clear 
guidelines, from my perspective.
    What I was talking about is the pre-acquisition process, 
the understanding of the possibilities and the limitations of 
the possibilities. In that context, we have not had very good 
conversations as of late. At the policy level is what I am 
talking about. At the technology level, we have these 
questions. But I think it is important for policy people and 
people who are deciding policy to understand what technology 
can do and cannot do.
    Mr. Rogers. So you would like to see the Department 
establish some guidelines so that format could be established?
    Mr. Boylan. I know there has been a recommendation to 
creating an advisory board that would have that type of 
capability.
    Mr. Rogers. Does the DOD do that now? Do they have that 
kind of format set up?
    Mr. Boylan. Yes.
    Mr. Rogers. That has been one of my goals is to see the 
Department emulate more of what DOD does, because they have 
been around so long and they have kind of stepped on all of the 
rakes and they know what not to do. But we are seeing DHS has 
not been pursuing that course of action. Because I do want to 
see what you are talking about. I want to see an on-going 
dialogue about the challenges that the Department is facing 
with the private sector, to see what is possible, and do it 
very early before you start developing the RFPs. To my 
knowledge, none of that--and I hear regularly about how 
frustrated the private sector is about trying to just talk with 
somebody.
    But Mr. Pearl, what would be the thing that you would most 
want to see them do as far as new guidelines? Is it that early 
dialogue?
    Mr. Pearl. Mr. Chairman, we have begun a process with some 
of the folks below the kind of HQ level, with some of the Under 
Secretaries. The Council is facilitating dialogue, for example, 
with the Under Secretary of S&T, with Dr. O'Toole. We have 
begun a dialogue with the Under Secretary of Management, Rafael 
Borris, the idea being in his team, the idea being is that the 
management component part over which the Under Secretary is 
responsible for, he does have on-going oversight authority to 
even rein in some of the procurement issues, and I think there 
are like 10 or 11 different procurement acquisition kind of 
different silos going on, but he does have a certain amount of 
oversight.
    However Dr. O'Toole has not been given those kinds of tools 
and does not have that oversight. So if the administrator of 
TSA or the administrator of any of CBP or any of the component 
parts, wishes to do their own R&D, they can do it without any 
semblance of necessarily communication. So we have been working 
with them on how we can have those dialogues.
    They call them industry days. The fact is that that 
language basically says, we have developed an RFI and RFP, we 
know what the contract is going to be, and we will call in 
industry and we will basically read you the Federal Register 
report. What our discussions have been, and we have gotten a 
little bit further than we have in the past, because it all 
depends on general counsel accepting it, it all depends on 
ethics, those kinds of things, that if we can have those 
discussions in conceptual framework, along the lines of what 
Mr. Boylan and I were discussing, long before, to figure out--
because nobody, whether it is in the public sector or in the 
private sector, can expend R&D resources anymore for what we 
think TSA in this case might want. That is part of the 
discussion.
    We have begun to move that ball, that needle, a little bit, 
and we are trying to get through the clearance. One of the 
things is the possibility of forming an industry-Government 
council outside of the normal kind of structure that would be 
kind of co-chaired by public sector and private sector, 
facilitated by organizations like the Council and other 
organizations that would be part of it so that we can get all 
of the players and interested players around the table.
    Mr. Rogers. You may not know the answer, but does the DOD 
have some process--you mentioned a while ago that they have 
these preliminary discussions. What do they call it? It is not 
industry days. How do they format it?
    Mr. Boylan. They have industry days that are interactive. 
What the criticism of DHS has been quite recently is that they 
come in and read and they don't discuss with the people that 
attend. It is a different atmosphere at DOD.
    Mr. Pearl. I don't think that this is something that should 
be either DOD- or DHS-model component. In many respects, DHS is 
a law enforcement agency in some respects, not a kind of 
National security agency. I think that the CIO who came in from 
the IRS has certain plans in terms of technology, and I think 
that Mr. Squires has been trying to push that kind of model.
    So I think that the lessons learned interagency, not just 
looking at the DOD model, but looking at how things across the 
board, whether it is in Veterans or Education or Interior, how 
does the process and how does the discussion about acquiring 
technologies in this case--what do you go through? There should 
be lessons learned both up-side and down-side, and those would 
go to the three questions I stated.
    Is it even economically reasonable in this environment, is 
it technologically feasible? We don't want things that can't be 
done. What are the unintended consequences? Those are the three 
things that we think should be asked across the board all the 
time.
    Mr. Rogers. We have passed the subcommittee mark on the TSA 
reauthorizatioin. We are about to bring it to full committee 
next month. Is there something in the authorization bill that 
would be necessary or helpful, in your view, on this matter 
that you would like to see us include at full committee mark? 
That is for any one of you.
    Mr. Pearl. Just briefly, I would like to see the Congress 
take a more encouraging supportive role. It doesn't always have 
to be the passage of law that says this is the law that you 
have to follow. I think that the nature of--and certainly our 
written testimony went to that--that Congress has an important 
role to encourage this kind of dialogue; to encourage exactly 
what the two of us have been saying, to come out of an 
authorization, not out of an appropriations approach; to come 
out of authorization that says we give a sense of acceptance 
and support for that kind of approach. That would help 
everybody and all of the parties get in the room, and I think 
if they heard that kind of bully-pulpit statement from the 
Congress, that should be part of it. We have submitted 
suggestions for that kind of approach to the staff director and 
to the folks on the Committee.
    Mr. Rogers. Mr. Boylan.
    Mr. Boylan. I agree. We didn't coordinate our testimony 
before this, Mr. Chairman. I think providing that guidance and 
high-level cover, to the career-level employees especially, 
that will give them comfort in engaging with us and together 
hopefully we can achieve some good things.
    Mr. Ben-Ari. Just one point. I completely agree on this 
topic of Government-industry coordination dialogue. I would 
just like to emphasize the point that internal dialogue 
discussions are not less important, and there are efficiencies 
to be gained. From a better dialogue across the various DHS 
components, especially when it comes to research and 
development, especially when it comes to acquisition, there are 
enterprise-wide or mission-wide elements that cut across 
programs and components. If those programs and components came 
together to put together a common requirement, common standard, 
and a common acquisition program, I think there are 
efficiencies there for the Department.
    Mr. Rogers. In response to one of the things I think that 
Mr. Boylan brought up. We did have a full committee mark this 
morning on the authorization. There was an accepted amendment 
by Mr. Duncan to DHS that requires future-year investments. It 
provides that the private sector--it will provide the private 
sector with budget projections so you will see some investment 
predictabiltiy going forward, which I think will be helpful.
    Mr. Richmond is recognized for any questions he may have.
    Mr. Richmond. To start with, when you talked about the 
industry days, and just from someone who is not familiar with 
how industry gets their ideas and new technology over to the 
right people in DHS or TSA, walk me through a company who 
either did their own research or came up with their own 
technology. How do you get an audience with TSA or DHS to 
inform them of that technology if you don't have technology 
showcases and things like that?
    Mr. Boylan. I guess I am the company guy, so I get to 
answer that.
    I have seen varying approaches. One thing that our 
technology department does is they will write an unsolicited 
white paper: Basically, here are some capabilities we have come 
across; are you interested? Sometimes that begins a dialogue.
    Sometimes it is a discussion around a current technology 
that is being procured by TSA where we have seen improvements 
of various sorts, or capabilities that could be added or 
developed into that technology, and you can have those 
discussions as well.
    Industry days, like I said, one of the criticisms is that 
usually it is TSA laying out a PowerPoint of what they want and 
what they expect. Then what has happened in the past is then 
industry comes in and often, unfortunately, this comes in 
through a bid protest that your requirement has a problem of a 
number of sorts. I can think of a few procurements that have 
been dragged out for multiple years because of this. If you 
would have had the engagement at the beginning, a lot of that 
could have been avoided.
    Mr. Richmond. To that solution, you recommend an advisory 
council, is that one of your ideas to navigate through that?
    Mr. Boylan. One of our suggestions is to have an advisory 
council where these types of discussions could take place.
    Mr. Pearl. It is important, I would add, that individual 
companies early on in the process, from 2001 to 2005--you know, 
I am picking numbers--we are trying to knock on the door of the 
components of the directorate to say we have got the greatest, 
latest product, technology, or whatever. It wasn't necessarily 
tied to what was being asked for, it was tied to what they had 
developed and what they had determined to be the need. Pre-oil 
spill or whatever. I think that the context was the Department 
kept saying no, that is not our priority right now. That is not 
what we want to do.
    So what we are trying to do is develop a dialogue where we 
would understand in the long run, and what Mr. Duncan in terms 
of multi-year funding should also be multi-year policy, you 
know, to make sure of what long-term strategies are. What are 
we looking for around the curve? At which point Government and 
industry together can discuss conceptually what is it that 
Government is going to need to maintain a high level of 
security.
    I think that the problem has been that focus has been on 
contract rather than on capabilities. It is on the checking of 
the box rather than the nature of what we are trying to achieve 
in mission. I think that if the two sides could get together to 
say this is what our mission, this is what our goal, this is 
what we want to achieve, what can industry bring capability-
wise to meet that mission, then we will work out the contracts 
down the road. We will work out what the procurements are. We 
will allow in this kind of format of a council all of the 
interested parties in the room, not just one who happened to 
knock loudest or shout louder. We want a fair process and that 
is exactly what we are trying to call for.
    Mr. Richmond. I guess this question would probably go to 
Mr. Ben-Ari, which is: In your opinion, what are some of the 
most surprising key findings regarding the DHS and S&T 
contracting?
    Mr. Ben-Ari. I think it would have to be the fact that so 
much is actually spent on service contracts that are not 
directly contributing to the research and development mission. 
Again comparing, for example, the Department of Defense, a 
different animal, with a $75 billion annual R&D budget, but for 
that budget they spend about $1.5 billion on what is classified 
as management and support, R&D management and support 
contracts. That is about 4 percent. In DHS that is 30 percent. 
There is something strange about this picture. I am not an 
expert on TSA's S&T funding and contract spending. That is true 
at the DHS level as well. Something here is strange.
    Part of it again might be just that certain contracts were 
incorrectly classified as R&D contracts as opposed to service 
contracts. But that in and of itself is troubling, because all 
of these years you were counting these contracts as R&D 
contracts and thought that--and possibly expected certain 
output from that R&D spending that never could have 
materialized because it was going into something else entirely.
    Mr. Richmond. Mr. Chairman, I yield back.
    Mr. Rogers. I thank the gentleman.
    Mr. Boylan, from your time at TSA, can you give me some 
examples of things where they partnered effectively in this 
process, and some projects?
    Mr. Boylan. I was at DHS, not TSA, Mr. Chairman.
    Mr. Rogers. I am sorry. Frankly, I am more interested in 
DHS as a whole than I am just one particular segment.
    Mr. Boylan. The one I know most about is explosive 
detection, and with explosive detection you have something that 
is very important. You have requirements that are really clear, 
and those requirements are that you need to be able to detect a 
specific number of substances and you need to detect an amount 
at a certain level, and that drives development. The technology 
in that area has developed over the last 10 years tremendously, 
because there were targets for development by R&D within 
companies funded by DHS and funded by international governments 
as well.
    Mr. Rogers. So there was some interaction, then, before 
they put an RFP out in that situation?
    Mr. Boylan. Yes. When I was first at the Department we 
would often have, as Mr. Pearl described, we would have people 
come in with the latest gadget and widget. You know, it was 
constant. It kind of reminded me of the Civil War days of the 
Federal Government at that point. I often wondered why am I 
sitting in this discussion, because I don't know what these 
people are talking about.
    That was the lesson that I learned in a policy position 
basically, that I needed to get a little more in-depth in what 
the science was, because I was making decisions that impacted 
this and I needed to know.
    Mr. Rogers. In your experience, we heard Mr. Ben-Ari talk 
about the percentage of DHS contracts to go to big companies, 
40 percent; 30 percent for medium, and 30 percent for small. In 
your experience, do smaller companies and medium-sized 
companies have a greater challenge in trying to penetrate into 
the Department, or really not? Is it just as difficult for a 
big company as it is for a small one? I would open that up to 
any of you.
    Mr. Boylan. I don't have data on this. But we interact with 
smaller companies all the time. Often companies are coming to 
us for support because we fall into a category of a bigger 
company. I hear lots of different stories and different 
experiences from different companies. But I do hear a constant 
theme of the difficulty of getting heard from smaller 
companies.
    Mr. Rogers. Is it because they don't understand the process 
or what?
    Mr. Boylan. That is part of it. I would have to say for my 
company it is easier to engage, because we are providing 
technology and servicing it every day. So that is a different 
position to be in. But we do have companies developing the 
newest, latest, greatest widget, and it is the common theme 
that they have difficulty getting heard. That goes back to the 
industry days and the advisory groups providing that 
opportunity for new technology that may come from anywhere to 
be heard.
    Mr. Rogers. What about you, Mr. Pearl?
    Mr. Pearl. We have a number of small businesses that are in 
the space, and over the course of the last 10 or 12 years, long 
before even 9/11, I was working with small businesses that were 
trying to in essence be heard, as Mr. Boylan is talking about. 
Sometimes it is part that they don't understand the process. 
Sometimes it is that they have a more limited R&D budget for 
themselves in terms of they have an idea and they want to sell 
it and they are trying to find out what they want to do, and 
the larger companies in the past have been able to invest in 
R&D, and that one can fail and this one can work and whatnot.
    The nature of what happens sometimes is that when the 
technology or whatever, in the case of a widget, a product, or 
a service, is identified in a small business way and can get in 
essence some traction. Sometimes the best way to do it is for 
them to align themselves with some of the larger companies, and 
they become in essence partners because that company hasn't 
developed it. They either are taken over, or they become subs 
or whatever.
    There are opportunities. The problem that my small 
companies are saying to us is the following: That in this 
environment, without a long-range strategic plan, they can't 
afford to waste any extra time and money in developing--even if 
they have a patent, even if they know what the best technology 
is going to be, they need to be able to get their foothold in. 
That goes to the international sphere as well.
    One of the things that we have been having discussions 
about is how do you take lessons learned in places like Israel 
or Great Britain or Spain or Germany or India--which is not a 
microcosm of itself, it is a macrocosm--but how you take those 
lessons learned and apply it? We have been encouraging greater 
communication between cut nation-states, that it is not just 
about the U.S. technology solution. We are going to be in a 
global environment.
    So communication, coordination, collaboration, all of the 
``-ations'' that I mentioned in my testimony, are exactly what 
we are trying to encourage not just between private sector and 
public sector, but between local and Federal, between the 
Federal Government and nation-states, between the different 
Federal agencies. We think that this Congress should be in the 
business of encouraging that kind of dialogue, that kind of 
communication, because we think that if you allow that, you 
plant a few seeds, there will be a lot of fruit borne.
    Mr. Rogers. Thank you. The gentlelady from Texas.
    Ms. Jackson Lee. Thank you, Mr. Chairman. I would like to 
acknowledge Mr. Richmond. I know he had an opportunity to ask 
questions and he was not here when I indicated that I had a 
mark-up as we speak, so I thank him for his indulgence as well.
    Mr. Ben-Ari, I am going to go over something that I know 
has been asked. I sort of have connections into the room and I 
know what questions may have been raised. But I want to explore 
this with you because I think this is a key cornerstone to what 
my opening statement was.
    It is about the management of R&D contract dollars by DHS. 
It is noted that they spent a significant amount. The Defense 
Department spent roughly $43.4 billion on R&D and $1.7 billion 
was spent on R&D management and support contracts. What does 
management and support actually mean, and is there a reason why 
DHS is spending more contract dollars on management and support 
of R&D than R&D?
    Remember, in my opening statement I said we need to be 
light years, many steps, ahead of individuals with shoe bombs 
and underwear bombs. I am very concerned about top-heavy 
management if you are not in the weeds of research. So I would 
appreciate your commentary on that, and if you can add to the 
fact that most Government agencies and departments in the 
Federal Government rely on investment in R&D for improving 
their functional capabilities. DHS's functional capabilities is 
securing the homeland at all levels from aviation to border to 
intelligence gathering, if you will. But according to your 
report, when looking at DHS contract spending, R&D claimed less 
than 10 percent. Less than 10 percent.
    Now, DOD is between 11 and 14 percent. I would argue that 
DHS needs to be higher because we are not a military, that we 
buy heavy equipment and we are using dollars for that, as much 
as we are trying to thwart terrorist acts. We are trying to be 
ahead of them, we are trying to be preventative. Prevention 
sometimes comes from human resources, but it also comes from 
technology.
    So based on your research, is there any particular reason 
why DHS R&D spending, particularly last year's spending, is 
particularly lower than other parts of the Federal Government? 
If you can give us your overview on that question.
    Mr. Ben-Ari. Sure. Thank you for that question. Starting 
with the issues of research and development management and 
support contracts, these are contracts that are awarded not for 
actual research and development activity, but in support of 
facilities and equipment that are used for research and 
development activities. So these are contracts to support and 
operate laboratories, test ranges, test equipment, and so 
forth. The reason that distinction is important is that these 
dollars do not contribute directly to any specific R&D outcome.
    So when measuring R&D--and I think it is important to also 
remember that R&D as is an input metric. You know how much you 
are putting in. You don't know how much you are getting out. It 
doesn't tell you necessarily what the outcome is of that money 
that you spent.
    But even when you are measuring an input metric, it is 
important to measure correctly. If you are counting research 
and development managing support as research and development, 
you are skewing the number.
    Ms. Jackson Lee. That is my point. I thank you for the 
explanation. But I understood that is what it is. That is my 
quarrel, is why is it so high and why is my actual R&D on DHS, 
which would benefit from R&D, more so because we don't produce 
heavy armor, why is it? Why do we have this imbalance with DHS?
    Mr. Ben-Ari. From what the data can tell, and I hesitate to 
go beyond that, but from what the data can tell, part of the 
reason for the high levels of spending on management and 
support of R&D is because certain contracts were misclassified 
or classified in error as management and support contracts. 
They were really contracts for other types of professional 
services. When that error was caught, the R&D management and 
support contracts were reclassified into the new category.
    Ms. Jackson Lee. So are you saying that DHS is investing 
adequately in pure R&D?
    Mr. Ben-Ari. I didn't say that. I said that when what we 
thought we were counting as research and development dollars, 
specifically research and development and management and 
support contract dollars, we were wrong; and these contracts 
were actually--are now, hopefully, correctly reclassified as 
different types of contract.
    In terms of spending levels on R&D overall, I think there 
is no magic number here or magic percentage: X amount of DHS 
dollars must be spent on research and development.
    I think that comparison with DOD is a good one. I mean, it 
is a Department that does depend on technological advantage on 
the battlefield, in the same way that DHS depends on a 
technology advantage.
    Ms. Jackson Lee. Do you think we can improve the investment 
in straight R&D in DHS?
    Mr. Ben-Ari. There is room for improvement if the mission 
calls for it. I would look at DHS' requirements today and in 
the future, and base research and development decisions on 
those requirements. If technologies exist today that meet 
today's requirements and requirements that we foresee for the 
next 5 years, then R&D spending levels are probably adequate. 
If, on the other hand, the expectation is, as you pointed out, 
for different types of threats which we are not even aware of 
today, then maybe the spending levels need to accommodate that 
to encompass a broader range of capabilities and a broader 
range of technology solutions to address those future threats.
    Ms. Jackson Lee. Mission is important. You do want to have 
your research and development connected to mission.
    Let me ask Mr. Pearl and Mr. Boylan three questions, if I 
might, together. One is TSA is engaged in reorganization. I am 
not sure if it is publicly known. But do you believe it is key 
to attach mission to reorganization? You know, you can move the 
chairs around on a deck and one of them may fall overboard. So 
the question is: Is mission and reorganization important?
    Because I think I heard you mentioning something about 
confusion to small businesses, and when you say that to me, 
small- and minority- and women-owned businesses are my passion, 
because I believe they are the job creators of America, and I 
indicated to you new starts and many others start out being 
small businesses.
    So should reorganization be tied to mission? Would that be 
more helpful for the outsider to know even where to go? Is it 
harmful when you cut resources, such as acquisition resources, 
such as R&D resources, for an agency like TSA? How can we 
improve the informational or close the informational gap of 
information when it comes to procurement for small- and 
minority- and women-owned businesses? How can we fix that 
problem, which is a problem overall in Federal agencies, 
period? But how can we in particular fix it to an agency like 
DHS, which truly benefits from R&D?
    Mr. Pearl, have you got the three?
    Mr. Pearl. I got the three. Let me start with the third 
one. That was extensively discussed before, when you were gone. 
I am hoping you will get that, as part of that and certainly in 
our written testimony, that there needs to be strong, 
substantive dialogue and communication, coordination, 
collaboration, long before an RFP, that everyone can take part 
in in a transparent and fair way. That allows small business, 
large business, to be in the room, to be able to share their 
expertise and their capabilities. Because before you get to 
mission--and this goes to your first question--before you get 
to mission, you have to know what it is that--or in the context 
of that, what the capabilities are in the context of do you 
want just Star Wars, do you want just, you know, science 
fiction, or are there--is there a technological feasibility 
that either a small business or a large business can bring to 
the table? So from that standpoint, the information gap can be 
filled when there are these kinds of long-before-the-contract 
discussions.
    With regard to the R&D cuts, there is no question but that 
it is not just TSA. What I think that all of us were talking 
about is not just the TSA budget when it comes to R&D; that it 
comes to the whole nature of research and development and 
looking ahead of the curve for DHS as a whole, and that we need 
better coordination and harmonization--dare I say 
standardization--so that there can be interoperability, so 
there can be many companies that are part of a long-range 
process when it comes to R&D.
    It is not just R&D at DHS. I know that the folks at S&T 
work with DOE, work with NSA, work with DOD, work with DOJ and 
the FBI on a regular basis as their R&D communication. We need 
to encourage that, not only within Government, but in the 
public labs. We need to talk about it in terms of the private 
labs that are going on. There needs to just be better 
coordination and communication. I think that if you do that, 
all three of your questions are answered sufficiently.
    Ms. Jackson Lee. Did you answer the questions about cutting 
resources being harmful to the process, resources on 
acquisition?
    Mr. Pearl. Well, the nature--it is transparent to say that 
the private sector is worried there is going to be a cut and 
therefore there isn't going to be sufficient funds for their 
operation. We are not talking about dollars, we are talking 
about dialogue. If in fact the mission is identified and 
capabilities are there, then whatever Congress decides is going 
to be appropriated to that mission, then we in the industry are 
going to be able to respond.
    So I am not going to take a position and the organization 
is not going to take a position on whether there should be X 
amount of dollars or Y amount of dollars. We just need to have 
a smarter landscape, a smarter environment in Homeland Security 
across the board.
    Ms. Jackson Lee. Thank you.
    Mr. Boylan.
    Mr. Boylan. On the mission question, in our experience it 
would be useful to break down some of the silos between 
operations and technology, for instance. Technology at TSA is 
our customer. That is primarily who we operate with. But then 
when the technology gets deployed, operations is the one that 
lives with it and has requirements that may be a little 
different, because they are interacting with the airports and 
the airlines and their requirements. So the two don't 
necessarily always meet, in our experience.
    So if there is a reorganization going on, which I have 
heard inklings of but no details about, I would encourage that 
the mission be a unified mission, and that would go a long way 
to, at least helping us in our mission, to help provide the 
technology that helps secure.
    Ms. Jackson Lee. Two quick questions, Mr. Chairman, to Mr. 
Ben-Ari and I will be finished.
    Mr. Ben-Ari, do you think a mentorship program would be 
helpful to small businesses?
    Mr. Ben-Ari. It couldn't hurt. I think they have been 
successful in the past in other agencies, in other departments, 
and I think there is always room for improvement.
    I would just point out again this data point of 30 percent 
of DHS contract awards going to small companies. That is much 
higher than both the Small Business Administration's minimum 
requirements and most other Government departments. So I agree 
there is always room for improvement, and a mentor program is 
one.
    Ms. Jackson Lee. Is it important to have the adequate 
resources for R&D, adequate financial resources for R&D?
    Mr. Ben-Ari. I think research and development, funding 
research and development to meet future requirements is very 
important. But those requirements have to be established, 
ideally, together with industry--that is part of the dialogue 
that I think was referred to earlier--and with the end-user. 
The people in the field undertaking the operation need to be 
part of this discussion as well.
    Ms. Jackson Lee. But they can't be part of the discussions. 
The question is: Does the United States need to invest adequate 
resources for R&D from the Government perspective to protect 
the homeland? Is that an important investment?
    Mr. Ben-Ari. It is an important investment.
    Ms. Jackson Lee. And not worthy of being looked at lightly 
or being subject to random cuts?
    Mr. Ben-Ari. Absolutely. We are putting future capabilities 
at risk if we do not have this process in place to look at 
future requirements and fund the capabilities to meet those 
requirements adequately today.
    Ms. Jackson Lee. Mr. Chairman, I thank you for your 
indulgence. Thank you to the witnesses as well.
    Mr. Rogers. I thank the gentlelady.
    I just wanted to ask one more thing. Currently TSA is 
engaged in a pilot program to allow third-party explosive 
detection canine teams to be certified by TSA. If implemented, 
TSA would then be leveraging the private sector to provide the 
service that until now has been the purview of the Federal 
teams.
    Are there other areas in which the private sector could be 
certified to provide services, that right now are only being 
handled by Federal employees, that you would like to see? Are 
you aware of any? Mr. Pearl, you mentioned certification in 
your opening statement, and that is one of the reasons I asked 
that.
    Mr. Pearl. There is no question, and it goes to the R&D 
question as well. The certification and designation--both Mr. 
Boylan and I were testifying earlier in the summer before the 
committee on the SAFETY Act, the law that already exists that 
allows DHS to give certification and designation to 
technologies that are antiterrorist technologies. That hasn't 
been fully marketed and fully publicized. That nature of how 
the Government can in essence give a sense of recognition to 
technologies that provide that is one way.
    I would not limit the whole R&D argument to just the 
Federal Government's role. I think the public labs, the 
academia, and in the private sector has R&D investment that 
they are ready to do as well.
    So the nature of the industry, the third party in terms of 
designation and standardization, is something that we are 
definitely interested in and the specifics we can look at 
more--we can get back to you on other ways that have worked in 
the past.
    Mr. Rogers. Well, I am definitely going to follow up on 
your recommendations earlier about making sure we include in 
our authorization bill next month language to encourage the 
Department to have these early--early conversations with the 
private sector in some sort of a format that is practical.
    But one thing that I am thinking about, I am about to start 
a Transportation Security Caucus here in the Congress. We have 
a lot of members not on the Homeland Security Committee that 
are interested in this topic. So to facilitate communication 
with them, I am going to be starting that.
    Is there a way that you think such a caucus of Members 
could bring about more of this dialogue, or really does it have 
to just come through the Department with the private sector?
    Mr. Boylan. I think that Members all have constituent 
airports and other transportation constituents who really would 
like to have their voices heard, in my experience, and I think 
that would be a valuable input for all of us, technology and 
Government.
    Mr. Rogers. Okay. Do you have more questions?
    Ms. Jackson Lee. If the gentleman would yield, I would hope 
that as well, we might add a very strong component on small and 
MWBEs. Even though I hear the 30 percent, I think there are new 
companies that don't know the system, way beyond the Beltway, 
that I would like to see having an opportunity to work for the 
Federal Government. Let's get them from Utah and Alabama, 
Mississippi, Michigan, Illinois. I know that there may be some. 
But that is where the gap of information is.
    If you are not buzzing around the area, which is the crowd 
that understands Federal contracting, you are not going to get 
too many beyond the Beltway who understand this process. I 
think they may have very worthy ideas, and I would like to make 
sure they get the opportunity to present their ideas to help 
the American people and secure the homeland.
    Thank you. I yield back.
    Mr. Rogers. I thank the gentlelady. I thank the witnesses. 
You have been very helpful. I would ask that there may be some 
written questions from Members who couldn't make it that they 
would want to submit to you, and I would ask you to respond to 
those within 10 days. After that we will close it out.
    With that, this committee is adjourned.
    [Whereupon, at 3:31 p.m., the subcommittee was adjourned.]

    TSA REFORM: EXPLORING INNOVATIONS IN TECHNOLOGY PROCUREMENT TO 
                     STIMULATE JOB GROWTH, PART III

                              ----------                              

                       Thursday, November 3, 2011

             U.S. House of Representatives,
           Subcommittee on Transportation Security,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:02 p.m., in 
Room 311, Cannon House Office Building, Hon. Mike Rogers 
[Chairman of the subcommittee] presiding.
    Present: Representatives Rogers, Cravaack, Turner, Jackson 
Lee, and Davis.
    Mr. Rogers. The Committee on Homeland Security, 
Subcommittee on Transportation Security will come to order.
    The subcommittee is meeting today to continue to examine 
innovative solutions to technology procurement at TSA that 
could generate cost savings for the Federal Government and 
stimulate job growth in the private sector.
    I want to thank all of our witnesses for being here to 
participate in what I believe is going to be a very fruitful 
and timely hearing. I am pleased to see the spectrum of offices 
that are participating in aviation technology, development, and 
procurement that are represented at the table.
    Leading up to this hearing we have had testimony from 
former DHS officials, the GAO, and industry representatives on 
how we can optimize the relationship between TSA and the 
private sector. They all expressed both success stories and 
challenges that TSA faces in finding the best ways to achieve 
this collaboration that is so important to developing the right 
technologies for risk-based screening.
    We now invite DHS, TSA, and the Science and Technology 
Directorate and the DHS Office of Inspector General to speak on 
what they perceive to be successes, challenges, and needed 
changes to foster innovation and meet our security needs as 
effectively as possible.
    One of TSA's stated aviation security goals is to develop 
enhanced technologies and capabilities to enable risk-based and 
intelligence-driven screening processes. I want to emphasize 
how important this goal is and what an opportunity it 
represents for providing both security and jobs. The question 
is: How can we work together to ensure that TSA is getting the 
technologies it needs to secure the traveling public and 
commerce, while promoting innovation and, therefore, job growth 
in the private sector?
    I know that Dr. Nayak in his capacity as Chief Procurement 
Officer has stated that one of his strategic objectives is to 
establish quality communication between industry and DHS. I 
look forward to hearing from him on how the initiatives within 
his offices are making that happen.
    I would also like to hear how acquisitions are being 
standardized across the Department so that vendors working with 
multiple components can do so with a level of predictability 
that they say is currently lacking.
    From Mr. Kane and Mr. Benda, I trust you will address the 
joint strategy you have undertaken to ensure that you have a 
workable plan for aviation technology investment. I know the 
existing plan looks out 2 years ahead, but I would love to see 
this extended further, say to 4 or 5 years, because I believe 
this is what industry needs to help achieve the mission 
successfully. I also think that TSA has the opportunity to be 
more of a leader in setting international standards for 
screening technology which would increase the market space for 
many U.S. companies.
    Finally, I look forward to Mr. Edwards' finding from the 
Inspector General's Office, which has produced some very useful 
reports on how acquisition of detection equipment can be 
consolidated across the Department. We know from our prior 
hearings that more use of strategic sources, better industry 
days, reestablishment of the Joint Requirements Council, and 
transparency with industry on the 5-year outlook are some of 
the key areas we must strengthen.
    I look forward to hearing the perspective of all the 
witnesses on these and other matters where we can work together 
to find solutions. Industry has ideas, and I want to ensure 
that TSA and DHS are listening to them. Then I want to turn 
those ideas into solutions.
    We have posed the question: What are the available options 
for adjusting how things are done at TSA that will foster more 
innovative capacity in the technology sector? Now we need to 
establish answers and implement the needed changes.
    We have an obligation to examine the ways to solve some of 
our Nation's most pressing challenges, of which high 
unemployment tops the list right now. We must leave no stone 
unturned in finding ways to reverse that trend and support all 
sectors of the economy, including technology innovation, which 
has long been one of America's greatest strengths.
    With that, I typically would yield right now to Ms. Jackson 
Lee, but, as I told the panelists a minute ago, she is in 
Judiciary with an amendment of her own and can't leave, so we 
are going to pass that and go straight to the witnesses for 
their testimony.
    Nick Nayak is the Chief Procurement Officer at the 
Department of Homeland Security. Prior to coming to DHS, Mr. 
Nayak served as Deputy Director for Internal Revenue Service 
Procurement. Before rising to Deputy Director for IRS 
Procurement, Mr. Nayak served in several high-impact leadership 
positions, including Director of Strategic Acquisition 
Initiatives, Deputy Director of the Office of Information 
Technology Acquisition, Assistant to the Director of 
Information Technology Program Management, Project Executive 
for the IRS Commissioner's Readiness Project, and Director of 
the Treasury Acquisition Institute.
    Robin Kane became Assistant Administrator for Security 
Technology at TSA in June 2009 after serving in an acting role 
since December 2008. As Assistant Administrator, Mr. Kane 
oversees the implementation and development of security 
technologies across multiple modes of transportation. He is 
responsible for development, test and evaluation, acquisition 
and deployment, and the maintenance of all TSA security 
technologies and systems. Mr. Kane joined TSA in 2005 as a 
branch chief within TSA's Office of Budget and Performance. 
Prior to TSA, Mr. Kane spent 20 years in the Coast Guard.
    Paul Benda joined the Department of Homeland Security 
Science and Technology Directorate in January 2010. He serves 
as the Under Secretary's Chief of Staff and Director of the 
Homeland Security Advanced Research Projects Agency.
    Can't you find anything else to do? You don't have much on 
your plate.
    Prior to joining DHS, Mr. Benda was Director of the Project 
Integration Office at the Department of Defense where he 
oversaw the design, implementation, testing, and commissioning 
of all security systems in the Pentagon reservation. Earlier, 
Mr. Benda served as the Pentagon's Chemical, Biological, 
Radiological, Nuclear, and Explosives Director; and in civilian 
service he was a program manager at DOD's Defense Advanced 
Research Projects Agency.
    Accompanying Mr. Benda in the audience today is Dr. Susan 
Hallowell, Director of the Transportation Security Laboratory. 
The TSL is a Federal laboratory of the DHS Science and 
Technology Directorate that is dedicated to finding and testing 
solutions to detect and deter weapons and explosive threats to 
transportation. Prior to being named as Director, Dr. Hallowell 
managed and executed research and development for explosives 
detection for DHS under TSA.
    Dr. Hallowell has worked for DHS and the Federal Aviation 
Administration for 20 years in the areas of explosive 
detection, research, and development and is an expert in the 
area of trace detection of explosives. Prior to working for the 
FAA, she worked as a research chemist for the U.S. Army in the 
area of detection and protection against chemical warfare 
agents.
    On behalf of the committee, I would like to thank Dr. 
Hallowell for her decades of service and her efforts at 
Transportation Security Laboratory that are vital to the 
security of transportation systems around the country.
    Charles Edwards assumed the position of Acting Inspector 
General for the Department of Homeland Security in February 
2011, where he previously served as Deputy Inspector General 
for the Department. Mr. Edwards has over 20 years' experience 
in the Federal Government, where he has held leadership 
positions at the Transportation Security Administration, the 
United States Postal Service, and the USPS Office of Inspector 
General.
    We have got a great panel here, and this is an area I care 
very much about. We can make some great changes. I hope that 
the witnesses here have had a chance to look at what came from 
our previous two hearings with Michael Jackson and Elaine Duke 
from their perspective in the rearview mirror and then the 
industry panel we had. I know they are all anxious to hear what 
you have to say.
    We will start with Dr. Nayak. You are recognized for 5 
minutes to summarize your opening statement.

   STATEMENT OF NICK NAYAK, CHIEF PROCUREMENT OFFICER, U.S. 
                DEPARTMENT OF HOMELAND SECURITY

    Mr. Nayak. Thank you, Mr. Chairman.
    Chairman Rogers, Ranking Member Jackson Lee, and Members of 
the subcommittee, I am pleased to testify before you today.
    As DHS Chief Procurement Officer, I am responsible for 
oversight and policy related to DHS' annual procurement of 
approximately $14 billion in goods and service. My background 
includes growing up in family-operated small businesses, 
working in the private sector for small and large businesses 
bidding on defense contracts, and more than 20 years of public 
service dedicated to building the Federal acquisition workforce 
and driving procurement initiatives to save taxpayer dollars.
    Since arriving at DHS a little more than a year ago, I 
established four priorities that I am using to improve DHS 
procurement: Quality contracting, quality people, quality 
program support, and the one priority that I added beyond my 
predecessors, quality interaction with industry and Government 
communication. Supporting each of my priorities are a number of 
initiatives that move DHS procurement forward in getting good 
deals for the taxpayer.
    In the area of quality contracting, DHS has achieved 
substantial success in spending money more efficiently through 
our Strategic Sourcing Program. The Department leads the 
Federal Government in coordinated procurements and has been 
recognized by the Office of Management and Budget, the General 
Services Administration, and the Partnership for Public Service 
because of our results. In fiscal year 2010, DHS saved over 
$347 million using strategically sourced contracts.
    In addition to savings, the Strategic Sourcing Program also 
focuses on maximizing the Department's use of small businesses 
and small disadvantaged business. Small business received 
approximately 36 percent of the total dollars that were 
strategically sourced in fiscal year 2010, far exceeding the 
Government-wide goal of 23 percent. We intend to expand the use 
of this valuable procurement tool in fiscal year 2012.
    In the area of quality communication with industry, I 
recently issued a Department-wide vendor communication plan. 
This publicly posted plan begins with a personal commitment 
from each head of contracting activity to enhance component 
engagement for all procurements. Requirements of the plan will 
result in an increased number of RFIs, draft RFBs, new and 
improved industry days related to specific procurements, a 
revamped on-line procurement forecast system supported by 
component procurement liaisons to answer inquiries from all in 
industry, a new and improved annual DHS industry day, and 
attendance at over 100 small business outreach events, 
including 10 small business vendor outreach sessions that 
include one-on-one appointments.
    In addition to my plan, we are investigating the 
possibility of a transparent industry advisory council and 
dialogue forum separate and apart from individual procurements. 
It must be open to all. We are contemplating reversing industry 
days, where industry comes in and they are invited to discuss 
their capabilities with us. I believe, given time for this plan 
to take hold, we are going to be a leader in communication with 
industry.
    In the areas of quality people and program support, the 
Department is committed to recruiting, developing, and 
retaining a world-class acquisition workforce. Through 
aggressive recruitment and retention strategies, the DHS 
contracting workforce has increased from 603 in fiscal year 
2004 to more than 1,400 professionals who processed over 90,000 
contracting actions and obligated $14 billion in fiscal year 
2010 and in 2011.
    However, the Department's rate of hiring contracting and 
programming support professionals has historically lagged well 
behind our needs. Our primary mechanism to correct this problem 
is our Acquisition Professional Career Program. This is a 3-
year program that provides participants with acquisition 
training experience through intensive training and on-the-job 
experience.
    Further, DHS has made significant progress in approving its 
existing workforce through training and certification for 
multiple acquisition career fields. A well-trained acquisition 
workforce can engage industry and apply flexible procurement 
strategies because they know more and they have better 
experience. Most importantly, a better workforce yields real 
savings to the taxpayer by a getting better business deal.
    DHS is committed to continuing to improve the acquisition 
process by enhancing our workforce, by partnering with 
industry, and incorporating best practices such as strategic 
sourcing. This approach supports the Department's frontline 
operations while ensuring effective oversight and efficient use 
of taxpayer resources.
    Thank you for the opportunity to participate today. I look 
forward to questions.
    [The statement of Mr. Nayak follows:]
                    Prepared Statement of Nick Nayak
                            November 3, 2011
    Chairman Rogers, Ranking Member Jackson Lee and Members of the 
subcommittee, I am pleased to testify before you today. As the Chief 
Procurement Officer since October 2010 at the Department of Homeland 
Security (DHS), I am responsible for oversight and policy related to 
DHS's annual procurement of approximately $14 billion in goods and 
services. DHS continues to improve its purchases across the Department 
first and foremost through the Strategic Sourcing Program. We are also 
expanding communication with large and small businesses to ensure we 
procure the right items at the right prices. The DHS acquisition 
workforce uses these tools to spend taxpayer resources efficiently and 
effectively. Today, I am happy to provide you an update on our 
continued success with strategic sourcing, our expansion of vendor 
communication and the status of our acquisition workforce.
                quality contracting--strategic sourcing
    DHS has achieved substantial success in spending money more 
efficiently through our Strategic Sourcing Program. The Department 
leads the Federal Government in coordinated procurements and has been 
recognized by the Office of Management and Budget, the General Services 
Administration, and the Partnership for Public Service because of our 
results. In fiscal year 2010, DHS saved over $347 million using 
strategic sourcing contracts. These savings come from initiatives that 
span across eight commodity families including:
   Industrial Products & Services
   Information Technology & Telecommunications
   Professional & Office Area Support Services
   Security
   Facilities & Construction
   Office Management & Miscellaneous Products
   Travel & Lodging
   Logistics Operations & Package Delivery Services
    The Department realized these significant savings by choosing the 
Strategic Sourcing Program for approximately $2.6 billion of its 
requirements. This savings represents approximately 18 percent of the 
$14 billion spent on contracts at the Department in fiscal year 2010.
    In addition to savings, the Strategic Sourcing Program also focuses 
on maximizing the Department's use of small and socio-economic 
disadvantaged companies. Small businesses received approximately 36 
percent of the total contract dollars that were strategically sourced 
in fiscal year 2010, far exceeding the Government-wide small business 
overall contracting goal of 23 percent. In fiscal year 2011, DHS 
awarded 13 new strategic sourcing initiatives. We look forward to 
continuing to expand this valuable procurement tool in fiscal year 
2012.
    The Strategic Sourcing Program has achieved success, in part, by 
facilitating collaboration between industry and Government. The Program 
undertakes comprehensive market research and examines buying trends 
across the Department. Based on industry standards and knowledge of the 
marketplace, DHS refines the requirement and creates the procurement 
strategy. When we have used this collaboration as part of the Strategic 
Sourcing Program, DHS has achieved robust competitions and significant 
cost savings.
    DHS's Wireless Devices procurement is one example of the Strategic 
Sourcing Program listening to industry and responding accordingly. In 
this case, we learned that the telecommunications carriers did not have 
the existing capability to provide the program with management reports. 
The procurement team decided to eliminate the reporting requirements 
from the carrier agreements and developed a separate procurement for 
the enterprise-wide reporting services. This modification allowed the 
telecommunication carriers to reduce the prices on the devices which 
DHS believes will result in a net savings that can be reported when the 
purchase is complete.
    Another example of collaboration that resulted in strategic 
sourcing savings was the purchase of enterprise software licenses. This 
procurement was one of several initiatives implemented as part of 
Secretary Napolitano's Efficiency Review to leverage the purchasing 
power of the entire Department. Multiple commercial and Government 
sources for software licenses were evaluated, allowing the Government 
to develop a strategy for purchasing an Enterprise Licenses Agreement 
(ELA) that resulted in $40 million in savings during fiscal year 2010 
due to lower prices and streamlined the procurement process.
               quality industry-government communications
    The Department is committed to promoting enhanced vendor engagement 
in the acquisition process. Building on the success of the Strategic 
Sourcing Program, I have included vendor communications as a 
cornerstone of my Strategic Plan. My publicly posted Vendor 
Communication Plan begins with a personal commitment from each Head of 
the Contracting Activity (HCA) to enhance Component engagement with 
industry, allowing industry to see how DHS will work to improve 
dialogue. The signed pledges have already resulted in increased 
communication with industry prior to and during source selection.
    In addition to holding executives accountable for increased 
communication, the Department also includes many other features in its 
Plan to strengthen vendor communication. For example, my office hosts a 
DHS Industry Day every year. Last year's event was attended by 
approximately 1,000 industry representatives and 2,000 participants via 
webcast. The event includes panels from each Component moderated by the 
appropriate HCA that provide program- and acquisition-specific 
information on the Components' planned major acquisitions. The Industry 
Day also facilitates discussion among companies and connects industry 
with the responsible Government representatives.
    Additionally, the Department conducts or attends over 100 small 
business outreach events each year. Vendor Outreach Sessions, conducted 
ten times a year by the Department's Office of Small and Disadvantaged 
Business Utilization (OSDBU), provide small businesses pre-scheduled 
one-on-one appointments with a DHS small business specialist. These 
sessions provide small businesses with an opportunity to discuss their 
capabilities and learn of potential procurement opportunities. Notices 
of upcoming Vendor Outreach Sessions are posted to the Small Business 
Central Event Listing on FedBizOpps, as well as on the DHS public 
website to maximize participation. These efforts have contributed to 
the awarding of approximately 30 percent of all DHS contracts to small 
businesses from 2007 through 2011, and outpacing all other large 
Federal agencies in achieving all of the Federal small business goals 
each year. These small businesses are making a significant contribution 
to DHS's mission.
    As an example, in fiscal year 2011 DHS awarded a $2 million 
contract to Astrophysics, Inc., a small business located in California, 
for a new technology or technological ideas for screening air cargo 
assembled into pallets, sometimes called ``skids''. Currently, in 
certain circumstances, pallets must be broken down before screening, 
which costs more and takes more time. Astrophysics Inc. is creating a 
system that will increase efficiency by scanning a full complement of 
medium- and high-density air cargo across a wide range of commodities 
(e.g., apparel, produce, seafood/meats, flowers, electronics, machine 
parts, printed material, and miscellaneous durable goods). Once 
operational, the system will reduce TSA's costs, reduce the time for 
screening, and enhance the security of air cargo. DHS values the 
contributions of its small business partners and recognizes that they 
are essential to accomplishing our mission.
    Finally, to assist large and small vendors, DHS publishes an 
acquisition forecast available on DHS's website through the new 
Acquisition Planning Forecast System. This new forecasting tool was 
implemented in response to industry, and will respond to industry 
concerns and provide an effective mechanism for industry to connect 
directly with those who may be interested in their technology.
                             quality people
    Effective industry engagement and good procurements require a 
trained and fully-staffed acquisition workforce. Through aggressive 
recruitment and retention strategies, DHS's contracting workforce has 
increased from 603 in fiscal year 2004 to more than 1,400 professionals 
who processed over 90,000 transactions, and obligated $14 billion in 
fiscal year 2010. However, the Department's rate of hiring contracting 
professionals has historically lagged well behind the Department's 
needs. Our primary mechanism to correct this problem is our Acquisition 
Professional Career Program (APCP). This 3-year program provides 
participants with acquisition training and experience through intensive 
training and on-the-job experience. DHS's future procurement 
improvements depend on continuing to grow its acquisition workforce 
through the APCP.
    Further, DHS has made significant progress in improving its 
existing workforce through training and certification for multiple 
acquisition career fields. All DHS contracting professionals receive 
appropriate training and experience commensurate with their 
responsibilities and certification requirements. As reported in our 
March 2011 update to our acquisition human capital plan, we continue to 
increase the training and experience of our program managers so they 
have the tools they need to successfully manage their assigned 
procurements.
    Our commitment to an improved professional workforce leads to an 
acquisition process that is more effective and efficient. A well-
trained acquisition workforce can engage industry and apply flexible 
procurement strategies because they know more and have better 
experience. Most importantly, a better workforce yields real savings to 
the taxpayer by getting a better business deal. In order to continue to 
expand communication with industry and deepen our procurement 
capability, DHS must continue to invest in our acquisition workforce. 
Our APCP program will continue to provide new energetic talent 
throughout DHS's Components. Our centralized training of all 
acquisition fields must be maintained so that all involved in the 
procurement process have the knowledge and tools they need to 
effectively engage industry and ensure DHS buys what it needs at a 
reasonable price.
                               conclusion
    DHS is committed to continuing to improve our acquisition process 
by enhancing its acquisition workforce and by partnering with industry 
and incorporating best practices from across the Department to 
efficiently procure common goods and services through the Strategic 
Sourcing Program. This approach supports the Department's front-line 
operations while ensuring effective oversight and efficient use of 
taxpayer resources.
    Thank you for the opportunity to participate in your discussions 
regarding the specific DHS procurement practices. I look forward to 
your questions.

    Mr. Rogers. Mr. Kane.

 STATEMENT OF ROBIN E. KANE, ASSISTANT ADMINISTRATOR, SECURITY 
       TECHNOLOGY, TRANSPORTATION SECURITY ADMINISTRATION

    Mr. Kane. Good afternoon, Chairman Rogers, Ranking Member 
Jackson Lee, and distinguished Members of the subcommittee. 
Thank you for the opportunity to testify today regarding the 
ways we are advancing security through innovation of new and 
improving technologies.
    TSA procures and deploys the detection equipment used to 
screen over 1.5 million passengers a day in the Nation's 
airports, as well as their carry-on and checked baggage. In 
addition, we test and approve technologies for use in screening 
air cargo and in other transportation modes.
    We work closely with the DHS Science and Technology 
Directorate as well as the private sector, including National 
labs, Federally-funded research and development corporations, 
and universities. A specific result of our collaboration was 
the joint development and publishing of the aviation security 
technology research and development strategy in March 2011. It 
contained an R&D roadmap to keep our efforts closely aligned.
    Since early 2010, TSA has also had a broad agency 
announcement soliciting input on transportation security 
innovative concepts. The BAA solicits proposals for research 
projects which offer potential for advancement and improvement 
of TSA security operations, technologies, processes, human 
factors, and capabilities. To date, TSA has received over 100 
proposals and made four awards under the BAA. Those discussions 
and engagements facilitate developing the requirements to 
address evolving threats to aviation and structure TSA's 
acquisition programs.
    TSA continues to advance security by investing in 
innovative technologies, improving efficiencies, and pursuing 
equipment standardization initiatives. Examples include 
advanced imaging technology, or AIT, which helps transportation 
security officers screen passengers for metallic and non-
metallic explosives as well as other anomalies. TSA is 
currently upgrading many of these machines with automated 
target recognition software, providing the same high level of 
detection, while enhancing privacy protection by replacing 
passenger-specific images with a generic outline of a person 
that is identical for all passengers.
    Early next year, TSA will field test an identification and 
boarding pass scanning system which quickly screens passengers 
for fraudulent IDs and boarding passes. If proven successful, 
this technology could replace the current ``lights and loupes'' 
manual method of authentication.
    TSA is also upgrading current X-ray systems, deploying 
next-generation systems to screen carry-on luggage at the 
security checkpoint. Next-generation units feature enhanced 
explosive detection capabilities that detect a wider range of 
threats.
    Bottled liquid scanner systems are used to detect potential 
liquid or gel threats, while differentiating between liquid 
explosives and common, benign liquids, such as baby formula or 
insulin. Next-generation systems detect a wider range of 
explosive materials and use light waves to screen sealed 
containers for explosive liquids. These units have been 
deployed to 230 airports.
    Over the next 5 years, a large number of TSA's explosive 
detection systems will reach the end of their useful life and 
replacing these aging units is a top priority. TSA intends to 
recapitalize them with more capable machines with greater 
detection capability through an on-going procurement.
    TSA is also using technology in innovative configurations. 
This past October we began testing TSA PreCheck, a voluntary 
passenger pre-screening initiative with an actual known 
traveler population at four U.S. airports, placing more focus 
on pre-screening individuals who volunteer information about 
themselves prior to flying. Because we know more about these 
passengers, TSA PreCheck travelers may divest fewer items, 
which could include leaving on their shoes and jacket.
    Of course, TSA will continue to incorporate random and 
unpredictable security measures throughout the security 
process. At no point is any traveler guaranteed expedited 
screening.
    Initial feedback from TSA PreCheck passengers has been 
favorable. TSOs are receiving very positive comments and the 
two partner airlines have successfully demonstrated the 
required technical capabilities.
    All of these efforts benefit from partnerships within DHS 
and with industry. TSA will continue to strengthen those 
relationships and processes to deliver the best technology and 
capabilities to provide effective security.
    Chairman Rogers, Ranking Member Jackson Lee, I thank you 
for the opportunity to appear today, and I look forward to 
answering your questions.
    [The joint prepared statement of Mr. Kane and Mr. Benda 
follows:]
        Joint Prepared Statement of Robin E. Kane and Paul Benda
                            November 3, 2011
    Good afternoon, Chairman Rogers, Ranking Member Jackson Lee, and 
distinguished Members of the subcommittee. Thank you for the 
opportunity to testify today about the Transportation Security 
Administration's (TSA) use of technology that supports our layered 
approach to securing the Nation's transportation systems while ensuring 
freedom of movement for people and commerce. To accomplish this 
mission, we employ risk-based, intelligence-driven operations to 
prevent terrorist attacks and reduce the vulnerability of the Nation's 
transportation system. While no layer on its own addresses all risk, in 
combination they create a strong and formidable system.
    Last fall, TSA Administrator John S. Pistole directed the agency to 
explore ways to develop a strategy for achieving risk-based security. I 
am pleased to have an opportunity today to discuss with the 
subcommittee the processes employed by TSA to advance innovation 
through new technologies that strengthen our multi-layered security 
system.
       creating innovative solutions by partnering with industry
    TSA has forged a number of partnerships to develop and deliver 
solutions to combat emerging and evolving threats to transportation 
security. Specifically, TSA works with the DHS Science and Technology 
Directorate (S&T) to create innovative solutions to threats and 
challenges. TSA also collaborates with the private sector including 
National labs, Federally-funded research and development corporations 
(FFRDCs), universities, and other qualified vendors at industry days, 
technical forums, conferences, and program reviews.
           collaborative approaches to technology innovation
    TSA is also working closely with trade associations that focus on 
homeland security issues to share its vision with industry 
stakeholders. Since early 2010, TSA has issued an annual Broad Agency 
Announcement (BAA) to collect innovative concepts from industry to 
inform future decisions for research and development (R&D) efforts and 
to identify innovation already available in the marketplace. In the 
last year, TSA pursued several submissions for proof-of-concept 
demonstrations focused on insider threat analysis, behavior detection, 
and explosive detection, and is currently reviewing numerous other 
proposals.
        advancing aviation security with technology investments
    To address the evolving threats to aviation, TSA continues to 
advance security by investing in innovative technologies, improving 
workforce efficiencies, and pursuing initiatives to further standardize 
and integrate equipment. Such advancements and initiatives include:
Advanced Imaging Technology and Automated Target Recognition
    Advanced Imaging Technology (AIT) helps Transportation Security 
Officers (TSOs) screen passengers for metallic and non-metallic 
explosives as well as other non-metallic threats. Currently, there are 
more than 500 AIT units at nearly 100 airports. Two months ago, TSA 
purchased an additional 300 machines, which are being deployed with 
Automated Target Recognition (ATR) software. ATR software upgrades are 
designed to further enhance passenger privacy by eliminating passenger-
specific images and instead displaying a generic outline of a person 
that is identical for all passengers. By removing the need for an 
officer to view images in a remote location, the use of the software 
also improves throughput capabilities of the technology and streamlines 
the checkpoint screening process. The ATR software provides the same 
high level of detection as AIT without the software and it allows for 
more targeted pat-downs because of the manner in which anomalies are 
displayed. The President's fiscal 2012 budget requests funding for an 
additional 275 AIT units. The availability of this equipment supports 
long-term needs while increasing efficiencies at checkpoints with even 
more effective ATR software and a reduced footprint, which will inform 
future deployment strategies.
Credential Authentication Technology/Boarding Pass Scanning Systems
    The Credential Authentication Technology/Boarding Pass Scanning 
Systems (CAT/BPSS) provide TSOs with an effective tool to quickly 
detect fraudulent or altered documents, enhancing security and 
increasing efficiency. This equipment automatically and concurrently 
verifies passenger boarding passes and IDs that passengers present to 
TSA during the security checkpoint screening process, as well as those 
IDs presented by airport and airline personnel to access sterile areas.
    We plan to conduct CAT/BPSS technology pilots in the coming months 
and throughput will be evaluated very closely as we determine the 
overall operational suitability of the various solutions. If testing 
proves successful, the technology could replace the current manual 
``lights and loupes'' method of ID and boarding pass authentication.
Automated Wait Time
    Automated Wait Time (AWT) systems utilize technology to monitor and 
track queuing traffic at the security checkpoint, enabling TSA to 
reallocate resources to areas of higher congestion and priority as 
needed. TSA preliminarily tested an AWT system at the TSA Systems 
Integration Facility (TSIF) and anticipates testing it in airports in 
the coming months.
Next Generation Advanced Technology X-Ray
    TSA is in the process of upgrading currently deployed AT X-ray 
systems, as well as deploying next generation, or AT-2 systems. This 
technology is used to screen carry-on luggage at the security 
checkpoint. In addition to other upgrades that streamline the bag check 
process, next generation AT X-ray units feature enhanced explosive 
detection capabilities that enable TSA to detect new threats.
    There are currently more than 1,000 AT units at nearly 100 
airports. These systems enhance security effectiveness and efficiency, 
and deployments will continue into calendar year 2012. We are working 
closely with DHS S&T and our qualified vendors to assess the AT-2 
system's capability to detect liquids, aerosols, and gels (LAG), which 
would help to expedite the secondary bag search process.
Bottled Liquids Scanners
    Bottled Liquids Scanner (BLS) screening systems are used to detect 
potential liquid or gel threats which may be contained in a passenger's 
property while differentiating between liquid explosives and common, 
benign liquid such as baby formula and insulin. Next-generation bottled 
liquids scanner screening systems have the ability to detect a wider 
range of explosive materials and use light waves to screen sealed 
containers for explosive liquids. TSA recently deployed 500 next-
generation BLS units to airports Nation-wide to add to the more than 
1,000 BLS units currently deployed at 230 airports.
Shoe-Scanning Detection Technology
    Shoe-Scanning Detection (SSD) technology is an advanced technology 
which would be capable of detecting both metallic and non-metallic 
threats concealed in passenger footwear without requiring passengers to 
remove their footwear at the checkpoint. DHS S&T recently issued a 
Broad Agency Announcement that supports R&D efforts to develop shoe-
scanner detection systems that meet TSA detection requirements.
Explosives Trace Detection
    Explosives Trace Detection (ETD) technology is used at security 
checkpoints around the country to screen carry-on baggage and 
passengers for traces of explosives. Officers may swab a piece of 
luggage or passenger hands and then use ETD technology to test for 
explosives. The swab is then placed inside the ETD unit, which analyzes 
the content for the presence of potential explosive residue. TSA is 
expanding its use of ETD technology in airports as part of its layered 
approach to aviation security.
Explosives Detection Systems Recapitalization and Optimization
    Over the next 5 years, a large number of Explosives Detection 
Systems (EDS) will reach the end of their useful life and replacing 
these aging units is a top priority. TSA will fund recapitalization 
projects, which include the work required to remove the existing EDS, 
minimal modifications to the Baggage Handling System infrastructure, 
and the associated purchase and installation of the new EDS. TSA's plan 
to replace the aging EDS fleet of equipment will be prioritized based 
on a combination of age and maintenance data.
                          risk-based security
    In the past, Administrator Pistole has spoken to this subcommittee 
about TSA's risk-based approach to enhancing security. I would like to 
provide you with the current status of two of our new risk-based 
programs that are supported by technological advancements:
TSAPreTM
    This past October, TSA began testing a limited and voluntary 
passenger pre-screening initiative with a small known traveler 
population at four U.S. airports (Miami, Dallas-Ft. Worth, Detroit, and 
Atlanta). This pilot program will help assess measures designed to 
enhance security, by placing more focus on pre-screening individuals 
who volunteer information about themselves prior to flying in order to 
potentially expedite the travel experience. By learning more about 
travelers through information they voluntarily provide, and combining 
that information with our multi-layered system of aviation security, we 
can better focus our limited resources on higher-risk and unknown 
passengers. This new screening system holds great potential to 
strengthen security while significantly enhancing the travel 
experience, whenever possible, for passengers.
    During this pilot, TSA is using pre-screening capabilities to make 
intelligence-based risk assessments for passengers who voluntarily 
participate in the TSAPreTM program and are flying 
domestically from one of the four airport pilot sites. Eligible 
participants include certain frequent flyers from American Airlines and 
Delta Air Lines as well as existing members of U.S. Customs and Border 
Protection's (CBP) Trusted Traveler programs including Global Entry, 
SENTRI, and NEXUS who are U.S. citizens and are flying on participating 
airlines. The data collected from these pilot sites will inform our 
plans to expand the program to include additional airlines as well as 
other airports that participate in CBP's Global Entry program, once 
they are operationally ready.
    TSAPreTM passengers are pre-screened each time 
they fly from participating airports. If the indicator embedded in 
their boarding pass reflects eligibility for expedited screening, the 
passenger is able to use the TSAPreTM lane. Because 
we know more about these passengers, TSAPreTM 
travelers are able to divest fewer items, which may include leaving on 
their shoes, jacket, and light outerwear, as well as other 
modifications to the standard screening process. As always, TSA will 
continue to incorporate random and unpredictable security measures 
throughout the security process. At no point are 
TSAPreTM travelers guaranteed expedited screening.
    Transportation Security Officers (TSOs) in the four pilot airports 
are receiving very positive feedback from TSAPreTM 
travelers while the two partner airlines have successfully demonstrated 
the technical capabilities required to participate in the program, thus 
paving the way for other airlines to follow. As we learn from these 
pilots, we are working closely with other airlines and airports to 
determine when they may be operationally ready to join. We are also 
working with CBP to ensure that individuals who want to apply for 
Trusted Traveler Programs are able to do so in an efficient manner.
Known Crewmember
    We hold airline pilots responsible for the safety of the traveling 
public every time they fly an aircraft. It makes sense to treat them as 
our trusted partners. To build on our risk-based approach to security, 
we are currently testing another identity-based system to enable TSA 
security officers to positively verify the identity and employment 
status of airline pilots. The Known Crewmember program is a joint 
initiative between the airline industry (Air Transport Association) and 
pilots (Air Line Pilots Association, International (ALPA)), which 
allows uniformed pilots from 22 airlines to show two forms of 
identification that are checked against a database called the ``Cockpit 
Access Security System (CASS),'' which confirms identity. After more 
than 2 months into the pilot program, and with deployments nearly 
complete at the seven participating airports, over 59,000 uniformed 
pilots have been cleared through the process with an average of nearly 
1,900 approvals per day. Both Known Crewmember and 
TSAPreTM are clear examples of TSA's commitment to 
focusing its attention and resources on those who present the greatest 
risk, thereby improving security and the travel experience for 
passengers across the country.
                               conclusion
    TSA will continue to enhance its layered security approach through 
state-of-the-art technologies, expanded use of existing and proven 
technology, passenger pre-screening, and other developments that will 
continue to strengthen aviation security. Chairman Rogers, Ranking 
Member Jackson Lee, I thank you for the opportunity to appear before 
you today, and I look forward to answering your questions about the use 
of innovative technology to provide additional layers of security to 
our Nation's transportation systems.

    Mr. Rogers. I thank you.
    As a fellow who got to go through the PreCheck system this 
past week for the first time, that lane was wonderful. I got to 
keep my shoes on and my belt and everything. All I had to do 
was take my keys and phone out. That is a great initiative. I 
am hopeful that we can see that soon expanded after the first 
of the year everywhere, because a lot of people are going to 
like it.
    Now I would like to recognize the Ranking Member, my friend 
and colleague from Texas, for her opening statement.
    Ms. Jackson Lee. Mr. Chairman, first of all, let me thank 
you for your courtesies and thank the witnesses.
    I notice, I assume, Mr. Chairman, you have indicated that 
there is a vote on the floor, and let me acknowledge the fact 
that in overlapping committees, I think there is some law 
enforcement officers even in the room, I know that Ms. Bell and 
Mr. Daniels are guests that are here in the room, one with 
Ultimate Lock, one a law enforcement officer. We were dealing 
with synthetic drugs, Mr. Chairman, in Judiciary in a markup. I 
was in the middle of a markup. I deeply appreciate your 
courtesies.
    Other Members, let me give comfort and defense to other 
Members. There are overlapping hearings. But this is a very 
important series of hearings, and I want to thank the 
witnesses, but I want to thank the Chairman. I think we have 
gained a lot of knowledge, that hopefully we will even come 
with an omnibus bill dealing with technology, small businesses, 
how we can improve our security.
    Mr. Chairman, you won't mind if I do one slight tongue-in-
cheek moment on technology that will include blinders on TSA 
inspectors for suitcases. We don't want to tempt anyone for 
what they might see in suitcases.
    Mr. Chairman, I guess you have missed the news, but I have 
expressed my great consternation in that, and I hope that Mr. 
Nayak is listening to me when I say that you should stick to 
the work that you are supposed to be doing when you are 
inspecting suitcases.
    But let me quickly, because--they will get that after the 
fact, Mr. Chairman--I want an omnibus bill on that. Will you 
join me in cosponsoring legislation?
    As we have discussed in the past, securing our Nation 
requires not only vigilance and resources but also innovation 
and imagination. As I indicated, this is a very important 
series of hearings that we have explored in focusing on TSA 
reform but also to generate guidance on how we move forward in 
the 21st Century.
    New technology, helping small businesses, creating the 
opportunity, if you will, for small businesses to show their 
wares to secure the homeland. That is what I want to be the 
resounding part of this series of hearings. How do we ensure 
that we miss no important technology that could help secure the 
homeland?
    One year ago, U.S. officials discovered a plot to plant 
explosives aboard a cargo plane leaving North Africa and bound 
for America. We are fortunate that that plot was uncovered and 
no lives were lost. That was not high technology. But the 
question of how that managed to go through and penetrate 
security is a question for the type of sophisticated technology 
we should be looking at.
    The anniversary of this al-Qaeda-inspired plot should 
remind us that this Nation's security depends upon our 
willingness to find and fix known security vulnerabilities 
before they occur. Our adversary's determination to exploit 
security vulnerabilities must be met and exceeded by our 
determination to fill the gaps. The challenge of mitigating 
threats can only be accomplished by our refusal to settle for 
the status quo.
    We must continually improve our security policies, develop 
and explore innovative security technologies, take the 
necessary steps to increase our security posture, and a 
sentence that I will repeat again, we must open the door for 
small businesses to access and provide exposure to their 
technology.
    To that end, policy should not undermine the ability of the 
Department to procure cutting-edge technologies developed by 
small, innovative firms. Having said that, I would caution that 
the Department must be prudent in its approach to testing, 
evaluating, and approving innovative security technology. As we 
saw with the purchase and deployment of the puffer machines 
under the previous administration, the failure to exercise due 
diligence in tests and evaluating innovative technologies 
before purchase can lead to wasted tax dollars. In these tight 
budgetary times, the Department must have a clear vision.
    I look forward to working with the Chairman, the Chairman 
of the full committee, the Ranking Member of the full committee 
as we open the doors of opportunity but yet have as our No. 1 
criteria our commitment to the safety and security of the 
American people. We can do both. We can walk down that journey 
together, jobs, technology, security of the American people all 
intertwined, all No. 1.
    As it says in Proverbs, where there is no vision, the 
people perish. I believe the Department of Homeland Security 
tragically came out of an enormous and deeply despairing time 
during the history of America. But we have generated great 
employees, agencies that have come under one head, and 
certainly under the leadership of Secretary Napolitano there is 
vision. I, however, want to see that vision impacted, Mr. 
Chairman, as we work together to not deny technology but as 
well to be able to ensure that those doors are open.
    That is why I was proud to support the amendment my 
colleague from Illinois, Mr. Davis, offered during committee 
consideration of the DHS authorization bill. His amendment 
would have established an Office of Public-Private Partnership 
within the S&T Directorate responsible for enhancing the 
Department's collaboration in the area of security technologies 
with stakeholders, including small businesses. Unfortunately, 
this amendment was defeated. I hope we can turn it around 
again.
    Turning to my panel of witnesses, I am pleased that we have 
witnesses before us today who are current officials of the 
Department of Homeland Security. We look forward to your 
insight.
    In particular, I look forward to hearing from Mr. Edwards, 
the Acting Inspector General, because we want to do what is 
right. I am delighted to be able to hear from those who are 
involved every day in procurement.
    I am also eager, as I indicated, to hear from Dr. Nayak as 
the new Chief Procurement Officer. Congratulations. I look 
forward to learning of your challenges and how you are involved 
in this effort.
    I look forward to hearing from Mr. Benda on the potential 
impact that the cuts contained in the House-passed Republican 
Homeland Security appropriations would have on the S&T 
Directorate.
    During the 111th Congress it has been certainly my 
challenge as the former Chairwoman to be delighted that this 
committee conducted oversight, held hearings, and saw that the 
House passed legislation addressing the development, 
procurement, and deployment of innovative security 
technologies.
    Let's work together, Mr. Chairman, and go forward with a 
vision helping to expand opportunities for America and securing 
the homeland.
    With that, I yield back.
    Mr. Rogers. I thank the gentlelady.
    We have been called for votes. We have got about 5 minutes 
to get over there. Fortunately, there are only going to be two 
votes, so we should be back in 20 minutes. I apologize, but 
they didn't ask me.
    So we are in recess until we can get back from votes.
    [Recess.]
    Mr. Rogers. I will call the hearing back to order and again 
apologize for the interruption, but I don't think we will have 
another one before this is over with.
    Mr. Benda, you are up. We look forward to hearing your 
testimony.

  STATEMENT OF PAUL BENDA, CHIEF OF STAFF, DIRECTOR, HOMELAND 
SECURITY ADVANCED RESEARCH PROJECTS AGENCY, U.S. DEPARTMENT OF 
 HOMELAND SECURITY, ACCOMPANIED BY SUSAN HALLOWELL, DIRECTOR, 
               TRANSPORTATION SECURITY LABORATORY

    Mr. Benda. Great. Thank you, Mr. Chairman Rogers, Members 
of the committee.
    I appreciate the opportunity to come before you today to 
talk about the Science and Technology Directorate and its role 
in the technology development and acquisition process. I would 
like to lay out for you how we plan on operating S&T in the 
future, especially in these constrained budget environments; 
and there are three areas in particular I would like to 
highlight.
    One, as S&T investment technologies, we are going to focus 
our investments on transitioning products to use. This is 
something we haven't done as well in the past as we would like, 
and this is going to be an effort for us moving forward.
    We are going to do this by looking at how the components do 
their work, look at their operations, look at where their 
bottlenecks occur, look at how they currently do things, and we 
are going to identify areas where technologies can make them 
more efficient. We are going to look at ways we can leverage 
our technical innovation, from large companies, from small, and 
ways to improve their processes and make them more efficient. 
We think this will create a pull from the components for them 
to want the technologies that we are deploying, and we have to 
work with our component partners to make sure that we are 
developing things they are interested in.
    Second, we understand the challenges that S&T faces trying 
to solve the problems of the Homeland Security enterprise. This 
mission space is too large for one R&D entity to solve all 
these challenges, so we are going to do what we like to call 
forage for technologies that exist out there and forage for 
partners to help us achieve these technical innovations that we 
are looking for.
    When I talk about that, I mean working with the 
interagency, working with the Department of Defense and look at 
what technologies they are developing and how can we leverage 
it. Work with our international partners to see what areas they 
are interested in. They face a lot of the same challenges. How 
can we leverage the technology that they are doing? Work with 
our university partners, Auburn University being a perfect 
example, Mr. Chairman, of some of the innovation that is going 
on there.
    We hope to bring to bear things such as DOD's investment in 
a $25 million basic research program called Compressed Sensing 
that we think can be the baseline for our next-generation 
automatic target recognition program that we hope to transition 
to TSA.
    We are looking at things such as working with the 
intelligence community on a new broad-spectrum IR laser that 
would allow us to do standoff explosives detection in a time 
line that is relative to mass transit. We are actually 
leveraging an intelligence community investment one-for-one 
dollars, so they are sharing half the cost with this 
investment.
    Third, we have to ensure that we leverage S&T's technical 
core for the use of the Department. We have got a mandate to 
focus on operational test and evaluation, the back end of the 
process, and I think we have done a great job of implementing 
that, and I think it is a very positive development for the 
Department as a whole to have a standardized OT&E process.
    But we need to leverage the technical capabilities that S&T 
brings to bear on the front end of the process. How do the 
components set their requirements? Can we assure that they are 
technically achievable? Are we not reaching for a brass ring 
that might be beyond our reach? So working in partnership with 
the components to achieve that.
    One key component of our test and evaluation, especially in 
the context of this hearing, is the Transportation Security 
Lab. S&T has developed a very strong partnership over the last 
couple of years with TSA, and TSL is a key component of that. 
They perform the qualification and certification testing for 
all the explosive detection technologies that TSA deploys.
    We work very closely with them and have worked to improve 
our processes to ensure that this is friendly to vendors, 
friendly to industry, but also provides a robust test 
environment so that nothing gets deployed before it is 
technically capable of achieving the mission needs as defined 
by TSA in the field.
    We have worked with TSA to develop an R&D strategy focused 
on aviation security that Mr. Kane had referenced in his 
testimony that was published in March 2011. In August 2011, we 
created a publicly releasable version of that testimony. We 
think we need to leverage not just with the interagency agency 
and our international partners but also with industry, and the 
best way to do that is for industry to know where we want to 
go.
    So this R&D strategy that we have we think is extremely 
important to get out there so they can see the priority 
investment areas for S&T as well as for TSA, and we are going 
to expand this. We are going to do a mapping of how TSA does 
operations, look at where technology can improve that mapping, 
and then create what we call an integrated support strategy 
document for TSA. We are going to prepare this in conjunction 
with my partner Robin over at TSA and then hopefully come up 
with a document that both Administrator Pistole and Dr. O'Toole 
can sign showing the investment and priorities for S&T and TSA 
into the future and make that public so industry can see where 
we are going.
    In closing, I would like to say that S&T does face some 
significant challenges. We think we have identified a good path 
forward where we can leverage interagency and commercial 
partners. We think we have established good relationships with 
our component partners.
    But the challenge we face is that in fiscal year 2011 our 
budget was cut 19 percent during the CR. In fiscal year 2012, 
the House-approved budget cut our budget by 77 percent, if you 
focus on our core R&D investments. If this comes to pass, we 
obviously have to scale back significantly our investments in 
technology. We will have to stop our cybersecurity research, 
which has won awards. We will have to stop our investment in 
small businesses. We will go from 60 CIBER awards down to four. 
We will have to stop our investment in biodefense research 
areas.
    So this will be a challenge as we move forward, and it will 
not allow us to invest in the requirement setting and testing/
evaluation process. We hope that this budget gets reconsidered, 
and I look forward to handling any of your questions you have 
for the future.
    Thank you.
    Mr. Rogers. Thank you very much, Mr. Benda.
    Mr. Edwards, I look forward to your opening statement.

STATEMENT OF CHARLES K. EDWARDS, ACTING INSPECTOR GENERAL, U.S. 
                DEPARTMENT OF HOMELAND SECURITY

    Mr. Edwards. Good afternoon, Chairman Rogers, Ranking 
Member Jackson Lee, and distinguished Members of the 
subcommittee. I am Charles Edwards, Acting Inspector General 
for the Department of Homeland Security. Thank you for inviting 
me to testify about procurement policies at the Transportation 
Security Administration.
    My testimony today will focus on two audit reports that my 
office completed this year: DHS's oversight of component 
acquisition programs and DHS's Department-wide management of 
detection equipment. While neither of these reports focused 
solely on TSA procurement, the findings and recommendations in 
both are relevant to the subcommittee's discussion today.
    The Department oversees acquisition programs at or about 
$300 million in life-cycle cost. Individual components such as 
TSA are responsible for the oversight and controls for 
acquisition programs below the $300 million threshold.
    We have reviewed 17 DHS acquisition programs, including 
eight programs at TSA, to determine whether the Department has 
established adequate management and oversight controls. We 
concluded that, while DHS generally had management oversight 
and controls in place, it needs to further define policies and 
strengthen oversight.
    We identified two areas for improvement: Clearer guidance 
and mandated use of available tools. We found that many 
components needed clearer guidance for determining when an 
acquisition was costly and complicated enough to be managed as 
an acquisition program or when the acquisition could be handled 
as a simple procurement.
    For example, TSA personnel reported that they classified 
all acquisitions that appeared to be programs as acquisition 
programs because the Department's guidance was unclear. We 
recommended that the Department create a decision matrix tool 
that the components can apply in pre-planning phases of the 
purchasing process in order to reduce this confusion. The 
Department concurred with our recommendation and agreed to 
develop a decision matrix.
    Another area where the Department can improve its oversight 
of acquisition programs is by mandating that components use the 
acquisition tools available to them. For example, the 
Department has created a Strategic Sourcing Program Office, or 
SSPO, to help components engage in market research, identify 
best practices, minimize duplication of effort, and provide 
Department-wide contract vehicles.
    Unfortunately, we found during our review that the 
Department was not ensuring or mandating that components use 
the SSPO when managing acquisition programs. We recommended 
that the Department make sure component personnel are at least 
considering the use of SSPO during the planning stages of their 
acquisitions. The Department agreed with this recommendation.
    The issue of strategic sourcing came up again during the 
second audit that I will discuss today, our audit of 
Department-wide management of detection equipment. Detection 
equipment includes metal detectors, explosive detection 
systems, and radiation detectors. For fiscal year 2010, DHS 
components had a combined inventory of detection equipment of 
more than $3.2 billion. TSA'S share of the equipment accounts 
for about two-thirds of that inventory.
    While DHS has applied strategic sourcing strategies for 
many common-use items such as firearms, ammunition, and office 
supplies, the Department is not using strategic sourcing to 
manage its purchase of detection equipment. Thus, we 
recommended that the Department establish a commodity council 
for detection equipment that can strategically source these 
items. Commodity councils are a crucial element of developing 
an effective Strategic Sourcing Program, including 
representatives across the organization who act as subject 
matter experts in the acquisition process.
    Generally, the component purchasing the largest quantity of 
a particular item takes the lead role in acquiring the 
commodity or service and may serve as the commodity's single 
item manager. Other Federal agencies such as DOD use the 
Commodity Council concept and DHS itself has created the 
Commodity Council to manage its acquisitions of weapons and 
ammunition. The Department agreed that an analysis of potential 
strategic sourcing for detection equipment is warranted.
    In conclusion, the Department has made considerable 
progress in establishing its acquisition management practices 
and procedures through improved guidance to the components and 
increased use of tools like strategic sourcing. The Department 
and its components, such as TSA, will continue to improve its 
acquisition processes.
    Chairman Rogers, this concludes my prepared remarks.
    I would be happy to answer any questions that you or other 
Members may have.
    [The statement of Mr. Edwards follows:]
                Prepared Statement of Charles K. Edwards
                            November 3, 2011
    Good morning Chairman Rogers, Ranking Member Jackson Lee, and 
distinguished Members of the subcommittee: I am Charles K. Edwards, 
Acting Inspector General of the Department of Homeland Security (DHS). 
Thank you for inviting me to testify today about improvements that can 
be made to the procurement and acquisition practices at DHS and 
specifically at the Transportation Security Administration (TSA).
    As you know, the DHS Office of Inspector General (OIG) was 
established in January 2003 by the Homeland Security Act of 2002, which 
amended the Inspector General Act of 1978. The DHS OIG seeks to promote 
economy, efficiency, and effectiveness in DHS programs and operations 
and reports directly to both the DHS Secretary and the Congress. We 
fulfill our mission primarily by issuing audit, inspection, and 
investigative reports that include recommendations for corrective 
action, and by referring cases to the United States Attorney General 
for prosecution.
    I am pleased to have the opportunity to testify about two of our 
audit reports today. I will describe some of the serious challenges 
facing DHS in acquisition management and address some improvements the 
Department can make in the oversight of components' acquisition 
programs. I will also offer some recommendations regarding the 
Department's acquisition of detection equipment.
                               background
    Acquisitions consume a significant part of the DHS' annual budget 
and are fundamental to the Department's ability to accomplish its 
mission. In fiscal year 2010, DHS awarded over $13 billion for more 
than 88,000 procurement actions. TSA's budget authority for fiscal year 
2010 was over $7.5 billion.
    The Under Secretary for Management (USM) is responsible for the 
overall DHS acquisition process. As the Department's Chief Acquisition 
Officer, the USM is responsible for managing, administering, and 
overseeing the Department's acquisition policies and procedures. The 
USM delegates the responsibility for effective Department-wide 
procurement policies and procedures, including procurement integrity, 
to the Chief Procurement Officer (CPO). The Office of the CPO (OCPO) is 
responsible for oversight of most DHS acquisition activities and 
services, including management, administration, and strategic sourcing. 
OCPO responsibilities also include developing and publishing 
Department-wide acquisition regulations, directives, policies, and 
procedures.
    Recognizing the continued increase in the quantity and complexity 
of DHS acquisitions, in November 2008 the USM classified acquisitions 
into three levels to define the extent and scope of required project 
and program management and the specific official who serves as the 
Acquisition Decision Authority. For level 1 acquisitions (greater than 
or equal to $1 billion), the Acquisition Decision Authority is the 
Deputy Secretary or Under Secretary for Management. Level 2 
acquisitions (between $300 million and $1 billion) are normally 
overseen by the USM or the Deputy USM and are potentially delegable to 
Component Acquisition Executives. For level 3 acquisitions (less than 
$300 million), the Acquisition Decision Authority is the component 
head. Thus, the Department oversees acquisition programs at or above 
$300 million in life-cycle cost. Individual components such as TSA are 
responsible for the oversight and controls for acquisition programs 
below the $300 million threshold.
    On May 26, 2010, the USM issued the Department's latest Major 
Acquisition Oversight List. The list identified 86 major acquisition 
programs, projects, and services requiring direct Departmental 
oversight. TSA had seven level 1 and five level 2 acquisition programs 
on that list. These programs included:
   Information Technology Infrastructure Program (Level 1)
   Transportation Worker Identification Credentialing (Level 1)
   Electronic Baggage Screening Program (Level 1)
   HRAccess (Level 1)
   Passenger Screening Program (Level 1)
   Screening Partnership Program (Level 1)
   Secure Flight (Level 1)
   Field Real Estate Management (Level 2)
   National Explosives Detection Canine Team Program (K9) 
        (Level 2)
   Security Technology Integrated Program (Level 2)
   Specialized Training (Level 2)
   TTAC Infrastructure Modernization Program (Level 2)
       additional dhs oversight needed for component acquisition
    While the Department has taken steps to improve its acquisition 
oversight processes and controls, our report OIG-11-71, DHS Oversight 
of Component Acquisition Programs (April 2011) identified additional 
areas for improvement. We made four recommendations to the CPO to 
strengthen the Department's management oversight and controls over 
component acquisition programs. The CPO agreed with our recommendations 
and initiated corrective actions.
    Our report DHS Oversight of Component Acquisition Programs resulted 
from an audit that was designed to determine whether the Department 
established adequate management oversight and controls over component 
acquisition programs. As part of this audit, we reviewed 17 DHS 
acquisition programs, including 8 programs at TSA. The following TSA 
acquisition programs were included in our review:
   Screening Partnership Program (Level 1)
   TTAC Infrastructure Modernization (Level 2)
   National Explosives Detection Canine Team Program (Level 2)
   HAZMAT Threat Assessment Program (Level 3)
   Freedom Center (formerly Trans Security Ops Center) (Level 
        3)
   Performance and Results Information System (Level 3)
   Consolidated Screening Gateway (Level 3)
   Intermodal Security Training Exercise Program (Level 3)
    Our report recognized that the Department has made improvements to 
its acquisition oversight processes and controls through implementation 
of a revised acquisition management directive. However, the Department 
needs to provide additional detailed guidance and improve controls in 
some areas. The Department has neither fully defined an acquisition 
program for its components, nor developed consistent guidance for 
reporting acquisitions in its standard system. In addition, the 
Department has not ensured that components are using all acquisition 
tools available and that they have adequate policies and procedures in 
place to manage acquisition programs.
    As a result, components created program management offices to 
manage simple procurements, incurring unnecessary administrative 
program costs without adding value to the programs. Additionally, 
without adequate controls in place, the Department did not have 
complete visibility of all programs within its acquisition portfolio.
                            unclear guidance
    The Department has not fully defined when a component should manage 
an acquisition under the requirements of the Acquisition Lifecycle 
Framework or manage it as a simple procurement. We found that many 
components were committed to following the Department's guidance but 
needed more structure for determining when to establish a program to 
acquire a product or service. We requested a list of all programs from 
each component and received numerous questions and conflicting 
responses. For example, TSA personnel reported that they classified all 
acquisitions that appeared to be programs as acquisition programs 
because the definition was unclear.
    Directive 102-01, which prescribes guidance over the Acquisition 
Review Process, Acquisition Lifecycle Framework, and Acquisition Review 
Board, establishes the overall policy and structure for acquisition 
management within the Department. But the directive does not provide a 
decision-making tool to determine if an acquisition warrants the higher 
level of internal controls required by the Acquisition Lifecycle 
Framework. The supplemental Acquisition Instruction/Guidebook 102-01-
001 (Guidebook) provides detailed instructions on implementing and 
managing acquisitions, but also does not provide clear instruction for 
determining if an acquisition should become an acquisition program, and 
in attempts to comply with the directive, components over-classified 
programs.
    We reviewed several acquisition programs that do not clearly fit 
into the Acquisition Lifecycle Framework process. Ten of the 17 (59%) 
programs we reviewed, with an estimated life-cycle cost of about $5.3 
billion, were acquisitions that identified commercial-off-the-shelf 
equipment or existing contracts to fulfill the needs identified by the 
program office. Component personnel likely could have managed these as 
simple procurements rather than acquisition programs. For example, the 
TSA classified renovation of an existing warehouse building as an 
acquisition program. It leased the 104,000-square-foot building in 2003 
and renovated approximately 89,000 square feet for about $42 million 
over the initial 10-year leasing period. In 2008, TSA primarily relied 
on existing contracts to complete 12,500 of the remaining 15,000 square 
feet of the warehouse building. According to TSA personnel, the 
renovation for the additional 12,500 square feet cost about $2.5 
million, with construction completed in January 2010. For this small 
renovation project, TSA personnel could have used simple procurement 
rules but instead increased administrative costs by implementing the 
more complicated internal control structure prescribed in Directive 
102-01.
    Based on the definition of an acquisition program in the Guidebook, 
this renovation could possibly be an acquisition program. However, 
based on the processes and procedures laid out in Directive 102-01's 
Acquisition Lifecycle Framework and Acquisition Review Process, this 
renovation does not meet the intentions of the existing guidance or 
present a high enough level of risk to warrant the increased costs of 
being managed as a program.
    Components should not create acquisition programs for acquiring 
products and services that are outside the intent and spirit of 
Directive 102-01. The Department can reduce some of the conflicts at 
the component level by developing a decision matrix that the components 
can apply in the pre-planning phases of the purchasing process.
                         use of available tools
    The Department developed inconsistent reporting requirements for 
components to follow when reporting an acquisition's progress in nPRS, 
the Department's standard reporting system. nPRS is an integrated 
system that provides DHS headquarters visibility of components' level 
1, 2, and 3 acquisition investments. It can also store working and 
approved key acquisition documents, earned value management 
information, and risk identification. Component personnel are 
responsible for entering and updating information regarding their 
acquisition programs in nPRS. This information includes, but is not 
limited to, cost, budget, performance, and schedule data.
    Since nPRS became operational in 2008, the Department has issued 
conflicting guidance and enforcement for reporting level 1, 2, and 3 
acquisition programs. Moreover, the Department has not ensured or 
mandated that components use nPRS, which would provide transparency and 
efficiency of component acquisition programs. Because the Department 
has not consistently mandated use of nPRS, component personnel have 
developed, or are in the process of developing, their own data-tracking 
systems.
    For example, TSA hired and spent approximately $100,000 for a 
contractor in 2005 to develop the TSA Acquisition Program Status 
Report, which served as its data-tracking system. As of June 2010, TSA 
had merged its acquisition program portfolio, levels 1, 2, and 3, into 
nPRS and will no longer use the TSA Acquisition Program Status Report. 
As of August 2010, nPRS is TSA's official tracking system for 
acquisition programs.
    The Department has also not ensured that the components use the 
Strategic Sourcing Program Office (SSPO) when managing acquisition 
programs. According to a 2005 memorandum from the Office of Management 
and Budget:

``Strategic sourcing is the collaborative and structured process of 
critically analyzing an organization's spending and using this 
information to make business decisions about acquiring commodities and 
services more effectively and efficiently. This process helps agencies 
optimize performance, minimize price, increase achievement of socio-
economic acquisition goals, evaluate total life-cycle management costs, 
improve vendor access to business opportunities, and otherwise increase 
the value of each dollar spent.''\1\
---------------------------------------------------------------------------
    \1\ Office of Management and Budget memorandum to Chief Acquisition 
Officers, Implementing Strategic Sourcing (May 20, 2005).

    The Department created the SSPO to help components identify best 
prices available for a requirement, engage in market research to 
identify the best available vendors and manufacturers, minimize 
duplication of effort for market research, and provide Department-wide 
contract vehicles. Because the current guidance is silent regarding the 
use of the SSPO, the Department may be incurring increased cost for 
component procurements. In addition, components may be conducting 
duplicative market research for procurements that the SSPO has 
performed. The Department should make sure that personnel at TSA and 
other components are at least considering the use of the SSPO during 
the planning stages of their acquisition programs.
           department-wide management of detection equipment
    Our recent audit report, OIG-11-47, DHS Department-wide Management 
of Detection Equipment (March 2011), highlighted some of the 
acquisition challenges facing the Department when multiple components 
have similar requirements or are buying the same type of equipment. We 
identified steps the Department can take to improve its acquisition 
processes. With improved management, DHS can streamline the acquisition 
process, improve efficiencies, and provide uniform equipment inventory 
information.
    DHS has eight different procurement offices that purchase detection 
equipment. Seven of these offices are at the component level, and each 
has its own head of contracting. These components are as follows:
   United States Customs and Border Protection
   Federal Emergency Management Agency
   Federal Law Enforcement Training Center
   United States Immigration and Customs Enforcement
   Office of Procurement Operations \2\
---------------------------------------------------------------------------
    \2\ In 2004, the Department created the Office of Procurement 
Operations to provide acquisition services to components that did not 
have a procurement office.
---------------------------------------------------------------------------
   Transportation Security Administration
   United States Coast Guard
   United States Secret Service
    Components maintain separate inventories for their detection 
equipment. For fiscal year 2010, the components had a combined 
inventory of more than $3.2 billion worth of detection equipment, most 
of which is deployed. The components purchased an average of about $387 
million worth of detection equipment in each of the last 3 years, 
ranging from about $280 million to $511 million. This equipment 
includes metal detectors, explosive detection systems, and radiation 
detectors (including some personal protective safety equipment) for 
screening people, baggage, and cargo at airports, seaports, and land 
ports of entry, as well as Federal buildings. As of March 1, 2010, 
TSA's detection equipment accounted for 66% of the Department's total 
inventory.
    Our audit work showed that DHS can better manage the acquisition of 
detection equipment by developing processes based on best practices 
such as strategic sourcing.
                           strategic sourcing
    As discussed above, DHS has established a Strategic Sourcing 
Program and has applied strategic sourcing strategies for many common 
use items, such as firearms, ammunition, and office supplies; however, 
the Department is not managing its detection equipment through this 
program. According to DHS officials, components are encouraged but not 
required to use the Strategic Sourcing Program and generally do not 
coordinate and communicate when acquiring detection equipment. There is 
no mechanism in place for components to standardize equipment purchases 
or identify common mission requirements among components. For example, 
the Department's Joint Requirements Council is inactive, and components 
do not have the expertise of commodity councils or single-item managers 
to rely on when acquiring detection equipment. Further, components view 
detection equipment as unique to their missions and do not attempt to 
identify common mission requirements among other components. This 
results in numerous inefficient purchases by individual components 
instead of consolidated purchases.
                   standardizing equipment purchases
    Some components did not standardize equipment purchases and 
purchased a variety of different detection equipment models. For 
example, United States Citizenship and Immigration Services (USCIS) has 
24 and CBP has 21 different models of small X-ray equipment, and CBP 
and USCIS each have 14 different models of walk-through metal 
detectors. When components have multiple models of equipment to meet 
similar missions, DHS incurs higher procurement administrative costs 
and logistic support costs for maintenance, training, and support. In 
contrast, TSA, which uses and maintains the largest inventory of 
detection equipment in the Department, uses only seven different models 
of small X-ray equipment and three models of walk-through metal 
detectors. By limiting the number of models and types of equipment, TSA 
is in a position to increase efficiencies in procurement, maintenance, 
and personnel flexibilities.
                      common mission requirements
    We identified about $170 million worth of small X-ray machines, 
metal detectors, and personal and hand-held radiation detectors that 
DHS could acquire through strategic sourcing strategies. Although 
multiple components were using similar equipment to meet similar 
screening missions, each component purchased the equipment separately. 
Components did not coordinate with each other to identify common 
requirements, consolidate purchases to gain buying power, or 
consolidate logistic support requirements.
    DHS Management Directive 1405 established a Joint Requirements 
Council (JRC) as a senior-level requirements review board to identify 
cross-cutting opportunities and common requirements among DHS 
organizational elements for non-information technology investments. The 
JRC met periodically between fiscal years 2004 and 2006. 
Representatives on the JRC reviewed programs and processes for 
potential mission overlap and redundancies. Among the programs reviewed 
were TSA's Secure Flight and Registered Traveler and CBP's Consolidated 
Registered Traveler programs. In 2006, the JRC stopped meeting after 
the Department assigned the council chair to other duties. However, DHS 
now recognizes the importance of the JRC and indicated that it might 
revive the council or pursue another alternative to identify duplicate 
programs and processes across the Department. This undertaking should 
include an effort to identify common data elements and nomenclature 
within inventories and to establish a data dictionary for the 
Department's detection equipment.
    In addition to the JRC, commodity councils are an integral element 
of developing an effective strategic sourcing program. Commodity 
councils include representatives from across the organization. The 
members act as the subject matter experts in the acquisition process 
and in establishing requirements for a specific commodity or service. 
Generally, the component purchasing the largest quantity of a 
particular item takes the lead role in acquiring the commodity or 
service and may serve as that commodity's single-item manager.
    DHS and other Federal agencies use the commodity council concept. 
For example, in 2003, DHS established the Weapons and Ammunition 
Commodity Council to create a Department-wide strategy for 
consolidating requirements and gaining economies of scale for the 
acquisition of weapons and ammunition. The council, which includes 
representatives from each component that uses weapons, developed 
requirements for firearms, ammunition, and body armor. ICE took the 
lead role, using service-level agreements with other components to 
establish one overall contract, which is available to all DHS entities.
    The Department has agreed in principle with our two 
recommendations, and is taking action to implement the recommendations. 
DHS is evaluating reestablishing the Joint Requirements Council and 
other alternatives to achieve the same goal. It will perform a business 
case analysis of detection equipment and establish a commodity council 
or working group if it determines that this equipment can be 
strategically sourced.
                               conclusion
    Though DHS was established by combining 22 agencies with different 
legacy systems, missions, and cultures, it has made considerable 
strides in establishing its acquisition management practices and 
procedures. It has established oversight policies, clarified roles and 
responsibilities for acquisition, and worked to address staff 
shortages. It needs to continue improvements that affect its cohesion 
as a Department and its bottom line. Increased use of such tools as 
strategic sourcing and a commonly-applied definition of an acquisition 
program will help the components such as TSA and will result in more 
cost-effective and efficient acquisitions.
    Mr. Chairman, this concludes my prepared statement. Thank you for 
the opportunity to testify and I welcome any questions from you or 
Members of the subcommittee.

    Mr. Rogers. Thank you. Great. Thank you very much.
    I will start off on the questions.
    Dr. Nayak, what is the one thing that DHS could do 
differently in engaging with the private sector that would have 
the largest impact on industry's ability to better support 
Homeland Security, in your view?
    Mr. Nayak. That is a great question. I don't think there is 
any one particular thing, but let me give you one, and let me 
also just add the entire list, because you really have to do a 
number of things.
    When we talk about industry, we are talking about everybody 
that is out there, as you well know, and being open and 
transparent in communicating with them. So one of the things 
that we can do is specific industry days around procurements 
have to be done better. You can't have one-way communication. 
You have to have two-way communication. You have to sit there 
and you have to wait for every question from everybody who 
participates in that industry. That is one.
    You obviously know RFIs. We need to increase the number of 
RFIs that we use, increase the number of draft RPs. It is a 
little challenging sometimes in general because of the way we 
get our money and funding. For instance, in the last fiscal 
year, we had to spend $10 billion in the last 5 months of the 
fiscal year.
    But a couple other things that I am doing that are new. One 
is we have created an industry liaison in every component. So 
we have got an on-line forecasting system of procurements in 
advance. Industry sees it. They call up. They get a program 
manager. Now we have a belly button that they can actually go 
to a live person to really find out what is the status of that.
    Mr. Rogers. Let me go back to your industry days--because 
you talked about that in your opening statement, too--about the 
revisions you are going to make in it. Two questions I have.
    One is: What is your time line for seeing that new and 
improved industry days program implemented? Then, second, you 
have talked about how different the industry segments are, and 
you are right. When you are interacting with Lockheed or 
Boeing, it is not the same as a small hub-zone company that you 
deal with. So in these industry days, will you do those 
separately? Like will you have an industry day for small 
businesses separate and apart from the one with the big guys, 
or do you do them all at once?
    Mr. Nayak. Okay, so great question. Let me address the 
first point first, what are we doing different in terms of 
industry days themselves and when is the time line.
    The time line is immediate. I have already issued an 
acquisition alert that essentially gives everybody across DHS 
direction. We have got to do these things well. But those are 
the ones around specific procurements.
    Outside of that, we have got to have a mechanism to talk to 
industry at large about capabilities, outside and away from 
procurements, so that we can have continuing dialogue. That is 
something that some people will classify as an industry 
advisory council.
    Sometimes when you hear ``industry advisory council'' you 
only think large business and you don't think small business. 
So what we have got to do, the nut we have to crack, is to 
figure out how to do this in a transparent way working with the 
private sector. So that is one big thing that will make a huge 
difference moving forward.
    The last thing I want to mention, and it is something new, 
it is something that we heard from industry, is to have reverse 
industry days. So often when we have industry days, we are 
communicating to industry. By the way, it is both large and 
small business, anybody who wants to come in. But a reverse 
industry day would be where we say here is the capability. 
Industry can come in and talk to us about the capability. We 
can get a little bit smarter, again, away from procurements 
where things get extremely sensitive.
    Mr. Rogers. That is what our industry panel talked about. 
They would like to see more of that dialogue, more of a skull 
session.
    I serve on the Armed Services Committee as well. One of the 
things the DOD will do is bring in industry and say: Here is 
the problem we got, and we are trying to figure out how to meet 
this problem. What are your thoughts? Everybody just kind of 
thinks out of the box in that session, and they go back and 
they work on it, too.
    That is the kind of dialogue I am hoping to see developed 
in DHS so that it is more of a partnership in trying to solve 
problems.
    Mr. Nayak. So that is what you are going to see moving 
forward.
    Mr. Rogers. That is great.
    Mr. Nayak. One more point, and that is on small business. 
We connect with small business. Every communication in industry 
days is open to everybody, but we do have specific and unique 
events for small business. We participate in over 100 outreach 
events, and then we have 10 separate vendor outreach segments 
where we meet one-on-one with companies. So across the board--
--
    In a previous hearing you had a gentleman here from CSIS, I 
believe, testify. Obviously we contract to support the mission, 
but it is also neat to know that our business is spread pretty 
evenly amongst large, medium, and small business.
    Mr. Rogers. That is great.
    Mr. Kane, you made reference to some new scanning system 
that you are going to be implementing pretty soon that will be 
able to determine or detect fraudulent ID. How will that work?
    Mr. Kane. Mr. Chairman, we call it--it has a long name--the 
credential authentication technology and boarding pass scanner 
system. So when you come up today you walk up to the travel 
document checker at the checkpoint, and they typically have a 
light and a loupe that they are going to look at those 
documents.
    This is technology that will read credentials such as your 
driver's license, such as a passport, which is the two most 
common you will see at a checkpoint. Then it will say, yes, 
this is a valid Virginia State driver's license and it has all 
the characteristics that a Virginia State driver's license has. 
It is going to look at that boarding pass and say, yes, this is 
a valid boarding pass and the name matches between these two 
documents. So the two documents match each other, and it is a 
valid boarding pass for that day. So that gets away from a lot 
of the manual errors that can be made.
    Mr. Rogers. Will there have to be a handler involved, a 
person, or will they just go up to a kiosk?
    Mr. Kane. Right now, there will still be that travel 
document checker in the process right now. It will be a little 
more automated in that the passenger will put their boarding 
pass up, but the officer will actually handle the credential.
    Mr. Rogers. Excellent.
    My time has expired. I now yield to the Ranking Member, Ms. 
Jackson Lee, for any questions she may have.
    Ms. Jackson Lee. Mr. Chairman, thank you very much.
    Let me also acknowledge the presence of Mr. Davis of 
Illinois. I know you have acknowledged the distinguished 
gentleman, Mr. Turner, I think and Mr. Cravaack for their 
presence here today.
    I want to pose a question. Mr. Edwards, I mentioned Mr. 
Davis because he had offered an amendment during the DHS 
authorization that would have established an Office of Public-
Private Partnerships within the S&T Directorate responsible for 
enhancing the Department's collaboration area of security 
technologies with stakeholders, including small businesses. I 
know that part of his intent is to ensure that these 
directorates work well.
    So let me pose a question to you, Mr. Edwards: In crafting 
for us, what is the most critical problem with the relationship 
between TSA, the Department of Homeland Security, DHS, S&T, and 
DHS Office of Procurement, and how can lawmakers or officials 
at the Department address it?
    Mr. Edwards. Thank you, ma'am.
    S&T tests a variety of technologies, including systems made 
up from a number of technologies. S&T provides test information 
along with its recommendations for best models to TSA and other 
components. TSA and other operational components make the 
product selection and procurement decisions and are not 
required to follow S&T's recommendations on products.
    Also, you know, if you use S&T in a similar way as their 
sitting role in the Acquisitions Review Board, rather than 
having them review during the acquisition process, if there is 
a decision memorandum that leverages S&T's technical expertise 
prior to the acquisition process, it can potentially save lots 
of dollars and time.
    Ms. Jackson Lee. If there is a--I am sorry?
    Mr. Edwards. There should be a decision memorandum from S&T 
giving their technical expertise and their opinion ahead of--
before the processes get started. That would really go a long 
ways.
    Ms. Jackson Lee. So information goes a long way if the 
memorandum exists that can either be passed from whether it is 
DHS, TSA. Of course, you indicated they don't have to accept 
the recommendation or the information--they can accept the 
information, not the recommendation. That is a document that we 
can track and we can utilize for, I think, informed decisions.
    Mr. Edwards. Absolutely.
    Ms. Jackson Lee. I think that is an important way of 
coordinating. More communication I assume would--and I don't 
want to call it forced communication, but should there be some 
structure that puts in a mechanism for required communication? 
Is that----
    Mr. Edwards. Absolutely. I quite agree with you.
    Ms. Jackson Lee. Dr. Nayak, thank you, and let me welcome 
you to the position. I understand you have been here about a 
year.
    Let me do one question that might seem as if I am asking 
you for a 3-hour presentation, but I am not because, I have a 
follow-up question.
    What is your vision for the procurement area for DHS?
    I heard in another hearing someone making a statement that 
the Federal Government buys things, needs things, and utilizes 
products; and many times small, medium, and large businesses 
are either rebuffed or confused about how to access providing 
their product to the Federal Government. So, quickly, what is 
your vision?
    That is my first question. I am going to put them both 
together. That may be two or three sentences in what you want 
to see happen.
    But then the other part of it is we are grappling with not 
only the supercommittee but the existing proposed House budget 
which impacts DHS' effort to assure accountability--or how 
would you think that is impacting assuring accountability--and 
an acquisition workforce. This budget, how is it impacting an 
acquisition workforce adequate to stimulate growth and 
innovative solutions in Homeland Security technology? So what 
direct impact--these proposed cuts in the DHS budget as it 
relates to your area, what direct impact will it have?
    So the first question is your quick vision for what you 
perceive you can do and the second would be that direct impact.
    Mr. Nayak. Thank you for the questions.
    The vision in a nutshell is really my job as the chief 
procurement officer and hovering over $14 billion to spend is I 
have got to be able to prove that we are getting a good deal 
for the taxpayer with all of that spend.
    Specifically, I have four priorities, and those support 
getting a good deal for the Government and for the taxpayer.
    They are quality people. I have got to have the best people 
in place. We have about 1,400 contracting people right now.
    We have to do good contracting.
    I mentioned strategic sourcing. Mr. Edwards mentioned 
strategic sourcing, mentioned detection equipment, which we are 
moving well along the way to strategically sourcing detection 
equipment.
    Quality program support. I have to influence the success of 
the more than 500 DHS programs that are supported by contracts 
that deliver quite a bit of the mission.
    Ms. Jackson Lee. How many programs did you say?
    Mr. Nayak. There is more than 500. There is about 82 major 
programs with a life-cycle cost of over $300 million.
    Then the other priority I have added as the new CPO for a 
little bit more than a year is quality interaction with 
industry. I mean, it is absolutely key. If we are going to 
contract with industry for $14 billion, we have to talk to them 
at every stage of the process. Talking to them well in advance, 
all businesses of all sizes, helps us clarify requirements, and 
that ultimately helps us get a better deal. So, all in all, the 
vision is to get a better deal.
    In terms of the budget impact and specifically in my area, 
line of business, which is acquisition, it would really, really 
basically set us back. I have been through this myself when I 
was with the IRS. When I came into the IRS, there was a lot of 
talk about not being able to modernize tax systems; and since 
then, at a minimum, we have E-File.
    When I got there in procurement, there were only 20 or 30 
procurement people. We built it up to 500 people, and since 
then they have a fairly premier procurement program.
    Similarly, at DHS, if we had to sustain these cuts, here is 
what pretty much would go out the window: Replenishing our 
acquisition workforce, gone; program oversight over those 500 
programs, gone; oversight in terms of all of our procurement 
actions, 90,000 actions in nine contracting offices across the 
Department, minimal at best.
    The $14 billion is spread through nine contracting offices. 
Two are of them report directly to me, and they account for 
about $6 billion. So if my organization, which includes those 
folks, are cut, you know, there may be an immediate cost 
savings in the cut itself, but the long-term impact is going to 
be devastating. We most likely will be back here chatting about 
all kinds of stuff in terms of acquisition that we really don't 
want to.
    Ms. Jackson Lee. Let me just ask one quick question, if the 
Chairman will yield to me for a minute.
    Mr. Edwards mentioned one fix could be, in terms of 
communication between TSA, DHS, and S&T, is an S&T memoranda 
that you would ultimately get, Dr. Nayak, and others, so that 
when some S&T product has been researched and reviewed there 
would be some chain of fielding that work, that assessment to 
you, to TSA, and others. In addition to I think I said maybe a 
structure that would channel that document so you would 
promptly get an assessment of a new technology that had been 
reviewed.
    Would that be helpful, Dr. Nayak? I was speaking to you. I 
was saying Mr. Edwards mentioned an S&T memorandum, and I 
mentioned a structure to get that memorandum to the appropriate 
persons. Would that be helpful to you once a product was 
reviewed?
    Mr. Nayak. I think helpful to the Department, yes.
    Ms. Jackson Lee. So getting a quick document to you that 
assessed a product would be helpful?
    Mr. Nayak. Yes.
    Ms. Jackson Lee. Would be helpful in streamlining your 
work, or at least assessing whether that product should be 
utilized?
    Mr. Nayak. Yes.
    Ms. Jackson Lee. I will yield back now. Thank you.
    Mr. Rogers. The Chairman is now proud to recognize our 
newest Member here on the subcommittee, Mr. Turner, who has 
recently been elected in New York, of all places. So we are 
proud to have you and look forward to your questions for the 
witnesses.
    Mr. Turner. Thank you, Mr. Chairman. New York continues to 
elect people. Not too many Republicans. That was the odd thing.
    A question, please, for Mr. Kane. We have aging technology, 
and I would like to hear what is in the pipeline, how it might 
be affected by the budget realities. I am particularly 
interested in the shoe technology which I find is the most 
abhorrent of all the security techniques, as necessary as it 
absolutely is. If you would?
    Mr. Kane. Congressman, yes, sir.
    We have a number of technology programs in the works right 
now. You know, as TSA stood up 10 years ago, obviously we used 
a lot of equipment that was in place and then we built out the 
baggage screening system in a very quick time frame. So much of 
that technology is nearing the end of its life, particularly 
the expensive technologies, which is the baggage screening 
equipment down in the baggage rooms.
    We have a recapitalization strategic plan to replace that 
equipment. I think what you will see us do is focus more of our 
budget resources on the recapitalization effort, focused on 
EDS, rather than new in-line systems in airports. With the 
Recovery Act, with some of the other funding that has come our 
way over the past couple of years, we have been very fortunate 
to build out a number of the in-line systems or get them funded 
so that the airports could build out their systems. So just the 
EDS in particular, we are going to focus on the 
recapitalization of those pieces of equipment.
    We also, of course, have the advanced imaging technology 
going into the checkpoints that replaces or sits alongside 
today the walk-through metal detectors, a completely new 
ability to detect nonmetallic threats. It just didn't exist 
before we brought that technology to the airports.
    We also are recapitalizing the X-rays, the carry-on bag X-
rays as well with the multi-view X-ray and with some ability to 
have auto-detection on there for bulk explosives.
    In addition, I mentioned previously the credential 
authentication technology. As I described earlier, if that 
proves successful in our field tests, after the beginning of 
the year you would see that start to show up at every 
checkpoint in the country as well.
    So we are doing a lot of work. We are trying to improve 
those technologies over time and have a spiral development 
approach, and that is where S&T helps us quite a bit.
    Then I think with the shoe scanner in particular--and it is 
everyone's favorite topic a lot--we found that just a difficult 
technology challenge to solve with everything that comes with a 
pair of shoes in the airport environments. I think a lot of 
what we are doing with our TSA PreCheck and prescreening and 
identifying those travelers who we feel are very low risk to 
the system and moving away from an one-size-fits-all approach 
will help us solve some of the shoe issue, allowing people to 
keep shoes on, for the most part, and those expedited screening 
lanes will help solve some of that problem and some of the 
frustration especially frequent travelers feel when they have 
to do that.
    Mr. Turner. Thank you. I will continue to wear slip-on 
loafers until that day.
    I experienced something 2 weeks ago on an international 
flight that would apply to domestic, and I don't know if this 
is solved through technology or procedure. One of the military 
personnel traveling with me, we went through two checkpoints. 
In the first checkpoint, he bought a bottle of expensive 
brandy, and it was handed to him after he got through security. 
Yet on the next flight we were checked again, and he was 
stopped for liquid. It was poured down the drain.
    That same thing may happen coming back, say, from Europe to 
the States, going from international to domestic. You have a 
carry-on that goes through again.
    Any comment? Was that just tough luck?
    Mr. Kane. I think it is understanding the systems that are 
in place. So, internationally, I can't speak to all the 
different regimes, although I know a lot of people will allow 
the duty-free liquids onto the flights, particularly with the 
secure technology, the tamper-evident bags they have over in 
Europe.
    We don't accept that in the United States. So when you come 
into the United States you need to put that bag from your 
carry-on into your checked baggage, and in virtually every case 
you are going to have to recheck that bag and you have to shift 
it over. If you don't understand that, you will sometimes 
experience difficulties at the checkpoint.
    Another technology challenge the world is obviously trying 
to solve is liquids packed in bags. We haven't cracked that 
yet. We are working towards it. It is another difficult 
challenge, though, to be able to do that and understand 
explosives in bags. On the other hand, it is a real threat. So 
we have to be able to address that threat.
    Mr. Turner. Thank you.
    I yield.
    Mr. Rogers. I thank the gentleman.
    The Chairman now recognizes the gentleman, Mr. Davis, for 
any questions he may have.
    Mr. Davis. Thank you very much, Mr. Chairman.
    Mr. Kane, during his appearance before the Senate Homeland 
Security and Governmental Affairs Committee yesterday, in 
response to concerns expressed by Senators Lieberman and 
Collins, Administrator Pistole expressed his concern that there 
is a perception that TSA's X-ray whole-body scanners are not as 
safe as they could be.
    I have some concerns about both the perception and the 
reality of the safety of these machines. My concerns extend to 
both the flying public and the Transportation Security Officers 
that work in the vicinity of these machines on a daily basis, 
and that is why I encourage the inclusion of language in the 
TSA authorization bill that would require an independent third 
party to carry out a study on the machines. I commend 
subcommittee Chairman Rogers for including that language in his 
bill.
    In light of the bipartisan and bicameral concerns about the 
safety of these machines, do you believe that an independent 
third-party assessment of the safety of the machines and the 
operating environment validating TSA's findings might be 
helpful?
    Mr. Kane. Congressman, I think we have had a number of 
independent third-party assessments of the technology. Johns 
Hopkins University did it. The Army's Public Health Command has 
done an assessment of the machines, and they do so on a regular 
basis in airports. We had an experiment with them in our lab, 
but they ran it where we took over 93,000 different samples. We 
are awaiting the final report on that. But it is going to show 
again that they are well within the safety standards that are 
set and that we set in the requirements that we published out 
to industry.
    Over and over again, the people we have had study this have 
said the technology is safe and well within the standards that 
we need to meet to be able to use that technology; and the 
benefit--the security benefit that we get by being able to 
detect a nonmetallic threat and maturing that type of detection 
capability in the airports is substantial.
    Mr. Davis. Thank you very much.
    Gentlemen, let me ask you, within my Congressional 
District, which includes a large part of the City of Chicago, 
our average daily ridership of bus and rail combined is 1.6 
million riders a day. Over 75 percent of those riders use buses 
to go to work, to the grocery store, and many other places that 
they use to live their lives. I have major concerns about 
technology related to bus system security.
    In the past year in my district, and even in Chairman 
King's district, city buses were stolen and operated by non-
transit employees for hours. In Chicago, a man stole a Chicago 
Transit Authority uniform, got in a bus on the south side, and 
drove from 8 o'clock a.m. to midnight, and then returned the 
vehicle to the garage and struck a parked bus. Fortunately, 
there were no passengers. But this incident could have taken 
place while he was driving the bus route.
    My question is: Are there any technologies that are ready 
for use or in the process of being created that you are aware 
of that would specifically deal with bus safety and security?
    Mr. Kane. The only one I am really aware of--and I am not 
very current, I have to admit, Congressman, on where we are on 
this--there are some technologies that from a remote location 
you could shut down a bus. So if you knew that bus had been 
taken that you could use that. The bus authority, the transit 
authority could use that to shut the bus down.
    Clearly, there is locator technologies that trucking 
companies and shipping companies use that allow them to track 
different things. So you could use that technology as well.
    I know we have run some pilots on those types of 
technology. I am not sure exactly where we are. We would put 
something like that on our approved equipment list that would 
then be able to be available for grant programs or for transit 
authorities to be able to procure off that approved equipment 
list. That just kind of says, hey, TSA has taken a look at this 
many times with S&T. It is a good technology, and here is the 
capabilities that that would have.
    Mr. Davis. Are any of the rest of you familiar with 
anything other than that?
    Mr. Benda. Congressman, Paul Benda from S&TP.
    We do have one new technology that we developed in public-
private partnership with industry which is called the Brave 
Camera. One of the issues that we have seen in the past in 
Israel, if you have a suicide bomber come on board a bus, if 
you have any type of surveillance in place, it destroys the 
camera and the recording that allows you to go back to do 
forensics.
    So we partnered with industry, put our requirements out, 
and they used their own internal dollars to build a camera that 
could meet the explosive blast and actually allow us to gather 
the data off that camera rather quickly. S&T then sponsored a 
test actually of getting a bus that was out of its life cycle 
and blowing it up with the camera inside.
    So that type of camera in place, while it is forensic, if 
you had that type of camera system in place, you would monitor 
it from a central location, as Mr. Kane had stated, in case an 
activity went on. But if the worst did happen, you could 
actually find out who that perpetrator was and learn from that 
incident so it doesn't happen again.
    Mr. Davis. Thank you, gentlemen, very much.
    Mr. Chairman, I yield back.
    Mr. Rogers. The Chairman now recognizes my colleague from--
what State is that--Minnesota, for 5 minutes.
    Mr. Cravaack. God's country, sir. God's country.
    I thank the panel for being here today. I appreciate it 
very much. Thank you for coming here and enlightening us.
    I did have a quick question, Dr. Nayak. Could you tell me a 
little bit, do you know how many--it is my understanding we 
have purchased 700 AT carry-on baggage X-ray devices, is that 
correct?
    Mr. Nayak. I am going to have to defer to Robin.
    Robin, do you have an answer to that?
    Mr. Kane. Yes, sir. The last procurement we made was 
slightly over 700. We, prior to that, had around 900 in the 
field. So the total is near 1,600.
    Mr. Cravaack. So you have purchased around 1,600 machines. 
Okay. All right.
    What is the total--I hope I will be able to get a group 
consensus here. What is the total cost per unit of these AT-2 
machines? Do you know?
    Mr. Kane. In round numbers, it is around $150,000.
    Mr. Cravaack. Per unit?
    Mr. Kane. Yes, sir.
    Mr. Cravaack. Are these devices being used at any current 
TSA airports right now?
    Mr. Kane. Yes, Congressman. We have at least 950 in the 
field, and a number of the 700 are also out into the field.
    Mr. Cravaack. So you have about 950 in the field and you 
purchased about 1,600, is that correct?
    Mr. Kane. That is correct.
    Mr. Cravaack. Is there any that are being stored or 
warehoused in Dallas, Texas, right now?
    Mr. Kane. Yes. We have some still remaining in the 
warehouse down in Dallas.
    Mr. Cravaack. Do you know how many those are?
    Mr. Kane. It would be whatever we have not deployed of the 
700, but it is probably over 600.
    Mr. Cravaack. Okay. Do you know what the cost of 
warehousing these are?
    Mr. Kane. I don't have the specific cost for that. We pay--
I would have to get you the number for the record, Congressman, 
in terms of what we pay for our overall warehousing.
    Mr. Cravaack. Okay. Could you do that by November 10? Would 
that be a possibility?
    Mr. Kane. I could certainly work through our folks to be 
able to provide that.
    Mr. Cravaack. Okay, great.
    I want to turn a little bit to the puffer machines, if I 
could. Has the TSA destroyed all its collection of the puffer 
machines at this time?
    Mr. Kane. We disposed of all of those. We don't destroy 
them. We turn them over to the Defense Reutilization Office, 
and they dispose of them or reuse them. I suspect most of them 
have been disposed of. I don't know that for certain.
    Mr. Cravaack. Do you know what the cost is for the 
destruction of each machine?
    Mr. Kane. I don't.
    Mr. Cravaack. Okay. All right. Then you are probably not 
going to be answering my last question. I would like--if you 
would, please, I would like to get the answer to that question 
as well by November 10.
    Then also I am curious to know what is the total cost of 
the program, including the purchase, storage, and the 
destruction of each one of these machines and how many 
machines, puffers, were there?
    Mr. Kane. I forget the exact number of the puffers that we 
have had. We disposed of them really prior to my coming on this 
job, so it has been a few years. I know the total value is 
somewhere I think in the $30 million range of that program.
    Mr. Cravaack. For the purchase?
    Mr. Kane. Right, for the purchase. The disposal cost is 
going to be a small fraction. At the end of the day, again, 
that will be lumped into the aggregate cost that we budget 
every year for disposal.
    Mr. Cravaack. Okay. Could you also have the TSA provide my 
office with the most recent quarterly warehouse inventory 
report?
    Mr. Kane. We can get that back for the record as 
appropriate.
    Mr. Cravaack. Okay, I appreciate that.
    I guess the next question I might have, I would go back to 
Mr. Nayak, if I could. What are the consequences if the TSA 
does not follow DHS procurement guidance?
    Mr. Nayak. The answer would be it depends on what stage of 
the acquisition life cycle they are not following guidance. If 
you have any specifics, I would be happy to answer it.
    Mr. Cravaack. What if, for example, that we weren't 
following procedures in regards to the puffer machines and the 
AT-2 machines?
    Mr. Nayak. So with regard to major programs like that, 
these kinds of decisions would be coming up to our Investment 
Review Board, and they most likely would not make it through at 
this stage in our evolution of the Investment Review Board. I 
was not around during these purchases.
    Mr. Cravaack. It is a hot potato.
    Mr. Nayak. Yes.
    Mr. Cravaack. Thank you very much for that.
    I would also like, Mr. Kane, if I could ask you just real 
briefly, what are we doing for expediting passage through TSA 
checkpoints for the business leaders or people that travel on 
business routinely? They are pretty much trusted travelers.
    Mr. Kane. Yes, sir. So we kicked off four proof of concepts 
in four airports on October 4 called TSA PreCheck, and that is 
to a small group of the known travelers, just to prove out the 
concept of being able to assess that risk, understand it within 
our secure flight system, put it within the boarding pass, and 
allowing those people an expedited screening process through 
those four lanes that we are proving out the concept in.
    In those lanes, they will typically get to leave their 
jackets on, leave their shoes on, leave their belts on, and put 
their carry-on--their laptops back in their carry-ons and a 
compliant 311 back in their carry-on. So we have--those pilots 
are running.
    I believe the administrator also testified yesterday that 
he thinks those will expand, as long as we are successful there 
and can prove out the concept.
    Mr. Cravaack. My time has expired. I yield back.
    Mr. Rogers. Great. I thank the gentleman.
    Mr. Benda, in your comments earlier you made a statement 
industry needs to know where we want to go, and I really liked 
hearing that. How do you envision seeing that happen?
    Mr. Benda. Well, I think it is a two-step process for us, 
sir. I think the first step we have already taken with TSA. 
They have actually been a partner in terms of developing 
requirements and putting together a plan, having an aviation 
security research and development plan. Then having one that is 
publicly accessible I think is key, so that people know exactly 
what we are doing.
    I think TSA does a good job of putting their requirements 
out in terms of what their detection technologies need to be, 
but we are looking to expand that. We are looking to go just 
beyond the aviation security R&D and into all of the R&D that 
we are going to be doing for TSA.
    So they have agreed to develop a pilot process with us 
where we are going to examine the different mission areas that 
we are going to focus our investments on, map out how those 
operations are done, try and identify where we think technology 
can achieve some efficiencies to be gained, and then identify 
those, identify what investment S&T is going to make, what 
procurement investments TASA plans to make in the future--
because there is no point in investing in R&D dollars if there 
is not a future investment strategy or market for that 
technology--and then come up with a publishable document that 
we can put out to industry to show them this is where we are 
going to be investing our dollars as well as where TSA will be 
procuring.
    Mr. Rogers. This would be for any one of you that want to 
take it, but one of the complaints that we have gotten from 
industry, particularly smaller companies, is that you all will 
put out an RFP and they will spend a significant amount of time 
and money preparing for it, and then you withdraw it or decide 
not to go forward. How frequently does that happen and why?
    Whoever would be the right person to hit that one, I would 
appreciate it.
    Mr. Nayak. I will just jump in, Chairman.
    It does not happen that frequently, but here is the 
problem. When it does happen, it hurts. You know, I was in 
small business. I was in large business. I understand it, 
because I also was the guy that did the proposals. So I lived 
and breathed that.
    So, you know, it did something we totally don't strive to 
do. It doesn't serve us well either. We drag our own folks 
through the process. It is never our intention, and then 
occasionally it does happen and industry does express 
themselves. So we make every attempt to not have that happen.
    Again, very importantly, it is really the minority. It not 
the majority. It is the exception.
    Mr. Rogers. Well, I would like to know if you could do a 
review, like go over the last 3 years, how frequently has that 
taken place. I have one company that spent about $100,000 
preparing. You know, for a small company, that is a lot of 
money to have it then withdrawn. It does hurt. So I would 
appreciate it if you could give me a ballpark number of how 
often that happened and what percentage that is. It may 
indicate just what you said, that it is a very rare occasion.
    Mr. Kane, does TSA fully adhere to DHS acquisition guidance 
in all of its procurements?
    Dr. Nayak, you can feel free to follow up on that.
    Mr. Kane. Mr. Chairman, we certainly strive to adhere to 
all the DHS guidance in our all of our procurements. I think we 
have all gotten better at that. But I would not say we are 100 
percent compliant with everything it is we need to do, just in 
catching up with when the acquisition directive was published 
and many of our procurements were on-going and getting 
ourselves square with all the guidance as we have these on-
going procurements happening. But we do follow the process with 
a very stringent test regime.
    The one thing the Department and us, I think we are the 
first operational test agent within the Department, meaning we 
can sign off our own test reports, still with the oversight of 
S&T's independent authority to have oversight there. Then we go 
through the investment review process with all those test 
results and with all those folks who are sitting in the room 
with the knowledge of the program.
    So I think we are much better at adhering to the guidance, 
and we intend to bring ourselves fully aligned in the near 
future.
    Mr. Nayak. So I will just add to that and just say that we 
have the Investment Review Board. There is a lot required of 
major programs at DHS, a lot of documentation, appropriate cost 
estimates. Part of this is staffing up appropriately in the 
components, which we have had a difficult time doing, frankly. 
So I wouldn't say everybody is perfect, but I would say our 
system now has evolved to a point where we can slowly move 
towards perfection.
    Mr. Rogers. Mr. Kane, development and procurement of the 
Advanced Imaging Technology, AIT, is of great interest to this 
subcommittee. To what can extent did TSA adhere to the 
established DHS acquisition process administered by the DHS 
Acquisition Review Board in procuring AITs?
    Mr. Kane. So we adhered to the process, but that was one of 
those procurements that was on-going as the acquisition 
directive 102, AD 8102 as we know, it was promulgated. So there 
were some of these documentation requirements that we did not 
complete.
    But what we did with the AIT, we went out and we did 
operational test and evaluation. We had those results reviewed. 
We presented those results to the Acquisition Review Board and 
any adjustments we had made in terms of many of the 
requirements along the way and got an affirmative decision for 
the full procurement and deployment of those systems.
    Mr. Rogers. Okay. To what extent do the AITs deliver in the 
performance initially promised in the original performance 
specifications?
    Mr. Kane. Sir, we are getting probably into areas of 
sensitive security information, Mr. Chairman. But the AITs are 
obviously the most effective technology we have for defecting 
nonmetallic threats and the only one we have for detecting 
nonmetallic threats on people.
    Mr. Rogers. Thank you very much.
    My time has expired. The Chairman now recognizes the 
Ranking Member for any further questions she may have.
    Ms. Jackson Lee. Thank you, Mr. Chairman.
    I want to pursue making sure that we have all the resources 
that we need to have to address all levels of business. But in 
particular we are finding through these hearings the need to 
focus on small businesses, with probably a great amount of both 
talent but also a great amount of inventiveness.
    Mr. Benda, you are in a very important area, and so my 
question is: If the present budget was to go forward as 
proposed by the House budget, what would happen in your area 
with respect to any impact on small businesses and the work 
that you do, the work that your particular area is engaged in, 
S&T?
    Mr. Benda. Thank you for the question, ma'am.
    We consider small businesses to be the engine of innovation 
for this country. We think they are critical to our success. 
Some examples if that budget did go forward, as I stated 
earlier, our core R&D funding would be cut by 77 percent. What 
that would mean is that our current SBIR process, our small 
business innovative research program, we fund around 60 
programs a year, would drop down to four. You would see a 
massive decrease in the amount of funds going to small 
businesses through that program.
    Ms. Jackson Lee. Give me that number again. You fund how 
many?
    Mr. Benda. Currently, on average, ma'am, we fund 60 
programs through our Small Business Innovative Research 
Program. If the budget went through as proposed, we would only 
be able to fund four.
    We also leverage small businesses, and where we have seen a 
lot of growth in our funding of small businesses is in the 
cybersecurity area. A lot of small start-ups happen on the 
coast.
    We recently lead a cyber BAA--it is a broad agency 
announcement, it's a contract vehicle--and we had over 1,000 
respondents to that vehicle, even though it is fairly small if 
you compare it to DOD standards. It is around $75 million over 
5 years. We had 1,000 respondents, and we had a whole range of 
companies that responded to that, with a significant part of 
that being small businesses.
    Those kinds of efforts would end. We would not have any 
money to pursue cybersecurity efforts. We would have no money 
to pursue any additional funding for bio-attacks, any 
additional funding for detecting submersibles that could 
smuggle drugs into the country or nuclear weapons. We would 
have to end all of our R&D in those areas. We estimate that the 
S&T funding currently funds around 1,400 science and 
engineering jobs. Those would all be lost.
    So we think that these kind of cuts would be catastrophic, 
at least towards the future of homeland security. That we would 
simply have to make do with what we have, not be able to 
innovate or improve our efficiencies.
    Ms. Jackson Lee. Thank you very much.
    That sounds pretty devastating to me, and particularly 
since we know we live in a different environment of franchise 
terrorism and one that acts on surprise, and even though 
intelligence is very important, but acts on innovative 
technologies that can be created.
    Thank you very much.
    Dr. Nayak, let me ask you to think about or to recommend 
for TSA in order to issue and award contracts in an efficient 
manner, we just have highlighted the puff technology, while at 
the same time ensuring competition in the proper use of TSA 
funds in technology development, so what do you recommend that 
TSA engage in in order to issue and award contracts in an 
efficient manner? What would be your suggestion?
    Mr. Nayak. I think, as Mr. Kane alluded to, we have a good 
process in place now through this management directive with 
respect to managing major programs. We just need to see that 
actually sort of take place over time.
    In other words, we have got an Investment Review Board. 
Major programs come up at least 11 times for review. We now 
have and we are developing an information technology tool where 
we have insight, real time insight, into--eventually it will be 
all 500 programs but, right now, our major programs. So just 
having the components go through that process will ensure 
effectiveness.
    Ms. Jackson Lee. Let me follow up with just one more 
question. Thank you.
    I am not sure if this was articulated in your testimony, 
but I am going to ask for sort of an ABC on that new process. I 
know you articulated it just to me. But if there is a non-
classified ``here is what is in place,'' I think it would be 
helpful for it to be in this committee or directed to all of 
us.
    Mr. Chairman, I am asking if that document or summary could 
be submitted to us, please.
    Mr. Nayak. I am happy to do that.
    Ms. Jackson Lee. Thank you.
    Let me go to this idea of small businesses, and it builds 
on testimony that we received on the Department's growing 
number of contracting operations with small and medium-sized 
businesses. We appreciate that growth. In fact, I am going to 
make a statement that we want to see that growth across the 
spectrum of Government agencies.
    We also learned that, based on the Federal procurement data 
system, DHS currently spends about 70 percent on service 
contracts and 30 percent on product contracts. One would tend 
to believe that a small business could work closely with the 
idea of service contracts. How does the Department reach out to 
small businesses to determine what current or emerging 
technology has been developed that could be applied to Homeland 
Security initiatives, particularly in this scheme that you have 
70 percent service-30 percent product, and how can we ensure 
that the Department maintains a healthy process with medium and 
small businesses? How can Congress continue to support this 
mission? Dr. Nayak.
    Mr. Nayak. Thank you.
    So with respect to technology specifically, I will let my 
fellow witnesses----
    Ms. Jackson Lee. Mr. Kane, maybe, from S&T.
    Mr. Nayak [continuing]. Can share. But I would like to 
share how we are doing.
    Just business overall, the spread is essentially about--
there really is no definition for medium business, but the CSIS 
report that the gentleman who came and testified in the second 
hearing, about 40 percent of our business goes to large 
business, about 30 to what they defined as the middle, and 30 
to small business.
    What I do want to share is, from a Departmental 
perspective, we take all businesses seriously in order to 
achieve the mission. But with respect to small business 
specifically, I do want to say it is important to note that we 
rank either one or two in every small business category among 
the top seven spending agencies in the Government which 
comprise 90 percent of the $500 billion spent in Government.
    So, just very briefly, in overall small business, we 
achieved 29 percent, and that was No. 2. In small and 
disadvantaged business, we achieved 11.5 percent of our spend. 
That was No. 1. In women-owned small business, we achieved 5.9 
percent. That was No. 2 among the top seven spending agencies. 
In small disadvantaged veteran-owned business, we were No. 2 
with 4 percent. No. 1 was the Veterans Administration, who has 
statutory authority to award contracts to veteran-owned 
businesses. We are very proud of that. HUBZone, which is very 
difficult to achieve, we achieved 3 percent. We were ranked No. 
1.
    So we take small business extremely seriously. We have had 
significant achievements over the past 3 years. At a macro 
level, the SBA has a new rating system. They give you A through 
F. We have had an A the last 2 years. We believe we are going 
to get another A in fiscal year 2011.
    But with respect to connecting with small business and 
technology I would ask Robin or Paul if they had anything to 
add.
    Mr. Kane. I would just briefly add that we have support 
contractors that support our technology programs, and one of 
those we set aside for a small business set-aside and awarded 
those contracts, a multi-award contract for professional 
engineering and logistic services that we did as a set-aside 
for small business, and we used multiple small businesses in 
the task quarters of that award.
    Ms. Jackson Lee. I yield back at this time and thank the 
witnesses.
    Mr. Rogers. The Chairman now recognizes the gentleman from 
Minnesota for any further questions he may have.
    Mr. Cravaack. Thank you, Mr. Chairman. There will just be 
one.
    Prior military--the military I have seen through the years, 
especially in aircraft where you would have a joint 
conglomeration of technologies in, for example, the Joint 
Strike Fighter. Though it might have a varied mission but at 
the same time being able to land at sea, the knuckles and the 
landing gear have got to be a little bit tougher, but mainly 
the same type of platform.
    What I want to see, I was wondering what the TSA is doing 
like in collaborating with some of the other agencies, say 
Border Patrol, in being able to combine the technology and the 
cost savings, and how much--I don't know if Mr. Kane or Dr. 
Nayak, you can answer these questions--but in combining the 
technologies, how much cost savings do you see there?
    Mr. Nayak. Let me first turn the mike on.
    Through our Strategic Sourcing Program, okay, so, 
essentially, we have 90,000 transactions, $14 billion for the 
last 3 years that we spent.
    What is strategic sourcing? It is the capability to look at 
those transactions and decipher how you can do exactly what you 
mentioned, Congressman, and that is see where there are 
opportunities to bring things together, leverage volume, just 
get a better deal overall.
    We have 42 initiatives in the Department that we have 
awarded. We have saved over $1 billion since our program got up 
and running in 2005. Our goal this year was $200 million. We 
have another 13 or 14 initiatives on the way. In fact, the 
canines was a strategic sourcing initiative success story. That 
is how we work it. That is done out of my office. It is on-
going.
    Detection equipment, which Mr. Edwards mentioned, is 
another interesting one where we agreed with the IG's Office. 
Detection equipment is an interesting one.
    In fact, all of these are very interesting. They take a 
little bit of time. Because you have to first sort of find the 
opportunity, which now we have the ability to do that. The 
second thing is get a working group together to figure out what 
of this can you really strategically source. On the surface, it 
sounds really good. Detection equipment, let's do it all. But a 
working group has to sort of work that out. Then eventually we 
get to the actual procurement, which replaces other contracts 
and saves dollars over time.
    Mr. Cravaack. So you do have something in place already 
that you can talk to other components to see if you can combine 
the purchase. Are you saying it is working well at this point?
    Mr. Nayak. It is working well, and we want to do more of 
it.
    Mr. Cravaack. That is good to know.
    With that, sir, I yield back.
    Mr. Rogers. I think that is the result of the IG report, 
right? That was one of the focuses you all had, and you are 
responding to that.
    Mr. Nayak. Only detection equipment. We had the program up 
and running. Their recommendation was to use the program 
specifically for detection equipment. But we have 42 
initiatives that already on-going. In other words, canines we 
figured out on our own.
    Mr. Rogers. Mr. Davis, do you have any additional 
questions?
    Mr. Davis. No.
    Ms. Jackson Lee. I do. I just want to make a comment. I 
just have a comment. So are you getting ready to do your 
questions?
    Mr. Rogers. Mr. Benda, you invite industry to bring its 
technologies to TSL at a fairly developmental stage for testing 
and for guidance on how their detectors can be improved to meet 
TSA needs. There is no cost to industry for this service, which 
can go on for months or years, which means you essentially 
provide a free research and development feedback resource. What 
are your perceptions as to how well industry appreciates this 
resource and is there anywhere else they can go for this kind 
of testing and evaluation service?
    Mr. Benda. Sure, sir. I appreciate the question.
    I think industry, the level of appreciation on the 
resource, it depends on whether they have gotten certification 
or qualification approval from the labs. So I think it all 
depends on where you are sitting.
    I do think it is an unusual aspect that the Transportation 
Security Lab offers, supported by the HSARPA, which I run, to 
work with them to move technologies through the process. We use 
what is called a collaborative research and development 
agreement, CRADA. It is a public-private partnership. Basically 
we think we need to improve that process, and I have been 
working with Susan and her staff as well as my explosive 
division director on how we can do that, as well as Robin's 
chief technology officer.
    Because it shouldn't take years, sir. If you are coming in, 
and we need to make up a better assessment early on, do we 
think this technology can meet the TSA requirements, and, if it 
can, we need to spend some time on that. But we need to put 
some bounds on it. We need to understand what market this 
technology can fill, what existing technology has filled that 
market already.
    We can't necessarily fund every technology that can 
eventually fill it or subsidize them with Government money. So 
if that market is already being filled adequately by an 
existing technology, the Government shouldn't subsidize them, 
as I imagine you would agree.
    So we want to look at that. We want to develop a process 
that is in place. We want to scope that support and make sure 
that, instead of taking years--no one should take years--but 
expedite that process to be a matter of months and make sure 
that those that have the best value come first.
    Mr. Rogers. Great. I note that TSL has recently improved 
its process for working with private sector through cooperative 
research development agreement which allows the maximum amount 
of information sharing to companies with clearances, even if 
they do not have a procurement contract. This sounds to me like 
a real DHS success story. Tell me how the agreement will help 
further industry's goals to provide needed technologies and 
grow their businesses.
    Mr. Benda. Again, that CRADA process is what you are 
referring to. The challenge that some small businesses have, as 
you have said, they can't get a clearance unless they have a 
contract in place. The CRADA allows us to use what is called, 
in technical parlance, a DD-254. We leverage a DOD process in 
place that says there is an existing agreement with the 
Government and allows us to share classified information with 
them because it is in the best interests of the Government, 
which also turns out to be in the best interests of the 
business. So when those processes are in place, they get a 
better understanding of what those requirements are.
    As you are certainly aware, we can't share with everyone 
what those technical requirements are because we can't let 
those become public.
    But the CRADA, once that is in place and once that sharing 
is in place, we are going to do a better job. The big process 
improvement we are going to make is that scoping up front and 
putting more documentation in place, both on the front end and 
the back end of the process. So people will understand what we 
are going to do in the CRADA. We will be very clear on our 
requirements, very clear on what we what we hope to achieve, 
very clear on the time lines, as well as at the end of the 
process in terms of what we have gotten out of it.
    Mr. Rogers. Great.
    We have Susan Hallowell here, and I have two questions for 
her. Susan, if you would come up to the microphone.
    Once the testing and evaluation is complete at TSL in New 
Jersey and including an additional stint in Florida for 
homemade explosives testing, I understand that machines are 
then sent to Washington Reagan Airport for initial field 
testing for liability and maintainability and then on to 
airports across the Nation for full-scale operational T&E.
    Some in industry balk at this prolonged process, which can 
take months, if not longer, and which requires shipping 
machinery across the Nation. They cite a better model in some 
countries in Europe where private companies are contracted to 
do the certification and they do it more quickly and 
efficiently than the Government can. We have also heard that 
delays sometimes happen because of simple things that are 
easily fixed, but the process requires a complete redo.
    Dr. Hallowell, can you please tell me whether and why every 
step of this process is necessary to ensure the efficacy of the 
technology that TSA is purchasing?
    Ms. Hallowell. Thank you, Mr. Chairman.
    Mr. Rogers. Just turn the microphone on.
    Ms. Hallowell. Actually, that overall process is held by 
TSA, so that is more of a TSA issue. The actual certification 
we do at the laboratory is just one small cog in a larger 
process. So I would put that question to Mr. Kane.
    Mr. Rogers. Okay. Mr. Kane.
    Mr. Kane. Yes, sir. Many of the things you just talked 
about, while they are virtually all true, as I understand what 
you just said, that is our process, much of which is required 
by the acquisition guidelines that we have to follow, and it is 
put in place to prevent things that have happened in the past 
such as the puffers.
    So our integration facility at Ronald Reagan is to get into 
a near-operational environment for equipment before we actually 
put it out into airports, and they have to experience what the 
real results are, and we find out things that aren't explosives 
detection.
    What TSL does, not exclusively, but what they do, their 
large expertise lies in explosive detection and qualifying 
that, yes, it can detect the things that we need. There are 
many other requirements that machines have to meet to operate 
in the airports, as you know and as we have experienced in the 
past.
    So we run this whole process. It does take time to run a 
test at the TSL, to run a test at our facility at Reagan, and 
then to do actual field testing. But that is a rigor that we 
want to put into this process so when we are making decisions 
on hundreds of millions of dollars that we are making the right 
decisions.
    Mr. Rogers. Okay. Then I won't ask this follow-up question, 
since it was Mr. Kane.
    Mr. Edwards, how much money do you think the Department 
could save if it used strategic sourcing to acquire all of its 
detection equipment?
    Mr. Edwards. Thank you, sir.
    We looked at just the detection equipment itself, and if 
they had used strategic sourcing they could save $170 million.
    Mr. Rogers. Excellent.
    What steps do you recommend be taken to standardize the 
inventory technology so that all components in the Department 
are aware of what other components already have and are 
purchasing?
    Mr. Edwards. Strategic sourcing is known for best 
practices. It results in efficiencies, economies of scale, and 
volume buying. It also reduces overhead costs for procurement.
    For instance, in the detection equipment, if you are 
buying--every component is buying different types, then you are 
going to increase the maintenance costs, the training costs. So 
if components work together and buy these--and have less number 
of the different types, then there is going to be volume 
savings.
    It also is good for the industry because you have a single 
point of contact that you can go to. They can just go to the 
Strategic Sourcing Program Office and the vendors can just go 
to them, rather than going to the different components.
    Mr. Rogers. Dr. Nayak, do you want to comment on that?--or 
you don't have to.
    Mr. Nayak. I think he accurately covered it.
    Mr. Rogers. That is great.
    The Chairman now recognizes the Ranking Member for any 
further questions.
    Ms. Jackson Lee. Thank you, Mr. Chairman.
    I will be concluding on this note. I am not sure you are 
having another round.
    Mr. Rogers. I have more, but I am going to give them in 
writing.
    Ms. Jackson Lee. Okay, and I am going to do that as well.
    But let me ask this question of Mr. Kane, and I am going to 
say to you that I would like to have a more extensive answer in 
writing. So that means a period of time that you may take that 
you can abbreviate.
    One of our increasing concerns across the Federal 
Government is the possibility of theft of large volumes of 
sensitive information contained in mobile data storage devices. 
What is the DHS policy concerning what portable data is 
encrypted and are there currently any DHS processes where 
portable data is not encrypted?
    Mr. Kane. Okay, and I will be happy to take that one back 
for the record. I am not the expert in this.
    But all of our portable devices, the CIO imposes 
requirements for encryption on those devices, and they actually 
have an approved list of those that we are allowed to use. So I 
can't just take any memory stick out and put it in my computer. 
It has to be an approved memory stick that I can use today.
    Ms. Jackson Lee. Mr. Chairman, I would almost say that this 
would warrant a classified briefing. There are so many various 
portable devices going around in many people's hands, and this 
is not a question of the integrity of the staff of DHS as much 
as it is the need to be secure. So I am going to submit this 
letter into the record--I am sorry, excuse me--this question 
into the record for a more extensive response.
    Let me quickly go to Mr. Edwards.
    TSA has confused purchases and acquisitions. There was some 
detection that IG released a report indicating that. Can you 
please explain the difference between an acquisition program 
and procurement and explain why additional costs may have been 
incurred by TSA in this case?
    Mr. Edwards. Thank you, ma'am.
    A simple procurement is a simple one-and-done action. For 
example, if you are buying paper, it can be managed by a single 
procurement. In contrast, an acquisition program is a more 
complex process that includes planning, purchasing, 
maintaining, managing, and overseeing an acquisition of goods 
and services. High-value items are normally usually acquired 
through an acquisition program.
    For example, if the Coast Guard is buying a Coast Guard 
cutter, it is managed and overseen by an acquisition program. 
In this case, what we are talking about in our report is TSA 
managed the renovation of a 12,500-square-feet warehouse as an 
acquisition program rather than using it as a simple 
procurement. By treating that relatively small renovation 
project as an acquisition program, TSA increased administrative 
costs and also due to additional personnel and also overhead 
costs it incurred because of the oversight and internal 
controls required for an acquisition program.
    Because of this confusion incurred by TSA and other 
components, we recommended to the Department that they double 
up the decision matrix tool about whether acquisitions should 
be managed as a simple procurement or an acquisition should be 
managed as an acquisition program. So the Department agreed to 
our recommendation and is in the process of implementing it.
    Ms. Jackson Lee. I think that is a great improvement. Thank 
you very much.
    Mr. Chairman, I just wanted to put two issues on the 
record. I made a somewhat humorous comment earlier, but I 
wanted to clarify two things.
    One, I wanted to conclude by thanking the witnesses and 
acknowledging to Dr. Nayak--I wanted to acknowledge the 
seemingly celebratory numbers that you are citing relating to 
your outreach to small businesses. I think whenever an agency 
comes forward, we should say thank you, and I want to thank you 
for what appears to be very positive numbers.
    I would only comment that I want our reach to be not only 
small businesses but the non-sophisticated small businesses 
that may be in States far and wide that don't have the 
experience that some who are in tune to working with the 
Federal Government--and if you live in this area long enough, 
you know that there is a constituency of small businesses, no 
discredit to them, that work with the Federal Government. That 
is their work. They know how to do it. That doesn't mean they 
are in Alabama. It doesn't mean they are in Texas. It doesn't 
mean they are in Illinois. It doesn't mean they are in 
Minnesota and various other places. I want us to get our 
numbers where we show that demographic or that geographic, 
excuse me, diversity, so that when we go home, wherever we 
might be, there will be someone who says that they received 
some information on that opportunity.
    That is the first thing, Mr. Chairman.
    The second thing, as I sit in this committee--and I will be 
brief--I think they pointedly put that picture, Mr. Chairman, 
in front of the Chairman and the Ranking Member, straight 
ahead, if you look and you will see it on the wall, for a 
reason, for us to know our purpose and our cause here. So I am 
serious.
    I want to publicly apologize for the actions of one TSA 
inspector that violated the trust of this work and violated a 
traveler's personal belongings. In this instance, it was a 
woman, and in this instance it probably would create humor, but 
I didn't think it was funny.
    So I am going to ask that we will perspectively have a 
meeting, we are overdue for a meeting with Mr. Pistole on a 
number of issues. I count that on the issue of professional 
development and training. I have been a champion of TSA in 
terms of its workforce for training, professional development, 
the ability to ascend to a higher position, and I am very 
disappointed in that particular act that occurred about a week 
or so ago.
    The second aspect, Mr. Chairman, that I would raise a point 
with is seemingly the confusion--I have not gotten a final 
report on the question asked as to whether or not TSA checks on 
checked weapons. As you well know, you can check a weapon in 
your suitcase, and I think the public is a little aghast that 
we have no record. I think we thought we were doing everything 
that we could, and I think there was a question of whether they 
were loaded or unloaded. But the answer came that that was not 
TSA's responsibility to determine that in a suitcase, lodged in 
a suitcase.
    I think we need to change that policy and there needs to be 
a way of determining what ammunition and weapons are in checked 
luggage. Our first line can be domestically versus 
internationally. We can maybe start with that, and I would like 
for us to take up that issue. That is not an NRA issue.
    Mr. Rogers. Where did you hear that? I went to the Atlanta 
Airport 2 weeks ago, not a flight, just to go over there and 
let them take me through their screening systems. One of the 
areas they took me through was where they screen the baggage. 
They do require that the gun be unloaded and it be in a box 
that is sealed. If the passenger doesn't disclose to you that 
they have got one in their bag, what they do, they will tag the 
bag so that you know he has disclosed it or she has disclosed 
it. But if not, they do run it through a scanner where they 
look for the gun. They allow you to have it, but it has got to 
be unloaded.
    Mr. Kane, am I stating that right?
    Mr. Kane. Sir, just to clarify, there are requirements for 
how you have to check a firearm. Our detection technology does 
not detect firearms in checked baggage.
    Mr. Rogers. Well, when I went through Atlanta, they said it 
did.
    Mr. Kane. If you are looking visually, you may see it on a 
visual image. But as a general rule, especially in our big in-
line systems, this equipment is designed to detect explosives, 
and it does not detect a firearm.
    Mr. Rogers. Well, I agree with the Ranking Member. We need 
to find out more about this.
    Ms. Jackson Lee. I think that would warrant a classified 
briefing.
    Mr. Rogers. I agree.
    Ms. Jackson Lee. Because we don't want to expose it. I 
thank Mr. Kane for his honesty in clarifying it for both the 
Chairman and myself. So I would list that as an item that is 
left with questions, and I believe it is appropriate for us to 
handle that in a manner appropriately.
    So, Mr. Chairman, because of the burden of our 
responsibility, I just want to make sure that we cross every t 
and dot every i, and I would look forward to pursuing those 
issues.
    Mr. Kane. Can I offer just two comments, Mr. Chairman, if I 
could?
    First, on the incident with the officer, I would just like 
to be on the record as saying TSA took that very seriously as 
well and instituted--this is a discipline issue and we clearly 
would institute a disciplinary process swiftly in that case, in 
all cases.
    Second, a firearm in a bag that you don't have access to is 
a much different proposition than a firearm in a carry-on bag. 
I just would like to note that. There are reasons for some of 
the differences we have.
    Ms. Jackson Lee. Oh, I fully understand that, but I think 
we need to get it clarified. As they say, that building reminds 
us that something can always go wrong, and that is the only 
reason I brought it up.
    Mr. Rogers. I just want to make sure I am clear on that. I 
understood when I was seeing that in-line process that it could 
determine a gun. We will follow up with you all and get 
somebody in that can help us in a classified setting explain 
the technology and its capabilities and limitations.
    I, first of all, want to thank all of you. I know we are 
over time, and I am not going to drag this out. But I have got 
a ton more questions. But what I am going to do is submit them 
to you in writing. The record will left open for 10 days, so if 
you can get us a reply to those, it will be very helpful to us.
    I do want to let you know I wanted to have this hearing on 
the record to raise a lot of these questions and give you an 
opportunity to offer your thoughts. But I would like to have a 
chance to sit down with you all again and the Ranking Member 
and let's just kind of talk through more of these for our 
edification in a more informal fashion. Because you all 
obviously are a great resource for us to draw on, and you have 
got a lot more that I would like to know.
    But I do think that I have gathered from your comments here 
today that you all are working on what I want to see, and that 
is more transparency and more interaction with the private 
sector as to how we can in partnership achieve our security 
goals, and that is encouraging. So I am very happy about that.
    The one thing I did want to ask, and it follows up to what 
the Ranking Member was pursuing, and that is, as you go forward 
with these industry days, and this will particularly be for Mr. 
Benda and Dr. Nayak, and you look at this new and improved 
version, how do you outreach to small businesses? How do you 
get the word out that you are inviting their participation?
    Mr. Nayak. Well, for us, it is very simple. We use the open 
announcement with what is called Fedbizopps. So it is an 
announcement to the world, and that is standard. That is what 
everybody who does business with the Government knows to go to.
    Mr. Benda. We follow the same process, sir. We will put out 
a request for information. We will use Fedbizopps.
    Mr. Rogers. Okay. Do you pretty much count on the their 
industry associations to kind of spread that word after they 
get the Fedbizopps release?
    Mr. Nayak. You know, there is about five or six. I noticed 
you had participation from one in a previous hearing. They 
cover a subset of the universe. They do have large and small 
business. But they are not the universe. So we do work very 
closely with them. Quite often--I speak at literally every one 
of the associations. But, again, we have to use something that 
goes out to the world.
    I mentioned an industry advisory council. Again, whatever 
we create has to be very open, very transparent, and that is 
the trick to sort of figuring this out. But we are working with 
those associations as well as others to figure it out.
    Mr. Rogers. Well, you know, I talked with the Ranking 
Member about this. I have been Chairman of this committee now 
for almost a year, and I didn't know what fbo.gov was until 3 
days ago as I prepared for this. Trust me, I am a low-tech 
fellow. I worry like she does about people who aren't 
sophisticated but have some contributions they can make.
    One of the things I am going to be doing is setting up a 
Transportation Security Caucus, and the Ranking Member has 
already indicated her desire to participate in that. We want to 
work with you all about some ideas about how we can stir 
interest out there and get folks who may not be computer-
sophisticated aware that there are opportunities here and we 
want their participation.
    I thank all of you. This has been a very worthwhile 
hearing, and we are now adjourned.
    [Whereupon, at 4:18 p.m., the subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

       Questions Submitted by Chairman Mike Rogers for Nick Nayak
    Question 1a. You have stated that one of your strategic objectives 
is to establish quality communication between industry and DHS. One way 
you aim to accomplish this is to require acquisition planners to 
develop vendor engagement strategies for major acquisitions that may 
include activities such as Industry Days or conferences; the ``DHS 
Acquisitions Planning Guide'' was just amended for this purpose.
    Do these requirements apply to all acquisitions planners across the 
Department, even within components like TSA that have their own 
acquisitions office?
    Answer. Response was not received at the time of publication.
    Question 1b. Do you expect DHS and TSA to put into effect a similar 
planning model to DOD's, whereby multi-year acquisition plans are 
provided to the vendor community to help better align private sector 
R&D with the needs of DHS and TSA? It seems to me that a 5-year budget 
estimate included in TSA's annual request to Congress would go a long 
way toward this end.
    Answer. Response was not received at the time of publication.
    Question 2. This committee has been spending some time, including 
through other hearings, looking at how the Department utilizes 
technologies that have been deployed in other agencies, such as the 
Department of Defense. One of the greatest tools at our disposal to 
save the Department needed dollars is to leverage existing 
technologies.
    Are existing technologies always considered when developing 
acquisition policy at the Department? If not, what one policy change 
would have the most impact on enhancing the Department's ability to 
effectively leverage emerging technology?
    Answer. Response was not received at the time of publication.
    Question 3a. The importance of establishing realistic and risk-
based requirements, and sharing them with the vendor community as early 
and as much as possible, cannot be overstated.
    Do you feel that requirements should be primarily based on mission 
needs, or on the existing capabilities of commercial technologies that 
vendors currently have?
    Answer. Response was not received at the time of publication.
    Question 3b. What is the proper role for vendors in setting 
technology requirements?
    Answer. Response was not received at the time of publication.
    Question 3c. Mr. Kane, as a follow up, what process does TSA follow 
to establish performance requirements for technologies it seeks to 
procure? And how does TSA use information from the scientific community 
to inform the development of key requirements?
    Answer. Response was not received at the time of publication.
    Question 3d. What options are open to the Department for 
establishing rigorous requirements that are threat- and risk-based, and 
for which there is cross-component input?
    Answer. Response was not received at the time of publication.
 Question Submitted by Ranking Member Sheila Jackson Lee for Nick Nayak
    Question. In your testimony, you assert that the Department has 
made progress in providing better training and certification for 
several acquisition career fields. What challenges, if any, have you 
faced in increasing training of DHS program managers? How have 
improvements in training and certification lead to a more effective 
acquisition process?
    Answer. Response was not received at the time of publication.
     Questions Submitted by Chairman Mike Rogers for Robin E. Kane
    Question 1a. TSA has recently undertaken a structural 
reorganization. Mr. Kane, you now lead the Office of Security 
Capabilities. TSA has stated that under the new system, all of the 
former Office of Security Technology and elements of the Office of 
Security Operations and the Office of Intelligence are grouped 
together, creating ``a single office with responsibility for defining 
and developing both the security and technology capabilities required 
to execute our counterterrorism mission'' and matching ``capabilities 
against threats to identify and deliver high priority capabilities to 
the field.''
    How does the TSA reorganization result in more streamlined 
development and procurement? Please provide us with some concrete 
examples of how this works.
    Answer. Response was not received at the time of publication.
    Question 1b. What is the ``Security Policy and Industry 
Engagement'' office responsible for?
    Answer. Response was not received at the time of publication.
    Question 2a. The joint TSA-S&T aviation security technology 
strategy states, ``To encourage consistent dialogue and proactive 
involvement with S&T, TSA will produce and maintain technology roadmaps 
that outline desired capabilities, high-level development milestones 
and dependencies for major technology products and incremental 
capability enhancements. Strategy roadmaps indicate key mission 
capability needs and the TSA efforts to accelerate the development of 
advanced solutions.''
    Have these roadmaps been completed and shared with the private 
sector? If not, when will they be complete and publicly available?
    Answer. Response was not received at the time of publication.
    Question 2b. Has the strategy resulted in new or improved 
technologies?
    Answer. Response was not received at the time of publication.
    Question 3. The ``For Official Use Only'' version of the joint TSA-
S&T aviation security technology investment plan has a time line for 
achieving specific goals and sub-goals that extends through fiscal year 
2014.
    Has this timeline been shared with industry? While I'm sure you 
need to be careful about broadcasting predictions that may change due 
to emerging threats, by the same token, industry needs some kind of 
roadmap to strategize and formulate semi-long term business plans.
    Answer. Response was not received at the time of publication.
    Question 4. The importance of establishing realistic and risk-based 
requirements, and sharing them with the vendor community as early and 
as much as possible, cannot be overstated.
    What process does TSA follow to establish performance requirements 
for technologies it seeks to procure? And how does TSA use information 
from the scientific community to inform the development of key 
requirements?
    Answer. Response was not received at the time of publication.
    Question 5a. Goal 4 from your aviation security technology strategy 
states that TSA is looking to ``increase capability to respond to 
emerging threats through development of flexible security solutions.''
    Since many of the technologies that TSA acquires are still 
undergoing additional development, how does the agency ensure that the 
technologies are improved once acquired?
    Answer. Response was not received at the time of publication.
    Question 5b. Is it going to become necessary for vendors and TSA to 
reach an agreement at some point that allows an open, standard data 
file format that allows TSA to contract out upgrades to the best 
vendor? Will TSA need rights to the data at some point to allow for 
true flexibility and efficiency in upgrading its systems?
    Answer. Response was not received at the time of publication.
    Question 6a. TSL provides a technical service for TSA by certifying 
equipment that meets its requirements, or determining what equipment 
does not meet TSA's requirements.
    Has TSA ever purchased equipment that did not meet certification 
standards as tested to by the TSL?
    Answer. Response was not received at the time of publication.
    Question 6b. Has TSA ever considered using the TSL in a different 
way, that is, harnessing its decades of experience working with 
technologies so that TSL is actually involved in the developing of 
requirements, and not solely testing to them?
    Answer. Response was not received at the time of publication.
    Question 7a. TSA used to engage in extensive research and 
development activities. In fiscal year 2006, Congress consolidated 
TSA's R&D activities with those in the S&T Directorate.
    What effect does the separation of research and development 
activities from acquisition and operational activities have on TSA's 
ability to adopt new technologies? What benefit, if any, would accrue 
from transferring back to TSA its research and development 
responsibilities?
    Answer. Response was not received at the time of publication.
    Question 7b. After the transfer of TSA R&D activities, TSA and S&T 
signed a memorandum of understanding regarding the use and priorities 
of the TSL. How successful is your partnership with S&T regarding use, 
upkeep, and priority setting for the TSL?
    Answer. Response was not received at the time of publication.
    Question 8. How does TSA incorporate the results of covert tests 
into its evaluation of existing technology and future procurements?
    Answer. Response was not received at the time of publication.
    Question 9a. According to the GAO, the S&T Test & Evaluation and 
Standards Office expressed concerns about TSA's operational test agent 
for the Passenger Screening Program. The T&E Office cited the lack of 
independence of the test agent since the test agent was part of the 
same TSA office responsible for managing the program. The T&E Office 
provided an interim approval valid for 1 year and outlined measures for 
TSA to take to ensure necessary independence.
    How has TSA responded to these actions by the S&T Directorate?
    Answer. Response was not received at the time of publication.
    Question 9b. What advantages, if any, might accrue from 
establishing a fully independent operational test agent in TSA, the S&T 
Directorate, or some other part of the Department?
    Answer. Response was not received at the time of publication.
    Question 10a. The testing and evaluation capabilities that the TSL 
and the Office of Test & Evaluation and Standards provide are key to 
ensuring that all machinery purchased by TSA meets its own prescribed 
standards.
    Does TSA leverage these capacities completely? Was that done with 
AIT?
    Answer. Response was not received at the time of publication.
    Question 10b. I understand that TSL often evaluates TSA technology, 
but not always. Why is that, and can you tell me about some 
technologies that you purchased that were not put through TSL testing?
    Answer. Response was not received at the time of publication.
    Question 11a. The S&T Directorate has established as one of its 
strategic goals to leverage its technical expertise to assist DHS 
components' in establishing operational requirements, and to select and 
acquire needed technologies. This requires the S&T Directorate to have 
a firm understanding of the technical and environmental constraints of 
the DHS components' operations and a close working relationship between 
S&T Directorate program managers and DHS component decision makers.
    In your experience, what activities, both formal and informal, has 
the S&T Directorate taken to increase its role in TSA's establishment 
of operational requirements?
    Answer. Response was not received at the time of publication.
    Question 11b. How successful have these activities been, and what 
results have come from them?
    Answer. Response was not received at the time of publication.
    Question 12. This committee has been spending some time, including 
through other hearings, looking at how the Department utilizes 
technologies that have been deployed in other agencies, such as the 
Department of Defense. One of the greatest tools at our disposal to 
save the Department needed dollars is to leverage existing 
technologies.
    Is there a process in place to evaluate the most advanced and 
innovative technology that may be in use elsewhere, and could now be 
utilized at TSA? And are existing technologies always considered when 
developing acquisition policy at the Department?
    Answer. Response was not received at the time of publication.
    Question 13. Is TSA satisfied with its current process for paying 
for technology procurement (purchasing technologies subject to yearly 
appropriations), or are there other models it is looking at?
    Answer. Response was not received at the time of publication.
    Question 14a. In October 2009, GAO reported that TSA had not 
completed a cost-benefit analysis on investments for screening 
passengers at airport checkpoints because they failed to develop life-
cycle cost estimates for these technologies. While TSA has recently 
developed life-cycle cost estimates, GAO reported that TSA has still 
not completed a cost-benefit analysis.
    To what extent does TSA analyze the benefits of technology 
acquisitions and ensure that the additional capabilities gained provide 
sufficient benefits to justify their significant costs? That is, do you 
perform a cost-benefit analysis for every acquisition, and at what 
point in the process does this happen?
    Answer. Response was not received at the time of publication.
    Question 14b. Does TSA engage its vendors in completing life-cycle 
costs and cost-benefit analyses? If not, are there changes that should 
be made to this process?
    Answer. Response was not received at the time of publication.
    Question 15. Would you consider establishing a technology advisory 
group made up, in part, of security technology manufacturers? Are there 
other advisory bodies within TSA on which industry already serves?
    Answer. Response was not received at the time of publication.
 Questions Submitted by Ranking Member Bennie G. Thompson for Robin E. 
                                  Kane
    Question 1. Over the past few years, TSA has increased the number 
of Behavioral Detection Officers at airports Nation-wide. Has TSA 
developed a scientific method for measuring the ability of Behavioral 
Detection Officers to identify people who intend to commit an act of 
terrorism or pose a threat to aviation? How many terrorist plots have 
been interrupted by Behavioral Detection Officers? Without scientific 
validation or proven results, how can TSA justify the expansion of the 
number of Behavioral Detection Officers? Does the Department perform 
covert testing on Behavioral Detection Officers like it does with 
passenger and baggage screeners?
    Answer. Response was not received at the time of publication.
    Question 2. TSA recently announced a major reorganization of its 
components and realignment of certain functions across the agency. How 
does this reorganization allow for an increase in cost savings 
associated with administrative and procurement functions? How will the 
proposed reorganization affect TSA's interaction with S&T and DHS? How 
will the proposed reorganization affect oversight of the development of 
new technologies?
    Answer. Response was not received at the time of publication.
    Question 3. TSA continues to make changes to its process for 
screening of passengers at airport checkpoints. Does TSA have a plan 
for ensuring that the use of new technology is integrated into new 
screening initiatives such as the Precheck program? Also has TSA 
updated its Passenger Checkpoint Program Strategy to reflect the 
increased use of AIT, BDOs, and the Precheck pilot?
    Answer. Response was not received at the time of publication.
 Questions Submitted by Ranking Member Sheila Jackson Lee for Robin E. 
                                  Kane
    Question 1. Last Congress, you testified that TSA and S&T have 
worked on streamlining processes and coordinating effectively with one 
another. What steps has TSA taken to streamline its relationship with 
the S&T Directorate and strengthen acquisition and procurement 
practices with DHS Office of Procurement? Please provide specific 
examples. Furthermore, can you provide more information on how AIT 
machines were purchased and vetted by the Department of Homeland 
Security?
    Answer. Response was not received at the time of publication.
    Question 2. Recently, TSA purchased 300 AIT machines equipped with 
ATR software that enhance passenger privacy. Have these enhanced AIT 
machines reduced delays and wait times in passenger screening? Can the 
existing 500 AIT units be updated with the new ATR software?
    Answer. Response was not received at the time of publication.
    Question 3. TSA has announced plans to conduct CAT/BPSS technology 
pilots to determine the sustainability of technology that would replace 
the current manual ``lights and loupes'' method of ID authentication. 
What challenges has TSA faced with the current ``lights and loupes'' 
system? How would CAT/BPSS technology enhance ID authentication?
    Answer. Response was not received at the time of publication.
    Question 4. TSA has deployed 500 next generation Bottled Liquids 
Scanners (BLS) to airports Nation-wide. In your judgment, how effective 
are the next generation BLS units in comparison to the existing BLS 
units? Does TSA plan on replacing the existing 1,000 BLS units?
    Answer. Response was not received at the time of publication.
    Question 5. One of our increasing concerns across the Federal 
Government is the possibility of theft of large volumes of sensitive 
information contained in mobile data storage devise. What is TSA policy 
concerning what portable data is encrypted and are there currently any 
DHS processes where portable data is not encrypted?
    Answer. Response was not received at the time of publication.
    Question 6. In October 7, 2011, the President issued an Executive 
Order directing Federal agencies to better safeguard classified 
information, to set up internal audit systems, and to make sure that 
reluctance to share critical intelligence in the aftermath of the Wiki 
Leaks exposure does not hamper collaboration across agencies. A 
component of the Executive Order makes individual agencies primarily 
responsible for securing the information they obtain and share. Has DHS 
given consideration as to how this order affects them and how will they 
go about evaluating possible solutions?
    Answer. Response was not received at the time of publication.
       Questions Submitted by Chairman Mike Rogers for Paul Benda
    Question 1. The TSL cannot necessarily relay to industry the 
classified technical requirements to which it is testing.
    Do you feel that the Department is sufficiently transparent in 
relating requirements for testing? Is the new CRADA that was described 
in your testimony sufficient to solve this problem?
    Answer. Response was not received at the time of publication.
    Question 2. The TSL provides testing services for agencies other 
than TSA, such as the U.S. Secret Service, the U.S. Coast Guard, and 
Customs and Border Protection.
    Have you found that these components have similar needs to TSA, 
which could perhaps benefit from joint requirements setting or 
strategic sourcing?
    Answer. Response was not received at the time of publication.
    Question 3. The Government Accountability Office recently released 
a report describing TSA's failure thus far to implement its 2010 
requirements for explosives detection systems. One of the reasons GAO 
cited for this lapse is that TSA and S&T have experienced challenges in 
collecting explosives data needed to procure and deploy systems that 
meet those requirements.
    While it is understandable that scientific endeavors like this can 
be unpredictable, on the other hand, does the process somehow need to 
be revised so that industry is not gearing up to meet requirements for 
an acquisition that may not happen due to scientific challenges? What 
can we learn from this experience so that we do not find ourselves in a 
similar position in the future?
    Answer. Response was not received at the time of publication.
    Question 4a. For many years the Science and Technology Directorate 
has invested in technology development aimed at detecting explosives in 
the transportation context. MagViz technology, for example, has 
received funding since at least fiscal year 2007. Under Secretary 
O'Toole has previously testified that the S&T Directorate is now 
attempting to develop a ``checkpoint of the future'' that can integrate 
many of these technologies to provide a multi-faceted detection 
capability.
    How would you characterize S&T Directorate support for these 
technologies? Are they research or development projects? What is the 
expected time frame for delivery of a final product? Of the 
technologies under consideration for integration into the ``checkpoint 
of the future,'' how many of them are mature and have undergone 
successful developmental and operational test and evaluation?
    Answer. Response was not received at the time of publication.
    Question 4b. Historically, the S&T Directorate has developed 
technologies to be transitioned to end-users rather than systems that 
incorporate those technologies. How significant a role will the S&T 
Directorate undertake in systems integration? With respect to the 
``checkpoint of the future,'' what challenges do you envision in 
attempting to integrate these technologies together into a single 
system?
    Answer. Response was not received at the time of publication.
    Question 4c. The S&T Directorate has established the Apex projects 
starting in fiscal year 2012. The ``checkpoint of the future'' is not 
one of them, although the impact of integrating and improving 
technologies so widely deployed at domestic and international airports 
provides the opportunity for substantial risk reduction and savings 
through operational efficiencies. Why has the S&T Directorate not 
designated this as an Apex project? What discussions has the S&T 
Directorate had with TSA leadership to identify whether this should 
become an Apex project?
    Answer. Response was not received at the time of publication.
 Question Submitted by Ranking Member Bennie G. Thompson for Paul Benda
    Question. The Under Secretary for Science and Technology has stated 
that the S&T Directorate should play a greater role in the acquisition 
of technologies by DHS components. Would an expanded role for the S&T 
Directorate in the acquisition of technologies by TSA increase the 
likelihood that acquired technologies will succeed in the field? Would 
such an expanded role for the S&T Directorate result in a more 
cumbersome process for private-sector vendors seeking to work with the 
Department on their security technologies?
    Answer. Response was not received at the time of publication.
 Question Submitted by Ranking Member Sheila Jackson Lee for Paul Benda
    Question. How did the Detroit Flight 253 incident and the discovery 
of the Yemen cargo plot impact priorities and planning at the 
Transportation Security Lab and throughout the Science and Technology 
Directorate? How will the proposed budget cuts affect that work?
    Answer. Response was not received at the time of publication.
Question Submitted by Ranking Member Sheila Jackson Lee for Charles K. 
                                Edwards
    Question. In your testimony you state that while DHS has taken 
steps to improve its acquisition oversight processes and controls, 
additional areas for improvement remain. What is the single most 
important improvement you believe needs to be implemented? Does the 
Department have a plan in place to implement the needed improvements?
    Answer. The Department of Homeland Security (DHS) continues to face 
challenges associated with implementing a fully integrated acquisition 
function. A successful acquisition process requires an effective 
acquisition management infrastructure. Acquisition management is a 
complex process that goes beyond simply awarding a contract. It begins 
with the identification of a mission need; continues with strategy 
development, while balancing cost, schedule, and performance; and 
concludes with contract closeout. It also includes managing operational 
and life cycle requirements, to include formulating concepts, assessing 
tradeoffs, and managing programs risks. We have performed various 
audits over the years that have identified the Department's 
improvements and challenges, which we outline annually in the Major 
Management Challenges Facing the Department of Homeland Security 
report. The one recurring need over the last several years has been an 
emphasis on further development and refinement of oversight and 
internal controls.
    The Department's most recent major management challenges report, 
OIG-12-08, dated November 2011, identified several areas which needed 
improvement. The Department concurred with our assessment and continues 
to make refinements and improvements. However, to address your specific 
request we refer you to our March 2011 audit report, DHS Department-
wide Management of Detection Equipment, OIG-11-47. In this report, we 
determined that the Department could improve its management of 
detection equipment by applying the principles of strategic sourcing. 
Strategic sourcing requires that the Department standardize equipment 
purchases, identify common mission requirements among components, and 
develop standard data elements for managing the inventory accounts.
    Although we made these recommendations to address improving the 
Department's management of detection equipment, the strategic sourcing/
logistics concepts imbedded as best business practices can be applied 
across the Department. These best practices provide for efficiencies of 
purchasing scale; serve to create greater competitive opportunities for 
more businesses, both large and small; and establish a foundation for 
standardization and transparency. The Department is in the process of 
implementing these recommendations by establishing a Steering Committee 
and a commodity working group that has begun to identify specific 
missions and needs. We will continue to monitor the progress of the 
Department in its actions to implement these recommendations and will 
encourage its leadership to apply these principles across its 
components and commodities.
    We have also continued to audit the Department's acquisition 
process, both system-wide and in specific component programs, and we 
plan to release those reports in the second quarter of 2012.

                                 
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