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DOD AND DHS: IMPLEMENTING AGENCY WATCHDOGS’ RECOMMENDATIONS COULD SAVE TAXPAYERS BILLIONS 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MARCH 19, 2013 

Serial No. 113–31 

Printed for the use of the Committee on Oversight and Government Reform 

( 

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

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

MARK POCAN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on March 19, 2013 ............................................................................ 1 

WITNESSES 

The Honorable Robert Hale, Under Secretary of Defense (Comptroller), U.S. 

Department of Defense 

Oral Statement ................................................................................................. 7 

Written Statement ............................................................................................ 10 

Mr. Lynne Halbrooks, Principal Deputy Inspector General, U.S. Department 

of Defense 

Oral Statement ................................................................................................. 15 

Written Statement ............................................................................................ 17 

The Honorable Rafael Borras, Under Secretary for Management, U.S. Department of Homeland Security 

Oral Statement ................................................................................................. 30 

Written Statement ............................................................................................ 32 

Mr. Charles Edwards, Deputy Inspector General, U.S. Department of Homeland Security 

Oral Statement ................................................................................................. 44 

Written Statement ............................................................................................ 46 

APPENDIX 

The Honorable Elijah Cummings, a Member of Congress from the State 

of Maryland, Opening Statement ....................................................................... 94 

The Honorable John Mica, a Member of Congress from the State of Florida, 

Opening Statement .............................................................................................. 96 

The Honorable Kerry Bentivolio, a Member of Congress from the State of 

Michigan, Opening Statement ............................................................................ 97 

Oversight and Government Reform Full Committee Hearing, Opening Statement ...................................................................................................................... 98 

The Honorable Gerald E. Connolly,a Member of Congress from the State 

of Virginia, Opening Statement .......................................................................... 100 

Letter from Mr. Brett A. Mansfield, Acting Assistant Inspector General Communications and Congressional Liaison to The Honorable Darrell Issa, a 

Member of Congress from the State of California ............................................. 102 

Questions for the Record from the Hon. Kerry Bentivolio to Mr. Halbrooks ..... 103 

Questions for the Record from the Hon. Kerry Bentivolio to Mr. Charles 

Edwards ................................................................................................................ 104 

Questions for the Record from the Hon. Kerry Bentivolio to Mr. Borras ........... 125 

Questions for the Record from the Hon. Paul A. Gosar to Witnesses ................. 127 

Questions for the Record from the Hon. Jackie Speier, a Member of Congress 

from the State of California to Mr. Hale ............................................................ 129 

Letter to Chairman Darrell Issa from Mr. Brett A. Mansfield ............................ 135 

(1) 

DOD AND DHS: IMPLEMENTING AGENCY 

WATCHDOGS’ RECOMMENDATIONS COULD 

SAVE TAXPAYERS BILLIONS 

Tuesday, March 19, 2013 

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, WASHINGTON, D.C. 

The committee met, pursuant to call, at 10:00 a.m., in Room 

2154, Rayburn House Office Building, Hon. Darrell E. Issa [chairman of the committee] presiding. 

Present: Representatives Issa, Mica, Duncan, Jordan, Walberg, 

Lankford, Amash, Gosar, DesJarlais, Gowdy, Farenthold, Woodall, 

Meadows, DeSantis, Cummings, Maloney, Norton, Tierney, Clay, 

Connolly, Speier, Pocan, Duckworth, Cardenas, and Horsford. 

Staff Present: Ali Ahmad, Majority Communications Advisor; 

Alexia Ardolina, Majority Assistant Clerk; Jen Barblan, Majority 

Counsel; Richard A. Beutel, Majority Senior Counsel; Molly Boyl, 

Majority Parliamentarian; Caitlin Carroll, Majority Deputy Press 

Secretary; Steve Castor, Majority General Counsel; John Cuaderes, 

Majority Deputy Staff Director; Jessica L. Donlon, Majority Counsel; Kate Dunbar, Majority Legislative Assistant; Adam P. Fromm, 

Majority Director of Member Services and Committee Operations; 

Linda Good, Majority Chief Clerk; Frederick Hill, Majority Director 

of Communications and Senior Policy Advisor; Christopher Hixon, 

Majority Deputy Chief Counsel, Oversight; Jean Humbrecht, Majority Counsel; Mark D. Marin, Majority Director of Oversight; 

Tegan Millspaw, Majority Professional Staff Member; Kristin L. 

Nelson, Majority Counsel; Ashok M. Pinto, Majority Deputy Chief 

Counsel, Investigations; James Robertson, Majority Professional 

Staff Member; Scott Schmidt, Majority Deputy Director of Digital 

Strategy; Jonathan J. Skladany, Majority Counsel; Peter Warren, 

Majority Legislative Policy Director; Rebecca Watkins, Majority 

Deputy Director of Communications; Meghan Berroya, Minority 

Counsel; Beverly Britton Fraser, Minority Counsel; Susanne 

Sachsman Grooms, Minority Chief Counsel; Carla Hultberg, Minority Chief Clerk; Peter Kenny, Minority Counsel; Elisa LaNier, Minority Deputy Clerk; and Dave Rapallo, Minority Staff Director. 

Chairman ISSA. The committee will come to order. 

The Oversight Committee exists to secure two fundamental principles: first, Americans have a right to know that the money Washington takes from them is well spent and, second, Americans deserve an efficient, effective Government that works for them. Our 

duty on the Oversight and Government Reform Committee is to 

protect these rights. 

2 

Our solemn responsibility is to hold Government accountable to 

taxpayers, because it is taxpayers that have a right to know what 

they get from their Government. We will work tirelessly, in partnership with citizen watchdogs and our inspectors general, to deliver the facts to the American people and bring genuine reform to 

the Federal bureaucracy. 

Today I want to thank our ranking member, Mr. Cummings, for 

joining me in this ongoing effort to offer up a fact-based blueprint 

for the conversation unfolding about controlling Government spending and waste. 

Two weeks ago we examined the Department of Transportation 

and the Department of Education. Today we will hear from witnesses from two of the largest Government agencies: the Department of Defense and the Department of Homeland Security. 

With the attention of policymakers on how to best manage sequestration, this is a time to lead the discussion by finding and 

eliminating waste as part of that savings. For weeks, the Administration has made a concerted public relations effort to speak about 

the dire consequences of sequestration, and there will be some 

areas that will be, quite frankly, missed. But, candidly, the claims 

of a dire consequence have been disproven. 

We are not here to argue over sequestration directly. As a matter 

of fact, we are most interested in the $67 billion that have been 

identified by the IGS that, if implemented, could save most of the 

cost of sequestration. 

We certainly understand that some of that $67 billion is onetime. But, this year, this cut is essential and we can do some of 

it through means less painful to the American people then acrossthe-board cuts. 

Recognizing that we are dealing with two of the larger pockets 

of money and, in the case of Homeland Security and our Department of Defense, we are dealing with the very security of the 

American people. So today, as we focus on unimplemented IG recommendations, I want to remind all of our members on both sides 

of the dais that this is an area where the largest amount of dollar 

reduction is occurring and that $2.3 billion into the size of these 

budgets is a lot of money. Additionally, it is not surprising that the 

greatest amount of unimplemented savings also occurs with the 

men and women in front of us. 

So I am hoping this hearing will refocus us again on common 

sense reform in savings, and finding ways to have reduction in cost 

without a reduction in the services we count on and the protection 

we so much need. 

With that, it is a pleasure to recognize the ranking member for 

his opening statement. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

Today’s hearing falls on the 10-year anniversary of the invasion 

of Iraq. Ten years ago today our Nation entered a war that has 

now cost the American taxpayers more than $2 trillion. Obviously, 

this staggering amount will be even higher when we calculate the 

final cost of the war in Afghanistan, which is still going on today. 

During these wars, billions of dollars have been paid through 

contracts with private defense companies. According to the ComVerDate Aug 31 2005 14:55 Jul 09, 2013 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\81664.TXT APRIL
3 

mission on Wartime Contracting, just one company, Kellogg Brown 

& Root, was paid more than $40 billion. 

Under so-called sole-source contracts, many companies never 

competed for a single task order. Because these cost-plus contracts 

guaranteed corporate profits, they incentivize companies to pad 

their bills. 

Rather than raising revenues to pay for these trillion dollar 

wars, the Bush administration slashed taxes, primarily benefitting 

the richest members of our society. From 2001 to 2010, Bush tax 

cuts reduced our Nation’s revenues by nearly $1 trillion. 

So now that we have ended the war in Iraq, are winding down 

the war in Afghanistan, and are facing record deficits, it would be 

logical to seek additional revenues and reduce defense spending, 

particularly on wasteful defense contracts. Instead, our House Republicans propose something vastly different. 

The Ryan budget, unveiled last week, would eliminate health insurance for tens of millions of Americans, slash Medicaid for the 

poorest among us, reduce education funding for children with disabilities, kick tens of thousands of kids out of Head Start, and 

abandon our commitment to seniors who rely on Medicare. House 

Republicans would rather do all of these things than ask the richest among us to contribute a penny more to address our Nation’s 

fiscal challenges. 

Although most people agree that it is time to rein in wasteful defense spending, the Ryan budget would increase the Pentagon’s 

budget to $645 billion next year. Although our wars are ending and 

the Pentagon’s contract management system is broken, the Ryan 

budget would pump tens of billions of dollars more into defense 

spending each year for the next decade. 

Today’s hearing offers a prime opportunity to take a step back 

and identify massive savings at the largest agency in the Federal 

Government, the Department of Defense. The Pentagon’s inspector 

general and the Government Accountability Office have warned repeatedly that the Defense Department continues to squander billions of dollars on wasteful contracts. Let me highlight just one example. 

Over the past 10 years, the Pentagon has severely mismanaged 

the biggest weapons acquisition program in history, the F–35 Joint 

Strike Fighter. It rushed to buy aircraft without adequate testing 

and it disregarded recommendations to slow down the acquisition 

process. As a result, the program now faces skyrocketing costs, expensive retrofits, and unacceptably poor performance. Experts have 

challenged the need for this aircraft and the Simpson-Bowles Commission recommended counseling the Marine variant, reducing 

other variant purchases, and outfitting planes already in service 

with less expensive upgrades. 

According to the Pentagon’s Office of Operational Test and Evaluation, testing for the Joint Strike Fighter has been extremely limited due to restrictions, including no night or weather capability 

and no combat capability. The Navy’s version of this plane cannot 

land on aircraft carriers, the radar does not appear to work, and 

no version of this plane has been cleared to fly at night. 

Last year, the Pentagon’s own acquisition chief called this acquisition malpractice. Nevertheless, the Department is forging ahead 

4 

with plans to buy nearly 2,500 planes for $400 billion, and the 

American taxpayers will be on the hook for another $1 trillion just 

to maintain these planes over their service lives. 

Mr. Chairman, I am thankful that today, before we consider Draconian cuts to core services that Americans across the Country rely 

on every single day, we will have an opportunity to closely examine 

this program and others at DOD and DHS in order to break our 

Nation’s addiction to wasteful contract spending. 

I thank our witnesses very much for being here today and I look 

forward to hearing their testimony. And, Mr. Chairman, with that, 

I yield back. 

Mr. MICA. [Presiding.] I thank the ranking member for his opening statement and recognize myself for a couple minutes. 

First, I want to say that we look forward to working with the Minority, particularly as chair of the Government Operations Subcommittee. I look forward to working with Mr. Connolly as we drill 

deeper into some of the issues of waste, fraud, and abuse, and how 

we can eliminate some of that unnecessary spending and cost and 

actually do a better job in a time of sequestration and budget cuts. 

However, since the sequestration went into effect, rather than 

identify wasteful and redundant programs that can be cut, the Administration, unfortunately, has gone around touting the alleged 

harmful consequences of sequestration. Some of them are over the 

top. They have threatened thousands of teachers will get a pink 

slip, federal prosecutors would have to close cases and let criminals 

go. 

Even programs like Meals on Wheels, that provide our seniors 

with assistance, would be cut; millions of seniors would lose this 

assistance, another claim. Thousands of students, I think 70,000 

they said, would lose access to Head Start programs. I think I even 

saw the DHS secretary threaten long lines and delays at our airports because of TSA cutbacks. 

Unfortunately, all of these statements I believe to be exaggerations. We have people who can speak to some of these claims here 

today, and that is part of the purpose of this hearing, is to identify 

some common sense ways that we can cut costs and improve efficiency in Government. Now, I know that sounds like a radical idea, 

but we can do it together. 

There are plenty of obvious candidates to cut wasteful spending, 

such as a $27 million project to help fund pottery classes in Morocco. Now, I know that is essential, but I think it could be a candidate that we could look at for eliminating wasteful spending. Half 

a million dollars to support specialty shampoo products for dogs 

and cats. Now, that is one, we have to keep that program going; 

$141,000 to fund a Chinese study on swine manure has to be absolutely essential to the continuation of the Republic as we know it; 

a $3,700 grant to build a miniature street in West Virginia out of 

Legos. I know how critical that is to the continuation of humanity. 

Then we have 3,986 TSA headquarter employees, and I believe 

I saw the figure, 26.8 percent of their headquarter employees are 

supervisors. These folks are all making in excess of $100,000 a year 

and we have only 457 airports in the entire Country that have any 

TSA presence. That is 3,986 TSA headquarter employees, but we 

can’t service the public at our airports. 

5 

We are going to hear from two inspectors general today, who will 

testify and have identified $2 billion worth of potential savings at 

their agencies that have not been implemented. So I think we could 

have a very productive session today, working in a very bipartisan 

manner, not in an alarmist manner, and eliminate some of these 

false claims and shed some light on where we can save money. 

So, with that, I would like to leave the record open for seven 

days, if it is okay with the ranking member, for members to submit 

statements for the record. 

Now I would like to turn to recognizing our witnesses. 

Mr. Tierney, oh, I am sorry, did you want to make an opening 

statement? 

Mr. TIERNEY. Yes, I would, Mr. Chairman. 

Mr. MICA. Okay. 

Mr. TIERNEY. Yes, if I might. Thanks. 

Mr. MICA. We will yield five minutes to Mr. Tierney. 

Mr. TIERNEY. Thank you. I notice that Mr. Chaffetz isn’t here, 

the chairman of the Subcommittee on Oversight for the National 

Security and Homeland Security. We have been working in a very 

bipartisan manner for some time now. I just want to make a couple 

of quick statements off the top on sequestration. 

Of course, when you read the sequestration order, you understand that there is not as much discretion to the executive branch 

as some might think; that, by its very nature, it dictates what must 

be cut and how it must be cut, down to the program level, and excludes a number of different things. So it is not a question of just 

giving over to the executive and having them make great decisions; 

many things they are sort of restricted from doing that. 

But I welcome these hearings. I would have hoped we would 

have had these hearings before sequestration went into effect. We 

should have been looking together to try to identify common 

ground that we could get rid of some things that we think are 

waste, fraud, or abuse on that. Certainly, the Department of Defense, which has not passed an audit in some time, if ever, would 

be a good place to start looking on that; it has been a problem in 

contracting. 

A lot of our subcommittee hearings have identified that. The cost 

and time and scope elements of looking at every contract, and oftentimes lose track of the time, the cost of time, when it gets extended out; changing the specifications during the course of contracts. The problems just go on and on: not having enough contract 

managers, not having enough that are trained, losing control of the 

project and continuing to go on in that basis. So we have a lot to 

work on. 

But 10 years ago today the United States began its invasion of 

Iraq based on flawed intelligence from the Bush administration, 

and since that time hundreds of billions of dollars of U.S. taxpayers 

have poured into Iraq and Afghanistan to support the wars and finance our reconstruction efforts there. We were concerned with the 

staggering sums of money that were provided and the lack of oversight, so, in 2005, Jim Leach, Republican from Iowa, and I coauthored bipartisan legislation that led the way to creating the Commission on Wartime Contracting. According to that Commission’s 

6 

final report, up to $60 billion in taxpayer funds were lost in Iraq 

and Afghanistan due to waste, fraud, and abuse. 

In response to these findings, I introduced the Oversight and Accountability in Wartime Contracting Act last Congress to strengthen the system for awarding and overseeing contractors in war 

zones and to reduce our reliance on no-bid contracts, both of which 

are serious issues. The bill adopted key recommendations of the 

Commission and included some of the same reforms that ended up 

in the National Defense Authorization Act. We worked across the 

aisle; we have long championed efforts to increase viability into 

contracts, to reduce the reliance on sole-source contracts, and to 

strengthen oversight mechanisms, but all of those problems continue to remain and continue to need our attention. 

This committee and the Subcommittee on National Security have 

long played an important role in identifying and preventing waste, 

fraud, and abuse in our Government programs, particularly in Iraq 

and Afghanistan. The subcommittee previously led a bipartisan investigation of jet fuel contracts in Kyrgyzstan and the multibillion 

dollar host nation trucking contract in Afghanistan. We worked on 

those with Mr. Flake over a series of years. 

Our investigation found that the trucking contract had spawned 

a vast extortion racket in which warlords, criminals, and insurgents extorted contractors for protection payments. Too often our 

contracts were developed without any insight not only into the base 

contract, but certainly into the subcontracts and the contracts at 

levels below those. 

Congressman Chaffetz has continued this tradition and he and I have introduced legislation seeking accountability over the $3 billion in U.S. plans to spend on fuel for the Afghan Army. We are 

also now leading a bipartisan investigation of the multibillion dollar food contract in Afghanistan that has led the Government to demand more than $750 million in overpayments. 

Given the fiscal challenges that are facing this Country, I welcome the opportunity to work on additional ways to reduce waste 

in the departments and protect the taxpayer dollars. 

So I thank you, Mr. Chairman, for the time and I look forward 

to working together on this committee to identify at least as 

healthy a portion as we can of the waste, fraud, and abuse that 

passes through the Department of Defense and Homeland Security 

budgets. Thank you. 

Mr. MICA. I thank you, Mr. Tierney, and, again, your counterpart, I guess, Mr. Chaffetz, National Security Subcommittee, and 

your willingness to work as the ranking member with him and the 

committee and Mr. Cummings. 

As I said, members will have seven days to submit opening statements for the record. 

So, with those comments, I will now recognize our panel today. 

Our witnesses include The Honorable Robert Hale. He is Under 

Secretary of Defense and Chief Financial Officer at the Department 

of Defense. We have Ms. Lynne Halbrooks, the Principal Deputy 

Inspector General for the Office of the Inspector General at the Department of Defense. We have the Honorable Rafael Borras. He is 

the Under Secretary of Management for DHS, Department of 

Homeland Security; and Mr. Charles Edwards. He is the Inspector 

7 

General for the Office of Inspector General at the Department of 

Homeland Security. So those are our first four witnesses. 

Witnesses, as is customary, this is an investigations oversight 

panel of Congress. If you will stand and be sworn, please. Raise 

your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give before this committee of Congress is the whole truth 

and nothing but the truth, so help you God? 

[Witnesses respond in the affirmative.] 

Mr. MICA. Let the record reflect that the witnesses all answered 

in the affirmative. 

I thank you so much for being with us and we will now recognize 

each of you. The customary procedure is you get five minutes to 

present your remarks. If you have lengthy additional information 

or testimony you would like submitted as part of the record, just 

redress that through the chair and it will be included. 

With that, let me first recognize Mr. Hale and welcome you. Mr. 

Hale, again, is the Under Secretary of Defense and Chief Financial 

Officer for the Department of Defense. Welcome, sir, and you are 

recognized. 

WITNESS STATEMENTS 

STATEMENT OF THE HONORABLE ROBERT HALE 

Mr. HALE. Well, thank you. I do have a statement, if you would 

include it in the record. 

Mr. MICA. Without objection, your statement will be part of the 

record. Proceed. 

Mr. HALE. So good morning to all the members of the committee 

and thank you for the opportunity to discuss efforts to improve efficiency at the Department of Defense. I am joined today by Lynne 

Halbrooks, the acting inspector general for the Department. 

Our offices share a common goal, which is to support the national security mission while making the best possible use of every 

taxpayer dollar. And I can tell you we review and make use of the 

many IG reports that are issued each year. 

Like Congress, DOD is mindful that our Nation is dealing with 

significant fiscal pressures. If I could borrow a line from Dwight Eisenhower, the patriot today is the fellow who can do the job with 

less money. That statement is, if anything, even more valid in our 

time than it was in the 1950s. 

Accordingly, our budget requests at DOD in recent years have included steps to curtail or eliminate programs that fail to meet 

needs or which were seriously troubled or provided capabilities too 

narrow to justify their expense. As a result, more than 20 DOD 

weapons programs have been restructured or eliminated in recent 

years, including the VH–71 Presidential helicopter, the Navy’s 

DDG–1000 ship program, the Air Force’s TSAT satellite, the 

Army’s Future Combat System, and the Marines’ Expeditionary 

Fighting Vehicle. We also ended production of two aircraft that 

have met their inventory objectives, the F–22 and C–17. 

DOD has eliminated lower priority organizations, such as the 

Joint Forces Command, the first time we have ever disestablished 

a combatant command. We have disestablished other organizations, 

8 

including the Second Fleet headquarters in Norfolk and two Air 

Operations Centers in Europe. We have cut costs through improved 

business practices and greater reliance on multi-year procurements, fuel saving initiatives, contract consolidation, and reliance 

on the VA’s drug pricing schedule for pharmaceuticals. 

These and other initiatives have led to planned savings in the President’s budget for fiscal year 2012 of about $150 billion over 

the five-year period 2012 to 2016. The 2013 budget projected another $60 billion in savings for the period 2013 through 2017. 

In addition, DOD has sought to slow the growth in military compensation while fully supporting the All-Volunteer Force. We proposed modest increases in the fees that military retirees pay for 

health care and proposed altering pharmacy co-pays in ways that 

encourage the use of generic brands and mail order delivery, which 

are much cheaper for us. We also proposed slowing the growth in 

military basic pay. In the President’s budget for 2013, these initiatives save $29 billion over five years. 

Finally, in our most recent budget, we proposed cutting back on 

selected Air Force aircraft and retiring nine Navy ships early. 

Looking ahead, we will continue these efforts to make more disciplined use of resources. Because the President’s budget for 2014 

hasn’t been sent to Congress, I can’t be specific, but I can tell you 

that we will again propose a package of changes. 

While DOD can propose efficiencies, I need your help on this 

committee and the Congress. Congress must approve them before 

they can take effect. In recent years, Congress denied a number of 

proposals to eliminate lower priority weapons programs and military units. Congress has also rejected some proposals to consolidate 

infrastructure and to slow the growth in military compensation, including partially rejecting increases in fees and co-pays for military 

retiree health care. These congressional actions, if sustained, will 

add billions to our budget over the coming years, and we hope that, 

during this period of downward pressure on our budgets, that Congress will reconsider and approved these efficiency initiatives. 

Unfortunately, these improvements alone aren’t going to be 

enough to meet the budget cuts imposed by sequestration. We are 

facing $46 billion of savings in less than seven months. We will do 

everything we can to use efficiencies, to use IG reports. Our goal 

is to minimize adverse effects on the mission. But the law itself is 

mindless and across-the-board, and efficiency initiatives aren’t 

going to be able to meet a number of these cuts. 

In 2013, we are also wrestling with a misallocation of funds 

under the current Continuing Resolution. We don’t have enough 

operations and maintenance money, which is key to military readiness. We actually have too many investment dollars. 

The bottom line of this sequestration and the Continuous Resolution problems is going, unfortunately, to be a crisis in military 

readiness, and you have heard that testimony from the Joint Chiefs 

in many forms. 

In view of the serious economic problems facing our Nation, we 

hope Congress will support all our efficiency initiatives, even the 

ones that are hard. We also hope that Congress will replace the 

current CR with appropriations bills, and they seem to be heading 

in that direction, at least for DOD. Finally, we urge Congress to 

9 

pass a deficit reduction package that the President can sign that 

permits the de-triggering of this mindless sequestration. The continued strength of our national security depends on successful action in all of our initiatives. 

That completes my statement, Mr. Chairman. After the other 

witnesses have spoken, I would be glad to answer questions. 

[Prepared statement of Mr. Hale follows:] 

10 


Insert offset folio 1 here 81664.001

Statement 

of 

Robert F. Hale 

Under Secretary of Defense (Comptro"er) 

before the 

House Committee on Oversight and Government Reform 

March 19,2013 

Embargoed Until Released 

by the House Committee on Oversight and Government Reform 
11 


Insert offset folio 2 here 81664.002

Good morning, Mr. Chairman, members of the committee. Thank you for this 

opportunity to discuss our efforts to improve efficiency at the Department of Defense (DoD). 

I am joined today by Lynne Halbrooks, the acting Inspector General for DoD. Lynne and 

I share a common goal that is, supporting the national security mission while also ensuring that 

we make the best possible use of every dollar. We take the DoDIG reports seriously and act on 

the great majority of recommendations stemming from the hundreds of reports that her dedicated 

team produces each year. 

I would begin by noting that - like Congress the leadership of the Department of 

Defense is mindful that our nation is dealing with significant fiscal and economic pressures. We 

recognize that we owe it to the taxpayers to make the most of every dollar they entrust to us for 

the defense of the United States. To borrow a line from Dwight Eisenhower, "The patriot today 

is the fellow who can do the job with less money." That statement is, if anything, truer in our 

time than it was in the 1950s. 

Initiatives to Improve Efficiency 

Consistent with this philosophy, the Department's budget requests in recent years 

included steps to curtail or eliminate programs where we felt we had met our procurement needs, 

or where programs were seriously troubled or provided capabilities that were judged too narrow 

to justify their expense. While these proposals are often referred to as efficiencies, they are 

better described as efforts to make more disciplined use of resources. Whatever the short-hand 

title, I would like to describe some of our efforts which have included termination of weapon 

programs, elimination of lower-priority organizations, and improvements in business processes. 

Over the past several years, more than 20 DoD weapons programs have been restructured 

or eliminated. They included termination of the second engine program for the Joint Strike 

Fighter, as wen as the VH-7l Presidential helicopter which will be replaced with a more-limited 

aircraft. We also terminated the Navy's DDG-IOOO ship program in favor of continued buys of 

the DDG-Sl destroyer, terminated the Air Force's TSAT satellite in favor of continued buys of 

the AEHF satellite, and ended the Army's Future Combat System (FCS) and the Marines' 

Expeditionary Fighting Vehicle in favor of, respectively, a more focused Ground Combat 

Vehicle program and Amphibious Combat Vehicle development efforts. DoD also ended 

production of the F-22 and C-17 aircraft, both of which had met their inventory objectives. 

DoD has eliminated lower-priority organizations in an effort to streamline operations and 

save money. We disestablished the Joint Forces Command, the first time a combatant command 

has ever been eliminated. The Navy disestablished the Second Fleet headquarters in Norfolk, a 

Cold War organization whose mission was transferred to Fleet Forces Command. The Air Force 

consolidated two Air Operations Centers in Europe and inactivated three numbered Air Forces, 

with the associated staff functions absorbed into existing major command headquarters. The 

Army is consolidating six installation management command regions into four. 

In recent budget proposals we have focused on cost-cutting actions related to business 

processes. The Navy is pursuing acquisition savings through multiyear procurement approaches 

for the FA-18 Elf, EA-18G, MH-60RlS, V-22 tilt-rotor aircraft, Virginia-class submarines and 
12 


Insert offset folio 3 here 81664.003

DDG Arleigh Burke Class ships. The Army is pursuing acquisition savings through multi-year 

procurement approaches for the UH-60 and CH-47 airframes. The Air Force has sought 

acquisition savings through adoption of a new method for acquiring both space launch vehicles 

and satellites - emphasizing block buys, sustained funding for engineering, and fixed-price 

contracts. Various Services have sought IT efficiencies through initiatives such as consolidation 

of e-mail servers. 

Specific initiatives have led to a more efficient Department. For example, the Air Force 

has introduced numerous fuel-saving initiatives including use of commercial flight-planning 

software to make real-time flight adjustments in air speed and altitude in order to reduce fuel 

requirements. The Navy has consolidated numerous contracts into four Navy-wide contracts 

with major carriers for wireless services, thereby achieving better prices and savings through 

"minute pooling." DoD's Transportation Command reduced shipping costs by using 40-foot 

rather than 20-foot shipping containers. DoD's health care agency reduced costs sharply by 

utilizing the Veterans Administration pharmaceutical pricing schedule and by using Medicare 

payment rates for certain hospitals. 

In some cases, Services have made difficult decisions to emphasize certain approaches to 

support activities in order to cut costs. The Army, for example, has sharply reduced military 

construction funding in favor of maintaining existing facilities. Other Services have also cut 

back on military construction. 

What have we saved? The initiatives described above, and many others, led to planned 

savings in the President's Budget for FY 2012 of about $150 billion in FY 2012-2016. In the 

budget for FY 20l3, savings of about $60 billion were planned in FY 2013-2017. The Services 

are monitoring these planned efficiency initiatives to be sure that they are implemented. Along 

with the Department's Deputy Chief Management Officer, I lead twice-yearly DoD-wide 

reviews to verifY implementation. 

In addition to these changes, DoD has pursued a program to slow the growth of military 

compensation while still fully supporting the All-Volunteer Force. Military pay and benefits 

have grown sharply in recent years, outstripping both end-strength growth and wage growth in 

the private sector. DoD has proposed initiatives to raise by modest amounts the fees that military 

retirees pay for health care and to modifY pharmacy co-pays in a manner that promotes use of 

cheaper alternatives including generic-brand pharmaceuticals and mail order delivery. In the FY 

2013 President's Budget, we also proposed to slow the growth in military basic pay in 2015 and 

beyond. In the President's Budget for FY 2013 these proposed initiatives saved about $29 billion 

over five years. More recently, we announced a plan to slow the growth in military basic pay for 

2014. 

Finally, in its FY 2013 budget DoD proposed to eliminate some lower-priority military 

units. Our proposals would have disestablished certain Army units, cut back on selected Air 

Force aircraft, and retired nine Navy ships early. 

2 
13 


Insert offset folio 4 here 81664.004

Support from Congress 

Despite the far-reaching nature of these initiatives, we are by no means done with our 

efforts to make more disciplined use of resources. Because the President's Budget for FY 2014 

has not yet been sent to Congress, I cannot discuss its specific content. But I can tell you that 

DoD will again propose a substantial package of initiatives aimed at improving efficiency. 

DoD can propose, but Congress must dispose. We need the support of Congress in our 

efficiency efforts. In recent years Congress has denied a number of our proposals including 

elimination oflower-priority weapons programs (such as the Global Hawk Block 30) and 

elimination oflower priority military units (including Navy ships and some Air Force aircraft 

such as the C-27J). Congress has also rejected some of our proposals to slow the growth in 

military compensation, including certain increases in fees and co-pays for military retiree health 

care, and has rejected our efforts to pursue consolidation of our infrastructure. Together these 

Congressional actions, if sustained, will add billions to our costs over the next five years. We 

hope that, in view of the serious economic problems facing our Nation, the Congress will allow 

us to implement these and other important changes. 

Improving Financial Controls and Processes 

In addition to initiatives that achieve specific budgetary savings, the Department is 

pursuing improved financial information and controls for all of our programs and operations. 

The Financial Improvement and Audit Readiness (FIAR) plan will lead to audit-ready financial 

statements and will document the accuracy and reliability of the financial information used by 

DoD's decision makers. 

The Department will achieve its FIAR goals by improving business systems, controls, 

and processes across all functional areas. By better controlling operations and better 

understanding our spending, the Department will improve its ability to identifY efficiencies. 

Organizations that have already achieved audit readiness report that the improved financial 

visibility allows them to more efficiently allocate unobJigated resources to urgent mission needs 

before the funds expire. They also have more timely and better documented information to use 

in judging the success of programs. 

Let me mention one other area related to financial controls - namely, control of improper 

payments. Improper payments have declined since DoD first reported on them in FY 2004. The 

Office of Management and Budget reported that the overall government-wide error rate for 

improper payments stood at about four percent in FY 2012, while DoD's error rate is 

significantly less than one percent. I believe that our program to control improper payments is 

sound, and I remain cornmitted to complying in all respects with current statutory requirements. 

Efficiencies and Sequestration 

I conclude by noting that, important though they are, efficiencies will unfortunately not 

be enough to meet the sudden and arbitrary FY 2013 budget cuts imposed by sequestration. If 

sequestration lasts for the remainder of the fiscal year, it would result in a reduction of as much 

3 
14 


Insert offset folio 5 here 81664.005

as $46 billion from our budgetary topline in FY 2013 alone. In the few months remaining in 

FY 2013, we would not have nearly enough time to identify and secure Congressional approval 

for the far-reaching changes that would be required to achieve these large savings. Moreover, 

the law requires that sequestration changes be made in a mindless, across-the-board manner. 

Sensible efficiency proposals would be unlikely to meet the details of the required reductions. 

In FY 2013 we are also wrestling with a misallocation of funds under the current 

Continuing Resolution (CR) - which provides too many dollars for investment and not enough 

for the Operation and Maintenance accounts that most influence military readiness. A year-long 

sequestration and CR, coupled with higher-than-expected costs in overseas contingency 

operations, would leave us with enormous shortfalls in the Operation and Maintenance funds that 

sustain military readiness. It will drive us to major cutbacks in training and maintenance that 

will in tum lead to a crisis in military readiness. We would also be forced to disrupt as many as 

2,500 investment programs - driving up unit costs at the very time we are trying to hold them 

down. 

We will continue our efforts to improve efficiency in the Department of Defense. In tum 

we hope the Congress will support our efficiency proposals. We also hope that the Congress will 

replace the current CR with appropriations bills for Defense and other Federal agencies. And we 

urge that Congress pass a balanced-deficit reduction package that the President can sign and that 

permits a de-triggering of sequestration. The continued strength of our national security depends 

on successful action on all these initiatives. 

4 
15 

Chairman ISSA. [Presiding.] Thank you, Mr. Hale 

We now go to Lynne Halbrooks, the Principal Deputy Inspector 

General of the Office of Inspector General of the Department of Defense. Welcome again. 

I apologize for being off, testifying at another hearing. I had no 

questions, so I came back quickly. 

The gentlelady is recognized. 

STATEMENT OF LYNNE HALBROOKS 

Ms. HALBROOKS. Thank you, Chairman. Chairman Issa, Ranking 

Member Cummings, and distinguished members of the committee, 

good morning and thank you for the opportunity to be here today 

to appear before you to discuss our efforts to reduce waste and improve efficiency within the Department of Defense. 

I would like to thank this committee for its critical work and sustained focus over the last several years to highlight the issues of 

unimplemented inspector general recommendations. It is essential 

to good government and effective stewardship of taxpayer dollars 

that IG recommendations are implemented. 

I am proud to be here today to represent the hundreds of dedicated DOD Office of Inspector General employees who, for 30 years, 

have been committed to conducting critical audits, investigations, 

inspections, and evaluations. 

Over the past 10 years, our office has issued more than 1300 reports addressing a wide variety of challenges within the Department and providing 7,684 recommendations to correct deficiencies. 

Of those, 95 percent have been addressed and closed and 5 percent, 

or 386 recommendations, remain open. Collectively, these reports 

have resulted in $37.3 billion in achieved monetary benefits to the 

Department, with additional potential monetary benefits of $3.5 

billion based on open recommendations. 

We have a strong follow-up program for tracking the status and 

implementation of recommendations and have found DOD leadership to be responsive to our recommendations. I believe the high 

level of responsiveness is a direct result of our focused oversight efforts. 

We prioritize our activities to ensure oversight is timely, relevant, and responsive to the dynamic environment within the Department and annually we prepare and submit our summary of 

what we consider to be the most serious management and performance challenges facing the Department. These challenges include 

acquisition processes and contract management; financial management; joint war fighting and readiness; information assurance, security and privacy; health care; equipping and training Iraq and 

Afghan security forces; and the nuclear enterprise. 

Additionally, we treat oversight pertaining to life and safety 

issues as a top priority. For example, over the past several years 

our office has found faulty testing of personal protective equipment, 

as well as electrical and fire safety issues. 

My prepared statement provides a number of recent examples 

that illustrate how our recommendations have identified ways for 

the Department to be more efficient and save money. For example, 

in September of 2012, we issued a report on the Missile Defense 

System that questioned the planned procurement and identified 

16 

over $2.5 billion in potential savings. Management agreed with our 

report and recommendations, stating, ‘‘the impact of the current 

fiscally-constrained environment compels redirection of funding to 

other systems.’’ 

We are currently following up with management to document the 

actions taken and the actual savings realized. 

We have also identified $423.7 million in potential monetary benefits that could be achieved through more effective use of existing 

inventory and procurement in spare parts. The Department is also 

currently taking action on those recommendations. 

Financial management is another challenge area where potential 

monetary benefits and savings can and have been identified. Our 

office has issued a series of reports which address concerns with 

the Department’s financial systems. In these reports, we recommend that DOD halt deployment of specific systems until our 

concerns are addressed. 

While the Department continues to take action to improve these 

processes, my staff and I remain concerned that the Department 

will have difficulty in meeting their financial readiness goals. 

I thank the committee for inviting me to testify on opportunities 

to reduce waste and improve efficiencies at DOD through implementation of our recommendations. We look forward to working 

with Department leadership to ensure our concerns are addressed 

in a timely manner. Given the fiscal challenges the Country is facing, every dollar we can save and put to better use is critical. 

This concludes my statement today. I request my written statement be included in the record and welcome any questions the committee may have. 

[Prepared statement of Ms. Halbrooks follows:] 

17 


Insert offset folio 6 here 81664.006

March 19, 2013 

Statement of 

Ms. Lynne M. Halbrooks 

Expected Release 

10:00 a.m. 

Principal Deputy Inspector General 

Department of Defense Inspector General 

before the 

Committee on Oversight and Government Reform 

on 

"Opportunities to Reduce Waste and Improve Efficiency at the 

Department of Defense and Other Federal Agencies" 

\Halbrooks Testimony.docx 
18 


Insert offset folio 7 here 81664.007

Chainnan Issa, Ranking Member Cummings, and distinguished members ofthe Committee: 

Oood morning and thank you for the opportunity to appear before you to discuss opportunities to 

reduce waste and improve efficiency within the Department of Defense. As requested, my 

testimony will focus on the status of reports with pending action, which include 

recommendations that have not yet been implemented, as well as opportunities to improve 

efficiencies within the Department. I would like to thank this Committee for its critical work and 

sustained focus over the last several years to highlight the issue of unimplemented 010 

recormnendations. It is essential to good government and effective stewardship of taxpayer 

dollars that IG recommendations are implemented. 

Today I will discuss DoD OIO oversight and follow-up, the status of open recommendations, 

and opportunities to improve efficiencies within the Department. 

DoD OIG OVERSIGHT AND FOLLOW-UP 

This year, we are commemorating 30 years of carrying out our mission to promote economy, 

efficiency, and effectiveness; and detect fraud and abuse in the programs and operations of 

the Department. I am proud to be here today to represent the hundreds of dedicated OIO 

employees who for 30 years have been committed to conducting critical audits, 

investigations, inspections, and evaluations. When a problem or weakness is identified 

through our oversight efforts, we make recommendations to responsible DoD officials for 

correcting the problems. Complete and effective oversight also includes monitoring 

management officials' corrective actions and assessing whether those actions effectively 

address the recommendations. 

The DoD OIO follow-up process monitors the Department's efforts to address open 

recommendations. Over the past 10 years, DoD 010 has issued over 1,300 reports addressing 

a wide variety of challenges within the Department and providing 7,684 recommendations to 

correct noted deficiencies. Of those 7,684 recommendations, 95 percent were addressed and 

closed, and 5 percent (or 386 recommendations) remain open. Collectively, those reports 

1 
19 


Insert offset folio 8 here 81664.008

have resulted in $37.3 billion in achieved monetary benefits to the Department with 

additional potential monetary benefits of $3.5 billion based on open recommendations. 1 

In most cases, the open recommendations are from more recent reports where management 

has concurred with our recommendations and is in the process of implementing corrective 

actions. However, in some instances the Department has not implemented recommendations 

in a timely manner. For example, DoD OIG is still tracking a recommendation made in a 

FY 2006 report. 

FOLLOW-UP PROCESS 

DoD OIG has a strong follow-up program for tracking the status and implementation of 

recommendations. Unlike other OIGs, DoD OIG is also statutorily required to monitor 

recommendations the Govermnent Accountability Office makes to DoD. 

DoD OIG is primarily responsible for recording, tracking, closing, and reporting on 

corrective actions management has taken to implement agreed-upon recommendations 

contained in DoD OlG and Govermnent Accountability Office reports. DoD OlG is also 

developing a plan to provide follow-up on recommendations provided to DoD from the 

Special Inspector General for Iraq Reconstruction when it wraps up its operation later this 

year. 

WORKlNG WlTH THE DEPARTMENT ON RECOMMENDATIONS 

The Department is generally responsive to addressing DoD OIG recommendations, with only 

5 percent of recommendations over a 10 year span still open. However, over the years, 

unresolved recommendations had accumulated. In 2010, we elevated our aging inventory of 

open recommendations to the Department to resolve recommendations, as well as determine 

what recommendations were still viable. As we reported to the Secretary of Defense in 

December 2010, we reduced the number of open reports from 230 in March 2010, to 85 in 

'One recommendation accounts for $2.5 billion of the $3.5 billion in potential savings. 

, Inspector General Act of 1978, as amended, Section 8, (c)(7) 

2 
20 


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September 2010. We continue to work closely with the Department not only on 

recommendations with monetary benefits, but on all recommendations, especially those 

affecting the safety and welfare of the warfighters. 

I look forward to working with Secretary Hagel and Deputy Secretary Carter to continue to 

ensure that the Department implements recommendations to improve efficiency of its 

programs and operations. 

During the course of an audit or evaluation, if we identify issues that we believe require 

immediate management attention, we issue memorandums that advise management of our 

concerns so they can take action to address life and death; health and safety; and timesensitive concerns. Follow-up on management actions is conducted during the course of the 

oversight and then addressed fully in the report issued at the end of the project. For example, 

last year, we issued a quick-reaction memorandum on the procurement of spare parts for 

G222 aircraft3 for the Afghan Air Force. Our concern was that program officials were 

acquiring spare parts before they had the critical data needed to accurately detennine if the 

spare parts were needed to sustain the G222 aircraft. The Department agreed with our 

suggestion to delay the procurement of the spare parts. They subsequently determined not to 

issue a new delivery order for G222 sustainment support and decided to use an alternate 

aircraft to meet the Afghan's long-term medium airlift requirement. It is estimated that, if the 

program had continued without corrective action, sustainment costs for the G222 would have 

exceeded $1 billon. We have found the use of these quick-reaction memorandums to be an 

effective means for initiating corrective action by management and ensuring that efficiencies 

are not lost during the timeframe of an on-going review. 

STATUS OF OPEN RECOMMENDATIONS 

The Committee requested we provide an update on the recommendations we submitted in our 

January 2013 response as well as a status on previously listed priority recommendations. 

JANUARY 2013 RESPONSE 

The G222 is manufactured by Alenia Aermacchi in Naples, Italy. The U.s. Air Force uses a modified G222 

airframe, known as the C-27A, and the Afghan Air Force uses the G222. 

3 
21 


Insert offset folio 10 here 81664.010

In January 2013 we provided our response to this Committee's request for "information 

about the ro community's highest priority recommendations for reducing waste and 

increasing efficiency in Executive Branch departments and agencies." We provided a list of 

ten recommendations that we deemed critical. Of those recommendations, DoD oro has 

recouped $81.6 million of the estimated $373 million in potential savings. 

UPDATE TO RESPONSE 

Since 2008, DoD oro has provided the Committee a total of 47 recommendations considered 

to be high priority. As of today, 33 of the 47 recommendations are closed and have resulted 

in monetary benefits of $298.2 million. The remaining 14 open recommendations have 

potential monetary benefits of $315.5 million. We will continue to work with the Department 

to monitor and track the status of implementation. 

OPPORTUNITIES TO IMPROVE EFFICIENCIES WITIDN DoD 

DoD oro prioritizes its activities to ensure oversight is timely, relevant, and responsive to 

the dynamic environment within the Department. DoD OIO oversight priorities correspond to 

the high-priority areas of the Department, including contingency operations; the health and 

safety of war fighters; major weapons systems acquisitions; investigating allegations of 

contract fraud; financial management; critical intelligence activities; and identifying 

opportunities to improve the efficiency of the Department. 

As required by "The Reports Consolidation Act of 2000 . .. we aunually prepare and submit 

our summary of what we consider to be the most serious management and performance 

challenges facing the Department. This is commonly referred to as IG management 

challenges. These are generally persistent and significant recurring challenges within the 

Department. For FY 2012, DoD oro identified seven management and performance 

challenges facing the Department. These challenges include acquisition processes and 

contract management; financial management; joint warfighting and readiness; information 

assurance, security, and privacy; health care; equipping and training Iraq and Afghan 

Security Forces; and the nuclear enterprise. 

4 
22 


Insert offset folio 11 here 81664.011

Today, I will highlight work in four areas in order to illustrate how our audit 

recommendations have identified ways for the Department to be more efficient and save 

money. 

1. ACQUISITION PROCESSES AND CONTRACT MANAGEMENT 

The Department continues to address challenges with acquisition and contracting for goods 

and services necessary to support the Department's mission. Challenges include obtaining 

adequate competition in contracts; defining contract requirements; obtaining fair and 

reasonable prices; oversight of contract performance; and maintaining contract 

documentation for payments. The following are specific examples of such related oversight 

work. 

MAJOR DEFENSE ACQIDSITION PROGRAMS (WEAPON SYSTEMS) 

During FY 2012, the Department spent, or was projected to spend, $26.9 billion on major 

defense acquisition programs (MDAPs) for acquisition category r and II programs. The 

Department continues to reprioritize and rebalance its investments in weapon systems and 

has made progress toward improving efficiency. As budgets continue to come under 

increasing scrutiny, the Department must continue to evaluate the merits, additional 

capabilities, and cost ofMDAPs. Oversight of these programs continues to remain a high 

priority within DoD OrG due to a number of high-profile programs being over cost and 

behind schedule. As a result of our work, senior leadership has agreed to further review the 

viability or terminate acquisition programs. 

For example, in September 2012, we issued a report4 on the DoD Joint Land Attack Cruise 

Missile Defense Elevated Netted Sensor System. While the specifics ofthe finding are 

restricted from public disclosure, we can say that we questioned the planned procurement of 

additional assets beyond the requirements and identified over $2.5 billion in potential 

savings. Management agreed with our report and recommendations stating "the impact of the 

current fiscally-constrained environment compels redirection of funding to other systems." 

Report No. DODIG-2012-121, "Acquisition of the Joint Land Attack Cruise Missile Defense Elevated Netted 

Sensor System," September 7, 2012 

5 
23 


Insert offset folio 12 here 81664.012

We are following up with management to document actions taken and the actual savings 

realized. 

In another example, we are auditing the Anny's acquisition of the individual carbine 

program, which is an acquisition the Department may want to re-evaluate. We expect to 

report concerns that DoD may not have an established need for this weapon nor developed 

performance requirements for the $1.8 billion acquisition. Currently, the Army is modifying 

its existing M4 rifle and, at the same time, seeking to develop a new rifle. However, key 

performance parameters such as accuracy, reliability, and lethality have not been established. 

In addition,it is unclear what additional capability this new rifle will have over the modified 

M4. Further, the Anny is seeking to acquire more rifles during a time when their total force 

structure will be reduced. We expect to issue our draft report within the next two months that 

will further elaborate on these concerns and provide recommendations for the Department to 

increase efficiencies. 

PERFORMANCE BASED LOGISTICS/SPARE PARTS PRICING 

In 2004, as a cost savings initiative, the Department moved to perfonnance-based logistics 

(PBL). DoD adopted PBL to implement performance-based life-cycle support strategies for 

weapon systems, while minimizing cost. However, DoD oro has found that this cost savings 

initiative has, in some instances, affected the Department's ability to obtain fair and 

reasonable prices for spare parts; the Services unnecessarily buy parts from PBL contractors 

instead of exhausting substantial unused DoD inventory available at the Defense Logistics 

Agency; and the Services have been buying parts from contractors at extraordinarily higher 

unit prices than comparable parts obtained from the Defense Logistics Agency. In total, DoD 

010 has made 124 recommendations addressing PBL issues. Of those 124 recommendations, 

56 recommendations are currently open. DoD oro identified $423.7 million in potential 

monetary benefits through effective use of existing inventory and procuring spare parts from 

more cost effective sources. 

6 
24 


Insert offset folio 13 here 81664.013

A series of recent audit reports5 on contracts with Boeing and Sikorsky to support Corpus 

Christi Army Depot identified that DoD did not use existing inventory and overpaid for spare 

parts. For example, DoD 010 identified $287.7 million in potential monetary benefits 

because the Army did not effectively use existing DoD inventory before procuring the same 

parts from Boeing. To illustrate, as shown below, we found Boeing charged the Army 

$1,678.61 for a ramp gate roller assembly used on the Chinook helicopter, when the DLA 

price was $7.71. 

Ramp Gate Assembly 

DLA 2009 Unit Price: $7.71 

Boeing 2009 Unit Price: $1,678.61 

Boeing Refunded: $76,849 

As a result of the problems identified in the report, Army Materiel Command issued new 

guidance requiring the use of DoD inventory before procuring more parts from private 

contractors and will address the excess inventory identified. 

CONTRACT~AGEMENT 

The Department continues to face persistent and significant challenges in contracting for 

goods and services, especially in support of contingency operations in Southwest Asia. In 

September 2012, DoD 010 published the second issuance of our summary report6 of 

contracting related challenges to provide DoD field commanders and contract managers with 

information on contracting problems related to contingency operations. We identified nine 

5 Report No. D-2011-061, "Excess Inventory and Contract Pricing Problems Jeopardize the Army Contract With 

Boeing to Support the Corpus Christi Army Depot," May 3, 2011, and 

Report No. DODIG-2012-004, "Changes Are Needed to the Army Contract With Sikorsky to Use Existing DoD 

Inventory and Control at the Corpus Christi Army Depot," November 3,2011 

6 Report No. DODIG-2012-134, "Contingency Contracting: A Framework for Reform - 2012 Update," 

September 18, 2012 

7 
25 


Insert offset folio 14 here 81664.014

systemic contracting problem areas relating to contingency contracting from reports issued 

by DoD OIG. The most pertinent issue in terms of saving taxpayer dollars is the lack of 

effective contract oversight in overseas contingency operations. Of the 72 collective reports 

analyzed, DoD OIG issued 48 reports that identified concerns with contract oversight and 

surveillance. Those 48 reports included 264 recommendations to address identified issues. As 

of August 2012, of those 264 recommendations, 22 recommendations were open. Without 

careful review by contracting officer representatives, the Department lacks the appropriate 

assurance that billions of dollars in goods and services were actually received or were 

delivered in a manner that meets the mission requirements of DoD. 

In March 2011, DoD OIG identified about $125 million in potential monetary benefits based 

on its audit of the prime vendor contract for subsistence in Afghanistan. 7 Our report found 

the Defense Logistics Agency needed to improve contract management of the subsistence 

contract for Afghanistan. Among several notable contract management deficiencies, DoD 

OIG found that DLA overpaid $125 million to the prime vendor for transportation and 

shipping container costs. DLA agreed with all the recommendations and stated they were 

making every effort to determine fair and reasonable prices and recover the difference 

between the reimbursement rates paid to the prime vendor and the finalized rates. 

Because of the magnitude of the finding, DoD OIG is currently performing follow-up to 

determine whether management took sufficient action to address the recommendations and 

recover the monetary savings. Preliminary information provided by the Department indicates 

that the original $125 million in potential monetary savings identified may actually be 

significantly higher. In December 2011, the Department requested the contractor repay over 

$756 million. The contactor then filed a claim with the Armed Services Board of Contract 

Appeals. In March 2012, the Department began recoveries at a rate of approximately 

$21 million per month. This is an example of where recommendations and aggressive 

management attention, including more broadly applying DoD OIG recommendations, could 

result in the Department recouping a significant overpayment. 

7 Report No. D-2011-047, "Improvements Needed in Contract Administration of the Subsistence Prime Vendor 

Contract for Afghanistan," March 2, 2011 

8 
26 


Insert offset folio 15 here 81664.015

2. FINANCIAL MANAGEMENT 

Financial management is another management challenge area where potential monetary 

benefits and savings can be found. DoD is undertaking significant efforts to develop 

auditable financial statements by the 2014 and 2017 deadlines. As part of this effort, the 

Department plans to spend more than $15 billion to further develop and implement new 

computer systems called Enterprise Resource Planning (ERP) systems that are intended to 

meet the needs of the financial management and functional communities. These ERP systems 

have experienced cost increases and schedule delays up to 13 years. As a result, DoD 

continues to use outdated legacy systems and this diminishes the estimated savings 

associated with transforming business operations through business system modernization. In 

addition, the impact of schedule delays increases the risk that DoD will not achieve an 

auditable Statement of Budgetary Resources by FY 2014 or accomplish its goal of full 

financial statement audit readiness by FY 2017. 

DoD oro has issued eight reports with a total of82 recommendations, which address 

concerns with the Department's ERPs. In this series of reports, we recommended that DoD 

halt deployment of specific ERPs until our stated concerns have been addressed.8 A July 

2012 report9 we issued highlights the need for improved oversight over the business process 

reengineering efforts for the ERPs and better alignment ofERPs to material weakness 

resolution within the Financial Improvement and Audit Readiness Plan. 

Continuing our oversight efforts, in February 2013, we announced an audit to determine 

whether additional ERP Systems cost increases and schedule delays have occurred since our 

July 2012 audit report. We will also determine whether DoD has implemented corrective 

actions to ensure the integrity of business process reengineering assessments submitted for 

DoD ERP programs. 

8 Report No. D-2012-072, "Previously Identified DefiCiencies Not Corrected in the General Fund Enterprise 

Business System Program," June 15, 2011 

Report No. DODIG-2012-111, "Enterprise Resource Planning Systems Schedule Delays and Reengineering 

Weaknesses Increase Risks to DoD's Auditability Goals," July 13, 2012 

9 
27 


Insert offset folio 16 here 81664.016

Additionally, reducing improper payments can produce significant efficiencies and savings. 

Improper payments are often the result of unreliable data and poor internal controls. These 

conditions create an environment where fraud and waste is more likely, and as a result, the 

Department lacks assurance that it is making proper payments. Once the Department 

identifies improper payments, DoD can use various payment mechanisms such as contract 

payment offset or recovery auditing. 

For FY 2012, the Department estimated $882 million in improper payments. DoD OIG 

remains concerned with the accuracy and completeness of the Department's estimation 

process. In response to our oversight dating back to 2011, the Department improved its 

improper payment estimation process, including implementing a program to statistically 

sample contract and vendor payments and review additional military health benefit programs 

that had previously not been included in Improper Payments Elimination and Recovery Act 

reviews. However, as we discuss in our March 2013 report,1O challenges remain, including 

$12.3 billion in outlays that were not reviewed for improper payments but should have been. 

Further, we remain concerned that the FY 2012 estimated amount of improper payments is 

not complete. 

3. EQUIPPING AND TRAINING IRAQ AND AFGHAN SECURITY FORCES 

An immeasurable potential savings lays in the speed in which the United States can equip 

and train Iraq and Afghan forces to be self-sufficient and able to defend their sovereign 

countries. For example, in Afghanistan, the United States spends several billion dollars a year 

to build the Afghan National Security Forces. DoD OIG oversight of U.S. efforts to train, 

equip, and mentor the Afghan National Security Forces has identified challenges in building 

those forces which may adversely impact the ability and timeliness of establishing selfsufficient and capable sovereign forces. For example, during the course of the OIG 

assessment of the development of the Afghan Air Force (AAF), II we received multiple 

10 Report No. DODIG-2013-0S4, "DoD Efforts to Meet the Requirements of the Improper Payments Elimination and 

Recovery Act in FY 2012," March 13, 2013 

11 Report No. DODIG-2012-141, "(U) Assessment of U.S. Government and Coalition Efforts to Train, Equip and Field 

the Afghan Air Force," September 28, 2012. 

10 
28 


Insert offset folio 17 here 81664.017

specific reports that the G-222/C-27A medium transport training aircraft were not safe to fly. 

On February 27, 2012, we sent a quick reaction memorandum 12 listing concerns over the safe 

operation of the AAF -assigned G-222/C-27 A aircraft to the Commanding General, NATO 

Training Mission-Afghanistan (NTM-A), and the Commander, USAF Central Command 

(USAFCENT). The U.S. Air Force commands initiated command directed investigations, 

completed in April 2012, and are implementing recommendations. Per our 

recommendations, the USAF decided that the G-222/C-27A should cease flying in February 

2013 and a DoD initiative to replace the aircraft is underway. DoD OIG has also conducted 

assessments on the establishment of the Office of Security Cooperation-Iraq within U.S. 

Embassy-Baghdad that have facilitated discourse on best practices during periods of 

transition. 

4. LIFE AND SAFETY 

While not a specific management challenge, we ensure that oversight pertaining to life and 

safety issues is a top priority. In the past several years, DoD OIG has found faulty testing of 

personal protective equipment as well as electrical and fire safety issues. We also identified 

faulty testing of body armor procured under an Army contract, to which the Secretary of the 

Army responded by ordering the identification and collection of the ballistic insert designs. 13 

Earlier this month we issued a report14 on inadequate contractor oversight of military 

construction projects valued at $36.9 million in Afghanistan. The Air Force Center for 

Engineering and the Environment Contingency Construction Division did not conduct 

effective contactor oversight. AFCEE officials relied completely on the technical expertise of 

contractor personnel. This resulted in conflicting electrical standards, incorrect fire standards, 

and significant deficient work being performed. The deficiencies led to serious increased 

hazards to the life and safety of coalition forces at these installations. 

12 Quick Reaction Memo, "( U) Concerns Over the Safe Operation of the C27 Aircraft in Afghanistan," February 27, 

2012. 

13 Report No. 0-2009-047, "000 Testing Requirements for Body Armor," January 29, 2009 

14 Report No. OOOIG-2013-0S2, "Inadequate Contract Oversight of Military Construction Projects in Afghanistan 

Resulted in Increased Hazards to Life and Safety of Coalition Forces," March 8, 2013 

11 
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Insert offset folio 18 here 81664.018

CONCLUSION 

I thank the Committee for inviting me to testify on opportunities to reduce waste and 

improve efficiencies at DoD through implementation of recommended actions from our 

oversight efforts. Senior Department leadership must remain vigilant in advocating and 

supporting the value of the Inspectors General and the oversight community including taking 

necessary actions to address recommendations and, when necessary, apply those lessons to 

programs and operations across the Department. 

We look forward to working with DoD leadership to ensure recommendations made by DoD 

OIG continue to be addressed in a timely manner. With the given fiscal challenges the 

country is facing, every dollar we can save and put to better use is critical. 

This concludes my statement today, and I welcome any questions the Committee may have. 

12 
30 

Chairman ISSA. Without objection, all opening statements will be 

placed in the record. 

With that, we recognize Secretary Borras. 

STATEMENT OF THE HONORABLE RAFAEL BORRAS 

Mr. BORRAS. Chairman Issa, Ranking Member Cummings, and 

other distinguished members of the committee, thank you for the 

opportunity to discuss the efforts to improve efficiency across the 

Department of Homeland Security. 

As the chief management official at DHS, I oversee policy, operations, and oversight for each of the critical management lines of 

businesses. These include acquisition, human capital, budget and 

finance, information technology, capital assets, and security. 

One of the top priorities during my three-year tenure has been 

to lay the groundwork to systematically integrate the Department’s 

management infrastructure. My personal experience as an executive in the private sector, as well as in the previous Federal and 

local government positions, has shown that building a strong and 

accountable management foundation is the best way to ensure that 

any organization operates at peak efficiency. Expanding on the 

work of my predecessors at DHS, I believe we are making significant progress to strengthen and mature that foundation. 

When the current administration arrived in 2009, the management infrastructure was relatively decentralized and some of the 

basic management authorities and delegations at the headquarters 

level to the Components needed to be updated. Working with the 

Components, we made lines of authority in oversight much clearer, 

providing headquarters with better visibility into the Components 

day-to-day operations. This has resulted in significant improvements to both the financial and acquisition management areas. 

The Government Accountability Office’s 2013–15 high-risk report 

acknowledges that significant progress has been made over the 

past three years to transform and integrate our management functions. We value the independent analysis provided by both the 

GAO and the OIG, and use their assessments as a barometer to 

measure our progress and to continue to make improvements. 

I am pleased to be joined today by Acting Inspector General Edwards. The Department has fostered an open and collaborative relationship with the OIG to find and reach resolution on their recommendations. Since March 2011, DHS has concurred on over 95 

percent of the OIG’s recommendations and has increased the rate 

of closeout in findings from recommendations from 56 percent to 

nearly 75 percent. We expect this positive trend to continue. It is 

clear to me that we share the same goal: to improve the quality of 

management at the Department. 

I would like to take this opportunity to describe how enhancements for our management infrastructure are improving efficiency, 

specifically in the areas of acquisition and financial management. 

The acquisition management function plays a key role in supporting the Department’s mission goals. As a DHS chief acquisition 

officer, I oversee annual expenditures of roughly $18 billion and 

have instituted several changes to improve the quality and the accountability of the Department’s acquisition structures and processes. In 2011, I restructured and strengthened oversight of all 

31 

major acquisition programs, which included creating an Office of 

Program Accountability and Risk Management, or PARM, and requiring the office to report directly to me. PARM ensures that all 

programs comply with Management Directive 102–01, which is the 

principle policy guiding the governance and the development and 

the execution of all programs. 

In the financial management area, for fiscal year 2012, DHS received its first qualified audit opinion on all five of its financial 

statements. This full-scope audit opinion is a pivotal step towards 

increasing transparency and accountability for the Department’s 

resources and is a result of DHS’s ongoing commitment to instituting sound financial management practices. We are focusing resources to obtain an unqualified opinion for 2013. 

The Department has also made significant improvement in its efforts to eliminate improper payments above and beyond the statutory requirements. Since 2009, DHS has been found compliant with 

the Improper Payments and Elimination Recovery Act of 2010 and 

its predecessor, the Improper Payments Information Act of 2002. 

Since mid-2010, we have recouped or resolved 95 percent of the $21 

million reported as high dollar overpayments. We continue to improve payment controls and to process and maintain good stewardship of taxpayer dollars. 

Since the beginning of the administration, DHS has made an unprecedented commitment to efficiency, fiscal discipline, and accountability. Since 2009, DHS has identified over $4 billion in cost 

avoidances and reduction, and have redeployed those funds to mission critical initiatives across the Department. 

Driving consolidation, integration, and standardization across the 

IT infrastructure is critical to realizing additional efficiencies. We 

have, for example, consolidated 18 legacy data centers into two 

state-of-the-art enterprise data centers. A CFO audit revealed that 

these migrations have resulted in average annual savings of $17 

million. 

Concluding, in the past four years the Department has made 

substantial strides to integrate management, improve efficiency, 

and maintain our service levels, despite operating with a relatively 

flat budget. We take seriously our responsibility to be good stewards of taxpayer money and I firmly believe we have a stronger, 

more integrated management structure that will continue to yield 

positive results. 

I thank you for the opportunity to appear here today and I look 

forward to answering your questions. 

[Prepared statement of Mr. Borras follows:] 

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TESTIMONY OF 

The Honorable Rafael Borras 

Under Secretary for Management 

U.S. Department of Homeland Security 

Before the 

U.S. House of Representatives 

Committee on Oversight and Government Reform 

Tuesday, March 19,2013 

Rayburn House Office Building, Room 2154 
33 


Insert offset folio 20 here 81664.020

Chairman Issa, Ranking Member Cummings and other distinguished members of the 

Committee, I thank you for the opportunity to appear today to discuss efforts to improve efficiency 

across the Department of Homeland Security (DHS). 

Secretary Napolitano has delegated me, as the chief management official at DHS, the 

responsibility to oversee the promulgation of policy, operations and oversight for each of the critical 

management Iines-of-business (LOB). These include: acquisition, human capital, budget & finance, 

information technology, capital assets, and security. Collectively, these functions form the 

backbone of the Department's management infrastructure as they support and sustain the people, 

processes, programs and systems that drive our Department. 

One of the top priorities during my now three-year tenure has been to lay the groundwork to 

systematically integrate the Department's management infrastructure. My personal experiences as 

an executive in the private sector, as well as in previous federal and local government assignments, 

have shown that building a strong and accountable management foundation is the best way to 

ensure any entetprise operates at peak efficiency. Expanding on the work of my predecessors, I 

believe that we are making significant progress maturing that foundation. 

When the current administration arrived at the Department in early 2009, the management 

infrastructure was relatively decentralized and some of the basic management authorities and 

delegations from the Headquarters-level to the Components either did not exist or were 

inconsistently applied. This was especially true in the areas of acquisition and program 

management, which led to confusion and other program challenges. Working with the 

Components, we updated key documents to make the lines-of-authority and oversight clear. As a 

2 
34 


Insert offset folio 21 here 81664.021

result of new and improved management directives and delegations, we have created better 

Headquarters visibility into day-to-dayoperations at the Component-level. More importantly, 

especially in the acquisition area, we have been able to pause or redirect inefficient programs. In 

fact, the Government Accountability Office's (GAO) bi-annual report, "High-Risk Series: An 

Update," issued just last month, cites the "significant" progress made over the past three years to 

transform and integrate the Department's management functions. GAO's independent analysis 

serves as one of the key barometers we use to measure progress. 

I am pleased to be joined by Acting Inspector General Edwards. DHS works closely with 

the Office of the Inspector General (OIG) to reach resolution on fmdings and recommendations, 

including corrective actions and target implementation dates. Of the 900 OIG recommendations 

issued since March 2011, DHS has concurred with 95 percent. Our working relationship with the 

OIG continues to be productive as we have increased the percentage of closed findings and 

recommendations over the past 24 months from 56 percent to nearly 75 percent and expect this 

positive trend to continue. Most importantly, we have fostered an open and collaborative 

relationship with the OIG and share the same goal-to improve the quality of management at the 

Department. 

I would like to take this opportunity to provide examples of how enhancements to our 

management infrastructure are improving efficiency, specifically in the areas of acquisition and 

fmancial management. 

3 
35 


Insert offset folio 22 here 81664.022

Acquisition Management 

As the DRS Chief Acquisition Officer, I oversee annual expenditures of roughly $18 billion 

and have worked to improve the Department's overall acquisition process by developing clearer 

policies and stronger oversight. Today, acquisition programs undergo a more rigorous 

requirements-development much earlier in the process, which enhances our ability to manage the 

implementation and execution phase. In 20 II, the Department restructured and strengthened 

oversight of all major acquisition programs, which included creating the Office of Program 

Accountability and Risk Management (P ARM) and requiring the office to report directly to me. 

P ARM manages and implements Management Directive (MD) 102-01, which is the principle policy 

guidance that governs the development and execution of all acquisition programs. MD 102-1 was 

recently updated to institutionalize the role ofP ARM within the Department and to clarify further 

the roles and responsibilities of that office. This update has improved the effectiveness of 

governance and ensures that cost, schedule and performance metrics are more effectively 

monitored. 

This policy has significantly improved program management at DRS and enhanced the 

effectiveness of governance. For example, since the revision to MD-I02, our enhanced governance 

structure determined that two major programs, Advanced Spectroscopic Portal (ASP) and 

Transformation and Systems Consolidation (TASC), be cancelled. It was also determined that three 

other programs, Student Exchange Visitor Information System (SEVIS II), Automated Commercial 

Enviromnent (ACE), and Biowatch be paused and their strategies be re-evaluated. 

In addition, P ARM supports programs earlier in their life cycle so they are better positioned 

for success during the execution phase. One specific example where effective oversight was 

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36 


Insert offset folio 23 here 81664.023

applied at the planning phase is the U.S. Immigration and Customs Enforcement (ICE) TECS 

Modernization program. As a result of a regular program reviews. the program was paused and ICE 

was directed to re-baseline and re-scope the requirements. This pause resulted in a reduction in the 

cost of the original estimate by roughly $46 million. 

Finally. each Component must have a Component Acquisition Executive (CAE) to oversee 

major programs. The new CAE structure establishes a more logical vertical line of authority 

between the Department and the Components. This allows for uniform implementation of policies, 

oversight and decision making. As a result of this change, program managers cannot deviate from 

an approved strategy unless they receive authorization from the designated decision authority. To 

strengthen the Department's oversight, the Executive Director for P ARM has direct input into 

hiring decisions for key Component acquisition officials, as well as their performance plans and 

appraisals. 

P ARM also provides independent assessments of major investment programs and works 

with DHS partners to enhance business intelligence to inform governance board decisions. It 

monitors programs between formal reviews to identify any emerging issues that DHS needs to 

address to keep the programs on track. 

We've also improved oversight ofIT investments by establishing a tiered governance model 

that allows for more frequent program reviews between ARBs. In addition, Centers of Excellence 

have been established to provide "hands-on" expertise to support Components in disciplines such as 

requirements engineering, cost analysis, and test and evaluation. 

5 
37 


Insert offset folio 24 here 81664.024

One of the most important initiatives during my tenure has been the building of an 

acquisition business intelligence platform, the Decision Support Tool (DST). The DST became 

operational in October 2011 and provides leadership, governance boards and program managers 

with a central dashboard for assessing and tracking the health of major acquisition programs, 

projects and portfolios, using indicators such as funding profile, cost, schedule, technical 

performance and risk. As a result of the DST, we have shifted program management oversight to be 

more data-driven, with an emphasis on business intelligence and maintaining quality data within 

DHS source systems. The OIG has acknowledged these efforts and noted in its annual "Major 

Management Challenges" report that DHS has significantly strengthened its acquisition 

management oversight. 

Financial Management 

In the financial management arena, DHS recently received its first qualified audit 

opinion on all five fmancial statements. This full-scope audit opinion on all five financial 

statements is a pivotal step towards increasing transparency and accountability for the 

Department's resources, and is the result ofDHS's ongoing commitment to instituting sound 

fmancial management practices to safeguard taxpayer dollars. DHS also provided qualified 

assurance of the effectiveness of internal controls over financial reporting for the first time in its 

history. This effort highlighted the success of the management integration efforts we have been 

pursuing at DHS. The Office ofthe Chief Financial Officer (OCFO) did an in-depth risk 

assessment of the issues, worked closely with our Component agencies to create mitigation 

plans, met regularly with Component CFOs to ensure adherence to the established milestones 

and remediation plans and kept the lines of communication open with the OIG. These efforts 

6 
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Insert offset folio 25 here 81664.025

represent significant progress in prudent fmancial management, and I am proud of the hard work 

of our CFO and employees across the Department that made this audit possible. 

The Department will continue to implement a risk-based approach to audit remediation and 

will work closely with our Components to mitigate risk of new material weaknesses or audit 

qualifications as a means to sustain our successes. We are committed to obtaining and sustaining an 

unqualified opinion for the Department in 2013. 

For the fourth year in a row, KPMG, LLP, the Department's independent auditor, has not 

identified any instances of noncompliance with the Improper Payments Elimination and Recovery 

Act of2010 (IPERA). The Department has also made significant progress in its efforts to eliminate 

improper payments above and beyond the statutory and regulatory requirements. DHS has been 

found compliant since Fiscal Year (FY) 2009 with both the Improper Payments Elimination and 

Recovery Act of2010 (IPERA) and its predecessor, the Improper Payments Information Act of 

2002 (IPIA). Over the last several years, DHS has driven our percentage of improper payments 

from over eight percent to just fewer than two percent. Since mid-201 0, we have recouped or 

resolved 95 percent of the $21 million reported as "high" dollar overpayments. DHS has instituted 

several efforts to improve payment controls and processes, as well as begun the implementation of 

the statutorily required Do Not Pay Portal databases. In addition, we have organized a Payment 

Center Work Group, bringing together Department and Component experts in payment 

management and processing, internal controls, and procurement to identifY sources and root causes 

of improper payments, existing best practices, and to promote their implementation. 

7 
39 


Insert offset folio 26 here 81664.026

The recent OIG report, titled, "Department of Romeland Security's Compliance with the 

Improper Payments and Elimination and Recovery Act of 20 I 0," contained six recommendations 

for improvement and enhancement of our processes, and DRS has confirmed closure of four of the 

six recommendations with the OrG. The first open recommendation relates to improving personnel 

independence during the testing phase, and this fmding is partially addressed. The second open 

recommendation relates to enhancing the Department's recovery auditing efforts where cost 

effective. We have found that recovery auditing is not cost effective at the U.S. Secret Service due 

to security restrictions dictating all recovery audit work be performed on-site, the relatively small 

size of the U.S. Secret Service, and vendor feedback. 

The OrG also made eight recommendations for further enhancements in the Compliance 

Audit which, when implemented, would further improve the accuracy and completeness of DRS's 

improper payments reporting and improve efforts to recover overpayments. DRS concurs with the 

recommendations and has taken positive actions to address and close these recommendations by 

March 31, 2013. 

Commitment to Efficiency 

Since the beginning of the Administration, DRS has made an unprecedented commitment to 

efficiency to better support frontline operations by building a culture of fiscal discipline and 

accountability. Through the Department-wide, employee-driven Efficiency Review (ER), which 

began in 2009, as well as other cost-saving initiatives, DRS has identified over $4 billion in cost 

avoidances and reductions, and redeployed those funds to mission-critical initiatives across the 

Department. To date, DRS ER has launched 46 initiatives designed to streamline operations and 

8 
40 


Insert offset folio 27 here 81664.027

change the way DHS does business. Specifically, the DHS ER has led to significant progress in the 

areas of physical assets, personnel, and day-to-day expenditures. 

In support of the Administration's Campaign to Cut Waste, DHS has established additional 

conference and travel policies and controls to reduce travel expenses and ensure conferences are 

cost-effective and that both travel and conference attendance is driven by critical mission 

requirements. During 2012, DHS issued a new directive that established additional standards for 

conferences and requires regular reporting on conference spending, further increasing transparency 

and accountability. We continue to improve our processes in these areas and the Department has 

undertaken a comprehensive review of all planned spending for the remainder ofFY 2013, 

including additional scrutiny of potential conference expenditures, to ensure that resources continue 

to be focused on mission-essential needs. Additionally, all DHS-hosted conferences with travel 

over $25,000, or conference related expenses over $10,000 (excluding travel), must be approved by 

the Deputy Secretary. 

DHS has also taken steps to strengthen oversight of those Components which have authority 

to execute and manage financial assistance, which is the transfer of anything of value for a public 

purpose, in support of the DHS mission. In DHS, fmancial assistance constitutes grants, 

cooperative agreements, training, loans, direct payments and insurance. DHS supports a wide 

variety of financial assistance, to include disaster assistance, preparedness grants, cybersecurity, 

research and university centers of excellence. 

To ensure proper oversight of the Components and develop Departmental policies, the 

Financial Assistance Policy and Oversight (F APO) office was established in 2009 within OCFO. 

9 
41 


Insert offset folio 28 here 81664.028

Since its inception, FAPO has standardized policies and documentation requirements for each of the 

four phases of the financial assistance lifecycle (pre-award, award, post award, and closeout) 

including the establishment of a standard Funding Opportunity Announcement (FOA) for grant 

applications, a standard Notice of Award document, and Standard Terms and Conditions for all 

DHS awards. Starting in FY 2011, FAPO reviewed all FOAs prior to their postings to Grants.gov 

to ensure compliance with Congressional mandates and consistency across DHS. We have also 

issued policies on 24 financial assistance topics. In FY 2012, the CFO issued a total of 11 policies 

and 27 additional policies are planned to be published in FY 2013. The Financial Assistance Line 

of Business (F ALOB) was created and has been incorporated into DHS directive and instruction. 

Currently, F APO is implementing the requirements to strengthen grants management, such as 

establishing and managing a warranting process for staff responsible for obligation ofDHS 

financial assistance funds and a training program for all DHS fmancial assistance administrative 

staff. 

For example, the Federal Emergency Management Agency (FEMA), working closely with 

OCFO, continues to consistently reduce the estimated error rate for its high-risk programs. Two 

FEMA programs that had estimated error amounts greater than $10 million are the Disaster Relief 

Fund Vendor Payments ($494 million payments tested, 3.09 percent estimated error rate, 

$15 million estimated error amount) and the Homeland Security Grant Program ($1,472 million 

payments tested, 1.00 percent estimated error rate, $15 million estimated error amount). 

Specifically, the overall error rate for FEMA's high-risk programs dropped from 8.0 percent 

reported in FY 2009 to 1.7 percent in FY 2010. FEMA's overall error rates of 1.04 percent 

(FY 2011) and 0.82 percent (FY 2012) fell below the reduced agency target rate (1.5 percent) two 

years in advance of the FY 2014 requirement. This marked improvement is a result of continuous 

10 
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Insert offset folio 29 here 81664.029

focus and efforts by OCFO and FEMA, who led and completed corrective action plans to eliminate 

improper payments. Other FEMA improvements include adding applicant eligibility edit checks, 

standardizing documentation requirements, and providing training on the root causes of errors and 

steps to address payment risks. 

Small Business Contracting 

DRS continues to support small businesses around the country. Since FY 2009, the Small 

Business Administration has evaluated agencies based on small business prime contracting, small 

business subcontracting, and a written progress plan. DRS has consistently received a grade of 

"A." 

Rationalizing the IT infrastructure 

Driving consolidation, integration and standardization across the IT infrastructure is a key to 

realizing additional efficiencies. DRS recently completed a network consolidation to "One Net," 

which leverages the buying power of the Department for all network series. To facilitate this, we 

have consolidated 16 data centers into two state-of-the-art enterprise data centers. A CFO audit 

showed us that these migrations resulted in an average annual savings of $17.4 million. As part of 

the Secretary's Efficiency Review, we have negotiated more than a dozen enterprise licenses with 

industry partners resulting in more than $353 million in cost avoidances. 

11 
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Insert offset folio 30 here 81664.030

Conclnsion 

The Department has made significant strides to integrate management, improve efficiency 

and reduce risk. I firmly believe we are making, and will continue to make, significant progress in 

these areas. I thank you for the opportunity to appear before you today, and I look forward to 

answering any questions you may have. 

12 
44 

Chairman ISSA. Thank you. 

General Edwards? 

STATEMENT OF CHARLES EDWARDS 

Mr. EDWARDS. Good morning, Chairman Issa, Ranking Member 

Cummings, and members of the committee. Thank you for the opportunity to discuss the work of DHS Office of Inspector General. 

Since our inception in 2003, DHS’s OIG has issued 8,068 recommendations to the Department, of which 1,253 remain open and 

unimplemented. My testimony today will discuss and address a few 

high priority open recommendations which require focus on ways 

the Department can improve its program operations, reduce fraud, 

waste, and mismanagement. 

First, DHS personnel require interoperability to communicate 

both with other DHS components and external partners. DHS established a goal that all components would be able to communicate 

using interoperable radio systems by establishing a common radio 

channel and purchasing standardized equipment. 

However, in November 2012, we reported that only 1 of 479 radio 

users we reviewed could access and communicate using the specified channel, and only 78 of 382 radios tested contained all the correct program settings. We recommended that DHS develop and disseminate policies and procedures to standardize Department-wide 

radio use to ensure interoperability. 

A second example involves CBP’s unmanned aircraft system pro- gram. Congress appropriated more than $240 million to establish 

this program and CBP developed plans to use the unmanned aircraft’s capabilities. We reported in May 2012, however, that CBP’s 

approach may underutilize resources and limit CBP’s mission. We 

recommended that CBP analyze requirements and develop plans to 

achieve the U.S. mission availability objective and acquire funding 

to provide necessary operations, maintenance, and equipment. 

The third example involves FEMA. In January 2012, we reported 

that only 6.3 percent of the public assistance projects for Louisiana 

had been closed out in the six years since Hurricane Katrina made 

landfall. Many of those projects are years past the closeout deadlines. They could involve substantial amounts of obligated funds 

that could be put to better use. The Federal Government provided 

100 percent funding of the public assistance projects and, therefore, 

the State has no incentive to close completed projects. We recommended that FEMA develop and implement policies, procedures, 

and time lines to ensure the projects with 100 percent Federal 

funding are closed timely. 

Additional high priority open recommendations focus on the accountability issues of financial management, information technology management, and cybersecurity. For example, although 

DHS produced auditable financial statements in fiscal year 2012 

and obtained a qualified opinion on those statements, challenges 

remain. DHS’s financial management systems are not able to process, store, and report financial data in a manner to ensure accuracy, confidentiality, integrity, and availability. 

With respect to IT management, CBP has the largest IT budget 

among the DHS components. Although the CBP chief information 

officer has taken several actions to support effective IT manageVerDate Aug 31 2005 14:55 Jul 09, 2013 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\DOCS\81664.TXT APRIL
45 

ment, we reported in June 2012 that system challenges remain, including issues of systems availability, interoperability, and 

functionality. 

Finally, in the area of cybersecurity, we have open recommendations regarding the risk of insider threats at TSA and the implementation of international cybersecurity programs. 

In conclusion, DHS has a critical role to play in ensuring national awareness, preparedness, and coordinated response to potential emergency situations, suspicious activities, and terrorist 

threats. Our reports provide the Department Secretary and Congress with an objective assessment of the issues, and at the same 

time provide specific recommendations to correct deficiencies and 

improve the economy, efficiency, and effectiveness of the Department’s programs. 

Our work, however, is only effective if the Department implements corrective actions timely to address deficiencies and weaknesses. Doing so will help ensure that the Department exercises 

proper stewardship of Federal resources. 

Mr. Chairman, this concludes my prepared remarks, and I would 

be happy to answer any questions that you or the members may 

have. 

[Prepared statement of Mr. Edwards follows:] 

46 


Insert offset folio 31 here 81664.031

STATEMENT OF CHARLES K. EDWARDS 

DEPUTY INSPECTOR GENERAL 

U.S. DEPARTMENT OF HOMELAND SECURITY 

BEFORE THE 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

U.S. HOUSE OF REPRESENTATIVES 

MARCH 19,2013 
47 


Insert offset folio 32 here 81664.032

Mr. Chainnan and Members of the Committee: 

Thank you for the opportunity to discuss ways to reduce waste and improve efficiency at 

the Department of Homeland Security (DHS). 

My testimony today will address DHS' high priority open recommendations for both the 

short tenn and long tenn. The open recommendations we identified as the highest 

priority were in eight reports issued between December 2011 and December 2012. These 

recommendations address critical mission areas, such as the security of our Nation's 

borders, infonnation sharing to accomplish intelligence and other Department goals, and 

the response to and recovery from natural disasters. The recommendations also address 

critical accountability issues, such as financial management, infonnation technology (IT) 

management, and cybersecurity. 

As DHS continues to mature as a Department, it has made progress in addressing its key 

mission areas and establishing the groundwork for effective stewardship over its 

resources; yet challenges remain. The open recommendations discussed today illustrate 

some of the ongoing challenges facing DHS and its component offices. Once these 

recommendations are addressed, DHS will be in a better position to improve the 

effectiveness and efficiency of its operations and reduce the potential for waste, fraud, 

and mismanagement. 

Background 

As of March 8,2013, DHS OIG has issued 8,068 of recommendations since its inception 

in March 2003, and 1,253 (16 percent) ofthose recommendations remain open. Of the 

open recommendations, 210 have monetary findings associated with them of $1.2 billion. 

In December 2012, we issued our Major Management Challenges report, which 

summarized and briefly assessed progress of the most serious challenges facing the 

Department. I These challenges were categorized into two main themes: Mission 

Areas-Intelligence, Transportation Security, Border Security, Infrastructure Protection, 

and Disaster Preparedness and Response; and Accountability Issues-Acquisition 

Management, Financial Management, IT Management, Grants Management, Employee 

Accountability and Integrity, and Cyber Security. 

On December 5, 2012, we received a request from this Committee to identify our office's 

five highest priority short-tenn and five highest priority long-tenn open recommendations 

to improve agency efficiency and reduce waste; and to describe whether and in what 

ways DHS management solicits input on how to improve efficiency and reduce waste. 

We provided this infonnation in a written response on February 11, 2013, identifying our 

short- and long-tenn high-priority recommendations; eight of which were also included 

in our 2012 Major Management Challenges. 

1 DHS OIG, Major Management Challenges Facing the Department of Homeland Security-Revised (OIG13-09, December 2012). 

2 
48 


Insert offset folio 33 here 81664.033

Five of the 10 high-priority open recolmnendations focus on DRS mission areas of 

border security, intelligence, and disaster preparedness and response. The remaining five 

high-priority open recommendations focus on accountability issues of financial 

management, IT management, and cybersecurity. 

Mission Area: Border Security 

Securing the Nation's borders from illegal entry of aliens and contraband, including 

terrorists and weapons of mass destruction continues to be a major challenge. Within 

DRS, the United States Customs and Border Protection (CBP) is responsible for securing 

the Nation's borders at and between the ports of entry. 

In an effort to accomplish this mission, DRS needs to improve its unmanned aircraft 

system program. In 2012, we made a high-priority short-term recommendation to 

improve CBP's program for its unmanned aircraft system (UAS). Also in 2012, we made 

one high-priority short-term recommendation to address interoperable communications 

oversight. 

CBP's Use of Unmanned Aircraft Systems in the Nation's Border Security 

The mission of CBP's Office of Air and Marine (OAM) is to protect the American people 

and the Nation's critical infrastructure through the coordinated use of integrated air and 

marine forces. Air and marine forces are used to detect, interdict, and prevent acts of 

terrorism and the unlawful movement of people, illegal drugs, and other contraband 

toward or across U.S. borders. The UAS provides command, control, communication, 

intelligence, surveillance, and reconnaissance capability to complement crewed aircraft 

and watercraft, and ground interdiction agents. 

After the pilot of the UAS program, Congress appropriated more than $240 million to 

establish a UAS program within CBP. During our 2012 review, CBP stated it had 

expended $152.3 million to purchase nine aircraft and related equipment, and it had 

seven operational aircraft. CBP received 2 additional aircraft in late 2011 and was 

awaiting delivery of a tenth aircraft purchased with FY 2011 funds. Each aircraft system 

cost approximately $18 million. 

We reported that CBP had not adequately planned resources needed to support its current 

unmanned aircraft inventory. Although CBP developed plans to use the unmanned 

aircraft's capabilities in its OAM mission, its Concept of Operations planning document 

did not adequately address processes (1) to ensure that required operational equipment, 

such as ground control stations and ground support equipment, is provided for each 

launch and recovery site; (2) for stakeholders to submit unmanned aircraft mission 

requests; (3) to determine how mission requests are prioritized; and (4) to obtain 

reimbursements for missions flown on stakeholders' behalf. This approach places CBP 

at risk of having invested substantial resources in a program that underutilizes resources 

and limits its ability to achieve OAM mission goals. 

Because UAS is a critical aspect of protecting the American people and the Nation's 

infrastructure, CBP needs to improve the planning of its UAS program to address its level 

3 
49 


Insert offset folio 34 here 81664.034

of operation, program funding, and resource requirements, along with stakeholder needs. 

We recommended that CBP analyze requirements and develop plans to achieve the UAS 

mission availability objective and acquire funding to provide necessary operations, 

maintenance, and equipment.2 

DRS' Oversight of Interoperable Communications 

The establishment of DRS in 2003 created a network Federal departments and agencies 

that work together to prevent and respond to terrorist attacks, natural disasters, and other 

threats. The Department set a goal that all components would be able to communicate 

using interoperable radio systems, and it planned to achieve that goal by establishing a 

common radio channel and purchasing standardized equipment. Even though DRS 

created policies, guidance, and templates to aid in achieving interoperability, and 

provided more than $18 million in assistance to State and local agencies, full 

interoperability remains a distant goal, according to a 2012 Government Accountability 

Office report.3 

In fact, in November 2012, we also reported that, although DHS had established a goal 

for interoperability and common radio chaunels, only 1 of 479 radio users we reviewed 

could access and communicate using the specified chaunel. Furthermore, only 78 of382 

(20 percent) radios tested contained all the correct program settings, including the name, 

for the common DHS channel. Additionally, DRS did not establish an effective 

governing structure with authority and responsibility to oversee the achievement of 

Department-wide interoperability. Without an authoritative governing structure to 

oversee emergency communications, DHS has limited interoperability policies and 

procedures. 

Because of this limited progress in interoperability, personnel do not have interoperable 

communications to rely on during daily operations, planned events, and emergencies. 

We recommended that DRS develop and disseminate policies and procedures to 

standardize Department-wide radio activities, including program settings, such as naming 

conventions, to ensure interoperability.4 

Mission Area: Disaster Preparedness and Response 

The Federal Emergency Management Agency's (FEMA) task of coordinating emergency 

support following disasters has become more challenging as the number of events to 

which it responds has risen each year-from 25 to 70 since 1980. From 2008 through 

2011, FEMA obligated an average of$9.5 billion each year in its response efforts. 

Although the agency has improved its disaster response and recovery, challenges remain. 

In late 2011 and early 2012, we issued two reports relating to FEMA's response to 

Hurricane Katrina. One report contained two high priority recommendations - one shortterm and one long-term- relating to FEMA's efforts to expedite disaster recovery in 

2 DHS-OIG, CBP's Use of Unmanned Aircraft Systems in the Nation's Border Security (OIG-12-85, May 

2012). 

3 Emergency Communications-Various Challenges Likely to Slow Implementation of a Public Safety 

Broadband Network (GAO-12-343, February 2012). 

4 DHS-OIG, DHS' Oversight of Interoperable Communications (OIG-13-06, November 2012). 

4 
50 


Insert offset folio 35 here 81664.035

Louisiana. The second report contained a high-priority recommendation to improve 

FEMA's process for tracking public assistance insurance in the long term. 

Efforts to Expedite Disaster Recovery in Louisiana 

Under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance 

Act, as amended (Stafford Act), FEMA provides Federal disaster grant assistance to state, 

tribal, and local govemments and certain private nonprofit organizations through the 

Public Assistance (P A) program. FEMA has an obligation to ensure that Federal disaster 

funds are used appropriately and timely. In January 2012, we reported that only 6.3 

percent of the P A projects for Louisiana had been closed-out in the 6 years since 

Hurricane Katrina made landfall. Many of these projects are years past the closeout 

deadlines. 

Although FEMA has worked with Louisiana to expedite the recovery effort, several 

factors have contributed to the slow progress of closing out P A projects. Specifically, the 

Federal Government provided 100 percent funding of P A projects. The State of 

Louisiana does not pay the project costs and has no incentive to seek cost effective 

replacement or repair solutions, close completed projects, or begin reducing the disaster 

workforce as work is completed. Other factors, such as the project procurement process, 

inconsistent decisions for applicant eligibility and replacement versus repair determines 

early in the P A process, and limited state staff resources also contributed to delays in 

closing P A projects. 

Because open PA projects could involve substantial amounts of obligated Federal dollars 

that could be put to better use, we recommended that FEMA develop and implement 

specific policies, procedures, and timelines to ensure that 100 percent federally funded 

projects are closed timely in the short term. Regarding long-term high priority 

challenges, we recommended that FEMA evaluate the status of all P A projects in 

Louisiana associated with Hurricane Katrina; and develop, in conjunction with Louisiana, 

a process to close completed projects and to expedite the completion of open projects. 5 

FEMA has taken several actions to respond to our recommendations. Specifically, 

FEMA has completed the draft of an updated standard operating procedure for P A 

program management and grant closeout. In addition, FEMA is implementing a training 

course, scheduled for a pilot release in FY 2013, to address the PA program process and 

the roles and responsibilities for closeout activities. FEMA has also developed a 

procedure to track the progress of recovery and the movement toward programmatic 

closeout of Hurricanes Katrina, Rita, Gustav, and Ike projects. 

FEMA has worked with the State of Louisiana, which developed a closeout process to 

ensure that each applicant and project meet the eligibility requirements and document 

standards mandated by Federal and State regulations. In addition, FEMA developed and 

communicated clear goals for subgrantee certification ofproject completion, which 

provide a closeout incentive if certification goals are met. FEMA conducted a complete 

review of the project closeout process used by the state. The average number of projects 

5 DRS-Ora, Efforts to Expedite Disaster Recovery in Louisiana (OIG-12-30), January 2012. 

5 
51 


Insert offset folio 36 here 81664.036

closed monthly has increased by 300 percent for Hurricanes Katrina and Rita in the first 

quarter of FY 2013. We will be reviewing these efforts to see whether they have 

successfully resolved the recommendations. 

FEMA's Process for Tracking Public Assistance Insurance Requirements 

FEMA PA grant projects totaled more than $10 billion for all disasters declared between 

2007 and 2010. Ofthat amount, $1.3 billion were provided for the buildings, contents, 

and equipment owned by State, tribal, and local governments as well as private nonprofit 

organizations. Since fiscal year 2009, we have issued 19 financial assistance grant 

reports that included findings pertaining to P A insurance requirements involving 

duplicate benefits, incomplete insurance reviews, and applicants who either did not 

obtain adequate insurance or did not file an insurance claim. 

The Stafford Act encourages states and local governments to protect themselves by 

obtaining insurance to supplement or replace government assistance, and requires 

applicants to obtain insurance on damaged insurable facilities as a condition of receiving 

P A grant funding, and to maintain insurance on those facilities in order to be eligible for 

PA funding in future disasters. Yet FEMA's PA program provides disincentives for 

applicants to carry insurance. For example, the P A program pays for building repair 

costs following a first disaster, which reduces the incentive for building owners to 

purchase insurance if they have not previously received disaster assistance. In addition, 

FEMA reimburses deductible amounts in insurance policies, regardless of the amount of 

the deductible, which encourages high deductibles. 

FEMA has been aware of these and other equity and disincentive problems for more than 

a decade. In February 2000, FEMA published an advance notice of proposed rulemaking 

in the Federal Register that addressed insurance requirements, procedures, and eligibility 

criteria with respect to buildings under the P A program. However, FEMA has not issued 

a final rule and stated that action on these issues has not occurred because regulatory 

review and rulemaking involving other programs have taken precedence. Consequently, 

the pertinent P A regulations continue to present the same disincentives and equity issues, 

and do not provide adequate guidance to those involved in receiving, granting, or 

overseeing P A grants. 

In December 2011, we recommended that FEMA complete the rulemaking process begun 

in 2000 and issue a final rule that resolves the longstanding problems with P A insurance 

regulations, including the topics of deductibles, self-insurance, and state insurance 

commissioners' determinations of reasonably available insurance, among others.6 

However, in February 2013, FEMA issued a memorandum rescinding the policy of 

reducing eligible costs by an insurance deductible. Effective immediately, FEMA 

deducts total insurance proceeds received or anticipated from the total eligible cost ofthe 

project. This change in policy provides further incentive for applicants to not carry 

insurance or, if they do, to choose the highest deductible possible. 

6 DHS-OIG, FEMA 's Process/or Tracking Public Assistance Insurance Requirements (OIG-12-18, 

December 2011). 

6 
52 


Insert offset folio 37 here 81664.037

Accountability Issue: Financial Management 

DRS is responsible for an annual budget or more than $59 billion, employs more than 

225,000 men and women and operates in more than 75 countries. Sound financial 

practices and related management operations are critical to achieving the Department's 

mission and to providing reliable, timely financial information to support management 

decision-making throughout DRS. Although DRS produced auditable financial 

statements in FY 2012 and obtained a qualified opinion on those statements, challenges 

remain for the Department's financial management. One high priority long-term 

challenge is the improvement of the Department's financial management systems. 

Independent Auditors' Report on DRS' FY 2012 Financial Statements and Internal 

Control over Financial Reporting 

An independent public accounting firm, KPMG LLP, performed the integrated audit of 

the DRS financial statements for fiscal year 2012 and an examination of internal control 

over financial reporting and compliance. KPMG considered the effects of financial 

system functionality in its tests, and determined that many key DRS financial systems are 

not compliant with Federal Financial Management Improvement Act of 1996 (FFMIA) 

and OMB Circular Number A-I27, Financial Management Systems, as revised. DRS 

financial system functionality limitations add substantially to the Department's 

challenges of addressing systemic internal control weaknesses, and limit the Departments 

ability to leverage IT systems to effectively and efficiently process and report financial 

data. 

Specifically, KPMG identified persistent and pervasive financial system functionality 

conditions at all of the significant DRS components in the following areas: 

• Inability of financial systems to process, store, and report financial and 

performance data to facilitate decision making, safeguarding and management of 

assets, and prepare financial statements that comply with generally accepted 

accounting principles. 

• Technical configuration limitations, such as outdated systems that are no longer 

fully supported by the software vendors, impaired DRS' ability to fully comply 

with policy in areas such as IT security controls, notably password management, 

audit logging, user profile changes, and the restricting of access for off-boarding 

employees and contractors. 

• System capability limitations prevent or restrict the use of applications controls to 

replace less reliable, more costly manual controls. Or in some cases, require 

additional manual controls to compensate for IT security or control weaknesses. 

7 
53 


Insert offset folio 38 here 81664.038

Additionally, KPMG detennined that the U.S. Coast Guard: 

• Is routinely unable to query its various general ledgers to obtain a population of 

financial transactions, and consequently must create many manual custom queries 

that delay financial processing and reporting processes. 

• Has a key financial system that is limited in processing overhead cost data and 

depreciation expenses in support of the property, plant, and equipment financial 

statement line item. 

• Uses production versions of financial statements that are outdated and do not 

provide the necessary core functional capabilities (e.g., general ledger 

capabilities). 

• Has a budgetary module of the core financial system that is not activated. As a 

result, key attributes (e.g., budget fiscal year) are missing and potential automated 

budgetary entries (e.g., upward adjustments) are not used. This has created the 

need for various manual workarounds and the implementation of nonstandard 

adjustments. 

• Has financial systems functionality limitations that are preventing the Coast 

Guard from establishing automated processes and application controls that would 

improve accuracy, reliability, and facilitate efficient processing of certain 

financial data; like receipt of goods and services upon delivery, and ensuring 

proper segregation of duties and access rights. 

KPMG concluded in its report that these findings limit DHS in its ability to process, 

store, and report financial data in a manner to ensure accuracy, confidentiality, integrity, 

and availability. KPMG emphasized that some of these weaknesses may result in material 

errors in financial data that go undetected through the nonnal course of business. 

Additionally, because of financial system functionality weaknesses, there is added 

pressure on mitigating controls to operate effectively. Because mitigating controls are 

often more manually focused, there is an increased risk of human error that could 

materially affect the financial statements. We recommended that the DHS Office of the 

Chief Infonnation Officer, in conjunction with the Office of the Chief Financial Officer, 

continue the Financial Systems Modernization initiative and make necessary 

improvements to the Department's financial management systems.? 

Accountability Issue: IT Management 

As technology constantly evolves, the protection of the Department's IT infrastructure 

becomes increasingly more important. The Department's ChiefInfonnation Officer has 

taken steps to mature IT management functions, improve IT governance, and integrate IT 

infrastructure. However, several DHS components continue to face IT management 

7 DHS-OIG,Independent Auditors' Reports onDHS' FY08, 09, 10, 11, and 12 Financial Statements and 

Internal Control Over Financial Reporting (OIG-09-09, November 2008; OIG-l 0-11, November 2009; 

OIG-ll-09, November 2010; OIG-12-07, November 2011; OIG-13-20, November 2012). 

8 
54 


Insert offset folio 39 here 81664.039

challenges. In 2012, we issued a high priority long-tenn recommendation to address a 

Customs and Border Protection (CBP) IT management challenge. 

CBP Infonnation Technology Management Challenges 

IT systems playa critical role in enabling CBP to accomplish its border security, trade, 

and travel missions. To support its mission, CBP had an IT budget of$1.5 billion in 

fiscal year 2012, making it the component with the largest IT budget within the 

Department. 

In June 2012, we reported that the CBP Chiefinfonnation Officer has taken several 

actions to support effective IT management by implementing a strategic planning 

process, developing an enterprise architecture, and establishing a systems engineering life 

cycle process to l,'Uide and manage CBP's infonnation technology environment. 

However, system availability challenges exist, due in part to aging infrastructure. Also, 

interoperability and functionality of the technology infrastructure have not been sufficient 

to support CBP mission activities fully. As a result, CBP employees have created 

workarounds or employed alternative solutions, which may hinder CBP's ability to 

accomplish its mission and ensure officer safety. We recommended that CBP implement 

a plan to address gaps in the existing requirements and reassess the technology insertion 

process to address functionality and interoperability challenges in the field. 8 

Accountability Issue: Cybersecurity 

Cybersecurity is our Nation's firewall because it is always on alert for constant threats to 

networks, computers, programs, and data. It contains technologies, processes, and 

practices that protect our systems from attack, damage, or unauthorized access. In 2012, 

we made three high priority recommendations - two to address the Transportation 

Security Administration's (TSA) insider threat challenges in the short-tenn, and one high 

priority long-tenn recommendation to address weaknesses in DHS' International 

Cybersecurity Programs. 

TSA Insider Threat Challenges 

TSA relies on sensitive transportation security infonnation to meet its mission of 

protecting the Nation's transportation systems. TSA employees, contractors, and partners 

have access to TSA' s operations, systems, and data. Based on job function, these trusted 

insiders are typically given unfettered or elevated access to mission-critical assets. This 

access creates potential vulnerability to insider threats, such as spying, release of 

infonnation, sabotage, corruption, impersonation, theft, smuggling, and terrorist attacks. 

We reported in July 2012 that TSA has taken steps to reduce the risk of insider threats by 

establishing an agency-wide Insider Threat Working Group and Insider Threat Section 

responsible for implementing a program to address insider threat risk. However, TSA 

had not yet implemented protective measures to detect or prevent unauthorized removal 

or copying of sensitive infonnation via portable media devices or unauthorized 

exfiltration of sensitive infonnation outside TSA's network. We recommended that TSA 

8 DHS-OIG, CBP Information Technology Management: Strengths and Challenges (OIG-12-95, June 

2012). 

9 
55 


Insert offset folio 40 here 81664.040

disable USB ports, which can be used to transfer data, on desktop and laptop computer if 

there is not a legitimate business need for them to be activated. We also recommended 

that TSA limit the size of e-mail file attachments if there is not a legitimate business need 

for such attachments. 9 

DHS' International Cybersecurity Programs 

Our Nation's economy and security are highly dependent on the global cyber 

infrastructure. The borderless nature of threats to, and emanating from, cyberspace 

requires robust engagement and strong partnerships with countries around the world. 

International engagement is a key element of the DHS cyber mission to safeguard and 

secure cyberspace. DHS' National Protection and Programs Directorate (NPPD) 

promotes cybersecurity awareness and fosters collaboration with other countries and 

organizations to global cyberspace threats. 

In August 2012, we reported that NPPD had undertaken actions to promote collaboration 

with the international community and develop partnerships with other nations to protect 

cyberspace better. However, NPPD had not defined its roles for carrying out the mission 

of its International Affairs Program nor had it developed a strategic implementation plan 

to provide a clear plan of action for achieving its cybersecurity goals with international 

partners, international industry, or the private sector. In addition, NPPD had not 

streamlined its International Affairs functions and processes to support its international 

cybersecurity goals, objectives, priorities efficiently, or effectively consolidate resources. 

Lastly, NPPD needed to strengthen its communications and information sharing activities 

with international partners to effectively promote international incident response, 

exchange of cyber data with other nations, or the sharing of best practices. We 

recommended that DHS develop and implement policies and procedures for establishing 

and maintaininfi open dialogues with foreign partners regarding cyber threats and 

vulnerabilities. 0 

Conclusion 

DHS OIG completes significant audit, inspection, and investigative work to promote the 

economy, efficiency, effectiveness, and integrity of the Department's programs and 

operations. Our reports provide the Department Secretary and Congress with an 

objective assessment of the issues, and at the same time provide specific 

recommendations to correct deficiencies and improve the economy, efficiency, and 

effectiveness of the respective programs. 

From April 1 ,2012 through September 30, 2012, our audits resulted in questioned costs 

of over $235 million. During this same period, DHS recovered approximately $115 

million as a result of disallowed costs identified in current and previous audit reports and 

from our investigative efforts. We issued 12 reports identifYing approximately $101 

million in funds that could be put to better use. 

9 DRS-OIG, Transportation Security Administration Has Taken Steps To Address the Insider Threat But 

Challenges Remain (OIG-12-120, September 2012). 

10 DHS-OIG, DHS Can Strengthen Its International Cybersecurity Programs (OIG-12-112, August 2012). 

10 
56 


Insert offset folio 41 here 81664.041

Our work, however, is only effective if the Department implements corrective actions 

timely to address deficiencies and weaknesses. Doing so will help to ensure that the 

Department exercises proper stewardship of Federal resources. 

Mr. Chairman, this concludes my prepared statement. I appreciate your time and 

attention and welcome any questions from you or members of the Committee. 

11 
57 

Chairman ISSA. Thank you all. 

I will now recognize myself for a round of questioning. 

Ms. Halbrooks, do you have subpoena authority as the IG at 

DOD? 

Ms. HALBROOKS. Yes. We have documentary and testimonial subpoena authority. 

Chairman ISSA. Have you ever had to use your testimonial subpoena authority? 

Ms. HALBROOKS. We have, sir. We have used it twice. 

Chairman ISSA. Ever? 

Ms. HALBROOKS. Yes. 

Chairman ISSA. Does that mean you don’t need it or does that 

mean that the fact that you have it means people reasonably comply in a timely fashion for interviews? 

Ms. HALBROOKS. The latter. While we have issued it twice, there 

have been a few other occasions where we have indicated our intent to issue one, and witnesses have cooperated. Likewise, of 

course, immeasurable is the effect of just having it and people 

knowing that we have it. 

Chairman ISSA. Mr. Edwards, do you have such subpoena authority? 

Mr. EDWARDS. No, sir. 

Chairman ISSA. Loaded question: Have you asked people to testify and they have simply declined and you have been unable to get 

them? 

Mr. EDWARDS. Not that I am aware of, sir. 

Chairman ISSA. Is there currently a system, General Halbrooks, 

is there currently a system for anybody to get testimonial subpoena 

authority other than yourself? 

Ms. HALBROOKS. We are the only inspector general’s office that 

has testimonial subpoena authority. It was given to us in the fiscal 

year 2010 National Defense Authorization Act. 

Chairman ISSA. So you have had it for a few years. Have you 

abused that authority? 

Ms. HALBROOKS. We have been very careful and judicious, and 

have not abused that authority. The rule of the law requires that 

we notify the Justice Department before we issue those subpoenas, 

and that has gone very well. 

Chairman ISSA. So you have worked in consultation with the 

Justice Department. And have they made suggestions, corrections, 

any kind of input over the years? 

Ms. HALBROOKS. No. They have concurred or not objected to our 

issuance of the subpoenas. 

Chairman ISSA. Now I am going to go out on a limb. Do you believe that this committee should provide a system for all IGS to 

have access to similar authority? 

Ms. HALBROOKS. That is a difficult decision. It certainly has 

helped us. It is something that I think has to be used carefully and 

with specific controls in place. We are comfortable we have those 

controls and that we use it very judiciously. I am not sure how that 

would translate to the rest of the IG community, sir. 

Chairman ISSA. Well, Mr. Hale, would you say that this is a tool 

that you are happy that your IG has? 

58 

Mr. HALE. I think the IG system is working fine, Mr. Chairman. 

I will stay with that. I think we get good help and we try to respond, as Ms. Halbrooks said. 

Chairman ISSA. Okay. It is obviously an area of interest for myself on this committee. 

Mr. Borras, Under Secretary Borras, you have increased, not just 

you, but your predecessor, have increased by about 5,500 TSA individuals between 2005 and 2012, 1,000 for general work, this is fulltime equivalents, and 4,500 for agents to operate advanced image 

technology systems, is that correct? 

Mr. BORRAS. I don’t know the exact number, but there has been 

an increase. 

Chairman ISSA. Okay. Well, suffice to say we got it from a letter. 

And this committee has held an awful lot of hearings on the failure 

of those advanced imaging systems, and it doesn’t surprise you, I 

am sure, to know that the last 14 or 15 times I have gone through 

security I haven’t gone through those imaging devices because, 

more and more, people are moving back to the old ones. 

When you are looking at how to accomplish sequestration, have 

you considered simply this 8 percent reduction in force through attrition to accomplish a big part of it? In other words, recognize a 

failure as a failure and allow attrition at TSA to pay for a big part 

of sequestration? 

Mr. BORRAS. Well, Mr. Chairman, as you know, the PPA structure in TSA is structured in such a way that salaries, for example, 

are their own PPA and subject to the effect of sequestration, and 

we don’t have the ability to—— 

Chairman ISSA. Wait, wait, wait a second, please. Your attrition 

at TSA is high. If, 19 months ago, you had put a hiring freeze on, 

today you would have more than 5500 less TSA agents. Now, you 

might have to hire some or transfer some, but you would have accomplished that if, 19 months ago, when sequestration was signed 

by the President. 

And, Mr. Hale, I wish you hadn’t said it was mindless in a way 

that disparages the President. Hopefully you didn’t mean that 

when he signed it. 

Mr. HALE. I had in mind the law. 

Chairman ISSA. Well, it has his signature on it and my vote on 

it, so it is double mindless, perhaps. 

Again, I go through security. Virtually everybody up here on the 

dais goes through. We are acutely aware that TSA is an organization that is very large, has a lot of people. It is your largest single 

budget item. Again, if you made decisions 19 months ago to use attrition as a tool, wouldn’t you have substantially less people on the 

payroll, if you had made plans to work with less people? I understand that it is a union organization, you can’t just be arbitrary. 

But if I have a choice of furloughing today or planning ahead, if 

I have an idea of how I can work with less people, why didn’t you 

do that, and wouldn’t it have reduced that number? 

Mr. BORRAS. Well, Mr. Chairman, two things. One, certainly 

there was an expectation within DHS, and I would suppose in both 

the administration and Congress, that sequestration would never 

come to pass. However, we did prudently look at various options. 

One of the things we had to be mindful of is not violating the ImVerDate Aug 31 2005 14:55 Jul 09, 2013 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 C:\DOCS\81664.TXT APRIL
59 

poundment Control Act, where you would willfully withhold monies 

in spite of the way the monies were appropriated. So we did look 

at and we have instituted across the Department, certainly since 

March 1st, since we have had sequestration in place, hiring freezes. 

There still is volatility as it relates to the impact of sequestration. The Senate CR bill that may pass has some significant 

changes particularly that affect TSA. One example would be the 

FAMS. 

Chairman ISSA. Okay, well, my time has expired. I just want to 

quickly comment. If you didn’t anticipate and begin doing things 

after the President signed the law, it would certainly not be prudent to anticipate some relief coming from a future action now. But 

for all of us on the committee, sequestration, many of us thought, 

would be negotiated out, but the reduction of 2.3 percent was always still the law. 

So your anticipation of not having across-the-board had to recognize you still were expecting a substantial portion of that 2.3 to hit 

each of your areas that you could save in. So to say that you didn’t 

think 2.3 was going to happen is to say that you didn’t expect that 

the President signed that reduction in good faith. He did sign it in 

good faith; it meant that you had to prepare for that, and apparently you didn’t. And we will hear from the FCC and a few other 

entities that did exactly what we described, began reducing their 

headcount of full-time equivalents in advance. 

With that, I will yield to the ranking member for seven minutes. 

Mr. CUMMINGS. Can I have 7.5, like you did, Mr. Chairman? It 

was 7.5. 

Chairman ISSA. Sure. 

Mr. CUMMINGS. Thank you. 

Chairman ISSA. I was just rounding. 

Mr. CUMMINGS. Okay. Let’s round up. 

Mr. Edwards, do you believe that you need testimonial subpoena 

authority? 

Mr. EDWARDS. The IG community is divided. Of course, from 

DHS we do believe that we would need that. 

Mr. CUMMINGS. And so although you have never had a problem 

getting witnesses in, you feel like you need it? Can you explain 

why? 

Mr. EDWARDS. Well, because when we need to go and reach outside of DHS employees or contractors, without having that authority, we have to still go to the Department of Justice. And we have 

been very prudent in every action that we have taken, and I feel, 

and many in the IG community also feel that having this authority 

would only bolster the IG’s role. 

Mr. CUMMINGS. Ms. Halbrooks, your job is to oversee the Department of Defense, the biggest agency in the Federal Government, 

with an annual budget of more than $1 trillion. In your written testimony, the number one area you highlight for reform is acquisition 

process and contract management. You say ‘‘challenges include obtaining adequate competition, defining contract requirements, obtaining fair and reasonable prices, and oversight of contract performance.’’ Is that right? 

Ms. HALBROOKS. That is right, sir. 

60 

Mr. CUMMINGS. And with that in mind, I want to ask about the 

largest weapons contract in history, the Joint Strike Fighter. So 

far, the Department has spent 12 years developing this deeply 

flawed aircraft and the cost has skyrocketed to about $400 billion, 

is that correct? Is that correct, ma’am? 

Ms. HALBROOKS. That is my understanding. 

Mr. CUMMINGS. You don’t know that? 

Ms. HALBROOKS. We haven’t done any work ourselves in the IG 

office. I know GAO recently issued a report on the cost overruns, 

but we have not looked at that particular weapon system with respect to cost overruns. 

Mr. CUMMINGS. So something costing $400 billion and $1 trillion 

over 30 years, is it just the way you operate that you don’t look at 

these weapons systems or what? I am kind of confused here. 

Ms. HALBROOKS. No, we do look at weapons systems. I certainly 

don’t want to leave you with that impression. Major weapon system 

acquisition is a focus of our work and the one example that I illustrate in my testimony of the JLENS program. 

Mr. CUMMINGS. Right. 

Ms. HALBROOKS. We were able to save the Department $2.5 billion when they agreed to cancel that program. 

On the F–35, and we continue, by the way, to look at other 

ACAT1 and ACAT2, the largest investments in the Department. 

They have 83 of the high value programs at $1.6 trillion and 116 

ACAT2s. So we do focus on that and that is going to be a continued 

area for renewed focus for the remainder of time. 

What we have done with the F–35 is decided that the value that 

we could add, because the cost overruns have been looked at in 

other places and certainly the Department leadership is aware of 

them, as well as the program office in GAO has added insight, we 

have undertaken this past year to do an assessment of the quality 

management of the system. So we have been to several contractor 

and subcontracting sites where they are actually producing parts 

of the F–35 and looked at whether the Government is getting what 

they have paid for. We have issued notices of concern with respect 

to the quality management and oversight at each of those plants. 

We will be rolling those up and issuing a final report in the next 

few months. 

Mr. CUMMINGS. Okay, I am glad you said that because this reminds me so much of the Deepwater project with the Coast Guard. 

I swear, it is almost like a mirror type situation. So you just said 

some very significant words, something that I used to say when we 

were dealing with the Deepwater project. I said, is Government 

getting what it paid for. 

Now, Ms. Halbrooks, combat planes need to fly at night, would 

you agree? 

Ms. HALBROOKS. Yes, sir. 

Mr. CUMMINGS. They need to flight at night. The same testing 

office reports that this plane does not yet have combat capability, 

nor can it fly at night. Would you agree that combat planes need 

to be able to engage in combat? 

Ms. HALBROOKS. Yes, sir. 

61 

Mr. CUMMINGS. Yes. And the Navy’s version of this plane can’t 

land on aircraft carriers. Ms. Halbrooks, I assume you would agree 

that this is a significant problem. 

Ms. HALBROOKS. It is, sir. And if I could add, you mentioned the 

Office of Test and Evaluation within the Department, and that is, 

I think, an example of the attention that the Department is giving 

this and how we have decided to use the IG resources in a way that 

complements that, in terms of focusing on the quality and what is 

happening in the individual plans, and not duplicate the oversight 

that is happening elsewhere. 

Mr. CUMMINGS. But I want to go back to something that you 

said, and I mentioned it a little bit earlier. You said the challenges 

include obtaining adequate competition, defining contract requirements, obtaining fair and reasonable prices, and oversight of contract performance. One of the things that we discovered in the 

Deepwater process is that we had extremely poor acquisition process. In other words, the people who were doing the acquisitions 

were not necessarily qualified to do them. When we changed that, 

we suddenly saw a big difference. 

Is this a situation where we have an acquisition problem? I 

mean, is that part of the problem or do you know? 

Ms. HALBROOKS. I think that is right. I think our reports have 

shown that over time and I think the Department has knowledge 

the acquisition workforce over the past several years has languished and that they have been trying to staff up and improve the 

quality of that workforce. But the lack of contract oversight, especially in the contingency operations, as Congressman Tierney 

talked about, remains a vulnerability for the Department. 

Mr. CUMMINGS. Ms. Halbrooks, to your office’s credit, the IG 

sounded the alarm on this flawed approach to acquisition years 

ago, and your office and the Government Accountability Office 

warned about the practice of something called concurrency. That is 

when the Department produces and buys planes while critical testing is still going on. 

Mr. Hale, let me turn to you. Right now these planes don’t work. 

Only a fraction of the testing is complete. Yet, the Department still 

plans to buy nearly 2,500 planes at a cost of $400 billion. The Department’s own acquisition chief, Under Secretary Frank Kendall, 

called this ‘‘acquisition malpractice.’’ 

Mr. Hale, do you agree with Mr. Kendall? Do you think this is 

acquisition malpractice? 

Mr. HALE. I am going to let Mr. Kendall defend those words, Mr. 

Cummings. 

Mr. CUMMINGS. Well, what do you think? 

Mr. HALE. I believe we need the F–35. I know that is true. We 

have a badly aging Air Force fleet and a badly aging Marine Corps 

fleet in particular, as well as problems in the Navy. But I sit every 

day in staff meetings with Frank Kendall and I know that he is 

deeply involved in trying to do a better job managing the F–35, 

which does have problems. I am also convinced, based on 40 years 

of watching the Department, we will make this plane work at night 

and land on carriers, and all the things it needs to do. 

Mr. CUMMINGS. To the tune of $1 trillion over the next 30 years? 

One trillion? How long do we have to wait? 

62 

Mr. HALE. The plane is still in development, so we will need to 

wait until we solve these problems. I understand your concerns, 

and we share those concerns at the Department, but we know we 

have to make this plane fly and fly right, and I believe we will do 

that. 

Mr. CUMMINGS. Thank you, Mr. Chairman. 

Chairman ISSA. Thank you. 

We now go to Mr. Mica. 

Would the gentleman yield for 10 seconds? 

Mr. MICA. Yes. 

Chairman ISSA. I might note that we will spend over $150 trillion over that period of time, just to put the trillion dollars in perspective. 

I yield back. 

Mr. MICA. Thank you. 

Mr. Borras, how much is the total DHS budget, did you say? In 

your testimony you gave a multibillion figure. 

Mr. BORRAS. I was referring to the—— 

Mr. MICA. Well, what is your total? What do you spend in DHS? 

Mr. BORRAS. The gross amount? 

Mr. MICA. The gross amount. 

Mr. BORRAS. The gross amount is just under $60 billion. 

Mr. MICA. Sixty billion. Okay, here is one of the categories of 

DHS, just your management, sort of your top bureaucracy. You 

spend $324 million under the category of Office of Chief Information Officer, is that correct? 

Mr. BORRAS. That appears to be. 

Mr. MICA. A third of the billion dollars for information office. 

Is that an area, Mr. Edwards, that might be a candidate for some 

cost savings? Is that absolutely essential for the process of DHS, 

Mr. Edwards? 

Mr. EDWARDS. Well, DHS spends about $6 billion in IT systems 

and infrastructure. Office of Chief Information Officer. 

Mr. MICA. Yes. So it might be a candidate. 

Mr. EDWARDS. Sure. 

Mr. MICA. Okay. Just my point. 

Let me drill down a little bit to TSA. First, the Secretary said, 

this is the 4th of March, we are going to see lines 150 to 200 percent as long as we see, and this is at TSA screening points. Are 

you aware of that, Mr. Borras? 

Mr. BORRAS. Yes, I am. 

Mr. MICA. Do you know any reason why she shouldn’t step down 

as Secretary when she makes a remark like that? Do you agree 

with it? Maybe we should have you step down too. Because there 

is no reason in an agency, how much is the agency’s total budget? 

How much is the agency’s total budget? It is $5.5 billion for TSA. 

Mr. BORRAS. For TSA? 

Mr. MICA. Yes. 

Mr. BORRAS. Yes. 

Mr. MICA. And within that you can move money around, can’t 

you, for sequestration? 

Mr. BORRAS. You cannot move money without reprogramming 

authority. 

63 

Mr. MICA. No, but, again, within the $5.5 billion, you have to cut $276 million. Now, let me ask you a question about how many personnel you have in TSA headquarters. Offline we have 3,900, just 

a hair under 4,000 people in administration, making, on average, 

$103,000 a year. Is that correct? 

Mr. BORRAS. I don’t know the exact number. 

Mr. MICA. Well, you should know. That is what is correct. It is 

online. That is the amount. And you have how many screeners? According to your online, also, 51,277? Is that correct, or in that 

range? 

Mr. BORRAS. In that range, yes, sir. 

Mr. MICA. And you can’t move some of the people out of administrative positions, sitting on their butt within just miles of the capitol of Washington, and put them to work? I mean, we should have 

the secretary out there screening people, if we need to do that to 

expedite people through the airport, and you. 

This is a joke. She needs to find other employment soon, and you may need to find it, and some of the 4,000 people making $103,000 

a year, and tell the public that they may be waiting three and four 

hours. You have the discretion to move money and personnel 

around within that account, isn’t that correct? 

Mr. EDWARDS. Yes. 

Mr. MICA. To meet that, Mr. Edwards? Mr. Edwards, the IG, just 

said yes. 

This is one of the most shameful things I have seen any agency 

do, and you are bloated beyond control. You have almost 66,000 

people; you have 10,000 administrative people out in the field. Do 

you know the percentage of people in the headquarters that are supervisory level? You ought to look at this information. It is nearly 

27; it is 26.8 percent. And some of those positions can’t be sequestered, Mr. Borras? 

We never intended Homeland Security to bloat to this extent. I 

was one of the authors of TSA. I can tell you that was never 

Congress’s intent. We never intended Homeland Security to grow 

to an agency that is totally out of control. This is an outrage to the 

American people. I am offended by the Secretary of Homeland Security to tell us and the American people that they are going to be 

subject to her form of torture to try to make sequestration look like 

it can’t be handled, that we can’t make these cuts and reductions 

from administrative overhead from management. Ten thousand 

people out in the field. 

How many airports are there where there is TSA presence, Mr. 

Borras, in the United States? 

Mr. BORRAS. It is about 470. 

Mr. MICA. Four hundred fifty-seven. And 30 airports have 70 

percent of the traffic, right? So you have airports with private 

screening, like Rochester, New York, Kansas City, Kansas, with 15 

to 18 TSA administrative personnel that you don’t need. You can 

get rid of some of these people. You can get rid of some of the people and get them out of the offices across the Potomac and around 

Washington, get them to work. And 51,000 screeners. Congress 

even put a cap of 40,000 screeners at one time. We started with 

68,500. What are you doing? It is outrageous. 

Chairman ISSA. I thank the gentleman. 

64 

Mr. MICA. I yield back the balance of my time. 

Chairman ISSA. Under Secretary, if you would like to answer, I 

will allow time. I know there were a lot of questions there. 

Mr. BORRAS. There were a lot of questions there and there were 

a lot of characterizations of both the intent of the secretary and of 

the Department. I appreciate the Congressman’s concern for aviation security. He has been very outspoken over the many years. 

Let me just say that we are doing everything we can to minimize 

the impact of sequestration not just in TSA, but across the board 

in the Department. I will say that the leadership is absolutely committed to minimizing the disruption of the services of the Department to both the traveling public, to the movement of cargo, to 

aviation security, to the protection of the President, to the response 

of natural disasters and otherwise. Sequestration is pretty much 

agnostic, Mr. Chairman. 

Chairman ISSA. I apologize for interrupting, but we are sort of 

on overtime that belongs to the other party. The gentleman, in 

that, did ask you if you could have reduced or you could reduce 

some of the administrative overhead. That seemed to be a clear 

question. Could you answer that? Then we will go to the other side. 

Mr. BORRAS. We are looking at, certainly, all of the overhead expenses, not just at TSA, across the board. We have instituted, in 

TSA, a hiring freeze; we have reduced overtime, which will have 

an impact, progressively, over time, not immediate, will have a progressive impact on operations. But we are looking at all areas. 

Chairman ISSA. Thank you. 

Mr. Tierney. 

Mr. TIERNEY. Thank you, Mr. Chairman. 

I know that this may not have been the intent of some people 

that put the Homeland Security laws together, but as one who 

voted against it, I think it was something we all could have anticipated would happen with the creation of a new department, it 

would blow out of control. I think at the time we said it was like 

rearranging the deck chairs on a sinking ship, as opposed to doing 

something constructive. 

Chairman ISSA. Would the gentleman yield? I heard it as strapping together multiple sinking ships, actually. 

Mr. TIERNEY. So here we are, and the fact of the matter is that 

we look at these things and we never should have let it get to sequestration. And I would hope that all these concerns that we 

show, Congress has the ability to dictate how money is spent, and 

maybe we ought to take some of that responsibility on ourselves, 

instead of grilling some of these witnesses. 

You are here and you should get grilled for your testimony or 

whatever, but Congress spends the dime. We ought to be deciding 

what money is going out to these departments. Then we don’t have 

to argue with you about how it is spent. So if we accept some of 

our responsibility, and if we had accepted it long before sequestration, life would have been better for a lot of different people and 

we could have avoided all of this. 

Now, Mr. Hale, I understand that the Joint Strike Fighter has 

actually been spared any major cuts under the sequester, is that 

correct? 

65 

Mr. HALE. No. It is a program project activity. It will take at 

least a 7.8 percent cut, depending on how it comes out. It will be 

reduced. 

Mr. TIERNEY. Okay. How do you intend to reduce it? 

Mr. HALE. The program manager will decide. They will look at 

a variety of things; support equipment, management reserves I 

would guess would be the start, but I expect we will buy fewer aircraft, probably two to four, and I think they are still thinking how 

they will do that. Incidentally, the whole game may change again, 

as Congress passes a budget, if they do so this week, because it will 

significantly affect the program project and activity status or structure. 

Mr. TIERNEY. Well, respectfully, I say to you your defense of the 

F–35 reminds me of the defenses I used to see of the F–22, and 

it is really a little bit disturbing. This program is out of control, 

and it looks to me like it is a program that just got too big to kill, 

and we find people just running around, not wanting to do what 

I think is pretty clearly indicated should be done on this. 

I note that in the Simpson-Bowles report; I note it on the 

Stimson report, a whole bunch of other reports that come out and 

indicate that this program is just growing exponentially, not necessarily to the benefit of the American people or our defense on 

that. 

Let me switch the subject, if I can, Ms. Halbrooks. We have a 

number of laws and regulations on the books that purport to encourage or to stop single source contracting. We really ask for full 

and open competition. Can you tell us a little bit about what risks 

are engendered by the failure to openly bid and compete a contract? 

Ms. HALBROOKS. I think open competition is inherent to getting 

the best pricing, the best value for the Government, and making 

sure that contracting is done in the most efficient and effective 

way. So it is a foundational concept that we compete contracts for 

the best price for the Government. 

Mr. TIERNEY. Well, recently, The Washington Post, among others, reported that no-bid contracts are increasing. 

Mr. Hale, I think one of the things that was reported is that the Department spent $100 billion on no-bid contracts last year. Is that 

correct? 

Mr. HALE. I don’t know that number. I will check for you. But 

there is a lot. 

Mr. TIERNEY. Would you get us that information, please? 

Mr. HALE. Yes. I will supply it for the record. 

Mr. TIERNEY. All right. So this happens even more in wartime. 

We found that out through the investigations we did on our own; 

we also found it out through the Wartime Contracting Commission, 

who said it was an unprecedented degree of no-bid contracts in 

both Iraq and Afghanistan and, really, there was no adequate competition on that. One example of that was $36 billion for the Logistics Civil Augmentation Program 3 contract. That was awarded to KBR, Kellogg, 

Brown and Root. The Army did not require competition on any task 

orders under the contract for eight full years. So in the absence of 

that full and open competition, no one should be surprised when 

66 

the Defense Contract Audit Agency found high amounts of questioned and unsupported costs. 

So we see this happening time and time again. It tends to create, 

particularly with the bridge extensions. Can you tell us how many 

of those sole-source bridge extension contracts exist, Mr. Hale? 

Mr. HALE. I don’t have that number either. 

Mr. TIERNEY. Would you get us that information as well? 

Mr. HALE. We will get that for the record. 

Mr. TIERNEY. It seems that that is being used to avoid re-competing the contract and it really creates an advantage for incumbent contractors, sort of stifles competition. 

What steps are you taking in the Department to sort of end that 

practice or to increase competition and reduce sole-source contracting? 

Mr. HALE. Well, the strongest one is a commitment to it, and we 

are committed to it. As Lynne said, it is a key. We are struggling 

right now because one of the best sources of competition is services 

contracting, and it is being cut severely as we try to achieve efficiencies, and it will be cut under sequestration and the other problems that we face. 

We are also, with lower budgets, finding it is harder to maintain 

multiple contractors in some of these large programs, because it is 

expensive up front to do it. But we share the commitment to competition is key to getting lower prices. 

Mr. TIERNEY. Just on the Defense Logistics Agency and the food contract over in Afghanistan there is a $750 million discrepancy in 

that contract, and yet they are giving them another sole-source 

contract for an extension on that. That kind of thing just seems absurd. 

Ms. Halbrooks, are you satisfied with the answer Mr. Hale just 

gave? 

Ms. HALBROOKS. Well, I appreciate his commitment, and the Department’s, to ensuring that sole-source contracts are scrutinized, 

but I think there still is a way to go. And the prime vendor example that you gave in Afghanistan does still present a concern, although we are encouraged that, after we issued our report, with potential monetary benefits of $125 million on that contract, that 

DOA actually went back and further scrubbed the books and looked 

deeper and is trying to recoup substantially more than that, which 

does show to me a willingness of the Department to take our IG 

recommendations and apply them more broadly to the problems at 

hand. 

Mr. TIERNEY. Except they gave the contract to the same company 

again. 

Ms. HALBROOKS. True. 

Chairman ISSA. Thank you. 

We now go to Mr. Walberg. We now go to Mr. Farenthold. Mr. 

Farenthold, would you yield for 10 seconds? 

Mr. FARENTHOLD. Absolutely, Mr. Chairman. 

Chairman ISSA. I just want to read from my Wikipidea on the F– 

22 Raptor. Sixty-six billion dollars was the program cost, 180 are 

in service and it continues to be a mainstay and a critical element 

in the stealth inventory of the Department of Defense. 

I will let that be answered later. 

67 

Mr. Farenthold. 

Mr. FARENTHOLD. Thank you very much, Mr. Chairman. As a 

member of the Transportation Committee, I am also deeply concerned about the TSA, so, Mr. Borras, Chairman Mica asks you 

about the statement Secretary Napolitano made, seeing doubling of 

wait times in airports as a result of sequestration. Has that happened? 

Mr. BORRAS. I am not aware that we have had any doubling of 

wait times at airports across the Country. 

Mr. FARENTHOLD. Has there been any significant measurable increase that you are aware of? 

Mr. BORRAS. I am aware of, in some instances, where, in some 

airports, due to the elimination or reduction of overtime that is required and has resulted in some additional wait time. 

Mr. FARENTHOLD. You are aware that the UK’s Telegraph reported that airport officials at two of our busiest airports, Atlanta 

and LAX, have reported no significant changes in wait time, nothing beyond what is normal. 

I guess my concern, and we are seeing it throughout the Government, is the scare tactics associated with sequestration and bad 

choices being made on where to implement those cuts. Are you all 

still talking about doing furloughs within the TSA? 

Mr. BORRAS. No. 

Mr. FARENTHOLD. All right. So how are you looking at meeting 

those cuts? 

Mr. BORRAS. Predominantly, again, the cuts at TSA cut across 

the various program plan activity accounts, the PPAs. The way 

TSA is structured, most of their salaries and expenses are in individual PPAs, so those will be subject to the 5 percent cut. 

Mr. FARENTHOLD. So you are going to cut salaries, then? 

Mr. BORRAS. No. You will have to reduce overtime; you will reduce training in other accounts. 

Mr. FARENTHOLD. Okay. And the chairman pointed out was it 

over 25 percent, one in four, there is one manager for every four 

TSA employees? I mean, that seems awful high to me, too. 

Mr. BORRAS. I don’t know that that is the number. I would be 

happy to provide the committee with a complete accounting of the 

supervisory staff ratio. 

Mr. FARENTHOLD. And with these cuts you all are still hiring, 

right? 

Mr. BORRAS. No, we have a hiring freeze. 

Mr. FARENTHOLD. Then how come there are 54 security specialist 

jobs currently posted on the Federal Government employment Web 

site? 

Mr. BORRAS. Well, I don’t know what date those were posted. 

Mr. FARENTHOLD. That was today. 

Mr. BORRAS. I don’t know what the posting date of those were. 

Mr. FARENTHOLD. All right, so you are wasting people’s time having them apply for jobs that aren’t there. You might want to go 

ahead and take those down. 

Mr. Hale, I wanted to visit with you about some of the Defense 

Department issues. I have a Corpus Christi Army Depot in the district I represent and they are potentially facing furloughs, despite 

saving the Government a ton of money on repairing rotary wing 

68 

aircraft. But assuming the Senate passes the MilCon VA and DOD 

appropriations similar to the House, are you going to have the 

flexibility to minimize furloughs and cuts and the overall effect of 

the sequestration on the program if we give you more reprogramming authority in an appropriations bill, as opposed to a CFR? 

Mr. HALE. Well, first, we didn’t, unfortunately, get, so far, at 

least, any additional transfer authority for reprogramming. Our 

problems are more than sequestration, Mr. Farenthold. You are 

probably aware of this, but the continuing resolution has the 

money in the wrong places. That will get fixed if the Congress 

passes it. 

But we have numerous other problems. We are going to protect 

our wartime spending, which means we have to take disproportional cuts in the base budget; and, unfortunately, right now we 

are spending more than we anticipated two years ago when we put 

together the wartime budget. When you add all that up, over the 

next seven months, we are about 40 percent short, under current 

laws, of our needs for O&M, which is causing the readiness crisis. 

The bill that is before Congress or the Senate right now, if it 

passes, will solve about a third of that, but we will still be in a crisis situation. We are going to have to cut training and lay off people. 

Mr. FARENTHOLD. I appreciate that. I am running out of time. I 

don’t mean to jump around, but I do want to get to Mr. Edwards 

and ask him a question specifically with respect to IT and homeland security. One of you all’s recommendations was increasing security from possible insider threats by simple things like disabling 

the USB port on computers so rogue employees couldn’t download 

all sorts of data. Have those been implemented yet? 

Mr. EDWARDS. Thank you, sir. TSA did not concur with us, so 

that remains still unresolved. 

Mr. FARENTHOLD. It seems to me like every low budget spy 

movie you have has somebody plugging something into a USB port 

and walking off with all sorts of data. Just turning those off would 

seem like an inexpensive, easy recommendation. And there are 

quite a few other recommendations throughout Homeland Security 

that haven’t been implemented and would save money, is that not 

correct? 

Mr. EDWARDS. There is 1,253. 

Mr. FARENTHOLD. Thank you very much. 

I yield back. 

Chairman ISSA. I thank the gentleman. 

We now go to the gentlelady from California, who was here at 

the bell, Ms. Speier. 

Ms. SPEIER. Mr. Chairman, thank you, and thank you to those 

at the witness table. 

I would like to spend a couple minutes talking about Ms. 

Halbrooks’ document, that we should probably spend an entire 

hearing on, because it talks about an issue that I thought was fixed 

decades ago, when we had gold-plated toilet seats, and we are paying exorbitant amounts of money for parts. 

In one of your reports you reference a ramp gate roller assembly, 

it looks like this little roller that you might see on a dishwasher, 

that was actually purchased at the Corpus Christi Army Depot. Its 

69 

cost from the Defense Logistics Administration would be $10.25, 

but we, at the Corpus Christi Army Depot, paid $1,626 for that. 

Now, that is a 15,768 percent cost increase. Why are we still having these kinds of problems? To you, Ms. Halbrooks and Mr. Hale. 

Ms. HALBROOKS. The root cause of the problems is a topic that 

probably Mr. Hale can address as well, but when the Department 

shifted, in 2004, to performance-based logistics, one of the unfortunate results was that the services are buying these types of parts 

from contractors and, in addition, DLA already has an inventory of 

excess parts. 

The reports that we have done, both with respect to the Sikorsky 

and Boeing contracts to support helicopters, where the spare parts 

are kept at the Corpus Christie Depot, have multiple examples of 

this type of thing. And you are right, it is a small part, it looks like 

a washer, and it is basically the Department has been buying spare 

parts that they already have in inventory and paying too much for 

them. 

Ms. SPEIER. All right, so how are we going to fix that, Mr. Hale? 

Mr. HALE. If we paid too much for that part, we need to get our 

money back. I am not familiar with that particular one. 

Ms. SPEIER. Well, you should be familiar with it. 

Mr. HALE. We have an organization to do that. 

Ms. SPEIER. All right, Mr. Hale, excuse me. You should be familiar with this because this is all out of an inspector general report 

that you should have studied very carefully when it was produced. 

Ms. Halbrooks, when was this produced? 

Ms. HALBROOKS. Our reports were issued in both 2011 and 2012. 

I will say, ma’am, that we have worked closely with the director 

of DLA. One of the concerns that we had when we identified that 

this problem was still remaining is that there were probably other 

contracts for equipment that the Department had where there was 

also excess inventory that needed to be drawn down. The Department has issued a policy, I am not sure if it was Army, I will have 

to get that for you or the Department can certainly, to require that 

they use the existing inventory. 

So they have responded to our reports and they have certainly 

concurred in our recommendations, and one of the agreements, 

rather, discussions that we had with the Department after these 

reports were issued was the efficient use of IG resources versus 

management proactive involvement. We could continue to look at 

contract after contract, or the Department could fix the problem. 

They indicated to us a willingness to proactively go and look at 

other systems and spare parts. We hope they are doing that and 

we are going to check up on them this year and do some more work 

in this area. 

Ms. SPEIER. It reminds me of the patient that complains about 

having been in the hospital and then finding out they paid $50 for 

an aspirin. It sounds like that is what we are doing in terms of 

some of these projects, so maybe that will explain why an F–35 is 

looking at a trillion dollars in costs over a short period of time. 

I guess I would like to see us fix something instead of just complaining about it. It is not very constructive for us to beat you all 

around the head and not have anything come from it. So I guess, 

Ms. Halbrooks, what I would like to hear from you is if there was 

70 

one thing this committee could kind of focus in on that would truly 

save money within the Department of Defense which you haven’t 

been getting traction on, what would that be? 

Ms. HALBROOKS. I think you have hit on one, spare parts, certainly, and I think the other one we have discussed as well, already, and that is the review of major weapons systems that are 

over budget and behind schedule. 

Ms. SPEIER. All right. In my remaining 17 seconds, let me just 

say that one of the other issues that I think we need to spend some 

time on is the overhead. We can talk about retaining somehow the 

profit sector, but if the contractors are allowed to pad their contracts with overhead, we are losing the battle. And I hope that you 

would address that at some point as well. Thank you. 

Chairman ISSA. I thank the gentlelady. 

We now go to the gentleman from North Carolina, Mr. Meadows. 

Mr. MEADOWS. Thank you, Mr. Chairman. 

And thank you, each of you, for your testimony. 

Secretary Borras, as you were testifying early on, you said over 

the last three years what you did was took a decentralized management approach and centralized that to become more efficient, is 

that correct? 

Mr. BORRAS. That is correct. 

Mr. MEADOWS. So essentially the management of DHS is under 

your purview and you oversee that in this new centralized organization? 

Mr. BORRAS. Well, we haven’t completely centralized. What I was 

referring to was the management directorates, those that report directly to me, the CFO, the CIO, the chief procurement office, et 

cetera, that those were largely decentralized in the management directorate and we have taken to centralize that. So if you are implying that I have centralized the management of CBP, TSA, et 

cetera, all under my control, the answer would be no. 

Mr. MEADOWS. So we are centralized in a decentralized way is 

what you are saying. So we have areas all over that still have their 

own vertical reporting areas. 

Mr. BORRAS. That is correct. 

Mr. MEADOWS. Okay. As we look at this, I want to focus on two 

areas, and one of it is the planning in anticipation of sequestration 

and how that was done. Because in some areas it sounds like we 

did unbelievable planning; in others it sounds like we did none. 

And I want to refer back. In 2011, some 26 employees received bonuses of over $10,000 apiece, with the highest bonus being $57,000 

to a single employee. There are indications that in 2012 not only 

did we cut back on that, but those were, indeed, increased in terms 

of the level of bonuses. Would you say that that is a fair characterization? 

Mr. BORRAS. That doesn’t square with my recognition of Department bonuses. Department bonuses over the last several years had 

begun to come down. So the amount of money we spend on bonuses 

has been decreasing. 

Mr. MEADOWS. So you would say 2012 decreased from 2011? 

Mr. BORRAS. I would be happy to provide you those numbers. 

Mr. MEADOWS. Well, from the Federal Web site, what we have 

is, under the Freedom of Information request, it indicated that 

71 

these facts are indeed correct: 26 people got bonuses of $10,000 or 

more and $57,000. So as part of this, in this anticipation, with regards to bonuses, when sequestration was originally signed into 

law, did you put out anything that said we needed to hold off on 

bonuses to make sure furloughs were not put on more of the rank 

and file? 

Mr. BORRAS. The Department issued guidance back in the fall. 

Our bonus cycle was much earlier than the sequestration cycle, but 

we put out guidance Department-wide which lowered the total 

amount available for bonuses. 

Mr. MEADOWS. So that happened as a result of sequestration, you 

put out a plan to reduce bonuses? 

Mr. BORRAS. Well, that was a recognition of the need to begin to 

control costs, absolutely. 

Mr. MEADOWS. All right. So as we look at this, going forward 

with this, I want to shift gears to, I guess, the secretary in the recent report we talked about, illegal traffic across the borders and 

some release of illegal detainees that we had of some 2,000, and 

I think the secretary warned that, because of sequestration, that 

we were going to have additional drug and human smugglers that 

were taking advantage of sequestration. How would this prediction, 

what was it based on, that we are going to have this additional 

human trafficking and drug because of sequestration? 

Mr. BORRAS. Well, I am not familiar with that specific quote. 

Mr. MEADOWS. It was in The Washington Post on Sunday. 

Mr. BORRAS. But I am not familiar with that specific quote. In 

general, all of the accounts, as I described earlier, are subject to 

the sequestration cuts, which includes, as well, those accounts that 

are in the removal operations of ICE. 

Mr. MEADOWS. So would you say that that statement was not 

based on any real data, then, it is just an overarching theme? 

Mr. BORRAS. Well, I don’t know the specific statement that she 

made relative to that. 

Mr. MEADOWS. So was there any study that was done in terms 

of additional increased drug trafficking that might result? Was 

there any study at all done, specific study? 

Mr. BORRAS. That wouldn’t be something that I would be specifically aware of; that wouldn’t be in my purview, to look at that kind 

of work. 

Mr. MEADOWS. So who would know about any studies? 

Mr. BORRAS. Well, whether it is the Customs and Border Protection or ICE, I am sure we can provide the committee some information to respond to your question relative to studies on impact on 

border. 

Mr. MEADOWS. All right, thank you. 

I yield back. Thank you, Mr. Chairman. 

Chairman ISSA. I thank the gentleman. 

We now go to the gentlelady from the District of Columbia, Ms. 

Norton. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

Some had looked at the cuts, certainly the 10-year cuts, as opportunities to look at the untouchable budget, the Defense Department 

budget. No one, of course, envisioned that any budget, domestic or 

defense, would be aided by the sequester cuts. But some, certainly 

72 

on the other side of the aisle, were willing to do the sequester, because they want cuts no matter what happens. At least they got 

some cuts. 

I note, by the way, that the Republican budget, both last year 

and this year, cuts enormously, and even this year even more enormously, domestic programs, while increasing the Pentagon budget. 

It does seem to me that the justification lies on those who want to 

increase any budget at a time when every other budget is being 

cut. 

So let’s take a look at one program. There are a thousand programs one could choose. The Joint Strike Fighter program. That is 

a really ambitious program, a $400 billion program, because it relates to existing fleets across the board; Army, Marine Corps, and 

Navy. And that may be well the most efficient thing to do, so I 

don’t question the initial idea. But this project has faced all of the 

problems associated with big defense projects of the kind from cost 

overruns to poor performance of the aircraft itself. I am interested 

in the bad management of the acquisition process. 

In 2003, the plan was to purchase 2500 aircraft over the life of 

this program. Despite the problems, including the cost overruns, I 

understand the Department still plans to purchase 2500 aircraft. 

Mr. Hale, is that correct? 

Mr. HALE. Yes. 

Ms. NORTON. Now, let’s look at the cost estimate for one plane. 

And I have to ask what is the function of these cost estimates if 

they rise so consequentially. In 2003, the cost estimate was $81 

million; today it is estimated to cost twice as much. We have gone 

through a recession. I thought the cost of materials was less. So I 

have to understand that increase during this period, so I ask, first, 

could you explain why the acquisition cost per plane has doubled 

in just 10 years? 

Mr. HALE. Well, I would like to check those numbers for you for 

the record. I don’t have them in my head. 

Ms. NORTON. Would they surprise you if those were in fact correct? 

Mr. HALE. No. I mean, the costs have gone up substantially. 

Ms. NORTON. Well, what would cause the cost to double? 

Mr. HALE. Unanticipated cost growth. We misestimated what it 

was going to cost to develop and to buy the aircraft when it was 

first put forward and unanticipated problems in the testing process 

I think are the two major reasons. 

Ms. NORTON. Having done such projects over the years, you don’t 

build in problematic areas so that you wouldn’t have what seems 

hard to explain, such huge increases in costs? 

Mr. HALE. We tried, but obviously in this case we weren’t successful, or at least not fully successful. 

Ms. NORTON. All right. Well, let’s look at the sequester. Surely, 

that provides an opportunity for you to look at some way to cut the 

acquisition cost of this Joint Strike Fighter. 

Mr. HALE. And we didn’t need sequester to do it. We have been 

pushing in every way we can, including trying to sharpen our pencils with the contractor and do a better job of negotiating with 

them, and I think we have at least had some success in that area. 

73 

Ms. NORTON. So do you expect that, particularly when the contractor sees what you are going through, and since you have been 

negotiating, that you will at least be able, at this point, to bring 

down this cost from $161 million, doubling the cost that was predicted 10 years ago? 

Mr. HALE. I would hope that we could bring them down. That 

certainly is our goal and we will do everything we can to make that 

happen. 

Ms. NORTON. Mr. Hale, are you in the process of negotiating now 

on that matter? 

Mr. HALE. I am sorry? 

Ms. NORTON. Are you in the process of negotiating to bring down 

the cost? 

Mr. HALE. Yes. We buy these planes in lots, and each lot is negotiated, and there was a lengthy negotiation over the prior lot, and 

it was caused by our desire to bring down the cost. So, absolutely, 

we will continue in future ones. 

Ms. NORTON. Could I ask, Mr. Chairman, that within the next 

60 days you report to the chairman of this committee what 

progress you have made on bringing down the cost of the Joint 

Strike Fighter program? 

Mr. HALE. We will do it. 

Ms. NORTON. Thank you very much. 

Mr. JORDAN. [Presiding.] Thank you. 

The gentleman from Oklahoma, Mr. Lankford. 

Mr. LANKFORD. Thank you, Mr. Chairman. 

Mr. Hale, I would like to get a chance to follow up on the conversation earlier about sequestration and the effects of the full year 

appropriations bill on DOD. You had mentioned before that about 

a third of the problem is solved in that. Could you go into greater 

detail on what help do you receive with a full year appropriation? 

Mr. HALE. The major help, and the continuing resolution fixed 

our base budget at the fiscal 2012 level. We made major changes 

between 2012 and 2013, increasing our operation and maintenance 

funding to maintain ready forces and cutting back on investment 

to meet the budget targets. The CR wiped that out. 

If we get an appropriations bill as the current one being debated 

before the Senate, it will get the money in the right appropriations, 

and that is the major help that it will provide to us and it will be 

significant. But it won’t get rid of the problems. We will still have 

sequestration and we still have a commitment to protect our wartime or OCO budget, which means a disproportionate cut on the 

base and some other OCO problems. 

Mr. LANKFORD. I understand. I am trying to drill down a little 

more. A general statement of it will help doesn’t help us. What 

does that mean is what I am asking. Because we are very concerned, as you are as well, about protecting workers and not protecting waste. Where we can find waste, we need to eliminate it. 

That is why the IG report is so significant to us, as well and your 

Department has been very helpful to identify those things with the 

IG and say let’s take action on that. 

But where we can find issues with inventory, as Ms. Speier had mentioned earlier, we have a washer that is $1600 and that kind 

of thing happens, that infuriates us. We want to protect our workVerDate Aug 31 2005 14:55 Jul 09, 2013 Jkt 000000 PO 00000 Frm 00077 Fmt 6633 Sfmt 6633 C:\DOCS\81664.TXT APRIL
74 

ers in the process, as you do as well, I am sure, so I need more 

specifics. 

When you say it helps a third of the way there, what do you 

mean by that? 

Mr. HALE. Briefly, we have a shortfall of around $35 billion 

under current law and what is called our operations and maintenance budget. It is made up of sequestration; it is caused by the 

fact that the money is in the wrong appropriations and by the OCO 

or wartime problems. I can give you more detail, but I will take 

more time than you would like. About a third of that will get fixed 

when you put the money in the right appropriations, if the Congress enacts that legislation. 

And I couldn’t agree with you more. We need to try to accommodate all of these, and we have told our managers find efficiencies 

if you can. But these cuts are sufficiently abrupt and large that we 

will have to go well beyond straight efficiencies. Anything that we 

could identify and get approved by Congress wouldn’t be enough to 

get $46 billion out of the defense budget in seven months, so we 

are going to have to do other things. 

Mr. LANKFORD. When you talk about the $46 billion, that is the 

budget authority number. What is the budget outlay number that 

has bene identified? That is the actual. What actually happens this 

year? 

Mr. HALE. We don’t deal in outlays, usually, but it is probably 

about 80 percent of that. A lot of it is O&M. I would have to get 

you that. We think in budget authority, which is what you appropriated. 

Mr. LANKFORD. I understand, but the latest estimate that we 

have is this is about an $85 billion cut. 

Mr. HALE. That is for the total Government. 

Mr. LANKFORD. Correct, across the total Government. And the actual budget outlays for that for this single year is about $45 billion 

to $44 billion. 

Mr. HALE. Okay. 

Mr. LANKFORD. So that statement would be that there is only a $1 billion cut everywhere else this year. I don’t think it would hold 

up. So it is about half of it. So what I am trying to figure out for 

DOD, have they identified what effect it has this year on it or what 

effects it is going to have out. Does that make sense? 

Mr. HALE. I am not sure I understand. On the outlays, you 

mean? 

Mr. LANKFORD. On the outlays. 

Mr. HALE. We don’t normally deal with that. I don’t have that 

number in my head. It is probably 75 percent or so of the budget 

authority cut, but I will get it for the record. 

Mr. LANKFORD. Okay. That would be terrific to be able to have 

because we are trying to identify what is the actual impact for this 

single seven month time period. It is not $46 billion for this seven 

month time period, though the effects of it have to take and have 

to start with that. I understand how it goes through the process. 

You also mentioned that there has been a dramatic increase in 

the cost of the war, or at least what you expected it would be in 

that. Can you give us some additional detail on that, especially 

since we referred to several things where prime contractors and 

75 

some waste that is there? I don’t want a war fighter hurt based on 

us not taking some of these recommendations in place. 

Mr. HALE. Two years ago, when we put together the overseas 

contingency operations budget, we underestimated the tempo of operations for the Army and the Air Force. We have also seen higher 

costs for transportation to get equipment out of Afghanistan, partly 

because of the ground lines, our inability to get full access to the 

ground lines of communication in Pakistan. The combination of 

those events have left us probably $6 billion to $10 billion short in 

fiscal 2013 of OCO budgets, and we are working to find every way 

we can to cut those back at the moment, because it will be a very 

difficult thing for us to handle in this kind of an environment. 

Mr. LANKFORD. Okay. One thing, if we can follow up on this in 

the days ahead. Dr. Coburn, in the Senate, has identified multiple 

areas where DOD overlaps with other agencies, whether that be 

energy research or a lot of different research projects. It tends to 

be that DOD ends up being the landing point for, if you want to 

do something in research for something, you land in DOD because 

no one can vote against defense funding on that. 

Has there been any progress made of identifying some of those 

specific projects to say there is no reason for us to do this, this is 

waste, and be able to get rid of it? 

Mr. HALE. So this is the department of everything report? 

Mr. LANKFORD. That is correct. 

Mr. HALE. The big dollars that were in there were things, and 

some of them we are doing, cut back on our defense agencies and 

we have made every effort to do that. They have been part of our 

overall reductions that I mentioned in my testimony. We have cut 

back on a number of general officers and senior executive service, 

one thing he recommended. He recommended we cut back on tuition assistance and, painful though it is, we are in the process of 

doing it. 

But I would point out that some of the things he recommended 

actually run counter to the laws you passed. He urged us to take 

a large number of military personnel and make them into civilians 

because they are sometimes cheaper. The Congress passed a law 

that said we had to cut proportion. 

Mr. LANKFORD. I understand. 

Mr. HALE. So we tried to implement his recommendations. 

Mr. LANKFORD. I understand a large part of his recommendations 

dealt with things like energy, where DOD and DOE are both doing 

energy research. And I understand it helps protect our men and 

women in uniform if we can have more efficient vehicles on the 

fields, having to refuel less. I get that. But if research is already 

being done in some other place, we need to be more efficient with 

that. That is just coordination between agencies to get that accomplished. 

With that, I yield back. 

Mr. JORDAN. I thank the gentleman. 

The gentleman from Wisconsin, Mr. Pocan, is recognized. 

Mr. POCAN. Thank you, Mr. Chair. I have a question really that 

is more proactive in this area of trying to reduce waste and improve efficiency. The question is for Mr. Hale. 

76 

I know that right now the DOD and the VA are trying to do a 

joint venture to do electronic health records, and I give a lot of 

credit to DOD that you did put out an RFI to some private contractors to take a look at that, but I think the concern that some of 

us may have is the original proposal was going to cost somewhere, 

I think the range is pretty wide, $4 billion to $16 billion over a six 

year process if we did it internally. 

Yet, I know there are a lot of vendors who do this currently who 

have what you would call, I guess, off-the-shelf programs that could 

work to integrate so that you could have this done much, much 

more quickly and at a fraction of the cost, at least initially. 

So, again, I give credit to DOD because I know you have done 

the RFI to the commercial providers to get some more information. 

DVA has not; they plan on, I think, using Vista and doing it internally still, at this point. 

I was just wondering what you are looking at as you are making 

this decision whether or not you are going to try to go to an offthe-shelf, more immediate and less costly plan, or what you are 

looking at as you balance, I guess, with DVA, if they are not going 

to do something. 

And let me just give you my concern. Back in our legislature, we 

did this with a voter file. We had someone create a system from 

scratch at a cost of $27 million, which, on the day the contract 

ended, we threw out and we had spent the $27 million. And our 

neighboring State of Minnesota did a system for about $3 million. 

So sometimes when you try to create something from scratch, especially with a six-year timeline, that is like a generation in software 

difference. 

I just want to know a little more about the thinking, because if 

this is an area we can provide some immediate savings now to 

what is budgeted for and have a system in place sooner, I would 

just like to know a little more how DOD is looking at this. 

Mr. HALE. Well, we are committed, our HR, to working with VA. 

It is a high priority program for us and for them. I have to tell you 

I don’t think we have figured out how to do it yet. I will also tell 

you we have not budgeted anywhere near the sorts of numbers you 

mentioned. We spent about $300 million of DOD money on that 

project so far, and we want to hold down the cost wherever we can, 

but we also want to make it work. So I can’t give you a blueprint. 

I will go back for you and check for the record to see if there is 

any additional information I can provide. But I think, frankly, we 

haven’t figured it out. 

Mr. POCAN. Okay. Can I ask is there a concern that you are not 

looking, and not specifically DOD, but the combined forces of the 

two agencies, at doing something that would be a little more immediate and a little less costly by doing one of these off-the-shelf, and 

there is a number of companies that do it that are out there, versus 

trying to kind of do this from scratch? 

Mr. HALE. There is an internal balance, sometimes we have tried 

off-the-shelf stuff and it just hasn’t worked because it doesn’t need 

our needs. So we have to balance the two. But I hear your point 

and, again, I think we are looking at all options right now and 

working with the VA, but I want to underscore we are committed 

to this project. 

77 

Mr. POCAN. Well, if you could provide the committee with some 

additional information on that, it would be very helpful. And just 

so you know, I have called and DOD staff have been extremely 

helpful when we have called on this. But I think your estimated 

cost that is coming out of this joint venture is the $4 billion to $16 

billion, but I think we have had some private firms to us in the 

under $1 billion cost. So it is a big, big difference and that is why 

that and the fact that it could be implemented in a fraction of the 

time a lot of us are just very concerned. So any information you 

can provide the committee would be appreciated. 

I yield my time back. 

Mr. JORDAN. I thank the gentleman. 

The gentleman from South Carolina is recognized, Mr. Gowdy. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Mr. Borras, what is a Level 1 detainee? 

Mr. BORRAS. You are referring to in ICE? 

Mr. GOWDY. Yes. 

Mr. BORRAS. That is something that I would have to get back to 

you on. 

Mr. GOWDY. But you wouldn’t disagree if I told you it was an aggravated felon. Level 1s are aggravated felons, and 10 of them were 

released due to sequestration. Do you know what it costs per day 

to detain an aggravated felon? 

Mr. BORRAS. No, I do not. 

Mr. GOWDY. Would you disagree if I told you it was $122 a day 

to detain an aggravated felon? 

Mr. BORRAS. No. A hundred twenty-two dollars sounds approximately right in terms of our cost per detention per bed per night. 

Mr. GOWDY. All right, so if it is $122 a day to detain a Level 1 

aggravated felon, do you know how many Level 1 aggravated felons 

were released by ICE as part of their cost savings due to sequestration? 

Mr. BORRAS. I do not. 

Mr. GOWDY. It would be 10 of them. So 10 times 122, even for 

a liberal arts major, is what, about $1,200 a day? Is that close? 

Mr. BORRAS. That sounds good. 

Mr. GOWDY. Is there nothing else in the Department budget 

where you could find $1,200 a day in savings other than to release 

Level 1 offenders? 

Mr. BORRAS. Well, the issue of whether it is Level 1 or any offenders aside—— 

Mr. GOWDY. Well, right now it is Level 1 because they are aggravated felons. So could you not find $1,200 somewhere else in the 

DHS budget other than releasing Level 1 aggravated felons as part 

of your cost-saving measures? 

Mr. BORRAS. If I had the discretion to be able to pick and choose 

where in the Department to pull savings, I certainly can do that. 

Mr. GOWDY. Now, wait a minute. How much money is DHS sitting on? Right now. 

Mr. BORRAS. Our total budget? 

Mr. GOWDY. No. How much unencumbered money are you sitting 

on right now? 

Mr. BORRAS. Unobligated money, I don’t have that exact number. 

78 

Mr. GOWDY. Well, I don’t need an exact number. Is it more than 

$1,200? 

Mr. BORRAS. Yes, sir. 

Mr. GOWDY. Okay. So don’t act as if you didn’t have any choice 

but to release aggravated felons. You are not suggesting that, are 

you? That the only choice you had was to release Level 1 aggravated felons back onto the streets? Is that what you are suggesting? 

Mr. BORRAS. I am not suggesting that in the least. 

Mr. GOWDY. Mr. Edwards, did you find any places where DHS 

might possibly save $1,200 a day? 

Mr. EDWARDS. We have a number of recommendations. 

Mr. GOWDY. I will just settle for one. Where is one where they 

might possibly have been able to do something other than release 

aggravated felons as part of their cost-saving measures? 

Mr. EDWARDS. Well, on this release part of it, I received a letter 

last week from Senator Coburn and I am looking into it, so I can’t 

really comment on that. 

Mr. GOWDY. Well, comment on any area where they might possibly have found $1200 a day. Anything? Conferences? Travel? 

Detailees? Vehicles? 

Mr. EDWARDS. Yes to all of that. 

Mr. GOWDY. Promotional materials? Anything? 

Mr. EDWARDS. Yes to all of that. 

Mr. GOWDY. Mr. Borras, when was the first time you realized the 

sequestration might be a possibility? 

Mr. BORRAS. Probably in August of 2011. 

Mr. GOWDY. August of 2011. So that gave you how many months 

to prepare to do something other than to release Level 1 aggravated felons? How many months between August 2011 and March 

2013? 

Mr. BORRAS. Nineteen, 20 months. 

Mr. GOWDY. All right. Would you agree with me that the decision 

to release Level 1 aggravated felons was not the only option you 

had? There were other places you could have cut cost. Do you agree 

or disagree with that? 

Mr. BORRAS. I don’t know enough about that particular budget 

line item to know what other options were available in that PPA 

to make choices to result in that release. 

Mr. GOWDY. Well, I am going to ask you again. Is your testimony 

that the only choice ICE had was to release aggravated felons back 

onto the street? There was nothing else they could do as a cost-savings measure? Is that your testimony? 

Mr. BORRAS. No, that is not my testimony. 

Mr. GOWDY. Okay. All right, thanks. 

Chairman ISSA. I would ask the gentleman have an additional 

one minute. Would the gentleman yield? 

Mr. GOWDY. Be happy to, Mr. Chairman. 

Chairman ISSA. Just following up. I want to make sure we get 

to this. Nothing in sequestration forced you to make that decision, 

is that correct, or your agency? 

Mr. BORRAS. Not that I am aware of. 

79 

Chairman ISSA. There were, as the gentleman was asking, there 

were clearly alternatives that could have been pursued. So this was 

a choice, not a requirement. 

Mr. BORRAS. I would have to assume that it was done on the 

basis of analysis of that particular budget activity. 

Chairman ISSA. Okay, let’s do the budget activity. 

Mr. Edwards, quickly, if you, from your experience, if you simply 

didn’t apprehend and incarcerate non-Level 1 felons, wouldn’t you 

quickly accomplish the same as the release of those felons? Looking 

at the amount of those felons released and the amount that come 

in every day in less than a month, if you just didn’t take in these 

other people, wouldn’t you reach the same number as releasing 

these felons? 

Mr. EDWARDS. Looking at your analysis, that makes sense. 

Chairman ISSA. Okay. I thank you. 

Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Mr. Borras, this issue that Mr. Gowdy raised about aggravated 

felons, isn’t that really a matter of a line item in your budget, not 

about sequestration? Aren’t you limited to 34,000 and you had 

36,000? 

Mr. BORRAS. We are required to make 34,000 beds available, that 

is correct. 

Mr. CONNOLLY. That is right. And you exceeded that number, so 

you had to do something to bring it down, since Congress is the one 

that mandates this line item in the budget, is that not correct? 

Mr. BORRAS. We do have a mandated requirement. 

Mr. CONNOLLY. That is right. So it has nothing to do with sequestration, per se; it has to do with how we appropriate your 

funding, is that correct? 

Mr. BORRAS. Yes. 

Mr. CONNOLLY. Thank you. Just to clear that up. 

There seems to be a narrative going around, all of a sudden, that 

sequestration is not so bad and that anything that is unpopular or 

anything that might attract attention unfavorably can be avoided. 

We even had a suggestion a little earlier in this hearing that 

maybe the secretary herself should leave her office and go and 

clear passengers at an airport somewhere. And I find that intriguing since so many people, just last summer, were decrying how 

dreadful and apocalyptic the consequences of sequestration in fact 

would be. 

Mr. Borras, you are in management. Presumably, you have been 

looking at worst case scenarios with respect to sequestration. Your 

own testimony is you have certainly been cognizant of it since August of 2011. So you have gone through some scenarios, is that not 

correct? 

Mr. BORRAS. That would be correct. 

Mr. CONNOLLY. And is it inevitable that we are going to see furloughs in the workforce that falls under your purview? 

Mr. BORRAS. That is correct, particularly in Customs and Border 

Protection. 

Mr. CONNOLLY. Right. I was going to get into that. So will we 

have furloughs of TSA employees that are unavoidable? 

80 

Mr. BORRAS. The answer to that question is a little complex. As 

I alluded to earlier, the current Senate CR that is being debated, 

and should it come to pass, will change some of the financial parameters of the sequestration as we know it today. 

Mr. CONNOLLY. All right. Absent that, because that hasn’t happened yet, presumably, you have to plan for furloughs in the TSA 

workforce, is that correct? 

Mr. BORRAS. Well, we have the ability right now to avoid furloughs in the TSA workforce. 

Mr. CONNOLLY. Entirely? 

Mr. BORRAS. Entirely. 

Mr. CONNOLLY. So what we heard earlier about up to 13 days of 

furloughs in the 47,000 workforce were false? 

Mr. BORRAS. No, I wouldn’t characterize it as false. I think there 

have been different iterations of sequestration, depending on what 

time. For example, there was a scenario based on the January 1st 

and the percentage cut that would be required to meet that. Then 

there was another calculation, series of calculations based on the 

March 1st date. The big uncertainty is since we don’t know what 

the funding availability is for the back half of the year, we are 

making projections, estimates based on limited amount of information. 

Mr. CONNOLLY. And do you expect furloughs in the CBP? 

Mr. BORRAS. In fact, we have already issued 60,000 furlough notices at Customs and Border Protection. 

Mr. CONNOLLY. And why were you so able to do that, but not on 

the TSA? 

Mr. BORRAS. On the Customs and Border Protection, their budget, the way it is structured, the PPAs that contain the salaries and 

expense accounts are predominantly salaries, so there is no alternative; you cannot move money around from different program activities, so the cut has to come out of the salary and expense line 

item. And we are calculating presently about 12 to 14 days of furlough. 

Mr. CONNOLLY. You were asked a little bit earlier by my friend 

and colleague from Texas, Mr. Farenthold, whether there had been 

any major delays or disruptions in security at major airports in the 

United States since sequestration kicked in, and you answered not 

to your knowledge, is that correct? 

Mr. BORRAS. That is correct. 

Mr. CONNOLLY. When did sequestration kick in, Mr. Borras? 

Mr. BORRAS. March 1st. 

Mr. CONNOLLY. March what? 

Mr. BORRAS. March 1st. 

Mr. CONNOLLY. And what is today’s date? 

Mr. BORRAS. Today is still the 19th. 

Mr. CONNOLLY. The 19th. So it has been 18 days. So did we expect the consequences of sequestration to kick in within the first 

19 days? 

Mr. BORRAS. No. I think the expectation that it would be progressive. 

Mr. CONNOLLY. Right. So the fact that we haven’t seen major disruptions doesn’t mean there couldn’t be some, and, as a matter of 

fact, we haven’t really seen the full kick-in of sequestration, just 

81 

given the nature of the calendar, 19 days. We are not talking about 

the apocalypse here, we are talking about a rolling set of spending 

reductions that cumulatively most certainly will have an impact. 

Would that be accurate? 

Mr. BORRAS. That is an accurate statement. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Chairman ISSA. Thank you. 

Pursuant to wanting to make sure that we do get the facts correct, on television, Secretary Napolitano said the following: several 

hundred, relating to the perfect storm of budgetary problems, the 

release of ICE-held prisoners, several hundred were related to sequester, but it wasn’t thousand. Oddly enough, between one side 

saying it was thousand and perhaps zero, the secretary has cleared 

it up, it was several hundred. 

With that, we go to the gentleman from Arizona, Mr. Gosar. 

Mr. GOSAR. Thank you, Chairman. 

First of all, I would like to thank the inspector general’s office. 

It is celebrating their 35th anniversary. It started back in 1978 

with 12 of the first 73 IGS, so thank you very, very much. 

For Ms. Halbrooks and Mr. Edwards, are you privy to the OMB 

documents? 

Ms. HALBROOKS. Regarding what, sir? 

Mr. GOSAR. Prevailing wage. The discrepancy in prevailing wage. 

Ms. HALBROOKS. I am not familiar with that issue. 

Mr. GOSAR. I find it very interesting that we are talking about 

tens of billions of dollars, and yet they cite 100 percent failure in 

prevailing wage accuracy that could save, if we had better accuracy 

on the prevailing wage, tens of billions of dollars, probably in both 

of your departments. Would this be something that would be very 

acutely brought forward? 

Mr. EDWARDS. We would be glad to look into that. 

Mr. GOSAR. I would like to. You know, the current format is 100 

percent, at least with the audit, the responses were 100 percent 

failure on those. If we were just to move that to the Department 

of Statistics, we would have much more accuracy and even, by their 

consensus, we would send tens of billions of dollars across the 

board. 

Mr. Borras, is this the first time we have gone through sequestration? 

Mr. BORRAS. Yes. 

Mr. GOSAR. Wrong. Wrong answer. In the 1980s we did sequestration. Let me ask you another question. Are you aware there was 

two programs or two bills put forward to mitigate sequestration in 

a much better scenario, start the conversation? Two bills from the 

House, how about that? Were there two bills from the House? 

Mr. BORRAS. I believe there were. 

Mr. GOSAR. Yes, one in May of 2012 and one in December of 

2012. Let me ask you another question. Is it a one-way street in 

which Congress dictates, cannot the agencies ask to mitigate? 

Mr. BORRAS. Absolutely. 

Mr. GOSAR. Where was that? Is there any documents you can 

point to asking Congress for mitigation in each of the different 

agencies, in sequestration? 

82 

Mr. BORRAS. Oh, not that I am aware of. But you asked me is 

it possible. 

Mr. GOSAR. So there is lack of leadership. 

Mr. BORRAS. Well, I wouldn’t characterize it as lack of leadership. I think we have been doing, and I have testified—— 

Mr. GOSAR. Well, first of all, let me interrupt you. Obviously, you 

didn’t because, in your testimony earlier, you said that you thought 

the sequestration aspects would be mitigated out, right, early in 

your testimony today? 

Mr. BORRAS. I did say that was the expectation. 

Mr. GOSAR. Yes. I mean, that’s typical. I am private sector. I am 

a dentist impersonating a politician. So I can see where bureaucrats get that kind of connotation. I find it offensive to the taxpayer 

that we would mitigate that. I think that what we should have 

been doing is looking at the opportunity for better spending the 

taxpayer dollars. 

Mr. Edwards, I want to get back to in your testimony you mentioned the Department of Homeland Security was not complying 

with the Federal Financial Management Improvement Act of 1996 

or the OMB’s requirements under its revised version of Financial 

Management Systems Circular. Can you explain why DHS has yet 

to comply with these laws and directives? 

Mr. EDWARDS. Yes, sir. Initially, DHS went with the big bang 

concept of having this one huge system, but now, under Mr. Borras’ 

leadership and others from the Department, instead of having this 

big bang approach, have each one of the components have a reliable financial system and then use business intelligence to draw 

the information out that could be produced daily. They are in the 

process of doing that, but still, even though they achieve the 

auditable qualified opinion, it was heavy lift because of the manual 

processes. But the hope is that as the systems, individual systems 

at the components come together and are fully functional, that 

would meet the requirement. 

Mr. GOSAR. So it seems to me when Mr. Borras was talking in 

regards to this, some parts within the agency are not responding 

to others or they have a different accountability system. Is that 

true? 

Mr. EDWARDS. They all have their own individuals systems now, 

and some of them are legacy systems. For instance, CBP has a 

really good system; Coast Guard system is not that good and they 

are working on it; FEMA is working on it as well. So all of these 

systems, once it is fully functional individually, could come together 

with a business. 

Mr. GOSAR. Is there some way that we could initiate making that 

speed up that system a little bit, Congress? 

Mr. EDWARDS. Absolutely. 

Mr. GOSAR. And how would that happen? 

Mr. EDWARDS. You would just, in the appropriations bill, put in 

language saying that this needs to be met. 

Mr. GOSAR. Mr. Chairman, I would like from both Ms. Halbrooks 

and from Mr. Edwards re-looking at the calibration of accuracy for 

the prevailing wage and what kind of savings we could save in both 

DOD and Homeland Security. I would appreciate that in writing. 

Chairman ISSA. I thank the gentleman. 

83 

And if you would agree to give those in follow-up writing, that 

would be helpful. 

Ms. HALBROOKS. Yes. 

Chairman ISSA. Thank you. 

We now go to the gentlelady from Illinois, Ms. Duckworth. 

Ms. DUCKWORTH. Thank you, Mr. Chairman. 

Ms. Halbrooks, in your testimony you indicated that over the 

past 10 years the DOD IG’s office has issued over 1,300 reports and 

7,684 recommendations of deficiencies. Of these, you have a very 

remarkable 95 percent of cases where the cases were addressed 

and closed. 

So I am confused as to why your office would walk away from 

the responsibility of providing oversight for the F–35 acquisition 

process, the most expensive weapons system that we have ever 

purchased in our Nation’s history, especially the concurrent acquisition process, when oversight of the acquisition process is one of 

the things, in your testimony, that you say you need to provide 

oversight for. 

Ms. HALBROOKS. Thank you. I don’t think that we have walked 

away from oversight of the acquisition process for that system. I 

think that we are confident that there is oversight within the Department and from others in Government, and decided to focus our 

resources on a complementary review for that weapon system, as 

well as other weapons systems that weren’t getting as much scrutiny but also offered potential savings. 

Ms. DUCKWORTH. Potential savings as high as could be gained 

from savings from the F–35 process? 

Ms. HALBROOKS. Well, the potential savings would all depend on 

the recommendations and how management would implement 

them. Certainly, some of the lesser systems, if our recommendations are that the requirements be scrutinized and they are canceled, could potentially also yield large dollar savings. 

Ms. DUCKWORTH. So, now, will you be relying on other people to 

provide oversight of the retrofitting process for F–35s, the ones that 

we have already bought but are not operational and taxpayers will 

still have to fund up to I am hearing figures from $1.7 billion to 

$4 billion to retrofit those aircraft? Will you be relying on other 

people to provide that oversight? 

Ms. HALBROOKS. Well, we want to make sure the Department 

has the best information from objective, unbiased sources, so we 

will continue to look at whose best position to provide that; and if 

we need to get involved, we will. 

Ms. DUCKWORTH. Okay. 

Mr. Hale, I happen to agree with you that certainly providing our 

troops with the best equipment and most advanced equipment, and 

moving them way from aging weapons system is certainly a priority. I flew the oldest flying Blackhawk in the United States Army 

inventory, a 1978 model delivered in, it was the fourth one off the 

production line. So I understand aging weapons systems. But, to 

date, the F–22 has yet to fly a single combat mission and, to date, 

we yet have a single F–35 that is operational. It can’t even do 

vertical takeoffs and landings right now, except for in test flights. 

In looking at this deeply flawed process, the concurrent acquisition process for the F–35, are you planning, in DOD, to continue 

84 

that type of process in the purchase of future weapons systems, 

such as sixth generation fighters, which we are already saying that 

we need, even before the F–35 is delivered? 

Mr. HALE. There is a balance to be struck here. If you eliminated 

all concurrency, total testing, everything done completely, it would 

take us 25 years, instead of 10, to do it. There is a balance to be 

struck. I am not arguing we have done it ideally in the case of the 

F–35. I think there are lessons to be learned and we could do better. But I don’t think we want to eliminate concurrency if sensible 

amounts of it speed getting these weapons into the hands of our 

troops, and that is important. 

Ms. DUCKWORTH. But these weapons systems that we are getting 

into the hands of our troops can’t actually be flown or used in combat because of the concurrent process. 

Mr. HALE. Well, we are not going to put it in the hands of troops 

until it can do the things it has to do to both protect them and fight 

effectively, and that is probably why we haven’t got IOC yet for the 

F–35. But we are going to make that plane work. I have a long history of doing it. It is not always pretty, but we will make that 

plane work. 

Ms. DUCKWORTH. And how far behind schedule from when we 

started the concurrent acquisition process, will the F–35 be operational? 

Mr. HALE. That is a good question. 

Ms. DUCKWORTH. It is now what, 10 years behind schedule? 

Mr. HALE. I don’t have that in my head, but it would be a substantial period. 

Ms. DUCKWORTH. So I say again are you saying that you will still 

pursue the same concurrent acquisition process for future weapons 

systems that you did for the F–35, or will you be doing a review 

to look at how deeply flawed that system is and perhaps adjusting 

it? 

Mr. HALE. We will absolutely try to make it better and learn lessons from it. What I said is, in principle, I don’t think getting rid 

of all concurrency is in the best interest of the taxpayers, because 

it would spread the programs out so long, one, we wouldn’t get the 

weapons we need and, two, there would be even more cost growth. 

There is a balance to be struck. Maybe we didn’t get it exactly right 

for the F–35, but I wouldn’t rule out concurrency in principle. 

Ms. DUCKWORTH. You really did get it right with the F–35. In 

fact, we are talking in the trillions of dollars eventually. 

Ms. Halbrooks, I asked General Brogdon about the security of 

the supply chain and making sure that every piece of equipment 

in our military weapons system, especially the F–35, comes from a 

secure source, so that we don’t, for example, have Chinese manufactured chips in the avionics system. And he was very honest and 

said that he is looking at it, but that he found four items, in fact, 

that were from unauthorized countries. Are we looking at that in 

other weapons systems as well? 

Ms. HALBROOKS. I can’t, today, think that we have a review that 

encompasses specifically, but as we look at contracting and how 

these systems are being built, and if the contractors are complying 

with the requirements, that should be something that we would 

come across. But I appreciate your focus and I will take that. 

85 

Ms. DUCKWORTH. I am sorry, Mr. Chairman, I have gone way 

over. 

Chairman ISSA. I am not sorry. Would the gentlelady yield for a 

second? 

Ms. DUCKWORTH. Yes, sir. 

Chairman ISSA. Colonel Duckworth, thank you for your service, 

but thank you for the question I think you asked Mr. Hale that he 

answered, which was he intends, apparently, to continue being over 

budget, over time, and describing a program that is in fact ‘‘not 

pretty, but it is going to work.’’ 

Would you like to revise that and talk in terms of reform that 

would have us not be over budget, over time again, and then say 

but it is not pretty, but we are going to make it work? 

Mr. HALE. Mr. Chairman, the question I heard was whether we 

would abandon all concurrency. That is the question to which I 

said no. 

Chairman ISSA. If the gentlelady wants to follow up. 

Ms. DUCKWORTH. Thank you, Mr. Chairman. My question was 

will you be pursuing the exact same process for the F–35 for future 

combat systems, especially the Next Generation 6 fighters that you 

are proposing now. 

Mr. HALE. I mean, the answer is no. We will do better and we 

will look to reform it. But I don’t want to throw out all concurrency. I don’t think that is wise. I guess I misunderstood you. 

I am sorry. 

Ms. DUCKWORTH. May I ask one more question? 

Chairman ISSA. Of course. 

Ms. DUCKWORTH. Not a problem. And then will you be advising 

your inspector general to provide greater oversight or will you, 

again, in future systems, rely on other agencies to provide that 

oversight? 

Mr. HALE. We would welcome oversight from the inspector general. 

Chairman ISSA. Thank you. 

Now we go to the gentleman from Ohio, Mr. Jordan. 

Mr. JORDAN. Thank you, Mr. Chairman. 

Mr. Borras, during Mr. Connolly’s question, he talked about sequestration taking effect March 1st, and in the past 19 days he 

asked you we haven’t seen any major disruptions. I believe your 

answer was yes to that question, is that correct? 

Mr. BORRAS. Yes. 

Mr. JORDAN. Okay. And then putting aside what Mr. Gowdy 

brought up, the fact that we released 10 Level 1 aggravated felons, 

your answer to we haven’t seen many major disruptions was yes. 

Yet, on March 4th we have the statement by Secretary Napolitano. 

She said, as a result of sequestration, airports were seeing lines 

150 to 200 percent as long as they would normally expect. So which 

is it? Three days after the sequestration the Secretary of Department of Homeland Security is saying we have lines 200 percent of 

normal and you are saying we haven’t seen any major disruptions. 

Which one is true? 

Mr. BORRAS. Well, I don’t know the specific statement that was 

made by the Secretary. 

86 

Mr. JORDAN. I just read it to you: ‘‘150 to 200 percent as long 

as we would normally expect.’’ You just told Mr. Connolly we 

haven’t seen any major disruptions. You have your boss saying we 

have. Who is telling the truth? 

Mr. BORRAS. Well, again, I don’t know what the statement is. If 

you are saying the statement said that we are currently seeing, at 

all airports, or that is the projection. 

Mr. JORDAN. She said airports were seeing 150 to 200 percent 

lines as long as we would normally expect. Was she wrong or were 

you wrong in what you gave your answer to Mr. Connolly? Or is 

200 percent of the line, is that not a disruption? It is a yes or no. 

One of you has to be right; one of you has to be wrong. 

Mr. BORRAS. Well, I am not aware of that. 

Mr. JORDAN. Well, according to the reporter, she is wrong, so 

maybe what you said is maybe the case, maybe we haven’t seen 

major disruptions. 

In your answer to the chairman in the first round of questions, 

he was talking about attrition and ways you could have planned for 

this, and you said this, ‘‘We thought sequestration wouldn’t happen.’’ Now, does the United States Department of Homeland Security make a habit of not preparing for the law of the land when 

it comes to its management practices? As Mr. Gowdy pointed out, 

as the chairman pointed out, you had 20 months to get ready of 

this. 

But because you had this assumption it wasn’t going to happen, 

you didn’t prepare. I mean, you told the chairman we didn’t expect 

it to happen. So when did you finally start, March the 2nd? When 

did you finally prepare for something you had 19 months lead time 

on? 

Mr. BORRAS. I would say we began to plan preliminarily for sequestration in the fall. 

Mr. JORDAN. So which is it, you thought it wasn’t going to happen, but you did start to plan. Where are you at? 

Mr. BORRAS. Exactly, that is where I am at. Certainly, in August 

of 2011 there was the hope that we would not face sequestration. 

In the fall, clearly, as January 1st was approaching, we continued 

to look at the possibility of sequestration. 

Mr. JORDAN. So you waited a year. 

Mr. BORRAS. No, we did not wait a year. 

Mr. JORDAN. Well, you said past August 2011. You said in the 

fall, as January 1st started to approach, you started to get ready. 

So you waited a year. Maybe if you hadn’t waited a year, maybe 

you wouldn’t have 50 job postings today on your Web site offering 

jobs. Maybe you wouldn’t have to be saying we are going to have 

to furlough people. 

Have you responded to the chairman’s letter where he asked 

your Department were there ways we could be helpful maintaining 

the reduction in spending in sequestration, but ways we, as Congress, could be helpful in helping you implement this? Have you responded to that letter? 

Mr. BORRAS. I am not aware of a letter that was written to me. 

Mr. JORDAN. No, it was written to the Department. You are here 

representing the Department, correct? Yes, it was written to the 

Department. Have you responded? Has the Department responded? 

87 

Mr. BORRAS. I believe that letter is in clearance. 

Mr. JORDAN. What does that mean? 

Mr. BORRAS. It is being completed and should be responded to 

the chairman by the end of the week. 

Mr. JORDAN. Again, it seems to me if you had 20 months to prepare for this, the chairman asked you how we can help you better 

implement it, you should have something ready to email right 

away, some response ready to go; here is our plan of action, Mr. 

Chairman, here is what we can do. We would appreciate your help 

giving us some flexibility in these particular areas of our budget. 

Finally, last area I want to get to, Mr. Chairman, last 40 seconds 

here. Ms. Speier and I have been working on this issue of conferences that agencies have attended and the amount of taxpayer 

dollars used at these various conferences. Do you know how many 

conferences the Department of Homeland Security has attended in 

2012? 

Mr. BORRAS. I don’t have that number off the top of my head. 

Mr. JORDAN. Do you know how much money you have spent on 

conferences, overnight conferences, where employees from your Department go? Do you know how many dollars you have spent on 

those kind of things? 

Mr. BORRAS. I don’t have that number off the top of my head. 

Mr. JORDAN. Mr. Edwards, do you happen to know those numbers? 

Mr. BORRAS. No, sir, but we did a report in 2009, we had 12 recommendations, and we are currently doing an audit on conference 

spending. 

Mr. JORDAN. Do you know, Mr. Edwards, of any of the conferences that employees from Homeland Security have attended, if 

any of them exceeded the amounts, the level per attendee that was 

spent at the GSA conference, the now famous GSA conference in 

Vegas? Do you know? 

Mr. EDWARDS. No, sir. 

Mr. JORDAN. Okay. Well, we would like for you to get that information, if you could. 

Mr. EDWARDS. Yes. 

Mr. JORDAN. Mr. Chairman, I yield back. 

Chairman ISSA. Thank you. 

We are going to wrap up. I going to do just a couple of questions. 

First of all, Secretary Hale, we have been a little tough on you, 

but I want to thank you. DOD is the only cabinet position that has 

responded with any specificity or any answer to our letters as to 

areas in which, legislatively or appropriations, we could provide 

you changes. So I appreciate that. 

I want to touch on one thing, and I think, General Halbrooks, 

you have been sort of almost beat up for not going after the F–35, 

and I could pile on on that, because I do think that it is such a 

large amount of dollars that special attention, at least over the 

shoulder of those doing oversight, is appropriate. But I want to 

touch base on something that I think should be a DOD imperative. 

Ms. Duckworth, you said you flew the oldest Blackhawk, entering service in 1978. I don’t know how to tell you this, but I was 

on UH–1s. There were just Charlies and they were first generation. 

You were not born when those went into production. 

88 

Ms. DUCKWORTH. [Remarks made off microphone.] 

Chairman ISSA. You did fly Hs. Well, they were hotels. They 

called them hotels because they were big. 

But when the other end of acquisition, which is repair part and 

disposal, it has been a mess at DOD at all parts of it since before 

most people in this audience were born. We buy things, they get 

shipped in. At Fort Riley, Kansas, if I remember correctly, there is 

still an anchor there because somebody ordered a ship’s anchor by 

mistake, and once it was railed in, they didn’t know what else to 

do with it, so they put it there. 

The disposal of equipment and the reuse has never been centralized. Now, if I were to go online today and I were to say I needed 

a part for a 1989 X, Chrysler 300, whatever it was, I can go to a 

single Web site and virtually every salvage yard in America feeds 

into that, and I can find out where the parts are, where the car 

is that contains that part. 

The world has modernized so that you do not have an excess part 

simply get sold off at a small auction and not put back into the system. And, more importantly, auctions continue to occur at every little base and compound, rather than a central selling system where 

people all over the world can bid up the price of the excesses of the 

Department of Defense. 

Now, it is not just the Department of Defense, but I would like 

you to really look at it because, in my two decades in the active 

and then reserves, the gentlelady’s 21 years now, this hasn’t gotten 

fixed. But the world has fixed this problem to a scale in which almost anything is sold globally, is auctioned globally; and we continue to have local auctions where people show up and they get 

deals. 

I know it is a small part of it, but I have been waiting for an 

opportunity to say isn’t this the kind of thing that, in addition to 

a billion dollar failed acquisition program out of Dayton, that we 

could also learn to sell our excesses and reuse our excesses better? 

Isn’t that an item that IGS have been talking about and organizational people have been talking about since you first knew there 

was a Department of Defense? 

Mr. HALE. I thought there was, and I am going to express my 

ignorance and take a risk here, Mr. Chairman, the Defense Resource Management Utilization Service or Reutilization Service. 

But let me go back and find more from our logistics experts, because I hear you, eBay and other things like it should certainly 

allow us those opportunities. I think we were using some of them. 

Chairman ISSA. And I agree with you, there have been efforts to 

try to do it, but I can tell you today it doesn’t work. 

General Halbrooks, I assume you have looked at the perfectly 

good product going out to sale while the same exact product is 

being reacquired in a very near location. 

Ms. HALBROOKS. Certainly, that is consistent with the work that 

we have done on our spare parts reports that we have talked about 

today. But, more broadly than that, I appreciate your input and the 

committee members’ input into areas for future work. As we start 

to look forward to doing our fiscal year 2014 audit planning, they 

will certainly be areas we take into consideration. 

Chairman ISSA. Thank you. 

89 

Mr. Cummings, do you have anything? 

Mr. CUMMINGS. Thank you very much. 

There has been quite a bit of effort made here today, Mr. Borras 

and Mr. Hale, talking about how you should have been prepared 

better for sequestration, and I want to be fair to you, and I don’t 

know if you know this, but I need you to let me know if you know 

this. 

According to what we did, according to what the Congress of the 

United States did, did you know that, according to Section 116(b) 

of the Continuing Appropriations Resolution of 2013, Congress required Federal agencies to submit their plans to implement sequestration cuts to the Congressional Appropriations Committee 30 

days after the President issues a sequestration order? And President Obama issued his sequestration order on March the 1st, 2013, 

so in order to implement the $85 billion and across-the-board 

spending cuts for fiscal year 2013, and, as a result, agencies are required to submit their sequestration plans to Congress, we have ordered you to do this now, you understand that, by April 1st, 2013. 

Were you aware of that, Mr. Hale? 

Mr. HALE. Absolutely. We call it a spin plan. Now, we are going 

to have a real problem because you are about to change the whole 

framework for us, I hope, in passing an appropriations legislation 

or a new continuing resolution is going to change the whole way 

we do sequestration. So I don’t know if we will make it, but we are 

well aware of it. 

Mr. CUMMINGS. Are you working on that plan? 

Mr. HALE. Yes. 

Mr. CUMMINGS. I got that. I am just asking, first of all, are you 

working on it pursuant to law that we passed. 

Mr. HALE. Yes. 

Mr. CUMMINGS. Okay. Number two, you are also telling me that 

because of the continuing resolution, that a monkey wrench may be 

thrown into that. Is that what you are saying? 

Mr. HALE. Yes. 

Mr. CUMMINGS. And can you explain that to me? 

Mr. HALE. The sequestration law requires that we base the cuts 

on program project and activity. It was defined by this continuing 

resolution you passed last September. It will now change and be 

applied, for at least the Department of Defense, based on what will 

essentially be an appropriations bill in this new continuing resolution. So all the numbers, all the base from which you take the cuts 

are going to change, and we will need to go back and make sure 

we still have the right plans. 

Mr. CUMMINGS. Now, is your interpretation of a law that we 

passed, the one I just referenced, in other words, you still have a 

deadline of April 1st, as you interpret the law? 

Mr. HALE. Yes. 

Mr. CUMMINGS. So you all are going to be working hard, I take 

it, once you figure out what we, as a Congress, what we are going 

to do. 

Mr. HALE. We will do our best. 

Mr. CUMMINGS. Do you think you will be able to make that April 

1st deadline? 

Mr. HALE. Probably not. 

90 

Mr. CUMMINGS. Okay. 

Mr. HALE. Not with meaningful information. I mean, we can give 

you old stuff, but that is not going to help you or us. 

Mr. CUMMINGS. Yes, I understand. It is getting kind of late. 

Mr. Borras, were you aware of that? 

Mr. BORRAS. Yes. 

Mr. CUMMINGS. So are you all preparing to submit your plan by 

April 1st, as required by Congress? 

Mr. BORRAS. We are working on our plan to meet the 30-day requirement as per law, and as Under Secretary Hale mentioned, we 

too will have adjustments that will be made to that plan based on 

the continuing resolution that gets passed for the balance of the 

year. 

Mr. CUMMINGS. Were you aware of that, Ms. Halbrooks? Were 

you aware of that? 

Ms. HALBROOKS. Yes. Yes. 

Mr. CUMMINGS. Okay. And you? 

So this really does cause some problems for you, doesn’t it, Mr. 

Borras? 

Mr. BORRAS. It will require some adjustment. I provided one example earlier in TSA, the FAMS program, which the impact would 

be about an additional $60 billion reduction; Secret Service, about 

$100 million reduction based on the estimates of what we know the 

bill to be today. 

Mr. CUMMINGS. Well, you know, it is interesting that we here in 

Congress, and I have talked to a number of Congress people, we 

too had to make some changes. I know I have just told my employees they are taking two days of furlough, and people say sequestration does not have impact. That is real. That is a real deal. Some 

of these people making $40,000, $45,000; they are losing two days 

a month. That is real. 

As a matter of fact, they have already started taking furlough 

days. So we are just going to have to work through this and hopefully it will not be as painful as it appears that it will be for some 

people. 

Thank you. 

Chairman ISSA. Would the gentleman yield? 

Mr. CUMMINGS. Of course. 

Chairman ISSA. I think the ranking member brings up an important point, that the CR that we passed out of the House that has 

major changes primarily for Department of Defense does create a 

situation in which a bill not yet passed, but to take effect for sure, 

one way or the other, by April 1st does change what particularly 

Department of Defense is going to report, and I do think that is 

the best reason for this committee to make every effort to try to 

find things that, no matter what the effects of future bills, agencies 

would want to either adjust or reduce or eliminate and work together on; and I thank the gentleman for pointing that out. 

Mr. CUMMINGS. Thank you. 

Chairman ISSA. Mr. Jordan, I understand you have another question? 

Mr. JORDAN. Just real quick, Mr. Chairman. I didn’t get this in 

in my five minutes. 

91 

Back to Ms. Napolitano’s statement on March 4th, 2013, she said 

that major airports were seeing lines 150 to 200 percent as long as 

we would normally expect. Did the Department survey airports 

around the Country between November 1st and November 4th to 

get that information that Ms. Napolitano then based her statement 

upon? 

Mr. BORRAS. I don’t have an answer to that question. I am not 

involved in the operations of either the airports or the borders and 

wouldn’t be cognizant at this time of what information was presented to the secretary relative to those operational matters out in 

the field. 

Mr. JORDAN. The fact is the reporter at that newspaper who reported this said they in fact called O’Hare Airport, Los Angeles 

International Airport, and Atlanta’s airport and the spokesperson 

for those respective airports said there were no major delays. 

So I just want to know where she got the information. What information did she base that statement on? And it would seem to 

me the only information you could base that statement on is if you 

called up the airports and said are you in fact experiencing delays, 

and are they 150 to 200 percent longer lines than you normally 

have at this point in the year. 

You don’t know if that was done? 

Mr. BORRAS. I don’t have that information. I would be happy to 

provide you the basis for that statement. 

Mr. JORDAN. I appreciate that and I hope you do get that to us, 

but it would seem to me, when you come in front of the committee, 

knowing that this is going to be about sequestration, knowing that 

this statement was made three days after sequestration took effect, 

it seems to me you would know what information the Secretary of 

the Department of Homeland Security based that statement on. 

And yet you come here and you just say I don’t know. 

So, with that, Mr. Chairman, I would yield back. 

Chairman ISSA. Thank you. 

Ms. Duckworth, do you have any questions? 

Mr. Cummings? 

Mr. CUMMINGS. Just one question. 

Mr. Hale and Mr. Borras, do you think that April 1st deadline 

should be extended? 

Mr. HALE. Well, Mr. Cummings, it is in the law. We will do our 

best to meet it. I just am concerned about meeting it well at this 

point, but we will get something as quickly as we can. I think we 

can work with you and with the committees. 

Mr. CUMMINGS. Mr. Borras? 

Mr. BORRAS. We will respond to the law. If there are any changes 

between now and April 1st, we will adjust accordingly, but right 

now we are planning to respond on April 1st. 

Mr. CUMMINGS. All right, thank you. 

Chairman ISSA. I am going to follow up on that briefly. 

Mr. Hale, isn’t it true that the appropriations bills passed out of 

the House substantially reflects requests that you had for changes? 

In other words, the negotiation that went on that led to DOD in 

the CR actually having, effectively, a new appropriation? Isn’t that, 

at least for our guidance, when I am talking to my colleagues and 

Mr. Cummings is talking to his, that, really, you have given us 

92 

most of what you are going to say on April 1st, which is we would 

like to have what was in the House’s CR negotiated? I realize there 

is always an anomaly, but a lot of it is reflected there? 

Mr. HALE. Yes and no. The yes part is—the no part is that they 

want us to look at each program, there are 2500 of them in the Department of Defense, and say what the specific cuts are against 

that level. That isn’t in the bill and we will have to do that for you, 

and we need to do that too. I mean, we need a spin plan to execute 

this, although I still hope that you end it in some fashion. But if 

it doesn’t get ended, then we have to make it work, and we will. 

Chairman ISSA. Thank you. 

I want to thank all of you for your testimony today. We will 

leave, as I believe was said earlier, five days for all to revise and 

extend, and for opening remarks of members. And, again, thank 

you. 

We stand adjourned. 

[Whereupon, at 12:30 p.m., the committee was adjourned.] 

(93) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

94 


Insert offset folio 42 here 81664.042

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ONE HUNDRED THIRTEENTH CONGRESS 

QCongress of tbe miniteb ~tates 

~f;louse of li\ep\'Cl.itlltatilJciS 

COMMITIEE ON OVERSIGHT AND GOVERNMENT REFORM 

2157 RAYBURN HOUSE OFFICE BUILD!NG 

WASHINGTON, DC 20515-6143 

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Opening Statement 

Rep. Elijah E. Cummings, Ranking Member 

Hearing on "DOD and DRS: Implementing Agency 

Watchdogs' Recommendations Could Save Taxpayers Billions" 

March 19,2013 

EL'JAH ~. CUMMJI,GS M .... !lYlIIND 

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l. TAMMY PUCKWORTH, ILl1t101S 

OMIN'l'ICDAViS.IW40lS 

!~~J£~~.D:~::F~~;~O:Jf~A 

MICtlEL~E LUJAN GRISHAM. W£W MEXICO 

Today's hearing falls on the ten-year anniversary of the invasion ofIraq. Ten years ago 

today, our nation entered a war that has !lOW cost the American taxpayers more than two trillion 

dollars. Obviously, this staggering amount will be even higher when we calculate the final cost 

of the war in Afghanistan, which is still going on today. 

During these wars, billions of dollars have been paid tlU'ough contracts with private 

defense companies. According to the Commission on Wartime Contracting, just one companyKellogg, Brown & Root-was paid more than $40 hillioll. Under so-called "sole-source" 

contracts, many companies never competed for a single task order. And because these "costplus" contracts guaranteed corporatc profits, they incentivized companies to pad their bills. 

Rathel' than raising revenues to pay for these trillion dollar wars, the Bush Administration 

slashed taxes, primarily benefitting the richest members of our society. From 2001 to 2010, the 

Bush tax cuts reduced our nation's revenues by nearly a trillion dollars more. 

So now that we have ended the war in Iraq, are winding down the war in Afghanistan, 

and are facing record deficits, it would be logical to seek additional revenues and reduce defense 

spending, particularly on wasteful defense contracts. 

Instead, House Republicans propose something vastly different. The Ryan budget 

ullVeiled last week would eliminate health insurance for tens of millions of Americans, slash 

Medicaid for the poorest among us, reduce education funding for children with disabilities, kick 

tens of thousands of kids out ofI-Ieac1 Start, and abandon our cOlllmitment to seniors who rely on 

Medicare, 

House Republicans would rather do all of these things than ask the richest among liS to 

contIibute a penny more to address Ot1l' nation's fiscal challenges, 

Although most people agree that it is time to rein in wasteful defense spending, the Ryan 

budget would increase the Pentagon's budget to $645 billion next year. Although Out' wars are 
95 


Insert offset folio 43 here 81664.043

cndiJlg and the Pentagon's contract management system is broken, the Ryan budget would pumJl 

tens ofbiHions of dollars more into defense spending each year for the next decade, 

Today's hearing offers a prime opportunity to take a step back and identify massive 

savings al the largest agency in the federal government-the Department of Defense. The 

Pentagon's Inspector General and the Government Accountability Office have warned repeatedly 

that the Defense Department continues to squander billions of dollars on wasteful contracts. 

Let me highlight just one example. Over the past ten years, the Pentagon has severely 

mismanaged the biggest weapons acquisition program in history, the F-35 Joint Strike Fighter. It 

rushed to buy aircraft without adequate testing, and it disregarded recommendations to slow 

down the acquisition process. As a result, the program now faces skyrocketing costs, expensive 

relrofi ts, and unacceptably poor performance. 

Experts have challenged the need for this aircraft, and the Simpson-Bowles Commission 

recommended canceling the Marine variant, reducing other variant purchases, and oLltfitting 

planes already in service with less expensive upgt'ades, 

According to the Pentagon's Office of Operational Test and Evaluation, testing for the 

JOillt Sl1ike Fighter has been extremely limited due to restrictions, including "no night or weather 

capability, and 110 combat capability." The Navy's version of this plane cannot land on aircraft 

carriers, the radar does 110t appear to work, and no version of this plane has been cleared to fly at 

night. Last year, the Pentagon's own acquisition chief called this "acquisition malpractice." 

Nevertheless, the Department is forging ahead with plans to buy nearly 2,500 planes foJ' 

$400 billion. And tbe American taxpayers will be on the hook for another $1 trillion just to 

maintain these planes over their service lives. 

MI'. Chairman, I am thankful that today-before we consider draconian cuts to core 

services that Americans across the country reJy on every single day-we will have an 

opportunity to closely examine this program and others at DOD and DES in order to break oUl' 

nation's addiction to wasteful contract spending. 

I thank our witnesses very much for being here, and I look forward to hearing their 

testimony. Thank YOll, Mr, Chairman. 

Contact: ROf), Sheehan, Press Secretary, (202) 226-5181. 
96 


Insert offset folio 44 here 81664.044

Rep. Mica Opening Statement 

• Since the sequester went into effect, rather than identify wasteful and 

redundant programs that can be cut, the Administration has touted the 

alleged harmful consequences of sequestration, such as: 

o 40,000 teachers will get pink slips. 

o Federal prosecutors would have to "close cases and let criminals go." 

o Meals on Wheels would serve 4 fewer million senior citizens. 

o 70,000 students would lose access to Head Start programs. 

o Extremely long airport delays. 

• What do all these claims have in common? At a minimum, they are 

exaggerations. In some cases, they are outright false. 

• We are here today to identify common sense ways to cut costs and 

improve efficiency in the government. 

• There are plenty of obvious candidates to be cut, such as: 

o $27 million project to help fund pottery classes in Morocco. 

o $500,000 to support specialty shampoo products for cats and dogs. 

o $141,000 to fund a Chinese study on swine manure. 

o $3,700 grant to build a miniature street in West Virginia out of Legos. 

• We are going to hear from two Inspectors General who have identified 

more than $2 billion worth of potential savings at their agencies that have 

not been implemented. 

• This is a far more productive discussion than making alarmist and false 

claims about the effects of sequestration. 
97 


Insert offset folio 45 here 81664.045

KEARY L BENTlVOUO 

llCongre55 of tue mniteb ~tatc5 

~OUlit of i\rprelitntatibtli 

'imlasbjngton. ll)e 205\5-2211 

aooWH.cHl'IO,!;O 

COWl'f.i~~.MI4a39Ll 

Mr. Chairman, Ranking Member, thank you for allowing me to speak and for holding this 

important briefing today. In light of the sequester, it is paramount that we identify and 

implement ways for the Department of Defense and the Department of Homeland Security to 

achieve cost savings through efficiency. I believe we can accomplish this without compromising 

national security. 

The role of the Inspector General is integral to investigating instances of waste and 

recommending ways in which taxpayer funds can be better used. However, unless these 

recommendations are heeded and Implemented, the opportunities for Increased cost savings 

presented by the Inspector General will be missed. We have a responsibility to the hardworking 

American taxpayer to practice wise stewardship of federal funds. listening and implementing 

the recommendations given by the Inspector Generalis the first step to achieving this goal. 

Sincerely, 

Kerry Bentlvolio 

United States Congress 
98 


Insert offset folio 46 here 81664.046

March 19, 2013 

OGR Full Committee Hearing Opening Statement - DOD and DHS: 

Implementing Agency Watchdog's Recommendations Could Save Taxpayers 

Billions 

Congressman Cardenas (CA-29) 

Thank you Chairman Issa and Ranking Member Cummings for calling this 

important hearing today to get some clarity on the steps that the Department of 

Defense (DOD) and Department of Rome land Security (DRS) are taking to ensure 

they are not wasting billions of taxpayer dollars on programs that are failing to 

deliver for the American people, 

During a time when the Ryan Budget is slashing billions from critical programs 

that many middle class and working families depend on, the DOD and DRS 

Inspector Generals (IG) have identified $1,025 and $1.158 biIIion of potential 

savings in each respective agency. Failing to implement these recommendations 

means that a total of$2.183 billion will be washed down the drain. 

I cannot help but imagine how many children we can properly educate in public 

schools; how many young adults we can send to college or train to be competitive 

in this global economy; how many families that have been devastated by this 

economic downturn we can help get back on their feet; how many elde~ly people 

we can ensure live out a dignified life after contributing so much to our country; 

or how many employees DOD can avoid giving furlough notices to in light of the 

estimated $46 billion in across-the-board cuts it will experience this year as a result 

of sequestration. We cannot allow bureaucratic inaction to let this situation 

continue. 

The DOD and DRS are two ofthree largest agencies in the federal government, 

with the Department of Veterans Affairs coming in second. They are charged with 

the great responsibility of ensuring our security at home and abroad. In FY 2012, 

DOD's budget stood at $553 billion and DRS' budget was $46.9 biIIion. 

I am a strong supporter of our military and national security apparatus. I am 

committed to ensuring that both DOD and DRS are well-resourced so they may 

continue to defend America and its interests. But with great budgets, comes great 

1 
99 


Insert offset folio 47 here 81664.047

March 19,2013 

responsibility. We cannot afford to waste millions of dollars in programs that do 

not further our security. 

As we grapple with fiscal challenges of our day, we must strongly demand that 

all agencies and departments do everything in their power to ensure they are not 

wasting valuable taxpayer money. 

I look forward to hearing from the witnesses about the concrete actions their 

respective agencies are taking to remedy the critical problems that have been 

highlighted by the Inspector Generals. Running ineffective or failing programs that 

are costing billions cannot be the standard mode of operation of any federal agency 

or department. The times do not allow for it. 

2 
100 


Insert offset folio 48 here 81664.048

Statement of Congressman Gerald E. Connolly (VA-H) 

Committee on Oversight and Government Reform 

DOD and DBS: Implementing Agency Watchdogs'Recommendations Could Save Taxpayer Billions 

March 19,2013 

Chainnan Issa and Ranking Member Cummings, thank you for holding today's hearing to examine the 

implementation ofInspector General (IG) recommendations at the U.S. Depmtments of Defense (DOD) 

and Homeland Security (DHS). Highlighting open IG recommendations is an incredibly valuable 

oversight exercise, and I want to express my appreciation to the Chair and Ranking Member for their 

strong bipartisan support of our Nation's dedicated Offices ofInspectors General (GIGs). 

Since enactment of the landmark Inspector General Act of 1978, IGs have served as indispensable, 

independent voices in the Executive Branch committed to rooting out waste, fraud, and abuse, while 

providing agencies with actionable recommendations to eliminate inefficient, and in certain cases, 

egregious, examples of misconduct and mismanagement. According to the most recent Progress Report 

of the Council ofInspectors General on Integrity and Efficiency, our Nation's 73 OIGs identified 

potential savings totaling approximately $93.9 billion in fiscal year 2011 alone - with $84.8 billion 

derived from audit recommendations agreed to by management, and $9.1 billion derived from 

investigative receivables and recoveries. 

In light of the relatively modest sum of $2. 7 billion budgeted for all 73 OIGs in FY 2011, it is clear that 

American taxpayers receive an excellent return on their investment, with $35 in potential savings 

identified for every $1 invested in OIGs. However, I believe we can do better in turning these potential 

savings into reality. One of the most valuable functions of this Committee is highlighting OIG priority 

open recommendations and conducting rigorous oversight to ensure agencies follow through on their 

implementation. Even if agencies were only able to implement half of the FY 2011 recommendations 

they agreed to, the resulting savings of $46.95 billion would be well worth the effort. 

Of course, we must always be cognizant that congressional oversight can actually become 

counterproductive when it focuses on horror stories while ignoring an examination of what works in 

government. While stories of waste, fraud, and abuse may be most effective in crafting an eye-catching 

headline, the reality is that our failure to recognize and reward innovative best practices in government 

carries real consequences and costs. As witnesses testified at our last Committee hearing, unbalanced 

oversight has resulted in a Federal acquisition workforce that is beaten down, and afraid to embrace 

innovative procU1'ement strategies for fear of reprisal and punishment over the slightest missteps or 

mistakes - which as any successful entrepreneur will tell you - are unavoidable, and even welcome, 

when pursuing new initiatives. 

In closing, I am pleased that this Committee is continuing to focus on substantive, bipartisan, good 

government issues that actually could improve the Federal Government. However, I would caution that 

all of the audits und recommendations in the world will not amount to much if we continue to denigrate 

the dedicated men and women of our Federal workforce, and allow sequestration to go forward. 

(OVER) 
101 


Insert offset folio 49 here 81664.049

From the never~ending pay freezes to enduring perpetual continuing resolutions to the abhorrent process 

of sequestration and threat of furloughs - it is astonishing how poorly we treat our civil service and then 

expI'ess shock when thei!' I'esults are less tbru, stellar, No successful private company would treat its 

workforce the way our government treats its own, and we must stop this abuse and denigration of the 

public servants we rely on to implement the cost-saving recommendations we are addressing here today. 

-END-
102 


Insert offset folio 50 here 81664.050

The Honorable Danell Issa 

Chairman 

INSPECTOR GENERAL DEPARTMENT OF DEFENSE 

4800 MARK CENTER DRIVE 

ALEXANDRIA, VIRGINIA 22350-1500 

Committee on Oversight and Government Reform 

U,S. House of Representatives 

Washington, DC 20515-6143 

Dear Mr. Chaliman: 

MAR 262013 

This letter is to request a correction to the record for testimony provided by Ms. Lynne 

M. Halbrooks, Principal Deputy Inspector General, Department of Defense, duriog the 

March 19,2013, Committee healing titled "DOD and DHS: Implementiog Agency Watchdogs' 

Recommendations Could Save Taxpayers Billions". 

During the question and answer segment of the hearing, Ranldng Member Cummiogs 

raised a question on the cost of the Joint Strike Fighter. In her response, Ms. Halbrooks 

misstated that the JLENS progrrun was cancelled. As provided in her Wlitten and oral statements 

the DoD IG repOlt questioned the plrumed procurement of additional assets beyond the 

requirements and identified over $2.5 billion in potential savings, Management agreed with our 

report and recommendations stating "the impact of the cunent fiscally-constrained environment 

compels redirection of fundiog to other systems." As a result, the procurement funding of the 

progrrun has been zeroed out, but the technology may contioue to be used, 

If you have any questions regarding this matter, please contact me at (703) 604-8324. 

cc: The Honorable Elijah Cummings 

Ranldng Member 

Sincerely, 

Actiog Assistallt Inspector General 

Communications and Congressional Liaison 
103 


Insert offset folio 51 here 81664.051

CHARRTS No.: HOGRC-OI-007 

House Government Reform Committee 

Hearing Date: March 19,2013 

Subjcct: DoD and DHS: Implementing Agency Watchdogs' Recommendations Could Save 

Taxpayers Billions 

Congressman: Congressman Bentivolio 

Witness: Acting (IG) Halbrooks 

Question: #7 

Question: Department of Defense officials have said the sequester cuts will require the 

majority of the Agency's 800,000 civilian employees to take up to 22 mandatory furlough days, 

losing a significant portion of their incomes. In addition, the Department has not ruled out the 

possibility of employee layoffs for temporary or term employees.- Ms. Halbrooks, are there 

recommendations that you have made as alternatives to implementing spending cuts rather than 

mandatory furlough days? - Are there recommendations for spending costs that would cut similar 

amounts of money as opposed to employee furlough days? 

Answer: 

The DoD IG has not made any specific recommendations to the Department as alternatives 

to implementing spending cuts rather than mandatory furlough days. Determining the 

priorities related to sequestration is a management decision and it is not appropriate for an 

Inspector General to become involved with establishing the Department's priorities. 

Over the past 10 years, DoD OIG has issued over 1,300 reports addressing a wide variety 

of challenges within the Department and providing 7,684 recommendations to correct 

noted deficiencies. Of those 7,684 recommendations, 95 percent were addressed and 

closed, and 5 percent (or 386 recommendations) remain open. Collectively, those reports 

have resulted in $37.3 billion in achieved monetary benefits to the Department with 

additional potential monetary benefits of $3.5 billion based on open recommendations. i 

The DoD IG makes specific recommendations that result in potential monetary benefits to 

ensure the taxpayer dollars are used efficiently and effectively. However, the Department 

has the ability to, and should, take those recommendations and apply them more broadly 

across the Department to achieve additional savings. 

'One recommendation accounts for $2.5 billion ofthe $3.5 billion in potential savings. 
104 


Insert offset folio 52 here 81664.052

Ouestions for· the Record 

Congressman Kerry Bentivolio 

Committee on Oversight and Government Reform 

Questions for: 

Charles Edwards, Acting Inspector General for the Department of Homeland Security 

Hearing entitled, "DOD and DHS: Implementing Agency Watchdogs' Recommendations Could 

Save Taxpayers Billions." 

• Two weeks ago, the Chairman released a staff report that described the high number of 

unimplemented IG recommendations, which totaled nearly $67 billion in 2012. Despite 

the billions in possible savings, the Obama Administration has been relying on scare 

tactics to frighten the American people on the effects of sequestration. At a POLITICO 

breakfast earlier this month, Secretary Napolitano discussed sequestration's impact on 

TSA lines at the airport and stated, "We are already seeing the effects ... [lines are] 150 to 

200 percent as long as we would normally expect." The United Kingdom's The Telegraph 

reported that airport officials at LAX, O'Hare, and Hartsfield-Jackson denied these 

claims. 

• Mr. Edwards, are there recommendations that you have for reducing the cost of running the 

TSA? 

Answer: Yes. As of the Committee's hearing on March 19,2013, my office had 113 open 

recommendations related to the TSA. While each one of these recommendations does 

not have a particular dollar savings attached, we believe that the recommendations we 

have made will lead to a more efficient and effective organization, which will result in 

cost savings for the taxpayer and the Government. Our TSA-related open 

recommendations do include about $10 million in questioned costs. 

For your information, I have attached a spreadsbeet that includes aU of my office's open 

TSA-related recommendations as of March 19,2013. 

Insert offset folio 53 here 81664.053

of the redress experience, and their 

satisfaction with the program, with the 

this information to identifY areas 

is SSI - the subject is 

documentation, and account 

reconciliations, to ensure that all 

errors in the financial statements are 

identified and corrected timely. 

OpenResolved OpenResolved 

I-A-l I Open. 

Resolved 

Insert offset folio 54 here 81664.054

010·09·57 Independent Auditors' Report 411612009 We recommend that TSA develop, implement, I·A·2 Open 0 0 

on the Transportation Security and/or update existing policies and procedures Resolved 

Administration's Consolidated to: a) require supervisory reviews of 

Balance Sheet as of accounting transactions (particularly 

September 30, 2008 routine transactions), and accounting data 

provided to and received from contractors and 

outside specialists, and adequately supervise and review work performed by accounting statf and contractors: b) analyze changes in accounting policy prior to their 

implementation, including steps to determine 

whether the implementation would result in a 

non-compliance with GAAP; c) assign 

accountability for supervisory reviews, and 

require that the reviews be documented; and d) 

eliminate reliance on the outside auditor to 

identifY errors and controls deficiencies over 

the accuracy and completeness of financial 

statements. 

010·09·57 Independent Auditors' Report 411612009 We recommend that TSA perform analysis to I·A·3 Open· () () 

on the Transportation Security accurately and completely compute the future Resolved 

Administration's Consolidated minimum tease commitments as disclosed in 

Balance Sheet as of Note iO to the consolidated balance sheet at 

September 30, 2008 September 30, 2008. 

010·09·57 Independent Auditors' Report 411612009 We recommend that TSA Work with its I·A·4 Open - () () 

on the Transportation Security accounting service provider to ensure that the Resolved 

Administration's Consolidated proper trading partner code is recorded for 

Balance Sheet as of each intragovernmental transaction. Until such 

September 30, 2008 time, TSA should consistently perform its 

manual process for the timely identification 

and reporting of trading partners tor 

intragovernmental activities and balances. 

010·09·57 Independent Auditors' Report 411612009 We recommend that TSA improve its review I·A·5 Open- 0 (J 

on the Transportation Security procedures to assist the Department with its Resolved 

Administration's Consolidated compliance with FMFJA and OMB Circular ABalance Sheet as of 123 to ensure that all material weaknesses are 

September 30, 2008 identified and reported to the Department. 

Insert offset folio 55 here 81664.055

OIG-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA compJete the review I-B-I Open- 0 0 

on the Transportation Security currently in process over idle assets, other Resolved 

Administration's Consolidated direct costs, and internal use software. and 

Balance Sheet as of record the proper correcting adjustments in the 

September 30, 2008 general ledger; 

OIG-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA develop and I-B-2 Open- 0 0 

on the Transportation Security implement policies and controls, including Resolved 

Administration's Consolidated appropriate supervision and management 

Balance Sheet as of oversight. to include assigned responsibility to 

September 30, 2008 account for idle assets, other direct costs, and 

internal use software in accordance with 

SFFASNo. 6 and SFFAS No. 10 on an 

ongoing basis. 

OIG-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA examine asset I-B-3 Open- 0 0 

on the Transportation Security purchases and establish an appropriate dollar Resolved 

Administration's Consolidated threshold for capitalization of purchases to 

Balance Sheet as of ensure that asset purchases are presented a., 

September 30, 2008 general property and equipment, and 

depreciated in compliance with GAAP (See 

Comment I-A, Financial Reporting). 

OIG-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA work with the DHS I-C-l Open - 0 0 

on the Transportation Security Office of Chief Information officer to ensure Resolved 

Administration's Consolidated that the Coast GuardlflNCEN complete the 

Balance Sheet as of corrective actions in FY 2009. 

September 30, 2008 

OIG-09-57 Independent Auditors' Report 4/1612009 We recommend that TSA implement the I-C-2 Open- 0 0 

on the Transportation Security recommendations in our LOU letter provided Resolved 

Administration's Consolidated to TSA, to effectively address the deficiencies 

Balance Sheet as of identitied above and described in greater detail 

September 30, 2008 in the LOU report. 

OIG-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA design and I-C-3 Open- 0 0 

on the Transportation Security implement appropriate corrective action plans Resolved 

Administration's Consolidated that address the root causes of the iT control 

Balance Sheet as of deficiencies at tsar Headquarters, 

September 30, 2008 

-_._- '-- _I-. 

Insert offset folio 56 here 81664.056

010-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA conduct a human I1-D-2 Open - 0 0 

on the Transportation Security resource needs assessment and financial Resolved 

Administration's Consolidated organizational assessment to identify gaps in 

Balance Sheet as of skill-sets, hire or re-align personnel to fill the 

September 30, 2008 gaps, and assign personnel with responsibilities 

that best match their expertise. 

010-09-57 Independent Auditors' Report 4/1612009 We recommend that TSA consider updating 11-0-3 Open - 0 0 

on the Transportation Security the financial organizational structure based on Resolved 

Administration's Consolidated the human resource needs assessment. 

B.lance Sheet as of 

September 30, 2008 

010-09-57 Independent Auditors' Report 4/1612009 We recommend that TSA strengthen the I1-D-4 Open - 0 0 

on the Transportation Security monitoring and supervision process over Resolved 

Administration's Consolidated financial reporting, and use of contractors. 

Balance Sheet as of 

September 30, 2008 

010-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA consistently I1-D-5 Open- 0 0 

on the Transportation Security emphasize the importance of strong financial Resolved 

Administration's Consolidated management and internal controls throughout 

Balance Sheet as of the agency. 

September 30, 2008 

010-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA improve I1-D-6 Open - 0 0 

on the Transportation Security communications, training, instruction and Resolved 

Administration's Consolidated oversight of non-accounting personnel that are 

Balance Sbeet as of essential to the accounting process, and rair 

September 30, 2008 and timely presentation of financial statement 

balances. 

010-09-57 Independent Auditors' Report 4/16/2009 We recommend that TSA consider additional ll-D-7 Open- 0 0 

on the Transportation Security training to ensure tbat all general ledger and Resolved 

Administration's Consolidated financial management personnel are kept 

Balance Sheet as of current ofOAAP requirements. 

September 30, 2008 

Insert offset folio 57 here 81664.057

OIG-09-57 Independent Auditors! Report 411612009 We recommend that TSA update the OMB I1-DI Open- 0 0 

on the Transportation Security Circular A-123 self review of entity level Resolved 

Administration's Consolidated controls and complete the GAP self assessment 

Balance Sheet as of tool for equity level controls. Evaluate the 

September 30, 2008 deficiencies identified by the process and take 

appropriate corrective actions, including the 

development ofa Mission Action Plan (MAO) 

for Omce of Chief Financial Omcer (OCFO) 

approval in FY 2009. 

OIG-09-57 Independent Auditors' Repnrt 411612009 We recommend that TSA develop policies and Ill-E Open- 0 0 

on the Transportation Security procedures to ensure full compliance with the Resolved 

Administration's Consolidated DCIA in FY 2009. 

Balance Sheet as of 

September 30, 2008 

OIG-09-57 Independent Auditors' Report 411612009 We recommend that TSA investigate each of Ill-F-I Open- 0 () 

on the Transportation Security the three instances of non-compliance Resolved 

Administration's Consolidated described above, to determine the cause of the 

Balance Sheet as of issue, and whether these instances of non .. 

September 30, 2008 compliance are systemic, or isolated 

occurrences, or a combination. 

OIG-09-57 Independent Auditors' Report 411612009 We recommend that TSA if the issues arc III-F-2 Open- 0 () 

on thc Transportation Security isolated, determine if additional training, Resolved 

Administration's Consolidated improvement in policies, or procedures, or 

Balance Sheet as of enhanced management monitoring controls 

September 30, 2008 would help prevent similar occurrences in the 

future. 

Insert offset folio 58 here 81664.058

OIG-09-S7 Independent Auditors' Report 4/16/2009 We recommend that TSA if systemic, develop I1l-F-3 Open - 0 0 

on the Transportation Security a MAP to identify the root cause and Resolved 

Administration's Consolidated implement corrective actions. Corrective action 

Balance Sheet as of may include: a) review employee elections 

September 30, 2008 made under previous human resource service 

providers and/or previous agencies to ensure the plans employees elect are the plans for 

which the employee receives benefits; b) 

review the process and controls in place during 

the "Open EnrollmentU period to ensure all 

changes made by employees during the period are reflected in the OPF: and c) inquire with 

NFC and gain an understanding of all 

calculations used to pay employees. 

OIG-09-64 Role of the No Fly and 7/20/2009 Determine whether certain No Fly restrictions I OpenSelectee Lists in Securing are appropriate. Resolved 

Commercial Aviation 

OIG-IO-09 Security of Air Cargo During lIIS12009 Enhance training and testing requirements by 3 OpenGround Transportation providing more specific guidance to regulated Resolved 

entities regarding training and testing 

requirements. Additionally, TSA should revise 

the Regulatory Activities Plan to allow more time for inspectors to review these 

requirements. 

Insert offset folio 59 here 81664.059

OIG·IO·09 Security of Air Cargo During 111512009 Provide better guidance, training, and 5 Open * 

Ground Transportation awareness to all users of the Pertormance and Resolved 

Results Information System. especially the 

Transportation Security Inspectors for Cargo. 

Specifically, develop an action plan for the 

TSA officials responsible for the Performance 

and Results Infonnation System to educate the 

inspectors and ensure optimal usc of the 

available data and analysis. The action plan 

should also describe: a) The quality and 

quantity of information that should be 

collected and reported to promote data 

consistency among field locations; b) Types of 

information and reports available for inspectors 

to generate from the system as an eflective 

management tool; and c) The available analysis 

in SharePoint to improve risk-based planning 

reporting capabilities. 

OIG·I0·09 Security of Air Cargo During 11/5/2009 Provide Cargo inspectors with automated tools 6 OpenGround Transportation that will allow them to dedicate more time with Resolved 

the regulated entities, Specifically, establish an 

action plan, with performance milestones, to address the issues preventing the agency from 

using the personal digital assistant devices, or 

similar tools to provide more efficient 

inspection activities, 

OIG·IO·119 Evaluation of Screening of 9/21/2010 This is a classified report 5a OpenAir Cargo Transported on Resolved 

Aircraft 

OIG·IO·75 Evaluation of Newly 3/31/2010 This is a classified report 2 OpenDeployed and Enhanced Resolved 

Screening Technology and 

Practices at the Passenger 

Screening Checkpoint 

OIG·IO·75 Evaluation of Newly 3131/2010 This is a classified report, 6 OpenDeployed and Enhanced Resolved 

Screening T echnoJogy and 

Practices at tbe Passenger 

Screening Checkpoint 

Insert offset folio 60 here 81664.060

OlG-IO-78 Independent Auditors' Report 41812010 Improve communication, training, supervision lAc Open- 0 0 

on Transportation Security andlor coordination with personnel outside of Resolved 

Administration's the Office of Financial Management to ensure 

Consolidated Balance Sheet that necessary transactional inputs and 

as of September 30, 2009 infonnation are received accurately and timely. 

OlG-IO-78 Independent Auditors' Report 41812010 Develop policies and procedures to ensure that IAe Open - 0 0 

on Transportation Security leases are accounted for and disclosed properly Resolved 

Administration's in accordance with the standards. 

Consolidated Balance Sheet 

as o[September 30, 2009 

OIG-Il-05 Transportation Security 1012512010 Finalize the documentation and I OpenAdministration's Management implementation of a comprehensive Resolved 

of Its Screening Workforce methodology to guide its efforts to keep the 

Training Program Can Be TSO training program and materials up-to·date 

Improved and relevant. 

OIG-ll-05 Transportation Security 1012512010 Establishes and documents a formal 2 Open -

Administration's Management Job Training Program with specific criteria for Resolved 

of Its Screening Workforce Transportation Security Officers selected to 

Training Program Can Be serve as monitors. 

Improved 

OIG-ll-05 Transportation Security 1012512010 Reviews and modifies its requirements for 3 OpenAdministration's Management training needs to guide agency allocation of Resolved 

of Its Screening Workforce computer resources to the airports. The 

Training Program Can Be Operational and Technical Training Division 

Improved should provide documented criteria and 

guidance for the placement of the training 

equipment. This should include the use of 

equipment in the training classrooms that is 

similar to equipment in checkpoint and 

checked baggage areas. Reviews and modifies 

its requirements for training needs to guide 

agency allocation of computer resources to the 

airports. The Operational and Technical 

Training Division should ensure that computer 

hardware and software, as well as the client 

servers, can support the complex needs of a 

robust. web-based training portfolio. 

'---

Insert offset folio 61 here 81664.061

OIG·1I·05 Transportation Security 10/25/2010 Conducts a study to identify the total average 4 Open· 

Administration's Management time needed for TSOs to complete required Resolved 

of Its Screening Workforce training, including time needed to travel to Training Program Can Be training locations: and, establishes 

Improved requirements that airport management provide 

the minimum time needed for the screening 

workforce to complete training requirements. 

OIG·II·07 Use of American Recovery 111912010 Implement procedures to ensure that EBSP 5 Open. 

and Reinvestment Act Funds projects using Recovery Act funds are Unresolved 

by the Transportation Security compliant with the Section 1605 Buy 

Administration for the American requirements. 

Electronic Baggage Screening 

Program 

OIG·1I·95 TSA's Oversight ofthe 71712011 Require that all airports having formal access I Open· 

Airport Badging Process control programs establish and implement Unresolved 

Needs Improvement quality assurance procedures to ensure (1) the 

accuracy and completeness of vetting 

infonnation, and (2) airport personnel conduct 

their own verifications of approved 

applications. 

DIG· 1 1·95 TSA's Oversight of the 7171201 I Require that all airports having formal access 2 Open. 

Airport Badging Process control programs ensure that airport operator Unresolved 

Needs Improvement employees utilize all available tools to verify 

the identity of applicants. Also, encourage 

airports to collect passport and Social Security numbers from applicants, as these are unique 

identifiers that can assist and expedite the 

application process. 

OIG·II-95 TSA's Oversight of the 71712011 Develop and provide standardized training on 3 Open· 

Airport Badging Process identification verification and require airport Unresolved 

Needs Improvement operator employees to complete this training 

on a recurrent basis. The training can be 

developed in coll.boration with other DHS 

agencies with expertise in correctly identifYing 

immigration documentation. 

-

Insert offset folio 62 here 81664.062

0IG·ll·95 TSA's Oversight urthe 717120 II Provide Transportation Security Inspectors 5 Open -

Airport Badging Process with real time reports generated from the Unresolved 

Needs Improvement existing database of all active badge holders for 

analysis. These reports should include an 

analysis identifYing possible records with data 

inaccuracies based on factors such as age and 

duplicate personal identification numbers. The 

reports should provide the agency with 

immediate capabilities to effectively monitor 

and track the clearance process. 

OIG·Il·95 TSA's Oversight of the 71712011 Require airports to conduct a criminal history 6 Open· 

Airport Badging Process records check for each badge holder on a Resolved 

Needs Improvement recurrent basis to correspond with badge 

renewaL This will ensure that individuals who 

have committed disqualifying crimes no longer 

have access to secured airport areas. 

0IG·12·06 Transportation Security 11/2112011 This recommendation is SSt I 

Administration Penetration Unresolved 

Testing of Advanced Imaging 

Technology 

0IG·12·06 Transportation Security 1l!2l!20ll This recommendation is SSt. 3 Open· 

Administration Penetration Unresolved 

Testing of Advanced Imaging 

Technology 

0IG·12·06 Transportation Security 1lI2l!2011 This recommendation is sst. 4 Open 

Administration Penetration Unresolved 

Testing of Advanced Imaging 

Technology 

0IG·12·06 Transportation Security 1l!2l/20ll This recommendation in SSl. 5 Open -

Administration Penetration Unresolved 

Testing of Advanced Imaging 

Technology 

OIG·12·06 Transportation Security 1 lI21/20 II This recommendation is SSt 6 OpenAdministration Penetration Unresolved 

Testing of Advanced Imaging 

Technology 

0IG·12·06 Transportation Security I lI2l120ll This recommendation is SSI. 7 OpenAdministration Penetration Unresolved 

Testing of Advanced Imaging 

Technology 

Insert offset folio 63 here 81664.063

010-12-103 Efficiency and Effectiveness 8/15/2012 Develop and implement a public awareness I Open -

ofTSA's Visible Intermodel initiative to convey the VIPR Program's intent. Resolved 

Prevention and Response 

Program Within Rail and Mass Transit Systems 

010-12-103 Efficiency and Effectiveness 8/15/2012 Extend OLE/FAMS and OSO VIPR 10 Open -

ofTSA's Visible Intermodel assignments for more than 1 year. Resolved 

Prevention and Response 

Program Within Rail and Mass Transit Systems 

010-12-103 Efficiency and Effectiveness 8/15/2012 Refine Standard Operating Procedures to II OpenofTSA's Visible Intermodel reflect appropriate roles and responsibilities for Resolved 

Prevention and Response TSls during VIPR operations. 

Program Within Rail and 

Mass Transit Systems 

010-12-103 Efficiency and Effectiveness 8/15/2012 Evaluate the realignment to determine any 12 OpenofTSA's Visible Intermodel potential adverse effects on TSA's ability to Resolved 

Prevention and Response ensure that VIPR teams have sufficient access 

Program Within Rail and to law enforcement canine teams. 

Mass Transit Systems 

OIG-12-103 Efficiency and Effectiveness 811512012 Develop and implement a TSA-wide VIPR 13 OpenofTSA's Visible Intermodel training program, to include rail safety and Resolved 

Prevention and Response incident response training 

Program Within Rail and scenarios. Mass Transit Systems 

010-12-103 Efficiency and Effectiveness 8/15/2012 Evaluate exercises that could incorporate VIPR 14 Open -

of TSA's Visible Intennodel teams, law enforcement partners and Resolved 

Prevention and Response stakeholders, and determine the feasibility of 

Program Within Rail and conducting joint exercises in all VIPR Program 

Mass Transit Systems field offices and areas of responsibility. 

010-12-103 Efficiency and Effectiveness 8/15/2012 Conduct an evaluation to determine what 16 OpenofTSA's Visible Intermodel safety and protective gear should be provided Resolved 

Prevention and Response to OSO assets when participating on VIPR 

Program Within Rail and operations. 

Mass Transit Systems 

Insert offset folio 64 here 81664.064

0IG-12-103 Efficiency and Effectiveness 8/15/2012 Clarity the definitions ofVIPR operations and 2 Open -

ofl'SA's Visible Intermodcl provide guidance to headquarters and the field Resolved 

Prevention and Response about how to complete operational 

Program Within Rail and documentation to correctly report operations. 

Mass Transit Systems 

OIG-12-103 Efficiency and Effectiveness 8/15/2012 Establish and implement a data reporting 3 Open -

ofTSA's Visible Intermodel procedure that ensures information submitted Resolved 

Prevention and Response to the Joint Coordination Center is updated and 

Program Within Rail and reflects each VIPR operation accurately. 

Mass Transit Systems 

OIG-12-103 Efficiency and Effectiveness 8/15/2012 Develop and communicate guidance for FAM 4 Open -

ofISA's Visible Intermodel engagement protocols and legal authorities Resolved 

Prevention and Response when VIPR teams encounter potential or actual 

Program Within Rail and criminal activity in mass transit environments. 

Mass Transit Systems 

OIG-12-103 Efficiency and Effectiveness 8115/2012 Provide enhanced guidance regarding riskw 5 Open * 

on'SA's Visible Intermodel based dep10yment planning and increase access Resolved 

Prevention and Response to risk assessment inrormation that VIPR tcalns 

Program Within Rail and can use to prioritize deployments with partners 

Mass Transit Systems and stakeholders, 

OIG-12-103 Efficiency and Effectiveness 8/15/2012 Designate VIPR Program 6 Openof TSA's Visible Intermodel authority to one TSA headquarters office to Resolved 

Prevention and Response ensure that overall field program 

Program Within Rail and ar..i:ivity and engagement, and oversight arc 

Mass Transit Systems coordinated effectively. 

OIG-12-103 Efficiency and Effectiveness 8/15/2012 Ensure coordination and engagement between 7 OpenofTSA's Visible Intermodel local V(PR team leaders and the Playbook Resolved 

Prevention and Response Manager, and ensure that airport law 

Program Within Rail and enforcement VIPR operations are integrated 

Mass Transit Systems with Security Playbook operations, 

0IG-I2-103 Efiiciency and Effectiveness 8/15/2012 Rc .. distribute existing VIPR F AM position 8 OpenofTSA's Visible Intermodel allocations among field offices according to Resolved 

Prevention and Response high·threat urban areas, critical infrastructure, 

Program Within Rail and and mass transit networks using a 

Mass Transit Systems methodology, 

L--

Insert offset folio 65 here 81664.065

010-12-103 Efficiency and Effectiveness 8/15/2012 Develop a process to increase oversight 9 OpenofTSA's Visible Intermodel regarding the availability and involvement of Resolved 

Prevention and Response OSO personnel and assets to OLE/F AM-led 

Program Within Rail and VIPRteams. 

Mass Transit Systems 

010-12-\05 Costs Invoiced by the City of 7130120\2 Resolve the $7,624,463 ofineligible and I Open- 8,471,626 

Phoenix for Cheeked Baggage unsupported capital costs. Unresolved 

Screening Projects at the 

Phoenix Sky Harbor 

International Airport 

010-12-\05 Costs Invoiced by the City of 713012012 Resolve the $1,219,914 of ineligible and 2 Open- 1,355,460 

Phoenix for Checked Baggage unsupported administrative costs. Unresolved 

Screening Projects at the 

Phoenix Sky lIarbor 

International Airport 

010-12-\05 Costs Invoiced by the City of 7/30/2012 Review the iron, steel, and manufactured goods 3 Open- 0 0 

Phoenix for Checked Baggage used in the CBrS to determine whether the City Unresolved 

Screening Projects at the complied with applicable "huy americanu 

Phoenix Sky Harbor requirements. 

International Airport 

010-12-\20 Transportation Security 9125/2012 Further develop the insider threat program to I OpenAdministration Has Taken include policies, procedures, and a risk Unresolved 

Steps To Address the Insider management plan pertinent to the insider 

Threat But Challenges threat. 

Remain 

OIG-\2-\20 Transportation Security 9/25/2012 Implement an insider threat training and 2 Open -

Administration Has Taken awareness program for the entire TSA Unresolved 

Steps To Address the Insider workforce. 

Threat But Challenges 

Remain 

orO-12-128 TSA Management and 9/28/2012 Create and document protocols to ensure that 1 OpenOversight at Honolulu sufficient information is gathered and used for Resolved 

International Airport thorough analysis when deciding to modify 

standard operating procedures. These protocols 

should be weB documented and ensure 

comprehensive, transparent. and logical 

approaches with detailed support, while allowing for flexibility to address urgent 

threats. _L..-

Insert offset folio 66 here 81664.066

OlG-12-128 TSA Management and 9/28/2012 Revise the position descriptions to clarify the 2 Opcn -

Oversight at Honolulu roles and responsibilities for checked baggage Resolved 

International Airport supervisors and managers and define the 

expectations for direct supervision, This should 

ensure that assigned stafr are performing 

screening duties in accordance with all standard operating procedures. 

OIG-12-128 TSA Management and 9/28/2012 Ensure that supervisors and managers are 3 OpenOversight at Honolulu trained on their responsibility and Resolved 

International Airport accountability to ensure that all screening 

operations are performed as required. 

OIG-12-128 TSA Management and 9128/2012 Develop and implement performance metrles 4 Open -

Oversight at Honolulu to evaluate the supervision of checked baggage Unresolved 

International Airport areas as part of supervisory performance plans 

and evaluations. These metrics should include 

frequent direct observation of baggage 

screening activities. 

0IG-12-26 Transportation Security 1/6/2012 This is a classified reporL I Open w 

Administration Covert Testing Resolved 

of Access Controls to Secured 

Airport Areas 

01G-12-26 Transportation Security lt6/2012 This is a classified report. 2 Open -

Administration Covert Testing Unresolved 

of Access Controls to Secured 

Airport Areas 

OIG-12-26 Transportation Security 1/6/2012 This is a classified report. 3 Open 

Administration Covert Testing Resolved 

of Access Controls to Secured 

Airport Areas 

0IG-12-26 Transportation Security lt6/2012 'Illis is a classified report. 4 Opcn -

Administration Covert Testing Unresolved 

of Access Controls to Secured 

Airport Areas 

OIG-12-26 Transportation Security lt6/2012 This is a classified report. 5 Open 

Administration Covert Testing Unresolved 

of Access Controls to Secured 

Airport Areas 

OIG-12-26 Transportation Security 1/6/2012 This is a classified report. 6 Open w 

Administration Covert Testing Unresolved 

of Access Controls to Secured 

Airport Areas 

Insert offset folio 67 here 81664.067

010-12-28 Allegations of Misconduct 1/20/2012 Identify other means to obtain information on I Openand Illegal Discrimination and Federal Air Marshals' performance that could Resolved 

Retaliation in the Federal Air assist supervisors when preparing evaluations. Marshal Service 

010-12-28 Allegations of Misconduct 1/20/2012 In consultation with the Director of the Federal 4 Openand Illegal Discrimination and Air Marshal Service, the Assistant Resolved 

Retaliation in the Federal Air Administrator of the Office of Professional 

Marshal Service Responsibility, and the Assistant Administrator 

of the Office of Human Capital, provide 

guidance and clarification regarding how long 

prior corrective or discipline actions should be 

considered and for which types of incidents. 

Current training to supervisors and the 

workforce concerning conduct should be 

assessed and additional training provided as 

necessary. 

010-12-38 Transportation Security 2116/2012 Develop a process to ensure that TSOs satisfy 3 OpenAdministration's Use of ANSI requirements for radiation safety Unresolved 

Backscatter Units 

010-12-38 Transportation Security 2/1612012 Develop a process to verify the completion of 4 OpenAdministration's Use of annual refresher training by TSOs operating Unresolved 

Backscatter Units backscatter units. 

010-12-39 Information Sharing on 2129/2012 Provide all Coordination Centers with live 6 Open -

Foreign Nationals: Border video feeds from security cameras in the Unresolved 

Security airport tenninals. 

010-12-39 Infonnation Sharing on 2/2912012 Provide all Coordination Centers with access 7 OpenForeign Nationals: Border to federal law enforcement data systems. Unresolved 

Security 

010-12-60 Review of Costs Incurred by 3/2112012 We recommend that TSA's Contracting Ofticer I Open- 1,354,740 

the City of Atlanta, Oeorgia, resolve the $1,354,740 of unsupported costs Resolved 

Relating to the HartsfieldJackson International Airport, 

Under Other Transactional 

Agreement Number HST04-

09-H-RECIS4 with the 

Transportation Security 

Administration 

Insert offset folio 68 here 81664.068

OIG-12-80 Transportation Security 5/3/2012 We recommend that the Transportation 1 Open -

Administration's Efforts To Security Administration Assistant Resolved 

IdentifY and Track Breaches Administrator, Office of Security Operations 

at OUf Nation's Airports Refine and use one comprehensive definition 

of what constitutes a security breach that can 

be universally reported to Performance and 

Results Information System and the 

Transportation Security Operations Center. 

Once issued, ensure that this guidance is used 

and clearly understood throughout the agency. 

OIG-12-80 Transportation Security 5/3/2012 We recommend that the Transportation 2 OpenAdministration's Efforts To Security Administration Assistant Resolved 

Identify and Track Breaches Administrator, Office of Security Operations 

at Our Nation's Airports develop a comprehensive oversight program to 

ensure: a, That security breaches arc accurately 

reported based on the revised definition, and 

the events are properly tracked and analyzed 

for trends, This should include local and 

national reporting that can be validated at the 

headquarters level. b, The agency consistently 

takes actions to correct vulnerabilities resulting 

from security breaches. 

OIG-12-94 Implementation and 7/6/2012 Identify how and when aircraft operators I Open -

Coordination ofTSA's Secure override an inhibited boarding pass printing Resolved 

Flight Program result and implement corrective action to 

eliminate unauthorized overrides by aircraft 

operators, 

0IG-12-96 Review of Allegations of 7/2/2012 Establish and implement timeframes for 1 Open -

Misconduct and issuing Emergency Amendments, including Unresolved Mismanagement Within deadlines for TSA offices involved in 

TSA's Office of Global reviewing and providing comments on them. 

Strategies 

OIG-12-96 Review of Allegations of 7/2/2012 Require rescreening for aU passengers arriving 2 Open 

Misconduct and at U.S. ports of entry from preclearance Unresolved 

Mismanagement Within airports that fail to achieve comparable status. 

TSA's Office of Global 

Strategies 

Insert offset folio 69 here 81664.069

OIG-13-05 Personnel Security and 10/26/2012 We recommend that the Assistant 3 OpenInternal Control at TSA's Administrator for the Office of Law Resolved 

Legacy Transportation Threat Enforcement/Federal Air Marshals: Provide the 

Assessment and Credentialing Adjudication Center sufficient Federal 

Office employees to establish internal control over 

operations and reporting requirements. 

OIG-l3-05 Personnel Security and 10126/2012 We recommend that the Assistant 4 OpenInternal Control at TSA's Administrator for the TSA Office of Resolved 

Legacy Transportation Threat Intelligence and Analysis: Develop a 

Assessment and Credentialing restructuring plan to enhance operational 

Office effectiveness in the Secure flight Operations 

Center staffing model. 

OIG-l3-05 Personnel Security and 10/26/2012 We recommend that the Assistant 5 Open -

Internal Control at TSA's Administrator for the TSA Office of Resolved 

Legacy Transportation Threat Intelligence and Analysis: Coordinate with 

Assessment and Credentialing both the Director of TIM and the Director of 

Office legacy TIAC Technology and oversee the 

development of the TIM data system and the 

decommissioning of legacy TIAC data 

systems. 

OIG-13-05 Personnel Security and 10/26/2012 We recommend that the TSA Administrator: 6 OpenInternal Control at TSA's For a minimum of 2 years. direct legacy TTAC Resolved 

Legacy Transportation Threat offices to refer all 

Assessment and Credentialing complaints, grievances, disciplinary actions, 

Office investigations, and inspections to appropriate 

TSA or DHS offices with primary oversight 

responsibility, 

OIG-13-05 Personnel Security and 10/2612012 We recommend that the TSA Administrator: 7 OpenInterna! Control at TSA's Provide employees a Know Your Rights and Resolved 

Legacy Transportation Threat Responsibilities website and brochure that 

Assessment and Credentialing compiles appropriate directives on conduct, 

Office processes, and redress options. 

OIG-13-05 Personnel Security and 10/2612012 We recommend that the TSA Chief Human 8 Open -

Internal Control at TSA's Capita! Ofiicer: Establish an independent Unresolved 

Legacy Transportation Threat review panel reporting to the Otnce of the 

Assessment and Credentialing Chief Human Capital Officer through which 

Ofiice legacy TTAC employees may request a review 

of desk audits and reassignments. 

Insert offset folio 70 here 81664.070

OIG-13-14 TSA's National Deployment 12/4/2012 We recommend that the Assistant 1 Open -

Force- FY 2012 Follow-Up Administrator for Security Operations develop Resolved 

a process and assign responsibility for ensuring 

that assessments of alternatives to hiring 

shortages arc concucted and documented as 

directed by the NDO FSD Guide. 

OIG-13-14 TSA's National Deployment 12/4/2012 We recommend that the Assistant 2 OpenForce - FY 2012 Follow-Up Administrator for Security Operations develop Resolved 

and implement a strategy to reduce hiring difficulties and improve retention. At a 

minimum, this effort should include an 

assessment of quality housing alternatives, 

additional pay incentives and bonuses, and 

transportation considerations. 

I 

0IG-13-14 TSA's National Deployment 12/4/2012 We recommend that the Assistant 3 OpenForce - FY 2012 Follow-Up Administrator for Security Operations revise Resolved 

the Support Request Fonn to include a section 

where Federal Security Directors can identify 

the types of screening equipment that National 

Deploymenl Force Transportation Security 

Officers will operate during the deployment. 

0IG-13-14 TSA's National Deployment 12/4/2012 We recommend that the Assistant 4 Open -

Force - FY 2012 Fol1ow-Up Administrator for Security Operations develop Resolved 

standardized procedures for TSA's Staffing and 

Scheduling Section and Office of Human 

Capital to conduct, review, and document costbenefit analyses on the Support Request Form 

consistently. 

OIG-13-14 TSA's National Deployment 12/4/2012 We recommend that the Assistant 5 OpenForce - FY 2012 Follow-Up Administrator for Security Operations develop Resolved 

guidance for Regional Directors on how to 

assess SSS and OBC's cost-benefit analysis as 

part of their decision-making process for NDF 

support requests. This guidance should include 

a requirement that Regional Directors 

document their assessment of the 

analysis on the Support Request Fonn. 

L----

Insert offset folio 71 here 81664.071

OIG-13-14 TSA's National Deployment 12/4/2012 We recommend that the Assistant 6 Open -

Force- FY 2012 Follow-Up Administrator for Security Operations, in the Resolved 

absence of a final decision regarding the 

Security Training Instructors Pilot Program, 

ensure that TSA has a process to maintain 

screeners1 equipment certifications and 

recertifications for National Deployment Force Transportation Security Officers. 

OIG-13-20 Independent Auditors' Report IlII412012 We recommend that TSA, Emphasize and train LA.2.a Open - 0 () 

on DBS FY 2012 employees on the critical aspects of key Unresolved 

Consolidated Financial transactional and supervisory review controls 

Statements and Report on including the precision of the review, the need 

Internal Control Over for supporting documentation, and impact to Financial Reporting the financial statements. 

010-13-20 Independent Auditors' Report 1lI14/2012 We recommend that TSA, Work with the TSA LA.2.b Open - 0 () 

on DBS FY 2012 leasing office to implement formal and Unresolved 

Consolidated Financial effective processes for identification, 

Statements and Report on evaluation, and recording of cancellable, 

Internal Control Over cancellable, and capital leases. 

Financial Reporting 

OIG-13-20 Independent Auditors' Report 1lI14/2012 We recommend that TSA, Expand the monthly LA.2.c Open - 0 0 

on DBS FY 2012 financial statement review process to Unresolved 

Consolidated Financial incorporate operational and business a(.;tivities 

Statements and Report on into the evaluation and assessment process. 

Internal Control Over 

Financial Reporting 

010-13-20 Independent Auditors' Report 11/14/2012 We recommend that TSA, Continue to analyze LA.2.d Open - 0 0 

on DBS FY 2012 alternatives, including evaluation of systems, to Unresolved 

Consolidated Financial enable FFMIA compliance. 

Statements and Report on 

Internal Control Over 

Financial Reporting 

010-13-20 Independent Auditors' Report 1lI14/2012 We recommend that: TSA: Develop ILF.2.a Open - 0 0 

on DBS FY 2012 formalized, documented, policies and Unresolved 

Consolidated Financial procedures to ensure systems are properly 

Statements and Report on evaluated for basics requirements by the 

Internal Control Over appropriate offices and levels of management 

Financial Reporting prior to implementation. 

Insert offset folio 72 here 81664.072

OIG·13·20 Independent Auditors' Report 11/14/2012 We recommend that: TSA: Develop policies ILF.2.b Open· 0 0 

on DHS FY 2012 and procedures. including monitoring and Unresolved 

Consolidated Financial training for employees both inside and outside 

Statements and Report on the TSA aFM on the importance to maintain 

Internal Control Over accurate, valid supporting documentation, 

Financial Reporting available for audit. 

• FPBU • Funds Put to Better Use '$[:1o,1
125 


Insert offset folio 73 here 81664.073

Question#: I 

Topic: illegal immigrant detainees 

Hearing: DOD and DHS: Implementing Agency Watchdogs' Recommendations Could Save 

Taxpayers Billions 

Primary: The Honorable Kerry Bentivolio 

Committee: OVERSIGHT & GOV RFORJvl (HOUSE) 

Question: On March I, the Associated Press reported that DHS released more than 2,000 

illegal immigrant detainees in February, before sequester took effect, and plans to release 

3,000 more before the end of this month. Initially, Secretary Napolitano claimed that they 

were not released due to budget cuts under sequestration; she has since then changed that 

position. 

Mr. Borras, at this point, how many illegal immigrant detainees have been released? 

Response: According to information provided by ICE, as of March 22, 2013, the total 

number of aliens released for budgetary reasons from February 9 through March I was 

2,226. 

Question: Are there more that are due to be released this month? 

Response: ICE does not intend to release additional individuals for budgetary reasons. 

Question: Has DHS considered alternatives to releasing these detainees? 

Response: ICE considered transferring detainees from more expensive detention beds to 

less costly locations. After analysis, it was determined that the realized savings would do 

little to offset the projected shortfall during the short-term. Factoring in additional 

transportation costs, ICE determined that detainee transfers were not a viable option to 

cover the anticipated deficit. Additionally, all ofthe aliens released remained in 

immigration proceedings. Some have since been removed or re-detained, and the rest are 

all on some form of supervised release (such as bond, order of recognizance, order of 

supervision, telephonic monitoring, or Global Positioning System monitoring). ICE 

continues to review and monitor all of the individuals released, and the agency reserves 

the right to re-detain any alien released if circumstances warrant or new information 

comes to light. ICE also works closely with state and local law enforcement, and follows 

a practice of responding to specific requests from law enforcement. 

Question: Could the IG recommendations be used to cut wasteful spending instead of 

releasing the detainees? 

Response: ICE continuously explores ways to increase efficiencies and lower costs. 

However, the detainee release was predicated on a short-term requirement to sustain an 
126 


Insert offset folio 74 here 81664.074

Question#: I 

Topic: illegal immigrant detainees 

Hearing: DOD and DHS: Implementing Agency Watchdogs' Recommendations Could Save 

Taxpayers Billions 

Primary: The Honorable Kerry Bentivolio 

Committee: OVERSIGHT & GOY RFORM (HOUSE) 

operationallcvel consistent with available funding. At the beginning of the second 

quarter of the Fiscal Year, ICE completed a review of its funding availability and spend 

plans for the remainder of the Continuing Resolution (CR) period, through Mareh 27, 

2013, and determined thatfunding would run out by March 9, 2013 (18 days prior to the 

expiration of the CR). 

To ensure that the current CR funding could be sustained through March 27, 2013, ICE 

determined that it was necessary to reduce its ADP. In order to mitigate the projected 

budget shortfalls, effective February 9,2013, ICE gradually adjusted the daily population 

count by releasing non-mandatory detention aliens who did not pose a threat to public 

safety while continuing with imminent removals and the detention of high priority aliens. 
127 


Insert offset folio 75 here 81664.075

Ouestions for the Record 

Congressman Paul Gosar 

Member of the Committee on Oversight and Government Reform 

Questions for: 

Charles Edwards, Deputy Inspector General for the Department of Homeland Security 

Hearing entitled, "DOD and DHS: Implementing Agency Watchdogs' Recommendations Could 

Save Taxpayers Billions." 

The following questions are posed to both IG Halbrooks and IG EdwardsIn eaeh of your respective agencies: 

1. Do you engage in contracts that must comply with the Davis-Bacon Act prevailing wage 

requirements? 

Answer - Yes, the Department of Homeland Security engages in contracts that are subject 

to the requirements of the Davis-Bacon and related Acts. 

2. Do you have an approximate number of how many current contracted employees are subject 

to the prevailing wage requirements established by the Davis-Bacon Act? 

In a report published April 14, 2011, titled, "Davis-Bacon Act: Methodological Expertise Critical 

for Improving Survey Quality," GAO stated on page 7 that "Labor cannot determine whether its 

Davis-Bacon survey results are representative of prevailing wages." Further, there have been 

trends in lG audits that show unsound methodology and high error rates in survey forms 

submitted to the Department of Labor's Wage and Hour Division. In one DOL audit, the IG 

found that "one or more errors existed in 100 percent ofthe wage reports" that were examined 

(Report Number: 04-04-003-04-420). There were errors with respect to reports on wage rates, 

benefits, job classifications, and projects. 

Answer - We are not able to answer questions 2 through 4 without conducting an audit of 

the Department of Homeland Security's contracts. Since the Department does not track 

and monitor all contracts above $2,000 (the threshold for Davis-Bacon), we would need to 

select a statistical sample of contracts exceeding $2,000 awarded by each of the 

components. Once we selected a sample we would need to examine the contract at each 

component location where the contracting files are maintained to determine if the contract 

was for or could include construction, alteration, or repair (including painting and 

decorating) of public buildings or public works. For those contracts meeting these criteria, 

we would need to determine whether the contractor hired sub-contractors to perform this 

type of work. Once this step was completed, we would need to validate each contractor's 

and sub-contractor's payroll records to confirm support for the number of contracted 

employees and determine whether prevailing wages were paid. We would also need to 

trace the payroll deposits to individual bank accounts to ensure the amount deposited 

agrees with the supporting accounting records and trace the payroll tax deposits to the 

appropriate organizations, such as IRS and state and local governments to ensure the 

amonnt deposited agrees with the supporting accounting records. We would then need to 
128 


Insert offset folio 76 here 81664.076

validate what work the contractor or snb-contractor performed. Finally, we would need to 

validate that the amount reported to DOL was supported by the contractor's or subcontractor's payroll records. To answer question 3 and 4 we would need to evaluate the 

potential new wage reporting system and create a valid predictive model to assess the 

system's impact. It is important to note that to ensure the inputs used for the predictive 

model were valid, we would need to conduct the audit using a statistically valid sampling 

methodology with a high confidence level. We can perform this analysis; however, this 

work would require time, resources, and a shift of priorities. 

3. If a new wage reporting system were to be implemented to calculate more accurate wages, do 

you foresee potential cost savings for your department? 

Answer - Please see our response to question uumber 2. 

4. If so, approximately how much savings could be produced? 

Answer - Please see our response to question number 2. 
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CHARRTS No.: HOGRC-OI-OOI 

House Government Refonn Cornmittee 

Hearing Date: March 19,2013 

Subject: DoD and DHS: Implementing Agency Watchdogs' Recommendations Could Save 

Taxpayers Billions 

Congressman: Congresswoman Speier 

Witness: USD(C) Hale 

Question: #1 

Question: Mr. Hale, in 2009 you chose a new head for DCAA and set three goals for 

refonn-improving the quality of audits, assessing the numbers and compliance of audits with 

acquisition laws and regulations, and having DCAA audit findings receive full consideration 

during contracting officer deliberations. The GAO has questioned the DCAA's risk strategy as not 

being sufficient to assure taxpayer interests are protected and the IG estimates that the strategy 

may be leaving $250 million in unjustified costs unrecovered each year. DCAA's sustention rate 

has gone from 63% in 2009 to 52%, the lowest level in more than a decade. 

a. How can DCAA be more effective at saving taxpayer money if contracting officers are acting on 

their recommendations less often? 

b. Why has the sustention rate dropped? 

c. Why should we believe that the new leadership and the implemented refonns are working to 

increase savings for taxpayers? 

Answer: There are three indicators that provide evidence for DCAA effectiveness: net savings, 

the effectiveness of our risk-based approach, and improvements in audit quality. 

Net savings: The most direct measure of effectiveness, as already discussed above, is 

the marked increase in net savings in the last three years as compared to anytime in the 

history of the agency. At $4.2 billion, DCAA brought back $6.70 for every taxpayer 

dollar invested. Importantly, this return on taxpayer investment represents real savings 

that enable the Department to do more--get more equipment, services, and 

supplies-with fewer dollars. Given the direct relationship to DCAA's audit mission 

and its impact on both cost avoidance and checks written by contractors to return funds 

to the US treasury, DCAA is one of the top oversight organizations in providing 

realized versus potential savings to the taxpayer and warfighter. 

Effectiveness ofa Risk-Based approach: A key enabler of the increase in net savings is 

our risk-based approach that redirects workyears to higher priority work. This approach 

was implemented partly due to the staffing crisis of decreases in the DCAA workforce 

between 2000 and 2008, and the concurrent increase in defense contracts as a result of 

two wars (see Chart 2 attached). As a result of the ensuing gap, DCAA has been forced 

to focus its efforts on those audits that provided the highest payback to the taxpayer. In 

their review, GAO noted in a report (GAO-13-13I, dated December, 2012) that 

DCAA's risk-based approach, which focuses its resources on audits considered to be 

"high risk or high dollar value," is one that "appears prudent and shows promise." 

GAO went on to say that ongoing success depends on several factors, including clear 
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measures to assess progress. In addition to existing measures in place, DCAA is 

developing other measures to assess the value of its approach. The increase in net 

savings, however, is one indicator that this change is making the best use ofDCAA's 

limited resources. 

Improvements in audit quality 

High quality audits form the basis of the significant increases in net savings for the 

taxpayer. Following GAO criticisms that many DCAA audits did not meet Generally 

Accepted Government Auditing Standards (GAGAS), coupled with a thorough internal 

assessment of our audit process, DCAA took several measures to improve the quality 

of its audits, including the revision of policies, procedures, and training. Specifically, 

our internal quality team conducted comprehensive training at every Field Audit 

Office. This training focused on three critical areas: 1) adequate planning, 2) sufficient, 

competent evidence, and 3) efficient documentation. Since this comprehensive training 

was delivered to our workforce, the results of our internal reviews have shown marked 

improvement in the quality of our audits. 

In surnmary, DCAA audit reforms are taking hold and producing positive results for the 

taxpayer. 

Insert offset folio 79 here 81664.079

Agency Percentage of Questioned Cost to Dollars Examined 

10.00% .... .. 

9.00% +----.. ..... .. -----... 

8.00% +-...... - ...... ..... ... -.. -.......... ... .... -... ... --.... -.. 

7 .00% 

6.00% .. 

5.00% .. .... ... -.-.. -.. -.--- .. --.. .. 

4.00% 3.96% .. --

3.02% 3.11 % 3.25% _..... .--.- -- .---

3.00% 

2.00% +...-.-.-.-... -... -.-----.... .. -. 

1.00% .. 

0.00% 

2002 2003 2004 2005 2006 2007 2008 

..... Agency Percentage 

2009 2010 2011 2012 20

Thru

Insert offset folio 80 here 81664.080

150% 

100% 

(II 

CD 

C 

IV 

..c: 

<..> 

CS

O% 

(II 

Il. 

0% 

-50% 

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 

Fiscal Year 1--Workyears 

--DoD Contract Spending 

Source for DoD contracting spending is a September 2012 study done by the Center for Strategic International Studies (CSIS) 
133 


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CHARRTS No.: HOGRC-OI-002 

House Government Refonn Committee 

Hearing Date: March 19, 2013 

Subject: DoD and DHS: Implementing Agency Watchdogs' Recommendations Could Save 

Taxpayers Billions 

Congressman: Congresswoman Speier 

Witness: USD(C) Hale 

Question: #2 

Question: Mr. Hale, your office is coordinating the efforts to make the Defense Department 

auditable by 2017. I am very concerned about the significant cost overruns and program 

mismanagement in many of the Enterprise Resource Programs. The IG has identified six ERP 

systems experiencing 1.5 to 12.5 years of schedule delays, and cumulative cost increases of$8 

billion. The Air Force's ECSS cost taxpayers $1 billion but we have nothing to show for it. It's my 

understanding that there really hasn't been sufficient accountability for this waste, either, since the 

program manager was removed but not fired. I'm also concerned that there isn't a plan for how the 

Air Force will achieve auditability without ECSS. 

a. What steps have been taken to hold people accountable for this failure? 

b. How does this program's failure impact the Air Force achieving accountability? 

Answer: I am fully committed to achieving financial auditability for DoD and we have made 

significant progress, particularly since fonner Secretary Panetta personally challenged the 

Department to accelerate audit efforts on our budgetary execution. That direction essentially 

forced a change in thinking about business systems. We plan to use systems currently in place to 

achieve our near tenn goals, while ensuring that our efforts to deliver modem, capable systerns 

continue so that sustaining auditability beyond 2017 will be cost-effective. I share your concerns 

relative to our track record in developing and delivering Enterprise Resource Programs, but that 

record needs to include some important context. Many of those systerns are fully deployed today 

and in the hands of thousands of users, clearly providing real business value. That value will 

increase as we gain experience. We also are applying the lessons-learned from earlier programs to 

ensure systems not yet fully deployed will benefit from this experience. With that background, 

allow me to respond to your specific questions: 

What steps have been taken to hold people accountable for this failure? 

The Under Secretary of Defense for Acquisition, Technology and Logistics tasked the Director, 

Perfonnance Assessments and Root Cause Analyses, to perfonn a fonnal root-cause analysis and 

to review issues surrounding contract type, program management skills, perfonnance measures, 

and risk management. Contributing factors to the failure of the Expeditionary Combat Support 

System (ECSS) program include: 

Two contract protests, one in October 2005 and another in September 2006, effectively halted the 

program. The protests were resolved in February 2006 and March 2007, respectively, at which 

point the program shifted toward design and initial piloting. Established processes that review the 

health and perfonnance oflarge acquisition programs like ECSS were actively applied to the 
134 


Insert offset folio 82 here 81664.082

program after the protests were cleared, identifying risks, governance issues, and mitigation plans 

to ensure program success. 

However, the program was unable to achieve critical milestones and as a result it was de-scoped 

and restructured in December 2009. In October 2010, the Air Force Senior Acquisition Executive 

declared a critical change (per title 10, U.S. C., chapter 144A) for failing to achieve a Full 

Deployment Decision within five years after funds were first obligated for the program. In 

February 2011, upon completion of the critical change, the Department implemented a number of 

additional actions designed to place the program on a path to success: 

• Replaced the Program Executive Officer and Program Manager; 

• Structured the program into increments and pilots; 

• Restructured the system's Integrator contract to limit the Government's financial 

exposure/liability; 

• Established performance-based success criteria to measure program progress; and 

• Directed independent assessments to identify risks and options. 

These actions came too late, did not yield the needed improvements in performance, and the 

program was cancelled. 

How does this program's failure impact the Air Force achieving accountability? 

The context of this question seems to focus on financial auditability (vs. accountability). Ifso, the 

Department is committed to meeting its stated audit readiness objectives despite the decision to 

cancel the ECSS program. To support Financial Improvement Audit Readiness, the Air Force is 

developing a plan that outlines requirements for the modification and sustainment oflegacy 

logistic systems that would have been replaced by ECSS. 
135 


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The Honorable Dan'ell Issa 

Chairman 

INSPECTOR GENERAL DEPARTMENT OF DEFENSE 

4800 MARK CENTER DRIVE 

ALEXANDRIA, VIRGINIA 22350-1500 

Committee on Oversight and Government Reform 

House of Representatives 

Washington, DC 20515-6143 

Dear Mr. Chairman: 

APR - 92013 

This letter is in response to your letter dated March 25, 2013, providing questions fi'om 

Representative Paul Gosar directed to Ms. Lynne Halbrooks, Principal Deputy Inspector 

General, Department of the Defense, as part of the hearing record for the Committee hearing 

held on March 19, 2013, titled "DOD and DHS: Implementing Agency Watchdogs' 

Recommendations Could Save Taxpayers Billions". 

The questions from Representative Gosar relate to requirements related to the Davis 

Bacon Act, As provided in the attached response to the questions, the DoD IG is unable to 

provide answers to these questions because we have not done any work related to the Davis 

Bacon Act prevailing wage requirements. Any answer that we would provide would be based 

only on speculation. As an audit organization, that is not appropriate. We currently do not 

anticipate our work covering this area unless we were auditing contracts related to the 

realignment of forces in the Pacific from Okinawa to Guam. However, because there has been 

very little movement on this effort within the Department, we are not anticipating doing any 

Guam related audits in the near future. If the Department begins executing contracts related to 

the realignment of forces in the Pacific, we will assess this as prot of our future audit plruming 

effOlts. . 

DoD compliance with the Davis Bacon Act falls under the purview of Office of the 

Undersecretary of Defense for Acquisition Technology and Logistics. Representative Gosar's 

staff can contact Mr. Dick Gitunan, the Director, Defense Procurement and Acquisition Policy, 

at 703-695-4235, for additional information regarding this issue. 

If you have any questions regarding this matter, please contact me at (703) 604-8324. 

Enclosure: As stated 

;co~ Brett A. Mansfield 

Acting Assistant Inspector General 

Communications and Congressional Liaison 

cc: The Honorable Elijah Cummings, Ranking Member 

The Honorable Paul Gosar 
136 

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House Government Reform Committee 

Hearing Date: March 19, 2013 

Subject: DoD and DHS: Implementing Agency Watchdogs' Recommendations Could Save 

Taxpayers Billions 

Congressman: Congressman Paul Gosar 

Witness: Principal Deputy Inspector General Halbrooks 

Question 1. Do you engage in contracts that must comply with the Davis-Bacon Act prevailing 

wage requirements? 

Answer: The DoD IG is unable to provide an answer to this question because we have 

not done any work related to the Davis Bacon Act prevailing wage requirements. 

Question 2. Do you have an approximate number of how many current contracted employees 

are subject to the prevailing wage requirements established by the Davis-Bacon Act? 

Answer: The DoD IG is unable to provide an answer to this question because we have 

not done any work related to the Davis Bacon Act prevailing wage requirements. 

Question 3. If a new wage reporting system were to be implemented to calculate more accurate 

wages, do you foresee potential cost savings for your department? 

Answer: The DoD IG is unable to provide an answer to this question because we have 

not done any work related to the Davis Bacon Act prevailing wage requirements. 

Question 4. If so, approximately how much savings could be produced? 

Answer: The DoD IG is unable to provide an answer to this question because we have 

not done any work related to the Davis Bacon Act prevailing wage requirements.