Homeland Security: Critical Design and Implementation Issues
Published: 2002-07-17T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: The government faces a unique opportunity to create an organization that is extremely effective in protecting the nation's borders and citizens against terrorism. There is likely to be considerable benefit over time from restructuring some of the homeland security functions, including reducing risk and improving the economy, efficiency, and effectiveness of consolidated agencies and programs. Sorting out those programs and agencies that would most benefit from consolidation versus those in which dual missions must be balanced in order to achieve a more effective fit in the proposed Department of Homeland Security is a difficult but critical task. Moreover, the magnitude of the challenges that the new department faces will clearly require substantial time and effort, and it will take institutional continuity and additional resources to be fully effective. In the short term, issues to be resolved include the harmonization of communication systems, information technology systems, human capital systems, the physical location of people and other assets, and other factors. Given the magnitude of this task, not everything can be achieved at once, and a deliberate phasing of some operations will be necessary. The new department will need to articulate a clear overarching mission and core values, establish a short list of initial critical priorities, develop effective communication and information systems, and produce an overall implementation plan for the new national strategy and related reorganization. Effective performance and risk management systems must also be established, and threat and vulnerability assessments must be completed.

section_title: Letter
paragraphs: Thank you for the opportunity to appear before this Select Committee  today to discuss one of the most important issues of our time, the  reorganization of government agencies and the reorientation of their  missions to improve our nation’s ability to better protect our homeland.  It  is important to recognize that this transition to a more effective homeland  security approach is part of a larger transformation effort that our  government must make to address emerging security, economic,  demographic, scientific, technological, fiscal and other challenges of the  21st century and to meet the expectations of the American people for  timely, quality and cost-effective public services.
In the months since the horrible events of September 11th, the President  and the Congress have responded with important and aggressive actions to  protect the nation, including creating an Office of Homeland Security  (OHS), passing new laws such as the USA Patriot Act and an initial  emergency supplemental spending bill, establishing a new agency to  improve transportation security, and working with unprecedented  collaboration with federal, state, and local governments, private sector  entities, non-governmental organizations, and other countries to prevent  future terrorist acts and to bring to justice those individuals responsible for  such terrible acts.
More recently, the Congress and the President have sought to remedy long- standing issues and concerns in the government’s homeland security  functions by proposing greater consolidation and coordination of various  agencies and activities.  On June 6th, the President announced a proposal to  establish a Department of Homeland Security (DHS) and on June 18th he  transmitted draft legislation to the Congress for its consideration.  Both the  House and the Senate have worked diligently on these issues and this  Select Committee is now deliberating on a variety of proposals and issues  raised by House committees and subcommittees.
In my testimony today, I will focus on two major issues that we believe the  Congress should consider creating a new cabinet department principally  dedicated to homeland security:  (1) the national strategy and criteria  needed to guide any reorganization of homeland security activities and to  help evaluate which agencies and missions should be included in or left out  of the new DHS; and (2) key issues related to the successful  implementation of, and transition to, a new department, including  leadership, cost and phasing, and other management challenges.  Our  testimony is based largely on our previous and ongoing work on national  preparedness issues, as well as a review of the proposed legislation.
In response to global challenges the government faces in the coming years,  we have a unique opportunity to create an extremely effective and  performance-based organization that can strengthen the nation’s ability to  protect its borders and citizens against terrorism.  There is likely to be  considerable benefit over time from restructuring some of the homeland  security functions, including reducing risk and improving the economy,  efficiency, and effectiveness of these consolidated agencies and programs.   Sorting out those programs and agencies that would most benefit from  consolidation versus those in which dual missions must be balanced in  order to achieve a more effective fit in DHS is a difficult but critical task.   Moreover, the magnitude of the challenges that the new department faces  will clearly require substantial time and effort, and will take institutional  continuity and additional resources to make it fully effective.  Numerous  complicated issues will need to be resolved in the short term, including a  harmonization of the communication systems, information technology  systems, human capital systems, the physical location of people and other  assets, and many other factors.  Implementation of the new department will  be an extremely complex task and will ultimately take years to achieve.   Given the magnitude of the endeavor, not everything can be achieved at the  same time and a deliberate phasing of some operations will be necessary.   As a result, it will be important for the new department to focus on:   articulating a clear overarching mission and core values; establishing a  short list of initial critical priorities; assuring effective communication and  information systems; and developing an overall implementation plan for  the new national strategy and related reorganization.  Further, effective  performance and risk management systems must be established, and work  must be completed on threat and vulnerability assessments.
subsections: section_title: Homeland Security Strategy, Criteria and Reorganization
paragraphs: Congress, in its deliberations on creating a new department, should pay  special attention to strategy, criteria and priorities for reorganization  critical to the nation’s efforts to protect the nation from terrorism.
subsections: section_title: Homeland Security Strategy
paragraphs: In recent testimony before the Congress, GAO urged that the proposal for  establishing DHS should not be considered a substitute for, nor should it  supplant, the timely issuance of a national homeland security strategy.   Based on our prior work, GAO believes that the consolidation of some  homeland security functions makes sense and will, if properly organized  and implemented, over time lead to more efficient, effective, and  coordinated programs; better intelligence sharing; and a more robust  protection of our people, borders, and critical infrastructure.  At the same  time, the proposed cabinet department, even with its multiple missions,  will still be just one of many players with important roles and  responsibilities for ensuring homeland security.  At the federal level,  homeland security missions will require the involvement of the Central  Intelligence Agency (CIA), Federal Bureau of Investigation (FBI), the U.S.  Marshals Service, the Department of Defense (DOD), and a myriad of other  agencies.   In addition, state and local governments, including law  enforcement and first responder personnel, and the private sector also  have critical roles to play.
If anything, the multiplicity of players only reinforces the  recommendations that GAO has made in the past regarding the urgent need  for a comprehensive threat, risk, and vulnerability assessment and a  national homeland security strategy that can provide direction and utility at  all levels of government and across all sectors of the country.
We are pleased that the Administration has just released the national  homeland security strategy and GAO stands ready to work with the  Congress and the Administration to ensure that a sound and strong strategy  can be effectively implemented to protect the country against terrorism.   Although GAO has not had time to thoroughly analyze the strategy yet, we  previously suggested that certain key elements be incorporated in the  homeland security strategy.  We have indicated that a national homeland  security strategy should: 1) clearly define and establish the need for  homeland security and its operational components, 2) clarify the  appropriate roles and responsibilities of federal, state, and local entities  and build a framework for partnerships for coordination, communication,  and collaboration, and 3) create specific expectations for performance and  accountability, including establishing goals and performance indicators.  In  addition, GAO has said the national strategy development and  implementation should include 1) a regular update of a national-level threat  and risk assessment effort, 2) formulate realistic budget and resource plans  to eliminate gaps, avoid duplicate effort, avoid “hitchhiker” spending, and  protect against federal funds being used to substitute for funding that  would have occurred anyway, 3) coordinate the strategy for combating  terrorism with efforts to prevent, detect, and respond to computer-based  attacks, 4) coordinate agency implementation by reviewing agency and  interagency programs to accomplish the national strategy, and 5) carefully  choose the most appropriate policy tools of government to best implement  the national strategy and achieve national goals.
Based on our preliminary review, some of these elements have been  addressed in the national strategy.  In the past, the absence of a broad- based homeland security definition or the ad hoc creation of a definition by  individual government departments suggest that a consistent and  transparent definition be applied to help create a more integrated approach  and unified purpose. The President’s national homeland security strategy  does provide for a proposed definition of homeland security, which should  help the government to more effectively administer, fund and coordinate  activities both inside and outside a new department and to ensure that all  parties are focused on the same goals and objectives, results and outcomes.   It is critically important that the Congress and the Administration agree on  a definition since it serves as the foundation for a number of key  organizational, operational and funding decisions.
Finally, I would also note that, in the past, we have suggested that a central  focal point such as OHS be established statutorily in order to coordinate  and oversee homeland security policy within a national framework.   Today, we re-emphasize the need for OHS to be established statutorily in  order to effectively coordinate activities beyond the scope of the proposed  DHS and to assure reasonable congressional oversight.
section_title: Need for Criteria and Reorganization
paragraphs: Often it has taken years for the consolidated functions in new departments  to effectively build on their combined strengths, and it is not uncommon  for these structures to remain as management challenges for decades.  It is  instructive to note that the 1947 legislation creating DOD was further  changed by the Congress in 1949, 1953, 1958, and 1986 in order to improve  the department’s structural effectiveness.  Despite these and other changes  made by DOD, GAO has consistently reported over the years that the  department -- more than 50 years after the reorganization -- continues to  face a number of serious management challenges.  In fact, DOD has 8 of 24  government wide high-risk areas based on GAO’s latest list, including the  governmentwide high-risk areas of human capital and computer security.   This note of caution is not intended to dissuade the Congress from seeking  logical and important consolidations in government agencies and programs  in order to improve homeland security missions.  Rather, it is meant to  suggest that reorganizations of government agencies frequently encounter  start-up problems and unanticipated consequences that result from the  consolidations are unlikely to fully overcome obstacles and challenges, and  may require additional modifications in the future to effectively achieve our  collective goals for defending the country against terrorism.
The Congress faces a challenging and complex job in its consideration of  DHS.  On the one hand, there exists a certain urgency to move rapidly in  order to remedy known problems relating to intelligence and information  sharing and leveraging like activities that have in the past and even today  prevent the United States from exercising as strong a homeland defense as  emerging and potential threats warrant.  Simultaneously, that same urgency  of purpose would suggest that the Congress be extremely careful and  deliberate in how it creates a new department for defending the country  against terrorism.  The urge to “do it quickly” must be balanced by an equal  need to “do it right.”  This is necessary to ensure a consensus on identified  problems and needs, and to be sure that the solutions our government  legislates and implements can effectively remedy the problems we face in a  timely manner.  It is clear that fixing the wrong problems, or even worse,  fixing the right problems poorly, could cause more harm than good in our  efforts to defend our country against terrorism.
GAO has previously recommended that reorganizations should emphasize  an integrated approach; that reorganization plans should be designed to  achieve specific, identifiable goals; and that careful attention to  fundamental public sector management practices and principles, such as  strong financial, technology, and human capital management, are critical to  the successful implementation of government reorganizations.  Similarly,  GAO has also suggested that reorganizations may be warranted based on  the significance of the problems requiring resolution, as well as the extent  and level of coordination and interaction necessary with other entities in  order to resolve problems or achieve overall objectives.
GAO, based on its own work as well as a review of other applicable studies  of approaches to the organization and structure of entities, has concluded  that the Congress should consider utilizing specific criteria as a guide to  creating and implementing the new department.   Specifically, GAO has  developed a framework that will help the Congress and the Administration  create and implement a strong and effective new cabinet department by  establishing criteria to be considered for constructing the department  itself, determining which agencies should be included and excluded, and  leveraging numerous key management and policy elements that, after  completion of the revised organizational structure, will be critical to the  department’s success.   Figure 1 depicts the proposed framework: With respect to criteria that the Congress should consider for constructing  the department itself, the following questions about the overall purpose  and structure of the organization should be evaluated:  Definition:  Is there a clear and consistently applied definition of  homeland security that will be used as a basis for organizing and  managing the new department?
Statutory Basis:  Are the authorities of the new department clear and  complete in how they articulate roles and responsibilities and do they  sufficiently describe the department’s relationship with other parties?
Clear Mission:  What will the primary missions of the new DHS be and  how will it define success?
Performance-based Organization:  Does the new department have  the structure (e.g., Chief Operating Officer (COO), etc.) and statutory  authorities (e.g., human capital, sourcing) necessary to meet  performance expectations, be held accountable for results, and leverage  effective management approaches for achieving its mission on a  national basis?
Congress should also consider several very specific criteria in its  evaluation of whether individual agencies or programs should be included  or excluded from the proposed department.  Those criteria include the  following:  Mission Relevancy: Is homeland security a major part of the agency or  program mission?  Is it the primary mission of the agency or program?
Similar Goals and Objectives:  Does the agency or program being  considered for the new department share primary goals and objectives  with the other agencies or programs being consolidated?
Leverage Effectiveness:  Does the agency or program being  considered for the new department create synergy and help to leverage  the effectiveness of other agencies and programs or the new department  as a whole?  In other words, is the whole greater than the sum of the  parts?
Gains Through Consolidation:  Does the agency or program being  considered for the new department improve the efficiency and  effectiveness of homeland security missions through eliminating  duplications and overlaps, closing gaps, and aligning or merging  common roles and responsibilities?
Integrated Information Sharing/Coordination:  Does the agency or  program being considered for the new department contribute to or  leverage the ability of the new department to enhance the sharing of  critical information or otherwise improve the coordination of missions  and activities related to homeland security?
Compatible Cultures:  Can the organizational culture of the agency or  program being considered for the new department effectively meld with  the other entities that will be consolidated?  Field structures and  approaches to achieving missions vary considerably between agencies.
Impact on Excluded Agencies: What is the impact on departments  losing components to DHS?  What is the impact on agencies with  homeland security missions left out of DHS?
In addition to the above criteria that the Congress should consider when  evaluating what to include and exclude from the proposed DHS, there are  certain critical success factors the new department should emphasize in its  initial implementation phase.  Over the years, GAO has made observations  and recommendations about many of these success factors, based on  effective management of people, technology, financial, and other issues,  especially in its biannual Performance and Accountability Series on major  government departments.   These factors include the following:  Strategic Planning:  Leading results-oriented organizations focus on  the process of strategic planning that includes involvement of  stakeholders, assessment of internal and external environments, and an  alignment of activities, core processes and resources to support  mission-related outcomes.
Organizational Alignment: The organization of the new department  should be aligned to be consistent with the goals and objectives  established in the strategic plan.
Communications:  Effective communication strategies are key to any  major consolidation or transformation effort.
Building Partnerships:  One of the key challenges of this new  department will be the development and maintenance of homeland  security partners at all levels of the government and the private sector,  both in the United States and overseas.
Performance Management:  An effective performance management  system fosters institutional, unit and individual accountability.
Human Capital Strategy:  The new department must ensure that its  homeland security missions are not adversely impacted by the  government’s pending human capital crisis, and that it can recruit,  retain, and reward a talented and motivated workforce, which has  required core competencies, to achieve its mission and objectives.  The  people factor is a critical element in any major consolidation or  transformation.
Information Management and Technology:  The new department  should leverage state-of-the art enabling technology to enhance its  ability to transform capabilities and capacities to share and act upon  timely, quality information about terrorist threats.
Knowledge Management:  The new department must ensure it makes  maximum use of the collective body of knowledge that will be brought  together in the consolidation.
Financial Management:  The new department has a stewardship  obligation to prevent fraud, waste and abuse; to use tax dollars  appropriately; and to ensure financial accountability to the President,  the Congress, and the American people.
Acquisition Management:  Anticipated as one of the largest federal  departments, the proposed DHS will potentially have some of the most  extensive acquisition government needs.  Early attention to strong  systems and controls for acquisition and related business processes will  be critical both to ensuring success and maintaining integrity and  accountability.
Risk Management:  The new department must be able to maintain and  enhance current states of homeland security readiness while  transitioning and transforming itself into a more effective and efficient  structural unit.  The proposed DHS will also need to immediately  improve the government’s overall ability to perform risk management  activities that can help to prevent, defend against, and respond to  terrorist acts.
Change Management:  Assembling a new organization out of separate  pieces and reorienting all of its processes and assets to deliver the  desired results while managing related risks will take an organized,  systematic approach to change.  The new department will require both  an executive and operational capability to encourage and manage  change.
section_title: Homeland Security Reorganization and Missions
paragraphs: The President’s proposal for the new department indicates that DHS, in  addition to its homeland security responsibilities, will also be responsible  for carrying out all other functions of the agencies and programs that are  transferred to it.  In fact, quite a number of the agencies proposed to be  transferred to DHS have multiple functions. Agencies or programs that  balance multiple missions present the Congress with significant issues that  must be evaluated in order to determine how best to achieve all of the goals  and objectives for which the entity was created.  While we have not found  any missions that would appear to be in fundamental conflict with the  department’s primary mission of homeland security, as presented in the  President’s proposal, the Congress will need to consider whether many of  the non-homeland security missions of those agencies transferred to DHS  will receive adequate funding, attention, visibility, and support when  subsumed into a department that will be under tremendous pressure to  succeed in its primary mission.  As important and vital as the homeland  security mission is to our nation’s future, the other non-homeland security  missions transferred to DHS for the most part are not small or trivial  responsibilities.  Rather, they represent extremely important functions  executed by the federal government that, absent sufficient attention, could  have serious implications for their effective delivery and consequences for  sectors of our economy, health and safety, research programs and other  significant government functions.  Some of these responsibilities include:  maritime safety and drug interdiction by the Coast Guard,   collection of commercial tariffs by the Customs Service,   public health research by the Department of Health and Human   advanced energy and environmental research by the Lawrence  Livermore and Environmental Measurements labs,  responding to floods and other natural disasters by the Federal  Emergency Management Agency (FEMA), and  authority over processing visas by the State Department’s consular  officers.
These examples reveal that many non-homeland security missions could be  integrated into a cabinet department overwhelmingly dedicated to  protecting the nation from terrorism.  Congress may wish to consider  whether the new department, as proposed, will dedicate sufficient  management capacity and accountability to ensure the execution of non- homeland security missions, as well as consider potential alternatives to  the current framework for handling these important functions.  One  alternative might be to create a special accountability track that ensures  that non-homeland security functions are well supported and executed in  DHS, including milestones for monitoring performance.  Conversely, the  Congress might separate out some of these functions.  In doing so, the  Congress will still need to hold agencies accountable for the homeland  security missions that are not incorporated in the new department.  In  making these decisions, Congress should consider the criteria presented  earlier in my testimony, especially those related to agency transitions, such  as mission relevancy, similar goals and objectives, leveraging effectiveness,  and creating gains through consolidation.  There are clearly advantages and  disadvantages to all of the decisions about placing agencies or programs  with multiple missions in DHS and Congress must carefully weigh  numerous important factors related to performance and accountability in  crafting the legislation.
For example, we have indicated in recent testimony that DHS could serve  to improve biomedical research and development coordination because of  the current fragmented state of disparate activities. Yet, we remain  concerned that the proposed transfer of control and priority setting for  research from the organizations where the research would be conducted  could be disruptive to dual purpose programs, which have important  synergies for public health programs that need to be maintained.   Similarly, we have testified that the President’s proposal, in tasking the new  department with developing national policy for and coordinating the  federal government’s research and development efforts for responding to  chemical, biological, radiological, and nuclear weapons threats, also  transfers some of the civilian research programs of the Department of  Energy.  Again, there may be implications for research synergy.
Congress may also craft compromises that strengthen homeland security  while reducing concerns of program disruption or unanticipated  consequences.  One such example is seen in recent deliberations about the  appropriate location for visa processing.  Congressional debate has  focused on two of our criteria, mission relevancy and gains through  consolidation.  The visa function attempts to facilitate legitimate travel  while at the same time denying entry to the United States of certain  individuals, including potential terrorists.  Some have argued that the  mission of the visa function is primarily related to homeland security and  that therefore the function should be located within the proposed  department.  Others have advocated that the Department of State (State)  should retain the visa function because they believe that there would be no  gains from consolidation.  They point out that State has an established field  structure and that it may be impractical to create a similar field structure in  the proposed department.  The compromise position of several committees  has been to transfer responsibility for visa policy to the proposed  department, while retaining the cadre of overseas visa officers within State.
As part of these deliberations, the Congress should consider not only the  mission and role that agencies fulfill today, but the mission and role that  they should fulfill in the coming years.  Thus, while it may be accurate that  large portions of the missions engaged in by the Coast Guard or FEMA  today do not relate primarily to homeland security, it is wholly appropriate  for Congress to determine whether the future missions of such agencies  should focus principally on homeland security.  Such decisions, of course,  would require the Congress to determine the best approach for carrying out  a range of the government’s missions and operations, in order to see that  non-homeland security activities of these departments are still achieved.  In  fact, given the key trends identified in GAO’s recent strategic plan for  supporting the Congress and our long range fiscal challenges, it is  appropriate to ask three key questions:  (1) what should the federal  government do in the 21st century? (2) how should the federal government  do business in the 21st century? and (3) who should do the federal  government’s business in the 21st century?  These questions are relevant for  DHS and every other federal agency and activity.
As the proposal to create DHS demonstrates, the terrorist events of last fall  have provided an impetus for the government to look at the larger picture  of how it provides homeland security and how it can best accomplish  associated missions.  Yet, even for those agencies that are not being  integrated into DHS, there remains a very real need and possibly a unique  opportunity to rethink approaches and priorities to enable them to better  target their resources to address our most urgent needs.  In some cases, the  new emphasis on homeland security has prompted attention to long- standing problems that have suddenly become more pressing.  For  example, we’ve mentioned in previous testimony the overlapping and  duplicative food safety programs in the federal government.  While such  overlap and duplication has been responsible for poor coordination and  inefficient allocation of resources, these issues assume a new, and  potentially more foreboding, meaning after September 11th given the threat  from bio-terrorism.  In another example, we have recommended combining  the Department of Justice’s Office of Domestic Preparedness with FEMA to  improve coordination.  A consolidated approach to many of these issues  can facilitate a concerted and effective response to new threats and  mission performance.
Similarly, we have conducted a number of reviews of State’s visa function  over the years and, based on our work, we believe that there are a number  of areas in which the visa function can be strengthened.  For example, the  U.S. government needs to ensure that there are sufficient staff at overseas  posts with the right training and experience to make good decisions about  who should and who should not receive a visa.  In addition, we are  currently looking at ways that the visa function can be strengthened as a  screen against potential terrorists and we expect to make  recommendations later this fiscal year.  These recommendations will apply  regardless of decisions about the respective roles of the State Department  and the proposed Department of Homeland Security regarding visa  functions.
section_title: Homeland Security Implementation and Transition Issues
paragraphs: The ultimate effectiveness of the new department will be dependent on  successfully addressing implementation and transition issues.  Picking the  right leadership for these critical positions in the new department will be  crucial to its success.  If you don’t have the right leadership team in key  policy, operational and management positions, the department will be at  risk.  In addition providing the new department with some reasoned and  reasonable human capital, management and budget flexibilities combined  with appropriate safeguards to protect the Congress’ constitutional  authorities and to prevent abuse can also help contribute to a successful  transition.  Both the Congress and the Executive Branch have critical roles  to play in achieving desired outcomes for the American people.
subsections: section_title: Key Success Factors, Leadership and Accountability
paragraphs: Among the most important elements for effectively implementing the new  cabinet department will be close adherence to the key success factors.   Strategic planning, building partnerships, human capital strategies,  financial management and other critical factors will make the difference  between a department that can quickly rise to the challenge of its mission  and one that might otherwise become mired in major problems and  obstacles that hamper efforts to protect the nation from terrorism.
The quality and continuity of the new department’s leadership is critical to  building and sustaining the long-term effectiveness of DHS and homeland  security goals and objectives.  The experiences of organizations that have  undertaken transformational change efforts along the lines that will be  necessary for the new department to be fully effective suggest that this  process can take up to 5 to 10 years to provide meaningful and sustainable  results.  Given the scope and nature of challenges facing the new  department, the critical question is how can we ensure that the essential  transformation and management issues receive the sustained, top-level  attention that they require.   The nation can ill-afford to have the secretary  or deputy secretary being side-tracked by administrative and operational  details -- the mission of the department requires their undivided attention.
As a result, it is important for the Congress to give serious consideration to  creating a deputy secretary for management/chief operating officer (COO)  position within the department to provide the sustained management  attention essential for addressing key infrastructure and stewardship  issues while helping to facilitate the transition and transformation process.    Recent legislative language adopted by the House Committee on  Government Reform suggests elevating the undersecretary for  management to a deputy secretary, equivalent to the deputy position  provided for in the Administration’s proposal.  We believe that is an  important first step to ensuring that transformation and management  issues receive the top-level attention they require.  Raising the  organizational profile of transformation and management issues is  important to ensure that the individual has the authority needed to  successfully lead department-wide initiatives. We are not convinced that an  under secretary for management, on par with the other under secretaries,  would necessarily have sufficient authority.
To provide further leadership and accountability for management,  Congress may wish to consider several points:  First, Congress should consider making the deputy secretary for  management/COO a term appointment of up to 7 years, subject to  Senate confirmation.  A term appointment would provide continuity that  spans the tenure of the political leadership and thereby help to ensure  that long-term stewardship issues are addressed and change  management initiatives are successfully completed.
Second, to further clarify accountability, the COO should be subject to a  clearly defined, results-oriented performance contract with appropriate  incentive, reward and accountability mechanisms.  The COO would be  selected without regard to political affiliation based on (1)  demonstrated leadership skills in managing large and complex  organizations, and (2) experience achieving results in connection with  “good government” responsibilities and initiatives.  Requiring that both  the performance contract and the subsequent performance evaluation  be made available to the Congress would provide additional  accountability and transparency.
In addition to providing top-level leadership and accountability, the  department will need to develop employee performance management  systems that can serve as a key tool for aligning institutional, unit, and  employee performance; achieving results; accelerating change; managing  the organization on a day-to-day basis; and facilitating communication  throughout the year so that discussions about individual and organizational  performance are integrated and ongoing. A cascading set of results- oriented performance agreements is one mechanism in a performance  management system that creates a “line of sight” showing how individual  employees can contribute to overall organizational goals.
Further accountability can be achieved by ensuring that all relevant  management laws are applied to the new department (e.g, Government  Performance and Results Act (GPRA), Chief Financial Officers Act, Clinger- Cohen Act, etc.).  These laws provide a foundation for the management  structure of the new department and a basis for ensuring appropriate  transparency and accountability.
section_title: Request for Increased Human Capital and Management Flexibilities
paragraphs: The President’s proposal includes a set of human capital and management  flexibilities for the new department.  GAO believes that its reasonable for  certain flexibilities to be granted to the new department in such areas as  human capital, provided that they are accompanied by adequate  transparency and accountability safeguards designed to prevent abuse.   Human capital and management flexibility will help the new department to  reorganize, realign and transform itself to achieve its important missions.   Appropriate safeguards can help to prevent abuse of federal employees and  provide adequate monitoring mechanisms to gauge performance.  For  instance, the Congress may wish to provide the new department with “early  out” and “buy out” authority in order to help quickly realign the component  entities and provide for future flexibility.  DHS might consider new  scientific and technical personnel tracks to encourage recruitment,  retention and rewarding of individuals with critical knowledge, or  Congress may wish to provide the new department with some limited term  appointment authority.  These and other suggested flexibilities for DHS  should be viewed in the context of how similar flexibilities have been  exercised by other agencies with similar missions, such as the  Transportation Security Administration (TSA), the DOD, the FBI, and the  CIA. Congress should also note that, as GAO has indicated in the past,  agencies are already accorded in law significant flexibilities, especially  with respect to human capital issues, but for a variety of reasons they do  not always take advantage of them.  DHS should use the these existing  flexibilities and be given others in areas where Congress has done so with  other agencies (e.g., TSA, Internal Revenue Service, DOD).
In requesting human capital flexibilities, questions have been raised about  whether they would result in eroding merit principles, veterans’  preferences, whistleblower protections, collective bargaining and other  basic civil service provisions.  Recent testimony to the Congress by  Governor Ridge has clarified the Administration’s commitment to these  provisions.   The final legislation should clearly reflect the applicability of  these tenets to the new department.
Other flexibilities, such as ones for acquisitions and contracting, are  included in the President’s proposal.  Careful analysis is needed to  determine the need for additional flexibilities.  Congress may want to  consider not expressly providing certain flexibilities in the initial  legislation, but rather providing a mechanism for expedited consideration  of flexibilities should the new department request them in the future.  For  example, the Congress might wish to agree on rules specifying procedures  for consideration of proposed changes, time limits on debate, or  requirements that any amendments to future legislation be strictly related  to DHS.  This would not be the blanket grant of authority envisioned in the  original Freedom to Manage proposal, but it would permit both the  executive branch and the Congress to feel confident that proposed changes  would receive timely consideration.
section_title: Request for Increased Budget Flexibility
paragraphs: The Administration has suggested that it needs a special grant of budget  flexibility for the Department of Homeland Security. GAO believes that  Congress should be careful to distinguish between those flexibilities that  will solely enhance the operations of DHS and those that might  simultaneously raise other concerns, including concerns about the  constitutional responsibilities and prerogatives of the legislative branch.   For instance, the President’s proposal permits the Secretary to allocate  funds as he sees fit, without regard to the original purpose of the  appropriations.  Moreover, there must be a system to identify homeland  security funds across the wide range of existing budget accounts and  program activities. This is necessary not only for the budget resolution and  appropriations process, but also for tracking budget execution and for  accountability to Congress.
The Congress, through its appropriations subcommittees, has proven quite  adept at creating and granting the kind of flexibility it sees as appropriate  to any given agency.   Congress gives agencies flexibility over the timing of  spending by varying the period of fund availability: agencies may receive  one-year, multi-year and no-year  funds.  Congress has granted  agencies varying degrees of transfer or reprogramming authority. These  flexibilities are generally provided as part of the appropriations process  and consider the balance between accountability and flexibility to ensure  that Congress is a partner in the spending of taxpayer funds.
Over the longer term the creation of the new Department may also be an  opportune time to review the account structure of the Department’s  component entities.  Should the orientation of budget accounts be shifted  toward the strategic goals defined in plans?  Such a reorientation might  facilitate the process of linking resource allocation to results consistent  with GPRA.  Efforts designed to rationalize the number of budget accounts  within the new department can serve to provide flexibility while ensuring  accountability.
section_title: DHS Transition Issues
paragraphs: The creation of the Department of Homeland Security will be one of the  largest reorganizations ever undertaken and the difficulty of this task  should not be underestimated.   Under the President’s proposal, 22 existing  agencies and programs and 170,000 people would be integrated into the  new department in order to strengthen the country’s defense against  terrorism.  With an estimated budget authority of the component parts of  the new department of $37.45 billion, successfully transitioning the  government in an endeavor of this scale will take considerable time and  money.  Careful and thorough planning will be critical to the successful  creation of the new department.  While national needs suggest a rapid  reorganization of homeland security functions, the transition of agencies  and programs into the new department is likely to take time to achieve.  At  the same time, the need for speed to get the new department up and  running must be balanced with the need to maintain readiness for new and  existing threats during the transition period.  Moreover, the organizational  transition of the various components will simply be the starting point – as  implementation challenges beyond the first year should be expected in  building a fully integrated department.  As I stated earlier, it could take 5 to  10 years to fully implement this reorganization in an effective and  sustainable manner.
A comprehensive transition plan needs to be developed. The transition plan  should establish a time table for the orderly migration of each component  agency or program to the new department, identify key objectives to be  achieved during the first year following the transfer, and describe the  strategy for achieving an orderly transition and sustaining mission  performance.  More detailed implementation plans also will be necessary  to address business system, processes, and resource issues.  The President  has taken an important first step by establishing a transition office within  the Office of Management and Budget.
Congress has an important oversight role to play in helping to ensure the  effective implementation of the new department.  In addition to the  transition plans, Congress should consider requiring DHS to submit regular  progress reports on implementation from the department and should also  conduct periodic oversight hearings to assess progress and performance.   In this regard, GAO stands ready to assist the Congress in conducting its  oversight role.
Increased cost must also be considered with regard to the President’s  proposal.  It is likely that over time consolidation of functions within DHS  may reduce costs below what otherwise would have been the case if these  functions continued to operate separately.  This, however, is unlikely to  happen quickly.  Moreover, we should expect that any reorganization would  incur start up costs as well as require some funding for redundant activities  to maintain continuity of effort during the transition period.  The  Congressional Budget Office (CBO) has estimated that the costs of  implementing the new department would be about $3 billion over the next  five years with an annual estimate of $150 million in FY2003 and $225  million thereafter.  However, there are other transition costs that CBO  acknowledges are not included in their estimates beyond the cost to hire,  house, and equip key personnel. The CBO estimate assumes continuation  of the existing multi-pay and retirement systems--however unlikely-- and  does not address the potential need to cross-train existing personnel.   Although the purchase of new computer equipment, supplies and  compatible information management systems are included, no estimates  are provided for the cost to correct existing computer system deficiencies  nor the resources to support some system redundancy for a period of time.  Finally, CBO did not attempt to price the relocation of personnel to a  central location.
The Administration has argued that CBO’s estimates are inflated. In fact,  CBO estimates that 1 percent of the total annual spending will be for  administrative costs, but that a proportionate share of the costs to  currently administer these agencies will be transferred. Depending on the  decision to co-locate personnel and the flexibilities ultimately provided to  the Administration in legislation--in particular a broad grant of transfer  authority and the ability to staff through non-reimbursable agreements with  other agencies-- these estimates may well change.  More important than a  precise cost estimate of the transition, however, is the recognition that  there will be short-term transition costs and that these costs need to be  made transparent.    To fully recognize the transition costs, in fact,  Congress should consider appropriating for them separately.
In summary, I have discussed the reorganization of homeland security  functions and some critical factors for success.  However, the single most  important element of a successful reorganization is the sustained  commitment of top leaders to modern, effective and credible human capital  strategies and to setting clear goals and appropriate accountability  mechanisms.  Top leadership involvement and clear lines of accountability  for making management improvements are critical to overcoming an  organization’s natural resistance to change, marshalling the resources  needed to improve management, and building and maintaining  organization-wide commitment to new ways of doing business.   Organizational cultures will not be transformed, and new visions and ways  of doing business will not take root without strong and sustained  leadership.   Strong and visionary leadership will be vital to creating a  unified, focused organization, as opposed to a group of separate units  under a single roof.  Modern human capital strategies, including  implementing a credible, effective and equitable performance management  system that links institutional, unit, team and individual performance  measurement and reward systems to the department’s strategic plan, core  values and desired outcomes will be critical to success.
Mr. Chairman, this concludes my written testimony.  I would be pleased to  respond to any questions that you or members of the Select Committee  may have at this time.
section_title: Related GAO Products
subsections: section_title: Homeland Security
paragraphs: Homeland Security: New Department Could Improve Coordination but  Transforming Control of Public Health Programs Raises Concerns (GAO- 02-954T, July 16, 2002).
Homeland Security: New Department Could Improve Biomedical R&D  Coordination but May Disrupt Dual-Purpose Efforts (GAO-02-924T, July  9, 2002).
Homeland Security: Title III of the Homeland Security Act of 2002 (GAO- 02-927T, July 9, 2002)
Homeland Security: Intergovernmental Coordination and Partnerships  Will Be Critical to Success (GAO-02-899T, July 1, 2002).
Homeland Security: New Department Could Improve Coordination but  May Complicate Priority Setting (GAO-02-893T, June 28, 2002).
Homeland Security: New Department Could Improve Coordination But  May Complicate Public Health Priority Setting (GAO-02-883T, June 25,  2002).
Homeland Security: Proposal for Cabinet Agency Has Merit, But  Implementation Will be Pivotal to Success (GAO-02-886T, June 25, 2002).
Homeland Security: Key Elements to Unify Efforts Are Underway but  Uncertainty Remains (GAO-02-610, June 7, 2002).
National Preparedness: Integrating New and Existing Technology and  Information Sharing into an Effective Homeland Security Strategy  (GAO-02-811T, June 7, 2002).
Homeland Security: Responsibility And Accountability For Achieving  National Goals (GAO-02-627T, April 11, 2002).
National Preparedness: Integration of Federal, State, Local, and Private  Sector Efforts Is Critical to an Effective National Strategy for Homeland  Security (GAO-02-621T, April 11, 2002).
Homeland Security: Progress Made; More Direction and Partnership  Sought (GAO-02-490T, March 12, 2002).
Homeland Security: Challenges and Strategies in Addressing Short- and  Long-Term National Needs (GAO-02-160T, November 7, 2001).
Homeland Security: A Risk Management Approach Can Guide  Preparedness Efforts (GAO-02-208T, October 31, 2001).
Homeland Security: Need to Consider VA’s Role in Strengthening Federal  Preparedness (GAO-02-145T, October 15, 2001).
Homeland Security: Key Elements of a Risk Management Approach  (GAO-02-150T, October 12, 2001).
Homeland Security: A Framework for Addressing the Nation’s Issues  (GAO-01-1158T, September 21, 2001).
section_title: Combating Terrorism
paragraphs: Combating Terrorism: Intergovernmental Cooperation in the  Development of a National Strategy to Enhance State and Local  Preparedness (GAO-02-550T, April 2, 2002).
Combating Terrorism: Enhancing Partnerships Through a National  Preparedness Strategy (GAO-02-549T, March 28, 2002).
Combating Terrorism: Critical Components of a National Strategy to  Enhance State and Local Preparedness (GAO-02-548T, March 25, 2002).
Combating Terrorism: Intergovernmental Partnership in a National  Strategy to Enhance State and Local Preparedness (GAO-02-547T, March  22, 2002).
Combating Terrorism: Key Aspects of a National Strategy to Enhance  State and Local Preparedness (GAO-02-473T, March 1, 2002).
Combating Terrorism: Considerations For Investing Resources in  Chemical and Biological Preparedness (GAO-01-162T, October 17, 2001).
Combating Terrorism: Selected Challenges and Related  Recommendations (GAO-01-822, September 20, 2001).
Combating Terrorism: Actions Needed to Improve DOD’s Antiterrorism  Program Implementation and Management (GAO-01-909, September 19,  2001).
Combating Terrorism: Comments on H.R. 525 to Create a President’s  Council on Domestic Preparedness (GAO-01-555T, May 9, 2001).
Combating Terrorism: Observations on Options to Improve the Federal  Response (GAO-01-660T, April 24, 2001).
Combating Terrorism: Comments on Counterterrorism Leadership and  National Strategy (GAO-01-556T, March 27, 2001).
Combating Terrorism: FEMA Continues to Make Progress in  Coordinating Preparedness and Response (GAO-01-15, March 20, 2001).
Combating Terrorism: Federal Response Teams Provide Varied  Capabilities: Opportunities Remain to Improve Coordination (GAO-01- 14, November 30, 2000).
Combating Terrorism: Issues in Managing Counterterrorist Programs  (GAO/T-NSIAD-00-145, April 6, 2000).
Combating Terrorism: Need to Eliminate Duplicate Federal Weapons of  Mass Destruction Training (GAO/NSIAD-00-64, March 21, 2000).
Combating Terrorism: Observations on the Threat of Chemical and  Biological Terrorism (GAO/T-NSIAD-00-50, October 20, 1999).
Combating Terrorism: Need for Comprehensive Threat and Risk  Assessments of Chemical and Biological Attack (GAO/NSIAD-99-163,  September 7, 1999).
Combating Terrorism: Observations on Growth in Federal Programs  (GAO/T-NSIAD-99-181, June 9, 1999).
Combating Terrorism: Analysis of Potential Emergency Response  Equipment and Sustainment Costs (GAO/NSIAD-99-151, June 9, 1999).
Combating Terrorism: Use of National Guard Response Teams Is Unclear  (GAO/NSIAD-99-110, May 21, 1999).
Combating Terrorism: Issues to Be Resolved to Improve  Counterterrorism Operations (GAO/NSIAD-99-135, May 13, 1999).
Combating Terrorism: Observations on Federal Spending to Combat  Terrorism (GAO/T-NSIAD/GGD-99-107, March 11, 1999).
Combating Terrorism: Opportunities to Improve Domestic Preparedness  Program Focus and Efficiency (GAO/NSIAD-99-3, November 12, 1998).
Combating Terrorism: Observations on the Nunn-Lugar-Domenici  Domestic Preparedness Program (GAO/T-NSIAD-99-16, October 2, 1998).
Combating Terrorism: Threat and Risk Assessments Can Help Prioritize  and Target Program Investments (GAO/NSIAD-98-74, April 9, 1998).
Combating Terrorism: Spending on Governmentwide Programs Requires  Better Management and Coordination (GAO/NSIAD-98-39, December 1,  1997).
section_title: Public Health
paragraphs: Bioterrorism: The Centers for Disease Control and Prevention’s Role in  Public Health Protection (GAO-02-235T, November 15, 2001).
Bioterrorism: Public Health and Medical Preparedness (GAO-02-141T,  October 10, 2001).
Bioterrorism: Review of Public Health and Medical Preparedness (GAO- 02-149T, October 10, 2001).
Food Safety and Security: Fundamental Changes Needed to Ensure Safe  Food (GAO-02-47T, October 10, 2001).
Bioterrorism: Coordination and Preparedness (GAO-02-129T, October 5,  2001).
Bioterrorism: Federal Research and Preparedness Activities (GAO-01- 915, September 28, 2001).
Chemical and Biological Defense: Improved Risk Assessments and  Inventory Management Are Needed (GAO-01-667, September 28, 2001).
West Nile Virus Outbreak: Lessons for Public Health Preparedness  (GAO/HEHS-00-180, September 11, 2000).
Need for Comprehensive Threat and Risk Assessments of Chemical and  Biological Attacks (GAO/NSIAD-99-163, September 7, 1999).
Chemical and Biological Defense: Program Planning and Evaluation  Should Follow Results Act Framework (GAO/NSIAD-99-159, August 16,  1999).
Combating Terrorism: Observations on Biological Terrorism and Public  Health Initiatives (GAO/T-NSIAD-99-112, March 16, 1999).
section_title: Aviation Security
paragraphs: Aviation Security: Vulnerabilities in, and Alternatives for, Preboard  Screening Security Operations (GAO-01-1171T, September 25, 2001).
Aviation Security: Weaknesses in Airport Security and Options for  Assigning Screening Responsibilities (GAO-01-1165T, September 21,  2001).
Aviation Security: Terrorist Acts Illustrate Severe Weaknesses in  Aviation Security (GAO-01-1166T, September 20, 2001).
Aviation Security: Terrorist Acts Demonstrate Urgent Need to Improve  Security at the Nation's Airports (GAO-01-1162T, September 20, 2001).
Aviation Security: Long-Standing Problems Impair Airport Screeners'  Performance (RCED-00-75, June 28, 2000).
Aviation Security: Slow Progress in Addressing Long-Standing Screener  Performance Problems (T-RCED-00-125, March 16, 2000).
Aviation Security: Progress Being Made, but Long-term Attention Is  Needed (T-RCED-98-190, May 14, 1998).
Aviation Security: FAA's Procurement of Explosives Detection  Devices (RCED-97-111R, May 1, 1997).
Aviation Security: Commercially Available Advanced Explosives  Detection Devices (RCED-97-119R, April 24, 1997).
Aviation Security: Technology's Role in Addressing Vulnerabilities (T- RCED/NSIAD-96-262, September 19, 1996).
Aviation Security: Urgent Issues Need to Be Addressed (T-RCED/NSIAD- 96-251, September 11, 1996).
Aviation Security: Immediate Action Needed to Improve Security (T- RCED/NSIAD-96-237, August 1, 1996).
section_title: Critical Infrastructure Protection
paragraphs: Critical Infrastructure Protection: Significant Homeland Security  Challenges Need to Be Addressed (GAO-02-918T, July 9, 2002).
Critical Infrastructure Protection: Significant Challenges in  Safeguarding Government and Privately Controlled Systems from  Computer-Based Attacks (GAO-01-1168T, September 26, 2001).
Critical Infrastructure Protection: Significant Challenges in Protecting  Federal Systems and Developing Analysis and Warning  Capabilities (GAO-01-1132T, September 12, 2001).
Critical Infrastructure Protection: Significant Challenges in Developing  Analysis, Warning, and Response Capabilities (GAO-01-1005T, July 25,  2001).
Critical Infrastructure Protection: Significant Challenges in Developing  Analysis, Warning, and Response Capabilities (GAO-01-769T, May 22,  2001).
Critical Infrastructure Protection: Significant Challenges in Developing  National Capabilities (GAO-01-323, April 25, 2001).
Critical Infrastructure Protection: Challenges to Building a  Comprehensive Strategy for Information Sharing and Coordination  (GAO/T-AIMD-00-268, July 26, 2000).
Critical Infrastructure Protection: Comments on the Proposed Cyber  Security Information Act of 2000 (GAO/T-AIMD-00-229, June 22, 2000).
Critical Infrastructure Protection: National Plan for Information  Systems Protection (GAO/AIMD-00-90R, February 11, 2000).
Critical Infrastructure Protection: Comments on the National Plan for  Information Systems Protection (GAO/T-AIMD-00-72, February 1, 2000).
Critical Infrastructure Protection: Fundamental Improvements Needed  to Assure Security of Federal Operations (GAO/T-AIMD-00-7, October 6,  1999).
Critical Infrastructure Protection: Comprehensive Strategy Can Draw on  Year 2000 Experiences (GAO/AIMD-00-1, October 1, 1999).
section_title: Disaster Assistance
paragraphs: Disaster Assistance: Improvement Needed in Disaster Declaration  Criteria and Eligibility Assurance Procedures (GAO-01-837, August 31,  2001).
FEMA and Army Must Be Proactive in Preparing States for Emergencies  (GAO-01-850, August 13, 2001).
Federal Emergency Management Agency:  Status of Achieving Key  Outcomes and Addressing Major Management Challenges (GAO-01-832,  July 9, 2001).
section_title: Budget and Management
paragraphs: Results-Oriented Budget Practices in Federal Agencies (GAO-01-1084SP,  August 2001).
Managing for Results: Federal Managers’ Views on Key Management  Issues Vary Widely Across Agencies (GAO-01-592, May 2001).
Determining Performance and Accountability Challenges and High Risks  (GAO-01-159SP, November 2000).
Managing for Results: Using the Results Act to Address Mission  Fragmentation and Program Overlap (GAO/AIMD-97-156, August 29,  1997).
Government Restructuring: Identifying Potential Duplication in Federal  Missions and Approaches (GAO/T-AIMD-95-161, June 7, 1995).
Government Reorganization: Issues and Principals (GAO/T-GGD/AIMD- 95-166, May 17, 1995).