As you know, our country’s transition into the 21st Century is characterized by a number of key trends including global interdependence; diverse, diffuse, and asymmetrical security threats; rapidly evolving science and technologies; dramatic shifts in the age and composition of our population; important quality of life issues; and evolving government structures and concepts. Many of these trends are intertwined, and they call for a reexamination of the role of government in the 21st Century given changing public expectations. Leading public and private organizations here in the United States and abroad have found that for organizations to successfully transform themselves they must often change their culture. Leading organizations also understand that their people, processes, technologies, and environments are the key enablers that drive cultural change. For governmental entities, this evolution generally entails shifts away from process to results; stovepipes to matrixes; hierarchical to flatter and more horizontal structures; an inward focus to an external (citizen, customer, and stakeholder) focus; management control to employee empowerment; reactive behavior to proactive approaches; avoiding new technologies to embracing and leveraging them; hoarding knowledge to sharing knowledge; avoiding risk to managing risk; and protecting turf to forming partnerships. While transformation across government is critically important to successful transition into the 21st century, it is of utmost importance at the FBI. This is the agency at the front line of defending the public and our way of life from a new and lethal threat, that of terrorism against Americans. At the same time the FBI maintains the responsibility for investigations of other serious federal crimes. Every American has a stake in assuring the success of the FBI’s efforts. The FBI is a unique organization comprised of thousands of devoted and capable public servants who live and breathe the agency’s motto of fidelity, bravery, and integrity everyday. The FBI has a long and proud history, and it does many things well. But, times have changed, and the FBI must change with the times in considering what it does and how it does business. At the same time, the motto itself is timeless in nature. Any changes at the FBI must be part of, and consistent with, broader governmentwide transformations that are taking place. This is especially true as the establishment of a Department of Homeland Security is debated and put into place. Moreover, Director Mueller had noted that the FBI reorganization and realignment efforts that we are discussing today are just the second phase in a comprehensive effort that he is planning to address a broad range of management and organizational challenges. This is, in effect, a down payment on a huge undertaking. Director Mueller has taken the first and most important step in successfully undertaking the needed transformation at the FBI—he has demonstrated his personal commitment through his direct involvement in developing and leading the Bureau’s transformation efforts. He has recognized a need to refocus priorities to meet the demands of a changing world and is now taking first steps to realign resources to achieve his objectives. His continued leadership, coupled with the involvement of other senior executives at the FBI, and clear lines of accountability for making needed improvements will be critical if the effort is to succeed. These factors are prerequisites to overcoming the natural resistance to change, marshalling the resources needed to improve the Bureau’s effectiveness, and building and maintaining the FBI-wide commitment to new ways of doing business. The Director is early in his 10-year term. This should prove very helpful because the experiences of leading organizations suggest that given the enormous challenges the FBI faces, successfully completing needed cultural and other transformations may take up to 7 or more years. At the same time, some steps are critical and time sensitive. As a result, the FBI needs to develop a comprehensive transformation plan with key milestones and assessment points to guide its overall transformation efforts. FBI Director Mueller unveiled the second phase of the reorganization at a news conference on May 29 and discussed it further at a hearing before the Senate Judiciary Committee on June 6, 2002. These proposed changes are designed to build on the initial reorganization actions Director Mueller took in December 2001. These earlier actions were to strengthen the FBI’s top-level management structure, enhance accountability, reduce executive span of control, and establish two new divisions for Records Management and Security. The central thrust of this next phase of the reorganization plan is to build an FBI with a national terrorism response capability that is larger and more mobile, agile, and flexible. The key elements of this second installment of the reorganization include a shifting of some resources from long-standing areas of focus, such as drugs, to counterterrorism and intelligence; building analytic capacity; and recruiting to address selected skill gaps. In light of the events of September 11, 2001, this shift is clearly not unexpected and is, in fact, consistent with FBI’s 1998 Strategic Plan as well as the current Department of Justice Strategic Plan. Since September 11, unprecedented levels of FBI resources have been devoted to counterterrorism and intelligence initiatives with widespread public approval. Indeed, the goals of this phase of the reorganization plan are not highly controversial. Enhancement of resources for counterterrorism, greater sharing of information with the Central Intelligence Agency (CIA) and others, improvements in analytic capacity, establishment of a centralized intelligence unit to make sense out of the gathered information, more training, and recruitment of specialists all seem to be rational steps to building agency capacity to fight terrorism. However, some specific aspects of the plan should be highlighted. A key element of the reorganization is to “redirect FBI’s agent workforce to ensure that all available energies and resources are focused on the highest priority threat to the nation, i.e. terrorism.” This shift is intended to move the FBI from a reactive mode of operation to a more proactive orientation. The primary goal is to prevent terrorism rather than investigate and apprehend after an event occurs. The FBI has been involved in proactive counterterrorism work for some time. This reorganization is intended to make a greater commitment. In accordance with the goal, some agents from drug, white collar, and violent crime investigative work will shift their focus to counterterrorism. Specifically, the plan calls for 518 agents to be shifted—400 agents from drug work and 59 each from white collar and violent crime to be reassigned to work on counterterrorism, security improvements, and training. Of the 518 agents being shifted, 480 will be permanently reassigned to counterterrorism work. In the case of drug enforcement, this shift moves about 30 percent of the staff currently assigned to this activity to counterterrorism work. For white collar and violent crime the shift is not as substantial representing about 2.5 percent and 3 percent of their staff years, respectively. Given the massive move of resources to counterterrorism following the events of September 11, this really represents fewer agents returning to their more traditional crime investigative work as opposed to agents moving away from current drug, white collar, and violent crime work. According to FBI data, the number of field agents assigned to terrorism work jumped from 1,057 before September 11 to 6,390 immediately following the tragic events of that day. FBI data show that a shift of 518 agents from drugs, white collar crime, and violent crime seems to do little to change the picture of the overall deployment of FBI special agent resources. Counterterrorism agent resources go from about 15 percent of total agent resources, to just under 20 percent. Thus, it seems that despite a change in priorities, most of the FBI resources will remain devoted to doing the same types of work they have been doing in the past. This realignment actually affects about five percent of the total FBI special agent workforce, and, therefore, represents a relatively modest change in the focus of the Bureau as a whole at least for the present time. Is this the right amount of resources to shift to counterterrorism at this time? Is this too much? Perhaps the more salient question is, is this too little? It is probably unrealistic to ask the FBI or anyone else for the answer to this question at this time, given that the government’s information about the nature and extent of the terrorist threat is still evolving. However, this is a question that must be answered in due course based on a comprehensive threat assessment and analysis, including the role the FBI and other government agencies should play in our future counterterrorism efforts. According to the FBI, the Special Agents in Charge (SACs) of the 56 field offices were asked to indicate how many agents could be redirected into terrorism work in their locations without unduly jeopardizing other investigative work. In fact, SACs generally volunteered more agents to shift to counterterrorism work than were actually shifted. According to the FBI, SACs were given general guidance but not specific guidelines or other directives upon which to base their decisions concerning reallocation of resources. Thus, for good or ill, field offices may have used different criteria for determining how many resources could be reallocated. FBI headquarters made final reallocation decisions based on resource needs requested by the Executive Assistant Director for Counterterrorism/Counterintelligence. Careful monitoring will be needed to ensure that the agents to be devoted to counterterrorism can be appropriately utilized and to what extent additional resources will be needed. Conversely, the impact of having fewer field agents working drug cases needs to be monitored and assessed over time. Prior to September 11, 2001, there was no indication from the FBI that their more traditional crime areas were overstaffed. FBI officials advised us that agents will still participate in as many crime-fighting taskforces as they have in the past, but that the number of agents assigned to each effort will be fewer in order to free resources for counterterrorism work. FBI officials also indicated that agents would be made available to assist state and local law enforcement with short-term needs, such as adding agents when widespread arrests are planned. In the drug area, which is the hardest hit in this reallocation, the Drug Enforcement Administration (DEA) is the major federal player.