Secretary of Homeland Security Michael Chertoff, on July 13, 2005, announced a six-point agenda for the Department of Homeland Security (DHS) designed to ensure that its policies, operations, and structures are best aligned to address potential threats to the nation, both today and in the immediate future. This agenda resulted from what he called a Second Stage Review, or 2SR, which had been launched in early March, just after he assumed office, and had been conducted over the next three months. It involved, he said, "a systematic evaluation of the Department's operations, policies and structures." Indeed, as Secretary Chertoff explained, 2SR involved the evaluation of a variety of operational and policy issues, and among those was "the DHS organizational structure, to make sure that our organization is best aligned to support our mission." However, no report on the 2SR process and proposed reforms was issued. This report focuses primarily on the conclusions and proposals resulting from 2SR pertaining to organization and managerial lines of authority matters. DHS was mandated by the Homeland Security Act of 2002. The creation of DHS resulted in a reorganization of the executive branch on a scale not experienced since the establishment of the Department of Defense (DOD) half a century earlier. Originally denominated the National Military Establishment at birth in 1947, DOD was given its current name and underwent the first of what would be a series of structural modifications through statutory amendments in 1949. A similarly complex organization, DHS was the product of legislative compromises, and it was anticipated that congressional overseers, as well as department officials, would monitor the management and operations of DHS with a view to adjusting its structure as conditions warranted. In this regard, Section 872 of the Homeland Security Act authorizes the Secretary of Homeland Security to reorganize functions and organizational units within DHS, subject to specified limits. Secretary Chertoff made use of this authority to implement some of his 2SR plans. For a period of 12 months after the effective date of the Homeland Security Act, Section 1502 vested the President with temporary authority to prescribe a reorganization plan for DHS, and subsequent modifications of that plan. In late January 2003, as components of DHS were being transferred to the department's operational control, President George W. Bush modified his original reorganization plan for DHS to reconfigure the functions of certain border security agencies into two new components—the Bureau of Customs and Border Protection and the Bureau of Immigration and Customs Enforcement—within the department's Border and Transportation Security Directorate (BTS). When it began operations, DHS was largely organized like a hand—the palm being the office of the Secretary/Deputy Secretary with the thumb and fingers being individual directorates for (1) management, (2) science and technology, (3) information analysis and infrastructure protection, (4) border and transportation security, and (5) emergency preparedness and response. In addition, however, approximately two dozen other units within the department, but not located within one of the directorates, reported directly to the Secretary. These included program entities, such as the United States Coast Guard and United States Secret Service, and units within the office of the Secretary, such as the Office of International Affairs and Office of State and Local Government Coordination, as well as some Assistant Secretaries. At the time of its creation, DHS had about 170,000 employees, only 18,000 of whom worked in the Washington, DC, area, indicating that the new department had a considerable field organization. In one of his first actions as Secretary of Homeland Security Tom Ridge's successor, Michael Chertoff, on March 2, 2005, the day before he was sworn in as Secretary, announced in testimony before the House Appropriations Subcommittee on Homeland Security that he was "initiating a comprehensive review of the Department's organization, operations, and policies." This effort, he said, would begin "within days." In his July 13, 2005, remarks concerning the results of the 2SR initiative, Secretary Chertoff explained that the work of that effort had been conducted utilizing "18 action teams—involving more than 250 DHS staff—to evaluate specific operational and policy issues." The participants were asked "how would you solve a particular problem," and "how would you take the best solutions and implement them aggressively." He noted, as well, that those immediately directing the 2SR effort also "actively sought opinions from hundreds of public and private partners at the federal, state, local, tribal and international levels." From these deliberations and consultations the following six-point agenda resulted. 1. Increase preparedness, with particular focus on catastrophic events. 2. Strengthen border security and interior enforcement and reform immigration processes. 3. Harden transportation security without sacrificing mobility. 4. Enhance information sharing with our partners, particularly with state, local and tribal governments and the private sector. 5. Improve DHS stewardship, particularly with stronger financial, human resource, procurement and information technology management. 6. Re-align the DHS organization to maximize mission performance. "In the weeks and months to come," said the Secretary, "the Department will launch specific policy initiatives in a number of key areas" relative to the six-point agenda. In his July 13, 2005, remarks concerning the results of the 2SR effort, Secretary Chertoff said that he had "concluded that some structural changes are needed at DHS to improve mission performance. Modest but essential course corrections regarding organization," he said, "will yield big dividends. Most can be accomplished administratively—a few require legislation." He then announced "organization changes that include four important areas of focus: ... (1) formation of a new, department-wide policy office; (2) significant improvements in how DHS manages its intelligence and information sharing responsibilities; (3) formation of a new operations coordination office and other measures to increase operational accountability; and (4) an important consolidation effort that integrates the Department's preparedness mission." These initiatives are discussed below. Secretary Chertoff "proposed creation of a central policy office led by an Under Secretary for Policy," which "will bring together our international affairs staff, a significant and new strategic planning capability, DHS-wide policy development assets, a senior policy advisor focused on refugee asylum policies, and enhanced private sector liaison resources. Collectively," he continued, "the Policy Directorate will strengthen the Department's ability to develop and plan vital policies." Such an office, he noted, "is not a new idea—it builds in part upon the foundational work of the Border and Transportation [Directorate] policy staff, which is to be folded into the new policy directorate." The authors of an August 17, 2004, Heritage Foundation report were among the first to propose an Under Secretary of Policy for DHS and a consolidation of the department's policy analysis and development offices under the direction of such an officer. The recommendation was reiterated in more elaborate form in a December 13, 2004, Heritage Special Report on DHS reform. At a January 26, 2005, hearing of the Senate Committee on Homeland Security and Governmental Affairs, the chair of the panel, Senator Susan Collins, observed that "there seemed to be unanimity on the need for an Under Secretary for Policy." Shortly after the Senate committee hearing, when the justification for the DHS Office of the Secretary and Executive Management budget request was unveiled, a proposed Office of Policy, Planning and International Affairs (OPPIA) was revealed. Headed by an Assistant Secretary, the new entity was to result from an expansion of the department's existing Office of International Affairs, and was described in the following terms. The Office of Policy, Planning, and International Affairs will be responsible for both strategic policy development and oversight of all program policy efforts in the Department, including various economic, regulatory, legislative, foreign and policy analysis functions which are critical to forming Departmental policies. This office oversees the Policy Review Board, which evaluates, promotes, and tracks developing policies throughout the Department. The Policy Review Board will be the vehicle by which senior leadership within the Department can assess proposals for major policy initiatives, ensure these initiatives are consistent with strategic goals and priorities, enhance inter-departmental engagement in policy development and provide clear leadership on policy initiatives. House appropriators recommended $8.7 million for OPPIA, which the House subsequently approved. Senate appropriators recommended $7.25 million for OPPIA, and indicated an expectation that it would assume the functions of the Operational Integration Staff, which assists the DHS leadership with coordination and integration of cross-organizational element missions, operational activities, and programs across the department's headquarters directorates and direct reporting agencies. The Senate later approved this funding for OPPIA, but it did not appear that either DHS or House appropriators expected the new policy office to assume the functions of the Operational Integration Staff. In compliance with Section 872 of the Homeland Security Act authorizing him to reorganize functions and organizational units within DHS, subject to specified limits, Secretary Chertoff sent a July 13, 2005, letter to Congress "with notification of the reallocation of functions and the establishment, consolidation and alteration of organizational units within the Department of Homeland Security," and indicating he intended "to implement these changes on October 1, 2005." He noted the effort to establish OPPIA under the leadership of an Assistant Secretary, and indicated he had "also asked Congress for legislation that would elevate this Assistant Secretary to an Under Secretary within the Department." The Under Secretary would head the Directorate for Policy, when established. He also identified various "existing organizational units that ... will be relocated to this new centralized policy office, including the Office of International Affairs, the Special Assistant to the Secretary for Private Sector Coordination, the Border and Transportation Security Policy and Planning Office and elements of the Border and Transportation Security Office of International Enforcement, the Homeland Security Advisory Committee, and the Office of Immigration Statistics." He added that "a strategic policy planning office and a refugee policy coordinator will be established within the new policy apparatus."