Last June, I highlighted the importance of the FBI’s success in transforming itself, noting several basic aspects of a successful transformation as well as the need for broader government transformation. Today, the importance of the FBI’s transformation has not diminished. The FBI continues to stand at the forefront of our domestic intelligence efforts to defend the public from the threat of terrorism, while still maintaining responsibility for investigations of other threats to our public safety such as those from drugs, violent crime, public corruption, and crimes against children. As I pointed out last June, any changes at the FBI must be part of, and consistent with, broader governmentwide transformation efforts that are taking place, especially those resulting from the establishment of the Department of Homeland Security and in connection with the intelligence community. To effectively meet the challenges of the post-September 11, 2001, environment, the FBI needs to consider employing key practices that have consistently been found at the center of successful transformation efforts. These key practices are to ensure that top leadership drives the transformation; establish a coherent mission and integrated strategic goals; focus on a key set of principles and priorities; set implementation goals and a timeline; dedicate an implementation team to manage the process; use a performance management system to define responsibility and establish a communication strategy; involve employees; and build a world class organization that continually seeks to implement best practices. Strategic human capital management is the centerpiece of any change management initiative, including any agency transformation effort. Thus far, we are encouraged by the progress that the FBI has made in some areas in the year since the announcement of phase II of its reorganization. Specifically, the commitment of Director Mueller and senior level leadership to the FBI’s reorganization; the FBI’s communication of priorities; and the FBI’s efforts to realign its activities, processes, and resources warrant recognition. However, a comprehensive transformation plan with key milestones and assessment points to guide its overall transformation effort is still needed. In addition, as I testified last June, the FBI can and should reinforce its transformation efforts through its performance management system by aligning unit, team, and individual employee performance expectations with planned agency goals and objectives. High-performing organizations create a clear linkage—“line of sight”—between individual performance and organizational success and thus transform their cultures to be more results-oriented, customer-focused, and collaborative in nature. This alignment will help FBI employees see the connection between their daily activities and the Bureau’s success. The FBI may already show some indication that its agents see how their work relates to agency priorities. Eighty-five percent of the special agents and 31 of the 34 analysts who completed our questionnaire in the 14 FBI field offices we visited generally or strongly agreed that their daily activities have been consistent with the FBI’s top priorities. Coupled with this alignment is the need for a performance management system that makes meaningful distinctions in performance. The FBI currently uses a pass/fail system to rate its employees’ performance. This type of system does not provide enough meaningful information and dispersion in ratings to recognize and reward top performers, help everyone attain their maximum potential, and deal with poor performers. As a result, the FBI needs to review and revise its performance management system to be in line with revisions to its strategic plan, including desired outcomes, core values, critical individual competencies, and agency transformational objectives. Although a strategic plan is vital to an organization’s transformation effort, the FBI has not completed the update to its strategic plan. At the same time, it has made some progress in its strategic planning efforts. Specifically, the FBI’s Office of Strategic Planning has developed a framework for a revised strategic plan. The operational divisions have made some progress in completing their program plans—the Bureau’s building blocks, in addition to the FBI’s top 10 priorities, for completing a strategic plan. Furthermore, information about the progress of the strategic planning process seems to have been disseminated. Both field office managers and field staff we spoke with generally reported being afforded the opportunity to provide input. Director Mueller, through leadership and management conferences, electronic communications, visits to field offices, messages on the FBI’s intranet, public statements, and press releases, has communicated the FBI’s top priorities. Additionally, the FBI, through a strategic planning reengineering project, is developing a revised strategic management process to better align the planning and budget processes with strategic priorities in the future. The Office of Strategic Planning has developed a framework for the revised strategic plan, and the operational divisions were provided guidance to develop their program plans. According to the FBI, the Counterintelligence and Cyber program plans have been completed, presented to FBI executive management, and approved. The Office of Strategic Planning is in the process of incorporating them into the revised strategic plan. As of June 2003, the Counterterrorism and Criminal Investigative Divisions’ program plans were in the final stages of development. FBI officials indicated that the implementation of two staff reprogrammings and delays in the appropriation of its fiscal year 2003 budget, as well as the war in Iraq, delayed the completion of these program plans. FBI officials estimate that a new strategic plan should be completed by the start of fiscal year 2004. It is unclear, however, whether the FBI will achieve this milestone, and because the plan has not been completed we cannot comment on the quality of its contents. As noted earlier, employee involvement in strategic planning, and transformation in general, is a key practice of a successful agency as it transforms. FBI executive management seems to have recognized this. Based on our discussions with program officials in FBI headquarters and visits to FBI field offices, field management in the 14 field offices we visited reported that they had been afforded opportunities to provide input into the FBI’s strategic planning process. In addition, 68 percent of the special agents and 24 of the 34 analysts who completed our questionnaire reported that they had been afforded the opportunity to provide input to FBI management regarding FBI strategies, goals, and priorities, by among others, participating in focus groups or meetings, and assisting in the development of the field offices’ annual report. FBI managers in the field offices we visited and 87 percent of the special agents and 31 of the 34 analysts who completed our questionnaire indicated that FBI management had kept them informed of the FBI’s progress in revising its strategic plan to reflect changed priorities. FBI management seems to also have been effective in communicating the agency’s top 3 priorities (i.e., counterterrorism, counterintelligence, and cyber crime investigations) to the staff. In addition to the awareness of management staff in FBI headquarters and field offices, nearly all of the special agents and all of the analysts who answered our questionnaire indicated that FBI executive management (i.e., Director Mueller and Deputy Director Gebhardt) had communicated the FBI’s priorities to their field offices. Management and most of the agents we interviewed in the field were aware of the FBI’s top 3 priorities. Further, over 90 percent of special agents and 28 of the 34 analysts who completed our questionnaire generally or strongly agreed that their field office had made progress in realigning its goals to be consistent with the FBI’s transformation efforts and new priorities. Completion of a revised strategic plan is essential to guide the decision making in the FBI’s transformation. The Director has set the priorities and they have been communicated; however, it is vital that the FBI place a priority on the completion of a new and formal strategic plan, as it is a key first step in transformation. In my statement last June, I highlighted the importance of the development of a strategic human capital plan to the FBI’s transformation efforts. A strategic human capital plan should flow from the strategic plan and guide an agency to align its workforce needs, goals, and objectives with its mission-critical functions. Human capital planning should include both integrating human capital approaches in the development of the organizational plans and aligning the human capital programs with the program goals. The FBI has not completed a strategic human capital plan, but has taken some steps to address short-term human capital needs related to implementing its changed priorities, as well as made progress, through a variety of initiatives, to begin to link human capital needs with the FBI’s strategic needs. The FBI should continue to build a long-term strategic human capital approach, including maximizing use of human capital flexibilities, to identify future critical needs and to attract, retain, and develop individuals with these skills. The FBI has taken actions to address human capital concerns related to implementing its changed priorities. These include (1) initiating several reengineering projects on human capital issues, such as succession planning, enhancing the FBI’s communication strategy and streamlining its hiring process; (2) initiating the staffing of the Office of Intelligence, a key component of building the FBI’s intelligence mission; (3) realigning agents and support staff to counterterrorism, counterintelligence, and cyber crime investigations to address priority areas; and (4) implementing plans to enhance recruitment and hiring for critical skill needs and training staff shifted to priority areas to address the change in the FBI’s priorities. This statement further addresses the FBI’s progress in realigning staff resources to priority areas and efforts to enhance recruitment, hiring and training of personnel in the sections that follow. Additional efforts underway within the FBI to address future human capital needs include, among others: Administrative Services Division actions to recruit personnel with critical skills, as identified by the Counterterrorism, Counterintelligence, and Cyber Divisions to support their priority missions. Steps to identify key staff competencies and establish comprehensive career programs for all occupational groups in the FBI and plans to link these competencies to training and developmental needs. In support of the FBI’s intelligence mission, the creation of two new intelligence analyst positions, the reclassification of a third position, and plans to establish career paths for these positions. Re-engineering the Training Division’s mission and operations intended to meet the present and future training needs of the FBI workforce.