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Before the Committee on Government Reform, House of Representatives:

United States Government Accountability Office:


9/11 Commission Report:

Reorganization, Transformation, and Information Sharing:

Statement of the Honorable David M. Walker: 
Comptroller General of the United States: 


Mr. Chairman and Members of the Committee:

We at GAO applaud the efforts of the 9/11 Commission and the dedicated 
family members of the victims of that tragic day whose combined efforts 
have resulted in a definitive account of the past events, and a number 
of constructive recommendations for the future. The sorrow, loss, 
anger, and resolve so evident immediately following the September 11, 
2001, attacks have been combined in an effort to help assure that our 
country will never again be caught unprepared. As the Commission notes, 
we are safer today but we are not safe, and much work remains. Although 
in today's world we can never be 100 percent secure, and we can never 
do everything everywhere, we concur with the Commission's conclusion 
that the American people should expect their government to do its very 

GAO's mission is to help the Congress improve the performance and 
ensure the accountability of the federal government for the benefit of 
the American people. GAO has been actively involved in improving 
government's performance in the critically important homeland security 
area both before and after the September 11 attacks. For example, GAO 
issued over 100 reports on homeland security-related issues and 
recommended the creation of a national focal point for homeland 
security before the attacks. We have also been privileged to actively 
support this Congress and the 9/11 Commission through details of key 
personnel, testimony before the Congress and the Commission, and 
sharing our research, products, and experiences.

Just a few days after the tragic events of September 11, I testified 
about various challenges and strategies to address both our short-and 
long-term homeland security needs and outlined a framework for 
addressing our nation's efforts. I emphasized that we as a nation must 
find the best ways to sustain our efforts over a significant time 
period, and leverage our finite human, financial, and technological 
resources in ways that would have the greatest impact. At that time, I 
identified several key questions that our government needed to address 
in order to improve the security of the homeland:[Footnote 1]

1. What are our vision and national objectives to make our homeland 
more secure?

2. What essential elements should constitute the government's strategy 
for securing the homeland?

3. How should the executive branch and the Congress be organized to 
address these issues?

4. How should we assess the effectiveness of any homeland security 
strategy implementation to address the spectrum of threats?

During the past few years, we have seen major efforts to address these 
questions, such as the formation of the Department of Homeland Security 
(DHS) and major initiatives such as strengthened passenger and baggage 
screening, increased border patrols, reform of the Federal Bureau of 
Investigation (FBI), and the creation of the Northern Command. However, 
as the 9/11 Commission and our own work indicates, these questions are 
yet to be fully addressed.

GAO has continued to explore these topics on behalf of this Committee 
and the Congress, issuing over 200 homeland security related products 
since the September 11 attacks, developing over 500 recommendations for 
action, testifying on over 90 occasions before the Congress, and 
working closely with the Congress and federal agencies, including the 
FBI, the Department of Defense (DOD), and DHS, to implement key 
recommendations to improve homeland security mission performance, 
improve government efficiency, and promote enhanced accountability and 
oversight to assure the American people that the federal government is 
doing all that can reasonably be expected.

In your request, you have asked me to address two issues: the lack of 
effective information sharing and analysis and the need for executive 
branch reorganization in response to the 9/11 Commission 
recommendations. Further, you have asked me to address how to remedy 
problems in information sharing and analysis by transforming the 
intelligence community from a system of "need to know" to one of a 
"need to share." The 9/11 Commission has recommended several 
transformational changes, such as the establishment of a National 
Counterterrorism Center (NCTC) for joint operational planning and joint 
intelligence and replacing the current Director of Central Intelligence 
with a National Intelligence Director (NID) to oversee national 
intelligence centers across the federal government. The NID would 
manage the national intelligence program and oversee agencies that 
contribute to it.

Yesterday, on August 2, 2004, the President asked Congress to create a 
NID position to be the principal intelligence advisor, appointed by the 
President, with the advice and consent of the Senate and serving at the 
pleasure of the President. Unlike the 9/11 Commission, the President 
did not propose that the NID be within the Executive Office of the 
President. He also announced that he will establish a NCTC whose 
Director would report to the NID, and that this center would build upon 
the analytic work of the existing Terrorist Threat Integration Center. 
He suggested that a separate center may be necessary for issues of 
weapons of mass destruction. Finally, he endorsed the 9/11 Commission's 
call for reorganization of the Congressional oversight structure. There 
are, however, several substantive differences between the President's 
proposal and the Commission's recommendations.

While praising the work of the 9/11 Commission, and endorsing several 
of its major recommendations in concept, the President differed with 
the Commission on certain issues. These differences reflect that 
reasoned and reasonable individuals may differ, and that several 
methods may exist to effectuate the transformational changes 
recommended. However, certain common principles and factors outlined in 
my statement today should help guide the debate ahead.

Although the creation of a NID and a NCTC would be major changes for 
the intelligence community, other structural and management changes 
have occurred and are continuing to occur in government that provide 
lessons for the intelligence community transformation. While the 
intelligence community has historically been addressed separately from 
the remainder of the federal government, and while it undoubtedly 
performs some unique missions that present unique issues (e.g., the 
protection of sources and methods) its major transformational 
challenges in large measure are the same as those that face most 
government agencies.

As a result, GAO's findings, recommendations, and experience in 
reshaping the federal government to meet Twenty-First Century 
challenges will be directly relevant to the intelligence community and 
the recommendations proposed by the 9/11 Commission. Reorganizing 
government can be an immensely complex activity with both opportunities 
and risks. As a result, those who propose to reorganize government must 
make their rationale clear and build a consensus for change if proposed 
reorganizations are to succeed and be sustained. All key players must 
be involved in the process.

The goal of improving information sharing and analysis with a focus 
upon the needs of the consumers of such improved information for 
specific types of threats can provide one of the powerful guiding 
principles necessary for successful transformation. The elevated threat 
advisory (orange alert) issued this past weekend for certain financial 
institutions in particular regions dramatically illustrates the value 
of improved analysis and sharing of information specific enough to 
guide effective and efficient preparedness actions by those most at 
risk. Earlier threat advisories issued by DHS were criticized for lack 
of specificity, "one size fits all" applicability, and lack of 
"actionable" information.

In my testimony today, I will cover four major points. First, I 
describe the rationale for improving effective information sharing and 
analysis, and suggest some ways to achieve positive results. 
Improvements would include, for example, developing a comprehensive and 
coordinated national plan to facilitate information sharing and 
relationships. Second, I provide some overview perspectives on 
reorganizational approaches to improve performance and note necessary 
cautions. For example, the Congress has an important role to play in 
the design and implementation of a new structure, and oversight will be 
key to success. Third, I illustrate that strategic human capital 
management must be the centerpiece of any serious change management 
initiative or any effort to transform the cultures of government 
agencies, including that of the intelligence community. Strategic 
management includes, for example, consideration of human capital 
flexibilities. Finally, I emphasize the importance of results-oriented 
strategic planning and implementation for the intelligence arena, 
focusing management attention on outcomes, not outputs, and the need 
for effective accountability and oversight to maintain focus upon 
improving performance. For example, much more attention needs to be 
paid to defining goals and measures, and providing for increased 
oversight of the performance of the intelligence community. I conclude 
by applying these concepts and principles to the challenges of reform 
in the intelligence community.

This testimony draws upon our wide-ranging, completed, and ongoing 
work, and our institutional knowledge on homeland security, combating 
terrorism, and various government organizational and management issues. 
We conducted our work in accordance with generally accepted government 
auditing standards.

Stronger Intelligence Sharing Is Needed:

Mr. Chairman, there is a continuing and heightened need for better and 
more effective and comprehensive information sharing. We agree the 
intelligence community needs to move from a culture of "need to know" 
to "need to share." The 9/11 Commission has made observations regarding 
information sharing, and recommended procedures to provide incentives 
for sharing and creating a "trusted information network." Many 
Commission recommendations address the need to improve information and 
intelligence collection, sharing, and analysis within the intelligence 
community itself. In addition, we must not lose sight of the fact that 
the purpose of improving information analysis and sharing is to provide 
better information throughout the federal government, and ultimately 
also to state and local governments, the private sector, and our 
citizens, so that collectively we are all better prepared. I want to 
make it clear that such information sharing must protect confidential 
sources and methods, and we do not propose any changes that would 
infringe upon those protections.

In addition, as the Congress considers the Commission's 
recommendations, I would also recommend that it consider the role that 
state and local agencies and the private sector should play as informed 
partners in homeland security. The Commission's work, as is the case 
with our own observations, notes the changing perspective of "federal" 
versus "other entities'" roles in homeland security and homeland 
defense. In performing its constitutional role of providing for the 
common defense, we have observed that the federal government must 
prevent and deter terrorist attacks on our homeland as well as detect 
impending danger before attacks occurs. Although it may be impossible 
to detect, prevent, or deter every attack, steps can and must be taken 
to reduce the risk posed by the threats to homeland security. 
Furthermore, in order to be successful in this area, the federal 
government must partner with a variety of organizations, both domestic 
and international.

Traditionally, protecting the homeland against threats was generally 
considered a federal responsibility. To meet this responsibility, the 
federal government (within and across federal agencies) gathers 
intelligence, which is often classified as national security 
information. This information is protected and safeguarded to prevent 
unauthorized access by requiring appropriate security clearances and a 
"need to know." Normally, the federal government did not share 
national-level intelligence with states and cities, since they were not 
viewed as having a significant role in preventing terrorism. Therefore, 
the federal government did not generally grant state and city officials 
access to classified information. After the September 11 attacks, 
however, the view that states and cities do not have a significant role 
in homeland security changed, and the "need to share" intelligence 
information became clear.[Footnote 2]

However, reconciling the need to share with actually sharing has been 
at the heart of the 9/11 Commission's recommendations and our own 
findings and observations on practices to improve information sharing. 
In work begun before the September 11 attacks,[Footnote 3] we reported 
on information-sharing practices of organizations that successfully 
share sensitive or time-critical information. We found that these 
practices include:

* establishing trust relationships with a wide variety of federal and 
nonfederal entities that may be in a position to provide potentially 
useful information and advice on vulnerabilities and incidents,

* developing standards and agreements on how shared information will be 
used and protected,

* establishing effective and appropriately secure communications 
mechanisms, and:

* taking steps to ensure that sensitive information is not 
inappropriately disseminated.

As you might recall, we also testified before this committee last year 
on information sharing. GAO has made numerous recommendations related 
to sharing, particularly as they relate to fulfilling DHS's critical 
infrastructure protection responsibilities.[Footnote 4] The Homeland 
Security Information Sharing Act, included in the Homeland Security Act 
of 2002 (P.L. 107-296), requires the President to prescribe and 
implement procedures for facilitating homeland security information 
sharing and establishes authorities to share different types of 
information, such as grand jury information; electronic, wire, and oral 
interception information; and foreign intelligence information. In July 
2003, the President assigned these functions to the Secretary of 
Homeland Security, but no deadline was established for developing such 
information sharing procedures.

To accomplish its missions, DHS must gain access to, receive, and 
analyze law enforcement information, intelligence information, and 
other threat, incident, and vulnerability information from federal and 
nonfederal sources, and it must analyze such information to identify 
and assess the nature and scope of terrorist threats. DHS must also 
share information both internally and externally with agencies and law 
enforcement on such things as goods and passengers inbound to the 
United States and individuals who are known or suspected terrorists and 
criminals (e.g., watch lists).

As we reported in June 2002,[Footnote 5] the federal government had 
made progress in developing a framework to support a more unified 
effort to secure the homeland, including information sharing. However, 
this work found additional needs and opportunities to enhance the 
effectiveness of information sharing among federal agencies with 
homeland security or homeland defense responsibilities, and with 
various state and city law enforcement agencies that have a key role in 
homeland security, as well as with the private sector.

As we reported in August 2003,[Footnote 6] efforts to improve 
intelligence and information sharing still needed to be strengthened. 
Intelligence-and information-sharing initiatives implemented by states 
and cities were not effectively coordinated with those of federal 
agencies, nor were they coordinated within and between federal 
entities. Furthermore, neither federal, state, nor city governments 
considered the information-sharing process to be effective. For 
example, information on threats, methods, and techniques of terrorists 
was not routinely shared; information that was shared was not perceived 
as timely, accurate, or relevant; and federal officials have not 
established comprehensive processes or procedures to promote effective 
information sharing. At that time, we recommended that the Secretary of 
Homeland Security work with the heads of other federal agencies and 
state and local authorities to:

* incorporate the existing information-sharing guidance that is 
contained in the various national strategies and information-sharing 
procedures required by the Homeland Security Act,

* establish a clearinghouse to coordinate the various information-
sharing initiatives to eliminate possible confusion and duplication of 

* fully integrate states and cities into the national policy-making 
process for information sharing and take steps to provide greater 
assurance that actions at all levels of government are mutually 

* identify and address the perceived barriers to federal information 
sharing, and:

* use a survey method or a related data collection approach to 
determine, over time, the needs of private and public organizations for 
information related to homeland security and to measure progress in 
improving information sharing at all levels of government.

* DHS concurred with the above recommendations.

DHS and other federal agencies have instituted major counterterrorism 
efforts involving information and intelligence sharing over the past 2 
years. For example, the Terrorist Threat Integration Center (T-TIC) was 
designed to improve the collection, analysis, and sharing of all 
counterterrorism intelligence gathered in the United States and 
overseas. The DHS Information Analysis and Infrastructure Protection 
(IAIP) Directorate is intended to receive intelligence from a variety 
of federal sources and act as a central fusion point for all 
intelligence relevant to homeland security and related critical 
infrastructure protection. Furthermore, the FBI has created a new 
Office of Intelligence, established a National Joint Terrorism 
Taskforce, expanded its Joint Terrorist Task Forces (JTTFs), and 
recently made operational an interagency joint Terrorist Screening 

Although improvements had been made, we continue to identify needs, 
such as developing a comprehensive and coordinated national plan to 
facilitate information-sharing on critical infrastructure protection 
(CIP); developing productive information sharing relationships among 
the federal government and state and local governments and the private 
sector; and providing appropriate incentives for nonfederal entities to 
increase information sharing with the federal government and enhance 
other critical infrastructure protection efforts. As we recently 
reported, information sharing and analysis centers (ISACs) have 
identified a number of challenges to effective CIP information sharing 
between the federal government and state and local governments and the 
private sector, including sharing information on physical and cyber 
threats, vulnerabilities, incidents, potential protective measures, 
and best practices. Such challenges include building trusted 
relationships; developing processes to facilitate information sharing; 
overcoming barriers to information sharing; clarifying the roles and 
responsibilities of the various government and private sector entities 
that are involved in protecting critical infrastructure; and funding 
ISAC operations and activities.[Footnote 7]

Although DHS has taken a number of actions to implement the public/
private partnership called for by federal CIP policy, it has not yet 
developed a plan that describes how it will carry out its information-
sharing responsibilities and relationships, including consideration of 
appropriate incentives for nonfederal entities to increase information 
sharing with the federal government, increase sector participation, and 
perform other specific tasks to protect the critical infrastructure. 
Such a plan could encourage improved information sharing among the 
ISACs, other CIP entities, and the department by clarifying the roles 
and responsibilities of all the entities involved and clearly 
articulating actions to address the challenges that remain.

The department also lacks policies and procedures to ensure effective 
coordination and sharing of ISAC-provided information among the 
appropriate components within the department. Developing such policies 
and procedures would help ensure that information is appropriately 
shared among its components and with other government and private 
sector CIP entities. GAO recommended that the Secretary of Homeland 
Security direct officials within DHS to (1) proceed with the 
development of an information-sharing plan that describes the roles and 
responsibilities of DHS, the ISACs, and other entities and (2) 
establish appropriate department policies and procedures for 
interactions with other CIP entities and for coordination and 
information sharing among DHS components. DHS has generally agreed with 
our findings and recommendations.

DHS has also implemented the Homeland Security Advisory System. 
Utilizing five color-coded threat levels, the system was established in 
March 2002 to disseminate information regarding the risk of terrorist 
acts to federal agencies, states and localities, and the public. Our 
recent work indicates that DHS has not yet officially documented 
communication protocols for providing threat information and guidance 
to federal agencies and states, with the result that some federal 
agencies and states may first learn about changes in the national 
threat level from media sources. Moreover, federal agencies and states 
responding to our inquiries indicated that they generally did not 
receive specific threat information and guidance, and they believed 
this shortcoming hindered their ability to determine whether they were 
at risk as well as their ability to determine and implement appropriate 
protective measures.[Footnote 8]

In addition, there is a need for an improved security clearance process 
so that state, local, and private sector officials have the access to 
information they need, but with appropriate security safeguards in 
place, while efforts to improve information sharing continue. In a 
recent report,[Footnote 9] we described the FBI's process for granting 
access to classified information for state and local law enforcement 
officials. The FBI's goal is to complete the processing for secret 
security clearances within 45 to 60 days and top secret security 
clearances within 6 to 9 months. While the FBI's processing of top 
secret security clearances has been generally timely, that was not the 
case for secret clearances. However, the FBI made substantial 
improvements in 2003 to the timeliness of processing secret clearances.

We also have conducted a body of work that has found that long-standing 
security clearance backlogs and delays in determining clearance 
eligibility affect industry personnel, military members, and federal 
employees. For example, as we reported in May of this year,[Footnote 
10] more than 187,000 reinvestigations, new investigations, or 
clearance adjudications were not completed for industry personnel alone 
within established time frames. Delays in conducting investigations and 
determining clearance eligibility can increase national security risks, 
prevent industry personnel from beginning or continuing work on 
classified programs and activities, or otherwise hinder the sharing of 
classified threat information with officials having homeland security 
or homeland defense responsibilities.

The FBI has also taken a number of steps to enhance its information 
sharing with state and local law enforcement officials, such as 
providing guidance and additional staffing. The FBI has further 
increased the number of its JTTFs, increasing them from 35 prior to the 
September 11 attacks to 84 as of July 2004 and state and local law 
enforcement officials' participation on these task forces has been 
increased. The FBI has at least one JTTF in each of its 56 field 
locations and plans to expand to 100. The FBI also circulates 
declassified intelligence through a weekly bulletin and provides threat 
information to state and local law enforcement officials via various 
database networks.

These critical needs for better information and information sharing 
identified by federal, state, and local governments and the private 
sector must form the clear rationale and basis for transformation of 
the intelligence community. Reorganization isn't the objective; rather 
it is improving government performance to meet twenty first century 
information sharing requirements. 9/11 Commission Chairman Thomas H. 
Kean and Vice-Chairman Lee H. Hamilton, in their testimony before the 
Senate Governmental Affairs Committee on July 30, 2004, noted:

"There is a fascination in Washington with bureaucratic solutions--
rearranging the wiring diagrams, creating new organizations. We do 
recommend some important institutional changes. We will articulate and 
defend those proposals. But we believe reorganizing governmental 
institutions is only a part of the agenda before us. Some of the 
saddest aspects of the 9/11 story are the outstanding efforts of so 
many individual officials straining, often without success, against the 
boundaries of the possible. Good people can overcome bad structures. 
They should not have to. We have the resources and the people. We need 
to combine them more effectively, to achieve unity of effort."

GAO agrees with this comment, and we have noted several related 
suggestions below.

While Changes May be Needed, Caution and Care Must be Taken:

As the committee is aware, GAO has done extensive work on federal 
organizational structure and how reorganization can improve 
performance. The 9/11 Commission has recommended major changes to unify 
strategic intelligence and operational planning with a National 
Counterterrorism Center and provide the intelligence community with a 
new National Intelligence Director. As the Congress and the 
administration consider the 9/11 Commission's recommendations, they 
should consider how best to address organizational changes, roles and 
responsibilities, and functions for intelligence-sharing 

In response to the emerging trends and long-term fiscal challenges the 
government faces in the coming years, we have an opportunity to create 
highly effective, performance-based organizations that can strengthen 
the nation's ability to meet the challenges of the twenty first century 
and reach beyond our current level of achievement. The federal 
government cannot accept the status quo as a given--we need to 
reexamine the base of government policies, programs, structures, and 
operations. We need to minimize the number of layers and silos in 
government, emphasize horizontal versus vertical actions, while moving 
our policy focus to coordination and integration. The result, we 
believe, will be a government that is effective and relevant to a 
changing society--a government that is as free as possible of outmoded 
commitments and operations that can inappropriately encumber the 
future, reduce our fiscal flexibility, and prevent future generations 
from being able to make choices regarding what roles they think 
government should play.

Many departments and agencies, including those of the intelligence 
community, were created in a different time and in response to 
challenges, threats, and priorities very different from today's world. 
Some have achieved their one time missions and yet they are still in 
business. Many have accumulated responsibilities beyond their original 
purposes. Many are still focused on their original mission that may not 
be relevant or as high a priority in today's world. Others have not 
been able to demonstrate how they are making a difference in real and 
concrete terms. Still others have overlapping or conflicting roles and 
responsibilities. Redundant, unfocused, uncoordinated, outdated, 
misaligned, and nonintegrated programs and activities waste scarce 
funds, confuse and frustrate program customers, and limit overall 
efficiency and effectiveness.[Footnote 11] These are the charges 
highlighted by the 9/11 Commission's findings and recommendations.

The problems the 9/11 Commission has described with our intelligence 
activities indicate a strong need for reexamining the organization and 
execution of those activities. However, any restructuring proposal 
requires careful consideration. Fixing the wrong problems or even 
worse, fixing the right problems poorly, could cause more harm than 

Past executive reorganization authority has served as an effective tool 
for achieving fundamental reorganization of federal operations. As I 
have testified before this committee,[Footnote 12] the granting of 
executive reorganization authority to the President can serve to better 
enable the President to propose government designs that would be more 
efficient and effective in meeting existing and emerging challenges 
involving the intelligence community and information sharing with other 
entities. However, lessons learned from prior federal reorganization 
efforts suggest that reorganizing government can be an immensely 
complex activity that requires consensus on both the goals to be 
achieved and the process for achieving them. Prior reorganization 
authority has reflected a changing balance between legislative and 
executive roles. Periodically, between 1932 and 1984, the Congress 
passed legislation providing the President one form or another of 
expedited reorganization authority.[Footnote 13]

Congressional involvement is needed not just in the initial design of 
the reorganization, but in what can turn out to be a lengthy period of 
implementation. The Congress has an important role to play--in both its 
legislative and oversight capacities--in establishing, monitoring, and 
maintaining progress to attain the goals envisioned by government 
transformation and reorganization efforts. However, as the 9/11 
Commission has noted, past oversight efforts in the intelligence area 
have been wholly inadequate.

To ensure efficient and effective implementation and oversight, the 
Congress will also need to consider realigning its own structure. With 
changes in the executive branch, the Congress should adapt its own 
organization. For example, the Congress has undertaken a reexamination 
of its committee structure, with the implementation of DHS. The DHS 
legislation instructed both houses of Congress to review their 
committee structures in light of the reorganization of homeland 
security responsibilities within the executive branch. Similarly, the 
9/11 Commission recommends realigning congressional oversight to 
support its proposals to reorganize intelligence programs.

Addressing Intelligence Human Capital Needs Requires Strategic 

The 9/11 Commission stresses the need for stronger capabilities and 
expertise in intelligence and national security to support homeland 
security. For example, the Commission recommends rebuilding the Central 
Intelligence Agency's analytical capabilities, enhancing the agency's 
human intelligence capabilities, and developing a stronger language 

We believe, Mr. Chairman, that at the center of any serious change 
management initiative are the people involved--people define the 
organization's culture, drive its performance, and embody its knowledge 
base. They are the source of all knowledge, process improvement, and 
technological enhancement efforts. As such, strategic human capital (or 
people) strategy is the critical element to maximizing government's 
performance and ensuring accountability of our intelligence community 
and homeland security efforts.

Experience shows that failure to adequately address--and often even 
consider--a wide variety of people and cultural issues is at the heart 
of unsuccessful organizational transformations. Recognizing the 
"people" element in these initiatives and implementing strategies to 
help individuals maximize their full potential in the new environment 
is the key to a successful transformation of the intelligence community 
and related homeland security organizations. Thus, organizational 
transformations that incorporate strategic human capital management 
approaches will help to sustain agency efforts and improve the 
efficiency, effectiveness, and accountability of the federal 
government. To help, we have identified a set of practices that have 
been found to be central to any successful transformation 
effort.[Footnote 14]

Committed, sustained, highly qualified, and inspired leadership, and 
persistent attention by all key parties in the successful 
implementation of organizational transformations, will be essential, if 
lasting changes are to be made and the challenges we are discussing 
today are to be effectively addressed. It is clear that in a knowledge-
based federal government, including the intelligence community, people-
-human capital--are the most valuable asset. How these people are 
organized, incented, enabled, empowered, and managed is key to the 
reform of the intelligence community and other organizations involved 
with homeland security.

We have testified that federal human capital strategies are not yet 
appropriately constituted to meet current and emerging challenges or to 
drive the needed transformation across the federal government. The 
basic problem has been the long-standing lack of a consistent approach 
to marshaling, managing, and maintaining the human capital needed to 
maximize government performance and ensure its accountability to the 
people. Thus, federal agencies involved with the intelligence community 
and other homeland security organizations will need the most effective 
human capital systems to address these challenges and succeed in their 
transformation efforts during a period of sustained budget constraints. 
This includes aligning their strategic planning and key institutional 
performance with unit and individual performance management and reward 

Fortunately, the Congress has passed legislation providing many of the 
authorities and tools agencies need. In fact, more progress in 
addressing human capital challenges was made in the last 3 years than 
in the last 20, and significant changes in how the federal workforce is 
managed are under way. For example, the Congress passed legislation 
providing governmentwide human capital flexibilities, such as direct 
hire authority, the ability to use category rating in the hiring of 
applicants instead of the "rule of three," and the creation of chief 
human capital officer (CHCO) positions and the CHCO Council. In 
addition, individual agencies--such as the National Aeronautical and 
Space Administration (NASA), DoD, and DHS--received flexibilities 
intended to help them manage their human capital strategically to 
achieve results.

While many agencies have received additional human capital 
flexibilities, additional ones may be both needed and appropriate for 
the intelligence, homeland security, national defense, and selected 
other agencies. While the above authorities are helpful, in order to 
enable agencies to rapidly meet their critical human capital needs, the 
Congress should consider legislation granting selected agency heads the 
authority to hire a limited number of positions for a stated period of 
time (e.g., up to 3 years) on a noncompetitive basis. The Congress has 
passed legislation granting this authority to the Comptroller General 
of the United States and it has helped GAO to address a range of 
critical needs in a timely, effective, and prudent manner over many 

Recent human capital actions have significant precedent-setting 
implications for the rest of government. They represent progress and 
opportunities, but also present legitimate concerns. We are fast 
approaching the point where "standard governmentwide" human capital 
policies and processes are neither standard nor governmentwide. As the 
Congress considers the need for additional human capital authorities 
for the intelligence community, it should keep in mind that human 
capital reform should avoid further fragmentation within the civil 
service, ensure reasonable consistency within the overall civilian 
workforce, and help maintain a reasonably level playing field among 
federal agencies in competing for talent. Importantly, this is not to 
delay needed reforms for any agency, but to accelerate reform across 
the federal government and incorporate appropriate principles and 

As the Congress considers reforms to the intelligence communities' 
human capital policies and practices, it should require that agencies 
have in place the institutional infrastructure needed to make effective 
use of any new tools and authorities. At a minimum, this institutional 
infrastructure includes a human capital planning process that 
integrates the agency's human capital policies, strategies, and 
programs with its program goals and mission and desired outcomes; the 
capabilities to effectively develop and implement a new human capital 
system; and, importantly, a set of appropriate principles and 
safeguards, including reasonable transparency and appropriate 
accountability mechanisms, to ensure the fair, effective, credible, 
nondiscriminatory implementation and application of a new system.

Managing for Results:

As Chairman Kean and Vice-Chairman Hamilton caution, organizational 
changes are just a part of the reforms needed. The Commission rightly 
says that effective public policies need concrete objectives, agencies 
need to be able to measure success, and the American people are 
entitled to see some standards for performance so they can judge, with 
the help of their elected representatives, whether the objectives are 
being met. To comprehensively transform government to improve 
intelligence and homeland security efforts, we must also carefully 
assess and define mission needs, current capabilities, resource 
practicalities, and priorities. And we must implement our plans to 
achieve those mission needs.

The federal government is well short of where it needs to be in setting 
national homeland security goals, including those for intelligence and 
other mission areas, to focus on results--outcomes--not inputs and 
outputs which were so long a feature of much of the federal 
government's strategic planning. We are concerned that the tenets of 
results management--shifting management attention from inputs, 
processes, and outputs to what is accomplished with them (outcomes or 
results)--still are elusive in homeland security goal setting and 
operational planning. We advocate a clear and comprehensive focus on 
homeland security results management, including the mission of 
intelligence and information sharing. Results management should have 
the elements to determine (1) if homeland security results are being 
achieved within planned timeframes, (2) if investments and resources 
are being managed properly, (3) if results are being integrated into 
ongoing decision making and priority setting, and (4) what action is 
needed to guide future investment policies and influence behavior to 
achieve results. These actions go far beyond a limited focus on 
organizational structure.

As the Gilmore Commission stated, a continuing problem for homeland 
security has been the lack of clear strategic guidance from the federal 
level about the definition and objectives of preparedness and how 
states and localities will be evaluated in meeting those 
objectives.[Footnote 15] The 9/11 Commission's broad recommendations, 
if adopted, will require a thoughtful, detailed, results-oriented 
management approach in defining specific goals, activities, and 
resource requirements.

The track record for homeland security results management to date is 
spotty. The National Strategy for Homeland Security, issued by the 
administration in July 2002, was intended to mobilize and organize the 
nation to secure the homeland from terrorist attacks.[Footnote 16] 
Intelligence and warning was one of its critical mission areas. Despite 
the changes over the past two years, the National Strategy has not been 
updated. In general, initiatives identified in the strategy do not 
provide a baseline set of performance goals and measures upon which to 
assess and improve preparedness, stressing activities rather than 
results. For example, for intelligence and warning, the National 
Strategy identified major initiatives that are activities, such as 
implementing the Homeland Security Advisory System, utilizing dual-use 
analysis to prevent attacks; and employing "red team" techniques.

Establishing clear goals and performance measures is critical to 
ensuring both a successful and a fiscally responsible and sustainable 
preparedness effort. We are currently doing work on the extent to which 
the National Strategy's goals are being implemented by federal 
agencies. Senator Lieberman has recently introduced legislation 
requiring executive branch efforts to produce a national homeland 
security strategy. We support the concept of a legislatively required 
strategy that can be sustained across administrations and provides a 
framework for congressional oversight. Before the administration's 
National Strategy for Homeland Security was issued, we had stated that 
the strategy should include steps designed to (a) reduce our 
vulnerability to threats; (b) use intelligence assets and other broad-
based information sources to identify threats and share information as 
appropriate; (c) stop incidents before they occur; (d) manage the 
consequences of an incident; and (e) in the case of terrorist attacks, 
respond by all means available, including economic, diplomatic, and 
military actions that, when appropriate, are coordinated with other 
nations.[Footnote 17] Earlier this year we provided a set of desirable 
characteristics for any effective national strategy that could better 
focus national homeland security decision making and increase the 
emphasis on outcomes.[Footnote 18]

Strategic planning is critical to provide mission clarity, establish 
long-term performance strategies and goals, direct resource decisions, 
and guide transformation efforts. In this context, we are reviewing the 
DHS strategic planning efforts. Our work includes a review of the 
manner by which the Department's planning efforts support the National 
Strategy for Homeland Security and the extent to which its strategic 
plan reflects the requirements of the Government Performance and 
Results Act of 1993.

DHS's planning efforts are evolving. The current published DHS 
strategic plan contains vague strategic goals and objectives for all 
its mission areas, including intelligence, and little specific 
information to guide congressional decision making. For example, the 
strategic plan includes an overall goal to identify and understand 
threats, assess vulnerabilities, determine potential impacts, and 
disseminate timely information to DHS's homeland security partners and 
the American public. That goal has very general objectives, such as 
gathering and fusing all terrorism-related intelligence and analyzing 
and coordinating access to information related to potential terrorist 
or other threats. Discussion of annual goals are missing, and 
supporting descriptions of means and strategies are vague, making it 
difficult to determine if they are sufficient to achieve the objectives 
and overall goals. These and related issues will need to be addressed 
as the DHS planning effort moves forward.

In another effort to set expectations, the President, through Homeland 
Security Presidential Directive 8,[Footnote 19] has tasked the 
Department of Homeland Security with establishing measurable readiness 
priorities and targets appropriately balancing the potential threat and 
magnitude of terrorist attacks, major disasters, and other emergencies 
with resources required to prevent, respond to, and recover from them. 
The task also is to include readiness metrics and elements supporting 
the national preparedness goal, including standards for preparedness 
assessments and strategies, and a system for assessing the nation's 
overall preparedness to respond to major events, especially involving 
acts of terrorism. However, those taskings have yet to be completed, 
but they will have to address the following questions:

* What are the appropriate national preparedness goals and measures? 
What are appropriate subgoals for specific areas such as critical 
infrastructure sectors?

* Do these goals and subgoals take into account other national goals 
such as economic security or the priority objectives of the private 
sector or other levels of government?

* Who should be accountable for achieving the national goals and 

* How would a national results management and measurement system be 
crafted, implemented, and sustained for the national preparedness 

* How would such a system affect needs assessment and be integrated 
with funding and budgeting processes across the many organizations 
involved in homeland security?

However, even if we have a robust and viable national strategy for 
homeland security, DHS strategic plan, and national preparedness goals, 
the issue of implementation remains. Implementation cannot be assured, 
or corrective action taken, if we are not getting the results we want, 
without effective accountability and oversight. The focus for homeland 
security must be on constantly staying ready and prepared for unknown 
threats and paying attention to improving performance. In addition to 
continuing our ongoing work in major homeland security mission areas 
such as border and transportation security and emergency preparedness, 
GAO can help the Congress more effectively oversee the intelligence 
community, and any changes should consider, in our view, an appropriate 
role for the GAO.

With some exceptions, GAO has broad-based authority to conduct reviews 
relating to various intelligence agencies. However, because of 
historical resistance from the intelligence agencies and the general 
lack of support from the intelligence committees in the Congress, GAO 
has done limited work in this community over the past 25 years. For 
example, within the past 2 years, we have done a considerable amount of 
work in connection with the FBI and its related transformational 
efforts. In addition, GAO has recently had some interaction with the 
Defense Intelligence Agency in connection with its transformation 
efforts. Furthermore, GAO has conducted extensive work on a wide range 
of government transformational and homeland security issues over the 
past several years. As always, we stand ready to offer GAO's assistance 
in support of any of the Congress' oversight needs.

The Challenges Faced in Intelligence Reform:

In conclusion, on the basis of GAO's work in both the public and the 
private sector over many years, and my own change management 
experience, it is clear to me that many of the challenges that the 
intelligence community faces are similar or identical to the 
transformation challenges applicable to many other federal agencies, 
including GAO. Specifically, while the intelligence agencies are in a 
different line of business than other federal agencies, they face the 
same challenges when it comes to strategic planning and budgeting, 
organizational alignment, human capital strategy, and the management of 
information technology, finances, knowledge, and change.

For the intelligence community, effectively addressing these basic 
business transformation challenges will require action relating to five 
key dimensions, namely, structure, people, process, technology, and 
partnerships. It will also require a rethinking and cultural 
transformation in connection with intelligence activities both in the 
executive branch and in the Congress.

With regard to the structure dimension, there are many organizational 
units within the executive branch and in the Congress with 
responsibilities in the intelligence and homeland security areas. Basic 
organizational and management principles dictate that, absent a clear 
and compelling need for competition or checks and balances, there is a 
need to minimize the number of entities and levels in key decision 
making, oversight, and other related activities. In addition, 
irrespective of how many units and levels are involved, someone has to 
be in charge of all key planning, budgeting, and operational 
activities. One person should be responsible and accountable for all 
key intelligence activities within the executive branch, and that 
person should report directly to the President. This position must also 
have substantive strategic planning, budget, operational integration, 
and accountability responsibilities and opportunities for the 
intelligence community in order to be effective. In addition, this 
person should be appointed by the President and confirmed by the Senate 
in order to help facilitate success and ensure effective oversight.

With regard to the oversight structure of the Congress, the 9/11 
Commission noted that there are numerous players involved in 
intelligence activities and yet not enough effective oversight is being 
done. As a result, a restructuring of intelligence and homeland 
security related activities in the Congress is also needed. In this 
regard, it may make sense to separate responsibility for intelligence 
activities from personal privacy and individual liberty issues in order 
to ensure that needed attention is given to both while providing for a 
check and balance between these competing interests.

With regard to the people dimension, any entity is only as good as its 
people, and as I stated earlier, the intelligence community is no 
exception. In fact, since the intelligence community is in the 
knowledge business, people are of vital importance. The people 
challenge starts at the top, and key leaders must be both effective and 
respected. In addition, they need to stay in their positions long 
enough to make a real and lasting difference. In this regard, while the 
FBI director has a 10-year term appointment, most agency heads serve at 
the pleasure of their appointing official and may serve a few years in 
their respective positions. This is a problem when the agency is in the 
need of a cultural transformation, such as that required in the 
intelligence community, which typically takes at least 5 to 7 years to 

In addition to having the right people and the right "tone at the top," 
agencies need to develop and execute workforce strategies and plans 
helping to ensure that they have the right people with the right skills 
in the required numbers to accomplish their missions. Many of these 
missions have changed in the post-Cold War and post September 11 world. 
This is especially critical in connection with certain skills that are 
in short supply, such as information technology and certain languages, 
such as Arabic. In addition, as the 9/11 Commission and others have 
noted, it is clear that additional steps are necessary to strengthen 
our human intelligence capabilities.

With regard to the process and technology dimensions, steps need to be 
taken to streamline and expedite the processes used to analyze and 
disseminate the tremendous amount of intelligence and other information 
available to the intelligence community. This will require extensive 
use of technology to sort and distribute information both within 
agencies and between agencies and other key players in various sectors 
both domestically and internationally, as appropriate. The 9/11 
Commission and others have noted various deficiencies in this area, 
such as the FBI's information technology development and implementation 
challenges. At the same time, some successes have occurred during the 
past 2 years that address process and technology concerns. For example, 
the Terrorist Screening Center, created under Homeland Security 
Presidential Directive 6 is intended to help in the consolidation of 
the federal government's approach to terrorism screening.[Footnote 20] 
This center has taken a number of steps to address various 
organizational, technological, integration, and other challenges, and 
it may serve as a model for other needed intra-and interorganizational 

With regard to partnerships, it has always been difficult to create an 
environment of shared responsibility, shared resources, and shared 
accountability for achieving difficult missions. Effective 
partnerships require a shared vision, shared goals, and shared trust in 
meeting agreed-upon responsibilities. Partnerships also mean that power 
is shared. Too often we have seen both public and private sector 
organizations where the term "partnership" is often voiced, but the 
reality is more a jockeying for dominance or control over the 
"partner." The end result is that resources are not shared, the shared 
mission is never complete or adequate, and opportunities for true 
strategic alliance are squandered. In the intelligence arena, we know 
the potential end result is failure for the nation.

With regard to the cultural dimension, this is both the softest and the 
hardest to deal with. By the softest, I mean it involves the attitudes 
and actions of people and entities. By the hardest, I mean that 
changing long-standing cultures can be a huge challenge, especially if 
the efforts involve organizational changes in order to streamline, 
integrate, and improve related capabilities and abilities. This 
includes both execution and oversight-related activities. As the 9/11 
Commission and others have noted, such a restructuring is needed in 
both the executive branch and the Congress. This will involve taking on 
the vested interests of many powerful players, and as a result, it will 
not be easy, but it may be essential, especially if we expect to go 
from a "need to know" to a "need to share' approach. As I have often 
said, addressing such issues takes patience, persistence, perspective, 
and pain before you prevail. Such is the case with many agency 
transformational efforts, including those within our own GAO. However, 
given the challenges and dangers that we face in the post 9/11 world, 
we cannot afford to wait much longer. The time for action is now.


Mr. Chairman, in its final report, the Gilmore Commission stated:

"There will never be an end point in America's readiness. Enemies will 
change tactics, citizens' attitudes about what adjustments in their 
lives they will be willing to accept will evolve and leaders will be 
confronted with legitimate competing priorities that will demand 
attention….In the end, America's response to the threat of terrorism 
will be measured by how we manage risk. There will never be a 100% 
guarantee of security for our people, the economy, and our society. We 
must resist the urge to seek total security--it is not achievable and 
drains our attention from those things that can be 
accomplished."[Footnote 21]

Managing risk is not simply about putting new organizations in place. 
It requires us to think about what must be protected, define an 
acceptable level of risk, and target limited resources while keeping in 
mind that the related costs must be affordable and sustainable. Perhaps 
more important, managing risk requires us to constantly operate under 
conditions of uncertainty, where foresight, anticipation, 
responsiveness, and radical adaptation are vital capabilities.

We can and we must enhance and integrate our intelligence efforts as 
suggested by the 9/11 Commission to significantly improve information 
sharing and analysis. Several models to achieve this result exist, and 
despite the unique missions of the intelligence community can readily 
be adapted to guide this transformation.

We at the GAO stand ready to constructively engage with the 
intelligence community to share our significant government 
transformation and management knowledge and experience in order to help 
members of the community help themselves engage in the needed 
transformation efforts. We also stand ready to help the Congress 
enhance its oversight activities over the intelligence community, 
which, in our view, are an essential element of an effective 
transformation approach. In this regard, we have the people with the 
skills, experience, knowledge, and clearances to make a big difference 
for Congress and the country.

Mr. Chairman, this concludes my statement. I would be happy to answer 
any questions that you or members of your committee may have at this 


For information on this testimony, please contact Randall Yim at (202) 
512-6787 or


[1] U.S. General Accounting Office. Homeland Security: A Framework for 
Addressing the Nation's Efforts, GAO-01-1158T (Washington, D.C.: Sept. 
21, 2001).

[2] U.S. General Accounting Office, Homeland Security: Efforts to 
Improve Information Sharing Need to Be Strengthened, GAO-03-760 
(Washington, D.C.: August 2003). 

[3] U.S. General Accounting Office, Information Sharing: Practices That 
Can Benefit Critical Infrastructure Protection, GAO-02-24 (Washington, 
D.C.: Oct. 15, 2001).

[4] U.S. General Accounting Office. Homeland Security: Information 
Sharing Responsibilities, Challenges, and Key Management Issues, GAO-
03-1165T (Washington, D.C.: Sept. 17, 2003); GAO-03-715T (May 8, 2003).

[5] U.S. General Accounting Office, Homeland Security: Key Elements to 
Unify Efforts Are Under Way but Uncertainty Remains, GAO-02-610 
(Washington, D.C.: June 7, 2002).

[6] GAO-03-760.

[7] U.S. General Accounting Office. Critical Infrastructure Protection: 
Improving Information Sharing with Infrastructure Sectors, GAO-04-780 
(Washington, D.C.: July 9, 2004).

[8] U.S. General Accounting Office, Homeland Security: Communication 
Protocols and Risk Communication Principles Can Assist in Refining the 
Advisory System, GAO-04-682 (Washington, D.C.: June 25, 2004).

[9] U.S. General Accounting Office. Security Clearances: FBI Has 
Enhanced Its Process for State and Local Law Enforcement Officials, 
GAO-04-596 (Washington, D.C.: April 30, 2004).

[10] U.S. General Accounting Office, DOD Personnel Clearances: 
Additional Steps Can Be Taken to Reduce Backlogs and Delays in 
Determining Security Clearance Eligibility for Industry Personnel, GAO-
04-632 (Washington, D.C: May 26, 2004).

[11] U.S. General Accounting Office, Managing in the New Millennium: 
Shaping a More Efficient and Effective Government for the 21st Century, 
GAO/T-OCG-00-9 (Washington, D.C.: Mar. 29, 2000).

[12] U.S. General Accounting Office, Executive Reorganization 
Authority: Balancing Executive and Congressional Roles in Shaping the 
Federal Government's Structure, GAO-03-624T (Washington, D.C.: April 3, 

[13] Ronald C. Moe, Congressional Research Service, The President's 
Reorganization Authority: Review and Analysis (Washington, D.C.: Mar. 
8, 2001).

[14] U. S. General Accounting Office, Results-Oriented Cultures: 
Implementation Steps to Assist Mergers and Organizational 
Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003).

[15] The Advisory Panel to Assess Domestic Response Capabilities for 
Terrorism Involving Weapons of Mass Destruction, V. Forging America's 
New Normalcy, (Arlington, VA.: Dec. 15, 2003).

[16] The White House, The National Strategy for Homeland Security, 
(Washington, D.C.: July 2002).

[17] U.S. General Accounting Office, Homeland Security: Challenges and 
Strategies in Addressing Short-and Long-Term National Needs, GAO-02-
160T (Washington, D.C.: Nov. 7, 2001).

[18] U.S. General Accounting Office, Combating Terrorism: Evaluation 
of Selected Characteristics in National Strategies Related to 
Terrorism, GAO-04-408T (Washington, D.C.: Feb. 3, 2004)

[19] The White House, Homeland Security Presidential Directive 8 
(National Preparedness), (Washington, D.C.: Dec. 17, 2003).

[20] The White House, Homeland Security Presidential Directive-6 
(Integration and Use of Screening Information), Washington, D.C.: Sept. 
16, 2003.

[21] V. Forging America's New Normalcy, p. 2.