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Hearing Of The Senate Homeland Security And Governmental Affairs Committee - Homeland Security Department's FY 2010 Budget


Location: Washington, DC

Chaired By: Senator Joseph I. Lieberman (ID-CT)

Witness: Janet A. Napolitano, Secretary, Department Of Homeland Security

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SEN. LIEBERMAN: (Sounds gavel.) Good afternoon, Secretary Napolitano, ladies and gentlemen.

This may be the latest in the day, Senator Collins, that you and I have begun a hearing. Is that possible?

SEN. SUSAN COLLINS (R-ME): I think it is. (Laughs.)

SEN. LIEBERMAN: (Laughs.) So once again a first for the three of us. The explanation of this is much too long and definitely not worth telling.

Anyway, I want to welcome you, Madame Secretary, to this, your first budget hearing before our committee as the secretary of the Department of Homeland Security.

A budget is, of course, as you know from your previous work as governor, is more than just a collection of numbers. Each line of the budget is in some sense a vision of what we expect from our government now and into the future.

I know that you and we on this committee share a similar vision of what we expect for the Department of Homeland Security, which is that it become an organization that is simply the best in the world at detecting, deterring, preparing for and responding to disasters natural and man-made, including terrorism and the threat posed by drug cartels -- one DHS whose components work together to keep the American people safe.

With those expectations in mind, I would say that there is a lot in President Obama's proposed 2010 budget for the Department of Homeland Security that is good news. One of the more interesting discussions that we may have today or may occur is exactly how much does President Obama's budget increase the -- (laughs) -- Department of Homeland Security spending. I've heard at least three different numbers based, I gather, on, as I understand it, on which baseline you use.

But in any case, there is a percentage increase in spending. In times of -- recommended by the president -- in times of economic stress and high deficits, obviously we have to make priority decisions. And therefore, I take the increase that the president has recommended as a testament to this administration's commitment to the department's critical mission of keeping our homeland safe.

I want to point out a few areas in which I was particularly pleased by increases recommended and then some others where I'm concerned.

I welcome the administration's $87 million increase in the department's National Cyber Security Division account. As we've discussed and heard testimony here, key information systems in the private and public sectors are attacked every day. And it's critical that we therefore beef up our defenses against computer attacks and data theft. This additional money will obviously help that to occur.

I'm also encouraged that the president's budget recognizes in a new way the threat on our borders posed by drugs, weapons, cash and human smuggling by including an increase of $135 million for the Southwest Border Initiative. But I know you will not be surprised to hear that I don't think that's enough. I'm particularly concerned that there's not enough new support being directed to inspections of southbound traffic to disrupt the flow of illicit guns and cash that the drug cartels use to wage war against each other and too frequently against the Mexican government.

Senator Collins and I introduced and the Senate passed an amendment to the budget resolution a short while ago for the next fiscal year that added $500 million for security at the Southwest border. So we will continue to work in this budget process to add more money for that purpose.

I'm also glad to see increased support for areas of the department's functioning that are really not high profile but matter a lot. And that goes particularly to management and integration of different sections of the department. The department -- the administration has, for instance, proposed an additional $32 million for the Office of Procurement. That should help to reduce the all too frequent cost and schedule overruns that have occurred over the years in major Department of Homeland Security acquisition programs.

The administration's decision to double the funding for grants under the SAFER Act -- Staffing for Adequate Fire and Emergency Response -- which enables fire departments across America to hire new firefighters, from ($)210 million to ($)420 million for fiscal year 2010 is really a big step forward. I appreciate it and I know the fire departments and citizenry around the country will appreciate it as well.

Unfortunately, the administration has also proposed deep cuts in funds for the Assistance to Firefighter Grant Program, commonly known around here as fire grants, which assist local departments particularly in purchasing equipment that's essential for them to perform their jobs safely and effectively. Frankly, I'm at a loss to understand why the administration not only proposed cutting this critical support for first responders but proposed cutting it by nearly 70 percent from $565 million this year to only ($)170 million next year.

I'd like during the question and answer to discuss the FEMA budget which seems to be only a nominal increase and less than I believe will be necessary, and also to discuss the Coast Guard budget. The Coast Guard is really stretched thin today, responsible for carrying out a wide range of both its traditional missions and all the new missions associated with homeland security such as port security. Personally, I believe that an increase in the base force of the Coast Guard is necessary, but the budget request anticipates actually a slight decline in the military work force of the Coast Guard. And I want to discuss that with you as well.

So bottom line, I appreciate the difficult decisions that must be made in every budget cycle overall. I think the department's budget will keep DHS moving forward. But I also think we can and must do more than that.

Senator Collins.

SEN. COLLINS: Thank you, Mr. Chairman.

Welcome, Madame Secretary, to the committee for your first budget hearing.

More than six years after its creation, the Department of Homeland Security has achieved considerable progress. But we also know from this committee's oversight work and from GAO and IG reports that much more needs to be done to integrate, improve and strengthen the department, and that requires adequate resources. With our security at stake, the department's mission of prevention, preparedness, response and recovery must be executed effectively.

As our nation confronts the challenges of terrorism, natural disasters and emerging threats such as cyber attacks and drug cartel violence, I'm disappointed that the administration's fiscal year 2010 budget provides for only a slight overall increase in homeland security funding for DHS. With the additional cuts proposed by the administration for the next four years, the department may be hard- pressed to carry out its vital missions no matter how hard the secretary and the employees of the department work to achieve them.

For example, as the chairman has indicated, critical resources, additional resources are needed to supplement efforts already under way on our Southwest border to combat drug, gun and cash smuggling by the drug cartels in Mexico. As the chairman indicated, he and I included $550 million for additional resources to fight the Mexican drug cartels in the recently passed budget resolution. And I would note that our amendment was adopted without any dissenting votes.

This is significantly more than the president's budget proposes. For example, our budget amendment would provide $260 million to hire and train 1,600 CBP officers and 400 canine teams. These agents and dogs would help combat the cartels' southbound smuggling of guns and cash into Mexico.

Unfortunately, the administration has proposed only 65 additional CBP officers for this purpose. As the chairman has pointed out, when you look at this segment of the president's budget compared to the Lieberman-Collins floor amendment, the difference is 90 percent less in the administration's budget.

I'm concerned that the president's proposed budget could also undermine our state and local partners who are often the first to respond to natural disaster and terrorist threats. While I applaud the funding proposed for our homeland security grant programs, proposed cuts to the Fire Act and the Port Security Grant Program could well deprive first responders and local communities of the resources needed to secure our nation.

Under the administration's proposal, as the chairman has pointed out, Fire Act grants would be cut by 70 percent; they would be slashed. And this is one of the programs that first responders tell me over and over again is the most effective, has the best return on the dollar and has the least bureaucracy associated with it. It's a peer-reviewed program, the dollars are efficiently and effectively spent, and they reach the first responder. This funding deficit could have serious consequences for ensuring that our nation's firefighters get the equipment and the training that they need.

The president's budget also proposes to eliminate funding for the Loran program. This program serves as a backup to the GPS program. The federal government has already invested $160 million in modernizing Loran. Discontinuing the entire program would leave the nation without a backup to the GPS program, wasting millions already spent on this system. And indeed, as I will get into a discussion later with the secretary on, the cost of closing the Loran program out may well approximate or even exceed the cost of upgrading the program, and it leaves us without a critical backup to GPS.

There is, however, some good news in the budget. It's encouraging that the administration recognizes the need to increase funding for cybersecurity, bombing prevention and technological advancements along the Northern border. An effective response to cyber threats will require coordination among several government agencies, law enforcement and the private sector. The additional funding requested in the budget will help DHS assume the leadership position needed on cybersecurity matters.

I also applaud the administration's proposals to increase staffing and resources for the offices of civil rights and civil liberties, the chief procurement officer and the inspector general. In particular, let me applaud the addition of almost 100 procurement personnel. Far too often departments shortchange the acquisition work force, even though understaffing in that area can compromise the ability of the department to carry out a host of missions and mandates. So I applaud the secretary for realizing how important it is to ensure that there's a sufficient number of acquisition specialists to ensure that the $14 billion spent annually by DHS on contracts is invested wisely and the programs are properly overseen.

At a time when budgets are tight, difficult decisions must be made. We cannot, however, underfund our nation's homeland security. So I associate myself with the comments made by the chairman. In fact, I think it is remarkable how similar our concerns are once again. (Laughter.) You would think we had compared notes on our opening statements.

Thank you, Mr. Chairman.

SEN. LIEBERMAN: Thank you, Senator Collins. I did note the similarity in the parts of the budget that we commented on. But I did note a really interesting difference, which is that I started with the parts that I was -- let's see, did I --

SEN. COLLINS: Happy about. (Laughs.)

SEN. LIEBERMAN: -- happy with and ended with the bad news. You started with the bad news and ended with the good news.

SEN. COLLINS: And do you know what? In the previous administration it was exactly the other way. (Laughter.)

SEN. LIEBERMAN: Isn't it odd how that happens? (Laughs.)

SEN. COLLINS: (Laughs) -- to be a remarkable coincidence. But as usual, Mr. Chairman, our bottom line --


SEN. COLLINS: -- is the same.


SEN. COLLINS: You add up the positives and the negatives and we end up at the same place.

SEN. LIEBERMAN: (Laughs.) Okay. All right. Are we entertaining you more than they did in the House today?

SEC. NAPOLITANO: Absolutely.

SEN. LIEBERMAN: Madame Secretary, welcome, and we would be glad to hear from you with an opening statement at this time.

SEC. NAPOLITANO: Well, thank you, Mr. Chairman. And I have a more complete statement for inclusion in the record.

But Chairman Lieberman, Senator Collins, members of the committee, thank you for the opportunity to testify on the Department of Homeland Security portion of President Obama's budget proposal for FY 2010. The proposed total budget for DHS is $55.1 billion, which includes $42.7 billion in appropriated funding.

DHS performs a broad range of activities across a single driving mission: to secure America from the entire range of threats that we face. The department's leadership in the past couple of weeks in response to the H1N1 flu outbreak only proves the breadth of this department's portfolio as well as the need to make DHS a stronger, more effective department.

This budget strengthens our efforts in what I see as the five main mission areas where we need to focus in order to secure the American people: first, guarding against terrorism, the founding purpose and perennial top priority of the department; second, securing our borders, an effort even more urgent as the United States looks to do its part to counter a rise in cartel violence; third, smart and effective enforcement of our immigration laws to facilitate legal immigration and pursue enforcement against those who violate the nation's immigration law; fourth, improving our preparation for, response to and recovery from disasters, not just hurricanes, tornadoes, fires and earthquakes but also unexpected situations like the H1N1 flu; and fifth, unifying the Department of Homeland Security, needing to work together as one department, one DHS, to ensure that we operate at full strength.

There are three cross-cutting approaches that the department is taking to strengthen its performance in each of these five areas and that are also strengthened in this budget: first, expanding partnerships with state, local and tribal governments, the first detectors and the first responders; second, bolstering our science and technology portfolio, investing in new technologies that can increase our capabilities fully cognizant of our efforts also to protect privacy and the individual rights; and third, maximizing efficiency through an efficiency review initiative that we launched in March to ensure that every security dollar is spent in its most effective way.

This budget adheres to the president's major reform goals -- government efficiency, transparency and cohesion -- and will play a major part in bringing about a new culture of responsibility and fiscal discipline at DHS.

The DHS budget request was based on alignment with the department priorities, and programs were assessed based on effectiveness and on risk.

First, in terms of budget priorities, to guard against terrorism the budget proposal includes $121 million to fund research for new technologies that detect explosives in public places and transportation networks; $87 million for new measures to protect critical infrastructure and cyber network from attack; third, systems to enhance information sharing among federal, state, local and tribal law enforcement.

For border security, this budget proposal includes $116 million to deploy additional staff and technology to the Southwest border to disrupt southbound smuggling of drugs and cash and to help combat cartel violence; $40 million for smart security technology funding on the Northern border to expand and integrate surveillance systems.

To ensure smart, effective enforcement of our immigration laws, this budget proposal includes $112 million to strengthen E-Verify to help employers maintain a legal work force; a total of $198 million for the Secure Communities Program, which helps state, local and tribal law enforcement target criminal aliens; and it improves security and facilitates trade and tourism through $145 million for the WHTI Initiative and $344 million for US-VISIT.

To help Americans prepare for, respond to and recover from natural disaster, the budget proposal includes doubling of the funds from 210 to 420 million (dollars) to increase the number of front-line firefighters; a $600 million increase to the Disaster Relief Fund to help individuals and communities affected by disasters; and it strengthens pre-disaster hazard mitigation efforts to reduce injury, loss of life and destruction of property.

To unify the department, this budget proposal includes ($)79 million for the consolidation of DHS headquarters, which will bring 35 disparate offices together, generating significant savings in the long run. It also includes $200 million to consolidate and unify our IT infrastructure and bring all of DHS under the same system -- one DHS.

In my few months as secretary I have seen a number of remarkable accomplishments in addition to challenges. I have seen this department's potential, and I believe we have a path towards realizing it. DHS is aiming to do even better at achieving our security mission. This budget will help the department do just that.

Thank you, Mr. Chairman.

SEN. LIEBERMAN: Thanks very much, Madame Secretary. We're off to a good start.

I think we'll do seven-minute rounds of questions.

As I noted in my opening statement, I was encouraged to see an increase in the budget for fiscal year 2010. I was surprised at the same time to notice that the updated summary tables that the Office of Management and Budgeting (sic) released this week shows the department's discretionary budget decreasing in fiscal year 2011 from 42.7 to 42 billion (dollars) and then would continue to decrease 4(00) to 500 million (dollars) every year for the next three years. Obviously the administration submits a five-year plan.

I was -- I'm concerned about that long-term budget projection because I expect that the needs of the department will increase, not decrease. And I wonder if you have any explanation for that.

SEC. NAPOLITANO: Mr. Chairman, two points: One is, part of that decrease is not a real decrease because the expectation is that there will be fee increases that help fill that gap.

But secondly, I think the charge from President Obama to his Cabinet has been to carry out our missions and to find ways that we can avoid costs and achieve savings while accomplishing the myriad missions that we have. That's why we've instituted an efficiency review process, which I believe will help us finds millions in cost avoidances without affecting mission accomplishment.

SEN. LIEBERMAN: Well, obviously we wish you well as you try to do what -- do all the things that the law and we ask you to do. If you can do it more efficiently, that's great. But we'll watch that. We'll monitor that. That's part of our responsibility to make sure we're not diminishing the effectiveness of the department because we're not funding it enough.

What kind of fees are we contemplating increasing?

SEC. NAPOLITANO: Well, there would be two. One is in the TSA realm and the other will be -- at the end of this year there will be another look at the fees charged through Citizenship and Immigration Services. Those are two areas that I can identify that we will be looking at.

SEN. LIEBERMAN: Okay. We'll keep talking to you about that.

Let me ask you a different kind of question. In the budget process any department head -- no department head gets anything he or she wants. In the -- in our work, several of us are on the Armed Services Committee. The services and the Department of Defense have come up with an interesting device that they actually submit to the committees of Congress called their unfunded priority list -- pretty interesting. And often the committee gives them some of those and maybe takes out some other stuff.

If I had to ask you what your top unfunded priority was in this budget, what would you say?

SEC. NAPOLITANO: Well, Mr. Chair, I think that the budget reflects a good balance of what the department needs moving forward at least in the first full year of my term as secretary. That being said, I think there are a few items that we are going to continue to look at because they are works in progress.

One would be the capitalization of the Coast Guard, for example, where there have been issues in the past about procurement, procurement efficiencies and the like. We want to make sure that those problems have been absolutely corrected and good program management is in place. But those will be some areas that we may want to be looking for in future years.

SEN. LIEBERMAN: Okay. That's helpful, and we'll continue to work with you maybe even this year.

Let me ask about the fire grants. This is a very unusual situation because the SAFER program, which helps local departments hire more firefighters, really has been increased quite significantly. And I support that. The fire grants, which are used usually for purchase of -- they can be used for training, but they're mostly used for purchase of equipment by the fire departments that they'd otherwise not be able to afford, are cut, as we've said, 70 percent. Why? Why the cut?

SEC. NAPOLITANO: Mr. Chairman, a couple of things: One is that there was money in the stimulus package for the fire grants, and so we took that into account. Secondly, over the past years this Congress has funded the fire grants basically at a two-to-one ratio compared to the SAFER grants.

In a way we went the reverse this year, in part because fire departments were telling us that in a time where localities were having to cut back on personnel, they felt that their number one priority was to have the firefighters to wear the equipment and to drive the trucks.

And therefore, there was a change in emphasis for that reason as well.

So the fact that we already had money through the stimulus bill, the fact that that part of firefighting support had been heavily funded over the last years, and the need to actually meet personnel costs now because of the economic situation around the country underlies the request.

SEN. LIEBERMAN: Okay. I hear you. I want to ask you to take another look at the Stimulus Act because I believe the funding in that act for the fire departments was for construction and renovation of the fire department buildings, not for the purchase of equipment, which the fire grants allow them to do.

So I don't -- I think that doesn't make it up. I understand the pressure on the local fire departments in terms of personnel, but it's also great in terms of equipment running out because the budgets of all the fire departments are so personnel-intensive that a lot of them end up operating equipment that is way too old and actually below some of the national standards that they have.

So my guess is there's going to be a lot of interest in these two programs. I mean, I suppose in a sense we've -- (laughs) -- stepped forward from where we tended to be too often under the previous administration, which is that both fire and SAFER were cut, and then members of Congress came along and restored the funding to both of them because there is a lot of support for this.

My time is up. I thank you. And I will yield now to Senator Collins.

SEN. COLLINS: Thank you, Mr. Chairman.

Madame Secretary, the National Security Presidential Directive number 66 established new guidance for the Arctic region. And the directive points out that the United States has broad and fundamental national security interests in the Arctic. And it calls on the United States to, quote, "assert a more active and influential national presence to protect its Arctic interests and to project sea power throughout the region."

Unfortunately, however, the Coast Guard is in danger of losing its polar icebreaking capacity. Both of the Coast Guard's heavy polar icebreakers are nearing the end of their service life. One of the two Polar Stars is actually not operational; it's tied up at a port in Seattle right now. And yet the president's proposed budget would provide no funding for polar icebreakers. More than just trying to reactivate the 33-year-old Polar Star, the Coast Guard really needs to move ahead immediately with the acquisition of two new polar icebreakers.

When Senator McCain and I visited Antarctica in 2006, this was an issue that the National Science Foundation raised with us as well. These two icebreakers are estimated to cost between 1.6 and 2 billion dollars and they will take eight to 10 years to complete. Why isn't there any funding at all to start replacing these two icebreakers when we know this need is acute?

SEC. NAPOLITANO: Thank you, Senator.

In the last fiscal year, money was moved from the National Science Foundation to the Coast Guard for the polar function and there's money in the pipeline there. And then I believe Congress added another ($)33 million for the renovation -- it was either for the Polar Star or for the Polar Sea, one of the two.

So that work is under way now. It was our judgment that for this fiscal year that is the work that should be completed as we really look at a longer-term investment on the polar side for the Coast Guard. So the decision was made that in this year, where budgets are tight and we have to prioritize, that the request for funding for new Polar Star ice capacity would not be requested.

SEN. COLLINS: The problem is that the Coast Guard still requires about $32 million to complete the reactivation. The appropriations bill for DHS for this fiscal year has about ($)30 million, but that's only about half as much as needed. It seems to me we at least need to fund the reactivation of the Polar Star. It's going to take two to three years to do that overhaul to extend the life of the Polar Star for perhaps seven to 10 more years at most.

So I would hope you would work with us. If we can't afford to start on the acquisition of two new Polar Star equivalents, which I think we need to do, we at least need to provide the ($)32.5 million to complete the reactivation of the Polar Star, and I would hope that you would work with us to try to identify that funding, at least.

SEC. NAPOLITANO: We'd be happy to work with you.

SEN. COLLINS: Thank you.

Let me turn to another issue that concerns me. Last December our committee heard testimony from the Commission on the Prevention of Weapons of Mass Destruction, Proliferation and Terrorism, known as the WMD commission, that was headed by our two former colleagues Senator Graham and Senator Talent.

The commission estimated the probability of a WMD attack somewhere in the world by the year 2013 as better than 50 percent, and they found that the greatest threat to be posed by biological terrorism and criticized the efforts in our government to do enough.

In view of this bipartisan, unanimous commission's finding I am surprised that the president's budget request would cut the Office of Health Affairs by 12 percent compared to last year and in particular the vast majority of the cut is to the BioWatch program.

Now, this program is designed to refine technology so that local and state governments can be alerted when a biological agent is found in a public place. I understand there's been some problems with the technology in New York City, but it seems to me that since DHS is continuing to work on a third-generation technology that we should not be cutting the funding for this area.

Could you please explain why, given the findings of the WMD commission, the administration is proposing to cut this important aspect of our defense against biological agents?

SEC. NAPOLITANO: Well, Senator, you're right, the defense against bio WMD is a key component of our future and our existing mission right now, but a couple of points: One is we shouldn't be asking for money when we are not satisfied that what we're buying actually works and works in the way that was intended, and there have been problems with the technology that was being purchased.

And secondly, because they're having problems they're actually -- there's a backup of unspent funds. And so rather than ask for new money we continue to work on the next generation, which will be a more autonomous BioWatch -- as opposed to a requiring a lot of manpower -- system.

That's where we want to get to but we view that we can make those changes and move in that direction without any cessation of our current activities with the budget that we requested.

SEN. COLLINS: Thank you, Mr. Chairman.

SEN. LIEBERMAN: Thank you very much, Senator Collins.

Senator Bennet, you're next, and then Senator McCain.

SENATOR MICHAEL BENNET (D-CO): Thank you, Mr. Chairman.

Thank you, Madame Secretary, for being here today, and I want to thank you and DHS and CDC for your prompt response to the H1N1 virus. Your cooperation and leadership of local law enforcement I think has made an enormous difference to the country, and I appreciate it very much.

I strongly support the increase in funds for addressing violence along the border. We must not only make sure that the violence does not spill over, but it's also important to put an end to the smuggling by drug cartels of illicit drugs that are plaguing communities.

My state of Colorado has been hit very hard by the trafficking and sale of methamphetamines. The epidemic has cost us, say, close to $1.4 billion, and in spite of the best efforts by local law enforcement, we continue to have one of the highest abuse rates in the nation. The largest source of methamphetamine are plants run by these cartels, which then traffic the drug through their affiliates in Colorado cities and towns.

Could you say a word about what's being done to curb the manufacture of methamphetamines in plants that are just across the border, and are there any strategies in place to limit not just the ability of cartels to smuggle in massive quantities but also to produce the illicit drugs in the first place?

SEC. NAPOLITANO: Yes, Senator. One of the key changes that has occurred in the last two years is that the government of Mexico has severely -- first it began limiting the import of ephedrine into the country, which is the precursor chemical that's used in the manufacture of meth. Now they've totally banned the importation of ephedrine into the country of Mexico. We're already seeing an impact on that in terms of the Mexican-produced meth that's there.

Ironically, an issue we have to confront is ephedrine being smuggled from the U.S. into Mexico, manufactured, and then smuggled back. So we're working on the meth issue with local and state law enforcement from both directions in that regard.

SEN. BENNET: So you're saying that the legal importation has been stopped but the illegal -- I don't know if it's importation or exportation -- is still going on?

SEC. NAPOLITANO: Yes. But the fact that the Mexican government itself has banned the importation of ephedrine and has law enforcement efforts in that regard now means the meth manufacturers in Mexico can only rely on ephedrine that's illegally imported. That's having an impact on their production capacity.

SEN. BENNET: Are there other steps the Mexican government's taking to disrupt the manufacture once the -- I mean, if it's illegally being smuggled in, it's still being made there and then coming back here.

SEC. NAPOLITANO: I'm unaware of whether they have a major lab issue or whether, like the United States, most meth is being manufactured in kind of home shops all over the place, which is a different kind of initiative.

I will tell you that we continue to have meth brought over the border. It has not been the drug increasing the most in the last month since I've been secretary. What we've been seeing is coke and a little more heroin, but all of them remain a problem, no doubt.

SEN. BENNET: I wanted to also ask you about the efforts on immigration that are in your budget. DHS is requesting additional appropriations for the naturalizations of military veterans, asylees and refugees, money for immigrant integration, which includes citizen promotion and learning English.

Combining these priorities with the resources put in place to address border violence and you request for additional funds for E- Verify, it appears you're beginning to create some sort of framework for immigration reform.

Would you talk a little about how these initiatives are coming together to address this severe problem of illegal immigration --

SEC. NAPOLITANO: Senator, what we are working on in terms of our budget is a framework that facilitates legal immigration under the existing law. You mentioned the naturalization of military. We have now naturalized over 45,000 members of the military since Operation Iraqi Freedom began. That's a very vigorous program for us and it's a great one.

Facilitate the legal but really help employers comply with the law on the work site, which means having access to something like E- Verify, and then continuing smart and effective enforcement, which has meant making some changes in terms of what we are requesting, primarily in the CBP budget.

SEN. BENNET: Thank you, Mr. Chairman.

Thank you.

SEN. LIEBERMAN: Thanks very much, Senator Bennet.

Senator McCain, welcome.

SEN. JOHN MCCAIN (R-AZ): Thank you, Mr. Chairman.

Welcome back, Madame Secretary. I'd follow up on Senator Bennet's comments. I notice you do have a number of increases in funding on a broad range of issues concerning immigration and I'm certainly glad to see that.

On the E-Verify issue, what needs to be done to make it more effective? I see where you're asking for $112 million. What is it that from a technical standpoint needs to be improved?

SEC. NAPOLITANO: Senator, what we are doing is improving the integrity of the database and also the kinds of data improved, and also the ease with which the data is searched, and also adding capacity for more and more employers to be on the system simultaneous.

SEN. MCCAIN: Would it be a good idea to require federal contractors to use E-Verify?

SEC. NAPOLITANO: It's certainly something that the administration has under consideration. It was something I did at the state level as governor.

SEN. MCCAIN: And probably the pushback by these contractors is that we're not able to implement E-Verify. I'm sure you got that when you were governor.

SEC. NAPOLITANO: There were issues raised about E-Verify, which is all the more reason you want to marry those proposals together to say look, we're going to require that you use it but we're going to keep building and improving the E-Verify system.

SEN. MCCAIN: Now, you have announced that you're going to go after employers, quote -- probably in more pleasant language than that, but basically that that's what you're going to do. What do you say the employer that says look, that person came to me with a Social Security card that seemed fine, birth certificate that seemed fine? What's our response to that person as we go after employers who have hired someone illegally?

SEC. NAPOLITANO: Well, the federal law, Senator, requires that if we are going to prosecute an employer, we have to prove that he knowingly hired an illegal. And if he's relied on a forged document that's a good forgery and doesn't have a pattern of doing that, has a good I-9 process for hiring, uses E-Verify, he's doing everything that he can to comply with the law. You're not going to be able to prove to a jury that he knowingly violated the immigration law.

On the other hand, if you do not start these cases with the idea of exploring what the employer knew and when he knew it, you will never make the case and the change in emphasis that we are undergoing in the department is to say in addition to the employees, who are pretty easy to pick up, in a way, you've got to spend some attention ascertaining whether you actually have a provable case against the employer.

SEN. MCCAIN: So it might not be a bad idea, using the rationale of a federal contractor, to start enforcing, at least, demanding use of E-Verify.

Isn't it true that illegal immigration into the United States in general has dropped off and in particular across the Arizona border?

SEC. NAPOLITANO: That is true.

SEN. MCCAIN: Do you account that for better enforcement or the economic situation or a combination of both?

SEC. NAPOLITANO: Probably a combination.

That means, however, that in this period where we don't have the job demand on this side, the economic incentive is not quite as large as it was, it's a great time for us to keep on with our enforcement efforts and keep building that infrastructure that we need.

SEN. MCCAIN: I don't mean to sound parochial, but at what point do you think we would have a fence/virtual fence across the Arizona- Mexico border? Have you got a -- I know that there's a virtual fence being constructed in some of the unpopulated areas of our border as well. Do you have any estimate as to when that might have been completed, both the fence and the virtual fence?

SEC. NAPOLITANO: I'll get back to you on that, Senator. We have just okayed the first actual implementation of the first phase of the virtual fence. As you know, there were a lot of problems with the initial construct, et cetera, et cetera. Those have been worked out. It's now going into place and we're now beginning to schedule the second phase -- the first phase down in the Tucson sector, the second phase a little to the west of there.

Let me not give you a firm date on the whole thing, but it is clearly in process now.

SEN. MCCAIN: Has the Department of Justice agreed to cooperate on prosecution of individuals that -- or employers that as this, quote, "crackdown on employers" associated with that?

SEC. NAPOLITANO: The attorney general and I have had several express discussions about the need to follow up and the ability to get search warrants and the like from the U.S. attorneys' offices, so yes.

SEN. MCCAIN: Have you got an assessment on the level of violence across the border? Is it getting better, worse? How's the Mexican government doing, and what more do we need to do to cooperate with them?

SEC. NAPOLITANO: We are having regular phone conference calls with sheriffs and police chiefs in the border communities themselves, and what they tell me is that their level of violence is pretty good -- pretty good in the sense of --

SEN. MCCAIN: There's some improvement or decrease?

SEC. NAPOLITANO: Their decrease. That being said, there was some open press today that they are now starting to see an uptick in homicides back in Juarez, which had been really on the severe downslide after they put the military in there. So I'm concerned about that.

We need to do a couple things: one is sustain the commitment we've already made along the border; two is complete our agreements with Mexican law enforcement, for example, on sharing inspections on the southbound lanes; three is facilitate the Merida Initiative, getting resources to the Mexican government.

SEN. MCCAIN: Do you think that this decrease in violence is attributed to effectiveness of the Mexican government and our level of cooperation, or do you think maybe the cartels are consolidating power, or both? Or it's hard to tell at this stage?

SEC. NAPOLITANO: I think it's too soon to tell, and that's why I keep saying we need to sustain what we are doing, because if what we are doing is only several months -- they'll just wait us out. These cartels have been around for a long time. This has to be a long-term initiative of the United States.

SEN. MCCAIN: Finally, Mr. Chairman, could I just say that I know that Secretary Napolitano met with a number of our veterans' representatives and sort of cleared the air on the issue of our respect and appreciation for our veterans.

I thank you for doing that, Madame Secretary.

SEC. NAPOLITANO: Thank you, Senator.

SEN. LIEBERMAN: Thanks for pointing that out, Senator McCain. I agree with you. I heard good reports after that meeting.

Senator Landrieu.

SEN. MARY L. LANDRIEU (D-LA): Thank you, Mr. Chairman.

Madame Secretary, thank you for honoring your commitment to come early in your term down to the Gulf Coast and to tour with me and others still the recovery that is, as you know, well under way. With your help and support we can move it even faster, so thank you.

I also note in the budget, Mr. Chairman, the continued funding, it's very small but significant, for the Office of Gulf Coast Recovery through the next year. We're hoping that that can be stepped up to be stronger in its coordination of the federal agencies and look to you for your advice as to how to carry that on in the future.

Also, I want to make note in this presentation the I think rather significant increase in disaster mitigation grants that it's, you know, to be penny wise, sometimes, and pound foolish when we don't put money on the front end to try to avoid the disasters and the expensive recovery.

So I wanted to note that, and I just have three questions, quickly.

One, Madame Secretary, as you know, we have allocated about $7.5 billion in the Gulf Coast for recovery from a major disaster and project work order sheets. That's a tremendous amount of money. We still have about 3.5 we're in the process of processing.

Because we've had a great number of difficulties, as the chairman and ranking member can understand, between the FEMA and local officials arguing over or disputing actually the value of what the library actually costs to rebuild or the fire station, the police station, which slows it down to expedite it, we've tried and I have put language in to set up some sort of independent arbitration panel.

Could you give me an update about your views of that and how that could be used not just to help our situation but how it could be used in the future to perhaps expedite some of the rebuilding that goes on after a disaster, which Homeland Security has some -- not all, but some -- responsibility towards?

SEC. NAPOLITANO: Yes, Senator.


SEC. NAPOLITANO: Yeah. First of all, it is our goal at the department to facilitate the long-term recovery and the resolution of as many public assistance grants as we can without having to use an arbitration panel. And one of the things that's happened since my visit to the Gulf Coast is we were able to make some decisions on some matters that were holding up lots of grants because they had applicability in a lot of different factual circumstances.

SEN. LANDRIEU: And we appreciate that.

SEC. NAPOLITANO: And so by resolving a few key things, we're now -- there's a lot of movement and working with the people in Louisiana to get that money out the door and into the ground, where it's supposed to be.

With respect to the arbitration process itself, there will be some things that need to be arbitrated. There are just plain differences between what we believe FEMA and taxpayers in general should be responsible for versus what the claimants view, and those need to be arbitrated and done effectively and expeditiously.

I don't know if the language of the actual arbitration has been finalized, but if not, it's any minute now because the lawyers have all had a chance to go at it. In my view, one thing that we are now learning from Katrina is we have, you know, preparation. We have a National Response Framework, which is kind of the immediate response to disaster, but we don't have the equivalent for our recovery framework, the more long-term issues that are much more cross-agency and really are about restoring community to where it was.

I think that this use of the mechanisms you have now put in place to work on this long-term recovery for Katrina give us an ideal way to test some of these thoughts and build into a national recovery framework that, assuming things are going well and it makes sense and people feel they've had their day in court, in a way, would give us a better situation then we now have for long-term recovery issues.

SEN. LANDRIEU: Well, I appreciate that. And thank you very much because that will be very helpful.

The other recovery issue -- I'm sure that you're familiar with this V-zone issue --


SEN. LANDRIEU: -- that is affecting Florida, Louisiana, Texas, some of the other coastal states. But the idea is obviously it makes sense not to rebuild in areas that are low-lying or subject to flood. Makes sense, we all agree with it.

The problem is some of these communities, particularly in our state -- Cameron Parish; South Cameron, that comes to mind; Grand Isle -- these are communities, historic communities. They've been here for hundreds of years. They're viable. They're not vacation beach places. They are maritime port, et cetera.

How are we making progress, I hope, in coming to some resolution on building safely in V-zones so we can get post offices, hospitals and schools and we're not asking these communities to function without the framework necessary for them to function?

SEC. NAPOLITANO: That is a very complicated question and it has applicability in lots of areas around the country.

From what I saw, Senator --

SEN. LANDRIEU: And not just coastal areas. Let me correct myself. It's not just coastal areas, it's many areas throughout the country.

SEC. NAPOLITANO: That's why viewing it through the lens of Katrina doesn't give one the total sense of what it is we're talking about, which is what we're now trying to put a framework around.

So let me talk first about in the Katrina area there were certain projects that were approved. People relied on that approval, made investments based on that approval, and then several years later new V-zone maps came out and all of a sudden FEMA was basically saying give us our money back. I think we have now fixed that situation for those areas or we are in the process of fixing that.

With respect to the larger question now is what do we do as a country to pay for rebuilding in now a designated high-flood area, and there we are continuing to work with you, your staff and the committee. I don't think we have come to a final resolution on that.

SEN. LANDRIEU: Okay. Well, I would just suggest in my 16 seconds remaining that there are models that we can find in other countries, Mr. Chairman, in Japan that has storm surge issues; in The Netherlands, that 60 percent of their country below sea level, that there are ways to think and engineer based on good science and smart sustainability models where you can build safely in these areas.

You can't build the regular way, but you can build in new ways, safely, and we might want to look at some of these international models, which is why I'm proud to be leading a delegation to The Netherlands with the blessing of the administration to look at some of these models so that we can have good plans and ideas for the future.

And I thank you very much.

SEN. LIEBERMAN: Thank you, Senator Landrieu. I'm glad you're going to explore that and the committee will await your report.

Senator Carper. Yes.


Thanks, Mr. Chairman.

Governor, how you doing?

SEC. NAPOLITANO: Good, thank you.

SEN. CARPER: How many years were you governor, six?

SEC. NAPOLITANO: A little over six, yes.

SEN. CARPER: Six years, two months, seven days, three hours.

SEC. NAPOLITANO: Just about. It was a great job. Loved it.

SEN. CARPER: It was a great job. As governor, you were required to put together and submit to your legislature each year an operating budget, a capital budget, I presume. In terms of your involvement as the chief executive of your state and your involvement as the secretary of this department, compare and contrast the roles that you played in each of them in terms of submitting a budget preparing (agenda ?) for this department. And how is your job in this role informed by what you did before?

SEC. NAPOLITANO: It's incredibly informed, because the budget is the basic operating document that the governor takes to the legislature and works from, and it is where you actually see whether statements translate into action.

I was very involved in the budget process in Arizona as governor in terms of drafting the executive budget, going through the agency budgets, meeting with the directors and making those recommendations to the legislature. We did not have legislative hearings where I was called on to testify on the budget when it was submitted. This is a new thing for me.

SEN. CARPER: But I presume your Cabinet secretaries were.

SEC. NAPOLITANO: Yes, they were. They were the ones who went.

SEN. CARPER: Did you have an operating and a capital budget?

SEC. NAPOLITANO: No, we did not. They were melded.

SEN. CARPER: Kind of like they are here.

SEC. NAPOLITANO: A little bit, yes. Obviously, different issues, a different history in terms of why certain accounts look the way they do and monies look the way they do. When I took office, Senator, I spent a good part of my first two weeks -- I think we booked about 20 hours just doing budget meetings within the component so I could get a handle on what was there.

SEN. CARPER: Was this right after you were confirmed, or before?

SEC. NAPOLITANO: Right after. And then was able to make some changes in the proposal, albeit in a transition year you're really building from a budget that was written by the administration before you as opposed to a totally new budget.

SEN. CARPER: But you feel you had an opportunity to put your imprint on it?


SEN. CARPER: All right. You've been in that office now for what, three months, roughly?

SEC. NAPOLITANO: One day less than President Obama.

SEN. CARPER: All right. In terms of what you know now, in terms of priorities, where you need money, where you don't need money, anything that you've learned that would allow you to suggest to us some different allocation, however modest, but a different allocation of funding than what we have seen presented to us?

SEC. NAPOLITANO: No. I did mention one item at the outset to Senator Lieberman and Senator Collins; they asked me about things that were not in the budget to the full extent that they possibly were needed and I talked with them about that.

But one area that is not dramatic, it's not bumper sticker-like but I believe for a new department is very important, and that is we need the acquisition, procurement, program management infrastructure.

We're uniting 22 different agencies. That part was probably underdone when the department was formed.

When you look at the 700 or so outstanding GAO issues about the department, probably half of them involve procurement or program management in one form or another. I believe now is the time, after six some-odd years, to begin building that administrative skeleton for the department because we now see what we need to have.

And so there is money in the budget for that, but it is too loosely characterized as administrative overhead. What it really is is giving us the administrative oomph to run this department effectively and efficiently.

SEN. CARPER: I understand some others may have gotten into this, but in terms of funding for, like, port security, transit security, I understand that just in looking at the numbers, you look at the numbers and you say, well, they reduced the spending request for 2010 well below what was appropriated in 2009, but I understand in the Recovery Act stimulus package there was actually money included that basically provides for what is effectively level funding. Is that a fair statement?

SEC. NAPOLITANO: That is correct. The Stimulus Act basically acted as a way to speed up the disposition and the money, which hopefully will translate into faster jobs.

SEN. CARPER: And help me on the -- there's a number of federal programs that we fund to support the work of first responders and firefighters, and there seems to be a change, just looking at the numbers roughly -- there seems some change in the allocation of funding. Would you just explain that for me? What have you all done here? And just explain to me why it's the right thing to do. And I think you've touched on this already, but --

SEC. NAPOLITANO: Right. Chairman Lieberman was very interested in this.

SEN. CARPER: I'm not surprised.

SEC. NAPOLITANO: What the budget does is it reduces the so- called SAFER grant amount, although there was money in the stimulus bill for SAFERs for fire stations, not for equipment, as you noted, and then doubles the grant funding for the program out of which we actually hire the firefighters themselves.

That was done out of a recognition that the SAFER grants had been heavily funded in prior years, about two to one equipment to personnel, and the request by local governments, which are under really bad budget pressures, that they really wanted money for the actual personnel for the next year or two and that's where they wanted us to put our emphasis, and that's what the budget does.

SEN. CARPER: All right, thank you. A question -- this regards the issue of your space. I understand your folks are going to be in the old St. Elizabeth Hospital grounds, is that where?

SEC. NAPOLITANO: That's the plan, yes.

SEN. CARPER: All right. And when will that likely happen?

SEC. NAPOLITANO: 2012, I believe, maybe Coast Guard going in as early as the latter part of 2011. And in the stimulus bill, there was included $650 million to speed that process along as well.

SEN. CARPER: Yeah. Can you just take a moment and explain how your department's budget plan relates, I guess, to non-St. Elizabeth's consolidation? (Off mike.)

SEC. NAPOLITANO: Right. What we have proposed is some millions to allow us to go ahead and consolidate from 35 some-odd locales within the district to seven or eight right now, and I will share with you, and I think you can appreciate how difficult it is to manage when everybody is so spread out all over the place.

And we believe that we can achieve cost efficiencies and better management by doing that now, including moving some of our folks out of one or two buildings that are just simply awful places to work in which we shouldn't put employees as a working environment while we wait for the St. E's project to be completed.

SEN. CARPER: All right, fair enough.

The last question I have is in terms of the requests you've asked for us other than to support your budget for your department, what else can we do to help you?

SEC. NAPOLITANO: I have found this committee very helpful, and like I said, I think we have a very good, strong relationship and I have no fear of coming to you when I need help on something.

SEN. CARPER: Some of your colleagues in the Cabinet are finding it difficult to get the senators to expeditiously act on nominations. Is that a concern for you?

SEC. NAPOLITANO: We do have a few nominations pending -- Rand Beers, for example, as a potential undersecretary; a few others that if we could move them through before the Memorial Day recess would be helpful. But you've been very fair so far in moving nominees forward.

SEN. CARPER: All right, good. Thanks so much. Good luck.


SEN. LIEBERMAN: Thanks, Senator Carper.

We're going to work hard, as you know. We try to move the nominations as soon as we can. I know there were some questions about Rand Beers, but we'll move as quickly as we can.

Senator Carper, in the wonderful way he always begins his questioning, asked you how long you'd been governor, so I feel obliged to ask you how long you were attorney general before you were governor.

SEC. NAPOLITANO: Only one term, four years, but I was the U.S. attorney for over four years before then.

SEN. LIEBERMAN: Yeah. But is it fair to say you enjoyed your time as attorney general at least as much as the time you were governor?

SEC. NAPOLITANO: Oh, Senator, it would be so hard to distinguish between the two. (Laughter.)

SEN. COLLINS: Let the record say that she rolled her eyes. (Laughter.)

SEN. CARPER: Mr. Chairman, whenever I talk to governors that are thinking of running for the Senate and they say, "What's it like?" And I tell them, I say, "My worst day as governor of Delaware was better than my best day in the United States Senate." (Laughter.) That's not true. That's not true. But whenever I'm trying to dissuade people from running, that's what I say. (Laughs.)

SEN. LIEBERMAN: Okay. I always look forward to the beginning of your questionings. They're always very personal.

SEN. CARPER: A lot of times, people look forward to the end of my questioning as well.

SEN. LIEBERMAN: Thank you.

Senator McCaskill.

SEN. CLAIRE MCCASKILL (D-MO): Thank you, Mr. Chairman.

First let me compliment you, Secretary Napolitano, on the new employer enforcement policy that you announced. It was incredibly timely. It happened quickly. It is an example of you getting it, that we have to put some resources into the investigation of those who have knowingly and purposefully violated the law continually as it relates to the hiring of illegal immigrants. And so I want to compliment you first.

Second, I do want to be sensitive to the fact that it's like you've been there 10 minutes and you've got major problems you're trying to solve.

So understanding that I don't expect you to move a mountain in that 10 minutes I do want to ask you today if you can tell me how many federal employees work in the department?

SEC. NAPOLITANO: It's roughly 208,000.

SEN. MCCASKILL: And can you tell me how many contractors work in the department?

SEC. NAPOLITANO: I don't have that number right now, but I can tell you that we have embarked on work to really re-look at how many contractors are being used compared to FTE, because as you know, when the department was stood up it was done so quickly that they really had to use contractors to get mission done.

We're now beyond that. We really need to be looking at what does the Congress need to appropriate to a department to carry out all the missions that it needs from an FTE basis.

SEN. MCCASKILL: Do you have any idea how many contractors are there? I mean, even ballpark?

SEC. NAPOLITANO: I don't even want to ballpark it right now.


SEC. NAPOLITANO: That's how many there are.

SEN. MCCASKILL: Well, I would like to get a ballpark as quickly as we could, because we need to have some benchmarks here. If we don't figure out what we started with, then I won't be able to give you as much credit as you deserve -- (laughter) -- as you begin to fix the problem.

So to the extent that you can run down how many are there, we -- it took us, believe it or not, months to figure out how many contractors we had in Iraq. Now, there were challenges with that also, but this has to be easier than Iraq in figuring out how many contractors we have. And so I'm looking forward to you giving me a number so we can then continually bug you about this.

And in that light, I'm curious about as you request things in this budget, were you focused on asking for the FTEs you need? I think one of the things that's happened is that I think that over the last eight years, unfortunately, in too many cases, it was, well, we don't have to ask for FTEs if we hire contractors.

It's like the secret growth of government. We don't have to own up to the fact that government size has exploded because it's all being done through contracts. And so I want to ask, have you in this budget for the increases you've sought, have you sought any increases in contractor personnel or have you asked for the slots to hire federal employees to do this work?

SEC. NAPOLITANO: No, Senator. I think that's a project that will be more fully reflected in the FY '11 budget request, which will be really the first full-year budget that I'll have had my hand in.

SEN. MCCASKILL: Okay. Let me ask about the acquisition reform. I notice that you've done the increases in work force intern program, which is terrific. You've done some selective acquisition transaction increases in program management policy.

I'm curious about whether or not you've begun to look at the GAO report that came out in November of 2008 that cited DHS and the contract procurement officer particularly for not having any kind of goals, performance review goals, as it relates to acquisition. Are your folks -- I mean, are you on it, so to speak?


SEN. MCCASKILL: Okay. Because I think having those, it's like knowing how many there are. You know, if you don't know what you're striving for, I think it's really hard, particularly for an agency as large as yours, to get there.

Really, the last thing I want to talk to you about today was about your senior career executive attrition. From 2004 to 2007 you lost 70 percent of your senior career executives, and according to the Partnership for Public Service there were no exit interviews, which is mind-boggling to me that you would watch senior career executives walk out the door in those kind of numbers without anybody saying, wait a minute, wait a minute, we need to know why you're leaving.

Could you share with the committee what plans you might have as it relates to assessing what the problems may be in the workplace that would cause that kind of loss of senior career people?

SEC. NAPOLITANO: One of the areas that we really are taking a look at is what we can do to create one DHS, as I said in my opening statement, a set of career paths within the department, improve morale where morale needs to be improved within the department, and how do we improve the personnel practices across the department?

Intake, outtake, exit interviews, all of that as part of that process; all of those are the kinds of administrative things that were not built into the department in its early days but now need to be put in place.

One of the things I will tell you, Senator, is how overall I've been so impressed with the men and women I have met at this department. By and large they joined it -- many of them joined right after 9/11, out of that, but others have continued to come in. This is a very devoted group of federal employees. We want to keep training them, we want to give them a career path and we want to keep them, so that's what we're looking to build.


Thank you, Mr. Chairman.

SEN. LIEBERMAN: Thanks very much, Senator McCaskill. Good line of questioning.

Senator Akaka, welcome back. You were with us this morning; you're with us this afternoon; lord knows where we'll be this evening.

SEN. DANIEL K. AKAKA (D-HI): Yeah. Well, we'll see.

SEN. LIEBERMAN: (Laughs.) We'll see, but thanks for being here.

SEN. AKAKA: Thank you very much, Mr. Chairman and our ranking member, Senator Collins. Good to be back with you.

And Secretary Napolitano, I would compliment you on what you've been doing and to tell you you look good at this time, even after the 100 days.


SEN. AKAKA: But from what I've read you've been doing well. Personally, I'm pleased with some of the things that you are doing.

At your confirmation hearing I urged you to focus on the department's management challenges, and I'm pleased to see that the president's proposed fiscal year 2010 budget reflects greater attention to management. This includes additional resources for the undersecretary of management's operations, which supports the human capital planning and contract management, among other tasks, and also increased the funding for the inspector general to enhance oversight efforts, and investments in management will no question help improve the efficiency and effectiveness of the integration of DHS and I'm pleased about that.

With respect to the contract management, I want to highlight the request for additional funding to recruit and train more acquisition personnel and increased funding for the oversight arm of the Office of the Chief Procurement Officer. However, with this additional funding the department would review less than half of major acquisition programs each year.

My question is should all major acquisition programs be reviewed annually to ensure proper management and combat waste? And if you do that, how much annual funding would be necessary for such an annual review?

SEC. NAPOLITANO: Senator, let me follow up with you on that but let me just say funding -- the review process is fairly formal and extensive.

That's a little different than oversight on a day-to-day basis, which obviously you have to do for everything that the department is doing. But that's certainly something we can get back to you on.

SEN. AKAKA: Thank you for that, Secretary.

I would like to discuss the DHS budget request for the conversion of many contractor positions back to civil service positions as well, and Senator McCaskill touched on contractors.

I believe that DHS currently relies, my belief, relies too heavily on contractors and uses them for tasks that should be done by government employees. This may have been necessary to help the department start up as it did, but now, DHS must develop an internal capacity to perform its ongoing programs.

How is DHS identifying positions for in-sourcing, and how many positions does DHS plan to in-source?

SEC. NAPOLITANO: Senator, I think that that is a process that we are just beginning to get under way and will probably be more fully reflected in the 2011 budget as we have a chance to really drill down in these departments and really know what's been contracted out or not and how many FTE it would take to bring it in-house and the like.

But that is something that we have begun. We've put the wheels in motion to really look at that. It is not the easiest process in the world, but we need to get it started, and we have.

SEN. AKAKA: Yes, I'm glad you're working on it, and I was concerned about how much more it's going to cost if you do that.

In the 2010 budget request, DHS S&T's university programs would receive over $4 million less than was enacted in fiscal year 2009. Among these university programs are the DHS's centers of excellence. These centers allow for research and concepts that help improve our homeland security. My question is, why has DHS decided to reduce funding levels to these centers?

SEC. NAPOLITANO: Again, that's something I will give you more detail on. But I think the thinking was that there was unspent money in prior years that could just be pushed forward so that the budget request is really kind of a steady funding request. It's not an increase, but it's not really a decrease either.

SEN. AKAKA: The total funding proposed for emergency management performance grants is $315 million for fiscal year 2010, the same funding level as the past two years. However, state emergency managers have said that they need at least $480 million in funding to meet their needs.

Again, this question: Why did the department determine that funding should remain flat for this program?

SEC. NAPOLITANO: Senator, I think our view was, in looking at cost to capability, in looking at risk, that this was a fair and balanced number to request of you at this point in time.

SEN. AKAKA: Secretary Napolitano, I'm pleased that the department is requesting an increase of $60 million for pre-disaster mitigation grants. I also see that you propose administering these grants under the operations management and administration account.

Beyond the increase in funding, what impact do you expect this transition will have on the effectiveness of DHS's pre-disaster mitigation efforts?

SEC. NAPOLITANO: I think, Senator, what I would hope to see is, in part because there will be money available, that will itself incentivize more thinking at the local level about what they should be doing in terms of pre-disaster mitigation, which has all kinds of ramifications, zoning decisions and the like, at the local level.

So ($)60 million spread across a whole country, it's a big number outside this room. Inside this room we know it's a small number, but as an incentive number I think it can be very helpful for us.

SEN. AKAKA: Thank you very much. Again, I'm pleased at what you're doing, and from your responses, you're working on some of those important issues and I wish you well.

SEC. NAPOLITANO: Thank you, sir.

SEN. AKAKA: Thank you, Mr. Chairman.

SEN. LIEBERMAN: Thank you, Senator Akaka.

Madame Secretary, I think Senator Collins and I have a few more questions. I know you've had a long day, but you're doing well.

SEC. NAPOLITANO: We're in there.

SEN. LIEBERMAN: You're in there. (Laughter.) I must say, I'm impressed by your ability to respond to the questions in some detail after having been on the job for just over 100 days, so I appreciate that.

Let me take you back to where we were the last time, I believe the last time we met, which was on the H1N1 flu; ask you a question off the budget and then one on.

Just generally, it seems to me that both in the media and in our lives we've stepped back from the high anxiety, and yet as we read the numbers that come out, the confirmed cases are going up. It's certainly happening in Connecticut and it's happening nationally.

So how would you describe where we are at this point in terms of the H1N1 flu? Is it an epidemic? Where are we going from here?

SEC. NAPOLITANO: Yes, Mr. Chairman. Yeah, we continue to see the number of confirmed cases go up. That's partially because the CDC has now got diagnosis tests distributed across the country, so now it's much easier to do a swab and do a confirmed case quickly for this strain of flu than at the initiation of the outbreak.

So we anticipate we will see numbers continue to rise. We anticipate that we will see some more deaths out of this flu.

You're right that the media attention and kind of what was going on a few weeks ago has dissipated, but I have directed our operations center to put forward a plan on what we need to be doing over the course of the summer across the federal government and with state and local school districts and others to really think through what our national response is going to be if this flu comes back in a more virulent form in the fall. And we will be working particularly with the CDC and the secretary of HHS and also with the White House on that, but we're in full kind of re-looking at what planning had been done before, what lessons we'd learned over those two weeks, and working now across all of those areas to prepare as much as we can for what may happen in the fall.

SEN. LIEBERMAN: Good, that's reassuring. And I take it the folks at CDC and the people that they're working with are still going full force ahead on trying to create a back scene, should we need it?

SEC. NAPOLITANO: That's correct.

SEN. LIEBERMAN: The president indicated at one point a few weeks ago that he'd be asking for $1.5 billion to deal with this potential flu outbreak -- the outbreak and potential endemic or a pandemic. That's obviously not reflected in this budget, but do you have any idea about how that money will be divided among the agencies?


SEN. LIEBERMAN: Yeah. I've forgotten for the moment whether it was requested by the president as -- it will be part of the supplemental?

SEC. NAPOLITANO: Yes, that's correct.

SEN. LIEBERMAN: Yeah, that's what I thought. Yeah, okay.

Somewhat related, the budget makes an interesting move and I don't know to what extent you were involved in it. It proposes moving all the remaining balances, approximately $1.5 billion, in the Department of Homeland Security's BioShield special reserve fund from DHS to the Department of Health and Human Services.

This is the fund from which we purchase biodefense countermeasures against some of the most troubling potential biological agents that the secretary of the Department of Homeland Security has determined could cause a public health emergency.

So this has been a program in which DHS -- the Department of Homeland Security -- and the Department of Health and Human Services have worked together, and I wonder if you could just, if you've been involved in this, indicate to -- tell us what's the thinking behind this. My concern here is that you're the Homeland Security secretary; this is the Homeland Security department. Obviously preparing to defend against a potential biological weapon is your primary responsibility as compared to other departments. I'm concerned that in this move of the money that DHS may end up playing a lesser role than I think we would like it to. So tell me what went into the decision and how you feel about the continuing role of your department in biodefense.

SEC. NAPOLITANO: This was a recommendation that came to me that I agreed with, the thinking being that this was never a complete move from HHS to DHS to begin with and there was a lot of confusion of roles, that this was really something that was an HHS primary level, which is the identification and purchase of, distribution of various antivirals or other types of medications, which is kind of what they're doing now for the H1N1.

I mean, they will have the lead in making decisions about vaccine and distribution of vaccine and the like. We retain the lead in making decisions about prevention of bio WMD, things that detect weapons of bio WMD and the like. This is really the public health side of what happens if something were to occur.

And given that by and large the medical expertise for that resides within HHS, it was my view and I think supported in both departments that this was a migration to the department that would be better served migrating back.

SEN. LIEBERMAN: So are you confident that the Homeland Security perspective will be maintained if this BioShield fund is no longer at DHS? Are there any understandings you've got with HHS about how that will happen?

SEC. NAPOLITANO: We don't have them in writing. We certainly have them and we can confirm them. Obviously, HHS understands as well the role that DHS needs to play, and I will share with you, H1N1 also being an example, we really worked hand in glove together on that. I think that model will continue.

SEN. LIEBERMAN: Okay, thank you.

Senator Collins.

SEN. COLLINS: Thank you, Mr. Chairman.

Last week, the GAO issued a report that raised serious concerns regarding the reliability of the GPS network and the report is alarming in many ways. GAO said that it's uncertain whether the Air Force will be able to acquire new satellites in time to maintain current GPS service without interruption, and GAO goes on to warn that if not, that some military operations and civilian uses would be adversely affected.

It's ironic that this alarming report by the GAO was released the same day that the administration's budget was released, which calls for the elimination of the Loran-C, which is the network foundation for eLoran, the leading proposed backup for GPS.

Now, the Department of Homeland Security and the Department of Transportation established an independent assessment team to look at eLoran and to look at what should be the appropriate backup for the GPS system, and the team found that eLoran could be deployed nationwide with an additional investment of $143 million. There's already been about ($)160 million invested in the modernization over the past 10 years.

It's going to cost approximately $146 million to decommission the existing Loran-C infrastructure. So for approximately the same amount of money, you could go to the deployment of the eLoran system and avoid the disruption that could occur because we're proceeding without a backup to GPS.

And again, the independent assessments team's recommendations were unanimous, and they recommended that the government should complete the eLoran upgrade. It doesn't make sense to me that DHS is recommending the decommissioning of the Loran-C system when the same amount of money -- in fact, a little less -- could be used to get us to the upgraded eLoran system when we know that we need a backup to GPS.

Could you explain to me why the department is proposing terminating this system rather than using the same amount of money to invest in the upgraded Loran system, which is needed as a backup for GPS?

SEC. NAPOLITANO: Yes, Senator. First, there's uniform agreement that Loran-C, the existing system, is out of date, antiquated and not sustainable in its current form. The view in the budget itself that was put forward was that the model, the paradigm being used of having one backup system for GPS was not the better way to go, that you needed to have a lot of different things that overlapped and different kind of fail safes as opposed to two systems, one being the full backup for the other, because from a prevention and protection standpoint it would be better to have multiple smaller systems as opposed to one uniform backup system, which is what eLoran is designed to be.

I'm happy to have someone from the Coast Guard come give you a technical briefing on that, but that was the recommendation that "underlied" the budget request.

SEN. COLLINS: But when I talked to the Coast Guard about this issue and I asked the question what is the backup going to be, there's not an answer to that. And in fact, while there is agreement that Loran-C is outmoded, there's also unanimous agreement that we need to proceed with eLoran, with the notable exception of whoever put together the budget at DHS.

But if you look at the public comments that were taken on this issue, they overwhelmingly point to the value of a Loran-based system that is modernized and upgraded. And again, the DHS' own assessment team, which worked with DOT, was unanimous and unambiguous in supporting the transition to eLoran.

My concern is that the administration is really putting the cart before the horse here. You're terminating the old system before you have a new system in place, and the GAO's report is alarming as far as the consequences of not having a backup to GPS, given the Air Force's problems in launching satellites, one of which is three years behind schedule and way over budget.

SEC. NAPOLITANO: Well, Senator, first of all, I think again, as on so many of these things, there is money to sustain things through F '10 as we look at the transition, but again, there is disagreement about what really should be the replacement there. And what I would look forward to doing over the next weeks is really working with you and your staff on that.

SEN. COLLINS: I look forward to doing so. I think if you look at the independent assessment team and this report and the public comments, you won't see much disagreement on the direction we should go in.

Mr. Chairman, I know time is running out. Let me just say that I'm going to submit two questions for the record. One is on the interagency operations centers that were established by the SAFE Port Act. The law which we wrote requires there to be centers at all the high-priority ports no later than October of 2009.

The chairman and I both wrote to the budget committee in support of full funding, which is ($)60 million. The Coast Guard has a spend plan which it can't implement because there's no money. And so my question, and you're lucky I'm only going to ask this for the record, is how are you going to meet the legislative mandate of the SAFE Port Act with regard to these centers at high-priority ports when you're zeroing out the funding?

And the second issue that I'm going to raise for the record has to do with a system called by the terrible name of Transformation and Systems Consolidation Initiative. Basically it's to bring all the financial systems of all the components of the department so that they're operating on common platforms using commercially available software.

The department's gone down this road before with the (Emerge2 ?) project, which spent $52 million and then was canceled. This is an example of a failed IT project. And I'm concerned that the department has committed itself to entering into a contract for this new system and did so before the acquisition review board completed its review.

I'm very concerned were going down the road of yet another expensive, failed IT project, so I'm going to submit that for the record as well.


SEN. COLLINS: Thank you.

SEN. LIEBERMAN: Thank you, Senator Collins.

Senator Akaka?

SEN. AKAKA: Thank you very much, Mr. Chairman.

Madame Secretary, I was looking for the costs that would have been reflected in a budget, and let me explain what the question is on that.

The fiscal year 2010 budget places the FPS, the Federal Protection Service, under the National Protection and Programs Directory, NPPD. NPPD seems like a logical fit for FPS because both are focused on infrastructure protection.

I understand that FPS currently relies on Immigration and Customs Enforcement for things like contract guard payment services. The question is, how much has the department budgeted for transition costs of moving FPS from ICE to NPPD, and where are these costs reflected in the budget?

SEC. NAPOLITANO: There is a transition budget. I don't know where the line item is precisely, but we'll get that to you, Senator.

Let me just say that I did not really look at a wholesale reorganization of this department. It has suffered from reorganization fatigue. Nonetheless, this particular issue caught my attention because there were just a lot of comments inside the department and outside of the department -- was FPS really in the best place, given its mission? And also whether administration of that was distracting ICE from its central mission, which is the enforcement of the nation's immigration and customs laws.

And so we did make the decision to make this one move, and yes, there are some transition costs. I think we can absorb many of them. We have a team in place now that's working directly on the transition in hopes that the Congress agrees with us that this is a better place for FPS.

SEN. AKAKA: Madame Secretary, FPS has requested a new offsetting collection authority which would allow FPS to determine appropriate staffing levels instead of mandating staffing numbers in statute.

However, GAO has identified a number of personnel challenges within FPS, including understaffing and poor human capital planning. Congress determined that minimum staffing levels were necessary to address security risks created by President Bush's plan to continue downsizing FPS.

My question is, what has FPS done to address its human capital planning needs and can you ensure us that FPS will not be understaffed if it were to eliminate the staffing floor?

SEC. NAPOLITANO: Yes, I think not only that, but I think I can tell you that with a focus on FPS, which is not the highest-profile part of the department, and part of this is just the process of creating one DHS and really uniting things and looking at mission as well, that we will maintain it at appropriate levels for, you know, the many, many facilities that it is charged with protecting.

SEN. AKAKA: As you may know, I am concerned about the diversity of DHS's work force, in particular in the Senior Executive Service level. A diverse work force, of course, an enhance the department's performance by bringing a greater variety of perspectives and approaches to policy development. I'm pleased to see that the Office of the Chief Human Capital Officer has requested funding for a human resource specialist to focus on enhancing diversity.

What do you envision the roles and responsibilities of the position to be, and how will you ensure that all DHS components work with the specialist to increase diversity?

SEC. NAPOLITANO: Well, one key area we want to focus on is how we're recruiting and our outreach on recruitment and how we let people know that there are good jobs within the department as opposed to relying on kind of the standard places where we attract recruits.

And then we also, as I mentioned to Senator McCaskill, need to have career paths and a real retention plan for our very good employees.

SEN. AKAKA: This is my final question: In 2008 and 2009, the Government Accountability Office reported that the Domestic Nuclear Detection Office is operating without up-to-date strategic plans for its critical investments in nuclear detection technologies at our borders or for its overarching nuclear detection efforts.

What is the status of your nuclear detection strategic plans, and how will you ensure that funds requested for DNDO will be spent effectively without up-to-date strategic plans?

SEC. NAPOLITANO: Well, we have obviously a strategic plan always under way, particularly in that very important area. But you might be interested knowing, Senator, that we did not request funds for DNDO to purchase new technology this year, and the reason is because we were not persuaded that the technology -- neither the plan but particularly the capacity of the technology that we needed was actually there -- that we wanted new money for.

We have enough back-funded money to continue current ops through FY '10, but before we come to the Congress and ask for money for new technology, we needed to see something better from the science community and from the vendors for what we need.

So we've gone back into that community on that basis, and it's my hope that moving forward working with this committee that I can build some credibility; we will have some credibility that when we actually come forward and say we need this for this thing new, that we don't do that lightly, that we've actually got a solid basis for that.

SEN. AKAKA: Well, I want to thank you very much for your responses. Again, you seem to be on the right course in what you're doing and I want to wish you well.

SEC. NAPOLITANO: Thank you, Senator.

SEN. AKAKA: Thank you very much.

SEN. LIEBERMAN: Thanks very much, Senator Akaka.

Madame Secretary, we thank you for your responsiveness. It's been a good exchange. The committee is intent on doing an authorization bill for the department this year and we'll see how the timing goes. In the normal course we've usually at least sent a communication and had verbal communication with our colleagues on the Subcommittee on Homeland Security of the Senate Committee on Appropriations. So I expect that we will do the same.

Without objection, I'm going to leave the record open for 15 days just to allow you that time to answer Senator Collins' two questions and any others --

SEC. NAPOLITANO: I look forward to that.

SEN. LIEBERMAN: Do you have any final comments you'd like to make?

SEC. NAPOLITANO: Thank you to the committee for the hearing. I appreciate you adjusting the schedule, since I had several hearings today and tomorrow on the budget. So I appreciate that courtesy as well.

SEN. LIEBERMAN: Understood.

Senator Collins?

SEN. COLLINS: Thank you.

SEN. LIEBERMAN: Thank you very much. The hearing is adjourned.


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