Senate Governmental Affairs Committee Holds Hearing on Homeland Security, Office of Management and Budget Nominations

COLLINS:

The committee will be in order. Today, the Committee on Governmental Affairs is holding a hearing to consider three nominations: Clark Kent Ervin to be the Inspector General of the Department of Homeland Security, Janet Hale to be the Undersecretary for Management at the Department of Homeland Security, and Linda Springer to be the Controller of the Office of Federal Financial Management at the Office of Management and Budget.

In January, the committee approved the nominations of Governor Ridge to be the secretary of the new department and Gordon England to be its first deputy secretary. I'm pleased today that the committee is considering the next set of Homeland Security nominees, Mr. Ervin and Ms. Hale, both of whom appear to have strong credentials and relevant experience for the positions for which they have been nominated.

The Department of Homeland Security officially opened its doors on January 24th. The establishment of the department is the most significant government restructuring in more than 50 years. It involves the merger of some 22 agencies and 170,000 employees.

The creation of the department is an enormous undertaking that will require a team effort to ensure success. As part of that team, the undersecretary for management, who will be responsible for the organizational issues in the new department, will have a particularly challenging job.

With this massive merger, the undersecretary for management will have to work to integrate disparate management, human resources, and information technology systems. Ms. Hale's extensive background in management in both the public and the private sectors appears to be ideal for undertaking the integration and management of these issues.

Another critical member of the Homeland Security team is the inspector general. For more than 20 years, the inspector generals have been the watchdogs for Congress and the taxpayers in the ongoing battle against waste, fraud, and abuse.

The DHS IG will face extraordinary challenges. Audit and investigative components from the various agencies must be integrated into a single entity within the department. The IG is also responsible for performing annual audits of the Coast Guard to ensure that its new homeland security responsibilities do not divert attention from its traditional roles, including vital search and rescue missions, which are of particular importance to my state.

Both the undersecretary for management and the inspector general will be crucial to the successful organization and proper functioning of this vital new department.

I'm also pleased that today we will consider the nomination of Linda Springer to be the controller of the Office of Federal Financial Management at OMB. The controller acts as the deputy and principal advisor to the deputy director for management in carrying out the financial management duties as outlined in the Chief Financial Officers Act of 1990.

This position is critical to ensuring that the financial management systems in the executive branch are efficient, accurate, and reliable. Ms. Springer's background, again, appears to be tailor- made for this position.

Before turning to my colleagues, I want to recognize Senator Carper for any opening comments that he may make and to welcome him today.

COLLINS:

Thank you very much, Senator Dole. Your endorsement means a great deal to the committee, and I know it does to the nominee as well. And we will be happy to excuse you, also, at this point.

Mr. Ervin and Ms. Hale have filed responses to biographical and financial questionnaires, answered pre-hearing questions submitted by the committee, and had their financial statements reviewed by the Office of Government Ethics. Without objection, this information will be made part of the hearing record, with the exception of the financial data which is on file and available for public inspection in the committee offices.

Our committee rules require that all witnesses in nomination hearings give their testimony under oath. So I would ask that you both stand and raise your right hand.

Do you swear that the testimony you're about to give the committee will be the truth, the whole truth, and nothing but the truth, so help you God?

ERVIN:

I do.

HALE:

I do.

COLLINS:

Mr. Ervin, do you have a statement you would like to make?

COLLINS:

Thank you very much, Ms. Hale.

There are three standard questions that we ask of all nominees for the record, and I'm going to begin my questioning with those. First, is there anything that you are aware of in your background which might present a conflict of interest with the duties of the office to which you have been nominated?

Mr. Ervin?

ERVIN:

No.

COLLINS:

Ms. Hale?

HALE:

No.

COLLINS:

Second, do you know of anything personal or otherwise that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you've been nominated?

Mr. Ervin?

ERVIN:

No.

COLLINS:

Ms. Hale?

HALE:

No.

COLLINS:

And, finally, do you agree without reservation to respond to any reasonable summons to appear and testify before any duly constituted committee of Congress if you are confirmed?

ERVIN:

Absolutely.

HALE:

Yes.

COLLINS:

Thank you.

Mr. Ervin, the General Accounting Office recently included the new Department of Homeland Security on its 2003 high-risk list. The designation is based on three factors.

First, it's an enormous undertaking that will take time to achieve in an effective and efficient manner. Second, the department's prospective components already face a wide array of existing management and operational challenges. And, third, the failure to effectively carry out its mission exposes the nation to potentially very serious consequences.

If you are confirmed as IG, how will you seek to ensure that DHS addresses these concerns and challenges, and what is your response to the GAO's listing
the new department on its high-risk list?

ERVIN:

Madam Chairwoman, I think the GAO has done a good job of identifying the significant challenges that face the department, and if I were to do so on my own, I would have identified exactly those challenges. As to how, if confirmed, I would proceed to help the department to address them, I would intend to have a very robust inspections, audit, and investigative team, thanks to the various parts of offices of inspector general that I would inherit. I would seek to conduct inspections, evaluations, audits, and investigations where necessary with regard to those three areas of challenge.

Furthermore, as I noted in my opening statement, to, I think, the credit of the secretary and the deputy secretary, I've been involved to a significant degree at the front end as the department begins its operations, and I have sought to provide some advice and recommendations to the secretary and other senior management so that at the very beginning of its operations, issues can be avoided and a plan can be put in place to address these challenges and others.

COLLINS:

Mr. Ervin, some of the component agencies of the new department are, frankly, troubled agencies, and the Immigration and Naturalization Services is one that comes immediately to mind. The INS, for example, has had continual problems in managing its information technology resources that are critical to its ability to function effectively, particularly in a post 9-11 environment.

The Department of Justice's inspector general, which has issued numerous reports on this, as well as GAO, have made a series of recommendations designed to increase the effectiveness of the information technology practices at INS. As inspector general, what would you do to ensure that we start to actually solve some of the problems that will be transferred to the new department, particularly in the area of information technology?

ERVIN:

Madam Chairwoman, I note that there are about 87 different information systems in INS alone. The large number of information systems, the fact that those systems cannot communicate with each other, the security vulnerabilities that each of those systems has are all, as you say, issues in the information technology area that have been identified by my colleague, the DOJ inspector general. I've had the benefit of a number of briefings both from him, personally, and from other members of his team with regard to those issues and others that affect INS.

I would propose to follow up on any outstanding recommendations with regard to those issues, if confirmed. And, indeed, I would expect to continue to do work in this area, both inspections and evaluations, and audits, as INS becomes a part of the Department of Homeland Security.

COLLINS:

Ms. Hale, one of the challenges facing the new department is developing a flexible and appropriate personnel system. It's my understanding that the component agencies are bringing in diverse personnel systems. I believe that it's very important that the federal employees' unions be fully involved in this process.

What are your plans for helping to integrate and develop a personnel system with the advice and in consultation with the federal employees' organizations?

HALE:

I share your concern about the disparate systems that we're inheriting from these agencies. It is truly a concern of our employees, and I think it's a concern of all of ours.

I have met with the senior union leadership, and I have pledged to them—as I will pledge to all of you because I know of your concern—that they will be an intricate part.

HALE:

We need to have employees on the front line, both union and non-union represented, we need middle management, we need senior management to be sure that this system is developed with an understanding of their business needs, their responsibilities out there, and we have already begun the consultations with the unions because they will be critically involved in this project.

COLLINS:

You are going to have an enormous task covering many different areas with a large department, a complicated reorganization. If you are confirmed, what would be your top priorities for the coming year?

HALE:

I think first and foremost is a smooth integration and transition of these agencies coming into the department. They clearly have diverse cultures, long histories, and proud accomplishments, and we need to be sure that the men and women on the front line do not see any adverse impact as they are transferred to the new department.

We then need to be sure that our IT systems are there to support their mission. We need to be sure we've got a new human capital system and an integrated financial management system. So I think if I started with the transition and then moved to the serious tasks that you've identified, those would be my top priorities.

COLLINS:

Thank you.

Senator Carper?

COLLINS:

Thank you very much, Senator Pryor.

Again, I want to thank our two nominees for appearing today. It is my hope that the committee will be able to act expeditiously next week on your nominations to bring them before the full Senate for confirmation.

I also want to express my personal appreciation for your willingness to serve your country, particularly in such challenging jobs. So thank you very much for your public service and for being with us this morning.

We'll now move to our second panel. We will consider and call up Linda Springer to be the controller of the Office of Federal Financial Management at the Office of Management and Budget.

Ms. Springer is currently the counselor to the deputy director for management at the Office of Management and Budget. Prior to that, she served in a number of executive positions in the private sector. Ms. Springer's strong background and experience in financial systems and management makes her well qualified for which she's been nominated.

Ms. Springer has filed responses to questionnaires, including biographical and financial information. She has answered pre-hearing questions submitted by the committee, undergone an interview with the committee staff and had her financial statements reviewed by the Office of Government Ethics. Without objection, this information will be made part of the hearing record with the exception of the financial data, which are on file and available for public inspection in the committee offices.

Our committee rules require that all witnesses give their testimony under oath. So, Ms. Springer, I would ask that you stand and please raise your right hand.

Do you swear that the testimony you're about to give to the committee will be the truth, the whole truth, and nothing but the truth, so help you God?

SPRINGER:

Yes.

COLLINS:

Thank you. Ms. Springer, if you have a statement that you would like to make, you can proceed at this time.

COLLINS:

Thank you very much, Ms. Springer. As I explained with our first panel, there are three standard questions that we ask of all nominees, and I'd like to proceed with those at this time.

First, is there anything that you are aware of in your background which might present a conflict of interest with the duties of the office to which you have been nominated?

SPRINGER:

No, there's not.

COLLINS:

Second, do you know of anything personal or otherwise that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated?

SPRINGER:

No.

COLLINS:

And, finally, do you agree without reservation to respond to any reasonable summons to appear and testify before any duly constituted committee of Congress if you are confirmed?

SPRINGER:

Yes, I do.

COLLINS:

Ms. Springer, there's long been a concern by members of this committee—and it's a concern that I share—that management issues seem to take a back seat to budget matters within the Office of Management and Budget. I was interested in your testimony that before agreeing to go to OMB, you raised this very issue.

But I do feel it's so important that we put the M back in OMB, and it is my impression that while this administration is making progress in that area, budget issues still tend to be the major focus of the office. What is your perspective on the emphasis placed on management?

SPRINGER:

I think, Senator, that there's a perception that by virtue of the size of the budget staff at the office that you could have the impression that management is still with a lower case M relative to the budget side. I would say that it's my observation so far that management probably has gotten more attention in recent years under the director, and that's been reinforced now with the recent nomination of Mr. Johnson to the deputy director position for management.

And, also, in talking with the people on the budget side, the resource management offices, they're very committed to partnering with the staff on the statutory management side in achieving our management goals. So I have seen an increasing amount of attention, and I expect that to continue, and I'll be working very hard to make sure that it does.

COLLINS:

Financial management related issues have been on the General Accounting Office's annual high-risk list for many years. That's the list of programs or operations that the GAO determines are particularly vulnerable to waste, fraud, abuse, and mismanagement.

The GAO has designated several agencies' financial management—and they are major agencies, the Department of Defense, for example; IRS; FAA; and the Forest Service—as high risk. In the most recent high-risk report, the GAO acknowledged that a wide range of financial management initiatives are underway, and progress is being made.

But we're still seeing departments and programs that are on the high-risk list year after year after year. In fact, some programs have been on the list since the inception of the high-risk list, which I believe is about a dozen years ago.

What do you think should be done to make dramatic progress in improving the financial management systems of the federal government?

SPRINGER:

I have had the opportunity with this new high-risk list that's just been published to start to review those reports. I requested them and I started to read them, and I share your observation and your concern about the length of time that it takes for the remediation activities.

One thing that I've noted is that there's a direct relationship between the time it takes and the size of the department, so that a department the size of the Department of Defense, for example, will take longer for its remediation to be totally installed and fruitful, just by virtue of the size of the operation. Having said that, it will be my plan to visit with each of those departments, their chief financial officers, and where it's appropriate their chief information officers and have the opportunity to review their plans with them, to see that there are milestones, metrics, and accountability standards and ways to see that it is on track.

We'll do that on a regular basis where it's appropriate, and the staff of the Office of Federal Financial Management are assigned as well to each of these agencies. So we'll be able to put very strong attention to monitoring progress on those plans. Should we find that there is not a plan in place, then, obviously, that would be step one, to work with those departments to make sure they have a viable plan to address those issues.

COLLINS:

What do you see as the relationship between an agency or a department's chief information officer and the chief financial officer? I'm sure you're aware that the Clinger-Cohen Act mandated the creation of the CIOs across government and envisioned a close working relationship and a far greater emphasis on management of technology and information systems than had been the case prior to the act.

What's your assessment of the act and how well it's working as you look across the federal government?

SPRINGER:

I don't think that there's any more important partnership in the agencies—as I have found to be the case in the private sector—than between the chief information officer and the chief financial officer. Without the integrity and the timeliness of good data, the chief financial officer or any other senior officer in the agency will not be able to make informed decisions.

So I think that the act is absolutely on target. I think that the agencies—what I have seen is that there's a different structure in place in each agency. In some cases, there's a reporting relationship, for example, between the chief information officer and the chief financial officer. In other departments, it's structured a little bit differently.

It will be one of my objectives to take the temperature and really get an assessment of how well that's working. And one of the ways to gauge it will be to see how well the agencies are able to meet the accelerated timeframes we have for financial reporting and to be able to have a look at some of the performance metrics and the timeliness and the quality of the data associated with those.

COLLINS:

Thank you.

COLLINS:

Thank you, Senator Lautenberg.

Ms. Springer, just one final question. If we were to bring you back before this committee a year from now, what would you hope to have accomplished? What are your priorities for this year?

SPRINGER:

There are several, Madam Chairwoman. The main priorities would, first of all, be in the area of moving toward acceleration of the—meeting the accelerated timeframe goals for '04 for the financial statements from each of the agencies.

I would hope that we can come back and—with a higher number of agencies beyond the 21 with clean opinions. I'd like to be able to report that to the committee. I'd like to be able to report that a number of them turned them in on a shorter timeframe than they were in '02. So I'd like to be able to report progress in that area.

I'd like to be able to report that we have made progress on erroneous payments. As you know, the original estimate was in the $20 billion range, and as a result of the reporting now required under the act, and that was required by OMB in the last budget cycle, the number now is closer to $35 billion. I'd like to be able to report to the committee a year from now that that number is lower, and it already has come down in some areas, but we'd like to see a lot more.

Those two items are at the top of the list, and I'm sure as I'm more fully engaged, should I be confirmed, that there would be a number of others on the list.

COLLINS:

I was hoping you were going to report to us that the erroneous payments, rather than growing to $35 billion because of better reporting, I suspect, had declined. That really is a very serious problem and an issue that this committee looks forward to working with you on.

I want to thank you very much for appearing today. I do hope that the committee will be able to move expeditiously on your confirmation next week, and we appreciate your willingness to serve. Thank you.

SPRINGER:

Thank you, Madam Chairwoman.

COLLINS:

Without objection, the hearing record will remain open until 5:00 p.m. today for the submission of any written questions or statements for the record.

This hearing is now adjourned.