[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
DOD AND DHS: IMPLEMENTING AGENCY WATCHDOGS' RECOMMENDATIONS COULD SAVE
TAXPAYERS BILLIONS
=======================================================================
HEARING
before the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MARCH 19, 2013
__________
Serial No. 113-31
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas MARK POCAN, Wisconsin
DOC HASTINGS, Washington TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming ROBIN L. KELLY, Illinois
ROB WOODALL, Georgia DANNY K. DAVIS, Illinois
THOMAS MASSIE, Kentucky PETER WELCH, Vermont
DOUG COLLINS, Georgia TONY CARDENAS, California
MARK MEADOWS, North Carolina STEVEN A. HORSFORD, Nevada
KERRY L. BENTIVOLIO, Michigan MICHELLE LUJAN GRISHAM, New Mexico
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on March 19, 2013................................... 1
WITNESSES
The Honorable Robert Hale, Under Secretary of Defense
(Comptroller), U.S. Department of Defense
Oral Statement............................................... 7
Written Statement............................................ 10
Mr. Lynne Halbrooks, Principal Deputy Inspector General, U.S.
Department of Defense
Oral Statement............................................... 15
Written Statement............................................ 17
The Honorable Rafael Borras, Under Secretary for Management, U.S.
Department of Homeland Security
Oral Statement............................................... 30
Written Statement............................................ 32
Mr. Charles Edwards, Deputy Inspector General, U.S. Department of
Homeland Security
Oral Statement............................................... 44
Written Statement............................................ 46
APPENDIX
The Honorable Elijah Cummings, a Member of Congress from the
State of Maryland, Opening Statement........................... 94
The Honorable John Mica, a Member of Congress from the State of
Florida, Opening Statement..................................... 96
The Honorable Kerry Bentivolio, a Member of Congress from the
State of Michigan, Opening Statement........................... 97
Oversight and Government Reform Full Committee Hearing, Opening
Statement...................................................... 98
The Honorable Gerald E. Connolly,a Member of Congress from the
State of Virginia, Opening Statement........................... 100
Letter from Mr. Brett A. Mansfield, Acting Assistant Inspector
General Communications and Congressional Liaison to The
Honorable Darrell Issa, a Member of Congress from the State of
California..................................................... 102
Questions for the Record from the Hon. Kerry Bentivolio to Mr.
Halbrooks...................................................... 103
Questions for the Record from the Hon. Kerry Bentivolio to Mr.
Charles Edwards................................................ 104
Questions for the Record from the Hon. Kerry Bentivolio to Mr.
Borras......................................................... 125
Questions for the Record from the Hon. Paul A. Gosar to Witnesses 127
Questions for the Record from the Hon. Jackie Speier, a Member of
Congress from the State of California to Mr. Hale.............. 129
Letter to Chairman Darrell Issa from Mr. Brett A. Mansfield...... 135
DOD AND DHS: IMPLEMENTING AGENCY WATCHDOGS' RECOMMENDATIONS COULD SAVE
TAXPAYERS BILLIONS
----------
Tuesday, March 19, 2013
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 10:00 a.m., in Room
2154, Rayburn House Office Building, Hon. Darrell E. Issa
[chairman of the committee] presiding.
Present: Representatives Issa, Mica, Duncan, Jordan,
Walberg, Lankford, Amash, Gosar, DesJarlais, Gowdy, Farenthold,
Woodall, Meadows, DeSantis, Cummings, Maloney, Norton, Tierney,
Clay, Connolly, Speier, Pocan, Duckworth, Cardenas, and
Horsford.
Staff Present: Ali Ahmad, Majority Communications Advisor;
Alexia Ardolina, Majority Assistant Clerk; Jen Barblan,
Majority Counsel; Richard A. Beutel, Majority Senior Counsel;
Molly Boyl, Majority Parliamentarian; Caitlin Carroll, Majority
Deputy Press Secretary; Steve Castor, Majority General Counsel;
John Cuaderes, Majority Deputy Staff Director; Jessica L.
Donlon, Majority Counsel; Kate Dunbar, Majority Legislative
Assistant; Adam P. Fromm, Majority Director of Member Services
and Committee Operations; Linda Good, Majority Chief Clerk;
Frederick Hill, Majority Director of Communications and Senior
Policy Advisor; Christopher Hixon, Majority Deputy Chief
Counsel, Oversight; Jean Humbrecht, Majority Counsel; Mark D.
Marin, Majority Director of Oversight; Tegan Millspaw, Majority
Professional Staff Member; Kristin L. Nelson, Majority Counsel;
Ashok M. Pinto, Majority Deputy Chief Counsel, Investigations;
James Robertson, Majority Professional Staff Member; Scott
Schmidt, Majority Deputy Director of Digital Strategy; Jonathan
J. Skladany, Majority Counsel; Peter Warren, Majority
Legislative Policy Director; Rebecca Watkins, Majority Deputy
Director of Communications; Meghan Berroya, Minority Counsel;
Beverly Britton Fraser, Minority Counsel; Susanne Sachsman
Grooms, Minority Chief Counsel; Carla Hultberg, Minority Chief
Clerk; Peter Kenny, Minority Counsel; Elisa LaNier, Minority
Deputy Clerk; and Dave Rapallo, Minority Staff Director.
Chairman Issa. The committee will come to order.
The Oversight Committee exists to secure two fundamental
principles: first, Americans have a right to know that the
money Washington takes from them is well spent and, second,
Americans deserve an efficient, effective Government that works
for them. Our duty on the Oversight and Government Reform
Committee is to protect these rights.
Our solemn responsibility is to hold Government accountable
to taxpayers, because it is taxpayers that have a right to know
what they get from their Government. We will work tirelessly,
in partnership with citizen watchdogs and our inspectors
general, to deliver the facts to the American people and bring
genuine reform to the Federal bureaucracy.
Today I want to thank our ranking member, Mr. Cummings, for
joining me in this ongoing effort to offer up a fact-based
blueprint for the conversation unfolding about controlling
Government spending and waste.
Two weeks ago we examined the Department of Transportation
and the Department of Education. Today we will hear from
witnesses from two of the largest Government agencies: the
Department of Defense and the Department of Homeland Security.
With the attention of policymakers on how to best manage
sequestration, this is a time to lead the discussion by finding
and eliminating waste as part of that savings. For weeks, the
Administration has made a concerted public relations effort to
speak about the dire consequences of sequestration, and there
will be some areas that will be, quite frankly, missed. But,
candidly, the claims of a dire consequence have been disproven.
We are not here to argue over sequestration directly. As a
matter of fact, we are most interested in the $67 billion that
have been identified by the IGS that, if implemented, could
save most of the cost of sequestration.
We certainly understand that some of that $67 billion is
one-time. But, this year, this cut is essential and we can do
some of it through means less painful to the American people
then across-the-board cuts.
Recognizing that we are dealing with two of the larger
pockets of money and, in the case of Homeland Security and our
Department of Defense, we are dealing with the very security of
the American people. So today, as we focus on unimplemented IG
recommendations, I want to remind all of our members on both
sides of the dais that this is an area where the largest amount
of dollar reduction is occurring and that $2.3 billion into the
size of these budgets is a lot of money. Additionally, it is
not surprising that the greatest amount of unimplemented
savings also occurs with the men and women in front of us.
So I am hoping this hearing will refocus us again on common
sense reform in savings, and finding ways to have reduction in
cost without a reduction in the services we count on and the
protection we so much need.
With that, it is a pleasure to recognize the ranking member
for his opening statement.
Mr. Cummings. Thank you very much, Mr. Chairman.
Today's hearing falls on the 10-year anniversary of the
invasion of Iraq. Ten years ago today our Nation entered a war
that has now cost the American taxpayers more than $2 trillion.
Obviously, this staggering amount will be even higher when we
calculate the final cost of the war in Afghanistan, which is
still going on today.
During these wars, billions of dollars have been paid
through contracts with private defense companies. According to
the Commission on Wartime Contracting, just one company,
Kellogg Brown & Root, was paid more than $40 billion.
Under so-called sole-source contracts, many companies never
competed for a single task order. Because these cost-plus
contracts guaranteed corporate profits, they incentivize
companies to pad their bills.
Rather than raising revenues to pay for these trillion
dollar wars, the Bush administration slashed taxes, primarily
benefitting the richest members of our society. From 2001 to
2010, Bush tax cuts reduced our Nation's revenues by nearly $1
trillion.
So now that we have ended the war in Iraq, are winding down
the war in Afghanistan, and are facing record deficits, it
would be logical to seek additional revenues and reduce defense
spending, particularly on wasteful defense contracts. Instead,
our House Republicans propose something vastly different.
The Ryan budget, unveiled last week, would eliminate health
insurance for tens of millions of Americans, slash Medicaid for
the poorest among us, reduce education funding for children
with disabilities, kick tens of thousands of kids out of Head
Start, and abandon our commitment to seniors who rely on
Medicare. House Republicans would rather do all of these things
than ask the richest among us to contribute a penny more to
address our Nation's fiscal challenges.
Although most people agree that it is time to rein in
wasteful defense spending, the Ryan budget would increase the
Pentagon's budget to $645 billion next year. Although our wars
are ending and the Pentagon's contract management system is
broken, the Ryan budget would pump tens of billions of dollars
more into defense spending each year for the next decade.
Today's hearing offers a prime opportunity to take a step
back and identify massive savings at the largest agency in the
Federal Government, the Department of Defense. The Pentagon's
inspector general and the Government Accountability Office have
warned repeatedly that the Defense Department continues to
squander billions of dollars on wasteful contracts. Let me
highlight just one example.
Over the past 10 years, the Pentagon has severely
mismanaged the biggest weapons acquisition program in history,
the F-35 Joint Strike Fighter. It rushed to buy aircraft
without adequate testing and it disregarded recommendations to
slow down the acquisition process. As a result, the program now
faces skyrocketing costs, expensive retrofits, and unacceptably
poor performance. Experts have challenged the need for this
aircraft and the Simpson-Bowles Commission recommended
counseling the Marine variant, reducing other variant
purchases, and outfitting planes already in service with less
expensive upgrades.
According to the Pentagon's Office of Operational Test and
Evaluation, testing for the Joint Strike Fighter has been
extremely limited due to restrictions, including no night or
weather capability and no combat capability. The Navy's version
of this plane cannot land on aircraft carriers, the radar does
not appear to work, and no version of this plane has been
cleared to fly at night.
Last year, the Pentagon's own acquisition chief called this
acquisition malpractice. Nevertheless, the Department is
forging ahead with plans to buy nearly 2,500 planes for $400
billion, and the American taxpayers will be on the hook for
another $1 trillion just to maintain these planes over their
service lives.
Mr. Chairman, I am thankful that today, before we consider
Draconian cuts to core services that Americans across the
Country rely on every single day, we will have an opportunity
to closely examine this program and others at DOD and DHS in
order to break our Nation's addiction to wasteful contract
spending.
I thank our witnesses very much for being here today and I
look forward to hearing their testimony. And, Mr. Chairman,
with that, I yield back.
Mr. Mica. [Presiding.] I thank the ranking member for his
opening statement and recognize myself for a couple minutes.
First, I want to say that we look forward to working with
the Minority, particularly as chair of the Government
Operations Subcommittee. I look forward to working with Mr.
Connolly as we drill deeper into some of the issues of waste,
fraud, and abuse, and how we can eliminate some of that
unnecessary spending and cost and actually do a better job in a
time of sequestration and budget cuts.
However, since the sequestration went into effect, rather
than identify wasteful and redundant programs that can be cut,
the Administration, unfortunately, has gone around touting the
alleged harmful consequences of sequestration. Some of them are
over the top. They have threatened thousands of teachers will
get a pink slip, federal prosecutors would have to close cases
and let criminals go.
Even programs like Meals on Wheels, that provide our
seniors with assistance, would be cut; millions of seniors
would lose this assistance, another claim. Thousands of
students, I think 70,000 they said, would lose access to Head
Start programs. I think I even saw the DHS secretary threaten
long lines and delays at our airports because of TSA cutbacks.
Unfortunately, all of these statements I believe to be
exaggerations. We have people who can speak to some of these
claims here today, and that is part of the purpose of this
hearing, is to identify some common sense ways that we can cut
costs and improve efficiency in Government. Now, I know that
sounds like a radical idea, but we can do it together.
There are plenty of obvious candidates to cut wasteful
spending, such as a $27 million project to help fund pottery
classes in Morocco. Now, I know that is essential, but I think
it could be a candidate that we could look at for eliminating
wasteful spending. Half a million dollars to support specialty
shampoo products for dogs and cats. Now, that is one, we have
to keep that program going; $141,000 to fund a Chinese study on
swine manure has to be absolutely essential to the continuation
of the Republic as we know it; a $3,700 grant to build a
miniature street in West Virginia out of Legos. I know how
critical that is to the continuation of humanity.
Then we have 3,986 TSA headquarter employees, and I believe
I saw the figure, 26.8 percent of their headquarter employees
are supervisors. These folks are all making in excess of
$100,000 a year and we have only 457 airports in the entire
Country that have any TSA presence. That is 3,986 TSA
headquarter employees, but we can't service the public at our
airports.
We are going to hear from two inspectors general today, who
will testify and have identified $2 billion worth of potential
savings at their agencies that have not been implemented. So I
think we could have a very productive session today, working in
a very bipartisan manner, not in an alarmist manner, and
eliminate some of these false claims and shed some light on
where we can save money.
So, with that, I would like to leave the record open for
seven days, if it is okay with the ranking member, for members
to submit statements for the record.
Now I would like to turn to recognizing our witnesses.
Mr. Tierney, oh, I am sorry, did you want to make an
opening statement?
Mr. Tierney. Yes, I would, Mr. Chairman.
Mr. Mica. Okay.
Mr. Tierney. Yes, if I might. Thanks.
Mr. Mica. We will yield five minutes to Mr. Tierney.
Mr. Tierney. Thank you. I notice that Mr. Chaffetz isn't
here, the chairman of the Subcommittee on Oversight for the
National Security and Homeland Security. We have been working
in a very bipartisan manner for some time now. I just want to
make a couple of quick statements off the top on sequestration.
Of course, when you read the sequestration order, you
understand that there is not as much discretion to the
executive branch as some might think; that, by its very nature,
it dictates what must be cut and how it must be cut, down to
the program level, and excludes a number of different things.
So it is not a question of just giving over to the executive
and having them make great decisions; many things they are sort
of restricted from doing that.
But I welcome these hearings. I would have hoped we would
have had these hearings before sequestration went into effect.
We should have been looking together to try to identify common
ground that we could get rid of some things that we think are
waste, fraud, or abuse on that. Certainly, the Department of
Defense, which has not passed an audit in some time, if ever,
would be a good place to start looking on that; it has been a
problem in contracting.
A lot of our subcommittee hearings have identified that.
The cost and time and scope elements of looking at every
contract, and oftentimes lose track of the time, the cost of
time, when it gets extended out; changing the specifications
during the course of contracts. The problems just go on and on:
not having enough contract managers, not having enough that are
trained, losing control of the project and continuing to go on
in that basis. So we have a lot to work on.
But 10 years ago today the United States began its invasion
of Iraq based on flawed intelligence from the Bush
administration, and since that time hundreds of billions of
dollars of U.S. taxpayers have poured into Iraq and Afghanistan
to support the wars and finance our reconstruction efforts
there. We were concerned with the staggering sums of money that
were provided and the lack of oversight, so, in 2005, Jim
Leach, Republican from Iowa, and I coauthored bipartisan
legislation that led the way to creating the Commission on
Wartime Contracting. According to that Commission's final
report, up to $60 billion in taxpayer funds were lost in Iraq
and Afghanistan due to waste, fraud, and abuse.
In response to these findings, I introduced the Oversight
and Accountability in Wartime Contracting Act last Congress to
strengthen the system for awarding and overseeing contractors
in war zones and to reduce our reliance on no-bid contracts,
both of which are serious issues. The bill adopted key
recommendations of the Commission and included some of the same
reforms that ended up in the National Defense Authorization
Act. We worked across the aisle; we have long championed
efforts to increase viability into contracts, to reduce the
reliance on sole-source contracts, and to strengthen oversight
mechanisms, but all of those problems continue to remain and
continue to need our attention.
This committee and the Subcommittee on National Security
have long played an important role in identifying and
preventing waste, fraud, and abuse in our Government programs,
particularly in Iraq and Afghanistan. The subcommittee
previously led a bipartisan investigation of jet fuel contracts
in Kyrgyzstan and the multibillion dollar host nation trucking
contract in Afghanistan. We worked on those with Mr. Flake over
a series of years.
Our investigation found that the trucking contract had
spawned a vast extortion racket in which warlords, criminals,
and insurgents extorted contractors for protection payments.
Too often our contracts were developed without any insight not
only into the base contract, but certainly into the
subcontracts and the contracts at levels below those.
Congressman Chaffetz has continued this tradition and he
and I have introduced legislation seeking accountability over
the $3 billion in U.S. plans to spend on fuel for the Afghan
Army. We are also now leading a bipartisan investigation of the
multibillion dollar food contract in Afghanistan that has led
the Government to demand more than $750 million in
overpayments.
Given the fiscal challenges that are facing this Country, I
welcome the opportunity to work on additional ways to reduce
waste in the departments and protect the taxpayer dollars.
So I thank you, Mr. Chairman, for the time and I look
forward to working together on this committee to identify at
least as healthy a portion as we can of the waste, fraud, and
abuse that passes through the Department of Defense and
Homeland Security budgets. Thank you.
Mr. Mica. I thank you, Mr. Tierney, and, again, your
counterpart, I guess, Mr. Chaffetz, National Security
Subcommittee, and your willingness to work as the ranking
member with him and the committee and Mr. Cummings.
As I said, members will have seven days to submit opening
statements for the record.
So, with those comments, I will now recognize our panel
today. Our witnesses include The Honorable Robert Hale. He is
Under Secretary of Defense and Chief Financial Officer at the
Department of Defense. We have Ms. Lynne Halbrooks, the
Principal Deputy Inspector General for the Office of the
Inspector General at the Department of Defense. We have the
Honorable Rafael Borras. He is the Under Secretary of
Management for DHS, Department of Homeland Security; and Mr.
Charles Edwards. He is the Inspector General for the Office of
Inspector General at the Department of Homeland Security. So
those are our first four witnesses.
Witnesses, as is customary, this is an investigations
oversight panel of Congress. If you will stand and be sworn,
please. Raise your right hand.
Do you solemnly swear or affirm that the testimony you are
about to give before this committee of Congress is the whole
truth and nothing but the truth, so help you God?
[Witnesses respond in the affirmative.]
Mr. Mica. Let the record reflect that the witnesses all
answered in the affirmative.
I thank you so much for being with us and we will now
recognize each of you. The customary procedure is you get five
minutes to present your remarks. If you have lengthy additional
information or testimony you would like submitted as part of
the record, just redress that through the chair and it will be
included.
With that, let me first recognize Mr. Hale and welcome you.
Mr. Hale, again, is the Under Secretary of Defense and Chief
Financial Officer for the Department of Defense. Welcome, sir,
and you are recognized.
WITNESS STATEMENTS
STATEMENT OF THE HONORABLE ROBERT HALE
Mr. Hale. Well, thank you. I do have a statement, if you
would include it in the record.
Mr. Mica. Without objection, your statement will be part of
the record. Proceed.
Mr. Hale. So good morning to all the members of the
committee and thank you for the opportunity to discuss efforts
to improve efficiency at the Department of Defense. I am joined
today by Lynne Halbrooks, the acting inspector general for the
Department.
Our offices share a common goal, which is to support the
national security mission while making the best possible use of
every taxpayer dollar. And I can tell you we review and make
use of the many IG reports that are issued each year.
Like Congress, DOD is mindful that our Nation is dealing
with significant fiscal pressures. If I could borrow a line
from Dwight Eisenhower, the patriot today is the fellow who can
do the job with less money. That statement is, if anything,
even more valid in our time than it was in the 1950s.
Accordingly, our budget requests at DOD in recent years
have included steps to curtail or eliminate programs that fail
to meet needs or which were seriously troubled or provided
capabilities too narrow to justify their expense. As a result,
more than 20 DOD weapons programs have been restructured or
eliminated in recent years, including the VH-71 Presidential
helicopter, the Navy's DDG-1000 ship program, the Air Force's
TSAT satellite, the Army's Future Combat System, and the
Marines' Expeditionary Fighting Vehicle. We also ended
production of two aircraft that have met their inventory
objectives, the F-22 and C-17.
DOD has eliminated lower priority organizations, such as
the Joint Forces Command, the first time we have ever
disestablished a combatant command. We have disestablished
other organizations, including the Second Fleet headquarters in
Norfolk and two Air Operations Centers in Europe. We have cut
costs through improved business practices and greater reliance
on multi-year procurements, fuel saving initiatives, contract
consolidation, and reliance on the VA's drug pricing schedule
for pharmaceuticals.
These and other initiatives have led to planned savings in
the President's budget for fiscal year 2012 of about $150
billion over the five-year period 2012 to 2016. The 2013 budget
projected another $60 billion in savings for the period 2013
through 2017.
In addition, DOD has sought to slow the growth in military
compensation while fully supporting the All-Volunteer Force. We
proposed modest increases in the fees that military retirees
pay for health care and proposed altering pharmacy co-pays in
ways that encourage the use of generic brands and mail order
delivery, which are much cheaper for us. We also proposed
slowing the growth in military basic pay. In the President's
budget for 2013, these initiatives save $29 billion over five
years.
Finally, in our most recent budget, we proposed cutting
back on selected Air Force aircraft and retiring nine Navy
ships early.
Looking ahead, we will continue these efforts to make more
disciplined use of resources. Because the President's budget
for 2014 hasn't been sent to Congress, I can't be specific, but
I can tell you that we will again propose a package of changes.
While DOD can propose efficiencies, I need your help on
this committee and the Congress. Congress must approve them
before they can take effect. In recent years, Congress denied a
number of proposals to eliminate lower priority weapons
programs and military units. Congress has also rejected some
proposals to consolidate infrastructure and to slow the growth
in military compensation, including partially rejecting
increases in fees and co-pays for military retiree health care.
These congressional actions, if sustained, will add billions to
our budget over the coming years, and we hope that, during this
period of downward pressure on our budgets, that Congress will
reconsider and approved these efficiency initiatives.
Unfortunately, these improvements alone aren't going to be
enough to meet the budget cuts imposed by sequestration. We are
facing $46 billion of savings in less than seven months. We
will do everything we can to use efficiencies, to use IG
reports. Our goal is to minimize adverse effects on the
mission. But the law itself is mindless and across-the-board,
and efficiency initiatives aren't going to be able to meet a
number of these cuts.
In 2013, we are also wrestling with a misallocation of
funds under the current Continuing Resolution. We don't have
enough operations and maintenance money, which is key to
military readiness. We actually have too many investment
dollars.
The bottom line of this sequestration and the Continuous
Resolution problems is going, unfortunately, to be a crisis in
military readiness, and you have heard that testimony from the
Joint Chiefs in many forms.
In view of the serious economic problems facing our Nation,
we hope Congress will support all our efficiency initiatives,
even the ones that are hard. We also hope that Congress will
replace the current CR with appropriations bills, and they seem
to be heading in that direction, at least for DOD. Finally, we
urge Congress to pass a deficit reduction package that the
President can sign that permits the de-triggering of this
mindless sequestration. The continued strength of our national
security depends on successful action in all of our
initiatives.
That completes my statement, Mr. Chairman. After the other
witnesses have spoken, I would be glad to answer questions.
[Prepared statement of Mr. Hale follows:]
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Chairman Issa. [Presiding.] Thank you, Mr. Hale
We now go to Lynne Halbrooks, the Principal Deputy
Inspector General of the Office of Inspector General of the
Department of Defense. Welcome again.
I apologize for being off, testifying at another hearing. I
had no questions, so I came back quickly.
The gentlelady is recognized.
STATEMENT OF LYNNE HALBROOKS
Ms. Halbrooks. Thank you, Chairman. Chairman Issa, Ranking
Member Cummings, and distinguished members of the committee,
good morning and thank you for the opportunity to be here today
to appear before you to discuss our efforts to reduce waste and
improve efficiency within the Department of Defense.
I would like to thank this committee for its critical work
and sustained focus over the last several years to highlight
the issues of unimplemented inspector general recommendations.
It is essential to good government and effective stewardship of
taxpayer dollars that IG recommendations are implemented.
I am proud to be here today to represent the hundreds of
dedicated DOD Office of Inspector General employees who, for 30
years, have been committed to conducting critical audits,
investigations, inspections, and evaluations.
Over the past 10 years, our office has issued more than
1300 reports addressing a wide variety of challenges within the
Department and providing 7,684 recommendations to correct
deficiencies. Of those, 95 percent have been addressed and
closed and 5 percent, or 386 recommendations, remain open.
Collectively, these reports have resulted in $37.3 billion in
achieved monetary benefits to the Department, with additional
potential monetary benefits of $3.5 billion based on open
recommendations.
We have a strong follow-up program for tracking the status
and implementation of recommendations and have found DOD
leadership to be responsive to our recommendations. I believe
the high level of responsiveness is a direct result of our
focused oversight efforts.
We prioritize our activities to ensure oversight is timely,
relevant, and responsive to the dynamic environment within the
Department and annually we prepare and submit our summary of
what we consider to be the most serious management and
performance challenges facing the Department. These challenges
include acquisition processes and contract management;
financial management; joint war fighting and readiness;
information assurance, security and privacy; health care;
equipping and training Iraq and Afghan security forces; and the
nuclear enterprise.
Additionally, we treat oversight pertaining to life and
safety issues as a top priority. For example, over the past
several years our office has found faulty testing of personal
protective equipment, as well as electrical and fire safety
issues.
My prepared statement provides a number of recent examples
that illustrate how our recommendations have identified ways
for the Department to be more efficient and save money. For
example, in September of 2012, we issued a report on the
Missile Defense System that questioned the planned procurement
and identified over $2.5 billion in potential savings.
Management agreed with our report and recommendations, stating,
``the impact of the current fiscally-constrained environment
compels redirection of funding to other systems.''
We are currently following up with management to document
the actions taken and the actual savings realized.
We have also identified $423.7 million in potential
monetary benefits that could be achieved through more effective
use of existing inventory and procurement in spare parts. The
Department is also currently taking action on those
recommendations.
Financial management is another challenge area where
potential monetary benefits and savings can and have been
identified. Our office has issued a series of reports which
address concerns with the Department's financial systems. In
these reports, we recommend that DOD halt deployment of
specific systems until our concerns are addressed.
While the Department continues to take action to improve
these processes, my staff and I remain concerned that the
Department will have difficulty in meeting their financial
readiness goals.
I thank the committee for inviting me to testify on
opportunities to reduce waste and improve efficiencies at DOD
through implementation of our recommendations. We look forward
to working with Department leadership to ensure our concerns
are addressed in a timely manner. Given the fiscal challenges
the Country is facing, every dollar we can save and put to
better use is critical.
This concludes my statement today. I request my written
statement be included in the record and welcome any questions
the committee may have.
[Prepared statement of Ms. Halbrooks follows:]
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Chairman Issa. Without objection, all opening statements
will be placed in the record.
With that, we recognize Secretary Borras.
STATEMENT OF THE HONORABLE RAFAEL BORRAS
Mr. Borras. Chairman Issa, Ranking Member Cummings, and
other distinguished members of the committee, thank you for the
opportunity to discuss the efforts to improve efficiency across
the Department of Homeland Security.
As the chief management official at DHS, I oversee policy,
operations, and oversight for each of the critical management
lines of businesses. These include acquisition, human capital,
budget and finance, information technology, capital assets, and
security.
One of the top priorities during my three-year tenure has
been to lay the groundwork to systematically integrate the
Department's management infrastructure. My personal experience
as an executive in the private sector, as well as in the
previous Federal and local government positions, has shown that
building a strong and accountable management foundation is the
best way to ensure that any organization operates at peak
efficiency. Expanding on the work of my predecessors at DHS, I
believe we are making significant progress to strengthen and
mature that foundation.
When the current administration arrived in 2009, the
management infrastructure was relatively decentralized and some
of the basic management authorities and delegations at the
headquarters level to the Components needed to be updated.
Working with the Components, we made lines of authority in
oversight much clearer, providing headquarters with better
visibility into the Components day-to-day operations. This has
resulted in significant improvements to both the financial and
acquisition management areas.
The Government Accountability Office's 2013-15 high-risk
report acknowledges that significant progress has been made
over the past three years to transform and integrate our
management functions. We value the independent analysis
provided by both the GAO and the OIG, and use their assessments
as a barometer to measure our progress and to continue to make
improvements.
I am pleased to be joined today by Acting Inspector General
Edwards. The Department has fostered an open and collaborative
relationship with the OIG to find and reach resolution on their
recommendations. Since March 2011, DHS has concurred on over 95
percent of the OIG's recommendations and has increased the rate
of closeout in findings from recommendations from 56 percent to
nearly 75 percent. We expect this positive trend to continue.
It is clear to me that we share the same goal: to improve the
quality of management at the Department.
I would like to take this opportunity to describe how
enhancements for our management infrastructure are improving
efficiency, specifically in the areas of acquisition and
financial management.
The acquisition management function plays a key role in
supporting the Department's mission goals. As a DHS chief
acquisition officer, I oversee annual expenditures of roughly
$18 billion and have instituted several changes to improve the
quality and the accountability of the Department's acquisition
structures and processes. In 2011, I restructured and
strengthened oversight of all major acquisition programs, which
included creating an Office of Program Accountability and Risk
Management, or PARM, and requiring the office to report
directly to me. PARM ensures that all programs comply with
Management Directive 102-01, which is the principle policy
guiding the governance and the development and the execution of
all programs.
In the financial management area, for fiscal year 2012, DHS
received its first qualified audit opinion on all five of its
financial statements. This full-scope audit opinion is a
pivotal step towards increasing transparency and accountability
for the Department's resources and is a result of DHS's ongoing
commitment to instituting sound financial management practices.
We are focusing resources to obtain an unqualified opinion for
2013.
The Department has also made significant improvement in its
efforts to eliminate improper payments above and beyond the
statutory requirements. Since 2009, DHS has been found
compliant with the Improper Payments and Elimination Recovery
Act of 2010 and its predecessor, the Improper Payments
Information Act of 2002. Since mid-2010, we have recouped or
resolved 95 percent of the $21 million reported as high dollar
overpayments. We continue to improve payment controls and to
process and maintain good stewardship of taxpayer dollars.
Since the beginning of the administration, DHS has made an
unprecedented commitment to efficiency, fiscal discipline, and
accountability. Since 2009, DHS has identified over $4 billion
in cost avoidances and reduction, and have redeployed those
funds to mission critical initiatives across the Department.
Driving consolidation, integration, and standardization
across the IT infrastructure is critical to realizing
additional efficiencies. We have, for example, consolidated 18
legacy data centers into two state-of-the-art enterprise data
centers. A CFO audit revealed that these migrations have
resulted in average annual savings of $17 million.
Concluding, in the past four years the Department has made
substantial strides to integrate management, improve
efficiency, and maintain our service levels, despite operating
with a relatively flat budget. We take seriously our
responsibility to be good stewards of taxpayer money and I
firmly believe we have a stronger, more integrated management
structure that will continue to yield positive results.
I thank you for the opportunity to appear here today and I
look forward to answering your questions.
[Prepared statement of Mr. Borras follows:]
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Chairman Issa. Thank you.
General Edwards?
STATEMENT OF CHARLES EDWARDS
Mr. Edwards. Good morning, Chairman Issa, Ranking Member
Cummings, and members of the committee. Thank you for the
opportunity to discuss the work of DHS Office of Inspector
General.
Since our inception in 2003, DHS's OIG has issued 8,068
recommendations to the Department, of which 1,253 remain open
and unimplemented. My testimony today will discuss and address
a few high priority open recommendations which require focus on
ways the Department can improve its program operations, reduce
fraud, waste, and mismanagement.
First, DHS personnel require interoperability to
communicate both with other DHS components and external
partners. DHS established a goal that all components would be
able to communicate using interoperable radio systems by
establishing a common radio channel and purchasing standardized
equipment.
However, in November 2012, we reported that only 1 of 479
radio users we reviewed could access and communicate using the
specified channel, and only 78 of 382 radios tested contained
all the correct program settings. We recommended that DHS
develop and disseminate policies and procedures to standardize
Department-wide radio use to ensure interoperability.
A second example involves CBP's unmanned aircraft system
program. Congress appropriated more than $240 million to
establish this program and CBP developed plans to use the
unmanned aircraft's capabilities. We reported in May 2012,
however, that CBP's approach may underutilize resources and
limit CBP's mission. We recommended that CBP analyze
requirements and develop plans to achieve the U.S. mission
availability objective and acquire funding to provide necessary
operations, maintenance, and equipment.
The third example involves FEMA. In January 2012, we
reported that only 6.3 percent of the public assistance
projects for Louisiana had been closed out in the six years
since Hurricane Katrina made landfall. Many of those projects
are years past the closeout deadlines. They could involve
substantial amounts of obligated funds that could be put to
better use. The Federal Government provided 100 percent funding
of the public assistance projects and, therefore, the State has
no incentive to close completed projects. We recommended that
FEMA develop and implement policies, procedures, and time lines
to ensure the projects with 100 percent Federal funding are
closed timely.
Additional high priority open recommendations focus on the
accountability issues of financial management, information
technology management, and cybersecurity. For example, although
DHS produced auditable financial statements in fiscal year 2012
and obtained a qualified opinion on those statements,
challenges remain. DHS's financial management systems are not
able to process, store, and report financial data in a manner
to ensure accuracy, confidentiality, integrity, and
availability.
With respect to IT management, CBP has the largest IT
budget among the DHS components. Although the CBP chief
information officer has taken several actions to support
effective IT management, we reported in June 2012 that system
challenges remain, including issues of systems availability,
interoperability, and functionality.
Finally, in the area of cybersecurity, we have open
recommendations regarding the risk of insider threats at TSA
and the implementation of international cybersecurity programs.
In conclusion, DHS has a critical role to play in ensuring
national awareness, preparedness, and coordinated response to
potential emergency situations, suspicious activities, and
terrorist threats. Our reports provide the Department Secretary
and Congress with an objective assessment of the issues, and at
the same time provide specific recommendations to correct
deficiencies and improve the economy, efficiency, and
effectiveness of the Department's programs.
Our work, however, is only effective if the Department
implements corrective actions timely to address deficiencies
and weaknesses. Doing so will help ensure that the Department
exercises proper stewardship of Federal resources.
Mr. Chairman, this concludes my prepared remarks, and I
would be happy to answer any questions that you or the members
may have.
[Prepared statement of Mr. Edwards follows:]
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Chairman Issa. Thank you all.
I will now recognize myself for a round of questioning.
Ms. Halbrooks, do you have subpoena authority as the IG at
DOD?
Ms. Halbrooks. Yes. We have documentary and testimonial
subpoena authority.
Chairman Issa. Have you ever had to use your testimonial
subpoena authority?
Ms. Halbrooks. We have, sir. We have used it twice.
Chairman Issa. Ever?
Ms. Halbrooks. Yes.
Chairman Issa. Does that mean you don't need it or does
that mean that the fact that you have it means people
reasonably comply in a timely fashion for interviews?
Ms. Halbrooks. The latter. While we have issued it twice,
there have been a few other occasions where we have indicated
our intent to issue one, and witnesses have cooperated.
Likewise, of course, immeasurable is the effect of just having
it and people knowing that we have it.
Chairman Issa. Mr. Edwards, do you have such subpoena
authority?
Mr. Edwards. No, sir.
Chairman Issa. Loaded question: Have you asked people to
testify and they have simply declined and you have been unable
to get them?
Mr. Edwards. Not that I am aware of, sir.
Chairman Issa. Is there currently a system, General
Halbrooks, is there currently a system for anybody to get
testimonial subpoena authority other than yourself?
Ms. Halbrooks. We are the only inspector general's office
that has testimonial subpoena authority. It was given to us in
the fiscal year 2010 National Defense Authorization Act.
Chairman Issa. So you have had it for a few years. Have you
abused that authority?
Ms. Halbrooks. We have been very careful and judicious, and
have not abused that authority. The rule of the law requires
that we notify the Justice Department before we issue those
subpoenas, and that has gone very well.
Chairman Issa. So you have worked in consultation with the
Justice Department. And have they made suggestions,
corrections, any kind of input over the years?
Ms. Halbrooks. No. They have concurred or not objected to
our issuance of the subpoenas.
Chairman Issa. Now I am going to go out on a limb. Do you
believe that this committee should provide a system for all IGS
to have access to similar authority?
Ms. Halbrooks. That is a difficult decision. It certainly
has helped us. It is something that I think has to be used
carefully and with specific controls in place. We are
comfortable we have those controls and that we use it very
judiciously. I am not sure how that would translate to the rest
of the IG community, sir.
Chairman Issa. Well, Mr. Hale, would you say that this is a
tool that you are happy that your IG has?
Mr. Hale. I think the IG system is working fine, Mr.
Chairman. I will stay with that. I think we get good help and
we try to respond, as Ms. Halbrooks said.
Chairman Issa. Okay. It is obviously an area of interest
for myself on this committee.
Mr. Borras, Under Secretary Borras, you have increased, not
just you, but your predecessor, have increased by about 5,500
TSA individuals between 2005 and 2012, 1,000 for general work,
this is full-time equivalents, and 4,500 for agents to operate
advanced image technology systems, is that correct?
Mr. Borras. I don't know the exact number, but there has
been an increase.
Chairman Issa. Okay. Well, suffice to say we got it from a
letter. And this committee has held an awful lot of hearings on
the failure of those advanced imaging systems, and it doesn't
surprise you, I am sure, to know that the last 14 or 15 times I
have gone through security I haven't gone through those imaging
devices because, more and more, people are moving back to the
old ones.
When you are looking at how to accomplish sequestration,
have you considered simply this 8 percent reduction in force
through attrition to accomplish a big part of it? In other
words, recognize a failure as a failure and allow attrition at
TSA to pay for a big part of sequestration?
Mr. Borras. Well, Mr. Chairman, as you know, the PPA
structure in TSA is structured in such a way that salaries, for
example, are their own PPA and subject to the effect of
sequestration, and we don't have the ability to----
Chairman Issa. Wait, wait, wait a second, please. Your
attrition at TSA is high. If, 19 months ago, you had put a
hiring freeze on, today you would have more than 5500 less TSA
agents. Now, you might have to hire some or transfer some, but
you would have accomplished that if, 19 months ago, when
sequestration was signed by the President.
And, Mr. Hale, I wish you hadn't said it was mindless in a
way that disparages the President. Hopefully you didn't mean
that when he signed it.
Mr. Hale. I had in mind the law.
Chairman Issa. Well, it has his signature on it and my vote
on it, so it is double mindless, perhaps.
Again, I go through security. Virtually everybody up here
on the dais goes through. We are acutely aware that TSA is an
organization that is very large, has a lot of people. It is
your largest single budget item. Again, if you made decisions
19 months ago to use attrition as a tool, wouldn't you have
substantially less people on the payroll, if you had made plans
to work with less people? I understand that it is a union
organization, you can't just be arbitrary. But if I have a
choice of furloughing today or planning ahead, if I have an
idea of how I can work with less people, why didn't you do
that, and wouldn't it have reduced that number?
Mr. Borras. Well, Mr. Chairman, two things. One, certainly
there was an expectation within DHS, and I would suppose in
both the administration and Congress, that sequestration would
never come to pass. However, we did prudently look at various
options. One of the things we had to be mindful of is not
violating the Impoundment Control Act, where you would
willfully withhold monies in spite of the way the monies were
appropriated. So we did look at and we have instituted across
the Department, certainly since March 1st, since we have had
sequestration in place, hiring freezes.
There still is volatility as it relates to the impact of
sequestration. The Senate CR bill that may pass has some
significant changes particularly that affect TSA. One example
would be the FAMS.
Chairman Issa. Okay, well, my time has expired. I just want
to quickly comment. If you didn't anticipate and begin doing
things after the President signed the law, it would certainly
not be prudent to anticipate some relief coming from a future
action now. But for all of us on the committee, sequestration,
many of us thought, would be negotiated out, but the reduction
of 2.3 percent was always still the law.
So your anticipation of not having across-the-board had to
recognize you still were expecting a substantial portion of
that 2.3 to hit each of your areas that you could save in. So
to say that you didn't think 2.3 was going to happen is to say
that you didn't expect that the President signed that reduction
in good faith. He did sign it in good faith; it meant that you
had to prepare for that, and apparently you didn't. And we will
hear from the FCC and a few other entities that did exactly
what we described, began reducing their headcount of full-time
equivalents in advance.
With that, I will yield to the ranking member for seven
minutes.
Mr. Cummings. Can I have 7.5, like you did, Mr. Chairman?
It was 7.5.
Chairman Issa. Sure.
Mr. Cummings. Thank you.
Chairman Issa. I was just rounding.
Mr. Cummings. Okay. Let's round up.
Mr. Edwards, do you believe that you need testimonial
subpoena authority?
Mr. Edwards. The IG community is divided. Of course, from
DHS we do believe that we would need that.
Mr. Cummings. And so although you have never had a problem
getting witnesses in, you feel like you need it? Can you
explain why?
Mr. Edwards. Well, because when we need to go and reach
outside of DHS employees or contractors, without having that
authority, we have to still go to the Department of Justice.
And we have been very prudent in every action that we have
taken, and I feel, and many in the IG community also feel that
having this authority would only bolster the IG's role.
Mr. Cummings. Ms. Halbrooks, your job is to oversee the
Department of Defense, the biggest agency in the Federal
Government, with an annual budget of more than $1 trillion. In
your written testimony, the number one area you highlight for
reform is acquisition process and contract management. You say
``challenges include obtaining adequate competition, defining
contract requirements, obtaining fair and reasonable prices,
and oversight of contract performance.'' Is that right?
Ms. Halbrooks. That is right, sir.
Mr. Cummings. And with that in mind, I want to ask about
the largest weapons contract in history, the Joint Strike
Fighter. So far, the Department has spent 12 years developing
this deeply flawed aircraft and the cost has skyrocketed to
about $400 billion, is that correct? Is that correct, ma'am?
Ms. Halbrooks. That is my understanding.
Mr. Cummings. You don't know that?
Ms. Halbrooks. We haven't done any work ourselves in the IG
office. I know GAO recently issued a report on the cost
overruns, but we have not looked at that particular weapon
system with respect to cost overruns.
Mr. Cummings. So something costing $400 billion and $1
trillion over 30 years, is it just the way you operate that you
don't look at these weapons systems or what? I am kind of
confused here.
Ms. Halbrooks. No, we do look at weapons systems. I
certainly don't want to leave you with that impression. Major
weapon system acquisition is a focus of our work and the one
example that I illustrate in my testimony of the JLENS program.
Mr. Cummings. Right.
Ms. Halbrooks. We were able to save the Department $2.5
billion when they agreed to cancel that program.
On the F-35, and we continue, by the way, to look at other
ACAT1 and ACAT2, the largest investments in the Department.
They have 83 of the high value programs at $1.6 trillion and
116 ACAT2s. So we do focus on that and that is going to be a
continued area for renewed focus for the remainder of time.
What we have done with the F-35 is decided that the value
that we could add, because the cost overruns have been looked
at in other places and certainly the Department leadership is
aware of them, as well as the program office in GAO has added
insight, we have undertaken this past year to do an assessment
of the quality management of the system. So we have been to
several contractor and subcontracting sites where they are
actually producing parts of the F-35 and looked at whether the
Government is getting what they have paid for. We have issued
notices of concern with respect to the quality management and
oversight at each of those plants. We will be rolling those up
and issuing a final report in the next few months.
Mr. Cummings. Okay, I am glad you said that because this
reminds me so much of the Deepwater project with the Coast
Guard. I swear, it is almost like a mirror type situation. So
you just said some very significant words, something that I
used to say when we were dealing with the Deepwater project. I
said, is Government getting what it paid for.
Now, Ms. Halbrooks, combat planes need to fly at night,
would you agree?
Ms. Halbrooks. Yes, sir.
Mr. Cummings. They need to flight at night. The same
testing office reports that this plane does not yet have combat
capability, nor can it fly at night. Would you agree that
combat planes need to be able to engage in combat?
Ms. Halbrooks. Yes, sir.
Mr. Cummings. Yes. And the Navy's version of this plane
can't land on aircraft carriers. Ms. Halbrooks, I assume you
would agree that this is a significant problem.
Ms. Halbrooks. It is, sir. And if I could add, you
mentioned the Office of Test and Evaluation within the
Department, and that is, I think, an example of the attention
that the Department is giving this and how we have decided to
use the IG resources in a way that complements that, in terms
of focusing on the quality and what is happening in the
individual plans, and not duplicate the oversight that is
happening elsewhere.
Mr. Cummings. But I want to go back to something that you
said, and I mentioned it a little bit earlier. You said the
challenges include obtaining adequate competition, defining
contract requirements, obtaining fair and reasonable prices,
and oversight of contract performance. One of the things that
we discovered in the Deepwater process is that we had extremely
poor acquisition process. In other words, the people who were
doing the acquisitions were not necessarily qualified to do
them. When we changed that, we suddenly saw a big difference.
Is this a situation where we have an acquisition problem? I
mean, is that part of the problem or do you know?
Ms. Halbrooks. I think that is right. I think our reports
have shown that over time and I think the Department has
knowledge the acquisition workforce over the past several years
has languished and that they have been trying to staff up and
improve the quality of that workforce. But the lack of contract
oversight, especially in the contingency operations, as
Congressman Tierney talked about, remains a vulnerability for
the Department.
Mr. Cummings. Ms. Halbrooks, to your office's credit, the
IG sounded the alarm on this flawed approach to acquisition
years ago, and your office and the Government Accountability
Office warned about the practice of something called
concurrency. That is when the Department produces and buys
planes while critical testing is still going on.
Mr. Hale, let me turn to you. Right now these planes don't
work. Only a fraction of the testing is complete. Yet, the
Department still plans to buy nearly 2,500 planes at a cost of
$400 billion. The Department's own acquisition chief, Under
Secretary Frank Kendall, called this ``acquisition
malpractice.''
Mr. Hale, do you agree with Mr. Kendall? Do you think this
is acquisition malpractice?
Mr. Hale. I am going to let Mr. Kendall defend those words,
Mr. Cummings.
Mr. Cummings. Well, what do you think?
Mr. Hale. I believe we need the F-35. I know that is true.
We have a badly aging Air Force fleet and a badly aging Marine
Corps fleet in particular, as well as problems in the Navy. But
I sit every day in staff meetings with Frank Kendall and I know
that he is deeply involved in trying to do a better job
managing the F-35, which does have problems. I am also
convinced, based on 40 years of watching the Department, we
will make this plane work at night and land on carriers, and
all the things it needs to do.
Mr. Cummings. To the tune of $1 trillion over the next 30
years? One trillion? How long do we have to wait?
Mr. Hale. The plane is still in development, so we will
need to wait until we solve these problems. I understand your
concerns, and we share those concerns at the Department, but we
know we have to make this plane fly and fly right, and I
believe we will do that.
Mr. Cummings. Thank you, Mr. Chairman.
Chairman Issa. Thank you.
We now go to Mr. Mica.
Would the gentleman yield for 10 seconds?
Mr. Mica. Yes.
Chairman Issa. I might note that we will spend over $150
trillion over that period of time, just to put the trillion
dollars in perspective.
I yield back.
Mr. Mica. Thank you.
Mr. Borras, how much is the total DHS budget, did you say?
In your testimony you gave a multibillion figure.
Mr. Borras. I was referring to the----
Mr. Mica. Well, what is your total? What do you spend in
DHS?
Mr. Borras. The gross amount?
Mr. Mica. The gross amount.
Mr. Borras. The gross amount is just under $60 billion.
Mr. Mica. Sixty billion. Okay, here is one of the
categories of DHS, just your management, sort of your top
bureaucracy. You spend $324 million under the category of
Office of Chief Information Officer, is that correct?
Mr. Borras. That appears to be.
Mr. Mica. A third of the billion dollars for information
office.
Is that an area, Mr. Edwards, that might be a candidate for
some cost savings? Is that absolutely essential for the process
of DHS, Mr. Edwards?
Mr. Edwards. Well, DHS spends about $6 billion in IT
systems and infrastructure. Office of Chief Information
Officer.
Mr. Mica. Yes. So it might be a candidate.
Mr. Edwards. Sure.
Mr. Mica. Okay. Just my point.
Let me drill down a little bit to TSA. First, the Secretary
said, this is the 4th of March, we are going to see lines 150
to 200 percent as long as we see, and this is at TSA screening
points. Are you aware of that, Mr. Borras?
Mr. Borras. Yes, I am.
Mr. Mica. Do you know any reason why she shouldn't step
down as Secretary when she makes a remark like that? Do you
agree with it? Maybe we should have you step down too. Because
there is no reason in an agency, how much is the agency's total
budget? How much is the agency's total budget? It is $5.5
billion for TSA.
Mr. Borras. For TSA?
Mr. Mica. Yes.
Mr. Borras. Yes.
Mr. Mica. And within that you can move money around, can't
you, for sequestration?
Mr. Borras. You cannot move money without reprogramming
authority.
Mr. Mica. No, but, again, within the $5.5 billion, you have
to cut $276 million. Now, let me ask you a question about how
many personnel you have in TSA headquarters. Offline we have
3,900, just a hair under 4,000 people in administration,
making, on average, $103,000 a year. Is that correct?
Mr. Borras. I don't know the exact number.
Mr. Mica. Well, you should know. That is what is correct.
It is online. That is the amount. And you have how many
screeners? According to your online, also, 51,277? Is that
correct, or in that range?
Mr. Borras. In that range, yes, sir.
Mr. Mica. And you can't move some of the people out of
administrative positions, sitting on their butt within just
miles of the capitol of Washington, and put them to work? I
mean, we should have the secretary out there screening people,
if we need to do that to expedite people through the airport,
and you.
This is a joke. She needs to find other employment soon,
and you may need to find it, and some of the 4,000 people
making $103,000 a year, and tell the public that they may be
waiting three and four hours. You have the discretion to move
money and personnel around within that account, isn't that
correct?
Mr. Edwards. Yes.
Mr. Mica. To meet that, Mr. Edwards? Mr. Edwards, the IG,
just said yes.
This is one of the most shameful things I have seen any
agency do, and you are bloated beyond control. You have almost
66,000 people; you have 10,000 administrative people out in the
field. Do you know the percentage of people in the headquarters
that are supervisory level? You ought to look at this
information. It is nearly 27; it is 26.8 percent. And some of
those positions can't be sequestered, Mr. Borras?
We never intended Homeland Security to bloat to this
extent. I was one of the authors of TSA. I can tell you that
was never Congress's intent. We never intended Homeland
Security to grow to an agency that is totally out of control.
This is an outrage to the American people. I am offended by the
Secretary of Homeland Security to tell us and the American
people that they are going to be subject to her form of torture
to try to make sequestration look like it can't be handled,
that we can't make these cuts and reductions from
administrative overhead from management. Ten thousand people
out in the field.
How many airports are there where there is TSA presence,
Mr. Borras, in the United States?
Mr. Borras. It is about 470.
Mr. Mica. Four hundred fifty-seven. And 30 airports have 70
percent of the traffic, right? So you have airports with
private screening, like Rochester, New York, Kansas City,
Kansas, with 15 to 18 TSA administrative personnel that you
don't need. You can get rid of some of these people. You can
get rid of some of the people and get them out of the offices
across the Potomac and around Washington, get them to work. And
51,000 screeners. Congress even put a cap of 40,000 screeners
at one time. We started with 68,500. What are you doing? It is
outrageous.
Chairman Issa. I thank the gentleman.
Mr. Mica. I yield back the balance of my time.
Chairman Issa. Under Secretary, if you would like to
answer, I will allow time. I know there were a lot of questions
there.
Mr. Borras. There were a lot of questions there and there
were a lot of characterizations of both the intent of the
secretary and of the Department. I appreciate the Congressman's
concern for aviation security. He has been very outspoken over
the many years.
Let me just say that we are doing everything we can to
minimize the impact of sequestration not just in TSA, but
across the board in the Department. I will say that the
leadership is absolutely committed to minimizing the disruption
of the services of the Department to both the traveling public,
to the movement of cargo, to aviation security, to the
protection of the President, to the response of natural
disasters and otherwise. Sequestration is pretty much agnostic,
Mr. Chairman.
Chairman Issa. I apologize for interrupting, but we are
sort of on overtime that belongs to the other party. The
gentleman, in that, did ask you if you could have reduced or
you could reduce some of the administrative overhead. That
seemed to be a clear question. Could you answer that? Then we
will go to the other side.
Mr. Borras. We are looking at, certainly, all of the
overhead expenses, not just at TSA, across the board. We have
instituted, in TSA, a hiring freeze; we have reduced overtime,
which will have an impact, progressively, over time, not
immediate, will have a progressive impact on operations. But we
are looking at all areas.
Chairman Issa. Thank you.
Mr. Tierney.
Mr. Tierney. Thank you, Mr. Chairman.
I know that this may not have been the intent of some
people that put the Homeland Security laws together, but as one
who voted against it, I think it was something we all could
have anticipated would happen with the creation of a new
department, it would blow out of control. I think at the time
we said it was like rearranging the deck chairs on a sinking
ship, as opposed to doing something constructive.
Chairman Issa. Would the gentleman yield? I heard it as
strapping together multiple sinking ships, actually.
Mr. Tierney. So here we are, and the fact of the matter is
that we look at these things and we never should have let it
get to sequestration. And I would hope that all these concerns
that we show, Congress has the ability to dictate how money is
spent, and maybe we ought to take some of that responsibility
on ourselves, instead of grilling some of these witnesses.
You are here and you should get grilled for your testimony
or whatever, but Congress spends the dime. We ought to be
deciding what money is going out to these departments. Then we
don't have to argue with you about how it is spent. So if we
accept some of our responsibility, and if we had accepted it
long before sequestration, life would have been better for a
lot of different people and we could have avoided all of this.
Now, Mr. Hale, I understand that the Joint Strike Fighter
has actually been spared any major cuts under the sequester, is
that correct?
Mr. Hale. No. It is a program project activity. It will
take at least a 7.8 percent cut, depending on how it comes out.
It will be reduced.
Mr. Tierney. Okay. How do you intend to reduce it?
Mr. Hale. The program manager will decide. They will look
at a variety of things; support equipment, management reserves
I would guess would be the start, but I expect we will buy
fewer aircraft, probably two to four, and I think they are
still thinking how they will do that. Incidentally, the whole
game may change again, as Congress passes a budget, if they do
so this week, because it will significantly affect the program
project and activity status or structure.
Mr. Tierney. Well, respectfully, I say to you your defense
of the F-35 reminds me of the defenses I used to see of the F-
22, and it is really a little bit disturbing. This program is
out of control, and it looks to me like it is a program that
just got too big to kill, and we find people just running
around, not wanting to do what I think is pretty clearly
indicated should be done on this.
I note that in the Simpson-Bowles report; I note it on the
Stimson report, a whole bunch of other reports that come out
and indicate that this program is just growing exponentially,
not necessarily to the benefit of the American people or our
defense on that.
Let me switch the subject, if I can, Ms. Halbrooks. We have
a number of laws and regulations on the books that purport to
encourage or to stop single source contracting. We really ask
for full and open competition. Can you tell us a little bit
about what risks are engendered by the failure to openly bid
and compete a contract?
Ms. Halbrooks. I think open competition is inherent to
getting the best pricing, the best value for the Government,
and making sure that contracting is done in the most efficient
and effective way. So it is a foundational concept that we
compete contracts for the best price for the Government.
Mr. Tierney. Well, recently, The Washington Post, among
others, reported that no-bid contracts are increasing.
Mr. Hale, I think one of the things that was reported is
that the Department spent $100 billion on no-bid contracts last
year. Is that correct?
Mr. Hale. I don't know that number. I will check for you.
But there is a lot.
Mr. Tierney. Would you get us that information, please?
Mr. Hale. Yes. I will supply it for the record.
Mr. Tierney. All right. So this happens even more in
wartime. We found that out through the investigations we did on
our own; we also found it out through the Wartime Contracting
Commission, who said it was an unprecedented degree of no-bid
contracts in both Iraq and Afghanistan and, really, there was
no adequate competition on that.
One example of that was $36 billion for the Logistics Civil
Augmentation Program 3 contract. That was awarded to KBR,
Kellogg, Brown and Root. The Army did not require competition
on any task orders under the contract for eight full years. So
in the absence of that full and open competition, no one should
be surprised when the Defense Contract Audit Agency found high
amounts of questioned and unsupported costs.
So we see this happening time and time again. It tends to
create, particularly with the bridge extensions. Can you tell
us how many of those sole-source bridge extension contracts
exist, Mr. Hale?
Mr. Hale. I don't have that number either.
Mr. Tierney. Would you get us that information as well?
Mr. Hale. We will get that for the record.
Mr. Tierney. It seems that that is being used to avoid re-
competing the contract and it really creates an advantage for
incumbent contractors, sort of stifles competition.
What steps are you taking in the Department to sort of end
that practice or to increase competition and reduce sole-source
contracting?
Mr. Hale. Well, the strongest one is a commitment to it,
and we are committed to it. As Lynne said, it is a key. We are
struggling right now because one of the best sources of
competition is services contracting, and it is being cut
severely as we try to achieve efficiencies, and it will be cut
under sequestration and the other problems that we face.
We are also, with lower budgets, finding it is harder to
maintain multiple contractors in some of these large programs,
because it is expensive up front to do it. But we share the
commitment to competition is key to getting lower prices.
Mr. Tierney. Just on the Defense Logistics Agency and the
food contract over in Afghanistan there is a $750 million
discrepancy in that contract, and yet they are giving them
another sole-source contract for an extension on that. That
kind of thing just seems absurd.
Ms. Halbrooks, are you satisfied with the answer Mr. Hale
just gave?
Ms. Halbrooks. Well, I appreciate his commitment, and the
Department's, to ensuring that sole-source contracts are
scrutinized, but I think there still is a way to go. And the
prime vendor example that you gave in Afghanistan does still
present a concern, although we are encouraged that, after we
issued our report, with potential monetary benefits of $125
million on that contract, that DOA actually went back and
further scrubbed the books and looked deeper and is trying to
recoup substantially more than that, which does show to me a
willingness of the Department to take our IG recommendations
and apply them more broadly to the problems at hand.
Mr. Tierney. Except they gave the contract to the same
company again.
Ms. Halbrooks. True.
Chairman Issa. Thank you.
We now go to Mr. Walberg. We now go to Mr. Farenthold. Mr.
Farenthold, would you yield for 10 seconds?
Mr. Farenthold. Absolutely, Mr. Chairman.
Chairman Issa. I just want to read from my Wikipidea on the
F-22 Raptor. Sixty-six billion dollars was the program cost,
180 are in service and it continues to be a mainstay and a
critical element in the stealth inventory of the Department of
Defense.
I will let that be answered later.
Mr. Farenthold.
Mr. Farenthold. Thank you very much, Mr. Chairman. As a
member of the Transportation Committee, I am also deeply
concerned about the TSA, so, Mr. Borras, Chairman Mica asks you
about the statement Secretary Napolitano made, seeing doubling
of wait times in airports as a result of sequestration. Has
that happened?
Mr. Borras. I am not aware that we have had any doubling of
wait times at airports across the Country.
Mr. Farenthold. Has there been any significant measurable
increase that you are aware of?
Mr. Borras. I am aware of, in some instances, where, in
some airports, due to the elimination or reduction of overtime
that is required and has resulted in some additional wait time.
Mr. Farenthold. You are aware that the UK's Telegraph
reported that airport officials at two of our busiest airports,
Atlanta and LAX, have reported no significant changes in wait
time, nothing beyond what is normal.
I guess my concern, and we are seeing it throughout the
Government, is the scare tactics associated with sequestration
and bad choices being made on where to implement those cuts.
Are you all still talking about doing furloughs within the TSA?
Mr. Borras. No.
Mr. Farenthold. All right. So how are you looking at
meeting those cuts?
Mr. Borras. Predominantly, again, the cuts at TSA cut
across the various program plan activity accounts, the PPAs.
The way TSA is structured, most of their salaries and expenses
are in individual PPAs, so those will be subject to the 5
percent cut.
Mr. Farenthold. So you are going to cut salaries, then?
Mr. Borras. No. You will have to reduce overtime; you will
reduce training in other accounts.
Mr. Farenthold. Okay. And the chairman pointed out was it
over 25 percent, one in four, there is one manager for every
four TSA employees? I mean, that seems awful high to me, too.
Mr. Borras. I don't know that that is the number. I would
be happy to provide the committee with a complete accounting of
the supervisory staff ratio.
Mr. Farenthold. And with these cuts you all are still
hiring, right?
Mr. Borras. No, we have a hiring freeze.
Mr. Farenthold. Then how come there are 54 security
specialist jobs currently posted on the Federal Government
employment Web site?
Mr. Borras. Well, I don't know what date those were posted.
Mr. Farenthold. That was today.
Mr. Borras. I don't know what the posting date of those
were.
Mr. Farenthold. All right, so you are wasting people's time
having them apply for jobs that aren't there. You might want to
go ahead and take those down.
Mr. Hale, I wanted to visit with you about some of the
Defense Department issues. I have a Corpus Christi Army Depot
in the district I represent and they are potentially facing
furloughs, despite saving the Government a ton of money on
repairing rotary wing aircraft. But assuming the Senate passes
the MilCon VA and DOD appropriations similar to the House, are
you going to have the flexibility to minimize furloughs and
cuts and the overall effect of the sequestration on the program
if we give you more reprogramming authority in an
appropriations bill, as opposed to a CFR?
Mr. Hale. Well, first, we didn't, unfortunately, get, so
far, at least, any additional transfer authority for
reprogramming. Our problems are more than sequestration, Mr.
Farenthold. You are probably aware of this, but the continuing
resolution has the money in the wrong places. That will get
fixed if the Congress passes it.
But we have numerous other problems. We are going to
protect our wartime spending, which means we have to take
disproportional cuts in the base budget; and, unfortunately,
right now we are spending more than we anticipated two years
ago when we put together the wartime budget. When you add all
that up, over the next seven months, we are about 40 percent
short, under current laws, of our needs for O&M, which is
causing the readiness crisis.
The bill that is before Congress or the Senate right now,
if it passes, will solve about a third of that, but we will
still be in a crisis situation. We are going to have to cut
training and lay off people.
Mr. Farenthold. I appreciate that. I am running out of
time. I don't mean to jump around, but I do want to get to Mr.
Edwards and ask him a question specifically with respect to IT
and homeland security. One of you all's recommendations was
increasing security from possible insider threats by simple
things like disabling the USB port on computers so rogue
employees couldn't download all sorts of data. Have those been
implemented yet?
Mr. Edwards. Thank you, sir. TSA did not concur with us, so
that remains still unresolved.
Mr. Farenthold. It seems to me like every low budget spy
movie you have has somebody plugging something into a USB port
and walking off with all sorts of data. Just turning those off
would seem like an inexpensive, easy recommendation. And there
are quite a few other recommendations throughout Homeland
Security that haven't been implemented and would save money, is
that not correct?
Mr. Edwards. There is 1,253.
Mr. Farenthold. Thank you very much.
I yield back.
Chairman Issa. I thank the gentleman.
We now go to the gentlelady from California, who was here
at the bell, Ms. Speier.
Ms. Speier. Mr. Chairman, thank you, and thank you to those
at the witness table.
I would like to spend a couple minutes talking about Ms.
Halbrooks' document, that we should probably spend an entire
hearing on, because it talks about an issue that I thought was
fixed decades ago, when we had gold-plated toilet seats, and we
are paying exorbitant amounts of money for parts.
In one of your reports you reference a ramp gate roller
assembly, it looks like this little roller that you might see
on a dishwasher, that was actually purchased at the Corpus
Christi Army Depot. Its cost from the Defense Logistics
Administration would be $10.25, but we, at the Corpus Christi
Army Depot, paid $1,626 for that.
Now, that is a 15,768 percent cost increase. Why are we
still having these kinds of problems? To you, Ms. Halbrooks and
Mr. Hale.
Ms. Halbrooks. The root cause of the problems is a topic
that probably Mr. Hale can address as well, but when the
Department shifted, in 2004, to performance-based logistics,
one of the unfortunate results was that the services are buying
these types of parts from contractors and, in addition, DLA
already has an inventory of excess parts.
The reports that we have done, both with respect to the
Sikorsky and Boeing contracts to support helicopters, where the
spare parts are kept at the Corpus Christie Depot, have
multiple examples of this type of thing. And you are right, it
is a small part, it looks like a washer, and it is basically
the Department has been buying spare parts that they already
have in inventory and paying too much for them.
Ms. Speier. All right, so how are we going to fix that, Mr.
Hale?
Mr. Hale. If we paid too much for that part, we need to get
our money back. I am not familiar with that particular one.
Ms. Speier. Well, you should be familiar with it.
Mr. Hale. We have an organization to do that.
Ms. Speier. All right, Mr. Hale, excuse me. You should be
familiar with this because this is all out of an inspector
general report that you should have studied very carefully when
it was produced.
Ms. Halbrooks, when was this produced?
Ms. Halbrooks. Our reports were issued in both 2011 and
2012. I will say, ma'am, that we have worked closely with the
director of DLA. One of the concerns that we had when we
identified that this problem was still remaining is that there
were probably other contracts for equipment that the Department
had where there was also excess inventory that needed to be
drawn down. The Department has issued a policy, I am not sure
if it was Army, I will have to get that for you or the
Department can certainly, to require that they use the existing
inventory.
So they have responded to our reports and they have
certainly concurred in our recommendations, and one of the
agreements, rather, discussions that we had with the Department
after these reports were issued was the efficient use of IG
resources versus management proactive involvement. We could
continue to look at contract after contract, or the Department
could fix the problem. They indicated to us a willingness to
proactively go and look at other systems and spare parts. We
hope they are doing that and we are going to check up on them
this year and do some more work in this area.
Ms. Speier. It reminds me of the patient that complains
about having been in the hospital and then finding out they
paid $50 for an aspirin. It sounds like that is what we are
doing in terms of some of these projects, so maybe that will
explain why an F-35 is looking at a trillion dollars in costs
over a short period of time.
I guess I would like to see us fix something instead of
just complaining about it. It is not very constructive for us
to beat you all around the head and not have anything come from
it. So I guess, Ms. Halbrooks, what I would like to hear from
you is if there was one thing this committee could kind of
focus in on that would truly save money within the Department
of Defense which you haven't been getting traction on, what
would that be?
Ms. Halbrooks. I think you have hit on one, spare parts,
certainly, and I think the other one we have discussed as well,
already, and that is the review of major weapons systems that
are over budget and behind schedule.
Ms. Speier. All right. In my remaining 17 seconds, let me
just say that one of the other issues that I think we need to
spend some time on is the overhead. We can talk about retaining
somehow the profit sector, but if the contractors are allowed
to pad their contracts with overhead, we are losing the battle.
And I hope that you would address that at some point as well.
Thank you.
Chairman Issa. I thank the gentlelady.
We now go to the gentleman from North Carolina, Mr.
Meadows.
Mr. Meadows. Thank you, Mr. Chairman.
And thank you, each of you, for your testimony.
Secretary Borras, as you were testifying early on, you said
over the last three years what you did was took a decentralized
management approach and centralized that to become more
efficient, is that correct?
Mr. Borras. That is correct.
Mr. Meadows. So essentially the management of DHS is under
your purview and you oversee that in this new centralized
organization?
Mr. Borras. Well, we haven't completely centralized. What I
was referring to was the management directorates, those that
report directly to me, the CFO, the CIO, the chief procurement
office, et cetera, that those were largely decentralized in the
management directorate and we have taken to centralize that. So
if you are implying that I have centralized the management of
CBP, TSA, et cetera, all under my control, the answer would be
no.
Mr. Meadows. So we are centralized in a decentralized way
is what you are saying. So we have areas all over that still
have their own vertical reporting areas.
Mr. Borras. That is correct.
Mr. Meadows. Okay. As we look at this, I want to focus on
two areas, and one of it is the planning in anticipation of
sequestration and how that was done. Because in some areas it
sounds like we did unbelievable planning; in others it sounds
like we did none. And I want to refer back. In 2011, some 26
employees received bonuses of over $10,000 apiece, with the
highest bonus being $57,000 to a single employee. There are
indications that in 2012 not only did we cut back on that, but
those were, indeed, increased in terms of the level of bonuses.
Would you say that that is a fair characterization?
Mr. Borras. That doesn't square with my recognition of
Department bonuses. Department bonuses over the last several
years had begun to come down. So the amount of money we spend
on bonuses has been decreasing.
Mr. Meadows. So you would say 2012 decreased from 2011?
Mr. Borras. I would be happy to provide you those numbers.
Mr. Meadows. Well, from the Federal Web site, what we have
is, under the Freedom of Information request, it indicated that
these facts are indeed correct: 26 people got bonuses of
$10,000 or more and $57,000. So as part of this, in this
anticipation, with regards to bonuses, when sequestration was
originally signed into law, did you put out anything that said
we needed to hold off on bonuses to make sure furloughs were
not put on more of the rank and file?
Mr. Borras. The Department issued guidance back in the
fall. Our bonus cycle was much earlier than the sequestration
cycle, but we put out guidance Department-wide which lowered
the total amount available for bonuses.
Mr. Meadows. So that happened as a result of sequestration,
you put out a plan to reduce bonuses?
Mr. Borras. Well, that was a recognition of the need to
begin to control costs, absolutely.
Mr. Meadows. All right. So as we look at this, going
forward with this, I want to shift gears to, I guess, the
secretary in the recent report we talked about, illegal traffic
across the borders and some release of illegal detainees that
we had of some 2,000, and I think the secretary warned that,
because of sequestration, that we were going to have additional
drug and human smugglers that were taking advantage of
sequestration. How would this prediction, what was it based on,
that we are going to have this additional human trafficking and
drug because of sequestration?
Mr. Borras. Well, I am not familiar with that specific
quote.
Mr. Meadows. It was in The Washington Post on Sunday.
Mr. Borras. But I am not familiar with that specific quote.
In general, all of the accounts, as I described earlier, are
subject to the sequestration cuts, which includes, as well,
those accounts that are in the removal operations of ICE.
Mr. Meadows. So would you say that that statement was not
based on any real data, then, it is just an overarching theme?
Mr. Borras. Well, I don't know the specific statement that
she made relative to that.
Mr. Meadows. So was there any study that was done in terms
of additional increased drug trafficking that might result? Was
there any study at all done, specific study?
Mr. Borras. That wouldn't be something that I would be
specifically aware of; that wouldn't be in my purview, to look
at that kind of work.
Mr. Meadows. So who would know about any studies?
Mr. Borras. Well, whether it is the Customs and Border
Protection or ICE, I am sure we can provide the committee some
information to respond to your question relative to studies on
impact on border.
Mr. Meadows. All right, thank you.
I yield back. Thank you, Mr. Chairman.
Chairman Issa. I thank the gentleman.
We now go to the gentlelady from the District of Columbia,
Ms. Norton.
Ms. Norton. Thank you very much, Mr. Chairman.
Some had looked at the cuts, certainly the 10-year cuts, as
opportunities to look at the untouchable budget, the Defense
Department budget. No one, of course, envisioned that any
budget, domestic or defense, would be aided by the sequester
cuts. But some, certainly on the other side of the aisle, were
willing to do the sequester, because they want cuts no matter
what happens. At least they got some cuts.
I note, by the way, that the Republican budget, both last
year and this year, cuts enormously, and even this year even
more enormously, domestic programs, while increasing the
Pentagon budget. It does seem to me that the justification lies
on those who want to increase any budget at a time when every
other budget is being cut.
So let's take a look at one program. There are a thousand
programs one could choose. The Joint Strike Fighter program.
That is a really ambitious program, a $400 billion program,
because it relates to existing fleets across the board; Army,
Marine Corps, and Navy. And that may be well the most efficient
thing to do, so I don't question the initial idea. But this
project has faced all of the problems associated with big
defense projects of the kind from cost overruns to poor
performance of the aircraft itself. I am interested in the bad
management of the acquisition process.
In 2003, the plan was to purchase 2500 aircraft over the
life of this program. Despite the problems, including the cost
overruns, I understand the Department still plans to purchase
2500 aircraft. Mr. Hale, is that correct?
Mr. Hale. Yes.
Ms. Norton. Now, let's look at the cost estimate for one
plane. And I have to ask what is the function of these cost
estimates if they rise so consequentially. In 2003, the cost
estimate was $81 million; today it is estimated to cost twice
as much. We have gone through a recession. I thought the cost
of materials was less. So I have to understand that increase
during this period, so I ask, first, could you explain why the
acquisition cost per plane has doubled in just 10 years?
Mr. Hale. Well, I would like to check those numbers for you
for the record. I don't have them in my head.
Ms. Norton. Would they surprise you if those were in fact
correct?
Mr. Hale. No. I mean, the costs have gone up substantially.
Ms. Norton. Well, what would cause the cost to double?
Mr. Hale. Unanticipated cost growth. We misestimated what
it was going to cost to develop and to buy the aircraft when it
was first put forward and unanticipated problems in the testing
process I think are the two major reasons.
Ms. Norton. Having done such projects over the years, you
don't build in problematic areas so that you wouldn't have what
seems hard to explain, such huge increases in costs?
Mr. Hale. We tried, but obviously in this case we weren't
successful, or at least not fully successful.
Ms. Norton. All right. Well, let's look at the sequester.
Surely, that provides an opportunity for you to look at some
way to cut the acquisition cost of this Joint Strike Fighter.
Mr. Hale. And we didn't need sequester to do it. We have
been pushing in every way we can, including trying to sharpen
our pencils with the contractor and do a better job of
negotiating with them, and I think we have at least had some
success in that area.
Ms. Norton. So do you expect that, particularly when the
contractor sees what you are going through, and since you have
been negotiating, that you will at least be able, at this
point, to bring down this cost from $161 million, doubling the
cost that was predicted 10 years ago?
Mr. Hale. I would hope that we could bring them down. That
certainly is our goal and we will do everything we can to make
that happen.
Ms. Norton. Mr. Hale, are you in the process of negotiating
now on that matter?
Mr. Hale. I am sorry?
Ms. Norton. Are you in the process of negotiating to bring
down the cost?
Mr. Hale. Yes. We buy these planes in lots, and each lot is
negotiated, and there was a lengthy negotiation over the prior
lot, and it was caused by our desire to bring down the cost.
So, absolutely, we will continue in future ones.
Ms. Norton. Could I ask, Mr. Chairman, that within the next
60 days you report to the chairman of this committee what
progress you have made on bringing down the cost of the Joint
Strike Fighter program?
Mr. Hale. We will do it.
Ms. Norton. Thank you very much.
Mr. Jordan. [Presiding.] Thank you.
The gentleman from Oklahoma, Mr. Lankford.
Mr. Lankford. Thank you, Mr. Chairman.
Mr. Hale, I would like to get a chance to follow up on the
conversation earlier about sequestration and the effects of the
full year appropriations bill on DOD. You had mentioned before
that about a third of the problem is solved in that. Could you
go into greater detail on what help do you receive with a full
year appropriation?
Mr. Hale. The major help, and the continuing resolution
fixed our base budget at the fiscal 2012 level. We made major
changes between 2012 and 2013, increasing our operation and
maintenance funding to maintain ready forces and cutting back
on investment to meet the budget targets. The CR wiped that
out.
If we get an appropriations bill as the current one being
debated before the Senate, it will get the money in the right
appropriations, and that is the major help that it will provide
to us and it will be significant. But it won't get rid of the
problems. We will still have sequestration and we still have a
commitment to protect our wartime or OCO budget, which means a
disproportionate cut on the base and some other OCO problems.
Mr. Lankford. I understand. I am trying to drill down a
little more. A general statement of it will help doesn't help
us. What does that mean is what I am asking. Because we are
very concerned, as you are as well, about protecting workers
and not protecting waste. Where we can find waste, we need to
eliminate it. That is why the IG report is so significant to
us, as well and your Department has been very helpful to
identify those things with the IG and say let's take action on
that.
But where we can find issues with inventory, as Ms. Speier
had mentioned earlier, we have a washer that is $1600 and that
kind of thing happens, that infuriates us. We want to protect
our workers in the process, as you do as well, I am sure, so I
need more specifics.
When you say it helps a third of the way there, what do you
mean by that?
Mr. Hale. Briefly, we have a shortfall of around $35
billion under current law and what is called our operations and
maintenance budget. It is made up of sequestration; it is
caused by the fact that the money is in the wrong
appropriations and by the OCO or wartime problems. I can give
you more detail, but I will take more time than you would like.
About a third of that will get fixed when you put the money in
the right appropriations, if the Congress enacts that
legislation.
And I couldn't agree with you more. We need to try to
accommodate all of these, and we have told our managers find
efficiencies if you can. But these cuts are sufficiently abrupt
and large that we will have to go well beyond straight
efficiencies. Anything that we could identify and get approved
by Congress wouldn't be enough to get $46 billion out of the
defense budget in seven months, so we are going to have to do
other things.
Mr. Lankford. When you talk about the $46 billion, that is
the budget authority number. What is the budget outlay number
that has bene identified? That is the actual. What actually
happens this year?
Mr. Hale. We don't deal in outlays, usually, but it is
probably about 80 percent of that. A lot of it is O&M. I would
have to get you that. We think in budget authority, which is
what you appropriated.
Mr. Lankford. I understand, but the latest estimate that we
have is this is about an $85 billion cut.
Mr. Hale. That is for the total Government.
Mr. Lankford. Correct, across the total Government. And the
actual budget outlays for that for this single year is about
$45 billion to $44 billion.
Mr. Hale. Okay.
Mr. Lankford. So that statement would be that there is only
a $1 billion cut everywhere else this year. I don't think it
would hold up. So it is about half of it. So what I am trying
to figure out for DOD, have they identified what effect it has
this year on it or what effects it is going to have out. Does
that make sense?
Mr. Hale. I am not sure I understand. On the outlays, you
mean?
Mr. Lankford. On the outlays.
Mr. Hale. We don't normally deal with that. I don't have
that number in my head. It is probably 75 percent or so of the
budget authority cut, but I will get it for the record.
Mr. Lankford. Okay. That would be terrific to be able to
have because we are trying to identify what is the actual
impact for this single seven month time period. It is not $46
billion for this seven month time period, though the effects of
it have to take and have to start with that. I understand how
it goes through the process.
You also mentioned that there has been a dramatic increase
in the cost of the war, or at least what you expected it would
be in that. Can you give us some additional detail on that,
especially since we referred to several things where prime
contractors and some waste that is there? I don't want a war
fighter hurt based on us not taking some of these
recommendations in place.
Mr. Hale. Two years ago, when we put together the overseas
contingency operations budget, we underestimated the tempo of
operations for the Army and the Air Force. We have also seen
higher costs for transportation to get equipment out of
Afghanistan, partly because of the ground lines, our inability
to get full access to the ground lines of communication in
Pakistan. The combination of those events have left us probably
$6 billion to $10 billion short in fiscal 2013 of OCO budgets,
and we are working to find every way we can to cut those back
at the moment, because it will be a very difficult thing for us
to handle in this kind of an environment.
Mr. Lankford. Okay. One thing, if we can follow up on this
in the days ahead. Dr. Coburn, in the Senate, has identified
multiple areas where DOD overlaps with other agencies, whether
that be energy research or a lot of different research
projects. It tends to be that DOD ends up being the landing
point for, if you want to do something in research for
something, you land in DOD because no one can vote against
defense funding on that.
Has there been any progress made of identifying some of
those specific projects to say there is no reason for us to do
this, this is waste, and be able to get rid of it?
Mr. Hale. So this is the department of everything report?
Mr. Lankford. That is correct.
Mr. Hale. The big dollars that were in there were things,
and some of them we are doing, cut back on our defense agencies
and we have made every effort to do that. They have been part
of our overall reductions that I mentioned in my testimony. We
have cut back on a number of general officers and senior
executive service, one thing he recommended. He recommended we
cut back on tuition assistance and, painful though it is, we
are in the process of doing it.
But I would point out that some of the things he
recommended actually run counter to the laws you passed. He
urged us to take a large number of military personnel and make
them into civilians because they are sometimes cheaper. The
Congress passed a law that said we had to cut proportion.
Mr. Lankford. I understand.
Mr. Hale. So we tried to implement his recommendations.
Mr. Lankford. I understand a large part of his
recommendations dealt with things like energy, where DOD and
DOE are both doing energy research. And I understand it helps
protect our men and women in uniform if we can have more
efficient vehicles on the fields, having to refuel less. I get
that. But if research is already being done in some other
place, we need to be more efficient with that. That is just
coordination between agencies to get that accomplished.
With that, I yield back.
Mr. Jordan. I thank the gentleman.
The gentleman from Wisconsin, Mr. Pocan, is recognized.
Mr. Pocan. Thank you, Mr. Chair. I have a question really
that is more proactive in this area of trying to reduce waste
and improve efficiency. The question is for Mr. Hale.
I know that right now the DOD and the VA are trying to do a
joint venture to do electronic health records, and I give a lot
of credit to DOD that you did put out an RFI to some private
contractors to take a look at that, but I think the concern
that some of us may have is the original proposal was going to
cost somewhere, I think the range is pretty wide, $4 billion to
$16 billion over a six year process if we did it internally.
Yet, I know there are a lot of vendors who do this
currently who have what you would call, I guess, off-the-shelf
programs that could work to integrate so that you could have
this done much, much more quickly and at a fraction of the
cost, at least initially.
So, again, I give credit to DOD because I know you have
done the RFI to the commercial providers to get some more
information. DVA has not; they plan on, I think, using Vista
and doing it internally still, at this point.
I was just wondering what you are looking at as you are
making this decision whether or not you are going to try to go
to an off-the-shelf, more immediate and less costly plan, or
what you are looking at as you balance, I guess, with DVA, if
they are not going to do something.
And let me just give you my concern. Back in our
legislature, we did this with a voter file. We had someone
create a system from scratch at a cost of $27 million, which,
on the day the contract ended, we threw out and we had spent
the $27 million. And our neighboring State of Minnesota did a
system for about $3 million. So sometimes when you try to
create something from scratch, especially with a six-year
timeline, that is like a generation in software difference.
I just want to know a little more about the thinking,
because if this is an area we can provide some immediate
savings now to what is budgeted for and have a system in place
sooner, I would just like to know a little more how DOD is
looking at this.
Mr. Hale. Well, we are committed, our HR, to working with
VA. It is a high priority program for us and for them. I have
to tell you I don't think we have figured out how to do it yet.
I will also tell you we have not budgeted anywhere near the
sorts of numbers you mentioned. We spent about $300 million of
DOD money on that project so far, and we want to hold down the
cost wherever we can, but we also want to make it work. So I
can't give you a blueprint. I will go back for you and check
for the record to see if there is any additional information I
can provide. But I think, frankly, we haven't figured it out.
Mr. Pocan. Okay. Can I ask is there a concern that you are
not looking, and not specifically DOD, but the combined forces
of the two agencies, at doing something that would be a little
more immediate and a little less costly by doing one of these
off-the-shelf, and there is a number of companies that do it
that are out there, versus trying to kind of do this from
scratch?
Mr. Hale. There is an internal balance, sometimes we have
tried off-the-shelf stuff and it just hasn't worked because it
doesn't need our needs. So we have to balance the two. But I
hear your point and, again, I think we are looking at all
options right now and working with the VA, but I want to
underscore we are committed to this project.
Mr. Pocan. Well, if you could provide the committee with
some additional information on that, it would be very helpful.
And just so you know, I have called and DOD staff have been
extremely helpful when we have called on this. But I think your
estimated cost that is coming out of this joint venture is the
$4 billion to $16 billion, but I think we have had some private
firms to us in the under $1 billion cost. So it is a big, big
difference and that is why that and the fact that it could be
implemented in a fraction of the time a lot of us are just very
concerned. So any information you can provide the committee
would be appreciated.
I yield my time back.
Mr. Jordan. I thank the gentleman.
The gentleman from South Carolina is recognized, Mr. Gowdy.
Mr. Gowdy. Thank you, Mr. Chairman.
Mr. Borras, what is a Level 1 detainee?
Mr. Borras. You are referring to in ICE?
Mr. Gowdy. Yes.
Mr. Borras. That is something that I would have to get back
to you on.
Mr. Gowdy. But you wouldn't disagree if I told you it was
an aggravated felon. Level 1s are aggravated felons, and 10 of
them were released due to sequestration. Do you know what it
costs per day to detain an aggravated felon?
Mr. Borras. No, I do not.
Mr. Gowdy. Would you disagree if I told you it was $122 a
day to detain an aggravated felon?
Mr. Borras. No. A hundred twenty-two dollars sounds
approximately right in terms of our cost per detention per bed
per night.
Mr. Gowdy. All right, so if it is $122 a day to detain a
Level 1 aggravated felon, do you know how many Level 1
aggravated felons were released by ICE as part of their cost
savings due to sequestration?
Mr. Borras. I do not.
Mr. Gowdy. It would be 10 of them. So 10 times 122, even
for a liberal arts major, is what, about $1,200 a day? Is that
close?
Mr. Borras. That sounds good.
Mr. Gowdy. Is there nothing else in the Department budget
where you could find $1,200 a day in savings other than to
release Level 1 offenders?
Mr. Borras. Well, the issue of whether it is Level 1 or any
offenders aside----
Mr. Gowdy. Well, right now it is Level 1 because they are
aggravated felons. So could you not find $1,200 somewhere else
in the DHS budget other than releasing Level 1 aggravated
felons as part of your cost-saving measures?
Mr. Borras. If I had the discretion to be able to pick and
choose where in the Department to pull savings, I certainly can
do that.
Mr. Gowdy. Now, wait a minute. How much money is DHS
sitting on? Right now.
Mr. Borras. Our total budget?
Mr. Gowdy. No. How much unencumbered money are you sitting
on right now?
Mr. Borras. Unobligated money, I don't have that exact
number.
Mr. Gowdy. Well, I don't need an exact number. Is it more
than $1,200?
Mr. Borras. Yes, sir.
Mr. Gowdy. Okay. So don't act as if you didn't have any
choice but to release aggravated felons. You are not suggesting
that, are you? That the only choice you had was to release
Level 1 aggravated felons back onto the streets? Is that what
you are suggesting?
Mr. Borras. I am not suggesting that in the least.
Mr. Gowdy. Mr. Edwards, did you find any places where DHS
might possibly save $1,200 a day?
Mr. Edwards. We have a number of recommendations.
Mr. Gowdy. I will just settle for one. Where is one where
they might possibly have been able to do something other than
release aggravated felons as part of their cost-saving
measures?
Mr. Edwards. Well, on this release part of it, I received a
letter last week from Senator Coburn and I am looking into it,
so I can't really comment on that.
Mr. Gowdy. Well, comment on any area where they might
possibly have found $1200 a day. Anything? Conferences? Travel?
Detailees? Vehicles?
Mr. Edwards. Yes to all of that.
Mr. Gowdy. Promotional materials? Anything?
Mr. Edwards. Yes to all of that.
Mr. Gowdy. Mr. Borras, when was the first time you realized
the sequestration might be a possibility?
Mr. Borras. Probably in August of 2011.
Mr. Gowdy. August of 2011. So that gave you how many months
to prepare to do something other than to release Level 1
aggravated felons? How many months between August 2011 and
March 2013?
Mr. Borras. Nineteen, 20 months.
Mr. Gowdy. All right. Would you agree with me that the
decision to release Level 1 aggravated felons was not the only
option you had? There were other places you could have cut
cost. Do you agree or disagree with that?
Mr. Borras. I don't know enough about that particular
budget line item to know what other options were available in
that PPA to make choices to result in that release.
Mr. Gowdy. Well, I am going to ask you again. Is your
testimony that the only choice ICE had was to release
aggravated felons back onto the street? There was nothing else
they could do as a cost-savings measure? Is that your
testimony?
Mr. Borras. No, that is not my testimony.
Mr. Gowdy. Okay. All right, thanks.
Chairman Issa. I would ask the gentleman have an additional
one minute. Would the gentleman yield?
Mr. Gowdy. Be happy to, Mr. Chairman.
Chairman Issa. Just following up. I want to make sure we
get to this. Nothing in sequestration forced you to make that
decision, is that correct, or your agency?
Mr. Borras. Not that I am aware of.
Chairman Issa. There were, as the gentleman was asking,
there were clearly alternatives that could have been pursued.
So this was a choice, not a requirement.
Mr. Borras. I would have to assume that it was done on the
basis of analysis of that particular budget activity.
Chairman Issa. Okay, let's do the budget activity.
Mr. Edwards, quickly, if you, from your experience, if you
simply didn't apprehend and incarcerate non-Level 1 felons,
wouldn't you quickly accomplish the same as the release of
those felons? Looking at the amount of those felons released
and the amount that come in every day in less than a month, if
you just didn't take in these other people, wouldn't you reach
the same number as releasing these felons?
Mr. Edwards. Looking at your analysis, that makes sense.
Chairman Issa. Okay. I thank you.
Mr. Connolly.
Mr. Connolly. Thank you, Mr. Chairman.
Mr. Borras, this issue that Mr. Gowdy raised about
aggravated felons, isn't that really a matter of a line item in
your budget, not about sequestration? Aren't you limited to
34,000 and you had 36,000?
Mr. Borras. We are required to make 34,000 beds available,
that is correct.
Mr. Connolly. That is right. And you exceeded that number,
so you had to do something to bring it down, since Congress is
the one that mandates this line item in the budget, is that not
correct?
Mr. Borras. We do have a mandated requirement.
Mr. Connolly. That is right. So it has nothing to do with
sequestration, per se; it has to do with how we appropriate
your funding, is that correct?
Mr. Borras. Yes.
Mr. Connolly. Thank you. Just to clear that up.
There seems to be a narrative going around, all of a
sudden, that sequestration is not so bad and that anything that
is unpopular or anything that might attract attention
unfavorably can be avoided. We even had a suggestion a little
earlier in this hearing that maybe the secretary herself should
leave her office and go and clear passengers at an airport
somewhere. And I find that intriguing since so many people,
just last summer, were decrying how dreadful and apocalyptic
the consequences of sequestration in fact would be.
Mr. Borras, you are in management. Presumably, you have
been looking at worst case scenarios with respect to
sequestration. Your own testimony is you have certainly been
cognizant of it since August of 2011. So you have gone through
some scenarios, is that not correct?
Mr. Borras. That would be correct.
Mr. Connolly. And is it inevitable that we are going to see
furloughs in the workforce that falls under your purview?
Mr. Borras. That is correct, particularly in Customs and
Border Protection.
Mr. Connolly. Right. I was going to get into that. So will
we have furloughs of TSA employees that are unavoidable?
Mr. Borras. The answer to that question is a little
complex. As I alluded to earlier, the current Senate CR that is
being debated, and should it come to pass, will change some of
the financial parameters of the sequestration as we know it
today.
Mr. Connolly. All right. Absent that, because that hasn't
happened yet, presumably, you have to plan for furloughs in the
TSA workforce, is that correct?
Mr. Borras. Well, we have the ability right now to avoid
furloughs in the TSA workforce.
Mr. Connolly. Entirely?
Mr. Borras. Entirely.
Mr. Connolly. So what we heard earlier about up to 13 days
of furloughs in the 47,000 workforce were false?
Mr. Borras. No, I wouldn't characterize it as false. I
think there have been different iterations of sequestration,
depending on what time. For example, there was a scenario based
on the January 1st and the percentage cut that would be
required to meet that. Then there was another calculation,
series of calculations based on the March 1st date. The big
uncertainty is since we don't know what the funding
availability is for the back half of the year, we are making
projections, estimates based on limited amount of information.
Mr. Connolly. And do you expect furloughs in the CBP?
Mr. Borras. In fact, we have already issued 60,000 furlough
notices at Customs and Border Protection.
Mr. Connolly. And why were you so able to do that, but not
on the TSA?
Mr. Borras. On the Customs and Border Protection, their
budget, the way it is structured, the PPAs that contain the
salaries and expense accounts are predominantly salaries, so
there is no alternative; you cannot move money around from
different program activities, so the cut has to come out of the
salary and expense line item. And we are calculating presently
about 12 to 14 days of furlough.
Mr. Connolly. You were asked a little bit earlier by my
friend and colleague from Texas, Mr. Farenthold, whether there
had been any major delays or disruptions in security at major
airports in the United States since sequestration kicked in,
and you answered not to your knowledge, is that correct?
Mr. Borras. That is correct.
Mr. Connolly. When did sequestration kick in, Mr. Borras?
Mr. Borras. March 1st.
Mr. Connolly. March what?
Mr. Borras. March 1st.
Mr. Connolly. And what is today's date?
Mr. Borras. Today is still the 19th.
Mr. Connolly. The 19th. So it has been 18 days. So did we
expect the consequences of sequestration to kick in within the
first 19 days?
Mr. Borras. No. I think the expectation that it would be
progressive.
Mr. Connolly. Right. So the fact that we haven't seen major
disruptions doesn't mean there couldn't be some, and, as a
matter of fact, we haven't really seen the full kick-in of
sequestration, just given the nature of the calendar, 19 days.
We are not talking about the apocalypse here, we are talking
about a rolling set of spending reductions that cumulatively
most certainly will have an impact. Would that be accurate?
Mr. Borras. That is an accurate statement.
Mr. Connolly. Thank you, Mr. Chairman.
Chairman Issa. Thank you.
Pursuant to wanting to make sure that we do get the facts
correct, on television, Secretary Napolitano said the
following: several hundred, relating to the perfect storm of
budgetary problems, the release of ICE-held prisoners, several
hundred were related to sequester, but it wasn't thousand.
Oddly enough, between one side saying it was thousand and
perhaps zero, the secretary has cleared it up, it was several
hundred.
With that, we go to the gentleman from Arizona, Mr. Gosar.
Mr. Gosar. Thank you, Chairman.
First of all, I would like to thank the inspector general's
office. It is celebrating their 35th anniversary. It started
back in 1978 with 12 of the first 73 IGS, so thank you very,
very much.
For Ms. Halbrooks and Mr. Edwards, are you privy to the OMB
documents?
Ms. Halbrooks. Regarding what, sir?
Mr. Gosar. Prevailing wage. The discrepancy in prevailing
wage.
Ms. Halbrooks. I am not familiar with that issue.
Mr. Gosar. I find it very interesting that we are talking
about tens of billions of dollars, and yet they cite 100
percent failure in prevailing wage accuracy that could save, if
we had better accuracy on the prevailing wage, tens of billions
of dollars, probably in both of your departments. Would this be
something that would be very acutely brought forward?
Mr. Edwards. We would be glad to look into that.
Mr. Gosar. I would like to. You know, the current format is
100 percent, at least with the audit, the responses were 100
percent failure on those. If we were just to move that to the
Department of Statistics, we would have much more accuracy and
even, by their consensus, we would send tens of billions of
dollars across the board.
Mr. Borras, is this the first time we have gone through
sequestration?
Mr. Borras. Yes.
Mr. Gosar. Wrong. Wrong answer. In the 1980s we did
sequestration. Let me ask you another question. Are you aware
there was two programs or two bills put forward to mitigate
sequestration in a much better scenario, start the
conversation? Two bills from the House, how about that? Were
there two bills from the House?
Mr. Borras. I believe there were.
Mr. Gosar. Yes, one in May of 2012 and one in December of
2012. Let me ask you another question. Is it a one-way street
in which Congress dictates, cannot the agencies ask to
mitigate?
Mr. Borras. Absolutely.
Mr. Gosar. Where was that? Is there any documents you can
point to asking Congress for mitigation in each of the
different agencies, in sequestration?
Mr. Borras. Oh, not that I am aware of. But you asked me is
it possible.
Mr. Gosar. So there is lack of leadership.
Mr. Borras. Well, I wouldn't characterize it as lack of
leadership. I think we have been doing, and I have testified--
--
Mr. Gosar. Well, first of all, let me interrupt you.
Obviously, you didn't because, in your testimony earlier, you
said that you thought the sequestration aspects would be
mitigated out, right, early in your testimony today?
Mr. Borras. I did say that was the expectation.
Mr. Gosar. Yes. I mean, that's typical. I am private
sector. I am a dentist impersonating a politician. So I can see
where bureaucrats get that kind of connotation. I find it
offensive to the taxpayer that we would mitigate that. I think
that what we should have been doing is looking at the
opportunity for better spending the taxpayer dollars.
Mr. Edwards, I want to get back to in your testimony you
mentioned the Department of Homeland Security was not complying
with the Federal Financial Management Improvement Act of 1996
or the OMB's requirements under its revised version of
Financial Management Systems Circular. Can you explain why DHS
has yet to comply with these laws and directives?
Mr. Edwards. Yes, sir. Initially, DHS went with the big
bang concept of having this one huge system, but now, under Mr.
Borras' leadership and others from the Department, instead of
having this big bang approach, have each one of the components
have a reliable financial system and then use business
intelligence to draw the information out that could be produced
daily. They are in the process of doing that, but still, even
though they achieve the auditable qualified opinion, it was
heavy lift because of the manual processes. But the hope is
that as the systems, individual systems at the components come
together and are fully functional, that would meet the
requirement.
Mr. Gosar. So it seems to me when Mr. Borras was talking in
regards to this, some parts within the agency are not
responding to others or they have a different accountability
system. Is that true?
Mr. Edwards. They all have their own individuals systems
now, and some of them are legacy systems. For instance, CBP has
a really good system; Coast Guard system is not that good and
they are working on it; FEMA is working on it as well. So all
of these systems, once it is fully functional individually,
could come together with a business.
Mr. Gosar. Is there some way that we could initiate making
that speed up that system a little bit, Congress?
Mr. Edwards. Absolutely.
Mr. Gosar. And how would that happen?
Mr. Edwards. You would just, in the appropriations bill,
put in language saying that this needs to be met.
Mr. Gosar. Mr. Chairman, I would like from both Ms.
Halbrooks and from Mr. Edwards re-looking at the calibration of
accuracy for the prevailing wage and what kind of savings we
could save in both DOD and Homeland Security. I would
appreciate that in writing.
Chairman Issa. I thank the gentleman.
And if you would agree to give those in follow-up writing,
that would be helpful.
Ms. Halbrooks. Yes.
Chairman Issa. Thank you.
We now go to the gentlelady from Illinois, Ms. Duckworth.
Ms. Duckworth. Thank you, Mr. Chairman.
Ms. Halbrooks, in your testimony you indicated that over
the past 10 years the DOD IG's office has issued over 1,300
reports and 7,684 recommendations of deficiencies. Of these,
you have a very remarkable 95 percent of cases where the cases
were addressed and closed.
So I am confused as to why your office would walk away from
the responsibility of providing oversight for the F-35
acquisition process, the most expensive weapons system that we
have ever purchased in our Nation's history, especially the
concurrent acquisition process, when oversight of the
acquisition process is one of the things, in your testimony,
that you say you need to provide oversight for.
Ms. Halbrooks. Thank you. I don't think that we have walked
away from oversight of the acquisition process for that system.
I think that we are confident that there is oversight within
the Department and from others in Government, and decided to
focus our resources on a complementary review for that weapon
system, as well as other weapons systems that weren't getting
as much scrutiny but also offered potential savings.
Ms. Duckworth. Potential savings as high as could be gained
from savings from the F-35 process?
Ms. Halbrooks. Well, the potential savings would all depend
on the recommendations and how management would implement them.
Certainly, some of the lesser systems, if our recommendations
are that the requirements be scrutinized and they are canceled,
could potentially also yield large dollar savings.
Ms. Duckworth. So, now, will you be relying on other people
to provide oversight of the retrofitting process for F-35s, the
ones that we have already bought but are not operational and
taxpayers will still have to fund up to I am hearing figures
from $1.7 billion to $4 billion to retrofit those aircraft?
Will you be relying on other people to provide that oversight?
Ms. Halbrooks. Well, we want to make sure the Department
has the best information from objective, unbiased sources, so
we will continue to look at whose best position to provide
that; and if we need to get involved, we will.
Ms. Duckworth. Okay.
Mr. Hale, I happen to agree with you that certainly
providing our troops with the best equipment and most advanced
equipment, and moving them way from aging weapons system is
certainly a priority. I flew the oldest flying Blackhawk in the
United States Army inventory, a 1978 model delivered in, it was
the fourth one off the production line. So I understand aging
weapons systems. But, to date, the F-22 has yet to fly a single
combat mission and, to date, we yet have a single F-35 that is
operational. It can't even do vertical takeoffs and landings
right now, except for in test flights.
In looking at this deeply flawed process, the concurrent
acquisition process for the F-35, are you planning, in DOD, to
continue that type of process in the purchase of future weapons
systems, such as sixth generation fighters, which we are
already saying that we need, even before the F-35 is delivered?
Mr. Hale. There is a balance to be struck here. If you
eliminated all concurrency, total testing, everything done
completely, it would take us 25 years, instead of 10, to do it.
There is a balance to be struck. I am not arguing we have done
it ideally in the case of the F-35. I think there are lessons
to be learned and we could do better. But I don't think we want
to eliminate concurrency if sensible amounts of it speed
getting these weapons into the hands of our troops, and that is
important.
Ms. Duckworth. But these weapons systems that we are
getting into the hands of our troops can't actually be flown or
used in combat because of the concurrent process.
Mr. Hale. Well, we are not going to put it in the hands of
troops until it can do the things it has to do to both protect
them and fight effectively, and that is probably why we haven't
got IOC yet for the F-35. But we are going to make that plane
work. I have a long history of doing it. It is not always
pretty, but we will make that plane work.
Ms. Duckworth. And how far behind schedule from when we
started the concurrent acquisition process, will the F-35 be
operational?
Mr. Hale. That is a good question.
Ms. Duckworth. It is now what, 10 years behind schedule?
Mr. Hale. I don't have that in my head, but it would be a
substantial period.
Ms. Duckworth. So I say again are you saying that you will
still pursue the same concurrent acquisition process for future
weapons systems that you did for the F-35, or will you be doing
a review to look at how deeply flawed that system is and
perhaps adjusting it?
Mr. Hale. We will absolutely try to make it better and
learn lessons from it. What I said is, in principle, I don't
think getting rid of all concurrency is in the best interest of
the taxpayers, because it would spread the programs out so
long, one, we wouldn't get the weapons we need and, two, there
would be even more cost growth. There is a balance to be
struck. Maybe we didn't get it exactly right for the F-35, but
I wouldn't rule out concurrency in principle.
Ms. Duckworth. You really did get it right with the F-35.
In fact, we are talking in the trillions of dollars eventually.
Ms. Halbrooks, I asked General Brogdon about the security
of the supply chain and making sure that every piece of
equipment in our military weapons system, especially the F-35,
comes from a secure source, so that we don't, for example, have
Chinese manufactured chips in the avionics system. And he was
very honest and said that he is looking at it, but that he
found four items, in fact, that were from unauthorized
countries. Are we looking at that in other weapons systems as
well?
Ms. Halbrooks. I can't, today, think that we have a review
that encompasses specifically, but as we look at contracting
and how these systems are being built, and if the contractors
are complying with the requirements, that should be something
that we would come across. But I appreciate your focus and I
will take that.
Ms. Duckworth. I am sorry, Mr. Chairman, I have gone way
over.
Chairman Issa. I am not sorry. Would the gentlelady yield
for a second?
Ms. Duckworth. Yes, sir.
Chairman Issa. Colonel Duckworth, thank you for your
service, but thank you for the question I think you asked Mr.
Hale that he answered, which was he intends, apparently, to
continue being over budget, over time, and describing a program
that is in fact ``not pretty, but it is going to work.''
Would you like to revise that and talk in terms of reform
that would have us not be over budget, over time again, and
then say but it is not pretty, but we are going to make it
work?
Mr. Hale. Mr. Chairman, the question I heard was whether we
would abandon all concurrency. That is the question to which I
said no.
Chairman Issa. If the gentlelady wants to follow up.
Ms. Duckworth. Thank you, Mr. Chairman. My question was
will you be pursuing the exact same process for the F-35 for
future combat systems, especially the Next Generation 6
fighters that you are proposing now.
Mr. Hale. I mean, the answer is no. We will do better and
we will look to reform it. But I don't want to throw out all
concurrency. I don't think that is wise. I guess I
misunderstood you. I am sorry.
Ms. Duckworth. May I ask one more question?
Chairman Issa. Of course.
Ms. Duckworth. Not a problem. And then will you be advising
your inspector general to provide greater oversight or will
you, again, in future systems, rely on other agencies to
provide that oversight?
Mr. Hale. We would welcome oversight from the inspector
general.
Chairman Issa. Thank you.
Now we go to the gentleman from Ohio, Mr. Jordan.
Mr. Jordan. Thank you, Mr. Chairman.
Mr. Borras, during Mr. Connolly's question, he talked about
sequestration taking effect March 1st, and in the past 19 days
he asked you we haven't seen any major disruptions. I believe
your answer was yes to that question, is that correct?
Mr. Borras. Yes.
Mr. Jordan. Okay. And then putting aside what Mr. Gowdy
brought up, the fact that we released 10 Level 1 aggravated
felons, your answer to we haven't seen many major disruptions
was yes. Yet, on March 4th we have the statement by Secretary
Napolitano. She said, as a result of sequestration, airports
were seeing lines 150 to 200 percent as long as they would
normally expect. So which is it? Three days after the
sequestration the Secretary of Department of Homeland Security
is saying we have lines 200 percent of normal and you are
saying we haven't seen any major disruptions. Which one is
true?
Mr. Borras. Well, I don't know the specific statement that
was made by the Secretary.
Mr. Jordan. I just read it to you: ``150 to 200 percent as
long as we would normally expect.'' You just told Mr. Connolly
we haven't seen any major disruptions. You have your boss
saying we have. Who is telling the truth?
Mr. Borras. Well, again, I don't know what the statement
is. If you are saying the statement said that we are currently
seeing, at all airports, or that is the projection.
Mr. Jordan. She said airports were seeing 150 to 200
percent lines as long as we would normally expect. Was she
wrong or were you wrong in what you gave your answer to Mr.
Connolly? Or is 200 percent of the line, is that not a
disruption? It is a yes or no. One of you has to be right; one
of you has to be wrong.
Mr. Borras. Well, I am not aware of that.
Mr. Jordan. Well, according to the reporter, she is wrong,
so maybe what you said is maybe the case, maybe we haven't seen
major disruptions.
In your answer to the chairman in the first round of
questions, he was talking about attrition and ways you could
have planned for this, and you said this, ``We thought
sequestration wouldn't happen.'' Now, does the United States
Department of Homeland Security make a habit of not preparing
for the law of the land when it comes to its management
practices? As Mr. Gowdy pointed out, as the chairman pointed
out, you had 20 months to get ready of this.
But because you had this assumption it wasn't going to
happen, you didn't prepare. I mean, you told the chairman we
didn't expect it to happen. So when did you finally start,
March the 2nd? When did you finally prepare for something you
had 19 months lead time on?
Mr. Borras. I would say we began to plan preliminarily for
sequestration in the fall.
Mr. Jordan. So which is it, you thought it wasn't going to
happen, but you did start to plan. Where are you at?
Mr. Borras. Exactly, that is where I am at. Certainly, in
August of 2011 there was the hope that we would not face
sequestration. In the fall, clearly, as January 1st was
approaching, we continued to look at the possibility of
sequestration.
Mr. Jordan. So you waited a year.
Mr. Borras. No, we did not wait a year.
Mr. Jordan. Well, you said past August 2011. You said in
the fall, as January 1st started to approach, you started to
get ready. So you waited a year. Maybe if you hadn't waited a
year, maybe you wouldn't have 50 job postings today on your Web
site offering jobs. Maybe you wouldn't have to be saying we are
going to have to furlough people.
Have you responded to the chairman's letter where he asked
your Department were there ways we could be helpful maintaining
the reduction in spending in sequestration, but ways we, as
Congress, could be helpful in helping you implement this? Have
you responded to that letter?
Mr. Borras. I am not aware of a letter that was written to
me.
Mr. Jordan. No, it was written to the Department. You are
here representing the Department, correct? Yes, it was written
to the Department. Have you responded? Has the Department
responded?
Mr. Borras. I believe that letter is in clearance.
Mr. Jordan. What does that mean?
Mr. Borras. It is being completed and should be responded
to the chairman by the end of the week.
Mr. Jordan. Again, it seems to me if you had 20 months to
prepare for this, the chairman asked you how we can help you
better implement it, you should have something ready to email
right away, some response ready to go; here is our plan of
action, Mr. Chairman, here is what we can do. We would
appreciate your help giving us some flexibility in these
particular areas of our budget.
Finally, last area I want to get to, Mr. Chairman, last 40
seconds here. Ms. Speier and I have been working on this issue
of conferences that agencies have attended and the amount of
taxpayer dollars used at these various conferences. Do you know
how many conferences the Department of Homeland Security has
attended in 2012?
Mr. Borras. I don't have that number off the top of my
head.
Mr. Jordan. Do you know how much money you have spent on
conferences, overnight conferences, where employees from your
Department go? Do you know how many dollars you have spent on
those kind of things?
Mr. Borras. I don't have that number off the top of my
head.
Mr. Jordan. Mr. Edwards, do you happen to know those
numbers?
Mr. Borras. No, sir, but we did a report in 2009, we had 12
recommendations, and we are currently doing an audit on
conference spending.
Mr. Jordan. Do you know, Mr. Edwards, of any of the
conferences that employees from Homeland Security have
attended, if any of them exceeded the amounts, the level per
attendee that was spent at the GSA conference, the now famous
GSA conference in Vegas? Do you know?
Mr. Edwards. No, sir.
Mr. Jordan. Okay. Well, we would like for you to get that
information, if you could.
Mr. Edwards. Yes.
Mr. Jordan. Mr. Chairman, I yield back.
Chairman Issa. Thank you.
We are going to wrap up. I going to do just a couple of
questions.
First of all, Secretary Hale, we have been a little tough
on you, but I want to thank you. DOD is the only cabinet
position that has responded with any specificity or any answer
to our letters as to areas in which, legislatively or
appropriations, we could provide you changes. So I appreciate
that.
I want to touch on one thing, and I think, General
Halbrooks, you have been sort of almost beat up for not going
after the F-35, and I could pile on on that, because I do think
that it is such a large amount of dollars that special
attention, at least over the shoulder of those doing oversight,
is appropriate. But I want to touch base on something that I
think should be a DOD imperative.
Ms. Duckworth, you said you flew the oldest Blackhawk,
entering service in 1978. I don't know how to tell you this,
but I was on UH-1s. There were just Charlies and they were
first generation. You were not born when those went into
production.
Ms. Duckworth. [Remarks made off microphone.]
Chairman Issa. You did fly Hs. Well, they were hotels. They
called them hotels because they were big.
But when the other end of acquisition, which is repair part
and disposal, it has been a mess at DOD at all parts of it
since before most people in this audience were born. We buy
things, they get shipped in. At Fort Riley, Kansas, if I
remember correctly, there is still an anchor there because
somebody ordered a ship's anchor by mistake, and once it was
railed in, they didn't know what else to do with it, so they
put it there.
The disposal of equipment and the reuse has never been
centralized. Now, if I were to go online today and I were to
say I needed a part for a 1989 X, Chrysler 300, whatever it
was, I can go to a single Web site and virtually every salvage
yard in America feeds into that, and I can find out where the
parts are, where the car is that contains that part.
The world has modernized so that you do not have an excess
part simply get sold off at a small auction and not put back
into the system. And, more importantly, auctions continue to
occur at every little base and compound, rather than a central
selling system where people all over the world can bid up the
price of the excesses of the Department of Defense.
Now, it is not just the Department of Defense, but I would
like you to really look at it because, in my two decades in the
active and then reserves, the gentlelady's 21 years now, this
hasn't gotten fixed. But the world has fixed this problem to a
scale in which almost anything is sold globally, is auctioned
globally; and we continue to have local auctions where people
show up and they get deals.
I know it is a small part of it, but I have been waiting
for an opportunity to say isn't this the kind of thing that, in
addition to a billion dollar failed acquisition program out of
Dayton, that we could also learn to sell our excesses and reuse
our excesses better? Isn't that an item that IGS have been
talking about and organizational people have been talking about
since you first knew there was a Department of Defense?
Mr. Hale. I thought there was, and I am going to express my
ignorance and take a risk here, Mr. Chairman, the Defense
Resource Management Utilization Service or Reutilization
Service. But let me go back and find more from our logistics
experts, because I hear you, eBay and other things like it
should certainly allow us those opportunities. I think we were
using some of them.
Chairman Issa. And I agree with you, there have been
efforts to try to do it, but I can tell you today it doesn't
work.
General Halbrooks, I assume you have looked at the
perfectly good product going out to sale while the same exact
product is being reacquired in a very near location.
Ms. Halbrooks. Certainly, that is consistent with the work
that we have done on our spare parts reports that we have
talked about today. But, more broadly than that, I appreciate
your input and the committee members' input into areas for
future work. As we start to look forward to doing our fiscal
year 2014 audit planning, they will certainly be areas we take
into consideration.
Chairman Issa. Thank you.
Mr. Cummings, do you have anything?
Mr. Cummings. Thank you very much.
There has been quite a bit of effort made here today, Mr.
Borras and Mr. Hale, talking about how you should have been
prepared better for sequestration, and I want to be fair to
you, and I don't know if you know this, but I need you to let
me know if you know this.
According to what we did, according to what the Congress of
the United States did, did you know that, according to Section
116(b) of the Continuing Appropriations Resolution of 2013,
Congress required Federal agencies to submit their plans to
implement sequestration cuts to the Congressional
Appropriations Committee 30 days after the President issues a
sequestration order? And President Obama issued his
sequestration order on March the 1st, 2013, so in order to
implement the $85 billion and across-the-board spending cuts
for fiscal year 2013, and, as a result, agencies are required
to submit their sequestration plans to Congress, we have
ordered you to do this now, you understand that, by April 1st,
2013. Were you aware of that, Mr. Hale?
Mr. Hale. Absolutely. We call it a spin plan. Now, we are
going to have a real problem because you are about to change
the whole framework for us, I hope, in passing an
appropriations legislation or a new continuing resolution is
going to change the whole way we do sequestration. So I don't
know if we will make it, but we are well aware of it.
Mr. Cummings. Are you working on that plan?
Mr. Hale. Yes.
Mr. Cummings. I got that. I am just asking, first of all,
are you working on it pursuant to law that we passed.
Mr. Hale. Yes.
Mr. Cummings. Okay. Number two, you are also telling me
that because of the continuing resolution, that a monkey wrench
may be thrown into that. Is that what you are saying?
Mr. Hale. Yes.
Mr. Cummings. And can you explain that to me?
Mr. Hale. The sequestration law requires that we base the
cuts on program project and activity. It was defined by this
continuing resolution you passed last September. It will now
change and be applied, for at least the Department of Defense,
based on what will essentially be an appropriations bill in
this new continuing resolution. So all the numbers, all the
base from which you take the cuts are going to change, and we
will need to go back and make sure we still have the right
plans.
Mr. Cummings. Now, is your interpretation of a law that we
passed, the one I just referenced, in other words, you still
have a deadline of April 1st, as you interpret the law?
Mr. Hale. Yes.
Mr. Cummings. So you all are going to be working hard, I
take it, once you figure out what we, as a Congress, what we
are going to do.
Mr. Hale. We will do our best.
Mr. Cummings. Do you think you will be able to make that
April 1st deadline?
Mr. Hale. Probably not.
Mr. Cummings. Okay.
Mr. Hale. Not with meaningful information. I mean, we can
give you old stuff, but that is not going to help you or us.
Mr. Cummings. Yes, I understand. It is getting kind of
late.
Mr. Borras, were you aware of that?
Mr. Borras. Yes.
Mr. Cummings. So are you all preparing to submit your plan
by April 1st, as required by Congress?
Mr. Borras. We are working on our plan to meet the 30-day
requirement as per law, and as Under Secretary Hale mentioned,
we too will have adjustments that will be made to that plan
based on the continuing resolution that gets passed for the
balance of the year.
Mr. Cummings. Were you aware of that, Ms. Halbrooks? Were
you aware of that?
Ms. Halbrooks. Yes. Yes.
Mr. Cummings. Okay. And you?
So this really does cause some problems for you, doesn't
it, Mr. Borras?
Mr. Borras. It will require some adjustment. I provided one
example earlier in TSA, the FAMS program, which the impact
would be about an additional $60 billion reduction; Secret
Service, about $100 million reduction based on the estimates of
what we know the bill to be today.
Mr. Cummings. Well, you know, it is interesting that we
here in Congress, and I have talked to a number of Congress
people, we too had to make some changes. I know I have just
told my employees they are taking two days of furlough, and
people say sequestration does not have impact. That is real.
That is a real deal. Some of these people making $40,000,
$45,000; they are losing two days a month. That is real.
As a matter of fact, they have already started taking
furlough days. So we are just going to have to work through
this and hopefully it will not be as painful as it appears that
it will be for some people.
Thank you.
Chairman Issa. Would the gentleman yield?
Mr. Cummings. Of course.
Chairman Issa. I think the ranking member brings up an
important point, that the CR that we passed out of the House
that has major changes primarily for Department of Defense does
create a situation in which a bill not yet passed, but to take
effect for sure, one way or the other, by April 1st does change
what particularly Department of Defense is going to report, and
I do think that is the best reason for this committee to make
every effort to try to find things that, no matter what the
effects of future bills, agencies would want to either adjust
or reduce or eliminate and work together on; and I thank the
gentleman for pointing that out.
Mr. Cummings. Thank you.
Chairman Issa. Mr. Jordan, I understand you have another
question?
Mr. Jordan. Just real quick, Mr. Chairman. I didn't get
this in in my five minutes.
Back to Ms. Napolitano's statement on March 4th, 2013, she
said that major airports were seeing lines 150 to 200 percent
as long as we would normally expect. Did the Department survey
airports around the Country between November 1st and November
4th to get that information that Ms. Napolitano then based her
statement upon?
Mr. Borras. I don't have an answer to that question. I am
not involved in the operations of either the airports or the
borders and wouldn't be cognizant at this time of what
information was presented to the secretary relative to those
operational matters out in the field.
Mr. Jordan. The fact is the reporter at that newspaper who
reported this said they in fact called O'Hare Airport, Los
Angeles International Airport, and Atlanta's airport and the
spokesperson for those respective airports said there were no
major delays.
So I just want to know where she got the information. What
information did she base that statement on? And it would seem
to me the only information you could base that statement on is
if you called up the airports and said are you in fact
experiencing delays, and are they 150 to 200 percent longer
lines than you normally have at this point in the year.
You don't know if that was done?
Mr. Borras. I don't have that information. I would be happy
to provide you the basis for that statement.
Mr. Jordan. I appreciate that and I hope you do get that to
us, but it would seem to me, when you come in front of the
committee, knowing that this is going to be about
sequestration, knowing that this statement was made three days
after sequestration took effect, it seems to me you would know
what information the Secretary of the Department of Homeland
Security based that statement on. And yet you come here and you
just say I don't know.
So, with that, Mr. Chairman, I would yield back.
Chairman Issa. Thank you.
Ms. Duckworth, do you have any questions?
Mr. Cummings?
Mr. Cummings. Just one question.
Mr. Hale and Mr. Borras, do you think that April 1st
deadline should be extended?
Mr. Hale. Well, Mr. Cummings, it is in the law. We will do
our best to meet it. I just am concerned about meeting it well
at this point, but we will get something as quickly as we can.
I think we can work with you and with the committees.
Mr. Cummings. Mr. Borras?
Mr. Borras. We will respond to the law. If there are any
changes between now and April 1st, we will adjust accordingly,
but right now we are planning to respond on April 1st.
Mr. Cummings. All right, thank you.
Chairman Issa. I am going to follow up on that briefly.
Mr. Hale, isn't it true that the appropriations bills
passed out of the House substantially reflects requests that
you had for changes? In other words, the negotiation that went
on that led to DOD in the CR actually having, effectively, a
new appropriation? Isn't that, at least for our guidance, when
I am talking to my colleagues and Mr. Cummings is talking to
his, that, really, you have given us most of what you are going
to say on April 1st, which is we would like to have what was in
the House's CR negotiated? I realize there is always an
anomaly, but a lot of it is reflected there?
Mr. Hale. Yes and no. The yes part is--the no part is that
they want us to look at each program, there are 2500 of them in
the Department of Defense, and say what the specific cuts are
against that level. That isn't in the bill and we will have to
do that for you, and we need to do that too. I mean, we need a
spin plan to execute this, although I still hope that you end
it in some fashion. But if it doesn't get ended, then we have
to make it work, and we will.
Chairman Issa. Thank you.
I want to thank all of you for your testimony today. We
will leave, as I believe was said earlier, five days for all to
revise and extend, and for opening remarks of members. And,
again, thank you.
We stand adjourned.
[Whereupon, at 12:30 p.m., the committee was adjourned.]
APPENDIX
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