[Senate Hearing 108-48] [From the U.S. Government Publishing Office] S. Hrg. 108-48 NOMINATIONS OF HON. CLARK KENT ERVIN, JANET HALE, AND LINDA M. SPRINGER ======================================================================== HEARING before the COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED EIGHTH CONGRESS FIRST SESSION ON THE NOMINATIONS OF HON. CLARK KENT ERVIN TO BE INSPECTOR GENERAL FOR THE DEPARTMENT OF HOMELAND SECURITY, JANET HALE TO BE UNDER SECRETARY FOR MANAGEMENT FOR THE DEPARTMENT OF HOMELAND SECURITY, AND LINDA M. SPRINGER TO BE CONTROLLER OF THE OFFICE OF FEDERAL FINANCIAL MANAGEMENT FOR THE OFFICE OF MANAGEMENT AND BUDGET __________ FEBRUARY 27, 2003 __________ Printed for the use of the Committee on Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 2003 86-958 PDF For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON GOVERNMENTAL AFFAIRS SUSAN M. COLLINS, Maine, Chairman TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois ROBERT F. BENNETT, Utah THOMAS R. CARPER, Deleware PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas Michael D. Bopp, Staff Director and Counsel Johanna L. Hardy, Senior Counsel Joyce A. Rechtschaffen, Minority Staff Director and Counsel Lawrence B. Novey, Minority Counsel Susan E. Propper, Minority Counsel Jennifer E. Hamilton, Minority Research Assistant Darla D. Cassell, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Collins.............................................. 1 Senator Carper............................................... 2 Senator Lautenberg........................................... 15 Senator Akaka................................................ 17 Senator Pryor................................................ 20 Prepared statement: Senator Voinovich............................................ 29 WITNESSES Thursday, February 27, 2003 Hon. Kay Bailey Hutchison, a U.S. Senator from the State of Texas 3 Hon. John Cornyn, a U.S. Senator from the State of Texas......... 3 Hon. Elizabeth Dole, a U.S. Senator from the State of North Carolina....................................................... 5 Hon. Clark Kent Ervin to be Inspector General for the Department of Homeland Security........................................... 6 Janet Hale to be Under Secretary for Management for the Department of Homeland Security................................ 8 Linda M. Springer to be Controller of the Office of Federal Financial Management for the Office of Management and Budget... 21 Alphabetical List of Witnesses Cornyn, Hon. John: Testimony.................................................... 3 Dole, Hon. Elizabeth: Testimony.................................................... 5 Ervin, Hon. Clark Kent: Testimony.................................................... 6 Prepared statement........................................... 30 Biographical and professional information.................... 32 Responses to pre-hearing questions........................... 38 Responses to post-hearing questions.......................... 124 Hale, Janet: Testimony.................................................... 8 Prepared statement........................................... 55 Biographical and professional information.................... 57 Responses to pre-hearing questions........................... 63 Responses to post-hearing questions.......................... 134 Hutchison, Hon. Kay Bailey: Testimony.................................................... 5 Springer, Linda M.: Testimony.................................................... 21 Prepared statement........................................... 105 Biographical and professional information.................... 107 Responses to pre-hearing questions........................... 114 Responses to post-hearing questions.......................... 136 NOMINATIONS OF HON. CLARK KENT ERVIN, JANET HALE, AND LINDA M. SPRINGER ---------- THURSDAY, FEBRUARY 27, 2003 U.S. Senate, Committee on Governmental Affairs, Washington, DC. The Committee met, pursuant to notice, at 11:03 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Susan M. Collins, Chairman of the Committee, presiding. Present: Senators Collins, Coleman, Akaka, Carper, Lautenberg, and Pryor. OPENING STATEMENT OF CHAIRMAN COLLINS Chairman Collins. The Committee will be in order. Today the Committee of Governmental Affairs is holding a hearing to consider three nominations, Clark Kent Ervin to be the Inspector General of the Department of Homeland Security; Janet Hale to be the Under Secretary for Management at the Department for Homeland Security; and Linda Springer to be the Controller of the Office of Federal Financial Management at the Office of Management and Budget. In January the Committee approved the nominations of Governor Ridge to be the Secretary of the new Department and Gordon England to be its first Deputy Secretary. I am pleased today that the Committee is considering the next set of Homeland Security nominees, Mr. Ervin and Ms. Hale, both of whom appear to have strong credentials and relevant experience to the positions for which they have been nominated. The Department of Homeland Security officially opened its doors on January 24. The establishment of the Department is the most significant government restructuring in more than 50 years. It involves the merger of some 22 agencies and 170,000 employees. The creation of the Department is an enormous undertaking that will require a team effort to ensure its success. As part of that team, the Under Secretary for Management, who will be responsible for the organizational issues in the new Department, will have a particularly challenging job. With this massive merger, the Under Secretary for Management will have to work to integrate disparate management, human resources, and information technology systems. Ms. Hale's extensive background in management in both the public and the private sectors appears to be ideal for undertaking the integration and management of these issues. Another critical member of the Homeland Security team is the Inspector General. For more than 20 years the Inspectors General have been the watchdogs for Congress and the taxpayers in the ongoing battle against waste, fraud, and abuse. The DHS IG will face extraordinary challenges. Audit and investigative components from the various agencies must be integrated into a single entity within the Department. The IG is also responsible for performing annual audits of the Coast Guard to ensure that its new Homeland Security responsibilities do not divert attention from its traditional roles, including vital search and rescue missions, which are of particular importance to my State. Both the Under Secretary for Management and the Inspector General will be crucial to the successful organization and proper functioning of this vital new Department. I am also pleased that today we will consider the nomination of Linda Springer to be the Controller of the Office of Federal Financial Management at OMB. The Controller acts as the deputy and principal advisor to the Deputy Director for Management in carrying out the financial management duties as outlined in the Chief Financial Officers Act of 1990. This position is critical to ensuring that the financial management systems in the Executive Branch are efficient, accurate, and reliable. Ms. Springer's background again appears to be tailor-made for this position. Before turning to my colleagues, I want to recognize Senator Carper for any opening comments that he may have, and to welcome him today. OPENING STATEMENT OF SENATOR CARPER Senator Carper. Thank you, Madam Chairman. And to our witnesses and to our colleagues, it is great to see each of you and I am looking forward to the hearing. I am going to ask a rhetorical question. I know this is not a time to ask questions. But I see Senator Dole here and I have always wondered this. For years I have told this story about when you had been nominated to be a cabinet secretary by former President Bush, and you were presented to the Senate by your husband, Senator Dole. And I am told that he said to his colleagues, he quipped, I regret that I have but one wife to give to my country. Is that true? Senator Dole. To my country's infrastructure. I think he also mentioned something about my biscuit recipe being something that might be used for potholes, too. We had a lot of fun with that. Senator Carper. Good. He has to be a hard act to follow. I am delighted to be here and look forward to the testimony and to having a chance to vote for our nominees. Thank you for your willingness to serve. Chairman Collins. I very much appreciate the Senator from Delaware clearing up that essential question that we have all wondered about throughout the year. Senator Carper. I have others, too. Chairman Collins. It is now my pleasure to recognize my distinguished colleagues for purposes of an introduction. We are very pleased to have the senior Senator from Texas, Senator Kay Bailey Hutchison here today, as well as our new colleague, Senator John Cornyn. I would ask Senator Hutchison if she would proceed. STATEMENT OF HON. KAY BAILEY HUTCHISON, A U.S. SENATOR FROM THE STATE OF TEXAS Senator Hutchison. Thank you, Madam Chairman. Bear with me a little bit because I had some dental work this morning and I am not speaking as clearly as I hope I usually do. I am very pleased to be here for Clark Kent Ervin, someone I have known for years and years. And he comes to this post, I think, with all of the right qualifications. First, of course, is academic qualifications, having gotten his bachelor of arts degree and his law degree from Harvard with honors, and he was a Rhodes Scholar. But then he went on into the legal field, distinguishing himself in that field and in several areas of our State service, including working with my colleague when he was Attorney General, and I know he will elaborate on that. But I think, even more to the point now, I cannot imagine a more important job than the Inspector General of the Department of Homeland Security because with the new emphasis that we are putting on terrorism, counterterrorism, and intelligence gathering in this agency, I think the role of Inspector General is going to be so very important. And he has the experience for the job. He has been Inspector General at the Department of State, and he has been Acting Inspector General since the Department of Homeland Security came into being. So I cannot think of a better person for this job and someone that I know personally will go the extra mile to do everything just right in this agency. And I am pleased to recommend him to you. Chairman Collins. Thank you very much, Senator Hutchison. I want to express admiration for your stamina and ability to withstand pain and still keep all of your Senate commitments, as well. It is typical of your extraordinary dedication to your job and the nominee is indeed fortunate to have your endorsement. Senator Cornyn. STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM THE STATE OF TEXAS Senator Cornyn. Madam Chairman, thank you for letting me appear here today with my senior Senator and my good friend, Clark Ervin, on this day when he comes before you seeking Senate confirmation as Inspector General of the Department of Homeland Security. When I was Attorney General for the 4 years preceding my service in the U.S. Senate, I recruited what I consider to be the best and brightest that our State had to offer when it came to my executive staff at the AG's office. In that pursuit I think I accomplished it, at least in part, when I convinced Clark to come to work with me as Deputy Attorney General, as General Counsel, and Director of Administration in my office before he was whisked away to Washington, DC to work at the State Department. While serving as my Deputy Attorney General, Clark tirelessly sought to ensure that taxpayer money was spent efficiently, effectively, and wisely. People that come into contact with Clark quickly realize, though, that he is more than just an excellent manager. Clark spent considerable time and effort helping make Texas a better place to work and live for some of the most vulnerable in our State. In one instance, Clark recognized that many very helpful government programs for children were not being utilized, particularly for children at risk. Parents, teachers, and other adults coming into regular contact with children were simply unaware of programs that existed to provide such necessary items as warm coats, dental services, and the like. Clark was also the one who introduced me to then-General Colin Powell's work on America's Promise, a wonderful organization that continues even today. And recognizing Clark's talents, he was whisked away by now Secretary of State Powell, who asked him to come to the Department of State as his Inspector General. Clark will be embarrassed to know that I will recount one story I remember of his meeting with then-designee for Secretary of State Colin Powell. When after meeting Clark and being very impressed with him personally and professionally General Powell asked him if he was married and pointed out or just dropped the idea that he happened to have two daughters that were not. It may have just been coincidence in that conversation, but Clark has since married someone else, for which we are very happy and congratulate him, and I know he is happy as well. As Inspector General at the State Department, Clark supervised inspections for diplomatic posts around the world to determine whether policy goals were being achieved and ensure the protection of our personnel, facilities, and intelligence information. Based on his dedication to public service, his love of this great country, and past success, the President has now nominated Clark for this very challenging position. Everybody who knows Clark recognizes his can-do attitude and I know that will serve him well as he works with Secretary Ridge to shape disparate organizations into a smooth functioning whole safeguarding the American people. I want to thank you, Madam Chairman, for giving me these few minutes to offer my enthusiastic and unequivocal support to this wonderful nominee, my friend Clark Ervin, to serve as Inspector General of the Department of Homeland Security. Chairman Collins. Thank you very much. I want to thank you for your personal endorsement and your firsthand knowledge of the nominee is very helpful. I know that both of the Senators from Texas have very tight schedules and we would excuse you at this point, if necessary. Senator Carper. Madam Chairman. Chairman Collins. The Senator from Delaware. Senator Carper. Before the Senators leave, something that happened last night has just sort of come into focus for me. Last night I got a phone call at home from Secretary Powell and he does not often call me at home. I thought he was calling to talk about the situation in the Middle East or Korea or whatever. And he asked if I was on this Committee and I said that I was. And he said if a fellow named Clark Kent Ervin comes before the Committee, ask him if he is happily married. [Laughter.] Chairman Collins. You need to get more sleep, Senator. [Laughter.] Senator Carper. I told him I would ask. Chairman Collins. Thank you. That can be your first question for the day, but we will not deduct it from your time. Again, I want to thank both Senators from Texas for taking the time to be with us this morning to share their thoughts. It is now my great pleasure to call upon the Senator from North Carolina, Senator Dole, to introduce Ms. Hale. STATEMENT OF HON. ELIZABETH DOLE, A U.S. SENATOR FROM THE STATE OF NORTH CAROLINA Senator Dole. Thank you. Madam Chairman, Members of the Committee, it is my great pleasure to introduce Janet Hale of Virginia as the President's nominee for Under Secretary for Management for the Department of Homeland Security. Despite the fact that she is not from the great State of North Carolina, a forgivable flaw, I am delighted to recommend Janet to you for this very important position. I have known her for many years and in many different capacities and I know that she is extremely well qualified and well prepared for this position. And Senator Lautenberg, you might remember our work together on aviation security, as well as age 21, the drinking law. Janet was at my side when we were working on those issues and it was a pleasure to work with you that time. Janet's resume includes numerous positions of significant responsibility in both the public and the private sectors. More importantly, her reputation and the results of her work are distinguished by the respect of her peers. Her accomplishments are numerous on behalf of the public and the institutions that she has so devotedly served for over 2 decades. As you well know, the duties of the Under Secretary for Management are critically important to the success of this new Department. The scope of responsibility is broad indeed, including budget development and execution, human resource management, information technology architecture and integration, procurement, and systems management and administrative services. Janet Hale's career has given her a depth of experience in each of these areas. I first worked with Janet when I served as Secretary of Transportation and she was a key member of my senior management team, serving as Assistant Secretary for Budget and Programs and managing the annual $26 billion budget. I was so proud and pleased for Janet when she moved on to the Office of Management and Budget to serve as the Associate Director for Economics and Government. There she was responsible for the Departments of Transportation, Treasury, Commerce, Justice and 25 smaller agencies, managing a $70 billion annual Federal budget. Over the years her management experience and portfolio have grown significantly and in her most recent position as Assistant Secretary of Budget, Technology and Finance at the Department of Homeland Security, her job description called for development and execution of a $475 billion budget. Janet also comes with private sector management experience, having served as Executive Vice President of the University of Pennsylvania. As the Chief Administrative Officer of the University, Janet was responsible for management of human resources, finances, facilities, and safety. While there she reengineered all core business functions, resulting in significant cost reduction and improvements in efficiency. It is important to highlight Janet's recent experience with systems integration, both at the Department of Health and Human Services and the House of Representatives, where she designed new financial accountability systems and unified the IT systems. This experience will serve her well as the Department of Homeland Security integrates the operations of 22 agencies. By temperament, talent, and experience Janet Hale is a proven and effective leader in institutional change management. As you can see, most of her career has been dedicated to serving the public and I believe we are fortunate indeed that she is willing to perform this important job for our country at such a critical time. Madam Chairman and Members of the Committee, it is my privilege to present Janet Hale. Chairman Collins. Thank you very much, Senator Dole. Your endorsement means a great deal to the Committee and I know it does to the nominee as well. And we would be happy to excuse you also at this point. Mr. Ervin and Ms. Hale have filed responses to biographical questions. Senator Carper. It is going to be an interesting hearing. Chairman Collins. For those of you in the audience who are not aware of the Senate's schedule, we were in until 1 a.m. last night. They have filed responses to biographical and financial questionnaires, answered pre-hearing questions submitted by the Committee, and had their financial statements reviewed by the Office of Government Ethics. Without objection, this information will be made part of the hearing record with the exception of the financial data which are on file and available for public inspection in the Committee offices. Our Committee rules require that all witnesses at nomination hearings give their testimony under oath, so I would ask that you both stand and raise your right hand. [Witnesses sworn.] Mr. Ervin, do you have a statement you would like to make? Mr. Ervin. Yes, Madam Chairman. Chairman Collins. Please proceed. TESTIMONY OF HON. CLARK KENT ERVIN \1\ TO BE INSPECTOR GENERAL FOR THE DEPARTMENT OF HOMELAND SECURITY Mr. Ervin. Good morning, Chairman Collins and other Members of the Committee. I am grateful to you for holding this hearing today on my nomination to serve as the Inspector General of the Department of Homeland Security. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Ervin appears in the Appendix on page 30. The biographical information appears in the Appendix on page 32. Responses to pre-hearing questions appear in the Appendix on page 38. Responses to post-hearing questions appear in the Appendix on page 124. --------------------------------------------------------------------------- Let me begin by expressing my thanks and appreciation to President Bush for the confidence in and support for me that he has shown by once again nominating me for a high Federal position. I also thank, of course, Senators Hutchison and Cornyn for taking time out of their very busy schedules to be here today on my behalf and for their extraordinarily kind words of support. Let me take a minute, if I may, also to introduce those members of my family who could be present today. I am joined by my wife, Carolyn Harris, and by my parents-in-law, Barbara and Harold Harris, as well. I am humbled, gratified, and excited by the prospect, if confirmed, of serving as the first Inspector General of the newest cabinet department representing, as you say, the largest reorganization of the Federal Government in more than half a century and charged with a mission of paramount importance, protecting our homeland against terrorist attack. Since being so designated by President Bush late last month, I have served as the Acting Inspector General to the new Department. Over the course of the first few weeks I have had a number of occasions to speak to and to interact with both Secretary Ridge and Deputy Secretary England. On several such occasions each of them has both privately and publicly stressed their support for me personally, and their appreciation of role of the Inspector General as an independent, objective, analyst, consultant, and constructive critic of the Department's programs and operations. To their credit, they have sought to involve me at the front end as the Department begins its operations, as opposed to my having to come in after the fact to conduct an inspection, audit, or investigation and finding problems that could be minimized if caught early or, better still, avoided altogether. Based on my experience so far with the Secretary, the Deputy Secretary, and other members of the senior management team, I expect to have a close and collaborative working relationship with them. As I believe that I demonstrated during the course of my tenure as Inspector General of the Department of State and the Broadcasting Board of Governors, I am deeply committed to the mission of inspectors general. As I see it, through inspection, evaluations, audits and investigations, it is to help the departments for which we have oversight responsibility achieve their respective missions in as efficient, effective, and economical manner as possible. The Department of Homeland Security faces a number of significant management challenges. First, of course, it is a new Department. Second, as of March 1 it will be a huge Department, the third largest in the Federal Government with more than 170,000 employees and a budget of more than $30 billion. It will be composed of 22 different Federal agencies or parts thereof, each of which will bring its own set of management challenges. And last but not least, and as noted above, its mission, protecting our country against terrorist attack, could not be more important. It is no exaggeration to say that the fate of our Nation depends upon the degree to which the Department succeeds in accomplishing its mission. And in seeking to accomplish a mission such as this, the Department cannot afford to waste one minute or one dollar. The Inspector General will play a key role in evaluating the degree to which the Department is accomplishing its mission and in recommending ways for it to do so as efficiently, effectively, and economically as possible. I pledge to each of you to be independent, objective, thorough, apolitical, and when need be, critical of the Department's programs and operations. I also pledge to be responsive, equally so, to both the Secretary and the Congress. I fully appreciate the fact that, if confirmed, I have a responsibility to keep the Congress, as well as the Secretary, thoroughly and promptly informed of significant findings and developments. One of the several gratifying aspects of my relatively short tenure as Inspector General at the State Department and the Broadcasting Board of Governors was developing a close and productive working relationship with certain Congressional members and staffers. Over the course of my tenure, the number of Congressional requests for work products and hearings steadily increased, which I took to be a measure of the Congress's confidence in me and the team that I had assembled. I hope to maintain Congress' confidence in me if confirmed for this position, and I would look forward to working closely with you, Chairman Collins, and other Members of the Committee or staff, and any other members and staffers who have an interest in Homeland Security-related matters. With that, thank you again, Chairman Collins, and other Members of the Committee, for holding this hearing today. And I look forward to answering any questions that any of you may have. Many thanks. Chairman Collins. Thank you. Ms. Hale, do you have a statement? Ms. Hale. Yes, I do. TESTIMONY OF JANET HALE \1\ TO BE UNDER SECRETARY FOR MANAGEMENT FOR THE DEPARTMENT OF HOMELAND SECURITY Ms. Hale. Thank you very much, Senator Collins and distinguished Members of this Committee. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Hale appears in the Appendix on page 55. The biographical information appears in the Appendix on page 57. Responses to pre-hearing questions appear in the Appendix on page 63. Responses to post-hearing questions appear in the Appendix on page 134. --------------------------------------------------------------------------- I, too, would like to take an opportunity to introduce some folks that are with me. Unfortunately, my mother is in Florida, my brother is in Southern California, but I have some friends here. I will spare them. But there are some people that work with both Clark and myself at the Department of Homeland Security that came to show their support for us and to understand the value of the Department that you all created here. And I would personally like to thank them and recognize that they have come up with us today. I obviously thank Senator Dole for her kind comments that she offered on my behalf. The primary mission of the new Department is clear, to deter, detect, prepare for, and respond to terrorist attacks and other threats against our country and our people. To accomplish this, the Department will need budgetary and human capital resources, technology development, and an efficient management and infrastructure support. The position I have been nominated to is charged with just these responsibilities. I am fortunate to have served in such capacities in both the public and private sector. I have had a unique opportunity to serve from the program level at a department, the departmental level, as Secretary Dole referenced, Office of Management and Budget, and here on Capitol Hill. I hope this has prepared me for the challenges that we are facing. Over the past few months, many people inside and outside government have highlighted the enormous management challenges facing the new Department. Merging 22 agencies and bringing nearly 180,000 Federal workers under one Department will not be an easy task. However with challenges comes opportunities. If confirmed, I look forward to helping the Department establish an organizational culture that values collaboration, interoperability, and information sharing to take advantages of these opportunities. There are several critical things that the Under Secretary for Management will need to focus on as a leader. First, all the management functions must directly support the operational mission and add value to the efforts of our men and women on the front line who are protecting our homeland and the American people. Second, the Under Secretary of Management must work closely with the four directors, the senior managers, and the IG to be sure that we are enforcing and implementing the Department's missions. Third, the Under Secretary for Management must recognize the importance of leveraging tremendous resources and capabilities of these incoming agencies for the benefit of the entire Department. The most important resources, of course, are our Federal employees who deserve the best tools available in order to ensure that they can effectively perform the homeland security and other critical missions. As Secretary Ridge said, new funding, technology and equipment are important, but no more so than the people who are willing to serve in this new Department. If confirmed, I am committed to ensuring that the leadership of the Department maintains continuous effective, two-way communication with our employees throughout all the organization. Finally, the Under Secretary must ensure that the management systems and processes provide good stewardship of government resources. The Department has a tremendous amount of resources and responsibility. If confirmed, I promise that I will honor those. I have been truly privileged to be nominated for this position and if the Senate should confirm me, I welcome the opportunity to work with Congress, with you particularly, to accomplish the important missions that we are charged in this statute. I look forward to answering your questions and I am pleased to be here today sitting next to my colleague, Clark Ervin. Thank you. Chairman Collins. Thank you very much, Ms. Hale. There are three standard questions that we ask of all nominees for the record and I am going to begin my questioning with those. First, is there anything that you are aware of in your background which might present a conflict of interest with the duties of the office to which you have been nominated? Mr. Ervin. No. Ms. Hale. No. Chairman Collins. Second, do you know of anything personal or otherwise that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated? Mr. Ervin. No. Ms. Hale. No. Chairman Collins. And finally, do you agree without reservation to respond to any reasonable summons to appear and testify before any duly constituted committee of Congress if you are confirmed? Mr. Ervin. Absolutely. Ms. Hale. Yes. Chairman Collins. Mr. Ervin, the General Accounting Office recently included the new Department of Homeland Security on its 2003 high-risk list. The designation is based on three factors. First, it is an enormous undertaking that will take time to achieve in an effective and efficient manner. Second, the Department's prospective components already face a wide array of existing management and operational challenges. And third, the failure to effectively carry out its mission exposes the Nation to potentially very serious consequences. If you are confirmed as IG, how will you seek to ensure that DHS addresses these concerns and challenges? And what is your response to the GAO's listing the new Department on its high-risk list? Mr. Ervin. Madam Chairman, I think the GAO has done a good job of identifying the significant challenges that face the Department. And if I were to do so on my own, I would have identified exactly those challenges. As to how, if confirmed, I would proceed to help the Department to address them, I would intend to have a very robust inspections, audit, and investigative team thanks to the various parts of Offices of Inspector General that I would inherit. I would seek to conduct inspections, evaluations, audits, and investigations where necessary with regard to those three areas of challenge. Furthermore, as I noted in my opening statement, to the credit of the Secretary and the Deputy Secretary, I have been involved to a significant degree at the front end, as the Department begins its operations, and I have sought to provide some advice and recommendations to the Secretary and other senior management so that at the very beginning of its operations issues can be avoided and a plan can be put in place to address these challenges and others. Chairman Collins. Mr. Ervin, some of the component agencies of the new Department are, frankly, troubled agencies and the Immigration and Naturalization Services is one that comes immediately to mind. The INS, for example, has had continual problems in managing its information technology resources that are critical to its ability to function effectively, particularly in a post-September 11 environment. The Department of Justice's Inspector General, which has issued numerous reports on this, as well as GAO have made a series of recommendations designed to increase the effectiveness of the information technology practices at INS. As Inspector General, what would you do to ensure that we start to actually solve some of the problems that will be transferred to the new Department, particularly in the area of information technology? Mr. Ervin. Madam Chairman, I note that there are about 87 different information systems in INS alone. The large number of information systems, the fact that those systems cannot communicate with each other, the security vulnerabilities that each of those systems has are all, as you say, issues in the information technology area that have been identified by my colleague, the DOJ Inspector General. I have had the benefit of a number of briefings, both from him personally and from other members of his team with regard to those issues and others that affect INS. I would propose to follow up on any outstanding recommendations with regard to those issues, if confirmed, and indeed I would expect to continue to do work in this area, both inspections and evaluations and audits, as INS becomes a part of the Department of Homeland Security. Chairman Collins. Ms. Hale, one of the challenges facing the new Department is developing a flexible and appropriate personnel system. It is my understanding that the component agencies are bringing in diverse personnel systems. I believe that it is very important that the Federal employees unions be fully involved in this process. What are your plans for helping to integrate and develop a personnel system with the advice and in consultation with the Federal employee organizations? Ms. Hale. I share your concern about the disparate systems that we are inheriting from these agencies. It is truly a concern of our employees and I think it is a considerable concern of all of ours. I have met with the senior union leadership and I have pledged to them, as I will pledge to all of you because I know of your concern, that they will be an intricate part. We need to have employees on the front line, both union and nonunion representative. We need middle management, we need senior management to be sure that this system is developed with an understanding of their business needs, their responsibilities out there, and we have already begun the consultation with the unions because they will be critically involved in this project. Chairman Collins. You are going to have an enormous task covering many different areas with a large department, and a complicated reorganization. If you are confirmed, what would be your top priorities for the coming year? Ms. Hale. I think first and foremost is a smooth integration and transition of these agencies coming into the Department. They clearly have diverse cultures, long histories, and proud accomplishments, and we need to be sure that the men and women on the front line do not see any adverse impact as they are transferred to the new Department. We then need to be sure that our IT systems are there to support their mission. We need to be sure that we have a new human capital system and an integrated financial management system. So I think if I started with the transition and then moved to the serious task that you have identified, those would be my top priorities. Chairman Collins. Thank you. Senator Carper. Senator Carper. Before I became a Senator I was a governor for 8 years, the Governor of Delaware, and very active in the National Governors Association. One of the traits of the practices within the National Governors Association is when a person is elected as a new governor in November of a year, the National Governors Association hosts what we literally call a new governor's school, and a school for governors and spouses. it is a wonderful time of sharing, where the old governors, the grizzled veterans, teach the new governors where they screwed up, the mistakes they made, and we learn from our experiences. Each of the new governors is appointed or assigned a mentor and it is a traditional organization. In my 8 years as governor, I got to be the mentor for Gary Locke from Washington, Governor Bob Wise from West Virginia, and also Governor Tom Ridge, which is unusual because you do not normally have someone from the opposite party. But he and I were colleagues and friends together in the House for a long time, came to the House together 20 years ago. Among the advice that I shared with Governor-elect Ridge, I said always surround yourself with people smarter than you. So my question for both of you is are you both smarter than Tom Ridge? [Laughter.] Ms. Hale. Clark, that is yours. Mr. Ervin. I certainly am not, Senator. Ms. Hale. If I can follow your advice, I will not answer because I think the guy is a great leader and I am proud to be part of this team, but I hope that I will put people smarter than me as my chief human capital officer and my CIO and CFO. Senator Carper. That is a great answer. Let us talk about team building. Can you talk to us about the nature of the teams that you will build and lead in your respective new assignments, if confirmed? Mr. Ervin. Senator, I will inherit if confirmed, about 457 employees from various offices of inspector general. The FEMA Office of Inspector General will be coming to the DHS office of Inspector General in its entirety, about 200 people. I will be getting a similar number, about 195 to be exact, from the Treasury Department's Office of Inspector General, about 45 from the Department of Transportation's Office of Inspector General, about 15 for the Department of Justice Inspector General, and two positions and about $250,000 from both the U.S. Department of Agriculture Inspector General and from GSA Office of Inspector General, for a total of about 457 employees and a budget of about $80 million. In addition to having a Washington-based staff of around 100 or so, the rest of the people are located in field offices around the country in the major cities of the country and along the Southwest border, particularly with regard to INS work. I would hope, beginning on day one, if confirmed, to do what I can to craft a cohesive team that would, on day one ideally and if not as soon as possible thereafter, to begin to think of themselves not as employees of the Office of Transportation Inspector General or FEMA Inspector General, etc., but instead as members of one integrated cohesive team, the Office of Department of Homeland Security Inspector General, focused on the mission of the Department of Homeland Security. I have had occasion during the course of the last few weeks, as acting Inspector General, to meet with some of the employees who would be transferred to this office from the Treasury Office of Inspector General and the FEMA Office of Inspector General. I am heartened by the expertise and credentials that these people bring, their dedication to their respective missions. And if confirmed, I think that I will have a team in place that is smarter than I and able to help me perform the mission that I would be entrusted to perform. Senator Carper. Thank you. Ms. Hale, our Chairman already asked the question that was on my mind, and she spoke of the representatives of employee groups that you will be dealing with. I was very pleased to hear that you have already begun to consult with them and to listen to them and for them to hear you out, as well. I would just say, I am not going to ask a question about it, but I want to provide some positive reinforcement to say that is just the kind of approach I would hope that you would not only take initially, but one that you would continue to embrace as you go forward. One of the areas that I think--Senator Collins and I share common interests in a whole lot of legislative areas. Really coincidentally, one of the areas I think we have had some common interest is in the sort of coordination there will be between this new Department and State and local providers. Can you share just a little bit, either of you but particularly Ms. Hale, how you would approach that subject? Ms. Hale. First, as you know, there is a State and local coordinator that I will work closely with because I think it is essential. Due to my tenure at the Department of Health and Human Services, I understand how critically important it is to provide the resources, which we did through the appropriations in the Congress, for public health infrastructure preparedness. I think that is the same thing we will see with the ODP grants and the FEMA First Responder grants. It is critical that we have one-stop shopping for the States, clear messages, and clear interoperability. So my goal is, just like I did at Transportation and at HHS, to meet with them, understand their needs, and work closely with my colleagues as we quickly get the money out and provide the technical assistance that we need to be sure that we are utilizing those resources. Senator Carper. Good. Mr. Ervin. If I could add to that, Senator, I certainly share Ms. Hale's and the Department's interest in getting money to States and localities just as quickly as possible, given the immensity of the needs and the seriousness of the needs to which the money would be put. Equally important, of course, is ensuring that controls are put in place, to ensure that the money is spent for the intended purpose, and to ensure that the money achieves the results that the money is intended to achieve. Just recently I have sent some advice that I believe has gone forward to the Secretary about just that. I will be very interested, as Inspector General, to ensure that the Department at the Federal level ensures, as I say, that the money is spent for the intended purpose and that the results are achieved, accountability and performance are very important criteria, needless to say. Senator Carper. When Vince Lombardi was the football coach, the head coach at the Green Bay Packers, he used to say unless you are keeping score, you are just practicing. And I have always found in my life that the things that I measure or ask others to measure are the things that we do best. I guess my last question for each of you is how will you measure the success of the team that you lead? How will you measure, looking back a year, 2 years, 3 years from now? How will you measure your success? Mr. Ervin. Well, there are a number of ways, Senator. One is led to believe that the number of products that he or she produces is an important indicator of success. Of course, as Inspector General, if I am confirmed, I would produce inspection reports and audit reports. I expect, given the immensity of the Department, and the complexity of its mission, there will be a number of those reports. But quantity is only one criterion and, relatively speaking, it is the less important one. The important criterion for me is ensuring that the Department achieves its mission as effectively and efficiently and economically as possible. If confirmed, I hope to have a long tenure. And at the end of that tenure, I would hope to be able to say in a measured way that there has been noticeable and demonstrable and quantifiable progress in terms of economy, efficiency, and effectiveness with regard to each of the Department's programs and operations, or at least those that are most significant. Senator Carper. Ms. Hale. Ms. Hale. I share Clark's concerns. I would emphasize the outcomes. I hope our borders are safer. I hope that the response we give to disaster relief across the country is provided efficiently and effectively. We will need to develop the outcome measures that are necessary to be sure that we have addressed the mission critical areas of our Department. Senator Carper. Madam Chairman, I just want to again thank our witnesses for being here today. Not only for that, but for your willingness to serve our country during a really challenging time. Ms. Hale, you mentioned, I think, the name of your mom, I think you mentioned your brother who are not here. I am sure they are proud of you and we sent along our best to them. And especially to your mom. Our thanks for raising a daughter who has a commitment to public service. Mr. Ervin, to you and to your family members who are present, as well, we want to thank them for their willingness to share you with all of us. Mr. Ervin. Thank you, Senator. Chairman Collins. Thank you, Senator. We are following the early bird rules. Senator Lautenberg, you would be next. OPENING STATEMENT OF SENATOR LAUTENBERG Senator Lautenberg. Thank you very much. It is a pleasure to have a chance to hear two, if I can use the term aspirants, so well qualified and experienced to take on these important assignments. Frankly, I am still somewhat concerned about the ability to organize all of this in what now is an urgent moment. So each of you in your particular responsibility is going to have a huge undertaking. I think that as time goes by and the Chairperson has heard me raise the question about what we do in the Senate to match up to this new cabinet-level department. So I look at this, and I reviewed some of the responses to the inquiries. Mr. Ervin, one of the things that concerned me, I come out of the corporate world, and the job of the Inspector General is, of course, unique to the government, I believe, is how you continue the association that you described you might have with the Secretary, and talk about senior staff meetings, senior leadership meetings, and about the chance to communicate at those meetings. I wonder how free you are to communicate the concerns that you have or things that you start to see, because you are prevented, by virtue of your responsibility, from early discussions with--I think, with the Secretary, the person to whom you report because you have to have had the information you seek firmly in hand before any suggestions or any reports are released. Do you think that there is any kind of a compromise which you ought to be concerned about with discussions at a senior leadership meeting? I do not think you can freely discuss research or ongoing investigations that your Department is doing, can you? Mr. Ervin. No, I completely agree with that, Senator, and I did not mean to suggest otherwise. My role, really, in these leadership meetings to date has been, appropriately I think, only one of listening and informing myself as to what the Department's plans are going forward. So that, at this early stage, I can offer my suggestions and recommendations as to how the Department might avoid things that might become pitfalls. Senator Lautenberg. Right, and I think that is a proper view. What about the IT phase of this huge Department? How many people will be assigned to the Inspector General's Office, do you know? Mr. Ervin. Yes, sir. There will be about 457 or so, and they will be drawn from both Washington and offices in the field. I did something, I do not know if it is unique but it is unusual, when I was the Inspector General at the State Department with regard to IT operations. I formed a discrete, a separate unit, in the Office of Inspector General solely, exclusively to focus on information technology issues headed by an Assistant Inspector General. And I would propose, if confirmed, to do exactly the same thing. One of the biggest challenges, as we have all noted here, that the Department will face, of course, lies in the information technology area in terms of interoperability, in terms of efficiency, in terms of redundancy, in terms of other such things, the information security needless to say. What I would propose to do is to take a hard look at the number of inspectors that I will be inheriting from these different offices, I think there are around 14 or so. I will be inheriting around 208 auditors, several of whom are not just financial auditors but they have expertise in program audits, as well. And I would craft, from the inspections team and from the audit team that I would inherit, a team of some size--I would say in the 50-person range probably and hopefully grow over time--to focus on information technology and information security issues. It is a critical part of my mission. Senator Lautenberg. How early do you think it would be possible for you to be involved? The planning part of the job is, I think, a very important one. You make recommendations based on the experience that you have had, and based on the outcome that you would like to see. So do you see being asked to intervene at an early period of time, in terms of laying out the strategy for creating the organization, particularly as it affects the IT section? Mr. Ervin. As a matter of fact, just a few days ago I had occasion to, I sought and received a briefing, from the Department's CIO, Chief Information Officer, about his plans as to enterprise architecture for the Department and his plans generally for proceeding with regard to information technology and information security issues. I and my Assistant Inspector General for Information Technology Designate, if confirmed, were pleased by what we heard and thought that the Department, based on what we heard, was proceeding in the right direction. And we would propose, if I am confirmed, to continue to monitor that, to make recommendations along the way, with regard to things that we think the Department might be able to do better and more economically and efficiently. Senator Lautenberg. What do you have to do to get the resources, both personnel and non-personnel resources, that you need? Do you start out by getting a budget or requesting a budget that you know can cover the needs of the Department? Mr. Ervin. Yes, sir. As I say, the 457 people I will be inheriting from these various Offices of Inspectors General or parts thereof, and a budget of about $80 million. And I hope that that will be sufficient for purposes of starting to do the work that the Office of Inspector General must do. Having said that, I would note that this is a huge Department, needless to say, the largest Department in the Federal Government, more than 170,000 employees, more than $30 billion budget. I would argue that over time thought should be given as to whether the Office of Inspector General should be comparable in size to other offices of Inspector General that oversee comparably-sized departments. The Office of Inspector General of the DOD, the Office of Inspector General at HHS, and the Office of Inspector General at the Tax Enforcement Administration are in the range of 1,000 people. And I would argue that over time an Office of Inspector General of comparable size would be in order for a department of this size. Senator Lautenberg. I see it says stop. That means go faster. Madam Chairman, we are fortunate to have two such skilled people, and the fact that you have worked together, I think, adds a degree of comfort to us that you are available to take this assignment. I need not caution you about how complicated life is going to get to be. Perhaps you should remember to greet your wife every time you see her because they may be less frequent than they used to be. The fact is that it is heartening to see such good candidates. We congratulate you as you go forth. Mr. Ervin. Thank you, Senator. Chairman Collins. Thank you, Senator. OPENING STATEMENT OF SEANTOR AKAKA Senator Akaka. Thank you very much, Madam Chairman. I want to compliment you on this hearing and your work as Chairperson of this Committee. And I want to welcome our panelists and also your family and friends to this hearing. Having as hard-hitting Senators as you have to introduce you this morning, there is no question about your experience and abilities. What you have done for our government already is commendable. I have a few questions to ask of both of you. Ms. Hale, if confirmed as Under Secretary for Management, you will be responsible for human resources and personnel, which will be a huge and enormous responsibility given the overall structure of the Homeland Security Department. As you know, Section 881 of the Homeland Security Act required the Secretary, in consultation with the Office of Personnel Management, to report to Congress by February 24 on a plan to eliminate disparities in pay and benefits for the new Department. I know from a discussion that I had with Deputy Secretary England that pay disparities with Federal law enforcement officers have been studied. However, that addresses only one of many issues, other issues relating to pay and benefits that must be addressed. February 24 has passed. March 1 is coming. Why has this overall deadline been missed? And what is the status of the plan, if there is such a plan? Ms. Hale. The status of the plan is that it is this close, and I think it will be up here in the next couple of days. One of the things that I think is terribly important, as I know that Chairman Collins and you and others had the opportunity to discuss this with Deputy Secretary England, is that we think it is terribly important to be sure that we look at this in relationship not just to the disparities. What you will see when the report comes up is just, as you know, the tremendous disparities that exist among our agencies. But far more importantly, as you both have indicated, it is critical that we start the design of the new system and we need to look at them in concert. So we think that it is important to kick off that effort of designing, including our employees, the unions, our management from across the country, and from all of our agencies. And I look forward to doing that. When I was at the Office of Management and Budget I spent a significant period of time looking at the disparities and watched one by one the law enforcement agencies get different benefits at different times. And this really is the time, under the auspices of this Department and your statute, that we bring those together. I think it will be a period of time before we can resolve all of them but doing it in concert, I think, is critical. Senator Akaka. Mr. Ervin, Inspectors General conduct independent and objective investigations, audits, and inspections in order to promote economy and efficiency while preventing waste, fraud, and abuse. However, the Homeland Security Act provides broad authority to halt an IG inspection and investigation. In fact, the Secretary of Homeland Security is authorized to prohibit the Inspector General from carrying out or completing any audit or inspection. Mr. Ervin, do you believe these limitations will affect your ability to protect against waste, fraud and abuse? Mr. Ervin. Senator, I took note of that limitation provision in the statute and I discussed it, as a matter of fact, with Secretary Ridge in my very first encounter with him. He assured me at the time, and I take him at his word, that he is unlikely ever to invoke that provision. He says that he cannot conceive of a circumstance under which he would invoke the provision. As you know, it is limited to those instances where, in his judgment, an inspection, audit or investigation by the Inspector General would in some way, or could, compromise intelligence matters, national security matters, criminal investigations, etc. I think I have demonstrated in my relatively short time as Inspector General of the State Department, where there is no such limitation on the Inspector General incidentally, that I am very sensitive to the proper handling of intelligence information, other national security information, and criminal investigations. And so I believe that there should be no concern about my ability to handle such matters and then carry through with an inspection, audit, or investigation. I take Secretary Ridge at his word that he would not invoke that provision. I believe that he takes me at my word when I say that he would not need to invoke that provision. Of course, no Inspector General or no one likes the notion of a limitation on his or her power, particularly given the importance of the mission of this office. I would note that there is a similar provision, as you know, with regard to the Inspector General of the Defense Department, the Central Intelligence Agency, and in certain others. I believe the Treasury Department, as well. There is no such limitation on the State Department Inspectors General, as I say. As a practical matter, I do not think it will be a problem because I do not believe that the Secretary will invoke the provision. Senator Akaka. Madam Chairman, my time has expired. Let me just say, before I leave, that I am interested and concerned about whistleblowers. I have one more a question and then I will place in the record other questions. Chairman Collins. If you would like to ask it, feel free, Senator. Senator Akaka. Thank you very much, for that. Mr. Ervin, ensuring that employees at the new Department have full whistleblower rights and protections has been very important to me and to all of us on this Committee. The Inspector General plays, without question, a significant role in helping whistleblowers disclose waste, fraud, and abuse without retaliation. As a nominee for Inspector General at the Department of Homeland Security, how do you view the role of the IG as it relates to whistleblowers? Mr. Ervin. Senator, I too share your interest in and concern for these issues. Whistleblowers must be protected if the function of government is to proceed as it should. The way I handled it when I was Inspector General at the State Department, and the way that I would propose to handle it if I am fortunate enough to be confirmed as Inspector General of the Homeland Security Department, is as follows: As you know, there is a separate independent Federal prosecutorial agency called the Office of Special Counsel. And if one looks at the website of the Office of Special Counsel, it says that its mission is to safeguard the merit system by protecting Federal employees and applicants from prohibited personnel practices, especially reprisal for whistleblowing. It is the primary mission of that office. Likewise, of course, as you suggested, the Office of Inspector General has an interest in whistleblowing, as well. A secondary mission of the Office of Special Counsel is doing what it can do to guard against waste, fraud, and abuse. That is a major part of the mission of the Office of Inspector General. So there is a lot of parallelism and complementariness in the missions of the Office of Inspector General and the Office of Special Counsel. The way I handled it at State and the way I propose to handle it at Homeland Security is if someone alleged that he or she was being retaliated against for having cooperated with, or for that matter initiated, an Office of Inspector General investigation, then I would seek to investigate that whistleblower allegation myself because, of course, such an allegation would go to the very integrity and efficacy and continued efficacy of the Office of Inspector General. It would obviously have a chilling effect on our investigations if people could, without consequence, be retaliated against for, as I say, either initiating or cooperating with our investigations. If however, there was an allegation that there was retaliation for whistleblowing but there was no allegation that the retaliation resulted from cooperating with or initiating an Office of Inspector General investigation, my inclination would be, subject to the circumstances, to refer that matter to the Office of Special Counsel, for two reasons. One, as I say, dealing with whistleblower allegations is the primary mission of the Office of Special Counsel. Second, the Office of Special Counsel, as I understand it, has a staff of about 106 criminal investigators and lawyers. Whereas, the Office of Inspector General, at least at the State Department, we were very understaffed in terms of criminal investigators. During the course of my tenure, I think we went down from 30 to 20. One of the felicitous things about the Department of Homeland Security, if I am fortunate to be confirmed is, as I may have said earlier, will be a much larger criminal investigative force. But that, generally, is the approach that I took there. I am inclined to say that I would take the same approach at Homeland Security if I am fortunate enough to be confirmed. Senator Akaka. Thank you very much for your response, and for both of you being here today. Madam Chairman, thank you for extending the time for me. Chairman Collins. Absolutely. Senator Pryor. OPENING STATEMENT OF SENATOR PRYOR Senator Pryor. Thank you, Madam Chairman. I actually do not have any questions, but more of a challenge for both of you. You all may have been here when now Secretary Ridge testified before the Committee. Many of us talked about this with him. You have this tremendous opportunity to have a brand-new department. We all know, everybody in this room, everybody in this country, from time to time gets fed up with bureaucracy and government and some of the seemingly idiotic things or the bad results sometimes the government gets itself into when everybody is trying to do the right thing and trying to do good. But both of you, especially in this Department, have a unique opportunity to set the course of this Department and set the tone, set up a framework where this Department could be the model agency in all of government. I hope you seize this opportunity and take the chance that history is giving you to go out there and do great things for this Nation and the world, and also do great things for our government so that other agencies, other departments can look to you about how to do things the right way, and the creative things that can be done in a government agency--under very difficult circumstances admittedly--but things that can be done there. And I just want to leave you all with that challenge and hope that you will go to the office every single day trying to establish this agency as a model agency for all of our government. Thank you, Senator. Chairman Collins. Thank you very much, Senator Pryor. Again, I want to thank our two nominees for appearing today. It is my hope that the Committee will be able to act expeditiously next week on your nominations to bring them before the full Senate for confirmation. I also want to express my personal appreciation for your willingness to serve your country, particularly in such challenging jobs. So thank you very much for your public service and for being with us this morning. We will now move to our second panel. We will consider and call up Linda Springer, who has been nominated to be the Controller of the Office of Federal Financial Management at the Office of Management and Budget. Ms. Springer is currently the Counselor to the Deputy Director for Management at the Office of Management and Budget. Prior to that she served in a number of executive positions in the private sector. Ms. Springer's strong background and experience in financial systems and management makes her well qualified for the position to which she has been nominated. Ms. Springer has filed responses to questionnaires, including biographical and financial information. She has answered pre-hearing questions submitted by the Committee, undergone an interview with the Committee staff, and had her financial statements reviewed by the Office of Government Ethics. Without objection, this information will be made part of the hearing record, with the exception of the financial data which are on file and available for public inspection in the Committee offices. Our Committee rules require that all witnesses give their testimony under oath. So Ms. Springer, I would ask that you stand and please raise your right hand. [Witness sworn.] Ms. Springer, if you have a statement that you would like to make you can proceed at this time. TESTIMONY OF LINDA M. SPRINGER \1\ TO BE CONTROLLER OF THE OFFICE OF FEDERAL FINANCIAL MANAGEMENT FOR THE OFFICE OF MANAGEMENT AND BUDGET Ms. Springer. I do. Thank you, Madam Chairman. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Springer appears in the Appendix on page 105. The biographical information appears in the Appendix on page 107. Responses to pre-hearing questions appear in the Appendix on page 114. Responses to post-hearing questions appear in the Appendix on page 136. --------------------------------------------------------------------------- I would also like to introduce, if I may, my family members who are here. Chairman Collins. Please do. Ms. Springer. My mother is here, and my brother, in the back. And my uncle and cousin, all from Pennsylvania. Chairman Collins. We welcome you all here today. Senator Lautenberg. Madam Chairman, if I may intervene with just a short statement. Chairman Collins. Absolutely. Senator Lautenberg. I note with pride that Ms. Springer was born in New Jersey, that she spent some part of her professional life, I believe, as well in our State and comes with a wealth of experience that we are pleased to have in government. We congratulate your mother and your family, as well, for having achieved this distinction that you are about to become, and we thank you for being here and we are proud of the things that you have done in the past, and look forward to talking to you for a moment about how you tackle this incredible job that lies ahead. Thank you very much, Madam Chairman. Thank you, Ms. Springer, for being here. Chairman Collins. I thank the Senator. Ms. Springer. Thank you, Senator. I might add that all of the family members that are here also have spent time in New Jersey as well. So we have a fondness for both States. Madam Chairman and Senator Lautenberg, Senator Pryor, as you know, I am pleased to be here today as the President's nominee to become Controller in the Office of Federal Financial Management at the Office of Management and Budget. My attraction to this position began last spring when I read the President's management agenda. My reaction was twofold. First I asked if the government was really this serious about management issues. And second, if it was, I wanted to be a part of it. As someone who is coming to government for the first time, I bring high expectations and standards for financial management. These are standards that I have held myself, as well as my staff in the areas for which I have been professionally responsible for over 25 years. There are three particular manifestations of these standards that I would like to share with the Committee today. The first is that financial management extends beyond a clean audit opinion. Integrity and reliability, things to which a clean audit attests, should be a given. In that area, with the particular help of this Committee, the Federal Government is making progress. A record 21 of 24 of the CFO Act agencies received clean audit opinions in 2002. But achievement of even 24 of 24 clean audits would not necessarily prove the existence of strong financial management. First class financial management requires integration of the financial impact of agency activities and decisions in operational execution and in senior management decisionmaking. It is accompanied by accountability standard setting, performance tracking, and other analysis. These are among the characteristics we should seek in government every bit as much as they are expected in the private sector. That leads to the second principle. Government should be held to the highest, if not higher, standards of financial management performance as the private sector. The Federal Government's constituents do not have the option of taking their business elsewhere. Citizens cannot elect to halt new investments; i.e., tax payments, until the company, the Federal Government, has improved its financial practices. Accordingly, I believe it is incumbent on every financial professional in government to execute his or her responsibilities according to standards of excellence that are consistent with this stewardship responsibility. The third principle is that the effort to advance the quality of financial management in the Federal Government largely transcends political philosophy. The government's financial managers are dedicated to making programs work better and more efficiently regardless of their purpose, and I certainly will be as well. It is analogous to the situation of the auto mechanic who is working to achieve optimal engine performance. His or her work is independent of the size of a car, the destination of the trip, or the identity of the driver. It occurs to me that I should tell you that I like to roll up my sleeves and get a little grease on my hands in checking the engine. So I am very committed to that principle. Should I be confirmed as Controller, I will lead the Office of Federal Financial Management with these principles in mind, in promoting and assisting the development of the type of environment that I have described. You have my personal commitment that I will give my very best effort in that responsibility. I do want to acknowledge the increased attention to strong financial management, of which I have been made aware, in both the Legislative and the Executive Branches, particularly as a result of the efforts of this good Committee. I hope to have the opportunity to participate in a continuation of that effort. Finally, I want to recognize and express my gratitude to the staff of the Office of Federal Financial Management for their work, and also to my family for their support in the period that has led up to this hearing. Thank you, Madam Chairman. Chairman Collins. Thank you very much, Ms. Springer. As I explained with our first panel, there are three standard questions that we ask of all nominees, and I would like to proceed with those at this time. First, is there anything that you are aware of in your background which might present a conflict of interest with the duties of the office to which you have been nominated? Ms. Springer. No, there is not. Chairman Collins. Second, do you know of anything personal or otherwise that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated? Ms. Springer. No. Chairman Collins. And finally, do you agree without reservation to respond to any reasonable summons to appear and testify before any duly constituted committee of Congress if you are confirmed? Ms. Springer. Yes, I do. Chairman Collins. Ms. Springer, there has long been a concern by Members of this Committee, and it is a concern that I share, that management issues seem to take a back seat to budget matters within the Office of Management and Budget. I was interested in your testimony that before agreeing to go to OMB you raised this very issue. But I do feel it is so important that we put the M back in OMB, and it is my impression that, while this administration is making progress in that area, budget issues still tend to be the major focus of the office. What is your perspective on the emphasis placed on management? Ms. Springer. I think, Senator, that there is a perception that, by virtue of the size of the budget staff at the Office, that you could have the impression that management still is a lowercase ``m'' relative to the budget side. I would say that it is my observation so far that management probably has gotten more attention in recent years under the director and that has been reinforced now with the recent nomination of Mr. Johnson to the deputy director position for management. And also, in talking with the people on the budget side, the resource management offices, that they are very committed to partnering with the staff on the statutory management side in achieving our management goals. So I have seen an increasing amount of attention and I expect that to continue and I will be working very hard to make sure that it does. Chairman Collins. Financial management related issues have been on the General Accounting Office's annual high-risk list for many years. That is the list of programs or operations that the GAO determines are particularly vulnerable to waste, fraud, abuse, and mismanagement. The GAO has designated several agencies' financial management--and they are major agencies, the Department of Defense, for example, IRS, FAA, and the Forest Service--as high risk. In the most recent high-risk report, the GAO acknowledged that a wide range of financial management initiatives are underway and progress is being made. But we are still seeing departments and programs that are on the high-risk list year after year after year. In fact, some programs have been on the list since the inception of the high risk list which, I believe, is about a dozen years ago. What do you think should be done to make dramatic progress in improving the financial management systems of the Federal Government? Ms. Springer. I have had the opportunity, with this new high risk list that has just been published, to start to review those reports. I have requested them and I have started to read them. And I share your observation and your concern about the length of time that it takes for the remediation activities. One thing that I have noted is that there is a direct relationship between the time it takes and the size of the department. So that a department the size of the Department of Defense, for example, will take longer for its remediation to be totally installed and fruitful just by virtue of the size of the operation. Having said that, it will be my plan to visit with each of those departments, their chief financial officers and, where it is appropriate, their chief information officers, and have the opportunity to review their plans with them, to see that there are milestones, metrics, and accountability standards and ways to see that it is on track. We will do that on a regular basis where it is appropriate. And the staff of the Office of Federal Financial Management are assigned, as well, to each of these agencies so that we will be able to put very strong attention to monitoring progress on those plans. Should we find that there is not a plan in place, then obviously that would be step one, to work with those departments to make sure they have a viable plan to address those issues. Chairman Collins. What do you see as the relationship between an agency or a department's chief information officer and the chief financial officer? As I am sure you are aware, the Clinger-Cohen Act mandated the creation of CIOs across government and envisioned a close working relationship and a far greater emphasis on management of technology and information systems than had been the case prior to the Act. What is your assessment of the Act and how well it is working as you look across the Federal Government? Ms. Springer. I do not think that there is any more important partnership in the agencies, as I have found to be the case in the private sector, than between the chief information officer and the chief financial officer. Without the integrity and the timeliness of good data, the chief financial officer or any other senior officer in the agency will not be able to make informed decisions. So I think that the Act is absolutely on target. I think that the agencies--what I have seen is that there is a different structure in place in each agency. In some cases, there is a reporting relationship, for example, between the chief information officer and the chief financial officer. In other departments it is structured a little bit differently. And it will be one of my objectives to take the temperature and really get an assessment of how well that is working. One of the ways to gauge it will be to see how well the agencies are able to meet the accelerated time frames we have for financial reporting and to be able to have a look at some of the performance metrics and the timeliness and the quality of the data associated with those. Chairman Collins. Thank you. Senator Lautenberg. Senator Lautenberg. Thank you, very much, Senator Collins. You know, you had me nodding my head because I was, as I mentioned, in the corporate sector for a long time before I came here. Whatever I do seems to take a long time. I ran a company called ADP and I was a founder of that company. We were three kids just out of school and borrowed $5,000 from an unwitting investor and produced a company that today has 40,000 employees. And when the CEO, the last one that I picked in my work at ADP--the first one already retired but I could not stand that--the fellow now who runs the company, the CEO, when he gives a speech to employees it is immediately translated to 10 languages. The scope of the company, even though I sat there through its beginnings and its development, it is one of America's most successful public companies. I look at it in awe. I look at it as a true example of the American opportunity. The three of us, two of my partners were brothers. Their family, like mine, were hard working factory people in Patterson, New Jersey. And here we have a company that had the longest growth record of any company in America, over 10 percent a year. That record, unfortunately, was just broken after 42 years. The CEO said publicly that it will be down to single digit growth in the next year because of the conditions around us. That it is not bad, 42 years of 10 percent increases each and every year. It was a good investment and I'm sorry I still do not have it. The thing that struck me, I am on the board of a not-for- profit organization that is part of a quasi-governmental entity here in Washington. We got in an argument about how clean is clean. What does it really mean? You hit on a very good observation that, I guess, was from your experience with Cooper's, was it? Ms. Springer. And in the financial services generally, yes. Senator Lautenberg. When we looked at what happened to some of America's purportedly great companies who walked away with clean opinions from their auditors and it turned out that they were totally defrauding the public and the investors and people affiliated with them, it is one of America's most disgraceful private sector moments. I am on the board of the Columbia Business School, my alma mater, and just arranged for a chair to be established on corporate governance. And while on the board of this agency that I was talking about, the discussion about someone who was waving the clean flag while we were having all kinds of management problems, unable to keep up with our receivables, unable to keep up with our payables, unable to keep up with our need for resources for our mission. To hear you say that is reassuring to me, Ms. Springer, I can tell you that, and the alert that you put up when you say that standards for financial management in government have to match the highest that we seek for any operating entity whether it is private or otherwise. So again, I commend you for that insight and hope that you will be able to continue to insist on that as a standard. Now you are going to work with the most beloved agency in government, OMB. But I think you have got broad enough shoulders to withstand the occasional carping that might take place. Are you prohibited from expressing opinions about financial policy as a controller, would you say? Ms. Springer. No, actually, I think that one of the main focuses of the Office of Federal Financial Management is to be a force behind policy. So oftentimes that will relate in a very specific sense for forming content of financial statements. It may involve, in a broader sense, working for example, as last year, with the Committee on legislative activities in the area of improper payments, erroneous payments, and things like that that led to the Act last year. I view that as the model for how the Legislative and Executive Branches can work together to achieve a common objective. So I would like to see more of that and I think we can work in the policy area. Senator Lautenberg. Let me ask you this without meaning to in any way cause you any discomfort. Financing operations on a deficit basis, is that something that you would opine on? Ms. Springer. I do not think that that necessarily would be a part of my job description. Senator Lautenberg. You are good. You are going to be terrific. Thank you, very much. Ms. Springer. Thank you, Senator. Chairman Collins. Thank you, Senator Lautenberg. Ms. Springer, just one final question. If we were to bring you back before this Committee a year from now, what would you hope to have accomplished? What are your priorities for this year? Ms. Springer. There are several, Madam Chairman. The main priorities would, first of all, be in the area of moving toward meeting the accelerated time frame goals for 2004 for the financial statements from each of the agencies. I would hope that we could come back with a higher number of agencies beyond the 21 with clean opinions, I would like to be able to report that to the Committee. I would like to be able to report that a number of them were turned in on a shorter time frame than they were in 2002. So I would like to be able to report progress in that area. I would like to be able to report that we have made progress on erroneous payments. As you know, the original estimate was in the $20 billion range. And as a result of the reporting now required under the Act and that was required by OMB in the last budget cycle, the number now is closer to $35 billion. I would like to be able to report to the Committee a year from now that that number is lower, and it already has come down in some areas, but we would like to see a lot more. Those two items are at the top of the list and I am sure, as I am more fully engaged, should I be confirmed, that there will be a number of others on the list. Chairman Collins. I was hoping you were going to report to us that the erroneous payments, rather than growing to $35 billion would, because of better reporting, I suspect, declined. That really is a very serious problem and an issue that this Committee looks forward to working with you on. I want to thank you very much for appearing today. I do hope that the Committee will be able to move expeditiously on your confirmation next week. We appreciate your willingness to serve. Thank you. Ms. Springer. Thank you, Madam Chairman. Chairman Collins. Without objection, the hearing record will remain open until 5 p.m. today for the submission of any written questions or statements for the record. This hearing is now adjourned. [Whereupon, at 12:31 p.m., the Committee was adjourned.] A P P E N D I X ---------- PREPARED STATEMENT OF SENATOR VOINOVICH Good morning and thank you, Madam Chairman. Today, the Senate Governmental Affairs Committee meets to consider nominations for three important government management posts, two at the Department of Homeland Security, and one at the Office of Management and Budget. I would like to extend a warm greeting to our nominees, including the Honorable Clark Kent Ervin for Inspector General at the Department of Homeland Security; Ms. Janet Hale for Under Secretary for Management at the Department of Homeland Security; and Ms. Linda Springer for Controller of the Office of Federal Financial Management at the Office of Management and Budget. The role of Inspector General of Homeland Security is extremely important to the success of the new Department. If confirmed, Mr. Ervin will serve as the internal watchdog by conducting audits, investigations, and maintaining strict oversight of the Department. Specifically, the Inspector General will ensure that the Department's employees and managers uphold the Homeland Security mission of protecting the American public against another terrorist attack. As you know, Members of Congress take their oversight role very seriously, so I can appreciate the significance of the Inspector General's responsibilities. I look forward to working with Mr. Ervin as he embarks on this challenging opportunity. The Under Secretary for Management is responsible for the administration and management of the Department of Homeland Security. If confirmed, Ms. Janet Hale will oversee the daunting task of transitioning and reorganizing 170,000 employees from 22 different agencies into one new Department. In addition to this massive undertaking, the Under Secretary for Management will direct other departmental activities including the budget, procurement, personnel, facilities and equipment, security, and grants and other management assistance programs. Therefore, the person selected for this position must have a broad set of competiencies to accomplish the challenges associated with the largest government restructuring since the creation of the Department of Defense in 1947. After reviewing her qualifications, I am confident that Ms. Hale possesses the skills necessary for the Under Secretary position. As a fellow Buckeye, I promise to closely monitor her progress. This morning, we will also hear from Ms. Linda Springer, the President's nominee for the Controller of the Office of Federal Financial Management at the Office of Management and Budget. With over 25 years of private sector experience, I commend her for answering the President's call to serve our country. I am certain that Ms. Springer's knowledge and background will be extremely helpful to the Federal Government's financial management community. I hope that we can move these nominations through the confirmation process in an expeditious manner. Thank you Madam Chairman. 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