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Backgrounder #1630 on Department of Homeland Security

February 28, 2003

Principles the Department of Homeland Security Must Follow for an Effective Transition

By

On March 1, 2003, the recently established Department of Homeland Security (DHS) will begin to absorb the federal agencies currently responsible for the functions being transferred to the new department. The most difficult aspects of making the transition from a disorganized federal bureaucracy incapable of adequately defending the homeland to a streamlined and efficient program with a strategic focus will become evident in the coming months and years.

As Secretary of Homeland Security Tom Ridge begins this transition, a number of principles should be followed:

  • Develop a multi-use culture for the DHS by building on the example of high-performing agencies that have successfully managed many diverse responsibilities.
  • Learn from the best practices of the private sector to effect an efficient transition and promote maximum rationalization of redundant programs and processes.
  • Ensure that traditional American civil liberties are advanced hand-in-hand with homeland security policies by empowering the Officer for Civil Rights and Civil Liberties and the Privacy Officer.
  • Begin to rectify deficiencies in the Homeland Security Act of 2002,1 beginning with restructuring the Border and Transportation Security Directorate and establishing an intelligence fusion center.
  • Provide better assistance to state and local governments by creating a network of high- level regional offices and reforming the first responder grant program.

DEVELOPING A MULTI-USE CULTURE

The one challenge shared by all of the diverse agencies being transferred to the DHS is the need to balance security missions with non-security duties or concerns. Indeed, how the department would balance sometimes seemingly conflicting duties was a major focus of the congressional debate over whether or not to create it and continues to be an item of consideration today.

Fortunately, the DHS will include two federal agencies, the United States Coast Guard (USCG) and the Federal Emergency Management Agency (FEMA), that have excelled at meeting diverse needs in a cost-effective manner.2 Secretary Ridge should promote the multi-mission focus of these agencies as a guiding ideology for the entire department.

At its core, a multi-use culture would develop programs to meet homeland security and non-homeland security challenges through shared resources and methods. In many incidents, such a flexible culture of operations will be a practical necessity as the cause--natural disaster, human error, or terrorist act--is not always immediately clear. In addition, this approach is also more cost-effective than the alternative of creating numerous, frequently redundant programs designed to respond to specific types of incidents.

FEMA and the Coast Guard offer clear examples of such a culture. FEMA's "all-hazards" approach to dealing with many different kinds of disasters has enabled it to develop strong relationships with the first-response community that has been central to its success. FEMA has recognized that local governments can afford only one set of first responders, so they must be equipped and trained to meet the variety of challenges they are likely to face. As a result, training programs and equipment are designed to work in many applications.

Similarly, the Coast Guard's focus on maritime operations has allowed it to develop tactics that are applicable to any situation that arises on America's waterways. To meet this challenge, the Coast Guard has focused on developing a program known as "Maritime Domain Awareness" that allows it to recognize what is occurring on America's waterways and quickly respond (usually within two hours). The process of surveillance, detection, classification, and interception is generally the same for each mission. Similarly, the assets used to observe, evaluate, and respond are typically the same.

A multiple-use approach to homeland security assets is the best strategy to enable the department to meet its important mission efficiently and effectively. Organizationally, such an approach also would be cost-effective. Thus, this is an issue not only of good governance, but also of practical necessity if the federal government is to interact efficiently with local agencies involved in its various missions.

LEARNING FROM THE PRIVATE SECTOR TO EFFECT AN EFFICIENT TRANSITION

The construction of the DHS is a merger on a nearly unprecedented scale: 22 federal agencies with approximately 177,000 employees will be brought together under new leadership. In addition, several entirely new offices have been created. Success, however, is by no means preordained. Fortunately, the experience of private-sector business mergers provides a model upon which a smooth, efficient, and cost-effective transition can be built.

Mergers that emphasize reducing redundancy and overlapping functions are more likely to achieve productivity gains and savings by emphasizing economies of scale. Many businesses are measurably successful, in budgetary and managerial terms, because of the sound principles they use to guide mergers and acquisitions.

One of the most important principles is maintaining an adaptable and versatile leadership that can make decisions with the shared goal of improving the effectiveness and efficiency of the ever-changing company.3 This flexibility allows business leaders to make necessary adjustments to meet the needs of a consolidated, restructured, and larger company; it is especially significant in personnel practices, as the changing needs of the company can include a redefinition of job descriptions, new policies and procedures, and cultural and attitudinal adjustments for every employee. Upholding the important principle of flexible and versatile leadership helps ensure that the merger is a success and that the separate companies are combined smoothly into one.

Flexibility is also an important factor in determining the financial success of the merger. The consolidation process of companies involved in a merger presents a timely opportunity to reduce inefficiencies and achieve cost savings with a more streamlined process of doing business. Historically, business mergers can result in substantial administrative savings by eliminating redundant functions.4

Thus, the process of mergers and acquisitions in the business sector, when using sound guiding principles, presents ample scope for generating profit. Indeed, an estimated 34 percent of companies enjoy such profits as a result of a well-planned process.5 The consulting firm of Booz Allen Hamilton has cited procurement savings of 3 percent to 25 percent.6 If the consolidation of federal homeland security programs into the DHS achieves similar overhead savings with the President's proposed homeland security budget for FY 2004 of $36.2 billion,7 this would mean budgetary savings in the hundreds of millions of dollars.

While cost reduction is not considered to be the sole goal of mergers and acquisitions, it is often the fortunate result of a flexible and well-managed business deal. The same is true of the creation of the Department of Homeland Security, which is intended to make the disjointed federal homeland security effort more effective. By bringing together federal programs and agencies from a myriad of departments, the creation of this new department is similar to a large-scale business merger. The consolidation effort will require flexibility and principled management decisions so that the federal government's many existing redundant functions can be coordinated and streamlined effectively.

ADVANCING CIVIL LIBERTIES AND SECURITY

The infusion of security practices into everyday domestic operations is relatively unprecedented in American history. For the nation's first century, two great oceans provided a degree of security from external threats, and while that has not been the case for decades, the mythology that America's foes will be fought overseas, not on U.S. soil, has lingered.

Homeland security policy necessarily challenges that illusion. The terrorist attacks on September 11, 2001, illustrated that vulnerabilities in domestic operations--whether simple aircraft boarding procedures or immigration and customs programs that emphasized economics and drug interdiction--present opportunities for America's enemies to attack. This new area of national security planning has rightfully led supporters and skeptics alike to question the effect that new policies will have on traditional American freedoms. In fact, both civil liberties and homeland security must be advanced together and in a mutually reinforcing manner.

To ensure that the privacy and civil liberties of all Americans are upheld with the increased level of security provided by the new department, the DHS will include two new positions: an Officer for Civil Rights and Civil Liberties and a Privacy Officer. The Officer for Civil Rights and Civil Liberties will be responsible for reviewing and assessing all information claiming an abuse of civil rights, civil liberties, or racial and ethnic profiling by DHS employees or officials. Implicit in this role is the public communication and promotion of this office's functions and responsibilities, as well as readily available contact information for filing a claim. The Secretary of Homeland Security will be required to review this information and report annually to Congress on the implementation of this office and the funds used toward its goal, as well as details of all allegations of abuse and the response by the department.

The Privacy Officer will be responsible for assuring that all technologies used by the DHS uphold and do not erode the privacy protections relating to use, collection, and disclosure of personal information as granted in the Privacy Act of 1974. In this capacity, it will be vital that the Privacy Officer quickly forge close relationships with the Director of the Office for Science and Technology in the Directorate for Information Analysis and Infrastructure Protection as well as the Undersecretary for Science and Technology. Similarly, it will be crucial for this officer to be aware of technologies being developed by other members of the homeland security community that may have applications for the DHS, such as the Defense Advanced Research Projects Agency's Total Information Awareness program.8 This officer will also be tasked with reviewing legislative and regulatory proposals involving the collection, use, and disclosure of personal information by the federal government. Additionally, the officer will assess the department's privacy rules and report annually to Congress on its activities, including reports of privacy violations.

The establishment of these positions is consistent with the DHS's fundamental responsibility to improve security while protecting the civil liberties of all Americans. As the DHS develops ways to prepare for and predict terrorist threats, it is also important that it not overreach and either infringe on civil liberties or lay the groundwork on which a future administration might restrict freedom.

Establishing offices to fulfill this responsibility is certainly a step in the right direction. While their oversight of such concerns seems appropriate at present, it must be flexible in the long term. The new department will be constantly researching and developing improved methods for homeland security, as technology continues to offer many solutions in this area. Such growth, however, will inevitably raise new concerns regarding privacy and civil liberties issues.9 Therefore, these two positions must be adaptable for proper oversight of the DHS's expanding capabilities in the future.

Both the Officer for Civil Rights and Civil Liberties and the Privacy Officer should be individuals who are thoroughly experienced and familiar with these issues, particularly within the federal government. A candidate with a background in national security issues, intelligence practices, and national security, criminal, constitutional, and privacy law would be well prepared to assess the true risk that is facing our country while also measuring it against the sensitive personal information that is needed to counter that risk. The delicate balance between increased security and upholding the civil liberties granted by the Constitution of the United States may indeed be one of the toughest challenges facing the new department, but it is also one of the most critical.

RECTIFYING THE DEFICIENCIES OF THE HOMELAND SECURITY ACT

From the day President Bush proposed the creation of the Department of Homeland Security, the reorganization was compared to the establishment of the Department of Defense (DOD) in 1947. Likewise, the Homeland Security Act of 2002 was frequently compared to the National Security Act of 1947.10

No commentator at the time could have known how true this analogy would be. Like the National Security Act, the Homeland Security Act failed to fully implement the vision behind it. For DOD, full reform did not come until 1986 with passage of the Goldwater-Nichols Act.11 Similar reform will be necessary in the DHS and the rest of the federal bureaucracy involved with homeland security, although this time Congress will share responsibility with the President because of the significant reorganization authority the Act grants the executive.

The two most glaring shortcomings of the Homeland Security Act were failure to effect the dramatic reform of America's border security agencies and failure to establish an intelligence fusion center that would solve the communication failures that prevented unraveling al-Qaeda's plot before the September 11 attack. In recent weeks, the Bush Administration has offered two proposals to rectify these imperfections: restructuring of the Border and Transportation Security Directorate and establishment of the Terrorist Threat Integration Center (TTIC).

RESTRUCTURING AMERICA'S BORDER SECURITY AGENCIES

On January 30, 2003, Secretary of Homeland Security Tom Ridge announced a restructuring of the DHS's Border and Transportation Security Directorate. Ridge's proposal would take the elements of the Immigration and Naturalization Service (including the Border Patrol), the Customs Service, the Animal and Plant Health Inspection Service, and the Federal Protective Service and consolidate their functions into two new entities:12

  • The Bureau of Customs and Border Protection would be responsible for securing points of entry into the United States and conducting physical inspections of people and conveyances at these points.
  • The Bureau of Immigration and Customs Enforcement , on the other hand, would be responsible for enforcing customs and immigration laws within the United States and securing federal property.

This reform, although overdue, may face opposition from Congress, which fought hard to keep these functions separate in the Homeland Security Act. Congress transferred all of the federal government's critical border security functions to the DHS, but it did so in a fragmented fashion. The Homeland Security Act was written in a way that separated customs and immigration enforcement.13 While placing both functions under one Undersecretary for Border and Transportation Security was a step in the right direction, it will do little to reduce redundancy at points of entry. Secretary Ridge's proposal would rectify this oversight.

EFFECTIVE INFORMATION SHARING THROUGH INTELLIGENCE FUSION

During his State of the Union Address, President Bush also announced the creation of a Terrorist Threat Integration Center to fuse and analyze terrorism-related information from all sources. The TTIC will report to the Director of Central Intelligence (DCI) and will consist of members of the DHS, the Federal Bureau of Investigation's Counterterrorism Division, the DCI's Counterterrorist Center, and the DOD.

Most important, the TTIC not only will have access to the full scope of intelligence and law enforcement information collected by the United States for analysis, but also will be responsible for ensuring that this information is shared with other agencies and state and local authorities. The center will be responsible for completing this mission through the use of shared databases and by maintaining an up-to-date database of known and suspected terrorists.

The findings of the joint inquiry of the Senate Select Committee on Intelligence and the House Permanent Select Committee on Intelligence into the September 11, 2001 , terrorist attacks,14 as well as other aspects of the investigation into 9/11 and the analysis and recommendations of nearly every report on homeland security since then, have all demonstrated the need for such a center. In the months and years before September 11, 2001, for example, two FBI offices and the CIA were conducting independent investigations related to the attacks, but none of these offices knew about the other's investigations; the names of the suspects being investigated were not even added to existing terrorist watch lists. Although legal impediments prevented the FBI and CIA from sharing this crucial information, the biggest obstacle was bureaucratic and human.

To deal effectively with this dangerous state of affairs, a solution that crosses agency lines and removes the human quotient from data transfers is necessary to ensure that all federal, state, and local entities with a counter-terrorism role have access to the information they need to prevent future attacks. To be successful, the TTIC must:

  • Include access to and the ability to explore all government databases, including those maintained by the intelligence, regulatory, and law enforcement communities;
  • Integrate the information found in those databases for use by individual analysts;
  • Make automated independent judgments about that information; and
  • Allow analysts to provide more complete and accurate warning.15

In addition, an intelligence fusion center is a better solution to the intelligence failures that preceded 9/11 than is the recommendation of some--including the Gilmore Commission, Senator Joseph Lieberman (D-CT), and others--that a new domestic intelligence agency be established. Such an agency would merely add another stovepiped agency to the collection of departments and offices that already do not adequately share information while also presenting serious challenges to American civil liberties.16

PROVIDING BETTER ASSISTANCE TO THE STATES

Creation of the Department of Homeland Security in no way reduces the crucial role of state and local government in providing homeland security. Local agencies are the most likely to respond first in a crisis.

For example, the approximately 17,000 state and local police departments may be the first to identify evidence of a possible terrorist threat. State and local health care communities will likely be the first to recognize the symptoms of a chemical or biological attack. Local fire, Emergency Medical Service (EMS), and police departments will nearly always arrive first at the scene of a terrorist attack. The September 11, 2001, attack on the Pentagon demonstrated this clearly: The local Arlington County fire department managed the response through the early days.

However, with the recent focus on federal efforts for the new DHS, many of the needs of state and local communities have been neglected.

ESTABLISHING A SYSTEM OF REGIONAL OFFICES

Communication between local, state, and federal authorities is vital. The DHS will include an Office for State and Local Government Coordination (OSLGC) in the Office of the Secretary to coordinate DHS policy related to state and local programs, assess state and local resources, and manage communication between the DHS and these agencies. The department's authorizing bill, however, provides no guidance on how the OSLGC should conduct these responsibilities, and merely establishing an office in Washington that is required to answer calls from state and local officials would be insufficient. To be fully effective, the office must have a presence outside of Washington, where it can closely interact with governors and mayors.

The DHS will inherit a variety of field offices from many of the 22 federal agencies it is absorbing, which the President has proposed consolidating as part of his FY 2004 budget request.17 Their functions would be bolstered by the appointment of a highly visible non-career appointee who would represent the DHS Secretary in a given geographic region and report to him through the Office of State and Local Government Coordination. This person should be the primary contact for officials in the region seeking advice or voicing concerns.

Similarly, regional liaison officers should be the primary link for transmitting federal objectives and priorities to states and localities. The regional liaison officer should supervise an operations center to communicate the federal response to a local incident in a coordinated, interagency manner.

The regional offices, however, should focus on managing the DHS's relationship with state and local governments and on providing them the resources they need. They should not have operational authority over the existing regional federal offices, which fulfill specific federal missions and should continue to answer to the appropriate undersecretary.

REFORMING FIRST RESPONDER GRANTS

Well-prepared first responders at the state and local level are crucial to an effective homeland security policy because they will always be the first to arrive on the scene of an attack. In 2003, to provide for these crucial assets more effectively, President Bush offered his First Responder Initiative, which included a dramatic increase in federal grants from $300 million to $3.5 billion, and a proposal to consolidate all federal, homeland security-related grants to first responders into one program that would be managed by the Federal Emergency Management Agency and designed to meet the different needs of recipient states.

In his FY 2004 budget request, President Bush asked Congress for $3.5 billion in grants for the Department of Homeland Security to deliver to state and local responders. This was the same amount he had requested as part of his First Responder Initiative in FY 2003. However, when Congress passed the omnibus appropriations bill (H.J. Res. 2) on February 13, 2003, the $3.5 billion was divided between $2 billion for domestic preparedness and $1.5 billion to law enforcement as part of established but underperforming grants managed by the Department of Justice for traditional policing purposes.18

In addition, Congress micromanaged how half of the domestic preparedness funds could be spent instead of providing Secretary of Homeland Security Ridge the flexibility to meet the varying needs of America's states and cities. This rigidity will dramatically reduce the usefulness of the funds.

All federal grants designed to assist first responders in preparing for disasters--whether terrorist, natural, or man-made--should be consolidated into a single, flexible program in the Department of Homeland Security,19 which should initially be funded at the President's requested level of $3.5 billion. The Secretary of Homeland Security should manage this consolidated grant program through the Office of State and Local Government Coordination, which will have the most direct interaction with the local governments that need support. Existing specialized domestic preparedness grants, whether under the DHS or another federal agency, should be eliminated.

The consolidated domestic preparedness grant program should provide assistance to first responders for planning, procuring equipment, training, and exercising. However, Congress should not micromanage how much the DHS can spend in each area. Instead, the OSLGC should be free to provide funds based on a state's needs.

In order to receive funds, states should be required to submit an application to the DHS that includes an all-hazards response plan featuring mutual assistance agreements among local communities and promotes interoperability of equipment and procedures. Funds should then be distributed through the state governors' offices consistent with such plans. The federal government should require that the majority of funds be transferred to the local level expeditiously. Finally, the grant level should be reassessed six months after the consolidation occurs, and annually afterwards, to ensure that the needs of America's first responders are being met.

CONCLUSION

The establishment of the Department of Homeland Security can dramatically improve domestic security in the United States. However, the efficiency of the transition from the previous sclerotic bureaucracy to the new department is crucial. Secretary Ridge should ensure that the department adopts a multi-use culture to balance its security and non-security missions, promote maximum consolidation as a best business practice, ensure that civil liberties and homeland security are advanced simultaneously, address the deficiencies of the Homeland Security Act of 2002, and take additional measures to assist state and local governments as effectively as possible.

Michael Scardaville is Policy Analyst for Homeland Security in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.


1. Public Law 107-296.

2. For more on the example provided by the USCG and FEMA, see Michael Scardaville, "Why a Multi-Use Approach Is Necessary to the Success of the DHS," Heritage Foundation Backgrounder No. 1571, July 18, 2002.

3. "Lessons from Master Acquirers: A CEO Roundtable on Making Mergers Succeed," Harvard Business Review, June 2000.

4. "Merger Integration: Delivering on the Promise," Booz Allen Hamilton, 2001.

5. "Making Acquisitions Work: Capturing Value After the Deal," Booz Allen Hamilton, 1999.

6. Ibid.

7. For details, see White House, "Securing the Homeland, Strengthening the Nation," February 2002, at http://www.whitehouse.gov/omb/budget/fy2004/homeland.html .

8. For more on this program, see Paul Rosenzweig and Michael Scardaville, "The Need to Protect Civil Liberties While Combating Terrorism: Legal Principles and the Total Information Awareness Program," Heritage Foundation Legal Memorandum No. 6, February 6, 2003.

9. For more on the principles that should be applied to these issues, see Paul Rosenzweig, "Principles for Safeguarding Civil Liberties in an Age of Terrorism," Heritage Foundation Executive Memorandum No. 854, January 31, 2003.

10. Public Law 80-253.

11. Public Law 99-433.

12. U.S. Department of Homeland Security, Border Reorganization Fact Sheet, January 30, 2003.

13. Public Law 107-296, Title 4, Subtitles B and D.

14. See, for example, the final report of the Joint Inquiry, at www.fas.org/irp/congress/2002_rpt/findings.html.

15. For a more complete discussion of how an intelligence fusion center should operate, see Larry M. Wortzel, Ph.D., "Creating an Intelligent Department of Homeland Security," Heritage Foundation Executive Memorandum No. 828, August 23, 2002.

16. For a more complete discussion of why a domestic intelligence agency is not a good policy prescription, see Larry M. Wortzel, Ph.D., "Americans Do Not Need a New Domestic Spy Agency to Improve Intelligence and Homeland Security," Heritage Foundation Executive Memorandum No. 848, January 10, 2003.

17. U.S. Department of Homeland Security, "Budget in Brief," p. 4, at www.dhs.gov/interweb/assetlibrary/FY_2004_BUDGET_IN_BRIEF.pdf.

18. David Muhlhausen, "How Congress an Improve Its Financial Support for Law Enforcement," Heritage Foundation Executive Memorandum No. 827, August 12, 2002.

19. Programs to assist local law enforcement's prevention and investigative responsibilities, post-incident recovery programs, and other homeland security-related grants unrelated to first responders and domestic preparedness should remain separate from this consolidated grant program.

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