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Homeland Security f o r sa l e

DHS: Five Years of Government Mismanagement



TABLE OF CONTENTS

Executive Summary 1

Methodology 2

I. Most Troubled DHS Component: FEMA 3

Dishonorable Mention: TSA 16

II. Most Outrageous Contract: Deepwater. 29

Dishonorable Mention: Radiation Detection Portal Monitors 35

III. Failed Program: US-VISIT 40

Dishonorable Mention: SBlnet 44

IV. Component with the Most Serious Crime Problem: CBP .48

Dishonorable Mention: TSA 55

V. Beneficiary of the Revolving Door: Tom Ridge 57

Dishonorable Mentions: Holman, Buchholz, Davis, Hutchison 61



Executive Summary

Since its creation five years ago, Americans have been inundated with stories ofwaste, fraud and

abuse at the Depmiment ofHomeland Security ("DHS"). Mismanagement, f,Yfossly excessive

spending, criminal conduct and shady no-bid contracts within DHS have become regular features

on the evening news and the front page of newspapers. As a result, Citizens for Responsibilityand Ethics in Washington ("CREW") has prepared a repOli documenting some of the most

serious problems facing the country's newest cabinet-level department.

Given the enormous size ofDHS and the nearly innumerable issues facing the agency, CREW

could not catalogue all of the problems. Instead, CREW has highlighted some of the agency's

most serious failings to see that those responsible will be held accountable and to spark a public

debate about how DHS can and must be improved in the next administration.

Whether it is the chronic staffing vacancies, the worst employee morale in the federal

government, the inoperability of information technology, our exposure to cyber-tenorism or

FEMA's fake press conferences, DHS's failures are reported on a daily basis. In addition to thespectacular and well documented failures of the Federal Emergency Management Agency during

and following Hunicane Katrina, there have been seemingly unending smaller outrages: that

DHS purchased iPods for "data storage," dog booties for hunicane recovery and designer rain

jackets for munitions training, only to learn the iPods were lost, the booties unused and the firing

range closed during rain.

There are more frightening facts as well. We take our shoes off at the airport, but baggage

screeners at Los Angeles International Airport missed 75% of the fake bombs smuggled through

by government auditors and we stock up on duct tape, plastic sheeting, water and batteries, but

DHS has no integrated plan for catastrophic disasters.

Then there is the utter waste of hard-earned taxpayer dollars. Billions have been spent on

projects to secure our borders and to inspect port cargo, but the projects have been delayed and

the contractors have overcharged, all under the less than watchful of eye ofDHS political

appointees.

DHS has come to epitomize the unworkable, incompetent government bureaucracy. The stories

about the agency would be comical if only our national security were not at stake.

Ensuring homeland security is not an easy task. Undoubtedly, there are talented, caring and

dedicated DHS employees who work every day to keep our nation safe. Nevertheless, the

agency must be held accountable for its failures and pushed to do better.



2

Methodology

Over the past year, CREW has collected and scrutinized press accounts, government reports,

lobbying disclosures, online databases and court documents regarding DHS, its components and

its employees. After reviewing the voluminous record, we created five categories: the most

troubled component ofDHS, the most outrageous contract entered into by DHS, programfailures, the agency with the most significant crime problem, and the biggest beneficiary of the

revolving door. In addition, in each category we have provided a dishonorablemention-not the

worst offender, but still worth public notice.



3

Most Troubled DHS Component:

Federal Emergency Management Agency

The primary mission of the Federal Emergency Management Agency ("FEMA") is to

reduce the loss of life and property and protect the nation from all hazards, including naturaldisasters, acts of terrorism and other man-made disasters.

lIt leads and supports the nation in a

risk-based, comprehensive emergency management system of preparedness, protection,

response, recovery and mitigation? It is tasked as the primary agency to coordinate federal

emergency assistance during disasters.3The organization exists primarily to coordinate other

federal agencies and departments during emergency response and recovery.4 It is intended to act

as an honest broker between departments and agencies, providing command structure, serving as

a single point of entry for state and local officials into the federal government.5

On March 1,2003, FEMA became part of the Department ofHomeland Security("DHS,,).6 Since that time, the emergency management community has complained that FEMA

has been systematically dismantled and stripped of authOlity and resources. 7 The communitycontends that organizational changes within DHS, a shi ft in programmatic priorities and DHS's

undue emphasis on terrorism at the expense of an "all hazards" based approach have left

FEMA's response capabilities diminished and the staffuntrained.8

1 Federal Emergency Management Agency's Mission, available at

http://www.fema.gov/about/index.shtm (Exhibit 1).

3 WHITE HOUSE, THE FEDERAL RESPONSE TO HURRICANE KATRINA: LESSONS LEARNED

[hereinafter HURRICANE KATRINA: LESSONS LEARNED] at 16 (February 23, 2006) (Exhibit 2).

4Id. at 17.

6Federal Emergency Management Agency's Mission, available at

http://www.fema.gov/about/index.shtm.

7 SELECT BIPARTISAN COMMITTEE TO INVESTIGATE THE PREPARATION FOR AND RESPONSETO HURRICANE KATRINA, A FAILURE OF INITIATIVE: FINAL REPORT OF THE SELECT BIPARTISAN

COMMITTEE TO INVESTIGATE THE PREPARATION FOR AND RESPONSE TO HURRICANE KATRINA,

H.R. REP. No. 000-000 [hereinafter SELECT BIPARTISAN COMMITTEE, A FAILURE OF INITIATIVE]

at 151-152 (February 15, 2006) (Exhibit 3).



4

Loss of 10ng-tenn professional staff and their institutional knowledge and expertise have

also weakened FEMA.9 Since 2002, FEMA has lost a number of its top disaster specialists,

senior leaders and experienced personnel. 10 Many emergency management professionals have

predicted this "FEMA brain drain" would limit the federal government's ability to manage

disasters of all types. I I

FEMA was also stacked with patronage appointments. 12 By late 2005, five of the eight

top FEMA officials had virtually no relevant experience, owing their jobs instead to connected

Republican officials. 13 FEMA's top three leaders had either ties to President Bush's 2000

campaign or the White House advance operation. 14 FEMA director Michael D. Brown was a

college friend of Joe Allbaugh, who had served as chiefo f staff to then-Governor Bush, Bush

2000 presidential campaign manager and FEMA director. 15 Mr. Brown's chief o f staff, Patrick J.

Rhode, was a fonner television reporter who worked as an advance staffer at the White House

and for the President's 2000 campaign. 16 FEMA's deputy chief o f staff, Brooks D. Altshuler,

was also a fonner presidential advance man and his predecessor, Scott Monis, was a media

strategist for President Bush with the Austin firm Maverick Media.17 Two other senior

operational jobs were filled by a fonner Republican lieutenant governor o fNebraska and a U.S.Chamber ofCommerce official who was once a political operative. 18

When Hunicane Katrina hit the Gulf Coast on August 29, 2005,19 the images o fmore

than 70,000 people stranded20 in New Orleans without power, dlinking water, medicine and

10 Id.

I I SELECT BIPARTISAN COMMITTEE, A FAILURE OF INITIATIVE at 151-152.

12 Spencer S. Hsu, Leaders Lacking Disaster Experience, Washington Post, September 9,

2005 (Exhibit 4).

13 Id.

14 Id.

IS Hsu, Washington Post, Sept. 9,2005; Dan Balz, The Governor's 'Iron Triangle' Points

the Wa y to Washington, Washington Post, July 23, 1999 (Exhibit 5).

16 Hsu, Washington Post, Sept. 9,2005.

17 Id.

18 Id.

19 HURRICANE KATRINA: LESSONS LEARNED at 34 (Exhibit 6).

(continued.. .)



5

shrinking food supplies,21 coupled with the thousands trapped in the Superdome22 and abandoned

on rooftops,23 drew the American public's attention to the agency's shortcomings.24

FEMA's failures during Katrina have been well documented in numerous government

reports and editorials.25In February 2006, The Federal Response to Hurricane Katrina: Lessons

Learned summed up the public reaction to the government's response.

Awakening to repOlis ofHurricane Katrina's landfall on the Gulf

Coast the morning ofMonday, August 29, American citizens

watched events unfold with an initial curiosity that soon turned to

concern and sorrow. The awe that viewers held for the sheer

ferocity of nature was soon matched with disappointment and

frustration at the seeming inability of the "government"-local,

State and Federal-to respond effectively to the crisis.26

In addition, the Select Bipartisan Committee to Investigate the Preparation for and

Response to Hurricane Katrina wrote, "[t]he readiness ofFEMA's national emergency responseteams was inadequate and reduced the effectiveness of the federal response,,,27 and "the

combination of [inadequate] staffing, training and organizational structures made FEMA's

perfonnance in the face of a disaster the size ofKatrina all but inevitable.,,28 The Senate

20 SELECT BIPARTISAN COMMITTEE, A FAILURE OF INITIATIVE at 103 (Exhibit 7).

21 New Orleans Shelters to be Evacuated. CNN, August 30, 2005 (Exhibit 8); HURRICANE

KATRINA: LESSONS LEARNED at 44 (Exhibit 9).

22 Jenny Jarvie, Katrina's Rising Toll; Many Evacuees Flee with Little, May Return toLess; Thousands ofPeople Relocated to Shelters Across the South Try to Sort Out Their Next

Step, Los Angeles Times, September 1, 2005 (Exhibit 10).


24 GOVERNMENT ACCOUNTABILITY OFFICE, CATASTROPHIC DISASTERS: ENHANCED

LEADERSHIP, CAPABILITIES AND ACCOUNTABILITY CONTROLSWILL IMPROVE THE

EFFECTIVENESS OF THE NATION'S PREPAREDNESS, RESPONSE AND RECOVERY SYSTEM, GAO-06

618 [hereinafter GAO REPORT ON CATASTROPHIC DISASTERS] at 1 (September 6, 2006) (Exhibit

12).

25 Id. at 2, 7.



28 Id. at 158.



6

Committee on Homeland Security and Govemment Affairs concluded, "[w]e were horrified

when the response to the Katrina catastrophe revealed-all too often, and for far too long-

confusion, delay, misdirection, inactivity, poor coordination, and lack ofleadership at all levels

of govemment.,,29 An editorial in USA Today stated, " .. . the inept response of the Federal

Emergency Management Agency (FEMA) [is] not only a human tragedy but also an

intemational embarrassment," while The Washington Times wrote "By FEMA's own descriptionof its mission, they failed. ,,30

FEMA's shortcomings extend further than its preparation and initial response to

Hurricane Katrina. Examples ofFEMA's management failures include some of the housing

programs the agency undertook during Katrina recovery and its handling of revisions to the

National Response Plan.

FEMA 's Use ofManufacturedHomes

Hurricanes Katrina and Rita produced more than one million evacuees, many in need of

transitional housing.31

FEMA's overall housing strategy was to use "traditional solutions" tohouse evacuees, such as shelters, hotels, rooftarps and tents.32 FEMA then planned to transition

victims to travel trailers, mobile homes and apatiments to address longer-tetm housing needs.33

On September 15,2006, President Bush announced that mobile homes and trailers would be

brought in to house the huge numbers of displaced people,34 but "[l]ocating temporary or long-

29 SENATE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS,

HURRICANE KATRINA: A NATIONAL STILL UNPREPARED, S. REP. No. 109-322 at iii (2006)

(Exhibit 15).

30 Editorial, FEMA Fails Katrina Victims, USA Today, September 5,2005; Editorial,

FEMA Fails its Core Mission, Washington Times, September 7, 2005 (Exhibit 16).

31 PRESIDENT'S COUNCIL ON INTEGRITY AND EFFICIENCY, EXECUTIVE COUNCIL ON

INTEGRITY AND EFFICIENCY, OVERSIGHT OF GULF COAST HURRICANE RECOVERY; A

SEMIANNUAL REPORT TO CONGRESS at 26 (October 1, 2006-March 31, 2007) (Exhibit 17).

32 Hearing on FEMA 's Manufactured Housing Program, Haste Makes Waste: Hearing

Before S. Comm. on Homeland Security and Governmental Affairs, 1091hCongo (April 21, 2006)

(Testimony ofRichard L. Skinner, Inspector General, Department ofHomeland Security at 3)

[hereinafterHearing on FEMA 's Manufactured Housing Program] (Exhibit 18).

33 Id.

34 President Discusses Hurricane Relief in Address to the Nation, VOL. 41 - NUM. 37

WEEKLY COMPo PRES. Doc.1405-1409 (Sep. 15, 2005) available at

http://www.whitehouse.gov/news/releases/2005/09/20050915-8.html (Exhibit 19).



7

term housing for Hurricane Katrina evacuees presented significant challenges" for the federalgovemment.35

FEMA's effort to provide trailers to evacuees suffered from the outset due to inadequate

planning and poor coordination.36

Despite lacking plans for how manufactured homes would be

used,37 FEMA hastili8

spent $2.7 billion to buy 145,000 mobile homes and trailers after Katrinaand Rita hit the GulfCoast, paying a bulk-rate price of about $19,000 per trailer on average.

39

At least 27,000 trailers were purchased "off-the-lot," without bargaining on price and without

requiring minimum standards.4o

Vendors were allowed to provide shelters without bathrooms,

beds, dinettes, refrigeration, electrical outlets, water heaters or ranges.41

FEMA purchased

thousands of homes that were too large for most of the existingmobile home parks to

accommodate.42

As FEMA was purchasing trailers, evacuees moving into their new homes were delayed

because FEMA had failed to plan for transpOliing the homes and infrastructure support, such as

water and electrical hook-ups.43 FEMA also experienced difficulty in identifying acceptable


36 Id.

37 PRESIDENT'S COUNCIL ON INTEGRITY AND EFFICIENCY, EXECUTIVE COUNCIL ON

INTEGRITY AND EFFICIENCY, OVERSIGHT OF GULF COAST HURRICANE RECOVERY; A

SEMIANNUAL REPORT TO CONGRESS [hereinafter PCIE/ECIE REPORT] at 18-20 (April 30, 2006)

(Exhibit 21).

38 Hearing on FEMA 's MamffacturedHousing Program (Testimony ofRichard L.Skilmer at 3).

39 FEMA Trailers at Fire-Sale Prices, Associated Press, March 8, 2007 (Exhibit 22).

40 PCIE/ECIE REPORT at 19 (April 30, 2006).

41 Id.

42

Memorandum from RichardL.

Skinner, Inspector General of the Department ofHomeland Security, to R. David Paulison, Acting Director for the Federal Emergency

Management Agency, Mobile Homes and Modular Homes at Hope and Red River, GC-HQ-06

12 [hereinafter IG Memo about Homes at Hope and Red River.] at 3 (February 17,2006)

(Exhibit 23).

43 HURRICANE KATRINA: LESSONS LEARNED at 50.



8

sites to place units and was slow in identifying applicants to occupy units. 44 For example, after

FEMA spent an estimated $8.5 million preparing seven Louisiana sites to serve as locations for

multiple units, local officials determined placement was not acceptable.45Sites were rejected for

various reasons: in some cases the owners or public officials withdrew the sites, while other sites

were found to be contaminated.46Similarly, federal regulations prohibited placing manufactured

homes in floodplains, meaning many of these houses could not be placed in Louisiana andMississippi where they were needed most,47

In February 2006, five months after Hurricane Katrina hit the GulfCoast, 10,770

manufactured homes purchased by FEMA were sitting in a cow pasture in Arkansas,48 even as

thousands remained homeless.49

While FEMA had been acquiring these homes since September

2005, at the time, only 17 had been used to house evacuees. 50

Many of the modular homes purchased by FEMA for emergency housing were not

properly stored and maintained.51Instead, they were left outside, covered with tarps and

exposed to rain, flooding and temperatures that often exceeded 100 degrees.52 As a result, an

estimated $3 to $4 million worth ofmodular units were damaged beyond repair. 53 FEMAallowed this to occur despite a February 2006 Inspector General report noting that the modular

44 Hearing on FEMA 'sManufactured Housing Program (Testimony of Richard L.

Skinner at 4).

45 Id.

461d.

47 IG Memo about Homes at Hope and Red River at 3.

48 Kelly Beaucar Vlahos, FEMA Defends Trailer Purchase, Fox News, February 20,2006

(Exhibit 24).

49 Interview with Michael Chertoff, Secretary of the Department ofHomeland Security,

Meet the Press, NBC, February 19,2006 (Exhibit 25).


51 DEPARTMENT OF HOMELAND SECURITY, OFFICE OF INSPECTOR GENERAL,

MANAGEMENT ADVISORY REPORT ON THE CONDITION, LOSSES, AND POSSIBLE USES OF FEMAMODULAR HOUSING, OIG-07-03 [hereinafter IG REPORT ON FEMA MODULAR HOUSING] at 1

(October 18, 2006) (Exhibit 26).

52 dL a t 3,4.

53 Id. at 4.



9

homes already had suffered minor damage, and warning that "if preventative measures are not

taken soon, more serious deterioration may OCCUr.,,54 The units remained stored and ended up

severely damaged, as predicted.55 In total, FEMA spent a total of $367 million on unused

housing. 56 In addition, FEMA paid $600,000 for the land on which the unused housing units

were stored and $272,000 to construct an access road to the site to store the units.57

Road

maintenance alone costs $58,000 every three months and perimeter security totals $136,000 permonth. 58 Unfortunately, the senior FEMA officials who authorized excess home purchases or

purchased housing that failed to meet specifications could not be identified and have not beenheld accountable. 59

While thousands of homes were never used in the recovery effort,60 idle trailers were not

the only problem for hurricane victims. From March to July 2006, FEMA was repeatedly

warned about dangerous levels of fonnaldehyde in FEMA trailers by the media, the

Environmental Protection Agency and the Center for Disease Control and Prevention, but

refused to conduct comprehensive testing of the occupied trailers because testing "would imply

FEMA's ownership of this issue.,,61 Worse still, as complaints were raised by occupants, FEMA

responses displayed indifference to the problem of fonnaldehyde exposure even after it wasdiscovered that some deathsmay have resulted from the exposure.62 While neglecting to

adequately protect the occupants from the serious health problems induced by exposure to this

known carcinogen, FEMA downplayed the problem and issued a public statement that there was

no ongoing risk. 63 Ultimately FEMA did test some unoccupied trailers from September to


55 IG REPORT ON FEMA MODULAR HOUSING at 1.

56 Beaucar Viahos, Fox News, Feb. 20, 2006.


58 Id.

59 Hearing on FEMA 'sManufacturedHousing Program (Testimony ofRichard L.Skinner at 5-6).

60 Associated Press, Mar. 8,2007.

61 Memorandum from Majority StaffofCommittee on Oversight and Government

Refonn to Members of the Committee on Oversight and Government Refonn, FEMADocuments [hereinafter Majority Staff, House Oversight Committee, Memo on Trailer

Formaldehyde] at 1 (July 19, 2007) (Exhibit 27).

62 Id. at 13.

63 Id. at 2.



10

October 2006. Even once FEMA tested the trailers (in anticipation of litigation), the agency kept

trailer windows open, ventilation fans running and air conditioners operating, conditions

described by FEMA staff as "unrealistic" and that likely skewed test resuIts.64As recently as

May 15,2007, FEMA Administrator David Paulison testified before the House Committee on

Homeland Security, "The fonnaldehyde issue was brought to our attention and we went out and

investigated and used the EPA and other agencies to do testing .. .We've been told theformaldehyde does not present a health hazard.,,65 The House Committee on Oversight and

Government Refonn noted, "[t]he persistent refusal by FEMA to conduct testing in occupied

trailers or under conditions that reflected actual use of the trailers may have been part of a

strategy to deny potential plaintiffs information that could be used against FEMA in litigation.,,66

In order to rid itselfof excess trailers and mobile homes, FEMA began taking initial steps

to sell of f the unused trailers in late September 2006.67 Even the sale of the trailers proved a

challenge for the U.S. government. In May 2007, the DHS Inspector General found FEMA

lacked consistent pricing practices, with homes selling for as little as $1.00 and as much as

$20,000.68According to the report, "pricing has not resulted in the best return for the

government and has been inequitable to buyers.,,69 On July 31,2007, FEMA suspended the saleof trailers until the Centers for Disease Control and Prevention and the Department ofHomeland

Security's Office ofHealth Affairs could test the air quality in trailers provided to GulfCoast

victims. 70 About 56,000 trailers are still occupied.7l While FEMA tells residents it is still

working on the issues, it prohibits its own staff from even briefly stepping inside of the trailers

once residents have moved out, claiming the trailers to be "too dangerous."n

64 Id.

65 Majority Staff, House Oversight Committee, Memo on Trailer Fonnaldehyde at 13.

66Id.

67 Nearly 10,000 Empty FEMA Trailers in Ark. Freed Up For Other Uses, Associated

Press, October 2,2006 (Exhibit 28).

68 DEPARTMENT OF HOMELAND SECURITY, OFFICE OF INSPECTOR GENERAL, SALES OF THE

FEDERAL EMERGENCY MANAGEMENT AGENCY TRAVEL TRAILERS AND MOBILE HOMES, OIG-07

41, at 1 (May 2, 2007) (Exhibit 29).

69Id.

70 Alex Johnson, FEMA Suspends Use of 'Toxic' Trailers,MSNBC, August 7, 2007(Exhibit 30).

71 Id.

n Annen Keteyian, FEMA Protecting Itself, ButNot Evacuees?, CBSNews, November

7,2007 (Exhibit 31).



11

Carnival Cruise Lines

Because FEMA was slow to provide trailers, alternative housing resources-such as

cruise ships-were used for the initial six months following Katrina.73 On the day FEMA signed

a $236 million deal with Carnival Cruise Lines to house victims, the agency accepted a foreignaid offer of two free Greek cruise ships.74 On September 15,2005, the U.S. rescinded itsacceptance of the Greek ships because they would arrive one month later. 75 During the first 30

days after the disaster, the Carnival ships were only about 35% occupied, costing FEMA about

$3,363 per evacuee per week.76 By October 31,2005, ship occupancy had increased to 74% to

90%.77 During the six-month contract, Carnival Cruise Lines charged the federal government$249 million for use of its cruise ships.78 While the company had repeatedly claimed it would

not receive higher profits than it would earn under normal operations, the government paidroughly $100 million more than the company earned in 2002, including payments as if evacuees

were drinking at Carnival's bars, gambling in Carnival's casinos and taking day trips to exoticlocations, even though the company had not actually incurred these entertainment or navigational

expenses.79

Anniston, Alabama Army Base

The cruise ship leases are not the only example of rushed and irresponsible contracting.On August 31, 2006, FEMA began refurbishing a former Army base in Anniston, Alabama to

73 PCIE/ECIE REPORT at 125 (April 30, 2006) (Exhibit 32); Federal Emergency

Management Agency: Frequently Requested National Statistics Hurricane Katrina - One YearLater available at http://www.fema.gov/hazard/hurricane/2005katrina/anniversary_factsheet.shtm(Exhibit 33).

74 Senators Ask Feds to Explain Katrina Cruise Contract, AssociatedPress, September29,2005; John Solomon and Spenser S. Hsu, Most Aid From Overseas Went Unclaimed,Washington Post, April 29, 2007 (Exhibit 34).

75 Solomon and Hsu, Washington Post, Apr. 29,2007.

76 PCIE/ECIE REPORT at 125 (April 30, 2006).

77 Id.

78 Solomon and Hsu, Washington Post, Apr. 29, 2007.

79 Letter from Rep. Henry A. Waxman to Michael Chertoff, Secretary, Department ofHomeland Security, at 4 (October 20, 2005) (Exhibit 35).



12

house as many as 1,000 evacuees,80 spending $7.9 million in order to make it inhabitable before

it opened on September 15.8l

According to the Govel11ment Accountability Office, FEMA went

ahead with this project despite wal11ings from FEMA officials in Alabama that the rooms were

not needed.82

In the end, the facility averaged less than ten evacuees per day and was shut down

less than two months later, costing approximately $416,000 per evacuee. 83

National Response Plan/National Response Framework

Effective disaster preparedness and response require definingwhat needs to be done,

where and by whom, how i t needs to done and how well it should be done.84FEMA has more

than 2,600 full-time employees and nearly 4,000 standby disaster assistance employees who are

available for deployment after disasters.85The agency works in concert with state and local

emergency management agencies, 27 federal agencies, the American Red Cross and private

entities.86

To facilitate rapid and effective decision-making, legal authorities, roles,

responsibilities and the lines of authority at all govel11ment levels must be clearly defined,

effectively communicated and well understood.87

The Homeland Security Act of 2002, which established DHS, specifically assigned

FEMA responsibility for "consolidating existing Federal Govel11ment emergency response plans

into a single, coordinated national response plan.,,88 This was to be an all-discipline, all-hazards

80 DEMOCRATIC STAFF OF THE COMMITTEE ON HOMELAND SECURITY, ONE YEAR

LATER .. .KATRINA'S WASTE: A REPORT DETAILING CONTRACTING FRAUD, WASTE AND ABUSE INTHE AFTERMATH OF HURRICANE KATRINA at 16 (August 28, 2006) (Exhibit 36).

81 Id.

82 Id.

83 Id.

84 Hearing on FEMA Preparedness in 2007 and Beyond, Hearin* Before H Subcomm.

on Domestic Policy, Comm. on Oversight and Government Reform, 11 ot 1 Congo (July 31, 2007)(Testimony ofWilliam O. Jenkins, Jr., Director ofHomeland Security and Justice Issues for the

Govel11ment Accountability Office at i) [hereinafter FEMA Preparedness Hearing] (Exhibit 37).

85 Federal Emergency Management Agency's Mission, available at

http://www.fema.gov/about/index.shtm.

86 Id.

87 Hearing on FEMA Preparedness (Testimony ofWilliam O. Jenkins, Jr. at i).




13

plan establishing a single comprehensive framework for the management of domestic incidents

where federal involvement is necessary.89 It is intended to form the basis for how the federal

government should coordinate with state, local and tribal governments and the private sector.90

DHS, however, initially assigned the Transportation Security Administration ("TSA")

responsibility for developing this plan rather than FEMA, the organization responsible forexecuting the plan during a crisisYI TSA, in turn, relied on an outside contractor.

92When some

in the first responder community reacted negatively to the contractor's draft plan, DHS

transfened the plan's development to the Integration Staffwithin the Secretary's office.93

In December 2004, DHS finally issued the National Response Plan,94 which was

criticized as too bureaucratic, overly complicated and as confusing the federal chain of

command.95

Further, the plan failed to include a detailed and operationally-specific procedure

for how to deal with catastrophic incidents.96

These issues proved problematic and contributed

to the inadequate federal response to Hurricane Katrina.97

In the wake ofHurricane Katrina, Congress tasked FEMA with revising the NationalResponse Plan to better equip the federal government to deal with future catastrophes.

98The

89 GAO REPORT ON CATASTROPHIC DISASTERS at 14 (Exhibit 39).

90 DEPARTMENT OF HOMELAND SECURITY, NATIONAL RESPONSE PLAN at i (2004) (Exhibit

40).

91 SELECT BIPARTISAN COMMITTEE, A FAILURE OF INITIATIVE at 156.

92

Id.

93 Id.

94 DEPARTMENT OF HOMELAND SECURITY, NATIONAL RESPONSE PLAN at i (2004).

95 Backgroundfor Hearing on Readiness in the Post-Katrina and Post-9/II World:

Hearing Before H. Subcomm. on Economic Development, Public Buildings and EmergencyManagement, Comm. on Transportation and Infrastructure, 11 oth Congo (Sept. 11, 2007)

available at http://transportation.house.gov/hearings/hearingdetai1.aspx?NewsID=298

[hereinafter Backgroundfor Hearing on Readiness in the Post-Katrina and Post-9/II World]

(Exhibit 41).

96 GAO REPORT ON CATASTROPHIC DISASTERS a t 14.

97 SELECT BIPARTISAN COMMITTEE, A FAILURE OF INITIATIVE at 156.

98 Backgroundfor Hearing on Readiness in the Post-Katrina and Post-9/II World.



14

agency was directed to solicit state and local experts to reflect the disaster management

community's wisdom.99

While FEMA and DHS had consistently claimed the National Response Plan's revisions

would be ready by June 1,2007, hurricane season came and went with FEMAmissing its self-

. d d dl'100

Impose ea me.

In August 2007, a draft of a new "National Response Framework," dated July 2007, was

obtained by the press and was subsequently circulated widely. 101 State and local officials were

critical of the plan and claimed that their concems were not adequately reflected in the draft. 102

As RobeIi C. Bohlmann, the U.S. Govemment Affairs Chair of the Intemational Association of

Emergency Managers testified, "[t]he document we saw bore no resemblance to what we had

discussed so extensively with FEMA."l03 Worse still, Mr. Bohlmann claimed, "[t]he draft

[National Response Framework] that we have reviewed appears to be more like a public relations

document rather than a response plan or framework .. . [and] fails to provide an overall structure

which will allow the different components of the Federal Govemment to adequately coordinate'h l'

d',,104

WIt one anot ler m a Isaster response

Mr. Bohlmann's comments are similar to those ofAl Ashwood, Director of the

Oklahoma State Emergency Management Agency, and President of the National Emergency

Management Agency, who months earlier claimed, "[i]nmy 19 years of emergency

management, I have never experienced a more polarized environment between state and federal

govemment.,,105 He also asserted that FEMA's consultation with state and local experts was a

sham. 106 Mr. Ashwood told a House subcommittee, "[y]ou will be told [the response plan] is a

99 Id.

1001d.

101 Id.

102 BackgroundforHearing on Readiness in the Post-Katrina and Post-9/II World.

103 Hearing on Readiness in the Post-Katrina and Post-9/II World (Testimony ofRobert

C. Bohlmann, U.S. Govemmental Affairs Committee Chair of the Intemational Association of

Emergency Managers at 2) (Exhibit 42).

104 Id. at 3-4.

105 Hearing on FEMA Preparedness (Testimony ofAl Ashwood, Director ofOklahoma

State Emergency Management Agency and President of the National EmergencyManagement

Agency at 2) (Exhibit 43).

106 1d.



15

national document, developed over many hours of collaboration between all levels of

government and all disciplines. Let me be the first to say you should have a shovel nearby whenyou hear this.,,107

DHS is over a year overdue in releasing the operationally-specific plan for how to deal

with catastrophic incidents.108

The revised National Response Framework is currently also notoperational. 109

Continued ML'I'management

While claiming to have made advances and improvements since Katrina, FEMA itself

acknowledges the agency is woefully unprepared for the next catastrophic event. I 10 AsHomeland Security Deputy Inspector General for Disaster Assistance Oversight Matt Jadacki

testified before Congress, FEMA still is "not there yet" in areas of catastrophic planning,

logistics, information technology, funding and leadership. I I I In assessing "what went wrong," inMarch 2006, the Government Accountability Office identified three categorical failures in the

federal government's response to Katrina: leadership, capabilities and accountability.1l2 Asrecently as July 31,2007, the Government Accountability Office reported that FEMA has still

not clearly defined leadership roles and responsibilities, developed the necessary disaster

response capability or produced accountability systems that protect against waste, fraud and

abuse. I 13 FEMA's assessment, awareness, emergency communication, evacuation, search and

rescue, logistical and mass sheltering capabilities are still inadequate. I 14

107Id.

108 GAO REPORT ON CATASTROPHIC DISASTERS at 14.

109 Hearing on FEMA Preparedness (Testimony ofAl Ashwood at 2).

liD Hearing on FEMA Preparedness (Testimony ofMatt Jadacki, Deputy Inspector

General for Disaster Assistance Oversight, Department ofHomeland Security) (Exhibit 44).

I I I Id.

112 GAO REPORT ON CATASTROPHIC DISASTERS at i (Exhibit 45).

113 Hearing on FEMA Preparedness (Testimony ofWilliam O. Jenkins, Jr., at i).

114 Id.



16

Most Troubled DHS Component, Dishonorable Mention:

Transportation Security Administration

Since its inception, the Department ofHomeland Security ("DHS") repeatedly has been

placed on the Govel11ment Accountability Office's "High Risk List," a distinction for federal

programs and agencies that are more vulnerable to fraud, waste, abuse and mismanagement. 1 In

the past five years, DHS has spent billions of dollars on bomb-detectionmachines, radiation

monitors and computer networks to identify tenorists.2 At the same time, intel11al govel11ment

audits repeatedly have questioned the cost effectiveness of equipment and security systems

purchased from corporations receiving billions of dollars a year under loosened regulations and

limited oversight.3 During this period, total funding for homeland security has nearly tripled

from $20.7 billion in fiscal year 2001, to the $61.1 billion requested in the 2008 budget.4 Other

than the Federal Emergency Management Agency, no component ofDHS appears as deficient as

the Transpoliation SecurityAdministration ("TSA").

TSA administers a variety of programs that epitomize the wasteful spending, fraud and

abuse at DHS. Established on November 19,2001, by the Aviation and TranspOliation Security

Act, TSA's main mission is to increase airline and airport security.5 Toward that end, TSA has

hired and deployed a federal workforce of over 50,000 passenger and baggage screeners and

installed equipment at more than 400 commercial airports to screen for explosives.6

I GOVERNMENT ACCOUNTABILITY OFFICE, HIGH RISK SERIES: AN UPDATE, GAO-07-310

(2007); GOVERNMENT ACCOUNTABILITY OFFICE, HIGH RISK SERIES: AN UPDATE, GAO-05-207

(2005); GOVERNMENT ACCOUNTABILITY OFFICE, HIGH RISK SERIES: AN UPDATE, GAO-03-119

(2003)(Exhibit 1).

2 Scott Higham and Robert O'Hanow Jr., Contracting Rush for Security Led to Waste,

Abuse, Washington Post, May 22, 2005 (Exhibit 2).

3 Id.

4 CONGRESSIONAL BUDGET OFFICE, ECONOMIC AND BUDGET ISSUE BRIEF: FEDERAL

FUNDING FOR HOMELAND SECURITY: AN UPDATE at 2 (July 20,2005) (Exhibit 3); OFFICE OF

MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, ANALYTICAL PERSPECTIVES, BUDGET OF

THE UNITED STATES GOVERNMENT, FISCAL YEAR 2008 at 19 (2007) (Exhibit 4).

5OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, BUDGET OF THE

UNITED STATES GOVERNMENT, FISCAL YEAR 2003 at 256 (2002) (Exhibit 5).

6 Aviation Security: Are We Truly Protected? Hearing Before H Subcomm. On

Transportation Security and Infrastructure Protection, Comm. on Homeland Security, 110th

Congo (October 16, 2007) (Testimony of Cathleen A. Berrick, Director ofHomeland Security and

Justice Issues at the Government Accountability Office, GAO-08-139T at i) [hereinafter

(continued ...)



17

Airport Screening - NCS Pearson, Inc.

From the outset, TSA's rush to hire contractors led to waste, fraud and abuse. 7 In

February 2002, before TSA began conducting passenger and baggage screening with federal

personnel, the agency awarded contracts ultimately worth over $788 million to various private

security finns. 8 Federal auditors found that of that amount, $127.4 million, or 21% of the total

amount billed to TSA, was for unsubstantiated and unsupported costs. 9 The contracts also

overstated labor. In one instance, the auditors questioned $5.6 million out of $7.1 million in

claimed costs, a whopping 79% of the total. 10

That same month, TSA also contracted with NCS Pearson, Inc. to tes t and hire airport

passenger and baggage screeners. 11 UnfOliunately, TSA failed to develop either a project

management plan or an acquisition plan, meaning that the agency entered the contract without

having finalized the number of screeners, the schedule or the budget. 12 The $104 million contract

awarded to NCS Pearson, Inc. quickly climbed to $741 million. 13

Auditors challenged at least $297 million of the $884 million in costs claimed by

Pearson, including expenditures for luxury hotels and excessive long-distance phone calls. 14

Aviation Security: Are We Truly Protected?] (Exhibit 6).

7 Higham and O'Harrow Jr., Washington Post, May 22,2005.

8 H. COMM. ON OVERSIGHT AND GOV'T REFORM, 110m CONG., WASTE, ABUSE AND

MISMANAGEMENT IN HOMELAND SECURITY CONTRACTS at 8 (Comm. Print 2006) [hereinafter

WASTE, ABUSE AND MISMANAGEMENT] (Exhibit 7).

9 Id.

10 Id. (citing DEFENSE CONTRACT AUDIT AGENCY, ApPLICATION OF AGREED-UPON

PROCEDURES (No. 6331-2003DI17900002) (April 11, 2003)).

11 WASTE, ABUSE AND MISMANAGEMENT at 9.

12 WASTE, ABUSE AND MISMANAGEMENT at 9 (citing DEPARTMENT OF HOMELAND

SECURITY INSPECTOR GENERAL, REVIEW OF THE TRANSPORTATION SECURITY

ADMINISTRATION'S MANAGEMENT CONTROLS OVER THE SCREENER RECRUITMENT PROGRAM,OIG-06-18 (December 2005)).

13 WASTE, ABUSE AND MISMANAGEMENT at 9 (citing Letter from Peter A. Iovino,

Assistant Administrator for Legislative Affairs, Department ofHomeland Security, to Rep.

Henry A. Waxman (September 2,2005)).


(continued...)



18

Among the disputed charges were $526.95 for one phone call f rom the Hyatt Regency O'Hare in

Chicago to Iowa City and $8,100 for elevator operators at the Marriott Marquis in Manhattan. 15

In one instance, Pearson gave a no-bid subcontract to Eclipse Events Inc., a company fonned by

two women with ties to the travel industry, to handle logistics. 16 The company was fonned on

March 28, 2002, two weeks after it received the $1.1 million no-bid subcontract from Pearson, a

contract that eventually grew to $24 million. 17 In total, the company's chief executive received

$5.4 million in pay for nine months' worth ofwork and a $270,000 pension. IS TSA eventually

paid Pearson $741 million, withholding only $143 million of the $297 million in costs

challenged by auditors. 19

Airport Screening - Boeing

Four months later, in June 2002, TSA awarded a cost-plus contract to Boeing to install

and maintain commercial airport luggage screening equipment,20 TSA estimated Boeing would

take seven months to insta ll the equipment at a cost of $508 million. 21 Costs, however, quickly

grew to at leas t $1 .2 billion and the deadline was extended by an additional 18 months.22


Henry A. Waxman (September 2,2005); DEFENSE CONTRACT AUDIT AGENCY, AUDIT REPORT

ON COSTS RECORDED THROUGH NOVEMBER 2,2002, Contract No. DTSA20-02-C-00400, Audit

RepOli No. 3541-2002A10100001 (May 3,2004)).

15 WASTE, ABUSE AND MISMANAGEMENT at 9 (citing DEFENSE CONTRACT AUDIT

AGENCY, AUDIT REPORT ON COSTS RECORDED THROUGH NOVEMBER 2,2002, Contract No.

DTSA20-02-C-00400, Audit Report No. 3541-2002A10100001 (May 3,2004)).

16 Robert O'Harrow Jr. and Scott Higham, Subcontractor's Story Details Post-91l1 Chaos,

Washington Post, July 28,2005 (Exhibit 8).

17 Id.



Henry A. Waxman (September 2,2005)).

20 WASTE, ABUSE AND MISMANAGEMENT at 1O.

21 Id.

22 Id. (citing DEPARTMENT OF HOMELAND SECURITY INSPECTOR GENERAL, EvALUATION

OF TSA's CONTRACT FOR THE INSTALLATION AND MAINTENANCE OF EXPLOSIVE DETECTION

EQUIPMENT AT UNITED STATES AIRPORTS, OIG-04-44 (September 2004); Higham and

(continued...)



19

The equipment registered many false alanns, causing delays.23 In order to decrease the

number of false alanns, the machines were later set to be less sensitive, making the machines less

effective at detecting bombs.24 Of the machines that Boeing did install, the Govemment

Accountability Office deemed them to be "inefficient," estimating it will cost an additional $3 to

$5 billion to upgrade the technology.25

Although TSA recognized in a January 2004 memorandum that "some costs were higher

than initially estimated" and there was "a slower than expected start by Boeing and some

significant last-minute inefficiencies due to subcontractor work," Boeing still received an award

of "good" for the first two fee periods and was paid fees totaling $54.6 million. 26

DHS's inspector general found that TSA paid Boeing $44 million without evaluating

Boeing's perfonnance.27 The inspector general also found that TSA paid Boeing a

disproportionate amount of profit compared to Boeing's costs and risks.28 While subcontracting

92% ofthe work, the company eamed profits on all contract-related costs, including the

subcontractors' costS.29 For example, in 2003, Boeing incurred only $39 million in direct costs,

O'HalTow, Washington Post, May 22,2005).


24 WASTE, ABUSE AND MISMANAGEMENT at 10 (citing Higham and 0 'Harrow,

Washington Post, May 22, 2005).

25 WASTE, ABUSE AND MISMANAGEMENT at 10 (citing Leveraging Technology to Improve

Aviation Security, Hearing Before H. Subcomm. on Economic Security, Infrastructure,

Protection and Cybersecurity, Comm. On Homeland Security, 109tl1 Congo (July 13, 2005)

(Testimony ofCathleen Berrick, Director ofHomeland Security and Justice at the Govemment

Accountability Office, GAO-05-896T)).

26 WASTE, ABUSE AND MISMANAGEMENT at 10-11 (citing TRANSPORTATION SECURITY

ADMINISTRATION, MEMORANDUM: PERIOD 1AWARD FEE DETERMINATION (January 13, 2004);

TRANSPORTATION SECURITY ADMINISTRATION, MEMORANDUM: PERIOD 2 AWARD FEE

DETERMINATION (July 20,2004)).


SECURITY INSPECTOR GENERAL, EVALUATION OF TSA's CONTRACT FOR THE INSTALLATION AND

MAINTENANCE OF EXPLOSIVE DETECTION EQUIPMENT AT UNITED STATES AIRPORTS, OIG-04-44

(September 2004)).

28 Id.



20

but received $S2 million in profits based on costs incurred by the subcontractors.30 According to

the inspector general, at least $49 million of the company's profits were "excessive."31

Airport Screening Today

TSA funding for aviation security has totaled about $20 billion since fiscal year 2004,32

yet TSA's spending decisions are still not fully based on tisk.33 TSA has estimated that at current

investment levels, installation of optimal checked baggage screening systems will not be

completed until approximately 2024.34

Despite the expenditure of enonnous sums ofmoney on airport screening, government

reports have repeatedly found gaps in aviation security since TSA took over responsibility for

passenger and baggage screening.35 As DHS's fonner inspector general, Clark Kent Ervin

testified before the House Committee on Homeland Security:

30 Id.


SECURITY INSPECTOR GENERAL, EVALUATION OF TSA's CONTRACT FOR HIE INSTALLATION AND

MAINTENANCE OF EXPLOSIVE DETECTION EQUIPMENT AT UNITED STATES AIRPORTS, OIG-04-44

(September 2004)).

32 Hearing on Aviation Security Challenges, Hearing Before H. Subcomm. on Homeland

Security, Comm. On Appropriations, 110 th Congo (February 13, 2007) (Testimony ofCathleen A.Berrick, Director ofHomeland Security and Justice Issues at the Government Accountability

Office, GAO-07-44ST at i) [hereinafterHearing on Aviation Security Challenges] (Exhibit 9).

33 The Grades are In!-Is the Department ofHomeland Security Measuring Up?, Hearing

Before H. Comm. on Homeland Security, 110th Congo (September IS, 2007) (Testimony ofDavid

M. Walker, Comptroller General of the United States, GAO-07-1240T at 25) [hereinafter The

Grades are In! ] (Exhibit 10).

34 Hearing on Aviation Security Challenges (Testimony ofCathleen A. Benick at i).

35 Lisa Myers, Rich Gardella, et aI, Airline Screeners Fail Government Bomb Tests,NBC News, March 17,2006 (Exhibit 11); Thomas Frank, Ctisis Seen in Luggage Screening, USA

Today, September 20,2006 (Exhibit 12); Thomas Frank, Most Fake Bombs Missed By

Screeners, USA Today, October IS, 2007 (Exhibit 13); One Year Later: Have TSA Airport

Security Checkpoints Improved? Hearing Before H. Comm. On Oversight and Gov 't Reform,

110 th Congo (November 15, 2007) (Testimony ofGregory D. Kutz, Managing Director and John

W. Cooney, Assistant Director for Forensic Audits and Special Investigations, Government

Accountability Office, GAO-OS-4ST at i) [hereinafterHave TSA Airport Security Checkpoints

Improved?] (Exhibit 14).



21

The sad fact is that for all the dollars and attention that has been

focused on screener perfonnance since 9/11 study after study - by

the DHS Inspector General, the Government Accountability Office;

news organizations, and, even, the TSA itself - shows that it is just

as easy today to sneak these deadly weapons past screeners than it

was on 9/11 [sic].36

Similarly, a classified TSA document uncovered by USA Today revealed that in tests

conducted in 2006, Los Angeles International Airport screeners missed about 75% of fake bombs

hidden on undercover agents posing as passengers37 At Chicago's O'Hare International AirpOli

screeners missed about 60% of hidden bomb materia1s.38 By contrast, San Francisco

International Airport screeners, who work for a private company rather than TSA, missed only

about 20% of the bombs.39 Screeners missed these incendiary devices despite having been

alerted to the auditors' covert testing.40

In addition, GAO found that despite TSA instituting the well publicized 3-1-1 rule,

prohibiting liquids, gels and aerosols over 3.4 fluid ounces in carry-on luggage and requiring

these items to be placed in a one-quart bag, bomb-making liquids still pass undetected through

TSA airport checkpoints.41

In total, TSA operates 700 security checkpoints and nearly 7,000 baggage screening areas

at over 450 airports.42 During 2006, TSA screened 708,400,522 people and 535,020,271 pieces

36 Cover Blown-Did TSA Tip OffAirport Screeners About Covert Testing? Hearing

Before H Comm. on Homeland Security, 110th Congo (November 14,2007) (Statement ofClark

Kent Ervin, Former Inspector General, Department ofHomeland Security at 1) (Exhibit 15).

37 Frank, USA Today, Oct. 18,2007.

38 Id.

40 Eileen Sullivan, TSA: No Intent to Tip Off Screeners, AssociatedPress, November 14,2007 (Exhibit 16).

41 Have TSA Airport Security Checkpoints Improved? (Testimony ofGregory D. Kutz and

John W. Cooney at 7).

42 Transportation Security Administration Website, WhatWe Do,

http://www.tsa.gov/what_we_do/screeningiindex.shtm,

http://www.tsa.gov/what_we_do/screeningisecurity_checkpoints.shtm (Exhibit 17).



22

of luggage and intercepted 13,709,211 prohibited items.43 Of these confiscated items, 85%

(11,616,249) were lighters and 12% (1,607,100) were knives.44

While TSA will spend close to $5 billion in 2007 securing passengers and their checked

and carry-on baggage, it will spend only $55 million to screen air cargo transported on the same

airplane.45 A total of only 300 full-time cargo security agents-less than one percent of the TSAworkforce-are focused on air cargo.46 As a result, the 1.5 million known shippers, 3,800 freight

forwarders (with 10,000 branches) and 300 air carriers that fonn the air cargo supply chain

largely police themselves.47 DHS's own inspector general confirmed that TSA has too few cargo

inspectors and an ineffective database to track violations and "vague regulations" for screening

cargo being put on passenger planes.48 While the 9/11 Commission Act of2007 requires DHS

to screen 100 percent of cargo transported on passenger aircraft within three years, TSA claims it

will not reach that goal for five to seven years.49

TSA has also failed to comply with the congressional mandate that it take responsibility

for passenger pre-screening from air carriers, despite the fact that it has received $141 million

since 2004 to take over watch-list screening.50 This has left the No-Fly List more vulnerable to

leaks and has prevented law enforcement and first responders from receiving infonnation more

43 Transportation Security Administration Website, Screening Statistics,

http://www.tsa.gov/research/screening_statistics.shtm (Exhibit 18).

44 Id.

45 P.l. CROWLEY AND BRUCE R. BUTTERWORTH, CENTER FOR AMERICAN PROGRESS,

KEEPING BOMBS OFF PLANES: AIR CARGO, AVIATION'S SOFT UNDERBELLY at 1 (May 2007)

(citing Richard A. Clarke and Rand Beers, THE FORGOTTEN HOMELAND, A CENTURY

FOUNDATION TASK FORCE REPORT, at 165), available at

www.americanprogress.org/issues/2007/05/pdf/air_cargo.pdf (Exhibit 19).

46 Id. at 2 (citing Hearing on Aviation Security Challenges (Statement ofKip Hawley,

Assistant Secretary ofHomeland Security, TranspOliation Security Administration)).

47 Id. (citing TSA Overview Briefing to Authors, December 14,2006).

48 Thomas Frank, Report Blasts Air Cargo Security; TSA Screening Flaws Endangering

Fliers, USA Today, September 7,2007 (Exhibit 20).

49 Aviation Security: Are we Truly Protected? (Testimony ofCathleen A. Berrick at 14-

15).

50 Hearing on Aviation Security Challenges (Testimony of Cathleen A. Berrick at 21).



23

quickly.5I The fiscal year 2008 budget requests $53 million for TSA to continue this program, a$38 million increase. 52

Transportation Worker I d e n t ~ f i c a t i o n Credential

Nearly five years after Congress mandated implementation of identification credentialsand despite the expenditure ofmillions of dollars, TSA has yet to fully implement tamper

resistant biometric identification credentials that stop people from gaining unescorted access to

sensitive areas of the maritime system and our nation's airports. 53 TSA has been hampered in

pati by intervention from Rep. Harold Rogers (R-KY), who has used the identification credential

project to steer millions of dollars of federal funds to his district.54

In 2002, a tamper-proof identification card for airport, rail and maritime workers was first

proposed.55 These biometric cards, know as Transportation Worker Identification Credentials

("TWIC"), were to help restrict access to sensitive areas in our nation's transportation system.56

Within months after the plans for the card were announced, Rep. Rogers, then chairman of the

House Appropriations Subcommittee on Homeland Security, seized the opportunity to steer

business to his home district. 57 Rep. Rogers inselied language into appropriations bills that

effectively pushed the government to produce the new card in Corbin, Kentucky, by requiring

that the cards employ existing technology manufactured in Corbin rather than the new, more

flexible, secure technology DHS prefelTed.58 Rep. Rogers added language in 2003 that urged

DHS to use "existing government card issuance centers" and blocked spending until DHSyielded to the mandates.59

51

SeeId.at

16.

52 Id.

53 Pressure Points for the Department ofHomeland Security, Congressional Quarterly

Weekly, October 20, 2007(Exhibit 21); Transportation Security Administration Website,

Transportation Worker Identification Credential (TWIC) Program,

http://www.tsa.gov/what_we_do/layers/twic/index.shtm (Exhibit 22); Eric Lipton, In Kentucky

Hills, Homeland Security Bonanza, New York Times, May 14, 2006 (Exhibit 23).

54 Lipton, New York Times, May 14, 2006.

55 Id.

56 Id.

57 Id.


59 Id.



24

In 2003, DHS was forced to hire a contractor at a cost of $4 million to determine which of

the two different cards to use, further delaying the program.60 To speed up production,

contractors initially planned to produce the prototype cards in Pennsylvania. 61 DHS, however,

was forced to move the work to Corbin to comply with Rep. Rogers' mandate that all cards be

produced in Kentucky, despite the fact that only a small number of cards were being printed and

moving the newer, smart card printing equipment added both expense and fuliher delays to theprogram. 62

The prototype testing benefitted companies with close ties to Rep. Rogers. 63 For

example, the Virginia-based company hired to test the cards shared its business with three

companies with operations in Corbin. 64 In 2004, just before Senture, a call-center service

provider, was awarded a subcontract as part of the testing effort, the company hired Rep. Rogers'

son John as a computer systems administrator.65 Ultimately, the study concluded that the newer,smart card was far superior.66

DHS, for its pati, contributed to the delays by repeatedly revising plans for the

identification card.67 In 2002, Congress directed DHS to issue the security cards.68 After morethan three years without much headway, Congress re-mandated creation of a TWIC in the 2006

SAFE Port Act, setting up specific deadlines and goals.69 The card was to be issued to ten of the

riskiest ports by July 1, 2007, to the 40 next riskiest ports by January 1, 2008, and nation-wide by

January 1, 2009.70 As ofOctober 20,2007, none of these objectives has been met.71 Instead,

TSA began issuing TWIC cards to workers at the Port ofWilmington, Delaware on October 16,

60 Id.

61

Id.


63 Id.

64 Id.

65 Id.


67 Id.

68 Congressional Quarterly Weekly, Oct. 20, 2007.

69 Id.

70 Id.

71 Id.



25

2007, and projected only 11 additional ports would have the cards by November 2007. 72 The

most vulnerable ports, including two of the busiest in New York and Los Angeles, are not

included on the list,73

Transportation Security Operations Center

In February 2003, TSA leased an undeveloped office building that encompassed 110,000

square feet for both the Transportation Security Operations Center and the Systems Operations

Control Division of the Federal Air Marshal Service.74 At the time, the building was viliually

balTen: it had no interior walls, floors, ceilings, electrical wiring, furniture, or equipment,75

By July 2003, the newly developed office building had 55 offices, more than 150

workstations, two watch floors, 12 conference rooms, seven kitchens and a fitness center.76

Forty-five of the 55 offices were equipped with television sets and cable; the kitchens were

stocked with refhgerators, microwaves, icemakers and dishwashers; and the 4,200 square-foot

fitness center had a towel laundry service.77 The space was intended at most for only 79 federal

employees and 57 contract employees.78

An internal review of the project found that $500,000 was spent on artwork, silk plants

and miscellaneous supplies.79 When the vendor who supplied the decorations submitted a single

invoice describing the goods as "enhancements," the vendor was instructed to divide the invoice

into thirds and describe the goods as "equipment and tools" to hide the purchases from the officer

responsible for the contract. 80 Of the $500,000 spent, $252,392 was for artwork, $29,032 went to

an art consultant and an assistant, $30,085 was for the purchase of silk plants and $13,861 was

72 Congressional Quarterly Weekly, Oct. 20,2007.

73 Id.

74 DEPARTMENT OF HOMELAND SECURITY, OFFICE OF INSPECTOR GENERAL,

IRREGULARITIES IN THE DEVELOPMENT OF TRANSPORTATION SECURITY OPERATIONS CENTER.>

OIG-05-18 [hereinafter IG REPORT ON IRREGULAIUTIES] at 3, 8 (March 2005) (Exhibit 24).

75 Id. at 3.

77 Id. at 7.

78 IG REpORT ON IRREGULARITIES at 3.

80 Id. at 6.



26

for lamps and miscellaneous supplies. 8l The vendor added a 20% markup of$65,074 and a

credit for future purchases totaling $26,243.82 The company also received $83,313 in

overpayments.83 Overall, the decoration project was filled with gross neglect and abuse,

including repeated use of purchase cards by TSA employees for $136,589 of furniture and

personal items such as love seats, annoires, leather briefcases and coffee potS. 84

The owners of the company from which TSA purchased the art and silk plants were not in

the business of selling such goods.85 They did, however, have a prior business and personal

relationship with the TSA facility operations officer who later quit TSA to start a business with

the company's owners, where he was an officer and employee and received a salary increase of

approximately $34,000 plus stock.86 TSA had no paperwork that either documented the process

or justified the project's $19 million price tag.87

TSA 's First Annual Awards Program

On November 19,2003, the second anniversary of the legislation creating TSA, theagency held its first annual awards program to honor employees, workgroups and transportation

security organizations from around the country for their distinguished professional

achievements.88 Approximately 1, I00 attended the three-hour ceremony at the Grand Hyatt

Hotel in Washington, D.C., where they saw 543 of their colleagues and 30 organizations receive

588 awards, plaques and medals.89 Guests were treated to gifts and hors d'oeuvres before retiring

to the rooms TSA furnished at various hotels around the city.90 TSA spent approximately

$461,745 in total for lodging, transportation, per diem allowances for award recipients and their

81 Id.

82 IG REpORT ON IRREGULARITIES at 6.

84 Id. a t 26.

85 Id. a t 6-7.

86 IG REPORT ON IRREGULARITIES at 7.

87 Id. a t 5.

88 DEPARTMENT OF HOMELAND SECURITY OFFICE OF INSPECTOR GENERAL, ASSESSMENT

OF EXPENDITURES RELATED TO THE FIRST ANNUAL TRANSPORTATION SECURITY

ADMINISTRATION AWARDS PROGRAM AND EXECUTIVE PERFORMANCE AWARDS, OIG-04-46

[hereinafter IG ASSESSMENT OF EXPENDITURES] at 3 (September 2004)(Exhibit 25).

89 Id. a t 5, 14.

90 Id. at 3, 5.



27

guests, party planning costs, food and beverages, audio visual support, awards, programs and

recipient photos.91

Included among these "excessive,,92 expenditures were $172,514, or 37%, of the total

awards program costs, to MarCom Group, Inc., a private event planning company hired to

coordinate aspects of the awards program.93 A total of $85,552 went to event planning servicesand another $81,767 to develop and produce the various award plaques and other items, such as

lapel pins, distributed at the ceremony.94 These costs also include a $2,718 "rush charge"

incurred because the plaque designs were not submitted until early November.95 In addition,

TSA paid MarCom $5,196 to produce official photographs of award recipients with the TSA

administrator, $1,486 for three balloon arches and $1,509 for directional signs.96

Food and beverages at the Grand Hyatt, including two coffee breaks and a reception

following the ceremony, cost $47,852.97 The reception alone, which TSA said did not include

lunch and did not provide enough food for each attendee, cost $33,183 or about $33 per person. 98

TSA paid $64 for each gallon of coffee, $3.75 for each soft drink, $1,850 for seven sheet cakes

and $1,500 for three cheese displays.99

TSA 's Executive Bonuses

In December 2003, TSA distributed $1,450,000 in individual cash awards. 100 The

bonuses were given in amounts of$10,000, $15,000, $17,500 and $20,000 to 88 of the 116

senior managers at TSA. 101 TSA was more generous than any other federal agency, awarding

76% of all eligible managers bonuses compared with 49% of executives that received bonuses

91 Id. at 4.

92 IG ASSESSMENT OF EXPENDITURES at 4.

93 Id. at 11.

94 Id. at 11,12.

95 Id. at 12.

96 IG ASSESSMENT OF EXPENDITURES.

97 Id. at 13.


101 Id.



28

govel11ment-wide. 102 According to the Office of Personnel Management, the average award for

all federal govel11ment agencies in FY 2002 was $12,444. TSA's FY 2003 average award at

$16,477 was one-third higher and was more than any other average award given to executive

employees at any other federal govel11ment agency. 103

At the same time, fewer than three percent of the TSA's 50,878 non-executive employeesreceived monetary bonuses, while seven percent received non-monetary "time-off' awards. 104

DHS's inspector general characterized this as "[a] substantial inequity that exists in TSA's

performance recognition program between executive and non-executive employees.,,105

102 Id. at 18.

103 Id.


105 Id. a t 23.



29

Most Outrageous Contract:

Deepwater

In fiscal year 2006, the Department ofHomeland Security ("DHS") obligated $15.7

billion for the procurement of goods and services, making it the third largest procurement

spender in the federal government. 1Unfortunately, numerous contracts have been mismanaged.

According to a report by the House Committee on Government Refonn:

The growth in DHS contracts has been accompanied by pervasive

mismanagement. DHS has repeatedly failed to engage in

responsible contract planning, including the determination of

government needs and program requirements. Compounding this

problem, the Department lacks both adequate trained contract

officials to oversee its burgeoning spending on contracts and a

coherent organization for acquisition management across theDepartment.2

No contract has been more mismanaged than that pertaining to the Integrated Deepwater

Systems Program ("Deepwater").

In 2002, the United States Coast Guard embarked on a modernization project, called

Deepwater, to update its surface fleet and aircraft. 3 Deepwater will take 25 years to complete at

a cost of $24 billion.4 Deepwater has been widely criticized for its mismanagement, cost over

runs and waste.s DHS's inspector general, Richard Skinner, testified before the Senate

Subcommittee on Oceans, Atmosphere, Fisheries and Coast Guard that the project suffered from

1 GOVERNMENT ACCOUNTABILITY OFFICE, DEPARTMENT OF HOMELAND SECURITY:

IMPROVED ASSESSMENT AND OVERSIGHT NEEDED TO MANAGE RISK OF CONTRACTING FOR

SELECTED SERVICES, GAO-07-990 at 1 (September 17,2007) (Exhibitl).

2H. COMM. ON OVERSIGHT AND GOV'T REFORM, 11 OTH CONG., WASTE, ABUSE AND

MISMANAGEMENT IN HOMELAND SECURITY CONTRACTS (Comm. Print 2006) (Exhibit 2).

3 Oversight Hearing on Recent Setbacks to the Coast Guard Deepwater Program,

Hearing Before the S. Subcomm. on Oceans, Atmosphere, Fisheries, and Coast Guard,. Comm.on Commerce, Science, and Transportation, l10

th Congo (February 14, 2007) (Testimony of

Richard L. Skinner, Inspector General, Department ofHomeland Security at 2) [Hearing on

Deepwater] (Exhibit 3).

4 Id.

S Rob Margetta, Homeland Security for Hire, Congressional Quarterly Weekly,

November 10, 2007 (Exhibit 4).



30

"flawed contract tenns and conditions, poorly defined perfonnance requirements, and

inadequate management and technical oversight."6

In 2002, when the Coast Guard began the Deepwater modernization project, it was faced

with a critical problem: the service did not have the resources to implement such a large

program.? The service sought to outsource the project to an independent contractor, IntegratedCoast Guard Systems ("ICGS"), a joint-venture between defense giants Lockheed Mmiin and

Northrop Grumman.8 ICGS was established specifically to handle the project and was tasked

with not only the construction of the new ships and aircraft, but also the day-to-day management

ofDeepwater. 9 ICGS chose Lockheed and Northrop to do much of the contract work, a

relationship that the fonner commander of the Coast Guard's Engineering and Logistics Center

characterized as worse than having the "fox watching the henhouse."lo

The Coast Guard was sidelined in the modernization project, playing only an advisory

role. 11 ICGS was given the sole authority to award subcontracts and "make or buy" decisions,

with no requirement that it consult with the Coast Guard. 12 While the Coast Guard and the

American Bureau of Shipping ("ABS") developed standards for the "design, construction and

cetiification of all cutters acquired under the Deepwater Program,,,13 ICGS was not obligated to

meet these specifications and was instead allowed to select its own cutter design criteria. 14

1101123 Modernization Project

The Coast Guard needs a replacement for its aging fleet of 110-foot Island Class patrol

boats. ls To meet short-tenn patrol and rescue needs until the new Fast Response Cutter was

introduced, the 11O-foot Island boats were to be retrofitted with an additional 13 feet creating a

6 Hearing on Deepwater (Testimony ofRichard L. Skinner at 2).

? Steve Kroft, The Troubled Waters of "Deepwater", CBSNews, August 19,2007

(Exhibit 5).

8 Id.


12 Id.

14 Id.

15 Kroft, CBSNews, Aug. 19,2007.



31

new class of 123-foot cutters.16 ICGS handled the retrofit but instead of extending the usability

and service life of the hulls, the retrofits effectively destroyed the seaworthiness of the boats. 17

Within weeks of taking delivery, serious hull defonnities and in some cases, buckling grounded

the craft. 18 The failure of the retrofits was inevitable according to Scott Sampson, development

section chief for the Coast Guard's Maintenance and Logistics Command Atlantic in the vessel

specifications branch. Testifying before a House committee, Mr. Sampson stated "the initial

problem of not increasing the strength of the 123 was a serious oversight ofbasic naval

architecture and their failure was predicted."19 The eight boats had to be decommissioned,20

resulting in a loss of$100 million.21 The DHS inspector general's Deepwater report found that

the ships were equipped with unauthorized electronics that were not waterproofed and failed to

meet security requirements.22

The 123-foot cutter retrofit was designed as a temporary measure to fill short-tenn patrol

and rescue needs until a replacement craft could be designed and brought on-line.23 The vessel

that was to assume these patrolling responsibilities, the Fast Response Cutter ("FRC"), never

got beyond the planning stages.

24

The original plans for the FRC called for a traditional steel, oraluminum hull, but ICGS later opted for a composite hull for the new line ofships.25 The new

composite hulls were heavier, requiring four engines, whereas with the old design, only two

16 Id.


19 Dan Caterinicchia, Lawmakers Blast Coast Guard, Contractors for Modernization

Problems, Associated Press, April 18, 2007 (Exhibit 6); see also Compliance with Requirements

of the Coast Guard's Deepwater Contract, Hearing before the House Committee on

Transportation and Infrastructure, 110th Congo (April 18, 2007) (Testimony of Scott C.

Sampson, Section Chiefof the Development, Maintenance & Logistics Command Atlantic,

Coast Guard) (Exhibit 7).

20 Press Release, Department ofHomeland Security, Coast Guard: Statement by Adm.

Thad Allen on Converted 123 Foot Patrol Boats, Changes to Deepwater Acquisition, US Fed

News, Aptil 17,2007 (Exhibit 8).




25 Id.



32

were needed.26 The composite hull may have been chosen over more conventional materials,

because Northrop Grumman had built a shipyard specifically for the construction of composite

hulled ships in Mississippi.27 After tests showed technical and design problems, the Coast

Guard decided that the FRC was unsuitable and pulled the plug, losing $38 million in

development costs.28

National Security Cutter

The National Security Cutter ("NSC") will be the largest, and most expensive ship the

Coast Guard has ever designed.29 It is designed to monitor 56,000 square miles of ocean each

day, and is supposed to be fast enough to operate with Navy battle groups.30 DHS' s inspector

general found that "the NSC, as designed and constructed, will not meet performance

specifications described in the original Deepwater contract.,,31 The inspector general found that

the design of the NSC was insufficient to survive a 30-year service life in either the Caribbean

or GulfofAlaska operating theaters.32 The cost of the NSC has increased from the original

price tag of$517 million in 2002 to $775 million as of2007. 33

26 Id.

28 Kroft, CBS News, Aug. 19,2007.

30 Id.


33 Id. at 8.



33

HH-65 Helicopter Upgrade

The Deepwater initiative also includes the Coast Guard's helicopter fleet,34 The HH-65

Dolphin helicopter is a short range recovery aircraft in the Coast Guard's air fleet,35 The HH-65

was experiencing an increase of in-flight loss-of-power incidents, increasing the likelihood of a

crash.36 The helicopters needed their old engines replaced.37 The Coast Guard's assistant

commandant for operations and the inspector general recommended that the re-engineering

could be handled in-house, where it could be done quickly and cheaply at the service's Aircraft

and Repair Supply Center ("ARSC").38 The ICGS estimate for the re-engineering was $294

million, $40 million more than it would have cost ARSC to perfonn the work.39 Nevertheless,

the commandant's recommendation was ignored and ICGS was awarded the project,40

Concerns were raised over ICGS 's inability to fulfill the contract within the Coast Guard's 24

month timeline.41 The inspector general recommended removing ICGS as the vendor in charge

of the retrofit and having ARSC perfOlID the remaining work as a government-perfonned

contract, but the Coast Guard did not agree with these recommendations.42

Congressional Scrutiny

In January 2007, Rep. Elijah Cummings (D-MD) gave the Coast Guard 120 days to

change course in the implementation the Deepwater project,43 Months later, members of

Congress still remained concerned over Deepwater's progress. Rep. James Oberstar (D-MN)

was particularly critical of the administration's repeated attempts "to contract out program

34 Id. at 9.

35 Coast Guard's Website, Aircraft and Cutters, HH-65C "Dolphin" Short Range

Recovery Helicopter, available at http://www.uscg.milldatasheet/hh-65.asp (Exhibit 10).

36 Hearing on Deepwater (Testimony ofRichard L. Skinner at 9).37 Id. at 10

40 Hearing on Deepwater (Testimony ofRichard L. Skinner at 10).41 ld.

43 Press Release, House Transportation and Infrastructure Committee: Rep. Cummings

Issues Statement on 'Deepwater: l20-Day Update', US FedNews, June 12,2007 [hereinafter

Cummings Statement] (Exhibit 11).



34

management duties that should be carried out by Federal emp10yees."44 Rep. Oberstar

continued, "the Deepwater Program has hied to replace the expertise of the Coast Guard with

the expertise of private contractors...who are experts at making money for their stockho1ders."45

As a result of congressional intervention, Coast Guard Commandant Thad Allan has

made a series of changes to the Deepwater program, including replacing ICGS as the primary

systems integrator with the Coast Guard, increasing the use of third-party cetiification of quality

standards, having the Coast Guard handle contacts with vendors directly where possible and

placing acquisitions under the command ofRear Admiral Gary B10re.46 These measures

effectively put the day-to-day operations and management ofDeepwater back in the hands of the

Coast Guard.

Finally, the Department of Justice has opened an investigation into the Deepwater

program to explore any wrongdoing on the part of the Coast Guard or ICGS.47

44 Press Release, House TranspOliation and Infrastructure Committee: Transportation and

Infrastructure Committee Leaders Urge Coast Guard to Examine Future ofDeepwater Contract,

US Fed News, April 13, 2007 (Exhibit 12).

45 Id.

46 Rep. Cummings' Press Release

47 Patricia Kime, Justice Department Enters Deepwater Fray, Navy Times, April 30, 2007

(Exhibit 13).



35

Most Outrageous Contract, Dishonorable Mention:

Radiation Detection Portal Monitors

Preventing a nuclear weapon or dirty bomb from being smuggled into the United States is

a national security priority.l To this end, in October 2002, the Department ofHomeland Security("DHS") began deploying radiation detection equipment, called radiation detection portal

monitors, at U.S. ports of entry.2 The goal was to screen all cargo, vehicles and individualscoming into the United States without delaying the movement of traffic. 3 Roughly five yearsafter DHS's creation, the agency still has not developed a program to screen incoming cargo forradiation.4

In 2003, DHS awarded a $350 million contract to Science Applications InternationalCorporation ("SAIC") to manufacture radiation detection machines,5 larger-scale equipment that

1 GOVERNMENT ACCOUNTABILITY OFFICE, COMBATING NUCLEAR SMUGGLING: DNDO

HAS NOT YET COLLECTED MOST OF THE NATIONAL LABORATORIES' TEST RESULTS ON

RADIATION PORTAL MONITORS IN SUPPORT OF DNDO's TESTING AND DEVELOPMENT PROGRAM,

GAO-07-347R [hereinafter GAO REPORT ON DNDO's TEST COLLECTION] at 1 (March 9, 2007)(Exhibit 1).

2 GOVERNMENT ACCOUNTABILITY OFFICE, COMBATING NUCLEAR SMUGGLING: DHS HAS

MADE PROGRESS DEPLOYING RADIATION DETECTION EQUIPMENT ATU.S. PORTS-OF-ENTRY, BUT

CONCERNS REMAIN, GAO-06-389 [hereinafter GAO REPORT ON NUCLEAR SMUGGLING] at i(March 22, 2006) (Exhibit 2).

3 Countering the Nuclear Threat to the Homeland: Evaluating the Procurement of

Radiation Detection Technologies, Hearing Before H Subcomm. on Emerging Threats,

Cybersecurity and Science and Technology, Comm. on Homeland Security, 110th Congo (March14,2007) (Testimony ofGene Aloise, Director ofNatural Resources and Environment,Government Accountability Office, GAO-07-581Tat 5) [hereinafter Countering the Nuclear

Threat to the Homeland] (Exhibit 3).

4 GOVERNMENT ACCOUNTABILITY OFFICE, DEPARTMENT OF HOMELAND SECURITY:

PROGRESS REPORT ON IMPLEMENTATION OF MISSION AND MANAGEMENT FUNCTIONS, GAO-07

454 [hereinafter GAO PROGRESS REPORT ON MANAGEMENT FUNCTIONS] at 118 (August 17,2007) (Exhibit 4).

5 H. COMM. ON OVERSIGHT AND GOV'T REFORM, 11 OTH CONG., WASTE, ABUSE AND

MISMANAGEMENT IN DEPARTMENT OF HOMELAND SECURITY CONTRACTS at 8 (Comm. Print2006) [hereinafter WASTE, ABUSE AND MISMANAGEMENT] (Exhibit 5); House Committee on

Oversight and Government Reform, More Dollars, Less Sense: Worsening Contracting Trends

Under the Bush Administration, Contracts Database, available athttp://oversight.house.gov/features/moredollars/contractdetails.asp?id=155 (Exhibit 6)



36

can screen vehicles, people and cargo entering the United States.6The project's goal was to

install 3,034 detectors by September 2009.7

In April 2005, the Domestic Nuclear Detection Office ("DNDO") was created by

presidential order and took over responsibiliti for choosing and purchasing the radiation

detection equipment used by Customs and Border Protection ("CBP,,).9

By May of2005, reports indicated that the portal monitors created by SAIC could not

differentiate between radiation emitted by a nuclear bomb and radiation emitted naturally from

routine materials like cat litter or ceramic tile. lo In order to detennine if the material is hannful,

CBP would have to conduct a "secondary inspection" using handheld devices. I I Moreover, Vayl

Oxford, acting director ofDNDO claimed he could not guarantee the monitors would recognize

all hannful materials; high-density shields made of lead or steel could block the machines'

ability detect uranium. 12 By December 2005, DHS had deployed 670 of 3,034 radiation portal

monitors, roughly 22 percent of the monitors DHS planned to deploy, at the cost of $286

6 GAO REPORT ON DNDO's TEST COLLECTION at 1.

7 GAO REPORT ON NUCLEAR SMUGGLING at i.


9 Id.; In October 2006, the SAFE Port Act fonnally established the organization, which is

responsible for conducting the research, development, testing and evaluation of radiation

detection equipment that can be used by CBP to detect smuggled nuclear or radiological

materials. Id.

10 WASTE, ABUSE AND MISMANAGEMENT at 12 (citing Eric Lipton, U.S. to Spend Billions

to Alter Security Systems, The New York Times, May 8, 2005); Countering the Nuclear Threat to

the Homeland at 1.

I I Nuclear Terrorism Prevention: Status Report on the Federal Government's Assessment

ofNew Radiation Detection Monitors, Hearing Before the H Subcomm. on Oversight and

Investigations, Comm. on Energy and Commerce, 110 lh Congo (September 18, 2007) (Testimony

of Gene Aloise, Director ofNatural Resources of Environment and Keith Rhodes, Chief

Technologist, Government Accountability Office, GAO-07-1247T at 1) [hereinafterNuclear

Terrorism Prevention] (Exhibit 7).

12 WASTE, ABUSE AND MISMANAGEMENT at 12-13 (citing Hearing on Detecting Nuclear

Weapons and Radiological Materials: How Effective is Available Technology? Joint Hearing

Before H Subcomm. on Prevention ofNuclear and BiologicalAttack with the H Subcomm. on

Emergency Preparedness and Science and Technology, Comm. on Homeland Security, 109lh

Congo (June 21, 2005) (Testimony ofVayl Oxford, Acting Director, Domestic Nuclear

Detection Office, Department ofHomeland Security)).



37

million.13

Within four months, the agency had fallen behind its installation schedule, making

project completion by September 2009 unlikely. 14

DNDO began looking to upgrade its system, hoping to have portals that could both detect

radiation and identify the radiological materials .15 By February 2006, DNDO had decided to

begin developing and purchasing new technology, believing the next generation of portalmonitors, known as Advanced Spectroscopic Portals ("ASPs"), would accomplish this goal. 16 In

order to implement the upgrade plan, DNDO completed a cost-benefit analysis in May 2006.17

The analysis supported DNDO's decision to move to the new technologyl8 and in July, DHS

awarded a five-year, 19 $1.2 billion contract to CanbelTa Industries, Raytheon and Thermo

Electron to buy and install this next generation of portal monitors.20

In October 2006, an audit conducted by the Government Accountability Office ("GAO")

concluded that "DNDO's 2006 cost-benefit analysis does not provide a sound analytical basis for

its decision to purchase and deploy advanced spectroscopic portal monitoring technology.,,21

DNDO had ignored its own performance evaluations, and relied on inaccurate estimates of

equipment performance. 22 For example, DNDO assumed that the ASPs would detect highlyenriched uranium 95% of the time, despite studies showing that the best of the three vendors'

detection rates was 50%,23 and as low as 17%.24 DNDO's analysis also focused on detecting


14 Id.


16 GAO REPORT ON DNDO's TEST COLLECTION at 1-2

17 Id. at 3.

18 Id.

19 Id.

20 House Committee on Oversight and Government Refonn, More Dollars, Less Sense:

Worsening Contracting Trends Under the Bush Administration, Contracts Database, available at

http://oversight.house.gov/features/l11Qreclollars/contractdetaiIs.asp?iel= 161 (Exhibit 8).

21 Countering the Nuclear Threat to the Homeland (Testimony ofGene Aloise at 3).

22 lei.

24 Robert O'Harrow Jr., Radiation Detector Program Delayed; DHS May Have Misled

Congress, GAO Audit Finds, Washington Post, July 20, 2007 (Exhibit 9).



38

uranium, but ignored other dangerous radiological and nuclear materials.25

Moreover, while the

current technology costs $55,000 per unit without installation, the new ASP costs approximately

$377,000 per unit.26

The report concluded the total cost for deploying both the current and new

portal monitors to be about $1 billion.27 The July 2006 contract however, was worth $1.2 billion

over 5 years, exceeding the actual cost by $200 million.28

As ofMarch 2007, DRS had not collected all the relevant testing infonnation that could

be used to improve DNDO's understanding of how the cun'ent portal monitors operate.29

In

order to ensure money would be spent appropriately, between February and March 2007, DNDO

conducted more tests at the auditor's urging. The tests used, however, were not objective and

used biased methods that enhanced the perfonnance of the ASP's capabilities.3o

Specifically,

DNDO calibrated the machines to optimize their results and scrutinized the equipment in

circumstances that did not match real world conditions.31 Federal authorities are investigating

allegations that DRS officials pressured an analyst testing the machines to destroy infonnation

about the perfonnance of the equipment.32

Congress pledged to withhold money for the equipment until DRS proves the monitorswill be more effective.

33Nevertheless, DRS deployed at least 966 of the original radiation portal

monitors,34 at a cost ofmore than $200 million.35 These devices still cannot distinguish between

25 Countering the Nuclear Threat to the Homeland (Testimony of Gene Aloise at 3).

26 Id. at 5.

27 Id. at 4.

28Id.


30 Robeli O'Rarrow Jr., DRS 'Dry Run' Support Cited; GAO Says Radiation Screening

Contractors Got Samples, The Washington Post, September 18, 2007 (Exhibit 10); Nuclear

Terrorism Prevention (Testimony of Gene Aloise and Keith Rhodes at 4).

31 Nuclear Terrorism Prevention (Testimony ofGene Aloise and Keith Rhodes at 4).

32 Robert O'Rarrow Jr., Radiation Detectors for BorderAre Delayed Again, WashingtonPost, November 20, 2007 (Exhibit 11).

33 Stephen Losely, Radiation Detectors for Borders Unreliable, GAO Says, Federal

Times, October 23,2006 (Exhibit 12).

34 GAO PROGRESS REPORT ON MANAGEMENT FUNCTIONS at 119.

(continued .. . )



39

hannless, naturally occurring radiological materials and dangerous materials.36 Auditors havepredicted cost ovelTuns of as much as $596 million for the new machines, the prototypes ofwhich have never been shown to be any more effective than the portals now in use.

37

350 ' Harrow, Washington Post, Sept. 18,2007.

36 GAO REPORT ON DNDO's TEST COLLECTION.

37 O'Harrow, Washington Post, July 20,2007.



40

Failed Program:

US-VISIT

Since 2003, roughly $1.3 billion has been spent on the United States Visitor and

Immigrant Status Indicator Technology program ("US-VISIT"),1 a program that has never worked

as Congress intended.

In 1996, Congress passed legislation ordering immigration officials to create a system to

track those who enter and those who leave the United States.2 In 2004, after years of delay, the

Department ofHomeland Security ("DHS") launched US-VISIT, which requires people to be

photographed and fingerprinted at ports of entry.3 This information is then checked against

databases of terrorists and other undesirables.4Unfortunately, the program tracks only those who

enter the country, not those who leave it. 5

In January 2004, domestic security officials began fingerprint scanning for arrivingvisitors.6In June 2004, DHS awarded a ten-year $10 billion contract to Accenture to help

implement the program. 7 US-VISIT, however, was fraught with problems.8A few months after

1 US- VISIT Exit: Closing Gaps in Our Security, Hearing before H Subcomm. On Border,

Maritime and Global Counterterrorism, Comm. on Homeland Security, 110th

Congo (June 28,

2007) (Testimony ofRandolph C. Hite, Director of Information Technology, Architecture and

Systems Issues and Richard M. Stana, Director ofHomeland Security and Justice Issues at the

Government Accountability Office, GAO-07-l044T at i) [herinafter US-VISIT Exit: Closing

Gaps in Our Security] (Exhibit 1).

2 Editorial, Watching the Exits, New York Times, December 23,2006 (Exhibit 2).

3 Id.

4 Id.

5 Editorial, Tracking Failure: Another 10 Years ofBorder Insecurity?, Washington Post,

December 25,2006 (Exhibit 3).

6 Rachel L. Swarns and Eric Lipton, U.S. Dropping Effort to Track ifVisitors Leave, New

York Times, December 15, 2006 (Exhibit 4).

7H. COMM. ON OVERSIGHT AND GOV'T REFORM, 11 OTH CONG., WASTE, ABUSE AND

MISMANAGEMENT IN HOMELAND SECURITY CONTRACTS at 8 (Comm. Print 2006) [hereinafter

WASTE, ABUSE AND MISMANAGEMENT] (Exhibit 5).

8 Id. at 15.



41

the contract was awarded, the Government Accountability Office claimed the program could not

"track the entry and exit of persons entering the United States at air, land and sea ports of entry,"

and "the program continues to invest hundreds ofmillions of dollars for a mission-critical

capability under circumstances that introduce considerable risk that cost-effective mission

outcomes will not be realized. ,,9

In December 2006, DHS planned to abandon monitoring the land departures of foreign

nationals. 10 Officials at DHS conceded that they lack the financing and the technology, meaning

the December 2007 goal of placing exit-monitoring systems at the 50 busiest land border

crossings would not be met. II Instead, officials claimed it would take 5 to 10 years to develop the

teclmology I2 at a cost of $3 billion,I3 a price considered prohibitive. 14 Officials also claimedimplementation would require additional employees, new buildings and roads at border crossings,

and would probably hamper the vital flow of commerce across the borders. 15 At the time,

Assistant Secretary ofHomeland Security Policy Stewart A. Baker estimated that an exit system at

the land borders would cost "tens of billions of dollars" and stated that DHS had concluded that

such a program was not currently feasible. 16

In June 2007, the Govel11ment Accountability Office found that despite the fact that one

quarter of a billion dollars has been allocated to creating an exit program, "[t]he prospects for

successfully delivering an operational exit solution are as uncertain today as they were 4 years

ago."I7 It continued, "[i]n the absence ofmore detailed plans and justification govel11ing its exit

intentions, it is unlikely that the department's latest efforts to deliver near-term air and sea exit

capabilities will produce results different from the past."I8

10 Spencer S. Hsu, U.S. Preparing to Drop Tracking of Foreigners' Departures by Land,Washington Post, December 15, 2006 (Exhibit 6).

II Swal11s and Lipton, New York Times, Dec. 15,2006.

12 Id.

13 Hsu, Washington Post, Dec. 15, 2006.

14 Swal11s and Lipton, New York Times, Dec. 15,2006.

15 Id.

16 Id.

17 US-VISIT Exit Capability (Testimony ofRandolph C. Hite and Richard M. Stana at i).

18 Id.



42

Even when US-VISIT functions correctly, it may not be an efficient or effective tool for

securing the nation's borders. The Government Accountability Office stated that DHS has yet to

demonstrate that the program is the "right solution" for immigration and border management. 19

Critics contend that US-VISIT wastes valuable resources to focus on 309 million people who

cross the nation's land borders annually.20 More than 70% of those who cross regularly are truck

drivers, workers or people going to visit family across the border and the vast majority of them are

vacationers.2IFor US-VISIT to be a viable program, its benefits must exceed its costs.

22Yet DHS

has never shown this to be the case.23

Moreover, in July 2006, DHS statistics indicated that the number of foreigners barred from

entering the United States actually dropped 32% at the nation's airports following US-VISITs

implementation.24While DHS maintained that the statistic was evidence of the program's

deterrence value, critics argued that new security measures have allowed more people to enter the

country who would have been rejected previously.25 Unions representing immigrations inspectors

claimed that a merger between the customs and immigration agencies that took place monthsbefore the launch of the new program resulted in an inspection process that failed to catch many

19 WASTE, ABUSE AND MISMANAGEMENT at 15 (citing Hearing to Examine US-VISIT,

Hearing Before S. Subcomm. on Homeland Security, Comm. on Appropriations, 109th

Congo

GAO-06-318T (January, 25 2006) (Testimony ofRandolph C. Hite, Director of Information

Technology, Architecture and Systems Issues for the Government Accountability Office)).

20 Alexandra Marks, Should U.S. Track Each Foreigner's Exit?, Christian Science

Monitor, Janumy 22,2007 (Exhibit 7).

21 Id.

22 Implementation ofus. Visit Entry/Exit Program, Hearing beforeH. Subcomm. on

Homeland Security, Comm. on Appropriations, 11Oth Congo (February 16, 2007) (Testimony of

Randolph C. Hite, Director of Infonnation Technology, Architecture and Systems Issues and

Richard M. Stana, Director ofHomeland Security and Justice Issues at the Government

Accountability Office, GAO-07-499T at 3) (Exhibit 8).

23 GOVERNMENT ACCOUNTABILITY OFFICE, U.S. VISITOR AND IMMIGRATION STATUS

PROGRAM'S LONGSTANDING LACK OF STRATEGIC DIRECTION AND MANAGEMENT CONTROLS

NEEDS TO BE ADDRESSED, GAO-07-1065 at 7 (August 2007) (Exhibit 9).

24 Brian Donohue, Updated Airport Security Finding Fewer Illegal Aliens, Star-Ledger,

July 23, 2006 (Exhibit 10).

25 Id.



43

illegal immigrants.26

In addition, the US-VISIT system has been plagued by computer security problems,

increasing the risk of computer attacks, data thefts and manipulation ofmillions of identity

records, including passport, visa and Social Security numbers, as well as the world's largest

fingerprint database.27 The vulnerabilities in the system increase the risk of cyber attacks and the

potential for losses of some of the government's most sensitive security databases.28

26 Id.

27 Spencer S. Hsu, Border Computers Vulnerable to Attack, Washington Post, August 3,

2007 (Exhibit 11).



44

Failed Program, Dishonorable Mention:

SBInet

The Secure Border Initiative that the Department ofHomeland Security ("DHS")

launched in November 2005 to reduce illegal immigration and secure the country's borders by

20101is a plime example of a failed federal program.

A central component of the initiative is SBlnet,2 a $2 billion project to create a "virtual

fence" along the border3 through an integrated network of cameras and sensors and other cutting

edge technologies that would deliver state-of-the-art border surveillance.4The two previous

federal efforts to secure the borders through technology failed due to equipment malfunctions,

power outages and millions in cost overruns and contractor overcharges.5 To date, the

experience with SBlnet has been no different, attributable in large part to DHS's decision to

contract out most of its contract planning, management and oversight functions to private

contractors.6

1 DEPARTMENT OF HOMELAND SECURITY, OFFICE OF INSPECTOR GENERAL, RISK

MANAGEMENT ADVISORY FOR THE SBINETPROGRAM INITIATION, 0IG-07-07 [hereinafter IG

ADVISORY FOR THE SBINET] at 2 (November 14, 2006) (Exhibit 1); see also Alice Lipowicz,.!2.Y

Land and Sea; Technology, Integration Fuel Secure Border Opportunities, Washington

Technology, October 15, 2007 (Exhibit 2).

2 Customs and Border Protection's Website, SBlnet, available athttp://www.cbp.gov/xp/cgov/border security/sbi/sbinet information! (Exhibit 3).- -

3 Robert Brodsky, Zack Phillips and Katherine McIntire Peters, Big Contracts, Big

Problems, Government Executive, August 15,2007 (Exhibit 4).

4 Id.; Press Release, Department ofHomeland Security: DHS Announces SBInet Award

to Boeing, September 21, 2006, available at

http://www.cbp.govIxplcgovInewsroom/newsJeleaseslarchives12006_newsJe leases/092006/09

212006.xml#contacts (Exhibit 5).

5 H. COMM. ON OVERSIGHT AND GOv'T REFORM, 110THCONG., WASTE, ABUSE AND

MISMANAGEMENT IN HOMELAND SECURITY CONTRACTS at 13-14 (Comm. Print 2006) (Exhibit

6); see also IG ADVISORY FOR THE SBINET at 2.

6 Memorandum from Majority Staff to Member of the Committee on Oversight and

Government Reform, Additional Information about SBInet Contract [hereinafter Memo from

Committee on Oversight about SBInet] (February 8,2007) (Exhibit 7).



45

In late September 2006, DHS awarded Boeing an "Indefinite Delivery Indefinite Quantity"

contract to implement SBInet.7 The contract initially guaranteed Boeing $67 million over three

years, but had a total price tag of up to $30 billion.8 Under the contract the work tasks anddeliverables were largely undefined,9leaving Boeing responsible for conceptualizing, designing,building and operating the multi-billion dollar project. 10 Eight of the 13 people involved in

developing the SBInet acquisition plan and the requirements for the contract were themselvescontractors. I I

With so much authority vested in one company and the work tasks largely undefined, theproject called for strong oversight. 12 Neveliheless, DHS embarked on the project with no plan to

adequately oversee it and no resources to effectively control costs and schedules.13

Of the 252

oversight staffpositions that the project required, only 69 were filled by the time DHS awardedthe contract to Boeing. 14 What little oversight DHS provided was done primarily bycontractors; 15 as ofDecember 2006, 60 of the 98 employees assigned by DHS to the SBInet

project office were contractors. 16 Some of these people even worked for companies that were

business partners ofBoeing, the company they were charged with overseeing.17One finn with a

potentially serious conflict of interest, Booz Allen Hamilton Inc., even boasted on its website of

7 Press Release, DHS, Sept. 21, 2006.

8 Brodsky, Phillips and Peters, Government Executive, Aug. 15,2007.

9 IG ADVISORY FOR THE SBINET at 2.

10 Memo from Committee on Oversight about SBInet.

I I Id.

13 IG ADVISORY FOR THE SBINETat 3.

14Id. at 4.


17 Hearing on the Management ofLarge Homeland Security Contracts, Hearing

Questions Management ofHomeland Security Contracts, Hearing Before H. Committee on

Oversight and Government Reform, 110Ih Congo (February 8,2007) (Opening Statement ofRep.HenryWaxman, Chainnan of the Committee on Oversight and Govenunent Refonn at 2)

(Exhibit 8).



46

its "extensive" and long-tenn relationship with Boeing. 18

As govemmental auditors predicted,19 the first phase of the contract -- a 28-mile stretch of

border in Arizona called "Project 28"-- has experienced cost over-runs and delays due to a range

of technological problems?O Nevertheless, DHS has paid Boeing $15 of the $20 million

promised by the contract for Project 28, even though it is not yet operational and needs to be

reworked, as even DHS Secretary Michael Chertoffhas acknowledged.21

Although DHS and Boeing sold a skeptical Congress on the project through claims that,

unlike its predecessors, SBInet would be easy to implement because it would use readily

available technology, this has not proven to be the case.22 DHS has pushed back the operationaldate ofProject 28 multiple times due to a host of technological problems.

23These include

difficulties integrating software,24 ground radar and cameras that cannot distinguish border

crossers from cows and bushes and blurring of the sensors caused by rain.25False alanns are

also set offby nearby traffic and planes flying overhead?6 As a result SBInet, a project that was

initially touted as low-risk because it would use readily available technology, has now been

downplayed to being merely a "prototype" facing challenges and technical difficulties because it"integrate[s] complex, off-the-shelftechnology that has never before been integrated," according

to Gregory Giddens, SBInet's executive director?7


19 Chris Strohm, Lawmakers Wary as Secure Border Initiative Nears Launch, National

Journal's CongressDaily, June 8, 2007 (Exhibit 9).

20 Chris Strohm, House Lawmakers Say Virtual Border Fence Was 'Oversold', National

Journal's CongressDaily, October 25, 2007 (Exhibit 10).

21 Nicole Gaouette, Border System Needs Work, ChertoffSays, Los Angeles Times,

September 6,2007 (Exhibit 11); JelTY Seper, Border Fence Not Yet 'Virtual'; ChertoffHolds

Project Funds, Washington Times, September 21,2007 (Exhibit 12).

22 Strohm, National Journal's CongressDaily, Oct. 25, 2007.

23 Alice Lipowicz, SBInet Struggles Through First Phase, Washington Technology,

September 3,2007 (Exhibit 13); Chris Strohm, Glitches Holding Up Tech-Based Border Security

Program, National Journal's CongressDaily, June 27,2007 (Exhibit 14).

24 Lipowicz, Washington Technology, Sept. 3, 2007.

25 Spencer S. Hsu and Dana Hedgpeth, Bush's 'Virtual Fence' Faces Trouble, Delays,

Washington Post, September 26, 2007 (Exhibit 15).

26 Lipowicz, Washington Technology, Sept. 3,2007.

27 Strohm, National Journal's CongressDaily, Oct. 25,2007.

(continued.. . )



47

For fiscal year 2008, Congress approved $1 billion for the SBInet system.28As oflate

October, the first phase of SBInet was still not operational.29

28 Lipowicz, Washington Technology, Oct. 15,2007.

29 Ben Bain, SBInetOff to Inauspicious Start, Washington Technology, October 26,2007

(Exhibit 16).



48

Agency with the Most Serious Crime Problem:

U.S. Customs and Border Protection

Customs and Border Protection ("CBP") has the dubious honor of being the agency with

the most significant crime problem in its ranks.

CBP's mission is to control and protect the nation's borders at and between the official

ports of entry. 1 The agency employs more than 41,000 employees and encompasses the

workforces ofU.S. Customs, U.S. Immigration, Animal and Plant Health Inspection Service and

the U.S. Border Patrol?

With its slogan, "Securing America's Borders," CBP characterizes its core roles as anti

telTorism and facilitating legitimate trade and travel.3CBP is responsible for overseeing the

1,900 miles of border between the United States and Mexico, the 5,000 miles ofborder with

Canada, 325 "ports of entry" between the United States and border countries and 142 CBP

Border Patrol stations with 33 checkpoints.4

On a typical day, CBP processes more than 1.1 million alTiving passengers for entry into

the country at 324 air, land and sea ports of entry. 5 CBP officers are responsible for screening all

alTiving passengers for customs and immigration violations, as well as detecting and preventing

telTorists and weapons ofmass destruction from entering the United States.6

In 2006, internal affairs investigators at DHS conducted more than 600 probes into the

criminal activities of immigration employees nationwide.7The criminal misconduct includes

1 Customs and Border Protection's Website, Protecting Our Borders Against TelTorismavailable at http://www.cbp.gov/xp/cgov/toolbox/about/missionlcbp.xml (Exhibit 1).

2 Id.

3 Id.

4 CUSTOMS AND BORDER PROTECTION, CBP: SECURING AMERICA'S BORDERS, A SALUTE

TO AMERICA'S FRONTLINE [hereinafter CBP SECURING AMERICA'S BORDERS] at 2 (September

2006) (Exhibit 2).

5 DEPARTMENT OF HOMELAND SECURITY, OFFICE OF INSPECTOR GENERAL SEMIANNUAL

REPORT TO CONGRESS at 22 (APRIL 1, 2006 - SEPTEMBER 30, 2006) (Exhibit 3); but see CBP

SECURING AMERICA'S BORDERS, which states there are 325 ports of entry.

6 Id.

7 Pauline AlTillaga, Corruption: How to Secure Homeland if Some Guardians Have

Turned?, Associated Press, September 23,2006 (Exhibit 4).



49

smuggling, bribery, sexual misconduct, assault and theft of government property.8Some of the

accused manned border crossings, others worked at airports.9

Still others worked behind desks

and were charged with taking bribes to provide naturalization papers to ineligible applicants.10

The fonner head of internal affairs at U.S. Citizenship and Immigration Services thought the

problem was so severe that he began complaining to Congress about rampant con-uption that he

claims remains unprobed. I I

Some of the most egregious cases involve Border Patrol agents. In 2006 alone, on the

California border, at least nine immigration officers were an-ested or sentenced on corruption

related charges. 12

Border Patrol Agents Alvarez andMcClaren

Border Patrol Agents Mario Alvarez and Samuel McClaren were assigned to the Mexican

Liaison Unit in the El Centro, California Border Patrol Sector, where they administered the

Guide Identification Prosecution Program ("GIPp,,).13 GIPP is a bi-national program between

the United States and Mexico, allowing the U.S. Border Patrol to work in conjunction withMexico's Office of the Attorney General to prosecute illegal immigrant smugglers. 14 Under this

program, illegal immigrant smugglers who are not prosecuted in the U.S. are deported to Mexico

for prosecution by Mexican authorities. 15

On March 7, 2006, an eight-count indictment was filed against Agents Alvarez and

McClaren charging them with conspiracy to smuggle illegal immigrants for financial gain,

conspiracy to commit bribery, bribery, false statements, smuggling illegal immigrants for

financial gain, filing false tax returns and criminal forfeiture. 16 According to the indictment, the

10Id.

I I An-illaga, Associated Press, Sept. 23, 2006.

13 U.S. v. Mario Alvarez and Samuel McClaren, Criminal No. 06cr0466 (S.D. Cal.)

Indictment, March 7,2006 [hereinafter Alvarez & McClaren Indictment] (Exhibit 5).

14 Id.

IS Id.

16 Id.



50

two men received cash bribes of approximately $300,000 from members of an illegal immigrant

smuggling organization in return for the agents' participation in illegal immigrant smugglingactivity.17 The agents allegedly unlawfully released or facilitated the release of numerous

previously apprehended illegal immigrants from the custody ofCBP and returned them to theimmigrant smuggling organization in exchange for cash payments. 18

Border Patrol Agent Elizalda

On June 2, 2006, a 15-count indictment was filed against Richard Elizalda, a CBP agent

who inspected vehicles and individuals seeking to enter the U.S. through the San Ysidro Port ofEntry in California. 19 The charges against Agent Elizalda included bribery by a public official

and bringing in illegal aliens for financial gain.2o

Agent Elizalda communicated his inspection lane assigmnent infOlmation via text

messaging to Raquel Arin and Carn1en Alvarado, leaders of an illegal immigrant smugglingoperation.

21Then, Agent Elizalda allowed immigrants to be illegally smuggled into the U.S. in

return for cash.22 During the course of the two-year conspiracy, he accepted between $70,000and $120,000 for allowing hundreds of illegal immigrants to enter the United States.

23

Agent Elizalda pleaded guilty to bribery by a public official and bringing in illegal aliens

for financial gain and was sentenced to serve 57 months imprisonment.24

17 Id.

18 Id.

19 U.S. v. Richard Elizalda, et. al., Criminal No. 06crl195 (S.D. Cal.) Indictment, June 2,

2006 (Exhibit 6).

20 Id.

21 Press Release, Office of the United States Attorney for the Southern District of

California: September 14, 2006 (Exhibit 7).

22 Id.

23 Id.

24 U.S. v. Richard Elizalda, Crim. No. 06crl195 (S.D. Cal.) Judgement, March 26,2007

(Exhibit 8).



51

Border Patrol Agent David Duque, Jr.

On September 7,2006, Border Patrol Agent David Duque, Jr., pleaded guilty to briberyand three counts of unlawfully transfen-ing identification documents.25 After an infonnant toldlaw enforcement officials that Agent Duque was involved in illegal activity involving narcotics,

illegal aliens and identification documents,26 a sting operation was put into place. Agent Duqueagreed to use his position to help the infonnant smuggle cocaine across the border and into theU.S. in return for $5,000. Eventually, under the eye of law enforcement officials, Agent Duquewaived the informant, who was transporting cocaine across the border, through the checkpoint.

27

Sh0l1ly thereafter, the infonnant met with Agent Duque and paid him $2,500.28 Agent Duquewas sentenced to 14 years imprisonment for his crimes.29

Other CBP Officials Criminally Charged

• On the California border, at least nine immigration officers were arrested or sentenced oncorruption-related charges within a twelve-month time frame.3o One ofthe convicted

Border Patrol agents was an illegal immigrant himself.31 On the Texas border, at least 10officers have been charged or sentenced in corruption schemes.32 These agents admitted

to taking money to allow drugs and immigrants to pass through the border. 33

• Lizandro Martinez had been a Customs officer for 14 years when he admitted thatbeginning in 2002 he began receiving $10,000 for each vehicle he allowed through his

25 U.S. v. David Duque, Jr., Criminal No. H-06-239 (S.D. Texas) Judgment in a Criminal

Case, Dec. 13,2006 [hereinafter U.S. v. Duque, Judgment] (Exhibit 9).

26 U.S. v. David Duque, Jr., Criminal No. H-06-463M (S.D. Texas) Criminal Complaint,Attachment B, Affidavit in Support ofCriminal Complaint (Exhibit 10).

27 Id.

29U.S. v. Duque, Judgment.

30 Arrillaga, AssociatedPress, Sept. 23, 2006.

31 Id.



52

inspection lane at the Progreso Intemational Bridge carrying marijuana into Texas.34

While temporarily disabling the license plate reader at his lane so there would be no

record, Officer Martinez allowed inmore than 13,000 pounds of drugs, sometimes in

pickup trucks "filled to the top.,,35 He pleaded guilty to drug trafficking conspiracy and

money laundering.36

• In June 2006, San Diego Customs Agent Mike Gilliland, a Customs employee since

1990, was indicted on charges of taking bribes to allow illegal immigrants through his

inspection lane at the Otay Mesa Port of Entry in Califomia.37Agent Gilliland conspired

with female smugglers to pennit caravans of cars packed with 10 or more immigrants

through his inspection lane.38Agent Gilliland admitted that he received as much as

$120,000 to help smugglers.39

He pleaded guilty and faces up to 15 years in prison.40

• On October 1, 2005, Customs and Border Protection Officer Femando Arango was

working at the Mariposa Port of Entry in Nogales, Arizona when he assisted a person he

believed to be a narcotics trafficker import into the U.S. 200 kilograms of cocaine packed

inside a recreational vehicle in retum for $50,000.41 Notably, Officer Arango had been

hired despite fleeing a drug smuggling charge 15 years earlier.42

• In July 2006, Oscar Antonio Oliiz, a Border Patrol agent in El Cajon, Califomia, was

sentenced to five years in prison for conspiring to bring at least 100 illegal immigrants

34 A Look at Corruption Cases Involving Immigration Officers, AssociatedPress,

September 24, 2006 (Exhibit 11).

35 Id.

36 Id.

37 Id.

38 AssociatedPress, Sept. 24, 2006.

39 OneIl R. Soto, At Border, Rise Seen in Corrupt Workers, San Diego Union-Tribune,

October 22, 2006 (Exhibit 12).

40 Id.

41 U.S. v. Femando Arango, Criminal No. CR 05-02033, Indictment, Oct. 26, 2005

(Exhibit 13).

42 Ralph Vatiabedian, Richard A. SelTano, and Richard Marosi, The Long Crooked Line,

Los Angeles Times, October 23,2006 (Exhibit 14).



53

into the United States.43Agent Ortiz admitted that he and fellow agent Eric Balderas

took money to transport illegal immigrants across the border, sometimes in official

Border Patrol vehicles.44During the course of the investigation it was discovered that

Agent Ortiz was an illegal immigrant himself and that in 2001, he had been detained

under suspicion of smuggling immigrants in his car. 45

• In February 2006, Fabian Solis, a Customs officer in Texas, was sentenced to three years

in prison for conspiring to smuggle undocumented immigrants into the U.S. for money.46

Between March 2003 and December 2004, charging $300 a head, Officer Solis pennitted

smugglers to transport immigrants from points in Mexico to the U.S. through his

inspection lanes at the Falcon Heights, Roma and Rio Grande international ports ofentry.47

• In January 2006, Jorge Reyeros was sentenced to 24 years in prison for conspiring with

his brother and Colombian drug traffickers to impOli cocaine.48 Mr. Reyeros' brother

was also convicted for acting as a middleman.49

• Four Border Patrol agents who worked together at the Sierra Blanca, Texas checkpoint

were sentenced to imprisonment after allowing drugs and immigrants into the country.50

Future Expansion ofCBP

Because President Bush has mandated better fortification of the nation's borders, CBP is

planning to increase the number of border agents from 13,500 to 18,000 by 2008.5lCritics

43 Associated Press, Sept. 24, 2006.

44 Id.

45 Vatiabedian, SelTano, and Marosi, Los Angeles Times, Oct. 23, 2006.

46 Associated Press, Sept. 24,2006.

47 Id.

48 Id.

49 Id.

50 Associated Press, Sept. 24, 2006.

51 James Pinkerton, Rise in Border Graft Feared, Houston Chronicle, June 17,2007

(Exhibit 15).



54

expect the level of corruption will increase with the expansion.52 Notably, before DHS was

created, the Customs Service alone had 180 intemal investigators to oversee its 22,000employees. 53

52 rd.

53 Vartabedian, Serrano and Marosi, Los Angeles Times, Oct. 23, 2006.



55

Agency with the Most Serious Crime Problem, Dishonorable Mention:

Transportation Safety Administration

As the Department ofHomeland Security ("DHS") attempted to cure the weaknesses in

the country's aviation security exposed by September 11, 2001, the Transportation Security

Administration ("TSA") was formed in November 2001, and charged with hiring tens of

thousands of employees to oversee security for the highways, railroads, buses, mass transit

systems, ports and the 450 U.S. airports. 1 The agency employs approximately 50,000 peop1e,2

including airport screeners3

On June 3,2003, TSA disclosed that it had fired 1,208 screeners at airports nationwide,

including 85 convicted felons.4Those fired included 503 screeners who, already on the job and

screening luggage, failed to notify the agency that they had been convicted of or charged with a

crime. 5 When asked by the House Appropriations Committee's Subcommittee on Homeland

Security about repmis of screeners in Los Angeles and New York airports who had criminal

records, TSA head James M. Loy suggested that the company with the contract in charge of

recruiting and assessing the applicants for airport screening jobs might have been partly to blame

for the incomplete background checks. 6

Although TSA has been conducting background checks, airpmi screeners continue to

commit crimes.7 The most recent DHS Office ofInspector General's semiannual repmi to

Congress highlights the continuing problems with TSA and the litany of crimes committed by

the agency's screeners.8One screener was sentenced to a year in jail for attempted sex with a

1 Transportation Security Administration's Website, What is TSA?, available at

http://www.tsa.gov/who_we_are/what_is_tsa.shtm (Exhibit 1).

2 Id.

3 Transportation Security Administration's Website, Welcome to WhatWe Do, available

at http://www.tsa.gov/what_we_do/index.shtm (Exhibit 2).

4 Sara Kehaulani Goo, 1,208 Airport Workers Fired After Checks, Washington Post, June

4,2003 (Exhibit 3).

5 Id.

7 Michelle Hunter, 9 Screeners Booked in Thefts from Bags, Times-Picayune, June 23,

2004 (Exhibit 4).

8 DEPARTMENT OF HOMELAND SECURITY OFFICE OF INSPECTOR GENERAL, SEMIANNUAL

REPORT TO THE CONGRESS, OCTOBER 1,2006 - MARCH 31,2007 at 30-31 (April 30,2007)

(Exhibit 5).

(continued .. . )



56

minor under 14, one was charged with identity theft, another was charged with possession ofmethamphetamine, yet another was sentenced to 48 months community custody for possessingand distributing child pornography, and there are numerous investigations into charges of theftby screeners.9

In June 2004, after a co-worker blew the whistle on fellow employees revealing that shehad witnessed some screeners taking items from luggage, nine TSA airport screeners wereatTested for pilfering property from airline passengers' luggage, accepting stolen money andbuying stolen goods from other screeners. IO At least four of the screeners were allegedly caughton surveillance cameras taking property out ofbags. II

On October 20,2005, TSA luggage screener Frank Ulerio, Jr., assigned to John F.

Kennedy International Airport, was charged with stealing $80,000 in cash from a suitcase thathad been checked and placed for inspection in a secure screening area. 12 The suitcase belongedto a 45-year old airline passenger fi.-om Astoria, Queens who was boarding a flight to Pakistan.The passenger discovered the money missing from his luggage when he disembarked in Pakistan

and reported the theft to the Port Authority ofNew York and New Jersey. 13

Similarly, on March 30, 2006, TSA workers Benny Arcano and Christopher Cadornapleaded guilty to stealing about $20,000 in American and foreign currency from luggage at theHonolulu Airport and sharing the proceeds with other screeners. 14 As part of their gleaagreement, the two agreed to cooperate in an investigation ofother TSA screeners. 5

10 Hunter, Times-Picayune, June 23, 2004.

IIId.

12 Jyotinnoy Datta, Security Agent at JFK Charged with Stealing $80,000 fromPassenger's Bag, News India, November 4,2005 (Exhibit 6).

I3Id.

14 Debra Barayuga, Airport Screeners Admit Theft, Honolulu Star, March 31, 2006(Exhibit 7).

IS Id.; United States ofAmerica v. Benny S. Arcano, Criminal No.: 06-00119 (D.Hawaii), March 30, 2006 Memorandum ofPlea Agreement at 12 (Exhibit 8); United States ofAmerica v. Christopher J. Cardorna, Criminal No.: 06-00119 (D. Hawaii), March 30, 2006Memorandum of Plea Agreement at 12 (Exhibit 9).



57

The Revolving Door:

Largest Beneficiary -- Tom Ridge

Since 2003, when the doors of the Department of Homeland Security ("DHS") first

opened, dozens of top officials have gone on to the private sector. 1 At least 90 officials fromDHS or its earlier incamation, the White House Office ofHomeland Security, are nowconsultants, executives or lobbyists for companies that collectively do billions of dollars worth of

domestic security business with DHS.2

Federal law prohibits senior officials from "any communication to or appearance" before

their fonner govemment department or agency on behalfof another for one year from the datethey leave their job.

3There is also a lifetime ban on communicating with anyone at the

department in connection with "a particular matter" in which the fonner official "participatedpersonally and substantially. ,,4

A separate law prohibits certain fonner federal employees, like program managers orcontracting officers, from accepting a job with a company they supervised for a year afterward if

a contract involved exceeded $10 million.5 Officials have been utilizing loopholes in the law to

get around these rules, like avoiding specific meetings, taking advantage of a short tenn of officeor accepting a lower pay rate in their federal job prior to leaving the agency to work for a privatefinn. 6

Within DHS's first five years, more than two-thirds of the department's most seniorexecutives have moved through its revolving door.7 In their new roles, these former department

officials command salaries that dwarf their former govemment paychecks.8

I Eric Lipton, Fonner Antiterror Officials Find Industry Pays Better, New York Times,

June 18, 2006 (Exhibit I).

2 Id.

3 18 U.S.C. § 207 (c) (1962).

4 18 U.S.C. §§ 207 (a)(1), (a)(2).

6 Editorial, Homeland Security Revolving Door, Buffalo News, June 25,2006 (Exhibit 2).

7 Lipton, New York Times, June 18,2006.



58

One of the former officials who has benefited is Tom Ridge.

On January 24,2003, Tom Ridge was sworn in as the first secretary ofDHS.9

Previously, he served as assistant district attorney in Erie County, Pennsylvania from 1980 to

1982, when he was elected to the U.S. House ofRepresentatives. 10 He was elected governor of

Pennsylvania in 1994, and was reelected four years later. I I

Mr. Ridge gave up his position as governor in 2001 to become assistant to the president

at the newly created Office ofHomeland Security.12 As the assistant to the president, Mr. Ridge

was responsible for helping to create and reorganize 22 previously existing agencies -- from

Treasury's Customs Service, to Agriculture's Plum Island Animal Disease Center, to the

previously independent Federal Emergency Management Agency (FEMA) -- into the country's

largest reorganization of government since the creation ofthe Department ofDefense, making it

the 15thcabinet department. 13 Upon its creation, DHS gained regulatory authority over matters

that included transportation security and border inspectors, giving them new homeland security

responsibilities.14Mr. Ridge became the new department's first secretary, serving in that

position until February 2005.15

Since his resignation from DHS, Mr. Ridge has consulted, directed and fonned a number

of private ventures covering domestic and international security issues. For example, only three

months after resigning from DHS, Mr. Ridge was appointed to the corporate board of Savi

Technology, a maker of frequency identification equipment that the department promoted while

Mr. Ridge was its leader. 16 He was compensated with an undisclosed number of stock options

before Savi was bought by Lockheed Martin, another large DHS domestic security contractor. 17

9 Bio ofTom Ridge, Secretary ofHomeland Security, available at

http://www.dhs.gov/xabout/history/editorial 0586.shtm [hereinafter Bio ofTom Ridge] (Exhibit3).

10 Press Release, Deloitte & Touche: Tom Ridge Named Deloitte & Touche USA Senior

Advisor, PR Newswire, November 2,2006 (Exhibit 4).

11 Id.

12 Id.

13 Dara Kay Cohen, Mariano-Florentino Cuellar and Barry R. Weingast, Ctisis

Bureaucracy: Homeland Secutity and the Political Design of Legal Mandates, 59 StanfordL.

Rev. 673, page 2 (2006) (Exhibit 5).

15 Bio ofTom Ridge.

16 Lipton, New York Times, June 18, 2006.

(continued.. .)



59

In June 2006, Mr. Ridge joined the board of directors of Iridium Satellite, a provider ofglobal satellite voice and data solutions. 18 Iridium Satellite has a fleet of 77 satellites andsupplies satellite communications to govemment agencies and corporations. 19 Iridium Satellite

also announced that it was establishing a strategic relationship with the U.S. govemment toprovide satellite data links to monitor ocean conditions?O The U.S. Coast Guard, an agency

within DHS, spent approximately $304,100 contracting with Iridium in 2006.21

Mr. Ridge became a senior advisor to Deloitte & Touche's state govemment practice inNovember 2006.22 Mr. Ridge's specific focus areas and responsibilities include "the effective

deployment of information technology to transfonn govemment, improving educationperformance and improving states' abilities to serve those most in need.,,23

On March 27, 2007, Abraxas Corporation, a risk mitigation technology company based innorthem Virginia, announced that Mr. Ridge had joined its board of advisors.

24Mr. Ridge,

however, actually had been working with the company since July 2006, prior to the release ofTrapWire, a counterterrorism software application that Abraxas has been developing to predict

I7 Id.

18 Ellen Sheng, Tom Ridge Joins Iridium Satellite's Board as a Director, Associated

Press, June 29,2006 (Exhibit 6).

19 Id.

20 Id.

21 0MB Watch, Contracts to Iridium Satellite LLC (FY 2006)

http://www.fedspending.org/fpds/fjJds.php?reptype=r&detail=-1&sortby=f&datype=T&reptype=r&database=fjJds&database=fjJds&parent_id=143 815&fiscal_year=2006&record_num=f500 (Exhibit 7).

22 Press Release, Deloitte & Touche, Nov. 2, 2006.

23

Id.

24 Press Release, Abraxas Corporation: Abraxas Corporation Announces Tom Ridge,Former Secretary ofHomeland Security, Joins Advisory Board, PR Newswire, March 27, 2007(Exhibit 8).



60

and prevent terrorist attacks?5 Since 2007, the Federal Law Enforcement Training Center, acomponent ofDHS, has paid Abraxas $237,906. 26

Mr. Ridge also provided consulting services to IDO Security, which designs, developsand markets devices for use in security screening?7 Mr. Ridge's role is to help accelerate U.S.

implementation ofIDO's "MagShoe," which is designed to detect metallic objects concealed onor in footwear and lower extremities through the use of electro-magnetic fields, without the needto remove footwear.28

Finally, on October 1,2007, Mr. Ridge announced the opening ofhis finn Ridge Global,which will assist clients with "strategic business generation, global trade security, riskassessment and contingency planning, crisis management and communications, leadershipguidance and change management, special event security and technology innovation andintegration.,,29 Ridge Global is based in Washington, D.C. and is comprised of former high-level

individuals in both government and private sector arenas, including international security andten'orism analyst Gen. Barry McCaffrey (Ret.), fonner U.S. Homeland Security Advisor Gen.

John Gordon (Ret.), fonner U.S. Coast Guard Commandant Adm. Thomas Collins (Ret.) andformer White House Cyber Security Advisor Howard Schmidt.30

Mr. Ridge is just one of a number of fonner domestic security officials who has benefitedfrom his connections to the federal agency he once supervised; there are at least 89 other fonnerDHS officials who have also moved through the agency's revolving dOOr.

31

25 Id.

26 OMB Watch, Contracts Search Results (FY 2007)

http://www.fedspending.org/tpds/fpds.php?reptype=r&detail=-1&sortby=f&state=VA&datype=T&reptype=r&database=tpds&database=tpds&parent_id=4133&fiscal_year=2007&record_num=f500 (Exhibit 9).

27 Press Release, WallStreetIdeas.com: IDa Security and Gov. Tom Ridge to Accelerate

MagShoe™ Program, M2 Presswire, September 10, 2007 (Exhibit 10).

29 Chris Togneri, Ridge Begins Global Advisory Finn, Pittsburgh Tribune-Review,


30 Press Release, Ridge Global: Tom Ridge Announces New Venture, PR Newswire,





61

Revolving Door - Dishonorable Mentions:

Mark Holman, Carl Buchholz and Ashley Davis

No lobbying finn was better connected to fonner Secretary ofDHS Tom Ridge than

Blank Rome Government Relations, the lobbying ann of the Philadelphia law and lobbying finnBlank Rome, LLP.! Three people who served as Mr. Ridge's top aides when he was the

country's top homeland security official work for the finn. 2 Mark Holman, who was Mr.Ridge's chiefof staffwhen he was governor of Pennsylvania, later worked for Mr. Ridge in theWhite House, serving as deputy assistant to the president for homeland security, before joiningBlank Rome.

3Carl M. Buchholz, who also worked in Mr. Ridge's White House office, is now

executive partner at the law finn, overseeing other lobbyists, and Ashley Davis, special assistantto Mr. Ridge in the White House, joined the fil111 as a lobbyist with responsibility for domesticsecurity issues.

4

When DHS opened its doors in 2003, Mr. Buchholz, who had taken a year's leave from

the finn to help the White House plan and create DHS, had returned to Blank Rome, taking Mr.Holman and Ms. Davis with him.5 The same year, Blank Rome signed up 18 companies as newhomeland security clients and began lobbying on homeland security for an additional six existingclients.6

Blank Rome's lobbying fees went from $1.1 million to more than $4 million between2002 and 2003, attributable, in part, to the finn's new DHS clients.? In 2004, the finn doubled its2003 revenues, bringing in more than $2.5 million from its DHS clients, and the firm earned

more than $1 million in fees from DHS clients in the first halfof2005. 8

! Philip Shenon, Fonner Domestic Security Aides Make a Quick Switch to Lobbying,The New York Times, April 29, 2003 (Exhibit 1).

2 Id.

5 Sarah Posner, Security for Sale, American Prospect, December 18, 2005 (Exhibit 2).



62

Among Blank Rome's new clients were Boeing and Bearing Point.9After hiring Blank

Rome, Bearing Point won three large DHS contracts: a $229 million contract for "eMerge2"

software, designed to integrate the financial management of all DHS components, a $12 million

contract to develop a "Transportation Worker Identification Credential" ("TWIC") to improve

security and a five-year, $30 million contract to study development of a ten-orist screening

system. 10

Within a year of signing the contracts with DHS, the TWIC and eMerge2 contracts were

drawing scrutiny and requests from members ofCongress for an investigation by the

Government Accountability Office.11

TWIC's costs hadmore than doubled to $24 million, and

the eMerge2 program was put on hold after trade magazines reported that the Coast Guard

already had a developed program for financial management that could be used department-wide,

after DHS had already spent $10 million on the eMerge2 program. 12

Finally, Mr. Holman and Ms. Davis signed up the Homeland SecUlity Corporation (HSC)

as a client. 13 HSC was stmied in 2001 by Doctor R. Crants, a Tennessee businessman who had

once been in charge of the country's largest privatized prison firm, and now has a $100 mil lioncontract with Lockheed Mmiin training thousands of security screeners throughout the nation's. 14mrpOlis.

Asa Hutchison

Former Arkansas congressman, Drug Enforcement Agency Director Asa Hutchison

served as under secretary for border and transportation security for two years from 2003 to 2005,

supervising 110,000 employees charged with guarding the nation's borders, ports and airpOlis.15

Months before he reSibY11ed fi'om his post, Mr. Hutchison began negotiating his new position with

Venable, a Washington law and lobbying firm that represents big domestic security contractors

such as Lockheed Martin. 16 He joined the finn the day after he resigned his DHS position.

I

?

9 Posner, American Prospect, Dec. 18,2005.

10 Id.

11 Id.

12 Id.

13 Posner, American Prospect, Dec. 18, 2005.

14 Id.

15 Eric Lipton, Former Antiten-or Officials Find Industry Pays Better, New York Times,

June 18,2006 (Exhibit 3).

16 Id.



63

Once employed by Venable, Mr. Hutchison began representing clients such as

Intelligenxia, a data-mining software company seeking domestic security business;

ImmuneRegen BioSciences, a pharmaceutical company that sells anti-radiation drugs; and

Global Computer Enterprises, a computer software and systems company. 18

Mr. Hutchison brought Alison R. Williams, his special assistant at DHS, with him to

Venable.19Since Ms. Williams had not been senior enough at the agency to be subject to the

one-year lobbying ban, she set up and attended a meeting without Mr. Hutchinson between

Global Computer Enterprises and Andrew B. Maner, then DHS's chief financial officer, who

was overseeing the introduction of a financial management system on behalfofDHS.20

Nine months after his departure from DHS, Mr. Hutchison moderated a private briefing

and reception for senior domestic security officials and industry representatives of Saflink, a

fingerprint and other identification technology company on the board ofwhich Mr. Hutchison

serves.21The meeting focused on two transportation security programs Saflink intended to bid

on and that Mr. Hutchison helped to create while he was still at DHS.22

Saflink's chief executiveofficer later claimed that the meeting had solidified the company's position as a leader in the

field in the minds of key government decision makers.23

Mr. Hutchison also opened Hutchison Security Strategies, a for-profit company in his

home state ofArkansas.24 He was joined in this endeavor by Betty Anderson Guhman, a fonner

DHS aide, who, like Ms. Williams, was not subject to the one-year lobbying ban.25Ms. Guhman

interacts regularly with DHS officials on behalfof the firm?6

17 Id.

18 Id.


20 Id.

22 Id.


24 Id.



64

Mr. Hutchison is also an investor in Fortress America Acquisition, a domestic security

investment firm for which he serves as an adviser.27

The company raised $42 million in 2005 by

selling stock through an initial public offering. Before the stock was sold publicly, Mr.

Hutchison bought 200,000 shares for $25,000. In 2006, the stock was worth more than $1.2

million.28

Other Former DHS Officials Who Have Moved through DHS's Revolving Door

• Michael Petrucelli, former acting director of citizenship and immigration services,

left his job with DHS in July 2005, and within months began lobbying the Coast

Guard on behalf ofhis new employer, GridPoint.29

• Victor Cerda, former acting director of Immigration and Customs Enforcement

("ICE"), departed ICE in 2005, and within months was hired by a company that is

a top ICE contractor. 30

• Carol DiBattiste, who in 2004 made $155,000 as deputy administrator at theTransportation Security Administration ("TSA"), earned more than $934,000 last

year from ChoicePoint, a DHS contractor she joined the same month she left theagency.31

• Tom Blank, once the number two official at the TSA, became vice chairman of

the lobbying firm Wexler & Walker two weeks after leaving the TSA.32Mr.

Blank's lobbying firm represents contractors including Lockheed Martin and

G e n e ~ ' a l Electric.33 These contractors pla?ned to ?id on an aiIf0rt checkpointsecunty program Blank helped create whIle workmg at TSA.-

27 Lipton, New York Times, June 18, 2006.

28 Id.

29 Id.

30 Id.

31

Lipton,New York Times,

June18,2006.

32 Id.

33 Id.

34 Id.



• C. Stewati Verdery Jr., former assistant secretary for border and transportation

policy, left his post to lead the homeland security practice at Mehlman Vogel

Castagnetti, Inc. and later founded the Monument Policy Group, working on

cargo security, immigration, international travel and technology issues, among

others.35

• Richard A. Falkenrath, fonner White House deputy homeland security adviser, is

a managing director at Civitas Group, which advises corporations and investors

on the domestic security market. 36

• Stephen E. Flynn retired as a Coast Guard commander and less than a month later

began consulting for SAIC on issues pertaining to port security and soon set up a

series ofmeetings with senior domestic security officials, including then

Secretary ofDHS, Tom Ridge.3?

• Rebecca L. Halkias served as Mr. Ridge's legislative affairs director in the White

House, left to join the lobbying firm C2Group, where she has lobbied on behalfofTyco Electronics, which was seeking to sell its wireless communications systems

. 38to government emergency response agencIes.-

35 Bio ofC. Stewmi Verdery, Jr., Partner and Founder, Monument Policy Group available

at www.monumentpolicy.com/bioslhtml (Exhibit 4).