of is cds control. rather they could result from factors imposed as such things as empd as we talked about procedures and policies and practices. so what extent are the management problems outlined in the internal memorandum attributed to barriers associated with the policies, procedures and practices, other than what you've already said about the hiring? >> sir, with respect to the procurement in the administration issues, those are areas where the alignment between iscd and the office of infrastructure protection and the office of the undersecretary needed to be better aligned with one another and the information flow needed to get from the bottom to the top so that we

were aware of those problems and could fix them. and this is, i think from my perspective the most disappointing thing about this discovery, which was epitomized by the failure of the office to report the tiering problem that we've described to you before. i have a consistent policy that i've told people that i want to hear bad news first from the people who worked for me and not from people outside. and i was extraordinarily disappointed by this and have used it as a teaching moment both with respect to iscd and ip, but with with respect to the entirety of nppd. it wasn't that i hadn't said it before, but if this kind of a problem existed, i needed to reiterate in the strongest possible language that this kind

of behavior was unacceptable. and didn't do justice to the people who worked for me and didn't allow us to fix the problems that they had. >> i appreciate that. let's hope we don't have too more teaching moments. ms. clark? >> thank you, mr. chairman. i want to go back to a little bit of what congress member marino trying to get at. and i want to ask a couple of questions about the status of the investigation regarding who leaked the memo to the news media. who is conducting the investigation, and can you explain the process? is it within dhs? >> the office of compliance and security which an office within nppd run by a certified law enforcement officer is

conducting the investigation. it was begun in the days after the leak. the process there is to go around and determine first of all who had possession of the report at one point in time. as director anderson has indicated, the two of them prepared the report. i don't believe there was anybody below them whoever had access to the report. but i'll let them speak. to that. and it went up to me and to my deputy and chief of staff. so that's where -- that's where the report appears to have been from its final drafting until i received it and it was leaked to the press. so those determine who the people who had custody of it were and determine all of them and look for corroborating information that might suggest who was responsible for that. these are never, ever easy kinds of investigations, but because of the nature of the disclosure,

while not classified information in the sense of our classification system, it was extraordinarily sensitive information. and we would like to find out who was responsible. >> so the process began shortly after the leak you stated? >> yes, ma'am. >> and it's ongoing? >> it's ongoing. so it's not one interview necessarily. >> right. >> it may be reinterviews of the same person over and over again in order to try to get the story straight. >> got it. thank you very much. i yield back the balance of my time, mr. chairman. >> the lady yields back and the chair will recognize ms. richardson for the second round. >> thank you, mr. chairman. so i understand you correctly, you have completed 55 of tier 1. you expect to be done by tier 1 some point in the next couple of months. and then you'll be starting tier

2. when do you expect to complete tier 2? >> the expectation is some time in fiscal year 13. but let me ask director anderson if she can be more specific than that. >> thank you, sir. thank you for the question. i think when we talk about completion, we have to talk about what we mean by completion in the context of the process. what we have completed so far is we have authorized or conditionally authorized 55 sight security plans. of those 55, ten have had authorization inspections conducted. the remaining 45 authorization inspections are in the queue to be conducted. we expect very soon to have completed the reviews of the actionable tier 1s. i say actionable because we have some tier 1 facilities that are not being actively reviewed because they've had a termination request that we've received from the facility or reasons like that. so we haven't continued to review the ssp because they

asked us to reevaluate their tiering. we have already begun reviewing the tier 2 site security plans, and we expect to have completed the reviews in the coming year, no later than the end of 2013, but hopefully well before. >> oblg. but the actual inspections would not take place of tier 2? probably in this year? >> we -- no. i do not believe we'll have begun the authorization inspections of the tier 2s in fq '12. >> okay. because i have a tier 2 facility that is in dire need. and i'll forward the information. but we've been patiently waiting. and i'm very concerned as this process continues. my next question has to do with your labor workforce. according to the notes and from our prior briefing that we've had, there has been a high reliance of contractors in this particular department. and the question is whether there has been an overreliance on these external folks.

to what degree do we think that it's appropriate for them to be performing the critical core functions such as training and development, sssp reviews and technical writing? would you agree that there still is -- what is the reliance, the percentage in your workforce of contractors versus internal employees? >> let me start the answer to that question because this is a problem or an issue that is in the nature of the organization of the department of homeland security. there are seven components which came as legacy organizations to the department. the headquarters almosts of the department did not pre-exist in most cases. the stand-up of the department. and so the initial stand-up of the department was heavy -- was very contractor-heavy. and as nppd is part of that headquarters element, so too

were we contractor-heavy. when i was briefed initially, the workforce of nppd was over 60% contractors. we have now gotten down to about 40% contractors in the last several years. so it is an issue, but we also have a balanced workforce initiative which requires all of our contractor hires to be reviewed not just by us, but by the office of general counsel to make sure that they are not performing inherently government work. so that's the framework that we're in. and let me let director anderson speak to the rest. >> thank you, sir. in fact, i think the undersecretary captured my thoughts exactly. when we talk about the use of contractors, although we certainly are evaluating whether or not any are doing inherently governmental work, my greater

concern as expressed in the memorandum to the undersecretary was the need for us to stabilize the program and to create a sustainable program. and with contractors coming and going, it's very difficult to do that. >> so in light of the limited amount of inspections that you've been able to complete and since currently you have approximately 108 inspectors, if you are to do new hires, is it the intention to do those from contractors or from -- to do them from federal positions? or do you intend upon increasing them at all? >> excuse me, increasing the number of inspectors? >> yes. >> as i mentioned during a previous question, we are currently evaluating what we will be able to accomplish in terms of our compliance activities with our existing workforce and projecting what additional resources -- what we will be able to accomplish with additional resources. >> mr. chairman, could i ask a

follow-up question because she didn't answer my question. okay. my question was i asked you that previous question. but my question now is once you do that review, if it calls for you needing to hire more, is it your intention to hire those from contractors or to hire them to internal training and hire into government positions? what is your intention? >> in so far as we have not yet developed a plan for additional inspector positions, i can't say categorically that a decision has been made to move in a certain direction, though i suppose it has been my anticipation that new inspector positions would be federal employees. >> and where is the bulk of your contractor positions of 40%? and that's my last question, mr. chairman. >> that's general to nppd. that's general to nppd. i don't know the specifics with her individual work. >> well, if you could just supply to the committee, because i know the chairman wants to get

on with the second panel of the workers that you have of now the 40% where they are located within the department. thank you. >> okay. i believe the gentlelady from new york wants to recapture the time that she gave back. >> just a minute of it, mr. chairman. i appreciate your indulgence. my question is directed to ms. anderson and mr. wulf. we've had a lot of discussion what went wrong. i want to focus in on the employees for a minute, because certainly with the investigations going on, with all that has been uncovered, there has to be some level of disruption, some level of not knowing where they stand. what is the relationship now with the employees? how were the employees getting through this? what types of things have been put in place to give some level

of reassurance to people that first of all they're valued, but second of all that things will work out in the end. and have there been conversations with their union? if you would share that with us, thank you. >> thank you for the question. i actually am really happy you asked a question about the workforce because there seems to be a perception that there is some question about the capabilities of the iscd team. and while it's true that i have identified instances where we don't have a good person position fit, i can honestly say i've never worked with a more talented, hard-working group of folks. and i think that they are the key to our success. and i'm very concerned about the impact of recent activities on their morale and on the confidence that they have in our program and in our way forward.

so you are correct in suggesting that there is a certain amount of angst and there have been some dips in morale since then. and certainly it's been a distraction from our mission activities. we're doing as much as we can to reassure them. we're being as transparent as we can with them at every stage of the process. when the fox news article was leaked, it came out as a result of the leak, i sat down with all of my folks and talked through it, and talked about it, and linked it back to previous discussions we had had about our challenges. been very open about that. we have, again, we've set up routine communications with our folks. we've shared with them the action plan, and we've involved them in the implementation of the action plan. we've engaged them at every level and to every extent we can. and certainly our engagement has involved the union. we've met with mr. wright, and we have to the extent that we

can, involved the inspectors in all of these discussions and have been sharing this information with them, reassuring them that they are an important part of our team. they are the key to the success of this program, and that we need to move forward with them. and we're taking every step we can to involve them in that process and to be transparent about it. >> okay. the gentle lady yields back. i want to thank the witnesses for their valuable testimony on this first panel and the members for the questions. members may have some additional questions for the witnesses. and we ask that you would respond to these in a timely fashion in writing. and with that, i would be pleased to dismiss this panel, and we'll on to panel 2. thank you very much. >> thank you, sir. >> thank you.

>> we have a distinguished panel of three witnesses for our second panel, mr. bill allmond is the vice president of government and public relations for the society of chemical manufacturers and affiliates. a position he has held since 2007. the society is the united states' leading trade association representing specialty batch chemical manufacturing. and prior to joining the society, mr. allmond served for

ten years with director of regulatory and public affairs at the national association of chemical distributors. mr. timothy scott is the chief security officer and corporate director of emergency services and security for the dow chemical company, a company he has served with since 1979. in his current role he leads dow's emerging service and securing global organizations at over 200 locations around the world. and mr. david wright is the president of the american federation of government employees local 918. again, his career as a federal protective service office in 1986. since that time has been promoted to the rank of sort inspector and has served as president of the local 918 since 2006. we thank all of you for being here. we of course will include your written testimonies in their entirety in the record, and we'd ask that you confine your statements to a summary of five minutes.

and we'll proceed from my left to my right with mr. allmond first. >> good afternoon, chairman long green. >> ranking member clark. i'm vice president of the public and relations at the society of chemical manufacturers and affiliates. i'll pleased to provide this testimony regarding the problems of and the progress made by the chemical facility anti-terrorism standards. nearly six years ago, congress enacted a comprehensive security chemical program known as cfats. thanks to this bipartisan effort, the regulated facilities are well down the road in implementing this important program. to great extent, dhs's rules implement the mandate by congress in 2006. regrettably, however, dhs stumbled in implementing the roles by failing to put in place among other things basic management practices or effective leadership. the 2011 internal memorandum from the infrastructure security compliance division is sobering. it demonstrates that a government agency without proper

management can take an effective regulatory framework and then mess it up. however, as this subcommittee assesses the department's failures with the cfats programs, we must bear in mind that it is processes and not the personnel itself. it is a success despite the internal management chances. we emphasize four key facts. first, this demanding program is now required in over 4,000 chemical facilities nationwide to develop and deploy security enhancements. covered facilities have invested billions of dollars in security upgrades to meet cfats' requirements. the majority members are small manufacturers have invested in estimated $515 million in security measures. hundreds of other regulated facilities that have not already done so have made pro activity investments in security measures in anticipation of their cfats compliance regulations. second and equally important,

cfats has led over 2,000 facilities to voluntarily take steps to reduce their risk profile that they no longer warrant regulation. thus, as predicted, cfats is driving facilities to reduce inherent hazards where in their expert judgment doing so is in fact safer, does not transfer risk to some other point in the supply chain, and makes economic sense. third, congress wisely drafted the cfats statute to impose security performance standards that are more demanding of higher risk facilities and less demanding of lower risk facilities. this performance-based approach protects facilities against attack without impairing the industry's ability to remain innovative and to maintain some of the nation's highest paying manufacturing jobs. finally, the standards have teeth. the secretary has the ability to levy significant fines on a facility for noncompliance, and can even shut down a facility. both the law and the rules are fundamentally sound and do not require replacement. the regulatory program they create is not inherently impossible for a government agency to implement, but it does require knowledgeable people to review ssps and inspect

facilities, and also the courage to make decisions based on judgment. unfortunately, the memorandum indicated that iscd staff largely does not have adequate skills, in part because higher levels of dhs prevented iscd from being able to hire sufficiently expert personnel. staff have also been discouraged from using their judgment. on the other hand, no one should dispute the fact that despite the challenges of cfats implementation, the two main alternatives would be far force. wants an absence of security chemical regulations nor a prescriptive program that would drive operations overseas due to burdens such as mandatory incorporation for inherently safer technology. they're confident that the new leadership of penny anderson and david wulf is committed to improving the nations and the programs' implementation. thanks to internal assessment, they have a greatest understanding of the challenges facing them in a robust action plan. the following are socma's

recommendation for getting back on track. one, congress should encourage iscd to collaborate more with industry where the greatest security expertise lies. iscd should and can be more transparent about its operations, also ensuring background check and credential programs needs to be a top priority. also man entertaining inherently safer technology into the cfats program is the last thing they should or could try to implement. also, iscd needs to retrain and as necessary replace much of its staff. and lastly, congress needs to provide certainty for the regulator and regulated alike by approving a multi-year cfats authorization. it may appear counterintuitive for a long-term authorization of a program troubled by agency mismanagement, but the key to fixing cfats is a vigorous oversight, not budget cuts or a complete reset. we appreciate this opportunity to testify today, and i look forward to your questions. >> thank you very much for your

testimony. mr. scott? >> chairman long green, ranking member clarke, my name is tim scott and i'm the chief security officer for the dow chemical company. speaking today on behalf of the dow and the american chemistry council, the nation's largest trade representative. i'll focus on four points today. first, there are clearly concerns on all sides about the lack of significant progress on the implementation of the chemical facility in our terrorism standards. we see these as management issues and not as issues with the cfats concept. second, acc member companies implemented the responsible care code for security in 2002 and have voluntarily and significantly improved the industry's security over the past decades, spending nearly $10 billion on security enhancements. third, cfats has achieved some progress towards improving the security of our nation's chemical sector. the cfats concept and the design are good.

and fourth, we now have an excellent opportunity to correct the course and complete the critical task before us. the lack of significant progress on cfats, along with the apparent internal issues at dhs are disheartening, but not a cause for altering our course and nullifying the efforts and progress that have been made. the open and collaborative partnership that made cfats successful in the beginning clearly has declined, and the lack of mission clarity and leadership is apparent. this is not a condemnation of everyone and everything in dhs. this is a breakdown in management, communication, and collaboration. making a relatively straight forward program overly complex and burdensome. this is a wake-up call, not a death knell. we now have the catalyst for change and an excellent opportunity to correct the course and achieve success. the concept in basic design of cfats are solid. cfats has potential and has sparked some improvements in security. it can be developed in an efficient and productive process to improve the security of our nation's critical chemistry.

industry has dedicated billions of dollars and thousands of hours working with dhs at every level. dow alone has spent about $250 million on security. we have completed vulnerability assessments, audits, and as needed security upgrades at our facilities worldwide, not just those regulated under cfats in the u.s. from the beginning and to this day dow has taken a leadership position in chemical security. for both our site security and our distribution system security processes. the cfats concept is good. risk-based and focused on the right priorities. the cfats design is good, allowing regulated companies to apply customized security systems and processes to each unique site and situation, to comply with dhs's established performance standard and subject to dhs approval. the issues with cfats are in the details, and those can be fixed if we work as a collaborative team with a common goal.

we need to fix what is wrong, not start over from square one, and we don't need to make the process more complex. there are many effective and efficient operations to achieve this successful implementation of cfats and the ultimate goal of reducing the vulnerability of the chemistry, our communities and our country. we can get site security plans approved. we can get the highest risk sites audited. we can get agreements and plans in place to reduce vulnerabilities and comply with the risk-based performance standards. and we can make this happen within a very reasonable period of time. included with my written statement are potential solutions to some issues of most concern -- the personnel surety process, site security approval, transparency on the risk assessment process, and reasonable alternatives that would expedite the process. this will be a difficult task, but not an impossible mission. cfats can work as conceived. implementation will take leadership, communication, and collaboration well beyond what we have seen recently. dhs, industry, and this subcommittee can make this work.

acc has consistently taken a proactive approach to security, and we have work in good faith with dhs from the beginning. our members have aggressively stepped out to make significant investments in security. industry does not want to waste this effort by starting over. acc is ready and willing to take on the challenge as an equal stakeholder to finish the task and fully implement cfats. we need dhs on the team to meet this challenge with the common administration and goal. acc asks that you simply address the internal issues in dhs, and that you reauthorize the cfats legislation so that we can continue the efforts that are already under way. thank you. >> thank you very much, mr. scott. now mr. wright, recognized for your statement. >> chairman lundgren, ranking member clark, and member of the subcommittee, my name is david wright. i'm president of afg local 918, the nppd union. i'm also an inspect were the federal protective service, a

component of nppd. i'm here to discuss our commitment to this critical homeland security administration and to work with mppd as i have repeatedly expressed to senior agency leaders. i've not been given the opportunity to review the internal report written by director anderson that generated this hearing. my knowledge of the contents of the internal report is mostly limited to what i've read in the fox news articles of december 2011. my perception is that these are the types of issues that can be addressed in a good labor management relationship. policies and procedures can only be addressed effectively by taking into account the perspective of the field level workforce that accomplishes the work on a daily basis. ag -- the afge local 918 local labor management relationship with nppd is mostly cooperative and effective. in direct conflict with what has been reported in the media as a

result of the late internal report. the conflict ranges from outright exaggeration of the vehicle mileage log issue to the implied agency inability to implement policy and procedure due to a union workforce. i've consistently pledged the union's cooperation at many nppd national level meetings, to include one meeting with director anderson in september 2011. at all meets, i've indicated the union's readiness to remove any perceived union roadblocks in support of the cfats program. on january 9th, 2012, after the negative news article, i met with director anderson in the presence of assistant secretaried to kyle and senior union leadership. once again i reiterated that successful accomplishment of the cfats mission is the union's first priority. and that while we would expect an opportunity to give meaningful input, there would be

no union roadblock to implementation of critical homeland security policies and procedures. i strongly reject the assertion that the workforce is unqualified. most have extensive backgrounds in law enforcement, military, regulatory authority, and academics. the chemical security workforce is dedicated and all came on board with the promise of building a new agency dedicated to closing a potential gap in the nation's homeland security network, the storage of mass amounts of hazardous chemicals at chemical facilities. in closing, i have been asked by the workforce to advise you and the american public that the nppd chemical security inspector workforce is qualified, willing, ready, and able to accomplish the critical task of assessing security at the nation's chemical facilities. afg local 918 is repeatedly declared its cooperation to the agency