are evidence that we've got to go back to ground zero? that in fact, the program has failed. that the fact that you've had these difficulties are respects to the compliance phase is an indication of lack of foundation in the program itself? >> short answer to that. i would say two things. the first is that as indicated by the chart up on the screen and i realize it's a little busy, if you were to look at the 12 steps that are in that chart, reading from left to right, top to bottom, we are in the tenth step of a 12-step process at this point this time. so, my first point would be we've come a long way from the very beginning of the program in terms of the things that we've

accompli accomplished. as we have gotten to the compliance stage, excuse me, as we've gotten to the site security plan authorization stage, we come to the realization through some, a number of difficult steps. and the result of the report that mrs. anderson and mr. wulf provided us, that we need to make sure that we have all of the people and items in place that will allow us to execute the program successfully in the final stages. so my first point is i think we've come a long way. we clearly still have challenges. the second point is that as long as the program continues to be operate on an annual authorization basis since the original authorization, it leaves a degree of uncertainty as to the long-term status and i

believe that we in our industry partners will be on a much stronger footing if you all indicate to us that you of belief in the program as we do and want to see it go forward. having said that, we obviously you you a great deal of information about the progress we make with respect to the plan of action and would hope that in the oversight function, we would be able to provide that. thank you. >> thank you. my time has expired. mrs. clark is recognized for five minutes. >> under secretary beers, your office recently provided the subcommittee with a memorandum entitled challenges facing iscd and the path forward, which identified challenges and as it continues implementing the cfats and programs including those

related to human capital management, strategic planning, procurement and basic program administration. many of the challenges identified appear to be long standing issues that have hindered dwmt development of cfats. when you testifies before the house committee in march of 2011, you gave no indication there were significant problems with the program's progress. when did npd management first become aware of problems with the cfats program and what problems were brought to its attention at this time? >> as we have briefed this committee and others at the point in time that the -- that i

asked for this report, there have been three different pieces of information or problems that have come to my attention, which the committee's have all been briefed on. the first was related to locality pay. the second was related to the slowness of the authorization of the site security plans and the third was related to the tiering mistake that occurred within the program. those three items represented and the last item came to my attention in june of last year. those three items and a report that i together with assistant secretary kyl had commissioned in december of 2010, formed the basis of wanting to make sure that we had a real thorough scrub of the program and that's what resulted in the report.

>> okay, challenges described in the iscd memorandum raised questions about whether iscd is positioned to make progress, implementing the cfats program, especially over the short-term. what barrier does iscd face in overcoming the challenges? what can npd do to help overcome these challenges? what actions can the subcommittee and ultimately, the congress take to help nppd and iscd overcome these challenges and does nppd intend to conduct a study to determine the extent to which the challenges outlined in the iscd internal memorandum extend to other nppd components? >> the nppd front office as well as the infrastructure protection

front office stand fully behind the iscd director and deputy director. we have provided them with human kcap tall support in order to t be able to realign the positions and the people in the organization to ensure the best possible match of requirements and qualifications. we have overcome the restrictions that existed from dhs overall about whether or not there could be training officers hired within the office. we have regular meetings with the leadership of the office in order to ascertain both where progress is on the plan of action and whether there are obstacles identified that leadership in nppd can overcome and if necessary, go to the secretary of homeland security to overcome those obstacles

should they exist. >> in light of the detailed failings of the program and especially in light of the managerial deficiencies, is it your opinion that the program should be reauthorized carte blanche for seven years without any recommendations from the authorizing committee and if so, why? >> it is my hope that the committee will authorize the program for the full seven years in order to create stability with the program. angel and i believe thwe can me that you should obviously hold us responsible for. and i think that that's a recipe for going forward. we have two very good people running the program now. we have the clear intent on the part of leadership to give them our full support. not that we didn't before, but didn't realize how much support was necessary, so i think that

what you see here is committed leadership that's ready to go forward and we would hope you would be prepared to authorize the program for the full seven years. >> mr. mahan from pennsylvania's recognized for five minutes. >> thank you, mr. chairman and thank you for your presence here today. one of the big concerns of course is not just your work in trying to internally resolve these issues, but the fact that there are businesses and others who are out waiting for the ultimate determination and at time, economic challenge that continues to be a concern. can you talk to me a little bit about the tiering formulas that are taking place and the process by which the tiers were identified and how it resolved itself at least at the first

level? >> sir, initially, we identified chemicals of interest in levels of hold that is sites might have to determine whether or not a second look was required. that information was provided as i indicated in my opening statement. 40,000 facilities were identified. >> self-report ed? >>. >> self-reported. >> were there any random checks to make sure there was accuracy? >> the check was the second tiering process, sir, which was a much more details, excuse me, a second assessment, which was a much more detailed site vulnerability assessment provided by those companies which reduce the 40,000 facilities to 4,000 plus facilities. so, we had a pretty clear indication there that we were getting to the heart of the high

risk chemical facilities who were then put into tiers depending upon the level of their holdings and the vel nerability. of those holdings. that provided an ability to look at each of them against a risk calculus that suggested how great the risk was with respect. >> but at some point in the program, there were some flaws in that process. can you identify those flaws and what we did to correct them? >> yes, sir. so, what we discovered in the tiering process was that the information that was used to put companies in particular tiers, the original tiering was done with, with unclassified dummy information, in a sense that it wasn't what we were going to use, but it gave us enough of a sense to get within the ballpark of what the risk factor was.

when we did the final tiering, that information did not get substituted for with the information which was classified which was a narrower parameter of how high the risk was. parameter in the sense of how many individuals would be affected by a chemical release in the vicinity of the plant. and so as a result of that, we discovered that we had mistiered a number of facilities and that those -- >> debt rement of the facilities in a sense some were higher risk? >> all of the tiering result of that either caused a reduction or they stayed in the same tier. no company that was mistiered went to a higher tier level as a result of that.

>> did any of these companies challenge their tier iing? >> we -- with respect to the retiering, no. with respect to tiering as a general proposition, companies change their holdings over time. they have new procedures that they put in place. the program allows them to come in and resubmit a screen and ask as to whether or not that would adjust -- >> then that could be done in an efficient fashion -- as many of the -- >> at any time. >> i want to jump to one last question in the time that i have. mrs. anderson, at one point in time, you had talked a little bit about the management and the culture where there were some senior officials with ethical and other kinds of performance issues that had been raised and that had not been checked upon or had gone unchecked.

can you elaborate on that and what has been done to try to alleviate that issue? >> yes, sir, and thank you for the question. i'm not sure that we identified any ethical issues per se from those you're referring to, but certainly cultural challenges that be something we've encountered and are working to overcome. i think that again, it's a function of putting together a large group of people very quickly. they all come from different places, have different life experiences and we're squashing them together and asking them to work together as a team and because of those experience, they have different outlooks on where we need to go and how we need to get there and sometimes, some of the nice things fall by the wayside in the rush to do that, and so what we are doing is everything that we can to create a cohesive culture to bring everyone into the team as an engaged, contributing member

of the team and to address the concerns they have with regard to consistency, transparency and fairness. we've done a number of things in regard. i have a monthly all hands meeting, town halls, if you will, both electronic, over the telephone with the field folks and in person with our headquarters folks. we've invigorated our newsletter. we're developing a share page. an online page where we can share information with each other. we have an open door policy. we have a series of e-mails, we're sharing information about the status of thipgs, so we're doing everything that we can to be as transparent as makes sense as we can f. to be as consistent and fair and to let all the members of our team know what we're doing, why, the direction we're going and to solisit their engage in the process. >> thank you. >> chair will now recognize mrs.

richardson for five minutes. >> thank you, mr. chairman. according to the notes that i have here, dhs began inspections of tier one facilities in february of 2010. by september of 2011, you had performed only nine authorized inspections and as of january 23rd, dhs had only completed 53. are those correct numbers? >> 55 now ma'am. >> out of how many that needed to be done? >> the overall number -- >> your mike is not on. >> excuse me. the overall number that would need to be done is about 4500. the tier ones are about 110, 111. >> so, of the 55, do those all come out of tier one? >> yes. >> o a. in light of that, how do you, how are you planning on being able to complete all of these if

we've only done 55 and 4,500 need to be done? >> the current plan is that we will finish the site security plan reviews for the tier one facilities in the next several months and then move on to the tier two facilities in the remainder of fiscal year '12. >> so about what time do you think you'll start tier two? >> sometime this summer, roughly. >> and will the tier one facilities be required to submit new i think their called ssps? even though the inspections are just being completed now? >> the plan is that the plans that we have now will be reviewed and if they are authorized, then we would go out

with an authorization inspection to make sure that the plan as submitted represents the reasonable approach to the facts on the ground. the inspectors will do that. if the inspectors then feel that that is true, then the plans would be approved. so, what we're talking about here is as the sight security plans are authorized, then we have authorization inspectors, where our inspectors go out and look at each of those sites. so that's the next of the last step and then it's approval an compliance -- >> i'm sorry, sir. i've only got two minutes and 16 seconds. it's my understanding that facilities resubmit their plan for tier one or tier two facilities. is that correct?

>> yes, ma'am, the regulation does suggest that, but it also offers some flexibility in how we implement that. >> since we're late in conducting these, are you still going to be requiring these companies to submit them on the two-year cycle or are you going to be making an adjustment? >> sorry. yes, we are right now focuses as a matter of priority in clearing the cue of plans that we have. at this point, we do not anticipate questioning ssps we've already authorized. >> for their first two-year submission. >> yes, ma'am, that's accurate. >> information memorandum also raszs concerns that the compliant has not been defined. it is quite possible that the

compliance and inspection will yield different results than the authorization inspection. this potentially would allow for disparity in results. have you implemented changes to address this? >> we have a process underway to ensure that to the extent possible that doesn't happen, but let me ask director anderson. >> thank you for the question. in fact, while it is true, we have not yet completed our policies and procedures in terms of the way forward for a compliance inspection, what we've done held off on conducting further aught thorizn inspections pending that information so that we can make sure that our authorization inspections are consistent and appropriate as they relate to our compliance inspections. we want to move together. >> all right. and i've got ten seconds now left. according to the memorandum, it states that you have

approximately 108 inspectors and they can only inspect 10 to 15% of the facilities. is is that correct? >> we're currently currently ev our workforce in terms of what it takes to do an inspection. and when we've fully conceptualized what an inspection is and what it takes to do that, then we'll be projecting our capabilities with our existing and any projected workforce. >> mr. chairman, my time is expired, but have i one more question. so before we release the panel if you could come back to me. >> yes. >> thank you, sir. >> mr. marino is recognized for five minutes. >> thank you, chairman. thank you, folks, for being here. i'm not sure who to direct this question to, but i'm going to start with mr. beers, and then perhaps both or one of the other two can add something to this.

the flaws in the program according to some information that you submitted to us in preparation for today, which i commend you on the way it was put together, did not appear overnight. and how did it happen that the information in the leaked memo made it to the media before being shared with congress or this committee? >> sir, what happened with the arrival of the report from director anderson and deputy director wulf was that we had not done a thorough review to ensure that there weren't more issues and questions and work proposals associated with that. and we were caught in a process before we were able to come to you and discuss this.

>> how many individuals had access to this information? >> to this information? >> yeah, to the report that was leaked. >> i can tell you that within the office of the undersecretary, i believe that number is three -- myself, my deputy, and the chief of staff. i'd have to ask ms. anderson how many people had access in her office. and my understanding is that only two people in the office of the assistant secretary had it. but i'm not sure about it. and penny may be able to shed more life on that. >> please. >> thank you for the question, sir. there were in fact seven hardcopies made of the final report, two belonging to deputy director wulf and myself, and the remainder moving forward the our leadership. there were other individuals that were involved in the transfer of those documents, but only seven hardcopies were made.

>> so are you saying that only seven individuals had access to that, or did they pass that on to someone else? the seven hardcopies. >> i can't speak -- sir, i can't speak to whether or not other folks who have received copies. >> so we're looking at anywhere from five to maybe 13 or 14 people had access to this. were any of these people interviewed subsequent to the release of the newspaper? >> there is an ongoing review of that, sir. >> okay. then i will not delve into questioning any further on this, but perhaps at some time we can get more of an in-depth explanation, being from law enforcement i understand that clearly. ms. anderson, i probably at least inferred a response incorrectly. one of my colleagues asked where we were headed with the process,

and you referred to there were cultural challenges. can you explain to me what you meant by cultural challenges, and did it have anything to do with the leak of the memo to the media? >> sir, thank you for the question. when i answered the question about where we were headed, i believe i was answering a question that was specifically directed toward our cultural and i believe the word ethical was used, our issues. >> yes. >> we're headed in a lot of directions depending on the challenge. >> okay. let me narrow my question more. so were you talking thereby is a challenge, a cultural challenge as far as informs being leaked, or what information can be shared or what information to be contained? because in my experience, at least in the eight, nine years i've been with the federal government as u.s. attorney now in congress, we all pretty much take an oath. and there is an understanding of

what information stays within an agency. and actually, i'm sure you would agree with me that no one other than designated individuals should be speaking with the media. obviously someone out there wants to make a name for themselves or at least read an article or hear of an article that were associated with. but please, can you elaborate on that? >> yes, sir. well, i share your disappointment in the leak of the report. i can't speak to the motivations of the person who leaked it because we're at this point, we don't know who did leak it. >> we did pretty much know what the motivations are when something like this occurs. i'm not holding you folks personally responsible. i am concerned about, as you say, the cultural aspect of this. what training has to take place before someone gets the point that this should not be done? >> i don't believe that the cultural challenges that identified in the memorandum can be attributed to the motivations

of the person leaking the report. >> thank you. i see my time has run out. i yield. >> we'll do a quick second round here since we only got four of us here. yield myself the first five minutes. this is both to ms. anderson and mr. wulf, because mr. wulf, you've gotten a pass here today. so we're going to hear from you a little bit. in the memorandum there is a section which talks about inadequate training capability. and the clause due to restrictions placed upon our hiring, quote/unquote, the division has not been able to hire personnel with the necessary level of knowledge, skills and abilities needed to appropriately achieve our mission. one example is training. what restrictions placed upon hiring are you referring to? >> that -- that passage of the

report referred to a policy and the undersecretary may be in a better position to speak at greater length about it. but a policy that is no longer in existence within an nppd that i believe was -- that i believe was in place to try to centralize the training function within the directorate. so that was a policy that at the time precluded our division from hiring into the division specifically individuals with training expertise, curriculum development, and that sort of expertise. that policy is no longer in existence, and we're moving forward to hire folks with the appropriate expertise. >> so you're talk about you weren't able to hire people who fully knew how to train people? is that what you're saying? >> we did not have in our training section individuals who had experience in the training discipline. that's accurate. we had folks --

>> and that's been corrected? >> that policy is no longer a policy, and i'm told it was a departmental policy, not an npd policy. >> mr. beers, according to our appropriation staff, you had a $25 million budget carry-overfor this, and even your fiscal cut of 14 million, that is still $11 million that needs to be spent. yet in the memo there is the citation of budget constraints as an obstacle to hiring and training personnel. what are those budget constraints? >> sir, that the budget constraints to hiring and training personnel are in part what mr. wulf was alluding to, that we couldn't use the money because the policy which was a centralizing policy for dhs didn't allow that to happen.

some of the other carryovers are a result of the program wasn't moving as evidenced by the slowness of the authorization of the sight security plans as rapidly as we had anticipated when we requested the money. but let me turn to director anderson to elaborate further. >> i concur. >> okay. so you got a $25 million budget carryover, a cut of $14 million. that's still $11 million. so you're not saying they're constraints in expending those funds for this purpose. that right? >> at this time i don't believe we have any. >> mr. beers, the is cds internal memorandum implies that some of the challenges involve human capital management procurement and program administration t