to the i.g., t.s.a. has not issued adequate policies to airports for carrying out maintenance responsibility. administrator neffenger, i want to challenge you to address these issues with the technologies used in the airport environment. as you report this issue consider both the current threat picture and the emerging threats. keep in mind that they are small and minority businesses in this country with exceptional technologies that could be beneficial to t.s.a. and improve efficiencies at the airport. and i highlight that because we've gotten accustomed to using three or four vendors. and every time we've come before this committee, somebody would say, well, they are the only someone with capacity to do what we need. my question is, how hard have we looked and how cooperative have we been with other people who are in this arena?

so i look forward to working with you on that. former administrator pistol implemented a risk-based approach to passenger screening. however, both the government accountability office and the office of inspector general have identified shortcomings with this approach. especially when it comes to granting passengers expedited screening through managed inclusion. significant shortcommings that i've observed with -- with managed inclusion include problems with the model used to identify passengers for this managed inclusion program. and the usefulness of having behavior that takes an officer to implement the managed inclusion program. and the reason i say that, mr. director, is we have been asking for whatever science that's available relative to

behavior detection officers and how that falls into this layered system of protection and unfortunately we've yet to get that report back from a scientific standpoint. this past monday legislation introduced by subcommittee chairman katko ranking member rice and me, directs t.s.a. to limit expedited airport screening to participants of the precheck program and other known low risk passengers. our bill passed the house. last week, three new measures were approved by the transportation security subcommittee. as we consider the three bills, we know that there are some issues that remain for the full committee's consideration. for instance, significant concerns have been raised by a diverse group of labor stakeholders for the measure aimed to address the alarming

reports of multiple security breaches caused by employees exploiting security gaps and abusing the credentialaling privileges. as we close these gaps we must ensure that the men and women whose job is to protect the flying public are not unduly impacted. as t.s.a. legislation works its way through the legislative process, we would welcome constructive engagement from t.s.a. administrator neffenger again, not only do i look forward to hearing from you on how you plan to address these issues, but i also want to hear from you on how you plan to address the most valuable asset within t.s.a. which is its work force. t.s.a. is plagued with very low morale and an extremely high turnover rate. employees cite low pay and barriers to advancement as some of their main issues. additionally the fellow air marshall service has not had a

class in nearly four years. again, i want to know your perspective on this. and what steps you plan to take to improve employee morale and if you plan on employing more federal air marshals. t.s.a. plays a vital part in protecting america. we can work together to help solve its problems. i look forward to this committee working with you as the new administrator and n-a bipartisan fashion. to help solve t.s.a.'s problems. and to improve. with that i yield back. chairman mccaul: i thank the ranking member. other members are reminded that opening statements may be submitted for the record. we are pleased to have the new administrator for the t.s.a., mr. peter neffenger serves as affers the sixth administrator of the t.s.a. where he leads security operations at more than 450 airports within the united states. and a work force of almost 60,000 employees. prior to joining t.s.a.,

administrator neffenger served as the 29th vice commandant of the united states coast guard. and the coast guard's deputy commandant for operations. we want to thank you for being here today. and your debut performance before this committee. the chair now recognizes admiral neffenger. administrator neffenger: thank you. i have written comments for the record and just a brief opening statement. good morning chairman mccall and rank ranking member thompson and the other members of the committee. thank you for letting me testify in my new role as administrator of the t.s.a. i'm pleased to share my vision and my thoughts about the future of t.s.a. let me begin by saying that t.s.a. is fundamentally a counterterrorism organization. our job is to deter, detect, and disrupt those who would harm our system of transportation across the country. especially the aviation sector. we protect legitimate trade and travel. we have a no fail mission. one for which the consequences of a successful attack

overwhelm the risk equation and for we must ensure we deliver mission success. this critically important mission is my highest priority. as i appear before this committee this morning, i'm in the middle of my now fourth week on the job. although brief, i've been thoroughly impressed with the professionals who occupy our ranks and i want to thank mr. thompson for noting those. officers and employees who are sworn an oath to serve their nation in the mission are critically important mission that encounters more than two million travelers a day in the aviation sector alone. i've also had some time to become more familiar with the challenges facing the agency and the development of of a set of priorities. my highest priority is to ensure solutions to the recent covert testing failures. overall, there are several critical elements that are essential to improving screening operations. first we must ensure the appropriate measures of effectiveness are in place to drive in institutional focus on our primary mission. but we measure is what our employees will pay attention to. so it's imperative that we get our metrics right. second, we must employ a culture of operational evolution.

one that constantly reassesses our assumptions, our plans and our processes. and must be able to rapidly field new concepts of operation and new technologies. finally, delivering an effective system and earning the confidence of the traveling public will only come through competence disciplined performance and professionalism. i've conveyed these standards to our work force. and i commit to you that i will relentlessly pursue these objectives. i take on this challenge with the leadership perspective that has been central to my approach, my entire career. a well defined and clear statement of mission, clear and unequivocal standards of performance, training, and resourcing. that enable the work force to achieve success, and an unwavering pursuit of accountability. i will set expectations of strong values for the work force and i will lead with t.s.a.'s core values of integrity, innovation and team spirit at my core. since its creation after the attacks of september 11, 2001, t.s.a. has played an invaluable role in protecting the traveling public. however, nearly 14 years later,

we continue to face a range of threats from terrorists who are inspired by messages of hatred and violence. and a number of terrorist groups remain intent on striking the united states in the west. and we know that some of them are specifically focused on aviation. and more troubling today the threat is more decentralized and more diffuse and more complex than ever before. these per sevent threats are t.s.a.'s most pressing challenge. ouren miss will continually adapt and so must we. we must leverage intelligence, technology, the experience of our frontline operators, and our partners in federal state and local governments in the private sector to employ effective measures. we must pay particular attention to the insider threat. a second challenge facing t.s.a. is retention, training, and accountability. frontline managers and screeners are critical to our success, agency culture, morale, and effectiveness are a direct result of career long development, recognition, and accountability. in the traveling public expects to be treated with dignity and respect. i will pay close attention to training and work force

development to include how to leverage and expand the t.s.a. academy to develop leaders and improve individual performance and instill a greater sense of pride in our agency, its mission, and its values. a third organizational challenge for t.s.a. is to ensure it is continually fielding the tools and equipment the work force needs today while envisioning how to modernize our system and transform the traveling experience in the future. i see a future where advanced capabilities can transform the experience while preserving risk based security as a central feature. i think it's possible in a an individual's buy row metric identity could become the boarding pass of the future. linked to intelligence systems and requiring passage through an integrated capability design tore detect metallic and nonmetallic based threats. this can be realized with a suitable strategic approach. as such i commit myself to ensuring that t.s. sarks a high performing, highly capable counterterrorism organization. gided by a risk based strategy and employing a multilayered intelligence driven operation and that we recruit and retain a highly trained work force,

one that harks the opportunity for career growth and development while placing a premium on professional values and accountability. that we pursue advanced capabilities with innovation and competition central to our way of thinking. and that t.s.a. continues to strengthen its integration in the intelligence community, in the private sector, with our stakeholders and among d.h.s. and other state, local partners. and develop and lead the work force and adapt and invest appropriately and remain focused on these critical success factors. finally throughout my years of service i remain aware of the need to balance desires for greater security with protection of the liberties and the rights that we cherish. safeguarding civil liberties and privacy interests is a top priority and i look forward to working with this committee to enhance the safety of the traveling public and to achieve this balance. i am proud to see how the men and women of t.s.a. each and every day and to have the privilege of serving with them in the defense of our country. members of the committee, i

thank you for the opportunity to be here today. and i look forward to your questions. chairman mccaul: thank you, admiral. i now recognize myself for questions. admiral, you and i know al qaeda, particularly al qaeda in the arashian peninsula and the corazon group in syria are still very intent on hitting the aviation sector. primarily flew bombs, specifically nonmetallic i.e.d.'s. this led to a heightening of screening at 25 airports overseas. we have made some progress against them through strikes, recently taking out the leader of the corazon group. and others. but that threat is still there. and with this dismal report card that came in 96% failure rate. given the threat that's out there, i'm concerned about the safety of the american people when they travel on airplanes.

not to mention that 73 aviation workers have potential ties to terrorism. now, i can't get into all the details. because it still remains classified in terms of what slipped through the cracks. but what are you doing -- what are you planning to do as the new t.s.a. administrator to address this enormous failure? administrator neffenger: mr. chairman thank you for the question. and you're absolutely correct to point out that this is a huge concern. and it greatly disturbs me to know that we had that fale you're rate at the checkpoint. as you know the checkpoint although not the only element system of our security is a critical part of security and the barrier between the sterile and nonsterile areas of an airport and a visible deterrent and the last chance to catch items that we do not want getting onboard aircraft. so as i look at the fill you're rate my immediate questions were the same ones that secretary johnson had.

as you know that came out during my nomination and confirmation process. and i had a number of conversations with the secretary. he immediately ordered an establishment of a team to take hard look at the nature of the failures and what they've done. so i inherited that theme. i've seen the work that they've done. and what i can do is i'll speak directly to what that team is doing. but i'll speak in more systemic terms of what it's telling us about where our concerns are. as you know, i'll begin by saying that covert testing is a -- is a net positive because you want to try to break your system of security on a daily basis to ensure that you've got it right. and it goes back to the need to continually adapt and evolve your organization. but when it breaks to the extent that we saw, that -- that raises some significant questions about how effective that you've been. so what the team has done is they took a hard look at exactly what the nature of each individual failure was. we looked case by case. of the tests that the i.g. did

and the i.g. -- and i sat and talked with the i.g. extensively about this. and they've been quite open about sharing their results. we looked at the nature of the tests. and we looked to see is it a technology issue? is it a human performance issue? is it a process or procedure issue? and as you might suspect, it is in some cases some combination of those three -- those three elements. and then we looked to see whether there was -- whether there was a way to mitigate that. so that what the team has done over the past three months, is to take a part all of those. and you got a detailed brief and i would off to the committee a detailed brief on the specifics of that team. i think that it would be -- it would help you to understand how we're moving forward. and then we looked at how -- how do we train out those specific failures? because the immediate need is to train out those failures. so that we don't have a repeat of those. we are now in the process of doing that over the course of the next 60 days by the end of september. we will have trained the failure, the specifics about

the failures to every frontline member of t.s.a. that will address the immediate problem. and i think that we can do that. the bigger question is, are there systemic issues in the way we are approaching our business that led to those failures in the first place? so that we -- what i doesn't want to see is some other set of failures in the future. i know that i can train to these. but i'm interested in figuring out how we train to the larger questions out there. and that's what we're working on now. and that goes to a vision for how you then begin to think of yourself in this continuously evolving continuously adapting way. and as i said, the -- the thing to remember is that there is -- there are other elements of the system. some of them virtual. some other physical elements of the system. but the checkpoint is one of the most important. and we have to get that right. chairman mccaul: you talked about technology and vision for the future. and you and i have talked about this privately. it seems like we have -- precheck i think has been a

success and global entry, more passenger friendly, nor risk based, which i think is where t.s.a. should go. but as we look at the future, you have the checkpoint of the future. and the use of technologies. what is your vision for the next say five to 10 years? what will the experience be like? what is your goal for the traveling passenger? administrator neffenger: a wonderful question. because as somebody who has traveled a lot over the years i know what checkpoints can feel like. when you get there. i do think that there's a vision for something in the future. one of the best terms i heard recently was security at the speed of life. and i like that. there are a number of interesting and innovative ideas out there. i mentioned one in my opening statement. the idea that you are your boarding pass. and if i can tie you biometrically to a reservation and identification and do it in a verified way, then -- then

one, that moves you through the process faster. we eliminate boarding passes. and every airline has a different style of boarding pass and makes it very challenging for those document checkers to check those. because they're looking at something different. there's not a lot of consistency there. so i think we can eliminate the boarding pass and move to integrated technology that does. and right now, there's a challenge because the a.i.t. machines don't do metal detection. metal detectors don't do nonmetallic explosives. and nothing sniffs for explosives as you go through. i've actually seen prototypes of machines that you can walk through and it does all of that in one. now, can they be fielded effectively? i don't know. i think this goes back to your earlier question about competition. i think we can do more to incentivize competition in the private sector. i am currently right now tied to a process that has me buying a lot of equipment that may be obsolete shortly after i buy it. i have to adapt continuously to

a changing threat. i looked at the way the department of defense has periodically incentivized competition in the private sector to come up with new ideas. i think there's ways to do that. i would love to have -- more conversations with this committee on ways that we can do that. ways that we can use or modify some of our acquisition practices and policies to allow us to do that. chairman mccaul: well, i look forward to working with you on that. and thank you for your testimony. the chair recognizes the ranking member. ranking member thompson: thank you very much, mr. neffenger your comments clearly are a breath of fresh air. and i think the chairman will agree with me on that. we've passed a modernization of acquisition, legislation to kind of give the department of -- the department a freer rein. one of the challenges we have is the culture that we've always done it this way. so we buy technology being

t.s.a., that we already know does not address the emerging threat. but because this is how we do, many in congress have raised their question a number of times. i'm glad to see you willing to say how can we get out of this? c.i.a. nasa, some of the other agencies, they have vehicles that they use to incentivize the acquisition of new technology. some of it is you -- you create a -- you purchase participation with those companies so they can continue development. we tried that for quite a while. and i want to talk to you a little bit about that. going forward. but as we talk about technology let's talk about how we do processes. the manager inclusion program and some of us have had real

problems with it. it appears that the issue became how can we get people through the checkpoint faster rather than how can we guarantee that those people who go through have actually been vetted? so we're at cross purposes. how do you see the department working on this managed inclusion program? administrator neffenger: well, thanks for your question. i agree completely with you. i would like to see us and in fact i've ordered a phasing out of the managed inclusion program. because the goal is to have a fully vetted population in the precheck program. the more i know -- i want known people, people i trust going through the program. that's -- that is really the heart of risk-based security. is i want to separate out a known population from the ones i don't know anything about. and i want to make the experience less -- less intrusive for the known

population. one that reduces the burden on the agency. i'm paying attention to the things i need to pay attention to versus people that i've already vetted. so i think we have to phase out managed inclusion because it introduces i think a -- perhaps a higher level of risk than we want in the system. and grow the use of passenger detecting or passenger screening canines. the explosive detection dogs that we have out there. that is -- they are a tremendous asset. and we're looking to -- we're looking to expand that program slightly. and to reposition some of the -- some of the canine teams that we have in locations that are lower risk to higher risk locations. but more importantly, i want to look to -- i've -- we're working on a request for a proposal to put out the option for private sector third party screeners to help us do the initial marketing and collection of people into the precheck program. i've had a number of

conversations with travel aggregators. with credit card companies. and the like. and i think that there's an opportunity to expand that bree check population. the known population, enrolled population. over the near term. and so i'm encouraged by the opportunity and hopingi am encouraged by the opportunity. i hope this request for proposal generates a lot of competition in the private sector. and then to grow that population. and then to move people that are already screen, like we did with military members and others, that have already had that ground checks, that already have biometrics on file, into the pre-check program based on their ongoing clearance. representative thompson: how do

you plan to get us off the bottom? mr. hefenger: i start with the fact that everyone rose -- raise their hand and took an oath of office. how many people in this country do that? i'm sure their eyes were open. they knew it was not the most popular job in the country. but they said i want to be the face of security for the traveling public. that is where morale starts. what is -- where does morale fail after that? i go right back to the mission and my dedication to the coast guard told me it starts with the

mission. and then you have to talk about that mission. and you have to train to that mission. and you have to measure that mission area. when i come to work, i know -- i want to know that i am being given the tools and the training to do it and they are backing me up when i have to make decisions. i think there is a lot of training to that and there is a workforce engagement needs. representative thompson: people who apply do not have to go back. now we are hearing, when they tried to get recertified, there is a tremendous backlog so that members' card expires before the new card comes. we would like for you to look at that. i don't want us to create a

bigger problem by alleviating the second trip and we didn't fix getting the card that to the person. those workers who work on military installations, on selected instances, are being required to get an additional card. it costs about $200. it has the same information that the twixk card has. can we see some reciprocity so that those workers don't have to pay for a second card? mr. heffenger: i am not familiar with the concern your raising. but if i can get with your staff, i can look into that. if we are collecting the same information, we can verify the same things.

i think we can work on reciprocity. representatives thompson: and the issue of getting the cards back before they expire? mr. heffenger: yes, sir. i know it has been a challenge. it is a focus area for me. i would like to know what the backlog is and are there things that can dramatically speed up that process? representative thompson: thank you very much. representative rogers: you have some in her should to deal with. you have some employees that you would like to put the fear of god into their heart or nothing is going to change. i have seen some good administrators precede you.

but i want you to understand that you've got some folks that really believe they don't have to change. you will be gone before they are. you need to make them understand that is not the case. it cannot be slight changes. it has to be dramatic changes. or it will be the same results we have had for the past seven years. the latest ig report that has upset some many people is identical to the last three edge reports. that is unacceptable. that is people who are unwilling to do anything different and don't believe there is any consequences for not doing anything different. so i hope you and still and understanding in them, if they are gone. and if you cannot do that, then you ought to be gone. i think you agree with that. one concern, i heard the chairman make reference to the project program. a vary good program as far as its goals. the problem we are running into

is that frequent travelers, the people who want into this program have gotten into it. the fsd's at the airport have not adjusted the lane activity to accommodate that traffic. so now you spend more time in the pre-check line than if you go into the priority lane. whatever they call it. and just go through the typical take your shoes off type. that is silly. people are going to stop going into the project program. they don't find it enhances their ability to get through faster. i hope you will address that with air force -- airport folks. the method of getting safe people that we know through through an efficient manner, it is the more infrequent travelers that might have a problem.

you understand that explosive detection canines are a valuable asset. they are the best asset you have. i am not going to talk in an open setting about the efficacy of the equipment or the personnel, but as soon as we are back from our august district work period, meet with you and go over in detail what shortcomings have been. i am vary very familiar with this subject matter. something needs to be done to remedy that. i hope you will need your commitment to meet with me in september. that is all i've got. think you, mr. chairman. representative jackson lee: thank you for your presence here today, vice admiral. let me thank you for your service. it is interesting that i followed my good friend mr. rogers.

i had the privilege of sharing the transportation committee and served as his ranking when he was chair and we are, if you will young but we have been here for a little bit. so we are really grateful for your service. as i thank you for your service let me take a different twist and say to you that i am vary proud of the men and women who serve every day on the front lines in many ways, but in particular today of transportation security officers. over the years, i have argued for increased professional development training, to recognize that morale and commitment have a lot to do with pay, respect, and professional developer and training. i will be posing questions within the short amount of time

that i have. again, my sympathy to the hernandez family for mr. geraldo hernandez killed in of duty as a transportation -- killed in the line of duty as a transportation security officer. we should never dismiss the fact, in all of the issues that you have to deal with, since 9/11, there are probably millions of tsa screenings, tso screenings. and any number of stops that the tso officers make a beginning to correct starts with acknowledging service. i think it is vary important to do so. let me also say, however, in addition to that, we have allegations of mismanagement wasteful procedures, retaliation against whistleblowers, low

morale, security gaps. but i never want to leave this table without saying thank you to the tso officers. i make it my business as i travel through airports across america, to say hello, to ask a question, or to watch their procedures. again, if i might, professional development training is crucial. so let me just ask you a series of questions. i think you can do better if we get rid of sequestration. you need the money placed in the right places. i agree with the use of privatization on the basis -- let me correct that. i believe there is a place for the private sector, in particular dealing with technology. i might have misheard you when you said a third tsa, that it was a private sector. i am against privatizing airports and tso officers. i think we need a professional,

trained group. i want your comments as it relates to a professional, trained group. i would be interested in you being able to craft an effective utilization of these individuals with a more effective use of the resources you are given on that. i want to take note of the fact that a young man in dallas was so in love with his girlfriend and he recently ran past security. i would like your comment on that. we shut down the newark airport a couple of years ago with another enamored young man who ran to security. and i want your comments on tso's being the most is a buffet's and america. how do -- the most visible faces in america. i hope i can join mr. rogers and others for that gift briefing. if you could -- that scif

briefing. if you could comment on those. mr. heffenger: thank you first and foremost for acknowledging the workforce. i couldn't agree with you more. the mission of tsa is delivered by the frontline transportation security officers in this country. i cannot say how important they are to the success of this program but i cannot thank them enough for the work that they do. i do that myself whenever i travel and certainly now. with respect to budget, i think you are right. sequestration will be a challenge for every government agency that will be subjected to it. i hope that congress is able to pass a budget resolution that will eliminate sequestration and allow us to have some certainty going forward. to make sure it was clear what i was saying with respect to third party -- what i was really speaking about was incentivizing have a sector entities, private sector businesses to help develop the technology that we

needed to the future. i think we can do that in a competitive way to provide incentives that don't have government taking on all the risks of development, don't have government buying huge capital outlays that -- outlays for equipment that later becomes obsolete. the bdo program as you know there has been some controversy about that program. there have been a number of gao audits. one has looked at the efficacy of the program and the work that is done. i know the tsa contracted out a third-party overview of that program. that third-party spent two years collecting data on that program and running tests. that was submitted as a report. there is a question about the underlying concerns. i know we are in the process of completing a report that shows what we believe to be the scientific underpinnings of that. that said, i understand the concern with the use of that.

from my perspective -- and i'm not clear on how i feel about the bdo program yet, being relatively new -- but from my perspective, a link to validated underpinnings, if i can so effectiveness with behavioral viewing, then i think it is an effective tool in the security toolkit. i know law enforcement agencies around the world use behavioral indications and determining whether they have problems, whether you are a beat cop or you are looking at another situation. i'm looking forward to reading that report that was done. it looks at the scientific underpinnings. and i look forward to discussing the further with the committee. the security breach at dallas airport, that you mentioned, that is of great concern to me. for a couple of reasons. one, i am vary concerned about our -- i am very concern about

the safety of our frontline workforce. the attack in new orleans earlier this spring, those are vary real threats. you have to be careful of that. so any potential for somebody to breach a barrier runs the potential for not just a safety issue, but also a security issue. so i ordered an immediate review of that incident. more importantly, this goes back to the systemic issue. i don't want to go around and whacking off everyone a problem there is. i want to look at the system and understand if we have an issue with security at our check. once that is the barrier -- once again, that is the barrier between a sterile and the nonsterile areas. i will share that with you when i have it. most importantly i'm going to look across the system and see how they are doing this. representative jackson lee:

thank you. i would like to put this in the record so we can discuss it with her and -- discuss it further. representative cap go -- representative katko: i want to thank you for the job that your employees are doing every day and day out. one of the areas i want to focus on a little bit today is the issue of access control. we kind of touched on it but it is a gaping hole in security at the airports nationwide. within the last year or two, you have had a major drug

trafficking ring operating out of the oakland airport. you had another one operating out of the dallas-fort worth airport that had implications in a briefing that is not necessarily probably. and an individual who smuggled as much as 160 guns, loaded including assault rifles on airlines. and brought them up to new york city. i think these incidences point out a major problem with access controls at airports. i recently had to -- had a bill passed in our subcommittee. i would like to hear your thoughts on the axis control issue. should there be minimum standards at all access point that these airports?

i would preface the question further by saying, it is clear from the dallas case that the viper teams that are used to do the random screening at various points would be monitored by the bad guys at dallas-fort worth and they were simply avoiding them. that is not going to work going forward. with that overview, i would like to hear your thought on access controls. mr. heffenger: thank you. i agree with your concern. as you know, those incidences -- let me back up a little bit and talk in general terms. this should be a known interested population. everyone of these workers gets vetted for background. there is a question about how far back we need to go in the future. they are continuously vetted. any credential holders are continuously vetted in the terrorist screening database. and currently, there is a

periodic re-vetting against criminal databases. that doesn't guarantee that you don't have a criminal population. so what do you do about the potential for criminal activity or worse in a known interested population? you introduce uncertainty to that population and you try to grow a culture of belonging to that organization. i absolutely agree that access should be reduced to the minimum necessary to ensure operations of the facility. my experience in the poor environment, when we looked at the maritime sector right after 9/11, a wide-open environment for obvious reasons. you want stuff to freely move in and out. the first answers we got back from the maritime cemetery was that it is impossible to close this down. but over time, -- the maritime secretary was that it is impossible to close this down. but over time, we did it. periodic, random, and other types of inspections that you are subject to come a growing

sense of culture that we are all in this together. as i look at the aviation environment, i look at the hundreds of different employers of people who hold. badges and you think, how do i get that group of people to think as one? to recognize, hey, this is their airport? so there is a campaign out there that -- a combination of reducing access points increasing setting specific standards for those access points, how you inspect those standards, keeping that randomized expectation of inspection. i think that helps. you need a number of these things. and then growing a sense amongst the workforce -- the large percentage of which are good, solid, hard-working people -- that, look, it is their response ability to help release this as well. there are some airports who have done this and have done it a very effectively. and i would like to look at their best practices and extend

those across. i am meeting with the airport executives, the airport council. this is a top issue of concern for me as well. representative: there are a couple of -- representative kat ko: there are a couple of airports doing this. those three airports are all going towards 100% screening of employees. we hear from airports across the country that is something i doable. i would like to hear your thoughts on that aired -- on that. mr. heffenger: i want to see what 100% secured it looks like. i want to hear from them how they achieved it. what are the challenges?

and what are the ongoing applications? i need to be able to address that when i meet with the airport to claim they cannot do that. so i am on a fact-finding mission over the next month or two to educate myself as to what the various arguments are. what i would like to do is to continue have -- continue to have this conversation going forward. representative rice: mr. secretary, i would like to talk first about diversity. i think gender diversity is a goal for most public and private sectors. but i think for tsa, it is an absolute necessity given the traveling public that they are interacting with on a daily basis. what percentage of tsa employees are women? mr. heffenger: i don't have that number off the top of my head. although i have asked for that. it is one of the things i and talking about this week.

diversity is critically important. anecdotally speaking, i am pleased to see what looks to be a vary diverse frontline workforce as i travel around. i will get you the percentage of women and break it up into categories. i think that diversity is the key to success in an organization. always has been. it is one of the biggest challenges we face in the coast guard and the military -- not just recruiting, but retaining a diverse-looking workforce. we found out early on that recruiting wasn't enough to call yourself diverse if there was no pathway of the organization. what i commit to you is that it is of critical importance to me across the organization. not just in the entry-level, but throughout the organization to look for opportunities throughout. representative rice: i am glad to hear you say that. i believe there are limitations

for female employees that male employees do not have. if they were to have a female employee and baggage needing to be moved to the passenger pat down area because of the need to have more women -- women only being able to pat down women -- and that leads to some level of frustration that women have because they are facing those kinds of limitations and room for upward mobility that men don't have. i am happy to be sitting here with you. i think you are a great choice. i think your focus on trying to improve the morale for your employees is a good goal. and i want to offer that we are here to improve your morale, such as it is. you are in a truly thankless job. i look forward to seeing you out in l.a. i am going to look at lax

airport on the 18th of this month. we stand ready to help you in any way that we can. mr. carter: admiral welcome. i can in no way speak from members of this committee, but for myself and i suspect the committee members agree with this, we wish you success. we want to see you succeed and we want to do everything to help you. i want to touch quickly on two things. first of all, understand that i represent the entire coast of georgia. on the coast, we have two major ports. we have the savannah court, the number two container port on the eastern seaboard. and we have the number two rolloff for in the nation. both of those ports are vitally important. in both of those ports, we use the turks cards the -- the twic

cards. the transportation workforce identification card. i am vary concerned. first of all, an individual used a card to gain access in a norfolk naval station and killed in able officer. twics holders have committed crimes in port areas. they can be used to commit crimes on ports. the proposed rulemaking for twics discusses multiple possible scenarios where the cards will not be effective. dhs has failed twice to complete a successful pilot program with the cards. dhs has not concluded a reliable analysis of the internal control effectiveness. and a weakness in --

my question is what about the twics cards? can they be fixed? if they can, how are you going to fix them? mr. heffenger: you raised a lot of the same questions i have coming into this job. as a former member of the coast guard, we worked with tsa throughout -- the coast guard it lamented the twic card reader program based on the rules of issuance. first of all, i want the mission to a known population. i want some biometrics on that person. i want to be able to run those against databases and tell me if i have a criminal act or. and i want to -- terminal actor. and i want to know if the disqualifying factors are the right to disqualifying factors for holding the card. a lot of groups, longshoremen

and others, had some concerns about that list. that took a lot of work to get that was negotiated. i think you need to continually look at that to make sure you have the right features or the right disqualifying factors and that you are consistent in the application. the second piece is to have it used properly when you are attempting to enter a facility. buy used properly, i mean what aspects of the facility does it give you access to? why does it give you access? and how known are you to the population? that is part of the reader issue and part of the procedure and rules issue. as you know, the card can be coded to give you access to different parts of the facility some more secure than others. all of that is -- my ongoing review right now the program. while i cannot specifically answer your questions today, what i will promise you is, over the next -- the coming weeks and months, i will answer them. the current state of play -- in

your particular instances, i would like more detail because i can look at the specifically for you. representative carter: i want to follow up on vetting some of the airline workers specifically. in june, we had a hearing and i was appalled to find out that some of the applicants were only required to have their last name and first initial and no social security number. i hope that has been taking care of already since that hearing. and if it hasn't, i hope the first a you do when you get back is to take care of that. mr. heffenger: for the specific ones, it has been taken care of. and we are moving to, as i said, a full name, social security number and clear connection to identity. representative carter: good. let me finish by repeating what i said before. we wish you success and thank

you. thank you for what you're doing. representative torres: thank you again, admiral, for being here with us today. i have no doubt it sounds like you have had a great support from this committee and we are sure you'll be successful addressing major concerns that we have seen with the tsa. and their responsibility of securing our nation and our ports. today i want to focus on my home airport, ontario international airport. as you may know, the airport is controlled by the los angeles airport. they have oversight and management control of this airport. through my experience not only as a passenger but going on a

security visit tour of the airport, i want to highlight for you today the concerns that i have. under the agreement, the arrangement it has with ontario lax is 56 miles away, and they are the ones controlling our airport. ontario airports manager is only at the airport on a part-time basis. it is a shared position with another airport. we used to have a full-time assistant manager, but that position was deleted a year ago. the authority, the management authority could be very well undermined when that manager is

not at ontario airport. it is unclear who was in charge of the airport when that person is physically not present. when it comes to technology, the ontario international airport seems to be lacking. the card reader technology that regulates access to the secure areas is inaccurate, meeting that employees have no limited access as to where they can enter secure areas. additionally, many dispatch centers security monitors at ontario airport are nonfunctioning. ontario airport gets old fire department equipment from lax. so whatever is deemed inoperable or unwanted at lax is shipped to ontario airport, and that is the equipment that our folks have to work with. when it comes to security, the airport perimeter appears to be

lacking in needs to be reviewed. for example, as a result of a grade separation on the north side of the airport, we have had residents that were able to walk into drive all the way through to the runway without being stopped. i also have concerns about the training of ontario airport employees. it appears that the lax employees do some training at the ontario facility, but it's not clear if our employees are participating in that training. as you can see, i have many concerns about the concert security -- this is a major problem because the airport serves millions of residents in california. it is a hub, an engine for our community in the inland empire.

my here, as i explained to you earlier, is not to get into the politics of who owns the airport. my goal here today is to ensure that you fully understand the issues and concerns that our community has as it relates to security, and he was managing it. who was responsible for the ontario airport? at this time i want to invite you to participate in a meeting with me to discuss these concerns to come up with solutions to these problems. would you be willing to discuss these issues and visit with me the airport and also would you be willing to work with me and other relevant federal officials to begin to address the tremendous problems that i have seen, personally witnessed at this airport? mr. neffenger: yes, i would be, and i look forward to the opportunity to understand better what the issues are and more

importantly to visit the airport and see for myself what these issues are. rep. thompson: torres: thank you, and it want to reiterate that i do get the ontario airport experience once a week. rep. ratcliffe: thank you, mr. chairman. admiral, first of all, i like to thank you for your 34 years of dedicated service in the coast guard. i certainly wish you the best of luck in your new role as the tsa administrator. you have a very difficult job ahead of you. as a number of our recent hearings in this committee have highlighted, there are some immediate and frankly glaring problems that you will need to address in this new role. we need to only rewind the clock a few days to underscore

some of the troubling gaps that exist right now at the tsa. i'm sure that you're aware that three days ago on sunday at the dallas-fort worth airport, a 26-year-old man was able to bypass tsa a security without a boarding pass or any identification at all and get on a plane to guatemala. according to the police report, it was only after the police were called and the individual left the plane that tsa's security became aware of the incident. i want to give you an opportunity to respond to what happened at dfw and give us any information that you can about your investigation into how a breach of that magnitude was possible. mr. neffenger: i share your great outrage over that.

as i said before, the checkpoint is a critically important element of the security system, and it forms a barrier between. with that specific case, it's under investigation. i'm happy to share the results with the committee once we see what the specifics where that caused that. the bottom line is that you should not have -- it should not be easy, it should be impossible for somebody to make their way past the checkpoint without being observed. it certainly should not be possible to get past the checkpoint to the point of getting on an aircraft without having known about it. we will find out what happened there, but it speaks -- as i said earlier -- to the more systemic question about how we are managing our checkpoints. i think it ties right into some of the concerns with respect to how we are supporting our frontline workforce what the training is, what the standards are. as i said, i think we will find

out what happened there and i will make sure that we put into place the procedures to keep it from happening again. it may be a question of changing the way those barriers are constructed when there's nobody manning the station. is quite often the case that you have lines that aren't open, unsecured during that time. rep. ratcliffe: dfw is an airport that i use frequently, and obviously, many of the constituents that i represent makes it one of the busiest airports in the country. can you at least tell us at this point -- do you know -- is this an issue that was specific to dfw or are some of the concerns here's something that could happen at other airports around the country? in other words, do you know if this is a configuration issue or is it a breach of protocol and procedure? you can share any information. mr. neffenger: as i said, i have

seen the report, the offices of investigation is working with that right now. i let you know what specifically were the issues here. my suspicion is that right now it is confined to that specific location, dallas-fort worth. i will have a full review. i talked to the operations and said -- i want you to look across the whole system and tell me whether we have got issues like this elsewhere. and if we do, i want to plan for how we are going to address those. rep. ratcliffe: obviously that unfortunate event at dfw highlights the challenges that you face and i do wish you luck. i look forward to having you work with this committee to improve airport safety. thanks for being with us. i yield back.

mr. neffenger: i thank the gentleman for raising this issue. i would like a report from the tsa. it is very disturbing -- i don't know how he got past security, completely and touched. we don't know anything about this individual, either, i assume at this point in time? mr. neffenger: what i can tell you is that he was distraught over his girlfriend heading out of town if you wanted to stop her. that's what i know. it looked like a love gone wrong. [laughter] rep. mccaul: we will see. mr. neffenger: i will share with this committee our findings. rep. mccaul: mr. keating is recognized. rep. keating: thank you. thank you for your service in the coast guard and for your comments here today. you are certainly stressing accountability, and doing the kind of work you did -- it is a difficult assignment but i think

you are on target. i just want to concentrate on one area, which has been something i've brought up the last several years. it represents, i think, a tremendous security issue with our airports. it dates back from the time i was a district attorney in massachusetts with the case of a 15-year-old boy stowing away on a commercial airline from charlotte douglas tragically losing his life over milton, massachusetts when the landing gear went down. the fact that he penetrated that security aroused concern, but what followed that issue -- just to put it in perspective, from 2001-2011, there were 1388 security breaches andin 450 domestic airports.

what's troubling is that the vulnerability assessment, as the risk seems to be getting greater, are going down. just to give you an idea -- from 2004-2008, there were 60 of those assessments from 450 airports. from 2011-20 13, that was reduced to 30 assessments annually. in 2014, only 12 of those assessments were covered. that means 97% of our nation's airports were reviewed for security risk, despite the fact that we have had time and time again, whether it is in chicago or philadelphia or los angeles or in charlotte we have had these kinds of breaches that occurred. scores of them has been people that have reached access to the runway at the airports, the refueling areas.

of 15-year-old, a 16-year-old can penetrate our security. in one instance, not even going to tech to after being revered. than we are vulnerable. if they can do that and still away themself, someone with a different motivation could weigh in explosive on those airlines and not risk their lives. i hesitate to say these things publicly, but nothing has been done in terms of progress. that's why when i wrote you congratulating you, i was very pleased to get a timely response -- and i appreciate that -- where you identify as a priority. i want to ask you where you are going with that, because it is important. and the chairman and i, when we were working on the subcommittee we had a field hearing -- one thing that was so obvious to us was the fact that this is a huge jurisdictional issue at these airports, and if

things go wrong, they end up pointing fingers at each other. they are run by the municipal airport organizations, run by authorities, and this jurisdiction is unresolved. even when the federal government comes in and says what you have to clean up, they don't do it. no one seems to make them do it. when you are doing that review the other thing you have to clear up is this jurisdictional issue, and if people are going from one airport to another, they are in the network. you are only as good as your weakest link and we are not even assessing more than 3% of those airports for safety. i want to just give you a minute to try and expand upon what you want to do going forward in dealing with this issue. and also with this jurisdictional problem. mr. neffenger: congressman, you

raise a number of important issues -- let me start by saying that i agree that perimeter security is a concern. i use my experience in the port environment to know this was one of the biggest challenges we had, trying to understand what is the perimeter and what to secure mean. the joint assessment that you mentioned, those are additional, multi agency assessments that are done in addition to the annual inspections done. there is a tsa regulatory requirement that we for phil i inspecting -- that we for still by inspecting the man -- that we fulfill by inspecting the perimeter. then we go beyond the perimeter. those are very important in concert. i want to make sure that the ratio of those is correct and i will look at that. i also need to attend one of these inspections to find out what they consist of.

anyone on this committee is welcome to join me, and i make the offer to the committee members, because i am very interested in how we are doing that. it goes back to my days trying to figure out how to secure port environments. i said, walking around, show me where the perimeter is, how do you secure that space, that space? jurisdiction is key because you are right, you can do the wizard of oz thing, just point out everybody by yourself when it comes, but i need to know what are the extensive my authorities to direct action, and to compel action. ideally, you do that in a partnership, because it is in everyone's best interest. from my perspective, i think the airports, the airlines, and others would find a great benefit to ensure that nobody gets on that field who should be on the field. rep. katko: thank you.

i am -- rep. keating: thank you. i am optimistic that this will be a success. i look forward to working with you. if you could report to me with your progress it would be deeply appreciated. i yield back. rep. mccaul: mrs. watson coleman. rep. coleman: thank you very much. congratulations, admiral. you are very encouraging and you seem to have taken this excitement all with all high expectation, and with respect to those who get the job done on behalf of all of us, thank you. i have a couple questions. number one has to do with the federal air marshal service. my understanding is that there hasn't been a class recruitment for nearly four years. i'm wondering -- do you have any plan to address what this might represent? are they still as necessary or is there something that is replacing the need for them? mr. neffenger: thank you for

that question. as you know, we have a new director of the federal air marshal service. i am really encouraged and enthusiastic about his approach, because he is coming with a very innovative set of eyes to look across the range of missions of the federal air marshals. i believe there is still value. i believe that they perform valuable missions. but i believe those missions have changed over time. the director is addressing some of those changes. they work a wide friday of missions, not just the aviation missions most people are familiar with. they also work on micro-teens and serve in joint terrorism task forces. may have been a unique, credentialed law enforcement perspective to thinking about the transportation world. that said, we have not hired for a long time in the federal air marshals. we have requested in our fy16

budget to begin the hiring process. that is an aging workforce -- 57 is mandatory r retirement. we will see some 30% of that workforce begin to age out. when you have a law enforcement agency, a federal agency, you need to refresh it. you need to grow new people and do it. i am hoping that our fy16 budget request will be met favorably and i hope we can begin to hire into what we are seeing and grow a new workforce as the mission changes over time. rep. coleman: thank you. another area that struck me as i was preparing for it today so do with the secure identification display area card. i understand that on occasion individuals who have had access to those cards have done things

which were illegal, and which were not acceptable. i was wondering what are your plans with regard to greater accountability of those cards? mr. neffenger: i think accountability is the key. as we were discussing earlier you have what should be a known and trusted population that you give those cards to. they get vetted for criminal background, and they get looked at continuously for potential nexus to terrorism. that said, we also know that you can still have criminal activity that occurs, and we have seen enough evidence of that over the past year. one of the things that came out of the incidents in atlanta last year the drug smuggling ring that was discovered, was the request by the secretary of the

homeland the aviation security advisory committee, to take a hard look at the insider threat problem in the use of badges. they came out with 28 recommendations as a result of that. we accepted all 28, and we are working very closely to implement those overtime. a number were done immediately. accountability was one of the ones. i'm very concerned about accountability -- it has been surprising that people periodically lose or misplaced their badge. there needs to be a process for immediate notification, shutting down the badge and take whatever action is necessary in the event it was done deliberately or intentionally. rep. coleman: thank you admiral. you have a big task ahead of you and i wish you the best of luck. i hope we can be of help. thank you. rep. mccaul: thank you. let me close by saying that i think the secretary chose the

right man for the job. we have enjoyed our conversations for the past several days and look over to working with you to improve both the safety of our airports and also making it more passenger friendly. the committee members may have additional questions in writing. pursuant to the committee rules, the record will be held open for 10 days, and the committee stands adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2015] captioning performed by the national captioning institute, which is responsible for its caption contents and accuracy. visit ncicap.org

this is an hour and 40 minutes.

ice of california. the subcommittee on court's intellectual property is and the internet will come to order. the chair is authorize said to declare a recess of the subcommittee at any time. today we welcome everyone here for a hearing on the internet of things. throughout its short history, the internet has been transform active and powerful tool and has shaped communication, commerce worldwide. technology, too, has proven to advance at rates that only moore's law scribes. with a doubling of capacity so quickly that about the time you run out of your short warranty, you in fact have a product that can out perform the one on your desk. but the internet of things

which broadly refers to a network connected real world items, able to exchange data with each other and across existing network infrastructure is a newer portion of what now becomes the future of our lives and our communication in the 21st century. it is estimated by 2020 there will be 25 billion connected things. and without a doubt, before we reach 2020, i will be wrong and there will be more connected things. by imbedding devices with electronic sensors, software capable of connecting market, we in fact, have smart devices. those smarter devices today already include if you choose every light switch in your home, the watch you wear, and products

throughout the home whether they be speakers to hear from or in fact sensors to control climate down to a portion of every room. data-driven technology is also improving the way we understand health care and the introduction of new health monitoring systems can, in fact prevent detect, and treat today any number of afflictions. a generation ago, the insulin pump was an amazing product. but it wasn't a true command pump. it wasn't connected to your physician. it wasn't, in fact, sensing other environments. today, it not only could but it soon will. at the same time as we talk about your home your lighting your messaging your voice, and of course your health and your

actual biological function issues like privacy and data security for these inoperable technologies become not just something to talk about but an area in which we in congress play a large and potentially destructive role if we're not careful in the development of these technologies. every day in america somewhere someone is being hacked. and somewhere someone is finding out their personal identifiable information has been compromised. too often it in fact, is the government who we hear it from. the government who controls, if you will whether or not you can further secure your internet of things, products, or not. a generation ago i stood with one of our witnesses at a time in which a member of congress, a former fbi agent was trying to

prevent 256 encryption. he was doing so because the fbi needed to be able to quickly crack the bad guys's transmissions. they needed to be able to unbundle a floppy disk information in a matter of second if they were going to deter organized crime. unfortunately, it meant that hackers were take microsoft operating system and quickly duplicating and denying them millions of dollars. it took a number of years for congress to realize that that artificial control was not only circumventable by reimporting it, but it was ludicrous because the bad guys were not going to limit their protection to 256 bits. unlicensed spectrum is going to be talked about again and again

today. i hope my witnesses will feel tree to take about the greater spectrum of things. i would remind all panelists, however, that the sec is not within our primary jurisdiction. but to unbanal and these other things will take a coordination between committees that do control spectrum. those of us who control a great deal of the privacy requirements and overseeing what the government allows. in january, the federal trade commission released a report that focused on data privacy and security. the report made a broad, nonbinding recommendation about how companies should address these issues from the onset and laid out the groundwork for the internet of things and ftc involvement.

when the congresswoman and i launched the caucus in january the first question we received were usually what is the internet of things and why does congress care. to a great extent, we have laid out a number of those in my opening statement today. but i would be remiss if i didn't say that the federal trade commission is an agency that has been enforcing breaches in security while providing little guidance. this is where we can come in with the heavy hand of government but seldom with a safe haven. that's an area in which the internet of things caucus and this committee has a an obligation to make sure we do both. today we look forward to a hearing with stakeholders in the marketplace. and further opportunities to deal with the challenges that congress brings and those in

which we can bring relief. thank you and i look forward to our witnesses. and the ranking member from new york for his opening statement. >> thank you, mr. chairman. the internet of things is next in our increasingly wired world. everything from household appliances, transportation systems, can harness the power of the internet and increase productive and choice. it holds great promise for consumers and businesses alike. but we must also face the threat of privacy. today's hearing is an opportunity to examine the benefits and the risks that the internet of things exists. it is experiencing explosive growth in years. by some estimates >> larry: 25 billion connected devices today. by 2020, in five short years,

maybe 50 billion. we are already seeing many innovative uses of things. across various industries and the potential risk this technology may hold. for example, according to one study by 2020 up to 90% of consumer cars may have an internet connection. up from less than 10% in 2013. with this technology drivers can monitor whether their car needs maintenance the fuel efficiency of various routes. as the new york sometimes described last week, researchers were able to track internet enabled cars location, determine their speed, turn on and off their blinkers from a far, turn on and off their blinkers lights, windshield wipers and radios, interfere with navigation devices and in some cases, control their brakes and steering. as more and more vehicles use internet technology it's vital

automakers install strict features. for example, traffic lights can be time to maximize traffic flow and ease congestion in real-time. garbage cans can signal when trash out to be collected. imagine a garbage can talking to the sanitation department. it has the chance to revolutionize. but unless cities integrate strong security measures, their infrastructure could be volatile to hackers. a in addition to security concerns, the internet of things raises a host of privacy implications particularly with respect to consumer devices. there is no doubt the technology

can improve in ways large and small. to maximize energy efficiently, your thermostat could be controlled remotely. amazon has introduced the dash button, which will allow customers to press a button and reorder certain household supplies. what do they do with the massive amounts of data they collect from customers. what choice do consumers have about how their information is used? and how will companies protect their sensitive information from being compromised in a cyber attack? these are all questions that must be considered as the technology expands its reach. many wear devices to track their physical health. one insurance company is offering a discount if they demonstrate a healthy lifestyle. it is not clear how health insurance companies may seek to

use this personal information in the future. will it be sold for marketing purposes? will it be used in a discriminatory manner to determine suitability, for credit or employment. in its examination of these important questions of the federal trade commission made a number of important considerations we must consider. it suggests the company build security at the outset rather than as an afterthought. it also recommended they monitor devices throughout their expected life cycle to provide security patches where possible to cover known risks. in addition, they urged protection of consumer's privacy by engaging in data minimization and notices and choices to consumers as to how their data may be used. although the ftc did not make any specific legislative recommendations, we should consider whether it is appropriate to address privacy concerns. if so should we seek solutions to these or should they be

addressed to broader legislation on these topics? the internet of things has led to important technological breakthroughs. our challenge is to promote the proper balance and making sure privacy is protect as this value technology continues to grow. i look forward to hearing from our witnesses in how to address these challenges and i yield back the balance of my time. >> thank you, mr. adler. >> thank you, mr. chairman. today we're here to learning more about the internet of things. it has the ability to not only improve the more mundane aspects of our lives, but transform health care and information technology industries. this is of particular interest to the judiciary committee

considering our longstanding jurisdiction when it comes to intellectual property cloud computing and digital trade. the internet of things refers to machines containing sensors that transmit data to other connected devices and the internet. dramatic in cloud computing the past several years has helped to enable the technology to reach its full potential. without the ability for data from an enter is net of things device to be analyzed in real-time, the data itself would certain little valuable. the a ability to access through mobile apps or even our cars makes these internet of things devices a key tool to finding creative solutions for many of the problems of daily life in the 21st century. smart agriculture will help us grow more food and prevent waste. smart transportation will help prevent traffic jams but can also be used to monitor road conditions and structural components of bridges and

overpass toss detect problems immediately. new wearables not only monitor the number of steps we take but can include sensors that can catch and alert taos potential medical emergencies before it actually becomes one. as this committee continues to study this new technology, it is important for us to keep in mind the full scope of the internet of things and be cognizant of policies today and in the future. in particular, we need to examine the privacy and security implications of this technology and look into the security privacy measures they are building now and as they plan to implement as open standards are to develop. i am hoping it helps fuel prosperity and creativity. i think we have a fantastic panel assembled today. i know all the witnesses and i look forward to hearing from them about this exciting new area of technology.

thank you, mr. chairman. >> on behalf of the ranking member, the gentlelady from washington first district will make a short opening statement. >> thank you. i want to thank my co-chair on internet of things caucus as well as the ranking member for calling this hearing on this important subject. when we examine the way products and sensors are being used and what's called the internet of things from home appliances to personal wearables it might be easy to conclude it is only by american ingenuity. we have an emerging set of challenges for innovators and consumers. to start, we need to make sure we update existing laws to reflect the way the world works today and where we are headed in the future. that means, for example, updating the electronic communications privacy act to make sure data on a server is the same as the documents in the file cabinet.

for the multibillion dollar internet of things to be successful, we need to be responsible stewards of policy. they must feel their devices can be secure and private, not vulnerable to hacking or spying. forging a path to adoption of uniform, preferably international standards. regulatory agencies must find ways to strike the right balance between encouragingen know vacations and upholding their duty in the realm of protected cars. all of these collect unprecedented amounts of adult, they hold great things like health research. provide individuals with control over their own data. again, i want ta thank the chair and the ranking member for calling today's important hearing and setting the stage for a productive and informative

series of hearings on the role that congress and our committee can play and create an environment where internet of things innovation can prosper and consumer protection is at the forefront. thank you, mr. chair. and i yield back. >> i thank you. and thank you for your leadership on this issue. it is now my pleasure to introduce our distinguished panel. the witnesses have written statements and have been entered into the record and will be placed in their entirety. and i would ask witnesses to summarize in about five minutes. their statements so we can leave time for lots of questions. but before i introduce the witnesses formally pursuant to the committee rules, i ask that all witnesses stand to take the oath. customarily raising your right hand. do you solemnly swear or affirm that the testimony you are about to give will be the truth the whole truth and nothing but the truth. please be seated. let the record reflect that all

witnesses answered in the affirmative. today our witnesses including mr. gary shapiro, president and ceo of consumer electronics association. mr. dean garfield, president and ceo of the technology industry council. baywall, president and ceo of a alliance of automobile manufacturers. and mr. morgan reid, executive director of act, a.c.t., act association. before i go down the road for the witnesses, i have to a little bit of a personal privilege. the other three know it. mr. shapiro and i go back a long time. we were there at the berth of the modern consumer electronics association. and i once worked for him on an unpaid highly compensated by unpaid position as the chairman. so if today i rough him up,

remember, get back. it takes a while. and with that, mr. shapiro. >> thank you, chairman. this is indeed a historic moment in my life. i have been referring to you as boss for 25 years. and you as chairman oversaw a good portion of our freedom and our growth. and thank you ranking member adler, chairman goodin and other members as well. it represents 2,000 technology companies. we own and produce the ces which is held each january in las vegas and is the world's largest innovation event. the internet of things is a big part of the ces. it is so big that 900 of our 3,600 exhibitors had related products in our recent show. and the other thing you should know exist because of smartphones. over a billion smartphones have been sold. and they contain something

called micro electronics mechanical systems mems. they measure things like pressure, temperature, location movement, and other valuable information. and because of the billions of these devices in phones they cost now just pennies to piece. they use very little energy. they hook up the internet. from garden soil to baby monitors and wearables like smart catches thermostats and lights, household products. they are using them to stay healthy, increase efficiency to be secure. and to make better decisions. you have heard the estimate ises of how these are going to grow. and they are estimates. i swore to tell the truth so i can't say they're factual. there is definite growth. we grew 32% in the united states

alone in terms of the connected home devices. it is almost a billion dollar marketplace in the united states. it allows consumers to mount security systems, manage heating and cooling and lighting systems. and they also increase home efficiency and cut bills. they can learn patterns over time. they can adjust temperatures. and maximize efficiency even when no one is home. while they save time and money for ordinary americans, there is an opportunity here to care for our aging population, as well as the 56 million americans with disabilities. the technology has been customized and costly. and professional novel interface like voice control. smoke detectors can be through lighting control. it can light up the whole house for a safe excite.

they are life changing and sustaining for many americans. think about our older loved ones. we have limited caregivers in an aging population. they will help seniors live independently and comfortably, maintain their quality of life and they can do this with remote, with caregivers watchly remotely at the same time older americans will retain their privacy and share just what they are comfortable sharing is. it requires spectrum. wireless is the platform in which most connect. we need an additional licensed and unlicensed spectrum. it is changing what skills we need to maintain our competitive advantage. we don't have enough skilled workers. that's why we are pushing for highly skilled integration reform. third, it requires government restraint. it does require us to consider new challenges. legitimate concerns about

safety privacy, security. who actually owns the data. stakeholders, including government can and should be discussing these today. as we said in our filing with the ftc it hinges on building trust. i just heard that again congresswoman. it's up to manufacturers and manufacturing to make good decisions about privacy and security. we are a passion a doing our best to protect consumers. but we recognize and respect the legitimate role of transparency, clarity. 30 standard making operations, activities that produce anti certified standards. focusing on technical aspects of the internet of things. and of course it's just beginning. and we have to be careful of overprescripted because that could stimy the growth of

things. any government action should be very now and focus on real harm. the internet things thing is huge. we will work together to make sure it supports growth in this dynamic sector. thank you. and i look forward to answering your questions. >> thank you, mr. shapiro. mr. garfield? >> ranking member adler, members of the committee. on behalf of 61 of the most dynamic and innovative companies in the world, we thank you for hosting this hearing. we thank you as well for the context which is outside pending legislation. as well, mr. chairman and congresswoman for your leadership in creating the internet of things caucus. sit our firm view that the internet of things has the poe to be one of the most technological innovations in history. that is with the right policy involvement to make sure i am not accused of hyperbolic.

our humble recommendations on how congress can be helpful. as to the first, the internet of things is the digitization of the connected world with computing systems. one may sound similar has the potential to be seismic in the creation of new industries. whether we're talking about watches that have the potential to not only help you to be more fit, but as well to prevent catastrophic health incidence through monitoring your heart rate. or we're talking about windshield wipers that have the ability to communicate with other windshield wipers and alert your car to an impending storm or an autonomous vehicle to a construction zone soon arriving. there has been much discussion of the home and personal

manifestations of things. it is important, however, not to ignore the commercial deployment. they are real, tangible, and have huge potential economic benefit. whether it is the demyment of centers in our energy grid to ensure greater resiliency and reliance, the deployment of sensors in transportation systems to allow more efficient delivery. or to ensure safety for workers. the economic impact, much of the economic impact will come from the deployment which by 2030 is expected to be almost $7 trillion. so what are we doing to ensure that is the case? we're focused on a multi-faceted approach that is heavily emphasized security, privacy standards as well as investment

in infrastructure. with regard to security and privacy or we are working innovating around those issues. making sure they are developed by design so they are part of our forethought rather than afterthought. we are developing solution toss ensure that both security and privacy are tailored to the particular environment. and as well we are investing in innovation because consumers demand high security and privacy and increasing transparency. it's in our interest and it's the right thing to do to meet the consumer demand. as well we are moving forward on global standards that are really privately better driven by the sector. and as well that are open standards to ensure that we have high inter opability as well as scaleability. finally, we are invested in the infrastructure. mr. shapiro noted the need for

broadband, band and wireless as well as ensuring that spectrum is available. the use of speck truck is growing on mobile date by 55% each year. with the internet of things and digitizization it will only grow more expeditiously. so spectrum will be increasingly important. in addition to doing those things we intend and need to partner with congress and the administration to make sure that policy is smartly in focus. one is we need a national strategy around the internet of things. much in the same way that a broadband, having a natural strategy will be incredibly helpful. second, we need more spectrum as mr. shapiro and i pointed out earlier.

the u.s. government is the largest holder of spectrum and has the greatest ability to impact spectrum and we hope to make it more efficient. finally, we need the exercise of restraint. it is in stages. in order to grow to reach its full potential it is important that we avoid mandates that put the thumb on the scale of particular technologies versus others. i look forward to your questions and the testimony of my colleagues. thank you. >> thank you. you only have to deal with all the questions set up in the opening statements. so i look forward to your five minutes. a piece of cake. >> chairman, members of the committee, thank you for the opportunity to testify this morning. a wore a different hat the last time i was here. another industry that was engaging with the challenge of

technology. during my time, it access began to replace ownership. the model transformed. now the last four years instead of fighting with gary shapiro, i mostly team up with him. it's easier. that's a good thing. >> only in washington. >> yeah, right. >> i represent the detroit three, six major european manufacturers, and three major japanese manufacturers as well. for us the impact of technology is every bit of profound but not threatening. technology and connectivity are ushering in a new era. some may say a golden age of mobility. we have seen enormous safety and environmental gains. striking the numbers and emissions as well as increases in mpg. the next generation of progress will come from iot based technologies. ownership patterns may evolve somewhat as ride sharing becomes

more prevalent. but the truly material impact of technology is the convergence of environmental safety productive and life quality benefits that arise from connectivity of an iot world. when it comes to cars, safety and objective conflicted. heavy and safe or light and green. every parent struggled with the choice for their teenagers. strategies for safety centered on surviving crashes. it harmonizes safety in green, crash avoidance. manages the car better than a human can fosters more efficient mobility because there will be fewer crashes on congestion. it translates into more economic productivity, more personal time fewer injuries fewer fatalities and fewer emissions and less wasted fuel. getting to the future as fast as

we can is critical. 95% of all traffic fatalities results in human error or environmental conditions. vehicle factors account for just a fraction. technology is so powerful because it offers the promise of mitt gating human error. as today's innovation automatic breaking adaptive lighting blind spot warnings. and tomorrow's technology is going to be and ultimately self-driving vehicles. it must be embraced and seen as the answer, not the problem. that means working proactively with privacy and cyber security. last year auto manufacturers began the first in the iot, nonpure play internet sector to adopt a comprehensive set of policies and principles. the principles have a strong lineage. the consumer product bill of rights and suggestions from privacy advocates.

transparency, respect for contacts. that is security. the most sensitive types of information needed for some technologies geo location where you're going. how fast you're going. biometrics. clear and prominent notice. the purposes of why it is collected and the entity with which it can be shared. similarly, the industry is working to stay ahead of the threat posed by malicious hackers. we announced the formation of auto isac. for sharing information existing or potential cyber threats. the alliance security bills in the house that would facilitate the public and private sectors while protecting individual security. we hope the senate is acts soon to move the bill to the present. the next 20 years the evolution of the internet is enormously

exciting. strengthening the quality of life, the environment and our economy. we look forward to working with you to realize the benefits of innovation and address the challenges that come along the way. >> thank you. mr. reid? >> chairman ranking member adler, distinguished members of the commute, i thank you for holding this important hearing on the internet of things. it represents 5,000 companies and technology firms around the globe making the software and the a apps you love. we are spearheading an effort to clarify outdated health regulation and remote patient monitoring and ensuring in which patients and consumers can see an improvement in the health. key stakeholders in congress. fda, hhs to encourage and support health policy toss keep information priority and secure.

i should talk about jobs created. but i would like to break from that a little bit. i want to tell you a story. it's one that i think is relevant to many of you and certainly to a huge chunk of your constituents. nearly everyone in this room caring for an aging parent or knows someone who is. now, imagine your parents are fortunate. they are living in their own home but significant medical challenges are beginning to face them. the questions begin. do i get a home health ant? do we pay 12,000 a month to move them into assist said living facility? do they move into my basement? how do i deal with the fact that my parents don't want to move into my basement? what do i do to help them live at home with dignity. most of you remember life alert, help, i've fallen and i can't get up. well, that kind of device is a personal emergency response system. they are great devices but incredibly limited to what they can do.

now, imagine a far more sophisticated that can track blood pressure blood sugar geo fencing for alzheimer's and much more. since they are small enough to fit in a watch like this one or maybe this one. and all of those devices i think everyone here has got one. all of them connect to a loved ones phone alert service, physician tablet and medical record. suddenly mom can stay at home another year maybe to maybe three. a all while managing her health. and if mom allows the data to be sent to you, you can be part of the solution. staying in touch and on top of her needs. and not insignificantly, your basement gets to keep its big screen tv. by 2050 there will be 83.7 million americans over the age of 65. twice the amount from 2012. 80% will have at least one chronic condition.

without question the age group's rapid growth will strain public and private health resources. the picture i painted is not a pipe dream but a cataclysmic outcome in aging adults. what is standing in the way of this dream. what is needed to make sure everyone can benefit from the new innovations. three quick messages. one, innovation helps happening. it can lead to lower costs better case, and improve patient outcome. the future will be founded on trust. which requires strong security and privacy measures. three, regulatory barriers outdated laws and lack of clarity around reimbursement are a threat to the advancement of mobile health. congress can and in cases must play an important role in helping health outcomes. questions about privacy security reimbursement and government regulation have met to create an environment where they are work to go make them

more medically relevant. patients and care providers but know their information is private and secure. industry best practices around sensitive health data to support these practices are important to establish trust and push the industry forward. clarifications on government access to data matter as well. including expert reform and lees act. as most of this information will eventually end up in the cloud. and congress has been pushing back on any government pressure to weaken encryption. finally, ensuring that doctors are reimbursed will be essential. currently, cms is statutorily prevented from certain monitoring because of absurd geographic restrictions and ant acquitted requirements. successful technology trumps and means to pay for it all come together.

i hope that happens now rather than see one more family member move out of the home they love because we failed to act. i look forward to your questions. >> on that note, i have questions. i recognize myself for a series of questions. mr. shapiro, you're not an engineer. you're a long recovering lawyer. but i'll ask you this question because i think your industry is well aware of the answer. as we sit here in error what percentage more or less of the band width are we using in this room, of the speier spectrum. if we were to look at the radio waves being used, the a.m. the fm, the old band width from television, what percentage of the spectrum is being used as we hit here? >> well, it's all spoken for. it uses a small percent. >> less than 1% will actually be

in these airways. i said i wasn't going to dwell too much on spectrum. if we are trying to create the a ability for an unlimited amount of communications between large and small devices, isn't one of our greatest tasks to recognize that we have allocated all the band width virtually and not used hardly any of it in any given time, any given room stpwhrfplt. >> yes. now i realize you gave me a softball. >> now you can take advantage of the devices. >> thank you. we through the laws, categorize it differently. by whether it's licensed or unlicensed. they have gotten for free a broadcast license and unlicensed anyone can use it. it promotes innovation. we calculated in a study we did

last year $62 billion of activity created by unlicensed spectrum. we are advocates for increasing the spectrum because it allows innovators to do cool things that will provide benefits. but there is a lot of spectrum that the government uses. what we are asking and there is legislation pending the government can figure out what can be repurposed for commercial purposes. it would create a huge amount of economic activity. if so it will make a tremendous a amount of money for the treasury. there is technology being developed which allows it will be split finer and fighter and used. that's some of the issues involving going forward. we are passionate about driverless cars and all the benefits and all the great things that are there. but we think there is an

opportunity there to look and test some of that being purposed for the area and split it up a little bit and share it. that's what mitch and i love to have wonderful conversations about. >> following up with mitch. mr. baywall there is going to be a lot of questions about obviously whether or not automobiles that are communicating with the internet are safe or not. and that's topical. but would it be fair to say that whether or not you share the band width has virtually nothing to do with whether or not you're going to be effectively hacked on your en crypted signals? that's a softball. >> well, maybe. and sometimes i can't do soft balls. and i'm also not an engineer. i think i would say a few things. >> one is as it relates to spectrum, we have heard the message from congress. and the notion of sharing if we can make that work. it is something that we really want to do. and field testing is going to happen in '15. and the notion of finding a way

to satisfy the spectrum but also meet safety is something that balance has to be struck and we are prepared to try to test to succeed rather than test to fail. so we are committed to that notion. i want to set the context in terms of v to v. this estimates that it could mitigate or eliminate up to 80% of all crashes on the road. and so the promise is overwhelming. the implications for life for injuries, for productivity are enormous. so i think the predicate for moving forward has on to do no harm. find a way to share but no harm. >> i want to quickly follow up. the history of data in the automobile has been one in the automobile manufacturers having proprietary data buses keeping them closed not publis