Security At Any Price?
Homeland protection isn't just Job 1 in Washington; it's more like a big old government ATM
Not too long ago--perhaps as late as Sept. 10, 2001--the term "homeland security" would have drawn blank stares from most Americans. But the terrorist attacks changed all that, probably forever. Today, a quick Google search of the term "homeland security" draws more than 40 million hits.
Even as bodies were still being recovered from the rubble of the Pentagon and the World Trade Center, the concept of protecting the American homeland from terrorists turned into an urgent priority--perhaps the top priority--for the federal government. In March 2003, 22 different federal agencies were merged into a massive new cabinet-level entity called the Department of Homeland Security. It was the single largest reorganization of the federal government since the creation of the Department of Defense, in 1947. Since then, vast oceans of money have been spent in the name of homeland security.
But what has it bought, exactly? A variety of studies have generally concluded that we are safer today, that homeland security initiatives have made a difference. Loopholes have been closed, security tightened. But those same studies and reports have also revealed a host of problems, many depressingly familiar to veteran government watchdogs. In Washington, following the money can be a particularly dispiriting enterprise. Five years ago, in fiscal year 2000, Washington spent just over $13 billion on homeland security. Next year, the federal government is expected to spend nearly $50 billion--a jump of almost 300 percent. "What we've seen," says Veronique de Rugy, a scholar with the American Enterprise Institute, "is nothing short of a sea change."
" Your idea." All that money has created the Washington equivalent of a Turkish bazaar. Almost every week, government-sponsored conferences lure all kinds of businesses with hopeful slogans about protection and security. One such conference, back in February, boasted on its website, "It could be your idea that helps shape the priorities for securing our country." In April, at a technology convention, dozens of exhibitors jammed into a corner of the Washington, D.C., convention center dubbed the Homeland Security Pavilion, peddling everything from software that allows first responders to check the FBI's criminal databases on their BlackBerrys to secure ID cards carrying a scan of the iris of an employee's eye. "This whole thing feels very personal and emotional now," said David Chung, director of business development at Fortress Technologies, a wireless security company in Oldsmar, Fla. "All our work-- all this activity --could ultimately go toward saving someone's life."
That there is a hive of activity is without question. In fiscal year 2004, the Department of Homeland Security approved $9 billion in contracts, and in the current fiscal year, it will award $11 billion. This summer, companies will compete for the American Shield Initiative, a contract that will increase the number of ground sensors and unmanned aerial vehicles at U.S. borders. Estimated price tag: $2.5 billion. The U.S. Visitor and Immigration Status Indicator Technology, or U.S. Visit, a program that collects fingerprints and photographs of international visitors, is expected to cost up to $10 billion; some in Congress are questioning the management of the contract.
Rainmakers. All that money has resulted in the replication of a time-honored Washington tradition: the revolving door. "The speed with which this one is turning is surprising," says Bill Allison, managing editor at the Center for Public Integrity, a watchdog group. "It's difficult to think of another agency that has had so much turnover in such a short period of time." Ethics rules generally restrict exiting government officials from lobbying their former employer for a year, but there have been some special exceptions created that allow former homeland security officials to lobby components of DHS--like the Secret Service or the Coast Guard--if they weren't directly involved with them previously. And there are no restrictions on lobbying Congress. Others say lobbying isn't even necessary. "In this town," says Ronald Marks, director of homeland security and intelligence programs at Serco, a government services provider, "just having a big name at your firm is a rainmaker."
In many ways, the spinning of DHS's revolving door began prior to the department's founding. In late 2002 and early 2003, just before Tom Ridge moved from the White House's Office of Homeland Security to become secretary of the newborn department, two of his top aides left for the lobbying world. Ashley Davis, Ridge's then special assistant, and Mark Holman, a man described in promotional materials for a speaking event as "the closest governmental and political adviser to [Ridge] for over 18 years," joined Blank Rome Government Relations LLC, a small lobbying shop in a law firm headed by a friend of Ridge's. Soon, Blank Rome was registered to lobby for companies like Boeing and BearingPoint--recipients of hundreds of millions of dollars in DHS contracts. Blank Rome's revenues grew 186 percent last year, the biggest growth spurt of any of Washington's 50 largest lobbying firms. The ethics rules do not prevent Davis and Holman from lobbying the Department of Homeland Security, because they worked at the precursor Office of Homeland Security, which was part of the White House. Critics call that hair-splitting, but Topper Ray, a spokesman for Blank Rome, disagrees. "The criticism is unwarranted and unfair," he says, noting that the White House homeland security office was "policy driven," with no "operational authority."
That may be, but the procession of DHS leaders to the private sector has only accelerated. In the past six months, more than a dozen top-level officials have left the department or announced their resignations, among them Ridge, Under Secretary Asa Hutchinson, and Adm. James Loy, a deputy secretary (box, Page 27). Many joined private-sector firms pursuing homeland security business. "I think we need experienced voices like myself that can help industry in a very tough environment," says Hutchinson of his new law firm post. Back at DHS, acting directors--or nonpermanent fill-ins--still occupy seven senior-level positions. The Transportation Security Administration is welcoming its fourth leader in three years. "DHS is not on the path to building up a competent cadre," says Richard Clarke, who served as terrorism czar under Presidents Bill Clinton and George W. Bush. "And that's worrisome."
"Whipsawed." Investigators have repeatedly questioned whether the agency is spending its money wisely. Congress's Government Accountability Office, the DHS inspector general's office, and congressional investigators have issued reports that have repeatedly highlighted a pattern of troubling spending decisions. Early on, DHS was plagued by the speed with which the department was put together after September 11 and the urgency of its mission to secure American airports, seaports, and borders. "In many ways, we were doing this whole thing with a gun to our heads," says Bob Liscouski, DHS's former assistant secretary for infrastructure protection. "We were basically being whipsawed between al Qaeda on one side and Congress with their deadlines on the other."
The tight timetables resulted in accelerated purchases of equipment that ultimately proved unable to do the job, some observers say. The machines that screen checked baggage for explosives, for instance, incorrectly flag 15 to 30 percent of all luggage, a recent news report says. Portals that check for radiation at ports and border crossings are also plagued by flaws (box, Page 28).
Former DHS Inspector General Clark Kent Ervin says the agency's performance has been marred by "several consistent, thematic problems" that show up in many contracts--including an absence of competitive bidding or insufficient oversight of the many contractor employees who work at DHS. The Transportation Security Administration overpaid Boeing by $49 million on a contract to install baggage-screening equipment, Ervin says. Boeing spokesman Fernando Vivanco insists that "the TSA, not Boeing, set the terms of the contract." And a no-bid contract had the TSA spending $461,000 on a party to celebrate the agency's first birthday.
During his almost two-year tenure as inspector general, Ervin was considered by many a junkyard dog. His replacement, Richard Skinner, has initiated another round of biting critiques. Last month, he released a report detailing "unethical and possibly illegal" expenditures made by TSA employees outfitting an operations center in suburban Virginia. Inadequately trained employees spent $500,000 on silk plants and artwork. Kitchens were outfitted with Sub-Zero refrigerators costing $3,000 each. And the belly of the building was filled with a 4,200-square-foot gym costing $300,000. "This is just déjà vu all over again," Ervin said of the revelations. "TSA is rapidly becoming the poster child for contracting dysfunction."
But some progress is evident. DHS has significantly increased its staff for contract oversight. At TSA just three years ago, for instance, a lone employee supervised performance of all of the agency's contracts. Today, 54 employees are assigned to contract-oversight duties. DHS has also established an Investment Review Board comprising top-level officials to keep an eye on, among other things, acquisitions that cost more than $100 million. But the board, says Ervin, is a "toothless tiger." A recent GAO report said the board didn't always do a good job establishing the costs of future investments and that lines of authority over procurement were still confused at DHS. But Mike Sullivan, the chief author of the GAO report, says the agency has been responsive to GAO's recommendations.
Battle lines. DHS money has been subject to all kinds of demands from a host of constituencies. The Urban Area Security Initiative was initially designed to use a risk-based formula to distribute $100 million to the nation's most vulnerable cities; it began with just seven municipalities, but after the White House and DHS were inundated with complaints from areas left off the list, the program extended eligibility to 30. This year, 80 cities and mass-transit agencies are in line for program grants. According to a report by Skinner, similar issues dogged the first three rounds of the port security grant program: Hundreds of projects deemed without merit by the grant-program staff received money from DHS, including some in Martha's Vineyard and some in St. Thomas, in the Virgin Islands. Other grant recipients used the money for purposes unrelated to homeland security. Marc Short, a DHS spokesman, says a different office now oversees the grant program; the nation's 66 most at-risk ports will be the only areas allowed to apply for grants in fiscal year 2005.
The battle lines are clearest in debates surrounding the funding formulas used to distribute grant money to the states. President Bush requested $3.36 billion in funding for DHS state and local grants for fiscal year 2006 alone. After the 9/11 attacks, Congress included a provision in the Patriot Act that required all states to receive a minimum share (0.75 percent) of the state grant money. That gobbled up 40 percent of the allocated funds; the rest was divvied up based on population. What emerged seemed curious to many: Last year, rural Wyoming received $37.74 in grants per capita, while New York, the target of repeated terrorist attacks, came away with $5.41 a head. Other big winners: the Virgin Islands and the Northern Mariana Islands (chart, Page 26).
Robots. "First responders all over this country weren't getting the money they needed," says Rep. Christopher Cox, a California Republican who heads the House Homeland Security Committee. "Political pork," adds Cox, was skewing the system. In Wyoming, police bought enough hazmat suits for every officer, as well as Miss Daisy, a robot capable of dismantling bombs. Officials in Lake County, Tenn., used federal money to help a high school buy a defibrillator for a high school basketball tournament.
Another controversial chunk of DHS money goes to fund research at colleges and universities. According to the watchdog group Citizens Against Government Waste, Congress has given out $100 million more to DHS education programs than requested by the president over the past two years. Some of this money--$18 million--has gone to a center at Dartmouth College (in the home state of Senate Appropriations homeland security subcommittee chair Judd Gregg) that researches cybersecurity. Congress created that center--and five others to study domestic security issues--before September 11. Gregg says he shouldn't have to apologize for maintaining their funding. "If we don't initiate think-tank approaches in responding to terrorists," he says, "then we'll be losing our best advantage in the war on terror, which is intellectual expertise."
Critics have also raised questions about Centers of Excellence, educational consortiums pursuing research relevant to DHS, which have received lucrative seed grants. Texas A&M University, for instance, hosts the Homeland Security National Center for Foreign Animal and Zoonotic Disease Defense, which studies things like avian influenza and vaccines for diseases passed from animal to man. For this work, DHS gave Texas A&M and its partners a three-year grant. Value: $18 million.
Texas lawmakers tried unsuccessfully to earmark funds for the program at Texas A&M during negotiations over the creation of DHS. When the school won the grant through a competition two years later, critics complained, saying the wording of DHS's proposal for the research center precluded broad competition. "As a student of the arts," says an education lobbyist, "I would say the whole thing was very artfully done." Neville Clarke, the director of the new center at Texas A&M, concedes that the actions of the state's congressional delegation created an appearance of bias, but he says his school--a longtime agricultural leader--earned the center "fair and square."
As questions about DHS expenditures have mounted, several efforts have been made to change the agency's procedures and formulas, increase oversight, and improve the way it does business. For now, however, the fate of these initiatives remains uncertain. Congress, for instance, is debating whether to change DHS funding formulas. Representative Cox has proposed allocating 90 percent of the grant money by using formulas that give priority to high-risk areas. Under his plan, every state would still receive at least 0.25 percent of the grant money. This month, Cox's plan passed handily in the House, but it's headed toward a collision in the Senate, where Susan Collins of Maine and Joe Lieberman of Connecticut have sponsored a bill that would guarantee that every state receive at least 0.55 percent of the DHS grants. The bill, however, would double the funds going to high-risk states. "It is important first responders in all states receive the proper equipment and training to be prepared for all attacks," says Collins. "It's well known that the 9/11 attackers trained and hid in small towns."
The 0.25 percent minimum allocation has been supported by the new homeland security secretary, Michael Chertoff, a no-nonsense former U.S. attorney and head of the Justice Department's Criminal Division who has come out of the blocks making no bones about his intention to shake things up. "We cannot protect every single person at every moment in every single place," Chertoff said in his first major policy address--and he hasn't stopped since. Chertoff has urged his department's inspector general to take a hard look at big-dollar contracts and repeatedly pointed out the silliness--in his view--of spending money to protect the two-lane bridge down the street from his home. A terrorist attack on the bridge, he said, would have "a relatively low consequence compared to an attack on the Golden Gate Bridge."
Bridges are hardly the only things Chertoff is pondering these days. Currently, he's in the midst of a massive review of his entire 180,000-person department--a process he said could result in changes in its organization and mission. Sources close to the review say the secretary plans to look closely at the agency's role in gathering intelligence and that he most likely will create a new high-level position within DHS specifically to oversee all policy matters. "Old categories, old jurisdiction, old turf," Chertoff warned, "will not define our objectives or the measure of our achievements."
The department appears to be closing ranks behind him. On April 1, DHS released a document that promised to clarify once and for all priorities in its funding of first responders. Among them: improving information sharing among different branches of government and expanding regional collaboration among first responders. "I think this will transform things tremendously," says Matt Mayer, the director of the office making the grants. Others say the new list of priorities lacks specifics. "I told my students," says Clarke, the former antiterrorism czar, who now teaches at Harvard University, "that if any of them had turned in such an anemic little list of goals for our first responders, I would have flunked them."
Despite Chertoff's insistence on change, the Department of Homeland Security clearly has a ways to go before Clarke, or a lot of other folks, will be ready to offer the department a passing grade.
In fiscal year 2004, the Department of Homeland Security approved $9 billion worth of contracts. In the current fiscal year, the total awarded will reach $11 billion.
DHS funds have been pushed and pulled by a host of constituencies.
Between homeland security and a bloated budget, deficits stretch to the horizon.
Spreading the Loot Around
President Bush has asked for $3.36 billion for state and local homeland security grants in fiscal year 2006. One of these formulas will determine how most of that money is divvied up.
New proposals ...
90 PERCENT PLAN
The House plan begins by carving up the money based on risk. States receiving less than 0.25 percent of the funds are topped off to that level; certain border states are raised to 0.45 percent. Still, 90 percent of funds are allocated according to risk.
60 PERCENT PLAN
In the Senate proposal, states are guaranteed a minimum percentage of the money, ranging from 0.55 percent to 3 percent, depending on population density. The remaining 60 percent of funds are rationed according to risk.
CURRENT FORMULA
First, each state and territory is handed 0.75 percent of the pot of money, a process that swallows up 40 percent of the funds. Remainder is split up based on population.
Grant dollars per capita--2004 (latest available)
$104.35 VIRGIN ISLANDS
$90.36 GUAM
$54.00 NORTHERN MARIANA ISLANDS
$37.74 WYOMING
$37.54 AMERICAN SAMOA
$34.16 DISTRICT OF COLUMBIA
$31.43 VERMONT
$30.82 NORTH DAKOTA
$30.18 ALASKA
$26.32 SOUTH DAKOTA
$24.86 DELAWARE
$22.66 MONTANA
$20.00 RHODE ISLAND
$17.75 HAWAII
$17.44 NEW HAMPSHIRE
$17.26 MAINE
$16.65 IDAHO
$14.10 NEBRASKA
$13.73 WEST VIRGINIA
$13.39 NEW MEXICO
$11.84 NEVADA
$11.56 UTAH
$10.65 KANSAS
$10.63 ARKANSAS
$10.32 MISSISSIPPI
$10.20 IOWA
$9.30 CONNECTICUT
$9.27 OKLAHOMA
$9.18 OREGON
$8.82 PUERTO RICO
$8.57 KENTUCKY
$8.52 SOUTH CAROLINA
$8.24 ALABAMA
$8.24 LOUISIANA
$8.17 COLORADO
$7.81 MINNESOTA
$7.57 WISCONSIN
$7.53 MARYLAND
$7.45 MISSOURI
$7.43 ARIZONA
$7.37 TENNESSEE
$7.22 WASHINGTON
$7.21 INDIANA
$7.14 MASSACHUSETTS
$6.75 VIRGINIA
$6.49 NORTH CAROLINA
$6.45 NEW JERSEY
$6.40 GEORGIA
$6.19 MICHIGAN
$6.00 OHIO
$4.97 CALIFORNIA
$5.24 TEXAS
$5.41 NEW YORK
$5.45 FLORIDA
$5.85 ILLINOIS
$5.89 PENNSYLVANIA
Source: "What Does Homeland Security Spending Buy?" a report by Veronique de Rugy
USN&WR
With Danielle Knight and Samantha Levine
This story appears in the May 30, 2005 print edition of U.S. News & World Report.