Building A Behemoth

hen President Bush proposed a new Department of Homeland Security to protect Americans against 21st century terrorist threats, he declared it was the biggest federal reorganization since 1947, the year Harry Truman combined the armed services into the Defense Department. The president may regret the comparison. Before Truman's effort had any effect on military coordination, it spawned the mother of all turf wars.

In the Navy, Truman's reform was seen as a pretext to help the Army gobble up the Marine Corps and to dissolve the Navy's aviation wing, which was threatened by the creation of the Air Force. This sentiment boiled over in May 1949, when a senior Navy official leaked a document to Congress that falsely alleged wrongdoing in the procurement of the B-36 bomber, the workhorse of the new Air Force. By sabotaging the B-36, some Navy officials believed they could win funding for a new aircraft carrier that would guarantee the survival of naval aviation. But after congressional hearings and a Navy investigation, the gambit backfired and some Navy employees lost their jobs.

Not only did defense reorganization fail to end interservice rivalry, it did almost nothing to improve joint military operations. As recently as the 1983 invasion of Grenada-where the military simply divided up the island, giving half to the Army and half to the Marine Corps-the services still were reluctant to work together. It took the 1986 Goldwater-Nichols Act to strengthen the Joint Chiefs of Staff and improve cooperation.

If previous reorganizations are any guide, it will take years for the Department of Homeland Security to mature into a well-run agency. Historically, reorganizations have been long, costly struggles that only sometimes have produced better-run programs. At other times, they have made things worse. Reorganization veterans point to the creation of the Energy Department in 1977, where reshuffling made life more difficult for the agencies involved. The legislation that authorized the department created a large staff of deputy secretaries to help the Energy secretary take control of the new department. In practice, the deputies acted as a barrier between agencies and the secretary, making it hard for officials in the field to gain top-level support. "The administrators at Energy are an example of bureaucracy at its worst," says Thomas Stanton, a fellow with the National Academy of Public Administration.

But history teaches only so much. In scale and scope, there is no real precedent for the creation of the Homeland Security Department. The department will absorb parts of 22 agencies with between 170,000 and 200,000 employees, depending on the final size of the Transportation Security Administration. Its dimensions are staggering. The department will inherit employees represented by 17 different labor unions. It will absorb 15 agencies with pay systems that differ from the standard civil service system, and 10 agencies that follow their own custom hiring methods. Dozens of information technology systems will have to be linked together in some way, a task that didn't exist in the reorganizations of 1947 or 1977. And since the bulk of homeland security work is done far from Washington, reorganization can't be an inside-the-Beltway exercise that ignores the needs of hundreds of field offices, or state and local officials.

At agencies slated to move, employees have dozens of questions about how reorganization will affect them. Will they have civil service protections? What will happen to programs that have nothing to do with homeland security? And if the department is headquartered outside Washington-a possibility under the Bush administration's proposal-how will Washington-area employees get to work?

Managers are uncertain whether they should continue projects involving their parent departments. For example, the Coast Guard, like other Transportation Department agencies, had planned to finish installing a financial system in fiscal 2003. But Mark Everson, deputy director for management at the Office of Management and Budget, says this project should be put on hold. "It is one of those issues that has to be very quickly reviewed," he says. "It would be unwise to act as though the Coast Guard will continue to be part of Transportation and as such ought to be part of Transportation's rollout on these systems."

Management questions like this will dog the new department for years, say veterans of previous reorganizations. In interviews for this story, seven federal management experts-including officials who helped design the Departments of Housing and Urban Development (1966) and Transportation (1967), and the Environmental Protection Agency (1971)-all worried that the complexity of the Bush reorganization will make the new department extraordinarily difficult to manage. "There has never been anything approaching a department proposal as complicated as this," says Alan Dean, a fellow with the National Academy of Public Administration. Dean managed the creation of the Transportation Department and served on the Hoover Commission, which issued a series of sweeping proposals for reorganizing the executive branch in 1947.

As complicated as it is, the administration's proposal contains scant detail on how the department will solve what many experts regard as the most glaring homeland security problem: poor coordination among the agencies involved. In fact, the White House says agencies actually have been working well together since the Sept. 11 terrorist attacks. "There is clearly an underappreciation from our team's perspective of how improved and efficient the interagency information sharing has been," says Mark Holman, chief of staff in the White House Office of Homeland Security. That's why some experts see the Homeland Security Department as less an effort to improve management and more a cudgel in the war against terrorism. This makes the Bush reorganization a throwback to the 1960s and 1970s, when new departments, such as Energy, were created as responses to great public problems.

The difficulty with this view is that some aspects of homeland security need clear management attention now. In April, the Justice Department inspector general found that from 1998 through 2001 the department failed to award more than half the money-$141 million out of $243 million-it was supposed to provide to train and equip state and local fire, police and emergency personnel. Even if the reorganization goes smoothly, it ultimately will mean little if the new department cannot fix problems like these.

REORGANIZATION ROULETTE

The job of setting up the department falls to the Office of Management and Budget, which has assembled two teams to manage the effort. One will tackle management issues that cut across the department, such as building compatible IT systems, while the other works on organizing the four broad divisions of the department: Border and Transportation Security; Emergency Preparedness; Information and Infrastructure; and Chemical, Biological, Radiological and Nuclear Countermeasures.

Some veterans of past reorganizations doubt OMB is up to the challenge. "OMB is incapable of doing it," says Dean. "They don't have a strong management staff and, anyhow, they're not going to be part of the new department." Dean believes reorganizations work best when they are directed by the agencies that will have to live with them. In the mid-1960s, agencies slated to move to the Transportation Department spent eight months crafting the legislative proposal for the department, and nine more months setting it up. The first Transportation secretary, Alan Boyd, was named before the planning began, providing a single leader who could settle disputes that flared up during the process.

The result was what Dean and others consider to be the best-managed reorganization in recent memory. When the department opened for business on April 1, 1967, employees arrived to find new phone directories and inch-thick books clarifying the new chain of command on their desks. They were able to begin routine work immediately, recalls Jack Basso, vice president of the American Association of State Highway and Transportation Officials, who was a clerk at the Bureau of Public Roads when Transportation opened.

Still, this relatively smooth reorganization turned bumpy when Boyd tried to consolidate print shops and other administrative functions in Transportation agencies. The agencies fought to preserve their own administrative offices. And employees at the Federal Aviation Administration, which had been an independent agency, were notoriously leery of their new home. For years, the FAA refused to fly the flag of the new department outside its headquarters.

Still, Transportation's creation was fairly straightforward, partly because the department was organized around the existing agencies that dealt with transportation. Any major consolidation of such agencies was out of the question: The FAA, for example, couldn't do the work of the Coast Guard. At the Homeland Security Department, on the other hand, some mergers of agency functions will be necessary-particularly if the administration is to make good on its claim that the new department can function without funding over and above that now allotted to its constituent agencies.

OMB already has taken the first step toward consolidating management systems at agencies slated to make up the new department. On July 19, before either branch of Congress had voted on the homeland security legislation, OMB invoked the 1996 Clinger-Cohen Act to freeze a slate of new technology projects at homeland security agencies. On July 30, OMB struck again, this time halting new financial management, procurement and human resources projects worth more than $500,000 each. The budget office now is reviewing all new investments at the agencies to get rid of redundant projects and consolidate financial, IT, and procurement systems, perhaps into single systems that could span the entire department.

"Clearly, an integrated and universal IT system would provide the best support for homeland security," wrote OMB Director Mitch Daniels in a July 19 memorandum. While OMB estimates that pooling all new investments in management systems could save $285 million over the next two years, complete consolidation of these systems will be enormously difficult. In financial management alone, seven homeland security agencies had planned to fund 21 separate systems next year.

OMB has tapped agency chief information officers, procurement executives, chief financial officers, and HR honchos to help steer the homeland security reorganization. The CIOs already have started taking an inventory of technology assets to see which systems-such as e-mail-could be standardized. OMB hopes to finish the reviews within a few months. Agencies, which want to revive the projects frozen by OMB, would like the process to move even faster. "I think [all the agencies] agree it needed to be completed yesterday," says Ronald Miller, CIO at the Federal Emergency Management Agency.

OMB also worked over the summer to persuade Congress to give extensive authority over the reorganization to the as-yet-unnamed Homeland Security secretary. Under the administration's proposal, the secretary could merge or eliminate almost all of the agencies transferred to the new department. Only the Secret Service and Coast Guard would be distinct. Both the full House and a key Senate committee have endorsed this broad reorganization authority.

Consolidation is likely within the border and transportation security division, which will be home to nine of 10 employees in the new department and account for two-thirds of the Homeland Security Department's $37 billion budget. Consolidation involving border security, an idea that has been kicked around since the 1970s, was the only reorganization proposal supported by the Clinton administration's National Performance Review. (The Treasury and Justice departments nixed the idea.) Customs and the Immigration and Naturalization Service, which includes the Border Patrol, share primary border management duties. Observers long have contended that the two agencies could better coordinate.

The administration "almost certainly will want to integrate those functions," says Elaine Kamarck, a professor at the Kennedy School of Government at Harvard University who directed the National Performance Review.

Agencies moving to the new department have their own ideas about how consolidation should work, and their efforts to implement these ideas will likely have at least as much of an effect on shaping the new department as directives from OMB. Veterans of reorganization say no amount of top-level management can prevent agencies from putting their own stamp on restructuring efforts. If history is a guide, a process that began in secrecy in the White House will be completed by agencies jockeying for turf and staking out new territory.

DON'T ASK PERMISSION

For much of the 1990s, the Coast Guard, INS and Customs were starved of resources and largely ignored by their parent departments. But Sept. 11 put a spotlight on how their traditional missions of protecting borders and regulating the flow of goods and people into the country relate to national security. The most adroit of these agencies have been positioning themselves for the future-and for the reorganization-ever since.

Consider the Customs Service. Within three weeks after Sept. 11, Customs created an Office of Border Security at its headquarters under Bonni Tischler, assistant commissioner for field operations. The office's primary mission was to help field inspectors target high-risk shipping containers for examination, but Tischler's team soon started churning out ideas to improve container security. The first was to enlist multinational companies to voluntarily secure their shipments, much as Customs had tapped the private sector to help stem narcotics traffic on the Southwest border. This initiative, known as the Customs-Trade Partnership Against Terrorism (C-TPAT), has enlisted more than 300 companies since its formal launch in November. Recently, C-TPAT expanded to include shipping companies and firms that transport air cargo.

Tischler, who retired in June, remembers the sense of purpose that she and her colleagues felt last fall. "It was an exciting time, it really was. It became apparent after the first couple days that we weren't just talking about keeping terrorists out of the country. We were also talking about how we keep the country moving trade-wise." Other projects were springing up as well. About the same time C-TPAT got under way, a career Customs investigator named Marcy Forman launched Operation Green Quest, a joint Treasury-FBI program to track terrorist finances.

Current and former officials credit Customs Commissioner Robert Bonner for getting these initiatives off the ground. Bonner, a former federal prosecutor who logged time in the Reagan and previous Bush administrations, proved adept at harnessing the best ideas of senior managers and selling them to the White House. "He had countless meetings with [Homeland Security Director Tom] Ridge, and some at the National Security Council, so they knew what we were doing," says Tischler. Bonner also helped devise the Container Security Initiative, a project that places Customs inspectors at major overseas ports.

When the news media began to focus on containers as potential terrorist tools, Bonner was quick to portray Customs as the lead federal agency on the issue. In June, he surrounded himself with Customs' latest detection equipment at a press conference timed to coincide with the release of Sum of All Fears, a movie in which the United States is attacked with a nuclear weapon that had been hidden in a shipping container. The message was clear: Customs can handle it.

In the Office of Homeland Security, officials were listening. Customs' container security measures were the only agency-initiated projects included in the administration's July 16 Homeland Security Strategy.

Customs officials see container security as a logical extension of their traditional role of inspecting cargo entering the country. When Customs folded shippers into C-TPAT, however, some experts questioned whether the Transportation Security Administration should really handle that job. But Customs never asked permission to expand its project, and since TSA has been preoccupied with airline security, the issue never erupted into a major controversy.

Now Customs is focusing on the homeland security reorganization. On July 12, Bonner told C-SPAN that moving the Border Patrol and inspectors from the Animal and Plant Health Inspection Service into Customs would improve border operations and save money. On July 15, he repeated this theme in a speech to the Heritage Foundation, a Washington-based think tank. "I think the president and the new secretary of the Department of Homeland Security should have the flexibility to see if it doesn't make some sense to reorganize those border functions and make them more effective and more efficient," he said. "That includes the possible consolidation of INS' border enforcement element into U.S. Customs [with APHIS inspectors] so we end up with one border agency, a U.S. Customs and Border Administration for our country."

Bonner, who has discussed absorbing the Border Patrol with senior officials at Customs, is said to be eyeing the top job in the border and transportation security division of the Homeland Security Department.

Other agencies also were quick to adapt their operations and plans to the events of Sept. 11. The Coast Guard secured support for its $10 billion, 20-year Deepwater project to upgrade ships, planes and other equipment it uses 50 miles or more offshore partly by emphasizing how the project would benefit homeland security. Adm. Patrick Stillman, Deepwater's director, believes other homeland security agencies could use the Coast Guard's deal with a team of contractors led by Lockheed Martin and Northrop Grumman to buy their border security equipment. "We fully intend to provide all members of the new department an opportunity to latch on to Deepwater in order to provide for far more cost-effective and efficient solutions," he says. Stillman adds that agencies could even pool their money and buy equipment together. "Intuition would lead you to believe that perhaps an [unmanned aerial vehicle] could have a Coast Guard stripe, a Customs seal and a Border Patrol seal on it."

But other agencies may balk at buying equipment that remains under Coast Guard control. "If the UAV is on a Coast Guard cutter, why would it have a Customs stripe on it?" says Ray Mintz, a former director of applied technology at Customs who is now a private consultant. "If an asset has all those badges on it, that's great, but so what? The issue is who gets the credit for making the bust."

MANAGING THE FIELD

Of all the initiatives outlined in the Homeland Security Strategy, only one could, theoretically, be run entirely from Washington: An inventory of key private sector assets by the Critical Infrastructure Assurance Office. Nearly every other department project will depend on hundreds of field offices that interact with state and local governments and the private sector.

The White House has made FEMA the lead agency to help state and local governments craft terrorism response plans. As a first step, it wants to funnel all first responder grant programs-$3.5 billion worth-through the agency. Centralizing the programs should help standardize the equipment and training the government provides, but it places a strain on FEMA, which lacks a large staff to dispense grants.

"I think it will be a tremendous challenge," says James Lee Witt, who headed FEMA during the Clinton administration. "When you add so many grants, you'll have to staff up and add financial management staff to review the applications."

Amy Smithson, an expert on terrorism preparedness at the Washington-based Henry L. Stimson Center, a nonprofit, nonpartisan international security research organization, worries that moving the grant programs will be another setback in the government's effort to work with first responders. "This is the fourth time these programs will have been moved. They started at the Army, then they went to the [Justice Department's] Office of Justice Programs, and now they're going to FEMA, and then FEMA will go to the Homeland Security Department. That speaks for itself," she says.

A more promising example of federal and local coordination is taking place at ports in South Florida. In late July, officials from nearly a dozen federal and local agencies gathered at the Port of Miami to conduct a joint inspection of shipping containers carrying hazardous materials. Firefighters from Miami worked alongside Customs inspectors. By law, the Coast Guard has jurisdiction over such containers, but the service doesn't have the personnel to do the job.

So Customs is tapping local firefighters to help out because they are trained to handle hazardous material spills. Firefighters, in turn, learn about the inspection process and can develop procedures for responding to emergencies at the port. Customs Special Agent John Clark, who helped organize the program, believes it could spread to other ports across the country. "It's the kind of exercise that one day may be routine in the new department," he says.

If that happens, it will be a strong indication that the officials who are managing the homeland security reorganization have accomplished their goals. The success of the effort will depend largely on whether the new department allows its components to push new solutions-a process that can involve turf fights-and whether the department's secretary is strong enough to rein them in. OMB's Everson is quick to say that the homeland security effort simply has to succeed, but he knows that reorganizations have failed before.

"I'm very conscious of the fact that we need to get people to cooperate. I think we are acutely conscious of the other failed attempts to bring about mergers that haven't worked," Everson says.