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Testimony of Director Mark Sullivan Before the House Subcommittee on Homeland Security Appropriations, on the Secret Service's Fiscal Year 2011 Budget Request

Release Date: 
April 16, 2010

Washington, D.C.
(Remarks as Prepared)

INTRODUCTION

Good morning Chairman Price, Ranking Member Rogers, and other distinguished Members of the Committee. It is my privilege to appear before you today to discuss the President’s fiscal year (FY) 2011 budget request for the U.S. Secret Service. I would like to begin by thanking you for your tremendous support over the last several years. Given the increased operational requirements we saw late in the 2008 presidential campaign and during the transition, this Committee responded quickly by providing the Secret Service with the funds to make staffing adjustments, enhance protective countermeasures, and address interoperable communications deficiencies with our partner agencies. Those investments have yielded a stronger, more nimble agency at a time when the complexity of our dual mission presents constant challenges.

Since the level of protective travel and number of major events, such as designated National Special Security Events (NSSEs), are often unknown until after our budget request is formalized, the Secret Service uses protective activity from previous years to assist in the development of our budget. Although we look at historical averages and other trends to project the rate of protective travel from year to year, the added uncertainties presented in the transition from one administration to the next can be a particular challenge. For example, in my appearance before the Committee last year, I testified that President Obama and Vice President Biden had publicly announced that they would engage in at least one overseas trip per month during their first year in office. From January 2009 through January 2010, President Obama engaged in 31 international travel stops, a 158 percent increase compared to former President George W. Bush’s first year in office. During the same period, Vice President Biden engaged in 21 international travel stops, compared to one international travel stop during former Vice President Cheney’s first year in office.

In addition to the increased international travel for the President and Vice President, the Secret Service was responsible for planning, coordinating, and implementing security operations for eight NSSEs in FY 2009, the most ever designated in a single fiscal year. The Presidential Inauguration, which in past years necessitated a single NSSE designation for the ceremony itself, as well as other events in the Washington, DC area, was broadened to five separate designations last year, including a train trip from Philadelphia, PA to Washington, DC, with large rallies in Wilmington, DE and Baltimore, MD, as well as a large concert event at the Lincoln Memorial. At the 64th United Nations General Assembly (UNGA) in New York City, the Secret Service prepared security plans and protected 189 heads of state and government and 60 spouses more than a 40 percent increase over the 63rd UNGA. Concurrent with the 64th UNGA, the Secret Service was also responsible for security operations associated with the G-20 held in Pittsburgh, PA, which President Obama attended with of 37 heads of state and government, along with their spouses.

The men and women from the Secret Service’s domestic and international field offices spent roughly half of their time supporting these protective efforts in addition to successfully dismantling a number of transnational criminal groups targeting our nation’s

financial institutions. For example, the established partnerships developed through our Electronic Crimes Task Forces (ECTFs) led to the Secret Service’s successful investigation into the network intrusion of Heartland Payment Systems (HPS). This investigation revealed that data from more than 130 million credit card accounts were at risk of being compromised and transferred to a command and control server operated by a transnational criminal group involved in other ongoing Secret Service investigations. An August 2009 indictment alleges that this transnational criminal group used various network intrusion techniques to breach security at HPS, navigate the credit card processing environment, and capture payment transaction data.

In addition to this protective and investigative activity, the Secret Service made additional progress on several large-scale projects in 2009 that were funded with the support of this Committee. The relocation of the Joint Operations Center (JOC) was completed in July 2009 and became operational in November 2009. As of February 2010, major construction of the new White House mail screening facility was 99 percent complete, and is scheduled to be operational following a testing phase of the specialized screening equipment and transition from the current facility. During FY 2009, the Secret Service screened more than three million pieces of mail and other parcels for hazardous materials to ensure the safety of those who live, work, and/or visit the White House Complex―a three-fold increase over the one million pieces screened in FY 2008. Given the increased volume of mail associated with the new administration, the Secret Service must be vigilant about the possible introduction of biological or other hazardous agents entering the White House Complex through the mail system.

FY 2011 BUDGET REQUEST SUMMARY

In alignment with the Department of Homeland Security’s (DHS) Quadrennial Homeland Security Review (QHSR), the Secret Service continues to manage known risks while making the investments necessary to prepare for evolving threats. The QHSR report that was recently transmitted to Congress notes that, “the American way of life depends upon the effective functioning of the Nation’s critical infrastructure and key resources, and the protection of key leadership and events.”1 The Secret Service’s dual mission to protect our national leaders, visiting heads of state and government, designated NSSEs, as well as to investigate crimes directed towards our nation’s banking and financial infrastructure, is critical in this regard.

The FY 2011 budget request for the Secret Service focuses on four primary areas: funding to provide the necessary training and equipment that will be needed in advance of the 2012 presidential campaign; funding to enhance protection of the White House Complex and other protective sites; funding to sustain critical investigative operations in the areas of protective intelligence, cyber crimes directed at our nation’s banking and financial institutions, and counterfeit suppression; and funding to address information technology (IT) and communications deficiencies in programs that directly support the protective and investigative mission.

The budget request totals $1.57 billion, an increase of $89 million (or 6 percent) over the FY 2010 enacted appropriation. Roughly half of this proposed increase represents adjustments to the base totaling $43.2 million which includes the following: $8 million to implement the Uniformed Division Modernization Act; $2.9 million for routine maintenance and replacement of detection equipment for the new White House mail screening facility; $19.5 million to accommodate pay adjustments associated with General Schedule pay increases; second year funding of $198,000 for staffing in support of the Information Integration and Transformation Program; third year funding of $9.7 million for protective mission staffing provided in the FY 2009 Omnibus Appropriations Act (P.L. 111-8); third year funding of $190,000 for international field office staffing; third year funding of $184,000 for staffing associated with cyber crime investigations; third year funding of $1.2 million for the former President George W. Bush post-presidency detail; and third year funding of $1.3 million for staffing associated with the enhanced protection of White House protectees.

Program increases proposed in the budget total $62.6 million and include $14 million for the start-up costs associated with the 2012 presidential campaign, and $36 million for the procurement of equipment and staffing associated with the Information Integration and Transformation Program. The budget also includes $12.6 million to begin the discovery, migration planning, and scheduling activities related to the DHS data center consolidation effort. Finally, as part of the Department’s goal to achieve efficiencies, the President’s budget proposes decreases totaling $16.8 million which include: $9.6 million for staffing provided in P.L. 111-8; $3.2 million for protective countermeasures; and $4 million for domestic field office operations.

PROTECTIVE OPERATIONS

For protective operations, the FY 2011 budget request provides funding to enhance protection of the White House Complex and other protective sites, and funding to provide the necessary training and equipment that will be needed in advance of the 2012 presidential campaign. This includes $8 million to fully implement the Uniformed Division Modernization Act. Contingent on passage of the authorizing legislation, these funds would provide the Secret Service with the resources needed to meet ongoing recruitment and retention challenges within the agency’s Uniformed Division.

The men and women who serve on the Uniformed Division are highly trained professionals responsible for protecting the White House Complex, the Vice President’s residence at the U.S. Naval Observatory, as well as providing a dedicated police presence and response to 537 foreign missions located in the Washington, DC area. Uniformed Division personnel assigned to the White House Branch process thousands of staff members, other workers, members of the press, individuals on official business, and tourists at the White House Complex on a daily basis. Through the effective use of fixed posts, foot and bicycle patrols, and police cruisers, these personnel are responsible for security throughout the White House Complex. Uniformed Division personnel assigned to the Counter Sniper Unit, Canine Unit, and the Emergency Response Team also provide

critical protective support to ensure the safety of the President, Vice President, and their families.

Uniformed Division Modernization Act

In recent years, the Uniformed Division has faced ongoing recruiting and retention challenges. This is in part because of its current pay structure and its inability to use certain hiring flexibilities, such as offering higher starting salaries to applicants who have prior state or local law enforcement experience. In addition, the administration of pay for Uniformed Division personnel is complicated by the fact that a majority of the governing authorities for Uniformed Division pay issues reside in the District of Columbia Code, rather than in Title 5 of the United States Code.

The Uniformed Division Modernization Act (S. 1510), which is currently pending before Congress, would create a new salary table for Uniformed Division members that establishes consistent rank and step increases, and provides for faster step progression. The pending legislation would also give the Uniformed Division new hiring flexibilities, and move the bulk of the governing authorities for Uniformed Division pay and compensation issues out of the District of Columbia Code and into Title 5 of the United States Code. The Office of Management and Budget has advised that there is no objection to the pending legislation, and that its enactment would be in accordance with the President’s program.

2012 Presidential Campaign

In addition to their critical role in securing the White House Complex, Vice President’s residence, and other protective sites, Uniformed Division personnel are also responsible for magnetometer operations during NSSEs and presidential campaigns. During the 2008 presidential campaign, magnetometers were used by the Uniformed Division to screen more than 4.2 million people―a 77 percent increase over the previous campaign.

Although the 2008 presidential campaign and related security activities associated with the transition ended just last year, the Secret Service is already beginning the necessary planning and advance work for the 2012 presidential campaign. This early preparation is critical because of the time required to provide advanced protective training to Secret Service employees and DHS partner agencies participating in campaign security activities. In addition, the Secret Service requires start-up funds to procure, outfit, and preposition sufficient protective vehicles to transport the expected number of protectees, and to purchase an adequate amount of technical security equipment to appropriately secure their residences and sites to be visited by the candidates.

For the start-up costs associated with the 2008 presidential campaign, the Secret Service received $18.4 million in FY 2007. This figure was formulated based upon the fact that there would be no incumbent President or Vice President running for office; therefore, the Secret Service would be required to provide protection for the sitting President and Vice President, as well as presidential and vice presidential candidates from each party.

In comparison, the Secret Service received $8.1 million in FY 2003 for start-up costs associated with the 2004 campaign when President Bush and Vice President Cheney ran for re-election. Further, campaign start-up costs for FY 2003 were initially formulated prior to the terrorist attacks on September 11, 2001.

The $14.0 million requested for the campaign in FY 2011 reflects a decrease in costs when compared to the 2008 start-up based on the expectation that President Obama and Vice President Biden will run for re-election. The $14.0 million also reflects the costs associated with procuring and deploying communications and other electronic equipment, protective vehicles, and advanced technical devices that provide an enhanced security environment for the candidates.

INVESTIGATIVE OPERATIONS

During presidential campaigns, NSSEs, and routine protective travel, the Secret Service’s international and domestic field office staff enables the protective details to conduct their operations efficiently with little lead time. Our field office personnel provide invaluable assistance to the protective details through their well-established, professional relationships with local, state, federal, and international law enforcement partners in their respective districts.

In addition to the critical support the Secret Service’s investigative field staff provides to the protective mission, the overall success of our mission is attributed to our roots as a law enforcement agency committed to protecting American consumers and industries from financial fraud. To build on the investigative successes of the past year, the FY 2011 budget request provides funding to sustain our efforts in the areas of protective intelligence, cyber crimes directed at our nation’s banking and financial institutions, and counterfeit suppression.

Cyber Crime Investigations

Consistent with recent news reports on cyber crime attacks targeting online financial systems, the Secret Service has seen an increase in network intrusions, hacking attacks, malicious software, and account takeovers leading to significant data breaches affecting every sector of the American economy.

Last year, the International Association of Chiefs of Police (IACP) and the International Association of Financial Crimes Investigators (IAFCI) recognized the Secret Service’s work on the TJX Companies, Inc. (TJX) investigation, which was one of the largest and most complex cases of its type in U.S. history. While cyber criminal groups operate in a world without borders, the law enforcement community does not. The transnational, multi-jurisdictional nature of these crimes has increased the time and resources needed for successful investigation and adjudication. These investigations also require seamless coordination between Secret Service domestic and international field offices, headquarters, and our law enforcement partners throughout the world. For example, in the TJX investigation, the Secret Service worked with domestic law enforcement partners as well as those in Estonia, Thailand, the United Arab Emirates, Turkey, Ukraine, Spain, Belarus, and Germany.

Counterfeit Suppression

The Secret Service’s well-established relationships with our international law enforcement partners would not be possible without our permanent presence in 22 international offices in 18 countries. In addition to the successes we have seen with respect to cyber crime investigations, our international offices have also assisted with the suppression of counterfeit U.S. currency. For example, Project Colombia is a continuation of the Secret Service’s efforts to establish and support Vetted Anti-Counterfeiting Forces (VACF) in Colombia. Since its inception in 2001, Project Colombia partners have seized approximately $239 million in counterfeit U.S. currency, arrested more than 600 suspects, suppressed close to 100 counterfeit printing plants, and reduced the amount of Colombia-originated counterfeit passed within the United States by more than 80 percent.

As a collateral effect of our investigative successes in Colombia, the criminal element has been pushed to other parts of South America. For example, from FY 2008 to FY 2009, the Secret Service noted a 156 percent increase in worldwide passing activity of counterfeit U.S. currency emanating from Peru. These counterfeit notes, referred to as the Peruvian Note Family, have emerged as one of the leading domestically passed notes in the last 12 months. In response to the increase in passing activity of the Peruvian Note Family, which was second only to the domestic passing of digital counterfeit in FY 2008, the Secret Service formed a temporary Peruvian Counterfeit Task Force (PCTF) in collaboration and partnership with Peruvian law enforcement officials. Since opening in Lima, Peru on March 15, 2009, the PCTF has yielded 31 arrests, 17 counterfeit plant suppressions, and the seizure of more than $19 million in counterfeit U. S. currency. Due to the overwhelming success of the PCTF, the Secret Service and Peruvian law enforcement officials have agreed to extend operations for an additional six-month period in FY 2010.

INFORMATION INTEGRATION AND TRANSFORMATION PROGRAM

The Secret Service has become increasingly reliant on technology to support its day-to-day operations. In support of the protective and investigative mission, the Secret Service must modernize its IT infrastructure and communications systems. The network and mainframe system used today struggles to meet operational demands, and is incompatible with federal guidelines for information sharing, enterprise architecture, and privacy protection. To address these deficiencies, the Secret Service has been working with the DHS Chief Information Officer (OCIO) for several years to address immediate infrastructure concerns while providing a long-term plan to replace our legacy mainframe IT system with a modern, web-based environment that can meet the demands of today’s mission requirements.

One example of the need for this modernization effort is the White House Communications Agency (WHCA) interoperability project. Between 2003 and 2008, WHCA modernized its telecommunications infrastructure by transitioning to Internet Protocol, or IP, for all voice, satellite, video, secure voice, and wireless communications. This modernization effort revolutionized WHCA’s overall communications capacity while rendering Secret Service systems and devices incompatible. Thanks to the funding this Committee provided in the FY 2009 Omnibus Appropriations Act, the Secret Service has initiated the upgrade of obsolete systems by integrating Radio over Internet Protocol, Voice over Internet Protocol, Secure Communications Interoperability Protocol, and multi-level secure technologies into the IT and voice infrastructure to achieve interoperability and full communications parity with WHCA. The FY 2011 budget request will enable the Secret Service to continue with these critical upgrades which will improve the security, performance, and reliability of our IT infrastructure and communications capabilities to meet mission requirements.

In addition to the WHCA interoperability project, the FY 2011 budget request also provides funding for the Secret Service to increase the security posture of our internal network, provide more storage to handle data for existing operations, improve information sharing capabilities, allow for the scheduling and tracking of all resources needed to support mission operations, and begin the migration planning and scheduling activities related to the systems and applications that will transition from the Secret Service to DHS Data Centers.

CONCLUSION

The Secret Service was created in 1865 as a bureau of the Treasury Department with a sole mission to suppress the counterfeiting of United States currency. One of the earliest Congressional references to the Secret Service Division was on August 5, 1882 in an act making appropriations for the legislative, executive, and judicial expenses of the government. That act provided, “For one chief, three thousand five hundred dollars; one chief clerk, two thousand dollars; one clerk of class four; two clerks of class two; one clerk of class one; one clerk at one thousand dollars; and one attendant at six hundred eighty dollars; in all, twelve thousand nine hundred and eighty dollars.” What is striking about this early reference is not only the amount of money provided, but the focus on the people. As I have said on many occasions, the strength of the Secret Service has been, and always will be, its people.

Despite the challenges the agency has faced over the last two years, the diverse men and women of the Secret Service remain vigilant and prepared for what lies ahead. At this moment, the Secret Service and its partners are currently engaged in security planning for the Nuclear Security Summit in Washington, DC next month, which was designated an NSSE by Secretary Napolitano on February 6, 2010. Later this year, we anticipate that the President, Vice President, and other protectees will be traveling concurrently to attend Congressional and gubernatorial campaign events around the country, and expect international travel stops to continue at a pace consistent with what we saw during the past year.

Further, as the complexity of cyber and other crimes directed at our nation’s banking and financial institutions grows, the Secret Service will continue to foster relationships with local, state, and federal law enforcement partners through our network of ECTFs and Financial Crimes Task Forces (FCTFs). We will also continue to provide the necessary computer-based training to enhance the investigative skills of our special agent workforce through the Electronic Crimes Special Agent Program (ECSAP). Finally, since one of the main obstacles encountered by special agents investigating transnational crimes are jurisdictional limitations, the Secret Service will continue to build partnerships with our international law enforcement counterparts in the coming year to further our efforts to disrupt criminal groups abroad from targeting our nation’s critical financial infrastructure.

In closing, I would like to thank you again for the opportunity to be here today. I look forward to working with the Committee as you consider the President’s FY 2011 budget request and would be happy to answer any questions you may have at this time.

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