LEXIS-NEXIS® Congressional Universe-Document

LEXIS-NEXIS® Congressional

October 20, 1999, Wednesday

TYPE: COMMITTEE HEARING

LENGTH: 28464 words

COMMITTEE: MILITARY PROCUREMENT SUBCOMMITTEE OF THE HOUSE ARMED SERVICES

HEADLINE: U.S. REPRESENTATIVE DUNCAN HUNTER (R-CA) HOLDS HEARING ON DEPARTMENT OF ENERGY SECURITY ISSUES

LOCATION: WASHINGTON, D.C.

BODY:
HOUSE ARMED SERVICE COMMITTEE: SUBCOMMITTEE ON MILITARY

PROCUREMENT HOLDS A HEARING ON DEPARTMENT OF ENERGY SECURITY

ISSUES

OCTOBER 20, 1999

SPEAKERS: U.S. REPRESENTATIVE DUNCAN HUNTER (R-CA), CHAIRMAN

U.S. REPRESENTATIVE FLOYD SPENCE (R-SC)

U.S. REPRESENTATIVE BOB STUMP (R-AZ)

U.S. REPRESENTATIVE JAMES V. HANSEN (R-UT)

U.S. REPRESENTATIVE JIM SAXTON (R-NJ)

U.S. REPRESENTATIVE JAMES M. TALENT (R-MO)

U.S. REPRESENTATIVE TERRY EVERETT (R-AL)

U.S. REPRESENTATIVE J.C. WATTS, JR. (R-OK)

U.S. REPRESENTATIVE WILLIAM M. "MAC" THORNBERRY (R-TX)

U.S. REPRESENTATIVE LINDSEY O. GRAHAM (R-SC)

U.S. REPRESENTATIVE JIM RYUN (R-KS)

U.S. REPRESENTATIVE JIM GIBBONS (R-NV)

U.S. REPRESENTATIVE MARY BONO (R-CA)

U.S. REPRESENTATIVE JOSEPH R. PITTS (R-PA)

U.S. REPRESENTATIVE ROBIN HAYES (R-NC)

U.S. REPRESENTATIVES NORMAN SISISKY (D-VA), RANKING MEMBER

U.S. REPRESENTATIVE IKE SKELTON (D-MO)

U.S. REPRESENTATIVE JOHN M. SPRATT, JR. (D-SC)

U.S. REPRESENTATIVE LANE EVANS (D-IL)

U.S. REPRESENTATIVE ROD R. BLAGOJEVICH (D-IL)

U.S. REPRESENTATIVE THOMAS H. ALLEN (D-ME)

U.S. REPRESENTATIVE JIM TURNER (D-TX)

U.S. REPRESENTATIVE ADAM SMITH (D-WA)

U.S. REPRESENTATIVE JAMES H. MALONEY (D-CT)

U.S. REPRESENTATIVE MIKE MCINTYRE (D-NC)

U.S. REPRESENTATIVE CYNTHIA MCKINNEY (D-GA)

U.S. REPRESENTATIVE ELLEN TAUSCHER (D-CA)

U.S. REPRESENTATIVE ROBERT BRADY (D-PA)

GLENN S. PODONSKY, DIRECTOR, OFFICE OF INDEPENDENT

OVERSIGHT & PERFORMANCE ASSURANCE, DEPARTMENT

OF ENERGY

GILBERT G. WEIGAND, DEPUTY ASSISTANT SECRETARY FOR

DEFENSE STRATEGIC COMPUTING & SIMULATION,

DEPARTMENT OF ENERGY

DR. C. PAUL ROBINSON, DIRECTOR, SANDIA NATIONAL

LABORATORIES

GENERAL EUGENE E. HABIGER, DIRECTOR, OFFICE OF

SECURITY & EMERGENCY OPERATIONS, DEPARTMENT

OF ENERGY

EDWARD MCCALLUM, ACTING DIRECTOR, COMBATING TERRORISM

TECHNOLOGY SUPPORT OFFICE, DEPARTMENT

OF DEFENSE

*

CHAIRMAN: The subcommittee will come to order.

The chairman, Mr. Hunter, is attending another event, and he will be joining us very shortly, but in the meantime, we wanted to go ahead and get started.

And, first, let me apologize to our witnesses and all our guests for the delay. There was, as you may know, another hearing in this room before we got started, and it has caused the schedules to get messed up.

Without objection, I will put the statement of the chairman, Mr. Hunter, into the record at this point, and ask the ranking member, Mr. Sisisky, if you have any comments you'd like to make.

SISISKY: I'm delighted that our guests are here, and I've been at that whole meeting since 9:00 this morning, so I will put my, with no exceptions, in the record.

CHAIRMAN: Without objection.

We will first hear testimony from Mr. Edward McCallum. Mr. McCallum was an employee of the Department of Energy for 25 years and director of the office of safeguards and security at DOE for the last ten.

We will next hear testimony from Mr. Glenn Podonsky, the director of DOE's office of independent oversight and performance assurance. Mr. Podonsky's office evaluates security and emergency operations at DOE facilities.

Mr. Gil Weigand, the deputy assistant secretary of energy for defense, strategic, computing, and simulation will then discuss the sale of a supercomputer by Sandia National Laboratory which could have had national security and proliferation implications.

He'll be followed by Dr. Paul Robinson, director of Sandia, who will explain the sale and recovery of the computer.

Finally, General Eugene Habiger, often referred to as DOE's new security czar, is the director of DOE office for security and emergency operations. He will describe the efforts of his office to improve DOE security.

With that brief introduction, let me turn to the witnesses, and, Mr. McCallum, you may proceed.

MCCALLUM: Thank you, Mr. Chairman, ladies and gentlemen, congressmen, and congresswomen.

I'm here today at your request to speak with the committee about my observations of the Department of Energy's safeguards and security program.

As has already been described earlier this year, DOE's arrogant disregard for national security was clearly described in the June '99 report on security at the Department of Energy by the president's foreign intelligence advisory board, chaired by Senator Rudman.

The title, "The Best of Science, the Worst of Security," set the stage for Congressman Cox's committee report on espionage at our national laboratories. It's clear today that DOE has sacrificed nuclear security for other budget priorities and has jeopardized national security by failing to protect our laboratories against widespread espionage and possible terrorist attacks.

I'm currently assigned to the Department of Defense as the acting director of the combating terrorism technology support office, under the assistant secretary for special operations and low intensity conflicts.

However, over the past nine years, I served as DOE's director of safeguards and security, as you already stated. In this capacity, I was responsible for the policy that governs the protection of the DOE's national security assets, including nuclear weapons, nuclear materials, highly classified material and facilities.

As the director, my team provided senior DOE management with sound professional judgment regarding security of our nation's most critical strategic nuclear assets. We provided specific action plans to correct shortcomings, even though much of what was recommended was not considered politically correct since the end of the Cold War.

The steady decline in resources available to the DOE safeguards and security program, as well as a lack of priority, allowed the department's security posture to deteriorate to a point where it is not effective.

Numerous unclassified reports from the office of safeguards and security issued between 1994 and 1999 document the reduction of the department's security readiness. These reports are supported by hundreds of classified incident and inspection reports that provide detailed analysis.

The information I present today is not new. The message has been repeated consistently over the last decade in such reports prepared by my office as the annual reports to the secretary in 1996 and 1997. In fact, these reports were frequently referenced and footnoted in the PFIAB report this spring.

External reviews, such as the report to the secretary by General James Freeze, or the review by the Department of Defense's nuclear command and control staff report on oversight in DOE in 1998, cite similar concerns.

There have also been dozens, literally dozens, of GAO office reports addressing these areas.

We have frequently reorganized, restructured, and studied these issues; however, the department has not chosen to resolve these serious and long-standing problems.

I'd like to briefly cover just a few specifics to introduce the committee to the severity of the issues. I must point out, however, that I've been off the DOE security scene for six months, and there may have been some changes, as the department has attempted to correct some of these issues. But it's clear to me that there remains a serious need for an infusion of technical expertise in the department and continuous external oversight or the problems will not be fixed except in the short run. Reorganization and reshuffling will not suffice.

One of the areas covered very heavily in the last year has been information security. Because of the espionage issues, the issues covered heavily by Congressman Cox, there's been a multitude of activity in the department. Indeed, just before I left, we were preparing a number of action plans to try to bring the department's laboratories and facilities up to speed. I think we're still sitting at the center of the worst spy scandal in our nation's history. We knew our greatest secrets were being stolen and we did nothing about it.

The DOE's computer security program has suffered from a variety of problems. Of primary concern is the lack of protection for unclassified systems. Until recently, little guidance was issued.

And as early as 1995, the chief information officer at the Department of Energy and my office collaborated with the field elements to develop a comprehensive manual. However, there was resistance at the labs and by the program assistant secretaries in Washington, because they believed that providing protections, such as firewalls and passwords -- what I would consider simple, commercial, and grade security -- was unnecessarily expensive and a hindrance to science. As a result, implementation of the computer security manual was prevented completely.

A variety of the computer security tools and techniques which would have been implemented, things as simple as using different floppy disc sizes between classified and unclassified systems, would have prevented many of the problems which have surfaced in reports to you ladies and gentlemen in the last year.

Despite the most severe and candid briefings to the secretary on compromises of nuclear weapons data at our national laboratories, we were still unable to move essential policy changes forward. Although we were well aware of ongoing espionage, it was not until parts of Congressman Cox's report were made public that DOE began to react.

In another area, which is of great concern to me, protective forces. There has been little public interest lately; however, it's an equally serious cause for concern.

An example would be, in 1992, the number of protective forces -- since 1992, the number of protective forces at DOE sites nationwide has decreased by almost 40 percent. That should be contrasted with a gain of almost 30 percent in the quantities of special nuclear materials at our facilities. And when I say special nuclear materials, those are defined in our orders and regulations as materials which can be used to make nuclear weapons.

HUNTER: Now, would you repeat that, Mr. McCallum? What declined by 40 percent?

MCCALLUM: Mr. Chairman, the number of protective forces, the men and women who carry firearms and protect our facilities against theft of nuclear materials, weapons, or sabotage, declined by about 40 percent, from a number of around 5,600 to a current number of around 3,500, depending on how that's changed since I left.

As I already said, they protect our facilities. They would be the first responders who would react in case of an attack, either by outsiders or a wayward insider who we've given access.

The number of security police officers has declined to the point where it's questionable at some facilities whether the DOE security force can defeat an adversary.

MCCALLUM: By 1996, several facilities were no longer capable of recovering a nuclear asset if it were lost due to terrorist action or an insider action. Indeed, a number of sites have even stopped training for this mission because resources were reduced below the minimum level necessary to expect success.

In order to rationalize these severe reductions, several of our sites began using unrealistic performance tests to verify their protective forces could win. For instance, artificial safety constraints were imposed on exercise Adversarial Red Teams that effectively neutralized their ability to operate. Last year, a review by a DOD special operations team at one of our sites reported that needlessly restrictive exercise rules for the intruders were unnecessary and resulted in a false sense of security.

This is related directly with physical security systems. The aging and deteriorating security systems throughout the DOE complex, including at such sites as Los Alamos and Rocky Flats, are a serious concern. Systems, including things like sensors, alarms, access control and video systems, are critical to ensure the adequate protection of special nuclear material and classified information, including nuclear weapons parts.

Many facilities have systems ranging in age from 14 to 21 years and are based on technology developed in the mid-'70s. Because of the obsolescence of these systems, they fail too frequently, and replacement parts and services are increasingly expensive and hard to obtain, also requiring very expensive and sometimes unreliable compensatory measures, meaning guard forces have to be assigned instead of sensors.

Older systems are also vulnerable to defeat by advanced technologies that are clearly readily available to potential adversaries who would like to enter our facilities. Continued reductions in budget, delays and cancellations in line-item construction funding increase the risks to our facilities and materials.

Further, DOE is not realizing some savings available through advancements in technology that have increased detection assessment and delay capabilities. As an example, the Air Force consolidated many of their nuclear weapons at one facility at Kirkland Air Force Base, reducing -- closing many other facilities and saved a tremendous amount of money. Depending on what source you go to, it's as much as half of their protection budget was saved.

I'd like to cover another area quickly and then move forward to some suggested fixes. I also fear that a recent decision by the department to have program assistant secretaries fund the cost of personnel clearances will have severe repercussions in the future. Since implementing this new approach, at least when I left the department, we were already seeing a dramatic increase in the backlog of personnel security investigations.

As well as other security areas, program offices must decide between competing interests when determining which areas to fund. Unfortunately, security activities are related and relegated to a lower tier in terms of importance by many organizations. As a result, the first and best line of defense against both insiders and espionage -- adequate funding and timely conduct of reinvestigations -- is critical for DOE to maintain a security posture that ensures only trustworthy individuals are given access to critical nuclear security assets.

Now to what you're probably more interested in is a path forward.

Operating beneath the surface of some of these major shortfalls are some fundamental issues that, if properly addressed, could provide the impetus to affect real change. These challenges are not new nor are there solutions.

The first area is safeguards and security program funding. I believe this is the central and root cause issue for failed security in the Department of Energy. As previously stated, when headquarter's program assistant secretaries face shortfalls in funding, there's a tendency to cut security programs in greater proportion than other program elements.

In recent years, these cuts have been made routinely without the benefit of assessing the impact of these cuts on the security of our sites or the safety of site personnel and surrounding communities. The implementation of virtually every security program has suffered significantly. Many of these cuts are ill-advised, and, as we have seen, they have led to serious security lapses. Nevertheless, my office had no authority, nor does the office that I left have the authority to ensure implementation of departmental security policies and regulations.

The new DOE security czar, General Habiger, still does not have a budget for implementation of anything. Safeguards and security budget for DOE should be provided through one line item to the DOE security director, not various assistant -- program assistant secretaries.

Program fragmentation and fragmentation of security funding has been in place in DOE for 20 years, and it has not worked. Without an adequate budget there is simply no authority in this government.

The second area which should be looked at is performance exercises. A centrally funded and well-integrated national security exercise program is critical to meet the safeguards and security protection needs of DOE and the nation. Regulations in existence today require exercises annually at DOE sites. However, many of the sites and exercises are conducted without the participation of local law enforcement, the FBI and other federal offices that should be involved. Their lack of participation makes these exercises largely meaningless.

Under Presidential Decision Directive 39, U.S. Policy on Counterterrorism, and Presidential Decision Directive 62, Protection Against Unconventional Threats to the Homeland and Americans Overseas, the secretary is directed to conduct exercises to ensure the safety and security of its nuclear facilities from terrorism.

With the cooperation and support of the FBI, several regional exercises were conducted at DOE sites last year. However, funding and commitment are far short of the required goals. My staff estimated that DOE is meeting only about 25 percent of site requirement.

Significantly, the majority of the funding for exercises resides at the site levels where expenditures must vie with other immediate program needs. Exercise funding should be centrally managed from a line item budget to assure the monies are available and spent on exercises.

The third area I'd like to cover is oversight. It must be obvious by now that attempts to implement internal oversight of the DOE safeguards and security program have failed over the last decade; indeed, many times over the last two decades. While there have been brief periods when oversight has been effective, organizational and budget pressures have played too central a theme for this function to remain within the DOE. When the student develops the grades and grades their own test and writes their own report card, there is no independent oversight.

Currently, internal oversight should be consolidated under the security director or abolished. Additionally, an organization like the commission on safeguards and security and counterintelligence for the Department of Energy facilities, proposed by the Senate in Section 3152 of the National Defense Authorization Act for fiscal year 2000, should be established rapidly to ensure independent review of security at DOE and its laboratories. This would fulfill long-standing recommendations of both the GAO and the Congress.

Further, a direct information mechanism of some type needs to be established with one or more of the congressional committees that have oversight of these areas in the Department of Energy.

Lastly, I'd like to talk briefly about organizational structure and accountability. In all of the reviews of the safeguards and security program conducted during the last decade, there is one recurring theme: namely, the organizational structure of the department's safeguards and security program does not align program authority and responsibility and is too often open to manipulation by the contractors.

Severe fragmentation of the safeguards and security program staff guarantees a lack of accountability in the program

For example, the current structure of the safeguards and security program has one organization developing policy, training and providing technical assistance to the field, the office of safeguards and security; another organization providing funding and implementing guidance, the headquarters program assistant secretaries.

A third tier, the operations offices, is responsible for implementation, while a fourth is responsible for oversight, formerly known as EH, and I guess now it's the OA, which Mr. Podonsky will address.

A fundamental change in both the organizational structure and funding of the safeguards and security program is absolutely necessary before the department can begin to systemically and systematically address the major challenges. These organizations must be consolidated with policy, guidance and implementation in one location and with an appropriate budget to participate in decision-making within the department.

Secretary Richardson recently announced the creation of a new security czar for the department. According to the secretary's pronouncements and the things that I've read in the newspapers, many of the concerns that I've cited today are being addressed.

However, the secretary's statements and the actual actions occurring within the department sometimes seem startlingly different. Program assistant secretaries continue to maintain separate security staffs. These staffs can be largely ineffective, because they're small, they lack some knowledge in areas, their experience levels are low, and they favor parochial interests frequently over national security concerns.

A disturbing document that I read recently entitled, "Safeguards and Security Roles and Responsibilities," was circulated by Sandia National Laboratory. It would give the security czar less authority in the Department of Energy than I had for the last 10 years.

Specifically, in the proposed security structure, critical approvals would be delegated from headquarters to the very laboratories that have allowed critical losses. Important security plans as well as approval of exceptions to national and departmental regulations would be delegated to the field. And, finally, oversight inspections would be conducted for cause-only based on initial reviews and self-inspections by the labs. Worse still, this internal oversight program wouldn't even report to the so-called czar.

Ladies and gentlemen, this devolution of the few authorities reserved to the DOE is in direct conflict with the serious negligence identified in both Congressman Cox's report and that of the PFIAB. It is the organizational equivalent of sending the fox in to count the hens.

In short, closing, I would like to mention the most positive aspect of the department's safeguards and security program. The program is staffed by hard working dedicated men and women, both federal and contractor, who are firmly committed to protecting the national security assets entrusted to their care. Despite the dwindling resources available to them, these individuals continue to perform in an outstanding manner.

Where this department has failed is in providing these professionals the necessary resources to allow them to perform their responsibilities safely and appropriately. The department has also failed to provide management support and protection so that individuals will bring forward problems and deficiencies without fear of retaliation.

Thank you, Mr. Chairman.

HUNTER: Thank you, Mr. McCallum.

Mr. Podonsky.

PODONSKY: Mr. Chairman, I have a prepared statement that runs about eight or nine minutes or I have a summary. I'd like to ask the chair which you would prefer?

HUNTER: Without objection, then you just go ahead and summarize your testimony, if you would.

PODONSKY: OK. Then, I'd like to submit my written testimony for the record.

HUNTER: Without objection, it's going to be received. In fact, without objection, all written statements will be taken into the record.

PODONSKY: Mr. Chairman, and members of the subcommittee, I appreciate the opportunity to discuss the status of security programs at the Department of Energy nuclear facilities, including the results of our most recent inspections.

I am the director of the office of independent oversight and performance assurance, which is a direct report to the secretary; has a responsibility for conducting independent oversight inspections of safeguard and security, cybersecurity and emergency management within the Department of Energy.

Since we were established, we have had three major focus areas: review of safeguards and security programs that have known problem areas, evaluating the effectiveness of cybersecurity programs in both classified and unclassified arena and evaluating the DOE emergency management programs.

As reported in the most recent annual report to the president, one or more important safeguard and security program elements at several DOE defense program sites were rated less than satisfactory. As a result, the undersecretary of energy established a goal and a plan for achieving a satisfactory status at all DOE defense program facilities by the end of this calendar year.

Based on our inspection of problem sites from the national security perspective -- Los Alamos National Laboratory, Lawrence Livermore National Laboratory, Sandia National Laboratories, and the Y-12 plant -- it is clear to us that a positive trend has been established. At every site we have evaluated, safeguard security programs have received high levels of management attention over the past year, and there have been significant improvements. As just one example, Los Alamos National Laboratory has now established an effective firewall to protect against unauthorized penetration of their unclassified computer network.

Although significant progress has been made, there is much work left to accomplish to achieve the goal of fully satisfactory programs at all DOE sites. The most prevalent problems we are currently seeing are in the areas of protection of the non-nuclear components of nuclear weapons -- which are the classified weapons parts -- and unclassified cybersecurity.

At the four sites we have reviewed, only Los Alamos National Laboratory was assigned an overall satisfactory rating. The other three sites were rated as marginal. However, based on their corrective action plans, we believe that Livermore and Sandia are on track to making improvements needed to achieve a satisfactory rating.

The inspection of the Y-12 plant, which was completed on October 8 -- wasn't complete on October 8, and we are anticipating receiving their corrective action plan next week. While the Y-12 plant) had significant challenges to overcome to achieve a satisfactory status, DOE headquarter organizations are coordinating their efforts to ensure that the needed improvements are being made on an expedited basis.

There are indicators that safeguard and security is on a positive track to achieving satisfactory programs within a short timeframe. The sites corrected many of their identified weaknesses soon after they were identified.

Unlike the past, the sites have developed corrective action plans that address each of the oversight findings. I must note that this is a major sea change in the Department of Energy. In my last 15 years of inspecting the Department of Energy, the department never tracked or seldom tracked its issues and findings and then corrected the problems. That's a difference today from what Mr. McCallum was just talking about in his statement.

Before the end of the year, we will be doing follow-up activities at all of the sites and we'll provide DOE senior management with an unbiased and independent perspective on progress toward the goal of fully satisfactory programs at all these sites.

PODONSKY: Prior to this organization being directly put under the secretary of energy, we had conducted independent oversight for 15 years. Our reports, many of which Mr. McCallum just referred to in terms of issues and findings, have documented many of these issues, but much of what Mr. McCallum just stated, however, in the last seven months have been corrected, as far as we can see from our inspections.

At the time, prior to seven months, there was no element of DOE that was adequately addressing these issues. We believe that this has now changed with the infrastructure that Secretary Richardson has put into place in which the policy organization under General Habiger, together with the program offices that are responsible for implementing, together with the oversight, are working to a common end of improving safeguard and security in the Department of Energy.

Thank you, Mr. Chairman.

HABIGER: I'd like to thank you, Mr. Chairman, and members of the committee for the opportunity to speak to you today regarding the current status of security at the Department of Energy.

Let me make it clear right up front that I did not come out of retirement from San Antonio, Texas, to be involved in mere reorganization and reshuffling. I'm here to make things happen, and I can report to you that things are happening.

I had not met Secretary Richardson before our meeting in June when he interviewed me for the job. I must tell you, I'm very impressed with him and what he's doing.

Since my arrival at the department, I have visited all of the department's major sites, reviewed virtually all of the site security plans, observed and participated in segments for our protective force training to include qualifying on the side arm rifle and shotgun that we use with our protective force.

I've examined our newly implemented cybersecurity procedures at our national laboratories, I've talked to hundreds of scientists, technicians, and security policeman, and I've taken -- and happily I am here to report I passed -- the DOE-administered polygraph test.

This is what I've found so far, Mr. Chairman.

First, it's clearly obvious that the department reacted appropriately to the wake-up call received this past year with the uncovering of internal security problems and the publication of both the Cox and the Rudman reports. And I will also tell you that those two reports formed the checklist for me as I began my initial work in the department.

Second, through (sic) security throughout the department is being administered responsibly and conscientiously by dedicated, hardworking professionals who are firmly committed to protecting the critical national security assets. These responsibilities of these individuals are demanding, yet despite obvious challenges they continue to perform in an outstanding manner.

Finally, although we do have security issues which we must and will address, I found all sites that I had visited have the foundation to perform their security functions capably, given adequate resources.

But I also discovered several troubling issues.

First and foremost, it was apparent to me early on that the department was extremely close to losing the confidence and trust of both the American people and Congress with respect to our ability to perform our security responsibilities. The enormous media coverage surrounding recent security related events, coupled with DOE's historical track record of security deficiencies, added to this erosion of public trust.

Secondly, and equally as important, I discovered that over the years the department had lost its focus on security. Let me emphasize that, Mr. Chairman -- we had lost our focus on security. The secretary, on several occasions, has referred to the department as being a group of fiefdoms within fiefdoms, and almost every fiefdom had its own security responsibility and security budget. There was no office within the department who had ultimate accountability for our security requirements.

Byproducts of this organizational dysfunction and lack of focus included a deterioration of security awareness and education resulting in a failure to remind and educate our employees and contractors as to their personal security, responsibilities, and accountabilities; a lack of attention to our cybersecurity practices in a world of increased computer hacking and cyberterrorism; and a gradual erosion or resources required to improve our capabilities to combat ever- changing terrorist and cyberterrorist threats.

And, finally -- and this is a big issue with me, Mr. Chairman, and members of this committee -- Congress has yet, up to this point, failed to fund the department's FY2000 budget amendment which came forward in July in order to make near- and long-term fixes.

We have valid requirements in the area of cybersecurity. For example, we have a valid requirement for $35 million to jump-start our cybersecurity program, and we got zero dollars in our request.

In addition, we need to equip our protective forces to combat weapons of mass destruction -- chemical, biological warfare equipment -- to fully arm our headquarters protection forces. Over at the Forestal building, less than 50 percent of our protective force is armed, because we can't afford the training for our people there -- and to complete our headquarter security upgrades.

And we were flogged for all the right reasons for not having a robust foreign visitor access program. We have no money to start that program, Mr. Chairman. Nor do we have any funds to set up an acceptable plutonium, uranium, and special nuclear materials control and accountability program.

Simply stated...

HUNTER: General Habiger?

HABIGER: Yes, sir.

HUNTER: Let me just hold you up for a second. Your lab leaders came to this Congress and begged us -- and I'm looking at one of them right now -- to continue the foreign visitor program. That wasn't imposed on you by Congress. That's been requested by the labs as an important part of the lab culture and the lab operation.

So, the idea that now -- now that they've asked us to have that, you don't have enough money to administer it, this subcommittee has asked you and your representatives from DOE about 15 times to give us what the ticket is, what the bill is, for the foreign visitor program. They've always deflected and deferred the question.

You're the first one that has sat there and said it actually costs money to operate that program. So, I'm going to put it on you to find out how much it costs and give us the bill, and maybe we'll take a second look at whether we need to have it or not.

HABIGER: I appreciate that, Mr. Chairman, you'll get it.

HUNTER: Please proceed.

HABIGER: You'll get it very quickly.

Simply stated, we have been given a mandate but not the resources to accomplish that mandate.

Through a series of comprehensive and sweeping initiatives by Secretary Richardson, the department has turned the corner, in my view, and has aggressively and dynamically changed the way it does its security business.

Another important step was to change the way the department managed its security responsibilities. In this regard, the secretary worked diligently to remove the organizational barriers that has historically impeded the department's ability to effectively and efficiently implement a comprehensive security program within the department.

Very quickly, Mr. Chairman, I'd like to outline the four-phase program that I've initiated since coming into this position.

First, in phase one, which was completed in August, I initiated visits to each of our DOE sites in the field and established a baseline from which to move forward. Areas requiring immediate fixes were identified. During this period, a complex-wide security standdown was conducted to promote security awareness as a valid individual responsibility. New policy was implemented for foreign visitors who visit our facilities to ensure that the tightest possible security procedures were followed.

In phase two, currently underway, I completed the visits to the sites and issued -- we're in the process of issuing policy, addressing key issues as standardized weapons for our protective forces, the requirement for protective forces to keep a round in the chamber of their weapons.

We weren't necessarily training the way we would fight. We now have policies in the field which mandate the timely reporting of security incidents, the use of warning banners on computer systems and badge validation procedures.

We are developing an integrated security awareness training curriculum, and two similar personal security assurance programs will be combined into a single departmental human reliability program to eliminate redundancy and streamline the administrative process.

In the area of cybersecurity, the national laboratories have implemented numerous corrective actions. Key among those is a program to achieve physical incompatibility between removable media formats within common laboratory work areas.

We are taking sweeping action in an effort to prevent the intentional or inadvertent transfer of classified information from classified to unclassified systems or to a media format easily concealed or removed.

Phase three, which will occur from January to March of next year: At this time, most or our new policies to fix security will be implemented, and I'll reevaluate while visiting the field to see the effectiveness of these policies.

And we are developing metrics so we can measure what we're doing.

When we reach phase four in April of next year, the proposed fixes will be in place and our efforts turned toward adjustments as we maintain and improve our security program.

We cannot control or alter the threats to the security interests entrusted to our care. But what can be controlled, however, is our ability to plan and respond to threats, should they ever materialize.

The changing security environment and other threats over the past decade have fundamentally altered the department's security perspective and posture. This is a significant challenge, but one that the Department of Energy is prepared to meet.

And, Mr. Chairman, if I may, I'd like, for just a few minutes, to talk about some of the issues that were addressed by Ed McCallum at the end of the table.

First of all, Ed has a great reputation. I've seen his work. He has done magnificent things for the department to correct and identify many of the problems that I and my staff are working today. But I'd like to correct the record, if I could. As Ed pointed out, he's been out of the fight for about six months now, and there have been some significant changes.

First, backlog of investigations. Mr. Chairman, we no longer have a backlog of background investigations, reinvestigations. And whatever backlog we have for new hires, I will be monitoring that on a monthly basis. You can put the backlog of investigations in the Department of Energy in the "it's been corrected" category.

Ed stated the new security czar does not have the budget of implementation of anything. Well, that was one of the contract items that I had with the secretary before I hired on. He understood, the secretary understood, I understood that if you don't have the control of the purse, so to speak, you don't have much control of anything. Now, we have some missionary work to do with the authorization of the Appropriations Committee, but for the FY2001 budget, the president's budget that will be coming over, there will be a separate line item for all security dollars, and I will have control over those dollars.

Ed made reference to a disturbing document entitled "Safeguards and Securities Roles and Responsibilities" and how that document would seriously degrade my authority. I couldn't agree more. That document is OBE'd (ph) and is not any way, shape, or form a policy document.

That's my opening statement, Mr. Chairman.

HUNTER: Thank you, General.

Dr. Robinson.

ROBINSON: Thank you, Mr. Chairman. I appear before you to testify on a much narrower issue, the issue of questions surrounding Sandia's sale of an excess Paragon computer. I have prepared a longer statement for the record that gives all the details. If I may, I'll just summarize briefly.

Mr. Chairman, I think there is less here than has met the eye in this matter. Sandia's excess computer was neither sold nor exported to the People's Republic of China, nor was it made operational. And no classified information was released with or on the computer when it was transferred.

The story of the computer, its role in our laboratory, its declaring to be excess, is delineated in the testimony. It was compared against the high-risk list of materials; it is not on the list. It was circulated for availability within the entire federal government, including calling sites that had computers of the same type asking if they would like to use it for spare parts. There was no interest. It was then advertised for sale twice to U.S. corporations. In the end, it was sold to a U.S. corporation.

The fact that the system was disposed of in a completely lawful manner does not...

HUNTER: Won't you describe, too, Dr. Robinson, what finally happened to the computer for members of the committee here.

ROBINSON: OK. The computer was sold to a company whose principals -- so we later learned -- was a citizen of the People's Republic of China. As a result of the Cox Commission training, one of the individuals who was involved in the sale came forward to the laboratory management and said, "Gee, I think that individual might not be a U.S. citizen but could be a Chinese citizen."

We began to investigate. We informed the Department of Energy at that time. The Department of Energy directed us to find out what the status of the computer was. We found the computer was stored in a site in Cupertino, California, where it had originally been transported after the sale. The individual allowed us to inspect the system.

ROBINSON: It was suggested that in order to be sure there was no possibility that this computer could ever be exported, even though it was clearly marked as export control on the documentation and on all the containers, that we buy it back. Indeed, we did buy it back.

Now, I would like say, am I satisfied with Sandia's performance that what we did was lawful and had checked all the squares? I'd like to tell you the answer is no.

I think we do have a higher obligation, as a national security laboratory, to put a lot more due diligence into looking is there any hypothetical us. Even though my experts tell me if they were given the same problem of obtaining computers to do supercomputing calculations by buying it from the market, this is not the route they would have gone; that there are many other routes available that were available a year ago at the time of this sale that would be far more advantageous than this much older vintage computer, which carried high operating costs and a high failure rate.

As I looked into it, I did find some serious problems, I think, within our U.S. laws, and I have suggested to you in the testimony some steps we might take together. The law prohibits, in the sale to a U.S. corporation, of making an inquiry as to the citizenship of the owner of that company. I think for items that are export controlled, it would be appropriate that you not only check to see what the ownership is, but that if it is a country listed on our sensitive countries list, as established by the State Department and by which we rate the seriousness of visits to the laboratories, that any country -- any company that is controlled by members from a sensitive country we should prohibit such sales. Had I known about this sale at that time and that the individual was a citizen of the PRC, I would have said, "No. We should ask for a waiver not to sell the device." And, so I've proposed some suggested fixes for your consideration.

I would like to point out that the initial press stories of this were far from the facts of the case, and indeed no harm to U.S. security resulted from the incident, but I think we're all wiser by the exercise that has taken place and the lessons learned including looking at gaps in our coverage for treating for such matter of export controlled material to U.S. companies.

HUNTER: OK. Dr. Robinson, thank you. Mr. Weigand.

WEIGAND: Thank you, Mr. Chairman. I would like to shorten my testimony just a small amount. Dr. Robinson's covered a couple of items that I have duplicated, but I would like to read into the record a part of my testimony.

Mr. Chairman and distinguished members -- I'd also like to do one other...

HUNTER: Could you get a little closer to your mike there, sir?

WEIGAND: Is that better?

HUNTER: That's better, yes.

WEIGAND: I'd also like to introduce three people that are with me here from the Department of Energy that were all involved in the examination and subsequent review of the events that took place around this Paragon machine. First one is Steven Michaelson (ph). He's with the Office of Contracting Resource Management; he's a director there; then it's Trish Dedick (ph), who is the director of the Office of International Policy and Analysis in our Office of Arms Control and Nonproliferation, and, Mr. Bill Hensley (ph), who is the director of Security for the Defense -- Office of Defense Programs.

Mr. Chairman and distinguished members of the committee, I'd like to thank you for inviting me to testify on security issues. In my capacity as deputy assistant secretary for research, development and simulation for the Office of Defense Programs, I oversee the nuclear weapons research and development simulation work at Los Alamos, Lawrence Livermore and Sandia National Laboratories.

While my office had no direct role in the sale and recovery of the Sandia Intel Paragon computer, I will try to provide you with the information from the department about that incident. I am best prepared to address the capabilities of the computer itself, and the computers in general, with regard to their use in the U.S. Nuclear Weapons Program, although to answer your questions on computers in some degree of detail, it may be necessary to speak in a classified environment.

The department named an Incident Review Team to conduct an investigation of the sale and recovery of the Paragon computer. Experts on procurement and export controls from the department's Office of Contract Resource Management and Office of Arms Control and Nonproliferation, with background in procedures and requirements regarding such transactions were asked to perform the investigation and to provide the department with a report of their findings.

I'd like to ask that a copy of that report, dated September 23, 1999, titled "Sandia National Laboratories' Sale of an Intel Paragon Supercomputer," be entered into the hearing record as part of my testimony today, and I'd also like the cover letter that I have sent out to Dr. Robinson asking that a corrective action plan be developed on the 11 points found in this incident report be also entered in the record.

I'll skip over, since the record will have the report -- it basically indicates the 11 recommendations that we've now asked Dr. Robinson to follow.

I want the committee to know that I fully supported the department's decision to investigate the Sandia Intel Paragon incident, and my office provided support to the experts who were assigned to the team. At the DOE, Nonproliferation Office of Arms Control and Nonproliferation led recovery activities and provided the investigative input of the subsequent review. That office, along with DOE's management and administration, Office of Contract and Resource Management, provided the department with the incident report.

I want to just give you a brief idea of what this computer was so that the committee does understand quite possibly its impact on national security. The Intel Paragon is basically a five-year old computer. It was declared obsolete by Sandia. After determining that there were no U.S. government agencies interested in the system, it was sold by Sandia on September 29, 1998 to a...

HUNTER: Would you discuss the capabilities of the computer, too, in your description?

WEIGAND: Yes, I will. I just wanted to basically say that it was sold to this company -- licensed American company, EHI Group, in Cupertino, California. And Dr. Robinson described what happened thereafter.

As far as the computer goes, depending upon its operating configuration, this Intel Paragon is capable of 150 million theoretical operations per second to about 200 million theoretical operations per second. And there's that wide gap, because it depends upon how you sum up the adders and arithmetic units in that computer, how you ultimately get a number. There's no single to describe it. It's in that range. It is a very powerful computer.

While the theoretical speed does sound impressive, in practical terms there are limitations with regard to this system. It was a forerunner of a research machine used in part to learn how to build the next generation computers. That computer generation computers does now exist at Sandia; it's called our Teraflux (ph) computer.

Today it would be -- it would be the most useful in an academic setting for research on parallel computer machines. The other use for it would be for spare parts on similar types of machines. The machine would be very expensive to operate and not very efficient when anyone tried to use it in a production mode. It did have, though, some of the U.S.' foremost and advanced interconnect technology and was sold with its operating system still on the machine, although the disk drives on which classified processing was done were not sold with the machine.

I think that the single most important statement probably that you could make about the machine's power is to a nation that has little computer power capability, the capability of this machine would represent a significant capability. It would be a substantial advance from anything that would be obtainable on the market.

And the rest of my remarks are basically stats and facts about the computer, and they'll be in the record.

HUNTER: OK. If you could, Mr. Weigand, just put that in context of the control range that we have for computers in terms of MTOPS.

WEIGAND: I will attempt to do that for you, and if I err, I'd like to Ms. Dedick (ph) help me.

HUNTER: Sure. We'll let you revise and extend; don't worry.

WEIGAND: My understanding is that we have about a 7,000-MTOPS limit on many exports to countries that are on the list of controlled -- we call it our controlled list; I think it's tier 4, or level 4. To our allies, we don't have any restrictions, so this computer could have -- can be obtained -- computers of this type and quality can be obtained by our allies. But to the countries in the level 4 category, this computer would represent a very significant capability, well above what they could obtain from the United States through the legal export...

HUNTER: So, there's a 7,000-MTOP...

WEIGAND: Yes, sir.

HUNTER: ... level...

WEIGAND: Yes, sir.

HUNTER: ... with respect to the categories -- the controlled categories in which China is a member.

WIEGAND: Yes, sir.

HUNTER: And the MTOPS on this computer were what?

WEIGAND: One hundred and fifty thousand MTOPS is a rating (ph) number, and...

HUNTER: One hundred and fifty thousand.

WEIGAND: And depending upon how you count, you could be higher.

HUNTER: One hundred and fifty thousand MTOPS.

WEIGAND: One hundreds and fifty thousand.

HUNTER: So, 7,000 is as high as you can go legally.

WEIGAND: Yes, sir.

HUNTER: And this one was 150,000.

WEIGAND: Yes, sir.

HUNTER: OK. OK. Proceed, if there's anything else you want to make in closing here.

WEIGAND: That basically concludes my remarks except for stats that are going to be in the record.

HUNTER: OK. Thank you very much, Mr. Weigand.

We've had -- this is the second hearing that we've had today, and our members have sat patiently through hearings all day, literally, with this subcommittee and the R&D Subcommittee. So, the chair is going to defer to folks that haven't had a chance to ask questions in the earlier hearings, and we've got quite a few wrap-up questions here at the end that we'll go with.

So, Mr. Sisisky.

SISISKY: I've been asking questions all day, but -- well, let me just go ahead and ask one. Then I have some other ones.

General Habiger and Mr. Podonsky, this is to you. Title 32 of the FY 2000 National Defense Authorization Act for FY 2000 mandates establishment of the National Nuclear Security Administration, and I know there's been a lot of talk regarding the legislation constraining the ability of the secretary's staff to assist him in performing his duties. What will be the practical effect of the legislation on the performance of his specific duties?

HABIGER: To be very candid with you, sir, I don't know. I hope it's not significant, but my initial look is that there's a potential for some significant changes in the way I'm now established through business. I'm established to do business in terms of providing policy, oversight, and control of the department's $800 million security budget, which I would not have under the newer organization, and I'm also responsible now for operations in emergency response. And under the title, I would no longer have responsibility for that.

The secretary has made it very clear that we will comply by the law. He did that yesterday in the Senate hearing.

SISISKY: Made it very clear?

HABIGER: Yes, sir.

SISISKY: Good.

HABIGER: And I will comply by the law. I'm an American, and I understand laws, and we'll make it work as best we can. But I will tell you, based upon my current responsibilities, there would be some significant changes.

SISISKY: Well, if everybody complies with the law, I think if it's wrong, then we can make the changes, but if people don't comply with the law, shame on you, because -- I'll just go by and sum up some questions later, Mr. Chairman.

HUNTER: The gentleman from South Carolina is recognized, Mr. Spence.

Mr. Ryan.

RYAN: Thank you, Mr. Chairman. Actually, my question is a bit of a follow-up to what was just said by the general just a moment ago about your willingness to comply with the law. I've sensed in our panel there's been a little bit of hesitation from the secretary and from the administration and even in your verbal statement you have said that you want to see the trust by the public and the Congress restored. So, we will take you at your word and look forward to working with you.

I do have a question, though, and it relates back to the Visitors -- The Foreign Visitors Program that has a 90-day limit on visitation from sensitive countries, and that takes effect on November 5.

RYAN: Do you feel that's sufficient time -- the 90 days -- for everything to be put in order so that the program will work well?

HABIGER: Yes, sir. As a matter of fact, one of the policies that we developed and is working through the staff now is a policy on foreign visits and assignments, and that policy will get out. It will comply with the intent of the act that was just passed, and we'll be able to get on with it at the end of the 90-day period. I'm confident of that.

RYAN: I'd like to direct that question to Mr. McCallum since he has been there for a time. Do you feel that 90 days is sufficient to be able to put the Foreign Visitors Program from sensitive countries in order, if you care to comment on that? I know you've been gone six months.

MCCALLUM: I'd have to caveat my answer with I have been gone six months. I'm not sure how much work has been accomplished in that time, but I will tell you that the department's been trying to fix that program for that last 15 years, and it's one that it will be very difficult to fix, because there's so many interests that want elements of other countries in as assignees or visitors.

I wish General Habiger the best of luck on that, and I hope that if there's anything that I can do to help, I'll be pleased to consult. That's a very difficult answer and a very difficult problem for the Department of Energy.

RYAN: And I do have one other question for Dr. Robinson, or I don't know who would want to respond to this, but with regard to the computer, and I'm curious as to some of the numbers involved. First of all, how much it was purchased from you for; how much you had to offer to get it back, and then how much you actually paid?

ROBINSON: Let's see. The...

RYAN: So, there's three parts to that question.

ROBINSON: OK. I'd even give you a fourth, if you will allow. First, I believe our original price was just under $31,000 when we sold it as excess. The original offer, when there was a strong interest shown in it and the suggestion that this might be a matter of some concern, an initial number of $2.7 million was suggested, and no one took that seriously. The individual had spent approximately $140,000 in buying the computer and transporting it to California and hiring the warehouse space for it for the nine months in which it was in his custody. We were authorized by the Department of Energy to offer up to $100,000. My colleague, the chief information officer of Sandia, Pace Spendeviter (ph), who's sitting behind me, then negotiated and agreed on a final number of $88,888.88. It seems eight is a lucky number in China.

RYAN: All right. Thank you very much, Mr. Chairman.

HUNTER: Mr. Spratt.

SPRATT: Thank you, Mr. Chairman, and thank you very much for your testimony, gentlemen.

Just briefly, on the back of an envelope, what do you need in the way of additional resources to do this job well -- I'll put the question, first, to General Habiger -- funds, personnel, new equipment, updated security equipment? And has this committee turned down or not fully funded some of your pending requests that would be useful to you?

HABIGER: Sir, I'm not aware of this committee turning down any specific request for funding. This is the first time I've appeared before this subcommittee, and your reputation in the department is very high and very positive in terms of your support for what we're doing and the problems we are trying to correct.

What I would prefer to do, sir -- I will give you a thumbnail sketch now, but I'd like to, when I respond to the chairman's request for specific information for the Foreign Visitors Program, to give you a breakout by line item. But specifically, in the area of cybersecurity, it's $35 million. We're asking for $16.5 million associated with hardware for the laboratories so they can centrally control this highly classified data so it can be only authorized under a two-person policy to be released to individuals. We need about $4.5 million for encryption equipment; $5 million for training. We discovered, and I have John Gilligan (ph), our cybersecurity point of contact, here with me today, and he discovered that we have not done a very good job in training our administrators out in the field at the laboratories, the National Laboratories, and our sites on the intricacies of managing cybersecurity.

We stood up, not too long ago, a computer incident advisory capability at Lawrence Livermore. It's an awesome capability, but we discovered that the labs weren't willing to provide this organization with reports of hackers. And I will tell you that, in my view, from my previous experience, that a serious hacker trying to get into a Department of Energy computer is about the same as somebody setting off a truck bomb outside one of our buildings. We need to let experts know about it and let the rest of the department know about it.

And, so now we have policy in place that directs the laboratories to report to this capability at Lawrence Livermore what has been happening to them, and then they can do the proper analytical work. And, oh, by the way, for the first time ever, that information is up- channeled to us so that we can take the appropriate actions and see what our basic threats are.

And I would offer that up as the primary program that I need support on. But, more importantly, the design basis threat, which is an interagency threat of the kinds of terrorists that we can expect to see going after our nuclear assets, whether they're Department of Defense or Department of Energy, just came out in the 11th of June last year. I cannot in this session go into any detail, but I will tell you, one of the things that came out of that new threat analysis is that our security people have to be able to respond to chemical and biological attacks in guarding our nuclear assets. There's a $5 million bill associated with that which is unfunded.

So, our Foreign Visitors Program -- and, again, Mr. Chairman, I did not mean to imply that you, specifically -- Congress was telling us to fix that problem, because, as I recall, that was specific in the PFIAB report about needing to get our act together in that area. But there, we're developing some new software, and I don't have any -- I have a very minimal staff. I have to hire something in the order of 12 new people to get that program up.

We need to get it up for two reasons. Number one -- three reasons -- number one, to tighten our process; number two, to make sure that our new tightened process is handled in a timely manner so that the labs don't have to come in with a six- or eight-week lead- turn time for us to respond so they can get approval. I'm very sensitive to the fact that foreign visitors are essential in the continuing dialogue in the scientific community. And, finally, I just need the people to make it happen. Right now, I don't have the people.

I will get you that, Mr. Chairman, and, sir, and get it over to you very quickly.

SPRATT: Now, what's the status of this inventory of your needs and the funds associated with it? Would it be -- can you obtain that money out of the hide of the FY 2000 budget, or is this an FY 2001 request?

HABIGER: It came over on the 14th of July, sir, as part of the department's FY 2000 supplemental.

SPRATT: Supplemental.

HABIGER: Yes, sir.

SPRATT: OK, fine.

HABIGER: And, as I said, we didn't do very well.

SPRATT: OK. So, the supplemental is still unfunded.

HABIGER: Yes, sir.

SPRATT: And that means until it's funded, you've got important needs there that can't be completed at least -- undertaken but not completed as robustly as you'd like.

HABIGER: Yes, sir.

SISISKY: Would the gentleman yield just a moment?

SPRATT: Certainly.

SISISKY: You are reprogramming to get some of those funds, are you not?

HABIGER: No, sir.

SISISKY: You sure?

HABIGER: I'm not aware of it, sir. I mean -- yes, it was a budget, but a budget amendment for FY 2000.

SPRATT: In conference or as a separate supplemental?

HABIGER: It was a separate supplemental, as I recall, sir, as part of the overall request.

SPRATT: And some of it's been funded. We've passed -- we've approved...

HABIGER: Congress has approved some additional monies that we requested for additional background investigations. Glenn Podonsky asked for some supplemental funds for his organization, and most of that was funded.

SPRATT: In the Energy appropriation bill?

HABIGER: Yes, sir; I believe so.

SPRATT: Dr. Robinson, one question of you. Dr. Foster, Johnnie (ph) Foster, makes the point not only about this but about safeguarding -- security and safeguard operations, generally, is everybody's responsibility, and if you make it a line responsibility, then some people will tend to think that's somebody else's job; that's not my job. And you need to inculcate this sense of security awareness in everybody.

Among your chemists and physicists and high-powered scientists, is this a problem now? Is there a new level of awareness? Any resistance to it?

ROBINSON: I think there is a new level of awareness. We have used the word "integrated" security management. The most important people are the people who have the knowledge to design the nuclear weapons. Having their good will, their attention to these matters is crucial. You can hire any number of guards standing outside, and if you don't have that, you don't have good security. And, so you have to integrate the entire package. And I think I favor my thinking along the lines of Dr. Foster.

SPRATT: Is tightened security affecting morale, but in particular, measures like polygraphs?

ROBINSON: There's no question that the question of polygraphs as a screening device -- a widespread screening device has gotten lots of criticism. General Habiger was brave enough to go around and do public hearings at all the sites, and he heard from our staff members regarding their questions. I believe the actions this week taken by the secretary saying rather than a case of polygraphing every individual, we will look to polygraph a more appropriate smaller group, was music to the ears of my scientists.

We do have a record of polygraphing for sensitive programs, and at my laboratory, just under 200 people have been polygraphed in the past as they work in compartmented programs, both for Defense Department and supporting intelligence agencies. Within that framework, adding this for DOE matters is appropriate, and I think we're ready to live with it. I believe we're working together to make these more directed and less onerous.

SPRATT: Thank you very much.

HUNTER: I thank the gentleman. Mr. Gibbons.

GIBBONS: Thank you very much, Mr. Chairman.

Mr. Podonsky, you were formerly the deputy assistant secretary of energy for oversight, are you not?

PODONSKY: Yes, sir.

GIBBONS: Who did you report to in that job?

PODONSKY: In that job I reported to the assistant secretary for environment, safety, and health.

GIBBONS: OK. And in your current position?

PODONSKY: In my current position, I am directly -- I report to secretary of energy, Mr. Bill Richardson.

GIBBONS: So, you've taken just one level of management out of...

PODONSKY: Actually, sir, I would tell you that is one giant leap. Having been in the department for 15 years, we have identified issues, including similar issues that were related to the Hoan Lee (ph) situation, as far back as 1994, and we were not very successful in getting people to pay attention to some of those issues, and part of that was where we reported to.

GIBBONS: Well, that's my next question, because I noticed in your testimony at the bottom of page one where you say, "We're pleased to report that our independent oversight inspections are receiving considerable attention and management support." And that leaves me to believe that they were not given considerable attention by management or the support of management prior to this incident. I'm not sure whether it's simply because of the change in the hierarchy or the structure of management or a renewed emphasis on the fact that we now know that there are some serious problems out there, have been, with the security of our labs.

Secondly, I'd like to ask you the question about the ratings, and I presume that this sheet -- this colored sheet, is something you're familiar with, which has the current and projected status of security ratings for all of the laboratories and Department of Energy facilities. Are you familiar with it?

PODONSKY: Yes. That is not our rating sheet. That is the department's rating sheet that has to do with the annual report to the president that we feed into.

GIBBONS: All right. Well, I noticed that there's some like the Los Alamos Labs that across the board have received a marginal rating in their security which is less than satisfactory. Yet, in here, the policy that was established says that the secretary plans or intends to have every agency of the department up to a satisfactory grade in security by the, I don't know, end of the year.

PODONSKY: End of the calendar year.

GIBBONS: Right. Now, I noticed on this sheet all is well, as the DOE has a couple of projected status sections in there that show only marginal. So, something -- it doesn't jive, either with their projected statement or they're saying they can't there. But that's not the case.

What I want to talk about -- maybe if I can go back over to Mr. Weigand -- you said the computer had its operating system intact when it was sold.

WEIGAND: Yes, sir; that's correct.

GIBBONS: What does that provide in terms of capability to any country which may have obtained this -- if some country had been permitted, for example, China, what capability would that computer -- would that operating system, in their given -- its current condition, a country like China with regard to its nuclear weapons, projects, and programs? Would it have been able to use that computer, for example, to go directly to the design of miniaturized warheads?

WEIGAND: It's not the operating system directly, Congressman, that would allow the machine to provide them expertise in making a leap to scientific answers. The operating system for a computer allows the computer to interact with the different peripherals -- the disks...

GIBBONS: Sure.

WEIGAND: ... the computer -- and it allows the human component to interact with the computers. It's sort of the brains of the computer. The scientists who work with the computer supply the knowledge through computer programs that are a set of instructions that the computer loops through in order to arrive at scientific calculations. So, the operating system would be essential but not complete.

Without an operating system, the scientists would not be able to communicate with the computer. With an operating system there, they're able to take their knowledge, transcribe it into the codes that the computer understands, connect with the operating system, and come up with answers and then make scientific judgments. The computer does not make the scientific judgments. The computer does not design the bomb. The computer does not give you the dimension and height and weight.

GIBBONS: Thank you for the education.

WEIGAND: The computer doesn't give you scientific judgment.

GIBBONS: The question now becomes, with this system -- the computer system, in the hands of the Chinese, would they have been able to move forward with their miniaturization program on nuclear weapons?

WEIGAND: Sir, I'll return to my statement that I made that a country that has a -- that does not have a substantial computing capability would benefit in a national security way from obtaining a computer of this type.

GIBBONS: So, your answer would essentially be yes, it could move forward.

WEIGAND: You're drawing a...

GIBBONS: Well, I don't want to put words in your mouth.

WEIGAND: No, I understand that. And I do not want to draw the same...

GIBBONS: I understand the text of your answer, but...

WEIGAND: You understand that the capability of small and lightweight is a substantial capability. I would rather not discuss in an open session as to the computing capability and the methods by which you arrive at that.

GIBBONS: I understand.

Have any other systems like this been sold previous to this that you've come across which we've been unable to return -- unable to question in terms of the sale to countries that weren't authorized?

WEIGAND: I'm not aware of any exactly similar instance. There were, to my knowledge, two -- there were two computers that had been raised as questions in the past with regard to their entry into, I believe it was the Soviet Union. But I think we should -- Trish, do you want to -- OK, this is not the same class of computers. This is a substantially powerful computer. Those were in the class of about 32,000 MTOPS.

GIBBONS: Sure, be happy to yield.

UNKNOWN: If the gentleman would yield, and I apologize for having to leave. Steve Bryan (ph), who was our first director DTSA (ph), has said publicly that he knows of no computer of this size that has ever been sold. Is he correct?

WEIGAND: No computer of this size that has ever been sold to who?

UNKNOWN: On a surplus market.

WEIGAND: To my knowledge, that's a true statement. You've got to understand, that computer is one of the largest computers in the world. That's why we had it.

GIBBONS: I guess the question, then, would be -- my final question would be, do we need to do something with regard to our checks and balances in terms of sales again of equipment like this overseas or is there something that we're missing that would have allowed a sale like to go through?

ROBINSON: If I could clarify, this was not exported, and so...

GIBBONS: It would have probably gone export though.

ROBINSON: There is no prohibition against the sale domestically of computers of any size.

GIBBONS: Well, I presume, Dr. Robinson, that anybody who is a foreign national can establish a United States company, buy a computer of this type, and then say that this company is transferring it for its own use to its other businesses overseas. Would that be an avenue they could...

ROBINSON: Congressman, I've looked into that in some depth as I've tried to look at the hypotheticals of this. Our law assumes that if someone establishes a business in the U.S. and registers their business in the U.S. that they will abide by our laws. And we, right now, have no basis in law to assume otherwise. I suggest in my testimony it might be a good idea for us to try and amend things when we're dealing with folks who represent sensitive countries. I would agree with you.

GIBBONS: Well, let me just follow-up one minute, if I may, Mr. Chairman.

When you have a company that you're selling a computer of this magnitude of its computing capacity to, do you ever question them as to why they need such a computer? And if you did in this case, what was their answer?

ROBINSON: Yes. You should recall that this was not being sold as the full computer. Parts had been removed, and it was a substantially smaller portion, and it was being sold as scrap, at that point, for parts. The individual indicated he had the prospects of salvaging the processor chips for a Internet service provider, named Pacific Bell, in his part of California, and that was the basis why he was buying the computer.

GIBBONS: Thank you, Mr. Chairman.

HUNTER: Mr. Robinson, do you have any knowledge as to whether or not that was a true assertion? I mean, I think the unasked question that we're all kind of wondering about is, was this a storage bin that you found this thing in or did this guy have an ongoing business where he could actually use a computer that was 40 times as powerful as the highest level of computer you could legally transfer to China?

ROBINSON: No. He...

HUNTER: I mean, did he have a Dairy Queen operation or did he really have a place where you could use this thing?

ROBINSON: His purchase of the computer and his shipment was very consistent with a scrap dealer. He transported it on a flatbed truck, which one wanting to use the computer would never have done.

HUNTER: Well, certainly, didn't we do some investigation about this guy?

ROBINSON: We did, and we did an index check, and he came up clean.

HUNTER: Well, I'm not talking about an index check. Does he have a scrap business?

ROBINSON: I'm told he buys various technology as he can, and then sells it. So, he's an intermediary dealer, but not a widespread scrap dealer.

HUNTER: Has he ever sold any scrap before? I mean, you guys know some things about this gentleman, so why don't you just tell us? What is your take on this guy that he was likely looking at a transfer to China or to another country, or was he a legitimate scrap dealer who just happened to have a nationality from another country?

ROBINSON: Why don't we have someone who was close to the discussion?

HUNTER: Well, I think we need that, because I think your statements at least imply that, and I think we need to just walk this thing through. Let's find out what this guy was.

TRISHA DEDICK (PH), DIRECTOR, OFFICE OF INTERNATIONAL POLICY AND ANALYSIS, OFFICE OF ARMS CONTROL AND NONPROLIFERATION, ENERGY DEPARTMENT: Mr. Chairman, I'm Trisha Dedick (ph), and I was part of that negotiation process. The individual in question was not a scrap dealer. He was a small businessman. I believe we found that he sold small computer products and whatnot. He had never bought anything of this size, to our knowledge, before or anything near that size. His explanation of what he planned to do with it did vary from time to time. He did talk about this IP address that he was going to establish, and he talked about several other possibilities, and he did change his story from time to time.

There is an ongoing investigation that continues by the Department of Commerce, and I believe that they would be able to provide more information at this time, because we have not gotten all of the information after the computer was, again, acquired by the department. But this investigation does continue, and the individual is being looked into.

HUNTER: That's what we wanted to know. OK.

OK, Mr. Gibbons, go ahead and continue if you want to. You're finished? OK. I thank you.

The gentlelady from California, Mrs. Tauscher.

TAUSCHER: Thank you, Mr. Chairman. Gentlemen, thank you very much for being here. As many of you know, I represent Livermore, California, the home of the best scientists in the world -- sorry, Dr. Robinson.

ROBINSON: But you have some of...

TAUSCHER: But I do have some of yours at Sandia.

Let me start by thanking you for your very hard work in a very tough situation. This has been a tough time, generally, as we've figured out the post-Cold War environment is a lot more difficult than necessarily the Cold War was for us, and it's a very challenging time, and we have got to pull together to make sure that we are using all of our energies to get from out behind the eight-ball and move forward. And, clearly, we can accept nothing less than a zero tolerance for anyone and anything that wants our secrets. We are the idea goody bag in the world, and people are going to constantly try to stick their hand in the bag and try to take things out, and we've got to be smart about how we prevent that.

I believe that we've had a multi-decade, perfectly bipartisan, systemic failure to really get this. And there's lots of blame to go around and lots of people to blame, but I'm tired of that, so I want to go ahead and fix it.

And what I'm interested in eliciting from you, specifically Dr. Robinson and General Habiger, is your indication of acceptance of what we've done in article 32 and the ability to move forward. I believe that the secretary's comments, as of yesterday, indicate his willingness to move forward and that we have got to do the best we can with the law that we passed and the president signed just a few weeks ago in the Defense authorization bill.

And, as you know, Mr. Thornberry is chairing a panel that Chairman Spence has put together as a special oversight panel. Many of the members are here in this room, so we are looking forward to hearing from you subsequently, and certainly the secretary subsequently, as to what we can do to make sure that we are absolutely never confused again and that we are absolutely preeminent, not only in the science that we produce and the protection of our nuclear stockpile and in our nonproliferation efforts around the world, but in national security. And it goes the bandwidth from things that nobody ever thought we'd have to worry about to gates and guards.

And I know that this is -- it's been tough, and you're not going to get an apology from me for being tough about it, but I know that we all share the heightened sense of the necessity to work together and the ability to work together. So, I look forward to that opportunity.

Mr. Chairman, I really don't have any questions, but I do want to tell you that I think that this is probably, in my opinion, the number one thing we have to do in this Congress and the next Congress is make sure we get this right. We don't have another chance.

ROBINSON: Could I...

HUNTER: Certainly.

ROBINSON: Could I respond? I have been disappointed, in fact, somewhat confused that the recent problems arose between the different views of how to fix this. We talked to Secretary Richardson as a group of lab directors on his joining the department and said we must change the past where there were too many people all giving conflicting views, all in control; we must streamline; we must have someone who is accountable; and that the decision loops close instead of endlessly going on. He agreed with that and took some major steps to reorganize the department into lead, principal secretarial officers, and we were delighted with that.

What he did is very close to the legislation, so it's my sincere hope on behalf of the laboratories that we can close the gap the rest of the way to streamline, get accountability, but not have many sets of open loops of management direction taking place.

TAUSCHER: If I could just add one more thing, Mr. Chairman.

TAUSCHER: I think that Chairman Spence has shown great agility and great foresight in helping us by creating this panel too to make sure that we were really focusing on Congress' role and making sure that at least on the side, in the House, that we were paying specific attention, because this is such a changed environment. And I want to congratulate you, Mr. Chairman, for your ability to do that. Thank you.

HUNTER: I thank the gentlelady. Mr. Jones.

JONES: Mr. Chairman, thank you very much, and, first, I want to thank you. I am not a member of your subcommittee, but I thank you for the opportunity of sitting here today and listening to the testimony from the panelists, and I thank each and every one.

I guess that I am like the fine lady from California. I want to go a little bit back in history, because I have an obligation to the people in my district. I represent the third district of North Carolina; take great pride, Camp LeJeune, Cherry Point, Seymour Johnson Air Force Base, and we have 77,000 retired veterans, men and women that are very patriotic and have great, strong feelings in this country, because they've served, many, during war time, obviously, if they're veterans. And I feel compelled to go just a little bit back in history.

You know, I think about it, when this revelation came out a year or two ago that there might be some type of espionage at our labs, Mr. Chairman, I think about it, quite frankly, if there had not been that leak, if it was a leak, if it had not been for the Cox report, then we probably would not be here today having this discussion, because we would not have known what had happened. And that's what concerns me.

And I want to start with Mr. McCallum and then Mr. Podonsky -- did I say that, correct? Close?

PODONSKY: Podonsky.

JONES: Thank you -- I've got to practice. I want to start and I want to ask this: Mr. McCallum, you were a director for how long as Safeguard and Security Office?

MCCALLUM: I was at the Office of Safeguard and Security -- it was just short of 10 years.

JONES: OK. And, Mr. Podonsky -- I'll keep trying; don't give up on me -- you have been with the Department of Energy for 15 years, right?

PODONSKY: Yes, sir.

JONES: What I want to know is how did we get into the situation that we're in today? When did you, Mr. McCallum, Mr. Podonsky, when did you suspicion that we had a problem? When were you ready to say to someone in higher authority, "We've got a problem"?

MCCALLUM: Congressman Jones, the problem as many problems evolved, we've always had a level of interest in our laboratories, I think as Congresswoman Tauscher said. It's a goody bag, and it's too good a technology base for foreign countries and rogue nations not to be interested in. So, there's always been a level that you can look back to that we or the FBI have been looking at. But evolving from about 1993 to about 1995, resources had been depleted, technical personnel had left the department, and we stopped being able to maintain any kind of sense of where we were, but there was a clear sense of decline.

By 1995, my office, the Office of Safeguards and Security, wrote a very cautiously negative report that essentially warned that there were cracks appearing in the infrastructure, but there were parts -- and that funding and support for the program needed to be escalated. Now, I focus on funding, because funding sends a major signal to the labs, to the lab directors, and to our field elements of whether it's important or not. Our funding had been chopped in the Safeguard and Security arena by about 40 percent, at the same time that we knew espionage was occurring.

We were aware of Chinese espionage in our labs back to about 1985. You've heard the magic words "tiger trap" and some of those operations that the bureau was running back then. We knew that there was activity. Those reports were ongoing. The lab Safeguards and Security and the lab counterintelligence people were briefed regularly by me and the director of Operations in counterintelligence. So, those elements were happening, but they slowly escalated. Incidents with computers, the evolution of computer systems escalated to the point that by 1995 we sent a flare up.

JONES: OK. Who did you send your report to? I mean, who should that have raised a red flag? I mean, who did the report go to?

MCCALLUM: We raised the flag for the serious time to the secretary of Energy in our annual report to the secretary for calendar year 1995 in January of 1996. Before that, there were numerous incident reports and numerous situations that pointed to a deteriorating information security, computer security program back to about 1992, but it had not become critical to the point where we had really lost control of the program, in my words, in the department until 1995.

JONES: Mr. Podonsky?

PODONSKY: I go back a little bit further, Congressman Jones, relative to when the problems in the department began, and I go back to the 1970s. There was a great concern by the legislative arm of the government about the department's ability to protect its nuclear materials and its weapons. A great deal of effort by Congressman Bliley and Congressman Dingell forced the department to take a good hard look back in the early '70s on how to plug these gaping holes of security.

That was find up and until about '84 to '89. Safeguard and Security was plugging the holes in terms of all the glaring problems. Then the department, in 1989, started to focus on environment, safety, and health, and the focus on security lessened. Some of the reductions in resources came about during that period.

We continued to do inspections and raised issues that we're talking about today as far back as '88. The most telling one was in '94. From '94 to '97, there was a great deal of focus on human radiation experiments as opposed to safeguards and security or even environment, safety, and health. It wasn't until recent times that we've come full circle back to the attention paid on safeguards and security. And I would say, having been in the department, living through all these cycles, the thing that is encouraging my folk -- my people, and myself the most is the way this new infrastructure is working.

And something that would be helpful to long past survive this current secretary who had the vision to stay with keeping a separate policy office and independent oversight and holding the line accountable, is somehow we need to make sure that federal and contractor people alike are accountable. It's a problem more of attitude and accountability, and that's one thing that we haven't seen in the department. It's always been easy in the department to blame contractors for failings, but it goes all the way back to the federal staff as well. And that's where the biggest problem lies in terms of the department, whether it be a safety issue or a security issue that we're looking at today.

JONES: So - and then I'm going to go to another question, Mr. Chairman -- but, basically -- and, again this is my first opportunity to sit in to hear this discussion in-depth -- but, basically, when you or Mr. McCallum -- in the mid-'90s you became concerned that maybe this espionage had picked up, so to speak, or, as Mr. McCallum said, has been ongoing, but maybe then you got aware that it was picking up as far as the advances being made in espionage. So, basically, when this report that he spoke about -- or your explanation, then you don't have -- you couldn't go to the sector at that time and say to her or to him, "Listen, we've got a serious problem out here. We need some action." I mean, does the process work that way?

PODONSKY: First of all, just a point of clarification. Our reports never alluded to the specific espionage. We specifically called out the systemic problems involving cybersecurity -- the classified and the unclassified. I just want to make that point clear. But, yes, the problem has been, as I explained to Secretary Richardson in May, the problem has been the ability to access the secretary, to inform the secretary of what's actually going on as well as, over the years, our ability to brief the legislative part of the government as to what was going on.

JONES: Mr. McCallum, was that...

MCCALLUM: Yes, we had a great deal of difficulty getting to the secretary's office in the '94-'95 time frame. We couldn't get through staff. They were clearly guardians at the gate, and we were not allowed to get there. We did finally almost push our way into the deputy secretary's office, Mr. Charlie Curtis (ph), who listened to the report, was very disturbed by it, and had us brief the field mangers in a session on what we were finding. And the briefing was done, but, frankly, the secretary's chief lieutenant, Mr. Don Perriman (ph), told the field managers not to worry about it.

JONES: Told the field managers not to worry about it.

MCCALLUM: He said: Don't worry about it. He said: Do what you got to do. So, the signals from the very top of the department at that time frame were: This is not a priority. This is not an important mission. Don't worry about it; we'll take care of these guys.

JONES: Just a couple more. Let me ask you in your comments and Mr. Podonsky, and maybe the general also could speak to this. I don't guess this would be classified. But you mentioned a concern that I found very interesting about terrorists within the country or terrorists coming from outside the country that could maybe overtake a lab, one of our labs. Did I understand that right in your testimony? I didn't get a chance to read it, but I was listening that mentioned that you did have a concern that this could happen?

MCCALLUM: I'm going to be careful about how I answer that in an open session, but clearly from the 1970s, as Mr. Podonsky mentioned, the Congress and the American people became concerned about the Munich terrorism. After the Munich Olympics, we were all urged in numerous organizations to get moving, and in fact, the Department of Energy changed from an individual-based security operation to one which if you looked at it in the mid-'80s, we had SWAT teams, we have helicopters, we were ready to react in a military fashion to a possible terrorist event, particularly when we were looking at nuclear weapons, and nuclear weapons, material from which nuclear weapons could be readily made.

So, yes, the concern is there. I think that the FBI and the intelligence community and the kind of report that General Habiger mentioned has said that the risk is low if we maintain a high security base. But that if we drop our security base, it could become increasingly problematic, because we know that there are people and organizations out there that want a nuclear capability.

So, yes, it is possible. And we became concerned by 1996 that several of four facilities had lost enough people and tactical capability that they could no longer efficiently respond. Now, to go into any more detail than that, I think we'd have to be in a closed session.

JONES: When you say lost a number of people for protection purposes, was that because of the decline in the budget or was that administrative decisions that...

MCCALLUM: I think that there were reductions in the budget about that point, and -- but the reductions, frankly, as we looked at it, one of the evaluations that we did, the department took about a 25- percent cut in our lab budgets and what were doing from the department, but we took about a 40-percent cut in personnel in the safeguards and security arena.

JONES: And the cuts meant that weapons, ammunition, and training declined to the point that the people that were there were tactically questionable?

MCCALLUM: Many of the younger people that came on to our forces -- we became oriented towards special weapons and tactics and military responses to a terrorist event -- were the first people to go, because many of our sites are unionized, and as in most union operations, the newest people are the first ones to go. So, the age of our force increased dramatically.

So, it was largely capability and numbers. If you have been to some of our sites, they're cities. There are hundreds of buildings and multiple targets. So, what we ended up with was a smaller force that was guessing where the bad guys might hit. And being the security director at the time, I had to worry about whether they were capable of stopping a terrorist attack if it should occur. And we raise those issues in, I think, the strongest terms.

JONES: And I guess, Mr. Podonsky, this is now being addressed in general. I guess this comment that was made by Colonel McCallum as far as the concern he had when he was there with the Department of Energy, we're addressing that adequately now, right?

PODONSKY: I can't speak for the general, but from an oversight perspective, we think that in the last six months there's been a marked sea change especially, and I don't want to emphasize the infrastructure, but having General Habiger as the head of policy and the security czar, having also direct access to the secretary as do myself, we're assuming any time you have a chief executive officer of a corporation get personally involved, you see major changes taking place, including the stressful tests that Barb Stone, who's with me today -- her people run performance tests on all of the sites. And we're going to continue to test. We'll trust, but we'll continue to verify that the department is moving on this track and not just rest our laurels on the infrastructure. But we do believe the department has made a tremendous sea change.

MCCALLUM: And just one comment, if I could, relating to access to the secretary. It's total; it's immediate, and he listens.

Virtually everything I've recommended to him, he has accepted and told me to implement. There's no bureaucratic nonsense involved; it's get out there and fix it.

MCCALLUM: In my opening statement, I made a comment about personally reviewing the security plans for each of our sites. Are they all perfect? No. Are we going to make them better? Yes, and we're going to do it very, very quickly.

We've cut down the bureaucratic infighting between headquarters and the field to make sure we have viable security plans out there. As a matter of fact, I have a team at one of our sites out there today, as we speak, to correct some bureaucratic infighting. And by the end of this week or the middle of next week, we'll have a viable plan out there.

JONES: Mr. Chairman, this will be my last question, if I may.

And, General, I'll ask you and Mr. Podonsky and Colonel McCallum, one of you gentlemen mentioned -- either Mr. Podonsky -- I'm getting better -- or Colonel McCallum in your comments that you felt that we needed to have oversight by an agency outside of the Department of Energy as it related to security. Would you three gentlemen comment on that? Either you do, or you don't, or you don't know at this time?

PODONSKY: I think Mr. McCallum was the one that made the statement, and there was a point in time that I would fully agree with him, having been in the job for 15 years, and at one point Mr. McCallum and I did the job together. When we were not able to get the attention of the department, oftentimes we discussed whether an external entity would be more effective. But also on a personal note, having been a regulator with the Nuclear Regulatory Commission, I will tell you that, in my opinion, external regulation for the department on safeguards and security is not the answer.

The answer is to institutionalize responsibility, accountability and hold people accountable. That's what it comes down to. We pay a lot of people, both federal staff as well as contractor folks, to run our laboratories and our sites. If they are held accountable, like private industry does, you don't need more oversights. Oversight with a sledgehammer is not the way to change the hearts and minds of people; it's to hold them accountable for what they were hired to do.

JONES: What would you like to -- General?

HABIGER: Yes, if I believed that would endure, I would agree. It's certainly the cleanest way to work it. Certainly a Cabinet-level officer should be able to do that. But I've been with the department in one capacity or another for about 25 years, and I've seen that cycle move through the phases of we're going to fix it, and then it gets broken again on three separate occasions.

I sat at a table like this in front of Congressman Dingell's committee about eight years ago with the secretary of energy when the secretary of energy said, "We're going to fix it, and it's going to stay fixed." And he was committed to those -- Admiral James Watkins -- and it worked for a couple of years. And then it went back into the wrong direction. I don't think that something as important as the protection of nuclear weapons can rely on the good faith and intentions of one or two people. And, unfortunately, I think things got so bad for several years that something outside of the department needs to be looked at.

There's a proposal, I think, in the legislation this year -- I think it's in the legislation -- there will be a commission. That should happen. The activity and activity level of commission can depend on whether the department is carrying out its responsibilities, but it's just failed too many times, and the promises have been made by too many different people, and it's failed. The competition for resources and the competition between open science and national security is just too much of a problem in the department. Somebody outside needs to make the -- at least be able to send a flare up.

I hope that the commitments that I hear made in the statements are very true, but I don't know what happens in four years or six years or eight years. We shouldn't be here again with this system broken. Nuclear weapons are too possibly disastrous.

MCCALLUM: I would just like, if I could comment quickly, I disagree. I think the department can oversee itself. Glenn has done -- Podonsky -- has done some marvelous work in institutionalizing the process so that his oversight evaluations are done when they're completed. I sit next to him. I sat down at Sandia when Dr. Robinson was out-briefed on his evaluation. I will go to the field, and when I leave, my successor will go to the field.

I think, Congressman Jones, the key to success here -- and I'm apolitical; I've said this many times; only one person knows how I vote, and that's my wife, and we cancel each other out every year -- but the point is we need strong leadership in the position of the secretary of energy; that's key. I think we've learned some lessons there.

HUNTER: Thank you, Mr. Jones, and I wanted to ask a guy who's been a real star in this area to -- who's got a few comments on this, Mr. Weldon, to kind of be our cleanup hitter.

But just before we do this, I just wanted to ask you, General: You're a military person, obviously. You believe in accountability.

HABIGER: Yes, sir.

HUNTER: You believe in chain of command. If you look at that diagram over there to your left, that's what you have in place right now. If you had a division-size element and you wanted to make sure that you had accountability and had responsibility and had the ability to bring people before you who had done either a good job or a bad job and act accordingly and you wanted to get your mission accomplished, I would submit to you that if that was your chain of command coming down from a division where you had a lot of -- or people on the staff of a division commander could end up micromanaging platoon members in the Third Platoon Company B, Fourth Battalion, you'd have a mess.

If the staff could replace that with what we have come up with with respect to reform of DOE, at least their weapons department, I want you to see what we replaced it with. We basically replaced it with a military model -- put that up there. That maze has been replaced with this. Now, I've told Bill, and I know he wants to have a strong security; I believe that very truly. He has an administrator; he makes the policy. He's the division commander, and he makes the policy on intelligence and counterintelligence, and if the administrator makes a mistake, he can pull that administrator before him, and he doesn't have 35 different lines of communication going down to the lab level. Now, I think it was you or Mr. Podonsky who mentioned fiefdoms within fiefdoms. Was that your statement?

HABIGER: Yes, sir.

HUNTER: Well, sir, if we don't -- if we didn't go -- if we hadn't gone to this new military-like accountability chain of command, you'd still have fiefdoms within fiefdoms, and I think that's -- that is the genesis for Mr. McCallum's statement, essentially what he's been saying, and I think there's some truth there, and that it's true if everybody's pulling together and you've energized this culture of being very attentive to security, you can hold that for awhile. But with that maze that we have there that is the present way that these fiefdoms within fiefdoms operate, the thing can degenerate back into a situation -- and I think you saw this.

When Mr. Lee was identified as having stolen some nuclear secrets, the head of the FBI sat in a room with the undersecretary of Energy, according to him, and said, "Remove this guy from the nuclear weapons vaults and take away his classified material, because he may be stealing stuff form us." She nodded approvingly. A couple weeks later he had a meeting with the secretary of energy. He said, "We think this guy's stealing nuclear weapons or nuclear secrets. Take him away from these classified areas." He nodded approvingly. Fourteen months later, somebody turned around, like a scene from the Keystone Cops, and said, "Is that guy still down there next to the weapons vault? I thought you were supposed to fire him," and somebody else said, "I thought you were supposed to fire him." That's what made the nuclear weapons laboratory system the laughing stock of the country. In my estimation, it's also partially a result of that maze that you saw and all the confusion and the lack of accountability that is manifested in it.

So, I would hope that you would look at this as a military man at that very clear chain of command that we now have. And that administrator's not hired by Congress; he's not hired by some adversary; he's hired by the administration who hires the same secretary of Energy, and he should be a guy in whom the Secretary has enormous confidence and trust. And if something doesn't go right, he can jerk him into the office and say, "Why didn't this go right down in the Third Platoon Company B?"

Now, don't you think that that is preferable to the mess that we've been operating under?

HABIGER: Mr. Chairman, I sat before this panel two days after I was hired, and I saw this, your previous chart, and I was showing the chart that the secretary of energy, Richardson, showed you and said, "Hey, this is where we are today. It's not quite as bad as you've depicted it -- or Chairman Spence had depicted it." When I came and signed this contract with the secretary of energy, I asked for two things: number one, if Gene Habiger is going to fix this problem in the Department of Energy, I need the full weight, power, and authority of the secretary of energy, and, number two, I said if I'm going to fix the problem in the Department of Energy, not specifically defense programs, but in the Department of Energy, I needed total and absolute control of those $800 million.

This is a new paradigm, and that's why when I was asked the question earlier what my role and responsibility and how am I going to do it, I don't know yet. It's a new way of doing business. I understand you military analogy, and in concept I agree totally with that, sir.

HUNTER: OK, thank you. And, now, Mr. Weldon.

WELDON: Thank you. It's time to liven the hearing up a little bit.

First of all, I'm going to start off by saying that I think the concerns that have been raised about our labs was largely brought on by Bill Richardson himself.

Now, why do I say that? Well, I was one of those nine members of Congress that served on the Cox committee. I sat through seven months of meetings with the CIA and the FBI, and I attended almost every one of them, during all of our holidays. I saw the evidence presented, and I was involved in all the recommendations we made, which were all nine to zero. There were no seven to two, or eight to one, or five to four votes; all of our votes were nine to zero. If there was a problem on any issues or any piece of any language of any of our recommendations or findings, we changed it. It was a nine to zero vote.

What we found in the Cox committee was not just about the labs; in fact, in my opinion, that was one small part of what we found in the Cox committee. There was a gross abuse of technology transfer capabilities be taken away from DTSA (ph), the DTRA (ph) movement, allowing technology to flow in terms of HPCs, encryption technology, aerospace technology, across the board.

The administration got our report the first week of January and started looking for it and knew what was in there. They made Bill Richardson the pit bull, and do you know when the report was finally released in May, he was the person we saw all over this city doing all the press conferences, talking about the Cox committee.

And what did he focus on? He didn't focus on the relaxation of the export controls. He didn't focus on DTSA (ph) and how it had been watered down. He didn't focus on the cooperation between space entities and Loral and the Hughes situation. He focused on one thing: It's all about the labs. Because why? Because the transfer of the W- 88 warhead occurred in the previous administration, and Bill Richardson could then say this was all about something that occurred in a previous administration, and we've corrected that. We've corrected all these problems.

So, the whole focus in this country came around to a debate on whether our labs are with it or not, and how could our labs have allowed the theft the W-88 warhead to occur? When I knew full well as someone who sat through seven months of testimony that what Bill Richardson was doing was spinning the Cox committee report; spinning it to try to make it look like it was something that it wasn't.

Now, I have some concerns at our labs, and I'm also a big supporter of our labs, and I'll get to that in a moment, but I want to focus on this issue, because in mind, in my opinion, it was Secretary Richardson who created this problem, because he thought the spin on the labs and the W-88 warhead theft could divert attention away from the other problems that we uncovered in the Cox committee relative to seven years of allowing technology to flow in an uncontrolled manner from the U.S. to China.

And then we got to ask the questions, and I'm going to ask you, Dr. Robinson, wasn't it Hazel O'Leary who ended the Laboratory ID Security Program?

ROBINSON: The biggest change, and I think it has been a major change, came in that period to omit the requirement of acute clearance for all of our folks and substitute for a large number of folks, in fact a majority of folks, an L-clearance.

WELDON: Didn't you take away the color-coded classification system?

ROBINSON: Yes.

WELDON: Wasn't it Hazel O'Leary who did that?

ROBINSON: That's my...

WELDON: Didn't we just reinstate that after the Cox committee report came out?

ROBINSON: It's being reinstated now.

WELDON: Isn't that interesting. Bill Richardson never mentioned that to the American people. Wasn't it Hazel O'Leary who entered the background checks at the labs, the kind of checks that occurred before she took office?

ROBINSON: That's the Q&L I think.

WELDON: So, is the answer yes?

ROBINSON: If I understand it's the Q&L, yes.

WELDON: Wasn't it Hazel -- well, you're not from Lawrence Livermore, so I'll put this on the record, because I know this to be true. When we found out that one of our retirees from Lawrence Livermore had violated his security clearance and had given away classified information in a public setting, one of the offices in California -- I can't think of which one it was -- punished him by taking away his top secret or security clearance as a retiree. And that went to Hazel O'Leary desk, and she overturned that denial.

Were you aware of that, Dr. Robinson? And wasn't it Hazel -- well, I know it was Hazel O'Leary , so I'll put this on record. All this fuss about Bill Richardson about the labs in the '90s and the '80s allowing the Chinese to steal the W-88 warhead designs, it's kind of interesting when in 1995 it was Hazel O'Leary herself who gave the designs for the W-87 warhead to a "U.S. News and World" reporter who published that in a special edition in July of 1995, including the warhead design of the W-87 warhead, which I was told by the lab leadership at Lawrence Livermore was classified at that time.

Now, Bill Richardson tried to create the impression when the China Cox committee came out that this all was something labs were doing and that he was taking control of this and was straightening it out, and that offended me, because I knew where it occurred, and I knew that much of what had occurred in the labs was orchestrated by the leadership of DOE.

Much like the dismemberment of the Russian Fishing Program that was formerly run by Jay Stewart (ph) was totally eliminated even though it had been recognized by everybody from (INAUDIBLE) who headed NATO to the former secretary of energy and Jim Schlessinger to be an outstanding effort. Jay Stewart's (ph) effort was eliminated, because he was coming to some conclusions that would cause ill feelings, perhaps, in Russia, because he was telling Hazel O'Leary that Russia did not have total and adequate stockpile of the Russian (INAUDIBLE) material.

And what offended many of us was when Bill Richardson (INAUDIBLE) the story and spun the Cox committee at the labs, because he felt that that one issue, the warhead issue, would be the one that would grab the media and the American people's attention. That's why I was so offended as Bill Richardson went around the country talking about what he had done and all of these things that were being changed from previous administrations. Then result in our seeing the sale of this computer at Sandia.

Now, Dr. Robinson, as you know, I've been a big support of your lab and all the labs, but I can tell you nothing incensed me more than this transfer. I wrote you immediately; I called on the phone; you wrote me a response back. Now, I'm going to ask some very specific questions, because I don't think we've been given the very specific information we need.

My concern with the lab wasn't some political rhetoric against Secretary Richardson, nor against you personally, because I have the highest regard for you. It was based on a memo that I got from Mr. Weigand. Have you seen that memo, Dr. Robinson? The memo that Mr. Weigand wrote to Vic Reese (ph) about the transfer?

ROBINSON: I don't believe I have.

WELDON: Do you remember this memo, Mr. Weigand?

WEIGAND: Yes, sir; I remember the memo. It's not a memo; it is a -- the following morning after I got the information, I wanted to write down what I knew, when I knew it, and inform my line of management. It is an internal memo that has been never been released, to my knowledge, until I've seen it in your hand, and it is a -- it was my way of writing down what I knew, when I knew it, so I documented very carefully something I considered to be a very significant incident with my boss.

WELDON: Mr. Weigand, I agree with you, and I have the highest respect for you and the work that you've done. I got this memo handed to me, along with several other memos, and when I read it, I said, "What in the heck is going on here?" It wasn't that I had some problem with Livermore, I wanted to chase Bill Richardson, but Bill Richardson's out telling the world, "Everything's OK; I've got everything under control," and I see this memo, which absolutely knocks me off my chair.

And, Dr. Robinson, when I quiz you about the sale, it's like, "Oh, well. No big deal; it happened." And I want to go through some specifics with you that were in Mr. Weigand's memo and ask if these two things are in sync.

First of all, Mr. Weigand, were you ever approached and offered the opportunity to buy the computer in question that was being offered for sale?

WEIGAND: Sir, I owned it.

WELDON: You owned it. So, they were selling your computer.

WEIGAND: Sir, I -- the equipment, yes. That's maybe a term of art, "I owned it." This is a Department of Energy equipment. It's in my line. It would have been my responsibility.

WELDON: OK. Then I should ask: Was DOD ever -- have the opportunity to acquire the equipment?

WEIGAND: The process should have allowed the federal government, first -- to have first dibs.

WELDON: Was DOD offered that opportunity.

WEIGAND: To my understanding, yes, sir.

WELDON: And they turned it down.

WEIGAND: Yes, sir.

WELDON: So, we've got on the table that the capability of the computer is between 150,000 MTOPS and 200,000 MTOPS, is that correct?

ROBINSON: That's of the full computer, yes.

WELDON: The way this whole thing came about was we sold the computer for surplus to an individual, and I would ask my colleagues -- I have classified information I can't put on the record about who this individual and his one-person company is. Do you know the -- the company's EHI. He's a one-person shop who just happens to buy high performance computers.

Dr. Robinson, are you aware of any affiliation between EHI and an Australian operation, or an Australian company?

ROBINSON: None.

WELDON: Are you aware of whether or not EHI -- are you aware of that connection? You are aware of that connection. Thank you.

I would suggest to my colleagues they have to see the analysis that I, as a member of Congress, got about this individual, EHI, the Australian company and the ties directly back to the Beijing Research Institute of Telemetry. And I can't for the life of me understand how we would not check a person trying to acquire a computer of this size and what his past activities may have been in terms of technology for the People's Liberation Army and one of its arms.

It didn't take much to ask for this, and, I don't know, myself, if I were going to be involved in surplusing what is in fact -- and Steven Bryan (ph), I've just gotten on the record, said he's never known of a sale like this ever during the time he served as director of DTSA (ph), and I think Mr. Weigand said he's never heard of one of this size either. How we could take a supercomputer of this size and simply decide we're going to surplus it, and, oh, this guy is just going to use it for some casual case of having the need for this surplus material?

In fact, you know how we found out about this. He went to the Intel Corporation to buy the parts to reconfigure the computer. Is that right or wrong, Dr. Robinson?

ROBINSON: That's how we first learned of it, yes.

WELDON: And Intel, their security -- thank goodness for Intel's security person -- they called the lab, and DOE -- was it you, Dr. Robinson or was it Mr. Weigand; who'd they call?

ROBINSON: They called people at the laboratory, and I would point out the parts they wanted were no longer made.

WELDON: But the request was he had gone to Intel trying to buy the parts to reconfigure the computer, so it wasn't our surveillance that found out about this. Intel Corporation tipped us off, and that happened in July. All of a sudden, the you know what hit the fan, and everybody started jumping around, and that's when the labs...

HUNTER: If the gentleman will yield.

WELDON: ... tried to buy the computer back.

HUNTER: If the gentleman will yield, then you're saying that he wasn't going to scrap the computer; he was trying to...

WELDON: Reconfigure.

HUNTER: Reconfigure the computer.

WELDON: Right.

HUNTER: Well, Dr. Robinson, if you knew that, why did you spend so much time talking to us about this guy being a scrap dealer?

ROBINSON: That is all I knew him to be, sir. I must say if he were going to reconfigure the computer, it would have been a really stupid act to transport it on a flatbed truck with no control and store it in a non-temperature controlled area. And, indeed, when we reacquired the computer, we found it in very, very bad shape from its journey on such a truck.

WELDON: Well, let me go on -- is the gentleman finished? In fact, I have a copy of the contract here, and in the contract that we signed between Sandia and EHI, we gave him the contact at Intel. Now, if he wasn't going to reuse the computer, Dr. Robinson, if it was going to be scrapped, why would we write on the contract the name "Contact Mike Rogers (ph), Intel Corporation, 507-0677-7787? If he wasn't going to reuse the computer, why would we give him the name of the contact at Intel?

ROBINSON: The system of the computer required Intel's approval to deliver it, and that was the individual who approved that, and it was provided. The computer was sold as is, where is, which we reminded him when he later made a request of Sandia that "Gee, there's enough here for me to make this operational." We reminded him this was sold as is, where is.

WELDON: But on our contract with him, why would we put the Intel contact for that computer if he was going to just scrap it? What's the purpose of that? I don't understand the purpose.

WEIGAND: Sir, could the gentleman who did the investigation for the DOE comment?

WELDON: Sure.

MICHAELSON: Hello. My name is Steve Michaelson, and I wrote the report that's been offered into the record with regard to the investigation of the incident. A couple things have been said maybe I can clarify.

With regard to the representations made by Intel, our investigation indicated that in fact those calls were made to Sandia National Laboratory in December of 1998, and the issue that was being raised was that there was a Mr. Chang (ph), the buyer of the Paragon computer, asking about parts, equipment, but not understanding fully what pieces of equipment he really needed for the computer and asking for available parts that actually were not accepted in that computer configuration.

So, it came across as there was an individual who had a high powered computer that didn't have sufficient information to really understand not only what he had but what was available to be added to that computer. "Just give me parts," and that raised some suspicion...

WELDON: So, that was in December of '98.

MICHAELSON: Yes, sir.

WELDON: Why, then, did we wait six months to try to buy it back?

MICHAELSON: Well, if you read the report, the report...

WELDON: I haven't seen the report yet, so I haven't read it.

MICHAELSON: OK, I'm sorry. The call was made to a senior program person within the Sandia organization. That individual raised the issue that a respected individual from Intel, a man who they had contact with over a long period of time, a man who was not given to glib remarks, had suggested that an individual was calling about a computer. He didn't seem to understand exactly what he had or what parts were available.

There was a suspicion that the computer was on its way to Peking or the People's Republic of China, and the contact at Sandia respected that information, raised it with his immediate supervisor and with the reapplication specialist on-site there at Sandia. Circumstances occurred that that information really never went any farther within the laboratory organization. Individuals, acting on their own, made a decision that this information was not credible.

WELDON: So, what triggered the offer to buy it back? Was it a TV station that came in and did the story in June or July?

MICHAELSON: I interviewed 20 people at the laboratory after July 23. And what was said to me was that the secretary stand-down event at Sandia Laboratories had raised the consciousness of the individuals in the laboratory. Security is an issue, and if somebody had remembered this incident in December of 1998 and brought that forward within their organization and elevated it to the attention of the laboratory and ultimately to the department.

ROBINSON: I think you could credit the Cox commission and the secretary's response to it with triggering this information to be passed up the management chain of people that felt, "Well, now, this is gossip. It doesn't look like it's really something." And when we focused the attention on Chinese espionage and the laboratories, as a result of our first day's training, a call was made to the management and came up to me, and we began to investigate, and we notified the Department of Energy.

WELDON: Was that in July?

ROBINSON: I thought it was June.

WELDON: So, the incident, you were aware of it as alive in December.

ROBINSON: We learned of it during the two-day stand-down.

WELDON: But in July is when it came up.

Let me read you a sentence from Mr. Weigand's memo, which indicates to me why -- and I didn't get your characterization of your testimony, Dr. Robinson, all the way, but, Chairman, did you say it was kind of like a trivial incident; it wasn't a major incident?

HUNTER: I said it was much ado about nothing.

WELDON: Much ado about nothing. Is that what it was, much ado about nothing?

HUNTER: No, less than it appears.

WELDON: Less than it appears.

ROBINSON: There is certainly less there than met the eye in the press.

WELDON: Well, let me read the statement of the gentleman sitting next to you. Now, you've characterized it your way.

"Until we're certain that there is physical evidence that the machine is still in the U.S., we should treat this matter as a significant national security concern."

Now, that grabs my attention. If someone who I have the highest respect for who's in charge of our computers says that what may have happened here is a significant national security concern, and to say this is less than a major issue certainly doesn't reflect the concern at that time.

WELDON: Maybe it's changed since then, but it certainly doesn't reflect the tone that Mr. Weigand had about what was happening in this incident when we were asking the questions. And when I first called Secretary Richard, and he had no idea what was going on. He wasn't even aware that you had already started trying to buy it back and in fact had the computer. He wasn't even aware of that.

ROBINSON: If I could answer for the record, and I need to make this a classified answer, and you will understand why, you must...

UNKNOWN: No, wait, wait, wait. You're not going to discuss classified here.

ROBINSON: No.

WELDON: No, he's not going to give classified here. He said he would make it classified.

ROBINSON: The question of what could be assembled from the marketplace if a country wanted a supercomputer of this performance formed the basis of our assessment that a country intent on trying to provide nuclear weapon calculations would not rate this as an exceptional opportunity versus what the marketplace could provide. And that's what I'll provide to you, and that's the basis of why I tried to put it with a little bit of perspective, sir.

WELDON: I would like to see that, because that flies in the face of this statement that to a country that has little of this computer power capability, reassembling this system would provide significant capability. That's from the memo.

Now, we've either got to have it one way or the other. Either it does provide significant capability to another country or it doesn't, but we can't have it both ways.

HUNTER: Well, if the gentleman will yield, before you got here, Mr. Weigand, right here in this hearing said it would provide significant capability. Didn't you, Mr. Weigand?

WEIGAND: Yes, sir. I stand by that statement. Normally, I think -- in fact, the good general knows, don't make a whole lot of decisions on the first bit of data you get from the battlefield. But those statements that I made I stand by. The explanation of those statements I am not at liberty to go into with you except in the classified mode.

WELDON: Understand.

WEIGAND: You need to understand, we're beginning to delve into Intel data. We're beginning to delve into what could be or couldn't be important to a nation's program that could or could not develop substantial national security...

WELDON: Mr. Weigand, I agree with you fully, and that's why I am so outraged that the whole attempt by this administration is to wipe off this issue off the table. Publicly, the perception being given by the lab and by Bill Richardson is nothing happened. It's all much ado about nothing. If people would look at what you wrote and look at the classified capability here, they would see that what you're saying is true. And I'm sick and tired of saying it publicly and having people of the administration say, "Oh, it's nothing," but we can't talk about it in public. We got to go to a classified session.

WEIGAND: I apologize for you.

WELDON: You don't have to apologize; it's not you.

WEIGAND: I just want to tell you that I intend to guard the information that I have until an appropriate setting, and I would be glad to discuss it with you in length...

WELDON: Well, I've asked the FBI for a formal FBI investigation.

WEIGAND: But I also want to be sure that we go in the record. This is not a problem that is alone with the laboratories. We have some of the most nationalistic-minded men and women that work at the laboratories. I do not believe that they intentionally would harm this nation's national security. This information we're dealing with -- I'm telling you, this is a pure and simple computer science issue that I am making those statements from. I am not making those statements necessarily specific to nuclear weapons. I'm making them...

WELDON: I understand.

WEIGAND: ... about how computer science today, which exists at every major U.S. university and how we use that computer science information in special ways to produce what we do for this nation.

WELDON: I understand.

WEIGAND: It's not that it is unique, but I do not want to give anyone any hedge on us by telling them what we think is important or doesn't think is important.

WELDON: Understand.

WEIGAND: Let them figure it out for themselves.

WELDON: I understand. And that's why my concern, Mr. Weigand, is in going through the China commission process that we went through, the cavalier attitude that I think has developed in terms of sale of high performance computers has caused this country harm, and the Cox committee agreed with that.

Steven Bryan (ph), the first director of DTSA (ph), testified on the record, both public and in classified session, that up until 1996 China had no high-performance computers in the 8- to 10,000-MTOP range and above -- zero. We changed -- the U.S. changed its policy on exporting high performance computers in '96, even though Japan wasn't a part of that process and every other manufacturer. We changed unilaterally. Within two years, because of our policy change, China acquired over 400 high-performance computers.

Now, I agree with you. I don't want other people to understand our process as well, but I would think that certainly sends a signal that up until 1996 we're not even going to make these HPCs available, and now all of sudden we're going to flood China with over 200 or 400, and we're going to be told we're going to be given a paper that's going to tell us where that HPC computer is being used. And then we find out from the Chinese they won't give us access to find the location of those HPCs.

WEIGAND: Congressman, I will go silent on this issue, if you'll just allow me one other comment. The word HPC, high-performance computer, is used and abused widely. The computer performance capability of a single microprocessor has, to my complete thrill, as an opportunity to be in that technology, increased fantastically because of the U.S. manufacturing capability. So, what was a very specialized, military capability, specially-built computers. Today, your kids have them.

And, so the problem we're dealing with here is that it's not the computer cycles that is the thing we need to understand how to protect, it's people like me. It's people who understand how to use them and use them in ways that can advance your national security gains. Because the computing cycles are out there, sir.

WELDON: Understand.

ROBINSON: If I could respond. I certainly did not testify on behalf of the administration. As I pointed out to my own peril when I testified on the test ban two weeks ago, I do not speak for the administration but trying to provide to you as an arm of the government the best technical judgment I can provide.

Let me give you one number that might put things into perspective, and it involves Microsoft Corporation and their 20th anniversary. It was pointed out that over the 20 years of their existence the cost of computing went down by a factor of $1 million; that's bit per second that you could buy when they started versus their 20th anniversary. It went down by a factor of $1 million over 20 years.

They revealed a study on the occasion of their 20th anniversary that had been performed by Intel Corporation, Hewlett-Packard, working with Microsoft that made a projection for the technology for the future that over the next 20 years there would be at least another million. So, we will go by a trillion decrease in cost for computing.

WELDON: Understand, OK.

ROBINSON: And that's the bits he's talking about. So, you have to recalibrate yourself as to what is available, what makes sense to protect, what you can hope to protect at any give point in time...

WELDON: And we did that. I understand.

ROBINSON: It's that perspective I'll provide you in a classified memo.

HUNTER: If my friend would yield for just a second. Dr. Robinson, think that's the whole point here. We were fortunate that this guy who was a scrap dealer who really wasn't a scrap dealer who showed up at your place in a flatbed truck and just happened to have a nationality of country that's been trying to get some of this stuff and probably was trying to get it for the country, didn't ship it. It was there for 80 days.

Now, you send stuff out through Long Beach Harbor, and we had the Customs Service before us, and they testified to us that only about two percent of the ships that move in and out have any search at all. So, probably, physically, this stuff could have been moved offshore.

The point is...

ROBINSON: Sir, the date it was there was eight and a half months it sat in his warehouse.

HUNTER: Well, that's my whole point. You've pointed out that it didn't leave, and therefore we should feel better, but my point is that's not because of any brilliant action on the part of the labs; that's because it just didn't move. And if you'll look at the massive traffic going in and out of Long Beach Harbor, much of it carried out by China's corporatized merchant marine, called Costco (ph), the guys that shipped the 2,000 machine guns into California, they only have a small percentage of those ships searched or looked at or surveilled, or monitored. So, obviously, it could have left.

So -- I mean, we've got a system here that hasn't worked, and it's the same non-working that was manifested in the 14 months that passed between the head of the FBI telling the secretary of energy to get a guy that he thought was a spy away from the nuclear weapons plans, and 14 months later, the guy's still there, and nobody's sure who was supposed to have removed him.

Now, that's the system that we've got here. And, so, sure, we all know, we've all seen the statistics that you can buy -- the same dollar today will buy a million times as much computing power as there was a few years ago. I wouldn't use that to hide behind. I mean, as long as we've got -- that's all the more reason for when we do have MTOP levels, past which you're not supposed to ship, the idea is to not let that stuff hemorrhage out any faster than it's going to in the natural course of business.

And, so -- I mean, this is almost a comedy. Guy drives up in a flatbed truck. He's a scrap dealer who's never scrapped anything. He's supposed to get rid of the stuff, but your guy writes down the name of the company that theoretically can get him the rest of the parts to rehabilitate it. He probably wasn't very smart. He probably didn't know what he was getting, but he took a chance on it; it didn't cost it much. Didn't cost China much, because I'm sure they're the people that would have ultimately paid for it.

The point is that you've got a system that's broken here.

WELDON: Let me get back to my -- I don't want to get bogged down in a computer discussion, because I agree with what you're saying about technology changing so rapidly, but that's not the issue here. It is the issue that internal concerns were raised by the technical experts, and what I'm seeing is double-talk, and that's what I want to get at, the double-talk and the double-speak.

Attached to the memo that Mr. Weigand sent to Mr. Reese (ph), which I will give the chairman a copy, and it will be kept in a classified form, is a summary page, along with a copy of the contract. This is called "Sandia's Summary of the Paragon Computer Sale."

I don't know whether you've seen this or not, Dr. Robinson, but I'm not going to ask you to respond whether you think it's valid, but this is what it says, and I'll read from it. Quote, "Sandia's staff also stated that there are no security concerns since the computer had never processed classified or sensitive information." That's what it says. Is that right? Well, you can't answer, but that's what it says.

Now, let me read...

ROBINSON: The computer that was sold, all of the classified parts were dismantled and were not sold.

WELDON: But here's what you said in your letter to me on July 26, quote, "Hard drives with sensitive and classified information were not part of the sale." Well, that doesn't jive with this, because it was used for classified. You're just saying that those hard drives were not.

ROBINSON: That's correct.

WELDON: But, now, let me read you Bill Richardson's letter to me on August the 11th. Quote, "Classified date in the computer was erased." So, was the secretary wrong?

ROBINSON: The hard drives -- the way the system was operated, different sets of drives were connected or disconnected. There was a security procedures. There was a double-check with a two-person rule to make sure that they could never be connected at the same time. The parts that were used in any classified computation, anything that could have a persistent memory, were removed from the computer; they were degaussed; they were then destroyed. They were not sold.

WELDON: So, when Bill Richardson says that classified data in the computer was erased...

ROBINSON: That's correct.

WELDON: ... that's correct.

ROBINSON: That's correct.

WELDON: So, there was classified information, but it wasn't on the computer...

ROBINSON: That was sold.

WELDON: ... that was given to the fellow from EHI.

ROBINSON: That's correct.

WELDON: Next line of questions deals with both Dr. Robinson and Mr. Richardson insisting that no sensitive information was provided in the sale; both insisting that classified data was degaussed before the sale.

Dr. Robinson, you stated in your letter to me that the sensitive and classified portions were degaussed and destroyed. But then you go on to say that insensitive hard drives were included in the sale but were not degaussed, because doing so risked deletion of parts of the operating system and added nothing to security. So, there were hard drives sold.

ROBINSON: Yes.

WELDON: And they weren't degaussed.

ROBINSON: Yes. They were the unclassified hard drives; yes, sir.

WELDON: So, that's not a problem?

ROBINSON: No.

WELDON: OK. Do you agree with that, Mr. Weigand?

WEIGAND: If I'm not mistaken, the requirements for selling the machine would have required them to degauss those also to eliminate information. I think we could get experts to comment. So, those were supposed to be -- that's one of our findings is that they weren't. But the information, to our knowledge, to date, is that there was no classified information...

WELDON: On that system.

WEIGAND: ... on that system, but we are continuing to investigate that.

WELDON: Did you want to add something?

MICHAELSON: Our property regulations require that any computer that's sold or moved out of the complex -- the Department of Energy complex, be degaussed, the memory erased, and then the operating system reinstalled, for instance, if we're going to donate them to a school or university. In fact, this machine did not have the memory erased, the operating system was available, and what hasn't come up yet is as part of the sale there were disks and manuals and documents transferred unbeknownst to the laboratory. The Office of Security Affairs is reviewing those disks, manuals and documents now.

As of this morning, I was advised that the capability of the forensic unit and the department to look at those disks and discern what was on them, the capacity of the department was exceeded. The disks have been returned to the Department of Commerce who's continuing the investigation, and those disks will be passed on to the FBI. They're all evidence in an action that's being taken against Mr. Chang (ph).

WELDON: Than you for that explanation. Also in the memo to Vic Reese (ph) there is mention that all the parts were not included, as you stated, Dr. Robinson, but it also suggests -- and I won't read the exact quote, but it suggests that what was provided should only present a challenging but straightforward task for a talented group of CS computer systems and EE engineering types to put a substantial computer in working order again. Do you agree with that, Dr. Robinson?

ROBINSON: I certainly didn't write it.

WELDON: But you agree with that.

ROBINSON: I would have to evaluate someone's skill level.

WELDON: But here we have someone saying that even though parts are removed for a group of computer systems and engineering types, it wouldn't be that difficult of a task to put a substantial computer back in working order again.

ROBINSON: I would assume that's the case, yes.

WELDON: Then how in the world could we sell this? I don't understand. I just don't understand. I mean, for -- and if the system was not necessary and had been removed of all the -- why would we try to buy it back, or why did we buy it back for $88,000? Why not just leave it go as surplus parts and let the guy have it?

ROBINSON: First of all -- and you missed my earlier testimony -- I asked myself in this process if I had this to do all over again, would we have sold the computer had I known about it? And I said the answer is no; we would not have. We abided by the law. We took the steps that are required...

WELDON: Not all of them.

ROBINSON: Not all of them, I agree. I am told we should have applied for a waiver, and we would have likely been granted that waiver. But I would not have followed through even with the steps if there was a chance that national security would be affected.

WELDON: But you weren't even informed about this.

ROBINSON: And I was not informed, but I believe I speak for the folks in my organization. They're as patriotic as anyone else you can find. They believe the value of the system and the part that they were selling, compared to what the marketplace could provide, that this did not present a major national security step.

HUNTER: If the gentleman will yield -- the gentleman will yield on that point. We've established a 7,000 MTOPS as the level beyond which the Chinese cannot legally buy a computer. This computer is 150,000 to 200,000 MTOPS. So, how could the come to the conclusion that they can go out and buy a similar computer?

ROBINSON: I would like to only answer that for you in a classified memo.

HUNTER: What I think what you're going to have to tell in a classified memo is that they can buy one illegally.

ROBINSON: No, but, trust me, I do not want to point my finger towards what is the right way for someone interested in getting higher computing capability off the open market to go. I have no desire to help anyone else do that, but there are ways with present products to get that.

WELDON: Gentleman finished?

HUNTER: Yes, just one further one, if my friend would indulge me here. The one thing that you've had here is that this was -- this guy was a dummy, because this thing was virtually unusable. But the last statement that Mr. Weldon read indicates to me he's not a dummy, because he read the statement to the effect that a smart team of computer guys could find this a challenging prospect but nonetheless could put this thing together.

Now, if you're the Chinese Nuclear Complex, and you can't legally buy anything more powerful than 7,000 MTOPS, but by using one of your teams and a discarded computer from an American nuclear establishment you can get one that's 40 times as powerful as the one that you can legally buy, doesn't that make it somewhat valuable, Dr. Robinson? And you haven't used the term "valuable" throughout this entire hearing.

ROBINSON: No, that's correct.

HUNTER: You sought to kind of...

ROBINSON: You're right. And it's probably a better term. Had it had that value, I think it would have been a very stupid thing for Mr. Chang (ph) to do to then transport it in an open flatbed truck without shipping the way other computer systems are, with very carefully shock-controlled, temperature-controlled ways.

HUNTER: But I wouldn't use the -- you're using the flatbed truck as the determinant of whether or not he's very smart or not. My point is that this memo that Mr. Weldon just read said that a group of smart computer guys wouldn't have a lot of trouble putting this thing together. Then they'd have a computer that had 150,000 to 200,000 MTOPS, which is 40 times the power that the Chinese nuclear complex could buy legally on the market.

Why is he such a dummy? And I wouldn't use the flatbed -- I mean, I think he did a great job. He drove up like an old junkman; you found out later he wasn't an old junkman; he'd never parted out anything, and you felt comfortable, because he drove up in an old truck.

WEIGAND: Well, he didn't know he was -- excuse me, he didn't know he was going to be in that.

ROBINSON: He didn't drive up in an old truck. The bid was solicited through the mail. He came with his brother-in-law to inspect the equipment and then chartered which was a flatbed truck.

HUNTER: But you didn't know that when you signed the contract with him.

ROBINSON: Of course not.

HUNTER: But, I mean, it's interesting to me that you brought that up about 20 times in this hearing that with a laboratory that's got all these smart guys in it, the one thing we don't have any systemic capability, apparently, of stopping this stuff, but we do have is we can reflect on the fact that the guy drove it away in a flatbed truck, and somehow that is probative of whether or not this was an espionage operation, whether or not the guy was very smart, and whether or not the nation lost anything of value.

ROBINSON: Congressman Hunter, let me say, I offer as evidence our expectation that if someone really intended to use a computer and not just for parts, it would be not a smart idea to ship it in the flatbed truck. Indeed, when we repurchased the computer and examined it, there was massive damage done to the computer, and it had to be as a result of that ride in the flatbed truck.

WELDON: I think that's a little disingenuous to make that the issue here. No one knew he was going to pick it up in a flatbed truck when he bought it, obviously. And maybe the guy didn't know what -- he didn't know what he was doing in transporting it that way, but you didn't know that at the time.

ROBINSON: I believe that's correct.

WELDON: If the insensitive -- if he was selling it for scrap, why wouldn't we have removed the insensitive hard drive and not given him that on the computer? Why wouldn't we have kept that part of the equipment, as well, if he was going to use it for scrap anyway? Why would you give him any of the hard drive?

ROBINSON: When it was advertised for sale, it was that it could be put back together and operated, but we were offering no...

WELDON: So, we advertised it.

ROBINSON: ... no guarantees that it could. It was as is.

WELDON: So, we advertised we could put it back together?

UNKNOWN: It was sold as operational.

WELDON: It was sold as operational?

WEIGAND: It sold as operational; yes, sir.

WELDON: Maybe I haven't been hearing in the room. Maybe there's some...

ROBINSON: No, it was sold as is, where is.

WELDON: Operational?

WEIGAND: Right.

WELDON: Well, as is doesn't imply to me operational.

ROBINSON: That's correct; it doesn't to me either.

WELDON: So, we sold it as operational.

WEIGAND: It sold as is.

MICHAELSON: Let me clarify for the record. In doing the investigation, we talked to any number of people at the site. We asked about why the hard drives had not been erased, and one of the explanations was is that it lessened the value of the unit as an operational entity.

WELDON: Whoa, whoa, whoa. Let's go back to that again. Repeat that sentence again.

MICHAELSON: To erase the hard drive would lessen the value of the unit as an operational entity.

WELDON: But it was being sold for scrap.

MICHAELSON: Well, look at the sales document itself. It says, here's a list of parts sold as is, where is. The sales document really doesn't say that it's operational. But within the laboratory complex, there were some people who were thinking of it as a unit that could be put into operation. I'll clarify that, even by university or by another government agency.

WELDON: I don't see anything in the contract about as is. It lists all the parts and what it is, and I don't see where it says, "as is" or...

ROBINSON: I could point that out in the sales documents.

WELDON: Well, the -- what is offending me even as much as the sale itself is the way that it's been spun different ways by Secretary Richardson, by the lab, and even here today. If we made a mistake, fine, we made a mistake, we own up to it, and move on. But to say "You're overstating this case; it's really not that bad," when we've got internal memoranda stating that it's a very severe issue. It's like we're trying to spin the things as opposed to dealing with what may have been an honest mistake.

And let me say this, Dr. Robinson: You mentioned the term "questioned patriotism." No one is questioning anyone's patriotism, and don't even mention that, because I'm offended by that. I don't think anyone did this because they want to secretly undermine the U.S. What I think may have happened is there may have been some casual conservation between these -- this individual at EHI and some of your employees at the lab who got to know him, and he was a good old guy. And you decided to sell him the system, because he wasn't going to do anything. There's wasn't any attempt to sell it to the Chinese.

My point is that we shouldn't allow that kind of a transfer to occur under any circumstance. And without getting into the details of the capability of the computer, now to go back and try to reinterpret what was said and reconfigure what kinds of equipment was in it -- which I'm not going to get into, because I'm not a computer expert at all; I'm not even computer literate -- just makes me think that we're now trying to, to some extent, cover our tracks for what had occurred. And I hope -- and I think you've made the point here very eloquently that it's not going to happen again -- but I just can't for the life of me understand how it happened in the first place.

ROBINSON: Well, understand, this was a sale of scrap computer parts to a U.S. company for which there are no prohibitions.

WELDON: Yes, but EHI is a one-person company.

ROBINSON: That's must be understood. That must be understood.

WELDON: A one-person company owned by a Chinese national that has ties to an Australian firm that if somebody would have checked would see where the connections go back to Beijing.

ROBINSON: That is the point, if you'll check into my testimony of the recommendation I'm putting forward, sir, is that there are no constraints against that in law nor to seek to know what the ownership of the company is would have in fact been a breech of the law.

WELDON: Dr. Robinson, I call that common sense. I call that common sense. I mean, I'm not a Ph.D., but I tell you, I have enough common sense to know that if I'm going to sell a 150,000 MTOP to a Chinese national, one-person shop, I want to find something out about the guy.

ROBINSON: I'm telling you that that's what the law should be changed to allow, and had I known that, I testified that I would have tried to stop the sale myself.

WELDON: The law doesn't cover...

ROBINSON: But I make no bones about it, we stand in great difference as to the belief of what you think the national security was of that system, what I believe, and what Mr. Weigand believes.

WELDON: Oh, no, no, no. Wait a minute. Wait a minute, Dr. Robinson. This memo wasn't written by me. It was written by Mr. Weigand. Don't you go say "you and I." Everything I've said is based on what Mr. Weigand wrote. Do you want me read the entire memo to you publicly?

ROBINSON: No, but I...

WELDON: Well, then don't say it's me and you. I'm reading what he wrote.

ROBINSON: I'm telling you that the risk, if there was a risk, to national security in this particular case was a very low risk. Mr. Weigand believes differently; you have accepted to believe his version. I'd be happy...

WELDON: Well, you just said it was me versus you and him.

ROBINSON: I would be happy to have us settle that debate, but that debate shouldn't be done in public; it should be done in classified.

WELDON: Well, it shouldn't be done in public, and this sale shouldn't have occurred in public, and, damn it, you ought to acknowledge it instead of trying to spin the thing a thousand different ways.

ROBINSON: I can only give you my testimony, sir.

WELDON: Well, you've given me your testimony, and I can tell you it's unacceptable. I have respect for you, but, like I said, this, in my opinion, should have caused Secretary Richardson to resign. He's out telling the American people "Everything's OK. Don't worry, we're under control," when he created this whole situation by blaming the labs on the W-87 issue. And he wasn't aware of what you were even doing.

WELDON: He wasn't even aware when I talked to him on the phone that you were buying the computer back, because the press out in L.A. -- or out in California was on your tail that they were aware of the story and had access to the same information that I got. They had these papers, and they were raising the same concerns I raised.

I'm sorry, Mr. Chairman, for being emotional, but I think this is outrageous. I think the spin trying to be created here is outrageous, and I'm not going to accept it.

HUNTER: I thank the gentleman, and I think there have been a number of different themes that have been offered today, and they're all extremely interesting.

Dr. Robinson, you mentioned that you didn't have the -- there's no bar to you selling to a one-man shop as long as it's an American company.

ROBINSON: Right, sir.

HUNTER: There was no mandate to sell this computer, was there?

ROBINSON: Yes, there is.

HUNTER: There is a mandate?

ROBINSON: Yes.

HUNTER: You have to do it?

WELDON: Excuse me, by who was the mandate?

ROBINSON: I could have applied for an exemption not to sell it, and had I known even possible difficulties or potential for it, I would have probably exercised it. But there is an order that all equipment that is used should be sold for salvage.

WELDON: Cite that, cite that for me. Give me the reference of that where it says you should -- not says should. You said you had to sell it. Give me the citation.

ROBINSON: It is in my testimony, but it's unless it's on the high-risk list, and this was not on the high-risk list of equipment.

WELDON: You're saying on the record it had to be sold; you had no choice.

ROBINSON: Unless you seek an exemption, that's correct.

WELDON: And the exemption is, what, for you to keep it?

ROBINSON: Or to do something else with it.

WELDON: So, you were being forced by our regulations to sell this computer?

ROBINSON: Unless you get an exemption, that's correct.

WELDON: Who gives the exemption?

DEDICK (ph): I believe this is a slight misunderstanding, if I may respectfully disagree with my colleague from Sandia. I believe he's talking about -- he's not looking at the law that actually should govern this case, and those are the export laws. And, in fact, part of the Department of Commerce's investigation now, they are looking into the fact of whether or not this indeed was an export, because it was sold to a Chinese national. So, it has not been established that this was not an export and that there was no violation of law.

I do understand that this is Sandia's belief, because they do believe that there are other pieces of law that would not allow them to check on the nationality of a potential buyer for this equipment. So, I understand their part to it, but, on the other hand, I do think that there is an ignoring of the export laws that were on the books.

And what we found in our investigation was that there was not a thorough enough review of the export rules. So, we do disagree with Sandia on that part.

HUNTER: In your estimation, though, is there a mandate to sell this equipment as surplus equipment?

DEDICK (ph): In my estimation, absolutely not.

HUNTER: OK.

WEIGAND: Congressman, may I put something else on the record, please?

HUNTER: Yes, Mr. Weigand.

WEIGAND: I'd like to put two things on the record. One of them was that as soon as the department found out about this computer being outside of the Sandia National Laboratories' control, we immediately informed my management. It was immediately raised with the undersecretary. The undersecretary nearly immediately formed a task force to go, and within two days the machine was back in the possession of Sandia Labs and the federal system.

HUNTER: Well, now, let me ask you, Mr. Weigand. I thought this machine resided for months in a warehouse.

WEIGAND: Congressman Hunter, that is absolutely true. What I am putting on the record is as soon as we knew and understood that this computer was outside of the control of the Department of Energy...

HUNTER: Why was it July? Why did it take so long?

WEIGAND: Sir, I think that -- I am looking into that. I've asked for processes. I've attached my letter to the top of the issues, and if you want to know my professional opinion, the machine should have a more (inaudible) look before it went out the door with regard to national security.

HUNTER: OK. Could you find out why it was July, and let us know, let the committee know.

WEIGAND: I will take that and get back to you.

The second item I want to put on the record is that I hope that you could take some comfort from the fact that the Department of Energy does have in residence the expertise to determine what computers may or may not be of risk to national security. I'm one part of that; Trish is another part of that.

With regard to this computer, I was actually the program manager at the DOE's Defense Advanced Research Projects Agency -- you're probably familiar with that agency. It actually did the research and development and build this computer under contract with the...

HUNTER: So, you recognized the value when you saw it.

WEIGAND: So, let me tell you something: I know that computer inside and out, I participated in parts of the design, and so I believe that the Department of Energy has called this just about right; that this computer went on the loose was a little bit of a -- I'll stand by my statement, it was a national security concern.

HUNTER: OK. OK, thank you.

Mr. McCallum, let me go back to this one issue that we've talked about a little bit which was the 14-month lapse between Mr. Lee being -- the instruction from the FBI being to get Mr. Lee's clearances away from him so he couldn't steal more nuclear secrets and the 14 months lapsing before somebody slapped their forehead and said, "Is he still working there, and does he still have the clearances?" What happened there in your estimation? Are you up to speed on that?

MCCALLUM: Congressman, much of that I don't have the detail on much more than you've already talked about. My office supported it, the Office of Counterintelligence in some of those investigations, and I know that at one point the department was a little slow to take action, because they were waiting to see whether the Federal Bureau of Investigation and didn't want to blow their case. I guess it was not until we became aware that Director Freeh supposedly said, "Get him out of there."

HUNTER: Yes, he said, and I'll quote, "There's no investigative reason to keep him there. Get him out of there."

MCCALLUM: Once the bureau says there's no investigative reason, to get him out of there, we should have taken immediate action.

HUNTER: OK. Put the -- if your staff could put up that matrix, and we're going to get everybody out of here very shortly. Put that matrix up that we had that's the present system before the reform.

This, General, is one thing I wanted to bring to your attention. You had the head of the FBI tell the assistant secretary of energy and then about a week later the secretary of energy to remove the person he'd identified as a spy from our nuclear secrets. Now, if you want to analogize that to the military operation, that's the division commander being told by the CINC to get that guy in third platoon out of there, OK? That's -- somewhere in that maze, that message was lost. That's what we're trying -- so, no matter how many good feeling, patriotic, hard-charging energetic people you put into that system and no matter how much you change the culture, I think you've got a system there that was begging for this to happen.

I mean, if you look at that, you've got so many different chains of command and channels of communication, nobody will stand up and say, "This shouldn't have been done." When we tried to figured out what happened, nobody's sure. It was mass confusion, and the interesting thing is the confusion happened not once but twice. And maybe we can talk to the -- I think it was Secretary Pena who received the direction the second time, the second direction to do this, and apparently didn't act on it. But that's what we're trying to change with a shortened, direct, accountable chain of command, if you will, between the secretary and the head of the Security Administration.

I mean, I hope you can appreciate that, and I would hope that you'd work with the secretary and help him to understand that's not going to hurt him. I think that's going to help him. I think that's going to help any secretary, and I think that will keep, as Mr. Podonsky mentioned, this thing from being a cyclical thing where you concentrate on environment one era to the detriment of security and the next era you concentrate on something else to the detriment of security. Finally, something blows up, and you concentrate on security.

But I think you'll need to look at what we've done in terms of making this thing more like a military operation with respect to accountability for security. And I would think that that's something the secretary should appreciate.

Do you have any comments on that, Mr. McCallum, Mr. Podonsky, and then, General? What do you think about the system we put in? Do you think it's going to help any? And that ain't it, incidentally; that's beforehand.

MCCALLUM: I think that the new system could have several major benefits, and one of them is to raise the level and attention of the Defense Program element of the department. There have been a number of proposed reorganizations over the years that have looked at essentially creating another undersecretary, and there's some serious benefits to that.

I have one major concern, and I'll address it in security, but I believe it will also hold true in safety. And that is if you move the security element into the Defense Programs or nuclear weapons piece of this, you've got major quantities of special nuclear materials that reside outside of those programs, under the assistant secretary for environmental management at places like the Savannah River Plant, the Idaho National Engineering Laboratory, Richland Operations Office and the Rocky Flats site in Colorado. That material would then lie outside of the direct command and control of this new organization.

When I first came to the headquarters in Mr. Podonsky's role as the inspector, that's in fact the organization that were in. And, frequently, those organizations, with tens of tons of weapons usable material, did not pay any attention to us, because we were Defense Programs. There is material that lies outside of that direct umbrella that you've drawn. It would not necessarily be covered adequately, and it's a good a material as the nuclear weapons people have.

HUNTER: How would you recommend adapting this system to handle that stuff, to control that? What you're saying is under the environmental umbrella, the old sites being cleaned up, et cetera...

MCCALLUM: Yes, sir.

HUNTER: ... there's a lot of stuff.

MCCALLUM: And there's still very good material at those sites, at some of them.

In the area of security, I think that the person who's the security director for the Department of Energy has to oversee all of those elements. Fragmentation has been part of the problem with different calls, as you done the line and block chart here. There needs to be one man in control or one person in control, one budget, and one program. And that way we'll get all of the material properly protected.

HUNTER: OK, thank you.

Mr. Podonsky.

PODONSKY: Well, the devil and salvation are in the details, and the details for the proposed agency have not obviously been totally worked out. I would just like to offer up an observation. In 1984, when I first joined the department, at a time that both Mr. McCallum and I were in the same business, Defense Programs had counterintelligence; it has intelligence; it had oversight; it has policy. The lines of communications were very clear, and it was very difficult for both Mr. McCallum and/or myself to get the attention of the assistant secretary for Defense Programs, because there was more focus at that time on production of nuclear weapons and maintaining the stockpile.

So, while I fully agree that the streamlining of the chain of command is necessary in the department for it to work, I still go back to an earlier statement I made about accountability, about an independent capability to oversee what that group is doing, both from environment, safety, and health as well as a security perspective. So, again, I conclude with the opening piece that the details are going to be very important to work out, and we need to look at history so that we don't make the same mistakes that we made 15 years ago.

HABIGER: Mr. Chairman, I agree wholeheartedly with what Mr. McCallum just said in terms of about 50 percent of the things that we're worried about are outside of the new structure, and that's one of the reasons why I took this job was that the secretary was going to make me the director of Security for the Department of Energy, not for a semi-autonomous agency or for Defense Programs.

And I'm not trying to pick an argument with you, sir -- I know better than that -- but the chart that you showed with your military organization, the reason why I waffled on you, I didn't see a director of Security for the Department of Energy. And when you have the sites that Ed just pointed out still not under the firm control of a security czar, I have concerns.

HUNTER: Well, how about if you've got weapons material, basically, much of it in these closed and bases that are in the process of cleaning up? I presume that's a lot of the stuff that we're talking about here.

HABIGER: In one site, yes; three sites, no.

HUNTER: OK. How about bringing that material under the direction of the administrator? He answers directly to the secretary. In other words, you're saying he doesn't have the jurisdiction for it right now, and therefore it's got to be overseen by somebody else, if you bring it under his jurisdiction, stuff that's in the environmental sites as well as the weapons sites.

HABIGER: As my colleague, Glenn Podonsky, just pointed out, the devil's in the details to try to make that work.

HUNTER: OK.

HABIGER: And also, sir, your very clean lines of military organization, which I can appreciate, become convoluted when you start doing things like that.

HUNTER: Well, but if you're talking about real stuff and real material, you may have to just move that under their jurisdiction, and let them handle it. I mean, we do that in the military all the time -- We change jurisdictions, we change commands.

Anyway, give us your -- I might -- we'll be interested in any additional thoughts you have for the record in taking a look as this thing; I'm sure you already have. But if you come back to the committee with an articulation of this problem Mr. McCallum mentioned and a way that you would solve it, we'd be happy to take a very close look at that.

HABIGER: All right, sir.

HUNTER: OK, appreciate it. OK.

I've got it -- staff just gave me a memo to the effect, Mr. Podonsky, that your organization is not barred from monitoring from the nuclear material within the -- in NSA, but you still don't control it.

PODONSKY: Yes, that...

HUNTER: You're not barred from monitoring.

PODONSKY: Right.

HUNTER: OK. Well, gentlemen, It's been a long and lively hearing, I think kind of an important one to have. Thank you for being with us, and we'll do this again shortly.

So, the devil's in the details. There are a lot of details, and we're going to be spending some time working with you. Thank you for being with us today. Thanks for your endurance.

HUNTER: Oh, General Habiger, and, Dr. Podonsky, Mr. Thompson reminds me that at the director level or at the secretary level there is a director of Security in title 31. Take a look at that.

UNKNOWN: All right, sir.

HUNTER: OK, thank you.

END

NOTES:
Unknown - Indicates speaker unknown.
Inaudible - Could not make out what was being said.
off mike - Indicates could not make out what was being said.

PERSON: DUNCAN L HUNTER (94%); JAMES V HANSEN (57%); BOB STUMP (57%); FLOYD SPENCE (57%); LEE TERRY (55%); MARY BONO (53%); ROBERT (ROBIN) HAYES (52%); IKE SKELTON (52%); NORMAN SISISKY (52%); CHRIS JOHN (51%); LANE EVANS (51%); JIM TURNER (50%); WILLIAM M THOMAS (50%);

LOAD-DATE: October 26, 1999