At his confirmation hearing, Acting Director David Paulison told senators he is trying to overcome the agency’s morale problem.
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Decision focused on short-term savings from halting the program and failed to consider the long-term benefits of competition, GAO says.
GAO sees improvement and members of Congress are working to get funding restored.
Number of positions involved has shrunk from 1,350 to 1,100 as employees await result.
Officials say local authorities will bear more responsibility during responses to this year's storms.
GAO encourages Defense to invest more in its Web-based contract payment system.
Senate panel plans later this week to debate and approve a compromise version of legislation to create an oversight process.
Armed Services panel chairman says plan to use money from retirements for upgrades and new purchases is too risky.
Senators upset at lack of early disclosure on spying program; also grill Michael Hayden on faulty pre-Iraq war intelligence.
Shippers would bear some of the cost; House Homeland Security Committee Democrat says process still would not be airtight.