"There are any number of excellently qualified candidates," P.J. Crowley of the progressive Washington think tank Center for American Progress told UPI. "It will be interesting to see the selection. The skill set will tell us a lot about the future direction (of the department) in an Obama administration."

Crowley was a senior national security official under President Bill Clinton, and the head of the Center for American Progress, John Podesta, is co-chair of the Obama transition team.

Crowley and other Democratic security experts said in interviews that the department, the second largest workforce in the federal government, has responsibilities in three areas of potentially enormous political significance for the new government -- counter-terrorism, disaster recovery and immigration.

"That is why the skill set is interesting ... you can compare it to the challenges in these ... diverse areas," said Crowley.

"How do you lead an agency that is still searching for a common identity?" asked Crowley, adding the department's agenda was "still a work in progress."

There was general agreement that the management challenges at Homeland Security were probably the most severe of any in the federal government, with the possible exception of the Department of Defense.

Many of its major acquisition programs -- like the Coast Guard's Deepwater recapitalization plan, or the high-technology virtual border in the southwest -- have been beset with cost overruns, underperformance and other management crises. And the department spent much of its first five years embroiled in internal and external turf battles.

"Whoever you bring in is going to need �� great executive leadership and management skills to run what is a very unwieldy department," said David Heyman of the non-partisan Center for Strategic and International Studies.

Heyman added that the pick also would have to have "the ability to connect with the public during a crisis," such as a natural disaster or a terrorist attack.

"You need a communicator, a leader, someone who can inspire �� one of the largest federal workforces," said Jessica Herrera-Flanigan, a former Democratic congressional staffer who now works as a public policy consultant in the private sector.

"The department has to move from the internal focus it has had to deal with its external relationships, the coordination across the federal government; the partnerships with state, local and tribal (governments) and the private sector; and repairing some of its international relationships," said Herrera-Flanigan.

The diversity of the issues the new secretary would have to deal with was challenging in itself. "In some ways you need a jack-of-all-trades," she concluded.

The name of Arizona governor and early Obama backer Janet Napolitano came up often as a possible candidate, though most observers were not keen to be quoted discussing possible candidates.

The governor herself has declined to commit to finishing out her second four-year term in Arizona, which finishes in 2010 and after which she cannot run for re-election, owing to term limits.

Napolitano, a former federal prosecutor and state attorney general, "has a law enforcement background, she is the governor of a border state," said Heyman, noting she had pioneered much of the National Governors' Association's work on homeland security issues. "Her stock also went up when she was named to the transition team," he added of Napolitano, who last week was named to a board that will advise the full-time transition staff but has yet to meet.

But Napolitano also has been mentioned as a possible U.S. attorney general, and the homeland post "is not likely to be at the top of anyone's list of jobs they want," remarked one Democratic insider who asked for anonymity. "There's not a lot of good things that can happen on your watch."

Other names being mooted in Beltway gossip included Raymond Kelly, the current New York City police commissioner, who in the Clinton administration first supervised the Secret Service and later ran U.S. Customs.

"He has an operational background �� and has been very creative (with the New York police)," said Heyman. "The way he has run NYPD is the gold standard, and everybody says so."

Other names said to be in consideration include Thad Allen, the current commander of the U.S. Coast Guard; former Clinton-era federal disaster chief James Lee Witt; and various current and former members of Congress.

Herrera-Flanigan said the department's relationships on Capitol Hill would be "a big issue."

"You have to solve the jurisdictional problem," she said, noting there are still almost 80 congressional committees with jurisdiction over some aspect of the department's work. "Something needs to give," she said of arrangements in Congress, so that the new secretary "is not being dragged up to the Hill by 80 committees" and can do his or her job.

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