This report discusses the reorganization of government agencies and the reorientation of their missions to improve our nation's ability to better protect our homeland. It is important to recognize that this transition to a more effective homeland security approach is part of a larger transformation that the government must make to address emerging fiscal, economic, demographic, scientific, technological and other challenges of the 21st century and to meet the expectations of the American people for timely, quality and cost-effect public service. This report focuses on two major issues that Congress should review in deliberations on creating a new cabinet department principally dedicated to homeland security (1) the need for reorganization and the principles and criteria to help evaluate what agencies and missions should be included in or left out of the new Dept. of Homeland Security and (2) issues related to the transition, cost and implementation challenges of the new department.