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A major hurdle in sharing resources between organizations is heterogeneity. Therefore, in order for two organizations to collaborate their policies have to be resolved. The process of resolving different policies is known as policy reconciliation, which in general is an intractable problem. This paper addresses policy reconciliation in the context of security. We present a formal framework and hierarchical representation for security policies. Our hierarchical representation exposes the structure of the policies and leads to an efficient reconciliation algorithm. We also demonstrate that agent preferences for security mechanisms can be readily incorporated into our framework. We have implemented our reconciliation algorithm in a library called the Policy Reconciliation Engine or PRE. In order to test the implementation and measure the overhead of our reconciliation algorithm, we have integrated PRE into a distributed high-throughput system called Condor.