My computer behaves as follows when a short password is entered:
# passwd testing
Changing password for user testing.
New UNIX password:
BAD PASSWORD: it is WAY too short
Retype new UNIX password:
No password supplied
No password supplied
No password supplied
passwd: Authentication token manipulation error
You have new mail in /var/spool/mail/root

My desired behavior is that passwd reprompts three times as follows:
# passwd testing
Changing password for user testing
New UNIX password:
BAD PASSWORD: it's WAY too short
New UNIX password:
BAD PASSWORD: it's WAY too short
New UNIX password:
BAD PASSWORD: it's WAY too short
passwd: Authentication token manipulation error

Which file should I change?

My current pam.d/system-auth is:
# cat pam.d/system-auth
#%PAM-1.0
# This file is auto-generated.
# User changes will be destroyed the next time authconfig is run.
auth required pam_env.so
auth sufficient pam_unix.so likeauth nullok
auth required pam_deny.so

account required pam_unix.so

password required pam_cracklib.so retry=3
password sufficient pam_unix.so use_authtok nullok md5 shadow
password required pam_deny.so

session optional pam_keyinit.so revoke
session required pam_limits.so
session [success=1 default=ignore] pam_succeed_if.so service in
crond quiet use_uid
session required pam_unix.so