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108TH CONGRESS

REPORT

HOUSE OF REPRESENTATIVES

2d Session

108-558

--INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 2005

JUNE 21, 2004- Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. GOSS, from the Permanent Select Committee on Intelligence, submitted the following

R E P O R T

together with

MINORITY VIEWS

[To accompany H.R. 4548]

[Including cost estimate of the Congressional Budget Office]

CONTENTS Page
Purpose 14
Overall Perspective on the Intelligence Budget and Committee Intent 15
Scope of Committee Review 16
Committee Findings and Recommendations 16
Section-by-Section Analysis of the Bill as Reported 40
Title I--Intelligence Activities
40
Section 101--Authorization of Appropriations
40
Section 102--Classified Schedule of Authorizations
40
Section 103--Personnel Ceiling Adjustments
40
Section 104--Community Management Account
41
Title II--Central Intelligence Agency Retirement and Disability System
41
Section 201--Authorization of Appropriations
41
Title III--General Provisions
41
Section 301--Increase in Employee Compensation and Benefits Authorized by Law
41
Section 302--Restriction on Conduct of Intelligence Activities
41
Section 303--Assistant Director of Central Intelligence For Information Management
41
Title IV--Central Intelligence Agency
42
Section 401--Permanent Extension of Central Intelligence Agency Voluntary Separation Incentive Program
42
Title V--Department of Defense Intelligence Activities
42
Section 501--National Security Agency Emerging Technologies Panel
42
Title VI--Education
42
Subtitle A--National Security Education Program
42
Section 601--Provision for Annual Funding
42
Section 602--Modification of Obligated Service Requirements Under the National Security Education Program
43
Section 603--Improvements to the National Flagship Language Initiative
43
Section 604--Establishment of Scholarship Program for English Language Studies for Heritage Community Citizens of the United States Within the National Security Education Program
43
Subtitle B--Improvement in Intelligence Community Foreign Language Skills
43
Section 611--Assistant Director of Central Intelligence for Language and Education
43
Section 612--Requirement for Foreign Language Proficiency for Advancement to Certain Senior Level Positions in the Intelligence Community
44
Section 613--Advancement of Foreign Languages Critical to the Intelligence Community
44
Section 614--Pilot Project for Civilian Linguist Reserve Corps
44
Section 615--Codification of Establishment of the National Virtual Translation Center
44
Section 616--Report on Recruitment and Retention of Qualified Instructors of the Defense Language Institute
45
Committee Position 45
Correspondence With Other Committees Regarding Particular Provisions 48
Letter From Chairman Hunter to Chairman Goss
48
Letter From Chairman Goss to Chairman Hunter
49
Letter From Chairman Boehner to Chairman Goss
49
Letter From Chairman Goss to Chairman Boehner
50
Oversight Findings and Recommendations 50
Fiscal Year Cost Projections 51
Congressional Budget Office Estimates 51
Committee Cost Estimates 54
Specific Constitutional Authority for Congressional Enactment of This Legislation 54
Changes to Existing Law 54
Minority Views 69

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

Sec. 1. Short title; table of contents.
TITLE I--INTELLIGENCE ACTIVITIES
Sec. 101. Authorization of appropriations.
Sec. 102. Classified schedule of authorizations.
Sec. 103. Personnel ceiling adjustments.
Sec. 104. Intelligence Community Management Account.
TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM
Sec. 201. Authorization of appropriations.
TITLE III--GENERAL PROVISIONS
Sec. 301. Increase in employee compensation and benefits authorized by law.
Sec. 302. Restriction on conduct of intelligence activities.
Sec. 303. Assistant Director of Central Intelligence for Information Management.
TITLE IV--CENTRAL INTELLIGENCE AGENCY
Sec. 401. Permanent extension of Central Intelligence Agency voluntary separation incentive program.
TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES
Sec. 501. National Security Agency Emerging Technologies Panel.
TITLE VI--EDUCATION
Subtitle A--National Security Education Program
Sec. 601. Provision for annual funding.
Sec. 602. Modification of obligated service requirements under the National Security Education Program.
Sec. 603. Improvements to the National Flagship Language Initiative.
Sec. 604. Establishment of scholarship program for English language studies for heritage community citizens of the United States within the National Security Education Program.
Subtitle B--Improvement in Intelligence Community Foreign Language Skills
Sec. 611. Assistant Director of Central Intelligence for Language and Education.
Sec. 612. Requirement for foreign language proficiency for advancement to certain senior level positions in the intelligence community.
Sec. 613. Advancement of foreign languages critical to the intelligence community.
Sec. 614. Pilot project for Civilian Linguist Reserve Corps.
Sec. 615. Codification of establishment of the National Virtual Translation Center.
Sec. 616. Report on recruitment and retention of qualified instructors of the Defense Language Institute.

TITLE I--INTELLIGENCE ACTIVITIES

SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

SEC. 102. CLASSIFIED SCHEDULE OF AUTHORIZATIONS.

SEC. 103. PERSONNEL CEILING ADJUSTMENTS.

SEC. 104. INTELLIGENCE COMMUNITY MANAGEMENT ACCOUNT.

TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

TITLE III--GENERAL PROVISIONS

SEC. 301. INCREASE IN EMPLOYEE COMPENSATION AND BENEFITS AUTHORIZED BY LAW.

SEC. 302. RESTRICTION ON CONDUCT OF INTELLIGENCE ACTIVITIES.

SEC. 303. ASSISTANT DIRECTOR OF CENTRAL INTELLIGENCE FOR INFORMATION MANAGEMENT.

TITLE IV--CENTRAL INTELLIGENCE AGENCY

SEC. 401. PERMANENT EXTENSION OF CENTRAL INTELLIGENCE AGENCY VOLUNTARY SEPARATION INCENTIVE PROGRAM.

TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

SEC. 501. NATIONAL SECURITY AGENCY EMERGING TECHNOLOGIES PANEL.

TITLE VI--EDUCATION

Subtitle A--National Security Education Program

SEC. 601. PROVISION FOR ANNUAL FUNDING.

SEC. 602. MODIFICATION OF OBLIGATED SERVICE REQUIREMENTS UNDER THE NATIONAL SECURITY EDUCATION PROGRAM.

SEC. 603. IMPROVEMENTS TO THE NATIONAL FLAGSHIP LANGUAGE INITIATIVE.

`SEC. 811. FUNDING FOR THE NATIONAL FLAGSHIP LANGUAGE INITIATIVE.

SEC. 604. ESTABLISHMENT OF SCHOLARSHIP PROGRAM FOR ENGLISH LANGUAGE STUDIES FOR HERITAGE COMMUNITY CITIZENS OF THE UNITED STATES WITHIN THE NATIONAL SECURITY EDUCATION PROGRAM.

`SEC. 812. FUNDING FOR SCHOLARSHIP PROGRAM FOR CERTAIN HERITAGE COMMUNITY RESIDENTS.

Subtitle B--Improvement in Intelligence Community Foreign Language Skills

SEC. 611. ASSISTANT DIRECTOR OF CENTRAL INTELLIGENCE FOR LANGUAGE AND EDUCATION.

SEC. 612. REQUIREMENT FOR FOREIGN LANGUAGE PROFICIENCY FOR ADVANCEMENT TO CERTAIN SENIOR LEVEL POSITIONS IN THE INTELLIGENCE COMMUNITY.

SEC. 613. ADVANCEMENT OF FOREIGN LANGUAGES CRITICAL TO THE INTELLIGENCE COMMUNITY.

`Subtitle A--Science and Technology'; and

`Subtitle B--Foreign Languages Program

`PROGRAM ON ADVANCEMENT OF FOREIGN LANGUAGES CRITICAL TO THE INTELLIGENCE COMMUNITY

`EDUCATION PARTNERSHIPS

`VOLUNTARY SERVICES

`REGULATIONS

`DEFINITIONS

`Subtitle C--Additional Education Provisions

`ASSIGNMENT OF INTELLIGENCE COMMUNITY PERSONNEL AS LANGUAGE STUDENTS

`Subtitle A--Science and Technology
`Sec. 1001. Scholarships and work-study for pursuit of graduate degrees in science and technology.
`Subtitle B--Foreign Languages Program
`Sec. 1011. Program on advancement of foreign languages critical to the intelligence community.
`Sec. 1012. Education partnerships.
`Sec. 1013. Voluntary services.
`Sec. 1014. Regulations.
`Sec. 1015. Definitions.
`Subtitle C--Additional Education Provisions
`Sec. 1021. Assignment of intelligence community personnel as language students.'.

SEC. 614. PILOT PROJECT FOR CIVILIAN LINGUIST RESERVE CORPS.

SEC. 615. CODIFICATION OF ESTABLISHMENT OF THE NATIONAL VIRTUAL TRANSLATION CENTER.

`NATIONAL VIRTUAL TRANSLATION CENTER

`Sec. 119. National Virtual Translation Center.'.

SEC. 616. REPORT ON RECRUITMENT AND RETENTION OF QUALIFIED INSTRUCTORS OF THE DEFENSE LANGUAGE INSTITUTE.

PURPOSE

The bill would:

OVERALL PERSPECTIVE ON THE INTELLIGENCE BUDGET AND COMMITTEE INTENT

The classified annex to this public report includes the classified Schedule of Authorizations and its associated language. The Committee views the classified annex as an integral part of this legislation. The classified annex contains a thorough discussion of all budget issues considered by the Committee, which underlies the funding authorization found in the classified Schedule of Authorizations. The Committee intends that all intelligence programs discussed in the classified annex to this report be conducted in accord with the guidance and limitations set forth as associate language therein. The classified Schedule is incorporated directly into this legislation by virtue of section 102 of the bill. The classified annex is available for review by all Members of the House of Representatives, subject to the requirements of clause 13 of rule XXIII of the Rules of the House of Representatives, and rule 13 of the Rules of Procedure for the House Permanent Select Committee on Intelligence.

SCOPE OF COMMITTEE REVIEW

U.S. intelligence and intelligence-related activities under the jurisdiction of the Committee include the National Foreign Intelligence Program (NFIP), the Tactical Intelligence and Related Activities (TIARA), and the Joint Military Intelligence Program (JMIP) of the Department of Defense.

The NFIP consists of all programs of the Central Intelligence Agency, as well as those national foreign intelligence, intelligence related, and/or counterintelligence programs conducted by: (1) the Department of Defense; (2) the Defense Intelligence Agency; (3) the National Security Agency; (4) the National Reconnaissance Office; (5) the National Geospatial-Intelligence Agency; (6) the Departments of the Army, Navy, and Air Force; (7) the Department of State; (8) the Department of the Treasury; (9) the Department of Energy; (10) the Department of Justice; (11) the Federal Bureau of Investigation; (12) the Department of Homeland Security; and (13) the U.S. Coast Guard. The Committee has exclusive legislative, authorizing and oversight jurisdiction of these programs.

The Department of Defense TIARA are a diverse array of reconnaissance and target acquisition programs that are a functional part of the basic military force structure and provide direct information support to military operations. TIARA, as defined by the Joint Chiefs of Staff and the Secretary of Defense, include those military intelligence activities outside the General Defense Intelligence Program that respond to the needs of military commanders for operational support information, as well as to national command, control, and intelligence requirements. The Committee on Armed Services in the House of Representatives shares oversight and authorizing jurisdiction of the programs comprising TIARA with the Permanent Select Committee on Intelligence.

The JMIP was established in 1995 to provide integrated program management of defense intelligence elements that support defense-wide or theater-level consumers. Included within JMIP are aggregations created for management efficiency and characterized by similarity, either in intelligence discipline (e.g., Signals Intelligence (SIGINT), Imagery Intelligence (IMINT)), or function (e.g., satellite support, aerial reconnaissance). The following aggregations are included in the JMIP: (1) the Defense Cryptologic Program (DCP); (2) the Defense Imagery and Mapping Program (DIMAP); (3) the Defense General Intelligence Applications Program (DGIAP), which itself includes (a) the Defense Airborne Reconnaissance Program (DARP), (b) the Defense Intelligence Tactical Program (DITP), (c) the Defense Intelligence Special Technologies Program (DISTP), (d) the Defense Intelligence Counterdrug Program (DICP), and (e) the Defense Space Reconnaissance Program (DSRP). As with TIARA programs, the Committee on Armed Services in the House of Representatives shares oversight and authorizing jurisdiction of the programs comprising the JMIP with the Permanent Select Committee on Intelligence.

COMMITTEE FINDINGS AND RECOMMENDATIONS

The Committee completed its review of the President's fiscal year 2005 budget request, carrying out its annual responsibility to prepare an authorization based on close examination of intelligence programs and proposed expenditures. The Committee, and in some cases, its component subcommittees, held 14 budget-related hearings covering all major intelligence programs within the National Foreign Intelligence Program, the Joint Military Intelligence Program, and the Tactical Intelligence and Related Activities accounts, and also covering functional capabilities, such as human intelligence, analysis, counterintelligence, counternarcotics, and counterterrorism.

As always, the Committee's legislative and budgetary actions are based on more than these budget-specific hearings. The actions taken in this bill are the result of the Committee's ongoing, rigorous oversight of the U.S. Intelligence Community. This oversight activity includes scores of Committee and subcommittee hearings on intelligence capabilities, strategies, plans, and challenges each year. In addition, the Committee Members and staff undertake hundreds of briefings and site visits annually.

Deserving of particular note is the time and attention the Committee has devoted to the in-depth study of three broad topics in particular. Over the past year, the Committee has conducted exhaustive reviews of: Intelligence Community language capabilities, all facets of the performance of the U.S. Intelligence Community on Iraq prior to the successful Operation Iraqi Freedom, and the interrogation and treatment of detainees in Iraq and other locations of the Global War on Terrorism (GWOT).

The Committee holds in highest regard the work accomplished by U.S. intelligence officers across the globe. Amid great sacrifice and intense conditions, the men and women of the Intelligence Community continue to perform their missions with great energy, and an enormous devotion to duty. The Committee commends these officers for their professionalism, integrity and perseverance, often in the most difficult of circumstances. The freedom and security of our great nation relies on their success.

Intelligence has been, rightly, recognized as a critical weapon in the GWOT. Resources for--and demands on--the U.S. Intelligence Community have increased dramatically in the two and three-quarters years since the attacks of September 11, 2001. This increase is even more dramatic when one takes into consideration the depth of the cutbacks, underinvestment, and the near fatal loss of political support for the IC in the last administration. Yet, looking at the Community as a whole, the Committee finds continuing gaps in capabilities and fundamental flaws in the management of resources and personnel. To the extent that these concerns may be outlined in an unclassified manner, the Committee has addressed them in the `Areas of Special Interest' section immediately following. A complete discussion of the Committee's oversight findings and recommendations is contained in the classified annex to this report.

This legislation, along with its accompanying report and classified annex, contains the Committee's specific recommendations about where the U.S. Intelligence Community should be heading, how it can posture itself for strategic superiority, and how the fiscal year 2005 intelligence budget should be invested. The classified schedule of authorizations includes the intelligence portion of the Contingent Emergency Reserve (CER), which the Committee views as an integral part of the fiscal year 2005 budget. Funds in the CER have been requested to address the high intelligence operations tempo in the GWOT--including Afghanistan and Iraq--and related areas.

The Committee applauds the President for taking this major step towards ending the practice--begun in earlier administrations--of funding critical operational intelligence and military requirements via supplemental appropriations. Funding by supplemental is a practice the Committee has addressed in great detail in past reports. Suffice to say, the Committee believes it should end.

In addition to a substantial enhancement for funding critical intelligence priorities related to the GWOT, H.R. 4548:

The Committee reported this legislation favorably. For the first time in at least ten years there were dissenting votes as the bill was reported from Committee. And, not just a few. Indeed, despite the positive expression of support for the bill in the classified version of the Minority Views, the eight Minority Members of the Committee who were present at the mark up voted against the `Intelligence Authorization Act for Fiscal Year 2005.' This was a bit startling given the thorough, bipartisan staff preparation for the mark up. In a marked departure from past practice, a number of the amendments offered by the Minority, however, were not shared on a bipartisan basis before the mark up. Taken as a group, the Minority amendments added nothing helpful to the bill or to the range of issues in which the HPSCI is already engaged.

Apparently, the Minority may be unaware that the Senate version of this bill is close to the House version, though slightly less generous in its funding levels. That bill was supported unanimously by both Majority and Minority. That the HPSCI Minority voted to deny the legal authorization to carry out the intelligence work during wartime, while trying to say they support the work of the IC, appears to be excessively contorted. It is noted that the unclassified Minority Views reserves expression of support for the work of the men and women of the Intelligence Community until the penultimate sentence of their views.

MARK UP

Closed Session

Notwithstanding the Minority's statements to the contrary, the specifics of the mark up discussion are sealed solely because there was substantial discussion of highly classified programs and intelligence information throughout the course of the proceeding. Indeed, discussion and debate on the legislative provisions alone, and amendments thereto, took approximately 3 hours. These included classified discussions related to the IC's national security need for improved language capabilities; how the IC is performing in the GWOT, particularly the IC's performance in Iraq and Afghanistan; and the need to improve or increase the IC's HUMINT analysis, and technical collection capabilities. It is useful, however, to review the areas of dispute that arose during the Committee's consideration of this legislation. During the course of this consideration, Minority Members offered seven amendments.

MINORITY AMENDMENTS OFFERED AT MARK UP

The Global War on Terrorism

Mr. Peterson, Mr. Boswell, and Mr. Cramer offered two amendments, the first to the statutory language and the second to the classified schedule of authorizations, which sought to double the total amount the Committee recommended for authorization in the Contingent Emergency Reserve (CER). Both of these amendments were defeated.

The Committee has spoken repeatedly against the practice of funding important intelligence capabilities via supplemental appropriations, and has been wary of that practice.

As stated above, the Committee believes that President Bush has taken a giant stride towards ending this practice through his CER request. Although some supplemental funds will probably be required before the end of fiscal year 2005, due to the uncertain requirements of war, requesting a significant portion of operations tempo funding up front through the CER is a vast improvement over past practice. The Committee has specifically authorized these funds in those areas the Committee believes are the most critical to win a global--emphasis on global--war on terror.

It is important to understand that the CER level in this legislation has been fully coordinated with the House Armed Services Committee and the House Appropriations Committee. In other words, this is real money.

Unfortunately, the funding level sought by the Peterson/Boswell amendments was not real money. It had not been coordinated with the HASC. It does not have dollars in Appropriations to back it up. So, had either amendment been approved, the funding in it would have been hollow. In other words, the amendments were nothing more than empty gestures.

`Hollow' funding is something the Committee makes every attempt to avoid. The Committee did not approve the Peterson/Boswell/Cramer amendments because in the view of the majority of its Members they were likely do more harm than good to the Intelligence Community.

Finally, the Committee notes that the same eight Minority Members who supported the two Peterson/Boswell/Cramer amendments unanimously opposed a later amendment offered by Mr. Gibbons to transfer a large sum of (real) money, in the hundreds of millions of dollars, from a long-term research and development project to provide additional operations tempo reserves for the GWOT.

It is relevant, also, to note that 5 Minority Members of the Committee voted in October 2003 against the $87 billion GWOT Supplemental Appropriations Act (P.L. 108-106).

Document Request--Detainees in the GWOT

Mr. Reyes offered an amendment to withhold or fence one-quarter of all funds authorized in the bill for the Central Intelligence Agency Program, the General Defense Intelligence Program, the Joint Military Intelligence Program, and the Tactical Intelligence and Related Activities program until the Committee receives various documents relating to the detention and interrogation of detainees in the GWOT.

The majority of the Committee Members believe that this amendment would have placed an absurdly high percentage of U.S. intelligence funding--dollars that all agree are absolutely critical to the GWOT--on hold pending a routine document request. It was the view of the Committee that this was a petty action masquerading as a grand gesture.

Document requests are normally handled through routine Committee business--that is, through staff work and official requests from the Chairman. In fact, several categories of the documents sought through this amendment have in fact been recently requested through a letter from Chairman Goss and Ranking Minority Member Harman:

House of Representatives,

Permanent Select Committee on Intelligence,

Washington, DC, June 1, 2004.

Hon. DONALD H. RUMSFELD,
Secretary of Defense, The Pentagon,
Washington, DC.

DEAR SECRETARY RUMSFELD: On June 11, 2004, we will hear testimony from Administration officials regarding the critical need for interrogation in the Global War on Terrorism. This hearing, originally scheduled for June 10 (see attached), will provide the Administration an opportunity to explain the policies underlying interrogation activities, the legal framework within which those activities are permitted to take place, and the value to our national security as a result of such interrogation. In anticipation of this hearing, the Committee requests that the Department provide the following documents, for the benefit of the Members, no later that 48 hours before the time of the hearing, which is scheduled to being at 9:00 on June 11.

Additionally, we have been advised that the International Committee of the Red Cross (ICRC) does not permit sharing of its reports and their related documents to legislative bodies of any country. For this reason, we understand, Brigadier General Karpinski's response to the ICRC of December 24, 2003, has not yet been made available to the Committee. We would request that you consider Section 502 of the National Security Act of 1947 when considering your obligation to the ICRC. Please advise us of the status of this continuing request.

Sincerely,
Porter J. Goss,
Chairman.
Jane Harman,
Ranking Democrat.

The Committee has no reason to believe that this request will not be honored.

Indeed, we have received good cooperation to date from the DOD and the CIA on information related to detainees and interrogation. The Committee has been aggressive in seeking this information, holding 5 full committee meetings so far (and a sixth hearing--the most substantial planned to date--was only postponed because the government was closed to observe the state funeral for President Ronald Reagan on that day). It has been rescheduled for July 13, 2004. In addition, we have held multiple high-level briefings for staff and individual Committee Members.

Likewise, the Committee has already received thousands of pages of documents, including:

The Committee staff has been briefed extensively on the approved interrogation authorities, as well as the value of detainee interrogation in the GWOT. Terrorist plots have been disrupted as a result. Similarly, high value targets have been apprehended and detained through information gained by appropriate methods of interrogation.

In fact, the bipartisan Committee staff was briefed within the last two weeks that many--if not all--of the prisoners in the Abu Ghraib abuse scandal were not even the subjects of intelligence interrogation. They were rapists, murderers, prison rioters, deviant individuals, and other hardened criminals. While that fact does not mitigate the abuses caused by a few, it does make it seem like less of an intelligence matter and more of a military police matter.

For these reasons, the Committee rejected the Reyes Amendment.

Document Request--Ahmed Chalabi

Ms. Eshoo offered an amendment to withhold or fence all funds (100%) for the office of the Undersecretary of Defense for Intelligence (USDI) until the Committee receives a `full accounting' of the relationship between DOD and Mr. Ahmed Chalabi from January 2001 through May 2004, as well as specific intelligence documents and the names of intelligence sources.

The Committee notes that DOD (including DIA) has been forthcoming in providing information on these matters. Documents continue to come into the Committee as requested. Members continue to receive briefings on the matter. In fact, the day just prior to mark-up Members had the opportunity to hear from executive branch officials on these and related matters. The detailed information provided at that briefing, in addition to all of DOD's other efforts to keep the Committee informed, provided a sufficient basis for the Majority to conclude that all of the information available on this subject has been made available to the Committee. All of this information is in addition to the more than twenty volumes of information and intelligence reporting the Committee has received in the course of its Iraq intelligence review.

For these reasons, and because the majority of Committee Members viewed the amendment as heavy-handed and unnecessary, it was rejected by the Committee.

Intelligence Community Restructuring

The Ranking Minority Member offered, as an amendment, her Intelligence Community restructuring legislation (H.R. 4104), which was introduced in the House on April 1st.

The amendment would have created a Director of National Intelligence (DNI) as a superstructure above the existing Intelligence Community. The Office of the DNI would have created an additional layer of bureaucracy. In addition, the amendment would have required nearly all senior management in the Office of the DNI to be Presidential appointees, subject to Senate confirmation. The Committee believes that this new bureaucratic super-structure would only widen the gap between analysts, operations officers and senior management; and create new inefficiencies in the flow of information. Additionally, the Committee is of the firm view that less political influence, not more, is needed in the Intelligence Community. Moreover, her amendment would serve to create confusing lines of authority and could be read as subjugating the Intelligence Community to the DOD. This is not a direction the Committee Majority wished to go.

The Ranking Minority Member's amendment would not address the key issue of providing a logical source of budget authority for the Intelligence Community. In fact, the amendment avoids providing the DNI more budget authority than the Director of Central Intelligence currently enjoys. Similarly, it satisfies none of the Joint Intelligence Committee's recommendations except with respect to DNI.

Although an argument has been advanced that her legislation would breakdown the information `stovepipes' in the Intelligence Community, the Committee does not assess that this is the case. The Committee believes just the opposite is true.

Finally, the Committee notes that H.R. 4104, introduced on April 1, 2004, was introduced by the Minority Membership of the Committee, without any engagement of the Majority Membership prior to its introduction. The Committee has held no hearings on the legislation.

The Chairman and ten other Members of the Committee introduced legislation asserting their vision to improve the management of the Intelligence Community (H.R. 4584), the Directing Community Integration Act.' The Committee intends to take up the issue of Intelligence Community management and structure in the near future. H.R. 4584 is not incorporated in the bill reported by the Committee.

The Committee rejected the Ranking Minority Member's amendment because it would create an additional layer of bureaucracy over the Intelligence Community, would fail to address critical needs such as improved budget authority for the head of the Intelligence Community, would not meet its stated goal of breaking down information stovepipes, and for a host of other issues that would most properly be addressed through Committee hearings and briefings.

Language Program

Mr. Holt offered an amendment to amend Mr. Bereuter's amendment, which was offered to provide increased intelligence community language capabilities through several different types of programs. Mr. Bereuter had introduced his amendment as two separate bills in the House prior to mark-up (H.R. 4573 and H.R. 4574). Mr. Holt sought to expand Mr. Bereuter's proposals in a way that would have complicated the jurisdictional aspects of the legislation. Additionally, Mr. Holt's amendments took a different approach to that being advanced by the Committee on Education and the Workforce. Based on these grounds, the Majority rejected the amendment offered by Mr. Holt.

Classified Program

Mr. Cramer offered an amendment to adjust the funding level for a classified program. The Majority disagreed with Mr. Cramer's arguments on the matter and rejected the amendment.

AREAS OF SPECIAL INTEREST

In the following several pages, the Committee highlights areas of concern that it believes must be addressed with a high priority by the Director of Central Intelligence, (DCI) as the leader of the Intelligence Community, if intelligence sufficient to protect our national security is to be obtained and provided to policy makers. The Committee places particular emphasis on issues that impact the Intelligence Community as a whole or that involve several various programs.

Global Human Intelligence Collection

All is not well in the world of clandestine human intelligence collection (HUMINT). The DCI himself has stated that five more years will be needed to build a viable HUMINT capability. The Committee, in the strongest possible terms, asserts that the Directorate of Operations (DO) needs fixing. For too long the CIA has been ignoring its core mission activities. There is a dysfunctional denial of any need for corrective action. The CIA must collect against all types of targets needed to gain the insights into plans and intentions of our adversaries, be they terrorist, political, economic, military, in nature. Countering the threat from terrorism is, of course, and should be, at the top of CIA's list of collection priorities, but the Central Intelligence Agency must continue to be much more than just the `Central Counterterrorism Agency' if America is to be truly secure, prosperous, and free.

The Committee has placed in the classified annex of this intelligence authorization its comprehensive analysis of what specifically is not right with the way the Directorate of Operations is being and has been managed. The Committee also assesses that the consequences of continued CIA mismanagement of the HUMINT mission are significant. Replete throughout this analysis, which includes specific recommendations for corrective action, are footnoted references to similar criticisms made by this Committee in the classified annexes of past intelligence authorization bills stretching back well before the 9/11 terrorist attacks. So, this is not new territory for the Committee. CIA has officially registered its strong objection to the Committee's exhaustively researched conclusions, which were reached over the course of years of close oversight and informed by hundreds of meetings and continuous dialogue with experienced CIA field operatives and Headquarters officials. That none of it could be made unclassified is unfortunate.

The Committee respects the authority of the DCI to make classification decisions and will, of course, abide by his ruling in this matter. After years of trying to convince, suggest, urge, entice, cajole, and pressure CIA to make wide-reaching changes to the way it conducts its HUMINT mission, however, CIA, in the Committee's view, continues down a road leading over a proverbial cliff. The damage to the HUMINT mission through its misallocation and redirection of resources, poor prioritization of objectives, micromanagement of field operations, and a continued political aversion to operational risk is, in the Committee's judgment, significant and could likely be long-lasting. Immediate and far-reaching changes can still reverse some of the worst factors eroding its capabilities, however. If the CIA continues to ignore the experience of many of its best, brightest, and most experienced officers, and continues to equate criticism from within and without--especially from its oversight committees--as commentary unworthy even of consideration, no matter how constructive, informed, and well-meaning that criticism may be, they do so at their peril. The DO will become nothing more than a stilted bureaucracy incapable of even the slightest bit of success. The nimble, flexible, core-mission oriented enterprise the DO once was, is becoming just a fleeting memory. With each passing day, it becomes harder to resurrect. The Committee highlights, with concern, the fact that it only took a year or two in the mid-1990's to decimate the capabilities of the CIA, that we are now in the 8th year of rebuild, and still we are more than 5 years away from being healthy. This is tragic. It should never happen again.

The Committee believes that the DO's difficulties are manifest in the discussion on Iraq's WMD. The analysts have taken a significant amount of criticism on the issue. It is imperative to point out, however, that the analysts do not collect the information they analyze. They simply take what is available and reach educated assessments. It is incumbent on the DO and other areas of the IC collection community to gather the information that will present a more complete picture. There was an insufficiency of the right amount of information available on this topic for the analysts. The U.S. cannot afford to be in such a position.

The State of the CIA's Directorate of Intelligence (DI)

In the aftermath of the terrorist attacks on the United States on September 11, 2001, the CIA's Directorate of Intelligence has experienced dramatic personnel shifts and a rapid increase in the demand for both its analysts and work product. The DI, much like the CIA's clandestine arm, the Directorate of Operations, suffered from disinvestments resulting from the so-called `peace dividend' of the 1990's. It was not until the World Trade Center and Pentagon were struck that senior DI management began to realize just how desperate the need is for an expanded and experienced analytic cadre.

DI analysts have earned a reputation in the Intelligence Community for being highly educated, well trained, motivated, and capable of handling demanding and fast moving assignments. As a result, with the expansion of the terrorist mission, DI analysts are in demand across the Intelligence Community, and in line with the CIA's `can-do' attitude has committed significant numbers of DI analysts to other organizations and posts. The CIA's analytic cadre, much like its covert counterpart in the DO, toil quietly, without significant praise, seldom ever to tell of success publicly, but sharply criticized for the least inaccuracy. The Committee notes the hard-working and dedicated rank-and-file professionals that provide the link between collection and truth and add value to raw data for policymakers.

The Committee notes four developments that, if not adequately addressed in the near-term, will work together to seriously undermine and degrade the relevance of the DI and its critically important products at a time when they are needed most by consumers. The first factor--the unsustainable surges in DI personnel to cover crisis issues without adequate back-filling--may be the easiest of the four problems to address. Aggressive new hiring is helping to mitigate this problem, but in the interim, overall DI expertise is declining, as new analysts need substantial training and on-the-job learning of their accounts. While there may be a strong temptation to surge these analysts to meet new crisis needs, it is important that this not be done prematurely or so haphazardly that it creates more problems than it seeks to solve. DI analysts must be allowed to develop true expertise. The DI must not be permitted to become an organization of generalists. Longer assignments on specific countries, regions, or issues--once discouraged by DI management concerned about analytic `clientitis'--should be strongly encouraged. This is, in the Committee's view, a major way to reverse permanently the trend towards widening global analytic gaps. Analytic depth can be more about skills than about numbers of bodies.

The second major DI problem area concerns the culture of analytic risk aversion, begun long before 9/11, but fostered through the continued perception on the part of the rank-and-file that senior DI managers do not want risk taking--however calculated, caveated, and warranted--and that they will not stand by an analyst who has made the wrong prediction. With some exceptions, the DI has become more focused on coordinated judgments that are often so caveated that they are of little use to consumers who are searching for some form of clarity in the very gray world of finished intelligence reporting. While clarity will not always be possible, analysts should be encouraged to be more forward leaning and to push the analytic envelope whenever possible, lest consumers turn more and more--as they have in recent years--to uncorroborated single-source HUMINT or SIGINT reports to inform their decisions. Creating an environment of some stability for analysts to develop adequate expertise will be an essential part of breaking the DI's risk averse culture, lest risk-taking become a reckless rather than calculated process.

The Committee recognizes that the DI is suffering from the difficult combination of vastly increasing requirements and too few bodies to service them. Strong DI leadership, however, with a demonstrated commitment to calculated risk-taking and to the true expertise building that must come with it, would begin to bridge the gap between where DI personnel numbers are now and the time when adequate help arrives. With the CIA's analysis on Iraq being widely criticized, DI leaders simply cannot afford to sit on their heels. If analysts decided to give up on risk-taking entirely, the national security interests of the country will suffer. This cannot be permitted to happen.

The third major problem area was also clearly evident to the Committee as a problem in the years before 9/11 and appeared in the form of criticial classified report language in past intelligence authorizations. This is the continuing overemphasis by senior DI managers on current intelligence reporting instead of on the longer-term, predictive, strategic intelligence forecasting that was once the strength of the DI and the staple of the DI's avid consumer base. The explosion of all form of open-source reporting, combined with technology for transmitting news across the globe in near-real time makes it nearly impossible for DI analysts to keep up. Instead of `chasing CNN,' as the Committee has observed in the past, the DI should be devoting much more of its resources to doing the kind of all-source, in-depth analysis that cannot, and is not, being done elsewhere in government or through media outlets. The DI will always have to leave some capability in place to make sure that its judgments about overnight developments in the world's hot spots are rapidly provided to consumers each day via tried and tested means, such as daily publications, spot reports, and briefings, for example. But, analysts have complained for years, and the Committee has heard the message loud and clear, that the preference of senior DI managers for current intelligence and opportunities to brief such product to high-level consumers far outstripped the DI's capacity to be useful. More importantly, such DI priorities damaged the DI's base of expertise by squandering scarce analytic resources that could be put to better use helping the more sophisticated line-consumers understand better what was behind the facade of the daily or hourly news reports. The crisis atmosphere post-9/11 has indeed generated more interest in rapid analytic judgments to address fast-moving situations, but the DI needs to play to its strengths and fill a badly needed function of giving the consumer a much higher degree of education than the `sound-bite' analysis currently being emphasized. These are the types of priorities to be set by the DI's top manager. The Committee continues to disagree with the rationale for the continuing trend towards current intelligence at the expense of nearly every other form of the discipline.

Finally, the Committee remains concerned that senior DI managers still do not have the ability to drive collection priorities, despite past Committee exhortations about the urgency of fixing this problem, and the CIA's own stated goals. A number of analytic judgments on Iraq have so far been found to be inconsistent with the facts on the ground. While intelligence analysis seldom, if ever, provides a 100 percent accurate picture, deficiencies were largely the result of years of inadequate or insufficient HUMINT collection, and extensive and ingrained denial and deception tactics that defeated technical collection efforts. Analysts had little actual ground truth with which to work. The Committee now finds the DO overly focused on a few priority targets, leaving analysts once again reliant on the media and other mostly open or insufficiently validated sources of information with which to make its key judgments. Given the recent performance on Iraq, the Committee believes that senior DI management should play a stronger role in determining collection priorities and advocating the need for global coverage.

CIA Compensation Reform Program

The Committee remains unconvinced and increasingly skeptical that the Pay for Performance (PFP) compensation reform program currently proposed by Agency leadership is the best, most appropriate pay system for the men and women of the CIA. It should be noted that the Committee is supportive of the President's vision regarding the need to change our government-wide pay system.

The Committee supports the design, development, and implementation of a reformed compensation plan for employees of the CIA. The Committee continues to have serious reservations, however, about the business model and assumptions upon which the CIA's proposed PFP system is based. The CIA is a unique Federal entity with vastly different jobs, many of which are not, and cannot, be preformed in the private sector. The Committee believes that it is a mistake to assume that money is the most significant employee motivator in the intelligence `business.' While financial compensation plays an important role in employment, it is not the sole motivating factor for many employees at CIA, nor should it be. CIA attracts the country's best and brightest, not for financial reward, but rather for the espirit d'corps, mission, and tradecraft that are unique to CIA.

The Committee, nonetheless, supports the notion of rewarding superior performers with increased pay. In addition to the issues noted above, the Committee remains concerned about the difficulty the Agency has had to date in projecting the actual costs of implementation and administration of the proposed program. These concerns were magnified by the results of the congressionally mandated compensation reform pilot program. The actual costs of the pilot program exceeded those projected by almost 20%, and the performance model did not produce the expected disparity between superior and mediocre performers. In fact, at the direction of senior Agency leadership, this 20 % overage was added to the program at its conclusion to enhance the delineation between higher and lower levels of performance. Inexplicably, notwithstanding these known deficiencies, the pilot program was touted by Agency management as a great success and a resounding affirmation of the proposed compensation reform system. The Committee notes with displeasure that Agency employees apparently were never told of the failures of the performance model and the resulting need for the infusion of these additional funds.

The Committee believes that greater improvement in communication between Agency leadership, employees, and Congress must occur before the proposed compensation reform plan is further implemented. When CIA seniors were questioned about certain materials provided by CIA that did not contain any known negative references regarding PFP, they claimed providing such data was not their responsibility, but rather that of lower ranking Agency personnel, and that they did not know why the information was never relayed to employees or to the Committee. The Committee is disappointed with what could be perceived as a callous indifference on the part of some CIA seniors of the impact such fundamental changes in the CIA's pay structure will have on Agency personnel and the continued unwillingness of some CIA seniors to engage in meaningful dialogue on this issue.

As noted above, and notwithstanding the foregoing, the Committee remains optimistic that an effective and well-managed effort to reform the compensation system at CIA is possible, although this will require significant modifications to the current plan, at a minimum. The Committee is encouraged by the willingness of the Office of Personnel and Management (OPM) to assist Agency senior leadership in their efforts to manage this process and address the concerns of CIA employees. The Committee has been advised that OPM and CIA will execute a Memorandum of Understanding (MOU) that clearly delineates their respective responsibilities with respect to this effort, and the Committee expects CIA to ensure this MOU is executed in a timely fashion. The intent of the MOU is to provide a cooperative framework within which OPM and CIA can work, with all interested stakeholders, to design, develop, implement, and communicate to CIA employees a reformed compensation system, and the Committee expects CIA to work with OPM in a manner consistent with this stated intent. Moreover, the Committee expects that as part of the OPM-CIA partnership, the question of whether the current plan needs to be replaced by an entirely new and better constructed plan will be seriously and expeditiously addressed.

The Committee directs that the DCI will regularly advise, in intervals of no less than every three months, the Committee of developments in the process of reviewing, revising, or replacing the current reform plan, and fences all non-personnel services funds associated with the implementation of the proposed PFP system, including employee conversions, information technologies, pay tool and compensation design, and related training, until the DCI certifies, in writing to the intelligence committees that CIA has complied with the following requirements:

1. An MOU is executed by and between the OPM and CIA that ensures that CIA will:

2. Another, more objective and completely `blind' survey of employee opinion on all of the key aspects of the PFP system is conducted through the auspices of or in conjunction with OPM as a replacement for the CIA's poorly designed and badly administered survey performed by a contractor firm that was a stakeholder in the initial reform plan. CIA's efforts, while in technical compliance with the letter of the Congress's corresponding CDA in the `Intelligence Authorization Act for Fiscal Year 2004,' certainly did not adhere to the spirit of that Congressional direction.

3. The following reports, outlined below, are completed and delivered in writing, signed personally by the DCI, to the intelligence committees of the House and Senate not later than 180 days after enactment of this provision:

(i) Management of the PFP System. This report shall detail the management processes the DCI has instituted and plans to institute to manage the implementation and administration of a PFP system. Specifically, this report shall delineate the process by which the DCI plans to select, train, certify, and evaluate the performance of pay pool managers, as well as the processes by, and regularity, with which these managers will communicate with Agency employees regarding all aspects of the proposed PFP system.

(ii) Cost of Implementation and Administration of Compensation Reform. This report shall detail all current and projected costs relating to the implementation and administration of the compensation reform program. Specifically, this report shall delineate all personal and non-personal services funds expended in the implementation and administration of compensation reform to date, to include, but not limited to, the following activities: performance management program and compensation implementation; IT systems development and deployment; training program development and implementation; surveys and focus groups; and communications. Additionally, this report shall detail the projected costs of the implementation and administration of compensation reform Agency-wide from FY06 through FY10.

(iii) Pilot Program Web Application. This report shall explain the process by which the Pilot Program web application was designed and developed. Additionally, this report shall include an assessment of the performance of the web application throughout the duration of the pilot program. This assessment shall be conducted in accordance with associated industry `best practices' and the Carnegie Mellon Capability and Maturity Model guiding principles. The report shall also detail the technological specifications of the current application baseline, as well as any information collected during the development and testing phases of the current baseline. The report shall evaluate the full technological impact a web application of this magnitude will have on the Agency's technological infrastructure. This evaluation shall include, but is not limited to, the impact to the Agency's network backbone, common application environment, and systems engineering and application maintenance workforce. Finally, this report shall include a cost estimate for the follow-on PFP tool application testing, development and deployment.

National Reconnaissance Office

The Committee is concerned about the amount of time and attention that the National Reconnaissance Office's (NRO) Director is available to provide to the NRO and the viability of its budget to sustain the number of programs underway.

A recent IG report described the various responsibilities that the NRO Director has in addition to those he has as Undersecretary of the Air Force and as Acquisition Executive. While the benefits that accrue to the national security space programs as a whole that result from combining these positions may be positive, the Committee is concerned that it comes at an expense to the NRO, which plays a significant role in our IC and national security apparatus. The Committee will seek to understand how the needs of the Air Force space programs can be met while ensuring a more balanced or appropriate amount of time and attention can be provided to the NRO.

The Committee recommendation is to continue the strong support for the 2005 funding request, but it has concerns about the viability and affordability into the future. At a time when the organization has struggled to fund adequately its current programs, it is embarking on a number of ambitious new capabilities. The future years' budget does not appear to be capable of sustaining it all. Moreover, some programs are likely to need additional time that will further exacerbate the fiscal viability. The Committee believes that the space systems provided by the NRO are an essential part of a comprehensive intelligence architecture and that either the budget should be capable of sustaining its programs or it should not start new programs.

Intelligence Community Language Capabilities

The core function of the Intelligence Community (IC) is the gathering of foreign intelligence vital to the national security of the United States. To perform effectively this mission, and to ensure that the information acquired is indeed accurate, our nation must have sufficient numbers of intelligence professionals who are proficient in foreign languages. Fluency in a foreign language must not be considered a highly specialized technical skill possessed only by the few. Rather, proficiency in language should be a core capability for virtually all intelligence officers. The Committee has long been concerned that the IC lacks a strategy to ensure that an adequate supply of skilled linguists will be available in the event of their need. This is particularly true of critical languages such as Arabic, Russian, Chinese, Korean, Japanese, Farsi/Persian, and Pashtu.

The Committee held a series of hearings on the issue of language capabilities in the IC, visited language institutions utilized by the IC, and solicited the views of leading academicians in the field of language and linguistics.

The Committee found that significant strides have been taken to improve the IC's language capabilities, particularly since the terrorist attacks of September 11, 2001. Initial steps have been taken in areas such as strategic planning of language requirements, increasing basic and applied research into the teaching of language and culture, augmenting existing Federal training programs, and broadening reservoir of linguists from which the IC might draw. The Committee would note that many of these initiatives are in response to congressional action. Nonetheless, the efforts by the Administration are to be commended, and, when taken together go a long way toward addressing the nation's need for expertise in critical languages. As correctly noted by Dr. Richard Brecht, Executive Director of the Center for Advanced Study of Language, these initiatives `represent some of the finest policy, planning, and program implementation on behalf of language in the history of the United States.'

While the Executive branch has begun to address concerns about critical language capabilities, the Committee found that much remains to be done. In particular, the Committee noted the absence of a single individual in the IC responsible for languages. There is no single individual tasked with developing a comprehensive, collaborative, and cohesive solution to the IC's language problem. In the absence of a single voice for language within the IC, each component has the ability to develop their own standards and set their own funding priorities. The Committee concluded that an essential component of any solution would be the creation of an Assistant Director of Central Intelligence for Language and Education.

The Committee strongly approves the policy that has been adopted by the Foreign Service, wherein foreign language capability is an integral component during consideration for promotion. Indeed, the Department of State's Employee Evaluation Report (EER) forms establish specific language criteria that must be met for promotion. For entry into the ranks of the Senior Foreign Service, individuals are expected to demonstrate full mastery of written communication in a foreign language, be able to effectively argue complex policy issues, and be able to adeptly discern the innermost meanings and nuances of messages that others convey. These are exactly the skills necessary for the collection of foreign intelligence. The Committee concludes that the most effective method of establishing the primacy of language skills is to require similar language skills for individuals being elevated into the ranks of the Senior Intelligence Service. One year after enactment of this Act, all individuals promoted to the Senior Intelligence Service shall be required to demonstrate proficiency in a foreign language at the 3/3 level or higher. The Committee understands that there are certain senior level positions, such as those requiring advanced scientific or computer expertise, which may not require language skills. If there is a SIS position that should be exempted because of the nature of the specific responsibilities of the position, the Director should advise the Committee and request an exemption for that specific position. The Committee intends to be judicious in the granting of such exemptions.

The Committee grants the authority to establish a program dedicated to the advancement of foreign languages critical to the IC. Under this program, the Director is authorized to enter into partnerships with educational institutions and to assign dedicated personnel and enlist volunteers to advance such partnerships. The Committee recommends that Concordia Language Villages would serve as an appropriate partnership, as would the SCOLA, and the Monterey Institute.

In the `Intelligence Authorization Act for Fiscal Year 2003,' the Committee tasked a report on the concept of a Civilian Linguist Reserve Corps. The report recommended moving forward with a three-year pilot program to establish a viable Corps. The Committee authorizes funds to implement the recommendations of this report.

The Committee concluded that the National Security Education Program (NSEP), which was created in the Boren Amendment to the `Intelligence Authorization Act of Fiscal Year 1992,' has been and remains one of the most effective tools to recruit highly qualified linguists for service in the field of national security. This program provides scholarships, grants, and fellowships for advance language and cultural training in return for service in a specified national security capacity. This program has operated on a trust fund, but the inclusion of additional expanded responsibilities has almost exhausted the fund. Provision of an annual authorization is the most effective method of ensuring continued funding. The Committee believes the Community Management Account of the DCI is the appropriate vehicle to provide such authorizations.

Assessing the Terrorist Target

The terrorism target transcends both our foreign intelligence and judicial systems. The IC was established to collect, assess, and disseminate foreign intelligence, prior to any adverse action or event. The judicial system investigates and administers justice after the law is broken.

The judicial and intelligence systems evolved almost independently over the last half-century. Terrorism challenges both systems and demands that the two work together.

The IC in fiscal year 2005 has requested a significant increase in funds for analysis with a substantial portion of these funds focused on assessing the terrorist target. In addition, the Executive Branch has begun to realign previously stovepiped organizations and analytic bodies to improve communication and information sharing for homeland security purposes. The Committee notes the significant role the Terrorist Threat Integration Center (TTIC) has played in moving the IC to reduce barriers to communication and Department-specific cultures. However, the Committee notes that the proliferation of counterterrorism divisions, task forces, and other organizations may create additional stovepipes. This is counter to the need to move information in a timely and efficient manner to those who need it most.

Since September 11, 2001, the Federal Government has realigned resources to create the Department of Homeland Security (DHS). Specifically P.L. 107-296 directed DHS to develop analytic capabilities to assess terrorist threats to the homeland and to disseminate that information to State, local, and private sector officials. The Terrorist Screening Center (TSC) has also been created within the Federal Bureau of Investigation (FBI), to consolidate more than a dozen `watchlists' and to provide one-stop shopping for authorities when individuals of concern are detained by police, boarding an aircraft, or entering the United States, among other actions that might provide an opportunity to learn more about that person. The Terrorist Threat Integration Center (TTIC), largely st