99–010

107TH CONGRESS REPORT " ! 2d Session SENATE 107–149

TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2003 FOR INTELLIGENCE AND INTELLIGENCE-RELATED ACTIVITIES OF THE UNITED 

STATES GOVERNMENT, THE COMMUNITY MANAGEMENT ACCOUNT, AND 

THE CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY 

SYSTEM, AND FOR OTHER PURPOSES

MAY 13 (legislative day, MAY 9), 2002.—Ordered to be printed 

Mr. GRAHAM, from the Select Committee on Intelligence, 

submitted the following 

R E P O R T 

[To accompany S. 2506] 

The Select Committee on Intelligence (SSCI or Committee), having considered an original bill (S. 2506), to authorize appropriations 

for fiscal year 2003 for intelligence and intelligence-related activities of the United States Government, the Community Management Account, and the Central Intelligence Agency Retirement and 

Disability System, and for other purposes, reports favorably thereon and recommends that the bill pass.

CONTENTS 

Page 

Purpose of the Bill ................................................................................................... 2

Classified Supplement to the Committee Report .................................................. 3 

Scope of Committee Review .................................................................................... 4 

Committee Action on the Fiscal Year 2003 Intelligence Budget ......................... 4 

Congress and the Intelligence Community 

Clarification of Intelligence Community Reporting Requirements .............. 6

Specificity of National Foreign Intelligence Budget Amounts for 

Counterterrorism, Counterproliferation, Counternarcotics and Counterintelligence .................................................................................................... 8

Modification of Authority to Make Funds for Intelligence Activities Available for other Intelligence Activities ........................................................... 8

Presidential Determinations to Limit Access to Reporting of Covert Actions ................................................................................................................ 9

Effective Provision of Intelligence to, and Use by, Congress ........................ 10

Clarification of Authority of Intelligence Community to Furnish Information on Intelligence Activities to Congress ................................................. 10 

Intelligence Community Personnel 

Standards and Qualifications for the Performance of Intelligence Activities .................................................................................................................. 11 

Military Support to the National Foreign Intelligence Program .................. 12 

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David L. Boren National Security Education Program ................................. 13 

Scholarships and Work-Study for Pursuit of Graduate Degrees in Science 

and Technology ............................................................................................. 16 

Intelligence Collection, Analysis and Dissemination 

Establishment of the National Commission for the Review of the Research and Development Programs of the U.S. Intelligence Community 17 

National Virtual Translation Center .............................................................. 18 

Foreign Terrorist Asset Tracking Center ....................................................... 18 

Terrorist Identification Classification System ............................................... 19 

Counterdrug ...................................................................................................... 20 

National Imagery and Mapping Agency Support to Homeland Security ..... 21 

Annual Report on Foreign Companies Involved in the Proliferation of 

Weapons of Mass Destruction that Raise Funds in the United States 

Capital Markets ............................................................................................ 21 

Counterintelligence 

FBI Implementation of Webster Commission Report Recommendations .... 22 

FBI Counterintelligence and Counterterrorism Training and Analysis ...... 22 

The National Counterintelligence Executive .................................................. 23 

Counterintelligence at the Department of Energy and the National Nuclear Security Administration ...................................................................... 24

Intelligence Community Financial Management, Planning, and Performance 

Intelligence Community Compliance with Federal Financial Accounting 

Standards ...................................................................................................... 25

Strategic and Performance Planning for the Intelligence Community ........ 28

Section-by-Section Analysis and Discussion .......................................................... 28 

Committee Action .................................................................................................... 35 

Estimate of Costs ..................................................................................................... 35 

Evaluation of Regulatory Impact ........................................................................... 35

Changes in Existing Law ........................................................................................ 35

PURPOSE OF THE BILL

This bill will: 

(1) Authorize appropriations for fiscal year 2003 for (a) U.S. 

intelligence activities and programs; (b) the Community Management Account of the Director of Central Intelligence; and (c) 

the Central Intelligence Agency Retirement and Disability System; 

(2) Authorize the personnel ceilings as of September 30, 

2003, for intelligence activities of the U.S. Government and for 

the Community Management Account of the Director of Central Intelligence; 

(3) Authorize the Director of Central Intelligence, with Office 

of Management and Budget approval, to exceed the personnel 

ceilings by up to two percent; 

(4) Amend the National Security Act to define the intelligence committees of Congress; 

(5) Require that the National Foreign Intelligence Program 

budget submission specify the amounts attributable to 

counterterrorism, counterproliferation, counternarcotics and 

counterintelligence; 

(6) Modify the legal authority to reprogram funds from one 

intelligence activity to another; 

(7) Clarify that there are no statutory impediments to the 

provision of information by the Director of Central Intelligence 

to the congressional intelligence committees; 

(8) Require the Director of Central Intelligence to establish 

a standard method for transliteration; 

(9) Require the Director of Central Intelligence to establish 

standards and qualifications for persons performing intelligence functions; 

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(10) Modify the David L. Boren National Security Education 

Program; 

(11) Establish scholarships and work-study opportunities for 

persons studying in the fields of science and technology; 

(12) Establish the National Virtual Translation Center; 

(13) Establish within the Central Intelligence Agency the 

Foreign Terrorist Asset Tracking Center; 

(14) Require the Director of Central Intelligence to develop 

and provide to the Intelligence Community and appropriate 

federal, state and local officials a list of known or suspected 

international terrorists and international terrorist organizations; 

(15) Require an annual report on foreign companies involved 

in the proliferation of weapons of mass destruction that raise 

funds in the United States capital markets; 

(16) Extend for two years the Central Intelligence Agency 

Voluntary Separation Pay Act; 

(17) Suspend for an additional year the reorganization of the 

Diplomatic Telecommunications Service Program Office; 

(18) Identify recurring reports due to the congressional intelligence committees, establish uniform due dates for reports, 

provide for extensions of due dates under certain circumstances, and repeal certain requirements for reports; 

(19) Establish the Office of the National Counterintelligence 

Executive in the Executive Office of the President; 

(20) Establish the National Commission for Review of Research and Development Programs of the United States Intelligence Community. 

CLASSIFIED SUPPLEMENT TO THE COMMITTEE REPORT

The classified nature of United States intelligence activities prevents the Committee from disclosing the details of its budgetary 

recommendations in this Report. The Committee has prepared a 

classified supplement to this Report which contains (a) the Classified Annex to this Report and (b) the classified Schedule of Authorizations which is incorporated by reference in the Act and has the 

same legal status as public law. The Classified Annex to this report 

explains the full scope and intent of the Committee’s action as set 

forth in the classified Schedule of Authorizations. The Classified 

Annex has the same status as any Senate Report and the Committee fully expects the Intelligence Community to comply with the 

limitations, guidelines, directions, and recommendations contained 

therein. 

The classified supplement to the Committee Report is available 

for review by any Member of the Senate, subject to the provisions 

of Senate Resolution 400 of the 94th Congress. 

The classified supplement is made available to the Committees 

on Armed Services and Appropriations of the Senate and the House 

of Representatives, the Permanent Select Committee on Intelligence of the House of Representatives and to the President. The 

President shall provide for appropriate distribution within the Executive branch. 

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SCOPE OF COMMITTEE REVIEW

The Senate Select Committee on Intelligence (SSCI or Committee) conducted a detailed review of the fiscal year 2003 budget 

requests for the National Foreign Intelligence Program (NFIP) of 

the Director of Central Intelligence; for the Joint Military Intelligence Program (JMIP) of the Deputy Secretary of Defense; and for 

the Tactical Intelligence and Related Activities (TIARA) of the military services. The Committee’s review entailed a series of briefings 

and hearings with senior government officials, numerous staff 

briefings, review of budget justification materials, and numerous 

written responses provided by the Intelligence Community to specific questions posed by the Committee. The Committee also monitored compliance with reporting requirements contained in statute. Those reports, if received by the Committee by their due dates, 

were scrutinized by the Committee and provided important information and analysis upon which appropriate action could be taken, 

if deemed necessary. 

In accordance with a Memorandum of Agreement with the Senate Armed Services Committee (SASC), the SSCI is including its 

recommendations on both JMIP and TIARA in the Classified 

Annex. The SSCI has agreed that JMIP and TIARA issues will continue to be authorized in the defense authorization bill. The SASC 

has also agreed to involve the SSCI staff in staff-level defense authorization conference meetings and to provide the Chairman and 

Vice Chairman of the SSCI the opportunity to consult with the 

SASC Chairman and Ranking Member before a JMIP or TIARA 

issue is finally closed out in conference in a manner with which 

they disagree. The Committee looks forward to continuing its productive relationship with the SASC on all issues of mutual concern. 

In addition to its annual review of the Administration’s budget 

request, the Committee performs oversight of various intelligence 

activities and programs. The Committee’s Audit Staff conducts indepth audits and reviews of specific programs and activities identified by the Committee as needing close scrutiny. The Audit Staff 

also supports the Committee’s continuing oversight of a number of 

administrative and operational issues. The Audit Staff’s inquiries 

frequently lead to Committee action with respect to the authorities, 

applicable laws, and budget of the activity or program concerned. 

During the last year, this group completed the Committee’s investigative work on the Intelligence Community’s actions in the case 

of Navy Commander Michael Scott Speicher, the October 2000 attack on the USS Cole and the Intelligence Community’s foreign 

materiel acquisition and exploitation programs. The Audit Staff 

also continued the Committee’s review of the espionage activities of 

former Federal Bureau of Investigation employee Robert Hanssen 

and the investigation leading to Hanssen’s arrest. The Staff’s additional projects included monitoring the products and activities of 

the Intelligence Community’s statutory and administrative Inspectors General and overseeing efforts by Intelligence Community 

agencies to improve their financial management systems. 

COMMITTEE ACTION ON THE FISCAL YEAR 2003 INTELLIGENCE BUDGET

The Committee conducted a thorough review of the Administration’s budget request for the National Foreign Intelligence Program 

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for fiscal year 2003. Consistent with its oversight responsibilities, 

the Committee carried out an extensive examination of the individual programs comprising the U.S. Intelligence Community. 

Building on the approach it took last year, the Committee’s review 

of the Administration’s fiscal year 2003 request reaffirmed its belief 

that the National Foreign Intelligence Program should be reviewed 

by specific priority areas as well as by individual agencies and 

functions. 

For fiscal year 2003 through fiscal year 2007, the Administration 

has proposed significant resource increases for our overall national 

intelligence effort. Such increases build upon substantial supplemental appropriations approved for the Intelligence Community for 

fiscal years 2001 and 2002 in the wake of the horrific terrorist attacks of September 11, 2001. The increased amounts already approved or requested for the National Foreign Intelligence Program 

are consistent with the need to strengthen the Intelligence Community in executing its roles in the ongoing war against terrorism and 

the protection of the American homeland. Additionally, requested 

resources will aid the Intelligence Community’s ongoing effort to 

pursue those intelligence subjects of greatest concern to our nation. 

The Committee compliments the Administration for requesting 

higher levels of resources for the Intelligence Community for fiscal 

year 2003 and beyond. As the Committee has noted in past years, 

the challenges confronting the Intelligence Community have, for 

too long, received inadequate attention and insufficient resources. 

This situation has changed in the wake of the attacks of September 

11, 2001. The Intelligence Community is poised to benefit from an 

infusion of additional people and funding that can provide momentum for a renewal of intelligence efforts against those individuals, 

groups, and states that seek to do us harm. As the Intelligence 

Community is our first line of defense, the Administration’s fiscal 

year 2003 request for the National Foreign Intelligence Program is 

a necessary first step in correcting the deficiencies of the past. 

In this budget, the Committee seeks to highlight five priority 

areas that must continue to receive particular attention in the near 

term if intelligence is to fulfill its role in our national security 

strategy. Four of the five priority areas were first addressed by the 

Committee in last year’s Intelligence Authorization Act. They are: 

(1) revitalizing the National Security Agency; (2) correcting deficiencies in human intelligence; (3) addressing the imbalance between intelligence collection and analysis; and (4) rebuilding a robust research and development program. This year, the Committee 

adds a fifth priority: modernizing the capabilities of Measurements 

and Signatures Intelligence to fulfill key intelligence requirements. 

In comparing the Administration’s fiscal year 2003 request to funding levels which the Committee recommended last year, the Committee is encouraged by the progress of the Intelligence Community 

in addressing the resource needs in the first four priority areas. 

The Administration’s request surpasses the Committee’s recommendation in every area. The Committee looks forward to 

progress in Measurements and Signals Intelligence in the coming 

year. 

Higher levels of proposed resources for fiscal year 2003 for the 

National Foreign Intelligence Program, however, will not rectify 

several important resource challenges which continue to confront 

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the Intelligence Community. Two of these important challenges are 

the product of the new paradigm facing Intelligence Community 

agencies and programs. In the past, the level of resources requested for the Intelligence Community was not commensurate 

with the myriad strategic and tactical missions of critical importance to national policy-makers and military forces in the post-Cold 

War world. This led to difficult and self-defeating trade-offs among 

mission areas by intelligence leaders. Today, however, those same 

intelligence leaders must ensure that the Intelligence Community 

can absorb and execute efficiently the substantial increase in resources that have flowed to, or are requested for, key intelligence 

programs in the wake of September 11, 2001. Two such programs 

include the continued efforts to recapitalize our human intelligence 

capabilities and to improve the pace and quality of the modernization of the National Security Agency. It will take persistent and 

strong management to ensure that taxpayer dollars are spent in a 

manner that minimizes waste and maximizes performance. 

At the same time, Intelligence Community leaders must address 

the shortfalls in the National Foreign Intelligence Program budget 

that did not, or could not, receive adequate attention during the 

Administration’s budget process. Such shortfalls include: 

• Concerns about our ability to collect information from certain key platforms; 

• Insufficient funds to complete a major acquisition program; 

and 

• Inadequate funds to ensure that information collected by 

the next generation of collection platforms will be processed, 

exploited, and appropriately disseminated to intelligence analysts. 

These shortfalls are not the only ones facing the Intelligence 

Community. Additionally, as the war against terrorism continues 

into its next phase, a series of intelligence challenges will likely 

arise which will further tax the resources and overall capabilities 

of the people and programs comprising the National Foreign Intelligence Program. 

The Committee credits the Administration for responding forcefully, in the midst of the ongoing war against terrorism, to improve 

the posture of the Intelligence Community in carrying out its allimportant national security mission. More work, however, remains 

to be done. Beyond any specific measures proposed for fiscal year 

2003, the Administration must continue to devote attention to the 

five priority areas identified by the Committee, as well as a host 

of resource-related issues that must be addressed if near-term increases in intelligence capabilities are to translate into sustained 

intelligence successes against complex and long-term threats to our 

nation. The Committee looks forward to working with the Administration on this overall effort in the days ahead. 

CONGRESS AND THE INTELLIGENCE COMMUNITY

Clarification of Intelligence Community reporting requirements 

One important mechanism for oversight by the Committee is to 

require annual and one-time reports by the Director of Central Intelligence to the intelligence committees of the Congress. As the 

Committee conducts its oversight responsibilities each year, it idenVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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tifies problems, issues and subject areas about which it needs additional information from the Community. In most cases, the Committee needs the information sought in the reports in order to inform the drafting of legislation or the budget authorization decisions for the following year. Accordingly, it is important that such 

reports be accurate and thorough. It is equally important that they 

be submitted on or before their due dates. 

The Committee has taken a close look at the performance of the 

Director of Central Intelligence in providing these important reports in a timely manner. The results of this review are dismal. Between December 1, 2001, and May 1, 2002, the Intelligence Community was required to submit a total of 84 annual and one-time 

reports to the congressional intelligence committees. Of this number, 18 were submitted after their due date; eight were incomplete, 

interim reports; and 51 were not submitted at all. Perhaps most 

disturbing, 10 of the reporting requirements not met were contained in statute. In sum, of the 84 reports required, seven were 

submitted by the deadline, for an overall record of eight percent 

compliance. 

By clarifying and reorganizing the various reporting requirements, Title IV of the bill is intended to address the problem of repeated failure by the Director of Central Intelligence to comply 

with the legal requirements to provide reports to Congress. First, 

the Committee has attempted to baseline all the annual and semiannual reports that are required by prior statutes, intelligence 

committee reports, and classified annexes. Section 401 establishes 

a uniform due date for annual and semi-annual reports in the National Security Act of 1947 (50 U.S.C. §401 et seq.). Also, in an effort to ensure that all of the reports required are, in fact, important 

to the fulfillment of the Committee’s responsibilities, the Committee surveyed the outstanding requirements. Section 441 repeals 

certain reports that the Committee found were no longer necessary. 

Further, in recognition that intelligence officers have critical duties 

that may inhibit their ability to meet the reporting deadlines in 

some circumstances, Section 401 provides for an automatic 30–day 

extension of any report deadline with written notice to the congressional intelligence committees. Beyond the 30–day extension, the 

due date for a report may be further extended by certification to 

the intelligence committees by the responsible official, the Director 

of Central Intelligence, Secretary of Defense, or Attorney General, 

that preparation and completion of the report by the due date 

would be detrimental to national security. Section 105 also resolves 

any ambiguity as to the legal status of reports required in committee reports and classified annexes by incorporating them by reference into the statute. Sections 411–431 incorporate certain recurring reports that were required in previous intelligence committee 

reports. 

The Committee expects that Section 401 will improve compliance 

by the Intelligence Community with the reporting requirements. In 

that regard, Section 401 requires by December 1, 2002, that the 

General Counsel of the Central Intelligence Agency, the legal advisor to the Director of Central Intelligence, prepare and provide a 

report describing the steps that have been taken to ensure that the 

Director obeys the law in the future. 

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The Committee has directed in the Classified Annex to this bill 

that a portion of the funds requested for fiscal year 2003 for the 

Office of the Director of Central Intelligence not be obligated or expended until reports to the congressional intelligence committees 

have been provided in accordance with Title IV. 

Specificity of national foreign intelligence budget amounts for 

counterterrorism, counterproliferation, counternarcotics and 

counterintelligence 

The Committee believes that it is essential to a rational budgeting process that budgets be built to reflect key concerns of policymakers. Unfortunately, this does not take place with respect to certain disciplines of vital concern to our nation’s security. Specifically, it is very difficult from existing Congressional Budget Justification Books to determine how much money the Intelligence 

Community has budgeted for counterterrorism, counternarcotics 

and counterproliferation. Counterintelligence, as an intelligence 

discipline, is accounted for in annual summary budget materials 

describing the National Foreign Intelligence Program, but there is 

no requirement for the Intelligence Community to continue to do 

so. This is not the first time the Congress has addressed this issue. 

In Section 1051 of the 1998 National Defense Authorization Act 

(P.L. 105–85) the Congress required the Administration to provide 

information on Executive branch funding to combat terrorism, including intelligence funding. Such information has proven useful in 

assisting this Committee in carrying out its budgeting and policy 

oversight responsibilities. The need for information on 

counterterrorism spending is all the more important in the wake 

of the terrorist attacks of September 11, 2001. The Committee 

notes, however, that the Administration’s ‘‘cross-cut’’ report on fiscal year 2002 counterterrorism spending levels has not yet been received and is past due. The result is that the Congress must review 

the President’s Fiscal Year 2003 budget request without the benefit 

of the report. 

The Committee believes that it is important for both the Executive and Legislative branches to be fully informed about annual resource levels requested by the Intelligence Community for the important disciplines of counterterrorism, counterproliferation, counternarcotics and counterintelligence. Accordingly, Section 304 will 

ensure that the National Foreign Intelligence Program budget, as 

submitted next year and in years following, will contain this essential ‘‘cross-cut’’ information. 

Modification of authority to make funds for intelligence activities 

available for other intelligence activities 

The Committee takes great care to set the amount authorized for 

a specific intelligence activity at the proper level to enable that program to be conducted in an effective and efficient manner. In some 

cases, however, the funding needs for a particular activity or program change after the intelligence authorizations have been enacted by Congress and signed by the President. In those cases, in 

accordance with the terms of Section 504 of the National Security 

Act of 1947 (50 U.S.C. §414), the Director of Central Intelligence 

may notify the intelligence committees that funds need to be reprogrammed from one activity to another. In addition to this notificaVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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tion, Section 504(a)(3) also requires that in such instances, (1) the 

activity to be funded be of a ‘‘higher priority’’ than the activity from 

which the funds are taken and (2) the need for funds for such activity be based on ‘‘unforeseen’’ requirements. 

The Committee is concerned that the correspondence it receives 

notifying it of the reprogramming of funds from one activity to another often does not set forth clearly how the Section 504 requirements of ‘‘higher priority’’ and ‘‘unforeseen’’ circumstances have 

been satisfied. Section 305 clarifies the ‘‘unforeseen’’ requirement 

by stating that such a requirement does not include the failure of 

the Director of Central Intelligence to anticipate an action by Congress, such as an authorization or appropriation level for an activity at a level lower than that requested in the President’s budget. 

Section 305 also amends Section 504 to require the Director of Central Intelligence to certify the facts that meet those statutory requirements. 

Presidential determinations to limit access to reporting of covert actions 

This Committee expressed concern in Senate Report 107–63 accompanying S. 1428, the Intelligence Authorization Bill for Fiscal 

Year 2002, with Executive branch compliance in some cases with 

the requirement in the National Security Act of 1947 (50 U.S.C. 

§401 et seq.) to provide the intelligence committees with written 

notice of Presidential covert action findings. 

Section 503 of the National Security Act (50 U.S.C. §413b) describes the process by which the President authorizes the conduct 

of covert actions by departments, agencies, or entities of the United 

States Government. Under this provision, the President may authorize a covert action if ‘‘the President determines such an action 

is necessary to support identifiable foreign policy objectives of the 

United States and is important to the national security of the 

United States, which determination shall be set forth in a finding 

* * * [and] [e]ach finding shall be in writing. * * *’’ Section 

503(a)(1) and (c)(1) set forth special circumstances in which the 

President is given the authority either to delay the written notification for 48 hours in an emergency situation, or to limit the access 

to the written finding in extraordinary circumstances to only eight 

members of Congress—the leadership of the Senate and House of 

Representatives and the leadership of the intelligence committees. 

In those special circumstances, however, the President is not relieved of his statutory responsibility to provide a copy of the finding 

in writing. Section 503(c)(3) and (4) state clearly that whenever 

prior notice of a covert action is not given to Congress, or Committee access is limited, the written finding shall state the reasons 

justifying those special circumstances.

The Committee restates its belief that the provision of written 

copies of the President’s findings is essential to effective congressional oversight of covert action programs. In cases in which access 

has been limited to the leadership of the Senate and House of Representatives and the leadership of the intelligence committees—and 

denied, because of the extreme sensitivity of the program, to the 

other members of the intelligence committees who are charged with 

oversight of the activities of the Intelligence Community—section 

503(c)(4) requires that the President provide to the Chairmen of 

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the intelligence committees a copy of the finding, including the reasons for such limited access. This is necessary in order to allow 

proper oversight, as contemplated by the statute, of these important and sensitive programs that the President has determined ‘‘affect the vital interests of the United States.’’ Accordingly, the Chairman and Vice Chairman of the Senate Select Committee on Intelligence direct that, whenever they are notified about a covert action initiative, an Executive branch official 

should bring the written copy for their personal review at the time 

of the notification. The Committee respects the desire of the Executive branch to keep custody of these sensitive documents and believes that this accommodation can satisfy the needs of both 

branches of government to fulfill their respective responsibilities. 

Effective provision of intelligence to, and use by, Congress 

In Senate Report 107–63 accompanying S. 1428, the Committee 

noted the importance of the role of Congress as a ‘‘consumer of intelligence to inform its decisionmaking on policy, and its concern 

that there had ‘‘been little effort to develop mechanisms to ensure 

that members of Congress receive intelligence, in a form tailored 

to their unique needs, to enable them to perform their policy-making responsibilities efficiently and effectively.’’ In an attempt to address this issue, the Committee directed the Director of Central Intelligence to prepare a comprehensive report on the subject. The 

Director has not, as yet, complied with this directive. 

Recent events have underscored the importance of Congress 

being informed with timely, relevant and accurate intelligence. 

Thus, the failure of the Director of Central Intelligence to comply 

with this directive is particularly troubling. The Committee also 

notes that this failure is, unfortunately, consistent with the pattern 

described above of noncompliance with requests, directives and 

statute concerning the provision of reports to Congress. 

Accordingly, the Committee adopts and renews the directive contained in Senate Report 107–63 concerning this report. 

Clarification of authority of Intelligence Community to furnish information on intelligence activities to Congress 

Section 306 reaffirms longstanding requirements that the Intelligence Community must report to the intelligence committees of 

the Congress all information necessary for those committees to fulfill their oversight responsibilities. This includes a duty to fulfill 

the Intelligence Community’s reporting requirements under sections 501, 502, and 503 of the National Security Act of 1947, and 

other statutes. Section 306 is designed to preserve the Intelligence 

Community’s unique relationship with its oversight committees in 

the wake of the USA PATRIOT Act of 2001, which gave intelligence agencies access to sources of information that were previously denied it. In order to ensure continued effective oversight 

of Intelligence Community activity, this section would make clear 

that it remains lawful for the Director of Central Intelligence to 

transmit information to Congress pursuant to the above- mentioned reporting requirements. This provision does not authorize 

Congress to have direct access to grand jury or other protected information in the possession of the law enforcement community. In 

the interest of ensuring continued oversight of Intelligence CommuVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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nity activities, it merely authorizes access, pursuant to existing 

statutory reporting requirements, to such otherwise protected information as may be used by intelligence officials in conducting analysis or making operational decisions. 

The Committee is well aware of the unique constitutional, statutory and historical aspects of the grand jury, and is extremely sensitive to the need to ensure that vigorous oversight by Congress is 

reconciled with the need for an independent grand jury. This legislation is not intended to change this balance, but merely to recognize that where grand jury-derived or other sensitive law enforcement information is made available to the Intelligence Community, 

it is the responsibility of the Congress to exercise meaningful oversight of how it is used. Similarly, where such information contributes to analytic products or operational decision making, the Congress, as a policy-making and oversight organization which, as a 

matter of law, must be kept informed of intelligence activities and 

other intelligence information, cannot be barred by statute from 

having access to the information necessary to fulfill its responsibilities.

The tension between grand jury secrecy and Congressional oversight, after all, is not a unique dynamic. A similar tension exists 

between the President’s constitutional foreign affairs role (and the 

Director of Central Intelligence’s statutory duty to protect sources 

and methods) and the intelligence committees’ oversight function. 

It is the Committee’s view that this tension has been resolved successfully during the 25-year history of the intelligence oversight 

committees. The Committee is confident that a similar accommodation can be reached in the context of grand jury information and 

other protected law enforcement information that is provided by 

law enforcement entities to the Intelligence Community pursuant 

to the USA PATRIOT Act, or other authorities. This legislation 

simply sets out a statutory framework for resolving these issues, 

and is designed principally to clarify the relationship between Rule 

6(e) of the Federal Rules of Criminal Procedure and the oversight 

provisions of the National Security Act of 1947, as amended. It 

does not seek to alter or describe the constitutionally-derived relationship between the three branches of government. 

INTELLIGENCE COMMUNITY PERSONNEL

Standards and qualifications for the performance of intelligence activities 

Section 308 clarifies the role of the Director of Central Intelligence, as head of the Intelligence Community, as the official responsible for ensuring that there are common standards and qualifications for individuals performing intelligence functions throughout the Community. The provision provides the Director broad 

flexibility to establish such standards and qualifications and it is 

the Committee’s hope that he will integrate this effort with the ongoing personnel programs detailed in the Classified Annex to this 

bill. 

The impetus for this legislation is two-fold. First, the Committee 

has an overall interest in ensuring that the Director vigorously exercise his authorities and prerogatives as head of the Intelligence 

Community. It is the view of the Committee that ensuring basic 

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standards and qualifications for intelligence officers, whether they 

be collectors, analysts, or technical experts, is a fundamental element of leading a community. In this respect it is not the Committee’s intention to require the Director to intrude into the internal 

personnel practices and decisions of the constituent elements of the 

Intelligence Community. He must, however, set some guidelines for 

the Community within which these elements can make their own 

judgments. 

Second, the Committee has become concerned that, particularly 

in the area of analysis, elements of the Intelligence Community are 

denominating individuals as ‘‘analysts’’ or ‘‘intelligence analysts’’ without adherence to a meaningful common definition of that word. 

Since September 11, 2001, the Committee has been struck by the 

ever-growing number of individuals who are called ‘‘intelligence analysts,’’ particularly in the area of terrorism. It is the Committee’s 

intention to require the Director to ensure that individuals performing analytic or other intelligence functions meet clear and rational minimum standards for performing those jobs. 

Military support to the National Foreign Intelligence Program 

The Committee continues to be concerned about the high percentage of military billets programmed for National Foreign Intelligence Program (NFIP) agencies that go unfilled each year. The 

problem continues to plague, in particular, the General Defense Intelligence Program, the Consolidated Cryptologic Program, and the 

National Imagery and Mapping Agency Program. Historically, approximately 3,000 military intelligence billets go unfilled in the 

NFIP by the Department of Defense each year. This accounts for 

well over $100 million that must be included in the NFIP budget, 

but from which the Intelligence Community receives no benefit. To 

date, however, no comprehensive solution has been worked out 

within the Executive branch that satisfies the concerns of the Department of Defense, the Intelligence Community, and the Congress. In the absence of any solution, intelligence requirements in 

support of policy-makers and military forces will go unmet, while 

the amount of funding devoted to intelligence activities will continue to be overstated to the Congress. 

Last year, the Committee noted that, for a variety of reasons, the 

military services might choose to assign personnel to intelligence 

positions at rates that are less than those stated in budget justification materials. The Committee also noted that it opposed such 

a practice, given the critical, ongoing importance of intelligence in 

supporting national decision-makers and deployed military forces. 

In light of the contributions of intelligence to the ongoing war 

against terrorism, the Committee believes that filling intelligence 

billets within the NFIP should be a top priority of the Department 

of Defense. In particular, the Committee believes that it is unacceptable that over 70 intelligence analytic billets are currently vacant at the U.S. Central Command, which is leading the fight 

against al Qaida terrorists in Afghanistan. The Committee is not 

alone in this view. It is the Committee’s understanding that the 

issue of unfilled military intelligence billets has been raised by the 

Commander of the U.S. Central Command in discussions with the 

Secretary of Defense and the Chairman of the Joint Chiefs of Staff. 

Clearly, a solution must be found for this ongoing problem. 

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The Committee notes that the Office of the Secretary of Defense 

agreed to provide a fair share of any military reprogramming back 

to the NFIP beginning in fiscal year 2001. To date, however, and 

despite the persistent nature of unfilled military billets in the 

NFIP, no military reprogramming has taken place. The Committee 

understands that the Department of Defense is currently studying 

the unfilled military billet problem, given concerns raised about the 

issue by the Defense Health Program and the Special Operations 

Command. The study, being carried out by the Program Analysis 

and Evaluation Office in the Office of the Secretary of Defense, has 

developed a number of options to address the overall issue. The 

Committee also understands, however, that any final decisions and 

implementation of agreed-upon solutions may not occur until fiscal 

year 2004. 

The Committee feels that this is too long to wait. Given the need 

to support fully our policy-makers and deployed forces with intelligence personnel at a level consistent with the Administration’s 

own budget request, the Committee strongly urges the Secretary of 

Defense and the Director of Central Intelligence to resolve this 

matter prior to the submission of the fiscal year 2004 budget request. 

David L. Boren National Security Education Program 

The National Security Education Program (NSEP), the National 

Security Education Trust Fund, and the National Security Education Board are the result of the David L. Boren National Security 

Education Act of 1991 (50 U.S.C. § 1901 et seq.) The NSEP was created due to a concern after Operation Desert Storm by Senator 

David L. Boren, then-Chairman of the Senate Select Committee on 

Intelligence, that the Intelligence Community lacked Arabic language expertise. Presently, the program provides scholarships and 

grants to students and academic institutions focused on those geographic areas, languages and fields of study that are deemed most 

critical to U.S. national security. 

The scholarship portion of the NSEP includes both undergraduate and graduate programs that seek to provide support to 

students who are interested in studying languages and cultures not 

commonly studied in the United States. It is the Committee’s understanding that undergraduate students often use their scholarships to study abroad or work as interns in an American Embassy. 

Graduate students use the scholarships to integrate studies into 

their existing curriculum by studying abroad or taking immersion 

language courses in the United States. An average of 150 students 

participate in the undergraduate program and 80 students participate in the graduate program each year. The institutional grant 

component of the program is an annual competition that provides 

funding to universities and colleges throughout the U.S. The grants 

give institutions of higher education financial assistance to develop 

or strengthen their capabilities to educate U.S. citizens in critical 

languages, cultures, and international fields. Areas focused upon in 

the grants programs are similar to those in the student program. 

The primary role of the National Security Education Board is to 

develop criteria for awarding scholarships, fellowships, and grants 

for the program. It consists of representatives from the Department 

of Defense, the Department of Education, the State Department, 

14

the Commerce Department, the Central Intelligence Agency, the 

Department of Energy, the National Endowment for the Humanities, and six presidential appointees. The Secretary of Defense 

serves as the Chairman of the Board, and the statute requires that 

the individuals appointed by the President be ‘‘experts in the fields 

of international, language, and area studies education.’’ The Board 

meets annually. 

The objective of the NSEP is to enhance the national security of 

the United States by increasing its capacity to deal effectively with 

foreign cultures and languages. The program seeks to produce an 

increased pool of applicants for work in the departments and agencies of the United States Government with national security responsibilities. The Committee views the graduate program as the 

most effective way of achieving the stated goal of the program for 

several reasons. First, the graduate program reaches students after 

they have already selected a career path. Also, NSEP officials have 

told the Committee that graduate students are enthusiastic about 

serving as federal employees, and generally seek employment in 

national security positions. The Committee notes that the undergraduate program, while providing unique learning opportunities, 

is an inadequate mechanism for ensuring that students will obtain 

employment with the federal government, and thereby fails to meet 

the stated goal of producing an increased pool of applicants to serve 

in the federal government. 

Because the NSEP is essentially taking a ‘‘risk’’ on students by 

providing them with a substantial amount of financial assistance, 

the Committee believes it is in the best interest of the program to 

focus on those students most likely to seek and attain employment 

in the field of national security. For these reasons, the Committee 

has included Section 309 in the bill, which is designed to refocus 

the National Security Education Program by eliminating the undergraduate portion of the Program and mandating the creation of 

the National Foreign Language Initiative. 

The NSEP retains the authority provided in the original legislation to award grants to institutions of higher education. The 

amended legislation seeks to streamline the grants component of 

the NSEP by mandating the creation of the National Foreign Language Initiative and eliminating the original grants component. 

The Committee notes that no new legislative authority is required 

to implement the Flagship Language Initiative; the proposed program is completely compatible with NSEP’s current legislative 

mandate. 

The National Foreign Language Initiative will unite the federal 

sector with the higher education community by utilizing the management and structure of the NSEP, the Defense Language Institute, the National Foreign Language Center, located at the University of Maryland, and several of the nation’s leading universities. 

Overall management of the initiative will be provided for the NSEP 

by the National Foreign Language Center at the University of 

Maryland. The National Foreign Language Center will, through institutional grants, establish working relationships with a set of 

flagship programs at major universities, which will commit to specific goals and objectives. 

The goal is to produce students with professional proficiency in 

critical foreign languages. At this so-called ‘‘level three’’ standard, 

15

the individual is capable of speaking with sufficient structural accuracy and vocabulary to participate effectively in most formal and 

informal conversations on practical, social, and professional topics. 

It is the intention of the Committee that the creation of the National Foreign Language Initiative lead to the creation of a permanent national capacity for advanced ability in critical languages. 

The flagship initiative will, in its first stage, focus on highly critical 

languages including Arabic, Chinese, Japanese, Korean, Russian, 

Hindi, Persian/Farsi, and Turkish. 

The Committee endorses the proposal submitted by the NSEP to 

establish the National Foreign Language Initiative. It is the intent 

of the Committee that this proposal be followed strictly. The Committee, therefore, requires that any changes, updates or modifications made to the proposal be submitted to the Committee in writing so that the Committee may provide its views prior to implementation. 

The Committee directs that no new grants be awarded under the 

previous program. Upon enactment of this legislation, all grants 

shall be awarded under the umbrella of the National Foreign Language Initiative. The Committee recognizes, however, that the 

NSEP may have outstanding grants that must be fulfilled. Once 

those obligations are met, the NSEP shall have no new grants authority, other than those outlined in the National Foreign Languages Initiative. No new funds are to be authorized for this year 

and no further funding is to be authorized for outstanding grants 

other than the original amount. The NSEP is further directed to 

use the current resources in the National Security Education Trust 

Fund to implement the National Foreign Language Initiative, 

pending development of a new funding mechanism. 

The NSEP was originally created by establishing a trust fund 

consisting of $150 million. The Department of Defense Appropriations Act of 1992 (P.L. 102–172), provided that $150 million of the 

funds appropriated in that Act were to be available only for the 

trust fund. Subsequently, Section 311 of the Intelligence Authorization Act for 1994 (P.L. 103–178) required that the amount in the 

fund in excess of $120 million was to be transferred to the Treasury as miscellaneous receipts. Following that action, an additional 

$75 million of the fund was rescinded by the Emergency Supplemental Appropriations and Rescissions for the Department of Defense to Preserve and Enhance Military Readiness Act of 1995 (P.L. 

104–6). Today, the fund contains approximately $43 million. Based 

on budget projections, the trust fund will require additional financial resources by Fiscal Year 2006 if the program is to continue. 

Based on the above data and the impending depletion of the National Security Education Trust Fund, it is the view of the Committee that incorporating the program into the regular annual appropriations process is the best way to ensure the continuity and 

success of the program. Therefore, the Committee directs the Secretary of Defense, in conjunction with the Director of Central Intelligence, to conduct a study, and publish a report based on that 

study, examining the best way to allow for a smooth transition 

from the trust fund to the regular appropriations process within 

the Department of Defense. This report shall be due 90 days after 

enactment of this provision. 

16

Scholarships and work-study for pursuit of graduate degrees in 

science and technology 

The Intelligence Community has a growing requirement for scientists and engineers to ensure the strength of its technology development and analysis capabilities. The Community must compete 

against private industry to recruit these scientists and engineers. 

The requirement of a lengthy clearance process, however, has 

sometimes hampered the Community in its efforts to attract the 

best and brightest. While the pay is often lower in the Intelligence 

Community than in industry, the Committee is convinced that once 

individuals experience the sense of mission and public service of intelligence work, the Intelligence Community will be substantially 

enhanced in its ability to hire and retain top scientists and engineers. 

In light of the need to attract scientists and engineers to the Intelligence Community, and noting both the direct and indirect benefits to the Intelligence Community of involving the talents of 

young scientific professionals in its work, Section 310 directs the 

creation of a Director of Central Intelligence Science and Technology Graduate Scholarship Program. The primary purpose of the 

program is to provide funding for graduate scholarships at the 

Masters and Ph.D. levels in the areas of advanced science and technology of greatest importance to the Intelligence Community 

through work-study opportunities and post-graduation service obligations. 

Section 310 sets forth the basic eligibility requirements for participation in the program. To ensure that there is a possibility of 

full employment in the Intelligence Community upon completion of 

the academic program, the Committee has directed that the applicants be required to obtain a SECRET level clearance as a condition of acceptance into the program. The program should provide 

for higher level clearances as needed. The Committee believes that 

the scholarship should pay the full tuition for applicants and that, 

in return, the applicants should commit to work in some element 

of the Intelligence Community. In this regard, the Committee believes that the Director of Central Intelligence should ensure that 

adequate personnel billets are available for each of the accepted applicants. Two options should be available to the recipients for completion of their service obligation: (1) if the scholarship recipient attends a college or university with classified information facilities or 

near an Intelligence Community entity, the recipient may work on 

classified projects during the academic year or during periods between academic years; (2) if the recipient does not select the first 

option, the work program can begin after graduation. 

The Committee believes the scholars emerging from this program 

should be under the direction of the Community Management Staff 

with options for rotation among various elements of the Intelligence Community. At the end of the service obligation, the scholars will then have a number of options for Intelligence Community 

employment. The program, therefore, should be overseen by the Assistant Director of Central Intelligence for Administration with the 

support of the Intelligence Community’s Chief Technical Officer. 

The Committee also believes that endowed academic chairs might 

offer the Intelligence Community with additional science and technology options. 

17

The Committee directs that by July 1, 2002, the Deputy Director 

of Central Intelligence for Administration, in consultation with the 

Intelligence Community’s Chief Technical Officer and the leading 

technical officers within the individual intelligence agencies, shall 

submit a plan to the intelligence committees recommending the optimal implementation of the Director of Central Intelligence 

Science and Technology Graduate Scholarship Program. The implementation plan should specify, at a minium, the most appropriate 

size of the program, optimal resources, security clearance considerations, academic qualifications of scholarship recipients, work 

study and future Intelligence Community employment considerations, and work products required of scholarship recipients. The 

plan should also discuss any administrative or legal requirements 

necessary for successful implementation. Furthermore, the plan 

should include views on the option of endowing academic chairs in 

Science and Technology as part of this program. The Committee expects to review the implementation plan prior to final congressional 

action on the fiscal year 2003 Intelligence Authorization Act. 

INTELLIGENCE COLLECTION, ANALYSIS AND DISSEMINATION

Establishment of the National Commission for the review of the research and development programs of the U.S. Intelligence Community 

The Committee supports a strong Intelligence Community research and development program. Research and development efforts support virtually all other Intelligence Community efforts by 

laying the groundwork for the necessary modernization and innovation of intelligence capabilities. The Committee remains focused on 

research and development as a key priority for current and future 

Intelligence Community resources. 

The Committee further believes that the Intelligence Community’s research and development program should be focused on 

Community-wide, rather than agency-specific, requirements and 

priorities as much as practicable. Traditionally, however, the Intelligence Community has not taken a centrally-managed approach to 

research and development investment. While a program such as 

the Intelligence Technology Innovation Center concentrates on 

channeling research and development funding to tackle intelligence 

problems of common concern, individual agencies, which retain the 

majority of research and development funding across the National 

Foreign Intelligence Program, still retain a large amount of flexibility in determining their own research and development agendas. 

Complicating the situation is a lack of common definitions across 

the Community as to what constitutes research and development. 

This leads in some cases to the funding of programs more commonly related to acquisition than to research. Additionally, it remains unclear as to whether the Intelligence Community’s designated lead officials for research and development possess the insight into specific agency programs that is necessary to construct 

a unified, coherent research and development program. 

In an effort to allow for increased understanding and focus of the 

Intelligence Community’s research and development efforts, the 

Committee has established, in Title VI of the bill, the National 

Commission for the Review of the Research and Development ProVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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grams of the U.S. Intelligence Community. The purpose of the 

Commission, to be composed of government officials and private 

sector experts, is to review the current state of research and development within the Intelligence Community. The Commission will 

pay particular attention to the individual research and development activities being sponsored across each intelligence agency or 

program, the level of resources devoted to research and development, and whether current activities are aligned with those scientific or technological fields judged to be of greatest importance to 

the anticipated intelligence efforts of the future. The Committee 

has provided for the transfer of $2 million from the Community 

Management Account to allow the Commission to carry out its 

work. 

National Virtual Translation Center 

In Senate Report 107–63 the Committee noted its concern ‘‘that 

intelligence in general, and intelligence related to terrorism in particular, is increasingly reliant on the ability of the Intelligence 

Community to quickly, accurately and efficiently translate information in a large number of languages.’’ The Committee suggested 

that this problem could be, in part, ‘‘alleviated by applying cuttingedge Internet-like technology to create a ‘National Virtual Translation Center.’ ’’ The Committee, however, declined to recommend 

establishing such a Center in law without thoughtful commentary 

from the Intelligence Community. Pursuant to Section 907 of the 

USA PATRIOT Act, such a report was required to be submitted on 

or before February 1, 2002. The report was received more than two 

months late, a delay which, in addition to contravening the explicit 

words of the statute, deprived the Committee of timely and valuable input into its efforts to craft this legislation. 

Despite the delay, the report, when finally received, was helpful. 

It is adopted by reference into this report. (See Director of Central 

Intelligence Report on the National Virtual Translation Center: A 

Concept Plan to Enhance the Intelligence Community’s Foreign 

Language Capabilities, April 29, 2002.) Section 311 of the bill establishes in law the National Virtual Translation Center as outlined in the Director’s report. The Committee looks forward to the 

growth of what it anticipates will be a valuable Intelligence Community tool. 

Foreign Terrorist Asset Tracking Center 

In Senate Report 107–63, the Committee ‘‘endorse[d], in principle, efforts to develop elements within the Intelligence Community designed to exploit effectively financial intelligence,’’ and noted 

that the ‘‘Foreign Terrorist Asset Tracking Center’’ (FTATC), then 

located in the Department of Treasury, showed ‘‘promise as a vehicle to address this need.’’ The Committee was hesitant to draft legislation directing Executive branch action on this vital issue without the benefit of receiving the carefully considered views of the Director of Central Intelligence and the Secretary of the Treasury. 

Accordingly, the Committee directed that a ‘‘report assessing the 

feasibility and advisability of establishing an element of the federal 

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ties and resources of international terrorist organizations.’’ That report has not been provided to the Committee. 

The same issue was addressed in Section 906 of the USA PATRIOT Act of 2001 (P.L. 107–56). In that statute, Congress again 

directed the Director of Central Intelligence and the Secretary of 

the Treasury to prepare the report called for in Senate Report 107– 63. This time the Congress required in law that the report be provided on or before February 1, 2002. The Director of Central Intelligence and the Secretary of the Treasury failed to provide a report, 

this time in direct contravention of a section of the USA PATRIOT 

Act. 

Despite the lack of Administration compliance with the statutory 

reporting requirement, the Committee continued its own analysis 

of the situation, and concluded that such an entity is a necessary 

component of the Intelligence Community, and that it would be 

best placed within the Central Intelligence Agency. Accordingly, 

Section 312 establishes the FTATC, under the direction of the Director of Central Intelligence, within the Central Intelligence Agency.

The Committee further directs that the statutorily-directed report be completed immediately, and that it should include a section 

describing the circumstances which led to the Director’s failure to 

comply with lawful reporting requirements. 

Terrorist Identification Classification System 

In the aftermath of the September 11, 2001, terrorist attacks 

against the United States, the Committee reviewed the Intelligence 

Community’s process for storing, retrieving, and disseminating intelligence collection and analysis regarding known or suspected 

international terrorists, and known or suspected international terrorist organizations. During a number of hearings this year, Committee members queried witnesses concerning the ability of CIA 

and FBI officials to derive a comprehensive list of the identities 

and biographic information on known or suspected international 

terrorists from the multitude of intelligence reports and databases 

containing potentially relevant information. The Committee found 

that, although the Intelligence Community did have a significant 

amount of intelligence concerning known or suspected international 

terrorists and terrorist organizations, the main databases used to 

store this information were not well-configured to provide it to 

those responsible for protecting American citizens from international terrorists. The Committee also believes that the current 

lack of a centralized system to handle such information not only 

hinders effective counterterrorism efforts, but makes meaningful 

oversight of Intelligence Community handling of United States person information contained in these databases more difficult. 

On May 6, 2002, Senator Wyden introduced S. 2459, a bill to require the creation of Terrorist Identification Classification System 

(TICS). The purpose of this legislation was to provide for the establishment and maintenance of a data system that both stores and 

retrieves the identities and biographic information of known or suspected international terrorists, as well as known or suspected international terrorist organizations, and to ensure that those federal, 

state, and local officials responsible for protecting Americans from 

this threat have appropriate, timely, and thorough access to this 

20

information. The Committee has incorporated a version this legislation into Section 313 of the Fiscal Year 2003 Intelligence Authorization Bill. 

This provision directs the Director of Central Intelligence to establish and maintain a list of individuals who are known or suspected international terrorists and organizations that are known or 

suspected international terrorist organizations. The Director of 

Central Intelligence must also ensure that pertinent information on 

this list is shared with departments and agencies of the Federal 

Government, State and local government agencies, and foreign governments or international organizations as the Director considers 

appropriate. This system also must be interoperable to the maximum extent practicable with the information systems of those departments, agencies, and organizations to ensure timely and thorough access to this vital information in the effort against terrorism. 

Pursuant to this provision, moreover, the DCI shall prescribe specific procedures for ensuring the appropriate standards for including names on—or removing names from—this list. 

The Committee intends that this system be maintained in accordance with existing laws and regulations governing the collection, storage, and dissemination of intelligence concerning United 

States persons. This provision does not confer additional authorities to the Director or any other element of the United States Government regarding the collection, retention, or dissemination of intelligence information on United States persons. 

Counterdrug 

The events of September 11, 2001, have demonstrated the pressing importance of strengthening our counterterrorism efforts. Recent analysis, however, has uncovered considerable information 

that terrorist groups often use illegal narcotics trafficking to raise 

funds for their operations. This illustrates the continuing importance of the United States’ counterdrug fight. 

For example, it is clear that the Taliban in Afghanistan procured 

significant funding by trafficking in the derivatives of the opium 

poppy plant. The Revolutionary Armed Forces of Colombia (FARC) 

has become a major force in the production of Colombian cocaine, 

which enables it to expand its terrorist insurgency activities, reported to include obtaining training in bomb-making from other 

international terrorist groups. Not only do illegal drugs threaten 

our national security through the scourge of addiction among 

Americans, they also provide the financial wherewithal for terrorists to carry out their murderous operations around the world. As 

such, the Intelligence Community must continue to make vigorous 

efforts to stem the flow of illegal drugs. 

As was described in last year’s public report to accompany the 

Intelligence Authorization bill (S. Report 107–63), on April 21, 

2001, an American missionary plane was mistakenly shot down by 

a Peruvian Air Force jet operating as part of the ‘‘air bridge denial’’

program. In H.R. 2883, the Fiscal Year 2002 Intelligence Authorization Act, Congress required the President to provide an annual 

report to Congress concerning any such program no later than February 1 of each year. Congress has still not received the report for 

2002. 

21

The Administration is currently examining options for resuming 

support to air interdiction efforts in Peru and Colombia. State Department representatives have kept Committee staff informed of 

the status of this review. The Committee appreciates this consultative effort and looks forward to continuing this dialogue as an implementation plan is developed. 

National Imagery and Mapping Agency support to homeland security 

The Committee recognizes the valuable role that the National 

Imagery and Mapping Agency (NIMA) can play in supporting 

homeland security operations generally, and the newly-created U.S. 

Northern Command, specifically. Exceptions to the standing prohibition against the NIMA tasking satellites to image the United 

States currently require detailed justifications that are adjudicated 

by a separate group of government officials outside the normal imagery tasking process, in order to ensure that the requests pass 

legal muster. With the prospect of increased imaging of the United 

States being necessary in support of homeland security and the 

war on terrorism, the Committee is concerned that the checks and 

balances in place to ensure against improper imaging requests not 

be circumvented or otherwise diminished. At the same time, the 

Committee does not want the added scrutiny given to such requests 

to unnecessarily hinder urgent collection needs that may arise. 

Accordingly, the Committee directs the Director of Central Intelligence, in coordination with the NIMA Director and the National 

Reconnaissance Office (NRO) Director, to provide a report detailing 

the process for approving the use of National Technical Means to 

image the United States and what changes to this process, if any, 

are being proposed or considered in the wake of the stand-up of the 

U.S. Northern Command and other homeland security initiatives. 

The report shall be submitted to the Committee no later than 

March 1, 2003. The Committee also directs the NIMA Director to 

provide a semi-annual report to the Committee detailing the number and purpose of all requests for imaging of the United States approved in the prior six month period. The semi-annual report will 

be due in accordance with the provisions in Section 401. 

Annual report on foreign companies involved in the proliferation of 

weapons of mass destruction that raise funds in the United 

States capital markets 

Section 314 requires the Director of Central Intelligence to submit a report to Congress each year setting forth certain foreign entities that he believes are involved in raising, or attempting to 

raise, money in United States capital markets by means of bond 

floats, initial public offerings, stock listings, or other such activities. Companies covered by this report should include any foreign 

company the Director believes to be involved in the proliferation of 

weapons of mass destruction—including nuclear, biological, or 

chemical weapons—and the means to deliver them, whether or not 

such transfers violate specific conventions, treaties, or the provisions of international export control regimes. This report must be 

submitted in unclassified form, but the Committee anticipates that 

it may be necessary to provide an associated classified annex in 

order to protect intelligence sources and methods involved in asVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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sessing certain entities’ involvement in proliferation activities. (In 

the event that the Director should determine that no such entities 

are involved in the U.S. capital markets, the Committee anticipates 

that the abovementioned report shall simply state this.) This section is not intended, and should not be construed, to authorize or 

encourage any restrictions upon access to U.S. capital markets. 

Rather, it is intended instead simply to provide national security 

decision-makers with visibility into the efforts of problem entities 

to raise money in the United States. 

COUNTERINTELLIGENCE

FBI implementation of Webster Commission Report recommendations 

The findings and recommendations of the March 2002 report of 

the Commission for the Review of Federal Bureau of Investigation 

(FBI) Security Programs (the ‘‘Webster Commission’’) have underscored the fact that the FBI has significant and systemic security 

problems that need to be addressed. The Committee commends the 

FBI for the efforts made to improve security under the leadership 

of the new Assistant Director of Security. Nevertheless, this bill 

recommends resources in excess of the Administration’s request to 

address unfunded security requirements at the FBI in fiscal year 

2003. The Committee remains concerned, however, that even in the 

wake of the Robert Hanssen espionage case, the Bureau’s perceived 

operational needs may still take inappropriate precedence over security concerns. The Committee believes that the security problem 

at the Bureau will never be addressed effectively unless and until 

senior FBI management becomes committed to making security—

which has often been, at most, a secondary priority—an important 

part of its culture. 

The Committee has directed in the Classified Annex to this bill 

that a portion of the funds requested for the Bureau’s Foreign 

Counterintelligence Program in Fiscal Year 2003 not be obligated 

or expended until both the Attorney General and the Director of 

the FBI provide the intelligence oversight committees, and other 

relevant committees of the Congress, with a written report on the 

Bureau’s plans to implement the recommendations contained in the 

Webster Commission report—including the time frame and funding 

necessary for their full implementation, as well as their plans to 

make security an integral part of the FBI’s culture. 

FBI counterintelligence and counterterrorism training and analysis 

The Committee is concerned about the adequacy of the Federal 

Bureau of Investigation’s training for its agents and analysts for 

counterintelligence and counterterrorism. Accordingly, the Committee directs the Director of the FBI, in consultation with the Director of Central Intelligence, to provide the intelligence committees with a written report no later than February 1, 2003, assessing the adequacy of the Bureau’s training program and career 

tracks for both its agents and its analytic cadre involved with counterintelligence and counterterrorism, as well as its plans to enhance the effectiveness of these programs. Specifically, the Committee requests that this report include the FBI’s criteria for developing certified expertise in counterintelligence and 

23

counterterrorism, a description of the required career milestones 

for such specialties, and how FBI counterintelligence and 

counterterrorism analytical products are disseminated within the 

Bureau and elsewhere in the Intelligence Community. In addition, 

the report should include an assessment of whether the FBI employees whose job duties include intelligence analysis meet Intelligence Community-wide standards of education, training and experience. 

The National Counterintelligence Executive 

In 2001, the President affirmed Presidential Decision Directive 

75 (PDD–75) which created a new, national-level counterintelligence system to address both traditional and emerging counterintelligence threats in the 21st century. PDD–75 established the 

National Counterintelligence Executive (NCIX) to serve as the substantive leader of national-level counterintelligence policy and stipulated that the National Counterintelligence Executive must have 

sufficient personnel and funds to carry out assigned duties. The 

PDD mandated that the NCIX provide the U.S. Government with 

strong, policy-driven leadership by creating new and enhanced 

counterintelligence capabilities; ensure coherent programs, strategies and cooperative approaches; and conduct effective oversight. 

The PDD also established a National Counterintelligence Board 

of Directors, chaired by the Director of the FBI, and comprised of 

the Deputy Secretary of Defense, the Deputy Director of Central 

Intelligence and a senior representative of the Department of Justice. The Board’s mission is to select, oversee and evaluate the National Counterintelligence Executive and to promulgate the mission, role and responsibilities of the NCIX. 

The specific duties set out for the NCIX include: • Identifying and prioritizing what must be protected (U.S. 

Critical National Assets); • Producing strategic counterintelligence analysis; • Developing a prioritized national threat assessment; 

• Formulating a National Counterintelligence Strategy; 

• Creating an integrated counterintelligence budget; 

• Establishing a strategic outreach program to the private 

sector; 

• Implementing a unified counterintelligence training and 

education program; and 

• Carrying out program reviews and evaluations. 

The first National Counterintelligence Executive assumed his duties in early May 2001, and began the process of building a new 

office focused on PDD–75 priorities. However, this individual, an 

FBI detailee, was transferred back to the Bureau in February 2002. 

This important position remains vacant. 

The Office of the National Counterintelligence Executive has also 

confronted notable resource constraints. The resource base for the 

new office consisted of the funds, positions and people that supported the former National Counterintelligence Center (NACIC). 

Although the Office of the National Counterintelligence Executive 

was tasked with building new capabilities while continuing NACIC 

legacy activities, it received no new resources in fiscal year 2001 

and only a small increase for fiscal year 2002. The Committee believes that the Administration request for the Office of the National 

24

Counterintelligence Executive for fiscal year 2003 does not address 

the Office’s requirements. The Committee has addressed this deficiency in the Classified Annex by recommending additional resources for the Office of the National Counterintelligence Executive. 

The Committee, which was a strong supporter of the creation of 

the Office of the National Counterintelligence Executive, believes 

that the Office of the NCIX is an essential component of our nation’s strategic approach to the counterintelligence threat. The recent Hanssen, Montes and Regan espionage cases—coupled with 

the national security implications of the tragic events of September 

11, 2001—highlight the need for a cooperative, national-level focus 

on counterintelligence, as envisioned by PDD–75, as an integral 

element of our nation’s homeland security effort. However, the 

Committee does not believe that the current placement of the Office of the National Counterintelligence Executive in the Executive 

branch has given the office the appropriate level of stature and effectiveness that it requires. 

Sections 502–504 codify into statute the authorities and responsibilities of the National Counterintelligence Executive as contained in PDD–75, and places the Office of the National Counterintelligence Executive into the Executive Office of the President, reporting directly to the President. The Committee believes that moving the Office of the NCIX to the Executive Office of the President 

with a direct reporting line to the President will optimize the effectiveness—and accountability—of the National Counterintelligence 

Executive’s mission, and give counterintelligence the appropriate 

emphasis and visibility it deserves as a core U.S. national security 

priority. 

Counterintelligence at the Department of Energy and the National 

Nuclear Security Administration 

This Committee has a long-standing interest in supporting a 

strong counterintelligence program at the Department of Energy 

(DOE). In 1996, at the request of this Committee, the Intelligence 

Authorization Act for fiscal year 1997 directed the FBI Director, in 

coordination with the Director of Central Intelligence, to provide a 

written assessment of the adequacy of the DOE’s current and 

planned counterintelligence activities at headquarters as well as 

the National Laboratories, and identify recommendations for needed improvements. This report, completed in 1997, noted that, although DOE’s counterintelligence program had made significant 

strides in recent years, problem areas persisted. For example, the 

Bureau’s report found that the counterintelligence mission at the 

DOE was unevenly or inadequately funded and lacked the central 

management and focus that would establish consistent and effective counterintelligence policy across the Department of Energy 

complex. (It is noteworthy that the FBI, in the wake of the 

Hanssen espionage case, is currently reorganizing itself to more effectively address the counterintelligence threat by centralizing its 

managerial focus on counterintelligence.) As a result of the concerns raised in this report, a 1998 Presidential Decision Directive 

(PDD–61) directed the Secretary of Energy to establish an Office of 

Counterintelligence in the Department, and this was done that 

same year. 

25

In 1999, Congress directed the creation of the National Nuclear 

Security Administration (NNSA), a semi-autonomous entity within 

the DOE with the mandate to streamline the management of the 

nation’s nuclear weapons and national security programs. This new 

entity included an Office of Defense Nuclear Counterintelligence. 

The Chief of this Office reports directly to the Administrator and 

addresses the management of counterintelligence in the NNSA 

through the implementation of the policies of both the Secretary of 

Energy and the Administrator of the NNSA. A Secretarial Memorandum was signed that laid out the responsibilities and relationship between the new Office of Defense Nuclear Counterintelligence and its parent organization, the DOE Office of Counterintelligence. These two elements comprise the DOE Counterintelligence Program. Accordingly, there are now two directors—the Director of the DOE Office of Counterintelligence and the Chief of the 

NNSA Office of Defense Nuclear Counterintelligence—who both 

manage the same program staff at DOE Headquarters and manage 

their field programs at sites delineated along lines of the NNSA/

DOE organization. However, although the sites are characterized 

as either DOE or NNSA, the program activities are not as easily 

separated since many NNSA program activities are supported by 

DOE sites. The Committee is concerned that this bifurcation has 

created administrative inefficiencies that affect day-to-day operations, has an adverse impact on counterintelligence investigations 

management, and diminishes the lines of program responsibility as 

well as overall accountability. 

Accordingly, the Committee directs the Office of the National 

Counterintelligence Executive—in consultation with the Secretary 

of Energy, the Administrator of the National Nuclear Security Administration, the Director of Central Intelligence and the Director 

of the Federal Bureau of Investigation—to review and assess the 

effectiveness of the division of the DOE Office of Counterintelligence and the NNSA Office of Defense Nuclear Counterintelligence, to include administrative and resource implications, as well 

as to assess the implications of consolidating the two programs. 

The Committee directs the Office of the National Counterintelligence Executive to provide a written report to the intelligence 

committees, and other relevant committees of the Congress, regarding this matter no later than December 1, 2002. This report should 

include recommendations to optimize the effectiveness and efficiency of the DOE/NNSA counterintelligence function. 

INTELLIGENCE COMMUNITY FINANCIAL MANAGEMENT, PLANNING AND

PERFORMANCE

Intelligence Community compliance with Federal financial accounting standards 

A January 1997 Presidential report on Executive Branch oversight of the Intelligence Community budget stated that Department of Defense (DoD) elements implementing programs and activities of the National Foreign Intelligence Program were subject 

to the Chief Financial Officers (CFO) Act of 1990 (as amended). Additionally, the National Security Agency (NSA), the Defense Intelligence Agency (DIA), and the National Reconnaissance Office 

(NRO) were directed to prepare classified financial statements beVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
26

ginning with their reporting of fiscal year 1997 financial information. 

To date, the NRO has most vigorously pursued compliance with 

the CFO Act. An independent public accounting firm conducted an 

audit of the NRO’s Fiscal Year 2000 financial statements. The 

audit, however, revealed significant shortcomings in the NRO’s financial management practices. These deficiencies caused the accounting firm to issue a disclaimer of opinion on the fiscal year 

2000 statements. The NRO has worked aggressively to rectify these 

deficiencies. The independent accounting firm’s audit of the fiscal 

year 2001 financial statements indicated substantial improvement 

by the NRO. As a result, the accounting firm was able to issue a 

qualified opinion on the statements. Nevertheless, progress has 

been limited for the remainder of the Intelligence Community. 

Senate Report 107–63 expressed the Senate Select Committee on 

Intelligence’s concerns about the financial management practices 

throughout the Intelligence Community. The Report required the 

Director of Central Intelligence, in consultation with the Secretary 

of Defense, to direct the appropriate statutory Inspectors General 

to perform an audit of the form and content of the Fiscal Year 2001 

financial statements of the DIA, NSA, National Imagery and Mapping Agency (NIMA), and the Central Intelligence Agency (CIA). 

The principal purpose of the audits was to determine if the agencies were preparing their financial statements consistent with Federal financial accounting standards and appropriate Office of Management and Budget guidance. Section 414 of this bill institutes a 

statutory requirement for an annual report describing the activities 

of each agency to ensure that their financial statements can be audited in accordance with Office of Management and Budget requirements. 

The Committee has received responses from the DoD and CIA Inspectors General outlining the results of their review of the form 

and content of the financial statements of the DIA, NSA, NIMA 

and CIA. The responses revealed that none of these agencies are 

able to produce auditable financial statements. Weaknesses include 

the improper preparation of selected required statements, failure to 

use accrual accounting, inability to reconcile the Fund Balance 

with Treasury, and inaccurate reporting of property, plant, and 

equipment. In fact, the newly-confirmed Inspector General for the 

Central Intelligence Agency identified these problems as a top priority in his testimony before the Committee at his confirmation 

hearing. The Committee is most concerned by the lack of internal 

controls reflected by these problem areas. The independent accounting firm audit conducted at the NRO also revealed a number 

of other weaknesses, particularly in the area of information systems security, that were not covered by the Inspector General form 

and content reviews. 

The response provided by the DoD Inspector General states that 

the NSA halted its plan to purchase a compliant accounting system 

based on guidance from the Under Secretary of Defense (Comptroller). The DoD Comptroller’s instruction reflected a desire to develop a Department-wide Financial Management Modernization 

Program. The impact of this guidance is significant for the Intelligence Community because the DIA and the NIMA utilize portions 

of the NSA’s accounting system. While the Committee understands 

27

the need for the DoD to have a common architecture for its myriad 

accounting systems, we are concerned that implementation of that 

standardized system is not estimated to be completed until 2007. 

Although the NSA has a plan to maintain and improve its current 

accounting system until the DoD completes its modernization program, its ability to fully comply with the CFO Act and other accounting requirements will be hindered. There also will be an impact on those agencies that rely on the NSA’s accounting system. 

In order to monitor the impact of the development of the DoD’s Financial Management Modernization Program, the Committee requests that the annual agency reports outlining progress towards 

auditable financial statements include a description of the impact 

of the modernization program and the steps being taken to make 

current systems compliant with Federal standards in the interim. 

Senate Report 107–63 also directed that the Director of Central 

Intelligence, in consultation with the Secretary of Defense, ensure 

that the DoD intelligence agencies and the CIA receive an audit of 

their financial statements no later than March 1, 2005. The audits 

are to be performed by a statutory Inspector General or a qualified 

Independent Public Accountant, at the discretion and under the direction of the appropriate Inspector General. In order to ensure 

that the Director of Central Intelligence and the agency heads 

within the Intelligence Community have adequate financial data, 

the Committee restates the requirement that the CIA, NSA, NIMA 

and DIA receive an audit of their financial statements no later 

than March 1, 2005. 

The Committee notes that while the DoD and CIA Inspectors 

General complied with the requirement for form and content audits 

as stated in Senate Report 107–63, they did not receive direction 

from the Director of Central Intelligence. The Committee is concerned that this inaction is indicative of a hands-off approach to financial management by the Intelligence Community. The Community Management Staff has increased its efforts in this area to a 

degree, primarily in response to Senate Report 107–63. However, 

it has still conducted minimal proactive oversight. For example, the 

Community Management Staff has not been actively involved in 

meetings on the creation of the DoD Financial Management Enterprise Architecture. While the Community Management Staff would 

have little influence on its development, it should be engaged in 

discussions on the ability of this architecture to be linked to new 

financial management systems installed within the DoD’s Intelligence Community elements. Such access will be crucial if the 

Community Management Staff is to provide the oversight necessary to ensure Community compliance with applicable financial 

reporting requirements. 

In order to facilitate adequate oversight of the Intelligence Community’s financial management systems and practices, the Committee directs that no later than February 1, 2003, the Deputy Director of Central Intelligence for Community Management provide 

the congressional intelligence committees with a report on how the 

Community Management Staff is structured to monitor Intelligence 

Community compliance with the CFO Act and related Office of 

Management and Budget guidance. This report should include 

planned actions to monitor the ability of each agency to comply 

with the Committee’s requirement for a financial statement audit 

28

by 2005. It should also include a description of the Community 

Management Staff’s ability to access the financial systems of each 

agency in order to generate required oversight information. 

Strategic and performance planning for the Intelligence Community 

In response to a Committee request, the Intelligence Community 

recently completed its strategic and performance plans for fiscal 

year 2003. The plans address the priorities and goals of both the 

Intelligence Community and the individual agencies within the National Foreign Intelligence Program aggregation. Consistent with 

the Committee’s report accompanying the Fiscal Year 2002 Intelligence Authorization Bill, the purpose of the plans is to provide 

the Director of Central Intelligence with vehicles with which to articulate program goals, measure program performance, improve 

program efficiency, and aid in resource planning. Updated performance plans for Fiscal Year 2004 are due to the Congress by March 

1, 2003. 

The Committee has reviewed the strategic and performance 

plans for fiscal year 2003 and compliments the Director of Central 

Intelligence’s Community Management Staff for producing the 

first-ever plans coordinated across the Intelligence Community 

aimed at establishing performance measures aligned with the Director of Central Intelligence’s stated priorities. The Committee believes, however, that more work needs to be done by the intelligence agencies, in close cooperation with the Community Management Staff, in developing refined program performance measures 

that can be used to determine if the Intelligence Community is 

achieving its stated strategic goals. A key issue is the development 

of performance plans and measures that are not focused solely on 

the attainment of intelligence capabilities but also on the value received from such capabilities in pursuit of Intelligence Community 

missions. The Committee feels that such ‘‘mission-based’’ performance plans and measures should be an essential element in any 

comprehensive effort to understand and evaluate the overall 

achievement of the Intelligence Community. 

The Committee thus directs the Director of Central Intelligence 

to include such output measures, designed to determine the value 

of Intelligence Community capabilities in achieving its stated strategic goals, in its fiscal year 2004 performance plans. The Committee further directs that the fiscal year 2004 performance plans 

include specific information on how they were utilized by the individual intelligence agencies in preparing their sections of the fiscal 

year 2004 budget for the National Foreign Intelligence Program.

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

TITLE I—INTELLIGENCE ACTIVITIES 

Section 101. Authorization of appropriations 

Section 101 lists departments, agencies, and other elements of 

the United States Government for the intelligence and intelligencerelated activities for which the Act authorizes appropriations for 

Fiscal Year 2003. 

29

Section 102. Classified schedule of authorizations 

Section 102 states that the details of the amounts authorized to 

be appropriated for intelligence and intelligence-related activities 

and personnel ceilings for the entities listed in Section 101 for Fiscal Year 2003 are contained in a classified Schedule of Authorizations. The Schedule of Authorizations is incorporated into the Act 

by this section. 

Section 103. Personnel ceiling adjustments 

Section 103 authorizes the Director of Central Intelligence, with 

the approval of the Director of the Office of Management and 

Budget, to exceed in Fiscal Year 2003 the personnel ceilings applicable to the components of the Intelligence Community under Section 102 by an amount not to exceed two percent of the total of the 

ceilings applicable under Section 102. The Director may exercise 

this authority only when necessary for the performance of important intelligence functions or to the maintenance of a stable personnel force, and any exercise of this authority must be reported 

to the intelligence committees of the Congress. 

Section 104. Community Management Account 

Section 104 provides details concerning the amount and composition of the Community Management Account (CMA) of the Director 

of Central Intelligence. 

Subsection (a) authorizes appropriations for Fiscal Year 2003 for 

the staffing and administration of various components under the 

CMA. Subsection (a) also authorizes funds identified for advanced 

research and development to remain available for two years. 

Subsection (b) authorizes full-time personnel for elements within 

the CMA for Fiscal Year 2003 and provides that such personnel 

may be permanent employees of the CMA element or detailed from 

other elements of the United States Government. 

Subsection (c) expressly authorizes the classified portion of the 

CMA. 

Subsection (d) requires that personnel be detailed on a reimbursable basis, with certain exceptions. 

Subsection (e) authorizes appropriations in the amount authorized for the CMA under subsection (a) to be made available for the 

National Drug Intelligence Center. Subsection (e) requires the Director of Central Intelligence to transfer these appropriations to the 

Department of Justice to be used for National Drug Intelligence 

Center activities under the authority of the Attorney General, and 

subject to Section 103(d)(1) of the National Security Act of 1947 (50 

U.S.C. 403–3(d)(1)). 

Section 105. Incorporation of reporting requirements 

Section 105 incorporates reporting requirements in the conference report, and House and Senate reports, and classified annexes thereto, into the Act. 

30

TITLE II—CENTRAL INTELLIGENCE AGENCY RETIREMENT 

AND DISABILITY SYSTEM 

Section 201. Authorization of appropriations 

Section 201 authorizes appropriations for fiscal year 2003 for the 

Central Intelligence Agency Retirement and Disability Fund. 

TITLE III—GENERAL PROVISIONS 

Section 301. Increase in employee compensation and benefits authorized by law 

Section 301 provides that appropriations authorized by the Act 

for salary, pay, retirement, and other benefits for federal employees 

may be increased by such additional or supplemental amounts as 

may be necessary for increases in such compensation or benefits 

authorized by law.

Section 302. Restriction on conduct of intelligence activities 

Section 302 provides that the authorization of appropriations by 

the Act shall not be deemed to constitute authority for the conduct 

of any intelligence activity which is not otherwise authorized by the 

Constitution or laws of the United States. 

Section 303. Definition of congressional intelligence committees 

Section 303 adds a definition of congressional intelligence committees to the National Security Act of 1947. 

Section 304. Specificity of National Foreign Intelligence Program 

budget amounts for counterterrorism, counterproliferation, 

counternarcotics and counterintelligence 

Section 304 requires the National Foreign Intelligence Program 

budget submission to include cross-agency budget aggregates for 

total expenditures in the Intelligence Community in the areas of 

counterterrorism, counterproliferation, counternarcotics and counterintelligence. This information will assist the authorizing and appropriating committees of Congress to make informed decisions 

about funding levels in those critical areas. 

Section 305. Modification of authority to make funds for intelligence 

activities available for other intelligence activities 

Section 305 is intended to clarify Section 504 of the National Security Act of 1947 with respect to the reprogramming of funds from 

one intelligence activity to another. The provision makes clear that 

the ‘‘unforeseen’’ requirement in Section 504 does not include the 

fact that it was unforeseen by the Executive branch that Congress 

would lower the level of funding for a particular activity. Section 

305 also requires the Director of Central Intelligence to certify in 

his letter to the congressional committees that the need for the reprogramming is both unforeseen and necessary to move funds from 

a lower to a higher priority activity. 

Section 306. Clarification of authority of Intelligence Community to 

furnish information on intelligence activities to Congress 

Section 306 reaffirms longstanding requirements that the Intelligence Community must report to its oversight committees all inVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00030 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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formation necessary for those committees to fulfill their responsibilities. This includes the duty to abide by the Intelligence Community’s reporting requirements under Sections 501, 502, and 503 of 

the National Security Act of 1947, and other statutes. This provision is intended to clarify and preserve the Intelligence Community’s unique relationship with its oversight committees in the 

wake of the USA PATRIOT Act of 2001, which gave intelligence 

agencies access to new sources of information. 

Section 307. Standardized transliteration of names into the Roman 

alphabet 

Section 307 requires the Director of Central Intelligence to establish a standardized method for transliterating personal and place 

names originally rendered in any language that uses an alphabet 

other than the Roman alphabet, and to ensure that the method established is used across the Intelligence Community. 

Section 308. Standards and qualifications for the performance of intelligence activities 

Section 308 requires the Director of Central Intelligence to prescribe standards and qualifications for individuals who perform intelligence or intelligence-related activities for use by all of the 

agencies of the Intelligence Community. These standards and 

qualifications will ensure that there is a uniform understanding 

throughout the Intelligence Community of the Director’s expectations for the performance of intelligence duties. 

Section 309. Modification of David L. Boren National Security Education Program 

Section 309 provides for the modification of the David L. Boren 

National Security Education Program by eliminating the undergraduate section of the Program and by restructuring the grants 

component to create a National Foreign Language Initiative. Section 309 also requires the Secretary of Defense, in conjunction with 

the Director of Central Intelligence, to produce a report outlining 

ways in which to move the Program from the trust fund into the 

regular appropriations process.

Section 310. Scholarships and work-study for pursuit of graduate 

degrees in science and technology 

Section 310 directs the creation of a Director of Central Intelligence Science and Technology Graduate Scholarship Program and 

recommends authorization of funds to initiate the program. The 

primary purpose of the program is to provide funding for graduate 

scholarships at the Masters and Ph.D. levels in areas of advanced 

science and technology of greatest need to the Intelligence Community, with work-study opportunities and post-graduation service obligations. Section 310 directs the submission of a plan recommending the optimal implementation of the Director of Central Intelligence Science and Technology Graduate Scholarship Program. 

Section 311. National Virtual Translation Center 

Section 311 requires the Director of Central Intelligence to establish within the Intelligence Community the National Virtual Translation Center in order to link by secure electronic means the eleVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00031 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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ments of the Community responsible for collection, storage, translation, analysis or other functions for which timely access to such 

information is important to the efficient and effective performance 

of their duties. 

Section 312. Foreign Terrorist Asset Tracking Center 

Section 312 requires the Director of Central Intelligence to establish within the Central Intelligence Agency the Foreign Terrorist 

Asset Tracking Center to conduct all-source intelligence analysis of 

the finances and financial interactions of international terrorists 

and international terrorist organizations. 

Section 313. Terrorist Identification Classification System 

Section 313 requires the Director of Central Intelligence to develop and maintain a list of known or suspected international terrorists and terrorist organizations and ensure that such list is 

available to all elements of the Federal, State and local governments that have a need for such information. This system will enable the various elements of the Intelligence Community that are 

engaged in counterterrorist activities to have a common source defining the parameters of the terrorist target and provide access to 

this information for those Federal, State and local officials responsible for protecting United States citizens from terrorist attacks. 

Section 314. Annual report on foreign companies involved in the 

proliferation of weapons of mass destruction that raise funds in 

the United States capital markets 

Section 314 requires the Director of Central Intelligence to prepare an annual report setting forth whether—and, where appropriate, which—any foreign companies involved in the proliferation 

of weapons of mass destruction, or the means to deliver them, are 

involved in raising money through offerings in U.S. capital markets. 

Section 315. Two-year extension of Central Intelligence Agency Voluntary Separation Pay Act 

Section 315 extends the Central Intelligence Agency Voluntary 

Separation Pay Act for two years, to September 30, 2005. 

Section 316. Additional one-year suspension of reorganization of 

Diplomatic Telecommunications Service Program Office 

Section 316 suspends until October 1, 2003 the effective date of 

the provisions in the Intelligence Authorization Act for Fiscal Year 

2001 that require reorganization of the Diplomatic Telecommunications Service Program Office.

TITLE IV—REPORTING REQUIREMENTS 

Section 401. Dates for submittal of various annual and semi-annual 

reports to the congressional intelligence committees 

Section 401 identifies the various annual and semi-annual reports required to be submitted to the congressional intelligence 

committees under provisions in previous intelligence authorization 

acts and various other statutes. The section sets a uniform due 

date for annual and semi-annual reports, and provides for extenVerDate Apr 18 2002 04:17 May 15, 2002 Jkt 099010 PO 00000 Frm 00032 Fmt 6659 Sfmt 6602 E:\HR\OC\SR149.XXX pfrm15 PsN: SR149
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sions of approximately 30 days of the due dates for annual, semiannual and non-recurring reports with written notice to the congressional intelligence committees. Additional extensions are permitted if the official responsible for the report certifies that preparation of the report by the due date would be detrimental to national security. 

Section 411. Annual assessment of satisfaction of Intelligence Community with collection, analysis, and production of intelligence 

Section 411 creates a statutory requirement to conduct an annual 

review required by Senate Report 106–48. 

Section 412. Annual report on threat of attack on the United States 

using weapons of mass destruction 

Section 412 creates a statutory requirement to submit an annual 

report required by Senate Report 105–24. 

Section. 413. Annual report on covert leases 

Section 413 creates a statutory requirement to submit an annual 

report required by Senate Report 105–24. 

Section 414. Annual report on improvement of financial statements 

of certain elements of the Intelligence Community for auditing 

purposes 

Section 414 creates a statutory requirement to submit an annual 

report required by Senate Report 107–63. 

Section 415. Annual report on activities of Federal Bureau of Investigation personnel outside the United States 

Section 415 creates a statutory requirement to submit an annual 

report required by House Report 104–832. 

Section 416. Annual report of Inspectors General of the Intelligence 

Community on proposed resources and activities of their offices 

Section 416 creates a statutory requirement to submit an annual 

report required by Senate Report 106–48. 

Section 417. Annual report on counterdrug intelligence matters 

Section 417 creates a statutory requirement to submit an annual 

report required by Senate Report 106–279. 

Section 431. Evaluation of policies and procedures of Department of 

State on protection of classified information at Department 

headquarters 

Section 431 creates a statutory requirement to submit an annual 

report required by Senate Report 106–279. 

Section 441. Repeal of certain report requirements 

Section 441 repeals two existing annual report requirements. 

TITLE V—COUNTERINTELLIGENCE ACTIVITIES 

Section 501. Short title; purpose 

Section 501 cites the title as the ‘‘Counterintelligence Enhancement Act of 2002’’ with the purpose of facilitating the enhancement 

34

of the counterintelligence activities of the United States Government.

Section 502. National Counterintelligence Executive 

Section 502 establishes the Office of the National Counterintelligence Executive. 

Section 503. National Counterintelligence Policy Board 

Section 503 establishes the National Counterintelligence Policy 

Board, to be chaired by the National Counterintelligence Executive. 

Section 504. Office of the National Counterintelligence Executive 

Section 504 establishes the Office of the National Counterintelligence Executive, to be headed by the National Counterintelligence 

Executive. The Office of the National Counterintelligence Executive 

shall be located in the Executive Office of the President. 

TITLE VI—NATIONAL COMMISSION FOR REVIEW OF RESEARCH AND DEVELOPMENT OF THE UNITED STATES INTELLIGENCE COMMUNITY 

Section 601. Findings 

Section 601 presents the findings of Congress with respect to the 

importance of the research and development programs of the 

United States Intelligence Community. 

Section 602. National Commission for Review of Research and Development Programs of the United States Intelligence Community 

Section 602 establishes the National Commission for the Review 

of the Research and Development Programs of the United States 

Intelligence Community. Section 602 provides for the composition 

and membership of the Commission, identifies the duties of the 

Commission, and the subject matters for the Commission’s review. 

Section 603. Powers of the Commission 

Section 603 describes the powers of the Commission to hold hearings, obtain information and testimony, and seek cooperation from 

agencies of the federal Government in support of the Commission’s 

work. 

Section 604. Staff of Commission 

Section 604 provides for the hiring of staff and consultants for 

the Commission. 

Section 605. Compensation and travel expenses 

Section 605 provides the procedures for paying compensation and 

travel expenses to Commission members. 

Section 606. Treatment of information relating to national security 

Section 606 directs that the Director of Central Intelligence assume responsibility for national security information that is considered or used by the Commission. 

35

Section 607. Final report; termination 

Section 607 provides the due date for the Commission’s final report and the date of termination of the Commission. 

Section 608. Assessments of final report 

Section 608 requires the Director of Central Intelligence and Secretary of Defense to provide an assessment of the Commission’s 

final report to the congressional intelligence committees. 

Section 609. Inapplicability of certain administrative provisions 

Section 609 exempts the Commission from the Federal Advisory 

Committee Act and the Freedom of Information Act.

Section 610. Funding 

Section 610 describes the funding for the Commission. 

Section 611. Definitions 

Section 611 provides definitions for this title. 

COMMITTEE ACTION

On May 8, 2002, the Select Committee on Intelligence approved 

the Bill and ordered that it be favorably reported. 

ESTIMATE OF COSTS

Pursuant to paragraph 11(a) of Rule XXVI of the Standing Rules 

of the Senate, the estimated costs incurred in carrying out the provisions of this Bill for fiscal year 2003 are set forth in the Classified Annex to this Bill. Estimates of the costs incurred in carrying 

out this Bill in the five fiscal years thereafter are not available 

from the Executive Branch, and therefore the Committee deems it 

impractical, pursuant to paragraph 11(a)(3) of Rule XXVI of the 

Standing Rules of the Senate, to include such estimates in this report. On May 10, 2002, the Committee transmitted this Bill to the 

Congressional Budget Office and requested that it conduct an estimate of the costs incurred in carrying out the provisions of this 

Bill. 

EVALUATION OF REGULATORY IMPACT

In accordance with paragraph 11(b) of Rule XXVI of the Standing 

Rules of the Senate, the Committee finds that no regulatory impact 

will be incurred by implementing the provisions of this legislation. 

CHANGES IN EXISTING LAW

In the opinion of the Committee it is necessary to dispense with 

the requirements of paragraph 12 of Rule XXVI of the Standing 

Rules of the Senate in order to expedite the business of the Senate.

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