identified gaps in coverage, alternative views continue to be fully considered, and concerns
raised by analysts are properly adjudicated. The Subcommittee is beginning an assessment of
analysis and will examine many of these issues in greater detail within that review.

IV. Information Sharing

Information sharing within the Community has been a long-standing area of concern for
the Congress and others, and it remains so. The WMD Commission noted that one of the biggest
impediments to the Community’s analytic efforts is the human or systematic resistance to
sharing information. The Congress felt so strongly about the need for improved information
sharing that the Intelligence Reform Act contains two major sections on the subject. One section
addresses intelligence information sharing in general and the other makes specific
recommendations for sharing information related to terrorism.

Section 1011 of the Intelligence Reform Act provides the Director with the authority “to
ensure maximum availability of and access to intelligence information within the Intelligence
Community”? on all topics. Combined with this authority is the responsibility to ensure that
there is a structure where all relevant information is analyzed but unplanned and unnecessary
duplication is avoided. Significant progress has been made in sharing information related to
countering terrorism within the Community, primarily through the efforts of the National
CounterTerrorism Center. That progress is not evident in other areas, and the Subcommittee is
not aware of who on the Director’s staff is primarily responsible for seeing it is done. Despite
the progress made to date, there are still issues related to the poorly defined roles,
responsibilities, and accountability of the organizations and activities who have complained that
they were not getting the information they need. The National CounterTerrorism Center’s
deputy for information sharing advised Subcommittee staff that out of the universe of
information available on terrorist targets, the National CounterTerrorism Center, the CIA's
CounterTerrorism Center and the Defense Intelligence Agency’s Joint Intelligence Task Force—
CounterTerrorism, were all analyzing approximately the same ten percent. An analogy has been
made to competing media outlets trying to get the same story to the public first, and the example
provided was the redundancy in the content and timing of the Community’s coverage of the July
2005 bombings in London.

In December 2005, the principal deputy tasked the Director of the National
CounterTerrorism Center to work with the Community agencies to define the roles,
responsibilities and authorities of those agencies conducting counterterrorism analysis. The
Director refers to this activity as the “lanes in the road.” The original due date for completing
this task was February 2006, but the coordination and cooperation on this extremely important
activity was lacking, and implementation was delayed until July 2006, when the framework for
CounterTerrorism analysis was signed by the Director and released. Until the Director, working
with the 16 intelligence agency leaders, clearly defines the individual roles and responsibilities,
assigns the appropriate authorities, and holds organizations accountable for what they are
supposed to do, progress in maximizing the sharing and exploitation of terrorism information

© 50 U.S.C. $403-1 (gX1)
-17-


We have seen many more things that are progressing in the direction Congress had
hoped. The areas of concern listed above simply indicate some specific areas that require
immediate attention, not everything that needs to be done within the full scope of Community
reform. The sense of community that is evolving, a greater awareness of activities at other
agencies, and the collaborative orchestration of intelligence-operations activity with the
Department of Defense all indicate that the Director is making the reforms Congress envisioned.
We have seen many activities moving forward that had been attempted in the past, but
abandoned because of insufficient authorities and resources.

Sustaining progress in these areas is critical to greater success. If the security clearance
process is not fixed, are we risking not being able to hire the people we need into the
Community? If we do not understand the future threats and national interests, and that
intelligence even has a role against a threat or in support of an interest, how can we assume that
the capabilities the Community is building will be the right capabilities? Even with the best laid
plans and structured budget, can we acquire the complex systems we need with the Community’s
current acquisition capabilities? If the analysts who need the data do have access to it, can they
provide the policy maker with the information necessary to protect our freedoms?

This assessment is a snapshot in time and the Subcommittee will continue monitoring the
progress in implementing the Intelligence Reform Act. The Subcommittee believes that regular,
objective measurement of key indicators can be a very useful tool in assessing whether there is
real, sustained progress. We are preparing an initial group of metrics that we will provide to the
Director and will periodically request that the Director update the Subcommittee on these
metrics. These metrics will be the basis for future Subcommittee assessments.


open source information outlet was subsumed by the Center, along with its budget and personnel.
The assistant deputy for open source is working with this Center and its manager to fulfill the
Director’s responsibilities in this area. As required in the National Intelligence Strategy, the
assistant deputy for open source created a plan for open source activities in which he sets his
vision and goals for the Community's use of open source information. His vision is to ensure
that open sources are routinely used “in all intelligence - disciplines, facilitated by innovative
experts—but with every officer open source capable.”

Overall, open source capabilities will be distributed throughout the Community agencies
in “centers of excellence” but will be centrally managed and interoperable. Accordingly, the
Center is working to duplicate its capabilities by helping to develop mini-open source centers
within the Community agencies. The Center is providing much needed training on establishing
these centers and using open source information while preventing unintended duplication of
efforts.

Interoperability of unclassified Community systems is one of the biggest challenges
facing the Community. The assistant deputy for open source has assured the Subcommittee that
he is working closely with the Chief Information Officer to develop a single open source
architecture that will provide optimum access to information, as well as working to make the
Internet available to all Community personnel on their desktop computers.

The Director also is focusing on eliminating duplication and waste for open source
funding. In past intelligence budgets it was difficult to track return on investment for open
source exploitation, largely because the various and often duplicative programs were funded
within multiple agencies’ budgets. Using the budget authorities granted to the Director in the
Intelligence Reform Act, the assistant deputy for open source is monitoring the annual
intelligence budget requests to ensure they are more effective on open source funding. For
example, the Open Source Center is in the midst of a major acquisition for a large-scale internet
exploitation capability. The Defense Intelligence Agency had started a similar effort, but
terminated it when they found out they could “piggy-back” on what the Open Source Center is
planning. This is the exact managerial role the Director’s staff should play for the Community.
We encourage the Director to maintain vigilance over this effort to convert the Community
culture into one that weaves the knowledge derived from open source information into all its
analytic products.

The Subcommittee recognizes the beneficial work completed in this area and inclusion of
more open source information into the Community’s analysis. This supports the goal of
improving the quality of assessments the Community provides to policy and decision makers.

As discussed elsewhere in this assessment, the Director restructured the President’s Daily Brief
so that it is a Community-wide product. So far this year, there has been a significant increase in
open source entries that have been included in the President’s Daily Brief. Yet, the Director will
continue to be challenged in ensuring that open source information is fully considered within
analysis. This challenge is one of many that will require continual leadership by the Director to
overcome existing cultural intransigence.

+” Office of the Director of National Intelligence, National Open Source Enterprise.

-34-


C. Improved Communications

Encouraging—or even demanding—free flowing communications across an enterprise is
an essential element of leadership. As stated previously, the Intelligence Reform Act requires
the Director to lead the Community. Section 1011 identifies a principal responsibility of the
Director to “serve as head of the intelligence community.”'® The Director is enhancing
Community-wide communications through the use of secure video teleconferencing. While the
benefit to the larger intelligence agencies may not be as apparent, the exchange of information
during these teleconferences has been of significant assistance for the smaller intelligence
agencies. A participant from one agency who attends the daily National CounterTerrorism
Center secure video teleconference stated the sessions are “absolutely a positive.” He noted the
teleconference starts with discussions on strategic issues of concern to the nation and moves to
more tactical issues. Representatives from several agencies have noted that the relationships
established in these Community forums have, at the least, provided them with the name and
phone number of the individual to contact within each intelligence agency when they have
questions and issues. They are able to respond rapidly with accurate information to the concerns
of their cabinet secretaries and undersecretaries, thus providing better input to policy decisions.

The Subcommittee has observed similar positive change as a result of the inclusion of
other intelligence agencies in the preparation of the President’s Daily Brief and National
Intelligence Estimates.'? The National CounterTerrorism Center and National
CounterProliferation Center have collapsed multiple working groups and forums into fewer,
more focused and empowered forums. The authorities of the Director have been effectively used
in formally establishing the Strategic Interdiction Group—a forum of senior leaders from across
the government-—to orchestrate counterproliferation interdiction activities of the United States.
The improved communication enabled by the Intelligence Reform Act is contributing to one of
its key goals and to one of the objectives the Director discussed with the Committee in January
2006, that of developing a ‘sense of community.’

D. Relationship with the Department of Defense

One challenge to the Director’s role as head of the Community is that many of the
intelligence agency leaders are administratively subordinate to leaders of other departments and
organizations, primarily the Secretary of Defense. While the Director has been working to
reform the Community, the Secretary of Defense has been reforming defense intelligence. As
part of the defense reform, the Secretary of Defense had decided to more effectively integrate the
intelligence functions with the operations functions and created Joint Intelligence Operations
Centers at combatant commands. This change affects the national intelligence community as
well as the military intelligence community. When the Director’s staff first learned of the plans,
they were concerned the planned actions would make coordination on the use of each
community’s collection platforms less effective. The deputy for customer outcomes engaged the
action officers in the Department of Defense and worked the issue to the satisfaction of all
involved parties. The relationships forged in this activity enabled the United States government

8 50 U.S.C. $403 (b).
? A National Intelligence Estimate is a comprehensive intelligence review of a particular country, region or other
topic.

-ll-


The Board met for the fourth time in mid-May 2006 and continues efforts to gather the
necessary information to establish an agenda and set priorities and goals for carrying out its
broad mandate. In developing these important priorities, the Board has met with senior
Administration officials, heads of departments, and various private groups such as the American
Civil Liberties Union and the Center for Democracy and Technology. The Subcommittee would
expect the Board to review the various intelligence program, including compartmented
programs, to ensure that they are protecting civil liberties consistent with statutes. The
Subcommittee would expect the Board to discuss any suggested changes with the Committee.

All Board members now have adequate security clearances and a new suite of offices is
under construction. The executive director is in the process of hiring several staff who he
expects to have on board by summer 2006. Additionally, requests for access to classified
information have been granted and indications are that the Board is sufficiently funded. The
executive director stated to the Subcommittee staff that he believed as the Board is stood-up,
they have more than adequate resources and funding to meet statutory responsibilities. He also
indicated a specific funding line is being considered within the Office of the President budget for
the Fiscal Year 2008 budget submission. One of the highest priorities is submission of the
annual report to Congress as required by the Act. Work on this report started when Board
members were officially sworn in and will be completed in March 2007.

In summary, start-up for the Board was frustratingly slow prior to confirmation of the
Chairman and Vice Chairman and appointment of all the Members in March 2006, but from that
point steady progress is being made. It is now functioning and focused on setting a clear and
concise agenda to comply with their mandate to oversee the protection of civil liberties.
Interviews with the executive director indicate that all organizational requirements such as secure
meeting space, clearances, and administrative staff are in place. A web site has been established
at www.privacyboard.gov for external communication. The Board has not been functioning long
enough for this Subcommittee to determine jong term effectiveness. ‘The annual report to
Congress due on March 14, 2007 should document actual progress and accomplishments.
Overall, establishing the agenda for effective oversight and the pace of accomplishment must
improve.

The Intelligence Reform Act also called for the establishment of a Civil Liberties
Protection Officer within the Director’s staff, which was filled in January 2006. Specifically, the
Civil Liberties Protection Officer is to ensure:

e the protection of civil liberties and privacy is appropriately incorporated into the
policies and procedures developed by the Director;

¢ oversee compliance by the Director’s staff with requirements under the
Constitution and all laws, regulations, Executive Orders, and implementing
guidelines relating to civil liberties and privacy; review and assess complaints and
other information indicating possible abuse;
ensure the use of technologies sustain, not erode privacy protections;

* ensure that persona! information contained in the “Privacy Act” is handled in full
compliance with fair information practices; conduct privacy impact assessments;
and

-21-


In December 2004, Congress passed and the President signed into law the Intelligence
Reform and Terrorism Prevention Act of 2004 (hereinafter referred to as the Intelligence Reform
Act). A number of lingering concerns about the Community helped to shape its provisions, but
the Act was significantly influenced by the recommendations of the 9/11 Commission. The
Intelligence Reform Act made reforms in several important areas of intelligence:

1) Leadership of the Community

2) Analysis

3) Information sharing

4) Civil liberties

5) Other areas, such as education and training, FBI culture, and security clearances

Provisions of the Act were further augmented and refined by the Administration's
response in July 2005 to the WMD Commission Report’s recommendations, of which the
Administration accepted, in whole or in part, 70 from a total of 74.

The Chairman and Ranking Member of the House Permanent Select Committee on
Intelligence believed that the Committee had a duty to do more than pass a new law and then
critique the results from the bleachers. They insisted that the Committee continue to engage the
Community on implementing these reforms. In fact, one of the primary responsibilities assigned
to the new Oversight Subcommittee, as outlined in the Committee’s oversight plan, is to oversee
implementation of the Intelligence Reform Act.

The Subcommittee takes that job very seriously and remains mindful of the potential
tragic consequences of another intelligence failure. Subcommittee members and staff have been
involved with many hours of briefings, meetings, discussions, and visits to various locations.
Both members and staff have received input from outside observers. And, the Subcommittee has
conducted several public hearings.

This assessment provides a snapshot of how well the goals of the Act are being satisfied
at this point. It is a mixed story — some good, needed steps have been taken while other reforms
have lagged. Some believe that the new structure is too cumbersome and bureaucratic; others
believe that the Director of National Intelligence (herein referred to as Director) is not showing
the leadership and degree of change for which they hoped. Differences in view are partially
explained by differences in expectations about whether the Intelligence Reform Act was a good
idea and about what role the Director would play.

This assessment will outline the primary areas of reform contained in the Act and the
goals for that area of reform. It will then give an assessment of the progress achieved in reaching
those goals.



second quarter of fiscal year 2006. Of these agencies, all but the FBI had an average
investigative time of less than 90 days. The FBI average was about 150 days.

Despite the data call, according to the Deputy Director for Special Security Center, the
Director’s staff has not yet collected the data on average adjudication times. He estimated that
each agency was spending about 30 to 40 days adjudicating the clearances.

Another concern of the Subcommittee is that the Director has done little to ensure the
reciprocal recognition of security clearances within the Community. The Director’s staff is still
looking for a process to quantify whether clearances are being recognized throughout the
Community. While the Special Security Center has acquired data from various Community
agencies on the number of clearances granted, the number recertified, the number denied and the
number revoked, the Director’s staff has no data on how often requests were made from one
intelligence agency to another to recognize an existing clearance. The Deputy Director for
Special Security Center, has no mechanism in place to capture this data or to track these requests.
The Deputy Director for Special Security Center claimed that tracking reciprocity requests would
be difficult based on the way the current system is configured: he likened it to tracking “hockey
[goal] assists.”

The Director’s inability to ensure that sensitive compartmented information security
clearances are recognized throughout the Community in a timely manner means that significant
resources continue to be expended to duplicate work already done. This continued waste,
occurring nearly 18 months after the enactment of Intelligence Reform Act provisions aimed at
stopping it, is simply unacceptable.

Congress intended for the Director to proactively “push” the Community to fix its piece
of an unwieldy security clearance system in a timely manner. By contrast, he seems content to
be passively “pulled” along with all the other Executive Branch agencies in the wake cf the
Office of Management and Budget’s attempts to fix the security clearance system government-
wide. The Office of Management and Budget has overall responsibility for reform of the
security clearance process government-wide under the terms of the Act and Executive Order
13381 (June 27, 2005) and has established fairly detailed plans with specific goals and timelines
for each executive branch agency. The Subcommittee is concerned that the Director is doing the
bare minimum as laid out in guidance from the Office of Management and Budget to work
towards real reform of the security clearance process within the Community.

‘The actions taken to date by the Director’s staff illustrate their overall passive approach
towards changing the security clearance process. When the Subcommittee staff asked the
Deputy Director for Special Security Center about the most significant accomplishments to date
in the area of security clearance reform, his responds was the “Collaboration Forum” and the
Peer Review pilot program. The Collaboration Forum is an interagency discussion group where
representatives from executive branch agencies (not just Community members) meet to discuss
barriers to reciprocal recognition of clearances and difficult adjudication cases. The Peer Review
program involved security personnel from one executive branch agency reviewing the
adjudication practices and procedures of another executive branch agency and commenting on
them. Both of these activities were directed in the Office of Management and Budget’s plan, but

-32-


will not proceed at the rate the American people deserve and expect. The Subcommittee further
notes that once the roles and responsibilities for counterterrorism analysis are defined, there will
be a need for similar efforts for the remaining intelligence targets of interest, whether they are

transnational in nature, such as proliferation of weapons of mass destruction, or country specific.

Section 1011 of the Intelligence Reform Act also requires the Director to establish
common information technology standards and systems within an enterprise architecture that has
multi-level security capabilities. The primary responsibility for these initiatives resides within
the office of the Chief Information Officer. The Chief Information Officer is not responsible for
operating the Community’s information technology infrastructure; rather, it is focused on
developing appropriate standards and facilitating greater interconnectivity between existing and
future Community systems. The office has created an Information Sharing and Customer
Outreach unit that will assist in this effort. The first functional area being pursued is the
Community’s human resource systems. These systems include not only personnel information,
but also are directly linked to the Community’s security systems and information sharing
capabilities. To date, the Chief Information Officer has published enterprise architecture
guidance and developed a capability to link the Community’s secret-level networks.
Additionally, the Office has used the authorities provided in the Intelligence Reform Act to
institute changes or exceptions to existing policics that have removed barriers to information
sharing within the Community and with our allies. These actions have also increased efficiency
and saved money.

Section 1016 of the Intelligence Reform Act cails for the creation of an Information
Sharing Environment to facilitate the exchange of terrorism information across the U.S.
Government and with state, local, tribal, public and private entities.’” One facet to sharing
terrorism information is ensuring that the consumers of terrorist threat information receive the
information they need in a useful way. Progress in this regard has been unacceptably slow. It
does no good to warn the mayors of major cities that a terrorist is planning a car bomb attack,
without providing known specifics that are necessary for understanding the threat. Useful
information must also be made available to and received from flaw enforcement officiais,
including tidbits of information that may seem irrelevant to the individual who observes it but
provides significant clues when reviewed in the context of all available data. For example, little
progress has been made in getting information observed by border patrol officers or airport
screeners into the national systems for analysis. In short, more must be done to ensure the right
information gets to the people who need it. The dots cannot be connected until the dots are
known.

The ultimate goal of the Information Sharing Environment is to create the conditions by
which information can be accessed across agency and jurisdictional boundaries and between the
federal government and its state, local, tribal, and private sector partners in a timely and efficient
manner. Creation of the Information Sharing Environment is to be directed by a Program
Manager designated by the President. The Program Manager is assisted by a forum of
information technology professionals and leaders from across the government (the Information
Sharing Council). The first Program Manager was designated in April 2005 but resigned in early

76 U.S.C. $485(b)
-18-


One area where the Director has taken action is in creating a “joint duty” assignment
process similar to the Goldwater-Nichols military “joint duty” process. The requirement of
civilian joint duty assignments across the 16 intelligence agencies is a major initiative previously
attempted during the Director of Central Intelligence-era but never successfully implemented.
As outlined in a recently published Intelligence Community Directive, these joint duty
assignments are now required for promotion to senior leadership positions.

The Subcommittee hopes that this joint duty requirement will result in personne!
throughout the Community having a greater understanding of the Community and a greater sense
of cooperation in working towards satisfying Community goals. By requiring joint assignments
before promotion to senior positions, the Director is forcing the Community towards this goal.

We note that a “joint duty” assignment practice has existed in the Community for some
time but was seen as a hindrance to promotion rather than a requirement. The Subcommittee
commends the Director for formalizing a policy that, in theory, rectifies the bias associated with
joint assignments by connecting them to promotion and pay. It remains to be seen if the Director
will pressure the Community to embrace and support joint duty assignments thereby maximizing
the value these assignments will bring to senior Community leaders. This directive is the first
step in the Director’s efforts to track career progression with the appropriate training and joint
experience necessary for the Community to retain its competitive edge. It is also the only
tangible direction out of the Director on personnel to date.

While some progress has been made, the Subcommittee finds it unacceptable that more
has not been accomplished to deliver clear policy guidance in the area of personnel. The
Subcommittee has seen little tangible evidence that the Director is acting on the Intelligence
Reform Act requirement to encourage intelligence agencies to recruit and hire people with the
necessary technical, linguistic and other key skills necessary to perform unique and complex
Community missions. We are concerned that individuals with these skill sets are not being hired
because they may not conform to current hiring policy and standards. Subcommittee members
and staff heard startling accounts of very qualified applicants being turned away because their
diverse backgrounds do not permit them to successfully complete the rigid and antiquated
applicant processing model of a “Cold-War” era. We have also heard accounts of individuals
with exceptional talent who were not recognized by the personnel specialists conducting career
fairs because they did not exactly match the job description for an open position.

All successful organizations achieve their success because of the talented people they
hire. The Director should set hiring guidelines for the intelligence agencies that result in the
recruitment of individuals possessing the critical skill sets needed, especially in the area of
technical and language expertise. Additionally, the Director must ensure that Community
recruiters understand the needs of the Community and are equipped to recognize individuals who
meet those needs, rather than turning qualified individuals away because the recruiter cannot
recognize this talent.

-24-


While discussions with the Program Manger for the Information Sharing Environment
and his staff indicate that progress is being made towards the creation of an Information Sharing
Environment, this is a complex endeavor that will require years to fully implement. Even with
clear and documented interest from the President, it does not appear that all agencies involved
are full participants. A true test of progress will be the thoroughness of the July 2006
Implementation Plan. But, it may require the active involvement of the White House and Office
of Management and Budget to ensure all parties are fully engaged in implementing any plans
with the appropriate sense of urgency.

Consistent with the 9/11 Commission, Congress concluded that in fighting the war on
terrorism the federal government may need additional powers and may need to enhance the use
of its existing powers. Any such addition or expansion must be accompanied by an effective
system of checks and balances to protect civil liberties.

As a result, the Intelligence Reform Act established a Privacy and Civil Liberties
Oversight Board within the Executive Office of the President. The Board’s mission is to ensure
concerns with respect to privacy and civil liberties are appropriately considered in the
implementation of laws, regulations, and executive branch policies related to efforts to protect
the nation against terrorism.

Although starting any new organization takes time, vision, energy, and commitment, the
amount of time it took to put the Privacy and Civil Liberties Oversight Board in place is
disappointing at best. Delays in submitting the nominations of board members and a lengthy
Senate confirmation process are equally to blame for the delay.

While the Board start-up was slower than expected, progress is now being made, and it is
the sense of the Subcommittee that the Board is taking its role in protecting civil liberties
seriously. The Board Chair and Vice Chair, along with fellow Board members, were formally
sworn in on March 14, 2006. In addition, an executive director was selected and began working
on the same date. The Board chair stated at her confirmation hearing that “We must protect the
country from those who would destroy us. But on the other hand, we can’t give up or give short
shrift to what makes this such a special nation. These are things that require careful balancing.
They require a great deal of back-and-forth to make sure the tension is properly resolved, so that
we do not sacrifice our civil liberties while we are fighting those who wish to destroy us.”78
Following the first meeting in March 2006, one Board member, a former White House Counsel
in the Clinton Administration, said “the meeting surprised him ....we were treated with great
seriousness by the White House and by the intelligence community, a lot of my Democratic

friends assumed ...we were really not going to be able to do much.””?

38 Civil-Liberties Board Interrupted, Brian Friel, National Journal January 1, 2006
29 Richard B. Schmitt, “White House Civil Liberties Panel Finally Meets after 16 Months”, Los Angeles Times,
March 17, 2006

-20-


neither of these activities addresses the specific requirements placed upon the Director by the
Intelligence Reform Act.

The Director was given specific tasks in the Intelligence Reform Act for improving the
sensitive compartmented information security clearance system within the Community. The
Director’s staff has not been aggressive in carrying out these tasks and has not given much
indication that they are even concerned about them. For example, the term “security clearance
reform” does not appear in the October 28, 2005 Director’s Report to the House Permanent
Select Committee on Intelligence on implementation of the Intelligence Reform Act nor in the
May 9, 2006 Director’s memo listing its first year accomplishments. When the deputy for
management issued his February 2006 data call for statistics on average investigation and
adjudication times, he cited Enterprise Objective 7 of the National Intelligence Strategy (October
2005) as part of the impetus for the reporting regime. Enterprise Objective 7 (or even the
National Intelligence Strategy as a whole) does not mention “security clearances”. At best the
Objective mentions the need to establish uniform and reciprocal guidance on “security issues of
common concern, including access to facilities, and electronic access to systems and databases.”

The Subcommittee is concerned that the Director has not implemented new policies and
procedures for granting access to sensitive compartmented information. The Director’s staff
waited 14 months to request statistics from the Community agencies to even establish a baseline
for their average investigative processing times; to date this baseline has not been completed. As
the Special Security Center Director and Deputy Director have shown, the Director has no clear
plan on how to even approach the problem of reciprocal recognition of clearances.

e. Utilization of Open Source Information

The Intelligence Reform Act requires the Director to “ensure that the intelligence
Community makes efficient and effective use of open-source information (information available
from public sources) and analysis.“ The Act leaves it up to the Director to decide how to
accomplish this but suggests through a “Sense of Congress” that an Open Source Center should
be created for this purpose.

The WMD Commission also stressed the need for the Community to better use open
source information in all aspects of analysis and asserted that an Open Source Directorate should
be created within the CIA. The report stated:

“In the near term, we believe that without an institutional "champion" and home, open
source will never be effectively used by the Intelligence Community. It is our hope that
open source will become an integral part of all intelligence activities and that, at some
point in the future, there may no longer be a need for a separate directorate.” *°

In response, the Director has created an Open Source Center with the CIA as its executive
agent. The Forcign Broadcast Information Service that previously acted as the Community’s

* 50 U.S.C. §403-1 note
a Report of the National Commission on intelligence Capabilities of the United States Regarding Weapons of Mass
Destruction, March 31, 2005, p. 379-380.

-33-


Catalog but could not because of the lack of resources and authority. Agencies refused to
cooperate by not providing specific information. The resources and authorities afforded the
Director have made such a database possible.

The deputy for analysis has created an assistant deputy for analytic integrity and
standards who also serves as the analytic ombudsman. One of the stated goals for this individual
is to “integrate analysts from all 16 intelligence agencies into a genuine community prepared to
share training, analytic methodology and access to information.” An Analysis Standards and
Evaluation Action Group has been created to provide a regular forum for the discussion of
problems and new approaches to intelligence analysis. Subgroups have been created to identify
best practices in analytic evaluation. Hard target countries have been selected for an evaluation
pilot program that was initiated in March 2006. The pilot will evaluate finished intelligence
written by all 16 Community agencies on these targets. Evaluation criteria will include
timeliness, objectivity, use of all available sources with a description of their reliability, use of
proper tradecraft, the use of alternative analysis, and other areas.

To enhance Community analytic capability, the assistant deputy for analytic integrity and
standards has developed an introductory analysis course for new Community analysts that covers
critical skills and will foster a stronger sense of community. If the pilot is successful and the
Community wants to continue the activity, the Director will have to identify funding since
resources are not programmed for future editions of the course.

As the analytic ombudsman, the assistant deputy for analytic integrity and standards
serves as the focal point for Community analysts who wish to raise concerns regarding
timeliness, politicization, bias, lack of objectivity, appropriate alternative analysis, and dissenting
views. In addition, she will supplement the avenues available to Community analysts who feel
they have exhausted the internal mechanisms of their agency without a fair resolution. The
Ombudsman will resolve problems and disputes through fact-finding, informal counseling and
conciliation, enhancing communications, and making recommendations to those involved. The
Ombudsman indicated that she is working on an “800 number type” arrangement for contacting
her office and has already begun to receive calls from non-Community analytic elements.
Despite this, judging from the analysis presented in the briefings the Committee has received on
various topics over the past year the Subcommittee remains concerned that the analytical
community is still too risk-adverse and subject to group-think. The Subcommittee has not seen
solid evidence that the Director is adequately addressing either of these two areas.

The deputy for analysis has also implemented changes to the presentation of several
existing analytic products. There has been significant change to the delivery of the President's
Daily Brief, which was previously produced almost exclusively by the CIA. The CIA continues
to provide the majority of the items in the President’s Daily Brief, but it now contains
contributions from State Department, the Defense Intelligence Agency, Federal Bureau of
Investigation (FBI), the Department of Homeland Security and others. In addition, the 16-
member briefing team now contains analysts from each of those agencies. The President’s Daily
Brief also incorporates alternative viewpoints when analysts disagree on how best to interpret
what is often times ambiguous or incomplete information. Each agency can write an alternative
view that goes through the same review process as the original entry. There is greater use of

-15-


information it needs to fulfill its responsibilities. However, these reporting requirements remain
a primary means through which Congress gets the information it needs to perform effective
oversight, and the Subcommittee believes that the efforts by both this Committee and the Office
of the Director should make it easier to meet reporting deadlines.

In leading and managing the Community, one of the more significant responsibilities of
the Director is to “ensure timely and effective collection, processing, analysis, and dissemination
including access by users to collected data consistent with applicable law.”'' In addition, the
Director must “determine requirements and priorities for, and manage and direct the tasking of,
collection, analysis, production, and dissemination of national intelligence by elements of the
IC” that are consistent with national priorities. The four deputy directors are managing the
implementation of these specific actions and have had some successes thus far. Their
responsibilities include managing current Community capabilities and ensuring the appropriate
capabilities are available for the future. The Director’s staff is engaged in a very broad spectrum
of activities as is conveyed in the Director’s May 2006 report to the Committee regarding the
progress of implementing the Intelligence Reform Act. The Subcommittee’s assessment is
similar in many areas, but based on the evidence the Subcommittee has seen differs in a few.
The Subcommittee has decided to highlight a few areas that indicate promise or concern with the
direction the Director has taken. The discussion of those activities follows.

A. Inventory of Capabilities

The WMD Commission highlighted the need for the Community leadership to manage all
its capabilities effectively, ensuring that the full spectrum of capabilities on a particular topic are
fully coordinated and used competently across the Community. It said:

“One of the most significant problems we identified in today’s Intelligence Community is
a lack of cross-Community focus on priority intelligence missions. By this, we mean that
in most cases there is not one office, or one individual, who is responsible for making
sure that the Intelligence Community is doing all it can to cotlect and analyze intelligence
on a subject like proliferation, or a country like Iran. Instead, intelligence agencies
allocate their scarce resources among intelligence priorities in ways that seem sensible to
them but are not optimal from a Community-wide perspective. The DNI [Director] needs
management structures and processes that ensure a strategic, Community-level focus on
priority intelligence missions. The specific device we propose is the creation of several
“Mission Managers...”

The Director has decided to employ a mission management concept to aid in prioritizing
collection and analysis activities and to eliminate unintended duplication. Two offices share
responsibility, the assistant deputy for mission management and assistant deputy for collection
strategies. These offices are working in tandem to create a full inventory of the existing
analytical and collection capabilities for most of the world (excluding North Korea, fran, and the

"50 U.S.C. Section 403-1()(i (AMI)

250 U.S.C. Section 403-1(f)(1)(A)(ii)

8 Report of the National Commission on Intelligence Capabilities of the United States Regarding Weapons of Mass
Destruction, March 31, 2005, p.19.

-7-


While the Commission and the Intelligence Reform Act both sided with keeping
domestic intelligence within the FBI, the jury is still out on whether or not the FBI can do the
job. Progress has been made, but it is clear that a transformational change has not yet occurred.
The FBI needs to do so with a greater sense of urgency.

d. Security Clearances

The 9/11 Commission recognized that the security clearance system, designed to be an
asset to the Community by providing a rational screen for limiting access to the most sensitive
secrets, had become a liability. In its report, the Commission stated,

“This country’s security policies- considered in their broadest form to include physical
security, infrastructure security, personnel security, and information and cyber security-
are in need of serious review. Today we face new threats and vulnerabilities that are in
many ways more encompassing, complex and subtle than those we confronted in the past
century. . . Fo respond to these challenges the Intelligence Community must . . . improve
the efficiency of the investigation, clearance and adjudication process. . .”" 2
Congress recognized this problem as well, and through the Intelligence Reform Act,
tasked the Director to establish uniform procedures for granting access to sensitive
compartmented information and to reduce the length of the security clearance process.
Specifically, section 1011) of the Intelligence Reform Act required the Director to:

“(1) establish uniform standards and procedures for the grant of access to sensitive
compartmented information...(2)ensure the consistent implementation of those standards
and procedures...(3)ensure that security clearances granted by individual elements of the
intelligence community are recognized by all elements of the intelligence community . .
.and (4) ensure that the process for investigation and adjudication of an application for
access to sensitive compartmented information is performed in the most expeditious
manner possible. . .”

[Emphasis added].

In general, security clearance processing involves two parts, first a background
investigation and then an adjudication. An authorized investigative agency (for exampie, the
FBD) looks into an applicant’s past history to see if the applicant meets the criteria for obtaining
access to secure compartmented information. If the background investigation indicates that the
applicant meets the criteria, then an authorized adjudicative agency (for example, the CIA)
actually grants that person access to secure compartmented information.

Section 3001(g)* of the Intelligence Reform Act expanded on the requirement for
expeditious clearance processing, compelling the Director to mect certain security clearance
processing goals within a five-year framework. The President designated the Office of
Management and Budget to lead the government effort but the Director has the responsibility for

® Report of the Commission on Intelligence Capabilities of the United States Regarding Weapons of Mass
Destruction, March 31, 2005, 545-546.

*® 50 U.S.C. §403-1 Gj)

450 U.S.C. §435 (bXg)


ec. Cultural Transformation of the Federal Burcau of Investigation

The 9/11 Commission noted that the FBI had made significant progress in improving its
intelligence capabilities and urged the FBI to fully institutionalize the shift of the Bureau to a
preventive counterterrorism posture. The Commission clearly noted:

“the FBI does need to be able to direct its thousands of agents and other employees to
collect intelligence in America’s cities and towns — interviewing informants, conducting
surveillance and searches, tracking individuals, working collaboratively with local
authorities, and doing so with meticulous attention to detail and compliance with the law.
The FBI’s job in the streets of the United States would thus be a domestic equivalent,
operating under the U.S. Constitution and quite different laws and rules, to the job of the
CIA’s operations officers abroad.”>®

Before 9/11 there was a serious lack of communication in assessing foreign vice domestic threats
to the U.S. The Commission found:

“The foreign intelligence agencies were watching overseas, alert to foreign threats to U.S.
interests there. The domestic agencies were waiting for evidence of a domestic threat
from siceper cells within the United States. No one was looking for a foreign threat to
domestic targets. The threat that was coming was not from sleeper cells. It was foreign —
but from foreigners who had infiltrated the United States.”

As a result, the Intelligence Reform Act directed the FBI to further improve its
intelligence capabilities and to develop and maintain within the Bureau a national intelligence
workforce. In addition, the Act provided direction to improve field office matters and budget
issues, and it levied specific reporting criteria. The WMD Commission recommended “the
creation of a new National Security Service within the FBI under a single Executive Assistant
Director. This service would include the Bureau's CounterTerrorism and Counterintelligence
Divisions and the Directorate of Intelligence. The service would be subject to the coordination
and budget authorities of the Director as well as to the same Attorney General authorities that
apply to other Bureau divisions,"“°

The National Security Branch is the organization with which the FBI must forge crucial
connections between foreign intelligence and domestic law enforcement and thus is an important
component of the Community in identifying and connecting critical “dots” that will help protect
the United States from attack. Formal establishment of the National Security Branch with full
funding authority for the CounterTerrorism, Counterintelligence, and intelligence missions of the
FBI is a major achievement.

38 National Commission on Terrorist Attacks Upon the United States, The 9/1 Commission Report: Final Report of
the National Commission on Terrorist Attacks Upon the United States, July 22, 2004, p. 423
a National Commission on Terrorist Attacks Upon the United States, The 9/11 Commission Report: Final Report of
the National Commission on Terrorist Attacks Upon the United States, July 22, 2004, p. 263

*° Report of the Commission on Intelligence Capabilities of the United States Regarding Weapons of Mass
Destruction , March 31, 2005, Appendix B

-27-


Hi. Leadership of the Intelligence Community

One of the most frequent criticisms of former Directors of Central Intelligence was that
they did not effectively lead the Community, but instead focused almost exclusively on running
the CIA. This narrow focus arose from a perceived lack of authority, inclination, and time.
During previous debates on intelligence reform, one option discussed was to separate the roles of
the Director of Central Intelligence and the Director of the CIA into two different positions. In
the Intelligence Reform Act, however, the Conferees from the House and Senate elected to create
something new and more robust--a Director of National Intelligence. The hope was for the
Director to be a visible leader, “establishing the objectives, priorities, and guidance for the IC”®
and leading the Community to function as a “true community.” During a public Subcommittee
hearing on July 28, 2005, Chairman Peter Hoekstra encapsulated the intentions of the authors of
the Intelligence Reform Act:

“Something needed to be done. We needed to create a new organizational structure. We
needed to create an organizational structure that I think was more than coordination. It
had to be able to provide strategic direction to the entire community so that there would
be a shared vision for where we were going to go and how we were going to get there,
and to make sure that it was resourced properly to the threats that we perceived. And that
is the vision that we have for the DNI [Director] and the DNI's [Director’s] office.

Then as we kept peeling down through the layers, we said it needs to be more than an
organizational change, it needs to be a transformation of the Intelligence Community. It
can't be a bureaucracy, and it had become too bureaucratic. That is why this oversight by
this committee is so critical to make sure that we get the Agency that we envisioned when
we passed the legislation....””

Likewise, when the Intelligence Reform Act was enacted the Ranking Member Jane Harman
stated:

"Our intelligence system is broken. We have 15 intelligence agencies with different rules,
cultures, and databases. Our intelligence community operates on a 1947 business model
designed to defeat the Soviet Union, which occurred in 1989. Fifteen years later, the
enemy is digital, but our organizational structure remains analog.

This long-overdue legislation will modernize our capabilities, integrate our intelligence
coliection and analysis efforts, unify our counter-terrorist efforts, and promote
information-sharing. It will promote the same ‘jointness' in intelligence that has been the
halimark of our military's success since the Goldwater-Nichols Act in 1986.

The new Director of National Intelligence will oversee and manage all of the
government's intelligence gathering and analysis capabilities. He (or she) will develop the
budgets for the agencies, manage the execution of the money, and manage and direct the
tasking of intelligence functions. The new Nationa! CounterTerrorism Center will bring

° 50 U.S.C. §403-1()(I(AY(i)
7 Congress, House, Permanent Select Committee on Intelligence, Subcommittee on Oversight, Status of the Director
of National Intelligence, hearing before the Subcommittee on Oversight, 109" Cong., 2TM sess... July 28, 2005.

-4.


Three concerns permeate our findings:
(1) Lack of urgency ~

We do not diminish the hard work by many people in the Community to make needed
changes. We also do not underestimate the difficulty in making changes in large
organizations with their own culture and self-interests. We further understand the
direction and pace of reform must be in accordance with the wishes of the President, as
the first among the many customers of the Community. Yet, the Subcommittee is still
concerned that an incremental approach is being used on issues like information sharing
and reform of human intelligence, and the Subcommittee believes that there must be a
greater sense of urgency in correcting the deficiencies identified by study after study.

(2) Trying new approaches —

The Community must try--and adopt--new approaches to old and new tasks. Analysis
has to focus on trying to discover the unknown unknowns, but analysis largely is still
clustered around reporting on the same 10% of the data. The FBI is exploring new
approaches to examine the “spaces between the cases.” To date the Community is still
using inflexible, narrow parameters for new hires, with human resource specialists
looking for round pegs for holes that now come in a variety of shapes.

(3) Insufficient prioritization —

The Director is trying to do a little of everything which slows down imprevements in key
areas. The Director needs to prioritize activities and have his staff focus on those that are
most important. Information sharing and other activities necessary to help in preventing
future terrorist attack require more attention.

In sum, we believe that intelligence is more crucial than ever in a time when "a few evil
men can kill on a scale equal with their hatred."* With stakes so high, we cannot accept a
“business-as-usual approach.” As Richard Coffman, a former Central Intelligence Agency (CIA)
officer, journalist and security consultant, wrote,

“Focusing on process and organizational change might be edifying for bureaucrats and
academics... [but] we can’t hide behind such Washington clichés as ‘it’s too early,’ or
‘it’s a work in progress.” In a war against a determined, ruthless and active foe, every

day counts and dithering could be deadly.” 5

* White House transcript of remarks by President Bush at the Citadel (Military College), Charleston S.C., December
11, 2001

> Richard Coffman, “Intelligence Reform,” Military.com April 18, 2006.
http://navyseals.com/community/articles/article.cfm?id=$383. (12 June 2006).



open source reporting and the National CounterTerrorism Center is now responsible for
managing and coordinating Community-wide terrorism items for the President’s Daily Brief.
Finally, the document contains more background information on the value of the available source
information.

There have also been major changes to the role of the National Intelligence Council. The
biggest change is that the deputy for analysis has made the National Intelligence Council the
focal point for the preparation of briefing material for Director and principal deputy participation
in Cabinet-level meetings. This task was previously done for the Director of Central Intelligence
almost exclusively by the CIA. To date, the National Intelligence Council and National
CounterTerrorism Center have produced over 300 briefing books for Director and principal
deputy participation in National Security Council and Homeland Security Council meetings.
These books are prepared with input from across the Community, and the content is shared with
Community analysts along with summaries of the meetings to facilitate better understanding of
the issues of importance to policy makers and to help in the long range planning for future
President’s Daily Brief contributions. These materials have also formed the basis for a number
of Congressional briefings.

Changes to the National Intelligence Estimates produced by the National Intelligence
Council include making the documents shorter and more focused and replacing a list of
conclusions with more precise language that thoroughly explores the implications of the critical
underlying judgments. Appendices and annexes are used to provide full transparency to these
judgments and the process used to reach them through careful identification of sources and
intelligence gaps. The National Intelligence Council is also making more use of external experts
from academia and think tanks to prepare certain parts of a National Intelligence Estimate.
Finally, the National Intelligence Estimate review process requires that cach key collection
agency describe how their intelligence was incorporated into the estimates.

The National Intelligence Council is in the process of adding a Long Range Analysis Unit
in response toa WMD Commission recommendation. It will be a group of 12-15 analysts
organized along the lines of a think tank and equally divided between Community and outside
experts. Its activities will be coordinated with the strategic analysis elements of the Community
and the Open Source Center. The goal will be to use innovative technologies to address issues
with strategic implications, such as global democratization, energy/environment, and threats to
future US military operations. The Subcommittee, however, remains concerned that there is still
insufficient long-term analysis. The WMD Commission recommended adding an organization to
perform only long-term and strategic analysis within the National Intelligence Council. Adding
the 12-15 analysts in the Long Range Analysis Unit appears to be more than offset by adding the
additional daily tasks to the existing National Intelligence Council staff. The Subcommittee will
continue examining this issue in follow-up reviews.

In summary, the Director has initiated a number of reforms to comply with both the
Intelligence Reform Act and the WMD Commission recommendations in the areas of analytic
integrity, exchanging information among analysts, and long term analysis. The Subcommittee
must continue its oversight to ensure the initiatives described above produce their intended
results. We must confirm that in the future analytic resources are shifted in response to

-16-


develop performance plans, which implement the same goals and objectives for their
subordinates. The Director has not yet fully implemented this process. Performance agreements
for 11 of the 16 intelligence agency leaders have been signed, but not for the other five agency
leaders or four deputy directors. If the performance agreements are to be the primary method for
providing consistent direction and guidance and all of them have not been completed, that
consistency may be missing. The Director does meet periodically with the various intelligence
agency leaders, but the daily direction to the intelligence agencies comes from the principal
deputy and the four deputy directors.

One way in which the Director has enabled himself to be able to spend more time leading
the Community is the process he uses for presenting the Community-prepared daily for the
President (President’s Daily Brief). Previously, the Director of Central Intelligence focused
heavily on the briefing. The Director has empowered the deputy for analysis to manage the
process and has created a dedicated team of professionals to organize and provide the brief.
Rather than relying primarily on the CIA for input to the briefing, the briefing staff solicits input
from across the Community. Because he uses a dedicated professional staff with outreach to the
Community, bringing a broader base of expertise to prepare the information, the Director does
not spend the amount of time preparing to give these briefings as did former Directors of Central
Intelligence, freeing him to focus on leading the Community.

In leading the Community, the Director must also coordinate with other organizations
and branches of government. There have been several disappointments in the Director's
relationship with Congress and with this Committee. The Committee had expected the Director
to work in partnership with the Committee, discussing and solving issues in their infancy. The
dialog to do this has been slow in developing. Some actions have actually strained relations
rather than built a partnership, for example the recent resignation of the Director of the CIA with
no notice or consultation. Likewise, the Congress was quite surprised when the Director
published the National Intelligence Strategy without first engaging with the Committee.

The Director must also ensure the Community is responsive to Congress. The
Intelligence Reform Act requires the Director to provide Congress status reports on multiple
topics. To date, the Director’s staff has provided 80% of these reports. Of these only slightly
more than half were provided on time. In addition to those reports, the Director is required to
“periodically review and assess the progress made toward the achievement of the goals and
milestones established in such [program management} plan; and submit to Congress a report on
the results of such review and assessment.”!° Even though the Director’s Senior Acquisition
Executive, jointly with the Department of Defense, has held numerous reviews of major systems
acquisition programs, the Director has not provided the Committee with the required reports on
the reviews. We address other concerns with the Community’s major systems acquisition
elsewhere in this assessment.

The Subcommittee is aware of the strain on time and resources to mcet Congressional
reporting requirements and has been working with the Director’s staff to reduce the required
annual reports that have been building up over the years, but may no longer be useful. We have
also been working to develop alternative, more efficient ways for the Committee to receive the

© 50 U.S.C. Section 403-1 (g)(1)(C)


¢ perform other duties as may be prescribed by the Director, or specified by law?

The Officer’s prime responsibility is to oversee civil liberty and privacy compliance
across the Community. Initially it was a difficult task as he had to rely on general counsel or
inspector general representatives from the various agencies. As of July 21, 2006, he has two
professional staff assisting. The first task was to ensure each agency appointed an official Civil
Liberties Protection Officer focal point to help form an oversight committee and stand-up a
proper infrastructure. Currently, all agencies with the exception of the Drug Enforcement
Agency have appointed a focal point. A primary task, pursuant to a Presidential memorandum,
is to develop and publish formal guidelines regarding information sharing for the Community by
June 15, 2006. The Officer is co-chairing the guideline committee with Department of Justice
and expects to meet the deadline with clearly defined and straightforward policy and procedures
that can be uniformly interpreted. The officer does meet regularly with the Privacy and Civil
Liberties Oversight Board and works closely with its executive director.

The Civil Liberties Protection Officer has established the vision, approach, and
methodology to oversee privacy and civil liberty protection across the Community. The addition
of assistant Civil Liberties Protection Officers in the near future will be an important step to
carry out mission requirements. The Subcommittee also looks forward to continued progress on
initiatives, such as a compliance reporting tool and privacy-protection technology research
project. The privacy guidelines for information sharing across the Community, currently in
draft, are sorely needed and all efforts should be made to finalize and publish as soon as
practical.

VI. Other Elements of Intelligence Reform

a. Personnel Activities

The Intelligence Reform Act requires the Director to “implement personnel policies and
programs throughout the Intelligence Community that encourage and facilitate assignments and
details of personnel to national intelligence centers, and between elements of the Intelligence
Community.”! The Director must also set standards for education, training, and career
development of personnel; encourage and facilitate the recruitment and retention of highly
qualified individuals for the conduct of intelligence activities; and ensure the effective
management of Community personnel who are responsible for Community-wide matters.°”
Additionally, the Act expressed a sense of Congress that the Director should prescribe
mechanisms that allow the rotation of Community personnel throughout the various elements of
the Community during the course of their careers. This will ensure the widest possible
understanding by Community personnel on the variety of intelligence requirements, methods,
users, and capabilities.

>° Intelligence Reform and Terrorism Prevention Act of 2004, December 7, 2004, page 22
*! 50 U.S.C Section §403-1 (F)G3)(A)
* Ibid.

-22-


SUBCOMMITTEE ON OVERSIGHT

HOUSE PERMANENT SELECT COMMITTEE ON INTELLIGENCE

Initial Assessment on the Implementation of
The Intelligence Reform and Terrorism Prevention Act of 2004

July 27, 2006



“The heart of intelligence then, is not in the plumbing for getting raw data from the
collector to the appropriate user. It is rather the enabling of appropriate action over time.
Intelligence so defined includes support not just for today’s decision-maker but for
tomorrow’s. This point deserves emphasis. In support of complex democratic
governments, successful intelligence must include a process for strategic collection
against future threats and the analysis of macro trends such that management choices can
be made for the next several administrations.”"°

While the Community has done a fair job in developing intelligence capabilities, the fact
that we do have a relatively successful counterterrorism capability is not necessarily the result of
deliberate planning by previous leadership. It is more the result of exceptional individuals
overcoming organizational and planning shortfalls across the Community and deploying systems
in the field which work. Poor understanding of the threats and the changing environment in
which our officers have to operate has resulted in an insufficient human intelligence capability
that does not and will not meet the nation’s needs. In addition, poor program management and
planning has put our imagery intelligence capabilities at risk. For example, the Director has
made a decision on the near-term space imagery architecture but the decision does not solve or
address longer-term needs. Only through effective strategic planning and review, a thorough
understanding of the future threats, and a willingness to make required structural changes will
the Director, in collaboration with the intelligence agency leaders, be able to provide any
reasonable level of assurance that we will have the necessary intelligence capabilities in the
future.

The National Intelligence Strategy calls for 15 implementation plans from senior officials
on the Director’s staff, These plans are intended to implement the strategy and guide the
intelligence agencies in transforming the Community. As of July 21, 2006, the Director has
approved all 15 plans. The Subcommittee will have to review the impiementation of these plans
to determine if they are having the desired effect. The work accomplished to date under the
leadership of the deputy for management has produced these plans and proposed high-level
metrics to track implementation of the National Intelligence Strategy.

Along with the implementation plans, a better defined strategic planning process is
necessary to prioritize intelligence requirements based on threats so senior leaders and decision
makers can make the tough calls to shift resources as needed. For example, how does the
Director conclude that enough resources are being applied to correcting shortfalls in human
intelligence collection rather than in other forms of collection or in analysis? ‘The Subcommittee
believes that only through a mature strategic planning process—a cohesive process that links
future national interests and threats to the capabilities the Community budgets for and develops--
can this type of analysis be performed, and only then can the United States develop an
intelligence capability that will adequately support policymakers in future administrations.
Senior leaders from throughout the Community have commented that this area is one of the least
developed and requires the most attention. The strategic planning process that exists presently,
and is planned for the near-term and fragmented, is not well understood across the Director’s
staff or within the intelligence agencies.

'6 Jennifer E. Sims and Burton Gerber, editors, Zransforming U.S. Intelligence, (Washington, D.C: Georgetown
University Press, 2005), page 17

-9-


issues of CounterTerrorism, CounterProliferation'* and CounterIntelligence, which have their
own mission managers). 'S While their efforts are not complete, these two assistant deputies,
with relatively small staffs, are making progress and having success in identifying the
Community’s collective capabilities against specific intelligence topics, within various countries
and regions. They have accomplished most of what they have done by close coordination with
their counterparts within the various intelligence agencies, orchestrating activities rather than
doing them within the Director’s staff. Their processes are beginning to identify unintended and
unwanted overlaps and, more importantly, critical gaps that must be overcome. Their larger
challenge will come when they have completed their surveys and recommend realigning roles
and responsibilities to eliminate overlapping activities as well as adjusting collection and
analysis tasking for the individual intelligence agencies. ‘The relationships established by the
Director with the intelligence agency leaders will be critical to their success in facilitating the
realignment.

The five mission managers (North Korea, Iran, CounterTerrorism, CounterProliferation
and CounterIntelligence) are working on similar activities with varying degrees of progress. To
avoid duplication and confliction, they are actively coordinating with the assistant deputy for
mission management and assistant deputy for collection strategies. Through its review, the
Subcommittee has found that the mission managers at the National CounterTerrorism Center and
the National CounterProliferation Center are working hard to integrate the capabilities across the
Community in a way that will ensure information sharing and reduce or eliminate duplication of
effort. In fact, the National CounterTerrorism Center is able to access a much greater percentage
of terrorism related information than in the past, and although lacking much law enforcement
and homeland security information, the National CounterTerrorism Center is much better
positioned to detect terrorist related activities.

Not only have the mission managers aided in inventorying the Community’s capabilities,
but they have created an environment where the staff can direct across-the-board, deep reviews,
engaging the entire Community without disrupting the daily mission. This form of management
should facilitate a more effective distribution of assets, from hiring and training of personnel to
allocation of work load. As a result, the productivity of the workforce and quality of the product
should improve. It also allows for a broader integration outside the Community across the
federal government and academia. In addition to understanding what intelligence capabilities the
community has, the mission managers must evolve to the point where their plans and objectives
are fully incorporated into the budget process.

B. Establishing Community Priorities

In leading the Community, the Director must also focus on the future and steer the
development of enhanced intelligence capabilities that will provide greater understanding of
future threats and national interests. In Transforming U.S. Intelligence, Dr. Jennifer Sims very
appropriately states,

' Counterproliferation is the activity by the United States government intended to prevent the proliferation of
nuclear, chemical and biological capabilities to other nations.

'S A mission manager is a position within the Community for an individual, operating with the Director’s authorities,
who coordinates all the intelligence activities against a specific country or topic.

-8-


proposed training program. While the FBI plans to draw on existing IC training resources to
complement its own initiatives, the FBI Academy’s limited capacity at Quantico may constrain
the number of new analysts and agents who can be trained in short order. We encourage the FBI
to identify resource requirements and any shortfalls in the upcoming budget request.

Through helpful discussions with FBI leadership, we are aware that the Bureau has a
number of quick reaction units, including CounterTerrorism “Fly Teams,” Hostage Rescue
Teams, Evidence Recovery Teams, and units specially trained to handle chemical or bioiogical
incidents. Senior National Security Branch leadership have agreed to evaluate whether there is
an additional need for an clite team to respond te terrorist incidents and gather pre-emptive
intelligence. This Subcommittee, in concert with the Subcommittee on Terrorism, Human
Intelligence, and CounterIntelligence, intends to more fully explore the capabilities of the
existing quick response units to better assess this concept.

The FBI proactive effort to improve its domestic intelligence capabilities has charted the
desired course. Special agents are just beginning to understand how to collect information when,
they do not have a specific criminal case --a significant cultural change. Our sense is that the
FBI now understands that the National Security Branch is an intelligence agency with law
enforcement power and deserves some credit for improvements made in the intelligence analyst
career path. However, this progress still requires institutionalization across the National Security
Branch. In particular, concerns remain regarding a lack of urgency to meet Intelligence Reform
Act mandates, turnover in senior leadership ranks, and the potential loss of momentum towards
intelligence reform.

In summary, the inability to formalize guidelines and standards for Human Source
Operations and the Field Intelligence Groups, two important pillars of intelligence reform, is
delaying implementation across the National Security Branch. National Security Branch
leadership readily admits that these guidelines are necessary to standardize operations throughout
the 56 field offices. Right now, the important strides the National Security Branch is making at
the major field offices such as Washington, New York, and Los Angeles in “filling the spaces
between the cases” are not being implemented uniformly at smailer field offices. Efforts to
standardize guidelines for Human Source Operations have dragged on for aimost two years. A
greater sense of urgency is required to complete this activity. Additionally, pilot programs to
promote improved collaboration between agents and intelligence analysts show tremendous
promise. This innovative methodology should be expanded to ail field offices as soon as
practical.

Turnover in organizations is inevitable; however, the Subcommittee is concerned about
the attrition of senior leaders within the National Security Branch. Strong, effective, and stable
leadership is essential if the FBI is to complete its transformation of the National Security
Branch to a preeminent domestic intelligence service. Constant change has the obvious potential
to stall progress. The new National Security Branch director will need to quicken the pace of
reform, continue to strengthen the role of intelligence analysts, roll out promising pilot programs,
formalize guidance and standards, and address logistic shortfalls such as a new school house”
for expanded training and sensitive compartmented information facility space in field offices.


The greater challenge to the FBI is changing the culture and evolving special agents from
law enforcement officers to intelligence collectors. Sources internal to the FBI readily admit a
“wall” existed between criminal investigation and intelligence collection efforts. We understand
the National Security Branch is considering how to give its staff latitude to conduct pre-emptive
collection and to hunt for leads that are not necessarily tied to an open case — an approach that
requires agents to increasingly adopt investigative techniques prevalent in intelligence rather
than law enforcement agencies. The FBI is pushing for changes in its Human Source manual,
which currently provides a confusing mixture of guidelines for recruiting, vetting, and employing
assets in both criminal and national security cases. This manual, which the FBI developed when
national security cases consisted mostly of counterintelligence investigations, is an example of
the need for urgency in changing the Bureau’s culture and revising its investigative techniques.
Al-Qaeda will not wait for the bureaucracy to spend months arguing over new procedures.

We note a very promising initiative started at one field office that uses a simple but
effective standard analytical methodology to determine if a new terrorist organization has begun
operating in the area. For a potential terrorist activity, the intelligence analyst and special agent
sit down together to identify gaps in what they know. They both then make efforts to collect the
missing information and iteratively fuse the information until they can identify the potential
terrorist group or activity. Referred to as “filling the spaces between the cases,” this concept,
spreading slowly across the major field offices, affords the ability to collect intelligence outside
of on-going cases that eventually might lead to additional linkages. This initiative needs more
urgency assigned to it and immediate implementation across all field offices.

The FBI has also been proactive in recruiting and hiring new intelligence analysts. Since
January 2004, the FBI has increased the intelligence analyst staffing in the inteiligence functions
of its field offices by 61 percent. According to the FBI Director, “there are now 5,000 agents
and 2,000 intelligence analysts” 41 inthe branch. Traditionally, agents have avoided national
security specializations because traditional criminal efforts were considered more career-
enhancing. The National Security Branch is working to make the intelligence analyst career path
more appealing in an effort to aid recruitment and reduce turnover. The Bureau is making
progress on the creation of an “Intelligence Career Service” that would raise the appeal of
intelligence careers (for both analysts and agents), clarify career paths and training requirements,
and make more senior-level positions available to non-agents. 1 his wiil be a long-term effort
that requires ongoing monitoring, encouragement, and oversight through consultation with FBI
managers, human resources personnel, and both agents and analysts.

Additionally, the National Security Branch has proposed an innovative training approach
to break down existing stereotypes. While not formalized, the training initiative proposes a dual
track alternative for future recruits. The National Security Branch is committed to providing its
incoming agents and analysts with extended specialized training related to national security
issues (as much as 12 weeks), and it has developed a new curriculum for this training. In
addition, the FBI has developed a six-week domestic collection training program in conjunction
with Director's staff and CIA; the first group to take this course will meet September 10. FBI is
just kicking off these training courses and expects to determine in the next few months whether it
has sufficient resources — including funding, instructors, and classroom space — to implement its

“| Testimony of the FBI Director to the Senate Judiciary Committee, 2 May 2006

- 28 -


all counter-terrorism operations under one roof, 0 agencies can share information in real
time about the enemy's plans and whereabouts.”*

The Intelligence Reform Act assigns the Director the responsibility to manage the
intelligence budget, ensure coordination and information sharing among the Community
agencies, and to ensure that the best intelligence is made available to policymakers. Except for
the Director of the CIA, Congress did not alter the organizational structure of the Community.
The individual agencies retain their own systems for operations, management, finance,
personnel, and acquisition management. This fact, among others, requires the Director to forge a
strong “federation” of intelligence agencies through continual engagement with those agencies’
directors and to establish common standards for those areas in which Community agencies must
work together. This engagement requires the Director to personally interact with each of the 16
leaders of the Community, give them direction, and monitor their progress in achieving their
objectives.

To lead and manage the Community, the Director and the Principal Deputy Director for
National Intelligence (herein referred to as the principal deputy) have divided their
responsibilities. The Director is responsible for coordinating “outward and upward.” For
example, the Director conducts the Joint Intelligence Community Council, which is comprised of
Cabinet secretaries and coordinates intelligence activities across the United States government.
The Director has largely left management of the Community to his principal deputy, while both
have delegated daily oversight of the intelligence agency activities to the four deputy directors
(for analysis, collection, customer outcomes, and management).

One cannot confuse leadership with management. An effective leader establishes the
environment and relationships that allow subordinates to effectively manage the activitics of the
enterprise. The challenge facing the Director and his principal deputy is that they must convince
the leaders of the 16 independent intelligence agencies that their success depends on his success,
and vice versa. To enable this success, the Director must create an environment in which
agencies complement each other rather than compete against each other and are given maximum
flexibility to accomplish Director-defined goals. It is no easy task.

Accountability is a major component to any successful leadership endeavor. To apply his
leadership across the Community, the Director is implementing performance agreements with
responsibilities and accountability for the leaders of the 16 intelligence agencies’ and his four
deputy directors. The Director is developing these agreements from the goals and objectives in
the National Intelligence Strategy (the Director’s strategy for transforming the Community)
published on October 25, 2005 and the supporting strategic implementation plans currently being
developed. The leaders of the Community agencies and the four deputy directors are then to

® Press Release, Harman Celebrates Passage of the Intelligence Bill, Dec 7, 2004,

http://www. house.gov/harman/press/reteases/2004/1208PR_Intel%20Passes. html (accessed on Jul 13, 2006).

° The 16 inteltigence agencies are: Central Intelligence Agency; National Security Agency; National Geospatial-
Intelligence Agency; National Reconnaissance Office; Defense Intelligence Agency; Department of State Bureau of
Intelligence and Research; Federal Bureau of Investigation National Security Branch; Department of Homeland
Security Office of Intetligence and Analysis; the intelligence organizations of the Air Force, Army, Navy and
Marines; and the intelligence functions of the Coast Guard, Department of Energy, Department of Treasury and
Drug Enforcement Administration.


2006. The current Program Manager was designated on March 15, 2006. The Information
Sharing Council has representatives from 17 agencies.

The creation of the Information Sharing Environment is a massive undertaking, and while
the President has issued directives and guidelines in support of this effort, progress to date has
been primarily limited to gaining a better understanding of the task. The Program Manager
released an Interim Implementation Plan in January 2006 that indicated an acute awareness of
the magnitude of the task but offered little detail on program execution. As an example of the
difficulties in getting the program moving, a December 2005 Presidential directive called for
each agency leader to designate a senior official to be responsible for information sharing.
However, the response has been inadequate. The Program Manager would like the designees to
be at the undersecretary level or above, but the first submissions did not mect this criterion in a
number of cases.

The current Program Manager intends to release the final Implementation Plan for the
Information Sharing Environment in July 2006. A working paper has been completed. The Plan
will be focused on one to three years into the future, when it is estimated that policy and
technology changes will require a reevaluation. The document on federal-wide roles, missions,
and responsibilities as related to the Information Sharing Environment was to be completed in
late June 2006. The Program Manager advised the Subcommittee that the final Implementation
Plan will provide greater detail on the steps to standardize procedures for classifying information
as “Sensitive But Unclassified”, guidelines for protecting privacy and civil liberties, information
on the structure and roles of state/local fusion centers, and the Information Sharing Environment
budget investment strategy.

One area where the Program Manager has made progress is with an electronic directory
service. The electronic directory service responds to a requirement in the Intelligence Reform
Act to allow participants in the field of terrorism analysis to locate and access information,
organizations, services, and personnel. The electronic data service is up and running at the
classified level, with an unclassified subset available to users outside the Community such as law
enforcement and homeland security officials. The Program Manager is still negotiating with
various agencies over the content level of their data and the classification level at which it will
appear.

The Information Sharing Environment Program Manager is also pursuing several pilot
programs with various organizations. One example is an FBI initiative that will allow federal,
state and local law enforcement personnel in selected areas to have direct and continuous access
to critical law enforcement databases, including the Terrorist Screening Center combined watch
list, directly from handheld devices. The State Department has proposed creating government-
wide Information Sharing Environment training courses. This entry-level training would entail a
Program Manager developed curriculum that could be given by any agency or made available
electronically. The Information Sharing Environment Program Manager will fund these basic
training courses. Each department or agency will fund any additional department specific
training.

-19-


Security Clearances. The Director must develop an overall plan, prioritize
activities, identify quick wins and implement them to begin to meet the mandates of
the Intelligence Reform Act. The Subcommittee believes that situations that defy
common sense must be eliminated, such as:

e The Director must address the system that requires an individual who processes
unclassified information in the open source center to go through the same security
screening process as the Director’s chief of staff who needs access to the most
sensitive secrets.

e The Director must resolve the process that takes months to transfer clearances for
an individual who will work in the exact same space but transfer from the
National Geospatial-Intelligence Agency to the CIA.

Information Sharing. Information sharing within the Community is one of the most
critical tenets of intelligence reform. We understand the tremendous undertaking this
represents for the Director’s staff, but we note most progress to date is limited to
understanding the task at hand.

e The Information Sharing Environment Program Manager must develop and
execute a meaningful Implementation Plan for an information sharing
environment.

e The Director must ensure intelligence analysts have the information they need and
ensure Community data that does not rise to the level of being reported remains
available for all-source analysts to consider.

Transforming the FBI Culture. The transformation of the FBI to an intelligence
agency with law enforcement power is starting to take root. While the FBI deserves
some credit for attempting to change from a pre-dominantly criminal investigation
mindset, the Subcommittee questions whether this transformation is happening fast
enough. We have witnessed false starts and frustrating delays before and this nation
cannot afford yet another one. To ensure an “all-out” institutional change, the
Subcommittee believes that:

e The FBI must roll-out successful pilot programs that fill “spaces between the
cases” across all field offices.

¢ The FBI must establish and implement standardized training and operational
guidelines for Field Intelligence Groups.

e The FBI must stop the revolving door at the National Security Branch —
leadership must be stabilized to complete the transformation.

Education and Training. One of the benefits derived from the formation of the
Office of the Director is the ability to better manage multi-agency issues and
activities such as “joint duty” assignments. Efforts attempted prior to stand-up of this
office often failed because the Director of Central Intelligence lacked proper
authorities. However, we are disappointed in progress to date and missed
opportunities to “hit the ground running” in the area of education and training. The
Subcommittee expects:

~36-


e The Director must better prioritize tasks and concentrate on issues germane to
educating and training Community professionals.

e The Director must ensure that “lessons learned” as determined by the Lessons
Learned Center are incorporated into on-going operations, not just training
programs.

Acquisition. We are told that the Senior Acquisition Executive is working on a plan
for acquisition across the Community but will not present that plan to Congress until
April 2007, definitely not with the urgency the Subcommittee would expect. One
way to have an immediate impact on the acquisition of major systems is to simply
enforce the statutes that have existed for decades and measure acquisition processes
that the intelligence agencies were required to do before the Intelligence Reform Act
was enacted. The Subcommittee believes:

e The Director must require and ascertain that the intelligence agencies’ acquisition
professionals are properly certified under existing statutory or regulatory
processes.

e The Director must require that individuals in the intelligence agencies under the
Department of Defense commit to a minimum of three years in an acquisition
position before being assigned to that position, again as required by statute.

e The Director must review the cost, schedule, and performance baselines of
acquisition programs at the intelligence agencies and report each review to the
Committee as required by the Intelligence Reform Act.

Strategic Planning and Review Processes. The strategic planning processes that
currently exists is fragmented and not well understood across the Community. The
Subcommittee senses that progress must occur in two ways:

e For the short term, the Director needs to complete the national intelligence
strategy implementation plans to get the Community on solid footing to
adequately support decision makers, and,

e For the longer term, the Director must implement a formalized, periodic and
structured review, similar to the Quadrennial Defense Review to ensure we mold
the intelligence capabilities to meet the future threat to and interests of the United
States.

Personnel. Another very important tenet of the Intelligence Reform Act was to
ensure intelligence mission areas are properly resourced. We note that current
personnel systems across the Community are incapable of “talking” to each other — a
stumbling block to sharing information and steering personnel between agencies. ‘The
sense of the Subcommittee is that current personnel systems and hiring practices are
too rigid or outdated. We would like to see the Director:

e Implement a master human resource system across all agencies.

« Investigate more open hiring practices to ensure the Community can employ
perhaps not the most conforming, but the most talented people in critical skills.

-37-


b. Education and Training

Section 1002 of the Intelligence Reform Act requires the Director to “establish an
integrated framework that brings together the educational components of the Community in
order to promote a more effective and productive Community through cross-disciplinary
education and joint training.”>” The Subcommittee believes the area of education and training
affords the Director one of the best and fastest opportunities to produce the desired sense of
community.

At the time of its investigation, the WMD Commission found that the Community lacked
the initial training necessary to instill a sense of community and shared mission in entry-level
personnel and no adequate management training program. They recommended the creation of a
National Intelligence University to standardize good tradecraft practices and set curriculum
standards, resulting in a more professionalized workforce.

In the current office structure, the assistant deputy for training and education also serves
as the Chancellor of the National Intelligence University. Through the work of a "virtually-
based" National Intelligence University, the Director plans to fulfill the Intelligence Reform Act
requirement of moving the Community’s education and training curriculum toward a more
professional and collaborative system. The National Intelligence University operates as a "front
office" for the full spectrum of Community education and training programs and wil! focus on
establishment of standards and policy.

The National Intelligence University staff plans to structure curriculum into three groups:
Local Programs, Common Programs and Joint Programs, which are expressly intended to
promote integration, with enrollments and curricula designed to achieve that goal. Joint
programs will include common "tradecraft" courses to train all entry-level personnel in areas
such as analysis. The Subcommittee is pleased with this action because standard tradecraft
training will ensure that Community personne! are able to communicate and operate with a
common language and training experience making joint duty assignments more productive. The
National Intelligence University staff and the human capital officer are also working to establish
“core competencies” in the areas of analysis, science and technology, foreign languages,
collection, and mission support.

In instances when the assistant deputy for education and training and the human capital
officer’s opinions differ, it is the deputy for management’s responsibility to make a final
judgment. Most recently, he made the decision to move the new Leadership Center out of the
National Intelligence University into the domain of the human capital officer. The Center will
look at methods for determining and instilling key qualities for effective leadership in the
Community workforce and plans to mandate that at least 25 percent of leadership classes be
filled with students employed outside the host agency. This will ensure that different agency
viewpoints and challenges are explored during class, leading to better “Community” trained
leaders. It is a further example of the Director’s efforts to promote and infuse jointness and
Community-wide understanding in Community leaders.

5750 U.S.C. Section §44 1-1
~25-


I. Introduction

On September 11, 2001, 19 suicidal terrorists, using fuel-filled airliners, attacked the
United States and killed approximately 3,000 innocent people.

Since that day, the national security organizations of the United States government have,
with varying degrees of urgency, attempted to respond to this difficult and deadly threat, for the
terrorists have made it clear that they will continue to pursue us.

It is apparent from information gathered through our intelligence efforts, as well as from
public declarations, that Al-Qaeda and similar groups are determined to kill as many Americans
as possible in the most spectacular fashion possible. (See, for example, Ayman al-Zawahiri’s
Knights Under the Prophet Banner' (2001)). The Subcommittee on Policy of the House
Permanent Select Committee on Intelligence recently released a report—AI-Qaeda: The Many
Faces of an Islamist Extremist Threat (June 2006)—that provides more details on this threat. It
is also clear that their goal is to establish a radical Islamic caliphate under their narrow and
distorted view of what the world should be. As British Prime Minister Tony Blair said on March
21, 2006, “It is not a clash between civilisations. It isa clash about civilisation.’

9/11 was a significant failure of American intelligence. Several studies and reviews have
analyzed the Intelligence Community (herein referred to as the Community), identified
deficiencies that contributed to this failure, and recommended changes to remedy them.

Among the reviews were:

¢ Joint Inquiry into the Terrorist Attacks of September 11, 2001 by the House and Senate
Intelligence Committees, December, 2002;

The Final Report of the National Commission on Terrorist Attacks Upon the United
States (9/11 Commission Report), July 22, 2004;

¢ The Commission on the Intelligence Capabilities of the United States Regarding
Weapons of Mass Destruction (WMD Commission), March 31, 2005.

One common conclusion, as expressed by the WMD Commission, emerged:

“But above all, we found an Intelligence Community that was too disorganized and
fragmented to use its many talented people and sophisticated tools effectively. There are
not enough coordinated and sustained Community-wide efforts to perform critical
intelligence functions — ranging from target development to strategic analysis — and
critical information still too often does not get to the analysts or policymakers who need
it most.”

' Ayman al-Zawahiri, Knights Under the Prophet’s Banner: the al_Qaeda Manifesto, Al-Sharq ai-Awsat, December
3, 2001, Foreign Broadcast Information Service (FBIS), GMP200) 1202000401, 2001

? British Prime Minister Tony Blair, Foreign Policy Speech, March 21, 2006

> Report of the National Commission on Intelligence Capabilities of the United States Regarding Weapons of Mass
Destruction, March 31, 2005, p. 309-310.

-1l-


to array its resources effectively against North Korea’s recent launch of the TaePoDong I
missile. The ability to sort out and solve this issue indicates that in this instance the
communications and relations between the Director and Secretary of Defense was productive and
professional and was able to tackle and solve a tough issue. The Subcommittee will examine
additional transactions in future reviews.

E. Budget Restructuring

To better understand and manage intelligence resources and to develop a more cohesive
Fiscal Year 2008 budget, the Director decided to revamp the budget structure and Congressional
Budget Justification Books.” While this budget restructuring was warranted, the Director’s staff
did not adequately coordinate the planned activity with the 16 intelligence agencies or with
Congress. In the past, the agencies would discuss their budget structure with congressional staff
before making any changes since the intended audience of these budget justification books was
congressional staff. In this instance, however, the Director’s staff directed significant changes
and restructuring without first coordinating the changes with congressional staff responsible for
monitoring agency budgets. While the principal deputy held several meetings with the
intelligence agency leaders, the agency staffs appear not to have fully understood the urgency
and significance of these meetings. For whatever reason, the intelligence agency staffs felt that
the Director’s staff was proceeding without fully coordinating with them and was making
substantial modifications to the budget structure. Some senior Community officials expressed
strong displeasure with the restructuring but most acquiesced, choosing not to battle the Director
on this issue. Whether because of poor coordination, or the reluctance of agencies to follow the
guidance of the Director, many felt the Director’s staff was heavy-handed.

A Subcommittee concern is that continued directing without prior, effective coordination
and collaboration with the intelligence agencies risks damaging critical relationships. The
Director and his staff must understand this danger and work with the 16 intelligence agencies
towards success as a federation, not against them towards failure. Dr. Jennifer Sims notes some
of the challenges the Director will face in overcoming the problems of bureaucratic rigidity and
states, “He could also make them much worse if a new, large bureaucratic staff tries to impose
changes with a heavy hand. Agencies are, after all, likely to develop strategics to counter what
they fear will become additional debilitating bureaucratic processes and regulations. ~

F. Acquisition Management

Prior to passage of the Intelligence Reform Act, Congressional encouragement convinced
the Director of Central Intelligence to establish a Senior Acquisition Executive. *? Congress also
required the Senior Acquisition Executive to work closely with the Undersecretary of Defense

2° A Congressional Budget Justification Book is a document submitted by each intelligence agency that provides
detailed justification of the items within their annual budget request.

2! Jennifer E. Sims and Burton Gerber, editors, Transforming U.S. Intelligence, (Washington, D.C: Georgetown
University Press, 2005), page 49.

> The Senior Acquisition Executive is the individual responsible for overseeing the development and purchasing of
systems and capabilities for the Community.

-12-


attempting to expand the authorities provided by the Intelligence Reform Act, the Director
should coordinate with the 16 intelligence agencies, use his authority as head of the Community
and reduce or eliminate the funding from other sources for acquisition programs that are
predominately funded through the National Intelligence Program.

Concurrently, many of the major acquisition programs at the National Reconnaissance
Office, the National Security Agency, and the National Geospatial-Intelligence Agency have cost
taxpayers billions of dollars in cost overruns and schedule delays. Part of this problem stems
from simply not enforcing existing statutes and Executive Branch requirements for a professional
acquisition workforce in a majority of the acquisition positions within the Community. 10
USS.C., Sections 1734 and 1735 mandate educational requirements, career development, and
rotational limitations for contracting officers and acquisition management officials, all of which
need stricter enforcement across the Community. While many of the failed programs were
initiated prior to creation of the Director, a greater sense of urgency must be garnered with DoD
to reverse this dismal track record. In addition, more solid evidence in the form of performance
measures or metrics for Community acquisitions must be collected, reviewed, and assessed
before the Director can claim any value added in the process. Of major concern is the fact that
even if the Director is able to clearly identify the future national interests and threats and to
restructure the budget to provide the capabilities to inform policy and decision makers on these
threats, the demonstrated poor performance of the Community in acquiring major systems puts
the best laid plans at risk of failure. Such a major problem as this one, as well as the other issues
highlighted deeper elsewhere in this assessment, requires vigorous leadership. The
Subcommittee is beginning a review of Community procurement and acquisition practices to
examine this and other issues that have been identified to Congress over the past few years.

Iii. Analysis

The Intelligence Reform Act contains a number of requirements relating to analysis.
Specifically, Section 1011 calls for the Director to “encourage sound analytic methods and
tradecraft,”** “ensure that analysis is based on all sources available,” and to “ensure that
differences in analytic judgment are fully considered and brought to the attention of
policymakers.” The Act also requires the Director to designate an individual who shali be
available to analysts to “counsel, conduct arbitration, offer recommendations, and, as
appropriate, initiate inquiries into real or perceived problems of analytic tradecraft or
politicization, biased reporting, or lack of objectivity in intelligence analysis.” 2

The deputy for analysis has undertaken a number of initiatives to integrate the
Community’s analytic cadre and improve its output. A primary example is creation of the
Analytic Resources Catalog. This database will have the names and other identifying
information such as home agency and areas of expertise for all analysts in the Community. The
purpose of the Analytic Resources Catalog is to promote an integrated Community of analysts
and allow the Community to tap their expertise wherever it resides. The former Assistant
Deputy Director of Central Intelligence for Analysis attempted to create an Analytic Resources

7450 U.S.C. $403-1(h)(1)(A),(B)
5 50 U.S.C. §403-1(h)G3)

-14-


II.

Il.

IV.

VI.

VI.

Table of Content

Introduction
Leadership of the Intelligence Community

Inventory of Capabilities

Establishing Community Priorities
Improved Communications

Relationship with the Department of Defense
Budget Restructuring

Acquisition Management

moepnogse

Analysis

Information Sharing

Civil Liberties

Other Elements of Intelligence Reform

Personnel Activities

Education and Training

Cultural Transformation of the Federal Bureau of Investigation

Security Clearances
Utilization of Open Source Information

enoge

Summary

11
11
12
12

14
17
20
22

22

25

27

30

33

35


VII. Summary

The ultimate success or failure of the Intelligence Reform Act is yet to be determined.
Former senior leaders of the Community have told the Subcommittee and staff that it will take
five years to fully implement the Act. While that may be true, the Subcommittee believes we
cannot wait that long to determine if the Director, as the leader of the Community, is
transforming the Community into what Congress envisioned when it passed the Intelligence
Reform Act. The terrorist threat is present, and it is real. The Community also faces other
challenges and threats, some known, some unknown. While the Subcommittee sees the Director
making progress, it is neither even nor all encompassing.

One fact is clear—since the tragic events of September 11, 2001 tremendous resources
have been and continue to be committed to national security and to countering terrorism. The
President, Congress, and American public expect the Director to lead the Community in making
improvements to the quality of intelligence provided to policy makers.

The Director is succeeding in completing many activities where previous attempts failed
under the Director of Central Intelligence structure. Most of these prior efforts were short lived
or failed because of lack of resources (money and personnel) and insufficient authority. That the
Director has been able to complete the Analyst Resource Catalog, inventories of analytical
capabilities on topics in various regions and countries, and an inventory of programmed technical
collection capabilities indicates a degree of success in achieving the goals of the Intelligence
Reform Act.

Where the Subcommittee has observed good progress in transforming the Community,
managers have taken complex activities, broken them into definable and achievable tasks and
begun executing. They did not wait for the 100 percent solution before beginning and appear to
have set priorities on which tasks were most important to be completed first. We identified
several notable areas in this assessment, such as the cultural reform currently under way in the
FBI National Security Branch and the inventory of capabilities being conducted by the assistant
deputy for mission management and the assistant deputy for collection strategies. We cannot say
they have succeeded, but they are on a promising path. In some areas the Director has not taken
that approach and continues to fall short of our expectations--notably in the areas of security
clearances and education and training. The Director needs to make progress in these areas. We
cannot wait for a perfect solution. These are problems that were identified years ago and the
subject of various studies, yet they continue to flounder.

Other positive areas where distinct progress has been made are in the re-tooling of the
President’s Daily Brief, the initiative to restructure the Fiscal Year 2008 budget. the
establishment of an Analytic Ombudsman to resolve disputes, and changes to the National
Intelligence Estimates. However, in all cases there is still work to be done.

In the Introduction we stated that progress towards intelligence reform was a mixed story,
some advances but other reforms lagging. We identified three areas of concern that permeate our
findings; lack of urgency, trying new approaches, and prioritization of efforts. These concerns
exist throughout the following areas, all of which require the Director’s attention:



The WMD Commission Report also highlighted the need for an overhaul of the
Community personnel system and states "the Community has had difficulty recruiting
individuals with certain critical skill sets; has often failed to encourage the type of ‘joint’
personnel assignments that are necessary to breaking down cultural barriers that exist among
agencies; and has proven insufficiently adept at hiring and mainstreaming mid-career ‘lateral’
hires from outside of the Intelligence Community.”*? To alleviate these problems, the WMD
Commission calls for “a DNI [Director]-level office responsible for analyzing the workforce,
developing strategies to ensure that priority intelligence missions are adequately resourced, and
creating Community human resource standards and policies to accomplish these objectives.”**

The Director’s National Intelligence Strategy acknowledges the personnel issues raised
by the Congress and the WMD Commission. Enterprise Objective Four of the Strategy is to
"attract, engage, and unify an innovative and results-focused Intelligence Community
Workforce."*> The human capital officer and the assistant deputy for education and training,
both located within the deputy for management's office, are assigned to fulfill this objective by
ensuring that the Community is recruiting an intelligent, innovative workforce; rewarding
expertise, excellence and commitment to mission; and encouraging initiative, resourcefulness,
and resilience.

The Strategy asserts that the Director will enable Community elements to identify
mission-critical human resource requirements; train, develop and promote Community
professionals according to rigorous, competency-based standards; select a senior leadership
cadre that promotes high performance, employce engagement, information sharing, and
collaboration: and develop evaluation and reward systems that reinforce excellence among
professionals and those who lead them. As follow-up to the Strategy, the human capital officer
has developed a comprehensive Community-wide Strategic Human Capital Plan that details how
the Director will achieve the personnel-related goals outlined in the Strategy. However, the
Subcommittee has not yet seen this plan.

In October 2005 the Director conducted the first-ever Community Employee Climate
Survey, seeking to gauge the job satisfaction of the workforce. The Director’s staff plans to
administer this survey annually to continually measure progress. The results of this survey have
already yielded insight into ways to improve morale and management of the Community
workforce. The Strategic Human Capital Plan is to include initiatives that specifically address
the issues employees identified as problems in the survey, including a widely voiced complaint
that promotion is not tied to performance. The Subcommittee will use the results of the next
survey (fall 2006) to determine progress relative to the goal of professionalizing the Community
workforce.

>? Report of the National Commission on Intelligence Capabilities of the United States Regarding Weapons of Mass
Destruction, March 31, 2005, p. 322

* Ibid,

% Office of the Director of National Intelligence, The National Intelligence Strategy of the United States of America
Transformation through Integration and Innovation, 13-14.

°° Office of the Director of National Intelligence, The National Intelligence Strategy of the United States of America:
Transformation through Integration and Innovation, 13-14.

-23-


Submitted by

Mac Thornberry TX)

Chairman
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Terry Everktt (R-AL)
ZL [son

Heather Wilson NM)

LM (ih

Todd Tiahrt (R-KS,

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“Se : iS)

Rick Rhazi (R-AZ)

Majority Staff:

Riley Perdue - Subcommittee Staff Director
Don Stone - Professional Staff Member
Don Campbell - Professional Staff Member
Jay Heath — Counsel

Kim Knur — Counsel

Carolyn Lyons — Professional Staff Member

“Bao A Camaz

E. (Budy ¢ Cramer, Jr. (D-AL)
Ranking Member

<I" ;
Silvestre Reyes (D-TX} éQ

OA Dude,

C.A. Dutch Ruppersberger (D-MB) ‘
WE. Lie
bas F. Tierney OM 7

Mike Delaney — Professional Staff Member

Eric Greenwald — Counsel

(Wagar the a2


the sensitive compartmented information clearances. Within two years of the enactment of the
Intelligence Reform Act (or no later than December 17, 2006), the Director must ensure that at
least 80% of the sensitive compartmented information security clearance applications from
within the Community are completed in an average of 120 days or less. This 120 day average
standard further requires that all background investigations be completed in an average time of
no more than 90 days and that all clearance adjudications be completed in an average time of no
morc than 30 days. Within five years of the enactment of the Intelligence Reform Act (or no later
than December 17, 2009), the Director must ensure that at least 90% of the sensitive
compartmented information security clearance applications from within the Community are
completed in an average of 60 days or less. This 60 day standard further requires that all
background investigations be completed in an average time of no more than 40 days and all
clearance adjudications be compieted in an average time of no more than 20 days. For
calculating all of the processing milestones listed in the Intelligence Reform Act, the “clock”
begins to run for processing time purposes only after the agency has received a complete security
clearance application.

To date, the major policy review and overhaul of standards and procedures for the
granting of access to sensitive compartmented information as envisioned by the Intelligence
Reform Act has not taken place. The current executive branch policy for granting access to
classified information was published in 1995 in Executive Order 12968. This executive order
delegated authority to the Director of Central Intelligence to establish procedures for granting
access to sensitive compartmented information. In October 1999, the Director of Central
Intelligence issued Directive 6/4 which established “Personnel Security Standards and
Procedures Governing Eligibility for Access to Sensitive Compartmented Information.” This
Director of Central Intelligence Directive 6/4 has been in effect since 1999 and is currently the
applicable standard for granting access to sensitive compartmented information within the
Community.

In accordance with section 1011 of the Intelligence Reform Act, the Director has tasked
the Special Security Center to review the Director of Central Intelligence Directive 6/4 with the
goal of republishing its contents with any changes as an Intelligence Community Directive. The
Director, Special Security Center advised Subcommittee staff that his office will issue an
Intelligence Community Directive on standards and procedures for granting access to sensitive
compartmented information within calendar year 2006 but provided little detail on the process he
will use to meet this goal.

The Director has started to address the task of expediting the clearance process. The
deputy for management issued a data call on February 3, 2006 for statistics on the average
investigation and adjudication time for security clearances within the Community. This data call
was intended to create a quarterly reporting requirement for all Community agencies so that the
Director’s staff could monitor their compliance with the performance milestones called for in the
Intelligence Reform Act. The Deputy Director for Special Security Center provided the
Subcommittee a chart listing the average investigative times for clearance processing in the CIA,
the Department of Homeland Security, the Defense Intelligence Agency, the FBI, the National
Reconnaissance Office, the National Security Agency and the Department of State during the

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The Director has initiatives under way to increase efficiency and effectiveness as well as
decrease duplication of effort and of funding in education and training. National Intelligence
University staff is working to make training programs virtually accessible and registration
transferable across agencies. Concurrently, the Community Registrars Council, an interagency
board of Community registrars and enrollment services officials, is working with the National
Intelligence University to establish registration policies, processes and practices to facilitate
cross-Community personnel enrollment in training and education with the ultimate goal being to
create a "one-stop," virtual registration process.

A Lessons Learned Center has been created under the National Intelligence University
“umbrella” that oversees and implements a Community-wide process for a real-time
incorporation of lessons-learned into the Community training curriculum. Current activities
include outreach to industry and international partners to determine appropriate “lessons” to
incorporate into the joint program class curriculum. The Center is also coordinating a
presentation series, where senior Community leaders will hold monthly seminars on topics of
interest to intelligence professionals. These presentations will be video-teleconferenced across
the Community to ensure maximum participation and knowledge transfer.

The Subcommittee is pleased that the Director’s staff has taken into account the
importance of using lessons-learned to improve Community activities but is concerned that the
lessons-learned activity has been placed in education and training instead of within an
operational component of the Director’s staff. For example, the Defense Department
incorporates real-time lessons-learned through the work of the Joint Lessons Learned System
activity, which is managed within current operations (the Joint Staff). This ensures that lessons-
learned are factored back into current operations while also providing input into curriculum for
training. The Director’s decision to place the intelligence community’s lessons-learned activity
in education and training takes the assistant deputy for education and training’s focus off the
primary task at hand.

The Subcommittee is disappointed that the Director has not taken more definitive action
to facilitate the development of a cadre of intelligence professionals who possess critical thinking
skills or expertise on a wide range of subjects. Much can be gained from using the classroom to
orient Community personnel in the new "vision" of an integrated, agile Community. For
instance, we are at a loss as to why the National Intelligence University staff would still be
taking inventory of the Community agencies’ individual education and training programs,
considering this information must be readily available for prospective students to apply. Rather,
the Director, at this point, should be actively guiding agency programs. The Director must
impose consistency and fill curriculum gaps in Community education and training programs if he
expects to facilitate intelligence agency production of intelligence professionals who possess the
necessary Community-wide understanding and mastery of their areas of expertise.

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As an important follow-up to the Intelligence Reform Act, the Fiscal Year 2007 House
Permanent Select Committee on Intelligence Authorization Bill requires the Director to institute
a formal strategic review process. “This Committee believes that achieving the necessary
reforms of the IC will only occur through a strategic review process. A formalized, periodic and
structured review, much like the Quadrennial Defense Review used by DoD could be a good
model.”17 Even with the best strategic planning process, the organization must take a step
backwards periodically and review that the decisions that have been made by the individuals who
operate the process to ensure aren’t overly influenced by the way business has always been done.
Experts who are removed from the daily process should periodically conduct a comprehensive
examination of the strategy, structure, modernization plans, infrastructure, budget plan, and other
elements of the intelligence program and policies of the United States with a view toward
determining and expressing the intelligence strategy of the United States and establishing an
intelligence program for the next 20 years. The Subcommittee is concerned that the goals of the
Strategic Review Process envisioned in the Fiscal Year 2007 bill may not be met.

One promising component of the Director’s process is the development of an Integrated
Collection Architecture (herein referred to as the Architecture) within the deputy for collection’s
staff. It is an attempt to capture collection capabilities of ali intelligence disciplines across the
Community and the accompanying budget structures to support the Community in determining
what future systems it should acquire. The senior advisor for technical architecture within the
organization has made solid progress in capturing the current technical capabilities of the
Community and the technical capabilities that will exist if the agencies execute their projected
budgets as currently planned. The Architecture incorporates scenarios developed with
significant input from the Departments of Defense and State that will enable a review of the
budgeted baseline against future threat environments. The Director should then have a better
understanding of where future gaps will exist and how best to restructure programs and the
budget to meet future needs. The collection gaps identified in the inventory of capabilities
discussed carlier will be one of the inputs into this Architecture. The Director’s staff hopes to
have the initial results this year, which will help formulate the fiscal year 2008 budget.

In developing the Architecture, managers have taken steps to avoid many of the
deficiencies of previous architecture studies. First, the Office of the Director created a Joint
Senior Steering Group composed of senior officials from the Department of Defense and three of
the deputy directors, which meets every four to six weeks to agree upon criteria, methodologies,
scenarios and other critical factors preventing conflict and abandonment in later stages. Second,
the scenarios and vignettes were reviewed and approved through existing Defense and
Community requirements review and generation processes. However, all intelligence disciplines
will not be incorporated into the Architecture until next year, so the full benefits of the
Architecture are at least a year and a half away. To be most effective, the Director must expand
this effort to incorporate all activities, including analytical and dissemination capabilities, across
the Community.

” House Permanent Select Committee on Intelligence, intelligence Authorization Act for Fiscal Year 2007, Report
to accompany H.R. 5020, April 6, 2006, Section C: Areas of Special Interest, p.21.

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for Acquisition, Technology and Logistics to review and report on the programs of the
intelligence agencies that were supposed to acquire or develop the major systems (technical
capabilities) needed to ensure the United States could collect intelligence about our adversaries.
The Senior Acquisition Executive and his Department of Defense counterpart repeatedly
reported to Congress that there were significant problems in the acquisition of major systems at
the various intelligence agencies. As part of the Intelligence Reform Act, the Director was given
specific authorities for overseeing these major systems acquisition programs. Specifically, the
Intelligence Reform Act tasks the Director to:

“(A) require the development and implementation of a program management plan that
includes cost, schedule, and performance goals and program milestone criteria, except
that with respect to Department of Defense programs the Director shall consult with the
Secretary of Defense;

(B) serve as exclusive milestone decision authority, except that with respect to
Department of Defense programs the Director shall serve as milestone decision authority
jointly with the Secretary of Defense or the designee of the Secretary; and

(C) periodically--(i) review and assess the progress made toward the achievement of the
goals and milestones established in such plan; and (ii) submit to Congress a report on the
results of such review and assessment.”

The Director has tasked the Senior Acquisition Executive with assisting him in carrying out these
important oversight requirements.

The Subcommittee’s review of progress made since passage of the Intelligence Reform
Act shows mixed results. It appears the Senior Acquisition Executive has forged a solid
partnership with the Department of Defense in its joint responsibility for reviewing programs and
determining if the programs are sound enough to continue. Together, the two organizations have
structured a tailored review process that puts more rigor in their oversight role. The Intelligence
Reform Act requires the Director to report the results of the periodic reviews to Congress. The
staff was told that the quarterly program reviews conducted by both organizations are starting to
generate helpful management information. But, to date the Subcommittee has not seen a single
report on any of the reviews of acquisition programs conducted by the Senior Acquisition
Executive.

While the Senior Acquisition Executive has established a working relationship with the
Department of Defense, he has been unable to promulgate overarching acquisition guidance to
the Community—resulting in too little progress over the past 18 months. The Intelligence
Reform Act only provides the Director authority for acquisition of major systems that are fully
funded in the Nationa! Intelligence Program. The Intelligence Reform Act also does not bestow
procurement authority for these programs to the Director. The concern by some Community
agencies and their cabinet departments is that the pending Senior Acquisition Executive’s draft
acquisition directive attempts to expand the authorities afforded to the Director in the
Intelligence Reform Act to include acquisition of major systems funded, in part, from outside the
National Intelligence Program and into areas over which it did not grant authority. As a result,
coordination of these new policies and procedures has stalled in the review process. Instead of

3 50 U.S.C. §403-1(g)(1)(A)-(C)