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[Senate Report 107-208]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 490
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-208

======================================================================

 
               INTELLIGENCE AUTHORIZATION ACT FOR FY 2003

                                _______
                                

                  July 9, 2002.--Ordered to be printed

                                _______
                                

    Mr. Levin, from the Committee on Armed Services, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2506]

    The Committee on Armed Services, to which was referred the 
bill (S. 2506) to authorize appropriations for Fiscal Year 2003 
for intelligence and intelligence-related activities of the 
United States Government, the Community Management Account, and 
the Central Intelligence Agency Retirement and Disability 
System, and for other purposes, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill as amended do pass.

                          PURPOSE OF THE BILL

    S. 2506 would authorize appropriations and other matters 
for Fiscal Year 2003 for intelligence activities of the United 
States, including certain Department of Defense intelligence-
related activities within the jurisdiction of the Senate Armed 
Services Committee.
    The Senate Select Committee on Intelligence reported the 
bill on May 13, 2002, and it was referred to the Committee on 
Armed Services in accordance with section 3(b) of Senate 
Resolution 400, 94th Congress.

                     SCOPE OF THE COMMITTEE REVIEW

    The committee has carefully reviewed the report of the 
Select Committee on Intelligence (S. Rept. 107-149) and has 
incorporated the relevant budget recommendations of the Senate 
Select Committee on Intelligence with modifications into S. 
2514, the National Defense Authorization Act for Fiscal Year 
2003, which the Senate passed on June 27, 2002.
    The following explains the committee's proposed amendment 
to the bill as reported by the Senate Select Committee on 
Intelligence, as well as the committee's clarification to the 
report issued by the Senate Select Committee on Intelligence.

Classified annex to the committee report

    The committee has prepared a classified annex to this 
report that describes other recommendations and concerns that 
are classified in nature.

Preparation and submittal of reports, reviews, studies and plans 
        relating to Department of Defense and Department of Energy 
        intelligence activities

    S. 2506, with its associated report (S. Rept. 107-149) and 
classified annex, contains numerous provisions requiring the 
preparation and submission of various reports, reviews, studies 
and plans concerning all facets of U.S. intelligence 
activities. Many of these reporting requirements include all, 
or elements of, Department of Defense and Department of Energy 
intelligence-related activities over which the Senate Select 
Committee on Intelligence and Armed Services Committee share 
oversight. The committee believes that all relevant oversight 
committees should receive these important reports, and that the 
Department of Defense and the Department of Energy should be 
consulted in conducting and preparing such reports, reviews, 
studies and plans that involve intelligence-related activities 
within these respective organizations. The committee's proposed 
amendment to S. 2506, as reported by the Senate Select 
Committee on Intelligence, would clarify the requirement for 
consultation with appropriate defense and energy officials and 
ensure that all relevant oversight committees are recipients of 
information on activities within their respective 
jurisdictions.

Standards and qualifications for the performance of intelligence 
        activities

    Section 308 of S. 2506 would clarify the role of the 
Director of Central Intelligence, as head of the Intelligence 
Community, as the official responsible for prescribing common 
standards and qualifications for individuals performing 
intelligence functions throughout the Community.
    The committee's proposed amendment would modify section 308 
to clarify that the Director should prescribe such standards 
inconsultation with those agencies whose responsibility it is to 
establish standards.

Modification of David L. Boren National Security Education Program

    Section 309 of S. 2506 would dramatically alter the 
purpose, scope and operation of the National Security Education 
Program (NSEP). The committee is concerned that insufficient 
consideration has been given to the views of the President, 
National Defense University, the Secretary of Defense's 
designee to oversee NSEP and to chair the National Security 
Education Board. The committee is also concerned that taking 
action at this point in time, without the careful review and 
analysis that this important subject deserves, would be 
premature. The committee recommends that the conferees on this 
bill consider the alternative of requiring the Secretary of 
Defense, in consultation with the Director of Central 
Intelligence, to conduct a study of the program and to report 
to the relevant congressional committees as to whether the NSEP 
is meeting its goals; whether any component of the program 
should be cancelled or changed; what the benefits and drawbacks 
are of the National Foreign Language Initiative; and whether 
the responsibility for the program should be transferred from 
the Secretary of Defense to the Director of Central 
Intelligence.
    Regardless of the outcome of that issue, the committee 
believes that a report on conversion of funding from trust fund 
to annual appropriations should consider the advisability of 
such action. Accordingly, the committee's recommended amendment 
to subsection (f) of section 309 would require the Secretary of 
Defense, in consultation with the Director of Central 
Intelligence, to report on the advisability of conversion of 
funding from the National Security Education Trust Fund to 
funding through annual appropriations.

Annual report on improvement of financial statements of certain 
        elements of the Intelligence Community for auditing purposes

    Section 414 of S. 2506 would require an annual report 
describing activities undertaken by the Central Intelligence 
Agency, National Security Agency, Defense Intelligence Agency 
and National Imagery and Mapping Agency to ensure that agency 
financial statements can be audited in accordance with Office 
of Management and Budget requirements. The committee supports 
efforts designed to improve the financial management of the 
defense intelligence agencies.
    At the same time, the committee recognizes that the 
financial management systems of the defense intelligence 
agencies are integrally linked to the financial management 
systems of the Department of Defense and cannot be addressed in 
isolation. On March 6, 2002, the DOD Comptroller testified 
before the Readiness Subcommittee of the Armed Services 
Committee that the root causes of DOD's financial management 
problems are ``(1) the uncontrolled proliferation of antiquated 
and stand alone financial management systems; and (2) the 
inefficient business processes that they support.''
    To address these root causes, DOD has initiated an effort 
to develop an enterprise architecture to support modernization 
of financial management systems and business processes. The 
Comptroller General of the United States testified that DOD 
should limit spending on new business data systems until this 
new enterprise architecture for financial management has been 
approved.
    Section 1006 of S. 2514 would require the Secretary of 
Defense to develop a comprehensive enterprise architecture by 
March 2003 for all budgetary, accounting, finance and data 
systems of the Department of Defense, and would require that 
all financial system upgrades be made in compliance with the 
new architecture. The committee expects the Secretary of 
Defense to ensure that the defense intelligence agencies comply 
with the requirements of section 1006 of S. 2514.

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

    Title VI of S. 2506 would establish a National Commission 
for Review of the Research and Development Programs of the 
United States Intelligence Community. Section 602 of S. 2506 
would establish the composition of the Commission to include 11 
members.
    The committee believes that the research and development 
programs within the Department of Defense make a significant 
contribution to the efforts of the Intelligence Community. 
Specifically, it would be difficult for the Commission to 
conduct a thorough review of research and development that 
contribute to the Intelligence Community programs without 
considering the programs funded and managed by the Department 
of Defense.
    Therefore, the committee's recommended amendment would 
modify section 602 to add a twelfth member to the Commission, 
and to identify that member as a senior intelligence official 
from the Office of the Secretary of Defense, to be designated 
by the Secretary of Defense.

                            COMMITTEE ACTION

    In accordance with the Legislative Reorganization Act of 
1946, as amended by the Legislative Reorganization Act of 1970, 
the committee approved a motion to report favorably to the 
Senate S. 2506, with amendments.

                              FISCAL DATA

    The committee will publish in the Congressional Record 
information on five-year cost projections when such information 
is received from the Congressional Budget Office.

                           REGULATORY IMPACT

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires that a report on the regulatory impact of a 
bill be included in the report on the bill. The committee finds 
that there is no regulatory impact in the cost of S. 2506.

                        CHANGES IN EXISTING LAW

    Pursuant to the provisions of paragraph 12 of rule XXVI of 
the Standing Rules of the Senate, the changes in existing law 
made by certain portions of the bill have not been shown in 
this section of the report because, in the opinion of the 
Committee, it is necessary to dispense with showing such 
changes in order to expedite the business of the Senate and 
reduce the expenditure of funds.

                                  
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